Exhibit 10.10
================================================================================
AGREEMENT AND PLAN OF MERGER AND REORGANIZATION
Among
CRW FINANCIAL, INC.
TELESPECTRUM WORLDWIDE INC.,
and
AND CRW ACQUISITION CORP.
Dated as of September 3, 1998
================================================================================
TABLE OF CONTENTS
Page No.
--------
W I T N E S S E T H...................................................................................1
ARTICLE I
THE MERGER............................................................................................1
SECTION 1.1. The Merger.......................................................................1
SECTION 1.2. Stockholder Meeting, Closing, Effective Time of the Merger.......................2
SECTION 1.3. Conversion and Cancellation of Securities........................................2
SECTION 1.4. Exchange of Certificates.........................................................3
SECTION 1.5. Options and Warrants.............................................................5
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE COMPANY.........................................................6
SECTION 2.1. Organization, Powers and Qualifications..........................................6
SECTION 2.2. Subsidiaries.....................................................................6
SECTION 2.3. Capital Stock....................................................................7
SECTION 2.4. Certificate of Incorporation, By-Laws and Minute Books...........................8
SECTION 2.5. Authority; Binding Effect........................................................8
SECTION 2.6. Conflict with Other Agreements; Approvals........................................8
SECTION 2.7. Governmental Consents and Approvals..............................................8
SECTION 2.8. SEC Reports......................................................................9
SECTION 2.9. Financial Statements.............................................................9
SECTION 2.10. Absence of Certain Changes......................................................10
SECTION 2.11. Indebtedness; Absence of Undisclosed Liabilities................................10
SECTION 2.12. Assets..........................................................................10
SECTION 2.13. Contracts.......................................................................11
SECTION 2.14. Insurance.......................................................................11
SECTION 2.15. Authorizations; Compliance With Law.............................................11
SECTION 2.16. Taxes...........................................................................11
SECTION 2.17. Absence of Litigation; Claims...................................................12
SECTION 2.18. Employee Benefit Plans; Employment Agreements...................................12
SECTION 2.19. Labor Matters...................................................................14
SECTION 2.20. Intellectual Property...........................................................14
SECTION 2.21. Adequacy of Disclosure..........................................................14
SECTION 2.22. Registration Statement; Proxy Statement/Prospectus..............................14
SECTION 2.23. Tax Matters.....................................................................15
SECTION 2.24. Affiliates......................................................................15
SECTION 2.25. Board Action; Vote Required; Applicability of Section 203.......................15
SECTION 2.26. Opinion of Financial Advisor....................................................15
SECTION 2.27. Brokers and Finders.............................................................15
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB..............................................16
SECTION 3.1. Organization and Powers.........................................................16
SECTION 3.2. Authority; Binding Effect.......................................................16
i
SECTION 3.3. Conflict with Other Agreements; Approvals.......................................16
SECTION 3.4. Governmental Consents and Approvals.............................................16
SECTION 3.5. Capital Stock...................................................................17
SECTION 3.6. Registration Statement; Proxy Statement/Prospectus..............................17
SECTION 3.7. SEC Reports.....................................................................17
SECTION 3.8. Financial Statements............................................................18
SECTION 3.9. Absence of Certain Changes......................................................18
SECTION 3.10. Absence of Litigation; Claims...................................................18
SECTION 3.11. Tax Matters.....................................................................18
SECTION 3.12. Affiliates......................................................................19
SECTION 3.13. Adequacy of Disclosure..........................................................19
SECTION 3.14. Brokers and Finders.............................................................19
ARTICLE IV
OTHER AGREEMENTS.....................................................................................19
SECTION 4.1. Conduct of the Company's Business...............................................19
SECTION 4.2. Parent's Undertakings...........................................................21
SECTION 4.3. Access to Information...........................................................21
SECTION 4.4. Stockholder Vote; Proxy Statement...............................................21
SECTION 4.5. Reasonable Best Efforts.........................................................23
SECTION 4.6. Public Announcements............................................................23
SECTION 4.7. Notification....................................................................23
SECTION 4.8. Subsequent Financial Statements.................................................23
SECTION 4.9. Control of Operations...........................................................24
SECTION 4.10. Regulatory and Other Authorizations.............................................24
SECTION 4.11. Takeover Statute................................................................24
SECTION 4.12. Indemnification of Directors and Officers.......................................24
SECTION 4.13. Tax-Free Reorganization.........................................................24
SECTION 4.14. No Solicitation.................................................................25
ARTICLE V
CONDITIONS TO CLOSING................................................................................26
SECTION 5.1. Conditions to the Obligations of the Company and Parent and Merger Sub .........26
SECTION 5.2. Conditions to the Obligations of the Company....................................27
SECTION 5.3. Conditions to the Obligations of Parent and Merger Sub..........................27
ARTICLE VI
TERMINATION, AMENDMENT AND WAIVER....................................................................29
SECTION 6.1. Termination.....................................................................30
SECTION 6.2. Effect of Termination...........................................................30
SECTION 6.3. Amendment.......................................................................30
SECTION 6.4. Waiver..........................................................................30
ARTICLE VII
MISCELLANEOUS........................................................................................31
SECTION 7.1. Survival of Representations and Warranties......................................31
ii
SECTION 7.2. Entire Agreement................................................................31
SECTION 7.3. Notices.........................................................................31
SECTION 7.4. Governing Law...................................................................32
SECTION 7.5. Descriptive Headings............................................................32
SECTION 7.6. Parties in Interest.............................................................32
SECTION 7.7. Counterparts; Facsimile Signatures..............................................32
SECTION 7.8. Expenses........................................................................32
SECTION 7.9. Personal Liability..............................................................32
SECTION 7.10. Binding Effect; Assignment......................................................33
SECTION 7.11. Severability....................................................................33
iii
AGREEMENT AND PLAN OF MERGER AND REORGANIZATION
This Agreement and Plan of Merger and Reorganization (this "Agreement"),
dated as of September 3, 1998, is made by and among CRW FINANCIAL, INC., a
Delaware corporation (the "Company"), TELESPECTRUM WORLDWIDE INC., a Delaware
corporation ("Parent"), and CRW ACQUISITION CORP., a Delaware corporation and
wholly-owned subsidiary of Parent ("Merger Sub").
W I T N E S S E T H
WHEREAS, the respective Boards of Directors of Parent, Merger Sub and the
Company and the sole stockholder of Merger Sub have each approved the business
combination described herein in which the Company will become a subsidiary of
Parent as a result of a merger of Merger Sub with and into the Company upon the
terms and subject to the conditions hereinafter set forth (the "Merger"),
pursuant to which each outstanding share of common stock, par value $.01 per
share ("Company Common Stock"), of the Company will be converted into the right
to receive shares of common stock, par value $.01 per share ("Parent Common
Stock"), of Parent in the manner set forth herein;
WHEREAS, the Boards of Directors of Parent and the Company have each
determined that the Merger is in the best interest of their respective
stockholders and have each approved this Agreement and the Merger upon the terms
and conditions set forth herein;
WHEREAS, the Board of Directors of Merger Sub has approved and adopted this
Agreement, and Parent, as the sole stockholder of Merger Sub, will adopt this
Agreement promptly after the execution hereof; and
WHEREAS, for federal income tax purposes, it is intended that the Merger
qualify as a reorganization under Section 368(a) of the Internal Revenue Code of
1986, as amended (the "Code");
NOW, THEREFORE, in consideration of the mutual representations, warranties,
covenants, agreements and conditions set forth below, the parties hereto,
intending to be legally bound, hereby agree as follows:
ARTICLE I
THE MERGER
SECTION 1.1. The Merger. Subject to the terms and conditions hereof and in
accordance with the General Corporation Law of the State of Delaware, as amended
(the "DGCL"), at the Effective Time (hereinafter defined): (a) Merger Sub shall
be merged with and into the Company and the separate existence of Merger Sub
shall cease; (b) the Company, as the surviving corporation in the Merger (the
"Surviving Corporation"), (i) shall be a wholly-owned subsidiary of Parent, (ii)
shall continue its corporate existence under the laws of the State of Delaware,
(iii) shall retain its present name and (iv) shall succeed to all rights,
assets, liabilities and obligations of Merger Sub and the Company in accordance
with the DGCL; (c) the Certificate of Incorporation of the Company, as in effect
immediately prior to the Effective Time, shall continue as the Certificate of
Incorporation of the Surviving Corporation; (d) the By-laws of the Merger Sub,
as in effect immediately prior to the Effective Time,
-1-
shall continue as the By-laws of the Surviving Corporation; (e) the directors of
Merger Sub immediately prior to the Effective Time shall be the directors of the
Surviving Corporation; and (f) the officers of the Merger Sub immediately prior
to the Effective Time shall continue as the officers of the Surviving
Corporation. From and after the Effective Time, the Merger will have all the
effects provided by the DGCL.
SECTION 1.2. Stockholder Meeting, Closing, Effective Time of the Merger.
The Company shall submit this Agreement to the holders of Company Common Stock
for approval and adoption at the Stockholders Meeting (hereinafter defined) to
be held as soon as practicable following the date of this Agreement in
accordance with Section 4.4 hereof. Subject to this Agreement receiving such
stockholder approval, and subject to the other provisions of this Agreement, the
parties shall hold a closing (the "Closing") on the next business day (or such
later date as the parties hereto may agree) following the day on which the last
of the conditions set forth in Article V hereof is fulfilled or waived (such
later date, the "Closing Date"), at 9:00 A.M. at the offices of Xxxxxx, Xxxxx &
Xxxxxxx LLP, One Xxxxx Square, Philadelphia, Pennsylvania, or at such other time
or place as the parties agree upon. On the next business day after the Closing
Date, the parties hereto shall cause the Merger to be consummated by filing a
certificate of merger (the "Certificate of Merger") with the Secretary of State
of the State of Delaware in such form as required by, and executed in accordance
with the relevant provisions of, the DGCL (the date and time of such filing, or
such later date or time agreed upon by Parent and the Company and set forth
therein, the "Effective Time.")
SECTION 1.3. Conversion and Cancellation of Securities.
(a) At the Effective Time, each share of Company Common Stock issued and
outstanding immediately prior to the Effective Time (other than any Appraisal
Shares (as defined in Section 1.3(d) hereof) and shares of Company Common Stock
described in Section 1.3(b) hereof) shall, by virtue of the Merger and without
any action on the part of the holder thereof, be converted into the right to
receive .709 (the "Exchange Ratio") of a share of Parent Common Stock (the
"Merger Consideration"); provided that no fractional shares of Parent Common
Stock shall be issued and, in lieu thereof, a cash payment shall be made
pursuant to Section 1.4(i) hereof. For purposes hereof, Fully- Diluted Common
Stock means the number of outstanding shares of Company Common Stock as of the
Effective Time (other than those shares of Company Common Stock beneficially
owned by the Parent or any of its Subsidiaries (as defined in Section 2.2
hereof)), plus the number of shares of Common Stock obtainable upon the exercise
of all outstanding options and warrants exercisable for Company Common Stock.
(b) At the Effective Time, each share of Company Common Stock
(i) beneficially owned by the Parent (or one of its Subsidiaries) immediately
prior to the Effective Time, or (ii) held in the treasury of the Company
immediately prior to the Effective Time, shall by virtue of the Merger and
without any action on the part of the holder thereof, be automatically canceled
and retired and cease to exist, and no cash, securities or other property shall
be payable in respect thereof.
(c) At the Effective Time, each share of Merger Sub common stock,
without par value ("Merger Sub Common Stock"), issued and outstanding
immediately prior to the Effective Time shall, by virtue of the Merger and
without any action by the holder thereof, be converted into one validly issued,
fully paid and nonassessable common share, par value $.01 per share, of the
Surviving Corporation ("Surviving Corporation Common Stock").
-2-
(d) Notwithstanding anything in this Agreement to the contrary, shares
of Company Common Stock held by a holder who, pursuant to Section 262 of the
DGCL or any successor provision, has the right to demand and properly demands
an appraisal of such shares of Company Common Stock ("Appraisal Shares"),
shall not be converted into the right to receive the Merger Consideration,
unless such holder fails to perfect or otherwise loses such holder's right to
such appraisal, if any. If, after the Effective Time, such holder fails to
perfect or loses any such right to appraisal, each such share of Company
Common Stock held by such holder shall be treated as a share of Company
Common Stock that had been converted as of the Effective Time into the right
to receive the Merger Consideration. At the Effective Time, any holder of
Appraisal Shares shall cease to have any rights with respect thereto, except
the rights provided in Section 262 of the DGCL or any successor provision and
as provided in the immediately preceding sentence. The Company shall give
prompt notice to the Parent of any demands received by the Company for
appraisal of shares of Company Common Stock.
(e) If between the date of this Agreement and the Effective Time, the
number of shares of Fully-Diluted Common Stock or the outstanding shares of
Parent Common Stock shall be changed into a different number of shares by
reason of any reclassification, recapitalization, split-up, combination or
exchange of shares, or any dividend payable in stock shall be declared
thereon with a record date within such period, the Exchange Ratio shall be
adjusted accordingly to provide to the holders of Fully-Diluted Common Stock
and accord the Parent and the Merger Sub with the same economic effect as
contemplated by this Agreement.
Section 1.4. Exchange of Certificates.
(a) Prior to the Closing Date, the Parent shall select a bank or trust
company reasonably acceptable to the Company to act as exchange and paying
agent (the "Exchange Agent") in connection with the surrender of certificates
evidencing shares of Company Common Stock converted into Merger Consideration
pursuant to the Merger. At the Effective Time, Parent shall deposit with the
Exchange Agent one or more certificates representing the shares of Parent
Common Stock to be issued in the Merger (the "Merger Stock"), which shares of
Merger Stock shall be deemed to be issued at the Effective Time. Promptly
after the Effective Time, Parent shall deliver to the Exchange Agent such
cash as may be required from time to time to make payment of cash in lieu of
fractional shares in accordance with Section 1.4(i) and 1.5 hereof.
(b) As soon as practicable after the Effective Time, but in no event
later than five days after the Effective Time, Parent shall direct the
Exchange Agent to mail to each person who was, at the Effective Time, a
holder of record of a certificate or certificates that immediately prior to
the Effective Time evidenced outstanding shares of Company Common Stock (the
"Certificates") (i) a letter of transmittal (with instructions for its use)
specifying 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, which shall be in a form and contain any other provisions as
Parent and the Surviving Corporation may reasonably agree and (ii)
instructions for use in effecting the surrender of the Certificates in
exchange for the Merger Consideration. Upon the proper surrender of
Certificates to the Exchange Agent, together with a properly completed and
duly executed letter of transmittal and such other documents as may be
required by the Exchange Agent, the holder of such Certificate shall be
entitled to receive in exchange therefor, and the Surviving Corporation shall
cause to be issued and paid, certificates representing the shares of Merger
Stock that such holder has the right to receive pursuant to the terms hereof
(together with any dividend or distribution with respect thereto made after
the Effective Time and any cash paid in
-3-
lieu of fractional shares pursuant to Section 1.4(i)), and the Certificate so
surrendered shall be canceled. If any portion of the Merger Consideration is to
be paid to a person other than the person who is the record holder of the
Company Common Stock at the Effective Time, it shall be a condition to such
payment that the certificate evidencing the Company Common Stock so surrendered
shall be properly endorsed or otherwise be in proper form for transfer and that
it be accompanied by all documents required to evidence and effect such transfer
and by evidence reasonably satisfactory to the Surviving Corporation and Parent
that any applicable stock transfer tax has been paid.
(c) After the Effective Time, each outstanding Certificate which
theretofore represented shares of Company Common Stock shall, until
surrendered for exchange in accordance with this Section 1.4, be deemed for
all purposes to evidence ownership of full shares of Parent Common Stock into
which the shares of Company Common Stock (which, prior to the Effective Time,
were represented thereby) shall have been so converted.
(d) Except as otherwise expressly provided herein, the Parent shall pay
all charges and expenses, including those of the Exchange Agent, in
connection with the exchange of Certificates for shares of Merger Stock. Any
Merger Stock or other cash delivered to the Exchange Agent pursuant to
Section 1.4(a) hereof, and not exchanged pursuant to Section 1.4(b) hereof
for Company Common Stock or fractional interests pursuant to Section 1.4(i)
hereof within 180 days after the Effective Time shall be returned by the
Exchange Agent to the Surviving Corporation which shall thereafter act as
exchange agent subject to the rights of holders of Company Common Stock
hereunder.
(e) At the Effective Time, the stock transfer books of the Company shall
be closed and no transfer of shares of Company Common Stock shall thereafter
be made.
(f) None of Parent, Merger Sub, the Company, the Surviving Corporation
or the Exchange Agent will be liable to any holder of shares of Company
Common Stock for any shares of Merger Stock, dividends or distributions with
respect thereto or cash payable in lieu of fractional shares pursuant to
Section 1.4(i) hereof delivered to a state abandoned property administrator
or other public official pursuant to any applicable abandoned property,
escheat or similar law.
(g) If any Certificates shall have been lost, stolen or destroyed, upon
the making of an affidavit of that fact by the person claiming such
Certificates to be lost, stolen or destroyed, the Exchange Agent will deliver
in exchange for such lost, stolen or destroyed Certificates the Merger
Consideration for the shares represented thereby, deliverable in respect
thereof, as determined in accordance with the terms hereof. When authorizing
such payment in exchange for any lost, stolen or destroyed Certificates, the
person to whom the Merger Consideration is to be issued, as a condition
precedent to such delivery, shall give Parent a bond or indemnity reasonably
satisfactory to Parent, its transfer agent and their respective insurance
carriers against any claim that may be made against Parent with respect to
the Certificates alleged to have been lost, stolen or destroyed.
(h) No dividend or other distribution declared or made after the
Effective Time with respect to the Merger 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 Merger Stock issuable upon surrender thereof
until the holder of such Certificate shall surrender such Certificate in
accordance with Section 1.4(b). Subject to the effect of applicable law,
following surrender of any such Certificate there shall be paid, without
interest, to the record holder of certificates representing whole shares of
Merger Stock issued in
-4-
exchange therefor: (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 Merger Stock; 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 surrender of such Certificate and a
payment date subsequent to such surrender payable with respect to such whole
shares of Merger Stock. No holder of Company Common Stock shall be entitled to
any interest on any cash amounts payable for fractional interests pursuant to
this Section 1.4(h).
(i) No certificates or scrip evidencing fractional shares of Merger
Stock shall be issued upon the surrender for exchange of Certificates, and
such fractional share interests shall not entitle the owner thereof to any
rights of a stockholder of Parent. In lieu of any such fractional shares,
each holder of a Certificate previously evidencing Company Common Stock, upon
surrender of such Certificate for exchange pursuant to this Article I, shall
be paid an amount in cash (without interest), rounded to the nearest cent,
determined by multiplying (a) the closing price for a share of Parent Common
Stock on the Nasdaq National Market on the first business day immediately
following the Effective Time, by (b) the fractional interest to which such
holder would otherwise be entitled (after taking into account all shares of
Company Common Stock held of record by such holder at the Effective Time).
Section 1.5. Options and Warrants.
(a) At the Effective Time, each option and warrant granted or issued by
the Company and exercisable for shares of Company Common Stock, which is
outstanding and unexercised or unconverted immediately prior thereto, shall
be assumed by Parent pursuant to a writing to be executed at the Closing in
form and substance reasonably acceptable to the Company, and, subject to the
following provisions, shall be converted into an option or warrant to
purchase shares of Parent Common Stock. Each such option or warrant shall be
converted into an option or warrant to purchase such number of shares of
Parent Common Stock at such exercise price as is determined as provided below
(and otherwise having the same duration and other terms as the original
option or warrant):
(i) the number of shares of Parent Common Stock to be subject to the
new option or warrant shall be equal to the product of (A) the number of
shares of Company Common Stock subject to the option or warrant immediately
prior to the Effective Time and (B) the Exchange Ratio, the product being
rounded, if necessary, up or down, to the nearest whole share; and
(ii) the exercise or convertible price per share of Parent Common
Stock under the new option or warrant shall be equal to (A) the exercise
price per share of the Company Common Stock under the option or warrant
immediately prior to the Effective Time divided by (B) the Exchange Ratio,
rounded, if necessary, up or down, to the nearest cent.
Notwithstanding the foregoing, those warrants that were issued by the Company
and Parent that are by their terms exercisable for shares of Parent Common Stock
(the "TLSP/CRW Warrants") shall be unaffected as a result of the Merger.
(b) At the Effective Time, the Purchaser shall deliver to holders of
original options and warrants (except for the TLSP/CRW Warrants) appropriate
agreements representing the new options
-5-
and warrants on the terms and conditions set forth in this Section 1.5(b). The
Parent shall take all corporate action necessary to reserve for issuance a
sufficient number of shares of Parent Common Stock for delivery upon exercise of
the new options and warrants in accordance with this Section 1.5(b). The Parent
shall file (i) a registration statement on Form S-8 (or any successor form) or
another appropriate form, effective promptly after the Effective Time, with
respect to shares of Parent Common Stock subject to the new options (but not any
such new warrants) and (ii) a registration statement on Form S-3 (or any
successor form) or another appropriate form (such registration statement, the
"Parent Form S-3"), effective promptly after the Effective Time, with respect to
shares of Parent Common Stock subject to the new warrants (but only with respect
to such shares of Parent Common Stock associated with shares of Company Common
Stock that had been registered by the Company on a registration statement on
Form S-3 (the "Company Form S-3"))). The Company, from time to time, shall also
prepare such resale prospectuses for inclusion in the Parent Form S-3 on the
same basis as contemplated by the Company Form S-3. The Company shall use all
reasonable efforts to maintain the effectiveness of (i) such Form S-8
registration statement for so along as such options remain outstanding and (ii)
the Parent Form S-3 for such period covered by the existing Company Form S-3. In
addition, with respect to those individuals who subsequent to the Merger will be
subject to the reporting requirements under Section 16(a) of the Securities
Exchange Act of 1934, as amended, and the rules and regulations thereunder (the
"Exchange Act"), the Parent shall administer any option plans assumed pursuant
to this Section 1.5(b) in a manner that complies with Rule 16b-3 promulgated
under the Exchange Act to the extent such option plan complied with such rule
prior to the Merger.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to, and agrees with, Parent and
Merger Sub as follows, except as set forth on a Disclosure Schedule delivered
by the Company concurrently with the execution and delivery of this Agreement
(the "Company Schedule"), each of which exceptions shall specifically
identify the relevant subsection hereof to which it relates and shall be
deemed to be representations and warranties as if made hereunder:
Section 2.1. Organization, Powers and Qualifications. The Company is a
corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware. The Company has all requisite corporate power
and authority to carry on its business as it has been and is now being
conducted and to own, lease and operate the properties and assets used in
connection therewith. The Company is duly qualified as a foreign corporation
authorized to do business and is in good standing in every jurisdiction in
which such qualification is required, all of which jurisdictions are
disclosed in the Company Schedule, except where the failure to be so
qualified would not have a Company Material Adverse Effect. As used in this
Agreement, "Company Material Adverse Effect" shall mean any fact, condition,
event, development or occurrence which, individually or when taken together
with all other such facts, conditions, events, developments or occurrences,
could reasonably be expected to have a material adverse effect on the
financial condition, or operating results of the Company and its Subsidiaries
(hereinafter defined), taken as a whole.
Section 2.2. Subsidiaries. (a) "Subsidiary" means, with respect to any
party, any corporation, limited liability company, partnership, joint
venture, or other business association or entity, at least a majority of the
voting securities or economic interests of which is, directly or indirectly,
owned
-6-
or controlled by such party or by any one or more of its Subsidiaries. As used
in this Agreement, "Joint Venture" means, with respect to any party, any
corporation, limited liability company, partnership, joint venture or other
business association or entity in which (i) such party or any one or more of its
Subsidiaries, directly or indirectly, owns or controls more than five percent
and less than a majority of any class of the outstanding voting securities or
economic interests, or (ii) such party or a Subsidiary of such party is a
general partner.
(b) The Company Schedule lists each Subsidiary and Joint Venture of the
Company, the jurisdiction of its organization and the amount of its securities
outstanding and the owners thereof. Each Subsidiary is duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
organization. Each Subsidiary has all requisite power and authority to carry on
its business as it has been and is now being conducted and to own, lease and
operate the assets and properties used in connection therewith. Each Subsidiary
is duly qualified as a foreign corporation authorized to do business and is in
good standing in every jurisdiction in which such qualification is required, all
of which jurisdictions are disclosed on the Company Schedule, except where the
failure to be so qualified would not have a Company Material Adverse Effect. All
issued and outstanding shares of capital stock of each Subsidiary have been duly
authorized, are validly issued and outstanding, are fully paid and nonassessable
and were issued in compliance with all applicable Federal and state securities
laws and, except as set forth on the Company Schedule, are lawfully owned of
record and beneficially by the Company or another Subsidiary of the Company,
free and clear of all pledges, liens, claims, security interests and other
charges or defects in title of any nature whatsoever ("Liens"). There are no
existing subscriptions, options, warrants, convertible securities, calls,
commitments, agreements, conversion rights or other rights of any character
(contingent or otherwise) calling for or requiring the issuance, transfer, sale
or other disposition of any shares of the capital stock of any Subsidiary of the
Company, or calling for or requiring the issuance of any securities or rights
convertible into or exchangeable for shares of capital stock of any Subsidiary
of the Company, nor is the Company or any Subsidiary of the Company subject to
any obligation (contingent or otherwise) to repurchase, redeem or otherwise
acquire shares of capital stock of any Subsidiary of the Company, in any case
except as set forth on the Company Schedule. Except for its Subsidiaries and its
Joint Ventures or as set forth in the Company Schedule, neither the Company nor
any Subsidiary of the Company directly or indirectly (i) owns or controls any
shares of any corporation nor has any voting securities of, or economic interest
in, either of record or beneficially in any association, partnership, limited
liability company, joint venture or other legal entity, or (ii) is a general
partner of any partnership.
Section 2.3. Capital Stock. The Company has authorized capital stock
consisting of 20,000,000 shares of Company Common Stock and 500,000 shares of
Preferred Stock, par value $.01 per share ("Company Preferred Stock"). As of the
date hereof: (i) 6,533,209 shares of Company Common Stock are issued and
outstanding, (ii) no shares of Company Preferred Stock were issued and
outstanding, (iii) no shares of Company Common Stock are held as treasury
shares, (iv) 1,205,000 shares of the Company Common Stock are underlying
outstanding stock options granted under the Company stock option or equity
compensation plans (the "Company Stock Plans"), (v) 362,500 shares of the
Company Common Stock are underlying outstanding warrants and (vi) 352,821 shares
of the Company Common Stock are obtainable pursuant to the terms of the
convertible notes. As of the date hereof, the Company owned 6,946,583 shares of
Parent Common Stock and other than the TLSP/CRW Warrants, which as of the date
hereof were exercisable for an aggregate of 678,410 shares of Parent Common
Stock, there are no existing subscriptions, options, warrants, convertible
securities, calls, commitments, agreements, conversion rights or other rights of
any character (contingent or otherwise) calling for or
-7-
requiring the issuance, transfer, sale or other disposition of any shares of
Company Common Stock or Parent Common Stock by the Company. All of the issued
and outstanding shares of Company Common Stock have been duly authorized and are
validly issued and outstanding, fully paid and nonassessable, and were issued in
compliance with all applicable Federal and state securities laws; and all of
such treasury shares were acquired by the Company in compliance with all
applicable laws, including without limitation all applicable Federal and state
securities laws. No shares of capital stock issued by the Company are or were,
at the time of their issuance, issued in violation of preemptive rights. There
are no voting trusts or other agreements or understandings to which the Company
is a party, nor, to the knowledge of the Company, to which any stockholder of
the Company is a party, with respect to the voting of capital stock of the
Company.
Section 2.4. Certificate of Incorporation, By-Laws and Minute Books. The
copies of the Certificate of Incorporation and all amendments thereto and of the
By-laws, as amended, of the Company and the Subsidiaries which have been
delivered to Parent are true, correct and complete copies thereof as in effect
on the date hereof. The minute books of the Company and the Subsidiaries which
have been made available for inspection contain minutes, which are accurate and
complete in all material respects, of all meetings and consents in lieu of
meetings of the Board of Directors (and any committee thereof) and of the
stockholders of the Company and the Subsidiaries since the respective dates of
incorporation.
Section 2.5. Authority; Binding Effect. The Company has all requisite
corporate power and authority to execute and deliver this Agreement and to
consummate the transactions contemplated hereby. All necessary action, corporate
or otherwise, required to have been taken by or on behalf of it by applicable
law, its charter document or otherwise to authorize (i) the approval, execution
and delivery on its behalf of this Agreement and (ii) its performance of its
obligations under this Agreement and the consummation of the transactions
contemplated hereby has been taken, except that this Agreement must be approved
by the holders of a majority of the outstanding Company Common Stock of record
on the record date for the Stockholders Meeting ("Required Company Stockholder
Approval"). This Agreement constitutes the Company's valid and binding
agreement, enforceable against it in accordance with its terms.
Section 2.6. Conflict with Other Agreements; Approvals. The execution and
delivery of this Agreement do not, and the consummation of the transactions
contemplated hereby will not, (i) violate or conflict with the Company's charter
or bylaws or the comparable organizational documents of any of its Subsidiaries,
or (ii) constitute a breach or default (or an event that with notice or lapse of
time or both would become a breach or default) or give rise to any Lien, third
party right of termination, cancellation, material modification or acceleration,
or loss of any benefit, under any Contract (hereinafter defined) to which the
Company or any Subsidiary of the Company is a party or by which it is bound, or
(iii) subject to the consents, approvals, orders, authorizations, filings,
declarations and registrations specified in Section 2.7 or in the Company
Schedule in response thereto, conflict with or result in a violation of any
permit, concession, franchise or license or any law, rule or regulation
applicable to the Company or any of its Subsidiaries or any of their properties
or assets, except, in the case of clauses (ii) and (iii), for any such breaches,
defaults, liens, third party rights, cancellations, modifications, accelerations
or losses of benefits, conflicts or violations which would not have a Company
Material Adverse Effect and do not materially impair the ability of the Company
to perform its obligations under this Agreement or prevent or materially delay
the consummation of any of the transactions contemplated hereby.
-8-
Section 2.7. Governmental Consents and Approvals. Except as set forth on
the Company Schedule, neither the execution and delivery of this Agreement nor
the consummation of the transactions contemplated hereby will require any
consent, approval, order, authorization, or permit of, or filing with or
notification to, any local, state, federal or foreign court, administrative
agency, commission or other governmental or regulatory authority, agency or
instrumentality ("Governmental Entity"), except (a) the filing of the
Registration Statement (hereinafter defined) with the Securities and Exchange
Commission (the "SEC") in accordance with the Securities Act of 1933, as
amended, and the rules and regulations thereunder (the "Securities Act") and the
entry of an order by the SEC permitting such Registration Statement to become
effective, and compliance with applicable state securities laws, (b) the filing
of the Proxy Statement (hereinafter defined) and related proxy materials with
the SEC in accordance with 0the Exchange Act, (c) notification pursuant to, and
expiration or termination of the waiting period under, the Xxxx-Xxxxx-Xxxxxx
Antitrust Improvements Act of 1976, as amended, and the rules and regulations
thereunder (the "HSR Act") and (d) the filing and recording of the Certificate
of Merger in accordance with the DGCL.
Section 2.8. SEC Reports. The Company has filed all required forms, reports
and documents with the SEC since January 1, 1997 (collectively, the "Company's
SEC Reports"), including without limitation the Company's Annual Report on Form
10-K for the year ended December 31, 1997 (the "Company 1997 Form 10-K") and the
Company's Quarterly Report on Form 10-Q for the fiscal quarters ended March 31,
1998 and June 30, 1998 (the "Company Forms 10-Q"). The Company's SEC Reports
have complied in all material respects with all applicable requirements of the
Securities Act and the Exchange Act. As of their respective dates, none of the
Company's SEC Reports, including, without limitation, any financial statements
or schedules included or incorporated by reference therein, contained any untrue
statement of a material fact or omitted to state a material fact required to be
stated or incorporated by reference therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading. There have been filed as exhibits to, or incorporated by
reference in, the Company 1997 Form 10-K and Company Forms 10-Q all contracts
which, as of the date hereof, are material as described in Item 601(b)(10) of
Regulation S-K. The Company has heretofore delivered or made available to
Parent, in the form filed with the SEC, all of the Company's SEC Reports.
Section 2.9. Financial Statements. The (a) consolidated balance sheets of
the Company and its Subsidiaries at December 31, 1997 and 1996 and the related
consolidated statements of earnings, changes in stockholders' equity and
statements of cash flow for the years then ended, together with the notes
thereto, audited by Xxxxxx Xxxxxxxx LLP (the "Company's Auditors"); and (b)
unaudited consolidated balance sheets of the Company and Subsidiaries at June
30, 1998 and related consolidated statements of income, changes in stockholders'
equity and statements of cash flow for the six-month period ended June 30, 1998,
(the "Balance Sheet Date") have been prepared in accordance with generally
accepted accounting principles consistently applied throughout the periods
involved ("GAAP"). Such balance sheets, including the related notes, fairly
present, in all material respects, the consolidated financial position, assets
and liabilities (whether accrued, absolute, contingent or otherwise) of the
Company and its Subsidiaries at the dates indicated and such consolidated
statements of income, changes in stockholders' equity and statements of cash
flow fairly present the consolidated results of operations, changes in
stockholders' equity and cash flow of the Company and its Subsidiaries for the
periods indicated. The unaudited consolidated financial statements as at and for
the six-month period ending June 30, 1998 contain all adjustments, which are
solely of a normal recurring nature, necessary to present fairly, in all
material respects, the financial position at June 30, 1998, and the results of
operations and
-9-
changes in stockholders' equity and financial position for the six-month period
then ended. (The unaudited consolidated balance sheet of the Company and its
Subsidiaries at June 30, 1998 described above is referred to herein as the
"Company Balance Sheet").
Section 2.10. Absence of Certain Changes. Except as described in the
Company Schedule, since December 31, 1997 (the "Company Audit Date"), the
Company and the Subsidiaries have conducted their business solely in the
ordinary course consistent with past practice. Except as otherwise disclosed on
the Company Schedule or as referred to in the Company's SEC Reports, since the
Company Audit Date, the Company and the Subsidiaries have not:
(a) suffered any Company Material Adverse Effect;
(b) been subject to any other events or conditions of any character that
would impair the ability of the Company to perform its obligations under this
Agreement or prevent or delay the consummation of any of the transactions
contemplated hereby;
(c) made any material change to their respective accounting methods,
principles or practices;
(d) incurred any material liabilities, other than liabilities incurred
in the ordinary course of business consistent with past practice, or
discharged or satisfied any Lien material, or paid any material liabilities,
other than in the ordinary course of business consistent with past practices,
or failed to pay or discharge when due any liabilities of which the failure
to pay or discharge has caused or will cause any material damage or risk of
material loss to it or any of its material assets or properties; or
(e) taken or been subject to any other action or event that would have
required the consent of Parent pursuant to Section 4.1 hereof.
Section 2.11. Indebtedness; Absence of Undisclosed Liabilities. The
Company Schedule discloses as of the date hereof all indebtedness for money
borrowed of the Company or any Subsidiary of the Company, accurately
disclosing for each such indebtedness the payee, the original principal
amount of the loan, the current unpaid balance of the loan, the interest rate
and the maturity date. Neither the Company nor any of its Subsidiaries has
any material indebtedness, liability or obligation of any kind (whether known
or unknown, accrued, absolute, asserted or unasserted, contingent or
otherwise) except (i) as and to the extent reflected, reserved against or
otherwise disclosed in the Balance Sheet, or (ii) for liabilities and
obligations incurred subsequent to the Balance Sheet Date in the ordinary
course of business and which do not have a Company Material Adverse Effect or
materially impair the ability of Parent to perform its obligations under this
Agreement or prevent or materially delay the consummation of any of the
transactions contemplated hereby.
Section 2.12. Assets. Except as described in the Company Schedule, the
Company and the Subsidiaries have good and marketable title to all their real
and personal properties and assets, including without limitation those assets
and properties reflected in the Balance Sheet in the amounts and categories
reflected therein, free and clear of all Liens, except (a) the lien of
current taxes not yet due and payable, (b) properties, interests, and assets
disposed of by the Company or any Subsidiary since the Balance Sheet Date
solely in the ordinary course of business consistent with past practice, (c)
such secured indebtedness as is disclosed in the Balance Sheet covering the
properties referred to therein, and
-10-
(d) such imperfections of title, easements and encumbrances, if any, as are not
substantial in character, amount or extent and do not materially detract from
the value, or interfere with the present or proposed use, of the properties
subject thereto ("Permitted Liens").
Section 2.13. Contracts.
(a) The Company Schedule lists each written or oral contract, agreement,
arrangement, lease, instrument, mortgage or commitment to which the Company
or a Subsidiary is a party or may be bound or to which their respective
properties or assets may be subject ("Contract").
(b) All Contracts are valid and binding on the Company or its
Subsidiaries, as applicable, and, to the knowledge of the Company, the other
parties thereto, and are in full force and effect as to the Company on the
date of this Agreement except to the extent they have previously expired in
accordance with their terms or except to the extent that their invalidity
would not have a Company Material Adverse Effect. None of the Company, any of
its Subsidiaries nor, to the Company's knowledge, any other parties, have
violated any provision of, or committed or failed to perform any act which
with notice, lapse of time or both would constitute a default under the
provisions of, any Contract, the termination or violation of which, or the
default under which, might have a Company Material Adverse Effect.
Section 2.14. Insurance. The Company Schedule accurately sets forth as
of the day preceding the date hereof all policies of insurance, other than
title insurance policies, held by or on behalf of the Company and all
outstanding claims. All such policies of insurance are in full force and
effect, and no notice of cancellation has been received. In the reasonable
judgment of the Company, such policies are in amounts which are adequate in
relation to the business and properties of the Company, and all premiums to
date have been paid in full.
Section 2.15. Authorizations; Compliance With Law. (a) The Company and
the Subsidiaries hold all licenses, franchises, certificates, consents,
permits, approvals, certificates of public convenience and necessity, and
authorizations ("Authorizations") from all Governmental Entities and other
persons which are necessary for the lawful conduct of their respective
businesses and their use and occupancy of their assets and properties in the
manner currently conducted, used and occupied, except where the failure to
hold any of the foregoing would not have a Company Material Adverse Effect or
materially impair the ability of the Company to perform its obligations under
this Agreement or materially prevent or materially delay the consummation of
any of the transactions contemplated hereby.
(b) The Company and each of the Subsidiaries is in compliance with all
applicable laws, statutes, ordinances, codes, rules and regulations of any
Governmental Entities, except where such violations would not have a Company
Material Adverse Effect.
Section 2.16. Taxes.
(a) All federal, state, local and foreign tax returns, reports,
statements and other similar filings required to be filed by the Company or
the Subsidiaries (the "Tax Returns") on or prior to the date hereof or with
respect to taxable periods ending on or prior to the date hereof with respect
to any federal, state, local or foreign taxes, assessments, deficiencies,
fees and other governmental charges or impositions (including, without
limitation, all income tax, unemployment compensation, social security,
-11-
payroll, sales and use, excise, privilege, property, ad valorem, transfer,
franchise, license, school and any other tax or similar governmental charge or
imposition (including interest, penalties or additions with respect thereto)
under laws of the United States or any state or municipal or political
subdivision thereof or any foreign country or political subdivision thereof
("Taxes") have been timely filed and all such Tax Returns are true, correct and
complete in all material respects.
(b) All Taxes called for by the Tax Returns have been fully paid. The
accruals for Taxes contained in the Balance Sheet are adequate to cover the
liabilities for Taxes of the Company and the Subsidiaries as of the Balance
Sheet Date and include adequate provision for all deferred taxes, and nothing
has occurred subsequent to that date to make any of such accruals inadequate.
(c) Neither the Company nor the Subsidiaries have received any notice of
assessment or proposed assessment in connection with any Taxes or Tax Returns
and there are not pending tax examinations of or tax claims asserted against
the Company or the Subsidiaries or any of their respective assets or
properties. Neither the Company nor any Subsidiary has extended, or waived
the application of, any statute of limitations of any jurisdiction regarding
the assessment or collection of any Taxes.
(d) There are no tax liens (other than any lien for current taxes not
yet due and payable) on any of the assets or properties of the Company or the
Subsidiaries. The Company has no knowledge of any basis for any additional
assessment of any Taxes. The Company and the Subsidiaries have made all
deposits required by law to be made with respect to employees' withholding
and other employment taxes, including without limitation the portion of such
deposits relating to taxes imposed upon the Company or the Subsidiaries.
Section 2.17. Absence of Litigation; Claims. There are no claims,
actions, suits, proceedings or investigations pending or, to the knowledge of
the Company, threatened against the Company or any of its Subsidiaries, or
any properties or rights of the Company or any of its Subsidiaries, or with
respect to which any director, officer, employee or agent is or may be
entitled to claim indemnification from the Company or any Subsidiary of the
Company, before any Governmental Entity or arbitrator, nor is there any
judgement, decree, injunction, rule or order of any Governmental Entity or
arbitrator expressly applicable by its terms to the Company or any of its
Subsidiaries.
Section 2.18. Employee Benefit Plans; Employment Agreements.
(a) The Company Schedule lists all employee benefit plans (as defined in
Section 3(3) of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA")) and all bonus, stock option, stock purchase, incentive,
deferred compensation, supplemental retirement, severance and other similar
fringe or employee benefit plans, programs or arrangements, and any current
or former employment or executive compensation or severance agreements,
written or otherwise, for the benefit of, or relating to, any employee of the
Company, any trade or business (whether or not incorporated) which is a
member of a controlled group including the Company or which is under common
control with the Company (an "ERISA Affiliate") within the meaning of Section
414 of the Code, or any subsidiary of the Company, as well as each plan with
respect to which the Company or an ERISA Affiliate could incur liability
under Section 4069 (if such plan has been or were terminated) or Section
4212(c) of ERISA (together, the "Employee Plans"), excluding former
agreements under which the Company has no remaining obligations and any of
the foregoing that are required to be maintained by
-12-
the Company under the laws of any foreign jurisdiction. With respect to each
Employee Plan, as applicable, a copy of (i) each such written Employee Plan
(other than those referred to in Section 4(b)(4) of ERISA, together with all
amendments, trust agreements, insurance policies and service agreements; (ii)
the three most recently filed Forms 5500 or 5500 C/R and any financial
statements attached thereto; (iii) the most recent Internal Revenue Service
("IRS") determination letter; (iv) the most recent summary plan description; (v)
all reports submitted within the preceding three years by third-party
administrators, actuaries, investment managers, consultants, or other
independent contractors, has been made available to Parent; and (vi) all notices
that were issued within the preceding three years by the IRS, Department of
Labor, the Pension Benefit Guarantee Corporation, or any other Governmental
Entity.
(b) Except as set forth in the Company Schedule, (i) except as required
by Section 4980B of the Code, none of the Employee Plans promises or provides
retiree medical or other retiree welfare benefits to any person and none of
the Employee Plans is a "multi employer plan" as such term is defined in
Section 3(37) of ERISA; (ii) there has not been any breach of any fiduciary
duty, as described in Section 404 of ERISA, or no "prohibited transaction",
as such term is defined in Section 406 of ERISA or Section 4975 of the Code,
with respect to any Employee Plan, which could result in any material
liability of the Company or any of its subsidiaries; (iii) all Employee Plans
are in compliance in all material respects with the requirements prescribed
by any and all statutes (including ERISA and the Code), orders, or
governmental rules and regulations currently in effect with respect thereto
(including applicable requirements for notification to participants or the
Department of Labor, IRS or Secretary of the Treasury), all employee plans
have in all material respects been operated at all times in accordance with
their terms and with ERISA and the Code, and the Company and each of its
subsidiaries have performed all material obligations required to be performed
by them under, are not in any material respect in default under or violation
of, and have no knowledge of any default or violation by any other party to,
any of the Employee Plans; (iv) each Employee Plan intended to qualify under
Section 401(a) of the Code and each trust intended to qualify under Section
501(a) of the Code is the subject of a favorable determination letter from
the IRS, and nothing has occurred which may reasonably be expected to impair
such determination; (v) all contributions required to be made to any Employee
Plan pursuant to Section 412 of the Code, or the terms of the Employee Plan
or any collective bargaining agreement, have been made on or before their due
dates; (vi) with respect to each Employee Plan, no "reportable event" within
the meaning of Section 4043 of ERISA (excluding any such event for which the
30 day notice requirement has been waived under the regulations to Section
4043 of ERISA) nor any event described in Section 4062, 4063, 4604 or 4041 of
ERISA has occurred; and (viii) neither the Company nor any ERISA Affiliate
has incurred, nor reasonably expects to incur, any liability under Title IV
of ERISA (other than liability for premium payments to the Pension Benefit
Guaranty Corporation arising in the ordinary course); (ix) neither the
Company nor any ERISA Affiliate has incurred any liability for any excise,
income or other taxes or penalties with respect to any Employee Plan which
has not been paid in full, and no event has occurred and no circumstance
exists that could give rise to any such liability; (x) there are no pending
or threatened claims against any Employee Plan (other than routine claims for
benefits) or against any fiduciary or an Employee Plan with respect to such
plan, nor is there any basis for such a claim; and (xi) no Employee Plan is
presently under audit or examination (nor has notice been received of a
potential audit or examination) by any governmental entity, and no matters
are pending with respect to any Employee Plan under any governmental
corrective or remedial program.
(c) The Company Schedule sets forth a true and complete list of each
current or former employee, officer or director of the Company or any of its
Subsidiaries who holds any option to purchase Company Common Stock as of the
date hereof, together with the number of shares of Company
-13-
Common Stock which are subject to such option, the date of grant of such option,
the extent to which such option is vested (or will become vested within six
months from the date hereof, or as a result of, the Merger), the option price of
such option (to the extent determined as of the date hereof), whether such
option is intended to qualify as an incentive stock option within the meaning of
Section 422(b) of the Code (an "ISO"), and the expiration date of such option.
The Company Schedule also sets forth the total number of such ISOs and such
nonqualified options.
(d) Except as set forth in the Company Schedule, any amount that could
be received (whether in cash or property or the vesting of property) as a
result of any of the transactions contemplated by this Agreement by any
employee, officer or director of the Company or any of its affiliates who is
a "disqualified individual" (as such term is defined in Proposed Treasury
Regulation Section 1.280G-1) under any employment, severance or termination
agreement, other compensation arrangement or Employee Plan currently in
effect would not be characterized as an "excess parachute payment" (as such
term is defined in Section 280G of the Code).
Section 2.19. Labor Matters. There are no controversies pending or, to
the knowledge of the Company, threatened, between the Company or any of its
Subsidiaries or any of their respective employees, which controversies would
have a Company Material Adverse Effect. Neither the Company nor any of its
Subsidiaries is party to any collective bargaining agreement or other labor
agreement with any union or labor organization and no union or labor
organization has been recognized by the Company nor or any of its
Subsidiaries as a bargaining representative for employees of the Company or
any of its Subsidiaries.
Section 2.20. Intellectual Property. Except for that which Casino Money
Centers, Inc. ("CMC") is the registered owner (and as to which no
representation or warranty is made by the Company), neither the Company nor
any Subsidiary of the Company has any registered copyrights, patents,
trademarks or applications for any registered copyrights, patents or
trademarks. In conducting their respective business as presently conducted,
neither the Company nor any Subsidiary of the Company (other than CMC, as to
which no representation or warranty is made hereby) is infringing upon or
unlawfully or wrongfully using any patent, trademark, trade name, service
xxxx, copyright or any other form of intellectual property or trade secret,
owned or claimed by another. Neither the Company nor any Subsidiary is in
default under, nor has it received any notice of any claim of infringement or
any other claim or proceeding relating to, any such patent, trademark, trade
name, service xxxx, copyright, trade secret or any other form of intellectual
property or any agreement relating thereto.
Section 2.21. Adequacy of Disclosure. No representation or warranty by
the Company in this Agreement, in any certificate or in the Company Schedule
furnished or to be furnished to Parent pursuant hereto, or in connection with
the negotiation, execution or performance of this Agreement, contains or will
contain any untrue statement of a material fact or omits or will omit to
state a material fact required to be stated herein or therein or necessary to
make any statement herein or therein not misleading.
Section 2.22. Registration Statement; Proxy Statement/Prospectus. The
information supplied by the Company for inclusion or incorporation by
reference in the registration statement of Parent on Form S-4 pursuant to
which shares of Parent Common Stock to be issued in the Merger will be
registered with the SEC (the "Registration Statement") shall not contain, at
the time the Registration Statement is declared effective by the SEC, any
untrue statement of a material fact or omit to state any material fact
required to be stated in the Registration Statement or necessary in order to
make the
-14-
statements in the Registration Statement not misleading. The information
supplied by the Company for inclusion or incorporation by reference in the proxy
statement/prospectus (the "Proxy Statement") to be sent to the stockholders of
the Company in connection with the special meeting of the Company's stockholders
to consider this Agreement (the "Stockholders Meeting") shall not, at the time
the Proxy Statement is first mailed to stockholders, at the time of the
Stockholders Meeting, or at the Effective Time, contain any untrue statement of
a material fact or omit to state a material fact necessary in order to make the
statements made, in light of the circumstances under which they were made, not
misleading or omit to state any material fact necessary to correct any statement
in any earlier communication with respect to the solicitation of proxies for the
Stockholders Meeting which has become false or misleading. If at any time prior
to the Effective Time any event relating to the Company or any of its affiliates
should be discovered by the Company which should be set forth in an amendment to
the Registration Statement or a supplement to the Proxy Statement, the Company
shall promptly inform Parent.
Section 2.23. Tax Matters. Neither the Company nor, to the knowledge of
the Company, any of its affiliates has taken or agreed to take any action
that would prevent the Merger from constituting a reorganization qualifying
under the provisions of Section 368(a) of the Code or make untrue any
representation or warranty contained in the Company Tax Certificate.
Section 2.24. Affiliates. Except for the persons listed on the Company
Schedule there are no persons who, to the knowledge of the Company, may be
deemed to be affiliates of the Company under Rule 1-02 of Regulation S-X of
the SEC and Rule 145 under the Securities Act.
Section 2.25. Board Action; Vote Required; Applicability of Section 203.
(a) The Special Committee of the Board of Directors, and the entire Board of
Directors of the Company, each has unanimously determined that the
transactions contemplated by this Agreement are in the best interests of the
Company and its stockholders and has resolved to recommend to such
stockholders that they vote in favor thereof.
(b) The provisions of Section 203 of the Delaware Law will not apply to
this Agreement or any of the transactions contemplated hereby.
(c) The Company represents and warrants that it has been advised by each
of its directors and executive officers that each such person intends to vote
his shares of Company Common Stock in favor of the approval and adoption of
this Agreement.
Section 2.26. Opinion of Financial Advisor. The Company has received the
opinion of Xxxxxx Xxxxxxxxxx Xxxxx Inc. (the "Company Financial Advisor"),
dated September 3, 1998, to the effect that, as of such date, the Merger
Consideration is fair from a financial point of view to the holders of
Company Common Stock and a copy of such opinion has been made available to
Parent.
Section 2.27. Brokers and Finders. Neither the Company, any Subsidiary
of the Company nor any of their respective officers, directors or employees
has engaged any broker or finder or incurred any liability for any brokerage
fees, commissions or finder's fees in connection with the transactions
contemplated herein, except that the Special Committee of the Board of
Directors of the Company has engaged the Company Financial Advisor as its
financial advisor pursuant to the terms of an engagement letter, a true and
complete copy of which has previously been furnished to Parent.
-15-
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
Parent and Merger Sub each represents and warrants to the Company as
follows, except as set forth on a Disclosure Schedule delivered by Parent
concurrently with the execution and delivery of this Agreement (the "Parent
Schedule"), each of which exceptions shall specifically identify the relevant
subsection hereof to which it relates and shall be deemed to be
representations and warranties as if made hereunder:
Section 3.1. Organization and Powers. Parent is a corporation duly
organized, validly existing and in good standing under the laws of the State
of Delaware. Merger Sub is a corporation duly organized, validly existing and
in good standing under the laws of the State of Delaware. Each of Parent and
the Merger Sub has all requisite corporate power and authority to carry on
its business as it has been and is now being conducted and to own, lease and
operate the properties and assets used in connection therewith.
Section 3.2. Authority; Binding Effect. Parent has all requisite
corporate power and authority to execute and deliver this Agreement and to
consummate the transactions contemplated hereby. All necessary action,
corporate or otherwise, required to have been taken by or on behalf of it by
applicable law, its charter document or otherwise to authorize (i) the
approval, execution and delivery on its behalf of this Agreement and (ii) its
performance of its obligations under this Agreement and the consummation of
the transactions contemplated hereby has been taken. This Agreement
constitutes Parent's valid and binding agreement, enforceable against it in
accordance with its terms.
Section 3.3. Conflict with Other Agreements; Approvals. The execution
and delivery of this Agreement do not, and the consummation of the
transactions contemplated hereby will not, (i) violate or conflict with the
Parent's or any of its Subsidiaries charter or bylaws, or (ii) constitute a
breach or default (or an event that with notice or lapse of time or both
would become a breach or default) or give rise to any Lien, third party right
of termination, cancellation, material modification or acceleration, or loss
of any benefit, under any contract to which the Parent or any Subsidiary of
the Parent is a party or by which it is bound, or (iii) subject to the
consents, approvals, orders, authorizations, filings, declarations and
registrations specified in Section 3.4 or in the Parent Schedule in response
thereto, conflict with or result in a violation of any permit, concession,
franchise or license or any law, rule or regulation applicable to the Parent
or any of its Subsidiaries or any of their properties or assets, except, in
the case of clauses (ii) and (iii), for any such breaches, defaults, liens,
third party rights, cancellations, modifications, accelerations or losses of
benefits, conflicts or violations which would not have a Parent Material
Adverse Effect and do not materially impair the ability of the Parent to
perform its obligations under this Agreement or prevent or materially delay
the consummation of any of the transactions contemplated hereby. As used in
this Agreement, "Parent Material Adverse Effect" shall mean any fact,
condition, event, development or occurrence which, individually or when taken
together with all other such facts, conditions, events, developments or
occurrences, could reasonably be expected to have a material adverse effect
on the financial condition, operating results of Parent and its Subsidiaries,
taken as a whole.
Section 3.4. Governmental Consents and Approvals. Except as set forth on
the Parent Schedule, neither the execution and delivery of this Agreement nor
the consummation of the transactions contemplated hereby will require any
consent, approval, order, authorization, or permit of, or filing with
-16-
or notification to, any Governmental Entity, except (a) the filing of the
Registration Statement with the SEC in accordance with the Securities Act and
the entry of an order by the SEC permitting such Registration Statement to
become effective, and compliance with applicable state securities laws, (b)
notification pursuant to, and expiration or termination of the waiting period
under the HSR Act, and (c) the filing and recording of the Certificate of Merger
in accordance with the DGCL.
Section 3.5. Capital Stock. Parent has authorized capital stock
consisting of 200,000,000 shares of Parent Common Stock and 5,000,000 shares
of Preferred Stock, par value $.01 per share ("Parent Preferred Stock"). As
of August 1, 1998: (i) 25,671,205 shares of Parent Common Stock were issued
and outstanding, (ii) no shares of Parent Preferred Stock were issued and
outstanding, (iii) no shares of Parent Common Stock were held as treasury
shares, (iii) no shares of Company Common Stock were held as treasury shares,
(iv) 4,032,705 shares of the Parent Common Stock underlying outstanding stock
options were granted under the Parent's 1996 Equity Compensation Plan (the
"Parent Stock Plan"), (v) 2,467,295 shares of the Parent Common Stock were
reserved for issuance under the Parent Stock Plan, and (vi) 2,426,733 shares
of Company Common Stock were reserved for issuance upon the exercise of
outstanding warrants and options issued outside of the Parent Stock Plan.
Since June 1, 1998 until the date hereof, (i) no additional shares of capital
stock have been reserved for issuance by Parent and (ii) the only issuances
of shares of capital stock of the Parent have been issuances of Parent Common
Stock upon the exercise of outstanding stock options. All of the issued and
outstanding shares have been duly authorized and are validly issued and
outstanding, fully paid and nonassessable, and were issued in compliance with
all applicable Federal and state securities laws. No shares of capital stock
issued by Parent are or were, at the time of their issuance, issued in
violation of preemptive rights. There are no existing subscriptions, options,
warrants, calls, commitments, agreements, conversion rights or other rights
of any character (contingent or otherwise) to purchase or otherwise acquire
from Parent at any time, or upon the happening of any stated event, any
shares of the capital stock of Parent whether or not presently issued or
outstanding, except as set forth on the Parent Schedule.
Section 3.6. Registration Statement; Proxy Statement/Prospectus. The
information supplied by the Parent for inclusion or incorporation by
reference in the Registration Statement shall not contain, at the time the
Registration Statement is declared effective by the SEC, any untrue statement
of a material fact or omit to state any material fact required to be stated
in the Registration Statement or necessary in order to make the statements in
the Registration Statement not misleading. The information supplied by the
Parent for inclusion or incorporation by reference in the Proxy Statement
shall not, at the time the Proxy Statement is first mailed to stockholders,
at the time of the Stockholders Meeting, or at the Effective Time, contain
any untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements made, in light of the circumstances
under which they were made, not misleading. If at any time prior to the
Effective Time any event relating to the Parent or any of its affiliates
should be discovered by the Parent which should be set forth in an amendment
to the Registration Statement or a supplement to the Proxy Statement, the
Parent shall promptly inform the Company.
Section 3.7. SEC Reports. Parent has filed all required forms, reports
and documents with the SEC since January 1, 1997 (collectively, the "Parent's
SEC Reports"), including without limitation Parent's Annual Report on Form
10-K for the year ended December 31, 1997 and Parent's Quarterly Reports on
Form 10-Q for the fiscal quarters ended March 31, 1998 and June 30, 1998. The
Parent's SEC Reports have complied in all material respects with all
applicable requirements of the Securities Act and the Exchange Act. As of
their respective dates, none of Parent's SEC Reports, including, without
-17-
limitation, any financial statements or schedules included or incorporated by
reference therein, contained any untrue statement of a material fact or omitted
to state a material fact required to be stated or incorporated by reference
therein or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. Parent has heretofore
delivered or made available to the Company, in the form filed with the SEC, all
of Parent's SEC Reports.
Section 3.8. Financial Statements. The (a) consolidated balance sheets
of the Parent and its subsidiaries at December 31, 1997 and 1996 and the
related consolidated statements of earnings, changes in stockholders' equity
and statements of cash flow for the years then ended, together with the notes
thereto, audited by Xxxxxx Xxxxxxxx LLP (the "Parent's Auditors"); and (b)
unaudited consolidated balance sheets of the Parent and its subsidiaries at
June 30, 1998 and related consolidated statements of income, changes in
stockholders' equity and statements of cash flow for the six-month period
ended June 30, 1998, have been prepared in accordance with GAAP. Such balance
sheets, including the related notes, fairly present, in all material
respects, the consolidated financial position, assets and liabilities
(whether accrued, absolute, contingent or otherwise) of the Parent and its
Subsidiaries at the dates indicated and such consolidated statements of
income, changes in stockholders' equity and statements of cash flow fairly
present the consolidated results of operations, changes in stockholders'
equity and cash flow of the Parent and its Subsidiaries for the periods
indicated. The unaudited consolidated financial statements as at and for the
six-month period ending June 30, 1998 contain all adjustments, which are
solely of a normal recurring nature, necessary to present, in all material
respects, fairly the financial position at June 30, 1998, and the results of
operations and changes in stockholders' equity and financial position for the
periods then ended.
Section 3.9. Absence of Certain Changes. Except as described in the
Parent Schedule, since December 31, 1997, the Parent and its Subsidiaries
have conducted their business solely in the ordinary course consistent with
past practice. Except as otherwise disclosed on the Parent Schedule, or in
Parents' SEC Reports, since December 31, 1997, the Parent and its
Subsidiaries have not
(a) suffered any Parent Material Adverse Effect; or
(b) been subject to any other events or conditions of any character that
would have a Parent Material Adverse Effect or impair the ability of Parent
to perform its obligations under this Agreement or prevent or delay the
consummation of any of the transactions contemplated hereby.
Section 3.10. Absence of Litigation; Claims. Except as set forth on the
Parent Schedule, there are no claims, actions, suits, proceedings or
investigations pending or, to the knowledge of Parent, threatened against
Parent or any of its Subsidiaries, or any properties or rights of Parent or
any of its Subsidiaries, before any Governmental Entity or arbitrator, which,
if decided adversely to Parent or such Subsidiary, would have a Parent
Material Adverse Effect or impair the ability of Parent to perform its
obligations under this Agreement or prevent or delay the consummation of any
of the transactions contemplated hereby, nor is there any judgement, decree,
injunction, rule or order of any Governmental Entity or arbitrator expressly
applicable by its terms to the Parent or any of its Subsidiaries having or
which, insofar as reasonably can be foreseen, in the future would have a
Parent Material Adverse Effect.
Section 3.11. Tax Matters. The representations and warranties contained
in the Parent Tax Certificate (as defined in Section 4.13 hereof) are true
and correct. Parent has not taken or agreed to take any action that would
prevent the Merger from constituting a reorganization qualifying under the
-18-
provisions of Section 368(a) of the Code or make untrue any representation or
warranty contained in the Parent.
Section 3.12. Affiliates. Except for the persons listed on the Parent
Schedule, there are no persons who, to the knowledge of Parent, may be deemed
to be affiliates of Parent under Rule 1-02 of Regulation S-X of the SEC.
Concurrently with the execution and delivery of this Agreement, Parent has
delivered to the Company an executed letter agreement, substantially in the
form of Exhibit B hereto, from each of such persons.
Section 3.13. Adequacy of Disclosure. No representation or warranty by
Parent in this Agreement, in any certificate or in the Parent Schedule
furnished or to be furnished to the Company pursuant hereto, or in connection
with the negotiation, execution or performance of this Agreement, contains or
will contain any untrue statement of a material fact or omits or will omit to
state a material fact required to be stated herein or therein or necessary to
make any statement herein or therein not misleading.
Section 3.14. Brokers and Finders. Neither the Parent nor any of its
respective officers, directors or employees has engaged any broker or finder
or incurred any liability for any brokerage fees, commissions or finder's
fees in connection with the transactions contemplated herein, except that the
Special Committee of the Board of Directors of Parent has engaged Xxxx Xxxxx
Xxxx Xxxxxx, Inc. as its financial advisor.
ARTICLE IV
OTHER AGREEMENTS
Section 4.1. Conduct of the Company's Business. The Company covenants
and agrees that, between the date of this Agreement and the Effective Time,
unless Parent shall otherwise consent in writing, and except as otherwise
expressly contemplated hereby, the business of the Company and its
Subsidiaries shall be conducted only in, and such entities shall not take any
action except in, the ordinary course of business. By way of amplification
and not limitation, except as otherwise expressly contemplated by this
Agreement or as otherwise set forth in the Company Schedule, the Company
agrees on behalf of itself and its Subsidiaries (other than CMC, which shall
not be subject to this Section 4.1) that, without the prior written consent
of Parent, they will, between the date of this Agreement and the Effective
Time:
(a) not directly or indirectly do any of the following: (i) amend or
propose to amend its Certificate of Incorporation or By-Laws; (ii) split,
combine or reclassify any outstanding shares of its capital stock, or
declare, set aside or pay any dividend payable in cash, stock, property or
otherwise with respect to such shares; (iii) redeem, purchase, acquire or
offer to acquire any shares of its capital stock; (iv) issue, sell, pledge or
dispose of, or agree to issue, sell, pledge or dispose of, any additional
shares of, or securities convertible or exchangeable for, or any options,
warrants or rights of any kind to acquire any shares of, its capital stock,
its shares of Parent Common Stock or of any class or other property or assets
whether pursuant to any rights agreement, stock option plans described in the
Company Schedule or otherwise, provided that the Company may issue shares of
Company Common Stock pursuant to currently outstanding options, warrants and
convertible securities and may issue one or more stock options (the
"Replacement Options") to replace the conversion rights contained in such
convertible
-19-
securities; (v) accelerate, amend or change the period of exerciseability of
options or restricted stock granted under any of the Company Stock Plans or
authorize cash payments in exchange for any options granted under any of such
plans except as required by the terms of such plans or any related agreements in
effect as of the date of this Agreement, (vi) hire, engage or otherwise retain
any new employee, consultant or independent contractor or (vii) enter into any
contract, agreement, commitment or arrangement with respect to any of the
matters set forth in this paragraph (a);
(b) not, directly or indirectly (i) acquire (by merger, consolidation or
acquisition of stock or assets) any corporation, partnership, limited
liability company or other business organization or division thereof or make
any equity investments therein; provided, however, that Find Dad, Inc. and
Kaplan & Xxxxxx Inc. may merge with and into CMC (the "CMC Merger"); (ii)
issue, sell, pledge, dispose of or encumber any assets (including without
limitation licenses, Authorizations or rights) of the Company or any of its
Subsidiaries or enter into any securitization transactions,; (iii) incur any
indebtedness for borrowed money or issue any debt securities, (iv) make any
commitments or agreements for capital expenditures or capital additions; (v)
except for the CMC Merger, enter into or modify any material contract, lease
or agreement except in the ordinary course of business and consistent with
past practice; (vi) terminate, modify, assign, waive, release or relinquish
any material contract rights or amend any material rights or claims not in
the ordinary course of business or except as expressly provided herein; or
(vii) enter into any contract, agreement, commitment or arrangement with
respect to any of the matters set forth in this paragraph (b);
(c) not, directly or indirectly (i) initiate any litigation or
arbitration proceeding, (ii) revalue any of its assets, including writing
down the value of inventory or writing off notes or accounts receivable,
other than in the ordinary course of business pursuant to arm's length
transactions on commercially reasonable terms, (iii) make any material change
to their respective accounting methods, principles or practices, or (iv)
settle or compromise any Tax liability, or prepare or file any Tax Return
inconsistent with past practice or, on any such Tax Return, take any
position, make any election, or adopt any method that is inconsistent with
positions taken, elections made or methods used in preparing or filing
similar Tax Returns in prior periods;
(d) not, directly or indirectly, (i) hire, engage or otherwise retain
any new employee, consultant or independent contractor; (ii) grant any
increase in the salary or other compensation of its employees or grant any
bonus to any employee or enter into any employment agreement or make any loan
to or enter into any material transaction of any other nature with any
officer or employee of the Company; (iii) take any action to institute any
new severance or termination pay practices with respect to any directors,
officers or employees of the Company or to increase the benefits payable
under its severance or termination pay practices; or (iv) adopt or amend, in
any respect, except as may be required by applicable law or regulation, any
bonus, profit sharing, compensation, stock option, restricted stock, pension,
retirement, deferred compensation, employment or other employee benefit plan,
agreement, trust, fund, plan or arrangement for the benefit or welfare of any
directors, officers or employees; provided, however, that the Company may
cause its 401(k) plan to be transfered to CMC;
(e) not, directly or indirectly, take (and will use reasonable efforts
to prevent any affiliate of the Company from taking) or agree in writing or
otherwise to take, (i) any of the actions described in this Section 4.l, (ii)
any action which would make any of the Company's representations or
warranties in this Agreement, if made on and as of the date of such action or
agreement, untrue or incorrect in any material respect, or (iii) any action
which could prevent it from performing, or cause it
-20-
not to perform, its obligations under this Agreement, or (iv) any action that
would cause the Merger not to be treated as a reorganization within the meaning
of Section 368(a) of the Code;
(f) promptly disclose to Parent any information contained in its
representations and warranties or the Company Schedule which, because of an
event occurring after the date hereof, is incomplete or is no longer correct
as of all times after the date hereof until the Closing Date; provided,
however, that none of such disclosures shall be deemed to modify, amend or
supplement the representations and warranties of the Company or the Company
Schedule hereto for the purposes of Article V hereof, unless Parent shall
have consented thereto in writing; and
(g) use reasonable efforts to obtain and deliver to the Parent at the
Closing an executed letter in substantially the form of Exhibit A from each
of the Company Affiliates;
provided, however, notwithstanding the provisions of this Section 4.1, that the
Company may make the Permitted Distribution as set forth in Section 5.1(f) and
issue any Replacement Options.
Section 4.2. Parent's Undertakings. Parent will not, directly or
indirectly, take (and will use reasonable efforts to prevent any affiliate of
the Company from taking) any action that would cause the Merger not to be
treated as a reorganization within the meaning of Section 368(a) of the Code.
Parent shall as promptly as practicable following the date hereof apply for
approval for listing of Parent Common Stock to be issued pursuant to the
Merger on the Nasdaq National Market ("NMS") upon official notice of
issuance.
Section 4.3. Access to Information. Between the date of this Agreement
and the Closing Date, the Company will (a) give Parent and its authorized
representatives reasonable access, during regular business hours upon
reasonable notice, to all offices, warehouses and other facilities and to all
of its books and records, (b) permit Parent to make such reasonable
inspections as it may require, and (c) cause its officers and those of its
subsidiaries to furnish Parent with such financial and operating data and
other information with respect to the business and properties of the Company,
as Parent may from time to time reasonably request and as the Company may
have on hand or be able to produce without hardship. All such access and
information obtained by Parent and its authorized representatives shall be
subject to the terms and conditions of the letter agreement between the
Company and Parent (the "Confidentiality Agreement") attached as Exhibit 4.3
hereto.
Section 4.4. Stockholder Vote; Proxy Statement.
(a) As promptly as practicable after the date hereof, the Company shall
take all action necessary in accordance with Rules 14a-1 et. seq. of the
Exchange Act, the DGCL, the rules of the Nasdaq Small-cap Market and its
Certificate of Incorporation and By-laws to call, give notice of, convene and
hold the Stockholders Meeting as promptly as practicable (unless such date
shall be delayed due to circumstances reasonably beyond the control of the
parties) to consider and vote upon the approval and adoption of this
Agreement and the transactions contemplated hereby and for such other
purposes as may be necessary or desirable. Subject to the fiduciary duties of
the Board of Directors under applicable law, as determined by such directors
in good faith after consultation with and based upon the written advice of
independent legal counsel, the Board of Directors of the Company shall use
its efforts to solicit and secure from its stockholders such approval and
adoption of this Agreement and the transactions contemplated hereby.
-21-
(b) As promptly as practicable after the date hereof, the Company and
Parent shall jointly prepare and file with the SEC preliminary proxy
materials of the Company under the Exchange Act with respect to the Merger,
and a preliminary prospectus of Parent with respect to Parent Common Stock to
be issued in the Merger and will thereafter use their respective best efforts
to respond to any comments of the SEC with respect thereto and to cause the
Registration Statement to become effective, and the Proxy Statement and
related proxy material to be mailed to the Company's stockholders, as
promptly as practicable. The Proxy Statement shall include the unqualified
recommendation of the Company's Board of Directors that the Company's
stockholders vote in favor of the approval and adoption of this Agreement,
unless otherwise necessary due to the applicable fiduciary duties of the
directors of the Company, as determined by such directors in good faith after
consultation with and based upon the written advice of independent legal
counsel.
(c) As soon as practicable after the date hereof, the Company and Parent
shall prepare and file any other filings required to be filed by each under
the Exchange Act or any other federal or state securities laws relating to
the Merger and the transactions contemplated hereby (collectively, "Other
Filings") and will use their respective reasonable best efforts to respond to
any comments of the SEC or any other appropriate government official with
respect thereto.
(d) The Company and Parent shall cooperate with each other and provide
to each other all information necessary in order to prepare, amend or
supplement, to the extent required by the Securities Act the Registration
Statement, the Proxy Statement and the Other Filings (collectively, the "SEC
Transaction Filings").
(e) The Company and Parent will notify the other party promptly of the
receipt of any comments from the SEC or its staff or any other appropriate
government official and of any requests by the SEC or its staff or any other
appropriate government official for amendments or supplements to any of the
SEC Transaction Filings or for additional information and will supply the
other party with copies of all correspondence between the Company or any of
its representatives or Parent and any of its representatives, as the case may
be, on the one hand, and the SEC or its staff or any other appropriate
government official, on the other hand, with respect thereto. If at any time
prior to the Effective Time, any event shall occur that should be set forth
in an amendment of, or a supplement to, any of the SEC Transaction Filings,
the Company and Parent agree promptly to prepare and file such amendment or
supplement and to distribute such amendment or supplement as required by
applicable law, including, in the case of an amendment or supplement to the
Proxy Statement, mailing such supplement or amendment to the Company's
stockholders. Parent will provide the Company with a reasonable opportunity
to review and comment on any amendment or supplement to the Registration
Statement or the Proxy Statement proposed to be made by it prior to filing
such amendment or supplement with the SEC. No amendment or supplement to the
information supplied by the Company for inclusion in the Proxy Statement
shall be made without the approval of the Company, which approval shall not
be unreasonably withheld or delayed. The Company will provide the Parent with
a reasonable opportunity to review and comment on any amendment or supplement
to the Proxy Statement proposed to be made by it prior to filing such
amendment or supplement with the SEC. No amendment or supplement to the
information supplied by Parent for inclusion in the Proxy Statement shall be
made without the approval of the Parent, which approval shall not be
unreasonably withheld or delayed. Parent shall not be required to maintain
the effectiveness of the Registration Statement for the purpose of resale by
stockholders of the Company who may be affiliates of the Company or Parent
pursuant to Rule 145 under the Securities Act.
-22-
(f) The information provided and to be provided by the Company and
Parent for inclusion or incorporation by reference in SEC Transaction Filings
shall at the time such information was supplied be true and correct in all
material respects and shall not omit to state any material fact required to
be stated therein or necessary in order to make such information not false or
misleading, and the Company and Parent each agree to promptly correct any
such information provided by it for use in the SEC Transaction Filings that
shall have become false or misleading. The SEC Transaction Filings, when
filed with the SEC or any appropriate government official, shall comply as to
form in all material respects with all applicable requirements of law. For
purposes of the foregoing, information concerning or related to the Parent
contained in the Proxy Statement shall be deemed to have been supplied by the
Parent and information concerning or related to the Company and the
Stockholders Meeting shall be deemed to have been supplied by the Company.
Section 4.5. Reasonable Best Efforts. Subject to the fiduciary duties of
the Company's Board of Directors, as determined by such directors in good
faith after consultation with and based upon the written advice of
independent legal counsel, and except as otherwise provided herein, each of
the parties hereto agrees to use its reasonable best efforts to take, or
cause to be taken, all appropriate action, and to do, or cause to be done,
all things necessary, proper or advisable under applicable laws, statutes,
ordinances, codes, rules and regulations to consummate and make effective the
transactions contemplated by this Agreement in the most expeditious manner
practicable, including but not limited to the satisfaction of all conditions
to the Merger, and to consummate the Merger as promptly as practicable, but
in no event later than December 31, 1998.
Section 4.6. Public Announcements. No party hereto shall make any public
announcements or otherwise communicate with any news media with respect to
this Agreement or any of the transactions contemplated hereby without prior
consultation with the other parties as to the timing and contents of any such
announcement as may be reasonable under the circumstances; provided, that
nothing contained herein shall prevent any party from promptly making all
filings with Governmental Entities and all disclosure as may, in its good
faith judgment, be required or advisable under applicable law, regulation or
stock exchange rule in connection with the execution and delivery of this
Agreement or the consummation of the transactions contemplated hereby (in
which case the disclosing party shall advise the other parties and provide
them with a copy of the proposed disclosure or filing prior to making the
disclosure or filing).
Section 4.7. Notification. Each party hereto shall, or promptly after
obtaining knowledge of the occurrence of any fact or circumstance that would
cause or constitute a breach of any of its representations and warranties set
forth herein, give notice thereof to the other parties and shall use its best
efforts to prevent or promptly to remedy such breach; provided, however, that
none of such notices shall be deemed to modify, amend or supplement the
representations and warranties of the such party or the disclosure schedules
of such party for the purposes of Article V hereof, unless the other party
shall have consented thereto in writing.
Section 4.8. Subsequent Financial Statements. Prior to the Effective
Time, the Company and the Parent will timely file with the SEC, each Annual
Report on Form 10-K, Quarterly Report on Form 10-Q and Current Report on Form
8-K required to be filed by such Party under the Exchange Act and the rules
and regulations promulgated thereunder and will promptly deliver to the other
copies of each such report filed with the SEC.
-23-
Section 4.9. Control of Operations. Nothing contained in this Agreement
shall give Parent, directly or indirectly, the right to control or direct the
Company's operations prior to the Effective Time. Prior to the Effective
Time, each of the Company and Parent shall exercise, consistent with the
terms and conditions of this Agreement, complete control and supervision over
its respective operations.
Section 4.10. Regulatory and Other Authorizations. Each party hereto
agrees to use commercially reasonable efforts to comply with all legal
requirements which may be imposed on such party with respect to the Merger
and to obtain all Authorizations, consents, orders and approvals of
Governmental Entities and non-governmental third parties that may be or
become necessary for its respective execution and delivery of, and the
performance of its respective obligations pursuant to, this Agreement, and
each party will cooperate fully with the other parties in promptly seeking to
obtain all such authorizations, consents, orders and approvals. Without
limitation, the Company and Parent shall each make an appropriate filing of a
Notification and Report Form pursuant to the HSR Act no later than 20 days
after the date hereof and shall promptly respond to any request for
additional information with respect thereto. Each such filing shall request
early termination of the waiting period imposed by the HSR Act.
Section 4.11. Takeover Statute. If any "fair price," "moratorium,"
"control share acquisition" or other form of antitakeover statute or
regulation shall become applicable to the transactions contemplated hereby,
each of the Company and Parent and the members of their respective Boards of
Directors shall use their reasonable best efforts to grant such approvals and
take such actions as are necessary so that the transactions contemplated
hereby may be consummated as promptly as practicable on the terms
contemplated hereby and otherwise use their reasonable best efforts to act to
eliminate or minimize the effects of such statute or regulation on the
transactions contemplated hereby.
Section 4.12. Indemnification of Directors and Officers. For a period of
six (6) years after the Effective Time, Parent shall cause the Company as the
Surviving Corporation, and any successor in interest thereto (a) to maintain
in effect the current provisions regarding indemnification of officers and
directors contained in the charter and bylaws of the Company, and (b) to
indemnify the directors and officers of the Company to the full extent to
which the Company is permitted to indemnify such officers and directors under
its charter and bylaws and applicable law; provided, that the Parent shall so
indemnify such officers and directors upon any failure of the Company to so
indemnify. Any claim for indemnification made prior to the expiration of the
six-year (6) period set forth above shall survive until the final
determination of such claim. Parent shall provide each individual who served
as a director or officer of the Company at any time prior to the Effective
Time with liability insurance for a period of thirty-six (36) months after
the Effective Time no less favorable in coverage and amount than any
applicable insurance in effect immediately prior to the Effective Time,
provided, however, that Parent shall not be obligated to provide such
coverage to the extent that the cost of such coverage exceeds 150% of the
cost of such coverage immediately prior to the Effective Time but will use
its reasonable best efforts to obtain as much liability insurance as can be
obtained for the remainder of such period for a premium not in excess (on an
annualized basis) of 150% of the last annual premium paid prior to the date
hereof.
Section 4.13. Tax-Free Reorganization. Each of Parent and the Company
will use its best efforts to cause the Merger to qualify as a
"reorganization" within the meaning of Section 368(a) of the Code, and to
enable Xxxxxx Xxxxxxxx LLP to render its opinion contemplated by Section
5.2(f) hereof. Each party shall make and shall use its best efforts to cause
those of its respective officers and
-24-
stockholders that counsel to the parties shall reasonably request to make, such
representations and certifications as counsel to the parties shall reasonably
request to enable them to render such opinion, including, without limitation,
the representations of Parent contained in a certificate of Parent (the "Parent
Tax Certificate") substantially in the form of the Parent Tax Certificate
attached as Item 4.13 of the Parent Letter and representations of the Company
contained in a certificate of the Company (the "Company Tax Certificate")
substantially in the form of the Company Tax Certificate attached as Item 4.13
to the Company Schedule.
Section 4.14. No Solicitation. (a) Until the termination of this
Agreement, without the prior written consent of Parent, from and after the
date hereof, the Company will not, and will not authorize or permit any of
its Subsidiaries or their officers, directors, employees, financial advisors
and agents ("Representatives") to, directly or indirectly, (i) solicit,
initiate or encourage (including by way of furnishing information) or take
any other action to facilitate knowingly any inquiries or the making of any
proposal which constitutes or may reasonably be expected to lead to an
Acquisition Proposal (as defined herein) from any person, (ii) engage in any
discussion or negotiations relating thereto or (iii) enter into any agreement
with respect to, agree to, approve or recommend any Acquisition Proposal;
provided, however, that notwithstanding any other provision hereof, the
Company may, (A) at any time prior to the time the Company's stockholders
shall have voted to approve this Agreement engage in discussions or
negotiations with a third party (and may furnish such third party information
concerning the Company and its business, properties and assets to such party)
who (without any solicitation, initiation, encouragement or negotiation,
directly or indirectly, by or with the Company or the Representatives after
the date hereof) makes an unsolicited bona fide written Acquisition Proposal
if, and only to the extent that, (1) after having received the advice of an
independent financial advisor, that such Acquisition Proposal, if
consummated, could result in a transaction that is more favorable from
financial point of view to the Company's stockholders than the Merger (such
an Acquisition Proposal, a "Superior Proposal"), and the Special Committee of
the Company's Board of Directors shall conclude in good faith, after
considering applicable provisions of state law, on the basis of oral or
written advice of outside counsel that such action is necessary for the Board
of Directors of the Company to act in a manner consistent with its fiduciary
duties under applicable law, and (2) prior to furnishing such information to
or entering into discussions or negotiations with such person or entity, the
Company receives from such person or entity an executed confidentiality
agreement in customary form, and (3) the Company shall have fully complied
with this Section 4.13; (B) comply with Rule 14e-2 promulgated under the
Exchange Act with regard to a tender or exchange offer, and/or (C) accept a
Superior Proposal from a third party, provided the Company terminates this
Agreement pursuant to Section 6.1(h) hereof. As used herein, "Acquisition
Proposal" shall mean a proposal or offer for a tender or exchange offer,
merger, consolidation or other business combination involving the Company or
any proposal to acquire in any manner a substantial equity interest in, or a
substantial portion of the Parent Common Stock beneficially owned by the
Company.
(b) The Company shall immediately cease and terminate any existing
solicitation, initiation, encouragement, activity, discussion or negotiation
with any parties conducted heretofore by the Company or its Representatives
with respect to an Acquisition Proposal. The Company shall notify Parent
orally and in writing of any such inquiries, offers or proposals (including,
without limitation, the terms and conditions of any such proposal and the
identity of the person making it), promptly after the receipt thereof, shall
keep Parent informed of the status and details of any such inquiry, offer or
proposal, and shall give Parent at least five (5) business days prior written
notice of (i) any meeting of the Board of Directors of the Company to take
any action with respect to an Acquisition Proposal or to withdrawing or
-25-
modifying, in a manner adverse to Parent, its recommendation to the Company's
stockholders in favor of approval of the Merger, and (ii) any agreement to be
entered into with any person making such inquiry, offer or proposal.
(c) Prior to accepting a Superior Proposal, the Company shall, and shall
cause its financial and legal advisors to, negotiate in good faith with
Parent, for a period of not less than five (5) business days, to make such
changes to the terms and conditions of this Agreement as would enable the
Company to proceed with the transactions contemplated hereby.
ARTICLE V
CONDITIONS TO CLOSING
Section 5.1. Conditions to the Obligations of the Company and Parent and
Merger Sub. The respective obligations of the Company, on the one hand, and
Parent and Merger Sub, on the other hand, to consummate the transactions
contemplated hereby are subject to the requirements that:
(a) Stockholder Approval. This Agreement shall have been approved and
adopted by the requisite vote of the stockholders of the Company in
accordance with the DGCL and the Certificate of Incorporation and Bylaws of
the Company.
(b) No Injunctions or Restraints; Illegality. No temporary restraining
order, preliminary or permanent injunction or other order issued by any court
of competent jurisdiction or other legal or regulatory restraint or
prohibition shall have been issued and be in effect (i) restraining or
prohibiting the consummation of the Merger or any of the transactions
contemplated hereby or (ii) prohibiting or limiting the ownership, operation
or control by the Company, Parent or any of their respective Subsidiaries of
any portion of the business or assets of the Company, Parent or any of their
respective Subsidiaries, or compelling the Company, Parent or any of their
respective Subsidiaries to dispose of, grant rights in respect of, or hold
separate any portion of the business or assets of the Company, parent or any
of their respective Subsidiaries (except as contemplated by Section 4.8(b)
hereof); nor shall any action have been taken by a Governmental Entity or any
federal, state or foreign statute, rule, regulation, executive order, decree
or injunction shall have been enacted, entered, promulgated or enforced by
any Governmental Entity or arbitrator, which is in effect and has the effect
of making the Merger illegal or otherwise prohibiting the consummation of the
Merger.
(c) HSR Act. Any waiting period applicable to the consummation of the
Merger under the HSR Act shall have expired or been terminated.
(d) Registration Statement. The Registration Statement shall have been
declared effective under the Securities Act and no stop orders with respect
thereto shall have been issued, or threatened to be issued, and Parent shall
have received all requisite authorizations under all applicable state
securities or blue sky laws necessary to consummate the transaction, copies
of which shall have been provided to the Company.
(e) Nasdaq National Market. Approval for listing by the NMS upon
official notice of issuance of Parent Common Stock to be issued in the Merger
shall have been received by Parent and remain in full force and effect.
-26-
(f) Permitted Distribution. The Company shall have made the Permitted
Distribution. For purposes hereof, "Permitted Distribution" means the total
cash and cash equivalents of the Company minus the total liabilities (each as
calculated in accordance with GAAP, consistently applied) of the Company,
each as of the closing of business on the day prior to the Closing Date. The
Company shall provide Parent with the opporunity to review its preliminary
calculation of the Permitted Distribution not less than five business days
prior to any payment of the Permitted Distribution and will provide Parent
with advance notice of any material changes from such preliminary calculation
prior to any payment thereof.
Section 5.2. Conditions to the Obligations of the Company. The
obligations of the Company to consummate the transactions contemplated hereby
are subject to the further requirements that:
(a) Representations and Warranties. The representations and warranties
of Parent and Merger Sub contained in this Agreement or in any other document
delivered pursuant hereto shall be true and correct in all material respects
on and as of the Closing Date with the same effect as if made on and as of
the Closing Date and at the Closing Parent shall have delivered to the
Company a certificate to that effect.
(b) Performance of Obligations. Each of the obligations of Parent and
the Merger Sub to be performed on or before the Closing Date pursuant to the
terms of this Agreement shall have been duly performed in all material
respects on or before the Closing Date and at the Closing Parent shall have
delivered to the Company a certificate to that effect.
(c) Absence of Material Adverse Effect. No Parent Material Adverse
Effect shall have occurred, and no fact or circumstance shall exist which
could reasonably be expected to result in a Parent Material Adverse Effect.
(d) Litigation. There shall not be any litigation or other proceeding
pending or threatened to restrain or invalidate the transactions contemplated
by this Agreement, which in the reasonable judgment of the Company would make
the consummation of the Merger imprudent or inadvisable in light of
applicable law.
(e) Fairness Opinion. The fairness opinion issued by the Company
Financial Advisor shall not have been rescinded by such Advisor.
(f) Tax Opinion. The opinion of Xxxxxx Xxxxxxxx LLP dated on or prior to
the Closing Date in form and substance reasonably satisfactory to the Company
(the "Tax Opinion") shall be in full force and effect and shall not have been
withdrawn.
Section 5.3. Conditions to the Obligations of Parent and Merger Sub. The
obligations of Parent and Merger Sub to consummate the transactions
contemplated hereby are subject to the further requirements that:
(a) Representations and Warranties. The representations and warranties
of the Company contained in this Agreement or in any other document delivered
pursuant hereto shall be true and correct in all material respects on and as
of the Closing Date with the same effect as if made on and
-27-
as of the Closing Date and at the Closing the Company shall have delivered to
Parent a certificate to that effect.
(b) Performance of Obligations. Each of the obligations of the Company
to be performed on or before the Closing Date pursuant to the terms of this
Agreement shall have been duly performed in all material respects on or
before the Closing Date and at the Closing the Company shall have delivered
to Parent a certificate to that effect.
(c) Sale of CMC. The Company shall have consummated the sale of all of
its capital stock of CMC pursuant to the terms of an agreement that imposes
no continuing indemnification obligation or other liability on the Company
that survives the closing of such transactions.
(d) Absence of Material Adverse Effect. No Company Material Adverse
Effect shall have occurred, and no fact or circumstance shall exist which
could reasonably be expected to result in a Company Material Adverse Effect.
(e) No Litigation. There shall not be any proceeding pending or
threatened to restrain or invalidate the transactions contemplated by this
Agreement, which in the reasonable judgment of Parent would make the
consummation of the Merger imprudent or inadvisable in light of applicable
law or the defense of which would involve material expense.
(f) No Equity Rights in Surviving Corporation. There shall not be any
securities, rights, warrants, options, or other instruments outstanding
which, after consummation of the Merger, would be convertible into or
exercisable for securities of the Surviving Corporation, and Parent shall be
satisfied that all outstanding options, warrants and convertible securities
of the Company will become options, warrants and convertible securities
solely with respect to Parent Common Stock on the terms described in Section
1.5 hereof;
(g) Appraisal Shares. The Appraisal Shares, if any, shall not represent
more than 10% of the aggregate outstanding shares of Company Common Stock;
(h) Consents. All authorizations, consents, orders or approvals of, or
declarations or filings with, and all expirations of waiting periods imposed
by, any governmental body, agency or official (all of the foregoing,
"Consents") which are necessary for the consummation of the transactions
contemplated hereby, other than Consents the failure to obtain which would
not have (i) a material adverse effect on the consummation of the
transactions contemplated hereby or (ii) a Company Material Adverse Effect,
shall have been filed, have occurred or have been obtained (all such permits,
approvals, filings and consents and the lapse of all such waiting periods
being referred to as the "Requisite Regulatory Approvals") and all such
Requisite Regulatory Approvals shall be in full force and effect, provided,
however, that a Requisite Regulatory Approval shall not be deemed to have
been obtained if in connection with the grant thereof there shall have been
an imposition by any state or federal governmental body, agency or official
of any condition, requirement, restriction or change of regulation, or any
other action directly or indirectly related to such grant taken by such
governmental body, which would reasonably be expected to either have a
Company Material Adverse Effect or prevent Parent from exercising authority
and control over the shares of Parent Common Stock owned by the Company
expected to be acquired by Parent by virtue of the Merger.
-28-
ARTICLE VI
TERMINATION, AMENDMENT AND WAIVER
Section 6.1. Termination. This Agreement may be terminated (by written
notice by the terminating party to the other party effective on the date such
notice is deemed to have been given) and the transactions contemplated hereby
may be abandoned at any time prior to the Closing Date:
(a) By mutual written consent of each of Parent and the Company;
(b) By either Parent or the Company if the Merger shall not have been
consummated on or before December 31, 1998 (the "Termination Date");
provided, however, that the right to terminate this Agreement under this
Section 6.1(b) shall not be available to any party whose failure to fulfill
any obligation under this Agreement has been the cause of, or resulted in,
the failure of the Effective Time to occur on or before the Termination Date;
(c) By either Parent or the Company if a Governmental Entity or
arbitrator shall have issued an order, decree or ruling or taken any other
action (which order, decree or ruling the parties shall use their
commercially reasonable efforts to lift), in each case permanently
restraining, enjoining or otherwise prohibiting the transactions contemplated
by this Agreement, and such order, decree, ruling or other action shall have
become final and nonappealable;
(d) By (i) Parent if the Company shall have breached, or failed to
comply with, in any material respect any of its obligations under this
Agreement or any representation or warranty made by the Company shall have
been incorrect in any material respect when made or shall have since ceased
to be true and correct in any material respect, and such breach, failure or
misrepresentation is not cured within thirty (30) days after notice thereof
or (ii) by the Company if the Parent shall have breached, or failed to comply
with, in any material respect any of its obligations under this Agreement or
any representation or warranty made by the Parent shall have been incorrect
in any material respect when made or shall have since ceased to be true and
correct in any material respect, and such breach, failure or
misrepresentation is not cured within thirty (30) days after notice thereof;
(e) By Parent if the Board of Directors of the Company or any committee
of the Board of Directors of the Company (i) shall withdraw or modify in any
adverse manner its approval and recommendation of this Agreement to its
stockholders, (ii) within ten (10 ) days after Parent's request, shall fail
to reaffirm such approval or recommendation referred to in clause (i), (iii)
shall approve or recommend any acquisition of the shares of Parent Common
Stock owned by it (other than pursuant to the TLSP/CRW Warrants) or any
tender offer for shares of its capital stock, in each case, other than by
Parent or an affiliate thereof, (iv) shall have recommended that the
stockholders of the Company tender their shares or publicly announced its
intention to take no position with respect to a tender offer or exchange
offer for any of the outstanding shares of the Company Common Stock that
shall have been commenced or a registration statement with respect thereto
shall have been filed (other than by Parent or an affiliate thereof), or (v)
shall resolve to take any of the actions specified in this clause (e);
(f) By either Parent or the Company if the Required Company Stockholder
Approval shall not have been obtained at the Stockholders Meeting, including
any adjournments thereof;
-29-
(g) By the Company, prior to the approval of this Agreement by the
stockholders of the Company, upon five (5) days' prior notice to Parent, if,
as a result of a Superior Proposal by a party other than Parent or any of its
affiliates, the Board of Directors of the Company determines in good faith
that their fiduciary obligations under applicable law require that such
Superior Proposal be accepted provided, however, that the Company has fully
complied with its obligations under Section 4.14 hereof and with all the
applicable requirements of Section 6.2(b) hereof, including the payment of
the Termination Fee and the Parent Expenses.
Section 6.2. Effect of Termination.
(a) In the event of termination of this Agreement as provided in Section
6.1 hereof, this Agreement shall forthwith become void and there shall be no
liability on the part of any of the parties, except (i) as set forth in the
last sentence of Section 4.3, the provisions of Section 4.6 hereof and the
provisions of 6.2(b), and (ii) nothing herein shall relieve any party from
liability for any willful breach hereof.
(b) (i) If this Agreement (A) is terminated by the Parent pursuant to
Section 6.1(e) or (f) hereof or by the Company pursuant to Section 6.1(g)
hereof, or (B) is terminated as a result of the Company's breach of Section
4.14 hereof which is not cured within 10 days after notice thereof to the
Company, and (ii) either (A) at the time of such termination or prior to the
Stockholders Meeting there shall have been an Acquisition Proposal (whether
or not such offer shall have been rejected or shall have been withdrawn prior
to the time of such termination or of the Stockholders Meeting) or (B) within
one (1) year after termination of the Agreement the Company shall have
entered into an agreement with respect to, or consummated, an Acquisition
Proposal, the Company shall pay to Parent an amount equal to (x) a cash
termination fee of $1,800,000 (the "Termination Fee"), and (y) all expenses
incurred by Parent in connection with the negotiation, execution and
performance of the transactions contemplated hereby (including without
limitation all fees and expenses payable to Parent's financial advisors,
auditor and counsel) not to exceed $150,000 ("Parent Expenses") within one
(1) business day after such termination or, in the case of (ii)(B), entering
into an agreement with respect to, or consummating an Acquisition Proposal.
(c) If the Company fails to promptly pay to Parent any Termination Fee
or Parent Expenses due under Section 6.2(b), the Company shall pay the costs
and expenses (including legal fees and expenses) in connection with any
action, including the filing of any lawsuit or other legal action, taken to
collect payment, together with interest on the amount of any unpaid fee at
the publicly announced prime rate of Citibank, N.A. from the date such fee
was required to be paid.
Section 6.3. Amendment. This Agreement may be amended by Parent and the
Company pursuant to a writing adopted by action taken by Parent and the
Company at any time before the Effective Time; provided, however, that, after
approval of this Agreement by the stockholders of the Company, no amendment
may be made which would alter or change the amount or kinds of consideration
to be received by the holders of Company Common Stock upon consummation of
the Merger or which would materially and adversely affect the holders of
Company Common Stock. This Agreement may not be amended except by an
instrument in writing signed by the parties to this Agreement.
-30-
Section 6.4. Waiver. At any time before the Effective Time, any party
hereto may (a) extend the time for the performance of any of the obligations
or other acts of the other parties, (b) waive any inaccuracies in the
representations and warranties contained herein or in any document delivered
pursuant hereto and (c) waive compliance with any of the agreements or
conditions contained herein. Any agreement on the part of a party to any such
extension or waiver shall be valid only as against such party and only if set
forth in an instrument in writing signed by such party.
ARTICLE VII
MISCELLANEOUS
Section 7.1. Survival of Representations and Warranties. The
representations and warranties contained herein shall not survive beyond the
Closing Date. This Section 7.1 shall not limit any covenant or agreement of
the parties hereto which by its terms requires performance after the Closing
Date.
Section 7.2. Entire Agreement. This Agreement constitutes the entire
agreement among the parties with respect to the subject matter hereof and
supersedes all prior written and oral and all contemporaneous oral agreements
and understandings with respect to the subject matter hereof.
Section 7.3. Notices. All notices and other communications hereunder
shall be in writing and shall be deemed to have been duly given when
delivered in person, by telecopy or by overnight courier service to the
respective parties as follows:
if to Parent or Merger Sub:
TeleSpectrum Worldwide Inc.
000 X. Xxxxx Xxxx
Xxxx xx Xxxxxxx, XX 00000
Telecopy: (000) 000-0000
Attention: Xx. Xxxxx X. Xxxxxx
with copies to:
Xxxxxx, Xxxxx & Bockius LLP
0000 Xxx Xxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000
Telecopy: (000) 000-0000
Attention: Xxxxxxx X. Xxxxxxx, Esq.
-31-
if to the Company:
CRW Financial, Inc.
000 Xxxx Xxxxx Xxxxxxxxx
Xxxxx 000
X. Xxxxxxxxxxxx, XX 00000
Telecopy: (000) 000-0000
Attention: Xx. Xxxxxxxx X. Xxxxxxxx
with a copy to:
Xxxxxx Xxxxxxxx LLP
3000 Two Xxxxx Xxxxxx
Xxxxxxxxxx xxx Xxxx Xxxxxxx
Xxxxxxxxxxxx, XX 00000
Telecopy: (000) 000-0000
Attention: Xxxxx X. Xxxxxxx, Esq.
or to such other address as the party to whom notice is given may have
previously furnished to the others in writing in the manner set forth above. Any
notice or communication delivered in person shall be deemed effective on
delivery. Any notice or communication sent by telecopy shall be deemed effective
on the first business day at the place of which such notice or communication is
received following the day on which such notice or communication was sent.
Section 7.4. 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 principles of conflicts of laws
applicable thereto.
Section 7.5. Descriptive Headings. The descriptive headings herein are
inserted for convenience of reference only and are not intended to be part of
or to affect the meaning or interpretation of this Agreement.
Section 7.6. Parties in Interest. This Agreement shall be binding upon
and inure solely to the benefit of each party hereto, and nothing in this
Agreement, express or implied, is intended to confer upon any other person
(including without limitation any employee of the Company or any Subsidiary)
any rights or remedies of any nature whatsoever under or by reason of this
Agreement except for Section 1.5 and Section 4.10 (which are intended to be
for the benefit of the persons provided for therein, and may be enforced by
such persons.)
Section 7.7. Counterparts; Facsimile Signatures. This Agreement may be
executed in counterparts, each of which shall be deemed to be an original,
but all of which shall constitute one and the same agreement. This Agreement
may be executed by facsimile signature which, for all purposes, shall be
deemed to be an original signature.
Section 7.8. Expenses. Except as otherwise provided herein, all costs
and expenses incurred in connection with the transactions contemplated by
this Agreement shall be paid by the party incurring such expenses except that
Parent and the Company shall share equally (i) the filing fees payable with
respect to the required filings under the HSR Act, (ii) the registration fees
payable with respect to filing
-32-
the Registration Statement, and (iii) all printing expenses incurred with
respect to the Proxy Statement and the Registration Statement.
Section 7.9. Personal Liability. This Agreement shall not create or be
deemed to create or permit any personal liability or obligation on the part of
any direct or indirect stockholder of any party hereto or any officer, director,
employee, agent, representative or investor of any party hereto.
Section 7.10. Binding Effect; Assignment. This Agreement shall inure to
the benefit of be binding upon the parties hereto and their respective legal
representatives and successors. This Agreement may not be assigned by any
party hereto without the prior written consent of the other party.
Section 7.11. Severability. If any provision of this Agreement or the
application thereof to any person or circumstance is held invalid or
unenforceable in any jurisdiction, the remainder hereof, and the application
of such provision to such person or circumstance in any other jurisdiction or
to other persons or circumstances in any jurisdiction, shall not be affected
thereby, and to this end the provisions of this Agreement shall be severable.
-33-
IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
executed on its behalf by its officers thereunto duly authorized on the day
and year first above written.
TELESPECTRUM WORLDWIDE INC.
By: /s/ Xxxxx Xxxxxx
----------------------------
Name: Xxxxx Xxxxxx
Title: President
CRW ACQUISITION CORP.
By: /s/ Xxxxx Xxxxxx
----------------------------
Name: Xxxxx Xxxxxx
Title: President
CRW FINANCIAL, INC.
By: /s/ Xxxxxxxx X. Xxxxxxxx
----------------------------
Name: Xxxxxxxx X. Xxxxxxxx
Title: Vice President
-34-
TABLE OF DEFINED TERMS
Page
Defined Term No.
------------------ ----
Acquisition Proposal......................................................25
Agreement..................................................................1
Appraisal Shares...........................................................3
Authorizations............................................................11
Balance Sheet Date.........................................................9
Certificate of Merger......................................................2
Certificates...............................................................3
Closing....................................................................2
Closing Date...............................................................2
CMC.......................................................................14
CMC Merger................................................................20
Code.......................................................................1
Company....................................................................1
Company 1997 Form 10-K.....................................................9
Company Audit Date........................................................10
Company Balance Sheet.....................................................10
Company Common Stock.......................................................1
Company Financial Advisor.................................................16
Company Form S-3...........................................................6
Company Forms 10-Q.........................................................9
Company Material Adverse Effect............................................6
Company Preferred Stock....................................................7
Company Schedule...........................................................6
Company Stock Plans........................................................7
Company Tax Certificate...................................................25
Company's SEC Reports......................................................9
Company's Auditors.........................................................9
Confidentiality Agreement.................................................21
Consents..................................................................28
Contract..................................................................11
DGCL.......................................................................1
Effective Time.............................................................2
Employee Plans............................................................12
ERISA.....................................................................12
ERISA Affiliate...........................................................12
Exchange Act...............................................................6
Exchange Agent.............................................................3
Exchange Ratio.............................................................2
Fully-Diluted Common Stock.................................................2
GAAP.......................................................................9
Governmental Entity........................................................9
HSR Act....................................................................9
-35-
IRS.......................................................................13
ISO.......................................................................14
Joint Venture..............................................................6
Liens......................................................................7
Merger.....................................................................1
Merger Consideration.......................................................2
Merger Stock...............................................................3
Merger Sub.................................................................1
Merger Sub Common Stock....................................................3
NMS.......................................................................21
Other Filings.............................................................22
Parent.....................................................................1
Parent Common Stock........................................................1
Parent Expenses...........................................................30
Parent Form S-3............................................................6
Parent Material Adverse Effect............................................16
Parent Preferred Stock....................................................17
Parent Stock Plan.........................................................17
Parent Schedule...........................................................16
Parent Tax Certificate....................................................25
Parent's SEC Reports......................................................17
Parent's Auditors.........................................................18
Permitted Distribution....................................................27
Permitted Liens...........................................................11
Proxy Statement...........................................................15
Registration Statement....................................................14
Replacement Options.......................................................19
Representatives...........................................................25
Required Company Stockholder Approval......................................8
Requisite Regulatory Approvals............................................28
SEC........................................................................9
SEC Transaction Filings...................................................22
Securities Act.............................................................9
Stockholders Meeting......................................................15
Subsidiary.................................................................6
Superior Proposal.........................................................25
Surviving Corporation......................................................1
Surviving Corporation Common Stock.........................................3
Tax Opinion...............................................................27
Tax Returns...............................................................11
Taxes.....................................................................12
Termination Date..........................................................29
Termination Fee...........................................................30
TLSP/CRW Warrants..........................................................5
-36-
