EXECUTION COPY
AGREEMENT AND PLAN OF MERGER
among
BMD VENTURE CAPITAL B.V.,
ELMIRA (BVI) UNLIMITED
and
TOMMY HILFIGER CORPORATION
Dated as of December 23, 2005
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TABLE OF CONTENTS
PAGE
ARTICLE I
THE MERGER
Section 1.1 The
Merger.....................................................4
Section 1.2
Closing........................................................4
Section 1.3 Effective
Time.................................................5
Section 1.4 Effects of the
Merger..........................................5
Section 1.5 Memorandum and Articles of
Association of the Surviving
Corporation...................................................
5
Section 1.6
Directors......................................................5
Section 1.7
Officers.......................................................5
ARTICLE II
CONVERSION OF SHARES; EXCHANGE OF CERTIFICATES
Section 2.1 Effect on
Shares...............................................5
Section 2.2 Exchange of
Certificates.......................................7
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Section 3.1 Qualification, Organization,
Subsidiaries, etc.................9
Section 3.2 Capital
Stock.................................................10
Section 3.3 Corporate Authority Relative
to this Agreement; No Violation..12
Section 3.4 Reports and Financial
Statements..............................14
Section 3.5 Internal Controls and
Procedures..............................14
Section 3.6 No Undisclosed
Liabilities....................................15
Section 3.7 Compliance with Law;
Permits..................................15
Section 3.8 Employee Benefit
Plans..........................................
Section 3.9 Absence of Certain Changes
or Events..........................18
Section 3.10 Investigations;
Litigation....................................18
Section 3.11 Tax
Matters...................................................18
Section 3.12 Labor
Matters.................................................19
Section 3.13 Intellectual
Property.........................................20
Section 3.14 Opinion of Financial
Advisor..................................22
Section 3.15 Required Vote of the Company
Shareholders.....................22
Section 3.16 Material
Contracts............................................22
Section 3.17 Finders or
Brokers............................................24
Section 3.18 Properties and
Leases.........................................24
Section 3.19 Environmental
Matters...........................................
Section 3.20 State Takeover
Statutes.......................................26
Section 3.21 Insurance
Policies............................................26
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
Section 4.1 Qualification; Organization,
Subsidiaries, etc................27
Section 4.2 Corporate Authority Relative
to this Agreement; No Violation..27
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Section 4.3 Compliance with Law;
Permits..................................28
Section 4.4 Investigations;
Litigation....................................29
Section 4.5 Available
Funds...............................................29
Section 4.6 Capitalization of Merger
Sub..................................29
Section 4.7
Guarantee.....................................................30
Section 4.8 No Vote of Parent
Stockholders................................30
Section 4.9 Finders or
Brokers............................................30
ARTICLE V
COVENANTS AND AGREEMENTS
Section 5.1 Conduct of Business by the
Company or Parent..................30
Section 5.2
Investigation.................................................34
Section 5.3 No
Solicitation...............................................35
Section 5.4 Filings, Other
Actions........................................37
Section 5.5 Stock Options and Other
Stock Based Awards; Employee Matters..39
Section 5.6 Reasonable Best
Efforts.......................................41
Section 5.7 Press
Releases................................................44
Section 5.8 Indemnification and
Insurance.................................44
Section 5.9 Section 16
Matters............................................45
Section 5.10 Control of
Operations.........................................45
Section 5.11 Certain Transfer
Taxes........................................45
Section 5.12
Financing.....................................................46
Section 5.13 Merger
Sub....................................................47
Section 5.14 Intentionally
Omitted.........................................47
Section 5.15 Existing
Indebtedness.........................................47
Section 5.16
Notification..................................................48
ARTICLE VI
CONDITIONS TO THE MERGER
Section 6.1 Conditions to Each Party's
Obligation to Effect the Merger....49
Section 6.2 Conditions to Obligation of
the Company to Effect the Merger..49
Section 6.3 Conditions to Obligation of
Parent and Merger Sub to Effect
the
Merger....................................................50
ARTICLE VII
TERMINATION
Section 7.1 Termination or
Abandonment....................................51
Section 7.2 Termination
Fees..............................................53
Section 7.3 Amendment or
Supplement.......................................55
Section 7.4 Extension of Time, Waiver,
etc................................55
ARTICLE VIII
MISCELLANEOUS
Section 8.1 No Survival of
Representations and Warranties.................56
Section 8.2
Expenses......................................................56
Section 8.3 Counterparts;
Effectiveness...................................56
Section 8.4 Governing
Law.................................................56
Section 8.5 Jurisdiction;
Enforcement.....................................56
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Section 8.6
Notices.......................................................57
Section 8.7 Assignment; Binding
Effect....................................58
Section 8.9
Severability..................................................58
Section 8.9 Entire Agreement; No
Third-Party Beneficiaries................59
Section 8.10
Headings......................................................59
Section 8.11
Remedies......................................................59
Section 8.11
Interpretation................................................60
Section 8.12
Definitions...................................................60
Exhibit A Form of
Guarantee
Exhibit B Consent of Sole
Shareholder of Merger Sub
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AGREEMENT AND PLAN OF MERGER, dated as of December 23, 2005
(the
"AGREEMENT"), among BMD Venture Capital
B.V., a Netherlands limited liability
company ("PARENT"), Elmira (BVI) Unlimited,
an unlimited company organized under
the laws of the British Virgin Islands and
a direct wholly-owned subsidiary of
Parent ("MERGER SUB"), and Tommy Hilfiger
Corporation, a company incorporated
under the laws of the British Virgin
Islands (the "COMPANY").
W I T N E S S E T H :
- - - - - - - - - -
WHEREAS, the respective Boards of Directors of Parent, Merger Sub
and
the Company have approved the merger of
Merger Sub with and into the Company
upon the terms and subject to the
conditions set forth in this Agreement and
pursuant to Section 170 of the BVI
Companies Act, 2004 (the "BC ACT") of the
British Virgin Islands;
WHEREAS, the respective Boards of Directors of the Company and
Merger
Sub have, by resolution and in accordance
with Section 170 of the BC Act,
approved this Agreement and the merger of
Merger Sub with and into the Company,
as set forth below (the "MERGER"), upon the
terms and subject to the conditions
set forth in this Agreement;
WHEREAS, the Board of Directors of Parent has approved and
declared
advisable this Agreement and the Merger, in
accordance with the laws of the
Netherlands; and
WHEREAS, concurrently with the execution of this Agreement, and as
a
condition to the willingness of the Company
to enter into this Agreement, Apax
Europe VI A, L.P. and Apax Europe VI-1,
L.P. (together, the "Guarantors") are
providing a guarantee (the "GUARANTEE") in
favor of the Company, in the form set
forth in Exhibit A hereto, with respect to
the performance by Parent and Merger
Sub, respectively, of their obligations
under this Agreement in the event of a
breach by either Parent or Merger Sub of
such obligations, subject to a cap as
further set forth in Section 8.11.
NOW THEREFORE, in consideration of the foregoing and the
representations, warranties, covenants and
agreements contained herein, and
intending to be legally bound hereby,
Parent, Merger Sub and the Company agree
as follows:
ARTICLE I
THE MERGER
Section 1.1 THE MERGER. At the Effective Time (as defined in
Section
1.3), upon the terms and subject to the
conditions set forth in this Agreement
and in accordance with the applicable
provisions of the BC Act, Merger Sub shall
be merged with and into the Company,
whereupon the separate corporate existence
of Merger Sub shall cease, and the Company
shall continue as the surviving
company in the Merger (the "SURVIVING
CORPORATION") and a wholly-owned
subsidiary of Parent.
Section 1.2 CLOSING. The closing of the Merger (the "CLOSING")
shall
take place at the offices of Wachtell,
Lipton, Rosen & Katz, 51 West 52nd
Street, New York, New York at 10:00 a.m.,
local time, on a date to be specified
by the parties (the "CLOSING DATE")
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which shall be no later than the second
business day after the satisfaction or
waiver (to the extent permitted by
applicable Law (as defined in Section 3.7(a))
of the conditions set forth in Article VI
(other than those conditions that by
their nature are to be satisfied by action
at the Closing, including Sections
6.3(d) and (e), but subject to the
satisfaction or waiver of such conditions),
or at such other place, date and time as
the Company and Parent may agree in
writing.
Section 1.3 EFFECTIVE TIME. On the Closing Date, immediately
after
the Closing, the parties shall cause the
merger to be consummated by executing
and filing articles of merger (the
"ARTICLES OF MERGER") with the BVI Registrar
of Corporate Affairs (the "REGISTRAR") and
make all other filings or recordings
required under the BC Act in connection
with the Merger. The Merger shall become
effective at such time as the Articles of
Merger are duly registered by the
Registrar, or at such later time as the
parties shall agree (subject to the
requirements of the BC Act) and as shall be
set forth in the Articles of Merger
(such date and time as the Merger becomes
effective is referred to herein as the
"EFFECTIVE TIME").
Section 1.4 EFFECTS OF THE MERGER. The effects of the Merger shall
be
as provided in this Agreement and in the
applicable provisions of the BC Act.
Without limiting the generality of the
foregoing, at the Effective Time, all the
assets of every description, including
choses in actions and the business of
each of the Company and Merger Sub shall
vest in the Surviving Corporation, and
all debts, claims, liabilities and
obligations of the Company and Merger Sub
shall become the debts, claims, liabilities
and obligations of the Surviving
Corporation, all as provided under the BC
Act.
Section 1.5 MEMORANDUM AND ARTICLES OF ASSOCIATION OF THE
SURVIVING
CORPORATION. Subject to Section 5.8 of this
Agreement, at the Effective Time,
the Memorandum and Articles of Association
of the Company, as set forth in
Schedule 1.5 hereto shall be the memorandum
and articles of association of the
Surviving Corporation, with such amendments
as may be required in connection
with the re-registration contemplated by
Section 5.4(d) until thereafter amended
in accordance with the provisions thereof
and applicable Law.
Section 1.6 DIRECTORS. Subject to applicable Law, the directors
of
Merger Sub immediately prior to the
Effective Time shall be appointed as
directors of the Surviving Corporation and
shall hold office until their
respective successors are duly elected and
qualified, or their earlier death,
resignation or removal.
Section 1.7 OFFICERS. The officers of the Company immediately
prior
to the Effective Time shall be the officers
of the Surviving Corporation and
shall hold office until their respective
successors are duly elected and
qualified, or their earlier death,
resignation or removal.
ARTICLE II
CONVERSION OF SHARES; EXCHANGE OF CERTIFICATES
Section 2.1 EFFECT ON SHARES. At the Effective Time, by virtue of
the
Merger and without any action on the part
of the Company, Merger Sub or the
holders of any securities of the Company or
Merger Sub:
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(a) CONVERSION OF COMPANY ORDINARY SHARES. Subject to Section
2.1(d),
each ordinary share, par value U.S.$0.01
per share, of the Company issued and
outstanding immediately prior to the
Effective Time (such shares collectively,
"COMPANY ORDINARY SHARES" or "SHARES" and
each, a "SHARE"), other than any
Cancelled Shares (as defined, and to the
extent provided, in Section 2.1(b)) and
any Dissenting Shares (as defined, and to
the extent provided, in Section
2.1(e)), shall thereupon be converted into
a right to receive U.S.$16.80 in
cash, without interest thereon (the "MERGER
CONSIDERATION"); and all Shares that
have been thus converted into the right to
receive the Merger Consideration as
provided in this Section 2.1 shall be
automatically cancelled and shall cease to
exist and the holders of certificates which
immediately prior to the Effective
Time represented such Shares shall cease to
have any rights with respect to such
Shares other than the right to receive the
Merger Consideration, without
interest thereon, upon surrender of such
certificates in accordance with this
Article II.
(b) PARENT AND MERGER SUB OWNED SHARES; TREASURY SHARES. Each
Share
that is owned, directly or indirectly, by
Parent or Merger Sub immediately prior
to the Effective Time or held by the
Company as treasury shares (in each case,
other than any such Shares held on behalf
of third parties) (the "CANCELLED
SHARES") shall, by virtue of the Merger and
without any action on the part of
the holder thereof, be cancelled and
retired and shall cease to exist, and no
consideration shall be delivered or
deliverable in exchange therefor.
(c) CONVERSION OF MERGER SUB SHARES. At the Effective Time, by
virtue
of the Merger and without any action on the
part of the holder thereof, each
ordinary share, par value U.S.$0.01 per
share, of Merger Sub issued and
outstanding immediately prior to the
Effective Time shall be converted into and
become one validly issued, fully paid and
nonassessable ordinary share, par
value U.S.$0.01 per share, of the Surviving
Corporation and shall constitute the
only outstanding shares of the Surviving
Corporation. From and after the
Effective Time, all certificates
representing the ordinary shares of Merger Sub
shall be deemed for all purposes to
represent the number of ordinary shares of
the Surviving Corporation into which they
were converted in accordance with the
immediately preceding sentence.
(d) ADJUSTMENTS. If at any time during the period between the date
of
this Agreement and the Effective Time, any
change in the outstanding Company
Ordinary Shares shall occur as a result of
any reclassification,
recapitalization, stock split (including a
reverse stock split) or combination,
exchange or readjustment of shares, or any
stock dividend or stock distribution
with a record date during such period (it
being understood that the right of the
Company to effect any of the foregoing
shall be subject to Section 5.1 hereof),
the Merger Consideration shall be equitably
adjusted to reflect such change.
(e) DISSENTING SHARES. For the purposes of this Agreement,
"DISSENTING SHARES" means Shares held by
holders who duly exercise their right
of dissent in relation to the Merger and in
accordance with the provisions of
Section 179 of the BC Act. At or from the
Effective Time, all Dissenting Shares
shall automatically be cancelled and shall
cease to exist or be outstanding, and
each holder of certificates representing
Dissenting Shares shall cease to have
any rights with respect thereto (including
any right to receive such holder's
portion of the Merger Consideration
pursuant to Section 2.1(a) hereof), except
for such rights as are granted under
Section 179 of the BC Act. Notwithstanding
the foregoing, if any holder of Dissenting
Shares fails at any time prior to or
following the Effective Time to perfect or
otherwise waives,
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withdraws or loses such holder's rights
under Section 179 of the IBC Act, then
the rights of such holder to be paid "fair
value" pursuant to Section 179 of the
BC Act shall cease to exist, and such
Dissenting Shares shall entitle their
holder to receive the Merger Consideration
pursuant to Section 2.1(a) hereof.
The Company shall give Parent (i) prompt
notice of any notice received by the
Company of any shareholder's intent to
exercise dissenter's rights pursuant to
Section 179 of the BC Act, the withdrawal
of any such notice and any other
documents served upon the Company pursuant
to Section 179 of the BC Act. The
Company shall not, except with the prior
written consent of Parent or as
otherwise required by an order, decree,
ruling or injunction of a court of
competent jurisdiction, make any payment
with respect to any such exercise of
dissenter's rights or offer to settle or
settle any such rights for an amount
higher than the Merger Consideration.
Section 2.2 EXCHANGE OF
CERTIFICATES.
(a) PAYING AGENT. At or immediately following the Effective
Time,
Parent shall deposit, or shall cause to be
deposited, with a U.S. bank or trust
company that shall be appointed by Parent
to act as a paying agent hereunder and
approved in advance by the Company in
writing (the "PAYING AGENT"), in trust for
the benefit of holders of the Shares, the
Company Stock Options (as hereinafter
defined) and the Company Stock-Based Awards
(as hereinafter defined), cash in
U.S. dollars sufficient to pay (i) the
aggregate Merger Consideration in
exchange for all of the Shares outstanding
immediately prior to the Effective
Time (other than the Cancelled Shares and
the Dissenting Shares), payable upon
due surrender of the certificates that
immediately prior to the Effective Time
represented Shares ("CERTIFICATES") (or
effective affidavits of loss accompanied
by any bond required by subsection (g) in
lieu thereof) and Shares represented
by book-entry ("BOOK-ENTRY SHARES")
pursuant to the provisions of this Article
II and (ii) the Option and Stock-Based
Consideration (as hereinafter defined)
payable pursuant to Section 5.5 (such cash
referred to in sub-section (a)(i) and
(a)(ii) being hereinafter referred to as
the "EXCHANGE FUND").
(b) PAYMENT PROCEDURES. (i) As soon as reasonably practicable
after
the Effective Time and in any event not
later than the second business day
following the Effective Time, the Paying
Agent shall mail (x) to each holder of
record of Shares whose Shares were
converted into the Merger Consideration
pursuant to Section 2.1, (i) a letter of
transmittal (which shall specify that
delivery shall be effected, and risk of
loss and title to Certificates shall
pass, only upon delivery of Certificates
(or effective affidavits of loss
accompanied by any bond required by
subsection (g) in lieu thereof) or
Book-Entry Shares to the Paying Agent and
shall be in such form and have such
other provisions as Parent and the Company
may reasonably specify), and (ii)
instructions for use in effecting the
surrender of Certificates (or effective
affidavits of loss accompanied by any bond
required by subsection (g) in lieu
thereof) or Book-Entry Shares in exchange
for the Merger Consideration and (y)
to each holder of a Company Stock Option or
a Company Stock-Based Award, a check
in an amount due and payable to such holder
pursuant to Section 5.5 hereof in
respect of such Company Stock Option or
Company Stock-Based Award.
(ii) Upon surrender of Certificates (or effective affidavits
of loss in lieu thereof) or Book-Entry
Shares to the Paying Agent together with
such letter of transmittal, duly completed
and validly executed in accordance
with the instructions thereto, and such
other documents as may customarily be
required by the Paying Agent, the holder of
such Certificates
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or Book-Entry Shares shall be entitled to
receive in exchange therefor a check
in an amount equal to the product of (x)
the number of Shares represented by
such holder's properly surrendered
Certificates (or effective affidavits of loss
in lieu thereof) or Book-Entry Shares
multiplied by (y) the Merger
Consideration. No interest will be paid or
accrued on any amount payable upon
due surrender of Certificates or Book-Entry
Shares. In the event of a transfer
of ownership of Shares that is not
registered in the transfer records of the
Company, a check for any cash to be paid
upon due surrender of the Certificate
may be paid to such a transferee if the
Certificate formerly representing such
Shares is presented to the Paying Agent,
accompanied by all documents required
to evidence and effect such transfer and to
evidence that any applicable stock
transfer Taxes have been paid or are not
applicable. Until surrendered as
contemplated by this Section 2.2, each
Certificate or Book-Entry Share shall be
deemed at any time after the Effective Time
to represent only the right to
receive upon such surrender the applicable
Merger Consideration as contemplated
by this Article II.
(iii) For the avoidance of doubt, the Paying Agent shall be
entitled to deduct and withhold from the
consideration otherwise payable under
this Agreement to any holder of Shares or
holder of Company Stock Options or
Company Stock-Based Awards, such amounts as
are required to be withheld or
deducted under the Internal Revenue Code of
1986, as amended (the "CODE") or any
provision of U.S. state, U.S. local or
foreign Tax Law with respect to the
making of such payment. To the extent that
amounts are so withheld or deducted
and paid over to the applicable
Governmental Entity, such withheld or deducted
amounts shall be treated for all purposes
of this Agreement as having been paid
to the holder of the Shares or holder of
the Company Stock Options or Company
Stock-Based Awards, in respect of which
such deduction and withholding were
made. If any withholding or deduction is
required to be made under the Laws of
any jurisdiction from the consideration
otherwise payable under this Agreement
to any holder of Shares or holder of
Company Stock Options or Company
Stock-Based Awards, the amount of such
payment shall be increased to an amount
which ensures that, after the making of
that withholding or deduction, the
holder entitled to receive such payment
receives and retains a net sum equal to
the payment which it would have received
and retained had no such withholding or
deduction been required; provided, that
this sentence shall not require that any
increase be made with respect to any
withholding or deduction to the extent such
withholding or deduction would have been
imposed had Parent and Merger Sub (or
their respective assignees pursuant to
Section 8.7) been corporations organized
under the Laws of the United States (or any
political subdivision thereof) or
the British Virgin Islands and not resident
for Tax purposes in any other
jurisdiction.
(c) CLOSING OF REGISTER OF MEMBERS. At the Effective Time, the
register of members of the Company shall be
closed, and there shall be no
further registration of transfers on the
register of members of the Surviving
Corporation of the Shares that were
outstanding immediately prior to the
Effective Time. If, after the Effective
Time, Certificates are presented to the
Surviving Corporation for transfer, they
shall be cancelled and exchanged for a
check in the proper amount pursuant to this
Article II.
(d) TERMINATION OF EXCHANGE FUND. Any portion of the Exchange
Fund
(including the proceeds of any investments
thereof) that remains undistributed
to the former holders of Shares, Company
Stock Options or Company Stock-Based
Awards for six months after the Effective
Time shall be delivered to the
Surviving Corporation upon demand, and
any
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former holders of Shares who have not
theretofore complied with this Article II
shall thereafter look only to the Surviving
Corporation (subject to abandoned
property, escheat or other similar laws)
for payment of its claim for the Merger
Consideration, without any interest
thereon, upon due surrender of their shares.
(e) NO LIABILITY. Notwithstanding anything herein to the
contrary,
none of the Company, Parent, Merger Sub,
the Surviving Corporation, the Paying
Agent or any other person shall be liable
to any former holder of Shares for any
amount properly delivered to a public
official pursuant to any abandoned
property, escheat or similar Law applicable
to the Company or any of the
Company's Subsidiaries or any of their
respective properties or assets. If any
Certificate or Book-Entry Share shall not
have been surrendered prior to such
date on which any Merger Consideration
payable to the holder of such Certificate
or Book-Entry Share pursuant to this
Article II would otherwise escheat to or
become the property of any Governmental
Entity, any such Merger Consideration in
respect of such Certificate or Book-Entry
Share shall, to the extent permitted
by applicable Law, become the property of
the Surviving Corporation, and any
former holder of Shares who has not
theretofore complied with this Article II
shall thereafter look only to the Surviving
Corporation for payment of his or
her claim for Merger Consideration.
(f) INVESTMENT OF EXCHANGE FUND. The Paying Agent shall invest
all
cash included in the Exchange Fund as
directed by Parent. Any interest and other
income resulting from such investments
shall be paid to Parent.
(g) LOST CERTIFICATES. In the case of any Certificate that has
been
lost, stolen or destroyed, upon the making
of an affidavit of that fact by the
person claiming such Certificate to be
lost, stolen or destroyed and, if
required by the Paying Agent or the
Surviving Corporation, the posting by such
person of a bond in customary amount as
indemnity against any claim that may be
made against it with respect to such
Certificate, the Paying Agent will issue in
exchange for such lost, stolen or destroyed
Certificate a check in the amount of
the number of Shares represented by such
lost, stolen or destroyed Certificate
multiplied by the applicable Merger
Consideration.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as disclosed in the corresponding numbered sections of
the
Disclosure Schedule delivered by the
Company to Parent immediately prior to the
execution of this Agreement (the "COMPANY
DISCLOSURE SCHEDULE") (it being agreed
that disclosure of any item in any section
of the Company Disclosure Schedule
shall be deemed disclosure with respect to
any other section of this Agreement
to which the relevance of such item is
reasonably apparent on its face), the
Company represents and warrants to Parent
and Merger Sub as follows:
Section 3.1 QUALIFICATION, ORGANIZATION, SUBSIDIARIES, ETC. Each
of
the Company and its Subsidiaries is a legal
entity duly organized and validly
existing under the Laws of its respective
jurisdiction of organization and has
all requisite corporate or similar power
and authority to own, lease and operate
its properties and assets and to carry on
its business as presently conducted,
and each of the Company and its
Subsidiaries is qualified to do business
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and is in good standing in each
jurisdiction where the ownership, leasing or
operation of its assets or properties or
conduct of its business requires such
qualification, except, in each case, where
the failure to be so organized,
validly existing, qualified or in good
standing, or to have such power or
authority, would not, individually or in
the aggregate, reasonably be expected
to have a Company Material Adverse Effect.
The Company has made available to
Parent prior to the date of this Agreement
a true and complete copy of the
Company's Memorandum and Articles of
Association and of the analogous
constitutive and governing documents of the
Company's Subsidiaries, each as
amended through the date hereof. The
Company's Memorandum and Articles of
Association are in full force and effect.
Neither the Company nor any of its
Subsidiaries is in violation of the
provisions of its governing documents. As
used in this Agreement, any reference to
any state of facts, circumstances,
event or change having a "COMPANY MATERIAL
ADVERSE EFFECT" means a material
adverse effect on the business, operations,
assets, liabilities, condition
(financial or otherwise) of the Company and
its Subsidiaries, taken as a whole,
except to the extent arising out of,
resulting from or relating to (i)(A) any
changes in general economic or political
conditions or the financial, credit or
securities markets, in each case in (x) the
United States or (y) Europe taken as
a whole, except, in either case, to the
extent that such changes
disproportionately impact the Company and
its Subsidiaries, taken as a whole,
relative to other participants in either
(1) the retail apparel and wholesale
apparel industry in the United States or
(2) the premium brand segment thereof
in Europe; (B) any events, circumstances,
changes or effects that affect
generally the retail apparel or wholesale
apparel industry (except to the extent
that such events, circumstances, changes or
effects disproportionately impact
the Company and its Subsidiaries taken as a
whole relative to other participants
in either (x) the retail apparel and
wholesale apparel industry in the United
States or (y) the premium brand segment
thereof in Europe); (C) any outbreak or
escalation of hostilities or war or any act
of terrorism; (D) the Hong Kong tax
matter referred to in the Company SEC
Documents (as defined herein), including
any claim relating thereto or the
settlement, compromise or consent made in
compliance with the terms of this Agreement
(the "HONG KONG TAX MATTER"); or (E)
the case entitled IN RE TOMMY HILFIGER
SECURITIES LITIGATION, (Civil Action No.
04-CV-7678(RO)), including any settlement,
compromise or consent made in
compliance with the terms of this Agreement
(the "SECURITIES CLASS ACTION") or
(ii) any events, circumstances, changes or
effects that the Company can
demonstrate are principally related to the
announcement or the existence of this
Agreement and the transactions contemplated
hereby; PROVIDED, that clause (ii)
shall not apply with respect to Section 3.3
(including for purposes of Section
6.3(a) insofar as Section 3.3 is
concerned); PROVIDED, FURTHER, that "Material
Adverse Effect" shall not include the
expected decline in U.S. wholesale
revenue, or the expected decrease in the
continuing U.S. men's, women's and
children's businesses (which no longer
includes young men's jeans and the
wholesale H Hilfiger businesses), described
in the section entitled
"Management's Discussion and Analysis of
Financial Condition and Results of
Operations--Forward Outlook" of the
Company's Annual Report on Form 10-K for the
fiscal year ended March 31, 2005.
Section 3.2 CAPITAL STOCK.
(a) As of December 15, 2005, the authorized share capital of
the
Company consisted of (i) 150,000,000
Company Ordinary Shares, of which (A)
92,464,503 Company Ordinary Shares were
issued and outstanding (which includes
all outstanding shares of restricted stock,
but excludes treasury shares); (B)
6,192,600 Company Ordinary Shares were held
in
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<PAGE>
treasury; and (C) 8,851,830 Company
Ordinary Shares were authorized and reserved
for future issuance upon exercise of
outstanding options to purchase Company
Ordinary Shares under the Tommy Hilfiger
(Eastern Hemisphere) Limited 1992 Stock
Incentive Plan, as amended, the Tommy
Hilfiger U.S.A., Inc. 1992 Stock Incentive
Plan, as amended, the Tommy Hilfiger
Corporation 2001 Stock Incentive Plan, the
Tommy Hilfiger Corporation Non-Employee
Directors Stock Option Plan, as amended,
and the Tommy Hilfiger Corporation 2003
Incentive Compensation Plan, as amended
(collectively, the "COMPANY INCENTIVE
PLANS"); and (ii) 5,000,000 preference
shares, U.S.$0.01 par value per share (the
"PREFERENCE SHARES"), of which none
were issued and outstanding. All the
outstanding Company Ordinary Shares are and
all Company Ordinary Shares reserved for
issuance as noted in clause (i)(C)
above shall be, when issued in accordance
with the respective terms thereof, (i)
issued and granted in compliance with all
applicable securities laws and other
applicable Laws and not in violation of any
preemptive rights and (ii) duly
authorized, validly issued (or will be, in
the case of shares referred to in
subclause (i)(C)) and are (or will be, in
the case of shares referred to in
subclause (i)(C)) fully paid and
non-assessable and are not subject to and were
not, and will not be, in the case of shares
referred to in subclause (i)(C),
issued in violation of any preemptive or
similar rights, purchase option, call
right, right of first refusal or similar
rights. No Subsidiary of the Company
owns any Company Ordinary Shares.
(b) Except as set forth in subsection (a) above: (i) the Company
does
not have any shares issued or outstanding,
other than Company Ordinary Shares
that have become outstanding after December
15, 2005 (pursuant to the exercise
of outstanding options to purchase Company
Ordinary Shares which options had
been outstanding on December 15, 2005) and
that had been reserved for issuance
as set forth in subsection (a)(i)(C) above
and (ii) there are no outstanding
subscriptions, options, warrants, calls,
convertible or exchangeable securities
or other similar rights, agreements or
commitments relating to the issuance of
shares, voting securities or other equity
interests in the Company to which the
Company or any of the Company's
Subsidiaries is a party obligating the Company
or any of the Company's Subsidiaries to (A)
issue, transfer or sell any shares,
voting securities or other equity interests
of the Company or any Subsidiary of
the Company or securities convertible or
exercisable into, or exchangeable for,
such shares, voting securities or equity
interests; (B) grant, extend or enter
into any such subscription, option,
warrant, call, convertible or exchangeable
securities or other similar right,
agreement, arrangement or commitment to
repurchase; or (C) redeem or otherwise
acquire any such shares, voting
securities or other equity interests.
(c) Except for outstanding awards to acquire Company Ordinary
Shares
under each of the Company Incentive Plans,
neither the Company nor any of its
Subsidiaries has outstanding bonds,
debentures, notes or other obligations, the
holders of which have the right to vote (or
which are convertible into or
exchangeable or exercisable for securities
having the right to vote) with the
shareholders of the Company on any
matter.
(d) There are no voting trusts or other agreements or
understandings
to which the Company or any of its
Subsidiaries is a party with respect to the
voting of the shares or other equity
interest of the Company or any of its
Subsidiaries.
(e) Section 3.2(e) of the Company Disclosure Schedule contains a
true
and complete list of the Company's
Subsidiaries, including its name, entity form
and jurisdiction of
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<PAGE>
organization. Except for the entities set
forth in Section 3.2(e) of the Company
Disclosure Schedule, the Company has no
Subsidiaries and owns no ownership
interest in any other partnership,
corporation or other entity. All of the
outstanding equity interests, as
applicable, of each Subsidiary of the Company
are validly issued, fully paid and
nonassessable and are owned, directly or
indirectly, by the Company free and clear
of any Liens, and none of such
outstanding equity interests have been
issued in violation of any preemptive or
similar rights, purchase option, call or
right of first refusal. There are no
outstanding options, warrants, calls, stock
appreciation rights or other rights
or commitments or any other agreements of
any character relating to the sale,
issuance or voting of, or the granting of
rights to acquire any equity interests
of, any such Subsidiary of the Company, or
any securities or other instruments
convertible into, exchangeable for or
evidencing the right to purchase any
equity interests of any such Subsidiary of
the Company.
(f) Section 3.2(f) of the Company Disclosure Schedule sets forth
a
true and complete list of all outstanding
restricted shares and options to
purchase Company Ordinary Shares as of the
date hereof, including the holders
thereof and the applicable dates of grant,
exercise prices and any conditions
precedent to vesting, in each case, related
thereto.
(g) Section 3.2(g) of the Company Disclosure Schedule is a true
and
complete schedule of the Company's
outstanding Indebtedness as of the close of
business on November 30, 2005. As of
November 30, 2005, the unused commitment
under the Company's cash-collateralized
letter of credit facility was
approximately U.S.$97 million. As used in
this Agreement, "INDEBTEDNESS" means,
without duplication, (i) all indebtedness,
notes payable (including, without
limitation, notes payable in connection
with acquisitions), accrued interest
payable or other obligations of the Company
and its Subsidiaries for borrowed
money, whether current, short-term, or
long-term, secured or unsecured, other
than intercompany indebtedness, (ii) all
indebtedness of the Company and its
Subsidiaries for the deferred purchase
price for purchases of property or
assets, (iii) all lease obligations of the
Company and its Subsidiaries under
leases which are capital leases in
accordance with GAAP, (iv) any obligations of
the Company or its Subsidiaries in respect
of banker's acceptances or letters of
credit (other than stand-by letters of
credit in the ordinary course or
documentary letters of credit in support of
trade payables), (v) any
indebtedness referred to in clauses (i)
through (iv) above of any person or
entity other than the Company or any of its
Subsidiaries which is either
guaranteed by, or secured by any Lien
(other than Permitted Liens) upon any
material property or assets owned by, the
Company or any of its Subsidiaries.
Section 3.3 CORPORATE AUTHORITY
RELATIVE TO THIS AGREEMENT; NO
VIOLATION.
(a) The Company has requisite corporate power and authority to
enter
into this Agreement and, subject to receipt
of the Company Shareholder Approval,
to consummate the transactions contemplated
hereby, including the Merger. The
execution and delivery of this Agreement
and the consummation of the
transactions contemplated hereby have been
duly and validly authorized by the
Board of Directors of the Company and,
except for (i) the Company Shareholder
Approval and (ii) the filing with, and
acceptance by the Registrar of, the
documents of re-registration as
contemplated by Section 5.4(d) and the Articles
of Merger, no other corporate proceedings
on the part of the Company are
necessary to authorize this Agreement or
the consummation of the transactions
contemplated hereby. The Board of Directors
of the
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<PAGE>
Company has approved this Agreement by way
of a board resolution adopted
pursuant to Section 170 of the BC Act and
determined that this Agreement is
advisable. This Agreement has been duly and
validly executed and delivered by
the Company and, assuming this Agreement
constitutes the valid and binding
agreement of the Parent and Merger Sub,
this Agreement constitutes the valid and
binding agreement of the Company,
enforceable against the Company in accordance
with its terms.
(b) Other than in connection with or in compliance with (i) the
provisions of the BC Act and the
International Business Companies Act, 1984,
(ii) the Securities Exchange Act of 1934,
as amended (the "EXCHANGE ACT") ,
(iii) the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended (the
"HSR ACT"), (iv) the European Community
Merger Regulation ("ECMR") and (v) the
approvals set forth on Section 3.3(b) of
the Company Disclosure Schedule
(collectively, the "COMPANY APPROVALS"), no
authorization, consent, clearance or
approval of, or filing or notification
with, any United States (whether federal,
state or local) or foreign, provincial or
supranational governmental or
regulatory agency, commission, court, body,
entity or authority or works council
or similar governmental or regulatory body
(each, a "GOVERNMENTAL ENTITY") is
necessary, under any Law (as hereinafter
defined) applicable to the Company or
any of the Company's Subsidiaries or any of
their respective properties or
assets, for the consummation by the Company
of the transactions contemplated by
this Agreement, except for such
authorizations, consents, approvals or filings
that, if not obtained or made, would not
reasonably be expected to have,
individually or in the aggregate, a Company
Material Adverse Effect.
(c) The execution and delivery by the Company of this Agreement
does
not, and the consummation of the
transactions contemplated hereby and compliance
with the provisions hereof will not (i)
result in any violation of, or default
(with or without notice or lapse of time,
or both) under, or any increased cost
or loss of benefit to the Company or any
Subsidiary thereof or increased benefit
to another party thereto under, or result
in the, or give rise to a right of,
termination, cancellation or acceleration
of any obligation under, any loan,
guarantee of Indebtedness or credit
agreement, note, bond, mortgage, indenture,
lease, agreement, contract, instrument,
permit, concession, franchise, right,
license, arrangement or other obligation
(each, a "CONTRACT") to which the
Company or any of the Company's
Subsidiaries is a party or by which the Company
or any of the Company's Subsidiaries is
bound or result in the creation of any
liens, claims, mortgages, encumbrances,
pledges, security interests, equities or
charges of any kind or any restriction on
transfer or, in the case of
securities, voting rights (each, a "LIEN")
upon any of the properties or assets
of the Company or any of the Company's
Subsidiaries, (ii) conflict with or
result in any violation in any respect of
any provision of the Memorandum and
Articles of Association or other equivalent
organizational document, in each
case as amended, of the Company or any of
the Company's Subsidiaries or (iii)
conflict with or violate any Laws
applicable to the Company or any of the
Company's Subsidiaries or any of their
respective properties or assets or any
order, injunction, decree, or judgment
(each, an "ORDER") applicable to the
Company or any of its Subsidiaries in
existence as of the date hereof, other
than, in the case of clauses (i) and (iii),
any such violation, conflict,
default, termination, cancellation,
acceleration, Lien or other circumstance
that would not (x) prevent or materially
delay the Company from performing its
obligations under this Agreement or taking
any action necessary to consummate
the transactions contemplated by this
Agreement or (y) reasonably be expected to
have, individually or in the aggregate, a
Company Material Adverse Effect.
13
<PAGE>
Section 3.4 REPORTS AND FINANCIAL
STATEMENTS.
(a) The Company has timely filed or furnished all forms,
documents
and reports (the "COMPANY SEC DOCUMENTS")
required to be filed or furnished
prior to the date hereof by it with the
Securities and Exchange Commission (the
"SEC") since March 31, 2004. As of their
respective dates, or, if amended, as of
the date of the last such amendment, the
Company SEC Documents complied in all
material respects with the requirements of
the Securities Act and the Exchange
Act, as the case may be, and the applicable
rules and regulations promulgated
thereunder, and none of the Company SEC
Documents contained any untrue statement
of a material fact or omitted to state any
material fact required to be stated
therein or necessary to make the statements
therein, in light of the
circumstances under which they were made,
or are to be made, not misleading.
None of the Company's Subsidiaries, other
than Tommy Hilfiger U.S.A., Inc.
(whose obligation is satisfied by
disclosures provided in the filings made by
the Company), is required to file with, or
furnish to, the SEC any form,
document or report.
(b) The Company has made available to Parent true, correct and
complete copies of all written
correspondence between the SEC, on the one hand,
and the Company or any of its Subsidiaries,
on the other hand, occurring since
March 31, 2004. As of the date hereof,
there are no outstanding or unresolved
comments in the comment letters received
from the SEC staff with respect to any
Company SEC Documents. The consolidated
financial statements (as restated, if
applicable, and including all related notes
and schedules) of the Company
included in the Company SEC Documents (i)
were prepared from the books and
records of the Company and its
Subsidiaries, (ii) complied in all material
respects with all applicable accounting
requirements and with the published
rules and regulations of the SEC with
respect thereto, (iii) fairly present in
all material respects the consolidated
financial position of the Company and its
consolidated Subsidiaries, as at the
respective dates thereof and the
consolidated results of their operations
and their consolidated cash flows and
changes in shareholders' equity for the
respective periods then ended (subject,
in the case of the unaudited statements, to
normal year-end audit adjustments
and to any other adjustments described
therein including the notes thereto) and
(iv) were prepared in accordance with
United States generally accepted
accounting principles ("GAAP") (except, in
the case of the unaudited statements,
as permitted by Form 10-Q of the SEC or
other SEC rules and/or regulations)
applied on a consistent basis during the
periods involved (except as may be
indicated therein or in the notes
thereto).
Section 3.5 INTERNAL CONTROLS AND
PROCEDURES.
(a) The Company is in compliance in all material respects with
(i)
the applicable provisions of the
Sarbanes-Oxley Act of 2002 (the "SARBANES-OXLEY
ACT") and (ii) the applicable listing and
corporate governance rules and
regulations of the New York Stock Exchange.
The Company has established and
maintains disclosure controls and
procedures and internal controls over
financial reporting (as such terms are
defined in paragraphs (e) and (f),
respectively, of Rule 13a-15 under the
Exchange Act) as required by Rule 13a-15
under the Exchange Act. The Company's
disclosure controls and procedures are
reasonably designed to ensure that all
material information required to be
disclosed by the Company in the reports
that it files or furnishes under the
Exchange Act is recorded, processed,
summarized and reported within the time
periods specified in the rules and forms of
the SEC, and that all such material
14
<PAGE>
information is accumulated and communicated
to the Company's management as
appropriate to allow timely decisions
regarding required disclosure and to make
the certifications required pursuant to
Sections 302 and 906 of the
Sarbanes-Oxley Act.
(b) The Company has disclosed, based on its most recent
evaluation
prior to the date hereof, to the Company's
auditors and the audit committee of
the Board of Directors of the Company (i)
any significant deficiencies and
material weaknesses in the design or
operation of internal controls over
financial reporting, which are reasonably
likely to materially adversely affect
the Company's ability to record, process,
summarize and report financial data
and (ii) any fraud or allegation of fraud,
whether or not material, known to
management that involves management or
other employees who have a significant
role in the Company's internal controls
over financial reporting. The Company
carried out an evaluation, under the
supervision and with the participation of
management, including the Company's Chief
Executive Officer and Chief Financial
Officer, of the effectiveness of the design
and operation of the Company's
disclosure controls and procedures as of
March 31, 2005, and such assessment
concluded that the Company's disclosure
controls and procedures were not
effective as of March 31, 2005, at the
reasonable assurance level, because of
the material weakness related to accounting
for income taxes described in
Management's Report on Internal Control
over Financial Reporting in the
Company's Annual Report on Form 10-K for
the fiscal year ended March 31, 2005.
As of the date hereof, management has taken
actions that it believes should
address such material weakness.
Section 3.6 NO UNDISCLOSED LIABILITIES. Except (a) as reflected
or
reserved against in the Company's
consolidated balance sheet as of March 31,
2005 (or the notes thereto) included in the
Company SEC Documents and (b) for
liabilities or obligations incurred in the
ordinary course of business since
March 31, 2005, neither the Company nor any
Subsidiary of the Company has any
liabilities or obligations of any nature,
whether or not accrued, contingent or
otherwise, that would be required by GAAP
to be reflected on a consolidated
balance sheet (or the notes thereto) of the
Company and its Subsidiaries, other
than those which are disclosed in the
Company SEC Documents or which,
individually or in the aggregate, would not
reasonably be expected to have a
Company Material Adverse Effect.
Section 3.7 COMPLIANCE WITH LAW;
PERMITS.
(a) The Company and each of the Company's Subsidiaries are in
compliance with and are not in default
under or in violation of any (i) any
federal, state, local or foreign law,
statute, ordinance, rule, regulation,
decree, agency requirement, license or
permit of any Governmental Entity
(collectively, "LAWS" and each, a "LAW") or
(ii) Order, in each case, applicable
to the Company, such Subsidiaries or any of
their respective properties or
assets and have not received any written
notice of any non-compliance, default
or violation of such Laws or Orders, except
in the case of each of (i) and (ii)
above, where such non-compliance, default
or violation of Laws or Orders would
not reasonably be expected to have,
individually or in the aggregate, a Company
Material Adverse Effect. Notwithstanding
anything contained in this Section
3.7(a), no representation or warranty shall
be deemed to be made in this Section
3.7(a) in respect of the matters referenced
in Section 3.5, or in respect of
environmental, Tax, employee benefits or
labor Laws matters.
15
<PAGE>
(b) The Company and the Company's Subsidiaries are in possession
of
all authorizations, licenses, permits,
consents, certificates, approvals and
orders of any Governmental Entity necessary
for the Company and the Company's
Subsidiaries to own, lease and operate
their properties and assets or to carry
on their businesses as they are now being
conducted (the "COMPANY PERMITS"),
except where the failure to have any of the
Company Permits would not reasonably
be expected to have, individually or in the
aggregate, a Company Material
Adverse Effect. All Company Permits are in
full force and effect, except where
the failure to be in full force and effect
would not reasonably be expected to
have, individually or in the aggregate, a
Company Material Adverse Effect. The
Company and the Company's Subsidiaries are,
and at all times since April 1, 2004
have been, in compliance with the terms and
conditions of the Company Permits,
and neither the Company nor any of the
Company's Subsidiaries has received
written notice of any violation of the
terms or conditions of the Company
Permits, or alleging the failure to hold or
obtain any Company Permits required
to own, lease and operate their properties
and assets or to carry on their
businesses as they are now being conducted,
except violations or failures that
would not reasonably be expected to have,
individually or in the aggregate, a
Company Material Adverse Effect. Neither
the Company nor any of the Company's
Subsidiaries has received written notice
that any of the Company Permits will
not be renewed, and there are no actions,
suits, inquiries, investigations or
proceedings pending to revoke or withdraw
any such Company Permits, except for
such non-renewals, revocations or
withdrawals that would not reasonably be
expected to have, individually or in the
aggregate, a Company Material Adverse
Effect.
Section 3.8 EMPLOYEE BENEFIT
PLANS.
(a) Section 3.8(a) of the Company Disclosure Schedule lists all
material Company Benefit Plans. "COMPANY
BENEFIT PLANS" means all employee
benefit plans, compensation arrangements
and other benefit arrangements, whether
or not "employee benefit plans" (within the
meaning of Section 3(3) of the
Employee Retirement Income Security Act of
1974, as amended ("ERISA"), whether
or not subject to ERISA), providing cash-
or equity-based incentives, profit
sharing, health, medical, dental,
disability, accident or life insurance
benefits or vacation, paid time off,
severance, retirement, pension or savings
benefits, that are sponsored, maintained or
contributed to by the Company or any
of its ERISA Affiliates for the benefit of
any current or former employees,
directors or consultants of the Company or
its Subsidiaries and all employee
agreements providing cash- or equity-based
compensation, vacation, retention,
severance, change of control, savings
contribution or other benefits or
commitments to any current or former
officer, director, employee, or consultant
of the Company or its Subsidiaries, except
to the extent providing benefits
imposed by applicable foreign Law. The
Company has made available to Parent a
true and complete copy (where applicable)
of: (i) each material Company Benefit
Plan, (ii) each trust or funding
arrangement prepared in connection with each
such Company Benefit Plan, (iii) the most
recently filed annual report on
Internal Revenue Service Form 5500 or any
other annual report required by
applicable Law, (iv) the most recently
received determination or opinion letter
for each such Company Benefit Plan, (v) the
most recently prepared actuarial
report and financial statement in
connection with each such Company Benefit
Plan, (vi) the most recent summary plan
description, any material summaries of
material modification, any employee
handbooks, and (vii) any material written
communications (or a description of any
material oral communications) by the
Company or the Subsidiaries to any current
or former employee, consultant, or
director of the Company or any
Subsidiary
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<PAGE>
concerning the extent of the benefits
provided under a material Company Benefit
Plan. Neither the Company nor any
Subsidiary has any commitment to establish any
new material Company Benefit Plan or to
materially modify any Company Benefit
Plan.
(b) None of the Company or any Subsidiary or any other person
or
entity that, together with the Company or
any Subsidiary, is or was treated as a
single employer under Section 414(b), (c),
(m) or (o) of the Code (each,
together with the Company and any
Subsidiary, an "ERISA AFFILIATE"), has now or
at any time within the past six years (and
in the case of any such other person
or entity, only during the period within
the past six years that such other
person or entity was an ERISA Affiliate)
contributed to, was required to
contribute to, sponsored, or maintained,
with respect to ERISA Affiliates, while
being an ERISA Affiliate: (i) a pension
plan (within the meaning of Section 3(2)
of ERISA) subject to Section 412 of the
Code or Title IV of ERISA; (ii) a
multiemployer plan (within the meaning of
Section 3(37) or 4001(a)(3) of ERISA);
or (iii) a single employer pension plan
(within the meaning of Section
4001(a)(15) of ERISA) for which an ERISA
Affiliate would reasonably be expected
to incur liability under Section 4063 or
4064 of ERISA.
(c) Except, in each case, where it would not be reasonably
expected
to have a Company Material Adverse Effect,
(i) each Company Benefit Plan
intended to be qualified under Section
401(a) or 401(k) of the Code has received
a favorable determination letter from the
Internal Revenue Service that the
Company Benefit Plan is so qualified, (ii)
each trust established in connection
with any Company Benefit Plan which is
intended to be exempt from federal income
taxation under Section 501(a) of the Code
has received a determination letter
from the Internal Revenue Service that it
is so exempt, and, (iii) to the
knowledge of the Company, no fact or
circumstance exists that would reasonably
be expected to adversely affect the
qualified status of any such Company Benefit
Plan or the exempt status of any such
trust.
(d) Each Company Benefit Plan and each related trust agreement
has
been established, maintained and
administered in compliance with its terms, and
in compliance with the applicable
provisions of ERISA, the Code and other
applicable Laws, except for such
non-compliance which would not reasonably be
expected to have, individually or in the
aggregate, a Company Material Adverse
Effect. Neither the Company nor its
Subsidiaries maintains or contributes to any
plan or arrangement which, and no Company
Benefit Plan provides, or has any
liability to provide medical benefits to
any Company Employee following his
retirement, except as required by
applicable Law or as provided in individual
agreements upon a severance event.
(e) Except as set forth in Section 3.8 of the Company
Disclosure
Schedule, the consummation of the
transactions contemplated by this Agreement
will not, either alone or in combination
with another event, (i) entitle any
current or former employee, consultant or
officer of the Company or any its
Subsidiaries to severance pay, unemployment
compensation or any other payment,
except as required by applicable Law, (ii)
accelerate the time of payment or
vesting, or increase the amount of
compensation due any such employee,
consultant or officer or (iii) result in an
excess parachute payment under
Section 280G of the Code.
(f) Section 3.8 of the Company Disclosure Schedule sets forth a
complete and accurate list of each Company
Benefit Plan (x) that is not subject
to United States Law and (y) in
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<PAGE>
which Company participation is not
mandatory under applicable foreign Law (a
"FOREIGN BENEFIT PLAN"), except as has not
had, and would not reasonably be
expected to have, a Company Material
Adverse Effect: (i) all employer and
employee contributions to each Foreign
Benefit Plan required by Law or by the
terms of such Foreign Benefit Plan have
been made or, if applicable, accrued in
accordance with GAAP, except for such
contributions or accruals, the failure of
which to make or accrue would not
reasonably be expected to have, individually
or in the aggregate, a Company Material
Adverse Effect; (ii) the fair market
value of the assets of each funded Foreign
Benefit Plan, the liability of each
insurer for any Foreign Benefit Plan funded
through insurance or the book
reserve established for any Foreign Benefit
Plan, together with any accrued
contributions, is sufficient to procure or
provide for the accrued benefit
obligations, as of the date of this
Agreement, with respect to all current and
former participants in such plan according
to the actuarial assumptions and
valuations most recently used and
consistent with applicable Law to determine
employer contributions to such Foreign
Benefit Plan; (iii) each Foreign Benefit
Plan required to be registered has been
registered and has been maintained in
good standing with applicable regulatory
authorities; and (iv) each Foreign
Benefit Plan is in compliance in all
material respects with all applicable Laws.
Section 3.9 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since March
31,
2005, except as otherwise specifically
contemplated or permitted by this
Agreement, the businesses of the Company
and its Subsidiaries have been
conducted in all material respects in the
ordinary course of business consistent
with past practice and there has not been
any event, development or state of
circumstances that has had or would
reasonably be expected to have, individually
or in the aggregate, a Company Material
Adverse Effect. The Company and its
Subsidiaries have not taken any action
between March 31, 2005 and the date of
this Agreement, that, if taken after the
date of this Agreement, would be
proscribed by subparagraphs (i), (ii),
(iv), (v), (vi), (xvii) of Section 5.1(a)
or agrees, in writing or otherwise, to take
any of the foregoing actions.
Section 3.10 INVESTIGATIONS; LITIGATION. (a) The Company has
not
received written notice of any
investigation or review pending (and, to the
knowledge of the Company, no such
investigation or review is threatened) by any
Governmental Entity with respect to the
Company or any of the Company's
Subsidiaries which would reasonably be
expected to (i) have, individually or in
the aggregate, a Company Material Adverse
Effect or (ii) prevent or materially
delay the Company from performing its
obligations under this Agreement or taking
any action necessary to consummate the
transactions contemplated by this
Agreement; and (b) there are no actions,
suits, grievances, arbitrations or
proceedings pending (or, to the knowledge
of the Company, threatened) against or
affecting the Company or any of the
Company's Subsidiaries, or any of their
respective properties, officers or
directors or for which the Company or any of
the Company's Subsidiaries is required to
indemnify a third party at law or in
equity before, and there are no orders,
judgments or decrees of or before, any
Governmental Entity, in each case, which
would reasonably be expected to (i)
have, individually or in the aggregate, a
Company Material Adverse Effect or
(ii) prevent or materially delay the
Company from consummating the transactions
contemplated by this Agreement.
Section 3.11 TAX
MATTERS.
(a) Except as would not, individually or in the aggregate,
reasonably
be expected to have a Company Material
Adverse Effect, (i) the Company and each
of its
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Subsidiaries have prepared 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
(taking into account all amendments
thereto) are complete and accurate; (ii)
the Company and each of its
Subsidiaries have paid on a timely basis
all Taxes that are due and payable by
them, except, in the case of clause (i) or
clause (ii) hereof, for Taxes
contested in good faith or for which
adequate reserves have been established;
(iii) the U.S. consolidated federal income
Tax Returns of Tommy Hilfiger USA,
Inc. have been examined by the Internal
Revenue Service (or the period for
assessment of the Taxes in respect of which
such Tax Returns were required to be
filed has expired) for the periods as set
forth in the Company Disclosure
Schedule; (iv) as of the date of this
Agreement, there are not pending or, to
the knowledge of the Company threatened in
writing, any audits, examinations,
investigations or other proceedings in
respect of Taxes; (v) there are no Liens
for Taxes on any of the assets of the
Company or any of its Subsidiaries other
than Permitted Liens; and (vi) none of
Tommy Hilfiger USA, Inc. or any of its
Subsidiaries has been a "controlled
corporation" or a "distributing corporation"
in any distribution occurring during the
last 30 months that was purported or
intended to be governed by Section 355 of
the Code (or any similar provision of
state, local or foreign Law). For purposes
of this Agreement, "PERMITTED LIENS"
means any Lien (A) for Taxes not yet due,
being contested in good faith or for
which adequate accruals or reserves have
been established, or (B) which is a
carriers', warehousemen's, mechanics',
materialmen's, repairmen's or other like
lien arising in the ordinary course of
business.
(b) For purposes of this Agreement: (i) "TAXES" means any and
all
domestic or foreign, federal, state, local
or other taxes of any kind (together
with any and all interest, penalties,
additions to tax and additional amounts
imposed with respect thereto) imposed by
any Governmental Entity, including
taxes on or with respect to income,
franchises, windfall or other profits, gross
receipts, property, sales, use, capital
stock, payroll, employment,
unemployment, social security, workers'
compensation or net worth, and taxes in
the nature of excise, withholding, ad
valorem or value added; and (ii) "TAX
RETURN" means any return, report or similar
filing required to be filed with
respect to Taxes, including any information
return, claim for refund, amended
return, or declaration of estimated Taxes.
It is agreed and understood that no
representation or warranty is made in
Sections 3.1 through 3.10 or in Sections
3.12 through 3.21 in respect of Tax
matters.
Section 3.12
LABOR MATTERS.
(a) Except to the extent imposed by applicable foreign Law, as of
the
date hereof, neither the Company nor any of
its Subsidiaries is a party to, or
bound by, any collective bargaining
agreement (or similar agreement or
arrangement in any foreign country) with
any employee, labor union or similar
labor organization; there are no collective
bargaining agreements (or similar
agreements or arrangements in any foreign
country) that pertain to any of the
employees of the Company or its
Subsidiaries; and no employees of the Company or
its Subsidiaries are represented by any
labor union or organization with respect
to their employment with the Company or its
Subsidiaries.
(b) As of the date hereof, no labor union, labor organization,
works
council, or group of employees of the
Company or its Subsidiaries has made a
pending demand for recognition or
certification, and there are no representation
or certification proceedings or
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<PAGE>
petitions seeking a representation
proceeding presently pending or, to the
knowledge of the Company, threatened in
writing to be brought or filed with the
National Labor Relations Board or any other
foreign labor relations tribunal or
authority. As of the date hereof, the
Company and its Subsidiaries have no
knowledge of any labor union organizing
activities with respect to any employees
of the Company or its Subsidiaries.
(c) From March 31, 2003 to the date hereof, there has been no
actual,
or to the knowledge of the Company,
threatened: (i) strikes, lockouts,
slowdowns, or work stoppages, or (ii)
unfair labor practice charges, material
arbitrations, material grievances, labor
disputes (other than routine individual
grievances), in each case, (x) against or
affecting the Company or its
Subsidiaries and (y) that, individually or
in the aggregate, would reasonably be
expected to have a Company Material Adverse
Effect.
(d) The Company and its Subsidiaries are in compliance with all
applicable Laws respecting employment and
employment practices, including,
without limitation, all laws respecting
terms and conditions of employment,
wages and hours and labor relations, health
and safety, child labor,
immigration, employment discrimination,
disability rights or benefits, equal
opportunity, affirmative action,
classification of workers as independent
contractors, workers' compensation,
employee leave issues and unemployment
insurance, except to the extent that the
failure to comply with any such Law,
individually or in the aggregate, would not
reasonably be expected to have a
Company Material Adverse Effect. The
Company and its Subsidiaries are and have
been in compliance in all material respects
with all notice and other
requirements, and do not have any material
liabilities, under the Worker
Adjustment and Retraining Notification Act
and any similar foreign, state or
local law relating to plant closings and
layoffs.
(e) From March 31, 2003 to the date hereof, except as has not
had,
and would not reasonably be expected to
have, a Company Material Adverse Effect,
the Company and its Subsidiaries have not
received (i) written notice of any
charge or complaint with respect to or
relating to them pending before the Equal
Employment Opportunity Commission or any
other Governmental Entity responsible
for the prevention of unlawful employment
practices, (ii) written notice of any
unfair labor practice charge or complaint
pending or threatened before the
National Labor Relations Board or any other
Governmental Entity against them, or
(iii) written notice of any complaints,
grievances or arbitrations arising out
of any collective bargaining agreement or
similar agreement.
(f) The Company and its Subsidiaries have taken all reasonable
steps
to require that their manufacturers,
contractors and subcontractors engaged in
the manufacturing of products for the
Company and its Subsidiaries do not
utilize forced labor, prison labor, convict
labor, indentured labor, child
labor, corporal punishment or other forms
of mental or physical coercion in
connection with the manufacture of the
products for the Company and its
Subsidiaries, including the maintenance of
a compliance program to monitor
activities of such entities.
Section 3.13
INTELLECTUAL PROPERTY.
(a) For the purposes of this Agreement, "INTELLECTUAL PROPERTY"
means
all U.S. and foreign (i) trademarks,
service marks, trade names, domain names,
logos, slogans, trade
20
<PAGE>
dress, and other similar designations of
source or origin, together with the
goodwill symbolized by any of the foregoing
("TRADEMARKS"); (ii) copyrights and
copyrightable subject matter
("COPYRIGHTS"); (iii) patents, patent applications,
patent disclosures, and all related
continuations, continuations-in-part,
divisionals, reissues, re-examinations,
substitutions, and extensions thereof
("PATENTS"); (iv) rights of publicity, (v)
moral rights and rights of
attribution and integrity, (v) computer
programs (whether in source code, object
code, or other form), databases and
compilations and data ("SOFTWARE"), (vi)
trade secrets and all confidential
information, know-how, inventions, processes,
formulae, models, and methodologies ("TRADE
SECRETS"), (vii) all rights in the
foregoing and in other similar intangible
assets, (viii) all applications and
registrations for the foregoing, and (ix)
all rights and remedies against past,
present, and future infringement,
misappropriation, or other violation thereof.
(b) Section 3.13(b) of the Company Disclosure Schedule sets forth
a
correct and complete list of all U.S. and
foreign (i) Trademark registrations
and applications (including domain names),
(ii) Copyright registrations and
applications, (iii) issued Patents and
Patent applications and (iv) material
Software. The Company or a Subsidiary is
the sole and exclusive beneficial and
record owner of all of the Intellectual
Property set forth in Section 3.13(b) of
the Company Disclosure Schedule, and all
such Intellectual Property is
subsisting and, to the knowledge of the
Company, valid and enforceable.
(c) Either the Company or a Subsidiary of the Company owns, or
is
licensed or otherwise possesses legally
enforceable rights to use, free and
clear of all Liens, all material
Intellectual Property used in their respective
businesses as currently conducted and the
consummation of the transactions
contemplated hereby will not materially
alter, impair, or require payments of
any additional amounts with respect to such
rights.
(d) There are, and in the past two (2) years have been, no
pending
or, to the knowledge of the Company,
threatened claims by any person alleging
infringement by the Company or its
Subsidiaries for their use of any
Intellectual Property in their respective
businesses as currently conducted that
would reasonably be expected to have,
individually or in the aggregate, a
Company Material Adverse Effect. To the
knowledge of the Company, except as
would not reasonably be expected to have,
individually or in the aggregate, a
Company Material Adverse Effect, the
conduct of the businesses of the Company
and its Subsidiaries does not infringe upon
any Intellectual Property rights or
any other proprietary right of any person
in any material respect or violate or
conflict with any Contracts related
thereto. As of the date hereof, and in the
past two (2) years, neither the Company nor
any of its Subsidiaries has made any
claim of a violation or infringement by
others of its rights to or in connection
with the Intellectual Property used in
their respective businesses, which
violation or infringement would reasonably
be expected to have, individually or
in the aggregate, a Company Material
Adverse Effect.
(e) To the knowledge of the Company, except as disclosed in
Sections
3.13(b) and 3.13(d) of the Company
Disclosure Schedule, and except as would not
reasonably be expected to have,
individually or in the aggregate, a Company
Material Adverse Effect, the word marks
TOMMY HILFIGER and KARL LAGERFELD, the
FLAG logo, and, with respect solely to
fragrances, the word mark TOMMY, are
available for use and registration as
trademarks throughout the United States,
Canada, Europe (namely, all Member States
of the European
21
<PAGE>
Union as of the date hereof, and
Switzerland) and Japan in connection with the
sale, marketing and distribution of all of
the following products and product
lines: fragrance, bedding, eyewear,
jewelry/watches, bags, belts/small leather
goods, clothing (including outerwear,
underwear, sleepwear/robes) and footwear.
(f) The Company and its Subsidiaries are in compliance in all
material respects with all applicable Laws,
as well as its own rules, policies,
and procedures relating to privacy, data
protection, and the collection and use
of personal information collected, used, or
held for use by the Company or its
Subsidiaries in their respective businesses
as currently conducted. No claims
have been asserted or, to the knowledge of
the Company, threatened against the
Company or its Subsidiaries alleging a
violation of any third party's privacy or
personal information or data rights and the
consummation of the transactions
contemplated hereby will not cause any
violation in any material respect of any
Law or rule, policy, or procedure related
to privacy, data protection, or the
collection and use of such personal
information.
Section 3.14 OPINION OF FINANCIAL ADVISOR. The Board of Directors
of
the Company has received the opinion of
J.P. Morgan Securities Inc., dated the
date of this Agreement, substantially to
the effect that, as of such date, the
Merger Consideration is fair to the holders
of the Company Ordinary Shares from
a financial point of view.
Section 3.15 REQUIRED VOTE OF THE COMPANY SHAREHOLDERS. The
affirmative vote of the holders of
outstanding Company Ordinary Shares, voting
together as a single class, representing a
simple majority of the votes of the
Company Ordinary Shares that were present
at the meeting and entitled to vote
thereon and were voted and did not abstain,
is the only vote of holders of
securities of the Company which is required
to approve and adopt this Agreement
and the transactions contemplated hereby
(the "COMPANY SHAREHOLDER APPROVAL").
Section 3.16
MATERIAL CONTRACTS.
(a)
Except for this Agreement and the Company Benefit Plans, as of
the date hereof, neither the Company nor
any of its Subsidiaries is a party to
or bound by any:
(i) "material contract" (as such term is defined in item
601(b)(10)
of Regulation S-K of the SEC);
(ii) employment Contract or Contract with an individual for
the
provision of consulting services in lieu of employment that
provides
for annual
cash base salary compensation as of the date hereof exceeding
U.S.$400,000 per year;
(iii) Contract with any current or former director or officer
of the
Company or its Subsidiaries that would be required to be
disclosed
under Item
404 of Regulation S-K under the Securities Act;
(iv) Contract between (x) the Company or any of the Company's
Subsidiaries, on the one hand, and (y) any affiliate of the Company
(other
than the
Company's Subsidiaries), on the other hand, of the type that
would be required to
be disclosed under Item 404 of Regulation S-K under
the
Securities Act;
22
<PAGE>
(v) Contract containing covenants of the Company or any of the
Company's
Subsidiaries not to compete in the apparel business in any
geographical area;
(vi) Contract that creates a partnership or joint venture or
similar
agreement with respect to any material business of the Company;
(vii) material written Contract (other than purchase orders)
with the
top five (by dollar volume during the fiscal year ended March
31,
2005)
suppliers or service providers of the Company and its
Subsidiaries;
(viii) Contract that, individually or in the aggregate, would
reasonably
be expected to prevent, or materially delay the Company's
ability to
consummate the Merger;
(ix) indenture, credit agreement, loan agreement, security
agreement,
guarantee, note, mortgage or other evidence of Indebtedness by
the
Company (including agreements related to interest rate or
currency
hedging
activities) with any third party in excess of U.S.$1 million;
(x) collective bargaining agreement or employee association
agreement
material to the Company and its Subsidiaries taken as a whole;
(xi) Contract for the sale of assets since March 31, 2005
(other
than inventory in the ordinary course of business) in excess of
U.S$1
million;
(xii) written Contract that contains a put, call, right of
first
refusal or similar right pursuant to which the Company or any
Subsidiary
would be required to purchase or sell any securities of any
entity;
(xiii) settlement or conciliation agreement or similar
agreement
with any Governmental Entity or order or consent of a
Governmental Entity to which the Company or any of its Subsidiaries
is
subject
involving future performance by the Company or any of its
Subsidiaries which is material to the Company and its Subsidiaries
taken
as a
whole;
(xiv) Contracts to which the Company or any of its
Subsidiaries is a party or otherwise bound (x) granting or
obtaining any
right to
use any material Trademarks or (y) restricting the Company's
rights, or
permitting other parties, to use or register any material
Trademarks;
(xv) other Contract under which the Company and its
Subsidiaries are obligated to make annual payments in excess of
U.S.$1
million
(other than leases, subleases or real property license
agreements
or in the
ordinary course of business); or
(xvi) acquisition agreement (other than with respect to
inventory
in the ordinary course) pursuant to which the Company or any of
its
Subsidiaries has continuing indemnification, "earn-out" or
other
contingent
obligations, in each case, that would be reasonably be expected
to result
in payments in excess of U.S.$1 million
23
<PAGE>
(all
contracts of the type described in this Section 3.16 being
referred
to herein
as "COMPANY MATERIAL CONTRACTS").
(b) The Company has made available to Parent copies of each
Company
Material Contract in effect as of the date
of this Agreement, together with all
material amendments and supplements thereto
in effect as of the date of this
Agreement. Neither the Company nor any
Subsidiary of the Company is in breach of
or default under the terms of any Company
Material Contract where such breach or
default would reasonably be expected to
have, individually or in the aggregate,
a Company Material Adverse Effect. To the
knowledge of the Company, no other
party to any Company Material Contract is
in breach of or default under the
terms of any Company Material Contract
where such breach or default would
reasonably be expected to have,
individually or in the aggregate, a Company
Material Adverse Effect. Each Company
Material Contract is a valid and binding
obligation in all material respects of the
Company or the Subsidiary of the
Company which is party thereto and, to the
knowledge of the Company, of each
other party thereto, and is in full force
and effect, except that (i) such
enforcement may be subject to applicable
bankruptcy, insolvency, reorganization,
moratorium or other similar Laws, now or
hereafter in effect, relating to
creditors' rights generally and (ii)
equitable remedies of specific performance
and injunctive and other forms of equitable
relief may be subject to equitable
defenses and to the discretion of the court
before which any proceeding therefor
may be brought. Except as would not
reasonably be expected to have, individually
or in the aggregate, a Company Material
Adverse Effect, (i) neither the Company
nor any Subsidiary of the Company has
received any written notice or claim of
default under any Company Material Contract
or any written notice of an
intention to, and to the knowledge of the
Company, no other party to any Company
Material Contract intends to terminate, not
renew or challenge the validity or
enforce-ability of any Company Material
Contract (including as a result of the
execution and performance of this
Agreement), (ii) to the Company's knowledge,
no event has occurred that, with or without
notice or lapse of time or both,
would result in a material breach or a
material default under any Company
Material Contract and (iii) the Company and
the Subsidiaries of the Company have
performed all respective material
obligations required to be performed by them
to date under the Company Material
Contracts and are not (with or without the
lapse of time or the giving of notice, or
both) in material breach thereunder.
Section 3.17 FINDERS OR BROKERS. Except for J.P. Morgan
Securities
Inc., neither the Company nor any of its
Subsidiaries has employed any
investment banker, broker or finder in
connection with the transactions
contemplated by this Agreement who might be
entitled to any fee or any
commission in connection with or upon
consummation of the Merger. Section 3.17
of the Company Disclosure Schedule contains
the Company's good faith estimate as
of the date hereof of all fees or
commissions required to be paid by the Company
or any of its Subsidiaries to any
investment banker or legal advisor, in each
case, for the provision of services to the
Company in connection with the
consummation of the transactions
contemplated hereby. The Company has made
available to Parent a true and correct copy
of its engagement letter with J.P.
Morgan Securities Inc. for services
provided in connection with this Agreement.
Section 3.18
PROPERTIES AND LEASES.
(a) Neither the Company nor any of its Subsidiaries owns any
real
property. Section 3.18 of the Company
Disclosure Schedule contains a true,
correct and complete list of all
24
<PAGE>
leases, subleases or other occupancy
agreements relating to all material real
property that any of the Company or its
Subsidiaries leases or subleases or
otherwise has any right, title or interest
in or to and sets forth the Company
or applicable Subsidiary that leases,
subleases or otherwise has an interest in
the same (the property demised thereunder
herein referred to as the "LEASED REAL
PROPERTY"), regardless of whether the terms
thereof have commenced. No person
other than the Company or one of its
Subsidiaries leases, subleases or licenses
or otherwise occupies the Leased Real
Property.
(b) With respect to each Leased Real Property, except in each case
as
would not reasonably be expected to have,
individually or in the aggregate, a
Company Material Adverse Effect: (i) such
lease or sublease is legal, valid,
binding, enforceable and in full force and
effect; (ii) there exists no material
default under any such lease or sublease by
the Company or any Subsidiary which
has not been cured, and, to the knowledge
of the Company, there has not occurred
any event that (with the lapse of time or
the giving of notice or both) would
constitute a material default on the part
of the Company or any of its
Subsidiaries under any such lease or
sublease; and (iii) the Company has made
available to Parent copies of each such
lease, sublease or license in effect as
of the date of this Agreement, together
with all material amendments and
supplements thereto in effect as of the
date of this Agreement.
Section 3.19
ENVIRONMENTAL MATTERS.
(a) Except as would not, individually or in the aggregate,
reasonably
be expected to have a Company Material
Adverse Effect:
(i) The Company and its Subsidiaries are and have been in
compliance
with all Environmental Laws, including possessing all material
Company
Permits required for its operations under applicable
Environmental
Laws;
(ii) Neither the Company nor any of its Subsidiaries has
received
written notice of, and, to the knowledge of the Company, is not
the
subject of, any actions, claims, investigations, demands,
citation,
complaint
or notices by any person alleging liability arising under, or
non-compliance with any Environmental Law; and
(iii) With respect to any Owned Real Property or Leased Real
Property
currently or formerly owned or leased, as the case may be, by
the
Company or
its Subsidiaries, there have been no Releases of Hazardous
Materials that are
reasonably likely to result in a claim against the
Company or
any of its Subsidiaries. Neither the Company nor any of its
Subsidiaries has entered into any agreement that may require it to
pay to,
reimburse,
guarantee, pledge, defend, indemnify or hold harmless any
person
from or against any liabilities arising out of or related to
the
generation, manufacture, use, transportation or disposal of
Hazardous
Materials,
or otherwise arising in connection with or under Environmental
Laws.
(b) As used herein:
(i) the term "ENVIRONMENTAL LAW" means any federal, state,
local and
foreign Law, judicial decisions, injunctions and permits and
governmental agreements relating to protection of human health or
the
environment (including ambient air, surface
25
<PAGE>
water,
ground water, land surface or subsurface strata), including
those
relating
to the Release of Hazardous Materials.
(ii) the term "HAZARDOUS MATERIAL" means all substances or
materials
regulated as hazardous, toxic, explosive, dangerous, flammable
or
radioactive under any Environmental Law, including (a)
petroleum,
asbestos
or polychlorinated biphenyls and (b) in the United States, all
substances
defined as Hazardous Substances, Oils, Pollutants or
Contaminants in the National Oil and Hazardous Substances
Pollution
Contingency Plan, 40 C.F.R. Section 300.5.
(iii) the term "RELEASE" means any release, spill, emission,
discharge,
leaking, pumping, injection, deposit, disposal, dispersal,
leaching
or migration into the indoor or outdoor environment (including
ambient air, surface water,
groundwater and surface or subsurface strata)
or into or
out of any property, including the movement of Hazardous
Material
through or in the air, soil, surface water, groundwater or
property.
Section 3.20 STATE TAKEOVER STATUTES. No "fair price,"
"moratorium,"
"control share acquisition" or other
similar antitakeover statute or regulation
enacted under state or federal laws in the
United States or in the British
Virgin Islands are applicable to the
Company in connection with the transactions
contemplated by this Agreement.
Section 3.21 INSURANCE POLICIES. All insurance policies maintained
by
the Company and its Subsidiaries as of the
date hereof (collectively, the
"INSURANCE POLICIES") "are listed in
Section 3.21 of the Company Disclosure
Schedule. All Insurance Policies are in
full force and effect and provide
insurance in such amounts and against such
risks as the management of the
Company reasonably has determined to be
prudent in
