<PAGE>
EXHIBIT 99.1
FOSTER'S BREWING GROUP LIMITED
Australian Company Number 007 620 886
--------------------------------------------------------------------------------
77 SOUTHBANK BOULEVARD, SOUTHBANK, VICTORIA, AUSTRALIA, 3006
TELEPHONE: 61 3 9633 2069
FAX: 61 3 9633 2070
NOT FOR RELEASE IN THE UNITED STATES
FOSTER'S ACQUIRES LEADING US WINE COMPANY
MELBOURNE: TUESDAY, 29 AUGUST 2000: Foster's Brewing Group (Foster's) today
announced it had entered into a Merger Agreement to acquire Beringer Wine
Estates (Beringer), a leading US premium wine producer based in California's
Napa Valley.
The acquisition will be launched by way of a tender offer for Beringer shares at
US$55.75 cash per share, to be followed by a merger at the same price per share.
Following the merger, Beringer would be wholly owned by Foster's. The proposed
offer price values Beringer equity at about A$2.0 billion. In addition, Foster's
would assume net debt of about A$560 million.
Foster's President and Chief Executive Officer, Mr Ted Kunkel, said, "This is a
defining event for Foster's. We searched the world for a suitable wine
acquisition and Beringer was the absolute stand out.
"The combination of Mildara Blass and Beringer will create one of the world's
largest and most profitable premium wine companies and will form a powerful new
growth engine for Foster's.
"Acquiring Beringer provides Foster's with direct access to one of the fastest
growing premium wine markets in the world, and reinforces Foster's standing as a
truly global premium beverage company.
"The acquisition of Mildara Blass was the first step in our wine strategy and
that has been outstandingly successful for Foster's. The addition of Beringer
will increase our international reach and will help drive our unique global wine
strategy to pursue growth via three key channels - wine trade, wine clubs and
wine services," Mr Kunkel said.
Mildara Blass Managing Director, Mr Terry Davis said, "This combination of two
great wine companies creates the world's first truly global premium wine
company, and Mildara Blass and Beringer Wine Estates are pleased to be first
movers in this regard. Beringer is a perfect business partner for Mildara Blass.
They have great Californian wineries and vineyards, strong brands, a history of
commitment to quality, outstanding growth and a strong management team."
<PAGE>
Beringer is a leading producer of premium Californian varietal wines and owns
several top-selling and award-winning premium wine brands including Beringer,
Meridian, Chateau St. Jean, Chateau Souverain, Stags' Leap and St. Clement. Its
flagship winery, Beringer Vineyards, is the only winery to have had both a red
and a white wine named "Wine of the Year" by WINE SPECTATOR magazine.
Mr Kunkel said Mildara Blass and Beringer were highly compatible companies.
"Both are leaders in their premium wine markets, both have top quality brand
portfolios, and both have outstanding management teams. Together they create a
global premium wine leader," he said.
Beringer's major shareholder is Texas Pacific Group and Associates (TPG) which,
together with a number of Beringer's directors and senior management, owns
approximately 55% of Beringer's outstanding shares. Foster's has entered into a
Tender, Voting and Option Agreement with TPG and this group of directors and
senior management of Beringer, which includes undertakings by each of the
parties to accept Foster's offer. The offer process is subject to customary US
conditions, details of which are set out in the attachment.
Foster's intends to fund the acquisition with a A$500 million underwritten
equity raising. The equity offering will be conducted via a 24 hour accelerated
global bookbuild with a provision for a further A$200 million of over
allotments. Foster's will raise $US400 million (approximately A$700 million) of
guaranteed subordinated exchangeable bonds (Bonds) which will also be
underwritten and will be offered to the market at the same time as the equity
placement. The remainder of Foster's funding will be sourced from committed bank
facilities.
An ASX trading halt will be in place throughout 29 August, 2000 while the
offerings are undertaken. Foster's expects that trading will recommence on 30
August, 2000 after the results of the equity and Bond offerings have been
announced.
A First Class Company
Mr Kunkel said "Beringer is a first class company which has a strong track
record due to the quality of its assets and management's expertise in brand
building and marketing."
Beringer:
- controls more than 10,000 acres of vineyard land in California's
premium grape growing areas, including more than 2,000 acres in the
famous Napa Valley, America's most revered growing region;
- is a leading US producer of premium table wines, the fastest growing
segment in the market. Over the past 12 months, sales of premium wines
in the US increased by 14% in the US$10 - $14 category and 18% in the
US$25+ category and this trend is expected to continue;
- has an excellent range of strongly branded successful products,
including Chateau St. Jean 1996 Cinq Cepages cabernet sauvignon, which
was selected as Wine of the Year in the 1999 WINE SPECTATOR "Top 100";
<PAGE>
- employs a highly skilled management team, which has extensive depth and
experience in the wine and branded consumer packaged goods industries.
It has a demonstrated ability to introduce innovative ideas and new
brands, and successfully integrate acquisitions and has a proven track
record of achieving strong growth, superior margins and high returns;
and
- has achieved widespread national distribution for its premium brands.
The Beringer senior management team, which includes Chairman and CEO, Walt
Klenz, Chief Operating Officer, Jim Watkins, Chief Financial Officer, Peter
Scott and Wine Master, Ed Sbragia, will continue with the company following the
merger.
Beringer Wine Estates Chairman and Chief Executive Officer, Mr Walt Klenz said,
"This represents a new and exciting chapter for Beringer Wine Estates, and we
are proud to be at the forefront of the globalisation of the premium wine
industry. This combination gives us a business partner with a similar
philosophy, and will provide us with access to new markets and new business
opportunities which assures Beringer's place as a key player in the world's
premium wine industry going forward."
New Growth Opportunity for Foster's
Mr Kunkel said acquiring Beringer will improve Foster's business mix. "A better
balance between beer and wine, continents and currencies will be achieved. We
are using our high return cash businesses to expand into another business with
outstanding growth prospects."
"Gaining direct on-the-ground access to the US wine market, with a well
established domestic brand portfolio, is a very attractive feature of Beringer.
The US has one of the fastest growing per capita premium wine consumption rates
in the world yet is underdeveloped by international standards - less than half
that of Australia and one eighth of the French rate," he said.
In addition, Beringer has in recent years invested heavily for the future. In
the last 3 years Beringer has invested US$54 million in 2,800 acres of new
plantings of premium varieties, and more than 30% of the company's vineyards are
yet to become fully yielding.
"The significant investment by Beringer in these new plantings has laid strong
foundations for Beringer's future," said Mr Kunkel. "The planted vineyards
represent sufficient supply to satisfy continued strong sales growth for a
number of years."
"The acquisition also provides a platform for further growth through the
expected consolidation of the fragmented US premium wine market. The Australian
market has already been through a process of rationalisation and Mildara Blass'
expertise in capitalising on this opportunity can be applied to the North
American market."
<PAGE>
Potential also exists for significant global cross-selling opportunities between
Beringer and Mildara Blass:
- Exports currently account for less than 4% of Beringer's revenue
compared to 50% for Mildara Blass. Mildara Blass has significant
distribution and marketing channels in Europe and the Asia Pacific
region which can be used to increase Beringer's sales.
- Beringer has an excellent, well established distribution system in the
US. Combining Mildara Blass's strongly branded premium wines with
Beringer's will increase Mildara Blass sales in the US.
Offer Details
The offer to purchase Beringer shares will be open for at least 20 business days
after the commencement of the offer period, which is expected to begin within
one week. Following the tender offer, Foster's will complete the acquisition via
either a short-form merger or a long-form merger, depending on the level of
acceptances to the offer.
Both alternatives are procedural, although a short-form merger will take about
one week, while a long-form merger could take up to four months as it requires a
shareholder meeting and simple majority vote. Foster's will be able to vote the
Beringer shares it purchases in the tender offer at that meeting.
Acquisition Funding and Financial Implications
Foster's will fund the acquisition through a combination of equity, bonds and
bank debt.
The equity raising of up to A$700 million will be raised by way of a placement
via a global bookbuild to institutional investors. UBS Warburg has underwritten
A$500 million of the equity, with provision for up to A$200 million of over
allotments. The bookbuild is expected to be completed within 24 hours of this
announcement. The exact number of shares to be issued will be advised on
completion of the bookbuild. The equity will be ordinary shares and will carry
an entitlement to a dividend from the date of the allotment.
UBS Warburg has also agreed to underwrite the issuance of US$400 million
(approximately A$700 million) of Bonds by a US subsidiary of Foster's. The Bonds
will be offered in bearer form in Europe and elsewhere outside the United
States.
Conversion of the Bonds would represent an equity raising at a 25% premium to
the equity placement price.
<PAGE>
Terms of the bonds include:
Guarantor: Foster's
Status: subordinated, unsecured obligations of the issuer and
Foster's
Issue price: 100%
Coupon: 4.25% - 4.75% pa with interest payable semi-annually
Maturity: 2003
Negative pledges: customary negative pledges
Events of defaults: customary events of default
Exchange: exchangeable into ordinary Foster's shares at any time
Exchange price: 25% above the placement price under the equity bookbuild
The balance of the funding will be secured from committed bank facilities.
Foster's estimates that the acquisition, under the proposed funding structure,
will be immediately cash EPS1 accretive. Foster's gearing (net debt/equity) is
expected to increase from 56% as at 30 June, 2000 to approximately 99% this
financial year. Interest coverage (EBIT/net interest) is expected to fall from
9.6 times to 4.3 times over the same period.
Mr Kunkel said the funding mix had been designed to ensure the company retained
its investment grade credit rating and achieved the lowest cost of capital.
Further information, including a summary of the agreement with Beringer and
unaudited consolidated pro forma financial statements, are attached.
Ends.
MEDIA INFORMATION:
GRAEME WILLERSDORF NICOLE DEVLIN
+61 3 9633 2073 +61 3 9633 2261
0418 288 400 0418 202 375
INVESTOR RELATIONS:
DOMENIC PANACCIO
+613 9633 2273
WWW.FOSTERS.COM.AU
NOTE: THIS MEDIA RELEASE CONTAINS FORWARD-LOOKING STATEMENTS BASED ON FOSTER'S
AND BERINGER'S CURRENT EXPECTATIONS, ASSUMPTIONS, ESTIMATES AND PROJECTIONS
ABOUT THEIR COMPANIES AND THEIR INDUSTRY. THESE FORWARD-LOOKING STATEMENTS
INVOLVE RISKS AND
----------
1 Cash EPS = EPS pre-amortisation
<PAGE>
UNCERTAINTIES. ACTUAL RESULTS COULD DIFFER MATERIALLY FROM THOSE ANTICIPATED IN
THESE FORWARD-LOOKING STATEMENTS AS A RESULT OF A NUMBER OF FACTORS, INCLUDING
THOSE MORE FULLY DESCRIBED UNDER THE CAPTION `RISK FACTORS' IN ITEM 1 TO
BERINGER'S ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED 30 JUNE 2000.
SEE `WHERE YOU CAN OBTAIN FURTHER INFORMATION' IN THE ATTACHMENT TO THIS
RELEASE.
UBS WARBURG LLC, A SUBSIDIARY OF UBS AG, IS ACTING AS FOSTER'S FINANCIAL ADVISER
IN RELATION TO THE TRANSACTION AND IS ALSO PROVIDING VARIOUS FUNDING SERVICES TO
FOSTER'S AS OUTLINED IN THIS RELEASE. JONES, DAY, REAVIS AND POGUE IS ACTING AS
FOSTER'S US COUNSEL AND CORRS CHAMBERS WESTGARTH IS ACTING AS FOSTER'S
AUSTRALIAN COUNSEL.
THIS ANNOUNCEMENT HAS BEEN PREPARED FOR PUBLICATION IN AUSTRALIA AND MAY NOT BE
RELEASED IN THE UNITED STATES. THIS ANNOUNCEMENT DOES NOT CONSTITUTE AN OFFER OF
SECURITIES FOR SALE IN AUSTRALIA, THE UNITED STATES OR ANY OTHER JURISDICTION.
ANY SECURITIES DESCRIBED IN THIS ANNOUNCEMENT MAY NOT BE OFFERED OR SOLD IN THE
UNITED STATES ABSENT REGISTRATION UNDER THE US SECURITIES ACT OR AN EXEMPTION
FROM REGISTRATION.
This announcement is not intended to be published or released in the United
States. If you are a resident of the United States who has received this
material inadvertently, please be advised as follows:
Foster's intends to file an Offer to Purchase and a Letter of Transmittal with
the U.S. Securities and Exchange Commission relating to Foster's offer to
purchase all outstanding shares of Class A common stock and Class B common stock
of Beringer Wine Estates Holdings, Inc. All Beringer stockholders are strongly
advised to read the Offer to Purchase and Letter of Transmittal when they are
available because they will contain important information relating to the offer.
These documents will be available at no charge on the SEC's website at
http:\\www.sec.gov and may be obtained for free from MacKenzie Partners, Inc.,
by calling (800) 322-2885.
<PAGE>
DETAILS OF THE ACQUISTION
REVIEW OF BERINGER'S BUSINESS
Beringer is a leading producer of premium Californian varietal table wines.
These wines are marketed under the Beringer Vineyards, Meridian Vineyards,
Chateau St. Jean, Chateau Souverain, Stags' Leap and St. Clement brand names.
Beringer competes in each of the premium wine market categories, its largest
entry in the popular premium category being the Beringer Vineyards White
Zinfandel product. Beringer is also represented across each of its brands
with high quality products in the ultra-premium category. Beringer also has a
growing import portfolio of premium brands from Italy, France and Chile.
Beringer sells its wine principally in the United States to distributors for
resale and has achieved a competitive position in chain stores, club stores,
other retail stores and restaurants. Sales are concentrated in California, and
to a lesser extent, the States of Florida, New Jersey, Texas and Illinois.
WHERE YOU CAN OBTAIN FURTHER INFORMATION
Publicly available information about Beringer can be obtained free of charge
from the SEC's web site HTTP://WWW.SEC.GOV and from EDGAR Online's web site
http://www.freeedgar.com.
PUBLICLY AVAILABLE INFORMATION ABOUT FOSTER'S CAN BE OBTAINED FREE OF CHARGE
FROM THE COMPANY'S WEB SITE http://www.fosters.com.au.
PROCEEDS FROM THE EQUITY PLACEMENT
PROCEEDS FROM THE EQUITY PLACEMENT WILL BE USED TO PARTIALLY FINANCE THE
ACQUISITION OF BERINGER. IF THE ACQUISITION IS NOT COMPLETED, THEN FOSTER'S
WOULD USE THE PROCEEDS OF THE EQUITY PLACEMENT FOR WORKING CAPITAL NEEDS AND
GENERAL CORPORATE PURPOSES.
EXCHANGE RATE INFORMATION FOR US PERSONS
Foster's publishes its financial statements in Australian dollars. Fluctuations
in the exchange rate between the Australian dollar and the US dollar affect the
US dollar equivalent to the Australian dollar amount of Foster's earnings,
assets and shareholders' equity. In addition, fluctuations in the exchange rate
affect the US dollar equivalent of the Australian dollar price of Foster's
shares on the Australian Stock Exchange and the US dollar equivalent of any cash
dividends paid in Australian dollars.
The Australian dollar is convertible into the US dollar at freely floating
rates. On 25 August 2000, the noon buying rate as certified for customs purposes
by the Federal Reserve Bank of New York was A$1.00 per US$0.5737.
<PAGE>
PRO FORMA UNAUDITED CONSOLIDATED FINANCIAL INFORMATION
The pro forma unaudited consolidated income statement data provided below for
financial year 30 June 2000 reflects the operations of Foster's as if the
acquisition of Beringer had occurred on 1 July 1999, but excludes any
amortisation charge on intangible assets acquired as such amounts cannot
currently be reliably determined. The pro forma balance sheet includes
intangible assets of $1,502.2 million, which is expected to be split between
brand names (which are unlikely to require amortisation under Foster's current
accounting policies) and goodwill (which would be amortised over 20 years). It
is likely that the resulting amortisation of goodwill would be a material
amount. As a result, the pro forma assumes that:
(i) the operating revenue earned by Beringer during financial year 2000 was
included and translated at the average exchange rate for financial year
2000;
(ii) the net operating profit before interest and tax earned by Beringer
during financial year 2000, excluding a one-time pre-tax gain of
US$26.4 million (A$42.1 million) on sale of the Napa Ridge brand, was
included and translated at the average exchange rate for financial year
2000;
(iii) the income tax attributable to Beringer's operating profit was
calculated using a tax rate of 38.8%, being the adjusted tax rate
applied by Beringer as disclosed in its Fourth Quarter and Fiscal 2000
Earnings news release. This was included as an acquisition adjustment;
(iv) the purchase consideration for Beringer was partially funded through a
convertible bond issue and increased borrowings and the consequent
increase in interest expense, net of related tax effects, was included
as an acquisition adjustment; and
(v) the interest expense on borrowings was calculated using Foster's
average cost of borrowings and was included as an acquisition
adjustment.
The pro forma unaudited consolidated balance sheet data as at 30 June 2000
reflects the balance sheet of Foster's as if the acquisition of Beringer had
occurred on 30 June 2000, but excludes acquisition accounting adjustments that
would be required under generally accepted accounting principles in Australia.
This is because the quantum of any such adjustments cannot currently be reliably
determined. As a result, the pro forma assumes that:
(i) the balance sheet of Beringer as at 30 June 2000 was included and
translated at the spot exchange rate as at 30 June 2000;
(ii) the purchase consideration for Beringer was funded through a
combination of an equity placement, a convertible bond issue and
increased debt; and
(iii) the difference between the net assets of Beringer as at 30 June 2000
and the purchase consideration was included as intangible assets.
These pro forma unaudited consolidated financial statements may not be
indicative of the results that actually would have occurred if the transactions
described above had been completed as of the dates indicated above or that may
be attained in the future. The pro forma unaudited
<PAGE>
consolidated financial statements should be read in conjunction with Foster's
unaudited Consolidated Financial Statements, Australian Stock Exchange
announcements and other media releases.
<PAGE>
INCOME STATEMENT DATA
EXCHANGE RATE (A$1.00 = US$0.6274)
<TABLE>
<CAPTION>
As at 30 June 2000
Historical Beringer Acquisition Pro forma
(2) (3) adjustment
(in A$ millions)
<S> <C> <C> <C> <C>
OPERATING REVENUE
Beer - Australian 1,357.4 1,357.4
- International 180.7 180.7
Leisure and hospitality 873.8 873.8
Other Carlton business 91.3 91.3
activities
Wine 712.2 699.4 1,411.6
Property and investments 142.6 142.6
Corporate 50.1 50.1
---------- ----------- ----------- ----------
3,408.1 699.4 - 4,107.5
========== =========== =========== ==========
OPERATING PROFIT/(LOSS)
BEFORE INTEREST AND TAX
Beer - Australian 384.6 384.6
- International 6.6 6.6
Leisure and hospitality 110.2 110.2
Other Carlton business 9.9 9.9
activities
Wine (1) 154.3 147.8 302.1
Property and investments 29.4 29.4
Corporate (44.3) (44.3)
---------- ----------- ----------- ----------
TOTAL OPERATING
PROFIT/(LOSS) BEFORE 650.7 147.8 - 798.5
INTEREST AND TAX (1)
Net interest expense (65.0) (141.8) (206.8)
Income tax attributable to
operating profit (154.5) (2.4) (156.9)
---------- ----------- ----------- ----------
Net profit before minority 431.2 147.8 (144.2) 434.8
interests (1)
Minority interests (3.4) (3.4)
---------- ----------- ----------- ----------
Net profit (1) 427.8 147.8 (144.2) 431.4
========== =========== =========== ==========
Interest coverage ratio 10.0 3.9
(times) (4)
Net profit per ordinary
share (fully diluted) - cents 24.7 22.8
</TABLE>
NOTE: THE ABOVE PRO FORMA INCOME STATEMENT DOES NOT PURPORT TO BE INDICATIVE
OF THE RESULTS WHICH THE COMBINED ENTITY WILL ACHIEVE IN THE FUTURE. IN
PARTICULAR, FOSTER'S ESTIMATES THAT THE ACQUISITION WILL RESULT IN AN
INCREASE IN CASH EARNINGS PER SHARE (IE EARNINGS PER SHARE PRE-AMORTISATION)
<PAGE>
(1) Excludes any amortisation charge on intangible assets acquired as such
amounts cannot currently be reliably determined. The pro forma balance
sheet includes intangible assets of $1,502.2 million, which is expected
to be split between brand names (which are unlikely to require
amortisation under Foster's current accounting policies) and goodwill
(which would be amortised over 20 years). It is likely that the
resulting amortisation of goodwill would be a material amount.
(2) Historical information is sourced from Foster's Audited Consolidated
Financial Statements for financial year ended 30 June 2000.
(3) Beringer information is sourced from its news release announcement
dated 3 August 2000 titled "Fourth Quarter and Fiscal 2000 Earnings" as
published on its web-site.
(4) The interest coverage ratio has been determined by dividing operating
profit before interest and tax by net interest expense.
BALANCE SHEET DATA
EXCHANGE RATE (A$1.00 = US$0.5988)
<TABLE>
<CAPTION>
As at 30 June 2000
Historical Beringer Acquisition Pro forma
(2) (3) adjustment
(in A$ millions)
<S> <C> <C> <C> <C>
Current assets 1,367.1 693.6 2,060.7
Non-current assets
- Intangible assets 1,332.6 1,502.2 2,834.8
- Other non-current assets 2,401.7 574.2 2,975.9
---------- ----------- ----------- ----------
TOTAL ASSETS 5,101.4 1,267.8 1,502.2 7,871.4
---------- ----------- ----------- ----------
Current liabilities 1,016.5 348.4 1,364.9
Non-current liabilities 1,777.1 451.5 1,280.7 3,509.3
---------- ----------- ----------- ----------
TOTAL LIABILITIES 2,793.6 799.9 1,280.7 4,874.2
---------- ----------- ----------- ----------
---------- ----------- ----------- ----------
TOTAL SHAREHOLDERS' EQUITY * 2,307.8 467.9 221.5 2,997.2
========== =========== =========== ==========
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY 5,101.4 1,267.8 1,502.2 7,871.4
========== =========== =========== ==========
Non-current borrowings 1,535.6 387.9 1,280.7 3,204.2
Current borrowings 223.1 243.5 466.6
Cash (508.5) - (508.5)
---------- ----------- ----------- ----------
Total net borrowings 1,250.2 631.4 1,280.7 3,162.3
========== =========== =========== ==========
</TABLE>
* The increase in total shareholders' equity between the historical and pro
forma balance sheets relates to the equity placement, net of issue costs.
SUMMARY OF THE ACQUISITION TERMS
On 29 August 2000, Foster's Brewing Group Limited ("Foster's"), Bordeaux
Acquisition Corp., a wholly owned subsidiary of Foster's, and Beringer Wine
Estates Holdings, Inc. ("Beringer") entered into a definitive agreement to
acquire all the issued and outstanding shares of Beringer. for US$55.75 per
share through a cash tender offer followed by a merger. The tender offer is
<PAGE>
expected to commence early next week. The offer is conditioned on the tender of
at least a majority of the voting securities of Beringer on a fully diluted
basis, antitrust approvals and other offer conditions customary in the United
States.
Beringer stockholders which own approximately 55% of Beringer's common stock
have committed to tender their shares to Foster's into the tender offer and to
support the transaction. The agreements with Beringer and with Beringer's
stockholders may be terminated under certain circumstances in the event that a
third party makes a superior competing offer for Beringer. The termination
rights are set out in further detail below. In such circumstances, a termination
fee of US$53.7 million would be payable to Foster's.
There can be no assurance that the conditions to Foster's acquisition of
Beringer's shares in the tender offer will be satisfied or that the merger will
occur. The tender offer is expected to close the first week in October and, if
Foster's acquires 100% of Beringer's Class A common shares and 90% of Beringer's
Class B shares, the merger will close within the next several days. If Foster's
acquires less than these amounts of Beringer's shares, the merger is expected to
close early in 2001. There can, however, be no assurance as to the exact timing
of the closing of the tender offer or the merger.
The following is a summary of the material terms of the merger agreement between
Foster's, Bordeaux Acquisition Corp. and Beringer, the conditions to the tender
offer and the voting agreement between Foster's and certain Beringer
shareholders.
THE MERGER AGREEMENT
THE OFFER. The Agreement and Plan of Merger, dated as of August 28, 2000, among
Beringer Wine Estates Holdings, Inc., a Delaware corporation (the "COMPANY"),
Foster's Brewing Group Limited (ABN: 49 007 620 886), a corporation organized
under the laws of the State of South Australia, Commonwealth of Australia
("PARENT"), and Bordeaux Acquisition Corp., a Delaware corporation and a wholly
owned subsidiary of Parent ("PURCHASER"), (the "MERGER AGREEMENT") contemplates
the commencement of a cash tender offer (the "OFFER") to purchase all of the
issued and outstanding shares of Class A common stock, US$0.01 par value, of the
Company (the "CLASS A SHARES") and all of the issued and outstanding shares of
Class B common stock, US$0.01 par value, of the Company (the "CLASS B SHARES"
and, together with the Class A Shares, the "Shares"), for US$55.75 per Share
(such price or such higher price as may be paid in the Offer, the "PER SHARE
AMOUNT"), net to the seller in cash and prescribes conditions to consummation of
the Offer. The Merger Agreement provides that, without the prior written consent
of the Company, Purchaser may not:
- Decrease or change the form of the Per Share Amount;
- Decrease the number of Shares sought to be purchased in the Offer;
- Amend or waive the Minimum Condition;
- Impose additional conditions to the Offer; or
<PAGE>
- Amend any other term of the Offer in any manner adverse to the holders
of Shares.
The "MINIMUM CONDITION" requires that there shall have been validly tendered and
not withdrawn prior to the Expiration Date a number of Shares that, together
with any Shares that Purchaser has the right to acquire pursuant to the Voting
Agreement (but that have not been validly tendered or have been withdrawn prior
to the Expiration Date) and any Shares then owned by Parent or any of its
Subsidiaries, constitutes at least a majority of the total voting power of the
outstanding securities of the Company entitled to vote in the election of
directors or in a merger (the "Voting Securities"), calculated on a fully
diluted basis on the date of purchase ("on a fully diluted basis" having the
following meaning: as of any date the number of Voting Securities the Company is
then required to issue pursuant to obligations outstanding at that date under
employee stock options, warrants, benefit plans or other rights to purchase or
acquire Voting Securities, assuming the absence of any vesting requirements or
conditions).
If on the initial expiration date of the Offer, which will be 20 business days
following commencement of the Offer (together with any extensions thereof, the
"EXPIRATION DATE"), all conditions to the Offer shall not have been satisfied or
waived, Purchaser may (and at the Company's request will) extend the Expiration
Date from time to time for such additional periods not to exceed 30 calendar
days in order to permit such conditions to be satisfied; provided, however, that
the Expiration Date may not be extended beyond January 31, 2001 (the "OUTSIDE
DATE"). Notwithstanding that all the conditions to the Offer have been
satisfied, Parent may, in its sole discretion, extend the Expiration Date for up
to 10 business days. In the event that the Minimum Condition has been satisfied
and all other conditions to the Offer have been satisfied or waived but less
than 100% of the Class A Shares and 90% of the Class B Shares, calculated on a
fully diluted basis, have been validly tendered and not withdrawn on the
Expiration Date, Purchaser will accept and purchase all of the Shares tendered
in the initial offer period and may notify stockholders of the Company of
Purchaser's intent to provide a "subsequent offer period" which shall not exceed
10 business days. Purchaser will, on the terms and subject to the prior
satisfaction or waiver of the conditions of the Offer, accept for payment and
purchase all Shares validly tendered and not withdrawn pursuant to the Offer as
soon as permissible after the Expiration Date of the Offer. Parent will cause
Purchaser to have sufficient funds make all payments required to be made
pursuant in the Offer and the Merger and Parent shall cause Purchaser to comply
with all of its obligations under the Merger Agreement.
The Company represented and warranted to Parent in the Merger Agreement that:
- The Board of Directors of the Company (the "BOARD OF DIRECTORS"), at a
meeting duly called and held unanimously:
- Approved and adopted the Merger Agreement and approved the
Voting Agreement (as defined below) and the transactions
contemplated thereby, including the Offer and the merger (the
"MERGER") of ------ Purchaser into the Company (such adoption
and approval being sufficient to render Section 203 of the
Delaware General Corporation Law (the "DGCL") inapplicable to
the Merger ---- Agreement and the Voting Agreement and the
transactions contemplated thereby, including the Offer and the
Merger); assuming that
<PAGE>
Parent and Purchaser are not "interested stockholders," as
such term is defined in Section 203 of the DGCL, immediately
prior to the execution of the Merger Agreement and the Voting
Agreement by Parent and Purchaser);
- Recommended that the stockholders of the Company accept the
Offer, tender their Shares pursuant to the Offer and adopt and
approve the Merger Agreement and the transactions contemplated
thereby, including the Merger; and
- Determined that the Merger Agreement and the transactions
contemplated thereby, including the Offer and the Merger, are
fair to and in the best interests of the stockholders of the
Company, and
- Goldman, Sachs & Co., the Company's financial advisor,
rendered its opinion to the Board of Directors to the effect
that the consideration to be received by the holders of Shares
of the Company pursuant to the Offer and the Merger is fair to
such holders from a financial point of view.
The Merger Agreement provides that, if requested by Parent, following or the
purchase by Purchaser of any Shares pursuant to the Offer and thereafter and the
purchase of Shares pursuant to the Voting Agreement, and from time to time
thereafter as Shares are acquired by Purchaser, Parent is entitled to designate
such number of directors, rounded up to the next whole number, on the Board of
Directors as is equal to the product of the total number of directors on the
Board of Directors (determined after giving effect to the directors so appointed
elected pursuant to such provision and including current directors serving as
officers of the Company) multiplied by the percentage that the aggregate number
of Shares beneficially owned by Parent or its affiliates (including such Shares
as are accepted for payment pursuant to the Offer, but excluding Shares held by
the Company) bears to the total number of Shares then outstanding. At such
times, if requested by Parent, the Company will also cause each committee of the
Board of Directors to include persons designated by Parent constituting the same
percentage of each such committee as Parent's designees are of the Board of
Directors. The Company will, upon request by Parent, promptly increase the size
of the Board of Directors or use its best efforts to secure the resignations of
such number of directors as is necessary to enable Parent's designees to be
elected to the Board of Directors and shall cause Parent's designees to be so
elected; provided, however, that, in the event that Parent's designees are
appointed or elected to the Board of Directors, until the Effective Time
(defined below), the Board of Directors shall include at least three directors
who are directors on the date the Merger Agreement and who are neither officers
of the Company nor designees, stockholders, affiliates or associates (within the
meaning of the federal securities laws) of Parent (such directors, the
"INDEPENDENT DIRECTORS"); provided further, that if no Independent Directors
remain, the other directors shall designate three persons to fill the vacancies
none of whom shall be either an officer of the Company or a designee,
stockholder, affiliate or associate of Parent, and such persons shall be deemed
to be Independent Director for purposes of the Merger Agreement.
THE MERGER. The Merger Agreement provides that, at the time of the consummation
of the Merger by the filing of a Certificate of Merger with the Secretary of
State of the State of Delaware, in such form as required by, and executed in
accordance with the relevant provisions
<PAGE>
of, the DGCL (the "EFFECTIVE TIME"), subject to the terms and conditions of the
Merger Agreement and the DGCL, Purchaser will be merged with and into the
Company. Following the Merger, the separate corporate existence of Purchaser
will cease and the Company will continue as the surviving corporation. The
Company as the surviving corporation after the Merger is hereinafter sometimes
referred to as the "SURVIVING CORPORATION." The officers and directors of the
Surviving Corporation are authorized to execute and deliver, on behalf of either
the Company of Purchaser, any deeds, bills of sale, assignments, assurances that
are necessary or desirable to vest, perfect or confirm record or otherwise in
the Surviving Corporation its right, title or interest in, to or under any of
the rights, properties or assets of either the Company or Purchaser acquired or
to be acquired by the Surviving Corporation as a result of, or in connection
with, the Merger or otherwise to carry out the Merger Agreement, and to take and
do, in the name of and on behalf of each such corporations or otherwise, all
such actions and things as may be necessary or desirable to vest, perfect or
confirm any and all right, title and interest in, to and under such rights,
properties or assets in the Surviving Corporation or otherwise to carry out the
Merger Agreement.
The Certificate of Incorporation of Purchaser, as in effect immediately prior to
the Effective Time, will be the Certificate of Incorporation of the Surviving
Corporation, until thereafter amended in accordance with the provisions thereof
and of the Merger Agreement and applicable law, except that Article FIRST of the
Certificate of Incorporation of the Surviving Corporation shall be amended to
read in its entirety as follows: "The name of the corporation is Beringer Wine
Estates Holdings, Inc." The By-Laws of Purchaser in effect at the time of the
Effective Time will be the By-Laws of the Surviving Corporation until amended,
as provided by law, the Certificate of Incorporation of the Surviving
Corporation and such By-Laws.
The directors of Purchaser immediately prior to the Effective Time will be the
initial directors of the Surviving Corporation, and the officers of the Company
immediately prior to the Effective Time will be the initial officers of the
Surviving Corporation, in each case until their successors are elected appointed
and qualified or until their earlier death, resignation or removal in accordance
with the Certificate of Incorporation and By-laws of the Surviving Corporation.
At the Effective Time, by virtue of the Merger and without any action on the
part of Purchaser, the Company or any holder of Shares, each Share issued and
outstanding immediately prior to the Effective Time (other than Shares held in
the treasury of the Company or owned by Parent or any direct or indirect wholly
owned subsidiary of Parent, which will be canceled and retired immediately
before the Effective Time and any Shares issued and outstanding immediately
prior to the Effective Time and held by a holder who has demanded and perfected
his demand for appraisal in accordance with the DGCL and as of the Effective
Time has neither effectively withdrawn nor lost his right to such appraisal
("DISSENTING SHARES")) will be canceled and extinguished and will be converted
into the right to receive the Per Share Amount therefor in cash, without
interest, upon surrender of the certificate formerly representing such Share. At
the Effective Time, each share of common stock of the Purchaser, par value
US$0.01 per share, issued and outstanding immediately prior to the Effective
Time will thereafter represent one validly issued, fully paid and non-assessable
share of common stock, par value US$0.01 per share, of the Surviving
Corporation.
<PAGE>
The Merger Agreement provides that the Company will take all actions necessary
to provide that, upon consummation of the Merger, each then-outstanding option
to purchase Shares (the "OPTIONS") granted under any of the Company's stock
option plans, as amended (the "OPTION PLANS") will be canceled by the Company in
exchange for payment to the holders of such Options of an amount equal to the
product of (A) the excess, if any, of the Per Share Amount over the per Share
exercise price thereof and (B) the number of Shares subject thereto (such
payment to be net of applicable withholding taxes). Any Options not canceled,
exercised or converted prior to the Effective Time will, by reason of the
Merger, thereafter represent the right to receive, upon payment of the exercise
price therefor, an amount in cash, without interest, equal to the Per Share
Amount times the number of Shares subject thereto (such payment to be net of
applicable withholding taxes).
The Company has agreed to take all actions necessary to provide that on and
after the date of the Merger Agreement, (A) no Shares will be purchased under
any Option Plan that is an "employee stock purchase plan" as defined in the
Internal Revenue Code of 1986, as amended, including all citations thereto or to
the Treasury Regulations promulgated thereunder and shall include any amendment,
substitute or successor provisions thereto (the "CODE") from and after the date
of the Merger Agreement and (B) any amounts previously contributed by employees
(through payroll deduction or otherwise) for the purpose of purchasing Shares
under any such Option Plan (for which the Shares have not been purchased as of
the date of the Merger Agreement) will be returned to such employees prior to
the Effective Time. The Merger Agreement also provides that (1) the Company
shall cause the Option Plans to terminate as of the Effective Time and (2) the
Company shall ensure that following the Effective Time no person, including any
holder of any Options or any participant in the Option Plans, will have any
right to acquire any equity securities of the Company, the Surviving Corporation
or any subsidiary thereof. Prior to the Effective Time, if necessary, the
Company shall (1) obtain any consents from holder of Options and (2) make any
amendments to the terms of the Option Plans that Company deems necessary to give
effect to the actions described in this paragraph or the preceding paragraph.
The Company has agreed pursuant to the Merger Agreement that, if required by
applicable law in order to consummate the Merger, following the purchase of and
payment for Shares by Purchaser pursuant to the Offer, the Company will:
- Promptly take all action necessary in accordance with the DGCL and its
Certificate of Incorporation and By-Laws to convene a special meeting
of its stockholders;
- Use its reasonable best efforts to solicit from stockholders of the
Company proxies in favor of the Merger, if necessary; and
- Take all other action necessary or, in the reasonable opinion of
Parent, advisable to secure any vote or consent of stockholders
required by the DGCL to effect the Merger.
Parent has agreed in the Merger Agreement that it will vote, or cause to be
voted, all of the Shares then directly or indirectly beneficially owned by it in
favor of the Merger.
The Merger Agreement further provides that, notwithstanding the foregoing, if
Parent, Purchaser or any other subsidiary of Parent acquires at least 100% of
the Class A Shares and 90% of the
<PAGE>
Class B Shares of the Company pursuant to the Offer or otherwise, the parties to
the Merger Agreement will take all necessary and appropriate action to cause the
Merger to become effective as soon as practicable after the acceptance for
payment of and payment for the Shares by Purchaser pursuant to the Offer without
a meeting of the stockholders of the Company, in accordance with Section 253 of
the DGCL.
REPRESENTATIONS AND WARRANTIES OF PARENT AND PURCHASER. Pursuant to the Merger
Agreement, Parent and Purchaser have made representations and warranties with
respect to, among other things:
<TABLE>
<S> <C>
- corporate and power; - accuracy of documents filed with
the Securities and Exchange
Commission (the "SEC"); and
- corporate authorization; - the ownership of Shares by Parent
and Purchaser.
- absence of conflicts and required
filings and consents;
- absence of brokerage or finders
fees or commissions payable;
</TABLE>
REPRESENTATIONS AND WARRANTIES OF THE COMPANY. Pursuant to the Merger Agreement,
the Company has made representations and warranties with respect to, among other
things:
<TABLE>
<S> <C>
- Corporate existence and power; - Accuracy and completeness of
information supplied in connection
- Capitalization; with governmental filing;
- Due authorization, execution and - Absence of brokerage or finders
delivery; fees;
- No conflicts; - Control share acquisition statute;
- Consents and approvals; - Compliance with laws;
- The absence of required waivers, - Tax matters;
consents or approvals;
- Permits;
- SEC filings;
- Intellectual property;
- Financial statements;
- Certain contractual obligations;
- Absence of a Company Material
Adverse Effect; - Certain environmental matters;
- Absence of litigation; - Required stockholders vote;
- Employee benefit plans; - The fairness opinion from Goldman
Sachs & Co.
<PAGE>
- Transactions with affiliates; and - Title to property.
</TABLE>
A "COMPANY MATERIAL ADVERSE EFFECT" means any change in or effect on the
business of the Company that is or can be reasonably expected to be materially
adverse to the business, assets, properties (including intangible properties),
condition (financial or otherwise), results of business or liabilities (of the
Company and its subsidiaries, taken as a whole, other than changes to the extent
they result from conditions generally affecting the wine industry or grape
growing areas, in the United States).
CONDUCT OF BUSINESS PENDING THE MERGER COVENANT. The Merger Agreement obligates
the Company and its subsidiaries (as defined below), from the date of the Merger
Agreement until the Effective Time, unless Parent otherwise consents in writing,
to conduct their operations only in the ordinary course of business in a manner
consistent with past practice and obligates the Company and its Subsidiaries to
use their commercially reasonable efforts to preserve substantially intact their
business organizations, to keep available the services of their present
officers, key employees and consultants and to preserve present relationships
with customers, suppliers and any other Persons with whom the Company and any of
its Subsidiaries has significant business relationships. "PERSON" means an
individual, corporation, partnership, limited liability company, association,
trust or any unincorporated organization. The Merger Agreement also contains
specific covenants as to certain impermissible activities of the Company prior
to the Effective Time, unless specifically disclosed in the schedules to the
Merger Agreement or otherwise consented to in writing by Parent, which provide
that the Company will not (and will not permit any of its Subsidiaries to):
- Adopt any amendment to its Certificate of Incorporation or By-Laws;
- Declare, set aside or pay any dividend or other distribution (whether
in cash, stock or property) in respect to its capital stock;
- Issue, sell, transfer, pledge, dispose of or encumber any additional
shares of, or securities convertible into or exchangeable for, or
options, warrants, calls, commitments or rights of any kind to acquire,
any shares of capital stock of any class of the Company or any
corporation or other legal entity of which the Company (either alone or
through or together with any other Subsidiary) owns, directly or
indirectly, more than 50% of the stock or other equity interests the
holders of which are generally entitled to vote for the election of the
board of directors or other governing body of such corporation or other
legal entity (each such entity, a "SUBSIDIARY") of its Subsidiaries,
other than the issuance of Shares, in accordance with the terms of
the instruments governing such issuance on the date of the Merger
Agreement, and previously disclosed to Parent in writing;
- Incur any long-term indebtedness or incur short-term indebtedness other
than under lines of credit existing on the date of the Merger
Agreement;
- Redeem, purchase, repurchase or otherwise acquire directly or
indirectly any of its capital stock or other securities;
<PAGE>
- Split, combine or reclassify any of its capital stock or issue or
authorize or propose the issuance of any other securities in respect
of, in lieu of or in substitution for shares of its capital stock;
- Enter into, amend, terminate, renew or fail to use reasonable efforts
to renew in any material respect any contract or agreement of the
Company included as exhibits to the Company's Annual Report on Form
10-K for the fiscal year ended June 30, 2000, the Company's Quarterly
Reports on Form 10-Q for the fiscal quarters ended September 30, 1999,
December 31, 1999 and March 31, 2000, or any periodic filing made
pursuant to the Exchange Act since June 30, 2000 (each such contract or
agreement, a "MATERIAL CONTRACT") or any contract or agreement to which
the Company or any of its Subsidiaries is a party or by which any of
them is bound set forth on Section 4.15 of the Disclosure Schedules
(each such contract or agreement, an "IDENTIFIED CONTRACT") except in
the ordinary course of business consistent with past practice;
- Except pursuant to employment contracts in effect as of the Merger
Agreement :
- Grant any increase in the compensation payable or to become
payable by the Company or any of its Subsidiaries to any
employee other than increases in the ordinary course of
business consistent with past practice to non-officer
employees of the Company;
- Adopt, enter into, amend or otherwise increase, or accelerate
the payment or vesting of the amounts, benefits or rights
payable or accrued or to become payable to or accrued under
any bonus, incentive compensation, deferred compensation,
severance, termination, change in control, retention,
hospitalization or other medical, life, disability, insurance
or other welfare, profit sharing, stock option, stock
appreciation right, restricted stock or other equity based,
pension, retirement or other employee compensation or benefit
plan, program agreement or arrangement; or
- Enter into or amend in any material respect any employment or
collective bargaining agreement or, except in accordance with
the existing written policies of the Company or existing
contracts or agreements, grant any severance or termination
pay to any officer, director or employee of the Company or any
of its Subsidiaries;
- Change the accounting principles used by it unless required by United
States generally accepted accounting principles (or, if applicable with
respect to Subsidiaries, foreign generally accepted accounting
principles);
- Acquire by merging or consolidating with, by purchasing an equity
interest in or a portion of the assets of, or by any other manner, any
business or any corporation, partnership, association or other business
organization or division thereof, or otherwise acquire any assets of
any other person (other than the purchase of assets from suppliers or
vendors in the ordinary course of business consistent with past
practice) for an amount in excess of US$500,000, individually or in the
aggregate;
<PAGE>
- Sell, lease, exchange, transfer or otherwise dispose of, or agree to
sell, lease, exchange, transfer or otherwise dispose of, any of its
assets except in the ordinary course of business consistent with past
practice;
- Mortgage, pledge, hypothecate, grant any security interest in, or
otherwise subject to any other lien on any of its properties or assets
other than Permitted Liens that are not purchase money security
interests relating to indebtedness representing an amount no greater
than the purchase price of such properties;
- Compromise, settle, grant any waiver or release relating to or
otherwise adjust any material claims, liabilities or obligations
(absolute, accrued, asserted or unasserted, contingent or otherwise),
including any litigation, except for any such compromise, settlement,
waiver, release or adjustment:
- In the ordinary course of business consistent with past
practice, and
- Involving a payment by the Company or any of its Subsidiaries
not in excess of US$500,000 in the aggregate, following prior
notice to and consultation with Parent;
- Incur any indebtedness for borrowed money or guarantee any
such indebtedness of another Person, issue or sell any debt
securities or warrants or other rights to acquire any debt
securities of the Company or any of its Subsidiaries,
guarantee any debt securities of another Person, enter into
any "keep well" or other agreement to maintain any financial
statement condition of another Person or enter into any
arrangement having the economic effect of any of the
foregoing;
- Make any loans, advances or capital contributions to, or investments
in, any other Person, other than to the Company or any Subsidiary of
the Company or to officers and employees of the Company or any of its
Subsidiaries for travel, business or relocation expenses in the
ordinary course of business;
- Make any capital expenditure or capital expenditures other than capital
expenditures set forth in the operating budget of the Company dated
August 15, 2000 and previously delivered to Parent, other than
expenditures in the ordinary course of business consistent with past
practice which individually or in the aggregate do not exceed
US$500,000;
- Hire or terminate or amend the terms of the employment of any executive
officer or other key employee;
- Enter into or amend in any material respect any Material Contract or
enter into any contract or agreement, written or oral, with any
Affiliate or associate or relative of the Company or relative of any
officer or director of the Company, or make any payment to or for the
benefit of, directly or indirectly, any of the foregoing;
- Authorize, recommend, propose or announce an intention to adopt a plan
of complete or partial liquidation or dissolution of the Company or any
of its Subsidiaries; or
<PAGE>
- Take any action including, without limitation, the adoption of any
stockholder rights plan or amendments to the Certificate of
Incorporation, which would, directly or indirectly, restrict or impair
the ability of Parent to vote, or otherwise to exercise the rights and
receive the benefits of a stockholder of the Company with respect to,
securities of the Company that may be acquired or controlled by Parent
or Purchaser or permit any stockholder of the Company to acquire
securities of the Company on a basis not available to Parent in the
event that Parent were to acquire securities of the Company; and
- Enter into an agreement, contract, commitment or arrangement to do any
of the foregoing.
NO SHOP COVENANT. The Merger Agreement provides that the Company and its
Subsidiaries will not and will not permit or authorize any officer, director,
agent, financial adviser, attorney, accountant or other representative to,
directly or indirectly,
- solicit, initiate or encourage submission of proposals or offers from
any Person relating to, or that could reasonably be expected to lead to
an Acquisition Transaction, or
- participate in any negotiations or discussions regarding, or
- furnish to any other Person any information with respect to, or
- otherwise cooperate in any way with, or
- assist or participate in, or
- facilitate any effort or attempt by any other Person to do or seek an
Acquisition Transaction, or
- enter into any letter of intent, agreement in principle, acquisition
agreement or other similar agreement with respect to an Acquisition
Transaction (an "ACQUISITION AGREEMENT") or any agreement in principle,
acquisition agreement or other similar agreement requiring it to
abandon, terminate or fail to consummate the Offer, the Merger or any
other transaction contemplated by the Merger Agreement or to consummate
an Acquisition Transaction.
However, subject to compliance with its covenant (described below) to notify
Parent in advance and keep Parent informed, prior to the acceptance for payment
of Shares by Purchaser pursuant to the Offer, the Company may furnish
information to such third party pursuant to a customary confidentiality
agreement and the Company may negotiate, explore or otherwise engage in
substantive discussions with such party,
- in response to a bona fide unsolicited proposal with respect to an
Acquisition Transaction that was made in circumstances not otherwise
involving a breach of the Merger Agreement and that the Board of
Directors determines, in its good faith
<PAGE>
judgment taking into account the advice of its financial advisor and
outside counsel, is or is reasonably likely to lead to a Superior
Proposal (as defined below),
- if the Board of Directors determines, in its good faith judgment,
taking into account the advice of outside legal counsel, that failing
to take such action would breach the fiduciary duties of the Board of
Directors to the to the stockholders of the Company under applicable
law.
Nothing in the Merger Agreement will prevent the Board of Directors from
complying with Rules 14d-9 and 14e-2 promulgated under the Exchange Act with
respect to any Acquisition Transaction or from making any required disclosure to
the Company's stockholders if, in the good faith judgment of the Company's Board
of Directors, taking into account the advice of outside counsel, that such
disclosure would be required under applicable laws.
The Merger Agreement provides that neither the Board of Directors of the Company
nor any committee thereof may:
- withdraw or modify, or propose publicly to withdraw or modify, in a
manner adverse to Parent or Purchaser, the approval or recommendation
by the Board of Directors or such committee of the Offer, the Merger,
the Merger Agreement or the Voting Agreement,
- approve or recommend, or propose publicly to approve or recommend, any
Acquisition Transaction, including for purposes of Section 203 of the
DGCL, or
- cause the Company to enter into any Acquisition Agreement,
PROVIDED, HOWEVER, that, notwithstanding anything in the Merger Agreement to the
contrary, subject to compliance by the Company with its covenant (described
below) to give Parent notice and keep Parent informed, prior to acceptance for
payment of Shares by Purchaser pursuant to the Offer, in response to a bona fide
unsolicited proposal with respect to an Acquisition Transaction, if the Board of
Directors:
- determines, in its good faith judgment and taking into account the
advice of its financial advisor and outside counsel, that
- such proposal is a Superior Proposal, and
- failure to take any of the actions set forth in the three
bullet points immediately preceding this proviso would breach
the fiduciary duties of the Board of Directors under
applicable law, and
- gives Parent four business days prior written notice of its intention
to do so, the Board of Directors may withdraw or modify its approval or
recommendation of the Offer, the Merger or the Merger Agreement or
approve or recommend an Acquisition Transaction or cause the Company to
enter into an Acquisition Agreement. Parent however, will retain its
right to terminate the Merger Agreement (see "Termination") and the
<PAGE>
Company may not enter into an Acquisition Agreement unless it
terminates the Merger Agreement and pays a termination fee to Parent.
The Merger Agreement requires the Company to immediately cease all existing
activities, discussions and negotiations with any parties conducted prior to the
execution of the Merger Agreement with respect to any proposal for an
Acquisition Transaction and request the return of all confidential information
regarding the Company provided any such parties prior to the execution of the
Merger Agreement pursuant to the terms of any confidentiality agreement or
otherwise.
Pursuant to the terms of the Merger Agreement, the Company will:
- Immediately (and in any event, no later than one business day after
receipt) advise Parent in writing of the receipt of a request for
information or any inquiries or proposals relating to an Acquisition
Transaction and any actions taken pursuant to the No Shop covenant,
specifying the material terms and conditions of such proposed
Acquisition Transaction and the identity of the other party or parties
involved; and
- Keep Parent reasonably informed of the status of any such request or
proposed Acquisition Transaction.
If any such inquiry or proposal is in writing, the Company shall promptly
deliver to Parent a copy of such inquiry or proposal. In addition, the Company
shall promptly (but in no event later than one business day) advise Parent in
writing if the Board of Directors makes any determination as to any Acquisition
Transaction as contemplated by the provisos described above in this Section.
For purposes of the Merger Agreement:
- "ACQUISITION TRANSACTION" means (other than the transactions
contemplated by the Merger Agreement)
- a merger, consolidation or other business combination,
recapitalization, liquidation, share exchange, sale of shares
of capital stock, tender offer or exchange offer or similar
transaction involving the Company or any of its Subsidiaries,
- Acquisition in any manner, directly or indirectly, of a
material interest in the outstanding voting securities of, or
a material equity interest in a substantial portion of the
assets of, the Company or any of its Subsidiaries, including
any single or multi-step transaction or series of related
transactions which is structured to permit a third party to
acquire beneficial ownership of 30% or greater equity interest
in the Company,
- The acquisition in any manner, directly or indirectly, of any
material portion of the business or assets (other than
immaterial or insubstantial assets or inventory in the
ordinary course of business or assets held for sale) of the
Company; or
<PAGE>
- Any other transaction that is intended or would be reasonably
likely to frustrate the completion of the transactions
contemplated by the Merger Agreement; and
- "SUPERIOR PROPOSAL" means a bona fide unsolicited written Acquisition
Transaction proposal by a third party involving all or substantially
all of the shares of capital stock or substantially all of the assets
of the Company and payment of consideration to the Company or the
stockholders of the Company that a majority of the disinterested
members of the Board of Directors determines, to be, taking into
account the transaction as a whole and all pertinent factors including
the availability of financing, any changes to the financial terms of
the Merger Agreement which as of the time of determination had been
proposed by Parent, any break-up fees, expense reimbursement provisions
and conditions to consummation, more favorable to the stockholders of
the Company from a financial point of view than the Offer, the Merger
and the other transactions contemplated by the Merger Agreement.
ACCESS TO INFORMATION/CONFIDENTIALITY. The Merger Agreement provides that, from
the date of the Merger Agreement until the Effective Time, the Company will give
Parent and its representatives reasonable access, at all reasonable times, to
its officers, employees, agents, properties, offices and other facilities and to
the books and records of the Company and its subsidiaries and all financial,
operating and other data and information reasonably requested by Parent or
Purchaser, subject to Parent's maintaining the confidentiality of any non-public
information disclosed to them. The parties also agree to keep each other's
confidential information confidential, subject to customary exceptions.
EFFORTS TO CONSUMMATE. The parties have agreed to use their reasonable best
efforts to take or cause to be taken all actions and to do or cause to be done
all things necessary, proper or advisable to consummate the transactions
contemplated by the Merger Agreement and to use their reasonable best efforts to
obtain all necessary waivers, consents and approvals, and to effect all
necessary filings under the Exchange Act, the Australian Stock Exchange Listing
Rules, the rules promulgated by the Australian Securities and Investments
Commission and statutes, rules, regulations, orders, decrees, administrative and
judicial doctrines, and other laws that are designed or intended to prohibit,
restrict or regulate actions having the purpose or effect of monopolization,
lessening of competition or restraint of trade, including, to the extent
applicable, the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended
(the "HSR ACT"), laws of the European Union or the member states thereof,
Australia and any other country in which the Company, its Subsidiaries, Parent
or its Subsidiaries has operations or derives revenue which are equivalent to
the HSR Act. The parties also agreed to cooperate in responding to inquiries
from, and making presentations to, regulatory authorities. Notwithstanding any
other provision of the Merger Agreement, in no event will Parent be required to
agree to any divestiture, hold separate or other requirement in connection with
the Merger Agreement or any of the transactions contemplated thereby.
INDEMNIFICATION; DIRECTORS' AND OFFICERS' INSURANCE. The Merger Agreement
provides that the Certificate of Incorporation and By-Laws of the Surviving
Corporation shall contain indemnification provisions identical to those
contained in the Certificate of Incorporation and By-laws of the Company
provided to Parent prior to the execution of the Merger Agreement and shall not
be amended, repealed or otherwise modified for a period of six years after the
Effective
<PAGE>
Time in any manner that would adversely affect the rights thereunder of
individuals who as of the date of the Merger Agreement were directors or
officers of the Company or otherwise entitled to indemnification under the
Certificate of Incorporation, By-Laws or indemnification agreements or their
respective heirs, executors and personal representatives (the "INDEMNIFIED
PARTIES"). Parent has agreed that from and after the Effective Date it will
cause the Surviving Corporation, to the fullest extent permitted under the DGCL,
to indemnify, defend and hold harmless, each Indemnified Party against any costs
or expenses (including reasonable attorneys' fees), judgments, fines, loses,
claims, damages, liabilities and amounts paid in settlement in connection with
any claim, action, suit, proceeding or investigation, including, without
limitation, liabilities arising out of the Merger Agreement, the Voting
Agreement and the transactions contemplated thereby, to the extent that it was
based on the fact that such Indemnified Party is or was a director or officer of
the Company and arising out of actions or omissions or alleged actions or
omissions occurring at or prior to the Effective Time, and in the event of any
such claim, action, suit, proceeding or investigation (whether arising before or
after the Effective Time),
- the Company or the Surviving Corporation, as applicable, shall pay the
reasonable fees and expenses of counsel selected by the Indemnified
Parties, which counsel shall be reasonably satisfactory to the Company
or the Surviving Corporation, as promptly as statements therefor are
received, and
- the Company and the Surviving Corporation will cooperate in the defense
of any such matter;
PROVIDED, HOWEVER, that neither the Company nor the Surviving Corporation shall
be liable for any settlement effected without its written consent (which consent
shall not be unreasonably withheld); and further, provided, that neither the
Company nor the Surviving Corporation shall be obliged to pay the fees and
disbursements of more than one counsel for all Indemnified Parties in any single
action except to the extent that, in the opinion of counsel for the Indemnified
Parties, two or more of such Indemnified Parties have conflicting interests in
the outcome of such action.
The Merger Agreement provides that for six years after the Effective Time, the
Surviving Corporation will be required to maintain or obtain officers' and
directors' liability insurance covering the Indemnified Parties who are
currently covered by the Company's officers and directors liability insurance
policy on terms not less favorable than those in effect on the date of the
Merger Agreement in terms of coverage and amounts; provided, however, that the
Surviving Corporation will not be required to expend in any year an amount in
excess of 200% of the annual aggregate premiums currently paid by the Company
for such insurance; and provided, further, that if the annual premiums of such
insurance coverage exceed such amount, the Surviving Corporation will be
obligated to obtain a policy with the best coverage available, in the reasonable
judgment of its Board of Directors, for a cost not exceeding such amount.
Nothing in the Merger Agreement prohibits the Surviving Corporation from
complying with its obligations under the preceding sentence by obtaining
insurance coverage under any policy maintained by Parent or any of its
subsidiaries. Parent has agreed to cause the Surviving Corporation to reimburse
all expenses, including reasonable attorney's fees and expenses,
<PAGE>
incurred by any person to enforce the foregoing obligations. Parent has agreed
that these provisions will survive consummation of the Merger and be binding on
all successors and assigns.
EMPLOYEE BENEFIT ARRANGEMENTS. With respect to employee benefit matters, the
Merger Agreement provides that at the Effective Time, the Surviving Corporation
will continue as the plan sponsor of each of the Company's employee benefits
plans. For at least one year following the Effective Time, employees of the
Company and its Subsidiaries will receive employee benefits that, in the
aggregate, are substantially comparable to the employee benefits provided
immediately prior to the execution of the Merger Agreement (excluding any stock
options or other stock based compensation), except (i) for termination of the
Option Plans and the employee stock purchase plan or (ii) as required by
applicable law (including as required to preserve any favorable tax treatment
afforded such benefits as of the Effective Time).
STANDSTILL AND CONFIDENTIALITY AGREEMENTS; ANTI-TAKEOVER PROVISIONS. The Merger
Agreement provides that through the Effective Time, except to the extent
required in order to take any of the actions permitted under the provisos of the
No Shop covenant described above, the Company:
- will not terminate, amend, modify or waive any provision of any
confidentiality or standstill agreement to which it or any of its
subsidiaries is a party; and
- will enforce, to the fullest extent permitted under applicable law, the
provisions of any such agreement, including by obtaining injunctions to
prevent any breaches of such agreements and to enforce specifically the
terms and provisions thereof in any court having jurisdiction.
CONDITIONS TO CONSUMMATION OF THE MERGER. Pursuant to the Merger Agreement, the
respective obligations of Parent, Purchaser and the Company to effect the Merger
are subject to the satisfaction, on or prior to the Closing Date, of each of the
following conditions (any or all of which may be waived by the parties to the
Merger Agreement in writing, in whole or in part, to the extend permitted by
applicable law):
- Purchaser shall have made, or caused to be made, the Offer and shall
have accepted for payment, the Shares validly tendered and not
withdrawn pursuant to the Offer; PROVIDED, HOWEVER, neither Parent nor
Purchaser may invoke this condition if Purchaser fails to make or cause
to be made the Offer or to accept for payment or pay for Shares
pursuant to the Offer in violation of the terms of the Offer or of the
Merger Agreement.
- The Merger Agreement shall have been adopted by the requisite vote of
the stockholders of the Company, if required by the DGCL; and
- No statute, rule, regulation, judgment, writ, decree, order or
injunction (whether temporary, preliminary or permanent) shall have
been promulgated, enacted, entered or enforced, and no other action
shall have been taken, by any government or governmental,
administrative or regulatory authority or by any court of competent
jurisdiction, that in any of the foregoing cases has the effect of
making illegal or directly or indirectly restraining, prohibiting or
restricting the consummation of the Merger.
<PAGE>
TERMINATION. The Merger Agreement may be terminated at any time before the
Effective Time, whether before or after approval of the Company's stockholders:
(1) By mutual written consent of the Parent and the Company; or
(2) By either Parent or the Company if any governmental or regulatory
authority, domestic or foreign, including, without limitation, any
quasi-governmental, supranational, statutory, environmental entity or
any stock exchange or court shall have issued an order, judgment or
decree, enacted a statute, rule, law, regulation or other legal
requirement or taken any other action which shall have become final and
nonappealable, in each case permanently restraining, enjoining, making
illegal or otherwise prohibiting
- the transactions contemplated by the Merger Agreement; or
- prior to the Purchaser's purchase of shares in the Offer (the
"OFFER COMPLETION DATE") for the benefit of Parent only, the
purchase of Shares from the parties to the Voting Agreement,
pursuant to the Voting Agreement or otherwise, or
(3) By either Parent or the Company if the Offer has not been consummated
by the Outside Date, or
(4) By the Company; if at any time prior to the Offer Completion Date:
- There shall be a material breach of any of Parent's or
Purchaser's representations or warranties under the Merger
Agreement, which breach shall not have been cured within 15
calendar days of the receipt of written notice thereof by
Parent from the Company, or
- There shall have been a material breach on the part of Parent
or Purchaser of any of their respective covenants or
agreements under the Merger Agreement, which breach shall not
have been cured within 15 calendar days of the receipt of
written notice thereof by Parent from the Company; or
(5) By Parent, if at any time prior to the Offer Completion Date:
- There shall be a material breach of any of the Company's
representations or warranties under the Merger Agreement,
which breach shall not have been cured within fifteen calendar
days of the receipt of written notice thereof by the Company
from Parent, or
- There shall have been a material breach on the part of the
Company of any of its covenants or agreements under the Merger
Agreement, which breach shall not have been cured within 15
calendar days of the receipt of written notice thereof by the
Company from Parent;
<PAGE>
(6) By Parent, if at any time prior to the Offer Completion Date:
- The Board of Directors or any committee thereof shall
withdraw, modify or change its recommendation or approval in
respect of the Merger Agreement, the Offer or the Merger in a
manner adverse to Parent, or shall have failed to reconfirm
its approval or recommendation in respect of the Merger
Agreement within five business days after a written request
from Parent to do so, or the Board of Directors or any
committee thereof shall have resolved to take such action,
- The Board of Directors or any committee thereof shall have
recommended any proposal other than by Parent in respect of
any Acquisition Transaction, or the Board of Directors or any
committee thereof shall have resolved to take such action,
- The Company shall take any action in significant breach of the
No Shop provision of the Merger Agreement, or
- Any Person or group (as defined in Section 13(d)(3) of the
Exchange Act) other than Parent, Purchaser or any of their
respective subsidiaries or affiliates or any party to the
Voting Agreement, shall have become the beneficial owner of
more than 40% of the outstanding Shares (either on a primary
or a fully diluted basis), or the Board of Directors or any
committee thereof shall have resolved to take such action;
PROVIDED, HOWEVER, that no public statement by the Company that (A) it
has received proposal regarding an Acquisition Transaction, (B) it has
given Parent the notice required by the Merger Agreement in connection
with its withdrawal of its recommendations, or (C) otherwise only
describes the technical operation of the No Shop, Termination Fee and
Termination provisions of the Merger Agreement will be deemed to be a
public proposal to withdraw or modify the Board of Directors'
recommendation for the purposes of the above termination provision and
the No Shop provision; or
(7) By either Parent or the Company if the Offer expires or is terminated
or withdrawn pursuant to its terms without any Shares being purchased
thereunder by Purchaser as a result of the failure of any of the
conditions or the occurrence of any of the events set forth in the
Conditions to the Offer.
(8) By the Company at any time prior to the Offer Completion Date if the
Board of Directors of the Company authorizes the Company, subject to
complying with the terms of the Merger Agreement, to enter into a
written agreement concerning a Superior Proposal with respect to the
Company; PROVIDED, HOWEVER, that
- The Company shall have complied with the No Shop provision;
- The Company shall have given Parent at least four business
days prior written notice of its intention to terminate the
Merger Agreement, attaching a
<PAGE>
description of all the material terms and conditions of such
Superior Proposal to such notice;
- During such four business days or greater period, the Company
engages in good faith negotiations with Parent with respect to
such changes as Parent may propose to the terms of the Merger
and the Merger Agreement;
- Parent does not make prior to such termination of the Merger
Agreement a definitive, binding offer which the Board of
Directors of the Company determines, in good faith after
consultation with its financial advisors, is at least as
favorable to the Stockholders as such Superior Proposal; and
- Prior to or concurrently with such termination pursuant to
this Section the Company pays to Parent in immediately
available funds the fee required to be paid (see "TERMINATION
FEE").
The Company will notify Parent promptly if its intention to enter into a written
agreement referred to in its notification shall change at any time after giving
such notification;
Pursuant to the Merger Agreement, in the event of the termination of the Merger
Agreement, written notice shall promptly be given to the other party specifying
the provision of the Merger Agreement under which such termination is made and
the Merger Agreement will become void and there shall be no liability on the
part of Parent, Purchaser or the Company, except that certain specified
provisions shall survive the termination of the Merger Agreement; and no party
will be relieved from liability for any prior deliberate or willful breach of
the Merger Agreement.
TERMINATION FEE. The Company will pay to Parent a termination fee of US$53.7
million in any of the following circumstances:
- If the Merger Agreement is terminated pursuant to paragraph (5) above
and
- at the time of such termination,
- the Merger Agreement is not terminable pursuant to paragraph
(4), and
- a proposal for an Acquisition Transaction shall have been made
known to the Company or been made directly to its Stockholders
generally or any Person shall have publicly announced an
intention (whether or not conditional) to make a proposal for
an Acquisition Transaction; and
- within one year of such termination, the Company becomes a
subsidiary of any Person or consummates an Acquisition
Transaction
- If Parent terminates the Merger Agreement pursuant to its right
described in paragraph (6) above, or
- the Company terminates the Merger Agreement pursuant to its right
described in paragraph (4) above,
<PAGE>
- If the Merger Agreement is terminated by either the Company or Parent
pursuant to their rights described in paragraphs (3) or (7) above and
- prior to such termination,
- the Minimum Condition shall not have been satisfied but each
other condition to the Offer shall have been satisfied, and
- a proposal for an Acquisition Transaction shall have been made
known to the Company or been made directly to the Stockholders
generally or any Person shall have publicly announced its
intention (whether or not conditional) to make a proposal for
an Acquisition Transaction, and
- within one year of such termination, then the Company becomes
a subsidiary of any Person or consummates an Acquisition
Transaction.
The provisions of the termination fee section of the Merger Agreement survive
any termination of the Merger Agreement. Except as described above, each party
will bear its own expenses in connection with the Merger Agreement and the
transactions contemplated thereby.
AMENDMENT. The Merger Agreement may be amended by the Company, Parent and
Purchaser at any time before the Effective Time and at any time before or after
any approval of the Merger Agreement by the Stockholders but, after any such
approval, no amendment may be made which reduces the amount or changes the type
of consideration into which each Share will be converted upon consummation of
the Merger. The Merger Agreement may not be amended except by an instrument in
writing signed by the parties.
EXTENSION; WAIVER. At any time before the Effective Time, any party may:
- Extend the time for the performance of any of the obligations or other
acts of the other parties,
- Waive any inaccuracies in the representations and warranties contained
in the Merger Agreement or in any document delivered pursuant to the
Merger Agreement, and
- Waive compliance with any of the agreements or conditions contained in
the Merger Agreement.
Any agreement on the part of a party to any extension or waiver shall be valid
only as against such party and only if set forth in an instrument in writing
signed by such party. Any such waiver shall constitute a waiver only with
respect to the specific matter described in such writing and shall in no way
impair the rights of the party granting such waiver in any other respect or at
any other time. Neither the waiver by any of the parties to the Merger Agreement
of a breach of or a default under any of the provisions of the Merger Agreement,
nor the failure by any of the parties, on one or more occasions, to enforce any
of the provisions of the Merger Agreement or to exercise any right or privilege
under the Merger Agreement, will be construed as a waiver of any other breach of
default of a similar nature, or as a waiver of any of such provisions, rights or
<PAGE>
privileges under the Merger Agreement. The rights and remedies provided in the
Merger Agreement are cumulative and none is exclusive of any other, or of any
rights or remedies that any party may otherwise have at law or in equity.
CONDITIONS TO THE OFFER
Notwithstanding any other provision of the Offer, Purchaser will not be required
to accept for payment or, subject to any applicable rules and regulations of the
SEC, including Rule 14e-1(c) promulgated under the Exchange Act (relating to
Purchaser's obligation to pay for or return tendered Shares promptly after
termination or withdrawal of the Offer), pay for, and (subject to any such rules
or regulations) may delay the acceptance for payment of any tendered Shares and
(except as provided in this Agreement) amend or terminate the Offer (whether or
not any Shares have theretofore been purchased or paid for pursuant to the
Offer) (A) unless the following conditions shall have been satisfied: (i) the
Minimum Condition, and (ii) any applicable waiting period under the HSR Act
shall have expired or been terminated prior to the expiration of the Offer, or
(B) if at any time on or after the date of this Agreement and prior to the time
of acceptance of Shares for payment or payment therefor any of the following
conditions exists:
- There shall be in effect an injunction or other order, decree, judgment
or ruling by a court of competent jurisdiction or by a governmental,
regulatory or administrative agency or commission of competent
jurisdiction or a statute, rule, regulation, executive order or other
action shall have been promulgated, enacted or taken by a governmental
authority or a governmental, regulatory or administrative agency or
commission of competent jurisdiction which in any such case (i)
restrains or prohibits the making or consummation of the Offer, the
consummation of the Merger or the purchase of Shares pursuant to the
Voting Agreement, (ii) prohibits or restricts the ownership or
operation by Parent (or any of its affiliates or Subsidiaries) of any
material portion of its or the Company's business or assets, or compels
Parent (or any of its affiliates or Subsidiaries) to dispose of or hold
separate any material portion of its or the Company's business or
assets, (iii) imposes material limitations on the ability of Parent
effectively to acquire or to hold or to exercise full rights of
ownership of the Shares, including, without limitation, the right to
vote the Shares purchased by Parent on all matters properly presented
to the stockholders of the Company, (iv) imposes any material
limitations on the ability of Parent or any of its affiliates or
Subsidiaries effectively to control in any material respect the
business and operations of the Company, or (v) which otherwise would
have a Company Material Adverse Effect; or
- There shall be instituted or pending any action or proceeding before
any governmental, regulatory or administrative agency or commission of
competent jurisdiction seeking any injunction, order, decree, judgment
or ruling having any effect set forth in (a) above; or
- This Agreement shall have been terminated by the Company or Parent in
accordance with its terms or any event shall have occurred which gives
Parent or Purchaser the right to terminate this Agreement or not
consummate the Merger; or
<PAGE>
- Any representation or warranty made by the Company in this Agreement
shall not have been true and correct in all material respects when made
if the representation or warranty is not qualified as to materiality or
a Company Material Adverse Effect or, if qualified, shall not have been
true and correct when made, or shall have ceased to be true and correct
in all material respects as of the Expiration Date as if made as of
such date if the representation or warranty is not qualified as to
materiality or a Company Material Adverse Effect or, if not so
qualified, shall have ceased to be true and correct, (ii) as of the
Expiration Date the Company shall not in all material respects have
performed any obligation or agreement and complied with its material
covenants to be performed and complied with by it under this Agreement,
or (iii) the Company or any Stockholder party to the Voting Agreement
shall have materially breached the Voting Agreement; or
- There shall have occurred and be continuing (i) any suspension or
limitation of trading in securities generally on the New York Stock
Exchange, Nasdaq Stock Market or Australian Stock Exchange (not
including any suspension or limitation of trading in any particular
security) or any setting of minimum prices for trading on such
exchange, (ii) any banking moratorium declared by the U.S. Federal, New
York or Australian authorities or any suspension of payments in respect
of banks in the United States, (iii) any commencement of war, armed
hostilities or other international or national calamity directly
involving the United States or Australia or having a significant
adverse effect on the functionality of financial markets in the United
States or Australia, or (iv) in the case of any of the foregoing,
existing at the time of commencement of the Offer, a material
acceleration or worsening thereof; or
- Parent and the Company shall have agreed that Parent shall amend the
Offer to terminate the Offer or postpone the payment for Shares
pursuant thereto; or
Subject to Parent and Purchaser's obligations under the Merger Agreement, the
foregoing conditions are for the sole benefit of Parent and may be asserted by
Parent regardless of the circumstances (including any action or inaction by
Parent) giving rise to any such conditions and such conditions, other than the
Minimum Condition, may be waived by Parent in whole or in part at any time and
from time to time, in each case, in the exercise of the good faith judgment of
Parent and subject to the terms of this Agreement. The failure by Parent at any
time to exercise any of the foregoing rights will not be deemed a waiver of any
such right and each such right will be deemed an ongoing right which may be
asserted at any time and from time to time.
THE TENDER, VOTING AND OPTION AGREEMENT
In connection with the execution of the Merger Agreement, TPG GenPar, L.P. and
certain of its affiliates and certain directors and executive officers of the
Company (each a "SUBJECT STOCKHOLDER" and, collectively, the "SUBJECT
STOCKHOLDERS") who collectively own approximately 55% of the total voting power
of the outstanding securities of the Company (after giving effect to the
conversion of Class A Shares into Class B Shares of the Company) entitled to
vote in the election of directors or in a merger (the "SUBJECT SHARES"), have
entered into the Tender, Voting and Option Agreement, dated August 28, 2000,
with Parent and Purchaser (the "VOTING AGREEMENT").
<PAGE>
AGREEMENT TO TENDER SHARES. Each Subject Stockholder has agreed to validly
tender (and not withdraw), in accordance with the Offer, not later than the
tenth business day after commencement of the Offer, all of such Subject
Stockholder's Subject Shares (other than Shares for which unexercised Options
are exercisable unless such Options have been exercised). In the event that,
notwithstanding the foregoing provision, any Subject Shares are for any reason
withdrawn from or not purchased under the Offer, those Subject Shares remain
subject to the terms of the Voting Agreement. Nothing in the Voting Agreement
obligates any Subject Stockholder to exercise any Options to purchase Shares.
AGREEMENT TO VOTE SUBJECT SHARES. Each Subject Stockholder has agreed that at
any meeting of the Stockholders called to consider and vote upon the adoption of
the Merger Agreement (and at any and all postponements and adjournments), and in
connection with any action to be taken in respect of the adoption of the Merger
Agreement by written consent of Stockholders, such Subject Stockholder will vote
or cause to be voted (including by written consent, if applicable) all of the
Subject Stockholder's Subject Shares which it has the right to vote in favor of
the adoption of the Merger Agreement and in favor of any other matter necessary
or appropriate for the consummation of the transactions contemplated by the
Merger Agreement that is considered and voted upon at any meeting or made the
subject of any written consent, as applicable. Each Subject Stockholder further
agreed that at any meeting of the Stockholders called to consider and vote upon
any Adverse Proposal (as defined below) (and at any and all postponements and
adjournments), and in connection with any action to be taken in respect of any
Adverse Proposal by written consent of Stockholders, each Subject Stockholder
will vote or cause to be voted (including by written consent, if applicable) all
of the Subject Stockholder's Subject Shares which it has the right to vote
against the adoption of such Adverse Proposal. For purposes of the Voting
Agreement, the term "ADVERSE PROPOSAL" means:
- any Acquisition Transaction;
- any proposal or action that would reasonably be expected to result in a
breach of any covenant, representation or warranty of the Company set
forth in the Merger Agreement; or
- any of the following actions (other than the Offer, the Merger and the
other transactions contemplated by the Merger Agreement):
- any extraordinary corporate transaction, such as a merger,
consolidation or other business combination involving the
Company or its Subsidiaries;
- a sale, lease or transfer of a material amount of assets of
the Company or one of its Subsidiaries, or a reorganization,
recapitalization, dissolution or liquidation of the Company or
any of its Subsidiaries;
(1) any change in a majority of the persons who constitute
the board of directors of the Company as of August 28,
2000;
<PAGE>
(2) any change in the present capitalization of the Company
or any amendment of the Company's Certificate of
Incorporation or By-Laws, as amended to date;
(3) any other material change in the Company's corporate
structure or business; or
- any action that, in the case of each of the matters referred
to in clauses (1), (2) and (3) of the prior bullet point is
intended, or could reasonably be expected, to impede,
interfere with, delay, postpone, or adversely affect the Offer
or the Merger and the other transactions contemplated by the
Voting Agreement and the Merger Agreement or increase the
likelihood that the transactions will not be consummated.
IRREVOCABLE PROXY. Each Subject Stockholder appointed Parent and any designee of
Parent, each of them individually, as such Subject Stockholder's proxy and
attorney-in-fact, with full power of substitution and resubstitution, to vote or
act by written consent with respect to all of the Subject Stockholder's Subject
Shares which it has the right to vote:
- in accordance with the agreement to vote Subject Shares provision
described above; and
- to sign its name (as stockholder) to any consent, certificate or other
document relating to the Company required or permitted under the DGCL
in connection with any matter referred to in such agreement to vote
Subject Shares provision.
This proxy was given to secure the performance of the duties of each Subject
Stockholder under the Voting Agreement and does not relieve the Subject
Stockholders of their obligations under the foregoing Agreement to Vote Subject
Shares provision. Each proxy is coupled with an interest and is irrevocable
until the termination of the Voting Agreement in accordance with its terms. Each
Subject Stockholder agreed to take further actions or execute other instruments
as may be necessary to effectuate the intent of this proxy. For Subject Shares
as to which a Subject Stockholder is the beneficial but not the record owner,
the Subject Stockholder agreed to cause any record owner of those Subject Shares
to grant to Parent a proxy to the same effect.
GRANT OF SUBJECT OPTION. Under the Voting Agreement, each Subject Stockholder
granted to Parent an irrevocable option (each, a "SUBJECT OPTION" and,
collectively, the "SUBJECT OPTIONs") to purchase the Subject Stockholder's
Subject Shares on the terms and subject to the conditions set forth in the
Voting Agreement at a purchase price per share equal to the Per Share Amount
(the "PURCHASE PRICE"). The Subject Options expire if the Merger Agreement is
terminated for any reason.
The Subject Options become exercisable if the Offer is consummated but (whether
due to improper tender or withdrawal of tender) Purchaser has not accepted for
payment and paid for all of the Subject Shares. The Subject Options are
exercisable in whole but not in part.
ADJUSTMENT FOR CHANGES IN CAPITALIZATION, ETC. The Voting Agreement provides
that in the event of any change in the capital stock of the Company by reason of
a stock dividend, subdivision,
<PAGE>
reclassification, recapitalization, split, combination, exchange of shares,
extraordinary distribution or similar transaction, the type and number or amount
of shares, securities or other property subject to each of the Subject Options,
and the purchase price payable therefor, will be adjusted appropriately so that:
- Parent will receive upon exercise of any Subject Option the type and
number or amount of shares, securities or property that Parent would
have retained and/or been entitled to receive n respect of the
applicable Subject Stockholder's Subject Shares if the Option had been
exercised immediately prior to such event or the record date therefore,
as applicable; and
- the applicable Subject Stockholder will receive upon exercise of any
Subject Option granted by such Subject Stockholder the amount of cash
that such Subject Stockholder would have received as a result of the
exercise of the Subject Option if the Subject Option has been exercised
immediately prior to such event or the record date therefor, as
applicable.
SHARING OF PROFITS. Under the Voting Agreement the Subject Stockholders
affiliated with TPG GenPar, L.P. ("TPG Stockholders") agreed that if the Merger
Agreement is terminated in circumstances under which Parent is entitled to
receive a fee from the Company and not later than one year from the date the
Merger Agreement is terminated (i) the Company consummates a merger,
acquisition, consolidation, recapitalization, liquidation, dissolution or
similar transaction involving, or any sale of all or substantially all of the
assets or equity securities of, the Company and its Subsidiaries (a "BUSINESS
COMBINATION"), (ii) the Company enters into an Acquisition Agreement providing
for a Business Combination, which Business Combination is ultimately
consummated, irrespective of when such consummation occurs, (iii) a TPG
Stockholder disposes of any or all of his Subject Shares to any person not an
affiliate or an associate of Parent or Purchaser or to the Company or any
affiliate thereof in connection with a Business Combination, or (iv) a TPG
Stockholder realizes proceeds in respect of his Subject Shares as a result of a
distribution to the TPG Stockholder by the Company following the sale of
substantially all of the Company's assets in connection with a Business
Combination (each, a "SUBSEQUENT TRANSACTION") at a per share price or with
equivalent per share proceeds having a value in excess of the Per Share Amount
(the "Subsequent Price"), then the TPG Stockholder will promptly pay to Parent
an amount equal to one-half of the product of:
- the excess of the Subsequent Price over the Per Share Amount multiplied
by
- the number of Subject Shares beneficially owned (other than
beneficially owned solely by reason of having a right to vote) by the
TPG Stockholder at the time the Business Combination is consummated or
at the time of disposal by the TPG Stockholder.
INDEMNIFICATION. The Voting Agreement provides that if Shares are purchased in
the Offer in accordance with the terms of the Merger Agreement, Parent and
Purchaser will jointly and severally indemnify fully, hold harmless and defend
the TPG Stockholders and their respective successors and assigns solely in such
party's capacity as a stockholder of the Company (collectively, the
"Indemnitees") from and against any and all costs and expenses (including, but
not limited to, reasonable attorneys' fees and the costs and expenses of
investigating, defending
<PAGE>
and litigating any claims), judgments, fines, losses, claims, damages and
liabilities to the extent sustained or incurred by any Indemnitee in connection
with any action, suit or proceeding by or on behalf of any Stockholder, other
than any Indemnitee (a "Claim") arising out of, relating to or based upon the
Voting Agreement or the Merger Agreement or the transactions contemplated
thereby; provided that the Indemnitee acted in good faith in connection with the
matters that are subject of such Claim. Notwithstanding anything contained in
the Indemnification provision of the Voting Agreement, no claim for indemnity
under this provision may be asserted by any Indemnitee arising or resulting from
- any breach by the Company of any representation, warranty or covenant
of the Company in the Merger Agreement; or
- any breach by any party to the Voting Agreement (other than by Parent
or Purchaser) of any representation, warranty or covenant in the Voting
Agreement.
REPRESENTATIONS AND WARRANTIES. The Subject Stockholders made customary
representations and warranties in the Voting Agreement relating to:
- Subject Share ownership;
- power and authority; execution and delivery;
- no conflicts; and
- brokers.
Parent and Purchaser also made customary representations and warranties in the
Voting Agreement relating to:
- organization; authority;
- execution and delivery;
- no conflicts; and
- securities law compliance.
RESTRICTION ON TRANSFER OF SUBJECT SHARES, PROXIES AND NONINTERFERENCE. Each
Subject Stockholder has agreed that he will not directly or indirectly:
- except in accordance with the terms of the Voting Agreement and for the
conversion of Subject Shares at the Effective Time in accordance with
the terms of the Merger Agreement and other limited circumstances,
offer for sale, sell, transfer, tender, pledge, encumber, assign or
otherwise dispose of, or enter into any contract, option or other
arrangement or understanding with respect to or consent to the offer
for sale, sale, transfer, tender, pledge, encumbrance, assignment or
other disposition of, any or all of such Subject Stockholder's Subject
Shares;
<PAGE>
- acquire any Shares or other securities of the Company (other then in the
event of any adjustment of the Company's Shares or the grant of Shares
to Directors as Director compensation in accordance with past practice);
- except in accordance with the terms of the Voting Agreement, grant any
proxies or powers of attorney, deposit any Subject Shares into a voting
trust or enter into a voting agreement with respect to any Subject
Shares; or
- take any action that would reasonably be expected to make any of the
Stockholder's representations and warranties contained in the Voting
Agreement untrue or incorrect or have the effect of impairing the
ability of the Stockholder to perform its obligations under the Voting
Agreement or preventing or delaying the consummation of any of the
transactions contemplated by the Voting Agreement.
NO SOLICITATION. The Voting Agreement provides that no Subject Stockholder will
take, or authorize or permit any of its officers, directors, employees, agents
or representatives (including any investment banker, financial advisor, attorney
or accountant of the Subject Stockholder) to take, any action that the Company
would be prohibited from taking under the first sentence of the No Shop
provision of the Merger Agreement (disregarding the proviso contained in that
sentence). Each Subject Stockholder has agreed to immediately advise Parent in
writing of the receipt of a request for information or any inquiries or
proposals relating to an Acquisition Transaction. Notwithstanding anything in
the Voting Agreement to the contrary:
- if any Subject Stockholder is a Director of the Company, that Subject
Stockholder may take actions in its capacity as a Director to the
extent permitted by the No Shop provision of the Merger Agreement; and
- if any Subject Stockholder is an officer of the Company, he or she may
take actions in his or her capacity as an officer to the extent
directed to do so by the Company Board in compliance with the No Shop
provision of the Merger Agreement.
TERMINATION. The Voting Agreement will terminate on the earliest to occur of:
- the purchase of all the Subject Shares in the Offer;
- the Effective Time; or
- the date the Merger Agreement is terminated in accordance with its
terms
The Voting Agreement may be earlier terminated by the mutual consent of the
Board of Directors of Parent and the Subject Stockholders representing a
majority of the Subject Shares subject to the Voting Agreement.
In the event of termination of the Voting Agreement, such agreement will become
null and void and of no effect with no liability on the part of any party and
all proxies granted thereby will be automatically revoked, except that no such
termination will relieve any party thereto from any liability for any breach of
that agreement occurring prior to such termination. Notwithstanding
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anything in the Voting Agreement to the contrary, if the Voting Agreement is
terminated for any reason, the Sharing of Profits provision described above will
survive such termination indefinitely and if the Voting Agreement is terminated
after Shares are purchased in the Offer or the Effective Time, the
Indemnification provision described above will survive such termination for a
period of six years.
