<PAGE>
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
SCHEDULE 14D-1
TENDER OFFER STATEMENT PURSUANT TO SECTION 14(D)(1)
OF THE SECURITIES EXCHANGE ACT OF 1934
------------------------
CONTROL DEVICES, INC.
(Name of Subject Company)
FIRST TECHNOLOGY ACQUISITION CORP.
AND
FIRST TECHNOLOGY PLC
(BIDDERS)
COMMON STOCK, NO PAR VALUE
(Title of Class of Securities)
------------------------
21238C103
(CUSIP Number of Class of Securities)
DR. FREDERICK J. WESTLAKE
CHAIRMAN
FIRST TECHNOLOGY PLC
2 CHEAPSIDE COURT, BUCKHURST ROAD
ASCOT, BERKSHIRE SL5 7RF
UNITED KINGDOM
44 1344 622 322
(Name, Address and Telephone Number of Person Authorized
to Receive Notices and Communications on Behalf of Bidders)
------------------------
COPY TO:
JERE R. THOMSON, ESQ.
JONES, DAY, REAVIS & POGUE
599 LEXINGTON AVENUE
NEW YORK, NEW YORK 10022
(212) 326-3939
------------------------
CALCULATION OF FILING FEE
<TABLE>
<CAPTION>
TRANSACTION VALUATION* AMOUNT OF FILING FEE**
<S> <C>
$154,266,109 $30,853
</TABLE>
* Estimated for purposes of calculating the filing fee only. Such amount was
derived by multiplying $16.25, the amount offered for each share of common
stock, no par value (the "Shares"), of Control Devices, Inc., by the sum of
(i) 8,325,967, representing all of the Shares that were issued and
outstanding as of February 22, 1999, (ii) 1,163,332, representing all of the
Shares reserved for issuance upon the exercise of all outstanding options to
purchase Shares, and (iii) 4,000, representing Shares expected to be issued
under the Employee Stock Purchase Plan.
** 1/50th of 1% of the value of the transaction.
/ / Check box if any part of the fee is offset as provided by Rule 0-11(a)(2)
and identify the filing with which the offsetting fee was previously paid.
Identify the previous filing by registration statement number or the form or
schedule and the date of its filing.
AMOUNT PREVIOUSLY PAID: NOT APPLICABLE FILING PARTY: NOT APPLICABLE
FORM OR REGISTRATION NO.: NOT APPLICABLE DATE FILED: NOT APPLICABLE
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Page 1 of 6 Pages
(EXHIBIT INDEX IS LOCATED ON PAGE 6)
<PAGE>
This Tender Offer Statement on Schedule 14D-1 is filed by First Technology
PLC, an English public limited company ("Parent"), and First Technology
Acquisition Corp., an Indiana corporation and an indirect, wholly owned
subsidiary of Parent ("Purchaser"), relating to the offer by Purchaser to
purchase all of the outstanding shares of common stock, no par value (the
"Shares"), of Control Devices, Inc., an Indiana corporation (the "Company"), and
the associated common share purchase rights (the "Rights"), at a purchase price
of $16.25 per Share, net to the seller in cash, on the terms and subject to the
conditions set forth in the Offer to Purchase, dated February 26, 1999 (the
"Offer to Purchase"), and in the related Letter of Transmittal and any
amendments or supplements thereto, copies of which are attached hereto as
Exhibits (a)(1) and (a)(2), respectively (which collectively constitute the
"Offer").
The item numbers and responses thereto below are in accordance with the
requirements of Schedule 14D-1.
ITEM 1. SECURITY AND SUBJECT COMPANY.
(a) The name of the subject company is Control Devices, Inc., an Indiana
corporation. The address of its principal executive offices is 228 Northeast
Road, Standish, Maine 04084. The telephone number of the Company at such
location is (207) 642-4535.
(b) The information set forth on the cover page and under "Introduction" of
the Offer to Purchase is incorporated herein by reference.
(c) The information set forth in Section 6 ("Price Range of the Shares;
Dividends on the Shares") of the Offer to Purchase is incorporated herein by
reference.
ITEM 2. IDENTITY AND BACKGROUND.
(a)-(d), (g) This Statement is filed by Purchaser and Parent. The
information set forth on the cover page, under "Introduction," in Section 8
("Certain Information Concerning Purchaser and Parent") and in Schedule I to the
Offer to Purchase is incorporated herein by reference.
(e)-(f) None of Purchaser, Parent or, to the knowledge of Purchaser and
Parent, any of the persons listed in Schedule I to the Offer to Purchase has
during the last five years been (i) convicted in a criminal proceeding
(excluding traffic violations or similar misdemeanors) or (ii) a party to a
civil proceeding of a judicial or administrative body of a competent
jurisdiction and as a result of such proceeding was or is subject to a judgment,
decree or final order enjoining future violations of, or prohibiting activities
subject to, federal or state securities laws or finding any violation of such
laws.
ITEM 3. PAST CONTACTS, TRANSACTIONS OR NEGOTIATIONS WITH THE SUBJECT COMPANY.
(a)-(b) The information set forth under "Introduction" and in Section 8
("Certain Information Concerning Purchaser and Parent"), Section 10 ("Background
of the Offer; Contacts with the Company") and Section 11 ("Purpose of the Offer
and the Merger; Plans for the Company; the Merger Agreement; the Shareholders
Agreement; Other Related Agreements; and Other Matters") of the Offer to
Purchase is incorporated herein by reference.
ITEM 4. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
(a)-(b) The information set forth in Section 9 ("Source and Amount of
Funds") of the Offer to Purchase is incorporated herein by reference.
(c) Not applicable.
ITEM 5. PURPOSE OF THE TENDER OFFER AND PLANS OR PROPOSALS OF THE BIDDER.
(a)-(e) The information set forth under "Introduction" and in Section 11
("Purpose of the Offer and the Merger; Plans for the Company; the Merger
Agreement; the Shareholders Agreement; Other Related
Page 2 of 6
<PAGE>
Agreements; and Other Matters") and Section 12 ("Dividends and Distributions")
of the Offer to Purchase is incorporated herein by reference.
(f)-(g) The information set forth in Section 13 ("Effect of the Offer on the
Market for the Shares, Stock Exchange Listing and Exchange Act Registration, and
Margin Securities") of the Offer to Purchase is incorporated herein by
reference.
ITEM 6. INTEREST IN SECURITIES OF THE SUBJECT COMPANY.
(a)-(b) The information set forth under "Introduction" and in Section 8
("Certain Information Concerning Purchaser and Parent") and Section 11 ("Purpose
of the Offer and the Merger; Plans for the Company; the Merger Agreement; the
Shareholders Agreement; Other Related Agreements; and Other Matters") of the
Offer to Purchase is incorporated herein by reference.
ITEM 7. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO
THE SUBJECT COMPANY'S SECURITIES.
The information set forth under "Introduction" and in Section 8 ("Certain
Information Concerning Purchaser and Parent"), Section 10 ("Background of the
Offer; Contacts with the Company"), Section 11 ("Purpose of the Offer and the
Merger; Plans for the Company; the Merger Agreement; the Shareholders Agreement;
Other Related Agreements; and Other Matters") and Section 12 ("Dividends and
Distributions") of the Offer to Purchase is incorporated herein by reference.
ITEM 8. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
The information set forth under "Introduction" and in Section 16 ("Fees and
Expenses") of the Offer to Purchase is incorporated herein by reference.
ITEM 9. FINANCIAL STATEMENTS OF CERTAIN BIDDERS.
The information set forth in Section 8 ("Certain Information Concerning
Purchaser and Parent"), Annex A, Annex B and Annex C of the Offer to Purchase is
incorporated herein by reference.
ITEM 10. ADDITIONAL INFORMATION.
(a) The information set forth under "Introduction" and in Section 8
("Certain Information Concerning Purchaser and Parent"), Section 10 ("Background
of the Offer; Contacts with the Company") and Section 11 ("Purpose of the Offer
and the Merger; Plans for the Company; the Merger Agreement; the Shareholders
Agreement; Other Related Agreements; and Other Matters") of the Offer to
Purchase is incorporated herein by reference.
(b)-(c) The information set forth under "Introduction" and in Section 14
("Certain Conditions of the Offer") and Section 15 ("Certain Legal Matters") of
the Offer to Purchase is incorporated herein by reference.
(d) The information set forth in Section 13 ("Effect of the Offer on the
Market for the Shares, Stock Exchange Listing and Exchange Act Registration, and
Margin Securities") of the Offer to Purchase is incorporated herein by
reference.
(e) To the best knowledge of Parent and Purchaser, there are no material
pending legal proceedings.
(f) The information set forth in the Offer to Purchase and the Letter of
Transmittal, copies of which are attached hereto as Exhibits (a)(1) and (a)(2),
respectively, is incorporated herein by reference.
ITEM 11. MATERIAL TO BE FILED AS EXHIBITS.
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(a)(1) Offer to Purchase, dated February 26, 1999
(a)(2) Letter of Transmittal
</TABLE>
Page 3 of 6
<PAGE>
<TABLE>
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(a)(3) Notice of Guaranteed Delivery
(a)(4) Form of Letter to Brokers, Dealers, Commercial Banks, Trust Companies and Other
Nominees
(a)(5) Form of Letter to Clients for use by Brokers, Dealers, Commercial Banks, Trust
Companies and Other Nominees
(a)(6) Guidelines for Certification of Taxpayer Identification Number on Substitute Form
W-9
(a)(7) Form of Summary Advertisement, dated February 26, 1999
(a)(8) Text of Joint Press Release of Parent and the Company, dated February 23, 1999
(a)(9) Text of Press Release of Parent, dated February 23, 1999
(b)(1) Loan Agreement, dated February 23, 1999, among Parent, HSBC Investment Bank PLC, as
Agent, The First National Bank of Chicago, HSBC Investment Bank PLC and Dresdner
Bank AG London Branch, as Joint Arrangers, and the banks on Schedule 1 attached
thereto
(b)(2) Bridging Agreement, dated February 23, 1999, between Parent and Dresdner Bank AG
London Branch
(b)(3) Underwriting Agreement, dated February 23, 1999, among Parent, First Technology
Funding PLC and Kleinwort Benson Securities Limited
(c)(1) Agreement and Plan of Merger, dated February 22, 1999, among Parent, Purchaser and
the Company
(c)(2) Confidentiality and Standstill Agreement, effective as of June 1, 1998, between
Parent and the Company
(c)(3) Shareholders Agreement, dated February 22, 1999, among Parent, Purchaser, the
Company and Ralph R. Whitney, Jr., Bruce D. Atkinson, Jeffrey G. Wood, Michel
Hauser-Kauffmann, Forrest E. Crisman, Jr., Glenn Scolnik and the spouses of Messrs.
Whitney and Atkinson
(c)(4) Subscription Agreement, dated February 22, 1999, between Parent and each of Ralph R.
Whitney, Jr., Bruce D. Atkinson, Jeffrey G. Wood, Michel Hauser-Kauffmann, Forrest
E. Crisman, Jr. and Glenn Scolnik
(c)(5) Employment Agreement, dated February 23, 1999, between the Company and Bruce D.
Atkinson
(c)(6) Employment Agreement, dated February 23, 1999, between the Company and Jeffrey G.
Wood
(c)(7) Employment Agreement between Realisations et Diffusion pour l'Industrie and Michel
Hauser-Kauffmann
(d) Not applicable
(e) Not applicable
(f) Not applicable
</TABLE>
Page 4 of 6
<PAGE>
SIGNATURES
After due inquiry and to the best of my knowledge and belief, I certify that
the information set forth in this statement is true, complete and correct.
FIRST TECHNOLOGY ACQUISITION CORP.
By: /s/ FREDERICK J. WESTLAKE
-----------------------------------------
Name: Frederick J. Westlake
Title: President
FIRST TECHNOLOGY PLC
By: /s/ FREDERICK J. WESTLAKE
-----------------------------------------
Name: Frederick J. Westlake
Title: Chairman
Dated: February 26, 1999
Page 5 of 6
<PAGE>
EXHIBIT INDEX
<TABLE>
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EXHIBIT DESCRIPTION
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<S> <C>
(a)(1) Offer to Purchase, dated February 26, 1999
(a)(2) Letter of Transmittal
(a)(3) Notice of Guaranteed Delivery
(a)(4) Form of Letter to Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees
(a)(5) Form of Letter to Clients for use by Brokers, Dealers, Commercial Banks, Trust Companies and Other
Nominees
(a)(6) Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9
(a)(7) Form of Summary Advertisement, dated February 26, 1999
(a)(8) Text of Joint Press Release of Parent and the Company, dated February 23, 1999
(a)(9) Text of Press Release of Parent, dated February 23, 1999
(b)(1) Loan Agreement, dated February 23, 1999, among Parent, HSBC Investment Bank PLC, as Agent, The First
National Bank of Chicago, HSBC Investment Bank PLC and Dresdner Bank AG London Branch, as Joint
Arrangers, and the banks on Schedule 1 attached thereto
(b)(2) Bridging Agreement, dated February 23, 1999, between Parent and Dresdner Bank AG London Branch
(b)(3) Underwriting Agreement, dated February 23, 1999, among Parent, First Technology Funding PLC and
Kleinwort Benson Securities Limited
(c)(1) Agreement and Plan of Merger, dated February 22, 1999, among Parent, Purchaser and the Company
(c)(2) Confidentiality and Standstill Agreement, effective as of June 1, 1998, between Parent and the Company
(c)(3) Shareholders Agreement, dated February 22, 1999, among Parent, Purchaser, the Company and Ralph R.
Whitney, Jr., Bruce D. Atkinson, Jeffrey G. Wood, Michel Hauser-Kauffmann, Forrest E. Crisman, Jr.,
Glenn Scolnik and the spouses of Messrs. Whitney and Atkinson
(c)(4) Subscription Agreement, dated February 22, 1999, between Parent and each of Ralph R. Whitney, Jr., Bruce
D. Atkinson, Jeffrey G. Wood, Michel Hauser-Kauffmann, Forrest E. Crisman, Jr. and Glenn Scolnik
(c)(5) Employment Agreement, dated February 23, 1999, between the Company and Bruce D. Atkinson
(c)(6) Employment Agreement, dated February 23, 1999, between the Company and Jeffrey G. Wood
(c)(7) Employment Agreement between Realisations et Diffusion pour l'Industrie and Michel Hauser-Kauffmann
(d) Not applicable
(e) Not applicable
(f) Not applicable
</TABLE>
Page 6 of 6
<PAGE>
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
CONTROL DEVICES, INC.
AT
$16.25 NET PER SHARE
BY
FIRST TECHNOLOGY ACQUISITION CORP.
AN INDIRECT, WHOLLY OWNED SUBSIDIARY
OF
FIRST TECHNOLOGY PLC
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK
CITY TIME, ON THURSDAY, MARCH 25, 1999, UNLESS THE OFFER IS EXTENDED.
The Offer is not conditioned upon the receipt of financing. See Section 9
regarding the financing commitments obtained by Parent.
The Offer is conditioned upon, among other things: (i) there being validly
tendered and not withdrawn prior to the Expiration Date (as defined in Section
1) that number of common shares ("Shares") of Control Devices, Inc. (the
"Company") that (together with any Shares owned by First Technology PLC
("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, calculated on a fully diluted basis
on the date of purchase (the "Minimum Condition"), (ii) the approval by the
shareholders of Parent of each of the acquisition of the Company, an increase in
share capital and certain other related matters at an extraordinary general
meeting ("Parent Shareholder Approval"), and (iii) the admission of certain
securities (to be issued in a rights offering by an affiliate of Parent) to the
Official List of the London Stock Exchange (the "Listing Condition"). The Offer
is also subject to certain other conditions. See Sections 1 and 14. For
additional information regarding Parent Shareholder Approval and the Listing
Condition, see Section 9.
The Board of Directors of the Company has unanimously recommended that
holders of Shares ("Shareholders") accept the Offer and approve and adopt the
Merger Agreement and the transactions contemplated thereby and has unanimously
determined that the Offer and the Merger are fair to and in the best interests
of the Company and the Shareholders.
In connection with the execution of the Merger Agreement, certain directors
and executive officers of the Company and related persons have agreed to tender
into the Offer, all the Shares that such Shareholders beneficially owned on
February 22, 1999 (in the aggregate, approximately 19% of all then outstanding
Shares), as well as any Shares thereafter acquired by them, including upon the
exercise of options to acquire Shares. See Section 11.
------------------------
The Dealer Manager for the Offer is:
[LOGO]
------------------------
February 26, 1999
<PAGE>
IMPORTANT
Any Shareholder desiring to tender all or any portion of its Shares should
either (1) complete and sign the appropriate Letter(s) of Transmittal (or a
manually signed facsimile thereof) in accordance with the instructions in such
Letter(s) of Transmittal, mail or deliver such Letter(s) of Transmittal and any
other required documents to IBJ Whitehall Bank & Trust Company (the
"Depositary"), and either deliver the certificates for those Shares to the
Depositary along with such Letter(s) of Transmittal or tender those Shares
pursuant to the procedures for book-entry transfer set forth in Section 3
hereof, or (2) request its broker, dealer, commercial bank, trust company or
other nominee to effect the tender on its behalf. Any Shareholder whose Shares
are registered in the name of a broker, dealer, commercial bank, trust company
or other nominee must contact that broker, dealer, commercial bank, trust
company or other nominee if the Shareholder desires to tender such Shares.
Any Shareholder who desires to tender Shares and whose certificate(s)
representing those Shares are not immediately available or who cannot comply
with the procedure for book-entry transfer on a timely basis should tender those
Shares by following the procedures for guaranteed delivery set forth in Section
3 hereof.
Questions and requests for assistance may be directed to MacKenzie Partners,
Inc. (the "Information Agent") or Dresdner Kleinwort Benson North America LLC
(the "Dealer Manager") at their respective addresses and telephone numbers set
forth on the back cover of this Offer to Purchase. Requests for additional
copies of this Offer to Purchase, the Letter of Transmittal, the Notice of
Guaranteed Delivery and other related materials may be directed to the
Information Agent or to brokers, dealers, commercial banks or trust companies.
<PAGE>
TABLE OF CONTENTS
<TABLE>
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PAGE
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INTRODUCTION..................................................................................................... 1
1. Terms of the Offer.................................................................................... 3
2. Acceptance for Payment and Payment for Shares......................................................... 5
3. Procedure for Tendering Shares........................................................................ 6
4. Withdrawal Rights..................................................................................... 8
5. Certain Federal Income Tax Consequences of the Offer and the Merger................................... 9
6. Price Range of the Shares; Dividends on the Shares.................................................... 10
7. Certain Information Concerning the Company............................................................ 11
8. Certain Information Concerning Purchaser and Parent................................................... 13
9. Source and Amount of Funds............................................................................ 14
10. Background of the Offer; Contacts with the Company.................................................... 16
11. Purpose of the Offer and the Merger; Plans for the Company; the Merger Agreement; the Shareholders
Agreement; Other Related Agreements; and Other Matters................................................ 19
12. Dividends and Distributions........................................................................... 37
13. Effect of the Offer on the Market for the Shares, Stock Exchange Listing and Exchange Act
Registration, and Margin Securities................................................................... 38
14. Certain Conditions of the Offer....................................................................... 39
15. Certain Legal Matters................................................................................. 41
16. Fees and Expenses..................................................................................... 43
17. Miscellaneous......................................................................................... 43
Schedule I--DIRECTORS AND EXECUTIVE OFFICERS OF PURCHASER
AND PARENT..................................................................................................... I-1
Annex A Audited Financial Statements of Parent for the financial year ended April 30, 1998...................... A-1
Annex B 1998 Interim Report of Parent (Unaudited)............................................................... B-1
Annex C Summary of Significant Differences Between UK GAAP and US GAAP.......................................... C-1
</TABLE>
i
<PAGE>
To the Holders of Common Stock of
Control Devices, Inc.:
INTRODUCTION
First Technology Acquisition Corp., an Indiana corporation ("Purchaser") and
an indirect, wholly owned subsidiary of First Technology PLC, an English public
limited company ("Parent"), hereby offers to purchase all of the outstanding
shares of common stock, no par value (the "Shares"), of Control Devices, Inc.,
an Indiana corporation (the "Company"), at a purchase price of $16.25 per Share,
net to the seller in cash, without interest thereon (the "Per Share Amount"),
upon the terms and subject to the conditions set forth in this Offer to Purchase
and in the related Letter of Transmittal (which, together with any amendments or
supplements hereto or thereto, collectively constitute the "Offer"). The common
share purchase rights (the "Rights") provided for in a Rights Agreement dated as
of May 7, 1998, as amended by Amendment No. 1, dated as of February 22, 1999
(the "Rights Agreement"), between the Company and BankBoston, N.A., are not
applicable to the Offer, the Merger Agreement or any of the transactions
contemplated thereby.
Tendering Shareholders who have Shares registered in their own name and who
tender directly to the Depositary will not be obligated to pay brokerage fees or
commissions or, except as set forth in Instruction 6 to the Letter of
Transmittal, transfer taxes on the purchase of Shares pursuant to the Offer.
Shareholders who hold their Shares through their broker or bank should consult
with such institution as to whether it charges any service fees. Purchaser will
pay all charges and expenses of Dresdner Kleinwort Benson North America LLC, as
the dealer manager (the "Dealer Manager"), IBJ Whitehall Bank & Trust Company,
as the depositary (the "Depositary"), and MacKenzie Partners, Inc., as the
information agent (the "Information Agent"), in connection with the Offer. See
Section 16.
THE BOARD OF DIRECTORS OF THE COMPANY (THE "COMPANY BOARD") HAS UNANIMOUSLY
RECOMMENDED THAT HOLDERS OF SHARES ("SHAREHOLDERS") ACCEPT THE OFFER AND APPROVE
AND ADOPT THE MERGER AGREEMENT AND THE TRANSACTIONS CONTEMPLATED THEREBY AND HAS
UNANIMOUSLY DETERMINED THAT THE OFFER AND THE MERGER ARE FAIR TO AND IN THE BEST
INTERESTS OF THE COMPANY AND SHAREHOLDERS. THE COMPANY HAS ADVISED PARENT THAT
ALL MEMBERS OF THE COMPANY BOARD INTEND TO TENDER THEIR SHARES PURSUANT TO THE
OFFER.
CLEARY GULL & REILAND INC., THE COMPANY'S FINANCIAL ADVISER ("CLEARY GULL"),
HAS DELIVERED TO THE COMPANY ITS OPINION THAT THE CONSIDERATION TO BE RECEIVED
BY SHAREHOLDERS IN THE OFFER AND THE MERGER IS FAIR, FROM A FINANCIAL POINT OF
VIEW, TO THE SHAREHOLDERS. (THAT OPINION DOES NOT EXPRESS A VIEW AS TO THE
COMPANY DIRECTORS AND OFFICERS WHO ARE PARTIES TO THE SHAREHOLDERS AGREEMENT AND
THE SUBSCRIPTION AGREEMENT). A COPY OF THE WRITTEN OPINION OF CLEARY GULL IS
CONTAINED IN THE COMPANY'S SOLICITATION/ RECOMMENDATION STATEMENT ON SCHEDULE
14D-9 (THE "SCHEDULE 14D-9") FILED WITH THE SECURITIES AND EXCHANGE COMMISSION
(THE "SEC") IN CONNECTION WITH THE OFFER, A COPY OF WHICH IS BEING MAILED TO
SHAREHOLDERS CONCURRENTLY WITH THIS OFFER TO PURCHASE.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS: (I) THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION DATE (AS DEFINED IN SECTION
1) THAT NUMBER OF SHARES THAT (TOGETHER WITH ANY SHARES 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, CALCULATED ON A FULLY DILUTED BASIS ON THE DATE OF
PURCHASE (THE "MINIMUM CONDITION"), (II) THE APPROVAL BY THE SHAREHOLDERS OF
PARENT OF EACH OF THE ACQUISITION OF THE COMPANY, AN INCREASE IN SHARE CAPITAL
AND CERTAIN OTHER RELATED MATTERS AT AN EXTRAORDINARY GENERAL MEETING ("PARENT
SHAREHOLDER APPROVAL"), AND (III) THE ADMISSION OF CERTAIN SECURITIES (TO BE
ISSUED IN A RIGHTS OFFERING BY AN AFFILIATE OF PARENT) TO THE OFFICIAL LIST OF
THE LONDON STOCK EXCHANGE (THE "LISTING CONDITION"). THE OFFER IS ALSO SUBJECT
TO CERTAIN OTHER CONDITIONS. SEE SECTIONS 1 AND 14. THE PARENT SHAREHOLDER
APPROVAL IS TO BE SOUGHT AT THE EXTRAORDINARY GENERAL MEETING SCHEDULED TO BE
HELD ON MARCH 11, 1999. THE LISTING CONDITION IS EXPECTED TO BE SATISFIED
SHORTLY AFTER THE PARENT SHAREHOLDER APPROVAL IS GIVEN. FOR ADDITIONAL
INFORMATION REGARDING PARENT SHAREHOLDER APPROVAL AND THE LISTING CONDITION, SEE
SECTION 9.
In connection with the execution of the Merger Agreement, Parent, Purchaser,
the Company and Ralph R. Whitney, Jr., Bruce D. Atkinson, Jeffrey G. Wood,
Michel Hauser-Kauffmann, Forrest E.
<PAGE>
Crisman, Jr., Glenn Scolnik and the spouses of Messrs. Whitney and Atkinson
(collectively, the "Management Shareholders," and each individually, a
"Management Shareholder") entered into a Shareholders Agreement, dated as of
February 22, 1999 (the "Shareholders Agreement"), pursuant to which each
Management Shareholder has unconditionally agreed to tender into the Offer all
the Shares that such Management Shareholder beneficially owned on February 22,
1999 (in the aggregate, approximately 19% of all then outstanding Shares
(approximately 16.5% of the Shares calculated on a fully diluted basis as of
such date)), as well as any Shares thereafter acquired by any of them, including
upon the exercise of options to acquire Shares (collectively, the "Subject
Shares"). Under the Shareholders Agreement, each Management Shareholder has
agreed to vote in favor of the Merger and against competing transactions and has
granted to Parent and Parent's designees an irrevocable proxy with respect to
the Subject Shares to vote such Shares under certain circumstances. The
Shareholders Agreement is more fully described in Section 11.
The Offer is being made pursuant to an Agreement and Plan of Merger, dated
as of February 22, 1999 (the "Merger Agreement"), among Parent, Purchaser and
the Company. The Merger Agreement provides, among other things, for the
commencement of the Offer by Purchaser and that, after the purchase of Shares
pursuant to the Offer, subject to the satisfaction or waiver of certain
conditions, Purchaser will be merged with and into the Company (the "Merger"),
with the Company surviving the Merger as an indirect, wholly owned subsidiary of
Parent (the "Surviving Corporation"). In the Merger, each Share (excluding
Shares owned by the Company or any of its subsidiaries or by Parent, Purchaser
or any other subsidiary of Parent) issued and outstanding immediately prior to
the effective time of the Merger (the "Effective Time") will be converted at the
Effective Time into the right to receive the Per Share Amount (or any greater
per share amount paid for Shares pursuant to the Offer), in cash payable to the
holder thereof without interest and less any required withholding taxes and, in
certain circumstances, stock transfer taxes (the "Merger Consideration"). The
Merger Agreement is more fully described in Section 11.
The Merger Agreement provides that the Company will use its reasonable best
efforts to provide that, at the Effective Time, each holder of a
then-outstanding option to purchase Shares under any of the Company's 1996 Stock
Compensation Plan and 1997 Stock Compensation Plan (collectively, the "Stock
Option Plans"), whether or not then exercisable (the "Options"), will, in
settlement thereof, receive from the Company for each Share subject to such
Option an amount (subject to any applicable withholding tax) in cash equal to
the difference between the Merger Consideration and the per Share exercise price
of such Option to the extent such difference is a positive number (such amount
being hereinafter referred to as the "Option Consideration"). The treatment of
Options is more fully described in Section 11.
The consummation of the Merger is subject to the satisfaction or waiver of a
number of conditions, including, if required, the approval of the Merger by the
requisite vote or consent of Shareholders. The Shareholder vote necessary to
approve the Merger is the affirmative vote of the holders of a majority of the
issued and outstanding Shares, including Shares held by Purchaser and its
affiliates, voting as a single class, at a special meeting of Shareholders. If
the Minimum Condition is satisfied and Purchaser purchases Shares pursuant to
the Offer, Purchaser will be able to effect the Merger regardless of how any
other Shareholder votes. Further, if Purchaser acquires at least 90% of the
outstanding Shares pursuant to the Offer or otherwise, Purchaser will be able to
effect the Merger pursuant to the "short-form" merger provisions of the Indiana
Business Corporation Law (the "IBCL"), without further notice to, or any action
by, any other Shareholder. In that event, Purchaser intends to effect the Merger
as promptly as practicable following the purchase of Shares in the Offer, and
Shareholders should consider this Offer to Purchase as notice to that effect.
See Section 11.
The Company has informed Purchaser that, as of February 22, 1999, there were
(i) 8,325,967 Shares issued and outstanding, (ii) options to purchase 1,163,332
Shares reserved for issuance upon exercise of outstanding stock options granted
by the Company, (iii) up to 4,000 Shares in the aggregate issuable pursuant to
the Company's Employee Stock Purchase Plan (as described in the 1998 10-K), and
(iv) no Shares of preferred stock of the Company issued and outstanding. Based
upon the Shares and stock
2
<PAGE>
options outstanding as of such date, at least 4,746,650 Shares would need to be
validly tendered pursuant to the Offer and not withdrawn in order for the
Minimum Condition to be satisfied.
No dissenters' rights will be available in connection with the Merger if (i)
as of the record date for the Shareholder vote on the Merger the Shares are
still listed for quotation on the Nasdaq (as defined in Section 6), or (ii)
Purchaser effects a "short-form" merger.
Certain federal income tax consequences of the sale of Shares pursuant to
the Offer and the exchange of Shares for the Merger Consideration pursuant to
the Merger are described in Section 5.
THIS OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN
IMPORTANT INFORMATION WHICH SHOULD BE READ CAREFULLY BEFORE ANY DECISION IS MADE
WITH RESPECT TO THE OFFER.
1. TERMS OF THE OFFER
Upon the terms and subject to the conditions of the Offer (including, if the
Offer is extended or amended, the terms and conditions of any such extension or
amendment), Purchaser will accept for payment (and thereby purchase) all Shares
that are validly tendered and not withdrawn in accordance with Section 4 prior
to the Expiration Date. The term "Expiration Date" means 12:00 midnight, New
York City time, on March 25, 1999, unless and until Purchaser, in accordance
with the terms of the Merger Agreement, shall have extended the period of time
during which the Offer is open, in which event the term "Expiration Date" means
the latest time and date at which the Offer, as so extended, expires. For
purposes of the Offer, a "business day" means any day other than a Saturday,
Sunday or a federal holiday and consists of the time period from 12:01 a.m.
through 12:00 midnight, New York City time.
In the event that the Offer is not consummated, Purchaser may seek to
acquire Shares through open-market purchases, privately negotiated transactions
or otherwise, upon such terms and conditions and at such prices as Purchaser
shall determine, which may be more or less than the Per Share Amount and could
be for cash or other consideration.
The Offer is conditioned upon, among other things, (i) satisfaction of the
Minimum Condition, (ii) satisfaction of the Listing Condition, and (iii) receipt
of Parent Shareholder Approval. The Offer is also subject to certain other
conditions set forth in Section 14 (the "Offer Conditions," and each condition
individually, an "Offer Condition"). For additional information regarding the
Listing Condition and Parent Shareholder Approval, see Section 9.
Subject to the terms of the Merger Agreement, without the prior written
consent of the Company, Purchaser will not, and Parent will cause Purchaser not
to, (i) decrease or change the form of the Per Share Amount, (ii) decrease the
number of Shares sought in the Offer, (iii) amend or waive the Minimum Condition
or impose conditions on the Offer other than the Offer Conditions, (iv) extend
the Expiration Date of the Offer except (A) as required by Law and (B) that, in
the event that any Offer Condition is not satisfied or waived at the time that
the Expiration Date would otherwise occur, (1) Purchaser must extend the
Expiration Date for 10 additional business days to the extent necessary to
permit such condition to be satisfied and (2) Purchaser may, in its sole
discretion, extend the Expiration Date for such period as it may determine to be
appropriate (but not beyond June 30, 1999), or (v) amend any term of the Offer
in any manner materially adverse to Shareholders (including without limitation
amendments resulting in any extension that would be inconsistent with the
preceding provisions of this sentence), provided, however, that (1) subject to
applicable legal requirements, Parent may cause Purchaser to waive any Offer
Condition, other than the Minimum Condition, in Parent's sole discretion, and
(2) the Offer may be extended in connection with an increase in the
consideration to be paid pursuant to the Offer so as to comply with applicable
rules and regulations of the SEC. Except as set forth above, and subject to
applicable legal requirements, Purchaser may amend the Offer or waive any Offer
Condition in its sole discretion. Assuming the prior satisfaction or waiver of
the Offer Conditions, Parent will cause Purchaser
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to accept for payment, and pay for, in accordance with the terms of the Offer,
all Shares validly tendered and not withdrawn pursuant to the Offer as soon as
practicable after the Expiration Date.
Subject to the terms of the Merger Agreement and the rights of tendering
Shareholders to withdraw their Shares, as described in Section 4, Purchaser will
retain all tendered Shares until the Expiration Date.
Subject to the applicable regulations of the SEC and the terms of the Merger
Agreement described above, Purchaser expressly reserves the right, in its sole
discretion, at any time or from time to time, to (i) delay the acceptance for
payment of or, regardless of whether such Shares were theretofore accepted for
payment, payment for Shares pending receipt of any regulatory or governmental
approvals specified in Section 15, (ii) terminate the Offer (whether or not any
Shares have theretofore been accepted for payment) if any condition referred to
in Section 14 has not been satisfied or upon the occurrence of any event
specified in Section 14, (iii) waive any condition (except, without the prior
written consent of the Company, the Minimum Condition), or (iv) except as set
forth in the Merger Agreement, otherwise amend the Offer in any respect, in each
case by giving oral or written notice of such termination, waiver or amendment
to the Depositary. The rights reserved by Purchaser in this paragraph are in
addition to Purchaser's rights pursuant to Section 14.
Any extension, delay in payment, termination or amendment of the Offer will
be followed as promptly as practicable by public announcement thereof and such
announcement in the case of an extension will be made no later than 9:00 a.m.,
New York City time, on the next business day after the previously scheduled
Expiration Date. Without limiting the manner in which Purchaser may choose to
make any public announcement, subject to applicable law (including Rules
14d-4(c) and 14d-6(d) under the Exchange Act, which require that material
changes be promptly disseminated to Shareholders in a manner reasonably designed
to inform them of such changes), Purchaser will have no obligation to publish,
advertise or otherwise communicate any such public announcement, other than by
issuing a release to the Dow Jones News Service.
If Purchaser makes a material change in the terms of the Offer, or if it
waives a material condition to the Offer, Purchaser will extend the Offer and
disseminate additional tender offer materials to the extent required by Rules
14d-4(c), 14d-6(d) and 14e-1 under the Exchange Act. The minimum period during
which an offer must remain open following material changes in the terms of the
Offer, other than a change in price or a change in percentage of securities
sought, will depend upon the facts and circumstances, including the materiality
of the changes. If a change is made with respect to the price and the percentage
of securities sought, a minimum of 10 business days must be required to allow
for adequate dissemination and investor response. The requirement to extend the
Offer will not apply to the extent that the number of business days remaining
between the occurrence of the change and the then-scheduled Expiration Date
equals or exceeds the minimum extension period that would be required because of
such amendment.
The Company has provided Purchaser with its Shareholder list and security
position listings for the purpose of disseminating the Offer to Shareholders.
This Offer to Purchase, the related Letter of Transmittal and other relevant
materials will be mailed to record holders of Shares and will be furnished to
brokers, dealers, commercial banks, trust companies and similar persons whose
names, or the names of whose nominees, appear on the Company's Shareholder list
or, if applicable, who are listed as participants in a clearing agency's
security position listing for subsequent transmittal to beneficial owners of
Shares.
The Rights Agreement, as amended, is inapplicable to the Offer, the
Shareholders Agreement, the Merger Agreement and the transactions contemplated
thereby. In the Merger Agreement, the Company represents and warrants that
neither the execution of the Merger Agreement or Shareholders Agreement nor the
commencement or completion of the Offer or consummation of the Merger or the
other transactions contemplated thereby will trigger the Rights Agreement.
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2. ACCEPTANCE FOR PAYMENT AND PAYMENT FOR SHARES
Upon the terms and subject to the conditions of the Offer (including, if the
Offer is extended or amended, the terms and conditions of any such extension or
amendment), Purchaser will accept for payment (and thereby purchase) and pay for
Shares that are validly tendered and not properly withdrawn prior to the
Expiration Date as soon as practicable after the later of the following dates:
(i) the Expiration Date, (ii) the satisfaction of the Minimum Condition, (iii)
subject to compliance with the applicable rules and regulations of the SEC, the
date of satisfaction or waiver of all the other conditions to the Offer set
forth in this Offer to Purchase. Subject to the applicable rules of the SEC and
the terms of the Merger Agreement, Purchaser expressly reserves the right to
delay acceptance for payment of, or payment for, Shares in order to comply, in
whole or in part, with any other applicable law or regulation.
In all cases, payment for Shares purchased pursuant to the Offer will be
made only after timely receipt by the Depositary of (i) certificates for the
Shares (or a timely Book-Entry Confirmation (as defined in Section 3) with
respect to the Shares), (ii) the appropriate Letter(s) of Transmittal (or a
manually signed facsimile thereof), properly completed and duly executed with
any required signature guarantees (or in the case of a book-entry transfer of
Shares, an Agent's Message), and (iii) all other documents required by the
Letter of Transmittal. See Section 3. The term "Agent's Message" means a
message, transmitted by a Book-Entry Transfer Facility (as defined in Section 3)
to and received by the Depositary and forming part of a Book-Entry Confirmation,
which states that (i) such Book-Entry Transfer Facility has received an express
acknowledgment from the participant in such Book-Entry Transfer Facility
tendering the Shares that are the subject of such Book-Entry Confirmation, (ii)
such participant has received and agrees to be bound by the terms of the
applicable Letter of Transmittal, and (iii) Purchaser may enforce such agreement
against such participant.
For purposes of the Offer, Purchaser will be deemed to have accepted for
payment (and thereby purchased) tendered Shares as, if and when Purchaser gives
oral or written notice to the Depositary of Purchaser's acceptance of such
Shares for payment. In all cases, payment for Shares purchased pursuant to the
Offer will be made by deposit of the purchase price with the Depositary, which
will act as agent for the tendering Shareholders for the purpose of receiving
payment from Purchaser and transmitting payment to the tendering Shareholders
whose Shares shall have been accepted for payment. If, for any reason,
acceptance for payment of any Shares tendered pursuant to the Offer is delayed,
or Purchaser is unable to accept for payment Shares tendered pursuant to the
Offer, then, without prejudice to Purchaser's rights under Section 14, the
Depositary may, nevertheless, on behalf of Purchaser, retain the tendered
Shares, and such Shares may not be withdrawn, except to the extent that the
tendering Shareholders are entitled to withdrawal rights as described in Section
4 and as otherwise required by Rule 14e-1(c) under the Exchange Act. Under no
circumstances will interest accrue on the consideration to be paid for the
Shares by Purchaser, regardless of any delay in making such payment.
If any tendered Shares are not purchased for any reason or if certificates
are submitted for more Shares than are tendered, certificates for the Shares not
purchased or tendered will be returned pursuant to the instructions of the
tendering Shareholder without expense to the tendering Shareholder (or, in the
case of Shares delivered by book-entry transfer into the Depositary's account at
a Book-Entry Transfer Facility pursuant to the procedures set forth in Section
3, the Shares will be credited to an account maintained at the appropriate
Book-Entry Transfer Facility) as promptly as practicable following the
expiration, termination or withdrawal of the Offer.
Purchaser reserves the right, subject to the provisions of the Merger
Agreement, to assign, in whole or, from time to time, in part, to one or more of
Parent's subsidiaries or affiliates, the right to purchase all or any portion of
the Shares tendered pursuant to the Offer, but no such assignment will relieve
Purchaser of its obligations under the Offer or prejudice the rights of
tendering Shareholders to receive payment for Shares validly tendered and
accepted for payment pursuant to the Offer.
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IF, PRIOR TO THE EXPIRATION DATE, PURCHASER INCREASES THE CONSIDERATION TO
BE PAID PER SHARE PURSUANT TO THE OFFER, PURCHASER WILL PAY THE INCREASED
CONSIDERATION FOR ALL OF THE SHARES PURCHASED PURSUANT TO THE OFFER, WHETHER OR
NOT THE SHARES WERE TENDERED PRIOR TO THE INCREASE IN CONSIDERATION.
3. PROCEDURE FOR TENDERING SHARES
VALID TENDERS. For Shares to be validly tendered pursuant to the Offer,
either (i) the appropriate Letter of Transmittal (or a manually signed facsimile
thereof), properly completed and duly executed, with any required signature
guarantees, or an Agent's Message in connection with a book-entry transfer of
Shares, and any other documents required by the Letter of Transmittal, must be
received by the Depositary at one of its addresses set forth on the back cover
of this Offer to Purchase prior to the Expiration Date, and either (a)
certificates representing tendered Shares must be received by the Depositary at
any one of those addresses prior to the Expiration Date, or (b) the Shares must
be delivered pursuant to the procedures for book-entry transfer set forth below
and a Book-Entry Confirmation must be received by the Depositary prior to the
Expiration Date, or (ii) the tendering Shareholder must comply with the
guaranteed delivery procedures set forth below. No alternative, conditional or
contingent tenders will be accepted.
THE METHOD OF DELIVERY OF CERTIFICATES FOR SHARES, THE LETTER OF TRANSMITTAL
AND ANY OTHER REQUIRED DOCUMENTS IS AT THE OPTION AND SOLE RISK OF THE TENDERING
SHAREHOLDER AND DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE
DEPOSITARY. IF DELIVERY IS MADE BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT
REQUESTED, PROPERLY INSURED, IS RECOMMENDED. IN ALL CASES, SUFFICIENT TIME
SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY.
BOOK-ENTRY TRANSFER. The Depositary will establish an account with respect
to the Shares at The Depository Trust Company (the "Book-Entry Transfer
Facility") for purposes of the Offer within two business days after the date of
this Offer to Purchase. Any financial institution that is a participant in the
Book-Entry Transfer Facility system may make book-entry delivery of Shares by
causing the applicable Book-Entry Transfer Facility to transfer the Shares into
the Depositary's account at the Book-Entry Transfer Facility in accordance with
the Book-Entry Transfer Facility's procedures for such transfer. However,
although delivery of the Shares may be effected through book-entry transfer into
the Depositary's account at the Book-Entry Transfer Facility, the appropriate
Letter of Transmittal (or a manually signed facsimile thereof), properly
completed and duly executed with any required signature guarantees, or an
Agent's Message, and any other required documents must, in any case, be
transmitted to, and received by, the Depositary at one of its addresses set
forth on the back cover of this Offer to Purchase prior to the Expiration Date,
or the tendering Shareholder must comply with the guaranteed delivery procedures
described below. The confirmation of a book-entry transfer of Shares into the
Depositary's account at a Book-Entry Transfer Facility as described above is
referred to as a "Book-Entry Confirmation." DELIVERY OF THE LETTER OF
TRANSMITTAL OR OTHER DOCUMENTS TO A BOOK-ENTRY TRANSFER FACILITY DOES NOT
CONSTITUTE DELIVERY OF THE LETTER OF TRANSMITTAL OR SUCH OTHER DOCUMENTS TO THE
DEPOSITARY.
SIGNATURE GUARANTEES. No signature guarantee is required on the Letter of
Transmittal, (i) if the Letter of Transmittal is signed by the registered holder
(which term, for purposes of this Section, includes any participant in the
Book-Entry Transfer Facility system whose name appears on a security position
listing as the owner of the Shares) of Shares tendered therewith and such
registered holder has not completed either the box entitled "Special Delivery
Instructions" or the box entitled "Special Payment Instructions" on the Letter
of Transmittal, or (ii) if such Shares are tendered for the account of a
financial institution (including most commercial banks, savings and loan
associations and brokerage houses) that is a participant in the Security
Transfer Agents Medallion Program, the New York Stock Exchange Medallion
Signature Guarantee Program or the Stock Exchange Medallion Program (an
"Eligible Institution"). In all other cases, all signatures on the Letter of
Transmittal must be guaranteed by an Eligible Institution. See Instruction 1 of
the Letter of Transmittal.
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If the certificates representing Shares are registered in the name of a
person other than the signer of the Letter of Transmittal or if payment is to be
made or if certificates for Shares not tendered or not accepted for payment are
to be returned to a person other than the registered holder of the certificates
surrendered, then the tendered certificates representing Shares must be endorsed
or accompanied by appropriate stock powers, in each case signed exactly as the
name or names of the registered holder or owner appears on the certificates,
with the signatures on the certificates or stock powers guaranteed by an
Eligible Institution as described above and as provided in the Letter of
Transmittal. See Instructions 1 and 5 of the Letter of Transmittal.
GUARANTEED DELIVERY. If a Shareholder wishes to tender Shares pursuant to
the Offer and the Shareholder's certificates are not immediately available or
the procedures for book-entry transfer cannot be completed on a timely basis or
time will not permit all required documents to be received by the Depositary
prior to the Expiration Date, the Shares may nevertheless be tendered if all the
following guaranteed delivery procedures are complied with:
(i) the tender is made by or through an Eligible Institution;
(ii) a properly completed and duly executed Notice of Guaranteed
Delivery, substantially in the form provided by Purchaser with this Offer to
Purchase, is received by the Depositary as provided below prior to the
Expiration Date; and
(iii) the certificates for all tendered Shares in proper form for
transfer or a Book-Entry Confirmation with respect to all tendered Shares,
together with a properly completed and duly executed Letter of Transmittal
(or a manually signed facsimile thereof) and any required signature
guarantees (or in the case of a book-entry transfer of Shares, an Agent's
Message), and any other documents required by the Letter of Transmittal, are
received by the Depositary within three New York Stock Exchange trading days
after the date of execution of the Notice of Guaranteed Delivery and a
representation that the Shareholder on whose behalf the tender is being made
is deemed to own the Shares being tendered within the meaning of Rule 14e-4
under the Exchange Act.
The Notice of Guaranteed Delivery may be delivered by hand or transmitted by
telegram, facsimile transmission or mailed to the Depositary and must include an
endorsement by an Eligible Institution in the form set forth in the Notice of
Guaranteed Delivery and a representation that the Shareholder on whose behalf
the tender is being made is deemed to own the Shares being tendered within the
meaning of Rule 14e-4 under the Exchange Act.
Notwithstanding any other provision of this Offer to Purchase, payment for
Shares accepted for payment pursuant to the Offer in all cases will be made only
after timely receipt by the Depositary of certificates for (or Book-Entry
Confirmation with respect to) the Shares, a Letter of Transmittal (or a manually
signed facsimile thereof), properly completed and duly executed with all
required signature guarantees (or, in the case of a book-entry transfer, an
Agent's Message) and all other documents required by the Letter of Transmittal.
Accordingly, payments may not be made to all tendering Shareholders at the same
time, and will depend upon when Share certificates are received by the
Depositary or Book-Entry Confirmations of such Shares are received into the
Depositary's account at the Book-Entry Transfer Facility.
BACKUP FEDERAL INCOME TAX WITHHOLDING. To prevent backup federal income tax
withholding with respect to the payment of the purchase price for Shares
purchased pursuant to the Offer, a Shareholder must provide the Depositary with
his or her correct taxpayer identification number and certify that he or she is
not subject to backup federal income tax withholding by completing the
substitute Form W-9 included in the Letter of Transmittal. See Instruction 10 of
the Letter of Transmittal. See Section 5 below.
DETERMINATION OF VALIDITY. All questions as to the form of documents and
the validity, eligibility (including time of receipt) and acceptance for payment
of any tender of Shares pursuant to any of the
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procedures described above will be determined by Purchaser in its sole
discretion, which determination will be final and binding on all parties.
Purchaser reserves the absolute right to reject any or all tenders of Shares
determined not to be in proper form or the acceptance of or payment for which
may, in the opinion of counsel, be unlawful and reserves the absolute right to
waive any defect or irregularity in any tender of Shares. Subject to the terms
of the Merger Agreement, Purchaser also reserves the absolute right to waive or
amend any or all of the Offer Conditions, other than the Minimum Condition.
Purchaser's interpretation of the terms and conditions of the Offer (including
the Letters of Transmittal and the instructions thereto) will be final and
binding on all parties. No tender of Shares will be deemed to have been validly
made until all defects and irregularities have been cured or waived. None of
Purchaser, Parent, Depositary, the Dealer Manager, the Information Agent or any
other person will be under any duty to give notification of any defects or
irregularities in tenders or incur any liability for failure to give any such
notification.
APPOINTMENT AS PROXY. By executing a Letter of Transmittal, a tendering
Shareholder irrevocably appoints designees of Purchaser as his or her
attorneys-in-fact and proxies, with full power of substitution and
resubstitution, in the manner set forth in the Letter of Transmittal, to the
full extent of the Shareholder's rights with respect to the Shares tendered by
the Shareholder and purchased by Purchaser and with respect to any and all other
Shares or other securities issued or issuable in respect of those Shares, on or
after the date of the Offer. All such powers of attorney and proxies will be
considered coupled with an interest in the tendered Shares. Such appointment
will be effective when, and only to the extent that, Purchaser accepts the
Shares for payment. Upon acceptance for payment, all prior powers of attorney
and proxies given by the Shareholder with respect to the Shares (and any other
Shares or other securities so issued in respect of such purchased Shares) will
be revoked, without further action, and no subsequent powers of attorney and
proxies may be given (and, if given, will not be deemed effective) by the
Shareholder. Purchaser or its designees, as the case may be, will be empowered
to exercise all voting and other rights of the Shareholder with respect to such
Shares (and any other Shares or securities so issued in respect of such
purchased Shares) as they in their sole discretion may deem proper, including
without limitation in respect of any annual or special meeting of Shareholders,
or any adjournment or postponement of any such meeting.
Purchaser reserves the absolute right to require that, in order for Shares
to be validly tendered, immediately upon Purchaser's acceptance for payment of
the Shares, Purchaser must be able to exercise full voting and other rights with
respect to the Shares, including voting at any meeting of Shareholders then
scheduled.
Purchaser's acceptance for payment of Shares tendered pursuant to any of the
procedures described above will constitute a binding agreement between the
tendering Shareholder and Purchaser upon the terms and subject to the conditions
of the Offer.
4. WITHDRAWAL RIGHTS
Tenders of Shares made pursuant to the Offer are irrevocable, except as
otherwise provided in this Section 4. Shares tendered pursuant to the Offer may
be withdrawn at any time prior to the Expiration Date and, unless theretofore
accepted for payment by Purchaser as provided in this Offer to Purchase, may
also be withdrawn at any time after April 26, 1999. If Purchaser extends the
Offer, is delayed in its purchase of or payment for Shares, or is unable to
purchase or pay for Shares for any reason, then, without prejudice to the rights
of Purchaser, tendered Shares may be retained by the Depositary on behalf of
Purchaser and may not be withdrawn, except to the extent that tendering
Shareholders are entitled to withdrawal rights as set forth in this Section 4.
The reservation by Purchaser of the right to delay the acceptance or
purchase of or payment for Shares is subject to the terms of the Merger
Agreement and provisions of Rule 14e-1(c) under the Exchange Act, which requires
Purchaser to pay the consideration offered or to return Shares deposited by or
on behalf of Shareholders promptly after the termination or withdrawal of the
Offer.
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For a withdrawal to be effective, a written, telegraphic or facsimile
transmission notice of withdrawal must be timely received by the Depositary at
one of its addresses set forth on the back cover of this Offer to Purchase. Any
such notice of withdrawal must specify the name of the person who tendered the
Shares to be withdrawn, the number of Shares to be withdrawn and the name of the
registered holder, if different from that of the person who tendered the Shares.
If certificates evidencing Shares have been delivered or otherwise identified to
the Depositary, then, prior to the release of the certificates, the tendering
Shareholder must also submit the serial numbers shown on the particular
certificates evidencing the Shares to be withdrawn, and the signature on the
notice of withdrawal must be guaranteed by an Eligible Institution (except in
the case of Shares tendered for the account of an Eligible Institution). If
Shares have been tendered pursuant to the procedure for book-entry transfer set
forth in Section 3, the notice of withdrawal must specify the name and number of
the account at the applicable Book-Entry Transfer Facility to be credited with
the withdrawn Shares.
All questions as to the form and validity (including time of receipt) of
notices of withdrawal will be determined by Purchaser, in its sole discretion,
which determination will be final and binding on all parties. No withdrawal of
Shares will be deemed to have been made properly until all defects and
irregularities have been cured or waived. None of Parent, Purchaser, the Dealer
Manager, the Depositary, the Information Agent or any other person will be under
any duty to give notification of any defects or irregularities in any notice of
withdrawal or incur any liability for failing to give such notification.
Any Shares properly withdrawn will be deemed not validly tendered for
purposes of the Offer, but may be tendered at any subsequent time prior to the
Expiration Date by following any of the procedures described in Section 3 above.
5. CERTAIN FEDERAL INCOME TAX CONSEQUENCES OF THE OFFER AND THE MERGER
The following is a summary of the material federal income tax consequences
of the Offer and the Merger to holders whose Shares are purchased pursuant to
the Offer or whose Shares are converted into the right to receive the Merger
Consideration in the Merger. This discussion is based upon the provisions of the
Internal Revenue Code of 1986, as amended (the "Code"), the applicable Treasury
Regulations promulgated and proposed thereunder and published judicial authority
and administrative rulings and practice. Legislative, judicial or administrative
authorities or interpretations are subject to change, possibly on a retroactive
basis, at any time, and a change could alter or modify the statements and
conclusions set forth below. It is assumed for purposes of this discussion that
the Shares are held as "capital assets" within the meaning of Section 1221 of
the Code. This discussion does not address all aspects of federal income
taxation that may be relevant to a particular Shareholder in light of such
Shareholder's personal investment circumstances, or those Shareholders subject
to special treatment under the federal income tax laws (for example, life
insurance companies, tax-exempt organizations, foreign corporations and
nonresident alien individuals) or to Shareholders who acquired their Shares
through the exercise of employee stock options or other compensation
arrangements. In addition, the discussion does not address any aspect of
foreign, state or local income taxation or any other form of taxation that may
be applicable to a Shareholder.
CONSEQUENCES OF THE OFFER AND THE MERGER TO SHAREHOLDERS. The receipt of
the Per Share Amount and the Merger Consideration will be a taxable transaction
for federal income tax purposes (and also may be a taxable transaction under
applicable foreign, state, local and other income tax laws). In general, for
federal income tax purposes, a Shareholder will recognize gain or loss equal to
the difference between his or her adjusted tax basis in the Shares sold pursuant
to the Offer or converted to cash in the Merger and the amount of cash received
therefor. Such gain or loss will be capital gain or loss and will be long-term
gain or loss, if, on the date of sale (or, if applicable, the date of the
Merger), the Shares were held for more than one year.
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BACKUP TAX WITHHOLDING. Under the Code, a Shareholder may be subject, under
certain circumstances, to "backup withholding" at a 31% rate with respect to
payments made in connection with the Offer or the Merger. Backup withholding
generally applies if the Shareholder (i) fails to furnish his or her social
security number or other taxpayer identification number ("TIN"), (ii) furnishes
an incorrect TIN, (iii) fails properly to report interest or dividends, or (iv)
under certain circumstances, fails to provide a certified statement, signed
under penalties of perjury, that the TIN provided is his or her correct number
and that he or she is not subject to backup withholding. Backup withholding is
not an additional tax but merely an advance payment, which may be refunded to
the extent it results in an overpayment of tax. Certain persons generally are
exempt from backup withholding, including corporations and financial
institutions. Certain penalties apply for failure to furnish correct information
and for failure to include the reportable payments in income. Each Shareholder
should consult with his or her own tax advisor as to its qualifications for
exemption from withholding and the procedure for obtaining such exemption.
THE FEDERAL INCOME TAX DISCUSSION SET FORTH ABOVE IS INCLUDED FOR GENERAL
INFORMATION PURPOSES ONLY. SHAREHOLDERS SHOULD CONSULT THEIR OWN TAX ADVISORS TO
DETERMINE THE FEDERAL, STATE, LOCAL AND FOREIGN TAX CONSEQUENCES OF THE OFFER
AND THE MERGER TO THEM IN VIEW OF THEIR OWN PARTICULAR CIRCUMSTANCES.
6. PRICE RANGE OF THE SHARES; DIVIDENDS ON THE SHARES
According to the Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1997 (the "1997 10-K") and Annual Report on Form 10-K for the
fiscal year ended January 2, 1999 (the "1998 10-K," and, together with the 1997
10-K, the "Company 10-K") and information supplied to Parent by the Company, the
principal trading market for the Shares is the Nasdaq Stock Market, Inc.'s
National Market (the "Nasdaq") and the Shares trade on the Nasdaq under the
symbol "SNSR." The following table sets forth, for the periods indicated, the
high and low sale prices per Share reported by the Nasdaq Composite Reporting
System, retroactively adjusted to reflect a 4-for-3 stock split effective
December 15, 1997, and a 5-for-4 stock split effective June 15, 1998.
According to the Company 10-K, the Company commenced trading on the Nasdaq
on October 2, 1996.
<TABLE>
<CAPTION>
HIGH LOW
--------- ---------
<S> <C> <C>
1996
Fourth Quarter (commencing October 2, 1996).................................................... $ 7.80 $ 5.55
1997
First Quarter.................................................................................. $ 9.38 $ 6.91
Second Quarter................................................................................. 7.88 6.91
Third Quarter.................................................................................. 9.45 7.66
Fourth Quarter................................................................................. 14.41 9.00
1998
First Quarter.................................................................................. $ 14.59 $ 10.00
Second Quarter................................................................................. 15.00 10.80
Third Quarter.................................................................................. 15.50 11.06
Fourth Quarter................................................................................. 17.00 8.75
1999
First Quarter (through February 22, 1999)...................................................... $ 17.13 $ 13.25
</TABLE>
The Company declared (and later paid) a dividend of $0.02 per Share in the
second quarter of 1998 and in each quarter thereafter. The Company dividend of
$0.02 per Share declared on January 22, 1999, to Shareholders of record on
February 26, 1999, will be paid in accordance with its terms on March 19, 1999.
10
<PAGE>
On February 22, 1999, the last full trading day before the public
announcement of Purchaser's intention to acquire the Shares, the last reported
sale price on the Nasdaq was $13.50 per Share. On February 25, 1999, the last
full trading day before the commencement of the Offer, the last reported sale
price on the Nasdaq was $15.91 per Share. SHAREHOLDERS ARE URGED TO OBTAIN
CURRENT MARKET QUOTATIONS FOR THE SHARES.
7. CERTAIN INFORMATION CONCERNING THE COMPANY
GENERAL INFORMATION. The Company is an Indiana corporation with its
principal executive offices located at 228 Northeast Road, Standish, Maine
04084. The Company designs, manufactures and markets circuit breakers,
electronic sensors and electronic ceramic component parts used by original
equipment manufacturers in the automotive, appliance and telecommunications
markets.
HISTORICAL FINANCIAL INFORMATION. Set forth below is certain selected
consolidated financial information with respect to the Company and its
subsidiaries excerpted from the Company 10-K. More comprehensive financial
information is included in such reports and other documents filed by the Company
with the SEC, and the following summary is qualified in its entirety by
reference to such reports and other documents and all of the financial
information (including any related notes) contained therein. The 1997 10-K and
the 1998 10-K are incorporated herein by reference. Such reports and other
documents should be available for inspection and copies should be obtainable in
the manner set forth below under "Available Information."
11
<PAGE>
CONTROL DEVICES, INC.
SELECTED CONSOLIDATED FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
FISCAL YEAR ENDED
----------------------------------------------------------
<S> <C> <C> <C>
JANUARY 2,
1999(1) DECEMBER 27, 1997 DECEMBER 28, 1996(1)
----------------- ----------------- --------------------
STATEMENT OF INCOME DATA:
Net sales............................................ $ 79,979 $ 70,204 $ 60,495
Cost of sales........................................ 52,080 45,279 38,929
------- ------- -------
Gross profit....................................... 27,899 24,925 21,566
Operating Expenses:
Selling, general and administrative.................. 12,077 10,755 9,209
Research and development............................. 5,377 4,421 3,847
------- ------- -------
Operating income..................................... 10,445 9,749 8,510
Interest expense..................................... (297) 170 1,562
------- ------- -------
Income before income taxes........................... 10,742 9,579 6,948
Income tax provision................................. 2,878 3,676 2,673
------- ------- -------
Net income........................................... $ 7,864 $ 5,903 $ 4,275
------- ------- -------
------- ------- -------
Net income applicable to common Shareholders......... 7,864 5,903 4,066
Net income per share:(2)
Basic.............................................. $ 0.95 $ 0.71 $ 0.77
Diluted............................................ $ 0.90 $ 0.69 $ 0.77
Weighted average common shares and equivalents
outstanding:(2)
Basic.............................................. 8,298 8,274 5,252
Diluted............................................ 8,778 8,524 5,271
BALANCE SHEET DATA (AT PERIOD END):
Working capital...................................... $ 22,563 $ 15,025 $ 10,761
Total assets......................................... 60,893 51,049 44,243
Long-term debt, net of current maturities............ 152 640 1,320
Redeemable preferred shares.......................... -- -- --
Shareholders' equity................................. 41,948 34,089 28,329
</TABLE>
- ------------------------
(1) The Selected Consolidated Financial Data presented for the fiscal year ended
December 28, 1996 includes the results of operations of Realisations et
Diffusion pour l'Industrie from April 1, 1996, the date of its acquisition
by the Company. The Selected Consolidated Financial Data presented for the
fiscal year ended January 2, 1999 includes the results of operations of
Arnould Electro-Industrie from June 26, 1998, the date of its acquisition by
the Company.
(2) On December 15, 1997, the Company effected a 4-for-3 stock split of its
Shares which entitled each Shareholder to receive one additional Share for
each three outstanding Shares held of record as of the close of business on
December 1, 1997. On June 15, 1998, the Company effected a 5-for-4 stock
split of its Shares which entitled each Shareholder to receive one
additional Share for each four outstanding Shares held of record as of the
close of business on May 29, 1998. All Share and per Share amounts in the
Selected Consolidated Financial Data have been restated to give retroactive
effect to the stock splits.
AVAILABLE INFORMATION. The Company is subject to the informational filing
requirements of the Exchange Act. In accordance with the Exchange Act, the
Company files periodic reports, proxy statements and other information with the
SEC relating to its business, financial condition and other matters. The Company
is required to disclose in such proxy statements certain information, as of
particular dates, concerning the Company's directors and officers, their
remuneration, stock options granted to them, the
12
<PAGE>
principal holders of the Company's securities and any material interest of those
persons in transactions with the Company. Such reports, proxy statements and
other information may be inspected at the SEC's office at 450 Fifth Street,
N.W., Washington, D.C. 20549, and also should be available for inspection and
copying at the regional offices of the SEC located at Citicorp Center, 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661; and 7 World Trade Center,
Suite 1300, New York, New York 10048. Copies may be obtained upon payment of the
SEC's prescribed fees by writing to its principal office at 450 Fifth Street,
N.W., Washington, D.C. 20549, or through the SEC's Website (http://www.sec.gov).
Although neither Parent nor Purchaser has any knowledge that would indicate
that statements contained herein based upon information furnished by the Company
or documents and records relating to the Company (collectively, the "Company
Information") are untrue, none of Parent, Purchaser, the Dealer Manager or the
Information Agent assumes any responsibility for the accuracy or completeness of
the Company Information or for any failure by the Company to disclose events
that may have occurred or may affect the significance or accuracy of any such
information but that are unknown to Parent and Purchaser.
8. CERTAIN INFORMATION CONCERNING PURCHASER AND PARENT
Purchaser, an Indiana corporation, was organized to acquire all of the
Shares pursuant to the Offer and the Merger and has not conducted any unrelated
activities since its organization. All of the outstanding capital stock of
Purchaser is owned indirectly by Parent. The principal executive offices of
Purchaser are located at 2 Cheapside Court, Buckhurst Road, Ascot, Berkshire,
England SL5 7RF, United Kingdom.
Parent is a public limited company registered in England and Wales, with its
principal executive offices located at 2 Cheapside Court, Buckhurst Road, Ascot,
Berkshire, England SL5 7RF, United Kingdom. Parent is engaged in the design,
development, manufacture and supply of products and services in the fields of
sensing, measurement and safety testing for the global transportation industry.
Neither Parent nor Purchaser is subject to the information requirements of
the Exchange Act and, therefore, reports relating to each of its business,
financial condition and other matters have not been filed with, and will not be
available from, the SEC. However, copies of Parent's audited consolidated
accounts for the year ended April 30, 1998 and Parent's unaudited interim
consolidated accounts for the six months ended October 31, 1998 and a summary of
the significant differences between U.S. and U.K. generally accepted accounting
principles are attached hereto as Annexes A, B and C, respectively.
Because the Purchaser is newly formed and has minimal assets and
capitalization, no meaningful financial information regarding Purchaser is
available.
Except as set forth elsewhere in this Offer to Purchase or Schedule I
hereto, (i) neither Parent nor Purchaser nor, to the knowledge of Parent or
Purchaser, any of the persons listed in Schedule I hereto or any associate or
majority-owned subsidiary of Parent or Purchaser or any of the persons so
listed, (a) beneficially owns or has a right to acquire any Shares or any other
equity securities of the Company, (b) has effected any transaction in the Shares
or any other equity securities of the Company during the past 60 days, or (c)
has any contract, arrangement, understanding or relationship with any other
person with respect to any securities of the Company (including any contract,
arrangement, understanding or relationship concerning the transfer or the voting
of any such securities, joint ventures, loan or option arrangements, puts or
calls, guarantees of loans, guarantees against loss or the giving or withholding
of proxies, consents or authorizations), (ii) there have been no transactions
which would require reporting under the rules and regulations of the SEC between
Parent or Purchaser or any of their respective subsidiaries or, to the knowledge
of Parent or Purchaser, any of the persons listed in Schedule I hereto, on the
one hand, and the Company or any of its executive officers, directors or
affiliates, on the other hand, and (iii) there have been no contacts,
negotiations or transactions between Parent or Purchaser or any of their
respective subsidiaries or, to the knowledge of Parent or Purchaser, any of the
persons listed in Schedule 1 hereto, on the one hand, and the Company or its
subsidiaries or affiliates, on the other hand, concerning a merger,
13
<PAGE>
consolidation or acquisition, a tender offer or other acquisition of securities
of any class of the Company, an election of directors of the Company or a sale
or other transfer of a material amount of assets of the Company or any of its
subsidiaries.
9. SOURCE AND AMOUNT OF FUNDS
The Purchaser estimates that the total amount of funds required to purchase,
pursuant to the Offer and the Merger, the number of Shares that were
outstanding, and subject to future issuance pursuant to outstanding options and
purchase plan rights, on a fully diluted basis as of February 22, 1999 will be
approximately $145.1 million (net of the exercise price payable with respect to
such Options and rights) and that approximately $6.7 million of additional funds
will be required to pay fees and expenses related to the Offer and the Merger.
The Purchaser plans to obtain all funds needed for the Offer and the Merger
through a capital contribution from Parent. Parent intends to fund substantially
all of this capital contribution from cash on hand and bank facilities,
including a bridge financing facility intended to be repaid through a rights
offering by First Technology Funding plc, a wholly owned subsidiary of Parent
("FT Funding"). The rights offering is fully underwritten by Dresdner Kleinwort
Benson.
The descriptions below of the Loan Agreement, the Bridging Agreement and the
Underwriting Agreement are qualified in their entirety by reference to the text
of such agreements filed as exhibits to the Tender Offer Statement on Schedule
14D-1 (the "Schedule 14D-1") filed by Parent and Purchaser with the SEC in
connection with the Offer, which agreements are incorporated herein by
reference.
BANK FACILITIES. Parent will obtain a portion of the funds from a credit
facility (the "Credit Facility") pursuant to a loan agreement (the "Loan
Agreement"), dated February 23, 1999, among Parent, HSBC Investment Bank PLC, as
agent, and The First National Bank of Chicago, HSBC Investment Bank PLC and
Dresdner Bank AG, London Branch (the "Banks"). Under the Credit Facility, the
Banks will provide Parent with a $40 million term loan and a $40 million
revolving credit facility. The proceeds of the Credit Facility will be used to
finance, in part, the payment of cash consideration for Shares that have been
accepted for payment by the Purchaser and the balance will be used to meet costs
and expenses associated with the Merger. The Credit Facility carries interest at
a rate equal to 1.1 percent over the U.S. dollar-denominated London Interbank
Offered Rate ("LIBOR").
The term loan facility is repayable in annual installments on April 30th of
each year until April 30, 2004. The revolving credit facility is repayable in
full on April 30, 2004. The term loan and revolving credit facilities are
unsecured, but Parent's subsidiaries will give guarantees for Parent's
obligations to the Banks and the Agent. Parent has agreed to cause the Company
and its subsidiaries to give guarantees on similar terms upon completion of the
Merger.
The Credit Facility is subject to various customary representations and
warranties, financial covenants, cancellation events and a change of control
provision. The availability of the Credit Facility depends on the fulfillment of
various conditions, including the satisfaction of the Minimum Condition. In
addition, if certain representations or warranties are incorrect in any material
respect when made or deemed to be made and have not been remedied within a
specified cure period, Parent will not be able to obtain funds from the Credit
Facility.
Parent plans to repay borrowings under the Credit Facility and interest
thereon out of cash from operations.
BRIDGING FACILITY. Dresdner Bank AG, London Branch ("Dresdner Bank"), has
agreed, in an Agreement dated February 23, 1999, between Parent and Dresdner
Bank (the "Bridging Agreement"), to provide a term loan facility of up to L40
million (or $65.2 million, calculated at the February 19, 1999 exchange rate of
1.6295 dollars for each pound) to Parent. The Bridging Agreement is repayable
directly from the proceeds of the underwritten rights issue described below, and
in any event before April 16, 1999. The Bridging Agreement will carry interest
at LIBOR plus mandatory costs, which interest rate is
14
<PAGE>
increased by one percent 14 days after the first advance thereunder is made. The
Bridging Agreement is unsecured.
The Bridging Agreement is subject to various customary representations,
warranties, and undertakings and an indemnity to Dresdner Bank. The availability
of funds under the Bridging Agreement depends on the fulfillment of various
conditions, including the obtaining of Parent Shareholder Approval and the
satisfaction of the Minimum Condition. In addition, if certain representations
or warranties are incorrect in any material respect when made or deemed to be
made and have not been remedied within a specified cure period, Parent will not
be able to obtain funds from the Bridging Agreement.
RIGHTS ISSUE. Parent intends to repay funds borrowed under the Bridging
Agreement with proceeds from the issuance (the "Rights Issue") of up to
12,029,189 units of convertible unsecured loan stock ("Loan Stock") by way of
offering each qualifying shareholder of Parent the right to receive one unit of
Loan Stock for every four ordinary shares ("Ordinary Shares") of Parent at a
price of 320 pence per unit of Loan Stock, for aggregate proceeds of
approximately L38.5 million (or $62.7 million, calculated at the February 19,
1999 exchange rate of 1.6295 dollars for each pound). If the Offer is not
consummated, the Loan Stock will be redeemed for its purchase price, plus
interest; if the Offer is consummated, the Loan Stock will be converted, into
Ordinary Shares.
The Rights Issue has been fully underwritten in accordance with an
underwriting agreement, dated February 23, 1999, among Parent, FT Funding and
Kleinwort Benson Securities Limited (the "Underwriting Agreement"). The
Underwriting Agreement is conditional, among other things, upon the passing of
the resolutions described below under "Parent Shareholder Approval" and the
admission of the Loan Stock to the Official List of the London Stock Exchange
(the "Admission") becoming effective by 10:00 a.m., London time, on March 12,
1999, or such later date as the parties to the Underwriting Agreement may agree,
but not later than March 22, 1999. The Parent Shareholder Approval and the
Admission are also conditions to the Offer and are referred to herein as the
"Shareholder Approval Condition" and the "Listing Condition."
Under the listing rules of the London Stock Exchange, a company listed on
that exchange is required to make application for admission to listing of any of
its shares where dealings are to take place on the London Stock Exchange.
Admission of any shares to listing only becomes effective when the decision of
the London Stock Exchange to admit the shares to listing has been announced by
being disseminated by the electronic systems used by the London Stock Exchange
for communicating with its member firms. In the case of the Rights Issue,
Admission is expected to take place at 9:00 a.m., London Time, on March 12,
1999, the day following the obtaining of Parent Shareholder Approval at the
extraordinary general meeting of Parent's shareholders scheduled to be held on
March 11, 1998.
Under the Underwriting Agreement, Parent has given certain representations,
warranties and undertakings and an indemnity to Kleinwort Benson Securities
Limited. In certain circumstances, including if a material breach of such
representations, warranties and undertakings occurs or is discovered before
Admission, Kleinwort Benson Securities Limited has the right to terminate the
Underwriting Agreement prior to Admission becoming effective.
PARENT SHAREHOLDER APPROVAL. The Offer itself is conditioned upon Parent
Shareholder Approval. See Section 14.
15
<PAGE>
On February 23, 1999, Parent mailed to its shareholders a notice of and
circular pertaining to an Extraordinary General Meeting (the "Meeting") of
Parent to be held on March 11, 1999. At the Meeting, the following resolutions
will be proposed and voted upon:
1. to approve the acquisition of the Company and authorize the borrowings
pursuant to the Bridging Facility; and
2. to increase Parent's authorized share capital in order to permit, among
other things, the issuance of the Ordinary Shares contemplated by the
Rights Issue.
Parent's Directors have recommended that Parent's shareholders vote in favor
of these resolutions. The affirmative vote of holders of a majority of the
Ordinary Shares of Parent represented in person or by proxy at the Meeting is
required for Parent Shareholder Approval.
10. BACKGROUND OF THE OFFER; CONTACTS WITH THE COMPANY
Over the past seven years, Parent has considered a number of possible
acquisitions, business combinations and other transactions of or with other
companies serving the global transportation industry in the supply of sensing,
measurement and safety-testing products.
On March 3, 1998, Dresdner Kleinwort Benson North America LLC (together with
Kleinwort Benson Securities Limited, "Dresdner Kleinwort Benson"), Parent's
financial adviser, sent a letter to Bruce D. Atkinson, the President, Chief
Executive Officer and a Director of the Company, offering to introduce
representatives of Parent to the Company for the purpose of exploring a
potential alliance. On March 24, 1998, representatives of Dresdner Kleinwort
Benson met with Mr. Atkinson and Jeffrey G. Wood, Vice President, Chief
Financial Officer, Secretary and Treasurer of the Company at the Company's
headquarters in Standish, Maine, for the purpose of obtaining information about
the Company.
On April 29 and 30, 1998, Dr. Fred Westlake, Executive Chairman of Parent,
and Oliver G. Burns, Finance Director of Parent, met with Mr. Atkinson and Mr.
Wood at the Company's headquarters. The meeting consisted of a general
discussion regarding the background of the two companies and their strategic
alternatives. On May 18, 1998, Dr. Westlake met in New York City with Ralph R.
Whitney, the Chairman of the Board of the Company, to discuss the possibility of
a business combination between the Company and Parent. The foregoing discussions
and various subsequent discussions focused principally on an exchange of shares
resulting in a combined company and various management, governance and similar
issues related thereto. The possibility of a small cash component was also
considered.
Following a series of telephonic and fax communications, a confidentiality
agreement was entered into between the Company and Parent on June 4, 1998. The
confidentiality agreement provided for the mutual exchange of certain
information between Parent and the Company and also contained customary
"standstill" provisions extending to June 30, 2000.
On June 15, 1998, Mr. Burns met with Mr. Atkinson and Mr. Wood at the
Company's headquarters to learn more about the Company. On June 16, 1998, Dr.
Westlake advised the Parent Board of the discussions with the Company. On June
19, 1998, Messrs. Whitney and Atkinson met with Dr. Westlake and Mr. Burns and
representatives of Dresdner Kleinwort Benson in Detroit. No agreement could be
reached as to price or structure during the meeting and the parties agreed to
suspend further negotiations until the Company's design, marketing and
consulting services agreement and licensing arrangements with an unaffiliated
person (the "Consultant") could be renegotiated.
In late June 1998 the parties recognized that a significant period of time
would be required to complete the negotiations with the Consultant and they
agreed to defer further due diligence investigations until that matter was
resolved. In mid-August 1998, the Company advised Parent that it had reached an
agreement in principle with this individual on the restructuring of their
arrangements. As discussed herein, the restructuring was finalized in late
December 1998.
On August 24, 1998, after consultation with various members of Parent's
Board of Directors (the "Parent Board"), Dr. Westlake sent a fax to Mr. Whitney
seeking to resolve the issues of price and structure. He expressed his
preference that a substantial portion of the consideration be in the form of
16
<PAGE>
Parent shares and said that he would be prepared to recommend $18.00 per Company
share. Dr. Westlake and Mr. Whitney discussed these issues on August 27 and
concurred that they would each support a transaction valued at $18.00 per
Company share, payable half in Parent stock and half in cash, subject to due
diligence, definitive documentation, satisfactory market conditions and board
approvals. Accordingly, a due diligence meeting among representatives of Parent
and the Company and their advisers was held in Portland, Maine, on September 2,
1998.
Prior to such meeting, however, stock market conditions in New York and
London had deteriorated markedly. The closing price of Parent shares on the
London Stock Exchange (the "Closing Price") dropped from 390.5p on August 21,
1998 (the last trading day preceding Dr. Westlake's fax), to 388.0p on August
26, 1998 (the last trading day preceding the conversation between Dr. Westlake
and Mr. Whitney) to 326.0p on September 1, 1998 (the last trading day preceding
the Portland meeting). The closing price of the Company's shares dropped from
$13.25 on August 21 to $11.63 on September 1.
Due to these market disruptions, Parent decided to suspend further due
diligence investigation of the Company. On September 5, 1998, a representative
of Dresdner Kleinwort Benson requested that Mr. Whitney explore alternative
prices and structures. Mr. Whitney responded that he wished to let market
conditions stabilize, but expressed a willingness to consider an all cash
transaction. At a September 10, 1998 meeting, various members of the Parent
Board concluded that Parent should not continue to proceed to acquire the
Company on the basis of an $18.00 per share price substantially payable in
Parent shares.
During September and October, various efforts were made to address the
issues of price and structure in light of then prevailing US and UK market
conditions.
On September 18, 1998, Parent received a report on the Company from
AutoFina, a consulting firm experienced in the automotive parts business.
AutoFina's report on September 18, 1998 was cautious as to the Company's growth
prospects.
At a September 29, 1998 meeting, the Parent Board considered the possibility
of acquiring the Company entirely for cash, but concluded that this should not
be done entirely on the basis of debt financing. It was agreed to explore the
possibility of a rights offering with Dresdner Kleinwort Benson. Dr. Westlake
and Mr. Whitney met in Denver on October 5, 1988 to discuss the situation. On
October 9, 1998, the closing price of the Company shares on the Nasdaq reached
its 1998 low of $8.75 per share.
On October 19, 1998, the Parent Board again reviewed the possibility of
acquiring the Company in an all cash transaction and reaffirmed that borrowing
all the funds required would over-leverage Parent. The Parent Board also
concluded, after receiving advice from Dresdner Kleinwort Benson, that the use
of a rights offering to partially finance such an acquisition was not
practicable due to then prevailing UK stock market conditions. In light of the
factors described above, the Parent Board decided to terminate further
negotiations with the Company. Dr. Westlake so advised Mr. Whitney on the same
day.
On November 17, 1998, during a review of the Company's operations in Europe,
Messrs. Atkinson and Wood met with Dr. Westlake and Mr. Burns at Parent's
headquarters in Ascot, England and discussed the Company's business.
In late November, based upon improving conditions in the UK market and a
rise in Parent's stock price on the London Stock Exchange, Dresdner Kleinwort
Benson advised Parent that the prospects for a successful rights offering had
improved. After deliberation, Parent's management concluded that the acquisition
of the Company in an all-cash transaction would be attractive, but only at a
price significantly lower than $18.00 per share. Among the factors contributing
to the latter decision were Parent's lower estimation of the Company's growth
prospects and the continued uncertainty of the worldwide automotive parts
markets.
On December 7, 1998, Dr. Westlake, after consultation with certain Parent
Board members, faxed to the Company a draft term sheet proposing to acquire all
the Company shares at $16.00 per share in cash, subject to various conditions,
including the renegotiation of employment and severance arrangements with
Messrs. Atkinson and Wood and Michel Hauser-Kauffmann, Managing Director of the
Company's French operations, the agreement of certain officers and directors of
the Company to invest $13 million of the
17
<PAGE>
proceeds of their Company stock and stock options in Parent stock, and the
payment of a termination fee and expenses under customary conditions. On
December 9, 1998, the Parent Board reviewed the situation. Price and structure
negotiations by telephonic and fax communications continued between the Company
and Parent during December.
On December 27, 1998, the Company and the Consultant entered into an
additional license agreement which provides for minimum cash royalty payments.
On December 28, 1998, the Consultant and the Company terminated the consulting
services agreement signed in April of 1995 and amended the Company's 1995
license agreements with the Consultant to reduce the minimum cash royalty and
license payments on certain products. In connection with the termination of such
consulting services agreement, the Company paid the Consultant a one time
payment of $635,553.
On January 4, 1999, Dr. Westlake and Mr. Burns met with Mr. Whitney at
Parent's headquarters. Mr. Whitney inquired whether Parent would reconsider a
share-for-share transaction. Alternatively, he said, he would be prepared to
recommend an all cash transaction at a price of $16.25 per share. On January 7,
1999, Mr. Burns sent Mr. Whitney a fax declining to consider a share-for-share
proposal, but agreeing to proceed on the basis of $16.25 per share in cash,
subject to various conditions. On January 14, 1999, the parties entered into a
letter agreement in which the Company agreed to give Parent a period of
exclusivity for six weeks in order for Parent to proceed with negotiations and a
due diligence investigation. Attached to the letter agreement was a draft
"proposed term sheet," which was expressly subject to Parent's completion of due
diligence and a working capital review and the signing of definitive
documentation. The document contemplated a purchase price of $16.25 per share in
cash, investment in Parent stock of $8 million of proceeds by certain officers
and directors, a termination fee of $3 million (plus expenses) payable by the
Company in customary circumstances, renegotiated employment arrangements with
Messrs. Atkinson, Wood and Hauser-Kauffmann, and binding undertakings to accept
Parent's offer by the Company directors and Messrs. Wood and Hauser-Kauffmann.
During January and February 1999 representatives of Parent and its
financial, accounting and legal advisors conducted a due diligence investigation
of the Company. During the same period, negotiations continued between
representatives of Parent and Messrs. Atkinson, Wood and Hauser-Kauffmann on the
revised employment arrangements of such Company executives. Negotiations
commenced in February, 1999 as to the terms of the Merger Agreement, the
Shareholders Agreement and the Subscription Agreement (the "Definitive Company
Agreements").
On February 20, 1999, Dr. Westlake and Mr. Whitney had a telephone
conversation in which they agreed that the termination payment would be a $2
million fee plus expenses not to exceed $7 million in the aggregate. They also
agreed as to various provisions of the Shareholders Agreement.
On February 22, 1999, the Parent Board approved the Definitive Company
Agreements and the financing arrangements described in Section 9, after the
review of such agreements and arrangements with its financial and legal
advisors. Also on February 22, 1999, the Company Board approved the Merger
Agreement and the Shareholders Agreement after review of such agreements and
arrangements with its financial and legal advisors. At such meeting, Cleary Gull
rendered its opinion that as of the date of such opinion and subject to certain
matters stated therein, the Per Share Amount was fair to the Company's
Shareholders from a financial point of view.
A press release announcing the transaction was issued by Parent and the
Company on February 23, 1999.
18
<PAGE>
11. PURPOSE OF THE OFFER AND THE MERGER; PLANS FOR THE COMPANY; THE MERGER
AGREEMENT; THE SHAREHOLDERS AGREEMENT; OTHER RELATED AGREEMENTS; AND OTHER
MATTERS
PURPOSE OF THE OFFER AND THE MERGER. The purpose of the Offer and the
Merger is to enable Purchaser to acquire, in one or more transactions, control
of the Company and the entire equity interest in the Company. The Offer is
intended to facilitate the acquisition of all of the Shares and to increase the
likelihood that the Merger will be completed promptly. The acquisition of the
entire equity interest in the Company has been structured as a cash tender offer
followed by a cash merger in order to provide a prompt and orderly transfer of
ownership of the Company from Shareholders to Parent and to provide Shareholders
promptly with cash equal to the Per Share Amount for all of their Shares.
PLANS FOR THE COMPANY. Following the Merger, the Company will be operated
as an indirect, wholly owned subsidiary of Parent. Except as otherwise described
in this Offer to Purchase, and for possible transactions between the Company and
other subsidiaries of Parent in connection with the integration of business
conducted by the Company with the other businesses of Parent and its
subsidiaries, Purchaser, Parent and the directors and officers of Purchaser and
Parent listed on Schedule I hereto have no current plans or proposals that would
result in (i) an extraordinary corporate transaction, such as a merger,
reorganization, liquidation or sale or transfer of a material amount of assets
involving the Company or any of its subsidiaries, (ii) except as otherwise
described in the Merger Agreement, any change in the present Company Board or
management of the Company, or (iii) any material change in the Company's
corporate structure or business.
Parent intends, from time to time, after completion of the Offer, to
evaluate and review the Company's and its subsidiaries' operations and the
potential opportunities for rationalization and the achievement of synergies
with Parent's operations, and to consider what, if any, changes would be
desirable in light of the results of such evaluations and reviews. After any
such review, Parent will determine what actions or changes, if any, would be
desirable in light of the circumstances that then exist, and it reserves the
right to effect such actions or changes.
THE MERGER AGREEMENT.
The following is a summary of the material terms of the Merger Agreement.
This summary is not a complete description of the terms and conditions of the
Merger Agreement and is qualified in its entirety by reference to the full text
of the Merger Agreement, which is incorporated by reference and filed with the
SEC as an exhibit to the Schedule 14D-1. The Merger Agreement may be examined
at, and copies obtained from, the offices of the SEC in the manner set forth in
Section 7 above. All terms not defined herein have the meanings ascribed to such
terms in the Merger Agreement.
THE OFFER. The Merger Agreement provides for the commencement of the Offer.
Without the prior written consent of the Company, Purchaser will not, and Parent
will not cause Purchaser to, (i) decrease or change the form of the Per Share
Amount, (ii) decrease the number of Shares sought in the Offer, (iii) amend or
waive the Minimum Condition or impose conditions on the Offer other than the
Offer Conditions, (iv) extend the Expiration Date except (A) as required by law
and (B) that, in the event that any Offer Condition is not satisfied or waived
at the time that the Expiration Date would otherwise occur, (1) Purchaser must
extend the Expiration Date for 10 additional business days to the extent
necessary to permit such condition to be satisfied, and (2) Purchaser may, in
its sole discretion, extend the Expiration Date for such additional period as it
may determine to be appropriate (but not beyond June 30, 1999 (the "Outside
Date")), or (v) amend any term of the Offer in any manner materially adverse to
Shareholders (including without limitation amendments resulting in any extension
which would be inconsistent with the preceding provisions of this sentence),
provided, however, that (1) subject to applicable legal requirements, Parent may
cause Purchaser to waive any Offer Condition, other than the Minimum Condition,
in Parent's sole discretion, and (2) the Offer may be extended in connection
with an increase in the consideration to be paid pursuant to the Offer so as to
comply with applicable rules and regulations of the SEC. Except as
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set forth above and subject to applicable legal requirements, Purchaser may
amend the Offer or waive any Offer Condition in its sole discretion. Assuming
the prior satisfaction or waiver of the Offer Conditions, Parent will cause
Purchaser to accept for payment, and pay for, in accordance with the terms of
the Offer, all Shares validly tendered and not withdrawn pursuant to the Offer
as soon as practicable after the Expiration Date or any extension thereof.
The Company made representations to Parent in the Merger Agreement that: (a)
the Company Board has, (i) determined that the Merger Agreement, the Offer and
the Merger are fair to and in the best interests of the Company and its
Shareholders, (ii) approved the Merger Agreement and the transactions
contemplated thereby, including the Offer and the Merger, (iii) taken all other
action necessary to render the limitations on control share acquisitions and
business combinations contained in Chapters 42 and 43 of the IBCL (or any
similar provision) inapplicable to any transactions contemplated by the Merger
Agreement, (iv) amended the Company Rights Agreement to, among other things,
render it inapplicable to any transactions contemplated by the Merger Agreement,
and (v) resolved to recommend acceptance of the Offer by Shareholders and
adoption of the Merger Agreement by Shareholders, and (b) Cleary Gull has
delivered to the Company Board its opinion that the consideration to be received
by Shareholders in the Offer and the Merger is fair to such Shareholders from a
financial point of view.
Pursuant to the Merger Agreement, the Company is not permitted to otherwise
amend the Rights Agreement or take any other action with respect to, or make any
determination under, the Rights Agreement, including a redemption of the Company
Rights (as defined in the Merger Agreement) or any action to facilitate a
Company Takeover Proposal.
BOARD REPRESENTATION. The Merger Agreement provides that promptly upon the
purchase of Shares by Purchaser pursuant to the Offer, and from time to time
thereafter, (i) Parent will be entitled to designate such number of directors
("Parent's Designees"), rounded up to the next whole number, as will give
Parent, subject to compliance with Section 14(f) of the Exchange Act,
representation on the Company Board equal to the product of (A) the number of
directors on the Company Board (giving effect to any increase in the number of
directors pursuant to the Merger Agreement) and (B) the percentage that such
number of Shares so purchased bears to the aggregate number of Shares
outstanding (such number being, the "Board Percentage"); provided, however, that
if the number of Shares purchased pursuant to the Offer equals or exceeds a
majority of the outstanding Shares, the Board Percentage will in all events be a
majority of the members of the Company Board, and (ii) the Company will, upon
request by Parent, promptly satisfy the Board Percentage by (A) increasing the
size of the Company Board or (B) using its reasonable best efforts to secure the
resignations of such number of directors as is necessary to enable Parent's
Designees to be elected to the Company Board, or both, and will use its
reasonable best efforts to cause Parent's Designees promptly to be so elected,
subject in all instances to compliance with Section 14(f) of the Exchange Act
and Rule 14f-1 promulgated thereunder. At the request of Parent, the Company
will take all lawful action necessary to effect any such election. Parent will
supply to the Company in writing and be solely responsible for any information
with respect to itself, the Parent's Designees and Parent's officers, directors
and affiliates required by Section 14(f) of the Exchange Act and Rule 14f-1
promulgated thereunder to be included in the Schedule 14D-9. Notwithstanding the
foregoing, at all times prior to the Effective Time, the Company Board will
include at least two Continuing Directors (as defined below).
The Merger Agreement further provides that, notwithstanding any other
provision of the Merger Agreement, the Company articles of incorporation or
bylaws, or of applicable law to the contrary, following the election or
appointment of Parent's Designees pursuant to the Merger Agreement and prior to
the Effective Time, any amendment or termination of the Merger Agreement by the
Company, extension by the Company for the performance or waiver of the
obligations or other acts of Parent or Purchaser under the Merger Agreement or
waiver by the Company of the Company's rights under the Merger Agreement will
require the affirmative vote of the majority of the Continuing Directors.
"Continuing Directors" means at any time, (i) those directors of the Company who
are directors on the date of the
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Merger Agreement and who voted to approve the Merger Agreement, and (ii) such
additional directors of the Company who are not affiliated with Parent,
Purchaser or any of their affiliates and who are designated as "Continuing
Directors" for purposes of the Merger Agreement by a majority of the Continuing
Directors in office at the time of such designation.
THE MERGER. The Merger Agreement provides that on its terms and subject to
its conditions, at the Effective Time, Purchaser will be merged with and into
the Company in accordance with the applicable provisions of the IBCL, and the
separate corporate existence of Purchaser will thereupon cease. The Company will
be the surviving corporation in the Merger (as such, the "Surviving
Corporation") in accordance with the IBCL.
The articles of incorporation of the Surviving Corporation to be in effect
from and after the Effective Time until amended in accordance with its terms and
the IBCL will be the articles of incorporation of Purchaser immediately prior to
the Effective Time. The bylaws of the Surviving Corporation to be in effect from
and after the Effective Time until amended in accordance with its terms, the
Surviving Corporation's articles of incorporation and the IBCL will be the
bylaws of Purchaser immediately prior to the Effective Time.
The members of the initial Board of Directors of the Surviving Corporation
will be the members of the Board of Directors of Purchaser immediately prior to
the Effective Time. All of the members of the Board of Directors of the
Surviving Corporation will serve until their successors are duly elected or
appointed and qualified or until their earlier death, resignation or removal in
accordance with the articles of incorporation and the bylaws of the Surviving
Corporation. The officers of the Surviving Corporation will consist of the
officers of the Company immediately prior to the Effective Time. Such Persons
will continue as officers of the Surviving Corporation until their successors
have been duly elected or appointed and qualified or until their earlier death,
resignation or removal in accordance with the articles of incorporation and the
bylaws of the Surviving Corporation.
CONSIDERATION TO BE PAID IN THE MERGER. The Merger Agreement provides that,
by virtue of the Merger and without any action on the part of Parent, Purchaser,
the Company or Shareholders, each Share issued and outstanding immediately prior
to the Effective Time (other than any Shares to be canceled as described below)
and any Shares issuable upon exercise of any option, conversion or other right
to acquire Shares existing immediately prior to the Effective Time will be
canceled and extinguished and be converted into the right to receive the Per
Share Amount, or such higher per Share amount as is paid in the Offer, in cash
payable to the holder thereof, without interest (the "Merger Consideration"), in
accordance with the Merger Agreement. All such Shares, when so converted, will
no longer be outstanding and will automatically be canceled and retired and will
cease to exist, and each holder of a certificate formerly representing any such
Share will cease to have any rights with respect thereto, except the right to
receive the Merger Consideration therefor upon the surrender of such certificate
in accordance with the Merger Agreement. Any payment will be made net of
applicable withholding taxes to the extent such withholding is required by law.
Notwithstanding the foregoing, if between the date of the Merger Agreement and
the Effective Time the outstanding Shares shall have been changed into a
different number of shares or a different class, by reason of any stock
dividend, subdivision, reclassification, recapitalization, split, combination or
exchange of shares, the Merger Consideration will be correspondingly adjusted on
a per-share basis to reflect such stock dividend, subdivision, reclassification,
recapitalization, split, combination or exchange of shares.
The Merger Agreement further provides that each Share held in the treasury
of the Company and each Share owned by Parent, Purchaser or any other direct or
indirect wholly owned subsidiary of Parent immediately before the Effective Time
(other than shares in trust accounts, managed accounts, custodial accounts and
the like that are beneficially owned by third parties) will be automatically
canceled and retired and will cease to exist and no payment or other
consideration will be made with respect thereto.
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Each share of common stock, par value $0.01 per share, of Purchaser issued
and outstanding immediately before the Effective Time will be converted into one
validly issued, fully paid and nonassessable share of common stock, par value
$0.01 per share, of the Surviving Corporation, which, in accordance with the
Merger Agreement, will constitute all of the issued and outstanding shares of
capital stock of the Surviving Corporation immediately after the Effective Time.
COMPANY STOCK OPTION PLANS. The Merger Agreement provides that
notwithstanding the provisions of the Merger Agreement applicable to Rights (as
defined therein), the Company will use its reasonable best efforts (which
include satisfying the requirements of Rule 16b-3(e) promulgated under Section
16 of the Exchange Act, without incurring any liability in connection therewith)
to provide that, at the Effective Time, each holder of an Option will, in
settlement thereof, receive from the Company for each Share subject to such
Option, the Option Consideration; provided, however, that with respect to any
Person subject to Section 16(a) of the Exchange Act, any such amount will be
paid as soon as practicable after the first date payment can be made without
liability to such Person under Section 16(b) of the Exchange Act and otherwise
any such amount will be paid within five business days after the Effective Time.
Notwithstanding anything herein stated, no Option Consideration will be paid
with respect to any Option unless, at or prior to the time of such payment, such
Option is canceled and the holder of such Option has executed and delivered a
release of any and all rights the holder had or may have had in respect of such
Option. The Company will cooperate with Parent in developing and taking any
actions reasonably designed to minimize the exercise of Options by the holders
thereof prior to the Offer Completion Date (as defined in the Merger Agreement).
The Merger Agreement further provides that, notwithstanding the provisions
of the Merger Agreement applicable to Rights, prior to the Effective Time, the
Company will use its reasonable best efforts to obtain all necessary consents or
releases from holders of Options under the Stock Option Plans and take all such
other lawful action as may be necessary to give effect to the transactions
contemplated by the Merger Agreement. Except as otherwise agreed to by the
parties, the Stock Option Plans will terminate as of the Effective Time and the
provisions in any other plan, program or arrangement providing for the issuance
or grant of any other interest in respect of the capital stock of the Company or
any subsidiary thereof will be canceled as of the Effective Time.
Notwithstanding the foregoing, if requested by Parent, the Company will use its
reasonable best efforts to assure that following the date of the Merger
Agreement, no participant in the Employee Stock Purchase Plan (as defined in the
Merger Agreement) of the Company will have any right to elect, to participate or
to make any contribution thereunder, and the Company will take all actions as
may be available to it to cause such plan to be suspended in respect of equity
securities of the Company or the Surviving Corporation other than as to Shares
the payment for which was deducted from the employee's payroll at or prior to
the date of the Merger Agreement.
REPRESENTATIONS AND WARRANTIES. The Merger Agreement contains various
representations and warranties of the parties. These include representations and
warranties by the Company with respect to: (i) existence, standing and corporate
power, (ii) authority and validity and effect of the Merger Agreement, (iii)
capitalization, (iv) subsidiaries, (v) other interests, (vi) no conflicts and
required filings and consents, (vii) compliance with laws, (viii) SEC documents,
(ix) litigation, (x) absence of certain changes, (xi) taxes, (xii) property,
(xiii) millennium compliance, (xiv) contracts, (xv) environmental matters, (xvi)
Company benefit plans and ERISA compliance, (xvii) state takeover statutes,
(xviii) voting requirements, (xix) no brokers, (xx) opinion of the Company,
(xxi) offer documents and proxy statements, and (xxii) the Company Rights
Agreement.
Parent and Purchaser have also made certain representations and warranties
with respect to: (i) existence, standing and corporate power, (ii) authority,
validity and effect of the Merger Agreement, (iii) no conflicts and required
filings and consents, (iv) no brokers, (v) offer documents and proxy statements,
and (vi) financing.
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No representations and warranties made by the Company, Parent or Purchaser
will survive beyond the Effective Time.
SHAREHOLDER MEETING. The Merger Agreement provides that the Company will
take all action necessary in accordance with applicable law and its articles of
incorporation and bylaws to convene a meeting of Shareholders (the "Company
Shareholders Meeting") as promptly as practicable after the Offer Completion
Date to consider and vote upon the approval and adoption of the Merger Agreement
and the Merger. The Company Board will recommend approval and adoption of the
Merger Agreement at the request of Parent or Purchaser. The Company Board will
recommend such approval and adoption, and the Company will take all lawful
action to solicit such approval, including without limitation timely mailing any
proxy statement; provided, however, that such recommendation (but not such
actions to convene the Company Shareholders Meeting) is subject to any action,
including any withdrawal or change of its recommendation, taken by, or upon
authority of, the Company Board, as the case may be, in the exercise of its good
faith judgment based upon and in conformity with the written opinion of outside
counsel (notice of which will be promptly given to Parent and Purchaser) that
such action is required in order to satisfy the fiduciary duties of the members
of the Company Board to Shareholders imposed by law. Without limiting the
generality or effect of any other provision of the Merger Agreement, the
Company's obligations to convene the Company Shareholder Meeting will not be
affected by the commencement, public proposal, public disclosure or
communication to the Company of any Company Takeover Proposal (as defined in the
Merger Agreement).
The Merger Agreement also provides that, notwithstanding the above, in the
event that Parent, Purchaser or any other subsidiary of Parent acquires at least
90% of the outstanding Shares 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 in accordance with the IBCL without a meeting of
Shareholders as soon as practicable after the acceptance for payment and
purchase of Shares by Purchaser pursuant to the Offer.
CONDUCT OF BUSINESS PENDING THE MERGER. The Company has agreed that during
the period from the date of the Merger Agreement until the Effective Time,
except as expressly provided for in the Merger Agreement, the Company will, and
will cause its subsidiaries to, carry on their respective businesses in the
usual, regular and ordinary course in substantially the same manner as
previously conducted and in compliance in all material respects with all
applicable laws and, to the extent consistent therewith, use all reasonable
efforts to preserve intact their current business organizations, use reasonable
efforts to keep available the services of their current officers and other key
employees and preserve their relationships with those Persons having business
dealings with them to the end that their goodwill and ongoing businesses will be
unimpaired at the Effective Time. Without limiting the generality or effect of
the foregoing, during the period from the date of the Merger Agreement to the
Effective Time, the Company will not, and will not permit any of its
subsidiaries to, without the prior written consent of Parent:
(i) other than the Company's regular quarterly dividend of $0.02 per
Share and except as otherwise provided in the Merger Agreement, (A) declare,
set aside or pay any dividends on, or make any other distributions in
respect of, any of its capital stock, (B) split, combine or reclassify any
of its capital stock or issue or authorize the issuance of any other
securities in respect of, in lieu of or in substitution for shares of its
capital stock, or (C) purchase, redeem or otherwise acquire any shares of
capital stock of the Company or any of its subsidiaries or any other
securities thereof or any rights, warrants or options to acquire any such
shares or other securities;
(ii) except for the issuance of Shares pursuant to the exercise of
Options outstanding on the close of business on the last business day
immediately preceding the date of the Merger Agreement or pursuant to the
Employee Stock Purchase Plan to the extent Shares have been paid for with
payroll deductions at or prior to the date of the Merger Agreement, issue,
deliver, sell, pledge or otherwise encumber any potential voting securities
or convertible securities;
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(iii) amend its articles of incorporation, bylaws or other comparable
organizational documents;
(iv) acquire by any means any business or any corporation, limited
liability company, partnership, joint venture, association or other business
organization or division thereof;
(v) dispose of or encumber in any way any of its properties or assets,
other than (A) in the ordinary course of business consistent with past
practice and (B) sales of assets which do not individually or in the
aggregate exceed $200,000;
(vi) (A) 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, or (B) 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;
(vii) make any capital expenditure or capital expenditures other than
capital expenditures set forth in the operating budget of the Company dated
February 4, 1999, as previously delivered to Parent, other than expenditures
in the ordinary course of business consistent with past practice that
individually or in the aggregate do not exceed $200,000;
(viii) make any change to its accounting methods, principles or
practices, except as may be required by generally accepted accounting
principles, or make or change any tax election or settle or compromise any
material tax liability or refund;
(ix) except as required by law or contemplated by the Merger Agreement,
enter into, adopt or amend in any material respect or terminate any Stock
Option Plan or any other agreement, plan or policy involving the Company or
any of its subsidiaries and one or more of their directors, officers or
employees, or materially change any actuarial or other assumption used to
calculate funding obligations with respect to any Company pension plans, or
change the manner in which contributions to any Company pension plans are
made or the basis on which such contributions are determined;
(x) other than as disclosed by Company to Parent, hire or terminate the
employment of any executive officer or key employee or increase the
compensation of any director, executive officer or other key employee of the
Company or pay any benefit or amount not required by a plan or arrangement
as in effect on the date of the Merger Agreement to any such person;
(xi) enter into or amend in any material respect any Material Contract
(as defined in the Merger Agreement) or enter into any contract or
agreement, written or oral, with any affiliate, associate or relative of
Parent, or make any payment to or for the benefit of, directly or
indirectly, any of the foregoing;
(xii) 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
(xiii) authorize, or commit or agree to take, any of the foregoing
actions.
CONSENTS, APPROVALS AND FILINGS. The Merger Agreement provides that upon
the terms and subject to the conditions set forth in the Merger Agreement, each
of the parties will use all reasonable efforts to consummate and make effective
the Offer, the Merger and the other transactions contemplated by the Merger
Agreement, including without limitation, (i) obtaining all necessary actions or
nonactions, waivers, consents and approvals from governmental entities and
making of all necessary registrations and filings (including filings with
governmental entities) and taking of all reasonable steps as may be necessary to
obtain an approval or waiver from, or to avoid an action or proceeding by, any
governmental entity,
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(ii) obtaining all necessary consents, approvals or waivers from third parties,
and (iii) execution and delivery of any additional instruments necessary to
consummate the transactions contemplated by, and to fully carry out the purposes
of, the Merger Agreement.
In connection with and without limiting the foregoing, the Company and
Parent will, and Parent will cause Purchaser to, (i) take all action necessary
to ensure that no state takeover statute or similar statute or regulation is or
becomes applicable to the Offer, the Merger or any of the other transactions
contemplated by the Merger Agreement, and (ii) if any state takeover statute or
similar statute or regulation becomes applicable thereto, take all action
necessary to ensure that the Offer and the Merger may be consummated as promptly
as practicable on the terms contemplated by the Merger Agreement and otherwise
to minimize the effect of such statute or regulation thereon.
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.
PUBLICITY. The Merger Agreement provides that the Company and Parent will,
subject to their respective legal obligations (including requirements of stock
exchanges and other similar regulatory bodies), consult with each other, and use
reasonable efforts to agree upon the text of any press release, before issuing
any such press release or otherwise making public statements with respect to the
transactions contemplated by the Merger Agreement and in making any filings with
any Governmental Entity or with any national securities exchange with respect
thereto.
INDEMNIFICATION; DIRECTORS' AND OFFICERS' INSURANCE. The Merger Agreement
provides that all rights to indemnification and exculpation from liabilities for
acts or omissions occurring at or prior to the Effective Time existing in favor
of the current or former directors or officers of the Company or each of its
subsidiaries as provided in their respective articles of incorporation or bylaws
(or comparable organizational documents) will be assumed by the Surviving
Corporation and the Surviving Corporation will be directly responsible for such
indemnification, without further action, as of the Effective Time and
indemnification rights provided in such articles of incorporation will continue
in full force and effect in accordance with their respective terms. In addition,
from and after the Effective Time, directors and officers of the Company who
become or remain directors or officers of the Surviving Corporation will be
entitled to the same indemnity rights and protections (including those provided
by directors' and officers' liability insurance) of the Surviving Corporation.
These provisions, (i) are intended to be for the benefit of, and will be
enforceable by, each indemnified party, his or her heirs and his or her
representatives, and (ii) are in addition to, and not in substitution for, any
other rights to indemnification or contribution that any such person may have by
contract or otherwise.
The Merger Agreement also provides that the Surviving Corporation will
maintain in effect for not less than six years after the Effective Time policies
of directors' and officers' liability insurance equivalent in all material
respects to those maintained by or on behalf of the Company and its subsidiaries
on the date thereof (and having at least the same coverage and containing terms
and conditions which are no less advantageous to the persons currently covered
by such policies as insured) with respect to matters existing or occurring at or
prior to the Effective Time; provided, however, that if the aggregate annual
premiums for such insurance at any time during such period exceed 200% of the
per annum rate of premium currently paid by the Company and its subsidiaries for
such insurance on the date of the Merger Agreement, then the Surviving
Corporation will provide the maximum coverage that shall then be available at an
annual premium equal to 200% of such rate.
EMPLOYEE BENEFIT MATTERS. The Merger Agreement provides that, on and after
the Effective Time, the Surviving Corporation will promptly pay or provide when
due all compensation and benefits as provided pursuant to the terms of, and to
honor in accordance with their current existing terms (except to the extent
amended or terminated in accordance with such terms), all compensation
arrangements, employment
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agreements and employee or director benefit plans, programs and policies in
existence as of the date of the Merger Agreement for all employees (and former
employees) and directors (and former directors) of the Company and its
subsidiaries.
The Merger Agreement further provides that, for the period commencing at the
Effective Time and ending on December 31, 1999, the Surviving Corporation will
provide employee benefits under plans, programs and arrangements which, in the
aggregate, will provide benefits to the employees of the Surviving Corporation
and its subsidiaries (other than employees covered by a collective bargaining
agreement) that are no less favorable in the aggregate than those provided
pursuant to the plans, programs and arrangements (other than those related to
the equity securities of the Company) of the Company and its subsidiaries in
effect on the date of the Merger Agreement; provided, however, that nothing in
the Merger Agreement will prevent the amendment or termination of any specific
plan, program or arrangement except that the Company's severance plan/policy
will not be amended to reduce the benefits thereunder with respect to
terminations of employees occurring before December 31, 1999, require that the
Surviving Corporation provide or permit investment in the securities of Parent,
the Company or the Surviving Corporation or interfere with the Surviving
Corporation's right or obligation to make such changes as are necessary to
comply with applicable law.
The Merger Agreement also provides that employees of the Surviving
Corporation will be given credit for all service with the Company and its
subsidiaries, to the same extent as such service was credited for such purpose
by the Company, under each employee benefit plan, program, or arrangement of
Parent in which such employees are eligible to participate for all purposes,
except for purposes of benefit accrual, under defined benefit pension plans,
and, in all cases, except to the extent such credit would result in duplication
of benefits. If employees of the Surviving Corporation and its subsidiaries
become eligible to participate in a medical, dental or health plan of Parent or
its subsidiaries, Parent will cause such plan to (i) waive any preexisting
condition limitations for conditions covered under the applicable medical,
health or dental plans of the Company and its subsidiaries and (ii) honor any
deductible and out of pocket expenses incurred by the employees and their
beneficiaries under such plans during the portion of the calendar year prior to
such participation. Notwithstanding the foregoing, in no event will the
employees be entitled to any credit for service, deductibles or out of pocket
expenses to the extent that it would result in a duplication of benefits with
respect to the same period of service, deductible or out of pocket expenses.
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Notwithstanding anything in the Merger Agreement to the contrary, from and
after the Effective Time, the Surviving Company will have sole discretion over
the hiring, promotion, retention, firing and other terms and conditions of the
employment of employees of the Surviving Company.
NO SOLICITATION. The Merger Agreement provides that the Company, its
affiliates and their respective officers, directors, employees, representatives
and agents will immediately cease any existing discussions or negotiations, if
any, with any parties with respect to any Company Takeover Proposal. The Company
will not, nor will it permit any of its subsidiaries to, nor will it authorize
or permit any of its officers, directors or employees or any investment banker,
financial advisor, attorney, accountant or other representative retained by it
or any of its subsidiaries to, directly or indirectly, (i) solicit, initiate or
encourage (including without limitation by way of furnishing information), or
take any other action designed or reasonably likely to facilitate, any inquiries
or the making of any proposal which constitutes or reasonably may give rise to
any Company Takeover Proposal or (ii) participate in any discussions or
negotiations regarding any Company Takeover Proposal; provided, however, that
if, at any time prior to the date on which Purchaser purchases Shares in the
Offer (the "Offer Completion Date"), the Company Board determines in good faith,
based upon and in conformity with the written opinion of outside counsel, that
failure to do so would result in a breach of its fiduciary duties to
Shareholders under applicable law, the Company may, in response to a Superior
Proposal (as defined below) which was not solicited by it and did not otherwise
result from a breach of any provision of the Merger Agreement, (A) furnish
information with respect to the Company and each of its subsidiaries to any
person pursuant to a customary confidentiality agreement not more favorable to
the recipient of such information than the Confidentiality Agreement (as defined
in the Merger Agreement) and (B) participate in negotiations regarding such
Superior Proposal. "Company Takeover Proposal" means any inquiry, proposal or
offer from any person relating to any direct or indirect acquisition or purchase
of 20% or more of the assets of the Company and its subsidiaries or 20% or more
of any class of equity securities of the Company or any of its subsidiaries, any
tender offer or exchange offer for Shares for any class of equity securities of
the Company or any of its subsidiaries, or any merger, consolidation, business
combination, recapitalization, liquidation, dissolution or similar transaction
involving the Company or any of its subsidiaries, other than the transactions
contemplated by this Agreement, or any other transaction that is intended or
could prevent the completion of the transactions contemplated hereby and
"Superior Proposal" means a bona fide written Company Takeover Proposal that (i)
involves the direct or indirect acquisition or purchase of 50% or more of the
assets of the Company and its subsidiaries or 50% or more of any class of equity
securities of the Company or any of its subsidiaries, (ii) involves payment of
consideration to the Company's Shareholders and other terms and conditions that,
taken as a whole, are superior to the Offer and the Merger, and (iii) is made by
a person reasonably capable of completing such Company Takeover Proposal, taking
into account the legal, financial, regulatory and other aspects of such Company
Takeover Proposal and the person making such Company Takeover Proposal.
The Merger Agreement further provides that, except as permitted therein,
neither the Company Board nor any committee thereof may (i) withdraw or modify,
or propose publicly to withdraw or modify, in a manner adverse to Parent or
Purchaser, the approval or recommendation by the Company Board or such committee
of the Offer, the Merger or the Merger Agreement, (ii) approve or recommend, or
propose publicly to approve or recommend, any Company Takeover Proposal, (iii)
cause or authorize the Company to enter into any letter of intent, agreement in
principle, acquisition agreement or other similar agreement related to any
Company Takeover Proposal (each, a "Company Acquisition Agreement"), or (iv)
release any third party from, or waive any provisions of, any confidentiality or
standstill agreement to which the Company is a party. Notwithstanding the
foregoing, in the event that prior to the Offer Completion Date, the Company
Board determines in good faith, after the Company has received a Superior
Proposal and based upon and in conformity with the written opinion of outside
counsel, that failure to do so would result in a breach of its fiduciary duties
to the Company's Shareholders under applicable law, the Company Board may,
subject to the terms of the Merger Agreement, withdraw or modify its approval or
recommendation of the Offer, the Merger or the Merger Agreement, approve or
27
<PAGE>
recommend a Superior Proposal or terminate the Merger Agreement; provided,
however, that not less than five business days prior to such termination, the
Company will notify Parent of its intention to terminate the Merger Agreement
pursuant to this paragraph and will cause its financial and legal advisers to
negotiate in good faith with Parent and Parent's financial and legal advisers
during such five-day period to make such adjustments in the terms and conditions
of the Merger Agreement as are acceptable to Parent and would cause such Company
Takeover Proposal not to be a Superior Proposal.
In addition to the obligations of the Company described above, the Company
will (i) immediately advise Parent orally and in writing of any request for
information or of any Company Takeover Proposal, the material terms and
conditions of such request or Company Takeover Proposal and the identity of the
Person making such request or Company Takeover Proposal and (ii) keep Parent
informed of the status and details (including amendments or proposed amendments)
of any such request or Company Takeover Proposal.
PARENT SHAREHOLDERS' MEETING. The Merger Agreement provides that Parent
will use its reasonable best efforts to convene an extraordinary general meeting
of its shareholders (the "Parent Shareholders Meeting") to be duly called and
held as soon as reasonably practicable for the purpose of obtaining Parent
Shareholder Approval. Subject to fiduciary obligations and requirements of
applicable law under the terms of the Merger Agreement, the Board of Directors
of the Parent will recommend to its shareholders each of the matters required
for Parent Shareholder Approval and will use reasonable effects to solicit such
approval. Parent Shareholder Approval means, to the extent required by
applicable law and the rules of the London Stock Exchange, the authorization and
approval by a majority of the holders of ordinary shares of Parent of (a) the
Merger Agreement, the Shareholders Agreement, the Subscription Agreement and the
transactions contemplated thereby, (b) the increase in the authorized share
capital of Parent to the extent necessary to facilitate the transactions
contemplated by the Merger Agreement and by the Subscription Agreements, and (c)
the Directors of Parent to allot securities within the meaning of Section 80 of
the Companies Act of 1985 of England and Wales, as amended, to the extent
necessary to facilitate the transactions contemplated by the Merger Agreement
and by the Subscription Agreements.
FINANCING. The Merger Agreement provides that Parent and Purchaser have
available funds and financing and underwriting commitments for funds which are,
in the aggregate, sufficient for the purchase of the outstanding Shares pursuant
to the Offer and the Merger and to perform their respective obligations under
the Merger Agreement. As of the date of the Merger Agreement, such commitments
had not been withdrawn and, to the knowledge of Parent, there were no facts or
circumstances existing as of the date of the Merger Agreement that would result
in any of the conditions to funding such commitments not being satisfied.
FEES AND EXPENSES. The Merger Agreement provides that, except for
Termination Fees described below, all fees and expenses incurred in connection
with the Offer, the Merger, the Merger Agreement and the transactions
contemplated thereby will be paid by the party incurring such fees or expenses,
whether or not the Merger is consummated, except that each of Parent and the
Company will bear and pay one-half of the costs and expenses incurred in
connection with (i) the filing, printing and mailing of the Proxy Statement, the
Schedule 14D-9, the Schedule 14D-1 and the other Offer Documents (including SEC
filing fees) and (ii) the filings of the pre-merger notification and report
forms under the HSR Act (including filing fees).
CONDITIONS TO THE MERGER. Pursuant to the Merger Agreement, the respective
obligations of each party to effect the Merger will be subject to the
fulfillment at or written waiver (as applicable) prior to the Closing Date, of
the following conditions:
(a) Purchaser shall have made, or caused to be made, the Offer and shall
have purchased, or caused to be purchased, the Shares pursuant to the Offer,
provided, that this condition shall be deemed to have been satisfied with
respect to the obligations of Parent and Purchaser to effect the Merger if
Purchaser fails 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;
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(b) The Merger Agreement and the transactions contemplated thereby shall
have been approved in the manner required by applicable law by Shareholders;
and
(c) No order or law enacted, entered, promulgated, enforced or issued by
any court of competent jurisdiction or other governmental entity or other
legal restraint or prohibition preventing the consummation of the Merger
shall be in effect.
The obligations of Parent and Purchaser to effect the Merger will be subject
to the fulfillment at or prior to the Closing Date (or such other date as may be
specified in the Merger Agreement) of the additional condition that the Company
shall have performed in all material respects its agreements contained in the
Merger Agreement required to be performed on or prior to the Closing Date.
TERMINATION AND FEES. The Merger Agreement may be terminated at any time
prior to the Effective Time, whether or not Company Shareholder Approval or
Parent Shareholder Approval has been obtained, by the mutual consent of Parent
and the Company.
The Merger Agreement may be terminated by action of the Board of Directors
of either Parent or the Company, whether or not Company Shareholder Approval or
Parent Shareholder Approval has been obtained, if (a) the Offer shall not have
been consummated by the Outside Date; provided, however, that no party may
terminate the Merger Agreement if such party's failure to fulfill any of its
obligations under the Merger Agreement, shall have been the reason that the
Offer Completion Date shall not have occurred on or before such date, (b) any
governmental entity permanently enjoined, restrained or otherwise prohibited the
consummation of the Offer, the Merger or any of the other transactions
contemplated by the Merger Agreement, or (c) the Offer expires or is terminated
or withdrawn pursuant to its terms without any Shares being purchased as a
result of the failure of any of the Offer Conditions to be satisfied prior to
the Expiration Date or any extension thereof, provided that any such termination
will not be effective unless and until the Company shall have paid to Purchaser
the fees and expenses described below.
The Merger Agreement further provides that it may be terminated at any time
prior to the Offer Completion Date, whether or not Parent Shareholder Approval
has been obtained, by action of the Company Board, if (a) there has been a
material breach by Parent or Purchaser of any representation or warranty
contained in the Merger Agreement which is not curable or is not cured by the
Outside Date and such breach had or could reasonably be likely to have a Parent
Material Adverse Effect (as defined in the Merger Agreement), (b) there has been
a material breach of any of the covenants set forth in the Merger Agreement on
the part of Parent or Purchaser, which breach is not curable or is not cured
within 15 calendar days after written notice of such breach is given, or (c) in
accordance with the Company Acquisition Agreement provisions of the Merger
Agreement, provided that any such termination will not be effective unless and
until the Company pays to Purchaser the fees and expenses described below.
In addition, Parent may terminate the Merger Agreement at any time prior to
the Offer Completion Date, whether or not Parent Shareholder Approval has been
obtained, if (a) there has been a material breach by the Company of any
representation or warranty contained in the Merger Agreement which is not
curable or is not cured by the Outside Date and such breach had or could
reasonably be likely to have a Company Material Adverse Effect (as defined in
the Merger Agreement), (b) the Company materially breached any of the covenants
set forth in the Merger Agreement on the part of the Company, which breach is
not curable or is not cured within 15 calendar days after written notice of such
breach is given to the Company, (c) the Company Board (i) withdrew or modified
in a manner adverse to Parent or Purchaser its approval or recommendation of the
Merger Agreement, the Offer or the Merger or failed to reconfirm its approval or
recommendation within five business days after Parent's written request to do
so, (ii) approved or recommended, or proposed publicly to approve or recommend,
a third-party Company Takeover Proposal to Shareholders, (iii) caused the
Company to take any action that would have constituted a breach of the Company
Acquisition Agreement prohibitions contained in the Merger Agreement, including
without limitation authorizing the Company to enter into a Company Acquisition
Agreement, (iv) approved the breach of the Company's obligation under the
Company Acquisition
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<PAGE>
Agreement prohibitions, or (v) resolved to take any of the foregoing actions,
(d) 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 shall have become the beneficial owner of more than 25% of the
outstanding Shares (either on a primary or fully diluted basis), or (e) Parent
Shareholder Approval shall not have been obtained at the Parent Shareholders
Meeting, provided that any termination described in this paragraph will not be
effective unless and until the Company shall have paid to Purchaser the fees and
expenses described below.
The Merger Agreement provides that in the event of termination of the Merger
Agreement, certain obligations of the parties to the Merger Agreement will
terminate. In the event of the termination of the Merger Agreement, nothing
therein will prejudice the ability of the non-breaching party to seek damages
from any other party for any prior deliberate or willful breach of the Merger
Agreement, including without limitation attorneys' fees and the right to pursue
any remedy at law or in equity with respect thereto. Furthermore, the Merger
Agreement provides that the Company will pay to Purchaser an amount equal to
$2.0 million (the "Termination Fee") in any of the following circumstances: (i)
the Merger Agreement is terminated at such time that the Merger Agreement is
terminable pursuant to paragraphs 5(c) or 6(c), above; (ii) the Merger Agreement
is terminated by either Parent or the Company pursuant to paragraph 3 or 4,
above, and at the time of such termination each of the following is true: (1)
the Minimum Condition shall not have been satisfied; (2) the Company shall not
have the right to terminate the Merger Agreement pursuant to paragraph 5(a) or
5(b), above; and (3) the Listing Condition and the Shareholder Approval
Condition shall have been satisfied; or (iii) the Merger Agreement is terminated
by Parent pursuant to paragraph 6(a), 6(b) or 6(d), above, and each of the
following occurs: (A) prior to such termination, a Company Takeover Proposal is
(x) publicly disclosed or has been made directly to Shareholders generally or
(y) any person (including without limitation the Company or any of its
subsidiaries) publicly announces an intention (whether or not conditional) to
make such a Company Takeover Proposal and (B) prior to the termination of the
Merger Agreement or within 12 months after the termination thereof, the Company
or a subsidiary thereof enters into a Company Acquisition Agreement or closes a
Company Takeover Proposal (such termination events, collectively, a "Takeover
Proposal Termination").
If the Merger Agreement is terminated in circumstances where a Termination
Fee is then payable, then in any such case the Company will promptly, but in no
event later than two business days after submission of a request therefor, pay
to Parent an amount equal to Parent's documented expenses; provided, however,
that in no event will the total of the expenses paid by the Company ("Expenses")
plus any Termination Fee paid by the Company exceed $7 million. "Expenses" means
all out-of-pocket fees, costs and other expenses incurred or assumed by Parent
or Purchaser or any of their affiliates or incurred on their behalf in
connection with the Merger Agreement or any of the transactions contemplated
thereby, including but not limited to in connection with the negotiation,
preparation, execution and performance of the Merger Agreement, the structuring
and financing of the Offer, the Merger and the other transactions contemplated
by the Merger Agreement, or any commitments or agreements relating to such
financing, including, without limitation, fees, expenses and selling and
underwriting commissions or other amounts payable to any banks, investment
banking firms, underwriters, other financial institutions and other persons and
their respective agents and counsel for arranging, committing to provide or
providing any financing for the Offer, the Merger and any other transactions
contemplated by the Merger Agreement or structuring, negotiating or advising
with respect to such transactions or financing, and all fees and expenses of
counsel, accountants, experts and computer, environmental, actuarial, insurance
and other consultants to Parent or Purchaser.
If a Termination Fee is payable pursuant to a Takeover Proposal Termination,
then the Company will pay the Termination Fee and Expenses to Parent upon the
signing of a Company Acquisition Agreement or, if no Company Acquisition
Agreement is signed, then at the closing (and as a condition to the closing) of
a Company Takeover Proposal. Notwithstanding any other provision of the Merger
Agreement, (i) in no event may the Company enter into a Company Acquisition
Agreement unless, prior thereto, the Company has paid any amount due under the
terms described above or which will become due under the terms
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<PAGE>
described above, (ii) the Company may not terminate the Merger Agreement under
paragraph 5(c), above, unless prior thereto it has paid any amount due under the
Merger Agreement to Parent, (iii) any amount due in the event that the Merger
Agreement is terminated under paragraph 5(c) or 6(c) and in circumstances in
which the Company has not entered into a Company Acquisition Agreement will be
payable promptly, but in no event more than two business days after request
therefor is made, and (iv) any amount due under the Merger Agreement will be
paid on the date due in immediately available funds wire transferred to the
account designated by the person entitled to such payment.
The Merger Agreement further provides that the termination fees and expenses
provisions thereof will survive any termination of the Merger Agreement.
AMENDMENT. The Merger Agreement may be amended by the parties thereto, by
action taken by their respective Boards of Directors, at any time before or
after approval of matters presented in connection with the Merger by
Shareholders of the Company but after any such Shareholder approval, no
amendment will be made that by law requires the further approval of such
Shareholders without obtaining such further approval. The Merger Agreement may
not be amended except by an instrument in writing signed on behalf of each of
the parties thereto.
ASSIGNMENT. Neither the Merger Agreement nor any of the rights, interests
or obligations thereunder may be assigned by any of the parties thereto (whether
by operation of law or otherwise) without the prior written consent of the other
parties. Subject to the preceding sentence, the Merger Agreement will be binding
upon and will inure to the benefit of the parties thereto and their respective
successors and assigns. Notwithstanding anything contained in the Merger
Agreement to the contrary, nothing in the Merger Agreement, expressed or
implied, is intended to confer on any person other than the parties thereto or
their respective heirs, successors, executors, administrators and assigns any
rights, remedies, obligations or liabilities under or by reason of the Merger
Agreement.
TIMING. The exact timing and details for the Merger will depend upon legal
requirements and a variety of other factors, including the number of Shares
acquired by Purchaser pursuant to the Offer. Although Purchaser has agreed to
cause the Merger to be consummated on the terms set forth above, there can be no
assurance as to the timing of the Merger.
CONFIDENTIALITY AND STANDSTILL AGREEMENT.
The Company and Parent entered into a Confidentiality and Standstill
Agreement which constitutes part of the entire agreement between the parties.
The Company and Parent agreed to furnish certain confidential non-public
information to each other in contemplation of a possible business combination
and they agreed to use such information solely for the sole purpose of
evaluating a possible business transaction and that such information would be
kept confidential unless required by law to disclose it. In consideration of the
exchange of confidential non-public information, Parent and the Company agreed
that until June 30, 2000, neither party would acquire, directly or indirectly,
any securities of the other or any subsidiaries of the other party or seek to
vote or influence the voting of the securities of the other party without the
prior written consent of the Board of Directors of the other party. The parties
further agreed not to solicit employees, customers, suppliers or competitors of
the other party or their subsidiaries (other than customer, supplier or
competitor contacts in the ordinary course of business) until the earlier of the
consummation of a business combination between the parties or June 30, 2000.
Parent and the Company agreed that monetary damages in the event of a breach
would be insufficient and a non-breaching party shall be entitled to equitable
relief. The Merger Agreement amends the standstill provisions of the
Confidentiality Agreement to permit Parent, Purchaser or any of their respective
affiliates or representatives to (a) effect any transaction permitted or
contemplated by the Merger Agreement or the Shareholders Agreement and (b) take
any action otherwise prohibited thereby (i) in the event that another person
publicly announces a Company Takeover Proposal and (ii) after the Offer
Completion Date.
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THE SHAREHOLDERS AGREEMENT.
In connection with the execution of the Merger Agreement, the Parent,
Purchaser and Management Shareholders entered into a Shareholders Agreement. The
following is a summary of the material terms of the Shareholders Agreement. This
summary is not a complete description of the terms and conditions of the
Shareholders Agreement and it is qualified in its entirety by reference to the
full text of the Shareholders Agreement, which is incorporated by reference and
filed with the SEC as an exhibit to the Schedule 14D-1. The Shareholders
Agreement may be examined at, and copies obtained from, the offices of the SEC
as set forth in Section 7 above. All terms not defined herein have the meanings
ascribed to such terms in the Shareholders Agreement or, if not in the
Shareholders Agreement, in the Merger Agreement.
TENDER OF SHARES. Upon the terms and subject to the conditions of the
Shareholders Agreements, each Management Shareholder has agreed to validly
tender pursuant to and in accordance with the terms of the Offer, not later than
the tenth business day after commencement of the Offer, all of its Management
Shareholder Subject Shares (as defined in the Shareholders Agreement). The
Shareholders Agreement will terminate upon the purchase of all the Subject
Shares by Purchaser pursuant to the Offer.
VOTING OF SHARES. During the Voting Agreement Period (as defined in the
Shareholders Agreement), each Management Shareholder has agreed to vote (or
cause to be voted) all of its Subject Shares (i) in favor of the adoption of the
Merger Agreement and any other matter necessary or appropriate for the
consummation of the transactions contemplated by the Merger Agreement, and (ii)
against any Adverse Proposal (as defined in the Shareholders Agreement), and
against any action or agreement that would be expected to make any
representation or warranty contained in the Shareholder Agreement untrue or
incorrect or have the effect of impairing the ability of a Management
Shareholder to perform his obligations under the Shareholder Agreement or
prevent or delay the consummation of the transactions contemplated thereby.
IRREVOCABLE PROXY. Each Management Shareholder has appointed Parent and
Parent's Designees as proxies to vote all of such Management Shareholder's
Subject Shares or grant a written consent in respect of such Subject Shares to
secure the performance of its duties under the Shareholders Agreement. Each of
these proxies is coupled with an interest and is irrevocable. For Subject Shares
where a Management Shareholder is the beneficial but not the record owner, such
Management Shareholder will use his best efforts to cause any record owner of
such Subject Shares to grant to Parent a proxy to the same effect as contained
herein.
RESTRICTION ON TRANSFER OF SUBJECT SHARES, PROXIES AND
NONINTERFERENCE. Each Management Shareholder has agreed not to directly or
indirectly, (a) except pursuant to the terms of the Shareholders Agreement and
the Merger Agreement, 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,
transfer, tender, pledge, encumbrance, assignment or other disposition of, any
or all of its Subject Shares, (b) except pursuant to the terms of the
Shareholders Agreement, grant any proxies or powers of attorney, deposit any of
its Subject Shares into a voting trust or enter into a voting agreement with
respect to such Subject Shares, or (c) except within the terms of a prior
written request of Parent, exercise any of the Subject Options (as defined in
the Shareholders Agreement), or (d) take any action that would reasonably be
expected to make any representation or warranty contained therein untrue or
incorrect or have the effect of impairing the ability of such Management
Shareholder to perform its obligations under the Shareholders Agreement or
preventing or delaying the consummation of any of the transactions contemplated
thereby.
NO SOLICITATION. Each Management Shareholder has agreed not to take, or
authorize or permit any of its officers, directors, employees, agents or
representatives (including any investment banker, financial adviser, attorney or
accountant) to take, any action that the Company would be prohibited from taking
under the "no solicitation" provisions of the Merger Agreement.
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In connection with the Merger, each Management Shareholder waived any
appraisal or dissenter's rights that he or she may have. The Management
Shareholders agreed not to exercise any purchase rights or rights of first
refusal with respect to any Shares.
TERMINATION. The Shareholders Agreement may be terminated in any one of the
following circumstances: (i) upon the purchase of all of the Subject Shares
pursuant to the Offer, or (ii) by the mutual consent of the Company Boards, the
Parent Board and Shareholders representing a majority of the Subject Shares
subject to the Management Shareholders Agreement.
THE SUBSCRIPTION AGREEMENT.
In connection with the execution of the Merger Agreement, Parent and each of
Ralph R. Whitney, Jr., Bruce D. Atkinson, Jeffrey G. Wood, Michel
Hauser-Kauffmann, Forrest E. Crisman, Jr. and Glenn Scolnik, officers and
directors of the Company (the "Investors"), entered into a Subscription
Agreement, dated February 22, 1999 (the "Subscription Agreement"). The following
is a summary of the material terms of the Subscription Agreement. This summary
is not a complete description of the terms and conditions of the Subscription
Agreement and is qualified in its entirety by reference to the full text of the
Subscription Agreement, which is incorporated by reference and filed with the
SEC as an exhibit to the Schedule 14D-1. The Subscription Agreement may be
examined at, and copies obtained from, the offices of the SEC as set forth in
Section 7 above. All terms not defined herein have the meanings ascribed to such
terms in the Subscription Agreement or, if not in the Subscription Agreement, in
the Merger Agreement.
SUBSCRIPTION FOR SHARES. Under the Subscription Agreement, upon the
consummation of the Offer, each Investor has agreed to invest a portion of the
cash consideration payable to him (or to certain accounts for his benefit) in
the Offer in Ordinary Shares of Parent ("Parent Shares"). The number of Parent
Shares that each Investor has agreed to purchase will be determined by dividing
the following "Investment Amounts" by the Per Share Purchase Price, which is
defined below:
<TABLE>
<CAPTION>
INVESTOR INVESTMENT AMOUNT
- -------------------------------------------------------------------------- ------------------
<S> <C>
R. Whitney................................................................ $ 2,732,725
B. Atkinson............................................................... $ 1,310,987
J. Wood................................................................... $ 873,991
M. Hauser-Kauffmann....................................................... $ 349,566
F. Crisman................................................................ $ 1,366,366
G. Scolnik................................................................ $ 1,366,366
------------------
$ 8,000,001
------------------
------------------
</TABLE>
In the event the division of an Investment Amount by the Per Share Purchase
Price gives rise to a fractional Parent Share, the applicable Investment Amount
will be reduced by an amount equal to such fractional Parent Share multiplied by
the Per Share Purchase Price.
The "Per Share Purchase Price" will be equal to the higher of (i) the middle
market price of a Parent Share, as derived from the Official List of the London
Stock Exchange, on the last business day in London immediately prior to the
Subscription Closing Date (defined below), and (ii) 80% of the Adjusted
Pre-Offer Market Price. The "Adjusted Pre-Offer Market Price" means the middle
market price of a Parent Share, as derived from the Official List of the London
Stock Exchange on the last business day (the "Pre-Offer Date") in London
immediately prior to the date on which the Offer is publicly announced by
Parent, as adjusted to reflect the Rights Offering. The Adjusted Pre-Offer
Market Price will be calculated by (i) adding (a) Parent's aggregate market
capitalization on the Pre-Offer Date, plus (b) the aggregate proceeds of the
Rights Offering, and (ii) dividing the sum of (a) and (b) by the sum of the
number of Parent Shares outstanding on the Pre-Offer Date and the number of
Parent Shares sold in the Rights Offering.
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The closing of the transactions contemplated by the Subscription Agreement
(the "Subscriptions") will take place on the next business day (the
"Subscription Closing Date") following the payment by Parent or its subsidiary
to the Investors of the cash consideration payable to them upon the consummation
of the Offer. Each Investor has agreed that, to accomplish the payment of his
Investment Amount, Parent will withhold from the cash consideration payable to
him in connection with the Offer an amount equal to his Investment Amount. The
Subscription Agreement provides for an adjustment to the type and number or
amount of Parent Shares and the Per Share Purchase Price payable therefor in the
event of any change in the capital stock of Parent by reason of a stock
dividend, subdivision, reclassification, recapitalization, split, combination,
exchange of shares, extraordinary distribution or similar transaction.
COVENANTS OF INVESTORS. Each Investor has agreed to comply with one of the
following two restrictions on transfer and resale of the Parent Shares: (i) for
a period of 18 months from the Subscription Closing Date, such Investor will not
sell, transfer or otherwise dispose of his legal or beneficial interest in any
of the Parent Shares issued to him pursuant to the Subscription Agreement or any
further shares allotted and issued by way of capitalization or bonus issue in
respect of or with reference to such Parent Shares; or (ii) (a) for a period of
12 months from the Subscription Closing Date, such Investor will not sell,
transfer or otherwise dispose of his legal or beneficial interest in any of the
Parent Shares issued to him pursuant to the Subscription Agreement or any
further shares allotted and issued by way of capitalization or bonus issue in
respect of or with reference to such Parent Shares, (b) on the first anniversary
of the Subscription Closing Date, or if such day is not a business day in
London, the next following business day in London, such Investor shall be
entitled to sell, transfer or otherwise dispose of the legal and/or beneficial
interest in not more than half of his then holdings of Parent Shares, and (c) if
such Investor sells, transfers or disposes of any of his Parent Shares in
accordance with clause (b), he shall not be entitled to sell, transfer or
otherwise dispose of the legal or beneficial interest in the remaining Parent
Shares held by him until the second anniversary of the Subscription Closing
Date.
Further, each Investor has agreed that if he wishes to sell, transfer or
otherwise dispose of any of his Parent Shares within two years from the
Subscription Closing Date, he must give prior written notice to Parent's brokers
of such intention. The notice must set out the number of Parent Shares intended
to be sold, transferred or otherwise disposed of. Parent's brokers will then be
entitled to purchase or procure purchasers for all or any of the Parent Shares
desired to be sold. To the extent Parent's brokers do not promptly so purchase
or procure purchasers for the Parent Shares desired to be sold, the selling
Investor may sell the remaining Parent Shares within 10 business days
thereafter.
If Parent registers its Parent Shares with the SEC and those shares are
publicly traded on a national securities exchange or listed for quotation on the
Nasdaq in the United States, the Investors may, subject to the restrictions
described above, sell their Parent Shares in the United States in compliance
with United States securities laws. Otherwise, each Investor has agreed that in
no event at any time will he sell, transfer or otherwise dispose of any interest
in his Parent Shares to a person or entity located in the United States. This
restriction will not, however, prevent any transfer to the personal
representative or heirs of such Investor, but such personal representative or
heirs will be bound by all of the covenants of the applicable Investor.
AMENDMENT AND TERMINATION. The Subscription Agreement may be amended only
by an instrument in writing signed on behalf of the party against whom such
amendment is sought to be enforced. The Subscription Agreement will terminate
upon the termination of the Merger Agreement in accordance with its terms.
ATKINSON AND WOOD EMPLOYMENT AGREEMENTS.
The Company has entered into employment agreements with Bruce D. Atkinson
and Jeffrey G. Wood (each, an "Employment Agreement"). If the Offer and the
Merger are consummated, these Employment Agreements will become agreements of
the Surviving Corporation. The following is a summary of the
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material terms of the Employment Agreements. This summary is not a complete
description of the terms and conditions of the Employment Agreements and is
qualified in its entirety by reference to the full texts of the Employment
Agreements, which are incorporated by reference and filed with the SEC as
exhibits to the Schedule 14D-1. The Employment Agreements may be examined at,
and copies obtained from, the offices of the SEC as set forth in Section 7
above. All terms not defined herein have the meanings ascribed to such terms in
the Employment Agreements.
TERM, EMPLOYMENT AND DUTIES. Subject to the provisions for termination
described below, the term of the Employment Agreements will be two years,
commencing on the date of the acquisition by Parent of a controlling interest in
the voting securities of the Company (the "Employment Date"). The Employment
Agreements provide that they will be renewed automatically for succeeding
periods of one year each on the same terms and conditions as contained therein
unless one party notifies the other of his or its intent not to renew the
Employment Agreement.
Under the Employment Agreements, the Company will employ Mr. Atkinson as the
President and Chief Executive Officer of the Company and Mr. Wood as the Chief
Financial Officer of the Company. Under Mr. Wood's Employment Agreement, if Mr.
Atkinson vacates his position with the Company, Mr. Wood will receive first
consideration by the Company Board as Mr. Atkinson's successor, subject to Mr.
Atkinson's endorsement. Mr. Atkinson and Mr. Wood will also be nominated to
serve as members of the Company Board and will hold other positions as the
Company may reasonably designate from time to time. The Employment Agreements
will supersede any other employment agreements or arrangements between the
Company and each of Mr. Atkinson and Mr. Wood.
COMPENSATION. The Company will pay Mr. Atkinson $264,600 per year and Mr.
Wood $176,400 per year and each will receive a bonus on or before the end of the
twelfth month following the close of Parent's fiscal year on April 30, 2000. The
amount of the bonus will not be less than $168,000 with respect to Mr. Atkinson
and $112,000 with respect to Mr. Wood. Thereafter, Mr. Atkinson and Mr. Wood
will each receive a bonus for each succeeding fiscal year calculated in
accordance with the executive bonus program of the Company. Mr. Atkinson's and
Mr. Wood's bonus opportunity under such executive bonus program will be
equivalent to the annual bonus opportunity available to similarly situated
executives of Parent.
TERMINATION AND TERMINATION BENEFITS. The Employment Agreements are
terminable by either party at any time with or without cause upon written notice
to that effect.
If Mr. Atkinson's Employment Agreement is terminated by Mr. Atkinson without
cause or by the Company with cause, the Company's only obligation is to pay Mr.
Atkinson his salary through the termination date. If the Employment Agreement is
terminated without cause by the Company or with cause by Mr. Atkinson during the
twenty-four month period following the Employment Date, the Company will pay Mr.
Atkinson: (i) twice his annual salary in effect at the date of termination; (ii)
twice the average annual bonus actually paid to him for the two preceding fiscal
year periods; and (iii) an amount equal to twice the average amount actually
paid by the Company for Mr. Atkinson's benefits for the two preceding years;
provided that if the sum of the foregoing items (i), (ii) and (iii) is less than
twice Mr. Atkinson's total base salary, bonus and benefits paid for calendar
year 1998 (the "Atkinson Baseline Benefit"), Mr. Atkinson shall instead be paid
the Atkinson Baseline Benefit. If Mr. Atkinson's Employment Agreement is
terminated without cause by the Company or with cause by Mr. Atkinson at any
time following the twenty-four month period following the Employment Date, the
Company will pay Mr. Atkinson the greater of (x) one-half of the amounts
specified in the preceding sentence, or (y) one-half the Atkinson Baseline
Benefit.
If Mr. Wood's Employment Agreement is terminated by Mr. Wood without cause
or by the Company with cause, the Company's only obligation is to pay Mr. Wood
his salary through the termination date. Except as provided in the next
sentence, if Mr. Wood's Employment Agreement is terminated without cause by the
Company or with cause by Mr. Wood, the Company will pay Mr. Wood: (i) twice his
annual
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salary in effect at the date of termination; (ii) twice the average annual bonus
actually paid to him for the two preceding fiscal year periods; and (iii) an
amount equal to twice the average amount actually paid by the Company for Mr.
Wood's benefits for the two preceding years; provided that if the sum of the
foregoing items (i), (ii) and (iii) is less than twice Mr. Wood's total base
salary, bonus and benefits paid for calendar year 1998 (the "Wood Baseline
Benefit"), Mr. Wood shall instead be paid the Wood Baseline Benefit. If the
Employment Agreement is terminated (x) without cause by the Company or with
cause by Mr. Wood at any time following Mr. Wood's first full year of service as
President and Chief Executive Officer of the Company or (y) with cause by Mr.
Wood following his decision not to accept appointment as President and Chief
Executive Officer of the Company, the Company will pay Mr. Wood the greater of
(x) one-half of the amounts specified in the preceding sentence, or (y) one-half
the Wood Baseline Benefit, which payment will be in lieu of any payment
otherwise payable pursuant to the provision described in the preceding sentence.
NON-SOLICITATION AND NON-COMPETITION. The Employment Agreements provide
that neither Mr. Atkinson nor Mr. Wood will compete with the Company or hold a
material interest in a business that competes with the Company for a period of
two years after the termination of his employment with the Company. The
Employment Agreements also provide that neither Mr. Atkinson nor Mr. Wood will
solicit for employment any person employed in the business of the Company.
KAUFFMANN EMPLOYMENT AGREEMENT.
In contemplation of the Offer and the Merger, Realisations et Diffusion pour
l'Industrie ("RDI"), a wholly owned subsidiary of the Company located in
Villepinte, France, has entered into an employment agreement with Michel
Hauser-Kauffmann (the "Kauffmann Agreement"). The Kauffmann Agreement will be
effective upon the occurrence of the Effective Time. The following is a summary
of the material terms of the Kauffmann Agreement. This summary is not a complete
description of the terms and conditions of the Kauffmann Agreement and is
qualified in its entirety by reference to the full text of the Kauffmann
Agreement, which is incorporated by reference and filed with the SEC as an
exhibit to the Schedule 14D-1. The Kauffmann Agreement may be examined at, and
copies obtained from, the offices of the SEC as set forth in Section 7 above.
All terms not defined herein have the meanings ascribed to such terms in the
Kauffmann Agreement.
TERM, EMPLOYMENT AND DUTIES. RDI will continue to employ Mr. Kauffmann
pursuant to the National Collective Bargaining Agreement for Engineers and
Executives in the Metallurgical Industries (the "Collective Bargaining
Agreement"), as Directeur Commercial with a position of Executive for an
indefinite term. In this capacity, Mr. Kauffmann will be responsible for the
marketing policy, quality, communication, technical and financial questions
relating to RDI. The Kauffmann Agreement provides that a termination by RDI will
become effective six months after the notice of such termination, except
termination by RDI for willful misconduct, which will be effective immediately.
The Kauffmann Agreement supersedes and cancels any other employment agreement or
arrangement between RDI and Mr. Kauffmann and replaces such agreement or
arrangement in its entirety.
COMPENSATION. Mr. Kauffmann will receive an annual global gross salary of
FRF 1,126,125. RDI may, at any time during the term of the Kauffmann Agreement,
but without any obligation, pay additional sums to Mr. Kauffmann by way of
bonuses or otherwise. Notwithstanding the foregoing, RDI will pay Mr. Kauffmann
a bonus of 50% of his salary earned from January 1, 1999 through April 30, 2000.
This bonus will be paid no later than July 15, 2000. In the fiscal year 2001 and
beyond, Mr. Kauffmann will participate in Parent's executive level bonus plan.
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TERMINATION AND TERMINATION BENEFITS. In the event that RDI gives notice of
dismissal to Mr. Kauffmann during the two-year period following the date of the
Kauffmann Agreement for any reason other than willful misconduct, Mr. Kauffmann
will be entitled to a lump sum indemnity, in lieu of the dismissal indemnity
provided by the Collective Bargaining Agreement and in lieu of damages, equal to
two years of compensation and bonus. If, during such two-year period, either (i)
Bruce Atkinson is terminated for reasons other than for cause from his position
as Chief Executive Officer and President of the Company and Jeffrey Wood is not
offered to replace Mr. Atkinson in such position, or (ii) Bruce Atkinson is
revoked from his office of permanent representative of RDI Management Company
Inc. and Jeffrey Wood or Mr. Kauffmann or an individual supported by Mr.
Kauffmann is not offered to replace Mr. Atkinson in such position, then Mr.
Kauffmann may terminate the Kauffmann Agreement and be entitled to the indemnity
described in the immediately preceding sentence. The compensation and bonus to
be used to determine the amount of the lump sum indemnity will be the greater of
(x) the amount of the compensation including benefits in kind and bonus received
by Mr. Kauffmann from January 1 through December 31, 1998 or (y) the amount of
the compensation including benefits in kind and bonus received by Mr. Kauffmann
during the 12 months preceding dismissal or resignation, as the case may be. If
notice of dismissal is given after the two-year period following the date of the
Kauffmann Agreement, Mr. Kauffmann will receive indemnity equal to one year of
compensation and bonus. In the event that RDI dismisses Mr. Kauffmann for
willful misconduct, Mr. Kauffmann will not be entitled to any indemnity
whatsoever. In the event that RDI dismisses Mr. Kauffmann for gross misconduct,
Mr. Kauffmann will be entitled to the indemnity described in either the first
sentence of this paragraph or the immediately preceding sentence, as the case
may be.
NON-SOLICITATION AND NON-COMPETITION. Mr. Kauffmann will undertake for a
period of one year, renewable once, following the termination of the Kauffmann
Agreement for any reason to refrain from engaging in any activity that competes
with RDI or the group of companies to which it belongs. In addition, Mr.
Kauffmann has agreed not to employ or attempt to employ RDI employees or solicit
RDI customers after termination of the Kauffmann Agreement. These noncompetition
and nonsolicitation undertakings are geographically limited to France, Italy,
the United Kingdom and Germany. In consideration for his commitment not to
compete, Mr. Kauffmann will receive after the termination of the Kauffmann
Agreement a monthly indemnity equal to 60% of his average monthly remuneration
during his last 12 months employed by RDI.
OTHER MATTERS.
GOING PRIVATE TRANSACTIONS. Rule 13e-3 under the Exchange Act is applicable
to certain "going-private" transactions. Purchaser does not believe that Rule
13e-3 will be applicable to the Merger, unless, among other things, the Merger
is completed more than one year after termination of the Offer. If applicable,
Rule 13e-3 would require, among other things, that certain financial information
regarding the Company and certain information regarding the fairness of the
Merger and the consideration offered to minority Shareholders be filed with the
SEC and disclosed to minority Shareholders prior to consummation of the Merger.
12. DIVIDENDS AND DISTRIBUTIONS
The Merger Agreement provides that if, between the date of the Merger
Agreement and the Effective Time, the outstanding Shares are changed into a
different number of shares or a different class by reason of any stock dividend,
subdivision, reclassification, recapitalization, split, combination or exchange
of shares, the Merger Consideration will be correspondingly adjusted on a
per-share basis to reflect such stock dividend, subdivision, reclassification,
recapitalization, split, combination or exchange of shares.
The Merger Agreement further provides that, during the period from the date
of the Merger Agreement to the Effective Time, the Company will not, and will
not permit any of its subsidiaries to, without the prior written consent of
Parent: (i) other than the Company's dividend of $0.02 per Share
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declared on January 22, 1999, which is payable on March 19, 1999 to holders of
record on February 26, 1999, and dividends and distributions (including
liquidating distributions) by a direct or indirect wholly owned subsidiary of
the Company to its parent, or by a subsidiary that is partially owned by the
Company or any of its subsidiaries, provided that the Company or any such
subsidiary receives or is to receive its proportionate share thereof, (A)
declare, set aside or pay any dividends on, or make any other distributions in
respect of, any of its capital stock, (B) split, combine or reclassify any of
its capital stock or issue or authorize the issuance of any other securities in
respect of, in lieu of or in substitution for shares of its capital stock, or
(C) purchase, redeem or otherwise acquire any shares of capital stock of the
Company or any of its subsidiaries or any other securities thereof or any
rights, warrants or options to acquire any such shares or other securities, and
(ii) except for the issuance of Shares pursuant to the exercise of Options that
are outstanding on the Measurement Date (as defined in the Merger Agreement) or
pursuant to the Company's Employee Stock Purchase Plan to the extent Shares have
been paid for with payroll deductions at or prior to the date of the Merger
Agreement, issue, deliver, sell, pledge or otherwise encumber any shares of its
capital stock, any other voting securities or any securities convertible into,
or any rights, warrants or options to acquire, any such shares, voting
securities or convertible securities.
Pursuant to the terms of the Merger Agreement, the Company is prohibited
from taking any of the actions described in the preceding paragraph and nothing
in this Offer to Purchase shall constitute a waiver by Purchaser or Parent of
any of its rights under the Merger Agreement or a limitation of remedies
available to Purchaser or Parent for any breach of the Merger Agreement,
including termination of the Merger Agreement.
13. EFFECT OF THE OFFER ON THE MARKET FOR THE SHARES, STOCK EXCHANGE LISTING AND
EXCHANGE ACT REGISTRATION, AND MARGIN SECURITIES.
The purchase of Shares pursuant to the Offer will reduce the number of
Shares that might otherwise trade publicly and may reduce the number of holders
of Shares, both of which could adversely affect the liquidity and market value
of the remaining Shares held by Shareholders other than Purchaser. Purchaser
cannot predict whether the reduction in the number of Shares that might
otherwise trade publicly would have an adverse or beneficial effect on the
market price for, or marketability of, the Shares or whether such reduction
would cause future market prices to be greater or less than the Per Share
Amount.
STOCK EXCHANGE LISTING. Depending upon the number of Shares purchased
pursuant to the Offer, the Shares may no longer meet the requirements of the
Nasdaq for continued listing and may, therefore, be delisted from such exchange.
According to the Nasdaq's published guidelines, the Nasdaq would consider
delisting the Shares if, among other things, the number of publicly held Shares
was less than 1,100,000, there were less than 400 round lot holders (as defined
in Section 4200(a)(30) of the NASD Manual--the Nasdaq Stock Market) of the
Shares or the aggregate market capitalization of the Company was less than $15.0
million. If, as a result of the purchase of Shares pursuant to the Offer, the
Shares no longer meet the requirements of the Nasdaq for continued listing and
the listing of Shares is discontinued, the market for the Shares will be
adversely affected.
The Company has advised Purchaser that, as of February 22, 1999, there were
8,325,967 Shares issued and outstanding. Purchaser intends to cause the Company
to seek to delist the Shares if it acquires control of the Company.
EXCHANGE ACT REGISTRATION. The Shares are currently registered under the
Exchange Act. Such registration may be terminated upon application of the
Company to the SEC if the Shares are not listed on a national securities
exchange and there are fewer than 300 record holders of the Shares. The
termination of the registration of the Shares under the Exchange Act would
substantially reduce the information required to be furnished by the Company to
holders of Shares and to the SEC and would make certain of the provisions of the
Exchange Act, such as the short-swing profit recovery provisions of Section
16(b) and the requirement of furnishing a proxy statement in connection with
Shareholders' meetings pursuant to
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Section 14(a), no longer applicable to the Shares. Furthermore, if the Shares
are no longer registered under the Exchange Act, the requirements of Rule 13e-3
under the Exchange Act with respect to "going private" transactions would no
longer be applicable to the Company. In addition, "affiliates" of the Company
and persons holding "restricted securities" of the Company may be deprived of
the ability to dispose of such securities pursuant to Rule 144 promulgated under
the Securities Act of 1933, as amended. Purchaser believes that the purchase of
the Shares pursuant to the Offer may result in the Shares becoming eligible for
termination of registration under the Exchange Act, and it is the intention of
Purchaser to cause the Company to make an application for termination of
registration of the Shares as soon as possible after successful completion of
the Offer if the Shares are then eligible for such termination.
MARGIN REGULATIONS. The Shares are currently "margin securities," as such
term is defined under the rules of the Board of Governors of the Federal Reserve
System (the "Federal Reserve Board"), which has the effect, among other things,
of allowing brokers to extend credit on the collateral of such securities.
Depending upon factors similar to those described above regarding listing and
market quotations, following the Offer, it is possible that the Shares might no
longer constitute "margin securities" for the purposes of the Federal Reserve
Board's margin regulations and, therefore, could no longer be used as collateral
for loans made by brokers.
If registration of the Shares under the Exchange Act were terminated, the
Shares would no longer be "margin securities." Purchaser intends to seek to
cause the Company to terminate the registration of the Shares under the Exchange
Act as soon after consummation of the Offer as the requirements for termination
of the registration of the Shares are met.
14. CERTAIN CONDITIONS OF 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) under the Exchange Act (relating
to Purchaser's obligation to pay for or return tendered Shares promptly after
expiration or termination of the Offer), to pay for any Shares, and (subject to
any such rules or regulations) may postpone the acceptance for payment or
payment for any Shares tendered, and subject to the terms of the Merger
Agreement, may amend or terminate the Offer (whether or not any Shares have
theretofore been purchased or paid for pursuant to the Offer) (i) unless the
following conditions have been satisfied: (a) there have been validly tendered
and not withdrawn prior to the Expiration Date a number of Shares which
represent 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, 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 Shares outstanding, together with the number of Shares the Company is then
required to issue pursuant to obligations outstanding at that date under
employee stock option or other benefit plans or otherwise), (b) any waiting
periods applicable to the Offer or the Merger under the HSR Act shall have
expired or been terminated prior to the expiration of the Offer, and, (c) the
admission of the convertible unsecured loan stock to be issued by First
Technology Funding plc, a wholly owned subsidiary of Parent, as necessary to
facilitate the transactions contemplated by the Merger Agreement to the Official
List of the London Stock Exchange shall have become effective in accordance with
the Rules of the London Stock Exchange, provided Parent shall have used its best
efforts to obtain such effectiveness (see Section 9), or (ii) if at any time on
or after the date of the Merger Agreement and before the Expiration Date
(whether or not any Shares have theretofore been accepted for payment or paid
pursuant to the Offer), any of the following events have occurred:
(A) any governmental entity or authority or any court shall have
enacted, issued, promulgated, enforced or entered any statute, rule,
regulation, executive order, decree, injunction or other order which is in
effect and which (1) restricts, prevents or prohibits consummation of the
transactions contemplated by any of the Merger Agreement, including the
Offer or the Merger, (2) prohibits,
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limits or otherwise adversely affects the ownership or operation by Parent
or any of its subsidiaries of all or any portion of the business or assets
of the Company and its subsidiaries or compels the Company, Parent or any of
their subsidiaries to dispose of or hold separate all or any portion of the
business or assets of the Company and its subsidiaries, or (3) imposes
limitations on the ability of Parent, Purchaser or any other subsidiary of
Parent to exercise effectively full rights of ownership of any Shares,
including without limitation, the right to vote any Shares acquired by
Purchaser pursuant to the Offer or otherwise on all matters properly
presented to the Shareholders, including without limitation the approval and
adoption of the Merger Agreement and the transactions contemplated thereby;
(B) there shall be instituted or pending any action or proceeding before
any United States or foreign court or governmental entity or authority by
any United States or foreign governmental entity or authority seeking any
order, decree or injunction having any effect set forth in paragraph (A)
above;
(C) the representations and warranties of the Company contained in the
Merger Agreement shall not be true and correct as of the Expiration Date (as
the same may be extended from time to time) as though made anew on and as of
such date (except for representations and warranties made as of a specified
date, which shall not be true and correct as of the specified date), except
for any breach or breaches of any representations or warranties in Sections
3.4 through 3.16 and Section 3.19 of the Merger Agreement which, in the
aggregate, could not be reasonably expected to have a material adverse
effect on the business, financial condition or results of operations of the
Company and its subsidiaries taken as a whole, or on the ability of the
Company to perform any of its obligations under the Merger Agreement;
(D) the Company shall not have performed or complied in all material
respects with its covenants under the Merger Agreement to which it is a
party and such failure continues until the later of (1) 15 calendar days
after actual receipt by it of written notice from Parent setting forth in
detail the nature of such failure or (2) the Expiration Date;
(E) there shall have occurred any material adverse change, or any
development that is reasonably likely to result in a material adverse
change, in the business, financial condition or results of operations of the
Company and its subsidiaries, taken as a whole;
(F) the Merger Agreement shall have been terminated in accordance with
its terms;
(G) the Company Board shall have (1) withdrawn or materially modified or
changed its recommendation of the Offer, the Merger or the Merger Agreement
(including by amendment of Schedule 14D-9) in a manner adverse to Purchaser
or Parent, (2) taken a position inconsistent with, its recommendation of the
Offer, the Merger or any of the Merger Agreement, (3) approved, endorsed or
recommended any Company Takeover Proposal, (4) taken any action referred to
in Section 5.2 of the Merger Agreement that is prohibited thereby or would
be so prohibited but for the exceptions thereto, or (5) resolved or publicly
disclosed any intention to do any of the foregoing;
(H) there shall have occurred (1) any general suspension of, or
limitation on prices for, trading in securities on the NYSE, (2) a decline
of at least 10% in either the Dow Jones Average of Industrial Stocks, the
Standard & Poor's 500 Index or the Financial Times-Stock Exchange all shares
index from the date of the Merger Agreement, (3) the declaration of a
banking moratorium or any limitation or suspension of payments in respect of
the extension of credit by banks or other lending institutions in the United
States, (4) any commencement of war, armed hostilities or other
international or national calamity directly involving the United States or
having a significant adverse effect on the functionality of financial
markets in the United States, or (5) in the case of any of the foregoing,
existing at time of commencement of the Offer, a material acceleration or
worsening thereof;
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(I) Parent Shareholder Approval shall not have been obtained at the
Parent Shareholder meeting; or
(J) it shall have been publicly disclosed or Parent shall have otherwise
learned that (1) any Person or "group" (as defined in Section 13(d)(3) of
the Exchange Act), other than Parent or its affiliates or any group of which
any of them is a member or any affiliates controlled by it or which is
referred to in clause (2) below, shall have acquired beneficial ownership
(determined pursuant to Rule 13d-3 promulgated under the Exchange Act) of
more than 21% of the outstanding Shares, (2) any such Person or group which
has filed a Schedule 13D or 13G prior to the date of the Merger Agreement
disclosing beneficial ownership of 10% or more of the outstanding Shares
shall have acquired beneficial ownership of 21% or more of the outstanding
Shares, or (3) any Person or group shall have entered into a definitive
agreement or agreement in principle with the Company with respect to a
merger, consolidation or other business combination with the Company.
The foregoing conditions are for the sole benefit of Purchaser and its
affiliates and may be asserted by Purchaser, or Parent on behalf of Purchaser,
regardless of the circumstances (including without limitation any action or
inaction by Purchaser or any of its affiliates other than a material breach by
Purchaser or Parent of the Merger Agreement) giving rise to any such condition
or may be waived by Purchaser, in whole or in part, from time to time in its
sole discretion, except as otherwise provided in the Merger Agreement. The
failure by Purchaser 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 and may be asserted at any time and from time to time. Any good
faith determination by Purchaser concerning any of the events described herein
will be final and binding.
15. CERTAIN LEGAL MATTERS
Except as described in this Section 15, based on a review of publicly
available filings made by the Company with the SEC and other publicly available
information concerning the Company, but without any independent investigation,
neither Purchaser nor Parent is aware of any license or regulatory permit that
appears to be material to the business of the Company and its subsidiaries,
taken as a whole, that might be adversely affected by Purchaser's acquisition of
Shares as contemplated in this Offer to Purchase or of any approval or other
action by any governmental authority that would be required for the acquisition
or ownership of Shares by Purchaser as contemplated in this Offer to Purchase.
Should any such approval or other action be required, Purchaser and Parent
presently contemplate that such approval or other action will be sought, except
as described below under "State Takeover Laws." While, except as otherwise
expressly described in this Section 15, Purchaser does not presently intend to
delay the acceptance for payment of or payment for Shares tendered pursuant to
the Offer pending the outcome of any such matter, there can be no assurance that
any such approval or other action, if needed, would be obtained or would be
obtained without substantial conditions or that failure to obtain any such
approval or other action might not result in consequences adverse to the
Company's business or that certain parts of the Company's business might not
have to be disposed of if such approvals were not obtained or other actions were
not taken or in order to obtain any such approval or other action. If certain
types of adverse action are taken with respect to the matters discussed below,
Purchaser could decline to accept for payment or pay for any Shares tendered.
See Section 14 above for certain conditions to the Offer.
STATE TAKEOVER LAWS. A number of states throughout the United States have
enacted takeover statutes that purport, in varying degrees, to be applicable to
attempts to acquire securities of corporations that are incorporated or have
assets, shareholders, executive offices or places of business in those states.
In EDGAR V. MITE CORP., the Supreme Court of the United States invalidated on
constitutional grounds the Illinois Business Takeover Act, which, as a matter of
state securities law, made certain corporate acquisitions more difficult. In CTS
CORP. V. DYNAMICS CORP. OF AMERICA, however, the Supreme Court of the United
States held that a state may, as a matter of corporate law and, in particular,
those laws concerning corporate
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governance, constitutionally disqualify a potential acquiror from voting on the
affairs of a target corporation without prior approval of the remaining
shareholders, provided that the laws were applicable only under certain
conditions.
Chapter 42 of the IBCL ("Chapter 42") states that unless the articles of
incorporation or the bylaws of an "issuing public corporation" provide that the
provisions of Chapter 42 do not apply to acquisitions of shares of such issuing
public corporation, an acquiring person, such as Purchaser, who makes a "control
share acquisition" with respect to such issuing public corporation may not
exercise voting rights pertaining to any "control shares" unless such rights are
conferred by holders of a majority of the outstanding shares of voting stock of
such issuing public corporation, excluding shares held by such acquiring person
or any officer or employee director of such issuing public corporation
("interested shares"), at a meeting of the shareholders. Chapter 42 defines
"issuing public corporation" as any corporation that has: (i) 100 or more
shareholders, (ii) its principal office or substantial assets within Indiana,
and (iii) more than 10% of its shareholders residing in Indiana, more than 10%
of its shares owned by Indiana residents or 10,000 shareholders residing in
Indiana. Chapter 42 defines "control shares" as an aggregate number of shares
owned by a person or in respect of which the person may exercise or direct the
exercise of the voting power of the issuing public corporation in an election of
directors within any of the following ranges: (a) one-fifth or more but less
than one-third, (b) one-third or more but less than a majority, or (c) a
majority or more. Chapter 42 defines a "control share acquisition" as the
acquisition of either ownership or the power to direct the voting power of
issued and outstanding control shares. The Company does not have its principal
office or substantial assets in Indiana, so Chapter 42 is inapplicable to the
Offer.
Chapter 43 of the IBCL ("Chapter 43") generally prohibits an Indiana
corporation from engaging in a "business combination" (defined as a variety of
transactions, including mergers) with an "interested shareholder" (defined
generally as a person that is the beneficial owner of 10% or more of a
corporation's outstanding voting stock) for a period of five years following the
date that such person became an interested shareholder, unless, among other
things, prior to the date such person became an interested shareholder, the
board of directors of the corporation approved either the business combination
or the transaction that resulted in the shareholder becoming an interested
shareholder. The Company Board has approved the Merger Agreement, the
Shareholders Agreement and the Purchaser's acquisition of Shares pursuant to the
Offer. Therefore, Chapter 43 does not apply to the Merger.
Indiana also has a takeover offers statute that by its terms would be
inapplicable to the Offer because the Company does not have its principal place
of business in Indiana.
Based on information supplied by the Company and the Company's
representations in the Merger Agreement, Purchaser does not believe that any
other state takeover statutes apply to the Offer or the Merger. Purchaser
reserves the right to challenge the applicability or validity of any state law
purportedly applicable to the Offer or the Merger and nothing in this Offer to
Purchase or any action taken in connection with the Offer or the Merger is
intended as a waiver of that right. If it is asserted that any state takeover
statute is applicable to the Offer or the Merger and an appropriate court does
not determine that it is inapplicable or invalid as applied to the Offer or the
Merger, Purchaser might be required to file certain information with, or to
receive approvals from, the relevant state authorities, and Purchaser might be
unable to accept for payment or pay for Shares tendered pursuant to the Offer or
be delayed in consummating the Offer or the Merger. In such case, Purchaser may
not be obligated to accept for payment or pay for any Shares tendered pursuant
to the Offer.
ANTITRUST. Based on Parent's and Purchaser's analyses to date, the purchase
of Shares under the Offer and the Merger is not subject to the notification
requirements under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended (the "HSR Act"), because the jurisdictional thresholds under the HSR Act
are not met by the transactions contemplated by the Merger Agreement. In
addition, based on Parent's and Purchaser's analysis to date, no pre-merger
notifications are required with respect to the transactions contemplated by the
Offer and the Merger in any foreign jurisdictions. This does not exempt
42
<PAGE>
the Offer and the Merger from U.S. or foreign antitrust laws, however. The
Federal Trade Commission (the "FTC"), the Antitrust Division of the United
States Department of Justice (the "Antitrust Division") and foreign governmental
authorities frequently scrutinize the legality under the antitrust laws of
transactions such as Purchaser's proposed acquisition of the Company. At any
time before or after Purchaser's purchase of Shares pursuant to the Offer, the
Antitrust Division, the FTC or a foreign governmental authority could take such
action under the antitrust laws as it deems necessary or desirable in the public
interest, including seeking to enjoin the purchase of Shares pursuant to the
Offer or the consummation of the Merger or seeking the divestiture of Shares
acquired by Purchaser or the divestiture of substantial assets of Purchaser or
its subsidiaries, or the Company or its subsidiaries. Private parties may also
bring legal action under the antitrust laws under certain circumstances. There
can be no assurance that a challenge to the Offer on antitrust grounds will not
be made or, if such a challenge is made, of the result of that challenge. See
Section 14 for certain conditions to the Offer, including conditions with
respect to litigation.
16. FEES AND EXPENSES
Dresdner Kleinwort Benson North America LLC ("DKBNA") is acting as Dealer
Manager in connection with the Offer, and DKBNA and its affiliate, Kleinwort
Benson Securities Limited ("KB" and, with DKBNA, "Dresdner Kleinwort Benson"),
are providing certain financial advisory services to Purchaser and Parent in
connection with the Offer. Pursuant to an engagement letter dated January 21,
1999, between Parent and KB, and a Dealer Manager Agreement dated as of February
25, 1999, among Parent, Purchaser and DKBNA, fees of $700,000 are currently
payable to Dresdner Kleinwort Benson, and an additional fee of $1,100,000, in
addition to amounts already paid, will be payable to Dresdner Kleinwort Benson
in the event the Offer is consummated. Parent has also agreed to reimburse
Dresdner Kleinwort Benson for its reasonable out-of-pocket expenses, including
certain fees and expenses of its counsel and any other advisor retained by
Dresdner Kleinwort Benson in connection with its engagement, not to exceed
L20,000 without Parent's approval, and to indemnify Dresdner Kleinwort Benson
and certain related persons against certain liabilities and expenses.
In the ordinary course of its business, Dresdner Kleinwort Benson engages in
securities trading, market-making and brokerage activities and may, at any time,
hold long or short positions and may trade or otherwise effect transactions in
securities of the Company or Parent. As of the date of this Offer to Purchase,
Dresdner Kleinwort Benson had no long or short positions in Shares held for its
own accounts.
Purchaser and Parent have retained MacKenzie Partners, Inc. to act as the
Information Agent and IBJ Whitehall Bank & Trust Company to serve as the
Depositary in connection with the Offer. The Information Agent and the
Depositary each will receive reasonable and customary compensation for their
services, be reimbursed for certain reasonable out-of-pocket expenses and be
indemnified against certain liabilities and expenses in connection therewith,
including certain liabilities and expenses under the Federal securities laws.
Except as set forth above, neither Purchaser nor Parent will pay any fees or
commission to any broker or dealer or other person in connection with the
solicitation of tenders of Shares pursuant to the Offer. Brokers, dealers, banks
and trust companies will be reimbursed by Purchaser upon request for customary
mailing and handling expense incurred by them in forwarding material to their
customers.
17. MISCELLANEOUS
The Offer is not being made to (nor will tenders be accepted from or on
behalf of) Shareholders residing in any jurisdiction in which the making of the
Offer or the acceptance thereof would not be in compliance with the securities,
blue sky or other laws of the jurisdiction. However, Purchaser may, in its
discretion, take such action as it may deem necessary to make the Offer in any
jurisdiction and extend the Offer to Shareholders in that jurisdiction. In any
jurisdiction where the securities, blue sky or other laws
43
<PAGE>
require the Offer to be made by a licensed broker or dealer, the Offer will be
deemed to be made on behalf of Purchaser by one or more registered brokers or
dealers that are licensed under the laws of the jurisdiction.
Purchaser has filed with the SEC the Schedule 14D-1 pursuant to Rule 14d-1
under the Exchange Act containing certain additional information with respect to
the Offer. The Schedule 14D-1 and any amendments to the Schedule 14D-1,
including exhibits, may be examined and copies may be obtained from the
principal office of the SEC in the manner set forth in Section 7 above (except
that they will not be available at the regional offices of the SEC).
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION ON BEHALF OF PURCHASER OR PARENT NOT CONTAINED IN THIS OFFER TO
PURCHASE OR IN THE LETTER OF TRANSMITTAL AND, IF GIVEN OR MADE, THE INFORMATION
OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED.
Neither the delivery of the Offer to Purchase nor any purchase pursuant to
the Offer will under any circumstances create any implication that there has
been no change in the affairs of Parent, Purchaser, the Company or any of their
respective subsidiaries since the date as of which information is furnished or
the date of this Offer to Purchase.
44
<PAGE>
SCHEDULE I
DIRECTORS AND EXECUTIVE OFFICERS OF PURCHASER AND PARENT
A. DIRECTORS AND EXECUTIVE OFFICERS OF PURCHASER
The directors of Purchaser are Frederick J. Westlake and Oliver G. Burns.
The executive officers of Purchaser are Messrs. Westlake and Burns and Neil
Clayton. Each of the directors and executive officers of Purchaser other than
Mr. Clayton is also an executive officer of Parent. Information concerning the
name, present principal occupation or employment and material occupation,
positions, offices or employment for the past five years of each director and
executive officer of Purchaser who is an executive officer of Parent is set
forth in the table of the directors and executive officers of Parent. Such
information is set forth below for Mr. Clayton. The business address of each
director and executive officer of Purchaser is 2 Cheapside Court, Buckhurst
Road, Ascot, Berkshire SL5 7RF, United Kingdom. All directors and officers of
Purchaser are citizens of the United Kingdom.
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR
AGE AT EMPLOYMENT AND
NAME 12/31/98 FIVE-YEAR EMPLOYMENT HISTORY
- --------------------------------------------------- ------------- ---------------------------------------------------
<S> <C> <C>
Neil Clayton 36 Secretary since 1999
Secretary, First Technology PLC for last five years
</TABLE>
B. DIRECTORS AND EXECUTIVE OFFICERS OF PARENT
The following table sets forth the name, present principal occupation or
employment and material occupations, positions, offices or employment for the
past five years of each director and executive officer of Parent and Purchaser.
Unless otherwise indicated below, (i) each individual has held his or her
positions for more than the past five years and (ii) the business address of
each person is 2 Cheapside Court, Buckhurst Road, Ascot, Berkshire SL5 7RF,
United Kingdom. Except as otherwise stated below, all directors and officers
listed below are citizens of the United Kingdom. Directors are identified with a
single asterisk.
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR
AGE AT EMPLOYMENT AND
NAME 12/31/98 FIVE-YEAR EMPLOYMENT HISTORY
- --------------------------------------------------- ------------- ---------------------------------------------------
<S> <C> <C>
Frederick J. Westlake.............................. 56 Director and Executive Chairman since 1984 Member
of the Boards of Directors of First Technology
Capital, Inc., a Michigan company and subsidiary of
Parent, and First Technology Acquisition, Inc., an
Indiana company and subsidiary of Parent
Oliver G. Burns.................................... 42 Finance Director since 1997
Finance Director of Siltrona International, Ltd.
from 1993 to 1997
Member of the Boards of Directors of First
Technology Capital, Inc., a Michigan company and
subsidiary of Parent, and First Technology
Acquisition, Inc., an Indiana company and
subsidiary of Parent
Muir A. Parker..................................... 54 Managing Director of Parent since 1997 Chief
Executive, Safety & Analysis Division from 1994 to
1997
</TABLE>
I-1
<PAGE>
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR
AGE AT EMPLOYMENT AND
NAME 12/31/98 FIVE-YEAR EMPLOYMENT HISTORY
- --------------------------------------------------- ------------- ---------------------------------------------------
<S> <C> <C>
Walter J. Borda.................................... 53 Director since 1998
(United States Citizen) Managing Partner, Borda & Clemmons law firm since
1999
Managing Partner, Stroble & Borda law firm prior to
1999
Patrick Burgess.................................... 53 Director since 1997
Partner, Gouldens solicitors firm for last 25 years
Member of the Boards of Directors of Hart Ventures
Plc, Jokyo Holdings Limited, Kaye Enterprises
Limited, London Forfeiting Company Plc and Strand
Partners Limited
John H. Feltham.................................... 73 Director since 1994
Retired
</TABLE>
I-2
<PAGE>
ANNEX A
AUDITORS' REPORT ON CORPORATE GOVERNANCE MATTERS
The following Auditors' Report and Annual Accounts appear in First
Technology PLC's Report and Accounts to Shareholders dated 21 August 1998.
Arthur Andersen has advised the Company that its audit opinion on the
financial statements for the year ended 30 April 1998 was expressed for the
purpose and the persons defined in the United Kingdom Companies Act 1985 and for
no other purposes or persons and that it does not accept any responsibility for
the audit report beyond that they owed to those to whom their report was issued
at the date of its issue.
Auditors' Report to
First Technology PLC on
Corporate Governance Matters
In addition to our audit of the financial statements, we have reviewed the
directors' statements on pages 21 and 22 concerning the Company's compliance
with the paragraphs of the Cadbury Code of Best Practice specified for our
review by the London Stock Exchange and their adoption of the going concern
basis in preparing the financial statements. The objective of our review is to
draw attention to non-compliance with Listing Rules 12.43(j) and 12.43(v).
We carried out our review in accordance with guidance issued by the Auditing
Practices Board. That guidance does not require us to perform the additional
work necessary to, and we do not, express any opinion on the effectiveness of
either the Company's system of internal financial control or its corporate
governance procedures nor on the ability of the Company and Group to continue in
operational existence.
OPINION
With respect to the directors' statements on internal financial control and
going concern on pages 21 and 22, in our opinion the directors have provided the
disclosures required by the Listing Rules referred to above and such statements
are not inconsistent with the information of which we are aware from our audit
work on the financial statements.
Based on enquiry of certain directors and officers of the Company, and
examination of relevant documents, in our opinion the directors' statement on
pages 21 and 22 appropriately reflects the Company's compliance with the other
aspects of the Code specified for our review by Listing Rule 12.43(j).
Arthur Andersen
Chartered Accountants
London 21st August 1998
FIRST TECHNOLOGY REPORT AND ACCOUNTS 1998 / 23
A-1
<PAGE>
AUDITORS' REPORT
TO THE SHAREHOLDERS OF FIRST TECHNOLOGY PLC
We have audited the financial statements on pages 26 to 47 which have been
prepared under the historical cost convention and the accounting policies set
out on page 29 and 30.
RESPECTIVE RESPONSIBILITIES OF DIRECTORS AND AUDITORS
As described on page 19 the Company's directors are responsible for the
preparation of financial statements. It is our responsibility to form an
independent opinion, based on our audit, on those statements and to report our
opinion to you.
BASIS OF OPINION
We conducted our audit in accordance with Auditing Standards issued by the
Auditing Practices Board. An audit includes examination, on a test basis, of
evidence relevant to the amounts and disclosures in the financial statements. It
also includes an assessment of the significant estimates and judgements made by
the directors in the preparation of the financial statements, and of whether the
accounting policies are appropriate to the Group's circumstances, consistently
applied and adequately disclosed.
We planned and performed our audit so as to obtain all the information and
explanations which we considered necessary in order to provide us with
sufficient evidence to give reasonable assurance that the financial statements
are free from material misstatement, whether caused by fraud or other
irregularity or error. In forming our opinion we also evaluated the overall
adequacy of the presentation of information in the financial statements.
OPINION
In our opinion the financial statements give a true and fair view of the
state of affairs of the Company and of the Group at 30th April 1998 and of the
Group's profit and cash flows for the year then ended and have been properly
prepared in accordance with the Companies Act 1985.
Arthur Andersen
Chartered Accountants
and Registered Auditors
London 21st August 1998
FIRST TECHNOLOGY REPORT AND ACCOUNTS 1998 / 24
A-2
<PAGE>
During the past year, the Group has recorded further growth in underlying sales
and profitability and combined with strong cash flows, has shown further
improvement in its key financial ratios.
Oliver Burns
FINANCE DIRECTOR
<TABLE>
<S> <C>
Group Profit and Loss Account.......................................................... 26
Balance Sheets......................................................................... 27
Group Cash Flow Statement.............................................................. 28
Principal Accounting Policies.......................................................... 29
Notes to the Financial Statements...................................................... 31
</TABLE>
FIRST TECHNOLOGY REPORT AND ACCOUNTS 1998 / 25
A-3
<PAGE>
GROUP PROFIT AND LOSS ACCOUNT
YEAR ENDED 30TH APRIL 1998
<TABLE>
<CAPTION>
CONTINUING DISCONTINUED
ACTIVITIES ACTIVITIES TOTAL
1998 1998 1998
NOTES L000 L000 L000
----- ----------- -------------------- ---------
<S> <C> <C> <C> <C>
Turnover................................. 1 51,928 2,343 54,271
Cost of sales............................ 2 (32,431) (1,565) (33,996)
----------- ------ ---------
Gross profit............................. 19,497 778 20,275
Other operating costs.................... 2 (8,017) (552) (8,569)
----------- ------ ---------
Operating profit......................... 1 11,480 226 11,706
Profit on sale of surplus property....... 3 387
Profit on the disposal of discontinued
activities............................. 3 958
Interest................................. 4 531
----------- ------ ---------
Profit on ordinary activities before
taxation............................... 6 13,582
Tax on profit on ordinary activities..... 7 (4,258)
----------- ------ ---------
Profit for the financial year............ 9,324
Dividends................................ 8 (2,396)
----------- ------ ---------
Transfer to reserves..................... 19 6,928
----------- ------ ---------
Basic earnings per share................. 9 19.49p
Headline earnings per share.............. 9 16.68p
Dividends per share...................... 8 5.00p
<CAPTION>
CONTINUING DISCONTINUED
ACTIVITIES ACTIVITIES TOTAL
1997 1997 1997
L000 L000 L000
-- ------------- ---------
<S> <C> <C>
Turnover................................. 46,543 3,933 50,476
Cost of sales............................(28,583) (2,499) (31,082)
-- ------ ---------
Gross profit............................. 17,960 1,434 19,394
Other operating costs.................... (9,071) (1,129) (10,200)
-- ------ ---------
Operating profit......................... 8,889 305 9,194
Profit on sale of surplus property....... --
Profit on the disposal of discontinued
activities............................. --
Interest................................. 36
-- ------ ---------
Profit on ordinary activities before
taxation............................... 9,230
Tax on profit on ordinary activities..... (3,216)
-- ------ ---------
Profit for the financial year............ 6,014
Dividends................................ (1,716)
-- ------ ---------
Transfer to reserves..................... 4,298
-- ------ ---------
Basic earnings per share................. 12.70p
Headline earnings per share.............. 12.70p
Dividends per share...................... 3.60p
</TABLE>
STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES
YEAR ENDED 30TH APRIL 1998
<TABLE>
<CAPTION>
1998 1997
L000 L000
--------- ---------
<S> <C> <C>
Profit attributable to shareholders.............................................................. 9,324 6,014
Currency translation difference on foreign currency net investments.............................. (492) (910)
--------- ---------
Total gains and losses for the year.............................................................. 8,832 5,104
--------- ---------
--------- ---------
</TABLE>
FIRST TECHNOLOGY REPORT AND ACCOUNTS 1998 / 26
A-4
<PAGE>
BALANCE SHEETS
YEAR ENDED 30TH APRIL 1998
<TABLE>
<CAPTION>
GROUP COMPANY
-------------------- --------------------
1998 1997 1998 1997
NOTES L000 L000 L000 L000
----- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Fixed assets
Tangible assets......................................................... 10 7,987 7,694 -- --
Investments............................................................. 11 -- -- 15,738 15,886
--------- --------- --------- ---------
7,987 7,694 15,738 15,886
--------- --------- --------- ---------
--------- --------- --------- ---------
Current assets
Surplus property held for resale........................................ 3 -- 800 -- --
Stocks.................................................................. 12 4,353 3,523 -- --
Debtors................................................................. 13 9,786 13,042 1,646 2,067
Cash.................................................................... 15,806 6,223 8,210 2,286
--------- --------- --------- ---------
29,945 23,588 9,856 4,353
Creditors: amounts falling due within one year.......................... 14 (11,424) (11,050) (12,028) (5,608)
--------- --------- --------- ---------
Net current assets/(liabilities)........................................ 18,521 12,538 (2,172) (1,255)
--------- --------- --------- ---------
--------- --------- --------- ---------
Total assets less current liabilities................................... 26,508 20,232 13,566 14,631
Creditors: amounts falling due after more than one year................. 15 (479) (988) -- --
Provisions for liabilities and charges.................................. 16 (184) (468) -- --
--------- --------- --------- ---------
Net assets.............................................................. 25,845 18,776 13,566 14,631
--------- --------- --------- ---------
--------- --------- --------- ---------
Capital and reserves
Called up share capital................................................. 18 4,795 1,590 4,795 1,590
Share premium account................................................... 19 6,077 9,052 6,077 9,052
Other reserves.......................................................... 19 -- (10,024) -- --
Profit and loss account................................................. 19 14,973 18,158 2,694 3,989
--------- --------- --------- ---------
Equity shareholders' funds.............................................. 25,845 18,776 13,566 14,631
--------- --------- --------- ---------
--------- --------- --------- ---------
</TABLE>
The financial statements on pages 26 to 47 were approved by the Board on
21st August 1998.
O G Burns F J Westlake
Director Chairman
FIRST TECHNOLOGY REPORT AND ACCOUNTS 1998 / 27
A-5
<PAGE>
GROUP CASH FLOW STATEMENT
YEAR ENDED 30TH APRIL 1998
<TABLE>
<CAPTION>
1998 1997
NOTES L000 L000 L000 L000
----- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Net cash inflow from operating activities........................... 22 14,894 10,585
Returns on investments and servicing of finance
Interest paid....................................................... (64) (108)
Interest received................................................... 553 158
--------- --------- --------- ---------
--------- --------- --------- ---------
Net cash inflow from returns on investment and servicing of
finance........................................................... 489 50
Taxation
UK corporation tax paid............................................. (1,269) (1,335)
Overseas tax paid................................................... (3,075) (1,692)
--------- --------- --------- ---------
--------- --------- --------- ---------
Taxation paid....................................................... (4,344) (3,027)
Capital expenditure and financial investment
Purchase of tangible fixed assets................................... (2,781) (2,600)
Sale of tangible fixed assets....................................... 126 49
Sale of surplus property............................................ 1,187 --
Disposal of businesses.............................................. 23 2,433 --
--------- --------- --------- ---------
--------- --------- --------- ---------
Net cash inflow/(outflow) from capital expenditure and financial
investment........................................................ 965 (2,551)
Equity dividends paid............................................... (1,914) (1,499)
Management of liquid resources
(Increase)/decrease in short term deposits.......................... 23 (3,843) 750
--------- --------- --------- ---------
--------- --------- --------- ---------
Net cash (inflow)/outflow from management of liquid resources....... (3,843) 750
--------- --------- --------- ---------
--------- --------- --------- ---------
Net cash inflow before financing.................................... 6,247 4,308
Financing
Repayment of term loans............................................. (485) (500)
Issue of share capital.............................................. 230 453
--------- --------- --------- ---------
--------- --------- --------- ---------
Net cash outflow from financing activities.......................... (255) (47)
--------- --------- --------- ---------
--------- --------- --------- ---------
Increase in cash in the year........................................ 23 5,992 4,261
--------- --------- --------- ---------
--------- --------- --------- ---------
</TABLE>
FIRST TECHNOLOGY REPORT AND ACCOUNTS 1998 / 28
A-6
<PAGE>
PRINCIPAL ACCOUNTING POLICIES
BASIS OF PREPARATION
The financial statements have been prepared under the historical cost
convention and in accordance with applicable accounting standards.
BASIS OF CONSOLIDATION
The consolidated financial statements incorporate the accounts of First
Technology PLC and all its subsidiaries. The results of subsidiaries acquired or
sold are included from the date of acquisition or to the date of disposal. As
permitted by Section 230 of the Companies Act 1985, the profit and loss account
of the Company is not presented as part of these financial statements.
GOODWILL
Goodwill previously written off on acquisition is charged to the profit and
loss account on disposal of subsidiary companies. Under the new accounting
standard FRS 10, GOODWILL AND INTANGIBLE ASSETS, goodwill arising on
acquisitions of subsidiaries after 30th April 1998 will be capitalised and
amortised over a period not exceeding 20 years. Goodwill arising on acquisitions
prior to 30th April 1998 has been written off to reserves.
FOREIGN CURRENCY
Assets and liabilities denominated in a foreign currency are translated at
the exchange rate ruling at the balance sheet date and the trading results of
the overseas subsidiaries at the average rate for the year. Translation
differences arising on the restatement of the net investment in these companies
and related hedging instruments are dealt with as adjustments to reserves. All
other differences are taken to the profit and loss account.
TANGIBLE FIXED ASSETS
Tangible fixed assets are stated at cost less depreciation. Depreciation is
charged at annual rates calculated to write down assets to their residual values
over their expected useful lives as follows:
<TABLE>
<S> <C>
Freehold land................................ nil
Freehold buildings........................... 2%
Short leaseholds............................. over the term of the lease
Plant, computers and fixtures................ 10%-33%
Motor vehicles............................... 25%-33%
</TABLE>
LEASED ASSETS
Fixed assets held under finance leases are capitalised and depreciated over
their expected useful lives. The finance charge is allocated to the profit and
loss account over the primary period of the lease in proportion to the capital
element outstanding. Operating lease rentals are charged to the profit and loss
account on a straight line basis.
FIXED ASSET INVESTMENTS
Investments held as fixed assets are included at cost less provision for any
permanent diminution in value.
FIRST TECHNOLOGY REPORT AND ACCOUNTS 1998 / 29
A-7
<PAGE>
RESEARCH AND DEVELOPMENT
Development expenditure relating to specific projects intended for
commercial exploitation is charged against profit in the year in which it is
incurred, other than that which is considered fully recoverable over the periods
expected to benefit from the project. Such expenditure is carried forward and
amortised over the periods expected to benefit from it, commencing with the
period in which related sales are first made. Expenditure on research is written
off to the profit and loss account as incurred.
PROPERTY HELD FOR SALE
Property held for sale is included in current assets and is valued at the
lower of cost and net realisable value.
STOCKS
Stocks and work in progress are valued at the lower of cost and net
realisable value. Work in progress and finished goods include an appropriate
proportion of attributable production overheads.
DEFERRED TAXATION
Deferred taxation is provided using the liability method on all timing
differences only to the extent that they are expected to reverse in the future
without being replaced.
PENSION COMMITMENTS
The cost of pensions in respect of the Group's defined benefit pension
scheme is charged to the profit and loss account so as to spread the cost over
the service lives of employees in the scheme. Variations from the regular cost
are spread over the expected remaining service lives of current employees in the
scheme. The pension cost is assessed in accordance with the advice of qualified
actuaries. Full provision is made for the related deferred tax.
FIRST TECHNOLOGY REPORT AND ACCOUNTS 1998 / 30
A-8
<PAGE>
NOTES TO THE FINANCIAL STATEMENTS
YEAR ENDED 30TH APRIL 1998
1. SEGMENTAL INFORMATION
(a) Turnover by destination:
<TABLE>
<CAPTION>
1998 1998 1998 1997 1997 1997
L000 L000 L000 L000 L000 L000
CONTINUING DISCONTINUED TOTAL CONTINUING DISCONTINUED TOTAL
---------- ------------ --------- ---------- ------------ ---------
<S> <C> <C> <C> <C> <C> <C>
UK............................................... 4,026 1,267 5,293 3,449 2,019 5,468
Rest of Europe................................... 16,200 798 16,998 14,498 1,433 15,931
USA.............................................. 22,199 19 22,218 16,327 32 16,359
Asia............................................. 5,170 229 5,399 8,227 397 8,624
South America.................................... 1,549 2 1,551 2,095 4 2,099
Other............................................ 2,784 28 2,812 1,947 48 1,995
---------- ------------ --------- ---------- ------------ ---------
51,928 2,343 54,271 46,543 3,933 50,476
---------- ------------ --------- ---------- ------------ ---------
---------- ------------ --------- ---------- ------------ ---------
</TABLE>
The discontinued activities comprise the businesses of the Industrial
Products section of First Technology Protection Systems Limited and First
Technology Fire and Safety Limited, the disposal of which was approved by
shareholders at the Extraordinary General Meeting held on 21st November 1997.
(b) Turnover by origin:
<TABLE>
<CAPTION>
1998 1998 1998 1997 1997 1997
L000 L000 L000 L000 L000 L000
CONTINUING DISCONTINUED TOTAL CONTINUING DISCONTINUED TOTAL
---------- ------------ --------- ---------- ------------ ---------
<S> <C> <C> <C> <C> <C> <C>
Europe........................................... 19,605 2,343 21,948 17,793 3,933 21,726
USA.............................................. 27,896 -- 27,896 23,845 -- 23,845
Japan............................................ 4,427 -- 4,427 4,905 -- 4,905
---------- ------------ --------- ---------- ------------ ---------
51,928 2,343 54,271 46,543 3,933 50,476
---------- ------------ --------- ---------- ------------ ---------
---------- ------------ --------- ---------- ------------ ---------
</TABLE>
FIRST TECHNOLOGY REPORT AND ACCOUNTS 1998 / 31
A-9
<PAGE>
(c) Operating profit by origin:
<TABLE>
<CAPTION>
1998 1998 1998 1997 1997 1997
L000 L000 L000 L000 L000 L000
CONTINUING DISCONTINUED TOTAL CONTINUING DISCONTINUED TOTAL
---------- ------------ --------- ---------- ------------ ---------
<S> <C> <C> <C> <C> <C> <C>
Europe........................................... 4,944 226 5,170 3,386 305 3,691
USA.............................................. 6,132 -- 6,132 4,942 -- 4,942
Japan............................................ 404 -- 404 561 -- 561
---------- ------------ --------- ---------- ------------ ---------
11,480 226 11,706 8,889 305 9,194
Exceptional items................................ 1,345 -- 1,345 -- -- --
Interest......................................... 531 -- 531 36 -- 36
---------- ------------ --------- ---------- ------------ ---------
Profit before taxation........................... 13,356 226 13,582 8,925 305 9,230
---------- ------------ --------- ---------- ------------ ---------
---------- ------------ --------- ---------- ------------ ---------
</TABLE>
(d) Net assets by origin:
<TABLE>
<CAPTION>
1998 1997
L000 L000
--------- ---------
<S> <C> <C>
Europe......................................................................................... 5,951 9,118
USA............................................................................................ 8,229 7,506
Japan.......................................................................................... (722) (504)
--------- ---------
Net operating assets........................................................................... 13,458 16,120
Net cash....................................................................................... 14,849 4,741
Taxation....................................................................................... (928) (1,032)
Dividends...................................................................................... (1,534) (1,053)
--------- ---------
Net assets..................................................................................... 25,845 18,776
--------- ---------
--------- ---------
</TABLE>
In the opinion of the directors, there is only one class of business.
2. COST OF SALES AND OTHER OPERATING COSTS
Certain costs directly attributable to sales have been reclassified from
Other Operating Costs to Cost of Sales, as the directors consider that this
gives a better presentation. These amounted to L697,000 in the year (1997:
L1,037,000). The comparatives have been restated. Other Operating Costs
represent other selling, general and administrative expenses.
FIRST TECHNOLOGY REPORT AND ACCOUNTS 1998 / 32
A-10
<PAGE>
3. EXCEPTIONAL ITEMS
The exceptional items comprise the profit on the disposal of surplus
property of L387,000 and the profit on the disposal of discontinued activities
of L958,000. The latter is after charging L403,000 of identified goodwill
previously written off to reserves on acquisition. The discontinued activities
comprised of First Technology Fire and Safety Limited and the Industrial section
of First Technology Protection Systems Limited. There was no taxation arising
from either transaction.
4. INTEREST
<TABLE>
<CAPTION>
1998 1997
L000 L000
----- ------
<S> <C> <C>
Interest payable on bank loans and overdrafts.................................................... (71) (122)
Interest receivable.............................................................................. 602 158
--- ---
Net interest receivable.......................................................................... 531 36
--- ---
--- ---
</TABLE>
5. DIRECTORS AND EMPLOYEES
(a) Staff costs (including directors):
<TABLE>
<CAPTION>
1998 1997
L000 L000
--------- ---------
<S> <C> <C>
Salaries......................................................................................... 8,691 8,261
Social security costs............................................................................ 786 780
Other pension costs.............................................................................. 369 445
--------- ---------
9,846 9,486
--------- ---------
--------- ---------
</TABLE>
(b) The average monthly number of employees during the year was as follows:
<TABLE>
<CAPTION>
1998 1997
NUMBER NUMBER
--------- ---------
<S> <C> <C>
Engineering and production.................................................................... 333 299
Office and managerial......................................................................... 63 66
Sales......................................................................................... 14 23
--------- ---------
410 388
--------- ---------
--------- ---------
</TABLE>
FIRST TECHNOLOGY REPORT AND ACCOUNTS 1998 / 33
A-11
<PAGE>
(c) Directors' aggregate remuneration:
<TABLE>
<CAPTION>
1998 1997
L000 L000
----- -----
<S> <C> <C>
Emoluments.......................................................................................... 607 583
Gains on exercise of share options.................................................................. 91 365
Contributions to money purchase schemes............................................................. 32 32
--- ---
730 980
--- ---
--- ---
</TABLE>
Directors' emoluments:
<TABLE>
<CAPTION>
SALARY BENEFITS ANNUAL 1998
OR FEES IN KIND BONUS TOTAL
L000 L000 L000 L000
----------- ------------- ----------- -----
<S> <C> <C> <C> <C>
F J Westlake (Executive Chairman)....................................... 200 15 67 282
O G Burns (appointed 17th November 1997)................................ 48 3 19 70
M A Parker.............................................................. 94 10 31 135
A R Adams (resigned 21st November 1997)................................. 54 3 -- 57
N R Young (resigned 20th July 1997)..................................... 20 2 -- 22
D P H Burgess (appointed 8th May 1997).................................. 18 -- -- 18
J H F Feltham........................................................... 23 -- -- 23
E M Irving.............................................................. -- -- -- --
--
--- --- ---
Total................................................................... 457 33 117 607
--
--
--- --- ---
--- --- ---
<CAPTION>
1997
TOTAL
L000
-----
<S> <C>
F J Westlake (Executive Chairman)....................................... 192
O G Burns (appointed 17th November 1997)................................ --
M A Parker.............................................................. 139
A R Adams (resigned 21st November 1997)................................. 122
N R Young (resigned 20th July 1997)..................................... 109
D P H Burgess (appointed 8th May 1997).................................. --
J H F Feltham........................................................... 21
E M Irving.............................................................. --
---
Total................................................................... 583
---
---
</TABLE>
(d) Directors' pension entitlements
Dr F J Westlake is a member of the First Technology Retirements Benefits
Scheme, which is a defined benefit scheme and details of which are set out in
note 17. Mr A R Adams is a deferred member of the scheme. They had accrued
entitlements as follows:
<TABLE>
<CAPTION>
ACCRUED PENSION ACCRUED PENSION INCREASE
30TH APRIL 1997 30TH APRIL 1998 INCREASE AFTER INDEXATION
L000 L000 L000 L000
------------------- ------------------- --------------- -------------------
<S> <C> <C> <C> <C>
F J Westlake....................... 97 104 7 4
A R Adams (resigned 21st November
1997)............................ 15 16 1 --
- --
--- ---
Total.............................. 112 120 8 4
- --
- --
--- ---
--- ---
<CAPTION>
TRANSFER VALUE
OF INCREASE
AFTER INDEXATION
L000
-------------------
<S> <C>
F J Westlake....................... 52
A R Adams (resigned 21st November
1997)............................ 4
--
Total.............................. 56
--
--
</TABLE>
Pension amounts disclosed above in respect of these directors represent the
value of benefits which accrued to them during the year.
FIRST TECHNOLOGY REPORT AND ACCOUNTS 1998 / 34
A-12
<PAGE>
Mr O G Burns, Dr M A Parker and Mr N R Young are members of their own
personal money purchase schemes. The company has paid contributions during the
year as follows:
<TABLE>
<CAPTION>
1998 1997
L000 L000
----- -----
<S> <C> <C>
O G Burns (appointed 17th November 1997)............................................................ 8 --
M A Parker.......................................................................................... 19 19
N R Young (resigned 20th July 1997)................................................................. 5 13
-- --
32 32
-- --
-- --
</TABLE>
Messrs W J Borda, D P H Burgess, J H Feltham and E M Irving are
non-executive directors, whose service is not pensionable.
(e) The directors' share options were as follows:
<TABLE>
<CAPTION>
AT NUMBER NUMBER NUMBER AT MARKET DATE
1ST MAY OF OPTIONS OF OPTIONS OF OPTIONS 30TH APRIL EXERCISE PRICE AT FROM WHICH
DIRECTOR 1997 EXERCISED GRANTED LAPSED 1998 PRICE EXERCISE EXERCISABLE
- ---------------------------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
O G Burns
Executive options........... -- -- 70,000 -- 70,000 340p -- 24.2.01
----------- ----------- ----------- ----------- ----------- ----- ----- -----------
Total....................... -- -- 70,000 -- 70,000
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------
M A Parker
Executive options........... 15,000 -- -- -- 15,000 102p -- 31.1.97
-- -- 70,000 -- 70,000 340p -- 24.2.01
----------- ----------- ----------- ----------- ----------- ----- ----- -----------
15,000 70,000 85,000
SAYE options................ 17,424 -- -- -- 17,424 99p -- 1.3.00
----------- ----------- ----------- ----------- ----------- ----- ----- -----------
Total....................... 32,424 -- 70,000 -- 102,424
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------
F J Westlake
Executive options........... 100,000 100,000 340p -- 24.2.01
----------- ----------- ----------- ----------- ----------- ----- ----- -----------
-- -- 100,000 -- 100,000
SAYE options................ 17,424 -- -- -- 17,424 99p -- 1.3.00
----------- ----------- ----------- ----------- ----------- ----- ----- -----------
Total....................... 17,424 -- 100,000 -- 117,424
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------
A R Adams
Executive options........... 30,804 (30,804) -- -- -- 137p 241p --
----------- ----------- ----------- ----------- ----------- ----- ----- -----------
15,000 (15,000) -- -- -- 127p 241p --
----------- ----------- ----------- ----------- ----------- ----- ----- -----------
30,000 (30,000) -- -- -- 102p 241p --
----------- ----------- ----------- ----------- ----------- ----- ----- -----------
----------- ----------- ----------- ----------- ----------- ----- ----- -----------
75,804 (75,804) -- -- --
SAYE options................ 11,856 -- -- (5,790) 6,066 99p -- --
----------- ----------- ----------- ----------- ----------- ----- ----- -----------
5,253 -- -- (5,253) 131p -- --
----------- ----------- ----------- ----------- -----------
Total....................... 92,913 (75,804) -- (11,043) 6,066
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------
<CAPTION>
EXPIRY
DIRECTOR DATE
- ---------------------------- ---------
<S> <C>
O G Burns
Executive options........... 24.2.08
---------
Total.......................
M A Parker
Executive options........... 31.1.04
24.2.08
---------
SAYE options................ 1.9.00
---------
Total.......................
F J Westlake
Executive options........... 24.2.08
---------
SAYE options................ 1.9.00
---------
Total.......................
A R Adams
Executive options........... --
---------
--
---------
--
---------
---------
SAYE options................ --
---------
--
Total.......................
</TABLE>
FIRST TECHNOLOGY REPORT AND ACCOUNTS 1998 / 35
A-13
<PAGE>
N R Young had no options
The number of options and the relevant exercise price have been adjusted for
the 2 for 1 capitalisation issue during the year (note 18). A R Adams realised a
gain of L91,000 on executive options. Under the rules of the SAYE scheme, A R
Adams exercised 6,066 of his options on 28th May 1998 and realised a gain of
L18,000. Total gains realised on executive options during the year were L91,000:
(1997 N R Young L19,000, F J Westlake L346,000).
6. PROFIT ON ORDINARY ACTIVITIES BEFORE TAXATION
<TABLE>
<CAPTION>
1998 L997
L000 L000
--------- ---------
<S> <C> <C>
Is stated after charging:
Operating lease charges--other................................................................... 373 508
Auditors' remuneration--audit fees............................................................... 90 89
Depreciation of tangible fixed assets............................................................ 2,015 1,984
Research and development......................................................................... 1,971 2,238
</TABLE>
Non-audit fees payable to the Group's auditors of L85,000 (1997: L19,000)
were incurred in the United Kingdom.
7. TAXATION
<TABLE>
<CAPTION>
1998 L997
L000 L000
--------- ---------
<S> <C> <C>
UK corporation tax at 31%........................................................................ 1,436 1,250
Overseas taxation................................................................................ 2,808 2,161
Deferred taxation................................................................................ (35) (203)
Prior year....................................................................................... 49 8
--------- ---------
4,258 3,216
</TABLE>
8. DIVIDENDS
<TABLE>
<CAPTION>
1998 1997
L000 L000
--------- ---------
<S> <C> <C>
Interim dividend--paid 1.8p (1997: 1.4p)......................................................... 861 663
Final dividend--proposed 3.2p (1997: 2.2p)....................................................... 1,535 1,053
--------- ---------
2,396 1,716
</TABLE>
The comparative dividends have been restated to reflect the 2 for 1
capitalisation issue during the year.
FIRST TECHNOLOGY REPORT AND ACCOUNTS 1998 / 36
A-14
<PAGE>
9. EARNINGS PER SHARE
Basic earnings per share is calculated on earnings of L9,324,000 (1997:
L6,014,000) and 47,847,698 ordinary shares (1997: 47,347,758) ordinary shares,
being the weighted average number of shares in issue for the year, as adjusted
for the 2 for 1 capitalisation issue (note 18). Headline earnings per share is
based on profit attributable to shareholders after taxation, excluding the
exceptional items, of L7,979,000 (1997: L6,014,000) and the same weighted
average number of shares.
10. TANGIBLE FIXED ASSETS
<TABLE>
<CAPTION>
FREEHOLD PLANT
LAND & SHORT COMPUTERS & MOTOR
BUILDINGS LEASEHOLDS FIXTURES VEHICLES TOTAL
GROUP L000 L000 L000 L000 L000
- ----------------------------------------------------------------- ----------- ----------- ------------- ----------- ---------
<S> <C> <C> <C> <C> <C>
COST
1st May 1997..................................................... 3,260 411 14,154 600 18,425
Additions........................................................ 79 24 2,345 288 2,736
Disposals........................................................ -- -- (138) (206) (344)
Discontinued activities.......................................... -- (52) (160) (133) (345)
Exchange differences............................................. (102) (5) (309) (5) (421)
----- ----- ------ ----- ---------
30th April 1998.................................................. 3,237 378 15,892 544 20,051
----- ----- ------ ----- ---------
----- ----- ------ ----- ---------
DEPRECIATION
1st May 1997..................................................... 757 262 9,357 355 10,731
Charge for the year.............................................. 99 41 1,736 139 2,015
Disposals........................................................ -- -- (71) (170) (241)
Discontinued activities.......................................... -- (19) (126) (74) (219)
Exchange differences............................................. (25) (3) (191) (3) (222)
----- ----- ------ ----- ---------
30th April 1998.................................................. 831 281 10,705 247 12,064
----- ----- ------ ----- ---------
----- ----- ------ ----- ---------
NET BOOK VALUE
30th April 1998.................................................. 2,406 97 5,187 297 7,987
----- ----- ------ ----- ---------
----- ----- ------ ----- ---------
30th April 1997.................................................. 2,503 149 4,797 245 7,694
----- ----- ------ ----- ---------
----- ----- ------ ----- ---------
</TABLE>
Freehold land and buildings include land at a cost of L255,000 (1997:
L255,000) which is not subject to depreciation. The cost of freehold land and
buildings includes capitalised interest of L118,000 (1997: L118,000).
Capital expenditure contracted for at 30th April 1998 was L997,000 (1997:
L412,000).
FIRST TECHNOLOGY REPORT AND ACCOUNTS 1998 / 37
A-15
<PAGE>
11. FIXED ASSET INVESTMENTS
<TABLE>
<CAPTION>
SHARES IN LOANS TO
SUBSIDIARIES SUBSIDIARIES TOTAL
COMPANY L000 L000 L000
- ------------------------------------------------------------------------------ ----------- ------------- ---------
<S> <C> <C> <C>
COST
1st May 1997.................................................................. 12,276 3,613 15,889
Exchange differences.......................................................... -- (148) (148)
----------- ----- ---------
30th April 1998............................................................... 12,276 3,465 15,741
----------- ----- ---------
----------- ----- ---------
PROVISIONS FOR DIMINUTION IN VALUE
1st May 1997 and 30th April 1998.............................................. (3) -- (3)
----------- ----- ---------
----------- ----- ---------
NET BOOK VALUE
30th April 1998............................................................... 12,273 3,465 15,738
----------- ----- ---------
30th April 1997............................................................... 2,273 3,613 15,886
----------- ----- ---------
----------- ----- ---------
</TABLE>
Details of the company's principal subsidiaries are given on page 47.
12. STOCKS
<TABLE>
<CAPTION>
1998 1997
GROUP L000 L000
- ------------------------------------------------------------------------------------------------- --------- ---------
<S> <C> <C>
Raw materials.................................................................................... 1,402 1,340
Work in progress................................................................................. 180 273
Finished goods................................................................................... 2,771 1,910
--------- ---------
4,353 3,523
--------- ---------
--------- ---------
</TABLE>
FIRST TECHNOLOGY REPORT AND ACCOUNTS 1998 / 38
A-16
<PAGE>
13. DEBTORS
<TABLE>
<CAPTION>
GROUP COMPANY
-------------------- --------------------
<S> <C> <C> <C> <C>
1998 1997 1998 1997
L000 L000 L000 L000
--------- --------- --------- ---------
AMOUNTS FALLING DUE WITHIN ONE YEAR
Trade debtors.................................................................. 8,104 11,061 -- --
Amounts owed by subsidiaries................................................... -- -- 1,093 1,794
Other debtors.................................................................. 488 974 120 10
Corporation tax................................................................ 153 3 -- --
Deferred taxation (note 16).................................................... 211 173 -- --
Prepayments and accrued income................................................. 180 226 49 --
Pension prepayment............................................................. 60 60 -- --
--------- --------- --------- ---------
9,196 12,497 1,262 1,804
--------- --------- --------- ---------
--------- --------- --------- ---------
AMOUNTS FALLING DUE AFTER MORE THAN ONE YEAR
Advance corporation tax........................................................ 384 263 384 263
Other debtors.................................................................. 50 66 -- --
Pension prepayment............................................................. 156 216 -- --
--------- --------- --------- ---------
9,786 13,042 1,646 2,067
--------- --------- --------- ---------
--------- --------- --------- ---------
</TABLE>
14. CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR
<TABLE>
<CAPTION>
GROUP COMPANY
-------------------- --------------------
<S> <C> <C> <C> <C>
1998 1997 1998 1997
L000 L000 L000 L000
--------- --------- --------- ---------
Bank loans and overdrafts................................................... 478 494 5,833 2,077
Trade creditors............................................................. 3,264 4,017 -- --
Amounts owed to subsidiaries................................................ -- -- 4,248 2,027
Corporation tax............................................................. 1,281 1,208 28 --
Advance corporation tax..................................................... 384 263 384 263
Other taxes and social security............................................. 211 273 -- --
Other creditors............................................................. 85 148 -- 109
Pension contributions....................................................... 23 -- -- --
Accruals and deferred income................................................ 4,164 3,594 1 79
Dividend proposed........................................................... 1,534 1,053 1,534 1,053
--------- --------- --------- ---------
11,424 11,050 12,028 5,608
--------- --------- --------- ---------
--------- --------- --------- ---------
</TABLE>
Bank loans and overdrafts include L478,000 (1997: L494,000) of Economic
Development Bonds (see note 15).
FIRST TECHNOLOGY REPORT AND ACCOUNTS 1998 / 39
A-17
<PAGE>
15. CREDITORS: AMOUNTS FALLING DUE AFTER MORE THAN ONE YEAR
<TABLE>
<CAPTION>
GROUP COMPANY
----------- -----------
<S> <C> <C> <C> <C>
1998 1997 1998 1997
L000 L000 L000 L000
---- ---- ---- ----
Bank loans repayable:
Between one and two years....................................................... 479 494 -- --
Between two and five years...................................................... -- 494 -- --
---- ---- ---- ----
479 988 -- --
---- ---- ---- ----
---- ---- ---- ----
</TABLE>
Bank loans at 30th April 1998 and 30th April 1997 comprise Economic
Development Bonds which were issued to finance, and are secured upon, the
Group's investment in freehold land, buildings and equipment at its facilities
in Plymouth and Grand Blanc, Michigan. The Economic Development Bonds are
repayable by annual installments by December 1999 and interest is charged
quarterly at a variable economic rate.
16. PROVISIONS FOR LIABILITIES AND CHARGES
<TABLE>
<CAPTION>
DEFERRED OTHER
TAXATION PROVISIONS TOTAL
L000 L000 L000
--------- ------------- ---------
<S> <C> <C> <C>
1st May 1997........................................................................ -- 468 468
Charged/(utilised) in the year...................................................... (35) (295) (330)
Transferred to deferred tax debtor.................................................. 38 -- 38
Exchange differences................................................................ 8 -- 8
--------- --- ---
30th April 1998 11 173 184
--------- --- ---
--------- --- ---
</TABLE>
During the year the provision for restructuring costs of L255,000 was
credited to the exceptional profit arising on the disposal of the discontinued
activities. Other provisions at 30th April 1998 are in respect of vacant
leasehold costs.
The analysis of deferred tax is as follows:
<TABLE>
<CAPTION>
GROUP COMPANY
------------- -----------
<S> <C> <C> <C> <C>
1998 1997 1998 1997
L000 L000 L000 L000
----- ----- ---- ----
Deferred tax debtor (note 13)................................................... (211) (173) -- --
Deferred tax provision.......................................................... 11 -- -- --
----- ----- ---- ----
(200) (173) -- --
----- ----- ---- ----
----- ----- ---- ----
</TABLE>
The analysis of the amounts provided:
<TABLE>
<S> <C> <C> <C> <C>
Accelerated capital allowances...................................... (10) (26) -- --
Short term timing differences....................................... (190) (147) -- --
--- --- -- --
(200) (173) -- --
--- --- -- --
--- --- -- --
</TABLE>
FIRST TECHNOLOGY REPORT AND ACCOUNTS 1998 / 40
A-18
<PAGE>
17. PENSION FUNDING
The Group operates a pension scheme providing benefits based on final
pensionable pay. The scheme is closed to new members. The assets of the scheme
are held separately from those of the Group, being held in a trustee
administered fund. Contributions to the scheme are charged to the profit and
loss account so as to spread the cost of pensions over the employees' working
lives with the Group. The contributions are determined by an independent
qualified actuary on the basis of triennial valuations using the discounted
income method. The most recent valuation of the scheme was at 5th April 1997.
The assumptions which have the most significant effect on the results of the
valuation are those relating to the rate of return on investments and the rates
of increase in salaries and pensions. It was assumed that the investment returns
would be 9% per annum, salary increases would average 6.5% per annum and the
allowance for Limited Price Indexation on pensions accruing after April 1997
would be 4.3% per annum.
The most recent actuarial valuation showed that the value of the schemes
assets was L4,403,000 and that the actuarial value of those assets represented
101% of the benefits that had accrued to members after allowing for expected
future increases in earnings. The impact of the withdrawal of tax credits on
dividend income is not expected to have a significant effect on the assessed
contribution rates.
The Group also operates various defined contribution schemes established in
accordance with local conditions and practices in the countries concerned.
18. CALLED UP SHARE CAPITAL
<TABLE>
<CAPTION>
1998 1997
----------------------- -----------------------
<S> <C> <C> <C> <C>
NUMBER NUMBER
OF SHARES L000 OF SHARES L000
------------ --------- ------------ ---------
Authorised:
Ordinary shares of 10p each.......................................... 60,000,000 6,000 20,000,000 2,000
Allotted, called up and fully paid:
Ordinary shares of 10p each.......................................... 47,948,025 4,795 15,902,725 1,590
</TABLE>
At the Extraordinary General Meeting held on 21st November 1997, the
shareholders approved a 2 for 1 capitalisation issue.
FIRST TECHNOLOGY REPORT AND ACCOUNTS 1998 / 41
A-19
<PAGE>
The Company issued Ordinary Shares of 10p each, credited as fully paid, at
prices between 13p and 197p per share under the First Technology Employee, 1994
Executive and 1994 Savings Related Share Option Schemes on the following dates:
<TABLE>
<CAPTION>
NUMBER
DATE OF SHARES
- ------------------------------------------------------------------------------------------------------- ---------
<S> <C>
9th May 1997........................................................................................... 75,804
10th June 1997......................................................................................... 36,000
4th August 1997........................................................................................ 23,367
10th February 1998..................................................................................... 15,414
24th February 1998..................................................................................... 53,100
26th March 1998........................................................................................ 27,765
17th April 1998........................................................................................ 8,400
---------
239,850
---------
---------
</TABLE>
The number of shares issued has been adjusted to reflect the capitalisation
issue.
The share price at 30th April 1998 was 398p (1997: 229p) and the highest and
lowest share prices during the year were 398p and 229p respectively.
The following outstanding options have been granted to directors and
employees of the Group under the First Technology Employee Share Option Scheme
all of which are normally exercisable between 3 and 10 years from the date of
grant.
<TABLE>
<CAPTION>
NUMBER EXERCISE
LAST DATE WHEN EXERCISABLE OF SHARES PRICE
- --------------------------------------------------------------------------------------------- --------- -----------
<S> <C> <C>
3rd February 2002............................................................................ 8,400 13p
31st January 2004............................................................................ 27,000 l02p
19th January 2006............................................................................ 197,400 153p
24th February 2008........................................................................... 700,000 340p
</TABLE>
The following outstanding options have been granted to directors and
employees of the Group under the First Technology PLC 1994 Savings Related Share
Option Scheme. Options are normally exercisable after 3, 5 or 7 years from the
date of grant and within 6 months thereafter.
<TABLE>
<CAPTION>
NUMBER EXERCISE
DATE OF GRANT OF SHARES PRICE
- --------------------------------------------------------------------------------------------- --------- -----------
<S> <C> <C>
13th January 1995............................................................................ 133,924 99p
23rd August 1995............................................................................. 13,076 131p
9th January 1997............................................................................. 14,106 180p
14th August 1997............................................................................. 9,015 197p
</TABLE>
The number of options and the relevant exercise prices have been adjusted to
reflect the 2 for 1 capitalisation issue.
FIRST TECHNOLOGY REPORT AND ACCOUNTS 1998 / 42
A-20
<PAGE>
19. RESERVES
<TABLE>
<CAPTION>
SHARE OTHER PROFIT & LOSS
PREMIUM RESERVES ACCOUNT
L000 L000 L000
----------- --------- -------------
<S> <C> <C> <C>
GROUP
1st May 1997.................................................................. 9,052 (10,024) 18,158
Foreign currency translation.................................................. -- -- (492)
Capitalisation issue (note 18)................................................ (3,223) -- --
Premium on shares issued during the year...................................... 248 -- --
Identified goodwill on discontinued activities (note 3)....................... -- 403 --
Transfer of goodwill previously written off................................... -- 9,621 (9,621)
Retained profit for the year.................................................. -- -- 6,928
----------- --------- ------
30th April 1998............................................................... 6,077 -- 14,973
----------- --------- ------
----------- --------- ------
</TABLE>
Foreign currency translation is stated after a related taxation credit of
L23,000 (1997: L122,000).
<TABLE>
<CAPTION>
SHARE OTHER PROFIT & LOSS
PREMIUM RESERVES ACCOUNT
L000 L000 L000
----------- --------- -------------
<S> <C> <C> <C>
COMPANY
1st May 1997.................................................................. 9,052 -- 3,989
Foreign currency translation.................................................. -- -- (124)
Capitalisation issue (note 18)................................................ (3,223) -- --
Premium on shares issued during the year...................................... 248 -- --
Deficit for the year.......................................................... -- -- (1,171)
----------- --------- ------
30th April 1998............................................................... 6,077 -- 2,694
----------- --------- ------
----------- --------- ------
</TABLE>
Foreign currency translation is stated after a related taxation credit of
L23,000 (1997: L122,000).
The consolidated profit attributable to shareholders includes a profit of
L1,225,000 (1997: L841,000) which is dealt with in the financial statements of
the parent company.
FIRST TECHNOLOGY REPORT AND ACCOUNTS 1998 / 43
A-21
<PAGE>
20. RECONCILIATION OF MOVEMENTS IN EQUITY SHAREHOLDERS' FUNDS
<TABLE>
<CAPTION>
1998 1997
L000 L000
--------- ---------
<S> <C> <C>
Profit attributable to shareholders............................................................ 9,324 6,014
Dividends...................................................................................... (2,396) (1,716)
--------- ---------
6,928 4,298
Foreign currency translation................................................................... (492) (910)
Identified goodwill on discontinued activities previously written off.......................... 403 --
Issue of ordinary shares net of expenses....................................................... 230 453
--------- ---------
7,069 3,841
Equity shareholders' funds at 1st May 1997..................................................... 18,776 14,935
--------- ---------
Equity shareholders' funds at 30th April 1998.................................................. 25,845 18,776
--------- ---------
--------- ---------
</TABLE>
21. LEASE COMMITMENTS
At 30th April 1998, the Group's annual rental commitments under operating
leases were as shown below, analysed according to the period in which lease
expires.
<TABLE>
<CAPTION>
1998 1997
L000 L000
----- -----
<S> <C> <C>
Land and buildings:
Expiring within 1 year.............................................................................. 76 --
Expiring in years 2 to 5............................................................................ 23 139
Expiring thereafter................................................................................. 232 270
--- ---
331 409
--- ---
--- ---
Other assets:
Expiring within 1 year.............................................................................. 7 7
Expiring in years 2 to 5............................................................................ 13 15
--- ---
20 22
--- ---
--- ---
</TABLE>
FIRST TECHNOLOGY REPORT AND ACCOUNTS 1998 / 44
A-22
<PAGE>
22. RECONCILIATION OF OPERATING PROFIT TO NET CASH INFLOW FROM OPERATING
ACTIVITIES
<TABLE>
<CAPTION>
1998 1997
L000 L000
--------- ---------
<S> <C> <C>
Operating profit............................................................................... 11,706 9,l94
Depreciation................................................................................... 2,015 1,984
Increase in stocks............................................................................. (1,787) (555)
Decrease/(increase) in debtors................................................................. 2,515 (2,993)
Increase in creditors.......................................................................... 422 2,418
(Profit)/loss on disposal of fixed assets...................................................... (20) 8
Exchange differences........................................................................... 83 450
(Decrease)/increase in provisions.............................................................. (40) 79
--------- ---------
Net cash inflow from operating activities...................................................... 14,894 10,585
--------- ---------
--------- ---------
</TABLE>
23. ANALYSIS AND RECONCILIATION OF NET FUNDS
<TABLE>
<CAPTION>
1ST MAY CASH EXCHANGE 30TH APRIL
1997 FLOW MOVEMENT 1998
L000 L000 L000 L000
----------- --------- ------------- -----------
<S> <C> <C> <C> <C>
Cash in hand, at bank.................................................. 6,223 5,992 (252) 11,963
Short term deposits.................................................... -- 3,843 -- 3,843
----- --------- --- -----------
6,223 9,835 (252) 15,806
Debt due within 1 year................................................. (494) -- 16 (478)
Debt due after 1 year.................................................. (988) 485 24 (479)
----- --------- --- -----------
Net funds.............................................................. 4,741 l0,320 (2l2) 14,849
----- --------- --- -----------
----- --------- --- -----------
</TABLE>
<TABLE>
<CAPTION>
1998 1997
L000 L000
--------- ---------
<S> <C> <C>
Increase in cash in the year.................................................................... 5,992 4,261
Cash outflow from decrease in debt.............................................................. 485 500
Cash outflow/(inflow) from the increase/(decrease) in liquid resources.......................... 3,843 (750)
--------- ---------
Increase in net funds resulting from cash flows................................................. 10,320 4,011
Translation differences......................................................................... (212) (401)
--------- ---------
Increase in net funds in the year............................................................... 10,108 3,610
Net funds at 1st May............................................................................ 4,741 1,131
--------- ---------
Net funds at 30th April......................................................................... 14,849 4,74l
--------- ---------
--------- ---------
</TABLE>
FIRST TECHNOLOGY REPORT AND ACCOUNTS 1998 / 45
A-23
<PAGE>
The cash inflow from the disposal of the discontinued activities may be
analysed as follows:
<TABLE>
<CAPTION>
L000
---------
<S> <C>
Proceeds of the disposal.................................................................................. 2,127
Costs of the disposal..................................................................................... (117)
---------
Net cash consideration.................................................................................... 2,010
Consideration received after year end..................................................................... (118)
Overdraft disposed of..................................................................................... 541
---------
Cash inflow from the disposal............................................................................. 2,433
---------
---------
</TABLE>
24. DISPOSALS
On 21st November 1997 at an Extraordinary General Meeting, the shareholders
approved the disposal of the industrial section of First Technology Protection
Systems Limited and of First Technology Fire and Safety Limited, to a company
controlled by Mr Adams and Mr Brown. Mr Adams is a former director of First
Technology PLC and First Inertia Switch Limited. Mr Brown is a former director
of First Inertia Switch Limited.
<TABLE>
<CAPTION>
L000
---------
<S> <C> <C>
Net cash consideration (note 23).................................................................. 2,010
Net assets disposed of:
Tangible fixed assets............................................................................. (126)
Stocks............................................................................................ (859)
Debtors........................................................................................... (931)
Creditors......................................................................................... 471
Overdraft......................................................................................... 541
---------
(904)
---------
---------
1,106
Identified goodwill............................................................................... (403)
Release of provisions (note 16)................................................................... 255
---------
Profit on disposal (note 3)....................................................................... 958
---------
---------
</TABLE>
FIRST TECHNOLOGY REPORT AND ACCOUNTS 1998 / 46
A-24
<PAGE>
25. POST BALANCE SHEET EVENT
On 31st July 1998, First Technology (Holdings) Inc. disposed of AVC Inc.
("AVC") to Mr E Summers. Mr Summers is a director of AVC. Prior to the sale, the
Group's shareholding in AVC was redeemed for substantially all of its cash and
debtors. The remaining assets approximated to nil, for which the Group received
a nominal consideration. Goodwill attributable to AVC was written off through
the Profit and Loss Account in 1992.
COMPOSITION OF THE GROUP
First Technology PLC, which is registered in England and Wales, has the
following principal subsidiaries all of which are wholly but indirectly owned:
<TABLE>
<S> <C>
SUBSIDIARY NATURE OF BUSINESS
- --------------------------------------------- ---------------------------------------------
</TABLE>
THIS COMPANY IS REGISTERED IN ENGLAND AND WALES AND OPERATES IN THE UK:
<TABLE>
<S> <C>
First Inertia Switch Limited Designs, manufactures and supplies sensors
and electronic modules.
</TABLE>
THESE COMPANIES ARE INCORPORATED AND OPERATE IN THE USA:
<TABLE>
<S> <C>
First Technology (Holdings) Inc. Investment holding company
First Technology Safety Systems Inc. Designs, manufactures and supplies crash test
dummies and related equipment, services and
analytical products primarily for automotive
applications.
First Inertia Switch Limited Designs, manufactures and supplies sensors
and electronic modules.
</TABLE>
THIS COMPANY IS INCORPORATED AND OPERATES IN JAPAN:
<TABLE>
<S> <C>
K.K. First Technology Safety Systems Distributor of automotive crash test dummies
and related safety equipment and services.
</TABLE>
THIS COMPANY IS INCORPORATED AND OPERATES IN FRANCE:
<TABLE>
<S> <C>
First Technology SA. Manufactures and supplies automotive sensors
and electronic modules.
</TABLE>
FIRST TECHNOLOGY REPORT AND ACCOUNTS 1998 / 47
A-25
<PAGE>
ANNEX B
The following interim financial statements appear in First Technology PLC's
Interim Report to Shareholders.
GROUP PROFIT AND LOSS ACCOUNT
FOR THE SIX MONTHS TO 31ST OCTOBER 1998 (UNAUDITED)
<TABLE>
<CAPTION>
UNAUDITED UNAUDITED AUDITED
6 MONTHS TO 6 MONTHS TO 12 MONTHS TO
31ST OCTOBER 31ST OCTOBER 30TH APRIL
1998 1997 1998
NOTES L'000 L'000 L'000
----- ------------- ------------- -------------
<S> <C> <C> <C> <C>
TURNOVER
Continuing activities........................................... 26,338 24,910 50,487
Discontinued activities......................................... 2 41 2,780 3,784
------ ------ ------
Total........................................................... 26,379 27,690 54,271
------ ------ ------
OPERATING PROFIT/(LOSS)
Continuing activities........................................... 5,981 5,070 11,596
Discontinued Activities......................................... 2 (102) 135 110
------ ------ ------
Total........................................................... 5,879 5,205 11,706
------ ------ ------
Profit on sale of property...................................... -- 387 387
Profit on the disposal of discontinued activities............... 2 -- -- 958
Net Interest.................................................... 486 180 531
PROFIT ON ORDINARY ACTIVITIES BEFORE TAXATION................... 6,365 5,772 13,582
------ ------ ------
Tax on profit on ordinary activities............................ 3 (2,228) (1,899) (4,258)
------ ------ ------
PROFIT FOR THE PERIOD........................................... 4,137 3,873 9,324
Dividends....................................................... 4 (1,009) (861) (2,396)
------ ------ ------
TRANSFER TO RESERVES............................................ 3,128 3,012 6,928
------ ------ ------
BASIC EARNINGS PER SHARE........................................ 5 8.62P 8.10p 19.49p
------ ------ ------
HEADLINE EARNINGS PER SHARE..................................... 5 8.62P 7.29p 16.68p
------ ------ ------
DIVIDEND PER SHARE.............................................. 4 2.10P 1.80p 5.00p
</TABLE>
B-1
<PAGE>
GROUP BALANCE SHEET
AS AT 31ST OCTOBER 1998 (UNAUDITED)
<TABLE>
<CAPTION>
UNAUDITED UNAUDITED AUDITED
AS AT AS AT AS AT
31ST OCTOBER 31ST OCTOBER 30TH APRIL
1998 1997 1998
L'000 L'000 L'000
------------ ------------ -----------
<S> <C> <C> <C>
FIXED ASSETS.............................................................. 7,931 7,452 7,987
CURRENT ASSETS
Stocks.................................................................... 4,457 5,012 4,353
Debtors................................................................... 10,655 12,329 9,786
Cash...................................................................... 18,509 10,278 15,806
------------ ------------ -----------
33,621 27,619 29,945
------------ ------------ -----------
CREDITORS: AMOUNTS FALLING DUE ONE YEAR................................... (11,938) (12,347) (11,424)
------------ ------------ -----------
NET CURRENT ASSETS........................................................ 21,683 15,272 18,521
------------ ------------ -----------
TOTAL ASSETS LESS CURRENT LIABILITIES..................................... 29,614 22,724 26,508
CREDITORS: AMOUNTS FALLING DUE AFTER MORE THAN ONE YEAR................... (238) (714) (479)
PROVISIONS FOR LIABILITIES & CHARGES...................................... (164) (448) (184)
------------ ------------ -----------
NET ASSETS................................................................ 29,212 21,562 25,845
------------ ------------ -----------
CAPITAL AND RESERVES
Called up share capital................................................... 4,799 1,596 4,795
Share premium account..................................................... 6,118 9,197 6,077
Other reserves............................................................ -- (10,024) --
Profit and loss account................................................... 18,295 20,793 14,973
------------ ------------ -----------
EQUITY SHAREHOLDERS' FUNDS................................................ 29,212 21,562 25,845
------------ ------------ -----------
</TABLE>
STATEMENT OF RECOGNIZED GAINS AND LOSSES
FOR THE SIX MONTHS TO 31ST OCTOBER 1998 (UNAUDITED)
<TABLE>
<CAPTION>
UNAUDITED UNAUDITED AUDITED
6 MONTHS TO 6 MONTHS TO 12 MONTHS TO
31ST OCTOBER 31ST OCTOBER 30TH APRIL
1998 1997 1998
L'000 L'000 L'000
------------- ------------- -------------
<S> <C> <C> <C>
Profit attributable to shareholders..................................... 4,137 3,873 9,324
Currency translation differences on foreign currency net investments.... 194 (377) (492)
----- ----- -----
Total gains and losses for the period................................... 4,331 3,496 8,832
----- ----- -----
</TABLE>
B-2
<PAGE>
GROUP CASH FLOW STATEMENT
FOR THE SIX MONTHS TO 31ST OCTOBER 1998 (UNAUDITED)
<TABLE>
<CAPTION>
AUDITED
UNAUDITED UNAUDITED 12 MONTHS
6 MONTHS TO 6 MONTHS TO TO
31ST OCTOBER 31ST OCTOBER 30TH APRIL
1998 1997 1998
L' L'0 L'
NOTES 000 00 000
----- ------------- ------------- -----------
<S> <C> <C> <C> <C>
NET CASH INFLOW FROM OPERATING ACTIVITIES......................... 6 6,363 6,415 14,894
Returns on investments and servicing of finance:
Interest paid................................................... (34) (38) (64)
Interest received................................................. 530 175 553
------ ------ -----------
NET CASH INFLOW FROM RETURNS ON INVESTMENTS AND SERVICING OF
FINANCE......................................................... 496 137 489
TAXATION
UK corporation tax paid........................................... (18) (4) (1,269)
Overseas tax paid................................................. (1,684) (1,449) (3,075)
------ ------ -----------
TAXATION PAID..................................................... (1,702) (1,453) (4,344)
------ ------ -----------
CAPITAL EXPENDITURE AND FINANCIAL INVESTMENT
Purchase of tangible fixed assets................................. (1,028) (1,129) (2,781)
Sale of tangible fixed assets..................................... 12 72 126
Sale of property held for sale.................................... -- 1,187 1,187
Disposal of businesses............................................ 106 -- 2,433
------ ------ -----------
NET CASH (OUTFLOW)/INFLOW FROM CAPITAL EXPENDITURE AND FINANCIAL
INVESTMENT...................................................... (910) 130 965
EQUITY DIVIDENDS PAID............................................. (1,536) (1,053) (1,914)
MANAGEMENT OF LIQUID RESOURCES
Increase in short term deposits................................... (4,400) (5,785) (3,843)
------ ------ -----------
NET CASH (OUTFLOW) FROM MANAGEMENT OF LIQUID RESOURCES............ (4,400) (5,785) (3,843)
------ ------ -----------
NET CASH (OUTFLOW)/INFLOW BEFORE FINANCING........................ (1,689) (1,609) 6,247
FINANCING
Repayment of term loans........................................... (241) (244) (485)
Issue of share capital............................................ 45 151 230
------ ------ -----------
Net cash (outflow) from financing activities...................... (196) (93) (255)
------ ------ -----------
(Decrease)/increase in cash in the period......................... (1,885) (1,702) 5,992
------ ------ -----------
</TABLE>
B-3
<PAGE>
NOTES TO THE INTERIM FINANCIAL STATEMENTS
1. The results for the six months ended 31st October 1998 and 1997 are
unaudited. The results for the year ended 30th April 1998, as shown in this
statement, do not constitute statutory accounts within the meaning of
section 240 of the Companies Act 1985, but have been derived from the full
audited financial statements for the year ended 30th April 1998 which have
been filed with the Registrar of Companies. The report of the auditors on
the financial statements for the year ended 30th April 1998 was unqualified.
2. Discontinued activities in the current period comprise AVC Inc. ("AVC"). On
31st July 1998, First Technology (Holdings) Inc. disposed of AVC to Mr. E.
Summers, a director of AVC. Prior to the sale, the Group's shareholding in
AVC was redeemed for substantially all of its cash and debtors. The
remaining assets approximated to nil, for which the Group received a nominal
consideration. Goodwill attributable to AVC was written off through the
Profit and Loss Account in 1992. The comparative figures include the sales
and operating results of the Industrial Products Section of First Technology
Protection Systems Limited and First Technology Fire and Safety Limited,
sold in November 1997. These have been restated to include the sales and
operating results of AVC during those periods.
3. The tax charge reflects the anticipated rate for the full year on profit
before exceptional items.
4. The directors have declared an interim dividend of 2.10p per ordinary share
(1997: 1.80p per ordinary share). The dividend is payable on 1st March 1999
to shareholders on the register on 5th February 1999.
5. Basic earnings per share is based on the profit attributable to shareholders
after taxation of L4,137,000 (1997: L3,873,000) and 47,976,841 shares (1997:
47,820,159, as adjusted for the 2 for 1 capitalisation issue on 21st
November 1997), being the weighted average number of shares in issue for the
period. Headline earnings per share is based on the profit attributable to
shareholders after taxation, excluding the exceptional items, of L4,137,000
(1997: L3,486,000) and the same weighted average number of shares. Earnings
per share diluted in respect of share options is not materially lower.
6. Reconciliation of Operating Profit to Net Cash Inflow from Operating
Activities
<TABLE>
<CAPTION>
UNAUDITED UNAUDITED AUDITED
6 MONTHS TO 6 MONTHS TO 12 MONTHS TO
31ST OCTOBER 31ST OCTOBER 30TH APRIL
1998 1997 1998
L'000 L'000 L'000
------------- ------------- -------------
<S> <C> <C> <C>
Operating profit................................................... 5,879 5,205 11,706
Depreciation....................................................... 1,129 1,077 2,015
Increase in stock.................................................. (79) (1,580) (1,787)
(Increase)/decrease in debtors..................................... (557) 782 2,515
Increase in creditors.............................................. 76 1,063 422
Exchange differences............................................... (68) (74) 83
Loss/(profit) on disposal of fixed assets.......................... 3 (38) (20)
Decrease in provisions............................................. (20) (20) (40)
----- ------ ------
NET CASH INFLOW FROM OPERATING ACTIVITIES.......................... 6,363 6,415 14,894
----- ------ ------
</TABLE>
7. A copy of this report will be circulated to shareholders and copies will
also be available on application to the Company's registered office at 2
Columbus Drive, Summit Avenue, Southwood, Farnborough, Hants., GU14 0NZ.
B-4
<PAGE>
ANNEX C
SUMMARY OF SIGNIFICANT DIFFERENCES BETWEEN UK GAAP
AND US GAAP
The consolidated financial statements of First Technology PLC ("the
Company") and its subsidiaries ("the Group") are prepared and presented under
the historical cost convention in accordance with United Kingdom generally
accepted accounting principles ("UK GAAP"). UK GAAP differs in certain
significant respects from United States generally accepted accounting principles
("US GAAP"). Certain significant differences between UK GAAP and US GAAP as they
relate to the financial statements of the Company are summarised below. Such
summary should not be construed to be exhaustive. Given the inherent differences
between UK GAAP and US GAAP, the financial statements presented under UK GAAP
are not presented fairly, in all material respects under US GAAP. The Company
has not quantified these differences, nor prepared consolidated financial
statements under US GAAP, nor undertaken a reconciliation of UK GAAP and US GAAP
financial statements. Had the Company undertaken any such qualification or
preparation or reconciliation, other potentially significant accounting and
disclosure differences may have come to their attention which are not identified
below. Accordingly, the Company can provide no assurance that the identified
differences in the summary below represent all the principal differences
relating to the Company and the Group. Further, no attempt has been made to
identify future differences between UK GAAP and US GAAP as the result of
prescribed changes in accounting standards. Professional bodies that promulgate
UK GAAP and US GAAP have a number of projects that could affect future
comparisons such as this one. Finally, no attempt has been made to identify all
future differences between UK GAAP and US GAAP that may affect the financial
statements as a result of transactions or events that may occur in the future.
GOODWILL AND OTHER INTANGIBLE ASSETS
Until 30 April 1998, under UK GAAP, the Group had written off directly to
reserves the cost of goodwill which had arisen upon acquisitions. Goodwill has
been calculated as the excess of cost over the tangible assets acquired and
liabilities assumed on the basis of their fair value at the date of acquisition.
Subsequent to the Group's 30 April 1998 audited financial statements, UK GAAP
was amended such that the adoption of the new Financial Reporting Standard (FRS)
10 "Goodwill and Intangible Assets" means that purchased goodwill and intangible
assets are capitalised and amortised through the profit and loss account over a
maximum period of 20 years with retrospective application.
Under US GAAP, the cost of the investment should be assigned to tangible and
identified intangible assets acquired and liabilities assumed on the basis of
their fair value at the date of acquisition. Any excess of cost over the fair
value of the net assets acquired should be capitalised and then amortised to
profit and loss over a period, not exceeding 40 years, except where management
consider that there has been a permanent diminution in the value of goodwill,
whereupon this element of the goodwill is charged to profit and loss account
immediately. Identified intangible assets should be amortised to the profit and
loss account over their estimated useful economic lives which may not exceed
forty years.
DEFERRED TAXATION
Under UK GAAP, deferred taxation is only accounted for to the extent that it
is probable that a liability or asset will arise in the foreseeable future. The
calculation of deferred taxation is based upon timing differences between
taxable and accounting income. Under US GAAP, deferred taxation should be
accounted for on all timing differences, and a valuation allowance established
in respect of deferred taxation assets where it is more likely than not that
some portion would not be realised. Additionally, for US GAAP purposes deferred
taxes would be provided in respect of US GAAP adjustments to the book basis of
assets and liabilities.
C-1
<PAGE>
PENSIONS
In respect of defined benefit pension obligations, US GAAP requires the use
of a discount rate which reflects current market conditions in determining the
provision for pension benefits. UK GAAP permits the use of longer term discount
rates. In addition to the difference in discount rates, the amortisation
procedure under US GAAP applies a corridor approach for recognising gains and
losses in the determination of periodic pension expense. Under UK GAAP,
actuarial gains and losses are amortised normally over the expected remaining
service lives without such corridor approach. Additionally, for UK funding and
accounting purposes it is satisfactory to carry out actuarial valuations at
three year intervals whereas annual valuations are required under US GAAP.
DIVIDENDS
Under UK GAAP, proposed ordinary dividends are provided for in the year in
respect of which they are recommended by the Board of Directors. Under US GAAP,
such dividends are provided for in the period they are declared by the
Directors.
CURRENT ASSETS AND LIABILITIES
Current assets under UK GAAP include amounts which fall due after more than
one year. Under US GAAP such assets would be reclassified as non-current assets.
Provisions for liabilities and charges under UK GAAP include amounts due within
one year which would be classified as current liabilities under US GAAP.
CASH FLOW STATEMENTS
Cash flows under UK GAAP represent increases or decreases in cash, which is
comprised of cash at bank and in hand and overdrafts. Under US GAAP, cash flows
represent increases or decreases in cash and cash equivalents, which include
short term, highly liquid investments with original maturities of less than 90
days, and exclude overdrafts.
There are also certain differences in classification of items within the
cash flow statement between UK GAAP and US GAAP. Under UK GAAP, cash flows are
presented in the following categories: (i) operating activities; (ii) returns on
investments and servicing of finance; (iii) taxation; (iv) capital expenditure
and financial investment; (v) acquisitions and disposals; (vi) equity dividends
paid; (vii) management of liquid resources; and (viii) financing. Under US GAAP,
cash flows are segregated into operating, investing and financing activities.
Cash flows from taxation, returns on investments and servicing of finance
are, with the exception of any interest paid but capitalised, included as
operating activities under US GAAP. The payment of any dividends are included
under financing activities and any capitalised interest is included under
investing activities for US GAAP purposes. Additionally, under US GAAP, cash
flows from the purchase and sale of tangible fixed assets and the sale of debt
and equity investments are shown within investing activities.
FINANCIAL INSTRUMENTS
Under UK GAAP, gains and losses on hedges are deferred and recognised in
income when they have crystallised. There are less detailed requirements than
under US GAAP regarding the disclosure of information on financial instruments
not reflected on the balance sheet.
Under US GAAP, the applicable accounting practice for financial instruments
depends on management's intention for their disposition and may require
adjustments to their market or fair values. The following conditions must be met
for an item to be accounted for as a hedge: (i) the item to be hedged must
expose the company to price or interest rate risks; (ii) it must be probable
that the results of the futures contract will substantially offset the effects
of price or interest rate changes on the hedged item;
C-2
<PAGE>
and (iii) the futures contract must be designated by management as a hedge of
the item. For future contracts that are accounted for as a hedge of items
reported at the lower of cost or market, gains and losses on future contracts
are deferred and recognised in income when costs relating to the hedged item are
recognised in income. Any unrealised gains and losses at the balance sheet date
are disclosed in the accounts, together with applicable accounting policies, the
end of the period fair value of the forward contract, and the face or contract
or notional principal amount.
COMPENSATION EXPENSE
Under UK GAAP, qualified Save As You Earn (SAYE) schemes which offer
employees up to a 20% discount on stock prices do not result in compensation
expense. Under US GAAP, if all other qualifications for a non compensatory plan
are met, but the plan offers a discount on the stock price greater than 15%, the
plan is considered compensatory, and compensation expense is recognised.
Under UK GAAP, no compensation expense is recognised upon the issuance of
stock options if the exercise price for the option is equivalent to, or above,
the market price of the stock on the date of issue. Under US GAAP, compensation
expense is based upon the exercise price of the option in comparison to the
market price of the stock on the measurement date. The measurement date is fixed
only when both the number of shares to be issued and the exercise price are
fixed.
DISCLOSURE
In general, disclosures required under US GAAP are more extensive than those
required under UK GAAP. For example, under US GAAP more detailed disclosures
would be required with respect to pension expense (actuarial assumptions,
components of pension expense, reconciliation of funded status), taxes (details
of the components of current and deferred income tax expenses and deferred tax
items, including valuation allowances), and equity (a statement of changes in
shareholders equity and associated rights).
C-3
<PAGE>
Facsimile copies of the Letter of Transmittal, properly completed and duly
signed, will be accepted. The Letter of Transmittal, certificates for Shares and
any other required documents should be sent or delivered by each Shareholder of
the Company or his broker, dealer, commercial bank, trust company or other
nominee to the Depositary, at one of the addresses set forth below:
THE DEPOSITARY FOR THE OFFER IS:
IBJ WHITEHALL BANK
& TRUST COMPANY
<TABLE>
<S> <C> <C>
BY MAIL: Telephone: (212) BY HAND OR OVERNIGHT COURIER:
IBJ Whitehall Bank & Trust 858-2103 IBJ Whitehall Bank & Trust
Company By Facsimile Company
P.O. Box 84 Transmission: One State Street
Bowling Green Station (212) 858-2611 New York, NY 10004
New York, NY 10274-0084 To Confirm Facsimile Attn: Securities Processing
Attn: Reorganization Transmissions: Window
Operations (212) 858-2103 Subcellar One, (SC-1)
Department
</TABLE>
Questions and requests for assistance may be directed to the Information
Agent or the Dealer Manager at their respective addresses and telephone numbers
listed below. Additional copies of this Offer to Purchase, the Letter of
Transmittal and the Notice of Guaranteed Delivery may be obtained from the
Information Agent as set forth below and will be furnished promptly at
Purchaser's expense. You may also contact your broker, dealer, commercial bank,
trust company or other nominee for assistance concerning the Offer.
THE INFORMATION AGENT FOR THE OFFER IS:
[LOGO]
156 FIFTH AVENUE
NEW YORK, NEW YORK 10010
(212) 929-5500 (CALL COLLECT)
OR CALL TOLL FREE (800) 322-2885
THE DEALER MANAGER FOR THE OFFER IS:
[LOGO]
75 WALL STREET
NEW YORK, NEW YORK 10005
(212) 429-2000 EXT. 2442
OR CALL TOLL FREE (800) 457-0245 EXT. 2442
<PAGE>
LETTER OF TRANSMITTAL
TO TENDER SHARES OF COMMON STOCK
OF
CONTROL DEVICES, INC.
PURSUANT TO THE OFFER TO PURCHASE
DATED FEBRUARY 26, 1999
BY
FIRST TECHNOLOGY ACQUISITION CORP.
AN INDIRECT, WHOLLY OWNED SUBSIDIARY
OF
FIRST TECHNOLOGY PLC
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK
CITY TIME, ON THURSDAY, MARCH 25, 1999, UNLESS THE OFFER IS EXTENDED.
THE DEPOSITARY FOR THE OFFER IS:
IBJ Whitehall Bank & Trust Company
<TABLE>
<S> <C>
BY MAIL: BY HAND:
IBJ Whitehall Bank & Trust Company IBJ Whitehall Bank & Trust Company
P. O. Box 84 One State Street
Bowling Green Station New York, New York 10004
New York, New York 10274-0084 Attn: Securities Processing Window,
Attn: Reorganization Operations Department Subcellar One, (SC-1)
</TABLE>
By Facsimile Transmission:
(212) 858-2611
To Confirm Receipt of Notice of Guaranteed Delivery:
(212) 858-2103
<TABLE>
<CAPTION>
DESCRIPTION OF SHARES TENDERED
NAME(S) AND ADDRESS(ES) OF REGISTERED HOLDER(S)
(PLEASE FILL IN, IF BLANK, EXACTLY AS NAME(S) SHARE CERTIFICATE(S) ENCLOSED
APPEAR(S) ON THE CERTIFICATE(S)) (ATTACH ADDITIONAL SIGNED LIST IF NECESSARY)
<S> <C> <C> <C>
<CAPTION>
TOTAL NUMBER
OF SHARES NUMBER OF
CERTIFICATE REPRESENTED BY SHARES
NUMBER(S)* CERTIFICATE(S)* TENDERED**
<S> <C> <C> <C>
Total Number
of Shares
* Need not be completed by Shareholders delivering Shares by book-entry transfer through the
Depositary.
** Unless otherwise indicated, it will be assumed that all Shares represented by Certificates
delivered to the Depositary are being tendered. See Instruction 4.
/ / CHECK HERE IF CERTIFICATES HAVE BEEN LOST OR MUTILATED. SEE SECTION 11.
</TABLE>
<PAGE>
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET FORTH
ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE TRANSMISSION TO A NUMBER
OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY TO THE
DEPOSITARY. YOU MUST SIGN THIS LETTER OF TRANSMITTAL IN THE APPROPRIATE SPACE
PROVIDED BELOW AND COMPLETE THE SUBSTITUTE FORM W-9 SET FORTH BELOW.
THE INSTRUCTIONS ACCOMPANYING THIS LETTER OF TRANSMITTAL SHOULD BE READ
CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED.
This Letter of Transmittal is to be completed by holders of Shares (as
defined below) either if certificates evidencing Shares ("Certificates") are to
be forwarded with this Letter of Transmittal or unless an Agent's Message (as
defined in the Offer to Purchase) is utilized, if delivery of Shares is to be
made by book-entry transfer to an account maintained by IBJ Whitehall Bank &
Trust Company (the "Depositary") at The Depository Trust Company (the
"Book-Entry Transfer Facility"), pursuant to the procedures set forth in Section
3 of the Offer to Purchase (as defined below).
Shareholders whose Certificates are not immediately available or who cannot
deliver their Certificates and all other required documents to the Depositary
prior to the Expiration Date (as defined in the Offer to Purchase) or who cannot
complete the procedures for book-entry transfer on a timely basis, must tender
their Shares according to the guaranteed delivery procedures set forth in
Section 3 of the Offer to Purchase. See Instruction 2 hereof. DELIVERY OF
DOCUMENTS TO THE BOOK-ENTRY TRANSFER FACILITY (AS DEFINED IN THE OFFER TO
PURCHASE) DOES NOT CONSTITUTE DELIVERY TO THE DEPOSITARY.
/ / CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER
MADE TO AN ACCOUNT MAINTAINED BY THE DEPOSITARY WITH THE BOOK-ENTRY TRANSFER
FACILITY, AND COMPLETE THE FOLLOWING (ONLY PARTICIPANTS IN THE BOOK-ENTRY
TRANSFER FACILITY MAY DELIVER SHARES BY BOOK-ENTRY TRANSFER).
Name of Tendering Institution: _____________________________________________
Account Number: ____________________________________________________________
Transaction Code Number: ___________________________________________________
/ / CHECK HERE IF SHARES ARE BEING TENDERED PURSUANT TO A NOTICE OF GUARANTEED
DELIVERY PREVIOUSLY SENT TO THE DEPOSITARY AND COMPLETE THE FOLLOWING.
PLEASE ENCLOSE A PHOTOCOPY OF SUCH NOTICE OF GUARANTEED DELIVERY.
Name(s) of Registered Shareholder(s): ______________________________________
Window Ticket Number (if any): _____________________________________________
Date of Execution of Notice of Guaranteed Delivery: ________________________
Name of Institution which Guaranteed Delivery: _____________________________
NOTE: SIGNATURES MUST BE PROVIDED BELOW
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
2
<PAGE>
-----------------------------------------------
SPECIAL PAYMENT INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5, 6 AND 7)
To be completed ONLY if Certificates for Shares not tendered or not
accepted for payment and/or the check for the purchase price of Shares
accepted for payment are to be issued in the name of someone other than
the undersigned, or if Shares delivered by book-entry transfer that are
not accepted for payment are to be returned by credit to an account
maintained at the Book-Entry Transfer Facility other than the account
indicated above.
Issue check and/or certificate(s) to:
Name _____________________________________________________________________
__________________________________________________________________________
(PLEASE TYPE OR PRINT)
Address __________________________________________________________________
__________________________________________________________________________
(INCLUDE ZIP CODE)
_________________________________________________________________________
(RECIPIENT'S TAX IDENTIFICATION OR SOCIAL SECURITY NO.)
(ALSO COMPLETE SUBSTITUTE FORM W-9 BELOW)
---------------------------------------------------------------
---------------------------------------------------------------
SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5, 6 AND 7)
To be completed ONLY if Certificates for Shares not tendered or not
accepted for payment and/or the check for the purchase price of Shares
accepted for payment are to be sent to someone other than the undersigned
or to the undersigned at an address other than that shown above.
Mail check and/or certificate(s) to:
Name _____________________________________________________________________
__________________________________________________________________________
(PLEASE PRINT)
Address __________________________________________________________________
__________________________________________________________________________
(INCLUDE ZIP CODE)
--------------------------------------------------------------
3
<PAGE>
-------------------------------------------------------------------------
IMPORTANT:
SHAREHOLDER: SIGN HERE AND COMPLETE SUBSTITUTE
FORM W-9 BELOW
___________________________________________________________________________
___________________________________________________________________________
SIGNATURE(S) OF SHAREHOLDER(S)
Dated: _________________, 1999
(MUST BE SIGNED BY THE REGISTERED HOLDER(S) EXACTLY AS NAME(S) APPEAR(S) ON
THE CERTIFICATE OR ON A SECURITY POSITION LISTING OR BY PERSON(S)
AUTHORIZED TO BECOME REGISTERED HOLDER(S) BY CERTIFICATES AND DOCUMENTS
TRANSMITTED HEREWITH. IF SIGNATURE IS BY TRUSTEES, EXECUTORS,
ADMINISTRATORS, GUARDIANS, ATTORNEYS-IN-FACT, AGENTS, OFFICERS OR
CORPORATIONS OR OTHERS ACTING IN A FIDUCIARY OR REPRESENTATIVE CAPACITY,
PLEASE PROVIDE THE FOLLOWING INFORMATION. SEE INSTRUCTION 5.)
Name(s): __________________________________________________________________
(PLEASE TYPE OR PRINT)
___________________________________________________________________________
Capacity (Full Title): ____________________________________________________
___________________________________________________________________________
Address: __________________________________________________________________
___________________________________________________________________________
(INCLUDE A ZIP CODE)
Area Code and Telephone No.: ______________________________________________
(HOME)
______________________________________________
(BUSINESS)
Tax Identification or
Social Security No. __________________________________________________________
(COMPLETE SUBSTITUTE FORM W-9 BELOW)
GUARANTEE OF SIGNATURE(S)
(SEE INSTRUCTIONS 1 AND 5)
Authorized Signature(s): _____________________________________________________
Name: ________________________________________________________________________
(PLEASE TYPE OR PRINT)
Title: _______________________________________________________________________
Name of Firm: ________________________________________________________________
Address: _____________________________________________________________________
______________________________________________________________________________
(INCLUDE ZIP CODE)
Area Code and Telephone No.: _________________________________________________
Dated: ____________________, 1999
------------------------------------------------------------------------------
4
<PAGE>
TO BE COMPLETED BY ALL TENDERING SHAREHOLDERS OF SECURITIES
(SEE INSTRUCTION 9)
<TABLE>
<C> <S> <C>
- -----------------------------------------------------------------------------------------
PAYOR'S NAME: IBJ WHITEHALL BANK & TRUST COMPANY
- -----------------------------------------------------------------------------------------
SUBSTITUTE
FORM W-9
DEPARTMENT OF
THE TREASURY
INTERNAL
REVENUE SERVICE
PART 1--PLEASE PROVIDE YOUR TIN IN TIN ------------------
THE BOX AT RIGHT AND CERTIFY BY (Social Security Number
SIGNING AND DATING BELOW. or Employer
Identification Number)
-----------------------------------------------------------------
PAYER'S REQUEST FOR
TAXPAYER
IDENTIFICATION
NUMBER (TIN)
AND CERTIFICATION
PART 2--FOR PAYEES EXEMPT FROM BACKUP WITHHOLDING
(SEE INSTRUCTIONS)
-----------------------------------------------------------------
PART 3--CERTIFICATIONS--UNDER PENALTIES OF PERJURY, I CERTIFY
THAT:
(1) The number shown on this form is my correct Taxpayer
Identification Number (or I am waiting for a number to be issued
to me) and (2) I am not subject to backup withholding either
because: (a) I am exempt from backup withholding, or (b) I have
not been notified by the Internal Revenue Service (the "IRS")
that I am subject to backup withholding as a result of a failure
to report all interest or dividends, or (c) the IRS has notified
me that I am no longer subject to backup withholding.
Signature ------------------------------------ Date
------------------------ , 1999
- -----------------------------------------------------------------------------------------
</TABLE>
You must cross out item (2) above if you have been notified by the IRS that you
are subject to backup withholding because of underreporting interest or
dividends on your tax return.
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU WROTE "APPLIED FOR" IN PART 1
OF THE SUBSTITUTE FORM W-9.
- --------------------------------------------------------------------------------
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a taxpayer identification number
has not been issued to me, and either (1) I have mailed or delivered an
application to receive a taxpayer identification number to the appropriate
Internal Revenue Service Center or Social Security Administration Office or
(2) I intend to mail or deliver an application in the near future. I
understand that if I do not provide a taxpayer identification number to the
payor within 60 days, 31% of all reportable payments made to me will be
withheld.
<TABLE>
<S> <C>
Signature Date
</TABLE>
------------------------------------------------------------------------------
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP
WITHHOLDING OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE OFFER.
PLEASE REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER
IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR INSTRUCTIONS.
5
<PAGE>
Ladies and Gentlemen:
The undersigned hereby tenders to First Technology Acquisition Corp., an
Indiana corporation ("Purchaser") and an indirect, wholly owned subsidiary of
First Technology PLC, an English public limited company ("Parent"), the
above-described common shares, no par value (the "Shares"), of Control Devices,
Inc., an Indiana corporation (the "Company"), at a purchase price of $16.25 per
Share, net to the seller in cash, without interest thereon, upon the terms and
subject to the conditions set forth in the Offer to Purchase, dated February 26,
1999 (the "Offer to Purchase") and this related Letter of Transmittal (which,
together with any amendments or supplements thereto or hereto, collectively
constitute the "Offer"). The common share purchase rights (the "Rights")
provided for in a Rights Agreement dated as of May 7, 1998, as amended by
Amendment No. 1, dated as of February 22, 1999 (the "Rights Agreement"), between
the Company and BankBoston, N.A., are not applicable to the Offer, the Merger
Agreement or any of the transactions contemplated thereby. The undersigned
understands that Purchaser reserves the right to transfer or assign, in whole or
from time to time in part, to one or more direct or indirect wholly owned
subsidiary of Parent, the right to purchase all or any portion of the Shares
tendered pursuant to the Offer, but no such assignment will relieve Purchaser of
its obligations under the Offer or prejudice the rights of the tendering
shareholders to receive payment for Shares validly tendered and accepted for
payment pursuant to the Offer.
Subject to, and effective upon, acceptance for payment of, or payment for,
the Shares tendered herewith in accordance with the terms and subject to the
conditions of the Offer (including, if the Offer is extended or amended, the
terms or conditions of any such extension or amendment), the undersigned hereby
sells, assigns, and transfers to, or upon the order of, Purchaser all right,
title and interest in and to all of the Shares that are being tendered hereby
and any and all dividends on the Shares (including, without limitation, the
issuance of additional Shares pursuant to a stock dividend or stock split, the
issuance of other securities, the issuance of rights for the purchase of any
securities, or any cash dividends) that are declared or paid by the Company on
or after the date of the Offer to Purchase and are payable or distributable to
shareholders of record on a date prior to the transfer into the name of the
Purchaser or its nominees or transferees on the Company's stock transfer records
of the Shares purchased pursuant to the Offer (collectively "Distributions"),
and irrevocably constitutes and appoints the Depositary the true and lawful
agent and attorney-in-fact of the undersigned with respect to such Shares (and
any Distributions), with full power of substitution (such power of attorney
being deemed to be an irrevocable power coupled with an interest), to (i)
deliver Certificates evidencing such Shares (and any Distributions), or transfer
ownership of such Shares (and any Distributions) on the account books maintained
by the Book-Entry Transfer Facility (as defined in the Offer to Purchase),
together, in any such case, with all accompanying evidences of transfer and
authenticity to, or upon the order of, Purchaser, upon receipt by the Depositary
as the undersigned's agent, of the purchase price with respect to such Shares,
(ii) present such Shares (and any Distributions) for transfer on the books of
the Company, and (iii) receive all benefits and otherwise exercise all rights of
beneficial ownership of such Shares (and any Distributions), all in accordance
with the terms and subject to the conditions of the Offer.
6
<PAGE>
The undersigned hereby irrevocably appoints each designee of Purchaser as
the attorney-in-fact and proxy of the undersigned, each with full power of
substitution and resubstitution, to the full extent of the undersigned's rights
with respect to all Shares tendered herewith and accepted for payment by
Purchaser (and any Distributions), including without limitation the right to
vote such Shares (and any Distributions) in such manner as each such attorney
and proxy or his substitute will, in his sole discretion, deem proper. All such
powers of attorney and proxies, being deemed to be irrevocable, will be
considered coupled with an interest in the Shares tendered with this Letter of
Transmittal. Such appointment will be effective when, and only to the extent
that, Purchaser accepts such Shares for payment. Upon such acceptance for
payment, all prior powers of attorney and proxies given by the undersigned with
respect to such Shares (and any Distributions) will be revoked, without further
action, and no subsequent powers of attorney and proxies may be given with
respect thereto (and, if given, will be deemed ineffective). The designees of
Purchaser will, with respect to the Shares (and any Distributions) for which
such appointment is effective, be empowered to exercise all voting and other
rights of the undersigned with respect to such Shares (and any Distributions) as
they in their sole discretion may deem proper. Purchaser reserves the absolute
right to require that, in order for Shares to be deemed validly tendered,
immediately upon the acceptance for payment of such Shares, Purchaser or its
designees be able to exercise full voting rights with respect to such Shares
(and any Distributions), including voting at any meeting of shareholders then
scheduled.
The undersigned hereby represents and warrants that the undersigned has full
power and authority to tender, sell, assign and transfer the Shares tendered
hereby (and any Distributions) and that, when the same are accepted for payment
and paid for by Purchaser, Purchaser will acquire good, marketable and
unencumbered title thereto, free and clear of all liens, restrictions, charges
and encumbrances, and that the Shares tendered hereby (and any Distributions)
will not be subject to any adverse claim. The undersigned, upon request, will
execute and deliver any additional documents deemed by the Depositary or
Purchaser to be necessary or desirable to complete the sale, assignment and
transfer of Shares tendered hereby (and any Distributions). In addition, the
undersigned will promptly remit and transfer to the Depositary for the account
of Purchaser any and all Distributions in respect of the Shares tendered hereby,
accompanied by appropriate documentation of transfer, and pending such
remittance and transfer or appropriate assurance thereof, the Purchaser will be
entitled to all rights and privileges as owner of any such Distributions and may
withhold the entire purchase price or deduct from the purchase price the amount
of value thereof, as determined by Purchaser in its sole discretion.
The undersigned understands that the valid tender of Shares pursuant to any
one of the procedures described in Section 3 of the Offer to Purchase and in the
instructions to this Letter of Transmittal will constitute a binding agreement
between the undersigned and the Purchaser with respect to such Shares upon the
terms and subject to the conditions of the Offer.
All authority herein conferred or herein agreed to be conferred will not be
affected by, and will survive, the death or incapacity of the undersigned and
any obligation of the undersigned hereunder will be binding upon the heirs,
executors, administrators, legal representatives, successors and assigns of the
undersigned. Tenders of Shares pursuant to the Offer are irrevocable, except
that Shares tendered pursuant to the Offer may be withdrawn at any time on or
prior to the Expiration Date.
The undersigned recognizes that, under certain circumstances set forth in
the Offer to Purchase, the Purchaser may not be required to accept for payment
any of the Shares tendered hereby.
7
<PAGE>
Unless otherwise indicated in this Letter of Transmittal under "Special
Payment Instructions," please issue the check for the purchase price and return
any Certificates evidencing Shares not tendered or not accepted for payment in
the name(s) of the registered holder(s) appearing under "Description of Shares
Tendered." Similarly, unless otherwise indicated under "Special Delivery
Instructions," please mail the check for the purchase price and return any
Certificates evidencing Shares not tendered or not accepted for payment (and
accompanying documents, as appropriate) to the address(es) of the registered
holder(s) appearing under "Description of Shares Tendered." In the event that
both the "Special Payment Instructions" and the "Special Delivery Instructions"
are completed, please issue the check for the purchase price and return any such
Certificates evidencing Shares not tendered or not accepted for payment (and
accompanying documents, as appropriate) in the name(s) of, and deliver such
check and return such Certificates (and accompanying documents, as appropriate)
to, the person(s) so indicated. Unless otherwise indicated herein under "Special
Payment Instructions," in the case of book-entry delivery of Shares, please
credit the account maintained at the Book-Entry Transfer Facility with respect
to any Shares not accepted for payment. The undersigned recognizes that
Purchaser has no obligation pursuant to the "Special Payment Instructions" to
transfer any Shares from the name of the registered holder if the Purchaser does
not accept for payment any of the Shares tendered hereby.
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER
1. GUARANTEE OF SIGNATURES. Except as otherwise provided below, no
signature guarantee is required on this Letter of Transmittal (a) if this Letter
of Transmittal is signed by the registered holder(s) (which term, for the
purposes of this document, includes any participant in any of the Book-Entry
Transfer Facility systems whose name appears on a security position listing as
the owner of the Shares) of Shares tendered herewith and such registered holder
has not completed either the box entitled "Special Delivery Instructions" or the
box entitled "Special Payment Instructions" on this Letter of Transmittal or (b)
if such Shares are tendered for the account of a financial institution
(including most commercial banks, savings and loan associations and brokerage
houses) that is a participant in the Security Transfer Agents Medallion Program,
the New York Stock Exchange Medallion Signature Guarantee Program or the Stock
Exchange Medallion Program (an "Eligible Institution"). In all other cases, all
signatures on the Letter of Transmittal must be guaranteed by an Eligible
Institution. See Instruction 1. If the Certificates are registered in the name
of a person other than the signer of this Letter of Transmittal or if payment is
to be made or Certificates for Shares not tendered or not accepted for payment
are to be returned to a person other than the registered holder of the
Certificates tendered, then the tendered Certificates must be endorsed or
accompanied by duly executed stock powers, in either case signed exactly as the
name or names of the registered owner or owners appear on the Certificates, with
the signatures on the Certificates or stock powers guaranteed by an Eligible
Institution as provided in this Letter of Transmittal. See Instructions 1 and 5.
8
<PAGE>
2. REQUIREMENTS OF TENDER. This Letter of Transmittal is to be completed by
shareholders if either Certificates evidencing Shares are to be forwarded with
this Letter of Transmittal or, unless an Agent's Message is utilized, if
delivery of Shares is to be made pursuant to the procedures for book-entry
transfer set forth in Section 3 of the Offer to Purchase. For Shares to be
validly tendered pursuant to the Offer, either (a) the appropriate Letter of
Transmittal (or a manually signed facsimile thereof), properly completed and
duly executed, with any required signature guarantees or an Agent's Message in
connection with a book-entry transfer of Shares, and any other documents
required by this Letter of Transmittal, must be received by the Depositary at
one of its addresses set forth in this Letter of Transmittal on or prior to the
Expiration Date and either (i) Certificates representing tendered Shares must be
received by the Depositary at one of those addresses on or prior to the
Expiration Date or (ii) Shares must be delivered pursuant to the procedures for
book-entry transfer set forth in Section 3 of the Offer to Purchase and a
Book-Entry Confirmation (as defined in the Offer to Purchase) must be received
by the Depositary on or prior to the Expiration Date or (b) the tendering
Shareholder must comply with the guaranteed delivery procedures set forth below
and in Section 3 of the Offer to Purchase.
Shareholders whose Certificates are not immediately available or who cannot
deliver their Certificates and all other required documents to the Depositary or
complete the procedures for book-entry transfer on or prior to the Expiration
Date may nevertheless tender their Shares by following the guaranteed delivery
procedures set forth in Section 3 of the Offer to Purchase. Pursuant to such
procedure: (i) such tender must be made by or through an Eligible Institution,
(ii) a properly completed and duly executed Notice of Guaranteed Delivery,
substantially in the form made available by Purchaser, must be received by the
Depositary on or prior to the Expiration Date, and (iii) Certificates
representing all tendered Shares in proper form for transfer, or a Book-Entry
Confirmation with respect to all the tendered Shares, together with a Letter of
Transmittal (or a manually signed facsimile thereof), properly completed and
duly executed, and any required signature guarantees (or, in the case of
book-entry transfers, an Agent's Message (as defined in the Offer to Purchase)
and any other documents required by this Letter of Transmittal, must be received
by the Depositary within three New York Stock Exchange trading days after the
date of such Notice of Guaranteed Delivery. If Certificates are forwarded
separately to the Depositary, a properly completed and duly executed Letter of
Transmittal (or a manually signed facsimile thereof) must accompany each
delivery.
THE METHOD OF DELIVERY OF CERTIFICATES, THIS LETTER OF TRANSMITTAL AND ANY
OTHER REQUIRED DOCUMENTS IS AT THE OPTION AND SOLE RISK OF THE TENDERING
SHAREHOLDER AND DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE
DEPOSITARY. IF DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT
REQUESTED, PROPERLY INSURED, IS RECOMMENDED. IN ALL CASES, SUFFICIENT TIME
SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY.
No alternative, conditional or contingent tenders will be accepted and no
fractional Shares will be purchased. All tendering Shareholders, by execution of
this Letter of Transmittal (or a manually signed facsimile thereof), waive any
right to receive any notice of the acceptance of their Shares for payment.
3. INADEQUATE SPACE. If the space provided in this Letter of Transmittal is
inadequate, the information required under "Description of Shares Tendered"
should be listed on a separate signed schedule attached to this Letter of
Transmittal.
4. PARTIAL TENDERS. If fewer than all of the Shares represented by any
Certificates delivered to the Depositary with this Letter of Transmittal are to
be tendered, fill in the number of Shares which are to be tendered in the box
entitled "Number of Shares Tendered." In such cases, a new Certificate for the
remainder of the Shares that were evidenced by your old Certificate(s) will be
sent, without expense, to the person(s) signing this Letter of Transmittal,
unless otherwise provided in the box entitled "Special Payment Instructions" or
the box entitled "Special Delivery Instructions" on this Letter of Transmittal,
as soon as practicable after the Expiration Date. All Shares evidenced by
Certificate(s) delivered to the Depositary will be deemed to have been tendered
unless otherwise indicated.
9
<PAGE>
5. SIGNATURES ON LETTER OF TRANSMITTAL, INSTRUMENTS OF TRANSFER AND
ENDORSEMENTS. If this Letter of Transmittal is signed by the registered
holder(s) of the Shares tendered hereby, the signature(s) must correspond
exactly with the name(s) as written on the face of the Certificate(s) without
alteration, enlargement or any change whatsoever.
If any of the Shares tendered hereby are owned of record by two or more
joint owners, all the owners must sign this Letter of Transmittal.
If any of the tendered Shares are registered in different names on several
Certificates, it will be necessary to complete, sign and submit as many separate
Letters of Transmittal as there are different registrations of Certificates.
If this Letter of Transmittal or any Certificates or instruments of transfer
are signed by a trustee, executor, administrator, guardian, attorney-in-fact,
officer of a corporation or other person acting in a fiduciary or representative
capacity, that person should so indicate when signing, and proper evidence
satisfactory to the Purchaser of that person's authority to so act must be
submitted.
If this Letter of Transmittal is signed by the registered holder(s) of the
Shares listed and transmitted hereby, no endorsements of Certificates or
separate instruments of transfer are required unless payment is to be made, or
Certificates not tendered or not purchased are to be issued or returned, to a
person other than the registered holder(s). Signatures on the Certificates or
instruments of transfer must be guaranteed by an Eligible Institution.
If this Letter of Transmittal is signed by a person other than the
registered holder(s) of the Shares evidenced by the Certificate(s) listed and
transmitted hereby, the Certificate(s) must be endorsed or accompanied by
appropriate instruments of transfer, in either case signed exactly as the
name(s) of the registered holder(s) appear on the Certificates for such Shares.
Signatures on the Certificates or instruments of transfer must be guaranteed by
an Eligible Institution.
6. TRANSFER TAXES. Except as set forth in this Instruction 6, the Purchaser
will pay or cause to be paid any transfer taxes with respect to the transfer and
sale of Shares to it or its order pursuant to the Offer. If, however, payment of
the purchase price is to be made to, or (in the circumstances permitted hereby)
if Certificates for Shares not tendered or not purchased are to be registered in
the name of, any person other than the registered holder(s), or if tendered
Certificates are registered in the name of any person other than the person(s)
signing this Letter of Transmittal, the amount of any transfer taxes (whether
imposed on the registered holder(s) or such person) payable on account of the
transfer to such person will be deducted from the purchase price unless
satisfactory evidence of the payment of such taxes or exemption therefrom is
submitted.
EXCEPT AS PROVIDED IN THIS INSTRUCTION 6, IT WILL NOT BE NECESSARY FOR
TRANSFER TAX STAMPS TO BE AFFIXED TO THE CERTIFICATE(S) LISTED IN THIS LETTER OF
TRANSMITTAL.
7. SPECIAL PAYMENT AND DELIVERY INSTRUCTIONS. If a check and Certificates
for unpurchased Shares are to be issued in the name of a person other than the
signer of this Letter of Transmittal or if a check is to be sent and
Certificates are to be returned to someone other than the signer of this Letter
of Transmittal or to an address other than that shown above, the appropriate
boxes on this Letter of Transmittal should be completed. If any tendered Shares
are not purchased for any reason and the Shares are delivered by book-entry
transfer, the Shares will be credited to an account maintained at the Book-Entry
Transfer Facility.
8. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Questions and requests for
assistance may be directed to the Information Agent at its address or telephone
number set forth below. Requests for additional copies of the Offer to Purchase,
this Letter of Transmittal and the Notice of Guaranteed Delivery may be directed
to the Information Agent or to brokers, dealers, commercial banks and trust
companies. Such materials will be furnished at Purchaser's expense.
10
<PAGE>
9. WAIVER OF CONDITIONS. The conditions of the Offer may be waived by the
Purchaser (subject to certain limitations in the Merger Agreement (as defined in
the Offer to Purchase)), in whole or in part, at any time or from time to time,
in the Purchaser's sole discretion.
10. BACKUP WITHHOLDING TAX. Each tendering Shareholder is required to
provide the Depositary with a correct Taxpayer Identification Number ("TIN") on
Substitute Form W-9, which is provided under "Important Tax Information" below
and to certify that the Shareholder is not subject to backup withholding.
Failure to provide the information on the Substitute Form W-9 may subject the
tendering Shareholder to a penalty and 31% federal income tax backup withholding
on the payment of the purchase price for the Shares. If the tendering
Shareholder has not been issued a TIN and has applied for a TIN or intends to
apply for a TIN in the near future, the tendering Shareholder should follow the
instructions set forth in Part III of the Substitute Form W- 9 and sign and date
both the Substitute Form W-9 and the "Certificate of Awaiting Taxpayer
Identification." If the Shareholder has indicated in Part III that a TIN has
been applied for and the Depositary is not provided with a TIN by the time of
payment, the Depositary will withhold 31% of all payments of the purchase price,
if any, made thereafter pursuant to the Offer until a TIN is provided to the
Depositary.
11. LOST OR DESTROYED CERTIFICATES. If any Certificate(s) representing
Shares has been lost or destroyed, the holders should promptly notify the
Depositary, IBJ Whitehall Bank & Trust Company, at (212) 858-2103. The holders
will then be instructed as to the procedure to be followed in order to replace
the Certificate(s). This Letter of Transmittal and related documents cannot be
processed until the procedures for replacing lost or destroyed Certificates have
been followed.
IMPORTANT: THIS LETTER OF TRANSMITTAL OR A MANUALLY SIGNED FACSIMILE HEREOF,
TOGETHER WITH ANY REQUIRED SIGNATURE GUARANTEES, OR, IN THE CASE OF BOOK-ENTRY
TRANSFER, AN AGENT'S MESSAGE (TOGETHER WITH CERTIFICATES OR A BOOK-ENTRY
CONFIRMATION FOR SHARES AND ANY OTHER REQUIRED DOCUMENTS) MUST BE RECEIVED BY
THE DEPOSITARY, OR A NOTICE OF GUARANTEED DELIVERY MUST BE RECEIVED BY THE
DEPOSITARY, ON OR PRIOR TO THE EXPIRATION DATE.
IMPORTANT TAX INFORMATION
Under current federal income tax law, a Shareholder whose tendered Shares
are accepted for payment is required to provide the Depositary (as payor) with
such Shareholder's correct TIN on Substitute Form W-9 below. If such Shareholder
is an individual, the TIN is such Shareholder's social security number. If the
tendering Shareholder has not been issued a TIN and has applied for a TIN or
intends to apply for a TIN in the near future, the Shareholder should so
indicate on the Substitute Form W-9. See Instruction 10. If the Depositary is
not provided with the correct TIN, the Shareholder may be subject to a $50
penalty imposed by the Internal Revenue Service. In addition, payments that are
made to the Shareholder with respect to Shares purchased pursuant to the Offer
may be subject to backup federal income tax withholding.
Certain Shareholders (including, among others, all corporations and certain
foreign individuals) are not subject to these backup withholding and reporting
requirements and should indicate their status by writing "exempt" across the
face of, and by signing and dating, the Substitute Form W-9. In order for a
foreign individual to qualify as an exempt recipient, that Shareholder must
submit a statement, signed under penalties of perjury, attesting to that
individual's exempt status. Forms for such statements can be obtained from the
Depositary. See the enclosed Guidelines for Certificates of Taxpayer
Identification Number on Substitute Form W-9 for additional instructions.
If backup withholding applies, the Depositary is required to withhold 31% of
any payments made to the Shareholder. Backup withholding is not an additional
tax. Rather, the federal income tax liability of persons subject to backup
withholding will be reduced by the amount of tax withheld. If withholding
results in an overpayment of taxes, a refund may be obtained from the Internal
Revenue Service.
11
<PAGE>
PURPOSE OF SUBSTITUTE FORM W-9
To prevent backup federal income tax withholding with respect to payment of
the purchase price for Shares purchased pursuant to the Offer, a shareholder
must provide the Depositary with his correct TIN by completing the Substitute
Form W-9 below, certifying that the TIN provided on Substitute Form W-9 is
correct (or that the shareholder is awaiting a TIN) and that (i) such
shareholder is exempt from backup withholding, (ii) the shareholder has not been
notified by the Internal Revenue Service that he is subject to backup
withholding as a result of failure to report all interest or dividends, or (iii)
the Internal Revenue Service has notified the shareholder that he is no longer
subject to backup withholding.
WHAT NUMBER TO GIVE THE DEPOSITARY
The shareholder is required to give the Depositary the social security
number or employer identification number of the record holder of the Shares
tendered hereby. If the Shares are registered in more than one name or are not
in the name of the actual owner, consult the enclosed Guidelines for
Certification of Taxpayer Identification Number on Substitute Form W-9 for
additional guidance on which number to report.
MANUALLY SIGNED FACSIMILE COPIES OF THE LETTER OF TRANSMITTAL, PROPERLY
COMPLETED AND DULY EXECUTED, WILL BE ACCEPTED. THE LETTER OF TRANSMITTAL,
CERTIFICATES FOR SHARES AND ANY OTHER REQUIRED DOCUMENTS SHOULD BE SENT OR
DELIVERED BY EACH SHAREHOLDER OF THE COMPANY OR HIS BROKER, DEALER, COMMERCIAL
BANK, TRUST COMPANY OR OTHER NOMINEE TO THE DEPOSITARY AT ONE OF ITS ADDRESSES
SET FORTH ON THE FIRST PAGE.
Questions and requests for assistance may be directed to the Information
Agent or the Dealer Manager at their respective addresses and telephone numbers
listed below. Additional copies of the Offer to Purchase, the Letter of
Transmittal and other tender offer materials may be obtained from the
Information Agent or the Dealer Manager as set forth below, and will be
furnished promptly at the Purchaser's expense. You may also contact your broker,
dealer, commercial bank, trust company or other nominee for assistance
concerning the Offer.
THE INFORMATION AGENT FOR THE OFFER IS:
[LOGO]
156 FIFTH AVENUE
NEW YORK, NEW YORK 10010
(212) 929-5500 (CALL COLLECT)
OR CALL TOLL FREE (800) 322-2885
THE DEALER MANAGER FOR THE OFFER IS:
[LOGO]
75 WALL STREET
NEW YORK, NEW YORK 10005
(212) 429-2000 EXT. 2442
OR CALL TOLL FREE (800) 457-0245 EXT. 2442
<PAGE>
NOTICE OF GUARANTEED DELIVERY
FOR
TENDER OF SHARES OF COMMON STOCK
OF
CONTROL DEVICES, INC.
(NOT TO BE USED FOR SIGNATURE GUARANTEES)
This Notice of Guaranteed Delivery, or one substantially equivalent to this
form, must be used to accept the Offer (as defined below) if certificates
representing shares of common stock, no par value (the "Shares"), of Control
Devices, Inc., an Indiana corporation, are not immediately available or time
will not permit all required documents to reach IBJ Whitehall Bank & Trust
Company (the "Depositary") on or prior to the Expiration Date (as defined in the
Offer to Purchase), or the procedures for delivery by book-entry transfer cannot
be completed on a timely basis. This Notice of Guaranteed Delivery may be
delivered by hand, transmitted by telegram, facsimile transmission or mailed to
the Depositary. See Section 3 of the Offer to Purchase.
THE DEPOSITARY FOR THE OFFER IS:
IBJ Whitehall Bank & Trust Company
<TABLE>
<S> <C>
BY MAIL: BY HAND AND OVERNIGHT DELIVERY:
IBJ Whitehall Bank & Trust Company IBJ Whitehall Bank & Trust Company
P. O. Box 84 One State Street
Bowling Green Station New York, New York 10004
New York, New York 10274-0084 Attn: Securities Processing Window,
Attn: Reorganization Operations Department Subcellar One, (SC-1)
</TABLE>
By Facsimile Transmission:
(212) 858-2611
To Confirm Receipt of Notice of Guaranteed Delivery:
(212) 858-2103
DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS OTHER THAN AS
SET FORTH ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA A FACSIMILE TRANSMISSION TO
A NUMBER OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY.
This Notice of Guaranteed Delivery is not to be used to guarantee
signatures. If the instructions to the Letter of Transmittal require a signature
to be guaranteed by an "Eligible Institution," such signature guarantee must
appear in the applicable space provided in the signature box on the Letter of
Transmittal.
The Eligible Institution that completes this form must communicate the
guarantee to the Depositary and must deliver the Letter of Transmittal and
certificates for Shares to the Depositary within the time period shown herein.
Failure to do so could result in a financial loss to such Eligible Institution.
THE GUARANTEE ON THE REVERSE SIDE MUST BE COMPLETED.
<PAGE>
Ladies and Gentlemen:
The undersigned hereby tenders to First Technology Acquisition Corp., an
Indiana corporation and an indirect, wholly owned subsidiary of First Technology
PLC, an English public limited company, upon the terms and subject to the
conditions set forth in the Offer to Purchase, dated February 26, 1999 (the
"Offer to Purchase"), and the related Letter of Transmittal (which, together
with any amendments or supplements thereto, collectively constitute the
"Offer"), receipt of which is hereby acknowledged, the number of Shares
indicated below pursuant to the guaranteed delivery procedures set forth in
Section 3 of the Offer to Purchase.
Number of Shares: ____________________________
Certificate No(s). (if available): _________________
If Share(s) will be tendered by book-entry transfer, check the box.
/ / The Depository Trust Company
Account Number: _______________________________
Date: ________________ Area Code and Telephone Number(s): ________________
Name(s) of Record Holder(s): _____ Signature(s): ____________________________
(Please Print)
Address(es): _________________________________________________________________
(Zip Code)
THE GUARANTEE SET FORTH BELOW MUST BE COMPLETED
GUARANTEE
(Not to be used for signature guarantee)
The undersigned, a firm that is a bank, broker, dealer, credit union,
savings association or other entity which is a member at the Securities
Transfer Agents Medallion Program, hereby guarantees to deliver to the
Depositary at one of its addresses set forth above (i) the certificates
representing all tendered Shares, in proper form for transfer, or a Book Entry
Confirmation (as defined in Section 3 of the Offer to Purchase) with respect
to such Shares, together with the properly completed and duly executed Letter
of Transmittal (or a manually signed facsimile thereof), with all required
signature guarantees, or, (ii) in the case of a book-entry transfer of Shares,
an Agent's Message (as defined in Section 2 of the Offer to Purchase), and all
other documents required by the Letter of Transmittal, all within three New
York Stock Exchange trading days after the date hereof. A NYSE trading day is
any day on which the NYSE is open for business.
<TABLE>
<S> <C>
Name of Firm: AUTHORIZED SIGNATURE
Address: Name:
PLEASE TYPE OR PRINT
Title:
ZIP CODE
Area Code and
Tel. No.: Dated: , 1999
</TABLE>
NOTE: DO NOT SEND CERTIFICATES FOR SHARES WITH THIS NOTICE OF GUARANTEED
DELIVERY. CERTIFICATES FOR SHARES SHOULD BE DELIVERED ONLY WITH THE
LETTER OF TRANSMITTAL.
<PAGE>
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
CONTROL DEVICES, INC.
AT
$16.25 NET PER SHARE
BY
FIRST TECHNOLOGY ACQUISITION CORP.
AN INDIRECT, WHOLLY OWNED SUBSIDIARY
OF
FIRST TECHNOLOGY PLC
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK
CITY TIME, ON THURSDAY, MARCH 25, 1999, UNLESS THE OFFER IS EXTENDED.
To Brokers, Dealers, Commercial Banks, February 26, 1999
Trust Companies and Other Nominees:
We have been appointed by First Technology Acquisition Corp., an Indiana
corporation ("Purchaser") and an indirect, wholly owned subsidiary of First
Technology PLC, an English public limited company ("Parent"), to act as Dealer
Manager in connection with the Purchaser's Offer to Purchase all the
outstanding shares of common stock, no par value (the "Shares"), of Control
Devices, Inc., an Indiana corporation (the "Company"), at a purchase price of
$16.25 per Share, net to the seller in cash, without interest thereon, upon
the terms and subject to the conditions set forth in the Offer to Purchase
dated February 26, 1999 (the "Offer to Purchase") and the related Letter of
Transmittal (which, together with any amendments or supplements thereto,
collectively constitute the "Offer"), enclosed herewith. The common share
purchase rights (the "Rights") provided for in a Rights Agreement dated as of
May 7, 1998, as amended by Amendment No. 1, dated as of February 22, 1999 (the
"Rights Agreement"), between the Company and BankBoston, N.A., are not
applicable to the Offer, the Merger Agreement or any of the transactions
contemplated thereby. Please furnish copies of the enclosed materials to those
of your clients for whose accounts you hold Shares in your name or in the name
of your nominee.
Enclosed herewith for your information and for forwarding to your clients
are copies of the following documents:
1. Offer to Purchase, dated February 26, 1999.
2. Letter of Transmittal to tender Shares for your use and for the
information of your clients, together with Guidelines of the Internal
Revenue Service for Certification of Taxpayer Identification Number on
Substitute Form W-9 providing information relating to backup federal
income tax withholding. Manually signed facsimile copies of the Letter of
Transmittal may be used to tender Shares.
3. A letter to shareholders of the Company from Ralph R. Whitney,
Chairman of the Company, together with a Solicitation/Recommendation
Statement on Schedule 14D-9.
4. Notice of Guaranteed Delivery for Tender of Shares of Common Stock
to be used to accept the Offer if neither of the two procedures for
tendering Shares set forth in the Offer to Purchase can be completed on a
timely basis.
<PAGE>
5. A form of letter which may be sent to your clients for whose
accounts you hold Shares registered in your name or in the name of your
nominee, with space provided for obtaining such clients' instructions with
regard to the Offer.
6. Return envelope addressed to the Depositary.
YOUR PROMPT ACTION IS REQUESTED. WE URGE YOU TO CONTACT YOUR CLIENTS AS
PROMPTLY AS POSSIBLE. PLEASE NOTE THAT THE OFFER AND WITHDRAWAL RIGHTS WILL
EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON THURSDAY, MARCH 25, 1999,
UNLESS THE OFFER IS EXTENDED.
Please note the following:
1. The tender price is $16.25 per Share, net to the seller in cash
without interest thereon, upon the terms and subject to the conditions set
forth in the Offer to Purchase.
2. The Offer is not conditioned upon the receipt of financing. See
Section 9 of the Offer to Purchase regarding the financing commitments
obtained by Parent.
3. The Offer is conditioned upon, among other things: (i) there being
validly tendered and not withdrawn prior to the Expiration Date that
number of common Shares of the Company that (together with any Shares
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,
calculated on a fully diluted basis on the date of purchase (the "Minimum
Condition"), (ii) the approval by the shareholders of Parent of each of
the acquisition of the Company, an increase in share capital and certain
other related matters at an extraordinary general meeting ("Parent
Shareholder Approval"), and (iii) the admission of certain securities to
be issued in a rights offering by an affiliate of Parent to the Official
List of the London Stock Exchange (the "Listing Condition"). For
additional information regarding Parent Shareholder Approval and the
Listing Condition, see Section 9 of the Offer to Purchase.
4. The Offer is being made for all of the outstanding Shares.
5. Tendering Shareholders will not be obligated to pay brokerage fees
or commissions or, except as set forth in Instruction 6 of the Letter of
Transmittal, transfer taxes on the purchase of Shares by Purchaser
pursuant to the Offer. However, federal income tax backup withholding at a
rate of 31% may be required, unless an exemption is provided or unless the
required tax identification information is provided. See Instruction 10 of
the Letter of Transmittal.
6. The Offer and withdrawal rights will expire at 12:00 midnight, New
York City time, on Thursday, March 25, 1999, unless the Offer is extended.
7. The Board of Directors of the Company has unanimously recommended
that holders of Shares ("Shareholders") accept the Offer and approve and
adopt the Merger Agreement and the transactions contemplated thereby and
has unanimously determined that the Offer and the Merger are fair to and
in the best interests of the Company and the Shareholders.
8. In all cases, payment for Shares purchased pursuant to the Offer
will be made only after timely receipt by the Depositary of (i)
certificates for the Shares (the "Certificates") or a timely Book-Entry
Confirmation (as defined in the Offer to Purchase) with respect to such
Shares, (ii) the appropriate Letters of Transmittal (or a manually signed
facsimile thereof), properly completed and duly executed with any required
signature guarantees (or, in the case of a book-entry transfer of shares,
an Agent's Message (as defined in the Offer to Purchase)), and (iii) all
other documents required by the Letter of Transmittal. Accordingly,
payments may not be made to all tendering Shareholders at the same time,
and will depend upon when Certificates for, or confirmations of book-entry
transfer of, such Shares are actually received by the Depositary.
2
<PAGE>
In order to take advantage of the Offer, the appropriate Letter of
Transmittal (or a manually signed facsimile thereof), properly completed and
duly executed, with any required signature guarantees, or an Agent's Message
in connection with book-entry transfer of Shares, and any other documents
required by the Letter of Transmittal must be sent to the Depositary at one of
the addresses set forth in the Offer to Purchase prior to the Expiration Date,
and either (a) Certificates representing tendered Shares must be received by
the Depositary at any one of those addresses prior to the Expiration Date, or
(b) the Shares must be delivered pursuant to the procedures for book-entry
transfer set forth below and a Book-Entry Confirmation must be received by the
Depositary prior to the Expiration Date..
If Shareholders wish to tender their Shares, but it is impracticable for
them to forward the Certificates for such Shares or other required documents
or complete the procedures for book-entry transfer prior to the Expiration
Date, a tender may be effected by following the guaranteed delivery procedures
specified in Section 3 of the Offer to Purchase. No alternative, conditional
or contingent tenders will be accepted.
Neither Purchaser nor Parent will pay any fees or commissions to any
broker or dealer or other person (other than the Dealer Manager, the
Information Agent or the Depositary, as described in the Offer to Purchase)
for soliciting tenders of Shares pursuant to the Offer. Purchaser will,
however, upon request, reimburse you for customary mailing and handling
expenses incurred by you in forwarding any of the enclosed materials to your
clients. Purchaser will pay or cause to be paid any stock transfer taxes
payable on the transfer of the Shares to it, except as otherwise provided in
Instruction 6 of the Letter of Transmittal.
Any inquiries you may have with respect to the Offer should be addressed
to Dresdner Kleinwort Benson North America LLC, the Dealer Manager, or
MacKenzie Partners, Inc., the Information Agent, at their respective addresses
and telephone numbers set forth on the back cover of the Offer to Purchase.
Additional copies of the enclosed materials may be obtained from Information
Agent or the Dealer Manager or from brokers, dealers, commercial banks or
trust companies.
Very truly yours,
Dresdner Kleinwort Benson North
America LLC
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU OR
ANY OTHER PERSON AS AN AGENT OF PURCHASER, PARENT, THE COMPANY, THE DEALER
MANAGER, THE INFORMATION AGENT, THE DEPOSITARY OR ANY AFFILIATE OF ANY OF
THEM, OR AUTHORIZE YOU OR ANY OTHER PERSON TO USE ANY DOCUMENT OR MAKE ANY
STATEMENT ON BEHALF OF ANY OF THEM IN CONNECTION WITH THE OFFER OTHER THAN THE
DOCUMENTS ENCLOSED HEREWITH AND THE STATEMENTS CONTAINED THEREIN.
3
<PAGE>
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
CONTROL DEVICES, INC.
AT
$16.25 NET PER SHARE
BY
FIRST TECHNOLOGY ACQUISITION CORP.
AN INDIRECT, WHOLLY OWNED SUBSIDIARY
OF
FIRST TECHNOLOGY PLC
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK
CITY TIME, ON THURSDAY, MARCH 25, 1999, UNLESS THE OFFER IS EXTENDED.
February 26, 1999
To Our Clients:
Enclosed for your consideration are the Offer to Purchase, dated February
26, 1999 (the "Offer to Purchase"), the related Letter of Transmittal (which,
together with any amendments or supplements thereto, collectively constitute the
"Offer") and other materials relating to the offer by First Technology
Acquisition Corp., an Indiana corporation ("Purchaser") and an indirect, wholly
owned subsidiary of First Technology PLC, an English public limited company
("Parent"), to purchase all the outstanding shares of common stock, no par value
(the "Shares"), of Control Devices, Inc., an Indiana corporation (the
"Company"), at a purchase price of $16.25 per Share, net to the seller in cash,
without interest thereon, upon the terms and subject to the conditions set forth
in the Offer to Purchase and the related Letter of Transmittal enclosed
herewith. The common share purchase rights (the "Rights") provided for in a
Rights Agreement dated as of May 7, 1998, as amended by Amendment No. 1, dated
as of February 22, 1999 (the "Rights Agreement"), between the Company and
BankBoston, N.A., are not applicable to the Offer, the Merger Agreement or any
of the transactions contemplated thereby. Holders of Shares ("Shareholders")
whose certificates for such Shares (the "Certificates") are not immediately
available or who cannot deliver their Certificates and all other required
documents to the Depositary or complete the procedures for book-entry transfer
on or prior to the Expiration Date (as defined in the Offer to Purchase) must
tender their Shares according to the guaranteed delivery procedures set forth in
Section 3 of the Offer to Purchase.
WE ARE (OR OUR NOMINEE IS) THE HOLDER OF RECORD OF SHARES HELD BY US FOR
YOUR ACCOUNT. A TENDER OF SUCH SHARES CAN BE MADE ONLY BY US AS THE HOLDER OF
RECORD AND PURSUANT TO YOUR INSTRUCTIONS. THE LETTER OF TRANSMITTAL ACCOMPANYING
THIS LETTER IS FURNISHED TO YOU FOR YOUR INFORMATION ONLY AND CANNOT BE USED BY
YOU TO TENDER SHARES HELD BY US FOR YOUR ACCOUNT.
Accordingly, we request instructions as to whether you wish to have us
tender any or all of the Shares held by us for your account, upon the terms and
subject to the conditions set forth in the Offer to Purchase.
Your attention is directed to the following:
1. The tender price is $16.25 per Share, net to the seller in cash without
interest thereon, upon the terms and subject to the conditions set forth
in the Offer to Purchase.
2. The Offer is not conditioned upon the receipt of financing. See Section
9 of the Offer to Purchase regarding the financing commitments obtained
by Parent.
3. The Offer is conditioned upon, among other things: (i) there being
validly tendered and not withdrawn prior to the Expiration Date that
number of common Shares of the Company that
<PAGE>
(together with any Shares 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, calculated on a fully diluted basis on the date
of purchase (the "Minimum Condition"), (ii) the approval by the
shareholders of Parent of each of the acquisition of the Company, an
increase in share capital and certain other related matters at an
extraordinary general meeting ("Parent Shareholder Approval"), and (iii)
the admission of certain securities to be issued in a rights offering by
an affiliate of Parent to the Official List of the London Stock Exchange
(the "Listing Condition"). The Offer is also subject to certain other
conditions. See Sections 1 and 14 of the Offer to Purchase. For
additional information regarding Parent Shareholder Approval and the
Listing Condition, see Section 9 of the Offer to Purchase.
4. The Offer is being made for all outstanding Shares.
5. Tendering Shareholders will not be obligated to pay brokerage fees or
commissions to the Dealer Manager, the Depositary or the Information
Agent, or, except as set forth in Instruction 6 of the Letter of
Transmittal, transfer taxes on the purchase of Shares by Purchaser
pursuant to the Offer. However, federal income tax backup withholding at
a rate of 31% may be required, unless an exemption is provided or unless
the required taxpayer identification information is provided. See
Instruction 10 of the Letter of Transmittal.
6. The Offer and withdrawal rights will expire at 12:00 midnight, New York
City time, on Thursday, March 25, 1999, unless the Offer is extended.
7. The Board of Directors of the Company has unanimously recommended that
Shareholders accept the Offer and approve and adopt the Merger Agreement
and the transactions contemplated thereby and has unanimously determined
that the Offer and the Merger are fair to and in the best interests of
the Company and the Shareholders.
8. In all cases, payment for Shares purchased pursuant to the Offer will be
made only after timely receipt by the Depositary of (i) certificates for
the Shares (the "Certificates") or a timely Book-Entry Confirmation (as
defined in the Offer to Purchase) with respect to such Shares, (ii) the
appropriate Letter(s) of Transmittal (or a manually signed facsimile
thereof), properly completed and duly executed with any required
signature guarantees (or, in the case of a book-entry transfer of Shares,
an Agent's Message (as defined in the Offer to Purchase)), and (iii) all
other documents required by the Letter of Transmittal. Accordingly,
payments may not be made to all tendering Shareholders at the same time,
and will depend upon when Certificates for, or confirmations of
book-entry transfer of, such Shares are actually received by the
Depositary.
If you wish to have us tender any or all of the Shares held by us for your
account, please so instruct us by completing, executing, detaching and returning
to us the instruction form set forth below. Please forward your instructions to
us in ample time to permit us to submit a tender on your behalf prior to the
Expiration Date. An envelope to return your instructions to us is enclosed. IF
YOU AUTHORIZE THE TENDER OF YOUR SHARES, ALL SUCH SHARES WILL BE TENDERED UNLESS
OTHERWISE SPECIFIED ON THE INSTRUCTION FORM SET FORTH BELOW.
The Offer is not being made to (nor will tenders be accepted from or on
behalf of) holders of Shares residing in any jurisdiction in which the making of
the Offer or acceptance thereof would not be in compliance with the laws of such
jurisdiction. In any jurisdiction where the securities, blue sky or other laws
require the Offer to be made by a licensed broker or dealer, the Offer shall be
deemed to be made on behalf of the Purchaser by one or more registered brokers
or dealers licensed under the laws of such jurisdictions.
<PAGE>
INSTRUCTIONS WITH RESPECT TO THE
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
CONTROL DEVICES, INC.
BY
FIRST TECHNOLOGY ACQUISITION CORP.
AN INDIRECT, WHOLLY OWNED SUBSIDIARY
OF
FIRST TECHNOLOGY PLC
The undersigned acknowledge(s) receipt of your letter, the enclosed Offer to
Purchase, dated February 26, 1999, and the related Letter of Transmittal (which,
together with any amendments or supplements thereto, collectively constitute the
"Offer") in connection with the offer by First Technology Acquisition Corp., an
Indiana corporation (the "Purchaser") and an indirect, wholly owned subsidiary
of First Technology PLC, an English public limited company, to purchase all of
the outstanding shares of common stock, no par value (the "Shares"), of Control
Devices, Inc., an Indiana corporation, at a purchase price of $16.25 per share
without interest thereon, upon the terms and subject to the conditions set forth
in the Offer.
This will instruct you to tender to the Purchaser the number of Shares
indicated below (or if no number is indicated below, all Shares) which are held
by you for the account of the undersigned, upon the terms and subject to the
conditions set forth in the Offer.
Number of Shares to be Tendered:________________________________Shares
Date:____________, 1999
SIGN HERE
Signature(s): __________________________________________________________
Print Name(s): _________________________________________________________
Print Address(es): _____________________________________________________
______________________________________
Area Code and Telephone Number(s): _____________________________________
Taxpayer Identification or Social Security Number(s): __________________
* Unless otherwise indicated, it will be assumed that all Shares held by us
for your account are to be tendered.
THIS FORM MUST BE RETURNED TO THE BROKERAGE FIRM MAINTAINING
YOUR ACCOUNT.
<PAGE>
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
GUIDELINES FOR DETERMINING THE PROPER IDENTIFICATION NUMBER TO GIVE THE
PAYER. The taxpayer identification number for an individual is the individual's
Social Security number. Social Security numbers have nine digits separated by
two hyphens: e.g., 000-00-0000. The taxpayer identification number for an entity
is the entity's Employer Identification number. Employer Identification numbers
have nine digits separated by only one hyphen: e.g., 00-0000000. The table below
will help determine the number to give the payer.
<TABLE>
<CAPTION>
- -------------------------------------------------------
<C> <S> <C> <C>
GIVE THE NAME AND SOCIAL
FOR THIS TYPE OF ACCOUNT: SECURITY NUMBER OF--
<CAPTION>
- -------------------------------------------------------
- -------------------------------------------------------
GIVE THE NAME AND
EMPLOYER IDENTIFICATION
FOR THIS TYPE OF ACCOUNT: NUMBER OF--
- -------------------------------------------------------
</TABLE>
<TABLE>
<C> <S> <C> <C>
1. Individual The individual
2. Two or more individuals (joint The actual owner of the
account) account or, if combined
funds, the first
individual on the
account(1)
3. Husband and wife (joint account) The actual owner of the
account or, if joint
funds, either person(1)
4. Custodian account of a minor The minor(2)
(Uniform Gift to Minors Act)
5. Adult and minor (joint account) The adult or, if the
minor is the only
contributor, the
minor(1)
6. Account in the name guardian or The ward, minor or
committee for a designated ward, incompetent person(3)
minor or incompetent person
7. a. The usual revocable The grantor-trustee(1)
savings trust (grantor
is also trustee)
b. So-called trust account The actual owner(1)
that is not a legal or
valid trust under state
law
8. Sole proprietorship The owner(4)
9. A valid trust, estate or pension The legal entity (Do not
trust furnish the identifying
number of the personal
representative or
trustee unless the legal
entity itself is not
designated in the
account title.)(5)
10. Corporate The corporation
11. Association, club, religious, The organization
charitable, educational or other
tax-exempt organization
12. Partnership The partnership
13. A broker or registered nominee The broker or nominee
14. Account with the Department of The public entity
Agriculture in the name of a public
entity (such as a state or local
government, school district or
prison) that receives agriculture
program payments
</TABLE>
<TABLE>
<C> <S> <C> <C>
- -------------------------------------------------------
- -------------------------------------------------------
</TABLE>
(1) List first and circle the name of the person whose number you furnish.
(2) Circle the minor's name and furnish the minor's social security number.
(3) Circle the ward's, minor's or incompetent person's name and furnish such
person's social security number.
(4) Show the name of the owner.
(5) List first and circle the name of the legal trust, estate, or pension trust.
NOTE: IF NO NAME IS CIRCLED WHEN THERE IS MORE THAN ONE NAME, THE NUMBER WILL BE
CONSIDERED TO BE THAT OF THE FIRST NAME LISTED.
<PAGE>
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
PAGE 2
SECTION REFERENCES ARE TO THE INTERNAL REVENUE CODE.
OBTAINING A NUMBER
If you do not have a taxpayer identification number or you don't know your
number, obtain Form SS-5, Application for a Social Security Number Card, or Form
SS-4, Application for Employer Identification Number, at the local office of the
Social Security Administration or the Internal Revenue Service (the "IRS") and
apply for a number.
To complete the Substitute Form W-9, if you do not have a taxpayer
identification number, write "Applied For" in the space for the taxpayer
identification number in Part 1, sign and date the Form, and give it to the
requester. If the requester does not receive your taxpayer identification number
within 60 days, backup withholding, if applicable, will begin and will continue
until you furnish your taxpayer identification number to the requester.
PAYEES EXEMPT FROM BACKUP WITHHOLDING
The following is a list of payees exempt from backup withholding and for which
no information reporting is required. For interest and dividends, all listed
payees are exempt except item (9). For broker transactions, payees listed in (1)
through (13) and a person registered under the Investment Advisers Act of 1940
who regularly acts as a broker are exempt. Payments subject to reporting under
sections 6041 and 6041A are generally exempt from backup withholding only if
made to payees described in items (1) through (7), except that a corporation
that provides medical and health care services or bills and collects payments
for such services is not exempt from backup withholding or information
reporting. Only payees described in items (2) through (6) are exempt from backup
withholding for barter exchange transactions, patronage dividends and payments
by certain fishing boat operators.
(1) A corporation.
(2) An organization exempt from tax under section 501(a), or an individual
retirement plan ("IRA"), or a custodial account under 403(b)(7), if the
account satisfies the requirements of section 401(f)(2).
(3) The United States or any of its agencies or instrumentalities.
(4) A State, the District of Columbia, a possession of the United States or
any of their political subdivisions or instrumentalities.
(5) A foreign government or any of its political subdivisions, agencies or
instrumentalities.
(6) An international organization or any of its agencies or instrumentalities.
(7) A foreign central bank of issue.
(8) A dealer in securities or commodities required to register in the United
States, the District of Columbia or a possession of the United States.
(9) A futures commission merchant registered with the Commodity Futures
Trading Commission.
(10) A real estate investment trust.
(11) An entity registered at all times during the tax year under the
Investment Company Act of 1940.
(12) A common trust fund operated by a bank under section 584(a).
(13) A financial institution.
(14) A middleman known in the investment community as a nominee or listed in
the most recent publication of the American Society of Corporate
Secretaries, Inc., Nominee List.
(15) A trust exempt from tax under section 664 or described in section 4947.
Payments of dividends and patronage dividends generally not subject to backup
withholding also include the following:
- - Payments to nonresident aliens subject to withholding under section 1441.
- - Payments to partnerships not engaged in a trade or business in the United
States and that have at least one nonresident partner.
- - Payments of patronage dividends not paid in money.
- - Payments made by certain foreign organizations.
- - Payments made to a nominee.
Payments of interest generally not subject to backup withholding include the
following:
- - Payments of interest on obligations issued by individuals.
Note: YOU MAY BE SUBJECT TO BACKUP WITHHOLDING IF THIS INTEREST IS $600 OR
MORE AND IS PAID IN THE COURSE OF THE PAYER'S TRADE OR BUSINESS AND YOU HAVE
NOT PROVIDED YOUR CORRECT TAXPAYER IDENTIFICATION NUMBER TO THE PAYER.
- - Payments of tax-exempt interest (including exempt interest dividends under
section 852).
- - Payments described in section 6049(b)(5) to nonresident aliens.
- - Payments on tax-free covenant bonds under section 1451.
- - Payments made by certain foreign organizations.
- - Mortgage interest paid by you.
Payments that are not subject to information reporting are also not subject to
backup withholding. For details see sections 6041, 6041A(a), 6042, 6044, 6045,
6049, 6050A and 6050N and the regulations under such sections.
Exempt payees described above should file Form W-9 to avoid possible erroneous
backup withholding. ENTER YOUR TAXPAYER IDENTIFICATION NUMBER. WRITE "EXEMPT" ON
THE FACE OF THE FORM, SIGN AND DATE THE FORM AND RETURN IT TO THE PAYER.
PRIVACY ACT NOTICE
Section 6109 requires you to give your correct taxpayer identification number to
persons who must file information returns with the IRS to report interest,
dividends, and certain other income paid to you, mortgage interest you paid, the
acquisition or abandonment of secured property, cancellation of debt or
contributions you made to an IRA. The IRS uses the numbers for identification
purposes and to help verify the accuracy of your tax return. You must provide
your taxpayer identification number whether or not you are qualified to file a
tax return. Payers must generally withhold 31% of taxable interest, dividend,
and certain other payments to a payee who does not furnish a taxpayer
identification number to a payer. Certain penalties may also apply.
PENALTIES
(1) PENALTY FOR FAILURE TO FURNISH TAXPAYER IDENTIFICATION NUMBER. If you fail
to furnish your taxpayer identification number to a payer, you are subject to a
penalty of $50 for each such failure unless your failure is due to reasonable
cause and not to willful neglect.
(2) CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO WITHHOLDING. If you make
a false statement with no reasonable basis that results in no backup
withholding, you are subject to a $500 penalty.
(3) CRIMINAL PENALTY FOR FALSIFYING INFORMATION. Falsifying certifications or
affirmations may subject you to criminal penalties including fines and/or
imprisonment.
FOR ADDITIONAL INFORMATION CONTACT YOUR TAX CONSULTANT OR THE INTERNAL REVENUE
SERVICE
<PAGE>
Exhibit 99(a)(7)
This announcement is neither an offer to purchase nor a solicitation of an
offer to sell Shares (as defined below). The Offer is made solely by the
Offer to Purchase dated February 26, 1999 and the related Letter of
Transmittal, and any amendments or supplements thereto, and is being made
to all holders of Shares. The Offer is not being made to (nor will tenders
be accepted from or on behalf of) holders of Shares residing in any
jurisdiction in which the making of the Offer or acceptance thereof would
not be in compliance with the laws of such jurisdiction. In any
jurisdiction where the securities, blue sky or other laws require the
Offer to be made by a licensed broker or dealer, the Offer shall be deemed
to be made on behalf of First Technology Acquisition Corp. by Dresdner
Kleinwort Benson North America LLC, the Dealer Manager for the Offer, or
one or more registered brokers or dealers licensed under the laws of such
jurisdiction.
NOTICE OF OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
CONTROL DEVICES, INC.
AT
$16.25 NET PER SHARE
BY
FIRST TECHNOLOGY ACQUISITION CORP.
AN INDIRECT, WHOLLY OWNED SUBSIDIARY OF
FIRST TECHNOLOGY PLC
First Technology Acquisition Corp., an Indiana corporation ("Purchaser")
and an indirect, wholly owned subsidiary of First Technology PLC, an English
public limited company ("Parent"), hereby offers to purchase all of the
outstanding shares of common stock, no par value (the "Shares"), of Control
Devices, Inc., an Indiana corporation (the "Company"), at a purchase price of
$16.25 per Share, net to the seller in cash, without interest thereon (the "Per
Share Amount"), upon the terms and subject to the conditions set forth in the
Offer to Purchase dated February 26, 1999 (the "Offer to Purchase") and in the
related Letter of Transmittal (which, together with any amendments or
supplements thereto, collectively constitute the "Offer"). The common share
purchase rights (the "Rights") provided for in a Rights Agreement dated as of
May 7, 1998, as amended by Amendment No. 1 dated as of February 22, 1999 (the
"Rights Agreement"), between the Company and Bank Boston, N.A., are not
applicable to the Offer, the Merger Agreement or any of the transactions
contemplated thereby. Tendering Shareholders who have Shares registered in their
own name and who tender directly to IBJ Whitehall Bank & Trust Company (the
"Depositary") will not be obligated to pay brokerage fees or commissions or,
except as set forth in Instruction 6 to the Letter of Transmittal, transfer
taxes on the purchase of Shares pursuant to the Offer. Following the Offer, the
Purchaser intends to effect the Merger described below.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT,
NEWYORK CITY TIME, ON THURSDAY, MARCH 25, 1999, UNLESS THE
OFFER IS EXTENDED.
THE OFFER IS NOT CONDITIONED UPON THE RECEIPT OF FINANCING. SEE SECTION 9
OF THE OFFER TO PURCHASE REGARDING THE FINANCING COMMITMENTS OBTAINED BY PARENT.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS: (I) THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION DATE THAT NUMBER OF SHARES
THAT (TOGETHER WITH ANY SHARES 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, CALCULATED ON A FULLY DILUTED BASIS ON THE DATE OF PURCHASE (THE
"MINIMUM CONDITION"), (II) THE APPROVAL BY THE SHAREHOLDERS OF PARENT OF THE
ACQUISITION OF THE COMPANY, AN INCREASE IN SHARE CAPITAL AND CERTAIN OTHER
RELATED MATTERS AT AN EXTRAORDINARY GENERAL MEETING ("PARENT SHAREHOLDER
APPROVAL"), AND (III) THE ADMISSION OF CERTAIN SECURITIES TO BE ISSUED IN A
RIGHTS OFFERING BY AN AFFILIATE OF PARENT TO THE OFFICIAL LIST OF THE LONDON
STOCK EXCHANGE (THE "LISTING CONDITION"). THE OFFER IS ALSO SUBJECT TO CERTAIN
OTHER CONDITIONS. SEE SECTIONS 1 AND 14 OF THE OFFER TO PURCHASE. FOR ADDITIONAL
INFORMATION REGARDING PARENT SHAREHOLDER APPROVAL AND THE LISTING CONDITION, SEE
SECTION 9 OF THE OFFER TO PURCHASE.
The Offer is being made pursuant to an Agreement and Plan of Merger, dated
as of February 22, 1999 (the "Merger Agreement"), among Parent, Purchaser and
the Company. The Merger Agreement provides, among other things, for the
commencement of the Offer by Purchaser and further provides that after the
purchase of Shares pursuant to the Offer, subject to the satisfaction or waiver
of certain conditions, Purchaser will be merged with and into the Company (the
"Merger"), with the Company surviving the Merger as an indirect, wholly owned
subsidiary of Parent (the "Surviving Corporation"). In the Merger, each Share
(excluding Shares owned by the Company or any of its subsidiaries or by Parent,
Purchaser or any other subsidiary of Parent) issued and outstanding immediately
prior to the effective time of the Merger (the "Effective Time") will be
converted at the Effective Time into the right to receive the Per Share Amount
(or any greater per share amount paid for Shares pursuant to the Offer) in cash
payable to the holder thereof without interest and less any required withholding
taxes and, in certain circumstances, stock transfer taxes (the "Merger
Consideration"). The Merger Agreement is more fully described in Section 11 of
the Offer to Purchase.
In connection with the execution of the Merger Agreement, Parent,
Purchaser, the Company and Ralph R. Whitney, Jr., Bruce D. Atkinson, Jeffrey G.
Wood, Michel Hauser-Kauffmann, Forrest E. Crisman, Jr., and Glenn Scolnik and
the spouses of Messrs. Whitney and Atkinson (collectively, the "Management
Shareholders," and each individually, a "Management Shareholder") entered into a
Shareholders Agreement, dated as of February 22, 1999 (the "Shareholders
Agreement"), pursuant to which each Management Shareholder has unconditionally
agreed to tender into the Offer, all the Shares that such Management Shareholder
beneficially owned on February 22, 1999 (in the aggregate, approximately 19% of
all then outstanding Shares), as well as any Shares thereafter acquired by them,
including upon the exercise of options to acquire Shares (collectively, the
"Subject Shares"). Under the Shareholders Agreement, each Management Shareholder
has agreed to vote in favor of the Merger and against competing transactions and
has granted to Parent and Parent's designees an irrevocable proxy with respect
to the Subject Shares to vote such Shares under certain circumstances. The
Shareholders Agreement is more fully described in Section 11 of the Offer to
Purchase.
THE BOARD OF DIRECTORS OF THE COMPANY HAS UNANIMOUSLY RECOMMENDED THAT
HOLDERS OF SHARES ("SHAREHOLDERS") ACCEPT THE OFFER AND APPROVE AND ADOPT THE
MERGER AGREEMENT AND THE TRANSACTIONS CONTEMPLATED THEREBY AND HAS UNANIMOUSLY
DETERMINED THAT THE OFFER AND THE MERGER ARE FAIR TO AND IN THE BEST INTERESTS
OF THE COMPANY AND THE SHAREHOLDERS.
For purposes of the Offer, Purchaser will be deemed to have accepted for
payment (and thereby purchased) tendered Shares as, if and when Purchaser gives
oral or written notice to the Depositary of Purchaser's acceptance of such
Shares for payment. In all cases, payment for Shares purchased pursuant to the
Offer will be made by deposit of the purchase price with the Depositary, which
will act as agent for the tendering Shareholders for the purpose of receiving
payment from Purchaser and transmitting payment to the tendering Shareholders
whose Shares shall have been accepted for payment. Under no circumstances will
interest accrue on the consideration to be paid for the Shares by Purchaser,
regardless of any delay in making such payment. In all cases, payment for Shares
purchased pursuant to the Offer will be made only after timely receipt by the
Depositary of (i) certificates for the Shares (or a timely Book-Entry
Confirmation (as defined in the Offer to Purchase) with respect to the Shares),
(ii) the appropriate Letter(s) of Transmittal (or a manually signed facsimile
thereof), properly completed and duly executed with any required signature
guarantees (or in the case of a book-entry transfer of Shares, an Agent's
Message (as defined in the Offer to Purchase)), and (iii) all other documents
required by the Letter of Transmittal.
The consummation of the Merger is subject to the satisfaction or waiver of
a number of conditions, including, if required, the approval of the Merger by
the requisite vote or consent of the Shareholders. The Shareholder vote
necessary to approve the Merger is the affirmative vote of the holders of a
majority of the issued and outstanding Shares, including Shares held by
Purchaser and its affiliates, voting as a single class, at a special meeting of
the Shareholders. If the Minimum Condition is satisfied and Purchaser purchases
Shares pursuant to the Offer, Purchaser will be able to effect the Merger
regardless of how any other Shareholder votes. Further, if Purchaser acquires at
least 90% of the outstanding Shares pursuant to the Offer or otherwise,
Purchaser will be able to effect the Merger pursuant to the 'short-form" merger
provisions of the Indiana Business Corporation Law, without further prior notice
to, or any action by, any other Shareholder. In that event, Purchaser intends to
effect the Merger as promptly as practicable following the purchase of Shares in
the Offer, and Shareholders should consider the Offer to Purchase as notice to
that effect.
UNDER NO CIRCUMSTANCES WILL INTEREST BE PAID ON THE PURCHASE PRICE TO BE
PAID FOR THE SHARES PURSUANT TO THE OFFER, REGARDLESS OF ANY EXTENSION OF THE
OFFER OR ANY DELAY IN MAKING SUCH PAYMENT. NO INTEREST WILL BE PAID ON THE
CONSIDERATION TO BE PAID IN THE MERGER TO SHAREHOLDERS WHO FAIL TO TENDER THEIR
SHARES PURSUANT TO THE OFFER, REGARDLESS OF ANY DELAY IN EFFECTING THE MERGER OR
MAKING SUCH PAYMENT.
The term "Expiration Date" means 12:00 midnight, New York City time, on
Thursday, March 25, 1999, unless and until Purchaser in accordance with the
terms of the Merger Agreement shall have extended the period of time during
which the Offer is open, in which event the term "Expiration Date" means the
latest time and date at which the Offer, as so extended, expires.
Subject to the terms of the Merger Agreement and the applicable rules and
regulations of the Securities and Exchange Commission, the Purchaser may, under
certain circumstances, (i) extend the period of time during which the Offer is
open and thereby delay acceptance for payment of and the payment for any Shares,
by giving oral or written notice of such extension to the Depositary and (ii)
amend the Offer in any other respect by giving oral or written notice of such
amendment to the Depositary. Any extension, delay, waiver, amendment or
termination of the Offer will be followed as promptly as practicable by a public
announcement thereof, the announcement in the case of an extension to be issued
no later than 9:00 a.m., New York City time, on the next business day after the
previously scheduled Expiration Date. During any such extension, all Shares
previously tendered and not properly withdrawn will remain subject to the Offer,
subject to the right of a tendering Shareholder to withdraw such Shareholder's
Shares.
Tenders of Shares made pursuant to the Offer may be withdrawn at any time
prior to the Expiration Date. Thereafter, such tenders are irrevocable, except
that they may be withdrawn at any time after April 26, 1999, unless theretofore
accepted for payment as provided in the Offer to Purchase. For a withdrawal to
be effective, a written, telegraphic or facsimile transmission notice of
withdrawal must be timely received by the Depositary at one of its addresses set
forth in the Offer to Purchase. Any such notice of withdrawal must specify the
name of the Person who tendered the Shares to be withdrawn, the number of Shares
to be withdrawn and the name of the registered holders, if different from the
person who tendered the Shares. If the Shares to be withdrawn have been
delivered to the Depositary, a signed notice of withdrawal with (except in the
case of Shares tendered by an Eligible Institution (as defined in the Offer to
Purchase)) signatures guaranteed by an Eligible Institution must be submitted
prior to the release of such Shares. In addition, such notice must specify, in
the case of Shares tendered by delivery of certificates, the name of the
registered holder (if different from that of the tendering Shareholder) and the
serial numbers shown on the particular certificates evidencing the Shares to be
withdrawn or, in the case of Shares tendered by book-entry transfer, the name
and number of the account at the Book-Entry Transfer Facility (as defined in the
Offer to Purchase) to be credited with the withdrawn Shares.
The information required to be disclosed by paragraph (e)(1)(vii) of Rule
14d-6 of the General Rules and Regulations under the Securities Exchange Act of
1934, as amended, is contained in the Offer to Purchase and is incorporated
herein by reference.
The Company has provided Purchaser with its Shareholder list and security
position listings for the purpose of disseminating the Offer to the
Shareholders. The Offer to Purchase, the related Letter of Transmittal and other
relevant materials will be mailed to record holders of Shares and will be
furnished to brokers, dealers, commercial banks, trust companies and similar
persons whose names, or the names of whose nominees, appear on the Company's
Shareholder list or, if applicable, who are listed as participants in a clearing
agency's security position listing for subsequent transmittal to beneficial
owners of Shares.
THE OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN
IMPORTANT INFORMATION WHICH SHOULD BE READ CAREFULLY BEFORE ANY DECISION IS MADE
WITH RESPECT TO THE OFFER.
Questions and requests for assistance and copies of the Offer to Purchase,
the related Letter of Transmittal and all other Offer materials may be directed
to the Information Agent or the Dealer Manager as set forth below, and copies
will be furnished promptly at the Purchaser's expense. The Purchaser will not
pay any fees or commissions to any broker or dealer or any other person (other
than the Dealer Manager and the Information Agent) for soliciting tenders of
Shares pursuant to the Offer.
The Information Agent for the Offer is:
MACKENZIE
PARTNERS, INC.
156 Fifth Avenue
New York, New York 10010
(212) 929-5500 (call collect)
or
CALL TOLL-FREE (800) 322-2885
THE DEALER MANAGER FOR THE OFFER IS:
-------------------------
[LOGO] Dresdner Kleinwort Benson
-------------------------
75 Wall Street
New York, New York 10005
(212) 429-2000 ext. 2442
or Call Toll Free (800) 457-0245 ext. 2442
February 26, 1999
<PAGE>
Exhibit 99(a)(8)
FOR IMMEDIATE RELEASE
MEDIA CONTACTS:
DAN BURCH (MACKENZIE PARTNERS): 212-929-5748
JEFF WOOD (CONTROL DEVICES CFO): 207-642-4535
FIRST TECHNOLOGY PLC TO ACQUIRE CONTROL DEVICES, INC.
FOR $16.25 PER SHARE IN CASH
IN A RECOMMENDED OFFER
BERKSHIRE, ENGLAND and STANDISH, MAINE -- February 23, 1999 -- First
Technology PLC (LSE:FRS) and Control Devices, Inc. (NASDAQ: SNSR) today jointly
announced a definitive agreement for First Technology's acquisition of Control
Devices in a recommended tender offer at $16.25 per share in cash for all of
Control Devices' outstanding shares. The transaction is valued at $154 million
on a fully-diluted equity basis.
In the transaction, Control Devices shareholders will receive $16.25
per share in cash under a tender offer expected to commence within a week and
close by the end of March 1999. Control Devices shares not purchased in the
tender offer will be converted into $16.25 in cash in a subsequent merger.
Certain of Control Devices' directors and executive officers holding shares
representing 19% of Control Devices' outstanding share capital have agreed to
tender their shares and vote for the transaction. In addition, Control Devices'
chairman, three of its executive officers and two of its nonemployee directors
have agreed to invest an aggregate of $8 million in First Technology shares.
The transaction has been unanimously approved by the boards of
directors of both companies. The tender offer is subject to a majority of
Control Devices' shares (on a fully-diluted basis) being tendered and not
withdrawn, as well as other conditions.
The transaction is not subject to financing. First Technology has
obtained an $80 million loan facility from HSBC Investment Bank, plc, The First
National Bank of Chicago and Dresdner Kleinwort Benson and a (pound)40 million
bridge facility from Dresdner Kleinwort Benson. The bridge facility will be
repaid with the proceeds of a First Technology rights offering being
underwritten by Dresdner Kleinwort Benson. The Control Devices acquisition and
related matters are subject to the approval of First Technology shareholders at
a meeting scheduled to be held on March 11, 1999. The rights offering will
commence upon the receipt of such shareholder approval and is expected to close
by April 6, 1999.
"We are very excited by the opportunities presented with the
acquisition of Control Devices," said Fred Westlake, Executive Chairman of First
Technology. "An important part of our growth strategy is to offer an expanded
product range to provide greater value to our automotive OEM customers. The
addition of Control Devices' solar, twilight, steering encoder and interior fog
sensors, as well as its portfolio of circuit breakers, will allow First
Technology to provide customers a broader array of products to enhance passenger
safety and comfort. Furthermore, Control Devices' technical and management
capabilities will be valued assets to our
<PAGE>
combined company. Together we will make the combined company far more than its
individual parts."
"This is an excellent opportunity for our shareholders and a
complementary fit that will benefit both companies," said Bruce Atkinson,
President, CEO and Director, of Control Devices. "Each of First Technology and
Control Devices will be able to cross-sell products to its respective customer
base as a whole and across geographies."
Dresdner Kleinwort Benson is advising First Technology on the
transaction, and Cleary Gull & Reiland is advising Control Devices.
Control Devices, based in Standish, Maine, designs, manufactures and
markets circuit breakers, electronic sensors and electronic ceramic component
parts used by OEMs in the automotive, appliance and telecommunications market.
The company generated fiscal 1998 annual revenues of $80 million from its
operations located in the US, France and the Dominican Republic. Control
Devices' products include over 250 types of circuit breakers, including metal
covered breakers (for wire harness, etc.) and glass enclosed breakers (for
hermetic applications inside small motors); optoelectronic sensors (solar,
twilight, steering encoder and interior fog); and solid state ceramic switches.
The acquisition will enable First Technology to expand its global product
offering of automotive sensing and safety products, increasing critical mass in
the US and Europe.
First Technology, based in Ascot, Berkshire, England, is an
international group serving the global transportation industry in the supply of
products and services in the fields of sensing, measurement and safety testing.
First Technology generated fiscal 1998 revenues of (pound)52 million ($85
million) from its operations based in the UK, the US, France and Japan. First
Technology's shares are traded on the London Stock Exchange and, based on the
closing price for First Technology shares on February 19, 1999, First Technology
had a market capitalization of approximately (pound)180 million ($294 million).
First Technology's products include crash activated sensors for fuel cut-off and
central door lock release, fuel level senders and rollover sensors. First
Technology Safety Systems, Inc., a subsidiary of First Technology, designs and
manufactures crash test dummies and related sensing equipment for use by the
major global automotive OEM and tier one suppliers. Automotive customers of
First Technology include, directly and indirectly, General Motors, Ford, Fiat,
Renault, PSA, Honda, Rover, Daimler- Chrysler, Daewoo and Toyota.
Forward-looking statements contained in this release involve risks and
uncertainties that could cause actual results to differ materially from those
contemplated. Factors that could cause such differences include the risks
associated with the automotive business generally, transactional effects,
integration risks and other investment considerations described from time to
time by the companies in their filings with the Securities and Exchange
Commission or the London Stock Exchange.
<PAGE>
Exhibit 99(a)(9)
23 FEBRUARY 1999
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN OR INTO THE UNITED
STATES OF AMERICA, CANADA, JAPAN OR AUSTRALIA
FIRST TECHNOLOGY PLC ("FIRST TECHNOLOGY")
PROPOSED ACQUISITION OF CONTROL DEVICES, INC ("CONTROL DEVICES")
AND
1 FOR 4 RIGHTS ISSUE
- - The Board of First Technology has entered into an agreement to acquire
Control Devices for approximately $145.1 million in cash (approximately
(pound)89.1 million)
- - The Acquisition will be partly funded by a 1 for 4 rights issue
(underwritten by Dresdner Kleinwort Benson) at 320 pence to raise
approximately (pound)37.6 million after expenses
- - Control Devices is listed on NASDAQ and is a leading designer and
manufacturer of circuit breakers, electronic sensors and electronic ceramic
component parts, principally for OEMs and their suppliers in the automotive
markets
- - Recommended tender offer for Control Devices for which First Technology has
irrevocable acceptances representing 16.5 per cent of Control Devices'
fully diluted share capital
- - Certain shareholders, including senior management, of Control Devices to
subscribe for $8 million ((pound)4.9 million) of First Technology new
ordinary shares
Commenting on the acquisition Dr Fred Westlake, Chairman, said:
"We are very excited by this opportunity. Control Devices is a extremely
well-managed company and has an excellent track record and reputation within the
industry. The Acquisition will significantly enhance the Group's strength in
North America and Europe, markets which we consider to be key to maintaining the
Group's long term growth objectives in automotive electronics."
Enquiries:
<TABLE>
<S> <C> <C>
First Technology plc Dr Fred Westlake, Chairman Today until 1 p.m.
Oliver Burns, Finance Director at Tavistock Communications
0181 600 2288
Thereafter
01344 622322
Dresdner Kleinwort Benson Stuart Stradling, Director 0171 623 8000
Tavistock Communications Lulu Bridges 0171 600 2288
</TABLE>
There will be a meeting for analysts today at 9.30 am at The City of London
Club, Old Broad Street, London.
Kleinwort Benson Securities Limited ("Dresdner Kleinwort Benson"), which is
regulated by The Securities and Futures Authority Limited, is acting for First
Technology and First Technology Funding plc and no one else in connection with
the Acquisition and Rights Issue and will not be responsible to any other person
for providing the protections afforded to customers of Dresdner Kleinwort Benson
or for providing advice in relation to the contents of this announcement or any
matter referred to herein.
Dresdner Kleinwort Benson has approved this announcement as an investment
advertisement solely for the purpose of section 57 of the Financial Services
Act.
<PAGE>
23 FEBRUARY 1999
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN OR INTO THE
UNITED STATES OF AMERICA, CANADA, JAPAN OR AUSTRALIA
FIRST TECHNOLOGY PLC ("FIRST TECHNOLOGY")
PROPOSED ACQUISITION OF CONTROL DEVICES, INC. ("CONTROL DEVICES")
AND
1 FOR 4 RIGHTS ISSUE
INTRODUCTION
The Board of First Technology announces that it has entered into an agreement to
acquire Control Devices for approximately $145.1 million in cash (approximately
(pound)89.1 million). Control Devices is listed on NASDAQ AND is a leading
designer and manufacturer of circuit breakers, electronic sensors and electronic
ceramic component parts, principally for original equipment manufacturers and
their suppliers in the automotive markets.
It is proposed that the Acquisition will be funded partly by a 1 for 4 rights
issue (to raise approximately (pound)37.6 million after expenses). The balance
of funding for the Acquisition will be provided by new BANK facilities, the
Group's existing cash resources and from the Subscription. The Bridging Facility
will initially provide part of the funding for the Acquisition and will be
repaid out of the proceeds of the Rights Issue. The Rights Issue has been fully
underwritten by Dresdner Kleinwort Benson, who are also broker to the Rights
Issue.
The Acquisition and the Rights Issue are conditional, INTER ALIA, upon the
approval of Shareholders which will be sought at an Extraordinary General
Meeting.
The Acquisition will be effected by means of a Tender Offer, which has been
unanimously recommended to the shareholders of Control Devices by its directors
and is conditional, INTER ALIA, upon the acceptance of not less than a majority
of the Control Devices Shares on a fully diluted basis. Certain of Control
Devices' shareholders, including some members of Control Devices' Directors and
senior management (who will remain with Control Devices after the Acquisition),
have agreed to tender their Control Devices Shares pursuant to the Tender Offer
in respect of their holdings, which together amount to approximately 16.5 per
cent. of Control Devices' fully diluted share capital. Furthermore, under the
terms of the Subscription, certain of these individuals have agreed to invest
$8.0 million (approximately (pound)4.9 million) in new Ordinary Shares.
INFORMATION ON CONTROL DEVICES
BACKGROUND
Control Devices was established in 1956 as a subsidiary of Sylvania which was
bought by GTE in 1959. Control Devices was the subject of a buy-out by its
current management in 1994 and a flotation on NASDAQ in 1996.
Control Devices' operations are based in Maine, USA where it operates two plants
and employs approximately 360 personnel in manufacturing, research and
development, engineering, sales and administration. In addition, Control Devices
has a manufacturing plant in the Dominican Republic which employs approximately
500 people. Control Devices distributes its products in Europe through RDI,
based near Paris, France. RDI was acquired by Control Devices in 1996, although
it has acted as Control Devices' European distributor for over 20 years. RDI,
which employs 121 people, also distributes various other electronic components
and vehicle aftermarket products. Control Devices operates a sales support
operation for OEMs for the automotive industry based in Detroit, USA.
<PAGE>
PRODUCTS
Control Devices has three main products divisions: Circuit Protection,
Electronic Sensors and Electronic Ceramics.
CIRCUIT PROTECTION DIVISION designs, manufactures and distributes hermetically
sealed glass and metal-based circuit breakers which protect transformers,
battery chargers, compressors and small motors from heat and current overloads
in the automotive, household and industrial markets.
ELECTRONIC SENSORS DIVISION designs, manufactures and distributes sensors used
to improve the safety and comfort of vehicles. Its three main products are:
- - Solar sensors which are used for automatic climate control systems
adjusting a vehicle climate control depending on the prevailing weather
conditions;
- - Twilight sensors which are used in daytime running to automatically
control the intensity of vehicles' exterior lights; and
- - Position sensors which are used in power steering and traction control
systems.
Solar and twilight sensors are manufactured by Control Devices under exclusive
licences.
Control Devices also has other sensors under development, such as fog sensors,
which detect condensation on interior windows of vehicles, so allowing the
air-conditioning system to remove it automatically.
ELECTRONIC CERAMICS DIVISION'S products include PTC (positive temperature
coefficient) thermistors and dielectric resonators. PTC thermistors, which
convert electrical current into heat, are used as component parts in
supplemental automotive heating applications, room air heaters and protection
devices for switching equipment critical to the operation of telephone
companies' central exchanges (facilities that provide the local switching and
distribution functions for telephone companies). Dielectric resonators are used
to filter frequencies in wireless communications equipment. In addition to sales
to cellular communication equipment manufacturers, the Company provides custom
designed dielectric resonators to the Personal Communication Systems equipment
manufacturers. Its PTC thermistors are also used in heating systems of diesel
and electric vehicles and domestic and industrial space heaters.
FINANCIAL RECORD
<TABLE>
<CAPTION>
PERIODS TO
2 JANUARY 2 JANUARY 31 DECEMBER 31 DECEMBER
1999 1999 1997 1996
(pound) MILLION** $ MILLION $ MILLION $ MILLION
----------------- --------- ----------- -----------
<S> <C> <C> <C> <C>
Circuit Protection 21.6 35.8 32.2 31.7
Electronic Sensors 10.0 16.6 12.7 8.8
Electronic Ceramics 3.4 5.7 7.0 4.5
RDI Distribution* 13.2 21.9 18.2 15.5
-------- -------- --------- ---------
48.2 80.0 70.2 60.5
-------- -------- --------- ---------
Operating Income 6.3 10.4 9.7 8.5
Income before Taxes 6.5 10.7 9.6 6.9
Net Income 4.8 7.9 5.9 4.3
</TABLE>
* = excludes Control Devices' products
** = translated at the average US $/UK (pound) exchange rate prevailing in the
period
BACKGROUND TO AND REASONS FOR THE ACQUISITION
First Technology's strong financial record over the last 6 years has been as a
result of the Board's strategy to develop the Group as a niche supplier to the
automotive industry by concentrating on the two core businesses of Automotive
Electronics and Safety and Analysis.
<PAGE>
The Board believes that the growth in the markets in which First Technology
operates, namely automotive sensing, switching and safety, has been driven by
continuing legislative pressure on manufacturers to build safer cars and
increases in consumer demand for vehicle safety and comfort. The Directors
believe that such demands on the OEMs will continue to underpin this favourable
market background.
The Directors believe that in developing new products to exploit the market,
First Technology has established strong market positions in its key products. In
so doing First Technology has forged strategic links with many of the world's
major automotive manufacturers, including General Motors, Ford, Fiat, Renault
and PSA and others. The combination of favourable market conditions combined
with the development of niche products has enabled First Technology to generate
organic growth in profits and create value for Shareholders. After reinvestment
in the business to support this growth, First Technology has also generated cash
balances which at 29 January 1999 amounted to approximately (pound)20 million.
The Board has stated that its strategy is to grow the business organically and
through acquisitions. The specialist nature of the Group's activities means that
there are few companies which meet the Board's acquisition criteria. Control
Devices is a company which operates in similar markets to First Technology, has
a complementary product range, customer base, new products under development and
is led by an experienced management team.
The Board believes Control Devices represents an excellent fit with First
Technology's existing automotive businesses and will bring substantial
commercial and financial benefits to the Group, in particular:
- - CUSTOMER FIT
Both Control Devices and First Technology have General Motors and Ford
Motor Company as key customers and both First Technology and Control
Devices supply products fitted on Mercedes vehicles. Control Devices
has three major automotive customers not currently served by the
Automotive Electronics Division ("AED") of First Technology. They are
VW/Audi, Volvo and Valeo. First Technology's AED serves a number of
automotive customers not serviced by Control Devices including Fiat,
Honda, Rover and Daewoo.
First Technology's Safety and Analysis Division is able to list a
number of the world's automotive manufacturers and many of their key
suppliers as its customers.
This widening of customer base is confidently expected to provide a
stronger platform for growth for the Enlarged Group.
- - PRODUCT DEVELOPMENT
The Board believes that there are complementary skills in product
development which will be of benefit to the Enlarged Group. Control
Devices' expertise in the areas of electronic sensing, chip-on-board
electronics, ceramics and electrical circuit protection, will
complement First Technology's skills in electromechanical and
electronic sensing and switching, crash detection, crash analysis,
vehicle dynamics and high level process automation. It is anticipated
that combining both companies' research and development efforts will
bring benefits in widening the potential breadth and scope of the new
product development programmes.
- - MARKETING AND CUSTOMER SUPPORT
Automotive customers are increasingly calling for faster sales response
from suppliers and greater technical support. The Acquisition will
allow considerably greater and better deployed sales and technical
support to be provided. In addition, the combined marketing activities
will provide more effective cover to automotive manufacturers and
suppliers.
In Europe, RDI has a well established marketing, sales and technical
support operation. Its business relationships in Germany are expected
to bring long term benefits to the Enlarged Group, as will RDI's strong
local presence in France.
- - MANAGEMENT
<PAGE>
Control Devices brings with it a highly experienced and dedicated
management team. Mr Bruce Atkinson has been associated with the
business and its predecessors for the last 36 years. He will continue
in his role of CEO of Control Devices having agreed to enter into a
contract of employment. Mr Atkinson is 58 years old and is a U.S.
citizen.
Mr Jeff Wood, the Chief Financial Officer (CFO) of Control Devices, has
also signed a new employment contract. Under the terms of the contract,
Mr Wood will continue in his role of CFO of Control Devices. Mr Wood is
42 years of age, has been with Control Devices for 17 years and is a
U.S. citizen.
Mr Michel Hauser-Kauffmann, the Managing Director of RDI, has agreed to
enter into a new contract of employment on similar terms to those of Mr
Atkinson and Mr Wood. Under that contract he will continue in his
present capacity as Managing Director of RDI, based in Paris. Mr
Hauser-Kauffmann has been running RDI for the last 10 years, is 55
years old and is a French citizen.
Messrs Atkinson, Wood and Hauser-Kauffmann have each agreed to
subscribe for shares in First Technology pursuant to the Subscription.
- - STRATEGIC POSITIONING
For some years now there has been a concerted move by the world's car
producers to reduce the number of suppliers they deal with. They are
also asking their suppliers to be responsible for an increasing amount
of system and sub-system development. In addition, they are calling for
their suppliers to have a global reach. These factors have led to
consolidation of the supply base. The Acquisition significantly
increases the size, product base, customer portfolio, technology span
and operational strength of the Enlarged Group in the key North
American and European markets.
FINANCIAL EFFECTS OF THE ACQUISITION
The Acquisition is expected to enhance earnings per share (before goodwill
amortisation) for the year ending 30th April 2000 and thereafter.
CURRENT TRADING AND PROSPECTS
More than 90 per cent. of First Technology's sales are made outside the U.K.,
with mainland Europe and North America accounting for over 80 per cent. between
them. North America is continuing to show healthy activity over recent months
whilst in Europe the overall level of sales has been and continues to be in line
with the Board's expectations.
The Board is pleased to report that it has received a letter of intent from
Hyundai that it will install First Technology fuel cut-off switches in a new
model commencing production next year.
Trading remains most satisfactory, with Group sales from continuing operations
exceeding the levels of last year. Trading of Control Devices remains in line
with its expectations and, accordingly, the Directors are confident of the
outlook for the Enlarged Group for First Technology's current financial year.
RIGHTS ISSUE
To enable funds advanced by Shareholders to be repaid if the Tender Offer is not
consummated, the Rights Issue is being made in the form of Stock Units, being
units of redeemable convertible unsecured loan stock in the capital of First
Technology Funding, a wholly-owned subsidiary of First Technology.
First Technology proposes to raise approximately (pound)37.6 million, net of
expenses, by way of a rights issue of Stock Units to Qualifying Shareholders.
Qualifying Shareholders will be offered Stock Units at a price of 320p per Stock
Unit on the following basis:
1 Stock Unit for every 4 existing Ordinary Shares
held at the close of business on the Record Date and so in proportion for any
other number of existing Ordinary Shares then held. Fractions of Stock Units
will not be allotted and, where necessary, entitlements to Stock Units will be
rounded down to the nearest whole number.
<PAGE>
Following whichever is the later date of the consummation of the Tender Offer
and the Rights Issue Closing Date, each Stock Unit will automatically be
converted into one New Ordinary Share.
The Rights Issue has been fully underwritten by Dresdner Kleinwort Benson. The
Rights Issue is conditional inter alia, upon the passing of the resolutions to
be proposed at the Extraordinary General Meeting, the Underwriting Agreement
having become unconditional and admission of the Stock Units to the Official
List having become effective. Listing of the Stock Units is expected to become
effective and dealings to commence (nil paid) on 12 March 1999. Dealings in the
New Ordinary Shares are expected to commence on 7 April 1999 being the business
day following the Rights Issue Closing Date.
The New Ordinary Shares will be issued fully paid and will rank pari passu in
all respects with the existing issued Ordinary Shares save that they will not be
entitled to receive or retain the dividend of 2.1p per share to be paid on 1
March 1999 in respect of the six month period ended 31 October 1998.
It is expected that this date for acceptance and payment for the Rights Issue
will be 6 April 1999.
SUBSCRIPTION
Certain of the existing shareholders of Control Devices have conditionally
agreed pursuant to the Subscription Agreement to subscribe for the Subscription
Shares. The aggregate value of the Subscription will be $8.0 million ((pound)4.9
million) payable on the consummation of the Tender Offer. The Subscription price
for the Subscription Shares will be the higher of (a) the middle market price of
an Ordinary Share as derived from the Official List of the London Stock Exchange
on the last business day immediately prior to the closing of the Subscription,
and (b) 80% of the "Adjusted Pre-Offer Market Price". The "Adjusted Pre-Offer
Market Price" means the middle market price of an Ordinary Share as derived from
the Official List of the London Stock Exchange on the last business day
immediately prior to the date on which the Tender Offer is publically announced
by the Company, as adjusted to reflect the Rights Issue.
Under the Subscription Agreement, the subscribing shareholders have agreed,
inter alia, not to sell or otherwise dispose of their Subscription Shares for a
period of 18 months from the date of issue. Alternatively the subscribing
shareholders may dispose of up to one half of their holding of Subscription
Shares on the date which is 12 months from the date of issue provided they do
not dispose of the remainder of their Subscription Shares for a further period
of 12 months.
DIRECTORS' INTENTIONS IN RELATION TO THE RIGHTS ISSUE
The Directors intend, as a minimum, to take up as many of their rights under the
Rights Issue as they are able using the net proceeds of sale of the balance of
their rights.
RECOMMENDATION
The Directors consider that the Acquisition and Rights Issue are in the best
interests of the Company and shareholders as a whole. The Directors have
received financial advice from Dresdner Kleinwort Benson and, in giving that
financial advice, Dresdner Kleinwort Benson has placed reliance on the
Directors' commercial assessments of the Acquisition and Rights Issue including,
without limitation, their assessment of Year 2000 issues.
SHAREHOLDER CIRCULAR AND EXTRAORDINARY GENERAL MEETING
A circular containing further details of the Acquisition, Rights Issue and
Subscription and a notice of Extraordinary General Meeting is expected to be
despatched to shareholders later today.
The Extraordinary General Meeting is expected to be held on 11 March 1999 at
11.30 a.m. at the offices of Nabarro Nathanson, 50 Stratton Street, London W1X
6NX. At the EGM ordinary resolutions will be proposed, inter alia, to approve
the Acquisition and to enable the Rights Issue to occur.
ENQUIRIES
<PAGE>
<TABLE>
<S> <S> <C>
First Technology plc Dr Fred Westlake, Chairman Today until 1 p.m.
Oliver Burns, Finance Director at Tavistock Communications
0181 600 2288
Thereafter
01344 622322
Dresdner Kleinwort Benson Stuart Stradling, Director 0171 623 8000
Tavistock Communications Lulu Bridges 0171 600 2288
</TABLE>
<PAGE>
APPENDIX I
EXPECTED TIMETABLE FOR THE RIGHTS ISSUE
<TABLE>
<CAPTION>
1999
----------
<S> <C>
Record date for the Rights Issue 5 March
Extraordinary General Meeting 11 March
Despatch of Provisional Allotment Letter by post 11 March
Dealings to commence in rights to subscribe for Stock Units (nil paid) 12 March
Latest time for splitting Provisional Allotment Letters (nil paid) 31 March
Latest time for acceptance and payment in full and registration of renunciation 6 April
Conversion of Stock Units 6 April
Dealings to commence in New Ordinary Shares 7 April
</TABLE>
APPENDIX II
DEFINITIONS
The following definitions apply throughout this document unless the context
requires otherwise:
"Acquisition" the proposed acquisition of Control Devices
by First Technology by way of the Tender
Offer and Merger
"Act" the Companies Act 1985, as amended
"Admission" admission of the Stock Units to the Official
List
"AEI" Arnould Electro Industrie S.A., a
wholly-owned subsidiary of Control Devices
"Board" or "Directors" the directors of First Technology
"Bridging Facility" the loan facility made available to the
Company for the purpose of the Acquisition
to be repaid out of the proceeds of the
Rights Issue
"Control Devices" or "CDI" Control Devices, Inc.
"Control Devices Group" Control Devices and its subsidiaries
"Control Devices Shares" the issued and outstanding common stock in
the capital of Control Devices
"Conversion" conversion of the Stock Units into New
Ordinary Shares
"Conversion Date" the date on which the Stock Units will
convert into New Ordinary Shares being the
later of (i) the date on which the Tender
Offer is consummated and (ii) the Rights
Issue Closing Date or within 5 business days
thereafter
"Conversion Price" 320p being the effective price per New
Ordinary Share (subject to adjustment) at
which Conversion will take place, being an
amount equal to the Rights Issue Price
<PAGE>
"Conversion Rate" the rate at which the Stock Units will
convert into New Ordinary Shares being one
New Ordinary Share for each Stock Unit fully
paid as adjusted from time to time in
accordance with the Deed Poll
"CREST" the system defined in the Uncertificated
Securities Regulations 1995, in respect of
which CRESTCo Limited is the operator
"Deed Poll" the deed poll constituting the Stock Units,
to be executed by First Technology and First
Technology Funding
"Dresdner Kleinwort Benson" Kleinwort Benson Securities Limited
"Enlarged Group" First Technology Group as enlarged by the
Acquisition
"Extraordinary General Meeting" an extraordinary general meeting of First
or "EGM" Technology expected to be convened for 11.30
am on 11 March 1999
"Facilities Agreement" the loan facility made available to the
Company for the purpose of the Acquisition
"First Technology" or "`Company" First Technology PLC
"First Technology Acquisition First Technology Acquisition Corp., a US
Corp." company incorporated in the State of Indiana
and a wholly-owned subsidiary of First
Technology "First Technology Funding" First
Technology Funding plc, a wholly owned
subsidiary of First Technology, which will
issue the Stock Units for the purposes of
the Rights Issue
"First Technology Group" or First Technology and its subsidiaries
"Group"
"First Technology Share Schemes" the First Technology PLC Employee Share
Option Scheme, the First Technology PLC 1994
Executive Share Option Scheme and the First
Technology PLC 1994 Savings-Related Share
Option Scheme
"GAAP" generally accepted accounting principles
"Listing Rules" the rules and regulations made by the London
Stock Exchange under the Financial Services
Act 1986 and contained in the London Stock
Exchange's publication of the same name
"London Stock Exchange" London Stock Exchange Limited
"Merger" the merger of First Technology Acquisition
Corp. with and into Control Devices in
accordance with the terms and conditions of
the Merger Agreement
"Merger Agreement" agreement and plan of merger dated 23
February 1999 between First Technology,
First Technology Acquisition Corp. and
Control Devices
"NASDAQ" the NASDAQ-AMEX Stock Market operated by
Nasdaq, Inc.
"New Ordinary Shares" new Ordinary Shares to be issued on
conversion of the Stock Units
"OEM" original equipment manufacturer
"Official List" the Official List of the London Stock
Exchange
"Ordinary Shares" ordinary shares of 10p each in the capital
of First Technology
<PAGE>
"Provisional Allotment Letter" or the renounceable provisional allotment
"PAL" letter, expected to be despatched to
Qualifying Shareholders following the EGM
"Qualifying Shareholders" Shareholders whose names appear on the
register of members on the Record Date
"RDI" Realisations et Diffusion pour l'Industrie,
a wholly-owned subsidiary of Control Devices
"Record Date" the record date for the Rights Issue being
close of business on 5 March 1999
"Rights Issue" proposed offer by way of rights of Stock
Units to Qualifying Shareholders
"Rights Issue Price" 320p per Stock Unit
"Rights Issue Closing Date" the last date for acceptance and payment
under the Rights Issue
"SEC" US Securities and Exchange Commission
"Shareholders" holders of Ordinary Shares
"Shareholder Agreement" agreement dated 23 February 1999 between
First Technology, First Technology
Acquisition Corp., Control Devices and
certain shareholders of Control Devices
"Stockholders" holders of Stock Units
"Stock Units" redeemable convertible unsecured loan stock
units of 10p each in the capital of First
Technology Funding to be issued pursuant to
the Rights Issue, the terms, rights and
restrictions of which are contained in the
Deed Poll
"Subscription" the subscription to be made by certain
shareholders of Control Devices for
Subscription Shares pursuant to the
Subscription Agreement
"Subscription Agreement" agreement dated 23 February 1999 between
First Technology and certain shareholders of
Control Devices
"Subscription Shares" new Ordinary Shares to be issued for cash to
certain shareholders of Control Devices,
pursuant to the Subscription Agreement
"Tender Offer" the tender offer to purchase to be made by
First Technology Acquisition Corp. to
acquire Control Devices Shares under the
terms of the Merger Agreement
"Underwriting Agreement" underwriting agreement dated
23 February 1999 between First Technology,
First Technology Funding and Dresdner
Kleinwort Benson
"United Kingdom" or "UK" United Kingdom of Great Britain and Northern
Ireland
"United States" or "US" United States of America, its territories
and possessions, any state of the United
States and the District of Columbia
Notes:
1. Unless otherwise stated, where currency amounts set out in this
announcement have been translated between pounds sterling and US dollars,
an exchange rate of (pound)1 = $1.6295 has been used, being the
<PAGE>
rate of exchange at close of business on Friday 19 February 1999 as
published in the Financial Times on Monday 22 February 1999, the latest
practicable date before the publication of this announcement.
2. References in this announcement to the words "consummated" or
"consummation" are to the closing of the particular transaction in
accordance with its terms.
Kleinwort Benson Securities Limited ("Dresdner Kleinwort Benson"), which is
regulated by The Securities and Futures Authority Limited, is acting for First
Technology and First Technology Funding plc and no one else in connection with
the Acquisition and Rights Issue and will not be responsible to any other person
for providing the protections afforded to customers of Dresdner Kleinwort Benson
or for providing advice in relation to the contents of this announcement or any
matter referred to herein.
Dresdner Kleinwort Benson has approved this announcement as an investment
advertisement solely for the purpose of section 57 of the Financial Services
Act.
<PAGE>
Exhibit 99(b)(1)
AGREEMENT
FOR TERM LOAN
AND
REVOLVING CREDIT FACILITIES
TOTALLING US$80,000,000
FOR
FIRST TECHNOLOGY PLC
JOINT ARRANGERS
THE FIRST NATIONAL BANK OF CHICAGO
HSBC INVESTMENT BANK PLC
DRESDNER BANK AG LONDON BRANCH
AGENT
HSBC INVESTMENT BANK PLC
<PAGE>
NORTON ROSE
London
CONTENTS
<TABLE>
<CAPTION>
<S> <C> <C>
CLAUSE HEADING PAGE
1 Purpose and Definitions.......................................................................1
2 The Facilities; Obligations of the Parties...................................................10
3 Conditions...................................................................................12
4 Utilisation of the Facilities................................................................13
5 Interest.....................................................................................14
6 Currencies...................................................................................15
7 Repayment, Prepayment and Cancellation.......................................................15
8 Guarantee....................................................................................17
9 Fees, Commitment Commission and Expenses.....................................................19
10 Payments and Taxes; Accounts and Calculations................................................20
11 Representations..............................................................................23
12 Undertakings.................................................................................25
13 Events of Default............................................................................29
14 Indemnities; Default Interest................................................................32
15 Unlawfulness and Increased Costs; Alternative Interest Rates.................................33
16 Set-off and Pro Rata Payments................................................................36
17 Assignment, Substitution and Lending Offices.................................................37
18 The Agent....................................................................................38
19 Notices and Other Matters....................................................................42
20 Governing Law and Jurisdiction...............................................................43
SCHEDULES
1 The Banks....................................................................................44
2 Form of Drawdown Notice......................................................................45
3 Documents and evidence required as conditions precedent to drawdown..........................46
4 Financial Undertakings.......................................................................47
5 Form of Borrower Accession Memorandum........................................................49
6 Form of Guarantor Accession Memorandum.......................................................51
7 Associated Costs Rate........................................................................53
8 Form of Substitution Certificate.............................................................55
</TABLE>
<PAGE>
THIS AGREEMENT is dated 23 February, 1999 and made BETWEEN
(1) FIRST TECHNOLOGY PLC as a Borrower;
(2) THE BANKS whose names and addresses are set out in schedule 1;
(3) THE FIRST NATIONAL BANK OF CHICAGO, HSBC INVESTMENT BANK PLC and DRESDNER
BANK AG LONDON BRANCH as Joint Arrangers; and
(4) HSBC INVESTMENT BANK PLC as Agent.
IT IS AGREED as follows:
1 PURPOSE AND DEFINITIONS
1.1 PURPOSE
This Agreement sets out the terms and conditions upon and subject to which
the Banks agree, according to their several obligations, to make available
to the Borrowers:
(a) a term loan facility of up to US$40,000,000; and
(b) a revolving credit facility of up to US$40,000,000,
(in each case) to be used (i) as to a maximum principal amount of up to
US$80,000,000, in paying the acquisition price of shares and
subsisting options in Colt and (ii) as to any unused balance, in
meeting costs and expenses associated with such acquisition, and for
general corporate purposes.
1.2 DEFINITIONS
In this Agreement, unless the context otherwise requires:
"ADDITIONAL BORROWER" means any Subsidiary of Filly which upon execution of
a Borrower's Accession Memorandum becomes a Borrower in accordance with
clause 2.5;
"ADVANCE" includes (as the context may require) a Term Loan Advance or a
Revolving Credit Advance;
"AGENT" means HSBC Investment Bank plc or such other person as may be
appointed agent for the Banks in accordance with the terms of this
Agreement;
"AGREEMENT AND PLAN OF MERGER" means the agreement and plan of merger with
respect to Colt, substantially in the form provided to the Joint Arrangers
prior to the date of this Agreement;
"ASSOCIATED COSTS RATE" means in relation to any period, a percentage rate
calculated for such period in accordance with schedule 7;
"AVAILABLE FACILITY AMOUNT" means, at any time:
(a) in relation to the Term Loan Facility, the amount by which the Term
Loan Commitments exceed the Dollar amount of the outstanding Term
Loan; and
(b) in relation to the Revolving Credit Facility, the amount by which the
Revolving Credit Commitments exceed the aggregate of the Dollar Amount
of all outstanding Revolving Credit Advances;
<PAGE>
"BANKING DAY" means a day (other than Saturday or Sunday) which is:
(a) a day on which banks and foreign exchange markets are open for
business in London;
(b) (if a payment of funds in Dollars is to be made on such day) on which
banks and foreign exchange markets are open for business in New York
City; and
(c) (if a payment of funds in an Optional Currency is to be made on such
day) on which banks and foreign exchange markets are open for business
in the principal financial centre in the country of the Optional
Currency concerned (or, in the case of a payment in Euro a day on
which the TARGET payments system is operating);
"BANKS" means the banks listed in schedule 1 and includes their respective
successors in title and Substitutes;
"BORROWED MONEY" means Indebtedness in respect of (i) money borrowed or
raised and debit balances at banks, (ii) any bond, note, loan stock,
debenture or similar debt instrument, (iii) acceptance or documentary
credit facilities, (iv) receivables sold or discounted (otherwise than on a
non-recourse basis), (v) deferred payments for assets or services acquired
where the deferred payment is arranged primarily as a method of raising
finance or financing the acquisition of those assets or services, (vi)
finance leases and hire purchase contracts, (vii) Derivatives Contracts,
(viii) any other transaction (including without limitation forward sale or
purchase agreements) having the commercial effect of a borrowing or raising
of money and (ix) guarantees in respect of Indebtedness of any person
falling within any of (i) to (viii) above;
"BORROWER" includes Filly and any Additional Borrower and "BORROWERS" shall
be construed accordingly;
"BORROWER'S ACCESSION MEMORANDUM" means a memorandum substantially in the
terms of schedule 5;
"COLT" means Control Devices Inc.;
"COLT GROUP" means Colt and its subsidiaries, and "MEMBER OF THE COLT
GROUP" shall be construed accordingly;
"CONSOLIDATED PROFITS BEFORE INTEREST AND TAX" has the meaning given to it
in Schedule 4;
"CONTRIBUTION" means in relation to a Bank at any relevant time, the
aggregate of (i) the Dollar Amount of the Term Loan owing to such Bank at
such time and (ii) the Dollar Amount of the Revolving Credit Advances owing
to such Bank at such time;
"DERIVATIVES CONTRACT" means a contract, agreement or transaction which is:
(a) a rate swap, basis swap, commodity swap, forward rate transaction,
commodity option, equity (or equity or other index) swap or option,
bond option, interest rate option, foreign exchange transaction, cap,
collar or floor, currency swap, currency option or any other similar
transaction; and/or
(b) any combination of such transactions,
in each case, whether on-exchange or otherwise;
"DOLLAR AMOUNT" means (a) in relation to an Advance to be drawn down in
Dollars, the amount in Dollars so drawn down and (b) in relation to an
Advance to be drawn down in an Optional Currency, the amount in Dollars
specified in the relevant Drawdown Notice which would be required to
purchase the principal amount of that Advance as determined in accordance
with clause 6.3;
<PAGE>
"DOLLARS", "US$" and "$" mean the lawful currency of the United States of
America and in respect of all payments to be made under this Agreement in
Dollars mean funds which are for same day settlement in the New York
Clearing House Interbank Payments System (or such other U.S. dollar funds
as may at the relevant time be customary for the settlement of
international banking transactions denominated in U.S. dollars);
"DRAWDOWN DATE" means in relation to any Advance, the date, being a Banking
Day, on which it is or is to be drawn down;
"DRAWDOWN NOTICE" means a notice substantially in the terms of schedule 2;
"ENCUMBRANCE" means any mortgage, charge (whether fixed or floating),
pledge, lien (other than a lien arising by operation of law in the ordinary
course of business), hypothecation, assignment by way of security or
security interest of any kind securing any obligation of any person;
"ENVIRONMENTAL LAW" means, in relation to the United Kingdom, the United
States or any part thereof or any other relevant jurisdiction, any
applicable law or regulation relating to (a) the pollution, conservation or
protection of the environment (both natural and built), (b) the
development, occupation, exploitation or other use of land, buildings or
other property or assets, (c) the creation, storage, handling and disposal
of industrial waste and hazardous substances and (d) health and safety at
work or elsewhere and includes, without limitation, the Environmental
Protection Act 1990 and all primary and subordinate legislation which that
Act replaces or re-enacts;
"EQUIVALENT AMOUNT" means, in relation to an Advance to be made in an
Optional Currency, the amount of such Optional Currency which can be
purchased with the Dollar Amount of the relevant Advance at the Agent's
spot rate of exchange for that purpose on receipt of the relevant Drawdown
Notice;
"ERISA" means the Employee Retirement Income Security Act of 1974 (USA);
"EVENT OF DEFAULT" means any of the events or circumstances described in
clause 13.1;
"FACILITIES" includes the Term Loan Facility and the Revolving Credit
Facility;
"FILLY" means First Technology PLC;
"FILLY GROUP" means Filly and its Subsidiaries (which shall include the
members of the Colt Group, if and when Filly or any Subsidiary has become
irrevocably bound to purchase shares in Colt) and "MEMBER OF THE FILLY
GROUP" shall be construed accordingly;
"FINANCE DOCUMENTS" includes:
(a) this Agreement;
(b) each Borrower Accession Memorandum;
(c) each Guarantor Accession Memorandum; and
(d) any notice or document delivered or entered into pursuant to or in
accordance with the terms of any of the other documents listed in (a)
- (c) above;
"GUARANTOR" means any Subsidiary of Filly which upon execution of a
Guarantor's Accession Memorandum becomes a guarantor in accordance with
clause 2.6;
"GUARANTOR'S ACCESSION MEMORANDUM" means a memorandum substantially in the
terms of schedule 6;
<PAGE>
"INDEBTEDNESS" means any obligation for the payment or repayment of money,
whether as principal or as surety and whether present or future, actual or
contingent;
"INFORMATION MEMORANDUM" means the Information Memorandum to be distributed
by the Joint Arrangers at the request of Filly in connection with this
Agreement;
"JOINT ARRANGERS" means The First National Bank of Chicago, HSBC Investment
Bank plc and Dresdner Bank AG London Branch
"LIBOR" means, in relation to a particular period, the arithmetic mean
(rounded upwards, if necessary, to five decimal places) of the London
interbank offered rates for deposits of the currency in question for a
period equal to such period at or about 11 a.m. on the Quotation Date for
such period as displayed on the relevant page of the Telerate Monitor for
the currency concerned (or such other page as may replace such page on such
service for the purpose of displaying London interbank offered rates of
leading banks for deposits of that currency) or, if on such date the
offered rates for the relevant period of fewer than two leading banks are
so displayed, as quoted to the Agent by each of the Reference Banks at the
request of the Agent;
"MAJORITY BANKS" means at any relevant time:
(a) Banks the aggregate of whose Total Commitments exceeds 66.66 per cent.
of the total of the Total Commitments of all the Banks; or
(b) if the Total Commitments of all of the Banks have been reduced to
zero, Banks the aggregate of whose Total Commitments exceeded 66.66
per cent. of the Total Commitments of all the Banks immediately prior
to such reduction;
"MARGIN" means 1.10 per cent. per annum;
"MATERIAL SUBSIDIARY" means, at any time, a Subsidiary of Filly (other than
Colt BV, Netherlands, Colt N.V., Netherlands Antilles, CDI Holdings France
S.A. and Realisations et Diffusion pour l'Industrie S.A.):
(a) whose gross assets or profits before tax represent 10 per cent. or
more of the consolidated gross assets or, as the case may be,
Consolidated Profits before Interest and Tax, of the Filly Group as
calculated by reference to the latest audited or unaudited financial
statements of such Subsidiary and the latest audited or unaudited
financial statements of the Filly Group Provided that in the case of a
Subsidiary acquired after the end of the financial period to which the
latest relevant financial statements relate, the reference to the
latest financial statements for the purposes of the calculation above
shall, until financial statements for the financial period in which
the acquisition is made are delivered pursuant to clause 12, be deemed
to be a reference to a consolidation of the most recent financial
statements of Filly and of those of the Subsidiary concerned adjusted
as deemed appropriate by the auditors of Filly; or
(b) not falling within sub-paragraph (a) above but which, as a result of
any intra-group transfers or re-organisation would, adopting either
test referred to in sub-paragraph (a) above and as if the accounts
referred to in such sub-paragraph had been drawn up immediately
following such transfer or reorganisation, be a Material Subsidiary.
A report by the auditors of Filly that in their opinion a Subsidiary is or
is not or was or was not at any particular time or during any particular
period a Material Subsidiary shall, in the absence of manifest error, be
conclusive and binding on all parties to this Agreement;
"MATURITY DATE" means, in relation to a Revolving Credit Advance, the last
day of the period for which that Revolving Credit Advance is drawn down;
"MATURITY PERIOD" means, in relation to any Revolving Credit Advance, the
period for which such Revolving Credit Advance has been drawn, as stated in
the applicable Drawdown Notice and subject to the other provisions of this
Agreement;
<PAGE>
"MONTH" means a period beginning in one calendar month and ending in the
next calendar month on the day numerically corresponding to the day of the
calendar month on which it started, provided that (i) if the period started
on the last Banking Day in a calendar month or if there is no such
numerically corresponding day, it shall end on the last Banking Day in such
next calendar month and (ii) if such numerically corresponding day is not a
Banking Day, the period shall end on the next following Banking Day in the
same calendar month but if there is no such Banking Day it shall end on the
preceding Banking Day and "MONTHS" and "MONTHLY" shall be construed
accordingly;
"OBLIGOR" includes any Borrower or any Guarantor, and "OBLIGORS" shall be
construed accordingly;
"OFFER" means the offer to be made by Filly or one of its Subsidiaries to
acquire the entire issued share capital of Colt, substantially on the terms
set out in the Agreement and Plan of Merger;
"OPTIONAL CURRENCY" means any currency which is freely available, freely
convertible into Dollars and dealt in on the London Interbank Market;
"ORIGINAL CONSOLIDATED FINANCIAL STATEMENTS" means the audited consolidated
financial statements of the Filly Group for its financial year ended 30th
April 1998;
"PERMITTED ENCUMBRANCE" means any Encumbrance which is permitted to subsist
in accordance with the provisions of clause 12.1(k) and which is comprised
within the list of Permitted Encumbrances to be delivered by Filly pursuant
to schedule 3;
"PLAN" means any employee pension benefit plan subject to the provisions of
Title IV of ERISA maintained by any Obligor or any of its Subsidiaries or
to which any Obligor or any of its Subsidiaries is required to contribute
on behalf of any of its employees;
"POTENTIAL EVENT OF DEFAULT" means any Event of Default or any event or
circumstance which, with the giving of notice and/or lapse of time and/or
the satisfaction of any other condition in each case as referred to in
clause 13.1, (or any combination thereof) would constitute an Event of
Default;
"QUALIFYING BANK" means:
(a) an institution which is a bank for the purposes of Section 840A Income
and Corporation Taxes Act 1988 and with respect to which interest
receivable under this Agreement is within the charge to United Kingdom
corporation tax; or
(b) an institution whose lending office is outside the United Kingdom and
which is resident (for the purposes of the relevant double tax treaty)
in a jurisdiction which has a double tax treaty with the United
Kingdom under which the payment of interest under this Agreement to
that lending office may be made without deduction or withholding on
account of United Kingdom taxation;
"QUOTATION DATE" means, in relation to an Interest Period or other period
for which LIBOR is to be determined, the date on which quotations would
customarily be provided by leading banks in the London Interbank Market for
deposit in the relevant currency for delivery on the first day of such
period;
"REFERENCE BANKS" means the principal London offices of Midland Bank plc,
The First National Bank of Chicago and Dresdner Bank AG London Branch and
any other bank from time to time designated as such by the Agent;
"REPORTABLE EVENT" means a reportable event as that term is defined in
Title IV of ERISA;
<PAGE>
"REVOLVING CREDIT ADVANCE" means each borrowing of a portion of the
Revolving Credit Commitments by a Borrower or (as the context may require)
the principal amount of that borrowing at any relevant time;
"REVOLVING CREDIT COMMITMENT" means, in relation to a Bank, the amount set
opposite its name in column (B) of schedule 1 and/or as the case may be in
any relevant Substitution Certificate, as reduced by any relevant term of
this Agreement;
"REVOLVING CREDIT COMMITMENT PERIOD" means the period commencing on the
date of this Agreement and ending on the earliest of:-
(a) 30th April 2004;
(b) the date on which Filly cancels the Revolving Credit Commitments in
full pursuant to clause 7.4; and
(c) the date on which the Revolving Credit Commitments are reduced to zero
pursuant to any relevant term of this Agreement;
"REVOLVING CREDIT FACILITY" means the revolving credit facility made
available by the Banks pursuant to clause 2.1(b);
"RIGHTS ISSUE" means the proposed issue of new stock units in Filly in
accordance with the terms of the Underwriting Agreement;
"SUBSIDIARY" of a person means:
(a) a subsidiary of that person within the meaning of section 736 of the
Companies Act 1985 (as amended); and
(b) a subsidiary undertaking of that person within the meaning of section
258 of the Companies Act 1985 (as amended);
"SUBSTITUTE" has the meaning given to it in clause 17.3;
"SUBSTITUTION CERTIFICATE" means a certificate substantially in the terms
of schedule 8;
"TAXES" includes all present and future taxes, levies, imposts or duties of
whatever nature together with interest thereon and penalties in respect
thereof and "TAXATION" shall be construed accordingly;
"TERM LOAN" means the aggregate principal amount of the Term Loan Advances
at any relevant time;
"TERM LOAN ADVANCE" means each borrowing of a portion of the Term Loan
Commitments by a Borrower or (as the context may require) the principal
amount of that borrowing at any relevant time;
"TERM LOAN COMMITMENT" means, in relation to a Bank, the amount set
opposite its name in column (A) of schedule 1 and/or, as the case may be,
in any relevant Substitution Certificate, as reduced by any relevant term
of this Agreement;
"TERM LOAN COMMITMENT PERIOD" means the period commencing on the date of
this Agreement and ending on the earliest of:-
(a) the date falling 180 days after the date of this Agreement;
(b) the date on which Filly cancels the Term Loan Commitments in full
pursuant to clause 7.4; and
<PAGE>
(c) the date on which the Term Loan Commitments are reduced to zero
pursuant to any relevant term of this Agreement;
"TERM LOAN FACILITY" means the term loan facility made available by the
Banks pursuant to clause 2.1(a);
"TERM LOAN INTEREST PAYMENT DATE" means the last day of each Term Loan
Interest Period;
"TERM LOAN INTEREST PERIOD" means each period for the calculation of
interest in respect of a Term Loan Advance ascertained in accordance with
clause 4.5;
"TERM LOAN REPAYMENT DATES" means each of the dates referred to in Column
(A) in clause 7.1;
"TOTAL COMMITMENT" means, in relation to a Bank at any relevant time, the
aggregate at such time of (i) that Bank's Term Loan Commitment and (ii)
that Bank's Revolving Credit Commitment;
"UNDERWRITING AGREEMENT" means an agreement (substantially in the form
provided to the Joint Arrangers prior to the date of this Agreement) under
which Kleinwort Benson Securities Limited will agree to underwrite a rights
issue of stock units by Filly;
"US OBLIGOR" means an Obligor incorporated in any part of the United States
of America.
1.3 HEADINGS
Clause headings (including sub-headings) and the table of contents are
inserted for convenience of reference only and shall be ignored in the
interpretation of this Agreement.
1.4 CONSTRUCTION OF CERTAIN TERMS
In this Agreement, unless the context otherwise requires:
(a) references to clauses and schedules are to be construed as references
to the clauses of, and schedules to, this Agreement and references to
this Agreement include its schedules;
(b) references to (or to any specified provision of) this Agreement or any
other document shall be construed as references to this Agreement that
provision or that document as in force for the time being and as
amended, novated, restated or supplemented in accordance with its
terms or, as the case may be, with the agreement of the relevant
parties;
(c) references to a "REGULATION" include any present or future regulation,
rule, directive or requirement of any agency, authority, central bank
or government department or any self-regulatory or other national or
supra-national authority;
(d) words importing the plural shall include the singular and vice versa;
(e) references to a "PERSON" shall be construed as including references to
an individual, firm, company, corporation, unincorporated body of
persons or any State or any agency thereof;
(f) references to any enactment shall be deemed to include references to
such enactment as re-enacted, amended or extended;
(g) references to a time of day are to London time;
(h) references to a "GUARANTEE" include references to an indemnity by way
of guarantee or other assurance against financial loss including,
without limitation, an obligation to
<PAGE>
purchase assets or services as a consequence of a default by any other
person to pay any Indebtedness and "GUARANTEED" shall be construed
accordingly.
1.5 ACCOUNTING TERMS
Except to the extent expressly defined in this Agreement, accounting and
financial terms used in this Agreement shall be construed in accordance
with generally accepted accounting principles in the United Kingdom (as
used and applied in the Original Consolidated Financial Statements).
1.6 MAJORITY BANKS
Where this Agreement provides for any matter to be determined by reference
to the opinion of the Majority Banks or to be subject to the consent or
request of the Majority Banks or for any action to be taken on the
instructions of the Majority Banks, such opinion, consent, request or
instructions shall (as between the Banks) only be regarded as having been
validly given or issued by the Majority Banks if all the Banks shall have
received prior notice of the matter on which such opinion, consent, request
or instructions are required to be obtained and the relevant majority of
Banks shall have given or issued such opinion, consent, request or
instructions but so that (as between the Borrowers on the one hand and the
Banks on the other hand) the Borrowers shall be entitled (and bound) to
assume that such notice shall have been duly received by each Bank and that
the relevant majority shall have been obtained to constitute Majority Banks
whether or not this is the case.
2 THE FACILITIES; OBLIGATIONS OF THE PARTIES
2.1 AMOUNT OF FACILITIES
The Banks, relying upon each of the representations and warranties in
clause 11, agree to make available to Filly in accordance with the terms of
this Agreement:
(a) a term loan facility of up to US$40,000,000; and
(b) a revolving credit facility of up to US$40,000,000.
2.2 OBLIGATIONS OF THE BANKS
The obligation of each Bank under this Agreement in relation to a
particular Advance shall be:
(a) in the case of a Term Loan Advance, to contribute that proportion of
such Advance which its Term Loan Commitment bears to the Term Loan
Commitments of all the Banks; and
(b) in the case of a Revolving Credit Advance, to contribute that
proportion of such Advance which its Revolving Credit Commitment bears
to the Revolving Credit Commitments of all the Banks.
2.3 OBLIGATIONS SEVERAL
The obligations of each Bank under this Agreement are several; the failure
of any Bank to perform such obligations shall not relieve any other Bank,
the Joint Arrangers, the Agent or any Borrower of any of their respective
obligations or liabilities under this Agreement nor shall the Agent or the
Joint Arrangers be responsible for the obligations of any Bank (except for
its own obligations, if any, as a Bank) nor shall any Bank be responsible
for the obligations of any other Bank under this Agreement.
2.4 INTERESTS SEVERAL
Notwithstanding any other term of this Agreement (but without prejudice to
the provisions of this Agreement relating to or requiring action by the
Majority Banks) the interests of the Agent, the Joint Arrangers and the
Banks are several and the amount due to the Agent (for its own
<PAGE>
account), to the Joint Arrangers and to each Bank is a separate and
independent debt. The Agent, the Joint Arrangers and each Bank shall have
the right to protect and enforce their respective rights arising out of
this Agreement and it shall not be necessary for the Agent, the Joint
Arrangers or any Bank (as the case may be) to be joined as an additional
party in any proceedings for this purpose.
2.5 ADDITIONAL BORROWERS
Filly may at any time (with the prior consent of all of the Banks, which
shall not be unreasonably withheld) notify the Agent that another member of
the Filly Group is to be designated as an additional Borrower for the
purposes of this Agreement. Any such designation shall take effect when the
following conditions have been satisfied, namely:
(a) the Agent has received a Borrower's Accession Memorandum in respect of
the designated entity, duly executed by the parties thereto; and
(b) the Agent has received such corporate approvals, opinions and other
documents as it may require to demonstrate the validity, legality and
enforceability of the Borrower's Accession Memorandum.
2.6 ADDITIONAL GUARANTORS
Filly shall procure that:
(a) each Material Subsidiary shall, not later than the Banking Day before
the Drawdown Notice in respect of the first Advance is given, (i)
execute and deliver to the Agent a Guarantor Accession Memorandum and
(ii) deliver to the Agent such corporate approvals, opinions and other
documents as the Agent may require to demonstrate the validity,
legality and enforceability of the Guarantor's Accession Memorandum;
(b) each other Material Subsidiary which is not already a Guarantor shall,
as soon as practicable and in any event within 45 days of becoming a
Material Subsidiary (i) execute and deliver to the Agent a Guarantor
Accession Memorandum and (ii) deliver to the Agent such corporate
approvals, opinions and other documents as the Agent may require to
demonstrate the validity, legality and enforceability of the
Guarantor's Accession Memorandum (but if Colt does not become a 90 per
cent. Subsidiary of Filly at the initial close of the Offer, then
Filly shall comply with this obligation in relation to members of the
Colt Group as soon as practicable, but in any event within 150 days of
the date on which Colt becomes a Material Subsidiary of Filly); and
(c) as at the date of this Agreement and at all times thereafter the
Guarantors, between them, contribute at least (i) 60 per cent of
Consolidated Profits before Interest and Tax of the Filly Group and
(ii) 80 per cent of total consolidated gross assets of the Filly
Group, in each case as calculated by reference to the most recent
audited or unaudited financial statements of the Filly Group and of
each Guarantor delivered pursuant to clause 12. During the period
between (i) the date on which Colt becomes a subsidiary of Filly and
(ii) the date on which the ensuing financial statements are delivered
pursuant to clause 12, the provisions of this sub-clause shall be
applied by reference to the proforma consolidated financial statements
of the Filly Group as provided to the Banks prior to the date of this
Agreement and the most recent annual, audited statements of the
Guarantor concerned.
2.7 RIGHTS AND OBLIGATIONS
Each Additional Borrower and each Additional Guarantor shall have the
rights and obligations which it would have had if it had originally
executed this Agreement as a borrower, or as a guarantor (as the case may
be). Those rights and obligations shall include (without limitation):
(a) (in the case of an Additional Borrower) the right to utilise the
Facilities and to request any Advance, subject to and in accordance
with the other provisions of this Agreement;
<PAGE>
(b) (in the case of an Additional Borrower) the obligation to repay, or to
pay amounts owing in respect of, any Advance drawn by it; and
(c) (in the case of any Additional Guarantor) the obligation to repay or
to pay all amounts owing by any Borrower in accordance with clause 8.
2.8 STATUS OF OBLIGATIONS
This Agreement is valid and binding as between Filly, the Banks, the Joint
Arrangers and the Agent notwithstanding that (as at the date of this
Agreement or any later time) no Guarantor has become party to it in
accordance with clause 2.6. If at any time any Guarantors do so become
party, then this Agreement shall be valid and binding as between Filly, the
Guarantors, the banks, the Joint Arrangers and the Agent.
2.9 FILLY AS OBLIGOR'S AGENT
Each Obligor (by its execution of this Agreement, a Borrower's Accession
Memorandum or a Guarantor's Accession Memorandum as the case may be)
irrevocably authorises Filly on its behalf:
(a) to receive all notices, requests, demands or other communications
under this Agreement; and
(b) to give all notices (including Drawdown Notices) and instructions and
generally to give consents for, or otherwise act on behalf of, such
Obligor without any further consent of, or reference to, that Obligor.
2.10 APPLICATION OF FACILITIES
Neither the Agent, the Joint Arrangers nor the Banks shall be obliged to
supervise the application of the proceeds of any Advance. The obligations
of the Borrowers and the Guarantors under this Agreement shall remain fully
valid and enforceable, notwithstanding that the proceeds of any Advance are
applied for a purpose not authorised by the terms of this Agreement.
3 CONDITIONS
3.1 DOCUMENTS AND EVIDENCE
The obligation of each Bank to contribute to any Advance shall be subject
to the condition that the Agent, or its duly authorised representative,
shall have received, not later than the Banking Day before the date on
which the Drawdown Notice in respect of the first Advance is given, the
documents and evidence specified in schedule 3 in form and substance
satisfactory to the Agent.
3.2 GENERAL CONDITIONS PRECEDENT
The obligation of each Bank to contribute to any Advance is subject to the
further conditions that at the date of each Drawdown Notice and on each
Drawdown Date:
(a) the representations and warranties set out in clause 11 are true and
correct on and as of each such date as if each were made with respect
to the facts and circumstances existing at such date; and
(b) no Potential Event of Default shall have occurred and be continuing or
would result from the making of such Advance.
<PAGE>
3.3 GRADUATED DRAWDOWN
(a) The first Advance may not be drawn unless (i) Filly or a Subsidiary has
become irrevocably obliged to purchase shares in Colt and (ii) the proceeds
of such Advance are to be applied towards the purchase price of those Colt
Shares.
(b) Once an Advance has been made under (a) above, then Advances having a
Dollar Amount not exceeding $20,000,000 may be made or renewed for working
capital purposes.
(c) No further Advance may then be made unless Filly demonstrates to the
Agent that the proceeds are to be applied in purchasing Colt shares.
(d) Once Colt has become a wholly owned Subsidiary and an Advance has been
made pursuant to (c) above, then any remaining balance of the Facilities
may be drawn for working capital purposes.
3.4 WAIVER OF CONDITIONS PRECEDENT
The conditions specified in this clause 3 are inserted solely for the
benefit of the Banks and may be waived on their behalf in whole or in part
and with or without conditions by the Agent acting on the instructions of
the Majority Banks in respect of the first or any other Advance without
prejudicing the right of the Agent acting on such instructions to require
fulfilment of such conditions in whole or in part in respect of any other
Advance.
4 UTILISATION OF THE FACILITIES
4.1 APPLICATION
The provisions of this clause 4 apply to all Advances.
4.2 DRAWDOWN
Subject to the terms and conditions of this Agreement, an Advance may be
made to a Borrower on a Banking Day following receipt by the Agent of a
Drawdown Notice (i) in the case of the first Drawdown Notice, not later
than 10.00 a.m. on the Banking Day which is the proposed Drawdown Date and
(ii) in any other case, not later than 3.00 p.m. on the third Banking Day
before the proposed Drawdown Date. Each such Drawdown Notice shall be
effective on actual receipt by the Agent and, once given, shall, subject as
provided in this Agreement, be irrevocable and shall oblige the Borrower to
make an Advance in accordance with the terms of such notice. No Drawdown
Notice may be given in respect of an amount which is the subject of a
notice of cancellation received by the Agent under clause 7.4.
4.3 AMOUNT
(a) Each Advance in respect of the Term Loan Facility shall be of a minimum
Dollar Amount of $1,000,000 or an integral multiple of $1,000,000.
(b) Each Advance in respect of the Revolving Credit Facility shall be of a
minimum Dollar Amount of $5,000,000 or an integral multiple of $1,000,000.
(c) No more than ten Advances shall be outstanding at any one time.
(d) No Advance may be drawn down on any day of an amount exceeding the
relevant Available Facility Amount on such day.
<PAGE>
4.4 MATURITY PERIOD
(a) Subject to the ensuing provisions of this clause 4.4, a Borrower shall
in the relevant Drawdown Notice select the Maturity Period applicable to
any Advance under the Revolving Credit Facility.
(b) Revolving Credit Advances may only be borrowed for a Maturity Period of
one, three or six months (or such other period as the Agent on the
instructions of the Banks may agree) ending no later than the last day of
the Revolving Credit Commitment Period.
4.5 TERM LOAN INTEREST PERIODS
(a) Subject to the ensuing provisions of this clause 4.5, a Borrower shall
in the relevant Drawdown Notice or (as the case may be) by notice received
by the Agent not later than 3.00 p.m. on the third Banking Day before the
beginning of a Term Loan Interest Period select the duration of each Term
Loan Interest Period.
(b) Subject to (c) and (d) below, each Term Loan Interest Period shall have
a duration of one, three or six months (or such other period as the Agent
on the instructions of the Banks may agree).
(c) A Term Loan Interest Period shall end on each Term Loan Repayment Date
in relation to that portion of the Term Loan which is required to be repaid
on that Term Loan Repayment Date.
(d) If a Borrower fails to select the duration of a Term Loan Interest
Period on any occasion, then (subject to the foregoing provisions of this
clause 4.5) it shall have a duration of three months.
4.6 NOTIFICATION TO BANKS
Upon receipt of each Drawdown Notice complying with the terms of this
Agreement the Agent shall promptly notify each Bank thereof and of the
details notified to it pursuant to clause 4.4 or 4.5 (as the case may be)
and, subject to the provisions of clause 3, each of the Banks shall on such
date participate in the relevant Advance by making available its portion of
the required amount in accordance with clause 10.2
4.7 TERMINATION
Without prejudice to any other provision of this Agreement:
(a) the Term Loan Commitments shall be reduced to zero on the last day of
the Term Loan Commitment Period; and
(b) the Revolving Credit Commitments shall be reduced to zero on the last
day of the Revolving Credit Commitment Period;
and no Advance may be made in respect of the relevant Facility following
such reduction.
5 INTEREST
5.1 INTEREST ON TERM LOAN ADVANCES
Each Borrower shall pay interest on each Term Loan Advance on each Term
Loan Interest Payment Date (or, in the case of a Term Loan Advance having a
Term Loan Interest Period of more than six months, by instalments at six
monthly intervals from the commencement of the Term Loan Interest Period
and on the applicable Term Loan Interest Payment Date) at the rate per
annum determined by the Agent to be the aggregate of (a) the Margin, (b)
LIBOR and (c) the Associated Costs Rate.
<PAGE>
5.2 INTEREST ON THE REVOLVING CREDIT ADVANCES
Each Borrower shall pay interest on each Revolving Credit Advance on its
Maturity Date (or, in the case of a Revolving Credit Advance having a
Maturity Period of more than six months, by instalments payable every six
months from the Drawdown Date of such Revolving Credit Advance and on the
Maturity Date) at the rate per annum determined by the Agent to be the
aggregate of (a) the Margin, (b) LIBOR and (c) the Associated Costs Rate.
6 CURRENCIES
6.1 SELECTION OF CURRENCIES
Subject to the provisions of this clause 6, if a Borrower so requests in
the Drawdown Notice, a proposed Revolving Credit Advance may be drawn down
in an Optional Currency. If no such request is received by the Agent such
Revolving Credit Advance will be drawn down in Dollars.
6.2 LIMIT ON CURRENCIES; NON-AVAILABILITY
No Revolving Credit Advance may be made or renewed in an Optional Currency
if (a) in consequence thereof there would be Advances outstanding in more
than six different currencies or (b) any Bank notifies the Agent not later
than 10 a.m. on the second Banking Day before the date on which such
Revolving Credit Advance is to be made or renewed that deposits of such
Optional Currency are not readily available to such Bank in an amount
comparable with such Bank's portion of the relevant Revolving Credit
Advance or (c) the Agent determines at any time prior to 10 a.m. (local
time in the principal financial centre in the country of the Optional
Currency concerned) on the proposed Drawdown Date that by reason of any
change in currency availability, currency exchange rates or exchange
controls it is or will be unlawful or otherwise impossible for such
Revolving Credit Advance to be drawn down in or to remain outstanding in
that Optional Currency. Accordingly, in any such event, the relevant
Revolving Credit Advance shall be made in or converted into Dollars.
6.3 CURRENCY AMOUNTS ON DRAWDOWN
If a Revolving Credit Advance is to be drawn down in an Optional Currency
the Banks shall, subject to clause 3, advance to the relevant Borrower on
the Drawdown Date the Equivalent Amount of such Optional Currency.
7 REPAYMENT, PREPAYMENT AND CANCELLATION
7.1 REPAYMENT OF TERM LOAN
Filly shall, on each of the dates referred to in Column (A) below, repay
(or procure that relevant Borrowers repay) the principal amount of the Term
Loan set out opposite such date in Column (B) below (or, if less, the
balance of the Term Loan Commitments):
<TABLE>
<CAPTION>
<S> <C>
------------------------------------------------- ------------------------------------------------
(A) (B)
TERM LOAN REPAYMENT DATE PRINCIPAL AMOUNT OF
TERM LOAN TO BE REPAID
------------------------------------------------- ------------------------------------------------
30 April 2000 $4,000,000
------------------------------------------------- ------------------------------------------------
30 April 2001 $9,000,000
------------------------------------------------- ------------------------------------------------
30 April 2002 $9,000,000
------------------------------------------------- ------------------------------------------------
30 April 2003 $9,000,000
------------------------------------------------- ------------------------------------------------
30 April 2004 $9,000,000
------------------------------------------------- ------------------------------------------------
</TABLE>
<PAGE>
7.2 REPAYMENT OF REVOLVING CREDIT ADVANCES
(a) Each Revolving Credit Advance shall be repaid by the relevant Borrower
on the Maturity Date of such Revolving Credit Advance. If a Revolving
Credit Advance (the "NEW ADVANCE") is to be made on a day on which another
Revolving Credit Advance in the same currency (the "MATURING ADVANCE") is
due to be repaid then, subject to the terms of this Agreement and so long
as the conditions referred to in clause 3.2 shall have been satisfied in
relation to the new Advance, the maturing Advance shall be deemed to have
been repaid on its Maturity Date either in whole (if the new Advance is
equal to or greater than the maturing Advance) or in part (if the new
Advance is less than the maturing Advance) and to the extent that the
maturing Advance is so deemed to have been repaid, the principal amount of
the new Advance to be made on such date shall be deemed to have been
credited to the account of the relevant Borrower by the Agent on behalf of
the Banks in accordance with the terms of this Agreement and the Banks
shall only be obliged to make available to the relevant Borrower a
principal amount equal to the amount by which the new Advance exceeds the
maturing Advance.
(b) On the last day of the Revolving Credit Commitment Period the Borrowers
shall in any event pay or repay all outstanding Revolving Credit Advances
in full.
7.3 PREPAYMENT
(a) A Borrower may prepay the Term Loan in whole or part (being $1,000,000
or any integral multiple thereof) on any Term Loan Interest Payment Date
relating to the part of the Term Loan to be so prepaid, subject to such
Borrower having given to the Agent at least 7 days notice of its intention
to make such prepayment.
(b) If a Borrower gives any such notice of prepayment then the Term Loan
Commitments shall be reduced by an amount equal to the principal amount to
be so prepaid.
(c) Every notice of prepayment shall be effective only on actual receipt by
the Agent. Any such notice shall be irrevocable and shall oblige the
relevant Borrower to make such prepayment in accordance with the terms of
such notice. Amounts prepaid in respect of the Term Loan may not be
redrawn.
(d) Amounts prepaid in respect of the Term Loan shall be applied in
reducing the repayment instalments under clause 7.1 in inverse order of
maturity.
(e) A Borrower may not prepay the Term Loan or any part thereof except as
expressly permitted by this Agreement.
(f) Any prepayment in respect of the Term Loan shall be made together with
interest accrued and any other sum owing under this Agreement in respect of
the principal amount so prepaid.
7.4 CANCELLATION OF COMMITMENTS
Filly may at any time by notice to the Agent (effective only on actual
receipt) cancel with effect from a date not less than seven days after the
receipt by the Agent of such notice the whole or any part (being $1,000,000
or any integral multiple thereof) of the total of the Term Loan Commitments
and the Revolving Credit Commitments which have not then been drawn,
utilised or requested in a Drawdown Notice. Any such notice of
cancellation, once given, shall be irrevocable and upon such cancellation
taking effect the Term Loan Commitments and/or the Revolving Credit
Commitments (as the case may be) of each Bank shall be reduced
proportionately.
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8 GUARANTEE
8.1 UNDERTAKING TO PAY
Each Guarantor hereby guarantees to pay to the Agent, for the account of
the Banks, the Joint Arrangers and the Agent, on demand by the Agent all
moneys and to discharge all obligations and liabilities now or hereafter
due, owing or incurred by the Borrowers or any of them to the Banks, the
Joint Arrangers or any of them and/or the Agent under or pursuant to this
Agreement in each case when the same become due for payment or discharge
whether by acceleration or otherwise.
8.2 GUARANTORS AS PRINCIPAL DEBTOR; INDEMNITY
As a separate and independent stipulation, each Guarantor agrees that if
any purported obligation or liability of any Borrower which would have been
the subject of this clause 8 had it been valid and enforceable is not or
ceases to be valid or enforceable against such Borrower on any ground
whatsoever whether or not known to the Banks or any of them, the Joint
Arrangers or the Agent (including, without limitation, any irregular
exercise or absence of any corporate power or lack of authority of, or
breach of duty by, any person purporting to act on behalf of such Borrower
or any legal or other limitation, whether under the Limitation Acts or
otherwise or any disability or incapacity or any change in the constitution
of such Borrower) each Guarantor shall nevertheless be liable to the Banks,
the Joint Arrangers and the Agent in respect of that purported obligation
or liability as if the same were fully valid and enforceable and each
Guarantor were a principal debtor in respect thereof. Each Guarantor hereby
agrees to keep the Agent, the Joint Arrangers and the Banks fully
indemnified on demand against all damages, losses, costs and expenses
arising from any failure of any Borrower to perform or discharge any such
purported obligation or liability.
8.3 NO SECURITY TAKEN BY THE GUARANTOR
Each Guarantor warrants that it has not taken or received, and undertakes
that until all moneys owing under this Agreement have been paid or
discharged in full, it will not take or receive, the benefit of any
security from any Borrower or any other person in respect of its
obligations under this clause 8.
8.4 INTEREST
Each Guarantor agrees to pay interest on each amount demanded of it under
this Agreement from the date of such demand until payment (as well after as
before judgement) at the rate, at the times and otherwise on the terms set
out in clause 14.4.
8.5 CONTINUING SECURITY AND OTHER MATTERS
The obligations of each Guarantor under this clause 8 shall:
(a) secure the ultimate balance from time to time owing to the Banks, the
Joint Arrangers and/or the Agent by the Borrowers and shall be a
continuing security, notwithstanding any settlement of account or
other matter whatsoever;
(b) be in addition to any present or future right or remedy held by or
available to the Banks, or any of them, the Joint Arrangers or the
Agent; and
(c) not be in any way prejudiced or affected by the existence of any such
rights or remedies or by the same being or becoming wholly or in part
void, voidable or unenforceable on any ground whatsoever or by the
Agent, the Joint Arrangers or the Banks dealing with, exchanging,
varying or failing to perfect or enforce any of the same or giving
time for payment or indulgence or compounding with any other person
liable.
8.6 NEW ACCOUNTS
If this Guarantee ceases to be continuing for any reason whatsoever each
Bank may nevertheless continue any account of any Borrower or open one or
more new accounts and the liability of the
<PAGE>
Guarantor under this Guarantee shall not in any manner be reduced or
affected by any subsequent transactions or receipts or payments into or out
of any such account.
8.7 LIABILITY UNCONDITIONAL
The liability of the Guarantors shall not be affected nor shall the
obligations of the Guarantors under this clause 8 be discharged or reduced
by reason of:
(a) the liquidation, receivership or administration of any Borrower or any
other person liable;
(b) the incapacity or any change in the name, style or constitution of any
Borrower or any other person liable;
(c) the Agent, the Joint Arrangers or any of the Banks granting any time,
indulgence or concession to, or compounding with, discharging,
releasing or varying the liability of, any Borrower or any other
person liable or renewing, determining, varying or increasing any
accommodation, facility or transaction or otherwise dealing with the
same in any manner whatsoever or concurring in, accepting or varying
any compromise, arrangement or settlement or omitting to claim or
enforce payment from any Borrower or any other person liable; or
(d) any act or omission which would not have discharged or affected the
liability of the Guarantor had it been a principal debtor instead of a
guarantor or by anything done or omitted which but for this provision
might operate to exonerate the Guarantor.
8.8 OTHER RIGHTS
Neither the Banks, the Joint Arrangers nor the Agent shall be obliged to
make any claim or demand on any Borrower or to resort to any other right or
remedy or other means of payment now or hereafter held by or available to
them or it before enforcing this Guarantee and no action taken or omitted
by the Banks, the Joint Arrangers or the Agent in connection with any such
other right or remedy or other means of payment shall discharge, reduce,
prejudice or affect the liability of any Guarantor under this Guarantee nor
shall the Banks, the Joint Arrangers or the Agent be obliged to apply any
money or other property received or recovered in consequence of any
enforcement or realisation of any such other right or remedy or other means
of payment in reduction of the amounts owing by any Borrower under this
Agreement.
8.9 WAIVER OF RIGHTS
Until all the moneys owing by each Borrower under this Agreement have been
paid, discharged or satisfied in full (and notwithstanding payment of a
dividend in any liquidation or under any compromise or arrangement) each
Guarantor agrees that, without the prior written consent of the Agent:
(a) it will not exercise its rights of subrogation, reimbursement and
indemnity against any Borrower or any other person liable;
(b) it will not claim any set-off or counterclaim against any Borrower or
any other person liable or claim or prove in competition with the
Agent, the Joint Arrangers or any of the Banks in the liquidation of
any Borrower or any other person liable or have the benefit of, or
share in, any payment from or composition with, any Borrower or any
other person liable or any other right or remedy now or hereafter held
by the Agent, the Joint Arrangers or any of the Banks for the moneys
hereby guaranteed or for the obligations or liabilities of any other
person liable but so that, if so directed by the Agent, it will prove
for the whole or any part of its claim in the liquidation of any
Borrower on terms that the benefit of such proof and of all money
received by it in respect thereof shall be held on trust for the
Banks, the Joint Arrangers and the Agent and applied in or towards
discharge of the moneys hereby guaranteed in accordance with the terms
of the Agreement.
<PAGE>
8.10 SUSPENSE ACCOUNTS
Any money received from any Guarantor may be placed to the credit of a
suspense account with a view to preserving the rights of the Banks, the
Joint Arrangers and the Agent to prove for the whole of their respective
claims against any Borrower or any other person liable.
8.11 SETTLEMENTS CONDITIONAL
Any release, discharge or settlement between any Guarantor and the Agent,
the Joint Arrangers or any of the Banks shall be conditional upon no
security, disposition or payment to the Agent, the Joint Arrangers or any
of the Banks by any Borrower or any other person liable being void, set
aside or ordered to be refunded pursuant to any enactment or law relating
to bankruptcy, liquidation, administration or insolvency or for any other
reason whatsoever and if such condition shall not be fulfilled the Banks,
the Joint Arrangers and the Agent shall be entitled to enforce this
Agreement against the Guarantors subsequently as if such release, discharge
or settlement had not occurred and any such payment had not been made.
8.12 GUARANTOR TO DELIVER UP CERTAIN PROPERTY
If, contrary to clauses 8.3 or 8.9, any Guarantor takes or receives the
benefit of any security or receives or recovers any money or other property
from the Borrower or other person liable, such security, money or other
property shall be held on trust for the Agent and shall be delivered to the
Agent on demand.
8.13 OTHER GUARANTORS
Each Guarantor agrees to be bound by this Agreement notwithstanding that
any other person intended at any time to execute or to be bound by this
Agreement or by any other guarantee or assurance may not do so or may not
be effectually bound and notwithstanding that such other guarantee or
assurance may be determined or be or become invalid or unenforceable
against any other person, whether or not the deficiency is known to the
Banks or any of them, the Joint Arrangers or the Agent.
8.14 JOINT AND SEVERAL OBLIGATIONS
The obligations of the Guarantors under this Agreement are joint and
several.
9 FEES, COMMITMENT COMMISSION AND EXPENSES
9.1 FEES
Filly shall pay to the Agent whether or not any part of the Term Loan
Commitments or the Revolving Credit Commitments is ever advanced:
(a) for the account of the Agent, an agency fee of an amount, on the dates
and in the manner agreed between Filly and the Agent in a letter dated
22nd February 1999;
(b) for the account of the Joint Arrangers, the arrangement and other fees
and amounts, on the dates and in the manner agreed between Filly and
the Joint Arrangers in a letter dated 22nd February 1999;
(c) on the last Banking Day in each of April, July, October and January,
for the account of each Bank, commitment commission computed in arrear
from the date of this Agreement (or, as the case may be, from the date
of the immediately preceding due date for payment of such commitment
commission) and computed on the daily undrawn amount of the Term Loan
Commitments (i) until the date falling 120 days after the date of this
Agreement, at the rate of 0.25 per cent. per annum and (ii)
thereafter, at the rate of 0.50 per cent. per annum; and
<PAGE>
(d) on the last Banking Day in each of April, July, October and January,
for the account of each Bank, commitment commission computed in arrear
from the date of this Agreement (or, as the case may be, from the
immediately preceding due date for payment of such commitment
commission) and computed on the daily undrawn amount of the Revolving
Credit Commitments at the rate of 0.5 per cent. per annum.
9.2 EXPENSES
Filly shall pay to the Agent within 30 days of demand:
(a) all expenses (including legal, printing and out-of-pocket expenses)
reasonably and properly incurred by the Agent and the Joint Arrangers
in connection with the negotiation, preparation, syndication and
execution of the Finance Documents and of any amendment, supplement or
restatement or extension of or the granting of any waiver or consent
given under the Finance Documents; and
(b) all expenses (including legal and out-of-pocket expenses) incurred by
the Agent, the Joint Arrangers, the Banks or any of them in
contemplation of, or otherwise in connection with, the enforcement of,
or preservation of any rights under, the Finance Documents or
otherwise in respect of the moneys owing under any of the Finance
Documents.
9.3 VALUE ADDED TAX
All fees and expenses payable pursuant to this clause 9 shall be paid
together with any value added tax payable by the Agent, the Joint Arrangers
or any Bank in respect of such fees and expenses. Any value added tax
chargeable in respect of any services supplied by the Agent, the Joint
Arrangers or any Bank under this Agreement shall be paid in addition to any
sum agreed to be paid under this Agreement.
9.4 STAMP AND OTHER DUTIES
Filly shall pay all stamp, documentary, registration or other like duties
or Taxes (including any like duties or Taxes payable by, or assessed on,
the Banks or the Agent or the Joint Arrangers) imposed on or in connection
with any of the Finance Documents and shall indemnify the Agent, the Joint
Arrangers and the Banks against any liability arising by reason of any
delay or omission by Filly to pay such duties or Taxes.
10 PAYMENTS AND TAXES; ACCOUNTS AND CALCULATIONS
10.1 NO SET-OFF OR COUNTERCLAIM; DISTRIBUTION TO THE BANKS
All payments to be made by a Borrower under this Agreement shall be made in
full, without any set-off or counterclaim whatsoever and, subject as
provided in clause 10.7, free and clear of any deductions or withholdings,
in Dollars or the relevant Optional Currency in immediately available funds
for value on the due date to the account of the Agent at such bank as the
Agent may from time to time specify for this purpose. Save where this
Agreement provides for a payment to be made for the individual account of
the Agent, any Joint Arranger or any Bank, (in which case the Agent shall
distribute the relevant payment to the party concerned) payments to be made
by a Borrower under this Agreement shall be for the account of all the
Banks and the Agent shall forthwith distribute such payments in like funds
as are received by the Agent to the Banks rateably in accordance with their
entitlements thereto.
10.2 PAYMENTS BY THE BANKS
All sums to be advanced or made available by the Banks to a Borrower under
this Agreement shall be remitted in Dollars or the relevant Optional
Currency in immediately available funds for value on the relevant Drawdown
Date to the account of the Agent at such bank as the Agent may have
notified to the Banks and shall be paid by the Agent on such date in like
funds as are
<PAGE>
received by the Agent to the account of the relevant Borrower specified in
the relevant Drawdown Notice.
10.3 AGENT MAY ASSUME RECEIPT
Where any sum is to be paid under this Agreement to the Agent for the
account of another person, the Agent may assume that the payment will be
made when due and may (but shall not be obliged to) make such sum available
to the person so entitled on the date such sum is due and payable. If it
proves to be the case that such payment was not made to the Agent, then the
person to whom such sum was so made available shall on request refund such
sum to the Agent together with interest thereon sufficient to compensate
the Agent for the cost of making available such sum up to the date of such
repayment and the person by whom such sum was payable shall indemnify the
Agent for any and all loss or expense which the Agent may sustain or incur
as a consequence of such sum not having been paid on its due date.
10.4 NON-BANKING DAYS
When any payment under this Agreement would otherwise be due on a day which
is not a Banking Day, the due date for payment shall be postponed to the
next following Banking Day unless such Banking Day falls in the next
calendar month in which case payment shall be made on the immediately
preceding Banking Day.
10.5 CURRENCY AND CALCULATIONS
(a) All payments of interest, principal and other amounts owing in respect
of an Advance shall be made in the currency in which such amount is
denominated.
(b) All payments of commitment commission and other fees shall be made in
Dollars.
(c) All interest, commitment commission and other payments of an annual
nature under this Agreement shall accrue from day to day and be calculated
on the basis of actual days elapsed and a 360 day year (save that a
calculation in Sterling shall be made on the basis of a 365 day year).
10.6 CERTIFICATES CONCLUSIVE
Any certificate or determination of the Agent or any Bank as to any rate of
interest, rate of exchange or any amount payable under this Agreement
shall, in the absence of manifest or proven error, be conclusive and
binding on the Borrower and (in the case of a certificate or determination
by the Agent) on the Banks.
10.7 GROSSING-UP FOR TAXES
Subject to clause 10.8, if at any time a Borrower is required to make any
deduction or withholding in respect of Taxes from any payment due under
this Agreement for the account of any Bank, the Joint Arrangers or the
Agent (or if the Agent is required to make any such deduction or
withholding from a payment to the Arranger or a Bank), the sum due from
such Borrower in respect of such payment shall be increased to the extent
necessary to ensure that, after the making of such deduction or
withholding, each Bank, the Joint Arrangers and the Agent receives on the
due date for such payment (and retains, free from any liability in respect
of such deduction or withholding) a net sum equal to the sum which it would
have received had no such deduction or withholding been required to be made
and such Borrower shall indemnify each Bank, the Joint Arrangers and the
Agent against any losses or costs incurred by any of them by reason of any
failure of such Borrower to make any such deduction or withholding or by
reason of any increased payment not being made on the due date for such
payment. The relevant Borrower shall promptly deliver to the Agent any
receipts, certificates or other proof evidencing the amounts (if any) paid
or payable in respect of any such deduction or withholding.
<PAGE>
10.8 QUALIFYING BANKS
Each Bank agrees promptly to notify the Agent and Filly if it ceases to be
a Qualifying Bank. If any Bank is not or ceases to be a Qualifying Bank
(save in circumstances where such Bank has ceased to be a Qualifying Bank
by reason of any change in law, regulation or double taxation treaty or in
its application or interpretation, in each case taking effect after the
date of this Agreement) then the Borrowers shall not be liable to pay to
that Bank under clause 10.7 any sum in excess of the sum it would have been
obliged to pay if that Bank had been or remained a Qualifying Bank.
10.9 CLAW-BACK OF TAX BENEFIT
If following any such deduction or withholding as is referred to in clause
10.7 from any payment by any Borrower, the Agent, any Joint Arranger or any
Bank shall receive or be granted a credit against or relief or remission
for or repayment of any Taxes paid or payable by it, the Agent, such Joint
Arranger or such Bank shall, subject to the relevant Borrower having made
any increased payment in accordance with clause 10.7 and to the extent that
the Agent, such Joint Arranger or such Bank can do so without prejudicing
the retention of the amount of such credit, relief, remission or repayment
and without prejudice to the right of the Agent, such Joint Arranger or
such Bank to obtain any other relief or allowance which may be available to
it, reimburse the relevant Borrower with such amount as the Agent, such
Joint Arranger or such Bank shall in its absolute discretion certify to be
the proportion of such credit, relief, remission or repayment as will leave
the Agent, such Joint Arranger or such Bank (after such reimbursement) in
no worse position than it would have been in had there been no such
deduction or withholding from the payment by the relevant Borrower. Such
reimbursement shall be made forthwith upon the Agent, such Joint Arranger
or such Bank certifying that the amount of such credit or remission has
been received by it. Nothing contained in this Agreement shall oblige the
Agent, any Joint Arranger or any Bank to rearrange its tax affairs or to
disclose any information regarding its tax affairs and computations.
10.10 BANK ACCOUNTS
Each Bank shall maintain, in accordance with its usual practices, an
account or accounts evidencing the amounts from time to time lent by, owing
to and paid to it under this Agreement. The Agent shall maintain control
accounts showing the amounts outstanding in respect of the Facilities and
other sums owing by the Borrowers under this Agreement and all payments in
respect thereof made by the Borrowers from time to time. The control
accounts shall, in the absence of manifest error, be conclusive as to the
amount from time to time owing by the Borrowers under this Agreement.
10.11 PARTIAL PAYMENTS
If, on any date on which a payment is due to be made by a Borrower under
this Agreement, the amount received by the Agent from such Borrower falls
short of the total amount of the payment due to be made by such Borrower on
such date then, without prejudice to any rights or remedies available to
the Agent and the Banks under this Agreement, the Agent shall apply the
amount actually received from such Borrower in or towards discharge of the
obligations of such Borrower under this Agreement in the following order,
notwithstanding any appropriation made, or purported to be made, by such
Borrower:
(a) firstly, in or towards payment, on a pro rata basis, of any unpaid
fees, costs and expenses of the Agent under this Agreement;
(b) secondly, in or towards payment on a pro rata basis, of any fees
payable to the Joint Arrangers under clause 9.1;
(c) thirdly, in or towards payment to the Banks, on a pro rata basis, of
any accrued commitment commission payable under clause 9.1 which shall
have become due but remains unpaid;
<PAGE>
(d) fourthly, in or towards payment to the Banks, on a pro rata basis, of
any accrued interest which shall have become due but remains unpaid;
(e) fifthly, in or towards payment to the Banks, on a pro rata basis, of
any principal amounts owing in respect of the Term Loan and, the
Revolving Credit Advances which shall have become due but remains
unpaid; and
(f) sixthly, in or towards payment of any other sum which shall have
become due but remains unpaid (and, if more than one such sum so
remains unpaid, on a pro rata basis).
The order of application set out in this clause 10.11(c)-(f) shall be
varied by the Agent if all Banks so direct.
11 REPRESENTATIONS
11.1 Filly represents that:
(a) DUE INCORPORATION: each member of the Filly Group is a company duly
incorporated under the laws of its jurisdiction of incorporation with
power to enter into the Finance Documents and to exercise its rights
and perform its obligations under the Finance Documents and all
corporate and other action required to authorise its execution of the
Finance Documents and its performance of its obligations thereunder
has been duly taken;
(b) BINDING OBLIGATIONS: this Agreement constitutes and the other Finance
Documents, when executed and delivered will constitute, valid and
legally binding obligations of the respective Obligors enforceable in
accordance with their respective terms;
(c) NO CONFLICT WITH OTHER OBLIGATIONS: the execution and delivery of, the
borrowing of the Commitments and the performance of their obligations
under, and compliance with the provisions of, the Finance Documents by
the Obligors will not (i) contravene any existing applicable law,
statute, rule or regulation or any judgment, decree or permit to which
any Obligor is subject, (ii) conflict with, or result in any breach of
any of the terms of, or constitute a default under, any agreement or
other instrument to which any Obligor is a party or is subject or by
which it or any of its property is bound, (iii) contravene or conflict
with any provision of any Obligor's incorporation documents or (iv)
result in the creation or imposition of or oblige any Obligor to
create any Encumbrance on any of its undertaking, assets, rights or
revenues;
(d) CONSENTS OBTAINED: every material consent, authorisation, licence or
approval of, or registration with or declaration to, governmental or
public bodies or authorities or courts required by any Obligor to
authorise, or required by any Obligor in connection with, the
execution, delivery, validity, enforceability or admissibility in
evidence of any of the Finance Documents or the performance by any
Obligor of its obligations under any of the Finance Documents has been
obtained or made and is in full force and effect and there has been no
default in the observance of the conditions or restrictions (if any)
imposed in, or in connection with, any of the same;
(e) NO FILINGS REQUIRED: it is not necessary to ensure the legality,
validity, enforceability or admissibility in evidence of any of the
Finance Documents that they or any other instrument be notarised,
filed, recorded, registered or enrolled in any court, public office or
elsewhere or that any stamp, registration or similar tax or charge be
paid on or in relation to any of the Finance Documents which have not
already been made;
(f) NO LITIGATION: no litigation, arbitration or administrative proceeding
is taking place, pending or, to the knowledge of the officers of
Filly, threatened against any member of the Filly Group which could
have a material adverse effect on the business, assets or financial
condition of Filly, any Material Subsidiary or the Filly Group taken
as a whole;
<PAGE>
(g) NO DEFAULTS: no member of the Filly Group is (nor would with the
giving of notice or lapse of time or the satisfaction of any other
condition or any combination thereof be) in breach of or in default
under any agreement relating to Borrowed Money to which it is a party
or by which it may be bound and no other Potential Event of Default
has occurred and is continuing;
(h) FINANCIAL STATEMENTS CORRECT AND COMPLETE: the audited financial
statements of Filly and the audited consolidated financial statements
of Filly and its Subsidiaries in respect of the financial year ended
on 30th April 1998 as delivered to the Agent have been prepared in
accordance with generally accepted accounting principles and practices
in the United Kingdom which have been consistently applied and give a
true and fair view of the financial position of Filly and the
consolidated financial position of Filly and its Subsidiaries
respectively as at such date and the results of the operations of
Filly and the consolidated results of the operations of Filly and its
Subsidiaries respectively for the financial year ended on such date
and, as at such date, neither Filly nor any of its Subsidiaries had
any significant liabilities (contingent or otherwise) or any losses
which are not disclosed by, or reserved against or provided for in,
such financial statements;
(i) NO MATERIAL ADVERSE CHANGE: there has been no material adverse change
in the financial position of Filly or the consolidated financial
position of Filly and its Subsidiaries from that set forth in the
financial statements referred to in clause 11.1(h);
(j) INFORMATION MEMORANDUM: the Information Memorandum (including the
financial model provided as a part thereof) and the information,
exhibits and reports furnished by Filly to the Agent and the Banks in
connection therewith or with the negotiation and preparation of this
Agreement are (or, in the case of the Information Memorandum, will be)
true and accurate in all material respects and not misleading and all
expressions of opinion contained therein genuinely reflect the
opinions of the directors and senior management of Filly and are based
on reasonable assumptions; do not omit material facts and all
reasonable enquiries have been made to verify the facts and statements
contained therein; and there are no other facts the omission of which
would make any fact or statement therein misleading;
(k) MILLENNIUM COMPLIANCE: each member of the Filly Group has taken or is
taking such steps as are necessary to ensure that its computer systems
are not susceptible to malfunction on account of the commencement of
the year 2000 (but this representation shall not apply to the Colt
Group until Colt has become a Subsidiary of Filly);
(l) COMPLIANCE WITH CONSENTS AND LICENCES: every consent, authorisation,
licence or approval required by any member of the Filly Group in
connection with the conduct of its business and the ownership, use,
exploitation or occupation of their respective property and assets has
been obtained and is in full force and effect and there has been no
default in the observance of the conditions and restrictions (if any)
imposed in, or in connection with, any of the same;
(m) ENVIRONMENTAL LAWS: each member of the Filly Group has complied with
all Environmental Laws applicable to it or the conduct of its business
(including, without limitation, as to the disposal of hazardous
substances and the obtaining of any requisite licenses or consents);
no claim in respect of any breach of any Environmental law is pending
or has been made or threatened against any member of the Filly Group
or any occupier of any of their respective properties or any of their
respective officers in their capacity as such and no member of the
Filly Group has any reason to believe that it has or is likely to have
any liability in relation to any such matters;
(n) EMPLOYEE RETIREMENT INCOME SECURITY ACT: In the case of each US
Obligor, all Plans are in compliance in all material respects with the
applicable provisions of ERISA; neither it nor any of its Subsidiaries
has incurred any material "accumulated funding deficiency" within the
meaning of section 302(a)(2) of ERISA in connection with any Plan;
there has been no Reportable Event for any Plan, the occurrence of
which would have a materially adverse effect on the US Obligor or any
of its Subsidiaries, nor has
<PAGE>
the US Obligor or any of its Subsidiaries incurred any material
liability to the Pension Benefit Guaranty Corporation under
section 4062 of ERISA in connection with any Plan;
(o) US GOVERNMENTAL REGULATION: In the case of each US Obligor, it is not
subject to regulation under any US federal or state statute or
regulation which may limit its ability to incur Indebtedness under
this Agreement or which will be contravened by the execution and
delivery of this Agreement by it.
11.2 REPETITION
The representations and warranties in clause 11.1 other than clauses
11.1(i) and (j) (and so that the representation and warranty in clause
11.1(h) shall for this purpose refer to the then latest audited financial
statements delivered to the Agent under clause 12.1) shall be deemed to be
repeated by Filly on and as of each Drawdown Date and each Term Loan
Interest Payment Date as if made with reference to the facts and
circumstances existing on each such day.
12 UNDERTAKINGS
12.1 Filly undertakes with each of the Banks, and the Agent that, from the date
of this Agreement and so long as any moneys are owing under this Agreement
or remain available for drawing by the Borrowers:
(a) NOTICE OF DEFAULT
it will promptly upon becoming aware of the same inform the Agent of
any occurrence which might adversely affect the ability of any Obligor
to perform its obligations under any of the Finance Documents and of
any Potential Event of Default and from time to time, if so requested
by the Agent, confirm to the Agent in writing that, save as otherwise
stated in such confirmation, no Potential Event of Default has
occurred and is continuing;
(b) CONSENTS AND LICENCES
it will obtain or cause to be obtained, maintain in full force and
effect and comply in all material respects with the conditions and
restrictions (if any) imposed in, or in connection with, every
consent, authorisation, licence or approval of governmental or public
bodies or authorities or courts and do, or cause to be done, all other
acts and things which may from time to time be necessary under
applicable law for the continued due performance of the obligations of
the Obligors under the Finance Documents;
(c) USE OF PROCEEDS
it will ensure that the Borrowers use the proceeds of Advances
exclusively for the purposes specified in clause 1.1;
(d) PARI PASSU
it will ensure that the obligations of the Obligors under the Finance
Documents shall at all times rank at least pari passu with all other
present and future unsecured and unsubordinated Indebtedness of the
Obligors with the exception of any obligations which are mandatorily
preferred by law and not by contract or which are secured by Permitted
Encumbrances complying with clause 12.1(k);
(e) AUDITED FINANCIAL STATEMENTS
it will prepare (and it will ensure that its Subsidiaries will
prepare) financial statements and consolidated financial statements
for itself and each of its Subsidiaries in accordance with generally
accepted accounting principles and practices consistently
<PAGE>
applied in respect of each financial year and cause the same to be
reported on by its auditors and deliver sufficient copies of the same
to the Agent for distribution to all the Banks as soon as practicable
but not later than 150 days after the end of the financial period to
which they relate;
(f) UNAUDITED FINANCIAL STATEMENTS
it will prepare (and it will ensure that its Subsidiaries will
prepare) unaudited financial statements and consolidated financial
statements in respect of each six-month and three-month period and
deliver sufficient copies of the same for distribution to all the
Banks as soon as practicable, but not later than 90 days (in the case
of six-monthly statements) or 30 days (in the case of three-monthly
statements) after the end of the financial period to which they
relate;
(g) AUDITORS COMPLIANCE CERTIFICATES
it will deliver to the Agent, together with each set of audited
financial statements, a certificate from its auditors stating that, as
at the end of the financial period covered by such announcement, Filly
was in compliance with the financial undertakings referred to in
clause 12.4 and providing in reasonable detail the calculations upon
which such certificate is based;
(h) DIRECTORS COMPLIANCE CERTIFICATES
it will, together with each set of unaudited financial statements
delivered under clause 12.1(f) and within 14 days of the preliminary
announcement of its annual results, deliver to the Agent a certificate
signed by its Finance Director and one other Director stating that, as
at the end of the financial period covered by such statements or
announcement, Filly was in compliance with the undertakings referred
to in clause 12.4 and providing in reasonable detail the calculations
upon which such certificate is based;
(i) DELIVERY OF REPORTS
it will (at the time of issue thereof) deliver to the Agent, for
distribution to the Banks, sufficient copies for all the Banks of
every report, circular, notice or like document issued by Filly to its
shareholders or creditors generally;
(j) PROVISION OF FURTHER INFORMATION
it will (on a confidential basis) provide the Agent with such
financial and other information concerning any member of the Filly
Group and its affairs as the Agent or any Bank (acting through the
Agent) may from time to time reasonably require;
(k) PRIORITY DEBT
it will ensure that the aggregate of (i) the amounts from time to time
secured pursuant to any Permitted Encumbrances and (ii) the amounts
from time to time owing to the Obligors by members of the Filly Group
which are not themselves Obligors shall at no time exceed
US$10,000,000, but this provision shall not apply to any Encumbrance
or Indebtedness created by any member of the Colt Group in favour of
any other member of the Colt Group and which is subsisting as at the
date of this Agreement and which, within six months of the date on
which Filly becomes irrevocably obliged to purchase Colt shares, is
either (i) repaid or redeemed (as the case may be) or (ii) brought
within the limit of US$10,000,000 provided for by this sub-clause;
(l) THE OFFER
in relation to the conduct of the Offer (and except with the prior
consent of the Majority Banks):
<PAGE>
(i) it will not make any material amendment to the terms of the Offer
(whether as to minimum acceptance levels or otherwise) as
described in the Agreement and Plan of Merger;
(ii) it will comply with all applicable laws (including the
requirements and rulings of the Securities and Exchange
Commission); and
(iii) it will not make any announcement or otherwise publicise the
existence or terms of this Agreement or the parties to it (except
that Filly may publish the existence and terms of this Agreement
to the extent required by law in connection with the Offer).
(m) INSURANCE
it will procure that each member of the Filly Group will insure and
keep insured all its properties and assets with underwriters or
insurance companies of repute to such extent and against such risks as
prudent companies engaged in similar businesses normally insure;
(n) PENSION SCHEMES
it will ensure that the levels of contribution to the pension schemes
for the time being operated by each member of the Filly Group do and
continue to cover the liabilities for funding such schemes recommended
by its actuaries and as required under applicable law;
(o) COMPLIANCE WITH LAWS AND REGULATIONS
it will procure that each member of the Filly Group will comply with
the terms and conditions of all laws, regulations, agreements,
licences and concessions material to the carrying on of its business
(including, without limitation, all applicable Environmental Laws);
(p) REPORTABLE EVENT
(i) it will promptly, and in any event within 30 days after any US
Obligor knows that any Reportable Event with respect to any Plan
has occurred, deliver to the Agent a statement of the finance
director of such US Obligor setting forth details as to such
Reportable Event and the action which such US Obligor proposes to
take with respect thereto, together with a copy of any notice of
such Reportable Event given to the Pension Benefit Guaranty
Corporation if a copy of such notice is available to such US
Obligor;
(ii) it will promptly after the filing thereof with the Internal
Revenue Service, deliver to the Agent copies of each annual
report with respect to each Plan administered by such US Obligor;
and
(iii) it will promptly after receipt thereof, deliver to the Agent a
copy of any notice (other than a notice of general application),
such US Obligor or any Subsidiary may receive from the Pension
Benefit Guaranty Corporation or the Internal Revenue Service with
respect to any Plan administered by such US Obligor.
12.2 Filly undertakes with each of the Banks, and the Agent that, from the date
of this Agreement and so long as any moneys are owing under this Agreement
or remain available for drawing by any Borrower and except with the prior
written consent of the Agent acting on the instructions of the Majority
Banks:
<PAGE>
(a) NEGATIVE PLEDGE
it will not permit any Encumbrance (other than a Permitted Encumbrance
complying with clause 12.1(k) or a lien arising by operation of law in
the ordinary course of business) by any member of the Filly Group to
subsist, arise or be created or extended over all or any part of the
present or future undertakings, assets, rights or revenues of any
member of the Filly Group to secure or prefer any present or future
Indebtedness of any person;
(b) TRANSACTIONS SIMILAR TO SECURITY
(except in the case of a transaction which gives rise to a Permitted
Encumbrance) it will not, and it will procure that none of its
subsidiaries will (i) enter into any sale and leaseback transaction in
respect of any of its assets or (ii) sell or otherwise dispose of any
of its receivables on recourse terms;
(c) NO MERGER
except pursuant to the Offer or pursuant to a solvent group
reconstruction previously approved by the Banks (such approval not to
be unreasonably withheld) it will not and will procure that none of
its subsidiaries will merge or consolidate with any other company or
person;
(d) DISPOSALS
it will not and will procure that none of its Subsidiaries will sell,
transfer, lend, lease or otherwise dispose of or cease to exercise
direct control over any part (being either alone or when aggregated
with all other disposals falling to be taken into account pursuant to
this clause 12.2(d) material in the opinion of the Majority Banks in
relation to the undertakings, assets, rights and revenues of the Filly
Group taken as a whole) of its present or future undertaking, assets,
rights or revenues (otherwise than by transfers, sales or disposals
for full consideration in the ordinary course of day-to-day trading)
whether by one or a series of transactions related or not;
(e) ACQUISITIONS
(except pursuant to the Offer) it will not, and will procure that none
of its Subsidiaries will, acquire any assets (including, without
limitation, any companies) other than in the ordinary course of its
trading activities or capital expenditure on its existing businesses;
(f) LOANS AND GUARANTEES
save for transactions permitted by clause 12.1(k), it will not, and
will procure that none of its Subsidiaries will, make any loans, grant
any credit (save for normal trade credit in the ordinary course of
day-to-day trading) or give any guarantee to or for the benefit of any
person;
(g) EXTERNAL BORROWINGS
it will procure that members of the Group which are not Guarantors
will not incur any Indebtedness in respect of Borrowed Money to a
person which is not a member of the Filly Group (but (i) this clause
shall not prohibit such Indebtedness to the extent to which the
aggregate principal amount so incurred does not exceed US$2,000,000
and (ii) this clause shall not prohibit borrowings by Filly or any
Additional Borrower under this Agreement or under a (pound)40,000,000
dual currency agreement signed by Filly on or about the date hereof
with Dresdner Bank AG London Branch);
<PAGE>
(h) CHANGE OF BUSINESS
(except as a direct consequence of the Offer) it will not change the
nature or scope of the business carried on by the Filly Group as at
the date of this Agreement.
12.3 EXCEPTION TO NEGATIVE UNDERTAKINGS
A transaction which would otherwise contravene the provisions of clause
12.2(b) (Transactions similar to security), 12.2(d) (Disposals) or 12.2(e)
(Acquisitions) shall not be taken to infringe those provisions if the
following conditions are satisfied:
(a) the amount or value of the consideration for the transaction is less
than $1,000,000;
(b) (where the amount or value of the consideration for the transaction
exceeds $1,000,000), details of the transaction have been provided to
the Agent before legally binding commitments have been made;
(c) the amount or value of the consideration for the transaction (when
aggregated with the amount or value of other exempt transactions
concluded during the same financial year) does not exceed $5,000,000;
and
(d) the amount or value of the consideration for the transaction (when
aggregated with the amount or value of other exempt transactions
concluded since the date of this Agreement) does not exceed
$15,000,000.
12.4 FINANCIAL UNDERTAKINGS
Filly undertakes with the Agent and the Banks that, from the date of this
Agreement until all moneys owing under any of the Finance Documents have
been paid in full, it will at all times comply with the financial
undertakings set out in Schedule 4.
13 EVENTS OF DEFAULT
13.1 Each of the events and circumstances set out below is an Event of Default
(whether or not caused by any reason outside the control of any member of
the Filly Group):
(a) NON-PAYMENT: any Obligor fails to pay any sum due from it under any
Finance Document in the currency, at the time and in the manner
stipulated in this Agreement; or
(b) BREACH OF CERTAIN OBLIGATIONS: any Obligor commits any breach of or
omits to observe any of the obligations or undertakings expressed to
be assumed by it under clauses 12.2 or 12.3; or
(c) BREACH OF OTHER OBLIGATIONS: any Obligor commits any other breach of
or omits to observe any of the obligations or undertakings expressed
to be assumed by it under any Finance Document and, in respect of any
such breach or omission which in the opinion of the Majority Banks is
capable of remedy, such action as the Agent may require shall not have
been taken within 14 days of the Agent notifying the relevant Obligor
of such default and of such required action; or
(d) MISREPRESENTATION: any representation or warranty made or deemed to be
made or repeated in or pursuant to any Finance Document or in any
notice, certificate or statement referred to in or delivered under any
Finance Document is or proves to have been incorrect or misleading in
any material respect; or
(e) CROSS-DEFAULT: any Borrowed Money of any one or more members of the
Filly Group in an aggregate amount exceeding $5,000,000 is not paid
when due or becomes (whether by declaration or automatically in
accordance with the relevant agreement or instrument constituting the
same) due and payable prior to the date when it would
<PAGE>
otherwise have become due or any creditor of any one or more members
of the Filly Group becomes entitled to declare any Borrowed Money in
an aggregate amount exceeding $5,000,000 of any one or more members of
the Filly Group so due and payable or to require cash
collateralisation or security for any such Borrowed Money or any
facility or commitment available to any one or more members of the
Filly Group relating to Borrowed Money in an aggregate amount
exceeding $5,000,000 is withdrawn, suspended or cancelled by reason of
any default (however described) of the company concerned; or
(f) DERIVATIVES CONTRACT DEFAULT: any member of the Filly Group fails to
make payment in relation to a Derivatives Contract of any sum on its
due date or the counterparty to a Derivatives Contract becomes
entitled to terminate that Derivatives Contract early by reason of
default on the part of any member of the Filly Group; or
(g) LEGAL PROCESS: any judgment or order made against any Obligor or
Material Subsidiary is not stayed, appealed in good faith or complied
with within 14 days or a creditor attaches or takes possession of, or
a distress, execution, sequestration or other process is levied or
enforced upon or sued out against, any material part of the
undertakings, assets, rights or revenues of any Obligor or Material
Subsidiary and is not discharged within 14 days; or
(h) INSOLVENCY: any Obligor or Material Subsidiary is deemed unable to pay
its debts within the meaning of section 123(1)(a), (b), (e) or (2) of
the Insolvency Act 1986 or otherwise becomes insolvent or stops or
suspends making payments (whether of principal or interest) with
respect to all or any class of its debts or announces an intention to
do so; or
(i) WINDING UP: any petition (other than a petition which Filly
demonstrates to be frivolous and vexatious) is presented or other step
is taken for the purpose of winding up any Obligor or Material
Subsidiary or an order is made or resolution passed for the winding up
of any Obligor or Material Subsidiary or a notice is issued convening
a meeting for the purpose of passing any such resolution; or
(j) ADMINISTRATION: any petition (other than a petition which Filly
demonstrates to be frivolous and vexatious) is presented or other step
is taken for the purpose of the appointment of an administrator of any
Obligor or Material Subsidiary; or
(k) APPOINTMENT OF RECEIVERS AND MANAGERS: any administrative or other
receiver is appointed of any Obligor or Material Subsidiary or any
part of their respective assets and/or undertakings or any other steps
are taken to enforce any Encumbrance over all or any part of the
assets of any Obligor or Material Subsidiary; or
(l) COMPOSITIONS: any steps are taken, or negotiations commenced, by any
Obligor or Material Subsidiary or by any of their respective creditors
with a view to proposing any kind of composition, compromise or
arrangement involving such company and any of its creditors; or
(m) ANALOGOUS PROCEEDINGS: there occurs, in relation to any Obligor or
Material Subsidiary, in any country or territory in which it carries
on business or to the jurisdiction of whose courts any part of its
assets is subject, any event which, in the reasonable opinion of the
Agent, appears in that country or territory to correspond with, or
have an effect equivalent or similar to, any of those mentioned in
clauses (g) to (l) (inclusive) or otherwise becomes subject, in any
such country or territory, to the operation of any law relating to
insolvency, bankruptcy or liquidation; or
(n) CESSATION OF BUSINESS: any Obligor or Material Subsidiary suspends or
ceases or threatens to suspend or cease to carry on its business; or
(o) SEIZURE: all or a material part of the undertakings, assets, rights or
revenues of, or shares or other ownership interests in, any member of
the Filly Group are seized,
<PAGE>
nationalised, expropriated or compulsorily acquired by or under the
authority of any government; or
(p) ILLEGALITY: it becomes unlawful for any Obligor to comply with any of
its obligations under any of the Finance Documents; or
(q) CHANGE OF CONTROL OF FILLY: any single person, or group of persons
acting in concert as defined in the City Code on Take-overs and
Mergers dated 8th July, 1993, acquires more than one-half in nominal
value of the equity share capital (as defined in section 744 of the
Companies Act 1985) of Filly; OR control (as defined in section 435 of
the Insolvency Act 1986) of Filly is acquired by any person and/or his
associates (as defined in that section) not having control of Filly at
the date of this Agreement; or
(r) CHANGE OF CONTROL OF BORROWER OR GUARANTORS: save as permitted by this
Agreement, or with the prior written consent of all the Banks, any
Borrower or Guarantor ceases to be a wholly owned Subsidiary (directly
or indirectly) of Filly; or
(s) RIGHTS ISSUE: the Rights Issue is not completed in accordance with the
terms of the Underwriting Agreement or the Underwriting Agreement is
terminated or cancelled or otherwise ceases to be in full force and
effect; or
(t) MATERIAL ADVERSE CHANGE: there occurs, in the opinion of the Majority
Banks, a material adverse change in the financial condition of any
Obligor which may affect the ability of any Obligor to perform all or
any of its obligations under or otherwise to comply with the terms of
any Finance Document; or
(u) MATERIAL EVENTS: any other event occurs or circumstance arises which,
in the opinion of the Majority Banks, is likely materially and
adversely to affect the ability of any Obligor to perform all or any
of its obligations under or otherwise to comply with the terms of any
Finance Document; or
(v) ERISA: Any Reportable Event, which, in the opinion of the Agent acting
on the instructions of the Majority Banks, constitutes grounds for the
termination of any Plan by the Pension Benefit Guaranty Corporation or
for the appointment by the appropriate United States District Court of
a trustee to administer any Plan, occurred, or any Plan is terminated
within the meaning of Title IV of ERISA, or a trustee is appointed by
the appropriate United States District Court to administer any Plan,
or the Pension Benefit Guaranty Corporation institutes proceedings to
terminate any Plan or to appoint a trustee to administer any Plan;
13.2 ACCELERATION
The Agent may and if so requested by the Majority Banks shall, without
prejudice to any other rights of the Banks, at any time after the happening
of an Event of Default so long as the same is continuing by notice to Filly
declare that:
(a) the obligation of each Bank to make its Total Commitment available
shall be terminated, whereupon the Total Commitments shall be reduced
to zero forthwith; and/or
(b) the Term Loan, the Revolving Credit Advances and all interest, and
commitment commission accrued and all other sums payable under the
Finance Documents have become immediately due and payable or have
become due and payable on demand, whereupon the same shall,
immediately or in accordance with the terms of such notice, become so
due and payable.
On or at any time after the making of any such declaration, the Agent shall
be entitled, to the exclusion of the relevant Borrower (and without
prejudice to clause 5), to select the duration of Term Loan Interest
Periods.
<PAGE>
13.3 DEMAND BASIS
If, pursuant to clause 13.2, the Agent declares the Term Loan and the
Revolving Credit Advances to be due and payable on demand then the Agent
may (and, if so instructed by the Majority Banks, shall) at any time by
written notice to Filly (a) call for repayment of the Term Loan and
Revolving Credit Advances on such date as may be specified in such notice
whereupon the Term Loan and Revolving Credit Advances shall become due and
payable on the date so specified together with all interest and commitment
commission accrued and all other sums payable under this Agreement or (b)
withdraw such declaration with effect from the date specified in such
notice.
14 INDEMNITIES; DEFAULT INTEREST
14.1 INDEMNITY AND THE OFFER
Filly shall indemnify each of the Banks, the Joint Arrangers and the Agent
(and each of their respective employees, officers and agents) against any
loss, liability, cost, damage, claim or expense which they may incur or
which may be asserted against them as a consequence (whether directly or
indirectly) of the Banks agreeing to finance the acquisition of the Colt
shares by the Filly Group.
14.2 MISCELLANEOUS INDEMNITIES
Each Borrower shall on demand indemnify each Bank, the Joint Arrangers and
the Agent, without prejudice to any of their other rights under this
Agreement, against any loss (including loss of Margin) or expense which
such Bank, such Joint Arranger or the Agent shall evidence and certify as
sustained or incurred by it as a consequence of:
(a) any default in payment by any Borrower of any sum under this Agreement
when due;
(b) the occurrence of any other Event of Default;
(c) any prepayment of all or part of a Term Loan Advance or a Revolving
Credit Advance being made otherwise than on a Term Loan Repayment Date
or Maturity Date (as the case may be);
(d) any Advance not being made for any reason (excluding any default by
the Agent, the Joint Arrangers or any Bank) after a Drawdown Notice
has been given,
including, in any such case, but not limited to, any loss or expense
sustained or incurred by such Bank in maintaining or funding its
obligations under this Agreement or any part thereof or in liquidating or
re-employing deposits from third parties acquired or contracted for to fund
its obligations under this Agreement or any part thereof or any other
amount owing to such Bank. The Banks shall take reasonable steps to
mitigate any losses which may be the subject of a claim under this clause
14.2.
14.3 CURRENCY OF ACCOUNT; CURRENCY INDEMNITY
No payment by a Borrower under this Agreement which is made in a currency
other than the currency (the "CONTRACTUAL CURRENCY") in which such payment
is required to be made pursuant to this Agreement shall discharge the
obligation in respect of which it is made except to the extent of the net
proceeds in the Contractual Currency nor shall the Agent or the Banks be
liable to any Borrower for any loss or alleged loss arising from
fluctuations in exchange rates between the date on which such payment is so
received by the Agent and the date on which the Agent effects such sale. If
any sum due from a Borrower under this Agreement or any order or judgement
given or made in relation to this Agreement is required to be converted
from the Contractual Currency or other currency in which the same is
payable under such order or judgement (the "FIRST CURRENCY") into another
currency (the "SECOND CURRENCY") for the purpose of (a) making or filing a
claim or proof against a Borrower, (b) obtaining an order or judgement in
any court or other tribunal or (c) enforcing any order or judgement given
or made in relation
<PAGE>
to this Agreement, such Borrower shall indemnify and hold harmless the
Agent, such Joint Arranger and each Bank from and against any loss suffered
as a result of any difference between (i) the rate of exchange used for
such purpose to convert the sum in question from the first currency into
the second currency and (ii) the rate or rates of exchange at which the
Agent, such Joint Arranger or such Bank may in the ordinary course of
business purchase the first currency with the second currency upon receipt
of a sum paid to it in satisfaction, in whole or in part, of any such
order, judgement, claim or proof. Any amount due from a Borrower under the
indemnity contained in this clause 14.3 shall be due as a separate debt and
shall not be affected by judgement being obtained for any other sums due
under or in respect of this Agreement and the term "RATE OF EXCHANGE"
includes any premium and costs of exchange payable in connection with the
purchase of the first currency with the second currency.
14.4 DEFAULT INTEREST
If any Borrower fails to pay any sum (including, without limitation, any
sum payable pursuant to this clause 14.4) on its due date for payment under
this Agreement such Borrower shall pay interest on such sum from the due
date up to the date of actual payment (as well after as before judgement)
at a rate determined by the Agent pursuant to this clause 14.4. The period
beginning on such due date and ending on such date of payment shall be
divided into successive periods of not more than three months as selected
by the Agent each of which (other than the first, which shall commence on
such due date) shall commence on the last day of the preceding such period.
The rate of interest applicable to each such period shall be the aggregate
(as determined by the Agent) of (a) one per cent. per annum, (b) the
Margin, (c) LIBOR and (d) the Associated Costs Rate, and unless such unpaid
sum is an amount of principal which became due and payable by reason of a
declaration by the Agent under clause 13.2 or a repayment or prepayment
occurring on a date other than a Term Loan Repayment Date or a Maturity
Date relating thereto, in which case the first such period selected by the
Agent shall end on such Maturity Date and interest shall be payable on such
principal sum during such period at a rate one per cent. above the rate
applicable thereto immediately before it fell due. Default interest under
this clause 14.4 shall be due and payable on the last day of each period
determined by the Agent pursuant to this clause 14.4 or, if earlier, on the
date on which the sum in respect of which such default interest is accruing
shall actually be paid. If, for the reasons specified in clause 15.5, the
Agent is unable to determine a rate in accordance with the foregoing
provisions of this clause 14.4, each Bank shall promptly notify the Agent
of the cost of funds to such Bank and interest on any sum not paid on its
due date for payment shall be calculated for each Bank at a rate determined
by the Agent to be one per cent. per annum above the aggregate of the
Margin and the cost of funds (including the Associated Costs Rate) to such
Bank.
15 UNLAWFULNESS AND INCREASED COSTS; ALTERNATIVE INTEREST RATES
15.1 UNLAWFULNESS
If at any time after the date of this Agreement, it becomes contrary to any
law or regulation for any Bank to contribute to Term Loan Advances or
Revolving Credit Advances or to maintain its Term Loan Commitment or
Revolving Credit Commitment or fund its Contribution, such Bank shall
promptly, through the Agent, notify Filly whereupon:
(a) such Bank's Term Loan Commitment and Revolving Credit Commitment shall
be reduced to zero; and
(b) each Borrower shall be obliged (on the date specified by the Bank
concerned, which shall not be earlier than the latest date by which
the relevant law or regulation requires the same to be repaid) to
prepay the Contribution of such Bank together with any other amounts
then owing by any Borrower to that Bank under this Agreement.
15.2 INCREASED COSTS
If the result of any change in, or in the interpretation or application of,
or the introduction of, any law or any regulation, request or requirement
(whether or not having the force of law but, if not having the force of
law, being a request or requirement with which banks in the relevant
<PAGE>
jurisdiction are generally accustomed to comply), including, without
limitation, those relating to Taxation, capital adequacy, liquidity,
reserve assets and special deposits and in each case occurring after the
date of this Agreement is to:
(a) subject any Bank to Taxes or change the basis of Taxation of any Bank
with respect to any payment under this Agreement (other than Taxes or
Taxation on the overall net income, profits or gains of such Bank);
and/or
(b) increase the cost to, or impose an additional cost on, any Bank or its
holding company in making or keeping available all or part of such
Bank's Term Loan Commitment or Revolving Credit Commitment or
maintaining or funding all or part of such Bank's Contribution; and/or
(c) reduce the amount payable or the effective return to any Bank under
this Agreement; and/or
(d) reduce any Bank's or its holding company's rate of return on its
overall capital by reason of a change in the manner in which it is
required to allocate capital resources to such Bank's obligations
under this Agreement; and/or
(e) require any Bank or its holding company to make a payment or forgo a
return on or calculated by reference to or on any amount received or
receivable by such Bank under this Agreement; and/or
(f) require any Bank or its holding company to incur or sustain a loss by
reason of being obliged to deduct all or part of such Bank's Term Loan
Commitment, Revolving Credit Commitment or Contribution from its
capital for regulatory purposes,
then and in each such case:
(i) such Bank shall notify Filly through the Agent in writing of such
event promptly upon its becoming aware of the same; and
(ii) Filly shall on demand, made at any time whether or not such
Bank's Contribution has been repaid or discharged, pay to the
Agent for the account of such Bank the amount which such Bank
specifies (in a certificate setting forth the basis of the
computation of such amount but not including any matters which
such Bank or its holding company regards as confidential) is
required to compensate such Bank and/or its holding company for
such liability to Taxes, increased or additional cost, reduction,
payment, forgone return or loss.
For the purposes of this clause 15, "HOLDING COMPANY" means, in relation to
a Bank, the company or entity (if any) within the consolidated supervision
of which such Bank is included.
15.3 EXCEPTION
Nothing in clause 15.2 shall entitle any Bank to receive any amount in
respect of compensation for any such liability to Taxes, increased or
additional cost, reduction, payment, forgone return or loss (a) to the
extent that the same is taken into account in calculating the Associated
Costs Rate or (b) to the extent that the same is the subject of an
additional payment under clause 10.7 or such payment would not otherwise be
required pursuant to clause 10.8.
15.4 FURTHER EXCEPTION
Nothing in clause 15.2 shall entitle any Bank to compensation for any such
liability to Taxes, increased or additional cost, reduction, payment,
forgone return or loss which arises as a consequence of (or of any law or
regulation implementing) (a) the proposals for international convergence of
capital measurement and capital standards published by the Basle Committee
on Banking Regulations and Supervisory Practices in July 1988, as amended
and/or (b) any
<PAGE>
applicable directive of the European Union (in each case) unless it results
from any change in, or in the interpretation or application of, such
proposals or any such applicable directive (or any law or regulation
implementing the same) occurring after the date hereof. For the purposes of
this clause 16.4 the term "APPLICABLE DIRECTIVE" means (exclusively) each
of the Own Funds Directive (89/299/EEC of 17th April 1989) and the Solvency
Ratio Directive (89/647/EEC of 18th December 1989) as amended.
15.5 MARKET DISRUPTION; NON-AVAILABILITY
(a) If and whenever, at any time prior to the making of any Advance or
prior to the beginning of any Term Loan Interest Period:
(i) the Agent shall have determined, after consultation with the
Reference Banks (which determination shall, in the absence of
manifest or proven error, be conclusive), that adequate and fair
means do not exist for ascertaining LIBOR during the relevant
Maturity Period or Term Loan Interest Period (as the case may
be); or
(ii) (when required to do so for the purposes of this Agreement) none
of the Reference Banks supplies the Agent with a quotation for
the purpose of calculating LIBOR; or
(iii) the Agent shall have received notification from Banks with Total
Commitments exceeding one half of the Total Commitments of all
the Banks that deposits in the relevant currency are not
available to such Banks in the London Interbank Market in the
ordinary course of business in sufficient amounts to fund their
Contributions;
the Agent shall forthwith give a notice (a "DETERMINATION NOTICE") to
Filly and to each of the Banks. A Determination Notice shall contain
particulars of the relevant circumstances giving rise to its issue.
After the giving of any Determination Notice the undrawn amount of the
Total Commitments shall not be borrowed until notice to the contrary
is given to Filly by the Agent.
(b) The Agent shall, as soon as is reasonably practicable after it has
given a Determination Notice, enter into negotiations with Filly with
a view to agreeing an alternative basis for determining the rates of
interest from time to time applicable under this Agreement.
(c) If no alternative basis is agreed pursuant to (b) above, each Bank
shall certify an alternative basis (the "SUBSTITUTE BASIS") for
maintaining its funding under this Agreement. The Substitute Basis may
(without limitation) include alternative interest periods, alternative
currencies or alternative rates of interest but shall include a margin
above the cost of funds including the Associated Cost Rate, if any, to
such Bank equivalent to the Margin. Each Substitute Basis so certified
shall be binding upon the Borrowers and shall take effect in
accordance with its terms from the date specified in the Determination
Notice until such time as none of the circumstances specified in
sub-clause (a) above continues to exist whereupon the normal interest
rate fixing provisions of this Agreement shall apply. During the first
30 days of a period when a Substitute Basis is in force the Agent and
Filly shall consult with a view to reverting to the normal interest
rate fixing provisions of this Agreement as soon as practicable.
15.6 MITIGATION
If, in respect of any Bank, circumstances arise which would or would upon
the giving of notice result in:
(i) the reduction of its Term Loan Commitment and its Revolving
Credit Commitment to zero pursuant to clause 15.1; or
<PAGE>
(ii) an increase in the amount of any payment to be made to it or for
its account pursuant to clause 10.7; or
(iii) a claim for indemnification pursuant to clause 15.2;
then, without in any way limiting, reducing or otherwise qualifying the
rights of such Bank or the obligations of Filly under any of the clauses
referred to in (i), (ii) or (iii) above:
(a) such Bank shall promptly upon becoming aware of the same notify the
Agent thereof and, in consultation with the Agent and Filly and to the
extent that it can do so without prejudice to its own position, take
reasonable steps to mitigate the effects of such circumstances
including the transfer of its facility office or the transfer of its
rights and obligations hereunder to another financial institution
acceptable to Filly and willing to participate in the Facilities in
which such Bank is then participating Provided that such Bank shall be
under no obligation to take any such action if, in the opinion of such
Bank, to do so would or might have any adverse effect upon its
business, operations or financial condition; and
(b) the Agent and the Banks shall, upon request of Filly enter into
negotiations in good faith with Filly in order to consider what
action, if any, can be taken with a view to rearranging the Facilities
on a basis which will mitigate the effects of such circumstances.
16 SET-OFF AND PRO RATA PAYMENTS
16.1 SET-OFF
Each Borrower authorises each Bank to apply any credit balance to which
such Borrower is then entitled on any account of such Borrower with such
Bank at any of its branches in or towards satisfaction of any sum then due
and payable from such Borrower to such Bank under this Agreement. For this
purpose each Bank is authorised to purchase with the moneys standing to the
credit of such account such other currencies as may be necessary to effect
such application. No Bank shall be obliged to exercise any right given to
it by this clause 16.1. Each Bank shall notify the Agent and the relevant
Borrower forthwith upon the exercise or purported exercise of any right of
set-off giving full details in relation thereto and the Agent shall inform
the other Banks.
16.2 PRO RATA PAYMENTS
(a) If at any time any Bank (the "RECOVERING BANK") receives or recovers
any amount owing to it by a Borrower under this Agreement by direct
payment, set-off, consolidation of accounts or in any manner other
than by payment through the Agent pursuant to clause 10.1 or 10.11
(not being a payment received from a Substitute or a sub-participant
in such Bank's Contribution or any other payment of an amount due to
the Recovering Bank for its sole account) the Recovering Bank shall,
within two Banking Days of such receipt or recovery (a "RELEVANT
RECEIPT") notify the Agent of the amount of the Relevant Receipt. If
the Relevant Receipt exceeds the amount which the Recovering Bank
would have received if the Relevant Receipt had been received by the
Agent and distributed pursuant to clause 10.1 or 10.11 (as the case
may be) then:
(i) within two Banking Days of demand by the Agent, the Recovering
Bank shall pay to the Agent an amount equal (or equivalent) to
the excess;
(ii) the Agent shall treat the excess amount so paid by the Recovering
Bank as if it were a payment made by the relevant Borrower and
shall distribute the same to the Banks (other than the Recovering
Bank) in accordance with clause 10.1 or 10.11 (as the case may
be); and
(iii) as between the relevant Borrower and the Recovering Bank the
excess amount so re-distributed shall be treated as not having
been paid.
<PAGE>
(b) If any part of the Relevant Receipt subsequently has to be wholly or
partly refunded by the Recovering Bank (whether to a liquidator or
otherwise) each Bank to which any part of such Relevant Receipt was so
re-distributed shall on request from the Recovering Bank repay to the
Recovering Bank such Bank's pro rata share of the amount which has to
be refunded by the Recovering Bank.
(c) Each Bank shall on request supply to the Agent such information as the
Agent may from time to time request for the purpose of this clause
16.2.
(d) Notwithstanding the foregoing provisions of this clause 16.2 no
Recovering Bank shall be obliged to share any Relevant Receipt which
it receives or recovers pursuant to legal proceedings taken by it to
recover any sums owing to it under this Agreement with any other party
which has a legal right to, but does not, either join in such
proceedings or commence and diligently pursue separate proceedings to
enforce its rights in the same or another court (unless the
proceedings instituted by the Recovering Bank are instituted by it
without prior notice having been given to such party through the
Agent).
16.3 NO RELEASE
For the avoidance of doubt it is hereby declared that failure by any
Recovering Bank to comply with the provisions of clause 16.2 shall not
release any other Recovering Bank from any of its obligations or
liabilities under clause 16.2.
16.4 NO CHARGE
The provisions of this clause 16 shall not, and shall not be construed so
as to, constitute a charge by a Bank over all or any part of a sum received
or recovered by it in the circumstances mentioned in clause 16.2.
17 ASSIGNMENT, SUBSTITUTION AND LENDING OFFICES
17.1 BENEFIT AND BURDEN
This Agreement shall be binding upon, and enure for the benefit of, the
Banks, the Joint Arrangers, the Agent and the Obligors and their respective
successors.
17.2 NO ASSIGNMENT BY OBLIGORS
The Obligors may not assign or transfer any of their rights or obligations
under this Agreement.
17.3 SUBSTITUTION
Each Bank (an "EXISTING BANK") may transfer, by way of novation, all or any
part of its rights, benefits and obligations under this Agreement to a
Qualifying Bank (a "SUBSTITUTE"). Any such novation may only be made with
the prior written consent of Filly but (i) such consent shall not be
unreasonably withheld or delayed and (ii) such consent shall be deemed to
have been given if Filly does not respond to any request to that effect
within five business days. On the Effective Date of such novation (as
specified and defined in a Substitution Certificate so executed and
delivered), to the extent that the Term Loan Commitment and/or the
Revolving Credit Commitment and/or Contribution of the Existing Bank are
expressed in a Substitution Certificate to be the subject of the novation
in favour of the Substitute effected pursuant to this clause 17.3, by
virtue of the counter-signature of the Substitution Certificate by the
Agent (for itself and the other parties to this Agreement):
(a) the existing parties to this Agreement and the Existing Bank shall be
released from their respective obligations towards one another under
this Agreement ("DISCHARGED OBLIGATIONS") and their respective rights
against one another under this Agreement ("DISCHARGED RIGHTS") shall
be cancelled;
<PAGE>
(b) the Substitute party to the relevant Substitution Certificate and the
existing parties to this Agreement (other than such Existing Bank)
shall assume obligations towards each other which differ from the
discharged obligations only insofar as they are owed to or assumed by
such Substitute instead of to or by such Existing Bank; and
(c) the Substitute party to the relevant Substitution Certificate and the
existing parties to this Agreement (other than such Existing Bank)
shall acquire rights against each other which differ from the
discharged rights only insofar as they are exercisable by or against
such Substitute instead of by or against such Existing Bank,
and on such Effective Date, the Substitute shall pay to the Agent for its
own account a fee of (pound)1,000.
17.4 RELIANCE ON SUBSTITUTION CERTIFICATE
The Agent and each Borrower shall be fully entitled to rely on any
Substitution Certificate delivered to the Agent in accordance with the
foregoing provisions of this clause 17 which is complete and regular on its
face as regards its contents and purportedly signed on behalf of the
relevant Existing Bank and the Substitute and the Agent shall not have any
liability or responsibility to any party as a consequence of placing
reliance on and acting in accordance with any such Substitution Certificate
if it proves to be the case that the same was not authentic or duly
authorised.
17.5 AUTHORISATION OF AGENT
Each party to this Agreement irrevocably authorises the Agent to
counter-sign each Substitution Certificate on its behalf for the purposes
of clause 17.3 without any further consent of, or consultation with, any
such party.
17.6 CONSTRUCTION OF CERTAIN REFERENCES
If any Bank novates all or any part of its rights, benefits and obligations
as provided in clause 17.3 all relevant references in this Agreement to
such Bank shall thereafter be construed as a reference to such Bank and/or
its Substitute to the extent of their respective interests.
17.7 LENDING OFFICES
Each Bank shall lend through its office at the address specified in
schedule 1 or, as the case may be, in any relevant Substitution Certificate
or through any other office of such Bank selected from time to time by such
Bank through which such Bank wishes to lend for the purposes of this
Agreement. If the office through which a Bank is lending is changed
pursuant to this clause 17.7 such Bank shall notify the Agent promptly of
such change.
17.8 DISCLOSURE OF INFORMATION
Any Bank may (against receipt of a confidentiality undertaking from the
person concerned) disclose to a prospective transferee or to any other
person who may propose entering into contractual relations with such Bank
in relation to this Agreement such information about Filly and the Filly
Group as it may think appropriate.
18 THE AGENT
18.1 APPOINTMENT OF THE AGENT
Each Bank hereby appoints the Agent to act as its agent in connection with
the Finance Documents and authorises the Agent to exercise such rights,
power, authorities and discretions as are specifically delegated to the
Agent by the terms of any of the Finance Documents together with all such
rights, powers, authorities and discretions as are reasonably incidental
thereto.
<PAGE>
18.2 AGENT'S DISCRETIONS
The Agent may:
(a) assume, unless it has, in its capacity as agent for the Banks,
received notice to the contrary from any other party to any of the
Finance Documents, that (i) any representation made by any Obligor in
connection with any of the Finance Documents is true, (ii) no Event of
Default or Potential Event of Default has occurred, (iii) the Obligors
are not in breach of or default under their obligations under any of
the Finance Documents and (iv) any right, power, authority or
discretion vested in any of the Finance Documents upon the Majority
Banks, the Banks or any other person or group of persons has not been
exercised;
(b) assume that the facility office of each Bank is that set out in
schedule 1 (or, in the case of a Substitute, at the end of the
Substitution Certificate to which it is a party as Substitute) until
it has received from such Bank a notice designating some other office
of such Bank to replace its facility office and act upon any such
notice until the same is superseded by a further such notice;
(c) engage and pay for the advice or services of any lawyers, accountants,
surveyors or other experts whose advice or services may to it seem
necessary, expedient or desirable and rely upon any advice so
obtained;
(d) rely as to any matters of fact which might reasonably be expected to
be within the knowledge of an Obligor upon a certificate signed by or
on behalf of an Obligor;
(e) rely upon any communication or document believed by it to be genuine;
(f) execute any Borrower Accession Memorandum or Guarantor Accession
Memorandum presented to it in accordance with the provisions of this
Agreement;
(g) refrain from exercising any right, power or discretion vested in it as
agent under any of the Finance Documents unless and until instructed
by the Majority Banks as to whether or not such right, power or
discretion is to be exercised and, if it is to be exercised, as to the
manner in which it should be exercised; and
(h) refrain from acting in accordance with any instructions of the
Majority Banks to begin any legal action or proceeding arising out of
or in connection with any of the Finance Documents until it shall have
received such security as it may require (whether by way of payment in
advance or otherwise) for all costs, claims, losses, expenses
(including legal fees) and liabilities together with any VAT thereon
which it will or may expend or incur in complying with such
instructions.
18.3 AGENT'S OBLIGATIONS
The Agent shall:
(a) promptly inform each Bank of the contents of any notice or document
received by it in its capacity as Agent from an Obligor under any
Finance Document;
(b) promptly notify each Bank of the occurrence of any Event of Default or
any default by an Obligor in the due performance of or compliance with
its obligations under any of the Finance Documents of which the Agent
has notice from any other party hereto;
(c) save as otherwise provided herein, act in accordance with any
instructions given to it by the Majority Banks, which instructions
shall be binding on all of the Banks; and
(d) if so instructed by the Majority Banks, refrain from exercising any
right, power or discretion vested in it as agent under any of the
Finance Documents.
<PAGE>
18.4 EXCLUDED OBLIGATIONS
Notwithstanding anything to the contrary expressed or implied herein, the
Agent shall not:
(a) be bound to enquire as to (i) whether or not any representation made
by any Obligor in connection with any of the Finance Documents is
true, (ii) the occurrence or otherwise of any Event of Default or
Potential Event of Default, (iii) the performance by a Borrower of its
obligations under any of the Finance Documents or (iv) any breach of
or default by a Borrower of or under its obligations under any Finance
Document;
(b) be bound to account to any Bank for any sum or the profit element of
any sum received by it for its own account;
(c) be bound to disclose to any other person any information relating to
any member of the Filly Group if such disclosure would or might in its
opinion constitute a breach of any law or regulation or be otherwise
actionable at the suit of any person; or
(d) be under any obligations other than those for which express provision
is made in any of the Finance Documents.
18.5 INDEMNIFICATION
Each Bank shall, from time to time on demand by the Agent, indemnify the
Agent against such Bank's pro-rata share of any and all costs, claims,
losses, expenses (including legal fees) and liabilities together with any
VAT thereon which the Agent may incur, otherwise than by reason of its own
gross negligence or wilful misconduct, in acting in its capacity as agent
under the Finance Documents.
18.6 EXCLUSION OF LIABILITIES
The Agent does not accept any responsibility for the accuracy and/or
completeness of the information (including without limitation, the
information memorandum) supplied by any Borrower in connection with the
preparation or negotiation of the Finance Documents or for the legality,
validity, effectiveness, adequacy or enforceability of any of the Finance
Documents and the Agent shall not be under any liability as a result of
taking or omitting to take any action in relation to any of the Finance
Documents, save in the case of gross negligence or wilful misconduct.
18.7 NO ACTIONS
Each of the Banks agrees that it will not assert or seek to assert against
any director, officer or employee of the Agent or any affiliate thereof any
claim it might have against any of them in respect of the matters referred
to in clause 19.6 (Exclusion of Liabilities).
18.8 BUSINESS WITH THE FILLY GROUP
The Agent may accept deposits from, lend money to and generally engage in
any kind of banking or other business with any member of the Filly Group.
18.9 RESIGNATION
The Agent may resign its appointment hereunder at any time without
assigning any reason therefor by giving not less than thirty days' prior
written notice to that effect to each of the other parties hereto and by
appointing any affiliate of the Agent in its stead, such appointment to
take effect from the date of resignation of the resigning agent.
18.10 SUCCESSOR AGENT
If a successor to the Agent is appointed under the provisions of clause
18.9 (Resignation), then (i) the retiring Agent shall be discharged from
any further obligation hereunder but shall remain
<PAGE>
entitled to the benefit of the provisions of this clause 19 and (ii) its
successor and such of the other parties hereto shall have the same rights
and obligations amongst themselves as they would have had if such successor
had been a party hereto.
18.11 OWN RESPONSIBILITY
It is understood and agreed by each Bank that it has itself been, and will
continue to be, solely responsible for making its own independent appraisal
of and investigations into the financial condition, creditworthiness,
condition, affairs, status and nature of each member of the Filly Group
and, accordingly, each Bank warrants to the Agent that it has not relied on
and will not hereafter rely on the Agent:
(a) to check or enquire on its behalf into the adequacy, accuracy or
completeness of any information provided by Filly in connection with
the Finance Documents or the transactions herein contemplated (whether
or not such information has been or is hereafter circulated to such
Bank by the Agent); or
(b) to assess or keep under review on its behalf the financial condition,
creditworthiness, condition, affairs, status or nature of any member
of the Filly Group.
18.12 AGENCY DIVISION SEPARATE
In acting as agent hereunder for the Banks, the Agent shall be regarded as
acting through its agency division which shall be treated as a separate
entity from any other of its divisions or departments and, notwithstanding
the foregoing provisions of this clause 18. Any information received by
some other division or department of the Agent may be treated as
confidential and shall not be regarded as having been given to the Agent's
agency division.
18.13 JOINT ARRANGERS
The Joint Arrangers shall be entitled (mutatis mutandis) to the same
exclusions, protections, immunities and other rights and benefits conferred
upon the Agent pursuant to this clause 18.
18.14 AMENDMENTS; WAIVERS
(a) Subject to clause 18.14(b), the Agent may, with the consent of the
Majority Banks (or if and to the extent expressly authorised by the
other provisions of this Agreement) and, if so instructed by the
Majority Banks, shall (i) agree amendments or modifications to this
Agreement with the Borrowers and/or (ii) vary or waiver breaches of,
or defaults under, or otherwise excuse performance of, any provision
of this Agreement by the Borrowers. Any such action so authorised and
effected by the Agent shall be documented in such manner as the Agent
shall (with the approval of the Majority Banks) determine, shall be
promptly notified to the Banks by the Agent and shall be binding on
all the Banks.
(b) Except with the prior written consent of all the Banks, the Agent
shall not have authority on behalf of the Banks to agree with the
Borrowers, any amendment or modification, waiver, variation or excuse
the effect of which would be to (i) reduce the Margin, (ii) postpone
the due date or reduce the amount of any payment of principal,
interest or other amount payable by the Borrowers under this
Agreement, (iii) change the currency in which any amount is payable by
the Borrowers under this Agreement, (iv) increase any Bank's Term Loan
Commitment or Revolving Credit Commitment, (v) extend the period
during which the Facilities can be utilised, (vi) change the
definition of "Majority Banks" in clause 1.2, (vii) change any
provision of this Agreement which expressly or impliedly requires the
approval or consent of all the Banks such that the relevant approval
or consent may be given otherwise than with the sanction of all the
Banks or (viii) change this clause 18.14.
<PAGE>
18.15 QUALIFYING BANK
Each Bank:
(a) represents and warrants to the Agent that it is a Qualifying Bank; and
(b) undertakes promptly to notify the Agent in the event of any change in
its status as a Qualifying Bank.
19 NOTICES AND OTHER MATTERS
19.1 NOTICES
Every notice, request, demand or other communication under this Agreement
shall:
(a) be in writing delivered personally or by first-class post or telefax;
(b) be deemed to have been received, subject as otherwise provided in this
Agreement, in the case of a letter when delivered personally or three
days after it has been put into the post and in the case of a telefax,
when a complete and legible copy is received by the addressee; and
(c) be sent:
(i) to Filly (on behalf of itself and each Obligor) at:
2 Cheapside Court
Buckhurst Road
Ascot SL5 7RF
Fax: 01344 622773
Attention: Finance Director
(ii) to the Agent at:
Vintners Place
68 Upper Thames Street
London EC4V 3BJ
Fax: 0171 336 9293
Attention: Loan Syndication Execution and Agency
(iii) to each Bank at its address or facsimile number specified in
schedule 1 or in any relevant Substitution Certificate
or to such other address or facsimile number as is notified by the
relevant party to the other parties to this Agreement.
19.2 NOTICES THROUGH THE AGENT
Every notice, request, demand or other communication under this Agreement
to be given by an Obligor to any other party shall be given to the Agent
for onward transmission as appropriate and to be given to an Obligor shall
(except as otherwise provided in this Agreement) be given by the Agent.
19.3 NO IMPLIED WAIVERS, REMEDIES CUMULATIVE
No failure or delay on the part of the Agent, the Joint Arrangers, the
Banks or any of them to exercise any power, right or remedy under this
Agreement shall operate as a waiver thereof, nor shall any single or
partial exercise by the Agent, the Joint Arrangers, the Banks or any of
them
<PAGE>
of any power, right or remedy preclude any other or further exercise
thereof or the exercise of any other power, right or remedy. The remedies
provided in this Agreement are cumulative and are not exclusive of any
remedies provided by law.
19.4 CHANGES IN CONSTITUTION OR REORGANISATIONS OF BANKS
This Agreement shall remain binding on each of the Obligors notwithstanding
any change in the constitution of the Banks, the Joint Arrangers or any of
them or the Agent or their or its absorption in, or amalgamation with, or
the acquisition of all or part of their or its undertaking or assets by,
any other person, or any reconstruction or reorganisation of any kind, to
the intent that this Agreement shall remain valid and effective in all
respects in favour of the Banks and any Substitute or other successor in
title of the Banks, the Joint Arrangers and the Agent in the same manner as
if such Substitute or other successor in title had been an original party
to the Agreement.
20 GOVERNING LAW AND JURISDICTION
20.1 LAW
This Agreement is governed by and shall be construed in accordance with
English law.
20.2 JURISDICTION
For the benefit of the Agent, the Joint Arrangers and the Banks, each
Obligor which is incorporated outside England and Wales;
(a) irrevocably submits to the non-exclusive jurisdiction of the English
courts for the purposes of any dispute or proceedings arising from any
Finance Documents; and
(b) irrevocably appoints Filly to receive on its behalf service of any
proceedings issued out of the English courts.
IN WITNESS whereof the parties to this Agreement have caused this Agreement to
be duly executed on the date first above written.
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE 1
THE BANKS
<S> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
(A) (B)
NAME TERM LOAN REVOLVING CREDIT
COMMITMENT COMMITMENT
($) ($)
- ----------------------------------------------------------------------------------------------------------------------------
The First National Bank of Chicago 13,333,333.34 13,333,333.34
1 Triton Square
London NW1 3FN
Fax: 0171 903 4678/306 9076
Attention: Jeffrey Bennett and
David Gillmor
- ----------------------------------------------------------------------------------------------------------------------------
Midland Bank plc 13,333,333.33 13,333,333.33
Poultry
London EC2P 2BX
Fax: 0171 260 4227
Attention: Phil Mills
- ----------------------------------------------------------------------------------------------------------------------------
Dresdner Bank AG London Branch 13,333,333.33 13,333,333.33
PO Box 18075
Riverbank House
2 Swan Lane
London EC4R 3UX
Fax: 0171 623 3598
Attention: Alan Clayton, Loans Administration
Department
- ----------------------------------------------------------------------------------------------------------------------------
40,000,000 40,000,000
- ----------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
SCHEDULE 2
FORM OF DRAWDOWN NOTICE
To: HSBC Investment Bank plc
Vintners Place
68 Upper Thames Street
London EC4V 3BJ
......................, 19..
US$80,000,000 Agreement dated - 1999
(THE "AGREEMENT")
[We refer to the Agreement and hereby give you notice that we wish to draw
down a Term Loan Advance of US$o on o 19 o and select a first Term Loan Interest
Period in respect thereof of o months.] The funds should be credited to
[bank/account details].
[We refer to the Agreement and hereby give you notice that we wish to draw
down a Revolving Credit Advance of US$o on o 19o and select a Maturity Period in
respect thereof of o months. The Revolving Credit Advance requested in this
Notice should be made available in [Dollars/Optional Currency]. The funds should
be credited to [bank/account details].]
We confirm that:
(i) no event or circumstance has occurred and is continuing which
constitutes an Event of Default or a Potential Event of Default;
(ii) the representations and warranties contained in clause 11 of the
Agreement are true and correct at the date hereof as if made with
respect to the facts and circumstances existing at such date.
We enclose the evidence of share ownership required pursuant to clause 3.3
of the Agreement.
Words and expressions defined in the Agreement shall have the same meanings
where used in this notice.
For and on behalf of
[RELEVANT BORROWER]
..............................................
<PAGE>
SCHEDULE 3
DOCUMENTS AND EVIDENCE REQUIRED AS CONDITIONS PRECEDENT TO DRAWDOWN
(a) Copies, certified as true, complete and up-to-date copies by an appropriate
officer of the incorporation documents of each Obligor.
(b) A copy, certified as a true copy by an appropriate officer, of resolutions
of the Board of Directors of each Obligor evidencing approval of the
Finance Documents and authorising its appropriate officers to execute and
deliver and to give all notices (including Drawdown Notices) and take all
other action required thereunder.
(c) Specimen signatures of the persons authorised in the resolutions referred
to in paragraph (b) above.
(d) A copy, certified as a true copy, of the resolution of the shareholders of
Filly approving the Offer and the Rights Issue.
(e) The Guarantor Accession Memorandum and other documents required pursuant to
clause 2.6(a).
(f) A copy of the Merger Plan and Agreement, together with evidence that (i)
the Offer was made in accordance with the terms of the Merger Plan and
Agreement and (ii) Filly has received acceptances in respect of more than
50 per cent. of the outstanding share capital of Colt and has thus become
obliged to purchase Colt shares pursuant to the Offer.
(g) A copy, certified as a true copy by an appropriate officer, of all consents
and authorisations required by Filly (i) in connection with the execution,
delivery and performance of this Agreement and (ii) the making of the Offer
and the acquisition of Colt shares.
(h) Evidence that the Board of Colt has recommended acceptance of the Offer to
its shareholders.
(i) Evidence that (i) the amounts made available to Filly by Dresdner Bank AG
London Branch pursuant to a (pound)40,000,000 dual currency facility
agreement dated on or about the date of this Agreement have been fully
drawn and (ii) the cash amounts available to Filly as shown in the
financial model (provided by Filly to form a part of the Information
Memorandum) have been substantially utilised for the purposes of the Offer.
(j) A copy of the Underwriting Agreement, together with evidence that
arrangements acceptable to the Banks with respect to the funding of the
Offer (including equity, subscription and bridging finance arrangements)
have been made and have become unconditional.
(k) Due diligence and accountants reports on the Colt Group.
(l) Business plan and Cashflow models relating to the enlarged Filly Group.
(m) A list of priority debt and Encumbrances affecting the Filly Group and
demonstrating compliance with clause 12.1(k).
(n) An opinion of US advisers with respect to the Offer in a form approved by
the Banks (acting reasonably).
(o) An opinion of Norton Rose in a form approved by the Banks (acting
reasonably).
<PAGE>
SCHEDULE 4
FINANCIAL UNDERTAKINGS
1 Filly undertakes with each of the Banks, the Joint Arrangers and the Agent
that, from the date of this Agreement and so long as any moneys remain
owing or available for drawing under this Agreement, it will procure that:
(a) Consolidated Profits before Interest and Tax in respect of each
Relevant Period shall be equal to or exceed 3 times Consolidated Net
Finance Charges for the corresponding period;
(b) Consolidated Borrowings at the end of any Relevant Period shall not
exceed 2.5 times EBITDA in respect of the corresponding period; and
(c) (with the exception of (i) an amount of up to(pound)40,000,000
outstanding pursuant to the bridging facility between Filly and Dresdner
Bank AG London Branch dated on or about the date of this Agreement and (ii)
an intra-day financing made available to FT Holdings Inc. in connection
with the completion of the Offer and as further described in a memorandum
from Filly to the Banks prior to the date of this Agreement, provided that
such transaction is unwound on an intra-day basis or, in the event of bank
transmission errors, within two business days), Consolidated Borrowings
shall at no time exceed $100,000,000.
2 In this schedule 4:
(a) "CONSOLIDATED BORROWINGS" means the aggregate principal amount
(including any fixed or minimum premium payable on final repayment) of
the following amounts (but excluding double counting):
(i) moneys borrowed or raised by any member of the Filly Group
(including any amounts payable on the redemption of any
preference shares);
(ii) bonds, notes, loan stock, debentures, commercial paper or other
debt securities issued by any member of the Filly Group;
(iii) sums outstanding under acceptances by any member of the Filly
Group or by any bank or acceptance house under acceptance credits
opened on behalf of any member of the Filly Group;
(iv) deferred Indebtedness (if accounted for as a liability under
generally accepted accounting principles in the United Kingdom)
of any member of the Filly Group for payment of the acquisition
or construction price for assets or services acquired or
constructed other than normal trade credit from suppliers for a
period not exceeding 90 days;
(v) the capital element of rental payments under finance leases; and
(vi) receivables sold or discounted with a right of recourse to any
member of the Filly Group;
(b) "CONSOLIDATED PROFITS BEFORE INTEREST AND TAX" means, in respect of
any Relevant Period, the consolidated profit on ordinary activities
(including any exceptional items) of the Filly Group, as shown in the
most recent financial statements delivered to the Agent pursuant to
clause 12, after adding back (i) the amount charged or chargeable as
tax on profit on ordinary activities during that period and (ii) the
Consolidated Net Finance Charges;
<PAGE>
(c) "CONSOLIDATED NET FINANCE CHARGES" means, in respect of any Relevant
Period, the aggregate amount of the interest (including, without
limitation, the interest element of finance leasing and hire purchase
payments) and other similar charges in the nature of interest arising
in connection with borrowings and/or facilities incurred by the Filly
Group in respect of that Relevant Period less the aggregate amount of
the interest and other similar amounts in the nature of interest
received by the Filly Group in respect of that Relevant Period;
(d) "EBITDA" means, in respect of any Relevant Period, the Consolidated
Profits before Interest and Tax for that period, but adding back
depreciation and amortisation; and
(e) "RELEVANT PERIOD" means each period of 12 months ending on (i) 30th
April in each year, (ii) 31st July in each year (iii) 31st October in
each year and (iv) 31st January in each year.
3 For the purposes of computing EBITDA, Consolidated Profits before Interest
and Tax and Consolidated Net Finance Charges with respect to any Relevant
Period:
(a) where EBITDA, Consolidated Profit before Interest and Tax or
Consolidated Net Finance Charges fall to be computed in respect of a
Relevant Period ending on 30th April in any year, they shall be
ascertained by reference to the audited financial statements to be
delivered by Filly pursuant to clause 12.1;
(b) where EBITDA, Consolidated Profits before Interest and Tax or
Consolidated Net Finance Charges fall to be computed in respect of a
Relevant Period ending on any other date, they shall be computed by
aggregating:
(i) the relevant figures disclosed in the unaudited financial
statements in respect of the period ending on that date, as
delivered to the Agent pursuant to clause 12.1(b)(ii); and
(ii) the relevant figures disclosed in the audited financial
statements to the immediately preceding 30th April, less the
corresponding figures disclosed in the unaudited financial
statements to the corresponding date in the preceding year, as
delivered to the Agent pursuant to clause 12.1;
(c) where Colt has not been a Subsidiary of Filly for the entirety of a
Relevant Period in respect of which a calculation is required to be
made, the calculation shall be made on a proforma basis in a manner
approved by the Agent.
<PAGE>
SCHEDULE 5
FORM OF BORROWER ACCESSION MEMORANDUM
THIS ACCESSION MEMORANDUM is dated - and made BETWEEN:
(1) [ADDITIONAL BORROWER] (the "ADDITIONAL BORROWER");
(2) [FILLY] ("FILLY"); and
(3) HSBC INVESTMENT BANK PLC (the "AGENT") as agent for the benefit of itself
and each of the Banks as defined in the Agreement described below.
WHEREAS:
(A) By an agreement (the "AGREEMENT") dated o 1999 and made between Filly (1),
the Original Guarantors therein mentioned (2), the Banks referred to in
schedule 1 to the Agreement (2), the Banks therein mentioned (3), the Joint
Arrangers therein mentioned (4) and the Agent (5), the Banks agreed, upon
and subject to the terms and conditions of the Agreement, to make available
to the Borrowers facilities of up to US$80,000,000.
(B) The Additional Borrower wishes to assume the rights and obligations of a
Borrower under and in accordance with the terms of the Agreement.
IT IS AGREED as follows:
1 DEFINITIONS
1.1 DEFINED EXPRESSIONS
In this Accession Memorandum, unless the context otherwise requires, words
and expressions defined in the Agreement and used in this Accession
Memorandum shall have the same meaning where used in this Accession
Memorandum.
1.2 HEADINGS
Clause headings are inserted for convenience of reference only and shall be
ignored in the interpretation of this Accession Memorandum.
2 ADDITIONAL BORROWER
2.1 BORROWER
The Additional Borrower shall become a Borrower for the purposes of the
Agreement and assumes the rights and obligations of a Borrower accordingly.
2.2 TERMS OF AGREEMENT
This Accession Memorandum takes effect subject to and in accordance with
the terms of the Agreement. Without limiting the generality of the
foregoing, the Additional Borrower hereby irrevocably authorises Filly to
act on its behalf in accordance with clause 2.9 of the Agreement.
2.3 ACKNOWLEDGEMENT
Filly executes this Accession Memorandum to acknowledge the arrangements
contemplated by it and to confirm its designation of the Additional
Borrower for the purposes of clause 2.5 of the Agreement.
<PAGE>
3 MISCELLANEOUS
3.1 NOTICES
Any notices required or permitted to be given to the Additional Borrower
under the terms of the Agreement may be given or sent to Filly on its
behalf.
3.2 LAW
This Accession Memorandum is governed by and shall be construed in
accordance with English law.
IN WITNESS where the parties have caused this Accession Memorandum to be duly
executed as a Deed on the date first above written.
EXECUTED and DELIVERED )
as a DEED by )
[ADDITIONAL BORROWER] )
EXECUTED as a DEED by )
[FILLY] )
SIGNED for and on behalf of )
HSBC INVESTMENT BANK PLC )
<PAGE>
SCHEDULE 6
FORM OF GUARANTOR ACCESSION MEMORANDUM
THIS ACCESSION MEMORANDUM is dated o and made BETWEEN:
(1) [ADDITIONAL GUARANTOR] (the "ADDITIONAL GUARANTOR");
(2) [FILLY] ("FILLY"); and
(3) HSBC INVESTMENT BANK PLC (the "AGENT") as agent for the benefit of itself
and each of the Banks as defined in the Agreement described below.
WHEREAS:
(A) By an agreement (the "AGREEMENT") dated o 1999 and made between Filly (1),
the Original Guarantors therein mentioned (2), the Banks referred to in
schedule 1 to the Agreement (2), the Banks therein mentioned (3), the Joint
Arrangers therein mentioned (4) and the Agent (5), the Banks agreed, upon
and subject to the terms and conditions of the Agreement, to make available
to the Borrowers facilities of up to US$80,000,000.
(B) The Additional Guarantor wishes to assume the rights and obligations of a
Guarantor under and in accordance with the terms of the Agreement.
IT IS AGREED as follows:
1 DEFINITIONS
1.1 DEFINED EXPRESSIONS
In this Accession Memorandum, unless the context otherwise requires, words
and expressions defined in the Agreement and used in this Accession
Memorandum shall have the same meaning where used in this Accession
Memorandum.
1.2 HEADINGS
Clause headings are inserted for convenience of reference only and shall be
ignored in the interpretation of this Accession Memorandum.
2 ADDITIONAL GUARANTOR
2.1 GUARANTOR
The Additional Guarantor shall become a Guarantor for the purposes of the
Agreement and assumes the rights and obligations of a Guarantor
accordingly.
2.2 TERMS OF AGREEMENT
This Accession Memorandum takes effect subject to and in accordance with
the terms of the Agreement. Without limiting the generality of the
foregoing, the Additional Guarantor hereby irrevocably authorises Filly to
act on its behalf in accordance with clause 2.9 of the Agreement.
2.3 ACKNOWLEDGEMENT
Filly executes this Accession Memorandum to acknowledge the arrangements
contemplated by it and to confirm its designation of the Additional
Guarantor for the purposes of clause 2.6 of the Agreement.
<PAGE>
2.4 LIMITATION
Notwithstanding any provision herein contained to the contrary, the
Guarantor's liability under the Agreement shall be limited to an amount not
to exceed as of any date of determination the greater of:
(a) the net amount of all Advances made to Filly under the Agreement and
then re-loaned or otherwise transferred to, or for the benefit of, the
Guarantor; and
(b) the amount which could be claimed by the Agent and the Banks from the
Guarantor under the Agreement without rendering such claim voidable or
avoidable under Section 548 of Chapter 11 of the Bankruptcy Code or
under any applicable state Uniform Fraudulent Transfer Act, Uniform
Fraudulent Conveyance Act or similar statute or common law after
taking into account, among other things, such Guarantor's right of
contribution and indemnification from any other Guarantor.
[NOTE: THE LIMITATION IN CLAUSE 2.4 IS TO BE INSERTED ONLY FOR
GUARANTORS INCORPORATED IN A PART OF THE UNITED STATES]
3 MISCELLANEOUS
3.1 NOTICES
Any notices required or permitted to be given to the Additional Guarantor
under the terms of the Agreement may be given or sent to Filly on its
behalf.
3.2 LAW
This Accession Memorandum is governed by and shall be construed in
accordance with English law.
IN WITNESS where the parties have caused this Accession Memorandum to be duly
executed as a Deed on the date first above written.
EXECUTED and DELIVERED )
as a DEED by )
[ADDITIONAL GUARANTOR] )
EXECUTED as a DEED by )
[FILLY] )
SIGNED for and on behalf of )
HSBC INVESTMENT BANK PLC )
<PAGE>
SCHEDULE 7
ASSOCIATED COSTS RATE
1 The Associated Costs Rate shall be calculated by the Agent in respect of
each period for which it falls to be calculated relating to an Advance in
accordance with the following formulae:
In relation to each Advance in Sterling:
CL + S(L - Z) + 0.01F
_______________________________ = PER CENT. PER ANNUM
100 - (C + S)
In relation to each other Advance:
0.01F
Y __________ = PER CENT. PER ANNUM
100
Where:
C = The amount required to be held as a non-interest bearing cash ratio
deposit with the Bank of England expressed as a percentage of an
eligible institution's eligible liabilities (above any stated
minimum).
F = The amount of Sterling per (pound)1,000,000 of the fee base of an
authorised institution payable to the Financial Services Authority
per annum (disregarding any minimum fee payable under the Fees
Regulations).
L = The average rate of interest per annum at which Sterling deposits of
an amount comparable to the relevant Advance are offered by the
Reference Banks to leading banks in the London Interbank Market at or
about 11.00 a.m. on the date of calculation for a period comparable
to the period for which the Associated Costs Rate is to be
calculated.
S = The amount required to be placed as special deposits with the Bank
of England, expressed as a percentage of an eligible institution's
eligible liabilities (above any stated minimum).
Y = The fraction of foreign currency liabilities taken into account
under the Fees Regulations in calculating the fee base (disregarding
any offset for claims on non-resident offices).
Z = The lower of L and the rate of interest per annum paid by the Bank
of England on special deposits at or about 11.00 a.m. on the date of
calculation.
2 For the purposes of calculating the Reserve Asset Cost:
(c) C, L, S and Z are included in the formula as numbers and not as
percentages, e.g. if C = 0.15 per cent. and L = 7 per cent. CL is
calculated as 0.15 x 7;
(d) the formula is applied on the first day of each period for which it
falls to be calculated (and the result shall apply for the duration of
such period);
(e) each amount is rounded up to the nearest four decimal places; and
<PAGE>
(f) if the formula produces a negative percentage, the percentage shall be
taken as zero.
3 If alternative or additional financial requirements are imposed by the Bank
of England, the Financial Services Authority or any other United Kingdom
governmental authority or agency which in the Agent's opinion make the
formulae (or either of them) no longer appropriate, the Agent shall be
entitled by notice to Filly to stipulate such other formulae as shall be
suitable to apply in substitution for the formulae. Any such other formulae
so stipulated shall take effect in accordance with the terms of such
notice.
4 In this schedule 2:
"AUTHORISED" and "INSTITUTION" have the meanings given to those terms in
the Banking Act 1987;
"BANK OF ENGLAND ACT" means the Bank of England Act 1998;
"ELIGIBLE INSTITUTION" has the meaning given to that term in schedule 2 to
the Bank of England Act;
"ELIGIBLE LIABILITIES" has the meaning given to that term in the Cash Ratio
Deposits (Eligible Liabilities) Order 1998 or the applicable substitute
order made under the Bank of England Act as is in force on the date of
application of the formula;
"FEE BASE" has the meaning given to that term in the Fees Regulations;
"FEES REGULATIONS" means the Banking Supervision (Fees) Regulations 1998 or
the applicable substitute regulations made under the Bank of England Act as
are in force on the date of application of the formula; and
"SPECIAL DEPOSITS" has the meaning given to that term by the Bank of
England on the date of application of the formula.
<PAGE>
SCHEDULE 8
FORM OF SUBSTITUTION CERTIFICATE
BANKS ARE ADVISED NOT TO EMPLOY SUBSTITUTION CERTIFICATES OR OTHERWISE TO ASSIGN
OR TRANSFER INTERESTS IN THE AGREEMENT WITHOUT FIRST ENSURING THAT THE
TRANSACTION COMPLIES WITH ALL APPLICABLE LAWS AND REGULATIONS, INCLUDING THE
FINANCIAL SERVICES ACT 1986 AND REGULATIONS MADE THEREUNDER.
To: HSBC Investment Bank plc
Vintners Place
68 Upper Thames Street
London EC4V 3BJ
Attention: ..............,19.....
SUBSTITUTION CERTIFICATE
This Substitution Certificate relates to a US$80,000,000 Facility Agreement (the
"AGREEMENT") dated o, 1999 between Filly (1), the Original Guarantors named
therein (2), the Banks whose names and addresses are set out in schedule 1 to
the Agreement (3), The First National Bank of Chicago, HSBC Investment Bank plc
and Dresdner Bank AG London Branch as Joint Arrangers (4) and HSBC Investment
Bank plc as Agent (5). Terms defined in the Agreement shall have the same
meaning in this Substitution Certificate.
1 [Existing Bank] (the "Existing Bank") (a) confirms the accuracy of the
summary of its Term Loan Commitment, Revolving Credit Commitment and
Contribution set out in the schedule to this Substitution Certificate; and
(b) requests [Substitute Bank] to novate the portion of its Term Loan
Commitment, Revolving Credit Commitment and Contribution specified in the
schedule to this Substitution Certificate by counter-signing and delivering
this Substitution Certificate to the Agent at its address for the service
of notices specified in the Agreement.
2 The Substitute requests the Agent (on behalf of itself, the Joint
Arrangers, the Borrowers and the Banks) to accept this Substitution
Certificate as being delivered to the Agent pursuant to and for the
purposes of clause 17.3 of the Agreement, so as to take effect in
accordance with the terms of that clause on [date of transfer] (the
"Effective Date").
3 The Agent (on behalf of itself and the other parties to the Agreement)
confirms the novation effected by this Substitution Certificate pursuant to
and for the purposes of clause 17.3 of the Agreement.
4 The Substitute confirms:
(a) that it has received a copy of the Finance Documents and all other
documentation and information required by it in connection with the
transactions contemplated by this Substitution Certificate;
(b) that it has made and will continue to make its own assessment of the
validity, enforceability and sufficiency of the Finance Documents and
this Substitution Certificate and has not relied and will not rely on
the Existing Bank, the Joint Arrangers or the Agent or any statements
made by any of them in that respect;
(c) that it has made and will continue to make its own credit assessment
of the Borrowers and the Guarantors and has not relied and will not
rely on the Existing Bank, the Joint Arrangers or the Agent or any
statements made by any of them in that respect;
<PAGE>
(d) accordingly, neither the Existing Bank, the Joint Arrangers nor the
Agent shall have any liability or responsibility to the Substitute in
respect of any of the foregoing matters; and
(e) it is a Qualifying Bank and (in this respect) undertakes to comply
with clause 18.15 of the Agreement.
5 Execution of this Substitution Certificate by the Substitute constitutes
its representation to the Existing Bank and all other parties to the
Agreement that it has power to become party to the Agreement as a Bank on
the terms herein and therein set out and has taken all necessary steps to
authorise execution and delivery of this Substitution Certificate.
6 The Existing Bank makes no representation or warranty and assumes no
responsibility with respect to the legality, validity, effectiveness,
adequacy or enforceability of any of the Finance Documents or any document
relating thereto and assumes no responsibility for the financial condition
of the Borrowers, the Guarantors or any other party to any of the Finance
Documents or for the performance and observance by the Borrowers, the
Guarantors or any other such party of any of its obligations under any of
the Finance Documents or any document relating thereto and any and all such
conditions and warranties, whether express or implied by law or otherwise,
are hereby excluded.
7 The Substitute hereby undertakes to the Existing Bank, the Borrowers, the
Joint Arrangers and the Agent that it will perform in accordance with their
terms all those obligations which by the respective terms of the Agreement
will be assumed by it after acceptance of this Substitution Certificate by
the Agent.
8 This Substitution Certificate is governed by English law.
NOTE: This Substitution Certificate is not a security, bond, note, debenture,
investment or similar instrument.
AS WITNESS the hands of the authorised signatories of the parties hereto on the
date appearing below.
<PAGE>
THE SCHEDULE
TO THE SUBSTITUTION CERTIFICATE
DETAILS OF PARTICIPATION NOVATED
Contribution to Term
Loan Advances:
Contribution to Revolving
Credit Advances:
Term Loan Commitment:
Revolving Credit
Commitment:
ADMINISTRATIVE DETAILS OF SUBSTITUTE
Lending office:
Account for payments:
Telephone:
Telefax:
Telex:
Attention:
<PAGE>
[EXISTING BANK] [SUBSTITUTE]
By: By:
Date: Date:
The Agent
By:
on its own behalf
and on behalf of the other parties to the Agreement.
<PAGE>
BORROWER
SIGNED for and on behalf of )
FIRST TECHNOLOGY PLC ) /s/ Frederick J. Westlake
JOINT ARRANGERS
SIGNED for and on behalf of )
THE FIRST NATIONAL BANK )
OF CHICAGO ) /s/ Jeffrey Bennett
SIGNED for and on behalf of )
HSBC INVESTMENT BANK PLC ) /s/ Bryony Sayers
SIGNED for and on behalf of )
DRESDNER BANK AG LONDON )
BRANCH ) /s/ Richard Simmons
BANKS
SIGNED for and on behalf of )
THE FIRST NATIONAL BANK )
OF CHICAGO ) /s/ Jeffrey Bennett
SIGNED for and on behalf of )
MIDLAND BANK PLC ) /s/ Philip Mills
SIGNED for and on behalf of )
DRESDNER BANK AG LONDON )
BRANCH ) /s/ Richard Simmons
<PAGE>
THE AGENT
SIGNED for and on behalf of )
HSBC INVESTMENT BANK PLC ) /s/ Bryony Sayers
<PAGE>
Exhibit 99(b)(2)
AGREEMENT
FOR A DUAL CURRENCY
FACILITY OF UP TO
(POUND)40,000,000
FOR
FIRST TECHNOLOGY PLC
PROVIDED BY
DRESDNER BANK AG
LONDON BRANCH
NORTON ROSE
London
<PAGE>
CONTENTS
<TABLE>
<CAPTION>
CLAUSE HEADING PAGE
<S> <C> <C>
1 Purpose and definitions.......................................................................1
2 The Facility; Obligations of the Parties......................................................5
3 Conditions....................................................................................6
4 Utilisation of the Facility...................................................................6
5 Interest......................................................................................7
6 Currencies....................................................................................7
7 Repayment, prepayment and cancellation........................................................7
8 Fees and expenses.............................................................................8
9 Payments and Taxes; accounts and calculations.................................................9
10 Representations..............................................................................10
11 Undertakings.................................................................................12
12 Events of Default............................................................................15
13 Indemnities; Default Interest................................................................17
14 Unlawfulness and increased costs; alternative interest rates.................................18
15 Set-off......................................................................................21
16 Assignment...................................................................................21
17 Notices and other matters....................................................................22
18 Governing law................................................................................22
SCHEDULES
1 Form of Drawdown Notice......................................................................24
2 Documents and evidence required as conditions precedent to drawdown..........................25
3 Associated Costs Rate........................................................................26
</TABLE>
<PAGE>
THIS AGREEMENT is dated 23 February, 1999 and made BETWEEN
(1) FIRST TECHNOLOGY PLC as Borrower; and
(2) DRESDNER BANK AG LONDON BRANCH, as Bank.
IT IS AGREED as follows:
1 PURPOSE AND DEFINITIONS
1.1 PURPOSE
This Agreement sets out the terms and conditions upon and subject to which
the Bank agrees to make available to the Borrower a dual currency facility
of up to (pound)40,000,000 or its equivalent in US Dollars, to provide
bridging finance in connection with a proposed rights issue by Filly.
1.2 DEFINITIONS
In this Agreement, unless the context otherwise requires:
"ADVANCE" means each borrowing of a portion of the Commitment by the
Borrower or (as the context may require) the principal amount of that
borrowing at any relevant time;
"AGREEMENT AND PLAN OF MERGER" means the agreement and plan of merger with
respect to Colt, substantially in the form provided to the Bank prior to
the date of this Agreement;
"ASSOCIATED COSTS RATE" means in relation to any period, a percentage rate
calculated for such period in accordance with schedule 3;
"AVAILABLE FACILITY AMOUNT" means, at any time, the amount by which the
Commitment exceeds the aggregate Sterling Amount of all of the outstanding
Advances at such time:
"BANKING DAY" means a day (other than Saturday or Sunday) which is:
(a) a day on which banks and foreign exchange markets are open for
business in London; and
(b) (if a payment of funds in Dollars is to be made on such day) on which
banks and foreign exchange markets are open for business in New York
City;
"BANK" means Dresdner Bank AG London Branch, and includes its successors in
title and assignees;
"BORROWED MONEY" means Indebtedness in respect of (i) money borrowed or
raised and debit balances at banks, (ii) any bond, note, loan stock,
debenture or similar debt instrument, (iii) acceptance or documentary
credit facilities, (iv) receivables sold or discounted (otherwise than on a
non-recourse basis), (v) deferred payments for assets or services acquired
where the deferred payment is arranged primarily as a method of raising
finance or financing the acquisition of those assets or services, (vi)
finance leases and hire purchase contracts, (vii) Derivatives Contracts,
(viii) any other transaction (including without limitation forward sale or
purchase agreements) having the commercial effect of a borrowing or raising
of money and (ix) guarantees in respect of Indebtedness of any person
falling within any of (i) to (viii) above;
"COLT" means Control Devices Inc.;
"COLT GROUP" means Colt and its subsidiaries, and "MEMBER OF THE COLT
GROUP" shall be construed accordingly;
1
<PAGE>
"COMMITMENT" means (pound)40,000,000 or such lesser amount as the Bank may
make available in accordance with clause 2.1, in each case as reduced by
any relevant term of this Agreement;
"COMMITMENT PERIOD" means the period commencing on the date of this
Agreement and ending on the earlier of:
(a) 16th April 1999 (or such later date as the Bank may stipulate);
(b) the date on which Filly cancels the Commitment in full in accordance
with clause 7.3; and
(c) the date on which the Commitment is reduced to zero pursuant to any
relevant term of this Agreement;
"DERIVATIVES CONTRACT" means a contract, agreement or transaction which is:
(a) a rate swap, basis swap, commodity swap, forward rate transaction,
commodity option, equity (or equity or other index) swap or option,
bond option, interest rate option, foreign exchange transaction, cap,
collar or floor, currency swap, currency option or any other similar
transaction; and/or
(b) any combination of such transactions,
in each case, whether on-exchange or otherwise;
"DOLLARS", "US$" and "$" mean the lawful currency of the United States of
America and in respect of all payments to be made under this Agreement in
Dollars mean funds which are for same day settlement in the New York
Clearing House Interbank Payments System (or such other U.S. dollar funds
as may at the relevant time be customary for the settlement of
international banking transactions denominated in U.S. dollars);
"DRAWDOWN DATE" means in relation to any Advance, the date, being a Banking
Day, on which it is or is to be drawn down;
"DRAWDOWN NOTICE" means a notice substantially in the terms of schedule 1;
"ENCUMBRANCE" means any mortgage, charge (whether fixed or floating),
pledge, lien (other than a lien arising by operation of law in the ordinary
course of business), hypothecation, assignment by way of security or
security interest of any kind securing any obligation of any person;
"ENVIRONMENTAL LAW" means, in relation to the United Kingdom, the United
States or any part thereof or any other relevant jurisdiction, any
applicable law or regulation relating to (a) the pollution, conservation or
protection of the environment (both natural and built), (b) the
development, occupation, exploitation or other use of land, buildings or
other property or assets, (c) the creation, storage, handling and disposal
of industrial waste and hazardous substances and (d) health and safety at
work or elsewhere and includes, without limitation, the Environmental
Protection Act 1990 and all primary and subordinate legislation which that
Act replaces or re-enacts;
"EQUIVALENT AMOUNT" means, in relation to an Advance to be made or received
in Dollars, the amount in Dollars which can be purchased with the Sterling
Amount of the relevant Advance at the Bank's spot rate of exchange for that
purpose on receipt of the relevant Drawdown Notice or (as the case may be)
at or about 11 a.m. on the second Banking Day before the beginning of an
Interest Period;
"EVENT OF DEFAULT" means any of the events or circumstances described in
clause 12.1;
2
<PAGE>
"FACILITY" means the dual currency facility made available by the Bank to
Filly pursuant to this Agreement;
"FILLY" means First Technology PLC;
"FILLY GROUP" means Filly and its Subsidiaries (which shall include the
members of the Colt Group, if and when Filly or its Subsidiary has become
irrevocably obliged to purchase shares in Colt) and "MEMBER OF THE FILLY
GROUP" shall be construed accordingly;
"FINANCE DOCUMENTS" includes:
(a) this Agreement; and
(b) any notice or document delivered or entered into pursuant to or in
accordance with the terms of this Agreement;
"INDEBTEDNESS" means any obligation for the payment or repayment of money,
whether as principal or as surety and whether present or future, actual or
contingent;
"INTEREST PAYMENT DATE" means, in relation to any Advance, the last day of
its Interest Period;
"INTEREST PERIOD" means, in relation to an Advance, each period for the
calculation of interest ascertained in accordance with clause 5;
"LIBOR" means, in relation to a particular period, the arithmetic mean
(rounded upwards, if necessary, to five decimal places) of the London
interbank offered rates for deposits of the currency in question for a
period equal to such period at or about 11 a.m. on the Quotation Date for
such period as displayed on the relevant page of the Telerate Monitor for
the currency concerned (or such other page as may replace such page on such
service for the purpose of displaying London interbank offered rates of
leading banks for deposits of that currency) or, if on such date the
offered rates for the relevant period of fewer than two leading banks are
so displayed the rate determined by the Bank to be the rate at which
deposits in the relevant currency were being offered to it in the London
interbank market at or about 11 a.m. on the Quotation Date;
"MARGIN" means:
(a) until the date 14 days from the date of the first Advance (or such
later date as the Bank may stipulate), zero per cent. per annum; and
(b) thereafter, one per cent. per annum;
"MONTH" means a period beginning in one calendar month and ending in the
next calendar month on the day numerically corresponding to the day of the
calendar month on which it started, provided that (i) if the period started
on the last Banking Day in a calendar month or if there is no such
numerically corresponding day, it shall end on the last Banking Day in such
next calendar month and (ii) if such numerically corresponding day is not a
Banking Day, the period shall end on the next following Banking Day in the
same calendar month but if there is no such Banking Day it shall end on the
preceding Banking Day and "MONTHS" and "MONTHLY" shall be construed
accordingly;
"OFFER" means the offer to be made by Filly or one of its Subsidiaries to
acquire the entire issued share capital of Colt, substantially on the terms
set out in the Agreement and Plan of Merger;
"ORIGINAL CONSOLIDATED FINANCIAL STATEMENTS" means the audited consolidated
financial statements of the Filly Group for its financial year ended 30th
April 1998;
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"PERMITTED ENCUMBRANCE" has the meaning given to it in a US$80,000,000
syndicated term loan and revolving credit facility agreement dated on or
about the date hereof and to which both Filly and the Bank (amongst others)
are party;
"POTENTIAL EVENT OF DEFAULT" means any Event of Default or any event or
circumstance which, with the giving of notice and/or lapse of time and/or
the satisfaction of any other condition in each case as referred to in
clause 12.1, (or any combination thereof) would constitute an Event of
Default;
"QUALIFYING BANK" means:
(a) an institution which is a bank for the purposes of Section 840A Income
and Corporation Taxes Act 1988 and with respect to which interest
receivable under this Agreement is within the charge to United Kingdom
corporation tax; or
(b) an institution whose lending office is outside the United Kingdom and
which is resident (for the purposes of the relevant double tax treaty)
in a jurisdiction which has a double tax treaty with the United
Kingdom under which the payment of interest under this Agreement to
that lending office may be made without deduction or withholding on
account of United Kingdom taxation;
"QUOTATION DATE" means, in relation to an Interest Period or other period
for which LIBOR is to be determined, the date on which quotations would
customarily be provided by leading banks in the London Interbank Market for
deposit in the relevant currency for delivery on the first day of such
period;
"REPAYMENT DATE" means the earlier of (i) 16th April 1999 and (ii) the date
upon which Filly has received the Rights Issue proceeds (or, in either
case, such later date as the Bank may stipulate);
"RIGHTS ISSUE" means the proposed issue of new stock units in Filly in
accordance with the terms of the Underwriting Agreement;
"STERLING AMOUNT" means (a) in relation to an Advance to be drawn down in
Sterling, the amount in Sterling so drawn down and (b) in relation to an
Advance to be drawn down in US Dollars, the amount in Sterling specified in
the relevant Drawdown Notice which would be required to purchase the
principal amount of that Advance as determined in accordance with clause 6;
"SUBSIDIARY" of a person means:
(a) a subsidiary of that person within the meaning of section 736 of the
Companies Act 1985 (as amended); and
(b) a subsidiary undertaking of that person within the meaning of section
258 of the Companies Act 1985 (as amended);
"TAXES" includes all present and future taxes, levies, imposts or duties of
whatever nature together with interest thereon and penalties in respect
thereof and "TAXATION" shall be construed accordingly;
"UNDERWRITING AGREEMENT" means an agreement (substantially in the form
provided to the Bank prior to the date of this Agreement) under which
Kleinwort Benson Securities Limited will agree to underwrite a rights issue
of stock units by Filly.
1.3 HEADINGS
Clause headings (including sub-headings) and the table of contents are
inserted for convenience of reference only and shall be ignored in the
interpretation of this Agreement.
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1.4 CONSTRUCTION OF CERTAIN TERMS
In this Agreement, unless the context otherwise requires:
(a) references to clauses and schedules are to be construed as references
to the clauses of, and schedules to, this Agreement and references to
this Agreement include its schedules;
(b) references to (or to any specified provision of) this Agreement or any
other document shall be construed as references to this Agreement that
provision or that document as in force for the time being and as
amended, novated, restated or supplemented in accordance with its
terms or, as the case may be, with the agreement of the relevant
parties;
(c) references to a "REGULATION" include any present or future regulation,
rule, directive or requirement of any agency, authority, central bank
or government department or any self-regulatory or other national or
supra-national authority;
(d) words importing the plural shall include the singular and vice versa;
(e) references to a "PERSON" shall be construed as including references to
an individual, firm, company, corporation, unincorporated body of
persons or any State or any agency thereof;
(f) references to any enactment shall be deemed to include references to
such enactment as re-enacted, amended or extended;
(g) references to a time of day are to London time;
(h) references to a "GUARANTEE" include references to an indemnity by way
of guarantee or other assurance against financial loss including,
without limitation, an obligation to purchase assets or services as a
consequence of a default by any other person to pay any Indebtedness
and "GUARANTEED" shall be construed accordingly.
1.5 ACCOUNTING TERMS
Except to the extent expressly defined in this Agreement, accounting and
financial terms used in this Agreement shall be construed in accordance
with generally accepted accounting principles in the United Kingdom (as
used and applied in the Original Consolidated Financial Statements).
2 THE FACILITY; OBLIGATIONS OF THE PARTIES
2.1 AMOUNT OF FACILITY
The Bank, relying upon each of the representations and warranties in clause
10, agrees to make available to Filly in accordance with the terms of this
Agreement a dual currency facility of up to the lesser of (i)
(pound)40,000,000 and (ii) the amount to be raised by Filly pursuant to the
Rights Issue.
2.2 APPLICATION OF FACILITIES
The Bank shall not be obliged to supervise the application of the proceeds
of any Advance. The obligations of Filly under this Agreement shall remain
fully valid and enforceable, notwithstanding that the proceeds of any
Advance are applied for a purpose not authorised by the terms of this
Agreement.
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3 CONDITIONS
3.1 DOCUMENTS AND EVIDENCE
The obligation of the Bank to make any Advance shall be subject to the
condition that the Bank, or its duly authorised representative, shall have
received, not later than the Banking Day before the date on which the
Drawdown Notice in respect of the first Advance is given, the documents and
evidence specified in schedule 2 in form and substance satisfactory to the
Bank.
3.2 GENERAL CONDITIONS PRECEDENT
The obligation of the Bank to make any Advance is subject to the further
conditions that at the date of each Drawdown Notice and on each Drawdown
Date:
(a) the representations and warranties set out in clause 10 are true and
correct on and as of each such date as if each were made with respect
to the facts and circumstances existing at such date; and
(b) no Potential Event of Default shall have occurred and be continuing or
would result from the making of such Advance.
3.3 WAIVER OF CONDITIONS PRECEDENT
The conditions specified in this clause 3 are inserted solely for the
benefit of the Bank and may be waived by it in whole or in part and with or
without conditions in respect of the first or any other Advance without
prejudicing the right of the Bank to require fulfilment of such conditions
in whole or in part in respect of any other Advance.
4 UTILISATION OF THE FACILITY
4.1 APPLICATION
The provisions of this clause 4 apply to all Advances.
4.2 DRAWDOWN
Subject to the terms and conditions of this Agreement, an Advance may be
made to Filly on a Banking Day following receipt by the Bank of a Drawdown
Notice (i) in the case of the first Drawdown Notice, not later than 10.00
a.m. on the Banking Day which is the proposed Drawdown Date and (ii) in any
other case, not later than 3.00 p.m. on the third Banking Day before the
proposed Drawdown Date. Each such Drawdown Notice shall be effective on
actual receipt by the Bank and, once given, shall, subject as provided in
this Agreement, be irrevocable and shall oblige Filly to make an Advance in
accordance with the terms of such notice. No Drawdown Notice may be given
in respect of an amount which is the subject of a notice of cancellation
received by the Bank under clause 7.3.
4.3 AMOUNT
(a) Each Advance shall be of a minimum Sterling Amount of(pound)5,000,000
or an integral multiple of (pound)1,000,000.
(b) No more than five Advances shall be outstanding at any one time.
(c) No Advance may be drawn down on any day of an amount exceeding the
relevant Available Facility Amount on such day.
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4.4 TERMINATION
Without prejudice to any other provision of this Agreement, the Commitment
shall be reduced to zero on the last day of the Commitment Period and no
Advance may be made thereafter.
5 INTEREST
5.1 INTEREST ON ADVANCES
Filly shall pay interest on each Advance on each Interest Payment Date
relating thereto at the rate per annum determined by the Bank to be the
aggregate of (a) the Margin, (b) LIBOR and (c) the Associated Costs Rate.
5.2 INTEREST PERIODS:
(a) Each Interest Period shall have a duration of seven days (or such
other period as Filly and the Bank may agree).
(b) The initial Interest Period in respect of each Advance shall commence
upon the date on which such Advance is made. Each subsequent Interest
Period shall commence upon the expiry of the immediately preceding
such period.
(c) An Interest Period in respect of each Advance shall end on the
Repayment Date.
6 CURRENCIES
6.1 SELECTION OF CURRENCIES
Subject to the provisions of this clause 6, if Filly so requests in the
Drawdown Notice, a proposed Advance may be drawn down in Dollars. If no
such request is received by the Bank, then such Advance will be drawn down
in Sterling.
6.2 CURRENCY AMOUNTS ON DRAWDOWN
If an Advance is to be drawn down in Dollars, the Banks shall, subject to
clause 3, advance to Filly on the Drawdown Date the Equivalent Amount in
Dollars.
6.3 RENEWAL OF DOLLAR ADVANCES
The Bank may, at or about 11 a.m. on the second Banking Day before the
beginning of an Interest Period, calculate the Equivalent Amount of each
Advance outstanding in Dollars. If the Equivalent Amount so ascertained (i)
exceeds the Sterling Amount of the Advance, then Filly shall on request
repay to the Bank an amount equal to the excess and (ii) falls short of the
Sterling Amount of the Advance, then the Bank shall advance to Filly an
amount equal to the shortfall (and such additional amount shall form part
of the principal amount of the Advance in question).
7 REPAYMENT, PREPAYMENT AND CANCELLATION
7.1 REPAYMENT
Filly shall repay all of the Advances in full on the Repayment Date.
7.2 PREPAYMENT
(a) Filly may prepay any Advance in whole or part (being a Sterling Amount
of (pound)1,000,000 or any integral multiple thereof) on any Interest
Payment Date relating to the Advance to be so prepaid, subject to
Filly having given to the Bank at least 14 days notice of its
intention to make such prepayment.
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(b) If Filly gives any such notice of prepayment then the Commitment shall
be reduced by an amount equal to the principal amount to be so
prepaid.
(c) Every notice of prepayment shall be effective only on actual receipt
by the Bank. Any such notice shall be irrevocable and shall oblige
Filly to make such prepayment in accordance with the terms of such
notice. Amounts prepaid may not be redrawn.
(d) Filly may not prepay any Advance or any part thereof except as
expressly permitted by this Agreement.
(e) Any prepayment in respect of any Advance shall be made together with
interest accrued and any other sum owing under this Agreement in
respect of the principal amount so prepaid.
7.3 CANCELLATION OF COMMITMENT
Filly may at any time by notice to the Bank (effective only on actual
receipt) cancel with effect from a date not less than seven days after the
receipt by the Bank of such notice the whole or any part (being
(pound)1,000,000 or any integral multiple thereof) of the total of the
Commitment which has not then been drawn, utilised or requested in a
Drawdown Notice. Any such notice of cancellation, once given, shall be
irrevocable and upon such cancellation taking effect the Commitment shall
be reduced proportionately.
8 FEES AND EXPENSES
8.1 FRONT END FEE
Filly shall pay to the Bank on the date of this Agreement, whether or not
any part of the Commitment is ever advanced, a front end fee of an amount
specified in a letter dated 16th February 1999 from the Bank to Filly.
8.2 EXPENSES
Filly shall pay to the Bank within 30 days of demand:
(a) all expenses (including legal, printing and out-of-pocket expenses)
reasonably and properly incurred by the Bank in connection with the
negotiation, preparation and execution of the Finance Documents and of
any amendment, supplement or restatement or extension of or the
granting of any waiver or consent given under the Finance Documents;
and
(b) all expenses (including legal and out-of-pocket expenses) incurred by
the Bank in contemplation of, or otherwise in connection with, the
enforcement of, or preservation of any rights under, the Finance
Documents or otherwise in respect of the moneys owing under any of the
Finance Documents.
8.3 VALUE ADDED TAX
All fees and expenses payable pursuant to this clause 8 shall be paid
together with any value added tax payable by the Bank in respect of such
fees and expenses. Any value added tax chargeable in respect of any
services supplied by the Bank under this Agreement shall be paid in
addition to any sum agreed to be paid under this Agreement.
8.4 STAMP AND OTHER DUTIES
Filly shall pay all stamp, documentary, registration or other like duties
or Taxes (including any like duties or Taxes payable by, or assessed on,
the Bank) imposed on or in connection with any of the Finance Documents and
shall indemnify the Bank against any liability arising by reason of any
delay or omission by Filly to pay such duties or Taxes.
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9 PAYMENTS AND TAXES; ACCOUNTS AND CALCULATIONS
9.1 NO SET-OFF OR COUNTERCLAIM
All payments to be made by Filly under this Agreement shall be made in
full, without any set-off or counterclaim whatsoever and, subject as
provided in clause 9.6, free and clear of any deductions or withholdings,
in Sterling or Dollars (as the case may be) in immediately available funds
for value on the due date to the account of the Bank at such bank as the
Bank may from time to time specify for this purpose.
9.2 PAYMENTS BY THE BANK
All sums to be advanced or made available by the Bank to Filly under this
Agreement shall be remitted in Sterling or Dollars (as the case may be) in
immediately available funds for value on the relevant Drawdown Date to the
account of Filly specified in the relevant Drawdown Notice.
9.3 NON-BANKING DAYS
When any payment under this Agreement would otherwise be due on a day which
is not a Banking Day, the due date for payment shall be postponed to the
next following Banking Day unless such Banking Day falls in the next
calendar month in which case payment shall be made on the immediately
preceding Banking Day.
9.4 CURRENCY AND CALCULATIONS
(a) All payments of interest, principal and other amounts owing in respect
of an Advance shall be made in the currency in which such amount is
denominated.
(b) All payments of front end and other fees shall be made in the currency
in which they are expressed.
(c) All interest and other payments of an annual nature under this
Agreement shall accrue from day to day and be calculated on the basis
of actual days elapsed and (i) in the case of a calculation in
Sterling, on the basis of a 365 day year and (ii) in the case of a
calculation in Dollars, a 360 day year.
9.5 CERTIFICATES CONCLUSIVE
Any certificate or determination of the Bank as to any rate of interest,
rate of exchange or any amount payable under this Agreement shall, in the
absence of manifest or proven error, be conclusive and binding on Filly.
9.6 GROSSING-UP FOR TAXES
Subject to clause 9.7, if at any time Filly is required to make any
deduction or withholding in respect of Taxes from any payment due under
this Agreement, the sum due from Filly in respect of such payment shall be
increased to the extent necessary to ensure that, after the making of such
deduction or withholding, the Bank receives on the due date for such
payment (and retains, free from any liability in respect of such deduction
or withholding) a net sum equal to the sum which it would have received had
no such deduction or withholding been required to be made and Filly shall
indemnify the Bank against any losses or costs incurred by it by reason of
any failure of Filly to make any such deduction or withholding or by reason
of any increased payment not being made on the due date for such payment.
Filly shall promptly deliver to the Bank any receipts, certificates or
other proof evidencing the amounts (if any) paid or payable in respect of
any such deduction or withholding.
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9.7 QUALIFYING BANK
The Bank agrees promptly to notify Filly if it ceases to be a Qualifying
Bank. If the Bank is not or ceases to be a Qualifying Bank (save in
circumstances where the Bank has ceased to be a Qualifying Bank by reason
of any change in law, regulation or double taxation treaty or in its
application or interpretation, in each case taking effect after the date of
this Agreement) then Filly shall not be liable to pay to the Bank under
clause 9.6 any sum in excess of the sum it would have been obliged to pay
if the Bank had been or remained a Qualifying Bank.
9.8 CLAW-BACK OF TAX BENEFIT
If following any such deduction or withholding as is referred to in clause
9.6 from any payment by Filly, the Bank shall receive or be granted a
credit against or relief or remission for or repayment of any Taxes paid or
payable by it, the Bank shall, subject to Filly having made any increased
payment in accordance with clause 9.6 and to the extent that the Bank can
do so without prejudicing the retention of the amount of such credit,
relief, remission or repayment and without prejudice to the right of the
Bank to obtain any other relief or allowance which may be available to it,
reimburse Filly with such amount as the Bank shall in its absolute
discretion certify to be the proportion of such credit, relief, remission
or repayment as will leave the Bank (after such reimbursement) in no worse
position than it would have been in had there been no such deduction or
withholding from the payment by Filly . Such reimbursement shall be made
forthwith upon the Bank certifying that the amount of such credit or
remission has been received by it. Nothing contained in this Agreement
shall oblige the Bank to rearrange its tax affairs or to disclose any
information regarding its tax affairs and computations.
9.9 BANK ACCOUNTS
The Bank shall maintain, in accordance with its usual practices, an account
or accounts evidencing the amounts from time to time lent by, owing to and
paid to it under this Agreement. Such account shall, in the absence of
manifest error, be conclusive as to the amount from time to time owing by
Filly under this Agreement.
10 REPRESENTATIONS
10.1 Filly represents that:
(a) DUE INCORPORATION: each member of the Filly Group is a company duly
incorporated under the laws of its jurisdiction of incorporation;
Filly has power to enter into the Finance Documents and to exercise
its rights and perform its obligations under the Finance Documents and
all corporate and other action required to authorise its execution of
the Finance Documents and its performance of its obligations
thereunder has been duly taken;
(b) BINDING OBLIGATIONS: this Agreement constitutes and the other Finance
Documents, when executed and delivered will constitute, valid and
legally binding obligations of Filly enforceable in accordance with
their respective terms;
(c) NO CONFLICT WITH OTHER OBLIGATIONS: the execution and delivery of, the
borrowing of the Commitment and the performance of its obligations
under, and compliance with the provisions of, the Finance Documents by
Filly will not (i) contravene any existing applicable law, statute,
rule or regulation or any judgment, decree or permit to which Filly is
subject, (ii) conflict with, or result in any breach of any of the
terms of, or constitute a default under, any agreement or other
instrument to which Filly is a party or is subject or by which it or
any of its property is bound, (iii) contravene or conflict with any
provision of Filly's incorporation documents or (iv) result in the
creation or imposition of or oblige Filly to create any Encumbrance on
any of its undertaking, assets, rights or revenues;
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(d) CONSENTS OBTAINED: every material consent, authorisation, licence or
approval of, or registration with or declaration to, governmental or
public bodies or authorities or courts required by Filly to authorise,
or required by Filly in connection with, the execution, delivery,
validity, enforceability or admissibility in evidence of any of the
Finance Documents or the performance by Filly of its obligations under
any of the Finance Documents has been obtained or made and is in full
force and effect and there has been no default in the observance of
the conditions or restrictions (if any) imposed in, or in connection
with, any of the same;
(e) NO FILINGS REQUIRED: it is not necessary to ensure the legality,
validity, enforceability or admissibility in evidence of any of the
Finance Documents that they or any other instrument be notarised,
filed, recorded, registered or enrolled in any court, public office or
elsewhere or that any stamp, registration or similar tax or charge be
paid on or in relation to any of the Finance Documents;
(f) NO LITIGATION: no litigation, arbitration or administrative proceeding
is taking place, pending or, to the knowledge of the officers of
Filly, threatened against any member of the Filly Group which could
have a material adverse effect on the business, assets or financial
condition of Filly, any Material Subsidiary or the Filly Group taken
as a whole;
(g) NO DEFAULTS: no member of the Filly Group is (nor would with the
giving of notice or lapse of time or the satisfaction of any other
condition or any combination thereof be) in breach of or in default
under any agreement relating to Borrowed Money to which it is a party
or by which it may be bound and no other Potential Event of Default
has occurred and is continuing;
(h) FINANCIAL STATEMENTS CORRECT AND COMPLETE: the audited financial
statements of Filly and the audited consolidated financial statements
of Filly and its Subsidiaries in respect of the financial year ended
on 30th April 1998 as delivered to the Bank have been prepared in
accordance with generally accepted accounting principles and practices
in the United Kingdom which have been consistently applied and give a
true and fair view of the financial position of Filly and the
consolidated financial position of Filly and its Subsidiaries
respectively as at such date and the results of the operations of
Filly and the consolidated results of the operations of Filly and its
Subsidiaries respectively for the financial year ended on such date
and, as at such date, neither Filly nor any of its Subsidiaries had
any significant liabilities (contingent or otherwise) or any losses
which are not disclosed by, or reserved against or provided for in,
such financial statements;
(i) NO MATERIAL ADVERSE CHANGE: there has been no material adverse change
in the financial position of Filly or the consolidated financial
position of Filly and its Subsidiaries from that set forth in the
financial statements referred to in clause 10.1(h);
(j) INFORMATION: all information, exhibits and reports furnished by Filly
to the Bank in connection with the negotiation and preparation of this
Agreement are true and accurate in all material respects and not
misleading and all expressions of opinion contained therein genuinely
reflect the opinions of the directors and senior management of Filly
and are based on reasonable assumptions; do not omit material facts
and all reasonable enquiries have been made to verify the facts and
statements contained therein; and there are no other facts the
omission of which would make any fact or statement therein misleading;
(k) MILLENNIUM COMPLIANCE: each member of the Filly Group has taken or is
taking such steps as are necessary to ensure that its computer systems
are not susceptible to malfunction on account of the commencement of
the year 2000 (but this representation shall not apply to the Colt
Group until Colt has become a Subsidiary of Filly);
(l) COMPLIANCE WITH CONSENTS AND LICENCES: every consent, authorisation,
licence or approval required by any member of the Filly Group in
connection with the conduct of
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its business and the ownership, use, exploitation or occupation of
their respective property and assets has been obtained and is in full
force and effect and there has been no default in the observance of
the conditions and restrictions (if any) imposed in, or in connection
with, any of the same;
(m) ENVIRONMENTAL LAWS: each member of the Filly Group has complied with
all Environmental Laws applicable to it or the conduct of its business
(including, without limitation, as to the disposal of hazardous
substances and the obtaining of any requisite licenses or consents);
no claim in respect of any breach of any Environmental law is pending
or has been made or threatened against any member of the Filly Group
or any occupier of any of their respective properties or any of their
respective officers in their capacity as such and no member of the
Filly Group has any reason to believe that it has or is likely to have
any liability in relation to any such matters.
10.2 REPETITION
The representations and warranties in clause 10.1 other than clauses
10.1(i) and (j) (and so that the representation and warranty in clause
10.1(h) shall for this purpose refer to the then latest audited financial
statements delivered to the Bank under clause 11.1) shall be deemed to be
repeated by Filly on and as of each Drawdown Date and each Interest Payment
Date as if made with reference to the facts and circumstances existing on
each such day.
11 UNDERTAKINGS
11.1 Filly undertakes that, from the date of this Agreement and so long as any
moneys are owing under this Agreement or remain available for drawing by
Filly:
(a) NOTICE OF DEFAULT
it will promptly upon becoming aware of the same inform the Bank of
any occurrence which might adversely affect the ability of Filly to
perform its obligations under any of the Finance Documents and of any
Potential Event of Default and from time to time, if so requested by
the Bank, confirm to the Bank in writing that, save as otherwise
stated in such confirmation, no Potential Event of Default has
occurred and is continuing;
(b) CONSENTS AND LICENCES
it will obtain or cause to be obtained, maintain in full force and
effect and comply in all material respects with the conditions and
restrictions (if any) imposed in, or in connection with, every
consent, authorisation, licence or approval of governmental or public
bodies or authorities or courts and do, or cause to be done, all other
acts and things which may from time to time be necessary or desirable
under applicable law for the continued due performance of the
obligations of Filly under the Finance Documents;
(c) USE OF PROCEEDS
it will use the proceeds of Advances exclusively for the purposes
specified in clause 1.1;
(d) PARI PASSU
it will ensure that the obligations of Filly under the Finance
Documents shall at all times rank at least pari passu with all other
present and future unsecured and unsubordinated Indebtedness of Filly
with the exception of any obligations which are mandatorily preferred
by law and not by contract or which are secured by Permitted
Encumbrances;
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(e) DELIVERY OF REPORTS
it will (at the time of issue thereof) deliver to the Bank copies of
every report, circular, notice or like document issued by Filly to its
shareholders or creditors generally;
(f) PROVISION OF FURTHER INFORMATION
it will (on a confidential basis) provide the Bank with such financial
and other information concerning any member of the Filly Group and its
affairs as the Bank may from time to time reasonably require;
(g) THE OFFER
in relation to the conduct of the Offer (and except with the prior
consent of the Bank):
(i) it will not make any material amendment to the terms of the
Offer (whether as to minimum acceptance levels or otherwise) as
described in the Agreement and Plan of Merger;
(ii) it will comply with all applicable laws (including the
requirements and rulings of the Securities and Exchange
Commission); and
(iii) it will not make any announcement or otherwise publicise the
existence or terms of this Agreement or the parties to it
(except that following consultation with the Bank, Filly may
publish the existence and terms of this Agreement to the extent
required by law in connection with the Offer).
(h) INSURANCE
it will procure that each member of the Filly Group will insure and
keep insured all its properties and assets with underwriters or
insurance companies of repute to such extent and against such risks as
prudent companies engaged in similar businesses normally insure;
(i) PENSION SCHEMES
it will ensure that the levels of contribution to the pension schemes
for the time being operated by each member of the Filly Group are and
continue to cover the liabilities for funding such schemes recommended
by its actuaries and as required under applicable law;
(j) COMPLIANCE WITH LAWS AND REGULATIONS
it will procure that each member of the Filly Group will comply with
the terms and conditions of all laws, regulations, agreements,
licences and concessions material to the carrying on of its business
(including, without limitation, all applicable Environmental Laws).
11.2 Filly undertakes with the Bank that, from the date of this Agreement and so
long as any moneys are owing under this Agreement or remain available for
drawing and except with the prior written consent of the Bank:
(a) NEGATIVE PLEDGE
it will not permit any Encumbrance (other than a Permitted Encumbrance
or a lien arising by operation of law in the ordinary course of
business) by any member of the Filly Group to subsist, arise or be
created or extended over all or any part of the present or future
undertakings, assets, rights or revenues of any member of the Filly
Group to secure or prefer any present or future Indebtedness of any
person;
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(b) TRANSACTIONS SIMILAR TO SECURITY
(other than a Permitted Encumbrance) it will not, and it will procure
that none of its Subsidiaries will, (i) enter into any sale and
leaseback transaction in respect of any of its assets or (ii) sell or
otherwise dispose of any of its receivables on recourse terms;
(c) NO MERGER
except pursuant to the Offer or pursuant to a solvent group
reconstruction previously approved by the Bank (such approval not to
be unreasonably withheld) it will not and will procure that none of
its Subsidiaries will merge or consolidate with any other company or
person;
(d) DISPOSALS
it will not and will procure that none of its Subsidiaries will sell,
transfer, lend, lease or otherwise dispose of or cease to exercise
direct control over any part (being either alone or when aggregated
with all other disposals falling to be taken into account pursuant to
this clause 11.2(d) material in the opinion of the Bank in relation to
the undertakings, assets, rights and revenues of the Filly Group taken
as a whole) of its present or future undertaking, assets, rights or
revenues (otherwise than by transfers, sales or disposals for full
consideration in the ordinary course of day-to-day trading) whether by
one or a series of transactions related or not;
(e) ACQUISITIONS
(except pursuant to the Offer) it will not, and will procure that none
of its Subsidiaries will, acquire any assets (including, without
limitation, any companies) other than in the ordinary course of its
trading activities or capital expenditure on its existing businesses;
(f) LOANS AND GUARANTEES
it will not, and will procure that none of its Subsidiaries will, make
any loans, grant any credit (save for normal trade credit in the
ordinary course of day-to-day trading) or give any guarantee (save for
guarantees given pursuant to the terms of the US$80,000,000 facility
of even date herewith) to or for the benefit of any person.
(g) CHANGE OF BUSINESS
(except as a direct consequence of the Offer) it will not change the
nature or scope of the business carried on by the Filly Group as at
the date of this Agreement.
11.3 EXCEPTION TO NEGATIVE UNDERTAKINGS
A transaction which would otherwise contravene the provisions of clause
11.2(b) (Transactions similar to security), 11.2(d) (Disposals) or 11.2(e)
(Acquisitions) shall not be taken to infringe those provisions if the
following conditions are satisfied:
(a) (where the amount or value of the consideration for the transaction
exceeds $1,000,000), details of the transaction have been provided to
the Bank before legally binding commitments have been made;
(b) the amount or value of the consideration for the transaction (when
aggregated with the amount or value of other exempt transactions
concluded during the same financial year) does not exceed $5,000,000;
and
(c) the amount or value of the consideration for the transaction (when
aggregated with the amount or value of other exempt transactions
concluded since the date of this Agreement) does not exceed
$15,000,000.
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12 EVENTS OF DEFAULT
12.1 Each of the events and circumstances set out below is an Event of Default
(whether or not caused by any reason outside the control of any member of
the Filly Group):
(a) NON-PAYMENT: Filly fails to pay any sum due from it under any Finance
Document in the currency, at the time and in the manner stipulated in
this Agreement; or
(b) BREACH OF CERTAIN OBLIGATIONS: Filly commits any breach of or omits to
observe any of the obligations or undertakings expressed to be assumed
by it under clauses 12.2 or 12.3; or
(c) BREACH OF OTHER OBLIGATIONS: Filly commits any other breach of or
omits to observe any of the obligations or undertakings expressed to
be assumed by it under any Finance Document and, in respect of any
such breach or omission which in the opinion of the Bank is capable of
remedy, such action as the Bank may require shall not have been taken
within 14 days of the Bank notifying Filly of such default and of such
required action; or
(d) MISREPRESENTATION: any representation or warranty made or deemed to be
made or repeated in or pursuant to any Finance Document or in any
notice, certificate or statement referred to in or delivered under any
Finance Document is or proves to have been incorrect or misleading in
any material respect; or
(e) CROSS-DEFAULT: any Borrowed Money of any one or more members of the
Filly Group in an aggregate amount exceeding $5,000,000 is not paid
when due or becomes (whether by declaration or automatically in
accordance with the relevant agreement or instrument constituting the
same) due and payable prior to the date when it would otherwise have
become due or any creditor of any one or more members of the Filly
Group becomes entitled to declare any Borrowed Money in an aggregate
amount exceeding $5,000,000 of any one or more members of the Filly
Group so due and payable or to require cash collateralisation or
security for any such Borrowed Money or any facility or commitment
available to any one or more members of the Filly Group relating to
Borrowed Money in an aggregate amount exceeding $5,000,000 is
withdrawn, suspended or cancelled by reason of any default (however
described) of the company concerned; or
(f) DERIVATIVES CONTRACT DEFAULT: any member of the Filly Group fails to
make payment in relation to a Derivatives Contract of any sum on its
due date or the counterparty to a Derivatives Contract becomes
entitled to terminate that Derivatives Contract early by reason of
default on the part of any member of the Filly Group; or
(g) LEGAL PROCESS: any judgment or order made against Filly or any
Material Subsidiary is not stayed, appealed in good faith or complied
with within 14 days or a creditor attaches or takes possession of, or
a distress, execution, sequestration or other process is levied or
enforced upon or sued out against, any material part of the
undertaking, assets, rights or revenues of Filly and is not discharged
within 14 days; or
(h) INSOLVENCY: Filly is deemed unable to pay its debts within the meaning
of section 123(1)(a), (b), (e) or (2) of the Insolvency Act 1986 or
otherwise becomes insolvent or stops or suspends making payments
(whether of principal or interest) with respect to all or any class of
its debts or announces an intention to do so; or
(i) WINDING UP: any petition (other than a petition which Filly
demonstrates to be frivolous or vexatious) is presented or other step
is taken for the purpose of winding up Filly or an order is made or
resolution passed for the winding up of Filly or a notice is issued
convening a meeting for the purpose of passing any such resolution; or
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(j) ADMINISTRATION: any petition (other than a petition which Filly
demonstrates to be frivolous or vexatious) is presented or other step
is taken for the purpose of the appointment of an administrator of
Filly; or
(k) APPOINTMENT OF RECEIVERS AND MANAGERS: any administrative or other
receiver is appointed of Filly or any part of its assets and/or
undertakings or any other steps are taken to enforce any Encumbrance
over all or any part of the assets of Filly; or
(l) COMPOSITIONS: any steps are taken, or negotiations commenced, by Filly
or by any of its creditors with a view to proposing any kind of
composition, compromise or arrangement involving such company and any
of its creditors; or
(m) ANALOGOUS PROCEEDINGS: there occurs, in relation to Filly, in any
country or territory in which it carries on business or to the
jurisdiction of whose courts any part of its assets is subject, any
event which, in the reasonable opinion of the Bank, appears in that
country or territory to correspond with, or have an effect equivalent
or similar to, any of those mentioned in clauses (g) to (l)
(inclusive) or otherwise becomes subject, in any such country or
territory, to the operation of any law relating to insolvency,
bankruptcy or liquidation; or
(n) CESSATION OF BUSINESS: Filly suspends or ceases or threatens to
suspend or cease to carry on its business; or
(o) SEIZURE: all or a material part of the undertakings, assets, rights or
revenues of, or shares or other ownership interests in, any member of
the Filly Group are seized, nationalised, expropriated or compulsorily
acquired by or under the authority of any government; or
(p) ILLEGALITY: it becomes unlawful for Filly to comply with any of its
obligations under any of the Finance Documents; or
(q) RIGHTS ISSUE: the Rights Issue is not completed in accordance with the
terms of the Underwriting Agreement or the Underwriting Agreement is
terminated or cancelled or otherwise ceases to be in full force and
effect; or
(r) CHANGE OF CONTROL OF FILLY: any single person, or group of persons
acting in concert as defined in the City Code on Take-overs and
Mergers dated 8th July, 1993, acquires more than one-half in nominal
value of the equity share capital (as defined in section 744 of the
Companies Act 1985) of Filly; OR control (as defined in section 435 of
the Insolvency Act 1986) of Filly is acquired by any person and/or his
associates (as defined in that section) not having control of Filly at
the date of this Agreement; or
(s) MATERIAL ADVERSE CHANGE: there occurs, in the opinion of the Bank, a
material adverse change in the financial condition of Filly which may
affect the ability of Filly to perform all or any of its obligations
under or otherwise to comply with the terms of any Finance Document;
or
(t) MATERIAL EVENTS: any other event occurs or circumstance arises which,
in the opinion of the Bank, is likely materially and adversely to
affect the ability of any Obligor to perform all or any of its
obligations under or otherwise to comply with the terms of any Finance
Document.
12.2 ACCELERATION
The Bank may, without prejudice to any of its other rights, at any time
after the happening of an Event of Default so long as the same is
continuing by notice to Filly declare that:
(a) the obligation of the Bank to make the Commitment available shall be
terminated, whereupon the Commitment shall be reduced to zero
forthwith; and/or
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(b) the Advances and all interest accrued and all other sums payable under
the Finance Documents have become immediately due and payable or have
become due and payable on demand, whereupon the same shall,
immediately or in accordance with the terms of such notice, become so
due and payable.
On or at any time after the making of any such declaration, the Bank shall
be entitled, to the exclusion of Filly (and without prejudice to clause 5),
to select the duration of Interest Periods.
12.3 DEMAND BASIS
If, pursuant to clause 12.2, the Bank declares the Advances to be due and
payable on demand then the Bank may at any time by written notice to Filly
(a) call for repayment of the Advances on such date as may be specified in
such notice whereupon the Advances shall become due and payable on the date
so specified together with all interest accrued and all other sums payable
under this Agreement or (b) withdraw such declaration with effect from the
date specified in such notice.
13 INDEMNITIES; DEFAULT INTEREST
13.1 INDEMNITY AND THE OFFER
Filly shall indemnify the Bank, (and each of its employees, officers and
agents) against any loss, liability, cost, damage, claim or expense which
they may incur or which may be asserted against them as a consequence
(whether directly or indirectly) of the Bank agreeing to finance the
acquisition of Colt shares by the Filly Group.
13.2 MISCELLANEOUS INDEMNITIES
Filly shall on demand indemnify the Bank, without prejudice to any of its
rights under this Agreement, against any loss (including loss of Margin) or
expense which the Bank shall evidence and certify as sustained or incurred
by it as a consequence of:
(a) any default in payment by Filly of any sum under this Agreement when
due;
(b) the occurrence of any other Event of Default;
(c) any prepayment of all or part of an Advance otherwise than on an
Interest Payment Date relating thereto);
(d) any Advance not being made for any reason (excluding any default by
the Bank) after a Drawdown Notice has been given,
including, in any such case, but not limited to, any loss or expense
sustained or incurred by the Bank in maintaining or funding its obligations
under this Agreement or any part thereof or in liquidating or re-employing
deposits from third parties acquired or contracted for to fund its
obligations under this Agreement or any part thereof or any other amount
owing to the Bank. The Bank shall take reasonable steps to mitigate any
losses which may be the subject of a claim under this clause 13.2.
13.3 CURRENCY OF ACCOUNT; CURRENCY INDEMNITY
No payment by Filly under this Agreement which is made in a currency other
than the currency (the "CONTRACTUAL CURRENCY") in which such payment is
required to be made pursuant to this Agreement shall discharge the
obligation in respect of which it is made except to the extent of the net
proceeds in the Contractual Currency nor shall the Bank be liable to Filly
for any loss or alleged loss arising from fluctuations in exchange rates
between the date on which such payment is so received by the Bank and the
date on which the Bank effects such sale. If any sum due from Filly under
this Agreement or any order or judgement given or made in relation to this
Agreement is required to be converted from the Contractual Currency or
other currency in which
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the same is payable under such order or judgement (the "FIRST CURRENCY")
into another currency (the "SECOND CURRENCY") for the purpose of (a) making
or filing a claim or proof against Filly, (b) obtaining an order or
judgement in any court or other tribunal or (c) enforcing any order or
judgement given or made in relation to this Agreement, Filly shall
indemnify and hold harmless the Bank from and against any loss suffered as
a result of any difference between (i) the rate of exchange used for such
purpose to convert the sum in question from the first currency into the
second currency and (ii) the rate or rates of exchange at which the Bank
may in the ordinary course of business purchase the first currency with the
second currency upon receipt of a sum paid to it in satisfaction, in whole
or in part, of any such order, judgement, claim or proof. Any amount due
from Filly under the indemnity contained in this clause 13.3 shall be due
as a separate debt and shall not be affected by judgement being obtained
for any other sums due under or in respect of this Agreement and the term
"RATE OF EXCHANGE" includes any premium and costs of exchange payable in
connection with the purchase of the first currency with the second
currency.
13.4 DEFAULT INTEREST
If Filly fails to pay any sum (including, without limitation, any sum
payable pursuant to this clause 13.4) on its due date for payment under
this Agreement Filly shall pay interest on such sum from the due date up to
the date of actual payment (as well after as before judgement) at a rate
determined by the Bank pursuant to this clause 13.4. The period beginning
on such due date and ending on such date of payment shall be divided into
successive periods of not more than three months as selected by the Bank
each of which (other than the first, which shall commence on such due date)
shall commence on the last day of the preceding such period. The rate of
interest applicable to each such period shall be the aggregate (as
determined by the Bank) of (a) one per cent. per annum, (b) the Margin, (c)
LIBOR and (d) the Associated Costs Rate, and unless such unpaid sum is an
amount of principal which became due and payable by reason of a declaration
by the Bank under clause 12.2 or a repayment or prepayment occurring on a
date other than an Interest Payment Date relating thereto, in which case
the first such period selected by the Bank shall end on such Interest
Payment Date and interest shall be payable on such principal sum during
such period at a rate one per cent. above the rate applicable thereto
immediately before it fell due. Default interest under this clause 13.4
shall be due and payable on the last day of each period determined by the
Bank pursuant to this clause 13.4 or, if earlier, on the date on which the
sum in respect of which such default interest is accruing shall actually be
paid. If, for the reasons specified in clause 14.5, the Bank is unable to
determine a rate in accordance with the foregoing provisions of this clause
13.4, then interest shall be calculated at the rate determined by the Bank
to be one per cent. per annum above the aggregate of the Margin and the
cost of funds (including the Associated Costs Rate) to the Bank.
14 UNLAWFULNESS AND INCREASED COSTS; ALTERNATIVE INTEREST RATES
14.1 UNLAWFULNESS
If at any time after the date of this Agreement, it becomes contrary to any
law or regulation for the Bank to make or fund Advances or to maintain its
Commitment, then the Bank shall promptly, notify Filly whereupon:
(a) the Commitment shall be reduced to zero; and
(b) Filly shall be obliged (on the date specified by the Bank, which shall
not be earlier than the latest date by which the relevant law or
regulation requires the same to be repaid) to prepay the Advances in
full, together with any other amounts then owing by Filly under this
Agreement.
14.2 INCREASED COSTS
If the result of any change in, or in the interpretation or application of,
or the introduction of, any law or any regulation, request or requirement
(whether or not having the force of law but, if not having the force of
law, being a request or requirement with which banks in the relevant
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jurisdiction are generally accustomed to comply), including, without
limitation, those relating to Taxation, capital adequacy, liquidity,
reserve assets and special deposits and in each case occurring after the
date of this Agreement is to:
(a) subject the Bank to Taxes or change the basis of Taxation of the Bank
with respect to any payment under this Agreement (other than Taxes or
Taxation on the overall net income, profits or gains of the Bank);
and/or
(b) increase the cost to, or impose an additional cost on, the Bank or its
holding company in making or keeping available all or part of the
Commitment or maintaining or funding all or part of the Advances;
and/or
(c) reduce the amount payable or the effective return to the Bank under
this Agreement; and/or
(d) reduce the Bank's or its holding company's rate of return on its
overall capital by reason of a change in the manner in which it is
required to allocate capital resources to the Bank's obligations under
this Agreement; and/or
(e) require the Bank or its holding company to make a payment or forgo a
return on or calculated by reference to or on any amount received or
receivable by the Bank under this Agreement; and/or
(f) require the Bank or its holding company to incur or sustain a loss by
reason of being obliged to deduct all or part of the Commitment or the
Advances from its capital for regulatory purposes,
then and in each such case:
(i) the Bank shall notify Filly in writing of such event promptly
upon its becoming aware of the same; and
(ii) Filly shall on demand, made at any time whether or not the
Advances have been repaid or discharged, pay to the Bank the
amount which the Bank specifies (in a certificate setting forth
the basis of the computation of such amount but not including any
matters which the Bank or its holding company regards as
confidential) is required to compensate the Bank and/or its
holding company for such liability to Taxes, increased or
additional cost, reduction, payment, forgone return or loss.
For the purposes of this clause 14, "HOLDING COMPANY" means, in relation to
the Bank, the company or entity (if any) within the consolidated
supervision of which the Bank is included.
14.3 EXCEPTION
Nothing in clause 14.2 shall entitle the Bank to receive any amount in
respect of compensation for any such liability to Taxes, increased or
additional cost, reduction, payment, forgone return or loss (a) to the
extent that the same is taken into account in calculating the Associated
Costs Rate or (b) to the extent that the same is the subject of an
additional payment under clause 9.6 or such payment would not otherwise be
required pursuant to clause 9.7.
14.4 FURTHER EXCEPTION
Nothing in clause 14.2 shall entitle the Bank to compensation for any such
liability to Taxes, increased or additional cost, reduction, payment,
forgone return or loss which arises as a consequence of (or of any law or
regulation implementing) (a) the proposals for international convergence of
capital measurement and capital standards published by the Basle Committee
on Banking Regulations and Supervisory Practices in July 1988, as amended
and/or (b) any applicable directive of the European Union (in each case)
unless it results from any change in, or
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in the interpretation or application of, such proposals or any such
applicable directive (or any law or regulation implementing the same)
occurring after the date hereof. For the purposes of this clause 14.4 the
term "APPLICABLE DIRECTIVE" means (exclusively) each of the Own Funds
Directive (89/299/EEC of 17th April 1989) and the Solvency Ratio Directive
(89/647/EEC of 18th December 1989) as amended.
14.5 MARKET DISRUPTION; NON-AVAILABILITY
(a) If and whenever, at any time prior to the making of any Advance or
prior to the beginning of any Interest Period:
(i) the Bank shall have determined that adequate and fair means do
not exist for ascertaining LIBOR during the relevant Interest
Period; or
(ii) the Bank shall have determined that deposits in the relevant
currency are not available to the Bank in the London Interbank
Market in the ordinary course of business in sufficient amounts
to fund the relevant Advance;
the Bank shall forthwith give a notice (a "DETERMINATION NOTICE") to
Filly. A Determination Notice shall contain particulars of the
relevant circumstances giving rise to its issue. After the giving of
any Determination Notice the undrawn amount of the Commitment shall
not be borrowed until notice to the contrary is given to Filly by the
Bank.
(b) The Bank shall, as soon as is reasonably practicable after it has
given a Determination Notice, enter into negotiations with Filly with
a view to agreeing an alternative basis for determining the rates of
interest from time to time applicable under this Agreement.
(c) If no alternative basis is agreed pursuant to (b) above, the Bank
shall certify an alternative basis (the "SUBSTITUTE BASIS") for
maintaining its funding under this Agreement. The Substitute Basis may
(without limitation) include alternative interest periods, alternative
currencies or alternative rates of interest but shall include a margin
above the cost of funds including the Associated Cost Rate, if any, to
the Bank equivalent to the Margin. Each Substitute Basis so certified
shall be binding upon Filly and shall take effect in accordance with
its terms from the date specified in the Determination Notice until
such time as none of the circumstances specified in sub-clause (a)
above continues to exist whereupon the normal interest rate fixing
provisions of this Agreement shall apply. During the first 30 days of
a period when a Substitute Basis is in force the Bank and Filly shall
consult with a view to reverting to the normal interest rate fixing
provisions of this Agreement as soon as practicable.
14.6 MITIGATION
If circumstances arise which would or would upon the giving of notice
result in:
(a) the reduction of the Commitment to zero pursuant to clause 14.1; or
(b) an increase in the amount of any payment to be made to it or for its
account pursuant to clause 9.6; or
(c) a claim for indemnification pursuant to clause 14.2;
then, without in any way limiting, reducing or otherwise qualifying the
rights of the Bank or the obligations of Filly under any of the clauses
referred to in (a), (b) or (c) above:
(i) the Bank shall promptly upon becoming aware of the same notify
Filly and to the extent that it can do so without prejudice to
its own position, take reasonable steps to mitigate the effects
of such circumstances including the transfer of its facility
office or the transfer of its rights and obligations
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hereunder to another financial institution acceptable to Filly
and willing to participate in the Facility Provided that the Bank
shall be under no obligation to take any such action if, in the
opinion of the Bank, to do so would or might have any adverse
effect upon its business, operations or financial condition; and
(ii) the Bank shall, upon request of Filly enter into negotiations in
good faith with Filly in order to consider what action, if any,
can be taken with a view to rearranging the Facility on a basis
which will mitigate the effects of such circumstances.
15 SET-OFF
15.1 SET-OFF
Filly authorises the Bank to apply any credit balance to which Filly is
then entitled on any account of Filly with the Bank at any of its branches
in or towards satisfaction of any sum then due and payable from Filly to
the Bank under this Agreement. For this purpose the Bank is authorised to
purchase with the moneys standing to the credit of such account such other
currencies as may be necessary to effect such application. The Bank shall
not be obliged to exercise any right given to it by this clause 15.1. The
Bank shall notify Filly forthwith upon the exercise or purported exercise
of any right of set-off giving full details in relation thereto.
16 ASSIGNMENT
16.1 BENEFIT AND BURDEN
This Agreement shall be binding upon, and enure for the benefit of, the
Bank, Filly and their respective successors.
16.2 NO ASSIGNMENT BY FILLY
Filly may not assign or transfer any of its rights or obligations under
this Agreement.
16.3 ASSIGNMENT BY BANK
The Bank may assign or transfer all or any part of its rights, benefits and
obligations under this Agreement to a Qualifying Bank. Any such novation
may only be made with the prior written consent of Filly but (i) such
consent shall not be unreasonably withheld or delayed and (ii) such consent
shall be deemed to have been given if Filly does not respond to any request
to that effect within five business days.
16.4 CONSTRUCTION OF CERTAIN REFERENCES
If the Bank assigns or transfers all or any part of its rights, benefits
and obligations as provided in clause 16.3 all relevant references in this
Agreement to the Bank shall thereafter be construed as a reference to the
Bank and/or its assignees/transferees to the extent of their respective
interests.
16.5 DISCLOSURE OF INFORMATION
The Bank may (against receipt of a confidentiality undertaking from the
person concerned) disclose to a prospective transferee or to any other
person who may propose entering into contractual relations with the Bank in
relation to this Agreement such information about Filly and the Filly Group
as it may think appropriate.
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17 NOTICES AND OTHER MATTERS
17.1 NOTICES
Every notice, request, demand or other communication under this Agreement
shall:
(a) be in writing delivered personally or by first-class post or telefax;
(b) be deemed to have been received, subject as otherwise provided in this
Agreement, in the case of a letter when delivered personally or three
days after it has been put into the post and in the case of a telefax,
when a complete and legible copy is received by the addressee; and
(c) be sent:
(i) to Filly at:
2 Cheapside Court
Buckhurst Road
Ascot SL5 7RF
Fax: 01344 622773
Attention: Finance Director
(ii) to the Bank at:
PO Box 18075
Riverbank House
2 Swan Lane
London EC4R 3UX
Fax: 0171 623 3598
Attention: Alan Clayton, Loans Administration Department
or to such other address or facsimile number as is notified by the
relevant party to the other party to this Agreement.
17.2 NO IMPLIED WAIVERS, REMEDIES CUMULATIVE
No failure or delay on the part of the Bank to exercise any power, right or
remedy under this Agreement shall operate as a waiver thereof, nor shall
any single or partial exercise by the Bank of any power, right or remedy
preclude any other or further exercise thereof or the exercise of any other
power, right or remedy. The remedies provided in this Agreement are
cumulative and are not exclusive of any remedies provided by law.
17.3 CHANGES IN CONSTITUTION OR REORGANISATIONS OF THE BANK
This Agreement shall remain binding on Filly notwithstanding any change in
the constitution of the Bank or its absorption in, or amalgamation with, or
the acquisition of all or part of its undertaking or assets by, any other
person, or any reconstruction or reorganisation of any kind, to the intent
that this Agreement shall remain valid and effective in all respects in
favour of the Bank, any assignee or transferee or other successor in title
of the Bank in the same manner as if such assignee, transferee or other
successor in title had been an original party to the Agreement.
18 GOVERNING LAW
This Agreement is governed by and shall be construed in accordance with
English law.
IN WITNESS whereof the parties to this Agreement have caused this Agreement to
be duly executed on the date first above written.
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SCHEDULE 1
FORM OF DRAWDOWN NOTICE
To: Dresdner Bank AG
PO Box 1875
Riverbank House
2 Swan Lane
London EC4R 3UX
............, 19..
(pound)40,000,000 Agreement dated o 1999
(THE "AGREEMENT")
[We refer to the Agreement and hereby give you notice that we wish to
draw down an Advance of (pound) o on o 19o The proceeds of the Advance requested
in this Notice should be made available in [Dollars/Sterling]. The funds should
be credited to [bank/account details].]
We confirm that:
(i) no event or circumstance has occurred and is continuing which
constitutes an Event of Default or a Potential Event of Default;
(ii) the representations and warranties contained in clause 11 of the
Agreement are true and correct at the date hereof as if made with
respect to the facts and circumstances existing at such date;
Words and expressions defined in the Agreement shall have the same
meanings where used in this notice.
For and on behalf of
FIRST TECHNOLOGY PLC
.................................
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SCHEDULE 2
DOCUMENTS AND EVIDENCE REQUIRED AS CONDITIONS PRECEDENT TO DRAWDOWN
(a) Copies, certified as true, complete and up-to-date copies by an appropriate
officer of the incorporation documents of Filly.
(b) A copy, certified as a true copy by an appropriate officer, of resolutions
of the Board of Directors of Filly evidencing approval of the Finance
Documents and authorising its appropriate officers to execute and deliver
and to give all notices (including Drawdown Notices) and take all other
action required thereunder.
(c) Specimen signatures of the persons authorised in the resolutions referred
to in paragraph (b) above.
(d) A copy, certified as a true copy, of the resolution of the shareholders of
Filly approving the Offer and the Rights Issue.
(e) A copy of the Merger Plan and Agreement, together with evidence that (i)
the Offer was made in accordance with the terms of the Merger Plan and
Agreement and (ii) Filly has become obliged to purchase Colt shares
pursuant to the Offer.
(f) Copies of (i) instructions from Filly to the underwriter under the
Underwriting Agreement, irrevocably instructing that the proceeds of the
rights issue therein described should be remitted to the Bank in payment of
all moneys owing under this Agreement and (ii) a confirmation from the
underwriter that it will comply with such instructions.
(g) A copy, certified as a true copy by an appropriate officer, of all consents
and authorisations required by Filly (i) in connection with the execution,
delivery and performance of this Agreement and (ii) the making of the Offer
and the acquisition of Colt shares.
(h) Evidence that the Board of Colt has recommended acceptance of the Offer to
its shareholders.
(i) A copy of the Underwriting Agreement, together with evidence that
arrangements acceptable to the Bank with respect to the funding of the
Offer (including equity, and term loan finance arrangements) have been made
and have become unconditional.
(j) Due diligence and accountants reports on the Colt Group.
(k) Business plan and Cashflow models relating to the enlarged Filly Group.
(l) An opinion of US advisers with respect to the Offer (in a form approved by
the Bank acting reasonably).
(m) An opinion of Norton Rose (in a form approved by the Bank acting
reasonably).
25
<PAGE>
SCHEDULE 3
ASSOCIATED COSTS RATE
1 The Associated Costs Rate shall be calculated by the Bank in respect of
each period for which it falls to be calculated relating to an Advance in
accordance with the following formulae:
In relation to each Advance in Sterling:
CL + S(L - Z) + 0.01F
-- -------- --- = PER CENT. PER ANNUM
100 - (C + S)
In relation to each Advance in Dollars:
0.01F
Y ----- = PER CENT. PER ANNUM
100
Where:
C = The amount required to be held as a non-interest bearing cash
ratio deposit with the Bank of England expressed as a percentage
of an eligible institution's eligible liabilities (above any
stated minimum).
F = The amount of Sterling per (pound)1,000,000 of the fee base of
an authorised institution payable to the Financial Services
Authority per annum (disregarding any minimum fee payable under
the Fees Regulations).
L = The rate of interest per annum at which Sterling deposits of an
amount comparable to the relevant Advance are offered by the Bank
to leading banks in the London Interbank Market at or about 11.00
a.m. on the date of calculation for a period comparable to the
period for which the Associated Costs Rate is to be calculated.
S = The amount required to be placed as special deposits with the
Bank of England, expressed as a percentage of an eligible
institution's eligible liabilities (above any stated minimum).
Y = The fraction of foreign currency liabilities taken into account
under the Fees Regulations in calculating the fee base
(disregarding any offset for claims on non-resident offices).
Z = The lower of L and the rate of interest per annum paid by the
Bank of England on special deposits at or about 11.00 a.m. on the
date of calculation.
2 For the purposes of calculating the Reserve Asset Cost:
(b) C, L, S and Z are included in the formula as numbers and not as
percentages, e.g. if C = 0.15 per cent. and L = 7 per cent. CL is
calculated as 0.15 x 7;
(c) the formula is applied on the first day of each period for which it
falls to be calculated (and the result shall apply for the duration of
such period);
(d) each amount is rounded up to the nearest four decimal places; and
26
<PAGE>
(e) if the formula produces a negative percentage, the percentage shall be
taken as zero.
3 If alternative or additional financial requirements are imposed by the Bank
of England, the Financial Services Authority or any other United Kingdom
governmental authority or agency which in the Bank's opinion make the
formulae (or either of them) no longer appropriate, the Bank shall be
entitled by notice to Filly to stipulate such other formulae as shall be
suitable to apply in substitution for the formulae. Any such other formulae
so stipulated shall take effect in accordance with the terms of such
notice.
4 In this schedule 2:
"AUTHORISED" and "INSTITUTION" have the meanings given to those terms in
the Banking Act 1987;
"BANK OF ENGLAND ACT" means the Bank of England Act 1998;
"ELIGIBLE INSTITUTION" has the meaning given to that term in schedule 2 to
the Bank of England Act;
"ELIGIBLE LIABILITIES" has the meaning given to that term in the Cash Ratio
Deposits (Eligible Liabilities) Order 1998 or the applicable substitute
order made under the Bank of England Act as is in force on the date of
application of the formula;
"FEE BASE" has the meaning given to that term in the Fees Regulations;
"FEES REGULATIONS" means the Banking Supervision (Fees) Regulations 1998 or
the applicable substitute regulations made under the Bank of England Act as
are in force on the date of application of the formula; and
"SPECIAL DEPOSITS" has the meaning given to that term by the Bank of
England on the date of application of the formula.
27
<PAGE>
BORROWER
SIGNED for and on behalf of )
FIRST TECHNOLOGY PLC ) /s/ Frederick J. Westlake
BANK
SIGNED for and on behalf of )
DRESDNER BANK AG LONDON BRANCH ) /s/ Richard Simmons
28
<PAGE>
Exhibit 99(b)(3)
CONFORMED COPY
Dated 23 February 1999
(1) FIRST TECHNOLOGY PLC
and
(2) FIRST TECHNOLOGY FUNDING PLC
and
(3) KLEINWORT BENSON SECURITIES LIMITED
RIGHTS ISSUE
UNDERWRITING AGREEMENT
LINKLATERS & ALLIANCE
One Silk Street
London EC2Y 8HQ
TEL: (+44) 171 456 2000
Ref: BR/HLC
<PAGE>
CONTENTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CLAUSE HEADING PAGE
<S> <C>
1 Interpretation...............................................................................................1
2 Conditions...................................................................................................4
3 The Rights Issue and the Acquisition.........................................................................6
4 Prohibited Shareholders, Restricted Shareholders and Fractions...............................................8
5 Underwriting Obligations.....................................................................................8
6 The Bank's Capacity.........................................................................................10
7 Fees, Commissions and Expenses..............................................................................11
8 Announcements...............................................................................................12
9 Warranties..................................................................................................13
10 Indemnity..................................................................................................18
11 Termination................................................................................................21
12 Time of the Essence........................................................................................22
13 General....................................................................................................22
14 Miscellaneous..............................................................................................23
15 Notices....................................................................................................23
16 Governing Law..............................................................................................24
</TABLE>
i
<PAGE>
THIS AGREEMENT is made on 23 February 1999 BETWEEN
(1) FIRST TECHNOLOGY PLC, whose registered office is at 2 Columbus
Drive, Summit Avenue, Southwood, Farnborough, Hampshire GU14 0NZ
("FIRST TECHNOLOGY");
(2) FIRST TECHNOLOGY FUNDING PLC, whose registered office is at 2
Columbus Drive, Summit Avenue, Southwood, Farnborough, Hampshire
GU14 0NZ (the "COMPANY"); and
(3) KLEINWORT BENSON SECURITIES LIMITED, whose registered office is
at 20 Fenchurch Street, London EC3P 3DB (the "BANK").
WHEREAS:
A The Company proposes to issue the Stock pursuant to the Rights Issue
at a price of 320p per Stock Unit, payable in full on acceptance.
B The Bank has agreed to underwrite the Rights Issue on the terms and
subject to the conditions set out in this Agreement.
IT IS AGREED as follows:
1 INTERPRETATION
In this Agreement (including the Recitals):
"ACQUISITION" means the proposed acquisition by First Technology of
all the Target Shares, details of which are contained in the Press
Announcement and the Circular;
"ACQUISITION AGREEMENTS" means the Merger Agreement, the Shareholder
Agreement, the Subscription Agreement and the Loan Agreement, each
in the agreed form;
"ADMISSION" means admission to the Official List of the Exchange in
accordance with paragraph 7.1 of the Listing Rules;
"BOARD" means the Board of Directors or a duly authorised committee
thereof;
"BROKERS" means Kleinwort Benson Securities Limited;
"BUSINESS DAY" means a day excluding a Saturday or Sunday on which
banks in London are open for business;
"CIRCULAR" means the circular letter (incorporating listing
particulars and a prospectus) in the agreed form to be despatched by
First Technology to its shareholders;
"DEED POLL" means the deed poll constituting the Stock to be
executed by First Technology and the Company in the agreed form;
"DIRECTORS" means the directors of First Technology;
1
<PAGE>
"EGM" means the extraordinary general meeting of First Technology,
notice of which is incorporated in the Circular;
"ENLARGED GROUP" means the Group as enlarged by the acquisition of
Target;
"EXCHANGE" means London Stock Exchange Limited;
"FIRST TECHNOLOGY ACQUISITION CORP." means First Technology
Acquisition Corp., a US company incorporated in the State of Indiana
and a wholly-owned subsidiary of First Technology;
"FIRST TECHNOLOGY SHAREHOLDERS" means the holders of First
Technology Shares whose names appear on the register of members of
First Technology as at the close of business on the Record Date or,
for the purposes of Clause 3.2, on the latest practicable date prior
to the posting of the Circular;
"FIRST TECHNOLOGY SHARES" means ordinary shares of 10p each in the
capital of First Technology;
"FSA" means the Financial Services Act 1986 including any
regulations made pursuant thereto;
"GAZETTE NOTICE" means the notice for insertion in the London
Gazette in the agreed form;
"GROUP" means First Technology and its subsidiary undertakings and
the expression "GROUP COMPANY" means any of them;
"IMPACT DAY" means the day on which the Rights Issue is announced
and the effective date of this Agreement;
"ISSUE DOCUMENTS" means the Press Announcement, the Circular and the
PAL;
"ISSUE PRICE" means the price of 320p per Stock Unit;
"LISTING RULES" means the listing rules made by the Exchange under
Section 142 FSA;
"LOAN AGREEMENT" means the agreement in the agreed form between
First Technology and The First National Bank of Chicago, HSBC
Investment Bank plc and Dresdner Kleinwort Benson as joint arrangers
and HSBC Investment Bank plc as agent;
"MERGER AGREEMENT" means the agreement and plan of merger in the
agreed form to be entered into as of Impact Day between First
Technology, First Technology Acquisition Corp. and Target, setting
out the terms on which First Technology Acquisition Corp. will be
merged with and into Target in accordance with the laws of England
and the laws of the State of Indiana;
"NEW FIRST TECHNOLOGY SHARES" means new ordinary shares of 10p each
in the capital of First Technology to be issued fully paid on
conversion of Stock Units as described in, and which will have the
rights set out in, the Circular;
2
<PAGE>
"PAL" means the provisional allotment letter in the agreed form to
be issued (nil paid) by the Company in connection with the Rights
Issue;
"PRESS ANNOUNCEMENT" means the press announcement in the agreed form
proposed to be released on the date hereof containing, inter alia,
details of the Acquisition and of the Rights Issue;
"PROHIBITED SHAREHOLDERS" means First Technology Shareholders with
registered addresses in the United States, Canada, Australia or the
Republic of Ireland;
"RECORD DATE" means 5 March 1999, being the record date for the
Rights Issue;
"REGISTRARS" means Lloyds Bank Registrars;
"RESOLUTIONS" means the resolutions as set out in the notice
convening the EGM contained in the Circular;
"RESTRICTED SHAREHOLDERS" means First Technology Shareholders with
registered addresses in territories where PALs may be sent subject
to modification or restriction e.g. South Africa;
"RIGHTS ISSUE" means the proposed offer of up to 12,029,189 Stock
Units by way of rights to First Technology Shareholders at the Issue
Price on the terms and subject to the conditions set out in the
Circular;
"RIGHTS ISSUE CLOSING DATE" means the last date for payment and
acceptance under the Rights Issue;
"SFA" means The Securities and Futures Authority Limited;
"SFA RULES" means the rules of the SFA;
"SHAREHOLDER AGREEMENT" means the agreement in the agreed form to be
entered into as of Impact Day between, First Technology, First
Technology Acquisition Corp., Target and certain shareholders of
Target, pursuant to which such shareholders have agreed to tender
their Target Shares in the cash tender offer to be made pursuant to
the Merger Agreement, in exchange for which such shareholders will
be entitled to receive cash consideration on the terms and
conditions set out in the Merger Agreement;
"STOCK" means redeemable convertible unsecured loan stock of the
Company to be issued in connection with the Rights Issue, having the
rights and being subject to the restrictions summarised in the
Circular and to be set out in the Deed Poll;
"STOCK UNIT" means a unit of Stock;
"STOCKHOLDERS" means the registered holders for the time being of
the Stock;
3
<PAGE>
"SUBSCRIPTION AGREEMENT" means the agreement in the agreed form to
be entered into as of Impact Day between First Technology and
certain shareholders of Target, pursuant to which such shareholders
agree to invest a proportion of the proceeds received for their
Target Shares under the cash tender offer to be made in accordance
with the terms of the Merger Agreement, to purchase First Technology
Shares on the terms and conditions set out in the agreement;
"TARGET" means Control Devices, Inc.;
"TARGET SHARES" means all the issued share capital of Target;
"UNITED STATES" means the United States of America, its territories
and possessions, any State of the United States and the District of
Columbia;
"VAT" means United Kingdom value added tax as provided for in the
Value Added Tax Act 1994 or any legislation amending or replacing
such Act; and
"VERIFICATION NOTES" means the verification notes in the agreed form
incorporating the answers thereto confirming the accuracy of the
information contained in the Circular.
1.1 Any reference to a document being "in the agreed form" means in the
form of the draft or proof thereof signed for the purpose of
identification by Linklaters & Alliance (on behalf of the Bank) and
Nabarro Nathanson (on behalf of the Company and First Technology)
with such alterations (if any) as may subsequently be agreed by or
on behalf of the Bank, the Company and First Technology. A complete
list of documents which are in the agreed form is set out in
Schedule 1.
1.2 References to a statutory provision include any subordinate
legislation made from time to time under that provision.
1.3 The Interpretation Act 1978 shall apply to this Agreement in the
same way as it applies to an enactment.
1.4 In this Agreement the expressions "SUBSIDIARY UNDERTAKING" and
"SUBSIDIARY" shall have the meanings given thereto in the Companies
Act 1985 (as modified by the Companies Act 1989).
1.5 References to this Agreement include its Schedules and references in
this Agreement to Clauses, sub-clauses and Schedules are to Clauses
and sub-clauses of, and Schedules to, this Agreement.
1.6 Headings shall be ignored in construing this Agreement.
1.7 References to time of day are to London time.
4
<PAGE>
2 CONDITIONS
2.1 The obligations of the Bank under this Agreement (with the exception
of the obligation set out in Clause 3.1) are conditional on:
2.1.1 the Circular being approved by the Exchange in
accordance with the Listing Rules;
2.1.2 two copies of the Circular being delivered to the
Registrar of Companies for registration as required by
Section 149 FSA in accordance with Clause 3.2;
2.1.3 the posting of the Circular and of the PALs in
accordance with Clause 3;
2.1.4 the execution and exchange of each of the Acquisition
Agreements by all parties thereto by no later than
Impact Day;
2.1.5 the passing without material amendment of the
Resolutions on 11 March 1999 (or such other date as the
Bank may agree);
2.1.6 Admission of the Stock occurring on or before 12 March
1999 (or such later date, being not later than 22 March
1999, as the Bank may agree); and
2.1.7 the delivery by First Technology to the Bank of a
certificate in the form set out in Schedule 2
immediately prior to the posting of the PALs.
2.2 The Company and First Technology will use their respective
reasonable endeavours to procure the fulfilment of the conditions
set out in Clause 2.1 by the times and dates stated therein.
2.3 The Company and First Technology have caused application to be made
to the Exchange for formal approval of the Circular and for
permission to be granted for Admission of the Stock and the New
First Technology Shares (subject only to the passing of the
Resolutions, the despatch of the PALs and the allotment and issue of
the Stock Units and, in the case of the New First Technology Shares,
conversion of the Stock Units and the allotment and issue of the New
First Technology Shares) in each case in accordance with the Listing
Rules. The Company and First Technology undertake to use their
respective reasonable endeavours to enable such Admission to become
effective and, in particular, to provide all such information,
execute all such documents, pay all such fees, give all such
undertakings and do or procure to be done all such acts and things
as may reasonably be required therefor.
2.4 The conditions in Clause 2.1 (other than that in Clause 2.1.6) may
be waived in whole or in part by notice in writing by the Bank to
First Technology and, subject to Clause 2.5, the time for
satisfaction of any of the conditions in Clause 2.1 extended by the
Bank.
2.5 If any of the conditions set out in Clause 2.1 is not fulfilled or
(other than in the case of the condition in Clause 2.1.6) waived as
described above and, in any event, by no later than 22 March 1999,
this Agreement shall cease and determine and no party to this
Agreement will have any claim against any other for costs, damages,
compensation or otherwise except that:
5
<PAGE>
2.5.1 such termination shall be without prejudice to any
accrued rights or obligations under this Agreement;
2.5.2 the Company or, failing the Company, First Technology
shall pay the commissions, fees and expenses specified
in Clause 7 subject as provided therein; and
2.5.3 the provisions of Clauses 1 (interpretation), 8
(announcements), 10 (indemnity), 12 (time of the
essence), 14 (miscellaneous), 15 (notices) and 16
(governing law) shall remain in full force and effect.
3 THE RIGHTS ISSUE AND THE ACQUISITION
3.1 At or as soon as possible after 7.30 a.m. on Impact Day, the Bank
and First Technology shall procure the release of the Press
Announcement to the Exchange and the Press.
3.2 On Impact Day, or such later date as the Bank may agree:
3.2.1 subject to the approval of the Circular by the Exchange
in accordance with the Listing Rules, First Technology
shall procure delivery to the Registrar of Companies of
two copies of the Circular for registration as required
by Section 149 FSA;
3.2.2 First Technology shall make available copies of the
Circular and any other documents required by the Listing
Rules for such period as may be required by the Listing
Rules; and
3.2.3 subject to compliance by First Technology with Clause
3.2.1, First Technology shall procure the posting of the
Circular to the First Technology Shareholders.
3.3 The Company and First Technology shall comply with Section 147 FSA
(and the provisions of the Listing Rules relating to supplementary
listing particulars) and will promptly:
3.3.1 notify the Bank if circumstances arise which require or
may require the publication of any supplementary listing
particulars in accordance with Section 147 FSA;
3.3.2 consult with the Bank as to the contents of any
supplementary listing particulars and comply with all
reasonable requirements of the Bank in relation thereto;
and
3.3.3 publish such supplementary listing particulars as may be
required by the Listing Rules.
3.4 Before posting of the PALs, the Company shall (and First Technology
shall procure that the Company shall), by resolution of its board of
directors or a duly authorised committee thereof, provisionally
allot the Stock to First Technology Shareholders who are not
Prohibited Shareholders, on the terms set out in the Circular.
6
<PAGE>
3.5 Subject to the satisfaction of the condition in Clause 2.1.5 and
save as otherwise described in Clause 4, First Technology shall
procure:
3.5.1 the posting of PALs to the First Technology Shareholders
forthwith after passing of the Resolutions; and
3.5.2 the publication of the Gazette Notice not later than 12
March 1999.
3.6 The Acquisition shall be made by First Technology on the terms and
conditions set out in the Acquisition Agreements or on such other
terms consistent therewith as First Technology may determine,
subject (in the case of other terms not consistent with such
documents in all material respects) to the prior approval of the
Bank (such approval not to be unreasonably withheld or delayed).
First Technology shall in any event discuss any such other terms
with the Bank before agreeing to them or implementing them.
3.7 First Technology shall, upon becoming aware prior to the Acquisition
Agreements becoming unconditional of any breach of any
representation, warranty, undertaking or covenant given in its
favour (or in favour of any of its subsidiary undertakings) therein,
promptly notify the Bank thereof. Upon request from the Bank, First
Technology shall provide such details as are within its knowledge
and, without prejudice to any right it may have to terminate any of
the Acquisition Agreements, enforce its rights in respect of such
breach in such manner as First Technology considers reasonable in
the circumstances following consultation with the Bank.
3.8 First Technology shall not prior to the Acquisition Agreements
becoming unconditional:
3.8.1 materially alter or agree to any material alteration of
any of the material terms of any of the Acquisition
Agreements or the Deed Poll;
3.8.2 waive or deem to be satisfied any condition precedent or
material term of any of the Acquisition Agreements;
3.8.3 grant any material time for performance or other
indulgence under any of the Acquisition Agreements or
proceed to completion thereof without full satisfaction
of each of the material terms and conditions of any of
the Acquisition Agreements;
3.8.4 in circumstances where First Technology is entitled to
rescind or terminate any of the Acquisition Agreements,
proceed to completion thereof; or
3.8.5 exercise any right of rescission or termination of any
of the Acquisition Agreements;
without the consent in writing of the Bank, such consent not to be
unreasonably withheld or delayed.
3.9 First Technology shall not prior to the Merger Agreement being
completed in accordance with its terms materially alter or agree to
any material alteration of any of the material terms of the Loan
Agreement without the consent in writing of the Bank, such consent
not to be unreasonably withheld or delayed.
7
<PAGE>
3.10 First Technology shall keep the Bank fully informed of any
discussions in connection with the Acquisition and/or the Rights
Issue and which may be material in the context thereof that it may
have with any government or governmental, quasi-governmental,
supranational, statutory or regulatory body or court.
3.11 The New First Technology Shares when issued and fully paid will rank
pari passu in all respects with the existing issued First Technology
Shares including the right to receive all dividends and other
distributions declared made or paid after the date hereof other than
the interim dividend of 2.1p per share in respect of the six month
period ended 31 October 1998 which is expected to be paid on 1 March
1999.
4 PROHIBITED SHAREHOLDERS, RESTRICTED SHAREHOLDERS AND FRACTIONS
4.1 PALs shall not be posted to Prohibited Shareholders but copies of
the Circular shall, if so required under the Articles of Association
of First Technology be posted to them only for the purpose of
enabling them to consider the Resolutions.
4.2 PALs posted to Restricted Shareholders shall be stamped
"Non-renounceable".
4.3 The rights of Prohibited Shareholders and Restricted Shareholders
shall be limited as described in the Circular.
4.4 Fractional entitlements shall be rounded down and Stock Units
allotted accordingly.
5 UNDERWRITING OBLIGATIONS
5.1 If by 3.00 p.m. on the Rights Issue Closing Date duly completed PALs
in respect of all the Stock Units have been lodged for acceptance
(whether by the persons to whom such Stock Units were provisionally
allotted or by renouncees of the right to accept allotment) in
accordance with the terms of the Circular, together with cheques or
other remittances for the full amount payable in respect of the
Issue Price (other than cheques or remittances which have been
notified to the Registrars as having been dishonoured by 3.00 p.m.
on the Rights Issue Closing Date), the Bank's obligations under this
Clause 5 will cease. Stock Units comprised in PALs which are not so
lodged are herein referred to as "NON-ACCEPTED STOCK UNITS",
PROVIDED THAT the Company may, with the Bank's consent, accept the
Stock Units comprised in any PAL as having been taken up by 3.00
p.m. on the Rights Issue Closing Date if the required remittance is
received no later than 3.00 p.m. on the Rights Issue Closing Date
from an authorised person (as defined in the FSA) specifying the
Stock Units concerned and undertaking to lodge the relevant PAL in
due course.
8
<PAGE>
5.2 If by 9.00 a.m. on the Business Day following the Rights Issue
Closing Date the Company and First Technology, after consultation
with the Bank and the Registrars, have (acting reasonably)
determined that sufficient evidence as to identity has not been
received or is unlikely to be received within a reasonable period of
time, pursuant to procedures maintained by the Registrars under the
Money Laundering Regulations 1993, in respect of any PAL lodged for
acceptance, the Stock Units comprised in that PAL may be deemed by
the Company and First Technology, after consultation with the Bank,
to be "Non-Accepted Stock Units".
5.3 At 3.00 p.m. on the Rights Issue Closing Date, the provisional
allotment of the Non-Accepted Stock Units will lapse. First
Technology will as soon as practicable thereafter and in any event
not later than 9.00 a.m. on the Business Day following the Rights
Issue Closing Date procure that the Registrars notify the Bank in
writing of the number of Non-Accepted Stock Units.
5.4 The Bank will endeavour to procure subscribers in the market on the
terms and subject to the conditions contained in the Circular and
the PAL for the Non-Accepted Stock Units at a price not less than
the total of the Issue Price and the expenses of procuring such
subscription not later than the close of business on the second
Business Day following the Rights Issue Closing Date, on the basis
that any amount realised in excess of the Issue Price and such
expenses shall be received and dealt with by the Company in
accordance with the Circular PROVIDED THAT the Bank shall not be
required to perform its obligations under this Clause 5.4 if it is
of the opinion that it is unlikely that any such subscribers can be
so procured at such price by such time. As soon as practicable
following notification by the Bank to First Technology (on behalf of
the Company) that subscribers have been found by such time for all
or some of the Non-Accepted Stock Units, the Company shall (and
First Technology shall procure that the Company shall):
5.4.1 allot the Non-Accepted Stock Units for which subscribers
shall have been procured to such subscribers or to the
Bank (as their agent) or to such persons as the Bank may
direct; and
5.4.2 deliver to the Bank duly receipted PALs (fully paid up)
in respect thereof in such names and in such
denominations as the Bank may require.
Subject to such allotment and delivery, the Bank will, not later
than 3.00 p.m. on the fourth Business Day after the Rights Issue
Closing Date, account to the Company for the proceeds of such
subscriptions (after deduction of the expenses of procuring such
subscriptions and any commissions and expenses recoverable by the
Bank from the Company, as described in Clause 7) in the manner
provided in Clause 5.7.
5.5 The Bank agrees that it will as agent for the Company use reasonable
endeavours to procure subscribers and, to the extent that it does
not so procure subscribers, it agrees that it will subscribe itself
on the terms and subject to the conditions (so far as the same are
applicable) and on the basis of the information contained in the
Circular for the Non-Accepted Stock Units not otherwise subscribed
pursuant to Clause 5.4 and will, not later than the fourth Business
Day after
9
<PAGE>
the Rights Issue Closing Date, pay or procure payment to the Company
of the Issue Price for the Non-Accepted Stock Units against delivery
to it or as it may direct of duly receipted PALs (fully paid up) for
the Non-Accepted Stock Units in such names and in such denominations
as it may require. Subject to compliance by First Technology with
Clause 5.3, the Bank will, not later than 3.00 p.m. on the third
Business Day after the Rights Issue Closing Date, notify the
subscribers procured by it as aforesaid (if any) of the number of
Stock Units (if any) to be subscribed by them pursuant to the
sub-underwriting arrangements entered into between them and the
Bank.
5.6 In default of the Bank complying with its obligations under Clause
5.5, the Company and First Technology will be entitled (and are
hereby irrevocably authorised) to treat this Agreement as the Bank's
application for such Non-Accepted Stock Units on the terms and
subject to the conditions and on the basis of the information set
out in the Issue Documents and subject to the Memorandum and
Articles of the Company and the conditions of the Deed Poll and to
allocate and issue the same to the Bank on such terms and subject to
such conditions and to register the same in the Bank's name.
5.7 Payments to the Company by the Bank pursuant to Clauses 5.4, 5.5 and
5.6 shall be made to such account as First Technology (on behalf of
the Company) may nominate on reasonable notice in immediately
available funds and such payment shall, to the extent of such
payment, discharge the relevant obligation.
5.8 The Company and First Technology confirm to the Bank that any
information which they may obtain as to whether or not persons have
been procured to take up any Non-Accepted Stock Units and for which
subscribers are not procured pursuant to Clause 5.4 or, if any such
persons have been so procured, as to the identities of any such
persons, is information obtained by the Bank in its capacity as
underwriter and not as financial adviser to the Company or to First
Technology. Accordingly (and notwithstanding any relationship which
the Bank may have with the Company or with First Technology as
financial adviser), the Bank shall be under no obligation to
disclose to the Company or to First Technology any of such
information.
6 THE BANK'S CAPACITY
6.1 Any transaction carried out by the Bank pursuant to Clause 5.4 will
constitute a transaction carried out in the capacity of agent at the
request of the Company and, as applicable, of First Technology and
not in respect of the Bank's own account. The Company and First
Technology each confirm that the Bank shall have all powers,
authorities and discretions on behalf of the Company or of First
Technology which are necessary for or reasonably incidental to its
obligations under Clauses 3.1 and 5, including the power to appoint
agents to act on its behalf in connection with its obligations
hereunder.
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6.2 The Bank will not in the absence of negligence, bad faith or wilful
default of its obligations under this Agreement be responsible for
any loss or damage to any person arising from any insufficiency or
alleged insufficiency of any dealing price (other than as a result
of non-compliance by the Bank with the provisions of Clause 5.4) or
from the timing of any such transaction.
7 FEES, COMMISSIONS AND EXPENSES
7.1 In consideration of the Bank's agreement to underwrite the Rights
Issue and its services in connection with the Rights Issue, the
Company or, failing the Company, First Technology will pay to the
Bank (together with VAT where applicable):
7.1.1 a commission of 1/4 per cent. on the aggregate value at
the Issue Price of the number of Stock Units to be
issued under the Rights Issue;
7.1.2 a commission of 1/2 per cent. on the aggregate value at
the Issue Price of the number of Stock Units to be
issued under the Rights Issue;
7.1.3 a commission of 1/2 per cent. on the aggregate value at
the Issue Price of the number of Stock Units to be
issued under the Rights Issue in respect of the period
from and including the date of this Agreement up to but
excluding the date falling 30 days after the date of
this Agreement;
7.1.4 a further commission of 3/4 per cent. on the aggregate
value at the Issue Price of the number of Stock Units to
be issued under the Rights Issue if the Bank's
obligations under Clauses 5.4, 5.5 and 5.6 become
unconditional in accordance with Clause 2;
7.1.5 a further commission of 1/8 per cent. on the aggregate
value at the Issue Price of the number of Stock Units to
be issued under the Rights Issue for each additional
period of seven days or part thereof following the
initial period of 30 days from and including the date of
this Agreement up to and including the date on which the
Bank notifies the sub-underwriters of the number of
Stock Units to be taken up by them pursuant to Clause
5.5 or, if earlier, the date when the Bank's obligations
hereunder are terminated or lapse or otherwise cease to
be capable of becoming unconditional; and
7.1.6 the Bank's reasonable legal and out-of-pocket expenses,
or, in the case of the commission referred to in Clauses 7.1.2,
7.1.3, 7.1.4 and 7.1.5 above, such lesser amount (if any) as the
Bank shall notify to the Company as having been paid by the Bank as
sub-underwriting commissions pursuant to sub-underwriting
arrangements entered into between the Bank and sub-underwriters
appointed by them.
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7.2 Payment of the amounts referred to in Clause 7.1 shall, except as
provided in Clause 7.1.4, be made whether or not the Bank shall be
called upon to subscribe or procure subscribers for any of the Stock
Units under this Agreement and whether or not the Bank's obligations
under this Agreement become unconditional or are terminated pursuant
to Clause 11.
7.3 Out of the commissions referred to in Clause 7.1 the Bank will pay
(together with VAT where applicable) sub-underwriting commissions to
such persons, if any, as it may procure to subscribe Stock Units in
or towards satisfaction of its underwriting obligations under Clause
5.
7.4 The amounts payable pursuant to Clause 7.1 shall become payable at
3.00 p.m. on the fourth Business Day following the Rights Issue
Closing Date or, if applicable, within two Business Days of any
announcement that the Rights Issue has been terminated. Amounts
payable to the Bank pursuant to Clause 7.1 may be withheld by it
from any payment to be made by it to the Company pursuant to Clause
5.
7.5 Save as provided in Clause 7.3, the Company or, failing the Company,
First Technology will bear all costs and expenses of and in
connection with or incidental to the Rights Issue and the making of
the Acquisition including, without limitation, the cost of printing,
advertising and distribution of the Circular and all other documents
connected with the Rights Issue and/or the Acquisition, the
Registrars' fees, the receiving bank's fee, the listing fees of the
Exchange, the Company's and First Technology's legal and other
professional fees and expenses and out-of-pocket expenses, stamp
duty or stamp duty reserve tax, if any, and, where applicable, VAT.
The Company or, failing the Company, First Technology will forthwith
upon demand by the Bank reimburse it the amount of any such expenses
which it may have paid at the request of and on behalf of the
Company and/or of First Technology together with any applicable VAT.
8 ANNOUNCEMENTS
8.1 Save as expressly required hereunder, by law or by the Exchange (in
which event the Bank will be consulted and its reasonable
representations will be taken into account by First Technology),
First Technology undertakes to the Bank that none of the following
will be published, made or despatched by or on behalf of any Group
Company between the date hereof and the date on which the
Acquisition is completed or any of the Acquisition Agreements are
terminated or lapse without the prior written consent of the Bank
(such consent not to be unreasonably withheld or delayed except that
the Bank may withhold its consent, in its absolute discretion, to
the inclusion in any document of a reference to its name) as to the
content, timing and manner of the publication, making or despatch
thereof:
8.1.1 any public announcement or communication in connection
with the Rights Issue or the Acquisition or concerning
any Group Company or Target which is or may be material
in the context of the Rights Issue, the Acquisition or
the issue of the New First Technology Shares;
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8.1.2 any notice, bill, poster or document announcing the
publication or posting of the Circular, the execution or
completion of the Acquisition Agreements or the issue of
the Stock Units or the New First Technology Shares and
indicating the essential characteristics of the Stock
Units or the New First Technology Shares; or
8.1.3 any document relating to Admission of the Stock Units or
the New First Technology Shares,
(together, for the purposes of Clause 8, the "ANNOUNCEMENTS").
8.2 First Technology shall procure that all Announcements (other than
any required to be made only by Target which shall be the
responsibility of Target) in relation to the Rights Issue and the
Acquisition as are required hereunder, by law or regulation are duly
made and shall procure that all such Announcements comply with all
applicable legal and regulatory requirements.
9 WARRANTIES
9.1 First Technology represents, warrants and undertakes to the Bank
that:
9.1.1 all statements of fact contained in the Issue Documents
are true and accurate in all material respects and not
misleading in any material respect and all expressions
of opinion, intention and expectation contained therein
are fair and honestly held and have been made after due
and careful enquiry and consideration;
9.1.2 there is no information which has not been disclosed in
the Issue Documents (a) the omission of which makes any
statement therein misleading in any material respect or
which, in the context of the Rights Issue or the
Acquisition, is material for disclosure therein or (b)
which investors and their professional advisers would
reasonably require, and reasonably expect to find there,
for the purpose of making an informed assessment of the
assets and liabilities, financial position, profits and
losses and prospects of First Technology and of the
rights attaching to the Stock Units and the New First
Technology Shares or (c) relating to the Group, Target
or the Directors which should be taken into account by
the Exchange in considering the suitability for listing
of the Stock Units and the New First Technology Shares;
9.1.3 the Issue Documents contain all particulars and
information required by, and the making of the Rights
Issue and the Acquisition, the allotment, issue and
listing of the Stock Units and the New First Technology
Shares, the issue or publication of the Issue Documents
and the execution and implementation of the Acquisition
Agreements, will, to the extent applicable, comply in
all material respects with, the Companies Act 1985, the
FSA, the Listing Rules, the rules and regulations of the
Exchange, applicable US Securities Laws, all other
relevant laws and regulations whether in the United
Kingdom or elsewhere all agreements to which any Group
Company is a party or by which any Group Company is
bound;
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9.1.4 the information and statements contained in the Issue
Documents in relation to Target are true and accurate in
all material respects and not misleading in any material
respect and all expressions of opinion, intention and
expection in relation to Target contained therein are
fair and honestly held and have been made after due and
careful enquiry and consideration;
9.1.5 there is no written information that has been supplied
to First Technology and/or its advisers by Target and/or
its advisers in connection with the due diligence
exercise carried out by First Technology in relation to
Target which would be material in the context of the
Rights Issue that has not been disclosed to the Bank;
9.1.6 the audited consolidated balance sheet of the Group as
at 30 April 1998 and the audited consolidated profit and
loss account of the Group for the financial year ended
on such date (including the notes thereto) have been
prepared in accordance with the Companies Act 1985 and
(except to the extent (if any) disclosed therein)
generally accepted accounting principles, standards or
practice consistently applied and give a true and fair
view of the state of affairs of the Group as at that
date and the profit or loss of the Group for the
financial year to that date;
9.1.7 the financial information contained in the interim
unaudited statement of the results of the Group for the
six months ended 31 October 1998 has (except to the
extent (if any) disclosed therein) been prepared in
accordance with generally accepted accounting principles
or practices consistent with those used in the
preparation of the audited consolidated accounts of the
Group for the financial year ended 30 April 1998 insofar
as appropriate in the preparation of an interim
unaudited statement and all statements of fact relating
to the Group contained in such statement are in the
context of such statements true and accurate in all
material respects and not misleading in any material
respects and all expressions of opinion, intention and
expectation contained therein are fair and honestly held
and have been made after due and careful enquiry and
consideration;
9.1.8 no Group Company is engaged in any litigation,
arbitration, prosecution or other legal proceeding, nor
so far as the Directors are aware is any such proceeding
pending or threatened against any Group Company, nor is
there any claim or so far as the Directors are aware any
fact likely to give rise to a claim, which in any such
case may have or has had during the 12 months preceding
the date of this Agreement a significant effect on the
financial position of the Group taken as a whole or
which individually or collectively are material for
disclosure in the context of the Rights Issue or the
Acquisition;
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9.1.9 since the date to which the latest published audited
consolidated accounts of the Group were made up, no
Group Company has entered into any contract or
commitment of an unusual or onerous nature which, in the
context of the Rights Issue or the Acquisition, is
material for disclosure as required by the Listing Rules
or other legal or regulatory requirements and the Group
taken as a whole has carried on business in the ordinary
and usual course and there has been no material adverse
change in the financial or trading position or, so far
as the Directors are aware, prospects of the Group taken
as a whole;
9.1.10 no outstanding indebtedness of the Group of an amount
which would be material in the context of the
Acquisition or the Rights Issue has become repayable
before its stated maturity, nor has any security in
respect of such indebtedness become enforceable by
reason of default by any Group Company and no event has
occurred or is, to the best of the knowledge,
information and belief of the Directors, impending
which, with the lapse of time or the fulfilment of any
condition or the giving of notice or the compliance with
any other formality, may result in any such indebtedness
becoming so repayable or any such security becoming
enforceable and no person to whom any such indebtedness
of any Group Company which is repayable on demand is
owed, has demanded or threatened to demand repayment of,
or to take any steps to enforce any security for, the
same;
9.1.11 no "Termination Event" (as defined in the Loan
Agreement) has occurred or is impending;
9.1.12 none of the warranties and representations given in
Clause 11 of the Loan Agreement is breached, untrue,
inaccurate or misleading in any material respect;
9.1.13 the statement contained in the Circular relating to
working capital represents the true and honest belief of
the Directors arrived at after due and careful
consideration and enquiry;
9.1.14 all factual information relating to the Group supplied
by First Technology to its auditors or to the Bank for
the purpose of their examination and review of the
working capital projections of the Group is true and
accurate in all material respects and is not by itself
or by omission misleading in any material respect and
all expressions of opinion, intention or expectation
made by First Technology in relation thereto are fair
and honestly held and made after due and careful
consideration;
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9.1.15 the working capital report of the Group dated 22 March
1999 has been approved by the Board, has been made after
due and careful enquiry, all expressions of opinion or
intention contained therein are made on reasonable
grounds and are truly and honestly held by the Directors
and are fairly based and there are no other facts known,
or which could on reasonable enquiry have been known, to
the Directors the omission of which would make any such
statement or expression in such report misleading in any
material respect;
9.1.16 each Group Company has carried on and is carrying on its
businesses and operations in all material respects in
accordance with applicable laws, regulations and by-laws
and all material statutory and other licences, consents,
permits and authorities necessary or desirable for the
carrying on of the businesses and operations of each
Group Company as now carried on have been obtained and
are valid and subsisting and all material conditions
applicable to any such licence, consent, permit or
authority have been and are complied with in all
material respects and there are no circumstances known
to any of the Directors which indicate that any of them
is likely to be revoked, rescinded, avoided or
repudiated or not renewed, in whole or in part, in the
ordinary course of events;
9.1.17 the Company and First Technology have power under their
respective Memoranda and Articles of Association to
enter into and perform the Acquisition Agreements and
the Deed Poll and (as applicable) to make the
Acquisition and the Rights Issue and to allot and issue
the Stock Units and the New First Technology Shares in
accordance with this Agreement and the Issue Documents
without any further sanction other than the passing of
the Resolutions and the Acquisition Agreements are, and
the Deed Poll will be, duly authorised and the
Acquisition Agreements constitute, and the Deed Poll
will constitute, legally binding obligations of the
Company and, as the case may be, of First Technology;
9.1.18 none of the entering into and performance of the
Acquisition Agreements, the making of the Rights Issue
or the Acquisition and/or the issue of any of the Issue
Documents will give rise to any breach (for which an
appropriate waiver has not been obtained), which would
be material in the context of the Rights Issue or the
Acquisition, under any agreement to which any Group
Company is a party or by which it or any of them or any
of their respective properties or assets is bound, or
will infringe any borrowing limits or restrictions or
the terms of any contract, obligation or commitment of
any Group Company (save to the extent of such waiver);
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9.1.19 it has implemented a millennium compliance programme
which will it believes ensure that the Information
Technology will be Millennium Compliant by no later than
August 1999 and to the best of the knowledge,
information and belief of the Directors after making due
and careful enquiries it has no reason to believe that,
if such steps are taken, the Information Technology and
the each part of it will not be Millennium Compliant in
all material respects.
For the purposes of this Clause 9.1.19:
"MILLENNIUM COMPLIANT" means that neither performance
nor functionality is or will be affected by dates prior
to, during or after the year 2000 and in particular (but
without limitation):
(i) no value for current date causes or will
cause any interruption in operation;
(ii) date-based functionality behaves and will
behave consistently for dates prior to,
during and after the year 2000;
(iii) in all interfaces and data storage, the
century in any date is and will be specified
either explicitly or by unambiguous
algorithms or inferencing rules; and
(iv) the year 2000 is and will be recognised as a
leap year, and
"INFORMATION TECHNOLOGY" means all computer systems,
communications systems, software and hardware owned,
used or licensed by or to any Group Company.
9.1.20 (i) to the best of the knowledge, information and belief
of the Directors, there is no substantial US market
interest (as that term is used in Regulation S made
under the US Securities Act of 1933) in the First
Technology Shares and (ii) neither First Technology nor
the Company has made or will make any directed selling
efforts in relation to the Stock Units within the
meaning of Regulation S; and
9.1.21 the Company is a corporation duly incorporated under the
laws of England and Wales with full power and authority
to carry on its business and, subject to the passing of
the Resolutions to implement the Rights Issue, as
described in the Circular.
9.2 For the purposes of Clause 9.1:
9.2.1 each of the warranties shall be qualified to the extent
of any facts or information fairly disclosed in the
Circular; and
9.2.2 the Directors shall be deemed to have knowledge of all
matters which should have been discovered by them,
having made all reasonable enquiries.
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9.3 The warranties contained given in Clause 9.1 shall remain in full
force and effect notwithstanding the completion of all matters and
arrangements referred to in or contemplated by this Agreement.
9.4 The Company and First Technology accept that the Bank is entering
into this Agreement in reliance upon each of the warranties
contained in Clause 9.1. Each of such warranties shall be construed
separately and shall not be limited or restricted by reference to or
inference from the terms of any other or any other term of this
Agreement, other than Clause 9.2.
9.5 Each of the Company and First Technology undertakes to the Bank:
9.5.1 not to cause and to use all reasonable endeavours not to
permit and to procure in so far as it is able to do so
that no Group Company will cause or fail to use all
reasonable endeavours not to permit any event to occur
before Admission of the Stock Units which would cause
any of the warranties contained in Clause 9.1 to be
breached or to become untrue or inaccurate or misleading
in any material respect if such warranties were repeated
at such date by reference to circumstances then
subsisting;
9.5.2 to give notice to the Bank if any of the warranties
contained in Clause 9.1 is breached, untrue, inaccurate
or misleading in any material respect or any other
provision of this Agreement is breached in any material
respect, or of the occurrence of any event described in
Clause 9.5.1, which shall come to the knowledge of First
Technology or of any Director prior to Admission of the
Stock Units. Following receipt of such notice by the
Bank, the provisions of Clause 11 shall apply.
9.6 First Technology undertakes to the Bank that it will not, and will
procure that no Group Company will, between the date hereof and the
date on which the Acquisition is completed or is terminated or
lapses, enter into any agreement, commitment or arrangement which
could materially and adversely affect the Rights Issue, the
Acquisition or the issue of the New First Technology Shares.
10 INDEMNITY
10.1 Subject to the provisions of this Clause 10, First Technology shall
indemnify the Bank, on an after tax basis against:
10.1.1 all claims, actions, proceedings, investigations,
demands, judgments and awards (together "CLAIMS") which
may be instituted, made, threatened or alleged against
or otherwise involve the Bank; and
10.1.2 all losses, liabilities, damages, costs, charges and
expenses (together "LOSSES") which may be suffered or
incurred by the Bank,
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in connection with or arising out of the services rendered or duties
performed by the Bank under this Agreement or otherwise in
connection with the making or implementation of the Rights Issue,
including (without limitation) all Losses which the Bank may incur
in investigating, preparing, disputing or defending any Claim
(whether or not the Bank is an actual or potential party to such
Claim) or in establishing any Claim or mitigating any Loss on its
part or otherwise enforcing its rights under this Clause 10 which
shall be additional and without prejudice to any rights which the
Bank may have at common law or otherwise.
10.2 The indemnity set out in Clause 10.1 shall extend (without
limitation) to all Claims which may be instituted, made, threatened
or alleged against or otherwise involve the Bank and to all Losses
suffered or incurred by the Bank:
10.2.1 as a person who has authorised the contents of the
Circular or any part thereof for the purpose of Section
152 FSA; or
10.2.2 as a person who has issued or approved the contents of
any investment advertisement issued in connection with
the Rights Issue for the purpose of Section 57(1) FSA;
or
10.2.3 in its capacity as sponsor to the application by the
Company and First Technology for Admission of the Stock
Units and the New First Technology Shares; or
10.2.4 in connection with or arising out of:
(i) the issue and publication of the Issue
Documents or the Gazette Notice (or any of
them) and any supplementary listing
particulars; or
(ii) any breach by the Company or by First
Technology of the warranties contained in
Clause 9.1 or of any other obligation of the
Company or of First Technology pursuant to
this Agreement; or
(iii) the failure or alleged failure by any Group
Company or any of the Directors to comply
with the Companies Act 1985, FSA or any
other requirements of applicable law or
regulation in relation to the Rights Issue
or the issue of the Stock Units or the New
First Technology Shares; or
(iv) the Issue Documents not containing, or
being alleged not to contain, all
information material in the context of the
Rights Issue, whether required by statute
or not, or any statement contained therein
being, or being alleged to be, untrue,
incorrect or misleading in any material
respect.
10.3 The Bank shall not be entitled to be indemnified in respect of
Claims or Losses to the extent that:
10.3.1 it is expressly required to bear any Losses under this
Agreement; or
10.3.2 the giving or implementation of an indemnity in respect
thereof is prohibited by law; or
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10.3.3 they arise as a result of the negligence, bad faith or
wilful default of the Bank; or
10.3.4 they arise as a result of the Bank having breached the
provisions of the FSA or the Rules of the SFA or any
other regulatory body.
10.4 If the Bank becomes aware of any Claim made or threatened within the
scope of the indemnity set out above, the Bank shall promptly notify
First Technology thereof and shall thereafter (subject to its being
indemnified and secured to its reasonable satisfaction by First
Technology against all losses it may suffer or incur as a result of
so doing), subject to the requirements (if any) of the Bank's
insurers, consult with First Technology regarding the Bank's conduct
of the Claim and shall provide the Company with such information and
copies of such documents relating to the Claim as the Company may
reasonably request provided that the Bank shall not be under any
obligation to take into account any requirements of the Company in
connection with such conduct not to provide the Company with a copy
of any document which is or, in the reasonable opinion of the Bank's
advisers, is likely to be privileged in the context of the Claim.
10.5 If First Technology becomes aware of any claim relevant for the
purposes of Clause 10.1 or any matter which may give rise to a
Claim, First Technology shall notify the Bank and shall provide the
Bank with such information and copies of such documents relating to
the Claim as it may reasonably request, provided that First
Technology shall not be required to do so to the extent that:
10.5.1 First Technology in good faith considers a relevant
document to be subject to a bona fide duty of
confidentiality owed by it to a third party or to be
privileged in the context of any litigation by First
Technology against the Indemnified Party (or vice versa)
connected with the Claim; or
10.5.2 it would prejudice any insurance cover to which First
Technology may from time to time be entitled.
10.6 No Claim shall be made against the Bank by the Company or by First
Technology to recover any Losses incurred by the Company or by First
Technology in connection with or arising out of the services
rendered or duties performed by the Bank in connection with the
making or implementation of the Rights Issue unless and to the
extent that they arise as a result of the negligence, bad faith or
wilful default of the Bank or their arise as a result of the Bank
having breached the provisions of the FSA or the Rules of the SFA or
any other regulatory body.
10.7 The Company and First Technology agree that they will not, without
the prior written consent of the Bank (which consent shall not be
unreasonably withheld or delayed), settle or compromise or consent
to the entry of any judgment with respect to any pending or
threatened Claim:
10.7.1 in respect of which indemnification may be sought by the
Bank under this Clause 10 (whether or not the Bank is an
actual or potential party to such Claim), unless such
settlement, compromise or consent includes an
unconditional release of the Bank from all liability
arising out of such Claim; or
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10.7.2 in respect of which indemnification may be sought by the
Bank under this Clause 10, unless notice of such Claim has
been given to the Bank pursuant to Clause 10.4.
10.8 If any sum payable under this Clause 10 shall be subject to a charge
to taxation in the hands of the Bank, the sum payable shall be
increased to such sum as will ensure that after payment of such
taxation the Bank shall be left with a sum equal to the sum that it
would have received in the absence of such charge to taxation.
10.9 For the purposes of this Clause 10, the expressions:
10.9.1 "the Bank" shall mean the Bank, its subsidiaries and
ultimate holding company and the subsidiaries of that
holding company and their respective directors,
officers, employees and agents and the Bank, in
receiving such indemnity, is acting for itself and as
trustee and/or agent for each of such persons with the
intent that the provisions of this Clause 10 shall be
enforceable by the Bank and each of such persons; and
10.9.2 "on an after tax basis" shall mean that there shall be
taken into account, in calculating the amount due to the
Bank under the indemnity contained in this Clause 10,
the treatment for the Bank's taxation purposes of the
liability (including costs and expenses) and of the
receipt of the payment under the indemnity, so that the
Bank shall not be placed in a better or worse position
than would have been the case had liability giving rise
to the claim in question not arisen.
11 TERMINATION
11.1 If First Technology makes any notification to the Bank pursuant to
Clause 9.5.2, or if the Bank otherwise becomes aware of any matter
or thing failing to be notified pursuant thereto, First Technology
and the Bank shall consult together as to the appropriate form of
any communication or announcement to be made with respect thereto.
Unless the matter or thing is remedied to the reasonable
satisfaction of the Bank, or the Bank considers that the matter is
not material in the context of the Rights Issue or the Acquisition
or the obligations of the Bank hereunder, the Bank shall have the
right, by notice in writing to First Technology to this effect given
prior to the commencement of dealings in the Stock Units (nil paid),
to terminate this Agreement forthwith upon the giving of such
notice.
11.2 If any notice is given by the Bank to First Technology pursuant to
Clause 11.1 to terminate this Agreement, the Bank shall on behalf of
First Technology withdraw any application to the Exchange for
Admission.
11.3 In the event that this Agreement is terminated pursuant to the
provisions of this Clause, no party to this Agreement will have any
claim against any other party to this Agreement for costs, damages,
compensation or otherwise except that:
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11.3.1 such termination shall be without prejudice to any accrued
rights or obligations under this Agreement;
11.3.2 the Company or, failing the Company, First Technology
shall pay the commissions, fees and expenses specified in
Clause 7 (other than the commission specified in Clause
7.1.4 and 7.1.5); and
11.3.3 the provisions of Clauses 1 (interpretation), 8
(announcements), 10 (indemnity), 12 (time of the essence),
14 (miscellaneous), 15 (notices) and 16 (governing law)
shall remain in full force and effect.
12 TIME OF THE ESSENCE
Time shall be of the essence of this Agreement, both as regards any
dates, times and periods mentioned and as regards any dates, times
and periods which may be substituted for them in accordance with
this Agreement or by agreement in writing between the parties.
13 GENERAL
13.1 First Technology will deliver to the Bank as soon as reasonably
practicable:
13.1.1 a certified copy of the resolution of the Board and of
the board of directors of the Company approving and
authorising (in each case, as applicable) the execution
of the Acquisition Agreements, the terms of the Rights
Issue and the Acquisition and the issue of the Press
Announcement and the Circular (and, if the said
resolution is of a committee of the Board, a certified
copy of the resolution of the Board appointing such
committee);
13.1.2 certified copies of responsibility statements signed by
all the Directors and by all of the directors of the
Company; and
13.1.3 Verification Notes signed by or on behalf of each person
to whom responsibility is assigned therein.
13.2 First Technology will deliver to the Bank as soon as reasonably
practicable after the provisional allotment of the Stock a certified
copy of the resolution of the board of directors of the Company
provisionally allotting the Stock.
13.3 First Technology will deliver a certified copy of the Resolutions
to the Bank as soon as reasonably practicable after the EGM.
13.4 First Technology will deliver to the Bank as soon as reasonably
practicable after confirmation of allotments and/or new allotments
of the Stock a certified copy of the resolution of the board of
directors of the Company confirming the allotment of the Stock taken
up and making new allotments of the Stock not taken up.
22
<PAGE>
13.5 First Technology will deliver to the Bank a certified copy of the
Deed Poll duly executed as a deed by the Company and by First
Technology as soon as reasonably practicable after the execution of
the same and, in any event, before the Rights Issue Closing Date.
14 MISCELLANEOUS
No delay or omission on the part of any party hereto in exercising
any right, power or remedy under this Agreement shall impair such
right, power or remedy or operate as a waiver thereof. The single or
partial exercise of any right, power or remedy under this Agreement
by any party hereto shall not preclude any other or further exercise
thereof or the exercise of any other right, power or remedy. The
rights, powers and remedies of each party hereto provided in this
Agreement are cumulative and not exclusive of any rights, powers and
remedies provided by law.
15 NOTICES
15.1 Any notice or other communication to be given or made to a party
under or in connection with this Agreement shall be sufficiently
given if in writing and communicated to the following addresses:
In the case of First Technology:
2 Columbus Drive,
Summit Avenue,
Southwood
Farnborough,
Hampshire GU14 0NZ
Fax: 01252 375825
Attention: Company Secretary
In the case of the Company:
2 Columbus Drive,
Summit Avenue,
Southwood
Farnborough,
Hampshire GU14 0NZ
Fax: 01252 375825
Attention: Company Secretary
In the case of the Bank:
20 Fenchurch Street
London EC3P 3DB
Fax: 0171 623 5535
Attention: Stuart Stradling
23
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15.2 Any such notice or other communication sent (i) by fax shall be
deemed to have been received at the time of despatch thereof, (ii)
by first class post shall be deemed to have been received 48 hours
after the time of posting and (iii) by personal delivery shall be
deemed to have been received upon delivery at the address of the
relevant party.
15.3 Any notice given by the Bank under Clause 11 may also be given by
any director of the Bank to any director of the Company or of First
Technology (as the case may be) either personally or by telephone
(to be confirmed immediately in writing) and shall have effect
immediately.
15.4 Any party may notify the other parties to this Agreement of a change
of its name, relevant addressee, address or fax number for the
purposes of Clause 15.1 provided that such notification shall only
be effective on:
15.4.1 the date specified in the notification as the date on
which the change is to take place; or
15.4.2 if no date is specified or the date specified is less
than five Business Days after the date on which notice
is given, the date falling five Business Days after
notice of any such change has been given.
16 GOVERNING LAW
This Agreement shall be governed by and construed in accordance with
English law.
IN WITNESS WHEREOF this Agreement has been entered into on the date
stated at the beginning.
24
<PAGE>
SCHEDULE 1
DOCUMENTS IN THE AGREED FORM
Circular
Deed Poll
Gazette Notice
Loan Agreement
Merger Agreement
PAL
Press Announcement
Shareholder Agreement
Subscription Agreement
Verification Notes
25
<PAGE>
SCHEDULE 2
[Letterhead of First Technology]
To: Kleinwort Benson Securities Limited o 1999
20 Fenchurch Street
London EC3P 3DB
Dear Sirs
RIGHTS ISSUE OF UP TO 12,029,189 STOCK UNITS OF 320P EACH
(THE "RIGHTS ISSUE")
We refer to the Rights Issue and the Underwriting Agreement relating
thereto dated 23 February 1999 (the "UNDERWRITING AGREEMENT"). Words
and expressions defined in the Underwriting Agreement have the same
meanings in this letter.
We confirm that:
(i) we have complied in all material respects with all our
obligations under the Underwriting Agreement which fail to
be performed to date;
(ii) we have been advised that the Exchange has agreed to admit
the Stock Units to the Official List subject only to the
despatch of PALs and the making of an announcement in
accordance with paragraph 7.1 of the Listing Rules;
(iii) the Resolutions have been passed without material
amendment at the EGM; and
(iv) save as previously notified to you pursuant to Clause
9.5.2 of the Underwriting Agreement, none of the
warranties contained in Clause 9.1 of the Underwriting
Agreement has been breached or is unfulfilled or was
untrue, inaccurate or misleading when made and none of
such warranties would be breached, untrue or inaccurate in
any respect were it to be repeated by reference to the
facts and circumstances subsisting at the date hereof,
which in any such case is material in the context of the
Rights Issue or the underwriting of the Stock Units.
Yours faithfully
...........................
Director
For and on behalf of FIRST TECHNOLOGY PLC
26
<PAGE>
SIGNED by Dr. Frederick Westlake }
for and on behalf of DR. FREDERICK WESTLAKE
FIRST TECHNOLOGY PLC
SIGNED by Dr. Frederick Westlake }
for and on behalf of
FIRST TECHNOLOGY FUNDING PLC DR. FREDERICK WESTLAKE
SIGNED by Stuart Stradling }
for and on behalf of
KLEINWORT BENSON SECURITIES LIMITED STUART STRADLING
27
<PAGE>
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER (this "AGREEMENT"), dated as of
February 22, 1999, by and among Control Devices, Inc., an Indiana corporation
(the "COMPANY"), First Technology PLC, an English public limited company
("PARENT"), and First Technology Acquisition Corp., an Indiana corporation
and an indirect wholly owned subsidiary of Parent ("PURCHASER").
RECITALS
A. The Board of Directors of the Company has determined that it is in
the best interests of the Company and its Shareholders for Purchaser to acquire
the Company on the terms and subject to the conditions set forth herein (the
"ACQUISITION");
B. As a first step in the Acquisition, the Company, Parent and
Purchaser each desire that Parent cause Purchaser to commence a cash tender
offer (the "OFFER") to purchase all of the Company's issued and outstanding
common shares, no par value (the "SHARES") for $16.25 per Share (the "PER SHARE
AMOUNT"), on the terms and subject to the conditions set forth in this
Agreement;
C. To complete the Acquisition, each of the Boards of Directors of the
Company, Parent and Purchaser has approved this Agreement and the merger of
Purchaser with and into the Company (the "MERGER"), wherein any issued and
outstanding Shares not tendered and purchased by Purchaser pursuant to the Offer
(other than Shares described in Section 2.6(b)) will be converted into the right
to receive the Per Share Amount, on the terms and subject to the conditions of
this Agreement and in accordance with the Indiana Business Corporation Law (the
"IBCL");
D. The Board of Directors of the Company (the "COMPANY BOARD") has
unanimously resolved to recommend that the holders of the Shares
("SHAREHOLDERS") accept the Offer and the Merger and approve this Agreement and
has determined that the consideration to be paid for each Share in the Offer and
the Merger is fair to the Shareholders;
E. The parties desire to make certain representations, warranties and
covenants in connection with the Offer and the
<PAGE>
Merger and also to prescribe various conditions to the Offer and the Merger; and
F. In order to induce Parent and Purchaser to enter into this
Agreement, concurrently with the execution and delivery hereof, Parent,
Purchaser, the Company and certain Shareholders, who on a combined basis
beneficially own 18.8% of the outstanding Shares, are entering into a
Shareholders Agreement, dated as of the date hereof (the "SHAREHOLDERS
AGREEMENT") and Parent and certain Shareholders of the Company are entering into
Subscription Agreements, dated as of the date hereof (the "SUBSCRIPTION
AGREEMENTS").
NOW THEREFORE, in consideration of the representations, warranties and
covenants contained in this Agreement, the parties agree as follows:
I. THE TENDER OFFER
1.1. THE OFFER. (a) Subject to the last sentence of this Section
1.1(a), as promptly as practicable (but in any event not later than five
business days after the public announcement of the execution and delivery of
this Agreement), Parent will cause Purchaser to commence (within the meaning of
Rule 14d-2 under the Securities Exchange Act of 1934, as amended (the "EXCHANGE
ACT")), the Offer whereby Purchaser will offer to purchase for cash all of the
Shares at the Per Share Amount, net to the seller in cash (subject to reduction
for any stock transfer taxes payable by the seller, if payment is to be made to
a Person other than the Person in whose name the certificate for such Shares is
registered, or any applicable federal back-up withholding), provided, however,
that Parent may designate another direct or indirect subsidiary of Parent as the
bidder thereunder (within the meaning of Rule 14d-1(c) under the Exchange Act,
in which case references herein to Purchaser will be deemed to apply to such
subsidiary, as applicable). Notwithstanding the foregoing, if between the date
of this Agreement and the Effective Time the outstanding Shares shall have been
changed into a different number of shares or a different class, by reason of any
stock dividend, subdivision, reclassification, recapitalization, split,
combination or exchange of shares, the Per Share Amount will be correspondingly
adjusted on a per-share basis to reflect such stock dividend, subdivision,
reclassification, recapitalization, split, combination or exchange of shares.
The obligation of Parent to cause Purchaser to commence the Offer, to consummate
the Offer and to accept for payment and to pay for Shares validly
2
<PAGE>
tendered in the Offer and not validly withdrawn in accordance therewith will be
subject to, and only to, those conditions set forth in Annex A hereto (the
"OFFER CONDITIONS").
(b) Without the prior written consent of the Company, Purchaser will
not, and Parent will cause Purchaser not to, (i) decrease or change the form of
the Per Share Amount, (ii) decrease the number of Shares sought in the Offer,
(iii) amend or waive the Minimum Condition (as defined in Annex A hereto) or
impose conditions other than the Offer Conditions on the Offer, (iv) extend the
expiration date of the Offer (the "EXPIRATION DATE") except (A) as required by
Law and (B) that, in the event that any Offer Condition is not satisfied or
waived at the time that the Expiration Date would otherwise occur, (1) Purchaser
must extend the Expiration Date for an aggregate of 10 additional business days
to the extent necessary to permit such condition to be satisfied and (2)
Purchaser may, in its sole discretion, extend the Expiration Date for such
period as it may determine to be appropriate (but not beyond the Outside Date),
or (v) amend any term of the Offer in any manner materially adverse to the
Shareholders (including without limitation amendments resulting in any extension
which would be inconsistent with the preceding provisions of this sentence),
provided, however, that (1) subject to applicable legal requirements, Parent may
cause Purchaser to waive any Offer Condition, other than the Minimum Condition,
in Parent's sole discretion, and (2) the Offer may be extended in connection
with an increase in the consideration to be paid pursuant to the Offer so as to
comply with applicable rules and regulations of the Securities and Exchange
Commission (the "SEC"). Except as set forth above and subject to applicable
legal requirements, Purchaser may amend the Offer or waive any Offer Condition
in its sole discretion. Assuming the prior satisfaction or waiver of the Offer
Conditions, Parent will cause Purchaser to accept for payment, and pay for, in
accordance with the terms of the Offer, all Shares validly tendered and not
withdrawn pursuant to the Offer as soon as practicable after the Expiration Date
or any extension thereof.
1.2. OFFER DOCUMENTS. (a) As soon as practicable on the date of
commencement of the Offer, Parent and Purchaser will file or cause to be filed
with the SEC a tender offer statement on Schedule 14D-1 ("SCHEDULE 14D-1") which
will contain an offer to purchase and related letter of transmittal and other
ancillary Offer documents and instruments pursuant to which the Offer will be
made (collectively with any supplements or amendments thereto, the "OFFER
DOCUMENTS") and which Parent and Purchaser represent,
3
<PAGE>
warrant and covenant will comply in all material respects with the Exchange Act
and other applicable Laws and will contain (or will be amended in a timely
manner so as to contain) all information which is required to be included
therein in accordance with the Exchange Act and the rules and regulations
thereunder and other applicable Laws; provided, however, that (i) no agreement
or representation hereby is made or will be made by Parent or Purchaser with
respect to information supplied by the Company in writing expressly for
inclusion in, or information derived from the Company's public SEC filings which
is incorporated by reference or included in, the Offer Documents (such supplied,
derived, incorporated or included information, the "COMPANY SEC INFORMATION")
and (ii) no representation, warranty or covenant is made or will be made herein
by the Company with respect to information contained in the Offer Documents
other than the Company SEC Information.
(b) Parent, Purchaser and the Company will each promptly correct any
information provided by them for use in the Offer Documents if and to the extent
that it becomes false or misleading in any material respect and Parent and
Purchaser will jointly and severally take all lawful action necessary to cause
the Offer Documents as so corrected to be filed promptly with the SEC and to be
disseminated to the Shareholders, in each case as and to the extent required by
applicable Law. In conducting the Offer, Parent and Purchaser will comply in all
material respects with the provisions of the Exchange Act and other applicable
Laws. Parent and Purchaser will endeavor to afford the Company and its counsel a
reasonable opportunity to review and comment on the Offer Documents and any
amendments thereto prior to the filing thereof with the SEC.
1.3. COMPANY ACTIONS. The Company hereby consents to the Offer and
represents that (a) the Company Board (at a meeting duly called and held) has
(i) determined that this Agreement, the Offer and the Merger are fair to and in
the best interests of the Company and its Shareholders, (ii) approved this
Agreement and the transactions contemplated hereby, including the Offer and the
Merger, (iii) took all other action necessary to render the limitations on
control share acquisitions and business combinations contained in Chapters 42
and 43 of the IBCL (or any similar provision) inapplicable to the transactions
contemplated hereby, including the Offer and the Merger, (iv) amended the
Company Rights Agreement as described in Section 3.22, and (v) resolved to
recommend acceptance of the Offer by the Shareholders and adoption of this
Agreement by the Shareholders and (b) Cleary
4
<PAGE>
Gull & Reiland Inc.(the "COMPANY FINANCIAL ADVISER") has delivered to the
Company Board the opinion described in Section 3.20. The Company will use its
reasonable best efforts to cause the Company Financial Adviser to permit the
inclusion of the opinion referred to in Section 3.20 in Schedule 14D-9 and the
Proxy Statement and a reference to such opinion in the Offer Documents. The
Company hereby consents to the inclusion in the Offer Documents of the
recommendation referred to in this Section 1.3; provided, however, that the
Company Board may withdraw, modify or change such recommendation to the extent,
and only to the extent and on the conditions, specified in Section 5.2(b). The
Company will file with the SEC simultaneously with the filing by Parent and
Purchaser of the Schedule 14D-1, a Solicitation/Recommendation Statement on
Schedule 14D-9 (together with all amendments and supplements thereto, "SCHEDULE
14D-9") containing such recommendations of the Company Board in favor of the
Offer and the Merger. The Company represents, warrants and covenants to Parent
and Purchaser that Schedule 14D-9 will comply in all material respects with the
Exchange Act and any other applicable Laws and will contain (or will be amended
in a timely manner so as to contain) all information that is required to be
included therein in accordance with the Exchange Act and the rules and
regulations thereunder and other applicable Laws; provided, however, (i) that no
representation, warranty or covenant is made or will be made herein by the
Company with respect to information supplied by Parent or Purchaser expressly
for inclusion in, or information derived from Parent's public SEC filings which
is incorporated or included in, Schedule 14D-9 (the "PARENT SEC INFORMATION"),
and (ii) no representation, warranty or covenant is made or will be made herein
by Parent or Purchaser with respect to information contained in Schedule 14D-9
other than the Parent SEC Information (which Parent SEC Information will include
the information furnished by Parent as contemplated by the next sentence). The
Company will include in Schedule 14D-9 information urnished by Parent in writing
concerning Parent's Designees as required by Section 14(f) of the Exchange Act
and Rule 14f-1 thereunder and will use its reasonable best efforts to have
Schedule 14D-9 available for inclusion in the initial mailing (and any
subsequent mailing) of the Offer Documents to the Shareholders. Each of the
Company and Parent will promptly correct any information provided by it for use
in Schedule 14D-9 if and to the extent that it becomes false or misleading in
any material respect and the Company will further take all lawful action
necessary to cause Schedule 14D-9 as so corrected to be filed promptly with the
SEC and disseminated to the Shareholders, in each case as and to the extent
required by applicable Law.
5
<PAGE>
Parent and its counsel will be given a reasonable opportunity to review Schedule
14D-9 and any amendments thereto prior to the filing thereof with the SEC. In
connection with the Offer, the Company will promptly furnish Parent with mailing
labels, security position listings and all available listings or computer files
containing the names and addresses of the record Shareholders as of the latest
practicable date and will furnish Parent such information and assistance
(including updated lists of Shareholders, mailing labels and lists of security
positions) as Parent or its agents may reasonably request in communicating the
Offer to the record and beneficial Shareholders. Subject to the requirements of
applicable Law, and except for such actions as are necessary to disseminate the
Offer Documents and any other documents necessary to consummate the Offer and
the Merger, Parent and Purchaser will, and will instruct each of their
respective Affiliates, associates, partners, employees, agents and advisors to,
hold in confidence the information contained in such labels, lists and files,
will use such information only in connection with the Offer and the Merger, and,
if this Agreement is terminated in accordance with its terms, will deliver
promptly to the Company (or destroy and certify to the Company the destruction
of) all copies of such information (and any copies, compilations or extracts
thereof or based thereon) then in their possession or under their control.
1.4. DIRECTORS. (a) Promptly upon the purchase of Shares by Purchaser
pursuant to the Offer, and from time to time thereafter, (i) Parent will be
entitled to designate such number of directors ("PARENT'S DESIGNEES"), rounded
up to the next whole number, as will give Parent, subject to compliance with
Section 14(f) of the Exchange Act, representation on the Company Board equal to
the product of (A) the number of directors on the Company Board (giving effect
to any increase in the number of directors pursuant to this Section 1.4) and (B)
the percentage that such number of Shares so purchased bears to the aggregate
number of Shares outstanding (such number being, the "BOARD PERCENTAGE");
provided, however, that if the number of Shares purchased pursuant to the Offer
equals or exceeds a majority of the outstanding Shares, the Board Percentage
will in all events be a majority of the members of the Company Board, and (ii)
the Company will, upon request by Parent, promptly satisfy the Board Percentage
by (A) increasing the size of the Company Board or (B) using its reasonable best
efforts to secure the resignations of such number of directors as is necessary
to enable Parent's Designees to be elected to the Company Board, or both, and
will use its reasonable best efforts to cause Parent's Designees
6
<PAGE>
promptly to be so elected, subject in all instances to compliance with Section
14(f) of the Exchange Act and Rule 14f-1 promulgated thereunder. At the request
of Parent, the Company will take all lawful action necessary to effect any such
election. Parent will supply to the Company in writing and be solely responsible
for any information with respect to itself, Parent's Designees and Parent's
officers, directors and Affiliates required by Section 14(f) of the Exchange Act
and Rule 14f-1 promulgated thereunder to be included in Schedule 14D-9.
Notwithstanding the foregoing, at all times prior to the Effective Time, the
Company Board will include at least two Continuing Directors.
(b) Notwithstanding any other provision hereof, of the articles of
incorporation or bylaws of the Company or of applicable Law to the contrary,
following the election or appointment of Parent's Designees pursuant to this
Section 1.4 and prior to the Effective Time, any amendment or termination of
this Agreement by the Company, extension by the Company for the performance or
waiver of the obligations or other acts of Parent or Purchaser hereunder or
waiver by the Company of the Company's rights hereunder will require the
affirmative vote of the majority of the Continuing Directors. For purposes of
this Agreement, the term the "CONTINUING DIRECTORS" means at any time (i) those
directors of the Company who are directors on the date hereof and who voted to
approve this Agreement and (ii) such additional directors of the Company who are
not affiliated with Parent, Purchaser or any of their affiliates and who are
designated as "Continuing Directors" for purposes of this Agreement by a
majority of the Continuing Directors in office at the time of such designation.
II. THE MERGER
2.1. THE MERGER. (a) On the terms and subject to the conditions of this
Agreement, at the Effective Time, Purchaser will be merged with and into the
Company in accordance with the applicable provisions of the IBCL, and the
separate corporate existence of Purchaser will thereupon cease. The Company will
be the surviving corporation in the Merger (as such, the "SURVIVING
CORPORATION") in accordance with the IBCL.
(b) The Merger will have the effects specified in Section 23-1-40-6 of
the IBCL.
2.2. THE CLOSING. The closing of the transactions contemplated by this
Agreement (the "CLOSING") will take place at
7
<PAGE>
the offices of Jones, Day, Reavis & Pogue, 599 Lexington Avenue, New York, New
York, at 10:00 a.m., local time, on the first business day after the date on
which the last of the conditions (excluding conditions that by their terms
cannot be satisfied until the Closing Date) set forth in Article VI is satisfied
or waived in accordance herewith, or at such other place, time or date as the
parties may agree. The date on which the Closing occurs is hereinafter referred"
to as the "CLOSING DATE."
2.3. EFFECTIVE TIME. On the Closing Date or as soon as practicable
following the date on which the last of the conditions set forth in Article VI
is satisfied or waived in accordance herewith, Purchaser and the Company will
cause articles of merger to be filed with the Secretary of State of the State of
Indiana as provided in Section 23-1-40-5 of the IBCL. Upon completion of such
filing, the Merger will become effective in accordance with the IBCL. The time
and date on which the Merger becomes effective is herein referred to as the
"EFFECTIVE TIME." Without limiting the generality of the foregoing, and subject
thereto, at the Effective Time all the property, rights, privileges, immunities,
powers and franchises of the Company will vest in the Surviving Corporation, and
all debts, liabilities and duties of the Company will become the debts
liabilities and duties of the Surviving Corporation.
2.4. ARTICLES OF INCORPORATION AND BYLAWS OF THE SURVIVING CORPORATION.
(a) The articles of incorporation of the Surviving Corporation to be in effect
from and after the Effective Time until amended in accordance with their terms
and the IBCL will be the articles of incorporation of Purchaser immediately
prior to the Effective Time (in the form attached hereto as Exhibit A).
(b) The bylaws of the Surviving Corporation to be in effect from and
after the Effective Time until amended in accordance with their terms, the
articles of incorporation of the Surviving Corporation and the IBCL will be the
bylaws of Purchaser immediately prior to the Effective Time.
2.5. DIRECTORS AND OFFICERS OF THE SURVIVING CORPORATION. (a) The
members of the initial Board of Directors of the Surviving Corporation will be
the members of the Board of Directors of Purchaser immediately prior to the
Effective Time. All of the members of the Board of Directors of the Surviving
Corporation will serve until their successors are duly elected or appointed and
qualified or until their earlier death, resignation
8
<PAGE>
or removal in accordance with the articles of incorporation and the bylaws of
the Surviving Corporation.
(b) The officers of the Surviving Corporation will consist of the
officers of the Company immediately prior to the Effective Time. Such Persons
will continue as officers of the Surviving Corporation until their successors
have been duly elected or appointed and qualified or until their earlier death,
resignation or removal in accordance with the articles of incorporation and the
bylaws of the Surviving Corporation.
2.6. CONVERSION OF SECURITIES. At the Effective Time, by virtue of the
Merger and without any action on the part of Parent, Purchaser, the Company or
the holder of any of the following securities:
(a) CONVERSION OF SHARES. Each Share issued and outstanding immediately
prior to the Effective Time (other than any Shares to be canceled pursuant to
Section 2.6(b)) and any Shares issuable upon exercise of any option, conversion
or other right to acquire Shares existing immediately prior to the Effective
Time (collectively, "RIGHTS") will be canceled and extinguished and be converted
into the right to receive the Per Share Amount, or such higher per Share amount
as is paid in the Offer, in cash payable to the holder thereof, without interest
(the "MERGER CONSIDERATION"), in accordance with Section 2.8. All such Shares,
when so converted, will no longer be outstanding and will automatically be
canceled and retired and will cease to exist, and each holder of a certificate
formerly representing any such Share will cease to have any rights with respect
thereto, except the right to receive the Merger Consideration therefor upon the
surrender of such certificate in accordance with Section 2.8. Any payment made
pursuant to this Section 2.6(a) and Section 2.8 will be made net of applicable
withholding taxes to the extent such withholding is required by Law.
Notwithstanding the foregoing, if between the date of this Agreement and the
Effective Time the outstanding Shares shall have been changed into a different
number of shares or a different class, by reason of any stock dividend,
subdivision, reclassification, recapitalization, split, combination or exchange
of shares, the Merger Consideration will be correspondingly adjusted on a
per-share basis to reflect such stock dividend, subdivision, reclassification,
recapitalization, split, combination or exchange of shares.
9
<PAGE>
(b) CANCELLATION OF TREASURY SHARES AND PARENT-OWNED SHARES. Each Share
held in the treasury of the Company and each Share owned by Parent, Purchaser or
any other direct or indirect wholly owned subsidiary of Parent immediately
before the Effective Time (other than shares in trust accounts, managed
accounts, custodial accounts and the like that are beneficially owned by third
parties) will be automatically canceled and retired and will cease to exist and
no payment or other consideration will be made with respect thereto.
(c) COMMON STOCK OF PURCHASER. Each share of common stock, par value
$0.01 per share, of Purchaser issued and outstanding immediately before the
Effective Time will be converted into and become one validly issued, fully paid
and nonassessable share of common stock, par value $0.01 per share, of the
Surviving Corporation, which, in accordance with this Agreement, will constitute
all of the issued and outstanding shares of capital stock of the Surviving
Corporation immediately after the Effective Time.
2.7. SURRENDER OF SHARES; STOCK TRANSFER BOOKS. (a) Prior to the
Effective Time, Purchaser will designate a bank or trust company selected by it
and reasonably acceptable to the Company to act as agent for the Shareholders in
connection with the Merger (the "EXCHANGE AGENT") to receive the funds necessary
to make the payments contemplated by Section 2.6. When and as needed, Parent
will make available to the Exchange Agent for the benefit of Shareholders the
aggregate consideration to which such holders will be entitled at the Effective
Time pursuant to Section 2.6(a).
(b) Each holder of a certificate or certificates representing any
Shares canceled upon the Merger pursuant to Section 2.6(a) (the "CERTIFICATES")
may thereafter surrender such Certificate or Certificates to the Exchange Agent,
as agent for such holder, to effect the surrender of such Certificate or
Certificates on such holder's behalf for a period ending one year after the
Effective Time. Parent agrees that promptly after the Effective Time it will
cause the distribution to Shareholders of record as of the Effective Time of
appropriate materials to facilitate such surrender. Upon the surrender of
Certificates for cancellation, together with such materials, Parent will cause
the Exchange Agent to pay the holder of such Certificates in exchange therefor
cash in an amount equal to the Merger Consideration multiplied by the number of
Shares represented by such Certificate. Until so surrendered, each such
Certificate
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<PAGE>
(other than certificates representing Shares to be canceled pursuant to Section
2.6(b)) will represent solely the right to receive the aggregate Merger
Consideration relating thereto.
(c) If payment of cash in respect of canceled Shares is to be made to a
Person other than the Person in whose name a surrendered Certificate or
instrument is registered, it will be a condition to such payment that the
Certificate or instrument so surrendered shall be properly endorsed or shall be
otherwise in proper form for transfer and that the Person requesting such
payment shall have paid any transfer and other taxes required by reason of such
payment in a name other than that of the registered holder of the Certificate or
instrument surrendered or shall have established to the satisfaction of the
Surviving Corporation or the Exchange Agent that such tax either has been paid
or is not payable.
(d) At the Effective Time, the stock transfer books of the Company will
be closed and there will not be any further registration of transfers of Shares
outstanding prior to the Effective Time or otherwise issuable pursuant to Rights
on the records of the Company. If, after the Effective Time, Certificates are
presented to the Surviving Corporation, they will be canceled and exchanged for
the Merger Consideration as provided in Section 2.6(a). No interest will accrue
or be paid on any cash payable upon the surrender of a Certificate or
Certificates which immediately before the Effective Time represented outstanding
Shares or Shares issuable upon exercise of Rights.
(e) Promptly following the date that is six months after the Effective
Time, the Exchange Agent will deliver to the Surviving Corporation all cash,
certificates and other documents in its possession relating to the transactions
contemplated hereby, and the Exchange Agent's duties will terminate. Thereafter,
each holder of a Certificate (other than Certificates representing Shares held
by Parent, Purchaser, any other direct or indirect wholly owned subsidiary of
Parent or in the treasury of the Company) may surrender such Certificate to the
Surviving Corporation and (subject to applicable abandoned property, escheat and
similar Laws) receive in consideration thereof the aggregate Merger
Consideration relating thereto, without any interest or dividends thereon.
(f) The Merger Consideration will be net to the holder of Shares in
cash, subject to reduction only for any applicable
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federal back-up withholding or, as set forth in Section 2.7(c), stock transfer
taxes payable by such holder.
(g) In the event any Certificate has been lost, stolen or destroyed,
upon the making of an affidavit of that fact by the Person claiming such
Certificate to be lost, stolen or destroyed, the Exchange Agent will issue in
exchange for such lost, stolen or destroyed Certificate the Merger Consideration
deliverable in respect thereof as determined in accordance with Section 2.6;
provided that the Person to whom the Merger Consideration is paid shall, as a
condition precedent to the payment thereof, give the Surviving Corporation a
bond in such sum as the Surviving Corporation may direct or otherwise indemnify
the Surviving Corporation in a manner satisfactory to it against any claim that
may be made against the Surviving Corporation with respect to the Certificate
claimed to have been lost, stolen or destroyed.
2.8. STOCK PLANS. (a) Without limiting the generality or effect of
Sections 2.6 or 2.7 and notwithstanding the provisions hereof applicable to the
Rights, the Company will use its reasonable best efforts (which include
satisfying the requirements of Rule 16b-3(e) promulgated under Section 16 of the
Exchange Act, without incurring any liability in connection therewith) to
provide that, at the Effective Time, each holder of a then-outstanding option to
purchase Shares under any of the Company's 1996 Stock Compensation Plan and 1997
Stock Compensation Plan (collectively, the "STOCK OPTION PLANS") (true and
correct copies of which have been delivered or made available by the Company to
Parent), whether or not then exercisable (the "OPTIONS"), will, in settlement
thereof, receive from the Company for each Share subject to such Option an
amount (subject to any applicable withholding tax) in cash equal to the
difference between the Merger Consideration and the per Share exercise price of
such Option to the extent such difference is a positive number (such amount
being hereinafter referred to as, the "OPTION CONSIDERATION"); provided,
however, that with respect to any Person subject to Section 16(a) of the
Exchange Act, any such amount will be paid as soon as practicable after the
first date payment can be made without liability to such Person under Section
16(b) of the Exchange Act and otherwise any such amount will be paid within five
business days after the Effective Time. Notwithstanding anything herein stated,
no Option Consideration will be paid with respect to any Option unless, at or
prior to the time of such payment, such Option is canceled and the holder of
such Option has executed and delivered a release of any and all rights the
holder had or may have had in respect of such
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Option. The Company will cooperate with Parent in developing and taking any
actions reasonably designed to minimize the exercise of Options by the holders
thereof prior to the Offer Completion Date.
(b) Without limiting the generality or effect of Sections 2.6
or 2.7 and notwithstanding the provisions hereof applicable to Rights, prior to
the Effective Time, the Company will use its reasonable best efforts to obtain
all necessary consents or releases from holders of Options under the Stock
Option Plans and take all such other lawful action as may be necessary to give
effect to the transactions contemplated by this Section 2.8. Except as otherwise
agreed to by the parties, (i) the Stock Option Plans will terminate as of the
Effective Time and the provisions in any other plan, program or arrangement
providing for the issuance or grant of any other interest in respect of the
capital stock of the Company or any Subsidiary thereof will be canceled as of
the Effective Time and (ii) the Company shall use its best efforts to assure
that following the Effective Time no participant in the Stock Option Plans or
other plans, programs or arrangements shall have any right thereunder to acquire
any equity securities of the Company, the Surviving Corporation or any
Subsidiary thereof and to terminate all such plans and any Options or other
Rights thereunder.
(c) Notwithstanding the foregoing, if requested by Parent, the
Company will use its reasonable best efforts to assure that following the date
of this Agreement, no participant in the Employee Stock Purchase Plan of the
Company will have any right to elect to participate or to make any contribution
thereunder, and the Company will take all actions as may be available to it to
cause such plan to be suspended in respect of equity securities of the Company
or the Surviving Corporation other than as to Shares the payment for which was
deducted from the employee's payroll at or prior to the date hereof.
III. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to each of Parent and
Purchaser, except as set forth in the letter, dated the date hereof, from the
Company to Parent initialed by those parties (the "COMPANY DISCLOSURE LETTER"),
as follows:
3.1. EXISTENCE; GOOD STANDING; CORPORATE AUTHORITY. The Company is a
corporation duly incorporated and validly existing
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under the laws of Indiana. The Company is duly licensed or qualified to do
business as a foreign corporation and is in good standing under the laws of any
other state of the United States in which the character of the properties owned
or leased by it or in which the transaction of its business makes such
qualification necessary, except where the failure to be so qualified or to be in
good standing could not reasonably be expected to have a Company Material
Adverse Effect. The Company has all requisite corporate power and authority to
own, operate and lease its properties and carry on its business as now
conducted. Each of the Company's Subsidiaries is a corporation or partnership
duly organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation or organization, has the corporate or partnership
power and authority to own its properties and to carry on its business as it is
now being conducted, and is duly qualified to do business and is in good
standing in each jurisdiction in which the ownership of its property or the
conduct of its business requires such qualification, except for jurisdictions in
which such failure to be so qualified or to be in good standing could not
reasonably be expected to have a Company Material Adverse Effect. The copies of
the Company's articles of incorporation and bylaws previously made available to
Parent are true and correct. As used in this Agreement, (a) the term "COMPANY
MATERIAL ADVERSE EFFECT" means any change, effect, event or condition that has
had or could reasonably be expected to (i) have a material adverse effect on the
business, results of operations or financial condition of the Company and its
Subsidiaries, taken as a whole, or (ii) prevent or materially delay the
Company's ability to consummate the transactions contemplated hereby, and
(b) the term "SUBSIDIARY" when used with respect to any party, means any
corporation or other organization, whether incorporated or unincorporated, of
which such party directly or indirectly owns or controls more than 50% of the
securities or other interests having by their terms ordinary voting power to
elect a majority of the board of directors or others performing similar
functions.
3.2. AUTHORIZATION, VALIDITY AND EFFECT OF AGREEMENT. The Company has
the requisite corporate power and authority to execute and deliver this
Agreement, the Shareholders Agreement and all agreements and documents
contemplated hereby and thereby to be executed and delivered by it. Subject only
to the approval of this Agreement, the Merger and the transactions contemplated
hereby by the holders of a majority of the outstanding Shares, this Agreement,
the Shareholders Agreement, the Offer, the Merger and the consummation by the
Company of the transactions
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contemplated hereby and thereby have been duly authorized by all requisite
corporate action. This Agreement and the Shareholders Agreement constitute, and
all agreements and documents contemplated hereby to be executed and delivered by
the Company (when executed and delivered pursuant hereto) will constitute, the
valid and binding obligations of the Company, enforceable against the Company in
accordance with their respective terms.
3.3. CAPITALIZATION. The authorized capital stock of the Company
consists of 16,000,000 Shares and 3,000,000 shares of preferred stock. As of the
close of business on the last business day immediately preceding the date hereof
(the "MEASUREMENT DATE"), (a) 8,325,967 Shares were issued and outstanding, each
of which was duly authorized, validly issued, fully paid and nonassessable, (b)
no shares of preferred stock of the Company had been designated or issued, (c)
312,660 Shares were reserved for issuance pursuant to the Employee Stock
Purchase Plan, (d) 1,113,333 Shares were reserved for issuance under the Stock
Option Plans, (e) options to purchase 829,999 Shares in the aggregate had been
granted under the Stock Option Plans as more particularly described in Section
3.3 of the Company Disclosure Letter (including the exercise prices thereof),
(f) an option to purchase 333,333 Shares had been granted pursuant to the option
agreement described in Section 3.3 of the Company Disclosure Letter, and (g) no
Shares were reserved for issuance pursuant to the Company Rights Agreement.
Since the Measurement Date, no additional shares of capital stock of the Company
have been issued and no other options, warrants or other rights to acquire
shares of the Company's capital stock (collectively, the "RIGHTS TO ACQUIRE")
have been granted. Except as described in the second preceding sentence, the
Company has no outstanding bonds, debentures, notes or other securities or
obligations the holders of which have the right to vote or which are convertible
into or exercisable for securities having the right to vote on any matter on
which any shareholder of the Company has a right to vote. All issued and
outstanding Shares are duly authorized, validly issued, fully paid,
nonassessable and free of preemptive rights. There are not at the date of this
Agreement any existing options, warrants, calls, subscriptions, convertible
securities or other Rights to Acquire which obligate the Company or any of its
Subsidiaries to issue, exchange, transfer or sell any shares of capital stock of
the Company or any of its Subsidiaries other than Shares issuable under the
Stock Option Plans or awards granted pursuant thereto, the Employee Stock
Purchase Plan and the Option referred to in clause (f) above. As of the
Measurement Date, there were no outstanding
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contractual obligations of the Company or any of its Subsidiaries to repurchase,
redeem or otherwise acquire any shares of capital stock of the Company or any of
its Subsidiaries. As of the Measurement Date, there were no outstanding
contractual obligations of the Company to vote or to dispose of any shares of
the capital stock of any of its Subsidiaries. The Company has delivered to
Parent a complete, true and correct copy of the Rights Agreement, dated as of
May 7, 1998, as amended to date (the "COMPANY RIGHTS AGREEMENT"), relating to
rights (the "COMPANY RIGHTS") to purchase Shares.
3.4. SUBSIDIARIES. Exhibit 21.1 to the Company's Annual Report on Form
10-K for the fiscal year ended January 2, 1999 lists all of the Subsidiaries of
the Company. The Company owns, directly or indirectly, all of the outstanding
shares of capital stock (or other ownership interests having by their terms
ordinary voting power to elect a majority of directors or others performing
similar functions with respect to such Subsidiary) of each of the Company's
Subsidiaries free and clear of all liens, pledges, security interests, claims or
other encumbrances (collectively, "LIENS"). Each of the outstanding shares of
capital stock (or such other ownership interests) of each of the Company's
Subsidiaries is duly authorized, validly issued, fully paid and nonassessable.
The following information for each Subsidiary of the Company has been previously
provided to Parent, if applicable: (i) its jurisdiction of incorporation or
organization; (ii) its authorized capital stock or share capital; and (iii) the
number of issued and outstanding shares of capital stock, share capital or other
equity interests.
3.5. OTHER INTERESTS. Except for interests in the Company's
Subsidiaries, neither the Company nor any of the Company's Subsidiaries owns,
directly or indirectly, any interest or investment (whether equity or debt) in
any domestic or foreign corporation, partnership, joint venture, business, trust
or entity, other than (a) non-controlling investments in the ordinary course of
business and corporate partnering, development, cooperative marketing and
similar undertakings and arrangements entered into in the ordinary course of
business and (b) other investments of less than $1.0 million in the aggregate.
3.6. NO CONFLICT; REQUIRED FILINGS AND CONSENTS. (a) The execution and
delivery of this Agreement and the Shareholders Agreement by the Company do not,
and the consummation by the Company of the transactions contemplated hereby and
thereby will not, (i) conflict with or violate the articles of incorporation
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or bylaws or equivalent organizational documents of the Company or any of its
Subsidiaries, (ii) subject to making the filings and obtaining the approvals
identified in Section 3.6(b), conflict with or violate any domestic or foreign
statute, rule, regulation or other legal requirement ("LAW") or order, judgment
or decree ("ORDER") applicable to the Company or any of its Subsidiaries or by
which any property or asset of the Company or any of its Subsidiaries is bound
or affected, or (iii) subject to making the filings, obtaining the approvals and
effecting any other matters identified in Section 3.6 of the Company Disclosure
Letter, result in any breach of or constitute a default (or an event which with
notice or lapse of time or both would become a default) under, result in the
loss of a material benefit under, or give to others any right of purchase or
sale, or any right of termination, amendment, acceleration, increased payments
or cancellation of, or result in the creation of a Lien on any property or asset
of the Company or any of its Subsidiaries pursuant to, any note, bond, mortgage,
indenture, contract, agreement, lease, license, permit, franchise or other
instrument or obligation to which the Company or any of its Subsidiaries is a
party or by which the Company or any of its Subsidiaries or any property or
asset of the Company or any of its Subsidiaries is bound or affected, except, in
the case of clauses (ii) and (iii), for any such conflicts, violations,
breaches, defaults, events, losses, rights, payments, cancellations,
encumbrances or other occurrences that, individually or in the aggregate, could
not be reasonably expected to have a Company Material Adverse Effect.
(b) The execution and delivery of this Agreement and the Shareholders
Agreement by the Company does not, and the performance of this Agreement and the
consummation by the Company of the transactions contemplated hereby and thereby
will not, require any consent, approval, authorization or permit of, or filing
with or notification to, any governmental or regulatory authority, domestic or
foreign, including without limitation, any quasi-governmental, supranational,
statutory, environmental entity and any stock exchange or court (each a
"GOVERNMENTAL ENTITY"), except (i) for (A) applicable requirements, if any, of
the Exchange Act, (B) the applicable pre-merger notification requirements of the
Hart-Scott Rodino Antitrust Improvements Act of 1976, as amended, if any, and
the rules and regulations thereunder and any other required filings with or
approvals of foreign competition Law authorities, and (C) the filing of articles
of merger pursuant to the IBCL and (ii) where the failure to obtain any such
consent, approval, authorization or permit, or to make any such filing or
notification, could not,
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individually or in the aggregate, reasonably be expected to have a Company
Material Adverse Effect.
3.7. COMPLIANCE WITH LAWS. Neither the Company nor any of its
Subsidiaries is in conflict with, or in default or violation of, (a) any Law or
Order applicable to the Company or any of its Subsidiaries or by which any
property or asset of the Company or any of its Subsidiaries is bound or affected
or (b) any note, bond, mortgage, indenture, contract, agreement, lease, license,
permit, franchise or other instrument or obligation to which the Company or any
of its Subsidiaries is a party or by which the Company or any of its
Subsidiaries or any property or asset of the Company or any of its Subsidiaries
is bound or affected, in each case except for such conflicts, defaults or
violations that could not, individually or in the aggregate, reasonably be
expected to have a Company Material Adverse Effect. The Company and its
Subsidiaries have obtained all licenses, permits and other authorizations and
have taken all actions required by applicable Law or government regulations in
connection with their business as now conducted, except where the failure to
obtain any such item or to take any such action could not, individually or in
the aggregate, reasonably be expected to have a Company Material Adverse Effect.
3.8. SEC DOCUMENTS. (a) The Company has filed all forms, reports and
documents required to be filed by it with the SEC since September 1, 1996
(collectively, the "COMPANY REPORTS"). As of their respective dates, the Company
Reports and any such reports, forms and other documents filed by the Company
with the SEC after the date of this Agreement (i) complied, or will comply, in
all material respects with the applicable requirements of the Securities Act of
1933, as amended (the "SECURITIES ACT"), the Exchange Act and the rules and
regulations thereunder and (ii) did not, or will not, contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements made therein, in the light of
the circumstances under which they were made, not misleading. The representation
in clause (ii) of the preceding sentence does not apply to any misstatement or
omission in any Company Report filed prior to the date of this Agreement which
was superseded by a subsequent Company Report filed prior to the date of this
Agreement. No Subsidiary of the Company is required to file any report, form or
other document with the SEC.
(b) Each of the financial statements included in or incorporated by
reference into the Company Reports (including the
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related notes and schedules) presents fairly, in all material respects, the
consolidated financial position of the Company and its Subsidiaries as of its
date or, if applicable, the results of operations, retained earnings or cash
flows, as the case may be, of the Company and its Subsidiaries for the periods
set forth therein (subject, in the case of unaudited statements, to normal
year-end audit adjustments, none of which is material in kind or amount), in
each case in accordance with generally accepted accounting principles
consistently applied during the periods involved, except as may be noted
therein.
(c) Neither the Company nor any of its Subsidiaries has any liabilities
or obligations of any nature (whether accrued, absolute, contingent or
otherwise) that would be required to be reflected on, or reserved against in, a
consolidated balance sheet of the Company or described or referred to in the
notes thereto, prepared in accordance with generally accepted accounting
principles consistently applied, except for (i) liabilities or obligations that
were so reserved on, or reflected in (including the notes to), the consolidated
balance sheet of the Company as of January 2, 1999, (ii) liabilities or
obligations arising in the ordinary course of business (including trade
indebtedness) since January 2, 1999, and (iii) liabilities or obligations which
could not, individually or in the aggregate, reasonably be expected to have a
Company Material Adverse Effect.
(d) Set forth in Section 3.8(d) of the Company Disclosure Letter is a
listing of all of the Company's and its Subsidiaries' indebtedness for borrowed
money outstanding as of the Measurement Date, setting forth in each case the
principal amount thereof. No payment defaults have occurred and are continuing
under the agreements and instruments governing the terms of such indebtedness.
3.9. LITIGATION. Except as disclosed in Section 3.9 of the Company
Disclosure Letter, there are no actions, suits or proceedings pending, publicly
announced or, to the Knowledge of the Company, threatened against or affecting
the Company or any of its Subsidiaries and there are no Orders of any
Governmental Entity or arbitrator outstanding against the Company or any of its
Subsidiaries, that, individually or in the aggregate, are reasonably likely to
have a Company Material Adverse Effect.
3.10. ABSENCE OF CERTAIN CHANGES. Except as described in the Company
Reports filed and publicly available prior to the date hereof (the "COMPANY
FILED REPORTS") or disclosed in Section
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3.10 of the Company Disclosure Letter, since January 2, 1999, there has not been
(a) any Company Material Adverse Effect, (b) any declaration, setting aside or
payment of any dividend of other distribution with respect to its capital stock,
(c) any split, combination or reclassification of any of the Company's capital
stock or any issuance or the authorization of any issuance of any other
securities in respect of, in lieu of or in substitution for any shares of the
Company's capital stock, (d) any granting by the Company or any of its
Subsidiaries to any director, executive officer or other key employee of the
Company of any increase in compensation, (e) any granting by the Company or any
of its Subsidiaries to any such director, executive officer or key employee of
any increase in severance or termination pay, except as was required under any
employment, severance or termination agreements in effect as of the date of the
most recent financial statements included in the Company Filed Reports or
referred to in Section 3.10 of the Company Disclosure Letter, (f) any entry by
the Company or any of its Subsidiaries into any employment, severance or
termination agreement with any such director, executive officer or key employee,
or (g) except insofar as may be required by a change in generally accepted
accounting principles, any change in accounting methods, principles or practices
by the Company. For purposes of this Agreement, "key employee" means any
employee whose current salary and targeted bonus exceeds $100,000 per annum.
3.11. TAXES. (a) Except as could not, individually or in the aggregate,
reasonably be expected to have a Company Material Adverse Effect, (i) the
Company has timely filed with the appropriate governmental authorities all Tax
Returns required to be filed by or with respect to the Company, (ii) all Taxes
shown to be due on such Tax Returns, all Taxes required to be paid on an
estimated or installment basis, and all Taxes required to be withheld with
respect to the Company have been timely paid or, if applicable, withheld and
paid to the appropriate taxing authority in the manner provided by Law, (iii)
the reserve for Taxes set forth on the consolidated balance sheet of the Company
and its Subsidiaries as of January 2, 1999 is adequate for the payment of all
Taxes through the date thereof and no Taxes have been incurred after January 2,
1999 which were not incurred in the ordinary course of business, (iv) except as
disclosed in Section 3.11 of the Company Disclosure Letter, no Federal, state,
local or foreign audits, administrative proceedings or court proceedings are
pending with regard to any Taxes or Tax Returns of the Company and there are no
outstanding deficiencies or
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assessments asserted or proposed, and (v) there are no outstanding agreements,
consents or waivers extending the statutory period of limitations applicable to
the assessment of any Taxes or deficiencies against the Company, and the Company
is not a party to any agreement providing for the allocation or sharing of
Taxes.
(b) The Company has not filed a consent to the application of Section
341(f) of the Internal Revenue Code of 1986, as amended (the "CODE").
(c) The Company is not and has not been a United States real property
holding company (as defined in Section 897(c)(2) of the Code) during the
applicable period specified in Section 897(c)(1)(ii) of the Code.
(d) No indebtedness of the Company is "corporate acquisition
indebtedness" within the meaning of Section 279(b) of the Code.
(e) The Company has not been a member of an affiliated group filing
consolidated or combined Tax Returns other than a federal income tax group the
common parent of which is the Company.
(f) For purposes of this Agreement, "TAXES" means all taxes, charges,
fees, levies or other assessments imposed by any United States Federal, state,
or local taxing authority or by any non-U.S. taxing authority, including but not
limited to, income, gross receipts, excise, property, sales, use, transfer,
payroll, license, ad valorem, value added, withholding, social security,
national insurance (or other similar contributions or payments), franchise,
estimated, severance, stamp, and other taxes (including any interest, fines,
penalties or additions attributable to or imposed on or with respect to any such
taxes, charges, fees, levies or other assessments).
(g) For purposes of this Agreement, "TAX RETURN" means any return,
report, information return or other document (including any related or
supporting information and, where applicable, profit and loss accounts and
balance sheets) with respect to Taxes.
3.12. PROPERTY. (a) Section 3.12(a) of the Company Disclosure Letter
contains a true and complete list of all (i) material patents and patent
applications in the name of the
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Company or any of its Subsidiaries, (ii) material trademark and service mark
registrations and applications in the name of the Company or any of its
Subsidiaries, (iii) copyright registrations and applications for works, (iv)
Internet domain names used or held for use in connection with the business of
the Company, and (v) all material licenses related to the foregoing.
(b) Except as set forth in Section 3.12(b) of the Company Disclosure
Letter, (i) the Company owns or, to the Knowledge of the Company, has the valid
right to use all intellectual property used by it in connection with its
business, including without limitation (A) trademarks and service marks
(registered or unregistered) and trade names, and all goodwill associated
therewith, (B) patents, patentable inventions, discoveries, improvements, ideas,
know-how, processes and Computer Software, (C) trade secrets and the right to
limit the use or disclosure thereof, (D) copyrights in all works, including
software programs and mask works, (E) domain names, and (F) the intellectual
property licensed from Dr. Dennis J. Hegyi (collectively "INTELLECTUAL
PROPERTY"), except where the failure to own or have the valid right to use the
Intellectual Property could not reasonably be expected to have a Company
Material Adverse Effect, (ii) all grants, registrations and applications for
Intellectual Property that are used in and are material to the conduct of the
businesses of the Company as currently conducted (A) are valid, subsisting, in
proper form and, to the Knowledge of the Company, have been duly maintained,
including the submission of all necessary filings and fees in accordance with
the legal and administrative requirements of the appropriate jurisdictions and
(B) have not lapsed, expired or been abandoned, (iii) to the Knowledge of the
Company, (A) there are no material conflicts with or infringements of any
Intellectual Property by any third party, and (B) the conduct of the businesses
of the Company as currently conducted does not materially conflict with or
infringe any proprietary right of any third party, (iv) there is no claim, suit,
action or proceeding pending or, to the Knowledge of the Company, threatened
against the Company (A) alleging any such conflict or infringement with any
third party's proprietary rights or (B) challenging the ownership, use, validity
or enforceability of the Intellectual Property, except for claims, suits,
actions, proceedings or challenges which could not reasonably be expected to
have a Company Material Adverse Effect, (v) all consents, filings and
authorizations by or with third parties necessary with respect to the
consummation of the transactions contemplated hereby as they may affect the
Intellectual Property have been obtained, except where the
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failure to have obtained such consents, filings or authorizations could not
reasonably be expected to have a Company Material Adverse Effect, (vi) the
Company is not, nor will it be as a result of the execution and delivery of this
Agreement or the performance of its obligations under this Agreement, in breach
of any material license, sublicense or other agreement relating to the
Intellectual Property, except for breaches which could not reasonably be
expected to have a Company Material Adverse Effect, and (vii) no former or
present employees, officers or directors of the Company hold any right, title or
interest directly or indirectly, in whole or in part, in or to any Intellectual
Property. For purposes of this Agreement, the term "COMPUTER SOFTWARE" means (A)
any and all computer programs and applications consisting of sets of statements
and instructions to be used directly or indirectly in computer software or
firmware whether in source code or object code form, (B) databases and
compilations, including without limitation any and all data and collections of
data, whether machine readable or otherwise, (C) all versions of the foregoing
including, without limitation, all screen displays and designs thereof, and all
component modules of source code or object code or natural language code
therefor, and whether recorded on papers, magnetic media or other electronic or
non-electronic device, (D) all descriptions, flowcharts and other work product
used to design, plan, organize and develop any of the foregoing, and (E) all
documentation, including without limitation all technical and user manuals and
training materials, relating to the foregoing.
(c) Section 3.12(c) of the Company Disclosure Letter sets forth all of
the real property owned in fee by the Company or any of its Subsidiaries (the
"OWNED REAL PROPERTY"). The Company or one of its Subsidiaries has good and
valid title to each parcel of Owned Real Property and to each other asset
reflected in the latest balance sheet of the Company included in the Company
Filed Reports (other than as disclosed in the Company Filed Reports, or any such
other asset disposed of or consumed in the ordinary course of business or as
specified in Section 3.12(c) of the Company Disclosure Letter) free and clear of
all Liens except (i) those specified in Section 3.12(c) of the Company
Disclosure Letter or reflected or reserved against in the latest balance sheet
of the Company included in the Company Filed Reports, (ii) taxes and general and
special assessments not in default and payable without penalty and interest or
the validity of which are being contested in good faith by appropriate actions,
(iii) Liens that constitute a statutory landlord lien or a carrier,
warehouseman, mechanic, supplier, materialman, repairman or
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similar Lien arising in the ordinary course of business, (iv) Liens granted in
favor of the senior lenders to the Company or any of its Subsdiaries, (v) rights
of third parties under leases of real property and tangible personal property,
(vi) all easements, covenants, ordinances, zoning regulations, restrictions and
other encumbrances which do not destroy marketability of title, materially
detract from the value or materially interfere with the present use of any Owned
Real Property, and (vii) other Liens that individually or in the aggregate could
not reasonably be expected to have a Company Material Adverse Effect
(collectively, "PERMITTED LIENS").
(d) The Company has heretofore made available to Parent true, correct
and complete copies of all leases, subleases and other agreements (the "REAL
PROPERTY LEASES") under which the Company or any of its Subsidiaries uses or
occupies or has the right to use or occupy, now or in the future, any real
property or facility (the "LEASED REAL PROPERTY"), including without limitation
all modifications, amendments and supplements thereto. Except in each case where
the failure could not reasonably be expected to have, individually or in the
aggregate, a Company Material Adverse Effect: (i) the Company or one of its
Subsidiaries has a valid leasehold interest in each parcel of Leased Real
Property free and clear of all Liens except Permitted Liens and each Real
Property Lease is in full force and effect, (ii) all rent and other sums and
charges due and payable by the Company or its Subsidiaries as tenants thereunder
are current in all material respects, (iii) no termination event or condition or
uncured default of a material nature on the part of the Company or any such
Subsidiary or, to the Knowledge of the Company, the landlord, exists under any
Real Property Lease, and (iv) the Company or one of its Subsidiaries is in
actual possession of each leased Real Property and is entitled to quiet
enjoyment thereof in accordance with the terms of the applicable Real Property
Lease.
3.13. MILLENNIUM COMPLIANCE. (a) To the Knowledge of the Company and
except as disclosed in the Company Filed Reports, achieving Millennium
Compliance for all Technology could not reasonably be expected to have a Company
Material Adverse Effect.
(b) For purposes of this Agreement, "TECHNOLOGY" means all proprietary
technology used in the business of the Company, including without limitation all
Intellectual Property and Computer Software so used, but excluding all
technology that is not located either at the Owned Real Property or Leased Real
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Property or on equipment which is owned, leased or controlled by the Company.
(c) For purposes of this Agreement, the Technology will be "MILLENNIUM
COMPLIANT" if:
(i) The functions, calculations and other computing processes
of the applicable Technology (collectively "PROCESSES"), perform in a
consistent manner and correctly track and account for dates and passage
of time, regardless of the date in time on which the Processes are
actually performed and regardless of the date on which data were input
into the product, whether before, on or after January 1, 2000 and
whether or not the dates are affected by leap years;
(ii) The Technology accepts, calculates, compares, sorts,
extracts, sequences and otherwise processes date inputs and date
values, and returns and displays date values in a consistent manner and
correctly tracks and accounts for dates and the passage of time,
regardless of the dates used, whether before, on or after January 1,
2000;
(iii) The Technology functions without interruptions caused by
the date in time on which the Processes are actually performed or by
the date input to the system, whether before, on or after January 1,
2000;
(iv) The Technology accepts and responds to year input in a
manner that resolves any ambiguities as to century in a defined and
predetermined and appropriate manner; and
(v) The Technology stores and displays date information in
ways that are unambiguous as to the determination of the century.
3.14. CONTRACTS. (a) There have been made available to Parent true,
correct and complete copies of all of the following contracts to which Company
or any of its Subsidiaries is a party or by which any of them is bound
(collectively, the "MATERIAL CONTRACTS"): (i) contracts with any current officer
or director of the Company or any of its Subsidiaries; (ii) contracts (A) for
the sale of any of the material assets of the Company or any of its
Subsidiaries, other than contracts entered into in the ordinary course of
business or (B) for the grant to any person of any preferential rights to
purchase any of its material assets;
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(iii) contracts which restrict the Company or any of its Subsidiaries from
competing in any line of business or with any person in any geographical area
in any material manner or which restrict any other person from competing with
the Company or any of its Subsidiaries in any line of business or in any
geographical area in any material manner; (iv) indentures, credit agreements,
security agreements, mortgages, guarantees, promissory notes and other
contracts relating to the borrowing of money; and (v) all other agreements,
contracts or instruments that are material to the Company and its
Subsidiaries taken as a whole.
(b) All of the Material Contracts are in full force and effect and are
the legal, valid and binding obligations of the Company and/or its Subsidiaries,
enforceable against them in accordance with their respective terms, subject to
applicable bankruptcy, insolvency, reorganization, moratorium and similar Laws
affecting creditors' rights and remedies generally and subject, as to
enforceability, to general principles of equity (regardless of whether
enforcement is sought in a proceeding at law or in equity), except where the
failure of such Material Contracts to be in full force and effect or to be
legal, valid, binding or enforceable against the Company and/or its Subsidiaries
has not had and could not reasonably be expected to have, individually or in the
aggregate, a Company Material Adverse Effect. Except as set forth in Section
3.14 of the Company Disclosure Letter, neither the Company nor any of its
Subsidiaries is in breach or default in any material respect under any Material
Contract nor, to the Knowledge of the Company, is any other party to any
Material Contract in breach or default thereunder in any material respect,
except for such breaches or defaults that have not had and could not,
individually or in the aggregate, reasonably be expected to have a Company
Material Adverse Effect.
3.15. ENVIRONMENTAL MATTERS. (a) Except as disclosed in the Company
Filed Reports, as specified in Section 3.15 of the Company Disclosure Letter or
as could not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect on the Company, to the Knowledge of the Company: (i)
neither the Company nor any of its current or former Subsidiaries has violated
or is in violation of any Environmental Law; (ii) none of the currently or
formerly Owned Real Property or Leased Real Property (including without
limitation soils and surface and ground waters) are contaminated with any
Hazardous Substance in levels or in quantities which require investigation
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or remediation under Environmental Laws; (iii) neither the Company nor any of
its current or former Subsidiaries is liable for any off-site contamination;
(iv) neither the Company nor any of its current or former Subsidiaries has any
liability or remediation obligation under any Environmental Law; (v) no assets
of the Company or any of its current or former Subsidiaries are subject to
pending or, to the Knowledge of the Company, threatened Liens under any
Environmental Law; (vi) the Company and its Subsidiaries have all material
Permits required under any Environmental Law ("ENVIRONMENTAL PERMITS"); (vii)
the Company and its Subsidiaries are in compliance with their respective
Environmental Permits in all material respects; and (viii) neither the Company
nor any of its current or former Subsidiaries has received any claim, notice or
request for information concerning any material violation or alleged violation
of, or any liability or alleged liability under, any Environmental Law.
(b) For purposes of this Agreement, the term (i) "ENVIRONMENTAL LAWS"
means any national, federal, state or local (whether domestic or foreign) Law
relating to: (A) releases or threatened releases of Hazardous Substances or
materials containing Hazardous Substances; (B) the manufacture, handling,
transport, use, treatment, storage or disposal of Hazardous Substances or
materials containing Hazardous Substances; or (C) otherwise relating to
pollution of the environment or the protection of human health, and (ii)
"HAZARDOUS SUBSTANCES" means: (A) those materials, pollutants and/or substances
defined in or regulated under the following federal statutes and their state
counterparts, as each may be amended from time to time, and all regulations
thereunder: the Hazardous Materials Transportation Act, the Resource
Conservation and Recovery Act, the Comprehensive Environmental Response,
Compensation and Liability Act, the Clean Water Act, the Safe Drinking Water
Act, the Atomic Energy Act, the Federal Insecticide, Fungicide and Rodenticide
Act, the Toxic Substances Act and the Clean Air Act; (B) petroleum and petroleum
products including crude oil and any fractions thereof; (C) natural gas,
synthetic gas and any mixtures thereof; (D) radon; (E) any other contaminant;
and (F) any materials, pollutants and/or substance with respect to which any
Governmental Entity requires environmental investigation, monitoring, reporting
or remediation.
3.16 COMPANY BENEFIT PLANS; ERISA COMPLIANCE. (a) Except as disclosed
in the Company Filed Reports or disclosed in Section 3.16(a) of the Company
Disclosure Letter there are no United States bonus, pension, profit sharing,
deferred compensation,
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incentive compensation, stock ownership, stock purchase, stock option, phantom
stock, fringe benefit, retirement, vacation, disability, death benefit,
hospitalization, medical, life, severance or other plan, agreement, arrangement,
policies or understanding, or change of control agreement whether formal or
informal, oral or written, legally binding or not providing benefits to any
current or former employee, officer, director, shareholder, consultant or
independent contractor of the Company or any of its Subsidiaries or to which the
Company or any of its Subsidiaries contributes or is or was obligated to
contribute (collectively, the "COMPANY BENEFIT PLANS") which will include each
"employee benefit plan" (within the meaning of Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA") whether or not
subject to ERISA. For purposes of this Agreement, the term "FOREIGN PLAN" will
refer to each plan, agreement, arrangement or understanding that is subject to
or governed by the Laws of any jurisdiction other than the United States, and
which would have been treated as a Company Benefit Plan had it been a United
States plan, agreement, arrangement or understanding. Section 3.16(a) of the
Company Disclosure Letter contains a true and complete list of all agreements or
plans providing for termination or severance pay to any employee of the Company.
(b) Except as set forth on Section 3.16(b) of the Company Disclosure
Letter, each Company Benefit Plan has been administered in accordance with its
terms, all applicable Laws, including ERISA and the Code, except for any
failures to administer any Company Benefit Plan that could not, individually or
in the aggregate, reasonably be expected to have a Company Material Adverse
Effect. The Company and all Company Benefit Plans are in compliance with the
applicable provisions of ERISA, the Code and all other applicable Laws, except
for any failures to be in such compliance that could not, individually or in the
aggregate, reasonably be expected to have a Company Material Adverse Effect.
Each Company Benefit Plan that is intended to be qualified under Section 401(a)
or 401(k) of the Code is so qualified and each trust established in connection
with any Company Benefit Plan that is intended to be exempt from federal income
taxation under Section 501(a) of the Code is so exempt. No fact or event has
occurred which is reasonably likely to affect adversely the qualified status of
any such Company Benefit Plan or the exempt status of any such trust, except for
any occurrence that could not, individually or in the aggregate, reasonably be
expected to have a Company Material Adverse Effect, and all contributions to,
and payments from, such Company Benefit
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Plans that are required to be made in accordance with such Company Benefit
Plans, ERISA or the Code have been timely made other than any failures that
could not, individually or in the aggregate, reasonably be expected to have a
Company Material Adverse Effect. Each Company Benefit Plan intended to meet the
requirements of Section 501(c)(9) of the Code meets such requirements in all
material respects and provides no disqualified benefits (as defined in
Section 4976(b) of the Code).
(c) The Internal Revenue Service (the "IRS") has issued favorable
determination letters with respect to the qualification of each qualified
Company Benefit Plan and related trust, and the IRS has not taken any action to
revoke any such letter and nothing has occurred, whether by action or failure to
act, that could reasonably be expected to cause the loss of such qualification.
The qualified Company Benefit Plans and trusts are set forth in Section 3.16(c)
of the Company Disclosure Letter.
(d) There are no leased employees within the meaning of Section 414(n)
of the Code who perform services for the Company or any of its Subsidiaries.
(e) No Company Benefit Plan is or at any time was (i) subject to Title
IV of ERISA; (ii) subject to the minimum funding standards of Section 302 of
ERISA or Section 412 of the Code; (iii) a "multiemployer plan" within the
meaning of Section 3(37) or 4001(a)(13) of ERISA or Section 414(f) of the Code;
or (iv) a "multiple employer plan" within the meaning of Section 413(c) of the
Code.
(f) No Company Benefit Plan provides medical benefits (whether or not
insured) with respect to current or former employees or officers or directors
after retirement or other termination of service.
(g) Except for Company Benefit Plans set forth on Section 3.16(g) of
the Company Disclosure Letter, the consummation of the transactions contemplated
by this Agreement will not, either alone or in combination with another event,
(i) entitle any current or former employee, officer or director of the Company
to severance pay, unemployment compensation or any other payment, except as
expressly provided in this Agreement, or (ii) accelerate the time of payment or
vesting, or increase the amount of compensation due any such employee, officer
or director.
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(h) Except for Company Benefit Plans set forth on Section 3.16(h) of
the Company Disclosure Letter, neither the Company nor any of its Subsidiaries
is a party to any agreement, contract or arrangement (including this Agreement)
that could result, separately or in the aggregate, in the payment of any "excess
parachute payments" within the meaning of Section 280G of the Code, or
accelerate or provide any other rights or benefits to any present or former
employee of the Company or any of its Subsidiaries. No Company Benefit Plan
provides for the reimbursement of excise taxes under Section 4999 of the Code or
any income taxes under the Code.
(i) With respect to each Company Benefit Plan, the Company has
delivered or made available to Parent a true and complete copy of: (A) each
writing constituting a part of such Company Benefit Plan, including, without
limitation, all Company Benefit Plan documents, and trust agreements; (B) the
most recent Annual Report (Form 5500 Series) and accompanying schedule, if any;
(C) the most recent annual financial report, if any; (D) the most recent
actuarial report, if any; and (E) the most recent determination letter from the
IRS, if any. Except as specifically provided in the foregoing documents
delivered or made available to Parent, there are no amendments to any Company
Benefit Plan that have been adopted or approved nor has the Company or any of
its Subsidiaries undertaken to make any such amendments or to adopt or approve
any new Company Benefit Plan.
(j) Except as set forth on Section 3.16(j) of the Company Disclosure
Letter, there are no pending or, to the Knowledge of the Company, threatened
claims (other than claims for benefits in the ordinary course), lawsuits or
arbitrations that have been asserted or instituted, or to the Company's
knowledge, no set of circumstances exists that may reasonably give rise to a
claim or lawsuit, against the Company Benefit Plans, any fiduciaries thereof
with respect to their duties to the Company Benefit Plans or the assets of any
of the trusts under any of the Company Benefit Plans that could reasonably be
expected to result in any liability of the Company or any of its Subsidiaries to
the United States Department of Treasury, the United States Department of Labor,
any Company Benefit Plan or any participant in a Company Benefit Plan, other
than any liability that could not, individually or in the aggregate, reasonably
be expected to have a Company Material Adverse Effect.
(k) With respect to each a Foreign Plan: (A) all amounts required to be
reserved under each book reserved Foreign Plan
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have been so reserved in accordance with reasonable accounting practices
prevailing in the country where such Foreign Plan is established; (B) each
Foreign Plan required to be registered with a Governmental Entity has been
registered, has been maintained in good standing with the appropriate
Governmental Entities, and has been maintained and operated in accordance with
its terms and applicable Law; and (C) the fair market value of the assets of
each funded Foreign Plan that is a defined pension plan (or termination
indemnity plan), and the liability of each insurer for each Foreign Plan that is
a defined benefit pension plan (or termination indemnity plan) and is funded
through insurance or the book reserve established for each Foreign Plan that is
a defined benefit pension plan (or termination indemnity plan) that utilizes
book reserves, together with any accrued contributions, is sufficient to procure
or provide for the liability for accrued benefits with respect to those current
and former employees of the Company and any of its Subsidiaries that participate
in such Foreign Plan according to the reasonable actuarial or other applicable
assumptions and valuations most recently used to determine employer
contributions to or the funded status or book reserve of such Foreign Plans.
(l) For purposes of this Section 3.16(l), the term "employee" will be
considered to include individuals rendering personal services to the Company or
any of its Subsidiaries as independent contractors.
(m) With respect to each Company Benefit Plan, there have been no
prohibited transactions or breaches of any of the duties imposed on
"fiduciaries" (within the meaning of Section 3(21) of ERISA) by ERISA with
respect to the Company Benefit Plans that could reasonably be expected to result
in any liability or excise tax under ERISA or the Code other than any liability
or Tax that could not, individually or in the aggregate, reasonably be expected
to have a Company Material Adverse Effect.
(n) All trusts providing funding for Company Benefit Plans that are
intended to comply with Section 501(c)(9) of the Code are exempt from federal
income taxation and, together with any other welfare benefit funds (as defined
in Section 419(e)(1) of the Code) maintained in connection with any of the
Company Benefit Plans, have been operated and administered in compliance with
all applicable requirements such that neither the Company or any of its
Subsidiaries, any Company Benefit Plan nor such trust or fund is subject to any
taxes, penalties or other liabilities imposed as a consequence of failure to
comply with such
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requirements other than any liability or Tax that could not, individually or in
the aggregate, reasonably be expected to have a Company Material Adverse Effect.
(o) All contributions, transfers, and payments in respect of any
Company Benefit Plan, other than transfers incident to an incentive stock option
plan within the meaning of Section 422 of the Code, have been or are fully
deductible under the Code.
(p) All (i) insurance premiums required to be paid with respect to,
(ii) benefits, expenses, and other amounts due and payable under, and (iii)
contributions, transfers, or payments required to be made by the Company to, any
Company Benefit Plan prior to the Closing Date will have been paid, made or
accrued on or before the Closing Date.
(q) With respect to any insurance policy that provides funding for
benefits under any Company Benefit Plan, to the Knowledge of the Company, no
insurance company issuing any such policy is in receivership, conservatorship,
liquidation or similar proceeding and, to the Knowledge of the Company, no such
proceedings with respect to any insurer are imminent.
(r) The Financial Statements contain adequate accruals for (i) bonuses,
sales commissions and vacation pay earned but not paid as of the date of this
Agreement and (ii) incurred but unpaid claims under Company Benefit Plans not
funded by insurance.
(s) Except as disclosed in Section 3.16(s) of the Company Disclosure
Letter, the disallowance of a deduction under Section 162(m) of the Code for
employee remuneration will not apply to any amount paid or payable by the
Company or any Subsidiary of the Company under any contract, Company Benefit
Plan, program, arrangement or understanding currently in effect.
(t) Neither the Company nor any of the Company's affiliates has any
liability with respect to any "employee benefit plans" (within the meaning of
Section 3(3) of ERISA) previously maintained or contributed to by the Company,
any of the Company's affiliates, any other trade or business which together with
the Company is treated by ERISA or the Code as a single employer, or any
predecessor of the Company, or to which the Company, any of the Company's
affiliates, any such trade or business or any such predecessor previously had an
obligation to contribute.
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3.17. STATE TAKEOVER STATUTES. The Company Board has approved the
Offer, the Merger, this Agreement and the transactions contemplated hereby and
such approval is sufficient to render inapplicable to the Offer, the Merger,
this Agreement, the Shareholders Agreement, the Subscription Agreements and the
transactions contemplated hereby and thereby, the limitation on control share
acquisitions and business combinations contained in Chapters 42 and 43 of the
IBCL (or any similar provision). Neither Chapter 42 of the IBCL nor any other
"fair price," "merger moratorium," "control share acquisition" or other
anti-takeover statute or similar statute or regulation applies or purports to
apply to the Offer, the Merger, this Agreement, the Shareholders Agreement, the
Subscription Agreements or any of the transactions contemplated hereby or
thereby.
3.18. VOTING REQUIREMENTS. The affirmative vote of the holders of a
majority of the issued and outstanding Shares, voting as a single class, at the
Company Shareholders Meeting to adopt this Agreement and approve the Merger
("COMPANY SHAREHOLDER APPROVAL") is the only vote of the holders of any class or
series of the Company's capital stock necessary to approve and/or adopt this
Agreement and the Shareholders Agreement and the transactions contemplated
hereby and thereby and to approve the Merger.
3.19. NO BROKERS. The Company has not entered into any
contract, arrangement or understanding with any Person or firm
which may result in the obligation of the Company or Parent to pay any
investment banker's or finder's fees, brokerage or agent's commissions or other
like payments in connection with the negotiations leading to this Agreement or
the consummation of the transactions contemplated hereby, except that the
Company has retained Company Financial Adviser as its financial advisor, the
arrangements with which have been disclosed to Parent and Purchaser prior to the
date hereof. Other than the foregoing arrangements, none of the executive
officers of the Company is aware of any claim for payment of any investment
banker's or finder's fees, brokerage or agent's commissions or other like
payments in connection with the negotiations leading to this Agreement or the
consummation of the transactions contemplated hereby. The Company or, if the
Effective Time occurs, the Surviving Corporation, will pay all amounts owed
pursuant to the foregoing arrangements.
3.20. OPINION OF COMPANY FINANCIAL ADVISER. The Company has received
the opinion of Company Financial Adviser to the
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effect that, as of the date hereof, the consideration to be received by the
Shareholders in the Offer and the Merger is fair to the Shareholders from a
financial point of view.
3.21. OFFER DOCUMENTS; PROXY STATEMENT. (a) The proxy statement to be
sent to the Shareholders in connection with a meeting of the Shareholders to
consider the Merger (the "COMPANY SHAREHOLDERS MEETING") or the information
statement to be sent to the Shareholders, as appropriate (such proxy statement
or information statement, as amended or supplemented, is herein referred to as
the "PROXY STATEMENT"), at the date mailed to the Shareholders and at the time
of the Company Shareholders Meeting (i) will comply in all material respects
with the applicable requirements of the Exchange Act and the rules and
regulations thereunder and (ii) will not contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. Neither the Schedule
14D-9 nor any of the information relating to the Company or its Affiliates
provided by or on behalf of the Company specifically for inclusion in the
Schedule 14D-1 or the Offer Documents will, at the respective times the Schedule
14D-9, the Schedule 14D-1 and the other Offer Documents or any amendments or
supplements thereto are filed with the SEC and are first published, sent or
given to Shareholders, contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary in order
to make the statements made therein, in light of the circumstances under which
they were made, not misleading. No representation or warranty is made by the
Company with respect to any Parent SEC Information.
3.22. THE COMPANY RIGHTS AGREEMENT. The Company Rights
Agreement has been amended (the "COMPANY RIGHTS PLAN AMENDMENT") as set forth in
Section 3.22 of the Company Disclosure Letter to, among other things, (i) render
the Company Rights Agreement inapplicable to the Offer, the Merger and the other
transactions contemplated hereby and the Shareholders Agreement and (ii) ensure
that (A) neither Parent nor any of its Subsidiaries nor any of its permitted
assignees or transferees is an Acquiring Person (as defined in the Company
Rights Agreement) pursuant to the Company Rights Agreement and (B) a
Distribution Date or Share Acquisition Date (in each case as defined in the
Company Rights Agreement) does not occur by reason of the execution of this
Agreement or the Shareholders Agreement, the commencement or
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completion of the Offer, the consummation of the Merger or the other
transactions contemplated hereby or thereby.
IV. REPRESENTATIONS AND WARRANTIES OF PARENT AND PURCHASER
Each of Parent and Purchaser represents and warrants to the Company as
follows:
4.1. EXISTENCE; GOOD STANDING; CORPORATE AUTHORITY. Each of Parent and
Purchaser is a corporation duly incorporated, validly existing and in good
standing (to the extent such a concept exists) under the laws of the
jurisdiction of its incorporation or organization. Parent is duly licensed or
qualified to do business as a foreign corporation and is in good standing in
each jurisdiction in which the character of the properties owned or leased by it
or in which the transaction of its business makes such qualification necessary,
except where the failure to be so qualified or to be in good standing could not
reasonably be expected to have a Parent Material Adverse Effect. A "PARENT
MATERIAL ADVERSE EFFECT" means any change, effect, event or condition that has
had or could reasonably be expected to (i) have a material adverse effect on the
business, results of operations or financial condition of Parent, Purchaser or
Parent's Subsidiaries, taken as a whole, or (ii) prevent or materially delay
Parent's or Purchaser's ability to consummate the transactions contemplated
hereby. Parent has all requisite corporate power and authority to own, operate
and lease its properties and carry on its business as now conducted. The copies
of the articles of incorporation and bylaws or equivalent organizational
documents of Parent and Purchaser previously made available to the Company are
true and correct.
4.2. AUTHORIZATION, VALIDITY AND EFFECT OF AGREEMENT. Each of Parent
and Purchaser has the requisite corporate power and authority to execute and
deliver this Agreement, the Shareholders Agreement and all agreements and
documents contemplated hereby and thereby to be executed respectively by it.
This Agreement, the Shareholders Agreement, the Offer, the Merger and the
consummation by Parent and Purchaser of the transactions contemplated hereby and
thereby have been duly and validly authorized by the respective Boards of
Directors of Parent and Purchaser and by Parent as sole shareholder of
Purchaser, and no other corporate action on the part of Parent and Purchaser is
necessary to authorize this Agreement, the Shareholders Agreement, the Offer and
the Merger or to consummate the transactions contemplated hereby or thereby
other than Parent
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Shareholder Approval. For purposes of this Agreement, "PARENT SHAREHOLDER
APPROVAL" means, to the extent required by applicable Law and the rules of the
London Stock Exchange, the authorization and approval by a majority of the
holders of ordinary shares of Parent of (a) this Agreement, the Shareholders
Agreement, the Subscription Agreement and the transactions contemplated hereby
and thereby, (b) the increase in the authorized share capital of Parent to the
extent necessary to facilitate the transactions contemplated hereby and by the
Subscription Agreements, and (c) the Directors of Parent to allot securities
within the meaning of Section 80 of the Companies Act of 1985 of England and
Wales, as amended, to the extent necessary to facilitate the transactions
contemplated hereby and by the Subscription Agreements. This Agreement and the
Shareholders Agreement constitute, and all agreements and documents contemplated
hereby to be executed and delivered by Parent or Purchaser (when executed and
delivered pursuant hereto) will constitute, the valid and binding obligations of
Parent or Purchaser, as the case may be, enforceable respectively against them
in accordance with their respective terms.
4.3. NO CONFLICT; REQUIRED FILINGS AND CONSENTS. (a) The execution and
delivery of this Agreement and the Shareholders Agreement by Parent and
Purchaser do not, and the consummation by Parent and Purchaser of the
transactions contemplated hereby and thereby will not, (i) conflict with or
violate the articles of incorporation or bylaws of Parent or Purchaser, (ii)
subject to making the filings and obtaining the approvals identified in Section
4.3(b), conflict with or violate any Law or Order applicable to Parent or any of
its Subsidiaries or by which any property or asset of Parent or any of its
Subsidiaries is bound or affected, or (iii) subject to making the filings,
obtaining the approvals and effecting any other matters identified in Section
4.3(b), result in any breach of or constitute a default (or an event which with
notice or lapse of time or both would become a default) under, result in the
loss of a material benefit under, or give to others any right of termination,
amendment, acceleration, increased payments or cancellation of, or result in the
creation of a Lien on any property or asset of Parent or any of its Subsidiaries
pursuant to, any note, bond, mortgage, indenture, contract, agreement, lease,
license, permit, franchise or other instrument or obligation to which Parent or
any of its Subsidiaries is a party or by which Parent or any of its Subsidiaries
or any property or asset of Parent or any of its Subsidiaries is bound or
affected, except in the case of clauses (ii) and (iii), for any such conflicts,
violations, breaches,
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defaults, events, losses, rights, payments, cancellations, encumbrances or other
occurrences that could not, individually or in the aggregate, reasonably be
expected to have a Parent Material Adverse Effect.
(b) The execution and delivery of this Agreement and the Shareholders
Agreement by Parent and Purchaser do not, and the performance of this Agreement
and the Shareholders Agreement and the consummation of the transactions
contemplated hereby and thereby by either of them will not, require any consent,
approval, authorization or permit of, or filing with or notification to, any
Governmental Entity, except (i) for (A) applicable requirements, if any, of the
Exchange Act, (B) the applicable pre-merger notification requirements of the HSR
Act, if any, and any other required filings with or approvals of foreign
competition authorities, (C) obtaining Parent Shareholder Approval, and (D) the
filing of articles of merger pursuant to the IBCL, and (ii) where failure to
obtain such consents, approvals, authorizations or permits, or to make such
filings or notifications, could not, individually or in the aggregate,
reasonably be expected to have a Parent Material Adverse Effect.
4.4. NO BROKERS. Except for arrangements with Kleinwort Benson
Securities Limited, neither Parent nor Purchaser has entered into any contract,
arrangement or understanding with any Person or firm which may result in the
obligation of the Company to pay any investment banker's or finder's fees,
brokerage or agent's commissions or other like payments in connection with the
negotiations leading to this Agreement or the consummation of the transactions
contemplated hereby. Parent will pay all amounts owed to Kleinwort Benson
Securities Limited, subject to Section 7.5(b).
4.5. OFFER DOCUMENTS; PROXY STATEMENT. None of the information supplied
by Parent, Purchaser, their respective officers, directors, representatives,
agents or employees, for inclusion in the Proxy Statement, or in any amendments
thereof or supplements thereto, will, on the date the Proxy Statement is first
mailed to Shareholders or at the time of the Company Shareholders Meeting,
contain any statement which, at such time and in light of the circumstances
under which it will be made, will be false or misleading with respect to any
material fact, or will omit to state any material fact necessary in order to
make the statements therein not false or misleading or necessary to correct any
statement in any earlier communication with respect to the solicitation of
proxies for the Company Shareholders
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Meeting which has become false or misleading. Neither the Offer Documents nor
any amendments thereof or supplements thereto will, at any time the Offer
Documents or any such amendments or supplements are filed with the SEC or first
published, sent or given to the Shareholders, contain any untrue statement of a
material fact or omit to state any material fact necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading. Notwithstanding the foregoing, Parent and Purchaser do not make
any representation or warranty with respect to any Company SEC Information.
4.6. FINANCING. Parent and Purchaser have available funds and financing
and underwriting commitments (the "COMMITMENTS") for funds which are, in the
aggregate, sufficient for the purchase of the outstanding Shares pursuant to the
Offer and the Merger and to perform their respective obligations under this
Agreement (the funding of such amounts, the "FINANCING"). As of the date of this
Agreement, such commitments have not been withdrawn and, to the Knowledge of
Parent, there are no facts or circumstances existing as of the date of this
Agreement that would result in any of the conditions to funding such commitments
not being satisfied.
V. COVENANTS
5.1. CONDUCT OF BUSINESS. (a) CONDUCT OF BUSINESS BY THE COMPANY.
During the period from the date of this Agreement to the Effective Time, the
Company will, and will cause its Subsidiaries to, carry on their respective
businesses in the usual, regular and ordinary course in substantially the same
manner as heretofore conducted and in compliance in all material respects with
all applicable Laws and, to the extent consistent therewith, use all reasonable
efforts to preserve intact their current business organizations, use reasonable
efforts to keep available the services of their current officers and other key
employees and preserve their relationships with those Persons having business
dealings with them to the end that their goodwill and ongoing businesses will be
unimpaired at the Effective Time. Without limiting the generality or effect of
the foregoing, except as expressly and specifically described in Section 5.1 of
the Company Disclosure Letter or as expressly provided by this Agreement, during
the period from the date of this Agreement to the Effective Time, the Company
will not, and will not permit any
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of its Subsidiaries to, without the prior written consent of Parent:
(i) other than the Company's regular quarterly dividend of
$0.02 per Share and dividends and distributions (including liquidating
distributions) by a direct or indirect wholly owned Subsidiary of the
Company to its parent, or by a Subsidiary that is partially owned by
the Company or any of its Subsidiaries, provided that the Company or
any such Subsidiary receives or is to receive its proportionate share
thereof, (A) declare, set aside or pay any dividends on, or make any
other distributions in respect of, any of its capital stock, (B) split,
combine or reclassify any of its capital stock or issue or authorize
the issuance of any other securities in respect of, in lieu of or in
substitution for shares of its capital stock, or (C) purchase, redeem
or otherwise acquire any shares of capital stock of the Company or any
of its Subsidiaries or any other securities thereof or any rights,
warrants or options to acquire any such shares or other securities;
(ii) except for the issuance of Shares pursuant to the
exercise of Options that are outstanding on the Measurement Date or
pursuant to the Employee Stock Purchase Plan to the extent Shares have
been paid for with payroll deductions at or prior to the date of this
Agreement, issue, deliver, sell, pledge or otherwise encumber any
shares of its capital stock, any other voting securities or any
securities convertible into, or any rights, warrants or options to
acquire, any such shares, voting securities or convertible securities;
(iii) amend its articles of incorporation, bylaws or other
comparable organizational documents;
(iv) acquire by merging or consolidating with, or by
purchasing a substantial portion of the assets of, or in any other
manner, any business or any corporation, limited liability company,
partnership, joint venture, association or other business organization
or division thereof;
(v) sell, lease, license, mortgage or otherwise encumber or
subject to any Lien or otherwise dispose of any of its properties or
assets, other than (x) in the ordinary course of business consistent
with past practice and (y)
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sales of assets which do not individually or in the aggregate exceed
$200,000;
(vi) (A) 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, or (B) 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;
(vii) make any capital expenditure or capital expenditures
other than capital expenditures set forth in the operating budget of
the Company dated February 4, 1999 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 $200,000;
(viii) make any change to its accounting methods, principles
or practices, except as may be required by generally accepted
accounting principles, or make or change any Tax election or settle or
compromise any material Tax liability or refund;
(ix) except as required by Law or contemplated hereby, enter
into, adopt or amend in any material respect or terminate any Stock
Option Plan or any other agreement, plan or policy involving the
Company or any of its Subsidiaries and one or more of their directors,
officers or employees, or materially change any actuarial or other
assumption used to calculate funding obligations with respect to any
Company pension plans, or change the manner in which contributions to
any Company pension plans are made or the basis on which such
contributions are determined;
(x) except as disclosed in Section 5.1 of the Company
Disclosure Letter, hire or terminate the employment of any executive
officer or key employee or increase the
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compensation of any director, executive officer or other key employee
of the Company or pay any benefit or amount not required by a plan
or arrangement as in effect on the date of this Agreement to any such
Person;
(xi) enter into or amend in any material respect any Material
Contract or enter into any contract or agreement, written or oral, with
any Affiliate, associate or relative of Parent, or make any payment to
or for the benefit of, directly or indirectly, any of the foregoing;
(xii) 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
(xiii) authorize, or commit or agree to take, any of the
foregoing actions.
(b) OTHER ACTIONS. Except as required by Law, neither the Company, on
the one hand, nor Parent or Purchaser, on the other hand, will, and will not
permit any of their respective Subsidiaries to, voluntarily take any action that
would, or that could reasonably be expected to, result in (i) any of the
representations and warranties of such party becoming untrue in any material
respect, or (ii) any of the conditions set forth in Annex A or Article VI not
being satisfied.
(c) NOTICE OF CHANGES. Each of the Company and Parent will promptly
advise the other party orally and in writing of (i) any representation or
warranty made by it or, in the case of Parent, it or Purchaser contained in this
Agreement becoming untrue or inaccurate in any material respect, (ii) the
failure by it or, in the case of Parent, it or Purchaser to comply in any
material respect with or satisfy in any material respect any covenant, condition
or agreement to be complied with or satisfied by it under this Agreement, or
(iii) any change or event having, or which, insofar as can reasonably be
foreseen, could reasonably be expected to have, a material adverse effect on
such party or on the truth of their respective representations and warranties or
the ability of the conditions set forth in Annex A or Article VI to be
satisfied; provided, however, that no such notification will affect the
representations, warranties, covenants or agreements of the parties or the
conditions to the obligations of the parties under this Agreement.
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(d) COMPANY SHAREHOLDERS MEETING. (i) The Company will take all action
necessary in accordance with applicable Law and its articles of incorporation
and bylaws to convene a meeting of the Shareholders as promptly as practicable
after the Offer Completion Date to consider and vote upon the approval and
adoption of this Agreement and the Merger. The Company Board will recommend such
approval and adoption and the Company will take all lawful action to solicit
such approval, including without limitation timely mailing any Proxy Statement;
provided, however, that such recommendation (but not such actions to convene the
Company Shareholders Meeting) is subject to any action, including any withdrawal
or change of its recommendation, taken by, or upon authority of, the Company
Board, as the case may be, in the exercise of its good faith judgment based upon
and in conformity with the written opinion of outside counsel (notice of which
will be promptly given to Parent and Purchaser) that such action is required in
order to satisfy the fiduciary duties of the members of the Company Board to the
Shareholders imposed by Law. Without limiting the generality or effect, the
Company's obligations pursuant to the first sentence of this Section 5.1(d) will
not be affected by the commencement, public proposal, public disclosure or
communication to the Company of any Company Takeover Proposal.
(ii) Notwithstanding Section 5.1(d)(i) hereof, in the event that
Parent, Purchaser or any other Subsidiary of Parent acquires at least 90% of the
outstanding Shares pursuant to the Offer or otherwise, the parties hereto agree,
at the request of Parent or Purchaser, to take all necessary and appropriate
action to cause the Merger to become effective in accordance with Section 23-1-
40-4 of the IBCL without a meeting of Shareholders as soon as practicable after
the acceptance for payment and purchase of Shares by Purchaser pursuant to the
Offer.
5.2. NO SOLICITATION. (a) The Company, its affiliates and their
respective officers, directors, employees, representatives and agents will
immediately cease any existing discussions or negotiations, if any, with any
parties with respect to any Company Takeover Proposal. The Company will not, nor
will it permit any of its Subsidiaries to, nor will it authorize or permit any
of its officers, directors or employees or any investment banker, financial
advisor, attorney, accountant or other representative retained by it or any of
its Subsidiaries to, directly or indirectly, (i) solicit, initiate or encourage
(including without limitation by way of furnishing information), or take any
other action designed or reasonably likely to
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facilitate, any inquiries or the making of any proposal which constitutes or
reasonably may give rise to any Company Takeover Proposal or (ii) participate in
any discussions or negotiations regarding any Company Takeover Proposal;
provided, however, that if, at any time prior to the date on which Purchaser
purchases Shares in the Offer (the "OFFER COMPLETION DATE"), the Company Board
determines in good faith, based upon and in conformity with the written opinion
of outside counsel, that failure to do so would result in a breach of its
fiduciary duties to the Shareholders under applicable Law, the Company may, in
response to a Superior Proposal which was not solicited by it and did not
otherwise result from a breach of any provision of this Agreement, (A) furnish
information with respect to the Company and each of its Subsidiaries to any
Person pursuant to a customary confidentiality agreement not more favorable to
the recipient of such information than the Confidentiality Agreement and (B)
participate in negotiations regarding such Superior Proposal. For purposes of
this Agreement, "COMPANY TAKEOVER PROPOSAL" means any inquiry, proposal or offer
from any Person relating to any direct or indirect acquisition or purchase of
20% or more of the assets of the Company and its Subsidiaries or 20% or more of
any class of equity securities of the Company or any of its Subsidiaries, any
tender offer or exchange offer for Shares for any class of equity securities of
the Company or any of its Subsidiaries, or any merger, consolidation, business
combination, recapitalization, liquidation, dissolution or similar transaction
involving the Company or any of its Subsidiaries, other than the transactions
contemplated by this Agreement, or any other transaction that is intended or
could prevent the completion of the transactions contemplated hereby and
"SUPERIOR PROPOSAL" means a bona fide written Company Takeover Proposal that (x)
involves the direct or indirect acquisition or purchase of 50% or more of the
assets of the Company and its Subsidiaries or 50% or more of any class of equity
securities of the Company or any of its Subsidiaries, (y) involves payment of
consideration to the Company's Shareholders and other terms and conditions that,
taken as a whole, are superior to the Offer and the Merger, and (z) is made by a
Person reasonably capable of completing such Company Takeover Proposal, taking
into account the legal, financial, regulatory and other aspects of such Company
Takeover Proposal and the Person making such Company Takeover Proposal.
(b) Except as expressly permitted by this Section 5.2(b), neither the
Company Board nor any committee thereof may (i) withdraw or modify, or propose
publicly to withdraw or
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modify, in a manner adverse to Parent or Purchaser, the approval or
recommendation by the Company Board or such committee of the Offer, the Merger
or this Agreement, (ii) approve or recommend, or propose publicly to approve or
recommend, any Company Takeover Proposal,(iii) cause the Company to enter into
any letter of intent, agreement in principle, acquisition agreement or other
similar agreement related to any Company Takeover Proposal (each, a "COMPANY
ACQUISITION AGREEMENT"), or (iv) release any third party from, or waive any
provisions of, any confidentiality or standstill agreement to which the Company
is a party. Notwithstanding the foregoing, in the event that prior to the Offer
Completion Date, the Company Board determines in good faith, after the Company
has received a Superior Proposal and based upon and in conformity with the
written opinion of outside counsel, that failure to do so would result in a
breach of its fiduciary duties to the Shareholders under applicable Law, the
Company Board may, subject to Section 7.5(b), withdraw or modify its approval or
recommendation of the Offer, the Merger or this Agreement, approve or recommend
a Superior Proposal or terminate this Agreement pursuant to Section 7.3(c),
provided, however, that not less than five business days prior to such
termination, the Company will notify Parent of its intention to terminate this
Agreement pursuant to this Section 5.2(b) and Section 7.3(c) and will cause its
financial and legal advisers to negotiate in good faith with Parent and Parent's
financial and legal advisers during such five-day period to make such
adjustments in the terms and conditions of this Agreement as are acceptable to
Parent and would cause such Company Takeover Proposal not to be a Superior
Proposal.
(c) In addition to the obligations of the Company set forth in Sections
5.2(a) and (b), the Company will (i) immediately advise Parent orally and in
writing of any request for information or of any Company Takeover Proposal, the
material terms and conditions of such request or Company Takeover Proposal and
the identity of the Person making such request or Company Takeover Proposal and
(ii) keep Parent informed of the status and details (including amendments or
proposed amendments) of any such request or Company Takeover Proposal.
(d) Nothing contained in this Section 5.2 will prohibit the Company
from taking and disclosing to its Shareholders a position contemplated by Rule
14e-2(a) promulgated under the Exchange Act; provided, however, that neither the
Company nor the Company Board nor any committee thereof may, except as expressly
permitted by Section 5.2, withdraw or modify, or propose publicly to withdraw
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or modify, its position with respect to the Offer, this Agreement or the Merger
or approve or recommend, or propose publicly to approve or recommend, a Company
Takeover Proposal.
5.3. FILINGS, REASONABLE EFFORTS. (a) Upon the terms and subject to the
conditions set forth in this Agreement, each of the parties will use all
reasonable efforts to take, or cause to be taken, all actions, and to do, or
cause to be done, and to assist and cooperate with the other parties in doing,
all things, necessary, proper or advisable to consummate and make effective, in
the most expeditious manner practicable, the Offer, the Merger and the other
transactions contemplated by this Agreement, including without limitation, (i)
obtaining of all necessary actions or nonactions, waivers, consents and
approvals from Governmental Entities and making of all necessary registrations
and filings (including filings with Governmental Entities) and taking of all
reasonable steps as may be necessary to obtain an approval or waiver from, or to
avoid an action or proceeding by, any Governmental Entity, (ii) obtaining of all
necessary consents, approvals or waivers from third parties, and (iii) execution
and delivery of any additional instruments necessary to consummate the
transactions contemplated by, and to fully carry out the purposes of, this
Agreement. Nothing set forth in this Section 5.3 will limit or affect actions
permitted to be taken pursuant to Section 5.2.
(b) In connection with and without limiting the foregoing, the Company
and Parent will, and Parent will cause Purchaser to, (i) take all action
necessary to ensure that no state takeover statute or similar statute or
regulation is or becomes applicable to the Offer, the Merger or any of the other
transactions contemplated hereby, and (ii) if any state takeover statute or
similar statute or regulation becomes applicable thereto, take all action
necessary to ensure that the Offer and the Merger and such other transactions
may be consummated as promptly as practicable on the terms contemplated hereby
and otherwise to minimize the effect of such statute or regulation thereon.
(c) Notwithstanding any other provision hereof, in no event will Parent
be required to agree to any divestiture, hold-separate or other requirement in
connection with this Agreement or any of the transactions contemplated thereby.
5.4. INSPECTION OF RECORDS. (a) From the date hereof to the Effective
Time, the Company will (i) allow all designated officers, attorneys, accountants
and other representatives of
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Parent reasonable access at all reasonable times to the offices, records and
files, correspondence, audits and properties, as well as to all information
relating to commitments, contracts, titles and financial position, or otherwise
pertaining to the business and affairs, of the parties and their respective
Subsidiaries, as the case may be and (ii) furnish to Parent and its counsel,
financial advisors, auditors and other authorized representatives such financial
and operating data and other information as such Persons may reasonably request.
(b) Subject to the requirements of applicable Law, and except for such
actions as are necessary to disseminate the Offer Documents and any other
documents necessary to consummate the Offer and the Merger, the parties will,
and will instruct each of their respective Affiliates, associates, partners,
employees, agents and advisors to, hold in confidence all such information as is
confidential or proprietary, will use such information only in connection with
the Offer and the Merger and, if this Agreement is terminated in accordance with
its terms, will deliver promptly to the other (or destroy and certify to the
other the destruction of) all copies of such information (and any copies,
compilations or extracts thereof or based thereon) then in their possession or
under their control.
5.5. PUBLICITY. The initial press release in the United States relating
to this Agreement will be a joint press release and thereafter the Company and
Parent will, subject to their respective legal obligations (including
requirements of stock exchanges and other similar regulatory bodies), consult
with each other, and use reasonable efforts to agree upon the text of any press
release, before issuing any such press release or otherwise making public
statements with respect to the transactions contemplated hereby and in making
any filings with any Governmental Entity or with any national securities
exchange with respect thereto.
5.6. PROXY STATEMENT. If required by applicable Law, Parent and the
Company will cooperate and promptly prepare and Parent will file with the SEC as
soon as practicable after the Offer Completion Date the Proxy Statement, and
promptly thereafter will mail the Proxy Statement to the Shareholders. Any Proxy
Statement will contain the recommendation of the Company Board that the
Shareholders approve and adopt this Agreement and approve the Merger and the
other transactions contemplated hereby. The Company agrees not to mail the Proxy
Statement to the Shareholders until Parent confirms that the information
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provided by Parent and Purchaser continues to be accurate. If at any time prior
to the Company Shareholders Meeting any event or circumstance relating to the
Company or any of its Subsidiaries or Affiliates, or its or their respective
officers or directors, should be discovered by the Company that is required to
be set forth in a supplement to any Proxy Statement, the Company will promptly
inform Parent and Purchaser to supplement such Proxy Statement and mail such
supplement to the Shareholders.
5.7. FURTHER ACTIONS. (a) Each party hereto will, subject
to the fulfillment at or before the Effective Time of each of the conditions of
performance set forth herein or the waiver thereof, perform such further acts
and execute such documents as may be reasonably required to effect the Merger.
(b) If, at any time after the Effective Time, the Surviving Corporation
considers or is advised that any deeds, bills of sale, assignments, assurances
or any other actions or things are necessary or desirable to vest, perfect or
confirm of record or otherwise in the Surviving Corporation its right, title or
interest in, to or under any of the rights, properties or assets of Purchaser or
the Company or otherwise to carry out this Agreement, the officers and directors
of the Surviving Corporation will be authorized to execute and deliver, in the
name and on behalf of Purchaser or the Company, all such deeds, bills of sale,
assignments and assurances and to take and do, in the name and on behalf of
Purchaser or the Company, all such other 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 this Agreement.
5.8. INSURANCE; INDEMNITY. (a) All rights to indemnification and
exculpation from liabilities for acts or omissions occurring at or prior to the
Effective Time existing in favor of the current or former directors or officers
of the Company or each of its Subsidiaries as provided in their respective
articles of incorporation or bylaws (or comparable organizational documents)
will be assumed by the Surviving Corporation and the Surviving Corporation will
be directly responsible for such indemnification, without further action, as of
the Effective Time and will continue in full force and effect in accordance with
their respective terms. In addition, from and after the Effective Time,
directors and officers of the Company who become or remain directors or officers
of the Surviving Corporation will be entitled to the same indemnity rights and
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protections (including those provided by directors' and officers' liability
insurance) of the Surviving Corporation. Notwithstanding any other provision
hereof, the provisions of this Section 5.8 (i) are intended to be for the
benefit of, and will be enforceable by, each indemnified party, his or her heirs
and his or her representatives and (ii) are in addition to, and not in
substitution for, any other rights to indemnification or contribution that any
such Person may have by contract or otherwise.
(b) The Surviving Corporation will maintain in effect for not less than
six years after the Effective Time policies of directors' and officers'
liability insurance equivalent in all material respects to those maintained by
or on behalf of the Company and its Subsidiaries on the date hereof (and having
at least the same coverage and containing terms and conditions which are no less
advantageous to the Persons currently covered by such policies as insured) with
respect to matters existing or occurring at or prior to the Effective Time;
provided, however, that if the aggregate annual premiums for such insurance at
any time during such period exceed 200% of the per annum rate of premium
currently paid by the Company and its Subsidiaries for such insurance on the
date of this Agreement, then the Surviving Corporation will provide the maximum
coverage that is then available at an annual premium equal to 200% of such rate.
5.9. EMPLOYEE BENEFITS MATTERS. (a) On and after the Effective Time,
the Surviving Corporation will promptly pay or provide when due all compensation
and benefits as provided pursuant to the terms of, and to honor in accordance
with their current existing terms (except to the extent amended or terminated in
accordance with such terms), all compensation arrangements, employment
agreements and employee or director benefit plans, programs and policies in
existence as of the date hereof for all employees (and former employees) and
directors (and former directors) of the Company and its Subsidiaries.
(b) The Surviving Corporation, for the period commencing at the
Effective Time and ending on December 31, 1999, will provide employee benefits
under plans, programs and arrangements which, in the aggregate, will provide
benefits to the employees of the Surviving Corporation and its Subsidiaries
(other than employees covered by a collective bargaining agreement) that are no
less favorable in the aggregate than those provided pursuant to the plans,
programs and arrangements (other than those related to the equity securities of
the Company) of the Company and its
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Subsidiaries in effect on the date hereof; PROVIDED, HOWEVER, that nothing
herein will prevent the amendment or termination of any specific plan, program
or arrangement except that the Company's severance plan/policy will not be
amended to reduce the benefits thereunder with respect to terminations of
employees occurring before December 31, 1999, require that the Surviving
Corporation provide or permit investment in the securities of Parent, the
Company or the Surviving Corporation or interfere with the Surviving
Corporation's right or obligation to make such changes as are necessary to
comply with applicable Law.
(c) Employees of the Surviving Corporation will be given credit for all
service with the Company and its Subsidiaries, to the same extent as such
service was credited for such purpose by the Company, under each employee
benefit plan, program, or arrangement of Parent in which such employees are
eligible to participate for all purposes, except for purposes of benefit
accrual, under defined benefit pension plans, and, in all cases, except to the
extent such credit would result in duplication of benefits. If employees of the
Surviving Corporation and its Subsidiaries become eligible to participate in a
medical, dental or health plan of Parent or its Subsidiaries, Parent will cause
such plan to (i) waive any preexisting condition limitations for conditions
covered under the applicable medical, health or dental plans of the Company and
its Subsidiaries and (ii) honor any deductible and out of pocket expenses
incurred by the employees and their beneficiaries under such plans during the
portion of the calendar year prior to such participation. Notwithstanding the
foregoing, in no event will the employees be entitled to any credit for service,
deductibles or out of pocket expenses to the extent that it would result in a
duplication of benefits with respect to the same period of service, deductible
or out of pocket expenses.
(d) Nothing in this Section 5.9 will require the continued employment
of any person.
5.10. CONVEYANCE TAXES. The Company and Parent will cooperate in the
preparation, execution and filing of all returns, questionnaires, applications
or other documents regarding any real property transfer or gains, sales, use,
transfer, value added, stock transfer and stamp taxes, any transfer, recording,
registration and other fees and any similar taxes which become payable in
connection with the transactions contemplated by this Agreement that are
required or permitted to be filed on or before the Effective Time and each party
will pay
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any such tax or fee which becomes payable by it on or before the Effective Time.
5.11. COMPANY RIGHTS AGREEMENT. The Company Board will take all further
action (in addition to that referred to in Section 3.22) reasonably requested in
writing by Parent (including redeeming the Company Rights immediately prior to
the Effective Time or amending the Company Rights Agreement) in order to render
the Company Rights inapplicable to the Offer and the Merger and the other
transactions contemplated hereby to the extent provided herein and the Company
Rights Plan Amendment. Except as provided above with respect to the Offer, the
Merger and the other transactions contemplated hereby, in connection with
actions permitted under Section 5.2(b), the Company Board will not (a) amend the
Rights Agreement or (b) take any other action with respect to, or make any
determination under, the Company Rights Agreement, including a redemption of the
Company Rights or any action to facilitate a Company Takeover Proposal.
5.12. PARENT SHAREHOLDERS' MEETING. Parent will use its reasonable best
efforts to convene an extraordinary general meeting of its shareholders (the
"PARENT SHAREHOLDERS MEETING") to be duly called and held as soon as reasonably
practicable for the purpose of obtaining Parent Shareholder Approval. Subject to
fiduciary obligations and requirements of applicable Law under the terms of this
Agreement, the Board of Directors of the Parent will recommend to its
shareholders each of the matters required for Parent Shareholder Approval and
will use reasonable efforts to solicit such approval.
5.13. VOTING OF SHARES. Parent will, and will cause Purchaser to, vote
all Shares owned by Parent, Purchaser or any of their controlled affiliates in
favor of the approval and adoption of this Agreement, the Offer, the Merger and
any other transactions contemplated by this Agreement at the Company
Shareholders Meeting.
5.14. FINANCING. Parent will use its reasonable best efforts to obtain
the Financing. In the event that any portion of the Financing becomes
unavailable, regardless of the reason therefor, Parent will use its reasonable
best efforts to obtain alternative financing, provided, however, that reasonable
best efforts will not be deemed to include acceptance of financial or other
terms that Parent determines are not, taken as a whole, at least as favorable in
all material respects to Parent as the terms contained in the Commitments.
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VI. CONDITIONS PRECEDENT
6.1. CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER. The
respective obligations of each party to effect the Merger will be subject to the
fulfillment at or prior to the Closing Date of the following conditions:
(a) Purchaser shall have made, or caused to be made, the Offer and
shall have purchased, or caused to be purchased, the Shares pursuant to the
Offer, provided, that this condition shall be deemed to have been satisfied with
respect to the obligation of Parent and Purchaser to effect the Merger if
Purchaser fails to accept for payment or pay for Shares pursuant to the Offer in
violation of the terms of the Offer or of this Agreement;
(b) This Agreement and the transactions contemplated hereby shall have
been approved in the manner required by applicable Law by the holders of the
issued and outstanding shares of capital stock of the Company; and
(c) No Order or Law enacted, entered, promulgated, enforced or issued
by any court of competent jurisdiction or other Governmental Entity or other
legal restraint or prohibition (collectively, "RESTRAINTS") preventing the
consummation of the Merger shall be in effect.
6.2. CONDITIONS TO OBLIGATION OF PARENT AND PURCHASER TO EFFECT THE
MERGER. The obligation of Parent and Purchaser to effect the Merger will be
subject to the fulfillment at or prior to the Closing Date (or such other date
as may be specified below) of the additional condition that the Company shall
have performed in all material respects its covenants contained in this
Agreement required to be performed on or prior to the Closing Date.
VII. TERMINATION
7.1. TERMINATION BY MUTUAL CONSENT. This Agreement may be terminated at
any time prior to the Effective Time, whether or not Company Shareholder
Approval or Parent Shareholder Approval has been obtained, by the mutual consent
of Parent and the
Company.
7.2. TERMINATION BY EITHER PARENT OR COMPANY. This Agreement may be
terminated by action of the Board of Directors of either Parent or the Company,
whether or not Company
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Shareholder Approval or Parent Shareholder Approval has been obtained, if (a)
the Offer shall not have been consummated by June 30, 1999 (the "OUTSIDE DATE");
provided, however, that no party may terminate this Agreement pursuant to this
Section 7.2(a) if such party's failure to fulfill any of its obligations under
this Agreement shall have been the reason that the Offer Completion Date shall
not have occurred on or before said date, (b) any Governmental Entity shall have
issued a Restraint or taken any other action permanently enjoining, restraining
or otherwise prohibiting the consummation of the Offer, the Merger or any of the
other transactions contemplated by this Agreement and such Restraint or other
action shall have become final and nonappealable, or (c) 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 Offer
Conditions to be satisfied prior to the Expiration Date or any extension
thereof, provided that any termination described in this Section 7.2 (a) or (c)
will not be effective unless and until the Company shall have paid to Purchaser
the fees and expenses described in Section 7.5(b).
7.3. TERMINATION BY COMPANY. This Agreement may be terminated at any
time prior to the Offer Completion Date, whether or not Parent Shareholder
Approval has been obtained, by action of the Board of Directors of the
Company, if (a) there has been a material breach by Parent or Purchaser of
any representation or warranty contained in this Agreement which is not
curable or, if curable, is not cured by the Outside Date and such breach had
or could reasonably be likely to have a Parent Material Adverse Effect, (b)
there has been a material breach of any of the covenants set forth in this
Agreement on the part of Parent or Purchaser, which breach is not curable or,
if curable, is not cured within 15 calendar days after written notice of such
breach is given by the Company to Parent, or (c) in accordance with Section
5.2(b), provided that any termination described in this Section 7.3(c) will
not be effective unless and until the Company pays to Purchaser the fees and
expenses described in Section 7.5(b).
7.4. TERMINATION BY PARENT. This Agreement may be terminated at
any time prior to the Offer Completion Date, whether or not Parent
Shareholder Approval has been obtained, by Parent, if (a) there has been a
material breach by the Company of any representation or warranty contained in
this Agreement which is not curable or, if curable, is not cured by the
Outside Date and such breach had or could reasonably be likely to have a
52
<PAGE>
Company Material Adverse Effect, (b) there has been a material breach of any
of the covenants set forth in this Agreement on the part of the Company,
which breach is not curable or, if curable, is not cured within 15 calendar
days after written notice of such breach is given by Parent to the Company,
(c) the Board of Directors of the Company shall have (i) withdrawn or
modified in a manner adverse to Parent or Purchaser its approval or
recommendation of this Agreement, the Offer or the Merger or failed to
reconfirm its approval or recommendation within five business days after a
written request to do so, (ii) approved or recommended, or proposed publicly
to approve or recommend, a third-party Company Takeover Proposal to the
Shareholders, (iii) caused the Company to take any action referred to in
Section 5.2 that would have constituted a breach thereof but for the
exceptions thereunder, including without limitation authorizing the Company
to enter into a Company Acquisition Agreement, (iv) approved the breach of
the Company's obligation under Section 5.2, or (v) resolved to take any of
the foregoing actions, (d) 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 shall have become the beneficial owner
of more than 25% of the outstanding Shares (either on a primary or fully
diluted basis), or (e) Parent Shareholder Approval shall not have been
obtained at the Parent Shareholders Meeting, provided that any termination
described in this Section 7.4 (a), (b), (c) or (d) will not be effective
unless and until the Company shall have paid to Purchaser the fees and
expenses described in Section 7.5(b).
7.5. EFFECT OF TERMINATION AND ABANDONMENT; TERMINATION FEE. (a) In the
event of termination of this Agreement pursuant to this Article VII, all
obligations of the parties hereto will terminate, except the obligations of the
parties pursuant to this Section 7.5, the last sentence of Section 1.3, Sections
5.4(b), 8.4 and 8.14. Notwithstanding the foregoing or any other provision of
this Agreement, in the event of termination of this Agreement, nothing herein
will prejudice the ability of the non-breaching party to seek damages from any
other party for any prior deliberate or willful breach of this Agreement,
including without limitation attorneys' fees and the right to pursue any remedy
at law or in equity with respect thereto.
(b)(i) The Company will pay to Purchaser an amount equal to $2.0
million (the "TERMINATION FEE") in any of the following circumstances:
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<PAGE>
(A) This Agreement is terminated at such time that
this Agreement is terminable pursuant to Sections 7.3(c) or 7.4(c); or
(B) This Agreement is terminated by either Parent or
the Company pursuant to Section 7.2(a) or 7.2(c) and at the time of
such termination each of the following is true:
(1) the Minimum Condition shall not have
been satisfied; and
(2) the Company shall not have the right to
terminate this Agreement pursuant to Section 7.3(a) or 7.3(b);
and
(3) the Listing Condition (as defined in
Annex A) and the Shareholder Approval Condition (as
defined in Annex A) shall have been satisfied; or
(C) This Agreement is terminated by Parent pursuant
to Sections 7.4(a), 7.4(b) or 7.4(d), and each of the following occurs:
(1) prior to such termination, a Company
Takeover Proposal is (x) publicly disclosed or has been made
directly to Shareholders generally or (y) any Person
(including without limitation the Company or any of its
Subsidiaries) publicly announces an intention (whether or not
conditional) to make such a Company Takeover Proposal; and
(2) prior to the termination of this
Agreement or within 12 months after the termination of this
Agreement, the Company or a Subsidiary thereof enters into a
Company Acquisition Agreement or closes a Company Takeover
Proposal.
(ii) If this Agreement is terminated in circumstances where a
Termination Fee is then payable, then in any such case the Company will
promptly, but in no event later than two business days after submission of a
request therefor, pay to Parent an amount equal to Parent's documented Expenses,
provided, however, that in no event will the total of the Expenses paid by the
Company pursuant to this Section 7.5(b) plus any Termination Fee paid by the
Company pursuant to this Secton 7.5(b), exceed $7 million.
54
<PAGE>
(iii) If a Termination Fee is payable pursuant to Section 7.5(b)(i)(C),
then the Company will pay the Termination Fee and Expenses to Parent upon the
signing of a Company Acquisition Agreement or, if no Company Acquisition
Agreement is signed, then at the closing (and as a condition to the closing) of
a Company Takeover Proposal. Notwithstanding any other provision hereof, (A) in
no event may the Company enter into a Company Acquisition Agreement unless,
prior thereto, the Company has paid any amount due under Section 7.5(b) or which
will become due under Section 7.5(b), (B) the Company may not terminate this
Agreement under Sections 5.2(b) or 7.3(c) unless prior thereto it has paid all
amounts due under Section 7.5(b) to Parent, (C) all amounts due in the event
that this Agreement is terminated under Section 7.3(c) or 7.4(c) and in
circumstances in which the Company has not entered into a Company Acquisition
Agreement will be payable promptly, but in no event more than two business days
after request therefor is made, and (D) all amounts due under this Section
7.5(b) will be paid on the date due in immediately available funds wire
transferred to the account designated by the Person entitled to such payment.
(iv) This Section 7.5(b) will survive any termination of this
Agreement. For purposes of this Agreement, the term "EXPENSES" means all
out-of-pocket fees, costs and other expenses incurred or assumed by Parent or
Purchaser or any of their Affiliates or incurred on their behalf in connection
with this Agreement or any of the transactions contemplated hereby, including
but not limited to in connection with the negotiation, preparation, execution
and performance of this Agreement, the structuring and financing of the Offer,
the Merger and the other transactions contemplated hereby, or any commitments or
agreements relating to such financing, including, without limitation, fees,
expenses and selling and underwriting commissions or other amounts payable to
any banks, investment banking firms, underwriters, other financial institutions
and other Persons and their respective agents and counsel for arranging,
committing to provide or providing any financing for the Offer, the Merger and
any other transactions contemplated hereby or structuring, negotiating or
advising with respect to such transactions or financing, and all fees and
expenses of counsel, accountants, experts and computer, environmental,
actuarial, insurance and other consultants to Parent or Purchaser.
(v) The Company acknowledges that the agreements contained in this
Section 7.5(b) are an integral part of the transactions
55
<PAGE>
contemplated by this Agreement, and that, without these agreements, Parent and
Purchaser would not enter into this Agreement; accordingly, if the Company fails
promptly to pay any amount due pursuant to this Section 7.5, and, in order to
obtain such payment, Parent or Purchaser commences a suit which results in a
judgment against the Company for any amounts set forth in this Section 7.5(b),
the Company will pay to Parent and Purchaser their costs and expenses (including
attorneys' fees and expenses) in connection with such suit, together with
interest on the amount of the fee at the prime rate of Citibank N.A. in effect
on the date such payment was required to be made.
VIII. GENERAL PROVISIONS
8.1. NONSURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS. All
representations, warranties and agreements in this Agreement or in any
instrument delivered pursuant to this Agreement will terminate at the Effective
Time or the termination of this Agreement pursuant to Article VII, as the case
may be, except that the covenants set forth in Article II and Sections 5.3, 5.8,
5.9 and 5.10 will survive the Effective Time indefinitely or, if applicable, for
the period therein specified and those set forth in the last sentence of Section
1.3 and in Sections 5.4(b), 7.5 and 8.14 will survive termination indefinitely
or, if applicable, for the period therein specified.
8.2. NOTICES. Any notice or other communication required to be given
hereunder will be sufficient if in writing, and sent by facsimile transmission
and by courier service (with proof of service), hand delivery or certified or
registered mail (return receipt requested and first-class postage prepaid),
addressed as follows:
If to Parent or Purchaser:
First Technology PLC
2 Cheapside Court
Buckhurst Road
Ascot
Berkshire SL5 7RF
United Kingdom
Attn: Dr. Fred Westlake
Fax No.: 44-1344-622-773
With copies to:
56
<PAGE>
Jones, Day, Reavis & Pogue
599 Lexington Avenue
New York, New York 10022
Attn: Jere R. Thomson, Esq.
Fax No.: 212-755-7306
If to the Company:
Control Devices, Inc.
228 Northeast Road
Standish, Maine 04084
Attn: Bruce D. Atkinson
Fax No.: 207-642-0111
With copies to:
Sommer & Barnard
4000 Bank One Tower
111 Monument Circle
Indianapolis, Indiana 46204
Attn: James A. Strain, Esq.
Fax No.: 317-236-9802
or to such other address as any party will specify by written notice so given,
and such notice will be deemed to have been delivered as of the date so
telecommunicated, personally delivered or mailed.
8.3. ASSIGNMENT; BINDING EFFECT. Neither this Agreement nor any of the
rights, interests or obligations hereunder will be assigned by any of the
parties hereto (whether by operation of Law or otherwise) without the prior
written consent of the other parties. Subject to the preceding sentence, this
Agreement will be binding upon and will inure to the benefit of the parties
hereto and their respective successors and assigns. Notwithstanding anything
contained in this Agreement to the contrary, except for the provisions of
Section 5.8, nothing in this Agreement, expressed or implied, is intended to
confer on any Person other than the parties hereto or their respective heirs,
successors, executors, administrators and assigns any rights, remedies,
obligations or liabilities under or by reason of this Agreement.
57
<PAGE>
8.4. ENTIRE AGREEMENT. This Agreement, Annex A, Exhibit A, the Company
Disclosure Letter and any documents delivered by the parties in connection
herewith, together with the Confidentiality and Standstill Agreement, effective
as of June 1, 1998, between Parent and the Company (the "CONFIDENTIALITY
AGREEMENT") which will survive the execution and delivery of this Agreement, and
the Shareholders Agreement constitute the entire agreement among the parties
with respect to the subject matter hereof and supersede all prior agreements and
understandings among the parties with respect thereto. No addition to or
modification of any provision of this Agreement will be binding upon any party
hereto unless made in writing and signed by all parties hereto. Notwithstanding
the foregoing, the first paragraph of Section 3 of the Confidentiality Agreement
is hereby amended so as to permit Parent, Purchaser or any of its respective
Affiliates or Representatives (as defined therein) to (a) effect any transaction
permitted or contemplated by this Agreement or the Shareholders Agreement and
(b) take any action otherwise prohibited by the first paragraph of Section 3 of
the Confidentiality Agreement (i) in the event that another Person publicly
announces a Company Takeover Proposal and (ii) after the Offer Completion Date.
Except as provided in the preceding sentence, no provision of this Agreement,
including without limitation Sections 1.3 and 5.4(b), will be deemed to limit
the parties' obligations under the Confidentiality Agreement.
8.5. AMENDMENT. This Agreement may be amended by the parties hereto, by
action taken by their respective Boards of Directors, at any time before or
after approval of matters presented in connection with the Merger by the
Shareholders but after any such Shareholder approval, no amendment will be made
which by Law requires the further approval of the Shareholders without obtaining
such further approval. This Agreement may not be amended except by an instrument
in writing signed on behalf of each of the parties hereto.
8.6. GOVERNING LAW. This Agreement will be governed by and construed in
accordance with the laws of the State of Indiana without regard to its conflict
of laws principles.
8.7. COUNTERPARTS. This Agreement may be executed by the parties hereto
in separate counterparts, each of which when so executed and delivered will be
an original, but all such counterparts will together constitute one and the same
instrument. Each counterpart may consist of a number of copies
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<PAGE>
hereof each signed by less than all, but together signed by all of the parties
hereto.
8.8. HEADINGS. Headings of the Articles and Sections of this Agreement
are for the convenience of the parties only, and will be given no substantive or
interpretive effect whatsoever.
8.9. CERTAIN DEFINITIONS/INTERPRETATIONS. (a) For purposes
of this Agreement:
(i) An "AFFILIATE" of any Person means another Person that
directly or indirectly, through one or more intermediaries, controls,
is controlled by, or is under common control with, such first Person;
(ii) "KNOWLEDGE" of any Person which is not an individual
means the knowledge of any of such Person's executive officers after
reasonable inquiry (in the case of the Company, such executive officers
being Bruce D. Atkinson and Jeffrey Wood); and
(iii) "PERSON" means an individual, corporation, partnership,
limited liability company, joint venture, association, trust,
unincorporated organization or other entity.
(b) When a reference is made in this Agreement to an Article, Section
or Annex, such reference will be to an Article or Section of, or an Annex to,
this Agreement unless otherwise indicated. The table of contents and headings
contained in this Agreement are for reference purposes only and will not affect
in any way the meaning or interpretation of this Agreement. Whenever the words
"include," "includes" or "including" are used in this Agreement, they will be
deemed to be followed by the words "without limitation." The words "hereof,"
"herein" and "hereunder" and words of similar import when used in this Agreement
will refer to this Agreement as a whole and not to any particular provision of
this Agreement. All terms used herein with initial capital letters have the
meanings ascribed to them herein and all terms defined in this Agreement will
have such defined meanings when used in any certificate or other document made
or delivered pursuant hereto unless otherwise defined therein. The definitions
contained in this Agreement are applicable to the singular as well as the plural
forms of such terms and to the masculine as well as to the feminine and neuter
genders of such term. Any agreement, instrument or statute
59
<PAGE>
defined or referred to herein or in any agreement or instrument that is referred
to herein means such agreement, instrument or statute as from time to time
amended, modified or supplemented, including (in the case of agreements or
instruments) by waiver or consent and (in the case of statutes) by succession of
comparable successor statutes and references to all attachments thereto and
instruments incorporated therein. References to a Person are also to its
permitted successors and assigns.
8.10. WAIVERS. Except as provided in this Agreement, no action taken
pursuant to this Agreement, including, without limitation, any investigation by
or on behalf of any party, will be deemed to constitute a waiver by the party
taking such action of compliance with any representations, warranties, covenants
or agreements contained in this Agreement. The waiver by any party hereto of a
breach of any provision hereunder will not operate or be construed as a waiver
of any prior or subsequent breach of the same or any other provision hereunder.
Subject to Section 1.4(b), at any time prior to the Effective Time, any party
hereto may (a) extend the time for the performance of any of the obligations or
other acts of the other parties hereto, (b) waive any inaccuracies in the
representations and warranties contained herein or in any document delivered
pursuant hereto, and (c) waive compliance with any of the agreements or
conditions contained herein. Any such extension or waiver shall be valid if set
forth in an instrument in writing signed by the party or parties to be bound
thereby.
8.11. INCORPORATION OF ANNEX A. Annex A attached hereto is hereby
incorporated herein and made a part hereof for all purposes as if fully set
forth herein.
8.12. SEVERABILITY. Any term or provision of this
Agreement which is invalid or unenforceable in any jurisdiction
will, as to that jurisdiction, be ineffective to the extent of
such invalidity or unenforceability without rendering invalid or unenforceable
the remaining terms and provisions of this Agreement or affecting the validity
or enforceability of any of the terms or provisions of this Agreement in any
other jurisdiction. If any provision of this Agreement is so broad as to be
unenforceable, the provision will be interpreted to be only so broad as is
enforceable.
8.13. ENFORCEMENT OF AGREEMENT. The parties hereto agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement was not performed in accordance with
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<PAGE>
its specific terms or was otherwise breached. It is accordingly agreed that the
parties will be entitled to an injunction or injunctions to prevent breaches of
this Agreement and to enforce specifically the terms and provisions hereof, this
being in addition to any other remedy to which they are entitled at law or in
equity.
8.14. EXPENSES. Except as set forth in Section 7.5, all fees and
expenses incurred in connection with the Offer, the Merger, this Agreement and
the transactions contemplated thereby will be paid by the party incurring such
fees or expenses, whether or not the Merger is consummated, except that each of
Parent and the Company will bear and pay one-half of the costs and expenses
incurred in connection with (i) the filing, printing and mailing of the Proxy
Statement, the Schedule 14D-9, the Schedule 14D-1 and the other Offer Documents
(including SEC filing fees) and (ii) the filings of the premerger notification
and report forms under the HSR Act (including filing fees).
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IN WITNESS WHEREOF, the parties have executed this Agreement and caused
the same to be duly delivered on their behalf on the day and year first written
above.
CONTROL DEVICES, INC.
By: /s/ Bruce D. Atkinson
-----------------------------------
Name: Bruce D. Atkinson
-------------------------------
Title: President and Chief Executive
------------------------------
Officer
FIRST TECHNOLOGY PLC
By: /s/ Dr. Frederick Westlake
-----------------------------------
Name: Dr. Frederick Westlake
-------------------------------
Title: Chairman
------------------------------
FIRST TECHNOLOGY ACQUISITION CORP.
By: /s/ Dr. Frederick Westlake
-----------------------------------
Name: Dr. Frederick Westlake
-------------------------------
Title: Chairman
------------------------------
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CONDITIONS TO COMPLETION OF 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) under the Exchange Act (relating
to Purchaser's obligation to pay for or return tendered Shares promptly after
expiration or termination of the Offer), to pay for any Shares, and (subject to
any such rules or regulations) may postpone the acceptance for payment or
payment for any Shares tendered, and, subject to the terms of the Agreement, may
amend or terminate the Offer (whether or not any Shares have theretofore been
purchased or paid for pursuant to the Offer) (i) unless the following conditions
have been satisfied: (a) there have been validly tendered and not withdrawn
prior to the Expiration Date a number of Shares which represent 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 ("VOTING
SECURITIES"), calculated on a fully diluted basis, on the date of purchase (the
"MINIMUM CONDITION") ("ON A FULLY DILUTED BASIS" having the following meaning;
as of any date, the number of Shares outstanding, together with the number of
Shares the Company is then required to issue pursuant to obligations outstanding
at that date under employee stock option or other benefit plans or otherwise),
(b) any waiting periods applicable to the Offer or the Merger under the HSR Act
shall have expired or been terminated prior to the expiration of the Offer, and
(c) the admission of the convertible unsecured loan stock to be issued by Filly
Funding Plc, a wholly owned subsidiary of Parent, as necessary to facilitate the
transactions contemplated by this Agreement to the Official List of the London
Stock Exchange shall have become effective in accordance with the Rules of the
London Stock Exchange, provided Parent shall have used its best efforts to
obtain such effectiveness (such condition, the "LISTING CONDITION"), or (ii) if
at any time on or after the date of this Agreement and before the Expiration
Date (whether or not any Shares have theretofore been accepted for payment or
paid for pursuant to the Offer), any of the following shall have occurred:
(A) any governmental entity or authority or any court shall
have enacted, issued, promulgated, enforced or entered any statute,
rule, regulation, executive order, decree, injunction or other order
which is in effect and which (1) restricts, prevents or prohibits
consummation of the transactions contemplated by any of this Agreement,
including the Offer or the Merger, (2)
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prohibits, limits or otherwise adversely affects the ownership or
operation by Parent or any of its Subsidiaries of all or any portion
of the business or assets of the Company and its Subsidiaries or
compels the Company, Parent or any of their Subsidiaries to dispose of
or hold separate all or any portion of the business or assets of the
Company and its Subsidiaries, or (3) imposes limitations on the
ability of Parent, Purchaser or any other Subsidiary of Parent to
exercise effectively full rights of ownership of any Shares, including
without limitation the right to vote any Shares acquired by Purchaser
pursuant to the Offer or otherwise on all matters properly presented
to the Shareholders, including without limitation the approval and
adoption of the Agreement and the transactions contemplated thereby;
(B) there shall be instituted or pending any action or
proceeding before any United States or foreign court or governmental
entity or authority by any United States or foreign governmental entity
or authority seeking any order, decree or injunction having any effect
set forth in paragraph (A) above;
(C) the representations and warranties of the Company
contained in this Agreement shall not be true and correct as of the
Expiration Date (as the same may be extended from time to time) as
though made anew on and as of such date (except for representations
and warranties made as of a specified date, which shall not be true
and correct as of the specified date), except for any breach or
breaches of any representations or warranties in Sections 3.4
through 3.16 and Section 3.19 of this Agreement which, in the
aggregate, could not be reasonably expected to have a material
adverse effect on the business, financial condition or results of
operations of the Company and its Subsidiaries, taken as a whole, or
on the ability of the Company to perform any of its obligations
under this Agreement;
(D) the Company shall not have performed or complied in all
material respects with its covenants under this Agreement to which it
is a party and such failure continues until the later of (1) 15
calendar days after actual receipt by it of written notice from Parent
setting forth in detail the nature of such failure or (2) the
Expiration Date;
(E) there shall have occurred any material adverse change, or
any development that is reasonably likely to result in a material
adverse change, in the business, financial condition or
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results of operations of the Company and its Subsidiaries, taken as a
whole;
(F) the Merger Agreement shall have been terminated in
accordance with its terms;
(G) the Company Board shall have (1) withdrawn or materially
modified or changed its recommendation of the Offer, the Merger or this
Agreement (including by amendment of Schedule 14D-9) in a manner
adverse to Purchaser or Parent, (2) taken a position inconsistent with,
its recommendation of the Offer, the Merger or any of this Agreement,
(3) approved, endorsed or recommended any Company Takeover Proposal,
(4) taken any action referred to in Section 5.2 of this Agreement that
is prohibited thereby or would be so prohibited but for the exceptions
thereto, or (5) resolved or publicly disclosed any intention to do any
of the foregoing;
(H) there shall have occurred (1) any general suspension of,
or limitation on prices for, trading in securities on the NYSE, (2) a
decline of at least 10% in either the Dow Jones Average of Industrial
Stocks, the Standard & Poor's 500 Index or the Financial Times-Stock
Exchange all shares index from the date of the Agreement, (3) the
declaration of a banking moratorium or any limitation or suspension of
payments in respect of the extension of credit by banks or other
lending institutions in the United States,(4) any commencement of war,
armed hostilities or other international or national calamity directly
involving the United States or having a significant adverse effect on
the functionality of financial markets in the United States, or (5) in
the case of any of the foregoing, existing at the time of commencement
of the Offer, a material acceleration or worsening thereof;
(I) Parent Shareholder Approval shall not have been obtained
at the Parent Shareholder Meeting (the "SHAREHOLDER APPROVAL
CONDITION"); or
(J) it shall have been publicly disclosed or Parent shall have
otherwise learned that (1) any Person or "group" (as defined in Section
13(d)(3) of the Exchange Act), other than Parent or its affiliates or
any group of which any of them is a member or any affiliates controlled
by it or which is referred to in clause (2) below, shall have acquired
beneficial ownership (determined pursuant to Rule 13d-3 promulgated
under the Exchange Act) of more than 21% of the outstanding Shares, (2)
any such Person or
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group which has filed a Schedule 13D or 13G prior to the date of the
Merger Agreement disclosing beneficial ownership of 10% or more of the
outstanding Shares shall have acquired beneficial ownership of 21% or
more of the outstanding Shares, or (3) any Person or group shall have
entered into a definitive agreement or agreement in principle with the
Company with respect to a merger, consolidation or other business
combination with the Company.
The foregoing conditions are for the sole benefit of Purchaser and its
affiliates and may be asserted by Purchaser, or Parent on behalf of Purchaser,
regardless of the circumstances (including without limitation any action or
inaction by Purchaser or any of its affiliates other than a material breach by
Purchaser or Parent of this Agreement) giving rise to any such condition or may
be waived by Purchaser, in whole or in part, from time to time in its sole
discretion, except as otherwise provided in this Agreement. The failure by
Purchaser 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
and may be asserted at any time and from time to time. Any good faith
determination by Purchaser concerning any of the events described herein will be
final and binding.
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TABLE OF DEFINED TERMS
PAGE
<TABLE>
<CAPTION>
<S> <C>
Acquisition .................................................... 1
Affiliate ...................................................... 52
Agreement ...................................................... 1
Board Percentage ............................................... 6
Certificates ................................................... 9
Closing ........................................................ 7
Closing Date ................................................... 7
Code .......................................................... 18
Commitments .................................................... 33
Company ........................................................ 1
Company Acquisition Agreement .................................. 39
Company Benefit Plans .......................................... 25
Company Board .................................................. 1
Company Disclosure Letter ...................................... 12
Company Filed Reports........................................... 17
Company Material Adverse Effect ................................ 12
Company Reports ................................................ 16
Company Rights Agreement ....................................... 14
Company Rights Plan Amendment .................................. 30
Company SEC Information ........................................ 3
Company Shareholder Approval ................................... 29
Company Shareholders Meeting ................................... 30
Company Takeover Proposal ...................................... 38
Computer Software .............................................. 20
Confidentiality Agreement ...................................... 51
Continuing Directors ........................................... 6
Dresdner Bank .................................................. 49
Effective Time .............. .................................. 7
Environmental Laws ............................................. 24
Environmental Permits .......................................... 24
ERISA .......................................................... 25
Exchange Act ................................................... 2
Exchange Agent ..............,,................................. 9
Expenses ....................................................... 49
Expiration Date ................................................ 2
Financing ...................................................... 34
Foreign Plan ................................................... 25
Governmental Entity ............................................ 15
Hazardous Substances ........................................... 24
IBCL ........................................................... 1
Intellectual Property .......................................... 19
IRS ............................................................ 26
Knowledge ...................................................... 52
Law ............................................................ 15
Leased Real Property ........................................... 21
Liens .......................................................... 14
Listing Condition .............................................. 56
Material Contracts ............................................. 23
Measurement Date ............................................... 13
Merger ......................................................... 1
Merger Consideration ........................................... 8
Millennium Compliant ........................................... 22
Minimum Condition .............................................. 56
Offer .......................................................... 1
Offer Completion Date .......................................... 38
Offer Conditions ............................................... 2
Offer Documents ................................................ 3
on a fully diluted basis ....................................... 56
Option Consideration ........................................... 11
Options ........................................................ 11
Order .......................................................... 15
Outside Date ................................................... 46
Owned Real Property ............................................ 21
Parent ......................................................... 1
Parent Material Adverse Effect ................................. 31
Parent SEC Information ......................................... 5
Parent Shareholder Approval .................................... 31
Parent's Designees ............................................. 5
Per Share Amount ............................................... 1
Permitted Liens ................................................ 21
Person ......................................................... 52
Processes ...................................................... 22
Proxy Statement ................................................ 30
Purchaser ...................................................... 1
Real Property Leases ........................................... 21
Restraints ..................................................... 45
Rights ......................................................... 8
Rights to Acquire .............................................. 13
Schedule 14D-1 ................................................. 3
Schedule 14D-9 ................................................. 4
SEC ............................................................ 3
Securities Act ................................................. 16
Shareholder Approval Condition ................................. 58
Shareholders ................................................... 1
Shareholders Agreement ......................................... 2
Shareholders Meeting ........................................... 44
Shares ......................................................... 1
Stock Option Plans ............................................. 11
Subscription Agreements ........................................ 2
Subsidiary ..................................................... 13
Superior Proposal .............................................. 38
Surviving Corporation .......................................... 7
Tax Return ..................................................... 19
Taxes .......................................................... 19
Technology ..................................................... 22
Termination Fee ................................................ 47
Voting Securities .............................................. 56
</TABLE>
<PAGE>
Exhibit 99(c)(2)
CONFIDENTIALITY AND STANDSTILL AGREEMENT
----------------------------------------
1. PURPOSE.
The parties hereto, First Technology, PLC, and Control Devices, Inc., an
Indiana corporation, may furnish certain confidential non-public information to
each other to assist them in evaluating a possible business combination. As a
condition to each party's furnishing such information to the other party (each
party furnishing such information being hereinafter referred to, with respect to
such information, as the "Disclosing Party", and each party receiving such
information being hereinafter referred to, with respect to such information, as
the "Receiving Party"), each party agrees, as set forth below, to treat any
information (herein collectively referred to as the "Evaluation Material") which
it receives as a Receiving Party from or on behalf of a Disclosing Party in
accordance with the provisions of this Agreement and to take or abstain from
taking certain other actions herein set forth.
The term "Evaluation Material" includes (i) all information prepared by the
Disclosing Party or its affiliates, directors, officers, employees, agents and
advisors (the affiliates, directors, officers, employees, agents and advisors of
a Disclosing Party or a Receiving Party, as the case may be, being referred to
collectively as the "Representatives") and (ii) all analyses, compilations,
studies or other material prepared by a Receiving Party or its Representatives
containing, based on or reflecting any information furnished by a Disclosing
Party or any of its Representatives. The term "Evaluation Material" does not
include information which (i) is already in the possession of a Receiving Party,
provided that such information is not known by such Receiving Party to be
subject to another confidentiality agreement with or other obligation of secrecy
to the Disclosing Party or a third party, or (ii) is or becomes generally
available to the public other than as a result of a disclosure by a Receiving
Party or any of its Representatives in
<PAGE>
violation of this Agreement, or (iii) becomes available to a Receiving Party
from a source other than the Disclosing Party or its Representatives, provided
that such source is not known by such Receiving Party to be in breach of a
confidentiality agreement or other obligation of secrecy, or (iv) prior to
disclosure hereunder, can be demonstrated by the Receiving Party to be within
the possession of the Receiving Party.
2. CONFIDENTIALITY AND USE OF EVALUATION MATERIAL.
Each Receiving Party hereby agrees that the Evaluation Material will be
used solely for the purpose of evaluating a possible transaction involving the
parties and that the Evaluation Material will be kept confidential by such
Receiving Party and its Representatives; provided, however, that (i) unless
otherwise specified, Evaluation Material may be disclosed to Representatives of
the Receiving Party who need to know such information for the purpose of
evaluating any possible transaction involving the parties (it being understood
that such Representatives shall be informed of the confidential nature of such
information and shall be directed to treat such information confidentially and
in accordance with this Agreement), (ii) any disclosure of Evaluation Material
may be made to which a Disclosing Party consents in writing, and (iii) any
disclosure of Evaluation Material may be made as otherwise required by law in
the written opinion of counsel to the Receiving party (including, without
limitation, pursuant to any federal or state securities laws or pursuant to any
legal, regulatory or legislative proceeding or pursuant to any applicable stock
exchange rules), as contemplated by the immediately following sentence (the
"Legal Exception"):
In the event that a Receiving Party or anyone to whom such Receiving Party
supplies the Evaluation Material receives a request to disclose all or any
part of the information contained in the Evaluation Material under the
terms of a subpoena, order, civil investigation demand or similar process
or other oral or written request, issued by a court of competent
jurisdiction or by a federal, state or local, foreign or domestic,
governmental or regulatory body or agency, such
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Receiving Party agrees to the extent practicable to (i) promptly notify the
Disclosing Party of the existence, terms and circumstances surrounding such
a request, (ii) consult with the Disclosing Party as to the advisability of
taking legally available steps to resist or narrow such request, and (iii)
only disclose such information after complying with clauses (i) and (ii)
and exercising reasonable effort, if so requested by the Disclosing Party
and at the Disclosing Party's sole expense, to obtain, to the extent
practical, an order or other reliable assurance that confidential treatment
will be accorded to such portion of any disclosed information which the
Disclosing Party so designates.
Each Receiving Party hereby acknowledges that it is aware, and that it will
advise its Representatives who are informed as to the matters which are the
subject of this Agreement, that the United States securities laws prohibit any
person who has received from an issuer material, non-public information
concerning the matters which are the subject of this Agreement from purchasing
or selling securities of such issuer or from communicating such information to
any other person under circumstances in which it is reasonably foreseeable that
such person is likely to purchase or sell such securities.
In addition, except (i) with the prior written consent of the Disclosing
Party or (ii) as required or permitted under the Legal Exception, each Receiving
Party will not, and will direct its Representatives not to, disclose to any
person (A) the existence of this Agreement or (B) that the Evaluation Material
has been made available to it, or (C) in the event that the parties engage in
discussions or negotiations with each other or their Representatives, the fact
that discussions or negotiations are taking place concerning a possible
transaction among the parties or any of the terms, conditions or other facts
with respect to any such possible transaction, including the status thereof.
If and to the extent it is the written opinion of counsel to a Receiving
Party that it is necessary or advisable in litigation to support or defend
actions taken by such Receiving Party which are being reviewed or challenged in
such proceedings, such Receiving Party may disclose
3
<PAGE>
in such proceedings the matters described in the preceding paragraph and its
analyses, compilations, studies and other materials relating to possible
transactions which were prepared by such Receiving Party or its Representatives.
Each Receiving Party agrees to give the Disclosing Party advance written notice
of any such disclosures to the extent practicable under the circumstances.
3. STANDSTILL.
In consideration of being furnished the Evaluation Material and in view of
the fact that the Evaluation Material consists of confidential and non-public
information, each party agrees that, for the period set forth in the last
sentence of this paragraph, it and its affiliates (as defined in Rule 12b-2 of
the General Rules and Regulations under the Securities Exchange Act of 1934, as
amended) shall not without the prior written authorization of the Board of
Directors of the other party (i) in any manner acquire, agree to acquire or make
any proposal to acquire, directly or indirectly, any securities of the other
party or any of its subsidiaries, (ii) in any manner acquire, agree to acquire
or make any proposal to acquire, directly or indirectly, any property of the
other party or any of its subsidiaries, except in the ordinary course of
business, (iii) make, or in any way participate, directly or indirectly, in any
"solicitation" of "proxies" (as such terms are used in the proxy rules of the
Securities and Exchange Commission) to vote, or seek to advise or influence any
person with respect to the voting of, any voting securities of the other party
or any of its subsidiaries, (iv) form, join or in any way participate in a
"group" (within the meaning of Section 13(d)(3) of the Securities Exchange Act
of 1934, as amended) with respect to any voting securities of the other party or
any of its subsidiaries, (v) otherwise act, alone or in concert with others, to
seek to control or influence the management, Board of Directors or policies of
the other party, (vi) disclose any intention, plan or arrangement inconsistent
with the foregoing, or (vii)
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<PAGE>
advise, assist or encourage any other persons in connection with any of the
foregoing. Each party also agrees, for the period set forth in the last
sentence of this paragraph, not to (i) request the other party or its
Representatives, directly or indirectly, to amend or waive any provision of this
paragraph (including this sentence) or (ii) take any action which might require
the other party to make a public announcement regarding the possibility of a
business combination or merger. The agreements set forth in this paragraph
shall otherwise survive the termination of this Agreement and shall not
terminate until June 30, 2000.
Each party further agrees that until a business combination between the
parties has been consummated or June 30, 2000 (whichever is earlier), it shall
not, directly or indirectly, solicit to employ any person who is, at the time of
such solicitation, an employee of the other party or any of its subsidiaries.
Each party understands the importance during the term of this Agreement of
limiting contacts regarding the subject matter of this Agreement to its
authorized personnel and the authorized personnel of the other party. Except
with the written consent of the other party, during the term of this Agreement
any party also agrees that neither it nor its affiliates shall initiate or
maintain any contact (except for those contacts made in the ordinary course of
business) with any customer, supplier or competitor of the other party or its
subsidiaries or any other person having a business or regulatory relationship
with the other party or its subsidiaries, regarding the operations of the other
party or its subsidiaries derived from the Evaluation Material.
4. NO WARRANTIES.
Although each Disclosing Party will endeavor to include in the Evaluation
Material information known to it which it believes to be relevant for the
purpose of the Receiving Party's
5
<PAGE>
investigation, each Receiving Party understands that neither the Disclosing
Party nor its Representatives have made or make any representation or warranty
as to the accuracy or completeness of the Evaluation Material. Each Receiving
Party agrees that neither the Disclosing Party nor its Representatives shall
have any liability to them or any of their Representatives resulting from the
use of the Evaluation Material.
5. RETURN OF EVALUATION MATERIALS.
Each Receiving Party agrees to (i) promptly redeliver to the Disclosing
Party or destroy, upon the latter's request, all written or otherwise tangible
Evaluation Material provided to it by the Disclosing Party or its
Representatives, and (ii) not retain any copies, extracts or other reproductions
in whole or in part of such written or otherwise tangible material. All other
Evaluation Material and documents, memoranda, notes, other writings and
otherwise tangible materials whatsoever prepared by a Receiving Party or its
Representatives based on the information in the Evaluation Material which were
not provided to the Receiving Party or its Representatives by the Disclosing
Party or its Representatives shall be destroyed, and such destruction shall be
certified in writing to the Disclosing Party by an authorized officer of the
Receiving Party supervising such destruction; provided that counsel to a
Receiving Party may, if requested by such Receiving Party, retain one copy of
any documents, memoranda, notes, other writings and otherwise tangible materials
prepared by such Receiving Party or its Representatives based upon the
Evaluation Material (and such Receiving Party shall notify the Disclosing Party
of its retention of any such materials); and provided further that any such
materials retained shall be held subject to the terms of this Agreement. The
agreements set forth in this paragraph shall otherwise survive the termination
of this Agreement and shall not terminate until December 31, 1999.
6
<PAGE>
6. BREACH.
Each Receiving Party agrees to be responsible for any breach of this
Agreement by any of its Representatives. Each party acknowledges and agrees
that money damages would not be a sufficient remedy for any breach of this
Agreement. Therefore, each party shall be entitled to equitable relief
including, without limitation, injunction and specific performance as a remedy
for any breach by the other party; and the party (including its Representatives)
which is in breach hereof shall not oppose the granting of such relief. Such
remedy shall not be deemed to be the exclusive remedy for a breach of this
Agreement, but shall be in addition to all other remedies available to a party
for all damages, costs and expenses (including reasonable attorneys' fees)
incurred by it in this regard.
7. FURTHER AGREEMENTS REQUIRED.
Each party agrees that unless and until a definitive agreement with respect
to a business combination of the parties has been executed and delivered,
neither party will be under any legal obligation of any kind whatsoever with
respect to such a transaction by virtue of this or any written or oral
expression with respect to such a transaction by any of its directors, officers,
employees, agents or any other Representatives thereof except, in the case of
this Agreement, for the matters specifically agreed to herein.
8. AMENDMENT.
This Agreement may be modified or waived only by a separate written
agreement, executed by each party, expressly so modifying or waiving this
Agreement.
9. NON-WAIVER.
Each party acknowledges and agrees that no failure or delay by the other
party in exercising any right, power or privilege hereunder shall operate as a
waiver thereof, nor shall any
7
<PAGE>
single or partial exercise thereof preclude any other further exercise thereof
or the exercise of any right, power or privilege hereunder.
10. SUCCESSORS AND ASSIGNS.
This Agreement shall be binding upon the respective successors and assigns
of the parties and shall inure to the benefit of, and be enforceable by, the
respective successors and assigns of the parties.
8
<PAGE>
11. NOTICE.
Any notice, request, demand, or other communication required or permitted
to be made under this Agreement shall be in writing and shall be delivered
personally or shall be sent by facsimile transmission. Any such notice shall be
deemed given when so delivered personally or sent by facsimile transmission (and
confirmed to have been received) to the address set forth below (or to any other
address subsequently furnished in writing by any party in accordance with this
paragraph), if to First Technology, PLC, then to:
First Technology, PLC
2 Cheapside Court
Buckhurst Road, Ascot
Berkshire, UK SL5 7RF
Attn: Dr. Fred J. Westlake
Telephone: 44-1344622322
Facsimile: 44-1344622773
with a copy to:
Walter J. Borda
Strobl & Borda, P.C.
Suite 200
300 East Long Lake Road
Bloomfield Hills, MI 48304
Telephone: (248) 540-2300
Facsimile: (248) 645-2690
if to Control Devices, Inc., then to:
Control Devices, Inc.
228 Northeast Road
Standish, ME 04084
Attn: Mr. Ralph R. Whitney, Jr.
Telephone: (207) 642-4535
Facsimile: (207) 642-0198
with a copy to:
James A. Strain, Esquire
Sommer & Barnard, PC
4000 Bank One Tower
9
<PAGE>
Indianapolis, Indiana 46204
Telephone: (317) 630-4000
Facsimile: (317) 236-9802
Such notice, request, demand or other communication will be deemed to have been
given as of the date so delivered personally or sent by facsimile.
12. SEVERABILITY.
If any provision of this Agreement is held by a court of competent
jurisdiction to be invalid, illegal or unenforceable, the remainder of the
provisions of this Agreement shall remain in full force and effect. The parties
shall endeavor in good faith negotiations to replace any invalid, illegal or
unenforceable provision with a valid, legal and enforceable provision, the
effect of which comes as close as possible to that of the invalid, illegal or
unenforceable provision.
13. TERM.
The term of this Agreement shall commence as of June 1, 1998. Except as
provided in Section 3 hereof, this Agreement shall terminate at Midnight,
December 31, 1999.
14. GOVERNING LAW.
This Agreement shall be governed by and construed in accordance with the
laws of the State of Indiana, United States of America, without regard to the
conflict of laws principles thereof.
15. HEADINGS.
The headings in this Agreement are for convenience of reference only and
shall not in any way limit or define the content, substance or effect of the
Agreement.
16. COUNTERPARTS.
10
<PAGE>
This Agreement may be executed in one or more counterparts, each of which
shall be deemed to be an original, but all of which shall constitute the same
agreement.
FIRST TECHNOLOGY, PLC. CONTROL DEVICES, INC
By: /s/ Fred J. Westlake By: /s/ Ralph R. Whitney, Jr.
---------------------------- ------------------------------
Fred J. Westlake Ralph R. Whitney, Jr.
Its Executive Chairman Its Chairman of the Board
Date: June , 1998 Date: June , 1998
11
<PAGE>
EXHIBIT 99(c)(3)
SHAREHOLDERS AGREEMENT
This SHAREHOLDERS AGREEMENT, dated as of February 22, 1999 (this
"AGREEMENT"), is made and entered into among First Technology PLC, an English
public limited company ("PARENT"), First Technology Acquisition Corp., an
Indiana corporation and wholly owned subsidiary of Parent ("PURCHASER"), Control
Devices, Inc., a Indiana corporation (the "COMPANY"), and each of the
shareholders set forth on Schedule A hereto (each, a "SHAREHOLDER" and,
collectively, the "SHAREHOLDERS").
RECITALS:
A. Parent, Purchaser and the Company propose to enter into an Agreement
and Plan of Merger, dated as of the date hereof (the "MERGER AGREEMENT"),
pursuant to which Purchaser will merge with and into Company (the "MERGER") on
the terms and subject to the conditions set forth in the Merger Agreement.
Except as otherwise defined herein, terms used herein with initial capital
letters have the respective meanings ascribed thereto in the Merger Agreement.
B. As of the date hereof, each Shareholder is the Beneficial Owner of
the number of Common Shares, no par value (the "COMMON STOCK"), of the Company,
set forth opposite such Shareholder's name on Schedule A hereto (the "SHARES")
and holds stock options (the "SUBJECT OPTIONS") to acquire the number of Shares
set forth opposite such Shareholder's name on Schedule B hereto which were
granted pursuant to the Company's stock option plans; and
C. As a condition and inducement to their willingness to enter into the
Merger Agreement, Parent and Purchaser have requested that each Shareholder
agree, and each Shareholder has agreed, to enter into this Agreement.
NOW, THEREFORE, in consideration of the foregoing and the
representations, warranties and covenants contained in this Agreement, and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto hereby agree as follows:
<PAGE>
ARTICLE I
TENDER OF SUBJECT SHARES
1.1 AGREEMENT TO TENDER SUBJECT SHARES. Each Shareholder will
cause to be validly tendered (and will not withdraw) pursuant to and in
accordance with the terms of the Offer, not later than the tenth business day
after commencement of the Offer, all of such Shareholder's Subject Shares. Each
Shareholder hereby acknowledges that Purchaser's obligation to accept for
payment and pay for Common Stock (including such Shareholder's Subject Shares)
pursuant to the Offer is subject to the terms and conditions of the Offer set
forth in the Merger Agreement. Upon the purchase of all the Subject Shares by
Purchaser pursuant to the Offer in accordance with this Section 1.1, this
Agreement will terminate. In the event, notwithstanding the provisions of the
first sentence of this Section 1.1, any Subject Shares are for any reason
withdrawn from the Offer or are not purchased pursuant to the Offer, such
Subject Shares will remain subject to the terms of this Agreement. For purposes
of this Agreement, the term "SUBJECT SHARES" means Shares together with any
other shares of Common Stock the Beneficial Ownership of which is acquired by
exercise of the Subject Options or otherwise by such Shareholder during the
period from and including the date hereof through and including the date on
which this Agreement is terminated pursuant to Section 5.3 hereof and
"BENEFICIAL OWNERSHIP" or "BENEFICIALLY OWNS" with respect to any securities
means having "beneficial ownership" of such securities as determined pursuant to
Rule 13d- 3 under the Securities Exchange Act of 1934, as amended (the "EXCHANGE
ACT").
ARTICLE II
VOTING OF SUBJECT SHARES
2.1 AGREEMENT TO VOTE SUBJECT SHARES. During the period
beginning on the date hereof and ending on the first anniversary of the date
hereof (the "VOTING AGREEMENT PERIOD"), at any meeting of the shareholders of
the Company called to consider and vote upon the adoption of the Merger
Agreement (and at any and all postponements and adjournments thereof), and in
connection with any action to be taken in respect of the adoption of the Merger
Agreement by written consent of shareholders of the Company, each Shareholder
will vote or cause to be voted (including by written consent, if applicable) all
of such Shareholder's Subject Shares in favor of the adoption of the Merger
Agreement and in favor of any other matter necessary or
2
<PAGE>
appropriate for the consummation of the transactions contemplated by the Merger
Agreement which is considered and voted upon at any such meeting or made the
subject of any such written consent, as applicable. During the Voting Agreement
Period, at any meeting of the shareholders of the Company called to consider and
vote upon any Adverse Proposal(and at any and all postponements and adjournments
thereof), and in connection with any action to be taken in respect of any
Adverse Proposal by written consent of shareholders of Company, each Shareholder
will vote or cause to be voted (including by written consent, if applicable) all
of such Shareholder's Subject Shares against the adoption of such Adverse
Proposal. For purposes of this Agreement, the term "ADVERSE PROPOSAL" means any
(x) Company Takeover Proposal, (y) proposal or action that would reasonably be
expected to result in a breach of any covenant, representation or warranty of
Company set forth in the Merger Agreement, or (z) the following actions (other
than the Offer, the Merger and the other transactions contemplated by the Merger
Agreement): (i) any extraordinary corporate transaction, such as a merger,
consolidation or other business combination involving the Company or its
Subsidiaries; (ii) 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; (iii) (A)
any change in a majority of the persons who constitute the board of directors of
the Company as of the date hereof; (B) any change in the present capitalization
of the Company or any amendment of the Company's articles of incorporation or
bylaws, as amended to date; (C) any other material change in the Company's
corporate structure or business; or (D) any other action that is intended, or
could reasonably be expected, to impede, interfere with, delay, postpone, or
adversely affect the Merger and the other transactions contemplated by this
Agreement and the Merger Agreement.
2.2 IRREVOCABLE PROXY. (a) GRANT OF PROXY. Each Shareholder
hereby appoints Parent and any designee of Parent, each of them individually,
such Shareholder'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
such Shareholder's Subject Shares in accordance with Section 2.1 hereof. This
proxy is given to secure the performance of the duties of such Shareholder under
this agreement. Each Shareholder affirms that this proxy is coupled with an
interest and is irrevocable. Each Shareholder will take such further action or
execute such other instruments as may be necessary to
3
<PAGE>
effectuate the intent of this proxy. For Subject Shares as to which the
Shareholder is the beneficial but not the record owner, the Shareholder will
use his best efforts to cause any record owner of such Subject Shares to
grant to Parent a proxy to the same effect as that contained herein.
(b) OTHER PROXIES REVOKED. Each Shareholder represents and
warrants that any proxies heretofore given in respect of such Shareholder's
Subject Shares are not irrevocable, and hereby revokes all such proxies.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.1 CERTAIN REPRESENTATIONS AND WARRANTIES OF THE
SHAREHOLDERS. Each Shareholder, severally and not jointly, represents and
warrants to Parent and Purchaser, as of the date hereof and as of the Closing
Date, as follows:
(a) OWNERSHIP. Such Shareholder is the sole Beneficial Owner
of the number of shares of Common Stock set forth opposite such Shareholder's
name on Schedule A hereto and has full and unrestricted power to dispose of and
to vote such Shares. The Shares are now, and at all times during the term hereof
will be, held by such Shareholder, or by a nominee or custodian for the benefit
of such Shareholder, free and clear of all Liens and proxies, except for any
Liens or proxies arising hereunder. The transfer by such Shareholder of its
Subject Shares to Purchaser or Parent pursuant to the Offer or the applicable
Option, respectively, will pass to and unconditionally vest in Purchaser or
Parent good and valid title to such Subject Shares, free and clear of all Liens
other than restrictions set forth under applicable securities laws. Except as
set forth in Schedule A and Schedule B hereto, such Shareholder does not (a)
Beneficially Own any securities of the Company on the date hereof or (b)
directly or indirectly, Beneficially Own or have any option, warrant or other
right to acquire any securities of the Company that are or may by their terms
become entitled to vote or any securities that are convertible or exchangeable
into or exercisable for any securities of the Company that are or may by their
terms become entitled to vote, nor is the Shareholder subject to any contract,
commitment, arrangement, understanding or relationship (whether or not legally
enforceable), other than this Agreement, that allows or obligates him to vote,
dispose of or acquire any securities of the Company. The Shareholder holds
4
<PAGE>
exclusive power to vote the Shares and has not granted a proxy to any other
Person to vote the Shares, subject to the limitations set forth in this
Agreement.
(b) POWER AND AUTHORITY; EXECUTION AND DELIVERY. Such
Shareholder has all requisite power and authority to enter into this Agreement
and to consummate the transactions contemplated hereby. In the case of each
Shareholder that is not a natural person, the execution and delivery of this
Agreement by such Shareholder and the consummation by such Shareholder of the
transactions contemplated hereby have been duly authorized by all necessary
action, if any, on the part of such Shareholder. This Agreement has been duly
executed and delivered by such Shareholder and, assuming that this Agreement
constitutes the valid and binding obligation of the other parties hereto,
constitutes a valid and binding obligation of such Shareholder, enforceable
against such Shareholder in accordance with its terms.
(c) NO CONFLICTS. The execution and delivery of this Agreement
do not, and, subject to compliance with the HSR Act and appropriate filings
under securities laws (which each Shareholder agrees to make promptly), to the
extent applicable, the consummation of the transactions contemplated hereby and
compliance with the provisions hereof will not, conflict with, result in a
breach or violation of or default (with or without notice or lapse of time or
both) under, or give rise to any material obligation, any right of termination,
cancellation, or acceleration of any obligation or any loss of a material
benefit under, or require notice to or the consent of any person under any
agreement, instrument, undertaking, law, rule, regulation, judgment, order,
injunction, decree, determination or award binding on such Shareholder, other
than such conflicts, breaches, violations, defaults, obligations, rights or
losses that individually or in the aggregate would not impair the ability of
such Shareholder to perform such Shareholder's obligations under this Agreement.
(d) BROKERS. No broker, finder or investment banker is
entitled to any brokerage, finder's or other fee or commission in connection
with the transactions contemplated by this Agreement or the Merger Agreement
based upon arrangements made by or on behalf of the Shareholder that is or will
be payable by the Company or any of its Subsidiaries.
5
<PAGE>
3.2 REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
represents and warrants to Parent and Purchaser, as of the date hereof and as of
the Closing Date, as follows:
(a) ORGANIZATION; AUTHORITY. The Company is a corporation duly
organized and validly existing under the laws of the State of Indiana, has the
requisite corporate power and authority to execute and deliver this Agreement
and to consummate the transactions contemplated hereby, and has taken all
necessary corporate action to authorize the execution, delivery and performance
of this Agreement.
(b) EXECUTION AND DELIVERY. This Agreement has been duly
executed and delivered by the Company and, assuming that this Agreement
constitutes the valid and binding obligation of the other parties hereto,
constitutes a valid and binding obligation of the Company, enforceable against
the Company in accordance with its terms.
(c) NO CONFLICTS. The execution and delivery of this Agreement
by the Company does not, and, subject to compliance with the HSR Act and
appropriate filings under securities laws (which the Company agrees to make
promptly), to the extent applicable, the consummation of the transactions
contemplated hereby and compliance with the provisions hereof will not, conflict
with, result in a breach or violation of or default (with or without notice or
lapse of time or both) under, or give rise to any material obligation, any right
of termination, cancellation, or acceleration of any obligation or any loss of a
material benefit under, or require notice to or the consent of any person under
(i) its articles of incorporation or bylaws, (ii) any agreement, instrument,
undertaking, law, rule, regulation, judgment, order, injunction, decree,
determination or award by which it is bound, or (iii) any judgment, writ,
decree, order or ruling applicable to the Company; except in the case of clauses
(ii) and (iii) for conflicts, violations, breaches or defaults that would not
impair the ability of the Company to perform its obligations under this
Agreement.
(d) ANTITAKEOVER STATUTES. The Company Board has approved the
Offer, the Merger, the Merger Agreement, this Agreement and the transactions
contemplated thereby and hereby and such approval is sufficient to render
inapplicable to the Offer, the Merger, the Merger Agreement, this Agreement and
the transactions contemplated thereby and hereby, the provisions of Chapter 43
of the IBCL. Neither Chapter 42 of the IBCL nor any
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other "fair price," "merger moratorium," "control share acquisition" or other
anti-takeover statute or similar statute or regulation applies or purports to
apply to the Offer, the Merger, the Merger Agreement, this Agreement or any of
the transactions contemplated thereby or hereby.
3.3 REPRESENTATIONS AND WARRANTIES OF PARENT. Each of Parent
and Purchaser hereby represents and warrants, jointly and severally, to each
Shareholder, as of the date hereof and as of the Closing Date, that:
(a) ORGANIZATION; AUTHORITY. Each of Parent and Purchaser is a
corporation duly organized, validly existing and in good standing under the laws
of the jurisdiction of its incorporation, has the requisite corporate power and
authority to execute and deliver this Agreement and, subject to obtaining Parent
Shareholder Approval, to consummate the transactions contemplated hereby, and
has taken all necessary corporate action to authorize the execution, delivery
and, subject to obtaining Parent Shareholder Approval, performance of this
Agreement.
(b) EXECUTION AND DELIVERY. This Agreement has been duly
executed and delivered by Parent and Purchaser and, assuming that this Agreement
constitutes the valid and binding obligation of the other parties hereto,
constitutes a valid and binding obligation of Parent and Purchaser, enforceable
against Parent and Purchaser in accordance with its terms.
(c) NO CONFLICTS. The execution and delivery of this Agreement
by Parent and Purchaser do not, and, subject to compliance with the HSR Act and
appropriate filings under securities laws (which the Parent and Purchaser agree
to make promptly), to the extent applicable, the consummation of the
transactions contemplated hereby and compliance with the provisions hereof will
not, conflict with, result in a breach or violation of or default (with or
without notice or lapse of time or both) under, or give rise to any material
obligation, any right of termination, cancellation, or acceleration of any
obligation or any loss of a material benefit under, or require notice to or the
consent of any person under (i) its articles of incorporation or bylaws or
equivalent organizational documents, (ii) any agreement, instrument,
undertaking, law, rule, regulation, judgment, order, injunction, decree,
determination or award by which it is bound, or (iii) any judgment, writ,
decree, order or ruling applicable to the Parent or Purchaser; except in the
case of clauses (ii) and (iii) for conflicts, violations,
7
<PAGE>
breaches or defaults that would not impair the ability of Parent or Purchaser
to perform its obligations under this Agreement.
ARTICLE IV
CERTAIN COVENANTS OF SHAREHOLDERS
4.1 RESTRICTION ON TRANSFER OF SUBJECT SHARES, PROXIES AND
NONINTERFERENCE. No Shareholder will, directly or indirectly: (a) except
pursuant to the terms of this Agreement and the Merger Agreement, 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
Shareholder's Subject Shares; (b) except pursuant to the terms of this
Agreement, grant any proxies or powers of attorney, deposit any of such
Shareholder's Subject Shares into a voting trust or enter into a voting
agreement with respect to any of such Shareholder's Subject Shares; (c) except
within the terms of a prior written request of Parent, exercise any of the
Subject Options; or (d) take any action that would reasonably be expected to
make any representation or warranty contained herein untrue or incorrect or have
the effect of impairing the ability of such Shareholder to perform such
Shareholder's obligations under this Agreement or preventing or delaying the
consummation of any of the transactions contemplated hereby.
4.2 ADJUSTMENTS. (a) In the event (i) of any stock dividend,
stock split, recapitalization, reclassification, combination or exchange of
shares of capital stock or other securities of the Company on, of or affecting
the Common Stock or the like or any other action that would have the effect of
changing a Shareholder's ownership of the Company's capital stock or other
securities or (ii) a Shareholder becomes the Beneficial Owner of any additional
shares of Common Stock or other securities of the Company, then the terms of
this Agreement will apply to the shares of capital stock held by the Shareholder
immediately following the effectiveness of the events described in clause (i) or
the Shareholder becoming the Beneficial Owner thereof, as described in clause
(ii), as though they were Shares hereunder.
(b) Each Shareholder hereby agrees, while this Agreement is in
effect, to promptly notify Parent of the number
8
<PAGE>
of any new Shares acquired by the Shareholder, if any, after the date hereof.
4.3 NO SOLICITATION. No Shareholder will take, or authorize or
permit any of its officers, directors, employees, agents or representatives
(including any investment banker, financial advisor, attorney or accountant) to
take, any action that the Company would be prohibited from taking under Section
5.2(a) or 5.2(b) of the Merger Agreement.
4.4 WAIVER OF APPRAISAL RIGHTS. Each Shareholder hereby waives
any rights of appraisal or rights to dissent from the Merger that such
Shareholder may have.
4.5 NONEXERCISE OF RIGHTS OF FIRST REFUSAL. No Shareholder
will exercise any purchase right or right of first refusal that it may have with
respect to any Common Stock of any other person in connection with any tender by
such other person of such Common Stock pursuant to the Offer.
4.6 COOPERATION. Each Shareholder will cooperate fully with
Parent and Company in connection with their respective reasonable best efforts
to fulfill the conditions to the Merger set forth in Article VI of the Merger
Agreement.
ARTICLE V
MISCELLANEOUS
5.1 SECURITIES LAW COMPLIANCE. The Options and the Subject
Shares to be acquired upon exercise of the Options are being and will be
acquired by Parent without a view to public distribution thereof otherwise than
in compliance with the Securities Act and applicable state securities laws and
will not be transferred or otherwise disposed of except in a transaction
registered or exempt from registration under the Securities Act and in
compliance with applicable state securities laws. Neither Parent nor Purchaser
will effect any offer or sale of Subject Shares which would cause any
Shareholder to violate the registration requirements of the Securities Act of
1933, as amended, or the registration or qualification requirements of the
securities laws of any jurisdiction.
5.2 FEES AND EXPENSES. Each party hereto will pay its own
expenses incident to preparing for, entering into and
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<PAGE>
carrying out this Agreement and the consummation of the transactions
contemplated hereby.
5.3 AMENDMENT; TERMINATION. This Agreement may not be amended
except by an instrument in writing signed on behalf of each of the parties
hereto. This Agreement will terminate (a) upon the purchase of all of the
Subject Shares pursuant to the Offer in accordance with Section 1.1 or (b) by
the mutual consent of the Board of Directors of the Company, the Board of
Directors of Parent and Shareholders representing a majority of the Subject
Shares subject to this Agreement. In the event of termination of this Agreement
pursuant to this Section 5.3, this Agreement will become null and void and of no
effect with no liability on the part of any party hereto and all proxies granted
hereby will be automatically revoked; provided, however, that no such
termination will relieve any party hereto from any liability for any breach of
this Agreement occurring prior to such termination, and provided further that
the representations and warranties set forth in Article III and covenants set
forth in Section 5.2 will survive the termination of this Agreement.
5.4 EXTENSION; WAIVER. Any agreement on the part of a party to
waive any provision of this Agreement, or to extend the time for any performance
hereunder, will be valid only if set forth in an instrument in writing signed on
behalf of such party. The failure of any party to this Agreement to assert any
of its rights under this Agreement or otherwise will not constitute a waiver of
such rights.
5.5 ENTIRE AGREEMENT; NO THIRD-PARTY BENEFICIARIES. This
Agreement and the Merger Agreement constitute the entire agreement among the
parties hereto with respect to the subject matter hereof, and supersede all
prior agreements and understandings, both written and oral, among the parties
with respect to such matters. Neither the Merger Agreement nor this Agreement is
intended to confer upon any person other than the parties hereto any rights or
remedies.
5.6 GOVERNING LAW. This Agreement will be governed by, and
construed in accordance with, the laws of the State of Indiana, regardless of
the laws that might otherwise govern under applicable principles of conflict of
laws thereof.
5.7 NOTICES. Any notice required to be given hereunder will be
sufficient if in writing, and sent by facsimile transmission and by courier
service (with proof of service), hand
10
<PAGE>
delivery or certified or registered mail (return receipt requested and
first-class postage prepaid), addressed as follows:
If to Parent or Purchaser:
First Technology PLC
2 Cheapside Court
Buckhurst Road
Ascot
Berkshire SL5 7RF
Attn: Dr. Fred Westlake
Fax No.: 44-1344-622-773
With copies to:
Jones, Day, Reavis & Pogue
599 Lexington Avenue
New York, New York 10022
Attn: Jere R. Thomson, Esq.
Fax No.: 212-755-7306
If to the Company or any
Shareholder:
Control Devices, Inc.
228 Northeast Road
Standish, Maine 04084
Attn: Bruce D. Atkinson
Fax No.: 207-642-0111February 22,
1999
With copies to:
Sommer & Barnard, PC
4000 Bank One Tower
Indianapolis, Indiana 46204
Attn: James A Strain, Esq.
Fax No.: 317-236-9802
or to such other address as any party will specify by written notice so given,
and such notice will be deemed to have been delivered as of the date so
telecommunicated, personally delivered or mailed.
11
<PAGE>
5.8 ASSIGNMENT. Neither this Agreement nor any of the rights,
interests, or obligations under this Agreement may be assigned or delegated, in
whole or in part, by operation of law or otherwise, by any Shareholder without
the prior written consent of Parent, and any such assignment or delegation that
is not consented to will be null and void. This Agreement, together with any
rights, interests, or obligations of Parent hereunder, may be assigned or
delegated, in whole or in part, by Parent without the consent of or any action
by any Shareholder upon notice by Parent to each Shareholder affected thereby as
herein provided. Subject to the preceding sentence, this Agreement will be
binding upon, inure to the benefit of, and be enforceable by, the parties and
their respective successors and assigns (including without limitation any person
to whom any Subject Shares are sold, transferred or assigned).
5.9 FURTHER ASSURANCES. Each Shareholder will execute and
deliver such other documents and instruments and take such further actions as
may be reasonably necessary or appropriate or as may be reasonably requested by
Parent in order to ensure that Parent receives the full benefit of this
Agreement, provided that such actions are at no cost to the Shareholder.
5.10 PUBLICITY. Parent, the Company and each Shareholder will
consult with each other party before issuing any press release or otherwise
making any public statements with respect to this Agreement or the Merger
Agreement or the other transactions contemplated hereby or thereby and will not
issue any such press release or make any such public statement before such
consultation, except as may be required by law or applicable stock exchange
rules.
5.11 ENFORCEMENT. Irreparable damage would occur in the event
that any of the provisions of this Agreement were not performed in accordance
with their specific terms or were otherwise breached. Accordingly, the parties
will be entitled to an injunction or injunctions to prevent breaches of this
Agreement and to enforce specifically the terms and provisions of this
Agreement, this being in addition to any other remedy to which they are entitled
at law or in equity.
5.12 SEVERABILITY. Whenever possible, each provision or
portion of any provision of this Agreement will be interpreted in such manner as
to be effective and valid under applicable law but if any provision or portion
of any provision of this Agreement is held to be invalid, illegal or
unenforceable in any
12
<PAGE>
respect under any applicable law or rule in any jurisdiction, such invalidity,
illegality or unenforceability will not affect any other provision or portion of
any provision in such jurisdiction, and this Agreement will be reformed,
construed and enforced in such jurisdiction as if such invalid, illegal or
unenforceable provision or portion of any provision had never been contained
herein.
5.13 COUNTERPARTS. This Agreement may be executed in one or
more counterparts, all of which will be considered one and the same instrument
and will become effective when one or more counterparts have been signed by each
party and delivered to the other parties.
5.14 HEADINGS. The descriptive headings contained herein are
for convenience and reference only and will not affect in any way the meaning or
interpretation of this Agreement.
5.15 REMEDIES NOT EXCLUSIVE. All rights, powers and remedies
provided under this Agreement or otherwise available in respect hereof at law or
in equity will be cumulative and not alternative, and the exercise of any
thereof by either party will not preclude the simultaneous or later exercise of
any other such right, power or remedy by such party.
13
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be signed as of the day and year first written above.
FIRST TECHNOLOGY PLC
By: /s/ Dr. Frederick Westlake
--------------------------------------------
Name: Dr. Frederick Westlake
---------------------------------------
Title: Chairman
--------------------------------------
FIRST TECHNOLOGY ACQUISITION
CORP.
By: /s/ Dr. Frederick Westlake
--------------------------------------------
Name: Dr. Frederick Westlake
---------------------------------------
Title: Chairman
--------------------------------------
CONTROL DEVICES, INC.
By: /s/ Bruce D. Atkinson
--------------------------------------------
Name: Bruce D. Atkinson
---------------------------------------
Title: President and Chief Executive Officer
--------------------------------------
[SIGNATURES CONTINUED ON THE FOLLOWING PAGE]
14
<PAGE>
SHAREHOLDERS:
/s/ Bruce D. Atkinson
---------------------------------------
Bruce D. Atkinson
/s/ Bettina R. Atkinson
---------------------------------------
Bettina Atkinson
/s/ Forrest E. Crisman, Jr.
---------------------------------------
Forrest E. Crisman, Jr.
Prudential Securities c/f
Forrest E. Crisman, Jr. PSP
FBO Forrest E. Crisman, Jr.
By: /s/ Forrest E. Crisman, Jr.
------------------------------------
Prudential Securities c/f
Forrest E. Crisman, Jr. MPP
FBO Forrest E. Crisman, Jr.
By: /s/ Forrest E. Crisman, Jr.
------------------------------------
/s/ Michel Hauser-Kauffmann
--------------------------------------
Michel Hauser-Kauffmann
/s/ Glenn Scolnik
--------------------------------------
Glenn Scolnik
Prudential Securities c/f
Glenn Scolnik Roll IRA
#OZJ-F46165-80
By: /s/ Glenn Scolnik
-------------------------------------
Glenn Scolnik
15
<PAGE>
Prudential Securities c/f
Glenn Scolnik PSP
FBO Glenn Scolnik #OZJ-R47951-80
By: /s/ Glenn Scolnik
------------------------------------
Glenn Scolnik
Prudential Securities c/f
Glenn Scolnik MPP
FBO Glenn Scolnik #OZJ-R47960-80
By: /s/ Glenn Scolnik
------------------------------------
/s/ Ralph R. Whitney, Jr.
--------------------------------------
Ralph R. Whitney
Ralph R. Whitney, Jr., Trustee
For the Plan of Ralph R. Whitney
Money Purchase Plan
By: /s/ Ralph R. Whitney, Jr.
------------------------------------
/s/ Faye W. Whitney
--------------------------------------
Faye Whitney
/s/ Jeffrey G. Wood
--------------------------------------
Jeffrey G. Wood
16
<PAGE>
17
<PAGE>
TABLE OF DEFINED TERMS
<TABLE>
<CAPTION>
<S> <C>
PAGE
Adverse Proposal ......................................................... 3
Agreement ................................................................ 1
Beneficial Ownership ..................................................... 2
Beneficially Owns ........................................................ 2
Common Stock ............................................................. 1
Company .................................................................. 1
Exchange Act ............................................................. 2
Merger ................................................................... 1
Merger Agreement ......................................................... 1
Parent ................................................................... 1
Purchaser ................................................................ 1
Shareholder .............................................................. 1
Shareholders ............................................................. 1
Shares ................................................................... 1
Subject Options .......................................................... 1
Subject Shares ........................................................... 2
</TABLE>
18
<PAGE>
SCHEDULE A
SHARES
Ralph R. Whitney..................... 534,481
Forrest E. Crisman, Jr............... 267,240
Glenn Scolnik........................ 267,240
Bruce D. Atkinson.................... 256,410
Jeffrey G. Wood...................... 170,940
Michel Hauser-Kauffmann.............. 68,369
19
<PAGE>
SCHEDULE B
<TABLE>
<CAPTION>
Grant
OPTIONS: # PRICE
- -------- ------ --------
<S> <C> <C>
Bruce D. Atkinson 75,000 $ 6.34
Bruce D. Atkinson 75,000 10.80
Jeffrey G. Wood 50,000 6.34
Jeffrey G. Wood 50,000 10.80
Michel Hauser Kauffmann 23,333 5.40
Michel Hauser Kaufmann 23,333 10.80
Ralph R. Whitney 1,666 7.61
Ralph R. Whitney 1,666 12.95
Glenn Scolnik 1,666 7.61
Glenn Scolnik 1,666 12.95
Forrest Crisman 1,666 10.00
Forrest Crisman 1,666 12.95
</TABLE>
20
<PAGE>
<PAGE>
EXHIBIT 99(c)(4)
SUBSCRIPTION AGREEMENT
This SUBSCRIPTION AGREEMENT, dated as of February 22, 1999 (the
"Agreement"), is made and entered into among First Technology PLC, an English
public limited company ("Parent"), and each of the investors set forth on
Schedule A hereto (each, an "Investor" and, collectively, the "Investors").
RECITALS:
A. Pursuant to an Agreement and Plan of Merger dated as of the date
hereof (the "Merger Agreement"), a wholly-owned subsidiary of Parent will merge
with Control Devices, Inc., an Indiana corporation (the "Company"), on the terms
and subject to the conditions set forth in the Merger Agreement.
B. As of the date hereof, each Investor owns shares of the Common
Stock, no par value, of the Company ("Company Shares").
C. Pursuant to the terms and conditions of a Shareholders Agreement of
even date herewith, each Investor has agreed to tender his or her Company Shares
in the cash tender offer (the "Offer") to be made pursuant to the Merger
Agreement, in exchange for which the Investor will be entitled to receive cash
consideration on the terms and conditions set forth in the Merger Agreement.
D. Each Investor desires to invest a portion of the proceeds he or she
will receive for his or her Company Shares pursuant to the Offer by subscribing
for Ordinary Shares of Parent ("Parent Shares") on the terms and subject to the
conditions set forth herein.
NOW, THEREFORE, in consideration of the foregoing and the
representations, warranties and covenants contained in this Agreement, and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto hereby agree as follows:
<PAGE>
ARTICLE I
SUBSCRIPTION FOR SHARES
1.1 SUBSCRIPTION. Each Investor hereby subscribes for, and Parent
hereby agrees to issue to each Investor, on the Closing Date (as defined below),
a number of Parent Shares equal to the quotient derived by dividing (a) the
Investment Amount set forth opposite such Investor's name on Schedule A hereto
(the "Investment Amount"), by (b) the Per Share Purchase Price (as hereinafter
defined), provided that no fractional Parent Shares shall be issued, and, in the
event the application of the foregoing formula gives rise to a fractional Parent
Share, the applicable Investment Amount shall be reduced by an amount equal to
such fractional Parent Share multiplied by the Per Share Purchase Price.
1.2 PER SHARE PURCHASE PRICE.
(a) For purposes of this Agreement, the "Per Share Purchase
Price" shall be the higher of (i) the middle market price of a Parent Share, as
derived from the Official List of the London Stock Exchange, on the last
business day in London immediately prior to the Closing Date, and (ii) 80% of
the Adjusted Pre-Offer Market Price. The "Adjusted Pre-Offer Market Price" means
the middle market price of a Parent Share, as derived from the Official List of
the London Stock Exchange (the "Pre-Offer Price"), on the last business day (the
"Pre-Offer Date") in London immediately prior to the date on which the Offer is
publically announced by Parent, as adjusted (as described below) to reflect the
underwritten rights offering being made by Parent contemporaneously with the
Offer (the "Rights Offering").
(b) The Adjusted Pre-Offer Market Price shall be calculated by
(i) adding (A) Parent's aggregate market capitalization on the Pre-Offer Date
(i.e., the number of Parent Shares outstanding on such date (the "Outstanding
Shares") multiplied by the Pre-Offer Price), plus (B) the aggregate proceeds of
the Rights Offering (i.e., the number of Parent Shares sold in such offering
(the "Rights Shares") multiplied by the offering price), and (ii) dividing the
sum of (A) and (B) by the sum of the number of Outstanding Shares and the number
of Rights Shares.
1.3 CLOSING OF THE SUBSCRIPTION.
2
<PAGE>
(a) Subject to the satisfaction or waiver of the conditions to
the parties' respective obligations set forth in Article IV, the consummation of
the transactions contemplated hereby (the "Subscription Closing") will take
place at the offices of Jones, Day, Reavis & Pogue, 599 Lexington Avenue, New
York, New York, at 10:00 a.m., local time, on the next business day (the
"Closing Date") following the payment by Parent or its subsidiary to the
Investors of the cash consideration payable to them upon the consummation of the
Offer (the "Offer Proceeds"). At the Subscription Closing, in exchange for each
Investor's payment of his or her Investment Amount, Parent shall deliver to such
Investor a copy of Parent's irrevocable instructions to its stock registrar
directing it to prepare and deliver to such Investor a stock certificate
evidencing the number of Parent Shares being issued to such Investor, as
determined pursuant to Section 1.1 hereof, as soon as practicable after the
Closing Date. Subject to Section 1.3(b), each Investor and Parent agree that, to
accomplish each Investor's payment of his or her Investment Amount, Parent shall
withhold from the cash consideration payable to such Investor in connection with
the Offer an amount equal to each Investor's Investment Amount, as adjusted, if
adjusted, pursuant to Section 1.1. The Parent Shares to be issued hereunder
shall be, when issued, duly issued, fully paid and not liable to further
assessment.
(b) Prior to the Closing Date, each Investor may assign some
or all of his right to purchase Parent Shares hereunder to an account or
accounts that hold Company Shares for the benefit of such Investor (each, an
"Investor Account") by providing Parent with written notice to that effect no
later than three business days prior to the Closing Date. Such notice shall
state the name of the Investor Account and the portion of the Investor's
Investment Amount that will be provided by Offer Proceeds otherwise payable to
such Investor Account in exchange for Company Shares held by it. If such a
notice is properly provided, upon the Subscription Closing, Parent shall retain
such portion of the Investor Account's Offer Proceeds and shall issue the
applicable number of Parent Shares to the Investor Account, which Parent Shares
shall be issued subject to the restrictions on transfer provided herein as if
issued to the applicable Investor. Notwithstanding an assignment in compliance
with this Section 1.3(b), each Investor shall be obligated to purchase any
Parent Shares not purchased by his assignee Investor Account, and each Investor
shall be liable for breaches by such assignee Investor Account of the
restrictions on transfer provided herein.
3
<PAGE>
1.4 ADJUSTMENT UPON CHANGES IN CAPITALIZATION, ETC. In the
event of any change in the capital stock of Parent by reason of a stock
dividend, subdivision, reclassification, recapitalization, split, combination,
exchange of shares, extraordinary distribution or similar transaction, the type
and number or amount of Parent Shares (and/or other securities or property), and
the Per Share Purchase Price payable therefor and the Adjusted Pre-Offer Market
Price, will be adjusted appropriately, and proper provision will be made in the
agreements or other documents governing such transaction, so that (a) each
Investor will receive upon the consummation of the transactions contemplated
hereby the type and number or amount of Parent Shares, securities or other
property that such Investor would have retained and/or been entitled to receive
in respect of his or her Parent Shares if the transactions contemplated hereby
had been consummated immediately prior to such event or the record date
therefor, as applicable, and (b) Parent will receive upon consummation of the
transactions contemplated hereby the amount of cash that Parent would have
received as a result thereof if it had occurred immediately prior to such event
or the record date therefor, as applicable. The provisions of this Section 1.4
will apply in a like manner to successive stock dividends, subdivisions,
reclassifications, recapitalizations, splits, combinations, exchanges of shares,
extraordinary distributions or similar transactions.
1.5 STAMP, TRANSFER AND SIMILAR TAXES. In the event any stamp, transfer
or similar taxes are payable as a result of the consummation of the transactions
contemplated hereby, each party hereto shall pay such taxes as applicable to it
and shall indemnify each other party to the extent such other party pays any
such taxes.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
2.1 REPRESENTATIONS AND WARRANTIES OF INVESTORS. Each Investor hereby
represents and warrants to Parent as follows:
(a) POWER AND AUTHORITY; EXECUTION AND DELIVERY. Such
Investor has all requisite power and authority to enter into this
Agreement and to consummate the transactions contemplated hereby.
This Agreement has been duly executed and delivered by such
Investor and, assuming that this Agreement constitutes the valid
4
<PAGE>
and binding obligation of the other parties hereto, constitutes a valid and
binding obligation of such Investor, enforceable against such Investor in
accordance with its terms, subject to applicable bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and similar laws affecting
creditors' rights and remedies generally and to general principles of equity.
(b) NO CONFLICTS. The execution and delivery of this Agreement
do not, and the consummation of the transactions contemplated hereby and
compliance with the provisions hereof will not, conflict with, result in a
breach or violation of or default (with or without notice or lapse of time or
both) under, or give rise to any material obligation, any right of termination,
cancellation, or acceleration of any obligation or any loss of a material
benefit under, or require notice to or the consent of any person under any
agreement, instrument, undertaking, law, rule, regulation, judgment, order,
injunction, decree, determination or award binding on such Investor, other than
such conflicts, breaches, violations, defaults, obligations, rights or losses
that individually or in the aggregate would not (i) impair the ability of such
Investor to perform such Investor's obligations under this Agreement or (ii)
prevent or delay the consummation of any of the transactions contemplated
hereby.
(c) INVESTMENT REPRESENTATIONS AND WARRANTIES. Each Investor
agrees and acknowledges that his or her execution of this Agreement constitutes
an agreement by him or her to purchase Parent Shares, and, as an inducement to
Parent's decision to agree to issue such Parent Shares to such Investor, such
Investor further represents and warrants as follows:
(i) Such Investor is acquiring Parent Shares
solely for investment for such Investor's account and not with a view to, or for
resale in connection with, the distribution or other disposition thereof.
(ii) Such Investor is a sophisticated investor
and has knowledge and experience in financial and business matters and has
independently evaluated, and not relied on Parent or any other Investor with
respect to, the merits and risks of its investment in Parent Shares. Such
Investor has received copies of (A) the Report and Accounts of Parent in respect
of the fiscal year ending April 30, 1998, (B) the Interim Report of
5
<PAGE>
Parent for the six months ending October 30, 1998, and (C) a draft dated
February 18, 1999 of the "Filly PLC" Rights Issue Circular relating to the
Rights Offering (collectively, the "Parent Disclosure Documents") and has been
given such other information as such Investor has requested with respect to the
Parent Shares and the transactions contemplated hereby.
(iii) Such Investor is an "Accredited Investor,"
as such term is defined in Rule 501 of Regulation D promulgated by the
Securities and Exchange Commission under the Securities Act of 1933.
2.2 REPRESENTATIONS AND WARRANTIES OF PARENT. Parent hereby represents
and warrants to each Investor as follows:
(a) ORGANIZATION; AUTHORITY. Parent is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation, has the requisite corporate power and
authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby, and has taken all necessary corporate action
to authorize the execution, delivery and performance of this Agreement.
(b) EXECUTION AND DELIVERY. This Agreement has been duly
executed and delivered by Parent and, assuming that this Agreement constitutes
the valid and binding obligation of the other parties hereto, constitutes a
valid and binding obligation of Parent, enforceable against Parent in accordance
with its terms, subject to applicable bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and similar laws affecting creditors'
rights and remedies generally and to general principles of equity.
(c) NO CONFLICTS. The execution and delivery of this Agreement
by Parent do not, and, subject to the making of appropriate filings under
securities laws (which Parent agrees to make promptly), to the extent
applicable, the consummation of the transactions contemplated hereby and
compliance with the provisions hereof will not, conflict with, result in a
breach or violation of or default (with or without notice or lapse of time or
both) under, or give rise to any material obligation, any right of termination,
cancellation, or acceleration of any obligation or any loss of a material
benefit under, or require notice to or the consent of any person under (i) its
constituent documents, (ii) any agreement, instrument, undertaking, law,
6
<PAGE>
rule, regulation, judgment, order, injunction, decree, determination or award by
which it is bound, or (iii) any judgment, writ, decree, order or ruling
applicable to Parent; except in the case of clauses (ii) and (iii) for
conflicts, violations, breaches or defaults that would not (i) impair the
ability of Parent to perform its obligations under this Agreement or (ii)
prevent or delay the consummation of any of the transactions contemplated
hereby.
(d) PARENT DISCLOSURE DOCUMENTS. As of the date hereof, the
Parent Disclosure Documents, taken as a whole, do not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made therein, in light of the circumstances under which they were
made, not misleading.
ARTICLE III
COVENANTS OF INVESTORS
3.1 RESTRICTIONS ON TRANSFERS AND RESALES.
(a) Each of the Investors will comply with one of the
following two restrictions on transfer and resale, except to the extent such
Investor receives Parent's prior written consent:
(i) for a period of eighteen months from the
Closing Date, he or she will not sell, transfer or otherwise dispose of his
legal or beneficial interest in any of the Parent Shares issued to him pursuant
to this Agreement or any further shares allotted and issued by way of
capitalization or bonus issue in respect of or with reference to such Parent
Shares; or
(ii) (A) for a period of 12 months from the
Closing Date, he or she will not sell, transfer or otherwise dispose of his
legal or beneficial interest in any of the Parent Shares issued to him or her
pursuant to this Agreement or any further shares allotted and issued by way of
capitalisation or bonus issue in respect of or with reference to such Parent
Shares; (B) on the first anniversary of the Closing Date, or if such day is not
a business day in London, the next following business day in London, such
Investor shall be entitled to sell, transfer or otherwise dispose of the legal
and/or beneficial interest in not more than half of his or her then holdings of
Parent Shares; and (C) if such Investor sells, transfers or disposes of any of
his Parent Shares in accordance with Section
7
<PAGE>
3.1(a)(ii)(B), he or she shall not be entitled to sell, transfer or otherwise
dispose of the legal or beneficial interest in the remaining Parent Shares held
by him or her until the second anniversary of the Closing Date.
(b) If at any time within two years from the Closing Date any
of the Investors becomes entitled and intends at any time to sell, transfer or
otherwise dispose of any of their Parent Shares in accordance with Section
3.1(a) or otherwise, such Investor shall, prior to entering into any such sale,
transfer or other disposal, give written notice to Parent's brokers at the
relevant time of such intention, which notice shall set out the number of Parent
Shares intended to be sold, transferred or otherwise disposed of. Such brokers
shall be entitled to purchase or to procure purchasers for all or any of
the shares mentioned in such notice promptly in accordance with their
obligations to such Investor, including, without limitation, the obligation to
provide best execution. To the extent such shares are not so purchased promptly,
the Investor concerned shall be entitled to sell all or any of the remaining
Parent Shares referred to in such notice but only within a period of 10 business
days (in London) thereafter.
3.2 NO U.S. TRANSFERS. If Parent registers its Parent Shares with the
Securities and Exchange Commission and such shares are publicly traded on a
national securities exchange or listed for quotation on the Nasdaq National
Market in the United States, the Investors may, subject to the other
restrictions contained elsewhere herein, offer and sell their Parent Shares in
the United States, provided that such offers and sales are made in compliance
with United States securities laws. Each Investor agrees that in no event at any
time will he or she sell, transfer or otherwise dispose of any interest in his
or her Parent Shares to a person or entity located in the United States or to a
person or entity, wherever located, that resides in the United States.
3.3 PERMITTED TRANSFERS. Notwithstanding the restrictions on transfer
provided in this Article III, each Investor may transfer some or all of the
Parent Shares purchased by him hereunder to the personal representatives or
heirs of such Investor or to members of the immediate family of such Investor,
provided that any such transferee shall be bound by all of the restrictions set
forth in this Article III and shall so agree in writing if requested by Parent.
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<PAGE>
ARTICLE IV
CONDITIONS TO SUBSCRIPTION CLOSING
4.1 CONDITIONS TO INVESTORS' OBLIGATIONS. The obligation of each
Investor to consummate the transactions contemplated hereby is subject to the
satisfaction or waiver (in whole or in part) on or prior to the Closing Date of
the following conditions:
(a) REPRESENTATIONS, WARRANTIES AND COVENANTS. The
representations and warranties of Parent contained in this Agreement shall have
been true and correct in all material respects as of the date of this Agreement
and the covenants and agreements contained in this Agreement to be complied with
by Parent on or before the Subscription Closing shall have been complied with in
all material respects.
(b) NO INJUNCTIONS OR RESTRAINTS. No judgment, order, decree,
law, temporary restraining order, preliminary or permanent injunction or other
order enacted, entered, promulgated, enforced or issued by any court of
competent jurisdiction or other governmental authority or other legal restraint
or prohibition preventing the consummation of the transactions contemplated
hereby shall be in effect.
(c) CONSUMMATION OF OFFER. The Offer shall have been
consummated.
(d) ADMISSION OF PARENT SHARES. The Parent Shares subscribed
for hereby shall have been admitted to listing on the Official List of the
London Stock Exchange and such listing shall have become effective.
4.2 CONDITIONS TO PARENT'S OBLIGATIONS. The obligation of Parent to
consummate the transactions contemplated hereby is subject to the satisfaction
or waiver (in whole or in part) on or prior to the Closing Date of the following
conditions:
(a) REPRESENTATIONS, WARRANTIES AND COVENANTS. The
representations and warranties of each Investor contained in this Agreement
shall have been true and correct in all material respects as of the date of this
Agreement and the covenants and agreements contained in this Agreement to be
complied with by the Investors on or before the Subscription Closing shall have
been complied with in all material respects.
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<PAGE>
(b) NO INJUNCTIONS OR RESTRAINTS. No judgment, order, decree,
law, temporary restraining order, preliminary or permanent injunction or other
order enacted, entered, promulgated, enforced or issued by any court of
competent jurisdiction or other governmental authority or other legal restraint
or prohibition preventing the consummation of the transactions contemplated
hereby shall be in effect.
(c) CONSUMMATION OF OFFER; TENDER OF SHARES. The Offer shall
have been consummated, and each Investor shall have tendered in the Offer (and
not withdrawn) all Company Shares owned by him or her in compliance with the
terms and conditions of the Offer.
ARTICLE V
MISCELLANEOUS
5.1 AMENDMENT; TERMINATION. This Agreement may not be amended except by
an instrument in writing signed on behalf of the party against whom such
amendment is sought to be enforced. This Agreement will terminate upon the
termination of the Merger Agreement in accordance with its terms. In the event
of termination of this Agreement pursuant to this Section, this Agreement will
become null and void and of no effect with no liability on the part of any party
hereto, except that no such termination will relieve any party hereto from any
liability for any breach of this Agreement occurring prior to such termination.
5.2 FEES AND EXPENSES. Each party hereto will pay its own expenses
incident to preparing for, entering into and carrying out this Agreement and the
consummation of the transactions contemplated hereby.
5.3 EXTENSION; WAIVER. Any agreement on the part of a party to waive
any provision of this Agreement, or to extend the time for any performance
hereunder, will be valid only if set forth in an instrument in writing signed on
behalf of such party. The failure of any party to this Agreement to assert any
of its rights under this Agreement or otherwise will not constitute a waiver of
such rights.
5.4 ENTIRE AGREEMENT; NO THIRD-PARTY BENEFICIARIES. This Agreement
constitutes the entire agreement among the parties hereto with respect to the
subject matter hereof and supersedes
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<PAGE>
all prior agreements and understandings, both written and oral, among the
parties with respect to such matters. This Agreement is not intended to confer
upon any person other than the parties hereto any rights or remedies.
5.5 GOVERNING LAW. This Agreement will be governed by, and construed in
accordance with, the laws of the State of Indiana, regardless of the laws that
might otherwise govern under applicable principles of conflict of laws thereof.
5.6 NOTICES. Any notice required to be given hereunder will be
sufficient if in writing and sent by facsimile transmission and by courier
service (with proof of service), hand delivery or certified or registered mail
(return receipt requested and first-class postage prepaid), addressed as
follows:
If to Parent:
First Technology PLC
2 Cheapside Court
Ascot
Berkshire SL5 7RF
United Kingdom
Attn: Dr. Fred Westlake
Fax No.: 44-1344-622-773
With a copy to:
Jones, Day, Reavis & Pogue
599 Lexington Avenue
New York, New York 10022
Attn: Jere R. Thomson, Esq.
Fax No.: 212-755-7306
If to any Investor:
c/o Control Devices, Inc.
228 Northeast Road
Standish, Maine 04084
Attn: Bruce D. Atkinson
Fax No.: 207-642-0111
With a copy to:
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<PAGE>
Sommer & Barnard, PC
4000 Bank One Tower
Indianapolis, Indiana 46204
Attn: James A. Strain, Esq.
Fax No.: 317-236-9802
or to such other address as any party will specify by written notice so given,
and such notice will be deemed to have been delivered as of the date so
telecommunicated, personally delivered or mailed.
5.7 ASSIGNMENT. Except to the extent provided in Section 3.2 and 3.3,
neither this Agreement nor any of the rights, interests, or obligations under
this Agreement may be assigned or delegated, in whole or in part, by operation
of law or otherwise, by any Investor without the prior written consent of
Parent, and any such assignment or delegation that is not consented to will be
null and void.
5.8 PUBLICITY. Parent and the Investors will consult with each other
before issuing any press release or otherwise making any public statements with
respect to this Agreement or the transactions contemplated hereby and will not
issue any such press release or make any such public statement before such
consultation, except as may be required by law or applicable stock exchange
rules.
5.9 ENFORCEMENT.
(a) Irreparable damage would occur in the event that any of
the provisions of this Agreement were not performed in accordance with their
specific terms or were otherwise breached. Accordingly, the parties will be
entitled to an injunction or injunctions to prevent breaches of this Agreement
and to enforce specifically the terms and provisions of this Agreement, this
being in addition to any other remedy to which they are entitled at law or in
equity.
(b) This Agreement shall be construed as a collection of
independent agreements between Parent and each Investor, enforceable separately,
such that a breach by one Investor (or a defense available to that Investor) or
a breach by Parent with respect to one Investor (or a defense available to
Parent with respect to one Investor) shall have no effect on the obligations
12
<PAGE>
of the other Investors to Parent or of Parent to the other Investors.
5.10 SEVERABILITY. Whenever possible, each provision or portion of any
provision of this Agreement will be interpreted in such manner as to be
effective and valid under applicable law but if any provision or portion of any
provision of this Agreement is law or rule in any jurisdiction, such invalidity,
illegality or unenforceability will not affect any other provision or portion of
any provision in such jurisdiction, and this Agreement will be reformed,
construed and enforced in such jurisdiction as if such invalid, illegal or
unenforceable provision or portion of any provision had never been contained
herein.
5.11 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, all of which will be considered one and the same instrument and
will become effective when one or more counterparts have been signed by each
party and delivered to the other parties.
5.12 HEADINGS. The descriptive headings contained herein are for
convenience and reference only and will not affect in any way the meaning or
interpretation of this Agreement.
5.13 REMEDIES NOT EXCLUSIVE. All rights, powers and remedies provided
under this Agreement or otherwise available in respect hereof at law or in
equity will be cumulative and not alternative, and the exercise of any thereof
by either party will not preclude the simultaneous or later exercise of any
other such right, power or remedy by such party.
5.14 DEFINITIONS. Except as otherwise defined herein, terms used herein
with initial capital letters have the respective meanings ascribed thereto in
the Merger Agreement.
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<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be signed as of the day and year first written above.
FIRST TECHNOLOGY PLC
By: /s/ Dr. Frederick Westlake
--------------------------------------
Name: Dr. Frederick Westlake
----------------------------------
Title: Chairman
---------------------------------
/s/ Bruce D. Atkinson
----------------------------------------
Bruce D. Atkinson
/s/ Forrest E. Crisman, Jr.
----------------------------------------
Forrest E. Crisman, Jr.
/s/ Michel Hauser-Kauffmann
----------------------------------------
Michel Hauser-Kauffmann
/s/ Glenn Scolnik
----------------------------------------
Glenn Scolnik
/s/ Ralph R. Whitney
----------------------------------------
Ralph R. Whitney
/s/ Jeffrey G. Wood
----------------------------------------
Jeffrey G. Wood
14
<PAGE>
SCHEDULE A
<TABLE>
<CAPTION>
INVESTOR INVESTMENT AMOUNT
-------- -----------------
<S> <C>
Ralph R. Whitney, Jr. US $2,732,725
Bruce D. Atkinson US $1,310,987
Jeffrey G. Wood US $ 873,991
Michel Hauser-Kauffmann US $ 349,566
Forrest E. Crisman, Jr. US $1,366,366
Glenn Scolnik US $1,366,366
US $8,000,001
</TABLE>
15
<PAGE>
Exhibit 99(c)(5)
EMPLOYMENT AGREEMENT
--------------------
THIS EMPLOYMENT AGREEMENT (hereafter "Agreement") is made as of the
23rd day of February, 1999, and is effective as of the Effective Date set forth
below, by and between Control Devices, Inc., an Indiana publicly traded limited
liability company (hereafter "Employer" or "Company") and Mr. Bruce D. Atkinson
(hereafter "Employee"), a resident of the State of Maine.
RECITALS
--------
Whereas, Employee is currently an employee of Employer serving in the
role as President and Chief Executive Officer of Employer at its headquarters
location in Standish, Maine, and
Whereas, First Technology PLC ("FTPLC") is a publicly traded limited
liability company, incorporated under the laws of England and Wales, which
desires to acquire, directly or indirectly, all of the voting securities of
Employer, and thereafter desires to assure a smooth transition and the continued
employment of Employee by Employer following FTPLC's acquisition of Employer,
and
Whereas, Employee and Employer each desire to set forth in full the
terms and conditions of employment by Employer which would apply to Employee
following the Effective Date.
NOW, THEREFORE, in consideration of the mutual covenants contained
herein and other good and valuable consideration the receipt and adequacy of
which are hereby acknowledged, the parties agree, as follows:
1. EMPLOYMENT. Employer hereby employs Employee and Employee hereby
accepts employment as the President and Chief Executive Officer of Employer
effective as of the Effective Date. Employee shall also serve as a member of the
Board of Directors of the Employer and in such other capacities as the Board of
Directors of Employer may reasonably designate from time to time consistent with
the position and title set forth above.
2. DUTIES. Employee shall have the full authority and responsibility as
the President and Chief Executive Officer of the Employer for the day-to-day
management and operations of the Company. Employee shall report directly and
solely to the Chairman of the Board of the Employer, who shall be appointed by
FTPLC and under normal circumstances will be the Chairman of the Board of FTPLC.
Employee shall devote his full business time and efforts to the performance of
his duties for Employer. Employee's services to Employer shall be rendered to
the best of his ability and with loyalty to the Employer. Employee shall not
during the term of this Agreement render services to any person, firm or
corporation other than Employer, either within or outside of business hours;
provided, that the Employee may serve on the board of directors of two companies
acceptable to Employer, and may devote reasonable personal time to charity,
industry groups and investment matters. Employee shall not have any interest,
direct or indirect, in any business that is competitive with the business of
Employer, other than ownership of not more than five percent of the outstanding
stock of any corporation whose stock is held of record by more than 500
stockholders and is actively traded on a public exchange.
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<PAGE>
3. TERM OF EMPLOYMENT. Subject to the provisions for termination as
hereinafter provided, the term of this Agreement shall be for a period of two
(2) years, commencing on the Effective Date and terminating two (2) years from
the Effective Date (the"Initial Term"), unless terminated as provided herein.
After the Initial Term this Agreement shall be renewed automatically for
succeeding periods of one (1) year each on the same terms and conditions as
contained herein ("Extension Term"), unless either party notifies the other in
writing at least forty-five days prior to the expiration of an Extension Term of
its intent not to renew this Agreement, or unless terminated as provided herein.
4. COMPENSATION AND BENEFITS.
(a) SALARY. Employer shall pay Employee a base salary of $264,600 per
year payable in bi-weekly installments. The Board of Directors of Employer shall
review Employee's base salary annually for potential increase only taking into
account corporate and individual performance, increases in the cost of living
and compensation of similarly situated executives working for companies in
similar industries; provided, however, that the amount of increase, if any,
shall be discretionary with the Board of Directors.
(b) BONUS. Employer shall pay Employee a bonus on or before the end of
the twelfth week following the close of the FTPLC's fiscal year ("Bonus Date")
on April 30, 2000. The amount of the bonus for the 16-month period from January
3, 1999 shall not be less than $168,000. Thereafter, the Employer shall pay
Employee a bonus on or before the Bonus Date calculated in accordance with the
executive bonus program adopted by the Board of Directors of the Company for
senior executives of the Company. Employee's bonus opportunity under such
executive bonus program shall be equivalent to the annual bonus opportunity
available to similarly situated executives of FTPLC.
(c) BENEFITS. Employee shall be entitled to all fringe benefits of the
Company normally made available to senior executives of the Company, including,
but not limited to, participation in the Company's qualified medical, dental,
life and disability insurance programs, holiday program, 401(k) program, and
executive vacation (4 weeks per year). In addition thereto, the Employee shall
be entitled to the following benefits:
(i) Use of a Company car, including reimbursement for all
normal operating, service and insurance expense related thereto.
(ii) Reimbursement of reasonable and necessary business
expenses incurred in connection with travel and entertainment on behalf
of the Company.
5. TERMINATION AND TERMINATION BENEFITS. This Agreement may be
terminated by Employee or Employer and benefits shall be paid in accordance with
the provisions set forth below:
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<PAGE>
(a) TERMINATION BY EMPLOYEE. Employee shall have the right at any time
to terminate his employment with Employer WITH OR WITHOUT CAUSE by providing
written notice to Employer to that effect. The fifteenth (15th) day following
the date of Employee's notice shall be considered the effective date of
termination ("Termination Date") of the Employee's employment for purposes of
this Paragraph Five and Paragraph Six, unless Employer exercises its option to
accelerate the Termination Date to any day immediately following Employer's
receipt of such notice.
(b) TERMINATION BY EMPLOYER. Employer shall have the right at any time
to terminate the employment of Employee WITH OR WITHOUT CAUSE by providing
written notice to the Employee to that effect. Employer shall have the right to
designate in such notice the date which shall be the effective date of
termination, but shall exercise reasonable efforts to provide not less than
fifteen days advance notice. Such date shall be treated as the Termination Date
for purposes of this Paragraph Five and Paragraph Six.
(c) BENEFITS PAYABLE UPON TERMINATION.
(i) If this Agreement is terminated WITHOUT CAUSE BY THE
EMPLOYEE OR WITH CAUSE BY THE EMPLOYER, Employer shall pay the
Employee's salary in full and reimburse all normal business related
expenses incurred by the Employee through the Termination Date, and
thereafter Employer shall have no further obligation to the Employee;
(ii) If this Agreement is terminated WITHOUT CAUSE BY THE
COMPANY OR WITH CAUSE BY THE EMPLOYEE DURING THE TWENTY-FOUR MONTH
PERIOD FOLLOWING THE EFFECTIVE DATE, the Employer shall pay to the
Employee in full settlement of all of its obligations to the Employee
hereunder upon receipt of a fully executed, mutually acceptable general
release (such general release shall be promptly (normally within 60
days) negotiated between the parties) from the Employee the following
cash benefits:
-an amount of money equivalent to twice the
annualized salary of Employee then in effect at the
Termination Date, plus
-an amount of money equivalent to twice the average
annual bonus actually paid (or, if termination of employment
occurs after the completion of a fiscal year but before the
payment of the bonus for such fiscal year, and if such bonus
is reasonably determinable on or before the Termination Date,
the amount of such bonus as so determined) to the Employee for
the two preceding fiscal year periods, plus
-an amount of money equivalent to twice the average
amount actually paid by the Company for the Employee's
benefits (i.e. health insurance, life insurance and 401(k)
benefit) for the two preceding fiscal years;
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<PAGE>
(iii) If this Agreement is terminated WITHOUT CAUSE BY THE
COMPANY OR WITH CAUSE BY THE EMPLOYEE AT ANY TIME FOLLOWING THE
TWENTY-FOUR MONTH PERIOD FOLLOWING THE EFFECTIVE DATE, the Employer
shall pay to the Employee in full settlement of all of its obligations
to the Employee upon receipt of a fully executed general release from
the Employee one-half of the cash benefits specified in sub-paragraph
(c) (ii);
(iv) If the amount of money calculated in accordance with
sub-paragraph c) (ii) above is less than the Employee's total base
salary, bonus and benefits paid for the calendar year 1998 ("Base Line
Benefit"), the amount of money payable to the Employee pursuant to that
sub-paragraph shall be twice the Base Line Benefit, and the amount of
money payable to the Employee pursuant to sub-paragraph c) iii) above
shall be equal to the Base Line Benefit.
(d) CAUSE FOR THE EMPLOYER. For purposes of this Agreement, the
following actions by the Employee shall constitute "cause" for termination of
this Agreement by Employer:
(i) Material breach of any of the terms of this Agreement or
of the Company's policies and procedures applicable to employees and/or
directors;
(ii) Conviction of or plea of guilty or NOLO CONTENDERE to a
crime involving moral turpitude or involving any violation of
securities or commodities law or regulation, or the issuance of any
court or administrative order enjoining or prohibiting Employee from
violating any such law or regulation;
(iii) Repeated or habitual intoxication with alcohol or drugs
while on the premises of the Company or any of its affiliates or during
the performance by Employee of any of his duties hereunder;
(iv) Embezzlement of any property belonging or entrusted to
the Company or any of its affiliates;
(v) Repeated or protracted absence from work without medical
justification;
(vi) Gross misconduct or gross neglect of duties, or wilful
failure to act with respect to duties or actions previously
communicated to Employee in writing by the Chairman of the Board of the
Company.
(e) CAUSE FOR THE EMPLOYEE. For purposes of this Agreement, the
following actions by the Employer shall constitute "cause" for termination of
this Agreement by Employee:
(i) Material breach of any of the terms of this Agreement;
(ii) Reduction in base salary, change in employment location,
material diminution in the Employee's position (including status,
office, title, authority, duties or responsibilites), or change in
reporting relationship directly and solely to the Chairman of the Board
of the FTPLC;
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<PAGE>
(iii) Change in the organizational structure of the Employer
without the consent of the Employee, which such consent shall not be
unreasonably withheld.
(iv) Failure of the Employer or alternatively FTPLC to adopt a
long term incentive plan for key employees of Employer on or before
December 31, 1999 which is reasonably comparable to Employer's
terminated 1996 and 1997 Stock Option Plans. It is understood that any
such plan would need to obtain FTPLC shareholder approval and comply
with relevant law;
(v) Delivery by Employer to Employee of a notice of Employer's
intent not to renew this Agreement as desribed in Section 3 above.
6) NON-SOLICITATION AND NON-COMPETITION. For a period of two years
following termination of Employee's employment with Employer, Employee shall
not, directly or indirectly, either as an equity owner (except for the ownership
of stock in any corporation whose stock is listed on a public stock exchange),
employee, salesperson, consultant, director, lender, or in any other capacity,
engage in or be interested in any business which sells or participates in the
sale, design or manufacture, for its own use or resale,
(i) any products which the Employer manufactures or sells, or
is actively considering manufacturing or selling, or is competitive
with such products during Employee's employment by Employer,or
(ii) any products manufactured, sold, competitive with or
actively being developed by any affiliate of the Employer if the
Employee was directly or indirectly involved therewith during his
employment by Employer,
provided that Employee shall not be prevented from working for any person whose
business involving manufacture or sale of such products is DE MINIMIS so long as
Employee has no direct or indirect involvement with such business. Employee
shall also not take any action that will in any way interfere with or cause the
termination of the business relationship between Employer and any customer of
Employer. Employee shall also not solicit for employment any person employed in
the business of Employer.
7. CONFIDENTIAL INFORMATION. During or subsequent to Employee's
employment with Employer, Employee agrees that he will not directly or
indirectly communicate, use, disseminate, disclose, lecture upon or publish
articles concerning any confidential information of Employer or FTPLC without
the prior written consent of Employer or FTPLC, except as required in the
ordinary course of performing employment duties for Employer or may be required
by law or order of a court or government agency. Furthermore, Employee agrees
that he will not utilize or make available any such confidential information of
Employer or FTPLC, either directly or indirectly, in connection with the
solicitation of Employee or the acceptance of future employment with any other
organization. Employee acknowledges and agrees that any intellectual property of
any sort developed or invented by Employee while employed by the Company
(whether or not during work hours) shall be and remain the sole and exclusive
property of the Company, and Employee shall have no interest therein. Employee
shall execute any instrument Employer deems necessary or desirable to transfer
and perfect Company's unencumbered interest in any intellecutal property
Employee invents or develops during the term of this Agreement.
5
<PAGE>
8. PROPERTY OF EMPLOYER. All documents, contact lists, mailing lists,
interview reports, reports and presentation materials, keys, equipment and
supplies given to Employee or developed by Employee during the term of this
Agreement, including computer diskettes and other storage medium in any tangible
form containing information generated in the course of employment are the sole
and exclusive property of Employer. Upon termination, for any reason, Employee
will deliver to Employer all such documents and tangible things, including,
without limitation, credit cards, diaries, phone lists, documents containing
customer lists, and customer information.
9. EMPLOYEE CLAIMS. All claims initiated by the Employee against the
Employer must be commenced within six months from the Effective Date of
termination.
10. SURVIVAL. The following paragraphs of this Agreement shall survive
for a period of two years subsequent to the termination of this Agreement: 6, 7
and 9.
11. CHOICE OF LAW. This Agreement shall be governed and controlled in
all respects by the laws of the State of Maine, including as to interpretation,
enforceability, validity, and construction.
12. CHOICE OF FORUM. Except as provided in paragraph 22 below, any
dispute hereunder which is not amicably resolved by the parties through friendly
negotiations shall be referred to the American Arbitration Association in
Boston, Massachusetts for resolution. The panel shall consist of three
arbitrators. Each party shall appoint one arbitrator and the two arbitrators
shall appoint the third. The decision of the arbitrators shall be final and
binding. Each party shall share the costs of arbitration equally, and any
decision of the arbitrators shall be enforceable by either party through an
action brought in the United States Federal District Court in Boston,
Massachusetts.
13. NOTICE. All notices and other communications required or permitted
under this Agreement shall be in writing and shall be deemed given when
delivered personally or by registered or certified mail, return receipt
requested, addressed as follows (or any other address that is specified in
writing by either party):
IF TO EMPLOYER:
Control Devices, Inc.
Attn: Corporate Secretary
288 Northeast Street
Standish, Maine, 04084-6419
WITH A COPY TO:
First Technology PLC
Attn: Corporate Secretary
2 Cheapside Court,
Buckhurst Road, Ascot,
Berks, SL5 7RF,
United Kingdom
6
<PAGE>
IF TO EMPLOYEE:
Mr. Bruce D. Atkinson
21 Mountain View,
Standish, Maine, 04084
WITH A COPY TO:
Stephen Bachelder
22 Free Street
Portland, Maine, 04101
14. WAIVER. Employer's failure to exercise a right or remedy shall not
operate as a waiver of any of Employer's rights or Employee's obligations under
this Agreement.
15. SEVERABILITY. Whenever possible, each provision of this Agreement
shall be interpreted in such a way as to be effective and valid under applicable
law. If a provision is prohibited by or invalid under applicable law, it shall
be ineffective only to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of this
Agreement.
16. AMENDMENTS. The terms of this Agreement may not be varied or
modified in any manner, except in a subsequent writing executed by an authorized
representative of both parties.
17. DIRECTOR'S INSURANCE. Employer shall maintain directly or through
FTPLC a director's and officer's liability insurance policy benefiting corporate
officers and directors, including Employee, in an amount equivalent to the
coverage provided in the similar policy maintained by FTPLC, which presently is
(pound) 10.0 million.
18. REMEDIES CUMULATIVE. The remedies provided in this Agreement shall
be cumulative, and the assertion by Employer of any right or remedy shall not
preclude the assertion by Employer of any other rights or the seeking of any
other remedies.
19. SUCCESSORS AND ASSIGNS. This Agreement may not be assigned by
Employee. Employer may assign this Agreement to an affiliated or subsidiary
company of Employer with or without the consent of Employee, subject to such
company entering into a written assumption of Employer's obligations hereunder,
in which event this Agreement shall be binding upon and inure to the benefit of
the such company.
20. EFFECTIVE DATE. This Agreement shall become effective simultaneous
with the completion of the acquisition by First Technology PLC of a controlling
interest in the voting securities of Control Devices, Inc.
21. COUNTERPARTS. This Agreement may be executed in one or more
counterparts each of which shall be deemed an original agreement, but all of
which shall be considered one instrument.
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22. INJUNCTIVE RELIEF. The Parties acknowledge that irreparable injury
will result from the failure of Employee to comply with the terms of this
Agreement. In the event of any actual or threatened default or breach of any of
the provisions of this Agreement, Employer shall have the right to specific
performance or injunctive relief, as well as monetary damage and any other
appropriate relief.
23. TERMINATION OF PRIOR AGREEMENTS. This Agreement, once effective,
shall constitutes the entire understanding between the parties with respect to
the subject matter hereof and supersedes any prior discussions, negotiations,
agreements and understandings between the parties relating to the terms and
conditions of employment of Employee.
24. TITLES. Titles and headings to articles, sections, or paragraphs in
this Agreement are inserted for convenience of reference only and are not
intended to affect the interpretation or construction of the Agreement.
25. ATTORNEY REVIEW. The parties represent that they have carefully
read this Agreement and have consulted with their attorney. The parties
affirmatively state that they understand the contents of this Agreement, and
sign this Agreement as their free act and deed.
IN WITNESS WHEREOF, this Agreement has been executed by the parties the
day and date heretofore stated.
WITNESS: BRUCE D. ATKINSON
---------------------
WITNESS: CONTROL DEVICES, INC.
---------------------
<PAGE>
Exhibit 99(c)(6)
EMPLOYMENT AGREEMENT
--------------------
THIS EMPLOYMENT AGREEMENT (hereafter "Agreement") is made as of the
23rd day of February, 1999, and is effective as of the Effective Date set forth
below, by and between Control Devices, Inc., an Indiana publicly traded limited
liability company (hereafter "Employer" or "Company") and Mr. Jeffrey G. Wood
(hereafter "Employee"), a resident of the State of Maine.
RECITALS
--------
Whereas, Employee is currently an employee of Employer serving in the
role as Vice President and Chief Financial Officer of Employer at its
headquarters location in Standish, Maine, and
Whereas, First Technology PLC ("FTPLC") is a publicly traded limited
liability company, incorporated under the laws of England and Wales, which
desires to acquire, directly or indirectly, all of the voting securities of
Employer, and thereafter desires to assure a smooth transition and the continued
employment of Employee by Employer following FTPLC's acquisition of Employer,
and
Whereas, Employee and Employer each desire to set forth in full the
terms and conditions of employment by Employer which would apply to Employee
following the Effective Date.
NOW, THEREFORE, in consideration of the mutual covenants contained
herein and other good and valuable consideration the receipt and adequacy of
which are hereby acknowledged, the parties agree, as follows:
1. EMPLOYMENT. Employer hereby employs Employee and Employee hereby
accepts employment as the Vice President and Chief Financial Officer of Employer
effective as of the Effective Date. Employee shall also serve as a member of the
Board of Directors of the Employer and in such other capacities as the Board of
Directors of Employer may reasonably designate from time to time consistent with
the position and title set forth above.
2. DUTIES AND ADVANCEMENT.
(a) DUTIES. Employee shall have the full authority and responsibility
as the Chief Financial Officer of the Employer for the day-to-day financial
management and operations of the Company. Employee shall report directly and
solely to the President and Chief Executive Officer of the Employer. Employee
shall devote his full business time and efforts to the performance of his duties
for Employer. Employee's services to Employer shall be rendered to the best of
his ability and with loyalty to the Employer. Employee shall not during the term
of this Agreement render services to any person, firm or corporation other than
Employer, either within or outside of business hours; provided, that the
Employee may serve on the board of directors of two companies acceptable to
Employer, and may devote reasonable personal time to charity, industry groups
and investment matters. Employee shall not have any interest, direct or
indirect, in any business that is competitive with the business of Employer,
other than ownership of not more than five percent of the outstanding stock of
any corporation whose stock is held of record by more than 500 stockholders and
is actively traded on a public exchange.
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(b) ADVANCEMENT. If Mr. Bruce D. Atkinson vacates the position of
President and Chief Executive Officer of the Company for any reason, Employee,
subject to Mr. Atkinson's endorsement, will receive first consideration by the
Board of Directors of the Company as Mr. Atkinson's successor. The terms of
Employee's engagement if so employed in such position will for one year be
essentially the same as set forth in this Agreement, but adjusted as appropriate
to reflect the new position and compensation level. Following one year in such
position, the terms of engagement will be modified to be substantially the same
as set forth in FTPLC's then current executive service agreement, adjusted to
reflect US employment law and conditions. If Employee is appointed to the
position of President and Chief Executive Officer of the Company, he shall
report at the discretion of the Board of Directors to the Chairman of the Board
or the Chief Group Executive of FTPLC.
3. TERM OF EMPLOYMENT. Subject to the provisions for termination as
hereinafter provided, the term of this Agreement shall be for a period of two
(2) years, commencing on the Effective Date and terminating two (2) years from
the Effective Date (the "Initial Term"), unless terminated as provided herein.
After the Initial Term, this Agreement shall be renewed automatically for
succeeding periods of one (1) year each on the same terms and conditions as
contained herein ("Extension Term"), unless either party notifies the other in
writing at least forty-five days prior to the expiration of an Extension Term of
its intent not to renew this Agreement, or unless terminated as provided herein.
4. COMPENSATION AND BENEFITS.
(a) SALARY. Employer shall pay Employee a base salary of $176,400 per
year tendered in bi-weekly installments. The Board of Directors of Employer
shall review Employee's base salary annually for potential increase only taking
into account corporate and individual performance, increases in the cost of
living and compensation of similarly situated executives working for companies
in similar industries; provided, however, that the amount of increase, if any,
shall be discretionary with the Board of Directors.
(b). BONUS. Employer shall pay Employee a bonus on or before the end of
the twelfth week following the close of FTPLC's fiscal year ("Bonus Date") on
April 30, 2000. The amount of the bonus for the 16 month period from January 3,
1999, shall not be less than $112,000. Thereafter, the Employer shall pay
Employee a bonus on or before the Bonus Date calculated in accordance with the
executive bonus program adopted by the Board of Directors of the Company for
senior executives of the Company. Employee's bonus opportunity under such
executive bonus program shall be equivalent to the annual bonus opportunity
available to similarly situated executives of FTPLC.
(c) BENEFITS. Employee shall be entitled to all fringe benefits of the
Company normally made available to senior executives of the Company, including,
but not limited to, participation in the Company's qualified medical, dental,
life and disability insurance programs, holiday program, 401(k) program, and
executive vacation program (4 weeks per year). In addition thereto, the Employee
shall be entitled to reimbursement of reasonable and necessary business expenses
incurred in connection with travel and entertainment on behalf of the Company.
5. TERMINATION AND TERMINATION BENEFITS. This Agreement may be
terminated by Employee or Employer and benefits shall be paid in accordance with
the provisions set forth below:
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(a) TERMINATION BY EMPLOYEE. Employee shall have the right at any time
to terminate his employment with Employer WITH OR WITHOUT CAUSE by providing
written notice to Employer to that effect. The fifteenth (15th) day following
the date of Employee's notice shall be considered the effective date of
termination ("Termination Date") of the Employee's employment for purposes of
this Paragraph Five and Paragraph Six, unless Employer exercises its option to
accelerate the Termination Date to any day immediately following Employer's
receipt of such notice.
(b) TERMINATION BY EMPLOYER. Employer shall have the right at any time
to terminate the employment of Employee WITH OR WITHOUT CAUSE by providing
written notice to the Employee to that effect. Employer shall have the right to
designate in such notice the date which shall be the effective date of
termination, but shall exercise reasonable efforts to provide not less than
fifteen days advance notice. Such date shall be treated as the Termination Date
for purposes of this Paragraph Five and Paragraph Six.
(c) BENEFITS PAYABLE UPON TERMINATION.
(i) If this Agreement is terminated WITHOUT CAUSE BY THE
EMPLOYEE OR WITH CAUSE BY THE EMPLOYER, Employer shall pay the
Employee's salary in full and reimburse all normal business related
expenses incurred by the Employee through the Termination Date, and
thereafter Employer shall have no further obligation to the Employee.
(ii) If this Agreement is terminated WITHOUT CAUSE BY THE
COMPANY OR WITH CAUSE BY THE EMPLOYEE, the Employer shall pay to the
Employee in full settlement of all of its obligations to the Employee
upon receipt of a fully executed, mutually acceptable general release
(such general release shall be promptly (normally within 60 days)
negotiated between the parties) from the Employee the following cash
benefits:
- an amount of money equivalent to twice the annualized salary
of Employee then in effect at the Termination Date, plus
- an amount of money equivalent to twice the average annual
bonus actually paid (or, if termination of employment occurs after the
completion of a fiscal year, but before payment of the bonus for such
fiscal year, and if such bonus is reasonably determinable on or before
the Termination Date, the amount of such bonus as so determined) to the
Employee for the two preceding fiscal year periods, plus
- an amount of money equivalent to twice the average amount
actually paid by the Company for the Employee's benefits (i.e., health
insurance, life insurance and 401(k) benefit) for the two preceding
fiscal years.
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(iii) If this Agreement is terminated (A) WITHOUT CAUSE BY THE
COMPANY OR WITH CAUSE BY THEEMPLOYEE AT ANY TIME FOLLOWING THE
EMPLOYEE'S FIRST FULL YEAR OF SERVICE AS PRESIDENT AND CHIEF EXECUTIVE
OFFICER OF THE COMPANY OR (B) WITH CAUSE BY THE EMPLOYEE FOLLOWING THE
EMPLOYEE'S DECISION NOT TO ACCEPT APPOINTMENT AS PRESIDENT AND CHIEF
EXECUTIVE OFFICER OF THE COMPANY, AND IN THE ABSENCE OF SUPERCEDING
TERMS OF SEVERANCE, the Employer shall pay to the Employee in full
settlement of all of its obligations to the Employee upon receipt of a
fully executed general release from the Employee one-half of the cash
benefits specified in sub-paragraph (c) (ii) above.
(iv) If the amount of money calculated in accordance with
sub-paragraph c) (ii) above is less than the Employee's total base
salary, bonus and benefits paid for the calendar year 1998 ("Base Line
Benefit"), the amount of money payable to the Employee pursuant to that
sub-paragraph shall be twice the Base Line Benefit, and the amount of
money payable to the Employee pursuant to sub-paragraph c) iii) above
shall be equal to the Base Line Benefit.
(d) CAUSE FOR THE EMPLOYER. For purposes of this Agreement, the
following actions by the Employee shall constitute "cause" for termination of
this Agreement by Employer:
(i) Material breach of any of the terms of this Agreement or
of the Company's policies and procedures applicable to employees and/or
directors;
(ii) Conviction of or plea of guilty or NOLO CONTENDERE to a
crime involving moral turpitude or involving any violation of
securities or commodities law or regulation, or the issuance of any
court or administrative order enjoining or prohibiting Employee from
violating any such law or regulation;
(iii) Repeated or habitual intoxication with alcohol or drugs
while on the premises of the Company or any of its affiliates or during
the performance by Employee of any of his duties hereunder;
(iv) Embezzlement of any property belonging or entrusted to
the Company or any of its affiliates;
(v) Repeated or protracted absence from work without medical
justification;
(vi) Gross misconduct or gross neglect of duties, or wilful
failure to act with respect to duties or actions previously
communicated to Employee in writing by the Chairman of the Board of the
Company.
(e) CAUSE FOR THE EMPLOYEE. For purposes of this Agreement, the
following actions by the Employer shall constitute "cause" for termination of
this Agreement by Employee:
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(i) Material breach of any of the terms of this Agreement,
(ii) Reduction in base salary, change in employment location,
material diminution in the Employee's position (including status,
office, title, authority, duties or responsibilites), or change in
reporting relationship directly and solely to the President and Chief
Executive Officer of the Employer,
(iii) Decision by the Board of Directors of the Company to
appoint someone other than the Employee in the role of President and
Chief Executive Officer as successor to Mr. Bruce D. Atkinson.
(iv) Failure of the Employer or alternatively FTPLC to adopt a
long term incentive plan for key employees of Employer on or before
December 31, 1999 which is reasonably comparable to Employer's
terminated 1996 and 1997 Stock Option Plans. It is understood that any
such plan would need to obtain FTPLC shareholder approval and comply
with relevant law.
(v) Delivery by Employer to Employee of a notice of Employer's
intent not to renew this Agreement as described in Section 3 above.
6. NON-SOLICITATION AND NON-COMPETITION. For a period of two years
following termination of Employee's employment with Employer, Employee shall
not, directly or indirectly, either as an equity owner (except for the ownership
of stock in any corporation whose stock is listed on a public stock exchange),
employee, salesperson, consultant, director, lender, or in any other capacity,
engage in or be interested in any business which sells or participates in the
sale, design or manufacture, for its own use or resale,
i) any products which the Employer manufactures or sells, is actively
considering manufacturing or selling, or is competitive with such
products, during Employee's employment by Employer, or
ii) any products manufactured, sold, competitive with or actively being
developed by any affiliate of the Employer, if the Employee was
directly or indirectly involved therewith during his employment by
Employer,
provided that Employee shall not be prevented from working for any person whose
business involving manufacture or sale of such products is DE MINIMIS so long as
Employee has no direct or indirect involvement with such business.. Employee
shall also not take any action that will in any way interfere with or cause the
termination of the business relationship between Employer and any customer of
Employer. Employee shall also not solicit for employment any person employed in
the business of Employer.
7. CONFIDENTIAL INFORMATION. During or subsequent to Employee's
employment with Employer, Employee agrees that he will not directly or
indirectly communicate, use, disseminate, disclose, lecture upon or publish
articles concerning any confidential information of Employer or FTPLC without
the prior written consent of Employer or FTPLC, except as required in the
ordinary course of performing employment duties for Employer, or as may be
required by law, order of a court or government agency. Furthermore, Employee
5
<PAGE>
agrees that he will not utilize or make available any such confidential
information of Employer or FTPLC, either directly or indirectly, in connection
with the solicitation of Employee or the acceptance of future employment with
any other organization. Employee acknowledges and agrees that any intellectual
property of any sort developed or invented by Employee while employed by the
Company (whether or not during work hours) shall be and remain the sole and
exclusive property of the Company, and Employee shall have no interest therein.
Employee shall execute any instrument Employer deems necessary or desireable to
transfer and perfect Company's unencumbered interest in any intellecutal
property Employee invents or develops during the term of this Agreement.
8. PROPERTY OF EMPLOYER. All documents, contact lists, mailing lists,
interview reports, reports and presentation materials, keys, equipment and
supplies given to Employee or developed by Employee during the term of this
Agreement, including computer diskettes and other storage medium in any tangible
form containing information generated in the course of employment are the sole
and exclusive property of Employer. Upon termination, for any reason, Employee
will deliver to Employer all such documents and tangible things, including,
without limitation, credit cards, diaries, phone lists, documents containing
customer lists, and customer information.
9. EMPLOYEE CLAIMS. All claims initiated by the Employee against the
Employer must be commenced within six months from the Effective Date of
termination.
10. SURVIVAL. The following paragraphs of this Agreement shall survive
for a period of two years subsequent to the termination of this Agreement: 6, 7
and 9.
11. CHOICE OF LAW. This Agreement shall be governed and controlled in
all respects by the laws of the State of Maine, including as to interpretation,
enforceability, validity, and construction.
12. CHOICE OF FORUM. Except as provided in paragraph 22 below, any
dispute hereunder which is not amicably resolved by the parties through friendly
negotiations shall be referred to the American Arbitration Association in
Boston, Massachusetts for resolution. The panel shall consist of three
arbitrators. Each party shall appoint one arbitrator and the two arbitrators
shall appoint the third. The decision of the arbitrators shall be final and
binding. Each party shall share the costs of arbitration equally, and any
decision of the arbitrators shall be enforceable by either party through an
action brought in the United States Federal District Court in Boston,
Massachusetts.
13. NOTICE. All notices and other communications required or permitted
under this Agreement shall be in writing and shall be deemed given when
delivered personally or by registered or certified mail, return receipt
requested, addressed as follows (or any other address that is specified in
writing by either party):
IF TO EMPLOYER:
Control Devices, Inc.
Attn: Corporate Secretary
288 NortheastStreet
Standish, Maine, 04084-6419
WITH A COPY TO:
First Technology PLC
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<PAGE>
Attn: Corporate Secretary
2 Cheapside Court,
Buckhurst Road, Ascot,
Berks, SL5 7RF
United Kingdom
IF TO EMPLOYEE:
Mr. Jeffrey G. Wood
63 Evergreen Lane
Windham, Maine, 04062
WITH A COPY TO:
Stephen Bachelder
22 Free Street
Portland, Maine, 04101
14. WAIVER. Employer's failure to exercise a right or remedy shall not
operate as a waiver of any of Employer's rights or Employee's obligations under
this Agreement.
15. SEVERABILITY. Whenever possible, each provision of this Agreement
shall be interpreted in such a way as to be effective and valid under applicable
law. If a provision is prohibited by or invalid under applicable law, it shall
be ineffective only to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of this
Agreement.
16. AMENDMENTS. The terms of this Agreement may not be varied or
modified in any manner, except in a subsequent writing executed by an authorized
representative of both parties.
17. DIRECTOR'S INSURANCE. Employer shall maintain directly or through
FTPLC a director's and officer's liability insurance policy benefiting corporate
officers and directors, including Employee, in an amount equivalent to the
coverage provided in the similar policy maintained by FTPLC, which presently is
(pound) 10.0 million.
18. REMEDIES CUMULATIVE. The remedies provided in this Agreement shall
be cumulative, and the assertion by Employer of any right or remedy shall not
preclude the assertion by Employer of any other rights or the seeking of any
other remedies.
19. SUCCESSORS AND ASSIGNS. This Agreement may not be assigned by
Employee. Employer may assign this Agreement to an affiliated or subsidiary
company of Employer with or without the consent of Employee, subject to such
company entering into a written assumption of Employer's obligations hereunder,
in which event this Agreement shall be binding upon and inure to the benefit of
such company.
20. EFFECTIVE DATE. This Agreement shall become effective simultaneous
with the completion of the acquisition by First Technology PLC of a controlling
interest in the voting securities of Control Devices, Inc.
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<PAGE>
21. COUNTERPARTS. This Agreement may be executed in one or more
counterparts each of which shall be deemed an original Agreement, but all of
which shall be considered one instrument.
22. INJUNCTIVE RELIEF. The parties acknowledge that irreparable injury
will result from the failure of Employee to comply with the terms of this
Agreement. In the event of any actual or threatened default or breach of any of
the provisions of this Agreement, Employer shall have the right to specific
performance or injunctive relief, as well as monetary damage and any other
appropriate relief.
23. TERMINATION OF PRIOR AGREEMENTS. This Agreement, once effective,
shall constitute the entire understanding between the parties with respect to
the subject matter hereof and shall supersede any prior discussions,
negotiations, agreements and understandings between the parties relating to the
terms and conditions of employment of Employee.
24. TITLES. Titles and headings to articles, sections, or paragraphs in
this Agreement are inserted for convenience of reference only and are not
intended to affect the interpretation or construction of the Agreement.
25. ATTORNEY REVIEW. The parties represent that they have carefully
read this Agreement and have consulted with their attorney. The parties
affirmatively state that they understand the contents of this Agreement, and
sign this Agreement as their free act and deed.
IN WITNESS WHEREOF, this Agreement has been executed by the parties the
day and date heretofore stated.
WITNESS: JEFFREY G. WOOD
---------------------
WITNESS: CONTROL DEVICES, INC.
---------------------
8
<PAGE>
EXHIBIT 99(c)(7)
TRANSLATION
EMPLOYMENT AGREEMENT
BETWEEN
Realisations et Diffusion pour l'Industrie - RDI, a societe par actions
simplifiee, with a share capital of FF.18,250,000, registered with the Registry
of Commerce and Companies of Bobigny under n(degree)B 712 042 803, having its
registered office at ZAC de Villepinte, 5 - 7 Allee Louis Breguet, 93421
Villepinte Cedex, and represented by _______________duly authorized
representative of RDI Management Company Inc., president of Realisations et
Diffusion pour l'Industrie,
hereinafter referred to as the "Company"
Party of the first part,
AND
Mr. Michel Hauser Kauffmann, born on March 19, 1943, in Lapalisse (03), of
French nationality, residing at 9 rue Meynadier, 75019 Paris, social security
n(degree) 01430303138017,
hereinafter referred to as the "Employee"
Party of the second part,
WHEREAS
The Employee was hired by the Company pursuant to an indefinite term contract
dated January 10, 1986, which included a clause recapturing his seniority as
from November 15, 1964;
The employment agreement was amended on three occasions: (i) March 23, 1993,
(ii) March 29, 1996 and (iii) in 1998 per an amendment entitled Amendment No.3
to the employment contract of January 10, 1986;
First Technology PLC. ("FT") has acquired as of the date hereof all of the
outstanding common shares of Control Devices Inc., the Company's current
controlling shareholder, and the board of FT
<PAGE>
has determined that it is in the best interest of FT and its shareholders to
retain the employment of the Employee;
Both the Employee and the Company recognize the need to enter into a new
employment agreement redefining the Employee's terms and conditions of
employment which as a result of the succession of amendments need to be
clarified and restating the guarantees provided in the Termination Benefits
Agreement entered into between FT and the Employee on February 3, 1999.
NOW, THEREFORE, THE PARTIES HAVE AGREED AS FOLLOWS:
ARTICLE 1 - PREVIOUS EMPLOYMENT CONTRACT AND AMENDMENTS
The present employment agreement shall supersede and cancel all prior agreements
entered into between the Employee and the Company regarding his employment by
the Company and in particular the January 10, 1986 employment agreement, the
March 23, 1993 and March 29, 1996 amendments to such employment agreement as
well as the 1998 Amendment No.3 to the employment contract of January 10, 1986.
The present employment agreement shall replace these agreements in their
entirety.
ARTICLE 2 - EMPLOYMENT - SENIORITY
The Company shall continue to employ the Employee pursuant to the National
Collective Bargaining Agreement for Engineers and Executives in the
Metallurgical Industries (CONVENTION COLLECTIVE NATIONALE DES INGENIEURS ET
CADRES DES INDUSTRIES METALLURGIQUES) hereinafter the "Collective Bargaining
Agreement"), as Directeur Commercial with a position of Executive ("CADRE"),
hierarchical grade coefficient III C, and pursuant to the conditions hereinafter
set forth (hereafter the "Contract").
For the purpose of the present agreement and for the determination of any right,
benefit or advantage under the Contract the Employee's seniority is set as at
November 15, 1964.
ARTICLE 3 - DUTIES
3.1 The Employee shall act as Directeur Commercial. In this capacity, the
Employee shall be responsible for the marketing policy, quality,
communication, technical and financial questions. In the performance of
these duties the Employee may be required to travel or effect missions
abroad.
2
<PAGE>
The Company may entrust him with new missions and functions involving
new responsibilities of a similar importance or more important.
The Employee shall report to the representative of RDI Management
Company, Inc., the President of the Company. He shall also report to
the Chief Executive Officer and President of Control Devices Inc..
3.2 To the extent that the Company is asked to sell and distribute products
from the existing FT portfolio, the Employee agrees to be responsible
to the relevant FT Executive Director for that part of his business and
to promote these products with the same commitment as that given to CDI
products.
3.3 Notwithstanding the provisions of Article 3.1 above if during the two
year period following the date hereof, one of the following events
occurs:
- Bruce David Atkinson, were terminated for reasons other than
for cause (as defined in his employment contract) by his
employer from his position as Chief Executive Officer and
President of Control Devices Inc. and Jeffrey G. Wood were not
offered to replace Mr.Atkinson in such position, or
- Bruce David Atkinson were revoked from his office of permanent
representative of RDI Management Company Inc., the President
of the Company, and Jeffrey G. Wood, or the Employee , or an
individual supported by the Employee were not offered to
replace Mr. Atkinson in such position,
then the Employee could consider that the present employment agreement
has been terminated at the initiative of the Company and the
indemnification provided at Article 14.1 hereafter would apply.
ARTICLE 4 - PLACE OF WORK
The principal place of work shall be at the location where the Company exercises
its principal activities, currently at ZAC de Villepinte, 5 - 7 Allee Louis
Breguet, 93421 Villepinte.
By mutual agreement of the parties, the place of work is a material clause of
the Contract. Consequently, any change of the place of work to a location other
than Paris and the Paris area will require the prior approval of the Employee.
In case of refusal by the Employee of this change, the Employee could consider
that the present employment agreement has been terminated at the initiative of
the Company and the indemnification provided for under Article 14 hereafter
would apply.
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<PAGE>
For purposes hereof, "Paris area" shall include the following departments:
Seine-et-Marne (77), Yvelines (78), Essonne (91) Hauts-de-Seine (92),
Seine-Saint-Denis (93), Val-de-Marne (94), and Val-D'Oise (95).
ARTICLE 5 - TERM AND TERMINATION OF THE CONTRACT
5.1 The present employment agreement is for an indefinite term.
5.2 In the event the Company terminates the present employment agreement ,
for any reason whatsoever, with the exception of termination for
willful misconduct (FAUTE LOURDE), the Company shall have the
obligation to inform the Employee of its decision, by registered mail,
return receipt requested, at least six (6) months before the decision
becomes effective unless more favorable provisions are agreed in
writing by the parties or under the terms of the Collective Bargaining
Agreement.
5.3 In the event of resignation, the Employee shall have the obligation to
inform the Company of its decision, by registered mail, return receipt
requested, at least three (3) months before the decision becomes
effective.
ARTICLE 6 - SALARY
6.1 In full remuneration for his services to the Company during the term of
this Contract, the Employee shall receive an annual global gross salary
of FRF 1,126,125 payable in thirteen (13) equal monthly installments
(hereafter the "Compensation"). The thirteenth month shall be payable
in accordance with customary Company policy. The Compensation may be
revised on an annual basis.
For purposes hereof the defined term "Compensation" will be used to
refer to the compensation specified in the present agreement and to any
revisions thereof.
6.2 The Employee shall spend the necessary time for the proper performance
of his duties which he will exercise in accordance with past working
patterns and related remuneration which has not included additional
compensation for overtime.
ARTICLE 7 - DISCRETIONARY BONUS - GUARANTEED BONUS
7.1 The Company may, at any time during the term of this Contract, but
without any obligation, pay additional sums to the Employee by way of
bonuses or otherwise, in recognition of the Employee's merit or the
efficiency of his work.
It is expressly agreed that such payments or bonuses will result from a
unilateral decision of the Company and will not create any contractual
obligation. Consequently, such payment, if
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<PAGE>
any, does not constitute a material element of the Contract and may be
modified or suppressed by the Company at any time.
7.2 Notwithstanding the foregoing the Company guarantees a bonus payment of
50% of Compensation, excluding the cash value of the benefits in kind,
earned from January 1, 1999 through April 30, 2000 ( the "Guaranteed
Bonus") to be paid no later than July 15, 2000. In the fiscal year 2001
and beyond the Employee shall participate in the FT executive level
bonus plan. Information regarding the terms and conditions of this plan
will be provided subsequently to the Employee.
So as to avoid any misinterpretation it is specified that the 1998
bonus paid in the course of 1999 will not be taken into account to
determine the amount of the Guaranteed Bonus.
ARTICLE 8 - INCENTIVE PLAN
8.1 The Employee currently participates in the 1996 and 1997 Stock Option
Plan of Control Devices Inc. (hereafter the "CDI Plan"). FT has
undertaken in the Termination Benefits Agreement, referred to above in
the Preamble, to put in place a long term incentive plan for the
employees of RDI, except the Employee himself, who currently
participate in the CDI Plan and to recommend to its shareholders that
such a plan be adopted by December 31, 1999.
8.2 By mutual agreement of the parties, the adoption of this plan
constitutes a material element of the present contractual relationship.
In the event such plan were not adopted by December 31, 1999, the
Employee could consider that the present employment agreement has been
terminated at the initiative of the Company and the indemnification
provided for under Article 14 hereafter would apply.
ARTICLE 9 - BUSINESS TRIPS AND EXPENSES
The Employee may need to spend short or long periods away from his place of work
in France or abroad as part of his duties.
Business expenses incurred by the Employee in the performance of his duties
shall be paid for by the Company or reimbursed upon presentation by the Employee
of supporting documentation signed off by the President of the Company.
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ARTICLE 10 - USE OF A COMPANY CAR
For fulfillment of his duties, the Company shall provide the Employee with a
company car, type Renault Safrane (that is to say in a category equal at the
most to 11 horsepower for tax purposes).
The Employee may also use this vehicle for personal use.
All costs associated with this vehicle (insurance for professional or personal
use, maintenance, repairs, taxes, etc....) shall be borne by the Company.
ARTICLE 11 - PAID VACATION - SOCIAL BENEFITS
11.1 The Employee will be entitled to paid vacation as provided by the
Collective Bargaining Agreement or by applicable regulations.
11.2 The Employee will be entitled to benefit from the retirement and
medical insurance programs applied by the Company. The allocation of
the related contributions (payroll deductions and employer's share)
will be done in accordance with laws, regulations and custom.
The Employee will also benefit from all social benefits granted to the
Company's personnel for welfare and supplementary healthcare coverage.
ARTICLE 12 - PROFESSIONAL OBLIGATIONS - CONFIDENTIALITY
12.1 The Employee undertakes, during the term of the present employment
agreement, to devote his full professional activity and attention to
the business of the Company and to use all of his attributes and
capacities to promote the Company's interests. The exercise of any
other professional activity, on his own behalf or on behalf of a third
party, is prohibited.
12.2 The Employee solemnly undertakes to keep in the strictest
confidentiality, both during and after the term of the present
employment agreement, information and data which the Company entrusts
to the Employee in connection with the performance of his obligations,
or of which the Employee becomes aware during the course of his
employment including but not limited to lists and/or details of
customers of the Company and/or of the group of companies to which it
belongs (the "Group Companies"), information relating to the business,
affairs, finances, products, processes, formulae, working methods,
inventions and applications, intellectual property (and in particular
patents, trademarks, inventions, know-how), used, owned or employed by
the Company and/or any of the Group Companies, (hereafter
the"Confidential Information").
12.3 The Employee further undertakes not to, either during or after the term
of the present agreement, divulge or use any Confidential Information
except in the proper performance of his duties or with the prior
written consent of the Company. During the term of the present
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agreement, the Employee shall take reasonable precaution to prevent the
publication or disclosure of any Confidential Information.
12.4 Except so far as may be necessary for the purposes of his duties, the
Employee shall not, without the written consent of the Company, retain
or make any originals or copies of any documents or materials
(including but not limited to facsimiles, telexes, letters, reports,
agreements, programs, magnetic tape discs or other software storage
media) containing Confidential Information.
ARTICLE 13 - USE AND RETURN OF COMPANY PROPERTIES
Originals or copies of whatever nature of the Confidential Information mentioned
above shall remain the property of the Company and the Employee undertakes to
return them without prior notification, on the effective date of the termination
of this contract for any reason.
ARTICLE 14 - SEVERANCE PAYMENT
14.1 In the event that the Company were to give notice of dismissal to the
Employee, during the two year period following the date hereof, for any
reason other than for wilful misconduct (FAUTE LOURDE), the Employee
would be entitled to a lump sum indemnity (INDEMNITE FORFAITIARE),in
lieu of the dismissal indemnity (INDEMNITE DE CONGEDIEMENT) provided by
the Collective Bargaining Agreement and in lieu of any and all other
damages, equal to two (2) years of compensation and bonus or to an
amount as provided by the Collective Bargaining Agreement if greater.
The compensation and bonus to be used to determine the amount of the
lump sum indemnity will be the greater of (i) the amount of the
compensation including benefits in kind, bonus and other contractual
entitlements received by the Employee from January 1 through December
31,1998 or (ii) the amount of the compensation including benefits in
kind and bonus and other contractual entitlements received by the
Employee during the 12 months preceding dismissal.
For purposes hereof, the compensation to be used for periods preceding
the entry into force of the present agreement, and the resulting
payment of the Compensation defined at Article 6 above, will be the
monthly gross salary received by the Employee for the considered
month(s).
The above mentioned indemnity will be in addition to the indemnity in
lieu of notice (INDEMNITE DE PREAVIS) and the indemnity in lieu of paid
vacation (INDEMNITE DE CONGES PAYES).
14.2 If the notice of dismissal is given after the two year period following
the date hereof, the above mentioned lump sum indemnity will be
reduced. In such a case the Employee would
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be entitled to one (1) year of compensation and bonus or to an amount
as provided by the Collective Bargaining Agreement if greater. This
indemnity will be in addition to the indemnity in lieu of notice
(INDEMNITE DE PREAVIS) and the indemnity in lieu of paid vacation
(INDEMNITE DE CONGES PAYES).
14.3 In the event that the Company were to dismiss the Employee for willful
misconduct (FAUTE LOURDE), the Employee would not be entitled to any
indemnity whatsoever. In the event that the Company would dismiss the
Employee for gross misconduct (FAUTE GRAVE) the Employee would be
entitled to the indemnity as the case may be under 14.1 above or 14.2
above.
ARTICLE 15 - NON-COMPETITION
The Employee recognizes that the duties to be performed by him under the terms
of this Contract give him access to important confidential information and
documents on the activities and the clientele of the Company and of the Group
Companies and that the Company has a legitimate interest in protecting such
information and documents.
Taking into account his duties, the Employee undertakes for a period of one (1)
year, renewable once, following the termination of the present employment
agreement for any reason (i.e., when the notice period is worked, from the end
of the notice period or from the date on which the notice period is interrupted
or, when the notice period is not worked, from the date of notification of the
dismissal), to refrain from engaging in any activity competing with the Company
and/or the Group Companies.
Consequently, the Employee undertakes not to directly or indirectly, through any
legal entity in which the Employee may have any interest (whether as officer,
director, shareholder, partner, employee, owner or otherwise):
(a) render, directly or indirectly, services similar to, or in
competition with the activities of the Company; or
(b) employ or attempt to employ any person who is then employed by
the Company or who was at any time during the year preceding
termination of this Contract in the Company's employ; or
(c) prospect, solicit, contact in any manner, the clients of the
Company as they exist as at the time of termination of this
Contract.
The undertaking mentioned in this Article shall be geographically limited to
France, Italy, the United-Kingdom and Germany.
In consideration for this commitment not to compete as set forth hereinabove and
pursuant to the Collective Bargaining Agreement, the Employee shall receive
after the effective termination of the present employment agreement for any
reason whatsoever (i.e., when the notice period is worked,
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from the end of the notice period or from the date on which the notice period is
interrupted or, when the notice period is not worked, from the date of
notification of the dismissal) an indemnity that shall be paid to the Employee
on a monthly basis corresponding to 6/10th of the average monthly remuneration
including contractual entitlements received by the Employee during his last
twelve months of presence in the Company unless more favorable provisions under
the terms of the Collective Bargaining Agreement. However, in the event of gross
misconduct (FAUTE LOURDE), this indemnity shall be reduced to 5/10th.
The Company shall have the unilateral right, which is expressly acknowledged by
the Employee, to waive compliance by the Employee with this non-competition
provision or to reduce the term thereof - and thereby to release itself
accordingly from the obligation to pay the indemnity provided as consideration
therefor - at any time during the performance of the present employment
agreement and at the latest during the eight (8) day period following
notification of termination of the agreement to the Employee or by the Employee.
Such waiver or reduction of term, as well as the conditions under which the
Company will be released from any obligation to pay to the Employee the
indemnity provided above for any portion of the Employee's non-competition
period that has been waived, will be exercised in accordance with the terms and
conditions of the Collective Bargaining Agreement.
Upon any breach by the Employee of this non-competition provision, the Company
shall be automatically released from any obligation to pay the above indemnity
and the Employee shall immediately cease the activity in question upon simple
notification by the Company, without prejudice to any other rights of the
Company to claim damages from the Employee for the damages effectively suffered
and to request an injunction to force the Employee to cease the competitive
activity.
ARTICLE 16 - APPLICABLE LAW
The present employment agreement is subject to French law. Anything not
specifically provided for herein shall be governed by the applicable Collective
Bargaining Agreement.
ARTICLE 17 - JURISDICTION
In the event of a dispute with respect to the present employment agreement, the
parties give exclusive jurisdiction to the competent French Courts.
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IN WITNESS WHEREOF, the parties hereto have signed this agreement in two copies,
in _____, on ____, 1999.
- ------------------------- --------------------------
The Company The Employee
represented by ______________
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