AGREEMENT AND PLAN OF MERGER
DATED AS OF AUGUST 1, 1999
BY AND BETWEEN
FIDELITY NATIONAL FINANCIAL, INC.
AND
CHICAGO TITLE CORPORATION
AND AMENDED AS OF OCTOBER 13, 1999
106
TABLE OF CONTENTS
PAGE
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ARTICLE I DEFINITIONS...................................... A-1
Section 1.1 Definitions................................... A-1
ARTICLE II THE MERGER...................................... A-6
Section 2.1 The Merger.................................... A-6
Section 2.2 Certificate of Incorporation and By-laws of
the Surviving Corporation.............................. A-7
Section 2.3 Board of Directors of the Surviving
Corporation............................................ A-7
Section 2.4 Headquarters.................................. A-7
Section 2.5 Transition Committee.......................... A-7
ARTICLE III CONVERSION OF SECURITIES AND RELATED MATTERS... A-8
Section 3.1 Conversion of Capital Stock................... A-8
Section 3.2 Fractional Shares; Adjustments................ A-13
Section 3.3 Exchange of Certificates...................... A-13
Section 3.4 Company Stock Options......................... A-15
Section 3.5 Shares of Dissenting Stockholders............. A-16
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF
THE COMPANY............................................... A-16
Section 4.1 Corporate Existence and Power................. A-16
Section 4.2 Corporate Authorization....................... A-16
Section 4.3 Governmental Authorization.................... A-17
Section 4.4 Non-Contravention............................. A-17
Section 4.5 Capitalization................................ A-17
Section 4.6 Subsidiaries.................................. A-18
Section 4.7 The Company SEC Documents..................... A-18
Section 4.8 Financial Statements; Reserves................ A-19
Section 4.9 No Material Undisclosed Liabilities........... A-20
Section 4.10 Information to Be Supplied................... A-20
Section 4.11 Absence of Certain Changes................... A-21
Section 4.12 Transactions with Affiliates................. A-21
Section 4.13 Litigation................................... A-21
Section 4.14 Taxes........................................ A-21
Section 4.15 Employees and Employee Benefits.............. A-22
Section 4.16 Investment Securities........................ A-23
Section 4.17 Compliance with Laws......................... A-23
Section 4.18 Forms of Contract............................ A-24
Section 4.19 Directors' and Officers' Insurance
Policies............................................... A-24
Section 4.20 Environmental Matters........................ A-24
Section 4.21 Finders' Fees; Opinion of Financial
Advisor................................................ A-24
Section 4.22 Required Vote; Board Approval................ A-25
Section 4.23 State Takeover Statutes...................... A-25
Section 4.24 Year 2000 Compliance......................... A-25
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TABLE OF CONTENTS (CONTINUED)
PAGE
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ARTICLE V REPRESENTATIONS AND WARRANTIES OF FIDELITY....... A-25
Section 5.1 Corporate Existence and Power................. A-25
Section 5.2 Corporate Authorization....................... A-26
Section 5.3 Governmental Authorization.................... A-26
Section 5.4 Non-Contravention............................. A-26
Section 5.5 Capitalization of Fidelity.................... A-26
Section 5.6 Subsidiaries.................................. A-27
Section 5.7 Fidelity SEC Documents........................ A-28
Section 5.8 Financial Statements; Reserves................ A-28
Section 5.9 No Material Undisclosed Liabilities........... A-29
Section 5.10 Information to Be Supplied................... A-29
Section 5.11 Absence of Certain Changes................... A-30
Section 5.12 Transactions with Affiliates................. A-30
Section 5.13 Litigation................................... A-30
Section 5.14 Taxes........................................ A-31
Section 5.15 Employees and Employee Benefits.............. A-31
Section 5.16 Investment Securities........................ A-32
Section 5.17 Compliance with Laws......................... A-32
Section 5.18 Forms of Contract............................ A-33
Section 5.19 Directors' and Officers' Insurance
Policies............................................... A-33
Section 5.20 Environmental Matters........................ A-33
Section 5.21 Finders' Fees; Opinion of Financial
Advisor................................................ A-33
Section 5.22 Required Vote; Board Approval................ A-33
Section 5.23 Ownership of Company Common Shares........... A-34
Section 5.24 Year 2000 Compliance......................... A-34
Section 5.25 Financing.................................... A-34
ARTICLE VI COVENANTS OF THE COMPANY........................ A-34
Section 6.1 The Company Interim Operations................ A-34
Section 6.2 Stockholder Meeting........................... A-36
Section 6.3 Acquisition Proposals; Board Recommendation... A-37
Section 6.4 Purchases of Company Common Shares............ A-38
ARTICLE VII COVENANTS OF FIDELITY.......................... A-38
Section 7.1 Fidelity Interim Operations................... A-38
Section 7.2 Executive Management.......................... A-40
Section 7.3 Stockholder Meeting........................... A-40
Section 7.4 Indemnification, Exculpation and Insurance.... A-41
Section 7.5 Employee Benefits............................. A-41
Section 7.6 Stock Exchange Listing........................ A-42
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TABLE OF CONTENTS (CONTINUED)
PAGE
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ARTICLE VIII COVENANTS OF FIDELITY AND THE COMPANY......... A-42
Section 8.1 Reasonable Best Efforts....................... A-42
Section 8.2 Certain Filings; Cooperation in Receipt of
Consents............................................... A-42
Section 8.3 Public Announcements.......................... A-44
Section 8.4 Access to Information; Notification of Certain
Matters................................................ A-44
Section 8.5 Payment of Special Dividend................... A-44
Section 8.6 Further Assurances............................ A-44
Section 8.7 Tax Matters................................... A-45
Section 8.8 Control of Other Party's Business............. A-45
Section 8.9 Affiliate Letters............................. A-45
Section 8.10 Financing.................................... A-45
ARTICLE IX CONDITIONS TO THE MERGER........................ A-45
Section 9.1 Conditions to the Obligations of Each Party... A-45
Section 9.2 Conditions to the Obligations of the
Company................................................ A-46
Section 9.3 Conditions to the Obligations of Fidelity..... A-47
ARTICLE X TERMINATION...................................... A-48
Section 10.1 Termination.................................. A-48
Section 10.2 Effect of Termination........................ A-49
Section 10.3 Termination Fee and Expenses................. A-49
ARTICLE XI MISCELLANEOUS................................... A-50
Section 11.1 Notices...................................... A-50
Section 11.2 Survival of Representations, Warranties and
Covenants after the Effective Time........... A-51
Section 11.3 Amendments; No Waivers....................... A-51
Section 11.4 Successors and Assigns....................... A-51
Section 11.5 Governing Law................................ A-51
Section 11.6 Counterparts; Effectiveness; Third Party
Beneficiaries.......................................... A-52
Section 11.7 Jurisdiction................................. A-52
Section 11.8 Waiver of Jury Trial......................... A-52
Section 11.9 Enforcement.................................. A-52
Section 11.10 Entire Agreement............................ A-52
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER dated as of August 1, 1999, and amended as of
October 13, 1999, by and between Chicago Title Corporation, a Delaware
corporation (the "Company"), and Fidelity National Financial, Inc., a Delaware
corporation ("Fidelity") (the "Agreement").
RECITALS
WHEREAS, the Boards of Directors of the Company and Fidelity each have
determined that a business combination between the Company and Fidelity is
advisable and in the best interests of their respective companies and
stockholders and presents an opportunity for their respective companies to
achieve long-term strategic and financial benefits, and accordingly have agreed
to effect the merger provided for herein upon the terms and subject to the
conditions set forth herein; and
WHEREAS, the parties hereto intend that the merger provided for herein
shall qualify for U.S. federal income tax purposes as a reorganization within
the meaning of Section 368 of the U.S. Internal Revenue Code of 1986, as amended
(together with the rules and regulations promulgated thereunder, the "Code") (a
"368 Reorganization"); and
WHEREAS, by resolutions duly adopted, the respective Boards of Directors of
the Company and Fidelity have approved and adopted this Agreement and the
transactions contemplated hereby.
NOW, THEREFORE, in consideration of the foregoing, and of the
representations, warranties, covenants and agreements contained herein, and
intending to be legally bound hereby, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1 Definitions.
(a) As used herein, the following terms have the following meanings:
"AAM" means Alleghany Asset Management, a Delaware corporation.
"AAM Distribution" means the distribution of Alleghany Asset Management to
Alleghany by Chicago Title & Trust Company, a wholly-owned subsidiary of the
Company, in June 1998.
"Acquisition Proposal" means any offer or proposal for, or indication of
interest in, a merger, consolidation, share exchange, business combination,
reorganization, recapitalization, liquidation, dissolution or other similar
transaction involving, or any purchase or acquisition of, 25% or more of (i) any
class of equity securities of the Company or (ii) the consolidated assets of the
Company and its Subsidiaries, other than the transactions contemplated by this
Agreement.
"Affiliate" means, with respect to any Person, any other Person, directly
or indirectly, controlling, controlled by, or under common control with, such
Person. For purposes of this definition, the term "Control" (including the
correlative terms "Controlling", "Controlled By" and "Under Common Control
With") means the possession, direct or indirect, of the power to direct or cause
the direction of the management and policies of a Person, whether through the
ownership of voting securities, by contract, or otherwise.
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"Alleghany" means Alleghany Corporation, a Delaware corporation of which
the Company was a wholly-owned subsidiary prior to the distribution of the
Company to stockholders of Alleghany in June 1998.
"Business Combination" means, with respect to the Company, (i) a merger,
reorganization, consolidation, share exchange, business combination,
recapitalization, liquidation, dissolution or similar transaction involving the
Company as a result of which either (A) the Company's stockholders prior to such
transaction (by virtue of their ownership of Company Common Shares) in the
aggregate cease to own at least 50.1% of the voting securities of the entity
surviving or resulting from such transaction (or the ultimate parent entity
thereof), or (B) the individuals comprising the board of directors of the
Company prior to such transaction do not constitute a majority of the board of
directors of the ultimate parent entity after such transaction, or (ii) a sale,
lease, exchange, transfer or other disposition of at least 49.9% of the assets
of the Company and its Subsidiaries, taken as a whole, in a single transaction
or a series of related transactions.
"Business Day" means any day other than a Saturday, Sunday or one on which
banks are authorized by law to close in New York, New York.
"Company Balance Sheet" means the Company's consolidated balance sheet
included in the Company 10-K relating to its fiscal year ended on December 31,
1998.
"Company Common Share" means one share of common stock of the Company,
$1.00 par value per share.
"Company Proceedings" means the litigation and other proceedings identified
as such on Section 4.13 of the Company Disclosure Schedule.
"Company SEC Documents" means (i) the annual report on Form 10-K of the
Company (the "Company 10-K") for the fiscal year ended December 31, 1998, (ii)
the quarterly report on Form 10-Q of the Company (the "Company 10-Q") for the
fiscal quarter ended March 31, 1999, (iii) the Company's proxy statement dated
March 29, 1999 relating to the 1999 Annual Meeting of Stockholders (the "Company
Proxy Statement"), and (iv) all other reports, filings, registration statements
and other documents filed by the Company with the SEC since June 17, 1998.
"Exchange Act" means the Securities Exchange Act of 1934, as amended, and
the rules and regulations promulgated thereunder.
"Exchange Ratio" means a fraction the numerator of which is the product of
1.004 and the number of outstanding Fidelity Common Shares immediately prior to
the Effective Time, and the denominator of which is the number of Merger Shares
(calculated to the nearest 0.0001).
"Fidelity Balance Sheet" means Fidelity's consolidated balance sheet
included in the Fidelity 10-K relating to its fiscal year ended on December 31,
1998.
"Fidelity Common Share" means one share of common stock of Fidelity, $.0001
par value per share.
"Fidelity Proceedings" means the litigation and other proceedings
identified as such on Section 5.13 of the Fidelity Disclosure Schedule.
"Fidelity SEC Documents" means (i) Fidelity's annual reports on Form 10-K
for its fiscal years ended December 31, 1997 and December 31, 1998 (the
"Fidelity 10-Ks"), (ii) Fidelity's quarterly report on Form 10-Q (the "Fidelity
10-Q") for its fiscal quarter ended March 31, 1999, (iii) Fidelity's proxy
statement dated May 10, 1999 relating to the 1999 Annual Meeting
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of Stockholders (the "Fidelity Proxy Statement"), and (iv) all other reports,
filings, registration statements and other documents filed by Fidelity with the
SEC since December 31, 1997.
"Governmental Entity" means any federal, state, municipal or local
governmental authority, any foreign or international governmental authority, or
any court, administrative or regulatory agency or commission or other
governmental agency.
"Joint Proxy Statement/Prospectus" means the joint proxy
statement/prospectus including the Registration Statement and the proxy
statement for the Company Stockholders Meeting and the Fidelity Stockholders
Meeting, together with any amendments or supplements thereto.
"knowledge" (and all correlative terms) as to any party means to the
knowledge of such party's executive officers or senior management identified on
Section 1.1 of that party's Disclosure Schedule.
"Law" means all laws, statutes and ordinances and all regulations, rules
and other pronouncements of Governmental Entities having the effect of law of
the United States, any foreign country or any foreign or domestic state,
province, commonwealth, city, country, municipality, territory, protectorate,
possession or similar instrumentality or any Governmental Entity thereof.
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset;
provided, however, that the term "Lien" shall not include (i) liens for water
and sewer charges and taxes not yet due and payable or being contested in good
faith (and for which adequate accruals or reserves have been established by the
Company or Fidelity, as the case may be) and (ii) mechanics', carriers',
workers', repairers', materialmen's, warehousemen's and other similar liens
arising or incurred in the ordinary course of business.
"Material Adverse Effect" means a material adverse effect on the financial
condition, business or results of operations of a Person and its Subsidiaries,
taken as a whole, other than (x) effects caused by (i) changes in general
economic or securities markets conditions, (ii) changes in interest rate levels,
(iii) changes that affect the title insurance industry, (iv) (A) in the case of
the Company, the identity of Fidelity as acquiror of the Company or the conduct
of Fidelity with respect to the transactions contemplated by this Agreement
prior to the Effective Time, or (B) in the case of Fidelity, the identity of the
Company as the acquired party or the conduct of the Company with respect to the
transactions contemplated by this Agreement prior to the Effective Time, or (v)
the public announcement of the transactions contemplated by this Agreement, or
(y) developments in, effects of, or circumstances arising from, in the case of
the Company, the Company Proceedings or, in the case of Fidelity, the Fidelity
Proceedings. "Fidelity Material Adverse Effect" means a Material Adverse Effect
in respect of Fidelity and its Subsidiaries, taken as a whole, and "Company
Material Adverse Effect" means a Material Adverse Effect in respect of the
Company and its Subsidiaries, taken as a whole.
"Merger Shares" means each Company Common Share outstanding immediately
prior to the Effective Time (other than Dissenting Shares (as hereinafter
defined) and other than shares to be cancelled in accordance with Section 3.1(a)
hereof).
"Micro General" means Micro General Corporation, a Delaware corporation of
which Fidelity is a controlling stockholder.
"NYSE" means the New York Stock Exchange.
"Person" means an individual, a corporation, a limited liability company, a
partnership, an association, a trust or any other entity or organization,
including any Governmental Entity.
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"Registration Statement" means the Registration Statement on Form S-4
registering under the Securities Act the Fidelity Common Shares issuable in
connection with the Merger.
"Revolving Credit Facility" means the Credit Agreement, dated as of August
1, 1998, by and among Fidelity, Sanwa Bank California and the Lenders from time
to time party thereto, or any similar replacement facility.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder.
"Subsidiary" when used with respect to any Person, means any other Person,
whether incorporated or unincorporated, of which (i) more than fifty percent of
the securities or other ownership interests or (ii) securities or other
interests having by their terms ordinary voting power to elect more than fifty
percent of the board of directors or others performing similar functions with
respect to such corporation or other organization, is directly owned or
controlled by such Person or by any one or more of its Subsidiaries.
"Superior Proposal" means a written proposal made by a Person other than
Fidelity which is (A) for a merger, consolidation, share exchange, business
combination, reorganization, recapitalization, liquidation, dissolution or other
similar transaction involving, or any purchase or acquisition of, that
percentage equal to 100% less the Minimum Percentage (as hereinafter defined) or
more of (i) any class of equity securities of the Company or (ii) the
consolidated assets of the Company and its Subsidiaries, and which is (B)
otherwise on terms which the Company's Board of Directors by a majority vote
determines in good faith (after consultation with its investment advisors and
outside legal counsel) would result in a transaction, if consummated, that is
more favorable to the Company's stockholders, from a financial point of view
(taking into account, among other things, all legal, financial, regulatory and
other aspects of the proposal, including conditions to consummation (which shall
not include a financing condition)) than the transactions contemplated hereby.
"Tax Sharing Agreement" means the Tax Sharing Agreement between the Company
and Alleghany dated as of June 17, 1998.
(b) Each of the following terms is defined in the Section set forth
opposite such term:
TERMS SECTION
----- -------
368 Reorganization Recitals
Aggregate Cash Share Fraction Section 3.1(e)
Allocation of Merger Consideration Section 3.1(c)
Average Fidelity Common Share Price Section 3.1(b)(iv)
Burdensome Condition Section 8.1
By-law Amendment Section 2.2
Cash Election Section 3.1(d)
Cash Election Shares Section 3.1(d)
Cash Fraction Section 3.1(f)(iii)
Cash Portion Section 3.1(b)(ii)
Certificate Section 3.1(d)
Certificate Amendment Section 2.2
Certificate of Merger Section 2.1(b)
Closing Section 2.1(d)
Code Recitals
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TERMS SECTION
----- -------
Company Preamble
Company 10-K Section 1.1
Company 10-Q Section 1.1
Company Employee Plans Section 4.15(a)
Company GAAP Financial Statements Section 4.8(a)
Company Insurance Subsidiaries Section 4.6(b)
Company Option Section 3.4(a)
Company Proxy Statement Section 1.1
Company Recommendation Section 6.2
Company Returns Section 4.14
Company Securities Section 4.5(b)
Company Statutory Financial Statements Section 4.8(b)
Company Stockholder Approval Section 4.22(a)
Company Stockholders Meeting Section 6.2
Company Systems Section 4.24
Confidentiality Agreement Section 6.3(a)
Determination Date Section 3.1(b)
DGCL Section 2.1(a)
Differential Section 3.1(b)(iii)
Dissenting Shares Section 3.5(a)
Effective Time Section 2.1(b)
Election Section 3.1(d)
Election Deadline Section 3.1(i)
End Date Section 10.1(b)(i)
Environmental Laws Section 4.20(b)
ERISA Section 4.15(a)
Exchange Agent Section 3.3(a)
Exchange Fund Section 3.3(a)
Extended End Date Section 10.1(b)(i)
Fidelity Preamble
Fidelity 10-Ks Section 1.1
Fidelity 10-Q Section 1.1
Fidelity Employee Plans Section 5.15(a)
Fidelity GAAP Financial Statements Section 5.8(a)
Fidelity Insurance Subsidiaries Section 5.6(b)
Fidelity Option Section 3.4(a)
Fidelity Proxy Statement Section 1.1
Fidelity Returns Section 5.14
Fidelity Securities Section 5.5(b)
Fidelity Statutory Financial Statements Section 5.8(b)
Fidelity Stockholder Approval Section 5.22(a)
Fidelity Stockholders Meeting Section 7.3
Fidelity Systems Section 5.24
Form of Election Section 3.1(d)
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TERMS SECTION
----- -------
GAAP Section 4.8(a)
Guarantee of Delivery Section 3.1(i)
HSR Act Section 4.3
Maximum Cash Section 3.1(c)
Maximum Shares Section 3.1(c)
Merger Section 2.1(a)
Merger Consideration Section 3.1(c)
Minimum Percentage Section 3.1(c)(i)
Non-Election Section 3.1(d)
Non-Election Shares Section 3.1(d)
Non-Election Fraction Section 3.1(h)(iii)
Per Share Cash Amount Section 3.1(e)
Per Share Stock Amount Section 3.1(e)
Reduced Supplemental Consideration Section 3.1(b)(iii)
Reduced Differential Section 3.1(b)(iv)
Restated By-laws Section 2.2
Restated Certificate Section 2.2
Stock Election Section 3.1(d)
Stock Election Shares Section 3.1(d)
Stock Fraction Section 3.1(g)(iii)
Stock Portion Section 3.1(b)(i)
Supplemental Consideration Section 3.1(b)(iii)
Supplemental Cash Portion Section 3.1(b)(iii)
Supplemental Exchange Ratio Section 3.1(b)(iv)
Supplemental Stock Portion Section 3.1(b)(iii)
Surviving Corporation Section 2.1(a)
Termination Fee Section 10.3(c)
Transition Committee Section 2.5
Year 2000 Compliant Section 4.24
ARTICLE II
THE MERGER
Section 2.1 The Merger.
(a) At the Effective Time, the Company shall be merged (the "Merger") with
and into Fidelity in accordance with the terms and conditions of this Agreement
and of the General Corporation Law of the State of Delaware (the "DGCL").
Following the Effective Time, Fidelity shall be the surviving corporation (the
"Surviving Corporation"), and shall succeed to and assume all the rights and
obligations of the Company in accordance with the DGCL.
(b) Not later than the second Business Day after satisfaction or, to the
extent permitted hereby, waiver of the conditions set forth in Article IX (other
than conditions that by their nature are to be satisfied at the Closing, but
subject to those conditions), the Company and Fidelity will file a certificate
of merger (the "Certificate of Merger") with the Secretary of State of the State
of Delaware and make all other filings or recordings required by the DGCL in
connection with the Merger. The Merger shall become effective upon the filing of
the
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Certificate of Merger with the Secretary of State of the State of Delaware in
accordance with the DGCL or at such later time which the parties hereto shall
have agreed upon and designated in such Certificate of Merger as the effective
time of the Merger (the "Effective Time").
(c) From and after the Effective Time, the Merger shall have the effects
set forth in the DGCL.
(d) The closing of the Merger (the "Closing") shall be held at the offices
of Dewey Ballantine LLP, 1301 Avenue of the Americas, New York, NY (or such
other place as agreed by the parties) at 10:00 a.m. New York City time on a date
to be specified by the parties, which shall be no later than the second Business
Day after satisfaction or, to the extent permitted hereby, waiver of the
conditions set forth in Article IX (other than conditions that by their nature
are to be satisfied at the Closing, but subject to those conditions), unless the
parties hereto agree to another date or time.
Section 2.2 Certificate of Incorporation and By-laws of the Surviving
Corporation. The restated certificate of incorporation of Fidelity, as in effect
immediately prior to the Effective Time, shall be amended as of the Effective
Time as described in Exhibit A-1 hereto and, as so amended, such restated
certificate of incorporation shall be the restated certificate of incorporation
of the Surviving Corporation until thereafter changed or amended as provided
therein or by applicable law (as so amended, the "Restated Certificate"). The
by-laws of Fidelity, as in effect immediately prior to the Effective Time, shall
be amended as of the Effective Time as described in Exhibit A-2 hereto and, as
so amended, such by-laws shall be the by-laws of the Surviving Corporation until
thereafter changed or amended as provided therein or by applicable law (as so
amended, the "Restated By-laws"). Such amendment and restatement of Fidelity's
certificate of incorporation and by-laws are referred to herein as the
"Certificate Amendment" and the "By-law Amendment," respectively.
Section 2.3 Board of Directors of the Surviving Corporation. Prior to the
Effective Time, Fidelity shall adopt resolutions to constitute the Board of
Directors of Fidelity and committees thereof from and after the Effective Time
in the manner described in Exhibit B hereto. From and after the Effective Time,
the members of the Board of Directors, the committees of the Board of Directors
and the composition of such committees shall be as set forth on or designated in
accordance with the Restated Certificate, the Restated By-laws and Exhibit B
hereto until the earlier of the resignation or removal of any individual set
forth on or designated in accordance with the Restated Certificate, the Restated
By-laws and Exhibit B or until their respective successors are duly elected and
qualified, as the case may be, or until as otherwise provided in the Restated
Certificate, the Restated By-laws and Exhibit B.
Section 2.4 Headquarters. Fidelity and the Company agree that the
headquarters of the Surviving Corporation shall be located in Irvine,
California; provided, however, that the Chicago Title and Trust Company
Foundation and the headquarters of certain business segments of the Surviving
Corporation to be mutually agreed by the parties prior to the Effective Time
will be located in Chicago, Illinois.
Section 2.5 Transition Committee. The parties agree to establish a
Transition Committee (the "Transition Committee") which will have a consultative
role and which will be in effect from the date hereof until the earlier of the
termination hereof or the Effective Time. The Transition Committee shall be
comprised of eleven persons, six of whom shall be designated by Fidelity
(including Patrick F. Stone, who shall serve as Chairman of the Transition
Committee), and five of whom shall be designated by the Company. The Transition
Committee will coordinate contacts between officers and employees of Fidelity
and the Company and will plan matters relating to the integration after the
Effective Time of Fidelity
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and the Company, including organization and staffing. The Transition Committee
will draw upon the resources of Fidelity and the Company as necessary or
appropriate.
ARTICLE III
CONVERSION OF SECURITIES AND RELATED MATTERS
Section 3.1 Conversion of Capital Stock. At the Effective Time, by virtue
of the Merger:
(a) Each Company Common Share held by the Company as treasury stock or
owned by Fidelity or any of its Subsidiaries immediately prior to the Effective
Time shall be cancelled, and no payment shall be made in respect thereof.
(b) Subject to Section 3.5 hereof, each Merger Share shall be cancelled
and, at the Effective Time, shall be converted into the right to receive
consideration having a value of $52.00 (unless Fidelity elects to pay the
Reduced Supplemental Consideration (as defined below), in which case the Company
shall have the right to terminate this Agreement as provided in Section
10.1(c)(iii) below), consisting of:
(i) a number of Fidelity Common Shares (the "Stock Portion") equal to
the Exchange Ratio;
(ii) an amount in cash equal to the lesser of (x) $26.00 or (y)(1)
$52.00 less (2) the Stock Portion multiplied by the Average Fidelity Common
Share Price (the "Cash Portion"); and
(iii) to the extent that the sum of (1) the product of the Stock
Portion multiplied by the Average Fidelity Common Share Price plus (2) the
Cash Portion is less than $52.00 (the "Differential"), then Fidelity shall
add an additional amount (the "Supplemental Consideration") to make up the
Differential; provided, however, that if the Average Fidelity Common Share
Price is less than $15.00, then Fidelity shall elect either (i) to pay the
Supplemental Consideration or (ii) to pay a reduced amount of Supplemental
Consideration (the "Reduced Supplemental Consideration") equal to the
product of the Average Fidelity Common Share Price multiplied by the lesser
of (x) a fraction (1) the numerator of which is the sum of (A) the product
of 0.50 multiplied by the Reduced Differential plus (B) the product of the
Average Fidelity Common Share Price multiplied by a fraction, the numerator
of which is the product of 0.50 multiplied by the Reduced Differential and
the denominator of which is $15.00 and (2) the denominator of which is the
Average Fidelity Common Share Price, or (y) a fraction, the numerator of
which is the Reduced Differential and the denominator of which is $13.00.
Any payment of the Supplemental Consideration or the Reduced
Supplemental Consideration, as the case may be, shall be made, at the
election of Fidelity, in the form of cash, Fidelity Common Shares or a
combination thereof. If Fidelity elects to pay all or any portion of the
Supplemental Consideration or the Reduced Supplemental Consideration, as
the case may be, in Fidelity Common Shares, the number of Fidelity Common
Shares to be issued as Supplemental Consideration or Reduced Supplemental
Consideration (the "Supplemental Stock Portion") shall be equal to the
Supplemental Exchange Ratio. If Fidelity elects to pay all or any portion
of the Supplemental Consideration or the Reduced Supplemental
Consideration, as the case may be, in cash, the amount of cash to be paid
as Supplemental Consideration or Reduced Supplemental Consideration shall
be the "Supplemental Cash Portion."
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(iv) For purposes of this Agreement, (1) the "Average Fidelity Common
Share Price" shall be determined on the second trading day immediately
prior to the date of the Effective Time (the "Determination Date") and
shall mean the average of the daily averages of the high and low sales
prices of a Fidelity Common Share (calculated to the nearest 0.0001) on the
NYSE Composite Transactions Tape for the 30 consecutive trading days
immediately preceding and including the Determination Date (or, in the
event that there is no trading of Fidelity Common Share on any day during
the 30-trading-day period, for such lesser number of days within such
30-trading-day period when Fidelity Common Shares are traded); (2) the
"Reduced Differential" shall be determined if the Average Fidelity Common
Share Price on the Determination Date is less than $15.00 and Fidelity
elects to pay the Reduced Supplemental Consideration, and shall be an
amount equal to the difference between (A) $52.00 and (B) the sum of (x)
$26.00 and (y) the product of the Stock Portion and $15.00; and (3) the
"Supplemental Exchange Ratio" shall be a fraction (calculated to the
nearest 0.0001), the numerator of which is the portion of the Supplemental
Consideration or the Reduced Supplemental Consideration, as the case may
be, to be paid in Fidelity Common Shares and the denominator of which is
the Average Fidelity Common Share Price.
(v) Schedule I hereto illustrates the application of this Section
3.1(b) at various assumed Average Fidelity Common Share Prices.
(c) The amount of merger consideration payable pursuant to Section 3.1(b)
(which shall consist of the Stock Portion, the Cash Portion, the Supplemental
Stock Portion (if any), and the Supplemental Cash Portion (if any), and which
shall have an aggregate value equal to $52.00 or, if Fidelity has elected to pay
the Reduced Supplemental Consideration, an aggregate value equal to $52.00 less
the difference between the Supplemental Consideration and the Reduced
Supplemental Consideration) shall be referred to herein as the "Merger
Consideration." After determining the aggregate amount of Merger Consideration
in accordance with the provisions of Section 3.1(b) (and giving effect to any
determination by Fidelity to pay any Supplemental Consideration (or Reduced
Supplemental Consideration) in the form of cash, Fidelity Common Shares or a
combination thereof), a determination shall be made (the "Allocation of Merger
Consideration") as to the total number of Fidelity Common Shares to be paid as
Merger Consideration (the "Maximum Shares") and the total amount of cash to be
paid as Merger Consideration (the "Maximum Cash"), taking into account the
following adjustments:
(i) in the event that the Allocation of Merger Consideration would
result in holders of Merger Shares owning less than that percentage (the
"Minimum Percentage") of whole outstanding Fidelity Common Shares
immediately after the Effective Time as is equal to the sum of (A) 50.1%,
plus (B) that percentage as is equal to (x) the Company Common Shares
issued by the Company (regardless of the consideration, if any, received by
the Company) to any person other than Alleghany, and not repurchased by the
Company directly from such person prior to the Effective Time, divided by
(y) the number of shares of Company Common Shares outstanding immediately
prior to the Effective Time, then if necessary to satisfy the conditions in
Section 9.2(c) or Section 9.3(c) hereof, the foregoing allocation shall be
adjusted (i.e., the Maximum Cash shall be reduced, and the Maximum Shares
shall be increased) such that the holders of the Merger Shares immediately
prior to the Effective Time will acquire at the Effective Time whole
Fidelity Common Shares equal to the Minimum Percentage of the Fidelity
Common Shares outstanding immediately after the Effective Time;
(ii) after giving effect to any adjustment required pursuant to the
immediately preceding clause (i), if the product of (A) the number of
Fidelity Common Shares to be issued in the Merger and (B) the mean of the
highest and lowest quoted trading price of
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Fidelity Common Shares on the date of the Effective Time (such product
referred to as "Value of Stock Consideration") is less than 40% of the sum
of the Value of Stock Consideration and the amount of cash consideration to
be issued in the Merger (such sum referred to as "Value of Merger
Consideration"), then the amount of cash to be issued in the Merger shall
be reduced and the amount of Fidelity Common Shares to be issued in the
Merger shall be increased such that the Value of Stock Consideration is at
least equal to 40% of the Value of Merger Consideration. For purposes of
the preceding sentence, Dissenting Shares, Company Common Shares exchanged
for cash in lieu of fractional shares of Fidelity Common Shares, Company
Common Shares owned by Fidelity or any of its Subsidiaries that will be
cancelled in accordance with Section 3.1(a), and Company Common Shares
repurchased by the Company since January 1, 1999, shall be treated as
Company Common Shares exchanged in the Merger for an amount of cash equal
to the purchase price therefor. The adjustments referred to in this
subparagraph (ii) shall be made in a manner so as to ensure that the Merger
qualifies as a reorganization under Section 368(a) of the Code and that the
conditions in Section 9.2(b) and Section 9.3(b) are satisfied.
(iii) The foregoing adjustments in subparagraphs (i) and (ii) shall be
applied in a manner such that the sum of (x) the total cash payable in
exchange for each Company Common Share and (y) the product of the number of
Fidelity Common Shares to be issued in exchange for each Company Common
Share multiplied by the Average Fidelity Common Share Price, shall be equal
to the amount of such sum in the absence of any adjustments under
subparagraphs (i) and (ii). For this purpose, the Average Fidelity Common
Share Price shall be equal to $15 if under Section 3.1(b)(iii) Fidelity has
elected to pay the Reduced Supplemental Consideration.
(d) Subject to the allocation and election procedures set forth in this
Section 3.1, each record holder (or beneficial owner through appropriate and
customary documentation and instructions) of Company Common Shares immediately
prior to the Effective Time shall be entitled to designate the number of such
holder's Company Common Shares with respect to which the holder elects to
receive the Merger Consideration entirely in cash ("Cash Election Shares"), and
to designate the number of such holder's Company Common Shares with respect to
which the holder elects to receive the Merger Consideration entirely in Fidelity
Common Shares ("Stock Election Shares"). Any Company Common Shares (other than
Dissenting Shares) with respect to which the holder (or the beneficial owner, as
the case may be) shall not have submitted to the Exchange Agent (as hereinafter
defined) an effective, properly completed Form of Election at or prior to the
Election Deadline (as hereinafter defined) shall be deemed to be "Non-Election
Shares." Any election to receive the Merger Consideration in cash (a "Cash
Election"), any election to receive the Merger Consideration in Fidelity Common
Shares (a "Stock Election") and any failure to indicate a preference as to the
receipt of cash, Fidelity Common Shares or a combination thereof (a
"Non-Election") shall be herein referred to as an "Election;" provided, however,
that no holder of Dissenting Shares shall be entitled to make an Election. All
such Elections shall be made on a form furnished by Fidelity for that purpose (a
"Form of Election") and reasonably satisfactory to the Company. If more than one
certificate which immediately prior to the Effective Time represented
outstanding Company Common Shares (a "Certificate") shall be surrendered for the
account of the same holder, the number of Fidelity Common Shares, if any, to be
issued to such holder in exchange for the Certificates which have been
surrendered shall be computed on the basis of the aggregate number of Company
Common Shares represented by all of the Certificates surrendered for the account
of such holder. Holders of record of Company Common Shares who hold such Company
Common Shares as nominees, trustees or in other representative capacities may
submit multiple Forms of Election, provided that such nominee, trustee or
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representative certifies that each such Form of Election covers all Company
Common Shares held for a particular beneficial owner.
(e) For purposes of this Agreement (including without limitation the
election procedures set forth in this Section 3.1), the following terms shall
have the following meanings (after giving effect to Section 3.1(b) and Section
3.1(c)): (i) the "Aggregate Cash Shares" shall mean the aggregate number of
Company Common Shares which may be converted into the right to receive the
Merger Consideration in the form of cash, and shall be equal to the product of
(A) a fraction (the "Aggregate Cash Share Fraction"), the numerator of which
shall be equal to the amount of cash to be issued in the Merger and the
denominator of which shall be equal to the sum of (x) the amount of cash to be
issued in the Merger and (y) the product of (1) the number of Fidelity Common
Shares to be issued in the Merger and (2) the Average Fidelity Common Share
Price, and (B) the number of Merger Shares; (ii) the "Aggregate Stock Shares"
shall mean the aggregate number of Company Common Shares which may be converted
into the right to receive the Merger Consideration in the form of Fidelity
Common Shares, and shall be equal to the product of (A) one minus the Aggregate
Cash Share Fraction and (B) the number of Merger Shares; (iii) the "Per Share
Stock Amount" shall mean a number of Fidelity Common Shares equal to (A) the
Merger Consideration divided by (B) the Average Fidelity Common Share Price; and
(iv) the "Per Share Cash Amount" shall mean an amount of cash equal to the
Merger Consideration.
(f) If the aggregate number of Cash Election Shares exceeds the Aggregate
Cash Shares, then:
(i) each Stock Election Share shall be converted into the right to
receive the Per Share Stock Amount;
(ii) each Non-Election Share shall be converted into the right to
receive the Per Share Stock Amount; and
(iii) each Cash Election Share shall be converted into the right to
receive: (x) the amount in cash, without interest, equal to the product of
(A) the Per Share Cash Amount and (B) a fraction (the "Cash Fraction"), the
numerator of which shall be the Aggregate Cash Shares, and the denominator
of which shall be the aggregate number of Cash Election Shares, and (y) the
number of Fidelity Common Shares equal to the product of (A) the Per Share
Stock Amount and (B) a fraction equal to one minus the Cash Fraction.
(g) If the aggregate number of Stock Election Shares exceeds the Aggregate
Stock Shares, then:
(i) each Cash Election Share shall be converted into the right to
receive the Per Share Cash Amount;
(ii) each Non-Election Share shall be converted into the right to
receive the Per Share Cash Amount; and
(iii) each Stock Election Share shall be converted into the right to
receive: (x) the number of Fidelity Common Shares equal to the product of
(A) the Per Share Stock Amount and (B) a fraction (the "Stock Fraction"),
the numerator of which shall be the Aggregate Stock Shares, and the
denominator of which shall be the aggregate number of Stock Election
Shares, and (y) the amount in cash, without interest, equal to the product
of (A) the Per Share Cash Amount and (B) a fraction equal to one minus the
Stock Fraction.
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(h) In the event that neither Section 3.1(f) nor Section 3.1(g) is
applicable, then:
(i) Each Cash Election Share shall be converted into the right to
receive the Per Share Cash Amount;
(ii) Each Stock Election Share shall be converted into the right to
receive the Per Share Stock Amount; and
(iii) Each Non-Election Share, if any, shall be converted into the
right to receive: (x) an amount in cash, without interest, equal to the
product of (A) the Merger Consideration and (B) a fraction (the
"Non-Election Fraction"), the numerator of which shall be the excess of (1)
the Aggregate Cash Shares over (2) the aggregate number of Cash Election
Shares, and the denominator of which shall be the number of Non-Election
Shares, and (y) the number of Fidelity Common Shares equal to the product
of (a) the Per Share Stock Amount and (B) a fraction equal to one minus the
Non-Election Fraction.
(i) Elections shall be made by holders of Company Common Shares by
delivering the Form of Election to the Exchange Agent (as hereinafter defined).
To be effective, a Form of Election must be properly completed, signed and
submitted to the Exchange Agent by no later than 5:00 p.m. (New York City time)
on the date of the Effective Time (the "Election Deadline"), and accompanied by
(1)(x) the Certificates representing the Company Common Shares as to which the
election is being made or (y) an appropriate guarantee of delivery of such
Certificates as set forth in such Form of Election from a firm which is a member
of a registered national securities exchange or of the National Association of
Securities Dealers, Inc. or a commercial bank or trust company having an office
or correspondent in the United States, provided such Certificates are in fact
delivered to the Exchange Agent within three NYSE trading days after the date of
execution of such guarantee of delivery (a "Guarantee of Delivery"), and (2) a
properly completed and signed letter of transmittal. Failure to deliver
Certificates covered by any Guarantee of Delivery within three NYSE trading days
after the date of execution of such Guarantee of Delivery shall be deemed to
invalidate any otherwise properly made Cash Election or Stock Election. Fidelity
will have the discretion, which it may delegate in whole or in part to the
Exchange Agent, to determine whether Forms of Election have been properly
completed, signed and submitted or revoked and to disregard immaterial defects
in Forms of Election. The good faith decision of Fidelity (or the Exchange
Agent) in such matters shall be conclusive and binding. Neither Fidelity nor the
Exchange Agent will be under any obligation to notify any person of any defect
in a Form of Election submitted to the Exchange Agent. A Form of Election with
respect to Dissenting Shares shall not be valid. The Exchange Agent shall also
make all computations contemplated by Sections 3.1(f), 3.1(g) and 3.1(h) above
and all such computations shall be conclusive and binding on the holders of
Company Common Shares in the absence of manifest error. Any Form of Election may
be changed or revoked prior to the Election Deadline. In the event a Form of
Election is revoked prior to the Election Deadline, Fidelity shall, or shall
cause the Exchange Agent to, cause the Certificates representing the Company
Common Shares covered by such Form of Election to be promptly returned without
charge to the Person submitting the Form of Election upon written request to
that effect from such Person.
(j) For the purposes hereof, a holder of Company Common Shares who does not
submit a Form of Election which is received by the Exchange Agent prior to the
Election Deadline (including a holder who submits and then revokes his or her
Form of Election and does not resubmit a Form of Election which is timely
received by the Exchange Agent), or who submits a Form of Election without the
corresponding Certificates or a Guarantee of Delivery, shall be deemed to have
made a Non-Election. Holders of Dissenting Shares shall not be entitled to make
an Election and shall not be deemed to have made a Non-Election; the rights of
such
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holders of Dissenting Shares shall be determined in accordance with Section 262
of the DGCL and as provided in Section 3.5 hereof. If any Form of Election is
defective in any manner such that the Exchange Agent cannot reasonably determine
the election preference of the stockholder submitting such Form of Election, the
purported Cash Election or Stock Election set forth therein shall be deemed to
be of no force and effect and the stockholder making such purported Cash
Election or Stock Election shall, for purposes hereof, be deemed to have made a
Non-Election.
(k) A Form of Election and a letter of transmittal shall be included with
or mailed contemporaneously with each copy of the Joint Proxy
Statement/Prospectus mailed to stockholders of the Company in connection with
the Company Stockholders Meeting (as hereinafter defined). Fidelity and the
Company shall each use its reasonable best efforts to mail or otherwise make
available the Form of Election and a letter of transmittal to all persons who
become holders of Company Common Shares during the period between the record
date for the Company Stockholders Meeting and the Election Deadline.
Section 3.2 Fractional Shares; Adjustments.
(a) No certificate or scrip representing fractional Fidelity Common Shares
shall be issued upon the surrender for exchange of Certificates, and such
fractional share interests will not entitle the owner thereof to vote or to any
other rights of a stockholder of Fidelity. Notwithstanding any other provision
of this Agreement, each holder of Company Common Shares exchanged pursuant to
the Merger who would otherwise have been entitled to receive a fraction of a
Fidelity Common Share (after taking into account all Certificates delivered by
such holder) shall receive, in lieu thereof, cash (without interest) in an
amount equal to such fractional part of a Fidelity Common Share multiplied by
the Average Fidelity Common Share Price.
(b) If at any time during the period between the Determination Date and the
Effective Time, any change in the outstanding shares of capital stock of
Fidelity or securities convertible or exchangeable into capital stock of
Fidelity shall occur, including by reason of any reclassification,
recapitalization, stock split or combination, exchange or readjustment of
shares, or any dividend or distribution thereon (other than regular quarterly
cash dividends, not in excess of $0.084 per Fidelity Common Share) or a record
date with respect to any of the foregoing shall occur during such period, the
number of Fidelity Common Shares constituting part of the Merger Consideration
shall be appropriately adjusted to provide to the holders of the Fidelity Common
Shares and the Company Common Shares the same economic effect as contemplated by
this Agreement prior to the consummation of such event.
Section 3.3 Exchange of Certificates.
(a) Exchange Agent. Promptly after the date hereof, Fidelity shall appoint
a commercial bank or trust company reasonably acceptable to the Company, having
net capital of not less than $100,000,000, or a subsidiary thereof, as an
exchange agent (the "Exchange Agent") for the benefit of holders of Company
Common Shares. At or immediately prior to the Effective Time, Fidelity shall
deposit with the Exchange Agent, for exchange or payment in accordance with this
Section 3.3, through the Exchange Agent, (i) certificates evidencing the total
number of Fidelity Common Shares to be issued in the Merger, and (ii) (1) cash
in an amount equal to (x) the Per Share Cash Amount multiplied by (y) the
Aggregate Cash Shares, and (2) any cash necessary to pay amounts due pursuant to
Section 3.2(a) and Section 3.5 (such certificates for Fidelity Common Shares and
such cash being hereinafter referred to as the "Exchange Fund"). The Exchange
Agent shall, pursuant to irrevocable instructions in accordance with this
Article III, deliver the Fidelity Common Shares and cash contemplated to be
issued pursuant to this Article III out of the Exchange Fund. Except as
contemplated by
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Section 3.3(e), Section 3.3(f) or Section 3.3(g) hereof, the Exchange Fund shall
not be used for any other purpose.
(b) Exchange Procedures. As promptly as practicable after the Effective
Time, Fidelity shall send, or will cause the Exchange Agent to send, to each
holder of record of a Certificate or Certificates that were converted into the
right to receive Fidelity Common Shares and/or cash pursuant Section 3.1, a
letter of transmittal and instructions (which shall be in customary form and
specify that delivery shall be effected, and risk of loss and title shall pass,
only upon delivery of the Certificates to the Exchange Agent), for use in the
exchange contemplated by this Section 3.3. Upon surrender of a Certificate to
the Exchange Agent, together with a duly executed letter of transmittal, the
holder of such Certificate shall be entitled to receive in exchange therefor a
certificate representing that number of whole Fidelity Common Shares and/or cash
which such holder has the right to receive pursuant to the provisions of this
Article III (after giving effect to any required withholding tax). Until
surrendered as contemplated by this Section 3.3, each Certificate shall be
deemed at any time after the Effective Time to represent only the right to
receive the Merger Consideration and unpaid dividends and distributions thereon,
if any, as provided in this Article III. If any portion of the Merger
Consideration is to be paid to a Person other than the Person in whose name the
Certificate is registered, it shall be a condition to such payment that the
Certificate so surrendered shall be properly endorsed or otherwise be in proper
form for transfer and that the Person requesting such payment shall pay to the
Exchange Agent any transfer or other taxes required as a result of such payment
to a Person other than the registered holder of such Certificate or establish to
the satisfaction of the Exchange Agent that such tax has been paid or is not
payable. If any Certificate shall have been lost, stolen or destroyed, upon the
making of an affidavit of that fact by the Person claiming such Certificate to
be lost, stolen or destroyed and, if required by Fidelity, the posting by such
Person of a bond, in such reasonable amount as Fidelity may direct, as indemnity
against any claim that may be made against it with respect to such Certificate,
the Exchange Agent will deliver, in exchange for such lost, stolen or destroyed
Certificate, the proper amount of the Merger Consideration, together with any
unpaid dividends and distributions on any such Fidelity Common Shares, as
contemplated by this Article III.
(c) Distributions with Respect to Unexchanged Shares. Whenever a dividend
or other distribution is declared by Fidelity in respect of the Fidelity Common
Shares, the record date for which is at or after the Effective Time, that
declaration shall include dividends or other distributions in respect of all
Fidelity Common Shares issuable pursuant to this Agreement. No dividends or
other distributions declared or made after the Effective Time with respect to
Fidelity Common Shares constituting part of the Merger Consideration shall be
paid to the holder of any unsurrendered Certificate, and no cash payment in lieu
of fractional shares shall be paid to any such holder, until such Certificate is
surrendered as provided in this Section 3.3. Following such surrender, there
shall be paid, without interest, to the Person in whose name the Fidelity Common
Shares have been registered (i) at the time of such surrender, the amount of
dividends or other distributions with a record date at or after the Effective
Time previously paid or payable on the date of such surrender with respect to
such whole Fidelity Common Shares, less the amount of any withholding taxes that
may be required thereon, and (ii) at the appropriate payment date subsequent to
surrender, the amount of dividends or other distributions with a record date at
or after the Effective Time but prior to surrender and a payment date subsequent
to surrender payable with respect to such whole Fidelity Common Shares, less the
amount of any withholding taxes which may be required thereon.
(d) No Further Ownership Rights in the Company Common Shares. As of the
Effective Time, all Company Common Shares shall automatically be cancelled and
retired and shall cease to exist, and each holder of a Certificate representing
any such Company Common Shares shall cease to have any rights with respect
thereto, except the right to receive, upon
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surrender of such Certificate, the Merger Consideration. As of the Effective
Time, the stock transfer books of the Company shall be closed and there shall be
no further registration of transfers on the Company's stock transfer books of
Company Common Shares outstanding immediately prior to the Effective Time. If,
after the Effective Time, Certificates are presented to the Surviving
Corporation for any reason, they shall be cancelled and exchanged as provided in
this Section 3.3.
(e) Return of Merger Consideration. Upon demand by Fidelity, the Exchange
Agent shall deliver to Fidelity any portion of the Merger Consideration
deposited with the Exchange Agent pursuant to this Section 3.3 that remains
undistributed to holders of Company Common Shares one year after the Effective
Time. Holders of Certificates who have not complied with this Section 3.3 prior
to such demand shall thereafter look only to Fidelity for payment of any claim
to the Merger Consideration and dividends or distributions, if any, in respect
thereof.
(f) No Liability. Neither Fidelity nor the Exchange Agent shall be liable
to any Person in respect of any Company Common Shares (or dividends or
distributions with respect thereto) for any amounts paid to a public official
pursuant to any applicable abandoned property, escheat or similar law.
(g) Withholding Rights. Fidelity shall be entitled to deduct and withhold
from the Merger Consideration (and any dividends or distributions thereon)
otherwise payable hereunder to any Person such amounts as it is required to
deduct and withhold with respect to the making of such payment under any
provision of federal, state, local or foreign income tax law. To the extent that
Fidelity so withholds those amounts, such withheld amounts shall be treated for
all purposes of this Agreement as having been paid to the holder of Company
Common Shares in respect of which such deduction and withholding was made by
Fidelity.
Section 3.4 Company Stock Options.
(a) At the Effective Time, each option to purchase Company Common Shares
(each, a "Company Option") outstanding under any stock option or compensation
plan or arrangement of the Company, whether or not vested or exercisable, shall
cease to represent a right to acquire Company Common Shares and shall be
converted into an option (each, a "Fidelity Option") to acquire, on the same
terms and conditions
