EXHIBIT 4.2
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IRREVOCABLE UNDERTAKINGS IN RESPECT OF AN OFFER BY
RETOS CARTERA, S.A.
FOR THE SHARES OF
RECOLETOS GRUPO DE COMUNICACION, S.A.
In Madrid, on 14 December, 2004
BETWEEN
ON THE ONE SIDE
XXXXXXX PLC, a company duly incorporated under the laws of England and Wales,
with registered office at 00 Xxxxxx, Xxxxxx XX0X 0XX, Xxxxxxx, and with
registration number 00053723 (hereinafter, "PEARSON"), duly represented by Mr.
Xxxxxxx Xxxxx Xxxxxxxxx, of legal age, of Canadian nationality, with Canadian
Passport number XX000000 and with business address at 00 Xxxxxx, Xxxxxx XX0X
0XX, Xxxxxxx, by virtue of a notarized and apostilled power of attorney dated 9
December 2004.
ON THE OTHER SIDE
RETOS CARTERA, S.A., a company duly incorporated under the laws of Spain, with
registered office at X/ Xxxxxxxxx x Xxx, x(xxxxxxx) 00, Xxxxxx, Xxxxx, and with
tax identification number A-84154046 (hereinafter, the "OFFEROR"), duly
represented by Xx. Xxxxx Xxxxxxxxxxx Xxxxxxx, of legal age, of Spanish
nationality, with National Identity Card number 14.899.002 Q and with business
address at Xxxxx xx xx Xxxxxxxxxx, x(xxxxxxx) 00, Xxxxxx, Xxxxx, in his capacity
as Managing Director (Consejero Delegado) of OFFEROR and by virtue of a
notarized power of attorney dated 14 December 2004 and granted by the Board of
Directors of OFFEROR.
PEARSON and OFFEROR shall be hereinafter jointly referred to as the "PARTIES",
and each of them individually as a "PARTY".
WHEREAS
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I. RECOLETOS GRUPO DE COMUNICACION, S.A. (hereinafter, "RECOLETOS" or the
"COMPANY"), a company duly incorporated under the laws of Spain, with
registered office at Xxxxx xx xx Xxxxxxxxxx, x(xxxxxxx) 00, Xxxxxx, Xxxxx,
is the parent of a group of companies whose main activity is media and
publishing.
RECOLETOS has a share capital of Euro 26,142,749.80, represented by
130,713,749 ordinary shares of Euro 0.20 nominal value each, all of them
listed on the Madrid, Barcelona, Bilbao and Valencia Stock Exchanges and
included in the Spanish Automated Quotation System (Xxxxxxx Continuo).
II. PEARSON OVERSEAS HOLDINGS LIMITED, a company duly incorporated under the
laws of England and Wales, with registered office at 00 Xxxxxx, Xxxxxx
XX0X 0XX, Xxxxxxx, and with registration number 00145205 (hereinafter,
"XXXX") is a wholly-owned subsidiary of PEARSON and PEDIFRI, S.L., a
company duly incorporated under the laws of Spain, with registered office
at Xxxxx xx xx Xxxxxxxxxx, x(xxxxxxx) 00, Xxxxxx, Xxxxx, and with tax
identification number B-79561478 (hereinafter, "PEDIFRI"), is, in turn, a
wholly-owned subsidiary of XXXX. XXXX and PEDIFRI, in turn, respectively
own 94,005,598 and 9,169,198 shares of RECOLETOS (together, hereinafter
the "SHARES") (71.92% and 7.01% of the share capital of the Company).
III. OFFEROR is a newly incorporated company with an issued share capital of
Euros 12,950,000, divided into 12,950,000 shares of Euro 1.00 nominal
value each, all fully subscribed and paid up, and subordinated
participating loans (prestamos participativos) from its shareholders in an
aggregate nominal amount of Euro 160,050,000. Attached hereto as Annex 1
to this Agreement is a chart showing the shareholding and participating
loan structure of OFFEROR.
IV. OFFEROR is interested in acquiring the Shares. Due to the fact that
RECOLETOS is a listed company in Spain, and in accordance with the
provisions of the Spanish securities markets regulations, such acquisition
may only be achieved by OFFEROR through a public tender offer over 100% of
the shares issued by RECOLETOS, thus giving the minority shareholders of
RECOLETOS the opportunity to sell their shares in the Company.
V. OFFEROR therefore intends to launch a public tender offer over RECOLETOS
in accordance with, and subject to, the provisions of clause 1 below
(hereinafter, the "OFFER").
VI. For the purposes referred to under IV above, the Parties have held
negotiations aimed at establishing the terms and conditions upon which
PEARSON would be prepared irrevocably to undertake, subject to the terms
of this Agreement, to procure that XXXX and PEDIFRI accept the Offer or
otherwise to procure that OFFEROR acquires, directly or indirectly, the
Shares.
VII. All payment obligations arising out of the Offer (therefore including
payment of the price of the Shares) have been secured by means of four
bank guarantees, each dated the date hereof, for an amount of Euro
365,354,992.80, Euro 240,000,000,
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Euro 246,000,000 and Euro 90,000,000, provided by Banco Espanol de
Credito, S.A. ("BANESTO"), Calyon, Sucursal en Espana ("CALYON"), Caja de
Ahorros y Monte de Xxxxxx xx Xxxxxx ("CAJA MADRID") and Caja de Ahorros
del Mediterraneo ("CAM") respectively, as required by Royal Decree
1197/1991, of July 26, as amended, on rules governing tender offers
(hereinafter, "ROYAL DECREE 1197/1991") (hereinafter, the "OFFER
GUARANTEES"), a copy of each of which is attached as Annex 2 hereto.
VIII. In addition, any payment obligations of OFFEROR in respect of the units
(participaciones) of PEDIFRI arising as a consequence of exercise by
PEARSON of the PEDIFRI Put Option (as defined below) have been secured by
means of four bank guarantees, each dated the date hereof, for an amount
of Euro 22,129,686, Euro 14,546,891.30, Euro 14,900,313.50 and Euro
5,441,334.20, provided by BANESTO, Calyon, Caja Madrid and CAM
respectively (hereafter the "PEDIFRI GUARANTEES"), a copy of each of which
is attached as Annex 3 hereto.
IX. Now therefore, the Parties have decided to enter into this agreement in
respect of the Offer (hereinafter, the "AGREEMENT"), which shall be
governed by the following
CLAUSES
1. IRREVOCABLE UNDERTAKING OF OFFEROR
1.1. OFFEROR hereby expressly and irrevocably undertakes to submit to the
Spanish Comision Nacional del Xxxxxxx de Valores (hereinafter, the
"CNMV"), not later than the next Business Day (hereinafter, a "BUSINESS
DAY" being a day other than a Saturday or Sunday or public holiday in the
city of Madrid) following the date of this Agreement, a request for the
authorization of the Offer (hereinafter, the "AUTHORIZATION"), together
with an "hecho relevante", the prospectus (in a form identical to the
draft attached as Annex 4 hereto) (hereinafter, the "PROSPECTUS"), the
Offer Guarantees and the remaining documentation required by Royal Decree
1197/1991, other than the administrative authorizations and clearances
from the authorities referred to in sub-clause 1.4 below (provided that
OFFEROR shall deliver to the CNMV on the date such applications or
submissions are made copies of the relevant application and submissions to
such authorities and shall deliver to the CNMV as soon as they are
available the relevant authorizations and clearances). OFFEROR shall
diligently progress and pursue the obtaining of the Authorization and,
subject to and conditional upon the Authorization having been obtained,
shall launch the Offer and seek diligently to ensure that the Offer
achieves a positive result, in each case within the briefest possible
timeframe.
1.2. The Offer shall be subject to the following terms and conditions:
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(i) It must be an offer for 100% of the shares of RECOLETOS.
(ii) It may be conditioned to the acquisition of 71.92% or less of the
shares of RECOLETOS.
(iii) The consideration of the Offer shall be Euro 7.20 per share (the
"OFFER PRICE") and each offeree shall, in addition to the Offer
Price, be offered the Deferred Contingent Offer Consideration as
described more fully in clause 9.
(iv) The Offer Price and the Deferred Contingent Offer Consideration
shall be fully paid in cash.
(v) The acceptance period of the Offer shall be two months.
1.3. Notwithstanding the provisions of sub-clause 1.1. above, in the event
that, prior to the submission of the request for the Authorization, any
third party had submitted a request for the authorization of another
tender offer in respect of some or all of the shares of RECOLETOS under
which, in the case of an all cash offer, the offer price is the same or
higher than the Offer Price or, in the case of any other offer, the
consideration offered for each RECOLETOS share is (as at the date of such
third party's request) as valuable as, or more valuable than, the
consideration offered for each RECOLETOS share under the Offer in the
reasonable opinion of Lazard Asesores Financieros, S.A. ("LAZARD"), then
OFFEROR shall have to choose (and shall immediately inform PEARSON of its
choice), during five (5) Business Days from the announcement of the
submission of the prior tender offer by the third party, between the
following:
(i) not to submit the Offer, in which case both Parties will be released
from their respective obligations under this Agreement without any
liability arising therefrom; or
(ii) to submit the Offer as a competing offer of the prior third party's
tender offer, therefore increasing the price of the Offer. OFFEROR
undertakes that any such competing offer it makes will continue to
satisfy the terms and conditions of this Agreement, save that the
Offer Price shall be higher (if necessary). If such a competing
offer is launched by OFFEROR:
(A) XXXXXXX'x undertakings to procure acceptance of the Offer in
sub- clause 2.2(i) and sub-clause 2.2(ii) of this Agreement
shall be deemed to be undertakings to procure acceptance of
such improved competing offer on the terms set out herein; and
(B) in the event that PEARSON exercises the PEDIFRI Put Option in
such circumstances, the total price payable for the PEDIFRI
units under sub-clause 3.3 shall be increased by the total
additional amount which would have been payable by OFFEROR for
the Shares in RECOLETOS held by PEDIFRI were PEDIFRI to have
accepted OFFEROR's improved competing offer for such Shares.
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1.4.(i) OFFEROR shall notify or, if appropriate, procure that its shareholders
shall notify the Offer to the competent anti-trust authorities in Spain
and Portugal and,to the extent legally required, any other regulatory
authorities within five (5) Business Days as from the date of submission
to the CNMV of the request for the Authorization, unless prior to that
date OFFEROR has received oral (to be confirmed by OFFEROR or its legal
counsel to PEARSON in writing) or written confirmation from the
authority concerned that no notification is required in connection with
the Offer, and OFFEROR shall diligently seek to ensure that it obtains
any necessary clearances from such authorities within the briefest
possible timeframe.
(ii) OFFEROR undertakes likewise to apply for the relevant authorizations of,
and/or make the appropriate notifications to, the Ministry of Industry,
Commerce and Tourism and the relevant Autonomous Regions, as required by
applicable legislation in connection with the television and radio
concessions held by RECOLETOS and its subsidiaries and affiliates within
the five (5) Business Days following the date of submission to the CNMV
of the request for the Authorization and shall diligently seek to ensure
that it obtains any necessary clearances and approvals from such
authorities in the briefest possible timeframe.
1.5. Unless OFFEROR has notified PEARSON within the terms of sub-clause 1.3 that
it has decided not to submit the Offer and subject to termination under any
other provision of this Agreement, OFFEROR undertakes to make and complete
the Offer (including, where necessary, making and completing the Offer on a
modified basis to include or conform with any condition, conditions or
amendments imposed by the CNMV, any competent anti-trust authorities or any
other competent regulatory authorities unless such condition or conditions
falls within sub-clause 1.6(i) and PEARSON is not prepared to agree to it
or them or within sub-clause 1.7(i) and OFFEROR is not prepared to agree to
it or them).
1.6. If:
(i) the CNMV, any competent anti-trust authorities or any other competent
regulatory authorities require any amendments or impose one or more
conditions for the transaction which would have a material adverse effect
on PEARSON (and any such condition or amendment which:
(A) could reduce the consideration (including in respect of Deferred
Contingent Offer Consideration) receivable by XXXX or PEDIFRI in
respect of the Shares; or
(B) could reduce the consideration (including in respect of Deferred
Contingent Offer Consideration) receivable by XXXX in respect of the
units in PEDIFRI,
shall be deemed to be a material adverse effect for these purposes); or
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(ii) OFFEROR has not exercised the OFFEROR Call Option prior to the expiry of
the OFFEROR Call Option Period (as such terms are defined in sub- clause
2.1); or
(iii) the legal notice referred to in Article 18 of Royal Decree 1197/1991 in
respect of the Offer has not been published by 14 April 2005,
and this Agreement has not been previously terminated in accordance with its
terms, then PEARSON shall have the right (but not the obligation) to
terminate this Agreement with immediate effect on written notice to OFFEROR.
1.7. If:
(i) the CNMV, any competent anti-trust authorities or any other competent
regulatory authorities deny approval of the Offer or require any
amendment or impose one or more conditions for the transaction which
would have a material adverse effect on the business of RECOLETOS taken
as a whole (and any such condition or amendment which is imposed by the
authorities in relation to the television and radio concessions referred
to in sub-clause 1.4 (ii) shall be deemed not to have a material adverse
effect for these purposes) or which could increase the Offer Price to
more than E7.20 per RECOLETOS share; or
(ii) the legal notice referred to in Article 18 of Royal Decree 1197/1991 in
respect of the Offer has not been published by 14 July 2005,
and this Agreement has not been previously terminated in accordance with its
terms, then OFFEROR shall have the right (but not the obligation) to
terminate this Agreement with immediate effect on written notice to PEARSON.
1.8. Following any termination under sub-clauses 1.6 and 1.7, neither party
shall have any claim against the other save for any rights which PEARSON
may have against OFFEROR in respect of OFFEROR's failure to comply with its
obligations under sub-clause 1.1, sub-clause 1.4 or sub-clause 1.5.
1.9. OFFEROR shall promptly notify PEARSON, and provide copies, of any
communications from the CNMV, any competent anti-trust authority or any
other competent regulatory authority in relation to obtaining the
Authorization and any other relevant clearances. Where reasonably requested
by PEARSON, OFFEROR shall provide PEARSON (or advisers nominated by
PEARSON) with draft copies of all submissions and communications to the
CNMV and any such other authority in relation to obtaining the
Authorization and any other relevant clearances at such time as will allow
PEARSON a reasonable opportunity to provide comments on such submissions
and communications before they are submitted or sent to the CNMV or such
other relevant authority. OFFEROR shall take into account any such comments
as are reasonable and provide PEARSON (or advisers nominated by PEARSON)
with copies of all such submissions and communications in the form
submitted or sent. Where reasonably requested by PEARSON and where
permitted by the CNMV or the other relevant authority
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concerned, OFFEROR shall allow persons nominated by PEARSON to attend all
meetings with the CNMV or such other relevant authorities in relation to
obtaining the Authorization and any other relevant clearances and, where
appropriate, to make oral submissions at such meetings. If necessary and
where reasonable grounds exist for expecting that such action by OFFEROR
could be successful, OFFEROR shall fully defend any court or
administrative action which the CNMV or any competent anti-trust authority
or any other regulatory authority may bring to prohibit, enjoin or modify
the Offer and/or the other transactions contemplated by this Agreement.
1.10. For the avoidance of doubt, none of the following shall affect any of
OFFEROR's obligations or undertakings under this Agreement, including,
without limitation its obligations and undertakings to make and complete
the Offer and its obligations and undertakings to act diligently:
(i) a third party submitting at any time a request for the authorization of
another tender offer over any RECOLETOS shares at a price lower than
the Offer Price;
(ii) a third party submitting following the submission of the request for
the Authorization a request for the authorization of another tender
offer over any RECOLETOS shares at a price equal to or higher than the
Offer Price; and
(iii) a third party taking any action in relation to any of the types of
tender offers referred to in sub-clauses 1.10(i) and 1.10(ii) above.
2. IRREVOCABLE UNDERTAKING OF PEARSON
2.1. Subject to sub-clauses 1.3, 1.6, 1.7, 1.8 and 2.5, PEARSON hereby grants an
option to OFFEROR (the "OFFEROR CALL OPTION") (which may be exercised by
OFFEROR at any time during the period commencing on the later of (i) 1
January 2005 and (ii) the date of commencement of the acceptance period of
the Offer, and ending five (5) Business Days later (the "OFFEROR CALL
OPTION PERIOD")) to require PEARSON to comply with sub-clause 2.2. The
OFFEROR Call Option may only be exercised by OFFEROR giving notice in the
form set out in Annex 5 hereto (the "OFFEROR EXERCISE NOTICE").
2.2. Subject to OFFEROR giving the Offeror Exercise Notice pursuant to
sub-clause 2.1 above and to sub-clauses 1.3, 1.6, 1.7, 1.8 and 2.5, PEARSON
hereby expressly and irrevocably undertakes (provided that the Offer is
capable of acceptance in accordance with the applicable tender offers
regulations):
(i) to procure acceptance of the Offer in respect of all of the Shares; or
(ii) to procure acceptance of the Offer in respect of all of the Shares
held directly by XXXX and to serve the PEDIFRI Exercise Notice (as
defined in sub-clause 3.2 below),
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in each case within five (5) Business Days of receipt by PEARSON of the
Offeror Exercise Notice; and if the Offer is not capable of acceptance
within such period but the Offer subsequently becomes capable of acceptance
in accordance with the applicable tender offers regulations then PEARSON
shall, subject always to the other provisions of this Agreement, comply
with any obligations under this subclause 2.2 as soon as reasonably
practicable in the circumstances.
2.3. (Subject always to the termination provisions in sub-clauses 1.3, 1.6, 1.7
and 1.8) As a consequence of the foregoing provisions of this clause 2:
(i) PEARSON expressly and irrevocably undertakes to procure that:
(A) neither XXXX nor PEDIFRI shall transfer the Shares, under any legal
title, to any third party;
(B) XXXX shall not transfer the units of PEDIFRI, under any legal title,
to any third party; and
(C) neither XXXX nor PEDIFRI shall accept any tender offer over
RECOLETOS competing with the Offer, whether previous or subsequent
to the Offer and regardless of the price of said tender offer; and
(ii) PEARSON shall procure that neither XXXX nor PEDIFRI shall accept the
Offer at any time prior to the OFFEROR Call Option Period or, unless
and until the Offeror Exercise Notice is given pursuant to sub-clause
2.1 above, during the OFFEROR Call Option Period, but without
prejudice to XXXXXXX'x rights to procure acceptance of the Offer and
to exercise the PEDIFRI Put Option (as defined in sub-clause 3.1
below) at any time after the expiry of the OFFEROR Call Option
Period.
2.4. For the avoidance of doubt:
(i) each of XXXX and PEDIFRI shall remain legal and beneficial owner of
its respective Shares unless and until it accepts the Offer and the
Offer is completed in accordance with its terms. Unless and until
each of XXXX and PEDIFRI accepts the Offer and such completion occurs
nothing in this Agreement shall operate to xxxxxx the rights
(including voting rights of its respective Shares) of XXXX or PEDIFRI
in relation to the Shares; and
(ii) XXXX shall remain legal and beneficial owner of the units of PEDIFRI
unless and until the sale of such units to OFFEROR is completed in
accordance with clause 3. Unless and until such completion occurs
nothing in this Agreement shall operate to xxxxxx the rights
(including voting rights of the PEDIFRI units) of XXXX in relation to
the units of PEDIFRI.
2.5. XXXXXXX'x undertakings in sub-clause 2.2 and 2.3(i) are and shall at all
times be conditional on:
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(i) each of OFFEROR's representations and warranties in sub-clause 7.1(v)
and (vi) being true and accurate at all relevant times; and
(ii) each of the Offer Guarantees and the PEDIFRI Guarantees remaining in
full force and effect.
2.6. Nothing in this Agreement shall prejudice XXXXXXX'x rights to procure
acceptance of the Offer and to exercise the PEDIFRI Put Option (as defined
in sub-clause 3.1 below) at any time after the expiry of the OFFEROR Call
Option Period.
3. PEDIFRI PUT OPTION
3.1. OFFEROR hereby grants PEARSON an option (hereinafter, the "PEDIFRI PUT
OPTION") to require OFFEROR to purchase from XXXX all of the units
comprising the equity capital of PEDIFRI subject to the terms and
conditions in this clause 3.
3.2. PEARSON may exercise the PEDIFRI Put Option by procuring that PEARSON and
XXXX serve on OFFEROR written notice in the form set out in Annex 6 hereto
(hereinafter, the "PEDIFRI EXERCISE NOTICE") following the serving of the
Offeror Exercise Notice or (provided that the Offer has been made) the
expiry of the OFFEROR Call Option Period but no later than 9:00 a.m.
(Madrid time) on the last Business Day of the Offer acceptance period.
3.3.(i) The effect of serving the PEDIFRI Exercise Notice shall be that OFFEROR
shall purchase and, PEARSON shall procure that XXXX shall sell, the
entire issued equity capital of PEDIFRI for an aggregate consideration
of:
(A) an amount which is equal to Euro 57,018,225.60 plus Net Assets (as
defined below), provided that, for the avoidance of doubt, the Net Assets
may be a negative amount and, in such circumstances an amount equal to
such negative amount of Net Asset shall be deducted from the amount of
Euro 57,018,225.60 (hereinafter, the "INITIAL PEDIFRI CONSIDERATION");
and:
(B) the Deferred Contingent Offer Consideration (as defined in sub-clause
9.2) which would, in relation to the Shares held by PEDIFRI at the time
of its transfer to OFFEROR be attributable to those Shares on the
assumption that PEDIFRI had accepted the Offer (hereinafter, the
"DEFERRED CONTINGENT PEDIFRI CONSIDERATION").
Completion shall be conditional only upon completion of the Offer by
OFFEROR. Completion shall take place on the same date and at the same time
as settlement occurs in respect of completion of the Offer. For such
purposes, XXXX and OFFEROR shall appear in front of a Notary Public of
Madrid at or prior to Completion and shall execute a sale and purchase
notarial deed, conditional only upon completion of the Offer by OFFEROR and
subject only to the representations and warranties set out expressly in
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this Agreement (hereinafter, the "NOTARIAL DEED"). At Completion, OFFEROR
shall pay the Initial PEDIFRI Consideration in cash in Euros to XXXX and
XXXX shall transfer the units in PEDIFRI to OFFEROR. The Parties shall
procure that from Completion, the current directors of PEDIFRI are
replaced with nominees of OFFEROR and PEARSON shall procure that on
resignation of the current directors of PEDIFRI, such directors shall
provide written confirmation to PEDIFRI that they have no outstanding
claims against, and are owed no amounts by, PEDIFRI. PEARSON shall procure
that XXXX does, and OFFEROR shall do, all other things to ensure that
Completion occurs in accordance with this clause 3. OFFEROR shall pay the
Deferred Contingent PEDIFRI Consideration in cash in Euros to XXXX at the
same time as it pays the Deferred Contingent Offer Consideration in
accordance with the terms of the Offer.
(ii) PEARSON (or, to the extent that at any relevant time, OFFEROR is the
owner of the PEDIFRI units, OFFEROR) shall procure that the accounts of
PEDIFRI for the year to 31 December 2004 (the "PEDIFRI 2004 ACCOUNTS") are
prepared promptly on a basis consistent with that on which the accounts of
PEDIFRI for the year to 31 December 2003 were prepared and are audited by
PricewaterhouseCoopers (or, if they are unwilling to act, another firm of
accountants of international repute selected by PEARSON) as promptly as
possible after such accounts have been prepared and that copies of such
audited accounts are delivered to the Parties promptly after they are
available.
(iii) PEARSON shall procure that:
(A) the intra-group loan shown in the PEDIFRI balance sheet for the
financial year ended 31 December 2003 is repaid by XXXX; and
(B) to the extent there are distributable reserves available for the
purpose and so far as legally possible in Spain, the cash resulting
from such intra-group loan repayment together with any other cash in
PEDIFRI is dividended up to XXXX or is otherwise distributed to XXXX.
(PEARSON and XXXX shall also have the right, but not the obligation, to
extract through reduction of capital of PEDIFRI and, in the case of any
such reduction of capital, notwithstanding anything to the contrary in
this Agreement, any reference to the total share capital of PEDIFRI to
be transferred at Completion and any representation or warranty in
respect of it shall be to the share capital as so reduced.)
Once this has been done, PEARSON shall procure that a balance sheet for
PEDIFRI which takes into account the operations referred to in (A) and (B)
(the "PROVISIONAL COMPLETION BALANCE SHEET") is drawn up on a basis
consistent with that on which the PEDIFRI 2004 Accounts were prepared (or,
if the balance sheet from the PEDIFRI 2004 Accounts is used for these
purposes, such balance sheet has been prepared in accordance with the
requirements of (ii) above). PEARSON shall procure that the Provisional
Completion Balance Sheet is audited by PricewaterhouseCoopers (or if they
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are unwilling to act, another firm of accountants of international repute
selected by PEARSON) as promptly as possible and that copies of such
audited balance (the "AUDITED COMPLETION BALANCE SHEET") shall be
delivered to the parties promptly after they are available.
The Parties shall use the Audited Completion Balance Sheet to calculate
the Net Assets of PEDIFRI for the purposes of calculating the Initial
PEDIFRI Consideration. The "NET ASSETS" shall be the amount in Euros that
is represented in the Audited Completion Balance Sheet by:
(C) adding the aggregate balance sheet value of all the assets;
(D) deducting the book value of the Shares held by PEDIFRI; and
(E) deducting the balance sheet value of the creditors and any other
liabilities (excluding, for the avoidance of doubt, all amounts
relating to shareholders' equity).
If the Provisional Completion Balance Sheet has not been audited prior to
Completion, then for the purposes of calculating the amount of the Initial
PEDIFRI Consideration to be paid at Completion, the Net Assets shall be
deemed to be the Net Assets figure shown by the unaudited Provisional
Completion Balance Sheet and, subsequently, once the audit of the
Provisional Completion Balance Sheet has been completed, shall be the Net
Assets figure shown by the Audited Completion Balance Sheet and an
appropriate adjusting repayment by XXXX to OFFEROR, or (as the case may
be) payment by OFFEROR to XXXX, shall be made to reflect any difference
between the amount paid by OFFEROR at Completion based on the unaudited
Provisional Completion Balance Sheet and the amount which would have been
payable at Completion had the Audited Completion Balance Sheet then been
available. Such adjusting repayment or, as the case may be, payment shall
be made within five (5) Business Days of the Audited Completion Balance
Sheet being delivered to the Parties.
To the extent that any non-cash item is taken into account as an asset in
the Provisional Completion Balance Sheet (or, as the case may be, Audited
Completion Balance Sheet) so that it is included in the calculation of the
Initial PEDIFRI Consideration, PEARSON shall guarantee to PEDIFRI the
receipt by PEDIFRI of its full amount within one year of Completion. If
PEARSON makes any payment to PEDIFRI under such guarantee then OFFEROR
agrees that PEARSON may require an assignment of the asset to PEARSON at
XXXXXXX'x cost but, if that is not legally possible, PEARSON may itself
take reasonable steps to obtain payment of such asset for PEDIFRI and
OFFEROR shall provide such access to the records of PEDIFRI as XXXXXXX
shall reasonably require for such purpose and shall procure payment by
PEDIFRI to XXXXXXX of any amount recovered.
(iv) If:
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(a)the Audited Completion Balance Sheet shows that the amount of Initial
PEDIFRI Consideration would be less than Euro 57,018,225.60; and
(b)the Offer acceptance period has not at that time closed,
XXXXXXX and XXXX may, by written notice to OFFEROR served not later than
9:00 a.m. (Madrid time) on the last Business Day of the Offer Acceptance
period, rescind their exercise of the PEDIFRI Put Option provided that
such notice of rescission is accompanied by an acceptance by PEDIFRI of
the Offer in respect of the Shares held by PEDIFRI. The effect of such
rescission shall be that XXXXXXX and XXXX shall not be required,
respectively, to procure the sale and sell the units of PEDIFRI and
OFFEROR shall not be required to buy them.
(v) For the purposes of OFFEROR's reasonable due diligence requirements,
during the period between (A) the date of this Agreement and (B) the
execution of the Notarial Deed or rescission of the PEDIFRI Put Option,
XXXXXXX agrees to provide OFFEROR and its duly authorised agents upon
reasonable request with full and free access (including the right to take
copies) during usual business hours to the books, accounts and records of
and relating to PEDIFRI except to the extent any such access is restricted
by law, provided that OFFEROR shall and ensure that its duly authorised
agents keep such disclosed information confidential. OFFEROR shall be
entitled to notify the auditors referred to above of any matter it
believes should be reflected in the Audited Completion Balance Sheet.
(vi) XXXXXXX undertakes to procure that PEDIFRI is run in the ordinary course
between (A) the date of this Agreement and (B) the execution of the
Notarial Deed or rescission of the PEDIFRI Put Option, except that such
actions as are necessary for the actions referred to in sub-clause
3.3(iii)(A) and (B) above may be taken.
4. SETTLEMENT AND DELIVERY
4.1. Subject to sub-clause 4.2, payment of the consideration for the Shares
shall be made by OFFEROR in the context of the Offer, in accordance with
the settlement procedures set forth by the applicable tender offers
regulations. The same shall apply, mutatis mutandis, to the delivery of the
Shares by XXXX and (where the PEDIFRI Put Option has not been exercised or
has been exercised and rescinded in accordance with clause 3) PEDIFRI to
OFFEROR.
4.2. Where the PEDIFRI Put Option has been exercised and not rescinded, payment
of the consideration for the sale to OFFEROR of the PEDIFRI units, and
settlement and delivery arrangements in relation to their transfer, shall
be as provided in clause 3.
5. UNDERTAKINGS
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5.1. XXXXXXX undertakes, to the extent necessary in each case, to procure that
XXXX and PEDIFRI do such things as are necessary in order to fulfil the
terms of this Agreement (whether or not any provision herein expressly
refers to XXXX and PEDIFRI), provided always that neither XXXXXXX nor XXXX
shall be responsible for any action or inaction of PEDIFRI following
completion of the transfer of the PEDIFRI units in accordance with clause
3.
5.2. OFFEROR undertakes, to the extent necessary in each case, to procure that
PEDIFRI does such things as are necessary in order to fulfil the terms of
this Agreement (whether or not any provision herein expressly refers to
PEDIFRI) following completion of the transfer of the PEDIFRI units in
accordance with clause 3.
6. REPRESENTATIONS AND WARRANTIES OF XXXXXXX
6.1. XXXXXXX represents and warrants to OFFEROR, as of the date hereof, as of
the date of completion of the Offer and (provided that the Notarial Deed is
executed) as of immediately prior to execution of the Notarial Deed, that:
(i) Each of XXXXXXX, XXXX and PEDIFRI is a limited liability company duly
incorporated and validly existing under the laws of its respective
jurisdiction of incorporation.
(ii) Each of XXXX and PEDIFRI is a wholly-owned direct or indirect
subsidiary of XXXXXXX.
(iii) Subject in each case to each of OFFEROR's representations and
warranties in sub-clause 7.1(v) being true and accurate at each
relevant time:
(a) Each of XXXXXXX and XXXX has full corporate power and authority and
has taken all necessary corporate actions to enter into and perform
its obligations under this Agreement.
(b) No other consent, approval or authorization is required to be
obtained by XXXXXXX and XXXX in connection with the execution and
consummation of this Agreement (and if PEDIFRI accepts the Offer,
XXXXXXX will procure that (a) and (b) will be satisfied in respect
of PEDIFRI).
(iv) None of XXXXXXX, XXXX and PEDIFRI is subject to any bankruptcy or
insolvency proceedings, and there is no action underway or threatened
to declare the bankruptcy or insolvency of any of them.
(v) This Agreement, following execution thereof, will constitute a valid
and legally binding obligation of XXXXXXX, enforceable against it in
accordance with its terms, subject to applicable bankruptcy,
insolvency, reorganization and other laws generally affecting the
enforcement of creditors' rights.
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(vi) Each of XXXX and PEDIFRI has valid and full title of ownership of the
Shares of RECOLETOS respectively referred to as being owned by each of
them in Whereas II above, free and clear of any security interest,
lien, charge, claim, right of pre-emption or first refusal or any other
third party right or encumbrance of any kind.
6.2. In the event that the units in PEDIFRI are transferred to OFFEROR pursuant
to the Notarial Deed, XXXXXXX represents and warrants to OFFEROR, as of the
date of the Notarial Deed, that:
(i) Subject in each case to OFFEROR's representations and warranties in sub-
clause 7.1(v) being true and accurate at each relevant time:
(a) XXXX has full corporate power and authority and has taken all
necessary corporate actions to enter into and perform its obligations
under the Notarial Deed.
(b) No other consent, approval or authorization is required to be obtained
by XXXX or PEDIFRI in connection with the execution and consummation
of the Notarial Deed.
(ii) The Notarial Deed, following execution thereof, will constitute a valid
and legally binding obligation of XXXX, enforceable against it in
accordance with its terms, subject to applicable bankruptcy, insolvency,
reorganization and other laws generally affecting the enforcement of
creditors' rights.
(iii) Immediately prior to the transfer to OFFEROR under the Notarial Deed,
XXXX has valid and full title of ownership of all of the issued units of
PEDIFRI, free and clear of any security interest, lien, charge, claim,
right of pre-emption or first refusal or any other third party right or
encumbrance of any kind.
(iv) The equity capital of PEDIFRI amounts to Euro 570,312.41, divided into
94,982 units, numbered 1 through 94,982 both inclusive, of Euro 6.010121
nominal value each, fully subscribed and paid up and no rights have been
granted to any person entitling that person to subscribe for, or convert
other rights into, shares in PEDIFRI.
(v) The PEDIFRI 2004 Accounts and the Audited Completion Balance Sheet will
be prepared in accordance with the basis of preparation set out therein
and will give a fair and genuine representation of the financial position
of PEDIFRI and of its assets and liabilities of the periods and as at the
times stated therein and in accordance with the basis of preparation set
out therein. PEDIFRI does not have any further liabilities (including
hidden, contingent or off balance sheet liabilities) other than those
which are or will be set out in or provided for in the Audited Completion
Balance Sheet).
(vi) PEDIFRI has no employees, has not performed any activities other than
the holding of Shares of RECOLETOS and is not a party to any agreement
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giving rise to obligations of the company vis-a-vis other companies
within the XXXXXXX group or third parties.
(vii) PEDIFRI is in compliance with its obligations under all applicable laws
to which it is subject and has performed and is up to date with all of
its obligations to pay taxes, file returns, documents and make payments.
(viii) There are no writs, actions, claims, disputes, legal or administrative
proceedings, arbitration proceedings, complaints, prosecutions or
investigations in progress or pending (nor to the best of XXXXXXX'x
belief are there any contemplated), which affect PEDIFRI other than
those which are or will be provided for in the Audited Completion
Balance Sheet.
(ix) Subsequent to 31 December 2004, there will be no material adverse change
in the financial condition of PEDIFRI except to the extent that it
changes as a consequence of the actions referred to in sub-clause
3.3(iii)(A) and (B) above or as otherwise reflected in the Audited
Completion Balance Sheet.
Notwithstanding anything to the contrary in this Agreement, neither XXXXXXX
nor XXXX shall be responsible for liabilities arising from matters, facts,
occurrences or situations relating to or affecting PEDIFRI prior to 3 October
1996.
No claim may be made under the representations and warranties in this
sub-clause 6.2 to the extent that the matter is provided for in the Audited
Completion Balance Sheet.
Subject to the provisions of the following paragraphs in this sub-clause 6.2,
XXXXXXX shall indemnify and hold harmless OFFEROR from and against any and
all losses, liabilities, costs, claims, damages, expenses or demands (or
actions in respect thereof) (excluding, for the avoidance of doubt, any
indirect losses and loss of profits) ("Losses") which OFFEROR incurs or which
is made against OFFEROR after Completion of OFFEROR's acquisition of PEDIFRI
to the extent such Losses result from any breach or alleged breach of any of
the representations or warranties set out in clause 6.2.
If any action, claim or demand shall be brought or alleged against OFFEROR in
respect of which the above indemnity is to be claimed against XXXXXXX,
OFFEROR shall promptly (and in any event within 10 Business Days) notify
XXXXXXX in writing and provide details of the relevant facts and
circumstances, and XXXXXXX shall have the option either (A) to pay OFFEROR an
amount equal to the amount claimed by the claimant, or (B) to assume the
defence thereof with legal advisers satisfactory to OFFEROR (acting
reasonably). If XXXXXXX fails to notify OFFEROR of its election between (A)
and (B) within ten Business Days (or such other period as may be agreed
between the Parties (acting reasonably)) after receipt of the notice of
commencement of the action (or three Business Days prior to the date upon
which the period for the defence of the claim in question expires, if
earlier), OFFEROR shall be free to defend or settle the
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claim in question and XXXXXXX'x obligations under the above indemnity
shall be unaffected.
XXXXXXX'x liability under the above indemnity shall not apply to the
extent that OFFEROR is entitled to reimbursement for any Losses from any
third party, including, without limitation, any insurer.
7. REPRESENTATIONS AND WARRANTIES OF OFFEROR
7.1. OFFEROR represents and warrants to XXXXXXX, as of the date hereof, as of
the date of the exercise of the OFFEROR Call Option, as of each date when
members of the XXXXXXX group accept the Offer, as of the date of any
exercise by XXXXXXX of the PEDIFRI Put Option, as of the date of
completion of the Offer and (provided that the Notarial Deed is executed)
as of immediately prior to execution of the Notarial Deed, that:
(i) OFFEROR is a limited liability company duly incorporated and validly
existing under the laws of Spain. The share capital of OFFEROR
amounts to Euros 12,950,000, divided into 12,950,000 shares of Euro
1.00 nominal value each, all belonging to a unique class and series
and being entitled to the same number of voting rights and fully
subscribed and paid up. OFFEROR has available cash, loan facilities
or other financing arrangements that will:
(A) at completion of the Offer provide in immediately available
funds the necessary cash resources to satisfy its payment
obligations under the Offer; and
(B) provide in immediately available funds the necessary cash
resources to satisfy its payment obligations under this
Agreement and the Notarial Deed,
and OFFEROR will be able to satisfy any conditions to such loan
facilities or other financing arrangements at or prior to such
payment obligations becoming due and payable.
(ii) OFFEROR has full corporate power and authority and has taken all
necessary corporate actions to enter into and perform its
obligations under this Agreement. No consent, approval or
authorization is required to be obtained by OFFEROR in connection
with the execution and consummation of this Agreement other than the
approval of the Offer by the CNMV and the approval by the
authorities referred to in clause 1.4 above.
(iii) OFFEROR is not subject to any bankruptcy or insolvency proceedings,
and there is no action underway or threatened to declare its
bankruptcy or insolvency.
(iv) This Agreement, following execution thereof, will constitute a valid
and legally binding obligation of OFFEROR, enforceable against it in
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accordance with its terms, subject to applicable bankruptcy, insolvency,
reorganization and other laws generally affecting the enforcement of
creditors' rights.
(v) In the context of the requirements of Chapter 11 of the United Kingdom
Listing Rules, no person who is (or was within the 12 months preceding the
date of this Agreement) a director (or a person in accordance with whose
directions or instructions the directors of such body are accustomed to
act (hereinafter, a "SHADOW DIRECTOR")) of XXXXXXX or of any other company
which is (and, if he, she or it has ceased to be such, was while he, she
or it was a director or a shadow director of such other company) XXXXXXX'x
subsidiary undertaking (hereinafter, a "RELATED PARTY") is directly or
indirectly interested (or has a conditional or contingent entitlement to
become interested) in OFFEROR or any parent undertaking or subsidiary
undertaking of OFFEROR so that such person is (or would on the fulfilment
of the condition or the occurrence of the contingency be) able:
(a) to exercise or control the exercise of 30% or more of the
votes able to be cast at general meetings of OFFEROR or any
parent undertaking or subsidiary undertaking of OFFEROR on
all, or substantially all, matters; or
(b) to appoint or remove directors of OFFEROR or any parent
undertaking or subsidiary undertaking of OFFEROR holding a
majority of voting rights at board meetings on all, or
substantially all, matters.
The above representation and warranty remains true and accurate if the
direct and indirect interests of each related party to which that
representation and warranty applies are aggregated with the direct and
indirect interests and conditional or contingent entitlements to become
interested of:
(c) all other related parties (taken together);
(d) the members (taken together) of all related parties' families;
(e) the trustees (acting as such) of any trust of which any
related party and/or any related party's family is a
beneficiary or discretionary object;
(f) any company in whose equity shares one or more related parties
or any member or members (taken together) of the related
party's or related parties' family or the related party or
related parties and any such member or members (taken
together) are directly or indirectly interested (or have a
conditional or contingent entitlement to become interested) so
that they are (or would on the fulfilment of the condition or
the occurrence of the contingency be) able:
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(A) to exercise or control the exercise of 30% or more of the
votes able to be cast at general meetings of such company or
any parent undertaking or subsidiary undertaking of such
company on all, or substantially all, matters; or
(B) to appoint or remove directors of such company or any parent
undertaking or subsidiary undertaking of such company holding
a majority of voting rights at board meetings on all, or
substantially all, matters.
Further no member or members (taken together) of a related party's family
or a related party and any such member or members (taken together) is or
are directly or indirectly interested (or has or have a conditional or
contingent entitlement to become interested) in OFFEROR or any parent
undertaking or subsidiary undertaking of OFFEROR so that such person is or
persons are (or would on the fulfilment of the condition or the occurrence
of the contingency be) able to do any of the things set out in sub-clauses
7.1(v)(a) and 7.1(v)(b) above.
Further, neither OFFEROR nor any person with a direct or indirect interest
in the share capital of OFFEROR is or has been within the 12 months prior
to the date of this Agreement entitled to exercise or to control the
exercise of 10% or more of the votes able to be cast on all or
substantially all matters at general meetings of XXXXXXX or any other
company which is XXXXXXX'x subsidiary undertaking (except the entitlements
to exercise or to control the votes attributable directly to the Shares
which are acquired pursuant to completion of the Offer and/or the Notarial
Deed).
Further, OFFEROR is not (nor has it been at any time within the 12 months
preceding the date of this Agreement) a person in accordance with whose
directions or instructions the directors of any subsidiary undertaking of
XXXXXXX (or of any company which has ceased to be a subsidiary undertaking
of XXXXXXX within the 12 months preceding the date of this Agreement) are
accustomed to act.
For the purposes of this Agreement an undertaking is a "PARENT
UNDERTAKING" in relation to another undertaking, a "SUBSIDIARY
UNDERTAKING", if:
(g) it holds a majority of the voting rights in the undertaking; or
(h) it has the right to appoint or remove a majority of its board of
directors; or
(i) it has the right to exercise a dominant influence over the
undertaking:
(A) by virtue of provisions contained in the undertaking's
by-laws; or
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(B) by virtue of a control contract; or
(j) it controls alone, or pursuant to an agreement with other
shareholders or members, a majority of the voting rights in
the undertaking; or
(k) it has a participating interest in the undertaking and:
(A) it actually exercises a dominant influence over it; or
(B) it and the subsidiary undertaking are managed on a
unified basis.
For the purposes of this Agreement an individual's "FAMILY" means
that individual's spouse and children.
(vi) The aggregate of the total paid up equity share capital and
subordinated participating loans (prestamos participativos) of
OFFEROR is not less than E83,000,000, the funds representing such
share capital (to the extent not used for expenditure within
sub-clause 7.1(vii) below) being currently held in the form of funds
readily available to OFFEROR.
(vii) Payments which would have to be made by OFFEROR if the Offer does
not proceed (excluding any payments for which OFFEROR may be liable
in respect of breach of any of its obligations under this Agreement)
will not exceed E 13,000,000 and no person with security interests
over the assets of OFFEROR would have any rights which, taken with
payments owed to any other person, would exceed such amount in such
circumstances. Apart from security interests, there are no other
third party rights or interests in the assets of OFFEROR.
(viii) Apart from any arrangement falling within clause 9.15 below, there
exists at the date of this Agreement, no agreement, arrangement or
undertaking, formal or informal, that would, but for the timing of
entering into such agreement, arrangement or undertaking, trigger
any of OFFEROR's obligations to pay any Deferred Contingent Offer
Consideration.
(ix) Except as disclosed in writing to XXXXXXX, neither OFFEROR nor any
of its officers, advisers or agents is aware of any right to bring
any claim against XXXXXXX or any of XXXXXXX'x subsidiary
undertakings or any of XXXXXXX'x or XXXXXXX'x subsidiary
undertakings officers, employees, advisers or agents under this
Agreement or in connection with any of the matters referred to in
this Agreement.
7.2. In the event that the units in PEDIFRI are transferred to OFFEROR pursuant
to the Notarial Deed, OFFEROR represents and warrants to XXXXXXX (for
itself and on behalf of XXXX), as of the date of the Notarial Deed, that:
(i) OFFEROR has full corporate power and authority and has taken all
necessary corporate actions to enter into and perform its
obligations under the Notarial Deed.
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(ii) No other consent, approval or authorization is required to be
obtained by OFFEROR in connection with the execution and
consummation of the Notarial Deed.
(iii) The Notarial Deed, following execution thereof, will constitute a
valid and legally binding obligation of OFFEROR, enforceable against
it in accordance with its terms, subject to applicable bankruptcy,
insolvency, reorganization and other laws generally affecting the
enforcement of creditors' rights.
8. PUBLIC DISCLOSURE
8.1. Save as provided in sub-clauses 8.2 and 8.3, no formal public announcement
or press release in connection with the signature or subject matter of
this Agreement shall be made or issued by or on behalf of either Party
without the prior written approval of the other Party (such approval not
to be unreasonably withheld or delayed).
8.2. Upon the signature of this Agreement, the Parties shall disclose the basic
contents of this Agreement and such other matters as are required in
connection with the signature and subject matter of this Agreement to the
CNMV and in accordance with the Listing Rules of the UK Listing
Authorities, by filing the notice and announcements substantially in the
form attached as Annex 7 hereto and a copy of this Agreement shall be
delivered to the CNMV and may be attached to the Prospectus.
8.3. If a Party has an obligation to make or issue any announcement or filing
or to take any other action, in each case required by law or by any stock
exchange or by any governmental authority, the relevant Party shall give
the other Party every reasonable opportunity to comment on any
announcement, release or filing before it is made or issued (provided that
this shall not have the effect of preventing the Party making the
announcement, release or filing or taking any such other action from
complying with its legal and/or stock exchange and/or other regulatory
obligations).
9. DEFERRED CONTINGENT OFFER CONSIDERATION
9.1. OFFEROR shall include the following provisions of this clause 9 in the
Offer.
9.2. Subject to the remaining provisions of this clause 9, if there shall occur
during the Relevant Period any Disposal by a Relevant Party of a RECOLETOS
Interest, OFFEROR shall pay to each Accepting Shareholder, in respect of
each of the Accepted Shares for which the Offer was accepted by such
Accepting Shareholder, the amount in cash in Euros of any Deferred
Contingent Offer Consideration arising from such Disposal.
For these purposes:
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"RELEVANT PERIOD" means the period commencing on the date of this
Agreement and ending at 23:59 (Madrid time) on the date which is 18
calendar months after the date for settlement pursuant to the Offer;
"DEFERRED CONTINGENT OFFER CONSIDERATION" means the Upside Amount arising
from any Disposal divided by:
(i) (where the PEDIFRI Put Option has been exercised), the total number
of Accepted Shares plus the number of shares in RECOLETOS held by
PEDIFRI at the date of the Notarial Deed; or
(ii) (where the PEDIFRI Put Option has not been exercised), the total
number of Accepted Shares;
"DISPOSAL" means any sale, transfer or any other disposal, whether for
cash or otherwise;
"FIRST UPSIDE PERIOD" means the period commencing on the date of this
Agreement and ending at 23:59 (Madrid time) on the date which is 12
calendar months after the date for settlement pursuant to the Offer;
"SECOND UPSIDE PERIOD" means the period commencing at the end of the First
Upside Period and ending at 23:59 (Madrid time) on the date which is 6
calendar months thereafter;
"RELEVANT PARTY" means:
(i) OFFEROR or any subsidiary of OFFEROR;
(ii) any person (which term in this Agreement includes any body corporate
or other legal entity as well as any individual) which holds any
interest in OFFEROR, whether:
(A) directly; or
(B) indirectly through any other person;
provided that no shareholder in BANESTO or any holding company of
BANESTO (where such person would, but for this proviso, be a
Relevant Party solely by virtue of its shareholding in BANESTO or
any holding company of BANESTO) shall be a Relevant Party; and
(iii) (while any person within (i) or (ii) retains any interest (direct or
indirect) in the shares of RECOLETOS), RECOLETOS or any subsidiary
of RECOLETOS.
"RECOLETOS INTEREST" means:
(i) any interest in the RECOLETOS Shares;
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(ii) any interest in any Relevant Party Shares;
(iii) any interest in the RECOLETOS Assets,
and "INTEREST" for these purposes means an interest of any type, whether
legal or beneficial, conditional or absolute, joint or sole and including
(without limitation):
(A) any option to acquire;
(B) any subscription, conversion or exchange rights into;
(C) any interest held through or pursuant to a trust or similar
arrangement in respect of;
(D) any arrangement giving the ability to exercise voting rights
attaching to or to receive the economic benefits deriving
from;
(E) any agreement, conditional or otherwise, to acquire or to call
for the delivery of;
in each case, any of the RECOLETOS Shares, Relevant Party Shares and
RECOLETOS Assets; and
(F) any agreement, conditional or otherwise, to acquire any of the
interests falling within (A) to (E) above, both inclusive;
"RECOLETOS SHARES" means the shares in the capital of RECOLETOS from time
to time;
"RELEVANT PARTY SHARES" means any shares (other than RECOLETOS Shares) or
units in the capital of or participations in (or any other form of
entitlement to share in assets on a dissolution, winding up or other
termination of), in each case, any Relevant Party (other than a Relevant
Party who is an individual);
"RECOLETOS ASSETS" means the assets of any kind from time to time of
RECOLETOS and its subsidiaries from time to time or of any of them
including (without limitation) real estate, intellectual property,
know-how, equipment, machinery, stock, debtors, the benefit of contracts,
shares and other securities, goodwill, information and claims;
"ACCEPTING SHAREHOLDERS" means the shareholders of RECOLETOS who accept
the Offer;
"UPSIDE AMOUNT" means:
(i) in the case of a Disposal for cash or cash equivalent of the full
beneficial interest in any RECOLETOS Share(s) (where there has been
no change to the denomination or number of RECOLETOS Shares in issue
from those existing at the date of this Agreement), an amount which
is equal to:
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C% (P x (A-B))
where, in each such case:
C = 80 where the relevant Disposal takes place in the First Upside
Period; or 50 where the relevant Disposal takes place in the
Second Upside Period;
P = the number of RECOLETOS Shares disposed of;
A = the amount of the consideration received or receivable per
RECOLETOS Share in respect of that disposal; and
B = the Trigger Price.
(ii) in the case of a Disposal for cash or cash equivalent of the full
beneficial interest in a RECOLETOS Asset, then for the purpose of
the calculation of any Upside Amount, the RECOLETOS Share Equivalent
of that RECOLETOS Asset shall first be determined as follows:
(A) the EBITDA generated by the business or businesses
attributable to that RECOLETOS Asset as a percentage of the
consolidated EBITDA generated by the whole of the RECOLETOS
business shall be calculated by the Independent Assessor by
reference to the most recently published audited consolidated
annual financial statements of RECOLETOS and its subsidiaries
and also (where no separate EBITDA attributable to such
business is specifically stated in any such audited accounts
of RECOLETOS for that period) such other factors (including
individual subsidiaries' accounts or statements for divisions
of the business) as the Independent Assessor, in its absolute
discretion, thinks fit to determine such EBITDA);
(B) that percentage is then applied to the total number of
RECOLETOS Shares in issue at the time of settlement of the
Offer;
(C) this then gives a number which is the RECOLETOS Share
Equivalent of the RECOLETOS Asset the subject of the Disposal
and this number shall be P for the purposes of the formula in
(i) above;
(D) the amount for the purposes of A in that formula shall be the
total consideration received or receivable in aggregate in
respect of the relevant Disposal of the RECOLETOS Asset
divided by the RECOLETOS Share Equivalent for the relevant
RECOLETOS Asset.
(iii) in the case of any other Disposal of a RECOLETOS Interest, the
amount calculated by the Independent Assessor (using as its
reference point the basis of calculation of Upside Amount in the
circumstances referred to in (i) above or in the case of a Disposal
of any interest in a RECOLETOS Asset, in (ii) above, but adjusting
for such factors as the Independent Assessor (in its absolute
discretion) thinks fit in the actual circumstances) as being (in the
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case of a Disposal within the First Upside Period) 80% or (in the
case of a Disposal within the Second Upside Period) 50% of the
difference between:
(A) the value of the consideration actually received or actually
receivable in respect of the relevant Disposal; and
(B) what would have been generated by the relevant Disposal of the
relevant RECOLETOS Interest had the underlying RECOLETOS
Shares been valued at the Trigger Price for the purposes of or
in the context of the relevant Disposal and (in the case of a
Disposal of a RECOLETOS Asset) had the value of all of
RECOLETOS's business been valued at the multiple of the
Trigger Price and the total number of RECOLETOS Shares in
issue at the date for settlement pursuant to the Offer;
"TRIGGER PRICE" means Euro 7.50; and
"INDEPENDENT ASSESSOR" means LAZARD or any replacement appointed in
accordance with clause 9.9.
9.3. Where any Disposal of a RECOLETOS Interest takes place otherwise than on
arms length market terms, any subsequent Disposal (whether direct or by
means of a Disposal of any interest in any entity which itself has an
interest, direct or indirect, in the relevant RECOLETOS Interest) shall,
if it falls within the Relevant Period, be treated as a Disposal of a
RECOLETOS Interest for the purposes of sub-clause 9.2 above even though
the Disposal would not, in such circumstances, be by a Relevant Party.
9.4. In calculating the amount of the consideration received or receivable in
respect of the Disposal of a RECOLETOS Interest, the relevant amount shall
be adjusted where there has been any payment or declaration of any
dividend or where there has been any other distribution or any return of
shareholders funds (including through share buy-backs) in the period from
and including the date for settlement pursuant to the Offer to and
including the date of the relevant Disposal of a RECOLETOS Interest so as
to reflect the value which RECOLETOS would have had if no such dividend
had been paid (or declared) or other distribution or return of
shareholders funds been made.
9.5. Where any Disposal of a RECOLETOS Interest is of an interest (for example,
an option) entitling the holder of that interest to acquire a further
RECOLETOS Interest(s), then the acquisition of such further RECOLETOS
Interest(s) shall be treated as the Disposal(s) of a RECOLETOS Interest
falling within sub-clause 9.2 above even though such acquisition of
further RECOLETOS Interest(s) itself falls outside the Relevant Period.
Similarly, if any Disposal of such a RECOLETOS Interest falls within the
First Upside Period, then even though the acquisition of the further
RECOLETOS Interest(s) pursuant to that first Disposal falls inside the
Second Upside Period or falls outside the Relevant Period, such
acquisition of the further RECOLETOS Interest(s) shall be treated as
falling within the First Upside Period.
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9.6. OFFEROR shall make any payment due to an Accepting Shareholder under
sub-clause 9.2 above within ten (10) Business Days of receipt by the
Relevant Party of the consideration in relation to the relevant Disposal
of the RECOLETOS Interest (or, where the calculation of the Upside Amount
has to be done by the Independent Assessor, within ten (10) Business Days
of the Independent Assessor completing that calculation). Where the
consideration is received in instalments OFFEROR shall pay the
proportionate part as above following receipt of each instalment. The fact
that receipt of consideration may fall outside the Relevant Period shall
not relieve OFFEROR from its payment obligations to Accepting Shareholders
where the Disposal of the RECOLETOS Interest to which the consideration
relates took place within the Relevant Period or is a Disposal to which
sub-clause 9.5 above applies.
9.7. The provisions of sub-clause 9.2 above shall not apply to Disposals of
interests in RECOLETOS Assets where such Disposals:
(i) are of a revenue nature and are made in the ordinary course of
business of RECOLETOS or the relevant RECOLETOS subsidiary; or
(ii) are Disposals where the aggregate RECOLETOS Share Equivalent of all
such Disposals (calculated as referred to in sub-clause 9.2 above)
does not, over the course of the Relevant Period, exceed 25% of the
total RECOLETOS Shares in issue at the time of settlement of the
Offer (but so that:
(A) any further Disposal(s) pursuant to an initial disposal within
the terms of sub-clause 9.5 above shall be treated as a
Disposal within the Relevant Period for these purposes; and
(B) the value of any Disposal involving instalment or deferred
payment(s) outside the Relevant Period shall be calculated by
reference to the discounted value of the payments on the date
of the Disposal (as determined by the Independent Assessor)).
9.8. The provisions of sub-clause 9.2 above shall not apply to any Disposal of
a RECOLETOS Interest to the extent that:
(i) such RECOLETOS Interest is an interest in the RECOLETOS Shares or
any interest in any Relevant Party Shares; and
(ii) that Disposal, together with all other such Disposals up to and
including that date would not amount to the disposal of interests
(direct or indirect) of an aggregate of more than a 1% of the
RECOLETOS Shares.
9.9. The following provisions shall apply in relation to the Independent
Assessor:
(i) OFFEROR shall pay the fees of the Independent Assessor.
(ii) If the Independent Assessor delays or becomes unwilling or incapable
of acting then the Parties shall request as soon as possible that
the President of
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the Spanish Institute of Financial Analysts (Presidente del
Instituto Espanol de Analistas Financieros) nominate another in its
place and the Parties shall co-operate to appoint such nominee as
soon as possible after such nomination. The nominee shall, upon
acceptance of its appointment become the Independent Assessor for
the purposes of this clause 9.
(iii) The Independent Assessor shall act as an expert and not as an
arbitrator and its decision shall (in the absence of manifest error)
be final and binding.
(iv) The Parties shall co-operate fully with any request for documents
and/or information reasonably requested by the Independent Assessor
and the Parties undertake to use all reasonable endeavours to
procure that other relevant persons subject to such requests do the
same.
(v) The Independent Assessor shall be appointed on terms that it carry
out any analysis and calculation it is required to do as promptly as
reasonably possible and shall notify both OFFEROR and PEARSON of its
conclusions as soon as possible after the conclusion of its analysis
and calculation.
(vi) To the extent required by the CNMV, the Independent Assessor shall
confirm to it any calculation of Upside Amount to be made under this
clause 9.
9.10. OFFEROR undertakes to notify PEARSON and the Independent Assessor
immediately upon OFFEROR or any of its officers becoming aware of any
Disposal of a RECOLETOS Interest.
9.11. Subject as provided in clause 9.12, any subscription for new shares,
units, participations or other equivalent rights in any Relevant Party at
a price which reflects a value per existing RECOLETOS share (assuming no
change to the number or denomination of RECOLETOS Shares in issue as at
the date of settlement of the Offer and no return of capital) of more than
the Trigger Price shall be treated as a Disposal of a RECOLETOS Interest
for the purposes of clause 9.2
9.12. Any investment by new investors in OFFEROR (and any subsequent transfer by
such new investor to another investor at an identical price within the
period referred to below) which takes place in the period commencing on
the date of this Agreement and ending at 23:59 (Madrid time) on the date
which is four calendar months after the date for settlement pursuant to
the Offer shall not give rise to an Upside Amount by virtue only of the
fact that such investors pay a price for their shares in OFFEROR which
includes a premium which would value the current number of RECOLETOS
Shares above the Trigger Price, the purpose of such premium being to
balance the subscription or purchase of shares in OFFEROR by RECOLETOS
management (at prices which would value the current number of RECOLETOS
Shares lower than the Trigger Price) under a management incentive scheme,
provided that:
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(i) the aggregate of such premiums shall not exceed the total of such
shortfall on new shares of OFFEROR representing no more than 5% of
the total share capital of OFFEROR as at the date of this Agreement;
(ii) the provisions of this clause 9.12 shall apply only to the initial
transfer to such a new investor (and any subsequent transfer by such
new investor to another investor at an identical price within the
period referred to above) and shall not apply to any subsequent
transfers by any of them;
(iii) OFFEROR shall procure that any public announcement by any such new
investor (or any such transferee) shall require the prior written
consent (not to be unreasonably withheld) of PEARSON and refer to
the price as being the Offer Price plus a component for fees and a
component related to the effective funding of a management incentive
scheme rather than a specific figure.
9.13. The provisions of clause 9.2 above shall not apply to the following
Disposals of RECOLETOS Interests:
(i) Disposals to persons within the same group as the transferor
provided that if any such person ceases to be the subsidiary company
or holding company of the transferor the ceasing to be such a
company shall itself be a Disposal of the relevant RECOLETOS
interest;
(ii) Disposals mortis causa where the transferor is an individual;
(iii) Disposals for no consideration;
(iv) Disposals involving the buy back and redemption by RECOLETOS of its
own shares; and
(v) a merger of OFFEROR and RECOLETOS by means of the Spanish process of
fusion, provided that in this case in this clause 9 RECOLETOS Assets
shall be read as OFFEROR Assets and any reference to RECOLETOS
Shares shall be read as with appropriate changes to take account of
the fusion into OFFEROR,
provided that the provisions of sub-clause 9.2 above will apply to
subsequent Disposals of RECOLETOS Interests by the relevant transferees
and to any disposals of interests in such transferees (unless such
subsequent Disposals are in the circumstances specified above).
9.14. Notwithstanding anything to the contrary in this clause 9, the maximum
amount of Deferred Contingent Offer Consideration payable in respect of
each Accepted Share shall not exceed Euro 10 in aggregate.
9.15. The provisions of clause 9.2 shall not apply to any Disposal of RECOLETOS
Shares where the disposal in question is in exercise by a creditor of
OFFEROR of
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security rights over the RECOLETOS Shares pursuant to any financing to
OFFEROR, including call option rights taken as security.
10. LIABILITY
10.1. Save as otherwise provided herein, each Party shall be liable to the other
Party for any damages, losses, costs and expenses caused to or incurred by
the latter arising out of or resulting from any breach or infringement by
the former Party of the obligations assumed under this Agreement.
10.2. Where one of the Parties considers that a breach or infringement of this
Agreement (hereinafter, a "BREACH") has occurred which is attributable to
the other Party, the former shall serve written notice on the latter
(hereinafter, a "NOTICE OF DISPUTE"), and, if the Breach may be remedied,
the Party in breach shall have to do so within a period of five (5)
Business Days, without prejudice to its liability vis-a-vis the other
Party for any damages and prejudices caused by the Breach. In the event
that it is not possible to remedy the Breach or should the Party in breach
fail to do so within such period, the Party in breach shall be liable
vis-a-vis the other Party for damages and prejudice caused by the Breach.
11. COSTS AND EXPENSES
Each of the Parties shall bear its own costs, legal and advisory expenses,
charges and other expenses (including taxation) arising out of the
negotiation, preparation, execution and performance of this Agreement.
OFFEROR shall pay all costs and expenses related to the preparation,
filing, completion and settlement of the Offer, including in relation to
obtaining the Authorization and any other regulatory clearances.
12. NOTICES
12.1. All notices or communications between the Parties with respect to this
Agreement must be made in writing by (i) hand delivery, (ii) registered
mail with acknowledgement of receipt, (iii) courier service, (iv)
facsimile, or (v) e-mail, in any case sent to the addresses or numbers set
forth in sub-clause 12.2 below.
12.2. The contact details of each Party for all notices to be made in connection
with this Agreement are the following:
For PEARSON:
Address: 00 Xxxxxx, Xxxxxx XX0X 0XX, Xxxxxxx
Attention: Xxxxxxxx Xxxxxxxx (CEO) and Xxxxxx Xxxxx (General Counsel)
Copy: The Company Secretary
Facsimile: x00 00 0000 0000 and x00 00 0000 0000
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E-mail: xxxxxxxx.xxxxxxxx@xxxxxxx.xxx and xxxxxx.xxxxx@xxxxxxx.xxx
For OFFEROR:
Address: X/ Xxxxxxxxx x Xxx, x(xxxxxxx) 00, Xxxxxx, Xxxxx
Attention: Xxxx Xxxxx
Facsimile: x00 00 000 00 00
E-mail: xxxxxxxxx@xxxxxxxxx.xxx
12.3. Any notice sent to the above-referred addresses shall be deemed to have
been received by the addressee, except if prior to the sending of such
notice the addressee had notified the sender of a change of address.
13. GOVERNING LAW, DISPUTE RESOLUTION, ENGLISH LANGUAGE AND MISCELLANEOUS
13.1. This Agreement shall be governed by the laws of Spain.
13.2. Any dispute under this Agreement which has not been resolved between the
Parties within thirty (30) Business Days of service of a Notice of Dispute
may be referred by either Party to and, following any such referral, shall
be finally resolved by arbitration under the Rules of Arbitration of the
International Chamber of Commerce by three arbitrators appointed in
accordance with those Rules. The seat of arbitration shall be Paris,
France. The language to be used in the arbitral proceedings shall be
English. The Parties shall have the right to seek interim relief from a
court of competent jurisdiction, at any time before and after the
arbitrator has been appointed, up until the arbitrator has made his final
award.
13.3. The parties may append to this Agreement or attach this Agreement to
documents in Spanish and documents the originals of which are in Spanish,
subject always to the following provisions: the language of this Agreement
and the transactions envisaged by it is English and all notices, demands,
requests, statements, certificates or other documents or communications
between the Parties shall be in English unless otherwise agreed. For the
avoidance of doubt, the English language version of this agreement shall
prevail to the exclusion of any translation of it into any other language.
13.4. This Agreement constitutes the entire agreement between the parties with
respect to the subject matter hereof and supersedes all agreements,
understandings, negotiations and discussions, whether written or verbal,
between the parties prior to the date hereof.
13.5. The Annexes to this Agreement form an integral part thereof.
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IN WITNESS WHEREOF, the Parties execute this Agreement in two counterparts, one
for each of them, in the place and on the date first above written.
XXXXXXX PLC
By
/s/ XXXXXXX XXXXX XXXXXXXXX
---------------------------
Mr. Xxxxxxx Xxxxx Xxxxxxxxx
RETOS CARTERA, S.A.
By
/s/ XXXXX XXXXXXXXXXX XXXXXXX
-----------------------------
Xx. Xxxxx Xxxxxxxxxxx Xxxxxxx
