EXHIBIT 99.3
February 28, 2000
Xxxxx Xxxxx
First Call International Ltd.
00 Xxxx Xxxx
Xxxxxx
XX0X 0XX
Dear Xxxxx:
This letter ("Letter Agreement") sets forth the agreement between
First Call International Ltd. ("First Call") and Xxxxxxx.xxx, Inc.
("Xxxxxxx.xxx") pursuant to which Xxxxxxx.xxx proposes to make an offer to the
shareholders of First Call for the entire issued share capital of First Call, on
the terms and conditions set forth in this Letter Agreement (the "Acquisition").
1. The Acquisition. The Acquisition will be structured as an exchange
offer (the "Exchange Offer") to be made by Xxxxxxx.xxx after the S-4 Effective
Date (as defined below) pursuant to which each of the First Call shareholders
accepting the offer shall sell, and Xxxxxxx.xxx shall purchase, all of the
outstanding capital stock in exchange for a pro rata share of the Issued Shares
(as defined below). In addition, prior to the closing, the outstanding
shareholder loans (which as of the date of this Agreement are approximately
(pound)5 million) will be converted to First Call capital stock and acquired by
way of the issuance of Xxxxxxx.xxx shares, as part of the purchase price.
2. Purchase Price. The total purchase price payable by Xxxxxxx.xxx for
all outstanding capital stock of First Call, assuming all options to purchase
shares of First Call have been exercised, and the outstanding shareholder loans
have been converted to capital stock, is the number of shares of Xxxxxxx.xxx
common stock that, in the aggregate will have a value of $132,000,000 (the
"Issued Shares") payable in accordance with the following schedule.
At the closing of the Acquisition: US$ Amount
--------------------------------- ----------
o Up front payment in Xxxxxxx.xxx stock in respect of First
Call's outstanding equity 104,000,000
o Up front payment in Xxxxxxx.xxx stock in respect of First
Call's outstanding shareholder loans 16,000,000
------------
SUB TOTAL 120,000,000
Twelve months after the closing of the Acquisition:
o Holdback of $12,000,000 of the Issued Shares in
pro rata amounts among the shareholders of First
Call, to be held in escrow, payable twelve (12)
months from the closing date, subject to offset
for any breach of warranties and indemnities made
in the Shareholders' Agreement (as defined below) 12,000,000
------------
TOTAL CONSIDERATION $132,000,000
The actual number of Xxxxxxx.xxx shares to be issued will be determined using
the average closing price of Xxxxxxx.xxx common stock for the 30 trading days
ending on the second trading day prior to the date that the S-4 Registration
Statement is declared effective by the US Securities and Exchange Commission
(the "SEC") (such date being the "Registration Date"). The parties have agreed
that they should each be protected from price movements of more than 10% from
the current average level. The average closing price of Xxxxxxx.xxx stock for
the 30 trading day period prior to signing this Letter Agreement is $15.734.
Therefore, if the average closing price for the 30 trading days prior to the
Registration Date is greater than 10% higher than $15.734 then the number of
shares to be issued will be calculated as through the average was $17.307. If
the average closing price for the 30 trading days prior to the Registration Date
is more than 10% below $15.734, then the number of shares to be issued will be
calculated as through the average was $14.160.
3. Employment Matters. At the closing of the Acquisition, key
employees and consultants, as determined by both parties, will enter into
employment and consulting agreements respectively with Xxxxxxx.xxx. Such
agreements may provide for a base salary, base rate and a grant of stock
options, subject to a vesting schedule, to purchase common stock of Xxxxxxx.xxx.
At the closing of the Acquisition, Xxxxxxx.xxx may grant other key employees
common stock options. Stock options to be granted to employees of First Call may
be for shares of First Call as determined by the joint decision of Xxxxx Xxxxx
and Xxxxxxx.xxx. The parties have discussed the appointment of Xxxxx Xxxxx to
the Xxxxxxx.xxx Board, however this would be subject to the approval of the
Xxxxxxx.xxx Board.
4. Definitive Agreement. The parties agree to use their best efforts
to expeditiously negotiate in good faith and to execute and deliver an agreement
between First Call and Xxxxxxx.xxx defining the Exchange Offer and containing
covenants of First Call concerning the conduct of its business prior to closing
of the Acquisition ("Definitive Agreement") and to approve the terms and
conditions to be agreed to by each of the shareholders of First Call
("Shareholders' Agreement") each consistent with the terms of this Letter
Agreement and containing representations, warranties, covenants, conditions and
indemnities customary for the acquisition of a business similar to First Call,
in form and substance reasonably satisfactory to First Call and Xxxxxxx.xxx.
Prior to filing the S-4 registration statement (a) Xxxxxxx.xxx shall have
2
satisfactorily completed its due diligence review of First Call, (b) both
parties shall have completed a mutually satisfactory joint operating and
business plan, (c) approval shall have been given by the respective Boards of
Directors of First Call and Xxxxxxx.xxx, (d) Xxxxxxx.xxx and First Call shall
have entered into the Definitive Agreement and (e) the shareholders of First
Call shall have approved the terms of the Shareholders' Agreement. The earlier
of the date that (i) both the First Call and Xxxxxxx.xxx Boards of Directors
have approved the terms of the Exchange Offer and (ii) the execution of the
Definitive Agreement is hereinafter referred to as the "Approval Date".
5. Conditions to Closing. The closing of the Acquisition shall be
conditioned upon (a) the S-4 Registration Statement being declared effective by
the SEC (the "S-4 Effective Date"), (b) the acceptance of the Exchange Offer by
all of the shareholders of First Call, including shares issued upon (i)
conversion of all shareholder loans into First Call common stock, and (ii)
exercise of all outstanding stock options held by First Call employees and
consultants to purchase First Call common shares and (c) any government or other
third party consents or waivers shall have been received. Xxxxxxx.xxx agrees to
use its best endeavors to file the S4 Registration Statement forthwith on, or as
soon as possible after, the Approval Date and to obtain an S-4 Effective Date as
soon as possible after such filing.
6. Break Fee. A. Air Miles International Group BV ("Air Miles") shall
pay to Xxxxxxx.xxx forthwith on demand the sum of US$13,200,000 (the "Break
Fee") in immediately available funds in the event that:
(1) on or prior to June 30, 2000 (unless Xxxxxxx.xxx has formally terminated
negotiations for the acquisition of First Call in writing at a time when there
has been no breach of this Letter Agreement by First Call or Air Miles), Air
Miles or any other shareholder of First Call accepts an offer to acquire its
shares in First Call, enters into a binding agreement or undertaking to sell its
shares in First Call or otherwise permits any person (including First Call) to
enter into any agreement or arrangement whereby any person acquires or
subscribes shares in First Call or the right to acquire or subscribe shares of
First Call or securities convertible or exchangeable into shares of First Call
or the right to acquire a substantial part of the undertaking or assets of First
Call (the provisions of this paragraph 6 being without prejudice to the
provisions of paragraph 7), or
(2) provided that the S-4 Effective Date is on or before 30 June 2000, on the
date that is 30 days after Xxxxxxx.xxx makes the Exchange Offer, any shareholder
of First Call has not accepted the Exchange Offer or any shareholder of First
Call has not executed a Shareholders' Agreement or delivered its shares in First
Call as required under the terms of the Exchange Offer, provided that Air Miles
shall have no liability under this paragraph 2 unless the Exchange Offer made by
Xxxxxxx.xxx conforms, in all material respects, to the terms of the Definitive
Agreement and the Shareholders' Agreement.
3
B. Xxxxxxx.xxx shall pay to First Call forthwith on demand the sum of
US$13,200,000 in immediately available funds in the event that:
(1) on or prior to 30 days after the S-4 Effective Date Xxxxxxx.xxx fails to
make the Exchange Offer in accordance with the terms of the Definitive
Agreement, or
(2) on or prior to June 30, 2000 (unless the shareholders of First Call have
formally terminated negotiations for the acquisition by Xxxxxxx.xxx of First
Call in writing at a time when there has been no breach of this Letter Agreement
by Xxxxxxx.xxx), Xxxxxxx.xxx takes any action in breach of paragraph 8 (the
provisions of this paragraph 6 being without prejudice to the provisions of
paragraph 8).
7. No Solicitation by First Call. From and after the date hereof and
until the earlier to occur of the termination of this Letter Agreement or the
execution of the Definitive Agreement, First Call shall not, and shall not
permit its officers, directors, employees, advisors, representatives or agents
(collectively, "Representatives"), except as required by applicable law, to, (a)
directly or indirectly, solicit, initiate, encourage (including by way of
furnishing information) or take any other action to facilitate any inquiry or
the making of any proposal which constitutes, or may be reasonably expected to
lead to, any acquisition or purchase of a substantial amount of the assets or
securities of First Call or any tender offer or exchange offer, merger,
consolidation, business combination, sale of substantially all assets, sale of
securities, re-capitalization, spin-off, liquidation, dissolution or similar
transaction involving First Call or any other transaction the consummation of
which would or could reasonably be expected to prevent or materially delay the
closing of the Acquisition (collectively, a "First Call Transaction Proposal")
or agree to or endorse any First Call Transaction Proposal or (b) propose, enter
into or participate in any discussions or negotiations regarding any First Call
Transaction Proposal, or furnish to any other person any information with
respect to the business or assets of First Call in connection with a First Call
Transaction Proposal, or otherwise cooperate in any way with, or assist or
participate in, facilitate or encourage, any effort or attempt by any other
person to do or seek any of the foregoing.
8. No Solicitation by Xxxxxxx.xxx. From and after the date hereof and
until the earlier to occur of the termination of this Letter Agreement or the
execution of the Definitive Agreement, Xxxxxxx.xxx shall not, and shall not
permit its officers, directors, employees, advisors, representatives or agents
(collectively, "Representatives"), except as required by applicable law, to, (a)
directly or indirectly, solicit, initiate, encourage (including by way of
furnishing information) or take any other action to facilitate any inquiry or
the making of any proposal which constitutes, or may be reasonably expected to
lead to, any acquisition or purchase by another person of a substantial amount
of the assets or securities of Xxxxxxx.xxx or any acquisition or purchase by
Xxxxxxx.xxx of a substantial amount of the assets or securities of another
person or any tender offer or exchange offer, merger, consolidation, business
combination, sale of substantially all assets, sale of securities,
re-capitalization, spin-off, liquidation, dissolution or similar transaction
involving Xxxxxxx.xxx as a buyer, seller or target or any other transaction the
4
consummation of which would or could reasonably be expected to prevent or
materially delay the closing of the Acquisition (collectively, a "Xxxxxxx.xxx
Transaction Proposal") or agree to or endorse any Xxxxxxx.xxx Transaction
Proposal or (b) propose, enter into or participate in any discussions or
negotiations regarding any Xxxxxxx.xxx Transaction Proposal, or furnish to any
other person any information with respect to the business or assets of
Xxxxxxx.xxx in connection with a Xxxxxxx.xxx Transaction Proposal, or otherwise
cooperate in any way with, or assist or participate in, facilitate or encourage,
any effort or attempt by any other person to do or seek any of the foregoing.
The term Xxxxxxx.xxx Transaction Proposal, as used in this paragraph, shall not
include any proposed transaction with an entity headquartered in North America.
9. S-4 Registration Statement. As soon as practically possible after
the Approval Date, Xxxxxxx.xxx will file an S-4 registration statement for the
Issued Shares. Once the S-4 has been declared effective by the SEC and the
Acquisition has closed, the shareholders of First Call will be allowed to sell
the Issued Shares, subject to the lockup provisions outlined in paragraph 10 and
as provided by applicable US securities laws.
10. Lockup Provisions. The portion of the Issued Shares held by the
non-employee shareholders of First Call (Xxxx Xxxxxxx, Xxxxxxx Xxxxx, Xxxx
Xxxxxx and Xxxx Xxxx) ("Investors") shall be referred to as "Investor Shares."
The portion of the Issued Shares held by the management and employees of First
Call (Air Miles, Xxxx Xxxxxxx, Xxxxxx Xxxxxx and Xxxxxxx Xxxxxx) ("Employees")
shall be referred to as "Employee Shares." The Investors will be allowed to sell
15% of the Investor Shares after three months following the closing of the
Acquisition, and thereafter an additional one fifteenth of the remaining 85% of
the Investor Shares each month through the eighteenth month following the
closing of the Acquisition. The Employees will be allowed to sell 10% of the
Employee Shares after three months following the closing of the Acquisition, an
additional 10% after six months following the closing of the Acquisition, an
additional 10% after nine months following the closing of the Acquisition, an
additional 15% after twelve months following the closing of the Acquisition, an
additional 15% after fifteen months following the closing of the Acquisition, an
additional 15% after eighteen months following the closing of the Acquisition,
an additional 15% after twenty-one months following the closing of the
Acquisition and the remainder of the Employee Shares after twenty-four months
following the closing of the Acquisition.
11. Undertaking. On the Approval Date, Air Miles will, if requested by
Xxxxxxx.xxx, execute and deliver an irrevocable undertaking to accept the
Exchange Offer.
12. Expenses. Each of First Call and Xxxxxxx.xxx shall bear its own
Transaction Expenses. "Transaction Expenses" shall mean the expenses (whether or
not incurred prior to the date hereof) arising out of, relating to or incidental
to the discussion, evaluation, negotiation and documentation of this Letter
Agreement and the transactions contemplated hereby.
5
13. Confidentiality Agreement. Each of Xxxxxxx.xxx and First Call
acknowledges and reaffirms the obligations contained in the Confidentiality
Agreement, dated February 2, 2000, previously executed by the parties.
14. Access. Each party will allow the other party and its independent
accountants, counsel and other representatives reasonable access to all
properties, books, records and personnel, upon reasonable notice, in order to
make such investigation of the business and affairs of the other as it deems
appropriate.
15. Publicity. Except as required by law or regulation, in no event
will either party make any public announcement or issue any press release with
respect to the transactions contemplated by this Letter Agreement without (a)
first consulting with the other party as to the form and substance thereof and
(b) obtaining the prior written consent of the other party.
16. Amendment. Any amendment, supplement, modification or waiver of or
to any provision of this Letter Agreement shall be effective only if it is made
and given in writing signed by the parties and only in the specific instance and
for the specific purpose for which made or given.
17. Effect. Except for the obligations and agreements set forth in
paragraphs 4, , 7, 8, 11, 12, 13, 14, 15, 16, 17, 18 and 19 hereof, which are
intended to be fully binding in accordance with their terms, and paragraph 6
which is intended to be fully binding after the Approval Date in accordance with
its terms, neither this Letter Agreement nor its acceptance constitute a
commitment, offer or legally binding or enforceable agreement of either
Xxxxxxx.xxx or the shareholders of First Call to consummate the Acquisition and
the failure for any reason to consummate (except for the breaches of paragraphs
4, 7, 8, 11, 12, 13, 14 and 15 hereof) shall not give rise to any legal
obligation on the part of any party hereto. If the Approval Date has not
occurred by June 30, 2000, this letter of intent and the obligations of the
parties hereunder shall terminate, except that the provisions of paragraphs ,
13, 15 and 18 shall survive. If the S-4 Effective Date has occurred by 30 June
2000, the provisions of paragraph 6 shall also survive.
18. Governing Law. This Letter Agreement shall be governed by, and
construed in accordance with English law, and the parties submit to the
non-exclusive jurisdiction of the English courts for the purpose of enforcing
any claim arising under this Letter Agreement.
19. Counterparts. This Letter Agreement may be executed in any number
of counterparts, each of which when so executed shall be deemed to be an
original and all of which taken together shall constitute one and the same
agreement.
6
Please confirm that the foregoing accurately sets forth our agreement
by executing this Letter Agreement and returning it to Xxxxxxx.xxx via fax
(000-000-0000) no later than 5:00 p.m. London time, February 29, 2000.
XXXXXXX.XXX, INC.
By: /s/ W. Xxxxxx Xxxxxx
--------------------------------
W. Xxxxxx Xxxxxx
Title: Co-Chairman and Chief Executive Officer
AGREED AND ACCEPTED ON THIS
29th DAY OF FEBRUARY, 2000
FIRST CALL INTERNATIONAL LTD.
By: /s/ Xxxxx Xxxxx
--------------------------------
Xxxxx Xxxxx
Title: Chairman and Chief Executive Officer
AIR MILES INTERNATIONAL GROUP B.V.
By: /s/ J. C. M. Veerman
--------------------------------
J. C. M. Veerman
Title: Managing Director
7
