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AGREEMENT AND PLAN OF MERGER
Between
BUSINESS SERVICES HOLDINGS, INC.
and
WORLD FINANCIAL NETWORK HOLDING CORPORATION
Dated as of August 30, 1996
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TABLE OF CONTENTS
PAGE
ARTICLE I
THE MERGER
SECTION 1.01 The Merger .................................................... 1
SECTION 1.02 Effect of the Merger .......................................... 1
SECTION 1.03 Consummation of the Merger .................................... 2
SECTION 1.04 Charter; By-Laws; Directors and
Officers ...................................................... 2
SECTION 1.05 Further Assurances ............................................ 3
ARTICLE II
CONVERSION OF SECURITIES
SECTION 2.01 Conversion of Common and Preferred
Stock of BSI ................................................. 3
SECTION 2.02 Stock Options, Warrants, Etc ................................. 4
SECTION 2.03 Surrender and Exchange of Securities ......................... 4
SECTION 2.04 Closing of Stock Transfer Books .............................. 5
ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION 3.01 Representations and Warranties of
BSI and WFN .................................................. 5
ARTICLE IV
COVENANTS
SECTION 4.01 Certain Covenants ........................................... 13
SECTION 4.02 Access to Information ....................................... 14
SECTION 4.03 Other Agreements ............................................ 14
SECTION 4.04 Notification of Certain Matters ............................. 14
SECTION 4.05 Indemnification ............................................. 14
ARTICLE V
CONDITIONS PRECEDENT TO THE MERGER
SECTION 5.01 Conditions Precedent to the Merger .......................... 15
ARTICLE VI
TERMINATION AND ABANDONMENT
SECTION 6.01 Termination and Abandonment ................................. 17
SECTION 6.02 Effect of Termination ....................................... 17
ARTICLE VII
MISCELLANEOUS
SECTION 7.01 Expenses, Etc ............................................... 17
SECTION 7.02 Publicity ................................................... 18
SECTION 7.03 Execution in Counterparts ................................... 18
SECTION 7.04 Notices ..................................................... 18
SECTION 7.05 Waivers ..................................................... 18
SECTION 7.06 Amendments, Supplements, Etc ................................ 19
SECTION 7.07 Entire Agreement ............................................ 19
SECTION 7.08 Applicable Law .............................................. 19
SECTION 7.09 Binding Effect, Benefits .................................... 19
SECTION 7.10 Assignability ............................................... 19
SECTION 7.11 Variation and Amendment ..................................... 20
ii
INDEX TO SCHEDULES AND EXHIBITS
SCHEDULE DESCRIPTION
3.01 (b) Subsidiaries
3.01 (c) Capitalization
3.01 (e) Effect of Agreements
3.01 (f) Financial Statements
3.01 (g) Certain Changes
3.01 (i) Litigation
3.01 (j) Labor Controversies
3.01 (l) Approvals
3.01 (m) Employee Benefit Plans
5.01 (e) Consents
EXHIBIT SECTION REF. DESCRIPTION
A 5.01(f) Form of Amended and Restated Stockholders
Agreement
B 5.01(g) Form of Securities Purchase Agreement
iii
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of August 30, 1996, between
BUSINESS SERVICES HOLDINGS, INC., a Delaware corporation ("BSI"), and WORLD
FINANCIAL NETWORK HOLDING CORPORATION, a Delaware corporation ("WFN"). BSI and
WFN are hereinafter sometimes referred to as the "Constituent Corporations" and
WFN as the "Surviving Corporation".
WHEREAS, BSI and WFN desire that BSI merge with and into WFN (the
"Merger"), upon the terms and conditions set forth herein and in accordance with
the General Corporation Law of the State of Delaware (the "Delaware GCL"), with
the result that WFN shall continue as the surviving corporation and the separate
existence of BSI shall cease; and
WHEREAS, BSI and WFN desire that at the Effective Time (as hereinafter
defined) all issued and outstanding shares of Common Stock, $.01 par value ("BSI
Common Stock"), and Preferred Stock, $1.00 par value ("BSI Preferred Stock"), of
BSI (excluding shares held in the treasury of BSI) be converted into the right
to receive fully paid and nonassessable shares of Common Stock, $.01 par value
("WFN Common Stock"), of WFN, as hereinafter provided; and
WHEREAS, the respective Boards of Directors and stockholders of BSI
and WFN have approved the Merger;
NOW, THEREFORE, in consideration of the mutual representations,
warranties, covenants, agreements and conditions contained herein, and in order
to set forth the terms and conditions of the Merger and the mode of carrying the
same into effect, the parties hereto hereby agree as follows:
ARTICLE I
THE MERGER
SECTION 1.01 THE MERGER. Subject to the terms and conditions of this
Agreement, at the Effective Time, in accordance with this Agreement and the
Delaware GCL, BSI shall be merged with and into WFN, the separate existence of
BSI shall cease, and WFN shall continue as the surviving corporation under the
corporate name of "World Financial Network Holding Corporation".
SECTION 1.02 EFFECT OF THE MERGER. Upon the effectiveness of the
Merger, the Surviving Corporation shall possess all of the rights, privileges,
powers and franchises as well of a public as of a private nature, and be subject
to all the
1
restrictions, disabilities and duties, of each of the Constituent Corporations;
and all and singular, the rights, privileges, powers and franchises of each of
the Constituent Corporations, and all property, real, personal and mixed, and
all debts due to any of the Constituent Corporations on whatever account, as
well for stock subscriptions as all other things in action or belonging to each
of the Constituent Corporations, shall be vested in the Surviving Corporation;
and all property, rights, privileges, powers and franchises, and all and every
other interest shall be thereafter as effectually the property of the Surviving
Corporation as they were of the Constituent Corporations, and the title to any
real estate vested by deed or otherwise in any of the Constituent Corporations
shall not revert or be in any way impaired by reason of the Merger; but all
rights of creditors and all liens upon any property of any of the Constituent
Corporations shall be preserved unimpaired, and all debts, liabilities and
duties of the Constituent Corporations (including, without limitation, the
indebtedness evidenced by the 10% Subordinated Note due January 24, 2002 of BSI
in the aggregate principal amount of $50,000,000 (the "Note")) shall thenceforth
attach to the Surviving Corporation, and may be enforced against it to the same
extent as if said debts, liabilities and duties had been incurred or contracted
by it. In connection with the foregoing, the Surviving Corporation shall, at the
Effective Time (as hereinafter defined), in addition to such other actions as
may be required in connection with the Merger, execute and deliver to the holder
of the Note, in substitution therefore, a 10% Subordinated Note due January 24,
2002 of the Surviving Corporation having terms identical to those contained in
the Note.
SECTION 1.03 CONSUMMATION OF THE MERGER. As soon as practicable after
the satisfaction or waiver of the conditions to the obligations of the parties
to effect the Merger set forth herein, provided that this Agreement has not been
terminated previously, the parties hereto will cause the Merger to be
consummated by filing with the Secretary of State of the State of Delaware a
properly executed Certificate of Merger (the time of such filing being the
"Effective Time").
SECTION 1.04 CHARTER; BY-LAWS; DIRECTORS AND OFFICERS. The Certificate
of Incorporation of the Surviving Corporation from and after the Effective Time
shall be the Certificate of Incorporation of WFN as in effect immediately prior
to the Effective Time, until thereafter amended in accordance with the
provisions thereof, the terms of the Amended and Restated Stockholders Agreement
referred to in Section 5.01(f) hereof and as provided by the Delaware GCL. The
By-Laws of the Surviving Corporation from and after the Effective Time shall be
the By-Laws of WFN as in effect immediately prior to the Effective Time,
continuing until thereafter amended in accordance with the
2
provisions thereof, the terms of the Amended and Restated Stockholders Agreement
referred to in Section 5.01(f) hereof and the Certificate of Incorporation of
the Surviving Corporation and as provided by the Delaware GCL. The initial
directors and officers of the Surviving Corporation shall be the directors and
officers, respectively, of WFN immediately prior to the Effective Time, in each
case until their respective successors are duly elected and qualified.
SECTION 1.05 FURTHER ASSURANCES. If at any time after the Effective
Time the Surviving Corporation shall consider or be advised that any deeds,
bills of sale, assignments or assurances or any other acts or things are
necessary, desirable or proper (i) to vest, perfect or confirm, of record or
otherwise, in the Surviving Corporation, its right, title or interest in, to or
under any of the rights, privileges, powers, franchises, properties or assets of
either of the Constituent Corporations, or (ii) otherwise to carry out the
purposes of this Agreement, the Surviving Corporation and its proper officers
and directors or their designees shall be authorized to execute and deliver, in
the name and on behalf of either of the Constituent Corporations, all such
deeds, bills of sale, assignments and assurances and do, in the name and on
behalf of such Constituent Corporation, all such other acts and things
necessary, desirable or proper to vest, perfect or confirm its right, title or
interest in, to or under any of the rights, privileges, powers, franchises,
properties or assets of such Constituent Corporation and otherwise to carry out
the purposes of this Agreement.
ARTICLE II
CONVERSION OF SECURITIES
SECTION 2.01 CONVERSION OF COMMON AND PREFERRED STOCK OF BSI. By
virtue of the Merger and without any action on the part of the holders of the
capital stock of BSI, at the Effective Time all outstanding shares of the
capital stock of BSI (excluding shares held in the treasury of BSI, which shall
be cancelled as provided in paragraph (d) below) shall be converted into the
right to receive fully paid and nonassessable shares of WFN Common Stock on the
following basis:
(a) BSI COMMON STOCK. Each share of BSI Common Stock issued and
outstanding immediately prior to the Effective Time shall be converted into the
right to receive fully paid and nonassessable shares of WFN Common Stock, at the
rate of one (1) share of WFN Common Stock for each share of BSI Common Stock.
(b) BSI PREFERRED STOCK. Each share of BSI Preferred Stock issued and
outstanding immediately prior to the Effective
3
Time shall be converted into the right to receive a number of fully paid and
nonassessable shares of WFN Common Stock equal to the quotient derived by
dividing:
(i) an amount equal to the sum of (x) $100 (the liquidation value of
each share of BSI Preferred Stock), plus (y) any accrued and unpaid
dividends thereon through the Effective Time; by
(ii) $1.00.
(c) PREFERRED STOCK DIVIDENDS. At the Effective Time the obligations
of BSI to pay accrued and unpaid dividends on the issued and outstanding shares
of BSI Preferred Stock shall be cancelled.
(d) TREASURY STOCK. Each share of capital stock of BSI that is held in
the treasury of BSI shall be cancel led and retired at the Effective Time and no
capital stock of WFN, cash or other consideration shall be paid or delivered in
exchange therefor.
SECTION 2.02 STOCK OPTIONS, WARRANTS. ETC. Each outstanding stock
option, warrant or other right to purchase BSI Common Stock, whether or not then
exercisable or vested, shall remain outstanding after the Effective Time and
shall at the Effective Time, subject to the satisfaction of the vesting
provisions and the payment of the exercise price thereof, be converted, subject
to Section 2.03(c) hereof, into and become the right to purchase that number of
shares of WFN Common Stock equal to the number of shares of BSI Common Stock
that would have been issued if such option, warrant or other right had been
exercised immediately prior to the Effective Time.
SECTION 2.03 SURRENDER AND EXCHANGE OF SECURITIES. (a) At the
Effective Time, each holder of an outstanding certificate or certificates that
prior thereto represented shares of BSI Common Stock or BSI Preferred Stock
shall surrender the same to WFN or its agent, and each such holder shall be
entitled upon such surrender to receive in exchange therefor, without cost to
it, the number of shares of WFN Common Stock into which the shares theretofore
represented by the certificate so surrendered shall have been converted as
provided in Section 2.01 hereof, and the certificate or certificates so
surrendered in exchange for such consideration shall forthwith be cancelled by
WFN.
(b) If a holder of BSI Common Stock or BSI Preferred Stock has lost
the certificate owned by such holder, then such holder shall submit an affidavit
describing the lost certificate, the number of shares evidenced thereby and
affirming the loss of that certificate in lieu of surrendering the lost
certificate to
4
WFN, which shall deem such lost certificate cancelled. Until so surrendered, the
outstanding certificates that, prior to the Effective Time, represented shares
of the capital stock of BSI that shall have been converted as aforesaid shall be
deemed for all corporate purposes, except as hereinafter provided, to evidence
the ownership of the consideration into which such shares have been so
converted.
(c) At the Effective Time, each holder of an outstanding option or
warrant to purchase shares of BSI Common Stock shall surrender the same to WFN
or its agent, and each such holder shall be entitled upon such surrender to
receive in exchange therefor, without cost to it, an option or warrant to
purchase the number of shares of WFN Common Stock calculated as provided in
Section 2.02 hereof, and the option or warrant so surrendered in exchange shall
forthwith be cancelled by WFN.
(d) No certificates or scrip representing fractional shares of WFN
Common Stock shall be issued upon the surrender for exchange of certificates
held by stockholders of BSI and such fractional share interests will not entitle
the owner thereof to vote or to any rights of a stockholder of WFN.
SECTION 2.04 CLOSING OF STOCK TRANSFER BOOKS. On and after the
Effective Time there shall be no transfers on the stock transfer books of BSI of
shares of capital stock of BSI that were issued and outstanding immediately
prior to the Effective Time.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION 3.01 REPRESENTATIONS AND WARRANTIES OF BSI AND WFN. Each of
BSI and WFN (being hereinafter referred to, collectively, as the "Merger
Parties" and, individually, as a "Merger Party") represents and warrants, only
as to itself and its subsidiaries, to the other Merger Party as follows:
(a) ORGANIZATION, POWER, ETC. (i) Such Merger Party is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware, is duly qualified or licensed and is in good standing to do
business as a foreign corporation in each jurisdiction in which the property
owned, leased or operated by it or the nature of its business, as now being
conducted, makes such qualification or licensing necessary (other than any such
jurisdictions in which the failure to be so qualified would not, in the
aggregate, have a material adverse effect on its business, properties or
financial condition), and has all requisite corporate power and authority to
own, operate and lease its properties, to carry on its busi-
5
ness as now being conducted and to execute, deliver and perform this Agreement.
(ii) WFN has all requisite corporate power and authority to execute,
deliver and perform the Amended and Restated Stockholders Agreement (as
hereinafter defined) and to issue and deliver the shares of WFN Common Stock
issuable upon the Merger at the Effective Time, as contemplated herein.
(b) SUBSIDIARIES. Except as set forth in Schedule 3.01(b) hereto, in
Part I thereof in the case of BSI and in Part II thereof in the case of WFN,
neither such Merger Party nor any of its subsidiaries owns of record or
beneficially, directly or indirectly, (i) any shares of outstanding capital
stock or securities convertible into capital stock of any other corporation or
(ii) any participating interest in any partnership, joint venture or other
non-corporate business enterprise. Except as set forth in Schedule 3.01(b), each
subsidiary of such Merger Party is a corporation duly organized, validly
existing and in good standing under the laws of its jurisdiction of
incorporation and has all requisite corporate power and authority to own,
operate and lease its properties and to carry on its business as it is now being
conducted. Except as set forth in Schedule 3.01(b), each such subsidiary is duly
qualified or licensed and is in good standing to do business as a foreign
corporation in each jurisdiction in which the property owned, leased or operated
by it or the nature of its business as now being conducted makes such
qualification or licensing necessary (other than any such jurisdiction in which
the failure to be so qualified would not, in the aggregate, have a material
adverse effect on the business, properties or financial condition of such Merger
Party and its subsidiaries, taken as a whole). All the outstanding shares of
capital stock of such Merger Party's subsidiaries are validly issued, fully paid
and nonassessable and are owned by such Merger Party or by a wholly-owned
subsidiary of such Merger Party, free and clear of any liens, claims, charges or
encumbrances, and there are no irrevocable proxies outstanding with respect to
any such shares. For purposes of this Agreement, the term "subsidiary" shall
mean any corporation or other business entity a majority of the outstanding
voting stock of which is entitled to vote for the election of directors is at
the time owned by such Merger Party and/or one or more other subsidiaries.
(c) CAPITALIZATION. (i) The authorized capital stock of BSI consists
of 34,000,000 shares of BSI Common Stock, $.01 par value, and 250,000 shares of
BSI Preferred Stock, $1.00 par value, of which 28,571,429 shares of BSI Common
Stock and 250,000 shares of BSI Preferred Stock are issued and outstanding,
fully paid and nonassessable, and 1,503,759 shares of BSI Common Stock are
reserved for issuance pursuant to an outstanding warrant to purchase BSI Common
Stock.
6
(ii) The authorized capital stock of WFN consists of 350,000,000
shares of WFN Common Stock, $.01 par value, of which 275,000,000 shares of
WFN Common Stock are issued and outstanding, fully paid and nonassessable and
8,270,000 shares are reserved for issuance upon the exercise of outstanding
options granted under the World Financial Network Holding Corporation and its
Subsidiaries Stock Option and Restricted Stock Purchase Plan.
(iii) Schedule 3.01(c) hereto, in Part I thereof in the case of BSI
and Part II thereof in the case of WFN, contains a true and complete list of
all the holders of shares of capital stock of such Merger Party and their
respective share holdings, and all outstanding options, warrants, calls or
other rights to subscribe for or purchase or acquire from such Merger Party,
or any plans, contracts or commitments providing for the issuance of, or the
granting of rights to acquire (i) any capital stock of such Merger Party or
(ii) any securities convertible into or exchangeable for any capital stock of
such Merger Party. Except as set forth in Schedule 3.01(c), such Merger Party
is not contractually obligated to repurchase, redeem or otherwise acquire any
of its outstanding shares of capital stock or options to acquire such stock
and there are no agreements among the stockholders of such Merger Party
regarding the voting of securities of such Merger Party.
(d) AUTHORIZATION OF AGREEMENTS. ETC. (i) The execution, delivery
and performance by such Merger Party of this Agreement and, in the case of
WFN, the Amended and Restated Stockholders Agreement and the consummation by
it of the transactions contemplated hereby and thereby, as the case may be,
have been duly and effectively authorized by all requisite corporate and
stockholder action. In furtherance of the foregoing, this Agreement has been
duly approved and adopted by a unanimous vote of the Boards of Directors and
stockholders of each of WFN and BSI. This Agreement constitutes, and the
Amended and Restated Stockholders Agreement, when executed and delivered by
WFN in accordance herewith, will constitute, the legal, valid and binding
obligation of such Merger Party, enforceable against such Merger Party in
accordance with its terms, subject, as to enforcement of remedies, to
applicable bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and other similar laws affecting the enforcement of creditors'
rights in general and to general principles of equity, regardless of whether
enforcement is sought in a proceeding in equity or at law.
(ii) The issuance and delivery by WFN of the shares of WFN Common
Stock issuable upon the consummation of the Merger at the Effective Time, as
contemplated herein, have been duly and effectively authorized by all
requisite corporate and stockholder
7
action, and such shares, when issued and delivered in accordance with this
Agreement, will be validly issued and outstanding, fully paid and
nonassessable shares of WFN Common Stock. The issuance and delivery of the
shares of WFN Common Stock under the circumstances contemplated by this
Agreement are not subject to any preemptive rights of stockholders of WFN or
to any right of first refusal or other similar right in favor of any person
and are exempt from the registration requirements of the Securities Act of
1933.
(e) EFFECT OF AGREEMENTS. Except as set forth in Section 3.01(e)
hereto, the execution and delivery by such Merger Party of this Agreement
and, in the case of WFN, the Amended and Restated Stockholders Agreement, and
performance by it of its obligations hereunder and thereunder, as the case
may be, will not violate, in any material respect, any provision of any
statute or regulation, the Certificate of Incorporation or Bylaws of such
Merger Party or any of its subsidiaries or any by-law, rule or regulation of
MasterCard International, Inc., VISA U.S.A., Inc. and VISA International,
Inc. or any order of any court or other agency of government, or any
judgment, award or decree or any indenture, agreement or other instrument to
which such Merger Party or any of its subsidiaries is a party, or by which
such Merger Party or any of its subsidiaries or any of their respective
properties or assets is bound, or conflict with in any material respect,
result in a material breach of or constitute (with due notice or lapse of
time or both) a material default under, any such indenture, or any agreement
or other instrument, or result in the creation or imposition of any lien,
charge, security interest or encumbrance of any nature whatsoever upon any of
the material properties or assets of such Merger Party and its subsidiaries,
taken as a whole.
(f) FINANCIAL STATEMENTS. (i) BSI has furnished to WFN: (A) the
unaudited balance sheet of BSI's wholly-owned subsidiary BSI Business
Services, Inc., a Delaware corporation ("Business Services"), and its
subsidiaries as of January 28, 1995 and the related statement of income for
the fiscal year then ended, (B) the unaudited balance sheet of Business
Services and its subsidiaries as of December 2, 1995 and the related
statements of income and cash flow for the period then ended and (C) the
unaudited balance sheet of BSI and its subsidiaries as of July 27, 1996 and
the related statements of income and cash flows for the six-month period then
ended, certified by the principal financial officer of BSI.
(ii) WFN has furnished to BSI: (A) the consolidated statements of
condition of World Financial Network National Bank as of January 29, 1994 and
January 28, 1995 and the related consolidated statements of income,
stockholders' equity and cash flows, certified by Coopers & Xxxxxxx, and (B)
the consolidated
8
balance sheet of WFN as of August 3, 1996 and the related statements of
income and cash flows for the six-month period then ended, certified by the
principal financial officer of WFN.
(iii) All such financial statements of such Merger Party (including
any related schedules and/or notes, if any) have been prepared in accordance
with generally accepted accounting principles consistently applied and
consistent with prior periods, except that such interim statements are
subject to year-end adjustments (which consist of normal recurring accruals)
and do not contain footnote disclosures and except that the financial
statements of BSI subsequent to January 10, 1996 reflect the effects of
purchase accounting. Except as set forth in Schedule 3.01(f) hereto, in Part
I thereof in the case of BSI and Part II thereof in the case of WFN, such
financial statements fairly present in all material respects the financial
position of the applicable Merger Party and its subsidiaries as of their
respective dates and present in all material respects the results of
operations of the applicable Merger Party and its subsidiaries for the
respective periods then ended, subject, in the case of unaudited financial
statements, to normal year-end adjustments and the absence of footnote
disclosure. Except (A) as set forth in the financial statements of such
Merger Party and its subsidiaries, (B) as incurred in the ordinary course of
business and consistent with past practice, or (C) as set forth in said
Schedule 3.01(f), such Merger Party and its subsidiaries have not incurred
any material liabilities or obligations of any kind or nature, whether known
or unknown (whether absolute, secured, contingent or otherwise) and whether
due or to become due since July 27, 1996, in the case of BSI, and August 3,
1996, in the case of WFN.
(g) ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as otherwise set
forth in Schedule 3.01(g) hereto, in Part I thereof in the case of BSI and
Part II thereof in the case of WFN, since July 27, 1996, in the case of BSI,
and August 3, 1996, in the case of WFN, neither such Merger Party nor any of
its subsidiaries has:
(i) incurred any obligation or liability (fixed or contingent),
except normal trade or business obligations incurred in the ordinary
course of business and consistent with past practice, none of which,
individually or in the aggregate, is materially adverse, and except in
connection with this Agreement and the transactions contemplated hereby;
(ii) discharged or satisfied any lien, security interest, charge or
other encumbrance or paid any obligation or liability (fixed or
contingent), other than in the ordinary course of business and consistent
with past practice;
9
(iii) mortgaged, pledged or subjected to any lien, security interest,
charge or other encumbrance any of its assets or properties with a value in
excess of $100,000 (other than mechanic's, materialman's and similar
statutory liens arising in the ordinary course of business and purchase
money security interests arising as a matter of law between the date of
delivery and payment);
(iv) transferred, leased or otherwise disposed of any of its assets or
properties except for a fair consideration in the ordinary course of
business and consistent with past practice or, except in the ordinary
course of business and consistent with past practice, acquired any assets
or properties;
(v) authorized, declared or paid any dividend or made any other
distribution on or in respect of any class of its capital stock or
established a record date for any of the foregoing;
(vi) cancelled or compromised any debt or claim greater than $100,000
individually, other than in the ordinary course of business consistent with
past practice;
(vii) waived or released any rights of material value;
(viii) transferred or granted any rights under any concessions,
leases, licenses, agreements, patents, inventions, trademarks, trade names,
servicemarks or copyrights or with respect to any know-how other than in
the ordinary course of business consistent with past practice;
(ix) made or granted any wage or salary increase applicable to any
group or classification of employees generally, entered into any employment
contract with, or made any loan to, or entered into any material
transaction of any other nature with, any officer or employee of such
Merger Party or any of its subsidiaries or affiliates;
(x) entered into any transaction, contract or commitment that,
individually or in the aggregate, is material, except this Agreement and
the transactions contemplated hereby and as permitted by Section 4.01
hereof;
(xi) suffered any casualty loss or damage (whether or not such loss or
damage shall have been covered by insurance) that affects in any material
respect its ability to conduct its business; or
(xii) suffered any material adverse change in its business, operations
or financial condition.
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(h) ACQUISITION AGREEMENTS. (i) To the knowledge of BSI, (A) the
representations and warranties of the parties contained in the Acquisition
Agreement dated as of January 12, 1996 (the "BSI Acquisition Agreement") between
BSI and JCP Telecom Systems, Inc. are true and correct in all material respects
as if made at and as of the date hereof, except to the extent any such
representation or warranty was expressly made as of a specified date, in which
case, to the knowledge of BSI, such representation or warranty was true and
correct in all material respects as of such date, and (B) the schedules to the
BSI Acquisition Agreement were complete and accurate in all material respects as
of the date of the BSI Acquisition Agreement and, except as set forth in the
Schedules to this Agreement, since the closing under the BSI Acquisition
Agreement nothing has come to the attention of BSI that would require any
modification to or supplement of the schedules to the BSI Acquisition Agreement.
(ii) To the knowledge of WFN, (A) the representations and warranties
of the parties contained in the Stock Purchase Agreement, dated as of October
24, 1995 (the "WFN Acquisition Agreement"), among Limited Commerce Corp., a
Delaware corporation ("Limited"), WFN and Welsh, Carson, Xxxxxxxx & Xxxxx VII,
L.P., a Delaware limited partnership ("WCAS VII"), are true and correct in all
material respects as if made at and as of the date hereof, except to the extent
any such representation or warranty was expressly made as of a specified date,
in which case, to the knowledge of WFN, such representation or warranty was true
and correct in all material respects as of such date, and (B) the schedules to
the WFN Acquisition Agreement were complete and accurate in all material
respects as of the date of the WFN Acquisition Agreement and, except as set
forth in the Schedules to this Agreement, since the closing under the WFN
Acquisition Agreement nothing has come to the attention of WFN that would
require any modification to or supplement of the schedules to the WFN
Acquisition Agreement.
(i) LITIGATION. Schedule 3.01(i) hereto, in Part I thereof in the case
of BSI and in Part II thereof in the case of WFN, sets forth, to such Merger
Party's knowledge, a complete list and an accurate description of all actions,
suits or proceedings involving claims relating to the business of such Merger
Party or any of its subsidiaries by or against such Merger Party or any of its
subsidiaries pending or threatened against such Merger Party or any of its
subsidiaries or any of their respective divisions or other operating entities at
law or in equity, or before or by any federal, state, municipal or other
governmental department, commission, board, bureau, agency or instrumentality.
Except for the matters set forth in said Schedule 3.01(i), (i) no such pending
or threatened claims, actions, suits, proceedings or investigations, if
adversely determined,
11
would, individually or in the aggregate, materially adversely affect the
business, properties or financial condition or prospects of such Merger Party
and its subsidiaries, taken as a whole, (ii) to such Merger Party's knowledge,
there is no basis for any other such claim, action, suit, proceeding or
investigation which, if adversely decided, would have such a material adverse
effect, and (iii) there are no actions, suits, proceedings or claims pending
before or by any court, arbitrator or government agency against or affecting
such Merger Party or any of its subsidiaries that seek to enjoin or prevent the
consummation of the transactions contemplated by this Agreement.
(j) LABOR CONTROVERSIES. Neither such Merger Party nor any of its
subsidiaries is a party to any collective bargaining agreement, and no such
agreement is applicable to any employees of such Merger Party. There are not any
controversies between such Merger Party or any of its subsidiaries and any of
such employees that might reasonably be expected to materially adversely affect
the conduct of the business of such Merger Party or any of its subsidiaries, or
any unresolved labor union grievances or unfair labor practice or labor
arbitration proceedings pending, or to the knowledge of such Merger Party,
threatened relating to the business of such Merger Party or any of its
subsidiaries. To the knowledge of such Merger Party, there are not any
organizational efforts presently being made or threatened involving any of such
employees. Except as set forth in Schedule 3.01(j), in Part I thereof in the
case of BSI and in Part II thereof in the case of WFN, neither such Merger Party
nor any of its subsidiaries has received written notice of any claim that such
Merger Party or any of its subsidiaries has not complied with any laws relating
to the employment of labor, including any provisions thereof relating to wages,
hours, collective bargaining, the payment of social security and similar taxes,
equal employment opportunity, employment discrimination and employment safety,
or that either such Merger Party or any of its subsidiaries is liable for any
arrears of wages or any taxes or penalties for failure to comply with any of the
foregoing.
(k) COMPLIANCE WITH LAW. To the knowledge of such Merger Party,
neither such Merger Party nor any of its subsidiaries is in default of any order
of any court, governmental authority or arbitration board or tribunal to which
such Merger Party or any of its subsidiaries is a party or is subject, and, to
the knowledge of such Merger Party, each of such Merger Party and its
subsidiaries is in substantial compliance with all material laws, ordinances,
governmental rules or regulations to which it is subject and has all material
licenses, registrations, qualifications, permits, franchises or other
governmental authorizations necessary to its ownership of its assets or to
conduct its business.
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(l) GOVERNMENTAL APPROVALS. Except as set forth in Schedule 3.01(1)
hereto, in Part I thereof in the case of BSI and in Part 11 thereof in the case
of WFN, no approval, authorization, consent or order or action of or filing with
any court, administrative agency or other governmental authority is required for
the execution and delivery by such Merger Party of this Agreement or the
consummation by such Merger Party of the transactions contemplated hereby.
(m) EMPLOYEE BENEFIT PLANS. Except as set forth in Schedule 3.01(m),
in Part I thereof in the case of BSI and in Part II thereof in the case of WFN,
to the knowledge of such Merger Party, such Merger Party and each of its
subsidiaries have been and currently are in compliance, both as to form and
operation, with the applicable provisions of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), and the Internal Revenue Code of
1986, as amended (the "Code"), respectively, with respect to each employee
benefit plan within the meaning of Section 3(3) of ERISA (a "Plan") maintained
for the benefit of employees by such Merger Party or any of its subsidiaries or
to which such Merger Party or any of its subsidiaries contributes or is required
to contribute or in which any employee of such Merger Party or any of its
subsidiaries participates. To the knowledge of such Merger Party, no event has
occurred, and there exists no condition or set of circumstances which has
resulted in, or which could result in, the imposition of any liability on such
Merger Party or any of its subsidiaries under ERISA, the Code or other
applicable law with respect to any Plan maintained for the benefit of employees
of such Merger Party or any of its subsidiaries.
(n) BROKER'S OR FINDERS' FEES. All negotiations relative to this
Agreement and the transactions contemplated hereby have been carried out by such
Merger Party directly with the other party hereto, without the intervention of
any person on behalf of such Merger Party in such manner as to give rise to any
claim by any person against the other parties hereto for a finder's fee,
brokerage commission or similar payment.
ARTICLE IV
COVENANTS
SECTION 4.01 CERTAIN COVENANTS. During the period from the date of
this Agreement to the Effective Time, each Merger Party will conduct its
business and operations in the ordinary course consistent with past practice and
use its reasonable efforts to preserve its relationships with business partners,
suppliers, employees and customers. Without limiting the generality of the
foregoing, except as otherwise contemplated by
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this Agreement, from the date of this Agreement until the Effective Time,
without the prior written consent of the other party hereto, each Merger Party
will not do any of the things required to be disclosed in Section 3.01(g) above.
SECTION 4.02 ACCESS TO INFORMATION. Between the date hereof and the
Effective Time, each Merger Party will afford to the representatives of the
other party hereto reasonable access during normal business hours and after
reasonable notice to the offices, facilities, books and records of such Merger
Party and the opportunity to discuss the affairs of such Merger Party with
officers and employees of such Merger Party familiar therewith. Such activities
shall be performed, so far as is reasonably possible, in such a manner as to
avoid disruption of normal operations.
SECTION 4.03 OTHER AGREEMENTS. Subject to the terms and conditions
herein provided, each of the parties hereto agrees to use all reasonable efforts
to take, or cause to be taken, all action and to do, or cause to be done, all
things necessary, proper or advisable to consummate and make effective as
promptly as practicable the transactions contemplated by this Agreement,
including, without limitation, using all reasonable efforts to obtain all
necessary waivers, consents and approvals and to effect all necessary
registrations and filings and submissions of information requested by
governmental authorities.
SECTION 4.04 NOTIFICATION OF CERTAIN MATTERS. Each party shall give
prompt notice to the other party hereto of (i) the occurrence, or failure to
occur, of any event which such party believes would be likely to cause any of
its representations or warranties contained in this Agreement to be untrue or
inaccurate at any time from the date hereof to the Effective Time and (ii) any
failure of such party, or of any officer, director, employee or agent thereof,
to comply with or satisfy any covenant, condition or agreement to be complied
with or satisfied by it hereunder; PROVIDED, HOWEVER, that failure to give such
notice shall not constitute a waiver of any defense that may be validly
asserted.
SECTION 4.05 INDEMNIFICATION. From and after the Effective Time, WFN
shall indemnify and hold harmless each current and former director and officer
of BSI against any costs or expenses (including reasonable attorneys' fees),
judgments, fines, losses, claims, damages or liabilities incurred in connection
with any claim, action, suit, proceeding or investigation, whether civil,
criminal, administrative or investigative, arising out of matters existing or
occurring at or prior to the Effective Time, whether asserted or claimed prior
to, at or after the Effective Time, to the fullest extent that BSI would have
been permitted under its Certificate of
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Incorporation and By-Laws as in effect on the date hereof to indemnify such
person (and WFN shall advance expenses as incurred to the fullest extent
permitted under BSI's Certificate of Incorporation and By-Laws as in effect on
the date hereof, provided the person to whom expenses are advanced provides an
undertaking to repay such advances if it is ultimately determined that such
person is not entitled to indemnification)
ARTICLE V
CONDITIONS PRECEDENT TO THE MERGER
SECTION 5.01 CONDITIONS PRECEDENT TO THE MERGER. The obligation of
each Merger Party to effect the Merger is subject, at its option, to the
satisfaction at or prior to the Effective Time of each of the following
conditions:
(a) ACCURACY OF REPRESENTATIONS AND WARRANTIES. The representations
and warranties of the other Merger Party contained in this Agreement or in any
certificate or document delivered pursuant hereto shall be true and correct in
all material respects on and as of the Effective Time as though made at and as
of that date.
(b) COMPLIANCE WITH COVENANTS. The other Merger Party shall have
performed and complied with all terms, agreements, covenants and conditions of
this Agreement to be performed or complied with by it at or prior to the
Effective Time.
(c) ALL PROCEEDINGS TO BE SATISFACTORY. All proceedings to be taken by
the other Merger Party in connection with the transactions contemplated hereby
and all documents incident there to shall be reasonably" satisfactory in form
and substance to such Merger Party and its counsel, and such Merger Party and
said counsel shall have received all such counterpart originals or certified or
other copies of such documents as it or they may reasonably request.
(d) LEGAL ACTIONS OR PROCEEDINGS. No legal action or proceeding shall
have been instituted or threatened seeking to restrain, prohibit, invalidate or
otherwise affect the consummation of the transactions contemplated hereby or
which would, if adversely decided, have a material adverse effect on the
business, properties or financial condition or prospects of either Merger Party.
(e) CONSENTS. The consents and actions set forth in Schedule 5.01(e)
hereto shall have been obtained or consummated, as the case may be.
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(f) AMENDED AND RESTATED STOCKHOLDERS AGREEMENT. The stockholders of
BSI and WFN shall have executed and delivered an Amended and Restated
Stockholders Agreement, substantially in the form of Exhibit A hereto, amending
and restating the Stockholders Agreement dated as of January 31, 1996 among WFN,
Limited, WCAS VII and the several investors named in Annex I thereto.
(g) SECURITIES PURCHASE AGREEMENT. The Company, Limited and the other
parties thereto shall have executed and delivered the Securities Purchase
Agreement substantially in the form of Exhibit B hereto.
(h) SUPPORTING DOCUMENTS. On or prior to the Effective Time, each
Merger Party and its counsel shall have received copies of the following
supporting documents:
(i) (1) copies of the Certificate of Incorporation of the other Merger
Party and all amendments thereto, certified as of a recent date by the
Secretary of State of the State of Delaware, and (2) a certificate of said
Secretary dated as of a recent date as to the due incorporation and good
standing of the other Merger Party and listing all documents on file with
said Secretary, and (3) confirmation from said Secretary as of the close of
business on the next business day preceding the Effective Time as to the
continued good standing of the other Merger Party and to the effect that no
amendment to its Certificate of Incorporation has been filed since the date
of the certificate referred to in clause (2) above; and
(ii) a certificate of the Secretary or an Assistant Secretary of the
other Merger Party dated the Effective Time and certifying: (1) that
attached thereto is a true and complete copy of its By-laws as in effect on
the date of such certification; (2) that attached thereto is a true and
complete copy of the resolutions adopted by its Board of Directors and
stockholders authorizing the execution, delivery and performance of this
Agreement and the Merger and that all such resolutions are still in full
force and effect and are all the resolutions adopted in connection with the
transactions contemplated by this Agreement; (3) that its Certificate of
Incorporation has not been amended since the date of the last amendment
referred to in the certificate delivered pursuant to clause (i) (2) above;
and (4) as to the incumbency and specimen signature of each of its officers
executing this Agreement and any certificate or instrument furnished
pursuant hereto, and a certification by another officer as to the
incumbency and signature of the officer signing the certificate referred to
in this paragraph (ii).
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All such documents shall be satisfactory in form and substance to such
Merger Party and its counsel.
ARTICLE VI
TERMINATION AND ABANDONMENT
SECTION 6.01 TERMINATION AND ABANDONMENT. This Agreement may be
terminated and the Merger may be abandoned at any time prior to the Effective
Time:
(a) by mutual action of the Boards of Directors of BSI and WFN; or
(b) by either BSI or WFN, if the conditions set forth in Section 5.01
shall not have been complied with or performed in any material respect by the
other Merger Party and such noncompliance or nonperformance shall not have been
cured or eliminated (or by its nature cannot be cured or eliminated) on or
before October 31, 1996.
SECTION 6.02 EFFECT OF TERMINATION. In the event of the termination of
this Agreement and the abandonment of the Merger pursuant to Section 6.01, this
Agreement shall thereafter become void and have no effect, and no party hereto
shall have any liability to the other party hereto or its stockholders or
directors or officers in respect thereof, and each party shall be responsible
for its own expenses, except that nothing herein shall relieve either party from
liability for any willful breach hereof.
ARTICLE VII
MISCELLANEOUS
SECTION 7.01 EXPENSES, ETC. Whether or not the transactions
contemplated by this Agreement are consummated, neither of the parties hereto
shall have any obligation to pay any of the fees and expenses of the other party
incident to the negotiation, preparation and execution of this Agreement,
including the fees and expenses of counsel, accountants, investment bankers and
other experts. BSI, on the one hand, and WFN, on the other hand, shall indemnify
the other and hold it harmless from and against any claims for finders' fees or
brokerage commissions in relation to or in connection with such transactions as
a result of any agreement or understanding between such indemnifying party and
any third party.
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SECTION 7.02 PUBLICITY. The parties hereto agree to cooperate in
issuing any press release or other public announcement concerning this Agreement
or the transactions contemplated hereby. Each party shall furnish to the other
drafts of all such press releases or announcements prior to their release.
Nothing contained herein shall prevent either party from at any time furnishing
any information required by any government authority.
SECTION 7.03 EXECUTION IN COUNTERPARTS. For the convenience of the
parties, this Agreement may be executed in one or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
SECTION 7.04 NOTICES. All notices that are required or may be given
pursuant to the terms of this Agreement shall be in writing and shall be
sufficient in all respects if given in writing and delivered or mailed by
registered or certified mail, postage prepaid, as follows:
If to WFN to:
World Financial Network Holding Corporation
0000 Xxxx Xxxxx Xxxxxx
Xxxxxxxx, Xxxx 00000
Attention: General Counsel
If to BSI to:
Business Services Holdings, Inc.
0000 Xxxxxx Xxxxxx Xxxx
Xxxxxx, Xxxxx 00000
or such other address or addresses as either party hereto shall have designated
by notice in writing to the other party hereto.
SECTION 7.05 WAIVERS. Either party hereto may, by written notice to
the other party hereto, (i) extend the time for the performance of any of the
obligations or other actions of the other party under this Agreement; (ii) waive
any inaccuracies in the representations or warranties of the other party
contained in this Agreement or in any document delivered pursuant to this
Agreement; (iii) waive compliance with any of the conditions or covenants of the
other contained in this Agreement; or (iv) waive performance of any of the
obligations of the other under this Agreement. Except as provided in the
preceding sentence, no action taken pursuant to this Agreement, including
without limitation any investigation by or on behalf of either party, shall be
deemed to constitute a waiver by the party taking such action of compliance with
any representations, warranties, covenants or agreements contained in this
Agreement. The waiver
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by either party hereto of a breach of any provision of this Agreement shall not
operate or be construed as a waiver of any subsequent breach.
SECTION 7.06 AMENDMENTS, SUPPLEMENTS, ETC. At any time this Agreement
may be amended or supplemented by such additional agreements, articles or
certificates, as may be determined by the parties hereto to be necessary,
desirable or expedient to further the purposes of this Agreement, or to clarify
the intention of the parties hereto, or to add to or modify the covenants, terms
or conditions hereof or to effect or facilitate any governmental approval or
acceptance of this Agreement or to effect or facilitate the filing or recording
of this Agreement or the consummation of any of the transactions contemplated
hereby. Any such instrument must be in writing and signed by both parties.
SECTION 7.07 ENTIRE AGREEMENT. This Agreement, its Exhibits and
Schedules, and the documents executed at the Effective Time in connection
herewith, constitute the entire agreement between the parties hereto with
respect to the subject matter hereof and supersede all prior agreements and
understandings, oral and written, between the parties hereto with respect to the
subject matter hereof. No representation, warranty, promise, inducement or
statement of intention has been made by either party that is not embodied in
this Agreement or such other documents, and neither party shall be bound by, or
be liable for, any alleged representation, warranty, promise, inducement or
statement of intention not embodied herein or therein. The representations and
warranties contained in this Agreement shall not survive after the Effective
Time.
SECTION 7.08 APPLICABLE LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware.
SECTION 7.09 BINDING EFFECT, BENEFITS. This Agreement shall inure to
the benefit of and be binding upon the parties hereto and their respective
successors and assigns. Notwithstanding anything contained in this Agreement to
the contrary, nothing in this Agreement, expressed or implied, is intended to
confer on any person other than the parties hereto or their respective
successors and assigns, any rights, remedies, obligations or liabilities under
or by reason of this Agreement.
SECTION 7.10 ASSIGNABILITY. Neither this Agreement nor any of the
parties' rights hereunder shall be assignable by either party hereto without
the prior written consent of the other party hereto.
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SECTION 7.11 VARIATION AND AMENDMENT. This Agreement may be varied or
amended at any time by action of the respective Boards of Directors of BSI or
WFN, without action by the stockholders thereof, PROVIDED that no such variance
or amendment shall, without consent of such stockholders, modify the
consideration that the holders of shares of BSI Common Stock and BSI Preferred
Stock shall be entitled to receive upon the Effective Time pursuant to Section
2.01 hereof and PROVIDED FURTHER that no such amendment or variation shall be
agreed to by WFN unless any approvals required under the WFN Stockholders
Agreement have theretofore been obtained.
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IN WITNESS WHEREOF, the parties have executed and delivered this
Agreement as of the day and year first above written.
WORLD FINANCIAL NETWORK HOLDING
CORPORATION
By /s/ Xxxxx X. Xxxxxxx
------------------------------
ATTEST:
/s/ Illegible
----------------------------------
BUSINESS SERVICES HOLDINGS, INC.
By /s/ Xxxxxxx X. xxXxxxxx
------------------------------
ATTEST:
/s/ Xxxxxx X. Xxxxxxxxx
----------------------------------
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