EXHIBIT 1
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AMENDED AND RESTATED
AGREEMENT AND
PLAN OF MERGER
by and among
CB XXXXXXX XXXXX SERVICES, INC.,
CBRE HOLDING, INC.
and
XXXX XX CORP.
May 31, 2001
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TABLE OF CONTENTS
Page
ARTICLE 1 DEFINITIONS................................................................................. 1
1.1. Definitions................................................................................ 1
ARTICLE 2 THE MERGER.................................................................................. 7
2.1. The Merger................................................................................. 7
2.2. Organizational Documents................................................................... 7
2.3. Directors and Officers..................................................................... 8
ARTICLE 3 CONVERSION OF SECURITIES AND RELATED MATTERS................................................ 8
3.1. Capital Stock of Acquiror.................................................................. 8
3.2. Cancellation of Treasury Stock and Acquiror Owned Shares................................... 8
3.3. Conversion of Company Shares............................................................... 8
3.4. Exchange of Certificates................................................................... 8
3.5. Company Stock Options...................................................................... 10
3.6. Deferred Compensation Plan................................................................. 10
3.7. Capital Accumulation Plan.................................................................. 11
3.8. Dissenting Shares.......................................................................... 11
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF THE COMPANY............................................... 12
4.1. Corporate Existence and Power.............................................................. 12
4.2. Corporate Authorization.................................................................... 12
4.3. Governmental Authorization................................................................. 13
4.4. Non-Contravention.......................................................................... 13
4.5. Capitalization............................................................................. 13
4.6. Subsidiaries............................................................................... 14
4.7. Company SEC Documents...................................................................... 15
4.8. Financial Statements; No Material Undisclosed Liabilities.................................. 15
4.9. Absence of Certain Changes................................................................. 16
4.10. Litigation................................................................................. 16
4.11. Taxes...................................................................................... 17
4.12. Employee Benefits.......................................................................... 17
4.13. Compliance with Laws; Licenses, Permits and Registrations.................................. 20
4.14. Title to Properties........................................................................ 20
4.15. Intellectual Property...................................................................... 20
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4.16. Finders' Fees; Opinions of Financial Advisor............................................... 21
4.17. Labor Matters.............................................................................. 21
4.18. Material Contract Defaults................................................................. 21
4.19. Required Vote; Board Approval.............................................................. 22
4.20. Information to Be Supplied................................................................. 22
4.21. Disclaimer of Other Representations and Warranties......................................... 23
ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF HOLDING AND ACQUIROR...................................... 23
5.1. Corporate Existence and Power.............................................................. 23
5.2. Corporate Authorization.................................................................... 23
5.3. Governmental Authorization................................................................. 24
5.4. Non-Contravention.......................................................................... 24
5.5. Financing.................................................................................. 24
5.6. Information to Be Supplied................................................................. 25
5.7. No Breach.................................................................................. 26
5.8. Disclaimer of Other Representations and Warranties......................................... 26
ARTICLE 6 COVENANTS OF THE COMPANY.................................................................... 26
6.1. Company Interim Operations................................................................. 26
6.2. Stockholder Meeting........................................................................ 29
6.3. Acquisition Proposals; Board Recommendation................................................ 29
ARTICLE 7 COVENANTS OF HOLDING AND ACQUIROR........................................................... 31
7.1. Director and Officer Liability............................................................. 31
7.2. Employee Benefits.......................................................................... 33
7.3. Severance Plan............................................................................. 34
7.4. Conduct of Holding and Acquiror............................................................ 34
7.5. Transfer Taxes............................................................................. 34
7.6. Investment Banking Fee..................................................................... 34
7.7. Financing Arrangements..................................................................... 34
7.8. Contribution and Voting Agreement.......................................................... 35
7.9. Board Member............................................................................... 35
ARTICLE 8 COVENANTS OF HOLDING, ACQUIROR AND THE COMPANY.............................................. 35
8.1. Efforts and Assistance..................................................................... 35
8.2. Proxy Statement and Schedule 13E-3......................................................... 37
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8.3. Public Announcements....................................................................... 38
8.4. Access to Information; Notification of Certain Matters..................................... 38
8.5. Further Assurances......................................................................... 39
8.6. Registration Statement..................................................................... 39
8.7. Disposition of Litigation.................................................................. 40
8.8. Confidentiality Agreements................................................................. 40
8.9. Resignation of Directors................................................................... 40
8.10. Senior Subordinated Notes.................................................................. 40
ARTICLE 9 CONDITIONS TO MERGER........................................................................ 42
9.1. Conditions to the Obligations of Each Party................................................ 42
9.2. Conditions to the Obligations of the Company............................................... 42
9.3. Conditions to the Obligations of Acquiror.................................................. 43
ARTICLE 10 TERMINATION................................................................................. 44
10.1. Termination................................................................................ 44
10.2. Effect of Termination...................................................................... 45
10.3. Fees and Expenses.......................................................................... 46
ARTICLE 11 MISCELLANEOUS............................................................................... 46
11.1. Notices.................................................................................... 46
11.2. Amendment and Restatement; Effectiveness of Representations and Warranties and Agreements.. 47
11.3. Survival of Representations, Warranties and Covenants after the Effective Time............. 47
11.4. Amendments; No Waivers..................................................................... 47
11.5. Successors and Assigns..................................................................... 47
11.6. Counterparts; Effectiveness; Third Party Beneficiaries..................................... 48
11.7. Governing Law.............................................................................. 48
11.8. Jurisdiction............................................................................... 48
11.9. Enforcement................................................................................ 48
11.10. Entire Agreement........................................................................... 48
11.11. Authorship................................................................................. 48
11.12. Severability............................................................................... 48
11.13. Waiver of Jury Trial....................................................................... 49
11.14. Headings; Construction..................................................................... 49
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AMENDED AND RESTATED AGREEMENT AND PLAN OF MERGER
This AMENDED AND RESTATED AGREEMENT AND PLAN OF MERGER (the "Agreement") is
made and entered into this 31/st/ day of May 2001, by and among CB Xxxxxxx Xxxxx
Services, Inc., a Delaware corporation (the "Company"), CBRE Holding, Inc. a
Delaware corporation formerly known as XXXX XX Holding Corp. ("Holding"), and
XXXX XX Corp., a Delaware corporation wholly owned by Holding ("Acquiror").
WHEREAS, a Special Committee of the Board of Directors of the Company has
(i) determined that the Merger (as defined herein) is advisable and in the best
interest of the Company's stockholders (other than the members of the Buying
Group (as defined herein)), and (ii) approved the Merger and recommended
approval of the Merger by the Board of Directors of the Company;
WHEREAS, the Board of Directors of the Company, subsequent to the
recommendation of the Special Committee, has (i) determined that the Merger is
advisable and in the best interest of the Company's stockholders (other than the
members of the Buying Group), and (ii) approved the Merger;
WHEREAS, the Board of Directors of each of Holding and Acquiror has
determined that the Merger is advisable and in the best interest of its
stockholders;
WHEREAS, Holding, Acquiror and certain stockholders of the Company (the
"Buying Group") have entered into an amended and restated contribution and
voting agreement, a copy of which is attached hereto as Exhibit A (the
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"Contribution and Voting Agreement"), pursuant to which, among other things,
those stockholders have agreed to vote their Company Shares in favor of adopting
and approving this Agreement and the Merger;
WHEREAS, by resolutions duly adopted, the respective Boards of Directors of
the Company, Holding and Acquiror have approved and adopted this Agreement and
the transactions and other agreements contemplated hereby; and
WHEREAS, the parties to this Agreement previously entered into an Agreement
and Plan of Merger, dated as of February 23, 2001 (the "Original Agreement"),
and an Amended and Restated Plan and Agreement of Merger, dated as of April 24,
2001 (the "First Amended and Restated Agreement"), and this Agreement
constitutes an amendment and restatement of the First Amended and Restated
Agreement.
NOW, THEREFORE, in consideration of the premises and promises contained
herein, and intending to be legally bound, the parties hereto agree as set forth
below.
ARTICLE 1
DEFINITIONS
1.1. Definitions. (a) As used herein, the following terms have the
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meanings set forth below:
"Acquiror Common Share" means one share of Common Stock of Acquiror, $0.01
par value per share.
"Acquiror Preferred Share" means one share of Participating Preferred Stock
of Acquiror, $0.01 par value per share.
"Acquisition Proposal" means any offer or proposal (whether or not in
writing) from any Third Party regarding any of the following: (a) a transaction
pursuant to which a Third Party acquires or would acquire beneficial ownership
of more than fifteen percent (15%) of the outstanding shares of any class of
Equity Interests of the Company, whether from the Company or pursuant to a
tender offer or exchange offer or otherwise, (b) a merger, consolidation,
business combination, reorganization, sale of substantially all assets,
recapitalization, liquidation, dissolution or similar transaction involving the
Company, or (c) any transaction which would result in a Third Party acquiring
15% or more of the fair market value on a consolidated basis of the assets
(including, without limitation, the capital stock of Subsidiaries) of the
Company and its Subsidiaries immediately prior to such transaction (whether by
purchase of assets, acquisition of stock of a Subsidiary or otherwise).
"Affiliate" means, with respect to any Person, any other Person, directly
or indirectly, controlling, controlled by, or under common control with, such
Person. For purposes of this definition, the term "control" (including the
correlative terms "controlling", "controlled by" and "under common control
with") means the possession, direct or indirect, of the power to direct or cause
the direction of the management and policies of a Person, whether through the
ownership of voting securities, by contract or otherwise.
"Business Day" means any day, other than a Saturday, Sunday or one on which
banks are authorized by Law to close in New York, New York.
"Capital Accumulation Plan" means the Capital Accumulation Plan of the
Company as amended through the date of this Agreement.
"Code" means the U.S. Internal Revenue Code of 1986, as amended, together
with the rules and regulations promulgated thereunder.
"Company Balance Sheet" means the Company's consolidated balance sheet
included in the Company 10-K relating to its year ended on December 31, 1999.
"Company Material Adverse Effect" means any material adverse effect on (a)
the business, assets, liabilities, financial condition or results of operations
of the Company and its Subsidiaries, taken as a whole, or (b) the ability of the
Company to perform its obligations under
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this Agreement or the other agreements and transactions contemplated hereby;
provided, however, that this definition shall exclude any material adverse
effect arising out of any change or development resulting from (v) U.S. or
global general economic or political conditions, (w) conditions generally
affecting the industry in which the Company and its Subsidiaries operate, (x)
changes in U.S. or global financial markets or conditions, (y) any generally
applicable change in Law or GAAP or interpretation of any thereof and/or (z) the
announcement of this Agreement or the transactions contemplated hereby or the
Company's performance of its obligations under this Agreement and compliance
with the covenants set forth herein.
"Company Share" means one share of common stock of the Company, $0.01 par
value per share.
"Company SEC Documents" means (a) the annual report on Form 10-K of the
Company (the "Company 10-K"), for the years ended December 31, 1998 and 1999,
(b) the quarterly reports on Form 10-Q of the Company for the quarters ended
March 31, June 30 and September 30, 1999 and 2000, (c) the Company's proxy
statements relating to meetings of, or actions taken without a meeting by, the
Company Stockholders, since January 1, 1999, and (d) all other reports, filings,
registration statements and other documents filed by the Company with the SEC
since January 1, 1999; in each case including all exhibits, appendices and
attachments thereto, whether filed therewith or incorporated by reference
therein.
"Company Stockholders" or "Stockholders" means the stockholders of the
Company as of the date hereof, as of the record date for the Company Stockholder
Meeting and as of the Closing Date, as applicable.
"Deferred Compensation Plan" means the Deferred Compensation Plan of the
Company, as amended and restated as of November 1, 1999, and as further amended
through the date of this Agreement.
"Equity Interest" means with respect to any Person, any and all shares,
interests, participations, rights in, or other equivalents (however designated
and whether voting or non-voting) of, such Person's capital stock or other
equity interests (including, without limitation, partnership or membership
interests in a partnership or limited liability company or any other interest or
participation that confers on a Person the right to receive a share of the
profits and losses, or distributions of assets, of the issuing Person) whether
outstanding on the date hereof or issued after the date hereof.
"Exchange Act" means the Securities Exchange Act of 1934, as amended, and
the rules and regulations promulgated thereunder.
"Governmental Entity" means any federal, state or local governmental
authority, any transgovernmental authority or any court, administrative or
regulatory agency or commission or other governmental authority or agency,
domestic or foreign.
"Holding Material Adverse Effect" means any change or effect that would
prevent or materially impair the ability of Holding or Acquiror to consummate
the Merger and the other transactions contemplated by this Agreement.
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"Joint Venture" means, with respect to any Person, any corporation or other
entity (including a division or line of business of such corporation or other
entity) (a) of which such Person and/or any of its Subsidiaries beneficially
owns a portion of the Equity Interests that is insufficient to make such
corporation or other entity a Subsidiary of such Person, and (b) that is engaged
in the same business as such Person or its Subsidiaries or in a related or
complementary business. "Company Joint Venture" means a Joint Venture of the
Company.
"Knowledge" means, with respect to the matter in question, if any of the
executive officers of the Company listed in Section 1.1 of the Company
Disclosure Schedule has actual knowledge of the matter.
"Law" means any federal, state, local or foreign law, rule, regulation,
judgment, code, ruling, statute, order, decree, injunction or ordinance or other
legal requirement.
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of an asset;
provided, however, that the term "Lien" shall not include (a) liens for
utilities and current Taxes not yet due and payable, (b) mechanics', carriers',
workers', repairers', materialmen's, warehousemen's and other similar liens
arising or incurred in the ordinary course of business or (c) liens for Taxes
being contested in good faith.
"Material Joint Venture" means a Company Joint Venture in which the Company
and the Company Subsidiaries, collectively, have invested, or committed to
invest, at least $3.0 million.
"Material Subsidiary" means a Company Subsidiary with more than $25.0
million in consolidated revenue during the Company's fiscal year ended December
31, 2000.
"Non-U.S. Competition Laws" means all (a) non-U.S. Laws intended to
prohibit, restrict or regulate actions having the purpose or effect of
monopolization or restraint of trade, (b) antitrust Laws by antitrust
authorities outside of the United States and (c) takeover Laws of jurisdictions
outside of the United States.
"Person" means an individual, corporation, limited liability company,
partnership, association, trust or any other entity or organization, including
any Governmental Entity.
"Prospectus" means the prospectus included in the Registration Statement,
together with any amendments or supplements thereto.
"Proxy Statement" means the proxy statement relating to the Company
Stockholder Meeting, together with any amendments or supplements thereto.
"RCBA" means RCBA Strategic Partners, L.P., a Delaware limited partnership
and the sole stockholder of Holding as of the date hereof.
"Registration Statement" means the Registration Statement on Form S-1 or
comparable form, together with any supplements thereto, registering shares of
common stock of Holding for issuance to employees of the Company under the
Securities Act.
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"Schedule 13E-3" means the Statement on Schedule 13E-3 to be filed by the
Company and Holding concurrently with the filing of the Proxy Statement pursuant
to the Exchange Act, together with any amendments or supplements thereto.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder.
"Special Committee" means the Special Committee of the Board of Directors
appointed by resolution of the Company's Board of Directors adopted on November
10, 2000.
"Subsidiary" means, with respect to any Person, any corporation or other
entity (including joint ventures) of which securities or other ownership
interests having ordinary voting power to elect a majority of the board of
directors or other Persons performing similar functions are directly or
indirectly owned, by such Person. "Company Subsidiary" means a Subsidiary of
the Company.
"Superior Proposal" means any of the transactions described in the
definition of Acquisition Proposal (with all of the percentages included in the
definition of Acquisition Proposal increased to 51% for purposes of this
definition) that is on terms which a majority of the disinterested members of
the Company's Board of Directors or the Special Committee determines in good
faith, after considering the advice of outside legal counsel and financial
advisors (a) represents a financially superior transaction for the Company's
Stockholders (other than Holding, Acquiror and the members of the Buying Group
and each of their respective Affiliates) to the transactions contemplated
hereby; (b) would result in a transaction, if consummated, that would be more
favorable to the Company's Stockholders (other than Holding, Acquiror and the
members of the Buying Group and each of their respective Affiliates) (taking
into account all facts and circumstances, including all legal, financial,
regulatory and other aspects of the proposal and the identity of the offeror)
than the transactions contemplated hereby; and (c) is reasonably capable of
being consummated (including, without limitation, the availability of committed
financing).
"Taxes" means all United States federal, state, local or foreign income,
profits, estimated gross receipts, windfall profits, environmental (including
taxes under Section 59A of the Code), severance, property, intangible property,
occupation, production, sales, use, license, excise, emergency excise,
franchise, capital gains, capital stock, employment, withholding, social
security (or similar), disability, transfer, registration, stamp, payroll, goods
and services, value added, alternative or add-on minimum tax, estimated, or any
other tax, custom, duty or governmental fee, or other like assessment or charge
of any kind whatsoever, together with any interest, penalties, fines, related
liabilities or additions to tax that may become payable in respect therefore
imposed by any Governmental Entity, whether disputed or not.
"Third Party" means a Person (or group of Persons) other than Holding,
Acquiror or any of their Affiliates (excluding the Company and its controlled
Affiliates).
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(b) Each of the following terms is defined in the Section set forth
opposite such term:
Terms Section
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Acquiror Preamble
Acquiror Senior Subordinated Notes 5.5(b)
Agreement Preamble
Buying Group Preamble
Certificate of Merger 2.1(b)
Certificates 3.4(a)
Claim 7.1(b)
Closing 2.1(d)
Closing Date 2.1(d)
Commitment Letter Financing 5.5(a)
Commitment Letters 5.5(a)
Company Preamble
Company Employee Plans 4.12(a)
Company Intellectual Property 4.15
Company Option 3.5(a)
Company Preferred Stock 4.5(a)
Company Recommendation 6.2
Company Returns 4.11
Company Securities 4.5(b)
Company Stockholder Approval 4.19(a)
Company Stockholder Meeting 6.2
Confidentiality Agreement 8.4(a)
Contribution and Voting Agreement Preamble
CSFB 5.5(a)
Debt Offer 8.10(a)
DGCL 2.1(a)
DLJ 5.5(a)
Dissenting Shares 3.8(a)
Effective Time 2.1(b)
End Date 10.1(b)(i)
ERISA 4.12(a)
ERISA Affiliate 4.12(a)
Exchange Agent 3.4(a)
Exchange Fund 3.4(a)
Financing 5.5(b)
Financing Agreements 7.7(a)
Foreign Plan 4.12(i)
GAAP 4.8(a)
Holding Preamble
Holding Shares 3.7(a)
HSR Act 4.3
Indemnified Parties 7.1(b)
Indenture 8.10(a)
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Letter of Transmittal 8.10(c)
Loan Shares 4.5(a)
Material Contracts 4.18
Merger 2.1(a)
Merger Consideration 3.3
Multiemployer Plan 4.12(b)
Note Purchase Agreement 5.5(b)
Notes 8.10(a)
Offer Documents 8.10(c)
Offer to Purchase 8.10(c)
Permits 4.13(b)
Permitted Actions 6.3(a)
Phantom Shares 4.5(a)
Plan Proceeds 3.7(a)
Purchase Agreement Financing 5.5(b)
Retirement Plan 4.12(b)
Secretary of State 2.1(b)
Senior Subordinated Notes Proceeds 5.5(b)
Share Limit 3.7(a)
Stock Fund Participant 3.7(a)
Surviving Corporation 2.1(a)
Termination Fee 10.2(b)
Transfer Taxes 7.5
Vested CBRE Stock Fund Units 3.6(a)
ARTICLE 2
THE MERGER
2.1. The Merger.
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(a) At the Effective Time, Acquiror shall be merged with and into the
Company (the "Merger") in accordance with the terms and conditions of this
Agreement and the Delaware General Corporation Law (the "DGCL"), at which time
the separate corporate existence of Acquiror shall cease and the Company shall
continue its existence. In its capacity as the corporation surviving the
Merger, this Agreement sometimes refers to the Company as the "Surviving
Corporation".
(b) As soon as practicable on or after the Closing Date, the Company and
Acquiror will file a certificate of merger or other appropriate documents (the
"Certificate of Merger") with the Delaware Secretary of State (the "Secretary of
State") and make all other filings or recordings required by the DGCL in
connection with the Merger. The Merger shall become effective at the time when
the Certificate of Merger is duly filed with and accepted by the Secretary of
State, or at such later time as is agreed upon by the parties and specified in
the Certificate of Merger (such time as the Merger becomes effective is referred
to herein as the "Effective Time").
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(c) From and after the Effective Time, the Merger shall have the effects
set forth in Section 259 of the DGCL.
(d) The closing of the Merger (the "Closing") shall be held at the
offices of Xxxxxxx Xxxxxxx & Xxxxxxxx, 0000 Xxxxxxxx Xxxxxx, Xxxx Xxxx,
Xxxxxxxxxx 00000 (or such other place as agreed by the parties) on the later of
(a) the date of the Company Stockholder Meeting, or (b) the day on which all of
the conditions set forth in Article 9 are satisfied or waived, unless the
parties hereto agree to another date. The date upon which the Closing occurs is
hereinafter referred to as the "Closing Date".
2.2. Organizational Documents. The Certificate of Merger shall provide
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that at the Effective Time, by virtue of the Merger and without any action on
the part of the holder of any Company Share, (a) the Company's certificate of
incorporation in effect immediately prior to the Effective Time shall be the
Surviving Corporation's certificate of incorporation and Article FOURTH of the
Surviving Corporation's certificate of incorporation shall be amended and
restated as set forth in Exhibit B hereto, and (b) the Company's by-laws in
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effect immediately prior to the Effective Time shall be the Surviving
Corporation's by-laws, in each case until amended in accordance with applicable
Law. .
2.3. Directors and Officers. From and after the Effective Time (until
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successors are duly elected or appointed and qualified), (a) Acquiror's
directors at the Effective Time shall be the Surviving Corporation's directors
and (b) the Company's officers immediately prior to the Effective Time shall be
the Surviving Corporation's officers
ARTICLE 3
CONVERSION OF SECURITIES AND RELATED MATTERS
3.1. Capital Stock of Acquiror. As of the Effective Time, by virtue of
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the Merger and without any action on the part of the holder of any Company Share
or Acquiror Common Share or Acquiror Preferred Share:
(a) each Acquiror Common Share issued and outstanding immediately prior
to the Effective Time shall be converted into one share of Common Stock, $0.01
par value per share, of the Surviving Corporation; and
(b) each Acquiror Preferred Share issued and outstanding immediately
prior to the Effective Time shall be converted into one share of Series A
Convertible Participating Preferred Stock, $0.01 par value per share, of the
Surviving Corporation.
3.2. Cancellation of Treasury Stock and Acquiror Owned Shares. As of the
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Effective Time, by virtue of the Merger and without any action on the part of
the holder of any Company Share or Acquiror Share, each Company Share held by
the Company as treasury stock or owned by Holding, Acquiror or any Company
Subsidiary immediately prior to the Effective Time shall be canceled and
retired, and no payment shall be made or consideration delivered in respect
thereof.
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3.3. Conversion of Company Shares. As of the Effective Time, by virtue
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of the Merger and without any action on the part of the holder of any Company
Share or Acquiror Share, each Company Share issued and outstanding immediately
prior to the Effective Time (other than (a) shares to be cancelled in accordance
with Section 3.2 and (b) Dissenting Shares) shall be converted into the right to
receive in cash from Acquiror, without interest, an amount equal to $16.00 (the
"Merger Consideration").
3.4. Exchange of Certificates.
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(a) Exchange Agent. Promptly after the date hereof, Acquiror shall
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appoint a bank or trust company reasonably acceptable to the Company as an agent
(the "Exchange Agent") for the benefit of holders of Company Shares for the
purpose of exchanging, pursuant to this Article 3, certificates representing the
Company Shares (the "Certificates"). Acquiror will make available to the
Exchange Agent, as needed, the Merger Consideration to be paid in respect of
Company Shares pursuant to this Article 3 (the "Exchange Fund"), and except as
contemplated by Section 3.4(f) or Section 3.4(g) hereof, the Exchange Fund shall
not be used for any other purpose. The Exchange Agent shall invest the Merger
Consideration as directed by the Acquiror or the Surviving Corporation, as the
case may be, on a daily basis. Any interest and other income resulting from
such investments shall be paid to the Surviving Corporation.
(b) Exchange Procedures. As promptly as practicable after the Effective
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Time, the Surviving Corporation shall send, or shall cause the Exchange Agent to
send, to each record holder of Certificates a letter of transmittal and
instructions (which shall be in customary form and specify that delivery shall
be effected, and risk of loss and title shall pass, only upon delivery of the
Certificates to the Exchange Agent), for use in the exchange contemplated by
this Section 3.4. Upon surrender of a Certificate to the Exchange Agent,
together with a duly executed letter of transmittal, the holder shall be
entitled to receive in exchange therefor the Merger Consideration as provided in
this Article 3 in respect of the Company Shares represented by the Certificate
(after giving effect to any required withholding Tax). Until surrendered as
contemplated by this Section 3.4, each Certificate shall be deemed after the
Effective Time to represent only the right to receive the Merger Consideration.
(c) No Further Rights in Company Shares. All cash paid upon surrender of
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Certificates in accordance with the terms hereof shall be deemed to have been
issued in full satisfaction of all rights pertaining to Company Shares
represented thereby. From and after the Effective Time, the holders of
Certificates shall cease to have any rights with respect to Company Shares,
except as otherwise provided herein or by Law. As of the Effective Time, the
stock transfer books of the Company shall be closed and there shall be no
further registration of transfers on the Company's stock transfer books of any
Company Shares, other than transfers that occurred before the Effective Time.
If, after the Effective Time, Certificates are presented to the Surviving
Corporation for any reason, they shall be canceled and exchanged as provided in
this Section 3.4.
(d) Alternate Endorsement. If payment of the Merger Consideration in
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respect of Company Shares is to be made to a Person other than the Person in
whose name a surrendered Certificate is registered, it shall be a condition to
such payment that the Certificate so surrendered shall be properly endorsed or
shall be otherwise in proper form for transfer and that the Person requesting
such payment shall have paid any transfer and other Taxes required by
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reason of such payment in a name other than that of the registered holder of the
Certificate surrendered or shall have established to the satisfaction of the
Surviving Corporation or the Exchange Agent that such Tax either has been paid
or is not payable.
(e) Return of Merger Consideration. Upon demand by the Surviving
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Corporation, the Exchange Agent shall deliver to the Surviving Corporation any
portion of the Merger Consideration made available to the Exchange Agent
pursuant to this Section 3.4 that remains undistributed to holders of Company
Shares six (6) months after the Effective Time. Holders of Certificates who
have not complied with this Section 3.4 prior to the demand by the Surviving
Corporation shall thereafter look only to the Surviving Corporation for payment
of any claim to the Merger Consideration.
(f) No Liability. None of Holding, the Surviving Corporation or the
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Exchange Agent shall be liable to any Person in respect of any Company Shares
(or dividends or distributions with respect thereto) for any amounts paid to a
public official pursuant to any applicable abandoned property, escheat or
similar Law.
(g) Withholding Rights. Each of the Surviving Corporation and Acquiror
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shall be entitled to deduct and withhold from the Merger Consideration otherwise
payable hereunder to any Person any amounts which it is required to deduct and
withhold with respect to payment under any provision of federal, state or local
income tax Law. To the extent that the Surviving Corporation or Acquiror
withholds those amounts, the withheld amounts shall be treated for all purposes
of this Agreement as having been paid to the holder of Company Shares in respect
of which deduction and withholding was made by the Surviving Corporation or
Acquiror, as the case may be.
(h) Lost Certificates. If any Certificate has been or is claimed to have
-----------------
been lost, stolen or destroyed, upon the making of an affidavit of that fact by
the Person claiming that a Certificate has been lost, stolen or destroyed and,
if required by the Surviving Corporation, the posting by such Person of a bond,
in such reasonable amount as the Surviving Corporation may direct, as indemnity
against any claim that may be made against it with respect to that Certificate,
the Exchange Agent will deliver in exchange for such lost, stolen or destroyed
Certificate, the proper amount of the Merger Consideration.
3.5. Company Stock Options.
---------------------
(a) At the Effective Time, each option to purchase Company Shares (each,
a "Company Option") outstanding under any stock option or compensation plan or
arrangement of the Company, whether or not vested, shall be canceled and in
consideration of such cancellation, the Surviving Corporation shall pay to each
holder of a canceled Company Option, as soon as practicable following the
Effective Time, an amount per Company Share subject to such canceled Company
Option equal to the greater of (i) the excess, if any, of (A) the Merger
Consideration over (B) the exercise price per Company Share subject to such
canceled Company Option and (ii) $1.00.
(b) Prior to the Effective Time, the Company, Holding and Acquiror shall
take all commercially reasonable actions to (i) obtain all necessary consents
from the holders of
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Company Options and (ii) take such other actions (including, without limitation,
amending the terms of any Company stock option or compensation plan or
arrangement), necessary to give effect to the transactions contemplated by
Section 3.5(a).
3.6. Deferred Compensation Plan.
--------------------------
(a) At the Effective Time, the Deferred Compensation Plan shall be
amended so that each CBRE Stock Fund Unit (as defined in the Deferred
Compensation Plan) shall thereafter represent the right to receive a share of
the common stock of Holding in accordance with the terms and conditions set
forth in the Deferred Compensation Plan. Each participant in the Deferred
Compensation Plan who has CBRE Stock Fund Units that are vested as of the
Effective Time and are credited to his or her account as of the Effective Time
("Vested CBRE Stock Fund Units") will be required, prior to the Effective Time,
to make one of the following elections with respect to such Vested CBRE Stock
Fund Units: (i) convert the value of his or her Vested CBRE Stock Fund Units
(based upon the Merger Consideration) into any of the insurance mutual fund or
interest index fund alternatives provided under the Deferred Compensation Plan
as of the Effective Time, or (ii) continue to hold the Vested CBRE Stock Fund
Units in his or her account under the Deferred Compensation Plan; provided,
however, that the election set forth in the foregoing clause (ii) shall only be
available to participants in the Deferred Compensation Plan who have Vested CBRE
Stock Fund Units and are United States employees of the Company or any of its
Subsidiaries or independent contractors of the Company or its Subsidiaries in
the states of California, New York, Illinois or Washington, in each of the
foregoing cases as of the Effective Time.
(b) Prior to the Effective Time, the Company, Holding and Acquiror shall
take all commercially reasonable actions (including, without limitation,
amending the terms of the Deferred Compensation Plan) necessary to give effect
to the transactions contemplated by Section 3.6(a).
3.7. Capital Accumulation Plan.
-------------------------
(a) In accordance with Section 3.3, at the Effective Time, each
participant in the Company's Capital Accumulation Plan with an account balance
invested in the Company Stock Fund (as defined in the Company's Capital
Accumulation Plan) (a "Stock Fund Participant") shall receive, in consideration
for such participant's Company Shares in the Company Stock Fund, the product of
(i) the number of Company Shares held in the Company Stock Fund at such time
multiplied by (ii) the Merger Consideration (the "Plan Proceeds"). As of the
Effective Time, provided that the Registration Statement shall have been
declared effective by the SEC prior thereto, each participant in the Company's
Capital Accumulation Plan who is a United States employee of the Company or any
of its Subsidiaries as of the Effective Time (the "Eligible Participants"), may
invest, pursuant to the terms of the Capital Accumulation Plan, in shares of the
Class A Common Stock of Holding, par value $0.01 per share (the "Holding
Shares"), based on a per share price equal to the Merger Consideration;
provided, however, that the aggregate number of Holding Shares that all Eligible
Participants will be entitled to purchase shall not exceed fifty percent of the
total number of Company Shares held in the Company Stock Fund by all Stock Fund
Participants as of April 1, 2001 (the "Share Limit"); provided, further,
-11-
that Holding may increase the Share Limit in its sole discretion. In the event
that the Eligible Participants request to purchase an aggregate number of
Holding Shares in excess of the Share Limit, the amount subscribed to by each
Eligible Participant shall be reduced pro rata based on the number of shares of
Holding each Eligible Participant initially requested to purchase.
Notwithstanding anything to the contrary stated herein, no Eligible Participant
will be entitled to have greater than 50% of his or her total account balance in
the Capital Accumulation Plan invested in Holding Shares as of the Effective
Time (with all other investments in the Capital Accumulation Plan account of
such Eligible Participant being valued as of the month end immediately preceding
the effectiveness of the Registration Statement).
(b) Prior to the Effective Time, the Company and Holding shall take all
commercially reasonable actions (including, without limitation, amending the
terms of the Capital Accumulation Plan) necessary to give effect to the
transactions contemplated by Section 3.7(a).
3.8. Dissenting Shares.
-----------------
(a) Notwithstanding any provision of this Agreement to the contrary,
Company Shares that are outstanding immediately prior to the Effective Time and
which are held by Persons who shall have properly demanded in writing appraisal
for such shares in accordance with Section 262 (or any successor provision) of
the DGCL (the "Dissenting Shares") shall not be converted into or represent the
right to receive the Merger Consideration as provided hereunder and shall only
be entitled to such rights and consideration as are granted by Section 262 (or
any successor provision) of the DGCL. Such Persons shall be entitled to receive
payment of the appraised value of such Company Shares in accordance with the
provisions of Section 262 (or any successor provision) of the DGCL, except that
all Dissenting Shares held by Persons who shall have failed to perfect or who
effectively shall have withdrawn or lost their right to appraisal of such shares
under Section 262 (or any successor provision) of the DGCL shall thereupon be
deemed to have been converted into the Merger Consideration pursuant to Section
3.3 hereto as of the Effective Time or the occurrence of such event, whichever
occurs later.
(b) The Company shall give Acquiror (i) prompt notice of any demands for
appraisal received by the Company, withdrawals of such demands and any other
instruments served pursuant to the DGCL and received by the Company and (ii) the
opportunity to participate in all negotiations and proceedings with respect to
demands for appraisal or the payment of the fair cash value of any such shares
under the DGCL. The Company shall not, except with the prior written consent of
Acquiror, make any payment with respect to any demands for appraisal or the
payment of the fair cash value of any such shares or offer to settle or settle
any such demands.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as disclosed in (i) the Company Disclosure Schedule attached hereto
or (ii) the Company SEC Documents filed prior to the date hereof or except as
specifically contemplated by this Agreement, the Company represents and warrants
to Acquiror as set forth below.
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4.1. Corporate Existence and Power. The Company is a corporation, duly
-----------------------------
incorporated, validly existing and in good standing under the Laws of the State
of Delaware, and has all corporate powers and authority required to own, lease
and operate its properties and to carry on its business as now conducted. The
Company is duly qualified to do business as a foreign corporation and is in good
standing in each jurisdiction where the character of the property owned, leased
or operated by it or the nature of its activities makes qualification necessary,
except where the failure to be qualified would not be reasonably likely to have,
individually or in the aggregate, a Company Material Adverse Effect.
4.2. Corporate Authorization. The execution, delivery and performance by
-----------------------
the Company of this Agreement and the consummation by the Company of the Merger
and the other transactions contemplated hereby are within the Company's
corporate powers and, except for the Company Stockholder Approval, have been
duly and validly authorized by all necessary corporate action and no other
corporate proceedings on the part of the Company are necessary to authorize this
Agreement or to consummate the transactions contemplated hereby (other than the
Company Stockholder Approval and the filing and recordation of the appropriate
documents with respect to the Merger in accordance with the DGCL). The Board of
Directors of the Company has approved this Agreement and has resolved to
recommend that its stockholders vote their shares in favor of the adoption of
this Agreement and the transactions contemplated hereby. This Agreement has been
duly and validly executed and delivered by the Company, and assuming that this
Agreement constitutes the valid and binding obligation of Holding and Acquiror,
constitutes the legal, valid and binding obligation of the Company, enforceable
against the Company in accordance with its terms.
4.3. Governmental Authorization. The execution, delivery and
--------------------------
performance by the Company of this Agreement and the consummation by the Company
of the transactions contemplated hereby will not require any consent, approval,
action, order, authorization, or permit of, or registration or filing with, any
Governmental Entity, other than (a) the filing of (i) the Certificate of Merger
in accordance with the DGCL and (ii) the appropriate documents with respect to
the Company's qualification to do business with the relevant authorities of
other states or jurisdictions in which the Company is qualified to do business;
(b) compliance with any applicable requirements of the Xxxx-Xxxxx-Xxxxxx
Antitrust Improvements Act of 0000 (xxx "XXX Xxx") and any Non-U.S. Competition
Laws; (c) compliance with any applicable requirements of the Securities Act and
the Exchange Act; (d) such as may be required under any applicable state
securities or blue sky Laws; and (e) other consents, approvals, actions, orders,
authorizations, registrations, declarations, filings and permits which, if not
obtained or made, would not be reasonably likely to have, individually or in the
aggregate, a Company Material Adverse Effect. The consummation of the Merger
and the other transactions contemplated hereby will not result in the lapse of
any Permit of the Company or its Subsidiaries or the breach of any authorization
or right to use any Permit of the Company or its Subsidiaries or other right
that the Company or any of its Subsidiaries has from a Third Party, except where
such lapses or breaches would not be reasonably likely to have, individually or
in the aggregate, a Company Material Adverse Effect.
4.4. Non-Contravention. The execution, delivery and performance by the
-----------------
Company of this Agreement and the consummation by the Company of the Merger and
the other transactions contemplated hereby do not and will not (a) contravene or
conflict with the Company's certificate
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of incorporation or by-laws, (b) assuming compliance with the matters referred
to in Section 4.3, contravene or conflict with or constitute a violation of any
provision of any Law binding upon or applicable to the Company or its
Subsidiaries or by which any of their respective properties is bound or
affected, (c) constitute a default under (or an event that with notice or lapse
of time or both could reasonably be expected to become a default) or give rise
(with or without notice or lapse of time or both) to a right of termination,
amendment, cancellation or acceleration under any agreement, contract, note,
bond, mortgage, indenture, lease, franchise, Permit or other similar
authorization or joint venture, limited liability or partnership agreement or
other instrument binding upon the Company or any Company Subsidiary, or (d)
result in the creation or imposition of any Lien on any asset of the Company or
any Company Subsidiary, other than, in the case of clauses (b), (c) and (d), any
items that would not be reasonably likely to have, individually or in the
aggregate, a Company Material Adverse Effect.
4.5. Capitalization.
--------------
(a) The authorized capital stock of the Company consists of 100,000,000
Company Shares and 8,000,000 shares of preferred stock, $0.01 par value per
share ("Company Preferred Stock"). As of February 19, 2001, (i) 21,678,125
Company Shares were issued and outstanding (1,380,094 Company Shares were held
in treasury), all of which have been duly authorized and validly issued and are
fully paid and nonassessable and were issued free of preemptive or similar
rights, including (x) 804,911 shares issued pursuant to the Company's 1999
Equity Incentive Plan and 1996 Equity Incentive Plan (the "Loan Shares") and (y)
1,781,837 shares held by the Company's Capital Accumulation Plan, (ii) no
Company Shares were held by Subsidiaries of the Company, (iii) 2,679,893 Company
Shares were issuable upon the exercise of Company Options then outstanding, (iv)
1,841,233 Company Shares were issuable as a result of elections made under the
Company's Deferred Compensation Plan (the "Phantom Shares"), of which 996,338
were vested, (v) 598,147 Company Shares were issuable upon the exercise of
Company Warrants then outstanding and (vi) no shares of Company Preferred Stock
were issued and outstanding. Since September 30, 2000, the Company has not
declared or paid any dividend or distribution in respect of any of its Equity
Interests and has not repurchased or redeemed any shares of its Equity
Interests, and its Board of Directors has not resolved to do any of the
foregoing.
(b) As of the date hereof, except (i) as set forth in this Section 4.5
and (ii) for changes since February 19, 2001, resulting from the exercise of
stock options outstanding on that date, the Company has not issued, or reserved
for issuance, any (x) Equity Interests of the Company, (y) securities of the
Company convertible into or exchangeable for Equity Interests of the Company or
(z) options, warrants or other rights to acquire from the Company, or
obligations of the Company to issue, any Equity Interests of the Company or
securities convertible into or exchangeable for Equity Interests of the Company
(the items in clauses (x), (y) and (z) being referred to collectively as the
"Company Securities"). There are no outstanding agreements or other obligations
of the Company or any Company Subsidiary to repurchase, redeem or otherwise
acquire any Company Securities.
(c) Section 4.5(c) of the Company Disclosure Schedule sets forth a
complete and accurate list of all outstanding Company Options, Company Warrants
and Loan Shares as of February 19, 2001, which list sets forth the name of the
holders thereof and, to the extent
-14-
applicable, the exercise price or purchase price thereof, the number of Company
Shares subject thereto, the governing Company Employee Plan with respect thereto
and the expiration date thereof.
4.6. Subsidiaries.
------------
(a) Each Subsidiary of the Company (i) is a corporation duly incorporated
or an entity duly organized, and is validly existing and in good standing under
the Laws of its jurisdiction of incorporation or organization, and has all
powers and authority required to own, lease or operate its properties and to
carry on its business as now conducted, and (ii) has all governmental licenses,
authorizations, consents and approvals required to carry on its business as now
conducted and is duly qualified to do business as a foreign corporation or
entity and is in good standing in each jurisdiction where the character of the
property owned, leased or operated by it or the nature of its activities makes
such qualification necessary, in each case with exceptions which would not be
reasonably likely to have, individually or in the aggregate, a Company Material
Adverse Effect.
(b) All of the outstanding Equity Interests in each Material Subsidiary
have been duly authorized and validly issued and are fully paid and
nonassessable and free of preemptive or similar rights. All of the Equity
Interests in each of its Material Subsidiaries are beneficially owned, directly
or indirectly, by the Company. Such Equity Interests are owned free and clear
of any Lien and free of any other limitation or restriction (including any
limitation or restriction on the right to vote, sell or otherwise dispose of the
stock or other ownership interests) and were issued in compliance with Federal
and state securities laws, in each case with exceptions which would not be
reasonably likely to have, individually or in the aggregate, a Company Material
Adverse Effect. There are no outstanding (i) securities of the Company or any
of its Material Subsidiaries convertible into or exchangeable or exercisable for
Equity Interests in any of its Material Subsidiaries, (ii) options, warrants or
other rights to acquire from the Company or any of its Material Subsidiaries, or
obligations of the Company or any of its Material Subsidiaries to issue, any
Equity Interests in, or any securities convertible into or exchangeable or
exercisable for any Equity Interests in, any of its Material Subsidiaries or
(iii) agreements, obligations or arrangements of the Company or any of its
Material Subsidiaries to issue, sell, repurchase, redeem or otherwise acquire
any Equity Interests of any of its Material Subsidiaries.
(c) Neither the Company, any of its Material Subsidiaries nor, to the
Knowledge of the Company, any Material Joint Venture is in violation of any
provision of its articles or certificate of incorporation or bylaws or
equivalent organizational documents, in each case with exceptions which would
not be reasonably likely to have, individually or in the aggregate, a Company
Material Adverse Effect.
4.7. Company SEC Documents.
---------------------
(a) The Company has made available to Acquiror the Company SEC Documents.
The Company has filed all reports, filings, registration statements and other
documents required to be filed by it with the SEC since January 1, 1999. No
Company Subsidiary is required to file any form, report, registration statement
or prospectus or other document with the SEC.
-15-
(b) As of its filing date, each Company SEC Document complied as to form
in all material respects with the applicable requirements of the Securities Act
and/or the Exchange Act, as the case may be.
(c) No Company SEC Document filed since January 1, 1999 pursuant to the
Exchange Act contained, as of its filing date, any untrue statement of a
material fact or omitted to state any material fact necessary in order to make
the statements made therein, in the light of the circumstances under which they
were made, not misleading. No Company SEC Document, as amended or supplemented,
if applicable, filed since January 1, 1999 pursuant to the Securities Act
contained, as of the date on which the document or amendment became effective,
any untrue statement of a material fact or omitted to state any material fact
required to be stated therein or necessary to make the statements therein not
misleading.
4.8. Financial Statements; No Material Undisclosed Liabilities.
---------------------------------------------------------
(a) Each of the audited consolidated financial statements and unaudited
consolidated interim financial statements of the Company included in the Company
SEC Documents were prepared in conformity with generally accepted accounting
principles applied on a consistent basis ("GAAP") (except as may be indicated in
the notes thereto) throughout the periods involved, and each fairly presents, in
all material respects, the consolidated financial position of the Company and
its consolidated Subsidiaries as of the dates thereof and their consolidated
results of operations and changes in financial position for the periods then
ended (subject to normal year-end adjustments in the case of any unaudited
interim financial statements).
(b) There are no liabilities or obligations of the Company or any Company
Subsidiary, which, individually or in the aggregate, would be material to the
Company and its Subsidiaries, taken as a whole, of any kind whatsoever, whether
accrued, contingent, absolute, determined, determinable or otherwise and, in
each case, that are required by GAAP to be set forth on a consolidated balance
sheet of the Company, other than:
(i) liabilities or obligations disclosed or provided for (A) in
the Company Balance Sheet or disclosed in the notes thereto or (B) in the
Company's consolidated balance sheet or disclosed in the notes thereto
included in the Company's quarterly report on Form 10-Q for the quarter
ended September 30, 2000;
(ii) liabilities or obligations incurred after September 30,
2000 in the ordinary course of business consistent with past practice; and
(iii) liabilities or obligations under this Agreement or incurred
in connection with the transactions contemplated hereby.
4.9. Absence of Certain Changes. Since September 30, 2000, except as
--------------------------
otherwise expressly contemplated by this Agreement, the Company and each of its
Subsidiaries have conducted their business in the ordinary course consistent
with past practice and there has not been (a) any damage, destruction or other
casualty loss (whether or not covered by insurance) affecting the business or
assets of the Company or any of its Subsidiaries that has had or would be
reasonably likely to have a Company Material Adverse Effect; (b) any amendment
or change in the Company's certificate of incorporation or by-laws; (c) any
material change by the
-16-
Company in its accounting methods, principles or practices (other than changes
required by GAAP after the date of this Agreement); (d) other than in the
ordinary course of business, any sale of a material amount of assets of the
Company and its Subsidiaries; (e) any material Tax election, any material change
in method of accounting with respect to Taxes or any compromise or settlement of
any proceeding with respect to any material Tax liability or (f) any action,
event, occurrence, development or state of circumstances or facts that has had
or would be reasonably likely to have, individually or in the aggregate, a
Company Material Adverse Effect.
4.10. Litigation. There is no action, suit, claim, investigation,
----------
arbitration or proceeding pending, or to the Knowledge of the Company
threatened, against the Company or any of its Subsidiaries or any of their
respective assets or properties before any arbitrator or Governmental Entity
that would be reasonably likely to have, individually or in the aggregate, a
Company Material Adverse Effect (it being understood that the mere filing of
litigation, or mere existence of litigation, by or on behalf of Company
Stockholders or any other Person, that challenges or otherwise seeks damages
with respect to the transactions contemplated hereby shall not in and of itself
be deemed to have such effect). Neither the Company nor any of its Subsidiaries
nor any of their respective properties is or are subject to any order, writ,
judgment, injunction, decree, determination or award having, or which would be
reasonably likely to have, individually or in the aggregate, a Company Material
Adverse Effect.
4.11. Taxes. Except for matters which would not have or would not be
-----
reasonably likely to have, individually or in the aggregate, a Company Material
Adverse Effect, (a) all material Tax returns, statements, reports and forms
(collectively, the "Company Returns") required to be filed with any taxing
authority by, or with respect to, the Company and the Company Subsidiaries have
been filed in accordance with all applicable Laws; (b) the Company and the
Company Subsidiaries have timely paid all Taxes due and payable whether or not
shown as being due on any Company Return (other than Taxes which are being
contested in good faith and for which reserves are reflected on the Company
Balance Sheet), and, as of the time of filing, the Company Returns correctly
reflected the facts regarding the income, business, assets, operations,
activities and status of the Company and the Company Subsidiaries; (c) the
charges, accruals and reserves for Taxes with respect to the Company and the
Company Subsidiaries reflected on the Company Balance Sheet are adequate under
GAAP to cover the Tax liabilities accruing through the date thereof; (d) there
is no action, suit, proceeding, audit or claim now proposed or pending against
the Company or any Company Subsidiary in respect of any Taxes; (e) neither the
Company nor the Company Subsidiaries are party to, bound by or have any
obligation under, any tax sharing agreement or similar contract or arrangement
or any agreement that obligates them to make any payment computed by reference
to the Taxes, taxable income or taxable losses of any other Person; (f) there
are no Liens with respect to Taxes on any of the assets or properties of the
Company or the Company Subsidiaries other than with respect to Taxes not due and
payable; (g) neither the Company nor any of the Company Subsidiaries (i) is, or
has been a member of an affiliated, consolidated, combined or unitary group,
other than one of which the Company was the common parent and (ii) has any
liability for the Taxes of any Person (other than the Company and the Company
Subsidiaries) under Treasury Regulation Section 1.1502-6 (or any similar
provision of state, local or foreign Law), or as a transferee or successor, by
contract or otherwise; (h) no consent under Section 341(f) of the Code has been
filed with respect to the Company or any of the Company Subsidiaries; (i)
neither the Company nor any of the Company Subsidiaries has ever entered into a
closing agreement pursuant to Section 7121 of the Code; and
-17-
(j) neither the Company nor the Company Subsidiaries has agreed to make or is
required to make any adjustment under Section 481(a) of the Code by reason of a
change in accounting method or otherwise.
4.12. Employee Benefits.
-----------------
(a) Except as set forth on the Company Disclosure Schedule and except for
any Foreign Plans, neither the Company nor any ERISA Affiliate (as defined
below) maintains, administers or contributes to any material "employee benefit
plan", as defined in Section 3(3) of the Employee Retirement Income Security Act
of 1974 ("ERISA"), or any material employment, severance or similar contract,
plan, arrangement or policy or any other material plan or arrangement (written
or oral) providing for compensation, bonuses, profit-sharing, stock option or
other stock related rights or other forms of incentive or deferred compensation,
vacation benefits, insurance coverage (including any self-insured arrangements),
health or medical benefits, disability benefits, workers' compensation,
supplemental unemployment benefits, severance benefits and post-employment or
retirement benefits (including compensation, pension, health, medical or life
insurance benefits) which covers any employee or former employee or director of
the Company or any Company Subsidiary. The Company has delivered or made
available (i) current, accurate and complete copies (or to the extent no such
copy exists, an accurate description) of each Company Employee Plan (as defined
below and, if applicable, related trust agreements), (ii) all amendments thereto
and written interpretations and (iii) for the two most recent years (A) the Form
5500 and attached schedules, (B) audited financial statements and (C) actuarial
valuation reports. The material plans (other than the Foreign Plans) listed on
Section 4.12 of the Company Disclosure Schedule are referred to collectively
herein as the "Company Employee Plans." An "ERISA Affiliate" of any Person
means any other Person which, together with such Person, would be treated as a
single employer under Section 414 of the Code.
(b) Except as would not have or would not be reasonably likely to have,
individually or in the aggregate, a Company Material Adverse Effect, (i) with
respect to each Company Employee Plan (other than a plan that constitutes a
"multiemployer plan", as defined in Section 3(37) of ERISA (a "Multiemployer
Plan")), subject to Title IV of ERISA (a "Retirement Plan"), no "accumulated
funding deficiency", as defined in Section 412 of the Code (whether or not
waived and no "reportable event", as defined in Section 4043 of ERISA, has been
incurred with respect to any Company Employee Plan which is a Retirement Plan,
whether or not waived, (ii) no condition exists and no event has occurred that
would constitute grounds for termination of any Company Employee Plan which is a
Retirement Plan or, with respect to any Company Employee Plan which is a
Multiemployer Plan, presents a risk of a complete or partial withdrawal under
Title IV of ERISA, (iii) neither the Company nor any of its ERISA Affiliates has
incurred any liability under Title IV of ERISA arising in connection with the
termination of, or complete or partial withdrawal from, any plan covered or
previously covered by Title IV of ERISA and neither the Company nor any ERISA
Affiliate would be subject to any withdrawal liability if, as of the Effective
Time, the Company, the Company Subsidiaries or any ERISA Affiliate were to
engage in a complete withdrawal (as defined in ERISA section 4203) or partial
withdrawal (as defined in ERISA section 4205) from any such Multiemployer Plan,
(iv) nothing has been done or omitted to be done and no transaction or holding
of any asset under or in connection with any Company Employee Plan has occurred
that will make the Company or any
-18-
Subsidiary, or any officer or director of the Company or any Subsidiary, subject
to any liability under Title I of ERISA or liable for any Tax pursuant to
Section 4975 of the Code (assuming the taxable period of any such transaction
expired as of the date hereof) and (v) neither the Company nor any ERISA
Affiliate has engaged in, or is a successor or parent corporation to an entity
that has engaged in, a transaction described in Section 4069 or 4212(c) of
ERISA.
(c) 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 Tax pursuant to Section 501(a) of the Code, except as would not have
or would not be reasonably likely to have, individually or in the aggregate, a
Company Material Adverse Effect. The Company has furnished to Acquiror copies
of the most recent Internal Revenue Service determination letters with respect
to each Company Employee Plan. Each Company Employee Plan has been maintained
in compliance with its terms and with the requirements prescribed by any and all
statutes, orders, rules and regulations, including ERISA and the Code, which are
applicable to such Company Employee Plan, except as would not have or would not
be reasonably likely to have, individually or in the aggregate, a Company
Material Adverse Effect.
(d) Except as would not have or would not be reasonably likely to have,
individually or in the aggregate, a Company Material Adverse Effect, (i) no
Company Employee Plan exists that could result in the payment to any present or
former employee of the Company Subsidiaries of any money or other property or
accelerate or provide any other rights or benefits to any present or former
employee of the Company or any Company Subsidiaries as a result of the
transaction contemplated by this Agreement and (ii) there is no contract,
agreement, plan or arrangement covering any employee or former employee of the
Company that, individually or collectively, would be reasonably likely to give
rise to the payment of any amount that would not be deductible pursuant to the
terms of Sections 162(m) or 280G of the Code.
(e) Except as would not have or would not be reasonably likely to have,
individually or in the aggregate, a Company Material Adverse Effect, there has
been no amendment to, written interpretation or announcement (whether or not
written) relating to, or change in employee participation or coverage under, any
Company Employee Plan which would increase the expense of maintaining such
Company Employee Plan above the level of the expense incurred in respect thereof
for the year ended December 31, 1999.
(f) Except as would not have or would not be reasonably likely to have,
individually or in the aggregate, a Company Material Adverse Effect, neither the
Company nor any Company Subsidiary has any obligations to provide retiree health
and life insurance or other retiree death benefits under any Company Employee
Plan, other than benefits mandated by Section 4980B of the Code or under
applicable Law, and each such Company Employee Plan may be amended or terminated
without incurring any material liability thereunder.
(g) Except as would not have or would not be reasonably likely to have,
individually or in the aggregate, a Company Material Adverse Effect, (i) no
Company Employee Plan is under audit or is the subject of an audit or
investigation by the Internal Revenue Service, the Department of Labor, the
Pension Benefit Guaranty Corporation or any other Governmental Entity, nor, to
the Knowledge of the Company, is any such audit or investigation threatened or
-19-
pending and (ii) with respect to any Company Employee Plan, (A) no actions,
suits or claims (other than routine claims for benefits in the ordinary course)
are pending or, to the Knowledge of the Company, threatened and (B) no facts or
circumstances exist that could reasonably be expected to give rise to any such
actions, suits or claims.
(h) Except as would not have or would not be reasonably likely to have,
individually or in the aggregate, a Company Material Adverse Effect, with
respect to each Retirement Plan, as of the Effective Time, the assets of each
such Retirement Plan are at least equal in value to the present value of the
accrued benefits (vested and unvested) of the participants in such Retirement
Plan on a termination and projected benefit obligation basis, based on the
actuarial methods and assumptions indicated in the most recent actuarial
valuation reports.
(i) Except as would not be reasonably likely to have, individually or in
the aggregate, a Company Material Adverse Effect, (i) all contributions required
to be made by the Company or any Material Subsidiary with respect to a Foreign
Plan have been timely made, (ii) each Foreign Plan has been maintained in
substantial compliance with its terms and with the requirements of any and all
applicable Laws and has been maintained, where required, in good standing with
the applicable Governmental Entity and (iii) neither the Company nor any
Material Subsidiary has incurred any obligation in connection with the
termination or withdrawal from any Foreign Plan. For purposes hereof, the term
"Foreign Plan" shall mean any plan, program, policy, arrangement or agreement
maintained or contributed to by, or entered into with, the Company or any
Material Subsidiary with respect to employees (or former employees) employed
outside the United States.
4.13. Compliance with Laws; Licenses, Permits and Registrations.
---------------------------------------------------------
(a) Neither the Company nor any of its Subsidiaries is in violation of,
or has violated, any applicable provisions of any Laws, except for violations
which would not be reasonably likely to have, individually or in the aggregate,
a Company Material Adverse Effect.
(b) The Company and each of its Subsidiaries has all permits, licenses,
easements, variances, exemptions, consents, certificates, approvals,
authorizations of and registrations (collectively, "Permits") with and under all
federal, state, local and foreign Laws, and from all Governmental Entities
required by the Company and each of its Material Subsidiaries to carry on their
respective businesses as currently conducted, except where the failure to have
the Permits would not be reasonably likely to have, individually or in the
aggregate, a Company Material Adverse Effect.
4.14. Title to Properties.
-------------------
(a) The Company and each of its Subsidiaries have good title to, or valid
leasehold interests in, all their properties and assets, except for (i) those
which are no longer used or useful in the conduct of their businesses and (ii)
defects in title, easements, restrictive covenants and similar Liens,
encumbrances or impediments that, in the aggregate, would not be reasonably
likely to have, individually or in the aggregate, a Company Material Adverse
Effect. All of these assets and properties, other than assets and properties in
which the Company or any of its Subsidiaries has leasehold interests, are free
and clear of all Liens, except for Liens that would
-20-
not be reasonably likely to have, individually or in the aggregate, a Company
Material Adverse Effect.
(b) Except as would not be reasonably likely to have, individually or in
the aggregate, a Company Material Adverse Effect, (i) the Company and each of
its Material Subsidiaries are in substantial compliance with the terms of all
leases of their properties or assets to which they are a party, and all such
leases are in full force and effect and (ii) the Company and each of its
Material Subsidiaries enjoy peaceful and undisturbed possession under all such
leases.
4.15. Intellectual Property. Except as would not be reasonably likely
---------------------
to have, individually or in the aggregate, a Company Material Adverse Effect,
the Company and each of its Subsidiaries own or have a valid license or other
right to use each trademark, service xxxx, trade name, domain name, mask work,
invention, patent, trade secret, copyright, know-how (including any
registrations or applications for registration of any of the foregoing) or any
other similar type of proprietary intellectual property right (collectively, the
"Company Intellectual Property") necessary to carry on the business of the
Company and its Subsidiaries, taken as a whole, as currently conducted. To the
Knowledge of the Company, neither the Company nor any of its Subsidiaries has
received any written notice of infringement of or challenge to, and there are no
claims pending with respect to the rights of others to the use of, any Company
Intellectual Property that, in any such case would be reasonably likely to have,
individually or in the aggregate, a Company Material Adverse Effect.
4.16. Finders' Fees; Opinions of Financial Advisor.
--------------------------------------------
(a) Except for Xxxxxx Xxxxxxx & Co. Incorporated, whose fees and expenses
will be borne by the Company, there is no investment banker, financial advisor,
broker, finder or other intermediary which has been retained by, or is
authorized to act on behalf of, the Company or any of its Subsidiaries which
might be entitled to any fee or commission from the Company, Holding, Acquiror
or any of their respective Affiliates upon consummation of the Merger or the
other transactions contemplated by this Agreement. The Company has heretofore
furnished to the Acquiror complete and correct copies of all agreements between
the Company or its Subsidiaries and Xxxxxx Xxxxxxx & Co. Incorporated pursuant
to which such firm would be entitled to any payment relating to the Merger and
the other transactions contemplated by this Agreement.
(b) The Special Committee has received the opinion of Xxxxxx Xxxxxxx &
Co. Incorporated, dated as of the date hereof, to the effect that, as of such
date, and subject to the qualifications stated therein, the Merger Consideration
is fair to the holders of Company Shares (other than Acquiror and the members of
the Buying Group and each of their respective Affiliates) from a financial point
of view.
4.17. Labor Matters. There are no strikes, slowdowns, work stoppages,
-------------
lockouts or other material labor controversies pending or, to the Knowledge of
the Company, threatened by or between the Company or any of its Material
Subsidiaries and any of their respective employees that would be reasonably
likely to have, individually or in the aggregate, a Company Material Adverse
Effect. Neither the Company nor any of its Subsidiaries is a party to, or bound
by, any collective bargaining agreement, contract or other agreement or
understanding with a
-21-
labor union or labor organization. The Company and each of its Material
Subsidiaries is in compliance with all applicable Laws, agreements, contracts,
and policies relating to employment, employment practices, wages, hours, and
terms and conditions of employment except for failures so to comply, if any,
that would not be reasonably likely to have, individually or in the aggregate, a
Company Material Adverse Effect.
4.18. Material Contract Defaults. To the Knowledge of the Company,
--------------------------
neither the Company nor any of its Material Subsidiaries is, or has received any
notice that any other party is, in default or unable to perform in any respect
under any material contracts, agreements, commitments, arrangements, leases,
licenses, policies or other instruments to which it or any of its Material
Subsidiaries is a party or by which it or any of its Material Subsidiaries is
bound ("Material Contracts"), except for those defaults which would not be
reasonably likely to have, individually or in the aggregate, a Company Material
Adverse Effect, and there has not occurred any event that with the lapse of time
or the giving of notice or both would constitute such a default, except for
those defaults which would not be reasonably likely to have, individually or in
the aggregate, a Company Material Adverse Effect. The Company has not received
written notice of the termination of, or intent to terminate any Material
Contract, except for such notices or terminations which would not be reasonably
likely to have, individually or in the aggregate, a Company Material Adverse
Effect.
4.19. Required Vote; Board Approval.
-----------------------------
(a) Under the DGCL (including, without limitation, Section 203 thereof),
the Company's certificate of incorporation and by-laws and any other applicable
Law or stock exchange rules, the only votes required of the holders of any class
or series of the Company's Equity Interests necessary to adopt this Agreement
and to approve the Merger and the other transactions contemplated hereby are the
following: (i) the approval, assuming a quorum is present, of a majority of the
Company Shares voting in person or by proxy at such meeting, and (ii) the
approval, and not the written consent, of at least 66 2/3% of the outstanding
Company Shares which are not owned by any "interested stockholder" (as defined
in Section 203 of the DGCL) (collectively, "Company Stockholder Approval").
(b) The Special Committee and the Company's Board of Directors has (i)
determined that this Agreement and the transactions contemplated hereby,
including the Merger, are in the best interests of the Company and its
Stockholders (other than Holding, Acquiror and the members of the Buying Group
and each of their respective Affiliates), (ii) approved this Agreement and the
transactions contemplated hereby, including the Merger and (iii) resolved to
recommend to the Company Stockholders that they vote in favor of adopting and
approving this Agreement and the Merger in accordance with the terms hereof.
4.20. Information to Be Supplied.
--------------------------
(a) The information supplied or to be supplied by the Company for
inclusion or incorporation by reference in (i) the Registration Statement will,
at the time the Registration Statement is filed with the SEC and at the time it
becomes effective under the Securities Act, not 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 not misleading and (ii) the
-22-
Schedule 13E-3 will, at the time it is first filed with the SEC and at any time
it is amended or supplemented, not 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 not misleading.
(b) The Proxy Statement will, at the time of the mailing thereof and at
the time of the Company Stockholder Meeting, not 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 light of the
circumstances under which they are made, not misleading or omit to state any
material fact necessary to correct any statement in any earlier communication
with respect to the solicitation of proxies for the Company Stockholder Meeting
which has become untrue or misleading.
(c) The Registration Statement and the Schedule 13E-3 (in each case with
respect to information provided by or incorporated by reference from, the
Company) and the Proxy Statement will comply as to form in all material respects
with the provisions of the Securities Act and the Exchange Act.
(d) Notwithstanding the foregoing, the Company makes no representation or
warranty with respect to any statements made or incorporated by reference in the
Registration Statement, the Proxy Statement or the Schedule 13E-3 based on
information supplied by Holding or Acquiror for inclusion or incorporation by
reference therein.
4.21. Disclaimer of Other Representations and Warranties. The Company
--------------------------------------------------
does not make, and has not made, any representations or warranties in connection
with the Merger and the transactions contemplated hereby other than those
expressly set forth herein. It is understood that any data, any financial
information or any memoranda or other materials or presentations are not and
shall not be deemed to be or to include representations and warranties of the
Company. Except as expressly set forth herein, no Person has been authorized by
the Company to make any representation or warranty relating to the Company or
any Company Subsidiary or their respective businesses, or otherwise in
connection with the Merger and the transactions contemplated hereby and, if
made, such representation or warranty may not be relied upon as having been
authorized by the Company.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF HOLDING AND ACQUIROR
Except as disclosed in the Holding and Acquiror Disclosure Schedule
attached hereto, Holding and Acquiror, jointly and severally, represent and
warrant to the Company that:
5.1. Corporate Existence and Power. Each of Holding and Acquiror is a
-----------------------------
corporation duly incorporated, validly existing and in good standing under the
Laws of its jurisdiction of incorporation and has all corporate powers and
authority required to own, lease and operate its properties and carry on its
business as now conducted. Each of Holding and Acquiror is duly qualified to do
business as a foreign corporation and is in good standing in each jurisdiction
where the character of the property owned, leased or operated by it or the
nature of its activities
-23-
makes qualification necessary, except where the failure to be qualified would
not be reasonably likely to have, individually or in the aggregate, a Holding
Material Adverse Effect. Each of Holding and Acquiror has heretofore made
available to the Company true and complete copies of its certificate of
incorporation and by-laws as currently in effect. Since the date of its
incorporation, each of Holding and Acquiror has not engaged in any activities
other than in connection with or as contemplated by this Agreement.
5.2. Corporate Authorization.
-----------------------
(a) The execution, delivery and performance by each of Holding and
Acquiror of this Agreement and the consummation by each of Holding and Acquiror
of the Merger and the other transactions contemplated hereby are within the
corporate powers of each of Holding and Acquiror and have been duly and validly
authorized by all necessary corporate action and no other corporate proceedings
on the part of Holding or Acquiror are necessary to authorize this Agreement or
to consummate the transactions contemplated hereby. This Agreement has been
duly and validly executed and delivered by each of Holding and Acquiror and
assuming that this Agreement constitutes the valid and binding obligation of the
Company, this Agreement constitutes a valid and binding agreement of each of
Holding and Acquiror, enforceable in accordance with its terms.
(b) The Board of Directors of each of Holding and Acquiror has (i)
determined that this Agreement and the transactions contemplated hereby,
including the Merger, are in the best interests of such company and its
stockholders, (ii) approved this Agreement and the transactions contemplated
hereby and (iii) resolved to recommend and recommended to its stockholders that
they vote in favor of adopting and approving this Agreement and the Merger in
accordance with the terms hereof. Holding, in its capacity as the sole
stockholder of Acquiror, has approved and adopted this Agreement and the
transactions contemplated hereby, including the Merger. The stockholders of
Holding have unanimously approved and adopted this Agreement and the
transactions contemplated hereby, including the Merger.
5.3. Governmental Authorization. The execution, delivery and
--------------------------
performance by each of Holding and Acquiror of this Agreement and the
consummation by Holding and Acquiror of the transactions contemplated hereby
will not require any consent, approval, action, order, authorization, or permit
of, or regulation or filing with, any Governmental Entity by Holding or Acquiror
other than (a) those set forth in clauses (a) through (d) of Section 4.3 and (b)
other consents, approvals, actions, orders, authorizations, registrations,
declarations, filings and permits which, if not obtained or made, would not
prevent or materially impair the ability of Holding or Acquiror to consummate
the Merger or the other transactions contemplated by this Agreement.
5.4. Non-Contravention. The execution, delivery and performance by
-----------------
Holding and Acquiror of this Agreement and the consummation by Holding and
Acquiror of the Merger and the other transactions contemplated hereby do not and
will not (a) contravene or conflict with the certificate of incorporation or by-
laws of either of Holding or Acquiror, (b) assuming compliance with the matters
referred to in Section 5.3, contravene or conflict with any provision of Law,
binding upon or applicable to either of Holding and Acquiror or by which any of
their respective
-24-
properties is bound or affected, (c) constitute a default under (or an event
that with notice or lapse of time or both could reasonably become a default) or
give rise (with or without notice or lapse of time or both) to a right of
termination, amendment, cancellation or acceleration under any agreement,
contract, note, bond, mortgage, indenture, lease, license, franchise, joint
venture, limited liability or partnership agreement or other instrument binding
upon, either of Holding or Acquiror, or (d) result in the creation or imposition
of any Lien on any asset of either of Holding or Acquiror other than, in the
case of clauses (b), (c) and (d), any such items that would not prevent or
materially impair the ability of Holding or Acquiror to consummate the Merger or
the other transactions contemplated by this Agreement.
5.5. Financing.
---------
(a) Acquiror has received and executed commitment letters dated February
23, 2001 from Credit Suisse First Boston ("CSFB") and DLJ Investment Funding,
Inc. ("DLJ") as amended on May 31, 2001 (collectively, the "Commitment
Letters"), pursuant to which CSFB and DLJ have committed, subject to the terms
and conditions set forth therein, to provide to the Company the amount of
financing set forth in the Commitment Letters (the "Commitment Letter
Financing"), to complete the transactions contemplated hereby and for working
capital and general corporate purposes following the Effective Time. A true and
complete copy of each of the Commitment Letters is attached hereto as Exhibit C.
---------
The Commitment Letters have not been amended or modified since the amendments of
May 31, 2001. Acquiror has fully paid any and all commitment fees or other fees
required by such Commitment Letters to be paid as of the date hereof (and will
duly pay any such fees after the date hereof). The Commitment Letters are valid
and in full force and effect and no event has occurred which (with or without
notice, lapse of time or both) would constitute a default thereunder on the part
of Holding or Acquiror.
(b) Acquiror has entered into a purchase agreement, dated as of May 31,
2001 (the "Note Purchase Agreement") with a group of initial purchasers,
including CSFB, providing for Acquiror to issue and sell, and such initial
purchasers to purchase, $229,000,000 aggregate principal amount of 11 1/4%
Senior Subordinated Notes due 2011 of Acquiror (the "Acquiror Senior
Subordinated Notes"), subject to the terms and conditions set forth in the Note
Purchase Agreement (the "Purchase Agreement Financing" and, together with the
Commitment Letter Financing, the "Financing"). The proceeds of the Acquiror
Senior Subordinated Notes are referred to herein as the "Senior Subordinated
Notes Proceeds." A true and complete copy of the Note Purchase Agreement is
attached hereto as Exhibit D. Acquiror has fully paid all commitment fees or
---------
other fees required by the Note Purchase Agreement to be paid as of the date
hereof (and will duly pay any such fees after the date hereof). The Note
Purchase Agreement is valid and in full force and effect and no event of default
has occurred which (with or without notice, lapse of time or both) would
constitute a default thereunder on the part of Acquiror (other than any matter
relating to the Company or any of its Subsidiaries).
(c) The Commitment Letters have been obtained and the Note Purchase
Agreement has been entered into, subject to the terms and conditions thereof, to
pay in part the aggregate Merger Consideration pursuant to the Merger, to
refinance in part any indebtedness of the Company and its Subsidiaries that will
become due as a result of the transactions contemplated by this Agreement, to
pay all related fees and expenses, and to provide additional financing for
future
-25-
working capital and general corporate needs of the Company and its Subsidiaries.
The obligations to fund the commitments under the Commitment Letters and the
Note Purchase Agreement are not subject to any conditions other than as set
forth in the Commitment Letters and the Note Purchase Agreement, respectively.
It is the good faith belief of Holding and Acquiror, as of the date hereof, that
the Financing will be obtained. Each of Holding and Acquiror will use its
reasonable best efforts to cause the Financing to be completed on the terms set
forth in the Commitment Letters and the Note Purchase Agreement.
(d) The Financing, together with the other funds available to Acquiror,
will provide sufficient funds to consummate the Merger and the other
transactions contemplated hereby on the terms set forth in this Agreement.
(e) Immediately after the consummation of the Merger, the Surviving
Corporation (i) will not be insolvent, (ii) will not be left with unreasonably
small capital, and (iii) will not have debts beyond its ability to pay such
debts as they mature.
5.6. Information to Be Supplied.
--------------------------
(a) The Registration Statement will, at the time the Registration
Statement is filed with the SEC and at the time it becomes effective under the
Securities Act, not 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 not misleading.
(b) The information supplied or to be supplied by Holding and Acquiror
for inclusion or incorporation by reference in (i) the Schedule 13E-3 will, at
the time it is first filed with the SEC and at any time it is amended or
supplemented, not 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 not misleading, and (ii) the Proxy Statement will,
at the time of the mailing thereof and at the time of the Company Stockholder
Meeting, not 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 light of the circumstances under which they are made,
not misleading or omit to state any material fact necessary to correct any
statement in any earlier communication with respect to the solicitation of
proxies for the Company Stockholder Meeting which has become untrue or
misleading.
(c) The Proxy Statement and the Schedule 13E-3 (in each case with respect
to information relating to Holding and Acquiror) and the Registration Statement
will comply as to form in all material respects with the provisions of the
Securities Act and the Exchange Act.
(d) Notwithstanding the foregoing, neither Holding nor Acquiror makes any
representation or warranty with respect to any statements made or incorporated
by reference in the Proxy Statement, the Registration Statement or the Schedule
13E-3 based on information supplied by the Company for inclusion or
incorporation by reference therein.
-26-
5.7. No Breach. Each Person affiliated with the Buying Group listed on
---------
Section 5.7 of the Holding and Acquiror Disclosure Schedule has reviewed Article
4 of this Agreement and has no actual knowledge as of the date hereof of any
breaches of the representations or warranties contained therein such that the
condition in Section 9.3(a)(ii) would not be satisfied.
5.8. Disclaimer of Other Representations and Warranties. Holding and
--------------------------------------------------
Acquiror do not make, and have not made, any representations or warranties in
connection with the Merger and the transactions contemplated hereby other than
those expressly set forth herein. It is understood that any data, any financial
information or any memoranda or other materials or presentations are not and
shall not be deemed to be or to include representations and warranties of
Holding and Acquiror. Except as expressly set forth herein, no Person has been
authorized by Holding or Acquiror to make any representation or warranty
relating to Holding or Acquiror or their respective businesses, or otherwise in
connection with the Merger and the transactions contemplated hereby and, if
made, such representation or warranty may not be relied upon as having been
authorized by Holding or Acquiror.
ARTICLE 6
COVENANTS OF THE COMPANY
The Company agrees as set forth below.
6.1. Company Interim Operations. Except as set forth in the Company
--------------------------
Disclosure Schedule or as otherwise expressly contemplated hereby, without the
prior consent of Acquiror (which consent shall not be unreasonably withheld or
delayed), from the date hereof until the Effective Time, the Company shall, and
shall cause each of its Material Subsidiaries to, conduct their business in all
material respects in the ordinary course consistent with past practice (with
such changes as the Company determines in good faith are necessary or advisable
with respect to (w) changes in U.S. or global economic, industry or political
conditions, (x) changes in U.S. or global financial markets or conditions, (y)
any generally applicable change in Law or interpretation of any thereof and/or
(z) the announcement of this Agreement or the transactions contemplated hereby
or the Company's performance of its obligations under this Agreement and
compliance with the covenants set forth herein), and shall use commercially
reasonable efforts to (i) preserve intact its present business organization,
(ii) maintain in effect all material Permits that are required for the Company
or such Material Subsidiary to carry on its business, (iii) keep available the
services of its present key officers and employees, and (iv) preserve existing
relationships with its material customers, lenders, suppliers and others having
material business relationships with it. Without limiting the generality of the
foregoing, except as set forth in the Company Disclosure Schedule or as
otherwise expressly contemplated by this Agreement, from the date hereof until
the Effective Time, without the prior consent of Acquiror, the Company shall
not, nor shall it permit any of its Subsidiaries, directly or indirectly, to:
(a) amend the Company's or any Subsidiary's certificate of incorporation
or by-laws (or equivalent organizational documents);
(b) (i) split, combine or reclassify any shares of capital stock of the
Company or amend the terms of any rights, warrants or options to acquire its
securities, (ii) declare, set aside or pay any dividend or other distribution
(whether in cash, stock or property or any combination
-27-
thereof) in respect of its Equity Interests, or (iii) redeem, repurchase or
otherwise acquire or offer to redeem, repurchase, or otherwise acquire any of
its securities or any rights, warrants or options to acquire its securities,
except for ordinary course dividends by Company Subsidiaries or, with respect to
clause (iii) only, pursuant to the existing terms of any Company Employee Plan
or Foreign Plan or any agreement executed pursuant thereto;
(c) issue, deliver, sell, or authorize the issuance, delivery or sale of,
its Equity Interests or any securities convertible into or exercisable for, or
any rights, warrants or options to acquire, its Equity Interests, other than,
(i) in connection with directors' qualifying shares, (ii) the issuance of
Company Shares upon the exercise of stock options granted prior to the date
hereof or in accordance with their present terms, and (iii) the issuance of
Company Shares in exchange for CBRE Stock Fund Units allocated under the
Deferred Compensation Plan prior to the date hereof, in accordance with the
terms of the Deferred Compensation Plan;
(d) acquire (whether pursuant to merger, stock or asset purchase or
otherwise) in one transaction or series of related transactions any Person, any
Equity Interests of any Person, any division or business of any Person or all or
substantially all of the assets of any Person for consideration having a fair
market value in excess of $5.0 million in any single or series of related
transactions or $15.0 million in the aggregate;
(e) sell, lease, encumber or otherwise dispose of any assets which are
material to the Company and its Subsidiaries, taken as a whole, other than (i)
sales in the ordinary course of business consistent with past practice, (ii)
equipment and property no longer used in the operation of the Company's
business, (iii) assets related to discontinued operations, and (iv)
contributions or other transfers of assets to any Joint Venture permitted by
Section 6.1(d) hereof; provided, however, that the consent of Acquiror to do any
of the foregoing shall not be unreasonably withheld;
(f) (i) (A) incur any indebtedness for borrowed money, except to fund
working capital in the ordinary course consistent with past practice under the
Company's existing credit facilities, (B) issue or sell any debt securities
(except intercompany debt securities) or warrants or other rights to acquire any
debt securities of the Company or any of its Subsidiaries, (C) make any loans,
advances (other than to employees of and consultants to the Company in the
ordinary course of business) or capital contributions to, or, except as
permitted by 6.1(d), investments in, any other Person, other than to the Company
or any Subsidiary of the Company or (D) assume, guarantee or endorse, or
otherwise as an accommodation become responsible for, the obligations of any
Person (other than obligations of Subsidiaries and the endorsements of
negotiable instruments for collection in the ordinary course of business
consistent with past practice), or (ii) enter into or materially amend any
contract, agreement, commitment or arrangements to effect any of the
transactions prohibited by this Section 6.1(f);
(g) except in the ordinary course of business consistent with past
practice, (i) materially amend, modify or terminate any material contract,
agreement or arrangement of the Company or any of its Material Subsidiaries or
(ii) otherwise waive, release or assign any material rights, claims or benefits
of the Company or any of its Material Subsidiaries thereunder; provided,
however, that the consent of Acquiror to do any of the forgoing shall not be
unreasonably withheld;
-28-
(h) (i) except as required by Law or any existing agreement, increase the
amount of compensation of any director or executive officer of the Company, (ii)
except as required by Law, an agreement existing on the date hereof or pursuant
to a Company severance policy existing on the date hereof, grant any severance
or termination pay to any director or senior officer of the Company or any
Material Subsidiary, (iii) adopt any additional material employee benefit plan
or (iv) except as may be required by Law or as necessary to comply with the
terms of this Agreement, amend in any material respect any Company Employee Plan
or Foreign Plan; provided, however, that the consent of Acquiror to do any of
the forgoing shall not be unreasonably withheld;
(i) materially change the Company's methods of accounting in effect at
September 30, 2000, except as required by changes in GAAP or by Regulation S-X
of the Exchange Act, as concurred in by its independent public accountants;
provided, however, that the consent of Acquiror to do any of the forgoing shall
not be unreasonably withheld;
(j) (i) settle, pay or discharge, any litigation, investigation,
arbitration, proceeding or other claim that is material to the business,
financial condition or results of operations of the Company and its
Subsidiaries, taken as a whole or (ii) settle, pay or discharge any Claim
against the Company with respect to or arising out of the transactions
contemplated by this Agreement;
(k) other than in the ordinary course of business consistent with past
practice, (i) make any material Tax election or take any position on any Company
Return filed on or after the date of this Agreement or adopt any method therein
that is materially inconsistent with elections made, positions taken or methods
used in preparing or filing similar returns in prior periods, (ii) enter into
any settlement or compromise of any material Tax liability that in either case
is material to the business of the Company and its Subsidiaries, taken as a
whole, (iii) file any amended Company Return with respect to any material Tax,
(iv) change any annual Tax accounting period, (v) enter into any closing
agreement relating to any material Tax or (vi) surrender any right to claim a
material Tax refund;
(l) adopt a plan of complete or partial liquidation, dissolution, merger,
consolidation, restructuring, recapitalization or other reorganization of the
Company or any of its Subsidiaries (other than the Merger); and
(m) agree or commit to do any of the foregoing; provided that the
limitations set forth in Sections 6.1(b) through 6.1(g) and Section 6.1(l) shall
not apply to any action, transaction or event occurring exclusively between the
Company and any Company Subsidiary or exclusively between any Company
Subsidiaries.
6.2. Stockholder Meeting. Subject to Section 6.3, the Company shall
-------------------
cause a meeting of its Stockholders (the "Company Stockholder Meeting") to be
duly called and held as promptly as reasonably practicable after the date hereof
for the purpose of obtaining the Company Stockholder Approval. Subject to
Section 6.3 hereto, (i) the Company's Board of Directors shall recommend
approval and adoption by its Stockholders of this Agreement and the transactions
contemplated hereby, including the Merger (the "Company Recommendation") and
(ii) the Company shall take all other reasonable lawful action to solicit and
secure the Company Stockholder Approval. The Company Recommendation, together
with a copy of the
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opinion referred to in Section 4.16(b), shall be included in the Proxy
Statement. Holding and Acquiror or their agents shall have the right to solicit
from the Company Stockholders proxies in favor of adoption of this Agreement and
the transactions contemplated hereby.
6.3. Acquisition Proposals; Board Recommendation.
-------------------------------------------
(a) The Company agrees that it shall not, nor shall it permit any Company
Subsidiary to, nor shall it authorize or knowingly permit any officer, director,
employee, investment banker, attorney, accountant, agent or other advisor or
representative of the Company or any Company Subsidiary, directly or indirectly,
to (i) solicit or initiate the submission of any Acquisition Proposal, (ii)
participate in any discussions or negotiations regarding, or furnish to any
Person any information with respect to, or take any other action knowingly to
facilitate any inquiries or the making of any proposal that constitutes or that
would reasonably be expected to lead to any Acquisition Proposal, (iii) grant
any waiver or release under any standstill or similar agreement with respect to
any class of the Company's equity securities or (iv) enter into any agreement
with respect to any Acquisition Proposal; provided, however, that if the Company
receives an unsolicited Acquisition Proposal from a Third Party that the
Company's Board of Directors or the Special Committee determines in good faith
is or could reasonably be expected to lead to the delivery of a Superior
Proposal from that Third Party, the Company may, subject to compliance with the
other provisions of this Section 6.3, furnish information to, and engage in
discussions and negotiations with, such Third Party with respect to its
Acquisition Proposal ("Permitted Actions"). Notwithstanding the foregoing, the
Board of Directors shall not take any Permitted Actions unless the Company
provides Acquiror with reasonable advance notice thereof.
(b) Except as permitted by this Section 6.3(b), neither the Board of
Directors of the Company, the Special Committee nor any committee thereof shall
amend, withdraw, modify, change, condition or qualify in any manner adverse to
Acquiror, the Company Recommendation (it being understood and agreed that a
communication by the Board of Directors of the Company or the Special Committee
to the Company Stockholders pursuant to Rule 14d-9(f) of the Exchange Act, or
any similar communication to the Company Stockholders in connection with the
making or amendment of a tender offer or exchange offer, shall not be deemed to
constitute a withdrawal, modification, amendment, condition or qualification of
the Company Recommendation for all purposes of this Agreement, including this
Section 6.3 and Section 10.1(e)). Notwithstanding the foregoing, in the event
that the Board of Directors of the Company or the Special Committee takes the
actions set forth in Section 6.3(e), the Board of Directors of the Company or
the Special Committee may (i) withdraw or modify in any manner adverse to
Acquiror, the Company Recommendation and (ii) approve or recommend, or propose
to approve or recommend, any Acquisition Proposal.
(c) Unless the Company's Board of Directors or the Special Committee has
previously withdrawn, or is concurrently therewith withdrawing, the Company
Recommendation in accordance with this Section 6.3, neither the Company's Board
of Directors nor any committee thereof shall recommend any Acquisition Proposal
to the Company Stockholders. Notwithstanding the foregoing, nothing contained
in this Section 6.3(c) or elsewhere in this Agreement shall prevent the
Company's Board of Directors or the Special Committee from complying with Rule
14e-2 under the Exchange Act with respect to any Acquisition Proposal or making
any disclosure required by or otherwise complying with applicable Law.
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(d) The Company shall notify Acquiror promptly (but in no event later
than the next Business Day) after receipt by the Company of any Acquisition
Proposal or any request for information relating to the Company or any of its
Subsidiaries in connection with an Acquisition Proposal or for access to the
properties, books or records of the Company or any of its Subsidiaries or any
request for a waiver or release under any standstill or similar agreement, by
any Person that informs the Board of Directors of the Company or such Subsidiary
that it is considering making, or has made an Acquisition Proposal; provided,
however, that prior to participating in any discussions or negotiations or
furnishing any such information, the Company shall receive from such Person an
executed confidentiality agreement on terms that are not materially less
favorable to the Company than the Confidentiality Agreement. The notice shall
indicate the terms and conditions of the proposal or request and the identity of
the Person making it, and the Company will promptly notify Acquiror of any
material modification of or material amendment to any Acquisition Proposal (and
the terms of such modification or amendment); provided, however, that, without
limiting what changes may be material, any change in the consideration to be
paid with respect to the Acquisition Proposal shall be deemed to be a material
modification or a material amendment. The Company shall keep Acquiror informed,
on a reasonably current basis, of the status of any negotiations, discussions
and documents with respect to such Acquisition Proposal or request.
(e) Holding, Acquiror or the Company may terminate this Agreement, if the
Company's Board of Directors or the Special Committee, after consultation with
its financial and legal advisors, shall have determined (i) to approve or
recommend an Acquisition Proposal after concluding that the Acquisition Proposal
constitutes a Superior Proposal and (ii) to enter into a binding agreement
concerning the Acquisition Proposal; provided, however, that the Company may not
exercise its right to terminate under this Section 6.3(e), unless (1) the
Company shall have provided to Acquiror at least three (3) Business Days' prior
written notice that its Board of Directors or the Special Committee has
authorized the termination and intends to terminate this Agreement pursuant to
this Section 6.3(e), specifying the material terms and conditions of the
Acquisition Proposal, and (2) Acquiror does not make, within three (3) Business
Days of delivery of the notice, an offer such that a majority of the
disinterested members of the Company's Board of Directors or the Special
Committee determines that the foregoing Acquisition Proposal no longer
constitutes a Superior Proposal. In connection with the forgoing, the Company
agrees that it will not enter into an agreement which binds the Company with
respect to such an Acquisition Proposal unless (x) the Company simultaneously
delivers to Acquiror the notice contemplated by the foregoing proviso, (y) such
agreement is not binding on the Company until three (3) Business Days after
delivery of the notice set forth in this Section 6.3(e) and (z) the Company has
the right under such agreement to unilaterally terminate such agreement prior to
the termination of this Agreement without any payment or other liability or
obligation of any kind.
(f) The Company shall immediately cease, and shall cause any party acting
on its behalf to cease, and cause to be terminated any existing discussions or
negotiations with any Third Party conducted heretofore with respect to any of
the foregoing and shall request any such parties in possession of confidential
information about the Company or its Subsidiaries that was furnished by or on
behalf of the Company or its Subsidiaries to return or destroy all such
information in the possession of any such party or the agent or advisor of any
such party.
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ARTICLE 7
COVENANTS OF HOLDING AND ACQUIROR
Each of Holding and Acquiror agrees as set forth below.
7.1. Director and Officer Liability.
------------------------------
(a) Holding, Acquiror and the Surviving Corporation agree that the
Surviving Corporation shall adopt on or prior to the Effective Time, in its
certificate of incorporation and by-laws, the same indemnification, limitation
of or exculpation from liability and expense advancement provisions as those set
forth in the Company's certificate of incorporation and by-laws, in each case as
of the date of this Agreement, and that such provisions shall not be amended,
repealed, revoked or otherwise modified for a period of six (6) years after the
Effective Time in any manner that would adversely affect the rights thereunder
of the individuals who on or prior to the Effective Time were directors,
officers, employees or agents of the Company or the Company Subsidiaries or are
otherwise entitled to the benefit of such provisions, unless such modification
is required after the Effective Time by applicable Law.
(b) To the fullest extent permitted under applicable Law, commencing at
the Effective Time and continuing for six (6) years thereafter, Holding shall,
and Holding shall cause the Surviving Corporation to, indemnify, defend and hold
harmless, each present and former director, officer or employee of the Company
and each Company Subsidiary and their respective estates, heirs, personal
representatives, successors and assigns (collectively, the "Indemnified
Parties") against all costs and expenses (including reasonable attorneys' fees),
judgments, fines, losses, claims, damages, liabilities and settlement amounts
paid in connection with any claim, action, suit, proceeding or investigation
(whether arising before or after the Effective Time) (each, a "Claim"), arising
out of or pertaining to any action or omission in their capacity as director or
officer of the Company or any Subsidiary of the Company or their serving at the
request of the Company or any Subsidiary of the Company as director, officer,
trustee, partner or fiduciary of another Person, pension or other employee
benefit plan or enterprise in each case occurring on or before the Effective
Time (including the transactions contemplated by this Agreement); provided,
however, that in the event any Claim or Claims for indemnification are made
within such six year period, all rights to indemnification in respect of any
such Claim or Claims shall continue until the final disposition of any and all
such Claims. Without limiting the foregoing, in the event of any Claim, (i)
Holding and the Surviving Corporation shall (x) periodically advance reasonable
fees and expenses (including attorneys fees) with respect to the foregoing, (y)
pay the reasonable fees and expenses of counsel selected by each Indemnified
Party, promptly after statements therefor are received and (z) vigorously assist
each Indemnified Party in such defense, and (ii) Holding and the Surviving
Corporation, as applicable, shall cooperate in the defense of any matter;
provided, however, that Holding and the Surviving Corporation shall not be
liable for any settlement effected without its prior written consent (which
consent shall not be unreasonably withheld or delayed).
(c) For six (6) years from the Effective Time, the Surviving Corporation
shall, and Holding shall cause the Surviving Corporation to, provide to the
Company's and each Company Subsidiary's directors and officers liability and
fiduciary liability insurance protection with the
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same coverage and in the same amount, and on terms no less favorable to the
directors and officers than that provided by the Company's directors' and
officers' liability insurance policies in effect on the date hereof; provided,
however, that the Surviving Corporation shall not be obligated to make premium
payments for such insurance to the extent such annual premiums exceed 250% of
the annual premiums paid as of the date hereof by the Company for such
insurance; and provided, further, that if the premiums with respect to such
insurance exceed 250% of the annual premiums paid as of the date hereof by the
Company for such insurance, the Surviving Corporation shall be obligated to
obtain such insurance with the maximum coverage as can be obtained at an annual
premium equal to the sum of (i) 250% of the annual premiums paid by the Company
as of the date hereof plus (ii) the cumulative amount by which the premiums paid
after the Effective Time are less than the product of 250% of the annual
premiums paid by the Company as of the date hereof and the number of years that
have expired since the Effective Time.
(d) All rights to indemnification and/or advancement of expenses
contained in any agreement with any Indemnified Parties as in effect on the date
hereof with respect to matters occurring on or prior to the Effective Time
(including the transactions contemplated hereby) shall survive the Merger and
continue in full force and effect.
(e) This Section 7.1 shall survive the consummation of the Merger and is
intended to be for the benefit of, and shall be enforceable by, the Indemnified
Parties referred to herein, their heirs and personal representatives and shall
be binding on the Surviving Corporation and its successors and assigns and the
covenants and agreements contained herein shall not be deemed exclusive of any
other rights to which an Indemnified Party is entitled, whether pursuant to Law,
contract or otherwise.
(f) If the Surviving Corporation or any of it successors or assigns (i)
consolidates with or merges into any other Person and shall not be the
continuing or surviving corporation or entity of such consolidation or merger,
or (ii) transfers or conveys all or substantially all of its properties and
assets to any Person, then, and in each case, to the extent necessary, proper
provision shall be made so that the successors and assigns of the Surviving
Corporation shall assume the obligations set forth in this Section 7.1.
(g) Nothing in this Agreement is intended to, shall be construed to or
shall release, waive or impair any rights to directors' and officers' insurance
claims under any policy that is or has been in existence with respect to the
Company or any of its officers, directors or employees, it being understood and
agreed that the indemnification provided for in this Section 7.1 is not prior to
or in substitution for any such claims under such policies.
7.2. Employee Benefits.
-----------------
(a) For twelve (12) months from the Effective Time, Holding shall provide
(or shall cause the Surviving Corporation to provide) employees of the Company
and the Company Subsidiaries with benefits under employee benefit plans (other
than equity based compensation) that are no less favorable in the aggregate than
those currently provided by the Company and the
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Company Subsidiaries to its employees. For purposes of any employee benefit plan
or arrangement maintained by Holding or the Surviving Corporation, Holding and
the Surviving Corporation shall recognize (or cause to be recognized) service
with the Company and its Subsidiaries and any predecessor entities (and any
other service credited by the Company under similar benefit plans) for all
purposes (including for vesting, eligibility to participate, severance, and
benefit accrual; provided, however, that solely to the extent necessary to avoid
duplication of benefits, amounts payable under employee benefit plans provided
by Holding or the Surviving Corporation may be reduced by amounts payable under
similar employee benefit plans of the Company and its Subsidiaries with respect
to the same periods of service). Any benefits accrued by employees of the
Company or any Company Subsidiary prior to the Effective Time under any defined
benefit pension plan of the Company or any Company Subsidiary that employs a
final average pay formula shall be calculated based on the terms of such plan.
From and after the Effective Time, Holding and the Surviving Corporation shall
waive any pre-existing condition limitations and credit any flexible spending
account balances, deductibles and out-of-pocket expenses that are applicable
and/or covered under the Company's and its Subsidiaries' employee benefit plans,
and are incurred by the employees and their beneficiaries during the portion of
the plan year prior to participation in the benefit plans provided by Holding
and the Surviving Corporation. The provisions of this Section 7.2 shall not
create in any employee or former employee of the Company or any Company
Subsidiary any rights to employment or continued employment with Holding,
Acquiror, the Surviving Corporation or the Company or any of their respective
Subsidiaries, successors or Affiliates. The provisions of this Section 7.2 shall
apply to employees of the Company or any Company Subsidiary who are on
disability or leave of absence.
(b) Participants in the Company's 401(k) plan and non-qualified
retirement plans will receive all Company contributions for the partial year
ending on the Closing Date without regard to any last day of the plan year
requirement or service requirement.
7.3. Severance Plan. For one (1) year from the Effective Time, Holding
--------------
shall provide (or shall cause the Surviving Corporation to provide) employees of
the Company and the Company's Subsidiaries with a severance plan that is no less
favorable than the plan currently applicable to the Company's employees.
Holding and the Surviving Corporation shall recognize (or cause to be
recognized) service with the Company and its Subsidiaries or any predecessor
entities (and any other services credited by the Company under similar severance
plans) for all purposes; provided, however, that solely to the extent necessary
to avoid duplication of benefits, amounts payable under other severance plans
provided by Holding or the Surviving Corporation may be reduced by the amounts
payable under the Company's severance plan.
7.4. Conduct of Holding and Acquiror. Holding will and will take all
-------------------------------
action necessary to cause Acquiror to perform its obligations under this
Agreement to consummate the Merger on the terms and subject to conditions set
forth in this Agreement.
7.5. Transfer Taxes. All state, local or foreign sales, use, real
--------------
property transfer, stock transfer or similar Taxes (including any interest or
penalties with respect thereto) attributable to the Merger (collectively, the
"Transfer Taxes") shall be timely paid by Holding, Acquiror or the Surviving
Corporation.
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7.6. Investment Banking Fee. If the Closing shall occur, Holding,
----------------------
Acquiror and the Surviving Corporation shall pay or cause to be paid all fees
and expenses due to Xxxxxx Xxxxxxx & Co. Incorporated from the Company pursuant
to the agreement referred to in Section 4.16(a).
7.7. Financing Arrangements.
----------------------
(a) Holding and Acquiror shall use their reasonable best efforts to
obtain the Financing on the terms set forth in Commitment Letters and the Note
Purchase Agreement and in an amount at least equal to the Financing on or prior
to the date of the Company Stockholders Meeting. The Commitment Letters, the
definitive agreements contemplated thereby and the Note Purchase Agreement
(along with any other document pursuant to which Holding and Acquiror intends to
obtain financing of all or a portion of the Financing) are referred to herein
collectively as the "Financing Agreements". The Company will be afforded a
reasonable opportunity to review and comment on the representations and
warranties contained in the Financing Agreements. Holding and Acquiror shall
use reasonable best efforts to ensure that the representations and warranties
contained in the Financing Agreements shall be consistent with the Commitment
Letters and the Note Purchase Agreement.
(b) Holding or Acquiror shall provide prompt written notice to the
Company of RCBA's, DLJ's or CSFB's refusal or unwillingness to provide the
financing described in the Contribution and Voting Agreement, the Commitment
Letters or the Note Purchase Agreement, as the case may be, and, in each case,
the stated reasons therefor (to the extent known).
(c) In the event that any portion of the Financing becomes unavailable in
the manner or from the sources originally contemplated, Holding and Acquiror
will use their reasonable best efforts to obtain any such portion from
alternative sources on substantially comparable terms, if available. Holding
and Acquiror acknowledge and agree that the condition set forth in Section
9.3(c) would be satisfied if they were able to obtain financing on terms
substantially comparable to those set forth in the draft commitment letter of
CSFB dated November 9, 2000 previously delivered to the Company.
(d) The Company acknowledges and agrees that Holding and Acquiror shall
have the right to seek to obtain alternative debt financing that they believe to
be on more favorable terms than the terms of the Commitment Letters so long as
they simultaneously continue to use their reasonable best efforts to obtain the
Financing on the terms set forth in the Commitment Letters.
7.8. Contribution and Voting Agreement. Holding and Acquiror shall
---------------------------------
enforce to the fullest extent permitted by applicable Laws Sections 3.1 and 4.4
of the Contribution and Voting Agreement. Sections 3.1 and 4.4 of the
Contribution and Voting Agreement shall not be amended, modified, terminated or
waived without the prior written approval of the Company and the Special
Committee or a majority of the disinterested members of the Board of Directors.
7.9. Board Member. Holding and Acquiror agree to cause the initial
------------
Board of Directors of Holding after the Effective Time to include one person who
is currently employed by the Company (other than Messrs. Xxxxx and White) as an
active broker of the Company.
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ARTICLE 8
COVENANTS OF HOLDING, ACQUIROR AND THE COMPANY
The parties hereto agree as set forth below.
8.1. Efforts and Assistance.
----------------------
(a) Subject to the terms and conditions hereof, each party will use
commercially reasonable best efforts to take, or cause to be taken, all actions,
to file, or caused to be filed, all documents and to do, or cause to be done,
all things necessary, proper or advisable to consummate and make effective the
transactions contemplated by this Agreement as promptly as practicable,
including, without limitation, obtaining all necessary consents, waivers,
approvals, authorizations, Permits or orders from all Governmental Entities or
other Third Parties. The Company, Holding and Acquiror shall furnish all
information required to be included in the Proxy Statement, the Schedule 13E-3,
the Registration Statement or for any application or other filing to be made
pursuant to the rules and regulations of any Governmental Entity in connection
with the transactions contemplated by this Agreement. Holding, Acquiror and the
Company shall have the right to review in advance, and to the extent reasonably
practicable each will consult the other on, all the information relating to the
other and each of their respective Subsidiaries, that appear in any filing made
with, or written materials submitted to, any third party or any Governmental
Entity in connection with the Merger. Holding and Acquiror shall act
reasonably and as promptly as reasonably practicable.
(b) Each of the Company and Holding shall make an appropriate filing of a
notification and report form pursuant to the HSR Act with respect to the
transactions contemplated hereby promptly and shall promptly respond to any
request for additional information pursuant to the HSR Act and supply such
information. In addition, the Company and Holding shall each promptly make any
other filing that is required under any Non-U.S. Competition Law. Holding,
Acquiror and the Company shall each use their commercially reasonable efforts to
resolve objections, if any, as may be asserted by any Governmental Entity with
respect to the Merger under any antitrust or trade or regulatory Laws or
regulations of any Governmental Entity, and neither the Company nor any of the
Company Subsidiaries shall agree to do any of the actions set forth in the
foregoing clause without the prior written consent of Acquiror. Holding and
Acquiror shall reasonably consult with the Company and, subject to being
permitted by the Governmental Entity to do so, the Company shall have the right
to attend and participate in any telephone calls or meetings that Holding or
Acquiror has with any Person with regard to this Agreement and the transactions
contemplated hereby.
(c) The Company agrees to provide, and will cause its Subsidiaries and
its and their respective officers, employees and advisers to provide, such
cooperation as is reasonably necessary in connection with the arrangement of any
financing to be consummated contemporaneously with or at or after the Closing in
respect of the transactions contemplated by this Agreement, including (i)
participation in meetings, due diligence sessions and road shows, (ii) the
preparation of offering memoranda, private placement memoranda, prospectuses and
similar documents, (iii) the execution and delivery of any commitment or
financing letters, underwriting , purchase or placement agreements, pledge and
security documents, other definitive financing documents, or other requested
certificates or documents and comfort letters
-36-
and consents of accountants as may be reasonably requested by Holding and
Acquiror and taking such other actions as are reasonably required to be taken by
the Company in the Commitment Letters or any other financing arrangements
contemplated by Section 7.7 hereof; provided, however, that (A) the terms and
conditions of any of the agreements and other documents referred to in clause
(iii) shall be consistent with the terms and conditions of the financing
required to satisfy the condition precedent set forth in Section 9.3(d), (B) the
Company shall be given a reasonable amount of time to review and comment on the
terms and conditions of any of the agreements and other documents set forth in
clause (iii) prior to the execution of those documents, (C) the terms and
conditions of such financing may not require the payment of any commitment or
other fees by the Company or any of its Subsidiaries, or the incurrence of any
liabilities by the Company or any of its Subsidiaries, prior to the Effective
Time and the obligation to make any such payment shall be subject to the
occurrence of the Closing and (D) the Company shall not be required to provide
any such assistance which would interfere unreasonably with the business or
operations of the Company or its Subsidiaries. In addition, in conjunction with
the obtaining of any such financing, the Company agrees, at the reasonable
request of Holding and Acquiror, to call for prepayment or redemption, or to
prepay, redeem and/or renegotiate, as the case may be, any then existing
indebtedness of the Company; provided that no such prepayment or redemption
shall themselves actually be made until contemporaneously with or after the
Effective Time of the Merger.
8.2. Proxy Statement and Schedule 13E-3.
----------------------------------
(a) Reasonably promptly after execution of this Agreement, the Company
shall prepare the Proxy Statement, file the Proxy Statement with the SEC under
the Exchange Act, and use commercially reasonable efforts to have the Proxy
Statement cleared by the SEC. Holding, Acquiror and the Company shall cooperate
with each other in the preparation of the Proxy Statement, and the Company shall
notify Acquiror of the receipt of any comments of the SEC with respect to the
Proxy Statement and of any requests by the SEC for any amendment or supplement
thereto or for additional information and shall provide to Acquiror reasonably
promptly copies of all correspondence between the Company or any representative
of the Company and the SEC. The Company shall give Acquiror and its counsel the
opportunity to review and comment on the Proxy Statement and any other documents
filed with the SEC or mailed to the Company Stockholders prior to their being
filed with, or sent to, the SEC or mailed to its Stockholders and shall give
Acquiror and its counsel the opportunity to review and comment on all amendments
and supplements to the Proxy Statement and any other documents filed with, or
sent to, the SEC or mailed to the Company Stockholders and all responses to
requests for additional information and replies to comments prior to their being
filed with, or sent to, the SEC or mailed to its Stockholders. Each of the
Company, Holding and Acquiror agrees to use its commercially reasonable efforts,
after consultation with the other parties hereto, to respond promptly to all
such comments of and requests by the SEC. As promptly as practicable after the
Proxy Statement has been cleared by the SEC, the Company shall mail the Proxy
Statement to the Stockholders. Prior to the date of approval of the Merger by
the Stockholders, each of the Company, Holding and Acquiror shall correct
promptly any information provided by it and used in the Proxy Statement that
shall have become false or misleading in any material respect, and the Company
shall take all steps necessary to file with the SEC and have cleared by the SEC
any amendment or supplement to the Proxy Statement as to correct the same and to
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cause the Proxy Statement as so corrected to be disseminated to the
Stockholders, in each case to the extent required by applicable Law.
(b) Promptly following the date of this Agreement, Holding, Acquiror and
the Company shall file with the SEC, and shall use all commercially reasonable
efforts to cause any of their respective Affiliates engaging in this transaction
to file with the SEC, a Schedule 13E-3 with respect to the Merger. Each of the
parties hereto agrees to use all commercially reasonable efforts to cooperate
and to provide each other with such information as any of such parties may
reasonably request in connection with the preparation of the Proxy Statement and
the Schedule 13E-3. The Schedule 13E-3 shall be filed with the SEC concurrently
with the filing of the Proxy Statement. Each of the Company, Holding and
Acquiror agrees to use its commercially reasonable efforts, after consultation
with the other parties hereto, to respond promptly to all such comments of and
requests by the SEC. Each party hereto agrees promptly to supplement, update
and correct any information provided by it for use in the Schedule 13E-3 if and
to the extent that such information is or shall have become incomplete, false or
misleading.
8.3. Public Announcements. The parties shall consult with each other
--------------------
before issuing any press release or making any public statement with respect to
this Agreement and the transactions contemplated hereby and shall not issue any
such press release or make any such public statement without the prior consent
of the other parties, which shall not be unreasonably withheld or delayed,
except as may be required by applicable Law or any listing agreement with any
national securities exchange.
8.4. Access to Information; Notification of Certain Matters.
------------------------------------------------------
(a) From the date hereof until the Effective Time and subject to
applicable Law, the Company shall (i) give to Holding and Acquiror, their
counsel, financial advisors, auditors and other authorized representatives
reasonable access to its offices, properties, books and records; (ii) furnish or
make available to Holding and Acquiror, their counsel, financial advisors,
auditors and other authorized representatives any financial and operating data
and other information as those Persons may reasonably request; and (iii)
instruct its employees, counsel, financial advisors, auditors and other
authorized representatives to cooperate with the reasonable requests of Holding
and Acquiror in their investigation. Any investigation pursuant to this Section
shall be conducted in a manner which will not interfere unreasonably with the
conduct of the business of the Company and its Subsidiaries and shall be in
accordance with any other existing agreements or obligations binding on the
Company or any of its Subsidiaries. Unless otherwise required by Law, each of
Holding and Acquiror will hold, and will cause its respective officers,
employees, counsel, financial advisors, auditors and other authorized
representatives to hold any nonpublic information obtained in any investigation
in confidence in accordance with and agrees to be bound by, the terms of the
confidentiality letter, dated December 15, 2000, as amended as of the date
hereof (the "Confidentiality Agreement"), among the Company and the members of
the Buying Group. No investigations pursuant to this Section 8.4(a) shall
affect any representations or warranties of the parties herein or the conditions
to the obligations of the parties hereto.
-38-
(b) The Company shall give prompt notice to Holding and Acquiror, and
Holding and Acquiror shall give prompt notice to the Company, of (i) the
occurrence or nonoccurrence of any event the occurrence or nonoccurrence of
which would reasonably be expected to cause any representation or warranty of
such party contained in this Agreement to be untrue or inaccurate in any
material respect; (ii) any failure of the Company or Holding and Acquiror, as
the case may be, to materially comply with or satisfy, or the occurrence or
nonoccurrence of any event, the occurrence or nonoccurrence of which would
reasonably be expected to cause the failure by such party to materially comply
with or satisfy , any covenant, condition or agreement to be complied with or
satisfied by it hereunder; (iii) any notice or other communication from any
Third Party alleging that the consent of such Third Party is or may be required
in connection with the transactions contemplated by this Agreement; and (iv) the
occurrence of any event, development or circumstance which has had or would be
reasonably likely to result in a Company or Holding Material Adverse Effect;
provided, however, that the delivery of any notice pursuant to this Section
8.4(b) shall not limit or otherwise affect the remedies available hereunder to
the party giving or receiving such notice.
8.5. Further Assurances. Upon the terms and subject to the conditions of
------------------
this Agreement, each of the parties hereto shall use their respective reasonable
best efforts to take, or cause to be taken, all actions and to do, or cause to
be done, all other things necessary, proper or advisable to consummate and make
effective as promptly as practicable the transactions contemplated by this
Agreement, to obtain in a timely manner all necessary waivers, consents and
approvals and to effect all necessary registrations and filings, and otherwise
to satisfy or cause to be satisfied all conditions precedent to its obligations
under this Agreement. At and after the Effective Time, the officers and
directors of the Surviving Corporation will be authorized to execute and
deliver, in the name and on behalf of the Company or Acquiror, any deeds, bills
of sale, assignments or assurances and to take and do, in the name and on behalf
of the Company or Acquiror, any other actions and things to vest, perfect or
confirm of record or otherwise in the Surviving Corporation any and all right,
title and interest in, to and under any of the rights, properties or assets of
the Company acquired or to be acquired by the Surviving Corporation as a result
of, or in connection with, the Merger.
8.6. Registration Statement.
----------------------
(a) Reasonably promptly after execution of this Agreement, Holding shall
prepare and file with the SEC the Registration Statement; provided, however,
that Holding and Acquiror shall use their commercially reasonable efforts to
file the Registration Statement simultaneously with the filings of the Schedule
13E-3 and the Proxy Statement. Holding and the Company agree to cooperate in
coordinating such simultaneous filings. Holding shall use commercially
reasonable efforts to have the Registration Statement declared effective under
the Securities Act as promptly as practicable after the filing and to keep the
Registration Statement effective as long as is necessary to offer and sell
shares of common stock of Holding to employees of the Company. Holding and the
Company shall also take any action required to be taken under any applicable
state securities or blue sky Laws in connection with the issuance of shares of
common stock of Holding.
(b) Holding and the Company shall cooperate with each other in the
preparation of the Registration Statement, and Holding shall notify the Company
of the receipt of any comments of
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the SEC with respect to the Registration Statement and of any requests by the
SEC for any amendment thereto or for additional information and shall provide to
the Company reasonably promptly copies of all correspondence between Holding or
any representative of the Holding and the SEC. Holding shall give the Company
and its counsel the opportunity to review the Registration Statement prior to
its being filed with the SEC and shall give the Company and its counsel the
opportunity to review all amendments to the Registration Statement and all
responses to requests for additional information and replies to comments prior
to their being filed with, or sent to, the SEC. Holding will advise the Company,
promptly after it receives notice thereof, of the time when the Registration
Statement has become effective or any supplement or amendment has been filed,
the issuance of any stop order, or any request by the SEC for amendment of the
Registration Statement or comments thereon and responses thereto or requests by
the SEC for additional information. If at any time prior to the Effective Time,
the Company or Holding discovers any information relating to either party, or
any of their respective Affiliates, officers or directors, that should be set
forth in an amendment to the Registration Statement, so that the document will
not include any misstatement of a material fact or omit to state any material
fact necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading, the party that discovers any
misleading information shall promptly notify the other parties hereto and an
appropriate amendment describing the information shall be promptly filed with
the SEC and, to the extent required by Law, disseminated to the recipients of
the Prospectus.
(c) Subject to compliance with applicable securities Laws, Holding and
Acquiror will use their commercially reasonable efforts to provide adequate
information and communications to the employees of the Company concerning the
proposed capitalization of Holding and any proposals of Holding or Acquiror to
allow employees of the Company to purchase shares of common stock of Holding
pursuant to the Registration Statement or to otherwise acquire equity securities
of Holding.
8.7. Disposition of Litigation. The Company will consult with Holding
-------------------------
with respect to any Action by any Third Party to restrain or prohibit or
otherwise oppose the Merger or the other transactions contemplated by this
Agreement and, subject to Section 6.3, will resist any such effort to restrain
or prohibit or otherwise oppose the Merger or the other transactions
contemplated by this Agreement. Holding may participate in (but not control)
the defense of any stockholder litigation against the Company and its directors
relating to the transactions contemplated by this Agreement at Holding's sole
cost and expense. In addition, subject to Section 6.3, the Company will not
voluntarily cooperate with any Third Party which has sought or may hereafter
seek to restrain or prohibit or otherwise oppose the Debt Offer, the Merger or
the other transactions contemplated by this Agreement and will cooperate with
Holding to resist any such effort to restrain or prohibit or otherwise oppose
the Debt Offer, the Merger or the other transactions contemplated by this
Agreement.
8.8. Confidentiality Agreements. The parties acknowledge that the
--------------------------
Company and the members of the Buying Group entered into the Confidentiality
Agreement, which Confidentiality Agreement shall continue in full force and
effect in accordance with its terms until the earlier of (a) the Effective Time
or (b) the expiration of the Confidentiality Agreement according to its terms.
Without the prior written consent of Acquiror, neither the Company nor any
Subsidiary of the Company will waive or fail to enforce any provision of any
confidentiality or similar
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agreement which the Company has entered into since November 10, 2000 in
connection with a business combination relating to the Company.
8.9. Resignation of Directors. Prior to the Effective Time, the Company
------------------------
shall use its commercially reasonable efforts to deliver to Acquiror evidence
satisfactory to Acquiror of the resignation of all directors of the Company
(other than Xxxxxxx X. Xxxx, Xxxxxxxx X. Xxxxxxx, Xxxxxxx X. Xxxxx and W. Xxxxx
Xxxxx), effective at the Effective Time.
8.10. Senior Subordinated Notes.
-------------------------
(a) At or prior to the Effective Time, the Company, Holding and Acquiror
will take all actions as may be necessary to (i) repurchase the aggregate
principal amount of the Company's 8-7/8% Senior Subordinated Notes due 2006
(hereinafter referred to as the "Notes") that are tendered to the Company on the
terms set forth in Section 8.10 of the Company Disclosure Schedule and such
other customary terms and conditions as are reasonably acceptable to Acquiror
and (ii) obtain the consent of holders of such principal amount of the Notes
outstanding required pursuant to terms of the First Supplemental Indenture dated
as of May 26, 1998 between the Company and State Street Bank and Trust Company
of California, National Association, as Trustee (the "Indenture"), to amend the
terms of the Indenture in the manner set forth in Section 8.10 of the Company
Disclosure Schedule (the foregoing clauses (i) and (ii), together the "Debt
Offer"). Notwithstanding the foregoing, in no event shall the Company be
required to take any action that could obligate the Company to repurchase any
Notes or incur any additional obligations to the holders of Notes prior to the
Effective Time.
(b) The Company shall waive any of the conditions to the Debt Offer and
make any other changes in the terms and conditions of the Debt Offer as
reasonably requested by the Acquiror, and the Company shall not, without
Acquiror's prior consent, waive any material condition to the Debt Offer, make
any changes to the terms and conditions of the Debt Offer set forth in Section
8.10 of the Company Disclosure Schedule or make any other material changes in
the terms and conditions of the Debt Offer. Notwithstanding the immediately
preceding sentence, Acquiror shall not request that the Company make any change
to the terms and conditions of the Debt Offer which decreases the price per Note
payable in the Debt Offer, changes the form of consideration payable in the Debt
Offer (other than by adding consideration) or imposes conditions to the Debt
Offer in addition to those set forth in Section 8.10 of the Company Disclosure
Schedule which are materially adverse to holders of the Notes (it being agreed
that a request by Acquiror that the Company waive any condition in whole or in
part at any time and from time to time in its sole discretion shall not be
deemed to be materially adverse to any holder of Notes), unless such change was
previously approved in writing by the Special Committee or a majority of the
disinterested members of the Board of Directors of the Company.
(c) Promptly following the date of this Agreement, Holding, Acquiror and
the Company shall prepare an offer to purchase the Notes (or portions thereof)
and forms of the related letter of transmittal (the "Letter of Transmittal")
(collectively, the "Offer to Purchase") and summary advertisement, as well as
other information and exhibits (collectively, the "Offer Documents"). Holding,
Acquiror and the Company shall cooperate with each other in the preparation of
the Offer Documents. All mailings to the holders of Notes in connection with
the Debt Offer shall
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be subject to the prior review, comment and reasonable approval of Acquiror.
Provided that this Agreement shall not have been terminated in accordance with
Section 10.1 , the Company shall, promptly after request of Acquiror (but in no
event earlier than twenty calendar days after the date hereof), commence the
Debt Offer and cause the Offer Documents to be mailed to the holders of the
Notes as promptly as practicable following execution of this Agreement. The
Company, Holding and Acquiror agree promptly to correct any information in the
Offer Documents that shall be or have become false or misleading in any material
respect.
(d) In connection with the Debt Offer, if requested by Acquiror, the
Company shall promptly furnish Acquiror with security position listings, any
non-objecting beneficial owner lists and any available listings or computer
files containing the names and addresses of the beneficial owners and/or record
holders of Notes, each as of a recent date, and shall promptly furnish Acquiror
with such additional information (including but not limited to updated lists of
Noteholders, mailing labels, security position listings and non-objecting
beneficial owners lists) and such other assistance as Acquiror or its agents may
reasonably require in communicating the Debt Offer to the record and beneficial
holders of Notes.
ARTICLE 9
CONDITIONS TO MERGER
9.1. Conditions to the Obligations of Each Party. The obligations of the
-------------------------------------------
Company, Holding and Acquiror to consummate the Merger are subject to the
satisfaction of the following conditions:
(a) the Company Stockholder Approval shall have been obtained;
(b) any applicable waiting period or required approval under the HSR Act,
Non-U.S. Competition Law or any other similar applicable Law required prior to
the completion of the Merger shall have expired or been earlier terminated or
received;
(c) no Governmental Entity of competent authority or jurisdiction shall
have issued any Law or taken any other action then in effect, which restrains,
enjoins or otherwise prohibits or makes illegal the consummation of the Merger;
provided, however, that the parties hereto shall use their commercially
reasonable efforts to have any such Law or other legal restraint vacated; and
(d) the Registration Statement shall have been declared by the SEC and
continue to be effective.
9.2. Conditions to the Obligations of the Company. The obligations of
--------------------------------------------
the Company to consummate the Merger are subject to the satisfaction of the
following further conditions:
(a) (i) each of Holding and Acquiror shall have performed in all material
respects all of its obligations hereunder required to be performed by it at or
prior to the Effective Time, (ii) (A) the representations and warranties of
Holding and Acquiror contained in this Agreement that are qualified by reference
to a Holding Material Adverse Effect shall be true and correct when made
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and at and as of the Effective Time, as if made at and as of such time, and (B)
all other representations and warranties of Holding and Acquiror shall have been
true and correct in all material respects when made and at and as of the
Effective Time as if made at and as of such time, and (iii) the Company shall
have received a certificate signed by the Chief Executive Officer or President
of each of Holding and Acquiror to the foregoing effect;
(b) each of Holding and Acquiror shall have obtained or made all
consents, approvals, actions, orders, authorizations, registrations,
declarations, announcements and filings contemplated by Section 5.3, which if
not obtained or made (i) would render consummation of the Merger illegal or (ii)
(assuming the Effective Time had occurred) would be reasonably likely to have,
individually or in the aggregate, a Holding Material Adverse Effect or a Company
Material Adverse Effect; and
(c) Holding and Acquiror shall have caused the valuation firm which has
delivered a solvency letter to the financial institutions providing the
Financing (or, if no such letter has been provided thereto, a valuation firm
reasonably acceptable to the Company) to have delivered to the Company a letter
addressed to the Special Committee and the Board of Directors in form and
substance reasonably satisfactory to the Special Committee as to the solvency of
the Company and its Subsidiaries after giving effect to the Merger, the
financing arrangements contemplated by Acquiror with respect to the Merger and
the other transactions contemplated hereby.
9.3. Conditions to the Obligations of Acquiror. The obligations of
-----------------------------------------
Acquiror to consummate the Merger are subject to the satisfaction of the
following further conditions:
(a) (i) the Company shall have performed in all material respects all of
its obligations hereunder required to be performed by it at or prior to the
Effective Time, (ii) (A) the representations and warranties of the Company
contained in this Agreement that are qualified by reference to a Company
Material Adverse Effect shall be true and correct when made and at and as of the
Effective Time, as if made at and as of such time, and (B) all other
representations and warranties of the Company shall have been true and correct
in all material respects when made and at and as of the time of the Effective
Time, as if made as of such time, and (iii) Acquiror shall have received a
certificate signed by the Chief Executive Officer or Chief Financial Officer of
the Company to the foregoing effect;
(b) the Company shall have obtained or made all consents, approvals,
actions, orders, authorizations, registrations, declarations, announcements and
filings contemplated by Section 4.3 which if not obtained or made (i) would
render consummation of the Merger illegal or (ii) would be reasonably likely to
have, individually or in the aggregate, a Company Material Adverse Effect;
provided, however, that this condition shall be deemed satisfied if the failure
of this condition is due to willful breach by Holding or Acquiror of any
covenant or willful failure to perform any agreement or a willful breach by
Holding or Acquiror of any representation or warranty contained in any of the
agreements related to the Financing;
(c) (i) the Senior Subordinated Notes Proceeds shall have been released
to the Acquiror from the escrow account into which they were deposited in
connection with the closing of the offering of the Acquiror Senior Subordinated
Notes, and (ii) the funding contemplated by the Commitment Letters shall have
been obtained on substantially the terms set forth in the
-43-
Commitment Letters or the funding of the alternative financing contemplated by
Section 7.7 shall have been obtained; and
(d) the consents of the holders of the Notes required by Section 8.10(a)
shall have been obtained.
ARTICLE 10
TERMINATION
10.1. Termination. This Agreement may be terminated and the Merger
-----------
abandoned at any time prior to the Effective Time by written notice, whether
before or after the Company Stockholder Approval shall have been obtained:
(a) by mutual written agreement of Holding, Acquiror and the Company, in
each case duly authorized by the Boards of Directors or a duly authorized
committee thereof;
(b) by either Acquiror or the Company, if
(i) the Merger shall not have been consummated by July 20, 2001
(the "End Date"); provided, however, that the right to terminate this
Agreement under this Section 10.1(b)(i) shall not be available to any party
whose breach of any provision of this Agreement has resulted in the failure
of the Merger to occur on or before the End Date;
(ii) there shall be any Law that makes consummation of the
Merger illegal or otherwise prohibited or any judgment, injunction, order
or decree of any Governmental Entity having competent jurisdiction
enjoining the Company or Acquiror from consummating the Merger is entered
and the judgment, injunction, judgment, order or decree shall have become
final and nonappealable and, prior to that termination, the parties shall
have used reasonable best efforts to resist, resolve or lift, as
applicable, the Law, judgment, injunction, order or decree; or
(iii) at the Company Stockholder Meeting (including any
adjournment or postponement thereof), the Company Stockholder Approval
shall not have been obtained;
(c) by the Company, (i) if a breach of any representation, warranty,
covenant or agreement on the part of Holding or Acquiror set forth in this
Agreement shall have occurred which would cause any of the conditions set forth
in Section 9.2(a) not to be satisfied, and such condition shall be incapable of
being satisfied by the End Date; or (ii) as contemplated by Section 6.3(e);
provided, however, that termination of this Agreement pursuant to this clause
(ii) shall not be effective until the Termination Fee has been paid to Acquiror
in accordance with Section 10.2(b);
(d) by Acquiror if a breach of or failure to perform any representation,
warranty, covenant or agreement on the part of the Company set forth in this
Agreement shall have occurred which would cause any of the conditions set forth
in Section 9.3(a) not to be satisfied, and such condition is incapable of being
satisfied by the End Date; or
-44-
(e) by Acquiror if the Board of Directors of the Company or the Special
Committee shall (i) (A) amend, withdraw, modify, change, condition or qualify
the Company Recommendation in a manner adverse to Holding and Acquiror; (B)
approve or recommend to the Company Stockholders an Acquisition Proposal (other
than by Holding, Acquiror or their Affiliates); or (C) approve or recommend that
the Company Stockholders tender their Company Shares in any tender or exchange
offer that is an Acquisition Proposal (other than by Holding, Acquiror or their
Affiliates); (ii) deliver any notice pursuant to Section 6.3(e) that it intends
to terminate this Agreement and such notice is not unconditionally withdrawn
prior to the third Business Day following such delivery; (iii) in the case of
the Board of Directors, the Special Committee or any other duly authorized
committee thereof, approve a resolution or agree to do any of the foregoing (it
being understood and agreed that the delivery of notice pursuant to Section
6.3(e) and any subsequent public announcement of such notice shall not entitle
Acquiror to terminate this Agreement pursuant to this Section 10.1(e), provided
such notice is unconditionally withdrawn prior to the third Business Day
following delivery and the Company has previously unconditionally terminated any
agreement entered into in connection with the related Acquisition Proposal); or
(iv) any Person or group (other than Holding, Acquiror or their Affiliates)
acquires beneficial ownership of a majority of the outstanding Company Shares.
10.2. Effect of Termination.
---------------------
(a) If this Agreement is terminated pursuant to Section 10.1 (including
any termination by way of Section 6.3), there shall be no liability or
obligation on the part of Holding, Acquiror, the Company or any of their
respective officers, directors, Stockholders, agents or Affiliates, except no
such termination shall relieve any party hereto of any liability or damages
resulting from any willful breach of this Agreement; provided that the
provisions of Sections 8.3, 8.8, 10.2 and 10.3 and Article 11 of this Agreement,
shall remain in full force and effect and survive any termination of this
Agreement.
(b) In the event that this Agreement is terminated by Acquiror pursuant
to Section 10.1(e) or by the Company pursuant to Section 10.1(c)(ii), the
Company shall pay to RCBA by wire transfer of immediately available funds to an
account designated by RCBA on the next Business Day following such termination a
cash amount equal to the sum of $7,500,000 plus all reasonable and documented
out-of-pocket expenses and fees incurred by Holding and its stockholders on or
prior to the termination of this Agreement in connection with the transactions
contemplated by this Agreement; provided, however, that the aggregate amount of
expenses and fees to be paid by the Company shall not exceed $3,000,000
(collectively, the "Termination Fee"). This Section 10.2(b) is intended to be
for the benefit of, and shall be enforceable by, RCBA.
(c) In the event that (i) this Agreement is terminated pursuant to
Sections 10.1(b)(iii) or 10.1(d), (ii) an Acquisition Proposal (with all
percentages included in the definition of Acquisition Proposal increased to 51%
for purposes of this definition) has been made prior to the Company Stockholder
Meeting or such termination (and, in the case of Section 10.1(d), prior to the
breach giving rise to termination) and (iii) a transaction contemplated by an
Acquisition Proposal (with all percentages included in the definition of
Acquisition Proposal increased to 51% for purposes of this definition) is
completed or a definitive agreement is executed by the parties thereto with
respect to an Acquisition Proposal (with all percentages included in the
-45-
definition of Acquisition Proposal increased to 51% for purposes of this
definition) within twelve (12) months from the date this Agreement is
terminated, the Company shall pay to RCBA by wire transfer of immediately
available funds to an account designated by RCBA on the next Business Day
following the closing of the transaction contemplated by such Acquisition
Proposal, a cash amount equal to the Termination Fee.
10.3. Fees and Expenses. Except as otherwise specifically provided herein,
-----------------
all fees and expenses incurred in connection herewith and the transactions
contemplated hereby shall be paid by the party incurring expenses, whether or
not the Merger is consummated.
ARTICLE 11
MISCELLANEOUS
11.1. Notices. All notices, requests and other communications to any
-------
party hereunder shall be in writing (including facsimile or similar writing) and
shall be given,
if to Holding or Acquiror, to:
x/x XXXX Xxxxxxx Xxxxxxxx, X.X.
000 Xxxxxxxxxx Xxxxxx, Xxxxx 000
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxx
Facsimile No.: (000) 000-0000
with a copy to:
Xxxxxxx Xxxxxxx & Xxxxxxxx
0000 Xxxxxxxx Xxxxxx
Xxxx Xxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxx Xxxxxxxxx
Facsimile No.: (000) 000-0000
if to the Company, to:
CB Xxxxxxx Xxxxx Services, Inc.
000 Xxxxx Xxxxxxxxx Xxxxxxxxx
Xxxxx 000
Xx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxxxx
Facsimile: (000) 000-0000
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with a copy to:
XxXxxxxxx, Will & Xxxxx
000 Xxxx Xxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxx, P.C.
Facsimile: (000) 000-0000
or such other address or facsimile number as a party may hereafter specify for
the purpose by notice to the other parties hereto. Each notice, request or other
communication shall be effective only (a) if given by facsimile, when the
facsimile is transmitted to the facsimile number specified in this Section and
the appropriate facsimile confirmation is received or (b) if given by overnight
courier or personal delivery when delivered at the address specified in this
Section.
11.2. Effectiveness of Amendment and Restatement; Effectiveness of
------------------------------------------------------------
Representations and Warranties and Agreements.
---------------------------------------------
(a) This Agreement amends certain provisions of the First Amended and
Restated Agreement and restates the terms of the First Amended and Restated
Agreement in their entirety so as to reflect and give effect to such amendments.
All amendments to the First Amended and Restated Agreement effected by this
Agreement, and all other covenants, agreements, terms and provisions of this
Agreement, shall have effect from the date of the Original Agreement.
(b) Each of the representations and warranties of each party hereto made
in this Agreement shall be deemed (i) to be made on the date of the Original
Agreement and as of the Closing Date and (ii) not made on the date hereof
(except that the representations and warranties of Acquiror in Section 5.5 shall
be deemed to be made on the date hereof and as of the Closing Date).
11.3. Survival of Representations, Warranties and Covenants after the
---------------------------------------------------------------
Effective Time. The representations and warranties contained herein and in any
--------------
certificate or other writing delivered pursuant hereto shall not survive the
Effective Time or the termination of this Agreement. The covenants contained in
Articles 2, 3, 7 and 11 shall survive the Effective Time.
11.4. Amendments; No Waivers.
----------------------
(a) Any provision of this Agreement may be amended or waived prior to the
Effective Time, if, and only if, the amendment or waiver is in writing and
signed, in the case of an amendment, by the Company, Holding and Acquiror or in
the case of a waiver, by the party against whom the waiver is to be effective;
provided, however, that after the Company Stockholder Approval, no such
amendment or waiver shall, without the further approval of the Company
Stockholders, be made that would require such approval under any applicable Law.
Notwithstanding the foregoing, any amendment or waiver agreed to by the Company
shall be effective only if authorized or approved in writing by the Special
Committee or a majority of the members of the Board of Directors not affiliated
with the Buying Group.
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(b) At any time prior to the Effective Time, any party hereto may with
respect to any other party hereto (a) extend the time for the performance of any
of the obligations or other acts of such party and (b) waive any inaccuracies in
the representations and warranties of such party contained herein or in any
document delivered pursuant hereto; provided, however, that any extension or
waiver agreed to by the Company shall be effective only if authorized or
approved in writing by the Special Committee or a majority of the members of the
Board of Directors not affiliated with the Buying Group. No such extension or
waiver shall be deemed or construed as a continuing extension or waiver on any
occasion other than the one on which such extension or waiver was granted or as
an extension or waiver with respect to any provision of this Agreement not
expressly identified in such extension or waiver on the same or any other
occasion. 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. The rights and remedies herein
provided shall be cumulative and not exclusive of any rights or remedies
provided by Law.
11.5. Successors and Assigns. The provisions of this Agreement shall be
----------------------
binding upon and inure to the benefit of the parties hereto and their respective
successors and assigns; provided, however, that all or any of the rights or
obligations of Holding or Acquiror may be assigned to any direct or indirect
wholly-owned Subsidiary of such party (which assignment shall not relieve such
assigning party of its obligations hereunder); provided, further, that other
than with respect to the foregoing proviso, no party may assign, delegate or
otherwise transfer any of its rights or obligations under this Agreement without
the consent of the other parties hereto. Any purported assignment in violation
hereof shall be null and void.
11.6. Counterparts; Effectiveness; Third Party Beneficiaries. This
------------------------------------------------------
Agreement may be signed in any number of counterparts, each of which shall be an
original, with the same effect as if the signatures thereto and hereto were upon
the same instrument. This Agreement shall become effective when each party
hereto shall have received counterparts hereof signed by all of the other
parties hereto. Except as set forth in Section 7.1 and Section 10.2(b), no
provision of this Agreement is intended to confer upon any Person other than the
parties hereto any rights or remedies hereunder.
11.7. Governing Law. This Agreement shall be construed in accordance with
-------------
and governed by the internal Laws of the State of Delaware applicable to
contracts executed and fully performed within the state of Delaware.
11.8. Jurisdiction. Except as otherwise expressly provided in this
------------
Agreement, the parties hereto agree that any suit, action or proceeding seeking
to enforce any provision of, or based on any matter arising out of or in
connection with, this Agreement or the transactions contemplated hereby shall be
brought in the United States District Court for the District of Delaware or, if
such court does not have jurisdiction over the subject matter of such proceeding
or if such jurisdiction is not available, in the Court of Chancery of the State
of Delaware, County of New Castle, and each of the parties hereby consents to
the exclusive jurisdiction of those courts (and of the appropriate appellate
courts therefrom) in any suit, action or proceeding and irrevocably waives, to
the fullest extent permitted by Law, any objection which it may now or hereafter
have to the laying of the venue of any suit, action or proceeding in any of
those courts
-48-
or that any suit, action or proceeding which is brought in any of those courts
has been brought in an inconvenient forum. Process in any suit, action or
proceeding may be served on any party anywhere in the world, whether within or
without the jurisdiction of any of the named courts. Without limiting the
foregoing, each party agrees that service of process on it by notice as provided
in Section 11.1 shall be deemed effective service of process.
11.9. Enforcement. The parties agree that irreparable damage would occur
-----------
in the event that any of the provisions of this Agreement were not performed in
accordance with their specific terms. It is accordingly agreed that the parties
shall be entitled to specific performance of the terms hereof, this being in
addition to any other remedy to which they are entitled at Law or in equity.
11.10. Entire Agreement. This Agreement (together with the exhibits and
----------------
schedules hereto) and the Confidentiality Agreement constitute the entire
agreement between the parties with respect to the subject matter hereof and
supersede all prior agreements and understandings, both oral and written,
between the parties with respect to the subject matter hereof.
11.11. Authorship. The parties agree that the terms and language of this
----------
Agreement were the result of negotiations between the parties and, as a result,
there shall be no presumption that any ambiguities in this Agreement shall be
resolved against any party. Any controversy over construction of this Agreement
shall be decided without regard to events of authorship or negotiation.
11.12. 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 terms and provisions of this Agreement shall nevertheless
remain in full force and effect so long as the economic or legal substance of
the transactions contemplated hereby is not affected in any manner adverse to
any party. Upon a 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 an acceptable manner to the end that
transactions contemplated hereby are fulfilled to the extent possible.
11.13. Waiver of Jury Trial. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY
--------------------
WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ALL RIGHTS TO TRIAL BY JURY IN
ANY ACTION, PROCEEDING, OR COUNTERCLAIM (WHETHER BASED UPON CONTRACT, TORT OR
OTHERWISE) ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OF THE
TRANSACTIONS CONTEMPLATED HEREBY.
11.14. Headings; Construction. The headings contained in this Agreement
----------------------
are for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. In this Agreement (a) words denoting the
singular include the plural and vice versa, (b) "it" or "its" or words denoting
any gender include all genders, (c) the word "including" shall mean "including
without limitation," whether or not expressed, (d) any reference herein to a
Section, Article, Paragraph, Clause or Schedule refers to a Section, Article,
Paragraph or Clause of or a Schedule to this Agreement, unless otherwise stated,
and (e) when calculating the period of time within or following which any act is
to be done or steps taken, the date which is the
-49-
reference day in calculating such period shall be excluded and if the last day
of such period is not a Business Day, then the period shall end on the next day
which is a Business Day.
* * *
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed by their respective authorized officers as of the day and year
first above written.
CBRE HOLDING, INC. CB XXXXXXX XXXXX SERVICES, INC.
By:_________________________ By:____________________________
Its:________________________ Its:___________________________
XXXX XX CORP.
By:_________________________
Its:________________________
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Section 8.10
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Senior Subordinated Notes
-------------------------
Debt Offer Terms and Conditions:
Transaction: Tender Offer and Consent Solicitation.
Issue: 8-7/8% Senior Subordinated Notes due 2006 (the
"Notes").
Outstanding: $175 million principal amount outstanding.
Trustee: State Street Bank and Trust Company of
California, National Association.
Type of Tender: Any and all; subject to minimum majority
tender with receipt of exit consents.
Conditions: Noteholders may not tender without consenting.
Holders of at least a majority of the Notes
submit consents to the Second Supplemental
Indenture.
All general conditions set forth in the Offer
to Purchase and Consent Solicitation Statement
of the Company dated May 25, 2001 shall have
been satisfied.
All of the conditions precedent to the Merger
as set forth in the Merger Agreement shall
have been satisfied except the condition set
forth at Section 9.3(d) of the Agreement;
Acquiror must have evidence that Section
9.3(d) of the Agreement will be satisfied upon
the Closing of the Debt Offer.
Consent Date: 10 business days after launch date (June 8,
2001, unless extended).
Expiration Date: No earlier than 21 business days after launch
date (May 25, 2001) and at least 10 business
days after the Consent Date. The Expiration
Date will be on or shortly before the date the
Merger is consummated.
Tender Consideration: Tender price per Bond: Offer Price less
Consent Fee plus accrued and unpaid interest
to payment date.
Consent Fee per Bond: $30 per $1,000.
Total Payment per Bond: Offer Price plus
accrued and unpaid interest to payment date.
Offer Price: Equal to the earliest redemption price plus an
amount resulting from a yield to the June 1,
2002 optional redemption date equal to the sum
of (i) the yield on the 6.625% U.S. Treasury
Note due May 31, 2002, as calculated in
accordance with standard market practice,
based on the bid price of such Treasury Note
as of 2:00 PM on the tenth business day
immediately preceding the scheduled expiration
date and (ii) 75 basis points; provided,
however, that the price shall be increased up
to the amount resulting from changing the
number in clause (ii) to 50 basis points if
such a change is necessary or advisable in
order to obtain the required number of exit
consents set forth in the following paragraph
(the "Price").
Exit Consents: The receipt of the minimum number of exit
consents required (i) to eliminate certain
restrictive covenants set forth in Articles 2,
3 and 5 of the Indenture, including:
. Limitation on Indebtedness;
. Limitation on Restricted Payments;
. Limitation on Transactions with Affiliates;
. Limitation on Liens;
. Limitation on Incurrence of Senior
Subordinated Indebtedness ;
. Limitation on Sale of Assets;
. Limitation on Preferred Stock of Restricted
Subsidiaries;
. Limitation on Dividends and Other Payment
Restrictions Affecting Restricted
Subsidiaries;
. Consolidation, Merger, Sale of Assets,
Etc.;
. Certain Events of Default; and
. Any of the other covenants reasonably
requested by Acquiror;
(ii) to amend Article 6 of the Indenture to
modify the defeasance option and (iii) to
eliminate each of the events of default that
may be eliminated by the holders of a majority
in principal amount of the Notes.
Dealer Manager: Credit Suisse First Boston.
-2-
Section 5.5
-----------
Financing
---------
For the avoidance of doubt, with respect to the Commitment Letters, any
potential failure to satisfy a condition to the closing of the Commitment Letter
Financing due to the financial performance of the Company would not constitute
an event of default thereunder.
The representations and warranties regarding the availability and sufficiency of
the Financing assume that the Company's EBITDA prior to the Closing will be in
accordance with the revised financial plan provided to Acquiror by the Company's
management.
Exhibit B
---------
Amended and Restated Article FOURTH
-----------------------------------
FOURTH:
------
A. The total number of shares of all classes of capital stock that the
corporation is authorized to issue is 108,000,000, of which (1) 8,000,000 shall
be Preferred Stock ("Preferred Stock"), 6,250,000 of which shall be designated
Series A Convertible Participating Preferred Stock ("Series A Preferred Stock")
and (2) 100,000,000 shall be Common Stock ("Common Stock"). Both the Preferred
Stock and Common Stock shall have a par value of $.01 per share.
B. The Common Stock shall consist of a single class of 100,000,000
shares, each of which shall be identical. There shall be no cumulative voting.
C. The Preferred Stock shall consist of a single class of 8,000,000
shares and may be issued from time to time in one or more series. The Board of
Directors of the corporation (the "Board of Directors") is expressly authorized
to provide for the issue of all or any of the Preferred Stock in one or more
series, to fix the designation and number of shares thereof and to determine or
alter for each such series, such voting powers, full or limited, or no voting
powers, and such designations, preferences and relative, participating, optional
or other special rights, and the qualifications, limitations or restrictions
thereof, as shall be stated and expressed in the resolution or resolutions
adopted by the Board of Directors providing for the issuance of such stock and
as may be permitted by the General Corporation Law of the State of Delaware.
The Board of Directors is also expressly authorized to increase or decrease (but
not below the number of shares of such series then outstanding, plus the number
of shares of such series issuable upon exercise of outstanding rights, options
or warrants or upon conversion of outstanding securities issued by the
corporation) the number of shares of any series. If the number of shares of any
such series shall be so decreased, the shares constituting such decrease shall
resume the status that they had prior to the adoption of the resolution
originally fixing the number of shares of such series.
The relative rights, preferences, privileges, limitations and restrictions
granted to or imposed on the Series A Preferred Stock or the holders thereof are
as follows:
1. Dividends.
a. Preference. The holders of the Series A Preferred Stock
shall be entitled to receive a dividend, prior and in preference to
any declaration or payment of any dividend (payable other than in
Common Stock or other securities and rights convertible into or
entitling the holder thereof to receive, directly or indirectly,
additional shares of Common Stock of the corporation), payable out of
funds legally available therefore when, as and if declared by the
board of directors of the corporation, at the rate of sixteen percent
(16%) per annum (compounded quarterly calculated on the basis of a 360
day year of twelve 30-day months) of the Original Purchase Price.
All such dividends shall be cumulative. To the extent the
dividend provided by this Section 1.a. is not paid, such dividends
shall cumulate and must be paid prior to any other dividend may be
paid by the corporation. Dividends that are declared and paid in an
amount less than the full amount of dividends accumulated on the
Series A Preferred Stock shall be applied to the earliest dividend
which has not theretofore been paid. The "Original Purchase Price"
for each share of Series A Preferred Stock shall be deemed to be
$16.00 per share of Series A Preferred Stock (as adjusted for stock
splits, stock dividends, combinations or similar events with respect
to such shares).
b. Participation. In addition to the preference set forth in
subsection a. above, the holders of Series A Preferred Stock shall be
entitled to participate on an as-converted to Common Stock basis in
any dividends paid to the holders of Common Stock.
2. Liquidation Preference.
In the event of any liquidation, dissolution or winding up of the
corporation, either voluntary or involuntary, distributions to the
stockholders of the corporation shall be made in the following manner:
a. Series A Preferred Stock Liquidation Preference. The holders
of Series A Preferred Stock shall be entitled to receive, prior and in
preference to any distribution of any of the assets or surplus funds
of the corporation to the holders of Common Stock of the corporation,
an amount per share of Series A Preferred Stock equal to the Original
Purchase Price plus any accrued but unpaid dividends per share,
whether or not declared and including compounding (as adjusted for
stock splits, stock dividends, combinations or similar events with
respect to such shares) (the "Series A Liquidation Preference"). If,
upon such liquidation, dissolution or winding up of the corporation,
the assets and funds distributed are insufficient to permit the
payment of the Series A Liquidation Preference, the entire assets and
funds legally available for distribution shall be distributed ratably
among the holders of the Series A Preferred Stock.
b. Remaining Assets. After payment or setting apart of payment
of the Series A Liquidation Preference, the holders of the Series A
Preferred Stock and the holders of the Common Stock shall be entitled
to receive the remaining assets of the corporation pro rata based on
the number of shares of Common Stock held by each such holder
(assuming full conversion of all the Series A Preferred Stock).
c. Reorganization or Merger.
(1) For the purposes of this Section 2, a liquidation,
dissolution or winding up of the corporation shall be deemed to
include (i) the acquisition of the corporation by another entity
by means of any transaction or series of related transactions
(including, without limitation,
2
any sale of capital stock, reorganization, recapitalization,
merger or consolidation but, excluding any merger effected
exclusively for the purpose of changing the domicile of the
corporation) unless the Corporation's stockholders of record as
constituted immediately prior to such acquisition or sale will,
immediately after such acquisition or sale (by virtue or
securities issued as consideration for the corporation's
acquisition or sale or otherwise) hold at least 50% of the voting
power of the surviving or acquiring entity or (y) a sale of all
or substantially all of the assets of the corporation. No
stockholder of the corporation shall enter into any transaction
or series of related transactions described above unless the
terms of such transaction or transactions provide that the
consideration to be paid to the stockholders of the corporation
is to be allocated in accordance with the preferences and
priorities set forth in this Section 2.
(2) In any of such events, if the consideration received by
the corporation is other than cash, its value will be deemed its
fair market value. Any securities shall be valued as follows:
(A) for securities not subject to investment letter or
other similar restrictions on free marketability,
(B) if traded on a securities exchange or the Nasdaq
Stock Market, the value shall be deemed to be the average of
the closing prices of the securities on such exchange or
market over the 30-day period ending three (3) days prior to
the closing of such transaction;
(C) if actively traded over-the-counter, the value
shall be deemed to be the average of the closing bid prices
over the 30-day period ending three (3) days prior to the
closing of such transaction; and
(D) if there is no active public market, the value
shall be the fair market value thereof, as determined in
good faith by the board of directors of the corporation.
(3) The method of valuation of securities subject to
investment letter or other restrictions on free marketability
shall take into account an appropriate discount (as determined in
good faith by the board of directors of the corporation) from the
market value determined as pursuant to (2)(A), (B) or (C) above
so as to reflect the approximate fair market value thereof.
3. Voting.
Except as otherwise required by law or contract, the holder of each
share of Common Stock issued and outstanding shall have one vote and the
holder of each share
3
of Preferred Stock shall be entitled to the number of votes equal to the
number of shares of Common Stock into which such share of Preferred Stock
could be converted at the record date for determination of the stockholders
entitled to vote on such matters, or, if no such record date is
established, at the date such vote is taken or any written consent of
stockholders is solicited, such votes to be counted together with all other
shares of the corporation having general voting power and not separately as
a class. Fractional votes by the holders of Preferred Stock shall not,
however, be permitted and any fractional voting rights shall (after
aggregating all shares into which shares of Preferred Stock held by each
holder could be converted) be rounded to the nearest whole number.
4. Conversion.
The holders of the Series A Preferred Stock have conversion rights as
follows:
a. Right to Convert. Each share of Series A Preferred Stock
shall be convertible, at the option of the holder thereof, at any time
after the date of issuance of such share at the office of the
corporation or any transfer agent for the Series A Preferred Stock,
into such number of fully paid and nonassessable shares of Common
Stock as is determined by dividing the Original Purchase Price by the
Conversion Price, determined as hereinafter provided, in effect at the
time of the conversion (the "Conversion Rate"). The Conversion Price
for the Series A Series A Preferred Stock shall initially be $16.00
per share. Such initial Conversion Price shall be subject to
adjustment as hereinafter provided.
b. Mechanics of Conversion. Before any holder of Series A
Preferred Stock shall be entitled to convert the same into full shares
of Common Stock and to receive certificates therefor, such holder
shall surrender the certificate or certificates therefor, duly
endorsed, at the office of the corporation or of any transfer agent
for the Series A Preferred Stock, and shall give written notice to the
corporation at such office that such holder elects to convert the
same; provided, however, that the holder may notify the corporation or
its transfer agent that such certificates have been lost, stolen or
destroyed and, in lieu of the surrender of such certificate or
certificates, execute an agreement satisfactory to the corporation to
indemnify the corporation from any loss incurred by it in connection
with such certificates. The corporation shall, as soon as practicable
after such delivery, or such agreement and indemnification in the case
of a lost certificate, issue and deliver at such office to such holder
of Series A Preferred Stock, a certificate or certificates for the
number of shares of Common Stock to which the holder shall be entitled
as aforesaid and a check payable to the holder in the amount of any
cash amounts payable as the result of a conversion into fractional
shares of Common Stock. Such conversion shall be deemed to have been
made immediately prior to the close of business on the date of such
surrender of the shares of Series A Preferred Stock to be converted,
and the person or persons entitled to receive the shares of Common
Stock issuable upon such conversion shall be treated for all purposes
as the record holder or holders of such shares of Common Stock on such
date.
4
c. Fractional Shares. In lieu of any fractional shares to which
the holder of Series A Preferred Stock would otherwise be entitled,
the corporation shall pay cash equal to such fraction multiplied by
the then effective Conversion Price. Whether or not fractional shares
are issuable upon such conversion shall be determined on the basis of
the total number of shares of Series A Preferred Stock of each holder
at the time converting into Common Stock and the number of shares of
Common Stock issuable upon such aggregate conversion.
d. Adjustment of Conversion Price. The Conversion Price of
Series A Preferred Stock shall be subject to adjustment from time to
time as follows:
(1) If the number of shares of Common Stock outstanding at
any time after the date hereof is increased by a stock dividend
payable in shares of Common Stock or by a subdivision or split-up
of shares of Common Stock, then, on the date such payment is made
or such change is effective, the Conversion Price of Series A
Preferred Stock shall be appropriately decreased so that the
number of shares of Common Stock issuable on conversion of any
shares of Series A Preferred Stock shall be increased in
proportion to such increase of outstanding shares.
(2) If the number of shares of Common Stock outstanding at
any time after the date hereof is decreased by a combination of
the outstanding shares of Common Stock, then, on the effective
date of such combination, the Conversion Price of Series A
Preferred Stock shall be appropriately increased so that the
number of shares of Common Stock issuable on conversion of any
shares of Series A Preferred Stock shall be decreased in
proportion to such decrease in outstanding shares.
(3) In case, at any time after the date hereof, of any
capital reorganization, or any reclassification of the stock of
the corporation (other than as a result of a stock dividend or
subdivision, split-up or combination of shares), or the
consolidation or merger of the corporation with or into another
person (other than a consolidation or merger in which the
corporation is the continuing entity and which does not result in
any change in the Common Stock), the shares of Series A Preferred
Stock shall, after such reorganization, reclassification,
consolidation, merger, sale or other disposition, be convertible
into the kind and number of shares of stock or other securities
or property of the corporation or otherwise to which such holder
would have been entitled if immediately prior to such
reorganization, reclassification, consolidation, merger, sale or
other disposition such holder had converted its shares of Series
A Preferred Stock into Common Stock. The provisions of this
clause (3) shall similarly apply to successive reorganizations,
reclassifications, consolidations, mergers, sales or other
dispositions.
e. Minimal Adjustments. All calculations under this Section 4
shall be made to the nearest cent or to the nearest one hundredth
(1/100) of a share, as
5
the case may be. No adjustment in the Conversion Price for Series A
Preferred Stock need be made if such adjustment would result in a
change in the Conversion Price of less than $0.01.
f. No Impairment. The corporation will not through any
reorganization, recapitalization, transfer of assets, consolidation,
merger, dissolution, issue or sale of securities or any other
voluntary action, avoid or seek to avoid the observance or performance
of any of the terms to be observed or performed hereunder by the
corporation, but will at all times in good faith assist in the
carrying out of all the provisions hereunder and in the taking of all
such action as may be necessary or appropriate in order to protect the
rights of the holders of Series A Preferred Stock set forth hereunder
against impairment. This provision shall not restrict the
corporation's right to amend its Certificate of Incorporation with the
requisite stockholder consent.
h. Reservation of Stock Issuable Upon Conversion. The
corporation shall at all times reserve and keep available out of its
authorized but unissued shares of Common Stock solely for the purpose
of effecting the conversion of the shares of Series A Preferred Stock
such number of its shares of Common Stock as shall from time to time
be sufficient to effect the conversion of all outstanding shares of
Series A Preferred Stock; and if at any time the number of authorized
but unissued shares of Common Stock shall not be sufficient to effect
the conversion of all then outstanding shares of Series A Preferred
Stock, the corporation will take such corporate action as may, in the
opinion of its counsel, be necessary to increase its authorized but
unissued shares of Common Stock to such number of shares as shall be
sufficient for such purpose.
i. Reissuance of Converted Shares. No shares of Series A
Preferred Stock which have been converted into Common Stock after the
original issuance thereof shall ever again be reissued and all such
shares so converted shall upon such conversion cease to be a part of
the authorized shares of the corporation.
5. Redemption.
The Series A Preferred Stock is not redeemable.
6