FORM 6-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Report of Foreign Issuer
Pursuant to Rule 13a-16 or 15d-16 of
the Securities Exchange Act of 1934
For the month of July, 2006
Commission File Number: 0-23696
RADICA GAMES LIMITED
(Translation of registrant's name into English)
Suite V, 6/F., 2-12 Au Pui Wan Street, Fo Tan, Hong Kong
(Address of principal executive offices)
Indicate by check mark whether the registrant files or will file annual
reports under cover of Form 20-F or 40-F
Form 20-F X Form 40-F
------ ------
Indicate by check mark if the registrant is submitting the Form 6-K in
paper as permitted by Regulation S-T Rule 101(b)(1):
Indicate by check mark if the registrant is submitting the Form 6-K in
paper as permitted by Regulation S-T Rule 101(b)(7):
Indicate by check mark whether the registrant by furnishing the
information contained in this Form is also thereby furnishing the information to
the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of
1934.
Yes No X
------ ------
If "Yes" is marked, indicate below the file number assigned to the
registrant in connection with Rule 12g3-2(b): 82: _________________
Contents:
1. Press Release dated July 25, 2006
2. Agreement and Plan of Amalgamation, dated July 25, 2006,
among Mattel Foreign Holdings, Ltd, Mattel Enterprises, Ltd,
Radica Games Limited and, solely with respect to Section
6.13, Mattel, Inc.
This Report on Form 6-K shall be deemed to be incorporated by reference
into the Registrant's Registration Statements on Form S-8 (No. 33-86960, No.
333-7000, No. 333-59737, 333-61260 and 333-122248) and on Form F-3 (No. 333-7526
and No. 333-79005).
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Pursuant to the requirements of Securities Exchange Act of 1934, the registrant
has duly caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
RADICA GAMES LIMITED
Date: July 26, 2006 /s/ Patrick S. Feely
------------------------ ----------------------------------
Patrick S. Feely
Chief Executive Officer
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[MATTEL LOGO] [RADICA LOGO]
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For Immediate Release CONTACTS: NEWS MEDIA SECURITIES ANALYSTS
Lisa Marie Bongiovanni, Mattel Mike Salop, Mattel
310-252-3524 310-252-2703
Patrick S. Feely David C.W. Howell
Chief Executive Officer, Radica Chief Financial Officer, Radica
626-744-1150 (Hong Kong)
852-2688-4201
MATTEL TO ACQUIRE RADICA
EL SEGUNDO, Calif., July 26, 2006 -- Mattel, Inc. (NYSE:MAT) and Radica
(NASDQ:RADA) announced an agreement by which Mattel will acquire Radica, the
maker of electronic entertainment toys. The transaction, which has been approved
by the companies' respective boards of directors, is valued at approximately
$230 million. Under the terms of the definitive agreement, Radica shareholders
will receive $11.55 in cash for each share of Radica common stock.
A leader in the electronics arena, Radica manufactures and markets a diverse
line of electronic entertainment products covering multiple business areas,
including electronic games carrying the Radica, 20Q(R) and Play TV(R) brand
names and youth electronics carrying the Girl Tech(R) brand name.
"The addition of Radica to the Mattel portfolio provides Mattel the opportunity
to partner our global brands with Radica's technological expertise to better
participate in the burgeoning electronic toys arena," said Robert A. Eckert,
chairman and chief executive officer of Mattel. "Radica's entrepreneurial spirit
has allowed Radica to capture and deliver on some of the hottest trends in
electronics, and the company has a proven track record of utilizing technology
to reinvent basic play."
"We are excited to be part of the Mattel family of brands and look forward to
taking our brands to the next level by capitalizing on Mattel's global network
and expertise," said Patrick S. Feely, chief executive officer of Radica. "Being
part of the world's largest and most profitable toy company affords our talented
employees a unique opportunity to grow and develop our brands. I look forward to
identifying and building upon the strong synergies between the two companies to
drive increased sales growth."
The transaction is subject to approval of Radica shareholders, as well as
customary regulatory approvals. Radica's largest shareholder has entered into a
voting agreement in which he has agreed to vote shares constituting 40 percent
of Radica's outstanding common stock in support of the transaction. It is
expected that the transaction will be completed in the fourth quarter of 2006.
Lehman Brothers, Inc. acted as financial advisor and Latham & Watkins LLP served
as legal advisor to Mattel in connection with the transaction. Navigant Capital
Advisors, LLC acted as financial advisor and Sullivan & Cromwell LLP served as
legal advisor to Radica in connection with the transaction.
(more)
MATTEL TO ACQUIRE RADICA/PAGE 2
ABOUT RADICA
Radica is a Bermuda company headquartered in Hong Kong. Radica had revenues in
2005 of approximately $163 million and maintains a Dallas-based design and
marketing office, as well as a state-of-the-art manufacturing facility in China.
Radica markets its products through subsidiaries in the United States, the
United Kingdom, Canada and Hong Kong. Radica employs over 6,000 people worldwide
in its group of companies. Internationally Radica sells products in
approximately 30 countries
ABOUT MATTEL
Mattel, Inc., (NYSE: MAT,
www.mattel.com) is the worldwide leader in the design, manufacture and marketing
of toys and family products, including Barbie(R), the most popular fashion doll
ever introduced. The Mattel family is comprised of such best-selling brands as
Hot Wheels(R), Matchbox(R), American Girl(R) and Tyco(R) R/C, as well as
Fisher-Price(R) brands (www.fisher-price.com), including Little People(R),
Rescue Heroes(R), Power Wheels(R) and a wide array of entertainment-inspired toy
lines. With worldwide headquarters in El Segundo, Calif., Mattel employs more
than 25,000 people in 42 countries and sells products in more than 150 nations
throughout the world. Mattel's vision is to be the world's premier toy brands --
today and tomorrow.
ADDITIONAL INFORMATION ABOUT THE TRANSACTION AND WHERE TO FIND IT
In connection with the proposed transaction, Radica intends to file relevant
materials with the Securities and Exchange Commission, including a proxy
statement on Form 6-K. INVESTORS AND SECURITY HOLDERS OF RADICA ARE URGED TO
READ THESE MATERIALS WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN
IMPORTANT INFORMATION ABOUT RADICA, MATTEL AND THE TRANSACTION. The proxy
statement and other relevant materials (when they become available) and any
other documents filed by Radica with the SEC may be obtained free of charge at
the SEC's website at www.sec.gov. In addition, investors and security holders
may obtain free copies of the documents filed with the SEC by Radica by
accessing the "Investor Relations" section of Radica's website at
www.Radicagames.com. Investors and security holders are urged to read the proxy
statement and the other relevant materials when they become available before
making any voting or investment decision with respect to the proposed
transaction. Radica and its directors and officers may be deemed to be
participants in the solicitation of proxies in respect of the contemplated
transaction. Information regarding Radica's directors and executive officers is
contained in Radica's Annual Report on Form 20-F for the year ended December 31,
2005 and in its report filed on Form 6-K dated May 2, 2006, filed with the SEC.
###
Note: Forward-looking statements with respect to the completion of the
transaction and the financial condition, results of operations and business of
the companies are subject to certain risks and uncertainties that could cause
actual results to differ materially from those set forth in such statements.
These include, without limitation: uncertainty as to whether and in what
timeframe the transaction will be completed, the failure to obtain the approval
of Radica's shareholders; the failure of either party to meet the closing
conditions set forth in the definitive agreement; the ability to retain key
personnel both before and after the transaction closes; the extent and timing of
regulatory approvals; ongoing relations between Radica and its suppliers,
customers and other parties; costs and other issues with respect to integrating
Radica, its products and its employees into Mattel and achieving expected
synergies; dependence on the timely development, manufacture, introduction and
customer acceptance of new products; the seasonality of the toy business;
customer concentration and pricing; significant changes in buying and payment
patterns of major customers, including as a result of bankruptcy and store
closures; adverse changes in general economic conditions in the U.S. and
internationally, including adverse changes in the retail environment, employment
and the stock market; order predictability and supply chain management; the
impact of competition, including from private label toys, on revenues and
margins; the supply and cost of raw materials (including oil and resin prices),
components, employee benefits and various services; the effect of currency
exchange rate fluctuations on reportable income; risks associated with
acquisitions and mergers; the possibility of product recalls and related costs;
risks associated with foreign operations; negative results of litigation,
governmental proceedings or environmental matters; changes in law and
regulations; possible work stoppages, slowdowns or strikes; possible outbreaks
of SARS, bird flu or other diseases; political developments and the threat or
occurrence of war or terrorist acts; the possibility of catastrophic events; the
inherent risk of Mattel and Radica new initiatives; and other risks and
uncertainties as may be detailed from time to time in public announcements and
SEC filings. This release contains forward-looking statements within the meaning
of federal securities laws. Readers are cautioned not to place undue reliance on
these forward looking statements and any such forward-looking statements are
qualified in their entirety to the cautionary statements contained in this press
release. Neither Mattel nor Radica updates forward-looking statements and
expressly disclaims any obligation to do so.
EXECUTION VERSION
AGREEMENT AND PLAN OF AMALGAMATION
Among
MATTEL FOREIGN HOLDINGS, LTD.,
MATTEL ENTERPRISES, LTD.,
RADICA GAMES LIMITED
and
MATTEL, INC.
(SOLELY WITH RESPECT TO SECTION 6.13)
Dated as of July 25, 2006
TABLE OF CONTENTS
PAGE
ARTICLE I The Amalgamation; Closing; Effective Time.......................2
1.1. The Amalgamation................................................2
1.2. Effective Time..................................................2
1.3. Closing.........................................................2
ARTICLE II Memorandum of Association and Bye-Laws of the Amalgamated
Company.........................................................2
2.1. Memorandum of Association.......................................2
2.2. The Bye-Laws....................................................2
ARTICLE III Officers and Directors of the Amalgamated Company...............3
3.1. Directors.......................................................3
3.2. Officers........................................................3
ARTICLE IV Effect of the Amalgamation on Capital Stock and Options;
Exchange of Certificates........................................3
4.1. Effect on Capital Stock.........................................3
4.2. Payment for Shares..............................................4
4.3. Stock Options...................................................5
4.4. Dissenting Shareholders.........................................6
4.5. Further Action..................................................6
ARTICLE V Representations and Warranties..................................6
5.1. Representations and Warranties of the Company...................6
5.2. Representations and Warranties of Parent and Amalgamation Sub..20
ARTICLE VI Covenants......................................................22
6.1. Interim Operations.............................................22
6.2. Acquisition Proposals..........................................24
6.3. Company Shareholders Meeting...................................26
6.4. Information Supplied...........................................26
6.5. Filings; Other Actions; Notification...........................27
6.6. Access.........................................................29
6.7. Publicity......................................................29
6.8. Certain Notices................................................29
6.9. FIRPTA Certificate.............................................30
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6.10. Benefits.......................................................30
6.11. Expenses.......................................................30
6.12. Indemnification; Directors' and Officers' Insurance............30
6.13. Guarantee......................................................32
ARTICLE VII Conditions.....................................................32
7.1. Conditions to Each Party's Obligation to Effect the
Amalgamation...................................................32
7.2. Conditions to Obligations of Parent and Amalgamation Sub.......33
7.3. Conditions to Obligation of the Company........................34
ARTICLE VIII Termination....................................................34
8.1. Termination by Mutual Consent..................................34
8.2. Termination by Either Parent or the Company....................35
8.3. Termination by the Company.....................................35
8.4. Termination by Parent..........................................35
8.5. Effect of Termination and Abandonment..........................36
ARTICLE IX Miscellaneous and General......................................37
9.1. Survival.......................................................37
9.2. Modification or Amendment......................................38
9.3. Waiver of Conditions...........................................38
9.4. Counterparts...................................................38
9.5. GOVERNING LAW..................................................38
9.6. Consent to Jurisdiction........................................38
9.7. Notices........................................................39
9.8. Entire Agreement; No Other Representations.....................40
9.9. Parties in Interest; No Third Party Beneficiaries..............40
9.10. Obligations of Parent and of the Company.......................41
9.11. Severability...................................................41
9.12. Interpretation.................................................41
9.13. Assignment.....................................................41
9.14. Specific Performance...........................................42
Annex A Definitions...................................................A-1
Annex B Bermuda Agreement of Amalgamation.............................B-1
Annex C-1 Memorandum of Association of Amalgamated Company..............C-1
Annex C-2 Bye-Laws of Amalgamated Company...............................C-2
Annex D Voting Agreement..............................................D-1
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AGREEMENT AND PLAN OF AMALGAMATION
AGREEMENT AND PLAN OF AMALGAMATION (hereinafter called this
"Agreement"), dated as of July 25, 2006, among Radica Games Limited, a Bermuda
company (the "Company"), Mattel Foreign Holdings, Ltd., a Bermuda company
("Parent"), Mattel Enterprises, Ltd., a Bermuda company and a wholly-owned
subsidiary of Parent ("Amalgamation Sub"), and solely with respect to Section
6.13, Mattel, Inc., a Delaware corporation ("Mattel"). Capitalized terms used
herein have the meanings set forth in Annex A hereto.
RECITALS
WHEREAS, the respective boards of directors of each of Parent,
Amalgamation Sub and the Company have approved the Amalgamation and the other
transactions contemplated by this Agreement upon the terms and subject to the
conditions set forth in this Agreement;
WHEREAS, the board of directors of the Company has resolved to
recommend adoption of the Agreement and approval of the Amalgamation by
shareholders of the Company;
WHEREAS, Parent, as the sole shareholder of Amalgamation Sub, has
adopted and approved this Agreement and the transactions contemplated hereby;
WHEREAS, as a condition to and an inducement to Parent and
Amalgamation Sub to enter into this Agreement, simultaneously with the execution
of this Agreement, certain shareholders of the Company are entering into a
voting agreement with Parent, in the form attached hereto as Annex D (the
"Voting Agreement"); and
WHEREAS, the Company, Parent and Amalgamation Sub desire to make
certain representations, warranties, covenants and agreements in connection with
this Agreement.
NOW, THEREFORE, in consideration of the premises, and of the
representations, warranties, covenants and agreements contained herein, the
parties hereto agree as follows:
ARTICLE I
The Amalgamation; Closing; Effective Time
1.1. The Amalgamation. Upon the terms and subject to the conditions
set forth in this Agreement, at the Effective Time, Amalgamation Sub and the
Company shall amalgamate (the "Amalgamation") with the resulting company
(sometimes hereinafter referred to as the "Amalgamated Company") continuing to
exist as a company incorporated and governed by the laws of Bermuda. The
Amalgamation shall have the effects specified under Section 109 of the Bermuda
Companies Act 1981 (the "Bermuda Act"). Prior to the Effective Time, the parties
shall enter into the Agreement of Amalgamation, in the form attached hereto as
Annex B, and undertake all such other matters, and do all such other things as
may be necessary to effect the Amalgamation under Bermuda law.
1.2. Effective Time. On the first business day (the "Application
Date") on which the last to be fulfilled or waived of the conditions set forth
in Article VII (other than those conditions that by their nature are to be
satisfied on the Application Date, but subject to the fulfillment or waiver of
those conditions) shall be satisfied or waived in accordance with this Agreement
and/or Laws, the Company and Parent will cause an application for registration
of an amalgamated company, along with all required documentation, to be filed
with the Registrar of Companies in Bermuda (the "Bermuda Registrar") as provided
in Section 108 of the Bermuda Act, unless another date or time is agreed to in
writing by Parent and Company. The Amalgamation shall become effective at the
time set forth in the certificate of amalgamation issued by the Bermuda
Registrar in connection with the application for registration (the "Effective
Time").
1.3. Closing. The closing of the Amalgamation shall take place at the
offices of Sullivan & Cromwell LLP, 1888 Century Park East, Los Angeles,
California at 9:00 A.M., or at such other time and place as the Company and
Parent may agree in writing, on the business day on which the certificate of
amalgamation with respect to the Amalgamation is issued by the Bermuda
Registrar.
ARTICLE II
Memorandum of Association and Bye-Laws of the Amalgamated Company
2.1. Memorandum of Association. The memorandum of association of
Amalgamation Sub as in effect immediately prior to the Effective Time (in the
form attached hereto as Annex C-1) shall be the memorandum of association of the
Amalgamated Company after the Effective Time (the "Memorandum of Association"),
until thereafter amended as provided therein or by applicable Bermuda law.
2.2. The Bye-Laws. The bye-laws of Amalgamation Sub as in effect at
the Effective Time (in the form attached hereto as Annex C-2) shall be the
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bye-laws of the Amalgamated Company after the Effective Time (the "Bye-Laws"),
until thereafter amended as provided therein or by applicable Bermuda law.
ARTICLE III
Officers and Directors
of the Amalgamated Company
3.1. Directors. The directors of Amalgamation Sub at the Effective
Time shall, from and after the Effective Time, be the directors of the
Amalgamated Company until their successors have been duly elected or appointed
and qualified or until their earlier death, resignation or removal in accordance
with the Memorandum of Association and the Bye-Laws.
3.2. Officers. The officers of the Amalgamation Sub at the Effective
Time shall, from and after the Effective Time, be the officers of the
Amalgamated Company until their successors have been duly elected or appointed
and qualified or until their earlier death, resignation or removal in accordance
with the Memorandum of Association and the Bye-Laws.
ARTICLE IV
Effect of the Amalgamation on Capital Stock and Options;
Exchange of Certificates
4.1. Effect on Capital Stock. At the Effective Time, as a result of
the Amalgamation and without any action on the part of the holder of any of the
shares of the Company:
(a) Amalgamation Consideration. Each share of the Common Stock, par
value $0.01 per share, of the Company (a "Share" and, collectively, the
"Shares") issued and outstanding immediately prior to the Effective Time (other
than Shares owned by Parent, Amalgamation Sub or any other direct or indirect
subsidiary of Parent or Shares that are owned by any direct or indirect
subsidiary of the Company (each, an "Excluded Share" and collectively, "Excluded
Shares")) shall be converted into the right to receive, subject to any required
withholding of taxes and without interest, an amount in cash equal to $11.55,
subject to appropriate adjustment for any dividend of Shares, subdivision,
reclassification, recapitalization, split, combination or exchange with respect
to the Shares occurring after the date hereof and before the Effective Time (the
"Amalgamation Consideration"). At the Effective Time, all Shares shall no longer
be outstanding and shall be cancelled and retired and shall cease to exist, and
each certificate (a "Certificate") formerly representing any Shares (other than
Excluded Shares) shall thereafter represent only the right to receive the
Amalgamation Consideration for each Share formerly represented thereby.
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(b) Excluded Shares. Each Excluded Share shall be cancelled by virtue
of the Amalgamation without payment of any consideration.
(c) Amalgamation Sub. Each share of Common Stock, par value $0.01 per
share, of Amalgamation Sub issued and outstanding immediately prior to the
Effective Time shall be converted into one share of common stock, par value
$0.01 per share, of the Amalgamated Company.
4.2. Payment for Shares.
(a) Paying Agent. As of the Effective Time, Parent shall deposit, or
shall cause to be deposited, with a paying agent selected by Parent with the
Company's prior approval, which approval shall not be unreasonably withheld (the
"Paying Agent"), for the benefit of the holders of Shares (other than Excluded
Shares), amounts sufficient in the aggregate to provide all funds necessary for
the Paying Agent to make payments pursuant to Section 4.1(a) (the "Payment
Fund").
(b) Payment Procedures. Promptly after the Effective Time, but in no
event later than the fifth business day following the Effective Time, the
Amalgamated Company shall cause the Paying Agent to mail to each holder of
record of Shares (other than holders of Excluded Shares) (i) a letter of
transmittal specifying that delivery shall be effected, and risk of loss and
title to the Certificates shall pass, only upon delivery of the Certificates (or
affidavits of loss in lieu thereof) to the Paying Agent, such letter of
transmittal to be in such form and have such other provisions as Parent and the
Company may reasonably agree, and (ii) instructions for use in effecting the
surrender of the Certificates. Upon surrender of a Certificate for cancellation
to the Paying Agent together with such letter of transmittal, duly executed, the
holder of such Certificate shall be entitled to receive in exchange therefor
payment in the amount of the Amalgamation Consideration for each Share formerly
represented thereby (after giving effect to any required tax withholdings) to
which such holder is entitled, and the Certificate so surrendered shall
forthwith be cancelled. No interest will be paid or accrued on any amount
payable upon due surrender of the Certificates. In the event of a transfer of
ownership of Shares that is not registered in the share register of the Company,
the Amalgamation Consideration to be paid upon due surrender of the Certificate
therefor may be paid to such a transferee if the Certificate formerly
representing such Shares is presented to the Paying Agent, accompanied by all
documents reasonably required to evidence and effect such transfer and to
evidence that any applicable stock transfer taxes have been paid. If any payment
is to be made to a Person other than the registered holder of the Certificate
surrendered in exchange therefor, it shall be a condition of such payment that
the Person requesting such exchange shall pay any transfer or other taxes
required by reason of the payment to a Person other than the registered holder
of the Certificate surrendered, or shall establish to the reasonable
satisfaction of Parent or the Paying Agent that such tax has been paid or is not
applicable.
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(c) Transfers. At the Effective Time, the share register of the
Company shall be closed and thereafter, there shall be no transfers on the share
register of the Company of the Shares that were outstanding immediately prior to
the Effective Time.
(d) Termination of Payment Fund. Any portion of the Payment Fund
(including the proceeds of any investments thereof) that remains unclaimed by
the shareholders of the Company for one year after the Effective Time shall be
paid to Parent. Any shareholders of the Company who have not theretofore
complied with this Article IV shall thereafter look only to Parent for payment
of cash upon due surrender of their Certificates (or affidavits of loss in lieu
thereof) without any interest thereon. Notwithstanding the foregoing, none of
Parent, the Amalgamated Company, the Paying Agent or any other Person shall be
liable to any former holder of Shares for any amount properly delivered to a
public official pursuant to applicable abandoned property, escheat or similar
Laws.
(e) Lost, Stolen or Destroyed Certificates. In the event any
Certificate shall have been lost, stolen or destroyed, upon the making of an
affidavit of that fact by the Person claiming such Certificate to be lost,
stolen or destroyed and delivery by such Person of an indemnity in favor of the
Company in respect thereof, the Paying Agent will pay in exchange for such lost,
stolen or destroyed Certificate and such an indemnity, the amount to which such
Person is entitled upon due surrender of and deliverable in respect of the
Shares formerly represented by such Certificate pursuant to this Agreement.
(f) Withholding. Parent and the Paying Agent shall be entitled to
deduct and withhold from the consideration otherwise payable pursuant to this
Agreement to any Company shareholder such amounts as Parent and the Paying Agent
are required to deduct and withhold under the Code or any other applicable Tax
Law with respect to the making of such payment. To the extent that amounts are
so withheld by Parent or the Paying Agent, such withheld amounts shall be
treated for all purposes of this Agreement as having been paid to the Company
shareholders in respect of whom such deduction and withholding was made by
Parent or the Paying Agent.
4.3. Stock Options. At the Effective Time, each then outstanding
option granted under the Company's 1994 Stock Option Plan, as amended and
restated (the "1994 Stock Plan") and under the Company's 2004 Omnibus Equity
Incentive Plan (the "2004 Stock Plan", together with the 1994 Stock Plan, the
"Stock Plans"), to purchase Shares (a "Company Option"), whether vested or
unvested, shall be canceled and converted into the right to receive from Parent
an amount of cash equal to the product of (x) the amount, if any, by which the
Amalgamation Consideration exceeds the exercise price per Share subject to such
Company Option (whether vested or unvested) and (y) the number of Shares
issuable pursuant to the unexercised and outstanding portion of such Company
Option, less any required withholding of taxes. Each of Parent and the Company
shall, prior to the Effective Time, take any necessary action in connection with
the foregoing sentence. Any amounts to be paid by Parent pursuant to this
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Section 4.3 shall be in addition to any amounts to be paid by or on behalf of
Parent pursuant to Section 4.2.
4.4. Dissenting Shareholders. Notwithstanding anything in this
Agreement to the contrary, any Shares that are held by shareholders of the
Company who did not vote in favor of the Amalgamation shall be cancelled at the
Effective Time and converted into the right to receive the Amalgamation
Consideration for each Share formerly represented thereby, subject to the rights
of shareholders of the Company ("Dissenting Shareholders") who are not satisfied
that the Amalgamation Consideration constitutes fair value of their Shares and
require appraisal of the fair value of their Shares ("Dissenting Shares") under
Section 106 of the Bermuda Act. In the event that the Company decides to proceed
with the Amalgamation pending the determination of any appraisal proceedings
initiated by Dissenting Shareholders, the Dissenting Shareholders shall receive
the Amalgamation Consideration for each Share formerly represented thereby upon
compliance with the requirements set forth in Section 4.2. The Company shall
give Parent (i) reasonably prompt notice of any written demands by Dissenting
Shareholders for appraisal of Dissenting Shares or withdrawals of such demands
received by the Company pursuant to the Bermuda Act and (ii) the opportunity to
participate to the extent permitted by applicable Bermuda law in all
negotiations and proceedings with respect to demands by Dissenting Shareholders
for appraisal of Dissenting Shares under the Bermuda Act. Except as required by
Section 106 of the Bermuda Act, prior to the Effective Time, the Company shall
not make any payment with respect to any demands by Dissenting Shareholders of
Dissenting Shares or offer to settle or settle any such demands.
4.5. Further Action. If, at any time after the Effective Time, any
further action is necessary or desirable to carry out the purposes of this
Agreement and to vest the Amalgamated Company with full right, title and
possession to all assets, property, rights, privileges, powers and franchises of
the Company, the officers and directors of the Amalgamated Company are hereby
fully authorized in the name of the Company or otherwise to take, and will use
all good faith efforts to take, all such lawful and necessary action in
connection therewith, so long as such action is not inconsistent with this
Agreement.
ARTICLE V
Representations and Warranties
5.1. Representations and Warranties of the Company. Except as set
forth in the disclosure letter delivered to Parent by the Company on or prior to
entering into this Agreement (the "Company Disclosure Letter") (it being agreed
that disclosure of any item in any part of the Company Disclosure Letter shall
be deemed disclosure with respect to any other part to which the relevance of
such item is reasonably apparent), the Company hereby represents and warrants to
Parent and Amalgamation Sub that:
6
(a) Organization, Good Standing and Qualification. The Company and
each of its Subsidiaries is duly organized, validly existing and in good
standing under the laws of its respective jurisdiction of organization and has
all requisite corporate or similar power and authority to own, lease, license
and operate its properties and assets and to carry on its business as presently
conducted. Each of the Company and its Subsidiaries is qualified or licensed to
do business and is in good standing in each jurisdiction where the ownership,
leasing, licensing or operation of its assets or properties or conduct of its
business requires such qualification or license, except where the failure to be
so organized, qualified, licensed or in good standing or to have such power or
authority, would not, individually or in the aggregate, reasonably be likely to
have a Company Material Adverse Effect. The Company has made available to Parent
a complete and correct copy of the Company's memorandum of association and
bye-laws, each as amended to date.
(b) Capital Structure. The authorized capital stock of the Company
consists of 100,000,000 Shares, of which 19,405,736 Shares were outstanding as
of the close of business on July 14, 2006. Since July 14, 2006, no Shares have
been issued except pursuant to the exercise of Company Options. All of the
outstanding Shares have been, and all Shares that may be issued pursuant to the
exercise of outstanding Company Options will be, duly authorized, validly
issued, fully paid and nonassessable. The Company has no Shares reserved for
issuance, except that, as of June 30, 2006, there were 970,178 Shares reserved
for issuance under outstanding Company Options issued pursuant to the 1994 Stock
Plan, which plan has terminated, and there were 47,500 Shares reserved for
issuance under outstanding Company Options issued pursuant to the 2004 Stock
Plan. Section 5.1(b) of the Company Disclosure Letter sets forth a correct and
complete list, as of the date hereof, of the prices at which outstanding Company
Options may be exercised, the number of Company Options outstanding at each such
price and the vesting schedule of the Company Options. Each of the outstanding
shares of capital stock of the Company's Subsidiaries is duly authorized,
validly issued, fully paid and nonassessable and owned by the Company, free and
clear of any lien, pledge, security interest, claim or other encumbrance.
Section 5.1(b) of the Company Disclosure Letter sets forth a true and complete
list of the Company's Subsidiaries, including the name, jurisdiction of
incorporation or formation and the Company's percentage ownership, direct or
indirect, of capital stock or other equity interests of each such Subsidiary.
Except as set forth above, there are no preemptive or other outstanding rights,
options, warrants, conversion rights, stock appreciation rights, redemption
rights, repurchase rights, agreements, arrangements, calls, commitments or
rights of any kind that obligate the Company or any of its Subsidiaries to issue
or sell any shares of capital stock or other securities of the Company or any of
its Subsidiaries or any securities or obligations convertible or exchangeable
into or exercisable for, or giving any Person a right to subscribe for or
acquire, any securities of the Company or any of its Subsidiaries, and no
securities or obligations evidencing such rights are authorized, issued or
outstanding. There are no outstanding contractual obligations of the Company or
any of its Subsidiaries restricting the transfer, affecting the voting rights or
7
requiring the registration for sale of any Shares or any capital stock of the
Company or any of its Subsidiaries.
(c) Corporate Authority; Approval and Fairness. (i) The Company has
all requisite corporate power and authority and has taken all corporate action
necessary in order to execute, deliver and perform its obligations under this
Agreement and to consummate, subject only to shareholder approval of this
Agreement by at least three-fourths of those voting at the Company Shareholders
Meeting (the "Company Requisite Vote"), the Amalgamation and the other
transactions involving the Company contemplated by this Agreement. This
Agreement has been duly authorized and executed by the Company and is a valid
and binding agreement of the Company, enforceable against the Company in
accordance with its terms, subject to bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium and similar laws of general applicability
relating to or affecting creditors' rights and to general equity principles (the
"Bankruptcy and Equity Exception").
(ii) The Board of Directors of the Company has (A) approved this
Agreement and the Amalgamation and the other transactions contemplated hereby,
(B) determined that this Agreement and the transactions contemplated hereby,
including the Amalgamation, are advisable, fair to and in the best interests of
the Company and the holders of Shares, (C) resolved to recommend that the
holders of Shares vote for the adoption of this Agreement and approval of the
Amalgamation at the Company Shareholders Meeting (the "Company Recommendation"),
and (D) received the written opinion of its financial advisor, Navigant Capital
Advisors, LLC ("Navigant"), to the effect that (subject to the assumptions made,
procedures followed, matters considered and limitations on review undertaken by
Navigant, in each case as set forth in such opinion) the Amalgamation
Consideration is fair to the Company's shareholders (other than the Company's
officers, directors and affiliates and their respective affiliates) from a
financial point of view.
(d) Governmental Filings; No Violations; Certain Contracts. (i) Other
than the filings and/or notices (A) pursuant to Section 1.2, (B) under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR
Act"), and the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
(C) to comply with state securities or "blue sky" laws, (D) required to be made
with the Nasdaq National Stock Market, (E) required to be made under applicable
foreign antitrust and competition laws and (F) pursuant to the Bermuda Act, no
notices, reports or other filings are required to be made by the Company with,
nor are any consents, waivers, registrations, approvals, permits,
authorizations, notices or filings required to be made or obtained by the
Company or any of its Subsidiaries to or from, any domestic or foreign
governmental or regulatory authority, agency, commission, body or other
governmental entity ("Governmental Entity"), in connection with the execution
and delivery of this Agreement by the Company and the consummation by the
Company and its Subsidiaries of the Amalgamation and the other transactions
contemplated hereby, except those that the failure to make or obtain would not,
individually or in the aggregate, reasonably be likely to have a Company
8
Material Adverse Effect or to prevent, materially delay or materially impair the
ability of the Company to consummate the transactions contemplated hereby.
(ii) The execution, delivery and performance of this Agreement by the
Company do not, and the consummation by the Company of the Amalgamation and the
other transactions contemplated hereby will not, constitute or result in (A) a
breach or violation of, or a default under, the memorandum of association or
bye-laws of the Company or the comparable governing instruments of any of its
Subsidiaries, (B) a breach or violation of, or a default, termination or
cancellation under, or the acceleration of any obligations or the creation of a
lien, pledge, mortgage, security interest, charge or other encumbrance (each, a
"Lien") on the assets of the Company or any of its Subsidiaries (with or without
notice, lapse of time or both) pursuant to, any Contracts (including Material
Contracts) binding upon the Company or any of its Subsidiaries or any Law or
Order applicable to the Company or any of its Subsidiaries or by which its or
any of their respective properties is bound or affected or (C) any change in the
rights or obligations of any party (including requiring any consents or waivers)
under any of the Contracts, except, in the case of clause (B) or (C) above, for
any breach, violation, default, termination, cancellation, acceleration, Lien or
change that, individually or in the aggregate, would not reasonably be likely to
have a Company Material Adverse Effect or to prevent, materially delay or
materially impair the ability of the Company to consummate the transactions
contemplated hereby.
(e) Company Reports; Financial Statements; Undisclosed Liabilities.
(i) The Company has timely filed all registration statements, reports, proxy
statements, information statements, forms or other documents, including any
exhibits, annexes and any amendments thereto, required to be filed by it with
the Securities and Exchange Commission (the "SEC") since December 31, 2003,
including the Company's Annual Report on Form 20-F for the years ended December
31, 2005, 2004 and 2003 (collectively, including any such documents filed
subsequent to the date hereof and as amended, the "Company Reports"). As of
their respective dates (or, if amended, as of the date of such amendment), the
Company Reports (i) complied in all material respects with the applicable
requirements of the Securities Act and Exchange Act, and (ii) did not contain
any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements made therein,
in light of the circumstances in which they were made, not misleading. Each of
the consolidated balance sheets included in or incorporated by reference into
the Company Reports (including the related notes and schedules) fairly presents
the consolidated financial position of the Company and its Subsidiaries as of
its date, and each of the consolidated statements of income, of shareholders'
equity and of cash flows included in or incorporated by reference into the
Company Reports (including any related notes and schedules) fairly presents the
results of operations, retained earnings, changes in financial position and 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 notes and
normal year-end audit adjustments that will not be material in amount or
effect), in each case in accordance with United States generally accepted
9
accounting principles ("GAAP") consistently applied during the periods involved,
except as may be noted therein. Except for liabilities and obligations set forth
in the Company Reports and except for liabilities and obligations incurred in
the ordinary course of business, the Company has no liabilities or obligations
of any nature (whether accrued, absolute, contingent or otherwise) required by
GAAP to be set forth on its consolidated balance sheet or in the notes thereto
which, individually or in the aggregate, would reasonably be likely to have a
Company Material Adverse Effect or to prevent, materially delay or materially
impair the ability of the Company to consummate the transactions contemplated
hereby. No enforcement action has been initiated, or to the knowledge of the
Company, threatened, against the Company by the SEC relating to disclosures
contained in any Company Reports. The books and records of the Company and each
of its Subsidiaries have been, and will be, maintained in accordance with
applicable legal and accounting requirements in all material respects.
(ii) The Company and its Subsidiaries are in compliance in all
material respects with the provisions of the Sarbanes-Oxley Act of 2002 that are
applicable to the Company and its Subsidiaries.
(f) Absence of Certain Changes. Except as disclosed in the Company
Reports, since December 31, 2005, the Company and its Subsidiaries have
conducted their respective businesses only in the ordinary and usual course of
such businesses and there has not been (i) any change in the financial
condition, properties, business or results of operations of the Company or any
of its Subsidiaries that, individually or in the aggregate, has had or would be
reasonably likely to have a Company Material Adverse Effect; (ii) any material
damage, destruction or other casualty loss with respect to any material asset or
property owned, leased, licensed or otherwise used by the Company or any of its
Subsidiaries, whether or not covered by insurance; (iii) any declaration,
setting aside or payment of any dividend or other distribution in cash, stock or
property in respect of the capital stock of the Company, other than the
Company's regular quarterly cash dividend of $0.05 per share payable on July 31,
2006 and October 31, 2006, or any redemption, purchase or acquisition of any
shares of any class or series of the capital stock of the Company or any of its
Subsidiaries; (iv) any change by the Company in accounting principles, practices
or methods; (v) any transfer, lease, licensing, sale, disposition or encumbrance
of any business unit or any material assets of the Company or any of its
Subsidiaries, other than sales of inventory in the ordinary course of business;
(vi) any acquisition by the Company or any of its Subsidiaries by merger,
consolidation, acquisition of all or substantially all the assets or capital
stock or other similar transaction of any corporation, partnership, limited
liability company or other business organization, except for purchases of
inventory in the ordinary course of business; (vii) any write-down of assets,
including inventory or accounts receivable, other than as required by GAAP;
(viii) any amendment of the memorandum of association or bye-laws or similar
organizational documents of the Company, or any alteration in any material
respect through merger, liquidation, reorganization, restructuring of corporate
structure or ownership of the Company or any of its "Significant Subsidiaries"
(within the meaning of Rule 1-02(w) of Regulation S-X promulgated by the SEC);
10
(ix) any new, or change in any, material Tax election; any material settlement
or compromise of any claim, notice, audit report or assessment in respect of
Taxes; any change in any annual Tax accounting period; any adoption or change in
any method of Tax accounting; any filing of any amended material Tax Return; any
entrance into any Tax allocation agreement, Tax sharing agreement, Tax indemnity
agreement or closing agreement relating to any material Tax; any surrender of
any right to claim a material Tax refund or any consent to any extension or
waiver of the statute of limitations period applicable to any material Tax claim
or assessment; or (x) any agreement to take any of the foregoing actions.
(g) Material Contracts. (i) Except as disclosed in the Company
Reports, none of the Company or any of its Subsidiaries is a party to any
Material Contract. As used in this Agreement, "Material Contract" means any (A)
Contract that would be a contract required to be filed pursuant to Instruction 4
under "Instructions as to Exhibits" in Form 20-F, (B) Contract providing for
aggregate expenditures to or by the Company in excess of $5,000,000, or annual
expenditures to or by the Company or any of its Subsidiaries in excess of
$2,500,000 (other than Contracts (I) pursuant to which the amount of royalty
payments vary with the amount of sales of a product to which the Contract
relates, and (II) for which such royalty payments have not exceeded $2,500,000
for any of the years ended December 31, 2003, 2004 and 2005), (C) partnership,
joint venture or limited liability or management agreement with any Person
(other than as solely between or among the Company or any of its Subsidiaries),
(D) except for this Agreement and any other document executed in connection with
the Amalgamation, Contract relating to any merger, consolidation, business
combination, share exchange, business acquisition, or for the purchase,
acquisition, sale or disposition of any assets (other than the sale of inventory
in the ordinary course of business) of the Company or any of its Subsidiaries,
in each case in which the consideration would have a value in excess of
$2,500,000, (E) Contract containing a non-compete or exclusivity provision that
materially limits the right (geographically or otherwise) of the Company or any
of its Subsidiaries to conduct any line of business or compete with any Person,
or (F) any material IP License that relates to a Key Product.
(ii) Each Material Contract is (A) a valid and binding obligation upon
the Company or any of its Subsidiaries that is a party thereto, (B) to the
knowledge of the Company, a valid and binding obligation of each other party
thereto, and (C) in full force and effect. No event has occurred that, with or
without notice, the passage of time or both, would constitute a default by the
Company or any of its Subsidiaries, or any other party thereto, under any
provision thereof or that would permit modification, cancellation, foreclosure,
imposition of any Lien, prepayment or acceleration or termination of any
Material Contract by any other party thereto or by it, except as would not,
individually or in the aggregate, reasonably be likely to have a Company
Material Adverse Effect. None of the Company or any of its Subsidiaries has
received any written notice regarding any violation or breach of, or default
under, any Material Contract, or any intention to terminate any such Material
11
Contract which would not, individually or in the aggregate, reasonably be likely
to have a Company Material Adverse Effect.
(h) Litigation. Except as disclosed in the Company Reports filed prior
to the date of this Agreement, (i) there are no actions, suits or proceedings
pending or, to the knowledge of the Company, threatened against the Company or
any of its Subsidiaries, and (ii) neither the Company nor any of its
Subsidiaries is subject to any outstanding Order, in each case, which would
individually or in the aggregate, reasonably be likely to have a Company
Material Adverse Effect or to prevent, materially delay or materially impair the
ability of the Company to consummate the transactions contemplated hereby.
(i) Employee Benefits. (i) All benefit and compensation plans,
contracts, agreements, policies or arrangements covering current or former
employees of the Company and any of its Subsidiaries (the "Employees") and
current or former directors of the Company, including, but not limited to,
"employee benefit plans" within the meaning of Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), and each material
employment, consulting, severance, termination, retirement, profit sharing,
bonus, incentive or deferred compensation, retention or change in control plan,
program, arrangement, agreement or commitment, and each bonus, stock option,
restricted stock or other equity-based, profit sharing, savings, life, health,
disability, accident, medical, insurance, vacation, other material fringe
benefit or other employee compensation plan, program, arrangement, agreement or
policy (the "Benefit Plans") are listed on Section 5.1(i) of the Company
Disclosure Letter. True and complete copies of all Benefit Plans listed on
Section 5.1(i) of the Company Disclosure Letter, including, if applicable, any
trust instruments and insurance contracts forming a part of any Benefit Plans,
all amendments thereto and the most recent determination letters issued by the
Internal Revenue Service (the "IRS"), all government and regulatory approvals
received from any foreign governmental authority in respect of any Non-U.S.
Benefit Plans (defined below), the most recent summary plan descriptions
(including any material modifications), the two most recent annual reports on
Form 5500 (including all attachments thereto), the two most recent actuarial
reports and the two most recent audited financial reports for any funded Benefit
Plan, have been made available to Parent.
(ii) All Benefit Plans, other than "multiemployer plans" within the
meaning of Section 3(37) of ERISA (each, a "Multiemployer Plan"), and all
benefit plans maintained outside of the United States primarily for the benefit
of Employees working outside of the United States ("Non-U.S. Benefit Plans"),
are in substantial compliance with ERISA, the Internal Revenue Code of 1986, as
amended (the "Code"), and other applicable Laws. Each Benefit Plan which is
subject to ERISA (the "ERISA Plans") that is an "employee pension benefit plan"
within the meaning of Section 3(2) of ERISA ("Pension Plan") and that is
intended to be qualified under Section 401(a) of the Code, has received a
favorable determination letter from the IRS, covering all tax law changes prior
to the Economic Growth and Tax Relief Reconciliation Act of 2001 or has applied
to the IRS for such favorable determination letter within the applicable
12
remedial amendment period under Section 401(b) of the Code, and the Company is
not aware of any circumstances likely to result in revocation of any such
favorable determination letter or the loss of the qualification of such plan
under Section 401(a) of the Code. Neither the Company nor any of its
Subsidiaries has engaged in a transaction with respect to any ERISA Plan that,
assuming the taxable period of such transaction expired as of the date hereof,
could subject the Company or any of its Subsidiaries to a tax or penalty imposed
by either Section 4975 of the Code or Section 502(i) of ERISA in an amount which
would be material. Neither the Company nor any of its Subsidiaries has incurred
nor reasonably expects to incur a material tax or penalty imposed by Section
4980F of the Code or Section 502 of ERISA.
(iii) Neither the Company nor any of its Subsidiaries, nor any entity
which is considered one employer with the Company under Section 4001 of ERISA or
Section 414 of the Code (A) maintains or contributes to or has within the past
six years maintained or contributed to a Pension Plan that is subject to
Subtitles C or D of Title IV of ERISA or Section 412 of the Code or (B)
maintains or has an obligation to contribute to or has within the past six years
maintained or had an obligation to contribute to a Multiemployer Plan. All
contributions required to be made under the terms of any Benefit Plan, as of the
date hereof, have been timely made or have been reflected on the Company
Reports.
(iv) As of the date hereof, there is no material pending or, to the
knowledge of the Company threatened, litigation relating to the Benefit Plans
and no Benefit Plan is the subject of an audit or investigation by the IRS, the
U.S. Department of Labor, the Pension Benefit Guaranty Corporation or any other
federal, state or local governmental agency, department or authority or any
foreign governmental agency, department or authority. Neither the Company nor
any of its Subsidiaries has any obligations to provide health, accident,
disability, life insurance or death benefits with respect to any current or
former employees, consultants or directors or any retirees of the Company or any
of its Subsidiaries, or the spouses, dependents or beneficiaries of any of the
foregoing, beyond the termination of employment or service of any such employee,
consultant, director or retiree, whether under any Benefit Plan or otherwise,
other than as required under Section 4980B of the Code or other applicable Law.
The Company or its applicable Subsidiary may amend or terminate any such plan at
any time without incurring any liability thereunder other than in respect of
claims incurred prior to such amendment or termination.
(v) There has been no amendment to, announcement by the Company or any
of its Subsidiaries relating to, or change in employee participation or coverage
under, any Benefit Plan which would increase materially the expense of
maintaining such plan above the level of the expense incurred therefor for the
most recent fiscal year. None of the execution of this Agreement, shareholder
approval of this Agreement or the consummation of the transactions contemplated
hereby, either alone or in combination with another event (whether contingent or
otherwise), will (A) entitle any current or former employee, consultant or
director of the Company or any of its Subsidiaries to any payment, (B) increase
13
the amount of compensation or benefits due to any such employee, consultant or
director, (C) accelerate the vesting, funding or time of payment of any
compensation, equity award or other benefit, (D) result in any "parachute
payment" under Section 280G of the Code (whether or not such payment would be
considered reasonable compensation for services rendered) or (E) result in
payments which would not be deductible under Section 162(m) of the Code.
(vi) To the extent the Company or any of its Subsidiaries has made any
payments or provided any benefits to any "service provider" that would
constitute "deferred compensation," in each case within the meaning of Section
409A of the Code, such payments have been made, and such benefits have been
provided, in good faith compliance with IRS Notice 2005-1, the proposed
regulations promulgated under Section 409A of the Code prior to the date hereof,
or with the provisions of Section 409A of the Code.
(vii) All stock options granted under the Stock Plans have been
granted in compliance, in all material respects, with the terms of applicable
Law and the applicable Stock Plans and the exercise price of each such option
was determined in accordance with the applicable Stock Plan.
(viii) With respect to each Non-U.S. Benefit Plan: (A) each such plan
has been administered in all material respects in accordance with its terms and
all applicable Laws, (B) all contributions, premiums, accruals, payments or
reimbursements required by applicable Law or the terms of the applicable plan
for all periods ending prior to or as of the date hereof have been made, and (C)
the current value of liabilities under each such plan do not exceed the assets
and reserves set aside under such plan as of the date hereof in an amount that
would be material.
(j) Compliance with Laws; Permits. (i) The Company and each of its
Subsidiaries are in compliance with all federal, state, local and foreign laws,
statutes, ordinances, rules, regulations, judgments, orders, injunctions,
decrees, licenses and permits of any Governmental Entity (collectively, "Laws")
applicable to the Company or any of its Subsidiaries or by which its or any of
their respective properties is bound or affected, except for such non-compliance
that, individually or in the aggregate, would not reasonably be likely to have a
Company Material Adverse Effect.
(ii) The Company and each of its Subsidiaries has all permits,
licenses, orders and other governmental authorizations, consents and approvals
necessary to own, lease or operate its properties and to conduct its business as
presently conducted (collectively, the "Permits"), except those the absence of
which would not, individually or in the aggregate, reasonably be likely to have
a Company Material Adverse Effect. There has occurred no default, revocation or
suspension under any such Permit, and no event has occurred that permits, or
upon the giving of notice or passage of time or both would permit, revocation,
non-renewal, modification, suspension, limitation or termination of any Permit
that is currently in effect, except in each case for any default, revocation,
14
suspension, event, non-renewal, modification, suspension, limitation or
termination that individually or in the aggregate, would not reasonably be
likely to have a Company Material Adverse Effect.
(k) Takeover Statutes. No "fair price," "moratorium," "control share
acquisition," "business combination" or other similar anti-takeover statute or
regulation or any anti-takeover provision in the Company's memorandum of
association and bye-laws is applicable to the Company, the Shares, the
Amalgamation or the other transactions contemplated hereby.
(l) Environmental Matters. (i) Except as set forth in the Company
Reports filed prior to the date hereof (A) to the knowledge of the Company, the
Company and its Subsidiaries are now and have always been in compliance, in all
material respects, with all applicable Environmental Laws and have all permits
necessary to conduct current operations; and (B) there have not been any
Hazardous Substances used, generated, treated, stored, transported, disposed of,
or released on, under, about, or emanating to or from any property currently or
previously owned, leased or operated by the Company or any of its Subsidiaries
at the time such property was owned, leased or operated by the Company or any of
its Subsidiaries except as permitted under applicable Environmental Laws.
(ii) Except as set forth in the Company Reports filed prior to the
date hereof, the Company and its Subsidiaries (A) are not the subject of any
pending written notice from any Governmental Entity or any other Person alleging
a material violation of, or liability under, any applicable Environmental Laws
nor, to the knowledge of the Company, is the Company or any Subsidiaries aware
of any probable basis for such a notice; and (B) are not, to the knowledge of
the Company, currently subject to any investigation, court order, administrative
order or decree arising under any Environmental Law. The Company has made
available to Parent copies of all environmental reports, studies, assessments
and sampling data in its possession or control relating to any properties
currently or previously owned, leased or operated by the Company or any of its
Subsidiaries.
(m) Taxes. (i) The Company and its Subsidiaries (A) have prepared in
good faith and duly and timely filed (taking into account any extension of time
within which to file) all Tax Returns (as defined below) required to be filed by
any of them and all such filed Tax Returns are complete and accurate in all
material respects; (B) have paid all Taxes (as defined below) that are due and
owing, whether or not shown as due on such filed Tax Returns, except with
respect to matters contested in good faith; and (C) have not waived any statute
of limitations with respect to Taxes or agreed to any extension of time with
respect to a Tax assessment or deficiency, nor has any request been made in
writing for any such waiver or extension. No deficiencies for Taxes of the
Company or its Subsidiaries have been claimed, proposed or assessed by any
authority and, as of the date hereof, there are not pending or, to the knowledge
of the Company, threatened, any audits, examinations, investigations or other
15
proceedings in respect of Taxes or Tax matters. No claim has ever been made by
an authority in a jurisdiction where the Company and its Subsidiaries do not
file Tax Returns that any of them is or may be subject to taxation by that
jurisdiction. The Company has made available to Parent true and correct copies
of all Tax Returns filed by the Company and its Subsidiaries for each of the
fiscal years ended December 31, 2005 (if any), 2004 and 2003, and complete and
accurate copies of all examination reports and statements of deficiencies
assessed against, and received by, or agreed to, by any of the Company and its
Subsidiaries (and their respective predecessors) since December 31, 2001. The
Company is not currently the beneficiary of any extension of time within which
to file any Tax Return. No power of attorney (other than powers of attorney
authorizing employees of the Company to act on behalf of the Company) with
respect to any Taxes has been executed or filed with any authority.
(ii) The unpaid Taxes of the Company did not, as of the date of the
most recent Company financial statements included in the Company Reports, exceed
the reserve for Tax liability (excluding any reserve for deferred Taxes
established to reflect timing differences between book and Tax income) set forth
on the face of the balance sheets (rather than in any notes thereto) contained
in the most recent Company financial statements included in the Company Reports.
Since the date of the most recent Company financial statements included in the
Company Reports, the Company has not incurred any liability for Taxes outside
the ordinary course of business or otherwise inconsistent with past custom and
practice.
(iii) There are no Liens for Taxes on any assets of the Company other
than Liens for Taxes not yet due and payable.
(iv) There are no Tax-sharing agreements or similar arrangements
(including indemnity arrangements) with respect to or involving the Company,
and, after the Effective Time, the Company shall not be bound by any such
Tax-sharing agreements or similar arrangements or have any liability thereunder
for amounts due in respect of periods prior to the Effective Time.
(v) The Company has never been a member of a group filing a
consolidated Tax Return (other than a group the common parent of which is the
Company). The Company has no liability for the Taxes of any other Person (A)
under Treasury Regulation Section 1.1502-6 (or any similar provision of state,
local, or foreign Law), (B) as a transferee or successor, (C) by contract, or
(D) otherwise.
(vi) The Company has withheld and paid all Taxes required to have been
withheld and paid in connection with amounts paid or owing to any employee,
independent contractor, creditor, shareholder or other third party.
(vii) The Company has never been a United States real property holding
corporation within the meaning of Section 897(c)(2) of the Code during the
applicable period specified in section 897(c)(1)(A)(ii) of the Code.
16
(viii) Neither the Company nor any of its Subsidiaries incorporated
outside of the United States is a "surrogate foreign corporation" within the
meaning of Section 7874(a)(2)(B) of the Code or is treated as a U.S. corporation
under Section 7874(b) of the Code.
(n) Labor Matters. Neither the Company nor any of its Subsidiaries is
a party to or otherwise bound by any collective bargaining agreement, contract
or other agreement or understanding with a labor union or labor organization,
nor, as of the date hereof, is the Company or any of its Subsidiaries the
subject of any material proceeding asserting that the Company or any of its
Subsidiaries has committed an unfair labor practice or seeking to compel it to
bargain with any labor union or labor organization nor is there pending or, to
the knowledge of the Company, threatened, nor has there been for the past five
years, any employee strike, material labor dispute, walk-out, work stoppage,
slow-down or lockout involving the Company or any of its Subsidiaries. There are
no claims, controversies, investigations, legal proceedings or complaints
pending or, to knowledge of the Company, threatened, by any Governmental Entity,
any employees, any party or parties representing any of such employees, or any
former employer of a current employee, against the Company or any of its
Subsidiaries before any court, arbitrator or other tribunal that are reasonably
likely to have a Company Material Adverse Effect.
(o) Insurance. All material fire and casualty, general liability,
business interruption, product liability and sprinkler and water damage
insurance policies maintained by the Company and its Subsidiaries are with
reputable insurance carriers and are of such character and in such amounts as
are in accordance with normal industry practice for companies engaged in similar
businesses.
(p) Real Property; Assets. (i) Section 5.1(p) of the Company
Disclosure Letter identifies (A) a complete, accurate and current list of all
real property owned by the Company and its Subsidiaries as of the date hereof
and (B) a complete, accurate and current list of all real property leased or
subleased by the Company and its Subsidiaries as of the date hereof
(collectively, the "Leased Properties"). Copies of the lease agreements under
which each Leased Property is leased (the "Leases") have been made available to
Parent. No event has occurred that, with or without notice, the passage of time
or both, would cause a breach or default under any such Lease, except as would
not, individually or in the aggregate, reasonably be likely to have a Company
Material Adverse Effect.
(ii) The Company and each of its Subsidiaries has good and valid title
to, or, in the case of Leased Properties and other leased assets, valid
leasehold interests in, all of its material tangible properties and assets,
real, personal and mixed, used or held for use in its business, free and clear
of any Liens, easements, title defects, deeds of trust, rights of way,
restrictive covenants, encroachments or similar restrictions or limitations,
except (A) as reflected in the Company's most recent balance sheet contained in
the Company Reports, statutory landlord Liens or Liens arising under equipment
17
leases entered into in the ordinary course of business consistent with past
practice, (B) Liens for Taxes not yet due and payable, (C) such imperfections of
title and encumbrances, if any, that do not in any material respect detract from
the value or interfere with the present use of the property subject thereto or
affected thereby, and (D) except as would not, individually or in the aggregate,
reasonably be likely to have a Company Material Adverse Effect.
(q) Intellectual Property. (i) Section 5.1(q) of the Company
Disclosure Letter sets forth a list of (A) all registered patents, trademarks,
copyrights, mask works and applications therefor owned by the Company or any of
its Subsidiaries, indicating the name of the registered owner, the registration
or application number and the applicable filing jurisdiction. True and correct
copies of all material IP Licenses that relate to any of the Key Products have
been made available to Parent.
(ii) The Company and/or its Subsidiaries owns, or has licensed or
otherwise possesses the right to make, use, sell, copy, distribute, make
derivative works of, publicly perform and publicly display (collectively, "Use")
all Intellectual Property that is Used in, or necessary for, the business of the
Company and its Subsidiaries as currently conducted (collectively, "Business
Intellectual Property"), except for any such failures to own, be licensed or
possess that individually or in the aggregate, would not reasonably be likely to
have a Company Material Adverse Effect. The execution, delivery and performance
of this Agreement will not change, or constitute or result in any change, in the
rights of the Company or any of its Subsidiaries to Use the Business
Intellectual Property, except for any such change that individually or in the
aggregate, would not reasonably be likely to have a Company Material Adverse
Effect. With respect to Business Intellectual Property owned by, or in the case
of copyrights, exclusively licensed to, the Company and/or its Subsidiaries
(collectively, the "Owned Intellectual Property"), neither the Company nor any
of its Subsidiaries has granted any security interests, rights of first refusal,
rights of first negotiation, options, calls or puts in any Business Intellectual
Property. The Owned Intellectual Property is valid, subsisting, in full force
and effect and to the Company's knowledge, enforceable, and the Company and/or
its Subsidiaries own all right, title and interest therein (including the sole
right to enforce) free and clear of all Liens.
(iii) Except as disclosed in Company Reports:
(A) neither the Company nor any of its Subsidiaries is in violation of
any IP License or other Material Contract as to which the Company or any of
its Subsidiaries is a party and pursuant to which the Company or any of its
Subsidiaries purports to have the right to Use any Business Intellectual
Property from third parties (collectively, "Third-Party Intellectual
Property"), except for any such failures to own, be licensed or possess
that individually or in the aggregate, would not reasonably be likely to
have a Company Material Adverse Effect, and neither the Company nor any of
18
its Subsidiaries will be in violation of any such agreement as a result of
the execution and delivery of this Agreement or the performance of the
Company's obligations hereunder;
(B) no claims, litigation, oppositions, cancellations, proceedings or
objections with respect to (I) Owned Intellectual Property or (II) to the
knowledge of the Company, Third-Party Intellectual Property, are currently
pending or are threatened by any Person;
(C) to the knowledge of the Company, there is no valid ground for any
bona fide claims (I) to the effect that the Company or any of its
Subsidiaries infringes, misappropriates or otherwise violates (including in
the manufacture, sale, licensing or use of any product as now Used, sold or
licensed or proposed for use, sale or license by the Company or any of its
Subsidiaries) any Intellectual Property of any Person; (II) against the use
by the Company or any of its Subsidiaries of any Business Intellectual
Property Used in the business of the Company or any of its Subsidiaries as
currently conducted or as proposed to be conducted; (III) challenging the
ownership, validity or enforceability of any of the Owned Intellectual
Property; or (IV) challenging any license or right to Use the Third-Party
Intellectual Property by the Company or any of its Subsidiaries, except, in
the case of (III) or (IV), as would not, individually or in the aggregate,
reasonably be likely to have a Company Material Adverse Effect;
(D) to the knowledge of the Company, there is no unauthorized use,
infringement or misappropriation of any of the Owned Intellectual Property
by any other Person, including any employee, consultant or former employee
or consultant of the Company or any of its Subsidiaries, except in each
case as would not, individually or in the aggregate, reasonably be likely
to have a Company Material Adverse Effect;
(E) the Company has taken reasonable measures to protect and preserve
the trade secret status of all trade secrets that are Business Intellectual
Property. It is the policy of the Company and each of its Subsidiaries to
require all employees and consultants to enter into or be bound by
confidentiality agreements or undertakings for the benefit of the Company
and/or its Subsidiaries which require such employees and consultants to
maintain the confidence of its trade secrets. All material Intellectual
Property developed on behalf of the Company or any of its Subsidiaries
either constitutes work made for hire or has been assigned to the Company;
(F) all of the Company's and its Subsidiaries' information technology
systems and computers, and Owned Intellectual Property (and all parts
thereof), have not materially malfunctioned or failed within the past three
years and otherwise operate as required by the Company and its Subsidiaries
in connection with their respective businesses; and
19
(G) To the knowledge of the Company and its Subsidiaries, none of the
Company or any of its Subsidiaries has received any written notice
asserting such Company's or Subsidiary's breach of, or default under, any
Material Contract that is an IP License, or written notice of any intention
of the other party thereto to terminate any such IP License prior to the
expiration of its stated term, where the breach or default under, or
termination of, such IP License would reasonably be likely to have a
material and adverse effect on the Company's or a Subsidiary's rights with
respect to a Key Product.
(r) Affiliate Transactions. Except as disclosed in the Company
Reports, there are no transactions, agreements, arrangements or understandings
between (i) the Company or any of its Subsidiaries, on the one hand, and (ii)
any Affiliate of the Company (other than the Company's Subsidiaries), on the
other hand, of the type that would be required to be disclosed under Item 404 of
Regulation S-K under the Securities Act.
(s) Product Liability. The Company is not aware of any claim, or event
that would be reasonably likely to result in a claim, against the Company or any
of its Subsidiaries for injury to any person or property of employees or any
third parties suffered as a result of the sale of any product or performance of
any service by the Company or any of its Subsidiaries, including claims arising
out of the defective or unsafe nature of its products or services, which could,
individually or in the aggregate, have a Company Material Adverse Effect.
(t) Foreign Corrupt Practices Act. Neither the Company nor any of its
Subsidiaries, nor, to the knowledge of the Company, any agent or employee has,
directly or indirectly, materially violated any applicable provision of the
Foreign Corrupt Practices Act of 1977, as amended.
(u) Brokers and Finders. Neither the Company nor any of its officers,
directors or employees has employed any broker or finder or incurred any
liability for any brokerage fees, commissions or finders fees in connection with
the Amalgamation or the other transactions contemplated hereby, except that the
Company has employed Navigant as its financial advisor, the arrangements with
which have been disclosed to Parent prior to the date hereof. The Company has
made available to Parent a true and correct copy of all engagement letters
relating to arrangements with Navigant.
5.2. Representations and Warranties of Parent and Amalgamation Sub.
Except as set forth in the disclosure letter delivered to the Company by Parent
on or prior to entering into this Agreement (the "Parent Disclosure Letter"),
each of Parent and Amalgamation Sub hereby represents and warrants to the
Company that:
(a) Organization and Good Standing. Each of Parent and Amalgamation
Sub is duly organized, validly existing and in good standing under the laws of
its respective jurisdiction of organization and has all requisite corporate or
20
similar power and authority to own, lease, license and operate its properties
and assets and to carry on its business as presently conducted.
(b) Corporate Authority. Each of Parent and Amalgamation Sub has all
requisite corporate or similar power and authority and has taken all corporate
or similar action necessary in order to execute, deliver and perform its
obligations under this Agreement and to consummate the Amalgamation and the
other transactions involving Parent and Amalgamation Sub contemplated by this
Agreement, including having obtained the requisite approval of the shareholders
of Amalgamation Sub by a vote of at least three-fourths of those voting at the
meeting of shareholders. This Agreement has been duly authorized and executed by
each of Parent and Amalgamation Sub and is a valid and binding agreement of
Parent and Amalgamation Sub, enforceable against each of Parent and Amalgamation
Sub in accordance with its terms, subject to the Bankruptcy and Equity
Exception.
(c) Governmental Filings; No Violations.
(i) Other than the filings and/or notices (A) pursuant to Section 1.2,
(B) under the HSR Act and the Exchange Act, (C) to comply with state securities
or "blue sky" laws, (D) required to be made with the New York Stock Exchange,
(E) required to be made pursuant to applicable foreign antitrust and competition
laws and (F) pursuant to the Bermuda Act, no notices, reports or other filings
are required to be made by Parent or Amalgamation Sub with, nor are any
consents, waivers, registrations, approvals, permits, authorizations, notices or
filings required to be obtained by Parent or Amalgamation Sub from, any
Governmental Entity, in connection with the execution and delivery of this
Agreement by Parent and Amalgamation Sub and the consummation by Parent and
Amalgamation Sub of the Amalgamation and the other transactions contemplated
hereby, except those that the failure to make or obtain would not, individually
or in the aggregate, reasonably be likely to have a Parent Material Adverse
Effect.
(ii) The execution, delivery and performance of this Agreement by
Parent and Amalgamation Sub do not, and the consummation by Parent and
Amalgamation Sub of the Amalgamation and the other transactions contemplated
hereby will not, constitute or result in (A) a breach or violation of, or a
default under, the governing instruments of Parent or Amalgamation Sub, (B) a
breach or violation of, or a default, termination or cancellation under, or the
acceleration of any obligations or the creation of a Lien on the assets of
Parent or Amalgamation Sub (with or without notice, lapse of time or both)
pursuant to, any Contracts binding upon Parent or Amalgamation Sub or any Law or
Order applicable to Parent or Amalgamation Sub or by which its or any of their
respective properties is bound or affected or (C) any change in the rights or
obligations of any party (including requiring any consents or waivers) under any
of the Contracts, except, in the case of clause (B) or (C) above, for any
breach, violation, default, acceleration, termination, cancellation, Lien or
change that, individually or in the aggregate, would not reasonably be likely to
have a Parent Material Adverse Effect.
21
(d) Brokers and Finders. Neither Parent nor any of its officers,
directors or employees has employed any broker or finder or incurred any
liability for any brokerage fees, commissions or finders fees in connection with
the Amalgamation or the other transactions contemplated hereby, except that
Parent has employed Lehman Brothers Inc. as its financial advisor, the
arrangements with which have been disclosed to the Company prior to the date
hereof.
(e) Available Funds. Parent has all funds necessary to satisfy all of
its obligations hereunder and in connection with the Amalgamation and the other
transactions contemplated hereby.
ARTICLE VI
Covenants
6.1. Interim Operations. The Company covenants and agrees as to itself
and its Subsidiaries that, after the date hereof and prior to the Effective Time
(unless Parent shall otherwise approve in writing, which decision whether to
approve shall not be unreasonably delayed, and except as otherwise expressly
contemplated hereby or set forth in the Company Disclosure Letter):
(a) (i) the business of it and its Subsidiaries shall be conducted in
the ordinary and usual course of business consistent with past practice and, to
the extent consistent therewith, it and its Subsidiaries shall use all
reasonable best efforts to preserve its business organization intact and
maintain its existing relations and goodwill with customers, suppliers,
distributors and employees; and (ii) it shall, and shall cause its Subsidiaries
to, pay Taxes of the Company and its Subsidiaries when due and payable, except
to the extent that both (A) any such Tax is contested in good faith by the
Company or any of its Subsidiaries, and (B) adequate reserves shall have been
provided for with respect to such Tax;
(b) it shall not (i) amend or restate the organizational documents of
the Company or any of its Subsidiaries; (ii) split, combine or reclassify its
outstanding shares of capital stock; (iii) declare, set aside or pay any
dividend or other distribution payable in cash, stock or property in respect of
any shares of its capital stock, other than dividends from any of its
Subsidiaries to it and other than its regular quarterly cash dividend of $0.05
per Share payable on July 31, 2006 and October 31, 2006, provided, that (A) if
the Effective Time shall occur on or prior to October 31, 2006, the Company
shall not pay (or declare to be paid) a dividend on October 31, 2006, and (B) at
any time on or prior to October 10, 2006, the Company may not declare any
dividend to be paid on October 31, 2006; or (iv) repurchase, redeem or otherwise
acquire, or permit any of its Subsidiaries to purchase or otherwise acquire, any
Shares or any securities convertible into or exchangeable or exercisable for any
shares of its capital stock other than repurchases of securities from employees
upon termination of employment;
22
(c) neither it nor any of its Subsidiaries shall (i) issue, sell,
pledge, dispose of, transfer or encumber, or authorize the issuance, sale,
pledge, disposition, transfer or encumbrance of any shares of, or securities
convertible into or exchangeable or exercisable for, or options, warrants,
calls, commitments or rights of any kind to acquire, any shares of its capital
stock of any class or other equity interests (other than (A) grants of Company
Options or restricted Shares in connection with regular quarterly grants to
directors of the Company, in each case not to exceed, in any calendar quarter,
600 Shares for each outside director and the chairman of the board of directors
of the Company, and (B) Shares issuable pursuant to Company Options outstanding
on the date hereof); (ii) transfer, lease, license, sell, dispose of or encumber
or authorize the transfer, lease, licensing, sale, disposition or encumbrance of
any business unit or any material assets of the Company or any of its
Subsidiaries, other than sales of inventory in the ordinary course of business;
or (iii) incur any indebtedness for borrowed money or issue any debt securities
or assume, guarantee, endorse or otherwise become liable for the obligations of
any Person in a principal amount not to exceed $250,000 in the aggregate for the
Company and its Subsidiaries, taken as a whole (other than indebtedness between
or among the Company and/or its Subsidiaries or letters of credit issued to
support purchase obligations of the Company or any of its Subsidiaries in the
ordinary course of business);
(d) neither it nor any of its Subsidiaries shall increase the
compensation payable or to become payable to its officers or to employees who
are not officers or directors (other than, in each case, planned merit or
promotional increases or increases in the ordinary course of business consistent
with past practice, in each case which are described in Section 6.1(d) of the
Company Disclosure Letter), or grant any rights to severance or termination pay
to, or enter into any employment or severance agreement with, any director,
officer or other employee of the Company or any of its Subsidiaries (except, in
the case of employees who are not officers or directors, in accordance with the
terms of the Benefit Plans), or establish, adopt, enter into or amend, any
collective bargaining agreement or Benefit Plan, except for amendments of an
administrative nature that would have a de minimis effect on the cost of
maintaining the Benefit Plan or as required by Law;
(e) except in the ordinary course of business consistent with past
practice, neither it nor any of its Subsidiaries shall (i) enter into, amend,
terminate, renew or extend, or waive, release or assign any material rights or
any material claims under any Contract that would be material to the Company and
its Subsidiaries taken as a whole or (ii) license, lease, sell or otherwise
dispose of, or (other than with respect to the natural expiration of copyrights
and patents in accordance with their scheduled expiration dates) cause the
lapsing or abandonment of any material Owned Intellectual Property;
(f) neither it nor any of its Subsidiaries shall make any capital
expenditures or other expenditures with respect to property, plant or equipment,
in each case that would exceed $2,500,000 in the aggregate for the Company and
its Subsidiaries, taken as a whole;
23
(g) neither it nor any of its Subsidiaries shall acquire by merger,
consolidation, acquisition of assets or capital stock or any similar transaction
any corporation, partnership, limited liability company or other business
organization or all or substantially all of the assets of any such entity;
(h) neither it nor any of its Subsidiaries shall settle or compromise
any claims or litigation in which (i) the amount settled or compromised exceeds
$250,000 (other than in the ordinary course of business consistent with past
practice as a result of sales or warranty programs) or (ii) such settlement or
compromise provides for the grant, transfer or relinquishment of any rights or
other non-monetary consideration and does not contain a full and unconditional
release of the Company and its Subsidiaries;
(i) neither it nor any of its Subsidiaries shall make any change,
other than as required by GAAP or by the SEC, to its accounting principles or
procedures;
(j) neither it nor any of its Subsidiaries shall make or change any
material Tax election, settle or compromise any claim, notice, audit report or
assessment in respect of Taxes, change any annual Tax accounting period, adopt
or change any method of Tax accounting, file any material Tax Return, enter into
any Tax allocation agreement, Tax sharing agreement, Tax indemnity agreement or
closing agreement relating to any material Tax, surrender any right to claim a
material Tax refund or consent to any extension or waiver of the statute of
limitations period applicable to any material Tax claim or assessment;
(k) neither it nor any of its Subsidiaries shall (i) make any loans,
advances or capital contributions to, or investments in, any other Person (other
than the Company or any of its Subsidiaries) in excess of $500,000 in the
aggregate, other than investments in cash or cash equivalents in the ordinary
course of business consistent with existing investment policies, or (ii) conduct
any write-down of assets, including inventory or accounts receivable, other than
as required by GAAP;
(l) neither it nor any of its Subsidiaries shall authorize or adopt a
plan of complete or partial liquidation, dissolution, merger, consolidation,
restructuring, recapitalization or other reorganization of the Company or any of
its Subsidiaries, or otherwise alter in any material fashion its corporate,
capital or ownership structure;
(m) neither it nor any of its Subsidiaries shall fail to use
reasonable best efforts to maintain their existing insurance policies in all
material respects in effect as of the date hereof; and
(n) neither it nor any of its Subsidiaries will authorize or enter
into an agreement to do any of the foregoing.
6.2. Acquisition Proposals. (a) The Company agrees that neither it nor
any of its Subsidiaries nor any of their respective officers and directors
shall, and that it shall not authorize or permit its or any of its Subsidiaries'
24
employees, agents and representatives to, directly or indirectly, initiate,
solicit, encourage or otherwise facilitate any inquiries or the making of any
proposal or offer with respect to a merger, reorganization, share exchange,
consolidation, amalgamation or similar transaction involving the Company, or
with respect to any purchase, acquisition, assignment, lease or transfer of 25%
or more of the consolidated assets of the Company or 25% or more of the equity
securities of the Company, or any combination of the foregoing (any such
proposal or offer being hereinafter referred to as an "Acquisition Proposal").
The Company further agrees that neither it nor any of its Subsidiaries nor any
of their respective officers and directors shall, and that it shall not
authorize or permit its or any of its Subsidiaries' employees, agents and
representatives to, directly or indirectly, engage in any negotiations
concerning, or provide any confidential information or data to, or have any
discussions with, any Person relating to a proposal that constitutes, or could
reasonably be expected to lead to, an Acquisition Proposal, otherwise facilitate
any effort or attempt to make or implement an Acquisition Proposal or enter into
an agreement or agreement in principle with respect to an Acquisition Proposal.
(b) The provisions of Section 6.2(a) shall not prevent the Company or
its Board of Directors, prior to obtaining the Company Requisite Vote and
subject to complying with the terms of this Agreement, from (A) complying with
its disclosure obligations under applicable Law; (B) providing information in
response to a request therefor by a Person who has made an unsolicited bona fide
written Acquisition Proposal if the Board of Directors receives from such Person
requesting such information an executed confidentiality agreement on terms no
more favorable to such person than those contained in the Confidentiality
Agreement (it being understood that such confidentiality agreement need not
prohibit the making, or amendment, of an Acquisition Proposal); (C) engaging in
any negotiations or discussions with any Person who has made an unsolicited bona
fide written Acquisition Proposal; (D) recommending such an Acquisition Proposal
to the shareholders of the Company; or (E) entering into a binding written
agreement concerning a transaction that constitutes a Superior Proposal, if, (i)
in each case referred to in clause (B), (C), (D) and/or (E) above, the Board of
Directors of the Company determines in good faith after consultation with
outside legal counsel and the Company's financial advisor that such action is
likely to be required in order for its directors to comply with their respective
fiduciary duties under applicable Law and (ii) in each case referred to in
clause (D) and/or (E) above, (x) the Company has given Parent five business
days' prior written notice (such five business day period to recommence upon
notification by the Company of any material change to the applicable Acquisition
Proposal) of its intention to take any such action (including attaching the most
current version of any such binding written agreement referred to in clause (E)
above) and (y) at the end of such five business day period, after taking into
account any adjusted, modified or amended terms proposed by Parent, the Board of
Directors of the Company determines in good faith (after consultation with its
outside legal counsel and financial advisor) that such Acquisition Proposal, if
accepted, has substantially the same likelihood of consummation as the
Amalgamation, taking into account all legal, financial and regulatory aspects of
the proposal and the Person making the proposal, and would, if consummated,
result in a transaction more favorable to the Company's shareholders from
25
a financial point of view than the Amalgamation (any Acquisition Proposal as to
which the Company's Board of Directors make such good faith determination being
referred to in this Agreement as a "Superior Proposal"). The Company agrees that
it will not recommend to the shareholders of the Company an Acquisition Proposal
referred to in clause (D) above or enter into a binding agreement referred to in
clause (E) above until, in each case, at least the sixth business day after it
has provided the notice (or revised notice, as the case may be) to Parent
required under the previous sentence. The Company agrees that it will
immediately cease and cause to be terminated any existing activities,
discussions or negotiations with any parties conducted heretofore with respect
to any Acquisition Proposal.
(c) The Company agrees that it will notify Parent promptly (and in any
event within twenty-four (24) hours) upon receipt of any Acquisition Proposal by
it or any of its representatives, including the material terms of such proposal,
the identity of the potential acquiror, any information requested from the
Company, or of any negotiations or discussions being sought to be initiated with
the Company. The Company shall keep Parent fully informed on a prompt basis with
respect to any material changes to the applicable Acquisition Proposal, the
Company's intention to enter into an Acquisition Proposal or any other material
developments with respect to the foregoing. The Company will simultaneously
provide to Parent any non-public information concerning the Company or its
Subsidiaries provided to any Person that was not previously provided to Parent.
6.3. Company Shareholders Meeting. The Company will take, in
accordance with applicable Law and its memorandum of association and bye-laws,
all action necessary to convene a meeting of holders of Shares (the "Company
Shareholders Meeting") as promptly as practicable after the date hereof to
consider and vote upon this Agreement. Subject to fiduciary obligations under
applicable Law, the Company's Board of Directors shall recommend approval of
this Agreement and shall take all lawful action to solicit such approval. For
the avoidance of doubt, nothing herein shall prevent the Company's Board of
Directors from withholding, withdrawing, amending or modifying its
recommendation that the Company's shareholders vote in favor of this Agreement
if the Company's Board of Directors determines in good faith after consultation
with outside legal counsel and the Company's financial advisor that it is
necessary to do so in order to act in a manner consistent with their fiduciary
duties under applicable Law; provided that Section 6.2 shall govern the
withholding, withdrawing, amendment or modifying of such recommendation in the
circumstances described therein.
6.4. Information Supplied. (a) The Company agrees, as to itself and
its Subsidiaries, that none of the information included or incorporated by
reference (i) in the Proxy Statement and any amendment or supplement thereto, at
the date of mailing to shareholders and at the time of the Company Shareholder
Meeting, and (ii) in any other filings required to be made by the Company with
the SEC in connection with the Amalgamation, or any amendment or supplement
thereto (collectively, the "Other Filings"), at the time of filing and at any
distribution or dissemination thereof, will contain any untrue statement of a
26
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; provided, however,
that the Company's covenants contained in clauses (i) and (ii) above will not
apply to statements or omissions included in the Proxy Statement or any Other
Filings based upon information furnished in writing to the Company by Parent or
Amalgamation Sub specifically for use therein. The Company agrees that the Proxy
Statement and any Other Filings, and any amendments or supplements thereto, when
filed by the Company with the SEC, or when distributed or otherwise disseminated
to the Company's shareholders, as applicable, will comply as to form in all
material respects with the applicable requirements of the Exchange Act
(including a form of proxy statement that complies as to form in all material
respects with the requirements of Section 14(a) of the Exchange Act as if such
section were applicable to the Company) and other applicable Laws.
(b) Parent agrees, as to itself and Amalgamation Sub, that none of the
information supplied or to be supplied by it or Amalgamation Sub in writing
specifically for use in (i) the Proxy Statement and any amendment or supplement
thereto, at the date of mailing to shareholders and at the time of the Company
Shareholders Meeting, or (ii) any Other Filing, at the time of filing and at any
distribution or dissemination thereof, will 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.
6.5. Filings; Other Actions; Notification. (a) In connection with the
Company Shareholders Meeting, the Company shall as promptly as reasonably
practicable prepare a proxy statement relating to the transactions contemplated
by this Agreement and the Amalgamation (the "Proxy Statement") in accordance
with applicable Law, including the Bermuda Act, and shall file or furnish the
Proxy Statement with the SEC no later than thirty (30) days after the date of
this Agreement. The Company shall mail the Proxy Statement to its shareholders
as promptly as reasonably practicable thereafter. The Company shall as promptly
as practicable notify Parent and Amalgamation Sub of the receipt of any oral or
written comments from the SEC relating to any request from the SEC for
amendments of, or supplements to, the Proxy Statement, as well as any request by
the SEC for additional information relating to the Proxy Statement. The Company
(in consultation with Parent and Amalgamation Sub) shall use its reasonable best
efforts to respond to the comments of the SEC, if any, with respect to the Proxy
Statement (including filing all exhibits and other document required to be so
filed with the SEC in response to such comments). The Company shall provide
Parent and Amalgamation Sub with a reasonable opportunity to review and comment
on drafts of the Proxy Statement (including each amendment or supplement
thereto) and all responses to requests, if any, for additional information by
and replies to comments of the SEC, prior to filing such with, or sending such
to, the SEC. If at any time prior to the Company Shareholders Meeting, any
information should be discovered by any party that should be set forth in an
amendment or supplement to the Proxy Statement, so that the Proxy Statement
would not include any untrue statement of a material fact or omit to state any
27
material fact required to be stated therein or necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading, the party that discovers such information shall promptly notify the
other parties hereto and, to the extent required by applicable Law, an
appropriate amendment or supplement describing such information shall be
promptly filed by the Company with the SEC and disseminated by the Company to
the shareholders of the Company; provided that prior to such mailing of any
amendment or supplement, the Company shall provide Parent with the right to
review and comment on such amendment or supplement as described in this Section
6.5. Subject to Section 6.2, the Proxy Statement shall contain the Company
Recommendation.
(b) The Company and Parent shall cooperate with each other and use
(and shall cause their respective Subsidiaries to use) their respective
commercially reasonable efforts to take or cause to be taken all actions, and do
or cause to be done all things, necessary, proper or advisable on its part
hereunder and applicable Laws to consummate and make effective the Amalgamation
and the other transactions contemplated hereby as soon as practicable, including
preparing and filing as promptly as practicable all documentation to effect all
necessary notices, reports and other filings and to obtain as promptly as
practicable all consents, registrations, approvals, permits and authorizations
necessary or advisable to be obtained from any third party (including
shareholders) and/or any Governmental Entity in order to consummate the
Amalgamation or any of the other transactions contemplated hereby. Subject to
Section 6.5(a) and applicable Laws relating to the exchange of information, to
the extent practicable, Parent and the Company shall have the right to
reasonably collaborate in connection with any communication that Parent or the
Company makes to any Governmental Entity regarding the Amalgamation and the
other transactions contemplated hereby before such communication is made.
(c) The Company shall, upon request by Parent, furnish Parent, the SEC
and any other Governmental Entities with all information concerning itself, its
Subsidiaries, directors, officers and shareholders and such other matters as may
be reasonably necessary or advisable in connection with the Proxy Statement or
any other statement, filing, notice or application made by or on behalf of
Parent to any third party and/or any Governmental Entity in connection with the
Amalgamation and the transactions contemplated hereby.
(d) Parent shall, upon request by the Company, furnish the Company,
the SEC and any other Governmental Entities with all information concerning
itself and Amalgamation Sub and such other matters as may be reasonably
necessary or advisable in connection with the Proxy Statement or any other
statement, filing, notice or application made by or on behalf of the Company or
any of its Subsidiaries to any third party and/or any Governmental Entity in
connection with the Amalgamation and the transactions contemplated hereby.
28
(e) The Company and Parent each shall keep the other apprised of the
status of matters relating to completion of the transactions contemplated
hereby, including promptly furnishing the other with copies of notice or other
communications received by Parent, Amalgamation Sub, the Company or any of its
Subsidiaries, from any third party and/or any Governmental Entity with respect
to the Amalgamation and the other transactions contemplated hereby.
6.6. Access. Upon reasonable notice, and except as may otherwise be
required by applicable Law, the Company shall (and shall cause its Subsidiaries
to) afford Parent's officers, employees, counsel, accountants and other
authorized representatives reasonable access, during normal business hours
throughout the period prior to the Effective Time, to its properties, books,
contracts, records, officers, employees and representatives and, during such
period, the Company shall (and shall cause each of its Subsidiaries to) furnish
promptly to Parent all information concerning its business, properties,
Contracts, financial data, personnel and other information as may reasonably be
requested, provided that the foregoing shall not require the Company or any of
its Subsidiaries to permit any inspection, or to disclose any information, that
in the reasonable judgment of the Company would result in the disclosure of any
trade secrets of third parties if the Company shall have used reasonable best
efforts to obtain the consent of such third party to such inspection or
disclosure. All requests for information made pursuant to this Section shall be
directed to an executive officer of the Company, as the case may be, or such
Person as may be designated by the Company's officers, as the case may be. All
such information shall be governed by the terms of the Confidentiality
Agreement.
6.7. Publicity. The initial press release with respect to the
transactions contemplated hereby shall be a joint press release and thereafter
the Company and Parent each shall consult with each other prior to issuing any
press releases or otherwise making public announcements with respect to the
Amalgamation and the other transactions contemplated hereby and prior to making
any filings with any third party and/or any Governmental Entity (including any
national securities interdealer quotation service) with respect thereto, except
as may be required by Law or by obligations pursuant to any listing agreement
with or rules of any national securities interdealer quotation service.
6.8. Certain Notices. From and after the date of this Agreement until
the Effective Time, each party hereto shall promptly notify the other party
hereto of (a) the occurrence, or non-occurrence, of any event that would be
likely to cause any condition to the obligations of any party to effect the
Amalgamation and the other transactions contemplated by this Agreement not to be
satisfied or (b) the failure of the Company or Parent, as the case may be, to
comply with or satisfy any covenant, condition or agreement to be complied with
or satisfied by it pursuant to this Agreement that would reasonably be expected
to result in any condition to the obligations of any party to effect the
Amalgamation and the other transactions contemplated by this Agreement not to be
satisfied; provided, however, that the delivery of any notice pursuant to this
Section 6.8 shall not cure any breach of any representation or warranty
requiring
29
disclosure of such matter prior to the date of this Agreement or otherwise limit
or affect the remedies available hereunder to the party receiving such notice.
6.9. FIRPTA Certificate. Prior to the Application Date, the Company
shall deliver to Parent such forms and certificates, duly executed and
acknowledged, in form and substance reasonably satisfactory to Parent,
certifying that the Amalgamation is exempt from withholding under Section 1445
of the Code.
6.10. Benefits. Subject to the terms of any collective bargaining
agreement currently in effect or which may be in effect in the future, Parent
agrees that, during the period commencing at the Effective Time and ending on
the second anniversary thereof, the employees of the Company and each of its
Subsidiaries will continue to be provided with benefits under employee benefit
plans that will be substantially similar in the aggregate to those currently
provided by the Company and each of its Subsidiaries to such employees. Parent
shall, or shall cause the Amalgamated Company to, honor in accordance with their
terms: (a) all employee benefit obligations to current and former employees of
the Company accrued as of the Effective Time, (b) to the extent set forth in the
Company Disclosure Letter, all employment or severance agreements entered into
prior to the date hereof and (c) the severance plan terms set forth in the
Company Disclosure Letter without amendment for one year immediately following
the Effective Time. Subject to the terms of any collective bargaining agreement
currently in effect or which may be in effect in the future, Parent will cause
each employee benefit plan of Parent in which employees of the Company are
eligible to participate to take into account for purposes of eligibility,
vesting and benefit accrual (other than benefit accrual under any defined
benefit pension plan) thereunder the service of such employees with the Company
as if such service were with Parent to the same extent that such service was
credited under a comparable plan of the Company.
6.11. Expenses. The Amalgamated Company shall pay all charges and
expenses, including those of the Paying Agent, in connection with the
transactions contemplated in Article IV, and Parent shall reimburse the
Amalgamated Company for such charges and expenses. Whether or not the
Amalgamation is consummated, except as set forth in Section 8.5(b), Section
8.5(c) and Section 8.5(d), all costs and expenses incurred in connection with
this Agreement and the Amalgamation and the other transactions contemplated
hereby shall be paid by the party incurring such expense.
6.12. Indemnification; Directors' and Officers' Insurance. (a) Parent
and the Amalgamated Company jointly and severally shall indemnify and hold
harmless, to the extent permitted under the Company's memorandum of association
and by-laws and indemnification agreements, if any, in existence on the date of
this Agreement, each present and former director, officer and employee of the
Company and each of its Subsidiaries (collectively, the "Indemnified Parties")
against any costs or expenses (including reasonable attorneys' fees), judgments,
fines, losses, claims, damages or liabilities incurred in connection with any
claim, action, suit, proceeding or investigation, whether civil, criminal,
administrative or investigative, arising out of or pertaining to matters
30
existing or occurring at or prior to the Effective Time, including the
transactions contemplated hereby.
(b) Any Indemnified Party wishing to claim indemnification under
paragraph (a) of this Section, upon learning of any such claim, action, suit,
proceeding or investigation, shall promptly notify in writing Parent or the
Amalgamated Company, but the failure to so notify shall not relieve Parent or
the Amalgamated Company of any liability it may have to such Indemnified Party
if such failure does not materially prejudice Parent or the Amalgamated Company.
In the event of any such claim, action, suit, proceeding or investigation
(whether arising before or after the Effective Time), (i) Parent or the
Amalgamated Company shall have the right to assume the defense thereof and
neither Parent nor the Amalgamated Company shall be liable to such Indemnified
Parties for any legal expenses of other counsel or any other expenses
subsequently incurred by such Indemnified Parties in connection with the defense
thereof, except that if Parent or the Amalgamated Company elects not to assume
such defense or counsel for the Indemnified Parties advises that there are
issues which raise conflicts of interest between Parent or the Amalgamated
Company and the Indemnified Parties such that it would be unethical or
inappropriate for the same counsel to represent both the Indemnified Parties, on
one hand, and Parent and Amalgamation Sub, on the other hand, the Indemnified
Parties may retain counsel satisfactory to them, and Parent or the Amalgamated
Company shall pay all reasonable fees and expenses of such counsel for the
Indemnified Parties reasonably promptly as statements therefor are received;
provided, however, that Parent and the Amalgamated Company shall be obligated
pursuant to this paragraph (b) to pay for only one firm of counsel for all
Indemnified Parties (in addition to any local counsel) unless the use of one
counsel for such Indemnified Parties would present such counsel with such a
conflict of interest, (ii) the Indemnified Parties will cooperate in the defense
of any such matter and (iii) neither Parent nor the Amalgamated Company shall be
liable for any settlement effected without its prior written consent, which
consent shall not be unreasonably withheld; and provided, further, that neither
Parent nor the Amalgamated Company shall have any obligation hereunder to any
Indemnified Party if and when a court of competent jurisdiction shall ultimately
determine, and such determination shall have become final, that the
indemnification of such Indemnified Party in the manner contemplated hereby is
prohibited by applicable Law. Parent may not agree to any settlement of any such
claim or action, other than solely for monetary damages for which Parent shall
be responsible hereunder, without the prior written consent of the Indemnified
Party, which consent shall not be unreasonably withheld, unless such settlement
includes an explicit and unconditional release from the party bringing such
claim. In any action hereunder as to which Parent has assumed the defense
thereof, the Indemnified Party shall continue to be entitled to participate in
the defense thereof, with counsel of its own choice, but Parent shall not be
obligated hereunder to reimburse the indemnified party of the costs or expenses
thereof, except as otherwise provided in this Section. If the indemnity provided
for by this Section is not available with respect to any Indemnified Party, then
the Amalgamated Company and the Indemnified Party shall contribute to the amount
payable in such proportion as is appropriate to reflect relative faults and
benefits.
31
(c) The Amalgamated Company shall maintain, and Parent shall cause the
Amalgamated Company to maintain, the Company's existing officers' and directors'
liability insurance for a period of six years after the Effective Time (provided
that coverage limits in the aggregate for the entire six-year period are not
less than the current annual limits, provided, further, that if such coverage is
unavailable, the Amalgamated Company shall use its reasonable best efforts to
obtain substantially equivalent coverage) with respect to claims arising from
facts or events that occurred prior to the Effective Time; provided, however,
that in no event shall the Amalgamated Company be required to expend more than
an amount per year equal to 200% of current annual premiums paid by the Company
for such insurance; provided further, however, that if the premiums for such
coverage exceed such amount, the Amalgamated Company shall purchase a policy
with the greatest coverage available for such 200% of the current annual
premiums paid by the Company. In lieu of the foregoing, Parent or the
Amalgamated Company may obtain a "tail" policy of substantially equivalent
coverage and amounts containing terms no less favorable to such former directors
or officers covering events occurring at or prior to the Effective Time for a
period of not fewer than six (6) years after the Effective Time at a cost not to
exceed 200% of the current annual premiums paid by the Company for the year
ended December 31, 2005.
(d) If Parent or the Amalgamated Company or any of their respective
successors or assigns (i) shall consolidate or amalgamate with or merge into any
other corporation or entity and shall not be the continuing or surviving
corporation or entity of such consolidation or merger or (ii) shall transfer all
or substantially all of its properties and assets to any individual, corporation
or other entity, then, and in each such case, proper provisions shall be made so
that the successors and assigns of Parent or the Amalgamated Company shall
assume all of the obligations set forth in this Section.
(e) The provisions of this Section are intended to be for the benefit
of, and shall be enforceable by, each of the Indemnified Parties, their heirs
and their representatives.
6.13. Guarantee. Mattel hereby fully and unconditionally guarantees to
the Company the performance of all obligations hereunder of Parent, Amalgamation
Sub and any of their respective assignees permitted under Section 9.13 (the
"Permitted Assignees") and the due and punctual payment by Parent, Amalgamation
Sub and any of their respective Permitted Assignees in full of any amounts
payable by Parent, Amalgamation Sub and any of their respective Permitted
Assignees pursuant to this Agreement.
ARTICLE VII
Conditions
7.1. Conditions to Each Party's Obligation to Effect the Amalgamation.
The respective obligation of each party to effect the Amalgamation is subject to
32
the satisfaction or waiver at or prior to the Application Date of each of the
following conditions:
(a) Shareholder Approval. This Agreement shall have been duly approved
by holders of Shares constituting the Company Requisite Vote in accordance with
applicable Law and the memorandum of association and the bye-laws of the
Company.
(b) Regulatory Consents. The waiting period applicable to the
consummation of the Amalgamation under the HSR Act shall have expired or been
terminated and, other than the filing provided for in Section 1.2, all notices,
reports and other filings required to be made prior to the Application Date by
the Company or Parent or any of their respective Subsidiaries with, and all
consents, registrations, approvals, permits and authorizations required to be
obtained prior to the Application Date by the Company or Parent or any of their
respective Subsidiaries from, any Governmental Entity in connection with the
execution and delivery of this Agreement and the consummation of the
Amalgamation and the other transactions contemplated hereby by the Company,
Parent and Amalgamation Sub shall have been made or obtained (as the case may
be).
(c) Litigation. No Governmental Entity of competent jurisdiction shall
have enacted, issued, promulgated, enforced or entered any statute, law,
ordinance, rule, regulation, judgment, decree, injunction or other order
(whether temporary, preliminary or permanent) (collectively, an "Order") that is
in effect and restrains, enjoins or otherwise prohibits consummation of the
Amalgamation or the other transactions contemplated hereby.
7.2. Conditions to Obligations of Parent and Amalgamation Sub. The
obligations of Parent and Amalgamation Sub to effect the Amalgamation are also
subject to the satisfaction or waiver by Parent at or prior to the Application
Date of the following conditions:
(a) Representations and Warranties. The representations and warranties
of the Company set forth in this Agreement shall be true and correct as of the
date of this Agreement and as of the Application Date as though made on and as
of the Application Date (except to the extent any such representation or
warranty expressly speaks as of an earlier date), and Parent shall have received
a certificate signed on behalf of the Company by an executive officer of the
Company to such effect; provided, however, that notwithstanding anything herein
to the contrary, this subsection shall be deemed to have been satisfied even if
such representations or warranties are not so true and correct unless the
failure of such representations or warranties to be so true and correct,
individually or in the aggregate, has had, or would reasonably be likely to
have, a Company Material Adverse Effect or would reasonably be likely to
prevent, materially delay or materially impair the ability of the Company to
consummate the transactions contemplated hereby; provided, further, that in
determining, solely for purposes of this subsection, whether the failure of such
representations or warranties to be so true and correct, individually or in
33
the aggregate, has had, or would reasonably be likely to have, a Company
Material Adverse Effect, any materiality exceptions contained in such
representations and warranties shall not be considered.
(b) Performance of Obligations of the Company. The Company shall have
performed in all material respects all obligations required to be performed by
it under this Agreement at or prior to the Application Date, and Parent shall
have received a certificate signed on behalf of the Company by an executive
officer of the Company to such effect.
(c) No Company Material Adverse Effect. Since the date of this
Agreement, there shall not have occurred any Company Material Adverse Effect or
any event or development that would, individually or in the aggregate,
reasonably be expected to have a Company Material Adverse Effect.
7.3. Conditions to Obligation of the Company. The obligation of the
Company to effect the Amalgamation is also subject to the satisfaction or waiver
by the Company at or prior to the Application Date of the following conditions:
(a) Representations and Warranties. The representations and warranties
of Parent and Amalgamation Sub set forth in this Agreement shall be true and
correct as of the date of this Agreement and as of the Application Date as
though made on and as of the Application Date (except to the extent any such
representation and warranty expressly speaks as of an earlier date), and the
Company shall have received a certificate signed on behalf of Parent by an
executive officer of Parent and an executive officer of Amalgamation Sub to such
effect; provided, however, that notwithstanding anything herein to the contrary,
this subsection shall be deemed to have been satisfied even if such
representations or warranties are not so true and correct unless the failure of
such representations or warranties to be so true and correct, individually or in
the aggregate, would reasonably be likely to have a Parent Material Adverse
Effect.
(b) Performance of Obligations of Parent and Amalgamation Sub. Each of
Parent and Amalgamation Sub shall have performed in all material respects all
obligations required to be performed by it under this Agreement at or prior to
the Application Date, and the Company shall have received a certificate signed
on behalf of Parent and Amalgamation Sub by an executive officer of Parent and
an executive officer of Amalgamation Sub to such effect.
ARTICLE VIII
Termination
8.1. Termination by Mutual Consent. This Agreement may be terminated
and the Amalgamation may be abandoned at any time prior to the Effective Time,
whether before or after the approval by shareholders of the Company referred to
in
34
Section 7.1(a), by mutual written consent of the Company and Parent by action of
their respective Boards of Directors.
8.2. Termination by Either Parent or the Company. This Agreement may
be terminated and the Amalgamation may be abandoned at any time prior to the
Effective Time by action of the Board of Directors of either Parent or the
Company if (a) the Amalgamation shall not have been consummated by December 15,
2006, whether such date is before or after the date of approval by the
shareholders of the Company (the "Original Termination Date"); provided,
however, that if the only condition to the closing that remains unsatisfied
(except for any condition that by its terms can only be satisfied at the
Closing) on the Original Termination Date are any or all of the conditions set
forth in Section 7.1(b) and Section 7.1(c) hereof, and such conditions are
capable of being satisfied on or prior to January 31, 2007 (such later date
being referred to herein as the "Outside Termination Date"), then the Original
Termination Date shall be automatically extended to the Outside Termination Date
without further action by or consent of any of the parties hereto, (b) the
approval of the Company's shareholders required by Section 7.1(a) shall not have
been obtained at a meeting duly convened therefor or at any adjournment or
postponement thereof or (c) any Order permanently restraining, enjoining or
otherwise prohibiting consummation of the Amalgamation shall become final and
non-appealable (whether before or after the approval by the shareholders of the
Company); provided, that the right to terminate this Agreement pursuant to
clause (a) above shall not be available to any party that has breached in any
material respect its obligations under this Agreement in any manner that has
been the cause of, or resulted in, the occurrence of the failure of the
Amalgamation to be consummated.
8.3. Termination by the Company. This Agreement may be terminated and
the Amalgamation may be abandoned at any time prior to the Effective Time, by
action of the Board of Directors of the Company:
(a) if, prior to obtaining the Company Requisite Vote, (i) the Company
is not in material breach of any of the terms of this Agreement, and (ii) if
permitted by, and in compliance with, Section 6.2, the Board of Directors of the
Company authorizes the Company to enter into a binding written agreement
concerning a transaction that constitutes a Superior Proposal; or
(b) if there has been a breach of any representation, warranty,
covenant or agreement made by Parent or Amalgamation Sub in this Agreement, or
any such representation and warranty shall have become untrue after the date of
this Agreement, such that Section 7.3(a) or 7.3(b) would not be satisfied and
such breach or condition is not curable or, if curable, is not cured within 20
days after written notice thereof is given by the Company to Parent.
8.4. Termination by Parent. This Agreement may be terminated and the
Amalgamation may be abandoned at any time prior to the Effective Time by action
of the Board of Directors of Parent if (a) the Board of Directors of the Company
35
shall have withdrawn or adversely modified its approval or recommendation of
this Agreement, recommended to the shareholders of the Company that they approve
an Acquisition Proposal or failed to reconfirm its recommendation of this
Agreement within five business days after a written request by Parent to do so,
(b) there has been a breach of any representation, warranty, covenant or
agreement made by the Company in this Agreement, or any such representation and
warranty shall have become untrue after the date of this Agreement, such that
Section 7.2(a) or 7.2(b) would not be satisfied and such breach or condition is
not curable or, if curable, is not cured within 20 days after written notice
thereof is given by Parent to the Company, or (c) there has been any event,
development or change of circumstance that constitutes, has had or could
reasonably be expected to have, individually or in the aggregate, a Company
Material Adverse Effect and such Company Material Adverse Effect is not cured
within 20 days after written notice thereof.
8.5. Effect of Termination and Abandonment. (a) In the event of
termination of this Agreement and the abandonment of the Amalgamation pursuant
to this Article VIII, this Agreement (other than as set forth in Section 9.1)
shall become void and of no effect with no liability on the part of any party
hereto (or of any of its directors, officers, employees, agents, legal and
financial advisors or other representatives); provided, however, except as
otherwise provided herein, no such termination shall relieve any party hereto of
any liability or damages resulting from any willful or intentional breach of
this Agreement.
(b) Without limiting Parent's rights under Section 8.5(c) or 8.5(d),
the Company shall pay Parent a termination fee of $6,940,764 (the "Termination
Fee"), plus up to an aggregate amount of $1,500,000 of all out-of-pocket
expenses of Parent and its Affiliates, including fees and expenses of financial
advisors, outside legal counsel, accountants, experts and consultants incurred
by Parent and its Affiliates or on their respective behalf in connection with or
related to this Agreement and the transactions contemplated hereby (the "Parent
Expenses") in the event that this Agreement is terminated (i) by the Company
pursuant to Section 8.3(a), or (ii) by Parent pursuant to Section 8.4(b), if,
solely with respect to the foregoing clause (ii), (A) an Acquisition Proposal
shall have been made to the Company or its shareholders or any Person shall have
publicly announced an intention to make an Acquisition Proposal with respect to
the Company prior to such termination and (B) within 12 months of such
termination, the Company consummates a definitive agreement with respect to an
Acquisition Proposal (with all percentages in the definition of Acquisition
Proposal increased to fifty percent (50%)). In the event of a Termination Fee
and Parent Expenses payable pursuant to Section 8.5(b)(i), such fee and expenses
shall be paid to Parent upon termination of this Agreement, and in the event of
a Termination Fee and Parent Expenses payable pursuant to Section 8.5(b)(ii),
such fee and expenses shall be paid to Parent upon the consummation of the
definitive agreement in connection with the applicable Acquisition Proposal.
36
(c) If this Agreement is terminated by Parent pursuant to Section
8.4(a), then, without limiting Parent's rights under Section 8.5(b) or 8.5(d),
upon termination of this Agreement, the Company shall pay to Parent an amount
equal to the Parent Expenses; provided, however, that if within 12 months of
such termination, the Company enters into or consummates a definitive agreement
with respect to an Acquisition Proposal (with all percentages in the definition
of Acquisition Proposal increased to fifty percent (50%)), then the Company
shall also pay to Parent an amount equal to the Termination Fee upon
consummation of such definitive agreement (even if such consummation occurs
following such 12 month period).
(d) If this Agreement is terminated by Parent or the Company pursuant
to Section 8.2(b), then, without limiting Parent's rights under Section 8.5(b)
or 8.5(c), upon termination of this Agreement, the Company shall pay to Parent
an amount equal to the Parent Expenses; provided, however, that if (A) an
Acquisition Proposal shall have been made to the Company or its shareholders or
any Person shall have publicly announced an intention to make an Acquisition
Proposal with respect to the Company prior to such termination and (B) within 12
months of such termination, the Company enters into or consummates a definitive
agreement with respect to an Acquisition Proposal (with all percentages in the
definition of Acquisition Proposal increased to fifty percent (50%)), then upon
the earlier of the execution or consummation of such definitive agreement, the
Company shall also pay to Parent an amount equal to the Termination Fee.
(e) The Company's payment of the Termination Fee and Parent Expenses,
as applicable, shall be the sole and exclusive remedy of Parent and Amalgamation
Sub against the Company and its Subsidiaries and their respective directors,
officers, employees, agents, advisors or other representatives with respect to
the breach of any covenant or agreement giving rise to such payment. Parent and
the Company acknowledge that the agreements contained in this Section 8.5 are an
integral part of the transactions contemplated by this Agreement and that,
without these agreements, Parent would not have entered into this Agreement.
Accordingly, if the Company fails to pay promptly any amount due pursuant to
this Section 8.5 and, in order to obtain such payment, Parent commences a suit
that results in a judgment against the Company for the amount set forth in this
Section 8.5, the non-prevailing party shall pay the prevailing party's costs and
expenses (including reasonable attorneys' fees and expenses) in connection with
such suit.
ARTICLE IX
Miscellaneous and General
9.1. Survival. Article IV, this Article IX and the agreements of the
Company, Parent and Amalgamation Sub contained in Sections 6.7 (Publicity), 6.10
(Benefits), 6.11 (Expenses) and 6.12 (Indemnification; Directors' and Officers'
37
Insurance) shall survive the consummation of the Amalgamation. This Article IX,
the agreements of the Company, Parent and Amalgamation Sub contained in Section
6.11 (Expenses), Section 8.5 (Effect of Termination and Abandonment) and the
Confidentiality Agreement shall survive the termination of this Agreement. All
other representations, warranties, covenants and agreements in this Agreement
shall not survive the consummation of the Amalgamation or the termination of
this Agreement.
9.2. Modification or Amendment. Subject to the provisions of the
applicable Law, at any time prior to the Effective Time, the parties hereto may
modify or amend this Agreement, by written agreement executed and delivered by
duly authorized officers of the respective parties.
9.3. Waiver of Conditions. The conditions to each of the parties'
obligations to consummate the Amalgamation are for the sole benefit of such
party and may be waived by such party in whole or in part to the extent
permitted by applicable Law. No failure or delay by any party in exercising any
right, power or privilege hereunder shall operate as a waiver thereof, nor shall
any single or partial exercise thereof preclude any other or further exercise
thereof or the exercise of any other right, power or privilege.
9.4. Counterparts. This Agreement may be executed in any number of
counterparts, each such counterpart being deemed to be an original instrument,
and all such counterparts shall together constitute the same agreement.
9.5. GOVERNING LAW. THIS AGREEMENT SHALL BE DEEMED TO BE MADE IN AND
IN ALL RESPECTS SHALL BE INTERPRETED, CONSTRUED AND GOVERNED BY AND IN
ACCORDANCE WITH THE LAW OF THE STATE OF DELAWARE WITHOUT REGARD TO THE CONFLICT
OF LAW PRINCIPLES THEREOF.
9.6. Consent to Jurisdiction. (a) Each of the parties hereto hereby
irrevocably and unconditionally submits, for itself and its property, to the
exclusive jurisdiction of any federal court located in the state of Delaware
(and any courts from which appeals from judgments of that court are heard) as to
any dispute or claim as to which there is subject matter jurisdiction in that
court and, for all other disputes or claims, the parties consent to exclusive
jurisdiction in any state court in the state of Delaware (and any courts from
which appeals from judgments of that court are heard) in any action or
proceeding arising out of or relating to this Agreement or the transactions
contemplated hereby or for recognition or enforcement of any judgment relating
thereto, and each of the parties hereby irrevocably and unconditionally (i)
agrees not to commence any such action or proceeding except in such courts, (ii)
agrees that any claim in respect of any such action or proceeding may be heard
and determined in such Federal court or, to the extent there is no subject
matter jurisdiction in such Federal court, in such state court, (iii) waives, to
the fullest extent it may legally and effectively do so, any objection which it
may now or hereafter have to the laying of venue of any such action or
38
proceeding in any such Delaware Federal or state court, and (iv) waives, to the
fullest extent permitted by Law, the defense of an inconvenient forum to the
maintenance of such action or proceeding in any such Delaware Federal or state
court. Each of the parties hereto agrees that a final judgment in any such
action or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by Law.
Each party to this Agreement irrevocably consents to service of process in the
manner provided for notices in Section 9.7. Nothing in this Agreement shall
affect the right of any party to this Agreement to serve process in any other
manner permitted by Law.
(b) EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY THAT MAY
ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT
ISSUES, AND THEREFORE IT HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT
IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR
INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT AND ANY OF THE
AGREEMENTS DELIVERED IN CONNECTION HEREWITH OR THE TRANSACTIONS CONTEMPLATED
HEREBY OR THEREBY. EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT (A) NO
REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY
OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK
TO ENFORCE EITHER OF SUCH WAIVERS, (B) IT UNDERSTANDS AND HAS CONSIDERED THE
IMPLICATIONS OF SUCH WAIVERS, (C) IT MAKES SUCH WAIVERS VOLUNTARILY, AND (D) IT
HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL
WAIVERS AND CERTIFICATIONS IN THIS SECTION 9.6(b).
9.7. Notices. Any notice, request, instruction or other document to be
given hereunder by any party to the others shall be in writing and delivered
personally or sent by registered or certified mail, postage prepaid, or by
facsimile, and shall be deemed delivered on the date delivered if by personal
delivery, on the date upon which receipt is signed or delivery is made if mailed
by registered or certified mail or on the date sent by facsimile if the
appropriate facsimile confirmation is received by the sender:
if to Parent or Amalgamation Sub:
Mattel, Inc.
333 Continental Boulevard
El Segundo, CA 90245-5012
Attention: Robert Normile
fax: (310) 252-2567
39
with a copy to:
James Beaubien
Latham & Watkins LLP
633 West Fifth Street, Suite 4000
Los Angeles, CA 90071-2007
fax: (213) 891-8763
if to the Company:
Radica Games Limited
180 S. Lake Avenue, Suite 440
Pasadena, CA 91101
Attention: Patrick Feely
fax: (626) 744-1155
with a copy to:
Alison S. Ressler
Sullivan & Cromwell LLP
1888 Century Park East
Los Angeles, California 90067
fax: (310) 712-8800
or to such other persons or addresses as may be designated in writing by the
party to receive such notice as provided above.
9.8. Entire Agreement; No Other Representations. This Agreement
(including any exhibits hereto), the Voting Agreement, the Company Disclosure
Letter, the Parent Disclosure Letter and the Confidentiality Agreement, dated
April 11, 2006, between Parent and the Company (the "Confidentiality Agreement")
constitute the entire agreement, and supersede all other prior agreements,
understandings, representations and warranties both written and oral, among the
parties, with respect to the subject matter hereof. EACH PARTY HERETO AGREES
THAT, EXCEPT FOR THE REPRESENTATIONS AND WARRANTIES CONTAINED IN THIS AGREEMENT,
NONE OF PARENT, AMALGAMATION SUB OR THE COMPANY MAKE ANY OTHER REPRESENTATIONS
OR WARRANTIES.
9.9. Parties in Interest; No Third Party Beneficiaries. Subject to
Section 9.13 (Assignment), this Agreement shall inure to the benefit of and be
binding upon the parties and their respective successors and permitted assigns.
Except as provided in Section 6.12 (Indemnification; Directors' and Officers'
Insurance), this Agreement is not intended to confer upon any Person other than
the parties hereto any rights or remedies hereunder.
40
9.10. Obligations of Parent and of the Company. Whenever this
Agreement requires Amalgamation Sub to take any action, such requirement shall
be deemed to include an undertaking on the part of Parent to cause Amalgamation
Sub to take such action. Whenever this Agreement requires any of the
Subsidiaries of the Company to take any action, such requirement shall be deemed
to include an undertaking on the part of the Company to cause such Subsidiary to
take such action and, after the Effective Time, on the part of the Amalgamated
Company to cause such Subsidiary to take such action.
9.11. Severability. The provisions of this Agreement shall be deemed
severable and the invalidity or unenforceability of any provision shall not
affect the validity or enforceability or the other provisions hereof. If any
provision of this Agreement, or the application thereof to any Person or any
circumstance, is invalid or unenforceable, (a) a suitable and equitable
provision shall be substituted therefor in order to carry out, so far as may be
valid and enforceable, the intent and purpose of such invalid or unenforceable
provision and (b) the remainder of this Agreement and the application of such
provision to other Persons or circumstances shall not be affected by such
invalidity or unenforceability, nor shall such invalidity or unenforceability
affect the validity or enforceability of such provision, or the application
thereof, in any other jurisdiction.
9.12. Interpretation. The table of contents and headings herein are
for convenience of reference only, do not constitute part of this Agreement and
shall not be deemed to limit or otherwise affect any of the provisions hereof.
Where a reference in this Agreement is made to a Section, such reference shall
be to a Section of this Agreement unless otherwise indicated. Whenever the words
"include," "includes" or "including" are used in this Agreement, they shall 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
shall refer to this Agreement as a whole and not to any particular provision of
this Agreement. The parties hereto have participated jointly in the negotiation
and drafting of this Agreement. In the event an ambiguity or question of intent
arises, this Agreement shall be construed as if drafted jointly by the parties
hereto, and no presumption or burden of proof shall arise favoring or
disfavoring any party by virtue of the authorship of any of the provisions of
this Agreement.
9.13. Assignment. No party to this Agreement may assign any of its
rights or obligations under this Agreement without the prior written consent of
Parent or the Company; provided, that Parent and the Amalgamation Sub may assign
any of its rights and obligations hereunder, in whole or in part, to any
Affiliate or Subsidiary of Parent without obtaining the consent of the Company
and any such assignment shall not relieve Parent or Amalgamation Sub of its
obligations hereunder; provided, further, that Amalgamation Sub may only assign
its rights and obligations hereunder to a company incorporated and governed by
the laws of Bermuda.
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9.14. Specific Performance. The parties agree that if any of the
provisions of this Agreement are not performed in accordance with their specific
terms or are otherwise breached, irreparable damage would occur, no adequate
remedy at law would exist and damages would be difficult to determine, and that
the parties shall be entitled to specific performance of the terms of this
Agreement, in addition to any other remedy at law or equity.
(Signature Page Follows)
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IN WITNESS WHEREOF, this Agreement has been duly executed and
delivered by the duly authorized officers of the parties hereto as of the date
first written above.
MATTEL FOREIGN HOLDINGS, LTD.
By /s/ Bryan Stockton
------------------------------------
Name: Bryan Stockton
Title: President
MATTEL ENTERPRISES, LTD.
By /s/ Bryan Stockton
------------------------------------
Name: Bryan Stockton
Title: President
RADICA GAMES LIMITED
By /s/ Patrick S. Feely
------------------------------------
Name: Patrick S. Feely
Title: Chief Executive Officer
MATTEL, INC.,
solely with respect to Section 6.13
By /s/ Andrew Vollero
------------------------------------
Name: Andrew Vollero
Title: Senior Vice President,
Strategic Planning and M&A
DEFINITIONS
"1994 Stock Plan" shall have the meaning set forth in Section 4.3 of
this Agreement.
"2004 Stock Plan" shall have the meaning set forth in Section 4.3 of
this Agreement.
"Acquisition Proposal" shall have the meaning set forth in Section
6.2(a) of this Agreement.
"Affiliate" shall mean, as to any Person, any other Person which,
directly or indirectly, is in control of, is controlled by or is under common
control with such Person. The term "control" (including, with correlative
meanings, the terms "controlled by" and "under common control with"), as applied
to any Person, means the possession, direct or indirect, of the power to direct
or cause the direction of the management and policies of such Person, whether
through the ownership of voting securities or other ownership interest, by
contract or otherwise.
"Agreement" shall have the meaning set forth in the Preamble of this
Agreement.
"Amalgamated Company" shall have the meaning set forth in Section 1.1
of this Agreement.
"Amalgamation" shall have the meaning set forth in Section 1.1 of this
Agreement.
"Amalgamation Consideration" shall have the meaning set forth in
Section 4.1(a) of this Agreement.
"Amalgamation Sub" shall have the meaning set forth in the Preamble of
this Agreement.
"Application Date" shall have the meaning set forth in Section 1.2 of
this Agreement.
"Bankruptcy and Equity Exception" shall have the meaning set forth in
Section 5.1(c)(i) of this Agreement.
"Benefit Plans" shall have the meaning set forth in Section 5.1(i)(i)
of this Agreement.
"Bermuda Act" shall have the meaning set forth in Section 1.1 of this
Agreement.
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"Bermuda Registrar" shall have the meaning set forth in Section 1.2 of
this Agreement.
"Business Intellectual Property" shall have the meaning set forth in
Section 5.1(q)(ii) of this Agreement.
"Bye-Laws" shall have the meaning set forth in Section 2.2 of this
Agreement.
"Certificate" shall have the meaning set forth in Section 4.1(a) of
this Agreement.
"Code" shall have the meaning set forth in Section 5.1(i)(ii) of this
Agreement.
"Company" shall have the meaning set forth in the Preamble of this
Agreement.
"Company Disclosure Letter" shall have the meaning set forth in
Section 5.1 of this Agreement.
"Company Material Adverse Effect" shall mean any change, event or
effect that is materially adverse to the condition (financial or otherwise),
properties, assets (including intangible assets), liabilities, business or
results of operations of the Company and its Subsidiaries, taken as a whole;
provided, however, that any change, event or effect resulting from any of the
following shall not be considered when determining if a Company Material Adverse
Effect has occurred: (i) any change in law, rule or regulation or generally
accepted accounting principles or interpretations thereof applicable to the
Company, (ii) any change in economic or business conditions generally or in the
handheld games industry specifically (in each case, not having a materially
disproportionate effect on the Company and its Subsidiaries, taken as a whole),
(iii) the public announcement of the transactions contemplated hereby, (iv) any
change in trading prices of the Shares in and of itself (provided, that the
reasons for a change in the trading prices of the Shares may be considered when
determining if a Company Material Adverse Effect has occurred), or (v) the
engagement by the United States in hostilities pursuant to the declaration of
war, or the occurrence of any terrorist attack upon or within the United States.
"Company Option" shall have the meaning set forth in Section 4.3 of
this Agreement.
"Company Recommendation" shall have the meaning set forth in Section
5.1(c)(ii) of this Agreement.
"Company Reports" shall have the meaning set forth in Section
5.1(e)(i) of this Agreement.
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"Company Requisite Vote" shall have the meaning set forth in Section
5.1(c)(i) of this Agreement.
"Company Shareholders Meeting" shall have the meaning set forth in
Section 6.3 of this Agreement.
"Confidentiality Agreement" shall have the meaning set forth in
Section 9.8 of this Agreement.
"Contract" shall mean any agreement, lease, license, sublicense,
commitment, contract, note, mortgage, guarantee or other obligation, together
with any amendments or modifications thereto and restatements thereof.
"Dissenting Shareholders" shall have the meaning set forth in Section
4.4 of this Agreement.
"Dissenting Shares" shall have the meaning set forth in Section 4.4 of
this Agreement.
"Effective Time" shall have the meaning set forth in Section 1.2 of
this Agreement.
"Employees" shall have the meaning set forth in Section 5.1(i)(i) of
this Agreement.
"Environmental Law" shall mean any applicable foreign, federal, state
or local Law, statute, rule of common Law, regulation, code, license, permit,
order, judgment, enforceable policy, decree or injunction from any Governmental
Entity (including European Union Directives 2002/95/EC, 2002/96/EC and
2005/84/EC) (A) relating to the protection of human health or the environment
(including air, water, soil and natural resources) or (B) the use, storage,
handling, release or disposal of Hazardous Substances, in each case as presently
in effect.
"ERISA" shall have the meaning set forth in Section 5.1(i)(i) of this
Agreement.
"ERISA Plans" shall have the meaning set forth in Section 5.1(i)(ii)
of this Agreement.
"Exchange Act" shall have the meaning set forth in Section 5.1(d)(i)
of this Agreement.
"Excluded Share" shall have the meaning set forth in Section 4.1(a) of
this Agreement.
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"GAAP" shall have the meaning set forth in Section 5.1(e)(i) of this
Agreement.
"Governmental Entity" shall have the meaning set forth in Section
5.1(d)(i) of this Agreement.
"Hazardous Substance" shall mean any substance, pollutant, chemical,
material or waste, whether solid, liquid or gas, to the extent presently listed,
defined, designated, classified or regulated as hazardous, toxic, reactive,
corrosive, ignitable, flammable or radioactive under any applicable
Environmental Law including petroleum and any derivative or by-products thereof,
asbestos and mold.
"HSR Act" shall have the meaning set forth in Section 5.1(d)(i) of
this Agreement.
"Indemnified Parties" shall have the meaning set forth in Section
6.12(a) of this Agreement.
"Intellectual Property" shall mean all right, title and interest in
and to all patents, patent applications, patent infringement claims, mask works,
copyrights, copyright registrations, copyright renewal rights, copyright
termination rights, copyright infringement claims, rights to copyright rights
and actions for accountings, trademarks, tradenames, trademark and tradename
registrations, trademark and tradename registration applications, trademark and
tradename registration renewal and amendment rights, trademark and tradename
infringement claims, trade secrets, trade secret misappropriation claims,
proprietary information, confidential information and other intellectual
property rights associated therewith and, in each case, all goodwill associated
therewith.
"IP Licenses" shall mean all Contracts by which the Company or any of
its Subsidiaries (i) purport to have the right to Use or permit others to Use
Intellectual Property in connection with any Key Product; (ii) receives a right
to Use or permit others to Use Intellectual Property, which rights are
non-assignable without the consent of the other party to the Contract or subject
to a provision triggered upon a change of control requirement; (iii) grants to
another Person an exclusive right to Use any Intellectual Property Right; and
(iv) receives information technology systems or computers or services related to
information technology systems or computers.
"IRS" shall have the meaning set forth in Section 5.1(i)(i) of this
Agreement.
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"Key Products" shall mean any product related to or derived from 20Q,
Cube World, Play TV, Digi Makeover, Password Journal, Girl Tech, Tetris, Video
Journal, Text Me or Bitty Bytes.
"Laws" shall have the meaning set forth in Section 5.1(j)(i) of this
Agreement.
"Leased Properties" shall have the meaning set forth in Section
5.1(p)(i) of this Agreement.
"Leases" shall have the meaning set forth in Section 5.1(p)(i) of this
Agreement.
"Lien" shall have the meaning set forth in Section 5.1(d)(ii) of this
Agreement.
"Material Contract" shall have the meaning set forth in Section
5.1(g)(i) of this Agreement.
"Mattel" shall have the meaning set forth in the Preamble of this
Agreement.
"Memorandum of Association" shall have the meaning set forth in
Section 2.1 of this Agreement.
"Multiemployer Plan" shall have the meaning set forth in Section
5.1(i)(ii) of this Agreement.
"Navigant" shall have the meaning set forth in Section 5.1(c)(ii) of
this Agreement.
"Non-U.S. Benefit Plans" shall have the meaning set forth in Section
5.1(i)(ii) of this Agreement.
"Order" shall have the meaning set forth in Section 7.1(c) of this
Agreement.
"Original Termination Date" shall have the meaning set forth in
Section 8.2 of this Agreement.
"Outside Termination Date" shall have the meaning set forth in Section
8.2 of this Agreement.
"Other Filings" shall have the meaning set forth in Section 6.4(a) of
this Agreement.
"Owned Intellectual Property" shall have the meaning set forth in
Section 5.1(q)(ii) of this Agreement.
"Parent" shall have the meaning set forth in the Preamble of this
Agreement.
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"Parent Disclosure Letter" shall have the meaning set forth in Section
5.2 of this Agreement.
"Parent Expenses" shall have the meaning set forth in Section 8.5(b)
of this Agreement.
"Parent Material Adverse Effect" shall mean any change, event or
effect that prevents, materially delays or materially impairs the ability of
Parent or Amalgamation Sub to consummate the transactions contemplated hereby.
"Paying Agent" shall have the meaning set forth in Section 4.2(a) of
this Agreement.
"Payment Fund" shall have the meaning set forth in Section 4.2(a) of
this Agreement.
"Pension Plan" shall have the meaning set forth in Section 5.1(i)(ii)
of this Agreement.
"Permits" shall have the meaning set forth in Section 5.1(j)(ii) of
this Agreement.
"Permitted Assignees" shall have the meaning set forth in Section 6.13
of this Agreement.
"Person" shall mean any individual, corporation (including
not-for-profit), general or limited partnership, limited liability company,
joint venture, estate, trust, association, organization, Governmental Entity or
other entity of any kind or nature.
"Proxy Statement" shall have the meaning set forth in Section 6.5(a)
of this Agreement.
"SEC" shall have the meaning set forth in Section 5.1(e)(i) of this
Agreement.
"Securities Act" shall mean the Securities Act of 1933, as amended
from time to time, including the rules and regulations promulgated thereunder.
"Share" shall have the meaning set forth in Section 4.1(a) of this
Agreement.
"Stock Plans" shall have the meaning set forth in Section 4.3 of this
Agreement.
"Subsidiary" shall mean, with respect to any Person, any entity,
whether incorporated or unincorporated, (i) of which at least a majority of the
securities or ownership interests having by their terms ordinary voting power to
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elect a majority of the board of directors or other persons performing similar
functions is directly or indirectly owned or controlled by such Person, (ii)
which holds at least 50% of the interests in the profits of such Person, or
(iii) is the general partner (in the case of a partner) or the managing member
(in the case of a limited liability company).
"Superior Proposal" shall have the meaning set forth in Section 6.2(b)
of this Agreement.
"Tax" (including, with correlative meaning, the terms "Taxes," and
"Taxable") shall mean all U.S. federal, state and local and Non-U.S. income,
profits, franchise, gross receipts, environmental, customs duty, capital stock,
severances, stamp, payroll, sales, employment, unemployment, disability, use,
property, withholding, excise, production, value added, occupancy and other
taxes, duties or assessments of any nature whatsoever, together with all
interest, penalties and additions imposed with respect to such amounts and any
interest in respect of such penalties and additions.
"Tax Return" shall mean all returns and reports (including elections,
declarations, disclosures, schedules, estimates and information returns)
required to be supplied to a Tax authority relating to Taxes.
"Termination Fee" shall have the meaning set forth in Section 8.5(b)
of this Agreement.
"Third-Party Intellectual Property" shall have the meaning set forth
in Section 5.1(q)(iii)(A) of this Agreement.
"Use" shall have the meaning set forth in Section 5.1(q)(ii) of this
Agreement.
"Voting Agreement" shall have the meaning set forth in the recitals to
this Agreement.
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AMALGAMATION AGREEMENT
THIS AGREEMENT is made the __________.
B E T W E E N:
1. Radica Games Limited, a Bermuda exempted company having its registered
office at Clarendon House, Church Street West, Hamilton, Bermuda ("R"); and
2. Mattel Enterprises, Ltd., a Bermuda exempted company having its registered
office at Canon's Court, 22 Victoria Street, Hamilton HM 12, Bermuda ("X").
W H E R E A S:
R and X have agreed to amalgamate pursuant to the provisions of the Companies
Act, 1981 of Bermuda and continue as a Bermuda exempted company on the terms
hereinafter appearing (the remaining company to be known in this agreement as
the "Amalgamated Company").
NOW IT IS HEREBY AGREED as follows:
1. The amalgamation shall occur and a certificate be issued by the Registrar
of Companies effective on _________, or as soon thereafter as possible.
2. The Memorandum of Association of the Amalgamated Company shall be as set
forth on Exhibit A hereto and the Amalgamated Company shall be called X.
3. The Bye-laws of the Amalgamated Company shall be those of X.
4. The names and addresses of the persons proposed to be directors of the
Amalgamated Company are as follows:
Doug Kerner Mattel, Inc.
333 Continental Boulevard
El Segundo, California 90245, U.S.A.
Robert Normile Mattel, Inc.
333 Continental Boulevard
El Segundo, California 90245, U.S.A.
Bryan Stockton Mattel, Inc.
333 Continental Boulevard
El Segundo, California 90245, U.S.A.
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5. The authorized capital stock of R consists of 100,000,000 shares of Common
Stock, par value $0.01, of which 19,405,736 shares were outstanding as of
the close of business on July 14, 2006. Each share of the Common Stock of R
issued and outstanding immediately prior to the effective time of the
amalgamation (other than shares owned by Mattel, Inc., X or any other
direct or indirect subsidiary of Mattel, Inc. or shares that are held in
treasury or owned by any direct or indirect subsidiary of X) shall be
converted into, and cancelled in exchange for, the right to receive,
subject to any required withholding of taxes and without interest, an
amount in cash equal to $11.55. Each share of Common Stock, par value $0.01
per share, of X issued and outstanding immediately prior to the effective
time of the amalgamation shall be converted into, and cancelled in exchange
for, one validly issued, fully paid and nonassessable share of common
stock, par value $0.01 per share, of the Amalgamated Company.
6. This agreement shall be governed by and construed in accordance with the
laws of Bermuda and the parties hereto submit to the non-exclusive
jurisdiction of the courts of Bermuda for matters related solely to this
Agreement.
IN WITNESS WHEREOF the parties hereto have executed this Agreement the day and
year first above written.
R
By:
--------------------------------
Name: Patrick Feely
Title: Chief Executive Officer
X
By:
--------------------------------
Name: Bryan Stockton
Title: President
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