SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): May 16, 2000 (May 11, 2000)
Young & Rubicam Inc.
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of incorporation)
001-14093 13-1493710
(Commission File No.) (IRS Employer Identification No.)
285 Madison Avenue
New York, New York 10017
(Address of principal executive offices, including ZIP code)
(212) 210-3000
(Registrant's telephone number, including area code)
(Former name or former address, if changed since last report)
<PAGE>
ITEM 5. OTHER EVENTS.
On May 12, 2000, Young & Rubicam Inc. ("Young & Rubicam") and WPP
Group plc ("WPP") announced that they have entered into a definitive merger
agreement dated as of May 11, 2000 providing for a business combination of Young
& Rubicam and WPP. The transaction is structured as a merger of Young & Rubicam
with a subsidiary of WPP and is subject to the approval of each company's
stockholders and other customary conditions. Subject to the terms of the
definitive merger agreement, at the time of the merger, each share of common
stock, par value $.01 per share, of Young & Rubicam, together with any
associated preferred share purchase rights, will be converted into the right to
receive .835 American Depositary Shares of WPP. Each American Depositary Share
of WPP represents five ordinary shares, of nominal value 10p each, of WPP, and
Young & Rubicam stockholders will be entitled to elect to receive WPP ordinary
shares in lieu of the American Depositary Shares.
Copies of the merger agreement and the press release announcing this
transaction are attached hereto as Exhibits 2.1 and 99.1, respectively, and are
incorporated herein by reference. This summary is qualified by reference to such
exhibits.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL STATEMENTS, AND EXHIBITS
(c) Exhibits.
2.1 Agreement and Plan of Merger, dated as of May 11, 2000,
among WPP Group plc, Young & Rubicam Inc. and a wholly
owned subsidiary of WPP Group plc
99.1 Joint Press Release, dated as May 12, 2000, issued by
WPP Group plc and Young & Rubicam Inc. (incorporated by
reference from the Schedule 14A filed on May 15, 2000 by
the Company)
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Dated: May 16, 2000
YOUNG & RUBICAM INC.
By: /s/ Renee E. Becnel
---------------------------------
Name: Renee E. Becnel
Title: Senior Vice President
-2-
<PAGE>
EXHIBIT LIST
Exhibit Description
No. -----------
---
2.1 Agreement and Plan of Merger, dated as of May 11, 2000, among WPP
Group plc, Young & Rubicam Inc. and a wholly owned subsidiary of
WPP Group plc
99.1 Joint Press Release, dated as May 12, 2000, issued by WPP Group
plc and Young & Rubicam Inc. (incorporated by reference from the
Schedule 14A filed on May 15, 2000 by the Company)
-3-
EXHIBIT 2.1
EXECUTION COPY
Agreement and Plan of Merger
by and among
WPP GROUP PLC,
YOUNG & RUBICAM INC.
and
YORK MERGER CORP.
Dated as of May 11, 2000
<PAGE>
TABLE OF CONTENTS
ARTICLE I THE MERGER........................................................1
Section 1.1. The Merger......................................................1
Section 1.2. Conversion and Exchange of Shares...............................2
Section 1.3. Surrender and Payment...........................................5
Section 1.4. Company Stock Options...........................................8
Section 1.5. Fractional Shares...............................................9
Section 1.6. The Surviving Corporation......................................10
Section 1.7. Lost, Stolen or Destroyed Certificates.........................11
Section 1.8. Appraisal Rights...............................................11
Section 1.9. Company Escrow Account.........................................12
ARTICLE II REPRESENTATIONS AND WARRANTIES..................................13
Section 2.1. Representations and Warranties of the Company..................13
2.1.1. Organization, Good Standing and Qualification..........13
2.1.2. Capital Structure......................................14
2.1.3. Corporate Authority, Approval and Fairness Opinion.....15
2.1.4. Governmental Filings, No Violations....................16
2.1.5. Reports; Financial Statements..........................18
2.1.6. Absence of Certain Changes.............................18
2.1.7. Litigation and Liabilities.............................19
2.1.8. Takeover Statutes......................................20
2.1.9. Brokers and Finders....................................20
2.1.10. Employee Benefit Plans.................................20
2.1.11. Labor and Employment Matters...........................24
2.1.12. Licenses...............................................24
2.1.13. Intellectual Property..................................24
2.1.14. Rights Agreement.......................................25
2.1.15. Continuity of Business.................................25
2.1.16. Compliance with Laws...................................25
2.1.17. Certain Contracts......................................25
2.1.18. Tax Treatment..........................................25
2.1.19. Tax Matters............................................26
Section 2.2. Representations and Warranties of Parent.......................27
2.2.1. Organization, Good Standing and Qualification...........27
2.2.2. Capital Structure......................................27
2.2.3. Corporate Authority and Approval.......................28
2.2.4. Governmental Filings, No Violations....................29
2.2.5. Reports; Financial Statements..........................30
2.2.6. Absence of Certain Changes.............................31
2.2.7. Litigation and Liabilities.............................31
2.2.8. Takeover Statutes......................................32
2.2.9. Brokers and Finders....................................32
2.2.10. Employee Benefit Plans.................................32
2.2.11. Labor and Employment Matters...........................35
2.2.12. Licenses...............................................35
2.2.13. Intellectual Property..................................35
2.2.14. Continuity of Business.................................35
2.2.15. Compliance with Laws...................................36
2.2.16. Certain Contracts......................................36
2.2.17. Tax Treatment..........................................36
2.2.18. Merger Sub's Operations................................36
2.2.19. Tax Matters............................................36
ARTICLE III COVENANTS......................................................37
Section 3.1. Interim Operations of the Company.............................37
Section 3.2. Interim Operations of Parent..................................41
Section 3.3. Acquisition Proposals.........................................42
Section 3.4. Information Supplied..........................................45
Section 3.5. Meetings......................................................47
Section 3.6. Filings; Other Actions; Notification..........................47
Section 3.7. Access........................................................49
Section 3.8. Publicity.....................................................50
Section 3.9. Benefits and Other Matters....................................50
3.9.1. Employee Benefits......................................50
3.9.2. Director and Officer Indemnification and Insurance.....52
3.9.3. Directors and Officers of Parent.......................53
Section 3.10. Expenses......................................................54
Section 3.11. Other Actions by the Company and Parent.......................54
3.11.1. Takeover Statutes.....................................54
3.11.2. Dividends.............................................54
Section 3.12. Trading/Listing Applications; Establishment of Parent
Depositary Shares.............................................55
Section 3.13. Letters of Accountants........................................55
Section 3.14. Agreements of Company Affiliates..............................55
Section 3.15. Tax Representation Letters....................................56
Section 3.16. Section 16(b).................................................56
Section 3.17. Employee and No-Sale Agreements to be Entered into by
Designees.....................................................56
Section 3.18. Headquarters; Name............................................56
3.18.1. Headquarters of the Parent............................56
3.18.2. Headquarters of Advertising Agencies of the Company...56
3.18.3. Name of Parent........................................57
Section 3.19. Convertible Notes.............................................57
Section 3.21 Transition Committee..........................................58
ARTICLE IV CONDITIONS......................................................59
Section 4.1. Conditions to Each Party's Obligation to Effect the Merger.....59
4.1.1. Shareholder Approvals...................................59
4.1.2. Regulatory Consents.....................................59
4.1.3. Laws and Orders.........................................60
4.1.4. Effectiveness of Form F-4...............................60
4.1.5. Listing and Trading.....................................60
Section 4.2. Conditions to Obligations of Parent and Merger Sub.............60
4.2.1. Representations and Warranties of the Company...........60
4.2.2. Performance of Obligations of the Company...............61
4.2.3. Tax Opinion.............................................61
Section 4.3. Conditions to Obligation of the Company........................62
4.3.1. Representations and Warranties of Parent................62
4.3.2. Performance of Obligations of Parent....................62
4.3.3. Tax Opinion.............................................62
ARTICLE V TERMINATION......................................................63
Section 5.1. Termination by Mutual Consent.................................63
Section 5.2. Termination by Either Parent or the Company...................63
Section 5.3. Termination by the Company....................................64
Section 5.4. Termination by Parent.........................................64
Section 5.5. Effect of Termination and Abandonment.........................64
ARTICLE VI MISCELLANEOUS AND GENERAL.......................................67
Section 6.1. Survival......................................................67
Section 6.2 Modification or Amendment.....................................67
Section 6.3. Waiver of Conditions..........................................67
Section 6.4. Failure or Indulgence not Waiver; Remedies Cumulative.........68
Section 6.5. Counterparts..................................................68
Section 6.6. Governing Law; Submission to Jurisdiction.....................68
Section 6.7. Notices.......................................................68
Section 6.8. Entire Agreement..............................................70
Section 6.9 Severability..................................................70
Section 6.10. Interpretation................................................71
Section 6.11. Assignment....................................................71
Section 6.12. Specific Performance..........................................71
<PAGE>
Exhibit A-1 Form of Employment Agreement
Exhibit A-2 List of Company Employees executing an Employment Agreement
Exhibit B-1 Form of No-Sale Agreement
Exhibit B-2 List of Company Employees and/or Stockholders executing a
No-Sale Agreement
Exhibit C Company Designees
Exhibit D Form of Company Affiliate Letter
Exhibit E Form of Parent's Tax Representation Letter
Exhibit F Form of Company's Tax Representation Letter
<PAGE>
Definitions
-----------
TERM SECTION
- ---- -------
2000 Bonus Program...................................................3.9.1.1
Acquisition Proposal...................................................3.3.1
Acquisition Transaction................................................3.1.4
Affiliate..............................................................2.1.1
Agreement...........................................................preamble
Bankruptcy and Equity Exception........................................2.1.3
Certificates...........................................................1.2.5
Closing................................................................1.1.3
Closing Date...........................................................1.1.3
Code................................................................recitals
Common Certificate.....................................................1.2.5
Companies Act..........................................................2.1.1
Company.............................................................preamble
Company Affiliates......................................................3.14
Company Committee Members...............................................3.21
Company Common Shares..................................................1.2.1
Company Convertible Notes..............................................2.1.2
Company Designees......................................................3.9.3
Company Disclosure Schedule..............................................2.1
Company Employee Plans..............................................2.1.10.1
Company Employees...................................................2.1.10.1
Company Employment Agreement........................................2.1.10.1
Company Money Market Preferred Shares..................................1.2.1
Company Officers.......................................................2.1.7
Company Preference Shares..............................................2.1.2
Company Proxy Statement..............................................3.4.1.1
Company Reports........................................................2.1.5
Company Required Consents............................................2.1.4.1
Company Requisite Vote.................................................2.1.3
Company Stock Option...................................................1.4.1
Company Stock Plans....................................................2.1.2
Company Stockholders' Meeting............................................3.5
Confidentiality Agreement..............................................3.3.1
Contracts............................................................2.1.4.2
Convertible Notes Indenture...........................................3.19.1
Deposit Agreement......................................................1.2.4
Depositary.............................................................1.2.4
DGCL...................................................................1.1.1
Disclosure Schedules.....................................................2.2
Dissenting Shares........................................................1.8
Effective Time.........................................................1.1.2
Employment Agreement................................................recitals
ERISA...............................................................2.1.10.1
ERISA Affiliate.....................................................2.1.10.2
Europe Company Stock Options...........................................1.4.1
Excess Shares............................................................1.5
Excess Shares Trust......................................................1.5
Exchange Act...........................................................2.1.1
Exchange Agent.........................................................1.3.1
Excluded Share.........................................................1.2.1
Form F-4.............................................................3.4.1.1
Governmental Consents..................................................4.1.2
Governmental Entity..................................................2.1.4.1
HSR Act..............................................................2.1.4.1
Indemnitees............................................................3.9.2
IP Rights.............................................................2.1.13
Law..................................................................2.1.4.2
Licenses..............................................................2.1.12
LSE......................................................................1.5
Material Adverse Effect................................................2.1.1
Merger..............................................................recitals
Merger Sub..........................................................preamble
NASDAQ...............................................................2.2.4.1
Nominee................................................................1.3.1
Nominee Agreement......................................................1.3.1
Non-Electing Record Holder.............................................1.3.1
Non-Europe Company Stock Options.......................................1.4.1
Non-US Company Designee................................................3.9.3
No-Sale Agreement...................................................recitals
Note Holders..........................................................3.19.1
NYSE...................................................................1.3.4
Orders.................................................................4.1.3
Parent..............................................................preamble
Parent ADRs............................................................1.2.4
Parent Certificates....................................................1.3.1
Parent Circular........................................................3.4.2
Parent Committee Members................................................3.21
Parent Depositary Shares...............................................1.2.2
Parent Designees.......................................................3.9.3
Parent Director Resolutions..............................................3.5
Parent Disclosure Schedule...............................................2.2
Parent Documents.......................................................3.4.2
Parent Employee Plans...............................................2.2.10.1
Parent Employees....................................................2.2.10.1
Parent ERISA Plans..................................................2.2.10.2
Parent Executive Directors.............................................2.2.7
Parent Listing Particulars.............................................3.4.2
Parent Ordinary Shares.................................................1.2.2
Parent Plans........................................................2.2.10.1
Parent Reports.........................................................2.2.5
Parent Required Consents.............................................2.2.4.1
Parent Requisite Resolutions.............................................3.5
Parent Requisite Vote..................................................2.2.3
Parent Shareholders Meeting..............................................3.5
Parties.............................................................recitals
Party...............................................................recitals
Person.................................................................2.1.1
Planning Committee......................................................3.21
Preferred Certificate..................................................1.2.5
Preferred Consideration................................................1.2.3
Regulation...........................................................2.1.4.1
Reports................................................................2.2.5
Representatives........................................................3.3.1
Rights Agreement.......................................................2.1.2
SEC....................................................................1.4.2
Securities Act.........................................................1.4.2
Subsidiary.............................................................2.1.1
Superior Proposal......................................................3.3.1
Surviving Corporation..................................................1.1.1
Takeover Statute.......................................................2.1.8
Tax Representation Letter...............................................3.15
Tax Returns........................................................2.1.20(a)
Taxes..............................................................2.1.20(c)
Termination Date.........................................................5.2
U.K. GAAP..............................................................2.2.5
U.S. GAAP..............................................................2.1.5
UKLA.................................................................2.2.4.1
US/UK Company Employee..............................................2.1.10.3
US/UK Parent Employee Plan..........................................2.2.10.4
<PAGE>
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER, dated as of May 11, 2000 (this
"Agreement"), by and among WPP GROUP PLC, an English public limited company
("Parent"), YOUNG & RUBICAM INC., a Delaware corporation (the "Company"),
and YORK MERGER CORP., a Delaware corporation and a direct, wholly owned
subsidiary of Parent ("Merger Sub").
W I T N E S S E T H :
WHEREAS, the respective Boards of Directors of the Company,
Parent and Merger Sub (each, a "Party" and, together, the "Parties") have
approved this Agreement and deem it advisable and in the best interests of
their respective shareholders to consummate the merger of Merger Sub with
and into the Company on the terms and conditions set forth in this
Agreement (the "Merger");
WHEREAS, for U.S. federal income tax purposes, it is intended
that the Merger qualify as a reorganization under the provisions of Section
368 of the Internal Revenue Code of 1986, as amended (the "Code"), and the
rules and regulations promulgated thereunder;
WHEREAS, concurrently with the execution and delivery of this
Agreement and as a condition and inducement to the willingness of Parent to
enter into this Agreement, Parent and/or the Company are entering into an
employment agreement substantially in the form of the agreement attached as
Exhibit A-1 (each an "Employment Agreement") with each of the employees of
the Company or its Subsidiaries listed on Exhibit A-2 and a sale
restriction/non-compete and non-solicitation agreement substantially in the
form of the agreement attached as Exhibit B-1 (each a "No-Sale Agreement")
with each of the stockholder-employees or former stockholder-employees of
the Company or its subsidiaries listed on Exhibit B-2.
NOW, THEREFORE, in consideration of the mutual representations,
warranties, covenants and agreements contained in this Agreement, the
Parties, intending to be legally bound, agree as follows:
ARTICLE I
THE MERGER
Section 1.1. The Merger.
----------
1.1.1. At the Effective Time (as defined in Section 1.1.2),
Merger Sub shall be merged with and into the Company in accordance with the
Delaware General Corporation Law (the "DGCL"), whereupon the separate
existence of Merger Sub shall cease, and the Company shall be the surviving
corporation in the Merger (the "Surviving Corporation") and shall continue
as a wholly owned subsidiary to be governed by the laws of the State of
Delaware, and the separate corporate existence of the Company, with all its
rights, privileges, immunities, powers, franchises, restrictions,
disabilities and duties, shall continue unaffected by the Merger except as
set forth in this Article I. The Merger shall have the effects specified in
the DGCL.
1.1.2. On the Closing Date (as defined in Section 1.1.3), the
Company and Merger Sub will file a certificate of merger with the Secretary
of State of the State of Delaware and make all other filings or recordings
required by applicable Law (as defined in Section 2.1.4.2) in connection
with the Merger. The Merger shall become effective at the time the
certificate of merger is duly filed with the Secretary of State of the
State of Delaware or at any later time as specified in the certificate of
merger (the "Effective Time").
1.1.3. The consummation of the Merger (the "Closing") shall take
place at 10:00 A.M. (New York City time) at the offices of Fried, Frank,
Harris, Shriver & Jacobson, One New York Plaza, New York, New York, as soon
as practicable, but in any event within three business days after the day
on which the last to be fulfilled or waived of the conditions set forth in
Article IV (other than those conditions that by their nature are to be
fulfilled at the Closing, but subject to the fulfillment or waiver of these
conditions) shall be fulfilled or waived in accordance with this Agreement,
unless otherwise agreed in writing by the Company and Parent (the "Closing
Date").
1.1.4. Parent shall have the right to elect, by written notice to
the Company, to cause Merger Sub to be a second-tier, wholly owned Delaware
subsidiary of Parent; provided that this election shall not adversely
affect the rights of the Company under this Agreement, the benefits to the
Company stockholders of the Merger (including the tax-free nature of the
Merger) or otherwise delay the consummation of the Merger.
Section 1.2. Conversion and Exchange of Shares. At the Effective Time,
by virtue of the Merger:
1.2.1. Each share of Common Stock, par value $.01 per share, of
the Company (including any associated preferred stock purchase rights)
(shares of Common Stock together with the associated rights, the "Company
Common Shares") and each share of Money Market Preferred Stock, par value
$.01 per share, of the Company ("Company Money Market Preferred Shares")
held by the Company as treasury stock or held by Parent or any Subsidiary
of Parent or the Company immediately prior to the Effective Time (each, an
"Excluded Share") shall be canceled and no payment of any consideration
shall be made with respect to these shares.
1.2.2. Subject to Section 1.5, each Company Common Share
outstanding immediately prior to the Effective Time, other than the
Excluded Shares, shall be converted into and shall be canceled in exchange
for the right to receive .835 (the "Exchange Ratio") American Depositary
Shares of Parent ("Parent Depositary Shares"), each Parent Depositary Share
representing five (5) ordinary shares of nominal value 10p each of Parent
("Parent Ordinary Shares"). Each holder of converted and canceled Company
Common Shares shall have the right to elect to receive, in lieu of some or
all of the Parent Depositary Shares the holder has the right to receive
pursuant to the prior sentence, the Parent Ordinary Shares represented by
the Parent Depositary Shares in respect of which this election is made.
1.2.3. Subject to Section 1.8, each Company Money Market
Preferred Share outstanding immediately prior to the Effective Time, other
than Company Money Market Preferred Shares constituting Excluded Shares,
shall be converted into and shall be canceled in exchange for the right to
receive from the Company (solely out of cash of its own on hand or out of
its own borrowings), $115 in cash plus the amount of all dividends accrued
and unpaid in respect of the Company Money Market Preferred Share as of the
Closing Date, without interest thereon (the "Preferred Consideration").
1.2.4. The Parent Depositary Shares issued in connection with the
Merger shall be evidenced by one or more receipts ("Parent ADRs") issued in
accordance with the Amended and Restated Deposit Agreement, dated as of
October 24, 1995, among Parent, Citibank, N.A., as Depositary (the
"Depositary"), and the holders and beneficial owners from time to time of
Parent ADRs, as amended and restated in accordance with this Agreement as
of the date on which the Effective Time occurs (the "Deposit Agreement").
As of the Effective Time, the Company shall be liable for all United
Kingdom stamp duties, stamp duty reserve tax and other similar taxes and
similar levies imposed in connection with the issuance or creation of the
Parent Depositary Shares to be issued in the Merger and any Parent ADRs in
connection therewith and any other United Kingdom stamp duty, stamp duty
reserve tax or other similar United Kingdom governmental charge (or any
interest or penalties thereon) that may be payable by Parent and the
Company pursuant to the Deposit Agreement. The Company shall have the same
obligation with respect to issuance of Parent Depositary Shares and Parent
ADRs in connection with the exercise of any Company Stock Options
outstanding as of the Effective Time that become exercisable for Parent
Depositary Shares in accordance with Section 1.4.1. Subject to Section
1.3.3, no holder of Company Stock Options or Company Common Shares shall be
obligated to pay any fee or other charge or expense to the Depositary, in
connection with the issuance of Parent Ordinary Shares, Parent Depositary
Shares or Parent ADRs pursuant to the Merger or Company Stock Options
outstanding at the Effective Time, or the related Parent Certificates (as
defined in Section 1.3.1).
1.2.5. At the Effective Time, all Company Common Shares and
Company Money Market Preferred Shares shall no longer be outstanding, shall
be canceled and retired and shall cease to exist, and each certificate (a
"Common Certificate") formerly representing any Company Common Shares
(other than Company Common Shares constituting Excluded Shares) shall
thereafter represent only the right to receive Parent Depositary Shares (or
at the election of the holder of canceled Company Common Shares, Parent
Ordinary Shares) as provided in Section 1.2.2 and the right, if any, to
receive cash in lieu of fractional interests in Parent Depositary Shares or
Parent Ordinary Shares, as applicable, pursuant to Section 1.5 and any
distribution or dividend pursuant to Section 1.3.6, in each case without
interest, and each certificate (a "Preferred Certificate" and when referred
to together with Common Certificates, the "Certificates") formerly
representing any Company Money Market Preferred Shares (other than Company
Money Market Preferred Shares constituting Excluded Shares) shall
thereafter represent only the right to receive the Preferred Consideration
with respect to each Company Money Market Preferred Share formerly
represented by the Preferred Certificate. Subject to the contemplated
amendments to the Deposit Agreement set forth in Section 3.20, the Parent
Depositary Shares and Parent Ordinary Shares issued in accordance with this
Article I shall be of the same class and shall have the same rights as the
currently outstanding Parent Depositary Shares or the currently outstanding
Parent Ordinary Shares, as applicable (it being understood that no
dividends in respect of the year ended December 31, 1999 or any other
dividend for which the record date is prior to the date of the Effective
Time shall be paid in respect of the Parent Depositary Shares or Parent
Ordinary Shares issued pursuant to this Article I).
1.2.6. Each share of common stock of Merger Sub, par value $0.01
per share, outstanding immediately prior to the Effective Time shall be
converted into one share of common stock of the Surviving Corporation.
1.2.7. In the event that, subsequent to the date of this
Agreement but prior to the Effective Time, the Company changes the number
of Company Common Shares or Company Money Market Preferred Shares, or
Parent changes the number of Parent Ordinary Shares, issued and
outstanding, in each case as a result of a stock split, reverse stock
split, stock dividend, recapitalization or redenomination of share capital,
or Parent changes the number of Parent Ordinary Shares represented by a
Parent Depositary Share, the Exchange Ratio and/or the Preferred
Consideration, as applicable, and other items dependent thereon shall be
appropriately adjusted.
Section 1.3. Surrender and Payment.
---------------------
1.3.1. Prior to the Effective Time, Parent shall appoint an agent
reasonably acceptable to the Company as exchange agent (the "Exchange
Agent") in connection with the Merger for the purpose of exchanging Common
Certificates for Parent ADRs or for certificates representing Parent
Ordinary Shares ("Parent Certificates"), as applicable, and cash in lieu of
fractional Parent Depositary Shares and Parent Ordinary Shares, as
applicable, in accordance with Section 1.5, and exchanging Preferred
Certificates for the Preferred Consideration. The Company shall act as
agent for each holder of record of Company Common Shares as of the
Effective Time that does not elect to receive Parent Ordinary Shares in
lieu of Parent Depositary Shares (each, a "Non-Electing Record Holder") and
shall enter into an agreement (the "Nominee Agreement") with Parent and the
Exchange Agent. Parent shall issue the Parent Ordinary Shares that will
represent the Parent Depositary Shares issuable pursuant to the Merger in
registered form to the Exchange Agent (or its nominee), as nominee and
agent for and on behalf of the Non-Electing Record Holders (the "Nominee")
for the issuance of Parent Depositary Shares in respect of Company Common
Shares for which Common Certificates have been properly delivered to the
Exchange Agent and no election has been made to receive Parent Ordinary
Shares, subject to the terms and conditions of this Agreement and the
Nominee Agreement. The Parent Ordinary Shares in registered form held by
the Nominee of the Non-Electing Record Holders shall be deposited by the
Nominee or on its behalf with the Depositary (or as it may direct) as and
when required for the delivery of Parent Depositary Shares in accordance
with this Article I. To the extent required, the Exchange Agent will
requisition from the Depositary, from time to time, that number of Parent
Depositary Shares, in any denominations as the Exchange Agent shall
specify, as are issuable in respect of Company Common Shares of
Non-Electing Record Holders for which Common Certificates have been
properly delivered to the Exchange Agent. Parent shall deposit with the
Exchange Agent, from time to time that number of Parent Certificates, in
any denominations as the Exchange Agent shall specify, as are issuable in
respect of Company Common Shares for which Common Certificates have been
properly delivered to the Exchange Agent, and an election has been made to
receive Parent Ordinary Shares. Parent shall also from time to time deposit
or cause to be deposited with the Exchange Agent U.S. dollars in an amount
sufficient to provide the Exchange Agent with the cash to fund payments to
be made pursuant to Section 1.3.6. The Company shall maintain, pursuant to
Section 1.9, sufficient funds in an escrow account with the Exchange Agent
to provide the Exchange Agent with the cash to fund payments in respect of
the Preferred Consideration.
1.3.2. Promptly after the Effective Time, the Surviving
Corporation shall send, or shall cause the Exchange Agent to send, to each
holder of record as of the Effective Time of Company Common Shares and/or
Company Money Market Preferred Shares (other than holders of shares that
constitute Excluded Shares) a letter of transmittal (which shall with
respect to holders of Company Common Shares also serve as a form of
election), in a form upon which the Company and Parent may reasonably
agree, for use in effecting delivery of Certificates to the Exchange Agent.
This letter of transmittal shall provide each holder of record of Company
Common Shares with the option to elect to receive Parent Ordinary Shares in
lieu of Parent Depositary Shares. Each holder of Company Common Shares or
Company Money Market Preferred Shares that have been converted in the
Merger into the right to receive the consideration set forth in Sections
1.2.2 and 1.2.3, as applicable, shall, upon surrender to the Exchange Agent
of a Certificate or Certificates, together with a properly completed letter
of transmittal covering the Company Common Shares or Company Money Market
Preferred Shares, as applicable, represented by the Certificate or
Certificates, receive (i) the number of whole Parent Depositary Shares (or,
if an election is duly made therefor, the number of whole Parent Ordinary
Shares) into which all of the Company Common Shares, represented by the
holder's Common Certificate or Common Certificates, are converted in
accordance with Section 1.2.2, (ii) a check in an amount of U.S. dollars
(after giving effect to any required tax withholdings) equal to (A) any
cash in lieu of fractional interests in shares to be paid pursuant to
Section 1.5, plus (B) any cash dividends or other distributions that the
holder has the right to receive pursuant to Section 1.3.6 and/or (iii) a
check in an amount of U.S. dollars (after giving effect to any required tax
withholdings) equal to the aggregate amount of the Preferred Consideration
which all of the Company Money Market Preferred Shares, represented by the
holder's Preferred Certificate or Preferred Certificates, are converted
pursuant to Section 1.2.3. Until so surrendered, each Common Certificate
shall, after the Effective Time, represent for all purposes only the right
to receive the number of whole Parent Depositary Shares and/or Parent
Ordinary Shares, as applicable, into which the Company Common Shares
represented by that Common Certificate are converted in accordance with
Section 1.2.2 and the applicable amounts provided in the foregoing clause
(ii) and each Preferred Certificate shall, after the Effective Time,
represent for all purposes only the right to receive the Preferred
Consideration into which the Company Money Market Preferred Shares
represented by that Preferred Certificate are converted in accordance with
Section 1.2.3.
1.3.3. If any Parent Depositary Shares, Parent Ordinary Shares or
Preferred Consideration, as applicable, are to be issued or paid to a
person other than the registered holder of Company Common Shares or Company
Money Market Preferred Shares, as applicable, represented by a Certificate
or Certificates surrendered with respect thereto, it shall be a condition
to this issuance or payment that the Certificate or Certificates so
surrendered shall be properly endorsed or otherwise be in proper form for
transfer and that the Person (as defined in Section 2.1.1) requesting this
issuance or payment shall pay to the Exchange Agent any transfer or other
taxes required as a result of this issuance or payment to a Person other
than the registered holder of these Company Common Shares or Company Money
Market Preferred Shares, as applicable, or establish to the satisfaction of
the Exchange Agent that this tax has been paid or is not payable.
1.3.4. The stock transfer books of the Company shall be closed at
the close of trading on the New York Stock Exchange ("NYSE") on the day
prior to the Effective Time, and thereafter there shall be no further
registration of transfers of Company Common Shares or Company Money Market
Preferred Shares that were outstanding prior to the Effective Time. After
the Effective Time, Certificates presented to the Surviving Corporation for
transfer shall be canceled and exchanged for the consideration provided
for, and in accordance with the procedures set forth, in this Article I.
1.3.5. Any Parent Ordinary Shares or Parent Depositary Shares to
be issued in respect of Company Common Shares (and any cash in lieu of
fractional interests in Parent Ordinary Shares or Parent Depositary Shares
to be paid pursuant to Section 1.5, plus any cash dividend or other
distribution that a former holder of Company Common Shares has the right to
receive pursuant to Section 1.3.6) and any Preferred Consideration to be
paid in respect of Company Money Market Preferred Shares, in each case
pursuant to this Article I, that remains unclaimed by any former holder of
Company Common Shares or Company Money Market Preferred Shares six months
after the Effective Time shall be held by the Exchange Agent (or a
successor agent appointed by Parent) or shall be delivered to the
Depositary upon the instruction of Parent and held by the Depositary, in
either case subject to the instruction of Parent in an account or accounts
designated for this purpose. Parent shall not be liable to any former
holder of Company Common Shares or Company Money Market Preferred Shares
for any securities delivered or any amount paid by the Depositary, the
Exchange Agent or its nominee, as the case may be, to a public official
pursuant to applicable abandoned property laws. Any cash remaining
unclaimed by holders of Company Common Shares or Company Money Market
Preferred Shares two years after the Effective Time (or any earlier date
immediately prior to that time as this cash would otherwise escheat to or
become property of any Governmental Entity (as defined in Section 2.1.4.1))
or as is otherwise provided by applicable Law shall, to the extent
permitted by applicable Law, become the property of the Surviving
Corporation or Parent, as Parent may determine (provided that unclaimed
Preferred Consideration shall become property of the Surviving
Corporation).
1.3.6. No dividends or other distributions with respect to Parent
Depositary Shares and Parent Ordinary Shares issuable with respect to the
Company Common Shares shall be paid to the holder of any unsurrendered
Common Certificates until those Common Certificates are surrendered as
provided in this Article I. Upon surrender, there shall be issued and/or
paid to the holder of the Parent Depositary Shares or Parent Ordinary
Shares issued in exchange therefor, without interest, (A) at the time of
surrender, the dividends or other distributions payable with respect to
those Parent Depositary Shares and Ordinary Depositary Shares with a record
date on or after the date of the Effective Time and a payment date on or
prior to the date of this surrender and not previously paid and (B) at the
appropriate payment date, the dividends or other distributions payable with
respect to those Parent Depositary Shares and Parent Ordinary Shares with a
record date on or after the date of the Effective Time but with a payment
date subsequent to surrender. For purposes of dividends or other
distributions in respect of Parent Depositary Shares and Parent Ordinary
Shares, all Parent Depositary Shares and Parent Ordinary Shares to be
issued and delivered pursuant to the Merger shall be deemed issued and
outstanding as of the Effective Time, and holders of these shares shall not
be entitled to receive any dividend in respect of the calendar year 1999 or
any other dividend in respect of which the record date is prior to the date
of the Effective Time.
Section 1.4. Company Stock Options.
---------------------
1.4.1. At the Effective Time, all employee and director stock
options granted to current or former employees or directors (and the Stock
Options listed in Section 2.1.10 of the Company Disclosure Schedule as an
exception to the representation set forth in Section 2.1.10.6 of this
Agreement) to purchase Company Common Shares (each, a "Company Stock
Option") which are then outstanding and unexercised shall cease to
represent a right to acquire Company Common Shares and (x) Company Stock
Options held by a Person whose primary place of residence or employment
with the Company or any of its Subsidiaries is in Europe ("Europe Company
Stock Options") shall be converted automatically into options to acquire
Parent Ordinary Shares as provided below and (y) all other Company Stock
Options ("Non-Europe Company Stock Options") shall be converted
automatically into options to acquire Parent Depositary Shares as provided
below, and Parent shall assume each Company Stock Option subject to the
terms of any of the Company Stock Plans (as defined in Section 2.1.2) and
the agreements evidencing grants thereunder. The Board of Directors of the
Company and Parent shall take, or shall cause their committees to take, all
action necessary to effectuate the foregoing. From and after the Effective
Time, (i) the number of Parent Ordinary Shares purchasable upon exercise of
each outstanding Europe Company Stock Option shall be equal to the product
of (x) the number of Company Common Shares that were purchasable under that
Europe Company Stock Option immediately prior to the Effective Time and (y)
five (5) times the Exchange Ratio (subject to adjustment as provided in
Section 1.2.7), rounded up or down to the nearest whole Parent Ordinary
Share, and (ii) the exercise price per Parent Ordinary Share under each
Europe Company Stock Option shall be obtained by dividing (x) the exercise
price per Company Common Share of each Europe Company Stock Option
immediately prior to the Effective Time by (y) five times the Exchange
Ratio (subject to adjustment as provided in Section 1.2.7), rounded up or
down to the nearest cent. From and after the Effective Time, (i) the number
of Parent Depositary Shares purchasable upon exercise of each outstanding
Non-Europe Company Stock Option shall be equal to the product of (x) the
number of Company Common Shares that were purchasable upon exercise of that
Non-Europe Company Stock Option immediately prior to the Effective Time and
(y) the Exchange Ratio (subject to adjustment as provided in Section
1.2.7), rounded up or down to the nearest whole Parent Depositary Share,
and (ii) the exercise price per Parent Depositary Share under each
Non-Europe Company Stock Option shall be obtained by dividing (x) the
exercise price per Company Common Share of each Non-Europe Company Stock
Option immediately prior to the Effective Time by (y) the Exchange Ratio
(subject to adjustment as provided in Section 1.2.7), rounded up or down to
the nearest cent. Notwithstanding the foregoing, the number of Parent
Ordinary Shares or Parent Depositary Shares, as applicable, and the
exercise price per Parent Ordinary Share or Depositary Share, as
applicable, of each Europe Company Stock Option or Non-Europe Company Stock
Option, as applicable, which is intended to be an "incentive stock option"
(as defined in Section 422 of the Code) shall be adjusted in accordance
with the requirements of Section 424 of the Code.
1.4.2. Prior to the Effective Time, Parent shall reserve for
issuance and shall make available for issuance in accordance with Section
1.4.1 the number of Parent Depositary Shares and Parent Ordinary Shares
necessary to satisfy Parent's obligations under Section 1.4.1. No later
than the Effective Time, Parent shall file with the U.S. Securities and
Exchange Commission (the "SEC") a registration statement on an appropriate
form or a post-effective amendment to a previously filed registration
statement under the Securities Act of 1933, as amended (the "Securities
Act"), with respect to the Parent Ordinary Shares and Parent Depositary
Shares which are subject to the Non-Europe Company Stock Options as
provided in Section 1.4.1, and shall use reasonable best efforts to
maintain the current status of the prospectus contained therein, as well as
comply with any applicable state securities or "blue sky" laws, for so long
as those options remain outstanding.
Section 1.5. Fractional Shares. Each former holder of Company
Common Shares otherwise entitled to receive a fractional interest in a
Parent Depositary Share or Parent Ordinary Share will be entitled to
receive in accordance with the provisions of this Section 1.5 a cash
payment in lieu of that fractional interest in a Parent Depositary Share or
Parent Ordinary Share representing the holder's proportionate interest in
the net proceeds from the sale by the Exchange Agent on behalf of all
holders otherwise entitled to fractional interests of the aggregate of (x)
the Parent Ordinary Shares (and fractional interests therein) underlying
the fractional interests in Parent Depositary Shares, and (y) the
fractional interests in Parent Ordinary Shares, in each case which would
otherwise be issued pursuant to the Merger (the "Excess Shares"). The sale
of the Excess Shares by the Exchange Agent shall be executed through the
London Stock Exchange Limited (the "LSE"). The Exchange Agent shall convert
or cause to be converted by sale or in any other manner that it may
determine, the proceeds of the sale of the Excess Shares into U.S. dollars.
Until the net proceeds of the sale of the Excess Shares have been
distributed to the former holders of Company Common Shares, the Exchange
Agent will hold the proceeds in trust for those former holders (the "Excess
Shares Trust"). Commissions, transfer taxes and other out-of-pocket
transaction costs, including the expenses and compensation, of the Exchange
Agent incurred in connection with the sale of the Excess Shares shall be at
the Company's expense for which, pursuant to Section 1.9, the Company shall
maintain sufficient funds in an escrow account and shall not be paid from
cash held in the Excess Shares Trust. The Exchange Agent shall determine
the portion of the Excess Shares Trust to which each former holder of
Company Common Shares shall be entitled, if any, by multiplying the amount
of the aggregate net proceeds comprising the Excess Shares Trust by a
fraction the numerator of which shall be the number of Parent Ordinary
Shares (and/or the amount of fractional interest therein) underlying the
fractional interest in a Parent Depositary Share and/or the fractional
interest in a Parent Ordinary Share, as applicable, to which the former
holder would otherwise be entitled and the denominator of which is the
aggregate number of Parent Ordinary Shares (and fractional interests
therein) underlying the aggregate amount of fractional interests in Parent
Depositary Shares plus the aggregate amount of fractional interests in
Parent Ordinary Shares to which all former holders of Company Common Shares
would otherwise be entitled. As soon as practicable after the determination
of the amount of cash, if any, to be paid to former holders of Company
Common Shares in lieu of fractional interests in a Parent Ordinary Share or
a Parent Depositary Share, the Exchange Agent shall pay those amounts to
the former holders without interest.
Section 1.6. The Surviving Corporation.
-------------------------
1.6.1. The certificate of incorporation of the Company in effect
at the Effective Time shall be the certificate of incorporation of the
Surviving Corporation until amended in accordance with applicable Law.
1.6.2. The by-laws of the Company in effect at the Effective Time
shall be the by-laws of the Surviving Corporation until amended in
accordance with applicable Law.
1.6.3. 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) subject to Section 3.9.3,
the officers of the Company at the Effective Time shall be the officers of
the Surviving Corporation.
Section 1.7. Lost, Stolen or Destroyed Certificates. In the event
any Certificate shall have been lost, stolen or destroyed, upon the
holder's compliance with the replacement requirements established by the
Exchange Agent, including, if necessary, the posting by the holder of a
bond in customary amount as indemnity against any claim that may be made
against it with respect to the Certificate, the Exchange Agent will issue
and deliver in exchange for the lost, stolen or destroyed Certificate the
applicable number of whole Parent Depositary Shares or whole Parent
Ordinary Shares (including cash in lieu of fractional shares in accordance
with Section 1.5), and any unpaid dividends or other distributions
deliverable pursuant to Section 1.3.6 in respect of Company Common Shares
or the Preferred Consideration payable in respect of the Company Money
Market Preferred Shares, as applicable, represented by the Certificate
pursuant to this Agreement.
Section 1.8. Appraisal Rights. In accordance with Section 262 of
the DGCL, no appraisal rights shall be available to holders of Company
Common Shares in connection with the Merger. Holders of Company Money
Market Preferred Shares which are issued and outstanding immediately prior
to the Effective Time and which are held by a holder who has not voted
those shares in favor of the approval and adoption of this Agreement, who
shall have delivered a written demand for appraisal of those shares in
accordance with the DGCL and who, as of the Effective Time, shall not have
effectively withdrawn or lost this right to appraisal (the "Dissenting
Shares") shall be entitled to those rights (but only those rights) as are
granted by Section 262 of the DGCL. Each holder of Dissenting Shares who
becomes entitled to payment for those Dissenting Shares pursuant to Section
262 of the DGCL shall receive payment from the Surviving Corporation in
accordance with the DGCL; provided, however, that (i) if any holder of
Dissenting Shares shall have failed to establish their entitlement to
appraisal rights as provided in Section 262 of the DGCL, (ii) if any holder
of Dissenting Shares shall have effectively withdrawn the holder's demand
for appraisal of the holder's shares or lost the holder's right to
appraisal and payment for the holder's shares under Section 262 of the DGCL
or (iii) if neither any holder of Dissenting Shares nor the Surviving
Corporation shall have filed a petition demanding a determination of the
value of all Dissenting Shares within the time provided in Section 262 of
the DGCL, the holder shall forfeit the right to appraisal of those
Dissenting Shares and each Dissenting Share shall be exchanged pursuant to
Section 1.2.3 of this Agreement. The Company shall give Parent prompt
notice of any demands received by the Company for appraisal of Company
Money Market Preferred Shares and Parent shall have the right to conduct
all negotiations and proceedings with respect to those demands. Any and all
amounts paid by the Company to holders of Dissenting Shares shall be paid
by the Company solely out of cash of its own on hand or out of its own
borrowings. In no event shall the Parent or its Affiliates provide directly
or indirectly any funds to the Company in respect of payments to holders of
Dissenting Shares or the repayment of any of these borrowings.
Section 1.9. Company Escrow Account. No later than two (2)
business days before Closing, the Company shall establish an escrow account
with the Exchange Agent consisting of an adequate amount of cash from the
Company's working capital to fund the Company's obligations under (i)
Section 1.2.4 with respect to stamp duties, stamp duty reserve taxes and
other similar taxes and similar levies, (ii) Section 1.3 with respect to
the Preferred Consideration, (iii) Section 1.5 with respect to commissions,
transfer taxes and other out-of-pocket transaction costs of the Exchange
Agent incurred in connection with the sale of the Excess Shares, (iv)
Section 1.8 with respect to Dissenting Shares and (v) any other expense
that counsel to Parent and counsel to Company reasonably agree relate to
the Company's stockholders.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
Section 2.1. Representations and Warranties of the Company. Except
as disclosed in the Company Reports (as defined in Section 2.1.5) filed
with the SEC prior to the date of this Agreement and except as set forth in
the corresponding sections of the Company's disclosure schedule to this
Agreement (the "Company Disclosure Schedule"), the Company represents and
warrants to Parent as follows:
2.1.1. Organization, Good Standing and Qualification. Each of the
Company and its Subsidiaries is duly organized, validly existing and in
good standing (with respect to jurisdictions that recognize the concept of
good standing) under the Laws of its respective jurisdiction of
organization and has all requisite corporate or similar power and
authority, and all government licenses, authorizations, consents and
approvals required to own, operate and lease its properties and assets and
to carry on its business as presently conducted and is duly qualified to do
business and is in good standing (with respect to jurisdictions that
recognize the concept of good standing) in each jurisdiction where the
ownership, operation or leasing of its assets or properties or conduct of
its business requires qualification, except where the failure to be so
organized, qualified or in good standing (with respect to jurisdictions
that recognize the concept of good standing) or to have this power or
authority, would not, individually or in the aggregate, have a Material
Adverse Effect (as defined below) on the Company. The Company has made
available to Parent complete and correct copies of the Company's
certificate of incorporation and by-laws, in each case as amended and as in
effect as of the date of this Agreement. As used in this Agreement, the
term (i) "Subsidiary" means, with respect to the Company, any entity,
whether incorporated or unincorporated, in which the Company owns, directly
or indirectly, more than fifty percent of the securities or other ownership
interests having by their terms ordinary voting power to elect more than
fifty percent of the directors or other persons performing similar
functions, or the management and policies of which the Company otherwise
has the power to direct, and, with respect to Parent, any body corporate
which is a subsidiary or subsidiary undertaking, in each case within the
meaning of the Companies Act 1985 of the United Kingdom, as amended (the
"Companies Act"); (ii) "Material Subsidiaries" when used in reference to
the Company means Young & Rubicam Denmark Group A/S (Denmark), Young &
Rubicam Development (Holdings) Limited, and Young & Rubicam International
Group B.V. (Netherlands) and Subsidiaries of the Company that are
"Significant Subsidiaries" (as defined in Rule 1-02(w) of Regulation S-X
promulgated under the Exchange Act); and when used in reference to Parent
means all Subsidiaries of Parent that are Significant Subsidiaries; (iii)
"Material Adverse Effect" on or with respect to Parent or the Company, as
the case may be, means a material adverse effect on the business,
properties, results of operations or financial condition of Company and its
Subsidiaries, taken as a whole, or the Parent and its Subsidiaries, taken
as a whole, as the case may be; provided, however, that the events,
consequences or conditions arising out of or caused by the following shall
not be deemed to be a Material Adverse Effect: (a) the announcement of this
Agreement and the Merger, including any termination, or reduction in,
client business due to the announcement or completion of the Merger or the
identity of the parties to this Agreement; (b) with respect to the clients
listed in Section 2.1.1 of the Company Disclosure Schedule (in the case or
the Company) or in Section 2.2.1 of the Parent Disclosure Schedule (as
defined in Section 2.2) (in the case of Parent), the impact of any change
in client business publicly announced by Parent or the Company, as
applicable, or any client prior to the date of this Agreement; or (c)
general changes in economic conditions in the broader economy or the
advertising industry as a whole (except to the extent that any change
materially disproportionately affects Parent and its Subsidiaries, on the
one hand, or the Company and its Subsidiaries, on the other hand); (iv)
"Person" shall mean any individual, corporation, general or limited
partnership, limited liability or unlimited liability company, joint
venture, estate, trust, association, organization, Governmental Entity or
other entity of any kind or nature; and (v) "Affiliate" shall have the
meaning specified in Rule 12b-2 of the Securities Exchange Act of 1934, as
amended (the "Exchange Act").
2.1.2. Capital Structure. (a) As of the date of this Agreement,
the authorized capital stock of the Company consists of 250,000,000 Company
Common Shares, of which 72,170,192 Company Common Shares were issued and
outstanding as of the close of business on May 1, 2000, and 10,000,000
shares of Preference Stock, par value $.01 per share (the "Company
Preference Shares"). Of the authorized Company Preference Shares, (i)
2,500,000 shares have been designated as Cumulative Participating Junior
Preferred Stock, of which no shares are issued or outstanding as of the
date of this Agreement but of which all have been reserved for issuance
pursuant to the Rights Agreement, dated May 1, 1998, between the Company
and The Bank of New York, as rights agent (the "Rights Agreement"), and
(ii) 50,000 shares have been designated as Company Money Market Preferred
Shares, of which 87 shares are issued and outstanding as of the date of
this Agreement. All of the outstanding Company Common Shares and Company
Preference Shares have been duly authorized and validly issued and are
fully paid and nonassessable. As of the date of this Agreement, the Company
has no Company Common Shares or Company Preference Shares reserved for or
otherwise subject to issuance, except (i) no more than 25,306,605 Company
Common Shares subject to issuance pursuant to Company Stock Options
outstanding as of the date of this Agreement (and the weighted average
exercise price of those Company Stock Options and the plans or agreements
pursuant to which those Company Stock Options have been issued (the
"Company Stock Plans") are set forth in Section 2.1.2 of the Company
Disclosure Schedule) and (ii) no more than 3,918,900 Company Common Shares
subject to issuance upon conversion of the Company's 3% convertible
subordinated notes due January 15, 2005 ("Company Convertible Notes"). The
Company Stock Options outstanding as of the date of this Agreement (and
identified in Section 2.1.2 of the Company Disclosure Schedule) exercisable
for up to 2,200,000 of the Company Common Shares referenced in clause (i)
of the prior sentence will not vest or become exercisable as a result of
the execution of this Agreement or the consummation of the transactions
contemplated by this Agreement. From the close of business on May 1, 2000
until the date of this Agreement, the Company has not issued, granted or
sold any Company Common Shares other than pursuant to the exercise of
Company Stock Options.
(b) Each of the outstanding shares of capital stock or other
ownership interests of each of the Company's Subsidiaries that constitute a
Significant Subsidiary is duly authorized, validly issued, fully paid and
nonassessable and owned by the Company or a direct or indirect wholly owned
Subsidiary of the Company, in each case free and clear of any lien, pledge,
security interest, claim or other encumbrance, except as would not,
individually or in the aggregate, have a Material Adverse Effect on the
Company. Except as set forth in Section 2.1.2(a), as of the date of this
Agreement, there are no preemptive or other outstanding rights, options,
warrants, conversion rights, stock appreciation rights, redemption rights,
repurchase rights, agreements, arrangements, calls, commitments or rights
of any kind which obligate the Company or any of its Material Subsidiaries
to issue or sell any shares of capital stock or other securities of the
Company or any of its Material Subsidiaries or any securities or
obligations convertible or exchangeable into or exercisable for, or giving
any Person a right to subscribe for or acquire from the Company or any of
its Material Subsidiaries, any securities of the Company or any of its
Material Subsidiaries, and no securities or obligations evidencing any
rights are authorized, issued or outstanding. Except as set forth in
Section 2.1.2(a), as of the date of this Agreement, the Company does not
have outstanding any bonds, debentures, notes or other obligations the
holders of which have the right to vote (or which are convertible,
exchangeable or exercisable for or into securities having the right to
vote) with the stockholders of the Company on any matter.
2.1.3. Corporate Authority, Approval and Fairness Opinion. The
Company has all requisite corporate power and authority to execute and
deliver this Agreement, to perform its obligations under this Agreement and
to consummate the Merger and the other transactions contemplated by this
Agreement, subject only to the adoption of this Agreement by the
affirmative vote of the holders of record not less than a majority of all
of the votes entitled to be cast by holders of Company Common Shares and
Company Money Market Preferred Shares (the "Company Requisite Vote"). Each
Company Common Share entitles its record holder to one vote per share, and
each Company Money Market Preferred Share entitles its record holder to
one-tenth of a vote per share, in connection with a vote of the
stockholders of the Company with respect to the adoption of this Agreement.
The execution and delivery of this Agreement, the performance by the
Company of its obligations under this Agreement and the consummation by the
Company of the Merger and the other transactions contemplated by this
Agreement have been duly authorized by all necessary corporate action on
the part of the Company, subject only to adoption of the Merger Agreement
by the stockholders of the Company pursuant to the Company Requisite Vote,
and assuming the due authorization, execution and delivery of this
Agreement by Parent and, to the extent applicable, Merger Sub, this
Agreement constitutes the valid and binding agreement of the Company
enforceable against the Company in accordance with its terms, subject to
bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and
similar laws of general applicability relating to or affecting creditors'
rights and to general equity principles (the "Bankruptcy and Equity
Exception"). The Board of Directors of the Company has adopted resolutions
(A) approving this Agreement, the Merger and the other transactions
contemplated by this Agreement, (B) declaring the advisability of this
Agreement, (C) determining that this Agreement, the Merger and the other
transactions contemplated by this Agreement are in the best interests of
the Company's stockholders and (D) subject to Section 3.3.5, recommending
that the Company's stockholders vote in favor of the adoption of this
Agreement at the Company Stockholders Meeting. The Board of Directors of
the Company has received the opinion of its financial advisors, Morgan
Stanley & Co. Incorporated and Bear Stearns and Co. Inc., to the effect
that, as of the date of this Agreement, the Exchange Ratio is fair to the
holders of Company Common Shares from a financial point of view.
2.1.4. Governmental Filings, No Violations.
-----------------------------------
2.1.4.1. Other than the necessary filings, notices,
approvals, confirmations, consents, declarations and/or decisions (A)
pursuant to Sections 1.1.2 and 3.4, (B) under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended (the "HSR Act"), the
Exchange Act and the Securities Act, (C) with and from the European
Commission, in accordance with Council Regulation (EEC) No 4064/89 as
amended (the "Regulation"), (D) with and from the competent authority of
any member state of the European Union to which any of the transactions
contemplated by this Agreement is referred pursuant to Article 9 of the
Regulation (E) or under other antitrust laws, competition or other similar
rules, regulations and judicial doctrines of jurisdictions outside of the
United States and the European Union, and (F) to comply with the rules and
regulations of the NYSE and the NASDAQ (as defined in Section 2.2.4.1)
(these filings, notices, approvals, confirmations, consents, declarations
and/or decisions to be made, given or obtained by the Company being, if
any, the "Company Required Consents"), no filings, notices, declarations
and/or decisions are required to be made by the Company or any of its
Subsidiaries with, nor are any approvals or other confirmations or consents
required to be obtained by the Company or any of its Subsidiaries from, any
governmental or regulatory (including stock exchange) authority, agency,
court, commission, body or other governmental entity (each, a "Governmental
Entity"), in connection with the execution and delivery by the Company of
this Agreement and the performance by the Company of its obligations under
this Agreement and the consummation by the Company of the Merger and the
other transactions contemplated by this Agreement, except those the failure
of which to make, give or obtain, individually or in the aggregate, would
not have a Material Adverse Effect on the Company or prevent, materially
delay or materially impair the Company's ability to consummate the Merger
or any of the other transactions contemplated by this Agreement.
2.1.4.2. The execution, delivery and performance of this
Agreement by the Company do not, and the performance of the Company of its
obligations under this Agreement and the consummation by the Company of the
Merger and the other transactions contemplated by this Agreement will not,
constitute or result in (A) a breach or violation of, or a default under,
the Company's certificate of incorporation or by-laws (as amended from time
to time), (B) subject to making, giving or obtaining all necessary filings,
notices, approvals, confirmations, declarations and/or decisions specified
by Section 2.1.4.1, a breach or violation of, or a default under, the
acceleration of any obligations or the creation of a lien, pledge, security
interest, right of purchase, sale or termination or other encumbrance on
the assets of the Company or any of its Subsidiaries (with or without
notice, lapse of time or both) pursuant to any agreement, lease, license,
contract, note, mortgage, indenture, arrangement or other obligation
("Contracts") binding upon the Company or any of its Subsidiaries or any
law, ordinance, regulation, judgment, order, decree, injunction,
arbitration, award, license or permit of any Governmental Entity ("Law") or
governmental or non-governmental permit or license to which the Company or
any of its Subsidiaries is subject, or (C) any change in the rights or
obligations of any party under any of these Contracts except, in the case
of clause (B) or (C) above, for any breach, violation, default,
acceleration, creation or change that, individually or in the aggregate,
would not have a Material Adverse Effect on the Company or prevent,
materially delay or materially impair the Company's ability to consummate
the Merger or any of the other transactions contemplated by this Agreement.
2.1.5. Reports; Financial Statements. Since December 31, 1997,
the Company has filed with the SEC all material forms, statements, reports
and documents (including all exhibits, post-effective amendments and
supplements thereto) required to be filed by it under each of the
Securities Act, the Exchange Act and the respective rules and regulations
thereunder (collectively, the "Company Reports"). As of their respective
dates, the Company Reports did not contain any untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements made therein, in the light of
the circumstances under which they were made, not misleading. Each of the
consolidated balance sheets included in or incorporated by reference into
the Company Reports (including the related notes and schedules) fairly
presents, in all material respects, the financial position of the Company
and its subsidiaries as of its date and each of the related consolidated
statements of operations, cash flows and charges in equity (deficit)
included in or incorporated by reference into the Company Reports
(including any related notes and schedules) fairly presents, in all
material respects, the results of operations and cash flows of the Company
and its subsidiaries for the periods set forth therein (subject, in the
case of unaudited statements, to notes and normal year-end audit
adjustments that will not be material in amount or effect), in each case in
conformity with generally accepted accounting principles in the United
States ("U.S. GAAP") consistently applied during the periods involved
except as may be noted therein.
2.1.6. Absence of Certain Changes. Except as expressly
contemplated by this Agreement, since December 31, 1999, the Company and
its Subsidiaries have conducted their respective businesses only in, and
have not engaged in any material transaction other than in accordance with,
the ordinary and usual course of these businesses, and since December 31,
1999 there has not been (i) any change in the financial condition,
properties, business or results of operations of the Company and its
Subsidiaries except those changes that, individually or in the aggregate,
have not had and would not have a Material Adverse Effect on the Company;
(ii) any declaration, setting aside or payment of any dividend or other
distribution in cash, stock or property in respect of the Company's capital
stock or any securities convertible, exchangeable or exercisable for or
into shares of its capital stock, except for (w) regular quarterly cash
dividends of no more than U.S. $.025 per Company Common Share, (x)
dividends in respect of the Company Money Market Preferred Shares in
accordance with their terms, and (y) interest payments in respect of the
Company Convertible Notes in accordance with their terms; (iii) any
redemption, repurchase or other acquisition of any shares of the Company's
capital stock or any securities convertible, exchangeable or exercisable
for or into shares of its capital stock (other than as required by the
terms of any Company Stock Plan and other than repurchases of Company Money
Market Preferred Shares for not more than the Preferred Consideration per
share), or (iv) any change by it in accounting principles, practices or
methods except as required by changes in U.S. GAAP. Between December 31,
1999 and the date of this Agreement, except as contemplated by this
Agreement, there has not been any increase in the compensation payable or
that could become payable by the Company or any of its Subsidiaries to
officers or key employees, other than increases in the ordinary and usual
course of business, and the Company has not entered into or amended any of
its compensation or benefit plans or agreements, including severance,
change of control or similar plans and agreements. Since December 31, 1999,
the Company has granted awards under its performance share plan implemented
pursuant to the Company's 1997 Incentive Compensation Plan and under
similar plans to the categories of persons with the terms (including
performance targets) applicable to these awards set forth in Section 2.1.6
of the Company Disclosure Schedule. Section 2.1.6 of the Company Disclosure
Schedule sets forth the estimated total value of the awards payable solely
as a result of a change of control and the amount reflected in the
Company's budget for 2000 previously delivered to Parent.
2.1.7. Litigation and Liabilities. (a) There are no civil,
criminal or administrative actions, suits, claims, hearings, investigations
or proceedings pending or, to the knowledge of the Company's chief
executive officer, chief financial officer, chief accounting officer,
general counsel or executive vice president for human resources ("Company
Officers" ), threatened against the Company or any of its Subsidiaries
except, in each case, for those that, individually or in the aggregate,
have not had and would not have a Material Adverse Effect on the Company or
prevent, materially delay or materially impair the Company's ability to
consummate the Merger or any of the other transactions contemplated by this
Agreement.
(b) Neither the Company nor any of its Subsidiaries had at
December 31, 1999, or has incurred since that date and as of the date of
this Agreement, any liabilities or obligations (whether absolute, accrued,
contingent or otherwise) of any nature, except (i) liabilities, obligations
or contingencies (1) which are accrued or reserved against in the most
recent audited consolidated balance sheet of the Company as of December 31,
1999 or reflected in the notes thereto or (2) which were incurred after
December 31, 1999 in the ordinary course of business and consistent with
past practices or (ii) liabilities, obligations or contingencies which (1)
would not, individually or in the aggregate, have a Material Adverse Effect
on the Company, (2) have been discharged or paid in full prior to the date
of this Agreement in the ordinary course of business, or (3) are not
required to be reflected in the consolidated financial statements of the
Company and its Subsidiaries prepared in accordance with U.S. GAAP
consistently applied.
2.1.8. Takeover Statutes. The Board of Directors of the Company
has taken or will take all appropriate and necessary action to render any
"fair price," "moratorium," "control share acquisition" or other similar
anti-takeover statute or regulation, including Section 203 of the DGCL
(each, a "Takeover Statute") inapplicable to this Agreement, the Merger and
the other transactions contemplated by this Agreement.
2.1.9. Brokers and Finders. Neither the Company nor any of its
Subsidiaries, officers, directors or employees has employed any broker or
finder or incurred any liability for any brokerage fees, commissions or
finders' fees in connection with the execution and delivery of this
Agreement or the Merger or the other transactions contemplated by this
Agreement, except that the Company has retained Morgan Stanley & Co.
Incorporated and Bear, Stearns & Co. Inc. as its financial advisors.
2.1.10. Employee Benefit Plans.
----------------------
2.1.10.1. Set forth in Section 2.1.10 of the Company
Disclosure Schedule is a list of each stock option, stock purchase, and
stock appreciation right with respect to the 100 highest paid (based on
1999 base salary and annual bonus) Company Employees (as defined below) who
are participants in the Company's Key Corporation Managers Bonus Plan,
including the exercise prices, vesting schedules and expiration dates of
the Company Stock Options, each material stock based incentive plan, or
other similar arrangement or policy applicable to any current, former, or
retired employee, officer, consultant, independent contractor, agent or
director of the Company or any of its Subsidiaries (collectively, the
"Company Employees"), each material plan, program, or policy providing for
bonuses, profit-sharing, stock option or other stock related rights or
other forms of incentive or deferred compensation, vacation benefits,
insurance coverage and self-insured arrangements, health or medical
benefits, disability benefits, workers' compensation, supplemental
unemployment benefits, severance benefits and post-employment or retirement
benefits or other employee benefits of any kind, whether funded or
unfunded, which is maintained, administered or contributed to by the
Company or any of its Subsidiaries or under which the Company or any of its
Subsidiaries has any liability, contingent or otherwise, and which covers
any Company Employee employed or providing services or formerly employed or
providing services in the United States or the United Kingdom to the
Company or any of its Subsidiaries, (including but not limited to each
"employee benefit plan," as defined in Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), but excluding
any plan that is a "multiemployer plan," as defined in Section 3(37) of
ERISA) (collectively, the "Company Employee Plans"), and each material
employment, severance, consulting, non-compete, or similar agreement or
contract that provides for equity grants and/or cash incentives that are
beyond and are inconsistent with the Company's ordinary annual equity grant
and/or cash incentive programs as set forth in the guidelines and criteria
therefor previously provided to Parent (each a "Company Employment
Agreement"). True and complete copies of all Company Employment Agreements
and Company Employee Plans, as listed in the preceding sentence, including,
but not limited to, any trust instruments and insurance contracts forming a
part of any Company Employee Plan, and all amendments have been provided or
made available to Parent. For purposes of this Agreement, the term "Company
Foreign Plan" shall refer to each material plan, program or contract
maintained, sponsored or contributed to by the Company or a Subsidiary that
is subject to or governed by the laws of any jurisdiction other than the
United States or the United Kingdom, and which would have been treated as a
Company Employee Plan had it been a United States or United Kingdom plan,
program or contact. The Company shall use its reasonable best efforts to
make available to Parent, within thirty (30) days following the date of
this Agreement, a list and copies of the Company Foreign Plans.
2.1.10.2. Each Company Employee Plan and Company Employment
Agreement has been established and maintained in compliance with its terms
and with the requirements prescribed by any and all statutes, orders, rules
and regulations (including but not limited to ERISA and the Code) which are
applicable to the plan or agreement, except where failure to so comply
would not, individually or in the aggregate, have a Material Adverse Effect
on the Company. Except as would not, individually or in the aggregate, have
a Material Adverse Effect on the Company in the six years prior to the date
of this Agreement, neither the Company, any of its Subsidiaries nor any
ERISA Affiliate contributes to, or is or has been required to contribute
to, any "multiemployer plan" as defined in Section 3(37) of ERISA. Except
as would not, individually or in the aggregate, have a Material Adverse
Effect on the Company, (i) neither the Company, any of its Subsidiaries nor
any of its ERISA Affiliates has incurred a liability, contingent or
otherwise, under Title IV of ERISA that has not been satisfied in full, and
(ii) to the knowledge of the Company Officers no condition exists that
presents a risk to the Company, any of its Subsidiaries or any of its ERISA
Affiliates of incurring any such liability other than liability for
premiums due the Pension Benefit Guaranty Corporation (which premiums have
been paid when due). For purposes of this Agreement, "ERISA Affiliate"
means, with respect to the Company or Parent, as applicable, each business
or entity which is a member of a "controlled group of corporations," under
"common control" or an "affiliated service group" with the Company or
Parent, as applicable, within the meaning of Sections 414(b), (c) or (m) of
the Code, or required to be aggregated with the Company or Parent, as
applicable, under Section 414(o) of the Code, or is under "common control"
with the Company or Parent, as applicable, within the meaning of Section
4001(a)(14) of ERISA. Except as would not, individually or in the
aggregate, have a Material Adverse Effect on the Company, all contributions
required to be made under the terms of any Company Employee Plan or Company
Foreign Plan have been made, and where applicable to a Company Employee
Plan, the Company, its Subsidiaries and its ERISA Affiliates have complied
with the minimum funding requirements under Section 412 of the Code and
Section 302 of ERISA with respect to each Company Employee Plan. Each
Company Employee Plan which is intended to be qualified under Section
401(a) of the Code is so qualified and has been so qualified during the
period from its adoption to date, and each trust forming a part thereof is
exempt from federal income tax pursuant to Section 501(a) of the Code and,
to the knowledge of the Company Officers, no circumstances exist which
could reasonably be expected to materially adversely affect qualification
or exemption.
2.1.10.3. Except as would not, individually or in the
aggregate, have a Material Adverse Effect on the Company, neither the
Company, any of its Subsidiaries nor any of its ERISA Affiliates (i)
maintains, contributes to or is party to any Company Employee Plan or
Company Employment Agreement which provides, or has any liability to
provide, life insurance, medical, severance or other employee welfare
benefits to any Company Employee upon his retirement or termination of
employment, except as may be required by Section 4980B of the Code; or (ii)
has ever represented, promised or contracted (whether in oral or written
form) to any Company Employee employed by or providing services to, or
formerly employed by or providing services to, the Company or any of its
Subsidiaries in the United States or the United Kingdom (each a "US/UK
Company Employee") (either individually or to the US/UK Company Employees
as a group) that the US/UK Company Employee(s) would be provided with life
insurance, medical, severance or other employee welfare benefits upon their
retirement or termination of employment, except to the extent required by
Section 4980B of the Code.
2.1.10.4. The execution, delivery of and performance by the
Parties of their obligations under and the consummation of the transactions
contemplated by this Agreement will not (either alone or upon the
occurrence of any additional or subsequent events) (i) constitute an event
under any Company Employee Plan, any Company Employment Agreement, or any
trust or loan related to any of those plans or agreements that will or may
result in any payment (whether of severance pay or otherwise),
acceleration, forgiveness of indebtedness, vesting, distribution, increase
in benefits or obligation to fund benefits with respect to any Company
Employee, (ii) to the knowledge of any Company Officer, constitute an event
under any Company Foreign Plans or any trust or loan related to any of
those plans that will or may result in payments (whether of severance pay
or otherwise), acceleration, forgiveness of indebtedness, vesting,
distributions, increases in benefits or obligations to fund benefits with
respect to any Company Employee (other than US/UK Company Employees) that
would be, individually or in the aggregate, material, or (iii) result in
the triggering or imposition of (x) any restrictions or limitations on the
right of the Company, any of its Subsidiaries or Parent to amend or
terminate any Company Employee Plan or any Company Employment Agreement, or
(y) to the knowledge of the Company Officers, any material restrictions or
limitations on the rights of the Company, any of its Subsidiaries or Parent
to amend or terminate any Company Foreign Plan. No payment or benefit which
will or may be made by the Company, or any of the Subsidiaries of the
Company, Parent or any of their respective ERISA Affiliates with respect to
any US/UK Company Employee will be characterized as an "excess parachute
payment" within the meaning of Section 280G(b)(1) of the Code. Except as
would not have a Material Adverse Effect on the Company, there is no
commitment covering any US/UK Company Employee, or, to the knowledge of the
Company Officers, any other Company Employee, that, individually or in the
aggregate, would reasonably be expected to give rise to the payment of any
amount that would result in a material loss of tax deductions pursuant to
Section 162(m) of the Code.
2.1.10.5. There has been no amendment to, written
interpretation or announcement (whether or not written) by the Company or,
to the knowledge of the Company Officers, any of its Subsidiaries or any of
its ERISA Affiliates relating to, or change in employee participation or
coverage under, any Company Employee Plan or Company Employment Agreement
which would increase the expense of maintaining the plan or agreement above
the level of the expense incurred in respect thereof for the 12 months
ended on December 31, 1999, except as would not, individually or in the
aggregate, have a Material Adverse Effect on the Company. Except as would
not, individually or in the aggregate, have a Material Adverse Effect on
the Company, all Company Foreign Plans (i) have been maintained in
accordance with all applicable requirements; (ii) if they are intended to
qualify for special tax treatment, meet all requirements for that
treatment; and (iii) if they are intended to be funded and/or book-reserved
are fully funded and/or book reserved, as appropriate, based upon
reasonable actuarial assumptions.
2.1.10.6. Except with respect to options granted to members
of the Board of Directors of the Company under the Directors Stock Option
Plan adopted January 16, 2000, the Company has not granted any Company
Stock Options under any Company Stock Plan to any person who was not a
common law employee of the Company or a Subsidiary of the Company as of the
date of grant.
2.1.11. Labor and Employment Matters. Except as would not,
individually or in the aggregate, have a Material Adverse Effect on the
Company, the Company and each Subsidiary (i) is in compliance with all
applicable Laws respecting employment, employment practices, labor, terms
and conditions of employment and wages and hours, in each case, with
respect to Company Employees; and (ii) is not liable for any payment to any
trust or other fund or to any Governmental Entity, with respect to
unemployment compensation benefits, social security or other benefits for
Company Employees. No work stoppage or labor strike against the Company or
any Subsidiary by Company Employees is pending or, to the knowledge of the
Company Officers, threatened.
2.1.12. Licenses. Each of the Company and its Subsidiaries has
all material permits, licenses, certificates, waivers or authorizations
("Licenses") from all Governmental Entities having jurisdiction over any
part of its business necessary for the conduct of any of its activities and
all Licenses are valid and in full force and effect, except for any
Licenses the failure of which to have or to be in full force and effect
would not, individually or in the aggregate, have a Material Adverse Effect
on the Company. Except as would not, individually or in the aggregate, have
a Material Adverse Effect on the Company, no event has occurred or other
fact exists with respect to any of the Licenses held by the Company or any
of its Subsidiaries which permits, or after notice or lapse of time or both
would permit, revocation or termination thereof or would result in any
other material impairment of the rights of the holder of any of the
Licenses.
2.1.13. Intellectual Property. Each of the Company and
its Subsidiaries own or have a valid right to use patents, trademarks,
trade names, domain names, service marks, copyrights, processes, formulae,
methods, schedules, technology, know-how, computer software programs and
applications and other proprietary information ("IP Rights") as are
necessary in connection with its respective businesses, except where the
failure to own or have a valid right to use such IP Rights, individually or
in the aggregate, would not have a Material Adverse Effect on the Company.
Except as would not, individually or in the aggregate, have a Material
Adverse Effect on the Company, neither the Company nor any of its
Subsidiaries has, to the knowledge of the Company Officers, infringed on
any IP Rights of any third party.
2.1.14. Rights Agreement. The Company has taken all necessary
action so that (a) neither the execution nor delivery of this Agreement,
the performance by the Parties of their respective obligations under this
Agreement, as applicable, and the consummation of the transactions
completed by this Agreement, including the Merger, give rise to or will
give rise to a "Distribution Date," "Stock Acquisition Date" or "Trigger
Date," or result in Parent or any of its Affiliates becoming an "Acquiring
Person" (each as defined in the Rights Agreement), under the Rights
Agreement and (b) the rights issued pursuant to the Rights Agreement shall
expire immediately prior to the Effective Time.
2.1.15. Continuity of Business. Section 2.1.15 of the Company
Disclosure Schedule sets forth, as of the date of this Agreement, the ten
largest clients (measured by fees and commissions generated) of the Company
and its Subsidiaries for the calendar year ended December 31, 1999. To the
knowledge of any of the Company Officers, no client of the Company or any
of its Subsidiaries identified pursuant to the preceding sentence has
advised the Company or any Subsidiary orally or in writing prior to or as
of the date of this Agreement that it (y) is terminating or considering
terminating the handling of its business by the Company or its Subsidiary,
as applicable, as a whole or (z) is planning to reduce its aggregate future
spending with the Company or any of its Subsidiaries in any material
manner.
2.1.16. Compliance with Laws. Neither the Company nor any of its
Subsidiaries is in violation of, or has violated, any applicable provisions
of any Laws except for any violations that, individually or in the
aggregate, would not have a Material Adverse Effect on the Company.
2.1.17. Certain Contracts. Section 2.1.17 of the Company
Disclosure Schedule sets forth a list of material Contracts with respect to
partnerships, joint ventures, strategic alliances, acquisitions or
dispositions containing covenants of the Company or any of its Subsidiaries
not to compete (i) in any line of business, (ii) in any industry or (iii)
in any geographical area, in each of cases (i), (ii) and (iii) that is
material to the Company and its Subsidiaries taken as a whole.
2.1.18. Tax Treatment. Neither the Company nor any of its
Subsidiaries has taken or agreed to take any action or failed to take any
action, and the Company Officers do not know of any other action taken or
failed to be taken by any other Person, which action or failure would
jeopardize the treatment of the Merger as a reorganization within the
meaning of Section 368 of the Code or the ability of counsel to render the
opinions described in Sections 4.2.3 and 4.3.3 of this Agreement.
2.1.19. Tax Matters.
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(a) All returns, declarations, reports, estimates, information
returns and statements required to be filed on or before the Effective Time
under federal, state, local or any foreign tax laws ("Tax Returns") with
respect to Company or any of its Subsidiaries, have been or will be timely
filed, or requests for extensions have been timely filed and have not
expired, except where a failure or failures to so timely file would not,
individually or in the aggregate, have a Material Adverse Effect on the
Company.
(b) Except as would not, individually or in the aggregate, have a
Material Adverse Effect on the Company, all material Tax Returns filed by
the Company or any of its Subsidiaries are complete and accurate in all
material respects.
(c) Except as would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect on the Company,
all Taxes (as defined below) shown to be due and payable (without regard to
whether those Taxes have been assessed) on the Tax Returns of the Company
or any of its Subsidiaries have been paid or adequate reserves have been
established for the satisfaction of those Taxes. For purposes of this
Agreement, "Taxes" shall mean all taxes, charges, fees, levies or other
assessments, however denominated, including, without limitation, all net
income, gross income, gross receipts, sales, use, ad valorem, goods and
services, capital, transfer, franchise, profits, license, withholding,
payroll, employment, employer health, excise, estimated, severance, stamp,
occupation, property or other taxes, custom duties, fees, assessments or
charges of any kind whatsoever, together with any interest and any
penalties, additions to tax or additional amounts imposed by any taxing
authority whether arising before, on or after the Effective Time.
(d) There are no outstanding agreements or waivers extending the
statutory period of limitations applicable to federal, state, local or
foreign income or other Tax Returns required to be filed by or with respect
to the Company or any of its Subsidiaries, except as would not,
individually or in the aggregate, have a Material Adverse Effect on the
Company.
(e) Except as would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect on the Company,
neither the Company nor any of its Subsidiaries is a party to any Tax
sharing or similar agreement or any agreement pursuant to which it or any
of its Subsidiaries has an obligation to indemnify any party (other than
the Company or one of its Subsidiaries) with respect to Taxes.
(f) Except as would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect on the Company,
all Taxes due with respect to completed and settled examinations or
concluded litigation relating to the Company or any of its Subsidiaries
have been paid in full or adequate reserves have been established for the
payment thereof.
(g) No material audit or examination or refund litigation with
respect to any Tax Return is pending as of the date of this Agreement.
Section 2.2. Representations and Warranties of Parent. Except as
disclosed in the Parent Reports (as defined in Section 2.2.5) filed with
the SEC prior to the date of this Agreement and except as set forth in the
corresponding sections of Parent's disclosure schedule to this Agreement
(the "Parent Disclosure Schedule" and, together with the Company Disclosure
Schedule, the "Disclosure Schedules"), Parent represents and warrants to
the Company as follows:
2.2.1. Organization, Good Standing and Qualification. Each of
Parent and its Subsidiaries is duly organized, validly existing and in good
standing (with respect to jurisdictions that recognize the concept of good
standing) under the Laws of its jurisdiction of organization and has all
requisite corporate or similar power and authority, and all government
licenses, authorizations, consents and approvals required to own, operate
and lease its properties and assets and to carry on its business as
presently conducted and is duly qualified to do business and is in good
standing (with respect to jurisdictions that recognize the concept of good
standing) in each jurisdiction where the ownership, operation or leasing of
its assets or properties or conduct of its business requires this
qualification, except where the failure to be so organized, qualified or in
good standing (with respect to jurisdictions that recognize the concept of
good standing), or to have this power or authority, would not, individually
or in the aggregate, have a Material Adverse Effect on Parent. Parent has
made available to the Company complete and correct copies of its memorandum
and articles of association and the Deposit Agreement, as amended to the
date of this Agreement. These memorandum and articles of association and
the Deposit Agreement, as so made available, are in full force and effect.
2.2.2. Capital Structure. (a) As of the date of this Agreement,
the authorized share capital of Parent is (pound)125,000,000 divided into
1,250,000,000 Parent Ordinary Shares. As of the close of business on May 5,
2000, the issued share capital of Parent consisted of 778,578,881 Parent
Ordinary Shares. All of the outstanding Parent Ordinary Shares are, and all
of the Parent Ordinary Shares to be issued pursuant to the Merger are, or
will be when issued, duly authorized and validly issued and fully paid or
credited as fully paid. As of the date of this Agreement, Parent has no
Parent Ordinary Shares reserved for or otherwise subject to issuance,
except (i) no more than 30,000,000 Parent Ordinary Shares subject to
issuance pursuant to outstanding options to purchase Parent Ordinary Shares
and (ii) a number of Parent Ordinary Shares with a value upon issuance
equivalent to no more than $100 million, in the aggregate, which are
issuable pursuant to "earn-out" provisions of acquisition and similar
agreements previously entered by Parent and/or its Subsidiaries. As of the
date of this Agreement, except as set forth above, Parent does not have
outstanding any 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 shareholders
of Parent on any matter.
(b) Each of the outstanding shares of capital stock or other
ownership interests of each of Parent's Subsidiaries that constitute a
Significant Subsidiary is duly authorized, validly issued, fully paid and
nonassessable and owned by Parent or a direct or indirect wholly owned
Subsidiary of Parent, in each case free and clear of any material lien,
pledge, security interest, claim or other encumbrance, except as would not
have a Material Adverse Effect on Parent. Except as set forth in Section
2.2.2(a), as of the date of this Agreement, there are no preemptive or
other outstanding rights, options, warrants, conversion rights, stock
appreciation rights, redemption rights, repurchase rights, agreements,
arrangements, calls, commitments or rights of any kind which obligate
Parent or any of its Material Subsidiaries to issue or sell any shares of
capital stock or other securities of Parent or any of its Material
Subsidiaries or any securities or obligations convertible or exchangeable
into or exercisable for, or giving any Person a right to subscribe for or
acquire from Parent or any of its Material Subsidiaries, any securities of
Parent or any of its Material Subsidiaries, and no securities or
obligations evidencing any rights are authorized, issued or outstanding.
Except as set forth in Section 2.2.2(a), as of the date of this Agreement,
Parent does not have outstanding any bonds, debentures, notes or other
obligations the holders of which have the right to vote (or which are
convertible, exchangeable or exercisable for or into securities having the
right to vote) with the shareholders of Parent on any matter.
2.2.3. Corporate Authority and Approval. Each of Parent and,
to the extent applicable, Merger Sub has all requisite corporate power and
authority to execute and deliver this Agreement, to perform its obligations
under this Agreement and to consummate the Merger and the other
transactions contemplated by this Agreement, subject only in the case of
Parent to the approval of the Parent Requisite Resolutions and the Parent
Director Resolutions (both as defined in Section 3.5) by, on a show of
hands, not less than a simple majority of the holders of the outstanding
Parent Ordinary Shares, present in person or, on a poll, by the holders of
not less than a simple majority of the votes attaching to the Parent
Ordinary Shares who vote in person or by proxy (the "Parent Requisite
Votes"). The execution and delivery by each of Parent and, to the extent
applicable, Merger Sub, of this Agreement, the performance by each of
Parent and Merger Sub of its obligations under this Agreement and the
consummation by Parent and Merger Sub of the Merger and the other
transactions contemplated by this Agreement have been duly authorized by
all necessary corporate action on the part of Parent and Merger Sub,
subject only in the case of Parent to the approval of the Parent Requisite
Resolutions and the Parent Director Resolutions pursuant to the Parent
Requisite Votes, and assuming the due authorization, execution and delivery
of this Agreement by the Company, this Agreement constitutes the valid and
binding agreement of Parent and, to the extent applicable, Merger Sub,
enforceable against Parent and, to the extent applicable, Merger Sub in
accordance with its terms, subject to the Bankruptcy and Equity Exception.
The Board of Directors of Parent has approved this Agreement, the Merger
and the other transactions contemplated by this Agreement and has adopted a
resolution, subject to Section 3.3.5 of this Agreement, that the Parent's
shareholders be recommended to vote in favor of the adoption of the Parent
Requisite Resolutions and the Parent Director Resolutions at the Parent
Shareholders Meeting (as defined in Section 3.5).
2.2.4. Governmental Filings, No Violations.
-----------------------------------
2.2.4.1. Other than the necessary filings, notices,
approvals, confirmations, consents, declarations and/or decisions (A)
pursuant to Sections 1.1.2 and 3.4, (B) under the HSR Act, the Exchange Act
and the Securities Act, (C) to comply with the rules and regulations of the
U.K. Listing Authority ("UKLA"), the LSE, the NYSE and the National
Association of Securities Dealers Automated Quotation System National
Market (the "NASDAQ") or any other stock exchanges on which securities of
the Company or Parent or any of its Subsidiaries are listed or traded, (D)
with and from the European Commission, in accordance with the Regulation,
(E) with and from the competent authority of any member state of the
European Union to which any of the transactions contemplated by this
Agreement is referred pursuant to under Article 9 of the Regulation), (F)
or under other antitrust laws, competition or other similar rules,
regulations and judicial doctrines of jurisdictions outside of the United
States and the European Union and (G) with and from H.M. Treasury pursuant
to Section 765 of Income and Corporation Tax Act 1988 (these filings,
notices, approvals, confirmations, consents, declarations and/or decisions
to be made, given or obtained by Parent being the "Parent Required
Consents"), no filings, notices, declarations and/or decisions are required
to be made by Parent or any of its Subsidiaries with, nor are any approvals
or other confirmations or consents required to be obtained by Parent or any
of its Subsidiaries from, any Governmental Entity, in connection with the
execution and delivery by Parent and, to the extent applicable, Merger Sub
of this Agreement, the performance by Parent and Merger Sub of their
obligations under this Agreement and the consummation by Parent and Merger
Sub of the Merger and the other transactions contemplated by this
Agreement, except those the failure of which to make, give or obtain,
individually or in the aggregate, would not have a Material Adverse Effect
on Parent or prevent, materially delay or materially impair Parent's or
Merger Sub's ability to consummate the Merger or any of the other
transactions contemplated by this Agreement.
2.2.4.2. The execution and delivery of this Agreement by
Parent and, to the extent applicable, Merger Sub do not, and the
performance of Parent and, to the extent applicable, Merger Sub of their
obligations under this Agreement and the consummation by Parent and Merger
Sub of the Merger and the other transactions contemplated by this Agreement
(including the issuance of Parent Depositary Shares, the issuance of Parent
Ordinary Shares to the Nominee and the deposit of Parent Ordinary Shares by
the Nominee with the Depositary against issuance of Parent Depositary
Shares in accordance with the Deposit Agreement) will not, constitute or
result in (A) a breach or violation of, or a default under Parent's
memorandum or articles of association or the certificate of incorporation
and by-laws of Merger Sub (each as amended from time to time), (B) subject
to making, giving or obtaining all necessary filings, notices, approvals,
confirmations, declarations and/or decisions specified by Section 2.2.4.1,
a breach or violation of, or a default under, the acceleration of any
obligations or the creation of a lien, pledge, security interest, right of
purchase, sale or termination or other encumbrance on the assets of Parent
or any of its Subsidiaries (with or without notice, lapse of time or both)
pursuant to any Contract binding upon Parent or any of its Subsidiaries or
any Law or governmental or non-governmental permit or license to which
Parent or any of its Subsidiaries is subject, or (C) any change in the
rights or obligations of any party under any of these Contracts except, in
the case of clause (B) or (C) above, for any breach, violation, default,
acceleration, creation or change that, individually or in the aggregate,
would not have a Material Adverse Effect on Parent or prevent, materially
delay or materially impair Parent's or Merger Sub's ability to consummate
the Merger or any of the other transactions contemplated by this Agreement.
2.2.5. Reports; Financial Statements. Since January 1, 1997,
Parent has filed with the SEC all material forms, statements, reports and
documents (including all exhibits, post-effective amendments and
supplements thereto) required to be filed by it under each of the
Securities Act, the Exchange Act and the respective rules and regulations
thereunder (collectively the "Parent Reports" and, together with the
Company Reports, the "Reports"). As of their respective dates, the Parent
Reports did not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make
the statements made therein, in light of the circumstances under which they
were made, not misleading. Each of the consolidated balance sheets of
Parent and its subsidiaries included in or incorporated by reference into
the Parent Reports (including the related notes and schedules) presents
fairly, in all material respects, the financial position of Parent and its
subsidiaries as of its date, and each of the related consolidated
statements of income, changes in shareowners' funds and cash flows included
in or incorporated by reference into the Parent Reports (including any
related notes and schedules) presents fairly, in all material respects, the
results of operations and cash flows of Parent and its subsidiaries for the
periods set forth therein (subject, in the case of unaudited statements, to
notes and normal year-end audit adjustments that will not be material in
amount or effect), in each case in conformity with generally accepted
accounting principles in the United Kingdom ("U.K. GAAP") consistently
applied during the periods involved except as may be noted therein. The
related notes reconciling to U.S. GAAP the consolidated financial
statements of Parent, or any portion thereof, as applicable, comply in all
material respects with the requirements of the SEC applicable to this
reconciliation. The audited consolidated statement of income of Parent and
its subsidiaries for the year ended December 31, 1999 to be included in
Parent's Annual Report on Form 20-F for that year will be consistent with
the unaudited consolidated statement of income of Parent and its
subsidiaries included in Parent's press release of February 17, 2000.
2.2.6. Absence of Certain Changes. Except as expressly
contemplated by this Agreement, since December 31, 1999, Parent and its
Subsidiaries have conducted their respective businesses only in, and have
not engaged in any material transaction other than according to, the
ordinary and usual course of such businesses, and since December 31, 1999
there has not been (i) any change in the financial condition, properties,
business or results of operations of Parent and its Subsidiaries except
those changes that, individually or in the aggregate, have not had and
would not have a Material Adverse Effect on Parent; (ii) any declaration,
setting aside or payment of any dividend or other distribution in cash,
stock or property in respect of Parent's capital stock, except for regular
cash dividends in the ordinary course, or (iii) any change by Parent in
accounting principles, practices or methods, except as required by changes
in U.K. GAAP or U.S. GAAP, as applicable.
2.2.7. Litigation and Liabilities. (a) There are no civil,
criminal or administrative actions, suits, claims, hearings, investigations
or proceedings pending or, to the knowledge of Parent's executive directors
(the "Parent Executive Directors"), threatened against Parent or any of its
Subsidiaries, except for those that, individually or in the aggregate,
would not have a Material Adverse Effect on Parent or prevent, materially
delay or materially impair Parent's or Merger Sub's ability to consummate
the Merger or any of the other transactions contemplated by this Agreement.
(b) Neither Parent nor any of its Subsidiaries had at December
31, 1999, or has incurred since that date and as of the date of this
Agreement, any liabilities or obligations (whether absolute, accrued,
contingent or otherwise) of any nature, except (i) liabilities, obligations
or contingencies (1) which are accrued or reserved against in the most
recent consolidated financial statements of Parent as of December 31, 1999
or reflected in the notes thereto, or (2) which were incurred after
December 31, 1999 in the ordinary course of business and consistent with
past practices, (ii) liabilities, obligations or contingencies which (1)
would not, individually or in the aggregate, have a Material Adverse Effect
on Parent, (2) have been discharged or paid in full prior to the date of
this Agreement in the ordinary course of business, or (3) are not required
to be reflected in the consolidated financial statements of Parent and it
Subsidiaries prepared in accordance with U.K. GAAP consistently applied.
2.2.8. Takeover Statutes. The Board of Directors of the Parent
has taken or will take all appropriate and necessary action to render any
potentially applicable Takeover Statute inapplicable to this Agreement, the
Merger and the other transactions contemplated by this Agreement.
2.2.9. Brokers and Finders. Neither Parent nor any of its
Subsidiaries, officers, directors or employees has employed any broker or
finder or incurred any liability for any brokerage fees, commissions or
finders' fees in connection with the execution and delivery of this
Agreement, the Merger or any of the other transactions contemplated by this
Agreement, except that Parent has employed Goldman Sachs International and
Merrill Lynch, Pierce, Fenner & Smith, Incorporated, as its financial
advisors.
2.2.10. Employee Benefit Plans.
----------------------
2.2.10.1. Parent maintains the Executive Stock Option Plan,
the Performance Share Plan, the Long-Term Incentive Plan, and the Worldwide
Ownership Plan (collectively, "Parent Employee Plans") in which directors,
former directors, employees and former employees of Parent or any of its
Subsidiaries (collectively, "Parent Employees") may participate subject to
their terms and the determinations of the compensation committee of Parent,
and the Leadership Equity Acquisition Plan, in which a small number of
senior executives of Parent and certain Subsidiaries may participate
subject to their terms and the determinations of the compensation committee
of Parent (collectively, "Parent Plans"). All Parent Plans have been
adopted and administered in conformity with all applicable Laws, and
subject to all necessary consents or approvals of Parent's shareholders.
True and complete copies of all Parent Employee Plans, and all amendments
thereto, have been provided or made available to the Company.
2.2.10.2. Each material Parent employee benefit and welfare
plan maintained in the United States or the United Kingdom has been
established and maintained in compliance with its terms and with the
requirements prescribed by any and all statutes, orders, rules and
regulations (including but not limited to ERISA and the Code) which are
applicable to that plan, except where failure to so comply would not,
individually or in the aggregate, have a Material Adverse Effect on Parent.
Except as would not, individually or in the aggregate, have a Material
Adverse Effect on Parent, neither Parent, any of its Subsidiaries nor any
ERISA Affiliate contributes to, or is or has ever been required to
contribute to, any "multiemployer plan" as defined in Section 3(37) of
ERISA. Except as would not, individually or in the aggregate, have a
Material Adverse Effect on Parent, in the six years prior to the date of
this Agreement, (i) neither Parent, any of its Subsidiaries nor any of its
ERISA Affiliates has incurred a liability, contingent or otherwise, under
Title IV of ERISA that has not been satisfied in full, and (ii) to the
knowledge of Parent's Executive Directors no condition exists that presents
a risk to Parent, any of its Subsidiaries or any of its ERISA Affiliates of
incurring any liability other than liability for premiums due the Pension
Benefit Guaranty Corporation (which premiums have been paid when due).
Except as would not, individually or in the aggregate, have a Material
Adverse Effect on Parent, all contributions required to be made under the
terms of any employee benefit plan subject to ERISA that is maintained,
sponsored, contributed to or required to be contributed to by Parent or its
Subsidiaries (the "Parent ERISA Plans") have been made, and where
applicable to a Parent ERISA Plan, Parent, its Subsidiaries and its ERISA
Affiliates have complied with the minimum funding requirements under
Section 412 of the Code and Section 302 of ERISA with respect to each
Parent ERISA Plan. Each Parent ERISA Plan which is intended to be qualified
under Section 401(a) of the Code is so qualified and has been so qualified
during the period from its adoption to date, and each trust forming a part
thereof is exempt from federal income tax pursuant to Section 501(a) of the
Code and, to the knowledge of the Parent Executive Directors, no
circumstances exist which could reasonably be expected to adversely affect
this qualification or exemption.
2.2.10.3. Except as would not, individually or in the
aggregate, have a Material Adverse Effect on Parent, neither Parent, any of
its Subsidiaries nor any of its ERISA Affiliates (i) maintains or
contributes to any Parent ERISA Plan which provides, or has any liability
to provide, life insurance, medical, severance or other employee welfare
benefits to any Parent Employee upon his retirement or termination of
employment, except as may be required by Section 4980B of the Code or (ii)
has ever represented, promised or contracted (whether in oral or written
form) to any Parent Employee (either individually or to the Parent
Employees as a group) that the Parent Employee(s) would be provided with
life insurance, medical, severance or other employee welfare benefits upon
their retirement or termination of employment, except to the extent
required by Section 4980B of the Code.
2.2.10.4. The execution, delivery of and performance by the
Parties of their obligations under and the consummation of the transactions
contemplated by this Agreement will not (either alone or upon the
occurrence of any additional or subsequent events) (i) constitute an event
under any material Parent employee plan that covers Parent Employees
employed by or providing services to Parent or any of its Subsidiaries in
the United States or the United Kingdom (a "US/UK Parent Employee Plan"),
trust or loan that will or may result in any payment (whether of severance
pay or otherwise), acceleration, forgiveness of indebtedness, vesting,
distribution, increase in benefits or obligation to fund benefits with
respect to any Parent Employee, or (ii) result in the triggering or
imposition of any restrictions or limitations on the right of Parent or any
of its Subsidiaries to amend or terminate any material US/UK Parent
Employee Plan and receive the full amount of any excess assets remaining or
resulting from this amendment or termination, subject to applicable taxes.
No payment or benefit which will or may be made by Parent, any of the
Subsidiaries of the Company, the Company or any of their respective
affiliates with respect to any Parent Employee will be characterized as an
"excess parachute payment" within the meaning of Section 280G(b)(1) of the
Code. Except as would not have a Material Adverse Effect on Parent, there
is no commitment covering any Parent Employee that, individually or in the
aggregate, would reasonably be expected to give rise to the payment of any
amount that would result in a material loss of tax deductions pursuant to
Section 162(m) of the Code.
2.2.10.5. There has been no amendment to, written
interpretation or announcement (whether or not written) by Parent, any of
its Subsidiaries or any of its Affiliates relating to, or change in
employee participation or coverage under, any material US/UK Parent
Employee Plan which would increase the expense of maintaining that US/UK
Parent Employee Plan above the level of the expense incurred in respect
thereof for the 12 months ended on December 31, 1999, except as would not,
individually or in the aggregate, have a Material Adverse Effect on Parent.
2.2.10.6. Except as would not, individually or in the
aggregate, have a Material Adverse Effect on Parent, all Parent ERISA Plans
(i) have been maintained in accordance with all applicable requirements;
(ii) if they are intended to qualify for special tax treatment meet all
requirements for that treatment; and (iii) if they are intended to be
funded and/or book-reserved are fully funded and/or book reserved, as
appropriate, based upon reasonable actuarial assumptions.
2.2.11. Labor and Employment Matters. Except as would not,
individually or in the aggregate, have a Material Adverse Effect on Parent,
Parent and each Subsidiary (i) is in compliance with all applicable Laws
respecting employment, employment practices, labor, terms and conditions of
employment and wages and hours, in each case, with respect to Parent
Employees; and (ii) is not liable for any payment to any trust or other
fund or to any Governmental Entity, with respect to unemployment
compensation benefits, social security or other benefits for Parent
Employees. No work stoppage or labor strike against Parent or any
Subsidiary by Parent Employees is pending or, to the knowledge of the
Parent Executive Directors, threatened.
2.2.12. Licenses. Each of Parent and its Subsidiaries has all
material Licenses from all Governmental Entities having jurisdiction over
any part of its business necessary for the conduct of any of its activities
and all such material Licenses are valid and in full force and effect,
except for any Licenses the failure of which to have or to be in full force
and effect would not, individually or in the aggregate, have a Material
Adverse Effect on Parent. Except as would not, individually or in the
aggregate, have a Material Adverse Effect on Parent, no event has occurred
or other fact exists with respect to any of the Licenses held by Parent or
any of its Subsidiaries which permits, or after notice or lapse of time or
both would permit, revocation or termination thereof or would result in any
other material impairment of the rights of the holder of any of the
Licenses.
2.2.13. Intellectual Property. Each of Parent and its
Subsidiaries own or have a valid right to use IP Rights as are necessary in
connection with its respective businesses, except where the failure to own
or have a valid right to use such IP Rights, individually or in the
aggregate, would not have a Material Adverse Effect on Parent. Except as
would not, individually or in the aggregate, have a Material Adverse Effect
on Parent, neither Parent nor any of its Subsidiaries has infringed on any
IP Rights of any third party.
2.2.14. Continuity of Business. Section 2.2.14 of the Parent
Disclosure Schedule sets forth, as of the date of this Agreement, the ten
largest clients (measured by fees and commissions generated) of Parent and
its Subsidiaries for the calendar year ended December 31, 1999. No client
of Parent or any of its Subsidiaries identified pursuant to the preceding
sentence has advised Parent or any of its Subsidiaries orally or in writing
prior to or as of the date of this Agreement that it (y) is terminating or
considering terminating the handling of its business by Parent or its
Subsidiary, as applicable, as a whole or (z) is planning to reduce its
aggregate future spending with Parent or any of its Subsidiaries in any
material manner.
2.2.15. Compliance with Laws. Neither Parent nor any of its
Subsidiaries is in violation of, or has violated, any applicable provisions
of any Laws except for any violations that, individually or in the
aggregate, would not have a Material Adverse Effect on Parent.
2.2.16. Certain Contracts. Section 2.2.16 of the Parent
Disclosure Schedule sets forth a list of material Contracts with respect to
partnerships, joint ventures, strategic alliances, acquisitions or
dispositions containing covenants of Parent or any of its Subsidiaries not
to compete (i) in any line of business, (ii) in any industry or (iii) in
any geographical area, in each of cases (i), (ii) and (iii) that is
material to Parent and its Subsidiaries taken as a whole.
2.2.17. Tax Treatment. Neither Parent nor any of its Subsidiaries
has taken or agreed to take any action or failed to take any action, and
the Parent Executive Directors do not know of any action taken or failed to
be taken by any other Person, which action or failure would jeopardize the
treatment of the Merger as a reorganization within the meaning of Section
368 of the Code or the ability of counsel to render the opinions described
in Sections 4.2.3 and 4.3.3 of this Agreement.
2.2.18. Merger Sub's Operations. Merger Sub was formed solely for
the purpose of engaging in the transactions contemplated by this Agreement
and has not (i) engaged in any business activities, (ii) conducted any
operations or (iii) incurred any liabilities other than pursuant to this
Agreement and in connection with the Merger and other transactions
contemplated by this Agreement.
2.2.19. Tax Matters. (a) All Tax Returns required to be filed on
or before the Effective Time under federal, state, local or any foreign tax
laws with respect to Parent or any of its Subsidiaries, have been or will
be timely filed, or requests for extensions have been timely filed and have
not expired, except where a failure or failures to so timely file would
not, individually or in the aggregate, be expected to have a Material
Adverse Effect on Parent.
(b) Except as would not, individually or in the aggregate, have a
Material Adverse Effect on Parent, all material Tax Returns filed by Parent
or any of its Subsidiaries are complete and accurate in all material
respects.
(c) Except as would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect on Parent, all
Taxes shown to be due and payable (without regard to whether those Taxes
have been assessed) on the Tax Returns of Parent or any of its Subsidiaries
have been paid or adequate reserves have been established for the
satisfaction of those Taxes.
(d) There are no outstanding agreements or waivers extending the
statutory period of limitations applicable to federal, state, local or
foreign income or other Tax Returns required to be filed by or with respect
to Parent or any of its Subsidiaries, except as would not, individually or
in the aggregate, have a Material Adverse Effect on Parent.
(e) Except as would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect on Parent, neither
Parent nor any of its Subsidiaries is a party to any Tax sharing or similar
agreement or any agreement pursuant to which it or any of its Subsidiaries
has an obligation to indemnify any party (other than Parent or one of its
Subsidiaries) with respect to Taxes.
(f) Except as would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect on Parent, all
Taxes due with respect to completed and settled examinations or concluded
litigation relating to Parent or any of its Subsidiaries have been paid in
full or adequate reserves have been established for the payment thereof.
(g) No material audit or examination or refund litigation with
respect to any Tax Return is pending as of the date of this Agreement.
ARTICLE III
COVENANTS
Section 3.1. Interim Operations of the Company. During the period
from the date of this Agreement until the Effective Time, the Company
shall, and shall cause each of its Subsidiaries to (unless the Parent shall
otherwise approve in writing and except as otherwise expressly contemplated
by or provided in this Agreement or as set forth in the corresponding
section of the Company Disclosure Schedule):
3.1.1. conduct its businesses in the ordinary and usual course in
all material respects and, to the extent consistent therewith, use
commercially reasonable efforts to preserve its business organization
intact and maintain its existing relations and goodwill with employees,
customers, clients, suppliers, creditors, lessors and business associates;
3.1.2. not (i) amend the certificate of incorporation or by-laws
of the Company; (ii) split, combine, subdivide or reclassify any of the
outstanding shares of capital stock of the Company; or (iii) adopt a plan
of complete or partial liquidation;
3.1.3. with respect to the Company and its Material Subsidiaries
(i) subject to Section 3.11.2, not declare, set aside or pay any dividend
or distribution payable in cash, stock or property in respect of any of its
capital stock or any securities convertible, exchangeable or exercisable
for or into shares of its capital stock, other than (w) in respect of the
Company Common Shares, regular quarterly cash dividends of no more than
$.025 per Company Common Share, (x) in respect of the Company Money Market
Preferred Shares, dividends required pursuant to the terms thereof, (y) in
respect of the Company Convertible Notes, interest payments required to be
made under the terms thereof, and (z) dividends paid to the Company or
wholly owned Subsidiaries of the Company; and (ii) not repurchase, redeem
or otherwise acquire (except for repurchases, redemptions or acquisitions
(A) required by the terms of its capital stock or securities outstanding on
the date of this Agreement, (B) required by the respective terms as of the
date of this Agreement of any Company Stock Plans, or (C) repurchases of
Company Money Market Preferred Shares for not more than the Preferred
Consideration per share) any shares of its capital stock, or any securities
convertible, exchangeable or exercisable for or into any shares of its
capital stock;
3.1.4. except as permitted by Section 3.1.5, not (i) issue, sell,
pledge, dispose of or encumber any shares of, or securities convertible
into or exchangeable or exercisable for, or rights, options, warrants,
conversion rights, stock appreciation rights, redemption rights, repurchase
rights, agreements, arrangements, calls, commitments or rights of any kind
to acquire, its capital stock (other than (x) grants to new hires and to
employees who become Company Employees as a result of acquisitions or other
business combinations permitted by this Agreement of Company Stock Options
to purchase up to 800,000 Company Common Shares, in the aggregate; provided
that those Company Stock Options are granted under Company Stock Plans in
effect as of the date of this Agreement in a manner consistent with past
practice and shall not vest or become exercisable as a result of this
Agreement or the consummation of the transactions contemplated by this
Agreement, (y) Company Common Shares issuable pursuant to Company Stock
Options outstanding on the date of this Agreement under the Company Stock
Plans or granted after the date of this Agreement in accordance with the
terms of this Agreement, or (z) upon conversion of the Company Convertible
Notes outstanding as of the date of this Agreement); (ii) incur or modify
in any material respect (x) any material indebtedness or any of the terms
of any material indebtedness or (y) any other liability except in the
ordinary and usual course of business and except for any judgment issued
against the Company or any of its Subsidiaries or any other liability, the
incurrence of which is not within the control of the Company or any of its
Subsidiaries; (iii) enter into any merger, reorganization, consolidation or
share exchange; (iv) sell, lease, license to any Person(s) or otherwise
dispose of any business or material assets or any other assets, outside the
ordinary and usual course of business (by merger, consolidation, stock or
asset disposition or otherwise); or (v) purchase, lease or license from any
Person or otherwise acquire any assets (outside of the ordinary and usual
course of business) and/or business(s) (by merger, consolidation, stock or
asset acquisition or otherwise) (any of these transactions an "Acquisition
Transaction"), or enter into any agreement with respect to any Acquisition
Transaction; provided that the Company and its Subsidiaries may enter into
or consummate any Acquisition Transaction so long as (1) no individual
Acquisition Transaction (together with all related transactions) entered
into after the date of this Agreement involves payment, delivery of
consideration or an agreement to deliver any future consideration of a
value or an estimated value of more than $50 million, (2) all Acquisition
Transactions entered into after the date of this Agreement do not involve
payment, delivery of consideration or an agreement to deliver any future
consideration of a value or an estimated value of more than $100 million,
in the aggregate, and (3) Parent is given notice no later than concurrently
with the entry into any agreement with respect to an Acquisition
Transaction and, in any event, before any public disclosure regarding an
Acquisition Transaction is made by the Company any of its Subsidiaries or
by any other party (if any Company Officer is aware that any public
disclosure is to be made by the other party);
3.1.5. not (i) terminate, establish, adopt, enter into,
implement, make any new grants or awards of equity-based compensation or
other benefits under, amend or otherwise modify any compensation or benefit
plan or outstanding award thereunder or agreement or increase the salary,
wage, bonus or other compensation of any directors, officers or employees
except (1) for increases in salary, wages or non-equity bonus compensation
or non-equity benefits in the ordinary and usual course of business
consistent with past practice; and (2) as permitted in accordance with
Section 3.1.4 and pursuant to the agreements listed in Section 3.1.5 of the
Company Disclosure Schedule; and (3) any immaterial amendment or
modification to any compensation or benefit plan, (ii) cause the
acceleration of the time of payment or vesting, or trigger any payment or
funding, of any compensation, benefits or awards, under any Company
Employment Agreement, any Company Employee Plan or any Company Foreign
Plan, except in each case as required by the applicable Company Employee
Plan, Company Foreign Plan or Company Employment Agreement pursuant to the
terms in effect as of the date of this Agreement, (iii) settle the exercise
of stock options in other than Company Common Shares or (iv) terminate
Without Cause (as defined in the No-Sale Agreement) the employment of any
employee of the Company or any of its Subsidiaries who is a party to a
No-Sale Agreement or take any action that would permit any of those
employees to terminate his or her employment for Good Reason (as defined in
the Employment Agreement), except if the Board of Directors of the Company
determines in good faith that any such termination or action is required
for it to comply with its fiduciary duties under applicable law;
3.1.6. subject to Section 3.6.1(b), not take any action or omit
to take any action which to the knowledge of the Company Officers would
prevent, materially delay or materially impede the consummation of the
Merger or the other transactions contemplated by this Agreement, including
any action or omission that would cause the Merger to fail to qualify as a
reorganization under Section 368 of the Code;
3.1.7. timely satisfy, or cause to be timely satisfied, all
applicable Tax reporting and filing requirements contained in the Code with
respect to the transactions contemplated by this Agreement, including,
without limitation, the reporting requirements contained in United States
Treasury Regulation Section 1.367(a)-3(c)(6);
3.1.8. not (w) take any action to amend the Rights Agreement, (x)
redeem the rights subject to the Rights Agreement or (y) take any action to
exempt any third party from the Rights Agreement;
3.1.9. not waive any of its rights under, or release any other
party from, amend, or fail to enforce its rights under, any provision of
any standstill agreement;
3.1.10. except as permitted by Section 3.1.4, not enter into, or
modify, amend the terms of, or terminate any material joint venture,
partnership or similar arrangement;
3.1.11. not (i) change its (w) Tax accounting policies, practices
or methods, or (x) Tax elections; and (ii) settle any material audits,
examinations or litigation with respect to Taxes;
3.1.12. not take any action to cause the Company Common Shares to
cease to be listed on the NYSE; or
3.1.13. authorize or enter into an agreement to do any of the
foregoing.
Section 3.2. Interim Operations of Parent. During the period from
the date of this Agreement until the Effective Time, Parent shall, and
shall cause each of its Subsidiaries to, as applicable (unless the Company
shall otherwise approve in writing and except as otherwise expressly
contemplated by or provided in this Agreement or as set forth in the
corresponding section of the Parent Disclosure Schedule):
3.2.1. conduct its business in the ordinary and usual course in
all material respects and, to the extent consistent therewith, use
commercially reasonable efforts to preserve its business organization
intact and maintain its existing relations and goodwill with customers,
suppliers, creditors, lessors, employees and business associates;
3.2.2. not (i) amend the memorandum and articles of association
of Parent or the Deposit Agreement; (ii) split, combine, subsidize or
reclassify the outstanding share capital of Parent or (iii) adopt a plan of
complete or partial liquidation;
3.2.3. (i) subject to Section 3.11.2, not declare, set aside or
pay any dividend or distribution payable in cash, stock or property in
respect of any of its capital stock, other than regular interim and final
annual cash dividends, consistent with past practice (including increases
consistent with past practice); or (ii) repurchase, redeem or otherwise
acquire (except for repurchases, redemptions or acquisitions (A) required
by the terms of its capital stock or securities outstanding on the date of
this Agreement, (B) required by the terms as of the date of this Agreement
of, or in the ordinary course of the operation of, any Parent employee
stock option or other employee plan or scheme or (C) otherwise in the
ordinary course) any shares of its capital stock or any securities
convertible, exchangeable or exercisable for or into shares of its capital
stock;
3.2.4. subject to Section 3.6.1(b), not take any action or omit
to take any action (including, without limitation, acquisitions or
dispositions, or waiving any of its rights under, releasing any other party
from, amending, or failing to enforce its rights under, any provision of
any standstill agreement) which to the knowledge of the Parent Executive
Directors would prevent, materially delay or materially impede the
consummation of the Merger or the other transactions contemplated by this
Agreement, including any action or omission that would cause the Merger to
fail to qualify as a reorganization under Section 368 of the Code;
3.2.5. timely satisfy, or cause to be timely satisfied, all
applicable Tax reporting and filing requirements contained in the Code with
respect to the transactions contemplated by this Agreement, including,
without limitation, the reporting requirements contained in United States
Treasury Regulation Section 1.367(a)-3(c)(6);
3.2.6. not take any action to cause the Parent Ordinary Shares to
cease to be listed on the LSE or the Parent Depositary Shares evidenced by
Parent ADRs to cease to be eligible for quotation on NASDAQ; or
3.2.7. authorize or enter into an agreement to do any of the
foregoing.
Section 3.3. Acquisition Proposals.
---------------------
3.3.1. Each of the Company and Parent agrees that neither it nor
any of its Subsidiaries nor any of its or any of its Subsidiaries' officers
or directors shall, and each of the Company and Parent shall direct and use
its best efforts to cause its and its Subsidiaries' officers, directors,
employees, investment bankers, attorneys, accountants, financial advisors,
agents or other representatives (collectively, with respect to each of the
Company and Parent, the "Representatives") not to, directly or indirectly,
initiate, solicit, encourage or otherwise facilitate any inquiries by any
Person not a Party or the making of any proposal or offer by any Person not
a Party with respect to, a merger, reorganization, share exchange,
consolidation or similar transaction involving the Company or Parent, as
applicable, or any purchase of, or offer to purchase, all or a substantial
portion of the equity securities of the Company or Parent, as applicable,
or of all or a substantial portion of the assets of the Company or Parent,
as applicable, and its Subsidiaries taken as a whole (any such proposal or
offer with respect to the Company or Parent, as applicable, whether made
prior to or after termination of this Agreement, being referred to with
respect to that Party as an "Acquisition Proposal"), except, in each case,
in connection with (and the term "Acquisition Proposal" shall not include)
a proposal for, or with respect to, a transaction that is permitted under
Sections 3.1 or 3.2, as applicable, if immediately after the consummation
of such transaction the stockholders or shareholders of the Company or
Parent, as applicable, immediately prior to the consummation of such
transaction continue to hold at least a majority of the outstanding shares
of the entity surviving or resulting from that transaction. Each of the
Company and Parent further agrees that neither it nor any of its
Subsidiaries nor any of its or any of its Subsidiaries' officers or
directors will, and that it will direct and use its best efforts to cause
its Representatives not to, directly or indirectly, engage in any
discussions or negotiations with or provide any confidential information or
data to any Person not a Party relating to an Acquisition Proposal or
engage in any negotiations concerning an Acquisition Proposal, or otherwise
facilitate any effort or attempt to make or implement an Acquisition
Proposal. Notwithstanding the foregoing, in the event that (i) Parent or
the Company shall receive an Acquisition Proposal and has not at any time
violated, in any material respect, the terms of this Section 3.3.1, (ii)
the Board of Directors of Parent or the Company, as applicable, determines
in its good faith judgment after receiving the advice of its financial
advisor that this Acquisition Proposal is reasonably likely to result in a
Superior Proposal and (iii) after giving the other Party at least 24 hours
notice of its intention to do so, the Party that received the Acquisition
Proposal may, in the case of the Company, prior to the receipt of the
Company Requisite Vote, and in the case of Parent, prior to receipt of the
Parent Requisite Vote, engage in discussions and/or negotiations with the
Person that made the Acquisition Proposal and/or furnish confidential
information and data to that Person pursuant to a customary confidentiality
agreement containing terms (other than any standstill or similar terms) no
less restrictive than those set forth in the Confidentiality Agreement,
dated as of February 13, 2000, between the Company and Parent (the
"Confidentiality Agreement"); provided that a copy of all written
information furnished to the Person that made the Acquisition Proposal is
promptly provided to the other Party to this Agreement. For purposes of
this Agreement, a "Superior Proposal" means in respect of the Company or
Parent, as applicable, any bona fide written Acquisition Proposal that (A)
is no longer conditioned upon or subject to any due diligence investigation
of the Company or Parent, as applicable, and its businesses by the Person
making the Acquisition Proposal and (B) the Board of Directors of the
Company or Parent, as applicable, determines in its good faith judgment (x)
after consultation with its financial advisors (and taking into account all
the terms and conditions of the Acquisition Proposal deemed relevant by
that Board of Directors, including any break-up fees, expense reimbursement
provisions, conditions to consummation, and the ability of the Person
making the Acquisition Proposal to obtain any financing necessary to effect
the transactions contemplated by the Acquisition Proposal), to be more
favorable from a financial point of view to its shareholders or
stockholders, as applicable, than the Merger, and (y) taking into account
all legal, financial, regulatory and other aspects of the Acquisition
Proposal, to constitute a transaction that is reasonably likely to be
consummated on the terms set forth in the Acquisition Proposal.
3.3.2. Each of the Company and Parent agrees that it will
immediately cease and cause to be terminated any existing activities,
discussions or negotiations with any Person conducted heretofore with
respect to any Acquisition Proposal. Each of the Company and Parent also
agrees that, if it has not already done so, it will promptly request, to
the extent it has a contractual right to do so, that each Person, if any,
that has heretofore executed a confidentiality agreement within the 12
months prior to the date of this Agreement in connection with its
consideration of any Acquisition Proposal to return or destroy all
confidential information or data heretofore furnished to any Person by or
on behalf of it or any of its Subsidiaries.
3.3.3. Each of the Company and Parent agrees that it will take
the necessary steps promptly to inform its Subsidiaries and its
Subsidiaries' Representatives of the obligations undertaken in this Section
3.3. Each of the Company and Parent agrees that it will promptly (and in no
event later than 24 hours after receipt of an Acquisition Proposal) notify
(which notice shall be provided orally and in writing and shall identify
the Person making the Acquisition Proposal and set forth its material
terms) the other Party after receipt of an Acquisition Proposal, or if any
nonpublic information is requested from, or any discussions or negotiations
are sought to be initiated or continued with, any of its or its
Subsidiaries' Representatives and thereafter shall keep the other Party
informed, on a current basis, of the status and material terms of any
proposals or offers.
3.3.4. Except as provided in Section 3.3.5, nothing contained in
this Agreement shall prohibit the Company or Parent, as applicable, from
taking and disclosing to its shareholders or stockholders, as applicable, a
position contemplated by Rule 14e-2(a) under the Exchange Act with respect
to an Acquisition Proposal by means of a tender or exchange offer or, in
the case of Parent, taking this action and making these recommendations as
the directors of Parent reasonably consider necessary so as to comply with
any obligations imposed on Parent by the City Code on Takeovers and Mergers
or the U.K. Panel on Takeover and Mergers in relation to any Acquisition
Proposal (provided, that it is hereby acknowledged, for the avoidance of
doubt that no provision of the City Code requires Parent or its directors
to solicit or initiate any Acquisition Proposal).
3.3.5. Subject to its fiduciary duties under applicable Law as
determined by the Board of Directors of Parent in good faith after receipt
of the advice of outside counsel, the Board of Directors of Parent shall
recommend that its shareholders vote to approve the Parent Requisite
Resolutions and the Parent Director Resolutions (and these recommendations
shall be included in the Parent Circular (as defined in Section 3.4.2)).
Subject to its fiduciary duties under applicable law as determined by the
Board of Directors in good faith after receipt of the advice of outside
counsel, the Board of Directors of the Company shall recommend that the
stockholders of the Company vote to approve the adoption of this Agreement
(and this recommendation shall be included in the Company Proxy Statement
(as defined in Section 3.4.1.1)). Notwithstanding the foregoing, (a)
subject to its fiduciary duties under applicable law, the Board of
Directors of the Company shall deliver written notice to Parent four (4)
business days prior to modifying its recommendation to its stockholders
advising Parent that it intends to do so absent modification to the terms
and conditions of this Agreement and (b) subject to its fiduciary duties
under applicable law, the Board of Directors of Parent shall deliver
written notice to the Company four (4) business days prior to modifying its
recommendation to its shareholders advising the Company that it intends to
do so absent modification to the terms and conditions of this Agreement.
3.3.6. The Merger, this Agreement and the transactions
contemplated by this Agreement shall be submitted to the stockholders of
the Company for the purpose of approving this Agreement, the Merger and the
transactions contemplated by this Agreement regardless of the
recommendation or any change in the recommendation of the Company's Board
of Directors with respect thereto.
3.3.7. The Merger, this Agreement and the transactions
contemplated by this Agreement shall be submitted to the shareholders of
Parent for the purpose of approving this Agreement, the Merger and the
transactions contemplated by this Agreement regardless of the
recommendation or any change in the recommendation of Parent's Board of
Directors with respect thereto.
Section 3.4. Information Supplied.
--------------------
3.4.1. Registration Statement; Other SEC Filings.
3.4.1.1. Each of Parent and the Company shall cooperate and
promptly prepare and Parent shall file with the SEC as soon as practicable
a Registration Statement on Form F-4 (or any successor form) (the "Form
F-4") under the Securities Act with respect to the Parent Ordinary Shares
and the Parent Depositary Shares issuable and deliverable pursuant to this
Agreement. A portion of the Form F-4 shall serve as a prospectus with
respect to the Parent Ordinary Shares and Parent Depositary Shares issuable
and deliverable pursuant to the terms of this Agreement and as the
Company's proxy statement with respect to the Company Stockholders' Meeting
(as defined in Section 3.5) (the "Company Proxy Statement"). Parent will
cause the Form F-4 to comply as to form in all material respects with the
applicable provisions of the Securities Act and Exchange Act and the rules
and regulations under the Securities Act and Exchange Act. Each of Parent
and the Company shall use reasonable best efforts to have the Form F-4
declared effective by the SEC as promptly as practicable after the filing.
Parent shall use reasonable best efforts to obtain, prior to the effective
date of the Form F-4, all necessary state securities law or "Blue Sky"
permits or approvals required to effect the transactions contemplated by
this Agreement. Parent will advise the Company, promptly after it receives
notice, of the time when the Form F-4 has become effective or any
supplement or amendment has been filed, the issuance of any stop order, the
suspension of the qualification of the Parent Depositary Shares or Parent
Ordinary Shares issuable and deliverable in connection with the Merger for
offering or sale in any jurisdiction.
3.4.1.2. The Company and Parent each agrees, as to itself
and its Subsidiaries, that none of the information supplied or to be
supplied by it or its Subsidiaries for inclusion or incorporation by
reference in the Form F-4 or the Company Proxy Statement, including any
amendment or supplement, will, at the time the Form F-4 becomes effective
under the Securities Act, or, in the case of the Company Proxy Statement,
at the date of mailing to stockholders and at the time of the Company
Stockholder Meeting, contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary
in order to make the statements therein, in the light of the circumstances
under which they were made, not misleading. If at any time prior to the
date of the consummation of the Merger any information relating to the
Company or Parent, or any of their respective Affiliates, officers or
directors, should be discovered by the Company or Parent which should be
set forth in an amendment and/or a supplement to the Form F-4 or the
Company Proxy Statement, so that the Form F-4 or the Company Proxy
Statement would not, at the time the Form F-4 becomes effective under the
Securities Act, or, in the case of the Company Proxy Statement, at the date
of mailing to stockholders and at the time of the Company Stockholder
Meeting, include any misstatement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading, the Party which discovers this information shall
promptly notify the other Party and, to the extent required by Law, an
appropriate amendment or supplement describing that information shall be
promptly filed with the SEC or any other applicable Governmental Entity
and, to the extent required by Law, disseminated to the Company's
stockholders.
3.4.1.3. Each of Parent and the Company will use reasonable
best efforts to cause the Parent Documents (as defined in Section 3.4.2) or
the Company Proxy Statement, as applicable, to be mailed to its respective
shareholders or stockholders, as applicable, as promptly as practicable
after the date of this Agreement.
3.4.2. The Company and Parent shall cooperate and Parent shall
promptly prepare and file with the UKLA (a) a circular to be sent to Parent
shareholders in connection with the Parent Shareholders Meeting (as defined
in Section 3.5) (the "Parent Circular"), containing (i) a notice convening
the Parent Shareholders Meeting, (ii) any other information (if any) as may
be required by the UKLA and (iii) any other information as Parent and the
Company shall agree to include; and (b) listing particulars relating to
Parent and its Subsidiaries and the Parent Ordinary Shares (the "Parent
Listing Particulars," and the Parent Circular and the Parent Listing
Particulars together being the "Parent Documents"). Parent agrees, as to
itself and its Subsidiaries, that the Parent Documents and any supplements
and any other circulars or documents issued to shareholders or employees of
Parent, will contain all particulars relating to Parent required to comply
in all material respects with all United Kingdom statutory and other legal
provisions (including, without limitation, the Companies Act, the U.K.
Financial Services Act 1986 and the rules and regulations made thereunder,
and the rules and requirements of the UKLA, LSE, NYSE and the NASDAQ) and
the Company and Parent each agrees, as to itself and its Subsidiaries, that
all information contained in those documents with respect to itself or its
Subsidiaries will be substantially in accordance with the facts and will
not omit anything material likely to affect the import of that information.
Parent will prepare (with the cooperation of the Company) a summary of the
Parent Listing Particulars, which shall comprise a fair summary of the key
information set out in the Parent Listing Particulars to be included in the
Company Proxy Statement.
Section 3.5. Meetings. The Company will take all action necessary
to convene a meeting to be held as promptly as practicable after the Form
F-4 has been declared effective by the SEC, of the holders of Company
Common Shares and Company Money Market Preferred Shares at which those
stockholders will vote with respect to the adoption of this Agreement (the
"Company Stockholders' Meeting"). Parent will take all action necessary to
convene, as promptly as practicable, after the Parent Documents have been
approved by the LSE, an extraordinary general meeting of Parent
shareholders at which the resolutions specified in the next succeeding
sentence will be proposed (the "Parent Shareholders Meeting"). Parent shall
propose at the Parent Shareholders Meetings resolutions to approve all of
the following transactions or matters: (1) (A) an increase in the
authorized ordinary share capital of Parent and (B) the authorization of
the Board of Directors of Parent to allot securities, including to the
Company stockholders pursuant to the Merger (the "Parent Requisite
Resolutions"), (2) the election of the Company Designees (as defined in
Section 3.9.3 of this Agreement) in accordance with Section 3.9.3, subject
to the consummation of the Merger (the "Parent Director Resolutions"), and
(3) any additional resolutions necessary to effect the transactions
contemplated by this Agreement.
Section 3.6. Filings; Other Actions; Notification.
------------------------------------
3.6.1. (a) Subject to Section 3.3.5 of this Agreement, the
Company and Parent shall each cooperate with the other and (i) use (and
shall cause their respective Subsidiaries to use) their reasonable best
efforts promptly to take or cause to be taken all actions, and do or cause
to be done all things, necessary, proper or advisable under this Agreement
and applicable Laws to consummate the Merger and the other transactions
contemplated by this Agreement as promptly as practicable, including
preparing and filing as promptly as practicable all documentation to effect
all necessary filings, notices, petitions, statements, registrations,
submissions of information, applications and other documents, and (ii) use
(and shall cause their respective Subsidiaries to use) reasonable best
efforts to obtain as promptly as practicable all approvals, consents,
registrations, permits, authorizations and other confirmations required to
be obtained from any third party, including the Company Required Consents
and Parent Required Consents, necessary, proper or advisable to consummate
the Merger and the other transactions contemplated by this Agreement.
Parent shall offer to take (and if this offer is accepted, commit to take)
all steps which, to the extent consistent with its use of reasonable best
efforts, it is capable of taking to avoid or eliminate impediments under
any antitrust, competition, or trade regulation law that may be asserted by
any Governmental Entity with respect to the Merger so as to enable the
Effective Time to occur as promptly as possible and shall use its
reasonable best efforts to defend through litigation on the merits any
claim asserted in any court by any party, including appeals. Without
limiting the foregoing, Parent shall, to the extent consistent with its use
of reasonable best efforts, (x) propose, negotiate, offer to commit and
effect (and if this offer is accepted, commit to and effect), by consent
decree, hold separate order, or otherwise, the sale, divestiture or
disposition of any assets or businesses or otherwise or (y) offer to take,
or offer to commit to take, any action limiting its freedom of action with
respect to, any businesses, services, or assets, in each case in order to
avoid the entry of, or to effect the dissolution of, any injunction,
temporary restraining order or other order that prohibits consummation of
the Merger.
(b) Notwithstanding anything contained in this Agreement to the
contrary, neither Party shall be required by this Section 3.6.1 to take any
action, including to accept or agree to any conditions, terms or
restrictions or any disposition of assets or businesses, as the case may
be, (x) which are not conditioned on consummation of the Merger or (y)
which, individually or in the aggregate, would have a Material Adverse
Effect on Parent, the Company and their respective Subsidiaries taken
together after giving effect to the Merger.
(c) The Company shall not accept or agree to any conditions,
terms, or restrictions or any disposition of assets or business pursuant to
this Section 3.6.1 without the prior written consent of Parent (not to be
unreasonably withheld). Subject to applicable Laws relating to the exchange
of information, the Company and Parent shall have the right to review in
advance, and to the extent practicable each will consult the other on, all
the information relating to the Company and its Subsidiaries or Parent and
its Subsidiaries, as the case may be, that appears in any filing made with,
or written materials submitted to, any third party and/or any Governmental
Entity in connection with the Merger and the other transactions
contemplated by this Agreement. In exercising the foregoing right, each of
the Company and Parent shall act reasonably and as promptly as practicable.
3.6.2. The Company and Parent each shall, upon request by the
other, furnish the other with all information concerning itself, its
Subsidiaries, directors, officers and shareholders and stockholders, as
applicable, and any other matters as may be reasonably necessary or
advisable in connection with the Form F-4, the Company Proxy Statement, the
Parent Documents or any other necessary filing, notice, statement,
registration, submission of information or application made by or on behalf
of the Company or Parent or any of their respective Subsidiaries to any
third party and/or any Governmental Entity in connection with the Merger
and the other transactions contemplated by this Agreement.
3.6.3. The Company and Parent each shall keep the other apprised
of the status of matters relating to the Merger and the other transactions
contemplated by this Agreement, including promptly furnishing the other
with copies of notices or other communications received by the Company or
Parent, as the case may be, or any of its Subsidiaries, from any third
party whose consent or approval is required or advisable and/or any
Governmental Entity with respect to the Merger and the other transactions
contemplated by this Agreement. The Company and Parent each shall give
reasonably prompt notice to the other of any change which in its good faith
judgement would have a Material Adverse Effect on it or of any failure of
any condition set forth in Article IV to the other Party's obligations to
effect the Merger.
3.6.4. Prior to making any filing, notice, petition, statement,
registration, submission of information or application to or with any third
party and/or Governmental Entity (including any securities exchange) in
connection with the consummation of the Merger and the other transactions
contemplated by this Agreement and except as may be required by Law or by
obligations pursuant to any listing agreement with or the rules of any
securities exchange, each Party shall make all reasonable best efforts to
consult with the other Party with respect to the content of the filing,
notice, petition, statement, registration, submission of information or
application and to provide the other Party with copies of the proposed
filing, notice, petition, statement, registration, submission of
information or application. The Company and Parent each shall not agree to
participate in any meeting with any Governmental Entity in respect of any
filings, investigation or other inquiry relating to the Merger and the
other transactions contemplated by this Agreement unless it consults with
the other Party in advance and, to the extent practicable and permitted by
the Governmental Entity, gives the other Party the opportunity to attend
and participate thereat.
3.6.5. In the event any claim, action, suit, investigation or
other proceeding by any Governmental Entity or other Person or other legal
or administrative proceeding is commenced that questions the validity or
legality of this Agreement, the Merger or the other transactions
contemplated by this Agreement or claims or damages in connection
therewith, the Parties agree to cooperate and use commercially reasonable
efforts, subject to the limitations set forth in Section 3.6.1, to defend
against and respond thereto.
Section 3.7. Access. In order to facilitate the consummation of
the Merger and the other transactions contemplated by this Agreement, the
Parties agree that, upon reasonable request to any Parent Executive
Director or Company Officer, as the case may be, designated for the
purpose, and except as may otherwise be required by applicable Law, the
Company and Parent each shall (and shall cause its Subsidiaries to) provide
reasonable access to the Representatives of the other, during normal
business hours throughout the period prior to the Effective Time, to its
properties, books, contracts and records and, during this period, each
shall (and shall cause its Subsidiaries to) furnish promptly to the other
all information concerning its business, properties and personnel as may
reasonably be requested; provided that no receipt of information pursuant
to this Section 3.7 shall affect or be deemed to modify any representation
or warranty made by the Company or Parent hereunder; and provided, further,
that the foregoing shall not require the Company or Parent to permit any
inquiry, or to disclose any information, that in the reasonable judgment of
the Company or Parent, as the case may be, would (i) violate any antitrust
or competition Law or (ii) result in the disclosure of any trade secrets of
third parties or violate any of its obligations with respect to
confidentiality to third parties if the Company or Parent, as the case may
be, shall have used commercially reasonable efforts to obtain the consent
of the third party to inspection or disclosure. All of this information
shall be governed by the terms of the Confidentiality Agreement, including
without limitation all information disclosed in the Disclosure Schedules,
and the Company and Parent, and each of their respective Subsidiaries,
shall use commercially reasonable efforts to maintain the confidentiality
of all of the information disclosed in the Disclosure Schedules.
Section 3.8. Publicity. The initial press release concerning this
Agreement, the Merger and the other transactions contemplated by this
Agreement shall be a joint press release, and thereafter the Company and
Parent shall consult with each other prior to issuing any press releases or
otherwise making public announcements with respect to the Merger and the
other transactions contemplated by this Agreement.
Section 3.9. Benefits and Other Matters.
--------------------------
3.9.1. Employee Benefits.
-----------------
3.9.1.1. For at least the twelve month period immediately
following the Effective Time, Parent will, or will cause the Surviving
Corporation to, provide to Company Employees (i) salary, incentive
compensation and other employee benefits (other than equity-based benefits
and compensation) which in the aggregate are substantially comparable to
the benefits provided pursuant to the Company's and its Subsidiaries'
plans, programs, policies and arrangements immediately prior to the
Effective Time and (ii) equity-based benefits and compensation pursuant to
criteria and procedures established by Parent which will be substantially
similar to the criteria and procedures applied to similarly situated
employees of Parent or its Subsidiaries; provided, however, that, (x) with
respect to Company Employees who are subject to collective bargaining or
other labor agreements, all benefits shall be provided in accordance with
the applicable collective bargaining or other labor agreements and (y) with
respect to Company Employees party to an employment agreement with the
Company, all salary, incentive compensation and other employee benefits
shall be provided in accordance with the employment agreement with the
Company Employee; and provided, further, that except as set forth in the
following sentence the foregoing shall not be construed to limit Parent's
flexibility in determining the design of any benefit plan or program. In
respect of the annual bonus payable to the Company Employees for service
rendered in calendar year 2000, Parent will, or will cause the Surviving
Corporation to, continue to honor the terms and conditions of and
obligations (whether existing as of the date of this Agreement or
thereafter) under the Company's year 2000 annual bonus program and the
award or participation agreements thereunder (the "2000 Bonus Program"),
which 2000 Bonus Program will be administered consistent with the Company's
historic annual bonus programs. The Company represents to Parent, and
Parent hereby acknowledges that, for purposes of the Company's Change in
Control Severance Plan, the "Service Supplement" and the "Severance Factor"
shall be, for purposes of persons identified in Section 2.1.10 of the
Company Disclosure Schedule as "Tier 1", "Tier 2" and "Tier 3" employees,
3, 2 and 1, respectively.
3.9.1.2. As of and after the Effective Time, Parent will, or
will cause the Surviving Corporation to, give Company Employees full credit
for purposes of eligibility and vesting and benefit accruals and
determinations (but not for purposes of benefit accruals or determinations
under any defined benefit pension plans, to the extent this credit would
result in a duplication of benefits for the same period of service), under
any employee compensation and incentive plans, benefit plans, programs,
policies and arrangements maintained for the benefit of Company Employees
as of and after the Effective Time by Parent, its Subsidiaries or the
Surviving Corporation for the Company Employees' service with the Company,
its Subsidiaries and their predecessor entities to the same extent
recognized by the Company immediately prior to the Effective Time. Parent
will, or will cause its Subsidiaries, to provide each Company Employee with
credit for any co-payments and deductibles incurred prior to the Effective
Time (or that later transition date to new welfare benefits plans as
defined in Section 3(1) of ERISA) for the calendar year in which the
Effective Time (or that later transition date) occurs, in satisfying any
applicable deductible or out-of-pocket requirements under any welfare plans
that the Company Employees are eligible to participate in after the
Effective Time.
3.9.1.3. From and after the Effective Time, Parent will
honor, and will cause its Subsidiaries to honor, in accordance with its
terms, (x) each existing employment, change of control, severance and
termination plan, policy or agreement of or between the Company or any of
its Subsidiaries and any officer, director or employee of that company,
equity-based plans, programs or agreements, bonus plans or programs and (y)
all obligations pursuant to outstanding restoration plans, equity-based
plans, programs or agreements, bonus plans or programs, bonus deferral
plans, vested and accrued benefits under any employee benefit plan, program
or arrangement of the Company or its Subsidiaries and similar employment,
compensation and benefit arrangements and agreements in effect as of the
Effective Time, in each case to the extent legally binding on the Company
or any of its Subsidiaries.
3.9.2. Director and Officer Indemnification and Insurance. (a)
Parent agrees that all rights to indemnification and all limitations on
liability existing in favor of any Indemnitee (as defined below) in respect
of acts or omissions of these Indemnitees on or prior to the Effective Time
as provided in the certificate of incorporation and by-laws of the Company
or an agreement between an Indemnitee and the Company or its Subsidiaries
in effect as of the date of this Agreement shall continue in full force and
effect in accordance with its terms.
(b) For six years after the Effective Time, Parent shall
indemnify and hold harmless the individuals who on or prior to the
Effective Time were officers or directors of the Company or any of its
Subsidiaries (the "Indemnitees") to the same extent as set forth in Section
3.9.2(a) above with respect to all actions or omissions by them in their
capacities as officers or directors of the Company, or taken by them at the
request of, the Company or any of its Subsidiaries. In the event any claim
in respect of which indemnification is available pursuant to the foregoing
provisions is asserted or made within that six-year period, all rights to
indemnification shall continue until the claim is disposed of or all
judgments, orders, decrees or other rulings in connection with the claim
are duly satisfied.
(c) For six years after the Effective Time, Parent agrees
that it will or will cause the Surviving Corporation to indemnify and hold
harmless the Indemnitees against any costs or expense (including reasonable
attorney's fees), judgements, fines, losses, claims, damages or liabilities
incurred in connection with any claim, action, suit proceeding or
investigation, whether civil, criminal, administrative or investigative,
arising out of or pertaining to matters relating to their duties or actions
in their capacity as officers and directors and existing or occurring at or
prior to the Effective Time, whether asserted or claimed prior to, at or
after the Effective Time, to the fullest extent permitted under applicable
law (and Parent shall, or shall cause the Surviving Corporation to, also
advance fees and expenses (including reasonable attorney's fees) as
incurred to the fullest extent permitted under applicable law; provided
that the person to whom expenses are advanced provides a customary
undertaking complying with applicable law to repay these expenses if it is
ultimately determined that this person is not entitled to indemnification).
The Certificate of Incorporation of the Surviving Corporation shall contain
provisions not less favorable with respect to indemnification than are set
forth in Article X of the Company's Certificate of Incorporation, which
provisions shall not be amended, repealed or otherwise modified for a
period of six years from the Effective Time in any manner that would
adversely affect the rights thereunder of the Indemnitees.
(d) For six years after the Effective Time, Parent shall
procure the provision of officers' and directors' liability insurance in
respect of acts or omissions occurring prior to the Effective Time covering
each Person currently covered by the Company's officers' and directors'
liability insurance policy on terms with respect to coverage and in amounts
no less favorable than those of the policy in effect on this date;
provided, however, that during this period, Parent shall not be required to
procure any coverage in excess of the amount that can be obtained for the
remainder of the period for an annual premium of 200% of the current annual
premium paid by the Company for its existing coverage.
(e) The obligations of Parent under this Section 3.9.2 shall
not be terminated or modified in a manner as to adversely affect any
Indemnitee to whom this Section 3.9.2 applies without the consent of the
affected Indemnitee (it being expressly agreed that the Indemnitees to whom
this Section 3.9.2 applies are intended to and shall be third party
beneficiaries of this Section 3.9.2).
3.9.3. Directors and Officers of Parent. The Board of Directors
of Parent shall take all action necessary so that, at the Effective Time,
the Board of Directors of Parent shall consist of: sixteen (16) directors,
(x) ten (10) of which shall be selected by the Board of Directors of Parent
prior to the Effective Time from among the directors of Parent (the "Parent
Designees"), (y) five (5) current directors of the Company listed on
Exhibit C (the "Company Designees") and (z) Mr. Masao Inagaki. If any of
the Company Designees are unable to serve due to death, illness, disability
or any other similar reason, prior to the Effective Time, the Company shall
select a replacement who shall be a "Company Designee" subject to Parent's
approval not to be unreasonably withheld; provided that at least one
Company Designee shall be neither a U.S. citizen nor a U.S. resident for
purposes of Rule 3b-4(c)(2)(i) under the Exchange Act (this Company
Designee, a "Non-US Company Designee"). If during a two year period after
the Effective Time any Company Designee ceases to be a member of the Board
of Directors of Parent due to retirement, resignation, death, illness,
disability or similar reason, the remaining Company Designees shall be
entitled to recommend a replacement (reasonably acceptable to Parent), who
if so appointed shall be for purposes of this sentence a "Company
Designee." Subject to the provisions of the memorandum and articles of
association of Parent and its fiduciary duties under applicable Law,
Parent's Board of Directors shall appoint the recommended replacement to
Parent's Board of Directors; provided that if a Non-US Company Designee is
to be replaced, the recommended replacement shall be neither a U.S. citizen
nor a U.S. resident for purposes of Rule 3b-4(c)(2)(i) under the Exchange
Act. In the event that Mr. Inagaki is unable to serve due to death,
illness, disability or other similar reason, Parent shall select a
replacement (reasonably acceptable to the Company Designees) who is neither
a U.S. citizen or a U.S. resident for purposes of Rule 3b-4(c)(2)(i) under
the Exchange Act. Following the Effective Time, a majority of the meetings
of the Board of Directors of Parent in each year shall be held in London,
England. As of the Effective Time, the Company's current Chief Executive
Officer shall be the Chairman of the Company, and the Company's current
Chief Financial Officer shall be the President and CEO of the Company
following the Effective Time.
Section 3.10. Expenses. Except as otherwise provided in Section
5.5, whether or not the Merger is consummated, all costs and expenses
incurred in connection with the Merger, this Agreement and the transactions
contemplated by this Agreement shall be paid by the party incurring the
expense, except that the Company and Parent shall share equally the costs
and expenses of filing, printing and distributing the Form F-4, the Company
Proxy Statement, the Parent Documents and related documents.
Section 3.11. Other Actions by the Company and Parent.
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3.11.1. Takeover Statutes. Subject to their respective fiduciary
duties under applicable Law, if any Takeover Statute is or may become
applicable to the Merger or the other transactions contemplated by this
Agreement, each of the Company and Parent and their respective Board of
Directors shall, subject to applicable Law, grant any approvals and take
any actions as are necessary so that the Merger and the other transactions
contemplated by this Agreement may be consummated as promptly as
practicable on the terms contemplated by this Agreement, and otherwise act
to eliminate or minimize the effects of any Takeover Statute on these
transactions.
3.11.2. Dividends. After the date of this Agreement, each of
Parent and the Company shall coordinate with the other as to the
declaration of any dividends in respect of Parent Ordinary Shares and
Company Common Shares and the record dates, it being the intention of the
Parties that Persons who are holders of Company Common Shares prior to the
Merger and holders of Parent Ordinary Shares or Parent Depositary Shares
receive in respect of the calendar year in which the Closing Date occurs
either (x) four quarterly dividends in respect of their Company Common
Shares, (y) two semi-annual dividends in respect of the Parent Ordinary
Shares or Parent Depositary Shares they receive pursuant to the Merger or
(z) two quarterly dividends in respect of their Company Common Shares and
one semi-annual dividend in respect of the Parent Ordinary Shares or Parent
Depositary Shares they receive pursuant to the Merger.
Section 3.12. Trading/Listing Applications; Establishment of
Parent Depositary Shares. Parent shall promptly prepare and submit to the
LSE an application with respect to the admission of the Parent Ordinary
Shares to trading on the LSE and to the NASDAQ a listing application in
respect of the Parent Depositary Shares issuable pursuant to the Merger,
and shall use reasonable best efforts to obtain, prior to the Effective
Time, approval for the admission to trading of the Parent Ordinary Shares,
in the case of the LSE, subject to allotment, and the listing of the Parent
Depositary Shares, in the case of the NASDAQ, subject to official notice of
issuance. Parent will prior to the Effective Time enter into all necessary
agreements with the Depositary and other parties to establish the Parent
Depositary Shares deliverable pursuant to the Merger.
Section 3.13. Letters of Accountants.
----------------------
(a) The Company shall use commercially reasonable efforts to
cause to be delivered to Parent "comfort" letters of PricewaterhouseCoopers
LLP, the Company's independent public accountants, dated the effective date
of the Form F-4 and the Closing Date, respectively, and addressed to the
Company and its directors and Parent and its directors, in form reasonably
satisfactory to Parent and customary in scope and substance for "comfort"
letters delivered by independent public accountants in connection with
registration statements similar to the Form F-4.
(b) Parent shall use commercially reasonable efforts to cause to
be delivered to the Company "comfort" letters of Arthur Anderson, Parent's
independent public accountants, dated the effective date of the Form F-4
and the Closing Date, respectively, and addressed to Parent and its
directors and the Company and its directors, in form reasonably
satisfactory to the Company and customary in scope and substance for
"comfort" letters delivered by independent public accountants in connection
with registration statements similar to the Form F-4.
Section 3.14. Agreements of Company Affiliates. The Company shall
promptly cause to be prepared and delivered to Parent a list identifying
all persons who may be deemed to be as of the date of the Company
Stockholders Meeting "affiliates" of the Company for purposes of Rule 145
under the Securities Act (the "Company Affiliates"), and shall use
commercially reasonable efforts to cause each Company Affiliate to deliver
to Parent an executed agreement in the form attached as Exhibit D as
promptly as practicable prior to the Closing Date.
Section 3.15. Tax Representation Letters. Parent shall deliver to
counsel to Parent and to counsel to the Company as of the Closing Date a
"Tax Representation Letter" substantially in the form attached as Exhibit E
and containing any other customary representations as shall be necessary to
enable each counsel to render the opinions described in Sections 4.2.3 and
4.3.3 of this Agreement. The Company shall deliver to counsel to the
Company and to counsel to Parent as of the Closing Date a Tax
Representation Letter substantially in the form attached as Exhibit F and
containing any other customary representations as shall be necessary to
enable counsel to render the opinions described in Sections 4.2.3 and 4.3.3
of this Agreement.
Section 3.16. Section 16(b). Parent and the Company shall take all
steps reasonably necessary to cause the transactions contemplated by this
Agreement and any other dispositions of equity securities of the Company
(including derivative securities) in connection with the transactions
contemplated by this Agreement by each individual who is a director or
officer of the Company to be exempt under Rule 16b-3 promulgated under the
Exchange Act.
Section 3.17. Employee and No-Sale Agreements to be Entered into
by Designees. The Company and Parent shall use their reasonable best
efforts to induce each of the employees and/or stockholders of the Company
and its Subsidiaries designated by the Group Chief Executive of Parent in
consultation with the Chief Executive Officer of the Company to enter into
an Employment Agreement (including the terms discussed prior to the date of
this Agreement) and/or a No-Sale Agreement, in each case as designated
prior to the Effective Time; provided that, with respect to any Person who
does not enter into an Employment Agreement and/or No-Sale Agreement,
nothing in this Section 3.17 shall affect the rights this Person may have
under any existing employment agreements, severance plans or arrangements
in which this Person is a party or participant.
Section 3.18. Headquarters; Name.
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3.18.1. Headquarters of the Parent. The main headquarters and
company offices of Parent will continue to be located in London, England
after the Effective Time.
3.18.2. Headquarters of Advertising Agencies of the Company. The
headquarters of each advertising agency operated by the Company and/or any
of its Subsidiaries that, as of the date of this Agreement, is located in
the United States will continue to be located in the United States after
the Effective Time.
3.18.3. Name of Parent. Parent shall maintain its current company
name after the Effective Time.
Section 3.19. Convertible Notes.
-----------------
3.19.1. If required by the terms of the Convertible Notes
Indenture, Parent shall make, or shall cause the Company to make, a
Designated Event Offer, as defined in the Indenture dated as of January 20,
2000 for the Company's 3% Convertible Subordinated Notes (the "Convertible
Notes Indenture"), in accordance with Sections 3.08 and 4.07 thereof, to
all the holders of convertibles notes ("Note Holders") under the
Convertible Notes Indenture.
3.19.2. To the extent requested by Parent, the Company shall use
its reasonable best efforts to cooperate in obtaining, prior to the Closing
Date, the consent of the Note Holders as is necessary under the Convertible
Notes Indenture to amend the Convertible Notes Indenture to remove Section
4.02 (other than the first sentence thereof); provided that if this
Agreement is terminated prior to the consummation of the Merger, Parent
shall reimburse the Company for its out of pocket fees and expenses
(including any consent fee paid but only to the extent requested by Parent)
incurred pursuant to this Section 3.19.2.
Section 3.20. Treatment of Holders of Parent Depositary Shares. (a)
Parent shall, at or prior to the Effective Time, enter into an amendment to
the Deposit Agreement with the Depositary to require that Parent deliver to
the Depositary for mailing, and if so delivered, the Depositary shall mail
or cause to be mailed, to the registered holders of Parent Depositary
Shares any reports mailed or otherwise distributed to holders of Parent
Ordinary Shares. This amendment shall be reasonably satisfactory to the
Company.
(b) Parent shall include for consideration by its shareholders at
the first annual general meeting of Parent after the Effective Time and,
subject to its fiduciary duties, the Board of Directors of Parent shall
recommend the approval of a resolution to approve amendments to Parent's
articles of association in order to provide, to the extent reasonably
practicable, for the holders of Parent Depositary Shares substantially the
same rights as holders of Parent Ordinary Shares, including with respect to
the rights to receive notice of, attend, speak and vote at general meetings
of holders of Parent Ordinary Shares including by providing for the
appointment of multiple proxies and sub-proxies and by providing that all
votes on special and extraordinary resolutions be taken on a poll. If these
amendments are approved, Parent shall cause the Deposit Agreement to be
amended to the extent reasonably necessary to give effect to these
amendments to Parent's articles of association. In addition, the Parent
shall include for consideration by its shareholders at the first annual
general meeting of Parent after the Effective Time and, subject to its
fiduciary duties, the Board of Directors of Parent shall recommend approval
of, a resolution to amend the Parents' articles of association to provide
for the delivery of notice of Parent board meetings to directors outside
the United Kingdom (whether or not requested by a director).
Section 3.21 Transition Committee. (a) The Parties will maintain,
during the period from the date of this Agreement through the first
anniversary of the Effective Time, a transition committee (the "Transition
Committee") initially comprised of the Company's current Chief Executive
Officer (who shall be Chairman of the Transition Committee) and Chief
Financial Officer (the "Company Committee Members") and Parent's current
Group Chief Executive and Group Finance Director (the "Parent Committee
Members"). The Transition Committee shall not be responsible for
controlling the operation of the businesses of the Company or Parent.
During the period from the Effective Time until the first anniversary of
the Effective Time, unless approved by a majority of the members of the
Transition Committee, Parent shall not, and shall not permit any of its
Subsidiaries to, (x) cause any of the material businesses of the Company or
any of its Subsidiaries existing as of the date of this Agreement to be
combined with any business of, or held by, Parent or any of its
Subsidiaries (other than the Company and its Subsidiaries) or (y) offer any
employee of the Company or any of its Subsidiaries employment with Parent
or any Subsidiary of Parent (other than the Company or any of its
Subsidiaries). In the event that any Parent Committee Member or Company
Committee Member shall not become, or, prior to the first anniversary of
the Effective Time, shall cease to be, for any reason, a member of the
Transition Committee, the remaining Parent Committee Member (if the person
ceasing to be a member was a Parent Committee Member) or Company Committee
Member (if the person ceasing to be a member was a Company Committee
Member) shall select a replacement Parent Committee Member or Company
Committee Member, as applicable, who shall be (x) if selected by the
remaining Company Committee Member, an employee of the Company or any of
its Subsidiaries, and (y) if selected by the remaining Parent Committee
Member, an employee of Parent or any of its Subsidiaries.
(b) In the event that Parent breaches any of the provisions of
Section 3.21(a) (and Parent fails to cure the breach within thirty (30)
business days after having received written notice from any Company
Committee Member setting forth in reasonable detail the action or inaction
giving rise to the breach), any party to a No-Sale Agreement shall have the
right during the thirty (30) day period thereafter to terminate the
provisions of Section 1(a) of the No-Sale Agreement, which upon this
termination the provisions of that Section will be of no further force and
effect.
ARTICLE IV
CONDITIONS
Section 4.1. Conditions to Each Party's Obligation to Effect the
Merger. The respective obligations of Parent, Merger Sub and the Company to
effect the Merger are subject to the satisfaction or waiver of each of the
following conditions:
4.1.1. Shareholder Approvals. (a) This Agreement shall have been
adopted by the stockholders of the Company constituting the Company
Requisite Vote and (b) the Parent Requisite Resolutions and the Parent
Director Resolutions shall have been duly approved by the shareholders of
Parent constituting the Parent Requisite Vote.
4.1.2. Regulatory Consents. (a) All the Company Required Consents
and Parent Required Consents from or with any Governmental Entity in
connection with the consummation of the Merger and the other transactions
contemplated by this Agreement shall have been made or obtained, and (b)
all other consents, approvals, declarations and authorizations of any
Governmental Entity of competent jurisdiction the failure of which to have
been obtained prior to the Effective Time would, individually or in the
aggregate, have a Material Adverse Effect on Parent or a Material Adverse
Effect on the Company after the Effective Time, or make illegal the
consummation of the Merger (these consents, approvals, declarations and
authorizations, together with the Company Required Consents and the Parent
Required Consents, the "Governmental Consents") shall have been obtained.
No Governmental Consents shall contain any terms or impose any condition or
restriction relating or applying to, or requiring changes in or limitations
on, the operation of any asset or businesses of the Company, Parent or any
of their respective Subsidiaries which term, condition or restriction,
individually or in the aggregate, would have a Material Adverse Effect on
Parent, the Company and their respective Subsidiaries, taken as a whole
after giving effect to the Merger.
4.1.3. Laws and Orders. No Governmental Entity of competent
jurisdiction shall have enacted, issued, promulgated, enforced or entered
any Law (whether temporary, preliminary or permanent) that is in effect and
restrains, enjoins or otherwise prohibits the consummation of the Merger,
or that would materially frustrate the express intent and purposes of this
Agreement (collectively, "Order") and no Governmental Entity of competent
jurisdiction has instituted a proceeding that would, individually or in the
aggregate, have a Material Adverse Effect on Parent, the Company and their
respective Subsidiaries, taken as a whole after giving effect to the
Merger.
4.1.4. Effectiveness of Form F-4. The Form F-4 shall have become
effective and no stop order suspending the effectiveness of the Form F-4
shall then be in effect, and no proceeding for that purpose shall then be
threatened by the SEC or shall have been initiated by the SEC and not
concluded or withdrawn and all state securities or "blue sky" permits or
approvals required to consummate the Merger shall have been received.
4.1.5. Listing and Trading. The Parent Ordinary Shares to be
issued pursuant to the Merger shall have been admitted to the Official List
of the UKLA and to trading on the main market of the LSE and this admission
shall have become effective in accordance with the rules and regulations of
the UKLA and the LSE and the Parent Depositary Shares to be issued shall
have been authorized for listing on the NASDAQ, subject to official notice
of issuance.
Section 4.2. Conditions to Obligations of Parent and Merger Sub.
The obligation of Parent to effect the Merger is also subject to the
satisfaction or waiver by Parent prior to the Closing Date of the following
conditions:
4.2.1. Representations and Warranties of the Company. Each
representation and warranty of the Company set forth in this Agreement
shall be true and correct in all material respects when made and as of the
Closing Date as if made on and as of that date (provided that those
representations and warranties which are by their express provisions made
as of a specific date need be true and correct only as of the specified
date), except to the extent that the failures of the representations and
warranties to be true and correct, taken together, would not reasonably be
expected to have a Material Adverse Effect on the Company (it being
understood that, for purposes of determining the accuracy of any
representations and warranties, all "Material Adverse Effect"
qualifications and other qualifications based on the word "material"
contained in the representations and warranties shall be disregarded),
provided, however, that the foregoing Material Adverse Effect qualifier
shall be inapplicable with respect to the representations and warranties
contained in Section 2.1.2(a), which shall be true and correct in all
material respects, and Parent shall have received a certificate signed on
behalf of the Company by an executive officer of the Company to that
effect.
4.2.2. Performance of Obligations of the Company. The Company
shall have performed in all material respects all obligations and covenants
required to be performed by or complied with by it under this Agreement at
or prior to the Closing Date, and Parent shall have received a certificate
signed on behalf of the Company by an executive officer of the Company to
that effect.
4.2.3. Tax Opinion. Parent shall have received an opinion from
Fried, Frank, Harris, Shriver & Jacobson (or, if Fried, Frank, Harris,
Shriver & Jacobson refuses to issue this opinion, from other counsel
reasonably satisfactory to Parent), dated as of the Closing Date,
substantially to the effect that, on the basis of the facts,
representations and assumptions set forth in the opinion, (i) the Merger
will be treated for U.S. federal income tax purposes as a reorganization
within the meaning of Section 368 of the Code (ii) Parent will be treated
as a corporation under Section 367(a) of the Code with respect to each
transfer of property thereto pursuant to the Merger, (iii) no gain or loss
will be recognized by the stockholders of the Company who exchange Company
Common Shares solely for Parent Ordinary Shares or Parent Depositary Shares
pursuant to the Merger (except with respect to cash received in lieu of
fractional interests in Parent Depositary Shares or Parent Ordinary
Shares), and (iv) each of Parent, Merger Sub and the Company will be a
party to the reorganization within the meaning of Section 368 of the Code.
The opinion set forth in clause (ii) may assume that any stockholder who is
a "five-percent transferee shareholder" with respect to Parent within the
meaning of United States Treasury Regulation Section 1.367(a)-3(c)(5)(ii)
files the agreement described in United States Treasury Registration
Section 1.3.67(a) - 3(c)(1)(iii)(B). In rendering its opinion, counsel
shall be entitled to rely upon customary representations of Parent and the
Company reasonably requested by counsel, including, without limitation,
those contained in the Tax Representation Letters substantially in the form
of Exhibits E and F.
Section 4.3. Conditions to Obligation of the Company. The
obligation of the Company to effect the Merger is also subject to the
satisfaction or waiver by the Company prior to the Closing Date of the
following conditions:
4.3.1. Representations and Warranties of Parent . Each
representation and warranty of Parent set forth in this Agreement shall be
true and correct in all material respects when made and as of the Closing
Date as if made on and as of that date (provided that those representations
and warranties which are by their express provisions made as of a specific
date need be true and correct only as of the specified date), except to the
extent that the failures of the representations and warranties to be true
and correct, taken together, would not reasonably be expected to have a
Material Adverse Effect on Parent (it being understood that, for purposes
of determining the accuracy of any representations and warranties, all
"Material Adverse Effect" qualifications and other qualifications based on
the word "material" contained in the representations and warranties shall
be disregarded), provided, however, that the foregoing Material Adverse
Effect qualifier shall be inapplicable with respect to the representations
and warranties contained in Section 2.2.2(a), which shall be true and
correct in all material respects, and the Company shall have received a
certificate signed on behalf of Parent by an executive officer of Parent to
that effect.
4.3.2. Performance of Obligations of Parent. Parent shall have
performed in all material respects all obligations and covenants required
to be performed by or complied with by it under this Agreement at or prior
to the Closing Date, and the Company shall have received a certificate
signed on behalf of Parent by an executive officer of Parent to that
effect.
4.3.3. Tax Opinion. The Company shall have received an opinion
from Wachtell, Lipton, Rosen & Katz (or, if Wachtell, Lipton, Rosen & Katz
refuses to issue this opinion, from other counsel reasonably satisfactory
to the Company), dated as of the Closing Date, substantially to the effect
that, on the basis of the facts, representations and assumptions set forth
in the opinion, (i) the Merger will be treated for U.S. federal income tax
purposes as a reorganization within the meaning of Section 368 of the Code,
(ii) Parent will be treated as a corporation under Section 367(a) of the
Code with respect to each transfer of property thereto pursuant to the
Merger, (iii) no gain or loss will be recognized by the stockholders of the
Company who exchange Company Common Shares solely for Parent Ordinary
Shares or Parent Depositary Shares pursuant to the Merger (except with
respect to cash received in lieu of fractional Parent Depositary Shares or
Parent Ordinary Shares) and (iv) each of Parent, Merger Sub and the Company
will be a party to the reorganization within the meaning of Section 368 of
the Code. The opinion set forth in clause (ii) may assume that any
stockholder who is a "five-percent transferee shareholder" with respect to
Parent within the meaning of United States Treasury Regulation Section
1.367(a)-3(c)(5)(ii) files the agreement described in United States
Treasury Registration Section 1.367(a) - 3(c)(1)(iii)(B). In rendering this
opinion, counsel shall be entitled to rely upon customary representations
of Parent and the Company reasonably requested by counsel, including,
without limitation, those contained in the Tax Representation Letters
substantially in the form of Exhibits E and F.
ARTICLE V
TERMINATION
Section 5.1. Termination by Mutual Consent. This Agreement may be
terminated and the Merger may be abandoned at any time prior to the
Effective Time, whether before or after the adoption of this Agreement by
the stockholders of the Company and/or the approval of the Parent Requisite
Resolutions and Parent Director Resolutions by the shareholders of Parent,
by mutual written consent of the Company and Parent, by action of their
respective Boards of Directors.
Section 5.2. Termination by Either Parent or the Company. This
Agreement may be terminated and the Merger may be abandoned at any time
prior to the Effective Time by action of the Board of Directors of either
Parent or the Company if (i) the Merger shall not have been consummated by
the nine month anniversary of the date of this Agreement (the "Termination
Date"), whether this date is before or after the date of adoption of this
Agreement by stockholders of the Company and/or after the date of the
approval of the Parent Requisite Resolutions and Parent Director
Resolutions by shareholders of Parent; provided that the right to terminate
this Agreement pursuant to this clause (i) shall not be available to any
Party whose failure to fulfill in any material respect its obligations
under this Agreement has caused or resulted in the Merger to have been
consummated, on or before the Termination Date; (ii) a Governmental Entity
of competent jurisdiction shall have enacted any Law or issued a final
non-appealable permanent injunction or order that prohibits the
consummation of the Merger; provided that the right to terminate this
Agreement pursuant to this clause (ii) shall not be available to any Party
who has not used commercially reasonable efforts to prevent this Law from
being enacted or this injunction or order from being issued or this
injunction or order is due to a material breach by that Party of its
obligations under this Agreement; (iii) the Company Requisite Vote shall
not have been obtained at a duly held Company Stockholders Meeting,
including any adjournments or postponements; or (iv) the Parent Requisite
Vote shall not have been obtained at a duly held Parent Shareholders
Meeting, including any adjournments or postponements.
Section 5.3. Termination by the Company. This Agreement may be
terminated and the Merger may be abandoned at any time prior to the
Effective Time, whether before or after the adoption of this Agreement by
the stockholders of the Company, by action of the Board of Directors of the
Company, if (i) the Board of Directors of Parent shall have withdrawn or
adversely modified its recommendations that Parent's shareholders vote to
approve the Parent Requisite Resolutions or the Parent Director
Resolutions; (ii) Parent or its Board of Directors shall recommend an
Acquisition Proposal to its shareholders; or (iii) any representation or
warranty of Parent contained in this Agreement shall be inaccurate or
Parent shall breach any covenant or agreement contained in this Agreement,
in either case as a result of which (because of the failure of Parent to
cure within twenty (20) business days following written notice of this
breach from the Company) a condition set forth in Sections 4.3.1 or 4.3.2
would not be satisfied prior to or as of the Termination Date.
Section 5.4. Termination by Parent. This Agreement may be
terminated and the Merger may be abandoned at any time prior to the
Effective Time, whether before or after the shareholders of Parent vote to
approve the Parent Requisite Resolution, by action of the Board of
Directors of Parent, if (i) the Board of Directors of the Company shall
have withdrawn or adversely modified its recommendation that the Company's
stockholders vote to adopt this Agreement and the transactions contemplated
by this Agreement; (ii) the Company or its Board of Directors shall
recommend an Acquisition Proposal to its stockholders; or (iii) any
representation or warranty of the Company contained in this Agreement shall
be inaccurate or the Company shall breach any covenant or agreement
contained in this Agreement, in either case as a result of which (because
of the failure of the Company to cure within twenty (20) business days
following written notice of this breach from Parent) a condition set forth
in Sections 4.2.1 or 4.2.2 would not be satisfied prior to or as of the
Termination Date.
Section 5.5. Effect of Termination and Abandonment.
-------------------------------------
5.5.1. In the event of termination of this Agreement and the
abandonment of the Merger pursuant to this Article V, this Agreement (other
than as set forth in Section 6.1) shall become void and of no effect with
no liability on the part of either Party (or of any of their
Representatives); provided, however, that no termination shall relieve
either Parent or the Company of any liability for damages resulting from
any willful and intentional breach of this Agreement or from any obligation
to pay, if applicable, the amounts payable pursuant to Section 5.5.2 or
5.5.3.
5.5.2. (a) If:
(i) Parent shall terminate this Agreement pursuant to clauses (i)
at a time when an Acquisition Proposal for the Company is pending or
(ii) of Section 5.4; or
(ii) any Person shall have made an Acquisition Proposal relating
to the Company or shall have publicly announced an Acquisition
Proposal (or an intention to make an Acquisition Proposal) and
thereafter (x) this Agreement is terminated pursuant to clause (iii)
of Section 5.2, by the Company pursuant to clause (i) of Section 5.2
(except if the Parent Requisite Vote has not been obtained prior to
this termination; provided that if the Parent Shareholders Meeting has
not been held prior to the time of this termination, this exception
shall not be applicable if an inaccuracy of a representation or
warranty of the Company contained in this Agreement, or the failure of
the Company to comply with any of its obligations contained in this
Agreement, is the primary cause of, or resulted in, the Parent
Shareholders Meeting not having been held), or pursuant to clause
(iii) of Section 5.4 and (y) within 9 months after the termination of
this Agreement, the Company enters into an agreement in respect of any
Acquisition Proposal or a transaction pursuant to an Acquisition
Proposal is consummated,
then in any case as described in clause (i) or (ii) the Company shall pay
to Parent (by wire transfer of immediately available funds not later than,
in the case of clause (i), one (1) business day following the date of
termination of this Agreement or, in the case of clause (ii), the date of
the agreement in respect of the Acquisition Proposal or, if earlier,
consummation of the transaction in respect thereof) an amount equal to $175
million (less, in the case of clause (ii), any amount previously or
simultaneously paid by the Company to Parent pursuant to paragraph (b) of
this Section 5.5.2).
(b) If either the Company or Parent shall terminate this
Agreement pursuant to clause (iii) of Section 5.2, then the Company shall
pay to Parent (by wire transfer of immediately available funds) not later
than the date of termination of this Agreement an amount equal to $25
million.
(c) The Company acknowledges that the agreements contained in
this Section 5.5.2 are an integral part of the transactions contemplated by
this Agreement, and that, without these agreements, Parent would not enter
into this Agreement; accordingly, if the Company fails promptly to pay any
amount due pursuant to this Section 5.5.2, and, in order to obtain the
payment, Parent commences a suit which results in a judgment against the
Company for the payment set forth in this Section 5.5.2, the Company shall
pay to Parent its costs and expenses (including attorneys' fees) in
connection with this suit, together with interest on the amount due from
each date for payment until the date of the payment at the prime rate of
Citibank, N.A. in effect on the date the payment was required to be made
plus 2 percent.
5.5.3. (a) If:
(i) the Company shall terminate this Agreement pursuant to
clauses (i) at a time when an Acquisition Proposal for Parent is
pending or (ii) of Section 5.3; or
(ii) any Person shall have made an Acquisition Proposal relating
to Parent or shall have publicly announced an Acquisition Proposal (or
the intention to make a proposal) and thereafter (x) this Agreement is
terminated pursuant to clause (iv) of Section 5.2, by Parent pursuant
to clause (i) of Section 5.2 (except if the Company Requisite Vote has
not been obtained prior to the time of this termination; provided that
if the Company Stockholders Meeting has not been held prior to the
time of this termination, this exception shall not be applicable if an
inaccuracy of a representation or warranty of Parent contained in this
Agreement, or the failure of Parent to comply with any of its
obligations contained in this Agreement is the cause of, or resulted
in, the Company Stockholders Meeting not having been held), or
pursuant to clause (iii) of Section 5.3 and (y) within 9 months after
the termination of this Agreement, Parent enters into an agreement in
respect of any Acquisition Proposal or a transaction pursuant to an
Acquisition Proposal is consummated,
then in any case as described in clause (i) or (ii) Parent shall pay to the
Company (by wire transfer of immediately available funds not later than, in
the case of clause (i), one (1) business day following the date of
termination of this Agreement or, in the case of clause (ii), the date of
the agreement in respect of the Acquisition Proposal or, if earlier,
consummation of the transaction in respect thereof) an amount equal to $75
million (less, in the case of clause (ii), any amount previously or
simultaneously paid by Parent to the Company pursuant to paragraph (b) of
this Section 5.5.3).
(b) If either Parent or the Company shall terminate this
Agreement pursuant to clause (iv) of Section 5.2, then Parent shall pay to
the Company (by wire transfer of immediately available funds) not later
than the date of termination of this Agreement an amount equal to $25
million.
(c) Parent acknowledges that the agreements contained in this
Section 5.5.3 are an integral part of the transactions contemplated by this
Agreement, and that, without these agreements, the Company would not enter
into this Agreement; accordingly, if Parent fails promptly to pay an amount
due pursuant to this Section 5.5.3 and, in order to obtain the payment, the
Company commences a suit which results in a judgment against Parent for the
payment set forth in this Section 5.5.3, the Parent shall pay to the
Company its costs and expenses (including attorneys' fees) in connection
with this suit, together with interest on the amount due from each date for
payment until the date of the payment at the prime rate of Citibank, N.A.
in effect on the date the payment was required to be made plus 2 percent.
ARTICLE VI
MISCELLANEOUS AND GENERAL
Section 6.1. Survival. This Article VI and the agreements of the
Company and Parent contained in Sections 3.9, 3.18.2, 3.20 and 3.21 shall
survive the Effective Time. This Article VI, the representations and
warranties contained in Sections 2.1.9 and 2.2.9, the agreements of the
Company and Parent contained in Sections 3.10, 5.5 and the last sentence of
3.7 shall survive the termination of this Agreement. All other
representations, warranties, agreements and covenants in this Agreement
shall not survive the Effective Time or the termination of this Agreement.
Section 6.2 Modification or Amendment. This Agreement may be
modified or amended by agreement of the Parties, by action taken or
authorized by their respective Boards of Directors, at any time prior to
the Effective Time; provided, however, that, after approval by
shareholders, in the case of Parent, or stockholders, in the case of the
Company, of the matters presented at the Company Stockholders Meeting or
the Parent Shareholders Meeting, no modification or amendment shall be made
which under applicable Law requires further approval by the shareholders or
stockholders, as the case may be, without further approval. This Agreement
may not be modified or amended except by an instrument in writing executed
and delivered by duly authorized officers of each of the Parties.
Section 6.3. Waiver of Conditions. Any provision of this Agreement
may be waived prior to the Effective Time if, and only if, this waiver is
in writing and signed by the Party against whom the waiver is to be
effective.
Section 6.4. Failure or Indulgence not Waiver; Remedies
Cumulative. No failure or delay by any Party in exercising any right, power
or privilege hereunder shall operate as a waiver thereof, nor shall any
single or partial exercise thereof preclude any other or further exercise
thereof or the exercise of any other right, power or privilege. Except as
otherwise herein provided, the rights and remedies herein provided shall be
cumulative and not exclusive of any rights or remedies provided by Law.
Section 6.5. Counterparts. This Agreement may be executed in any
number of counterparts, each counterpart being deemed to be an original
instrument, and all counterparts shall together constitute the same
agreement.
Section 6.6. Governing Law; Submission to Jurisdiction. (a) This
Agreement shall be deemed to be made in, and in all respects shall be
interpreted, construed and governed by and in accordance with the laws of
the State of Delaware applicable to contracts to be performed wholly in
that state, except to the extent, in the case of Parent, the Companies Act
and English Law are applicable.
(b) The Parties irrevocably submit to the jurisdiction of the
courts of the State of Delaware and the federal courts of the United States
of America, in each case located in the State of Delaware, solely in
respect of the interpretation and enforcement of the provisions of this
Agreement and in respect of the transactions contemplated by this Agreement
and waive, and agree not to assert, as a defense in any action, suit or
proceeding for the interpretation or enforcement hereof, that it is not
subject thereto or that any action, suit or proceeding may not be brought
or is not maintainable in these courts or that the venue of these courts
may not be appropriate or that this Agreement may not be enforced in or by
these courts. The Parties consent to and grant any of these courts
jurisdiction over the person of the Parties and over the subject matter of
any dispute and agree that mailing of process or other papers in connection
with any action or proceeding in the manner provided in Section 6.7, or in
other manners as may be permitted by Law, shall be valid and sufficient
service thereof.
Section 6.7. Notices. Notices, requests, instructions or other
documents to be given under this Agreement shall be in writing and shall be
deemed given, (i) when sent if sent by facsimile, provided that the
facsimile is promptly confirmed by telephone confirmation thereof, (ii)
when delivered, if delivered personally to the intended recipient, and
(iii) one business day after date of guaranteed delivery later, if sent by
overnight guaranteed delivery via a national courier service, and in each
case, addressed to a Party at the following address for that Party:
IF TO THE COMPANY:
Young & Rubicam Inc.
285 Madison Avenue
New York, New York 10017
Attention: Stephanie W. Abramson, Esq.
Telecopier: (212) 210-5544
with copies to
Wachtell, Lipton, Rosen & Katz
51 West 52nd Street
New York, New York 10019
Attention: Martin Lipton, Esq.
Patricia A. Vlahakis, Esq.
Telecopier: (212) 403-2000
and
Freshfields
65 Fleet Street
London EC4T 2HS
England
Attention: Edward Braham, Esq.
Telecopier: 44-171-832-7001
IF TO PARENT OR MERGER SUB:
WPP Group PLC
27 Farm Street
London W1X 6RD
England
Attention: Group Chief Executive
Telecopier: 44-171-493-6819
with copies to
Fried, Frank, Harris, Shriver & Jacobson
One New York Plaza
New York, New York 10004
Attention: Arthur Fleischer, Jr., Esq.
Stuart Z. Katz, Esq.
Telecopier: (212) 859-4000
and
Davis & Gilbert
1740 Broadway
Third Floor
New York, New York 10019
Attention: Philip S. Reiss, Esq.
Curt C. Myers, Esq.
Telecopier: (212) 765-7920
and
Allen & Overy
One New Change
London EC4M 9QQ
England
Attention: Richard Cranfield, Esq.
Mark Gearing, Esq.
Telecopier: 44-171-330-9999
or to any other Persons or addresses as may be designated in writing by the
Party to receive this notice as provided above.
Section 6.8. Entire Agreement. This Agreement (including the
exhibits), the Disclosure Schedules (including the exhibits) and the
Confidentiality Agreement (other than Sections 3 and 4 of the
Confidentiality Agreement which are hereby terminated and have no further
force and effect) constitute the entire agreement, and supersede all other
prior agreements, understandings, representations and warranties both
written and oral, between the Parties with respect to the subject matter of
this Agreement. References to this Agreement shall for all purposes be
deemed to include references to the Disclosure Schedules (including the
exhibits). Except as set forth in Section 3.9.2, this Agreement is not
intended to confer upon any Person other than the Parties any rights or
remedies hereunder. No employee or former employee of the Company or Parent
who is not a director of the Company or Parent shall be deemed a third
party beneficiary with respect to any provision of this Agreement.
Section 6.9 Severability. The provisions of this Agreement shall
be deemed severable and the invalidity or unenforceability of any provision
shall not affect the validity or enforceability of the other provisions. If
any provision of this Agreement, or the application to any Person or any
circumstance, is invalid or unenforceable, (a) a suitable and equitable
provision shall be substituted therefor in order to carry out, so far as
may be valid and enforceable, the intent and purpose of the invalid or
unenforceable provision unless the substitution of that provision would
materially frustrate the express intent and purposes of this Agreement and
(b) the remainder of this Agreement and the application of this provision
to other Persons or circumstances shall not be affected by its invalidity
or unenforceability, nor shall invalidity or unenforceability affect the
validity or enforceability of this provision, or the application thereof,
in any other jurisdiction.
Section 6.10. Interpretation. The headings in this Agreement are
for convenience of reference only, do not constitute part of this Agreement
and shall not be deemed to limit or otherwise affect any of the provisions
of this Agreement. Where a reference in this Agreement is made to a Section
or Exhibit, that reference shall be to a Section of or Exhibit to this
Agreement unless otherwise indicated. 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 6.11. Assignment. This Agreement shall not be assignable by
operation of law or otherwise, and any purported assignment in violation of
this provision shall be void.
Section 6.12. Specific Performance. Each Party acknowledges and agrees
that the other Party could be irreparably damaged in the event that its
obligations contained in this Agreement are not performed in accordance
with their specific terms or are otherwise breached in each case on or
prior to the Effective Time. Accordingly, each Party agrees that the other
Party will be entitled to an injunction or injunctions to enforce
specifically any covenants in any action in any court having personal and
subject matter jurisdiction, in addition to any other remedy to which that
Party may be entitled at law or in equity.
<PAGE>
IN WITNESS WHEREOF, this Agreement has been duly executed and
delivered by the duly authorized officers of Parent, the Company and Merger
Sub as of the date of this Agreement.
WPP GROUP PLC
By: /s/ Martin Sorrell
---------------------------------
Name: Martin Sorrell
Title: Group Chief Executive
YOUNG & RUBICAM INC.
By: /s/ Thomas D. Bell, Jr.
---------------------------------
Name: Thomas D. Bell, Jr.
Title: Chief Executive Officer
YORK MERGER CORP.
By: /s/ Martin Sorrell
---------------------------------
Name: Martin Sorrell
Title: Chief Executive Officer
