Execution Copy
INVESTMENT AGREEMENT
between
ARROW MASTERS LP,
ARROW PARTNERS LP and
ARROW OFFSHORE, LTD.
and
X.X. XXXXXXX & CO., LTD.
Dated as of May 20, 2008
TABLE OF CONTENTS
Page
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ARTICLE I DEFINITIONS.............................................................................................1
SECTION 1.1 DEFINITIONS..................................................................................1
ARTICLE II THE OFFER; SHARE PURCHASE..............................................................................4
SECTION 2.1 THE OFFER....................................................................................4
SECTION 2.2 COMPANY ACTION...............................................................................5
SECTION 2.3 PRIMARY SHARE PURCHASES......................................................................6
ARTICLE III CONDITIONS............................................................................................6
SECTION 3.1 CONDITIONS PRECEDENT TO THE OBLIGATION OF THE COMPANY TO ISSUE THE SHARES....................6
SECTION 3.2 CONDITIONS PRECEDENT TO THE OBLIGATION OF PURCHASERS TO PURCHASE THE SHARES..................7
ARTICLE IV REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE COMPANY...............................................8
SECTION 4.1 ORGANIZATION, STANDING AND POWER; SUBSIDIARIES...............................................8
SECTION 4.2 CAPITAL STRUCTURE............................................................................9
SECTION 4.3 NEWLY ISSUED SHARES..........................................................................9
SECTION 4.4 NO CONFLICT; REQUIRED FILINGS AND CONSENTS...................................................9
SECTION 4.5 OFFER DOCUMENTS; SCHEDULE 14D-9.............................................................10
SECTION 4.6 SEC FILINGS; FINANCIAL STATEMENTS...........................................................11
SECTION 4.7 ABSENCE OF LITIGATION.......................................................................11
SECTION 4.8 BROKERS.....................................................................................12
ARTICLE V REPRESENTATIONS AND WARRANTIES OF PURCHASERS...........................................................12
SECTION 5.1 ORGANIZATION................................................................................12
SECTION 5.2 AUTHORITY RELATIVE TO THIS AGREEMENT........................................................12
SECTION 5.3 NO CONFLICT; REQUIRED FILINGS AND CONSENTS..................................................12
SECTION 5.4 FINANCING...................................................................................13
SECTION 5.5 OFFER DOCUMENTS.............................................................................13
SECTION 5.6 NON-DISTRIBUTION............................................................................13
SECTION 5.7 ACCREDITED INVESTOR STATUS..................................................................14
SECTION 5.8 RELIANCE ON EXEMPTIONS......................................................................14
SECTION 5.9 INFORMATION.................................................................................14
SECTION 5.10 TRANSFER OR RESALE..........................................................................14
SECTION 5.11 LEGENDS.....................................................................................14
SECTION 5.12 BROKERS.....................................................................................15
SECTION 5.13 ABSENCE OF LITIGATION.......................................................................15
ARTICLE VI COVENANTS.............................................................................................16
SECTION 6.1 CONDUCT OF BUSINESS BY THE COMPANY..........................................................16
SECTION 6.2 NO SOLICITATION OF TRANSACTIONS.............................................................17
SECTION 6.3 LISTING OF NEWLY ISSUED SHARES..............................................................17
SECTION 6.4 FURTHER ACTION; ALL REASONABLE EFFORTS......................................................17
SECTION 6.5 PUBLIC ANNOUNCEMENTS........................................................................18
SECTION 6.6 STANDSTILL AGREEMENT........................................................................18
ARTICLE VII TERMINATION, AMENDMENT AND WAIVER....................................................................19
SECTION 7.1 TERMINATION.................................................................................19
SECTION 7.2 EFFECT OF TERMINATION.......................................................................20
SECTION 7.3 FEES AND EXPENSES...........................................................................20
ARTICLE VIII GENERAL PROVISIONS..................................................................................21
SECTION 8.1 AMENDMENT...................................................................................21
SECTION 8.2 NOTICES.....................................................................................21
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TABLE OF CONTENTS
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SECTION 8.3 SEVERABILITY................................................................................22
SECTION 8.4 SPECIFIC PERFORMANCE........................................................................22
SECTION 8.5 ENTIRE AGREEMENT; ASSIGNMENT................................................................22
SECTION 8.6 WAIVER......................................................................................22
SECTION 8.7 PARTIES IN INTEREST.........................................................................22
SECTION 8.8 GOVERNING LAW...............................................................................23
SECTION 8.9 WAIVER OF JURY TRIAL........................................................................23
SECTION 8.10 HEADINGS....................................................................................23
SECTION 8.11 COUNTERPARTS................................................................................23
ANNEX A..CONDITIONS TO THE OFFER
ANNEX B..REGISTRATION RIGHTS AGREEMENT
ANNEX C..WAIVER OF SHARE VOTING RESTRICTIONS
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INVESTMENT AGREEMENT, dated as of May 20, 2008 (this "Agreement"), between
ARROW OFFSHORE, LTD, a Cayman Islands exempted company ("Arrow Offshore"), ARROW
PARTNERS LP, a Delaware limited partnership ("Arrow Partners"), and ARROW
MASTERS LP, a Delaware limited partnership ("Arrow Masters" and collectively
with Arrow Offshore and Arrow Partners, "Purchasers"), and X.X. XXXXXXX & CO.,
LTD., a Bermuda exempted Company (the "Company").
WHEREAS, the parties hereto have determined that it is in best interests
of the parties and their respective equity owners that Purchasers make a cash
tender offer (the "Offer") for up to 19,902,000 common shares, par value $0.001
per share, of the Company ("Common Shares") for a purchase price per Common
Share equal to the closing price of the Common Shares on the New York Stock
Exchange on May 20, 2008, but not to be greater than $1.60 or less than $1.50,
less any dividends paid to holders of record of Common Shares from and after the
date hereof through the Closing Date (such amount, or any greater amount per
share paid pursuant to the Offer, being the "Per Share Amount"), net to the
seller in cash, upon the terms and subject to the conditions of this Agreement
and the Offer;
WHEREAS, the parties hereto have determined that it is in the best
interests of the parties and their respective equity owners, as applicable,
that, immediately following the Closing of the Offer, if Purchasers shall not
have purchased at least 13,840,000 Common Shares pursuant to the Offer and as
described in Section 2.3(b), Purchasers will have the option but not the
obligation to purchase, for a purchase price per Common Share equal to the Per
Share Amount, up to 2,430,000 newly issued Common Shares of the Company;
WHEREAS, the parties hereto have determined that it is in the best
interests of the parties and their respective equity owners, as applicable, that
immediately following the closing of the Offer, Purchasers shall purchase from
the Company 5,010,000 Common Shares at a purchase price per Common Share equal
to the Per Share Amount; and
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
and agreements herein contained, and intending to be legally bound hereby
Purchasers and the Company hereby agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1 Definitions. For purposes of this Agreement:
"Acquisition Proposal" means (i) any proposal or offer from any person
relating to any direct or indirect acquisition of (A) all or substantially all
of the assets of the Company and its subsidiaries, taken as a whole, or (B) over
20% of any class of equity securities of the Company; (ii) any tender offer or
exchange offer as defined pursuant to the Exchange Act that, if consummated,
would result in any person beneficially owning 20% or more of any class of
equity securities of the Company; or (iii) any merger, consolidation, business
combination, recapitalization, liquidation, dissolution or similar transaction
involving the Company, in each case other than the Transactions.
"affiliate" of a specified person means a person who, directly or
indirectly through one or more intermediaries, controls, is controlled by, or is
under common control with, such specified person.
"beneficial owner", with respect to any Common Shares, has the meaning
ascribed to such term under Rule 13d-3(a) of the Exchange Act.
"Board" means the Board of Directors of the Company.
"business day" means any day on which the principal offices of the SEC in
Washington, D.C. are open to accept filings, or, in the case of determining a
date when any payment is due, any day on which banks are not required or
authorized to close in The City of New York.
"Code" means the Internal Revenue Code of 1986, as amended.
"control" (including the terms "controlled by" and "under common control
with") means the possession, directly or indirectly, or as trustee or executor,
of the power to direct or cause the direction of the management and policies of
a person, whether through the ownership of voting securities, as trustee or
executor, by contract or credit arrangement or otherwise.
"knowledge of the Company" means the actual knowledge of the officers of
the Company after reasonable investigation.
"Law" means any foreign, international, Federal, state, provincial or
domestic law, treaty, convention, statute, code, ordinance, rule, regulation or
order.
"Liens" means any mortgages, deeds of trust, liens (statutory or other),
pledges, security interests, collateral security arrangements, conditional and
installment agreements, claims, covenants, conditions, restrictions,
reservations, options, rights of first offer or refusal, charges, easements,
rights-of-way, encroachments or other encumbrances or title imperfections or
defects of any kind or nature.
"Material Adverse Effect" means, when used in connection with the Company
or any of its subsidiaries, any event, circumstance, change or effect that is
materially adverse to the financial condition or results of operations of the
Company and its subsidiaries, taken as a whole; provided, however, that
"Material Adverse Effect" shall not include any event, circumstance, change or
effect arising out of or attributable to (i) any decrease in the market price of
the Common Shares, (ii) events, circumstances, changes or effects that generally
affect the industries in which the Company operates, (iii) general economic
conditions or events, circumstances, changes or effects affecting the securities
markets generally, or (iv) changes arising from the announcement of the
execution of this Agreement or the consummation of the Transactions.
"NDA" means the Confidentiality Letter Agreement dated April 16, 2008
between the Company and Arrow Capital Management, LLC.
"Newly Issued Shares" means any Common Shares issued pursuant to the
Primary Share Purchases; provided, however, that the number of Newly Issued
Shares shall not exceed the number that represents 19.9% of the total
outstanding Common Shares immediately prior to the Primary Share Purchases.
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"Organizational Documents" means the memorandum of association and
bye-laws (or the equivalent organizational documents), in each case as in effect
on the date of this Agreement.
"person" means an individual, corporation, partnership, limited
partnership, limited liability company, syndicate, person (including, without
limitation, a "person" as defined in Section 13(d)(3) of the Exchange Act),
trust, association or entity or government, political subdivision, agency or
instrumentality of a government.
"Primary Share Purchase" or "Primary Share Purchases" means any purchase
by Purchasers and issuance and sale by the Company, of any Newly Issued Shares,
in accordance with either Section 2.3(a) or 2.3(b) hereof.
"Shareholders" means holders of Common Shares.
"subsidiary" or "subsidiaries" of the Company, Purchasers or any other
person means an affiliate controlled by such person, directly or indirectly,
through one or more intermediaries.
"Transactions" means, collectively, each of the Offer and the Primary
Share Purchases and the other transactions contemplated by this Agreement.
The following terms have the meaning set forth in the Sections set forth
below:
Defined Term Location of Definition
------------ ----------------------
Action Section 4.7
Agreement Preamble
Board Recommendation Section 2.2
Closing Section 2.3(c)
Closing Date Section 2.3(c)
Common Shares Recitals
Company Preamble
Disclosure Schedules ARTICLE IV
Exchange Act Section 2.1(a)
GAAP Section 4.6(b)
Governmental Authority Section 4.4(c)
NDA Section 6.6(a)
New York Stock Exchange Additional Listing Application Section 6.3(a)
Offer Recitals
Offer Documents Section 2.1(b)
Offer to Purchase Section 2.1(b)
Per Share Amount Recitals
Primary Share Purchases Section 2.3
Purchasers Preamble
Schedule 14D-9 Section 2.2(a)
Schedule TO Section 2.1(b)
SEC Section 2.1(a)
Securities Act Section 4.6(a)
SEC Reports Section 4.6(a)
subsequent offering period Section 2.1(a)
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ARTICLE II
THE OFFER; SHARE PURCHASE
Section 2.1 The Offer.
(a) Purchasers shall commence the Offer as promptly as reasonably
practicable after the date hereof, but in no event later than May 28, 2008.
Purchasers shall hold the Offer open for a minimum period equal to the longer of
(i) 20 business days following the commencement thereof or (ii) until July 8,
2008. The obligation of Purchasers to accept for payment Common Shares tendered
pursuant to the Offer shall be subject to the conditions set forth in Annex A
hereto. Purchasers expressly reserve the right to waive any such condition, to
increase the price per share payable in the Offer, to extend the offer to
provide for "subsequent offering periods," as such term is defined in, and in
accordance with, Rule 14d-11 under the Exchange Act and to make any other
changes in the terms and conditions of the Offer; provided, however, that,
without the prior written consent of the Company, Purchasers shall not (i)
decrease the price per share payable in the Offer, (ii) reduce the maximum
number of Common Shares to be purchased in the Offer, (iii) impose conditions to
the Offer in addition to those set forth in Annex A hereto, (iv) change the form
of consideration payable in the Offer or (v) amend, add to or waive any term or
condition of the Offer in any manner that would be, in any significant respect,
adverse to the Company or the Shareholders. The Per Share Amount shall, subject
to any applicable withholding of taxes, be net to the seller in cash, and shall
be reduced by the per share distributions, if any, declared and payable by the
Company to Shareholders from and after the date hereof until the expiration of
the Offer, upon the terms and subject to the conditions of the Offer. Upon
expiration of the Offer, Purchasers shall, subject to pro-ration, accept for
payment Common Shares validly tendered and not withdrawn pursuant to the Offer
and pay for all such Common Shares promptly following the acceptance of Common
Shares for payment in accordance with applicable Law and any rule, regulation or
interpretation of the SEC. Notwithstanding the immediately preceding sentence
and subject to the applicable rules of the SEC and the terms and conditions of
the Offer, Purchasers expressly reserve the right to delay payment for Common
Shares to the extent required for compliance in whole or in part with applicable
Laws. Any such delay shall be effected in compliance with Rule 14e-1(c) under
the Securities Exchange Act of 1934, as amended (the "Exchange Act").
(b) As promptly as reasonably practicable on the date of
commencement of the Offer, Purchasers shall file with the SEC a Tender Offer
Statement on Schedule TO (together with all amendments and supplements thereto,
the "Schedule TO") with respect to the Offer. The Schedule TO shall contain or
shall incorporate by reference an offer to purchase (the "Offer to Purchase")
and forms of the related letter of transmittal and any related summary
advertisement (the Schedule TO, the Offer to Purchase and such other documents,
together with all supplements and amendments thereto, being referred to herein
collectively as the "Offer Documents"). Purchasers and the Company agree to
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correct promptly any information provided by any of them for use in the Offer
Documents that shall have become false or misleading, and Purchasers further
agree to take all steps necessary to cause the Schedule TO, as so corrected, to
be filed with the SEC, and the other Offer Documents, as so corrected, to be
disseminated to Shareholders, in each case as and to the extent required by
applicable federal securities laws.
Section 2.2 Company Action.
(a) Provided that the conditions contained in Sections 3.1(a) and
(c) are satisfied as of the date of commencement of the Offer, as if such date
was the Closing Date, except as required by the fiduciary duties of the Board
under applicable Law as determined by the Board in good faith, after
consultation with its counsel, the Company shall consent to the inclusion in the
Offer Documents of a statement that the Board has authorized and approved this
Agreement and the transactions contemplated hereby and determined that this
Agreement and such transactions are in the best interests of the Shareholders,
but, that the Board is remaining neutral and making no recommendation as to
whether Shareholders should tender their Shares in the Offer (the "Board
Recommendation"), together with such other supporting information regarding the
Board Recommendation as shall be mutually agreeable by the Board and Purchasers.
As promptly as reasonably practicable on or after the date of commencement of
the Offer, (but in no event later than 5 business days thereafter) the Company
shall file with the SEC a Solicitation/Recommendation Statement on Schedule
14D-9 (together with all amendments and supplements thereto, the "Schedule
14D-9") containing, except as required by the fiduciary duties of the Board
under applicable Law as determined by the Board in good faith, after
consultation with its counsel, the Board Recommendation, and shall disseminate
the Schedule 14D-9 to the extent required by Rule 14d-9 promulgated under the
Exchange Act, and any other applicable federal securities laws. The Company and
Purchasers agree to correct promptly any information provided by any of them for
use in the Schedule 14D-9 which shall have become false or misleading, and the
Company further agrees to take all steps necessary to cause the Schedule 14D-9,
as so corrected, to be filed with the SEC and disseminated to Shareholders, in
each case as and to the extent required by applicable federal securities laws.
(b) The Company shall, or shall cause its agents to, promptly
furnish Purchasers, upon request, with (i) mailing labels containing the names
and addresses of all record Shareholders, (ii) security position listings of
Common Shares held in stock depositories and (iii) a non-objecting beneficial
owners (NOBO) list, each as of a recent date, together with all other available
listings and computer files containing names, addresses and security position
listings of record holders and beneficial owners of Common Shares. The Company
shall, or shall cause its agents to, furnish Purchasers upon request with such
additional information, including, without limitation, updated listings and
computer files of Shareholders, mailing labels and security position listings,
and such other assistance in disseminating the Offer Documents to holders of
Common Shares as Purchasers may reasonably request. Subject to the requirements
of applicable Law, and except for such steps as are necessary to disseminate the
Offer Documents and any other documents necessary to consummate the Offer,
Purchasers shall hold in confidence the information contained in such labels,
listings and files, shall use such information only in connection with the
Offer, and, if this Agreement shall be terminated in accordance with Section
7.1, shall deliver to the Company all copies of such information then in its
possession.
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Section 2.3 Primary Share Purchases.
(a) On the second business day immediately following the later of
(i) the expiration date of the Offer or (ii) if Purchasers provide for
subsequent offering periods, the expiration date of the final subsequent
offering period, if Purchasers shall have purchased fewer than 13,840,000 Common
Shares, pursuant to the Offer and Section 2.3(b), then Purchasers shall have the
option, but not the obligation, to require the Company to issue and sell to
Purchasers up to 2,430,000 additional Newly Issued Shares at the Per Share
Amount.
(b) On the second business day immediately following the later of
(i) the expiration date of the Offer or (ii) if Purchasers provide for
subsequent offering periods, the expiration date of the final subsequent
offering period, Purchasers shall be required to purchase and the Company shall
issue 5,010,000 Newly Issued Shares at the Per Share Amount in addition to any
shares purchased pursuant to Section 2.3(a).
(c) The purchase price for all Newly Issued Shares shall be the Per
Share Amount. The closing of the purchase and sale of the Newly Issued Shares
shall take place at the offices of Xxxxxx & Xxxxxxx LLP, 000 Xxxx Xxxxxx, Xxx
Xxxx, Xxx Xxxx 00000-0000 (the "Closing"), and the date of such Closing shall be
the Closing Date (the "Closing Date").
ARTICLE III
CONDITIONS
Section 3.1 Conditions Precedent to the Obligation of the Company to
Issue the Shares. The obligation hereunder of the Company to issue the Newly
Issued Shares to Purchasers in each Primary Share Purchase is subject to the
satisfaction or waiver, at or before the Closing, of each of the conditions set
forth below. These conditions are for the Company's sole benefit and may be
waived by the Company at any time in its sole discretion.
(a) Accuracy of Purchasers' Representations and Warranties. The
representations and warranties of Purchasers contained in Article V hereof shall
be true and correct in all material respects as of the date when made and as of
the Closing as though made at that time, except for representations and
warranties that are expressly made as of a particular date.
(b) Performance by Purchasers. Purchasers shall have performed,
satisfied and complied in all material respects with all covenants, agreements
and conditions required by this Agreement to be performed, satisfied or complied
with by Purchasers at or prior to the Closing.
(c) No Injunction. No statute, rule, regulation, executive order,
decree, ruling or injunction shall have been enacted, entered, promulgated or
endorsed by any court or governmental authority of competent jurisdiction which
prohibits the consummation of any of the transactions contemplated by this
Agreement.
Section 3.2 Conditions Precedent to the Obligation of Purchasers to
Purchase the Shares. The obligation hereunder of Purchasers to acquire and pay
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for the Newly Issued Shares in any Primary Share Purchase is subject to the
satisfaction or waiver, at or before the Closing, of each of the conditions set
forth below. These conditions are for Purchasers' sole benefit and may be waived
by Purchasers at any time in their sole discretion.
(a) Accuracy of the Company's Representations and Warranties. Each
of the representations and warranties of the Company contained in Article IV
hereof shall be true and correct in all material respects as of the date when
made and as of the Closing as though made at that time (except for
representations and warranties that speak as of a particular date).
(b) Performance by the Company. The Company shall have performed,
satisfied and complied in all respects with all covenants, agreements and
conditions required by this Agreement to be performed, satisfied or complied
with by the Company at or prior to the Closing.
(c) No Injunction. No statute, rule, regulation, executive order,
decree, ruling or injunction shall have been enacted, entered, promulgated or
endorsed by any court or governmental authority of competent jurisdiction which
prohibits the consummation of any of the transactions contemplated by this
Agreement.
(d) Registration Rights Agreement. The Company shall have provided
to Purchasers a Registration Rights Agreement in the form attached hereto as
Annex B.
(e) Voting Restriction Waivers. The Board of Directors shall have
adopted the waivers of the voting restrictions in the Company's Bye-laws set
forth in Annex C.
(f) Listing Application for Newly Issued Shares. The Newly Issued
Shares shall have been listed or approved for listing on the exchange on which
the Common Shares are then listed.
ARTICLE IV
REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE COMPANY
As an inducement to Purchasers to enter into this Agreement, and except as
disclosed in a separate disclosure schedule which has been delivered by the
Company to Purchasers prior to the execution of this Agreement (the "Disclosure
Schedules"), the Company hereby represents, warrants and covenants to Purchasers
that:
Section 4.1 Organization, Standing and Power; Subsidiaries.
(a) Each of the Company and each of its subsidiaries is duly
organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation or organization, has the requisite power and
authority to own, lease and operate its properties and to carry on its business
as now being conducted, except where the failures to be so organized, existing
and in good standing or to have such power and authority, in the aggregate,
would not reasonably be expected to have a Material Adverse Effect on the
Company, and is duly qualified and in good standing to do business as a foreign
corporation or other legal entity in each other jurisdiction in which the nature
of its business or the ownership or leasing of its properties makes such
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qualification necessary other than in such jurisdictions where the failures so
to qualify or to be in good standing would not, individually or in the aggregate
reasonably be expected to have a Material Adverse Effect on the Company. The
Organizational Documents of the Company and each of its subsidiaries are in full
force and effect. Neither the Company nor any of its subsidiaries is in
violation of its Organizational Documents other than violations which would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect on the Company.
(b) Section 4.1(b) of the Disclosure Schedules includes all the
subsidiaries of the Company which as of the date of this Agreement are
significant subsidiaries (as defined in Rule 1-02 of Regulation S-X of the SEC).
All the outstanding shares of capital stock of, or other equity interests in,
each such significant subsidiary have been validly issued and are fully paid and
non-assessable and are, except as set forth in Section 4.1(b) of the Disclosure
Schedules, owned directly or indirectly by the Company, free and clear of all
Liens and free of any other restriction (including any restriction on the right
to vote, sell or otherwise dispose of such capital stock or other ownership
interests), except for restrictions imposed by applicable securities laws
including but not limited to the requirement of the consent of the Bermuda
Monetary Authority in respect of the transfer of shares. Except as set forth in
the Company SEC Reports filed prior to the date hereof, neither the Company nor
any of its subsidiaries directly or indirectly owns any equity or similar
interest in, or any interest convertible into or exchangeable or exercisable
for, any corporation, partnership, joint venture or other business association
or entity (other than subsidiaries), that is or would reasonably be expected to
be material to the Company and its subsidiaries taken as a whole.
Section 4.2 Capital Structure.
(a) The authorized share capital of the Company consists of
125,000,000 Common Shares. As of the close of business on May 20, 2008,
50,351,566 Common Shares were issued and outstanding. No Common Shares are held
by any subsidiary of the Company. Other than restricted Common Shares
("Restricted Shares") granted to employees of the Company, since April 30, 2008
to the date of this Agreement, there have been no issuances of shares of the
Company or any other securities of the Company. All issued and outstanding
shares of the Company are duly authorized, validly issued, fully paid and
non-assessable, and no class of the Company's share capital is entitled to
preemptive rights. As of May 20, 2008, options to purchase 181,265 Common Shares
("Stock Options") and 3,959,724 Restricted Shares were outstanding. No Stock
Option (i) has a per share exercise price lower than the fair market value of a
Common Share on the date of grant of such Stock Option, (ii) has had its grant
date backdated or (iii) has had its grant date delayed in order to take
advantage of the release or other public announcement of material non-public
information regarding the Company or its subsidiaries. Section 4.2(a) of the
Disclosure Schedules sets forth a correct and complete list, as of the date of
this Agreement, of outstanding Restricted Shares and Stock Options, including
the holder thereof, the date of grant, the term (in the case of Stock Options),
the number of Common Shares subject to such Stock Option, the Company stock
plan, if applicable, under which such award was granted and, where applicable,
the exercise price.
(b) Except as otherwise set forth in this Section 4.2(b) or in
Section 4.2(b) of the Disclosure Schedules, as of the date of this Agreement,
there are no securities, options, warrants, calls, rights, commitments,
8
agreements, arrangements or undertakings of any kind to which the Company or any
of its subsidiaries is a party or by which any of them is bound obligating the
Company or any of its subsidiaries to issue, deliver or sell, or cause to be
issued, delivered or sold, additional shares or other voting securities of the
Company or any of its subsidiaries or obligating the Company or any of its
subsidiaries to issue, grant, extend or enter into any such security, option,
warrant, call, right, commitment, agreement, arrangement or undertaking. As of
the date of this Agreement, there are no outstanding obligations of the Company
or any of its subsidiaries to repurchase, redeem or otherwise acquire any shares
of the Company or any of its subsidiaries.
Section 4.3 Newly Issued Shares. The Newly Issued Shares, when, if
and as, issued pursuant to each Primary Share Purchase in accordance with the
terms hereof, will be validly issued, fully paid and nonassessable and, assuming
the representations and warranties of Purchasers are true and accurate, will be
issued in compliance with all applicable Laws.
Section 4.4 No Conflict; Required Filings and Consents.
(a) The Company has all requisite corporate power and authority to
enter into this Agreement and to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly authorized by all necessary
corporate action on the part of the Company. No other corporate proceedings on
the part of the Company are necessary to approve this Agreement or to consummate
the transactions contemplated hereby. This Agreement has been duly executed and
delivered by the Company and constitutes a valid and binding agreement of the
Company, enforceable against it in accordance with its terms, except as such
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium and similar Laws relating to or affecting creditors generally or by
general equitable principles (regardless of whether such enforceability is
considered in a proceeding in equity or at law).
(b) The execution and delivery of this Agreement by the Company does
not or will not, as the case may be, and the consummation by the Company of the
transactions contemplated hereby does not and will not, conflict with, or result
in a violation of, or constitute a default (with or without notice or lapse of
time, or both) under, or give rise to a right of, or result by its terms in the,
termination, amendment, cancellation or acceleration of any obligation or the
loss of a material benefit under, or the creation of a lien, pledge, security
interest, charge or other encumbrance on, or the loss of, any assets pursuant
to: (A) any provision of the Organizational Documents of the Company or any
material subsidiary of the Company or (B) except as, in the aggregate, would not
reasonably be expected to have a Material Adverse Effect on the Company or,
subject to obtaining or making the consents, approvals, orders, authorizations,
registrations, declarations and filings referred to in paragraph (c) below, any
loan or credit agreement, note, mortgage, bond, indenture, lease, benefit plan
or other agreement, obligation, instrument, permit, concession, franchise,
license, judgment, order, decree, statute, law, ordinance, rule or regulation
applicable to the Company or any subsidiary of the Company or their respective
properties or assets.
(c) Except for the New York Stock Exchange Additional Listing
Application with respect to the Newly Issued Shares, the execution and delivery
9
of this Agreement and any agreements contemplated hereby by the Company do not,
and the performance of this Agreement and any agreements contemplated hereby by
the Company will not, require any consent, approval, authorization or permit of,
or filing with or notification to, any federal, state, county or local
government, governmental, regulatory or administrative authority, agency,
instrumentality or commission or any court, tribunal, or judicial or arbitral
body (a "Governmental Authority") or any other person.
Section 4.5 Offer Documents; Schedule 14D-9. Neither the Schedule
14D-9 nor any information supplied by the Company for inclusion in the Offer
Documents shall, at the times the Schedule 14D-9, the Offer Documents or any
amendments or supplements thereto are filed with the SEC or are first published,
sent or given to Shareholders, as the case may be, contain any untrue statement
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. Notwithstanding the
foregoing, the Company makes no representation or warranty with respect to any
information supplied by Purchasers or any of Purchasers' representatives for
inclusion in the foregoing documents. The Schedule 14D-9 shall comply in all
material respects as to form with the requirements of the Exchange Act and the
rules and regulations thereunder.
Section 4.6 SEC Filings; Financial Statements.
(a) The Company has filed on a timely basis all forms, reports and
documents required to be filed by it with the SEC through the date of this
Agreement (the "SEC Reports"). The SEC Reports (i) were prepared, in all
material respects, in accordance with the requirements of the Securities Act of
1933, as amended (the "Securities Act") or the Exchange Act, as the case may be,
and the rules and regulations promulgated thereunder, and (ii) did not at the
time they were filed contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary in order to
make the statements made therein, in the light of the circumstances under which
they were made, not misleading. No subsidiary of the Company, except X.X.
Xxxxxxx & Co., Inc., X.X. Xxxxxxx Asset Management Ltd. and X.X. Xxxxxxx
Securities Limited, is required to file any form, report, registration statement
or prospectus or other document with the SEC.
(b) Each of the consolidated financial statements (including, in
each case, any notes thereto) contained in the SEC Reports was prepared in
accordance with United States generally accepted accounting principles ("GAAP")
applied on a consistent basis throughout the periods indicated (except as may be
indicated in the notes thereto) and each fairly presented in all material
respects the consolidated financial position, results of operations and cash
flows of the Company and its consolidated subsidiaries as at the respective
dates thereof and for the respective periods indicated therein, except as
otherwise noted therein (subject, in the case of unaudited statements, to normal
and recurring year-end adjustments).
Section 4.7 Absence of Litigation. Except as disclosed in the SEC
Reports and Schedule 4.7 of the Disclosure Schedules, as of the date of this
Agreement, there is no litigation, suit, claim, action or proceeding (an
"Action") pending or, to the knowledge of the Company, threatened in writing
against the Company or any of its subsidiaries, or any property or asset of the
Company or any of its subsidiaries, before any Governmental Authority that (i)
10
would have a Material Adverse Effect, (ii) seeks to delay or prevent the
consummation of any Transaction or (iii) if successful would prevent or delay
consummation of the Transactions, or otherwise prevent the Company from
performing its obligations under this Agreement or would render the
Transactions, this Agreement or any agreements contemplated hereby, null and
void. Except as disclosed in the SEC reports, neither the Company nor any of its
subsidiaries nor any property or asset of the Company or any of its subsidiaries
is subject to any continuing order of, consent decree, settlement agreement or
similar written agreement with, or, to the knowledge of the Company, continuing
investigation by, any Governmental Authority, or any order, writ, judgment,
injunction, decree, determination or award of any Governmental Authority that
would have a Material Adverse Effect or prevent or delay consummation of the
Transactions, or otherwise prevent the Company from performing its obligations
under this Agreement or any agreements contemplated hereby.
Section 4.8 Brokers. No broker, finder, investment banker or other
person is entitled to any brokerage, finder's or other fee or commission in
connection with the Transactions based upon arrangements made by or on behalf of
the Company other than the fees and expenses of (i) Xxxxxxx Lynch, Pierce,
Xxxxxx & Xxxxx Incorporated and (ii) Duff & Xxxxxx, LLC, the cost of which shall
be borne solely by the Company.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PURCHASERS
As an inducement to the Company to enter into this Agreement, Purchasers
hereby represent and warrant to the Company that:
Section 5.1 Organization. Purchasers are entities duly organized,
validly existing and in good standing under the laws of the jurisdiction of
their organization and have the requisite power and authority and all necessary
governmental approvals to own, lease and operate their properties and to carry
on their business as it is now being conducted, except where the failure to be
so organized, existing or in good standing or to have such power, authority and
governmental approvals would not prevent or delay consummation of the
Transactions, or otherwise prevent Purchasers from performing their obligations
under this Agreement and any agreements contemplated hereby. Arrow Capital
Management, LLC, a Delaware limited liability company ("Arrow Management"), is
the sole manager of Arrow Masters and Arrow Partners and the co-advisor of Arrow
Offshore. Arrow Offshore Advisors, LLC, a Delaware limited liability company
("Offshore Advisors") is a co-advisor of Arrow Offshore. Arrow Advisors LLC, a
Delaware limited liability company ("Arrow Advisors"), is the sole general
partner of Arrow Masters and Arrow Partners.
Section 5.2 Authority Relative to this Agreement. Each Purchaser has
all necessary power and authority to execute and deliver this Agreement and any
agreements contemplated hereby, to perform its obligations hereunder and
thereunder and to consummate the Transactions. The execution and delivery of
this Agreement and any agreements contemplated hereby by each Purchaser and the
consummation by each Purchaser of the Transactions have been duly and validly
authorized by all necessary action, and no other proceedings on the part of each
Purchaser are necessary to authorize this Agreement and any agreements
contemplated hereby or to consummate the Transactions. Each of this Agreement
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and any agreements contemplated hereby has been duly and validly executed and
delivered by each Purchaser, and, assuming due authorization, execution and
delivery by the Company, constitutes legal, valid and binding obligations of
each Purchaser enforceable against each Purchaser in accordance with its terms.
Section 5.3 No Conflict; Required Filings and Consents.
(a) The execution and delivery of this Agreement and any agreements
contemplated hereby by each Purchaser does not, and the performance of this
Agreement and any agreements contemplated hereby by such Purchaser will not, (i)
conflict with or violate the Organizational Documents of such Purchaser, (ii)
assuming that all consents, approvals, authorizations and other actions
described in subsection (b) have been obtained and all filings and obligations
described in subsection (b) have been made, conflict with or violate any Law
applicable to such Purchaser or by which any property or asset of it is bound or
affected, or (iii) result in any breach of, or constitute a default (or an event
which, with notice or lapse of time or both, would become a default) under, or
give to others any rights of termination, amendment, acceleration or
cancellation of, or result in the creation of a lien or other encumbrance on any
property or asset of such Purchaser pursuant to, any note, bond, mortgage,
indenture, contract, agreement, lease, license, permit, franchise or other
instrument or obligation to which such Purchaser is a party or by which such
Purchaser or any property or asset of such Purchaser is bound or affected,
except, with respect to clauses (ii) and (iii), for any such conflicts,
violations, breaches, defaults or other occurrences which would not prevent or
materially delay consummation of the Transactions, or otherwise prevent such
Purchaser from performing its obligations under this Agreement or any agreements
contemplated hereby.
(b) The execution and delivery of this Agreement and any agreements
contemplated hereby by each Purchaser does not, and the performance of this
Agreement and any agreements contemplated hereby by such Purchaser will not,
require any consent, approval, authorization or permit of, or filing with, or
notification to, any Governmental Authority or any other person, except for
requirements of the Exchange Act applicable to the Offer.
(c) No Purchaser is an "investment company" or an entity "controlled
by an investment company" or is required to be registered as an "investment
company" as those terms are defined in the Investment Company Act of 1940, as
amended.
Section 5.4 Financing. Each Purchaser has, and will have at the time
of consummation of the Offer and the Closing, sufficient funds to acquire all
the shares in the Offer and the Newly Issued Shares in the Primary Share
Purchases without any financing contingency.
Section 5.5 Offer Documents. The Offer Documents shall not, at the
time the Offer Documents are filed with the SEC, are first published or are sent
or given to Shareholders, as the case may be, 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 made therein, in the light of the
circumstances under which they were made, not misleading. Notwithstanding the
foregoing, neither Purchaser makes any representation or warranty with respect
to any information supplied by the Company or any of its representatives for
inclusion in the Offer Documents. The Offer Documents will comply in all
material respects with the requirements of the Exchange Act and the rules and
regulations thereunder.
12
Section 5.6 Non-Distribution. Each Purchaser is purchasing the Newly
Issued Shares for its own account and not with a view towards, or for resale in
connection with, the public sale or distribution thereof.
Section 5.7 Accredited Investor Status. Each Purchaser is an
"accredited investor" as that term is defined in Rule 501(a)(3) of Regulation D
promulgated under the Securities Act.
Section 5.8 Reliance on Exemptions. Each Purchaser understands that
the Newly Issued Shares are being offered and sold to it in reliance on specific
exemptions from the registration requirements of United States federal and state
securities laws and that the Company is relying upon the truth and accuracy of,
and such Purchaser's compliance with, the representations, warranties,
agreements, acknowledgments and understandings of such Purchaser set forth
herein in order to determine the availability of such exemptions and the
eligibility of such Purchaser to acquire the Newly Issued Shares.
Section 5.9 Information. Each Purchaser and its advisors have been
furnished with all materials relating to the business, finances and operations
of the Company and materials relating to the offer and sale of the Newly Issued
Shares which have been requested by such Purchaser. Each Purchaser and its
advisors have been afforded the opportunity to ask questions of the Company and
have received complete and satisfactory answers to any such inquiries. Each
Purchaser understands that its investment in the Newly Issued Shares involves a
high degree of risk. Each Purchaser has sought such accounting, legal and tax
advice as it has considered necessary to an informed investment decision with
respect to its acquisition of the Newly Issued Shares.
Section 5.10 Transfer or Resale. Each Purchaser understands that (i)
the Newly Issued Shares have not been and are not being registered under the
Securities Act or any state securities laws, and may not be transferred unless
(a) subsequently registered thereunder, or (b) each Purchaser shall have
delivered to the Company an opinion of counsel, reasonably satisfactory in form,
scope and substance to the Company, to the effect that the securities to be sold
or transferred may be sold or transferred pursuant to an exemption from such
registration; (ii) any sale of such securities made in reliance on Rule 144
promulgated under the Securities Act may be made only in accordance with the
terms of said rule and further, if said rule is not applicable, any resale of
such securities under circumstances in which the seller (or the person through
whom the sale is made) may be deemed to be an underwriter (as that term is
defined in the Securities Act) may require compliance with some other exemption
under the Securities Act or the rules and regulations of the SEC thereunder; and
(iii) except as contemplated by the Registration Rights Agreement, neither the
Company nor any other person is under any obligation to register such securities
under the Securities Act or any state securities laws or to comply with the
terms and conditions of any exemption thereunder.
Section 5.11 Legends. Each Purchaser understands that unless, and
until such time as the Newly Issued Shares have been registered under the
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Securities Act, the certificates representing such securities shall bear a
restrictive legend in substantially the following form (and a stop-transfer
order may be placed against transfer of such certificates):
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED OR APPLICABLE STATE SECURITIES LAWS. THE
SECURITIES MAY NOT BE SOLD, TRANSFERRED OR ASSIGNED IN THE
ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE
SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED
AND APPLICABLE STATE SECURITIES LAWS, OR AN OPINION OF
COUNSEL REASONABLY ACCEPTABLE TO THE COMPANY THAT
REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR APPLICABLE
STATE SECURITIES LAWS. ANY SUCH SALE, ASSIGNMENT OR
TRANSFER MUST ALSO COMPLY WITH OR BE EXEMPT FROM
APPLICABLE STATE SECURITIES LAWS.
The legend set forth above as it appears on the certificate(s) representing the
Newly Issued Shares shall be removed and the Company shall issue a certificate
without such legend to the holder of such shares upon which it is stamped, if,
unless otherwise required by federal or state securities laws, (a) the sale of
such shares is registered under the Securities Act, or (b) in connection with a
sale transaction, such holder provides the Company with an opinion of counsel,
in form, substance and scope reasonably acceptable to the Company, to the effect
that a public sale or transfer of such shares may be made without registration
under the Securities Act, or (c) such holder provides the Company with an
opinion of counsel experienced in such matters that the shares can be sold
pursuant to Rule 144 under the Securities Act (or a successor rule thereto)
without any restriction as to the number of securities acquired as of a
particular date that can then be immediately sold.
Section 5.12 Brokers. No broker, finder, investment banker or other
person is entitled to any brokerage, finder's or other fee or commission in
connection with the Transactions based upon arrangements made by or on behalf of
any Purchaser.
Section 5.13 Absence of Litigation. There is no Action pending or,
to the knowledge of each Purchaser, threatened against such Purchaser or any of
its subsidiaries, or any property or asset of such Purchaser or any of its
subsidiaries, before any Governmental Authority that as of the date hereof,
seeks to delay or prevent the consummation of any Transaction. Neither such
Purchaser nor any of its subsidiaries nor any property or asset of such
Purchaser or any of its subsidiaries is subject to any continuing order of,
consent decree, settlement agreement or similar written agreement with, or, to
the knowledge of such Purchaser, continuing investigation by, any Governmental
Authority, or any order, writ, judgment, injunction, decree, determination or
award of any Governmental Authority that would prevent or delay consummation of
the Transactions, or otherwise prevent such Purchaser from performing its
obligations under this Agreement or any agreements contemplated hereby.
14
ARTICLE VI
COVENANTS
Section 6.1 Conduct of Business by the Company. The Company agrees
that, from the date of this Agreement until the Closing Date, neither the
Company nor any of its subsidiaries shall, except as specifically contemplated
in this Agreement, directly or indirectly:
(a) amend or otherwise change its Organizational Documents;
(b) issue, sell, pledge, dispose of, grant, encumber, or authorize
the issuance, sale, pledge, disposition, grant or encumbrance of, (i) any shares
of any class of share capital or other ownership interest of the Company or any
of its subsidiaries, or any options, warrants, convertible securities or other
rights of any kind to acquire any such shares or any other ownership interest
(including, without limitation, any phantom interest), of the Company or any of
its subsidiaries or (ii) any material assets of the Company or any of its
subsidiaries;
(c) declare, set aside, make or pay any dividend or other
distribution, payable in cash, securities, property or otherwise, with respect
to any of its Common Shares;
(d) reclassify, combine, split, subdivide or redeem, or purchase or
otherwise acquire, directly or indirectly, any of its capital stock;
(e) (i) acquire (including, without limitation, by merger,
consolidation, or acquisition of stock or assets or any other business
combination) any corporation, partnership, other business organization or any
division thereof, real property or any material amount of assets; (ii) except
for borrowings under existing credit facilities, incur any indebtedness for
borrowed money or issue any debt securities or assume, guarantee or endorse, or
otherwise as an accommodation become responsible for, the obligations of any
person, or make any loans or advances, or grant any security interest in any of
its assets except in the ordinary course of business; (iii) other than in the
ordinary course of business, enter into any contract or agreement other than as
contemplated herein; or (iv) enter into or amend any contract, agreement,
commitment or arrangement with respect to any matter set forth in this Section
6.1(e);
(f) take any action, other than actions required by GAAP or in the
ordinary course of business, to change its accounting policies or procedures;or
(g) announce an intention, enter into any agreement or otherwise
make a commitment, to do any of the foregoing.
Section 6.2 No Solicitation of Transactions.
(a) Neither the Company nor any of its subsidiaries shall, directly
or indirectly, through any officer, director, agent or otherwise, solicit, or
initiate the submission of, any Acquisition Proposal.
(b) Notwithstanding anything in this Section 6.2 to the contrary,
the Company may negotiate and otherwise engage in discussions with any person
who delivers an Acquisition Proposal that (i) a majority of the Board believes,
15
if consummated, would result in a transaction that is superior to the Offer and
(ii) a nationally recognized financial advisor engaged by the Board advises the
Board would, if consummated, be superior to the Offer from a financial point of
view, if the Company has complied with the terms of Section 6.2(a).
(c) The Board shall be permitted to withdraw its approval of the
Transactions and the Board Recommendation, but only if the Company has complied
with Section 6.2(a) and 6.2(b).
Section 6.3 Listing of Newly Issued Shares.
(a) As soon as practicable following commencement of the Offer, but
in no event more than ten calendar days thereafter, the Company shall file with
the New York Stock Exchange an application to list the maximum number of Newly
Issued Shares issuable pursuant to Section 2.3 hereof, in accordance with
Section 703 of the New York Stock Exchange's listing standards (or other
self-regulatory operating system on which Common Shares are then traded) ("New
York Stock Exchange Additional Listing Application"). If it is impracticable to
list the Newly Issued Shares on the New York Stock Exchange, the Company will
use its best efforts to obtain a listing of the Newly Issued Shares subject to
notice of issuance on the American Stock Exchange or NASDAQ.
(b) The Company shall use its bests efforts to cause the Common
Shares to continue to be listed on the New York Stock Exchange for a period of
one year following the Closing Date or, if such listing is no longer permitted,
the Company will use its best efforts to obtain a listing of the Common Shares
on the American Stock Exchange or NASDAQ.
Section 6.4 Further Action; All Reasonable Efforts.
(a) Each of the parties shall use its reasonable efforts to timely
satisfy each of the conditions precedent to the obligations hereunder of the
other party hereto, as set forth in Article III hereof.
(b) Without limiting the foregoing, upon the terms and subject to
the conditions hereof, each of the parties hereto shall use all reasonable
efforts to take, or cause to be taken, all appropriate action, and to do, or
cause to be done, all things necessary, proper or advisable under applicable
Laws and regulations to consummate and make effective the Transactions,
including, without limitation, using all reasonable efforts to obtain all
permits, consents, approvals, authorizations, qualifications and orders of
Governmental Authorities and parties to contracts with the Company and any of
its subsidiaries, or Purchasers or any of their subsidiaries, as applicable, as
are necessary for the consummation of the Transactions and to fulfill the
conditions to the Offer.
(c) Each of the parties hereto agrees to cooperate and use all
reasonable efforts to vigorously contest and resist any Action, including
administrative or judicial Action, and to have vacated, lifted, reversed or
overturned any decree, judgment, injunction or other order (whether temporary,
preliminary or permanent) that is in effect and that restricts, prevents or
prohibits consummation of the Transactions, including, without limitation, by
vigorously pursuing all available avenues of administrative and judicial appeal.
16
Section 6.5 Public Announcements. Purchasers and the Company agree
that no public release or announcement concerning the Transactions, the Offer or
the Newly Issued Share Issuance shall be issued by either party without the
prior consent of the other party (which consent shall not be unreasonably
withheld), except as such release or announcement may be required by Law or the
rules or regulations of any securities exchange, in which case the party
required to make the release or announcement shall use all reasonable efforts to
allow the other party reasonable time to comment on such release or announcement
in advance of such issuance.
Section 6.6 Standstill Agreement.
(a) Paragraph (b) hereof shall replace, amend and restate in its
entirety the 10th paragraph of the Confidentiality Letter Agreement dated April
16, 2008 between the Company and Arrow Capital Management LLC (the "NDA").
(b) Purchasers agree that except for the transactions contemplated
by this Agreement until the earlier of (i) the expiration of one year from the
Closing Date, or (ii) the date on which the Company publicly announces a
significant corporate transaction requiring approval of the Shareholders and
involving a material acquisition, disposition, amalgamation, merger or
consolidation or any other similar extraordinary corporate transaction
including, without limitation, the issuance of equity or debt securities by the
Company that requires the approval of Shareholders, neither they nor any of
their affiliates, including Arrow Capital, will (a) in any manner acquire, agree
to acquire or make any proposal to acquire, directly or indirectly, any
securities or property of the Company or any of its subsidiaries, (b) except at
the specific written request of the Company, propose to enter into, directly or
indirectly, any merger or business combination involving the Company or any of
its subsidiaries or to purchase, directly or indirectly, a material portion of
the assets of the Company or any of its subsidiaries, (c) make, or in any way
participate in, directly or indirectly, any `solicitation' of `proxies' (as such
terms are used in the proxy rules of the Securities and Exchange Commission) to
vote, or seek to advise or influence any person with respect to the voting of,
any voting securities of the Company or any of its subsidiaries, (d) form, join
or in any way participate in a `group' (within the meaning of Section 13(d)(3)
of the Securities Exchange Act of 1934) with respect to any voting securities of
the Company or any of its subsidiaries, (e) otherwise act, alone or in concert
with others, to seek to control or influence the management, Board of Directors
or policies of the Company, (f) disclose any intention, plan or arrangement
inconsistent with the foregoing, (g) advise, assist or encourage any other
persons in connection with any of the foregoing, or (h) request any waiver of
the provisions of this Section 6.6(b). Purchasers and Arrow Capital also agree
during such period not to take any action which might require the Company to
make a public announcement regarding the possibility of a business combination
or merger; provided that notwithstanding the foregoing in addition to the
Transactions, Purchasers and Arrow Capital may purchase additional outstanding
Common Shares in open market purchases in compliance with all applicable laws
and regulations and, if applicable, the Company's xxxxxxx xxxxxxx policies
commencing more than 30 days after the Closing Date, provided that Purchasers
and Arrow Capital together with their affiliates shall not at any time
collectively own more than 45% of the outstanding Common Shares.
17
ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER
Section 7.1 Termination. This Agreement may be terminated and the
Transactions may be abandoned at any time prior to the Closing:
(a) by mutual written consent of Purchasers and the Company duly
authorized by the boards of directors or equivalent management boards of
Purchasers and the Company;
(b) by either Purchasers or the Company if any Governmental
Authority shall have enacted, issued, promulgated, enforced or entered any
non-appealable permanent injunction, order, decree or ruling which is then in
effect and has the effect of making consummation of the Offer or the Primary
Share Purchases illegal or otherwise preventing or prohibiting consummation of
the Offer or the Primary Share Purchases;
(c) by Purchasers if, prior to the Closing, (i) the Board or any
committee thereof shall have withdrawn or modified in a manner adverse to
Purchasers its approval of this Agreement, the Primary Share Purchases or the
Board Recommendation other than in accordance with Section 6.2(c) hereof, or
(ii) the Board shall have approved an Acquisition Proposal; provided, however,
that if Purchasers shall not have theretofore so terminated this Agreement,
Purchasers shall no longer have the right to terminate this Agreement pursuant
to this clause (ii) with respect to any such Acquisition Proposal from and after
the time the Company has notified Purchasers in writing that the Board has
withdrawn its recommendation and approval of such Acquisition Proposal and has
reinstated its approval of this Agreement, the Newly-Issued Share Purchase and
the Board Recommendation;
(d) by the Company, upon approval of the Board, if (i) Purchasers
shall have (A) failed to commence the Offer by the close of business on May 28,
2008, (B) terminated the Offer without having accepted any shares for payment
thereunder or (C) failed to pay for shares pursuant to the Offer by August 29,
2008, unless such action or inaction under (A), (B) or (C) shall have been
caused by or resulted from the existence of the conditions specified in
paragraph (c), (d), (e) or (g) of Annex A, or (ii) prior to the purchase of
shares pursuant to the Offer, the Board determines in good faith, upon
consultation with outside counsel, that it is required to do so by its fiduciary
duties under applicable Law; or
(e) by either Purchasers or the Company following the date which is
90 days after the entering by a Governmental Authority of competent jurisdiction
of a temporary restraining order or preliminary injunction, which has not been
vacated or dismissed, that prohibits the consummation, in whole or in part, of
the Offer or the Primary Share Purchases.
Section 7.2 Effect of Termination. In the event of the termination
of this Agreement pursuant to Section 7.1, this Agreement shall forthwith become
void, and there shall be no liability on the part of any party hereto, except
(i) as set forth in Section 7.3 and (ii) nothing herein shall relieve any party
from liability for any willful breach hereof.
18
Section 7.3 Fees and Expenses.
(a) Except as otherwise provided in this Section 7.3, all costs and
expenses incurred in connection with this Agreement and the Transactions shall
be paid by the party incurring such expenses, whether or not any Transaction is
consummated.
(b) As liquidated damages to compensate Purchasers for lost
opportunity time, expenses and avoiding the difficulty of trying to quantify
damages, the Company shall pay Purchasers an aggregate fee of $500,000 (to be
divided by each Purchaser as Purchasers shall notify the Company in writing) on
the earliest to occur of (i) consummation of a transaction resulting from an
Acquisition Proposal, (ii) if this Agreement is terminated by Purchasers
pursuant to Section 7.1(c)(ii) at any time following the date that is 90 days
after the date on which the Company has approved or recommended an Acquisition
Proposal in accordance with Section 6.2(b), or (iii) pursuant to Section
7.1(d)(ii).
(c) In the event that Purchasers elect to extend the Offer solely
because the Company has failed to timely comply with paragraph (g) of Annex A,
the Company shall pay all printing and mailing costs associated with such
extension.
(d) If the Company fails to pay any amount due Purchasers under this
Section 7.3, the Company shall also pay any costs and expenses incurred by
Purchasers in any legal action to enforce this Agreement that results in any
final, non-appealable judgment against the Company.
ARTICLE VIII
GENERAL PROVISIONS
Section 8.1 Amendment. This Agreement may not be amended except by
an instrument in writing signed by the parties hereto.
Section 8.2 Notices. All notices, requests, claims, demands and
other communications hereunder shall be in writing and shall be given (and shall
be deemed to have been duly given upon receipt) by delivery in person, by
telecopy or by registered or certified mail (postage prepaid, return receipt
requested) to the respective parties at the following addresses (or at such
other address for a party as shall be specified in a notice given in accordance
with this Section 8.2):
if to Purchasers:
Arrow Capital Management, LLC
000 Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Telephone No: (000) 000-0000
Fax No: (000) 000-0000
Attention: Xxxxx Xxxxxx, Jr.
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with a copy to:
Post Xxxxxxx & Koffler LLP
Two Jericho Plaza, Wing A
Xxxxxxx, XX 00000
Telephone No: (000) 000-0000
Fax No: (000) 000-0000
Attention: Xxxxx X. Xxxxxxx
if to the Company:
X.X. Xxxxxxx & Co., Ltd.
Xxxxxxx Xxxx
00 Xxxxx Xxxxxx
Xxxxxxxx XX 00
Bermuda
Telephone No: (000) 000-0000
Fax No: (000) 000-0000
Attention: Xxxx Xxxxxxxxxx
with a copy to:
Xxxxxx & Xxxxxxx LLP
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000-0000
Telephone No: (000) 000-0000
Fax No: (000) 000-0000
Attention: Xxxxx Xxxx
Section 8.3 Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of law,
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the Transactions is not affected in any manner materially adverse
to any party. Upon such determination that any term or other provision is
invalid, illegal or incapable of being enforced, the parties hereto shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible in a mutually acceptable manner in
order that the Transactions be consummated as originally contemplated to the
fullest extent possible.
Section 8.4 Specific Performance. The parties hereto agree that
irreparable damage would occur in the event any provision of this Agreement is
not performed in accordance with the terms hereof and that the parties shall be
entitled to specific performance of the terms hereof, in addition to any other
remedy at law or equity.
Section 8.5 Entire Agreement; Assignment. This Agreement (including
the exhibits, annexes and schedules hereto and the NDA) constitutes the entire
agreement among the parties with respect to the subject matter hereof and
thereof and supersede all prior agreements and undertakings, both written and
20
oral, among the parties, or any of them, with respect to the subject matter
hereof and thereof. This Agreement shall not be assigned by operation of law or
otherwise, except that Purchasers may assign all or any of their rights and
obligations hereunder, including the obligation to make the Offer, to any
affiliate of Purchasers, provided that no such assignment shall relieve the
assigning party of its obligations hereunder.
Section 8.6 Waiver. No purported extension or waiver by any party
shall be valid unless set forth in an instrument in writing signed by the party
or parties to be bound thereby.
Section 8.7 Parties in Interest. This Agreement shall be binding
upon and inure to the benefit of each party hereto, and nothing in this
Agreement, express or implied, is intended to or shall confer upon any other
person any right, benefit or remedy of any nature whatsoever under or by reason
of this Agreement.
Section 8.8 Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of New York applicable to
contracts executed in and to be performed in that State. All actions and
proceedings arising out of or relating to this Agreement shall be heard and
determined exclusively in any New York state or federal court. The parties
hereto hereby (a) submit to the exclusive jurisdiction of the courts of the
State of New York for the purpose of any Action arising out of or relating to
this Agreement brought by any party hereto, and (b) irrevocably waive, and agree
not to assert by way of motion, defense, or otherwise, in any such Action, any
claim that it is not subject personally to the jurisdiction of the above-named
court, that its property is exempt or immune from attachment or execution, that
the Action is brought in an inconvenient forum, that the venue of the Action is
improper, or that this Agreement or the Transactions may not be enforced in or
by the above-named court.
Section 8.9 Waiver of Jury Trial. EACH OF THE PARTIES HERETO HEREBY
WAIVES TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW ANY RIGHT IT MAY HAVE
TO A TRIAL BY JURY WITH RESPECT TO ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING
OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR THE TRANSACTIONS. EACH OF
THE PARTIES HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF
ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY
WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND
(B) ACKNOWLEDGES THAT IT AND THE OTHER PARTY HERETO HAVE BEEN INDUCED TO ENTER
INTO THIS AGREEMENT AND THE TRANSACTIONS, AS APPLICABLE, BY, AMONG OTHER THINGS,
THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 8.9.
Section 8.10 Headings. The descriptive headings contained in this
Agreement are included for convenience of reference only and shall not affect in
any way the meaning or interpretation of this Agreement.
Section 8.11 Counterparts. This Agreement may be executed and
delivered (including by facsimile transmission) in one or more counterparts, and
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by the different parties hereto in separate counterparts, each of which when
executed shall be deemed to be an original but all of which taken together shall
constitute one and the same agreement.
[Remainder of page intentionally left blank.]
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IN WITNESS WHEREOF, Purchasers and the Company have caused this Agreement
to be executed as of the date first written above by their respective officers
thereunto duly authorized.
Arrow Masters LP Arrow Partners LP
By: Arrow Advisors LLC By: Arrow Advisors LLC
General Partner General Partner
By: /s/ Alexandre von Furstenberg By: /s/ Alexandre von Furstenberg
----------------------------- -----------------------------
Alexandre von Furstenberg Alexandre von Furstenberg
Co-Managing Member Co-Managing Member
By: /s/ Xxx Xxxxxx By: /s/ Xxx Xxxxxx
----------------------------- -----------------------------
Xxx Xxxxxx Xxx Xxxxxx
Co-Managing Member Co-Managing Member
Arrow Offshore, Ltd. X.X. Xxxxxxx & Co., Ltd.
By: /s/ Xxx Xxxxxx By: /s/ Xxxxxxx X. Xxxxxxx
----------------------------- -----------------------------
Xxx Xxxxxx Xxxxxxx X. Xxxxxxx
Director Chief Executive Officer
23
ANNEX A
CONDITIONS TO THE OFFER
Notwithstanding any other provision of the Offer, Purchasers shall not be
required to accept for payment any shares tendered pursuant to the Offer at the
expiration of the Offer, if any of the following conditions shall exist:
(a) there shall have been instituted and remain pending any Action
brought by any Governmental Authority of competent jurisdiction over the Company
(i) challenging or seeking to make illegal or otherwise directly or indirectly
restrain or prohibit the Offer or the Newly Issued Share Purchases, (ii) seeking
to impose material limitations on the ability of Purchasers to exercise
effectively full rights of ownership of any shares, including, without
limitation, the right to vote any shares acquired or owned by Purchasers on all
matters properly presented to the Shareholders, or (iii) seeking to require
divestiture by Purchasers of any shares;
(b) there shall be in effect any judgment, order or injunction
entered or issued by any Governmental Authority of competent jurisdiction having
the effect of making the consummation of the Offer or the Primary Share
Purchases illegal or otherwise preventing or prohibiting consummation of the
Offer or the Primary Share Purchases;
(c) (i) the Board, or any committee thereof, shall have withdrawn or
modified, in a manner adverse to Purchasers and not reinstated, its approval of
this Agreement, the Primary Share Purchases or the Board Recommendation, shall
have recommended that Shareholders not tender their shares in the Offer, shall
have approved or recommended any Acquisition Proposal or any other material
acquisition of shares other than the Offer or the Primary Share Purchases or
(ii) the Board, or any committee thereof, shall have resolved to do any of the
foregoing;
(d) any representation or warranty of the Company in the Agreement
shall not be true and correct as of such time on or after the date of this
Agreement, except as would not have a Material Adverse Effect or prevent or
materially delay consummation of the Transactions, or otherwise prevent the
Company from performing its obligations under this Agreement;
(e) the Company shall have failed to perform any material obligation
or to comply with any material agreement or covenant of the Company to be
performed or complied with by it at or prior to the expiration of the Offer
under the Agreement or any agreement contemplated hereby;
(f) the Agreement shall have been terminated in accordance with its
terms;
(g) the Company shall not have filed with the SEC its Annual Report
on Form 20-F for the year ended December 31, 2007;
(h) Purchasers and the Company shall have agreed that Purchasers
shall terminate the Offer; or
A-1
(i) any Newly Issued Shares shall not have been listed or approved
for listing on such exchange as the Common Shares are then listed.
A-2
ANNEX B
REGISTRATION RIGHTS AGREEMENT
B-1
ANNEX C
WAIVER OF SHARE VOTING RESTRICTIONS
The Common Shares held by Purchasers shall be subject to all voting
restrictions set forth in the Bye-laws of the Company, provided that the Board
of Directors shall have approved the following waivers:
(a) For purposes of that portion of Bye-law 62 that precedes the
definition of "Controlled Shares", clause (ii) of such definition shall be
inapplicable to Purchasers.
(b) For purposes of Bye-law 63, clause (i) of the definition of
"Controlled Shares" set forth in Bye-law 62 shall be inapplicable to Purchasers.
(c) "24%" shall be substituted for "20%" in Bye-law 63 in the case of
Purchasers.
The foregoing waivers shall not be assignable without the prior written
consent of the Board.
C-1