1
EXHIBIT 2.3
RIGHTS OFFERING AGREEMENT
RIGHTS OFFERING AGREEMENT, dated as of May 16, 2000 (this "AGREEMENT"), by and
among Telefonica, S.A., a company organized under the laws of the Kingdom of
Spain ("TELEFONICA"), Terra Networks, S.A., a company organized under the laws
of the Kingdom of Spain ("TERRA"), and Lycos, Inc., a Delaware corporation
('LYCOS").
W I T N E S S E T H :
WHEREAS, Terra and Lycos have entered into an Agreement and Plan of
Reorganization dated as of the date hereof, pursuant to which Lycos will become
a wholly owned subsidiary of Terra (the "REORGANIZATION AGREEMENT"; capitalized
terms used herein but not defined herein shall have the meanings ascribed
thereto in the Reorganization Agreement);
WHEREAS, in connection with the Reorganization Agreement, Terra (the "TERRA
BOARD") has agreed to consummate a rights offering (the "RIGHTS OFFERING") of
shares of common stock ("SUBSCRIPTION STOCK") equal to an aggregate value,
including a par value plus premium to be paid in by the subscribers, of 2.2
billion Euros (the "SUBSCRIPTION AMOUNT");
WHEREAS, Telefonica wishes to support Terra's business prospects and join
other Terra shareholders in a common vision for Terra's success.
NOW THEREFORE, in consideration of the above-referenced recitals, and other
good and valuable consideration, the receipt and adequacy of which is hereby
conclusively acknowledged, the parties hereto intending to be legally bound,
agree as follows:
1. Rights Offering.
(a) As soon as reasonably practicable after the date of this Agreement,
the Board of Directors of Terra will call a meeting of the Terra shareholders
("TERRA SHAREHOLDERS") as soon as practicable to seek their approval to delegate
to the Board of Directors the power to effectuate the Rights Offering in an
amount equal to the Subscription Amount, in accordance with the Spanish
Corporation Law of 1989 (Texto Refundido de xx Xxx de Sociedades Anonimas). The
Terra Shareholders shall agree that necessary terms and conditions, including in
order to permit Telefonica to subscribe to the shares of the Subscription Stock
in accordance with Section 2 below, shall be determined by the Board of
Directors or the Delegated Committee of the Board of Directors (the "COMMITTEE")
at a meeting of such Board or Committee to be held in order to carry out the
Rights Offering. The per share subscription price shall be the closing price per
share of the Terra Capital Stock on the Spanish Continuous Market Exchange
(Systema de Interconexion Bursatil-Xxxxxxx Continuo) ("SCME") on May 16, 2000.
The Rights Offering shall be effective, available for subscription, completed
and the proceeds therefrom received by Terra at least ten full SCME trading days
prior to the period during which the Terra Average Price is to be calculated
pursuant to the terms of the Reorganization Agreement.
(b) As soon as practicable following the date of this Agreement, Terra
shall (i) prepare and file with the CNMV a relevant fact disclosure (hecho
relevante), (ii) prepare and arrange to have a prior notice to the CMNV
outlining the proposed transaction (comunicacion previa) and have registered
with and verified by the CMNV a prospectus (folleto), and (iii) prepare and file
with the U.S. Securities and Exchange Commission a registration statement on
Form F-1 (the "Registration Statement"), if necessary, relating to the Rights
Offering. Terra shall use its reasonable best efforts to have such prospectus
registered, and the Registration Statement, if required, filed with and declared
effective, by the relevant securities authorities as promptly as practicable
after such filings. Terra shall also use its reasonable best efforts to (i)
obtain all necessary state securities law or "Blue Sky" permits and approvals
required to carry out the Rights Offering, (ii) make the filings with and obtain
the authorization of the listing of Terra Shares on the Spanish Stock Exchange
and the verification by the NSEC and the Managing Companies of the Spanish Stock
Exchanges and
1
2
(iii) make the filing with and obtain the approval of the Nasdaq National Market
to authorize the quotation of the ADSs.
2. Telefonica Commitment.
Subject to the terms and conditions of this Agreement, Telefonica agrees
that it shall subscribe for all of the shares of the Subscription Stock not
subscribed for by other shareholders of Terra in the Rights Offering; provided,
however, that in no event shall Telefonica be required to subscribe for in
excess of the entire Subscription Amount in connection with the Rights Offering.
3. Voting of Terra Shares. Telefonica agrees that it shall vote all of
its Terra Shares, which Telefonica represents to constitute approximately 66.6%
of the outstanding Terra Shares (all such shares, as they may be adjusted as a
result of any stock split, stock dividend, reclassification, merger,
reorganization, recapitalization or other change in the capital structure of
Terra, as well as any Terra Shares acquired after the date hereof and prior to
the meeting at which a vote of the Terra Shareholders is held in respect of
matters contemplated hereby or by the Reorganization Agreement, the "SUBJECT
SHARES"), in favor of the matters to be voted upon by the holders of Terra
Shares pursuant to the transaction contemplated hereby and by the Reorganization
Agreement. Telefonica agrees that it shall vote all such Terra Shares against
any matter upon which the Terra Shareholders are asked to vote involving any
amendment of the Terra Articles or the Terra By-Laws or any proposals or
transactions involving Terra or its Subsidiaries that, in any such case, would
prevent or materially delay consummation of the transactions contemplated hereby
or by the Reorganization Agreement or change in any manner the voting rights of
any class of capital stock of Terra.
4. Purchase and Sale of Subject Shares. Telefonica and Terra each hereby
agrees that it will not, and that it shall use its reasonable best efforts to
cause its "affiliates" and "associates" (as such terms are defined under Rule
12b-2 promulgated under the Exchange Act) not to, purchase or agree to purchase
any additional Terra Shares, any securities convertible into or exchangeable for
Terra Shares or any options, warrants or other rights to acquire Terra Shares
during the period during which the Terra Average Price is to be calculated
pursuant to the terms of the Reorganization Agreement and that it will not,
during such period, publicly announce any intention to purchase any Terra Shares
(other than pursuant to the Rights Offering). Telefonica further agrees that it
shall not sell, transfer, pledge, assign or otherwise dispose of (collectively,
"Transfer") or enter into any contract, option or other arrangement with respect
to the Transfer of, or the creation or offer of any derivative security in
respect of, the Subject Shares to any person or commit or agree, or announce an
intention to, take any of the foregoing actions.
5. Representations and Warranties. Telefonica represents and warrants
(with respect to the representations and warranties regarding Telefonica only)
to Lycos, Terra represents and warrants (with respect to the representations and
warranties regarding Terra only) to Lycos and Lycos represents and warrants
(with respect to the representations and warranties regarding Lycos only) to
Telefonica and Terra:
(a) It has full corporate power and authority to execute and deliver
this Agreement and the Reorganization Agreement (if it is a party thereto)
and has full corporate power and authority to consummate the transactions
contemplated hereby and thereby (if it is a party thereto); the execution
and delivery of this Agreement and the Reorganization Agreement (if it is a
party thereto) and the consummation of the transactions contemplated hereby
and thereby (if it is a party thereto) have been duly and validly approved
by its Board of Directors (or, in the case of Telefonica, the Chairman of
the Board of Telefonica under the authorization granted by the Executive
Committee of the Board of Telefonica); this Agreement and the
Reorganization Agreement (if it is a party thereto) has been duly and
validly executed and delivered by it and (assuming due authorization,
execution and delivery by the other party or parties thereto) constitutes
valid and binding obligation(s) of it, enforceable against it in accordance
with its (or their) terms; neither the execution and delivery of this
Agreement or the Reorganization Agreement (if it is a party thereto) by it
nor the consummation by it of the transactions
2
3
contemplated hereby or thereby (if it is a party thereto), nor compliance
by it with any of the terms or provisions hereof, will violate any
provision of its certificate of incorporation, articles of incorporation,
by-laws or other similar documents or violate any statute, code, ordinance,
rule, regulation, judgment, order, writ, decree or injunction applicable to
it or any of its properties or assets; and no consents or approvals of or
filings or registrations with any court, administrative agency or
commission or other governmental or regulatory authority or instrumentality
("GOVERNMENTAL AUTHORITY"), or of or with any third party, are necessary in
connection with the execution and delivery by it of this Agreement or the
Reorganization Agreement (if it is a party thereto) and the consummation by
it of the transactions contemplated hereby or thereby (if it is a party
thereto) and compliance by it with any of the provisions hereof or thereof
(if it is a party thereto), other than those the failure of which to obtain
or make would not reasonably be expected to prevent or materially delay the
transactions contemplated hereby and other than the approvals, filings,
notices and registrations referred to in Section 1 and in the
Reorganization Agreement.
(b) Telefonica represents and warrants to Lycos that Telefonica owns,
directly or indirectly, all of the Subject Shares, free and clear of any
liens, pledges, charges, encumbrances and security interests whatsoever.
Telefonica represents and warrants to Lycos that Telefonica does not own
(of record or beneficially) any options, warrants, rights or other similar
instruments to acquire any capital stock or other voting securities of
Terra. Telefonica has the sole right to vote and Transfer the Subject
Shares, and none of the Subject Shares is subject to any voting trust or
other agreement, arrangement or restrictions with respect to the voting or
Transfer of the Subject Shares, except pursuant to this Agreement.
Telefonica hereby agrees that at all times prior to and including the date
of Terra Shareholder Meeting, it shall continue to own and have the right
to vote no less than the number and kind of Terra Shares held as of the
date hereof. To the extent inconsistent with the provisions of this
Agreement, Telefonica hereby represents that any proxies heretofore given
in respect of the Subject Shares are not irrevocable and that it hereby
revokes any and all previous proxies given by it with respect to the
Subject Shares or any other voting securities of Terra. Telefonica hereby
agrees that it shall not, directly or indirectly, grant any proxies or
powers of attorney with respect to the Subject Shares or any other voting
securities of Terra with respect to any matter that would prevent or
materially delay Telefonica from complying with its obligations set forth
in this Agreement. The parties understand and agree that the
representations and warranties contained in this Section 5(b) regarding the
Subject Shares do not relate to any Subject Shares acquired after the date
hereof.
6. General Provisions.
(a) This Agreement may be executed in counterparts, all of which shall be
considered one and the same agreement and shall become effective when
counterparts have been signed by each of the parties and delivered to the other
parties, it being understood that all parties need not sign the same
counterpart.
(b) This Agreement, together with the Reorganization Agreement (if a party
thereto) (including the documents and the instruments referred to herein)
constitutes the entire agreement and supersedes all prior agreements and
understandings, both written and oral, among the parties with respect to the
subject matter hereof.
(c) This Agreement shall be governed and construed in accordance with the
laws of the Kingdom of Spain, without regard to any applicable conflicts of law
principles.
(d) Except as otherwise required by applicable law or the rules of the
NASDAQ and Spanish Stock Exchange authorities (in which cases the party
proposing to make any disclosure shall provide reasonable notice to the other
party prior to making the proposed disclosure), none of the parties shall, or
shall permit any of its subsidiaries to, issue or cause the publication of any
press release or other public announcement with respect to, or otherwise make
any public statement concerning, the transactions contemplated by this Agreement
without the consent of Terra and Telefonica, in the case
3
4
of a proposed announcement or statement by Lycos, or Lycos, in the case of a
proposed announcement or statement by Terra or Telefonica, which consent shall
not be unreasonably withheld.
(e) This Agreement may not be amended, changed, supplemented, waived or
otherwise modified or terminated except by an instrument in writing signed by
Lycos and Telefonica. The failure of any party hereto to exercise any right,
power or remedy provided under this Agreement or otherwise available in respect
hereof at law or in equity, or to insist upon compliance by any other party
hereto with its obligations hereunder, and any custom or practice of the parties
at variance with the terms hereof, shall not constitute a waiver by such party
of its right to exercise any such or other right, power or remedy or to demand
such compliance.
(f) This Agreement shall be binding upon and shall inure to the benefit of
and be enforceable by the parties and their respective successors and assigns,
including without limitation in the case of any corporate party hereto any
corporate successor by merger or otherwise, and in the case of any individual
party hereto any trustee, executor, heir, legatee or personal representative
succeeding to the ownership of the Subject Shares or other securities subject to
this Agreement. Notwithstanding any transfer of Subject Shares, the transferor
shall remain liable for the performance of all obligations under this Agreement
of the transferor.
(g) If any term of this Agreement or the application thereof to any party
or circumstance shall be held invalid or unenforceable to any extent, the
remainder of this Agreement and the application of such term to the other
parties or circumstances shall not be affected thereby and shall be enforced to
the greatest extent permitted by applicable law, provided that in such event the
parties shall negotiate in good faith in an attempt to agree to another
provision (in lieu of the term or application held to be invalid or
unenforceable) that will be valid and enforceable and will carry out the
parties' intentions hereunder.
(h) The parties acknowledge that money damages are not an adequate remedy
for violations of this Agreement and that any party may, in its sole discretion,
apply to a court of competent jurisdiction for specific performance or
injunctive or such other relief as such court may deem just and proper in order
to enforce this Agreement or prevent any violation hereof and, to the extent
permitted by applicable law, each party waives any objection to the imposition
of such relief. All rights, powers and remedies provided under this Agreement or
otherwise available in respect hereof at law or in equity shall be cumulative
and not alternative, and the exercise or beginning of the exercise of any
thereof by any party shall not preclude the simultaneous or later exercise of
any other such right, power or remedy by such party.
(i) This Agreement is not intended to be for the benefit of and shall not
be enforceable by any person or entity who or which is not a party hereto.
(j) Each party hereto hereby waives any right to a trial by jury in
connection with any such action, suit or proceeding.
(k) Each of Telefonica, Terra and Lycos irrevocably agree that any legal
action or proceeding with respect to this Agreement or for recognition and
enforcement of any judgment in respect hereof brought by another party hereto or
its successors or assigns may be brought and determined in any Delaware state
court or Federal court sitting in the State of Delaware, and each of Telefonica
and Lycos hereby (x) irrevocably submits with regard to any such action or
proceeding for itself and in respect to its property, generally and
unconditionally, to the exclusive personal jurisdiction of the aforesaid courts
in the event any dispute arises out of this Agreement or any transaction
contemplated hereby, (y) agrees that it will not attempt to deny or defeat such
personal jurisdiction by motion or other request for leave from any such court
and (z) agrees that it will not bring any action relating to this Agreement or
any transaction contemplated hereby in any court other than any Delaware state
or Federal court sitting in the State of Delaware. Any service of process to be
made in such action or proceeding may be made by delivery of process in
accordance with the notice
4
5
provisions contained in Section 6(k). Each of Telefonica, Terra and Lycos hereby
irrevocably waives, and agrees not to assert, by way of motion, as a defense,
counterclaim or otherwise, in any action or proceeding with respect to this
Agreement, (a) the defense of sovereign immunity, (b) any claim that it is not
personally subject to the jurisdiction of the above-named courts for any reason
other than the failure to serve process in accordance with this Section 6(k),
(c) that it or its property is exempt or immune from jurisdiction of any such
court or from any legal process commenced in such courts (whether through
service of notice, attachment prior to judgment, attachment in aid of execution
of judgment, execution of judgment or otherwise), and (d) to the fullest extent
permitted by applicable law that (i) the suit, action or proceeding in any such
court is brought in an inconvenient forum, (ii) the venue of such suit, action
or proceeding is improper and (iii) this Agreement, or the subject matter
hereof, may not be enforced in or by such courts.
(l) Telefonica hereby appoints National Registered Agents, Inc., with
offices on the date hereof at 0 Xxxx Xxxxxxxxxx Xxxxxx in the City of Dover,
County of Kent, State of Delaware, and with offices on the date hereof at 000
Xxxxx Xxxxxx, Xxxxx Xxxxx, in the City of New York, County of New York, State of
New York, as its authorized agent (the "AUTHORIZED AGENT"), upon whom process
may be served in any suit, action or proceeding arising out of or relating to
this Agreement or any transaction contemplated by this Agreement that may be
instituted in any court described in Section 6(k). Telefonica agrees to take any
and all reasonable action, including the filing of any and all documents, that
may be necessary to establish and continue such appointment in full force and
effect as aforesaid. Telefonica agrees that service of process upon the
Authorized Agent shall be, in every respect, effective service of process upon
Telefonica.
(m) Subject to the terms and conditions of this Agreement, the parties
hereto each agree to use its reasonable best efforts in good faith to take, or
cause to be taken, all actions, and to do, or cause to be done, all things
necessary, proper or desirable, or advisable under applicable laws, so as to
permit consummation of transactions contemplated hereby and by the
Reorganization Agreement (if a party thereto) including, without limitation,
using its reasonable best efforts to obtain (and cooperating with the other
party hereto to obtain) any consent, authorization, order or approval of, or any
exemption by, any Governmental Authority (as defined in Section 5(a)) and any
other third party that is required to be obtained by any of the parties hereto
in connection with the transactions contemplated by this Agreement and by the
Reorganization Agreement (if a party thereto).
(n) All notices and other communications hereunder shall be in writing and
shall be deemed given if delivered personally, telecopied (with confirmation),
mailed by registered or certified mail (return receipt requested) or delivered
by an express courier (with confirmation) to the parties at the following
addresses (or at such other address for a party as shall be specified by like
notice):
if to Lycos, to:
Lycos, Inc.
000-0 Xxxxxx Xxxx Xxxx
Xxxxxxx, XX 00000-0000
Facsimile No.: 000-000-0000
Attn.: Xxxxxx X. Xxxxxx
With a copy to:
Cravath, Swaine & Xxxxx
Worldwide Plaza
000 Xxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Facsimile No.: 212-474-3700
Attn: Xxxxxx X. Xxxxxxx, Esq.
Xxxxx X. Xxxxx, Esq.
5
6
and
if to Tiger, to:
Tiger, S.A.
Xxx xx xxx Xxx Xxxxxxxxx
00, Complejo Atica, Edeficial
Xxxxxxx xx Xxxxxxx
00000 Xxxxxx
Xxxxx
Facsimile No.: 011-34-91-452-3144
Attention: Xxxxxxx xx Xxxxxxx
With a copy to:
Wachtell, Lipton, Xxxxx & Xxxx
00 Xxxx 00xx Xx.
Xxx Xxxx, XX
Facsimile: 212-403-2000
Attention: Xxxxx X. Xxxxxxxxx, Esq.
and a copy to:
Xxxxxxxxx Xxxxxxx, LLP
The MetLife Building
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Facsimile No.: (000) 000-0000
Attn: Xxxxxxxx X. Xxxxxxx, Esq.
(o) It is a condition precedent to the effectiveness of this Agreement
that the Reorganization Agreement shall have been executed and delivered by each
of the parties thereto and be in full force and effect. In the event the
Reorganization Agreement is terminated in accordance with its terms, this
Agreement shall automatically terminate and be of no further force or effect.
Upon such termination, except for any rights any party may have in respect of
any breach by any other party of its or his obligations hereunder, none of the
parties hereto shall have any further obligation or liability hereunder.
6
7
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized as of the date
first above written.
TELEFONICA, S.A.
By: /s/ XXXX XXXXXXXXXX
------------------------------------
Name: Xxxx Xxxxxxxxxx
Title: Chairman and Chief Executive
Officer
TERRA NETWORKS, S.A.
By: /s/ XXXX XXXXXXX XXXXXXXX
------------------------------------
Name: Xxxx Xxxxxxx Xxxxxxxx
Title: Chief Executive Officer
LYCOS, INC.
By: /s/ XXXXXX X. XXXXX
------------------------------------
Name: Xxxxxx X. Xxxxx
Title: President and Chief Executive
Officer
7
