STOCK PURCHASE AGREEMENT
among
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇,
THE STOCKHOLDERS OF ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇
and
▇▇▇▇▇ & MCLENNAN COMPANIES, INC.
Dated as of March 12, 1997
TABLE OF CONTENTS
Page
ARTICLE I
PURCHASE AND SALE OF SHARES
Section 1.1 Purchase and Sale of Shares . . . . . 1
Section 1.2 Closing; Delivery and Payment. . . . 2
Section 1.3 Calculation of Stock Consideration
in Shares . . . . . . . . . . . . 3
Section 1.4 Adjustments to Prevent Dilution . . . 3
Section 1.5 Actions of Sellers' Designee and
Sellers' Committee. . . . . . . . 4
Section 1.6 Substitution of Seller's Estate . . . 5
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Section 2.1 Organization, Authority and
Qualification; Certificate
and By-laws . . . . . . . . . . . 5
Section 2.2 Approval, Validity and Fairness . . 6
Section 2.3 Subsidiaries of the Company . . . . 7
Section 2.4 Capitalization . . . . . . . . . . 8
Section 2.5 Company Financial Information . . . 9
Section 2.6 Absence of Certain Changes or
Events . . . . . . . . . . . . . 9
Section 2.7 Title to Properties; Absence of
Liens and Encumbrances, etc. . . 10
Section 2.8 Company Material Contracts . . . . 11
Section 2.9 No Conflict . . . . . . . . . . . . 12
Section 2.10 Governmental Filings; No
Violations. . . . . . . . . . . . 13
Section 2.11 Litigation and Liabilities . . . . 13
Section 2.12 Compliance with Law; Permits . . . 14
Section 2.13 Takeover Statutes . . . . . . . . . 15
Section 2.14 Tax Matters . . . . . . . . . . . . 15
Section 2.15 Labor Matters . . . . . . . . . . . 19
Section 2.16 Employee Matters . . . . . . . . . 19
Section 2.17 Environmental Matters . . . . . . . 23
Section 2.18 Intellectual Property . . . . . . . 23
Section 2.19 Insurance . . . . . . . . . . . . . 25
Section 2.20 Brokers and Finders . . . . . . . . 25
Section 2.21 Company Employees . . . . . . . . . 26
Section 2.22 Information in Registration
Statement . . . . . . . . . . . 26
Section 2.23 Financial Condition . . . . . . . . 26
Section 2.24 Non-Signing Stockholders and
Retirees . . . . . . . . . . . . 26
Section 2.25 No Other Representations or
Warranties . . . . . . . . . . . 27
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE SELLERS
Section 3.1 Execution, Delivery, Validity and
Enforceability of Agreements. . . 27
Section 3.2 Ownership of Shares . . . . . . . . 27
Section 3.3 Acquisition for Investment, etc. . . 28
Section 3.4 No Conflict. . . . . . . . . . . . . 29
Section 3.5 Approval of Change in Control
Payments . . . . . . . . . . . . 29
Section 3.6 No Other Representations or
Warranties. . . . . . . . . . . . 30
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER
Section 4.1 Organization, Authority and
Qualification; Certificate
and By-laws. . . . . . . . . . . 30
Section 4.2 Approval, Validity and Fairness . . 31
Section 4.3 Subsidiaries of Buyer . . . . . . . 31
Section 4.4 Capitalization of Buyer . . . . . . 32
Section 4.5 Buyer Reports; Financial
Statements . . . . . . . . . . . 33
Section 4.6 Absence of Certain Changes or
Events . . . . . . . . . . . . . 33
Section 4.7 No Conflict . . . . . . . . . . . . 34
Section 4.8 Governmental Filings; No
Violations . . . . . . . . . . . 35
Section 4.9 Litigation and Liabilities . . . . 35
Section 4.10 Compliance with Law; Permits. . . . 36
Section 4.11 Takeover Statutes . . . . . . . . . 36
Section 4.12 Tax Matters . . . . . . . . . . . . 36
Section 4.13 Employee Matters. . . . . . . . . . 38
Section 4.14 Intellectual Property . . . . . . . 39
Section 4.15 Brokers and Finders . . . . . . . . 39
Section 4.16 Financial Capability. . . . . . . . 39
Section 4.17 Securities Act. . . . . . . . . . . 40
Section 4.18 Rights Plan . . . . . . . . . . . . 40
Section 4.19 No Other Representations or
Warranties . . . . . . . . . . . 40
ARTICLE V
TAX MATTERS
Section 5.1 Sellers' Tax Indemnification of
Buyer . . . . . . . . . . . . . . 40
Section 5.2 Proration of Taxes . . . . . . . . 41
Section 5.3 Tax Returns . . . . . . . . . . . . 41
Section 5.4 Transfer Taxes . . . . . . . . . . 44
Section 5.5 Contest Provisions . . . . . . . . 44
Section 5.6 Post-Closing Actions Which May
Affect the Sellers' Liability
for Taxes . . . . . . . . . . . . 46
Section 5.7 Certain Post-Closing Settlement
Payments . . . . . . . . . . . . 47
Section 5.8 Assistance and Cooperation . . . . 48
Section 5.9 Maintenance of Books and Records. . 49
Section 5.10 Characterization of Tax
Indemnification Payments . . . . 49
Section 5.11 Indemnity Payments . . . . . . . . 49
Section 5.12 Carryforwards . . . . . . . . . . . 49
ARTICLE VI
CERTAIN COVENANTS AND AGREEMENTS
OF THE COMPANY AND BUYER
Section 6.1 Company Interim Operations. . . . . 50
Section 6.2 Acquisition Proposals . . . . . . . 53
Section 6.3 Filings; Other Actions;
Notification . . . . . . . . . . 54
Section 6.4 Access and Information . . . . . . 56
Section 6.5 Employee and Retiree Matters . . . 57
Section 6.6 Retention of Books and Records . . 64
Section 6.7 Amended Company Certificate and
By-laws . . . . . . . . . . . . 64
Section 6.8 Publicity . . . . . . . . . . . . 64
Section 6.9 Directors' and Officers,
Indemnification and
Insurance . . . . . . . . . . . 65
Section 6.10 Parachute Payments; Shareholder
Approval Requirements . . . . . 67
Section 6.11 Expenses. . . . . . . . . . . . . . 67
Section 6.12 Other Actions by the Company and
Buyer . . . . . . . . . . . . . 68
Section 6.13 Non-Competition and Non-
Solicitation . . . . . . . . . . 69
Section 6.14 Escrow Agreements . . . . . . . . . 71
Section 6.15 Quarterly Financial Statements . . 72
Section 6.16 Closing Company Financial
Information . . . . . . . . . . 73
Section 6.17 Permitted Distributions . . . . . . 74
Section 6.18 Resale Restrictions . . . . . . . . 76
Section 6.19 EEOC Action . . . . . . . . . . . . 77
ARTICLE VII
CONDITIONS TO CLOSING
Section 7.1 Conditions to Each Sale and
Purchase Obligation . . . . . . . 77
Section 7.2 Conditions to Each Purchase
Obligation . . . . . . . . . . . 78
Section 7.3 Conditions to Each Sale
Obligation . . . . . . . . . . . 80
ARTICLE VIII
TERMINATION
Section 8.1 Termination by Mutual Consent. . . . 81
Section 8.2 Termination by Either Sellers'
Designee or Buyer . . . . . . . . 81
Section 8.3 Termination by the Sellers'
Designee . . . . . . . . . . . . 81
Section 8.4 Termination by Buyer . . . . . . . . 82
Section 8.5 Effect of Termination and
Abandonment . . . . . . . . . . . 83
ARTICLE IX
SURVIVAL; INDEMNIFICATION
Section 9.1 Survival Periods . . . . . . . . . . 83
Section 9.2 Indemnification . . . . . . . . . . 84
Section 9.3 General Procedures; Third Party
Claims . . . . . . . . . . . . . 87
ARTICLE X
MISCELLANEOUS
Section 10.1 Modification or Amendment . . . . 88
Section 10.2 Waiver of Conditions . . . . . . . 88
Section 10.3 Assignment . . . . . . . . . . . . 89
Section 10.4 Entire Agreement . . . . . . . . . 89
Section 10.5 Parties in Interest; No Third
Party Beneficiaries . . . . . . 89
Section 10.6 Obligations of Buyer and of the
Company . . . . . . . . . . . . 89
Section 10.7 Counterparts . . . . . . . . . . . 90
Section 10.8 Section Headings . . . . . . . . . 90
Section 10.9 Notices . . . . . . . . . . . . . 90
SECTION 10.10 GOVERNING LAW AND VENUE; WAIVER
OF JURY TRIAL . . . . . . . . . 92
Section 10.11 Severability . . . . . . . . . . . 93
ARTICLE XI
DEFINITIONS
Section 11.1 Specific Definitions . . . . . . . 94
Section 11.2 Other Terms . . . . . . . . . . . . 104
Section 11.3 Other Definitional Provisions . . . 104
ANNEXES
ANNEX A Sellers' Shares and Purchase Price
ANNEX B Directors and Executive Officers after Closing
ANNEX C Persons Entitled to Receive Employee Award
Agreements
ANNEX D Persons Entitled to Receive Retiree Agreements
EXHIBITS
Exhibit A Form of Employee Award Agreement
Exhibit B Form of Retiree Agreement
Exhibit C Form of Registration Rights Agreement
Exhibit D Form of Indemnity Escrow Agreement
STOCK PURCHASE AGREEMENT, dated as of March 12,
1997, between ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, a New Jersey corporation
(the "Company"), the stockholders of the Company listed on
Annex A hereto (each such stockholder, a "Seller") and ▇▇▇▇▇
& McLennan Companies, Inc., a Delaware corporation
("Buyer").
W I T N E S S E T H:
WHEREAS, each Seller owns shares of common stock,
no par value, of the Company ("Company Common Stock");
WHEREAS, each Seller desires to sell to Buyer, and
Buyer desires to purchase from such Seller, such Seller's
shares of Company Common Stock, as more specifically
provided herein; and
WHEREAS, the Company, as well as the Sellers and
Buyer, desire that these sales and the other transactions
contemplated herein be consummated as provided herein.
NOW, THEREFORE, in consideration of the premises
and mutual representations, warranties and covenants
contained herein, and subject to and on the terms and
conditions herein set forth, the parties hereto agree as
follows:
ARTICLE I
PURCHASE AND SALE OF SHARES
Section 1.1 Purchase and Sale of Shares. On the
terms and subject to the conditions provided herein, Buyer
agrees to purchase from each Seller, and each Seller agrees,
severally and not jointly, to sell to Buyer, such number of
shares of Company Common Stock for such consideration,
consisting of (i) cash and (ii) shares of Buyer Common
Stock, as are specified on Annex A with respect to such
Seller. For each Seller, such number of shares as so
specified are herein called such Seller's "Shares," and such
cash consideration, stock consideration and cash and stock
consideration, taken together, as so specified are herein
called the "Cash Consideration," "Stock Consideration" and
"Purchase Price" for such Seller's Shares, respectively.
The Shares of all Sellers and the Purchase Prices for all
Sellers' Shares, in each case in the aggregate, are herein
called the "Total Shares" and the "Total Purchase Price,"
respectively.
Each Seller's Stock Consideration has initially
been expressed in Annex A as a dollar amount of Buyer Common
Stock (such Seller's "Stock Consideration in Dollars").
Prior to the Closing Time, each Seller's Stock Consideration
in Dollars will be converted into a number of shares of
Buyer Common Stock (such Seller's "Stock Consideration in
Shares"), and Annex A will be amended to reflect such
conversion, all as provided in Section 1.3.
Section 1.2 Closing; Delivery and Payment.
(a) The closing for the several purchases and
sales provided for in Section 1.1 (the "Closing") shall take
place at the offices of ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ at 10:00 A.M. local time,
no later than the first Business Day following the
satisfaction or waiver of the conditions set forth in
Article VII hereof, or on such other date and at such other
time and place as the Company and Buyer may hereafter
mutually agree upon in writing. The date on which the
Closing is to occur as provided by this subsection (a) is
herein called the "Closing Date" and the time and date on
which the Closing is to occur as provided in this subsection
(a) are herein called the "Closing Time."
(b) At the Closing Time, the Sellers' Designee
shall deliver to Buyer certificates representing each
Seller's Shares duly endorsed or accompanied by stock powers
duly executed, and in form for transfer to Buyer, and Buyer
shall pay to each Seller the Purchase Price for such
Seller's Shares, each such payment to be made by (i) wire
transfer of the Cash Consideration for such Seller's Shares,
in immediately available funds, to such account as the
Seller's Designee may designate, which designation shall
occur not later than the third Business Day prior to the
Closing Date and (ii) delivery to the Sellers' Designee of
certificates representing the Stock Consideration for such
Seller's Shares registered in the name of such Seller, less
(x) any portion of such Seller's Stock Consideration
required to be placed in escrow pursuant to Section 6.14(a),
which portion shall be delivered to the Escrow Agent, and
(y) any portion of such Seller's Cash Consideration equal to
amounts payable by the Company with respect to Taxes
(including withholding, unemployment, social security, and
other Taxes) as a result of the removal of the restrictions
on such Seller's Shares. To the extent that the Cash
Consideration payable to any Seller is insufficient for the
payment of the Taxes described in clause (y) (the
"Shortfall"), such Seller's Stock Consideration shall be
reduced and such Seller's cash consideration shall be
increased, in an amount equal to the amount of the
Shortfall, with each share of the Stock Consideration valued
at the Closing Stock Price. The amount described in clause
(y) and the preceding sentence shall be paid in a timely
fashion to the relevant Tax authority. Buyer, in
consultation and cooperation with the Sellers, shall cause
the payments to be made to the relevant Tax authority of the
Taxes referred to in clause (ii) of the preceding sentence.
Notwithstanding the foregoing requirement of delivery of the
Stock Consideration at the Closing, if Buyer is unable to
deliver certificates representing the Stock Consideration at
Closing, the Closing shall occur in any event, and Buyer
shall deliver such certificates in accordance with the
foregoing as soon as practicable thereafter, but not later
than three Business Days after the Closing Date and no
Seller shall have any right of action against Buyer with
respect to such delivery occurring after the Closing if made
as provided herein.
Section 1.3 Calculation of Stock Consideration in
Shares. Prior to the Closing Time, each Seller's Stock
Consideration in Shares will be determined by dividing his
or her Stock Consideration in Dollars by the Closing Stock
Price, with any resulting fractional share being Rounded.
On the first Business Day following the day which is the
last trading day included in the determination of the
Closing Stock Price, an amended version of Annex A, setting
forth the Stock Consideration in Shares for each Seller
shall be attached to and made a part of this Agreement. The
Company, Buyer and Sellers' Designee shall initial such
amended Annex.
Section 1.4 Adjustments to Prevent Dilution. In
the event that Buyer changes or proposes to change the
number of shares of Buyer Common Stock (or form or nature
thereof), or securities convertible or exchangeable into or
exercisable for shares of Buyer Common Stock, issued and
outstanding prior to the Closing as a result of a stock
split (including a reverse split), stock dividend or
distribution, recapitalization, reclassification, merger,
consolidation, issuer tender or exchange offer or other
similar transaction having a record or effective date prior
to the Closing, then the number of shares of Buyer Common
Stock (or form or nature thereof) required under this
Agreement, the Retiree Agreements and the Employee Award
Agreements to be issued and delivered to the Sellers at the
Closing and the Retirees and employees in accordance with
the terms of their respective agreements shall be, to the
extent appropriate, equitably adjusted.
Section 1.5 Actions of Sellers' Designee and
Sellers' Committee.
(a) Any and all actions to be taken under or in
connection with this Agreement and the Other Transaction
Agreements by or on behalf of the Sellers may be so taken by
▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ and ▇▇▇▇▇▇ ▇. ▇▇▇▇, or any
of them, as attorney-in-fact for the Sellers (each such
Person, when acting in such capacity, being herein called
the "Sellers' Designee"). Any action so taken by the
Sellers' Designee shall be deemed to have been taken, and
Buyer may rely on any such action as having been taken, by
the Sellers. The Sellers' Designee has been duly and
validly appointed by each Seller to act as attorney-in-fact
for such Seller in connection with the transactions
contemplated by this Agreement, including, without
limitation, executing the Escrow Agreements and the
Registration Rights Agreement, and Sellers' Designee has
provided Buyer with satisfactory documentation to such
effect. The Sellers' Agreement, pursuant to which the
Sellers' Designee and the Sellers' Committee was created,
will not be modified in a manner which is inconsistent with
the preceding sentences of this Section 1.5, without Buyer's
consent. The Sellers' Designee and/or the Sellers'
Committee will provide Buyer with a copy of any such
amendment.
(b) Any and all actions to be taken hereunder by
the Sellers' Committee after the Closing may be taken by a
majority of the members at the time of such action. Buyer
may rely on any written action taken after the Closing by a
majority of the members at the time of such action, acting
in their capacity as the Sellers' Committee. The members of
the Sellers' Committee shall initially be ▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ and ▇▇▇▇▇▇ ▇. ▇▇▇▇, but may change (in
number and identity) from time to time upon written notice
given to the Buyer by a majority of the members of the
Sellers' Committee as constituted before such change. The
Sellers' Committee has been duly and validly appointed by
each Seller to act as such for such Seller in connection
with the transactions contemplated by this Agreement and the
Other Transaction Agreements. The Sellers' Committee has
provided Buyer with satisfactory documentation to such
effect.
(c) It is understood and agreed by Buyer that
each Sellers' Designee and each member from time to time of
the Sellers' Committee is acting solely as a representative
of the Sellers and, in such capacity, has no liability or
obligation with respect to any representation, warranty,
covenant or agreement of the Company or Seller in this
Agreement or any of the Other Transaction Agreements, or
with respect to any action taken or omitted to be taken in
connection with the transactions contemplated herein and
therein.
Section 1.6 Substitution of Seller's Estate.
This Agreement and the Other Transaction Agreements executed
by a Seller shall be binding upon and shall inure to the
benefit of the estate, personal representatives,
distributees, heirs, successors or permitted assigns of such
Seller.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as set forth in the corresponding sections
or subsections of the schedule delivered to Buyer by the
Company upon the execution and delivery of this Agreement
(the "Company Disclosure Schedule"), the Company hereby
represents and warrants to Buyer as follows:
Section 2.1 Organization, Authority and
Qualification; Certificate and By-laws.
(a) The Company has been duly incorporated, is
validly existing and is in good standing under the laws of
the State of New Jersey, with full power and authority to
own, lease or operate its assets and to carry on its
business as currently conducted. The Company is duly
qualified as a foreign corporation to do business and is in
good standing in each jurisdiction where the ownership or
operation of its properties and assets or the conduct of its
business requires such qualification, except where the
failure to be so qualified and in good standing, when taken
together with all other such failures, is not reasonably
likely to have a Company Material Adverse Effect.
(b) Set forth in Section 2.1(b)(i) of the Company
Disclosure Schedule is a complete and correct copy of the
Company's certificate of incorporation and by-laws, each as
in effect on the date of this Agreement (the "Current
Company Certificate and By-laws"). Set forth in Section
2.1(b)(ii) of the Company Disclosure Schedule is a complete
and correct copy of the Company's certificate of
incorporation and by-laws, each as will be in effect when
the filing contemplated by Section 6.7 is made and accepted
(the "Amended Company Certificate and By-laws"). The
Current Company Certificate and By-laws are, on the date
hereof, and will continue to be until the Amended Company
Certificate and By-laws become effective, in full force and
effect. The Company has taken all corporate action
(including obtaining the approval of its board of directors
and stockholders (which stockholders' approvals will be
effective not later than the tenth day after the date of
this Agreement)) necessary in order for the Amended Company
Certificate and By-laws to become effective, other than the
filing contemplated by Section 6.7, and upon such filing and
its acceptance, the Amended Company Certificate and By-laws
will be in full force and effect. Except as described in
this subsection (b), the Company has taken no action to
amend the Current Company Certificate and By-laws or the
Amended Company Certificate and By-laws, other than such
amendments as would become effective only if the Closing
failed to occur on the Closing Date.
Section 2.2 Approval, Validity and Fairness.
(a) The Company has all requisite corporate power
and authority and has taken all corporate action necessary
in order to execute, deliver and perform its obligations
under this Agreement and to consummate the transactions
contemplated for it hereby, subject only to the filing and
acceptance contemplated by Section 6.7 and the effectiveness
of the Company's stockholders' approvals which will be
effective not later than the tenth day after the date of
this Agreement. This Agreement is a valid and binding
agreement of the Company enforceable against the Company in
accordance with its terms.
(b) The board of directors of the Company (i) has
approved this Agreement and the transactions contemplated
for the Company hereby and (ii) has received the opinion of
its financial advisors, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated
("▇▇▇▇▇▇ ▇▇▇▇▇▇▇"), to the effect that, as of the date of
their opinion, the Total Purchase Price to be received by
the Sellers in payment for the Total Shares, together with
all amounts to be received by the Retirees under the Retiree
Agreements and by Employees under the Employee Award
Agreements and amounts to be distributed pursuant to Section
6.17, is fair from a financial point of view to the Company,
and a copy of such opinion has been delivered to Buyer. It
is agreed and understood that such opinion is for the
benefit of the Company's board of directors and may not be
relied on by Buyer.
Section 2.3 Subsidiaries of the Company. Section
2.3(i) of the Company Disclosure Schedule lists the name of
each Subsidiary of the Company and, with respect to each
Significant Subsidiary, the jurisdiction of its
organization, the authorized, issued and outstanding number
of shares of its capital stock and the record and beneficial
holder of the shares of its capital stock. Section 2.3(ii)
of the Company Disclosure Schedule lists the name of each
other Subsidiary and each Other Entity, together with the
percentage of the equity or other ownership interests of
such Subsidiary or Other Entity held by the Company,
directly or indirectly. Each Subsidiary of the Company is a
corporation duly organized, validly existing and in good
standing under the laws of its jurisdiction of organization,
with full power and authority to own, lease or operate its
assets and to carry on its business as it is currently being
conducted, and is duly qualified as a foreign corporation to
do business, and is in good standing, in each jurisdiction
where the ownership or operation of its properties and
assets or the conduct of its business requires such
qualification, except where the failure to be so qualified
and in good standing, when taken together with all other
such failures, is not reasonably likely to have a Company
Material Adverse Effect. The Company has made available to
Buyer a complete and correct copy of each of its Significant
Subsidiaries' certificate of incorporation and by-laws, each
as amended to date. Such Significant Subsidiaries'
certificates of incorporation and by-laws so delivered are
on the date of this Agreement, and will be at the Closing
Time, in full force and effect.
Section 2.4 Capitalization.
(a) The authorized capital stock of the Company
consists of 100,000 shares of Company Common Stock, of which
54,965 shares are validly issued and outstanding as of the
close of business on December, 31, 1996 and the date hereof.
All of such outstanding shares have been duly authorized and
are validly issued, fully paid and nonassessable. The
Sellers' Shares, in aggregate, constitute all of the issued
and outstanding shares of capital stock of the Company.
Except for 28,275 shares of Company Common Stock held in
treasury, the Company has no shares of capital stock
reserved for issuance.
(b) Each of the outstanding shares of capital
stock of each of the Company's Significant Subsidiaries is
duly authorized, validly issued, fully paid and
nonassessable and, except for directors' qualifying shares,
is owned by a direct or indirect wholly owned Subsidiary of
the Company, free and clear of all liens, pledges, security
interests, rights of first refusal, claims and other
encumbrances (collectively, "Encumbrances"), in each case
except as reflected in Section 2.3 (with respect to capital
stock not held, directly or indirectly, by the Company).
(c) Except as set forth in Section 2.4(c) of the
Company Disclosure Schedule, there are no preemptive or
other outstanding rights, options, warrants, conversion
rights, stock appreciation rights, agreements, arrangements
or commitments under which the Company or any of its
Significant Subsidiaries is or may become obligated to issue
or sell, or giving any person a right to subscribe for or
acquire, any shares of the capital stock, or any securities
or obligations exercisable or exchangeable for or
convertible into any shares of the capital stock, of the
Company or any of its Significant Subsidiaries. The
aggregate number of Shares identified on Section 2.4(c) of
the Company Disclosure Schedule bear the restrictive legend
set forth therein.
(d) Section 2.4(d) of the Company Disclosure
Schedule sets forth a brief description of, and the names of
all Persons holding any rights existing under the Company's
certificate of incorporation, by-laws or by contract to
receive any payment in respect of any dividend, distribution
or other amount that may become payable by the Company in
respect of its capital stock or other equity related right
of the Company.
Section 2.5 Company Financial Information. Set
forth in Section 2.5 of the Company's Disclosure Schedule is
a copy of (a) the audited consolidated balance sheet of the
Company and its Subsidiaries as of December 31, 1996 and
1995 (the "Company Balance Sheet") and (b) the audited
consolidated statements of income, changes in stockholder's
equity and cash flows of the Company and its Subsidiaries
for the fiscal years ended December 31, 1996 and 1995 (such
statements of income, changes in stockholder's equity and
cash flows with the notes thereto, together with the Company
Balance Sheet, the "Company Financial Information"). The
Company Financial Information has been prepared in
accordance with U.S. generally accepted accounting
principles applied on a consistent basis ("GAAP")(except as
may be noted therein), and present fairly, in all material
respects, the consolidated financial position of the Company
and its Subsidiaries as of December 31, 1996 and 1995, and
the consolidated statements of income, changes in
stockholder's equity and cash flows of the Company and its
Subsidiaries for the fiscal years ended December 31, 1996
and 1995, subject to the notes regarding the matters
reflected therein.
Section 2.6 Absence of Certain Changes or Events.
Except as may be reflected in the Company Financial
Information or set forth in Section 2.6 of the Company
Disclosure Schedule, and except as may be contemplated by
this Agreement and the other Transaction Agreements
(including the payment of any dividend, distribution or
other amount contemplated by Section 6.17), since December
31, 1996 (a) the Company and its Subsidiaries taken as a
whole have conducted their businesses only in, and have not
engaged in any material transaction other than according to,
the ordinary course of such businesses consistent with past
practice and (b) there has not been (i) any adverse change
in the properties, financial condition or results of
operations of the Company and its Subsidiaries taken as a
whole or any development or combination of developments of
which the Company has knowledge that, individually or in the
aggregate, has had or is reasonably likely to have a Company
Material Adverse Effect; (ii) any material damage,
destruction or other casualty loss with respect to any
material asset or property owned, leased, or otherwise used
by the Company or any of its Subsidiaries whether or not
covered by insurance; (iii) any declaration, setting aside
or payment of any dividend or other distribution in respect
of the capital stock of the Company; (iv) any material
change by the Company in accounting principles, practices or
methods; (v) except for increases or amendments in the
ordinary course of business consistent with past practice or
as required-by law, any material increase in the
compensation payable or to become payable by the Company or
any of its Subsidiaries to any of their directors, officers
or employees or any material increase in the benefits under,
or adoption of, any bonus, insurance, pension or other
employee benefit plan, payment or arrangement, for or with
any such directors, officers or employees; (vi) any
terminations or amendment of any Company Material Contract
except for any termination or amendments that, individually
or in the aggregate, are not reasonably likely to have a
Company Material Adverse Effect; or (vii) any agreement,
whether in writing or otherwise, to take any action
described in this Section 2.6 or any action that would
constitute a breach under Section 6.1 hereof.
Section 2.7 Title to Properties; Absence of Liens
and Encumbrances, etc.
(a) Section 2.7(a) of the Company Disclosure
Schedule lists (i) all leases to which the Company or any of
its Subsidiaries is a party as of the date hereof other than
those leases relating to properties of 20,000 square feet or
less (the "Company Lease Agreements"), setting forth in the
case of any such lease covering real property, the location
of such real property, and (ii) all real properties owned by
the Company or any of its Subsidiaries as of the date hereof
(the "Company Owned Real Property"). Except as set forth in
Section 2.7(a) of the Company Disclosure Schedule, each of
the Company and its Subsidiaries has good and valid and, in
the case of the Company Owned Real Property, insurable title
to, or a valid and binding leasehold interest in, all of the
properties and assets owned or leased by the Company or any
of its Subsidiaries free and clear of all Encumbrances,
except for: (i) any Encumbrances reflected in the Company
Financial Information; (ii) any Encumbrances for taxes,
assessments and other governmental charges not yet due and
payable or due but not delinquent or due and being contested
in good faith by appropriate proceedings; (iii) any
mechanics', workmen's, repairmen's, warehousemen's,
carriers' or other similar liens and encumbrances arising in
the ordinary course of business consistent with past
practice or being contested in good faith by appropriate
proceedings (the "Permitted Encumbrances"); and (iv) any
easements, quasi easements, covenants, licenses, rights of
way, land use, zoning or other legal requirements,
ordinances or plans which do not materially detract from the
value of the properties and assets of the Company taken as a
whole for the uses and purposes for which such properties
and assets are currently employed or materially impair the
operations of the Company and which have arisen only in the
ordinary course of business.
(b) The Company Lease Agreements are in full
force and effect. There exists no event of default by the
Company or its Subsidiaries under any such leases or, to the
Company's knowledge, by any third party thereto, nor any
event which with notice or lapse of time or both would
constitute a material event of default by the Company or any
of its Subsidiaries thereunder.
Section 2.8 Company Material Contracts. (a)
Section 2.8 of the Company Disclosure Schedule sets forth
all of the following contracts, agreements, leases,
mortgages, indentures, notes or other obligations whether
oral or written (collectively, "Contracts") to which the
Company or any of its Subsidiaries is a party or otherwise
bound: (i) material Contracts of partnership or joint
venture or with shareholders or a significant business
partner; (ii) all material Contracts with Unison partners;
(iii) all Contracts with Sellers or Retirees; (iv) Contracts
containing material covenants not to compete in any line of
business or with any Person in any geographical area; (v)
Contracts relating to any material acquisition or
divestiture, consummated with the last three years, of any
operating business or assets or capital stock of any Person;
(vi) Contracts relating to the borrowing of money or
guarantee of any payment by a third party in excess of $30
million; (vii) confidentiality Contracts with respect to
information relating to the Company or any of its
Subsidiaries which provide for terms more favorable than the
Company Confidentiality Agreement, including with respect to
the release of obligations as a result of this Agreement or
the transactions contemplated hereby; (viii) any other
Contracts pursuant to the terms of which there is either a
current or future obligation or right of the Company or any
of its Subsidiaries to make payments or incur obligations in
excess of $10 million or receive payments or value in excess
of $10 million which can be cancelled without liability,
premium or penalty only on ninety days or more notice; and
(x) any other Contract which is material (without regard to
dollar value) to the Company and its Subsidiaries taken as a
whole (such Contracts required to be listed in Section 2.8
of the Company Disclosure Schedule being referred to herein
as the "Company Material Contracts").
(b) There have been delivered or made available
to Buyer true, complete and correct copies of all Company
Material Contracts. All Company Material Contracts are
valid and binding upon the Company or one of its
Subsidiaries, in accordance with their terms. There exists
no event of default by the Company or its Subsidiaries under
any such Company Material Contracts or, to the Company's
knowledge, by any third party thereto, nor any event which
with notice or lapse of time or both would constitute a
material event of default by the Company or any of its
Subsidiaries thereunder.
Section 2.9 No Conflict. The execution, delivery
and performance of this Agreement by the Company and the
Sellers do not, and the consummation by the Company, the
Sellers, the Retirees and the employees of the Company of
the transactions contemplated hereby will not, constitute or
result in (a) a breach or violation of, or a default under,
the Current Company Certificate and By-laws (provided that
the Amended Company Certificate and By-laws become effective
as contemplated by Section 2.1(b)) or the Amended Company
Certificate and By-laws (when in effect as contemplated by
Section 2.1(b)), or the certificate and by-laws (or
comparable governing instruments) of any of the Company's
Significant Subsidiaries, (b) except as set forth in Section
2.9(b) of the Company Disclosure Schedule, a breach or
violation of or default under, or the acceleration of any
obligation or the creation of any Encumbrance on the assets
of the Company or any of its Subsidiaries pursuant to, any
Contracts binding upon the Company or any of its
Subsidiaries (in each case with or without notice, lapse of
time or both) or any Law or Governmental or non-governmental
permit or license to which the Company or any of its
Subsidiaries is subject or (c) any change in the rights or
obligations of any party under any of the Contracts
specified in clause (b) above, except, in the case of
clauses (b) and (c) above, for any breaches, violations,
defaults, accelerations, creations or changes that,
individually or in the aggregate, are not reasonably likely
to have a Company Material Adverse Effect or prevent,
materially burden or materially impair the ability of the
Company and the Sellers to consummate the transactions
contemplated by this Agreement and subject, in the case of
clause (b) above, to the matters referred to in Section 2.10
and set forth in Section 2.9 of the Company Disclosure
Schedule.
Section 2.10 Governmental Filings; No Violations.
Other than filings and/or notices (a) under the HSR Act,
(b) pursuant to the state insurance brokerage laws of New
York, California and Texas and similar laws in other states
of the United States, (c) with the New Jersey Secretary of
State as contemplated by Section 6.7, (d) pursuant to the
Exchange Act and Investment Advisors Act with respect to
broker-dealer and investment advisory registrations
maintained by ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ Securities, Inc., (e)
notification to Lloyds, the Insurance Brokers Registration
Council and the U.K. P.I.A. of a change in ownership of the
Company, and (f) pursuant to other applicable foreign laws,
no notices, reports or other filings are required to be made
by the Company and its Subsidiaries, the Sellers or Retirees
or employees of the Company with, nor are any consents,
registrations, approvals, permits or authorizations required
to be obtained by the Company and its Subsidiaries or the
Sellers from, any governmental or regulatory authority,
agency, commission, body or other governmental entity
("Governmental Entity"), in connection with the execution
and delivery of this Agreement by the Company and the
Sellers and the consummation by the Company, the Sellers,
the Retirees and the employees of the Company of the
transactions contemplated hereby, except those that the
failure to make or obtain is not, individually or in the
aggregate, reasonably likely to have a Company Material
Adverse Effect or prevent, materially burden or materially
impair the ability of the Company or the Sellers to
consummate the transactions contemplated by this Agreement.
Section 2.11 Litigation and Liabilities. Except
as disclosed in the Company Financial Information or set
forth in Section 2.11 of the Company Disclosure Schedule,
there are no (a) civil, criminal or administrative actions,
suits, claims, hearings, investigations or proceedings
pending or, to the knowledge of the Company, threatened
against the Company or any of its Subsidiaries or (b)
obligations or liabilities, whether or not accrued,
contingent or otherwise, including those relating to matters
involving any Environmental Law, or any other facts or
circumstances of which the Company has knowledge that could
result in any claims against or obligations or liabilities
of the Company or any of its Subsidiaries, except, in the
case of clauses (a) and (b), for those that are not,
individually or in the aggregate, reasonably likely to have
a Company Material Adverse Effect or prevent, materially
burden or materially impair the ability of the Company and
the Sellers to consummate the transactions contemplated by
this Agreement. In addition, the actions enumerated on
Section 2.11 of the Company Disclosure Schedule (excluding
the EEOC Action identified by an asterisk), net of any
insurance recoveries, are not, individually or in the
aggregate, reasonably likely to have a Company Material
Adverse Effect. Neither the Company nor any of its
Subsidiaries is subject to any judgment, order, decree or
arbitration award of any Governmental Entity that,
individually or in the aggregate, is reasonably likely to
have a Company Material Adverse Effect or prevent,
materially burden or materially impair the ability of the
Company and the Sellers to consummate the transactions
contemplated by this Agreement.
Section 2.12 Compliance with Law; Permits. The
businesses of each of the Company and its Subsidiaries have
not been, and are not being, conducted in violation of any
law, ordinance, regulation, judgment, order, decree,
arbitration award, license or permit of any Governmental
Entity (collectively, "Laws"), except for violations or
possible violations that, individually or in the aggregate,
are not reasonably likely to have a Company Material Adverse
Effect or prevent, materially burden or materially impair
the ability of the Company and the Seller to consummate the
transactions contemplated by this Agreement. No
investigation or review by any Governmental Entity with
respect to the Company or any of its Subsidiaries is pending
or, to the knowledge of the Company, threatened, nor has any
Governmental Entity indicated an intention to conduct the
same, except for those the outcome of which, individually or
in the aggregate, are not reasonably likely to have a
Company Material Adverse Effect or prevent, materially
burden or materially impair the ability of the Company and
the Seller to consummate the transactions contemplated by
this Agreement. The Company and its Subsidiaries each has
all permits, licenses, franchises, variances, exemptions,
orders and other governmental authorizations, consents and
approvals necessary to conduct its business as currently
conducted except those the absence of which, individually or
in the aggregate, are not reasonably likely to have a
Company Material Adverse Effect or prevent, materially
burden or materially impair the ability of the Company and
the Seller to consummate the transactions contemplated by
this Agreement.
Section 2.13 Takeover Statutes. No "fair price,"
"moratorium," "control share acquisition" or other similar
anti-takeover statute or regulation (including the New
Jersey Stockholders Protection Act or Section 203 of the
Delaware General Corporation Law) in effect on the date
hereof (each a "Takeover Statute") is or at the Closing Time
will be, and when the Amended Company Certificate and By-
laws are in effect as contemplated by Section 2.1(b), no
applicable anti-takeover provision in the Company's
certificate of incorporation and by-laws at the Closing Time
will be, applicable to the Company, the Shares or the
transactions contemplated by this Agreement.
Section 2.14 Tax Matters.
(a) Except as set forth in Section 2.14 of the
Company Disclosure Schedule, as reflected in the Company
Financial Information or, with respect to clauses (a), (b),
(c), (e), (i), (n) and (p), which are not reasonably likely,
individually or in the aggregate, to have a Company Material
Adverse Effect: (a) the Company and each of its Subsidiaries
(i) have prepared in good faith and duly and timely filed
all Tax Returns required to be filed by any of them and all
such filed Tax Returns are complete and accurate in all
respects, (ii) have paid all Taxes that are required to be
paid or that the Company or any of its Subsidiaries are
obligated to withhold from amounts owing to any employee,
creditor or third party, except with respect to matters
contested in good faith, and (iii) have not waived any
statute of limitations with respect to Taxes or agreed to
any extension of time with respect to a Tax assessment or
deficiency; (b) there are not pending or threatened in
writing, any audits, examinations, investigations or other
proceedings in respect of Taxes or Tax matters; (c) there
are no Encumbrances for Taxes upon the assets or properties
of any of the Company or its Subsidiaries except for
statutory liens for Taxes not yet due; (d) the Tax Returns
of the Company and its Subsidiaries for the taxable periods
ended before December 31, 1992 have been examined by the
appropriate Governmental Entity (or the applicable statute
of limitations for the assessment of Taxes for such periods
has expired) and, without regard to whether or not
reasonably likely to have a Company Material Adverse Effect,
a list of all audits, examinations or investigations
commenced or completed with respect to the Company or its
Subsidiaries commenced with respect to Taxable periods
ending after January 1, 1992 is set forth on Section 2.14 of
the Company Disclosure Schedule; (e) none of the Company or
any of its Subsidiaries is a party to, is bound by, or has
any obligation under, any Tax sharing agreement, Tax
indemnification agreement or similar contract or
arrangement, and none of the Company or any of its
Subsidiaries has any potential liability or obligation to
any person as a result of, or pursuant to, any such
agreement, contract or arrangement; (f) no power of attorney
has been granted by or with respect to the Company or any of
its Subsidiaries with respect to any matter relating to
Taxes; (g) none of the Company or any of its Subsidiaries is
a party to any agreement, plan, contract or arrangement
(whether oral or in writing) that would result, separately
or in the aggregate, in the payment of any "excess parachute
payments" within the meaning of Section 280G of the Code;
(h) no amounts paid by the Company or any of its
Subsidiaries to any ERISA Plan would fail to be deductible
under Sections 404 or 404A of the Code; (i) all Tax
deficiencies which have been claimed, proposed or asserted
against any of the Company or its Subsidiaries have been
fully paid or finally settled, and no issue has been raised
in any examination by any Tax authority, which, by
application of similar principles, could reasonably be
expected to result in the proposal or assertion of a Tax
deficiency for another year not so examined; (j) none of the
Company or any of its Subsidiaries has or will acquire on or
before the Closing any "investment in United States
property" within the meaning of Section 956 of the Code; (k)
none of the Company or any its Subsidiaries has any deferred
intercompany gain or loss arising as a result of a deferred
intercompany transaction within the meaning of Treasury
Regulation Section 1.1502-13 (or similar provision under
state, local or foreign law) or any excess loss accounts
within the meaning of Treasury Regulation Section 1.1502-19;
(l) none of the Company or any of its Subsidiaries has
derived in any prior taxable years or derives in the current
taxable year any amounts includible in income under Section
951(a)(1)(A) of the Code; (m) the Company, as the common
parent of an affiliated group of corporations (as defined in
Section 1504 of the Code) consisting solely of the Company
and its Subsidiaries, has filed since December 31, 1987 or
earlier a consolidated return for United States federal
income tax purposes on behalf of itself and all of its
Subsidiaries that are "includible corporations" (within the
meaning of Section 1504(b) of the Code) and none of the
Company or its Subsidiaries has been a member of an
affiliated group (or similar state or local filing group)
other than the group in which the Company is the Common
Parent; (n) the Company and each of its Subsidiaries have
receipts or other appropriate documentation for all foreign
taxes, charges, fees, levies or other assessments paid or
accrued from January 1, 1992; (o) the Company is not and has
not been a United States real property holding corporation
(as defined in Section 897(c)(2) of the Code) during the
applicable period specified in Section 897(c)(1)(ii) of the
Code; and (p) with respect to each Subsidiary of the Company
that is a partnership for United States federal income tax
purposes (i) each such partnership has complied with all
applicable requirements of the Code, including but not
limited to the registration and investor list requirements
applicable to tax shelters; (ii) all partnership allocations
currently have and have had substantial economic effect for
United States federal income tax purposes and otherwise
satisfy or have satisfied the requirements under the Code;
and (iii) the capital account for no partner has a deficit.
There are not unresolved questions or claims concerning the
Company's or any of its Subsidiaries' Tax liability that
would have a Company Material Adverse Effect. Other than
any Tax Returns which have not yet been required to be
filed, the Company has made available to Buyer true and
correct copies of the United States federal income Tax
Return and any state, local or foreign Tax Return for any
jurisdiction that represents five percent or more of the
aggregate Taxable income of the Company and its Subsidiaries
as filed by the Company and any of its Subsidiaries for each
of the taxable years ended December 31, 1995, 1994, 1993,
and 1992.
(b) Section 2.14 of the Company Disclosure
Schedule sets forth (i) all material elections with respect
to Taxes of each of the Company and its Subsidiaries and
(ii) all foreign, state and local jurisdictions in which
each of Company and its Subsidiaries is or has been subject
to Tax and each material type of Tax payable in such
jurisdiction during the taxable year ended December 31,
1996.
(c) The Company has previously delivered or made
available to Buyer complete and accurate copies of each of
(i) all audit reports, letter rulings, technical advice
memoranda, and similar documents issued by a governmental
authority relating to the United States federal, state,
local or foreign Taxes due from or with respect to any of
the Company or its Subsidiaries and (ii) any closing
agreements entered into by any of the Company or its
Subsidiaries with any Tax authority in each case existing on
the date hereof. The Company will deliver to Buyer all
materials with respect to the foregoing for all matters
arising after the date hereof. Neither the Company nor any
of its Subsidiaries has any liability with respect to
income, franchise or similar Taxes that accrued on or before
December 31, 1996 in excess of the amounts that are accrued
with respect thereto and are reflected in the Company
Financial Information, except where the failure to be so
accrued would not be reasonably likely to have a Company
Material Adverse Effect, and from the date of the Company
Financial Information, none of the Company or any of its
Subsidiaries has incurred any liability for Taxes other than
in the ordinary course of business.
(d) As used in this Agreement, (i) the term "Tax"
(including, with correlative meaning, the terms "Taxes" and
"Taxable") includes all federal, state, local and foreign
taxes, including without limitation, income, windfall,
profits, gains, franchise, gross receipts, transfer,
license, environmental, customs duty, capital stock,
severance, stamp, payroll, sales, employment, unemployment,
disability, use, property, withholding, excise, production,
value added, occupancy and other taxes, duties or
assessments of any nature whatsoever, together with all
interest, penalties and additions imposed with respect to
such amounts and any interest in respect of such penalties
and additions, and (ii) the term "Tax Return" includes all
returns and reports (including elections, declarations,
disclosures, schedules, estimates and information returns)
required to be supplied to a Tax authority relating to
Taxes.
(e) The Company represents that Annex A sets
forth (i) the name of each individual holding shares of
Company Common Stock the restrictions (other than those
referred to in Section 2.4(c)) with respect to which will be
removed prior to Closing upon the execution of the Agreement
by persons owning more than seventy-five percent of the
voting power of the Company Common Stock and (ii) the amount
of all payments to be received by each such individual (in
cash or otherwise) upon a change in the ownership or control
of the Company.
Section 2.15 Labor Matters. Except as set forth
in Section 2.15 of the Company Disclosure Schedule, neither
the Company nor any of its Subsidiaries is a party to or
otherwise bound by any collective bargaining agreement,
contract or other agreement or understanding with a labor
union or labor organization, nor, as of the date hereof, is
the Company or any of its Subsidiaries the subject of any
proceeding asserting that the Company or any of its
Subsidiaries has committed an unfair labor practice or is
seeking to compel it to bargain with any labor union or
labor organization nor is there pending or, to the knowledge
of the Company, threatened, nor has there been for the past
five years, any labor strike, dispute, walkout, work
stoppage, slow-down or lockout involving the Company or any
of its Subsidiaries. The Company has previously made
available to Buyer correct and complete copies of all labor
and collective bargaining agreements to which the Company or
any of its Subsidiaries is party or by which any of them are
otherwise bound.
Section 2.16 Employee Matters.
(a) The term "Company Compensation and Benefit
Plans" shall include each bonus, deferred compensation,
pension, retirement, profit-sharing, thrift, savings,
employee stock ownership, stock bonus, stock purchase,
restricted stock, stock option, phantom stock, employment,
termination, severance, change of control, compensation,
incentive, medical, health, death benefit, dependent care,
disability, cafeteria, scholarship or other plan, agreement,
policy, arrangement or commitment that covers employees,
directors, former employees or former directors (or any
dependents or beneficiaries of any of them) of the Company
and its Subsidiaries or with respect to which the Company or
any of its Subsidiaries may have any liability. A complete
and correct copy of each Company Compensation and Benefit
Plan covering current U.S. employees of the Company and its
Subsidiaries and any trust, agreement or insurance contract
forming a part of such Company Compensation and Benefit
Plans has been made available to Buyer prior to the date
hereof. Such Company Compensation and Benefit Plans are
listed in Section 2.16(a) of the Company Disclosure Schedule
and any "change of control" or similar provisions therein
are specifically identified in Section 2.16(a) of the
Company Disclosure Schedule. Neither the Company nor its
Subsidiaries has any formal commitment, nor has it
communicated to any employee its intention, to modify or
change any Compensation and Benefit Plan (other than as
required by law) or to establish any new plan. With respect
to each such Company Compensation and Benefit Plan, the
Company has delivered or otherwise made available to Buyer
complete and correct copies of each of the following
documents, if applicable: (a) the annual report for the last
six years; (b) the actuarial report carried out on the FAS
87 basis for the last three years; (c) the most recent
summary plan description, together with each summary of
material modifications; (d) the most recent determination
letter received from the IRS or, for plans outside the U.S.,
from the appropriate governmental agency; (e) forms filed
with the PBGC for the last six years; (f) Form 5310 or Form
5330 filed with the IRS in the last six years; (g) the most
recent nondiscrimination tests performed under ERISA and the
Code (including for purposes of compliance with Code
Sections 401(a)(4), 401(k), 401(m) and 410(b)); (h) all
minutes of meetings in the past six years of any committee
or trustee body established to administer such Plan; (i) all
correspondence within the last three years with the PBGC,
IRS, United States Department of Labor or other governmental
agency.
(b) Each Company Compensation and Benefit Plan
has been operated and administered substantially in
accordance with its terms and with all applicable law,
including the Code and the Employee Retirement Income
Security Act of 1974, as amended ("ERISA") and all notices,
filings and disclosures required under ERISA or the Code or
other applicable law have been timely made. Each Company
Compensation and Benefit Plan that is an "employee pension
benefit plan" within the meaning of Section 3(2) of ERISA (a
"Company Pension Plan") and that is subject to Section 201,
301 or 401 of ERISA has received a favorable determination
letter from the IRS, and the Company is not aware of any
circumstances likely to result in revocation of any such
favorable determination letter. There is no pending or, to
the knowledge of the Company, threatened material litigation
relating to the Company Compensation and Benefit Plans.
Neither the Company nor any Subsidiary nor any fiduciary or
administrator of any Company Compensation and Benefit Plan
has engaged in a transaction with respect to any Company
Compensation and Benefit Plan that, assuming the taxable
period of such transaction expired as of the date hereof,
would subject the Company or any of its Subsidiaries to a
material tax, penalty or liability.
(c) As of the date hereof, no liability under
Title IV of ERISA has been or is expected to be incurred by
the Company, or any Subsidiary or any ERISA Affiliate (as
defined below) with respect to any ongoing, frozen or
terminated "single-employer plan," within the meaning of
Section 4001(a)(15) of ERISA, currently or formerly
maintained by any of them, or with respect to any plan of
any entity (an "ERISA Affiliate") which is, as of the date
hereof, or was considered one employer with the Company or
any of its Subsidiaries under Section 4001 of ERISA or
Section 414 of the Code (an "ERISA Affiliate Plan").
Neither the Company nor any Subsidiary has or will have any
material liability (contingent or otherwise, including,
without limitation, any obligation for taxes, penalties,
contributions, losses, claims, damages, judgments,
settlement costs, expenses or costs) of any nature
whatsoever arising out of or relating to any ERISA Affiliate
Plan. Neither the Company nor its Subsidiaries nor any
ERISA Affiliate has contributed, or been obligated to
contribute, to a multiemployer plan under Subtitle E of
Title IV of ERISA at any time since September 26, 1980. No
notice of a "reportable event," within the meaning of
Section 4043 of ERISA for which the 30-day reporting
requirement has not been waived, has been required to be
filed for any Company Pension Plan or any ERISA Affiliate
Plan within the 12-month period ending on the date hereof or
will be required to be filed in connection with the
transactions contemplated by this Agreement.
(d) All contributions required to be made under
the terms of any Company Compensation and Benefit Plan for
all periods through the date hereof have been timely made
and have been reflected in the Company Financial Information
in accordance with GAAP. Neither any Company Pension Plan
nor ERISA Affiliate Plan has an "accumulated funding
deficiency" (whether or not waived) within the meaning of
Section 412 of the Code or Section 302 of ERISA. Neither
the Company nor its Subsidiaries has provided, or is
required to provide, security to any Company Pension Plan or
to any ERISA Affiliate Plan pursuant to Section 401(a)(29)
of the Code. No Company Pension Plan or ERISA Affiliate
Plan has a "liquidity shortfall" as defined in Section
412(m)(5) of the Code. No notice has been required under
Section 4011 of ERISA with respect to any Company Pension
Plan or any ERISA Affiliate Plan.
(e) Under each Company Pension Plan which is a
single-employer plan subject to Title IV of ERISA, as of the
last day of the most recent plan year ended prior to the
date hereof, the actuarially determined present value of all
"benefit liabilities," within the meaning of Section
4001(a)(16) of ERISA (as determined on the basis of the
actuarial assumptions contained in the Company Pension
Plan's most recent actuarial valuation), did not exceed the
then current value of the assets of such Company Pension
Plan, and there has been no material change in the financial
condition of such Company Pension Plan since the last day of
the most recent plan year. Except as set forth in the
financial statements for the Company Compensation and
Benefit Plans, and except as set forth in Section 2.16(e) of
the Company Disclosure Schedule, the assets of each Company
Compensation and Benefit Plan consist solely of cash and
readily marketable securities traded on a recognized
exchange.
(f) Neither the Company nor its Subsidiaries have
any obligations for retiree health, life or other welfare
benefits under any Company Compensation and Benefit Plan,
covering current or former U.S. employees of the Company and
its Subsidiaries except as set forth in Section 2.16(a) of
the Company Disclosure Schedule. The Company or its
Subsidiaries may amend or terminate any such plan at any
time without incurring any material liability thereunder.
(g) Except as set forth in Section 2.16(g) of the
Company Disclosure Schedule, the consummation of the
transactions contemplated by this Agreement will not (i)
entitle any employees of the Company or its Subsidiaries to
severance pay or any other payment, (ii) accelerate the time
of payment or vesting or trigger any payment of compensation
or benefits under, or increase the amount payable or trigger
any other material obligation pursuant to, any of the
Company Compensation and Benefit Plans or (iii) result in
any breach or violation of, or a default under, any of the
Company Compensation and Benefit Plans covering current or
former U.S. employees of the Company and its Subsidiaries.
(h) All Company Compensation and Benefit Plans
covering current or former non-U.S. employees of the Company
and its Subsidiaries comply in all material respects with
applicable local law. Except as set forth in Section
2.16(h) of the Company Disclosure Schedule, with respect to
such Plans taken as a whole, the Company and its
Subsidiaries have no material unfunded liabilities. The
present value of annual benefits under the Company's U.K.
pension plans will not exceed the value of their assets as
at April 1, 1997, based on the assumptions to be used for
the purposes of the minimum funding requirement pursuant to
Section 56 of the Pensions ▇▇▇ ▇▇▇▇. The projected benefit
obligation determined on the FAS 87 basis for the Company's
pension plans do not exceed plan assets measured on that
same FAS 87 basis.
(i) No amounts payable under the Company
Compensation and Benefit Plans or any other agreement or
arrangement to which the Company, any Subsidiary or any
ERISA Affiliate is a party will, fail to be deductible for
federal income tax purposes by virtue of section 280G of the
Code.
(j) Neither the Company nor any of its officers
or employees, nor any fiduciary of any Company Compensation
and Benefit Plan has made or will make any material written
or oral representation to any employee or any participant in
any such Plan prior to the Closing concerning the
transactions contemplated hereby that are inconsistent with
the provisions of this Agreement.
Section 2.17 Environmental Matters. Except for
such matters that, alone or in the aggregate, are not
reasonably likely to have a Company Material Adverse Effect,
each of the Company and its Subsidiaries: (i) is in
compliance with applicable Environmental Laws; (ii) has not
received any written notices from any Governmental Entity
alleging the violation of any applicable Environmental Law;
(iii) is not the subject of any order, injunction or decree
of any Governmental Entity arising under any Environmental
Law; and (iv) has not generated, stored, used, emitted,
discharged or disposed of any Hazardous Substance except as
permitted under applicable Environmental Laws.
"Environmental Law" means any law, regulation,
code, license, permit, order, decree or injunction relating
to the protection of the environment (including air, water,
soil and natural resources) or the use, storage, handling,
release or disposal of any hazardous or toxic substance.
"Hazardous Substance" means any substance listed,
defined, designated or classified as hazardous, toxic or
radioactive under any applicable Environmental Law,
including petroleum and any derivative or by-products
thereof.
Section 2.18 Intellectual Property.
(a) The Company and/or each of its Subsidiaries
owns, or is licensed or other-wise possesses legally
enforceable rights to use all patents, trademarks, trade
names, service marks, copyrights (and applications
therefor), technology, know-how, computer software programs,
applications and tangible and intangible proprietary
information and materials that are used in the business of
the Company and its Subsidiaries as currently conducted,
except for any such failures to own, be licensed or possess
that, individually or in the aggregate, are not reasonably
likely to have a Company Material Adverse Effect, and to the
knowledge of the Company, all patents, trademarks, trade
names, service marks and copyrights held and used in the
business currently conducted by the Company and/or its
Subsidiaries are valid and subsisting. The foregoing not
withstanding, the Company has full and exclusive rights to
the name "▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇" in every jurisdiction in which
the Company or one of its Subsidiaries has an office.
(b) Except as disclosed in Section 2.18 of the
Company Disclosure Schedule or as is not reasonably likely
to have a Company Material Adverse Effect:
(i) the Company is not, nor will it be as a
result of the execution, delivery or performance
of this Agreement by it or the Seller, in
violation of any licenses, sublicenses and other
agreements as to which the Company is a party and
pursuant to which the Company is authorized to use
any third-party patents, trademarks, service marks
or copyrights ("Third-Party Intellectual Property
Rights");
(ii) no claims with respect to (I) the patents,
registered and material unregistered trademarks
and service marks, registered copyrights, trade
names, and any applications therefor owned by the
Company or any its Subsidiaries (the "Company
Intellectual Property Rights"); (II) any trade
secret material to the Company; or
(III) Third-Party Intellectual Property Rights are
currently pending or, to the knowledge of the
Company, are threatened by any Person;
(iii) the Company does not know of any valid
grounds for any bona fide claims (I) to the effect
that the use, sale or licensing of any product as
now used, sold or licensed or proposed for use,
sale or license by the Company or any of its
Subsidiaries, infringes on any copyright, patent,
trademark, service ▇▇▇▇ or trade secret; (II)
against the use by the Company or any of its
Subsidiaries, of any trademarks, trade names,
trade secrets, copyrights, patents, technology,
know-how or computer software programs and
applications used in the business of the Company
or any of its Subsidiaries as currently conducted
or as proposed to be conducted; (III) challenging
the ownership, validity or effectiveness of any of
the Company Intellectual Property Rights or other
trade secret material to the Company; or (IV)
challenging the license or legally enforceable
right to use of the Third-Party Intellectual
Rights by the Company or any of its Subsidiaries;
and
(iv) to the knowledge of the Company, there is no
unauthorized use, infringement or misappropriation
of any of the Company Intellectual Property Rights
by any third party, including any employee or
former employee of the Company or any of its
Subsidiaries.
Section 2.19 Insurance. Section 2.19 of the
Company Disclosure Schedule lists all material insurance
policies maintained by or on behalf of the Company or any of
its Subsidiaries and, except as are not reasonably likely to
have a Company Material Adverse Effect, (i) such insurance
policies are in full force and effect, (ii) the Company or
its Subsidiary, as the case may be, is not in default
thereunder, (iii) all claims thereunder have been filed in
due and timely fashion and (iv) all such policies will
remain in full force and effect after the Closing Time,
unaffected by the transaction contemplated hereby.
Section 2.20 Brokers and Finders. None of the
Company, its officers, directors and employees and the
Sellers has employed any broker or finder or incurred any
liability for any brokerage fees, commissions or finders
fees in connection with the transactions contemplated in
this Agreement, except that the Company has employed ▇▇▇▇▇▇
▇▇▇▇▇▇▇ as its financial advisor, the arrangements with
which have been disclosed to Buyer prior to the date hereof.
Section 2.21 Company Employees. To the best
knowledge of the Company, as of the date of this Agreement,
no employee or group of employees of the Company or any of
its Subsidiaries who is or are responsible for a material
business operation of the Company and its Subsidiaries, has
or have delivered any notice of termination or indicated
that he or she is or they are considering such an action.
Section 2.22 Information in Registration
Statement. None of the information supplied or to be
supplied by the Company or any of its Subsidiaries prior to
the Closing expressly for the purpose of inclusion or
incorporation by reference in any registration statements to
be filed with the SEC by Buyer in respect of registration of
Buyer Common Stock to be issued in connection with the
transactions contemplated by this Agreement, the
Registration Rights Agreement or the Other Transaction
Documents (the "Registration Statements") will, at the time
it is filed with the SEC and at the time it becomes
effective under the Securities Act, contain any untrue
statement of a material fact or omit to state any material
fact required to be stated therein to make the statements
therein, in light of the circumstances under which they were
made, not misleading; provided that the Company makes no
representation and warranty with respect to any information
provided, or related to periods commencing on or after the
Closing.
Section 2.23 Financial Condition. On the Closing
Date, the Company will have not less than $75 million of
Working Capital ("Working Capital" shall mean the total
current assets of the Company and its Subsidiaries less the
total current liabilities of the Company and its
Subsidiaries (exclusive of net Excess Reserves, which shall
equal the Excess Reserves net of any Tax related
adjustment)).
Section 2.24 Non-Signing Stockholders and
Retirees.
(a) No Retiree who does not execute and
deliver a Retiree Agreement will be entitled to receive, by
reason of the several sales of Shares by the Sellers to
Buyer at the Closing, any consideration for his or her Ten
Year Contract in an amount greater than the consideration
such Retiree would have been entitled to receive under the
Retiree Agreement contemplated for him or her in
Section 6.5(d).
(b) No stockholder or retiree of the Company
shall have any right to any payments under Section 6.17
other than as specified by the Sellers' Designee or the
Sellers' Committee, as the case may be.
Section 2.25 No Other Representations or
Warranties. Except for the representations and warranties
contained in this Article II, neither the Company nor any
other Person on behalf of the Company makes any other
express or implied representation or warranty.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE SELLERS
Each Seller, solely as to himself or herself,
represents and warrants to Buyer as follows:
Section 3.1 Execution, Delivery, Validity and
Enforceability of Agreements.
(a) This Agreement has been duly executed and
delivered by such Seller and constitutes a legal, valid and
binding obligation of such Seller, enforceable against such
Seller in accordance with its terms, subject to general
equity principles.
(b) Each of the Other Transaction Agreements to
which such Seller will become a party at the Closing
pursuant to this Agreement, when executed and delivered by
or on behalf of such Seller, will have been duly executed
and delivered by such Seller and will constitute a legal,
valid and binding obligation of such Seller, enforceable
against such Seller in accordance with its terms, subject to
general equity principles.
Section 3.2 Ownership of Shares. Immediately
prior to Closing such Seller will have good and valid title
to Shares to be sold by such Seller hereunder, free and
clear of all Encumbrances, and upon delivery of such Shares
by such Seller and payment therefor by Buyer at the Closing
pursuant hereto, good and valid title to such Seller's
Shares, free and clear of all Encumbrances (other than those
that do not arise by action of or with respect to such
Seller) will pass to Buyer. Upon payment of the Purchase
Price for such Seller's Shares, all such Seller's rights
with respect to any equity interest in the Company and any
claim against the Company shall be extinguished (other than
in Seller's capacity as an employee of the Company for
accrued employee benefits).
Section 3.3 Acquisition for Investment, etc.
(a) Such Seller is an "accredited investor"
within the meaning of Rule 501 promulgated under the
Securities Act and such Seller has such knowledge and
experience in financial and business matters that he is
capable of evaluating the merits and risks of his investment
in Buyer Common Stock.
(b) Such Seller is acquiring the Buyer Common
Stock not with a view toward or for resale in connection
with any distribution thereof, or with any intention of
distributing or selling Buyer Common Stock in violation of
the Securities Act, and Seller will not sell or offer to
sell or otherwise transfer Buyer Common Stock in violation
of the Securities Act.
(c) Such Seller acknowledges that representatives
of the Sellers have been, on behalf of all Sellers, provided
an opportunity to examine all documents and ask questions
of, and has received answers thereto from, Buyer and its
representatives regarding the business, management, and
financial affairs of Buyer and its subsidiaries, and such
representatives have obtained all traditional information
requested by them of Buyer and its Subsidiaries and their
respective representatives to verify the accuracy of all
information furnished to them regarding the acquisition of
Buyer Common Stock.
(d) Such Seller understands that (i) the Buyer
Common Stock has not been registered under the Securities
Act, by reason of its issuance in a transaction exempt from
the registration requirements of the Securities Act pursuant
to Section 4(2) thereof, (ii) the Buyer Common Stock must be
held indefinitely unless a subsequent disposition thereof is
registered under the Securities Act or is exempt from such
registration, (iii) the certificates representing shares of
Buyer Common Stock shall bear a legend to such effect (as
set forth in Section 7 of the Registration Rights
Agreement), and (iv) Buyer will make a notation on its
transfer books to such effect.
(e) Such Seller will provide any information
reasonably requested by Buyer to enable Buyer to file a Form
D with the SEC under Securities Act.
Section 3.4 No Conflict. The execution, delivery
and performance of this Agreement by such Seller does not,
and the consummation by such Seller of the transactions
contemplated for him or her hereby will not, constitute or
result in (a) a breach or violation of or default under, or
the acceleration of any obligation or the creation of any
Encumbrance on the assets of such Seller pursuant to, any
Contracts binding upon such Seller (in each case with or
without notice, lapse of time or both) or any Law or
Governmental or non-governmental permit or license to which
such Seller is subject or (b) any change in the rights or
obligations of any party under any of the Contracts
specified in clause (a) above, other than in each instance
under clause (a) or (b) that, individually or in the
aggregate, would not materially burden or impair the ability
of such to consummate such transactions.
Section 3.5 Approval of Change in Control
Payments. (a) Each Seller has consented and cast his or
her separate vote (within the meaning of Code Section
280G(b)(5)(B)(i) and the proposed Treasury Regulations
issued thereunder) approving the right of any person who is
a disqualified individual (within the meaning of Code
Section 280G(c) and the proposed Treasury Regulations issued
thereunder) to receive and/or retain the payments made in
connection with and as a result of the transactions
contemplated by this Agreement, the Employee Award
Agreements and the Retiree Agreements.
(b) For purposes of the vote described in Section
3.5(a), each Seller has been provided with adequate
disclosure of all material facts (within the meaning of Code
Section 280G(b)(5)(B)(ii) and the proposed Treasury
Regulations issued thereunder) concerning the payments made
(or to be made) to disqualified individuals in connection
with and as a result of the transactions contemplated by
this Agreement, the Employee Award Agreements and the
Retiree Agreements.
(c) Each Seller has reviewed and is familiar with
the information set forth in Annex A and the transactions
resulting in the receipt, whether actually or
constructively, by the persons named in Annex A of the
amounts set forth therein.
Section 3.6 No Other Representations or
Warranties. Except for the representations and warranties
of such Seller contained in this Article III, neither such
Seller nor any other Person on behalf of such Seller makes
any other express or implied representation or warranty.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER
Except as set forth in the corresponding sections
or subsections of the schedule delivered to the Company by
Buyer upon the execution and delivery of this Agreement (the
"Buyer Disclosure Schedule") or as disclosed in a Buyer
Report filed prior to the date hereof, Buyer represents and
warrants to the Company and each of the Sellers as follows:
Section 4.1 Organization, Authority and
Qualification; Certificate and By-laws.
(a) Buyer has been duly incorporated, is validly
existing and is in good standing under the laws of the State
of Delaware, with full power and authority to own or lease
its assets and to carry on its business as currently
conducted. Buyer is duly qualified as a foreign corporation
to do business and is in good standing in each jurisdiction
where the ownership and operation of its properties and
assets or the conduct of its business requires such
qualification, except where the failure to be so qualified
and in good standing, when taken together with all other
such failures, is not reasonably likely to have a Buyer
Material Adverse Effect. A complete and correct copy of
Buyer's certificate of incorporation and by-laws, each as in
effect on the date of this Agreement are filed as exhibits
to the Buyer Reports. Buyer's certificate of incorporation
and by-laws are, on the date hereof, and will continue to be
at the Closing Time, in full force and effect.
Section 4.2 Approval, Validity and Fairness.
(a) Buyer has all requisite corporate power and
authority and has taken all corporate action necessary in
order to execute, deliver and perform its obligations under
each of this Agreement and the Other Transaction Agreements
and to consummate the transactions contemplated for it
hereby and thereby, and no vote of the holders of the
capital stock of Buyer is necessary under any Law (subject
to the provisions of Section 6.3(f)), or Buyer's certificate
of incorporation and by-laws in connection with such
execution, delivery, performance and consummation. Each of
this Agreement and the Other Transaction Agreements is a
valid and binding agreement of Buyer enforceable against
Buyer in accordance with its terms.
(b) The board of directors of Buyer has approved
each of this Agreement and the Other Transaction Agreements
and the transactions contemplated for Buyer hereby and
thereby.
(c) Buyer has taken all necessary corporate
action to permit it to issue the Buyer Common Stock required
to be issued as part of the Total Purchase Price for the
Total Shares and pursuant to the Other Transaction
Agreements. All such Buyer Common Stock, when issued, will
be validly issued, fully paid and nonassessable, and no
stockholder of Buyer will have any preemptive right of
subscription or purchase in respect thereof.
Section 4.3 Subsidiaries of Buyer. Each
Significant Subsidiary of Buyer is a corporation duly
organized, validly existing and in good standing under the
laws of its jurisdiction of organization, has the power and
authority to own or lease its assets and to carry on-its
business as it is currently being conducted, and is duly
qualified as a foreign corporation to do business, and is in
good standing, in each jurisdiction where the ownership or
operation of its properties and assets or the conduct of its
business requires such qualification, except where the
failure to be so qualified and in good standing, when taken
together with all other such failures, is not reasonably
likely to have a Buyer Material Adverse Effect.
Section 4.4 Capitalization of Buyer.
(a) The authorized capital stock of Buyer
consists of 200,000,000 shares of Buyer Common Stock, of
which 72,318,960 shares were outstanding as of the close of
business on December 31, 1996, and 6,000,000 shares of
Preferred Stock, par value $1.00 per share (the "Buyer
Preferred Stock"), of which no shares were outstanding as of
the close of business on December 31, 1996 or on the date
hereof. All of the outstanding shares of Buyer Common Stock
have been duly authorized and are validly issued, fully paid
and nonassessable. Buyer has no shares of capital stock
reserved for issuance, except: that, as of December 31,
1996, there were (i) 8,200,000 shares of Buyer Common Stock
reserved for issuance pursuant to Buyer's 1992 Incentive and
Stock Award Plan, 752,493 shares of Buyer Common Stock
reserved for issuance pursuant to Buyer's 1988 Incentive and
Stock Award Plan, 4,000,000 shares of Buyer Common Stock
reserved for issuance pursuant to Buyer's 1994 Employee
Stock Purchase Plan, 431,500 shares of Buyer Common Stock
reserved for issuance pursuant to Buyer's 1990 Employee
Stock Purchase Plan, 500,000 shares of Buyer Common Stock
reserved for issuance pursuant to Buyer's Stock Purchase
Plan for International Employees, 250,000 shares of Buyer
Common Stock reserved for issuance pursuant to Buyer's
Directors Stock Compensation Plan and up to 6,000,000 shares
of Buyer Common Stock to be reserved for issuance either
pursuant to the 1997 Incentive and Stock Award Plan or other
employee awards (such plans being referred to herein,
collectively, as the "Buyer Stock Plans"), and 1,500,000
shares reserved as Deferred Stock Units ("Deferred Stock
Units") and (ii) 2,000,000 shares of Buyer Preferred Stock
reserved for issuance pursuant to Buyer's Shareholder Rights
Plan, dated as of August 26, 1987, and amended as of
September 18, 1990 and January 1, 1991 between Buyer and
▇▇▇▇▇▇ Trust Company of New York (as successor Rights Agent)
(the "Buyer Rights Agreement").
(b) Except as set forth in paragraph (a) above,
as permitted pursuant to Section 6.1 and in Section 4.6 of
the Buyer Disclosure Schedule, as of December 31, 1996 there
were no preemptive or other outstanding rights, options,
warrants, conversion rights, stock appreciation rights,
agreements, arrangements or commitments under which Buyer
became obligated to issue or sell, or giving any Person a
right to subscribe or acquire, any shares of the capital
stock, or securities or obligations exercisable or
exchangeable for or convertible into any shares of the
capital stock of Buyer.
Section 4.5 Buyer Reports; Financial Statements.
Buyer has delivered or otherwise made available to the
Company each registration statement, report, proxy statement
and information statement prepared by it since December 31,
1995, each in the form (including exhibits and any
amendments thereto) filed with the SEC (each such
registration statement report, proxy statement or
information statement, a "Buyer Report"). As of their
respective dates, the Buyer Reports did not, and any Buyer
Reports filed with the SEC subsequent to the date hereof
will not, contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein
or necessary to make the statements made therein, in light
of the circumstances in which they were made, not
misleading. Each of the consolidated balance sheets
included in or incorporated by reference into the Buyer
Reports (including the related notes and schedules) fairly
presents, or will fairly present, in all material respects,
the consolidated financial position of Buyer and its
Subsidiaries as of its date and each of the consolidated
statements of income and cash flows included in or
incorporated by reference into the Buyer Reports (including
any related notes and schedules) fairly presents, or will
fairly present, in all material respects, the results of
operations, retained earnings and cash flows, as the case
may be, of Buyer and its Subsidiaries for the periods set
forth therein (subject, in the case of unaudited statements,
to the notes and normal year-end audit adjustments that will
not be material in amount or effect), in each case in
accordance with U.S. generally accepted accounting
principles consistently applied during the periods involved,
except as may be noted therein. Set forth on Section 4.5 of
the Buyer Disclosure Schedule is a copy of audited
consolidated financial statements of Buyer for the year
ended December 31, 1996, which for purposes of this
Agreement shall be treated as a "Buyer Report."
Section 4.6 Absence of Certain Changes or Events.
Except as may be reflected in the Buyer Reports filed prior
to the date hereof or Section 4.6 of the Buyer Disclosure
Schedule, and except as may be contemplated by this
Agreement and the Other Transaction Agreements, since the
Buyer Audit Date (a) Buyer and its Subsidiaries taken as a
whole have conducted their businesses only in, and prior to
the date hereof have not engaged in any material transaction
other than according to, the ordinary course of such
businesses consistent with past practice and (b) there has
not been (i) any change in the properties, financial
condition or results of operations of Buyer and its
Subsidiaries taken as a whole or any development or
combination of developments of which Buyer has knowledge
that, individually or in the aggregate, has had or is
reasonably likely to have a Buyer Material Adverse Effect;
(ii) any material damage, destruction or other casualty loss
with respect to any material asset or property owned, leased
or otherwise used by Buyer or any of its Subsidiaries
whether or not covered by insurance; (iii) any declaration,
setting aside or payment of any dividend or other
distribution in respect of the capital stock of Buyer other
than regular quarterly dividends (including any increases
made in the ordinary course) and dividends payable in Buyer
Common Stock; or (iv) any material change by Buyer in
accounting principles, practices or methods except as may be
required by GAAP.
Section 4.7 No Conflict. The execution, delivery
and performance of each of this Agreement and the Other
Transaction Agreements by Buyer do not, and the consummation
by Buyer of the transactions contemplated for it hereby and
thereby will not, constitute or result in (a) a breach or
violation of, or a default under, Buyer's certificate of
incorporation and by-laws, or the certificate and by-laws
(or comparable governing instruments) of any of Buyer's
Significant Subsidiaries, (b) a breach or violation of or
default under, or the acceleration of any obligation or the
creation of any Encumbrance on the assets of Buyer or any of
its Subsidiaries pursuant to, any Contracts binding upon
Buyer or any of its Subsidiaries (in each case, with or
without notice, lapse of time or both) or any Law or
governmental or nongovernmental permit or license to which
Buyer or any of its Subsidiaries is subject or (c) any
change in the rights or obligations of any party under any
of the Contracts specified in clause (b) above, except, in
the case of clause (b) or (c) above, for any breaches,
violations, defaults, accelerations, creations or changes
that, individually or in the aggregate, are not reasonably
likely to have a Buyer Material Adverse Effect or prevent,
materially burden or materially impair the ability of Buyer
to consummate the transactions contemplated by this
Agreement and the Other Transaction Agreements and subject,
in the case of clause (b) above, to the matters referred to
in Section 4.8.
Section 4.8 Governmental Filings; No Violations.
Other than filings and/or notices (a) under the HSR Act, (b)
pursuant to the Securities Act, the Exchange Act, state
securities or "blue sky" laws and the rules of the New York
Stock Exchange, Inc. ("NYSE"), in each case as provided in
Section 6.12(b) and the Registration Rights Agreement, (c)
notification to Lloyds, the Insurance Brokers Registration
Council and the U.K. P.I.A. of a change of control, and (d)
pursuant to other applicable foreign laws, no notices,
reports or other filings are required to be made by Buyer
and its Subsidiaries with, nor are any consents,
registrations, approvals, permits or authorizations required
to be obtained by Buyer and its Subsidiaries from, any
Governmental Entity, in connection with the execution and
delivery of this Agreement and the Other Transaction
Agreements by Buyer and the consummation by Buyer of the
transactions contemplated hereby and thereby, except those
that the failure to make or obtain is not, individually or
in the aggregate, reasonably likely to have a Buyer Material
Adverse Effect or prevent, materially burden or materially
impair the ability of Buyer to consummate the transactions
contemplated by this Agreement and the Other Transaction
Agreements.
Section 4.9 Litigation and Liabilities. Except
as disclosed in the Buyer Reports filed with the SEC prior
to the date hereof, there are no (a) civil, criminal or
administrative actions, suits, claims, hearings,
investigations or proceedings pending or, to the knowledge
of Buyer, threatened against Buyer or any of its
Subsidiaries or (b) obligations or liabilities, whether or
not accrued, contingent or otherwise and whether or not
required to be disclosed, including those relating to
matters involving any Environmental Law, or any other facts
or circumstances of which Buyer has knowledge that could
result in any claims against or obligations or liabilities
of Buyer or any of its Subsidiaries, except, in the case of
clauses (a) and (b), for those that are not, individually or
in the aggregate, reasonably likely to have a Buyer Material
Adverse Effect or prevent, materially burden or materially
impair the ability of Buyer to consummate the transactions
contemplated by this Agreement and the Other Transaction
Agreements. Neither Buyer nor any of its Subsidiaries is
subject to any judgment, order, decree or arbitration award
of any Governmental Entity that, individually or in the
aggregate, is reasonably likely to have a Buyer Material
Adverse Effect or prevent, materially burden or materially
impair the ability of Buyer to consummate the transactions
contemplated by this Agreement and the other Transaction
Agreements.
Section 4.10 Compliance with Law; Permits.
Except as disclosed in the Buyer Reports filed with the SEC
prior to the date hereof, the businesses of each of Buyer
and its Subsidiaries have not been, and are not being,
conducted in violation of any Laws, except for violations or
possible violations that, individually or in the aggregate,
are not reasonably likely to have a Buyer Material Adverse
Effect or prevent, materially burden or materially impair
the ability of Buyer to consummate the transactions
contemplated by this Agreement and the Other Transaction
Agreements. Except as disclosed in the Buyer Reports filed
prior to the date hereof, no investigation or review by any
Governmental Entity with respect to Buyer or any of its
Subsidiaries is pending or, to the knowledge of Buyer,
threatened, nor has any Governmental Entity indicated an
intention to conduct the same, except for those the outcome
of which, individually or in the aggregate, are not
reasonably likely to have a Buyer Material Adverse Effect or
prevent, materially burden or materially impair the ability
of Buyer to consummate the transactions contemplated by this
Agreement and the Other Transaction Agreements. Buyer and
its Subsidiaries each has all permits, licenses, franchises,
variances, exemptions, orders and other governmental
authorizations, consents and approvals necessary to conduct
its business as currently conducted except those the absence
of which, individually or in the aggregate, are not
reasonably likely to have a Buyer Material Adverse Effect or
prevent, materially burden or materially impair the ability
of Buyer to consummate the transactions contemplated by this
Agreement and the Other Transaction Agreements.
Section 4.11 Takeover Statutes. No Takeover
Statute is, or at the Closing Time or promptly upon the
Resale Registration Time will be, and no applicable
antitakeover provision in Buyer's certificate of
incorporation and by-laws is, or at the Closing Time will
be, applicable to Buyer, the Buyer Common Stock or the
transactions contemplated by any of this Agreement and the
Other Transaction Agreements.
Section 4.12 Tax Matters. Except as set forth in
Section 4.12 of the Buyer Disclosure Schedule, as disclosed
in the Buyer Reports or as are not reasonably likely to have
a Buyer Material Adverse Effect: (a) Buyer and each of its
Subsidiaries (i) have prepared in good faith and duly and
timely filed (taking into account any extension of time
within which to file) all Tax Returns required to be filed
by any of them and all such filed Tax Returns are complete
and accurate in all respects, (ii) have paid all Taxes that
are required to be paid or that Buyer or any of its
Subsidiaries are obligated to withhold from amounts owing to
any employee, creditor or third party, except with respect
to matters contested in good faith, and (iii) have not
waived any statute of limitations with respect to Taxes or
agreed to any extension of time with respect to a Tax
assessment or deficiency; (b) there are not pending or, to
the knowledge of Buyer threatened in writing, any audits,
examinations, investigations or other proceedings in respect
of United States federal income Taxes or United States
federal income Tax matters; (c) there are no Encumbrances
for Taxes upon the assets or properties of Buyer or any of
its Subsidiaries except for statutory liens for Taxes not
yet due; (d) the United States federal income Tax Returns of
Buyer and its Subsidiaries for the taxable periods ending
before December 31, 1991 have been examined by the
appropriate governmental authority (or the applicable
statute of limitations for the assessment of Taxes for such
periods has expired) and a list of all United States federal
income audits, examinations or investigations commenced or
completed with respect to Buyer or any of its Subsidiaries
from January 1, 1992 is set forth on Section 4.12 of the
Disclosure Schedule; (e) all Tax deficiencies which have
been claimed, proposed or asserted against any of Buyer or
its Subsidiaries have been fully paid or finally settled,
and no issue has been raised in any examination by any
United States federal income tax authority, which by
application of similar principles, could be expected to
result in the proposal or assertion of a Tax deficiency for
another year not so examined; and (f) Buyer, as the common
parent of an affiliated group of corporations (as defined in
Section 1504 of the Code) consisting solely of Buyer and its
Subsidiaries, has filed since January 1, 1990 or earlier a
consolidated return for United States federal income tax
purposes on behalf of itself and all of its Subsidiaries
that are "includible corporations" (within the meaning of
Section 1504(b) of the Code). There are not, to the
knowledge of Buyer, any unresolved questions or claims
concerning Buyer's or any of its Subsidiaries' Tax liability
that would have a Buyer Material Adverse Effect. Buyer has
made available to the Company true and correct copies of the
United States federal income tax returns filed by Buyer and
its Subsidiaries for each of the Taxable years ended
December 31, 1995, 1994, 1993 and 1992. Neither Buyer nor
any of its Subsidiaries has any liability with respect to
income, franchise or similar Taxes that accrued on or before
the Buyer Audit Date in excess of the amounts that are
accrued with respect thereto and are reflected in the Buyer
Reports filed prior to the date hereof, except where the
failure to be so accrued would not be reasonably likely to
have a Buyer Material Adverse Effect.
Section 4.13 Employee Matters.
(a) A copy of each pension, retirement,
profit-sharing, thrift, savings, employee stock ownership,
medical, health plan, that covers current U.S. employees of
Buyer's insurance and reinsurance brokerage businesses and
any trust arrangement or insurance contract forming a part
of plans has been made available to the Company prior to the
date hereof. Such plans are listed in Section 4.13(a) of
the Buyer Disclosure Schedule.
(b) Each "employee pension benefit plan" within
the meaning of Section 3(2) of ERISA maintained or
contributed to by Buyer and its Subsidiaries ("Buyer Pension
Plan") and that is intended to be qualified under
Section 401(a) of the Code has received a favorable
determination letter from the IRS, and Buyer is not aware of
any circumstances likely to result in revocation of any such
favorable determination letter. There is no pending or, to
the knowledge of Buyer, threatened material litigation
relating to the employee benefit plans (within the meaning
of Section 3(3) of ERISA) maintained or contributed to by
Buyer and its Subsidiaries ("Buyer Compensation and Benefit
Plans"). Neither Buyer nor any of its Subsidiaries has
engaged in a transaction with respect to any Buyer
Compensation and Benefit Plan that, assuming the taxable
period of such transaction expired as of the date hereof,
would subject Buyer or any of its Subsidiaries to a material
tax or penalty imposed by either Section 4975 of the Code or
Section 502 of ERISA.
(c) As of the date hereof, no material liability
under Subtitle C or D of Title IV of ERISA has been or is
expected to be incurred by Buyer or any Subsidiary with
respect to any ongoing, frozen or terminated "single-
employer plan," within the meaning of Section 4001(a)(15) of
ERISA, currently or formerly maintained by any of them, or
the single-employer plan of any entity which is considered
an ERISA Affiliate of Buyer. Buyer and its Subsidiaries
have not incurred and do not expect to incur any material
withdrawal liability with respect to a multiemployer plan
under Subtitle E to Title IV of ERISA.
(d) Neither any Buyer Pension Plan nor any
single-employer plan of an ERISA Affiliate of Buyer has an
"accumulated funding deficiency" (whether or not waived)
within the meaning of Section 412 of the Code or Section 302
of ERISA. Neither Buyer nor its Subsidiaries has provided,
or is required to provide, security to any Buyer Pension
Plan or to any single-employer plan of an ERISA Affiliate of
Buyer pursuant to Section 401(a)(29) of the Code.
(e) Buyer and its Subsidiaries have no material
unfunded liabilities with respect to any Buyer Pension Plan
that covers current or former non-U.S. employees or former
employees of Buyer and its Subsidiaries.
Section 4.14 Intellectual Property. Buyer and/or
each of its Subsidiaries owns, or is licensed or otherwise
possesses legally enforceable rights to use all patents,
trademarks, trade names, service marks, copyrights (and
applications therefor), technology, know-how, computer
software programs or applications, and tangible and
intangible proprietary information and materials that are
used in the business of Buyer and its Subsidiaries as
currently conducted, except for any such failures to own, be
licensed or possess that, individually or in the aggregate,
are not reasonably likely to have a Buyer Material Adverse
Effect, and to the knowledge of Buyer, all patents,
trademarks, trade names, service marks and copyrights held
and used in the business currently conducted by Buyer and/or
its Subsidiaries are valid and subsisting.
Section 4.15 Brokers and Finders. None of Buyer
and its officers, directors and employees has employed any
broker or finder or incurred any liability for any brokerage
fees, commissions or finders fees in connection with the
transactions contemplated in this Agreement, except that
Buyer has employed ▇.▇. ▇▇▇▇▇▇ as its financial advisor, the
arrangements with which have been disclosed to the Company
prior to the date hereof.
Section 4.16 Financial Capability. As of the
Closing Date, Buyer will have sufficient funds to satisfy
all of its cash obligations required to be satisfied as of
the Closing Date under this Agreement and the Other
Transaction Agreements and the transactions contemplated
hereby and thereby.
Section 4.17 Securities Act. Buyer is an
accredited investor within the meaning of Rule 501(a) under
the Securities Act. Buyer is acquiring the Shares solely
for the purpose of investment and not with a view to, or for
sale in connection with, any distribution thereof in
violation of the Securities Act. Buyer acknowledges that
the Shares are not registered under the Securities Act or
any applicable state securities law, and that such Shares
may not be sold or otherwise transferred except pursuant to
the registration provisions of the Securities Act or an
applicable exemption therefrom and pursuant to any
applicable state and other securities laws.
Section 4.18 Rights Plan. None of the Sellers
shall be deemed an Acquiring Person (as defined in the Buyer
Rights Agreement), the Distribution Date (as defined in the
Buyer Rights Agreement) shall not be deemed to occur and the
Rights will not separate from the shares of Buyer Common
Stock, as a result of entering into this Agreement and the
Other Transaction Agreements or consummating the
transactions contemplated hereby and thereby; assuming that
Sellers do not beneficially own any other shares of Buyer
Common Stock.
Section 4.19 No Other Representations or
Warranties. Except for the representations and warranties
contained in this Article IV, neither Buyer nor any other
Person makes any other express or implied representation or
warranty on behalf of Buyer.
ARTICLE V
TAX MATTERS
Section 5.1 Sellers' Tax Indemnification of
Buyer. Each Seller, severally and not jointly, shall
indemnify Buyer, on a pro rata basis according to the
relative amounts of the Purchase Prices received by such
Sellers for their Shares, from, against and in respect of,
except to the extent reflected as current liabilities in the
Company Financial Information, any Taxes imposed with
respect to the Company or any of its Subsidiaries for the
taxable periods, or portions thereof, ended on or before the
Closing including, with respect to taxable periods beginning
before the Closing but ending thereafter, the portion of
such taxable period ending on the Closing Date, any Taxes
imposed upon Buyer or the Company due to the failure of the
Company's representation and warranty set forth in Section
2.14(a)(o) or the failure of the representations and
warranties under Section 3.5 of this Agreement to be true,
complete and correct in all respects and any Taxes imposed
with respect to "excess distributions" (as defined in
Section 1291 of the Code) made in any period ending after
the Closing by any Subsidiary of the Company or Other Entity
to the extent that such excess distributions are attributed
under Section 1291 to taxable periods ending on or before
the Closing. Sellers shall be entitled to, and Buyer shall
pay, or cause to be paid, to the Sellers' Committee any
refund of Taxes of the Company or its Subsidiaries received
for such periods as provided in Section 5.7.
Section 5.2 Proration of Taxes. To the extent
permitted by law or administrative practice, the taxable
years of the Company and its Subsidiaries shall be closed at
the Closing Date. Whenever it is necessary to determine the
liability for Taxes for a portion of a taxable year or
period that begins before and ends after the Closing Date,
the determination of the Taxes for the portion of the year
or period ending at, and the portion of the year or period
beginning after, the Closing Date shall be determined by
assuming that the taxable year or period ended at the close
of business on the Closing Date, except that exemptions,
allowances or deductions that are calculated on an annual
basis shall be prorated on the basis of the number of days
in the annual period elapsed through the Closing Date as
compared to the number of days in the annual period elapsing
after the Closing Date.
Section 5.3 Tax Returns.
(a) Except to the extent otherwise provided
herein, the Sellers' Committee shall prepare, in a manner
consistent with past practice other than as required by law,
(A) all Tax Returns with respect to the Company and its
Subsidiaries for the taxable periods, or portions thereof,
beginning before and ending on or prior to the Closing Date
(including all Tax Returns with respect to U.S. Federal,
state and local income taxes which are required or permitted
by law or administrative practice to be filed with respect
to a taxable period, or portion thereof, beginning before
and ending on or prior to the Closing Date) and (B) all
other Tax Returns for the Company and its Subsidiaries due
to be filed on or before the Closing Date. The Company
shall file or cause to be filed when due such Tax Returns
described in this Section 5.3(a). Not less than sixty (60)
days prior to the date on which such Tax Return is due to be
filed (taking into account any applicable extensions) (the
"Due Date"), the Sellers' Committee shall deliver a copy of
such Tax Returns to Buyer for its review and approval, which
may not be unreasonably withheld. If Buyer objects to any
items reflected on such returns (which objection shall be
made no later than 10 days before the Due Date), the parties
shall attempt to resolve the disagreement. If the parties
are unable to resolve the disagreement, the dispute shall be
referred to a "Big Six" accounting firm selected by the
auditors of Buyer at such time and the Company as of the
Closing Date (the "Tax Arbitrator") whose determination
shall be binding upon the parties. The fees and expenses of
the Tax Arbitrator shall be borne equally by the Sellers and
Buyer. If the dispute has not been resolved or the Tax
Arbitrator has not made its determination prior to the Due
Date, the Tax Return shall be filed as originally proposed
by the Sellers' Committee, reflecting any items previously
objected to by Buyer and agreed to by the Sellers'
Committee, and Buyer shall pay to the Sellers' Committee the
amount requested by the Sellers' Committee (the "Sellers'
Requested Amount"). When the amount due to the Sellers from
Buyer in respect of such Tax Return is finally determined, a
settlement payment (the "Sellers' Settlement Payment") shall
be made from Buyer to the Sellers' Committee in an amount
equal to the excess, if any, of (i) the amount finally
determined to be due over (ii) the Sellers' Requested Amount
or from the Sellers' Committee to Buyer in an amount equal
to the excess, if any, of (i) the Sellers' Requested Amount
over (ii) the amount finally determined to be due.
(b) Buyer shall prepare all Tax Returns with
respect to the Company and its Subsidiaries for taxable
periods beginning on or ending after the Closing Date and
due to be filed after the Closing Date. With respect to
such Tax Returns for periods beginning before the Closing
Date, Buyer shall deliver a copy of such Tax Returns not
less than sixty (60) days prior to the Due Date with respect
to such Tax Returns to the Sellers' Committee for its review
and approval, which may not be unreasonably withheld. The
Sellers' Committee is entitled to object to any items
reflected on such Tax Return relating solely to Taxes for
which the Sellers are liable pursuant to this Agreement. If
the Sellers' Committee objects (which objection shall be
made no later than 10 days before the Due Date), the parties
shall attempt to resolve the disagreement. If the parties
are unable to resolve the disagreement, the dispute shall be
referred to the Tax Arbitrator, whose determination shall be
binding on the parties. The fees and expenses of the Tax
Arbitrator shall be borne equally by the Sellers and Buyer.
If the dispute has not been resolved or the Tax Arbitrator
has not made its determination prior to the Due Date, the
Tax Return shall be filed as originally proposed by Buyer,
reflecting any items previously objected to by the Sellers'
Committee and agreed to by Buyer, the Sellers shall pay to
Buyer the amount requested by Buyer (the "Buyer Requested
Amount"). When the amount due to Buyer from the Sellers in
respect of such Tax Return is finally determined, a
settlement payment (the "Buyer Settlement Payment") shall be
made from the Sellers to Buyer in an amount equal to the
excess, if any, of (i) the amount finally determined to be
due over (ii) the Buyer Requested Amount or from Buyer to
the Sellers' Committee in an amount equal to the excess, if
any, of (i) the Buyer Requested Amount over (ii) the amount
finally determined to be due. Buyer shall file or cause to
be filed when due all such Tax Returns described in this
Section 5.3(b).
(c) Information to be Provided by Buyer. With
respect to Tax Returns to be filed by the Sellers' Committee
pursuant to Section 5.3(a) hereof, Buyer shall within 210
days following the end of the taxable year beginning before
and ended on or after the Closing Time prepare and provide
to the Sellers' Committee a package of tax information
materials (the "Tax Package"), which shall be completed in
accordance with past practice including past practice as to
providing the information, schedules and work papers and as
to the method of computation of separate taxable income, tax
credits, and other relevant measures of income and credits
of the Company and its Subsidiaries. Buyer shall cause the
Tax Package for the portion of the taxable period ending on
the Closing Date to be delivered to the Sellers' Committee
within 210 days after the Closing Date.
(d) Notwithstanding anything to the contrary
herein, Buyer, the Company and the Sellers' Committee shall
determine jointly the manner in which the removal of
restrictions on the transferability of the Sellers' Shares,
as contemplated in Section 2.1(b) and Section 6.7 hereof,
and any other changes in the capitalization of the Company
prior to Closing are reported for United States federal,
state, local and foreign income tax purposes, provided, that
the removal of restrictions on the transferability of
Sellers' Shares shall be treated as resulting in
compensation income to the Sellers.
Section 5.4 Transfer Taxes. All excise, sales,
use, transfer (including real property transfer or gains),
stamp, documentary, filing, recordation and other similar
taxes and fees which may be imposed or assessed as a result
of the transactions effected pursuant to this Agreement,
together with any interest, additions or penalties with
respect thereto and any interest in respect of such
additions or penalties ("Transfer Taxes"), shall be borne
equally by Buyer and the Sellers. Notwithstanding Section
5.3, which shall not apply to Tax Returns relating to
Transfer Taxes, any Tax Returns that must be filed in
connection with Transfer Taxes shall be prepared and filed
when due by the party primarily or customarily responsible
under the applicable local law for filing such Tax Returns,
and such party will use its reasonable efforts to provide
such Tax Returns to the other parties at least 10 days prior
to the Due Date for such Tax Returns.
Section 5.5 Contest Provisions.
(a) Notice Requirement. Buyer shall promptly
notify the Sellers' Committee in writing upon receipt by
Buyer, any of its affiliates, or the Company or any of its
Subsidiaries of notice of any pending or threatened audits,
adjustments or assessments (a "Tax Audit") which may
materially affect the liability for Taxes of the Company or
any of its Subsidiaries for which the Sellers would be
required to indemnify Buyer pursuant to Section 5.l(a). If
Buyer fails to give such prompt notice to the Tax Committee,
it shall not be entitled to indemnification for any Taxes
arising in connection with such Tax Audit if such failure to
give notice materially adversely affects the right of the
Sellers' Committee, as agent of Sellers, to participate in
the Tax Audit.
(b) If such Tax Audit involves solely Taxes for
which the Sellers are liable (taking into consideration any
indemnification obligation pursuant to this Agreement), the
Sellers' Committee shall at its expense control the complete
defense and settlement of the interests of itself and each
other party in such Tax Audit provided that the Sellers'
Committee so notify Buyer in writing within twenty days of
receiving notice from Buyer under Section 5.5(a). The
Sellers' Committee shall keep Buyer informed about, and
shall allow Buyer to participate in, at its sole expense,
the defense of any such Tax Audit. The Sellers' Committee
shall not pay, discharge, settle, compromise, litigate, or
otherwise dispose (collectively, "dispose") of any item
subject to such Tax Audit without obtaining the prior
written consent of Buyer, which consent shall not be
unreasonably withheld or delayed. If Buyer disagrees with
any proposed disposition of any such item, Buyer shall have
the right, at its sole expense, to litigate such item,
provided, however, that Buyer shall not settle such item
subject to Tax Audit without obtaining the prior written
consent of the Sellers' Committee, which consent shall not
be unreasonably withheld or delayed; provided, further, that
(x) the Sellers' indemnification obligation with respect to
such Taxes subject to Tax Audit shall be no greater than
such obligation would have been had such item been disposed
of in the manner originally contemplated by the Sellers'
Committee and (y) Buyer shall indemnify, defend and hold
harmless the Sellers from and against any liability for
Taxes with respect to the Company and its Subsidiaries that
are imposed upon the Company or any of its Subsidiaries in
excess of the liability for Taxes, if any, that otherwise
would have resulted had such item been disposed on in the
manner originally contemplated by the Sellers' Committee.
(c) If the Sellers' Committee does not provide
Buyer with notice as required under this Section 5.5(b),
Buyer shall control the defense of any Tax Audit involving
solely Taxes for which the Sellers are liable (taking into
account any indemnification obligation imposed pursuant to
this Agreement) and shall be entitled to dispose of such
item subject to Tax Audit without the written consent of the
Sellers' Committee.
(d) If a Tax Audit involves Taxes for which both
Sellers and Buyer may be liable, Buyer and the Sellers'
Committee shall attempt in good faith to sever the Tax Audit
and each shall control the Tax Audit involving Taxes for
which it may be liable (taking into account any
indemnification obligation imposed pursuant to this
Agreement) and shall adhere to the requirements of this
Section 5.5 regarding participation, disposition, litigation
and other matters with respect to such Tax Audit and the
items and Taxes that are the subject thereof. If the Tax
Audit cannot be severed, Buyer shall at its expense control
the complete defense and settlement of the interests of
itself and each other party in such Tax Audit; provided,
however, that (i) Buyer shall keep the Sellers' Committee
informed about, and shall consult with the Sellers'
Committee in good faith about, any items in such Tax Audit
with respect to Taxes for which the Sellers are liable,
although the Sellers' Committee shall not be entitled to
participate in the proceedings; (ii) Buyer shall be entitled
to dispose of any item subject to such Tax Audit with
respect to Taxes for which the Sellers are liable without
obtaining the prior consent of the Sellers' Committee; and,
(iii) if the Sellers' Committee disagrees with any proposed
disposition of any such item, the Sellers' Committee shall
have the right, at its sole expense, to litigate such item,
provided, however, that the Sellers' Committee shall not
settle such item subject to Tax Audit without obtaining the
prior written consent of the Buyer, which consent shall not
be unreasonably withheld or delayed.
(e) Buyer, in its sole discretion and at its
expense, shall control the complete defense and settlement
of the interests of itself and each other party in any other
Tax Audit.
Section 5.6 Post-Closing Actions Which May Affect
the Sellers' Liability for Taxes.
(a) Buyer shall not take, and shall not permit
the Company or any of its Subsidiaries to take, any action
that is materially inconsistent with the manner in which Tax
Returns have been filed by the Company with respect to
taxable periods ending on or before the Closing if such
action materially increases the Sellers' liability for Taxes
for which the Sellers are required to indemnify Buyer or
materially reduces any refund or overpayment due to Sellers
with respect to Taxes for a period ending on or before the
Closing Date, provided, that, notwithstanding the foregoing,
this Section 5.6(a) shall not apply with respect to (i) any
action taken by the surviving or resulting corporation if
the Company merges with or into Buyer or an Affiliate of the
Buyer or if Buyer or an Affiliate of the Buyer merges with
or into the Company or (ii) any action required by law.
(b) Except to the extent required by law, neither
Buyer nor any of its affiliates shall, without the prior
written consent of the Sellers' Committee, which consent
shall not be unreasonably withheld, amend any Tax Return
filed by, or with respect to, the Company or any of its
Subsidiaries for any taxable period, or portion thereof,
beginning before the Closing Time.
Section 5.7 Certain Post-Closing Settlement
Payments.
(a) Buyer's Claiming, Receiving or Using of
Refunds and Overpayments. Other than as set forth in
Section 6.17, if, after the Closing, Buyer or its affiliates
(a) receive any refund, or (b) applies any overpayment of
Taxes with respect to a taxable period ending on or before
the Closing (except to the extent reflected in the Company
Financial Information as a current asset) which, in either
case (a) and (b), (i) relate to a Tax paid by the Company or
any of its Subsidiaries or (ii) is the subject of
indemnification by the Sellers hereunder, Buyer shall
promptly pay, or cause to be paid, to the Sellers' Committee
for the benefit of the Sellers an amount in aggregate equal
to the refund or overpayment (including interest) received
or applied by Buyer or its affiliates. Buyer agrees to
notify the Sellers' Committee promptly of both the discovery
of a right to claim any such refund or overpayment and the
receipt of any such refund or application of any such
overpayment. Buyer agrees to claim any such refund or to
apply any such overpayment as soon as possible and to
furnish to the Sellers' Committee all information, records
and assistance necessary to verify the amount of the refund
or overpayment.
(b) Subsequent Adjustment. In the event that any
Tax refund, benefit or savings described in any clause of
this Section 5.7 is subsequently reduced as a result of any
adjustment required by any Tax authority, this Section 5.7
shall be applied, taking into account such adjustment. If
the Sellers, on the one hand, or Buyer or its affiliates, on
the other hand, have paid any amount to the other on the
basis of the application of this Section 5.7 prior to such
subsequent adjustment or such subsequent creation of tax
attributes (each, a subsequent event) and the amount due
pursuant to this Section 5.7 taking into account such
subsequent event is determined to have changed as a result
of such subsequent event, the parties agree to make any
payment necessary to settle the difference between the
amount previously paid and the amount subsequently
determined to be due.
(c) Resolution of Calculation Disputes. In the
event that the Sellers' Committee and Buyer cannot agree on
any calculation required under Section 5.7, such calculation
shall be made by the Tax Arbitrator, acting as an expert and
not as an arbitrator, whose decision shall be final and
binding and whose expenses shall be shared equally by the
Sellers and Buyer.
Section 5.8 Assistance and Cooperation. The
Sellers and Buyer agree that, after the Closing Time:
(A) each party shall assist (and cause its
affiliates to assist) the other in preparing any Tax
Returns which the other is responsible for preparing
and filing;
(B) the parties shall cooperate fully in
preparing for any audits of, or disputes with taxing
authorities regarding, any Tax Returns and payments in
respect thereof;
(C) the parties shall make available to each
other and to any taxing authority as reasonably
requested all relevant books and records relating to
Taxes;
(D) the parties shall provide timely notice to
the other in writing of any pending or proposed audits
or assessments with respect to Taxes for which the
other may have an indemnification obligation under this
Agreement;
(E) the parties Shall furnish each other with
copies of all relevant correspondence received from any
Tax authority in connection with any audit or
information request with respect to any Taxes referred
to in subsection (D) above; and
(F) except as otherwise provided herein, the
party requesting assistance or cooperation shall bear
the other's out-of-pocket expenses in complying with
such request to the extent that those expenses are
attributable to fees and other costs of unaffiliated
third-party service providers other than attorneys'
fees.
Section 5.9 Maintenance of Books and Records.
Until the applicable statute of limitations (including
periods of waiver) has run for any Tax Returns filed or
required to be filed covering the periods up to and
including the Closing Date, Buyer shall retain all books and
records in existence on the Closing Date and after the
Closing Date will provide the Sellers' Committee access to
such books and records for inspection and copying by the
Sellers' Committee and its representatives during normal
business hours upon reasonable request and upon reasonable
notice. After the expiration of such period, no such books
and records shall be destroyed by Buyer without first
advising the Sellers' Committee in writing detailing the
contents of any such books and records and giving the
Sellers' Committee at least 120 days to obtain possession
thereof.
Section 5.10 Characterization of Tax
Indemnification Payments. All amounts of Purchase Price
paid by the Sellers to Buyer or by Buyer to the Sellers
pursuant to this Agreement shall be treated as adjustments
to the Purchase Price for all Tax purposes.
Section 5.11 Indemnity Payments. All amounts
payable or to be paid to the Sellers under this Article V
shall be payable or paid to the Sellers' Committee for the
benefit of the Sellers. All amounts payable or to be paid
to Buyer or to the Sellers' Committee under this Article V
("Indemnity Payments") shall be paid in immediately
available funds within five Business Days after the later of
(i) receipt of a written request from the party entitled to
such Indemnity Payment and (ii) the day of payment of the
amount that is the subject of the Indemnity Payment by the
party entitled to receive the Indemnity Payment. All such
Indemnity Payments shall be made to the accounts and in the
manner specified in such written notice. All such Indemnity
Payments shall be made without giving effect to any tax
deduction or credit allowable to the party receiving the
Indemnity Payment with respect to any payments made by the
party receiving the Indemnity Payment and on account of
which the Indemnity Payment is being made.
Section 5.12. Carryforwards. Other than as
specifically provided in this Section 5.12 and in Section
6.17, notwithstanding anything to the contrary in this
Agreement, Buyer shall be under no obligation to make any
payment to the Sellers with respect to any credit or
deduction attributable to any pre-Closing period which is
available as a carryforward to a post-Closing period
(including a post-Closing period beginning before and ending
after the Closing Date) provided, however, that solely with
regard to any federal net operating loss carryforwards
attributable to pre-Closing periods, the Indemnity Payments
otherwise required to be made by the Sellers to Buyer under
this Article V shall be reduced in the aggregate by the
amount of any reduction in the federal income Taxes of the
Company and its Subsidiaries for a post-Closing period
attributable to the utilization of such federal net
operating loss carryforwards. The amount of any such
reduction in the federal income Taxes of the Company and its
Subsidiaries for any post-Closing period shall be determined
by Buyer as if the Company and its Subsidiaries were a
separate affiliated group filing a separate consolidated
return for federal income tax purposes for the taxable year
in which the net operating loss carryforward is utilized.
In the event that the Sellers' Committee disagrees with any
calculation required under this Section 5.12, such
calculation shall be made by the Tax Arbitrator, acting as
an expert and not as an arbitrator, whose decision shall be
final and binding and whose expenses shall be shared equally
by the Sellers and Buyer.
ARTICLE VI
CERTAIN COVENANTS AND AGREEMENTS
OF THE COMPANY AND BUYER
Buyer covenants and agrees with each of the
Company and the Sellers, the Company (and solely with
respect to Sections 6.3(e) and 6.4(c), each of the Sellers,
severally and not jointly as to such Seller) covenants and
agrees with Buyer and the Company covenants and agrees with
Sellers with respect to Section 6.17 as follows:
Section 6.1 Company Interim Operations. The
Company and Buyer, solely with respect to Sections 6.1(b),
(c), (g) and (j), each covenants and agrees as to itself and
its Subsidiaries that, after the date hereof and prior to
the Closing (unless Buyer or the Company, as the case may
be, shall otherwise approve in writing, which approval shall
not be unreasonably withheld or delayed, and except as
otherwise expressly contemplated by this Agreement and the
Other Transaction Agreements or set forth in Section 6.1 of
the Company Disclosure Schedule or the Buyer Disclosure
Schedule, as the case may be):
(a) the business of the Company and its
Subsidiaries shall be conducted in the ordinary and usual
course and, to the extent consistent therewith, the Company
and its Subsidiaries shall use all reasonable efforts to
preserve its business organization intact and maintain its
existing relations and goodwill with customers, suppliers,
distributors, creditors, lessors, employees and business
associates;
(b) each of the Company and Buyer shall not
(i) issue, sell, pledge, dispose of or encumber any capital
stock owned by it in any of its Subsidiaries; provided,
however, for purpose of this clause (i), in the case of
Buyer, Subsidiaries shall include only those Subsidiaries
engaged in the insurance and reinsurance business;
(ii) amend its certificate of incorporation or by-laws
(other than as contemplated in Section 2.1(b) in the case of
the Company); (iii) (A) in the case of the Company, split,
combine or reclassify its outstanding shares of capital
stock and (B) in the case of Buyer, reclassify its
outstanding shares of capital stock; (iv) declare, set aside
or pay any dividend or other distribution payable in cash,
stock, rights or other securities or property in respect of
any capital stock other than dividends by its direct or
indirect wholly owned Subsidiaries to it or its other direct
or indirect wholly owned subsidiaries and provided, that
this Section 6.l shall not prohibit (A) in the case of the
Company, (1) 1997 annual cash dividends declared by the
Company prior to the date of this Agreement and paid by the
Company to its stockholders in an aggregate amount not in
excess of $4.5 million (it being understood and accepted
that the Company may pay additional amounts under Ten-Year
Contracts not in excess of $12.5 million in the aggregate)
and (2) cash distributions to be made by the Company to such
current and former stockholders of the Company, to the
extent permitted under Section 6.17 and (B) in the case of
Buyer, (1) regular quarterly cash dividends on Buyer Common
Stock (subject to increases only in the ordinary course) and
(2) dividends payable in shares of Buyer Common Stock; or
(v) repurchase, redeem or otherwise acquire, or permit any
of its Subsidiaries to purchase or otherwise acquire, any
shares of its capital stock or any securities convertible
into or exchangeable or exercisable for any shares of its
capital stock, other than (A) in the case of the Company,
repurchases of shares of Company Common Stock held by
Persons other than Sellers for cash in an amount not in
excess of $10 per share and (B) in the case of Buyer,
pursuant to the Buyer Stock Plans or by Buyer in the
ordinary course consistent with past practice;
(c) neither the Company nor any of its
Subsidiaries, on the one hand, or Buyer or any of its
Subsidiaries (to include only those Subsidiaries engaged in
insurance and reinsurance brokerage business), on the other
hand, shall (i) (A) in the case of the Company, issue, sell,
pledge, dispose of or encumber any shares of its capital
stock, or any securities convertible into or exchangeable or
exercisable for, or options, warrants, calls, commitments or
rights of any kind to acquire, directly or indirectly, any
shares of its capital stock of any class, or (B) in the case
of Buyer, other than for fair value or pursuant to Buyer
Stock Plans, as Deferred Stock Units or to another wholly-
owned Subsidiary of Buyer, issue, sell, pledge, dispose of
or encumber any shares of its capital stock, or any
securities convertible into or exchangeable or exercisable
for, or options warrants, calls, commitments or rights of
any kind to acquire, directly or indirectly, any shares of
its capital stock of any class, (ii) with respect to the
Company only, other than in the ordinary and usual course of
business, transfer, lease, license, guarantee, sell,
mortgage, pledge, dispose of or encumber any other property
or assets (including capital stock of any of its
Subsidiaries) or incur or modify any material indebtedness
or other liability; (iii) with respect to the Company only,
make any commitments for, make or authorize any capital
expenditures other than in the ordinary course of business
consistent with past practice or, by any means, make any
acquisition of, or investment in, assets or stock of any
other Person or entity in excess of $10 million in the
aggregate; or (iv) with respect to the Company only, incur
additional indebtedness for borrowed money in excess of $30
million;
(d) neither the Company nor any of its
Subsidiaries shall terminate, establish, adopt, enter into,
make any new grants or awards under, amend or otherwise
modify, any Company Compensation and Benefit Plans or
increase the salary, wage, bonus or other compensation of
any employees except increases occurring in the ordinary
course of business consistent with past practice (which
shall include normal periodic performance reviews and
related compensation increases); neither the Company nor any
of its Subsidiaries shall make any change in the membership
of pension trustee bodies outside the U.S.;
(e) neither the Company nor any of its
Subsidiaries shall settle or compromise any material claims
or litigation or, except in the ordinary and usual course of
business, modify, amend or terminate any of the Company
Material Contracts or waive, release or assign any material
rights or claims;
(f) neither the Company nor any of its
Subsidiaries shall make any Tax election or permit any
insurance policy naming the Company as a beneficiary or loss
payable payee to be cancelled or terminated except in the
ordinary and usual course of business;
(g) neither it nor any of its Subsidiaries shall
knowingly take any action or omit to take any action that
would cause any of its representations and warranties herein
to become untrue in any material respect; and
(h) neither the Company nor any of its
Subsidiaries will change any of the accounting or tax
principles, practices or methods (except as required by
GAAP);
(i) neither the Company nor any of its
Subsidiaries will settle or compromise any Tax liability or
agree to any adjustment of any Tax attribute; and
(j) neither the Company nor any of its
Subsidiaries (nor Buyer or its Subsidiaries engaged in the
insurance or reinsurance brokerage business, with respect to
subsections (b) and (c)(i)) will authorize or enter into an
agreement to do any of the foregoing.
Section 6.2 Acquisition Proposals. The Company
agrees that neither it nor any of its Subsidiaries nor any
of the officers and directors of it or its Subsidiaries
shall, and that it shall direct and use its best efforts to
cause its and its Subsidiaries' employees, agents and
representatives (including any investment banker, attorney
or accountant retained by it or any of its Subsidiaries) not
to, directly or indirectly, initiate, solicit, encourage or
otherwise facilitate any inquiries or the making of any
proposal or offer with respect to a merger, reorganization,
share exchange, consolidation or similar transaction
involving, or any purchase of all or any significant portion
of the assets or capital stock of, it or any of its
Subsidiaries (any such proposal or offer being hereinafter
referred to as an "Acquisition Proposal"). The Company
further agrees that neither it nor any of its Subsidiaries
nor any of the officers and directors of it or its
Subsidiaries shall, and that it shall direct and use its
best efforts to cause its and its Subsidiaries' employees,
agents and representatives (including any investment banker,
attorney or accountant retained by it or any of its
Subsidiaries) not to, directly or indirectly, engage in any
negotiations concerning, or provide any confidential
information or data to, or have any discussions with, any
Person relating to an Acquisition Proposal, or otherwise
facilitate any effort or attempt to make or implement an
Acquisition Proposal. The Company agrees that it will
immediately cease and cause to be terminated any existing
activities, discussions or negotiations with any parties
conducted heretofore with respect to any of the foregoing.
The Company agrees that it will take the necessary steps to
promptly inform the individuals or entities referred to in
the first sentence hereof of the obligations undertaken in
this Section 6.2. The Company also agrees that it will
promptly request each Person other than Buyer that has
heretofore executed a confidentiality agreement in
connection with its consideration of a business combination
with the Company to return or destroy all confidential
information heretofore furnished to such Person by or on
behalf of the Company or any of its Subsidiaries. Until the
earlier of termination of this Agreement and the Closing, no
Seller shall transfer any Shares to any Person other than
the Company or another Seller.
Section 6.3 Filings; Other Actions; Notification.
(a) The Company and Buyer shall cooperate with
each other and use (and shall cause their respective
Subsidiaries to use) their respective reasonable best
efforts to take or cause to be taken all actions, and do or
cause to be done all things, necessary, proper or advisable
under this Agreement and applicable Laws to consummate the
transactions contemplated by this Agreement as soon as
practicable, including preparing and filing as promptly as
practicable all documentation to effect all applications,
notices, petitions, filings and other documents, and
obtaining as promptly as practicable all permits, consents,
approvals and authorizations, necessary or advisable to be
made to or with or obtained from any third party and/or any
Governmental Entity in order to consummate the transactions
contemplated by this Agreement. Subject to applicable laws
relating to the exchange of information, Buyer and the
Company shall have the right to review in advance (or
promptly in the case of filings or submissions made prior to
the date hereof), and to the extent practicable each will
consult the other on, all the information relating to Buyer
or the Company, as the case may be, and any of their
respective Subsidiaries, that appear in any filing made
with, or written materials submitted to, any third party
and/or any Governmental Entity in connection with the
transactions contemplated by this Agreement. In exercising
the foregoing right, each of the Company and Buyer shall act
reasonably and as promptly as practicable.
(b) The Company and Buyer each shall, upon
request by the other, furnish the other with all information
concerning itself, its Subsidiaries, directors, officers and
stockholders and such other matters as may be reasonably
necessary or advisable in connection with any statement,
filing, notice or application made by or on behalf of any of
Buyer and the Company and their respective Subsidiaries, or
by or on behalf of any Seller, to any third party and/or any
Governmental Entity in connection with the transactions
contemplated by this Agreement.
(c) The Company and Buyer each shall keep the
other apprised of the status of matters relating to
completion of the transactions contemplated hereby,
including promptly furnishing the other with copies of
notice or other communications received by Buyer or by the
Company or any Seller, as the case may be, or any of its
Subsidiaries, from any third party and/or any Governmental
Entity with respect to the transactions contemplated by this
Agreement. The Company and Buyer each shall give prompt
notice to the other of any change that is reasonably likely
to result in a Company Material Adverse Effect or Buyer
Material Adverse Effect, respectively.
(d) Without limiting the generality of the
undertakings pursuant to this Section 6.3, the Company and
Buyer agree to provide or cause to be provided promptly to
any and all federal, state, local or foreign court or
Government Entity with jurisdiction over enforcement of any
applicable antitrust laws ("Government Antitrust Entity")
information and documents requested by any Government
Antitrust Entity or necessary, proper or advisable to permit
consummation of the transactions contemplated by this
Agreement.
(e) Each of the Sellers identified in Annex A,
severally and not jointly, covenants and agrees with the
Company and Buyer to use his or her best efforts to prepare
and file such notices and other documentation with, and to
obtain such consent or approval from, any Governmental
Entity as may be necessary to be filed or obtained by or on
behalf of such Seller under the HSR Act in order to
consummate the sale of such Seller's Shares to Buyer as
contemplated herein, in each case as soon as practicable.
(f) In the event Buyer is required, under any
rule of or listing agreement with the New York Stock
Exchange, to obtain shareholder approval of the transactions
contemplated by the Employee Award Agreements, and Buyer is
unable to obtain such approval in a manner that does not
materially burden or delay consummation of such
transactions, Buyer may meet its payment obligations under
such agreements by postponing the issuance but not the
distribution of Buyer Common Stock for up to one year (or,
if earlier, the receipt of shareholder approval) (without
adversely affecting the right to receive dividends or
dividend equivalents) and/or by paying cash to the extent
necessary to comply with such shareholder approval
requirement, or in any other manner that the Sellers'
Committee may approve in writing. In no event, however,
shall Buyer be entitled to delay or avoid the Closing or the
performance of its obligations hereunder and the Employee
Award Agreements, including delivery of awards thereunder
(as modified by Buyer to implement the matters referred to
in the preceding sentence), by reason of such shareholder
approval requirement.
Section 6.4 Access and Information.
(a) Upon reasonable notice, and except as may
otherwise be required by applicable law, the Company and
Buyer each shall (and shall cause its Subsidiaries to)
afford the other's officers, employees, counsel, accountants
and other authorized representatives ("Representatives")
access, during normal business hours throughout the period
prior to the Closing, to its properties, books, contracts
and records and, during such period, each shall (and shall
cause its Subsidiaries to) furnish promptly to the other all
information concerning its related businesses, properties
and personnel as may reasonably be requested, provided that
the foregoing shall not require the Company or Buyer, to
permit any inspection, or to disclose any information, that
in the reasonable judgment of the Company or Buyer, as the
case may be, would result in the disclosure of any trade
secrets of third parties or violate any of its obligations
with respect to confidentiality if the Company or Buyer, as
the case may be, shall have attempted to obtain the consent
of such third party to such inspection or disclosure. All
requests for information made pursuant to this Section 6.4
shall be directed to an executive officer of the Company or
Buyer, as the case may be, or such Person as may be
designated by either of its officers, as the case may be.
(b) All information provided to or obtained by
Buyer, its Subsidiaries and their respective Representatives
pursuant to subsection (a) above shall be held by Buyer in
accordance with and subject to the terms of the
confidentiality agreement, dated December 20, 1996, between
Buyer and the Company (the "Company Confidentiality
Agreement").
(c) All information provided to or obtained by
the Company, its Subsidiaries and their respective
Representatives or to or by any Seller pursuant to
subsection (a) above shall be held by the Company or such
Seller, as the case may be, in accordance with and subject
to the terms of the confidentiality agreement, dated
February 24, 1997, between Buyer and the Company (the "Buyer
Confidentiality Agreement").
Section 6.5 Employee and Retiree Matters.
(a) Benefits. Buyer agrees that during the
period after the Closing and before the employees of the
Company and its Subsidiaries are offered participation in
the employee benefit and fringe benefit plans of Buyer, such
employees shall continue to be provided with benefits under
the terms of the current employee pension, welfare and
fringe benefit plans of the Company and its Subsidiaries
substantially as in effect on the date hereof (except for
the ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ Supplementary Retirement Plan, which
shall be frozen as of the Closing). Buyer shall provide
such employee benefit and fringe benefit plans for the
employees of the Company and its Subsidiaries as are
provided from time to time to similarly situated employees
of Buyer. For purposes of eligibility, vesting, and (if it
would not cause an increase in benefits) benefit accruals,
such plans shall take into account service by employees of
the Company and its Subsidiaries as if such service were
with the Buyer, but only to the extent that consideration of
such service is consistent with applicable law, and does not
result in any duplication of benefits; provided that with
respect to the foregoing Buyer shall not be required to make
any additional contributions to such plans to fund accrued
benefits with respect to such prior service with ▇▇▇▇▇▇▇ &
▇▇▇▇▇▇▇ or its Subsidiaries. If employees of the Company
and its Subsidiaries become eligible to participate in any
of the medical, dental, health and disability plans or life
insurance plans so developed and implemented for the
employees of the Buyer (or any of its Subsidiaries) in the
year in which the Closing occurs, (i) such medical, dental
or health plans shall provide that any pre-existing
conditions, waiting periods and actively at work
requirements in such plans shall be waived with respect to
such employees (to the extent presently waived under the
Company's plans) and (ii) such medical, dental or health
plans shall take into account to the extent practicable
expenses incurred prior to the Closing by such employees
under similar plans maintained by the Company and its
Subsidiaries in the year in which the Closing occurs for
purposes of satisfying applicable deductible, coinsurance
and maximum out-of-pocket expenses. After the Closing,
Buyer shall cause the Company to honor all employee benefit
obligations to current and former employees under all plans
and (except to the extent that any material obligations
thereunder have not been reflected as an expense in the
Company Financial Information and the Closing Company
Financial Information or not reflected in Section 2.16(g) of
the Company Disclosure Schedule) all employment or severance
agreements entered into by the Company and its Subsidiaries.
Buyer, Sellers and the Company agree that no current or
former director of the Company or any other Person shall
have any rights with respect to the Company's directors'
salary pool after the Closing and such salary pool shall be
terminated as of the Closing.
(b) Election to Buyer's Board of Directors;
Organization of Insurance Brokerage Holding Company;
Appointment of Directors and Officers.
(i) At the first regular meeting of the Board of
Directors of Buyer following the later of the Closing or the
1997 Annual Meeting of Buyer's stockholders, Buyer shall
take all steps which may be necessary in order to enable
Messrs. ▇▇▇▇▇, ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ and a Person to be
designated by the Sellers' Committee (provided that such
Person is not a present or former director, officer or
employee of the Company or any of its Affiliates and is
reasonably acceptable to Buyer's board of directors)
promptly to be appointed to Buyer's board of directors in
accordance with Buyer's organizational documents.
(ii) At the time of his election as a director
▇▇. ▇▇▇▇▇ will retire as an employee of Buyer but will
continue to serve as Vice-Chairman of Buyer until December
31, 1997. Thereafter, he shall continue to be eligible for
nomination as an independent director of Buyer in accordance
with Buyer's organizational documents.
(iii) At or prior to the Closing, Buyer shall
organize a new corporation that is wholly owned by Buyer and
is named "J&H ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, Inc." (the "Insurance
Brokerage Holding Company"). As soon as reasonably
practicable after the Closing, Buyer shall cause the board
of directors and executive officers of the Insurance
Brokerage Holding Company to consist of Persons whose
identity and positions shall be determined prior to the
Closing Time by Buyer and the Company in consultation and
cooperation with one another. Such directors and executive
officers shall be employees of the Company or Buyer at the
Closing Time, and their appointment shall be subject (to the
extent deemed appropriate by Buyer) to the approval of
Buyer's board of Directors after the Closing Date (which
approval Buyer shall use its best efforts to obtain). Such
directors and executive officers and their positions shall
be set forth on Annex B hereto prior to the Closing Date and
such Annex will be initialled by Buyer, the Company and
Sellers' Designee. Thereafter, it is Buyer's intention that
each such Person shall have the customary duties,
responsibilities, authority and benefits associated with
each position specified for him or her in Annex B (including
rights to indemnification and insurance for directors' and
officers' liability comparable to those provided directors
and officers of Buyer).
(iv) Following the Closing, Buyer shall cause all
the insurance and reinsurance brokerage businesses conducted
by Buyer and the Company and their respective Subsidiaries
worldwide to be operated by and the management
responsibility of the Insurance Brokerage Holding Company
(the "Consolidation"), notwithstanding the legal ownership
of such entities. The Company, ▇▇▇▇▇ & McLennan,
Incorporated, a Delaware corporation ("MMI"), and Seabury &
▇▇▇▇▇, Inc., a Delaware corporation, will be wholly-owned
subsidiaries of the Insurance Brokerage Holding Company.
▇▇▇ ▇▇▇▇▇▇▇▇▇ & Company, Inc., a Delaware corporation
("▇▇▇▇▇▇▇▇▇"), is a subsidiary of MMI and will be under the
supervision and control of the Insurance Brokerage Holding
Company. ▇▇▇▇▇ & McLennan Risk Capital Holdings, Inc., a
subsidiary of ▇▇▇▇▇▇▇▇▇, and its subsidiary ▇▇▇▇▇ & McLennan
Risk Capital Corp., will not be under the supervision and
control of the Insurance Brokerage Holding Company. The
Insurance Brokerage Holding Company shall have primary
responsibility for planning and implementing the
Consolidation.
(c) Employee Award Agreements.
(i) As provided in this Section 6.5(c), each of
the Persons to be named in Annex C at the Closing Time will
be entitled to receive for value provided to the Company an
employee award agreement substantially in the form set forth
as Exhibit A (with such modifications as may be approved by
Buyer and Sellers' Designee or Sellers' Committee, as the
case may be). Annex C will specify next to each such
Person's name the amounts of cash and Buyer Common Stock to
be set forth in such Person's employee award agreement (all
such employee award agreements required hereunder to be
executed and delivered by Buyer are herein called the
"Employee Award Agreements"). Each Employee Award Agreement
will become effective only when executed and delivered to
the Person entitled thereto by the Company and countersigned
and returned by such Person to the Company before the
expiration of the applicable Employee Acceptance Period, but
not earlier than the Employee Registration Time. In the
event that any employee entitled to receive an Employee
Award Agreement is deceased before such agreement becomes
effective, his or her estate shall be entitled to be
substituted for such employee as a party to such agreement,
which shall be modified as contemplated in the applicable
form thereof attached as Exhibit A, and references in this
Section 6.5(c) to such employee shall be deemed to mean his
or her estate as necessary.
(ii) Beginning promptly after the date of this
Agreement, the Company and Buyer will consult together in
good faith regarding the employees of the Company and its
Subsidiaries who are to be named in Annex C and the amount
of cash and Buyer Common Stock (if any), and the form of
Employee Award Agreement, to be specified for each such
employee as contemplated by Annex C. Only Persons who are
employees of the Company and its Subsidiaries will be
eligible to be named in Annex C, unless the Company and the
Buyer otherwise agree. The number of such employees to be
named in Annex C shall be approximately 600 (in addition to
certain managing principals and principals) and the
aggregate amount of cash, together with the aggregate dollar
amount of Buyer Common Stock, to be specified for all
employees named in Annex C (including listed managing
principals and principals) shall be approximately $500
million, of which approximately one-third shall be cash.
The Company and Buyer will use their respective best efforts
to reach a good faith agreement as to the names and other
items to be specified in Annex C as soon as practicable
after the date of this Agreement but not later than two
Business Days prior to the Closing Date. A completed
version of Annex C setting forth all such agreed upon items
shall be added to and made a part of this Agreement not
later than such Business Day. Any Buyer Common Stock to be
specified for an employee in such version of Annex C shall
be expressed as a dollar amount, and the number of shares
issuable under such employee's Employee Award Agreement
shall be determined prior to the Closing Time by dividing
such specified dollar amount by the Closing Stock Price,
with any resulting fractional share being Rounded. The
number of shares of Buyer Common Stock issuable under each
Employee Award Agreement shall be set forth in the amended
version of Annex C, which shall be added to and made a part
of this Agreement prior to the Closing Time. The Company,
Buyer and Sellers' Designee shall initial the revised
schedule.
(iii) Promptly after the later of the Employee
Filing Time and the Closing Time, the Company will make
available an Employee Award Agreement to each Person
entitled to receive one. The Company shall execute and
deliver to the entitled Person two counterparts of the
Employee Award Agreement such Person is entitled to receive
under this Section 6.5(c), together with a written statement
that such agreement may be accepted by the entitled Person
countersigning and returning to the Company (in the manner
provided in Section 10.9, which shall be set forth) one such
counterpart and related stock power attached thereto before
the expiration of the applicable Employee Acceptance Period
(the date and time of which shall also be set forth). Such
statement shall also provide that no Employee Award
Agreement shall become binding on the entitled Person or
otherwise effective until the Employee Registration Time.
Buyer shall cause the Company to honor its obligations under
the Employee Award Agreements.
(iv) "Employee Acceptance Period" shall mean, with
respect to each Employee Award Agreement, the period
beginning on the day when the Company delivers the executed
counterparts thereof and the accompanying statement to the
Person entitled thereto as provided in this Section 6.5(c)
and ending at the later of the Employee Registration Time
and the close of business on the 30th day (or, if such day
is not a Business Day, the next succeeding Business Day)
following the day on which such delivery is made.
(d) Retiree Agreements.
(i) Annex D sets forth the names of certain
living, former directors, and the estates of certain
deceased former directors, of the Company as of the date of
this Agreement (such named Persons, the "Retirees"). As of
such date, each Retiree named in Annex D whose name is not
marked by an asterisk held a Ten-Year Contract carrying the
Payment Rights specified next to such Retiree's name, and
all Ten-Year Contracts, and the Payment Rights carried
thereby, that were outstanding on such date are set forth in
Annex D.
(ii) As provided in this Section 6.5(d), each
Retiree will be entitled to receive an agreement
substantially in the form set forth as Exhibit B (with
appropriate modification for estates and for Retirees that
do not hold Ten-Year Contracts) and which shall provide for
payment of such amount of cash and such dollar amount of
Buyer Common Stock (before deducting the amount to be
delivered to the Escrow Fund) as are specified next to such
Retiree's name in Annex D (all such agreements required
hereunder to be executed and delivered by Buyer are herein
called the "Retiree Agreements") which payment shall be net
of all withholding Taxes imposed thereon. The number of
shares of Buyer Common Stock issuable under any Retiree
Agreement shall be determined prior to the Closing Time by
dividing the dollar amount of such stock specified for such
agreement in Annex D by the Closing Stock Price, with any
resulting fractional share being Rounded. Such number of
shares for each Retiree Agreement (before deducting the
amount to be delivered to the Escrow Fund), with the Escrow
Fund amount shown separately, shall be set forth in an
amended version of Annex D, which shall be added to and made
a part of this Agreement prior to the Closing Time. The
Company, Buyer and Sellers' Designee shall initial the
revised schedule. Each Retiree Agreement will become
effective only when executed and delivered to the Person
entitled thereto by Buyer and countersigned and returned to
Buyer by such Person before the expiration of the applicable
Retiree Acceptance Period. In the event that any Retiree
entitled to receive a Retiree Agreement dies before such
agreement becomes effective, his or her estate shall be
entitled to be substituted for such Retiree as a party to
his or her Retiree Agreement, which shall be modified as
appropriate to reflect such substitution, and references in
this Section 6.5(d) to such Retiree shall be deemed to mean
his or her estate as necessary. Promptly following the
execution of this Agreement, the Company will contact each
Retiree and urge him or her to accept the Retiree Agreement
to be delivered to such Person pursuant to this Section
6.5(d). (The Company shall not be required by the preceding
sentence to make any payment to a Retiree.)
(iii) Promptly following the execution of this
Agreement, Buyer will deliver, as the Company instructs, a
Retiree Agreement and two counterparts thereto executed by
Buyer, to each such Person entitled to receive one. Each
Retiree shall have the right to execute such Retiree
Agreement until the expiration of the applicable Retiree
Acceptance Period. Each such agreement shall be effective
if and when it is countersigned and returned to Buyer, by or
on behalf of the entitled Person, during the applicable
Retiree Acceptance Period. At the Closing, Buyer shall pay
the consideration payable under each such agreement which is
executed prior to the Closing, in the manner provided
herein, therein and in any payment instructions given by the
Company to Buyer by or on behalf of the entitled Person.
With respect to any Retiree Agreement that does not become
effective during the applicable Retiree Acceptance Period,
Buyer shall, if requested by the Company before the Closing
or by the Sellers' Committee after the Closing, consult and
cooperate with the Company (prior to the Closing) and the
Sellers' Committee (after the Closing) to determine and
implement a reasonable way (which the Buyer, after
consultation with the Sellers' Designee or Sellers'
Committee, believes will not interfere with any private
placement exemption from registration under the Securities
Act of Buyer Common Stock previously effected pursuant to
this Section 6.5) to enable such entitled Person to enter
into such Retiree Agreement with Buyer after the Employee
Registration Time and the effective time of the Resale
Registration Statement, and to obtain the benefit of having
the Buyer Common Stock issuable thereunder included in
either such registration or another registration as
appropriate and at an appropriate time.
(iv) "Retiree Acceptance Period" shall mean the
period beginning on or after the date hereof upon delivery
of a Retiree Agreement executed by Buyer to each such Person
entitled to receive one and ending at the close of business
on the day (or, if such day is not a Business Day, on the
next succeeding Business Day) before the Resale Registration
Statement or Employee Registration Statement is filed with
the SEC (or such shorter period as the Company may request).
Section 6.6 Retention of Books and Records.
After the Closing, Buyer shall cause the Company and its
Subsidiaries to retain, until all applicable tax statutes of
limitations (including periods of waiver) have expired, all
books, records and other documents pertaining to the Company
and its Subsidiaries in existence at the Closing Time that
are required to be retained for tax and legal purposes under
the Company's current retention policies and to make the
same available after the Closing for inspection and copying
by any of the Sellers or its agents at such Seller's
expense, during regular business hours and upon reasonable
request and advance notice. After the expiration of such
period, no such books and records shall be destroyed by
Buyer without first advising the Sellers' Committee in
writing detailing the contents thereof and giving Sellers'
Committee at least 120 days to obtain possession thereof.
The Sellers agree that such records will be kept strictly
confidential and used only for tax purposes.
Section 6.7 Amended Company Certificate and By-
laws. At least one Business Day prior to Closing, the
Company shall file with the New Jersey Secretary of State
its amended certificate of incorporation substantially in
the form set forth in Section 2.1(b)(ii) of the Company
Disclosure Schedule (and which by its terms shall become
effective at the Closing Time) and shall cause its amended
by-laws substantially in the form set forth in said section
to be effective when such filing has been made and accepted
by the New Jersey Secretary of State. It is understood and
agreed that the Company may reinstate its certificate of
incorporation and by-laws as in effect prior to the Closing
Time if the Closing does not occur on the Closing Date.
Section 6.8 Publicity. The initial press release
regarding the transactions contemplated by this Agreement
and the Other Transaction Agreements shall be a press
release issued by each of the Company and Buyer. The
Company and Buyer shall each consult with the other prior to
issuing any press release or otherwise making a public
announcement with respect to the transactions contemplated
by this Agreement and the Other Transaction Agreements and
prior to making any filings with any third party or
Governmental Entity (including any securities exchange) with
respect to such transactions, except to the extent that any
such issuance, announcement or filing is required by Law (or
by obligation pursuant to any listing agreement with or rule
of any national securities exchange) to be made without such
consultation.
Section 6.9 Directors' and Officers,
Indemnification and Insurance.
(a) From and after the Closing, Buyer shall
indemnify and hold harmless, to the fullest extent
authorized under applicable law (and Buyer shall also
advance expenses as incurred to the fullest extent
authorized under applicable law, provided that the Person to
whom expenses are advanced provides an undertaking to repay
such advances if it is ultimately determined that such
Person is not entitled to indemnification), each present and
former director, officer and employee of the Company and its
Subsidiaries determined as of the Closing (collectively, the
"Company Indemnified Parties") against all costs, expenses
(including reasonable attorneys' fees), judgments, fines,
losses, claims, damages and liabilities (collectively,
"Costs") incurred in connection with any claim, action,
suit, proceeding or investigation, whether civil, criminal,
administrative or investigative and whether asserted or made
prior to, at or after the Closing (if asserted or made prior
to the applicable statute of limitations), arising out of or
pertaining to matters existing or occurring at or prior to
the Closing including the transactions contemplated by this
Agreement and the Other Transaction Agreements (such claims,
actions, suits, proceedings and investigations,
collectively, "Company Actions"); provided, however, that
Buyer shall not be required to indemnify any Company
Indemnified Party pursuant hereto in any Company Action if
it shall be determined that, in connection with such action
such party acted in bad faith and not in a manner such party
believed to be in or not opposed to the best interests of
the Company. In the event any claim or claims are asserted
or made within the applicable statute of limitations, all
rights to indemnification in respect of any such claim or
claims shall continue until final disposition.
(b) Any Company Indemnified Party wishing to
claim indemnification under Section 6.9(a) in respect of a
Company Action, upon learning of such action, shall promptly
notify Buyer and the Company thereof, but the failure to so
notify shall not relieve Buyer of any liability it may have
to such party hereunder if such failure does not materially
prejudice Buyer. In the event of any Company Action
(whether arising before, at or after the Closing), (i) Buyer
shall have the right to assume, or cause the Company to
assume, the defense thereof and Buyer shall not be liable to
the Company Indemnified Parties for any legal expenses of
other counsel or any other expenses subsequently incurred by
such parties in connection with the defense thereof, except
that if Buyer and the Company elect not to assume such
defense or counsel for the Company Indemnified Parties
advises that there are issues which raise conflicts of
interest between Buyer or the Company and the Company
Indemnified Parties, the Company Indemnified Parties may
retain counsel satisfactory to them and Buyer shall pay all
reasonable fees and expenses of such counsel promptly as
statements therefor are received (provided, however, that
Buyer shall be obligated pursuant to this paragraph (b) to
pay for only one firm of counsel (other than local counsel)
for all Company Indemnified Parties in any jurisdiction
unless the use of one such counsel for Company Indemnified
Parties would present such counsel with a conflict of
interest); (ii) the Company Indemnified Parties will
cooperate in the defense of any such matter; and (iii) Buyer
shall not be liable for any settlement effected without its
prior written consent. Notwithstanding the foregoing, Buyer
shall not have any obligation hereunder to any Company
Indemnified Party if and when a court of competent
jurisdiction shall ultimately determine, and such
determination shall have become final, that the
indemnification of such party in the manner contemplated
hereby is prohibited by applicable law or not required under
paragraph (a) above. If such indemnity is not available
with respect to a Company Indemnified Party, then Buyer and
such party shall contribute to the amount payable in such
proportion as is appropriate to reflect their relative
faults and benefits.
(c) The provisions of this Section 6.9 are
intended to be for the benefit of, and shall be enforceable
by, each of the Company Indemnified Parties, their estates,
heirs, distributees, successors, assigns and
representatives.
(d) Notwithstanding the foregoing, (i) nothing
contained in this Section 6.9 shall in any way entitle any
Person to indemnification for any Costs (A) other than
expenses (including reasonable attorneys fees) and the
advancement of such expenses, if such Costs are the result
of circumstances giving rise to a breach of the
representations and warranties contained in Sections 2.24
(a) or (b), or (B) with respect to claims made prior to the
Closing which would be covered by the terms of the Bermuda
E&O insurance policy and (ii) nothing contained in this
Section 6.9 shall in any way limit, diminish or restrict
Buyer's right to indemnification pursuant to Articles V and
IX. Each Seller agrees that to the extent a conflict exists
between this Section 6.9 and the provisions of the Company's
by-laws, this Section 6.9 shall govern, and no Seller shall
seek or be entitled to indemnification under the Company's
by-laws for matters covered by this Section 6.9.
(e) If at any time Buyer determines to obtain D&O
insurance for any of the matters covered in this Section
6.9, Sellers shall cooperate with Buyer in obtaining such
coverage, including completing any application for such
insurance.
Section 6.10 Parachute Payments; Shareholder
Approval Requirements. Prior to taking any action with
respect to the Company Common Stock that could result in a
parachute payment (as defined in Section 280G((b)(2)) to an
employee of the Company who is a disqualified individual (as
defined in Section 280G(c) of the Code), including without
limitation any amendment of the Current Certificate and
Bylaws as contemplated by Section 2.1(b) and Section 6.7 to
remove restrictions on the transferability of shares of
Company Common Stock, the Company and Sellers in a timely
manner shall have taken all actions necessary to comply
fully with the shareholder approval requirements of Section
280G(b)(5)(B), including those set forth in proposed
Treasury Regulation Section 1.280G-1, Q/A-7 or, any
modifications or amendments thereof, and any final Treasury
Regulations addressing this issue applicable to any such
action or pronouncements (the "Shareholder Approval
Requirements").
Section 6.11 Expenses. Except as may be
otherwise expressly provided in this Agreement and the Other
Transaction Agreements and whether or not such transactions
are consummated, all costs and expenses (including fees and
expenses of counsel and financial advisors) incurred in
connection with such transactions shall be paid by the
Company, if incurred by the Company or any Sellers; provided
that any such expenses are taken into account in determining
the Company's earnings, and by the Buyer, if incurred by
Buyer.
Section 6.12 Other Actions by the Company and
Buyer.
(a) Takeover Statute. If any Takeover Statute is
or may become applicable to the transactions contemplated by
this Agreement, each of Buyer and the Company and its board
of directors shall grant such approvals and take such
actions as are necessary so that such transactions may be
consummated as promptly as practicable on the terms
contemplated by this Agreement and otherwise act to
eliminate or minimize the effects of such statute or
regulation on such transactions.
(b) Registration Rights. (i) Buyer has executed
and delivered to the Sellers' Designee, for the benefit of
each of the Sellers and the Persons entitled under Section
6.5(d) to receive a Retiree Agreement, a registration rights
agreement providing for registration under the Securities
Act of all Buyer Common Stock to be received by such Persons
pursuant to this Agreement and the Retiree Agreements, all
as provided in such agreement (as amended from time to time,
the "Registration Rights Agreement").
(ii) In addition to the action required to be
taken under the Registration Rights Agreement in order to
have the Resale Registration Statement filed and declared
effective, Buyer hereby agrees to prepare and file with the
SEC as soon as practicable after the date hereof a separate
registration statement on Form S-3 or Form S-8 pursuant to
which the shares of Buyer Common Stock to be delivered
pursuant to the Employee Award Agreements (and any Retiree
Agreements that first become effective after the Closing)
shall be registered under the Securities Act for the purpose
of such delivery (the "Employee Registration Statement").
The earliest date and time when such registration statement
is filed with the SEC is herein called the "Employee Filing
Time". Buyer shall use its best efforts to cause the
Employee Registration Statement to be declared effective
under the Securities Act as soon as practicable after the
date hereof. The date and time of such effectiveness is
herein called the "Employee Registration Time." In
connection with such registration, Buyer shall follow the
procedures set forth in Sections 3(c), (e), (h) and (j) and
4 of the Registration Rights Agreement, to the extent
applicable. Buyer shall pay the expenses of such
registration (including filing fees and fees and expenses of
its accountants and counsel). The Company shall cooperate
in providing such information as reasonably may be needed to
effect the registration contemplated in this paragraph.
(iii) Buyer shall use its best efforts to cause
the shares of Buyer Common Stock to be issued pursuant to
this Agreement, the Retiree Agreements and the Employee
Award Agreements (subject to Section 6.3(f)) to be approved
for listing on the NYSE prior to such issuance, subject to
official notice of issuance, prior to the Closing Time.
(c) Company FIRPTA Statement. The Company shall
provide to each Seller no more than 30 days prior to the
Closing a statement in writing that the Company is not a
United States real property holding corporation (the
"Company FIRPTA Statement"). The Company FIRPTA Statement
shall conform in all respects to the requirements of
Treasury Regulation Section 1.897-2(g)(1), including any
applicable notice requirement under Treasury Regulation
Section 1.897-2(h).
Section 6.13 Non-Competition and Non-
Solicitation.
(a) Each Seller who is a director of the Company
as of the date hereof hereby agrees that during the Non-
Compete Period such Seller, other than in connection with
his duties as an employee of the Company, Buyer or any of
their respective Subsidiaries, will not (x) engage in, or
participate in the ownership (unless limited to 3%),
management, operation or control of any business engaged in,
the insurance or reinsurance brokerage business or the
benefit consulting business in any area which the Company,
Buyer or any of their respective Subsidiaries do such
business or (y) otherwise engage in any activities which
compete with the business of the Company, Buyer or their
respective Subsidiaries as conducted on the Closing Date,
and agrees that thereafter, such Person shall be subject to
the non-solicitation restrictions set forth in paragraph (b)
until the later of the second anniversary of the last day of
the Non-Compete Period and the second anniversary of the
date on which such Seller is no longer employed by the
Company, Buyer or any of their respective Subsidiaries. The
Non-Compete Period shall commence on the Closing Date and
end on the fifth anniversary of the Closing Date.
Notwithstanding the foregoing, if such a director is
terminated at any time after the Closing without cause (as
such term is defined in the Employee Award Agreement), then
the Non-Compete Period shall be three years from the
Closing Date, provided that such Seller will thereafter be
subject to the non-solicitation restrictions set forth in
paragraph (b) as if such Seller had not been a director as
of the date hereof.
(b) Each Seller who is not a director of the
Company as of the date hereof hereby agrees that during the
Non-Solicit Period, such Seller will not (x) solicit, accept
or service business that competes with businesses conducted
by the Company, Buyer or any of their Subsidiaries (i) from
any clients or prospects of the Company or its affiliates
who were solicited directly by Seller or where Seller
supervised, directly or indirectly, in whole or in part, the
solicitation activities related to such clients or prospects
or (ii) from any former client who was such within two (2)
years prior to such termination and who was solicited
directly by Seller or where Seller supervised, directly or
indirectly, in whole or in part, the solicitation activities
related to such former client; or (y) solicit any employee
of the Company or its affiliates to terminate his
employment. The Non-Solicit Period shall commence on the
Closing Date and end on the later of the fifth anniversary
of the Closing Date and the second anniversary of the date
on which such Seller is no longer employed by the Company,
Buyer or any of their respective Subsidiaries.
(c) Each such Seller hereby acknowledges that
Buyer, in entering into this Agreement and agreeing to pay
the respective Purchase Price, is relying on such Seller's
agreement set forth in this Section 6.13.
(d) Each Seller hereby acknowledges that in the
event that such Seller shall breach any of the provisions of
this Section 6.13 or in the event that any such breach is
threatened, in addition to and without limiting or waiving
any other remedies available to the Buyer at law or in
equity, Buyer shall be entitled to immediate injunctive
relief in any court, domestic or foreign, having the
capacity to grant such relief, to restrain any such breach
or threatened breach and to enforce the provisions of this
Section 6.13. Each Seller also acknowledges and agrees that
there is no adequate remedy at law for any such breach or
threatened breach and, in the event that any proceeding is
brought seeking injunctive relief, agree not to use as a
defense thereto that there is an adequate remedy at law.
Each Seller further acknowledges that the restrictions
provided for in this Section 6.13 and the duration and the
scope thereof are, under all of the circumstances,
reasonable and necessary for the protection of Buyer and its
investment hereunder. If any provision of this Section 6.13
is determined to be too broad so as to be unenforceable,
such provision shall be deemed to have been modified to be
only so broad as is enforceable.
Section 6.14 Escrow Agreements. (a) At the
Closing, Buyer, Sellers, the Escrow Agent and each Retiree
with an effective Retiree Agreement at the Closing shall
enter into an escrow agreement substantially in the form of
Exhibit D hereto (the "Indemnity Escrow Agreement"). Buyer
shall designate the Escrow Agent subject to the Company's
approval which shall not be unreasonably withheld. At the
Closing, Buyer will deliver an amount equal to ten percent
of the Total Purchase Price, consisting of shares of Buyer
Common Stock to be funded by Sellers and Retirees with
effective Retiree Agreements at the Closing as provided
below (the "Escrow Fund") to the Escrow Agent in accordance
with the terms of the Indemnity Escrow Agreement to secure
certain obligations of the Sellers pursuant to this
Agreement. Pursuant to the Indemnity Escrow Agreement, the
Escrow Agent shall hold the Escrow Fund for a period of two
years following the Closing subject to asserted claims for
indemnification. Each Retiree executing a Retiree Agreement
shall have appointed the Seller's Committee to act as his or
her attorney-in-fact with respect to the matters set forth
in the Indemnity Escrow Agreement. Notwithstanding the
foregoing, on the first anniversary of the Closing Date, the
Escrow Agent shall release to the Sellers' Committee an
amount equal to one-half of the Escrow Fund, reduced by any
amounts paid to Buyer prior to such anniversary date and any
amounts then reserved with respect to any unresolved
asserted claims for Damages made by the Buyer Group all as
is provided in the Indemnity Escrow Agreement. The Escrow
Fund initially will consist of a number of shares of Buyer
Common Stock to be contributed ratably by each Seller and
each Retiree with an effective Retiree Agreement at the
Closing in an amount equal to such Person's proportionate
interest (based on the amount to be received by such Person
for their Shares or Ten-Year Contracts, as the case may be)
in the amount equal to the sum of (x) the Total Purchase
Price and (y) the aggregate payments to be received by the
Retirees with effective Retiree Agreements at the Closing in
exchange for their Ten-Year Contracts. In respect of the
shares placed in the Escrow Fund, the number of shares of
Buyer Common Stock deliverable hereunder to each such Seller
and Retiree at the Closing will be reduced by the amount to
be delivered to the Escrow Agent as part of the Escrow Fund;
provided, that the shares to be delivered into the Escrow
Fund on behalf of each such Seller and Retiree shall be
drawn first from the shares of such Person that are subject
to transfer restrictions under Section 7(a) of the
Registration Rights Agreement until the second anniversary
of the Closing Date and thereafter, as necessary from the
shares of such Person that are subject to such resale
restrictions until the first anniversary of the Closing Date
(with any resulting fractional share being Rounded).
(b) At the time following the Closing that it is
determined that there are funds to be deposited in escrow
pursuant to Section 6.17(c), Buyer and the Sellers' Designee
shall agree on an appropriate form of escrow agreement with
the Escrow Agent, or such other escrow agent as mutually
agreed to by Buyer and Sellers' Committee, whereby the funds
to be escrowed pursuant to Section 6.17(c) shall be
deposited with such escrow agent (and shall bear interest in
accordance with its terms) in accordance with the terms of
this Agreement and such escrow agreement (the "Tax Escrow
Agreement").
Section 6.15 Quarterly Financial Statements. Not
later than 45 days after the end of any fiscal quarter,
unless the Closing shall have occurred the Company will
provide to Buyer the balance sheet, statement of income,
changes in stockholders' equity and statement of cash flows
for such fiscal quarter. Such quarterly financial
statements will be prepared in accordance with GAAP applied
on a basis consistent with the Company Financial
Information, and will present fairly, in all material
respects, the consolidated financial position of the Company
and its Subsidiaries as of last day of such quarter, and the
consolidated statements of income, changes in stockholders'
equity and cash flows of the Company and its Subsidiaries
for the quarter then ended.
Section 6.16 Closing Company Financial
Information. (a) Within 45 days after the Closing, the
Sellers' Committee shall deliver to Buyer the following:
(i) a consolidated balance sheet of the Company and its
Subsidiaries as of the Closing Date (the "Closing
Consolidated Balance Sheet"), (ii) a consolidated statement
of income for the Company and its Subsidiaries for the Pre-
Closing Period (the "Closing Consolidated Income
Statement"), (iii) an auditor's report of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
LLP, the Company's independent accountants, stating that the
financial statements referred to in item (a)(i) and (a)(ii)
above are fairly presented, in all material respects, in
accordance with GAAP applied on a basis consistent with the
audited Company Financial Information relating to the year
ended December 31, 1996 (except as provided in paragraph (b)
below), and (iv) a report of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP, as to the
consolidated working capital of the Company and its
Subsidiaries, which report shall be prepared in accordance
with AICPA Statement on Auditing Standards No. 75 and shall
indicate (x) the Company's compliance with Section 2.23 and
(y) the amount, if any, by which the payments contemplated
by Section 6.17(a) would need to be reduced to ensure
compliance with Section 2.23. Such financial statements and
reports are referred to herein as the "Closing Company
Financial Information."
(b) The Closing Company Financial Information
shall be prepared in accordance with GAAP applied on a basis
consistent with that employed in the preparation and
presentation of the Company Financial Information and
continue to include as current liabilities (as reflected in
the Company Financial Information): $14.5 million of excess
reserves for severance costs, $5.2 million of excess
reserves for errors and omissions insurance and $12.0
million of excess reserves for federal and state Taxes
(collectively, the "Excess Reserves"); provided, that any
additional borrowings over and above those in the Company
Financial Information for the year ended December 31, 1996
shall be classified as a current liability for purposes of
the Closing Company Financial Information, effect shall be
given to the total expenses incurred and to be incurred by
the Company in connection with the transactions contemplated
hereby, including all income Tax provisions necessary to
fully accrue for the income Taxes attributable to the
repatriation of funds to be distributed as set forth in
clause (x) of Section 6.17(a) (after taking into account
Taxes already provided for on the Company's balance sheet as
of December 31, 1996 included in the Company Financial
Information for unremitted foreign earnings), and no effect
shall be given in the Closing Company Financial Information
to any effect associated with any tax deduction, tax loss
carrybacks and other tax benefits available in connection
with or resulting from the payments to be made by the
Company or other events or matters contemplated pursuant to
this Agreement.
(c) The results of the Report referred to in
Section 6.16(a)(iv) shall be binding on all parties hereto
unless, not later than the tenth day after a copy of the
Closing Company Financial Information is delivered to the
Buyer, the Buyer notifies the Sellers' Committee in writing
that it objects to the Report and sets forth its basis for
doing so. In that event, not later than the fifth Business
Day after the Buyer delivers its notice of objection, Buyer
and the Sellers' Committee shall refer their dispute to
Deloitte & Touche LLP and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP, their
respective independent accountants, and direct such firms to
resolve the dispute in any reasonable manner as soon as
possible. Such firms' resolution shall be binding on all
parties hereto absent manifest error. If such firms have
not resolved the dispute by the fifth Business Day after it
has been referred to them, Buyer and the Sellers' Committee
will cause their respective independent accountants to
select a third accounting firm of national standing, which
shall be independent of the Buyer and Sellers' Committee, to
resolve the dispute in any reasonable manner as soon as
possible. Such third firm's resolution shall be binding on
all parties hereto absent manifest error. Buyer and the
Sellers' Committee shall each pay one-half of such third
firm's fees and expenses. The Sellers' Committee shall have
such access to the Company's financial and accounting
records as it reasonably may request in order to carry out
its responsibilities under Sections 6.16 and 6.17.
Section 6.17 Permitted Distributions.
(a) Promptly upon finalization of the Closing
Company Financial Information (as defined in Section 6.16)
and subject to any reduction required so that the payments
contemplated in this Section 6.17 shall not cause the
representation and warranty set forth in Section 2.23 to be
untrue, the Company will make the following payments to the
Sellers' Committee for distributions to such current and
former stockholders and employees of the Company and its
Subsidiaries as the Sellers' Committee may determine:
(x) An amount in cash, not to exceed $175
million, consisting of the Company's excess cash, $100
million of which is held by J&H Interests, Inc. and $75
million of which is held by J&H Investments (Bermuda) Ltd.
(y) An amount in cash equal to the Applicable
Percentage of 1997 Pre-Closing Earnings, less an amount, if
any, equal to any dividends to be received by Sellers,
Retirees and the Employees on the Buyer Common Stock to be
issued pursuant to this Agreement which are attributable to
the Pre-Closing Period. The term "1997 Pre-Closing
Earnings" shall mean the consolidated net income of the
Company and its Subsidiaries for the Pre-Closing Period, as
reflected on the Closing Consolidated Statement of Income
(such net income shall reflect the normal directors' salary
accrual). The term "Pre-Closing Period" shall mean the
period commencing on January 1, 1997 and ending on the
Closing Date. The term "Applicable Percentage" shall mean
85%.
(b) Payments of the amounts referred to in
paragraphs (x) and (y) of Section 6.17(a) shall be (i) with
interest on all amounts due at the rate of 5% per annum from
the date of Closing to the date of payment and (ii) made net
of all applicable withholding Taxes.
(c) After the Closing, upon written request by
the Sellers' Committee, Buyer shall deliver to the Sellers'
Committee, an amount in cash equal to the cash balance of
the Bermuda E&O insurance policy less (i) $10 million (the
estimated cost of purchasing a three-year E&O tail policy)
and (ii) any Taxes payable with respect to the cancellation
or other termination of such policy and any repatriation of
funds received on such cancellation or termination. Any
such payment shall be made net of all applicable withholding
Taxes. Pending such delivery, Buyer will cause the Company
to maintain this policy in full force and effect for the
exclusive benefit of the current and former directors and
officers of the Company (determined as of the Closing),
without prejudicing the submission of claims asserted
against the Company prior to the Closing that would be
covered by such policy, and to make such changes in the
policy as are reasonably requested by the Seller's Committee
at its expense (if any).
(d) The Company shall pay to the Sellers'
Committee the amount of (i) any Tax refunds attributable to
any carrybacks of losses or credits and (ii) any reduction
in Taxes during the Pre-Closing Period, each of (i) and (ii)
attributable to a deduction for any amounts payable to the
Sellers, employees of the Company or any of its
Subsidiaries, or the Retirees pursuant to this Agreement,
but no such amount shall be payable to the Sellers'
Committee until there has been a Final Determination with
respect to the item giving rise to the Tax refund or
reduction in Taxes and, in addition, in the case of (d)(i)
above until such amount has been received by the Company. A
"Final Determination" shall mean the final resolution of
liability for any Tax for a taxable period (i) by a
decision, judgment, decree or other order by a court of
competent jurisdiction, which has become final and
unappealable; (ii) by a closing agreement or accepted offer
in compromise under Section 7121 or 7122 of the Code, or
comparable agreements under the laws of any state, local or
foreign jurisdictions; (iii) by any allowance of a refund or
credit in respect of an overpayment of Tax, but only after
the expiration of all periods during which such refund may
be recovered (including by way of an offset) by the
jurisdiction imposing the Tax; or (iv) by reason of the
expiration of the applicable statute of limitations. If any
such Tax refund is received prior to such Final
Determination, the amount shall be placed in escrow upon
receipt thereof by the Company or Buyer. Likewise, the
amount of any reduction in Taxes shall be placed in escrow
as soon as practicable after determination, except to the
extent of payments of estimated Taxes from the period from
January 1, 1997 until the Closing which amounts shall be
placed into escrow only when refunded by the Tax authority
or applied by Buyer as an overpayment. The escrow shall be
subject to an escrow agreement substantially similar to that
described in Section 6.14(b), but shall reflect the
provisions of this Section 6.17.
6.18 Resale Restrictions. Each Seller hereby
agrees to be bound by the resale restrictions applicable to
his or her Stock Consideration under the Registration
Agreement, as provided therein. Each Seller acknowledges
that the certificates representing the Stock Consideration
shall bear a legend reflecting such restrictions, as well as
any restrictions imposed under the Securities Act, and all
in accordance with the Registration Rights Agreement.
6.19 EEOC Action. Buyer and Sellers agree that
with respect to the EEOC action which is set forth in
Section 2.11 of the Company Disclosure Schedule and marked
thereon by an asterisk, all Damages (including costs of
defense) arising from such action shall be shared equally by
Buyer, on the one hand, and the Sellers, on the other hand.
The Sellers' Committee shall be entitled, in consultation
with Buyer, to manage the defense of such action. The
Sellers' obligations pursuant to this Section 6.19 shall be
treated for all purposes of this Agreement as if they were
indemnification obligations under Section 9.2, subject to
the next two sentences. On the first anniversary of the
Closing, the Sellers' Committee shall have an option to
(i) release the amount of the Escrow Fund scheduled to be
released on such first anniversary date and treat the
Sellers' obligations under this Section 6.19 (including
costs of defense) as if they were indemnification
obligations under Article V or (ii) retain all remaining
amounts in the Escrow Fund until the second anniversary of
the Closing Date and continue to treat the Sellers'
obligations under this Section 6.19 as indemnification
obligations under Section 9.2. In the case of clause (ii),
on the second anniversary of the Closing, all remaining
amounts in the Escrow Fund not needed to cover Damages
indemnifiable under Section 9.2 shall be released to
Sellers, but Sellers' obligations under this Section 6.19
(including costs of defense) shall continue with any Damages
covered by such obligations and assessed after the second
anniversary being limited to the amount of funds released
from the Escrow Fund on the second anniversary. The
Sellers' obligations under this Section 6.19 shall be
several and not joint.
ARTICLE VII
CONDITIONS TO CLOSING
Section 7.1 Conditions to Each Sale and Purchase
Obligation. The obligation of each Seller to sell his or
her Shares, and the obligation of Buyer to purchase such
Seller's Shares, are subject to the satisfaction or waiver
at or prior to the Closing Time of each of the following
conditions:
(a) Regulatory Consents. All waiting periods
applicable under the HSR Act to the consummation of the
sales of the Total Shares shall have expired or been
terminated. In addition, all filings required by Law to be
made prior to the Closing Time by the Company or Buyer or
any of their respective Subsidiaries or by any Seller with,
and all consents, approvals and authorizations required by
Law to be obtained prior to the Closing Time by the Company
or Buyer or any of their respective Subsidiaries or by any
Seller from, any Governmental Entity (collectively,
"Governmental Consents") in order to consummate the sales of
the Total Shares shall have been made or obtained (as the
case may be), except where the failure to obtain any such
Governmental Consents, individually or in the aggregate, is
not reasonably likely to have a Company Material Adverse
Effect or a Buyer Material Adverse Effect or provide a
reasonable basis to conclude that the parties hereto or any
of their respective affiliates, directors, officers, agents,
advisors or other representatives would be subject to the
risk of criminal liability if the sales of the Total Shares
were consummated.
(b) Litigation. No court or Governmental Entity
of competent jurisdiction shall have enacted, issued,
promulgated, enforced or entered any statute, rule,
regulation, judgment, decree, injunction or other order
(whether temporary, preliminary or permanent) that is in
effect and restrains, enjoins or otherwise prohibits
consummation of the transactions contemplated by this
Agreement and the Other Transaction Agreements
(collectively, an "Order"), and no Governmental Entity shall
have instituted or threatened to institute any proceeding
seeking any such order.
Section 7.2 Conditions to Each Purchase
Obligation. The obligation of Buyer to purchase the Shares
of any particular Seller is also subject to the satisfaction
or waiver by Buyer prior to the Closing Time of the
following conditions:
(a) Representations and Warranties. The
representations and warranties of the Company set forth in
Article II and the representations and warranties of the
Sellers set forth in Article III shall be true and correct
as of the date of this Agreement and as of the Closing Time
as though made on and as of the Closing Time (except to the
extent any such representation or warranty expressly speaks
as of an earlier time), and Buyer shall have received a
certificate signed on behalf of the Company by the Chairman
and Chief Financial Officer of the Company to such effect
with respect to the Company's representations and warranties
in Article II; provided, however, that notwithstanding
anything herein to the contrary, this Section 7.2(a) shall
be deemed to have been satisfied even if such
representations and warranties are not so true and correct
unless any failure of such representations and warranties
(without giving effect to any materiality standards
contained therein) to be so true and correct, individually
or in the aggregate, has had, or is reasonably likely to
have, a Company Material Adverse Effect or is reasonably
likely to prevent, materially burden or materially impair
the ability of the Company and the Sellers to consummate the
transactions contemplated for them by this Agreement.
(b) Performance of Obligations. The Company and
the Sellers shall have performed in all material respects
all obligations required to be performed by them under this
Agreement at or prior to the Closing Time, and Buyer shall
have received a certificate signed on behalf of the Company
by the Chairman and Chief Financial Officer of the Company
to such effect with respect to the Company's obligations.
(c) Legal Opinion. Buyer shall have received a
customary opinion of ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, counsel to the
Company, dated the Closing Date, in a form reasonably
satisfactory to Buyer.
(d) Amended Company Certificate and By-laws. The
Company's amended certificate of incorporation substantially
in the form set forth in Section 2.1(b)(ii) of the Company
Disclosure Schedule shall have been filed with, and accepted
for filing by, the New Jersey Secretary of State and the
Company's amended by-laws substantially in the form set
forth in said section shall be effective.
(e) FIRPTA Affidavits and Procedures. Each
Seller shall have provided or caused to be provided to Buyer
(i) an affidavit, in a form satisfactory to Buyer, stating
under penalties of perjury such Seller's taxpayer
identification number and that such Seller is not a foreign
person within the meaning of Section 1445(b) of the Code
(each, a "FIRPTA Affidavit") or (ii) a copy of the Company
FIRPTA Statement provided by the Company pursuant to Section
6.12(c), provided, however, that, if any such Seller shall
fail to provide to Buyer a FIRPTA Affidavit or the Company
FIRPTA Statement, the transaction shall nevertheless close,
and Buyer shall withhold and pay over to the appropriate Tax
authority the amount required to be withheld under Section
1445 of the Code as determined by Buyer.
Notwithstanding the foregoing, if the conditions
in this Section 7.2 have not been satisfied but would be
satisfied with respect to the sales of Shares representing
in the aggregate at least 90% of all shares of Company
Common Stock issued and outstanding as of the Closing Time,
were the remaining Shares excluded from this Agreement, then
such conditions shall be deemed satisfied with respect to
such reduced number of Shares and the several sales thereof
shall proceed as contemplated herein. However, the
provisions of this paragraph shall not relieve any party of
liability resulting from a breach of this Agreement.
Section 7.3 Conditions to Each Sale Obligation.
The obligation of each Seller to sell his or her Shares is
also subject to the satisfaction or waiver by the Sellers'
Designee prior to the Closing Time of the following
conditions:
(a) Representations and Warranties. The
representations and warranties of Buyer set forth in Article
IV shall be true and correct as of the date of this
Agreement and as of the Closing Time as though made on and
as of the Closing Time (except to the extent any such
representation and warranty expressly speaks as of an
earlier time), and the Sellers' Designee shall have received
a certificate signed on behalf of Buyer by the Chairman and
Chief Financial Officer of Buyer to such effect; provided,
however, that notwithstanding anything herein to the
contrary, this Section 7.3(a) shall be deemed to have been
satisfied even if such representations and warranties
(without giving effect to any materiality standards
contained therein) are not so true and correct unless the
failure of such representations and warranties to be so true
and correct, individually or in the aggregate, has had, or
is reasonably likely to have, a Buyer Material Adverse
Effect or is reasonably likely to prevent, materially burden
or materially impair the ability of Buyer to consummate the
transactions contemplated for it by this Agreement and the
Other Transaction Agreements.
(b) Performance of Obligations. Buyer shall have
performed in all material respects all obligations required
to be performed by it under this Agreement and the
Registration Rights Agreement at or prior to the Closing
Time, and the Sellers' Designee shall have received a
certificate signed on behalf of Buyer by the Chairman and
Chief Financial Officer of Buyer to such effect.
(c) Legal Opinion. The Sellers' Designee shall
have received a customary opinion of Skadden, Arps, Slate,
▇▇▇▇▇▇▇ & ▇▇▇▇ LLP, counsel to Buyer, dated the Closing
Date, in a form satisfactory to the Sellers' Committee.
(d) NYSE Listing. The shares of Buyer Common
Stock issuable pursuant to this Agreement and the Retiree
Agreements shall have been authorized for listing on the
NYSE upon official notice of issuance.
ARTICLE VIII
TERMINATION
Section 8.1 Termination by Mutual Consent. This
Agreement may be terminated and the transactions
contemplated by this Agreement may be abandoned at any time
by mutual written consent of the Sellers' Designee and
Buyer.
Section 8.2 Termination by Either Sellers'
Designee or Buyer. This Agreement may be terminated and the
transactions contemplated by this Agreement may be abandoned
with respect to all of the parties hereto by action of the
Sellers' Designee or by action of Buyer at any time before
the Closing, if (i) the Closing shall not have occurred on
or before September 30, 1997 (the "Termination Date"), or
(ii) any order permanently restraining, enjoining or
otherwise prohibiting such sales shall become final and
nonappealable; provided, that the right to terminate this
Agreement pursuant to clause (i) above shall not be
available (A) to the Sellers' Designee if the respective
obligations of the Company and the Sellers under this
Agreement have been breached or (B) to Buyer if its
obligations under this Agreement have been breached, in each
case (A) and (B), in any material respect (for this purpose,
the Company and the Sellers being considered as a whole) and
in any manner that shall have proximately contributed to the
occurrence of the failure of the Closing to occur.
Section 8.3 Termination by the Sellers' Designee.
(a) This Agreement may be terminated and the
transactions contemplated by this Agreement may be abandoned
by action of the Sellers' Designee at any time before the
Closing if there has been a material breach by Buyer of any
representation, warranty, covenant or agreement contained in
this Agreement (provided, that with respect to any
representation or warranty containing a Buyer Material
Adverse Effect standard, any breach thereof shall be deemed
material) that is not curable or, if curable, is not cured
within 15 days after written notice of such breach is given
by the Company to the party committing such breach.
(b) This Agreement may be terminated and the
transactions contemplated by this Agreement may be abandoned
by action of the Seller's Designee if the Closing Stock
Price (determined without giving effect to the proviso
contained in the definition of such term) is below $102;
provided, however, that the Sellers' Designee may not effect
such termination if Buyer agrees that (i) the Closing Stock
Price shall be determined for all purposes of this Agreement
as if the definition of such term did not contain the
proviso presently contained therein and (ii) the Stock
Consideration in Shares for each Seller (with comparable
adjustments for Retirees and Employees) shall equal the
Stock Consideration in Dollars for such Seller (or Retiree
or Employee, as the case may be), multiplied by .92, and
divided by an amount equal to the Closing Stock Price
specified in clause (i) above. In such event, this
Agreement shall be deemed appropriately amended to effect
the foregoing.
Section 8.4 Termination by Buyer.
(a) This Agreement may be terminated and the
transactions contemplated by this Agreement may be abandoned
by action of Buyer at any time before the Closing if there
has been a material breach by the Sellers and the Company
(considered as a whole) of any representation, warranty,
covenant or agreement contained in this Agreement (provided,
that with respect to any representation or warranty
containing a Company Material Adverse Effect standard, any
breach thereof shall be deemed material) that is not curable
or, if curable, is not cured within 15 days after written
notice of such breach is given by Buyer to the Company.
(b) This Agreement may be terminated and the
transactions contemplated by this Agreement may be abandoned
by action of Buyer if the Closing Stock Price (determined
without giving effect to the proviso contained in the
definition of such term) is above $138; provided, however,
that Buyer may not effect such termination if Sellers'
Designee agrees that (i) the Closing Stock Price shall be
determined for all purposes of this Agreement as if the
definition of such term did not contain the proviso
presently contained therein and (ii) the Stock Consideration
in Shares for each Seller (with comparable adjustments for
Retirees and Employees) shall equal the Stock Consideration
in Dollars for such Seller (or Retiree or Employee, as the
case may be), multiplied by 1.08, and divided by an amount
equal to the Closing Stock Price specified in clause (i)
above. In such event, this Agreement shall be deemed
appropriately amended to effect the foregoing.
Section 8.5 Effect of Termination and
Abandonment.
(a) In the event of termination of this Agreement
and the abandonment of the transactions contemplated by this
Agreement pursuant to this Article VIII, this Agreement
(other than as set forth in Sections 6.4(b) and (c), 6.11
and 8.5, Articles X and XI and the Confidentiality
Agreements) shall become void and of no effect with no
liability of any party hereto (or of any of its directors,
officers, employees, agents, legal and financial advisors or
other representatives); provided, however, except as
otherwise provided herein, no such termination shall relieve
any party hereto of any liability or damages resulting from
any breach of this Agreement.
ARTICLE IX
SURVIVAL; INDEMNIFICATION
Section 9.1 Survival Periods. All
representations and warranties of the parties contained in
this Agreement, the Company Disclosure Schedule, the Buyer
Disclosure Schedule or any certificate or document expressly
setting forth representations and warranties delivered in
connection herewith shall survive the Closing (applicable as
of the Closing Date as if made on and as of such date) but
shall apply only with respect to claims asserted in writing
against the party from whom indemnification may be sought
hereunder within two years from the Closing Date; provided,
that the representations and warranties set forth in Section
2.4(a), Sections 2.24 (a) and (b) and Article III shall
survive the Closing indefinitely (and claims may be asserted
at any time); provided, however, that Section 2.14 shall not
survive the Closing. Notwithstanding anything in this
Agreement to the contrary, the obligations of the Sellers
under Article V shall survive the Closing but shall apply
only to claims asserted in writing against the party from
whom indemnification may be sought hereunder within 60 days
after the expiration of any applicable statutes of
limitations. The covenants and agreements of the parties
hereto shall survive the Closing in accordance with their
terms, provided, that, with respect to any failure to
perform any such covenant or agreement prior to the Closing,
any claim of such failure must be asserted in writing
against the party from whom indemnification may be sought
within two years from the Closing Date other than any claim
arising as failure to perform any covenant or agreement
which claim is the subject of the indemnity provided in
Article V, which claim shall survive the Closing and which
claim may be asserted in writing within 60 days after the
expiration of any applicable statute of limitations. For
purposes of this Agreement, the representations and
warranties of the Company contained herein shall be deemed
to include the Company Disclosure Schedule and the
representations and warranties of Buyer contained herein
shall be deemed to include the Buyer Disclosure Schedule.
Rights of a party to indemnification shall not be limited or
affected by any pre-Closing investigation by such party.
Section 9.2 Indemnification. Subject to the
other provisions of this Article IX, from and after the
Closing:
(a) The Sellers shall indemnify and hold harmless
Buyer and its Subsidiaries, each of Buyer's and its
Subsidiaries' directors, officers and employees, and each of
the heirs, executors, successors and permitted assigns of
any of the foregoing (collectively, "Buyer Group") from and
against any costs or expenses (including reasonable
attorneys' fees), judgments, fines, losses, claims and
damages (collectively, "Damages") incurred by the members of
Buyer Group which arise out of or are the result of any
breach of any representation or warranty or failure to
perform any covenant or agreement made by Sellers or the
Company under this Agreement (including the Company
Disclosure Schedule); provided that, for purposes of this
Section 9.2, covenants and agreements of the Company shall
relate only to those to be performed on or prior to the
Closing; and provided, further, that, no Seller shall have
any obligation to provide indemnification under this Section
9.2(a) unless Buyer provides the Sellers' Committee with
written notice that indemnification is being claimed under
this Section 9.2(a) (stating the nature and factual basis of
the claim, the provision of this Agreement allegedly
breached and the dollar amount of indemnification being
sought, if known or estimable) not later than the time
provided in Section 9.1. Notwithstanding anything to the
contrary, if a representation or warranty is breached in
accordance with its terms (including any materiality
standard contained therein), Damages for such a breach shall
be determined without giving effect to any materiality
standard contained therein. Any such indemnification shall
be satisfied solely out of the Escrow Fund, except with
respect to (x) Damages relating to Article III, which shall
be satisfied directly by the respective Seller, (y) Damages
relating to matters under Sections 2.4(a) which shall be
satisfied directly by the Sellers and (z) Damages relating
to matters under Sections 2.24 (a) or (b) or Tax matters
under Article V which shall be satisfied first out of the
Escrow Fund and then by Sellers; provided, however, that, if
such Damages relating to matters under Sections 2.24 (a) or
(b) or Tax matters under Article V are satisfied out of the
Escrow Fund, then Sellers shall be responsible for
indemnification obligations for Damages other than matters
under Sections 2.24 (a) or (b) or Tax matters under Article
V up to the amount of Damages relating to matters under
Sections 2.24 (a) or (b) or Tax matters under Article V
satisfied out of the Escrow Fund (in addition to any amounts
satisfied directly from the Escrow Fund). Notwithstanding
the foregoing, no Seller shall have any liability or
obligation in respect of any expenses or other costs
associated with an asserted claim for which it is not
obligated to provide indemnification. Only Buyer (or its
successor) may take any action with respect to
indemnification under this Section 9.2(a) or Article V.
(b) Buyer shall indemnify and hold harmless each
Seller and each of his or her heirs, executors, successors
and permitted assigns (the "Seller Group") from and against
any Damages incurred by the members of the Seller Group
which directly or indirectly arise out of or are the result
of any breach of any representation or warranty or the
failure to perform any covenant or agreement made by Buyer
under this Agreement (including the Buyer Disclosure
Schedule); provided that Buyer shall not have any obligation
to provide indemnification under this Section 9.2(b) unless
the Sellers' Committee provides Buyer with written notice
that indemnification is being claimed under this Section
9.2(b) (stating the nature and factual basis of the claim,
the provisions of this Agreement allegedly breached and the
dollar amount of indemnification being sought, if known or
estimable) not later than the time provided in Section 9.1.
Only the Sellers' Committee may take any action with respect
to indemnification under this Section 9.2(b).
(c) No claim or group of claims for Damages may
be submitted by the Sellers' Committee, on the one hand, or
Buyer, on the other hand, unless the Buyer Group, in the
case of Buyer, or the Seller Group, in the case of the
Sellers' Committee, shall have previously incurred Damages
that in the aggregate exceed $5,000,000 and that would be
indemnifiable under this Section 9.2 but for this sentence.
The Buyer Group, on the one hand, and the Seller Group, on
the other hand, shall, upon exceeding such threshold, be
entitled to seek indemnification for all Damages claimed
thereafter in excess of such threshold, but in no event
shall such party be responsible to indemnify the other party
with respect to such first $5,000,000 of Damages.
Notwithstanding the foregoing, nothing in this Section
9.2(c) shall limit in any manner each Seller's obligations
under Article V to indemnify Buyer with respect to Tax
matters or limit Seller's indemnification obligations under
Section 9.2(a) with respect to breaches of Sections 2.4(c)
and 2.24 (a) or (b).
(d) The Sellers' obligations under Section 9.2(a)
and Article V shall be several and not joint. Accordingly,
no Seller shall be responsible for any amount payable under
this Section 9.2 or Article V in excess of his or her
pro rata share, which for each Seller shall be determined by
dividing the number of Shares sold by such Seller to Buyer
at the Closing by the total number of Shares sold by all
Sellers to Buyer at the Closing; provided, however, that no
Seller shall have any liability or obligation with respect
to a breach by any other Seller of his or her
representations and warranties in Article III or a failure
by any other Seller to sell his or her Shares to Buyer on
the terms and conditions herein. The Sellers also
acknowledge that, for purposes of indemnification, they (and
not the Company) shall be solely responsible for breaches by
the Company of representations and warranties made by the
Company hereunder and for breaches by the Company of any
covenants hereunder prior to the Closing. Notwithstanding
any other provision of this Agreement, no Seller shall have
any liability or obligation hereunder, with respect to any
breach of any representation, warranty, covenant or
agreement of the Company or any Seller, except to the extent
specifically provided in this Section 9.2, Section 6.19 (to
the extent provided therein) and Article V; it being
understood and agreed that, except as specifically provided
in Section 6.19, Buyer's sole remedy for any breach of a
representation or warranty (other than those set forth in
Article III or Sections 2.4(a) or 2.24 (a) or (b)) or any
failure to perform a covenant or agreement herein by the
Company or any Seller shall be to seek indemnification
payable out of the Escrow Fund (whether or not sufficient to
cover Damages) or, in the case of Damages for Tax matters,
as provided in Article V, in each case to the extent and in
the manner set forth in this Article IX and Article V; and
it being further understood and agreed that the foregoing
shall not limit any rights Buyer may have for fraud or
willful misrepresentation. Buyer acknowledges that claims
for breaches of representations and warranties contained in
Section 3.5 shall be made only pursuant to Article V.
Section 9.3 General Procedures; Third Party
Claims. (a) If a party seeking indemnification (an
"Indemnified Party") intends to seek indemnification
pursuant to this Article IX, such Indemnified Party shall
promptly (and in any event shall deliver such notice within
the survival periods set forth in Section 9.1 hereof) notify
Sellers' Committee or Buyer, as the case may be (the
"Indemnifying Party"), in writing of such claim for Damages
describing such claim in reasonable detail; provided, that,
subject to Section 9.1, the failure to provide such notice
shall not affect the obligations of the Indemnifying Party
unless and to the extent it is actually prejudiced thereby.
Any notice of claim so delivered shall be delivered at the
same time to the Escrow Agent. In the event that such claim
involves a claim by a third party against the Indemnified
Party, the Indemnifying Party shall have 30 days after
receipt of such notice to decide whether it will undertake,
conduct and control, through counsel of its own choosing
(which shall be reasonably satisfactory to the Indemnified
Party) and at its own expense, the settlement or defense
thereof, and if it so decides, the Indemnified Party shall
cooperate with the Indemnifying Party in connection
therewith; provided, that the Indemnified Party may
participate (subject to control by the Indemnifying Party)
in such settlement or defense through counsel chosen by it
whose fees and expenses shall be borne by the Indemnified
Party. Notwithstanding anything in this Section 9.3(a) to
the contrary, the Indemnifying Party may, without the
consent of the Indemnified Party, settle or compromise any
action or consent to the entry of any judgment which
involves the payment of money only and includes as an
unconditional term thereof the delivery by the claimant or
plaintiff to the Indemnified Party of a duly executed and
legally effective written release of the Indemnified Party
from all liability in respect of such action. The
Indemnifying Party shall not be liable for any settlement of
any such action or proceeding effected without its written
consent, but if settled with its written consent (which
shall not be unreasonably withheld) or if there be a final,
non-appealable judgment for the plaintiff in any such action
or proceeding, the Indemnifying Party agrees to indemnify
and hold harmless such Indemnified Parties from and against
any loss or liability by reason of such settlement or
judgment. Notwithstanding the foregoing, to the extent
there is a conflict, any claims for Damages with respect to
Taxes pursuant to this Section 9.3 shall be governed by
Article V hereof.
(b) The Indemnified Party and the Indemnifying
Party shall cooperate fully in all aspects of any
investigation, defense, pre-trial activities, trial,
compromise, settlement or discharge of any claim in respect
of which indemnity is sought pursuant to Article IX,
including, but not limited to, by providing the other party
with reasonable access to employees and officers (including
as witnesses) and other information.
ARTICLE X
MISCELLANEOUS
Section 10.1 Modification or Amendment. This
Agreement may be modified or amended only by written
agreement executed and delivered by the Sellers' Designee,
the Company and Buyer. Any such modification or amendment
shall be binding on all parties hereto.
Section 10.2 Waiver of Conditions. The
conditions to each of the parties' obligations to consummate
the sales of Shares are for the sole benefit of such party.
Such conditions may be waived only by the Sellers' Designee,
with respect to any condition to the Sellers' obligations,
or by Buyer, with respect to any condition to its
obligations, in whole or in part to the extent permitted by
applicable law.
Section 10.3 Assignment. This Agreement shall
not be assignable by operation of law or otherwise, except
that, upon written notice to the Company and the Sellers'
Designee not later than the second Business Day prior to the
Closing Date, Buyer may assign its rights to purchase the
Shares hereunder to a wholly-owned Subsidiary; it being
understood, however, that no such assignment shall relieve
Buyer of its obligations hereunder.
Section 10.4 Entire Agreement. This Agreement,
the Other Transaction Agreements and the Confidentiality
Agreements constitute the entire agreement, and supersede
all prior agreements, understandings, representations and
warranties, both oral and written, among the parties hereto
with respect to the subject matter hereof. EXCEPT FOR ITS
REPRESENTATIONS AND WARRANTIES CONTAINED IN THIS AGREEMENT,
NO PARTY HERETO MAKES ANY REPRESENTATION OR WARRANTY, AND
EACH PARTY HERETO HEREBY DISCLAIMS ANY OTHER REPRESENTATION
OR WARRANTY MADE BY ITSELF OR ANY OF ITS OFFICERS,
DIRECTORS, EMPLOYEES, AGENTS, FINANCIAL AND LEGAL ADVISORS
OR OTHER REPRESENTATIVES, WITH RESPECT TO THE EXECUTION AND
DELIVERY OF THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED
HEREBY, NOTWITHSTANDING THE DELIVERY OR DISCLOSURE TO ANY
OTHER PARTY OR ITS REPRESENTATIVES OF ANY DOCUMENTATION OR
OTHER INFORMATION WITH RESPECT TO ANY ONE OR MORE OF THE
FOREGOING.
Section 10.5 Parties in Interest; No Third Party
Beneficiaries. This Agreement shall inure to the benefit of
and be binding upon the parties hereto and their respective
successors and permitted assigns. Except as specifically
provided in Section 6.9 (Directors' and Officers'
Indemnification and Insurance), this Agreement is not
intended to confer upon any Person other than the parties
hereto any rights or remedies hereunder.
Section 10.6 Obligations of Buyer and of the
Company. Whenever this Agreement requires a Subsidiary of
Buyer to take any action, such requirement shall be deemed
to include an undertaking on the part of Buyer to cause such
Subsidiary to take such action. Whenever this Agreement
requires a Subsidiary of the Company to take any action,
such requirement shall be deemed to include an undertaking
on the part of the Company to cause such Subsidiary to take
such action.
Section 10.7 Counterparts. This Agreement and
any amendments hereto may be executed in one or more
counterparts, each of which shall be deemed to be an
original instrument, and all such counterparts shall
together constitute the same agreement.
Section 10.8 Section Headings. The section and
paragraph headings and table of contents contained in this
Agreement are for reference purposes only and shall not in
any way affect the meaning or interpretation of this
Agreement.
Section 10.9 Notices. Any notice, request,
instruction or other document to be given hereunder by any
party (or other Person referred to herein) shall be deemed
given if in writing and delivered personally or sent by
facsimile (if a facsimile number for the intended recipient
is provided in this Section or by notice given as provided
in this Section), by telegram or by registered or certified
mail (return receipt requested):
(a) if to the Company before the Closing, to:
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: General Counsel
with a copy to:
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
If to the Company after the Closing, to Buyer
and Buyer's counsel, each at the addresses
set forth in this Section 10.9
(b) if to any Seller before the Closing, to:
Each of Messrs. ▇▇▇▇▇▇, ▇▇▇▇▇ and Roxe, as
the Sellers' Designee, at the address
specified below:
c/o Johnson & ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
(c) if to any Seller after the Closing, to:
Each of the members of the Sellers'
Committee, at the address specified to Buyer
in writing prior to the Closing, with a copy
to:
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
(d) if to Buyer, to:
▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ Companies, Inc.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: General Counsel
with a copy to:
Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
or to such other Persons or addresses as may be designated
in writing by the party to receive such notice as provided
above. Any notice given by mail or telegram shall be
effective when received. Any notice given by facsimile
shall be effective when the appropriate facsimile answerback
is received.
SECTION 10.10 GOVERNING LAW AND VENUE; WAIVER OF
JURY TRIAL. (a) THIS AGREEMENT SHALL BE DEEMED TO BE MADE
IN AND IN ALL RESPECTS SHALL BE INTERPRETED, CONSTRUED AND
GOVERNED BY AND IN ACCORDANCE WITH THE LAW OF THE STATE OF
NEW YORK. The parties hereby irrevocably submit to the
jurisdiction of the courts of the State of New York and the
Federal courts of the United States of America located in
The Borough of Manhattan, The City of New York solely in
respect of the interpretation and enforcement of the
provisions of this Agreement, and in respect of the
transactions contemplated hereby, and hereby waive, and
agree not to assert, as a defense in any action, suit or
proceeding for the interpretation or enforcement hereof,
that it is not subject thereto or that such action, suit or
proceeding may not be brought or is not maintainable in said
courts or that the venue thereof may not be enforced in or
by such courts, and the parties hereto irrevocably agree
that all claims with respect to such action or proceeding
shall be heard and determined in such a New York State or
Federal court. The parties hereby consent to and grant any
such court jurisdiction over the person of such parties and
over the subject matter of such dispute and agree that
mailing of process or other papers in connection with any
such action or proceeding in the manner provided in Section
10.9 or in such other manner as may be permitted by law
shall be valid and sufficient service thereof.
(b) EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY
CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY
TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE
EACH SUCH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY
WAIVES ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN
RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT
OF OR RELATING TO THIS AGREEMENT, OR THE TRANSACTIONS
CONTEMPLATED BY THIS AGREEMENT. EACH PARTY CERTIFIES AND
ACKNOWLEDGES THAT (i) NO REPRESENTATIVE, AGENT OR ATTORNEY
OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE,
THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION,
SEEK TO ENFORCE THE FOREGOING WAIVER, (ii) EACH SUCH PARTY
UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF THIS
WAIVER, (iii) EACH SUCH PARTY MAKES THIS WAIVER VOLUNTARILY
AND (iv) EACH SUCH PARTY HAS BEEN INDUCED TO ENTER INTO THIS
AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND
CERTIFICATIONS IN THIS SECTION 10.10.
Section 10.11 Severability. The provisions of
this Agreement shall be deemed severable and, to the fullest
extent permitted by applicable law, the invalidity or
unenforceability of any provision shall not affect the
validity or enforceability of the other provisions hereof.
If any provision of this Agreement, or the application
thereof to any Person or circumstance, is invalid or
unenforceable, then, to the fullest extent permitted by
applicable law, (a) a suitable and equitable provision shall
be substituted therefor in order to carry out, so far as may
be valid and enforceable, the intent and purpose of such
invalid or unenforceable provision and (b) the remainder of
this Agreement and the application of such provision to
other Persons or circumstances shall not be affected by such
invalidity or unenforceability, nor shall such invalidity or
unenforceability affect the validity or enforceability of
such provision, or the application thereof, in any other
jurisdiction.
ARTICLE XI
DEFINITIONS
Section 11.1 Specific Definitions. As used in
this Agreement, the following terms shall have the meanings
set forth or as referenced below:
"Acquisition Proposal" shall have the meaning set
forth in Section 6.2.
"Affiliate", as applied to any Person, means any
other Person directly or indirectly controlling, controlled
by or under common control with that Person.
"Agreement" shall mean this Agreement, all
Annexes, all Exhibits, the Company Disclosure Schedule and
the Buyer Disclosure Schedule, but such term shall not
include any other agreement, even if a form of such other
agreement is set forth in an Exhibit.
"Amended Company Certificate and By-laws" shall
have the meaning set forth in Section 2.1(b).
"Applicable Percentage" shall have the meaning set
forth in Section 6.17(a).
"Business Day" shall mean any day other than a
Saturday, a Sunday or a day on which banks in The City of
New York, New York are authorized or obligated by law or
executive order to close.
"Buyer" shall have the meaning set forth in the
Preamble.
"Buyer Audit Date" shall mean December 31, 1996.
"Buyer Common Stock" shall mean the common stock,
par value $1.00 per share, of Buyer.
"Buyer Confidentiality Agreement" shall have the
meaning set forth in Section 6.4(c).
"Buyer Disclosure Schedule" shall have the meaning
set forth in the preamble to Article IV. Such Buyer
Disclosure Schedule is incorporated by reference in this
Agreement and shall form a part hereof as though set forth
in full herein.
"Buyer Group" shall have the meaning set forth in
Section 9.2(a).
"Buyer Material Adverse Effect" shall mean a
material adverse effect on the properties, financial
condition or results of operations of Buyer and its
Subsidiaries considered as a whole; provided, however, that
any such effect resulting (i) from any change in law, rule,
regulation or generally accepted accounting principles or
interpretations thereof that applies to both Buyer and the
Company, (ii) from any change in economic conditions
generally or in the industries in which Buyer and its
Subsidiaries operate or (iii) from any of the actions to be
taken by Buyer pursuant to this Agreement, shall not be
considered when determining whether or not a Buyer Material
Adverse Effect has occurred. A liability, cost or other
items reasonably expected to cause (or in fact causing) a
reduction in net income (other than on a one-time basis) of
$50 million or more or a reduction in net worth of $200
million or more, shall be deemed to be a Buyer Material
Adverse Effect, provided that for purposes of determining
the Sellers' rights to indemnification under Article IX, a
liability, cost or other items reasonably expected to cause
(or in fact causing) a reduction in net worth of $20 million
or more shall be deemed to be a Buyer Material Adverse
Effect.
"Buyer Preferred Stock" shall have the meaning set
forth in Section 4.4(a).
"Buyer Report" shall have the meaning set forth in
Section 4.5.
"Buyer Requested Amount" shall have the meaning
set forth in Section 5.3(b).
"Buyer Rights Agreement" shall have the meaning
set forth in Section 4.4(a).
"Buyer Settlement Payment" shall have the meaning
set forth in Section 5.3(b).
"Buyer Stock Plans" shall have the meaning set
forth in Section 4.4(a).
"▇▇▇▇▇▇▇▇▇" shall have the meaning set forth in
Section 6.5(b)(iii).
"Cash Consideration" shall have the meaning set
forth in Section 1.1.
"Closing" shall have the meaning set forth in
Section 1.2(a).
"Closing Company Financial Information" shall have
the meaning set forth in Section 6.16(a).
"Closing Consolidated Balance Sheet" shall have
the meaning set forth in Section 6.16(a).
"Closing Consolidated Income Statement" shall have
the meaning set forth in Section 6.16(a).
"Closing Date" shall have the meaning set forth in
Section 1.2(a).
"Closing Stock Price" shall mean the average of
the per share closing prices of Buyer Common Stock as
reported on the NYSE composite transactions reporting system
(as reported in the New York City edition of The Wall Street
Journal or, if not reported thereby, another authoritative
source) for the five consecutive trading days in such market
ending on the second trading day immediately preceding the
Closing Date, provided that (i) if such average price shall
be more than $129, the Closing Stock Price shall be deemed
to be $129, and (ii) if such average price shall be less
than $111, the Closing Stock Price shall be deemed to be
$111.
"Closing Time" shall have the meaning set forth in
Section 1.2(a).
"Code" shall mean the United States Internal
Revenue Code of 1986, as amended from time to time.
"Company" shall have the meaning set forth in the
Preamble.
"Company Actions" shall have the meaning set forth
in Section 6.9(a).
"Company Balance Sheet" shall have the meaning set
forth in Section 2.5.
"Company Common Stock" shall have the meaning set
forth in the Preamble.
"Company Compensation and Benefit Plans" shall
have the meaning set forth in Section 2.16(a).
"Company Confidentiality Agreement" shall have the
meaning set forth in Section 6.4(b).
"Company Disclosure Schedule" shall have the
meaning set forth in the preamble to Article II. Such
Company Disclosure Schedule is incorporated by reference in
this Agreement and shall form a part hereof as though set
forth in full herein.
"Company Financial Information" shall have the
meaning set forth in Section 2.5.
"Company Indemnified Parties" shall have the
meaning set forth in Section 6.9(a).
"Company Intellectual Property Rights" shall have
the meaning set forth in Section 2.18(b)(ii).
"Company Lease Agreements" shall have the meaning
set forth in Section 2.7(a).
"Company Material Adverse Effect" shall mean a
material adverse effect on the properties, financial
condition or results of operations of the Company and its
Subsidiaries considered as a whole; provided, however, that
any such effect resulting (i) from any change in law, rule,
regulation or generally accepted accounting principles or
interpretations thereof that applies to both Buyer and the
Company, (ii) from any change in economic conditions
generally or in the insurance or reinsurance brokerage
industry or (iii) from any of the actions to be taken by the
Company pursuant to this Agreement, shall not be considered
when determining whether or not a Company Material Adverse
Effect has occurred. A liability, cost or other items
reasonably expected to cause (or in fact causing) a
reduction in net income (other than on a one-time basis) of
$10 million or more or a reduction in net worth of $50
million or more, shall be deemed to be a Company Material
Adverse Effect, provided that for purposes of determining
Buyer's rights to indemnification under Article IX, a
liability, cost or other items reasonably expected to cause
(or in fact causing) a reduction in net worth of $5 million
or more shall be deemed to be a Company Material Adverse
Effect.
"Company Material Contracts" shall have the
meaning set forth in Section 2.8(a).
"Company Owned Real Property" shall have the
meaning set forth in Section 2.7(a).
"Company Pension Plan" shall have the meaning set
forth in Section 2.16(b).
"Confidentiality Agreements" shall mean the Buyer
Confidentiality Agreement and the Company Confidentiality
Agreement.
"Consolidation" shall have the meaning set forth
in Section 6.4(b)(iii).
"Contracts" shall have the meaning set forth in
Section 2.8.
"Costs" shall have the meaning set forth in
Section 6.9(a).
"Current Company Certificate and By-laws" shall
have the meaning set forth in Section 2.1(b).
"Damages" shall have the meaning set forth in
Section 9.2(a).
"Deferred Stock Units" shall have the meaning set
forth in Section 4.4(a).
"dispose" shall have the meaning set forth in
Section 5.5(b).
"Due Date" shall have the meaning set forth in
Section 5.3(a).
"Employee Acceptance Period" shall have the
meaning set forth in Section 6.5(c)(iv).
"Employee Award Agreements" shall have the meaning
set forth in Section 6.5(c)(i).
"Employee Filing Time" shall have the meaning set
forth in Section 6.12(b)(ii).
"Employee Registration Statement" shall have the
meaning set forth in Section 6.12(b)(ii)
"Employee Registration Time" shall have the
meaning set forth in Section 6.13(b)(ii).
"Encumbrances" shall have the meaning set forth in
Section 2.4(b).
"Environmental Law" has the meaning set forth in
Section 2.17.
"ERISA" shall have the meaning set forth in
Section 2.16(b).
"ERISA Affiliate" shall have the meaning set forth
in Section 2.16(c).
"ERISA Affiliate Plan" shall have the meaning set
forth in Section 2.16(c).
"Escrow Fund" shall have the meaning set forth in
Section 6.14(a).
"Exchange Act" shall mean the United States
Securities and Exchange Act of 1934, as amended from time to
time.
"Final Determination" shall have the meaning set
forth in Section 6.17(c).
"FIRPTA Affidavit" shall have the meaning set
forth in Section 7.2(f).
"GAAP" shall have the meaning set forth in Section
2.5.
"Government Antitrust Entity" shall have the
meaning set forth in Section 6.3(d).
"Governmental Consents" shall have the meaning set
forth in Section 7.1(a).
"Governmental Entity" shall have the meaning set
forth in Section 2.10.
"Hazardous Substance" shall have the meaning set
forth in Section 2.17.
"HSR Act" shall mean the United States ▇▇▇▇-
▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976, as amended
from time to time.
"Indemnified Party" shall have the meaning set
forth in Section 9.3(a).
"Indemnifying Party" shall have the meaning set
forth in Section 9.3(a).
"Indemnity Escrow Agreement" shall have the
meaning set forth in Section 6.14(a).
"Indemnity Payments" shall have the meaning set
forth in Section 5.11.
"Insurance Brokerage Holding Company" shall have
the meaning set forth in Section 6.5(b)(iii).
"Investment Advisors Act" shall mean the United
States Investment Advisors Act of 1940, as amended from time
to time.
"IRS" shall mean the United States Internal
Revenue Service.
"Laws" shall have the meaning set forth in Section
2.12.
"MMI" shall have the meaning set forth in Section
6.5(b)(iii).
"▇▇▇▇▇▇ ▇▇▇▇▇▇▇" shall have the meaning set forth
in Section 2.2(b) .
"1997 Pre-Closing Earnings" shall have the meaning
set forth in Section 6.17(a).
"NYSE" shall have the meaning set forth in Section
4.10.
"Order" shall have the meaning set forth in
Section 7.1(b).
"Other Entity" shall mean, with respect to any
Person, any other Person which is not a Subsidiary in which
the Company directly or indirectly owns any equity or other
ownership interest that exceeds 20% of the total equity or
other ownership interest of such other Person.
"Other Transaction Agreements" shall mean the
Employee Award Agreements, Retiree Agreements and
Registration Rights Agreement.
"Payment Right" shall mean, with respect to any
holder of a Ten-Year Contract at any time, a number
calculated by dividing (a) the sum, for each year remaining
at such time during which such holder is entitled to
payments under such contract, of the portion of dividends of
the Company to which such holder is entitled under such
contract with respect to such year (such sum being such
holder's "Total Remaining Payment Rights") by (b) the Total
Remaining Payment Rights of all holders of Ten-Year
Contracts at such time.
"Permitted Encumbrances" shall have the meaning
set forth in Section 2.7(a).
"Person" means any individual, corporation,
partnership, firm, joint venture, association, joint-stock
company, trust, estate, unincorporated organization,
governmental or regulatory body or other entity.
"Pre-Closing Period" shall have the meaning set
forth in Section 6.17(a).
"Registration Statements" shall have the meaning
set forth in Section 2.22.
"Purchase Price" shall have the meaning set forth
in Section 1.1.
"Registration Rights Agreement" shall have the
meaning set forth in Section 6.12(b).
"Representatives" shall have the meaning set forth
in Section 6.4.
"Resale Registration Time" shall mean the date and
time when the Resale Registration Statement becomes
effective under the Securities Act.
"Resale Registration Statement" shall mean the
registration statement required to be filed by Buyer under
the Registration Rights Agreement registering for resale
under the Securities Act shares of Buyer Common Stock held
by the Sellers and Persons entitled to receive Retiree
Agreements, in each case as set forth in the Registration
Rights Agreement.
"Retiree Acceptance Period" shall have the meaning
set forth in Section 6.5(d)(iv).
"Retiree Agreements" shall have the meaning set
forth in Section 6.5(d)(ii).
"Retirees" shall have the meaning set forth in
Section 6.5(d)(i).
"Rights" shall have the meaning specified therefor
in the Buyer Rights Agreement.
"Rounded" shall mean any fractional share which is
less than .5 shall be rounded downward to the nearest whole
share and any fractional share which is .5 or greater shall
be rounded upward to the nearest whole share.
"SEC" shall mean the United States Securities and
Exchange Commission.
"Securities Act" shall mean the United States
Securities Act of 1933, as amended from time to time.
"Seller" shall have the meaning set forth in the
Preamble.
"Sellers' Committee" shall mean ▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ and ▇▇▇▇▇▇ ▇. ▇▇▇▇, and their successors as
a majority of the members of Sellers' Committee shall notify
Buyer from time to time.
"Sellers' Designee" shall have the meaning set
forth in Section 1.5(a).
"Sellers' Requested Amount" shall have the meaning
set forth in Section 5.3(a).
"Sellers' Settlement Payment" shall have the
meaning set forth in Section 5.3(a).
"Shareholder Approval Requirements" shall have the
meaning set forth in Section 6.10.
"Shares" shall have the meaning set forth in
Section 1.1.
"Significant Subsidiary" shall mean, with respect
to any Person, a Subsidiary of such Person that is a
"Significant Subsidiary" as defined in Rule 1.02(w) of
Regulation S-X promulgated pursuant to the Exchange Act.
"Stock Consideration" shall have the meaning set
forth in Section 1.1.
"Stock Consideration in Dollars" shall have the
meaning set forth in Section l.l.
"Stock Consideration in Shares" shall have the
meaning set forth in Section 1.1.
"Subsidiary" shall mean, with respect to any
Person, any other Person of which at least a majority of the
securities or other ownership interests having by their
terms ordinary voting power to elect a majority of the board
of directors or other persons performing similar functions
for such other Person is directly or indirectly owned or
controlled by such Person, by, one or more of such Person's
Subsidiaries or by such Person and any one or more of such
Person's Subsidiaries.
"Takeover Statute" shall have the meaning set
forth in Section 2.13.
"Tax," "Taxes," "Taxable" and "Tax Return" shall
have the respective meanings set forth for such terms in
Section 2.14(d).
"Tax Arbitrator" shall have the meaning set forth
in Section 5.3(a).
"Tax Audit" shall have the meaning set forth in
Section 5.5(c).
"Tax Escrow Agreement" shall have the meaning set
forth in Section 6.14(b).
"Tax Package" shall have the meaning set forth in
Section 5.3(a).
"Ten-Year Contracts" shall mean the Ten-Year
Certificates issued to former stockholders of the Company
under the Current Company Certificate and By-laws.
"Termination Date" shall have the meaning set
forth in Section 8.2.
"Third-Party Intellectual Property Rights" shall
have the meaning set forth in Section 2.18(b)(i).
"Total Purchase Price" shall have the meaning set
forth in Section 1.1.
"Total Shares" shall have the meaning set forth in
Section 1.1.
"Transfer Taxes" shall have the meaning set forth
in Section 5.4.
"Working Capital" shall have the meaning set forth
in Section 2.23.
Section 11.2 Other Terms. Other terms may be
defined elsewhere in the text of this Agreement and, unless
otherwise indicated, shall have such meaning indicated
throughout this Agreement.
Section 11.3 Other Definitional Provisions.
(a) The words "hereof," "herein" and "hereunder"
and words of similar import, when used in this Agreement,
shall refer to this Agreement as a whole and not to any
particular provision of this Agreement.
(b) The terms defined in the singular shall have
a comparable meaning when used in the plural, and vice
versa.
(c) The terms "dollars" and "$" shall mean United
States Dollars.
(d) The term "knowledge" when used in this
Agreement with respect to the Company shall mean the actual
knowledge of ▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇ and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, without
obligation of any further review or inquiry, and does not
include information of which they may be deemed to have
constructive knowledge only.
(e) The term "knowledge" when used in this
Agreement with respect to Buyer shall mean the actual
knowledge of A.J.C. ▇▇▇▇▇, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇ ▇.
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇ and ▇▇▇▇▇▇▇ ▇. ▇▇▇ ▇▇▇▇▇, without
obligation of any further review or inquiry, a does not
include information of which they may be deemed to have
constructive knowledge only.
(f) Unless the context otherwise requires, any
reference herein to any "Article," "Section," "Annex" or
"Exhibit" refers to an Article or Section of, or an Annex or
Exhibit attached to, this Agreement, as the case may be.
(g) Unless the context otherwise requires, any
reference herein to this Agreement or any Annex or Exhibit
shall mean, at any time, this Agreement or such Annex or
Exhibit, as the case may be, as the same may be amended to
such time, provided, however, that references to the date of
this Agreement shall in all cases mean March 12, 1997.
IN WITNESS WHEREOF, this Agreement has been signed
on behalf of each of the parties hereto as of the date first
written above.
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇
By /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: President
The Persons Listed on
Annex A, As Sellers
By /s/ ▇.▇. ▇▇▇▇
------------------------
Name: ▇.▇. ▇▇▇▇
As Attorney-in-Fact
▇▇▇▇▇ & MCLENNAN
COMPANIES, INC.
By /s/ A.J.C. ▇▇▇▇▇
------------------------
Name: A.J.C. ▇▇▇▇▇
Title: Chairman
ANNEX A
Schedule of Consideration
-------------------------
Cash Consideration Stock Consideration in Dollars Total Consideration
------------------ ------------------------------ -------------------
335,324,477 670,648,964 1,005,973,441
ANNEX B
Directors and Executive Officers After the Closing
--------------------------------------------------
Name ______________________ Position ______________________
Initialed by:
__________ ___________ __________
Atlantic Mariner ___________________,
as Seller's Designee
ANNEX C
Persons Entitled to Receive Employee Award Agreements
-----------------------------------------------------
Dollar Value
Name Cash of Shares Number of Shares
--------------- --------------- ---------------- -----------------
Initialed by:
__________ ___________ __________
Atlantic Mariner ___________________,
as Seller's Designee
ANNEX D
Schedule of Consideration
-------------------------
Cash Consideration Stock Consideration in Dollars Total Consideration
------------------ ------------------------------ -------------------
99,000,001 198,000,002 297,000,003
