EXHIBIT 2.1
CONFIDENTIAL
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AGREEMENT AND PLAN OF MERGER
by and among
PRECISION RESPONSE CORPORATION,
USA NETWORKS, INC.
and
P ACQUISITION CORP.
Dated as of January 12, 2000
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TABLE OF CONTENTS
Page
ARTICLE I
THE MERGER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
SECTION 1.1 The Merger . . . . . . . . . . . . . . . . . . . . . 2
SECTION 1.2 Effect on Shares of Company Common Stock . . . . . . 2
SECTION 1.3 Exchange of Certificates . . . . . . . . . . . . . . 4
SECTION 1.4 Company Options . . . . . . . . . . . . . . . . . . . 9
SECTION 1.5 Closing . . . . . . . . . . . . . . . . . . . . . . 11
ARTICLE II
THE SURVIVING CORPORATION . . . . . . . . . . . . . . . . . . . . 12
SECTION 2.1 Amended and Restated Articles of
Incorporation . . . . . . . . . . . . . . . . . . 12
SECTION 2.2 By-laws . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 2.3 Directors and Officers . . . . . . . . . . . . . . 12
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY . . . . . . . . . . 12
SECTION 3.1 Corporate Existence and Power . . . . . . . . . . . 12
SECTION 3.2 Corporate Authorization . . . . . . . . . . . . . . 13
SECTION 3.3 Consents and Approvals; No Violations . . . . . . . 14
SECTION 3.4 Capitalization . . . . . . . . . . . . . . . . . . 15
SECTION 3.5 Subsidiaries . . . . . . . . . . . . . . . . . . . 16
SECTION 3.6 SEC Documents . . . . . . . . . . . . . . . . . . . 18
SECTION 3.7 Financial Statements . . . . . . . . . . . . . . . 18
SECTION 3.8 Information Supplied . . . . . . . . . . . . . . . 19
SECTION 3.9 Absence of Material Adverse Changes, etc . . . . . 20
SECTION 3.10 Taxes . . . . . . . . . . . . . . . . . . . . . . . 21
SECTION 3.11 Employee Benefit Plans . . . . . . . . . . . . . . 24
SECTION 3.12 Litigation . . . . . . . . . . . . . . . . . . . . 26
SECTION 3.13 Compliance with Laws . . . . . . . . . . . . . . . 27
SECTION 3.14 Labor Matters . . . . . . . . . . . . . . . . . . . 28
SECTION 3.15 Certain Contracts and Arrangements . . . . . . . . 28
SECTION 3.16 Intellectual Property . . . . . . . . . . . . . . . 29
SECTION 3.17 Year 2000 Compliance . . . . . . . . . . . . . . . 30
SECTION 3.18 Finders' Fees . . . . . . . . . . . . . . . . . . . 31
SECTION 3.19 Opinion of Financial Advisors . . . . . . . . . . . 31
SECTION 3.20 Board Recommendation . . . . . . . . . . . . . . . 31
SECTION 3.21 Voting Requirements . . . . . . . . . . . . . . . . 32
SECTION 3.22 Title to Properties . . . . . . . . . . . . . . . 32
SECTION 3.23 Certain Contracts . . . . . . . . . . . . . . . . . 32
SECTION 3.24 Tax Matters . . . . . . . . . . . . . . . . . . . . 33
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER AND NEWCO. . . . . . . . . 33
SECTION 4.1 Corporate Existence and Power . . . . . . . . . . . 33
SECTION 4.2 Corporate Authorization . . . . . . . . . . . . . . 33
SECTION 4.3 Consents and Approvals; No Violations . . . . . . . 34
SECTION 4.4 Capitalization . . . . . . . . . . . . . . . . . . 35
SECTION 4.5 SEC Documents . . . . . . . . . . . . . . . . . . . 36
SECTION 4.6 Financial Statements . . . . . . . . . . . . . . . 37
SECTION 4.7 Information Supplied . . . . . . . . . . . . . . . 37
SECTION 4.8 Litigation . . . . . . . . . . . . . . . . . . . . 37
SECTION 4.9 Tax Matters . . . . . . . . . . . . . . . . . . . . 38
SECTION 4.10 Compliance with Laws . . . . . . . . . . . . . . . 38
SECTION 4.11 Share Ownership . . . . . . . . . . . . . . . . . . 38
SECTION 4.12 Ownership of Newco; No Prior Activities;
Assets of Newco . . . . . . . . . . . . . . . . . . 39
SECTION 4.13 Finders' Fees . . . . . . . . . . . . . . . . . . . 39
ARTICLE V
COVENANTS OF THE PARTIES . . . . . . . . . . . . . . . . . . . . . 40
SECTION 5.1 Conduct of the Business of the Company . . . . . . 40
SECTION 5.2 Advice of Changes . . . . . . . . . . . . . . . . . 45
SECTION 5.3 Letters of the Company's Accountants . . . . . . . 45
SECTION 5.4 Letters of Buyer's Accountants . . . . . . . . . . 46
SECTION 5.5 Shareholders' Meeting; Proxy Material . . . . . . . 46
SECTION 5.6 Access to Information . . . . . . . . . . . . . . . 48
SECTION 5.7 No Solicitation . . . . . . . . . . . . . . . . . . 50
SECTION 5.8 Director and Officer Liability . . . . . . . . . . 53
SECTION 5.9 Reasonable Best Efforts . . . . . . . . . . . . . . 55
SECTION 5.10 Certain Filings . . . . . . . . . . . . . . . . . . 56
SECTION 5.11 Public Announcements . . . . . . . . . . . . . . . 56
SECTION 5.12 Further Assurances . . . . . . . . . . . . . . . . 56
SECTION 5.13 Employee Matters . . . . . . . . . . . . . . . . . 56
SECTION 5.14 State Takeover Laws . . . . . . . . . . . . . . . . 58
SECTION 5.15 Affiliates . . . . . . . . . . . . . . . . . . . . 58
SECTION 5.16 Listing . . . . . . . . . . . . . . . . . . . . . . 59
SECTION 5.17 Litigation . . . . . . . . . . . . . . . . . . . . 59
SECTION 5.18 Tax Treatment . . . . . . . . . . . . . . . . . . . 59
SECTION 5.19 Stockholders Agreement Legend . . . . . . . . . . . 59
ARTICLE VI
CONDITIONS TO THE MERGER . . . . . . . . . . . . . . . . . . . . . 60
SECTION 6.1 Conditions to Each Party's Obligations . . . . . . 60
SECTION 6.2 Conditions to the Company's Obligations . . . . . . 61
SECTION 6.3 Conditions to Buyer's and Newco's Obligations
. . . . . . . . . . . . . . . . . . . . . . . . . 62
ARTICLE VII
TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
SECTION 7.1 Termination . . . . . . . . . . . . . . . . . . . . 63
SECTION 7.2 Effect of Termination . . . . . . . . . . . . . . . 65
SECTION 7.3 Fees . . . . . . . . . . . . . . . . . . . . . . . 66
ARTICLE VIII
MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . 66
SECTION 8.1 Notices . . . . . . . . . . . . . . . . . . . . . . 66
SECTION 8.2 Survival of Representations and Warranties . . . . 68
SECTION 8.3 Interpretation . . . . . . . . . . . . . . . . . . 68
SECTION 8.4 Amendments, Modification and Waiver . . . . . . . . 69
SECTION 8.5 Successors and Assigns . . . . . . . . . . . . . . 69
SECTION 8.6 Specific Performance . . . . . . . . . . . . . . . 69
SECTION 8.7 Governing Law . . . . . . . . . . . . . . . . . . . 69
SECTION 8.8 Severability . . . . . . . . . . . . . . . . . . . 70
SECTION 8.9 Third Party Beneficiaries . . . . . . . . . . . . . 70
SECTION 8.10 Entire Agreement . . . . . . . . . . . . . . . . . 70
SECTION 8.11 Counterparts; Effectiveness . . . . . . . . . . . . 71
Exhibits
Exhibit A Intentionally omitted
Exhibit B Stockholders Agreement
Exhibit C Affiliates Agreement
Exhibit C1 Amended and Restated Articles of Incorporation
Exhibit D1 Certificate of Officer of the Company
Exhibit D2 Certificate of Officer of Buyer
TABLE OF DEFINED TERMS
Term Section No.
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1996 Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Acquisition Proposal . . . . . . . . . . . . . . . . . . . . . . . . . 51
Active Subsidiary . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Articles of Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Buyer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Buyer Class B Common Stock . . . . . . . . . . . . . . . . . . . . . . 35
Buyer Common Shares . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Buyer Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Buyer Preferred Stock . . . . . . . . . . . . . . . . . . . . . . . . . 35
Buyer SEC Documents . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Buyer Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Buyer's Representatives . . . . . . . . . . . . . . . . . . . . . . . . 49
Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Closing Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Code . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Common Shares Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Company Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Company Disclosure Schedule . . . . . . . . . . . . . . . . . . . . . . 12
Company Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Company Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Company Preferred Stock . . . . . . . . . . . . . . . . . . . . . . . . 15
Company Proxy Statement . . . . . . . . . . . . . . . . . . . . . . . . 15
Company SEC Documents . . . . . . . . . . . . . . . . . . . . . . . . . 18
Company Securities . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Company Stockholders Meeting . . . . . . . . . . . . . . . . . . . . . 47
Company Voting Debt . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Confidentiality Agreement . . . . . . . . . . . . . . . . . . . . . . . 49
Continuing Employees . . . . . . . . . . . . . . . . . . . . . . . . . 57
Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
Effective Time . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Excess Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Exchange Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Exchange Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Exchange Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Exchange Ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Facilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
FBCA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Form S-4 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
GAAP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
▇▇▇▇▇▇▇ ▇▇▇▇▇ . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Governmental Entity . . . . . . . . . . . . . . . . . . . . . . . . . . 15
HSR Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Indemnifiable Claim . . . . . . . . . . . . . . . . . . . . . . . . . . 53
Indemnitees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
Intellectual Property . . . . . . . . . . . . . . . . . . . . . . . . . 30
Legal Restraints . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
Licenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Lien . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Material Adverse Effect . . . . . . . . . . . . . . . . . . . . . . . . 13
Maximum Amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1, 2
Merger Consideration . . . . . . . . . . . . . . . . . . . . . . . . . . 3
MIS Systems . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
NASD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Nasdaq . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Newco . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Permits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27, 38
Person . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Required Company Shareholder Vote . . . . . . . . . . . . . . . . . . . 13
SEC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Secretary of State . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Securities Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Stock Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Stockholders Agreement . . . . . . . . . . . . . . . . . . . . . . . . . 1
Subsidiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Superior Proposal . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
Surviving Corporation . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Tax Return . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Termination Date . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of January 12, 2000 (this
"Agreement"), by and among Precision Response Corporation, a Florida
corporation (the "Company"), USA Networks, Inc., a Delaware corporation
("Buyer"), and P Acquisition Corp., a Florida corporation and a wholly
owned subsidiary of Buyer ("Newco").
W I T N E S S E T H
WHEREAS, the respective Boards of Directors of Buyer, Newco and
the Company have each adopted this Agreement as the Plan of Merger and
approved this Agreement and the merger of Newco with and into the Company
(the "Merger"), upon the terms and subject to the conditions set forth
herein, and in accordance with the Florida Business Corporation Act (the
"FBCA"), whereby each issued and outstanding share of common stock, par
value $.01 per share of the Company (the "Company Common Stock") (other
than shares of Company Common Stock owned by Buyer, Newco or any other
Subsidiary (as defined in Section 3.5(a) hereof) of Buyer immediately prior
to the Effective Time (as defined in Section 1.1(b) hereof)), will, upon
the terms and subject to the conditions set forth herein, be converted into
the right to receive the Merger Consideration (as defined in Section 1.2(a)
hereof);
WHEREAS, for Federal income tax purposes, the parties to this
Agreement intend that the Merger qualify as a reorganization within the
meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended
(the "Code"), and that this Agreement constitutes a plan of reorganization;
and
WHEREAS, as a condition and inducement to Buyer to enter into
this Agreement and incur the obligations set forth herein, concurrently
with the execution and delivery of this Agreement, Buyer is entering into a
Stockholders Agreement with certain stockholders of the Company
substantially in the form of Exhibit B hereto (the "Stockholders
Agreement") pursuant to which, among other things, such shareholders have
agreed to vote such shares in favor of this Agreement and the Merger
provided for herein.
NOW, THEREFORE, in consideration of the representations,
warranties, covenants, agreements and conditions set forth herein and in
the Stockholders Agreement, and intending to be legally bound hereby, the
parties hereto agree as follows:
ARTICLE I
THE MERGER
SECTION 1.1 The Merger.
(a) Upon the terms and subject to the conditions of this
Agreement, and in accordance with the FBCA, at the Effective Time, Newco
shall be merged (the "Merger") with and into the Company, whereupon the
separate existence of Newco shall cease, and the Company shall continue as
the surviving corporation (sometimes referred to herein as the "Surviving
Corporation") and shall continue to be governed by the laws of the State of
Florida.
(b) Concurrently with the Closing (as defined in Section 1.7
hereof), the Company, Buyer and Newco will cause articles of merger (the
"Articles of Merger") with respect to the Merger to be executed and filed
with the Secretary of State of the State of Florida (the "Secretary of
State") as provided in the FBCA. The Merger shall become effective on the
date and time at which the Articles of Merger has been duly filed with the
Secretary of State or at such other date and time as is agreed between the
parties and specified in the Articles of Merger, and such date and time is
hereinafter referred to as the "Effective Time."
(c) From and after the Effective Time, the Surviving Corporation
shall possess all the rights, privileges, immunities, powers and franchises
and be subject to all of the obligations, restrictions, disabilities,
liabilities, debts and duties of the Company and Newco.
SECTION 1.2 Effect on Shares of Company Common Stock. At
the Effective Time, by virtue of the Merger and without any action on the
part of the holder of any shares of Company Common Stock or any shares of
capital stock of Newco:
(a) Conversion of Company Common Stock. Subject to Section
1.3(e), each share of Company Common Stock issued and outstanding
immediately prior to the Effective Time (other than shares cancelled
pursuant to Section 1.2(b) hereof) shall be converted into 0.54 (the
"Exchange Ratio", subject to increase as provided in Section 7.1(j) hereof
in the event that Buyer exercises its Top-up Right (as defined in Section
7.1(j) hereof) in which case the Exchange Ratio shall be as calculated in
Section 7.1(j) hereof), fully paid and nonassessable shares of common
stock, par value $0.01 per share, of Buyer ("Buyer Common Stock") (the
"Merger Consideration"). As of the Effective Time, all such shares of
Company Common Stock shall no longer be outstanding and shall automatically
be canceled and shall cease to exist, and each holder of a certificate
representing any such shares of Company Common Stock shall cease to have
any rights with respect thereto, except the right to receive certificates
representing the Merger Consideration and any cash in lieu of fractional
shares of Buyer Common Stock to be issued or paid in consideration therefor
upon surrender of such certificate in accordance with Section 1.3, without
interest.
(b) Cancellation of Shares of Company Common Stock. Each share
of Company Common Stock held by the Company as treasury stock or owned by a
wholly-owned Subsidiary of the Company or by Buyer, Newco or any other
Subsidiary of Buyer immediately prior to the Effective Time shall
automatically be cancelled and retired and cease to exist, and no Merger
Consideration or other consideration or payment shall be delivered therefor
or in respect thereto.
(c) Capital Stock of Newco. Each share of common stock of Newco
issued and outstanding immediately prior to the Effective Time shall be
converted into and become one share of common stock, par value $.01, of the
Surviving Corporation with the same rights, powers and privileges as the
shares so converted and shall constitute the only outstanding shares of
capital stock of the Surviving Corporation.
(d) Adjustment of Exchange Ratio. In the event Buyer changes (or
establishes a record date for changing) the number of shares of Buyer
Common Stock issued and outstanding prior to the Effective Time as a result
of a stock split, stock dividend, recapitalization, subdivision,
reclassification, combination, exchange of shares or similar transaction
with respect to the outstanding Buyer Common Stock and the record date
therefor shall be prior to the Effective Time, the Exchange Ratio shall be
proportionately adjusted to reflect such stock split, stock dividend,
recapitalization, subdivision, reclassification, combination, exchange of
shares of similar transaction.
SECTION 1.3 Exchange of Certificates.
(a) Exchange Agent. As of the Effective Time, Buyer shall enter
into an agreement with such bank or trust company as may be designated by
Buyer (the "Exchange Agent"), which shall provide that Buyer shall deposit
with the Exchange Agent as of the Effective Time, for the benefit of the
holders of shares of Company Common Stock, for exchange in accordance with
this Article I, through the Exchange Agent, certificates representing the
shares of Buyer Common Stock (such shares of Buyer Common Stock, together
with any dividends or distributions with respect thereto with a record date
after the Effective Time, any Excess Shares (as defined in Section 1.3(e))
and any cash (including cash proceeds from the sale of the Excess Shares)
payable in lieu of any fractional shares of Buyer Common Stock being
hereinafter referred to as the "Exchange Fund") issuable pursuant to
Section 1.2 in exchange for outstanding shares of Company Common Stock.
(b) Exchange Procedures. As soon as reasonably practicable
after the Effective Time, the Exchange Agent shall mail to each holder of
record of a certificate or certificates which immediately prior to the
Effective Time represented outstanding shares of Company Common Stock (the
"Certificates") whose shares were converted into the right to receive the
Merger Consideration pursuant to Section 1.2, (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 Buyer may reasonably specify) and (ii) instructions for
use in surrendering the Certificates in exchange for the Merger
Consideration. Upon surrender of a Certificate for cancellation to the
Exchange Agent, together with such letter of transmittal, duly executed,
and such other documents as may reasonably be required by the Exchange
Agent, the holder of such Certificate shall receive in exchange therefor a
certificate representing that number of whole shares of Buyer Common Stock
which such holder has the right to receive pursuant to the provisions of
this Article I, certain dividends or other distributions in accordance with
Section 1.3(c) and cash in lieu of any fractional share of Buyer Common
Stock in accordance with Section 1.3(e), and the Certificate so surrendered
shall forthwith be canceled. In the event of a transfer of ownership of
Company Common Stock which is not registered in the transfer records of the
Company, a certificate representing the proper number of shares of Buyer
Common Stock may be issued to a person other than the person in whose name
the Certificate so surrendered is registered if such Certificate shall be
properly endorsed or otherwise be in proper form for transfer and the
person requesting such issuance shall pay any transfer or other taxes
required by reason of the issuance of shares of Buyer Common Stock to a
person other than the registered holder of such Certificate or establish to
the satisfaction of Buyer that such tax has been paid or is not applicable.
Each Certificate shall be deemed at any time after the Effective Time to
represent only the Merger Consideration and the right to receive upon
surrender in accordance with this Section 1.3 certificates representing the
Merger Consideration into which the shares of Company Common Stock shall
have been converted pursuant to Section 1.2, cash in lieu of any fractional
shares of Buyer Common Stock as contemplated by Section 1.3(e) and any
dividends or other distributions to which such holder is entitled pursuant
to Section 1.3(c). No interest shall be paid or will accrue on any cash
payable to holders of Certificates pursuant to the provisions of this
Article I.
(c) Distributions with Respect to Unexchanged Shares. No
dividends or other distributions with respect to Buyer 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 Buyer Common Stock
represented thereby, and no cash payment in lieu of fractional shares shall
be paid to any such holder pursuant to Section 1.3(e), and all such
dividends, other distributions and cash in lieu of fractional shares of
Buyer Common Stock shall be paid by Buyer to the Exchange Agent and shall
be included in the Exchange Fund, in each case until the surrender of such
Certificate in accordance with this Article I. Subject to the effect of
applicable escheat or similar laws, following surrender of any such
Certificate there shall be paid to the holder of the certificate
representing whole shares of Buyer Common Stock issued in exchange
therefor, without interest, (i) at the time of such surrender, the amount
of dividends or other distributions with a record date after the Effective
Time theretofore paid with respect to such whole shares of Buyer Common
Stock, and the amount of any cash payable in lieu of a fractional share of
Buyer Common Stock to which such holder is entitled pursuant to Section
1.3(e) and (ii) at the appropriate payment date, the amount of dividends or
other distributions with a record date after the Effective Time but prior
to such surrender and with a payment date subsequent to such surrender
payable with respect to such whole shares of Buyer Common Stock.
(d) No Further Ownership Rights in Company Common Stock. All
Merger Consideration issued or paid upon the surrender for exchange of
Certificates in accordance with the terms of this Article I (including any
cash paid pursuant to this Article I) shall be deemed to have been issued
(and paid) in full satisfaction of all rights pertaining to the shares of
Company Common Stock theretofore represented by such Certificates, and
there shall be no further registration of transfers on the stock transfer
books of 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
or the Exchange Agent for any reason, they shall be canceled and exchanged
as provided in this Article I, except as otherwise provided by law.
(e) No Fractional Shares. (i) No certificates or scrip
representing fractional shares of Buyer Common Stock shall be issued upon
the surrender for exchange of Certificates, no dividend or distribution of
Buyer shall relate to such fractional share interests and such fractional
share interests will not entitle the owner thereof to vote or to any rights
of a stockholder of Buyer.
(ii) As promptly as practicable following the Effective Time, the
Exchange Agent shall determine the excess of (A) the number of whole shares
of Buyer Common Stock delivered to the Exchange Agent by Buyer pursuant to
Section 1.3(a) over (B) the aggregate number of whole shares of Buyer
Common Stock to be distributed to former holders of Company Common Stock
pursuant to Section 1.3(b) (such excess being herein called the "Excess
Shares"). Following the Effective Time, the Exchange Agent shall, on
behalf of former stockholders of the Company, sell the Excess Shares at
then-prevailing prices in the over-the-counter market through one or more
member firms of the National Association of Securities Dealers, Inc. (the
"NASD"), and in round lots to the extent practicable. The Exchange Agent
shall use reasonable efforts to complete the sale of the Excess Shares as
promptly following the Effective Time as, in the Exchange Agent's sole
judgment, is practicable consistent with obtaining the best execution of
such sales in light of prevailing market conditions. Until the net proceeds
of such sale or sales have been distributed to the holders of Certificates
formerly representing Company Common Stock, the Exchange Agent shall hold
such proceeds in trust for such holders (the "Common Shares Trust"). The
Company 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 former holder of Company Common Stock is 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 former holder of Company Common
Stock is entitled (after taking into account all shares of Company Common
Stock held at the Effective Time by such holder) and the denominator of
which is the aggregate amount of fractional share interests to which all
former holders of Company Common Stock are entitled.
(iii) Notwithstanding the provisions of Section 1.3(e)(ii),
Buyer may elect at its option, exercised prior to the Effective Time, in
lieu of the issuance and sale of Excess Shares and the making of the
payments hereinabove contemplated, to pay each former holder of Company
Common Stock an amount in cash equal to the product obtained by multiplying
(A) the fractional share interest to which such former holder (after taking
into account all shares of Company Common Stock held at the Effective Time
by such holder) would otherwise be entitled by (B) the last reported sale
price for a share of Buyer Common Stock (as reported in The Wall Street
Journal, or, if not reported thereby, any other authoritative source) on
the Closing Date, and, in such case, all references herein to the cash
proceeds of the sale of the Excess Shares and similar references shall be
deemed to mean and refer to the payments calculated as set forth in this
Section 1.3(e)(iii).
(iv) As soon as practicable after the determination of the
amount of cash, if any, to be paid to holders of Certificates formerly
representing Company Common Stock with respect to any fractional share
interests, the Exchange Agent shall make available such amounts to such
holders of Certificates formerly representing Company Common Stock subject
to and in accordance with the terms of Section 1.3(c).
(f) Termination of Exchange Fund. Any portion of the Exchange
Fund which remains undistributed to the holders of the Certificates for six
months after the Effective Time shall be delivered to Buyer, upon demand,
and any holders of the Certificates who have not theretofore complied with
this Article I shall thereafter look only to Buyer for payment of their
claim for Merger Consideration, any dividends or distributions with respect
to Buyer Common Stock and any cash in lieu of fractional shares of Buyer
Common Stock.
(g) No Liability. None of Buyer, the Surviving Corporation, the
Company or the Exchange Agent shall be liable to any person in respect of
any shares of Buyer Common Stock, any dividends or distributions with
respect thereto, any cash in lieu of fractional shares of Buyer Common
Stock or any cash from the Exchange Fund, in each case delivered to a
public official pursuant to any applicable abandoned property, escheat or
similar law. If any Certificate shall not have been surrendered prior to
one year after the Effective Time (or immediately prior to such date on
which any amounts payable pursuant to this Article I would otherwise
escheat to or become the property of any Governmental Entity (as defined in
Section 3.3(b)), any such amounts shall, to the extent permitted by
applicable law, become the property of the Surviving Corporation, free and
clear of all claims or interest of any person previously entitled thereto.
(h) Investment of Exchange Fund. The Exchange Agent shall
invest any cash included in the Exchange Fund, as directed by Buyer, on a
daily basis. Any interest and other income resulting from such investments
shall be paid to Buyer.
(i) Lost Certificates. If any Certificate shall have been lost,
stolen or destroyed, upon the making of an affidavit of that fact by the
person claiming such Certificate to be lost, stolen or destroyed and, if
required by Buyer, the posting by such person of a bond in such reasonable
amount as Buyer may direct as indemnity against any claim that may be made
against it with respect to such Certificate, the Exchange Agent shall issue
in exchange for such lost, stolen or destroyed Certificate the applicable
Merger Consideration with respect thereto and, if applicable, any unpaid
dividends and distributions on shares of Buyer Common Stock deliverable in
respect thereof and any cash in lieu of fractional shares, in each case
pursuant to this Agreement.
SECTION 1.4 Company Options. (a) At the Effective Time, each of
the then outstanding Options (as defined below) shall be (i) assumed by
Buyer, in accordance with the terms of the applicable Stock Plan (as
defined below) and option agreement by which it is evidenced, except that
from and after the Effective Time, Buyer and its Board of Directors or
Compensation Committee, as the case may be, shall be substituted for the
Company and its subsidiaries and their respective Boards of Directors
(including if applicable the entire Board of Directors) administering any
such Stock Plan, and (ii) converted into an option to purchase that number
of shares of Buyer Common Stock determined by multiplying the number of
shares of Company Common Stock subject to such Option at the Effective Time
by the Exchange Ratio, at an exercise price per share of Buyer Common Stock
equal to the exercise price per share of such Option immediately prior to
the Effective Time divided by the Exchange Ratio; except that, in the case
of an Option to which Section 421 of the Code applies by reason of its
qualification under Section 422 of the Code, the conversion formula shall
be adjusted, if the Company determines that such adjustment is necessary,
to comply with Section 424(a) of the Code. If the foregoing calculation
results in an assumed Option being exercisable for a fraction of a share of
Buyer Common Stock, then the number of shares of Buyer Common Stock subject
to such option shall be rounded down to the nearest whole number of shares.
Except as otherwise set forth in this Section 1.4 and except to the extent
required under certain agreements in effect as of the date hereof between
the Company and certain of its employees, the term, status as an "incentive
stock option" under Section 422 of the Code (if applicable), all applicable
restrictions or limitations on transfer and vesting and all other terms and
conditions of Options will (except as otherwise provided in the applicable
Stock Plan or Option) to the extent permitted by law and otherwise
reasonably practicable, be unchanged. As soon as practicable following the
date of this Agreement, the Board of Directors of the Company (or, if
appropriate, any committee thereof administering the Stock Plans) shall
adopt such resolutions or take such other actions as may be required to
effect the provisions of this Section 1.4(a).
"Options" means any option granted, and not exercised, expired or
terminated, to a current or former employee, director or independent
contractor of the Company or any of its subsidiaries or any predecessor
thereof to purchase shares of Company Common Stock pursuant to the
Company's Amended and Restated 1996 Incentive Stock Plan, as amended,
Amended and Restated 1996 Nonemployee Director Stock Option Plan or any
other stock option, stock bonus, stock award, or stock purchase plan,
program, or arrangement of the Company or any of its subsidiaries or any
predecessor thereof (collectively, the "Stock Plans") or any other contract
or agreement entered into by the Company or any of its subsidiaries.
(b) At the Effective Time, Buyer shall cause the shares of Buyer
Common Stock issuable upon exercise of the assumed Options to be registered
on Form S-8 (or any successor form) promulgated by the Securities and
Exchange Commission (the "SEC"), and shall maintain the effectiveness of
such registration statement for so long as such assumed Options remain
outstanding, except to the extent, and for such period, that such
effectiveness is interfered with by the issuance of an SEC stop order;
provided that the Buyer shall use its reasonable best efforts to have any
such stop order lifted as soon as practicable.
(c) As soon as reasonably practicable after the Effective Time,
Buyer shall deliver to each holder of an assumed Option an appropriate
notice setting forth such holder's rights pursuant to such Option. The
Company and Buyer shall take all commercially reasonable actions which are
necessary in order to effect the foregoing provisions of this Section 1.4
as of the Effective Time.
(d) Both Buyer and the Company shall take such steps as may be
required to cause the transactions contemplated by this Section 1.4 and any
other dispositions of Company equity securities and/or acquisitions of
Buyer equity securities (including, in each case derivative securities) in
connection with this Agreement or the transactions contemplated hereby by
any individual who is a director or officer of the Company, to be exempt
under Rule 16b-3 promulgated under the Securities Exchange Act of 1934, as
amended, and the rules and regulations thereunder (the "Exchange Act"),
such steps to be taken in accordance with the interpretative letter dated
January 12, 1999, issued by the SEC to Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇
LLP.
SECTION 1.5 Closing. Subject to the satisfaction or waiver of
the conditions set forth in Article VI hereof, the closing of the Merger
(the "Closing") will take place at 10:00 a.m., New York City time, on a
date to be specified by the parties hereto, which shall be no later than
the third business day after the satisfaction of the conditions set forth
in Section 6.1 hereof, at the offices of Skadden, Arps, Slate, ▇▇▇▇▇▇▇ &
▇▇▇▇ LLP, 919 Third Avenue, New York, New York, unless another time, date
or place is agreed to in writing by the parties hereto (such date, the
"Closing Date").
ARTICLE II
THE SURVIVING CORPORATION
SECTION 2.1 Amended and Restated Articles of Incorporation.
The Amended and Restated Articles of Incorporation as amended and restated
as set forth in Exhibit C-2 hereto shall be the articles of incorporation
of the Surviving Corporation until thereafter amended in accordance with
applicable law.
SECTION 2.2 By-laws. The by-laws of Newco in effect at the
Effective Time shall be the By-laws of the Surviving Corporation until
thereafter amended in accordance with applicable law, the articles of
incorporation of the Surviving Corporation and the by-laws of the Surviving
Corporation.
SECTION 2.3 Directors and Officers. From and after the
Effective Time, the directors of Newco at the Effective Time shall be the
directors of the Surviving Corporation and the officers of the Company at
the Effective Time shall be the officers of the Surviving Corporation, in
each case until their respective successors are duly elected or appointed
and qualified in accordance with applicable law.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Buyer and Newco as
follows:
SECTION 3.1 Corporate Existence and Power. The Company is a
corporation duly incorporated, validly existing and in good standing under
the laws of the State of Florida, and except as set forth on Schedule 3.1
of the Company Disclosure Schedule delivered by the Company to the Buyer
prior to the execution of this Agreement (the "Company Disclosure
Schedule"), has all corporate powers and all governmental licenses,
authorizations, consents and approvals (collectively, "Licenses") required
to carry on its business as now conducted except for failures to have any
such License which, in the aggregate, would not reasonably be expected to
have a Material Adverse Effect (as defined hereafter). The Company is duly
qualified to do business as a foreign corporation and is in good standing
in each jurisdiction where the character of the property owned, leased or
operated by it or the nature of its activities makes such qualification
necessary, except in such jurisdictions where failures to be so qualified,
in the aggregate, would not reasonably be expected to have a Material
Adverse Effect. As used herein, the term "Material Adverse Effect" means a
material adverse effect (i) on the condition (financial or otherwise),
business, operations, properties, assets or results of operations of the
Company and its Subsidiaries, or Buyer and its Subsidiaries, as the case
may be, in each case taken as a whole, that is not a result of general
changes in the economy or the industries in which such entities currently
operate, or (ii) on the ability of the Company and its Subsidiaries, or
Buyer and Newco, as the case may be, to promptly perform their respective
obligations hereunder or under the transactions contemplated hereby. The
Company has heretofore made available to Buyer complete and correct copies
of the Company's Amended and Restated Articles of Incorporation and the
Company's By-laws as currently in effect.
SECTION 3.2 Corporate Authorization. The Company has the
requisite corporate power and authority to execute and deliver this
Agreement and, subject to approval of this Agreement and the Plan of Merger
by the affirmative votes of holders of a majority of the outstanding shares
of Company Common Stock (the "Required Company Shareholder Vote"), to
consummate the transactions contemplated herein. The execution and
delivery of this Agreement and the performance of its obligations hereunder
have been duly and validly authorized by the Board of Directors of the
Company and, other than the approval of this Agreement and the Plan of
Merger by the Required Company Shareholder Vote, no other corporate
proceedings or actions on the part of the Company are necessary to
authorize the execution, delivery and performance of this Agreement and to
consummate the transactions contemplated herein. This Agreement has been
duly executed and delivered by the Company and constitutes, assuming due
authorization, execution and delivery of this Agreement by Buyer and Newco,
a valid and binding obligation of the Company, enforceable against the
Company in accordance with its terms.
SECTION 3.3 Consents and Approvals; No Violations.
(a) Except as set forth in Schedule 3.3(a) of the Company
Disclosure Schedule, neither the execution and delivery of this Agreement
nor the performance by the Company of its obligations hereunder will (i)
conflict with or result in a violation or breach of any provision of the
Company's Amended and Restated Articles of Incorporation or the Company's
By-laws; (ii) result in a violation or breach of, or constitute (with or
without due notice or lapse of time or both) a default (or give rise to any
right of termination, cancellation or acceleration or obligation to
repurchase, repay, redeem or acquire or any similar right or obligation or
to loss of a material benefit) under, or result in the creation of any Lien
(as defined in Section 3.5(b)) upon any of the properties or assets of the
Company or any of its Subsidiaries under, any of the terms, conditions or
provisions of any note, mortgage, letter of credit, other evidence of
indebtedness, guarantee, license, lease or agreement or similar instrument
or obligation to which the Company or any of its Subsidiaries is a party or
by which any of them or any of their assets may be bound or (iii) assuming
that the filings, registrations, notifications, authorizations, consents
and approvals referred to in subsection (b) below have been obtained or
made, as the case may be, violate any order, injunction, decree, statute,
rule or regulation of any Governmental Entity (as defined in Section 3.3(b)
hereof) to which the Company or any of its Subsidiaries or any of their
respective assets is subject, excluding from the foregoing clauses (ii) and
(iii) such conflicts, defaults, breaches, rights, violations or Liens (A)
that would not, in the aggregate, reasonably be expected to have a Material
Adverse Effect or (B) that become applicable as a result of the business or
activities in which Buyer or Newco or any of their respective affiliates
is or proposes to be engaged or any acts or omissions by, or facts
pertaining to, Buyer or Newco.
(b) Except as set forth in Schedule 3.3(b) of the Company
Disclosure Schedule, no filing or registration with, notification to, or
authorization, consent or approval of, any government or any agency, court,
tribunal, commission, board, bureau, department, political subdivision or
other instrumentality of any government (including any regulatory or
administrative agency), whether federal, state, provincial, municipal,
domestic or foreign (each, a "Governmental Entity") is required in
connection with the execution and delivery of this Agreement by the Company
or the performance by the Company of its obligations hereunder, except (i)
the filing of the Articles of Merger in accordance with the FBCA and
filings to maintain the good standing of the Surviving Corporation; (ii)
compliance with any applicable requirements of the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇
Antitrust Improvements Act of 1976, as amended, and the rules and
regulations thereunder (the "HSR Act"); (iii) the filing with the SEC of
(A) a proxy statement relating to the Company Stockholders Meeting (as
defined in Section 5.5) (such proxy statement, as amended or supplemented
from time to time, the "Company Proxy Statement"), and (B) compliance with
any applicable requirements of the Securities Act of 1933, as amended, and
the rules and regulations thereunder (the "Securities Act") and the
Exchange Act, as may be required in connection with this Agreement and the
Stockholders Agreement and the transactions contemplated hereby and
thereby; (iv) compliance with any applicable requirements of state blue sky
or takeover laws; and (v) such other consents, approvals, orders,
authorizations, notifications, registrations, declarations and filings (A)
the failure of which to be obtained or made would not prevent or materially
delay consummation of the transactions contemplated herein and would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect or (B) that become applicable as a result of the business or
activities in which Buyer or Newco or any of their respective affiliates is
or proposes to be engaged or any acts or omissions by, or facts pertaining
to, Buyer or Newco.
SECTION 3.4 Capitalization. The authorized capital stock of
the Company consists of 100,000,000 shares of Company Common Stock and
20,000,000 shares of preferred stock, par value $.01 per share, of the
Company (the "Company Preferred Stock"). As of December 31, 1999, there
were (i) 21,794,400 shares of Company Common Stock and (ii) no shares of
Company Preferred Stock issued and outstanding. All outstanding shares of
capital stock of the Company have been duly authorized and validly issued
and are fully paid and nonassessable and not subject to preemptive rights.
As of December 31, 1999, there were (i) outstanding Options in respect of
4,205,372 shares of Company Common Stock at option prices ranging from
$4.06 to $24.72 per share and outstanding Options with respect to 7,000
shares of Company Common Stock at an option price of $.01 per share, all of
which Options were granted pursuant to the Precision Response Corporation
Amended and Restated 1996 Incentive Stock Plan as amended through June 21,
1999 (the "1996 Plan") and an additional 243,228 shares of Company Common
Stock available for future grants pursuant to the 1996 Plan through May 30,
2006 and (ii) up to 300,000 shares of Company Common Stock were authorized
for possible issuance pursuant to the Precision Response Corporation
Amended and Restated 1996 Nonemployee Director Stock Option Plan, of which
there were outstanding Options in respect of 65,000 shares of Company
Common Stock at option prices ranging from $5.53 to $43.00 per share.
Except as set forth in this Section 3.4, except for changes since December
31, 1999 resulting from either (x) the exercise of Options outstanding on
such date or granted, in accordance with Section 5.1(b) hereof, after such
date or (y) the grant, in accordance with Section 5.1(b) hereof, of Options
after such date and except by reason of the adoption of a shareholder
rights plan in accordance with Section 5.1, there are outstanding (i) no
shares of capital stock or other voting securities of the Company, (ii) no
securities of the Company or any Subsidiary of the Company convertible into
or exchangeable for shares of capital stock or voting securities of the
Company and (iii) except as set forth in Schedule 3.4 of the Company
Disclosure Schedule, no options, warrants, calls, subscriptions or other
rights to acquire from the Company, and no obligation of the Company to
issue, transfer, sell or otherwise dispose of any capital stock, voting
securities or securities convertible into or exchangeable for capital stock
or voting securities of the Company (the items in clauses (i), (ii) and
(iii) being referred to collectively as the "Company Securities"). There
are no outstanding obligations of the Company or any of its Subsidiaries to
repurchase, redeem or otherwise acquire any Company Securities.
SECTION 3.5 Subsidiaries.
(a) Each Subsidiary of the Company that is actively engaged in
any business or owns any assets or has any liabilities other than in either
case a de minimis amount thereof (each, an "Active Subsidiary") (i) is a
corporation duly incorporated, validly existing and in good standing under
the laws of its jurisdiction of incorporation, (ii) except as set forth in
Schedule 3.5(a) of the Company Disclosure Schedule, has all corporate
powers and all material governmental licenses, authorizations, consents and
approvals required to carry on its business as now conducted or as
reasonably expected by the Company to be conducted and (iii) is duly
qualified to do business as a foreign corporation and is in good standing
in each jurisdiction where the character of the property owned or leased by
it or the nature of its activities makes such qualification necessary,
except for failures of this representation and warranty to be true which
would not, in the aggregate, reasonably be expected to have a Material
Adverse Effect. For purposes of this Agreement, "Subsidiary" means with
respect to any Person, another Person, an amount of the voting securities,
other voting ownership or voting partnership interests of which is
sufficient to elect at least a majority of its Board of Directors or other
governing body (or, if there are no such voting interests, 50% or more of
the equity interests of which) is owned directly or indirectly by such
first Person; and a "Person" means an individual, corporation, partnership,
joint venture, association, trust, unincorporated organization, limited
liability company or other entity. All Active Subsidiaries and their
respective jurisdictions of incorporation are identified in Schedule 3.5 of
the Company Disclosure Schedule.
(b) Except as set forth in Schedule 3.5(b) of the Company
Disclosure Schedule, all of the outstanding shares of capital stock of each
Active Subsidiary of the Company are duly authorized, validly issued, fully
paid and nonassessable, and such shares are owned by the Company or by a
Subsidiary of the Company free and clear of any Liens or limitation on
voting rights; provided that no representation is made as to any shares of
capital stock owned by any Persons other than the Company or a Subsidiary
of the Company. Except as set forth in Schedule 3.5(b) of the Company
Disclosure Schedule, there are no subscriptions, options, warrants, calls,
rights, convertible securities or other agreements or commitments of any
character relating to the issuance, transfer, sale, delivery, voting or
redemption (including any rights of conversion or exchange under any
outstanding security or other instrument) for any of the capital stock or
other equity interests of any of such Subsidiaries. Except as set forth in
Schedule 3.5(b) of the Company Disclosure Schedule, there are no agreements
requiring the Company or any of its Subsidiaries to make contributions to
the capital of, or lend or advance funds to, any Subsidiaries of the
Company. For purposes of this Agreement, "Lien" means, with respect to any
asset, any mortgage, lien, pledge, charge, security interest or encumbrance
of any kind in respect of such asset.
SECTION 3.6 SEC Documents. The Company has filed all reports,
proxy statements, registration statements, forms and other documents
required to be filed with the SEC since January 1, 1997 (the "Company SEC
Documents"). As of their respective dates, and giving effect to any
amendments or supplements thereto filed prior to the date of this
Agreement, (a) the Company SEC Documents complied in all material respects
with the requirements of the Securities Act or the Exchange Act, as the
case may be, and the applicable rules and regulations of the SEC
promulgated thereunder and (b) none of the Company SEC Documents (except as
to the financial statements contained therein, which are dealt with in
Section 3.7 hereof) contained any untrue statement of a material fact or
omitted 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 were made, not misleading.
SECTION 3.7 Financial Statements. The financial statements of
the Company (including, in each case, any notes and schedules thereto)
included in the Company SEC Documents (a) comply as to form in all material
respects with all applicable accounting requirements and the rules and
regulations of the SEC with respect thereto, (b) are in conformity with
generally accepted accounting principles ("GAAP"), applied on a consistent
basis (except in the case of unaudited statements, as permitted by the
rules and regulations of the SEC) during the periods involved (except as
may be indicated in the related notes and schedules thereto) and (c) fairly
present, in all material respects, the consolidated financial position of
the Company and its consolidated Subsidiaries as of the dates thereof and
the consolidated results of their operations and cash flows for the periods
then ended (subject, in the case of unaudited statements, to normal year-
end audit adjustments). Except (i) as reflected in such financial
statements or in the notes thereto, (ii) for liabilities incurred in
connection with this Agreement or the transactions contemplated hereby or
(iii) such liabilities as are not in the aggregate reasonably likely to
have a Material Adverse Effect, neither the Company nor any of its
Subsidiaries has any liabilities or obligations of any nature (whether
accrued, absolute, contingent or otherwise). The Company's consolidated
revenues, net income and earnings before interest, taxes, depreciation and
amortization for the quarter ended December 31, 1999(i) will not be less,
respectively, than such amounts for the quarter ended September 30, 1999
and (ii) subject to the audit of the Company's financial statements for the
year ended December 31, 1999 and finalization of such amounts for the
fourth quarter ended December 31, 1999, and except as disclosed in Schedule
3.7 of the Company Disclosure Schedule, are currently anticipated to be not
less than $59.4 million, $2.7 million and $9.3 million, respectively.
SECTION 3.8 Information Supplied. None of the information
supplied or to be supplied by the Company specifically for inclusion or
incorporation by reference in (i) the registration statement on Form S-4 to
be filed with the SEC by Buyer in connection with the issuance of Buyer
Common Stock in the Merger (the "Form S-4") will, at the time the Form S-4
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 to make the statements therein not misleading or (ii)
the Company Proxy Statement will, at the date it is first mailed to the
Company's stockholders or at the time of the Company Stockholders Meeting,
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. The Company Proxy Statement will comply as to form
in all material respects with the requirements of the Exchange Act and the
rules and regulations thereunder. No representation or warranty is made by
the Company with respect to statements made or incorporated by reference
therein based on information supplied by Buyer specifically for inclusion
or incorporation by reference in the Company Proxy Statement.
SECTION 3.9 Absence of Material Adverse Changes, etc. Except
as disclosed in the Company SEC Documents filed by the Company and publicly
available prior to the date of this Agreement or as set forth in Schedule
3.9 of the Company Disclosure Schedule, since December 31, 1998, the
Company and its Subsidiaries have conducted their business only in the
ordinary course of business consistent with past practice and there has not
been or occurred:
(a) any event, change, occurrence or development which has had
or is reasonably likely to have a Material Adverse Effect on the Company
and its Subsidiaries, taken as a whole;
(b) any declaration, setting aside or payment of any dividend or
other distribution with respect to any shares of capital stock of the
Company, any repurchase, redemption or other acquisition by the Company or
any Subsidiary of the Company of any outstanding shares of capital stock or
other equity securities of, or other ownership interests in, the Company,
any split, combination or reclassification of any of the Company's capital
stock or any issuance or the authorization of any issuance of any other
securities in respect of, in lieu of, or in substitution for, shares of the
Company's capital stock;
(c) any amendment of any material term of any outstanding
security issued by the Company or any Subsidiary of the Company;
(d) any incurrence, assumption or guarantee by the Company or
any Subsidiary of the Company of any indebtedness for borrowed money other
than in the ordinary course of business consistent with past practice;
(e) any creation or assumption by the Company or any Subsidiary
of the Company of any Lien on any asset other than in the ordinary course
of business consistent with past practice;
(f) any damage, destruction or other casualty loss (whether or
not covered by insurance) affecting the business or assets of the Company
or any Subsidiary of the Company which, individually or in the aggregate,
has had, or would reasonably be expected to have, a Material Adverse
Effect;
(g) any change in any method of accounting or accounting
practice or principles by the Company or any Subsidiary of the Company,
except for any such change required by reason of a change in GAAP;
(h) any (i) grant of any severance or termination pay to any
current or former director, executive officer or employee of the Company or
any Subsidiary of the Company, (ii) employment, deferred compensation or
other similar agreement (or any amendment to any such existing agreement)
with any such director, executive officer or employee of the Company or any
Subsidiary of the Company entered into, (iii) increase in benefits payable
under any existing severance or termination pay policies or employment
agreements or (iv) increase in compensation, bonus or other benefits
payable to current or former directors, executive officers or employees of
the Company or any Subsidiary of the Company, other than for clauses (i),
(ii) and (iv) above, in the case of employees (other than directors and
executive officers), in the ordinary course of business;
(i) any issuance of any Company Securities other than Options and
other than upon the exercise of Options; or
(j) authorize any of, or commit or agree to take any of, the
foregoing actions except as otherwise permitted by this Agreement.
SECTION 3.10 Taxes.
(a) Except as set forth in Schedule 3.10 of the Company
Disclosure Schedule, (1) all Tax Returns required to be filed by or on
behalf of the Company, each of its Subsidiaries, and each affiliated,
combined, consolidated or unitary group of which the Company or any of its
Subsidiaries is or has been a member (a "Company Group") have been timely
filed in the manner prescribed by law, and all such Tax returns are true,
complete and accurate except to the extent any failures to file or failures
to be true, correct or accurate would not in the aggregate reasonably be
expected to have a Material Adverse Effect; (2) all Taxes due and owing by
the Company, any Subsidiary of the Company or any Company Group have been
timely paid, or adequately reserved for in accordance with GAAP, except to
the extent any failure to pay or reserve would not in the aggregate
reasonably be expected to have a Material Adverse Effect; (3) there are no
claims or assessments presently pending against the Company, any Subsidiary
of the Company or any Company Group, for any alleged Tax deficiency, and
the Company does not know of any threatened claims or assessments against
the Company, any Subsidiary of the Company or any Company Group for any
alleged Tax deficiency, which in either case if upheld would reasonably be
expected in the aggregate to have a Material Adverse Effect; (4) each
material deficiency resulting from any audit or examination relating to
Taxes by any taxing authority has been paid or is being contested in good
faith and in accordance with law and is adequately reserved for in
accordance with GAAP; (5) there are no Liens for Taxes on any asset of the
Company or any Subsidiary of the Company, except for Liens for Taxes not
yet due and payable and Liens for Taxes that would not in the aggregate
reasonably be expected to have a Material Adverse Effect; (6) the Company
and each of its Subsidiaries has complied in all respects with all rules
and regulations relating to the withholding of Taxes (including, without
limitation, employee-related Taxes), except for failures to comply that
would not in the aggregate reasonably be expected to have a Material
Adverse Effect; (7) neither the Company nor any of its Subsidiaries is a
party to any Tax sharing agreement, Tax indemnity obligation or similar
agreement, arrangement or practice with respect to Taxes (including any
advance pricing agreement, closing agreement or other agreement relating to
Taxes with any taxing authority); and (8) neither the Company nor any of
its Subsidiaries is a party to any agreement, contract, or arrangement
that, individually or collectively, would give rise to the payment of any
amount (whether in cash or property, including shares of capital stock)
that would not be deductible pursuant to the terms of Sections 162(a)(1),
162(m) or 162(n) of the Code; (9) neither the Company nor any of its
Subsidiaries is required to include in income any adjustment pursuant to
Section 481(a) of the Code (or similar provisions of other law or
regulations) in its current or in any future taxable period by reason of a
change in accounting method, nor does the Company or any of its
Subsidiaries have any knowledge that the Internal Revenue Service (or other
taxing authority) has proposed or is considering proposing, any such change
in accounting method; (10) neither the Company nor any affiliate of the
Company has made with respect to the Company, its Subsidiaries, or any
assets held by the Company or any Subsidiary any consent under Section 341
of the Code; (11) the Company and each of its Subsidiaries has complied in
all respects with all rules and regulations relating to the withholding of
Taxes (including, without limitation, employee-related Taxes), except for
failures that would not in the aggregate reasonably be expected to have a
Material Adverse Effect; (12) the Company made a valid election to be
treated as an S Corporation (within the meaning of Section 1361 of the
Code) beginning on May 1, 1988 and for each taxable period thereafter (or
portion thereof), up through and including July 15, 1996, the Company
properly maintained a valid election under Section 1362(a) of the Code (as
well as the equivalent provisions, if any, of all applicable State or local
statutes) to be treated as an "S Corporation"; and (13) neither the Company
nor any of its Subsidiaries has constituted either a "distributing
corporation" or a "controlled corporation" (within the meaning of Section
355(a)(1)(A) of the Code) in a distribution of stock qualifying for tax-
free treatment under Section 355 of the Code (A) in the two years prior to
the date of this Agreement, or (B) in a distribution that could otherwise
constitute part of a "plan" or "series of related transactions" (within the
meaning of Section 355(e) of the Code) in conjunction with the Merger.
(b) The statutes of limitations for the federal income Tax
Returns of the Company and the Subsidiaries of the Company (including,
without limitation, any Company Group) have expired or otherwise have been
closed for all taxable periods ending on or before December 31, 1995.
(c) For purposes of this Agreement, (i) "Taxes" means all taxes,
levies or other like assessments, charges or fees (including estimated
taxes, charges and fees), including, without limitation, income,
corporation, advance corporation, gross receipts, transfer, excise,
property, sales, use, value-added, license, payroll, withholding, social
security and franchise or other governmental taxes or charges, imposed by
the United States or any state, county, local or foreign government or
subdivision or agency thereof, any liability for taxes, levies or other
like assessments, charges or fees of another Person pursuant to Treasury
Regulation Section 1.1502-6 or any similar or analogous provision of
applicable law or otherwise (including, without limitation, by agreement)
and such term shall include any interest, penalties or additions to tax
attributable to such taxes, levies or other like assessments, charges or
fees and (ii) "Tax Return" means any report, return, statement, declaration
or other written information required to be supplied to a taxing or other
governmental authority in connection with Taxes.
SECTION 3.11 Employee Benefit Plans.
(a) Schedule 3.11(a) of the Company Disclosure Schedule contains
a true and complete list of each deferred compensation, incentive
compensation and equity compensation plan; "welfare" plan, fund or program
(within the meaning of section 3(1) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA")); "pension" plan, fund or
program (within the meaning of section 3(2) of ERISA); each employment or
termination agreement; each severance agreement; and each other material
employee benefit plan, fund, program, agreement or arrangement, in each
case, that is sponsored, maintained or contributed to or required to be
contributed to by the Company or its Subsidiaries, whether written or oral,
for the benefit of any employee or former employee of the Company or its
Subsidiaries (collectively, the "Company Plans").
(b) With respect to each Company Plan, the Company has
heretofore delivered or made available to Buyer true and complete copies of
the Company Plan and any amendments thereto (or if the Company Plan is not
a written Company Plan, a description thereof), any related trust or other
funding vehicle, any service provider agreement or investment management
agreement, any reports or summaries required under ERISA or the Code and
the most recent determination letter, if any, received from the Internal
Revenue Service with respect to each Company Plan intended to qualify under
section 401 of the Code. The Company has no unfunded liabilities with
respect to any Company Plan as of the end of the Company's most recent
fiscal year that are not reflected on the Company's financial statements
for such fiscal year.
(c) The Company has not at any time maintained, or contributed
to, any defined benefit plan covered by Title IV of ERISA, or incurred any
liability under Title IV of ERISA, and the transactions contemplated by
this Agreement will not subject the Company to any liability under Title IV
of ERISA. The Company has not at any time maintained, or contributed to,
any multiemployer plan described in section 3(37) of ERISA, or incurred any
withdrawal liability under ERISA, and the transactions contemplated by this
Agreement will not subject the Company to any withdrawal liability under
ERISA.
(d) Each Company Plan has been operated and administered in all
material respects in accordance with its terms and applicable law,
including, but not limited to, ERISA and the Code.
(e) Except as set forth in Schedule 3.11(e) of the Company
Disclosure Schedule, each Company Plan intended to be "qualified" within
the meaning of section 401(a) of the Code has received a favorable
determination letter from the Internal Revenue Service, and nothing has
occurred since the date of such determination that would adversely affect
the qualified status of any such Company Plan.
(f) Except as set forth in Schedule 3.11(f) or 3.11(a) of the
Company Disclosure Schedule, no Company Plan provides medical, surgical,
hospitalization, death or similar benefits (whether or not insured) for
employees or former employees of the Company or any Subsidiary for periods
extending beyond their retirement or other termination of service, other
than (i) coverage mandated by applicable law, (ii) death benefits under any
"pension plan," or (iii) benefits the full cost of which is borne by the
current or former employee (or his or her beneficiary).
(g) There are no pending or anticipated claims by or on behalf
of any Company Plan, by any participant, beneficiary or fiduciary covered
under any such Company Plan, or otherwise involving any such Company Plan
(other than routine claims for benefits). To the best of the Company's
knowledge, no Company Plan is subject to any ongoing audit, investigation,
or other administrative proceeding of any governmental entity, and no
Company Plan is the subject of any pending application for administrative
relief under any voluntary compliance program or closing agreement program
of the Internal Revenue Service or the Department of Labor. To the best of
the Company's knowledge, no person or entity has engaged in any "prohibited
transaction" (as such term is defined in ERISA and the Code) with respect
to any Company Plan. The Company has paid or remitted all contributions to
any Company Plan within the time required by applicable law, and if
applicable, within the deadline for claiming a tax deduction for the year
with respect to the contribution.
(h) Except as set forth in Schedule 3.11(h) of the Company
Disclosure Schedule, the consummation of the transactions contemplated by
this Agreement will not, either alone or in combination with another event,
(i) entitle any current or former employee or officer of the Company to
severance pay, unemployment compensation or any other payment,(ii)
accelerate the time of payment or vesting, or increase the amount of
compensation due any such employee or officer, (iii) require assets to be
set aside or other forms of security to be provided with respect to any
liability under any Company Plan, or (iv) result in any "excess parachute
payment" (within the meaning of Section 280G of the Code) under any Company
Plan.
SECTION 3.12 Litigation. Except as set forth in either the
Company SEC Documents filed by the Company and publicly available prior to
the date of this Agreement, or Schedule 3.12 of the Company Disclosure
Schedule or otherwise fully covered by insurance, there is no action, suit
or proceeding pending against, or to the knowledge of the Company
threatened against, and, to the knowledge of the Company, there is no
investigation pending or threatened against, the Company or any Subsidiary
of the Company (or any Company Plan) or any of their respective properties
before any court or arbitrator or any Governmental Entity except those
which, individually or in the aggregate, would not 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 the Company or any of its Subsidiaries which would
reasonably be expected to have a Material Adverse Effect.
SECTION 3.13 Compliance with Laws.
(a) Except as set forth in Schedule 3.13 of the Company
Disclosure Schedule, the Company and its Subsidiaries are in compliance
with all applicable laws, ordinances, judgments, decrees, rules and
regulations of any federal, state, local or foreign governmental authority
applicable to their respective businesses and operations, except for such
violations, if any, which, in the aggregate, would not reasonably be
expected to have a Material Adverse Effect. Except as set forth in
Schedule 3.13 of the Company Disclosure Schedule, all governmental
approvals, permits and licenses (collectively, "Permits") required to
conduct the business of the Company and its Subsidiaries and for them to
own, lease or operate their assets have been obtained, are in full force
and effect and are being complied with except for such violations and
failures to have Permits in full force and effect, if any, which,
individually or in the aggregate, would not reasonably be expected to have
a Material Adverse Effect.
(b) There are no conditions relating to the Company or any of
its Subsidiaries or relating to the Company's or any of its Subsidiaries'
ownership, use or maintenance of any real property owned or operated, or
previously owned or operated, by the Company or any of its Subsidiaries,
and the Company does not know of any such condition in respect of such real
property not related to the ownership, use or maintenance, that would lead
to any liability for violation of any federal, state, county or local laws,
regulations, orders or judgments relating to pollution or protection of the
environment or any other applicable environmental, health or safety
statutes, ordinances, orders, rules, regulations or requirements which
liability would reasonably be expected to have a Material Adverse Effect.
The Company and its Subsidiaries have received, handled, used, stored,
treated, shipped and disposed of all hazardous or toxic materials,
substances and wastes (whether or not on its properties owned or operated
by others) in compliance with all applicable environmental, health or
safety statutes, ordinances, orders, rules, regulations or requirements,
except for possible noncompliances which, individually or in the aggregate,
would not reasonably be expected to have a Material Adverse Effect.
SECTION 3.14 Labor Matters. Except to the extent set forth in
Schedule 3.14 of the Company Disclosure Schedule, as of the date of this
Agreement (i) there is no labor strike, dispute, slowdown, stoppage or
lockout actually pending or, to the knowledge of the Company, threatened
against the Company or any of its Subsidiaries; (ii) to the knowledge of
the Company, no union organizing campaign with respect to the Company's or
any of its Subsidiaries' employees is underway; (iii) there is no unfair
labor practice charge or complaint against the Company or any of its
Subsidiaries pending or, to the knowledge of the Company, threatened before
the National Labor Relations Board or any similar state or foreign agency;
(iv) there is no written grievance pending relating to any collective
bargaining agreement or other grievance procedure; (v) to the knowledge of
the Company, no charges with respect to or relating to the Company or any
of its Subsidiaries are pending before the Equal Employment Opportunity
Commission or any other agency responsible for the prevention of unlawful
employment practices; and (vi) there are no collective bargaining
agreements with any union covering employees of the Company or any of its
Subsidiaries, except for such exceptions to the foregoing clauses (iii)
through (v) which, individually or in the aggregate, would not reasonably
be expected to have a Material Adverse Effect.
SECTION 3.15 Certain Contracts and Arrangements. Except as set
forth in Schedule 3.15 of the Company Disclosure Schedule, each material
contract or agreement to which the Company or any of its Subsidiaries is a
party or by which any of them is bound is in full force and effect, and
neither the Company nor any of its Subsidiaries, nor, to the knowledge of
the Company, any other party thereto, is in breach of, or default under,
any such contract or agreement, and no event has occurred that with notice
or passage of time or both would constitute such a breach or default
thereunder by the Company or any of its Subsidiaries, or, to the knowledge
of the Company, any other party thereto, except for such failures to be in
full force and effect and such breaches and defaults which, in the
aggregate, would not reasonably be expected to have a Material Adverse
Effect.
SECTION 3.16 Intellectual Property.
(a) The Company and its Subsidiaries own or have the right to
use all material Intellectual Property (as defined in Section 3.16(c)).
Schedule 3.16(a) of the Company Disclosure Schedule sets forth a current
and complete list of all registrations and applications relating to
material Intellectual Property.
(b) Except as set forth in Schedule 3.16(b)(1) of the Company
Disclosure Schedule, to the knowledge of the Company: (i) all of the grants
or registrations relating to material Intellectual Property owned by the
Company and its Subsidiaries are subsisting and unexpired, free of all
liens or encumbrances and have not been abandoned; (ii) either the Company
or one of its Subsidiaries is the owner of record of any application,
registration or grant for each material item of Intellectual Property
(except for the licensed Intellectual Property set forth in Schedule
3.16(b)(2) of the Company Disclosure Schedule); (iii) the Company does not
infringe the Intellectual Property rights of any third party in any respect
that would reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect; (iv) no third party or entity is
currently infringing upon the Intellectual Property rights of the Company,
except for such infringements that would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect; (v) no
judgment, decree, injunction, rule or order has been rendered by a
Governmental Entity which would limit, cancel or question the validity of,
or the Company's or its Subsidiaries' rights in and to, any Intellectual
Property owned by the Company in any respect that would reasonably be
expected to have, individually or in the aggregate, a Material Adverse
Effect; and (vi) the Company has not received notice of any pending or
threatened suit, action or adversarial proceeding that seeks to limit,
cancel or question the validity of, or the Company's or its Subsidiaries'
rights in and to, any Intellectual Property, which would reasonably be
expected to have, individually or in the aggregate, a Material Adverse
Effect. Schedule 3.16(b)(2) of the Company Disclosure Schedule sets forth
a correct and complete list of all licenses, sublicenses and permissions to
use any material item of Intellectual Property (in each case identifying
the item licensed, the license parties and the date of the license
agreement or other agreement permitting the use of the item). To the
knowledge of the Company, there is no default by the Company or its
Subsidiaries under such licenses, sublicenses or permissions that is
reasonably likely to have, individually or in the aggregate, a Material
Adverse Effect.
(c) For purposes of this Agreement "Intellectual Property" shall
mean all rights, privileges and priorities provided under U.S., state and
foreign law relating to intellectual property and reasonably necessary for
the Company and its Subsidiaries to conduct their business as it is
currently conducted, including without limitation all (x) (1) proprietary
inventions, discoveries, processes, formulae, designs, methods, techniques,
procedures, concepts, developments, technology, new and useful improvements
thereof and proprietary know-how relating thereto, whether or not patented
or eligible for patent or equivalent protection; (2) copyrights and
copyrightable works, including computer applications, programs, software,
databases and related items; (3) trademarks, service marks, trade names,
and trade dress, internet domain names, the goodwill of the business
symbolized thereby, and all common-law rights relating thereto; (4) trade
secrets and other confidential information; (y) all registrations and
applications for any of the foregoing and (z) licenses or other similar
agreements granting to the Company or any of its Subsidiaries the rights to
use any of the foregoing.
SECTION 3.17 Year 2000 Compliance. Except for the matters set
forth in Schedule 3.17 of the Company Disclosure Schedule, all of the MIS
Systems and the Facilities are Year 2000 Compliant, except for any such
failures to be Year 2000 Compliant which, individually or in the aggregate
would not reasonably be expected to have a Material Adverse Effect. "Year
2000 Compliant" means that (i) the MIS Systems accurately process, provide
and/or receive all date/time data (including calculating, comparing,
sequencing, processing and outputting) within, from, into, and between
centuries (including the twentieth and twenty-first centuries and the years
1999 and 2000), including leap year calculations, and (ii) neither the
performance nor the functionality nor the Company's or any of its
Subsidiaries' provision of the products, services, and other item(s) at
issue will be affected by any dates/times prior to, on, after or spanning
January 1, 2000. "Facilities" means any facilities or equipment used by
the Company or any of its Subsidiaries' in any location, including HVAC
systems, mechanical systems, elevators, security systems, fire suppression
systems, telecommunications systems, and equipment, whether or not owned by
the Company or any of its Subsidiaries. "MIS Systems" means any computer
software and systems (including hardware, firmware, operating system
software, utilities, and applications software) used in the ordinary course
of business by or on behalf of the Company or any of its Subsidiaries,
including the Company's or any of its Subsidiaries' payroll, accounting,
billing/receivables, inventory, asset tracking, customer service, human
resources, call center and e-mail systems.
SECTION 3.18 Finders' Fees. Except for ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co.
("▇▇▇▇▇▇▇ Sachs"), there is no investment banker, broker, finder or other
intermediary which has been retained by, or is authorized to act on behalf
of, the Company or any Subsidiary of the Company that would be entitled to
any fee or commission from the Company, any Subsidiary of the Company,
Buyer or any of Buyer's affiliates upon consummation of the transactions
contemplated by this Agreement. The Company has provided to Buyer a true
and accurate basis for calculating all the fees that would be payable by
the Company to ▇▇▇▇▇▇▇ ▇▇▇▇▇ in connection with the transactions
contemplated hereunder. Neither the Company, nor any Subsidiary, has any
continuing obligation to pay a broker's or finder's fee or any other
commission or similar fee to any agent, broker, investment banker or other
person or firm in connection with any acquisition, sale, financing or other
similar transaction to be consummated after the date hereof (other than
with respect to the Merger as set forth in this Section).
SECTION 3.19 Opinion of Financial Advisors. The Company has
received the opinion of ▇▇▇▇▇▇▇ Sachs to the effect that, as of such date,
the Exchange Ratio is fair from a financial point of view to the
stockholders of the Company. The Company will promptly following the
receipt thereof deliver to Buyer a copy of the written opinion from ▇▇▇▇▇▇▇
▇▇▇▇▇ to the foregoing effect.
SECTION 3.20 Board Recommendation. The Board of Directors of
the Company, at a meeting duly called and held, has unanimously (i)
determined that this Agreement and the transactions contemplated hereby,
including the Merger, taken together are fair to and in the best interests
of the shareholders of the Company, (ii) approved and adopted this
Agreement, the Stockholders Agreement and the transactions contemplated
hereby and thereby, including the Merger, (iii) taken all actions necessary
on the part of the Company to render inapplicable to this Agreement, the
Stockholders Agreement and the transactions contemplated hereby and
thereby, including the Merger, the provisions of Section 607.0902 and
Section 607.0901 of the FBCA and (iv) resolved to recommend that the
shareholders of the Company approve this Agreement and the Plan of Merger.
SECTION 3.21 Voting Requirements. The Required Company
Shareholder Vote is the only vote of the holders of the Company's capital
stock necessary to approve this Agreement and the Plan of Merger and the
transactions contemplated by this Agreement.
SECTION 3.22 Title to Properties. (a) Each of the Company and
its Subsidiaries has good and marketable title to, or valid leasehold
interests in, all its material, tangible properties and assets, free and
clear of all Liens, except for defects in title, easements, restrictive
covenants, taxes which are not yet due and payable, mechanics', carriers',
workers', materialmen's and similar Liens, and similar encumbrances or
impediments that, in the aggregate, do not and will not materially
interfere with the use of the properties or assets subject thereto or
affected thereby or otherwise materially impair business operations at such
properties.
(b) Each of the Company and its Subsidiaries has complied with
the terms of all leases to which it is a party and under which it is in
occupancy, except for noncompliances which, individually or in the
aggregate, would not reasonably be expected to have a Material Adverse
Effect. As of the date of this Agreement, each of the Company and its
Subsidiaries enjoys peaceful and undisturbed possession under all such
leases.
SECTION 3.23 Certain Contracts. Neither the Company nor any of
its Subsidiaries is a party to or bound by any non-competition agreement or
any other similar agreement or obligation which purports to limit in any
material respect the manner in which, or the localities in which, the
business of the Company and its Subsidiaries is conducted.
SECTION 3.24 Tax Matters. Neither the Company nor any of its
Subsidiaries has taken any action or knows of any fact, agreement, plan or
other circumstance that is reasonably likely to prevent the Merger from
qualifying as a reorganization within the meaning of Section 368(a) of the
Code.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER AND NEWCO
Buyer and Newco jointly and severally represent and warrant to
the Company as follows:
SECTION 4.1 Corporate Existence and Power. Each of Buyer and
Newco is a corporation duly incorporated, validly existing and in good
standing under the laws of its jurisdiction of incorporation, and has all
corporate power and all Licenses required to carry on its business as now
conducted except for failures to have any such License which would not, in
the aggregate, reasonably be expected to have a Material Adverse Effect.
Each of Buyer and Newco is duly qualified to do business as a foreign
corporation and is in good standing in each jurisdiction where the
character of the property owned, leased or operated by it or the nature of
its activities makes such qualifications necessary, except for those
jurisdictions where failures to be so qualified would not, in the
aggregate, reasonably be expected to have a Material Adverse Effect. Each
of Buyer and Newco has heretofore delivered or made available to the
Company true and complete copies of the governing documents or other
organizational documents of like import, as currently in effect, of each of
Buyer and Newco.
SECTION 4.2 Corporate Authorization. Each of Buyer and Newco
has the requisite corporate power and authority to execute and deliver this
Agreement and to perform its obligations hereunder. The execution and
delivery of this Agreement and the performance of its obligations hereunder
have been duly and validly authorized by the Board of Directors of each of
Buyer and Newco, Buyer has approved and adopted this Agreement and the Plan
of Merger in its capacity as the sole stockholder of Newco and no other
corporate proceedings or actions on the part of either Buyer or Newco are
necessary to authorize the execution, delivery and performance of this
Agreement. This Agreement has been duly executed and delivered by each of
Buyer and Newco and constitutes, assuming due authorization, execution and
delivery of this Agreement by the Company, a valid and binding obligation
of each of Buyer and Newco, enforceable against each of Buyer and Newco in
accordance with its terms.
SECTION 4.3 Consents and Approvals; No Violations.
(a) Neither the execution and delivery of this Agreement nor the
performance by either Buyer or Newco of its obligations hereunder will (i)
conflict with or result in a violation or breach of any provision of the
certificate of incorporation or by-laws (or other governing or
organizational documents) of either Buyer or Newco or (ii) result in a
violation or breach of, or constitute (with or without due notice or lapse
of time or both) a default (or give rise to any right of termination,
cancellation or acceleration or obligation to repurchase, repay, redeem or
acquire or any similar right or obligation or to loss of a material
benefit) under, or result in the creation of any Lien (as defined in
Section 3.5(b)) upon any of the properties or assets of Buyer or Newco or
any of Buyer's Subsidiaries under, any of the terms, conditions or
provisions of any note, mortgage, letter of credit, other evidence of
indebtedness, guarantee, license, lease or agreement or similar instrument
or obligation to which Buyer or any of its Subsidiaries is a party or by
which any of them or any of their assets may be bound or (iii) assuming
that the filings, registrations, notifications, authorizations, consents
and approvals referred to in subsection (b) below have been obtained or
made, as the case may be, violate any order, injunction, decree, statute,
rule or regulation of any Governmental Entity to which Buyer or any of its
Subsidiaries is subject, excluding from the foregoing clauses (ii) and
(iii) such requirements, defaults, breaches, rights or violations (A) that
would not, in the aggregate, reasonably be expected to have a Material
Adverse Effect or (B) that become applicable as a result of any acts or
omissions by, or facts pertaining to, the Company.
(b) No filing or registration with, notification to, or
authorization, permit, consent or approval of, any Governmental Entity is
required in connection with the execution and delivery of this Agreement by
either Buyer or Newco or the performance by either Buyer or Newco of its
obligations hereunder, except (i) the filing of the Articles of Merger in
accordance with the FBCA and filings to maintain the good standing of the
Surviving Corporation; (ii) compliance with any applicable requirements of
the HSR Act; (iii) the filing with the SEC of (A) the Form S-4, and (B)
compliance with any applicable requirements of the Securities Act and the
Exchange Act as may be required in connection with this Agreement and the
Stockholders Agreement and the transactions contemplated hereby and
thereby; (iv) compliance with any applicable requirements of state blue sky
laws; (v) such filings with and approvals of the NASD to permit the shares
of Buyer Common Stock that are to be issued in the Merger to be quoted on
The Nasdaq Stock Market's National Market ("Nasdaq") and (vi) such other
consents, approvals, orders, authorizations, notifications, registrations,
declarations and filings (A) the failure of which to be obtained or made
would not prevent or materially delay consummation of the Merger and would
not, in the aggregate, reasonably be expected to have a Material Adverse
Effect or (B) that become applicable as a result of any acts or omissions
by, or facts pertaining to, the Company.
SECTION 4.4 Capitalization. As of the date hereof, the
authorized capital stock of Buyer consists of 800,000,000 shares of Buyer
Common Stock, 200,000,000 shares of Class B common stock, par value $.01,
of Buyer (the "Buyer Class B Common Stock" and, together with the Buyer
Common Stock, the "Buyer Common Shares"), and 15,000,000 shares of
preferred stock, par value $.01 per share, of Buyer (the "Buyer Preferred
Stock"). As of November 30, 1999, there were (i) 136,721,815 shares of
Buyer Common Stock issued and outstanding, (ii) 31,516,726 shares of Buyer
Class B Common Stock issued and outstanding, (iii) no shares of Buyer
Preferred Stock issued and outstanding, (iv) 294,124 shares of Buyer Common
Stock held in treasury by Buyer and its Subsidiaries, (v) shares of USANi
LLC exchangeable into 90,683,119 shares of Buyer Common Stock and
73,285,000 shares of Buyer Class B Common Stock issued and outstanding,
(vi) shares of Home Shopping Network, Inc. exchangeable into 15,810,032
shares of Buyer Common Stock and 798,272 shares of Buyer Class B Common
Stock issued and outstanding, (vii) 7% Convertible Subordinated Debentures
due July 1, 2003 convertible into 568,749 shares of Buyer Common Stock at a
conversion price of $66.43 per share outstanding and (viii) outstanding
options to purchase 35,517,213 shares of Buyer Common Stock under various
stock option plans described in, or incorporated by reference in, the Buyer
SEC Documents (as defined in Section 4.5) and outstanding warrants to
purchase 83,997 shares of Buyer Common Stock. Except as set forth in this
Section 4.4, as of November 30, 1999, there were outstanding (i) no shares
of capital stock or other voting securities of Buyer, (ii) no securities of
Buyer or any Subsidiary of Buyer convertible into or exchangeable for
shares of capital stock or voting securities of Buyer and (iii) except as
set forth in the Buyer SEC Documents, no options, warrants, calls,
subscription or other rights to acquire from the Buyer, and no obligation
of Buyer to issue, transfer, sell or otherwise dispose of any capital
stock, voting securities or securities convertible into or exchangeable for
capital stock or voting securities of Buyer (the items in clauses (i), (ii)
and (iii) being referred to collectively as the "Buyer Securities"). All
outstanding shares of capital stock of Buyer have been, and all shares
which may be issued in connection with the Merger will be, when issued,
duly authorized and validly issued, fully paid and nonassessable and,
except as set forth in the Buyer SEC Documents, not subject to preemptive
rights.
SECTION 4.5 SEC Documents. Buyer has filed all reports, proxy
statements, registration statements, forms and other documents required to
be filed with the SEC since January 1, 1997 (the "Buyer SEC Documents").
As of their respective dates, and giving effect to any amendments or
supplements thereto filed prior to the date of this Agreement, (a) the
Buyer SEC Documents complied in all material respects with the requirements
of the Securities Act or the Exchange Act, as the case may be, and the
applicable rules and regulations of the SEC promulgated thereunder and (b)
none of the Buyer SEC Documents (except as to the financial statements
contained therein, which are dealt with in Section 4.6 hereof) contained
any untrue statement of a material fact or omitted 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 were
made, not misleading.
SECTION 4.6 Financial Statements. The financial statements of
Buyer (including, in each case, any notes and schedules thereto) included
in the Buyer SEC Documents (a) comply as to form in all material respects
with all applicable accounting requirements and the rules and regulations
of the SEC with respect thereto, (b) are in conformity with GAAP, applied
on a consistent basis (except in the case of unaudited statements, as
permitted by the rules and regulations of the SEC) during the periods
involved (except as may be indicated in the related notes and schedules
thereto) and (c) fairly present, in all material respects, the consolidated
financial position of Buyer and its consolidated Subsidiaries as of the
dates thereof and the consolidated results of their operations and cash
flows for the periods then ended (subject, in the case of unaudited
statements, to normal year-end audit adjustments).
SECTION 4.7 Information Supplied. None of the information
supplied or to be supplied by Buyer specifically for inclusion or
incorporation by reference in (i) the Form S-4 will, at the time the Form
S-4 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 to make the statements therein not
misleading or (ii) the Company Proxy Statement will, at the date it is
first mailed to the Company's stockholders or at the time of the Company
Stockholders Meeting, 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. The Form S-4 will comply as to
form in all material respects with the requirements of the Securities Act
and the rules and regulations thereunder. No representation or warranty is
made by Buyer with respect to statements made or incorporated by reference
therein based on information supplied by the Company specifically for
inclusion or incorporation by reference in the Form S-4.
SECTION 4.8 Litigation. Except as set forth in the Buyer SEC
Documents filed by Buyer and publicly available prior to the date of this
Agreement, as of the date of this Agreement, there is no action, suit or
proceeding pending against, or to the knowledge of Buyer threatened
against, Buyer or any Subsidiary of Buyer or any of their respective
properties before any court or arbitrator or any Governmental Entity which,
individually or in the aggregate, would 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
Buyer or any of its Subsidiaries having, or which, insofar as reasonably
can be foreseen, in the future would have, any such effect.
SECTION 4.9 Tax Matters. Neither Buyer nor any of its
Subsidiaries has taken any action or knows of any fact, agreement, plan or
other circumstance that is reasonably likely to prevent the Merger from
qualifying as a reorganization within the meaning of Section 368(a) of the
Code.
SECTION 4.10 Compliance with Laws. Except as set forth in the
Buyer SEC Documents filed by Buyer and publicly available prior to the date
hereof, as of the date of this Agreement, the Buyer and its Subsidiaries
are in compliance with all applicable laws, ordinances, judgments, decrees,
rules and regulations of any federal, state, local or foreign governmental
authority applicable to their respective businesses and operations, except
for such violations, if any, which, in the aggregate, would not reasonably
be expected to have a Material Adverse Effect. Except as set forth in the
Buyer SEC Documents filed by Buyer and publicly available prior to the date
hereof, as of the date hereof, all Permits required to conduct the business
of the Buyer and its Subsidiaries and for them to own, lease or operate
their assets have been obtained, are in full force and effect and are being
complied with except for such violations and failures to have Permits in
full force and effect, if any, which, individually or in the aggregate,
would not reasonably be expected to have a Material Adverse Effect.
SECTION 4.11 Share Ownership. As of the time immediately prior
to the execution of this Agreement, neither Buyer nor any Subsidiary or
controlled affiliate of Buyer beneficially owns or will acquire any shares
of Company Common Stock other than shares that they may be deemed to
beneficially own pursuant to the Stockholders Agreement. None of such
entities is an "interested shareholder" for purposes of Section 607.0902 of
the FBCA.
SECTION 4.12 Ownership of Newco; No Prior Activities; Assets of
Newco.
(a) Newco was formed solely for the purpose of the Merger and
engaging in the transactions contemplated hereby.
(b) As of the date hereof and the Effective Time, the capital
stock of Newco is and will be directly owned 100% by Buyer. Further, there
are not as of the date hereof and there will not be at the Effective Time
any outstanding or authorized options, warrants, calls, rights, commitments
or any other agreements of any character which Newco is a party to, or may
be bound by, requiring it to issue, transfer, sell, purchase, redeem or
acquire any shares of capital stock or any securities or rights convertible
into, exchangeable for, or evidencing the right to subscribe for or
acquire, any shares of capital stock of Newco.
(c) As of the date hereof and the Effective Time, except for
obligations or liabilities incurred in connection with its incorporation or
organization and the transactions contemplated hereby and activities,
agreements or arrangements in connection with the transactions contemplated
hereby, Newco has not and will not have (i) incurred, directly or
indirectly through any of its Subsidiaries or affiliates, any obligations
or liabilities, (ii) engaged in any business or activities of any type or
kind whatsoever or (iii) entered into any agreements or arrangements with
any Person.
SECTION 4.13 Finders' Fees. Except for Credit Suisse First
Boston Corporation, there is no investment banker, broker, finder or other
intermediary which has been retained by, or is authorized to act on behalf
of, the Buyer or any Subsidiary of the Buyer that would be entitled to any
fee or commission from the Buyer, any affiliate of the Buyer, the Company
or any Subsidiary of the Company upon consummation of the transactions
contemplated by this Agreement.
ARTICLE V
COVENANTS OF THE PARTIES
SECTION 5.1 Conduct of the Business of the Company. During
the period from the date of this Agreement and continuing until the
Effective Time, the Company agrees as to itself and its Subsidiaries that
(except as expressly contemplated or permitted by this Agreement or as set
forth in Schedule 5.1 of the Company Disclosure Schedule or to the extent
that Buyer shall otherwise consent in writing), the Company and its
Subsidiaries shall carry on their respective businesses in the usual,
regular and ordinary course consistent with past practice and shall use
their reasonable best efforts to preserve intact their present lines of
business, maintain their rights and franchises and preserve intact their
relationships with customers, suppliers and others having business dealings
with them and keep available the services of their present officers and
employees, in each case to the end that their ongoing businesses shall not
be impaired in any material respect at the Effective Time. At any time,
the Company shall have the right to adopt a Shareholder Rights Plan and to
issue and redeem rights thereunder (provided that the redemption price is
not greater than $.01) and amend such Plan; provided that such Plan shall
expressly provide that for all purposes thereunder Buyer and its affiliates
and associates shall be excluded from the definition of an "Acquiring
Person", or any similar definition, and the Merger or, assuming compliance
with Section 4.11 of this Agreement, any other acquisition of beneficial
ownership of Company capital stock, will not trigger or result in the
exercisability or any change in the exercisability of the rights. Without
limiting the generality of the foregoing, during the period from the date
of this Agreement and continuing until the Effective Time, except as
expressly contemplated or permitted by this Agreement or as set forth in
Schedule 5.1 of the Company Disclosure Schedule or to the extent that Buyer
shall otherwise consent in writing, the Company agrees as to itself and its
Subsidiaries as follows:
(a) Dividends; Changes in Share Capital. The Company shall not,
and shall not permit any of its Subsidiaries to, (i) declare, set aside or
pay any dividend or other distribution with respect to any of its capital
stock, (ii) split, combine or reclassify any of its capital stock or issue
any other securities in respect of, in lieu of or in substitution for,
shares of its capital stock, except for any such transaction by a wholly-
owned Subsidiary of the Company which remains a wholly-owned Subsidiary
after consummation of such transaction, or (iii) repurchase, redeem or
otherwise acquire any shares of its capital stock or any securities
convertible into or exercisable for any shares of its capital stock, except
for any such transaction by a wholly-owned Subsidiary of the Company which
remains a wholly-owned Subsidiary after consummation of such transaction.
(b) Issuance of Securities. The Company shall not, and shall not
permit any of its Subsidiaries to, issue, deliver or sell any shares of its
capital stock of any class, any bonds, debentures, notes or other
indebtedness of the Company having the right to vote on any matters on
which shareholders may vote ("Company Voting Debt") or any securities
convertible into or exercisable for, or any rights, warrants or options to
acquire, any such shares of capital stock or Company Voting Debt, other
than (i) the issuance of Common Stock upon the exercise of Options
outstanding on the date of this Agreement or granted hereafter to the
extent permitted hereunder, (ii) the issuance of Options in the ordinary
course of business consistent with past practice to employees (other than
executive officers) in an aggregate amount covering not more than 100,000
shares of Company Common Stock so long as such grants are consistent with
past practice including for new hires or (iii) issuances by a wholly-owned
Subsidiary of the Company of capital stock to such Subsidiary's parent or
another wholly-owned Subsidiary of the Company.
(c) Governing Documents; Securities. The Company shall not, and
shall not permit any of its Subsidiaries to, amend (i) their respective
certificates of incorporation, by-laws or other governing documents or (ii)
any material term of any outstanding security issued by the Company or any
Subsidiary of the Company.
(d) No Acquisitions. The Company shall not, and shall not permit
any of its Subsidiaries to, acquire (or agree to acquire or take any steps
to facilitate the acquisition of) by merging or consolidating with, or by
purchasing a substantial equity interest in or, outside of the ordinary
course of business, a substantial portion of the assets of, or by any other
manner, any business or any corporation, partnership, association or other
business organization or division thereof or otherwise acquire or agree to
acquire any such assets, stock or operations of another company.
(e) No Liens. The Company shall not, and shall not permit any of
its Subsidiaries to, create, assume or otherwise incur any Lien or
restriction on transfer of any nature whatsoever on any asset, except for
defects in title, easements, restrictive covenants, taxes which are not yet
due and payable, mechanics', carriers', workers', materialmen's and similar
Liens, and similar encumbrances or impediments that, in the aggregate, do
not and will not materially interfere with the use of the properties or
assets subject thereto or affected thereby or otherwise materially impair
business operations at such properties.
(f) No Relinquishment of Rights. The Company shall not, and
shall not permit any of its Subsidiaries to, (i) relinquish, waive or
release any material contractual or other right or claim, (ii) settle any
material action, suit, claim, investigation or other proceeding or (iii)
knowingly dispose of or permit to lapse any rights in any material
Intellectual Property or knowingly disclose to any Person not an employee
of the Company or any Subsidiary of the Company or otherwise knowingly
dispose of any material trade secret, process or knowhow not a matter of
public knowledge prior to the date of this Agreement, except pursuant to
judicial order or process.
(g) Investments. The Company shall not, and shall not permit any
of its Subsidiaries to make any loans, advances or capital contributions
to, or investments in, any other Person (other than pursuant to any
contract or other legal obligation of the Company or any of its
Subsidiaries existing at the date of this Agreement which are set forth in
Schedule 5.1(g) of the Company Disclosure Schedule or in the ordinary
course of business consistent with past practice).
(h) Indebtedness. Except for increases to the borrowing limit
under the Credit Agreement to an aggregate amount not to exceed
$50,000,000, the Company shall not, and shall not permit any of its
Subsidiaries to, create, incur or assume any indebtedness for borrowed
money, issuances of debt securities, guarantees, loans or advances, except
in the ordinary course of business consistent with past practice.
(i) Compensation; Severance. Other than as set forth in
Schedules 3.11(a), 5.1(c) or 5.1(i) of the Company Disclosure Schedule or
pursuant to obligations or permitted by this Agreement to be entered into
thereafter, the Company shall not, and shall not permit any of its
Subsidiaries to (A) pay or commit to pay any severance or termination pay
to any director, executive officer or employee of the Company or any
Subsidiary of the Company (other than severance or termination pay (i)
required pursuant to the terms of an employee benefit plan, program,
policy, agreement or arrangement listed on Schedule 3.11(a) or 5.1(i) of
the Company Disclosure Schedule or applicable law or (ii) in an aggregate
amount not to exceed $100,000 in the case of payments to directors and vice
presidents and other non-executive officers of the Company), (B) enter into
any employment, deferred compensation, consulting, severance or other
similar agreement (or any amendment to any such existing agreement
(including further amending the amendments entered into in connection with
this transaction with certain employees which are to become effective upon
and subject to the occurrence of the Effective Time)) with any director or
executive officer of the Company or any Subsidiary of the Company, (C)
increase or commit to increase any employee benefits payable to any
director, executive officer or employee of the Company or any Subsidiary of
the Company, including wages, salaries, compensation, pension, severance,
termination pay or other benefits or payments or any acceleration of any
vesting schedule associated with any such compensation (except in the case
of employees other than executive officers and directors in the ordinary
course of business consistent with past practice); provided, however, that
in no event shall the Company make any increase in the wage rates or
benefits payable to employees at any of the Company's call centers or
change the terms of any general employee incentive compensation related to
call volume or any other performance factor; provided further that, the
Company may increase wage rates to call center employees (x) to the extent
(and only to the extent) that the full cost of any such increase is passed
along to a customer or customers pursuant to the applicable service
agreement and (y) in addition to increases permitted pursuant to clause (x)
above, in an aggregate amount not to exceed $350,000 on an annualized
basis, (D) adopt or make any commitment to adopt any additional employee
benefit plan, or (E) make any contribution (other than (i) regularly
scheduled contributions and (ii) contributions required pursuant to the
terms thereof) to, or amend or terminate or make any commitment to amend or
terminate, any Company Plan.
(j) Accounting Methods; Income Tax Elections. The Company shall
not, and shall not permit any of its Subsidiaries to, (i) change its
methods of accounting or accounting practice or principles as in effect at
December 31, 1998, except for any such change as required by reason of a
change in GAAP, (ii) make or rescind any Tax election, or (iii) make any
change to its method of reporting income, deductions or other Tax items for
Tax purposes; provided that, in the case of matters described in clauses
(ii) and (iii) above, Buyer shall not unreasonably withhold its consent.
(k) Certain Agreements. The Company shall not, and shall not
permit any of its Subsidiaries to, enter into any agreements or
arrangements that limit or otherwise restrict the Company or any of its
Subsidiaries or any of their respective affiliates or successors, or that
could, after the Effective Time, limit or restrict Buyer or any of its
affiliates (including the Surviving Corporation) or successors, from
engaging or competing in any line of business or in any geographic area.
(l) Corporate Structure. The Company shall not, and shall not
permit any of its Subsidiaries to, alter (through merger, liquidation,
reorganization, restructuring or any other fashion) the corporate structure
or ownership of the Company or any Subsidiary, except for changes in the
corporate structure or ownership of the Company's Subsidiaries which do not
adversely affect the Company and its Subsidiaries taken as a whole.
(m) Capital Expenditures. The Company shall not, and shall not
permit any Subsidiary to, make or agree to make any new capital
expenditures in excess of the amounts by category and limitations by
category set forth on Schedule 5.1(m) of the Company Disclosure Schedule.
(n) Without the prior consent of Buyer which consent shall not be
unreasonably withheld, the Company shall not, and shall not permit any of
its Subsidiaries to, (i) enter into a material amendment to any of the
services agreements with any of the clients set forth on Schedule 5.1(n) of
the Company Disclosure Schedule or (ii) enter into a new services agreement
or an amendment to an existing services agreement if such new agreement or
amendment contains a "most favored nations" provision as to pricing or any
other material term thereof.
(o) The Company shall not, and shall not permit any of its
Subsidiaries to, agree, propose, authorize or enter into any commitment to
take any action described in the foregoing subsections (a) - (n) of this
Section 5.1, except as otherwise permitted by this Agreement.
SECTION 5.2 Advice of Changes. The Company and Buyer shall
promptly advise the other party orally and in writing to the extent it has
knowledge of (i) any representation or warranty made by it (and, in the
case of Buyer, made by Newco) contained in this Agreement becoming untrue
or inaccurate such that the condition set forth in Section 6.2(b) or
Section 6.3(b), respectively, would not be satisfied, (ii) the failure by
it (and, in the case of the Buyer, by Newco) to comply with or satisfy in
any material respect any covenant, condition or agreement to be complied
with or satisfied by it under this Agreement and (iii) any change or event
causing, or which is reasonably likely to cause, any of the conditions set
forth in Article VI not to be satisfied; provided, however, that no such
notification shall affect the representations, warranties, covenants or
agreements of the parties (or remedies with respect thereto) or the
conditions to the obligations of the parties under this Agreement.
SECTION 5.3 Letters of the Company's Accountants. The Company
shall use reasonable efforts to cause to be delivered to Buyer two letters
from the Company's independent public accountants, one dated a date within
two business days before the date on which the Form S-4 shall become
effective and one dated a date within two business days before the Closing
Date, each addressed to Buyer, in scope and form reasonably satisfactory to
Buyer and customary in scope and form for comfort letters delivered by
independent public accountants in connection with registration statements
similar to the Form S-4.
SECTION 5.4 Letters of Buyer's Accountants. Buyer shall use
reasonable efforts to cause to be delivered to the Company two letters from
Buyer's independent accountants, one dated a date within two business days
before the date on which the Form S-4 shall become effective and one date a
date within two business days before the Closing Date, each addressed to
the Company, in scope and form reasonably satisfactory to the Company and
customary in scope and form for comfort letters delivered by independent
public accountants in connection with registration statements similar to
the Form S-4.
SECTION 5.5 Shareholders' Meeting; Proxy Material. (a) As
soon as practicable following the date of this Agreement, Buyer and the
Company shall prepare and the Company shall file with the SEC the Company
Proxy Statement and Buyer and the Company shall prepare and Buyer shall
file with the SEC the Form S-4, in which the Company Proxy Statement will
be included as a prospectus. Each of the Company and Buyer shall use all
reasonable efforts to have the Form S-4 declared effective under the
Securities Act as promptly as practicable after such filing. The Company
will use all reasonable efforts to cause the Company Proxy Statement to be
mailed to the Company's stockholders as promptly as practicable after the
Form S-4 is declared effective under the Securities Act. Buyer shall also
take any action (other than qualifying to do business in any jurisdiction
in which it is not now so qualified or to file a general consent to service
of process) required to be taken under any applicable state securities laws
in connection with the issuance of Buyer Common Stock in the Merger and the
Company shall furnish all information concerning the Company and the
holders of capital stock of the Company as may be reasonably requested in
connection with any such action and the preparation, filing and
distribution of the Company Proxy Statement. No filing of, or amendment or
supplement to, or correspondence to the SEC or its staff with respect to,
the Form S-4 will be made by Buyer, or the Company Proxy Statement will be
made by the Company, without providing the other party a reasonable
opportunity to review and comment thereon. Buyer will advise the Company,
promptly after it receives notice thereof, of the time when the Form S-4
has become effective or any supplement or amendment has been filed, the
issuance of any stop order, the suspension of the qualification of the
Buyer Common Stock issuable in connection with the Merger for offering or
sale in any jurisdiction, or any request by the SEC for amendment of the
Form S-4 or comments thereon and responses thereto or requests by the SEC
for additional information. The Company will advise Buyer, promptly after
it receives notice thereof, of any request by the SEC for the amendment of
the Company Proxy Statement or comments thereon and responses thereto or
requests by the SEC for additional information. If at any time prior to
the Effective Time any information relating to the Company or Buyer, or any
of their respective affiliates, officers or directors, should be discovered
by the Company or Buyer which should be set forth in an amendment or
supplement to any of the Form S-4 or the Company Proxy Statement, so that
any of such documents would not include any misstatement of a material fact
or omit to state any material fact necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading, the party which discovers such information shall promptly
notify the other parties hereto and an appropriate amendment or supplement
describing such information shall be promptly filed with the SEC and, to
the extent required by law, disseminated to the stockholders of the
Company. Prior to the close of business on the second business date after
the date hereof, the Company shall file with the SEC a copy of this
Agreement and the Stockholders Agreement as exhibits to a current report on
Form 8-K (the "Company 8-K").
(b) The Company shall establish, prior to or as soon as
practicable following the date upon which the Form S-4 becomes effective, a
record date (which shall be prior to or as soon as practicable following
the date upon which the Form S-4 becomes effective) for, duly call, give
notice of, convene and hold a meeting of its stockholders (the "Company
Stockholders Meeting") for the purpose of considering and taking action
upon this Agreement and the Plan of Merger and (with the consent of Buyer)
such other matters as may in the reasonable judgment of the Company be
appropriate for consideration at the Company Stockholders Meeting. Once
the Company Stockholders Meeting has been called and noticed, the Company
shall not postpone or adjourn the Company Stockholders Meeting (other than
(i) for the absence of a quorum or (ii) to allow reasonable additional time
for the filing and mailing of any supplemental or amended disclosure which
it believes in good faith is necessary under applicable law and for such
supplemental or amended disclosure to be disseminated and reviewed by the
Company's shareholders prior to the Company Stockholders Meeting; provided
that in the event that the Company Stockholders Meeting is delayed to a
date after the Termination Date (as defined in Section 7.1(b)), then the
Termination Date shall be extended to the fifth business day after such
date) without the consent of the Buyer. The Board of Directors of the
Company shall declare that this Agreement and the Plan of Merger are
advisable and recommend approval of the Plan of Merger and this Agreement
by the Company's stockholders, and shall include in the Form S-4 and the
Company Proxy Statement a copy of such recommendation; provided that the
Board of Directors of the Company may withdraw, modify or change such
recommendation if but only if (i) it believes in good faith, based on such
matters as it deems relevant, including the advice of the Company's
financial advisors that a Superior Proposal (as defined in Section 5.7(b)
hereof) has been made and (ii) it has determined in good faith, after
consultation with outside counsel that the withdrawal, modification or
change of such recommendation is, in the good faith judgment of the Board
of Directors, required by the Board to comply with its fiduciary duties
imposed by the FBCA. Notwithstanding the foregoing, the Board of Directors
of the Company shall submit this Agreement and the Plan of Merger for
approval to the Company's stockholders whether or not the Board of
Directors of the Company determines after the date hereof that this
Agreement and the Plan of Merger are no longer advisable and recommends
that the stockholders of the Company reject it. Unless the Board of
Directors of the Company has withdrawn its recommendation of this Agreement
and the Plan of Merger in compliance with this Section 5.5(b), the Company
shall use its reasonable best efforts to solicit from stockholders of the
Company proxies in favor of the Merger and shall take all other actions
necessary or advisable to secure the vote or consent of stockholders
required by the FBCA to effect the Merger.
SECTION 5.6 Access to Information. Upon reasonable advance
notice, between the date of this Agreement and the Closing Date, the
Company shall (i) give Buyer, its respective counsel, financial advisors,
auditors and other authorized representatives (collectively, "Buyer's
Representatives") reasonable access during normal business hours to the
offices, properties, books and records of the Company and its Subsidiaries,
(ii) furnish to Buyer's Representatives such financial and operating data
and other information relating to the Company, its Subsidiaries and their
respective operations (including, to the extent permitted by the Company's
outside accountants, their work papers (and the Company agrees to cooperate
with Buyer in obtaining such access to such work papers)) as such Persons
may reasonably request and (iii) instruct the Company's employees, counsel
and financial advisors to cooperate with Buyer in its investigation of the
business of the Company and its Subsidiaries; provided that all requests
for information, to visit offices or properties or to interview the
Company's employees or agents should be directed to and coordinated with
the general counsel of the Company or such person or persons as he shall
designate; provided further that any information and documents received by
Buyer or Buyer's Representatives (whether furnished before or after the
date of this Agreement) shall be held in strict confidence in accordance
with the Confidentiality Agreement dated October 5, 1999 between the
Company and Buyer (the "Confidentiality Agreement"), which shall remain in
full force and effect pursuant to the terms thereof as though the
Confidentiality Agreement had been entered into by the parties on the date
of this Agreement, notwithstanding the execution and delivery of this
Agreement or the termination hereof. Notwithstanding anything to the
contrary in this Agreement, neither the Company nor any of its Subsidiaries
shall be required to disclose any information to Buyer or the Buyer
Representatives if doing so would violate any agreement in effect on the
date hereof, law, rule or regulation to which the Company or any of its
Subsidiaries is a party or to which the Company or any of its Subsidiaries
is subject or which in the reasonable judgment of the Company could result
in a waiver of the attorney-client privilege. No review pursuant to this
Section 5.6 shall have an effect for the purpose of determining the
accuracy of any representation or warranty given by either party hereto to
the other party hereto.
SECTION 5.7 No Solicitation.
(a) From the date of this Agreement until the Effective Time or,
if earlier, the termination of this Agreement in accordance with its terms,
the Company shall not (whether directly or indirectly through advisors,
agents or other intermediaries), and the Company shall cause its and its
Subsidiaries' respective officers, directors, advisors, representatives and
other agents not to, directly or indirectly, (a) solicit, initiate or
encourage , or take any other action to facilitate, any inquiries or the
making of any proposal that constitutes, or may reasonably be expected to
lead to, any Acquisition Proposal or (b) participate or engage in
substantive discussions or negotiations with, or disclose or provide any
non-public information relating to the Company or its Subsidiaries or
afford access to the properties, books or records of the Company or its
Subsidiaries to, any Person (including any "person" as defined in Section
13(d)(3) of the Exchange Act) that has made an Acquisition Proposal or with
or to any Person in contemplation of an Acquisition Proposal or (c) enter
into any agreement or agreement in principle providing for or relating to
an Acquisition Proposal; provided, however, if and only if (i) a Person has
submitted an unsolicited written Acquisition Proposal (under circumstances
in which the Company has complied with its obligations under this Section
5.7(a)) to the Company's Board of Directors, (ii) the Company's Board of
Directors believes in good faith, based on such matters as it deems
relevant, including the advice of the Company's financial advisor, that
such Acquisition Proposal is a Superior Proposal and (iii) the Company's
Board of Directors determines (which determination shall, to the extent
applicable, be consistent with the advice of counsel) in good faith, based
on such matters as it deems relevant, including consultation with the
Company's outside legal counsel, that engaging in such negotiations or
discussions or providing such information is required to satisfy the
fiduciary duties of the Board of Directors of the Company under the FBCA,
then the Company may during the Applicable Period, but not thereafter,
furnish information with respect to the Company and its Subsidiaries (so
long as the Company has entered into a customary confidentiality agreement
with such party) and participate in negotiations and discussions regarding
such Acquisition Proposal; provided further that, during (and only during)
the Applicable Period (as defined below) and after the third business day
following Buyer's receipt of written notice advising Buyer that the
Company's Board of Directors is prepared to accept such Superior Proposal,
which notice specifies the material terms and conditions of such Superior
Proposal and identifies the Person making such Superior Proposal, the Board
of Directors of the Company may, in response to a Superior Proposal which
was not solicited by the Company and which did not otherwise result from a
breach of this Section 5.7(a), terminate this Agreement, if the Board of
Directors of the Company determines in good faith, based on such matters as
it deems relevant, including consultation with the Company's outside legal
counsel that it is required to do so in order to comply with its fiduciary
duties to the Company's stockholders under the FBCA, and, concurrently with
such termination, causes the Company to pay the fee payable pursuant to
Section 7.3(a) hereof by reason thereof. Nothing contained in this
Agreement shall prohibit the Company or the Company's Board of Directors
from taking and disclosing to the Company's shareholders a position with
respect to a tender or exchange offer by a third party pursuant to Rules
14d-9 and 14e-2(a) promulgated under the Exchange Act or from making any
disclosure required by applicable law. The Company shall immediately cease
and cause to be terminated and shall cause its Affiliates and Subsidiaries
and its or their respective officers, directors, employees, representatives
or agents, to terminate all existing discussions or negotiations with any
Persons conducted heretofore with respect to, or that could reasonably be
expected to lead to, an Acquisition Proposal. Nothing contained herein
shall prohibit the Company from making any disclosure that it believes in
good faith, after receipt of advice of outside counsel, is required under
the securities laws.
(b) For purposes of this Agreement, "Acquisition Proposal" shall
mean any inquiry, proposal or offer from any person (other than Buyer,
Newco or any of their Affiliates) relating to any merger, consolidation,
recapitalization, liquidation or other direct or indirect business
combination, involving the Company or any Subsidiary or the issuance or
acquisition of shares of capital stock or other equity securities of the
Company or any Subsidiary representing 15% or more (by voting power) of the
outstanding capital stock of the Company or such Subsidiary or any tender
or exchange offer that if consummated would result in any Person, together
with all Affiliates thereof, beneficially owning shares of capital stock or
other equity securities of the Company or any Subsidiary representing 15%
or more (by voting power) of the outstanding capital stock of the Company
or such Subsidiary, or the acquisition, license, purchase or other
disposition of a substantial portion of the technology, business or assets
of the Company or any Subsidiary outside the ordinary course of business or
inconsistent with past practice and the term "Superior Proposal" means any
bona fide Acquisition Proposal to effect a merger, consolidation or sale of
all or substantially all of the assets or capital stock of the Company
which is on terms that the Board of Directors of the Company determines in
its good faith judgment (after receipt of the advice of a financial advisor
of nationally recognized reputation) provides for consideration which would
exceed the value of the consideration provided for in the Merger, after
taking into account all relevant factors, including any conditions to such
Acquisition Proposal, the timing of the closing thereof, the risk of
nonconsummation, the ability of the Person making the Acquisition Proposal
to finance the transaction contemplated thereby and any required
governmental or other consents, filings and approvals. For purposes of
this Agreement, "Applicable Period" shall mean a period of 45 consecutive
days commencing on the day on which the Company files the Company 8-K.
(c) In addition to the other obligations of the Company set
forth in this Section 5.7, the Company shall immediately advise Buyer
orally and in writing of any request for information with respect to any
Acquisition Proposal, or any inquiry with respect to or which could result
in an Acquisition Proposal, the material terms and conditions of such
request, Acquisition Proposal or inquiry, and the identity of the person
making the same. The Company shall inform Buyer on a prompt and current
basis of the status and content of any discussions regarding any
Acquisition Proposal with a third party and as promptly as practicable of
any change in the price, structure or form of the consideration or material
terms of and conditions regarding the Acquisition Proposal or of any other
developments or circumstances which would reasonably be expected to
culminate in the taking of any of the actions referred to in Section 5.7(a)
hereof.
SECTION 5.8 Director and Officer Liability.
(a) Buyer, Newco and the Company agree that all rights to
indemnification and all limitations on liability existing in favor of any
Indemnitee (as defined below) as provided in the Company's Amended and
Restated Articles of Incorporation, the Company's By-laws or an agreement
between an Indemnitee and the Company or a Subsidiary of the Company as in
effect as of the date hereof and listed in Schedule 5.8 to the Company
Disclosure Schedule shall survive the Merger and continue in full force and
effect. To the extent permitted by the FBCA, advancement of expenses
pursuant to this Section 5.8 shall be mandatory rather than permissive and
the Surviving Corporation shall advance Costs (as defined in Section 5.8
hereof) in connection with such indemnification.
(b) In addition to the other rights provided for in this
Section 5.8 and not in limitation thereof, for four years after the
Effective Time, Buyer shall, and shall cause the Surviving Corporation to,
to the fullest extent permitted by law, (i) indemnify and hold harmless the
individuals who on or prior to the Effective Time were officers, directors,
employees or fiduciaries of any of the Company, its Subsidiaries and its
benefit plans (in all of their capacities) (the "Indemnitees") against all
losses, expenses (including, without limitation, attorneys' fees and the
cost of any investigation or preparation incurred in connection thereof),
claims, damages, liabilities, judgments, or amounts paid in settlement
(collectively, "Costs") incurred by them in respect to any threatened,
pending or contemplated claim, action, suit or proceeding, whether
criminal, civil, administrative or investigative arising out of acts or
omissions occurring on or prior to the Effective Time (including, without
limitation, in respect of acts or omissions in connection with this
Agreement and the transactions contemplated hereby) (an "Indemnifiable
Claim") and (ii) advance to such Indemnitees all Costs incurred in
connection with any Indemnifiable Claim; provided that, no indemnification
shall be available to any person who is found by a court in a final
judgment (from which no appeal can be or is taken) to be guilty of a felony
and any such person shall be required to reimburse the Buyer or Surviving
Corporation for all Costs previously advanced to such person pursuant to
the foregoing plus interest on such amount at the "United States Rate" (as
hereafter defined). In the event any Indemnifiable Claim is asserted or
made within such four year period, all rights to indemnification and
advancement of costs in respect of any such Indemnifiable Claim shall
continue until such Indemnifiable Claim is disposed of or all judgments,
orders, decrees or other rulings in connection with such Indemnifiable
Claim are fully satisfied. As used herein, the "United States Rate" shall
mean the federal interest rate applicable to overpayments or refunds under
Internal Revenue Code Section 6621(a)(1) applicable to persons or entities
other than a corporation.
(c) Buyer shall, and shall cause the Surviving Corporation to,
expressly assume and honor in accordance with their terms all indemnity
agreements listed in Schedule 5.8 of the Company Disclosure Schedule. For
four years after the Effective Time, Buyer will, and will cause the
Surviving Corporation to, provide officers' and directors' liability
insurance in respect of acts or omissions occurring prior to the Effective
Time covering each such Person currently covered by the Company's officers'
and directors' liability insurance policy on terms with respect to coverage
and amount no less favorable than those of such policy in effect on the
date hereof; provided, however, that in no event shall Buyer or Surviving
Corporation be required to expend more than an amount per year equal to
150% of current annual premiums paid by the Company for such insurance (the
"Maximum Amount") to maintain or procure insurance coverage pursuant
hereto; provided, further, that if the amount of the annual premiums
necessary to maintain or procure such insurance coverage exceeds the
Maximum Amount, Buyer and Surviving Corporation shall procure and maintain
for such four-year period, the most advantageous policies of directors' and
officers' insurance obtainable for an annual premium equal to the Maximum
Amount. In the event that any Indemnitee is entitled to coverage under an
officers' and directors' liability insurance policy pursuant to this
Section 5.8(c) and such policy has lapsed, terminated, been repudiated or
is otherwise in breach or default, in any such case as a result of Buyer's
failure to maintain and fulfill its obligations pursuant to such policy as
provided in this Section 5.8(c); Buyer shall, and shall cause the Surviving
Corporation to pay to the Indemnitee such amounts and provide any other
coverage or benefits as the Indemnitee shall have received pursuant to such
policy. Buyer agrees that, should the Surviving Corporation fail to comply
with the obligations of this Section 5.8, Buyer shall be responsible
therefor.
(d) Notwithstanding any other provisions hereof, the obligations
of the Company, the Surviving Corporation and Buyer contained in this
Section 5.8 shall be binding upon the successors and assigns of Buyer and
the Surviving Corporation. In the event the Company or the Surviving
Corporation or any of their respective successors or assigns (i)
consolidates with or merges into any other Person or (ii) transfers all or
substantially all of its properties or assets to any Person, then, and in
each case, proper provision shall be made so that successors and assigns of
the Company or the Surviving Corporation, as the case may be, honor the
indemnification obligations set forth in this Section 5.8.
(e) The obligations of the Company, the Surviving Corporation,
and Buyer under this Section 5.8 shall not be terminated or modified in
such a manner as to adversely affect any Indemnitee to whom this Section
5.8 applies without the consent of such affected Indemnitee (it being
expressly agreed that the Indemnitees to whom this Section 5.8 applies
shall be third party beneficiaries of this Section 5.8).
(f) Buyer shall, and shall cause the Surviving Corporation to,
advance all Costs to any Indemnitee incurred by enforcing the indemnity or
other obligations provided for in this Section 5.8; provided that Buyer may
require any such advance to be subject to the receipt of an undertaking
from such Indemnitee to repay such costs plus interest on such amount at
the United States Rate to the extent that a court determines that such
Indemnitee is entitled to such indemnification.
SECTION 5.9 Reasonable Best Efforts. Upon the terms and
subject to the conditions of this Agreement, each party hereto shall use
its reasonable best efforts to take, or cause to be taken, all actions and
to do, or cause to be done, all things necessary, proper or advisable to
consummate and make effective, in the most expeditious manner practicable,
the Merger and the other transactions contemplated by this Agreement and
the Stockholders Agreement.
SECTION 5.10 Certain Filings. The Company and Buyer shall
cooperate with one another (i) in connection with the preparation of the
Form S-4 and the Company Proxy Statement, (ii) in determining whether any
action by or in respect of, or filing with, any Governmental Entity is
required, or any actions, consents, approvals or waivers are required to be
obtained from parties to any material contracts, in connection with the
consummation of the transactions contemplated by this Agreement and (iii)
in seeking any such actions, consents, approvals or waivers or making any
such filings, furnishing information required in connection therewith or
with the Form S-4 and the Company Proxy Statement and seeking timely to
obtain any such actions, consents, approvals or waivers.
SECTION 5.11 Public Announcements. Neither the Company, Buyer
nor any of their respective affiliates shall issue or cause the publication
of any press release or other public announcement with respect to the
Merger, this Agreement, the Stockholders Agreement or the other
transactions contemplated hereby and thereby without the prior consultation
with, and concurrence of, the other party, except as may, in a party's
good faith judgment, be required by law or by any listing agreement with,
or the policies of, a national securities exchange.
SECTION 5.12 Further Assurances. At and after the Effective
Time, the officers and directors of the Surviving Corporation will be
authorized to execute and deliver, in the name and on behalf of the Company
or Newco, any deeds, bills of sale, assignments or assurances and to take
and do, in the name and on behalf of the Company or Newco, any other
actions to vest, perfect or confirm of record or otherwise in the Surviving
Corporation any and all right, title and interest in, to and under any of
the rights, properties or assets of the Company acquired or to be acquired
by the Surviving Corporation, as a result of, or in connection with, the
Merger.
SECTION 5.13 Employee Matters.
(a) Buyer agrees that individuals who are employed by the
Company and its Subsidiaries as of the Closing shall be continued as
employees of the Surviving Corporation immediately following the date of
the Closing ("Continuing Employees"). For a period of one year immediately
following the date of the Closing, Buyer agrees to cause the Surviving
Corporation and its Subsidiaries to provide to all Continuing Employees
coverage by benefit plans or arrangements that are, in the aggregate,
substantially similar to either (i) those provided to the employees
immediately prior to the date of the Closing or (ii) those provided to
Buyer's similarly situated employees; provided, however, that nothing
herein shall interfere with the Surviving Corporation's or any Subsidiary's
right to make such changes as are necessary to conform with applicable law
or to terminate the employment of any employee of the Surviving Corporation
or of any Subsidiary.
(b) Buyer shall, and shall cause its Subsidiaries to, honor in
accordance with their terms all agreements, contracts, arrangements,
commitments and understandings described in Schedule 3.11(a) of the Company
Disclosure Schedule.
(c) Except with respect to accruals under any defined benefit
pension plans, Buyer will, or will cause the Surviving Corporation and its
Subsidiaries to, give Continuing Employees full credit for purposes of
eligibility, vesting and determination of the level of benefits under any
employee benefit plans or arrangements maintained by Buyer, the Surviving
Corporation or any Subsidiary of Buyer or the Surviving Corporation for
such Continuing Employees' service with the Company or any Subsidiary of
the Company to the same extent recognized by the Company immediately prior
to the Effective Time. Buyer will, or will cause the Surviving Corporation
and its Subsidiaries to, (i) waive all limitations as to preexisting
conditions, exclusions and waiting periods with respect to participation
and coverage requirements applicable to the Continuing Employees under any
welfare plan that such employees may be eligible to participate in after
the Effective Time, other than limitations or waiting periods that are
already in effect with respect to such employees and that have not been
satisfied as of the Effective Time under any welfare plan maintained for
the Continuing Employees immediately prior to the Effective Time, and (ii)
provide each Continuing Employee with credit for any co-payments and
deductibles paid prior to the Effective Time in satisfying any applicable
deductible or out-of-pocket requirements under any welfare plans that such
employees are eligible to participate in after the Effective Time to the
same extent as if those deductibles or co-payments had been paid under the
welfare plans for which such employees are eligible after the Effective
Time.
(d) Buyer acknowledges that for purposes of all the Company
Plans listed in Schedule 5.13(d) of the Company Disclosure Schedule, the
consummation of the Merger as contemplated by this Agreement will
constitute a "Change in Control" of the Company (as such term is defined in
such plans, agreements and arrangements). The Buyer agrees (i) to cause
the Surviving Corporation after consummation of the Merger contemplated by
this Agreement to pay all amounts provided under such plans, agreements and
arrangements in accordance with their terms, and (ii) to honor and to cause
the Surviving Corporation to honor, all rights, privileges and
modifications to or with respect to any such plans, agreements and
arrangements which became effective as a result of such Change in Control.
SECTION 5.14 State Takeover Laws. If any "fair price,"
"business combination" or "control share acquisition" statute or other
similar statute or regulation is or may become applicable to the Merger,
this Agreement, the Stockholders Agreement or any of the other transactions
contemplated hereby or thereby, the Company and Buyer shall each take such
actions as are necessary so that the transactions contemplated by this
Agreement and the Stockholders Agreement may be consummated as promptly as
practicable on the terms contemplated hereby and thereby and otherwise act
to eliminate or minimize the effects of any such statute or regulation on
the Merger and the other transactions contemplated by this Agreement and
the Stockholders Agreement.
SECTION 5.15 Affiliates. The Company shall deliver to Buyer at
least 30 days prior to the Closing Date, a letter identifying all persons
who are, at the time of such letter, "affiliates" of Buyer for purposes of
Rule 145 under the Securities Act. The Company shall use reasonable
efforts to cause each such person to deliver to Buyer at least 30 days
prior to the Closing Date, a written agreement substantially in the form
attached as Exhibit C hereto.
SECTION 5.16 Listing. Buyer shall use reasonable best efforts
to cause the Buyer Common Stock issuable in the Merger to be approved for
quotation on Nasdaq, subject to official notice of issuance, as promptly as
practicable after the date hereof, and in any event prior to the Closing.
SECTION 5.17 Litigation. Subject to the Company not having to
disclose any information or documents to Buyer if the Company's Board of
Directors determines that such non-disclosure is required in order to
comply with its fiduciary duties under the FBCA, the Company shall consult
with Buyer from time to time and shall keep Buyer informed on a current
basis as to all aspects of litigation against the Company and/or its
directors which may arise relating to the transactions contemplated by this
Agreement and the Stockholders Agreement, subject to no party being
required to waive the attorney-client privilege.
SECTION 5.18 Tax Treatment. Each of Buyer and the Company shall
use reasonable best efforts to cause the Merger to qualify as a
reorganization under the provisions of Section 368 of the Code and to
obtain the opinion of counsel referred to in Sections 6.2(b). Each of
Buyer and the Company shall execute the officers' certificates
substantially in the form attached as Exhibits D1 and D2 hereto, as of the
date the Form S-4 is declared effective by the SEC and as of the Closing
Date; provided, however, that the failure of the Company, Buyer or Newco to
certify as to any matter in such officer certificate because of an event,
or change in facts or law, in any such case outside of such parties'
control, shall not constitute a breach of this covenant.
SECTION 5.19 Stockholders Agreement Legend. The Company will
inscribe upon any certificate representing Subject Shares (as defined in
the Stockholders Agreement) tendered by any Stockholder (as defined in the
Stockholders Agreement) in connection with any proposed transfer of any
Subject Shares by such Stockholder in accordance with the terms of the
Stockholders Agreement the following legend: "THE SHARES OF COMMON STOCK,
PAR VALUE $0.01 PER SHARE, OF USA NETWORKS, INC., REPRESENTED BY THIS
CERTIFICATE ARE SUBJECT TO A STOCKHOLDERS AGREEMENT DATED AS OF JANUARY 12,
2000, AND ARE SUBJECT TO THE TERMS THEREOF. COPIES OF SUCH AGREEMENT MAY
BE OBTAINED AT THE PRINCIPAL EXECUTIVE OFFICES OF PRECISION RESPONSE
CORPORATION."; and the Company will return such certificate containing such
inscription to the Stockholder within three business days following the
Company's receipt thereof. Such legend may be removed after the Company's
Stockholders Meeting.
ARTICLE VI
CONDITIONS TO THE MERGER
SECTION 6.1 Conditions to Each Party's Obligations. The
respective obligations of the Company, Buyer and Newco to consummate the
Merger are subject to the satisfaction or, to the extent permitted by
applicable law, the waiver on or prior to the Closing Date of each of the
following conditions:
(a) this Agreement and the Plan of Merger shall have been
approved by the Required Company Shareholder Vote in accordance with the
FBCA;
(b) any applicable waiting period under the HSR Act relating to
the Merger shall have expired or shall have been terminated;
(c) no judgment, order, decree, statute, law, and no material
ordinance, rule or regulation shall exist or shall have been entered,
enacted, promulgated, enforced or issued by any court or other Governmental
Entity of competent jurisdiction (collectively, "Legal Restraints") which
prohibits consummation of the Merger;
(d) there shall not be pending or threatened in writing or by a
senior official of a Governmental Entity any suit, action or proceeding by
any Governmental Entity (i) seeking to prevent consummation of the Merger,
(ii) seeking to prohibit or limit in any material respect ownership or
operation by the Company or Buyer and their respective Subsidiaries of any
material portion of the business or assets of the Company or Buyer and
their respective Subsidiaries or to compel the Company or Buyer or their
respective Subsidiaries to dispose or hold separate any material portion of
the business or assets of the Company or Buyer and their respective
Subsidiaries taken as a whole, as a result of the Merger or the other
transactions contemplated by this Agreement or (iii) which is otherwise
reasonably likely to have a Material Adverse Effect on the Company or the
Buyer, as applicable;
(e) the Form S-4 shall have become effective under the
Securities Act and shall not be the subject of any stop order or
proceedings seeking a stop order; and
(f) the shares of Buyer Common Stock issuable to the Company's
stockholders as contemplated by this Agreement shall have been approved for
quotation on Nasdaq, subject to official notice of issuance.
SECTION 6.2 Conditions to the Company's Obligations. The
obligation of the Company to consummate the Merger shall be further subject
to the satisfaction or, to the extent permitted by applicable law, the
waiver of each of the following conditions:
(a) each of Buyer and Newco shall have performed in all material
respects each of its respective agreements and covenants contained in this
Agreement that are required to be performed by it at or prior to the
Closing Date pursuant to the terms hereof;
(b) the representations and warranties of Buyer and Newco set
forth herein shall be true and correct as of the date hereof and as of the
Effective Time, with the same effect as if made at and as of such time
(except to the extent expressly made as of an earlier date, in which case
as of such date), except where the failure of such representations and
warranties to be so true and correct (without giving effect to any
limitation as to "materiality" or "Material Adverse Effect" or words of
similar import set forth therein) does not have, and is not reasonably
likely to have, individually or in the aggregate, a Material Adverse Effect
on Buyer;
(c) the Company shall have received from Skadden, Arps, Slate,
▇▇▇▇▇▇▇ & ▇▇▇▇ LLP, counsel to the Company, on the date on which the Form
S-4 is declared effective by the SEC and on the Closing Date, an opinion,
in each case dated as of such respective date and stating that the Merger
will qualify for U.S. federal income tax purposes as a reorganization
within the meaning of Section 368(a) of the Code (the issuance of such
opinion shall be conditioned upon the receipt by such tax counsel of the
officers' letters of the Company, Newco and Buyer, substantially in the
form attached as Exhibits D1 and D2 hereto); and
(d) the Company shall have received a certificate signed by the
chief financial officer or general counsel of Buyer, dated the Closing
Date, to the effect that, to such officer's knowledge, the conditions set
forth in Sections 6.2(a) and 6.2(b) hereof have been satisfied or waived.
SECTION 6.3 Conditions to Buyer's and Newco's Obligations.
The obligations of Buyer and Newco to effect the Merger shall be further
subject to the satisfaction or, to the extent permitted by applicable law,
the waiver of each of the following conditions:
(a) the Company shall have performed in all material respects
each of its agreements and covenants contained in this Agreement (other
than that contained in Section 5.2 hereof) that are required to be
performed by it at or prior to the Closing Date pursuant to the terms
hereof;
(b) the representations and warranties of the Company set forth
herein shall be true and correct as of the date hereof and as of the
Effective Time, with the same effect as if made at and as of such time
(except to the extent expressly made as of an earlier date, in which case
as of such date), except where the failure of such representations and
warranties to be so true and correct (without giving effect to any
limitation as to "materially" or "Material Adverse Effect" or words of
similar import set forth therein) does not have, and is not reasonably
likely to have, individually or in the aggregate, a Material Adverse Effect
on the Company; and
(c) Buyer shall have received a certificate signed by the chief
executive officer of the Company, dated the Closing Date, to the effect
that, to such officer's knowledge, the conditions set forth in Sections
6.3(a) and 6.3(b) hereof have been satisfied or waived.
ARTICLE VII
TERMINATION
SECTION 7.1 Termination. Notwithstanding anything herein to
the contrary, this Agreement may be terminated and the Merger may be
abandoned at any time prior to the Effective Time, whether before or after
the Company has obtained stockholder approval:
(a) by the mutual written consent of the Company and Buyer;
(b) by either the Company or Buyer, if the Merger has not been
consummated by September 30, 2000, or such other date, if any, as the
Company and Buyer shall agree upon or as is provided in Section 5.5(b)
hereof (the "Termination Date"); provided that, the right to terminate this
Agreement under this Section 7.1(b) shall not be available to any party
whose intentional failure to fulfill any obligation under this Agreement
has been the cause of, or resulted in, the failure of the Merger to have
been consummated on or before such date by reason of the failure of the
Company to hold the Company Stockholders Meeting;
(c) by either the Company or Buyer, if there shall be any law or
regulation that makes consummation of the Merger illegal or if any
judgment, injunction, order or decree enjoining Buyer or the Company from
consummating the Merger is entered and such judgment, injunction, order or
decree shall become final and nonappealable;
(d) by either Buyer or the Company, if at the Company Stockholders
Meeting (including any adjournment or postponement thereof), the Required
Company Shareholder Vote shall not have been obtained;
(e) by the Company in accordance with Section 5.7(a); provided
that, in order for the termination of this Agreement pursuant to this
paragraph (e) to be deemed effective, the Company shall have complied with
all provisions of Section 5.7;
(f) by Buyer, if (i) the Board of Directors of the Company shall
have withdrawn or modified or amended in any respect adverse to Buyer its
recommendation of this Agreement, the Plan of Merger or the Merger or shall
have failed to make such favorable recommendation, (ii) the Board of
Directors of the Company (or any committee thereof) shall have recommended
to the shareholders of the Company any Acquisition Proposal or shall have
resolved to, or publicly announced an intention to, do so or (iii) a third
party acquires 30% or more of the outstanding shares of the Company Common
Stock;
(g) by Buyer, if the Company shall have breached or failed to
perform in any material respect any of its representations, warranties,
covenants or other agreements contained in this Agreement, which breach or
failure to perform (A) would give rise to the failure of a condition set
forth in Section 6.3(a) or (b), and (B) is incapable of being or has not
been cured by the Company within 20 calendar days after giving written
notice to the Company of such breach or failure to perform;
(h) by the Company, if Buyer shall have breached or failed to
perform in any material respect any of its representations, warranties,
covenants or other agreements contained in this Agreement, which breach or
failure to perform (A) would give rise to the failure of a condition set
forth in Section 6.2(a) or (b), and (B) is incapable of being or has not
been cured by Buyer within 20 calendar days after the giving of written
notice to Buyer of such breach or failure to perform;
(i) by Buyer, if any of the stockholders who are parties to the
Stockholders Agreement shall have breached in any material respect any
representation, warranty, covenant or agreement thereof and such breach has
not been promptly cured after notice to any such stockholder; provided,
however, that such breach shall be of the kind that denies Buyer the
material benefits contemplated by the Stockholders Agreement; or
(j) by the Company by delivering notice of its proposed
termination to the Buyer (the "Termination Notice") (and in such event, the
Agreement will terminate on the second business day after delivery of such
Termination Notice unless prior thereto the Buyer shall have notified the
Company orally and in writing that it intends to exercise its Top-up Right
(as defined hereafter)) in the event that the Average Buyer Price (as
defined hereafter) is less than $37.04; provided that, within one business
day after receipt of the Termination Notice, the Buyer shall have the right
to irrevocably agree (by giving the notice referred to above) to increase
the Exchange Ratio from 0.54 to that fraction equal to the quotient
obtained by dividing $20 by the Average Buyer Price (the "Top-up Right")
and, upon exercise of such Top-up Right, the Termination Notice shall be
deemed to be withdrawn and of no further force and effect and the Exchange
Ratio shall be increased as provided pursuant to the foregoing. As used
herein, the "Average Buyer Price" shall equal the volume-weighted average
sales price per share, rounded up to four decimal points, of Buyer Common
Stock, as reported on the Nasdaq, on the twenty consecutive trading days
(the "Valuation Period") ending on the second full trading day prior to the
Company Stockholders Meeting. In the event that Buyer declares a stock
split, stock dividend or other reclassification or exchange with respect to
the shares of Buyer Common Stock with a record or ex-dividend date
occurring during the Valuation Period or for the period between the
termination of the Valuation Period and the Effective Time, there will be
an appropriate adjustment made to the closing sales prices during the
Valuation Period for purposes of calculating the Average Buyer Price.
The party desiring to terminate this Agreement shall give written
notice of such termination to the other party.
SECTION 7.2 Effect of Termination.
(a) Except for any willful and material breach of this Agreement
by any party hereto (which breach and liability therefor shall not be
affected by the termination of this Agreement), if this Agreement is
terminated pursuant to Section 7.1 hereof, then this Agreement shall become
void and of no effect with no liability on the part of any party hereto;
provided that the agreements contained in Sections 7.2 and 7.3 hereof, the
second proviso to the first sentence of Section 5.6 hereof and Article VIII
shall survive the termination hereof.
(b) Buyer and Newco agree that neither the Company nor its
directors, officers, employees, representatives or agents shall be deemed,
by reason of any person making an Acquisition Proposal or any actions taken
in connection with an Acquisition Proposal not otherwise in violation of
this Agreement, to have tortiously or otherwise wrongfully interfered with
or caused a breach of this Agreement, or other agreements, instruments and
documents executed in connection herewith, or the rights of Buyer or Newco
or any of their affiliates hereunder.
SECTION 7.3 Fees.
(a) If this Agreement shall have been terminated pursuant to
Section 7.1(e) or 7.1(f) hereof, then the Company shall, promptly, but in
no event later than one business day after the termination of this
Agreement, pay the Buyer $23,000,000 in cash, as liquidated damages, which
amount shall be payable in same day funds. Only one fee in the aggregate
of $23,000,000 shall be payable pursuant to this Section 7.3(a).
(b) All costs and expenses incurred in connection with this
Agreement and the transactions contemplated hereby shall be paid by the
party incurring such expenses; provided, however, that Buyer and the
Company shall share equally all fees and expenses, other than attorneys'
fees, incurred in relation to the printing, filing and mailing of the
Company Proxy Statement (including any preliminary materials related
thereto), the Form S-4 (including financial statements and exhibits) and
any amendments or supplements thereto and all filing fees payable in
connection with filings made under the HSR Act.
ARTICLE VIII
MISCELLANEOUS
SECTION 8.1 Notices. All notices, requests, demands, waivers
and other communications required or permitted to be given under this
Agreement to any party hereunder shall be in writing and deemed given upon
(a) personal delivery, (b) transmitter's confirmation of a receipt of a
facsimile transmission, (c) confirmed delivery by a standard overnight
carrier or when delivered by hand or (d) when mailed in the United States
by certified or registered mail, postage prepaid, addressed at the
following addresses (or at such other address for a party as shall be
specified by notice given hereunder):
If to Buyer, to:
USA Networks, Inc.
Carnegie Hall Tower
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: General Counsel
with a copy to:
▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
If to the Company, to:
Precision Response Corporation
▇▇▇▇ ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: General Counsel
with a copy to:
Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇ ▇. ▇▇▇▇▇, Esq.
and:
Bilzin ▇▇▇▇▇▇▇ ▇▇▇▇ Price & ▇▇▇▇▇▇▇ LLP
2500 First Union Financial Center
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
SECTION 8.2 Survival of Representations and Warranties. The
representations and warranties contained herein and in any certificate or
other writing delivered pursuant hereto shall not survive the Effective
Time. All other covenants and agreements contained herein which by their
terms are to be performed in whole or in part, or which prohibit actions,
subsequent to the Effective Time, shall survive the Merger in accordance
with their terms.
SECTION 8.3 Interpretation. References in this Agreement to
"reasonable best efforts" shall not require a Person obligated to use its
reasonable best efforts to obtain any consent of a third party to incur
material out-of-pocket expenses or indebtedness or, except as expressly
provided herein, to institute litigation. References herein to the
"knowledge of the Company" shall mean the knowledge of the executive
officers (as such term is defined in Rule 3b-7 promulgated under the
Exchange Act) of the Company after reasonable inquiry. For purposes of
this Agreement, the term "affiliate" shall have the meaning set forth in
Rule 12b-2 of the Exchange Act. Whenever the words "include," "includes"
or "including" are used in this Agreement they shall be deemed to be
followed by the words "without limitation." The phrase "made available"
when used in this Agreement shall mean that the information referred to has
been made available if requested by the party to whom such information is
to be made available.
The article and section headings contained in this Agreement are
solely for the purpose of reference, are not part of the agreement of the
parties hereto and shall not in any way affect the meaning or
interpretation of this Agreement. Any matter disclosed pursuant to any
Schedule of the Company Disclosure Schedule or the Buyer Disclosure
Schedule shall not be deemed to be an admission or representation as to the
materiality of the item so disclosed. Any matter disclosed in one section
of the Company Disclosure Schedule or the Buyer Disclosure Schedule shall
be deemed disclosed with respect to another section only if such disclosure
is made in such a way as to make its relevance with respect to such other
section readily apparent.
SECTION 8.4 Amendments, Modification and Waiver.
(a) Except as may otherwise be provided herein, any provision of
this Agreement may be amended, modified or waived by the parties hereto, by
action taken by or authorized by their respective Board of Directors, prior
to the Effective Time if, and only if, such amendment or waiver is in
writing and signed, in the case of an amendment, by the Company, Buyer and
Newco or, in the case of a waiver, by the party against whom the waiver is
to be effective; provided that after the approval of the Plan of Merger by
the shareholders of the Company, no such amendment shall be made except as
allowed under applicable law.
(b) No failure or delay by any party in exercising any right,
power or privilege hereunder shall operate as a waiver thereof nor shall
any single or partial exercise thereof preclude any other or further
exercise thereof or the exercise of any other right, power or privilege.
The rights and remedies herein provided shall be cumulative and not
exclusive of any rights or remedies provided by law.
SECTION 8.5 Successors and Assigns. The provisions of this
Agreement shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and assigns; provided that no party
may assign, delegate or otherwise transfer any of its rights or obligations
under this Agreement without the consent of the other parties hereto.
SECTION 8.6 Specific Performance. The parties acknowledge and
agree that any breach of the terms of this Agreement would give rise to
irreparable harm for which money damages would not be an adequate remedy
and accordingly the parties agree that, in addition to any other remedies,
each shall be entitled to enforce the terms of this Agreement by a decree
of specific performance without the necessity of proving the inadequacy of
money damages as a remedy.
SECTION 8.7 Governing Law. This Agreement shall be governed by
and construed in accordance with the laws of the State of Delaware
(regardless of the laws that might otherwise govern under applicable
principles of conflicts of laws thereof) as to all matters, including, but
not limited to, matters of validity, construction, effect, performance and
remedies, other than to the extent Florida law governs the Merger itself.
The parties hereby irrevocably and unconditionally submit to the exclusive
jurisdiction of any court of the State of Delaware or any federal court
sitting in the State of Delaware for purposes of any suit, action or other
proceeding arising out of this Agreement.
SECTION 8.8 Severability. If any term or other provision of
this Agreement is invalid, illegal or incapable of being enforced by any
rule of law, or public policy, all other conditions and provisions of this
Agreement shall nevertheless remain in full force and effect so long as the
economic or legal substance of the transactions contemplated herein are not
affected in any manner materially adverse to any party hereto. Upon such
determination that any term or other provision is invalid, illegal or
incapable of being enforced, the parties hereto shall negotiate in good
faith to modify this Agreement so as to effect the original intent of the
parties as closely as possible in a mutually acceptable manner.
SECTION 8.9 Third Party Beneficiaries. This Agreement is
solely for the benefit of the Company and its successors and permitted
assigns, with respect to the obligations of Buyer and Newco under this
Agreement, and for the benefit of Buyer and Newco, and its respective
successors and permitted assigns, with respect to the obligations of the
Company under this Agreement, and this Agreement shall not, except to the
extent necessary to enforce the provisions of Article I and Section 5.8
hereof be deemed to confer upon or give to any other third party any
remedy, claim, liability, reimbursement, cause of action or other right.
SECTION 8.10 Entire Agreement. This Agreement, including any
exhibits or schedules hereto, and the Confidentiality Agreement and the
Stockholders Agreement constitute the entire agreement among the parties
hereto with respect to the subject matter hereof and thereof and supersedes
all other prior agreements or understandings, both written and oral,
between the parties or any of them with respect to the subject matter
hereof and thereof.
SECTION 8.11 Counterparts; Effectiveness. This Agreement may
be signed in any number of counterparts, each of which shall be deemed an
original, with the same effect as if the signatures thereto and hereto were
upon the same instrument. This Agreement shall become effective when each
party hereto shall have received counterparts hereof signed by all of the
other parties hereto.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be duly executed by their respective authorized officers as of the day
and year first above written.
PRECISION RESPONSE CORPORATION
By: ___________________
Name:
Title:
USA NETWORKS, INC.
By: ___________________
Name:
Title:
P ACQUISITION CORP.
By: ____________________
Name:
Title: