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Exhibit 10.23
OPTION AGREEMENT
This Stock Option Agreement (this "Agreement"), is made and entered
into this 12th day of December, 1996, by and between YOUNG & RUBICAM HOLDINGS
INC., a New York corporation ("Holdings"), YOUNG & RUBICAM INC., a New York
corporation (the "Company"), YOUNG & RUBICAM INC., a Delaware corporation and a
wholly-owned subsidiary of Holdings ("Y&R DEL"), and H&F ORCHARD PARTNERS III,
L.P., a California limited partnership (the "Purchaser").
RECITALS
1. The parties hereto have entered into a Contribution Agreement
dated as of October 30, 1996 (the "Contribution Agreement"). All capitalized
terms not defined herein have the meanings ascribed to them in the Contribution
Agreement.
2. Pursuant to the Contribution Agreement, Holdings has agreed to
grant to the Purchaser an option to purchase certain shares of Holdings' common
stock, par value $0.01 per share (the "Holdings Common Stock"), on the terms and
subject to the conditions set forth below.
3. Immediately following consummation of the transactions
contemplated by the Contribution Agreement, Holdings will merge with and into
the Company (the "Holdings Merger"). In such merger, all outstanding shares of
Holdings Common Stock will become and thereafter represent shares of common
stock, par value $0.01 per share, of the Company ("Company Common Stock").
Thereafter, the Company will merge with and into Y&R DEL (the "Company Merger").
In such merger, all outstanding shares of Company Common Stock will become and
thereafter represent shares of common stock, par value $0.01 per share, of Y&R
DEL ("Y&R DEL Common Stock"). Upon the effectiveness of each such merger, the
surviving corporation will assume all obligations of the other constituent
corporation under this Agreement, and all references to the "Company" and
"Company Common Stock" herein shall be deemed to refer to (a) Holdings and
Holding Common Stock prior to the Holdings Merger, (b) the Company and the
Company Common Stock thereafter until the Company Merger and (c) following the
Company Merger, to Y&R DEL and the Y&R DEL Common Stock, respectively, without
any further action by any party hereto.
AGREEMENT
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements contained herein, and other good and valuable
consideration, the receipt and adequacy of which are hereby acknowledged, the
Company and the Purchaser agree as follows:
1.1. Grant of Option. The Company hereby grants to the Purchaser an
exclusive and irrevocable option (the "Option") to purchase from the Company
11,218 authorized but unissued shares of Company Common Stock (collectively, the
"Option Shares") at a cash price per share of $115 (the "Exercise Price")
subject to adjustment as provided in Section 1.6 hereof.
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1.2. Exercise of the Option. (a) (i) Subject to the conditions set
forth in Section 1.3 hereof, the Option may be exercised by the Purchaser, in
whole or in part, at any time or from time to time after the date hereof for
cash or Company Common Stock.
(ii) The Company shall not, prior to the termination of the
Option, take any action which would have the effect of preventing or disabling
the Company from delivering the Option Shares to the Purchaser upon exercise of
the Option or otherwise performing the Company's obligations under this
Agreement.
(b) In the event the Purchaser elects to exercise the Option, the
Purchaser shall give a written notice to the Company specifying the number of
the Option Shares the Purchaser will purchase and the place and date (not later
than ten Business Days, nor earlier than one Business Day, from the date such
notice is mailed, but not earlier than the expiration of any applicable waiting
period under the HSR Act) for the closing of such purchase.
1.3. Payment and Delivery of Certificate(s) upon Exercise of Option.
(a) At any closing of any purchase of any of the Option Shares hereunder:
(i) the Purchaser shall (1) if exercising the Option for cash,
pay to the Company the aggregate price for the Option Shares so purchased
by certified or cashier's check or by wire transfer, and (2) if exercising
the Option for Company Common Stock, deliver to the Company a certificate
or certificates representing the number of shares of Company Common Stock
equal to the number of Option Shares so purchased multiplied by a
fraction, the numerator of which is 115 and the denominator of which is
the Public Market Value per share of Company Common Stock (as defined in
the Stockholders' Agreement) as of the most recent Regular Valuation (as
defined therein) preceding the date of notice of exercise pursuant to
Section 2.04(b) of the Stockholders' Agreement (or, if prior to the first
Regular Valuation, $115); provided that the Company Common Stock so used
to exercise must meet then applicable eligibility criteria under GAAP;
(ii) the Company shall deliver to the Purchaser a duly issued
certificate (or certificates in the denominations designated by the
Purchaser in its notice of exercise) representing the number of the Option
Shares purchased (or if necessary due to the delivery under clause (i)(2)
of this Section 1.3(a) by the Purchaser of a certificate for a number of
shares of Company Common Stock in excess of the number of shares required
to be delivered under clause (i)(2) of this Section 1.3(a), the Company
shall deliver to the Purchaser a duly issued certificate (or certificates
in the denominations designated by the Purchaser in its notice of
exercise) representing the number of the Option Shares purchased plus the
number of shares of Company Common Stock represented by the certificate
delivered to the Company by the Purchaser minus the number of shares of
Company Common Stock required to be delivered by the Purchaser under
clause (i)(2) of this Section 1.3(a)); and
(iii) the number of Option Shares subject to the Option shall
be reduced by the number of shares of Company Common Stock acquired by the
Purchaser at such closing.
(b) The obligation of the Company to deliver Option Shares at such
closing shall be subject to the conditions that no preliminary or permanent
injunction or other order, decree or ruling issued by a court of competent
jurisdiction or by a governmental, regulatory or administrative agency or
commission, shall be in effect which would prohibit such sale and delivery, and
any applicable waiting period under the HSR Act shall have expired.
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1.4. Representations and Warranties of the Company. The Company
hereby represents and warrants to the Purchaser as follows:
(a) Due Authorization, Etc. This Agreement has been duly authorized
by all necessary corporate action on the part of the Company, has been duly
executed by a duly authorized officer of the Company and is valid, binding and
enforceable against the Company in accordance with its terms, except as may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium and
other similar laws of general application which may affect the enforcement of
creditors' rights generally, by general equitable principles and by implied
covenants of good faith and fair dealing.
(b) Option Shares. The Company has taken all necessary corporate
action to authorize and reserve for issuance, upon exercise of the Option, the
Option Shares. The Option Shares, upon purchase by the Purchaser, will be duly
authorized, validly issued, fully paid and nonassessable, and delivered to the
Purchaser free and clear of all claims, liens, charges, security interests or
encumbrances of any kind, including, without limitation, any preemptive or
similar rights other than those set forth in the Closing Agreements.
(c) No Violation. Neither the execution and delivery of this
Agreement nor the consummation of the transactions contemplated hereby will
result in any breach or violation of, be in conflict with, or will constitute a
default under, the Amended and Restated Certificate of Incorporation or the
Amended and Restated By-laws of the Company or any indenture, loan or credit
agreement or any other agreement or instrument to which the Company is a party,
or by which the Company or any of its subsidiaries may be affected or is bound,
which would have a Material Adverse Effect upon the Company.
1.5. Representations and Warranties of the Purchaser. The Purchaser
hereby represents and warrants to the Company as follows:
(a) Due Authorization. This Agreement has been duly authorized by
all necessary action on the part of the Purchaser and has been duly executed by
a duly authorized officer of the Ultimate General Partner, and is valid, binding
and enforceable against the Purchaser in accordance with its terms, except as
may be limited by applicable bankruptcy, insolvency, reorganization, moratorium
and other similar laws of general application which may affect the enforcement
of creditors' rights generally, by general equitable principles and by implied
covenants of good faith and fair dealing.
(b) Distribution. Any shares of Company Common Stock to be acquired
upon exercise of the Option will not be acquired by the Purchaser with a view to
the public distribution thereof, and will not be transferred, except in a
transaction registered or exempt from registration under the Securities Act and
permitted by this Agreement.
(c) No Violation. Neither the execution and delivery of this
Agreement nor the consummation of the transactions contemplated hereby will
result in any breach or violation of, be in conflict with, or will constitute a
default under, the limited partnership agreement of the Purchaser or any
indenture, loan or credit agreement or any other agreement or instrument to
which the Purchaser is a party, or by which the Purchaser or any of its
subsidiaries may be affected or is bound, which would have a Material Adverse
Effect upon the Purchaser.
1.6. Adjustment Upon Changes in Capitalization. In the event of any
change in, or affecting, the issued and outstanding Company Common Stock by
reason of any dividend, stock split, merger, recapitalization, combination,
conversion, exchange of shares or other change in the corporate or capital
structure of the Company, the number and
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kind of shares or securities subject to the Option and the Exercise Price shall
be appropriately and equitably adjusted (with adjustments being cumulative if
more than one of such events shall have occurred) so that the Purchaser shall
receive, upon exercise of the Option, the number and class of shares of Company
Common Stock or other securities or property that the Purchaser would have
received in respect of Option Shares if the Option had been exercised
immediately prior to such event.
1.7. Ownership of Option Shares. The Purchaser shall hold the Option
Shares subject to the terms of the Stockholders' Agreement.
1.8. Specific Performance. The Company and the Purchaser acknowledge
that the Option and the Option Shares are unique and that neither party hereto
will have an adequate remedy at law if the other breaches any covenant contained
herein or fails to perform any of its obligations under this Agreement.
Accordingly, each party agrees that the other shall have the right, in addition
to any other rights which it may have, to specific performance and equitable
injunctive relief if the other party shall fail or threaten to fail to perform
any of its obligations under this Agreement.
1.9. Expiration. (a) If on the fifth anniversary of the Closing, the
number of Option Shares exceeds 50% of the initial number of Option Shares (as
adjusted pursuant to Section 1.6), then on such anniversary, the number of
Option Shares shall be reduced to 50% of the initial number of Option Shares (as
adjusted pursuant to Section 1.6).
(b) The Option shall expire on the earlier to occur of (i) the date
on which the number of Option Shares is reduced to zero, and (ii) the seventh
anniversary of the Closing.
1.10. Miscellaneous. (a) Assignability. (i) The rights and
obligations of the Purchaser with respect to all or a portion of the Option
shall be assignable by the Purchaser to and only to any Affiliate of the
Purchaser, if and only if such Affiliate shall, by a written instrument
reasonably satisfactory to the Company, agree to assume all of the Purchaser's
obligations hereunder and to be bound by all of the terms and conditions of this
Agreement and the Stockholders' Agreement.
(ii) The obligations of the Company shall not be assignable
without the prior written consent of the Purchaser, and any purported assignment
without such prior written consent shall be null and void.
(b) Third Parties. Nothing expressed or implied in this Agreement is
intended or shall be construed to confer upon or give to any third party any
rights or remedies by virtue of this Agreement or any exercise or non-exercise
of the Option granted hereby.
(c) Amendments. This Agreement may not be modified, amended, altered
or supplemented except upon the execution and delivery of a written agreement
executed by the parties hereto.
(d) Notices. Except as otherwise expressly provided herein, all
notices, requests, claims, demands and other communications hereunder shall be
in writing and shall be deemed to have been duly given to any party when
delivered by hand, by messenger or by a nationally recognized overnight delivery
company, when delivered by telecopy and confirmed by return telecopy, or when
delivered by first-class mail, postage prepaid and return receipt requested, to
the parties at the addresses set forth below:
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If to the Company: Young & Rubicam Holdings Inc. and
Young & Rubicam Inc.
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Attention: Xxxxxxxxx X. Xxxxxxxx, Esq.
Facsimile: (000) 000-0000
with a copy to: Cleary, Gottlieb, Xxxxx & Xxxxxxxx
Xxx Xxxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxx, Esq.
Facsimile: (000) 000-0000
If to the Purchaser: H&F Investors III, Inc.
Xxx Xxxxxxxx Xxxxx
00xx Xxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxx Xxxxxxxxxxxx
Facsimile: (000) 000-0000
with a copy to: Wachtell, Lipton, Xxxxx & Xxxx
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxxx X. Xxxxxxxx, Esq.
Facsimile: (000) 000-0000
The addresses set forth above may be changed by any party upon furnishing to the
other party a notice of change of address in accordance with the terms of this
paragraph.
(e) Governing Law. Prior to the Company Merger, this Agreement shall
be governed by and construed in accordance with the law of the State of New
York; provided, however, that following the Company Merger, this Agreement shall
be governed by and construed in accordance with the law of the State of
Delaware.
(f) Counterparts. This Agreement may be executed in several
counterparts, each of which shall be an original, but all of which together
shall constitute one and the same Agreement.
(g) Effect of Headings. The section and paragraph headings herein
are for convenience only and shall not affect the construction hereof.
(h) Time of the Essence. The parties agree that time shall be of the
essence in the performance of obligations hereunder.
(i) Survival of Representations and Warranties. The representations,
warranties, covenants and agreements shall survive any closing pursuant to this
Agreement.
(j) Expenses. Subject to subsection (m) below, each of the parties
hereto shall pay all fees and expenses it incurs in connection with this
Agreement.
(k) Severability. If any term, provision, covenant or restriction of
this Agreement is held by a court of competent jurisdiction to be invalid, void
or unenforceable,
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the remainder of the terms, provisions, covenants and restrictions of this
Agreement shall remain in full force and effect and shall in no way be affected,
impaired or invalidated.
(l) Entire Agreement. This Agreement and the other agreements
referenced herein constitute the entire agreement between the Company and the
Purchaser with respect to the matters covered herein and supersede any prior
negotiations, understandings or agreements with respect to the matters
contemplated hereby.
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IN WITNESS WHEREOF, this Agreement has been executed and delivered
by the parties set forth below.
YOUNG & RUBICAM INC.,
a New York corporation
By /s/ Xxxxxxxxx X. Xxxxxxxx
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Name: Xxxxxxxxx X. Xxxxxxxx
Title: Executive Vice President and General
Counsel
YOUNG & RUBICAM HOLDINGS INC.
By /s/ Xxxxxxxxx X. Xxxxxxxx
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Name: Xxxxxxxxx X. Xxxxxxxx
Title: Secretary and Assistant Treasurer
YOUNG & RUBICAM INC.,
a Delaware corporation
By /s/ Xxxxxxxxx X. Xxxxxxxx
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Name: Xxxxxxxxx X. Xxxxxxxx
Title: Secretary and Assistant Treasurer
H&F ORCHARD CAPITAL PARTNERS III, L.P.
By its General Partner,
H&F Investors III
By its Managing General Partner,
Xxxxxxx & Xxxxxxxx Associates
III, L.P.
By its Managing General Partner,
H&F Investors III, Inc.
By__________________________________________
Name: Xxxxxx X. Xxxxxxxxxxxx
Title: Vice President
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IN WITNESS WHEREOF, this Agreement has been executed and delivered
by the parties set forth below.
YOUNG & RUBICAM INC.,
a New York corporation
By__________________________________________
Name: Xxxxxxxxx X. Xxxxxxxx
Title: Executive Vice President and General
Counsel
YOUNG & RUBICAM HOLDINGS INC.
By__________________________________________
Name: Xxxxxxxxx X. Xxxxxxxx
Title: Secretary and Assistant Treasurer
YOUNG & RUBICAM INC.,
a Delaware corporation
By__________________________________________
Name: Xxxxxxxxx X. Xxxxxxxx
Title: Secretary and Assistant Treasurer
H&F ORCHARD CAPITAL PARTNERS III, L.P.
By its General Partner,
H&F Investors III
By its Managing General Partner,
Xxxxxxx & Xxxxxxxx Associates
III, L.P.
By its Managing General Partner,
H&F Investors III, Inc.
By /s/ Xxxxxx X. Xxxxxxxxxxxx
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Name: Xxxxxx X. Xxxxxxxxxxxx
Title: Vice President
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