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[EXECUTION COPY]
EXHIBIT 10.58
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AGREEMENT AND PLAN OF MERGER
BY AND AMONG
USA NETWORKS, INC.,
BRICK ACQUISITION CORP.
AND
TICKETMASTER GROUP, INC.
AS OF MARCH 20, 1998
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TABLE OF CONTENTS
PAGE
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ARTICLE 1 THE MERGER..................................................... 2
Section 1.1. The Merger.............................................. 2
Section 1.2. Effective Time of the Merger............................ 2
Section 1.3. Closing................................................. 2
Section 1.4. Effects of the Merger................................... 2
Section 1.5. Certificate of Incorporation and Bylaws of Surviving
Corporation........................................... 2
ARTICLE 2 EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE CONSTITUENT
CORPORATIONS; EXCHANGE OF CERTIFICATES ........................ 3
Section 2.1. Effect of Merger on Capital Stock....................... 3
(a) Capital Stock of Sub............................... 3
(b) Treatment of Certain Shares of Company Common
Stock......... .................................. 3
(c) Exchange Ratio for Company Common Stock............ 3
(d) Adjustment of Exchange Ratio for Dilution and Other
Matters.......................................... 3
Section 2.2. Exchange of Certificates................................ 4
(a) Exchange Agent..................................... 4
(b) Exchange Procedures................................ 4
(c) Distributions with Respect to Unsurrendered
Certificates..................................... 5
(d) No Further Ownership Rights in Company Common
Stock......... .................................. 5
(e) No Issuance of Fractional Shares................... 5
(f) Termination of Exchange Fund....................... 6
(g) No Liability....................................... 7
(h) Lost, Stolen or Destroyed Certificates............. 7
Section 2.3. Stock Options........................................... 7
Section 2.4. Taking of Necessary Action; Further Action.............. 7
ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF THE COMPANY.................. 8
Section 3.1. Organization and Qualification; Subsidiaries............ 8
Section 3.2. Certificate of Incorporation and Bylaws................. 9
Section 3.3. Capitalization.......................................... 9
Section 3.4. Authority Relative to this Agreement; Board Approval.... 10
Section 3.5. No Conflict; Required Filings and Consents.............. 10
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Section 3.6. Compliance; Permits..................................... 11
Section 3.7. SEC Filings; Financial Statements....................... 12
Section 3.8. Absence of Certain Changes or Events.................... 13
Section 3.9. Absence of Litigation................................... 13
Section 3.10. Registration Statement; Proxy Statement................. 13
Section 3.11. Brokers................................................. 14
Section 3.12. Opinion of Financial Advisor............................ 14
Section 3.13. Employee Benefit Plans.................................. 14
Section 3.14. Tax Matters............................................. 15
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB............... 15
Section 4.1. Organization and Qualification; Subsidiaries............ 15
Section 4.2. Certificate of Incorporation and Bylaws................. 16
Section 4.3. Capitalization.......................................... 16
Section 4.4. Authority Relative to this Agreement; Board Approval.... 17
Section 4.5. No Conflict; Required Filings and Consents.............. 18
Section 4.6. Compliance; Permits..................................... 18
Section 4.7. SEC Filings; Financial Statements....................... 19
Section 4.8. Absence of Certain Changes or Events.................... 20
Section 4.9. Absence of Litigation................................... 20
Section 4.10. Registration Statement; Proxy Statement................. 20
Section 4.11. Brokers................................................. 21
Section 4.12. Opinion of Financial Advisor............................ 21
Section 4.13. Interim Operations of Sub............................... 21
Section 4.14. Employee Benefit Plans.................................. 21
Section 4.15. Tax Matters............................................. 22
ARTICLE 5 CONDUCT AND TRANSACTIONS PRIOR TO EFFECTIVE TIME; ADDITIONAL
AGREEMENTS..................................................... 22
Section 5.1. Information and Access.................................. 22
Section 5.2. Conduct of Business of the Company...................... 22
Section 5.3. Conduct of Business of Parent........................... 24
Section 5.4. Preparation of S-4 and Proxy Statement; Other Filings... 25
Section 5.5. Letter of Independent Auditors.......................... 26
Section 5.6. Shareholders Meeting.................................... 26
Section 5.7. Agreements to Take Reasonable Action.................... 27
Section 5.8. Consents................................................ 27
Section 5.9. NASDAQ Quotation........................................ 28
Section 5.10. Affiliates.............................................. 28
Section 5.11. Indemnification and Insurance........................... 28
Section 5.12. Notification of Certain Matters......................... 28
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Section 5.13. Employee Agreements..................................... 28
Section 5.14. Reorganization.......................................... 29
ARTICLE 6 CONDITIONS PRECEDENT........................................... 29
Section 6.1. Conditions to Each Party's Obligation to Effect the
Merger................................................ 29
(a) Shareholder Approval............................... 29
(b) Effectiveness of the S-4........................... 29
(c) Governmental Entity Approvals...................... 29
(d) No Injunctions or Restraints; Illegality........... 29
(e) NASDAQ Quotation................................... 29
Section 6.2. Conditions of Obligations of Parent and Sub............. 30
(a) Representations and Warranties..................... 30
(b) Performance of Obligations of the Company.......... 30
(c) Consents........................................... 30
(d) Tax Opinion........................................ 30
Section 6.3. Conditions of Obligations of the Company................ 30
(a) Representations and Warranties..................... 30
(b) Performance of Obligations of Parent and Sub....... 31
(c) Consents........................................... 31
(d) Tax Opinion........................................ 31
(e) Officer of Parent.................................. 31
ARTICLE 7 TERMINATION................................................... 31
Section 7.1. Termination............................................. 31
Section 7.2. Effect of Termination................................... 33
Section 7.3. Fees and Expenses....................................... 33
ARTICLE 8 GENERAL PROVISIONS............................................. 33
Section 8.1. Amendment............................................... 33
Section 8.2. Extension; Waiver....................................... 33
Section 8.3. Nonsurvival of Representations, Warranties and
Agreements........ ................................... 33
Section 8.4. Entire Agreement........................................ 34
Section 8.5. Severability............................................ 34
Section 8.6. Notices................................................. 34
Section 8.7. Headings................................................ 35
Section 8.8. Counterparts............................................ 35
Section 8.9. Benefits; Assignment.................................... 35
Section 8.10. Governing Law........................................... 36
EXHIBIT A Form of Company Affiliate Letter
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INDEX OF DEFINED TERMS
Term Section
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"Agreement"............................................................. Preamble
"Approvals"............................................................. Section 3.1
"Approved Matter"....................................................... Section 3.1
"Blue Sky Laws"......................................................... Section 4.5(b)
"Business Day".......................................................... Section 1.3
"Certificates".......................................................... Section 2.2(b)
"Closing"............................................................... Section 1.3
"Closing Date".......................................................... Section 1.3
"Code".................................................................. Recitals
"Common Shares Trust"................................................... Section 2.2(e)(iii)
"Commonly Controlled Entity"............................................ Section 3.13(a)
"Company"............................................................... Preamble
"Company Banker"........................................................ Section 3.11
"Company Benefit Plans"................................................. Section 3.13(a)
"Company Common Stock".................................................. Recitals
"Company Disclosure Letter"............................................. Section 3.3
"Company Option"........................................................ Section 2.3
"Company Permits"....................................................... Section 3.6(b)
"Company SEC Reports"................................................... Section 3.7(a)
"Confidentiality Agreement"............................................. Section 5.1
"Constituent Corporations".............................................. Section 1.1
"Cooperation Agreement" ................................................ Recitals
"Effective Time"........................................................ Section 1.2
"ERISA"................................................................. Section 3.13(a)
"ERISA Plan"............................................................ Section 3.13(a)
"Excess Shares"......................................................... Section 2.2(e)(ii)
"Exchange Act".......................................................... Section 3.5(b)
"Exchange Agent"........................................................ Section 2.2(a)
"Exchange Fund"......................................................... Section 2.2(a)
"Exchange Ratio"........................................................ Section 2.1(c)
"GAAP".................................................................. Section 3.7(b)
"Governmental Entity"................................................... Section 3.5(b)
"Illinois Articles of Merger"........................................... Section 1.2
"Illinois Certificate of Merger"........................................ Section 1.2
"Illinois Statute"...................................................... Recitals
"Investment Agreement".................................................. Section 5.3
"Liberty"............................................................... Section 5.3
"Material Adverse Effect"............................................... Section 3.1, 4.1
"Merger"................................................................ Recitals
"Multiemployer Plan".................................................... Section 3.13(a)
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"NASD".................................................................. Section 2.2(e)(iii)
"Ordinary Venue Contracts".............................................. Section 5.2
"Other Filings"......................................................... Section 5.4
"Parent"................................................................ Preamble
"Parent Banker"......................................................... Section 4.11
"Parent Benefit Plans".................................................. Section 4.14(a)
"Parent Class B Common Stock"........................................... Section 4.3
"Parent Common Shares".................................................. Section 4.3
"Parent Common Stock"................................................... Section 2.1(c)
"Parent Disclosure Letter".............................................. Section 4.3
"Parent ERISA Plan"..................................................... Section 4.14(a)
"Parent Permits"........................................................ Section 4.6(b)
"Parent Preferred Stock"................................................ Section 4.3
"Parent Proxy Statement"................................................ Section 4.3
"Parent SEC Reports".................................................... Section 4.7(a)
"Proxy Statement"....................................................... Section 3.5(b)
"▇▇▇▇▇ Option".......................................................... Section 2.3
"S-4"................................................................... Section 3.10
"SEC"................................................................... Section 3.1
"Securities Act"........................................................ Section 3.7(a)
"Shareholders Meeting".................................................. Section 3.10
"Special Committee"..................................................... Recitals
"Stock Plan"............................................................ Section 2.3
"Sub"................................................................... Preamble
"Sub Common Stock"...................................................... Section 2.1(a)
"subsidiary"............................................................ Section 3.1
"Surviving Corporation"................................................. Section 1.1
"Surviving Corporation Common Stock".................................... Section 2.1(a)
"Transactions".......................................................... Recitals
"Universal"............................................................. Section 5.3
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AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement") is dated as
of March 20, 1998, by and among USA NETWORKS, INC., a Delaware corporation
("Parent"), BRICK ACQUISITION CORP., an Illinois corporation and a wholly owned
subsidiary of Parent ("Sub"), and TICKETMASTER GROUP, INC., an Illinois
corporation (the "Company").
RECITALS:
A. The Boards of Directors of Parent, Sub and the Company have
each approved the terms and conditions of the business combination between
Parent and the Company to be effected by the merger (the "Merger") of Sub with
and into the Company, pursuant to the terms and subject to the conditions of
this Agreement and the Business Corporation Act of the State of Illinois (the
"Illinois Statute"), and each deems the Merger advisable and in the best
interests of each corporation. A Special Committee of the Board of Directors of
the Company (the "Special Committee") has determined that the Merger is fair to,
and in the best interests of, the holders of shares of common stock, no par
value, of the Company ("Company Common Stock"), other than Parent and its
subsidiaries, and has recommended to the Board of Directors of the Company that
it approve the terms and conditions of the Merger, including this Agreement. The
Disinterested Directors (as defined in Section 5/7.85 of the Illinois Statute)
of the Company have approved the terms and conditions of the Merger.
B. Each of Parent, Sub and the Company desires to make certain
representations, warranties, covenants and agreements in connection with the
Merger.
C. For federal income tax purposes, it is intended that the
Merger and the transactions contemplated thereby qualify as a reorganization
under the provisions of Section 368(a) of the United States Internal Revenue
Code of 1986, as amended (the "Code").
D. It was a condition, which condition was satisfied, to the
willingness of Parent and Sub to enter into this Agreement and to consummate the
transactions contemplated hereby (the "Transactions"), including the acquisition
of the stock of the Company in the Merger from the Company's shareholders,
including the Chief Executive Officer, that the Chief Executive Officer of the
Company entered into that certain agreement with Parent, dated March 9, 1998
(the "Cooperation Agreement"), pursuant to which, among other things, such
individual agreed not to compete with, or to solicit customers of, the Company
from and after the expiration of his current employment agreement with the
Company and to cooperate with the Company and Parent to provide for an orderly
transition to a new Chief Executive Officer of the Company.
NOW, THEREFORE, in consideration of the premises and mutual
covenants and agreements contained in this Agreement, the parties agree as
follows:
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ARTICLE 1
THE MERGER
SECTION 1.1. THE MERGER. Upon the terms and subject to the conditions of this
Agreement and in accordance with the Illinois Statute, at the Effective Time,
Parent shall cause Sub to be merged with and into the Company. Following the
Merger, the Company shall continue as the surviving corporation (the "Surviving
Corporation") and the separate corporate existence of Sub shall cease. Sub and
the Company are collectively referred to as the "Constituent Corporations."
SECTION 1.2. EFFECTIVE TIME OF THE MERGER. Subject to the
provisions of this Agreement, the Merger shall become effective (the "Effective
Time") upon the filing of properly executed articles of merger (the "Illinois
Articles of Merger") with, and the issuance of a certificate of merger (the
"Illinois Certificate of Merger") by, the Secretary of State of the State of
Illinois in accordance with the Illinois Statute. The Effective Time shall be
the time of the Closing as set forth in Section 1.3.
SECTION 1.3. CLOSING. Unless this Agreement shall have been
terminated pursuant to Section 7.1, the closing of the Merger (the "Closing")
will take place at 10:00 a.m. on a date (the "Closing Date") to be mutually
agreed upon by the parties, which date shall be no later than the third Business
Day after satisfaction of the latest to occur of the conditions set forth in
Sections 6.1 (other than Section 6.1(d)), 6.2(b) (other than the delivery of the
officers' certificate referred to therein), 6.2(c), 6.3(b) (other than the
delivery of the officers' certificate referred to therein), and 6.3(c), unless
another date is agreed to in writing by the parties. The Closing shall take
place at the offices of Wachtell, Lipton, ▇▇▇▇▇ & ▇▇▇▇, ▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇
▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, unless another place is agreed to in writing by the
parties. As used in this Agreement, "Business Day" shall mean any day, other
than a Saturday, Sunday or legal holiday on which banks are permitted to close
in the City and State of New York, the State of Delaware or the State of
Illinois.
SECTION 1.4. EFFECTS OF THE MERGER. At the Effective Time: (a)
the separate existence of Sub shall cease and Sub shall be merged with and into
the Company, with the result that the Company shall be the Surviving
Corporation, and (b) the Merger shall have all of the effects provided by the
Illinois Statute.
SECTION 1.5. CERTIFICATE OF INCORPORATION AND BYLAWS OF SURVIVING
CORPORATION. At the Effective Time, (a) the certificate of incorporation of Sub
shall be the certificate of incorporation of the Surviving Corporation until
altered, amended or repealed as provided in the Illinois Statute; (b) the bylaws
of Sub shall become the bylaws of the Surviving Corporation until altered,
amended or repealed as provided in the Illinois Statute or in the certificate of
incorporation or bylaws of the Surviving Corporation; (c) the directors of Sub
shall become the initial directors of the Surviving Corporation, such directors
to hold office from the Effective Time until their respective successors are
duly elected or appointed as provided in the certificate of incorporation and
bylaws of the Surviving Corporation; and (d) the officers of the Company
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shall continue as the officers of the Surviving Corporation until such time as
their respective successors are duly elected as provided in the bylaws of the
Surviving Corporation.
ARTICLE 2
EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE
CONSTITUENT CORPORATIONS; EXCHANGE OF CERTIFICATES
SECTION 2.1 EFFECT OF MERGER ON CAPITAL STOCK. At the Effective Time, subject
and pursuant to the terms of this Agreement, by virtue of the Merger and without
any action on the part of the Constituent Corporations or the holders of any
shares of capital stock of the Constituent Corporations:
(a) Capital Stock of Sub. Each issued and outstanding share of
the common stock, $.01 par value per share, of Sub ("Sub Common Stock")
shall be converted into one validly issued, fully paid and nonassessable
share of common stock, $.01 par value per share, of the Surviving
Corporation ("Surviving Corporation Common Stock"). Each stock
certificate of Sub evidencing ownership of any such shares shall
continue to evidence ownership of such shares of Surviving Corporation
Common Stock.
(b) Treatment of Certain Shares of Company Common Stock. Each
share of Company Common Stock that is owned by the Company as treasury
stock and each share of Company Common Stock that is owned by Parent,
Sub or any other wholly owned subsidiary of Parent shall not be
cancelled and retired and shall be treated as provided in Section
2.1(c).
(c) Exchange Ratio for Company Common Stock. Each share of
Company Common Stock issued and outstanding immediately prior to the
Effective Time (other than shares of Company Common Stock held by
shareholders who properly demand dissenters' rights in accordance with
Section 5/11.70 of the Illinois Statute), shall, subject to Section
2.1(d), be converted into the right to receive 1.126 of a fully paid and
nonassessable share of common stock, $.01 par value per share, of Parent
("Parent Common Stock") (the "Exchange Ratio"). At the Effective Time,
all such shares of Company Common Stock shall no longer be outstanding,
and shall automatically be cancelled and retired and cease to exist, and
each holder of a certificate representing any such shares shall cease to
have any rights with respect thereto, except the right to receive the
shares of Parent Common Stock to be issued in consideration therefor
upon the surrender of such certificate in accordance with Section 2.2,
without interest. No fractional shares of Parent Common Stock shall be
issued; and, in lieu thereof, a cash payment shall be made pursuant to
Section 2.2(e).
(d) Adjustment of Exchange Ratio for Dilution and Other Matters.
If, between the date of this Agreement and the Effective Time, the
outstanding shares of Parent Common Stock shall have been changed into a
different number of shares or a different class by reason of any
reclassification, recapitalization, split-up, stock dividend, stock
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combination, exchange of shares, readjustment or otherwise, then the
Exchange Ratio, as the case may be, shall be correspondingly adjusted.
Without otherwise limiting the foregoing, the Exchange Ratio of 1.126
set forth in paragraph (c) above gives effect to the two-for-one stock
split declared by the Company on February 20, 1998, with respect to the
Parent Common Shares (as defined in Section 4.3).
SECTION 2.2. EXCHANGE OF CERTIFICATES.
(a) Exchange Agent. Prior to the Closing Date, Parent shall
select a bank or trust company reasonably acceptable to the Company to act as
exchange agent (the "Exchange Agent") in the Merger. Prior to the Effective
Time, Parent shall deposit with the Exchange Agent, for the benefit of the
holders of shares of Company Common Stock, for exchange in accordance with this
Article 2, certificates representing the shares of Parent Common Stock (such
shares of Parent Common Stock, together with any dividends or distributions with
respect thereto, the "Exchange Fund") issuable pursuant to Section 2.1(c) at the
Effective Time in exchange for outstanding shares of Company Common Stock, which
shall include such shares of Parent Common Stock to be sold by the Exchange
Agent pursuant to Section 2.2(e).
(b) Exchange Procedures. As soon as practicable after the
Effective Time, Parent shall instruct the Exchange Agent to mail to each holder
of record (other than the Company, Parent, Sub and any wholly owned subsidiary
of the Company) of a certificate or certificates which immediately prior to the
Effective Time represented issued and outstanding shares of Company Common Stock
(collectively, the "Certificates") whose shares were converted into the right to
receive Parent Common Stock pursuant to Section 2.1(c), (i) a letter of
transmittal (which shall specify that delivery shall be effected, and risk of
loss and title to the Certificates shall pass, only upon delivery of the
Certificates to the Exchange Agent and shall be in such form and have such other
provisions as Parent and the Company may reasonably specify) and (ii)
instructions for use in effecting the surrender of the Certificates in exchange
for certificates representing Parent Common Stock and any cash in lieu of
fractional shares of Parent Common Stock. Upon surrender of a Certificate for
cancellation to the Exchange Agent, together with a duly executed letter of
transmittal and such other documents as may be reasonably required by the
Exchange Agent, the holder of such Certificate shall be entitled to receive in
exchange therefor a certificate representing that number of whole shares of
Parent Common Stock which such holder has the right to receive pursuant to the
provisions of this Article 2 and any cash in lieu of fractional shares of Parent
Common Stock, and the Certificate so surrendered shall forthwith be cancelled.
In the event of a transfer of ownership of shares of Company Common Stock which
is not registered on the transfer records of the Company, a certificate
representing the proper number of shares of Parent Common Stock and any cash in
lieu of fractional shares of Parent Common Stock may be issued and paid to a
transferee if the Certificate representing such Company Common Stock is
presented to the Exchange Agent, accompanied by all documents required to
evidence and effect such transfer and by evidence that any applicable stock
transfer taxes have been paid. Until surrendered as contemplated by this Section
2.2, each Certificate shall be deemed, on and after the Effective Time, to
represent only the right to receive upon such surrender the certificate
representing shares of Parent Common Stock and cash in lieu of any fractional
shares of Parent Common Stock as contemplated by this Article 2 and the Illinois
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Statute. The consideration to be issued in the Merger will be delivered by the
Exchange Agent as promptly as practicable following surrender of a Certificate
and any other required documents. No interest will be payable on such
consideration regardless of any delay in making payments.
(c) Distributions with Respect to Unsurrendered Certificates. No
dividends or other distributions declared or made after the Effective Time with
respect to Parent Common Stock with a record date after the Effective Time shall
be paid to the holder of any unsurrendered Certificate with respect to the
shares of Parent Common Stock represented thereby, and no cash payment in lieu
of fractional shares shall be paid to any such holder pursuant to Section 2.2(e)
until the holder of record of such Certificate shall surrender such Certificate.
Subject to the effect, if any, of applicable laws, following surrender of any
such Certificate, there shall be paid to the record holder of the certificates
representing whole shares of Parent Common Stock issued in exchange therefor or
such holder's transferee pursuant to Section 2.2(e), without interest, (i) at
the time of such surrender, the amount of any cash payable in lieu of a
fractional share of Parent Common Stock to which such holder is entitled
pursuant to Section 2.2(e) and the amount of dividends or other distributions on
Parent Common Stock with a record date after the Effective Time theretofore paid
with respect to such whole shares of Parent Common Stock, and (ii) at the
appropriate payment date, the amount of dividends or other distributions on
Parent Common Stock with a record date after the Effective Time but prior to
surrender and a payment date subsequent to surrender payable with respect to
such whole shares of Parent Common Stock.
(d) No Further Ownership Rights in Company Common Stock. All
shares of Parent Common Stock issued upon the surrender for exchange of shares
of Company Common Stock in accordance with the terms of this Article 2 (plus any
cash paid pursuant to Section 2.2(c) or 2.2(e)) shall be deemed to have been
issued (and paid) in full satisfaction of all rights pertaining to such shares
of Company Common Stock. From and after the Effective Time, the stock transfer
books of the Company shall be closed with respect to the shares of Company
Common Stock, and there shall be no further registration of transfers on the
stock transfer books of the Company or the Surviving Corporation of the shares
of Company Common Stock which were 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 Article 2.
(e) No Issuance of Fractional Shares.
(i) No certificates or scrip for fractional shares of
Parent Common Stock 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 rights of a shareholder of Parent.
(ii) As promptly as practicable following the Effective
Time, the Exchange Agent shall determine the excess of (A) the number of
full shares of Parent Common Stock delivered to the Exchange Agent by
Parent pursuant to Section 2.2(a) over (B) the aggregate number of full
shares of Parent Common Stock to be distributed to holders
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of Company Common Stock pursuant to Section 2.2(b) (such excess, the
"Excess Shares"). As soon after the Effective Time as practicable, the
Exchange Agent, as agent for the holders of Company Common Stock, shall
sell the Excess Shares at then prevailing prices in the over-the-counter
market, all in the manner provided in clause (iii) of this
Section 2.2(e).
(iii) The sale of the Excess Shares by the Exchange Agent
shall be executed in the over-the-counter market through one or more
member firms of the National Association of Securities Dealers, Inc.
(the "NASD") and shall be executed in round lots to the extent
practicable. Until the net proceeds of such sale or sales have been
distributed to the holders of Company Common Stock, the Exchange Agent
will hold such proceeds in trust for the holders of Company Common Stock
(the "Common Shares Trust"). Parent shall pay all commissions, transfer
taxes and other out-of-pocket transaction costs, including the expenses
and compensation of the Exchange Agent incurred in connection with such
sale of the Excess Shares. The Exchange Agent shall determine the
portion of the Common Shares Trust to which each holder of Company
Common Stock shall be entitled, if any, by multiplying the amount of the
aggregate net proceeds comprising the Common Shares Trust by a fraction,
the numerator of which is the amount of the fractional share interest to
which such holder of Company Common Stock is entitled and the
denominator of which is the aggregate amount of fractional share
interests to which all holders of Company Common Stock are entitled.
(iv) As soon as practicable after the determination of the
amount of cash, if any, to be paid to the holders of Company Common
Stock in lieu of any fractional share interests and subject to clause
(v) of this Section 2.2(e), the Exchange Agent shall make available such
amounts to such holders of Company Common Stock.
(v) Parent or the Exchange Agent shall be entitled to
deduct and withhold from the consideration otherwise payable pursuant to
this Agreement to any holder of shares of Company Common Stock such
amounts as Parent or the Exchange Agent is required to deduct and
withhold with respect to the making of such payment under the Code, or
any provision of state, local or foreign tax law. To the extent that
amounts are so withheld by Parent or the Exchange Agent, such withheld
amounts shall be treated for all purposes of this Agreement as having
been paid to the holder of the shares of Company Common Stock in respect
of which such deduction and withholding was made by Parent or the
Exchange Agent.
(f) Termination of Exchange Fund. Any portion of the Exchange
Fund and Common Shares Trust which remains undistributed to the shareholders of
the Company for 12 months after the Effective Time shall be delivered to Parent,
upon demand, and any former shareholders of the Company who have not theretofore
complied with this Article 2 shall thereafter look only to Parent for payment of
their claim for Parent Common Stock, any cash in lieu of fractional shares of
Parent Common Stock and any dividends or distributions with respect to Parent
Common Stock.
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(g) No Liability. Neither the Exchange Agent, Parent, Sub nor the
Company shall be liable to any holder of shares of Company Common Stock or
Parent Common Stock, as the case may be, for shares (or dividends or
distributions with respect thereto) from the Exchange Fund or cash from the
Common Shares Trust delivered to a public official pursuant to any applicable
abandoned property, escheat or similar law.
(h) Lost, Stolen or Destroyed Certificates. In the event any
Certificates evidencing shares of Company Common Stock shall have been lost,
stolen or destroyed, the holder of such lost, stolen or destroyed Certificate(s)
shall execute an affidavit of that fact upon request. The holder of any such
lost, stolen or destroyed Certificate(s) shall also deliver a reasonable
indemnity against any claim that may be made against Parent or the Exchange
Agent with respect to the Certificate(s) alleged to have been lost, stolen or
destroyed. The affidavit and any indemnity which may be required hereunder shall
be delivered to the Exchange Agent, who shall be responsible for making payment
for such lost, stolen or destroyed Certificate(s).
SECTION 2.3. STOCK OPTIONS. At the Effective Time, the Company's
obligation with respect to each outstanding option (each, a "Company Option") to
purchase shares of Company Common Stock issued pursuant to the Company's Stock
Plan (the "Stock Plan") and (unless otherwise elected by the optionee pursuant
to the terms of an individual agreement) pursuant to the Stock Option Agreement,
dated as of December 15, 1993, between the Company and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ (the
"▇▇▇▇▇ Option"), as amended in the manner described in the following sentence,
shall be assumed by Parent. The Company Options so assumed by Parent shall
continue to have, and be subject to, the same terms and conditions as set forth
in the Stock Plan and the ▇▇▇▇▇ Option and the agreements pursuant to which such
Company Options were issued as in effect immediately prior to the Effective
Time, which plan, agreements and ▇▇▇▇▇ Option shall be assumed by Parent, except
that (in accordance with the applicable provisions of such plan and ▇▇▇▇▇ Option
and subject to any other rights that a holder of Company Options may have) (a)
each such Company Option shall be exercisable for that number of whole shares of
Parent Common Stock equal to the product of that number of shares of Company
Common Stock covered by such Company Option immediately prior to the Effective
Time multiplied by the Exchange Ratio and rounded up to the nearest whole number
of shares of Parent Common Stock, and (b) the exercise price per share of Parent
Common Stock shall equal the exercise price per share of Company Common Stock in
effect immediately prior to the Effective Time divided by the Exchange Ratio.
The adjustment provided herein with respect to any Company Options which are
"Incentive Stock Options" (as defined in Section 422 of the Code) shall be and
is intended to be effected in a manner which is consistent with Section 424(a)
of the Code. Parent shall reserve for issuance the number of shares of Parent
Common Stock that will become issuable upon the exercise of such Company Options
pursuant to this Section 2.3.
SECTION 2.4. TAKING OF NECESSARY ACTION; FURTHER ACTION. If, at
any time after the Effective Time, any such further action is necessary or
desirable to carry out the purposes of this Agreement or to vest, perfect or
confirm of record or otherwise establish in the Surviving Corporation full
right, title and interest in, to or under any of the assets, property, rights,
privileges, powers and franchises of the Company and Sub, the officers and
directors of the
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Surviving Corporation are fully authorized in the name and on behalf of each of
the Constituent Corporations or otherwise to take all such lawful and necessary
or desirable action.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Parent and Sub as follows:
SECTION 3.1. ORGANIZATION AND QUALIFICATION; SUBSIDIARIES. Each of the Company
and its "Significant Subsidiaries" (as such term is defined in Regulation S-X
promulgated by the Securities and Exchange Commission (the "SEC")) is a
corporation or other entity duly incorporated or organized, validly existing
and, as applicable, in good standing under the laws of the jurisdiction of its
incorporation or organization and has the requisite corporate or other power and
authority to own, lease and operate its assets and properties and to carry on
its business as it is now being conducted. Each of the Company and its
subsidiaries is in possession of all franchises, grants, authorizations,
licenses, permits, easements, consents, certificates, approvals and orders
("Approvals") necessary to own, lease and operate the properties it purports to
own, operate or lease and to carry on its business as it is now being conducted,
except where the failure to have such Approvals would not, individually or in
the aggregate, have a Material Adverse Effect (as defined below). Each of the
Company and its subsidiaries is, as applicable, duly qualified or licensed as a
foreign corporation to do business, and is in good standing, in each
jurisdiction where the character of the properties owned, leased or operated by
it or the nature of its business makes such qualification or licensing
necessary, except for such failures to be so duly qualified or licensed and in
good standing that would not, either individually or in the aggregate, have a
Material Adverse Effect. When used in this Article 3 or elsewhere in this
Agreement in connection with the Company or any of its subsidiaries, the term
"Material Adverse Effect" means any change, event or effect that is materially
adverse to the business, financial condition or results of operations of the
Company and its subsidiaries taken as a whole, excluding (i) any changes or
effects resulting from any matter, which matter was expressly approved by the
Board of Directors of the Company following the date hereof unless, with respect
to such matter, both directors of the Company who are also executive officers of
Parent either voted against or abstained from voting (such matter and related
contemplated transactions, an "Approved Matter") and (ii) changes in general
economic conditions in the economy as a whole. Other than wholly owned
subsidiaries and except as disclosed in the Company SEC Reports or Section 3.1
of the Company Disclosure Letter, the Company does not directly or indirectly
own any equity or similar interest in, or any interest convertible or
exchangeable or exercisable for any equity or similar interest in, any
corporation, partnership, limited liability company, joint venture or other
business, association or entity. As used in this Agreement, "subsidiary" with
respect to any person shall mean any entity which such person has the ability to
control the voting power thereof, either through ownership of equity interests
or otherwise, provided that under no circumstances shall the Company and its
subsidiaries be deemed to be subsidiaries of Parent.
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SECTION 3.2. CERTIFICATE OF INCORPORATION AND BYLAWS. The Company
has previously furnished or made available to Parent a complete and correct copy
of its Articles of Incorporation and Bylaws as amended to date. Such Articles of
Incorporation and bylaws are in full force and effect. Neither the Company nor
any of its Significant Subsidiaries is in violation of any of the provisions of
its certificate of incorporation or bylaws or equivalent organizational
documents.
SECTION 3.3. CAPITALIZATION. The authorized capital stock of the
Company consists of 80,000,000 shares of Company Common Stock and 20,000,000
shares of Company Preferred Stock. At the close of business on March 9, 1998,
(a) 26,176,265 shares of Company Common Stock were issued and outstanding, all
of which are validly issued, fully paid and nonassessable, and not subject to
preemptive rights, (b) of the amount referred to in clause (a) above, no shares
of Company Common Stock were held in treasury by the Company or by wholly owned
subsidiaries of the Company, (c) options to purchase 2,658,086 and 1,331,340
shares of Company Common Stock were outstanding under the Stock Plan and the
▇▇▇▇▇ Option, and (d) 237,346 shares of Company Common Stock were reserved for
issuance to the former owners of the Company's Canadian subsidiary. As of the
date hereof, no shares of Company Preferred Stock were issued or outstanding. No
change in such capitalization has occurred between March 9, 1998 and the date
hereof, except (i) the issuance of shares of Company Common Stock pursuant to
the exercise of outstanding options and (ii) as contemplated by this Agreement.
Except as set forth in this Section 3.3 or as disclosed in Section 3.3 of the
disclosure letter delivered by the Company to Parent (the "Company Disclosure
Letter"), as of the date of this Agreement, there are no options, warrants or
other rights, agreements, or commitments, in each case to which the Company or
any of its subsidiaries is a party, of any character relating to the issued or
unissued capital stock of the Company or any of its subsidiaries or obligating
the Company or any of its subsidiaries to issue or sell any shares of capital
stock of, or other equity interests in, the Company or any of its subsidiaries.
All shares of Company Common Stock subject to issuance as aforesaid, upon
issuance on the terms and conditions specified in the instruments pursuant to
which they are issuable, shall be duly authorized, validly issued, fully paid
and nonassessable and not subject to preemptive rights. Except as set forth in
Section 3.3 of the Company Disclosure Letter, there are no obligations,
contingent or otherwise, of the Company or any of its subsidiaries to
repurchase, redeem or otherwise acquire any shares of Company Common Stock or
the capital stock of any subsidiary or to provide funds to or make any material
investment (in the form of a loan, capital contribution or otherwise) in any
such subsidiary or any other entity other than guarantees of obligations of
subsidiaries entered into in the ordinary course of business. All of the
outstanding equity interests of each of the Company's subsidiaries are duly
authorized, validly issued, and, where applicable, fully paid and nonassessable,
and, except as set forth in Section 3.3 of the Company Disclosure Letter or (in
the case of subsidiaries of the Company only) for such matters as would not,
individually or in the aggregate, have a Material Adverse Effect, all such
shares are owned by the Company or another subsidiary free and clear of all
security interests, liens, claims, pledges, agreements, limitations in the
Company's voting rights, charges or other encumbrances of any nature whatsoever.
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SECTION 3.4. AUTHORITY RELATIVE TO THIS AGREEMENT; BOARD
APPROVAL.
(a) The Company has all necessary corporate power and authority
to execute and deliver this Agreement and to perform its obligations hereunder
and, subject to obtaining the approval of the shareholders of the Company of
this Agreement, to consummate the Transactions. The execution and delivery of
this Agreement by the Company and the consummation by the Company of the
Transactions have been duly and validly authorized by all necessary corporate
action on the part of the Company and no other corporate proceedings on the part
of the Company are necessary to authorize this Agreement or to consummate the
Transactions so contemplated (other than, with respect to the Merger, the
approval and adoption of this Agreement by the vote of shareholders of the
Company owning at least a majority of the outstanding shares of Company Common
Stock in accordance with the Illinois Statute and the Company's Articles of
Incorporation and Bylaws, which vote is the only vote required to consummate the
Transactions under the Company's Articles of Incorporation and the Illinois
Statute). This Agreement has been duly and validly executed and delivered by the
Company and, assuming the due authorization, execution and delivery by Parent
and Sub, constitutes the legal and binding obligation of the Company,
enforceable against the Company in accordance with its terms, subject to (i)
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting or relating to creditors rights generally and (ii) the availability of
injunctive relief and other equitable remedies. The Company has taken all
appropriate actions so that the restrictions on business combinations contained
in Section 5/11.75 of the Illinois Statute will not apply to Parent or Sub and
their respective affiliates and associates with respect to or as a result of
this Agreement or the Transactions.
(b) The Board of Directors of the Company based on the
recommendation of the Special Committee (which recommendation was a condition to
the approval of the Company's Board of Directors set forth in clause (i) of this
sentence) has, prior to this Agreement, (i) approved this Agreement and the
Transactions (including for purposes of the Illinois Statute), (ii) determined
that the Transactions are fair to and in the best interests of the shareholders
of the Company and (iii) recommended that the shareholders of the Company
approve this Agreement and the Transactions. This Agreement and the Transactions
have been approved by the vote of at least two-thirds of the Disinterested
Directors (as defined in Section 5/7.85 of the Illinois Statute), and no vote of
Company shareholders pursuant to Section 5/7.85 of the Illinois Statute is
required in connection with the Transactions.
SECTION 3.5. NO CONFLICT; REQUIRED FILINGS AND CONSENTS.
(a) The execution and delivery of this Agreement by the Company
do not, and the performance of its obligations hereunder and the consummation of
the Transactions by the Company will not, (i) conflict with or violate the
certificate of incorporation, bylaws or equivalent organizational documents of
the Company or any of its subsidiaries; (ii) subject to obtaining the approval
of the Company's shareholders of this Agreement in accordance with the Illinois
Statute and the Company's Articles of Incorporation and Bylaws and compliance
with the requirements set forth in Section 3.5(b), conflict with or violate any
law, rule, regulation, order, judgment or decree applicable to the Company or
any of its subsidiaries or by which any of their
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respective properties is bound or affected; or (iii) except as set forth in
Section 3.5 of the Company Disclosure Letter, result in any breach of or
constitute a default (or an event that with notice or lapse of time or both
would become a default) under, or alter the rights or obligations of any third
party or the Company or its subsidiaries under, or give to others any rights of
termination, amendment, acceleration, increased payments or cancellation of, or
result in the creation of a lien or other encumbrance on any of the properties
or assets of the Company or any of its subsidiaries pursuant to, any note, bond,
mortgage, indenture, contract, agreement, lease, license, permit, franchise or
other instrument or obligation to which the Company or any of its subsidiaries
is a party or by which the Company or any of its subsidiaries or any of their
respective properties are bound or affected, except, in the case of clauses (ii)
and (iii) above, for any such conflicts, violations, breaches, defaults or other
alterations or occurrences that would not prevent or delay consummation of the
Merger in any material respect, or otherwise prevent the Company from performing
its obligations under this Agreement in any material respect, and would not
have, individually or in the aggregate, a Material Adverse Effect. Section 3.5
of the Company Disclosure Letter lists all material consents, waivers and
approvals under any agreements, contracts, licenses or leases required to be
obtained by the Company or its subsidiaries in connection with the consummation
of the Transactions.
(b) The execution and delivery of this Agreement by the Company
do not, and the performance of its obligations hereunder and the consummation of
the Transactions by the Company will not, require any consent, approval,
authorization or permit of, or registration or filing with or notification to,
any court, administrative agency, commission, governmental or regulatory
authority, domestic or foreign (a "Governmental Entity"), except (i) the filing
of documents to satisfy the applicable requirements, if any, of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and state takeover laws,
(ii) the filing with the SEC of a proxy statement and prospectus in definitive
form relating to the Shareholders Meeting (the "Proxy Statement"), (iii) the
filing of the Illinois Articles of Merger with, and the issuance of the Illinois
Certificate of Merger by, the Secretary of State of the State of Illinois, (iv)
filings under the rules and regulations of the NASD, or (v) where the failure to
obtain such consents, approvals, authorizations or permits, or to make such
filings or notifications (A) would not prevent or delay consummation of the
Merger in any material respect or otherwise prevent or delay in any material
respect the Company from performing its obligations under this Agreement or (B)
would not, individually or in the aggregate, have a Material Adverse Effect.
SECTION 3.6. COMPLIANCE; PERMITS.
(a) Except as set forth in Section 3.6 or 3.9 of the Company
Disclosure Letter, neither the Company nor any of its subsidiaries is in
conflict with, or in default or violation (i) of, any law, rule, regulation,
order, judgment or decree applicable to the Company or any of its subsidiaries
or by which any of their respective properties is bound, or (ii) whether after
the giving of notice or passage of time or both, of, any note, bond, mortgage,
indenture, contract, agreement, lease, license, permit, franchise or other
instrument or obligation to which the Company or any of its subsidiaries is a
party or by which the Company or any of its subsidiaries or any of their
respective properties is bound, except for any conflicts, defaults or violations
which do not and would not have, individually or in the aggregate, a Material
Adverse Effect.
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(b) The Company and its subsidiaries hold all permits, licenses,
variances, exemptions, orders and approvals from Governmental Entities which are
material to operation of the business of the Company and its subsidiaries taken
as a whole (collectively, the "Company Permits"). The Company and its
subsidiaries are in compliance with the terms of the Company Permits, except
where the failure to so comply would not, individually or in the aggregate, have
a Material Adverse Effect.
SECTION 3.7. SEC FILINGS; FINANCIAL STATEMENTS.
(a) The Company has made available to Parent a correct and
complete copy of each report, schedule, registration statement (but only such
registration statements that have become effective prior to the date hereof) and
definitive proxy statement filed by the Company with the SEC on or since the
date of its initial public offering and prior to the date of this Agreement (the
"Company SEC Reports"), which are all the forms, reports and documents required
to be filed by the Company with the SEC since such date. As of their respective
dates, the Company SEC Reports and any forms, reports and other documents filed
by the Company with the SEC after the date of this Agreement (i) complied or
will comply in all material respects with the requirements of the Securities Act
of 1933, as amended (the "Securities Act"), or the Exchange Act, as the case may
be, and the rules and regulations of the SEC thereunder applicable thereto, and
(ii) did not at the time they were filed (or if amended or superseded by a
filing prior to the date of this Agreement then on the date of such filing) or
will not at the time they are filed contain any untrue statement of a material
fact or omit to state a material fact necessary in order to make the statements
made, in light of the circumstances under which they were made, not misleading,
provided, however, that no representation is made with respect to information
included in the Company SEC Reports that was provided in writing by Parent or
Sub. None of the Company's subsidiaries is required to file any reports or other
documents with the SEC.
(b) Each of the consolidated financial statements (including, in
each case, any related notes thereto) contained in the Company SEC Reports
complied as to form in all material respects with applicable accounting
requirements and with the published rules and regulations of the SEC with
respect thereto, had been prepared in accordance with generally accepted
accounting principles ("GAAP") applied on a consistent basis throughout the
periods involved (except as may be indicated in the notes thereto or, in the
case of the unaudited statements, as permitted by Form 10-Q or the Exchange Act
regulations promulgated by the SEC), and each fairly presented the consolidated
financial position of the Company and its consolidated subsidiaries in all
material respects as at the respective dates thereof and the consolidated
results of its operations and cash flows for the periods indicated (subject, in
the case of the unaudited interim financial statements, to normal audit
adjustments which were not and are not expected, individually or in the
aggregate, to be material in amount).
(c) Neither the Company nor any of its subsidiaries has any
liabilities (absolute, accrued, contingent or otherwise) of a nature required to
be disclosed on a balance sheet or in the related notes to the consolidated
financial statements prepared in accordance with GAAP which are, individually or
in the aggregate, material to the business, results of operations or financial
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condition of the Company and its subsidiaries taken as a whole, except
liabilities (i) set forth in Section 3.7 of the Company Disclosure Letter or the
Company SEC Reports filed with the SEC prior to the date of this Agreement or
provided for in the Company's balance sheet (and related notes thereto) as of
January 31, 1997 filed in the Company SEC Reports, or (ii) incurred since
January 31, 1997 in the ordinary course of business, none of which are material
to the business, results of operations or financial condition of the Company and
its subsidiaries, taken as a whole or (iii) arising out of or incurred in
connection with (x) this Agreement or the transactions contemplated hereby or
(y) an Approved Matter.
SECTION 3.8. ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as set
forth in Section 3.8 of the Company Disclosure Letter, contemplated by this
Agreement or disclosed in the Company SEC Reports, since January 31, 1997, (a)
the Company and its subsidiaries have, in all material respects, conducted their
businesses only in the ordinary course and in a manner consistent with past
practice and have not taken any of the actions set forth in Section
5.2(b)(i)-(iv), (vii), (x), (xi), (xii) (but with respect to this clause, only
since October 31, 1997) and (xiii), and (b) there has not been (i) any
transaction, commitment, dispute or other event or condition (financial or
otherwise) of any character (whether or not in the ordinary course of business),
individually or in the aggregate, having or which could reasonably be expected
to have a Material Adverse Effect, or (ii) any material change by the Company in
its accounting methods, principles or practices except as required by concurrent
changes in GAAP.
SECTION 3.9. ABSENCE OF LITIGATION. Except as disclosed in the
Company SEC Reports or Section 3.9 of the Company Disclosure Letter, there are
no claims, actions, suits, investigations or proceedings pending or, to the best
knowledge of the Company, threatened against the Company or any of its
subsidiaries, before any court, arbitrator or administrative, governmental or
regulatory authority or body, domestic or foreign, that, individually or in the
aggregate, would, or reasonably could be expected to, have a Material Adverse
Effect, nor is there any judgment, decree, injunction, rule or order of any
Governmental Entity or arbitrator outstanding against the Company or any of its
subsidiaries (a) having or which would, or reasonably could be expected to, have
a Material Adverse Effect or (b) which seeks to restrain, enjoin or delay
consummation of any of the Transactions.
SECTION 3.10. REGISTRATION STATEMENT; PROXY STATEMENT. None of
the information supplied or to be supplied by the Company for inclusion or
incorporation by reference in (a) the registration statement on Form S-4 to be
filed with the SEC by Parent in connection with the issuance of the Parent
Common Stock in or as a result of the Merger (the "S-4") will, at the time the
S-4 is filed with the SEC and at the time it becomes effective under the
Securities Act, contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary in order to make
the statements therein, in light of the circumstances under which they are made,
not misleading; and (b) the Proxy Statement will, at the date the Proxy
Statement is mailed to the shareholders of the Company, at the time of the
shareholders meeting of the Company (the "Shareholders Meeting") in connection
with the Transactions and as of the Effective Time, contain any untrue statement
of a material fact or omit to state any material fact necessary in order to make
the statements made, in light of the circumstances under which they are made,
not misleading, provided, however, that no
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representation is made with respect to information included in the Proxy
Statement that was provided in writing by Parent or Sub. The Proxy Statement
will comply as to form in all material respects with the provisions of the
Exchange Act and the rules and regulations promulgated by the SEC thereunder.
SECTION 3.11. BROKERS. Except as set forth in Section 3.11 of the
Company Disclosure Schedule, no broker, finder or investment banker (other than
▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ (f/k/a Salomon Brothers Inc) (the "Company Banker")) is
entitled to any brokerage, finder's or other fee or commission in connection
with the Merger and the Transactions based upon arrangements made by or on
behalf of the Company. The Company has heretofore furnished to Parent a complete
copy of all agreements between the Company and the Company Banker pursuant to
which such firm would be entitled to any payment relating to the Merger and the
Transactions.
SECTION 3.12. OPINION OF FINANCIAL ADVISOR. The Special Committee
and the Company's Board of Directors have received the written opinion, dated
March 9, 1998, of the Company Banker that, as of March 9, 1998, the Exchange
Ratio is fair to the holders of Company Common Stock (other than Parent or any
subsidiary of Parent) from a financial point of view, a copy of which opinion
will be delivered to Parent.
SECTION 3.13. EMPLOYEE BENEFIT PLANS.
(a) The Company has delivered or made available to Parent prior
to the execution of this Agreement true and complete copies (or, in the case of
bonus or other incentive plans, summaries thereof) of all material pension,
retirement, profit-sharing, deferred compensation, stock option, employee stock
ownership, severance pay, vacation, bonus or other material incentive plans, all
other material written employee programs, arrangements or agreements, whether
arrived at through collective bargaining or otherwise, all material medical,
vision, dental or other health plans, all life insurance plans and all other
material employee benefit plans or fringe benefit plans, including, without
limitation, all "employee benefit plans" as that term is defined in Section 3(3)
of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"),
currently adopted, maintained by, sponsored in whole or in part by, or
contributed to by the Company or any entity required to be aggregated with the
Company pursuant to Section 414 of the Code (each, a "Commonly Controlled
Entity") for the benefit of current or former employees, retirees, dependents,
spouses, directors, independent contractors or other beneficiaries and under
which current or former employees, retirees, dependents, spouses, directors,
independent contractors or other beneficiaries are eligible to participate
(collectively, the "Company Benefit Plans"). Any of the Company Benefit Plans
which is an "employee pension benefit plan," as that term is defined in Section
3(2) of ERISA, is referred to herein as an "ERISA Plan." No Company Benefit Plan
is or has been a multiemployer plan within the meaning of Section 3(37) of ERISA
(a "Multiemployer Plan").
(b) All Company Benefit Plans are in compliance with the
applicable terms of ERISA and the Code and any other applicable laws, rules and
regulations the breach or violation of which could result in a Material Adverse
Effect.
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(c) No ERISA Plan is subject to Title IV or Section 302 of ERISA,
and no circumstances exist that could result in material liability to the
Company under Title IV or Section 302 of ERISA.
(d) Except as set forth in Section 3.13 of the Company Disclosure
Letter, as described in any Company SEC Reports or as provided under the Stock
Plan or any related agreement and the ▇▇▇▇▇ Option, neither the execution and
delivery of this Agreement nor the consummation of the Transactions (or any
termination of employment in connection with the Transactions) will (i) result
in any material payment becoming due to any current or former director or
employee of the Company or any of its affiliates from the Company or any of its
affiliates under any Company Benefit Plan or otherwise, (ii) materially increase
any benefits otherwise payable under any Company Benefit Plan or (iii) result in
any acceleration of the time of payment or vesting of any such benefits to any
material extent.
SECTION 3.14. TAX MATTERS. Neither the Company nor any of its
subsidiaries has taken or agreed to take any action (including in connection
with the Transactions) that would prevent the Merger from constituting a
reorganization qualifying under the provisions of Section 368(a) of the Code.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB
Parent and Sub jointly and severally represent and warrant to the
Company, as follows:
SECTION 4.1 ORGANIZATION AND QUALIFICATION; SUBSIDIARIES. Each of Parent and
its Significant Subsidiaries is a corporation or other entity duly organized,
validly existing and, as applicable, in good standing under the laws of the
jurisdiction of its incorporation or organization and has the requisite
corporate or other power and authority to own, lease and operate its assets and
properties and to carry on its business as it is now being conducted. Each of
Parent and its subsidiaries is in possession of all Approvals necessary to own,
lease and operate the properties it purports to own, operate or lease and to
carry on its business as it is now being conducted, except where the failure to
have such Approvals would not, individually or in the aggregate, have a Material
Adverse Effect (as defined below). Each of Parent and its subsidiaries is, as
applicable, duly qualified or licensed as a foreign corporation or other entity
to do business, and is in good standing, in each jurisdiction where the
character of the properties owned, leased or operated by it or the nature of its
business makes such qualification or licensing necessary, except for such
failures to be so duly qualified or licensed and in good standing that would
not, either individually or in the aggregate, have a Material Adverse Effect.
When used in this Article 4 or elsewhere in connection with Parent or any of its
subsidiaries, the term "Material Adverse Effect" means any change, event or
effect that is materially adverse to the business, financial condition or
results of operations of Parent and its subsidiaries (including USANi LLC, a
Delaware limited liability company) taken as a whole, excluding changes in
general economic conditions in the economy as a whole. Other than wholly owned
subsidiaries and except as disclosed in the Parent
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SEC Reports (as defined in Section 4.7(a)) or Section 5.3 of the Parent
Disclosure Letter, Parent does not directly or indirectly own any equity or
similar interest in, or any interest convertible or exchangeable or exercisable
for any equity or similar interest in, any corporation, partnership, limited
liability company, joint venture or other business, association or entity.
SECTION 4.2. CERTIFICATE OF INCORPORATION AND BYLAWS. Parent has
previously furnished to the Company a complete and correct copy of its
Certificate of Incorporation and Bylaws as amended to date. Such certificate of
incorporation and bylaws are in full force and effect. Neither Parent nor any of
its Significant Subsidiaries is in violation of any of the provisions of its
certificate of incorporation or bylaws or equivalent organizational documents.
SECTION 4.3. CAPITALIZATION. In each case without giving effect
to the 2-for-1 stock split declared by Parent on February 20, 1998, as of the
date hereof, the authorized capital stock of Parent consists of (a) 800,000,000
shares of Parent Common Stock and 200,000,000 shares of Class B common stock,
par value $.01 per share, of Parent ("Parent Class B Common Stock" and, together
with the Parent Common Stock, the "Parent Common Shares") and (b) 15,000,000
shares of preferred stock, par value $.01 per share, of Parent ("Parent
Preferred Stock"), none of which have been designated as to class or series. At
the close of business on March 11, 1998, (i) 51,089,631 shares of Parent Common
Stock were issued and outstanding and 16,006,808 shares of Parent Class B Common
Stock were issued and outstanding, all of which Parent Common Stock and Parent
Class B Common Stock are validly issued, fully paid and nonassessable and,
except as disclosed in the Parent proxy statement dated January 12, 1998 (the
"Parent Proxy Statement"), not subject to any preemptive rights, (ii) no shares
of Parent Common Stock were held in treasury by Parent or by subsidiaries of
Parent, (iii) shares of USANi LLC exchangeable into 54,327,175 Parent Common
Shares were outstanding, and (iv) Home Shopping Network, Inc. shares
exchangeable into 7,905,016 shares of Parent Common Stock and 399,136 shares of
Parent Class B Common Stock were outstanding. At the close of business on March
2, 1998, options to purchase 17,499,297 shares of Parent Common Stock were
outstanding under Parent's 1997 Stock and Annual Incentive Plan, 1995 Stock
Incentive Plan, 1992 Stock Option and Restricted Stock Plan, Stock Option Plan
for Outside Directors, other Company stock option plans described in documents
incorporated by reference in the Parent SEC Reports, and under equity
compensation arrangements. Except as set forth in Section 4.3 of the Parent
Disclosure Letter, no change in such capitalization has occurred between March
2, 1998 and the date hereof, except for issuances of Parent Common Stock upon
exercise, conversion or exchange of the outstanding securities referenced in
this Section 4.3. As of the date hereof, no shares of Parent Preferred Stock
were issued or outstanding. The authorized capital stock of Sub consists of
100,000,000 shares of Sub Common Stock. As of the date hereof, 1,000 shares of
Sub Common Stock are issued and outstanding. All of the outstanding shares of
Parent's and Sub's respective capital stock have been duly authorized and
validly issued and are fully paid and nonassessable. Except as set forth in this
Section 4.3, the Parent Proxy Statement or as disclosed in the disclosure letter
delivered by Parent to the Company (the "Parent Disclosure Letter"), as of the
date of this Agreement, there are no options, warrants or other rights,
agreements, or commitments, in each case, to which Parent or any of its
subsidiaries is a party, of any character relating to the issued or unissued
capital stock of Parent or any of its subsidiaries or obligating Parent or any
of its subsidiaries to issue or sell any shares of capital stock of, or other
equity interests in,
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Parent or any of its subsidiaries. All shares of Parent Common Stock subject to
issuance as aforesaid, upon issuance on the terms and conditions specified in
the instruments pursuant to which they are issuable, shall, and the shares of
Parent Common Stock to be issued pursuant to the Merger will be, duly
authorized, validly issued, fully paid and nonassessable and not subject to
preemptive rights, except as set forth in the Parent Proxy Statement. Except as
set forth in the Parent Proxy Statement or Section 4.3 of the Parent Disclosure
Letter, there are no obligations, contingent or otherwise, of Parent or any of
its subsidiaries to repurchase, redeem or otherwise acquire any shares of Parent
Common Stock or the capital stock of any subsidiary or to provide funds to or
make any material investment (in the form of a loan, capital contribution or
otherwise) in any such subsidiary or any other entity other than guarantees of
obligations of subsidiaries entered into in the ordinary course of business. All
of the outstanding equity interests (other than directors' qualifying shares) of
each of Parent's subsidiaries are duly authorized, validly issued, and, where
applicable, fully paid and nonassessable and, except as set forth in the Parent
Proxy Statement or for such matters as would not, individually or in the
aggregate, have a Material Adverse Effect, all such shares (other than
directors' qualifying shares) are owned by Parent or another subsidiary. The
shares of Surviving Corporation Common Stock to be issued in the Merger will,
upon issuance, be validly issued, fully paid, nonassessable and free and clear
of all security interests, liens, claims, pledges, agreements, limitations in
the holder's voting rights, charges or other encumbrances of any nature
whatsoever (in each case to which the Surviving Corporation is a party).
SECTION 4.4. AUTHORITY RELATIVE TO THIS AGREEMENT;
BOARD APPROVAL.
(a) Each of Parent and Sub has all necessary corporate power and
authority to execute and deliver this Agreement, and to perform its obligations
hereunder and to consummate the transactions contemplated hereby. The execution
and delivery of this Agreement by Parent and Sub and the consummation by Parent
and Sub of the Transactions have been duly and validly authorized by all
necessary corporate action on the part of Parent and Sub and no other corporate
proceedings on the part of Parent or Sub are necessary to authorize this
Agreement, or to consummate the Transactions (other than the approval of the
NASD listing application with respect to the issuance of shares of Parent Common
Stock in the Merger). This Agreement has been duly and validly executed and
delivered by Parent and Sub and, assuming the due authorization, execution and
delivery by the Company, constitutes the legal and binding obligations of Parent
and Sub, enforceable against Parent and Sub in accordance with its terms,
subject to (i) bankruptcy, insolvency, reorganization, moratorium or other
similar laws affecting or relating to creditors rights generally and (ii) the
availability of injunctive relief and other equitable remedies.
(b) The Board of Directors of Parent has (i) approved this
Agreement and the Transactions and (ii) determined that the Transactions are
fair to and in the best interests of the shareholders of Parent. No vote of
Parent shareholders is required in connection with the Transactions.
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SECTION 4.5. NO CONFLICT; REQUIRED FILINGS AND CONSENTS.
(a) The execution and delivery of this Agreement by Parent and
Sub do not, and the performance of their respective obligations hereunder and
the consummation of the Transactions by Parent and Sub will not, (i) conflict
with or violate the certificate of incorporation, bylaws or equivalent
organizational documents of Parent or any of its subsidiaries; (ii) subject to
compliance with the requirements set forth in Section 4.5(b), conflict with or
violate any law, rule, regulation, order, judgment or decree applicable to
Parent or any of its subsidiaries or by which their respective properties are
bound or affected; or (iii) result in any breach of or constitute a default (or
an event that with notice or lapse of time or both would become a default)
under, or alter the rights or obligations of any third party or Parent or its
subsidiaries under, or give to others any rights of termination, amendment,
acceleration, increased payments or cancellation of, or result in the creation
of a lien or other encumbrance on any of the properties or assets of Parent or
any of its subsidiaries pursuant to, any note, bond, mortgage, indenture,
contract, agreement, lease, license, permit, franchise or other instrument or
obligation to which Parent or any of its subsidiaries is a party or by which
Parent or any of its subsidiaries or any of their respective properties are
bound or affected, except in the cases of clauses (ii) and (iii) above, for any
such conflicts, violations, breaches, defaults or other alterations or
occurrences that would not prevent or delay consummation of the Merger in any
material respect, or otherwise prevent Parent and Sub from performing their
respective obligations under this Agreement in any material respect, and would
not have, individually or in the aggregate, a Material Adverse Effect. Section
4.5(a) of the Parent Disclosure Letter lists all material consents, waivers and
approvals under any agreements, contracts, licenses or leases required to be
obtained by Parent or its subsidiaries in connection with the consummation of
the Transactions.
(b) The execution and delivery of this Agreement by Parent and
Sub do not, and the performance of their respective obligations hereunder and
the consummation of the Transactions by Parent and Sub will not, require any
consent, approval, authorization or permit of, or registration or filing with or
notification to, any Governmental Entity except (i) the filing of documents to
satisfy the applicable requirements, if any, of the Exchange Act and state
takeover laws, (ii) the filing with the SEC of the Proxy Statement and the
declaration of effectiveness of the S-4 by the SEC, (iii) the filing of the
Illinois Articles of Merger with, and the issuance of the Illinois Certificate
of Merger by, the Secretary of State of the State of Illinois, (iv) filings
under the rules and regulations of the NASD, (v) filings under state securities
laws ("Blue Sky Laws"), and (vii) where the failure to obtain such consents,
approvals, authorizations or permits, or to make such filings or notifications
(A) would not prevent or delay consummation of the Merger in any material
respect or otherwise prevent or delay in any material respect Parent or Sub from
performing their respective obligations under this Agreement or (B) would not,
individually or in the aggregate, have a Material Adverse Effect.
SECTION 4.6. COMPLIANCE; PERMITS.
(a) Except as disclosed in Section 4.6 or Section 4.9 of the
Parent Disclosure Letter, neither Parent nor any of its subsidiaries is in
conflict with, or in default or violation (i) of, any law, rule, regulation,
order, judgment or decree applicable to Parent or any of its
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subsidiaries or by which any of their respective properties is bound, or (ii)
whether after the giving of notice or passage of time or both, of, any note,
bond, mortgage, indenture, contract, agreement, lease, license, permit,
franchise or other instrument or obligation to which Parent or any of its
subsidiaries is a party or by which Parent or any of its subsidiaries or any of
their respective properties is bound, except for any such conflicts, defaults or
violations which do not and would not have, individually or in the aggregate, a
Material Adverse Effect.
(b) Parent and its subsidiaries hold all permits, licenses,
variances, exemptions, orders and approvals from Governmental Entities which are
material to the operation of the business of Parent and its subsidiaries taken
as a whole (collectively, the "Parent Permits"). Parent and its subsidiaries are
in compliance with the terms of the Parent Permits, except where the failure to
so comply would not, individually or in the aggregate, have a Material Adverse
Effect.
SECTION 4.7. SEC FILINGS; FINANCIAL STATEMENTS.
(a) Parent has made available to the Company a correct and
complete copy of each report, schedule, registration statement and definitive
proxy statement filed by Parent with the SEC on or after January 1, 1997 and
prior to the date of this Agreement (the "Parent SEC Reports"), which are all
the forms, reports and documents required to be filed by Parent with the SEC
since January 1, 1997. As of their respective dates, the Parent SEC Reports and
any forms, reports and other documents filed by Parent and Sub after the date of
this Agreement (i) complied or will comply in all material respects with the
requirements of the Securities Act or the Exchange Act, as the case may be, and
the rules and regulations of the SEC thereunder applicable thereto, and (ii) did
not at the time they were filed (or if amended or superseded by a filing prior
to the date of this Agreement then on the date of such filing) or will not at
the time they are filed contain any untrue statement of a material fact or omit
to state a material fact necessary in order to make the statements made, in
light of the circumstances under which they were made, not misleading, provided,
however, that no representation is made with respect to information included in
the Parent SEC Reports that was provided in writing by the Company. None of
Parent's subsidiaries is required to file any reports or other documents with
the SEC.
(b) Each of the consolidated financial statements (including, in
each case, any related notes thereto) contained in the Parent SEC Reports
complied as to form in all material respects with applicable accounting
requirements and with the published rules and regulations of the SEC with
respect thereto, had been prepared in accordance with GAAP applied on a
consistent basis throughout the periods involved (except as may be indicated in
the notes thereto or, in the case of the unaudited statements, as permitted by
Form 10-Q or the Exchange Act regulations promulgated by the SEC) and each
fairly presented the consolidated financial position of Parent and its
consolidated subsidiaries in all material respects as at the respective dates
thereof and the consolidated results of its operations and cash flows for the
periods indicated (subject, in the case of the unaudited interim financial
statements, to normal audit adjustments which were not and are not expected,
individually or in the aggregate, to be material in amount).
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(c) Except as disclosed in Section 4.7 of the Parent Disclosure
Letter, neither Parent nor any of its subsidiaries has any liabilities
(absolute, accrued, contingent or otherwise) of a nature required to be
disclosed on a balance sheet or in the related notes to the consolidated
financial statements prepared in accordance with GAAP which are, individually or
in the aggregate, material to the business, results of operations or financial
condition of Parent and its subsidiaries taken as a whole, except liabilities
(i) set forth in the Parent SEC Reports filed with the SEC prior to the date of
this Agreement or provided for in Parent's balance sheet (and related notes
thereto) as of December 31, 1996 filed in the Parent SEC Reports or (ii)
incurred since December 31, 1996 in the ordinary course of business, none of
which are material to the business, results of operations or financial condition
of Parent and its subsidiaries, taken as a whole.
SECTION 4.8. ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as
disclosed in the Parent SEC Reports or in Section 4.8 of the Parent Disclosure
Letter or as contemplated by this Agreement, since December 31, 1996, (a) Parent
and its subsidiaries have, in all material respects, conducted their businesses
only in the ordinary course and in a manner consistent with past practice and
have not taken any of the actions set forth in Section 5.3(b)(i)-(iv), and (b)
there has not been (i) any transaction, commitment, dispute or other event or
condition (financial or otherwise) of any character (whether or not in the
ordinary course of business), individually or in the aggregate, having or which
could reasonably be expected to have a Material Adverse Effect or (ii) any
material change by Parent in its accounting methods, principles or practices
except as required by concurrent changes in GAAP.
SECTION 4.9. ABSENCE OF LITIGATION. Except as disclosed in
Section 4.9 of the Parent Disclosure Letter or the Parent SEC Reports, there are
no claims, actions, suits, investigations or proceedings pending or, to the best
knowledge of Parent, threatened against Parent or any of its subsidiaries before
any court, arbitrator or administrative, governmental or regulatory authority or
body, domestic or foreign, that, individually or in the aggregate, would, or
could reasonably be expected to, have a Material Adverse Effect, nor is there
any judgment, decree, injunction, rule or order of any Governmental Entity or
arbitrator outstanding against Parent or any of its subsidiaries (a) having or
which would, or could reasonably be expected to, have a Material Adverse Effect
or (b) which seeks to restrain, enjoin or delay consummation of any of the
Transactions.
SECTION 4.10. REGISTRATION STATEMENT; PROXY STATEMENT. None of
the information supplied or to be supplied by Parent for inclusion or
incorporation by reference in the S-4 will, at the time the S-4 is filed with
the SEC and at the time it becomes effective under the Securities Act, contain
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they are made, not
misleading, provided, however, that no representation is made with respect to
information included in the S-4 that was provided in writing by the Company. The
Proxy Statement will comply as to form in all material respects with the
provisions of the Exchange Act and the rules and regulations promulgated by the
SEC thereunder, and the S-4 will comply as to form in all material respects with
the provisions of the Securities Act and the rules and regulations promulgated
by the SEC thereunder.
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SECTION 4.11. BROKERS. No broker, finder or investment banker
(other than ▇▇▇▇▇ & Company Incorporated ("Parent Banker")) is entitled to any
brokerage, finder's or other fee or commission in connection with the Merger and
the transactions contemplated by this Agreement based upon arrangements made by
or on behalf of Parent or Sub.
SECTION 4.12. OPINION OF FINANCIAL ADVISOR. In connection with
its March 13, 1998 approval of the Transactions, Parent's Board of Directors has
received the oral opinion of Parent Banker that, as of March 13, 1998, the
Exchange Ratio for each share of Company Common Stock (other than shares owned
by Parent and its subsidiaries) is fair to Parent from a financial point of
view, which opinion will be confirmed in writing, a copy of which will be
delivered to the Company.
SECTION 4.13. INTERIM OPERATIONS OF SUB. Sub is a direct wholly
owned subsidiary of Parent and was formed solely for the purpose of engaging in
the Transactions, has engaged in no other business activities and has conducted
its operations only as contemplated hereby.
SECTION 4.14. EMPLOYEE BENEFIT PLANS.
(a) Parent will deliver or make available to the Company as soon
as practicable after the execution of this Agreement true and complete copies
(or, in the case of bonus or other incentive plans, summaries thereof) of all
material pension, retirement, profit-sharing, deferred compensation, stock
option, employee stock ownership, severance pay, vacation, bonus or other
material incentive plans, all other material written employee programs,
arrangements or agreements, whether arrived at through collective bargaining or
otherwise, all material medical, vision, dental or other health plans, all life
insurance plans and all other material employee benefit plans or fringe benefit
plans, including, without limitation, all "employee benefit plans" as that term
is defined in Section 3(3) of ERISA, currently adopted, maintained by, sponsored
in whole or in part by, or contributed to by Parent or any Commonly Controlled
Entity of Parent for the benefit of current or former employees, retirees,
dependents, spouses, directors, independent contractors or other beneficiaries
and under which current or former employees, retirees, dependents, spouses,
directors, independent contractors or other beneficiaries are eligible to
participate (collectively, the "Parent Benefit Plans"). Any of the Parent
Benefit Plans which is an "employee pension benefit plan," as that term is
defined in Section 3(2) of ERISA, is referred to herein as a "Parent ERISA
Plan." Except as set forth in Section 4.14 of the Parent Disclosure Letter, no
Parent Benefit Plan is or has been a Multiemployer Plan within the meaning of
Section 3(37) of ERISA.
(b) All Parent Benefit Plans are in compliance with the
applicable terms of ERISA and the Code and any other applicable laws, rules and
regulations the breach or violation of which could result in a Material Adverse
Effect.
(c) No parent ERISA Plan is subject to Title IV or Section 302 of
ERISA and no circumstances exist that could result in material liability to
Parent under Title IV or Section 302 of ERISA.
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(d) Neither the execution and delivery of this Agreement nor the
consummation of the Transactions (or any termination of employment in connection
with the Transactions) will (i) result in any material payment becoming due to
any current or former director or employee of Parent or any of its affiliates
from Parent or any of its affiliates under any Parent Benefit Plan or otherwise,
(ii) materially increase any benefits otherwise payable under any Parent Benefit
Plan, or (iii) result in any acceleration of the time of payment or vesting of
any such benefits to any material extent.
SECTION 4.15. TAX MATTERS. Neither Parent nor any of its
affiliates has taken or agreed to take any action (including in connection with
the Transactions) that would prevent the Merger from constituting a
reorganization qualifying under the provisions of Section 368(a) of the Code.
ARTICLE 5
CONDUCT AND TRANSACTIONS PRIOR TO
EFFECTIVE TIME; ADDITIONAL AGREEMENTS
SECTION 5.1. INFORMATION AND ACCESS. From the date of this
Agreement and continuing until the Effective Time, the Company and Parent each
agrees as to itself and its subsidiaries that it shall afford and, with respect
to clause (b) below, shall cause its independent auditors to afford, (a) to the
officers, independent auditors, counsel and other representatives of the other
reasonable access to its and its subsidiaries' properties, books, records
(including tax returns filed and those in preparation) and executives and
personnel in order that the other may have a full opportunity to make such
investigation as it reasonably desires to make of the other, and, in the case of
access to the Company's executives and personnel, to plan and provide for the
Merger and for the future direction of the Company, and (b) to the independent
auditors of the other, reasonable access to the audit work papers and other
records of its independent auditors. No investigation pursuant to this Section
5.1 shall affect or otherwise obviate or diminish any representations and
warranties of any party or conditions to the obligations of any party. Promptly
following the date hereof, the Company will deliver to Parent a complete copy of
its current operating budget. Except as required by law or stock exchange or
NASD regulation, any information furnished pursuant to this Section 5.1 shall be
treated confidentially by such party, its officers, independent accountants and
other representatives and advisors (except for such information as has otherwise
been made public (other than by reason of a violation of this Section 5.1)),
subject, in the case of information furnished to Parent, to any limitations in
the letter agreement, dated as of February 9, 1998, between Parent and the
Company (the "Confidentiality Agreement").
SECTION 5.2. CONDUCT OF BUSINESS OF THE COMPANY. Except as
contemplated by this Agreement (including Section 5.2 of the Company Disclosure
Letter) or with respect to Approved Matters, and excluding transactions between
the Company and its wholly owned subsidiaries or between such subsidiaries,
during the period from the date of this Agreement and continuing until the
Effective Time or until the termination of this Agreement pursuant to Section
7.1, (a) the Company and its subsidiaries shall conduct their respective
businesses in the
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ordinary and usual course consistent with past practice (including, without
limitation, with respect to the terms of any new arena or venue contracts or
renewals of existing arena or venue contracts (such contracts, "Ordinary Venue
Contracts"), or financial expenditures), and (b) neither the Company nor any of
its subsidiaries shall without the prior written consent of Parent:
(i) declare, set aside or pay any dividends on or make any other
distribution in respect of any of its capital stock, except dividends or
distributions declared and paid by a subsidiary of the Company only to
the Company or another subsidiary of the Company;
(ii) split, combine or reclassify any of its capital stock or
issue or authorize or propose the issuance or authorization of any other
securities in respect of, in lieu of, or in substitution for shares of
its capital stock or repurchase, redeem or otherwise acquire any shares
of its capital stock;
(iii) issue, deliver, pledge, encumber or sell, or authorize or
propose the issuance, delivery, pledge, encumbrance or sale of, or
purchase or propose the purchase of, any shares of its capital stock or
securities convertible into, or rights, warrants or options to acquire,
any such shares of capital stock or other convertible securities (other
than the issuance of such capital stock to the Company or a wholly owned
subsidiary of the Company, or upon the exercise or conversion of
outstanding options or warrants in accordance with the Stock Plan or the
▇▇▇▇▇ Option in effect on the date of this Agreement or other
convertible or exchangeable securities outstanding on the date hereof,
in each case in accordance with its present terms), authorize or propose
any change in its equity capitalization, or amend any of the financial
or other economic terms of such securities or the financial or other
economic terms of any agreement relating to such securities;
(iv) amend its Articles of Incorporation or Bylaws in any manner;
(v) take any action that would or could reasonably be expected to
result in any of its representations and warranties set forth in this
Agreement being untrue or in any of the conditions to the Merger set
forth in Article not being satisfied;
(vi) merge or consolidate with any other person, or acquire any
assets or capital stock of any other person, other than acquisitions of
assets in the ordinary course of business, such as for inventory or
relating to the ordinary operations of the Company;
(vii) incur any indebtedness or guarantee any indebtedness of
another person or increase the indebtedness outstanding under any
current agreement relating to indebtedness, other than trade payables,
or as disclosed on Section 5.2 of the Company Disclosure Letter, in each
case in the ordinary course of business;
(viii) make or authorize any capital expenditures of the Company
and its subsidiaries taken as a whole, other than capital expenditures
permitted pursuant to Section 5.2 of Company Disclosure Letter;
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(ix) except as may be required by changes in applicable law or
GAAP, change any method, practice or principle of accounting;
(x) enter into any new employment agreements, or increase the
compensation of any employee or officer of the Company or any of its
subsidiaries (including entering into any bonus, severance or consulting
agreement or other employee benefits arrangement or agreement pursuant
to which such person has the right to any form of compensation from the
Company or any of its subsidiaries), other than (A) with the prior
consent of Parent, which consent will not be unreasonably withheld, or
(B) as required by law or by written agreements in effect on the date
hereof with such person, or otherwise amend in any material respect any
existing agreements with any such person or use its discretion to
materially amend any Company Benefit Plan or accelerate the vesting or
any payment under any Company Benefit Plan;
(xi) enter into any transaction with any officer or director of
the Company or its subsidiaries, other than as provided for in the terms
of any agreement in effect on or prior to the date hereof and described
in the Company Disclosure Letter;
(xii) enter into, amend in any material respect or waive any
material rights under or terminate any material agreement to which the
Company or any of its subsidiaries is a party, it being agreed that any
Ordinary Venue Contract with less than $2,000,000 in financial
commitments or guarantees by the Company or its subsidiaries over five
years shall not be deemed material with respect to the entering into of
a new or amending or extending an existing agreement;
(xiii) settle or otherwise compromise any material litigation,
arbitration or other judicial or administrative dispute or proceeding
relating to the Company or any of its subsidiaries; or
(xiv) authorize or enter into any contract, agreement, commitment
or arrangement to do any of the foregoing.
With respect to any matter requiring the consent of Parent under
this Section 5.2, the Company shall provide Parent with a summary of the deal
terms, and Parent shall have five business days to discuss the matter with
representatives of the Company and to indicate whether it consents to such
matter. If Parent does not respond by the close of business on the fifth
business day after it receives the notice hereunder, then such matter shall be
deemed to have been consented to, and the Company may proceed on the basis of
the terms described to Parent in the notice. If Parent advises the Company that
it does not consent to such matter in such time period, the Company shall not
take such action.
SECTION 5.3. CONDUCT OF BUSINESS OF PARENT. Except as
contemplated by this Agreement (including the Parent Disclosure Letter), and the
Parent Proxy Statement or the Investment Agreement, as amended and restated as
of December 18, 1997, among Parent, Universal Studios, Inc. ("Universal"), Home
Shopping Network, Inc., and Liberty Media Corporation ("Liberty") (the
"Investment Agreement") and excluding transactions between
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Parent and its wholly owned subsidiaries or between such subsidiaries, during
the period from the date of this Agreement and continuing until the Effective
Time or until the termination of this Agreement pursuant to Section 7.1, (a)
Parent and its subsidiaries shall conduct their respective businesses in the
ordinary and usual course consistent with past practice, and (b) neither Parent
nor any of its subsidiaries shall without the prior written consent of the
Company:
(i) declare, set aside or pay any dividends on or make any other
distribution in respect of any of its capital stock, except the 2-for-1
stock split declared by Parent on February 20, 1998, or dividends or
distributions declared and paid by a subsidiary of Parent only to Parent
or another subsidiary of Parent;
(ii) split, combine or reclassify any of its capital stock or
issue or authorize or propose the issuance or authorization of any other
securities in respect of, in lieu of or in substitution for shares of
its capital stock, except for the 2-for-1 stock split declared by Parent
on February 20, 1998 or repurchase, redeem or otherwise acquire any
shares of its capital stock;
(iii) except for the 2-for-1 stock split declared by Parent on
February 20, 1998, issue, deliver, pledge, encumber or sell, or
authorize or propose the issuance, delivery, pledge, encumbrance or sale
of, or purchase or propose the purchase of, any shares of its capital
stock or securities convertible into, or rights, warrants or options to
acquire, any such shares of capital stock or other convertible
securities (other than (A) the issuance of such capital stock to Parent
or another wholly owned subsidiary of Parent, or upon the exercise or
conversion of options or other convertible or exchangeable securities
outstanding on the date of this Agreement or which Parent is obligated
to issue pursuant to the Investment Agreement and related agreements
with Universal and Liberty, or (B) the granting of options or stock to
employees in the ordinary course of business and the issuance of Parent
Common Stock upon exercise thereof) or authorize or propose any change
in its equity capitalization;
(iv) amend its Certificate of Incorporation in any manner or
amend its Bylaws in any material respect; (v) take any action that would
or could reasonably be expected to result in any of its representations
and warranties set forth in this Agreement being untrue or in any of the
conditions to the Merger set forth in Article 6 not being satisfied; or
(vi) authorize or enter into any contract, agreement, commitment
or arrangement to do any of the foregoing.
SECTION 5.4. PREPARATION OF S-4 AND PROXY STATEMENT; OTHER
FILINGS. As promptly as practicable after the date of this Agreement, Parent and
the Company shall prepare and file with the SEC a preliminary Proxy Statement in
form and substance reasonably satisfactory to each of Parent and the Company and
Parent shall prepare and file with the SEC the S-4, in which the Proxy Statement
(or portion thereof) will be included as part of a prospectus. Each of Parent
and the Company shall use its reasonable best efforts to respond to any comments
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of the SEC, to have the S-4 declared effective under the Securities Act as
promptly as practicable after such filing and to cause the Proxy Statement
approved by the SEC to be mailed to the Company's shareholders at the earliest
practicable time. As promptly as practicable after the date of this Agreement,
Parent and the Company shall prepare and file any other filings required under
the Exchange Act, the Securities Act or any other federal or Blue Sky Laws
relating to the Merger and the Transactions, including, without limitation or
under state takeover laws (the "Other Filings"). The Company and Parent will
notify the other party promptly of the receipt of any comments from the SEC or
its staff and of any request by the SEC or its staff or any other government
officials for amendments or supplements to the S-4, the Proxy Statement or any
Other Filing or for additional information, and will supply the other with
copies of all correspondence between it or any of its representatives, on the
one hand, and the SEC, or its staff or any other government officials, on the
other hand, with respect to the S-4, the Proxy Statement, the Merger or any
Other Filing. The Proxy Statement, the S-4 and the Other Filings shall comply in
all material respects with all applicable requirements of law. Whenever any
event occurs which is required to be set forth in an amendment or supplement to
the Proxy Statement, the S-4 or any Other Filing, Parent or the Company, as the
case may be, shall promptly inform the other party of such occurrence and
cooperate in filing with the SEC or its staff or any other government officials,
and/or mailing to shareholders of the Company, such amendment or supplement. The
Proxy Statement shall include, subject to applicable fiduciary duties (based on
advice of outside counsel to the Special Committee), the recommendations of the
Board of Directors of the Company in favor of approval of this Agreement and the
Transactions; provided, that the Board of Directors of the Company will not
recommend approval of this Agreement and the Transactions without the
recommendation of the Special Committee. The Company and Parent each shall
promptly provide the other (or its counsel) copies of all filings made by it
with any Governmental Entity in connection with this Agreement and the
Transactions. Parent shall take all necessary actions to cause the shares of
Parent Common Stock issuable in connection with the Stock Plan and the ▇▇▇▇▇
Option (to the extent not exercised at or prior to the Effective Time) to be
registered under the Securities Act. Prior to the Effective Time, the Company
shall take appropriate action so that Parent's assumption of the Stock Plan as
of the Effective Time shall be effective.
SECTION 5.5. LETTER OF INDEPENDENT AUDITORS. The Company and
Parent shall use all reasonable efforts to cause to be delivered to the other
"comfort" letters of Ernst & Young LLP, the Company's independent auditors, and
KPMG Peat Marwick LLP, the Company's previous independent auditors, and of Ernst
& Young LLP, Parent's independent auditors, in each case dated and delivered the
date on which the S-4 shall become effective and as of the Effective Time, and
addressed to the Boards of Directors of the Company and Parent, in form and
substance reasonably satisfactory to the other and customary in scope and
substance for letters delivered by independent auditors in connection with
registration statements similar to the S-4.
SECTION 5.6. SHAREHOLDERS MEETING. The Company shall call its
Shareholders Meeting to be held as promptly as practicable for the purpose of
voting upon this Agreement. The Company shall use its reasonable best efforts to
hold the Shareholders Meeting on the date as soon as practicable after the date
on which the S-4 becomes effective. At the Shareholders
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Meeting, Parent agrees to vote, or cause to be voted, all shares of Company
Common Stock beneficially owned by it in favor of the Transactions and approval
of this Agreement.
SECTION 5.7. AGREEMENTS TO TAKE REASONABLE ACTION.
(a) The parties shall take, and shall cause their respective
subsidiaries to take, all reasonable actions necessary to comply promptly with
all legal requirements which may be imposed on them with respect to the Merger
and shall take all reasonable actions necessary to cooperate promptly with and
furnish information to the other parties in connection with any such
requirements imposed upon them or any of their subsidiaries in connection with
the Merger. Each party shall take, and shall cause its subsidiaries to take, all
reasonable actions necessary (i) to obtain (and will take all reasonable actions
necessary to promptly cooperate with the other parties in obtaining) any
clearance, consent, authorization, order or approval of, or any exemption by,
any Governmental Entity, or other third party, required to be obtained or made
by it (or by the other parties or any of their respective subsidiaries) in
connection with the Transactions or the taking of any action contemplated by
this Agreement; (ii) to lift, rescind or mitigate the effect of any injunction
or restraining order or other order adversely affecting its ability to
consummate the Transactions; (iii) to fulfill all conditions applicable to the
parties pursuant to this Agreement; and (iv) to prevent, with respect to a
threatened or pending temporary, preliminary or permanent injunction or other
order, decree or ruling or statute, rule, regulation or executive order, the
entry, enactment or promulgation thereof, as the case may be; provided, however,
that with respect to clauses (i) through (iv) above, the parties will take only
such curative measures (such as licensing and divestiture) as the parties
determine to be reasonable.
(b) Subject to the terms and conditions of this Agreement, each
of the parties shall use all reasonable efforts to take, or cause to be taken,
all actions and to do, or cause to be done, all things necessary, proper or
advisable under applicable laws and regulations to consummate and make effective
as promptly as practicable the Transactions, subject to the appropriate approval
of the shareholders of the Company. Upon the request of Parent, the Company
will, and will use its reasonable efforts to cause its officers to, cooperate
with a designated search committee of officers and/or directors of Parent
appointed by Parent to identify an appropriate successor Chief Executive Officer
for the Company in connection with the Merger. In the event that Parent believes
that the Company is not in compliance with the foregoing, Parent shall provide
written notice to the non-employee directors of the Company so that the Company
may so comply by taking such action as such directors deem appropriate in their
good faith judgment.
SECTION 5.8. CONSENTS. Parent, Sub and the Company shall each use
all reasonable efforts to obtain the consent and approval of, or effect the
notification of or filing with, each person or authority whose consent or
approval is required in order to permit the consummation of the Merger and the
Transactions and to enable the Surviving Corporation to conduct and operate the
business of the Company and its subsidiaries substantially as presently
conducted and as contemplated to be conducted.
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SECTION 5.9. NASDAQ QUOTATION. Parent shall use its reasonable
best efforts to cause the shares of Parent Common Stock issuable to the
shareholders of the Company in the Merger to be eligible for quotation on the
NASD National Market (or other national market or exchange on which Parent
Common Stock is then traded or quoted) prior to the Effective Time.
SECTION 5.10. AFFILIATES. At least ten Business Days prior to the
date of the Shareholders Meeting, the Company shall deliver to Parent a list of
names and addresses of those persons who were, at the record date for the
Company Shareholders Meeting, "affiliates" of the Company within the meaning of
Rule 145 under the Securities Act. The Company shall use its reasonable efforts
to deliver or cause to be delivered to Parent, prior to the Effective Time, from
each of the affiliates of the Company identified in the foregoing list,
agreements substantially in the form attached to this Agreement as Exhibit A.
SECTION 5.11. INDEMNIFICATION AND INSURANCE. Parent shall cause
the Surviving Corporation to maintain in effect, for a period of six years after
the Effective Time, the current provisions regarding indemnification of officers
and directors (including with respect to advancement of expenses) contained in
the Articles of Incorporation and Bylaws of the Company. Upon the Effective
Time, Parent shall assume all of the obligations of the Company under the
Company's existing indemnification agreements with each of the existing and
former directors and officers of the Company, as such agreements relate to the
indemnification of such persons for expenses and liabilities arising from facts
or events which occurred on or before the Effective Time or relating to the
Merger or Transactions. In addition, Parent agrees to provide to the current
directors and officers of the Company the maximum indemnification protection
(including with respect to advancement of expenses) permitted under the Illinois
Statute. Parent agrees to cause the Company to have in effect, as of the
Effective Time and covering the six-year period following the Effective Time,
for the benefit of the Company's current and former directors and officers,
insurance in the same amount and on substantially the same terms as the
Company's current directors' and officers' policies with respect to acts or
omissions occurring on or prior to the Effective Time.
SECTION 5.12. NOTIFICATION OF CERTAIN MATTERS. Each of the
Company, Parent and Sub shall give prompt notice to the other such parties of
the occurrence, or failure to occur, of any event, which occurrence or failure
to occur would be likely to cause (a) any representation or warranty contained
in this Agreement to be untrue or inaccurate in any material respect at any time
from the date of this Agreement to the Effective Time, or (b) any material
failure of the Company, Parent, or Sub as the case may be, or of any officer,
director, employee or agent thereof, to comply with or satisfy any covenant,
condition or agreement to be complied with or satisfied by it under this
Agreement. Notwithstanding the foregoing, the delivery of any notice pursuant to
this Section shall not limit or otherwise affect the remedies available
hereunder to the party receiving such notice.
SECTION 5.13. EMPLOYEE AGREEMENTS. From and after the Effective
Time, Parent shall cause the Surviving Corporation to fulfill all written
employment, severance, termination, consulting and retirement agreements, as in
effect on the date hereof, to which the Company or any of its subsidiaries is a
party, pursuant to the terms thereof and applicable law.
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SECTION 5.14. REORGANIZATION. From and after the date hereof,
each of Parent and the Company and their respective subsidiaries shall not, and
shall use reasonable efforts to cause their affiliates not to, take any action,
or fail to take any action, that would jeopardize qualification of the Merger as
a reorganization within the meaning of Section 368(a) of the Code or enter into
any contract, agreement, commitment or arrangement that would have such effect.
ARTICLE 6
CONDITIONS PRECEDENT
SECTION EXCHANGE 6.1. CONDITIONS TO EACH PARTY'S OBLIGATION TO
EFFECT THE MERGER. The respective obligations of each party to effect the Merger
are subject to the satisfaction prior to the Closing Date of the following
conditions:
(a) Shareholder Approval. This Agreement shall have been approved
and adopted by the requisite vote of the shareholders of the Company, in
accordance with all applicable provisions of the Illinois Statute.
(b) Effectiveness of the S-4. The S-4 shall have been declared
effective by the SEC under the Securities Act and shall not be the
subject of any stop order or proceeding by the SEC seeking a stop order.
(c) Governmental Entity Approvals. All other material
authorizations, consents, orders or approvals of, or declarations or
filings with, or expiration of waiting periods imposed by, any
Governmental Entity necessary for the Merger and the consummation of the
Transactions shall have been filed, expired or been obtained, other than
those that, individually or in the aggregate, the failure to be filed,
expired or obtained would not, in the reasonable opinion of Parent, have
a Material Adverse Effect on the Company or Parent.
(d) No Injunctions or Restraints; Illegality. No temporary
restraining order, preliminary or permanent injunction or other order
issued by any court of competent jurisdiction or other legal restraint
or prohibition preventing the consummation of the Merger or the other
Transactions shall be in effect, nor shall any proceeding brought by an
administrative agency or commission or other governmental authority or
instrumentality, domestic or foreign, seeking any of the foregoing be
pending or threatened; and there shall not be any action taken, or any
statute, rule, regulation or order (whether temporary, preliminary or
permanent) enacted, entered or enforced which makes the consummation of
the Merger or the other Transactions illegal or prevents or prohibits
the Merger or the other Transactions.
(e) NASDAQ Quotation. The shares of Parent Common Stock issuable
to the holders of the Company Common Stock pursuant to the Merger shall
have been authorized for quotation on the NASD National Market (or other
national market or
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exchange on which Parent Common Stock is then traded or quoted), upon
official notice of issuance.
SECTION 6.2. CONDITIONS OF OBLIGATIONS OF PARENT AND SUB. The
obligations of Parent and Sub to effect the Merger are subject to the
satisfaction of the following additional conditions, unless waived in writing by
Parent:
(a) Representations and Warranties. The representations and
warranties of the Company set forth in this Agreement shall be true and
correct or, in the case of representations and warranties not containing
any materiality qualifier, including, without limitation, "Material
Adverse Effect," shall be true and correct in all material respects (i)
as of the date hereof and (ii) as of the Closing Date, as though made on
and as of the Closing Date (provided, that in the cases of clauses (i)
and (ii), any such representation and warranty made as of a specific
date shall be true and correct as of such specific date), and Parent
shall have received certificates to such effect signed by the Chief
Executive Officer or the Chief Financial Officer of the Company with
respect to Company matters.
(b) Performance of Obligations of the Company. The Company shall
have performed in all material respects all of its respective
obligations and covenants, taken as a whole, required to be performed by
it under this Agreement prior to or as of the Closing Date, and Parent
shall have received a certificate to such effect signed by the Chief
Executive Officer or the Chief Financial Officer of the Company.
(c) Consents. Parent and Sub shall have received duly executed
copies of all material third-party consents and approvals contemplated
by this Agreement or the Company Disclosure Letter to be obtained by the
Company in form and substance reasonably satisfactory to Parent and Sub,
except those consents the failure to so receive would not, individually
or in the aggregate, have a Material Adverse Effect on the Company.
(d) Tax Opinion. Parent and Sub shall have received the opinion,
dated the Closing Date, of Wachtell, Lipton, ▇▇▇▇▇ & ▇▇▇▇, special
counsel to Parent, based upon customary representations, to the effect
that (i) the Merger will be treated for federal income tax purposes as a
reorganization within the meaning of Section 368(a) of the Code, and
that each of the Company, Sub and Parent will be a party to that
reorganization within the meaning of Section 368(b) of the Code, and
(ii) no taxable gain or loss will be recognized, for federal income tax
purposes, by shareholders of the Company who exchange Company Common
Stock for shares of Parent Common Stock pursuant to the Merger (except
with respect to cash received in lieu of fractional shares).
SECTION 6.3. CONDITIONS OF OBLIGATIONS OF THE COMPANY. The obligation of
the Company to effect the Merger is subject to the satisfaction of the following
conditions, unless waived in writing by the Company:
(a) Representations and Warranties. The representations and
warranties of Parent and Sub set forth in this Agreement shall be true
and correct or, in the case of
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representations and warranties not containing any materiality qualifier,
including, without limitation, "Material Adverse Effect," shall be true
and correct in all material respects (i) as of the date hereof and (ii)
as of the Closing Date, as though made on and as of the Closing Date
(provided, that in the cases of clauses (i) and (ii), any such
representation and warranty made as of a specific date shall be true and
correct as of such specific date), and the Company shall have received
certificates to such effect signed by a senior executive officer of
Parent and of Sub to such effect with respect to Parent matters and Sub
matters, respectively.
(b) Performance of Obligations of Parent and Sub. Each of Parent
and Sub shall have performed in all material respects all of their
respective obligations and covenants, taken as a whole, required to be
performed by such party under this Agreement prior to or as of the
Closing Date, and the Company shall have received certificates to such
effect signed by a senior executive officer of Parent and of Sub with
respect to Parent and Sub matters, respectively.
(c) Consents. The Company shall have received duly executed
copies of all material third-party consents and approvals contemplated
by this Agreement and the Parent Disclosure Letter to be obtained by
Parent in form and substance reasonably satisfactory to the Company,
except those consents the failure to so receive, would not, individually
or in the aggregate, have a Material Adverse Effect on Parent.
(d) Tax Opinion. The Company shall have received the opinion,
dated the Closing Date, of Shearman & Sterling, special counsel to the
Company, based upon customary representations, to the effect that (i)
the Merger will be treated for federal income tax purposes as a
reorganization within the meaning of Section 368(a) of the Code, and
that each of the Company, Sub and Parent will be a party to that
reorganization within the meaning of Section 368(b) of the Code, and
(ii) no taxable gain or loss will be recognized, for federal income tax
purposes, by shareholders of the Company who exchange Company Common
Stock for shares of Parent Common Stock pursuant to the Merger (except
with respect to cash received in lieu of fractional shares).
(e) Officer of Parent. Mr. ▇▇▇▇▇ ▇▇▇▇▇▇ shall continue to be the
Chief Executive Officer of Parent.
ARTICLE 7
TERMINATION
SECTION 7.1. TERMINATION. This Agreement may be terminated at any time prior to
the Effective Time of the Merger, whether before or after approval of the Merger
by the shareholders of the Company:
(a) by mutual written consent duly authorized by the Boards of
Directors of Parent and the Company based on the recommendation of the
Special Committee;
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(b) by either Parent or the Company if the Merger shall not have
been consummated by December 31, 1998 (provided, that the right to
terminate this Agreement under this Section 7.1(b) shall not be
available to any party whose action or failure to act has been the cause
of or resulted in the failure of the Merger to occur on or before such
date and such action or failure to act constitutes a breach of this
Agreement);
(c) by either Parent or the Company, if (i) a court of competent
jurisdiction or other Governmental Entity shall have issued an order,
decree or ruling or taken any other action, in any case having the
effect of permanently restraining, enjoining or otherwise prohibiting
the Merger, which order, decree or ruling is final and nonappealable or
(ii) a governmental, regulatory or administrative agency or commission
shall seek to enjoin the Merger and the terminating party reasonably
believes that the time period required to resolve such governmental
action and the related uncertainty is reasonably likely to have a
Material Adverse Effect on either Parent or the Company;
(d) by either Parent or the Company, if the required approvals of
the shareholders of the Company contemplated by this Agreement shall not
have been obtained by reason of the failure to obtain the required vote
upon a vote taken at a Shareholders Meeting or at any adjournment
thereof (provided, that the right to terminate this Agreement under this
Section 7.1(d) shall not be available to any party where the failure to
obtain shareholder approval of such party shall have been caused by the
action or failure to act of such party in breach of this Agreement);
(e) by Parent, if the Board of Directors of the Company acting on
the recommendation of the Special Committee shall have withdrawn or
modified its recommendation concerning the Merger in accordance with
Section 5.4 hereof;
(f) by the Company, upon a breach of any representation,
warranty, covenant or agreement on the part of Parent set forth in this
Agreement, or if any representation or warranty of Parent shall have
become untrue, in either case such that the conditions set forth in
Section 6.3(a) or Section 6.3(b) would not be satisfied as of the time
of such breach or as of the time such representation or warranty shall
have become untrue, provided, that if such inaccuracy in Parent's
representations and warranties or breach by Parent is curable by Parent
through the exercise of its reasonable efforts and for so long as Parent
continues to exercise such reasonable efforts, the Company may not
terminate this Agreement under this Section 7.1(f); or
(g) by Parent, upon a breach of any representation, warranty,
covenant or agreement on the part of the Company set forth in this
Agreement, or if any representation or warranty of the Company shall
have become untrue, in either case such that the conditions set forth in
Section 6.2(a) or Section 6.2(b) would not be satisfied as of the time
of such breach or as of the time such representation or warranty shall
have become untrue, provided, that if such inaccuracy in the Company's
representations and warranties or breach by the Company is curable by
the Company through the exercise of its
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reasonable efforts and for so long as the Company continues to exercise
such reasonable efforts, Parent may not terminate this Agreement under
this Section 7.1(g).
SECTION 7.2. EFFECT OF TERMINATION. In the event of the termination of
this Agreement as provided in Section 7.1, this Agreement shall be of no further
force or effect, except (a) as set forth in the last sentence of Section 5.1,
this Section 7.2, Section 7.3, and Article 8, each of which shall survive the
termination of this Agreement, and (b) nothing herein shall relieve any party
from liability for any breach of this Agreement.
SECTION 7.3. FEES AND EXPENSES. All fees and expenses incurred in
connection with this Agreement and the Transactions shall be paid by the party
incurring such expenses, whether or not the Merger is consummated.
ARTICLE 8
GENERAL PROVISIONS
SECTION 8.1 AMENDMENT. This Agreement (including the Exhibits and disclosure
letters hereto) may be amended prior to the Effective Time by Parent, Sub and
the Company, by action taken by the Board of Directors of Parent and the Board
of Directors of the Company (provided, that no amendment shall be approved by
the Board of Directors of the Company unless such amendment shall have been
recommended by the Special Committee and, if required by law, approved by the
disinterested directors of the Company), at any time before or after approval of
the Merger by the shareholders of the Company but, after any such approval, no
amendment shall be made which by law requires further approval by such
shareholders without such further approval. This Agreement may not be amended
except by an instrument in writing signed on behalf of each of the parties.
SECTION 8.2. EXTENSION; WAIVER. At any time prior to the Effective Time
(whether before or after approval of the shareholders of the Company), Parent
and the Company may (a) extend the time for the performance of any of the
obligations or other acts of the other parties, (b) waive any inaccuracies in
the representations and warranties contained in this Agreement or in any
document delivered pursuant to this Agreement and (c) waive compliance with any
of the agreements or conditions contained in this Agreement. Any extension or
waiver on behalf of the Company shall be taken only upon the recommendation of
the Special Committee (and, if required by law, by the disinterested directors
of the Company). Any agreement on the part of a party to any such extension or
waiver shall be valid only if set forth in an instrument in writing signed on
behalf of such party.
SECTION 8.3. NONSURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS.
All representations, warranties and agreements in this Agreement or in any
instrument or certificate delivered pursuant to this Agreement shall be deemed
to be conditions to the Merger and shall not survive the Merger, except for the
agreements contained in Sections 2.2 (exchange of Certificates), 2.3 (Company
Options), 2.4 (further assurances), 5.11 (indemnification), 5.13 (employee
agreements) and 5.14 (reorganization), each of which shall survive the Merger.
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SECTION 8.4. ENTIRE AGREEMENT. This Agreement (including the Exhibits
and disclosure letters hereto) and the Confidentiality Agreement contain the
entire agreement among all of the parties with respect to the subject matter
hereof and supersede all prior arrangements and understandings, both written and
oral, with respect thereto, but shall not supersede any agreements among any
group of the parties hereto entered into on or after the date hereof. In this
regard, the breach of the Cooperation Agreement in and of itself shall not be
deemed to be a breach of this Agreement.
SECTION 8.5. SEVERABILITY. It is the desire and intent of the parties
that the provisions of this Agreement be enforced to the fullest extent
permissible under the law and public policies applied in each jurisdiction in
which enforcement is sought. Accordingly, in the event that any provision of
this Agreement would be held in any jurisdiction to be invalid, prohibited or
unenforceable for any reason, such provision, as to such jurisdiction, shall be
ineffective, without invalidating the remaining provisions of this Agreement or
affecting the validity or enforceability of such provision in any other
jurisdiction. Notwithstanding the foregoing, if such provision could be more
narrowly drawn so as not to be invalid, prohibited or unenforceable in such
jurisdiction, it shall, as to such jurisdiction, be so narrowly drawn, without
invalidating the remaining provisions of this Agreement or affecting the
validity or enforceability of such provision in any other jurisdiction.
SECTION 8.6. NOTICES. All notices and other communications pursuant to
this Agreement shall be in writing and shall be deemed to be sufficient if
contained in a written instrument and shall be deemed given if delivered
personally, telecopied, sent by nationally recognized, overnight courier or
mailed by registered or certified mail (return receipt requested), postage
prepaid, to the parties at the following addresses (or at such other address for
a party as shall be specified by like notice):
(a) if to Parent or Sub, to:
USA Networks, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: General Counsel
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇;
with a copy to:
Wachtell, Lipton, ▇▇▇▇▇ & ▇▇▇▇
▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
(b) if to the Company, to:
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Ticketmaster Group, Inc.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, General Counsel
Telecopier: ▇▇▇-▇▇▇-▇▇▇▇;
with a copy to:
Shearman & Sterling
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇, Esq.
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇;
and to:
▇▇▇▇, Gerber & ▇▇▇▇▇▇▇▇▇
▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
All such notices and other communications shall be deemed to have been received
(a) in the case of personal delivery, on the date of such delivery, (b) in the
case of a telecopy, when the party receiving such telecopy shall have confirmed
receipt of the communication, (c) in the case of delivery by nationally
recognized overnight courier, on the Business Day following dispatch and (d) in
the case of mailing, on the third Business Day following such mailing.
SECTION 8.7. HEADINGS. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
SECTION 8.8. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other parties, it being understood that all
parties need not sign the same counterpart.
SECTION 8.9. BENEFITS; ASSIGNMENT. This Agreement is not intended to
confer upon any person other than the parties any rights or remedies hereunder
and shall not be assigned by operation of law or otherwise; provided, however,
that the officers and directors of the Company are intended beneficiaries of the
covenants and agreements contained in Section 5.11, the Company employees having
the agreements described in Section 5.13 and the holders of Company Options
described in Section 2.3, provided, that such assignment shall not alter the
treatment of the Merger under the Code for Company shareholders, and the Company
shall
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execute any amendment to this Agreement necessary to provide the benefits of
this Agreement to any such assignee.
SECTION 8.10. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware applicable to
contracts made and to be performed therein, without giving effect to laws that
might otherwise govern under applicable principles of conflicts of law, provided
that any matter relating to the fiduciary matters affecting the Company and its
board of directors or to the mechanics and legal consequences of the Merger
shall be governed by Illinois law.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be
signed by their respective officers thereinto duly authorized, as of the date
first written above.
USA NETWORKS, INC.
By:
---------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇
Title: Senior Vice President
and General Counsel
BRICK ACQUISITION CORP.
By:
---------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇
Title: President
TICKETMASTER GROUP, INC.
By:
---------------------------------
Name:
Title:
[SIGNATURE PAGE TO AGREEMENT AND PLAN OF MERGER]
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EXHIBIT A
FORM OF COMPANY AFFILIATE LETTER
USA Networks, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Gentlemen:
I have been advised that as of the date of this letter I may be
deemed to be an "affiliate" of Ticketmaster Group, Inc., an Illinois corporation
(the "Company"), as the term "affiliate" is defined for purposes of paragraphs
(c) and (d) of Rule 145 of the rules and regulations (the "Rules and
Regulations") of the Securities and Exchange Commission (the "Commission") under
the Securities Act of 1933, as amended (the "Act"). Pursuant to the terms of the
Agreement and Plan of Merger dated as of March 20, 1998 (the "Agreement"), by
and among USA Networks, Inc., a Delaware corporation ("Parent"), Brick
Acquisition Corp., an Illinois corporation ("Sub"), and the Company, Sub will be
merged with and into the Company (the "Merger").
As a result of the Merger, I may receive shares of common stock,
par value $.01 per share, of Parent ("Parent Securities"). I would receive such
shares in exchange for shares (or options for shares) owned by me of common
stock, no par value per share, of the Company.
I represent, warrant and covenant to Parent that in the event I
receive any Parent Securities as a result of the Merger:
1. I shall not make any sale, transfer, assignment or other
disposition of the Parent Securities in violation of the Act or the
Rules and Regulations.
2. I have carefully read this letter and the Agreement and
discussed the requirements of such documents and other applicable
limitations upon my ability to sell, transfer, assign or otherwise
dispose of Parent Securities, to the extent I felt necessary, with my
counsel or counsel for the Company.
3. I have been advised that the issuance of Parent Securities to
me pursuant to the Merger has been registered with the Commission under
the Act on a Registration Statement on Form S-4. However, I have also
been advised that, because at the time the Merger is submitted for a
vote of the shareholders of the Company, (a) I may be deemed to be an
affiliate of the Company and (b) the distribution by me of the Parent
Securities has not been registered under the Act, I may not sell,
transfer, assign or otherwise dispose of Parent Securities issued to me
in the Merger unless (i) such sale, transfer, assignment or other
disposition is made in conformity with the volume and other limitations
of Rule 145 promulgated by the Commission under the Act, (ii) such sale,
transfer, assignment or other disposition has been registered under the
Act or (iii) in the opinion of counsel reasonably acceptable to Parent,
such sale, transfer, assignment or other disposition is otherwise exempt
from registration under the Act.
▇-▇
▇▇
▇. I understand that Parent is under no obligation to register
the sale, transfer, assignment or other disposition of Parent Securities
by me or on my behalf under the Act or to take any other action
necessary in order to make compliance with an exemption from such
registration available solely as a result of the Merger.
5. I also understand that there will be placed on the
certificates for the Parent Securities issued to me or any substitutions
therefor, a legend stating in substance:
THE SHARES REPRESENTED BY THIS CERTIFICATE WERE ISSUED IN A
TRANSACTION TO WHICH RULE 145 PROMULGATED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, APPLIED. THE SHARES REPRESENTED BY THIS
CERTIFICATE MAY ONLY BE TRANSFERRED IN ACCORDANCE WITH THE TERMS
OF AN AGREEMENT DATED [ ] BETWEEN THE REGISTERED HOLDER
HEREOF AND USA NETWORKS, INC., A COPY OF WHICH AGREEMENT IS ON
FILE AT THE PRINCIPAL OFFICES OF USA NETWORKS, INC.
6. I also understand that unless a sale or transfer is made in
conformity with the provisions of Rule 145, or pursuant to a
registration statement, Parent reserves the right to put the following
legend on certificates issued to any transferee:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 AND WERE ACQUIRED
FROM A PERSON WHO RECEIVED SUCH SHARES IN A TRANSACTION TO WHICH
RULE 145 PROMULGATED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, APPLIED. THE SHARES HAVE BEEN ACQUIRED BY THE HOLDER NOT
WITH A VIEW TO, OR FOR RESALE IN CONNECTION WITH, ANY
DISTRIBUTION THEREOF WITHIN THE MEANING OF THE SECURITIES ACT OF
1933, AS AMENDED, AND MAY NOT BE SOLD, PLEDGED OR OTHERWISE
TRANSFERRED EXCEPT IN ACCORDANCE WITH AN EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS
AMENDED.
It is understood and agreed that the legends set forth in
paragraphs 5 and 6 above shall be removed by delivery of substitute certificates
without such legend if the undersigned shall have delivered to Parent a copy of
a letter from the staff of the Commission, or an opinion of counsel reasonably
satisfactory to Parent in form and substance reasonably satisfactory to Parent,
to the effect that such legend is not required for purposes of the Act.
A-2
46
Execution of this letter should not be considered an admission on
my part that I am an "affiliate" of the Company as described in the first
paragraph of this letter, or as a waiver of any rights I may have to object to
any claim that I am such an affiliate on or after the date of this letter.
Very truly yours,
-----------------------------------
Name:
Accepted this ____ day of
_____________, 1998, by
USA NETWORKS, INC.
By
----------------------------------
Name:
Title:
A-3