1
EXHIBIT 2.1
Dated 10 May 1999
INSIGHT ENTERPRISES, INC.
and
ACTION COMPUTER SUPPLIES HOLDINGS PLC
-----------------------
MERGER AGREEMENT
-----------------------
2
MERGER AGREEMENT
THIS AGREEMENT is made on 10 May 1999.
BETWEEN:
(1) INSIGHT ENTERPRISES, INC., a US corporation organised under the
laws of Delaware, having its registered office at 6820 South Harl Avenue, Tempe,
Arizona 85283, USA (Offeror);
(2) ACTION COMPUTER SUPPLIES HOLDINGS PLC, a company registered in
England with number 02479302 and whose registered office is at Alperton House,
Bridgewater Road, Wembley, Middlesex HA0 1 EH (Offeree).
WHEREAS:
(i) The parties desire the merger of Offeror and Offeree.
(ii) The parties intend to effect the Merger by means of a scheme
of arrangement under Section 425 of the Act to be proposed by
Offeree to its shareholders under which the whole of the
Offeree Scheme Shares will be cancelled and reissued to
Offeror or a wholly owned subsidiary designated by Offeror and
Offeror will issue Consideration Stock to the former
shareholders of Offeree.
(iii) The Merger is subject to the Conditions.
IT IS AGREED AS FOLLOWS:
1 Interpretation
1.1 Definitions
In this Agreement, including the Appendices, the headings shall not
affect its interpretation and, unless the context otherwise requires, the
provisions in this Clause I apply;
Acquisition means the acquisition of Offeree by Offeror Group pursuant
to the Scheme;
Advisers in relation to Offeror means Morgan Stanley, Skadden Arps
Slate Meagher & Flom LLP and KPMG LLP and in relation to Offeree means Warburg
2
3
Dillon Read, a division of UBS AG, Linklaters & Paines and Deloitte & Touche,
including (unless the context requires otherwise) partners in and directors and
employees of such advisers;
Affiliate means, in relation to a party, any person that directly or
indirectly, through one or more intermediaries, controls, is controlled by, or
is under common control with, the party or who otherwise falls within the
definition of affiliate for purposes of Rule 145 of the United States Securities
Act of 1933 or SEC Accounting Series Release 135. A party shall be deemed to
control a person if such party owns directly or indirectly, 50% or more of the
voting rights of such person;
Act means the Companies Act 1985, as amended;
Agreed Form means, in relation to the documents listed in Appendix I
hereto, such documents in the terms agreed between the parties, whether before
or after the date hereof, and signed by them or on their behalf for the purposes
of identification, such agreement not to be unreasonably withheld or delayed;
Agreed Terms means, the terms set out in Appendix II hereto;
Announcement means the joint press announcement in the Agreed Form;
Announcement Date means 10 May 1999;
Associate, in relation to Offeree, means: (i) any member of the Offeree
Group: or (ii) any director, officer or employee of any member of the Offeree
Group;
Board means the board of directors of any relevant person;
Business Day means a day (other than a Saturday, Sunday or public
holiday in London or New York) on which banks are generally open for business in
London and New York;
Circular means the circular in the Agreed Form to be issued by Offeree
to Offeree Shareholders containing an explanatory statement and the Scheme
regarding, inter alia, the cancellation of the Offeree Scheme Shares, the
allotment of New Offeree Shares to Offeror (or as it may direct) pursuant to the
Scheme and the allotment of Consideration Stock to Offeree Scheme Shareholders;
City Code means the City Code on Takeovers and Mergers;
3
4
Conditions means the conditions to the Merger set out in Appendix 1 to
the Announcement;
Consideration Stock means the fully paid and non-assessable Offeror
Stock to be issued to Offeree Scheme Shareholders as consideration under the
Scheme on the terms referred to in the Announcement;
Court means the High Court of Justice in England and Wales;
Court Meeting means the meeting of Offeree Shareholders convened by the
Court, notice of which will be contained in the Circular (or any adjournment
thereof);
Court Order means the order of the Court sanctioning the Scheme under
Section 425 of the Act and confirming the cancellation of the share capital in
connection therewith under Section 137 of the Act;
Effective Date means the date on which the Scheme becomes effective;
Employee Share Option Schemes means, together, the 1990 Executive
(Performance Related) Share Option Scheme, the 1994 Executive Share Option
Scheme, the 1996 Replacement Share Option Scheme, the Sharesave Option Scheme
1997 and the Senior Executive Share Option Scheme 1997;
Encumbrance means any charge, mortgage, lien, hypothecation, judgement,
encumbrance, easement, security, title retention, preferential right, trust
arrangement, or any other security interest or any other agreement or
arrangement having a commercial effect analogous to the conferring of security
or similar right in favour of any person;
Exchange Act means the United States Securities Exchange Act of 1934,
as amended;
Exclusivity Period means the period between the date hereof and the
earliest of the Effective Date, 5.00 p.m. (London time) on 31 December 1999, the
date of termination of this Agreement pursuant to Clause 14 and payment of the
amount under Clause 8.3.2 or 8.3.4;
Extraordinary General Meeting means the extraordinary general meeting
of Offeree Shareholders, notice of which will be contained in the Circular or
any adjournment thereof;
4
5
Exchange Proportion means the amount of Offeror Stock to be issued in
exchange for each Offeree Scheme Share determined as provided in Clause 4;
Meetings means the Court Meeting and the Extraordinary General Meeting;
NASDAQ means the NASDAQ National Market System operated by
NASDAQ, Inc.;
New Offeree Shares means the ordinary shares of 10 p each in the
capital of Offeree to be issued fully paid to Offeror (or as it may direct)
pursuant to the Scheme;
Offeree Group means Offeree and its subsidiary undertakings;
Offeree Scheme Shareholders means holders of Offeree Scheme Shares;
Offeree Scheme Shares means the Offeree Shares in issue on the date of
the Scheme together with any further Offeree Shares;
(a) in issue up to 48 hours prior to the time of the Court
Meeting; and
(b) issued thereafter and prior to the close of business on
the Business Day before the date of the Court Order either on
terms that the original or any subsequent holders thereof
shall be bound by the Scheme or in respect of which the
holders thereof shall have agreed to be bound by the Scheme;
other than any such Offeree Shares held or to be held by any member of the
Offeror Group;
Offeree Shareholders means the holders of Offeree Shares;
Offeree Shares means ordinary shares of 10 p each in the capital of
Offeree;
Offeror Group means Offeror and its subsidiary undertakings;
Offeror Stock means shares of common stock of US$0.01 par value each in
the capital of Offeror;
Offeror Stockholder Approval means the affirmative vote of the holders
of a majority of the outstanding Offeror Stock as of the record date for the
Special
5
6
Meeting for the purpose of approving the issuance of the Consideration Stock by
Offeror pursuant to the Scheme;
Offeror Takeover Proposal means any publicly announced intention to
make any bona fide proposal or offer by any third party or any proposal or offer
so made for a merger, exchange offer, consolidation, partnership, joint venture
or other business combination involving, or any purchase of, all or
substantially all of the assets of Offeror Group or more than 50% of the voting
share capital of Offeror which is any such case is conditioned on the Merger not
being completed;
Proxy Statement means the letter to stockholders, notice of meeting,
proxy statement and the form of proxy to be distributed to the holders of
Offeror Stock in connection with the issuance of the Consideration Stock by
Offeror pursuant to the Scheme and any schedules or other documents required to
be filed with the SEC in connection therewith or any revisions or supplements
thereto in the Agreed Form;
Record Date means close of business on the Business Day immediately
preceding the Effective Date;
Representatives means in relation to each party, the directors,
employees, consultants of, and any individuals seconded to work for, such party
(including persons who, at the relevant time, occupied such position);
Resolutions means the resolution to be proposed at the Court Meeting
and the resolutions to be proposed at the Extraordinary General Meeting;
Scheme means the scheme of arrangement under Section 425 of the Act to
be contained in the Circular;
SEC means the United States Securities and Exchange Commission;
Special Meeting means the meeting of Offeror's stockholders being held
in connection with the approval of the issuance of the Consideration Stock;
Takeover Proposal means any publicly announced intention to make any
bona fide proposal or offer by any third party (other than a proposal or offer
by any member of the Offeror Group) or any proposal or offer so made for a
merger, scheme of arrangement, exchange offer, consolidation, partnership, joint
venture or other business combination involving, or any purchase of, all or
substantially all of the assets of Offeree Group or more than 50% of the voting
share capital of Offeree or other similar transaction that is inconsistent with
the implementation of the Merger; and
6
7
Timetable means the timetable for the Merger substantially in the
Agreed Form.
1.2 Subordinate Legislation
Any reference to a statutory provision shall include any subordinate
legislation made from time to time under that provision which is in force at the
date of this Agreement;
1.3 Modification etc. of Statutes
Any reference to a statutory provision shall include such provision as
from time to time modified or re-enacted or consolidated whether before or after
the date of this Agreement so far as such modification, re-enactment or
consolidation applies or is capable of applying to any transactions entered into
under this Agreement prior to the Effective Date and (so far as liability
thereunder may exist or can arise) shall include also any past statutory
provision (as from time to time modified, re-enacted or consolidated) which such
provision has directly or indirectly replaced except to the extent that any
statutory provision made or enacted after the date of this Agreement would
create or increase a liability of any party under this Agreement.
1.4 Companies Act 1985
The words holding company, subsidiary and subsidiary undertaking shall
have the same meanings in this Agreement as their respective definitions in the
Act.
1.5 Interpretation Act 1978
The Interpretation Act 1978 shall apply to this Agreement in the same
way as it applies to an enactment.
1.6 Appendices etc.
References to this Agreement shall include the Appendix to it and
references to Clauses are to clauses of this Agreement.
1.7 Currency
References in this Agreement to [L], p or pound sterling
shall be deemed to be references to the lawful currency of the UK. References in
this Agreement to $, cents or US dollars shall be deemed to be references to the
lawful currency of the US.
7
8
2 The Merger
2.1 The Merger shall be effected by way of the Scheme. The parties
shall use all reasonable endeavours to comply with the Timetable and (so far as
they each may be able) to achieve satisfaction of the Conditions provided that
this Clause 2.1 shall not oblige Offeree to take any action if, at the time when
such action would otherwise have been required pursuant to this Clause 2.1, the
Board of Offeree shall have withdrawn (or modified in a manner adverse to
Offeror) its approval or recommendation of the transactions contemplated by this
Agreement (whether before or after the Court Meeting or the Extraordinary
General Meeting) and Offeree shall, at such time, have paid any amounts which
are due to be paid at that time under Clauses 8.3 or 14.2.
2.2 The parties shall cooperate in the development of a structure for
the Merger with the objective of achieving optimum taxation consequences for the
enlarged Offeror Group consistent with satisfaction of Condition 5(a) in
Appendix I to the Announcement.
3 Share Transfer
3.1 Offeror agrees with and undertakes to Offeree that it will acquire,
or procure the acquisition by a member of the Offeror Group of, at least one
Offeree Share prior to the Record Date.
3.2 Offeree agrees that it will procure that Offeror or such member of
the Offeror Group shall become the registered holder of the Offeree Share(s)
referred to in Clause 3.1 as soon as practicable and in any event on the Record
Date.
4 Share Exchange
4.1 Unless the Board of Offeree shall, at the time when such action
would otherwise have been required pursuant to this Clause 4.1, have withdrawn
(or modified in a manner adverse to Offeror) its approval or recommendation of
the transactions contemplated by this Agreement (whether before or after the
Court Meeting or the Extraordinary General Meeting) and Offeree shall, at such
time, have paid any amounts which are due to be paid at that time under Clauses
8.3 or 14.2, Offeree agrees to seek the earliest appropriate dates for the
relevant Court hearings, to instruct its registrars to despatch the Circular,
appropriate forms of proxy for use at the Court Meeting and the Extraordinary
General Meeting and, in the event of the Resolutions being passed by the
requisite majorities, promptly to apply to the Court for and diligently to seek
its sanction of the Scheme.
8
9
4.2
4.2.1 Offeror shall, subject to the Scheme becoming effective, issue to
Offeree Scheme Shareholders on the Record Date, the Consideration Stock. For
each Offeree Share held by an Offeree Scheme Shareholder as at the Record Date
the holder will receive the Exchange Proportion of a share of Offeror Stock.
In this Clause 4.2.1. the following definitions shall apply:
Exchange Proportion means:
For each Offeree Scheme Share 0.16 of a share of Offeror Stock
save that no fraction of a share of Offeror Stock shall be issued to Offeree
Scheme Shareholders but in lieu thereof, each Offeree Scheme Shareholder on the
Record Date who would otherwise be entitled to such a fraction of a share of
Offeror Stock (after aggregating all fractions of shares of Offeror Stock to
which such Offeree Scheme Shareholder would otherwise be entitled) shall instead
receive cash (without interest) from Offeror as if any entitlement to a fraction
of a share of Offeror Stock to which such Offeree Scheme Shareholder would
otherwise have been entitled had been sold at the closing price of Offeror Stock
on NASDAQ on the Effective Date and converted into pounds sterling at the
mid-point of the closing spread of the US dollar to the pound sterling spot
rate, as shown in the Financial Times (U.K. edition) on the Business Day
immediately following the Effective Date.
4.3 If at any time during the period between the date of this Agreement
and the time for the calculation of the amount of Consideration Stock to be
issued under the Scheme any change in the outstanding shares of capital stock of
Offeror shall occur as a result of any capital reorganisation, reclassification,
stock split (including a reverse stock split) readjustment of shares, or any
stock dividend with a record date during such period the Consideration Stock
shall be adjusted equitably.
4.4 Offeree and Offeror agree that, subject to the requirements of the
Inland Revenue and the Panel on Takeovers and Mergers (where applicable), each
option over Offeree Shares granted prior to the Record Date under the terms of
the Employee Share Option Schemes shall (if the Scheme becomes effective) be
dealt with in accordance with the proposals to be made to optionholders in the
Employee Share Option Schemes in accordance with the Agreed Terms.
4.5 Offeree agrees to procure the agreement of the persons entitled to
receive Offeree Shares as final deferred consideration pursuant to the agreement
dated 29 October 1997 between Offeree and H.Thuillier and others relating to the
9
10
purchase of Fraser Associates plc (the Fraser Agreement) (to the extent that
such Offeree Shares are not Offeree Scheme Shares) instead to receive the number
of shares of Offeror Stock determined by multiplying the Exchange Proportion of
a share of Offeror Stock by the number of Offeree Shares comprised in such
consideration in full and final settlement of their entitlement to such Offeree
Shares failing which to deliver an opinion of Counsel instructed by Offeree to
appear on its behalf in connection with the Scheme, addressed to Offeror, in
terms reasonably satisfactory to Offeror confirming that notwithstanding the
terms of the Fraser Agreement and any entitlement to such consideration, in the
absence of such agreement the proposed amendment to the articles of association
of Offeree referred to in Condition 2(b) shall operate to cause any Offeree
Shares issued as such consideration to be acquired by a member of the Offeror
Group in exchange for an issue of shares of Offeror Stock as therein provided
following such amendment.
5 Consideration
The Consideration Stock shall be validly issued, fully paid,
non-assessable and free of Encumbrance and shall rank pari passu in all respects
with the Offeror Stock then in issue, including the right to receive and retain
any dividends and other distributions declared, made or paid after the Effective
Date.
6 The Special Meeting
As soon as reasonably practicable after the date of the Announcement
and after such document has been approved by the SEC, Offeror will disseminate
the Proxy Statement to the Offeror Stockholders entitled to vote at the Special
Meeting.
7 Co-operation
Each of the parties shall promptly provide such assistance and
information as may reasonably be required by any of the others for the purposes
of or in connection with the Circular and the Proxy Statement including, without
limitation, any that may be required by any regulatory authority.
8 Undertakings
8.1 Offeror agrees to instruct Counsel to appear on its behalf at the
hearing of the petition to sanction the Scheme and to undertake to the Court to
be bound thereby.
8.2 Offeror and Offeree undertake promptly to notify each other (and
supply copies of all relevant information) of any event or circumstance of which
they
10
11
become aware that would be likely to have a significant impact on the
satisfaction of the Conditions.
8.3
8.3.1 In consideration of the commitment of time, cost, expense and
personnel by Offeror and of Offeror incurring the expense of instructing
advisers for the purpose of investigating, finalising and documenting the
Merger, Offeree represents, warrants and undertakes that, during the Exclusivity
Period, it will not and will procure that none of its Affiliates, Advisers or
Representatives, or those of any member of the Offeree Group, will solicit,
initiate or knowingly encourage (including by way of furnishing information), or
enter into discussions or negotiations regarding, any Takeover Proposal from
any person or any acquisition or disposal of assets by Offeree other than in the
ordinary course of its existing business.
Provided that Offeree may engage in discussions or negotiations with,
and furnish information concerning Offeree, the Offeree Group, or their
businesses, properties or assets to, a third party which has made an unsolicited
Takeover Proposal if, and only to the extent that, the Board of Offeree
concludes, in good faith, after consultation with, and based upon the written
advice of, its outside counsel at a meeting of the Board, that the failure to
take such action would be in breach of the fiduciary duties of the directors of
Offeree or would violate the obligations of the Board of Offeree under the
provisions of the City Code, the Act and/or the rules and regulations of the
London Stock Exchange Limited and on the basis that (i) a copy of the written
legal advice, along with a copy of the minutes of such Board meeting reflecting
the Board's conclusion, shall promptly be provided to Offeror by Offeree and
(ii) Offeree shall promptly (but in any event within 24 hours) notify Offeror of
the receipt of any Takeover Proposal, including the material terms and
conditions thereof (to the extent known) (and any changes in the material terms
and conditions thereof of which it becomes aware) and the identity of the person
making such Takeover Proposal.
8.3.2 If Offeree is in breach of Clause 8.3.1, Offeree will pay to
Offeror damages equal to Offeror's reasonable costs and expenses incurred in
investigating and making the Merger up to the date of the breach, each of
Offeree and Offeror agreeing such amount to be a genuine pre-estimate of damages
suffered by Offeror. The maximum amount so payable shall not be equal to or
exceed the amount determined under Clause 8.3.4; such amount shall be paid
within 5 Business Days of demand.
11
12
8.3.3 If Offeree defaults in the payment when due of any sum payable
under Clause 8.3.2, Offeree's liability shall be increased to include interest
on such sum from the date when such payment is due until the date of actual
payment at a rate per annum of 2% above the base lending rate from time to time
of Barclays Bank plc. Such interest shall accrue from day to day and shall be
included within the maximum amount determined under Clause 8.3.4.
8.3.4 In consideration of the commitment of time, costs, expenses and
personnel by Offeror, if on or before the expiry of the Exclusivity Period any
announcement is made by any third party with respect to a Takeover Proposal
(which Takeover Proposal is made and becomes unconditional in all respects or
otherwise effective), Offeree will pay to Offeror, within 7 days of demand, a
fee of the lesser of:
(i) $1,000,000; and
(ii) the largest sum as would not reduce the net assets of Offeree
as defined in Section 152(2) of the Act to a material extent,
Provided that, if Offeree has no net assets (as so defined), no such
sum shall be payable.
8.3.5 It is agreed that the maximum aggregate amount payable by Offeree
under the terms of Clauses 8.3.2, 8.3.3, 8.3.4, 8.10 and 14.2 shall not exceed
the lesser of $1,000,000 and the largest sum as would not reduce the net assets
of Offeree as defined in Section 152(2) of the Act to a material extent Provided
that, if Offeree has no net assets (as so defined), such amount shall be nil.
8.4 Offeror and Offeree shall each furnish to one another and to one
another's counsel all such information as may be reasonably required in
connection with the Proxy Statement and the Circular.
8.5 Offeree represents and warrants to Offeror that no information
furnished by Offeree in connection with the Proxy Statement or the Circular will
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make any information so
furnished, in light of the circumstances under which it was so furnished, not
misleading in any material respect as of the date of the mailing of the Proxy
Statement or the Circular as the case may be and at the time of the Special
Meeting or the Court Meeting as the case may be.
12
13
8.6 Offeror represents and warrants to Offeree that no information
furnished by Offeror in connection with the Circular will contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary in order to make any information so furnished, in
light of the circumstances under which it was so furnished, not misleading in
any material respect as of the date of the mailing of the Circular and at the
time of the Court Meeting.
8.7 Offeror represents and warrants to Offeree that no information to
be included in the Proxy Statement, or incorporated by reference in it, other
than information furnished by Offeree or its advisers in connection with the
Proxy Statement, will contain any untrue statement of a material fact or omit to
state a material fact (other than information concerning Offeree or its advisers
necessary to enable the Proxy Statement to comply with the provisions of the
Exchange Act and the rules and regulations promulgated thereunder) required to
be stated therein or necessary in order to make any information so furnished, in
light of the circumstances under which it was so furnished, not misleading in
any material respect as of the date of the mailing of the Proxy Statement and at
the time of the Special Meeting.
8.8 Offeror represents and warrants to Offeree that the Proxy Statement
will comply as to form in all material respects with the provisions of the
Exchange Act and the rules and regulations promulgated thereunder, except that
no representation or warranty is made by Offeror with respect to:
(i) information furnished by Offeree or its advisers in connection
with the Proxy Statement; or
(ii) the failure by Offeree or its advisers to provide information
concerning Offeree or its advisers necessary to enable the
Proxy Statement to comply with such provisions.
8.9 Offeror agrees to indemnify and hold Offeree (for itself and on
behalf of its directors and officers) harmless up to a maximum amount equal to
$1,000,000 from and against any and all losses, damages, liabilities, costs and
expenses to which Offeree may become subject arising from Offeror's breach of
Clauses 8.6, 8.7 or 8.8.
8.10 Offeree agrees to indemnify and hold harmless up to a maximum
amount equal to the Termination Fee (as defined in Clause 14.2) Offeror (for
itself and on behalf of its directors and officers) from and against any and all
losses, damages, liabilities, costs and expenses to which Offeror may become
subject arising from Offeree's breach of Clause 8.5.
13
14
8.11 To the knowledge of Offeror, Offeror has not taken or failed to
take any action, which action or failure would of itself prevent the treatment
of the Merger as a pooling-of-interests under US GAAP.
8.12 To the knowledge of Offeree, Offeree has not taken or failed to
take any action or failure, which action or failure would of itself prevent the
treatment of the Merger as a pooling-of-interests under US GAAP. Offeree
undertakes to notify Offeror, as soon as reasonably practicable and in any event
prior to the publication of the Circular or so soon thereafter as a person
becomes an Affiliate, of the persons (in addition to the existing directors of
Offeree) who are, or may be, an Affiliate of Offeree, and to use all reasonable
endeavours to cause each such person to execute an Affiliate Letter in the
Agreed Form.
8.13 Offeror represents and warrants to Offeree that Offeror believes
that, on the basis of the facts and circumstances known to Offeror on the date
of this Agreement, if the Merger were completed on the date of this Agreement,
the Merger should be accounted for as a pooling-of-interest under US GAAP.
9 Announcement
9.1 Offeree and Offeror agree that the Announcement shall be released
to the London Stock Exchange Limited at or about 07.30 hours (London time) on
the Announcement Date.
9.2 During the Exclusivity Period, Offeree and Offeror shall, subject
to the requirements of law or any regulatory body or the rules and regulations
of any recognised stock exchange or the City Code or the Panel on Takeovers and
Mergers, consult together as to the terms of, the timetable for and manner of
publication of, any formal announcement, circular or publication to
shareholders, employees, customers, suppliers, distributors and sub-contractors
and to any recognised stock exchange or other authorities or to the media or
otherwise which either may desire or be obliged to make regarding this Agreement
or any matter referred to herein. Any other communication which Offeree or
Offeror may make concerning such matters shall, subject to the requirements of
law or any regulatory body or the rules and regulations of any recognised stock
exchange, be consistent with any such formal announcement or circular as
aforesaid.
14
15
10 Assignment
This Agreement is personal to the parties to it and may not be assigned
in whole or in part.
11 Variation
No variation of this Agreement shall be effective unless in writing and
signed by or on behalf of Offeree and by Offeror.
12 Time of the Essence
Any time, date or period referred to in any provision of this Agreement
may be extended by mutual agreement between Offeree and Offeror but as regards
any time, date or period originally fixed or any time, date or period so
extended time shall be of the essence.
13 Costs
Save as provided in this Agreement, each party shall bear all legal,
accountancy and other costs and expenses incurred by it in connection with this
Agreement and the implementation of the Scheme and the Acquisition.
14 Termination: Termination Fee
14.1 Notwithstanding anything contained in this Agreement to the
contrary, this Agreement may be terminated as follows:
14.1.1 by the mutual consent of Offeror and Offeree;
14.1.2 by either Offeror or Offeree, by written notice, if the
Effective Date shall not have occurred on or before 31 December 1999 and the
party seeking to terminate this Agreement pursuant to this Clause 14.1.2 shall
not have breached in any material respect its obligations under this Agreement
in any manner that shall have proximately contributed to the failure to
consummate the Merger on or before such date;
14.1.3 by Offeror, by written notice, if the Board of Offeree (through
its own action or though any agency, or otherwise) shall have:
15
16
(i) withdrawn (or modified in a manner adverse to Offeror) its
approval or recommendation of the transactions contemplated
hereby; or
(ii) approved or recommended, or proposed publicly to approve or
recommend, any Takeover Proposal; or
(iii) failed to comply with its obligations under Clause 4.1
(subject as provided in that Clause);
14.1.4 by Offeror if any financial adviser to the Board of Offeree
appointed pursuant to Rule 3 of the City Code withdraws or in any way modifies
its consent (whether written or oral) to being named in the context of any
recommendation statement by the Board of Offeree to its shareholders regarding
the Acquisition; or
14.1.5 by either Offeror or Offeree if there shall have been a breach
by the other of the obligations referred to in Clause 2.1 with respect to any of
the Conditions, which if not cured would cause the Conditions not to be
satisfied, and such breach shall not have been cured within 15 days after notice
thereof shall have been received by the party alleged to be in breach, subject
in all cases to compliance with the City Code and the requirements of the Panel
on Takeovers and Mergers.
If this Agreement is terminated pursuant to this Clause 14.1., this
Agreement shall terminate (except for Clauses 8.5, 8.6, 8.7, 8.8, 8.9, 8.10,
9.2, 10, 11, 13, 14, 15, 16 and 17), and there shall be no other liability on
the part of Offeree (on the one hand) and Offeror (on the other hand) to the
other.
14.2 Subject to the provisions of this Agreement which are expressly
provided to survive termination, if this Agreement is terminated by Offeror
pursuant to Clauses 14.1.3, 14.1.4 or 14.1.5 (other than in circumstances
falling within Clause 14.3), Offeree shall pay to Offeror a fee (the
"Termination Fee") of the lesser of:
(i) $1,000,000; and
(ii) the largest sum as would not reduce the net assets of Offeree
as defined in Section 152(2) of the Act to a material extent,
in cash, such payment to be made promptly, but in no event later than the fifth
Business Day following a termination by Offeror pursuant to Clauses 14.1.3,
14.1.4 or 14.1.5 as the case may be less any payment previously made under
Clause 8.3,
Provided that, if Offeree has no net assets (as so defined), the
Termination Fee shall not be payable.
16
17
14.3 If, during the Exclusivity Period, Offeror makes a commitment to
any third party regarding, or makes any announcement in relation to, an
acquisition or disposal of assets by Offeror for consideration representing
either alone or together with other such acquisitions or disposals, as the case
may be, in excess of US$40 million, Offeror will promptly (but in any event
within 24 hours) notify Offeree of the proposed acquisition or disposal,
including the material terms and conditions thereof (to the extent known) and
any changes in the material terms and conditions thereof of which it becomes
aware and the identity of the third party.
If the Board of Offeree concludes, in good faith, after consultation
with, and based upon the written advice of, its outside counsel at a meeting of
the Board, that it is required, as a result of such acquisition or disposal by
Offeror, to withdraw or modify in a manner adverse to Offeror its approval or
recommendation in respect of the Merger in order to comply with its fiduciary
duties or in order to avoid violating the obligations of the Board of Offeree
under the provisions of the City Code, the Act and/or the rules and regulations
of the London Stock Exchange, Offeree may withdraw or modify its approval or
recommendation in respect of the Merger, and shall not be in breach of any
clause of this Agreement as a result thereof.
14.4 If during the Exclusivity Period
(i) the Board of Offeror shall either prior to publication of the
Proxy Statement publish its decision not to proceed with the
Merger or following publication of the Proxy Statement
recommend that Inverness shareholders do not give the Offeror
Stockholder Approval, in either such case other than as a
result of the breach or non-satisfaction of one or more of
the Conditions (not caused primarily by the action or inaction
of Offeror) or termination of this Agreement pursuant to
Clause 14 or any event giving rise to payment of any amount
under Clause 8.3.2 or 8.3.4 or breach by Offeree of this
Agreement; or
(ii) Offeror shall be the subject of any Offeror Takeover Proposal
and Condition 2(c) in Appendix I of the Announcement is not,
or ceases to be capable of being, satisfied by 31 December
1999 other than as a result of the breach or non-satisfaction
of any other Condition (not caused primarily by the action or
inaction of Offeror) or of termination of this Agreement
pursuant to Clause 14 or any event giving rise to payment of
any amount under Clause 8.3.2 or 8.3.4 or breach by Offeree of
this Agreement,
17
18
Offeror shall pay to Offeree a fee of $1,000,000 or such lesser amount
as shall have been determined to be the maximum amount that could be paid by
Offeree under any of Clauses 8.3 and 14.2, such payment to be made promptly, but
in no event later than the fifth Business Day following such event.
14.5 If the Board of Offeree resolves to take either of the courses of
action referred to in Clauses 14.1.3(i) or (ii), a written record of any legal
advice received by such Board in connection with such resolution, along with a
copy of the minutes of such Board meeting reflecting the Board's conclusion,
shall promptly be provided to Offeror by Offeree.
14.6 If such financial adviser as is referred to in Clause 14.1.4
withdraws or modifies its consent as referred to in that Clause, a written
record of any legal advice received by the Board of Offeree in connection with
such withdrawal or modification, along with a copy of the minutes of any board
meeting at which such withdrawal or modification was considered, shall promptly
be provided to Offeror by Offeree.
15 Notices
15.1 Any notice or other communication requiring to be given or served
under or in connection with this Agreement shall be in writing and may be
delivered by hand or by courier or sent by fax or by post to the party to be
served at its address stated in this Agreement or at such other address as it
may have notified to the other parties in accordance with this Clause 15.1. All
such notices or communications in the case of parties (1) and (2) inclusive
shall be given or served on Offeror. Any notice or other document sent by post
shall be sent by registered post (if both posted and for delivery within the
same jurisdiction) or by registered airmail (if posted for delivery outside the
jurisdiction in which it is posted), return receipt requested (or any
substantially equivalent service).
15.2 Any notice or document delivered or sent in accordance with Clause
15.1 shall be deemed to have been served:
15.2.1 if delivered by hand or by courier, at the time of delivery; or
15.2.2 if sent by fax, at 10.00am (local time at the destination) on
the Business Day at the destination after its transmission; or
15.2.3 if posted, at 10.00a.m. on the second Business Day at the
destination after it was put into the post if posted for delivery within the
same jurisdiction, or at
18
19
10.00 a.m. (local time at the destination) on the fifth Business Day after it
was put in the post if sent by registered airmail.
16 Severance
If any provision of this Agreement shall be held to be illegal or
unenforceable, in whole or in part, under any enactment or rule of law, but
would be valid and enforceable if deleted in whole or in part or reduced in
application, such provision shall apply with such deletion or modification as
may be necessary to make it valid and enforceable but the enforceability of the
remainder of this Agreement shall not be affected.
17 Governing Law
17.1 This Agreement shall be governed by and construed in accordance
with the laws of England. Each party irrevocably agrees that the courts of
England are to have non-exclusive jurisdiction to settle any dispute which may
arise out of or in connection with this Agreement.
17.2 Each party irrevocably submits to the jurisdiction of such courts
and waives any objection to proceedings in any such court on the ground of venue
or on the ground that the proceedings have been brought in an inconvenient
forum. This Clause 17.2 is for the benefit of each party and shall not limit its
rights to take proceedings in any other court of competent jurisdiction.
In witness whereof this Agreement has been duly executed on the date first
mentioned on page 1.
SIGNED by /s/ Stanley Laybourne
on behalf of
INSIGHT ENTERPRISES, INC.
SIGNED by /s/ George Laplante
on behalf of
ACTION COMPUTER SUPPLIES
HOLDINGS PLC
19