Exhibit 2.1
AGREEMENT AND PLAN OF MERGER
AMONG
CORDIANT COMMUNICATIONS GROUP PLC
LIGHTHOUSE ACQUISITION, INC.
AND
LIGHTHOUSE GLOBAL NETWORK, INC.
Dated as of July 4, 2000
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TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS...........................................................2
Section 1.1 Definitions..............................................2
ARTICLE II
THE MERGER...........................................................10
Section 2.1 The Merger..............................................10
Section 2.2 Effective Time..........................................10
Section 2.3 Effects of the Merger...................................11
Section 2.4 Exchange Ratio..........................................11
Section 2.5 Conversion and Exchange of Company Stock................11
Section 2.6 Exchange of Certificates................................12
Section 2.7 Withholding Rights......................................15
Section 2.8 Company Stock Options; Other Stock-Based Plans..........16
Section 2.9 Conversion/Preferred Election; Procedure................17
Section 2.10 The Surviving Corporation..............................18
ARTICLE III
THE CLOSING..........................................................19
Section 3.1 Closing.................................................19
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY........................19
Section 4.1 Organization, Standing and Power........................19
Section 4.2 Capital Structure.......................................19
Section 4.3 Authority Relative to this Agreement....................21
Section 4.4 Non-Contravention; Approvals and Consents...............21
Section 4.5 Financial Statements....................................22
Section 4.6 Absence of Certain Events...............................22
Section 4.7 Information Supplied....................................23
Section 4.8 Books and Records.......................................23
Section 4.9 Title to Properties; Encumbrances.......................24
Section 4.10 Leases.................................................24
Section 4.11 Material Contracts.....................................24
Section 4.12 Accounts Receivable....................................26
Section 4.13 Legal Proceedings......................................26
Section 4.14 Permits; Compliance with Laws and Orders...............26
Section 4.15 Employee Benefit Plans.................................27
Section 4.16 Employment Relations and Agreement.....................30
Section 4.17 Taxes..................................................31
Section 4.18 Intellectual Property..................................34
Section 4.19 Environmental Laws and Regulations.....................35
Section 4.20 Liabilities............................................36
Section 4.21 Insurance..............................................36
Section 4.22 Acquisition Agreement Payments.........................36
Section 4.23 Voting Requirements....................................37
Section 4.24 State Takeover Statutes; Certain Charter Provisions....37
Section 4.25 Brokers................................................37
Section 4.26 No Other Representations or Warranties.................37
Section 4.27 Customers..............................................37
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB..............38
Section 5.1 Organization and Qualification..........................38
Section 5.2 Share Capital...........................................38
Section 5.3 Authority Relative to this Agreement....................39
Section 5.4 Non-Contravention; Approvals and Consents...............39
Section 5.5 SEC Reports and Financial Statements....................40
Section 5.6 Absence of Certain Changes or Events....................41
Section 5.7 Legal Proceedings.......................................41
Section 5.8 Information Supplied....................................41
Section 5.9 Permits; Compliance with Laws and Orders................42
Section 5.10 Compliance with Agreements.............................42
Section 5.11 Vote Required..........................................42
Section 5.12 Business of Merger Sub.................................42
Section 5.13 Brokers................................................43
Section 5.14 Absence of Undisclosed Liabilities.....................43
Section 5.15 Contracts..............................................43
Section 5.16 Taxes..................................................43
Section 5.17 Ownership of Company Stock; Reorganization.............44
Section 5.18 No Other Representations or Warranties.................44
Section 5.19 Customers..............................................44
ARTICLE VI
COVENANTS RELATING TO CONDUCT OF BUSINESS............................44
Section 6.1 Conduct of Business by the Company Pending the Merger...44
Section 6.2 No Solicitation.........................................47
Section 6.3 Third Party Confidentiality Agreements..................48
ARTICLE VII
ADDITIONAL AGREEMENTS................................................48
Section 7.1 Access to Information...................................48
Section 7.2 Actions for Compliance with Securities Laws.............48
Section 7.3 Approval of Shareholders................................48
Section 7.4 Contingent Payments ...................................49
Section 7.5 INTENTIONALLY LEFT BLANK................................49
Section 7.6 Admission of Parent Shares..............................49
Section 7.7 Fees and Expenses.......................................50
Section 7.8 Commercially Reasonable Efforts.........................50
Section 7.9 Public Announcements....................................50
Section 7.10 Indemnification; Directors' and Officers' Insurance....51
Section 7.11 Companies Act Section 103...............................51
Section 7.12 Dividends, Distributions and Issuances.................51
Section 7.13 Employee Benefit Plans.................................51
Section 7.14 Registration Rights....................................51
ARTICLE VIII
Tax Matters..........................................................54
Section 8.1 Certain Tax Covenants...................................54
Section 8.2 Tax Indemnification.....................................55
Section 8.3 Transfer Taxes..........................................57
Section 8.4 Amended Returns.........................................57
Section 8.5 Carrybacks..............................................57
Section 8.6 Tax Covenants Regarding Merger..........................57
Section 8.7 Tax Cooperation.........................................58
ARTICLE IX
CONDITIONS PRECEDENT.................................................59
Section 9.1 Conditions to Each Party's Obligation to Effect the
Merger..................................................59
Section 9.2 Conditions to Obligation of Parent And Merger Sub to
Effect the Merger.......................................61
Section 9.3 Conditions to Obligation of the Company to Effect
the Merger..............................................62
ARTICLE X
SURVIVAL OF REPRESENTATIONS; INDEMNIFICATION.........................63
Section 10.1 Survival of Representations............................63
Section 10.2 Indemnification........................................63
Section 10.3 Stockholder Indemnitors' Representative................65
Section 10.4 Indemnification Procedures.............................65
Section 10.5 Limitations............................................66
Section 10.6 Adjustment for Insurance...............................67
Section 10.7 Adjustment for Recoveries under Acquisition Agreements.67
Section 10.8 Subrogation............................................68
Section 10.9 Set-Off................................................68
Section 10.10 Exclusive Remedy......................................68
ARTICLE XI
TERMINATION, AMENDMENT AND WAIVER....................................68
Section 11.1 Termination............................................68
Section 11.2 Effect of Termination..................................69
Section 11.3 Payment of Certain Fees................................70
ARTICLE XII
GENERAL PROVISIONS...................................................70
Section 12.1 Notices................................................70
Section 12.2 Interpretation.........................................71
Section 12.3 Counterparts...........................................71
Section 12.4 Entire Agreement; No Third-Party Beneficiaries.........71
Section 12.5 Amendment..............................................71
Section 12.6 Waiver.................................................72
Section 12.7 Governing Law..........................................72
Section 12.8 Assignment.............................................72
Section 12.9 Severability...........................................72
Section 12.10 Enforcement of this Agreement.........................72
Section 12.11 Incorporation of Exhibits.............................72
EXHIBIT 1 - Amended and Restated Certificate of the Company
EXHIBIT 2 - Indemnification Letter
EXHIBIT 3 - Election Notice
EXHIBIT 4 - Form of Investor Representation Letter
EXHIBIT 5 - Purchaser Representative Certificate
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of July 4, 2000 (this
"Agreement"), among Cordiant Communications Group plc, a company organized under
the laws of England and Wales ("Parent"), Lighthouse Acquisition, Inc., a
Delaware corporation and a direct wholly owned subsidiary of Parent ("Merger
Sub"), and Lighthouse Global Network, Inc., a Delaware corporation (the
"Company") (Merger Sub and the Company being hereinafter collectively referred
to as the "Constituent Corporations").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, Parent, Merger Sub and the Company intend to effect a merger
of Merger Sub with and into the Company in accordance with this Agreement, the
Delaware General Corporation Law (the "DGCL") and such other state laws as may
be applicable (the "Merger"). Upon consummation of the Merger, Merger Sub will
cease to exist, and the Company will become a direct wholly owned subsidiary of
Parent;
WHEREAS, the Merger Sub was organized for the sole purpose of enabling
Parent to acquire the Company Stock and Merger Sub has not and will not engage
in any activities of any nature which are not solely for the purpose of enabling
Parent to acquire the Company Stock;
WHEREAS, the respective boards of directors of Parent and Merger Sub
have approved this Agreement and the Merger, upon the terms and subject to the
conditions set forth herein, and unanimously recommend that their respective
shareholders approve the transactions contemplated by this Agreement;
WHEREAS, the Board of Directors of the Company has unanimously approved
this Agreement and the Merger upon the terms and subject to the conditions set
forth herein, has determined that it is advisable and in the best interests of
its stockholders, and unanimously recommends that its stockholders adopt and
approve this Agreement and the Merger;
WHEREAS, it is intended that the Merger qualify as a tax-free
reorganization within the meaning of Section 368(a) of the Internal Revenue Code
of 1986, as amended from time to time (the "Code"); and
WHEREAS, to induce Parent and Merger Sub to enter into this Agreement
and to consummate the Merger, simultaneously with the execution of this
Agreement, certain stockholders of the Company owning, in the aggregate,
approximately 86% of the issued and outstanding shares of Class A Common Stock
(as defined herein), are entering into an agreement with Parent and Merger Sub
(the "Stockholders Agreement") pursuant to which they have agreed, among other
things, to vote the shares of Class A Common Stock owned by such stockholders in
favor of the adoption and approval of this Agreement and the approval of the
Merger.
NOW, THEREFORE, in consideration of the premises and the
representations, warranties and agreements herein contained, the parties agree
as follows:
ARTICLE I
DEFINITIONS
Section 1.1 Definitions. For all purposes of this Agreement, except as
otherwise expressly provided or unless the context otherwise requires, the terms
defined in this Article have the meanings assigned to them in this Article:
"Acquisition Agreements" means the agreements set forth on Schedule A
attached hereto, pursuant to which the Company has outstanding contingent
obligations to issue (i) shares of 6% Preferred Stock (or cash in lieu thereof),
whether directly or in exchange for preference shares which may be issuable by
Lighthouse Holdings (UK) Limited, and (ii) in the case of the Connect Agreement,
6% Preferred Stock and Class B Common Stock (or in either case, cash in lieu
thereof).
"Admission to the Official List" means admission to the Official List
of the UKLA becoming effective pursuant to Rule 7.1 of the Listing Rules;
"Acquisition Agreement Indemnity" has the meaning set forth in Section
10.7.
"Admission" means Admission to Trading and Admission to the Official
List.
"Admission to Trading" means admission to trading on the LSE's markets
for listed securities becoming effective in accordance with the Standards;
"Affiliate" of any Person shall mean any Person directly or indirectly
controlling, controlled by, or under common control with, such Person; provided,
that, for the purposes of this definition, "control" (including with correlative
meanings, the terms "controlled by" and under common control with"), as used
with respect to any Person, shall mean the possession, directly or indirectly,
of the power to direct or cause the direction of the management and policies of
such Person, whether through the ownership of voting securities or partnership
interests, by contract or otherwise.
"Agreement" has the meaning set forth in the preamble hereto.
"Audited Financial Statement" has the meaning set forth in Section
4.5(a).
"Amended and Restated Certificate" shall mean the Company's Second
Amended and Restated Certificate of Incorporation, as amended, attached hereto
as Exhibit 1.
"Balance Sheet" has the meaning set forth in Section 4.5.
"Balance Sheet Date" has the meaning set forth in Section 4.5.
"Blackout Period" has the meaning set forth in Section 7.14(e).
"business day" means a day other than a Saturday, a Sunday or a day on
which banks in New York, New York or London, England are permitted or required
by law to close.
"Certificate" has the meaning set forth in Section 2.5(c)(ii).
"Certificate of Merger" has the meaning set forth in Section 2.2.
"Circular" has the meaning set forth in Section 4.7.
"Class A Common Stock" means the Class A Voting Common Stock, par value
$0.0001 per share, of the Company.
"Class B Common Stock" means the Class B Non-Voting Common Stock, par
value $0.0001 per share, of the Company.
"Closing" has the meaning set forth in Section 3.1.
"Closing Date" has the meaning set forth in Section 3.1.
"COC" has the meaning set forth in Section 9.1(h)(i).
"Code" has the meaning set forth in the fourth WHEREAS clause hereto.
"Common Stock Certificate" has the meaning set forth in Section
2.5(c)(ii).
"Common Stock Exchange Ratio" has the meaning set forth in Section
2.4(b).
"Companies Act" has the meaning set forth in Section 5.2(a).
"Company" has the meaning set forth in the preamble hereto.
"Company Common Stock" means the Class A Common Stock and the Class B
Common Stock.
"Company Contract" means each agreement, contract or commitment set
forth in Section 4.11 of the Company Disclosure Letter (or required to be set
forth in Section 4.11 of the Company Disclosure Letter).
"Company Disclosure Letter" has the meaning set forth in Section 4.1.
"Company Financial Statements" has the meaning set forth in Section
4.5(a).
"Company's Knowledge," "Knowledge of the Company" means the actual
knowledge, after reasonable inquiry, of (i) Terence Graunke, Tim Donmoyer,
Julian Hanson-Smith, and Kathleen Johnston, with respect to the Company and each
Subsidiary and (ii) with respect to each Subsidiary, as applicable, the Chief
Executive Officer and Chief Financial Officer of each such Subsidiary.
"Company Material Adverse Effect" means any condition, change or effect
that is materially adverse to the business, operations or condition (financial
or otherwise) of the Company and its Subsidiaries taken as a whole.
"Company Materiality Terms" has the meaning set forth in Section
10.2(c).
"Company Permits" has the meaning set forth in Section 4.14.
"Company Stock" means the Class A Common Stock, the Class B Common
Stock and the 8% Preferred Stock.
"Company Stock Plans" has the meaning set forth in Section 4.2(a).
"Company Stock Rights" has the meaning set forth in Section 2.8(a)(ii).
"Company Stockholders' Approval" has the meaning set forth in Section
7.3(b).
"Company Stockholders' Meeting" has the meaning set forth in Section
7.3(b).
"Connect Agreement" means the Sale and Purchase Agreement dated 21 May
1999 by and among, Propose One (BVI) Limited, Secure One (BVI) Limited, Paul
Seligman, Martin Banbury, Lighthouse Holdings, Inc. and Lighthouse (UK) Limited
and related Stock Restriction Agreement dated 30 June 1999 and the Put and Call
Option Deed, associated therewith.
"Constituent Corporations" has the meaning set forth in the preamble
hereto.
"Contingent Holder" means any Person that has a contingent right to
receive, directly or indirectly, shares of 6% Preferred Stock (or cash in lieu
thereof) under the Acquisition Agreements set forth on Schedule A attached
hereto and/or, in the case of the Connect Agreement, 6% Preferred Stock and
Class B Common Stock (or in either case, cash in lieu thereof).
"Contingent Payments" has the meaning set forth in Section 2.9(b).
"Contracts" has the meaning set forth in Section 4.4(a).
"Conversion Election" means the election by any Contingent Holder to
receive Parent Shares in lieu of the 6% Preferred Stock (or cash in lieu
thereof) and/or, in the case of the Connect Agreement, 6% Preferred Stock and
Class B Common Stock (or in either case, cash in lieu thereof) to which such
Contingent Holder would otherwise be entitled under the terms of the relevant
Acquisition Agreement.
"Credit Agreement" means the Credit Agreement, dated July 8, 1999, as
amended, among the Company, Lighthouse Holdings (UK) Limited and First Union
National Bank, as Administrative Agent.
"DGCL" has the meaning set forth in the first WHEREAS clause hereto.
"Disclosure" has the meaning set forth in Section 7.9.
"Dissenting Stock" means the Company Stock which is held by
stockholders who have properly complied with the provisions of Section 262 of
the DGCL with respect to appraisal rights.
"$" shall mean United States dollars.
"Effective Time" has the meaning set forth in Section 2.2.
"8% Payment Shares" means 21,273,149 Parent Shares.
"8% Preferred Certificate" has the meaning set forth in Section
2.5(c)(i).
"8% Preferred Stock" means the 8% Convertible Redeemable Preferred
Stock, par value $0.01 per share, of the Company.
"Election Notice" has the meaning set forth in Section 2.9(a).
"Employee Benefit Plans" has the meaning set forth in Section 4.15(a).
"Environmental Law" has the meaning set forth in Section 4.19(a).
"ERISA" has the meaning set forth in Section 4.15(a).
"Exchange Act" means the U.S. Securities Exchange Act of 1934, as
amended, and the rules and regulations thereunder.
"Exchange Agent" has the meaning set forth in Section 2.6(a).
"Exchange Fund" has the meaning set forth in Section 2.6(a).
"Exchange Rate" shall mean the average currency exchange rate of pounds
sterling to US dollars as published in the Wall Street Journal over the 10
consecutive Trading Days ending one Trading Day immediately preceding the date
hereof.
"Final Orders" has the meaning set forth in Section 9.1(g).
"Final Prospectus" has the meaning set forth in Section 7.14(b).
"FS Act" means the Financial Services Act 1986, as amended, of the
United Kingdom;
"FTA" has the meaning set forth in Section 9.1(h)(i).
"Governmental or Regulatory Authority" has the meaning set forth in
Section 4.4(a).
"Holders" means the holders of record of certificates of Company Common
Stock as of the Effective Time.
"HSR Act" has the meaning set forth in Section 4.4(b).
"Indemnifiable Loss" has the meaning set forth in Section 10.6.
"Indemnification Agreement" has the meaning set forth in Section
2.6(b)(i).
"Indemnification Threshold" has the meaning set forth in Section 10.5.
"Indemnifying Party" has the meaning set forth in Section 10.4(a).
"Indemnitee" has the meaning set forth in Section 10.4(a).
"Indemnity Payment" has the meaning set forth in Section 10.6.
"Intellectual Property" has the meaning set forth in Section 4.18(a).
"Issuance Obligation" means, with respect to any Person, any
outstanding or authorized options, warrants, calls, rights or subscriptions,
claims of any character, obligations, convertible or exchangeable securities or
other commitments, contingent or otherwise, to which such Person is a party or
by which it is bound obligating such Person or any Subsidiary of such Person to
issue, deliver or sell, or cause to be issued, delivered or sold, additional
shares of capital stock of such Person or any of its Subsidiaries or obligating
such Person or any of its Subsidiaries to grant, extend or enter into any such
option, warrant, call, right or agreement.
"Key Employee" shall mean any officer, manager, account executive or
other employee who is the senior person directly responsible for a material
client relationship with the Company or any of the Company's Subsidiaries.
"Laws" has the meaning set forth in Section 4.4(a).
"Letter of Transmittal" has the meaning set forth in Section 2.6(b)(i).
"License" has the meaning set forth in Section 4.18(a).
"Lien" has the meaning set forth in Section 4.2(b).
"Listing Particulars" has the meaning set forth in Section 4.7.
"Listing Rules" means the Listing Rules made by the UKLA pursuant to
Part IV of the FS Act, as amended from time to time;
"Loss" has the meaning set forth in Section 10.2(a).
"LSE" means London Stock Exchange Limited.
"Material Subsidiaries" means Bates UK Limited, Diamond Ad Limited,
Bates Gruppen AS, Grupo Bates SA, The Communications Group Pty Ltd, Sholz &
Friends GmbH, Bates Advertising Holding SA, Bates Advertising USA, Inc. and
Healthworld Corporation.
"Merger" has the meaning set forth in the first WHEREAS clause hereto.
"Merger Consideration" has the meaning set forth in Section 2.4.
"Merger Sub" has the meaning set forth in the preamble hereto.
"Notice" has the meaning set forth in Section 10.4(a).
"NYSE" means the New York Stock Exchange, Inc.
"OFT" has the meaning set forth in Section 9.1(h)(i).
"Orders" shall have the meaning set forth in Section 4.4(a).
"Parent" has the meaning set forth in the preamble hereto.
"Parent Disclosure Documents" has the meaning set forth in Section 4.7.
"Parent Disclosure Letter" has the meaning set forth in Section 5.2(c).
"Parent Financial Statements" has the meaning set forth in Section
5.5(a).
"Parent Indemnitee" has the meaning set forth in Section 10.2(a).
"Parent Indemnitors" has the meaning set forth in Section 10.2(b).
"Parent's Knowledge", "Knowledge of the Parent" means the actual
knowledge with respect to Parent, Michael Bungey, Arthur D'Angelo and the Chief
Executive Officer and Chief Financial Officer of each of the Material
Subsidiaries.
"Parent Material Adverse Effect" means any condition, change or effect
that is materially adverse to the business, operations or condition (financial
or otherwise) of Parent and its Subsidiaries taken as a whole.
"Parent Materiality Terms" has the meaning set forth in Section
10.2(c).
"Parent Permits" has the meaning set forth in Section 5.9.
"Parent SEC Report" means the most recent Form 20-F filed by Parent.
"Parent Share Rights" has the meaning set forth in Section 2.8(a)(ii).
"Parent Share Value" means the product of (x) the average of the
closing middle market quotation of a Parent Share on the LSE as reported in the
Daily Official List of the LSE for each of the 10 consecutive Trading Days
ending one Trading Day immediately preceding the date hereof multiplied by (y)
the Exchange Rate.
"Parent Shareholders' Approval" has the meaning set forth in Section
7.3(a).
"Parent Shareholders' Meeting" has the meaning set forth in Section
7.3(a).
"Parent Shares" means ordinary voting shares, with a nominal value of
UK fifty pence each, of Parent.
"Permitted Liens" means (i) Liens reserved against in the Company
Financial Statements, to the extent so reserved and specifically disclosed, (ii)
Liens for Taxes not yet due and payable, (iii) immaterial Liens and (iv) Liens
under the Credit Agreement.
"Person" means any individual, partnership, joint venture, corporation,
limited liability company, limited liability partnership, trust, unincorporated
organization, group or government or other department or agency thereof.
"Post-Closing Period" means any taxable year (other than a Pre-Closing
Period).
"(pound)" means United Kingdom pounds sterling.
"Pre-Acquisition Breach" has the meaning set forth in Section 10.2(a).
"Pre-Closing Period" shall have the meaning specified in Section
4.17(b).
"Preferred Election" means the election by any Contingent Holder to
retain the contingent right to receive shares of 6% Preferred Stock (or cash in
lieu thereof) or, in connection with the Connect Agreement, shares of 6%
Preferred Stock and the Class B Common Stock (or in either case, cash in lieu
therof) in accordance with the terms of the relevant Acquisition Agreement.
"Prior Ownership Allocation" means the proportional ownership interests
in the Company set forth in Section 4.2(a)(iii) of the Company Disclosure
Letter.
"Prospectus" has the meaning set forth in Section 7.14(h).
"Registered Securities" has the meaning set forth in Section 7.14(a).
"Returns" shall have the meaning specified in Section 4.17(a).
"SEC" means the United States Securities and Exchange Commission.
"SEC Reports" has the meaning set forth in Section 5.5.
"Securities Act" means the U.S. Securities Act of 1933, as amended, and
the rules and regulations thereunder.
"Shelf Registration" has the meaning set forth in Section 7.14(a).
"6% Preferred Stock" means the 6% Convertible Redeemable Preferred
Stock, par value $0.01 per share, of the Company.
"Skadden Arps" shall have the meaning specified in Section 9.3(c).
"SOS" has the meaning set forth in Section 9.1(h)(i).
"Standards" means the Admission and Disclosure Standards published by
the LSE.
"Stock Option" has the meaning set forth in Section 2.8(a)(i).
"Stockholders Agreement" has the meaning set forth in the fifth WHEREAS
clause.
"Stockholder Indemnitees" has the meaning set forth in Section 10.2(b).
"Stockholder Indemnitors" has the meaning set forth in Section 10.2(a).
"Stockholder Indemnitors' Representative" has the meaning set forth in
Section 10.3(a).
"Stockholders" has the meaning set forth in Section 7.14(a).
"Stop order" has the meaning set forth in Section 7.14(g).
"Subsidiary" of any Person means (i) any corporation of which the
outstanding capital stock having at least a majority of the votes entitled to be
cast in the election of directors under ordinary circumstances shall at the time
be owned, directly or indirectly, by such Person or (ii) any other Person of
which at least a majority of the voting interest under ordinary circumstances is
at the time, directly or indirectly, owned by such Person.
"Surviving Corporation" has the meaning set forth in Section 2.1.
"Takeover Proposal" has the meaning set forth in Section 6.2(a).
"Tax Threshold" has the meaning set forth in Section 10.5.
"Taxes" shall mean all taxes, assessments, duties, fees, levies or
other charges imposed by any governmental authority, including, without
limitation, all Federal, state, local, foreign and other income, franchise,
profits, capital gains, capital stock, transfer, sales, use, occupation,
property, value added, inheritance, estate, excise, social security, severance,
windfall profits, stamp, license, payroll, withholding and other taxes,
assessments, charges, duties, fees, levies or other governmental charges of any
kind whatsoever (whether payable directly or by withholding and whether or not
requiring the filing of a Return), all estimated taxes, deficiency assessments,
additions to tax, penalties and interest.
"Termination Date" shall have the meaning specified in Section
11.1(b)(i).
"Trading Day" shall mean any day on which Parent Shares are traded on
the LSE.
"Treasury Regulations" shall mean the temporary and final regulations
promulgated pursuant to the Code.
"Unaudited Financial Statements" has the meaning set forth in Section
4.5(a).
"U.S. GAAP" means generally accepted accounting principles of the
United States applied on a consistent basis by the Company.
"UKLA" or "UK Listing Authority" means the Financial Services
Authority, as the competent authority for listing in the United Kingdom pursuant
to the FS Act;
"UK GAAP" means generally accepted accounting principles in the United
Kingdom applied on a consistent basis by Parent.
"UK Subsidiary" means any Subsidiary of the Company that (i) is
incorporated in the United Kingdom or (ii) carries on any trade or business in
the United Kingdom.
"VEBAs" has the meaning set forth in Section 4.15(a).
"Violation" has the meaning set forth in Section 7.14(h).
"Voting Debt" has the meaning set forth in Section 4.2(a).
ARTICLE II
THE MERGER
Section 2.1 The Merger. Upon the terms and subject to the conditions
set forth in this Agreement, at the Effective Time, Merger Sub shall be merged
with and into the Company in accordance with the DGCL. Following the Merger, the
separate existence of Merger Sub shall cease, and the Company shall be the
surviving corporation in the Merger (the "Surviving Corporation"), shall succeed
to and assume all rights and obligations of Merger Sub and shall continue to be
governed by the laws of the State of Delaware with all its rights, privileges,
immunities, powers and franchises and shall continue unaffected by the Merger
except as set forth in this Article II.
Section 2.2 Effective Time. As soon as practicable following the
satisfaction or waiver of the conditions set forth in Article IX, the Company
and Merger Sub will cause a certificate of merger (the "Certificate of Merger")
to be executed and filed with the Secretary of State of the State of Delaware
and make all other filings or recordings required by applicable law in
connection with the Merger. The Merger shall become effective at such time as
the Certificate of Merger is duly filed with the Secretary of State of the State
of Delaware or at such later time as is specified in the Certificate of Merger
in accordance with the DGCL (the "Effective Time").
Section 2.3 Effects of the Merger. The Merger shall have the effects
set forth in the applicable provisions of the DGCL.
Section 2.4 Exchange Ratio. Except as provided in clause (a) and (b) of
Section 2.5, at the Effective Time, each share of Company Stock outstanding
immediately prior to the Effective Time shall, in accordance with Section
2.5(c), be converted into and shall be canceled in exchange for the right to
receive from Parent, a number of Parent Shares determined as set forth below
(the "Merger Consideration"):
(a) for each holder of 8% Preferred Stock, a number of Parent Shares as
set forth opposite such holder's name in Section 2.4(a) of the Company
Disclosure Letter; and
(b) for each share of Company Common Stock outstanding as of the
Effective Time, 5.2115 Parent Shares (the "Common Stock Exchange Ratio").
The maximum number of Parent Shares issued pursuant to this Section 2.4
shall not exceed 74,999,965 plus such number of Parent Shares issued in
connection with any Stock Options exercised after the date hereof.
Section 2.5 Conversion and Exchange of Company Stock. At the Effective
Time:
(a) Cancellation of Treasury Stock. All shares of Company Stock owned
by the Company as treasury stock immediately prior to the Effective Time shall,
by virtue of the Merger, and without any action on the part of the holder
thereof, no longer be outstanding, shall be canceled and retired without payment
of any consideration therefor and shall cease to exist.
(b) Capital Stock of Merger Sub. Each share of common stock of Merger
Sub outstanding immediately prior to the Effective Time shall be canceled and,
in consideration of the issuance of Parent Shares as provided by Section 2.4(c),
the Surviving Corporation shall issue to Parent such number of shares of common
stock of the Surviving Corporation as shall be agreed between Parent and Merger
Sub prior to the Effective Time to have an aggregate value equal to the Parent
Shares to be issued in the Merger.
(c) Conversion of Company Stock. (i) Except as provided in clause (a)
of this Section 2.5, the shares of 8% Preferred Stock held by each holder of 8%
Preferred Stock outstanding immediately prior to the Effective Time shall be
converted into, and shall be canceled in exchange for the right to receive from
Parent pursuant to Section 2.5(d), a number of Parent Shares as set forth
opposite such holder's name in Section 2.4(a) of the Company Disclosure Letter.
At the Effective Time, all shares of 8% Preferred Stock shall no longer be
outstanding, shall be canceled and retired and shall cease to exist, and each
certificate (an "8% Preferred Certificate") formerly representing any of such 8%
Preferred Stock shall thereafter represent only the right to receive the number
of Parent Shares issuable pursuant to this Section 2.5(c) and the right, if any,
to receive pursuant to Section 2.6(f) cash in lieu of fractional Parent Shares
and any dividend or distribution pursuant to Section 2.6(c), in each case
without interest.
(ii) Except as provided in clause (a) and (b) of this Section 2.5, each
share of Company Common Stock outstanding immediately prior to the Effective
Time shall be converted into, and shall be canceled in exchange for the right to
receive from Parent pursuant to Section 2.5(d), a number of Parent Shares equal
to the Common Stock Exchange Ratio. At the Effective Time, all Company Common
Stock shall no longer be outstanding, shall be canceled and retired and shall
cease to exist, and each certificate (a "Common Stock Certificate") formerly
representing any of such Company Common Stock shall thereafter represent only
the right to receive the number of Parent Shares issuable pursuant to this
Section 2.5(c) and the right, if any, to receive pursuant to Section 2.6(f) cash
in lieu of fractional Parent Shares and any dividend or distribution pursuant to
Section 2.6(c), in each case without interest. The 8% Preferred Certificate and
the Common Stock Certificate are each sometimes referred to herein as a
"Certificate".
(d) In consideration of the issue to Parent by the Surviving
Corporation of shares of common stock of the Surviving Corporation pursuant to
Section 2.5(b), Parent shall issue Parent Shares, in accordance with Section
2.6, for the purpose of giving effect to the delivery of the Merger
Consideration referred to in Section 2.5(c).
(e) In the event that, subsequent to the date of this Agreement but
prior to the Effective Time, the Company changes the number of shares of Company
Stock (other than as a result of the exercising of outstanding stock options),
or Parent changes the number of Parent Shares, issued and outstanding as a
result of a stock split, stock combination, stock dividend, recapitalization,
redenomination of share capital or other similar transaction, each Exchange
Ratio and other items dependent thereon shall be appropriately adjusted.
Section 2.6 Exchange of Certificates. (a) Exchange Agent. Prior to the
Effective Time, Parent shall appoint The Bank of New York or a bank or trust
company reasonably acceptable to the Company, as exchange agent (the "Exchange
Agent") for the purposes of this Agreement. At the Effective Time, Parent shall
allot to each holder of Company Stock who immediately prior to the Effective
Time has duly surrendered his Certificate or Certificates of Company Stock
beneficially owned by such holder and delivered a duly executed Indemnification
Agreement (as defined herein), the Parent Shares to which such holder is
entitled pursuant to Section 2.5(c) above. Promptly following the Effective
Time, Parent shall issue the Parent Shares so allotted and procure the delivery
to such holders of a certificate or certificates representing such Parent
Shares, together with the consideration listed in items (B) and (C) of Section
2.6(b)(ii) (such consideration being referred to herein as the "Exchange Fund").
If any Certificate has not been duly surrendered prior to the Effective Time,
the Parent shall promptly after due surrender thereof (together with the
delivery of a duly executed Indemnification Agreement) at any later time, allot
and issue to the holders of such Certificates the Parent Shares to which they
are entitled pursuant to Section 2.5(c) and deliver or procure delivery to them
of certificates in respect of such Parent Shares, together with the
consideration listed in items (B) and (C) of Section 2.6(b)(ii).
(b) Exchange Procedures. (i) As soon as reasonably practicable after
the Effective Time, or at such other time as mutually agreed upon between Parent
and the Company, Parent shall cause the Exchange Agent to mail to each holder of
record of a Certificate immediately prior to the Effective Time whose shares of
Company Stock will be converted pursuant to this Article II into the right to
receive the Merger Consideration (x) a letter of transmittal (which shall
specify that delivery shall be effected, and risk of loss and title to the
Certificates shall pass, only upon due delivery of the Certificates to the
Exchange Agent and shall be in such form and have such other provisions as the
Company and Parent may mutually agree on) (the "Letter of Transmittal")
providing instructions for use in effecting the surrender of Certificates in
exchange for certificates representing the Parent Shares and cash in lieu of
fractional Parent Shares and (y) an agreement to be executed by the holder of
record of such Certificate (or such other Person receiving the Merger
Consideration in exchange for such Certificate, as provided for in the third
sentence of Section 2.6(b)(ii)) in the form of Exhibit 2 attached hereto (the
"Indemnification Agreement"). The parties hereto agree that no Person otherwise
entitled to receive the Merger Consideration shall be given the Merger
Consideration unless and until such Person delivers to the Exchange Agent a
validly executed Indemnification Agreement. Notwithstanding anything to the
contrary contained herein, each of the parties agrees to use its commercially
reasonable efforts to effect the surrender of the Certificates and the issuance
of the Parent Shares, in accordance with the terms and conditions of this
Agreement, at the Effective Time.
(ii) Upon surrender of a Certificate for cancellation to the Exchange
Agent, together with the Letter of Transmittal and the Indemnification
Agreement, each duly executed and completed in accordance with its terms, the
holder of such Certificate shall be entitled to receive in exchange therefor (A)
a certificate or certificates (if the Company Stock is represented by more than
one Certificate and the holder of such Company Stock desires to receive a new
certificate for each Certificate so surrendered) representing that whole number
of Parent Shares (or, subject to compliance with applicable procedures in the
United Kingdom, Parent Shares in uncertificated form), (B) the amount of
dividends or other distributions, if any, with a record date on or after the
Effective Time which theretofore became payable with respect to such Parent
Shares, and (C) the cash amount payable in lieu of fractional Parent Shares in
accordance with Section 2.6(f), in each case which such holder has the right to
receive pursuant to the provisions of this Article II, and the Certificate so
surrendered shall forthwith be canceled. In no event shall the holder of any
Certificate be entitled to receive interest on any funds to be received in the
Merger. In the event of a transfer of ownership of Company Stock which is not
registered in the transfer records of the Company, a certificate or certificates
representing that whole number of Parent Shares, plus the cash amount payable in
lieu of fractional Parent Shares in accordance with Section 2.6(f) and any
dividends or other distributions, if any, may be issued to a transferee if the
Certificate representing such Company Common Stock is presented to the Exchange
Agent accompanied by all documents required to evidence and effect such transfer
and by evidence that any applicable stock transfer taxes have been paid. Until
surrendered as contemplated by this Section 2.6(b) and subject to Section
2.6(c), each Certificate shall, after the Effective Time, represent for all
purposes only the right to receive the consideration listed in items (A), (B)
and (C) of this Section 2.6(b)(ii) as contemplated by this Article II.
(c) Distributions With Respect To Unexchanged Shares. No dividends or
other distributions declared, made or paid after the Effective Time with respect
to Parent Shares with a record date on or after the Effective Time shall be paid
to the holder of any unsurrendered Certificate with respect to the Parent Shares
represented thereby and no cash payment in lieu of fractional Parent Shares
shall be paid to any such holder pursuant to Section 2.6(f) until the holder of
record of such Certificate shall surrender such Certificate in accordance with
this Section. Subject to the effect of applicable laws, following surrender of
any such Certificate, there shall be paid to the record holder of the
certificates representing Parent Shares issued in exchange therefor, without
interest, (i) at the time of such surrender, the amount of dividends or other
distributions, if any, with a record date on or after the Effective Time which
theretofore became payable, but which were not paid by reason of the immediately
preceding sentence, with respect to such Parent Shares and (ii) at the
appropriate payment date, the amount of dividends or other distributions with a
record date on or after the Effective Time but prior to surrender and a payment
date subsequent to surrender payable with respect to such Parent Shares.
(d)......No Further Ownership Rights In Company Stock. All Parent Shares
delivered upon the surrender for exchange of Certificates in accordance with the
terms hereof (including any cash paid pursuant to Section 2.6(f) or 2.6(c))
shall be deemed to have been issued at the Effective Time in full satisfaction
of all rights pertaining to the Company Stock represented thereby. From and
after the Effective Time, the stock transfer books of the Company shall be
closed and there shall be no further registration of transfers thereon of the
shares of Company Stock which were outstanding immediately prior to the
Effective Time. If, after the Effective Time, Certificates are presented to the
Surviving Corporation for any reason, they shall be canceled and exchanged as
provided in this Section.
(e) Dissenting Stock. Notwithstanding anything in this Agreement to the
contrary, those shares of Company Stock which immediately prior to the Effective
Time are Dissenting Stock shall not be converted into the right to receive the
Merger Consideration as provided in Section 2.4(c) hereof, but the holders of
Dissenting Stock shall be entitled to receive such consideration as shall be
determined pursuant to Section 262 of the DGCL from the Company or the Surviving
Corporation; provided, however, that, if any such holder shall have failed to
perfect or shall withdraw (with the written approval of the Surviving
Corporation, if such withdrawal is not tendered within 60 days after the
Effective Time) or lose his right to appraisal and payment in accordance with
the DGCL, such holder's shares shall thereupon be deemed to have been converted
as of the Effective Time into the right to receive the Merger Consideration,
without any interest thereon, and such shares shall no longer be Dissenting
Stock. The Company (and after the Effective Time, the Surviving Corporation)
shall give Parent (A) prompt notice of any written demands for appraisal,
withdrawals of demands for appraisal and any other related instruments received
by the Company or the Surviving Corporation, as the case may be, and (B) the
opportunity to direct all negotiations and proceedings with respect to demands
for appraisal. The Company (and, after the Effective Time, the Surviving
Corporation) will not voluntarily make any payment with respect to any demands
for appraisals and will not, without the prior written consent of Parent, settle
or offer to settle any such demand, provided however, that notwithstanding
anything herein to the contrary, Parent or any of its Affiliates (other than the
Surviving Corporation) shall not provide any funds (via loan, capital
contributions, or otherwise), solely for the purpose of making the Company's or
the Surviving Corporation's payments of consideration to holders of Dissenting
Stock.
(f) No Fractional Shares. No certificate or scrip representing
fractional Parent Shares will be issued in the Merger upon the surrender for
exchange of Certificates, and such fractional Parent Share interests will not
entitle the owner thereof to vote or to any rights of a holder of Parent Shares.
In lieu of any such fractional Parent Share, each holder of Certificates who
would otherwise have been entitled to a fraction of a Parent Share in exchange
for such Certificates pursuant to this Section shall receive from the Exchange
Agent a cash payment in United States currency in lieu of such fractional Parent
Share determined by multiplying (A) Parent Share Value times (B) the fractional
Parent Share interest to which such holder would otherwise be entitled.
(g) Termination Of Exchange Fund. Any portion of the Exchange Fund
which remains undistributed to the stockholders of the Company for one year
after the Effective Time shall be delivered to or as directed by Parent, upon
demand, and any holders of Certificates who have not theretofore complied with
this Article II shall thereafter look only to Parent (subject to abandoned
property, escheat and other similar laws) as general creditors for payment of
their claim for Parent Shares, any cash in lieu of fractional Parent Shares and
any dividends or distributions with respect to Parent Shares. Neither Parent nor
the Surviving Corporation shall be liable to any holder of any Certificate for
Parent Shares (or dividends or distributions with respect thereto), or cash
payable in respect of fractional Parent Shares, delivered to a public official
pursuant to any applicable abandoned property, escheat or similar law. Any
amounts remaining unclaimed by holders of Parent Shares five years after the
Effective Time (or such earlier date immediately prior to such time as such
amounts would otherwise escheat to or become property of any governmental
entity) shall, to the extent permitted by applicable law, become the property of
the Surviving Corporation free and clear of any claims or interest of any Person
previously entitled thereto.
(h) Lost, Stolen or Destroyed Certificates. If any Certificate shall
have been lost, stolen or destroyed, upon the making of an affidavit of that
fact by the Person claiming such Certificate to be lost, stolen or destroyed
and, if required by Parent, the posting by such Person of a bond in such amount
as Parent may reasonably direct as indemnity against any claim that may be made
against it with respect to such Certificate, the Exchange Agent will deliver in
exchange for such lost, stolen or destroyed Certificate the applicable Merger
Consideration with respect to the shares of Company Stock formerly represented
thereby, any cash in lieu of fractional Parent Shares, and unpaid dividends and
distributions in respect of or Parent Shares deliverable in respect thereof,
pursuant to this Agreement.
Section 2.7 Withholding Rights. Each of the Surviving Corporation and
Parent shall be entitled to deduct and withhold from the consideration otherwise
payable pursuant to this Agreement to any holder of shares of Company Stock such
amounts as it is required to deduct and withhold with respect to the making of
such payment under the Code, or any provision of state, local or foreign tax
law. To the extent that amounts are so withheld by the Surviving Corporation or
Parent, as the case may be, such withheld amounts shall be treated for all
purposes of this Agreement as having been paid to the holder of the shares of
Company Stock in respect of which such deduction and withholding was made by the
Surviving Corporation or Parent, as the case may be. The parties agree that
there is no withholding tax under UK tax law.
Section 2.8 Company Stock Options; Other Stock-Based Plans. (a)
Immediately prior to the Effective Time, the board of directors of the Company
(or the appropriate committee thereof) shall have adopted such resolutions,
taken such actions and obtained any necessary consents as may be required to
effect the following:
(i) adjust or implement, as may be applicable or appropriate, the terms
of all outstanding and unexercised stock options to purchase shares of
Company Common Stock heretofore granted under the Company Stock Plans (as
defined in Section 4.2(a)) or under the agreements set forth in Section
2.8(a)(i) of the Company Disclosure Letter (each, a "Stock Option") and the
terms of the Company Stock Plans and the agreements set forth in Section
2.8(a)(i) of the Company Disclosure Letter to provide that at the Effective
Time, each Stock Option outstanding and unexercised immediately prior to the
Effective Time shall be deemed to constitute an option to acquire, on the
same terms and conditions as were applicable under such Stock Option, Parent
Shares where (x) the number of Parent Shares which may be acquired upon
exercise of each such Stock Option shall be equal to the number of shares of
Company Common Stock that were purchasable under such Stock Option
immediately prior to the Effective Time multiplied by the Common Stock
Exchange Ratio, subject to adjustment as provided in Section 2.5(e), and
rounding up to the nearest whole Parent Share and (y) the per Parent Share
exercise price under each such Stock Option shall be obtained by dividing
the per share exercise price of each such Stock Option by the Common Stock
Exchange Ratio and dividing such result by the Exchange Rate, subject to
adjustment as provided in Section 2.5(e), and rounding down to the nearest
penny. Notwithstanding the foregoing, in the case of any Stock Option to
which Section 421 of the Code applies by reason of its qualification under
Section 422 of the Code ("qualified stock options"), the option price, the
number of shares which may be acquired pursuant to such Stock Option and the
terms and conditions of exercise of such Stock Option shall be determined in
order to comply with Section 424(a) of the Code. Accordingly, with respect
to any qualified stock options, the per Parent Share exercise price shall be
rounded up to the nearest pence and the number of Parent Shares which may be
purchasable shall be rounded down to the nearest Parent Share;
(ii) except with respect to rights to any Issuance Obligation of the
Company and/or its Subsidiaries under any Acquisition Agreement, adjust or
implement, as may be applicable or appropriate, the terms of all outstanding
stock units, deferred stock awards, stock appreciation rights and other
rights to acquire Company Common Stock, restricted stock, or any other
interest in respect of Company Common Stock under any Company Stock Plan,
program, arrangement or agreement specified in Section 2.8(a) of the Company
Disclosure Letter, other than Stock Options ("Company Stock Rights"), to
provide that, at the Effective Time, (x) each holder of a Company Stock
Right shall be entitled to that number of stock units, deferred stock
awards, stock appreciation rights or other corresponding rights, including
restricted shares, as the case may be, with respect to Parent Shares
("Parent Share Rights") equal to the number of applicable Company Stock
Rights held by such holder immediately prior to the Closing multiplied by
the Common Stock Exchange Ratio, on the same terms and conditions as were
applicable under such Company Stock Right, as adjusted in accordance with
this Section 2.8, subject to adjustment as provided in Section 2.5(e), and
rounding up to the nearest whole Parent Share, and (y) the share value on
the grant date with respect to each Parent Share Right shall be equal to the
share value on the grant date of the corresponding Company Stock Right as in
effect immediately prior to the Effective Time, divided by the Common Stock
Exchange Ratio and dividing such result by the Exchange Rate, subject to
adjustment as provided in Section 2.5(e), and rounding down to the nearest
penny; and
(iii) make such other changes to the Company Stock Plans and any other
plan, program, arrangement or agreement providing for the issuance or grant
of any other interest in respect of, or payment determined by reference to,
the capital stock of the Company or any of its subsidiaries as appropriate
to give effect to the Merger, subject to approval by Parent.
(b) As of the Effective Time, Parent agrees to assume all Stock Options
and Company Stock Rights in accordance with the terms hereof. If applicable and
as soon as practicable after the Effective Time, Parent shall deliver to the
holders of Stock Options and Company Stock Rights appropriate notices setting
forth such holders' rights pursuant to the applicable Company Stock Plan,
program, arrangement or agreement, and the agreements evidencing the grants of
such Stock Options and Company Stock Rights shall continue in effect on the same
terms and conditions (subject to the adjustments required by this Section 2.8
after giving effect to the Merger). After the Effective Time, Parent shall
comply with the terms of the Company Stock Plans and the agreements set forth in
Section 2.8(a)(i) of the Company Disclosure Letter, as adjusted in accordance
with Section 2.5(e). Parent shall take all corporate action necessary to reserve
for issuance a sufficient number of Parent Shares for delivery upon exercise of
Stock Options assumed by it in accordance with this Section 2.8. Simultaneously
with the Closing, Parent shall file a registration statement on Form S-8 (or any
successor or other appropriate forms), which shall cover all of the Parent
Shares to be issued upon the exercise of Stock Options assumed by Parent in
accordance with this Section 2.8 and shall use its reasonable efforts to
maintain the effectiveness of such registration statement or registration
statements (and maintain the current status of the prospectus or prospectuses
contained therein) for so long as such options remain outstanding.
(c) Except as set forth in Section 2.8(c) of the Company Disclosure
Letter, the Company agrees that, on or after the date hereof, it will not grant
any stock options, stock appreciation rights, stock units, deferred stock awards
or other rights to acquire Company Common Stock or any other interest in Company
Common Stock and will not take any action to accelerate the exercisability of
Stock Options or Company Stock Rights, and/or permit cash payments to holders of
Stock Options or Company Stock Rights with respect to such Stock Options or
Company Stock Rights.
Section 2.9 Conversion/Preferred Election; Procedure. (a) The Company
shall deliver to Parent, not less than five days prior to the Effective Time,
each election notice validly executed and delivered to the Company by each
Contingent Holder, in a form mutually agreed upon by the parties hereto within
10 business days of the date hereof (an "Election Notice") indicating the
election by such Contingent Holder of either the Conversion Election or the
Preferred Election. Any Contingent Holder who has not submitted an Election
Notice shall continue to have the right to receive shares of 6% Preferred Stock
(including any rights to cash in lieu thereof to the extent provided for in such
Acquisition Agreement) or, in the case of the Connect Agreement, shares of 6%
Preferred Stock and Class B Common Stock in accordance with the terms and
conditions of the applicable Acquisition Agreement. In connection with the
Conversion Election, each share of 6% Preferred Stock shall be converted into
and shall be exchanged for the right to receive from Parent, a number of Parent
Shares determined by dividing $1,000.00 by the Parent Share Value. In connection
with the Connect Agreement, each share of Class B Common Stock shall be
converted into and exchanged for the right to receive from Parent a number of
Parent Shares equal to the Common Stock Exchange Ratio. No certificate or scrip
representing fractional Parent Shares will be issued to the Contingent Holders.
In lieu of any such fractional Parent Share, each Contingent Holder who would
otherwise have been entitled to a fraction of a Parent Share shall be entitled
to receive a cash payment in United States currency in lieu of such fractional
Parent Share determined by multiplying (A) Parent Share Value times (B) the
fractional Parent Share interest to which such Contingent Holder would otherwise
be entitled.
(b) Parent expressly guarantees, as of the Effective Time, the
contingent payment obligations of the Company set forth in each Acquisition
Agreement (each, a "Contingent Payment" and collectively, the "Contingent
Payments") in accordance with the terms and conditions of such Acquisition
Agreement, if and when such payment becomes due. Parent agrees that the form of
payment, if any, under each Acquisition Agreement shall be made in accordance
with the Election Notice or, absent the submission of an Election Notice, in
accordance with the applicable Acquisition Agreement. The parties agree that
each Contingent Holder is an intended third party beneficiary of this Agreement
(only for purposes of enforcing the obligations assumed by Parent in this
Section 2.9). Parent or any of its Affiliates (other than Surviving Corporation)
shall not provide funding (via loan, capital contributions or otherwise), solely
for the purpose of making the Company's or the Surviving Corporation's in-kind
payments (but excluding in-kind payments of Parent Shares) of the Contingent
Payments.
Section 2.10 The Surviving Corporation. (a) The certificate of
incorporation of the Company, as in effect immediately prior to the Effective
Time shall be the Certificate of Incorporation of the Surviving Corporation
until thereafter changed or amended as provided therein or by applicable Law.
(b) The bylaws of the Company as in effect immediately prior to the
Effective Time, shall be the bylaws of the Surviving Corporation until amended
in accordance therewith or with the Certificate of Incorporation and applicable
Law.
(c) From and after the Effective Time, until successors are duly
elected or appointed and qualified in accordance with applicable Law, (i) the
directors of Merger Sub at the Effective Time shall be the directors of the
Surviving Corporation, and (ii) the officers of Merger Sub at the Effective Time
shall be the officers of the Surviving Corporation.
ARTICLE III
THE CLOSING
Section 3.1 Closing. The closing of the Merger (the "Closing") shall
take place (i) at the offices of White & Case LLP, 1155 Avenue of the Americas,
New York, New York 10036 at 10:00 a.m. (New York time) on the third business day
after the day on which the last of the conditions set forth in Article IX (other
than those conditions that by their nature are to be fulfilled at the Closing,
but subject to the fulfillment or waiver of such conditions) shall be fulfilled
or waived in accordance with this Agreement or (ii) at such other place and time
and/or on such other date as the Company and Parent may agree in writing (the
"Closing Date").
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Parent and Merger Sub as
follows:
Section 4.1 Organization, Standing and Power. Except as disclosed in
Section 4.1 of the Company Disclosure Letter, the Company and each of its
Subsidiaries is a corporation duly organized, validly existing and in good
standing (with respect to jurisdictions which recognize the concept of good
standing) under the laws of the jurisdiction in which it is incorporated and has
the requisite corporate power and authority to own, lease and operate its
properties and to carry on its business as now being conducted except for such
failures to be in good standing or to have such power and authority, which could
not be reasonably be expected to, individually or in the aggregate, have a
Company Material Adverse Effect. Except as disclosed in Section 4.1 of the
Company Disclosure Letter, the Company and each of its Subsidiaries is duly
qualified to do business, and is in good standing (with respect to jurisdictions
which recognize the concept of good standing), in each jurisdiction where the
character of its properties owned or held under lease or the nature of its
activities makes such qualification necessary, except where the failure to be so
qualified could not reasonably be expected to, individually or in the aggregate,
have a Company Material Adverse Effect. No later than five business days prior
to the Closing, the Company will have made available to Parent and Merger Sub
complete and correct copies of the certificate of incorporation and by-laws of
the Company and the comparable governing documents of each of its Subsidiaries,
in each case as amended to the date of this Agreement. Other than as set forth
in Section 4.1 of the letter dated the date hereof and delivered by the Company
to Parent and Merger Sub simultaneously with the execution and delivery of this
Agreement (the "Company Disclosure Letter"), the respective certificates of
incorporation and by-laws or other organizational documents of the Subsidiaries
of the Company do not contain any provision limiting or otherwise restricting
the ability of the Company to control such subsidiaries which cannot be amended
by the Company without restriction.
Section 4.2 Capital Structure. (a) As of the date of this Agreement,
the authorized capital stock of the Company consists of (i) nine million two
hundred forty-eight thousand six hundred eighty-four (9,248,684) shares of Class
A Common Stock, (ii) two million six hundred seventy- two thousand five hundred
and fifteen (2,672,515) shares of Class B Common Stock, (iii) one hundred
fourteen thousand nine hundred twenty (114,920) shares of 8% Preferred Stock and
(iv) sixty-three thousand (63,000) shares of 6% Preferred Stock. As of the date
of this Agreement, (i) (a) 9,215,350.691 shares of Class A Common Stock, (b)
1,094,015 shares of Class B Common Stock and (c) 104,066.58684 shares of 8%
Preferred Stock were issued and outstanding, all of which were validly issued,
fully paid and nonassessable and free of preemptive rights, (ii) 58,333 shares
of Class A Common Stock were held in the treasury of the Company or by its
Subsidiaries and (iii) 1,400,000 shares of Class B Common Stock have been
granted as awards or reserved for future issuance pursuant to the Company's 2000
Stock Incentive Plan and 96,000 Class B Common Stock were granted as awards
pursuant to the Company's 1999 Stock Option Plan, as amended (collectively, the
"Company Stock Plans"). No shares of 6% Preferred Stock are outstanding. As of
the date of this Agreement, except (i) as set forth above and (ii) as set forth
in Section 4.2(a)(i) of the Company Disclosure Letter, no shares of capital
stock or other voting securities of the Company were issued, reserved for
issuance or outstanding. The Company does not have any outstanding bonds,
debentures, notes or other obligations the holders of which have the right to
vote (or which are convertible into or exercisable for securities having the
right to vote) with the stockholders of the Company on any matter ("Voting
Debt"). As of the date of this Agreement, except for stock options not in excess
of 1,500,000 shares of Company Common Stock granted under the Company Stock
Plans and as set forth on the Section 4.2(a)(ii) to the Company Disclosure
Letter, there are no outstanding Issuance Obligations obligating the Company or
any of its Subsidiaries to issue or sell any Company Stock or any capital stock
of the Company's Subsidiaries or to grant, extend or enter into any such
Issuance Obligation. Section 4.2(a)(iii) of the Company Disclosure Letter sets
forth a true and complete list of the record owners of capital stock of the
Company as of the date hereof; provided Section 4.2(a)(iii) of the Company
Disclosure Letter shall be updated as of the Effective Date to reflect any
options exercised on or prior to the Effective Date.
(b) Section 4.2(b) of the Company Disclosure Letter sets forth (i) the
name and jurisdiction of incorporation of each Subsidiary of the Company, (ii)
its authorized capital stock, (iii) the number of issued and outstanding shares
of its capital stock and (iv) the record owners of such shares. Except as set
forth in Section 4.2(b) of the Company Disclosure Letter, all of the outstanding
capital stock of, or ownership interests in, each Subsidiary of the Company is
owned by the Company, directly or indirectly. All of the issued and outstanding
shares of capital stock of each Subsidiary held by the Company are validly
existing, fully paid and non-assessable. Except as set forth in Section 4.2(b)
of the Company Disclosure Letter, no Subsidiary of the Company has outstanding
Voting Debt and no Subsidiary of the Company is bound by, obligated under, or
party to an Issuance Obligation with respect to any security of the Company or
any Subsidiary of the Company. Except as set forth in Section 4.2(b) of the
Company Disclosure Letter and for Liens (as defined below) under the Credit
Agreement, all of such capital stock or ownership interest of each Subsidiary of
the Company is owned by the Company, directly or indirectly, free and clear of
all security interests, liens, claims, pledges, options, rights of first
refusal, agreements, charges or other encumbrances of any nature or any other
limitation or restriction (including any restriction on the right to vote or
sell the same, except as may be provided under applicable Federal or State
securities laws) (collectively, "Liens").
(c) Except for the Company's interest in its Subsidiaries, and except
as set forth in Section 4.2(c) of the Company Disclosure Letter, the Company
does not directly or indirectly own any equity or similar interest in, or any
interest convertible into or exchangeable or exercisable for any equity or
similar interest in, any corporation, partnership, joint venture, limited
liability company or other business association or entity (other than
non-controlling investments in the ordinary course of business and corporate
partnering, development, cooperative marketing and similar undertakings and
arrangements entered into in the ordinary course of business).
Section 4.3 Authority Relative to this Agreement. The Company has all
requisite corporate power and authority to enter into this Agreement, and,
subject to obtaining the Company Stockholders' Approval, to perform its
obligations hereunder and to consummate the transactions contemplated hereby.
The execution, delivery and performance of this Agreement by the Company and the
consummation by the Company of the transactions contemplated hereby have been
duly and validly unanimously approved by the Board of Directors of the Company,
the Board of Directors of the Company has unanimously recommended the approval
of this Agreement by the stockholders of the Company and directed that this
Agreement be submitted to the stockholders of the Company for their
consideration, and no other corporate proceedings on the part of the Company or
its stockholders are necessary to authorize the execution, delivery and
performance of this Agreement by the Company and the consummation by the Company
of the transactions contemplated hereby, other than obtaining the Company
Stockholders' Approval. This Agreement has been duly and validly executed and
delivered by the Company and constitutes a legal, valid and binding obligation
of the Company enforceable against the Company in accordance with its terms,
except as enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the enforcement of
creditors' rights generally and by general equitable principles (regardless of
whether such enforceability is considered in a proceeding in equity or at law).
Section 4.4 Non-Contravention; Approvals and Consents. (a) Except as
disclosed in Section 4.4(a) of the Company Disclosure Letter, the execution and
delivery of this Agreement by the Company does not, and the performance by the
Company of its obligations hereunder and the consummation of the transactions
contemplated hereby will not, conflict with, result in a violation or breach of,
constitute (with or without notice or lapse of time or both) a default under,
result in or give to any Person any right of payment or reimbursement,
termination, cancellation, modification or acceleration of, or result in the
creation or imposition of any Lien upon any of the assets or properties of the
Company or any of its Subsidiaries under, any of the terms, conditions or
provisions of (i) the certificates or articles of incorporation or by-laws (or
other comparable charter documents) of the Company or any of its Subsidiaries,
or (ii) subject to obtaining the Company Stockholders' Approval and the taking
of the actions described in Section 4.4(b), (x) any statute, law, rule,
regulation or ordinance (together, "Laws"), or any judgment, decree, order,
writ, permit or license (together, "Orders"), of any court, tribunal,
arbitrator, authority, agency, commission, official or other instrumentality of
the United States, any foreign country or any domestic or foreign state, county,
city or other political subdivision (a "Governmental or Regulatory Authority")
applicable to the Company or any of its Subsidiaries or any of their respective
assets or properties, or (y) any note, bond, mortgage, security agreement,
indenture, license, franchise, permit, concession, contract, lease or other
instrument, obligation or agreement of any kind (together, "Contracts") to which
the Company or any of its Subsidiaries is a party or by which the Company or any
of its Subsidiaries or any of their respective assets or properties is bound,
excluding from the foregoing clauses (x) and (y), conflicts, violations,
breaches, defaults, rights of payment and reimbursement, terminations,
modifications, accelerations and creations and impositions of Liens which,
individually or in the aggregate, could not reasonably be expected to have a
Company Material Adverse Effect or prevent, materially impair, or materially
delay the ability of the Company to consummate the transactions contemplated by
this Agreement.
(b) Except (i) for the filing of a pre-merger notification report by
the Company under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended, and the rules and regulations thereunder (the "HSR Act"), (ii) for the
filing of the Certificate of Merger and other appropriate merger documents
required by the DGCL with the Secretary of State and appropriate documents with
the relevant authorities of other states in which the Constituent Corporations
are qualified to do business, and (iii) as disclosed in Section 4.4(b) of the
Company Disclosure Letter, no consent, approval or action of, filing with or
notice to any Governmental or Regulatory Authority or other public or private
third party is necessary or required under any of the terms, conditions or
provisions of any law or order of any Governmental or Regulatory Authority or
any Contract to which the Company or any of its Subsidiaries is a party or by
which the Company or any of its Subsidiaries or any of their respective assets
or properties is bound for the execution and delivery of this Agreement by the
Company, the performance by the Company of its obligations hereunder or the
consummation of the transactions contemplated hereby, other than such consents,
approvals, actions, filings and notices which the failure to make or obtain, as
the case may be, individually or in the aggregate, could not reasonably be
expected to have a Company Material Adverse Effect or prevent, materially impair
or materially delay the ability of the Company to consummate the transactions
contemplated by this Agreement.
Section 4.5 Financial Statements. (a) The Company has heretofore
furnished Parent with (i) the audited consolidated balance sheets of the Company
as of December 31, 1998 and 1999, together with related consolidated statement
of operations, stockholders' equity and cash flows for the twelve months then
ended (the "Audited Financial Statements"), together with the reports of Arthur
Andersen LLP thereon (the audited consolidated balance sheet as at December 31,
1999 (the "Balance Sheet Date") is hereinafter referred to as the "Balance
Sheet"), and (ii) the unaudited consolidated balance sheet as of April 30, 2000,
and the related unaudited consolidated statement of operations for the four
months then ended (the "Unaudited Financial Statements" and, together with the
Audited Financial Statements, the "Company Financial Statements"). Except for
normal year-end adjustments and for absence of footnotes with respect to the
Unaudited Financial Statements and as set forth on Section 4.5 of the Company
Disclosure Letter, the Company Financial Statements, including the footnotes
thereto (i) have been prepared in accordance with U.S. GAAP and (ii) fairly
present, in all material respects, the financial position of the Company and its
Subsidiaries at the respective dates thereof, and the results of the operations
and cash flows of the Company and its consolidated Subsidiaries for the
respective periods indicated.
Section 4.6 Absence of Certain Events. Since the Balance Sheet Date and
except as disclosed in Section 4.6 of the Company Disclosure Letter, the Company
and its Subsidiaries have operated their respective businesses only in the
ordinary course consistent with past practices and there has not occurred (i)
any change, event, occurrence, transaction or development which could reasonably
be expected to, individually or in the aggregate, have a Company Material
Adverse Effect; (ii) any material change by the Company or any of its
Subsidiaries in its accounting methods, principles or practices; (iii) any
amendments or changes in the Certificate of Incorporation or by-laws (or other
comparable governing documents) of the Company or any of its Subsidiaries; (iv)
any revaluation by the Company or any of its Subsidiaries of any of their
respective assets, including, without limitation, write-offs of accounts
receivable, other than in the ordinary course of the Company's and its
Subsidiaries' businesses consistent with past practices; (v) any damage,
destruction or loss which, individually or in the aggregate, resulted in or
could reasonably be expected to result in a Company Material Adverse Effect;
(vi) any material transaction or entered into any material agreement outside the
ordinary course of business which could reasonably be expected to have a Company
Material Adverse Effect; (vii) any increase in the compensation of any officer
of the Company or any of its Subsidiaries or any general salary or benefits
increase to the employees of the Company or any of its Subsidiaries other than
in the ordinary course of business; or (viii) any declaration, setting aside or
payment of any dividend or other distribution with respect to any shares of
capital stock of the Company, or any repurchase, redemption or other acquisition
by the Company or any of its Subsidiaries of any outstanding shares of capital
stock or other securities of, or other ownership interests in, the Company.
Except as set forth in Section 4.6 of the Company Disclosure Letter, since the
Balance Sheet Date, neither the Company nor any of its Subsidiaries has taken
any action specified in clauses (a), (b), (d), (e), (f), (g), (l), (m) and (n),
of Section 6.1 of this Agreement.
Section 4.7 Information Supplied. The information supplied or to be
supplied by the Company for inclusion in any filing by Parent with the UKLA
and/or the LSE in respect of the Merger (including, without limitation, a Class
1 circular to be issued to shareholders of Parent (the "Circular"), and the
listing particulars under Part IV of the FS Act relating to Parent Shares to be
issued in the Merger (the "Listing Particulars") (which may be comprised in a
single document or two separate documents and which are collectively referred to
in this Agreement, together (where the context allows) with any amendments or
supplements thereto, the "Parent Disclosure Documents") will, at all relevant
times, include all information relating to the Company and its Subsidiaries
which is within the Knowledge of the Company (or which it would be reasonable
for them to obtain by making inquiries), which, in each case, is reasonably
requested by Parent to enable the Parent Disclosure Documents and the parties
hereto to comply in all material respects with all United Kingdom statutory and
other legal and regulatory provisions (including, without limitation, the
Companies Act, the FS Act and the rules and regulations made thereunder, and the
rules and requirements of the UKLA and the LSE) and all such information
contained in such documents will be substantially in accordance with the facts
and will not omit anything materially likely to affect the import of such
information.
Section 4.8 Books and Records. Except as set forth on Schedule 4.8 of
the Company Disclosure Letter, the respective minute books of the Company and
its Subsidiaries, as previously made available to Parent and its
representatives, contain reasonable records of all meetings of, and official
action taken by (including action taken by written consent) the respective
stockholders and Boards of Directors of the Company and each Subsidiary. Except
as set forth in Section 4.8 of the Company Disclosure Letter, neither the
Company nor any Subsidiary of the Company has any of its material records,
systems, controls, data or information recorded, stored, maintained, operated or
otherwise wholly or partly dependent upon or held by any means (including any
electronic, mechanical or photographic process, whether computerized or not)
which (including all means of access thereto and therefrom) are not under the
exclusive ownership and control of the Company or such Subsidiary.
Section 4.9 Title to Properties; Encumbrances. Except for properties
and assets reflected in the Balance Sheet or as disclosed in Section 4.9 of the
Company Disclosure Letter, or acquired since the Balance Sheet Date, which have
been sold or otherwise disposed of in the ordinary course of business and for
personal properties and assets (tangible and intangible) leased by the Company
or its Subsidiaries, the Company and its Subsidiaries have good, valid and
marketable title to (a) all of their personal properties and assets (tangible
and intangible), including, without limitation, all of the properties and assets
reflected in the Balance Sheet, except as indicated in the notes thereto, and
(b) all of the personal properties and assets purchased by the Company and its
Subsidiaries since the Balance Sheet Date; in each case free and clear of all
Liens other than Permitted Liens. All of the tangible personal property owned
by, and material to, the Company and its Subsidiaries and used in their business
is in good operating condition and repair, ordinary wear and tear excepted, and,
in the aggregate, is adequate and suitable for the purposes for which it is
presently being used. Neither the Company nor any of its Subsidiaries owns any
real property.
Section 4.10 Leases. (a) Section 4.10(a) of the Company Disclosure
Letter contains an accurate and complete list of all (i) real property leases
and (ii) leases to which the Company or any Subsidiary is a party requiring an
annual aggregate payment of at least $120,000. The Company has made available to
Parent and its counsel true and complete copies of each such lease (including
all amendments). Each lease set forth in Section 4.10(a) of the Company
Disclosure Letter which has not expired (or required to be set forth in Section
4.10(a) of the Company Disclosure Letter) is in full force and effect; and there
exists no event of default or event, occurrence, condition or act (including the
consummation of the transactions contemplated by this Agreement) which, with the
giving of notice, the lapse of time or the happening of any further event or
condition, would become a default under such lease on the part of the Company or
its Subsidiary party thereto, which cannot be cured without the payment of cash
or, to the Knowledge of the Company, any other party thereto. Except as set
forth on Section 4.10(a) of the Company Disclosure Letter, the real and personal
properties subject to each lease set forth in Section 4.10(a) of the Company
Disclosure Letter is in a state of good maintenance and repair, ordinary wear
and tear excepted, and are adequate and suitable for the purposes for which they
are presently being used.
(b) Except as disclosed in Section 4.10(b) of the Company Disclosure
Letter, neither the Company nor any of its Subsidiaries has any actual or
contingent liabilities in respect of leasehold properties in the UK not
currently occupied by the Company or any Subsidiary in an amount exceeding
(pound)50,000 in aggregate.
Section 4.11 Material Contracts. (a) Except as set forth on Section
4.11 of the Company Disclosure Letter, neither the Company nor any of its
Subsidiaries is a party to or bound by:
(i) any agreement, contract or commitment relating to the employment of
any Person, or any bonus, deferred compensation, pension, profit sharing,
stock option, employee stock purchase, retirement or other employee benefit
plan providing for annual payments of, or benefits having a total annual
value to any employee of more than $100,000;
(ii) any agreement, indenture or other instrument which contains
restrictions with respect to payment of dividends or any other distribution
in respect of its capital stock;
(iii) any agreement, contract or commitment relating to capital
expenditures other than contracts, agreements or commitments not exceeding
$75,000 individually, or $300,000 in the aggregate, except for capital
expenditures contained in the 2000 Company Capital Expenditures Budget set
forth in Section 4.11(a)(i) of the Company Disclosure Letter;
(iv) any loan (other than accounts receivable from trade debtors in the
ordinary course of business) or advance to (other than travel allowances to
the employees of the Company or any of its Subsidiaries), or investment in,
any Person or any agreement, contract or commitment relating to the making
of any such loan, advance or investment;
(v) any agreement evidencing indebtedness of the Company or any of its
Subsidiaries, including loan and credit agreements, promissory notes and
other instruments of indebtedness;
(vi) any guarantee or other contingent liability in respect of any
indebtedness or obligation of any Person (other than the endorsement of
negotiable instruments for collection in the ordinary course of business);
(vii) any management service, consulting or any other similar type
contract (including any employee lease or outsourcing arrangement) providing
for annual payments of more than $100,000;
(viii) any agreement, contract or commitment limiting the ability of
the Company to engage in any line of business or to compete with any Person;
(ix) any agreement, contract or commitment which involves annual base
payments of $150,000 or more and which is not cancelable without penalty
within 120 days;
(x) any agreement, contract or commitment regarding (i) the purchase,
sale, lease or disposal of any capital stock or other securities of the
Company or any of its Subsidiaries or (ii) the purchase, sale lease or
disposal of any assets of the Company or any of its Subsidiaries other than
in the ordinary course of business;
(xi) any agreement, contract or commitment (other than as set forth in
item (i) above) with any Affiliate, stockholder or employee of the Company
or any of its Subsidiaries (including any officer, director, agent or
consultant) other than in the ordinary course of business; or
(xii) any agreement, contract or commitment outside the ordinary course
of business providing for payments of more than $150,000.
(b) Except as set forth in the Section 4.11(b) of the Company
Disclosure Letter, each Company Contract which has not expired in accordance
with its terms is valid and binding, in full force and effect and enforceable
against the parties thereto in accordance with their respective terms, other
than such failures to be so valid and binding, in full force and effect or
enforceable which, could not reasonably be expected to have, either individually
or in the aggregate, a Company Material Adverse Effect. Except as set forth in
the Section 4.11(b) of the Company Disclosure Letter, there is not under any
Company Contract any existing default, or event which, after notice or lapse of
time, or both, would constitute a default, by the Company or any of its
Subsidiaries, or to the Company's Knowledge, any other party, except to the
extent such default could not reasonably be expected to have a Company Material
Adverse Effect.
Section 4.12 Accounts Receivable. Except as set forth in Section 4.12
of the Company Disclosure Letter, the accounts receivable of the Company and its
Subsidiaries recorded in the Financial Statements have arisen in bona fide arm's
length transactions in the ordinary course of business, and all such receivables
still outstanding are valid and binding obligations of the account debtors and,
to the Company's Knowledge, without counterclaims, set-offs or other defenses.
Section 4.13 Legal Proceedings. Except as disclosed in Section 4.13 of
the Company Disclosure Letter (i) there are no actions, suits or proceedings
pending or, to the Knowledge of the Company, threatened or, to the Knowledge of
the Company, investigations pending or threatened against the Company or its
Subsidiaries (or any of their respective properties, rights or franchises), at
law or in equity, or before or by any federal, state or foreign commission,
board, bureau, agency, regulatory or administrative instrumentality, employment
tribunal or other Governmental or Regulatory Authority or any arbitrator or
arbitration tribunal, that could reasonably be expected to, individually or in
the aggregate, have a Company Material Adverse Effect or could prevent,
materially impair or materially delay the consummation of the transactions
contemplated hereby and (ii) neither the Company nor any of its Subsidiaries is
subject to any judgment, order or decree entered in any material lawsuit or
proceeding.
Section 4.14 Permits; Compliance with Laws and Orders. Except as set
forth in Section 4.14 of the Company Disclosure Letter, (i) the Company and its
Subsidiaries hold, all permits, licenses, variances, exceptions, orders and
approvals of all Governmental or Regulatory Authorities necessary for the lawful
conduct of their respective businesses (the "Company Permits"), except for the
failure to hold such Company Permits which could not reasonably be expected to,
individually or in the aggregate, have a Company Material Adverse Effect; (ii)
the Company and its Subsidiaries are in compliance with the terms of the Company
Permits, except where the failure to comply could not reasonably be expected to,
individually or in the aggregate, have a Company Material Adverse Effect and
(iii); the businesses of the Company and its Subsidiaries are not being, and
have not been, conducted in violation of any law, ordinance or regulation of any
Governmental or Regulatory Authority, except for violations or possible
violations which could not reasonably be expected to, individually or in the
aggregate, have a Company Material Adverse Effect. This Section 4.14 shall be
deemed not to include representations and warranties with respect to the matters
covered in Sections 4.3, 4.4, 4.15, 4.16, 4.17, 4.18, 4.19, 4.23 and 4.24.
Section 4.15 Employee Benefit Plans. (a) List of Plans. Set forth in
Section 4.15(a) of the Company Disclosure Letter is an accurate and complete
list of all domestic and, subject as provided by the final sentence of this
Section 4.15(a), foreign (i) "employee benefit plans," within the meaning of
Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended,
and the rules and regulations thereunder ("ERISA"), where applicable; (ii)
bonus, stock option, stock purchase, restricted stock, incentive, fringe
benefit, "voluntary employees' beneficiary associations" ("VEBAs") under Section
501(c)(9) of the Code, where applicable, profit-sharing, pension or retirement,
deferred compensation, medical, life insurance, disability, accident, salary
continuation, severance, accrued leave, vacation, sick pay, sick leave,
supplemental retirement and unemployment benefit plans, programs, arrangements,
commitments and/or practices (whether or not insured); (iii) employment,
consulting, termination, and severance contracts or agreements; in each case for
active, retired or former employees or directors, whether or not any such plans,
programs, arrangements, commitments, contracts, agreements and/or practices
(referred to in (i), (ii) or (iii) above) are in writing or are otherwise exempt
from the provisions of ERISA; that have been established, maintained or
contributed to (or with respect to which an obligation to contribute has been
undertaken) or with respect to which any potential liability is borne by the
Company or any of its Subsidiaries, including, solely for this purpose and
solely for the purpose of all of the representations in this Section 4.15, any
predecessors to the Company or to any Subsidiaries and all employers (whether or
not incorporated) that would be treated together with the Company and any of its
Subsidiaries as a single employer within the meaning of Section 414 of the Code
("Employee Benefit Plans"). In respect of each of the UK Subsidiaries acquired
by Lighthouse Holdings (UK) Limited, the details of Employee Benefit Plans as at
the date of the relevant Acquisition Agreement disclosed by the Company
Disclosure Letter are not incomplete or inaccurate in any material respect as at
the date of this Agreement (and as of the Effective Date).
(b) Status of Plans. Except as set forth in Section 4.15(b) of the
Company Disclosure Letter, each Employee Benefit Plan (including any related
trust) complies in form with the requirements of all applicable laws, including,
without limitation, ERISA and the Code, where applicable, and has at all times
been maintained and operated in substantial compliance with its terms and the
requirements of all applicable laws, including, without limitation, ERISA and
the Code. Except as set forth in Section 4.15(b) of the Company Disclosure
Letter, no complete or partial termination of any Employee Benefit Plan has
occurred or, to the Knowledge of the Company, is expected to occur. Except as
set forth in Section 4.15(b) of the Company Disclosure Letter, neither the
Company nor any of its Subsidiaries has any commitment, intention or
understanding to create, modify or terminate any Employee Benefit Plan except as
required or provided by applicable law or in the ordinary course of business
consistent with past practice. Except as required to maintain the tax-qualified
status of any Employee Benefit Plan intended to qualify under Section 401(a) of
the Code or as required by other applicable law, no condition or circumstance
exists that would prevent the amendment or termination of any Employee Benefit
Plan. To the Knowledge of the Company, no event has occurred and no condition or
circumstance has existed that could reasonably be expected to result in a
material increase in the benefits under or the expense of maintaining any
Employee Benefit Plan from the level of benefits or expense incurred for the
most recent fiscal year ended thereof.
(c) No Pension Plans. No Employee Benefit Plan is an "employee pension
benefit plan" (within the meaning of Section 3(2) of ERISA) subject to Section
412 of the Code or Section 302 or Title IV of ERISA. Within the past six years,
neither the Company nor any of its Subsidiaries has maintained or contributed
to, or had any obligation to contribute to, any "multiple employer plan" (within
the meaning of the Code or ERISA) or any "multiemployer plan" (as defined in
Section 4001(a)(3) of ERISA).
(d) Liabilities. Except as set forth in Section 4.15(d) of the Company
Disclosure Letter, neither the Company nor any of its Subsidiaries maintains any
Employee Benefit Plan which is a "group health plan" (as such term is defined in
Section 607(1) of ERISA or Section 5000(b)(1) of the Code) that has not been
administered and operated in all respects in compliance with the applicable
requirements of Part 6 of Subtitle B of Title I of ERISA and Section 4980B of
the Code except where the failure to comply does not result in a material
liability and neither the Company nor any of its Subsidiaries is subject to any
material liability, including, without limitation, additional contributions,
fines, taxes, penalties or loss of tax deduction as a result of such
administration and operation. No Employee Benefit Plan which is a group health
plan is a "multiple employer welfare arrangement," within the meaning of Section
3(40) of ERISA. Each Employee Benefit Plan that is intended to meet the
requirements of Section 125 of the Code meets such requirements, except where
the failure to meet such requirements does not result in a material liability,
and each program of benefits for which employee contributions are provided
pursuant to elections under any Employee Benefit Plan meets the requirements of
the Code applicable thereto, except where the failure to meet such requirements
does not result in a material liability.
Except as set forth in Section 4.15(d) of the Company Disclosure
Letter, neither the Company nor any of its Subsidiaries maintains any Employee
Benefit Plan (whether qualified or non-qualified under Section 401(a) of the
Code) providing for post-employment or retiree health, life insurance and/or
other welfare benefits and having unfunded liabilities, and neither the Company
nor any of its Subsidiaries have any obligation to provide any such benefits to
any retired or former employees or active employees following such employees'
retirement or termination of service. Neither the Company nor any of its
Subsidiaries has any unfunded liabilities pursuant to any Employee Benefit Plan
that is not intended to be qualified under Section 401(a) of the Code. No
Employee Benefit Plan holds as an asset any interest in any annuity contract,
guaranteed investment contract or any other investment or insurance contract,
policy or instrument issued by an insurance company that, to the Knowledge of
the Company, is or may reasonably be expected to be the subject of bankruptcy,
conservatorship, insolvency, liquidation, rehabilitation or similar proceedings.
Except as set forth in Section 4.15(d) of the Company Disclosure
Letter, neither the Company nor any of its Subsidiaries has incurred any
liability for any tax or excise tax arising under Chapter 43 of the Code, and to
the Knowledge of the Company no event has occurred and no condition or
circumstance has existed that could reasonably be expected to give rise to any
liability.
Except as set forth in Section 4.15(d) of the Company Disclosure
Letter, there are no actions, suits, claims or disputes pending, or, to the
Knowledge of the Company, threatened, anticipated or expected to be asserted
against or with respect to any Employee Benefit Plan, or the assets of any such
plan (other than routine claims for benefits and appeals of denied routine
claims), or any fiduciary (in such capacity) of such plan. Except as set forth
in Section 4.15(d) of the Company Disclosure Letter, no civil or criminal action
brought pursuant to the provisions of Title I, Subtitle B, Part 5 of ERISA is
pending, threatened, anticipated, or expected to be asserted against the Company
or any of its Subsidiaries or any fiduciary of any Employee Benefit Plan, in any
case with respect to any Employee Benefit Plan. To the Knowledge of the Company,
except as set forth in Section 4.15(d) of the Company Disclosure Letter, no
Employee Benefit Plan or any fiduciary thereof (in such capacity) is the direct
or indirect subject of an audit, investigation or examination by any
governmental or quasi-governmental agency.
(e) Contributions. Full payment has been timely made of all amounts
which the Company or any of its Subsidiaries is required, under applicable law
or under any Employee Benefit Plan or any agreement relating to any Employee
Benefit Plan to which the Company or any of its Subsidiaries is a party, to have
paid as contributions or premiums thereto as of the last day of the most recent
fiscal year of such Employee Benefit Plan ended prior to the date hereof. The
Company has made adequate provision for reserves to meet contributions and
premiums and any other liabilities that have not been paid or satisfied because
they are not yet due under the terms of any Employee Benefit Plan, applicable
law or related agreements. Benefits under all Employee Benefit Plans are as
represented in this Section 4.15 and have not been materially increased
subsequent to the date as of which documents have been provided.
(f) Tax Qualification. Except as set forth in Section 4.15(f) of the
Company Disclosure Letter, each Employee Benefit Plan intended to be qualified
under Section 401(a) of the Code and each trust established in connection with
any Employee Benefit Plan which is intended to be exempt from Federal income
taxation under Section 501(a) of the Code has been determined to be so qualified
or exempt by the Internal Revenue Service (or is within the remedial amendment
period for submitting an application for a determination letter with the
Internal Revenue Service and is awaiting receipt of a response). Each VEBA has
been determined by the Internal Revenue Service to be exempt from Federal income
tax under Section 501(c)(9) of the Code. Since the date of each most recent
determination referred to in this paragraph (f), to the Knowledge of the
Company, no event has occurred and no condition or circumstance has existed that
resulted or is likely to result in the revocation of any such determination or
that could adversely affect the qualified status of any such Employee Benefit
Plan or the exempt status of any such trust or VEBA.
(g) Transactions. Except as set forth in Section 4.15(g) of the Company
Disclosure Letter, neither the Company nor any of its Subsidiaries nor any of
their respective directors, officers, employees or, to the Knowledge of the
Company, other Persons who participate in the operation of any Employee Benefit
Plan or related trust or funding vehicle to which ERISA is applicable, has
engaged in any transaction with respect to any Employee Benefit Plan or breached
any applicable fiduciary responsibilities or obligations under Title I of ERISA
that would subject any of them to a material tax, penalty or liability for
prohibited transactions or breach of any obligations under ERISA or the Code or
would result in any material claim being made under, by or on behalf of any such
Employee Benefit Plan by any party with standing to make such claim.
(h) Triggering Events. Except as set forth in Section 4.15(h) of the
Company Disclosure Letter, the execution of this Agreement and the consummation
of the transactions contemplated hereby, do not constitute a triggering event
under any Employee Benefit Plan, policy, arrangement, statement, commitment or
agreement, whether or not legally enforceable, which (either alone or upon the
occurrence of any additional or subsequent event) will or may result in any
payment (whether of severance pay or otherwise), "parachute payment" (as such
term is defined in Section 280G of the Code, in the case of any Employee Benefit
Plan to which such section is applicable), acceleration, vesting or increase in
benefits to any employee or former employee or director of the Company or any of
its Subsidiaries. Except as set forth in Section 4.15(h) of the Company
Disclosure Letter, or, in the case of the UK Subsidiaries, otherwise disclosed
in the Company Disclosure Letter, no Employee Benefit Plan provides for the
payment of severance, termination, change in control or similar-type payments or
benefits.
(i) Documents. The Company has made available to Parent or its counsel
true and complete copies of all material documents forming part of each Employee
Benefit Plan, including, without limitation (where applicable): (i) all Employee
Benefit Plans as in effect on the date hereof, together with all amendments
thereto, including, in the case of any Employee Benefit Plan not set forth in
writing, a written description thereof; (ii) all current summary plan
descriptions, summaries of material modifications, and material communications;
(iii) all current trust agreements, declarations of trust and other documents
establishing other funding arrangements (and all amendments thereto and the
latest financial statements thereof); (iv) the most recent Internal Revenue
Service determination letter obtained with respect to each Employee Benefit Plan
or related trust intended to be qualified under Section 401(a) of the Code or
exempt under Section 501(a) or 501(c)(9) of the Code; (v) the annual report on
Internal Revenue Service Form 5500-series or 990 for each of the last three
years for each Employee Benefit Plan required to file such form; (vi) the most
recently prepared financial statements for each Employee Benefit Plan for which
such statements are required; and (vii) all material contracts and agreements
relating to each Employee Benefit Plan, including, without limitation, service
provider agreements, insurance contracts, annuity contracts, investment
management agreements, subscription agreements, participation agreements, and
recordkeeping agreements and collective bargaining agreements.
(j) Except as set out in section 4.15(j) of the Company Disclosure
Letter, no UK Subsidiary has any contractual agreement, which exists for the
provision of relevant benefits (as defined in Section 612 of the UK Income and
Corporation Taxes Act 1988 ("ICTA")) for any past or present officer or employee
of any UK Subsidiary (or predecessor in business of any UK Subsidiary) or for
any relative or dependant of any such a person in connection with which any UK
Subsidiary is or may become liable to make any payment.
Section 4.16 Employment Relations and Agreement. (a) Except as could
not reasonably be expected to have a Company Material Adverse Effect or as
disclosed in Section 4.16(a) of the Company Disclosure Letter, (i) each of the
Company and its Subsidiaries is, and at all times has been, in compliance with
all Federal, state or other applicable laws respecting employment and employment
practices, terms and conditions of employment and wages and hours, and is not
and, to the Knowledge of the Company, has not, engaged in any unfair labor
practice; (ii) no unfair labor practice complaint against the Company or any of
its Subsidiaries is pending before the National Labor Relations Board; (iii)
there is no labor strike, dispute, slowdown or stoppage actually pending or, to
the Knowledge of the Company, threatened against or involving the Company or any
of its Subsidiaries, (iv) no representation question exists respecting the
employees of the Company or any of its Subsidiaries; (v) no grievance exists to
the Company's Knowledge, no arbitration proceeding arising out of or under any
collective bargaining agreement is pending and no claim therefor has been
asserted; (vi) no collective bargaining agreement or agreement or arrangement
with any trade union or staff association is in effect or is currently being
negotiated by the Company or any of its Subsidiaries; (vii) no Key Employee of
the Company or any of the Company's Subsidiaries has given written notice to the
Parent of any plans to terminate his, her or its employment or relationship with
the Company or any of the Company's Subsidiaries, and to the Company's Knowledge
has not threatened orally or in writing to terminate her, his or its employment
or relationship with the Company or any of the Company's Subsidiaries; and
(viii) in the 12 months preceding the date of this Agreement, neither the
Company nor any of its Subsidiaries has given notice of redundancies to the
Secretary of State or started consultations with a trades union under Chapter II
of Part IV of the UK Trade Union and Labour Relations (Consolidation) Act 1992
or failed to comply with its obligations under Chapter II of Part IV of that
Act; or been a party to a relevant transfer (as defined in the Transfer of
Undertakings (Protection of Employment) Regulations 1981) or failed to comply
with a duty to inform and consult under those Regulations.
(b) Except as set forth in Section 4.16(b) of the Company Disclosure
Letter, neither the Company nor any of its Subsidiaries has any written, or, to
the Knowledge of the Company, any oral, employment or severance agreement with
any other Person providing for payments of more than $100,000. The executed
copies of the employment agreements and similar agreements set forth in Section
4.16(b) of the Company Disclosure Letter are true and correct and such
agreements have not since been amended, modified or rescinded except to the
extent disclosed to Parent.
Section 4.17 Taxes. (a) Tax Returns. Except as set forth in Section
4.17 of the Company Disclosure Letter, the Company and each of its Subsidiaries
has timely filed or caused to be timely filed with the appropriate taxing
authorities all material returns, statements, forms and reports for Taxes
("Returns") that are required to be filed as of the date hereof and will so file
all Returns that are required to be filed on or prior to the Closing Date. Such
Returns have accurately reflected (or in the case of the returns that are not
yet due, will accurately reflect) all material liability for Taxes of the
Company and its Subsidiaries for the periods covered thereby and all other
information presented on such Returns is true, correct and complete in all
material respects.
(b) Payment of Taxes. Except as set forth in Section 4.17 of the
Company Disclosure Letter, all material Taxes of the Company and its
Subsidiaries for all taxable years or periods that end on or before the Closing
Date and, with respect to any taxable year or period beginning before and ending
after the Closing Date, the portion of such taxable year or period ending on and
including the Closing Date ("Pre-Closing Period") have been or will, prior to
the Closing, be timely paid in full or (x) with respect to taxable years or
periods (or portions thereof) ending on or prior to December 31, 1999, accrued
and fully provided for in accordance with GAAP on the Balance Sheet and (y) with
respect to tax periods (or portions thereof) beginning after December 31, 1999,
accrued on the books and records of the Company and its Subsidiaries as of the
Closing Date in accordance with GAAP or other applicable non-U.S. accounting
standards and to the extent not paid when due (i) with respect to Taxes due on
or prior to the date hereof, disclosed in writing to Parent prior to the date
hereof and (ii) with respect to Taxes due after the date hereof, but on or prior
to the Closing Date, disclosed in writing to Parent prior to the Closing Date.
(c) Except as set forth in Section 4.17 of the Company Disclosure
Letter:
(i) Neither the Company nor any of its Subsidiaries has been the
subject of an audit or other examination of Taxes by the tax authorities of any
nation, state or locality pursuant to which the Company or any of its
Subsidiaries may be liable for any Taxes after the Closing, nor has the Company
or any of its Subsidiaries received any written notices from any taxing
authority relating to any issue which could affect the Tax liability of the
Company or any of its Subsidiaries.
(ii) Neither the Company nor any of its Subsidiaries (A) has entered
into an agreement or waiver or been requested to enter into an agreement or
waiver extending any statute of limitations relating to the payment or
collection of Taxes of the Company or any of its Subsidiaries that has not
expired, (B) is presently contesting any Tax liability before any court,
tribunal or agency or (C) has applied for and/or received a ruling or
determination from a taxing authority regarding a past or prospective
transaction of the Company or any of its Subsidiaries.
(iii) Neither the Company nor any of its Subsidiaries has been included
in any "consolidated," "unitary" or "combined" Return provided for under the law
of the United States, any foreign jurisdiction or any state or locality with
respect to Taxes for any taxable period for which the statute of limitations has
not expired (other than a group of which the Company and/or its Subsidiaries are
the only members).
(iv) All material Taxes which the Company or any of is Subsidiaries is
(or was) required by law to withhold or collect have been duly withheld or
collected, and have been timely paid over to the proper authorities to the
extent due and payable.
(v) No written claim has ever been made by any taxing authority in a
jurisdiction where the Company or any of its Subsidiaries does not file Tax
Returns that the Company or any of its Subsidiaries, as the case may be, is or
may be subject to taxation by that jurisdiction.
(vi) There are no tax sharing, allocation, indemnification or similar
agreements in effect as between the Company or any of its Subsidiaries or any
predecessor or Affiliate thereof (other than such agreements between the Company
and wholly-owned Subsidiaries) and any other party (including any predecessors
or Affiliates thereof) under which Parent, Merger Sub, the Company or any of its
Subsidiaries could be liable for any Taxes or other claims of such other party.
(vii) Neither the Company nor any of its Subsidiaries has applied for,
been granted, or agreed to any accounting method change for which it will be
required to take into account any adjustment under Section 481 of the Code or
any similar provision of the Code or the corresponding tax laws of any nation,
state or locality.
(viii) No election under Section 341(f) of the Code has been made or
shall be made prior to the Closing Date to treat the Company or any of its
Subsidiaries as a consenting corporation, as defined in Section 341 of the Code.
(ix) Neither the Company nor any of its Subsidiaries is a party to any
agreement, policy, arrangement, statement, commitment, whether or not legally
enforceable, which, as in effect on the date hereof, (either alone or upon the
occurrence of any additional or subsequent event) will or may require the
Company or any of its Subsidiaries or any Affiliate thereof to make any payment
that would constitute an "excess parachute payment" for purposes of Sections
280G and 4999 of the Code.
(x) Neither the Company nor any of its Subsidiaries is a "United States
real property holding corporation" within the meaning of Section 897(c)(2) of
the Code.
(xii) Neither the Company nor any of its Subsidiaries has taken any
action or knows of any fact, agreement or plan that is reasonably likely to
prevent the Merger from qualifying as a reorganization within the meaning of
Section 368(a) of the Code.
(xiii) The Company and each Subsidiary have delivered or made available
to Parent copies of each of the Returns for income Taxes filed on behalf of the
Company and each Subsidiary since December 31, 1998, with respect to the
Company, and since December 31, 1996, with respect to the Subsidiaries.
(xiv) No UK Subsidiary has within the previous six years acquired any
assets from another UK Subsidiary which was at any relevant time a member of the
same group of companies (as defined in Section 170 TCGA 1992) as that of which
any UK Subsidiary was also a member or an associated company as defined in
Section 774 ICTA 1988.
(xv) No UK Subsidiary is, nor will any become, liable to pay, or make
reimbursement or indemnity in respect of, any Tax liability (or any amount
corresponding to a Tax liability) which is also a Tax liability of another
person and which is payable by the UK Subsidiary by virtue of (A) the other
person failing to discharge such Tax liability and (B) UK Subsidiary being at
any time before Closing a member of the same group as such other person or
otherwise connected with or related to such other person for Tax purposes.
(xvi) No UK Subsidiary has entered into any indemnity, guarantee or
covenant under which it has agreed or can be procured to meet or pay a sum
equivalent to or by reference to another person's liability to Tax.
(xvii) No UK Subsidiary is liable, nor has any event or omission
occurred in consequence of which a UK Subsidiary could at any time become
liable, to make a payment to any Person as a result of the discharge by that
Person of any liability of the relevant UK Subsidiary to Tax incurred on or
before Closing.
(xviii) All documents to which any UK Subsidiary is a party and under
which the relevant UK Subsidiary has any rights or which form part of such UK
Subsidiary's title to any asset owned by it have been duly stamped with the
correct amount of stamp duty and any applicable stamp or other duty in respect
of such documents has been accounted for and paid and no such documents which
are outside the United Kingdom would attract stamp duty if they were brought
into the United Kingdom.
(xiv) Each UK Subsidiary has complied in all respects with the
provisions of Part IV Finance Act 1986 (stamp duty reserve tax) and with any
regulations made under it and neither it nor any nominee for it is a party to
any agreement which falls within the terms of Section 87(1) of that Act
(principal charge) and in relation to which the conditions referred to in
Section 92(1) of that Act (repayment or cancellation of Tax) have not been
fulfilled.
(xx) As at 6 April 1999, no UK Subsidiary had unrelieved surplus
advance corporation tax, as defined The Corporation Tax (Treatment of Unrelieved
Surplus Advance Corporation Tax) Regulations 1999 (SI 1999/358) (the "Shadow ACT
Regulations").
(xxi) No UK Subsidiary has at any time on or after 6 April 1999 been a
member of any group (for the purposes of the Shadow ACT Regulations) that had
another member which had unrelieved surplus advance corporation tax (as defined
in such Regulations) as at 6 April 1999.
(xxii) No securities (within the meaning of Section 254(1) ICTA 1988)
issued by any UK Subsidiary and remaining in issue at the date of this Agreement
were issued in circumstances such that the interest or any other amount payable
on those securities falls to be treated as a distribution.
(xxiii) No UK Subsidiary has, within the period of six years preceding
Closing, made or received any distribution which is an exempt distribution
within Sections 213 to 218(1) (inclusive) ICTA 1988 (demergers).
(xxiv) No shares in or assets of any UK Subsidiary were acquired by it
or (as the case may be) the Company in circumstances such that they have or
might become subject to any Inland Revenue charge or continue to be subject to
any Inland Revenue charge to which they were subject immediately before such
acquisition or such that, if they bad been subject to an Inland Revenue charge
immediately before such acquisition, they would have continued to be subject to
it.
Section 4.18 Intellectual Property. (a) Except as set forth on Section
4.18(a) of the Company Disclosure Letter, the Company or its Subsidiaries
exclusively owns, free and clear of all Liens (other than Permitted Liens), or
is licensed to use, the rights to all domestic and foreign patents, patent
applications, registered and unregistered trademarks and service marks, trade
names, company names, copyrights together with any registrations and
applications therefor, Internet domain names, net lists, schematics,
inventories, technology, trade secrets, proprietary information, know-how,
databases, inventions, computer software programs or applications including,
without limitation, all object and source codes and tangible or intangible
proprietary information or material that are used or necessary in the business
of the Company and any of its Subsidiaries as currently conducted (the
"Intellectual Property"), except for such Intellectual Property the failure of
which to own or license could not reasonably be expected to result in a Company
Material Adverse Effect. Section 4.18(a) of the Company Disclosure Letter sets
forth: (i) all material patents, patent applications, registered and
unregistered trademarks and service marks, trade names, company names,
registered copyrights, and any applications therefor, foreign and domestic; and
(ii) all material licenses and other agreements to which the Company or any of
its Subsidiaries is a party (the "Licenses") and pursuant to which the Company
or any of its Subsidiaries is authorized to use any Intellectual Property and
includes the identities of the parties thereto and the applicable royalty and
the term thereof. Neither the Company nor any of its Subsidiaries is, or as a
result of the execution, delivery or performance of the Company's obligations
hereunder will be, in violation of, or lose any rights pursuant to, any license
or agreement set forth in Section 4.18(a) of the Company Disclosure Letter,
except for such losses or violations which could not reasonably be expected to
result in a Company Material Adverse Effect.
(b) Except as set forth on Section 4.18(b) of the Company Disclosure
Letter, no claims have been asserted in writing to the Company or any of its
Subsidiaries or, to the Knowledge of the Company, are threatened by any Person
nor, to the Knowledge of the Company, are there any grounds for any bona fide
claims (i) to the effect that the manufacture, sale, use, offer for sale,
reproduction, distribution or modification, of any product or process by the
Company or any of its Subsidiaries infringes on any copyright, trade secret,
trademark, patent or other intellectual property right of any Person, (ii) that,
if sustained, could reasonably be expected to materially adversely affect the
interests of the Company or any of its Subsidiaries in any Intellectual
Property, or (iii) challenging the ownership, validity or enforceability of any
of the Intellectual Property. All patents and all registered trademarks and
service marks set forth in Section 4.18(a) of the Company Disclosure Letter and
all copyrights held by the Company or any of its Subsidiaries are valid,
enforceable and subsisting, except for such failure to be valid and enforceable
or subsisting that could not reasonably be expected to, individually or in the
aggregate, have a Company Material Adverse Effect. To the Knowledge of the
Company, there is not and, to the Knowledge of the Company, there has not been
any unauthorized use, infringement or misappropriation of any of the
Intellectual Property by any Person, including, without limitation, any employee
or former employee.
(c) The operation of the Company as of the Effective Time shall require
no rights under Intellectual Property other than the rights under Intellectual
Property owned by the Company and rights granted to the Company pursuant to the
Licenses.
Section 4.19 Environmental Laws and Regulations. (a) For purposes of
this section, "Environmental Law" shall mean any Federal, state or local law,
statute, rule, regulation, order or other requirement of law relating to the
protection of human health or the environment, or to the manufacture, use,
transport, treatment, storage, disposal, release or threatened release of
petroleum products, asbestos, urea formaldehyde insulation, polychlorinated
biphenyls or any substance listed, classified or regulated as hazardous or
toxic, or any similar term, under such Environmental Law.
(b) Except as could not reasonably be expected to, individually or in
the aggregate, have a Company Material Adverse Effect or set forth in Section
4.19 of the Company Disclosure Letter, (i) the Company and each of its
Subsidiaries is in compliance with all applicable Environmental Laws, and has
obtained, and is in material compliance with, all permits required under
applicable Environmental Laws, (ii) neither the Company nor any of its
Subsidiaries has received any written notice of any proceedings or actions by
any governmental authority or other Person pending or, to the Knowledge of the
Company, threatened against the Company, or any of its Subsidiaries under any
Environmental Law, and (iii) there are no facts, circumstances or conditions
relating to the business or operations of the Company or any of its
Subsidiaries, or to any real property at any time owned, leased or operated by
the Company or any of its Subsidiaries, that could reasonably be expected to
give rise to any claim, proceeding or action against the Company, or any of its
Subsidiaries or to any liability of the Company or any of its Subsidiaries,
under any Environmental Law.
Section 4.20 Liabilities. Except for matters reflected or reserved
against in the Balance Sheet or as disclosed in Section 4.20 of the Company
Disclosure Letter, neither Company nor any of its Subsidiaries had at such date,
or has incurred since that date, any material liabilities or obligations
(whether absolute, accrued, contingent, fixed or otherwise, or whether due or to
become due), except liabilities or obligations (i) which were incurred
subsequent to the Balance Sheet Date, in the ordinary course of business
consistent with past practice or (ii) which have not been, and could not
reasonably be expected to, individually or in the aggregate, have a Company
Material Adverse Effect.
Section 4.21 Insurance. (a) Set forth on Section 4.21(a) of the Company
Disclosure Letter is an accurate and complete list of insurance policies which
the Company and its Subsidiaries maintain with respect to their businesses,
properties or employees and the Company has made available to Parent true and
complete copies of each such insurance policy. Such policies are in full force
and effect and, to the Knowledge of the Company, are free from any right of
termination on the part of the insurance carriers. Such policies are in the
amounts and types of coverage that are customarily carried by companies
similarly situated and by companies engaged in similar businesses. Since January
1, 1999, there has not been any material adverse change in the Company's
relationship with its insurers or in the premiums payable pursuant to such
policies.
(b) Set forth on Section 4.21(b) of the Company Disclosure Letter is an
accurate and complete list of all claims made by the Company or any of its
Subsidiaries to its insurance carriers since the later of (i) January 1, 1999
and (ii) the date of the acquisition of the Subsidiary and the Company.
Section 4.22 Acquisition Agreement Payments. The consummation of the
transactions contemplated by this Agreement will not result in an acceleration
of the Contingent Payments.
Section 4.23 Voting Requirements. The affirmative vote of the holders
of at least a majority of the outstanding shares of Class A Common Stock (voting
as one class, with each share of Class A Common Stock having one (1) vote)
entitled to be cast approving this Agreement and the Merger is the only vote of
the holders of any class or series of the Company's capital stock necessary to
approve this Agreement, the Merger and the transactions contemplated by this
Agreement.
Section 4.24 State Takeover Statutes; Certain Charter Provisions. The
Board of Directors of the Company has, to the extent such statute is applicable,
taken all action (including appropriate approvals of the Board of Directors of
the Company) necessary to exempt Parent, its Subsidiaries, their Affiliates, the
Merger, this Agreement, the Stockholder Agreements and the transactions
contemplated hereby and thereby from Section 203 of the DGCL. No other state
takeover statutes and no charter or by-law provisions are applicable to the
Merger, this Agreement, the Stockholder Agreements and the transactions
contemplated hereby and thereby.
Section 4.25 Brokers. No broker, investment banker or other Person,
other than Lazard Freres & Co. LLC, the fees and expenses of which will be paid
by the Company, is entitled to any broker's, finder's or other similar fee or
commission in connection with the transactions contemplated by this Agreement
based upon arrangements made by or on behalf of the Company. A true and correct
copy of the engagement letter of Lazard Freres & Co. LLC as in effect on the
date hereof has been delivered to Parent.
Section 4.26 No Other Representations or Warranties. Subject to Section
10.10 with respect to claims for fraud and except for the representations and
warranties contained in this Agreement, the Company makes no representation or
warranty, expressed or implied, written or oral, and the Company hereby to the
maximum extent permitted by applicable law disclaims any such representation or
warranty (including without limitation any warranty of merchantability or of
fitness for a particular purpose), whether by the Company, its Subsidiaries,
their Affiliates or any of their officers, directors, employees, agents or
representatives or any other Person, with respect to the Company or its
Subsidiaries or the execution and delivery of this Agreement or the transactions
contemplated hereby, notwithstanding the delivery or disclosure to Parent or
Merger Sub, any Affiliate of Parent or Merger Sub or any of their officers,
directors, employees, agents or representatives or any other Person of any
documentation or other information by the Company or its Subsidiaries or any of
their Affiliates, officers, directors, employees, agents or representatives or
any other Person with respect to any one or more of the foregoing.
Section 4.27 Customers. Except as could not reasonably be expected to
have a Company Material Adverse Effect, the Company and its Subsidiaries have
not received any written notice, nor does the Company have any Knowledge, that
any of the top five customers of the Company and its Subsidiaries (determined on
a consolidated basis by revenues) (i) have ceased, or will cease, to use
products, goods and services of the Company or its Subsidiaries or (ii) have
materially reduced, or will materially reduce, the use of products, goods or
services of the Company or its Subsidiaries.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
Parent and Merger Sub represent and warrant to the Company as follows:
Section 5.1 Organization and Qualification. Each of Merger Sub, Parent
and Parent's Material Subsidiaries is a corporation duly incorporated, validly
existing and in good standing (with respect to jurisdictions which recognize the
concept of good standing) under the laws of its jurisdiction of incorporation
and has full corporate power and authority to conduct its business as and to the
extent now conducted and to own, operate and lease its assets and properties,
except for such failures to be so existing and in good standing (with respect to
jurisdictions which recognize the concept of good standing) or to have such
power and authority which, individually or in the aggregate, could not
reasonably be expected to have a Parent Material Adverse Effect. Each of Parent,
Merger Sub and Parent's Material Subsidiaries is duly qualified, licensed or
admitted to do business and is in good standing (with respect to jurisdictions
which recognize the concept of good standing) in each jurisdiction in which the
ownership, use or leasing of its assets and properties, or the conduct or nature
of its business, makes such qualification, licensing, admission or good standing
necessary, except for such failures to be so qualified or in good standing (with
respect to jurisdictions which recognize the concept of good standing) which,
individually or in the aggregate, could not reasonably be expected to have a
Parent Material Adverse Effect. Parent has previously delivered to the Company
correct and complete copies of the memorandum and articles of association and
by-laws (or other comparable charter documents) of Parent and Merger Sub.
Section 5.2 Share Capital. (a) The authorized share capital of Parent
consists solely of (i) 416,000,000 Parent Shares, of which 277,218,378 shares
were issued and outstanding as of June 27, 2000. All of the issued Parent Shares
are, and all Parent Shares to be issued as the Merger Consideration pursuant to
Section 2.5(c) will be, upon issuance, duly authorized, validly issued and fully
paid and voting, and no class of shares is entitled to preemptive rights, except
as provided in Section 89 of the Companies Act 1985 of Great Britain (the
"Companies Act").
(b) The authorized capital stock of Merger Sub consists of 1,000 shares
of common stock, par value $.01 per share, all of which are validly issued and
outstanding, fully paid and nonassessable and are owned by Parent free and clear
of all Liens.
(c) Except as disclosed in the Parent SEC Report or Section 5.2(c) of
the letter dated the date hereof and delivered by Parent and Merger Sub to the
Company simultaneously with the execution and delivery of this Agreement (the
"Parent Disclosure Letter"), as of July 4, 2000 there are no (i) outstanding
Issuance Obligations obligating Merger Sub, Parent or any of its Subsidiaries to
issue or sell any Parent Shares or capital stock of Merger Sub or any of
Parent's Material Subsidiaries or to grant, extend or enter into any such
Issuance Obligation (ii) Voting Debt of Parent or any of its Material
Subsidiaries or (iii) voting trusts, proxies or other commitments,
understandings, restrictions or arrangements to which Parent, Merger Sub or any
of Parent's Material Subsidiaries is a party with respect to the voting of or
the right to participate in dividends or other earnings in respect of any shares
of Merger Sub, Parent or any of Parent's Material Subsidiaries.
(d) Except as set forth in the Parent SEC Report or Section 5.2(d) of
the Parent Disclosure Letter, all of the outstanding capital stock of, or
ownership interests in, each Material Subsidiary of Parent is owned by Parent,
directly or indirectly. All of the issued and capital stock of each Material
Subsidiary is validly existing, fully paid and non-assessable. Except as set
forth in the Parent SEC Report or Section 5.2(d) of the Parent Disclosure
Letter, no Material Subsidiary of Parent has outstanding Voting Debt and no
Material Subsidiary of Parent is bound by, obligated under, or party to an
Issuance Obligation with respect to any security of Parent or any Material
Subsidiary of Parent. Except as set forth in the Parent SEC Report or Section
5.2(d) of the Parent Disclosure Letter, all of such capital stock or ownership
interest is owned by Parent, directly or indirectly, free and clear of all
Liens(other than Permitted Liens).
Section 5.3 Authority Relative to this Agreement. Each of Parent and
Merger Sub has full power and authority to enter into this Agreement, and,
subject to obtaining the Parent Shareholders' Approval (as defined in Section
7.3(a)), to perform its obligations hereunder, and to consummate the
transactions contemplated hereby. The execution, delivery and performance of
this Agreement by each of Parent and Merger Sub and the consummation by each of
Parent and Merger Sub of the transactions contemplated hereby have been duly and
validly approved by the Board of Directors of Parent and Merger Sub. The Board
of Directors of Parent has passed a resolution declaring the advisability of the
Merger and resolving that the Merger be submitted for consideration by the
shareholders of Parent. No other corporate proceedings on the part of Parent or
Merger Sub or their shareholders are necessary to authorize the execution,
delivery and performance of this Agreement by Parent or Merger Sub and the
consummation by Parent and Merger Sub of the transactions contemplated hereby,
other than obtaining the Parent Shareholders' Approval. This Agreement has been
duly and validly executed and delivered by each of Parent and Merger Sub and
constitutes a legal, valid and binding obligation of each of Parent and Merger
Sub enforceable against each of Parent and Merger Sub in accordance with its
terms, except as enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the enforcement of
creditors' rights generally and by general equitable principles (regardless of
whether such enforceability is considered in a proceeding in equity or at law).
Section 5.4 Non-Contravention; Approvals and Consents. (a) The
execution and delivery of this Agreement by each of Parent and Merger Sub do
not, and the performance by each of Parent and Merger Sub of its obligations
hereunder and the consummation of the transactions contemplated hereby will not,
conflict with, result in a violation or breach of, constitute (with or without
notice or lapse of time or both) a default under, result in or give to any
Person any right of payment or reimbursement, termination, cancellation,
modification or acceleration of, or result in the creation or imposition of any
Lien upon any of the assets or properties of Parent or any of its Subsidiaries
under, any of the terms, conditions or provisions of (i) the memorandum or
articles of association or by-laws (or other comparable charter documents) of
Parent or any of its Material Subsidiaries or (ii) subject to the obtaining of
the Parent Shareholders' Approval and the taking of the actions described in
paragraph (b) of this Section, (x) any laws or orders of any Governmental or
Regulatory Authority applicable to Parent or any of its Subsidiaries or any of
their respective assets or properties, or (y) any Contracts to which Parent or
any of its Subsidiaries is a party or by which Parent or any of its Subsidiaries
or any of their respective assets or properties is bound, excluding from the
foregoing clauses (x) and (y) conflicts, violations, breaches, defaults, rights
of payment or reimbursement, terminations, modifications, accelerations and
creations and impositions of Liens which, individually or in the aggregate,
could not reasonably be expected to have a Parent Material Adverse Effect or
prevent, materially impair or materially delay the ability of Parent and Merger
Sub to consummate the transactions contemplated by this Agreement.
(b) Except (i) for the filing of a pre-merger notification report by
Parent under the HSR Act, (ii) for the filings with various state securities
authorities that are required in connection with the transactions contemplated
by this Agreement, (iii) for the filing of the Certificate of Merger and other
appropriate merger documents required by the DGCL with the Secretary of State
and appropriate documents with the relevant authorities of other states in which
the Constituent Corporations are qualified to do business, (iv) for the filings
with, notices to, and approvals of, the UKLA and the LSE and (v) as disclosed in
Section 5.4(b) of the Parent Disclosure Letter, no consent, approval or action
of, filing with or notice to any Governmental or Regulatory Authority or other
public or private third party is necessary or required under any of the terms,
conditions or provisions of any law or order of any Governmental or Regulatory
Authority or any Contract to which Parent or any of its Subsidiaries is a party
or by which Parent or any of its Subsidiaries or any of their respective assets
or properties is bound for the execution and delivery of this Agreement by each
of Parent and Merger Sub, the performance by each of Parent and Merger Sub of
its obligations hereunder or the consummation of the transactions contemplated
hereby other than such consents, approvals, actions, filings and notices which
the failure to make or obtain, as the case may be, individually or in the
aggregate, could not reasonably be expected to have a Parent Material Adverse
Effect or prevent, materially impair or materially delay the ability of Parent
and Merger Sub to consummate the transactions contemplated by this Agreement.
Section 5.5 SEC Reports and Financial Statements. Parent has delivered
or made available to the Company a true and complete copy of each form, report,
schedule, registration statement, definitive proxy statement and other document
(together with all amendments thereof and supplements thereto) filed by Parent
with the SEC and each biannual report distributed by Parent to its shareholders
since December 31, 1997 (as such documents have since the time of their filing
been amended or supplemented, the "SEC Reports"), which are all the documents
(other than preliminary materials) that Parent was required to file with the SEC
since such date. As of their respective dates, the SEC Reports (i) complied as
to form in all material respects with the requirements of the Securities Act or
the Exchange Act, as the case may be, and (ii) did not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading. The audited
consolidated financial statements and unaudited interim consolidated financial
statements (including, in each case, the notes, if any, thereto) included in the
SEC Reports (the "Parent Financial Statements") complied as to form in all
material respects with the published rules and regulations of the SEC with
respect thereto, were prepared in accordance with UK GAAP (except as may be
indicated therein or in the notes thereto and except with respect to unaudited
statements) and fairly present (subject, in the case of the unaudited interim
financial statements, to normal, recurring year-end audit adjustments (which are
not expected to be, individually or in the aggregate, materially adverse to
Parent and its consolidated Subsidiaries)) the consolidated financial position
of Parent and its consolidated Subsidiaries as at the respective dates thereof
and the consolidated results of their operations and cash flows for the
respective periods then ended. The related notes reconciling to United States
generally accepted accounting principles such consolidated financial statements
comply in all material respects with the requirements of the SEC applicable to
such reconciliation.
Section 5.6 Absence of Certain Changes or Events. Except as disclosed
in the Parent SEC Report, or Section 5.6 of the Parent Disclosure Letter,
between December 31, 1999 and the date of this Agreement (a) there has not been
(i) any change, event, occurrence or development having, or that could
reasonably be expected to, individually or in the aggregate, have a Parent
Material Adverse Effect; (ii) any material change by Parent or any of its
Material Subsidiaries in its accounting methods, principles or practices; (iii)
any damage, destruction or loss which individually or in the aggregate, resulted
in or could reasonably be expected to result in a Material Adverse Effect; and
(iv) any event pursuant to which Parent or any of its Material Subsidiaries has
incurred any material liabilities (direct, contingent or otherwise) or engaged
in any material transaction or entered into any material agreement outside the
ordinary course of business which could reasonably be expected to have a Parent
Material Adverse Effect; and (b) Parent and its Material Subsidiaries have
conducted their respective businesses only in the ordinary course substantially
consistent with past practice.
Section 5.7 Legal Proceedings. Except as disclosed in the Parent SEC
Reports or in Section 5.7 of the Parent Disclosure Letter, (i) there are no
investigations, actions, suits or proceedings pending or, to the knowledge of
Parent, threatened against, nor, to the knowledge of Parent, are there any
Governmental or Regulatory Authority investigations or audits pending or
threatened against Parent or any of its Subsidiaries or any of its assets and
properties which, individually or in the aggregate, could reasonably be expected
to have a Parent Material Adverse Effect or prevent, materially impair or
materially delay the ability of Parent and Merger Sub to consummate the
transactions contemplated by this Agreement, and (ii) neither Parent nor any of
its Subsidiaries is subject to any order of any Governmental or Regulatory
Authority which, individually or in the aggregate, is having or could reasonably
be expected to have a Parent Material Adverse Effect or prevent, materially
impair or materially delay the ability of Parent and Merger Sub to consummate
the transactions contemplated by this Agreement.
Section 5.8 Information Supplied. The Parent Disclosure Documents will,
at all relevant times, include all information relating to Parent and its
Subsidiaries which is required to enable the Parent Disclosure Documents and the
parties hereto to comply in all material respects with all applicable United
Kingdom statutory and other legal and regulatory provisions (including, without
limitation, the Companies Act, the FS Act, the Listing Rules and the Standards)
and all such information contained in such documents will be substantially in
accordance with the facts and will not omit anything material which is likely to
affect the import of such information; provided, however, no representation is
made by Parent or Merger Sub with respect to information supplied in writing by
or on behalf of the Company expressly for inclusion therein.
Section 5.9 Permits; Compliance with Laws and Orders. Parent and its
Subsidiaries hold all permits, licenses, franchises, variances, exemptions,
orders and approvals of all Governmental and Regulatory Authorities necessary
for the lawful conduct of their respective businesses (the "Parent Permits"),
except for failures to hold such Parent Permits which, individually or in the
aggregate, are not having and could not reasonably be expected to have a Parent
Material Adverse Effect. Parent and its Subsidiaries are in compliance with the
terms of the Parent Permits, except failures so to comply which, individually or
in the aggregate, could not reasonably be expected to have a Parent Material
Adverse Effect. Except as disclosed in the Parent SEC Report, neither Parent nor
its Subsidiaries are in violation of or default under any law, ordinance or
regulation or order of any Governmental or Regulatory Authority, except for such
violations or defaults which, individually or in the aggregate, could not
reasonably be expected to have a Parent Material Adverse Effect. Except as set
forth in Section 5.9 of the Parent Disclosure Letter, no investigation or review
by any Governmental or Regulatory Authority with respect to the Parent or any of
its Subsidiaries is pending or, to the knowledge of Parent, threatened, nor, to
the knowledge of Parent, has any Governmental or Regulatory Authority indicated
an intention to conduct the same, other than, in each case, those which could
not reasonably be expected to, individually or in the aggregate, have a Parent
Material Adverse Effect. This Section 5.9 shall be deemed not to include
representations and warranties with respect to the matters covered in Sections
5.3, 5.4, 5.11 and 5.16.
Section 5.10 Compliance with Agreements. Except as disclosed in the
Parent SEC Report or Section 5.10 of the Parent Disclosure Letter, neither
Parent nor any of its Subsidiaries is in breach or violation of, or in default
in the performance or observance of any term or provision of, and no event has
occurred which, with notice or lapse of time or both, could reasonably be
expected to result in a default under, (i) the memorandum or articles of
association (or other comparable charter documents) of Parent or any of its
material Subsidiaries or (ii) any Contract to which Parent or any of its
Subsidiaries is a party or by which Parent or any of its Subsidiaries or any of
its assets or properties is bound, except in the case of clause (ii) for
breaches, violations and defaults which, individually or in the aggregate, are
not having and could not reasonably be expected to have a Parent Material
Adverse Effect.
Section 5.11 Vote Required. The only votes of the holders of any class
of shares of Parent required to approve the Merger and the other transactions
contemplated hereby is the affirmative vote of a majority of such ordinary
shareholders of Parent as (being entitled to do so) are present and vote (or, in
the case of a vote taken on a poll, the affirmative vote by shareholders or
their proxies representing a majority of the Parent Shares in respect of which
votes were validly exercised) at the Parent Shareholders Meeting in relation to
the approval of the Merger.
Section 5.12 Business of Merger Sub. Merger Sub was organized on May
31, 2000 solely for the purpose of enabling Parent to acquire the Company Stock
(including the transactions provided in this Agreement) and has not engaged in
any business or activities of any nature since it was incorporated. During the
period from the date of this Agreement through the Effective Time, Merger Sub
shall not engage in any business or any activities of any nature which are not
solely for the purpose of enabling Parent to acquire Company Stock and provided
in or contemplated by this Agreement.
Section 5.13 Brokers. No broker, investment banker or other Person,
other than UBS Warburg LLC, the fees and expenses of which will be paid by
Parent, is entitled to any broker's, finder's or other similar fee or commission
in connection with the transactions contemplated by this Agreement based upon
arrangements made by or on behalf of Parent or Merger Sub.
Section 5.14 Absence of Undisclosed Liabilities. Except for matters
reflected or reserved against in the balance sheet as at December 31, 1999 or as
disclosed in Section 5.14 of the Parent Disclosure Letter, neither Parent nor
any of its Subsidiaries had at such date, or has incurred since that date, any
material liabilities or obligations (whether absolute, accrued, contingent,
fixed or otherwise, or whether due or to become due), except liabilities or
obligations (i) which were incurred in the ordinary course of business
consistent with past practice or (ii) which have not been, and could not
reasonably be expected to, individually or in the aggregate, have a Parent
Material Adverse Effect.
Section 5.15 Contracts. Except as set forth in Section 5.15 of the
Parent Disclosure Letter, neither Parent nor its Subsidiaries is a party to, or
has any obligation under, any Contract which contains any covenant currently or
prospectively limiting the freedom of Parent or any of its Subsidiaries to
engage in any line of business or to compete with any entity, except to the
extent such limitations could not reasonably be expected to have a Parent
Material Adverse Effect. All Contracts to which Parent or any of its Material
Subsidiaries is a party or by which any of their respective assets is bound are
valid and binding, in full force and effect and enforceable against the parties
thereto in accordance with their respective terms, other than such failures to
be so valid and binding, in full force and effect or enforceable which could not
reasonably be expected to, either individually or in the aggregate, have a
Parent Material Adverse Effect. There is not under any such Contract any
existing default or event which, after notice or lapse of time, or both, would
constitute a default by Parent or any of its Material Subsidiaries or, to
Parent's knowledge, any other party, except to the extent such default could not
reasonably be expected to have a Parent Material Adverse Effect.
Section 5.16 Taxes. Except as disclosed in Section 5.16 of the Parent
Disclosure Letter, Parent and each Material Subsidiary (i) has timely filed or
will timely file all material Tax Returns required to be filed and such Returns
are and will be true, correct and complete in all material respects and (ii) all
material Taxes of the Parent and each Subsidiary which are due and payable for
all Pre-Closing Periods have been or will be, prior to Closing, timely paid in
full or reflected in accordance with UK GAAP on the Parent Financial Statements.
Parent and each Material Subsidiary has withheld or collected all material Taxes
they were required to withhold and collect, and have timely paid to the proper
authorities such Taxes withheld or collected to the extent due and payable.
Parent, or one or more of its "qualified subsidiaries" or "qualified
partnerships" within the meaning of Treasury Regulations Section 1.367-3(c)(5)
will have been engaged in an active trade or business outside the United States,
within the meaning of Treasury Regulations Section 1.367(a)-2T(b)(2) and (3),
for the entire previous 36-month period immediately preceding the Merger. Parent
(and, if applicable, its qualified subsidiary or qualified partnership engaged
in such active trade or business) does not have and will not have as of the
Effective Time an intention to substantially dispose of or discontinue such
active trade or business. As of the date hereof (and as of the Effective Time),
the fair market value of Parent is (and will be) at least equal to the fair
market value of the Company. For purposes of the preceding sentence, the fair
market value of Parent will be determined under Treasury Regulation Section
1.367(a)-3(c)(3)(iii)(B). As of the date hereof (and as of the Effective Time),
other than pursuant to this Agreement, neither Parent nor any corporation
related to Parent or Affiliates or Subsidiaries of the Parent owns or will own
beneficially or of record any shares of Company stock or other securities,
options, warrants or instruments giving the holder thereof the right to acquire
Company stock or other securities issued by Company. As of the date hereof (and
as of the Effective Time), Merger Sub has (and will have) no liabilities (other
than as arise pursuant to the terms of this Agreement) that will be assumed by
the Company, and Merger Sub will not transfer any assets to the Company in the
Merger that are subject to any liabilities.
Section 5.17 Ownership of Company Stock; Reorganization. None of
Parent, Merger Sub or any Subsidiary of Parent or Merger Sub (i) own any shares
of Company Stock; (ii) will acquire any shares of Company Stock other than as a
result of the Merger or (iii) has taken any action or knows of any fact,
agreement, plan or other circumstances that would prevent the Merger from
qualifying as a reorganization within the meaning of Section 368(a) of the Code.
Section 5.18 No Other Representations or Warranties. Subject to Section
10.10 with respect to claims for fraud and except for the representations and
warranties contained in this Agreement, Parent and Merger Sub make no
representation or warranty, expressed or implied, written or oral, and Parent
and Merger Sub hereby to the maximum extent permitted by applicable law disclaim
any such representation or warranty (including without limitation any warranty
of merchantability or of fitness for a particular purpose), whether by Parent,
its Subsidiaries (including Merger Sub), their Affiliates or any of their
officers, directors, employees, agents or representatives or any other Person,
with respect to Parent or Merger Sub or the execution and delivery of this
Agreement or the transactions contemplated hereby, notwithstanding the delivery
or disclosure to the Company, any Affiliate of the Company or any of their
officers, directors, employees, agents or representatives or any other Person of
any documentation or other information by Parent or its Subsidiaries (including
Merger Sub) or any of their Affiliates, officers, directors, employees, agents
or representatives or any other Person with respect to any one or more of the
foregoing.
Section 5.19 Customers. Except as could not reasonably be expected to
have a Parent Material Adverse Effect, Parent and its Subsidiaries have not
received any written notice, nor does Parent have any knowledge, that any of the
top five customers of Parent (determined on a consolidated basis by revenues)
(i) have ceased, or will cease, to use products, goods and services of Parent or
its Subsidiaries or (ii) have materially reduced, or will materially reduce, the
use of products, goods or services of Parent or its Subsidiaries.
ARTICLE VI
COVENANTS RELATING TO CONDUCT OF BUSINESS
Section 6.1 Conduct of Business by the Company Pending the Merger.
Except as otherwise expressly contemplated by this Agreement or as described in
Section 6.1 of the Company Disclosure Letter, during the period from the date of
this Agreement through the Effective Time, the Company shall, and shall cause
its Subsidiaries to, use its commercially reasonable efforts to carry on their
respective businesses in, and not enter into any material transaction other than
in accordance with the regular and ordinary course, preserve intact their
current business organizations, and, to the extent consistent therewith, keep
available the services of their current officers and employees and preserve
their relationships with customers, suppliers and others having business
dealings with them. Without limiting the generality of the foregoing, and,
except as otherwise expressly contemplated by this Agreement or as described in
Section 6.1 of the Company Disclosure Letter, during the period from the date of
this Agreement through the Effective Time, the Company shall not, and shall not
permit any of its Subsidiaries to, without the prior written consent of Parent:
(a) (x) declare, set aside or pay any dividends on, or make any other
actual, constructive or deemed distributions in respect of, any of its capital
stock, or otherwise make any payments to stockholders of the Company in their
capacity as such, other than dividends payable to the Company declared by any of
the Company's Subsidiaries, (y) split, combine or reclassify any of its capital
stock or issue or authorize the issuance of any other securities in respect of,
in lieu of or in substitution for shares of its capital stock or (z) purchase,
redeem or otherwise acquire any shares of capital stock of the Company or any of
its Subsidiaries or any other securities thereof or any rights, warrants or
options to acquire any such shares or other securities;
(b) issue, deliver, sell, pledge (other than Permitted Liens), dispose
of or otherwise encumber any shares of its capital stock, any other voting
securities or equity equivalent or any securities convertible into or
exchangeable or exercisable for, or any rights, warrants or options to acquire,
any such shares, voting securities or convertible securities or equity
equivalent (other than, in the case of the Company, the issuance of Company
Common Stock during the period from the date of this Agreement through the
Effective Time upon the exercise of Stock Options outstanding (as set forth in
Section 4.2(a)) on the date of this Agreement in accordance with their current
terms) or enter into any agreement or contract with respect to the sale or
issuance of any of its securities;
(c) except with respect to amendments to the certificate of
incorporation of the Company set forth on Section 6.1(c) of the Company
Disclosure Letter, amend its certificate of incorporation or by-laws or amend
the certificate of incorporation and by-laws (or other organizational documents)
of any of its Subsidiaries;
(d) acquire or agree to acquire by merging or consolidating with, or by
purchasing assets of or equity in, or by any other manner, any business or any
corporation, partnership, association or other business organization or division
thereof or otherwise acquire or agree to acquire any assets (other than in the
ordinary course of business consistent with past practice);
(e) sell, lease or otherwise dispose of or agree to sell, lease or
otherwise dispose of, any of its assets that are material, individually or in
the aggregate, to the Company and its Subsidiaries taken as a whole;
(f) incur any indebtedness for borrowed money or guarantee any such
indebtedness or issue or sell any debt securities or guarantee any debt
securities of others, except for (i) borrowings or guarantees incurred in the
ordinary course of business consistent with past practice for working capital
purposes, or (ii) indebtedness of any Subsidiary of the Company to the Company
or to another Subsidiary of the Company, in the ordinary course of business
consistent with past practice or make any loans, advances or capital
contributions to, or investments in, any other Person, other than to the Company
or any wholly-owned Subsidiary of the Company and other than in the ordinary
course of business consistent with past practice;
(g) alter through merger, liquidation, reorganization, restructuring or
in any other fashion, the corporate structure or ownership of the Company or any
of its Subsidiaries of the Company or adopt any plan with respect to any of the
foregoing;
(h) grant any severance or termination pay not currently required to be
paid under existing severance plans, enter into or adopt, or amend any existing,
severance plan, agreement or arrangement or, other than in the ordinary course
of business or as required by applicable law, enter into or amend any employee
benefit plan (including without limitation, the Company Stock Plan), or enter
into or amend any employment or consulting agreement which involves (i) annual
base payments of $150,000 or more and (ii) a term of at least one year;
(i) except for capital expenditures contained in the 2000 Capital
Expenditure Plan, enter into any contract or commitment with respect to capital
expenditures with a value in excess of, or requiring expenditures by the Company
and its Subsidiaries in excess of $75,000, individually, or enter into contracts
or commitments with respect to capital expenditures with a value in excess of,
or requiring expenditures by the Company and its Subsidiaries in excess of
$300,000, in the aggregate;
(j) except to the extent required under existing employee and director
benefit plans, agreements or arrangements as in effect on the date of this
Agreement, increase the compensation or fringe benefits of any of its directors,
officers or employees, provided, that with respect to employees that are not
executive officers or directors of the Company, the Company may increase
compensation associated with promotions and regular reviews in the ordinary
course of business consistent with past practice;
(k) agree to the settlement of any material claim or litigation;
(l) make or rescind any material tax election or settle or compromise
any material tax liability that would or may materially increase the liability
of the Company or any of its Subsidiaries for any period;
(m) make any material change in its method of accounting except as
required by applicable law or U.S. GAAP;
(n) except as required under the Company Stock Plan and as otherwise
provided in this Agreement, take any action to accelerate the payment, right to
payment or vesting of any bonus, severance, profit sharing, retirement, deferred
compensation, stock option, insurance or other compensation or benefits;
(o) other than items covered by paragraph (k) above, pay, discharge or
satisfy any claims, liabilities or obligations (absolute, accrued, asserted or
unasserted, contingent or otherwise), other than the payment, discharge or
satisfaction (A) of any such claims, liabilities or obligations in the ordinary
course of business and consistent with past practice or (B) of claims,
liabilities or obligations reflected or reserved against in, or contemplated by,
the Company Financial Statements (or the notes thereto);
(p) enter into any agreement, understanding or commitment that
restrains, limits or impedes the Company's or any of its Subsidiaries' ability
to compete with or conduct any business or line of business, including, but not
limited to, geographic limitations on the Company's or any of its Subsidiaries'
activities;
(q) materially amend or terminate any material contract to which it is
a party or waive any of its material rights or claims except in the ordinary
course of business consistent with past practice; or
(r) agree, in writing or otherwise, to take any of the foregoing
actions.
Section 6.2 No Solicitation. (a) Neither the Company nor any of its
Subsidiaries shall, directly or indirectly, take (and the Company shall not
authorize or permit its, or its Subsidiaries', officers, directors, employees,
financial advisors, attorneys and other advisors, representatives and agents)
any action to (i) solicit, facilitate, initiate or encourage the submission of,
any Takeover Proposal (as hereafter defined), (ii) enter into any agreement with
respect to any Takeover Proposal or enter into any arrangement, understanding or
agreement requiring it to abandon, terminate or fail to consummate the Merger or
any other transaction contemplated by this Agreement or (iii) participate in any
way in any discussions or negotiations regarding, or furnish to any Person
(other than Parent or Merger Sub) any information with respect to, or take any
other action to facilitate any inquiries or the making of any proposal that
constitutes, or may reasonably be expected to lead to, any Takeover Proposal.
"Takeover Proposal" shall mean any proposed merger or other business
combination, sale or other disposition of any material amount of assets, sale of
shares of capital stock, tender offer or exchange offer or similar transactions
involving the Company or any of its Subsidiaries or the Parent, as applicable.
(b) Neither the Board of Directors of the Company nor any committee
thereof shall (i) withdraw or modify, or propose to withdraw or modify, in a
manner adverse to Parent or Merger Sub, the approval or recommendation by such
Board of Directors or such committee of the Merger and this Agreement or (ii)
approve or recommend, or propose to approve or recommend, any Takeover Proposal
or (iii) cause the Company to enter into any letter of intent, agreement in
principle, acquisition agreement or other similar agreement related to any
Takeover Proposal.
(c) In addition to the obligations of the Company set forth in
paragraphs (a) and (b) of this Section 6.2, promptly after receipt thereof, the
Company shall advise Parent in writing of any request for information or any
Takeover Proposal, or any inquiry, proposal, discussions or negotiation with
respect to any Takeover Proposal.
(d) Immediately following the execution of this Agreement, the Company
will cease any existing discussions or negotiations with any parties conducted
heretofore with respect to any Takeover Proposal and request each Person which
has heretofore executed a confidentiality agreement in connection with its
consideration of acquiring the Company or any portion thereof to return all
confidential information heretofore furnished to such Person by or on behalf of
the Company.
Section 6.3 Third Party Confidentiality Agreements. During the period
from the date of this Agreement through the Effective Time, (i) the Company
shall not terminate, amend, modify or waive any provision of any confidentiality
agreement regarding a Takeover Proposal to which the Company is a party (other
than any involving Parent), and (ii) the Company shall enforce, to the fullest
extent permitted under applicable law, the provisions of any such agreements,
including, but not limited to, obtaining injunctions to prevent any breaches of
such agreements and to enforce specifically the terms and provisions thereof in
any court of the United States or any state thereof having jurisdiction.
ARTICLE VII
ADDITIONAL AGREEMENTS
Section 7.1 Access to Information. Each of the Company and Parent
shall, and shall cause each of its Subsidiaries to, afford to the other party,
and to the other party's accountants, counsel, financial advisers and other
representatives, reasonable access and permit them to make such inspections as
they may reasonably request during the period from the date of this Agreement
through the Effective Time to all their respective properties, books, contracts,
commitments and records and, during such period, each of the Company and Parent
shall, and shall cause each of its Subsidiaries to, furnish promptly to the
other party (i) a copy of each report, schedule, registration statement and
other document filed by it during such period pursuant to the requirements of
federal or state laws and (ii) all other information concerning its business,
properties, clients and Personnel as Parent may reasonably request.
Section 7.2 Actions for Compliance with Securities Laws. As soon as
practicable after the date of this Agreement, Parent and the Company shall
prepare the private placement memorandum and shall take any other commercially
reasonable action (other than qualifying as a foreign corporation or taking any
action which would subject it to service of process in any jurisdiction where
Parent is not now so qualified or subject) required to be taken under applicable
state blue sky or securities laws in connection with the issuance of Parent
Shares in connection with the Merger.
Section 7.3 Approval of Shareholders. (a) As soon as reasonably
practicable after the date hereof, Parent shall, through its Board of Directors,
duly call, give notice of, convene and hold an extraordinary general meeting of
its shareholders (the "Parent Shareholders' Meeting"), for the purpose of voting
to approve the Merger in accordance with this Agreement and any resolutions
necessary or appropriate to enable Parent to implement the same (the "Parent
Shareholders' Approval"). Unless the Board of Directors of Parent, based upon
the advice of their independent professional advisors, including legal advisors,
determines in good faith that making such recommendation, or failing to amend,
modify or withdraw any previously made recommendation, could reasonably be
expected to result in a breach of their fiduciary duties to shareholders imposed
by law, Parent shall include in the Circular the recommendation of the Board of
Directors of Parent that the shareholders of Parent approve such matters, and
shall use its commercially reasonable efforts to obtain such approval. In
connection with the Parent Shareholders' Meeting, subject to applicable law, (i)
Parent shall, as soon as practicable after the date of this Agreement and in
accordance with the Listing Rules, prepare and submit to the UKLA for approval
the Circular and Listing Particulars, and shall use its commercially reasonable
efforts to have such documents formally approved by the UKLA and shall
thereafter publish the Circular and the Listing Particulars and dispatch the
Circular and Listing Particulars to its shareholders in compliance with all
legal requirements applicable to the Parent Shareholders' Meeting and the
Listing Rules and (ii) if necessary thereafter, promptly publish or circulate
amended, supplemental or supplemented materials and, if required in connection
therewith, resolicit votes. Parent shall give the Company and its counsel the
opportunity to review the Circular and the Listing Particulars before the same
is published. The Company agrees to cooperate with Parent in the preparation of
the Parent Disclosure Documents including providing such information with
respect to the Company and its Subsidiaries as may be reasonably required to be
disclosed therein.
(b) The Company shall, through its Board of Directors, duly call, give
notice of, convene and hold a meeting of its stockholders for the purpose of
voting on the approval of the Merger in accordance with this Agreement (the
"Company Stockholders' Meeting") as soon as reasonably practicable after the
date hereof. In lieu of the Company Stockholders' Meeting, the Company may
provide a duly authorized written consent of its stockholders in accordance with
Section 228 of the Delaware General Corporation Law. The Company shall, through
its Board of Directors, include in any materials delivered to the stockholders
of the Company the recommendation of the Board of Directors of the Company that
the stockholders of the Company approve such matters, and shall use its
commercially reasonable efforts to obtain such approval (the "Company
Stockholders' Approval").
Section 7.4 Contingent Payments . Notwithstanding anything to the
contrary contained herein, Parent agrees that any shares of stock of the Company
issued to the Contingent Holders shall have the right to vote in all matters
subject to the general vote of the stockholders of the Company.
Section 7.5 INTENTIONALLY LEFT BLANK.
Section 7.6 Admission of Parent Shares. Parent shall use its
commercially reasonable efforts, and the Company shall cooperate in respect
thereto, to procure the Admission of the Parent Shares to be issued pursuant to
the Merger on the date of the Effective Time; and to procure the Admission of
all other Parent Shares to be issued pursuant to this Agreement on the date on
which such shares are issued.
Section 7.7 Fees and Expenses. (a) Subject to Section 7.7(b), whether
or not the Merger is consummated, all costs and expenses incurred in connection
with this Agreement and the transactions contemplated hereby shall be paid by
the party incurring such costs and expenses, (including the payment by Parent of
any filing fee associated with the HSR Act) except as expressly set forth in
this Agreement.
(b) In the event that this Agreement is terminated and the Merger is
not consummated solely as a result of the (i) failure of Parent to receive the
Parent Shareholders' Approval, (ii) failure of the Parent board of directors to
recommend the Merger, (iii) failure of Parent to publish the Circular or the
Listing Particulars or any required supplement thereto or (iv) failure of Parent
to receive approval of the Listing Particulars, Parent shall pay to the Company
$2 million.
(c) Parent shall make any payments due under Section 7.7(b) above
promptly (and in any event within five days of receipt by Parent of written
notice from the Company) by wire transfer of immediately available funds to an
account designated by the Company.
Section 7.8 Commercially Reasonable Efforts. Upon the terms and subject
to the conditions set forth in this Agreement, each of the parties agrees to use
its commercially reasonable efforts to take, or cause to be taken, all actions,
and to do, or cause to be done, and to assist and cooperate with the other party
in doing, all things necessary, proper or advisable to consummate and make
effective, in the most expeditious manner practicable, the Merger, and the other
transactions contemplated by this Agreement, including (a) obtaining all
necessary actions or non-actions, waivers, consents and approvals from
Governmental Entities and the making of all necessary registrations and filings
(including filings with Governmental Entities, including without limitation, all
filings under the HSR Act) and the taking of all reasonable steps as may be
necessary to obtain an approval or waiver from or to avoid an action or
proceeding by any Governmental Entity, (b) obtaining all necessary consents,
approvals or waivers from third parties, (c) defending any lawsuits or other
legal proceedings, whether judicial or administrative, challenging this
Agreement or the consummation of the transactions contemplated hereby, including
seeking to have any stay or temporary restraining order entered by any court or
other Governmental Entity vacated or reversed, and (d) executing and delivering
any additional instruments necessary to consummate the transactions contemplated
by this Agreement.
Section 7.9 Public Announcements. Except as and to the extent required
by applicable law or regulations, including without limitation the Listing Rules
and the Standards, without the prior written consent of the other party, none of
the Company, Parent or their respective Subsidiaries will, and each will direct
its officers, directors, employees, agents, attorneys, accountants, consultants
and financial advisors not to, make, directly or indirectly, any public comment,
statement, or communication (each, a "Disclosure") with respect to this
Agreement or the transactions contemplated by this Agreement. The Company and
Parent shall mutually agree upon the form and content of any Disclosure that may
be made with respect to this Agreement or the transactions contemplated by this
Agreement and, except as required by law or regulation, or by the UKLA or the
LSE, no such Disclosure shall be made unless mutually agreed upon by the parties
hereto.
Section 7.10 Indemnification; Directors' and Officers' Insurance. (a)
From and after the Effective Time, Parent agrees to, and to cause the Surviving
Corporation to, indemnify and hold harmless all past and present officers,
directors, employees and agents of the Company and of its Subsidiaries to the
full extent such Persons have been indemnified by the Company pursuant to the
Company's Certificate of Incorporation and by-laws as in effect as of the date
hereof for acts and omissions occurring at or prior to the Effective Time and
shall advance expenses on the terms provided therein. The parties hereto agree
that the officers, directors, employees and agents of the Company and its
Subsidiaries covered by such indemnification are intended to be third-party
beneficiaries under this Section 7.10 and shall have the right to enforce the
obligations of Parent and the Surviving Corporation under this Section 7.10.
(b) Parent will provide, or cause the Surviving Corporation to provide,
for a period of not less than six years after the Effective Time, for the
benefit of the Company's current directors and officers, an insurance and
indemnification policy that provides coverage for events occurring at or prior
to the Effective Time that is no less favorable than the existing policy or, if
substantially equivalent insurance coverage is unavailable, the best available
coverage; provided, however, that Parent and the Surviving Corporation shall not
be required to pay an annual premium for such insurance in excess of 1.50 times
the last annual premium paid prior to the date hereof, but in such case shall
purchase as much of such coverage as possible for such amount.
Section 7.11 Companies Act Section 103. Parent shall comply with its
obligations under Section 103 of the Companies Act (to the extent applicable) in
relation to the allotment of any Parent Shares to be issued pursuant to this
Agreement.
Section 7.12 Dividends, Distributions and Issuances. During the period
from the date of this Agreement through the Effective Time, Parent shall not (i)
declare, set aside or pay any extraordinary dividends on, or make any other
extraordinary distributions in respect of, any of its capital stock, except for
ordinary cash dividends on Parent Shares consistent with past practice, or (ii)
split, combine or reclassify or otherwise materially alter the Parent Shares.
Section 7.13 Employee Benefit Plans. Parent agrees that, for a period
of at least 2 years following the Closing Date, it shall, or it shall cause its
Subsidiaries to, provide the eligible employees of the Company and its
Subsidiaries with employee compensation and benefit plans, programs and policies
that will provide a level of benefits to eligible employees of the Companies and
its Subsidiaries that are, as the of the Effective Time, substantially
comparable in the aggregate to the level of benefits received by the applicable
United States or United Kingdom employees of the Parent who are of similar
position or rank as the eligible employees of the Company and its Subsidiaries.
Section 7.14 Registration Rights. (a) Parent shall, within 5 Business
Days following the Closing, use its reasonable best efforts to prepare and file
a "shelf" registration statement (a "Shelf Registration") covering the resale of
the Parent Shares to be issued to each of the stockholders of the Company (the
"Stockholders") at the Closing, and thereafter Parent shall use its reasonable
best efforts to cause such registration statement to become effective, and (ii)
Parent shall use its reasonable best efforts to keep the Shelf Registration
continuously effective until the earlier of such time as all of such shares have
been disposed of or two years after the Effective Time. Parent will use its
reasonable best efforts to effect such qualifications under applicable Blue Sky
or other state securities laws as may be reasonably requested by the
Stockholders (provided that Parent shall not be obligated to file a general
consent to service of process or qualify to do business as a foreign corporation
or otherwise subject itself to taxation in any jurisdiction solely for the
purpose of any such qualification) to permit or facilitate the sale or other
distribution of the Parent Shares to be registered hereunder (the "Registered
Securities"). In connection with the Shelf Registration, each Stockholder will
furnish to Parent in writing such information as Parent reasonably requests for
use in connection with the Shelf Registration or the Final Prospectus (defined
below).
(b) Subject to the other provisions of Section 7.14, each Stockholder
agrees that he or it will only make offers to sell and sell Registered
Securities with a final prospectus ("Final Prospectus") which is part of the
effective Shelf Registration or pursuant to another applicable exemption from
registration.
(c) Parent shall furnish to each Stockholder such number of copies of
the Final Prospectus and any amendment or supplement thereto as the Stockholder
may reasonably request in order to effect the sale of the Registered Securities
to be offered and sold by the Stockholder, but only while the Parent is required
to cause the Shelf Registration to remain current.
(d) Parent shall afford the Stockholders and their representatives the
opportunity at reasonable times and in a reasonable manner to make such
reasonable examination and inquire into the financial condition and business of
Parent and its affiliates as the Stockholders' counsel may deem necessary or
prudent in connection with the preparation of the Shelf Registration.
(e) Anything in this Agreement to the contrary notwithstanding, Parent
shall be entitled at any time after December 2000 to postpone for one 90 day
period in any 365 day period (a "Blackout Period") the filing of any amendments
or supplements that Parent reasonably determines are required for the Shelf
Registration or Final Prospectus to comply with all applicable securities laws
if Parent reasonably determines that any such filing would impede, delay or
interfere with any financing, offer or sale of securities, acquisition,
corporate reorganization or other significant transaction involving Parent or
any of' its Affiliates, or require disclosure of material information which
Parent has a bona fide business purpose for preserving as confidential. Upon
notice by Parent to the Stockholders of such determination, each of the
Stockholders covenants that he or it shall (i) keep the fact of any such notice
strictly confidential, (ii) promptly halt any offer, sale, trading or transfer
by him or it or any of his or its Affiliates of any of the Registered Securities
until Parent has notified the Stockholders that the Blackout Period has ended
and (iii) promptly halt any use, publication, dissemination or distribution of
the Shelf Registration, the Final Prospectus included therein and any amendment
or supplement thereto by him or it and any of his or its Affiliates for the
duration of the Blackout Period. Parent will, as promptly as practicable after
the Blackout Period, take such actions as may be necessary to file and have
declared effective any required amendment or supplement to the Shelf
Registration or Final Prospectus. Parent agrees to promptly notify the
Stockholders of the ending of any Blackout Period.
(f) Parent will bear all expenses of any Shelf Registration pursuant to
this Section 7.14 (other than underwriters' commissions and expenses and
brokerage commissions and fees, if any, payable with respect to Registered
Securities sold by the Stockholders and fees and expenses of counsel, any
accountants or any experts for the Stockholders), including, without limitation,
registration fees, printing expenses, expenses of compliance with Blue Sky or
other state securities laws, and legal and audit fees incurred by Parent in
connection with such Shelf Registration and amendments or supplements in
connection therewith.
(g) (i) Parent will notify the Stockholders promptly of (A) any action
by the SEC to suspend the effectiveness of a Shelf Registration or the
institution or threatening of any proceeding for such purpose (a "stop order")
or (B) the receipt by Parent of any notification with respect to the suspension
of the qualification of the Registered Securities for sale in any jurisdiction
or the initiation or threatening of any proceeding for such purpose. Immediately
upon receipt of any such notice, the Stockholders shall cease to offer or sell
any Registered Securities pursuant to the Shelf Registration in the jurisdiction
to which such stop order or suspension relates. Parent will use all reasonable
efforts to prevent the issuance of any such stop order or the suspension of any
such qualification and, if any such stop order is issued or any such
qualification is suspended, to obtain as soon as possible the withdrawal or
revocation thereof, and will notify the Stockholders at the earliest practicable
date of the date on which the Stockholders may offer and sell Registered
Securities pursuant to the Shelf Registration. (ii) Parent will notify the
Stockholders promptly of the occurrence of any event or the existence of any
state of facts that, in the judgment of Parent, should be set forth in the Shelf
Registration or Final Prospectus such that the Shelf Registration or Final
Prospectus could not then be available for the resale of the Registered
Securities. Immediately upon receipt of such notice, the Stockholders shall
cease to offer or sell any Registered Securities pursuant to the Shelf
Registration and the Final Prospectus, cease to deliver or use the Shelf
Registration and the Final Prospectus and, if so requested by Parent, return to
Parent, at its expense, all copies (other than permanent file copies) of the
Shelf Registration and Final Prospectus. Subject to the Parent's right to
declare a Blackout Period, Parent will, as promptly as practicable, take such
action as may be necessary to amend or supplement the Shelf Registration in
order to set forth or reflect such event or state of facts. Parent will furnish
copies of such proposed amendment or supplement to the Stockholders.
(h) The Parent agrees to indemnify and hold harmless each of the
Stockholders and each person, if any, who controls any Company Stockholder
within the meaning of the Securities Act, against any and all losses, claims,
damages, liabilities or expenses, joint or several, to which such Stockholders
or such controlling person may become subject, under the Securities Act, the
Exchange Act, or any other federal or state statutory law or regulation, or at
common law or otherwise (including in settlement of any litigation, if such
settlement is effected with the written consent of the Parent, which consent
shall not be unreasonably withheld), insofar as such losses, claims, damages,
liabilities or expenses (or actions in respect thereof as contemplated below)
arise out of or are based upon any untrue statement or alleged untrue statement
of any material fact contained in the registration statement on Form F-3 (the
"Registration Statement"), including the prospectus, financial statements and
schedules, and all other documents filed as a part thereof, as amended at the
time of effectiveness of the Registration Statement, including any information
deemed to be a part thereof as of the time of effectiveness pursuant to
paragraph (b) of Rule 430A, or pursuant to Rule 434, of the Rules and
Regulations, or the prospectus, in the form first filed with the SEC pursuant to
Rule 424(b) of the Regulations, or filed as part of the Registration Statement
at the time of effectiveness if no Rule 424(b) filing is required (the
"Prospectus"), or any amendment or supplement thereto, or arise out of or are
based upon the omission or alleged omission to state in any of them a material
fact required to be stated therein or necessary to make the statements in any of
them, in light of the circumstances under which they were made, not misleading
(collectively referred to herein as a "Violation"), and will reimburse each
Stockholder and each such controlling person for any legal and other expenses as
such expenses are reasonably incurred by such Stockholders or such controlling
person in connection with investigating, defending, settling, compromising or
paying any such loss, claim, damage, liability, expense or action; provided,
however, that Parent will not be liable in any such case to the extent that any
such loss, claim, damage, liability or expense arises out of or is based upon an
untrue statement or alleged untrue statement or omission or alleged omission
made in the Registration Statement, the Final Prospectus or any amendment or
supplement thereto in reliance upon and in conformity with written information
furnished to Parent, by or on behalf of the Stockholders expressly for use
therein and; provided further, that the Parent will not be required to indemnify
any of the foregoing Persons on account of any losses, claims, damages or
liabilities arising from a Violation if and to the extent that such Violation
was made in a preliminary prospectus and was corrected in a subsequent
prospectus that was required by law to be delivered to the Person making the
claim with respect to which indemnification is sought hereunder (and such
subsequent prospectus was delivered by the Company to the Stockholders to permit
delivery of such prospectus in a timely manner), and such subsequent prospectus
was not so delivered to such Person. The parties hereto intend for this
indemnification to be a separate and distinct obligation from the other
indemnification obligations contained herein and that the limitations on
indemnification contained in Section 10.5 shall be inapplicable to this
indemnification.
ARTICLE VIII
Tax Matters
Section 8.1 Certain Tax Covenants. The Company and each of its
Subsidiaries agree that, from and after the date of this Agreement and until the
Closing Date, (i) to prepare all Returns in a manner which is consistent with
the past practices of the Company and each Subsidiary, as the case may be, with
respect to the treatment of items on such Returns except to the extent that any
inconsistency (x) would not or may not materially increase Parent's, the
Company's, the Surviving Corporation's or any Subsidiary's liability for Taxes
for any period or (y) is required by law; (ii) to refrain from incurring any
material liability for Taxes other than in the ordinary course of business;
(iii) to refrain from entering into any settlement or closing agreement with a
taxing authority that materially increases or may materially increase the Tax
liability of the Company or any of its Subsidiaries for any period without the
consent of Parent, which consent shall not be unreasonably withheld or delayed,
except as required by law. Parent agrees that after the Closing Date, (i) it
shall cause the Returns of Company and each of its Subsidiaries to be prepared
in a manner which is consistent with the past practices of the Company and each
Subsidiary, as the case may be, with respect to the treatment of items on such
Returns, except to the extent that any inconsistency (x) would not materially
increase Company's or any of its Subsidiary's Tax liability with respect a
Pre-Closing Period or (y) is required by law, and (ii) to refrain from entering
into any settlement or closing agreement with a taxing authority that materially
adversely affects the Tax liability of the Company and its Subsidiaries for any
Pre-Closing Period, without the consent of Stockholders which consent shall not
be unreasonably withheld or delayed, except as required by law.
Section 8.2 Tax Indemnification. (a) Notwithstanding any provision to
the contrary contained in this Agreement except for Section 8.2(b), the last
sentence of Section 10.2(a), and clause (y) (including the provisos thereto) of
Section 10.5, and Sections 10.6, 10.7, 10.8 and 10.10, the stockholders of the
Company shall severally (and not jointly), in proportion to the Prior Ownership
Allocation, agree, as Stockholder Indemnitors' (as defined herein), to indemnify
defend and hold harmless Parent, Merger Sub, the Surviving Corporation, their
Affiliates (including the Company and its Subsidiaries) and the successors to
the foregoing (and their respective shareholders, officers, directors, employees
and agents) on an after-tax basis (without duplication) against (i) all Taxes,
losses, claims and expenses resulting from, arising out of, or incurred with
respect to, any claims that may be asserted by any party based upon,
attributable to, or resulting from the failure of any representation or warranty
made pursuant to Section 4.17 (other than Section 4.17(a) or (b)) of this
Agreement to be true and correct as of the Closing Date; (ii) all Taxes imposed
on or asserted against the properties, income or operations of the Company or
its Subsidiaries, or for which the Company or any of its Subsidiaries may
otherwise be liable, for all Pre-Closing Periods (including, with respect to
taxable periods that begin prior to and end after the Closing Date, the portion
of such taxable periods up to and including the Closing Date), except for (x)
Taxes accrued and fully provided for in accordance with GAAP on the unaudited
consolidated balance sheet of the Company as of April 30, 2000, (y) Taxes
imposed or asserted against the properties, income or operations of the Company
or its Subsidiaries or for which the Company or any of its Subsidiaries may
otherwise be liable as a result of the conduct of operations (including holding
of property) in the ordinary course of business of the Company or its
Subsidiaries after April 30, 2000 that are (i) paid or discharged by the Company
prior to the Effective Time or (ii) not yet due and payable at the Effective
Time or (z) incurred by the Company or its Subsidiaries outside the ordinary
course of business but only to the extent and such Tax is incurred as a result
of a transaction(s) occurring at the direction of the Parent, and (iii) all
Taxes imposed on Parent, Merger Sub, the Surviving Corporation and their
Affiliates (including the Company or any Subsidiary) or for which Parent, Merger
Sub, the Surviving Corporation and their Affiliates (including the Company or
any Subsidiary) becomes liable (other than Taxes of the Company and its
Subsidiaries) under Section 1.1502-6 of the Treasury Regulations or any similar
provision of state, local or foreign law as a result of the Company or any of
its Subsidiaries being a member prior to the Closing Date of an affiliated,
combined, consolidated or unitary group of corporations. Nothing in this
agreement shall be construed as a guarantee of the existence or amount of any
loss, credit, carryforward, basis or other tax attribute, whether past, present
or future of the Company or any Subsidiary, and any reduction in whole or in
part of any such tax attributes shall not give rise to an indemnification
obligation by the Stockholder Indemnitors under this Agreement.
(b) The stockholders of the Company shall be under no liability
pursuant to this section 8.2 or pursuant to any representations, warranties,
obligations or indemnities contained in this Agreement and relating to UK Taxes,
in respect of any UK Taxes or any losses, claims and expenses in respect of UK
Taxes to the extent that:
(i) provision or reserve therefor has been made in the unaudited
consolidated balance sheet of the Company as of April 30, 2000;
(ii) it arises out of a transaction, act, omission or event occurring,
or in respect of income profit or gains earned, accrued or received, after April
30, 2000 but before Closing in the ordinary course of business of the Company or
any of the Subsidiaries;
(iii) it was paid or discharged before Closing;
(iv) it arises as a result of any change in law, rates of tax,
statutes, regulations, practice, concession or directive occurring after
Closing;
(v) it would not have arisen but for a voluntary transaction, act or
omission carried out or effected or occurring at any time after Closing by or
affecting any of the Company, the Subsidiaries, the Parent or any other person
connected with any of them, which the Parent, the Company or the relevant
Subsidiary knew or ought reasonably to have been aware would give rise to the
liability or increased liability, other than to the extent any such transaction,
act or omission is carried out or effected by the Company or its Subsidiaries
pursuant to a legally binding commitment created on or before Closing;
(vi) it arises as a result of a change (other than to comply with law
or with generally accepted accounting practice as at Closing) after Closing in
any accounting policy or practice or the length of any accounting period for tax
purposes of the Company or any of the Subsidiaries;
(vii) the Parent, the Company or any Subsidiary has a right of recovery
in respect thereof from a person or persons other than the Company or its
Subsidiaries but only to the extent that such right is successfully enforced;
(viii) it arises or is increased by reason of a breach by the Parent of
the provisions of this Agreement;
(ix) it can be relieved or mitigated by the use of any losses, reliefs,
allowances, exemption set off or credits in computing or against income profits,
gains or Taxes, arising in respect of a period or an event, act, omission or
transaction occurring prior to Closing other than one treated as an asset or as
reducing a provision in the unaudited consolidated balance sheet of the Company
as of April 30, 2000; or
(x) it arises in respect of a transaction, act, omission or event
occurring after April 30, 2000 but before Closing or in respect of income
profits or gains earned, accrued or received since April 30, 2000 but before
Closing, to the extent that the consideration actually earned, accrued, received
or receivable in relation thereto is greater than the consideration deemed to
have been earned, accrued, received or receivable for the purposes of the
relevant Taxes.
(c) Any payment by the stockholders hereunder shall, to the extent
permitted by applicable law, be treated as a reduction in the Merger
Consideration.
Section 8.3 Transfer Taxes. All transfer, sales and use, value added,
registration, documentary, stamp and similar Taxes imposed in connection with
the exchange of the Parent Shares for Company Stock or any other transaction
that occurs pursuant to this Agreement shall be borne by the party that is
primarily liable for such tax under applicable law. Notwithstanding anything
herein to the contrary, Parent and/or Merger Sub and their affiliates will pay
or assume only those expenses or liabilities of the Company and Stockholders
that are solely and directly related to the Merger in accordance with the
guidelines of Rev. Rul. 73-54, 1973-1 C.B.187. Otherwise Parent, Merger Sub,
Company, and Stockholders each will pay their own expenses, if any, incurred in
connection with the Merger and any other transactions contemplated by this
Agreement.
Section 8.4 Amended Returns. Neither Parent, the stockholders of the
Company nor the Company shall file or cause to be filed any amended Return or
claims for refund with respect to the Company or its Subsidiaries, for a
Pre-Closing Period without the prior written consent of Parent and Stockholder
Indemnitors' Representative, which consent shall not be unreasonably withheld or
delayed. In no event shall the stockholders of the Company file or cause to be
filed any amended Return or claim for refund with respect to the Company for any
period that begins on or after the Closing Date.
Section 8.5 Carrybacks. Without the prior written consent of
Stockholder Indemnitors' Representative, which consent shall not be unreasonably
withheld or delayed, none of Parent, Company or any Subsidiary of Company shall
carry back any net operating loss or other item or attribute from a Post-Closing
Period to a Pre-Closing Period. Parent and Company agree to reimburse
stockholders of Company for any reasonable out-of-pocket costs incurred by such
stockholders connected therewith, including, but not limited to, reasonable
out-of-pocket costs of time spent by independent accountants preparing such
carryback returns and any adjustment to Taxes for which the stockholders are
liable hereunder.
Section 8.6 Tax Covenants Regarding Merger. Following the Closing,
neither Parent, Sub nor the Surviving Corporation shall take any action or cause
any action to be taken, which action is (i) in violation of the undertakings set
forth in the representations and warranties provided by Parent and Merger Sub to
the Company's counsel in connection with the opinion rendered to the Company
pursuant to Section 9.3(c) or (ii) outside the ordinary course of business that
a reasonable person after reasonable inquiry would believe would cause the
Merger to fail to be treated as a reorganization within the meaning of Section
368(a) of the Code. After the Effective Time, Parent agrees to take all steps
required to ensure that the Surviving Company will comply with the reporting
requirements described in U.S. Treasury Regulations Section 1.367(a)-3(c)(6).
Parent also agrees to provide to the Surviving Company and any other person that
is a holder of shares of Company Stock immediately prior to the Effective Time
that may have tax reporting obligations (including reporting obligations under
Section 6038B of the Code) with respect to any transactions effected pursuant to
this Agreement, any information necessary to comply with the tax reporting
requirements (including the filing requirements of Section 6038B and the U.S.
Treasury Regulations promulgated thereunder). In addition, prior to December 31,
2006, Parent will neither transfer, sell or otherwise dispose of any shares of
capital stock of the Company, other than a transfer to a Subsidiary or an
Affiliate of Parent so long as such transfer is described in Treasury
Regulations Section 1.367(a)-8(g)(2) and Parent provides the Shareholder Parties
(as defined below) within 15 days of such transfer with the information
necessary to comply with the requirements of Treasury Regulation Sections
1.367(a)-8(g)(2)(ii) through (iv), nor permit a "deemed disposition" of any such
shares within the meaning of Treasury Regulations Section 1.367(a)-8(e)(3).
Parent agrees to report the breach of any covenant of this Section 8.6 to any
holder of shares of Company Common Stock that, solely as a result of the receipt
of the Merger Consideration at the Effective Time, becomes the beneficial owner
of 5% or more of Parent Shares (collectively, the "Shareholder Parties") within
15 days of such breach.
Section 8.7 Tax Cooperation. After the Closing Date, Parent, Company
and Subsidiaries, on the one hand, and Stockholders, on the other hand, agree to
furnish or cause to be furnished to each other, upon request, as promptly as
practicable, such information and assistance (including access to books,
records, work papers and Pre-Closing Period Returns) relating to the Company and
its Subsidiaries and shall make available (during normal business hours) such
knowledgeable employees of Parent, Company or any of Company's Subsidiaries as
is reasonably necessary for the preparation of any Return, claim for refund or
audit, and the prosecution or defense of any claim, suit or proceeding relating
to any proposed Tax adjustment. For a period of seven years from the Closing
Date, Parent shall maintain and make available (during normal business hours) to
Stockholder Indemnitors, on Stockholder Indemnitors' reasonable request, copies
(at the sole expense of Stockholder Indemnitors) of any and all information,
books, and records referred to in this Section 8.8. After such seven-year
period, Parent, Companies and its Subsidiaries may dispose of such information,
books and records provided that prior to such disposition, Parent shall give
Stockholders Indemnitor's Representative the opportunity to take possession of
such information, books and records.
Section 8.8 Tax Controversies. Parent shall promptly notify Stockholder
Indemnitors' Representative upon receipt by Parent or any Affiliate of Parent
(including the Company and its Subsidiaries after the Closing Date) of written
notice of any inquiries, claims, assessments, audits or similar events with
respect to Taxes relating to (i) a taxable period ending prior to or ending on
and including the Closing Date or (ii) other item(s) for which Stockholder
Indemnitors may be liable or obligated to indemnify under Section 8.2. If the
item(s) discussed in such notice(s) would (either alone, or together with any
previous or other current claims, assessments or similar items), if resolved to
the detriment of the Company or any Subsidiary or other Persons which
Stockholder Indemnitors are obligated to indemnify under Section 8.2, result in
an assessment for Taxes, in the aggregate, in excess of $1,000,000 (any such
inquiry, claim, assessment, audit or similar event, to the extent relating to a
taxable period ending prior to or ending on and including the Closing Date and
in excess of $1,000,000 a "Tax Matter"), Stockholder Indemnitors'
Representative, at the sole expense of Stockholders, shall have the authority to
represent the interests of the Company and its Subsidiaries or other Persons
which Stockholder Indemnitor are obligated to indemnify under Section 8.2 with
respect to such Tax Matter before the Internal Revenue Service, any other taxing
authority, any other governmental agency or authority or any court and shall
have the right to control the defense, compromise or other resolution of such
Tax Matter, including responding to inquiries and contesting, defending against
and resolving any assessment for additional Taxes or notice of Tax deficiency or
other adjustment of Taxes of, or relating to, a Tax Matter; provided, however,
that none of Stockholder Indemnitors' Representative, the Company or any
Subsidiary shall enter into any settlement of or otherwise compromise any such
Tax Matter that affects or may affect the Tax liability of Parent, Merger Sub,
the Surviving Corporation or any of its Subsidiaries or any Affiliate of the
foregoing for any period ending after the Closing Date (including, with respect
to any taxable year or period that begins before and ends after the Closing
Date, the portion such period that is after the Closing Date) without the prior
written consent of Parent, which consent shall not be unreasonably withheld or
delayed. Stockholder Indemnitors' Representative shall keep Parent fully and
timely informed with respect to the commencement, status and nature of any Tax
Matter. Stockholder Indemnitors' Representative shall, in good faith, consult
with Parent regarding the conduct of or positions taken in any such proceeding.
Except as set forth in the preceding provisions of this Section 8.8, Parent
shall have the sole right to represent the interests of the Company, Surviving
Corporation and its Subsidiaries with respect to any inquiries, claims,
assessments, audits or similar events with respect to Taxes for all taxable
periods; provided, however, Parent shall not, and shall cause its Affiliates
(including the Company and its Subsidiaries) not to enter into any settlement of
any contest or otherwise compromise any such audit or other Tax proceeding with
respect to (i) any taxable year or period ending on or prior to the Closing Date
(ii) or other item(s) for which Stockholder Indemnitors may be liable or
obligated to indemnify under Section 8.2, to the extent that the aggregate
liability incurred under all such settlements and compromises and any prior
payments that count against the Tax Threshold are greater than the Tax
Threshold, without the prior written consent of Stockholder Indemnitors'
Representative, which consent shall not be unreasonably withheld or delayed.
Section 8.9 Survival of Tax Covenants. Notwithstanding anything herein
to the contrary, the representations, warranties and covenants of the Company,
Merger Sub, and Parent contained in Sections 4.17, 5.12, 5.16, 5.17 and Article
VIII shall survive until the expiration of the applicable statute of
limitations.
ARTICLE IX
CONDITIONS PRECEDENT
Section 9.1 Conditions to Each Party's Obligation to Effect the Merger.
The respective obligations of each party to effect the Merger shall be subject
to the fulfillment at or prior to the Effective Time of the following
conditions:
(a) Stockholder Approval. The Company shall have received the Company
Stockholders' Approval and the Parent shall have received the Parent
Shareholders' Approval.
(b) [Intentionally left blank]
(c) Admission. All necessary approvals of the UKLA and the LSE shall
have been obtained for the Admission of the new Parent Shares to be issued in
the Merger on the date of the Effective Time, subject only to the allotment of
such shares and immediately prior to the filing of the Merger Certificate no
action shall have been taken or notice given by the UKLA or the LSE and no event
shall otherwise have occurred, which will or is reasonably likely to result in
such Admission not to become effective on the date of the Effective Time.
(d) HSR Act. Any waiting period (and any extension thereof) applicable
to the consummation of the Merger under the HSR Act shall have expired or been
terminated.
(e) Injunctions or Restraints. No court of competent jurisdiction or
other competent Governmental or Regulatory Authority shall have enacted, issued,
promulgated, enforced or entered any law or order (whether temporary,
preliminary or permanent) which is then in effect and has the effect of making
illegal or otherwise restricting, preventing or prohibiting consummation of the
Merger or the other transactions contemplated by this Agreement.
(f) H.M. Treasury Consent. Parent (as required) shall have received
consent from H.M. Treasury pursuant to Section 765 of the UK Income and
Corporation Taxes Act 1988 in respect of the Merger and any other matter
contemplated hereby, or confirmation that no consent is required.
(g) Governmental and Regulatory Consents and Approvals. Other than the
filings provided for by Section 2.2, all consents, approvals and actions of,
filings with and notices to any Governmental or Regulatory Authority (including
under the HSR Act) required of Parent, the Company or any of their respective
Subsidiaries to consummate the Merger and the other matters contemplated hereby
shall have been made or obtained (as the case may be) and become Final Orders
(as defined in this Section below), and such Final Orders shall not,
individually or in the aggregate, contain terms or conditions that would have,
or could reasonably be expected to have, a Material Adverse Effect on the
Surviving Corporation and its Subsidiaries, taken as a whole. A "Final Order"
means an action by the relevant Governmental or Regulatory Authority that has
not been reversed, stayed, enjoined, set aside, annulled or suspended, with
respect to which any waiting period prescribed by applicable law before the
transactions contemplated hereby may be consummated has expired, and as to which
all conditions to the consummation of such transactions prescribed by applicable
law, regulation or order have been satisfied.
(h) UK Fair Trading Act. Any of:
(i) the Office of Fair Trading (the "OFT") shall not have indicated in
writing that the Secretary of State for Trade and Industry (the "SOS") in
the exercise of his powers under the Fair Trading Act 1973 (the "FTA")
intends to refer the Merger or any matter relating thereto to the
Competition Commission ("COC"); or
(ii) in the event of an COC reference, the COC shall have concluded
that the Merger does not or may not be expected to operate against the
public interest; or
(iii) if on a reference the COC shall have concluded that the Merger
does or may be expected to operate against the public interest, the SOS
shall have indicated in writing that it is his intention to approve the
Merger,
PROVIDED that if any indication by the SOS referred to in (i) or (iii) above is
subject to undertakings, assurances, or any other terms or conditions, such
undertakings, assurances, terms or conditions would not have, or could
reasonably be expected not to, individually or in the aggregate, have a Parent
Material Adverse Effect.
(i) Other Consents And Approvals. The consent or approval of each
Person (other than a Governmental or Regulatory Authority) whose consent or
approval is required of Parent, the Company or any of their Subsidiaries under
any Contract in order to consummate the Merger and the other transactions
contemplated hereby shall have been obtained, except for those consents and
approvals which, if not obtained, would not have, or could not reasonably be
expected to have, a Parent Material Adverse Effect or on the ability of Parent
or the Company to consummate the transactions contemplated hereby.
Section 9.2 Conditions to Obligation of Parent And Merger Sub to Effect
the Merger. The obligation of Parent and Merger Sub to effect the Merger is
further subject to the fulfillment, at or prior to the Effective Time, of each
of the following additional conditions (all or any of which may be waived in
whole or in part by Parent and Merger Sub in their sole discretion):
(a) Representations and Warranties. (A) The representations and
warranties of the Company contained herein that are qualified by a Company
Material Adverse Effect and the representations and warranties contained in
Section 4.5 shall be true and correct when made and on the Closing Date (except
for representations and warranties made as of a specified date, which need be
true and correct only as of the specified date), as if made on and as of such
date and (B) all other representations and warranties of the Company shall have
been true and correct when made and on and as of the Closing Date (except for
representations and warranties made as of a specified date, which need be true
and correct only as of the specified date) as if made on and as of such date,
except where the failure of such representations and warranties to be so true
and correct could not reasonably be expected to, individually or in the
aggregate, have a Company Material Adverse Effect, and the Company shall have
delivered to Parent a certificate, dated the Closing Date and executed in the
name and on behalf of the Company by its Chairman of the Board, Chief Executive
Officer or President, to such effect.
(b) Performance of Obligations. The Company shall have performed and
complied with, in all material respects, the agreements, covenants and
obligations which are required by this Agreement to be so performed or complied
with by the Company at or prior to the Closing, and the Company shall have
delivered to Parent a certificate, dated the Closing Date and executed in the
name and on behalf of the Company by its Chairman of the Board, Chief Executive
Officer or President, to such effect.
(c) Material Adverse Effect. No Company Material Adverse Effect shall
have occurred and there shall exist no facts or circumstances arising after the
date of this Agreement, which in the aggregate would, or insofar as reasonably
can be foreseen, could reasonably be expected to, when taken together with any
breaches or violations of any representations, warranties, covenants and
agreements of the Company contained herein, have a Company Material Adverse
Effect.
(d) Proceedings. All proceedings to be taken on the part of the Company
in connection with the transactions contemplated by this Agreement and all
documents incident thereto shall be reasonably satisfactory in form and
substance to Parent, and Parent shall have received copies of all such documents
and other evidences as Parent may reasonably request in order to establish the
consummation of such transactions and the taking of all proceedings in
connection therewith.
(e) Investor Representation Letter. Parent shall have received from
each of the holders of Company Stock, an investor representation letter, in the
form attached as Exhibit 4.
(f) Purchaser Representative Certificate. Parent shall have received a
duly executed Purchaser Representative Certificate, in the form attached hereto
as Exhibit 5 from each of the holders of Company Stock that is not an
"accredited investor" as defined in Regulation D under the Securities Act.
Section 9.3 Conditions to Obligation of the Company to Effect the
Merger. The obligation of the Company to effect the Merger is further subject to
the fulfillment, at or prior to the Effective Time, of each of the following
additional conditions (all or any of which may be waived in whole or in part by
the Company in its sole discretion):
(a) Representations and Warranties. (A) The representations and
warranties of Parent and Merger Sub contained herein that are qualified by a
Parent Material Adverse Effect and the representations and warranties contained
in Section 5.5 shall be true and correct when made and on and as of the Closing
Date (except for representations and warranties made as of a specified date,
which need be true and correct only as of the specified date), as if made on and
as of such date and (B) all other representations and warranties of Parent and
Merger Sub shall have been true and correct when made and on and as of the
Closing Date (except for representations and warranties made as of a specified
date, which need be true and correct only as of the specified date) as if made
on and as of such date, except where the failure of such representations and
warranties to be so true and correct could not reasonably be expected to,
individually or in the aggregate, have a Parent Material Adverse Effect, and
Parent and Merger Sub shall each have delivered to the Company a certificate,
dated the Closing Date and executed in the name and on behalf of Parent by its
Chief Executive Officer or any Executive Director, and in the name and on behalf
of Merger Sub by its Chairman of the Board, Chief Executive Officer or
President, to such effect.
(b) Performance of Obligations. Parent and Merger Sub shall have
performed and complied with, in all material respects, each agreement, covenant
and obligation required by this Agreement to be so performed or complied with by
Parent or Merger Sub at or prior to the Effective Time, and Parent and Merger
Sub shall each have delivered to the Company a certificate, dated the Closing
Date and executed in the name and on behalf of Parent by its Chairman of the
Board, President or any Executive Officer or any Executive Director and in the
name and on behalf of Merger Sub by its Chairman of the Board, Chief Executive
Officer or Finance Director, to such effect.
(c) Tax Opinion. The Company shall have received an opinion of Skadden,
Arps, Slate, Meagher and Flom (Illinois) ("Skadden Arps"), dated the Closing
Date, that on the basis of facts, representations and assumptions set forth in
such opinion which are consistent with the state of facts existing as of the
Effective Time, for federal income tax purposes, the Merger will constitute a
reorganization within the meaning of Section 368(a) of the Code. In rendering
such opinion, Skadden Arps may rely upon the representations contained herein
and may require and rely upon (and may incorporate by reference) reasonable
representations from Parent, Merger Sub, the Company and others.
(d) Registration of Option Shares. Pursuant to Section 2.8, Parent
shall have filed a registration statement with the SEC, which registration
statement shall be effective at the Effective Time, with respect to the Parent
Ordinary Shares to be issued upon the exercise of Stock Options after the
Effective Time.
(e) Companies Act Section 103. Notwithstanding the provisions of
Section 7.11, each holder of Company Stock shall have received the report to
which such holder is entitled in compliance with section 103 of the Companies
Act in relation to the allotment of Parent Shares by Parent in accordance with
Section 2.6, unless Parent has provided to the Company a written opinion of
leading U.K. Queen's counsel, in a form reasonably satisfactory to the Company,
that Parent is not required to provide a report under section 103 of the
Companies Act in relation to such allotment.
ARTICLE X
SURVIVAL OF REPRESENTATIONS; INDEMNIFICATION
Section 10.1 Survival of Representations. Except for the
representations and warranties contained in (i) Sections 4.15, 4.17, 4.19, 5.12,
5.16 and 5.17 which shall survive until the expiration of the applicable statute
of limitations (including any extensions thereof) and (ii) Sections 4.2 and 4.3,
5.2 and 5.3, which shall survive indefinitely, the representations and
warranties contained in this Agreement shall survive for a period of 1 year from
the Effective Time.
Section 10.2 Indemnification. (a) Stockholder Indemnification. Subject
to clause (c) of this Section 10.2 and Section 10.5, the stockholders of the
Company (the "Stockholder Indemnitors") shall severally (and not jointly), in
proportion to the Prior Ownership Allocation, indemnify and hold Parent, the
Surviving Corporation and their Affiliates and their respective officers,
directors, employees, agents and Affiliates and their respective successors and
assigns (each a "Parent Indemnitee") harmless from damages, losses, liabilities,
obligations, claims of any kind, interest or expenses (including, without
limitation, reasonable attorneys' fees and expenses (each a "Loss")), suffered
or paid, directly or indirectly, through application of the Surviving
Corporation's or the Parent's assets or otherwise, as a result of, in connection
with or arising out of (i) the failure of any representation or warranty made by
the Company in this Agreement or in any Schedule, Exhibit, or Certificate
attached hereto or thereto or delivered pursuant to this Agreement (other than
pursuant to Section 4.7 (Information Supplied) and Section 4.17 (Taxes)) to be
true and correct in all respects as of the date of this Agreement and as of the
Effective Time (except for representations and warranties made as of a specific
date, which shall be true and correct as of such date), (ii) any Loss arising
out of any third party claim referred to in Section 10.4 primarily in connection
with the failure of any representation or warranty made by the Company in
Section 4.7 to be true and correct in all respects and (iii) any breach or
alleged breach by the Company of any of its covenants or agreements contained in
this Agreement. Notwithstanding any other provision of this Agreement, including
this Section 10.2(a) and Article VIII, none of the Stockholder Indemnitors shall
have any obligation to indemnify, or otherwise have any liability to, the Parent
Indemnitees for any Loss arising out of, or relating to the business,
operations, tax liability or tax matters of any of the Subsidiaries of the
Company prior to the closing of the acquisition of such Subsidiaries by the
Company or by another Subsidiary of the Company or by a Subsidiary of any such
Subsidiary, and so on, including without limitation any breach of a
representation or warranty contained in Article IV arising out of or related to
the business, operations, tax liability or tax matters of such Subsidiaries
prior to the date of the closing of the acquisition of such Subsidiaries by the
Company or by another Subsidiary of the Company or by a Subsidiary of any such
Subsidiary, and so on (a "Pre-acquisition Breach") other than with respect to
any such Pre-acquisition Breach which any of Terence Graunke, Tim Donmoyer,
Kathleen Johnston, Julian Hanson-Smith and Daniel Kirk has actual knowledge,
after reasonable inquiry, as of the date of this Agreement.
(b) Parent Indemnification. Subject to clause (c) of this Section 10.2
and Section 10.5, Parent and Merger Sub ("Parent Indemnitors") shall jointly and
severally indemnify and hold the stockholders of the Company and their
Affiliates and their respective officers, directors, employees, agents and
Affiliates and their respective successors and assigns (each a "Stockholder
Indemnitee") harmless from all Losses, suffered or paid, directly or indirectly,
by a Stockholder Indemnitee, as a result of, in connection with or arising out
of (i) the failure of any representation or warranty made by Parent in this
Agreement or in any Schedule, Exhibit, or Certificate attached hereto or thereto
or delivered by Parent pursuant to this Agreement (other than pursuant to
Section 5.8) to be true and correct in all respects as of the date of this
Agreement and as of the Effective Time (except for representations and
warranties made as of a specific date, which shall be true and correct as of
such date), (ii) any Loss arising out of any third party claim referred to in
Section 10.4 primarily in connection with the failure of any representation or
warranty made by Parent in Section 5.8 to be true and correct in all respects
(iii) any breach or alleged breach by Parent and/or Merger Sub of any of their
respective covenants or agreements contained in this Agreement, (iii) any
failure of the Surviving Corporation to pay the Contingent Holders the
Contingent Payments if and when due and (iv) any contravention of Section 103 of
the Companies Act by Parent or any independent person (as defined in Section 108
of the Companies Act) in relation to the issuance of Parent Shares by Parent in
accordance with Section 2.6.
(c) The parties hereto have agreed that separate standards will apply
to the use of the terms "material," "materiality," and "Company Material Adverse
Effect" (together "Company Materiality Terms") or "material," "materiality," or
"Parent Material Adverse Effect" (together "Parent Materiality Terms") for
purposes of determining the satisfaction of Section 9.2(a) or 9.3(a), on the one
hand, and the rights to indemnification under Sections 10.2(a) and (b) or
otherwise (including any claim of fraud), on the other. For purposes of
determining the satisfaction of Sections 9.2(a) and 9.3(a), the Company
Materiality Terms or the Parent Materiality Terms shall each be given their
respective separate meanings in accordance with applicable law. For purposes of
indemnification, the representations and warranties in Article IV (other than
Section 4.5, the second sentence of Section 4.8, and clauses (i), (v) and (vi)
of Section 4.6), the covenants contained in Section 6.1 and Article V (other
than Section 5.5 and clause (a)(i) of Section 5.6) shall be construed as if they
were not qualified by the Company Materiality Terms or the Parent Materiality
Terms, as applicable. For indemnification purposes under Section 10.2(a), the
Company Materiality Terms contained in Section 4.5, the second sentence of
Section 4.8, clauses (i), (v) and (vi) of Section 4.6 and the Parent Materiality
Terms, contained in Section 5.5, the covenants contained in Section 6.1 and
clause (a)(i) of Section 5.6 shall each be given their separate meaning in
accordance with applicable law.
(d) The obligations to indemnify and hold harmless pursuant to this
Section 10.2, as applicable, shall survive the consummation of the transactions
contemplated by this Agreement for the time periods set forth in Section 10.1,
except for claims for indemnification asserted prior to the end of such periods,
which claims shall survive until final resolution thereof.
Section 10.3 Stockholder Indemnitors' Representative. (a) Terence
Graunke shall be appointed by the stockholders of the Company (in the
Indemnification Agreements) as the sole, exclusive, true and lawful agent and
representative of the Stockholder Indemnitors (the "Stockholder Indemnitors'
Representative") with respect to any and all matters relating to, arising out
of, or in connection with, this Article X of this Agreement.
(b) Parent shall be entitled to rely on the Stockholder Indemnitors'
Representative's authority as the agent and representative of the Stockholder
Indemnitors for all purposes hereunder (including the giving or receiving of
notices and information to or from an Indemnifying Party pursuant to Section
10.4 other than a service of process) and shall have no liability for any such
reliance.
Section 10.4 Indemnification Procedures. (a) If an event occurs which a
party (an "Indemnitee") asserts is an indemnifiable event pursuant to Section
10.2, as applicable, the Indemnitee shall promptly notify the other party
obligated to provide such indemnification (the "Indemnifying Party"). If any
Indemnitee shall incur any Loss in respect of which indemnification may be
sought by such Indemnitee pursuant to this Article X , Sections 7.14 or 8.2,
such Indemnitee shall assert a claim for indemnification by written notice
("Notice") to the Indemnifying Party stating the nature and basis of such claim.
In the case of a Loss arising by reason of any third-party claim, the Notice
shall be given within 30 days of the filing or written assertion which the
Indemnitee believes will give rise to indemnification pursuant to this Article
X, Sections 7.14 or 8.2, but the failure of the Indemnitee so to notify the
Indemnifying Party shall not relieve the Indemnifying Party of any liability the
Indemnifying Party may have to the Indemnitee except to the extent that the
Indemnifying Party demonstrates that its defense of such claim is prejudiced
thereby. The Indemnitee shall provide to the Indemnifying Party all information
and documentation reasonably necessary to support and verify any Loss or other
claims which the Indemnitee believes give rise to a claim for indemnification
hereunder and shall give the Indemnifying Party reasonable access to all books,
records and Personnel in the possession or under the control of the Indemnitee
which would have bearing on such claim.
(b) In the case of third party claims, the Indemnifying Party shall
(subject to its acknowledgment of its indemnity obligation) have the option (i)
to conduct any proceeding or negotiations in connection therewith, (ii) to take
all other steps to settle, remedy or defend any such claim, provided that the
Indemnifying Party shall not settle any such claim without the consent of the
Indemnitee, which consent shall not be unreasonably withheld and (iii) to employ
counsel reasonably acceptable to the Indemnitee to contest any such claim or
liability in the name of the Indemnitee or otherwise. The Indemnifying Party
shall, within 15 days of receipt of Notice of such claim, notify the Indemnitee
of its intention to assume the defense of such claim provided that the
Indemnifying Party has unconditionally acknowledged in writing the Indemnifying
Party's indemnity obligation hereunder. If the Indemnifying Party shall decline
to assume the defense of any such claim, the Indemnitee may defend against any
such claims in such manner as it may deem appropriate, without prejudice to its
indemnification rights hereunder. The expenses of all proceedings, contests or
lawsuits with respect to such claims shall be borne by the Indemnifying Party
but only if the Indemnifying Party is responsible pursuant hereto to indemnify
the Indemnitee in respect of the third-party claim and provided that, if the
Indemnifying Party shall have assumed the defense of any such claim as provided
herein, the fees and expenses of any counsel retained by the Indemnitee shall be
paid by the Indemnitee. Regardless of which party shall assume the defense of
the claim, the parties agree to cooperate fully with one another in connection
therewith. No third party claim, demand, action or proceeding for which an
Indemnitee is seeking indemnification under this Article X shall be settled
without the prior written consent of the Indemnifying Party. If (i) a firm
written offer is made to settle any such third party claim, demand, action or
proceeding, (ii) the Indemnifying Party proposes to accept such settlement and
(iii) the Indemnitee refuses to consent to such settlement, then: (A) the
maximum liability of the Indemnifying Party relating to such third party claim,
demand, action or proceeding shall be the amount of the proposed settlement if
the amount thereafter recovered from the Indemnitee on such third party claim,
demand, action or proceeding is greater than the amount of the proposed
settlement; and (B) the Indemnitee shall pay all reasonable attorneys' fees and
legal costs and expenses incurred after rejection of such settlement by the
Indemnitee, but if the amount thereafter recovered by such third party from the
Indemnitee is less than the amount of the proposed settlement, the Indemnitee
shall be reimbursed by the Indemnifying Party for such attorneys' fees and legal
costs and expenses up to a maximum amount equal to the difference between the
amount recovered by such third party and the amount of the proposed settlement.
If, and to the extent, the Indemnifying Party is responsible pursuant hereto to
indemnify the Indemnitee in respect of a third-party claim, then within 5
business days of the reasonable request of the Indemnitee, the Indemnifying
Party shall pay on behalf of the Indemnitee, in immediately available funds, the
amount of any Loss, or such portion thereof as the Indemnifying Party shall be
responsible for, pursuant to this Article X representing payment by the
Indemnifying Party of such third-party claim. If any Loss or other claims
incurred by the Indemnitee do not involve payment by the Indemnitee of a
third-party claim, then if, and to the extent, the Indemnifying Party is
responsible pursuant hereto to indemnify the Indemnitee against such Loss, the
Indemnifying Party shall within ten (10) days of the reasonable request of the
Indemnitee pay to the Indemnitee, in immediately available funds, the amount of
such Loss or other claims payable pursuant to this Article X.
Section 10.5 Limitations. Anything to the contrary contained herein
notwithstanding (x) no Indemnitee shall be entitled to recover with respect to
Losses relating to breaches of (i) representations and warranties made in this
Agreement (other than with respect to Losses arising out of the representations
and warranties set forth in Section 4.7 and Section 4.17, Sections 5.12, 5.16
and 5.17) from an Indemnifying Party and (ii) breaches of any of covenants,
undertakings or other agreements of the Company set forth in the first sentence
of Section 6.1, unless and until the aggregate amount of Losses under this
Agreement exceeds $10 million (the "Indemnification Threshold"), and then only
to the extent such aggregate amount exceeds the Indemnification Threshold and
(y) with respect to Taxes, losses, claims and expenses arising out of the
representations and warranties set forth in Section 4.17 and Section 5.16 and
the indemnification obligations set forth in Article VIII, the Parent
Indemnitees or Stockholder Indemnitees, as applicable, shall not be entitled to
recover from the Parent Indemnitors or Stockholder Indemnitors, as applicable,
unless and until the aggregate amount of such Taxes, losses, claims and expenses
exceeds $1 million (the "Tax Threshold"), and then only to the extent such
aggregate amount exceeds the Tax Threshold; provided, however, that the
Indemnitees shall not be entitled to recover from the Indemnifying Parties, in
aggregate, more than $70,000,000 (the "Cap") of the total amount of Losses
referred to in clauses (x) and (y); and provided further that, with respect to
clause (x), no individual Loss shall be applied to the Indemnification Threshold
or subject to a claim for indemnification under this Article X unless the total
amount of such Loss exceeds $150,000; for the avoidance of doubt, the Parent
Indemnitees, individually or in the aggregate, shall not be entitled to recover
from any Stockholder Indemnitor an aggregate amount equal to or exceeding the
product of $70,000,000 multiplied by such Stockholder Indemnitor's Prior
Ownership Allocation.
Section 10.6 Adjustment for Insurance. The amount which an Indemnifying
Party is required to pay to, for or on behalf of the Indemnitee pursuant to this
Article X and Article VIII shall be adjusted (including, without limitation,
retroactively) by any insurance proceeds actually recovered by or on behalf of
such Indemnitee in reduction of the related indemnifiable loss (the
"Indemnifiable Loss"), less the cost of procuring such insurance proceeds.
Amounts required to be paid, as so reduced, are hereinafter sometimes called an
"Indemnity Payment." If an Indemnitee has received or has had paid on its behalf
an Indemnity Payment for an Indemnifiable Loss and subsequently receives
insurance proceeds for such Indemnifiable Loss, then the Indemnitee shall (i)
promptly notify the Indemnifying Party of the amount and nature of such proceeds
and benefits, together with the cost of procuring them, and (ii) pay to the
Indemnifying Party the amount of such insurance proceeds (reduced by such
procurement cost), or, if lesser, the amount of the Indemnity Payment.
Section 10.7 Adjustment for Recoveries under Acquisition Agreements.
The amount of any Loss which the Stockholder Indemnitors are required to pay to
a Parent Indemnitee pursuant to this Article X and Article VIII shall be reduced
(including, without limitation, retroactively by refunds to the Stockholder
Indemnitors if appropriate) by any amounts received by such Parent Indemnitee in
connection with such Loss under any Acquisition Agreement in connection with the
acquisition of the Subsidiary (an "Acquisition Agreement Indemnity"), less the
cost incurred and not otherwise recovered in procuring such Acquisition
Agreement Indemnity. In the event that the breach of a representation and
warranty under this Agreement also constitutes a breach of a representation and
warranty under an Acquisition Agreement, then, in such instance, as a condition
precedent to any Parent Indemnitee making a claim under this Article X and
Article VIII, such Parent Indemnitee must, to the extent available under the
indemnification provisions of the applicable Acquisition Agreement, make a claim
for indemnification under such Acquisition Agreement. Although any Parent
Indemnitee may, immediately after making such claim under such Acquisition
Agreement, make a claim for indemnification under this Article X or Article
VIII, as the case may be, provided Parent Indemnitee must use all commercially
reasonable efforts to obtain a recovery of all the applicable Losses covered by
an Acquisition Agreement Indemnity from the Indemnifying Parties related to such
Acquisition Agreements. In the event that a Parent Indemnitee agrees to settle a
claim relating to the Acquisition Agreements, the maximum liability of the
Indemnifying Party as to such claim will not exceed the amount of such
settlement.
Section 10.8 Subrogation. Upon making any Indemnity Payment, the
Indemnifying Party will, to the extent of such Indemnity Payment, be subrogated
to all rights of the Indemnitee against any third party in respect of the Loss
to which the payment relates; provided, however, that until the Indemnitee
recovers full payment of its Loss, any and all claims of the Indemnifying Party
against any such third party on account of such payment are hereby made
expressly subordinated and subjected in right of payment of the Indemnitee's
rights against such third party. Without limiting the generality of any other
provision hereof, each such Indemnitee and Indemnifying Party will duly execute
upon request all instruments reasonably necessary to evidence and perfect the
above described subrogation and subordination rights.
Section 10.9 Set-Off. Parent Indemnitors shall not have any rights to
set-off any Losses against any payments to be made by such Person pursuant to
this Agreement or any other agreement, except as otherwise expressly provided
herein or therein.
Section 10.10 Exclusive Remedy. Following the Closing, the indemnities
provided for in this Article X , Article VIII and Section 7.14(h) shall be the
sole and exclusive remedies of any of the Indemnitees and their respective
officers, directors, stockholders, employees, Affiliates, agents,
representatives, successors and assigns for any breach of or inaccuracy in any
representation or warranty or any breach, nonfulfillment or default in the
performance of any of the covenants or agreements contained in this Agreement
(but not any such covenants or agreements to the extent they are by their terms
to be performed after the Closing Date). No Indemnitee shall be entitled to a
recision of this Agreement, punitive damages or to any further indemnification
rights or claims of any nature whatsoever in respect thereof (whether by
contract, common law, statute, law, regulation or otherwise), all of which the
parties hereby waive, provided, however, that nothing in this Agreement is
intended to waive any claims or remedies for fraud.
ARTICLE XI
TERMINATION, AMENDMENT AND WAIVER
Section 11.1 Termination. This Agreement may be terminated, and the
transactions contemplated hereby may be abandoned, at any time prior to the
Effective Time, whether prior to or after the Company Stockholders' Approval or
the Parent Shareholders' Approval:
(a) By mutual written agreement of the parties hereto duly authorized
by action taken by or on behalf of their respective Boards of Directors;
(b) By either the Company or Parent upon notification to the
non-terminating party by the terminating party:
(i) at any time after September 7, 2000 (the "Termination Date"),
if the Merger shall not have been consummated on or prior to such date
and such failure to consummate the Merger is not caused by a breach of
this Agreement by the terminating party; provided, however, that if on
such date Parent and the Company and their respective Subsidiaries have
not received all of the approvals required in order to satisfy the
conditions set forth in Section 9.1(f), 9.1(g) or 9.1(h) but all other
conditions to effect the Merger shall be fulfilled or shall be capable
of being fulfilled, then, at the option of either Parent or the Company
(which shall be exercised by written notice), the Termination Date
shall be extended until October 7, 2000;
(ii) if the Company Stockholders' Approval or the Parent
Shareholders' Approval shall not be obtained by reason of the failure
to obtain the requisite vote upon a vote actually held at a meeting of
such stockholders or shareholders, or any adjournment thereof, called
therefor;
(iii) if there has been a material breach of any representation,
warranty, covenant or agreement on the part of the non-terminating
party set forth in this Agreement (determined in all cases as if the
terms "material" or "materially" were not included in any such
representation or warranty), which breach is not curable or, if
curable, has not been cured within thirty (30) days following receipt
by the non-terminating party of notice of such breach from the
terminating party which breach, when taken together with any other
breaches of representations, warranties, covenants and agreements of
the non-terminating party contained in this Agreement, has or could
reasonably be expected to have a Company Material Adverse Effect or a
Parent Material Adverse Effect, as the case may be;
(iv) if the average of the closing middle market quotation of a
Parent Share on the LSE as reported in the Daily Official List of the
London Stock Exchange falls below 254.5p for any 15 Trading Days prior
to the Effective Time; or (v) if any court of competent jurisdiction or
other competent Governmental or Regulatory Authority shall have issued
an order making illegal or otherwise preventing or prohibiting the
Merger and such order shall have become final and nonappealable; or
(c) By Parent if the shares of Dissenting Stock represents 2% or more
of the total shares of Company Common Stock issued and outstanding (without
giving effect to the Stock Options) immediately prior to the Effective Time.
Section 11.2 Effect of Termination. In the event of termination of this
Agreement by either Parent or the Company, this Agreement shall forthwith become
void and there shall be no liability hereunder on the part of the Company,
Parent or Merger Sub or their respective officers or directors; provided,
however, that nothing contained in this Section 11.2 shall relieve any party
hereto from any liability for any breach of this Agreement or for obligations
under Sections 7.7(b), 7.7(c), 7.9 or 11.3.
Section 11.3 Payment of Certain Fees. If this Agreement is terminated
by either party pursuant to Section 11.1(b)(ii) hereof and (x) a bona-fide
Takeover Proposal with respect to Parent has been publicly announced or
communicated to Parent's shareholders after the date of this Agreement and prior
to the Parent Shareholder Meeting and (y) concurrently with or within six (6)
months of the date of such termination, Parent consummates a Takeover Proposal,
then Parent shall pay $8 million to the Company.
ARTICLE XII
GENERAL PROVISIONS
Section 12.1 Notices. All notices and other communications hereunder
shall be in writing and shall be deemed given if delivered personally, sent by
overnight courier or telecopied (with a confirmatory copy sent by overnight
courier) to the parties at the following addresses, or at such other address for
a party as shall be specified by like notice:
(a) if to Parent or Merger Sub, to
c/o Cordiant Communications Group plc
121-141 Westbourne Terrace
London, W2 6JR
Attention: Michael Bungey
Facsimile No.: 011-44-207-262-4300
with copies to:
White & Case LLP
1155 Avenue of the Americas
New York, NY 10036
Attention: Timothy B. Goodell, Esq.
Facsimile No.: (212) 354-8113
and:
Gould & Wilkie LLP
One Chase Manhattan Plaza
New York, New York, 10005
Attention: Michael J. Kopcsak, Esq.
Facsimile No.: (212) 363-2138
and:
Macfarlanes
10 Norwich Street London EC4A 1BD
Attention: Mary Leth, Esq.
Facsimile No.: 011-44-171-831-9607
(b) if to the Company, to
Lighthouse Global Network, Inc.
676 North Michigan Avenue
Chicago, IL 60611
Attention: Kathleen Johnston, Esq.
Facsimile No.: (312) 640-7051
with a copy to:
Skadden Arps Slate Meagher & Flom (Illinois)
333 West Wacker Drive
Suite 2100
Chicago, IL 60606
Attention: Peter C. Krupp, Esq.
Facsimile No.: (312) 407-0411
Section 12.2 Interpretation. When a reference is made in this Agreement
to a Section, such reference shall be to a Section of this Agreement unless
otherwise indicated. The table of contents and headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement. Whenever the words "include,"
"includes" or "including" are used in this Agreement, they shall be deemed to be
followed by the words "without limitation."
Section 12.3 Counterparts. This Agreement may be executed in
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other parties.
Section 12.4 Entire Agreement; No Third-Party Beneficiaries. This
Agreement, including the documents and instruments referred to herein, together
with the Confidentiality Agreement dated March 6, 2000, (a) constitutes the
entire agreement and supersedes all prior agreements and understandings, both
written and oral, among the parties with respect to the subject matter hereof
and (b) except as otherwise provided in Sections 2.9(b) and 7.10, is not
intended to confer upon any Person other than the parties any rights or remedies
hereunder.
Section 12.5 Amendment. This Agreement may be amended by the parties
hereto, by or pursuant to action taken by their respective Boards of Directors,
at any time before or, to the extent permitted by applicable Law, after any
approval of the Merger by the stockholders of the Company. This Agreement may
not be amended except by an instrument in writing signed on behalf of each of
the parties hereto.
Section 12.6 Waiver. At any time prior to the Effective Time, the
parties hereto may (i) extend the time for the performance of any of the
obligations or other acts of the other parties hereto, (ii) waive any
inaccuracies in the representations and warranties contained herein or in any
document delivered pursuant hereto and (iii) waive compliance with any of the
agreements or conditions contained herein which may legally be waived. Any
agreement on the part of a party hereto to any such extension or waiver shall be
valid only if set forth in an instrument in writing signed on behalf of such
party.
Section 12.7 Governing Law. This Agreement shall be governed by, and
construed in accordance with, the substantive laws of the State of New York,
regardless of the laws that might otherwise govern under applicable principles
of conflicts of laws thereof; provided however, that the Merger shall be
governed by the laws of the State of Delaware.
Section 12.8 Assignment. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any of the parties
without the prior written consent of the other parties, except that Merger Sub
may assign, in its sole discretion, any of or all its rights, interests and
obligations under this Agreement to Parent or to any direct or indirect
wholly-owned subsidiary of Parent, but no such assignment shall relieve Parent
or Merger Sub of any of its obligations hereunder. Subject to the preceding
sentence, this Agreement shall be binding upon, inure to the benefit of, and be
enforceable by, the parties and their respective successors and assigns.
Section 12.9 Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of law,
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby are not affected in any manner
materially adverse to any party. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible in a mutually acceptable manner in
order that the transactions be consummated as originally contemplated to the
fullest extent possible.
Section 12.10 Enforcement of this Agreement. The parties agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement were not performed in accordance with their specific terms or were
otherwise breached. It is accordingly agreed that the parties shall be entitled
to an injunction or injunctions to prevent breaches of this Agreement and to
enforce specifically the terms and provisions hereof in any court of the United
States or any state having jurisdiction, this being in addition to any other
remedy to which they are entitled at law or in equity.
Section 12.11 Incorporation of Exhibits. The Company Disclosure Letter,
the Parent Disclosure Letter and all Exhibits, Schedules and annexes attached
hereto and referred to herein are hereby incorporated herein and made a part
hereof for all purposes as if fully set forth herein.
<PAGE>
IN WITNESS WHEREOF, Parent, Merger Sub and the Company have caused this
Agreement to be signed by their respective officers thereunto duly authorized
all as of the date first written above.
CORDIANT COMMUNICATIONS GROUP PLC
By: /s/ Arthur D'Angelo
---------------------------------
Name: Arthur D'Angelo
Title: Chief Financial Officer
LIGHTHOUSE ACQUISITION, INC.
By: /s/ Arthur D'Angelo
---------------------------------
Name: Arthur D'Angelo
Title: President
LIGHTHOUSE GLOBAL NETWORK, INC.
By: /s/ Terence M. Graunke
---------------------------------
Name: Terence M. Graunke
Title: Chairman/Chief Executive
Officer
