SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
Current Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) August 22, 1999
PSINet Inc.
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(Exact name of registrant as specified in its charter)
New York 0-25812 16-1353600
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
510 Huntmar Park Drive, Herndon, Virginia 20170
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (703) 904-4100
(Former name or former address, if changed since last report)
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Item 5. Other Events
On August 23, 1999, PSINet Inc. announced it had entered into a
definitive agreement to acquire Transaction Network Services, Inc. (NYSE: TNI).
The $720 million aggregate purchase price consists of $351 million in cash and
up to 7.8 million shares of PSINet common stock. TNI shareholders may elect to
receive cash, PSINet stock, or both. The stock portion of the transaction has
been designed to achieve tax-free treatment for federal income tax purposes.
Completion of the transaction is subject to a number of conditions, including
receipt of TNI shareholder approval and regulatory approvals. A copy of the
Agreement and Plan of Merger, dated August 22, 1999, is attached hereto as
Exhibit 2.1 and is incorporated herein by reference. The press release
announcing the transaction is also attached hereto as Exhibit 99.1.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
(c) Exhibits
Exhibit 2.1 Agreement and Plan of Merger, dated August 22,
1999, among PSINet Inc., PSINet Shelf I Inc. and Transaction
Network Services, Inc.
Exhibit 99.1 Press release dated August 23, 1999
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Dated: August 24, 1999 PSINET INC.
By: /s/ David N. Kunkel
David N. Kunkel
Executive Vice President and
General Counsel
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EXHIBIT INDEX
Exhibit No. Description Location
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Exhibit 2.1 Agreement and Plan of Merger, dated 5
August 22, 1999, among PSINet Inc.,
PSINet Shelf I Inc. and Transaction
Network Services, Inc.
Exhibit 99.1 Press release dated August 23, 1999 50
Exhibit 2.1
AGREEMENT AND PLAN OF MERGER
DATED AS OF AUGUST 22, 1999
AMONG
PSINET INC.,
PSINET SHELF I INC.
AND
TRANSACTION NETWORK SERVICES, INC.
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER (this "Agreement"), dated as of August 22,
1999, by and among PSINET INC. ("Parent"), a New York corporation, PSINET SHELF
I INC. ("Merger Subsidiary"), a Delaware corporation and a wholly-owned
subsidiary of Parent, and TRANSACTION NETWORK SERVICES, INC. (the "Company"), a
Delaware corporation.
WHEREAS, the respective Boards of Directors of Parent, Merger
Subsidiary and the Company have approved the merger of the Company with and into
the Merger Subsidiary (the "Merger"), upon the terms and subject to the
conditions set forth herein.
NOW, THEREFORE, in consideration of the foregoing premises and the
representations, warranties and agreements contained herein the parties hereto
agree as follows:
ARTICLE I
THE MERGER
Section 1.1 The Merger. Upon the terms and subject to the conditions of
this Agreement, at the Effective Time (as defined in Section 1.3), the Company
shall be merged with and into Merger Subsidiary and the separate existence of
the Company shall thereupon cease, and the Merger Subsidiary shall continue as
the surviving corporation in the Merger (the "Surviving Corporation") under the
laws of the State of Delaware under the name "Transaction Network Services,
Inc." as a wholly-owned subsidiary of Parent. Throughout this Agreement, the
term "Merger Subsidiary" shall refer to the Merger Subsidiary prior to the
Merger and the term "Surviving Corporation" shall refer to the Merger Subsidiary
in its status as the surviving corporation in the Merger.
Section 1.2 Closing. The closing of the Merger will take place as
promptly as practicable (and in any event within two business days) after
satisfaction or waiver in writing of the conditions set forth in Article VIII
(the "Closing Date"). The Closing shall be held at the offices of Nixon Peabody
LLP, One Thomas Circle, Washington, D.C., unless another date, time or place is
agreed to in writing by the parties hereto.
Section 1.3 Effective Time of the Merger. The Merger shall become
effective upon the filing of a certificate of merger ("Certificate of Merger")
pursuant to and in compliance with this Agreement and Section 251 of the General
Corporation Law of the State of Delaware (the "Delaware Law") with the Secretary
of State of the State of Delaware. When used in this Agreement, the term
"Effective Time" shall mean the time at which the Certificate of Merger has been
filed and become effective in accordance with Delaware Law.
Section 1.4 Effect of the Merger. The Merger shall, from and after the
Effective Time, have all the effects provided by Delaware Law. If at any time
after the Effective Time the Surviving Corporation shall consider or be advised
that any further deeds, conveyances, assignments or assurances in law or any
other acts are necessary, desirable or proper to vest, perfect or confirm, of
record or otherwise, in the Surviving Corporation, the title to any property or
rights of the Company to be vested in the Surviving Corporation, by reason of,
or
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as a result of, the Merger, or otherwise to carry out the purposes of this
Agreement, the Company agrees that the Surviving Corporation and its proper
officers and directors shall execute and deliver all such deeds, conveyances,
assignments and assurances in law and do all things necessary, desirable or
proper to vest, perfect or confirm title to such property or rights in the
Surviving Corporation and otherwise to carry out the purposes of this Agreement,
and that the proper officers and directors of the Surviving Corporation are
fully authorized in the name of each of the Company and the Merger Subsidiary or
otherwise to take any and all such actions.
ARTICLE II
THE SURVIVING CORPORATION
Section 2.1 Certificate of Incorporation. The certificate of
incorporation of the Merger Subsidiary as in effect immediately prior to the
Effective Time shall be the certificate of incorporation of the Surviving
Corporation until thereafter duly amended, except that the name of the Surviving
Corporation shall be "Transaction Network Services, Inc."
Section 2.2 By-laws. The By-laws of the Merger Subsidiary as in effect
immediately prior to the Effective Time shall be the By-laws of the Surviving
Corporation until thereafter duly amended.
Section 2.3 Board of Directors; Officers. The directors of the Merger
Subsidiary in office immediately prior to the Effective Date shall be the
directors of the Surviving Corporation immediately after the Effective Time and
the officers of the Merger Subsidiary in office immediately prior to the
Effective Date shall be the officers of the Surviving Corporation immediately
after the Effective Time in each case, until the earlier of their respective
deaths, resignations, or removals, and the time that their respective successors
have been duly elected or appointed and shall have qualified.
ARTICLE III
CONVERSION OF SHARES
Section 3.1 Merger Consideration. As of the Effective Time, by virtue
of the Merger and without any action on the part of any stockholder of the
Company or Merger Subsidiary:
(a) Shares Of Merger Subsidiary Stock. Each share of common stock, par
value $.01 per share, of Merger Subsidiary (the "Merger Subsidiary Common
Stock") that is issued and outstanding immediately prior to the Effective Time
shall remain issued and outstanding unchanged by reason of the Merger as one
fully paid and nonassessable share of common stock, par value $.01 per share, of
the Surviving Corporation.
(b) Cancellation Of Certain Company Common Stock.
Each share of the Company's common stock, par value $.01 per share ("Company
Common Stock") that is owned by the Company as treasury stock and any shares of
Company Common Stock that are owned by Parent shall be canceled and shall cease
to exist, and no stock of Parent or other consideration shall be delivered in
exchange therefor.
(c) Conversion Of Company Common Stock. Subject to the
provisions of this Section 3.1, each share of Company Common Stock, other than
Dissenting Shares (as defined in Section
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3.1(n)) and shares canceled pursuant to Section 3.1(b), issued and outstanding
immediately prior to the Effective Time shall by virtue of the Merger and
without any action on the part of the holder thereof, be converted into the
right to receive the merger consideration as follows (the "Merger
Consideration") (i) $45.00 in cash (the "Cash Consideration"), or (ii) a number
of validly issued, fully paid and nonassessable (subject to Section 630 of the
New York Business Corporation Law ("NYBCL") shares of Common Stock, par value
$.01 per share, of Parent ("Parent Common Stock") equal to the Exchange Ratio
(as defined below) (the "Stock Consideration"), or (iii) the right to receive a
combination of cash and shares of Parent Common Stock determined in accordance
with this Section 3.1 (the "Mixed Consideration"). Notwithstanding any provision
of this Agreement to the contrary (other than Section 3.1(l)) and assuming all
outstanding Company Stock Options, ESPP Options and any options issued pursuant
to Section 6.1(a)(ii) are exercised prior to the Effective Time, no more than
7,796,223 shares of Parent Common Stock shall be issued as Stock Consideration
and a maximum aggregate of $350,830,015 shall be issued as Cash Consideration in
the Merger. The "Exchange Ratio" shall be equal to 1:1. No fractional shares of
Parent Common Stock shall be issued in connection with the Merger and in lieu
thereof the holder of shares of Company Common Stock shall have the right to
receive cash in an amount equal to the closing price of the Parent Common Stock
on the third trading day prior to the Effective Time multiplied by the
fractional share amount.
(d) Cash Election. Subject to the limitations of the Cash Election
Number (defined below), each record holder of shares of Company Common Stock
immediately prior to the Effective Time shall be entitled to elect to receive
cash for all or any part of such holder's shares of Company Common Stock (a
"Cash Election"). Notwithstanding the foregoing, the maximum aggregate number of
shares of Company Common Stock that may be converted into the right to receive
cash in the Merger plus any Dissenting Shares shall be 50% of the total number
of shares of Company Common Stock issued and outstanding as of the Effective
Time (the "Cash Election Number"). Cash Elections shall be made on a form
designed for that purpose (a "Form of Election"). A holder of record of shares
of Company Common Stock who holds such shares as nominee, trustee or in another
representative capacity (a "Representative") may submit multiple Forms of
Election, provided that such Representative certifies that each such Form of
Election covers all the shares of Company Common Stock held by such
Representative for a particular beneficial owner.
(e) Cash Election Shares. If the aggregate number of shares of Company
Common Stock covered by Cash Elections (the "Cash Election Shares") exceeds the
Cash Election Number, each Cash Election Share shall be converted into (i) the
right to receive an amount in cash, without interest, equal to the product of
(A) the Cash Consideration and (B) a fraction (the "Cash Fraction"), the
numerator of which shall be the Cash Election Number and the denominator of
which shall be the total number of Cash Election Shares, and (ii) a number of
shares of Parent Common Stock equal to the product of (A) the Exchange Ratio and
(B) a fraction equal to one minus the Cash Fraction. The adjustments provided in
this Section 3.1(e), if applicable, will result in each holder of Company Common
Stock making a Cash Election receiving Cash Consideration for such holder's Cash
Election Shares on a pro rata basis with all other holders of Cash Election
Shares and Stock Consideration for the balance of such
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holder's shares of Company Common Stock so that the maximum aggregate Cash
Election Number is not exceeded.
(f) Stock Election. Subject to the limitations of the Stock Election
Number (as defined below), each record holder of shares of Company Common Stock
immediately prior to the Effective Time shall be entitled to elect to receive
shares of Parent Common Stock for all or any part of such holder's shares of
Company Common Stock (a "Stock Election"). Notwithstanding the foregoing, the
maximum aggregate number of shares of Company Common Stock that may be converted
into the right to receive shares of Parent Common Stock in the Merger shall be
50% of the total number of shares of Company Common Stock issued and outstanding
as of the Effective Time (the "Stock Election Number"). Stock Elections shall be
made on a Form of Election. A Representative may submit multiple Forms of
Election, provided that such Representative certifies that each such Form of
Election covers all the shares of Company Common Stock held by such
Representative for a particular beneficial owner.
(g) Stock Election Shares. If the aggregate number of shares of Company
Common Stock covered by Stock Elections (the "Stock Election Shares") exceeds
the Stock Election Number, each Stock Election Share shall be converted into (i)
the right to receive a number of shares of Parent Common Stock, equal to the
product of (A) the Exchange Ratio and (B) a fraction (the "Stock Fraction"), the
numerator of which shall be the Stock Election Number and the denominator of
which shall be the total number of Stock Election Shares, and (ii) an amount in
cash, without interest, equal to the product of (A) the Cash Consideration and
(B) a fraction equal to one minus the Stock Fraction. The adjustments provided
in this Section 3.1(g), if applicable, will result in each holder of Company
Common Stock making a Stock Election receiving Stock Consideration for such
holder's Stock Election Shares on a pro rata basis with all other holders of
Stock Election Shares and Cash Consideration for the balance of such holder's
shares of Company Common Stock so that the maximum aggregate Stock Election
Number is not exceeded.
(h) Mixed Election. Subject to the limitations of the Cash Election
Number and the Stock Election Number, each record holder of shares of Company
Common Stock immediately prior to the Effective Time shall be entitled to elect
to receive shares of Parent Common Stock for part of such holder's shares of
Company Common Stock and cash for the remaining part of such holder's shares of
Company Common Stock (the "Mixed Election" and, collectively with Stock Election
and Cash Election, the "Election"). Mixed Elections shall be made on a Form of
Election. A Representative may submit multiple Forms of Election, provided that
such Representative certifies that each such Form of Election covers all the
shares of Company Common Stock held by such Representative for a particular
beneficial owner. With respect to each holder of Company Common Stock who makes
a Mixed Election, the shares of Company Common Stock such holder elects to be
converted into the right to receive Cash Consideration shall be treated as Cash
Election Shares for purposes of the provisions contained in Sections 3.1(d) and
(e), and the shares such holder elects to be converted into the right to receive
shares of Parent Common Stock shall be treated as Stock Election Shares for
purposes of the provisions contained in Sections 3.1(f) and (g).
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(i) Form Of Election. To be effective, a Form of Election must be
properly completed, signed and submitted to Parent's transfer agent and
registrar, as paying agent or such other entity as may be designated by Parent
(the "Paying Agent"). Parent shall have the discretion, which it may delegate in
whole or in part to the Paying Agent, to determine whether Forms of Election
have been properly completed, signed and submitted or revoked and to disregard
immaterial defects in Forms of Election. The decision of Parent (or the Paying
Agent) in such matters shall be conclusive and binding. Neither Parent nor the
Paying Agent shall be under any obligation to notify any person of any defect in
a Form of Election submitted to the Paying Agent. The Paying Agent shall also
make all computations contemplated by this Section 3.1, and all such
computations shall be conclusive and binding on the holders of shares of Company
Common Stock.
(j) Failure to Make an Election. For the purposes hereof, a holder of
shares of Company Common Stock who does not submit a Form of Election that is
received by the Paying Agent prior to the Election Deadline (as defined in
Section 3.1(k)) (the "No Election Shares") shall be deemed not to have made a
Cash Election, Stock Election or Mixed Election. If Parent or the Paying Agent
shall determine that any purported Election was not properly made, the shares
subject to such improperly made Election shall be treated as No Election Shares.
No Election Shares shall be treated by the Parent as a Mixed Election
designating one-half as Cash Election Shares and one-half as Stock Election
Shares.
(k) Election Deadline. Parent and the Company shall each use its
reasonable commercial efforts to cause copies of the Form of Election to be
mailed to the record holders of the Company Shares not fewer than thirty days
prior to the Effective Time and to make the Form of Election available to all
persons who become record holders of Company Shares subsequent to the date of
such mailing and no later than the close of business on the seventh business day
prior to the Effective Time. A Form of Election must be received by the Paying
Agent by 5:00 p.m., New York City time, on third Business Day following the
Effective Date (the "Election Deadline") in order to be effective. All elections
may be revoked until the Election Deadline in writing by the record holders
submitting Forms of Election.
(l) Anti-Dilution Provisions. In the event Parent (i) changes (or
establishes a record date for changing) the number of shares of Parent Common
Stock issued and outstanding prior to the Effective Time as a result of a stock
split, stock dividend, stock combination, recapitalization, reclassification,
reorganization or similar transaction with respect to the outstanding Parent
Common Stock or (ii) pays or makes an extraordinary dividend or distribution in
respect of Parent Common Stock (other than a distribution referred to in clause
(i) of this sentence) and, in either case, the record date therefor shall be
prior to the Effective Time, the Merger Consideration shall be proportionately
adjusted. If, between the date hereof and the Effective Time, Parent shall merge
or consolidate with or into any other corporation (a "Business Combination") and
the terms thereof shall provide that Parent Common Stock shall be converted into
or exchanged for the shares of any other corporation or entity, then provision
shall be made so that shareholders of the Company who would be entitled to
receive shares of Parent Common Stock pursuant to this Agreement shall be
entitled to receive, in lieu of each share of Parent Common Stock issuable to
such shareholders as
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provided herein, the same kind and amount of securities or assets as shall be
distributable upon such Business Combination with respect to one share of Parent
Common Stock and the parties hereto shall agree on an appropriate restructuring
of the transactions contemplated herein.
(m) Company Stock Options. Pursuant to the terms of the plans pursuant
to which the Company Stock Options (as defined in Section 4.2(a)) were issued
and this Agreement, which are expressly assumed by the Parent as of the
Effective Time, the outstanding and unexercised Company Stock Options shall, at
the Effective Time, become exercisable for shares of Parent Common Stock in
accordance with their terms except that the number of shares of Parent Common
Stock subject to such Options shall be equal to the product of the (i) number of
shares of Company Common Stock subject to the original Option, and (ii) the
Exchange Ratio, and the exercise price per share of Parent Common Stock under
such Option shall be equal to (iii) the exercise price under the Option as
written divided by (iv) the Exchange Ratio. The adjustments provided herein with
respect to any Options which are "incentive stock options" (as defined in
Section 422 of the Code) shall be effected in a manner consistent with Section
424(a) of the Code.
(n) Dissenting Shares. Each outstanding share of Company Common Stock
the holder of which has perfected his right to dissent under applicable law and
has not effectively withdrawn or lost such right as of the Effective Time (the
"Dissenting Shares") shall not be converted into or represent a right to receive
the Merger Consideration, and the holder thereof shall be entitled only to such
rights as are granted by applicable law; provided, however, that any Dissenting
Share held by a person at the Effective Time who shall, after the Effective
Time, withdraw the demand for payment for shares or lose the right to payment
for shares, in either case pursuant to the Delaware Law, shall be deemed to be
converted into, as of the Effective Time, into the right to receive Stock
Consideration, any cash in lieu of fractional shares, and/or Cash Consideration
pursuant to Section 3.1(c) in the same manner as if such shares were No Election
Shares. The Company shall give Parent prompt notice upon receipt by the Company
of any such written demands for payment of the fair value of such shares of
Company Common Stock and of withdrawals of such notice and any other instruments
provided pursuant to applicable law. Any payments of Cash Consideration made in
respect of Dissenting Shares shall be made by the Surviving Corporation.
Section 3.2 Stockholders' Rights at the Effective Time. On and after
the Effective Time, the certificates that immediately prior to the Effective
Time represented shares of the Company Common Stock (the "Certificates") shall
cease to represent any rights with respect to the Company and shall only
represent the right to receive the Cash Consideration and/or the Stock
Consideration, together with the amount of cash, if any, payable in lieu of
fractional shares of Parent Common Stock into which any shares of Company Common
Stock have been converted, provided, however, that no dividends or other
distributions, if any, in respect of the shares of Parent Common Stock, declared
after the Effective Time and payable to holders of record after the Effective
Time, and no interest with respect to any Cash Consideration, shall be paid to
the holders of any unsurrendered Certificates until such Certificates and
transmittal letters are surrendered and delivered as provided in Section 3.3 of
this Agreement. Subject to applicable Delaware Law, after the surrender and
exchange of Certificates, the record holders thereof will be entitled to receive
any such dividends or other distributions declared after the
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Effective Time without interest thereon, which theretofore have become payable
with respect to the number of shares of Parent Common Stock for which such
Certificates were exchangeable. Notwithstanding anything herein to the contrary,
holders of any unsurrendered Certificates shall not be entitled to exercise any
rights as a holder of Parent Common Stock, including, without limitation, the
right to vote the Parent Common Stock, until such Certificates are surrendered
and exchanged pursuant to this Agreement.
Section 3.3 Surrender and Exchange of Share Certificates.
(a) Promptly after the Effective Time, the Parent shall make available
to the Paying Agent such certificates evidencing such number of shares of Parent
Common Stock and such amount of cash in order to enable the Paying Agent to
effect the conversion of Company Common Stock into Stock Consideration, any cash
in lieu of fractional shares, and/or Cash Consideration.
(b) On the Closing Date, Parent shall instruct the Paying Agent to mail
to each person who was a holder of record of shares of the Company Common Stock
immediately prior to the Effective Time: (i) a letter of transmittal; and (ii)
instructions for use in effecting the surrender of the Certificates nominally
representing the Company Common Stock in exchange for Stock Consideration, and
any cash payable in lieu of fractional shares, and/or Cash Consideration based
upon such holder's Election, as adjusted, or otherwise as provided in Section
3.1.
(c) After the Effective Time, each holder of a Certificate shall
surrender and deliver such Certificate to the Paying Agent together with a duly
completed and executed transmittal letter. and accompanied by the Certificate
(or by an appropriate guarantee of delivery of such Certificate signed by a firm
that is a member of any registered national securities exchange or a member of
the National Association of Securities Dealers, Inc. or a bank, broker, dealer,
credit union, savings association or other entity that is a member in good
standing of an acceptable signature guarantee program of transfer agents or
securities exchanges)Promptly after such surrender and delivery, the holder
shall receive a certificate representing the number of whole shares of Parent
Common Stock for which such holder's shares of the Company Common Stock have
been converted for Stock Elections, together with a check for any cash in lieu
of any fractional share of Parent Common Stock, or a check for the cash payable
in respect of such shares for Cash Elections or both. Until so surrendered and
exchanged, each Certificate formerly representing an outstanding share of
Company Common Stock shall after the Effective Time be deemed for all purposes
to evidence only the right to receive Stock Consideration, and any cash payable
in lieu of fractional shares, and/or Cash Consideration elected based upon such
holder's Election, as adjusted, or otherwise, as provided in Section 3.1.
(d) At the Effective Time, the stock transfer books of the Company
shall be closed and no transfer of shares of Company Common Stock shall be made
thereafter, other than transfers of shares of Company Common Stock that have
occurred prior to the Effective Time. In the event that, after the Effective
Time, certificates are presented for transfer to the
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transfer agent for the Company, the Merger Subsidiary or Parent, they shall be
delivered to the Paying Agent and exchanged for Stock Consideration, and any
cash payable in lieu of fractional shares, and/or Cash Consideration, all as
provided for in this Section 3.3.
(e) Any shares of Parent Common Stock or cash that remains
undistributed to the stockholders of the Company as of the Effective Time for
one year after the Effective Time shall be delivered to the Company by the
Paying Agent, upon demand, and any former stockholders of the Company who have
not previously complied with this Section 3.3 shall thereafter look only to
Parent for payment of their claim for Stock Consideration, any cash payable in
lieu of fractional shares, and/or Cash Consideration.
(f) Neither the Paying Agent, nor any of the Company, Merger Subsidiary
or Parent shall be liable to any holder of shares of Company Common Stock with
respect to any shares of Parent Common Stock (or dividends or distributions with
respect to Parent Common Stock) delivered to a public official pursuant to any
applicable abandoned property, escheat or similar law, rule, regulation,
statute, order, judgment or decree.
(g) In the event any Certificates shall have been lost, stolen or
destroyed, the Paying Agent shall issue such Stock Consideration, and any cash
payable in lieu of fractional shares, and/or Cash Consideration and any
dividends or other distributions with respect to Parent Common Stock to which
such holder is entitled in exchange for such lost, stolen or destroyed
Certificates, upon the making of an affidavit of that fact by the holder thereof
and the delivery of such bond as the Paying Agent may reasonably require.
(h) No transfer taxes shall be payable by any stockholder of the
Company in respect of the issuance of the Parent Common Stock under this Section
3.3, except that if any Parent Common Stock is to be issued in a name other than
that in which the Certificate surrendered has been registered, it shall be a
condition of such issuance that the person requesting such issuance shall pay to
Parent any transfer taxes payable by reason thereof, or of any prior transfer of
such surrendered certificate, or establish to the satisfaction of Parent that
such taxes have been paid or are not payable.
Section 3.4 No Further Rights. From and after the Effective Time,
holders of certificates theretofore evidencing shares of Company Common Stock
shall cease to have any rights as stockholders of the Company, except as
provided herein or by law.
Section 3.5 Registration Statement; Prospectus/Proxy Statement.
(a) For the purposes of (i) registering the issuance of Parent Common
Stock to holders of the shares of Company Common Stock in connection with the
Merger with the Securities and Exchange Commission ("SEC") under the Securities
Act of 1933, as amended, and the rules and regulations promulgated thereunder
(the "Securities Act"), and complying with applicable state securities laws and
(ii) holding the meeting of the Company stockholders ("Company Special Meeting")
to approve the Merger (the "Company Proposal"), Parent and the Company will
cooperate in the preparation of a registration statement on Form S-4 (such
registration statement, together with any and all amendments and supplements
thereto, being herein referred to as the "Registration Statement"), including a
prospectus/proxy statement
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satisfying all requirements of applicable state securities laws, the Securities
Act and the Securities Exchange Act of 1934, as amended, and the rules and
regulations promulgated thereunder (the "Exchange Act"). Such prospectus/proxy
statement in the form mailed by the Company and, if required, Parent to their
respective stockholders, together with any and all amendments or supplements
thereto, is herein referred to as the "Prospectus/Proxy Statement."
(b) The Company will furnish Parent with such information concerning
the Company and its subsidiaries as is necessary in order to cause the
Prospectus/Proxy Statement, insofar as it relates to the Company and its
subsidiaries, to comply with applicable law. None of the information relating to
the Company and its subsidiaries supplied by the Company for inclusion in, or
incorporated by reference in, the Prospectus/Proxy Statement will be false or
misleading with respect to any material fact or will omit to state any material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. The Company agrees promptly to advise Parent if, at any time prior
to the Company Special Meeting, any information provided by it for inclusion in,
or incorporated by reference in, the Prospectus/Proxy Statement is or becomes
incorrect or incomplete in any material respect and to provide Parent with the
information needed to correct such inaccuracy or omission. The Company will
furnish Parent with such supplemental information as may be necessary in order
to cause the Prospectus/Proxy Statement, insofar as it relates to the Company
and its subsidiaries, to comply with applicable law after the mailing thereof to
the stockholders of the Company.
(c) Parent will include in the Prospectus/Proxy Statement such
information concerning Parent and its subsidiaries as is necessary in order to
cause the Prospectus/Proxy Statement, insofar as it relates to Parent and its
subsidiaries, to comply with applicable law. None of the information relating to
Parent and its subsidiaries included in, or incorporated by reference in, the
Prospectus/Proxy Statement will be false or misleading with respect to any
material fact or will omit to state any material fact required to be stated
therein or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. If, at any time prior
to the Company Special Meeting, any information included in or incorporated by
reference by Parent in the Prospectus/Proxy Statement is or becomes incorrect or
incomplete in any material respect, Parent shall correct such inaccuracy or
omission. Parent will furnish such supplemental information as may be necessary
in order to cause the Prospectus/Proxy Statement, insofar as it relates to
Parent and its subsidiaries, to comply with applicable law after the mailing
thereof to the stockholders of the Company.
(d) The Company and Parent agree to cooperate in making any preliminary
filings of the Prospectus/Proxy Statement with the SEC, as promptly as
practicable, pursuant to Rule 14a-6 under the Securities Exchange Act, and shall
cooperate in responding to any comments with respect thereto received from the
SEC.
(e) Parent will file the Registration Statement with the SEC and
appropriate materials with applicable state securities agencies as promptly as
practicable and will use all reasonable efforts to cause the Registration
Statement to become effective under the Securities Act and all such state filed
materials to comply with applicable state securities laws. The Company
authorizes Parent to utilize in the Registration Statement and in all such state
filed materials, the information concerning the Company and its subsidiaries
provided to Parent for
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inclusion in, or incorporated by reference in, the Prospectus/Proxy Statement.
Parent promptly will advise the Company when the Registration Statement has
become effective and of any supplements or amendments thereto, and Parent will
furnish the Company with copies of all such documents. Except for the
Prospectus/ Proxy Statement or the preliminary prospectus/proxy statement,
neither Parent nor the Company shall distribute any written material that might
constitute a "prospectus" relating to the Merger or the Company Proposal within
the meaning of the Securities Act or any applicable state securities law without
the prior written consent of the other party.
(f) The Company shall mail the Prospectus/Proxy Statement to its
stockholders as promptly as practicable after the date the Registration
Statement is declared effective under the Securities Act.
Section 3.6 Tax-Free Reorganization. The parties intend that the Merger
qualify as a reorganization within the meaning of Section 368(a)(2)(D) of the
Internal Revenue Code of 1986, as amended, and the regulations thereunder (the
"Code"). None of the parties will knowingly take any action that would cause the
Merger to fail to qualify as a reorganization within the meaning of Section
368(a) of the Code or applicable SEC rules. Each of the parties shall report the
Merger for income tax purposes as a reorganization within the meaning of Section
368(a)(2)(D) of the Code (and any comparable state or local tax statute),
subject to the receipt of the opinions described in Sections 8.2(c) and 8.3(c).
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Parent and Merger Subsidiary
that, except as disclosed in the Company Disclosure Schedule which has been
delivered to Parent prior to the execution of this Agreement (the "Company
Disclosure Schedule"):
Section 4.1 Organization and Qualification. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware. Each of the Company and its Significant Subsidiaries
(as defined in Section 10.8(a)) has the requisite corporate power and authority
to carry on its business as it is now being conducted and is duly qualified or
licensed to do business, and is in good standing, in each jurisdiction where the
character of its properties owned or held under lease or the nature of its
activities makes such qualification necessary, except where the failure to be so
qualified will not have a Company Material Adverse Effect (as defined in Section
10.8(a)). The Company has heretofore made available to Parent and Merger
Subsidiary a complete and correct copy of the Certificate of Incorporation and
By-laws or comparable organizational documents, each as amended to the date
hereof, of the Company and each of its Significant Subsidiaries.
Section 4.2 Capitalization.
(a) The authorized capital stock of the Company consists of 20,000,000
shares of Company Common Stock and 38,681 shares of Company preferred stock. As
of the date of this Agreement, 13,172,942 shares of Company Common Stock were
validly issued and
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outstanding, fully paid and nonassessable and no shares of Company preferred
stock were outstanding. There are no bonds, debentures, notes or other
indebtedness or other securities issued or outstanding having general voting
rights with respect to the Company or directly or indirectly convertible in to
securities having general voting rights. The Company holds no shares of capital
stock as treasury shares. As of the date hereof, except for stock options to
acquire an aggregate of 2,400,886 shares of Company Common Stock (the "Company
Stock Options"), options to acquire approximately 6,617 shares of the Company
Common Stock issued pursuant to the Company's employee stock purchase plan
("ESPP Options"), there are no options, warrants, calls or other rights,
agreements or commitments presently outstanding obligating the Company to issue,
deliver or sell shares of its capital stock, or obligating the Company to grant,
extend or enter into any such option, warrant, call or other such right,
agreement or commitment.
(b) All the outstanding shares of capital stock of each Significant
Subsidiary of the Company are validly issued, fully paid and nonassessable and,
except as disclosed in the Company SEC Reports (as defined in Section 4.5(a)),
are owned by the Company or by a wholly-owned subsidiary of the Company, free
and clear of any Liens. There are no existing options, warrants, calls or other
rights, agreements or commitments of any character relating to the sale,
issuance or voting of any shares of the issued or unissued capital stock of any
of the Significant Subsidiaries of the Company which have been issued, granted
or entered into by the Company or any of its Significant Subsidiaries. The
Significant Subsidiaries of the Company are listed in Section 4.2(b) of the
Company Disclosure Schedule.
(c) The Company SEC Reports set forth all entities in which the Company
or any subsidiary holds less than all of the outstanding equity interests (the
"Ventures") and each entity in which the Company or any subsidiary holds the
right or obligation to acquire any equity interests ("Other Investments").
Except as set forth in the Company SEC Reports, the Company has not exercised
any call with respect to any interest in the Ventures nor has the holder of any
interest in the Ventures exercised any put with respect to any such interest to
the Company. The Company has no obligation to acquire any additional interests
in the Other Investments and neither the Company nor any other Person has taken
any action to acquire additional interests in, or to dispose of any equity in,
such Other Investments.
Section 4.3 Authority Relative to this Agreement. The Company has the
necessary corporate power and authority to execute and deliver this Agreement
and, subject to approval of this Agreement and the transactions contemplated
hereby by the holders of the Company Common Stock, to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby by the Company have
been duly and validly authorized and approved by the Company's Board of
Directors and no other corporate proceedings on the part of the Company are
necessary to authorize or approve this Agreement or to consummate the
transactions contemplated hereby (other than, with respect to the Merger, the
approval of this Agreement by the necessary vote of the stockholders of the
Company). This Agreement has been duly executed and delivered by the Company,
and assuming the due authorization, execution and delivery by Parent and Merger
Subsidiary, and subject to the stockholder approval referred to in the preceding
sentence, constitutes the valid and binding obligation of the Company
enforceable against the
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Company in accordance with its terms.
Section 4.4 No Conflicts, Required Filings and Consents.
(a) None of the execution and delivery of this Agreement by the
Company, the consummation by the Company of the transactions contemplated hereby
or compliance by the Company with any of the provisions hereof will (i) subject
to approval by the Company's stockholders referred to in Section 4.3, conflict
with or violate the Certificate of Incorporation or By-laws of the Company or
the comparable organizational documents of any of the Company's Significant
Subsidiaries or Ventures, (ii) subject to receipt or filing of the required
Consents (as defined in Section 4.4(b)), conflict with or violate any statute,
ordinance, rule, regulation, order, judgment or decree applicable to the Company
or any of its Significant Subsidiaries or by which any of them or any of their
respective properties or assets may be bound or affected, or (iii) result in a
violation or breach of or constitute a default (or an event which with notice or
lapse of time or both would become a default) under, or give to others any
rights of termination, amendment, acceleration or cancellation of, or result in
the creation of any lien, charge, security interest, pledge, or encumbrance of
any kind or nature (any of the foregoing being a "Lien") on any of the property
or assets of the Company or any of the Company's Significant Subsidiaries (any
of the foregoing referred to in clause (ii) or this clause (iii) being a
"Violation") pursuant to, any note, bond, mortgage, indenture, contract,
agreement, lease, license, permit, franchise or other instrument or obligation
to which the Company or any of the Company's Significant Subsidiaries is a party
or by which the Company or any of the Company's Significant Subsidiaries or any
of their respective properties may be bound or affected except in the case of
the foregoing clause (ii) or (iii) for any such Violations which would not have
a Company Material Adverse Effect.
(b) None of the execution and delivery of this Agreement by the
Company, the consummation by the Company of the transactions contemplated hereby
or compliance by the Company with any of the provisions hereof will require any
consent, waiver, license, approval, authorization, order or permit of, or
registration or filing with or notification to (any of the foregoing being a
"Consent"), any government or subdivision thereof, domestic, foreign,
multinational or supranational or any administrative, governmental or regulatory
authority, agency, commission, court, tribunal or body, domestic, foreign,
multinational or supranational (a "Governmental Entity"), except for (i)
compliance with any applicable requirements of the Securities Act and the
Exchange Act, (ii) the filing of the Certificate of Merger pursuant to Delaware
Law, (iii) certain state takeover, securities, "blue sky" and environmental
statutes, (iv) compliance with the Hart-Scott-Rodino Antitrust Improvements Act
of 1976, as amended (the "HSR Act"), (v) such filings as may be required in
connection with the taxes described in Section 7.8, and (vi) Consents the
failure of which to obtain or make would not have a Company Material Adverse
Effect.
Section 4.5 Reports and Financial Statements.
(a) The Company has filed with the SEC all forms, reports, schedules,
registration statements and definitive proxy statements (the "Company SEC
Reports") required to be filed by it with the SEC since January 1, 1996. As of
their respective dates, the Company SEC Reports complied as to form in all
material respects with the requirements of the Exchange Act
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or the Securities Act, as the case may be, and the rules and regulations of the
SEC thereunder applicable to such Company SEC Reports. As of their respective
dates and as of the date any information from such Company SEC Reports has been
incorporated by reference, the Company SEC Reports did not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. The Company has filed
all material contracts and agreements and other documents or instruments
required to be filed as exhibits to the Company SEC Reports.
(b) The consolidated balance sheets of the Company as of December 31,
1998 and 1997 and the related consolidated statements of earnings, stockholders'
equity and cash flows for each of the three years in the period ended December
31, 1998 (including the related notes and schedules thereto) contained in the
Company's Form 10-K for the year ended December 31, 1998 (the "Company Financial
Statements") present fairly, in all material respects, the consolidated
financial position and the consolidated results of operations and cash flows of
the Company and its consolidated subsidiaries as of the dates or for the periods
presented therein in conformity with United States generally accepted accounting
principles ("GAAP") applied on a consistent basis during the periods involved
except as otherwise noted therein, including in the related notes.
(c) The consolidated balance sheets and the related statements of
earnings and cash flows (including, in each case, the related notes thereto) of
the Company contained in the Form 10-Q for the quarterly period ended June 30,
1999 (the "Company Quarterly Financial Statements") have been prepared in
accordance with the requirements for interim financial statements contained in
Regulation S-X, which do not require all the information and footnotes necessary
for a fair presentation of financial position, results of operations and cash
flows in conformity with GAAP. The Company Quarterly Financial Statements
reflect all adjustments necessary to present fairly in accordance with GAAP
(except as indicated), in all material respects, the consolidated financial
position, results of operations and cash flows of the Company for all periods
presented therein.
Section 4.6 Information. None of the information supplied or to be
supplied by the Company for inclusion or incorporation by reference in the
definitive Prospectus/Proxy Statement will, at the time of filing with the SEC,
at the time of the mailing of the Prospectus/Proxy Statement or any amendments
or supplements thereto to the Company's stockholders or at the time of the
Company Special Meeting, contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary in order
to make the statements therein, in light of the circumstances under which they
are made, not misleading. The portion of the Prospectus/Proxy Statement based on
information supplied by the Company for inclusion or incorporation by reference
therein will comply as to form in all material respects with the applicable
provisions of the Securities Act and the Exchange Act and the rules and
regulations thereunder.
Section 4.7 Litigation. Except as disclosed in the Company SEC Reports,
as of the date hereof, there is no suit, action or proceeding pending or, to the
knowledge of the Company, threatened against or affecting the Company or any of
its subsidiaries that is reasonably expected to have a Company Material Adverse
Effect, nor is there any judgment,
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decree, injunction or order of any Governmental Entity or arbitrator outstanding
against the Company or any of its subsidiaries having, or which is reasonably
expected to have, individually or in the aggregate, a Company Material Adverse
Effect.
Section 4.8 Absence of Certain Changes or Events. Except as disclosed
in the Company SEC Reports or as contemplated by this Agreement, since June 30,
1999, the Company has conducted its business only in the ordinary course, and
there has not been (i) any change that would have a Company Material Adverse
Effect; (ii) any declaration, setting aside or payment of any dividend or other
distribution (whether in cash, stock or property) with respect to any of the
Company's capital stock, or any redemption, purchase or other acquisition of any
of its capital stock, (iii) any split, combination or reclassification of any of
the Company's capital stock or, except with respect to the Company Stock Options
and ESPP Options described in Section 4.2 or after the date hereof, as expressly
permitted by Section 6.1(a)(ii) hereof, any issuance or the authorization of any
issuance of any other securities in respect of, in lieu of or in substitution
for shares of the Company's capital stock, (iv) any granting by the Company or
any of its subsidiaries to any officer of the Company of any increase in
compensation, except in the ordinary course of business consistent with prior
practice or as required under employment agreements in effect as of December 31,
1998, (v) any granting by the Company or any of its subsidiaries to any officer
of the Company of any increase in severance or termination pay, except as
required under employment, severance or termination agreements or plans in
effect as of December 31, 1998, (vi) any entry by the Company or any of its
subsidiaries into any employment, severance or termination agreement with any
officer of the Company, or any increase in benefits available under or
establishment of any Company Benefit Plan (as defined in Section 4.9(a) below)
except in the ordinary course of business consistent with past practice, or
(vii) any material change in accounting methods, principles or practices by the
Company, except insofar as may have been required by a change in GAAP.
Section 4.9 Employee Benefit Plans. (a) Schedule 4.9 of the Company
Disclosure Schedule sets forth a complete and correct list of all "employee
benefit plans", as defined in Section 3(3) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), and any other pension plans or
employee benefit arrangements or payroll practices (including, without
limitation, severance pay, vacation pay, company awards, salary continuation for
disability, sick leave, deferred compensation, bonus or other incentive
compensation, stock option or stock purchase arrangements or policies)
maintained, or contributed to, by the Company, its subsidiaries or any trade or
business (whether or not incorporated) which is treated with the Company or its
subsidiaries as a single employer under Section 414(b), (c), (m) or (o) of the
Code ("ERISA Affiliate") with respect to employees of the Company, its
subsidiaries or their ERISA Affiliates ("Company Benefit Plans"). Each Plan is
in writing and the Company has previously furnished Parent with a true and
complete copy of each Plan document, including all amendments thereto, and a
true and complete copy of each material document prepared in connection with
each such Plan, including, without limitation, (i) a copy of each trust or other
funding arrangement, (ii) each summary plan description and summary of material
modifications, (iii) the three most recently filed Form 5500's, including all
attachments thereto, (iv) the most recently received Internal Revenue Service
("IRS") determination letter for each such Plan, and (v) the most recently
prepared
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actuarial report and financial statement in connection with each such Plan.
Neither the Company nor its subsidiaries have any express or implied commitment
(x) to create or incur liability with respect to or cause to exist any other
employee benefit plan, program or arrangement, (y) to enter into any contract or
agreement to provide compensation or benefits to any individual, or (z) to
modify, change or terminate any Plan, other than with respect to a modification,
change or termination required by ERISA or the Code.
(b) The Company, its subsidiaries and their ERISA Affiliates have never
sponsored, contributed to, or incurred any liability with respect to an employee
benefit plan that is subject to Title IV of ERISA or Section 412 of the Code and
no fact or event exists which could give rise to any liability under Title IV of
ERISA or Section 412 of the Code.
(c) Each of the Company Benefit Plans intended to qualify under Section
401(a) of the Code ("Qualified Plans") has received a favorable determination
letter from the Internal Revenue Service that such Plan is so qualified, and,
except as disclosed on Schedule 4.9(c), nothing has occurred with respect to the
operation of any such Plan which, either individually or in the aggregate, would
cause the loss of such qualification or the imposition of any material
liability, penalty or tax under ERISA or the Code.
(d) There has been no prohibited transaction (within the meaning of
Section 406 of ERISA or Section 4975 of the Code) with respect to any Company
Benefit Plan. Neither the Company nor any Subsidiary is currently liable or has
previously incurred any liability for any tax or penalty arising under Section
4971, 4972, 4975, 4979, 4980 or 4980B of the Code or Section 502 of ERISA, and
no fact or event exists which could give rise to any such liability.
(e) All contributions and premiums required by law or by the terms of
any Company Benefit Plan or any agreement relating thereto have been timely made
(without regard to any waivers granted with respect thereto) in all material
respects.
(f) The liabilities of each Company Benefit Plan that has been
terminated or otherwise wound up, have been fully discharged in material
compliance with applicable law.
(g) There has been no violation of ERISA with respect to the filing of
applicable returns, reports, documents and notices regarding any of the Company
Benefit Plans with the Secretary of Labor or the Secretary of the Treasury or
the furnishing of such notices or documents to the participants or beneficiaries
of the Company Benefit Plans which, either individually or in the aggregate,
could result in a material liability to the Company.
(h) There are no pending legal proceedings which have been asserted or
instituted against any of the Company Benefit Plans, the assets of any such
Plans or the Company or any ERISA Affiliate or the plan administrator or any
fiduciary of the Company Benefit Plans with respect to the operation of such
plans (other than routine, uncontested benefits claims).
(i) Each of the Company Benefit Plans has been maintained, in all
material respects, in accordance with its terms and all provisions of applicable
laws and regulations. All amendments and actions required to bring each of the
Company Benefit Plans into conformity in all material respects with all of the
applicable provisions of ERISA and other applicable laws and regulations have
been made or taken except to the extent that such
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amendments or actions are not required by law to be made or taken until a date
after the Closing Date.
(j) The Company and its subsidiaries have never maintained a welfare
benefit plan providing continuing benefits after the termination of employment
(other than as required by Section 4980B of the Code and at the former
employee's own expense), and the Company, its subsidiaries and each of their
ERISA Affiliates have complied in all material respects with the notice and
continuation requirements of Section 4980B of the Code and the regulations
thereunder.
(k) Neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereby will (i) result in any
material payment (including, without limitation, severance, unemployment
compensation or golden parachute) becoming due to any director or employee of
the Company or it subsidiaries, (ii) materially increase any benefits otherwise
payable under any Company Benefit Plan, or (iii) result in the acceleration of
the time of payment or vesting of any such benefits to any material extent other
than vesting of the Company Stock Options in accordance with their terms.
(l) The Company and its subsidiaries are in compliance in all material
respects with applicable laws and collective bargaining agreements with respect
to all benefit plans, contracts and arrangements covering non-U.S. Business
Employees ("Non-U.S. Benefit Plans"). The Company and its subsidiaries have no
unfunded liabilities in violation of local law or that would, if the plan were
covered by ERISA, violate the funding obligations prescribed by ERISA, which,
either individually or in the aggregate, in any material respect. All benefits
payable under each of the Non-U.S. Benefit Plans are provided in accordance with
the terms of the governing provisions of the relevant Non-U.S. Benefit Plan. The
Company and the Subsidiaries are not aware of any failure to comply with any
applicable law which would or might result in the loss of tax approval or
qualification of any Non-U.S. Benefit Plans.
Section 4.10 Labor Relations. There are no labor controversies pending
or threatened with respect to the Company and neither the Company nor any U.S.
subsidiary is a party to any collective bargaining agreements with any labor
union or other representative of employees. No non-U.S. subsidiary is a party to
any collective bargaining agreement with any labor union or other representative
of employees or any works' council or similar entity under applicable laws. To
the knowledge of the Company, there no any pending or threatened union
organization activity by or among any of its or its subsidiaries' employees.
Section 4.11 Taxes. The Company and its subsidiaries have duly filed
all material foreign, federal, state and local income, franchise, excise, real
and personal property and other Tax (as defined in Section 10.8(a)) returns and
reports (including, but not limited to, those filed on a consolidated, combined
or unitary basis) required to have been filed by the Company and its
subsidiaries prior to the date hereof. All of the foregoing returns and reports
are true and correct in all material respects, and the Company and its
subsidiaries have paid or, prior to the Effective Time will pay, all Taxes,
interest and penalties shown on such returns or reports as being due or (except
to the extent the same are contested in good faith) claimed to be due to any
federal, state, local or other taxing authority. The Company has paid and will
pay all installments of estimated taxes due on or before the Effective Time. The
Company and its
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subsidiaries have paid or made adequate provision in accordance with GAAP in the
financial statements of the Company for all Tax payable in respect of all
periods ending on or prior to the date of this Agreement and will have made or
provided for all taxes payable in respect of all periods entering in or prior to
the Closing Date. As of the date hereof, all deficiencies proposed as a result
of any audits have been paid or settled. The Company and each subsidiary has
paid, collected or withheld, or caused to be paid, collected or withheld, all
amounts of Tax required to be paid, collected or withheld, other than such Taxes
for which adequate reserves in the Company Financial Statements have been
established or which are being contested in good faith. There are no claims or
assessments pending against the Company or any Significant Subsidiary for any
alleged deficiency in any Tax, and the Company has not been notified in writing
of any proposed Tax claims or assessments against the Company or any Significant
Subsidiary. There is no contract, agreement, plan or arrangement covering any
Person that, individually or collectively, could give rise to the payment of any
amount that would not be deductible by the Parent, the Company, or any of the
subsidiaries of the Company by reason of Section 280G of the Code.
Section 4.12 Compliance with Applicable Laws. The Company and its
subsidiaries hold all permits, licenses, variances, exemptions, orders and
approvals of all Governmental Entities necessary for them to own, lease or
operate their properties and assets and to carry on their businesses
substantially as now conducted (the "Company Permits"), except for such permits,
licenses, variances, exemptions, orders and approvals the failure of which to
hold would not have a Company Material Adverse Effect. The Company and its
subsidiaries are in material compliance with applicable laws and the terms of
the Company Permits. Except as disclosed in the Company SEC Reports filed prior
to the date of this Agreement, the Company has not received any notice that the
business operations of the Company and its subsidiaries are being conducted in
violation of any law, ordinance or regulation of any Governmental Entity.
Section 4.13 Voting Requirements. The affirmative vote of the holders
of a majority of the total number of votes entitled to be cast by the holders of
the Company Common Stock outstanding as of the record date for the Company
Special Meeting is the only vote of the holders of any class or series of the
Company's capital stock or other securities necessary to approve this Agreement
and the transactions contemplated by this Agreement.
Section 4.14 Material Contracts. Neither the Company nor any subsidiary
is a party or is subject to any material note, bond, mortgage, indenture,
contract, lease, license, agreement, understanding, instrument, bid or proposal
that is required to be described in or filed as an exhibit to any Company SEC
Report ("Company Material Contract") that is not so described in or filed as
required by the Securities Act or the Exchange Act, as the case may be. The
Company has made available to Parent true and accurate copies of the Company
Material Contracts. All such Company Material Contracts are valid and binding
and are in full force and effect and enforceable against the Company or its
subsidiaries in accordance with their respective terms. Other than contracts
included in the Company Material Contracts, none of the Company's contracts
which are material individually or in the aggregate provide for consideration to
be paid or received other than cash on the one hand and goods and services
customarily provided by the Company or used by the Company in its business in
the ordinary course on the other hand. No Consent of any person is needed in
order that each such
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Company Material Contract shall continue in full force and effect in accordance
with its terms without penalty, acceleration or rights of early termination by
reason of the consummation of the transactions contemplated by this Agreement,
except for Consents the absence of which would not, in the aggregate, have a
Company Material Adverse Effect, and neither the Company nor any of its
subsidiaries is in violation or breach of or default under any such Company
Material Contract; nor to the Company's knowledge is any other party to any such
Company Material Contract in violation or breach of or default under any such
Company Material Contract.
Section 4.15 Title to Property. The Company and each of its
subsidiaries has good and defensible title to all of its material properties and
assets, free and clear of all Liens, except Liens for taxes not yet due and
payable and such Liens or other imperfections of title, that do not constitute a
Company Material Adverse Effect, and all leases, easements, licenses, rights of
way, and other rights pursuant to which the Company or any of its subsidiaries
lease from others or otherwise have the right to use material real or personal
property, individually or in the aggregate material to the business of Company
(all of the foregoing, collectively, the "Company Real Property Rights"), are
valid and effective in accordance with their respective terms, and there is not,
under any of such leases, easements, licenses, and other rights, any existing
material default or event of default (or event which with notice or lapse of
time, or both, would constitute a material default), except where the lack of
such validity and effectiveness or the existence of such default or event of
default does not constitute a Company Material Adverse Effect. Neither the
Company nor any subsidiary is a party or is subject to any Company Real Property
Rights that is required to be described in or filed as an exhibit to any Company
SEC Report that is not so described in or filed as required by the Securities
Act or the Exchange Act, as the case may be. The Company has made available to
Parent true and accurate copies of the Company Real Property Rights. All such
Company Real Property Rights are valid and binding and are in full force and
effect and enforceable against the Company or its subsidiaries in accordance
with their respective terms. No Consent of any person is needed in order that
each such Company Real Property Rights shall continue in full force and effect
in accordance with its terms without penalty, acceleration or rights of early
termination by reason of the consummation of the transactions contemplated by
this Agreement, except for Consents the absence of which would not have a
Company Material Adverse Effect, and neither the Company nor any of its
subsidiaries is in violation or breach of or default under any such Company Real
Property Rights; nor to the Company's knowledge is any other party to any such
Company Real Property Rights in violation or breach of or default under any such
Company Real Property Rights.
Section 4.16 Intellectual Property.
(a) The Company and its subsidiaries, directly or indirectly, own, or
are licensed or otherwise possess legally enforceable rights to use, all
patents, trademarks, trade names, service marks, copyrights and any applications
therefor, technology, know-how and tangible or intangible proprietary
information or materials that are material to the business of the Company and
its subsidiaries (the "Company Intellectual Property Rights").
(b) Either the Company or one of its subsidiaries is the sole and
exclusive owner of, or the exclusive or non-exclusive licensee of, with all
right, title and interest in and to (free and
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clear of any Liens), the Company Intellectual Property Rights, and, in the case
of the Company Intellectual Property Rights owned by the Company or one of its
subsidiaries, has sole and exclusive rights (and is not contractually obligated
to pay any compensation to any third party in respect thereof) to the use
thereof or the material covered thereby in connection with the services or
products in respect of which the Company Intellectual Property Rights are being
used. Except as described in the Company SEC Reports, no claims with respect to
the Company Intellectual Property Rights have been asserted or, to the knowledge
of the Company, are threatened by any person that are reasonably likely to
constitute a Company Material Adverse Effect: (i) to the effect that the
manufacture, sale, licensing, or use of any of the services or products of the
Company or any of its subsidiaries as now manufactured, sold or licensed or used
or proposed for manufacture, use, sale or licensing by the Company or any of its
subsidiaries infringes on any copyright, patent, trade mark, service mark or
trade secret of a third party; (ii) against the use by the Company or any of its
subsidiaries of any trademarks, service marks, trade names, trade secrets,
copyrights, patents, technology or know-how and applications used in the
business of the Company and any of its subsidiaries as currently conducted or as
proposed to be conducted; or (iii) challenging the ownership by the Company or
any of its subsidiaries or the validity of any of the Company Intellectual
Property Rights. All registered trademarks, service marks and copyrights held by
the Company and the Significant Subsidiaries are valid and subsisting, except to
the extent any failure does not constitute a Company Material Adverse Effect. To
the knowledge of the Company, there is no unauthorized use, infringement or
misappropriation of any of the Company Intellectual Property Rights by any third
party, including any employee or former employee of the Company or any of its
subsidiaries that would have a Company Material Adverse Effect. No Intellectual
Property Right is subject to any outstanding decree, order, judgment, or
stipulation restricting in any manner the licensing thereof by the Company or
any subsidiary, except to the extent any such restriction does not constitute a
Company Material Adverse Effect. Neither the Company nor any of the subsidiaries
has entered into any agreement (other than exclusive distribution agreements)
under which the Company or any of the subsidiaries is restricted from selling,
licensing or otherwise distributing any of its products to any class of
customers, in any geographic area, during any period of time or in any segment
of the market, except to the extent any such restriction does not constitute a
Company Material Adverse Effect.
(c) The Company and its subsidiaries have a compliance program in place
to evaluate and address issues regarding whether their computer systems,
software, hardware, firmware, middleware and other information technology
(collectively, "Information Technology") are Year 2000 Ready (as defined below);
the Company and its subsidiaries have taken, are taking, and will take all
measures the Company reasonably believes are necessary to make their Information
Technology, particularly the Information Technology upon which the Company or
the subsidiaries will rely to provide services to customers, Year 2000 Ready,
including remediation and the use of contingency plans, if necessary, should a
year 2000 problem arise from any cause within the control of the Company or any
of the subsidiaries that may affect those services; and the Company and the
subsidiaries have requested or are in the process of requesting from those
third-party vendors and suppliers of the Company or of the subsidiaries that
directly support the services that the Company or any of the subsidiaries
provides to customers reasonable assurances that their Information Technology
are Year 2000 Ready, and that they are taking or have taken adequate measures to
prevent problems caused by the year
<PAGE>
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2000 that may impact the services and products they provide to the Company or
any of the subsidiaries. The Company and the subsidiaries have previously made
available to Parent copies of all year 2000 warranties that the Company or any
of the subsidiaries has provided, and currently provides, to customers. As used
in this Agreement, "Year 2000 Ready" shall mean that Information Technology is
designed to be used prior to, during and after the calendar year 2000 A.D. and
such Information Technology will accurately receive, provide and process
date/time data (including, without limitation, calculating, comparing and
sequencing) from, into and between the twentieth and twenty-first centuries
A.D., and leap year calculations and will not malfunction, cease to function or
provide invalid or incorrect results as a result of date/time data (including,
without limitation, to the extent that other Information Technology used in
combination with such Information Technology properly exchanges date/time data
with it).
Section 4.17 Interested Party Transactions. Since December 31, 1998, or
as described in the Company SEC Reports, no event has occurred that would be
required to be reported by the Company pursuant to Item 404 of Regulation S-K
promulgated by the SEC.
Section 4.18 Undisclosed Liabilities. Except as disclosed in the
Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1998
(or in any subsequently filed Company SEC Reports), as of the date hereof,
neither the Company nor any of its subsidiaries has any liabilities or any
obligations of any nature whether or not accrued, contingent or otherwise,
except for liabilities or obligations incurred in the ordinary course of
business since December 31, 1998 or which individually or in the aggregate are
not material in nature or amount. As of the date of this Agreement, no
investigation or review by any Governmental Entity with respect to the Company
or any of its subsidiaries is pending or threatened, nor has any such
Governmental Entity indicated an intention to conduct any such investigation or
review.
Section 4.19 Environmental Matters. Except as would not reasonably be
expected to have a Company Material Adverse Effect: (i) to the knowledge of the
Company, no real property currently or formerly owned or operated by the Company
or any current subsidiary is contaminated with any Hazardous Substances to an
extent or in a manner or condition now requiring remediation under any
Environmental Law; (ii) no judicial or administrative proceeding is pending or
to the best knowledge of the Company threatened relating to liability for any
off-site disposal or contamination; and (iii) the Company and its subsidiaries
have not received any claims or notices alleging liability under any
Environmental Law, and the Company has no knowledge of any circumstances that
could result in such claims. "Environmental Law" means any applicable federal,
state or local law, regulation, order, decree, or judicial opinion or other
agency requirement having the force and effect of law and relating to noise,
odor, Hazardous Substance or the protection of the environment. "Hazardous
Substance" means any toxic or hazardous substance that is regulated by or under
authority of any Environmental Law, including any petroleum products, asbestos
or polychlorinated biphenyls.
Section 4.20 Restrictions on Business Activities. There is no Material
Agreement, judgment, injunction, order or decree binding upon the Company or any
of its subsidiaries or any of their properties which has had or could reasonably
be expected to have the effect of
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prohibiting or materially impairing any business practice of the Company or any
of its subsidiaries or the conduct of business by the Company or any of its
Subsidiaries as currently conducted or as proposed to be conducted by the
Company.
Section 4.21 Certain Business Practices. Neither the Company nor any of
its subsidiaries nor any director, officer, employee or agent of the Company or
any of its subsidiaries has in any material respect (i) used any funds for
unlawful contributions, gifts, entertainment or other unlawful payments relating
to political activity, (ii) made any unlawful payment to any foreign or domestic
government official or employee or to any foreign or domestic political party or
campaign or violated any provision of the Foreign Corrupt Practices Act of 1977,
as amended, (iii) consummated any transaction, made any payment, entered into
any agreement or arrangement or taken any other action in violation of Section
1128B(b) of the Social Security Act, as amended, or (iv) made any other unlawful
payment.
Section 4.22 Brokers; Expenses. Except for Morgan Stanley & Co.
Incorporated (the "Company's Financial Advisor") whose fees shall be paid by the
Company, no agent, broker, finder, investment banker or other firm or Person is
or will be entitled to any broker's or finder's fee or other similar commission
or fee in connection with the transactions contemplated by this Agreement based
upon arrangements made by or on behalf of the Company. The Company has provided
to Parent a good faith estimate and description of the expenses of the Company
and its subsidiaries that the Company expects to incur or has incurred in
connection with the transactions contemplated by the Agreement.
Section 4.23 Board Approval. The Board of Directors of the Company by
resolutions duly adopted by unanimous vote of those voting at a meeting duly
called and held and not subsequently rescinded or modified in any way (the
"Company Board Approval"), has duly (i) determined that this Agreement and the
Merger are fair to and in the best interests of the Company and its
stockholders, (ii) approved this Agreement and the Merger and (iii) recommended
that the stockholders of the Company adopt this Agreement and approve the Merger
and directed that this Agreement and the transactions contemplated hereby be
submitted for consideration by the Company's stockholders at the Company Special
Meeting. The Company Board Approval constitutes approval of this Agreement and
the Merger for purposes of Section 203 of the Delaware Law. To the knowledge of
the Company, except for Section 203 of the Delaware Law (which has been rendered
inapplicable), no state takeover statute is applicable to the Merger or the
other transactions contemplated hereby. The Company's Board of Directors or an
appropriate committee thereof has determined (y) to accelerate the "Option
Termination Date" of the offering under the Company's 1994 Employee Stock
Purchase Plan so that all outstanding ESPP Options shall be exercisable as of
August 23, 1999, and (z) to suspend any further offerings under such plan prior
to the consummation of the Merger or termination of this Agreement in accordance
with its terms.
Section 4.24 Opinion of the Company's Financial Advisor. The Company
has received the opinion of the Company's Financial Advisor, dated the date of
this Agreement, to the effect that, as of such date, the Merger Consideration is
fair, from a financial point of view, to the Company's stockholders, a copy of
which opinion has been made available to Parent.
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ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUBSIDIARY
Parent and Merger Subsidiary jointly and severally represent and
warrant to the Company that, except as disclosed in the Parent Disclosure
Schedule which has been delivered to the Company prior to the execution of this
Agreement (the "Parent Disclosure Schedule"):
Section 5.1 Organization and Qualification. Parent is a corporation
duly organized, validly existing and in good standing under the laws of the
State of New York. Merger Subsidiary is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware. Each of
Parent and each of its Significant Subsidiaries has the requisite corporate
power and authority to carry on its business as it is now being conducted and is
duly qualified or licensed to do business, and is in good standing, in each
jurisdiction where the character of its properties owned or held under lease or
the nature of its activities makes such qualification necessary, except where
the failure to be so qualified will not, individually or in the aggregate, have
a Parent Material Adverse Effect.
Section 5.2 Ownership of Merger Subsidiary. Merger Subsidiary is a
direct wholly-owned subsidiary of Parent.
Section 5.3 Authority Relative to Agreement. Each of Parent and Merger
Subsidiary has the necessary corporate power and authority to execute and
deliver this Agreement and to consummate the transactions contemplated hereby.
The execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby by Parent and Merger Subsidiary have been duly
and validly authorized and approved by the respective Boards of Directors of
Parent and Merger Subsidiary and by Parent as the sole stockholder of Merger
Subsidiary and no other corporate proceedings on the part of Parent or Merger
Subsidiary are necessary to authorize and approve this Agreement or to
consummate the transactions contemplated hereby. This Agreement has been duly
executed and delivered by each of Parent and Merger Subsidiary, and assuming the
due authorization, execution and delivery by the Company, constitutes the valid
and binding obligation of Parent and Merger Subsidiary enforceable against each
of them in accordance with its terms.
Section 5.4 No Conflicts; Required Filings and Consents.
(a) None of the execution and delivery of this Agreement by Parent or
Merger Subsidiary, the consummation by Parent or Merger Subsidiary of the
transactions contemplated hereby or compliance by Parent or Merger Subsidiary
with any of the provisions hereof will (i) conflict with or violate the charter
or By-laws of Parent or Merger Subsidiary or the comparable organizational
documents of any of Parent's Significant Subsidiaries, (ii) subject to receipt
or filing of the required Consents, conflict with or Violate any statute,
ordinance, rule, regulation, order, judgment or decree applicable to Parent or
Merger Subsidiary or any of Parent's Significant Subsidiaries, or by which any
of them or any of their respective properties or assets may be bound or
affected, or (iii) result in a Violation of, or result in the creation of any
Lien on any of the property or assets of Parent or Merger Subsidiary or any of
Parent's Significant Subsidiaries pursuant to, any note, bond, mortgage,
indenture, contract, agreement,
<PAGE>
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lease, license, permit, franchise or other instrument or obligation to which
Parent or Merger Subsidiary or any of Parent's Significant Subsidiaries is a
party or by which Parent or Merger Subsidiary or any of Parent's Significant
Subsidiaries or any of their respective properties may be bound or affected
except in the case of the foregoing clause (ii) or (iii) for any such Violations
which would not have a Parent Material Adverse Effect.
(b) None of the execution and delivery of this Agreement by Parent or
Merger Subsidiary, the consummation by Parent or Merger Subsidiary of the
transactions contemplated hereby or compliance by Parent or Merger Subsidiary
with any of the provisions hereof will require any Consent of any Governmental
Entity, except for (i) compliance with any applicable requirements of the
Securities Act and the Exchange Act, (ii) the filing of the Certificate of
Merger under Delaware Law, (iii) certain state takeover, securities, "blue sky"
and environmental statutes, (iv) compliance with the HSR Act, (v) such filings
as may be required in connection with the taxes described in Section 7.8, and
(vi) Consents the failure of which to obtain or make would not have a Parent
Material Adverse Effect.
Section 5.5 Information. None of the information supplied or to be
supplied by Parent or Merger Subsidiary for inclusion in, or incorporation by
reference in, the definitive Prospectus/Proxy Statement required to be mailed to
the stockholders of the Company in connection with the Merger will, at the time
of filing with the SEC, at the time of the mailing of the Prospectus/Proxy
Statement' or any amendments or supplements thereto to the Company's
stockholders and at the time of the Company Special Meeting, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they are made, not misleading. The portion of the
Prospectus/Proxy Statement based on information supplied by Parent for inclusion
or incorporation by reference therein will comply as to form in all material
respects with the applicable provisions of the Securities Act and the Exchange
Act and the rules and regulations thereunder.
Section 5.6 Litigation. As of the date hereof, there is no suit, action
or proceeding pending or, to the knowledge of Parent or Merger Subsidiary,
threatened against or affecting Parent, Merger Subsidiary or any of Parent's
Significant Subsidiaries that, individually or in the aggregate, is reasonably
expected to have a Parent Material Adverse Effect, nor is there any judgment,
decree, injunction or order of any Governmental Entity or arbitrator outstanding
against Parent, Merger Subsidiary or any of Parent's Significant Subsidiaries
having, or which is reasonably expected to have, individually or in the
aggregate, a Parent Material Adverse Effect which has not been disclosed in
Parent's SEC Reports.
Section 5.7 Voting Requirements. No vote of the holders of any class or
series of the capital stock of Parent is necessary to approve this Agreement or
the transactions contemplated hereby.
Section 5.8 Brokers. Except for Donaldson Lufkin & Jenrette Securities
Corporation and Wasserstein Perella & Co., Inc. whose fees shall be paid by
Parent, no agent, broker, finder, investment banker or other firm or Person is
or will be entitled to any broker's or finder's fee or other similar commission
or fee in connection with the transactions contemplated by this Agreement based
upon arrangements made by or on behalf of Parent or
<PAGE>
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the Merger Subsidiary.
Section 5.9 Capitalization. The authorized capital stock of Parent as
of the date of this Agreement consists of 250 million shares of Parent Common
Stock and 30 million shares of Parent preferred stock, of which 1,000,000 shares
are designated as Series A Junior Participating Preferred Stock and 9,200,000
shares are designated as 6 3/4% Series C Cumulative Convertible Preferred Stock
("Series C Stock"). Parent has scheduled a special meeting of its shareholders
at which it is seeking authorization to, among other things, increase the number
of authorized shares of Parent Common Stock to 500 million. As of August 18,
1999, 64,864,145 shares of Parent Common Stock were validly issued and
outstanding, fully paid and nonassessable, subject to Section 630 of the NYBCL;
99,556 shares of Parent Common Stock in its treasury; and 9,200,000 shares of
the Series C Stock were validly issued and outstanding, fully paid and
nonassessable subject to Section 630 of the NYBCL. There are no bonds,
debentures, notes or other indebtedness issued or outstanding having general
voting rights with respect to Parent. As of the date hereof, except for the
Series C Stock, Parent's Rights Agreement, dated as of May 8, 1996, as amended,
and securities issued or issuable thereunder, stock options to acquire an
aggregate of 13,737,764 shares of Parent Common Stock ("Parent Stock Options")
and options issued or to be issued pursuant to Parent's employee stock purchase
plan from time to time and other rights and commitments described in the
Parent's SEC Reports (as defined in Section 5.10 below), there are no options,
warrants, calls or other rights, agreements or commitments presently outstanding
obligating Parent to issue, deliver or sell shares of its capital stock, or
obligating Parent to grant, extend or enter into any such option, warrant, call
or other such right, agreement or commitment.
Section 5.10 Reports and Financial Statements.
(a) Parent has filed with the SEC all forms, reports, schedules,
registration statements and definitive proxy statements (the "Parent SEC
Reports") required to be filed by it with the SEC since January 1, 1996. As of
their respective dates, the Parent SEC Reports complied as to form in all
material respects with the requirements of the Exchange Act or the Securities
Act, as the case may be, and the rules and regulations of the SEC thereunder
applicable to such Parent SEC Reports. As of their respective dates and as of
the date any information from such Parent SEC Reports has been incorporated by
reference, the Parent SEC Reports did not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading. Parent has filed all material contracts,
agreements and other documents or instruments required to be filed as exhibits
to the Parent SEC Reports.
(b) The consolidated balance sheets of Parent as of December 31, 1998
and 1997 and the related consolidated statements of earnings, stockholders'
equity and cash flows for each of the three years in the period ended December
31, 1998 (including the related notes and schedules thereto) contained in
Parent's Form 10-K for the year ended December 31, 1998 present fairly, in all
material respects, the consolidated financial position and the consolidated
results of operations and cash flows of Parent and its consolidated subsidiaries
as of the dates or for the periods presented therein in conformity with GAAP
applied on a consistent basis during the periods involved except as otherwise
noted therein, including in the related notes.
<PAGE>
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(c) The consolidated balance sheets and the related statements of
earnings and cash flows (including, in each case, the related notes thereto) of
Parent contained in the Form 10-Q for the quarterly period ended June 30, 1999
(the "Parent Quarterly Financial Statements") have been prepared in accordance
with the requirements for interim financial statements contained in Regulation
S-X, which do not require all the information and footnotes necessary for a fair
presentation of financial position, results of operations and cash flows in
conformity with GAAP. The Parent Quarterly Financial Statements reflect all
adjustments necessary to present fairly in accordance with GAAP (except as
indicated), in all material respects, the consolidated financial position,
results of operations and cash flows of Parent for all periods presented
therein.
Section 5.11 Absence of Certain Changes or Events. Except as disclosed
in the Parent SEC Reports, since June 30, 1999, there has not been (i) any
declaration, setting aside or payment of any dividend or other distribution
(whether in cash, stock or property) with respect to any of the Parent's capital
stock, or, any redemption, purchase or other acquisition of any of its capital
stock, (ii) any split, combination or reclassification of any of the Parent's
capital stock or, except with respect to Parent Stock Options, any issuance or
the authorization of any issuance of any other securities in respect of, in lieu
of or in substitution for shares of the Parent's capital stock, or (iii) any
material change in accounting methods, principles or practices by Parent, except
insofar as may have been concurred in by the Parent's independent public
accountants or required by a change in GAAP.
ARTICLE VI
CONDUCT OF BUSINESS PENDING THE MERGER
Section 6.1 Conduct of the Business Pending the Merger
(a) From and after the date hereof, prior to the Effective Time, except
as contemplated by this Agreement or unless Parent shall otherwise agree in
writing, the Company shall, and shall cause its subsidiaries to, carry on their
respective businesses in the usual, regular and ordinary course in substantially
the same manner as heretofore conducted and to use reasonable efforts to conduct
their business in a manner consistent with the budgets and plans heretofore made
available to Parent, and shall cause its subsidiaries to, use reasonable efforts
to preserve intact their present business organizations, keep available the
services of their employees and preserve their relationships with customers,
suppliers, licensors, licensees, distributors and others having business
dealings with them to the end that their goodwill and on-going businesses shall
not be impaired in any material respect at the Effective Time. Unless Parent
shall otherwise agree in writing, prior to the Effective Time, the Company shall
not and shall not permit its subsidiaries to:
(i) declare, set aside, or pay any dividends on, or make any
other distributions in respect of, any of its capital stock,
other than dividends and distributions by any direct or
indirect subsidiary of the Company to its parent(s), split,
combine or reclassify any of its capital stock or, other than
pursuant to the exercise of
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Company Stock Options or ESPP Options outstanding on the date
of this Agreement, issue or authorize the issuance of any
other securities in respect of, in lieu of or in substitution
for shares of its capital stock, or except as permitted by
clause (ii) below, purchase, redeem or otherwise acquire,
other than pursuant to the exercise of Company Stock Options
or ESPP Options outstanding on the date of this Agreement, any
shares of capital stock of the Company or any of its
subsidiaries or any other equity securities thereof or any
rights, warrants, or options to acquire any such shares or
other securities other than purchases, redemptions or
acquisitions of equity securities of wholly-owned subsidiaries
of the Company or rights, warrants or options to acquire such
securities;
(ii) except for issuances of capital stock of the Company's
subsidiaries to the Company or a wholly-owned subsidiary of
the Company, issue, deliver, sell, pledge or otherwise
encumber any shares of its capital stock including any Company
Options other than 12,000 options at fair market value on the
date of issuance to the prospective employee listed on
Schedule 6.1(a) or any ESPP Options, any other voting
securities of the Company or any securities convertible into,
or any rights, warrants or options to acquire, any such shares
or voting securities (other than the issuance of Company
Common Stock upon the exercise of Company Stock Options or
ESPP Options outstanding on the date of this Agreement) or
amend the terms of any such securities, rights, warrants or
options;
(iii) amend its Certificate of Incorporation or By-Laws or
comparable organizational documents of any of its subsidiaries
or Ventures;
(iv) acquire or agree to acquire by merging or consolidating
with, or by purchasing a substantial portion of the assets of,
or by any other manner, any business or any corporation,
partnership, joint venture, association or other business
organization or division thereof, or any assets that are
material, individually or in the aggregate, to the Company and
its subsidiaries taken as a whole, except, in any such case,
in the ordinary course of business, and except transactions
between a wholly-owned subsidiary of the Company and the
Company or another wholly-owned subsidiary of the Company;
(v) subject to a Lien or sell, lease or otherwise dispose of
any of its material properties or assets, including the
Ventures and Other Investments, except in the ordinary course
of business and except transactions between a wholly-owned
subsidiary of the Company and the Company or another
wholly-owned subsidiary of the Company;
(vi) incur any indebtedness for borrowed money or guarantee
any such indebtedness of another person, issue or sell any
debt securities of the Company or any of its subsidiaries,
guarantee any debt securities of another person (other than
indebtedness to, guarantees of, or issuances or sales to the
Company or a wholly-owned subsidiary of the Company), or enter
into any "keep well" or other agreement to maintain any
financial condition of another person, except,
<PAGE>
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in any such case, for borrowings or other transactions
incurred in the ordinary course of business including to repay
existing indebtedness pursuant to the terms thereof, or except
in the ordinary course of business, make any loans, advances
or capital contributions to, or investments in, any other
person, other than to the Company or any direct or indirect
subsidiary of the Company or settle or compromise any material
claims or litigation;
(vii) authorize any of, or commit or agree to take any of, the
foregoing actions.
(b) The Company shall promptly provide the Parent copies of all filings
made by the Company with any Governmental Entity in connection with this
Agreement and the transactions contemplated hereby. The Company shall, before
settling or compromising any material income tax liability of the Company or any
of its subsidiaries, consult with Parent and its advisors as to the positions
and elections that will be taken or made with respect to such matter.
ARTICLE VII
ADDITIONAL AGREEMENTS
Section 7.1 Access to Information.
(a) From the date hereof through the Effective Time or earlier
termination of this Agreement in accordance with its terms, the Company and its
subsidiaries shall afford to Parent and Parent's accountants, counsel and other
representatives full and reasonable access during normal business hours (and at
such other times as the parties may mutually agree) to its properties, books,
contracts, commitments, records and personnel and, during such period, shall
furnish promptly to Parent (i) a copy of each report, schedule and other
document filed or received by it pursuant to the requirements of federal
securities laws, and (ii) all other information concerning its business,
properties and personnel as Parent may reasonably request. Parent shall hold,
and shall cause its employees, agents and representatives to hold, in confidence
all "Confidential Information" in accordance with the terms of the Mutual
Nondisclosure Agreement, dated May 24, 1999 between Parent and the Company
("Confidentiality Agreement"), which shall remain in full force and effect in
accordance with the terms thereof, including, without limitation, in the event
of termination of this Agreement. No investigation pursuant to this Section
7.1(a) shall limit any representation or warranty of the Company.
(b) From the date hereof through the Effective Time or earlier
termination of this Agreement in accordance with its terms, Parent shall afford
to the Company and the Company's accountants, counsel and other representatives
full and reasonable access during normal business hours (and at such other times
as the parties may mutually agree) to its properties, books, contracts,
commitments, records and personnel and, during such period, shall furnish
promptly to the Company (i) a copy of each report, schedule and other document
filed or received by it pursuant to the requirements of federal securities laws,
and (ii) all other information concerning its business, properties and personnel
as the Company may reasonably
<PAGE>
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request. The Company shall hold, and shall cause its employees, agents and
representatives to hold, in confidence all "Confidential Information" in
accordance with the terms of the Confidentiality Agreement, which shall remain
in full force and effect in accordance with the terms thereof, including,
without limitation, in the event of termination of this Agreement. No
investigation pursuant to this Section 7.1(b) shall limit any representation or
warranty of Parent.
(c) As soon as practicable after the date hereof, the Company shall use
its best efforts to cooperate and assist Parent and Parent's independent public
accountants in the compilation and preparation of all financial statements and
financial statement schedules of the Company prepared in accordance with GAAP
and reports and consents of the Company's independent public accountants as may
be necessary or deemed advisable by Parent to comply with SEC reporting and
disclosure requirements. The Company shall deliver to Parent's independent
public accountants and/or the Company's independent public accountants all
engagement letters and management representation letters as may be reasonably
requested by Parent or such accountants. The Company shall use its best efforts
to cause its independent public accountants to cooperate with and assist Parent
and its independent public accountants in the preparation of the financial
statements contemplated by this Section 7.1(c).
Section 7.2 Company Special Meeting. The Company shall take all action
necessary, in accordance with applicable law and its Certificate of
Incorporation and By-laws, to convene the Company Special Meeting as promptly as
reasonably practicable after the date on which the definitive Prospectus/Proxy
Statement' has been mailed to the Company's stockholders for the purpose of
considering and taking action upon the Merger and this Agreement.
Section 7.3 Revolving Credit Facility. Parent and Merger Subsidiary
will cooperate with the Company to provide for the payment of the Company's $75
million revolving credit facility (the "Credit Facility") at or prior to
Closing.
Section 7.4 Public Announcements. On or before the Closing Date, Parent
and the Company shall not (nor shall they permit any of their respective
Affiliates to), without prior consultation with the other party and such other
party's review of and consent to any public announcement concerning the
transactions contemplated by this Agreement, issue any press release or make any
public announcement with respect to such transactions during such period, and
Parent and the Company shall, to the extent practicable, allow the other party
reasonable time to review and comment on such release or announcement in advance
of its issuance and use reasonable efforts in good faith to reflect the
reasonable and good faith comments of such other party, provided, however, no
party shall be prevented from making any disclosure required by law at the time
so required because of any delay on the part of the other party. The parties
intend that the initial announcement of the terms of the transactions
contemplated by this Agreement shall be made by joint press release of Parent
and the Company.
Section 7.5 Indemnification of the Company's Directors and Officers and
Insurance. Parent agrees that all rights to indemnification existing as of the
date of this Agreement in favor of any director, officer, employee or agent of
the Company and its subsidiaries (the "Indemnified Parties") as provided in
their respective Certificate of Incorporation, By-laws or
<PAGE>
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comparable organizational documents or in indemnification agreements with the
Company or any of its subsidiaries, or otherwise in effect as of the date
hereof, shall survive the Merger and shall continue in full force and effect for
a period of not less than six years from the Effective Time, provided that, in
the event any claim or claims are asserted or made within such six-year period,
all rights to indemnification in respect of any such claim or claims, shall
continue until final disposition of any and all such claims. Without limiting
the generality of the foregoing, in the event any such Indemnified Party is or
becomes involved in any capacity in any action, proceeding or investigation in
connection with any matter, including, without limitation, the transactions
contemplated by this Agreement, occurring prior to or at the Effective Time,
Parent shall cause the Surviving Corporation to pay as incurred such Indemnified
Party's legal and other expenses (including the cost of any investigation and
preparation) incurred in connection therewith. The Surviving Corporation shall
cause to be maintained in effect for a period of three years, the current
policies of directors' and officers' liability insurance and fiduciary liability
insurance maintained by the Company (provided that the Surviving Corporation may
substitute therefor policies of at least the same coverage and amounts
containing terms and conditions which are, in the aggregate, no less
advantageous to the insured) with respect to claims arising from facts or events
that occurred on or before the Effective Time; provided, however, that in no
event shall the Surviving Corporation be required to expend in any one year an
amount in excess of 200% of the annual premiums currently paid by the Company
for such insurance; and, provided, further, that if the annual premiums of such
insurance coverage exceed such amount, the Surviving Corporation shall be
obligated to obtain a policy with the greatest coverage available for a cost not
exceeding such amount.
Section 7.6 Efforts; Consents.
(a) Subject to the terms and conditions of this Agreement, each of the
parties hereto agrees to use its reasonable commercial efforts to take, or cause
to be taken, all actions and to do, or cause to be done, all things necessary,
proper or advisable to consummate and make effective as promptly as practicable
the transactions contemplated by this Agreement and the Merger and to cooperate
with each other in connection with the foregoing. Without limiting the
generality of the foregoing, each of the Company, Merger Subsidiary and Parent
shall make or cause to be made all required filings with or applications to
Governmental Entities (including under the Securities Act, the Exchange Act and
the HSR Act and to state and local Governmental Entities with respect to any
transfers of Company Permits), and use its best efforts to (i) obtain all
necessary consents of all Governmental Entities and other third parties,
necessary for the parties to consummate the transactions contemplated hereby,
(ii) oppose, lift or rescind any injunction or restraining order or other order
adversely affecting the ability of the parties to consummate the transactions
contemplated hereby, and (iii) fulfill all conditions to this Agreement.
(b) Without limiting the foregoing, the Company and Parent shall use
their best efforts and cooperate in promptly preparing and filing as soon as
practicable, and in any event within five business days of executing this
Agreement, (i) notifications under the HSR Act, (ii) notifications or other
filings under the merger control statutes of any other applicable jurisdictions
in connection with the Merger and the other transactions contemplated hereby,
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and to respond as promptly as practicable to any inquiries or requests received
from the Federal Trade Commission, the Antitrust Division of the United States
Department of Justice, the other Governmental Entities for additional
information or documentation and to respond as promptly as practicable to all
inquiries and requests received from any Governmental Entity in connection with
antitrust matters or matters relating to the Company Permits. Each of Parent,
Merger Subsidiary and the Company, to the extent applicable, further agrees to
file contemporaneously with the filing of the applications any requests for
waivers of applicable FCC rules or rules or regulations of other Governmental
Entities as may be required to expeditiously prosecute such waiver requests and
to diligently submit any additional information or amendments for which the FCC
or any other relevant Governmental Entity may ask with respect to such waiver
requests.
Section 7.7 Notice of Breaches. The Company shall give prompt notice to
Parent, and Parent or Merger Subsidiary shall give prompt notice to the Company,
of (i) any representation or warranty made by it contained in this Agreement
which has become untrue or inaccurate in any material respect, or (ii) the
failure by it to comply with or satisfy in any material respect any covenant,
condition, or agreement to be complied with or satisfied by it under this
Agreement; provided, however, that such notification shall not excuse or
otherwise affect the representations, warranties, covenants or agreements of the
parties or the conditions to the obligations of the parties under this
Agreement.
Section 7.8 Transfer and Gains Taxes and Certain Other Taxes and
Expenses. Parent and Merger Subsidiary agree that the Surviving Corporation will
pay all real property transfer, gains and other similar taxes and all
documentary stamps, filing fees, recording fees and sales and use taxes, if any,
and any penalties or interest with respect thereto, payable in connection with
consummation of the Merger without any offset, deduction, counterclaim or
deferment of the payment of the Merger Consideration.
Section 7.9 Acquisition Proposals.
(a) The Company agrees that it shall not nor shall any of its
subsidiaries or any of the officers and directors of the Company or its
subsidiaries nor any of its or its subsidiaries' employees, agents and
representatives (including any investment banker, attorney or accountant
retained by it or any of its subsidiaries), directly or indirectly, initiate,
solicit, encourage or knowingly facilitate (including by way of furnishing
information) any inquiries or the making of any proposal or offer with respect
to a merger, reorganization, share exchange, consolidation, business
combination, recapitalization, liquidation, dissolution or similar transaction
involving, or any purchase or sale of all or any significant portion of the
assets or more than 10% of the Company Common Stock or the assets or capital
stock of any of its subsidiaries (any such proposal or offer (other than a
proposal or offer made by Parent or an affiliate thereof) being hereinafter
referred to as an "Acquisition Proposal"). The Company further agrees that
neither it nor any of its subsidiaries nor any of the officers and directors of
it or its subsidiaries shall, and that it shall direct and use its best efforts
to cause its and its subsidiaries' employees, agents and representatives
(including any investment banker, attorney or accountant retained by it or any
of its subsidiaries) not to, directly or indirectly, have any
<PAGE>
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discussion with or provide any confidential information or data to any Person
relating to an Acquisition Proposal, or engage in any negotiations concerning an
Acquisition Proposal, or knowingly facilitate any effort or attempt to make or
implement an Acquisition Proposal or accept an Acquisition Proposal.
Notwithstanding the foregoing, the Company or its Board of Directors shall be
permitted, in response to an unsolicited bona fide written Acquisition Proposal
by any Person, to engage in any discussions or negotiations with, or provide any
information to, any Person in response to an unsolicited bona fide written
Acquisition Proposal by any such Person, if and only to the extent that: (i) the
Company Special Meeting shall not have occurred; (ii) the Board of Directors of
the Company concludes in good faith that such Acquisition Proposal could
reasonably be expected to constitute a Superior Proposal (as defined in Section
10.8(a) below); (iii) prior to providing any information or data to any Person
in connection with an Acquisition Proposal by any such Person, the Company Board
of Directors receives from such Person an executed confidentiality agreement on
terms substantially similar to those contained in the Confidentiality Agreement;
and (iv) at least two days prior to providing any information or data to any
Person or entering into discussions or negotiations with any Person, the Board
of Directors of the Company notifies Parent promptly of such inquiries,
proposals or offers received by, any such information requested from, or any
such discussions or negotiations sought to be initiated or continued with, any
of its representatives indicating, in connection with such notice, the name of
such Person and the material terms and conditions of any proposals or offers.
The Company agrees that it will keep Parent informed, on a current basis, of the
status and terms of any such proposals or offers and the status of any such
discussions or negotiations. The Company agrees that it will immediately cease
and cause to be terminated any existing activities, discussions or negotiations
with any parties conducted heretofore with respect to any Acquisition Proposal.
The Company agrees that it will take the necessary steps to promptly inform the
individuals or entities referred to in the first sentence of this Section 7.9 of
the obligations undertaken in this Section 7.9 and that any breach of the
provisions of this Section 7.9 by any officer or director of the Company or its
subsidiaries or any investment banker, financial advisor, attorney, accountant
or other representative of the Company or its subsidiaries will be deemed a
breach by the Company.
(b) Except as permitted in this Section 7.9, neither the Board of
Directors of the Company nor any committee thereof shall (i) withdraw or modify,
or propose publicly to withdraw or modify, in a manner adverse to Parent, or
take any action not explicitly permitted by this Agreement that would be
inconsistent with, the approval or recommendation by such Board of Directors or
such committee of the transactions contemplated by this Agreement, (ii) approve
or recommend, or propose publicly to approve or recommend, any Acquisition
Proposal, or (iii) cause the Company to enter into any letter of intent,
agreement in principle, acquisition agreement or other similar agreement (each,
an "Acquisition Agreement") related to any Acquisition Proposal. Notwithstanding
the foregoing, in the event that prior to the vote on the transactions at the
Company Special Meeting, the Board of Directors of the Company determines in
good faith, that an Acquisition Proposal constitutes a Superior Proposal, the
Board of Directors of the Company may (x) withdraw or modify its approval or
recommendation of the Transactions in connection with the Company Special
Meeting, (y) approve or recommend a Superior Proposal and (z) if it so chooses,
cause the Company to enter into an Acquisition Agreement with respect to such
Superior Proposal but, in each of the
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case, only at a time that is after: (A) the fifth (5th) day following Parent's
receipt of written notice from the Company advising Parent that the Board of
Directors of the Company has received a Superior Proposal, specifying the
material terms and conditions of such Superior Proposal, identifying the person
making such Superior Proposal, and advising Parent that the Board of Directors,
of the Company has determined that it will no longer recommend approval of the
Transactions; (B) the Company has paid the Termination Fee (as defined in
Section 9.3(b)) to Parent; and (C) the Company has terminated this Agreement in
accordance with its terms.
Section 7.10 Related Agreements. Simultaneously with the execution and
delivery of this Agreement, or as otherwise provided in this Section 7.10, and
as material consideration for the execution and delivery of this Agreement by
Parent and Merger Subsidiary, each of the executive officers and the other
Persons listed on Schedule 7.10(a) to this Agreement is entering into a
stockholders' voting and proxy agreement pursuant to which such Persons agree to
vote the shares of the Company Common Stock owned by them in favor of the
Company Proposal at the Company Special Meeting and provide the proxies named
therein with such Person's irrevocable proxy with respect to such vote
(collectively, the "Related Agreements").
Section 7.11 Employee Benefits.
(a) Parent shall cause the employees of the Company and its
subsidiaries (collectively, the "Company Employees") to be covered under the
Parent's "employee benefit plans" as defined in ERISA ("Parent Benefit Plans")
and for at least two years after the Effective Time, Parent shall, or shall
cause the Surviving Corporation to, provide benefits, in the aggregate, that are
no less favorable than the benefits provided, in the aggregate, under such
Parent Benefit Plans immediately prior to the Effective Time to the Company
Employees. Notwithstanding the foregoing, nothing herein shall require: (A) the
continuation of any Company Benefit Plan or prevent the amendment or termination
thereof (subject to the maintenance, in the aggregate, of the benefits as
provided in the preceding sentence); or (B) require Parent or the Surviving
Corporation to continue or maintain any stock purchase or other equity plan
related to the equity of the Company or the Surviving Corporation or to change
the eligibility requirements of any stock or other equity plan of Parent; or (C)
constitute any obligation on the part of Parent, the Surviving Corporation or
any of their Affiliates to change the employment status of any of the Company
Employees to other than "at will."
(b) With respect to any Parent Benefit Plans in which the Company
Employees participate effective as of the Closing Date, Parent shall, or shall
cause the Surviving Corporation to, to the extent permitted under the Parent
Benefits Plans: (A) not impose any limitations more onerous than those currently
in effect as to pre-existing conditions, exclusions and waiting periods with
respect to participation and coverage requirements applicable to the Company
Employees under which any welfare benefit plan in which such employees may be
eligible to participate after the Effective Time, (B) provide each Company
Employee with credit for any co-payments and deductibles paid prior to the
Effective Time in satisfying any applicable deductible or out-of-pocket
requirements under any welfare benefit plan in which such employees may be
eligible to participate after the Effective Time, and (C) recognize all service
of the Company Employees with the Company for all purposes (including, without
limitation, purposes of eligibility to participate, vesting credit, entitlement
for benefits, and
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benefit accrual) in any benefit plan in which such employees may be eligible to
participate after the Effective Time, to the same extent taken into account
under a comparable Company Benefit Plan immediately prior to the Closing Date.
Section 7.12 Nasdaq Listing. Parent shall use its best efforts to cause
the shares of Parent Common Stock to be issued in the Merger and the shares of
Parent Common Stock to be reserved for issuance upon exercise of the Company
Stock Options to be approved for quotation, upon official notice of issuance on
the Nasdaq National Market.
ARTICLE VIII
CONDITIONS PRECEDENT
Section 8.1 Conditions to Each Party's Obligation to Effect the Merger.
The respective obligations of each party to effect the Merger shall be subject
to the fulfillment at or prior to the Effective Time of the following
conditions:
(a) This Agreement and the transactions contemplated hereby shall have
been approved and adopted by the requisite vote of the holders of the Company
Common Stock at the Company Special Meeting;
(b) The waiting period applicable to the consummation of the Merger
under the HSR Act shall have expired or been terminated and any other material
Consents from Governmental Entities and other third parties which in any case
are required to be received prior to the Effective Time with respect to the
transactions contemplated hereby shall have been received;
(c) The shares of Parent Common Stock to be issued in the Merger and
such other shares to be reserved for issuance in connection with the Merger
shall have been approved for listing on the Nasdaq National Market upon official
notice of issuance;
(d) The Registration Statement shall have been declared effective by
the SEC under the Securities Act, no stop order suspending the effectiveness of
the Registration Statement shall have been issued by the SEC, and no proceedings
for that purpose shall have been initiated or threatened by the SEC; and
(e) The consummation of the Merger shall not be restrained, enjoined or
prohibited by any order, judgment, decree, injunction or ruling of a court of
competent jurisdiction; provided, however, that the parties shall comply with
the provisions of Section 7.6 and shall further use their best efforts to cause
any such order, judgment, decree, injunction or ruling to be vacated or lifted.
Section 8.2 Conditions to Obligation of the Company to Effect the
Merger. The obligation of the Company to effect the Merger shall be subject to
the fulfillment at or prior to the Effective Time of the following additional
conditions, unless waived by the Company, that:
(a) The representations and warranties of Parent and Merger Subsidiary
contained in this Agreement that are modified by materiality or Parent Material
Adverse Effect shall be true
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and correct in all respects, and those that are not so modified shall be true
and correct in all material respects, on the date hereof and as of the Effective
Time as if made at the Effective Time (except such representations and
warranties made as of a specific date which need only be true as written as of
such date). The Company shall have received a certificate of an authorized
officer of Parent and Merger Subsidiary, on behalf of Parent and Merger
Subsidiary, to such effect.
(b) Parent and Merger Subsidiary shall have performed or complied with
all agreements and covenants required to be performed by each of them under this
Agreement at or prior to the Effective Time in all material respects, and the
Company shall have received a certificate of an authorized officer of Parent and
Merger Subsidiary, on behalf of Parent and Merger Subsidiary, to such effect.
(c) The Company shall have received from Arent Fox Kintner Plotkin &
Kahn, PLLC, or other counsel reasonably acceptable to the Company, on the
Closing Date, a written opinion dated as of such date that the Merger qualifies
as a reorganization within the meaning of Section 368(a)(2)(D) of the Code.
(d) The Credit Facility shall have been paid.
Section 8.3 Conditions to Obligations of Parent and Merger Subsidiary
to Effect the Merger. The obligations of Parent and Merger Subsidiary to effect
the Merger shall be subject to the fulfillment at or prior to the Effective Time
of the following additional conditions, unless waived by Parent:
(a) The representations and warranties of the Company contained in this
Agreement that are modified by materiality or Company Material Adverse Effect
shall be true and correct in all respects, and those that are not so modified
shall be true and correct in all material respects, on the date hereof and as of
the Effective Time as if made at the Effective Time (except such representations
and warranties made as of a specific date which need only be true as written as
of such date and except that the representations set forth in Section 4.2 shall
be true and correct in all respects). Parent shall have received a certificate
of an authorized officer of the Company, on behalf of the Company, to such
effect.
(b) The Company shall have performed or complied with all agreements
and covenants required to be performed by it under this Agreement at or prior to
the Effective Time in all material respects, other than the covenants with
respect to issuance of shares of Company capital stock, Company Options and ESPP
Options which shall be complied with as set forth in Section 6.1(a)(i) and (ii),
and Parent shall have received a certificate of an authorized officer of the
Company, on behalf of the Company, to such effect.
(c) Parent shall have received from Nixon Peabody LLP, on the Closing
Date, a written opinion dated as of such date that the Merger qualifies as a
reorganization within the meaning of Section 368(a)(2)(D) of the Code.
(d) The Related Agreements have been executed and delivered by the
respective parties thereto and continue in full force and effect.
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ARTICLE IX
TERMINATION, AMENDMENT AND WAIVER
Section 9.1 Termination. This Agreement may be terminated at any time
prior to the Effective Time, whether before or after approval by the
stockholders of the Company:
(a) by mutual written consent of Parent and the Company;
(b) by the Company, upon a material breach of this Agreement on the
part of Parent or Merger Subsidiary which has not been cured and which would
cause the condition set forth in Section 8.2 to be incapable of being satisfied
by February 29, 2000;
(c) by Parent, upon a material breach of this Agreement on the part of
the Company set forth in this Agreement which has not been cured and which would
cause the conditions set forth in Section 8.3 to be incapable of being satisfied
by February 29, 2000;
(d) by Parent or the Company if any court of competent jurisdiction
shall have issued, enacted, entered, promulgated or enforced any order,
judgment, decree, injunction or ruling, after reasonable efforts on the part of
Parent and the Company to resist, resolve or lift, which permanently restrains,
enjoins or otherwise prohibits the Merger and such order, judgment, decree,
injunction or ruling shall have become final and nonappealable;
(e) by either Parent or the Company if the Merger shall not have been
consummated on or before February 29, 2000 (the "Upset Date") provided the
terminating party is not otherwise in material breach of its representations,
warranties or obligations under this Agreement;
(f) by either Parent or the Company if the Company Special Meeting
(including as it may be adjourned from time to time) shall have concluded
without the Company having obtained the required stockholder approval of this
Agreement and the transactions contemplated hereby;
(g) by Parent if the Board of Directors of the Company, prior to the
Company Special Meeting (i) shall withdraw or modify in any adverse manner the
Company Board Approval, (ii) shall approve or recommend a Superior Proposal
pursuant to Section 7.9 or (iii) shall resolve to take any of the actions
specified in clauses (i) or (ii) above; or
(h) by the Company at any time prior to the Company Special Meeting,
upon five business days' prior notice to Parent, if the Board of Directors of
the Company shall approve a Superior Proposal; provided, however, that (i) the
Company shall have complied with Section 7.9, (ii) the Board of Directors of the
Company shall have concluded in good faith, after giving effect to all
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concessions which may be offered by Parent pursuant to clause (iii) below, on
the basis of the advice of its financial advisors and outside counsel, that such
proposal is a Superior Proposal and (iii) prior to any such termination, the
Company shall, and shall cause its financial and legal advisors to, negotiate
with Parent to make such adjustments in the terms and conditions of this
Agreement as would enable Parent to proceed with the transactions contemplated
hereby; provided, however, that it shall be a condition to termination by the
Company pursuant to this Section 9.l(h) that the Company shall have made the
payment of the Termination Fee to Parent required by Section 9.3(b).
Section 9.2 Effect of Termination. In the event of termination of this
Agreement by either Parent or the Company, as provided in Section 9.1, this
Agreement shall forthwith terminate and there shall be no liability hereunder on
the part of any of the Company, Parent or Merger Subsidiary or their respective
officers or directors; provided that Sections 4.22 (Brokers); 5.8 (Brokers); the
second sentence of 7.1(a) (Confidentiality), the second sentence of 7.1(b)
(Confidentiality); Section 7.9 to the extent the Company is required to pay the
Termination Fee until such Fee is paid; this Section 9.2, 9.3 (Fees and
Expenses); and 10.6 (Governing Law) shall survive the termination and remain in
full force and effect and; provided, further, that (i) each party shall remain
liable for any willful breaches of such party's covenants hereunder or
intentional or willful breaches of such party's representations and warranties
hereunder prior to its termination, and (ii) Parent and the Company shall share
equally the fees and expenses incurred in connection with the filing and
printing of the Proxy Statement/Prospectus (including any preliminary proxy
statement/ prospectus) and the filing fees under the HSR Act.
Section 9.3 Fees and Expenses.
(a) Whether or not the Merger is consummated, all costs and expenses
incurred in connection with this Agreement and the transactions contemplated by
this Agreement shall be paid by the party incurring such expenses, except as
otherwise provided in Section 7.8 and Section 9.2.
(b) Parent and the Company agree that the Company shall pay to Parent
the sum of $15,000,000 (the "Termination Fee") solely as follows: (i) if Parent
shall terminate this Agreement pursuant to Section 9.1(g)(ii) or if the Company
shall terminate this Agreement pursuant to Section 9.1(h), (ii) if (A) the
Company or Parent shall terminate this Agreement pursuant to Section 9.1(f) due
to the failure of the Company's stockholders to approve and adopt this
Agreement, (B) at any time after the date of this Agreement and at or before the
time of the event giving rise to such
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termination there shall exist an Acquisition Proposal with respect to the
Company and (C) within 12 months of the termination of this Agreement, the
Company enters into a definitive agreement with any third party with respect to
an Acquisition Proposal or an Acquisition Proposal is consummated, or (iii) if
(A) Parent shall terminate this Agreement pursuant to Section 9.1(c) or 9.1(e)
or Section 9.1(g)(i) or 9.1(g)(iii) or the Company or Parent shall terminate
this Agreement pursuant to Section 9.1(d), (B) at any time after the date of
this Agreement and at or before the time of the event giving rise to such
termination there shall exist an Acquisition Proposal, (C) following the
existence of such Acquisition Proposal and prior to any such termination, the
Company shall have intentionally breached (and not cured after notice thereof)
any of its material covenants or agreements set forth in this Agreement in any
material respect, and (D) within 12 months of any such termination of this
Agreement, the Company shall enter into a definitive agreement with any third
party with respect to an Acquisition Proposal or an Acquisition Proposal is
consummated.
(c) The Termination Fee required to be paid pursuant to Section 9.3(b)
shall be made prior to, and shall be a pre-condition to the effectiveness of
termination of this Agreement by the Company pursuant to Section 9.1(h). Any
other payment required to be made shall be made to Parent not later than two
business days after the entering into of a definitive agreement with respect to,
or the consummation of, an Acquisition Proposal, as applicable. All payments
under this Section 9.3 shall be made by wire transfer of immediately available
funds to an account designated by Parent.
Section 9.4 Amendment. This Agreement may be amended by the parties
hereto at any time before or after approval hereof by the stockholders of the
Company, but, after such approval, no amendment shall be made which (i) changes
the form or decreases the amount of the Merger Consideration, (ii) in any way
materially adversely affects the rights of the Company's stockholders or (iii)
under applicable law would require approval of the Company's stockholders, in
any such case referred to in clauses (i), (ii) and (iii), without the further
approval of such stockholders. This Agreement may not be amended except by an
instrument in writing signed on behalf of each of the parties hereto.
Section 9.5 Waiver. At any time prior to the Effective Time, the
parties hereto may, to the extent permitted by applicable law, (i) extend the
time for the performance of any of the obligations or other acts of any other
party hereto, (ii) waive any inaccuracies in the representations and warranties
by any other party contained herein or in any documents delivered by any other
party pursuant hereto and (iii) waive compliance with any of the agreements of
any other party or with any conditions to its own obligations contained herein.
Any agreement on the part of a party hereto to any such extension or waiver
shall be valid only if set forth in an instrument in writing signed on behalf of
such party.
ARTICLE X
GENERAL PROVISIONS
Section 10.1 Non-Survival of Representations, Warranties and
Agreements. The representations and warranties in this Agreement shall not
survive the Merger.
Section 10.2 Notices. All notices or other communications under this
Agreement shall be in writing and shall be given (and shall be deemed to have
been duly given upon receipt) by delivery in person, by telecopy (with
confirmation of receipt), or by registered or certified mail, postage prepaid,
return receipt requested, addressed as follows:
If to the Company:
Transaction Network Services, Inc.
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1939 Roland Clarke Place
Reston, VA 20191
Attention: John J. McDonnell, III,
General Counsel and Secretary
Telecopy No.: (703) 453-8397
With copies to:
Arent Fox Kintner Plotkin & Kahn, PLLC
1050 Connecticut Avenue, N.W.
Washington, DC 20036-5339
Attention: Jeffrey E. Jordan, Esq.
Telecopy: (202) 8576395
If to Parent or Merger Subsidiary:
PSINet Inc. Courier:
510 Huntmar Park Drive 11180 Sunrise Valley Drive
Herdon, VA 22070 Reston, VA 20191
Attention: David N. Kunkel
Executive Vice President, General Counsel
Telecopy: (703) 904-9527
With a copy to:
Nixon Peabody LLC
437 Madison Avenue
New York, NY 10022
Attention: Richard F. Langan, Jr., Esq.
Telecopy: (212) 940-3111
or to such other address as any party may have furnished to the other parties in
writing in accordance with this Section.
Section 10.3 Specific Performance. The parties hereto agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement were not performed in accordance with their specific terms or were
otherwise breached. Accordingly, the parties further agree that each party shall
be entitled to an injunction or restraining order to prevent breaches of this
Agreement and to enforce specifically the terms and provisions hereof in any
court of the United States or any state having jurisdiction, this being in
addition to any other right or remedy to which such party may be entitled under
this Agreement, at law or in equity.
Section 10.4 Entire Agreement. This Agreement (including the documents
and instruments referred to herein) constitutes the entire agreement and
supersedes all other prior agreements and understandings, both written and oral,
among the parties, or any of them, with respect to the subject matter hereof.
Section 10.5 Assignments; Parties in Interest. Neither this Agreement
nor any of the
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rights, interests or obligations hereunder may be assigned by any of the parties
hereto (whether by operation of law or otherwise) without the prior written
consent of the other parties. 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 or shall confer upon any person not a party
hereto any right, benefit or remedy of any nature whatsoever under or by reason
of this Agreement, including to confer third party beneficiary rights, except
for the provisions of Article III and Section 7.5.
Section 10.6 Governing Law. This Agreement, except to the extent that
provisions of Delaware Law (with respect to the Merger only) are mandatorily
applicable to the Merger and the rights of the stockholders of the Company,
shall be governed in all respects by the laws of the State of New York (without
giving effect to the provisions thereof relating to conflicts of law). The
exclusive venue for the adjudication of any dispute or proceeding arising out of
this Agreement or the performance thereof shall be the courts located in the
County of New York, State of New York and the parties hereto and their
affiliates each consents to and hereby submits to the jurisdiction of any court
located in the County of New York, State of New York or Federal courts in the
Southern District of New York.
Section 10.7 Headings; Disclosure. 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. Any disclosure by the
Company or Parent in any portion of its respective Disclosure Schedule shall be
deemed disclosure in each other portion of such Disclosure Schedule.
Section 10.8 Certain Definitions and Rules of Construction.
(a) As used in this Agreement:
"Affiliate," as applied to any person, shall mean any other person
directly or indirectly controlling, controlled by, or under common control with,
that person; for purposes of this definition, "control" (including, with
correlative meanings, the terms "controlling," "controlled by" and "under common
control with"), as applied to any person, means the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of that person, whether through the ownership of voting securities, by
contract or otherwise.
"Acquisition Agreement" has the meaning set forth in Section 7.9(b).
"Acquisition Proposal" has the meaning set forth in Section 7.9(a).
"Agreement" has the meaning set forth in the preamble to this
Agreement.
"Business Combination" has the meaning set forth in Section 3.1(m).
"Cash Consideration" has the meaning set forth in Section 3.1(c).
"Cash Election" has the meaning set forth in Section 3.1(d).
"Cash Election Number" has the meaning set forth in Section 3.1(d).
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"Cash Election Shares" has the meaning set forth in Section 3.1(e).
"Cash Fraction" has the meaning set forth in Section 3.1(e).
"Certificate of Merger" has the meaning set forth in Section 1.3.
"Certificates" has the meaning set forth in Section 3.2.
"Closing Date" has the meaning set forth in Section 1.2.
"Code" has the meaning set forth in Section 3.6.
"Company" has the meaning set forth in the preamble to this Agreement.
"Company Benefit Plans" has the meaning set forth in Section 4.9.
"Company Board Approval" has the meaning set forth in Section 4.23.
"Company Common Stock" has the meaning set forth in Section 3.1(b).
"Company Disclosure Schedule" has the meaning set forth in Article IV,
Introduction.
"Company Employees" has the meaning set forth in Section 7.11.
"Company Intellectual Property Rights" has the meaning set forth in
Section 4.16(a).
"Company Financial Statements" has the meaning set forth in Section
4.5(b).
"Company Material Adverse Effect" shall be an event or occurrence or
series of events or occurrences which individually or in the aggregate with all
other events or occurrences would be reasonably likely to have a material
adverse effect on the business, operations, financial condition or results of
operations of the Company and its subsidiaries taken as a whole, other than any
change, circumstances or effect relating to (i) the economy or securities
markets in general or (ii) the industries in which the Company operates in
general and not specifically relating to the Company.
"Company Material Contract" has the meaning set forth in Section 4.14.
"Company Permits" has the meaning set forth in Section 4.12.
"Company Proposal" has the meaning set forth in Section 3.5(a).
"Company Real Property Rights" has the meaning set forth in Section
4.15.
"Company Quarterly Financial Statements" has the meaning set forth in
Section 4.5(c).
"Company SEC Reports" has the meaning set forth in Section 4.5(a).
"Company Special Meeting" has the meaning set forth in Section 3.5(a).
"Company Stock Options" has the meaning set forth in Section 4.2(a).
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"Company's Financial Advisor" has the meaning set forth in Section
4.2.3.
"Confidentiality Agreement" has the meaning set forth in Section
7.1(a).
"Consent" has the meaning set forth in Section 4.4(b).
"Credit Facility" has the meaning set forth in Section 7.3.
"Delaware Law" has the meaning set forth in Section 1.3.
"Dissenting Shares" has the meaning set forth in Section 3.1(n).
"Effective Time" has the meaning set forth in Section 1.3.
"Election" has the meaning set forth in Section 3.1(h).
"Election Deadline" has the meaning set forth in Section 3.1(k).
"Environmental Law" has the meaning set forth in Section 4.19.
"ERISA" shall have the meaning set forth in Section 4.9(a).
"ERISA Affiliate" has the meaning set forth in Section 4.9(a).
"ESPP Options" has the meaning set forth in Section 4.2(a).
"Exchange Act" has the meaning set forth in Section 3.5(c).
"Exchange Ratio" has the meaning set forth in Section 3.1(a).
"Form of Election" has the meaning set forth in Section 3.1(d).
"GAAP" has the meaning set forth in Section 4.5(b).
"Governmental Entity" has the meaning set forth in Section 5.4(b)
"HSR Act" has the meaning set forth in Section 4.4(b).
"Hazardous Substance" has the meaning set forth in Section 4.19.
"Indemnified Parties" has the meaning set forth in Section 7.5.
"Information Technology" has the meaning set forth in Section 4.16(c).
"IRS" has the meaning set forth in Section 4.9.
"Knowledge" or any other formulation of "knowledge" shall mean, the
knowledge of the Company's senior executive officers with respect to the
Company, and with respect to Parent and Merger Subsidiary, the knowledge of
Parent's senior executive officers.
"Lien" has the meaning set forth in Section 4.4(a).
"Merger" has the meaning set forth in the preamble to this Agreement.
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"Merger Consideration" has the meaning set forth in Section 3.1(a).
"Merger Subsidiary" has the meaning set forth in the preamble to this
Agreement.
"Merger Subsidiary Common Stock" has the meaning set forth in Section
3.1(a).
"Mixed Consideration" has the meaning set forth in Section 3.1(c).
"Mixed Election" has the meaning set forth in Section 3.1(h).
"NYBCL" has the meaning set forth in Section 3.1(c).
"No Election Shares" has the meaning set forth in Section 3.1(j).
"Non-U.S. Benefit Plans" has the meaning set forth in Section 4.9(l).
"Other Investments" has the meaning set forth in Section 4.2(c).
"Parent" has the meaning set forth in the preamble to this Agreement.
"Parent Benefit Plans" has the meaning set forth in Section 7.11.
"Parent Common Stock" has the meaning set forth in Section 3.1(c).
"Parent Disclosure Schedule" has the meaning set forth in Article V,
Introduction.
"Parent Material Adverse Effect" shall be an event or occurrence or
series of events or occurrences which individually or in the aggregate with all
other events or occurrences would be reasonably likely to have a material
adverse effect on the business, operations, financial condition or results of
operations of Parent and its subsidiaries taken as a whole, other than any
change, circumstances or effect relating to (i) the economy or securities
markets in general or (ii) the industries in which Parent operates in general
and not specifically relating to Parent.
"Parent Quarterly Financial Statements" has the meaning set forth in
Section 5.10(c).
"Parent SEC Reports" has the meaning set forth in Section 5.10(a).
"Paying Agent" has the meaning set forth in Section 3.1(i).
"Person" shall include individuals, corporations, partnerships, limited
liability companies, trusts, other entities and groups (which term shall include
a "group" as such term is defined in Section 13(d)(3) of the Exchange Act).
"Prospectus/Proxy Statement" has the meaning set forth in Section
3.5(a).
"Qualified Plans" has the meaning set forth in Section 4.9.
"Registration Statement" has the meaning set forth in Section 3.5(a).
"Related Agreements" has the meaning set forth in Section 7.10.
"Representative" has the meaning set forth in Section 3.1(d).
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"SEC" has meaning set forth in Section 3.5(a).
"Securities Act" has the meaning set forth in Section 3.5(a).
"Series C Stock" has the meaning set forth in Section 5.9.
"Significant Subsidiaries" means subsidiaries within the meaning of
Regulation S-X under the Exchange Act, which in the case of references to the
Significant Subsidiaries of Parent, shall include Merger Subsidiary.
"Stock Consideration" has the meaning set forth in Section 3.1(c).
"Stock Election" has the meaning set forth in Section 3.1(f).
"Stock Election Number" has the meaning set forth in Section 3.1(f).
"Stock Election Shares" has the meaning set forth in Section 3.1(g).
"Stock Fraction" has the meaning set forth in Section 3.1(g).
"Subsidiary" or "Subsidiaries" means, with respect to Parent, the
Company or any other person, any corporation, partnership, joint venture or
other legal entity of which Parent, the Company or such other person, as the
case may be (either alone or through or together with any other subsidiary),
owns, directly or indirectly, stock or other equity interests the holders of
which are generally entitled to more than 50% of the vote for the election of
the board of directors or other governing body of such corporation or other
legal entity.
"Superior Proposal" means a bona fide unsolicited written Acquisition
Proposal to acquire more than 50% of the voting power of the shares of the
Company Common Stock then outstanding or all or substantially all the assets of
the Company for consideration consisting of cash and/or securities which the
Board of Directors of the Company concludes in good faith (after consultation
with its financial advisors and legal counsel), taking into account all legal,
financial, regulatory and other aspects of the proposal and the Person making
the proposal, (i) would, if consummated, result in a transaction that is
materially more favorable to the Company's stockholders (in their capacities as
stockholders), from a financial point of view, than the transactions
contemplated by this Agreement and (ii) is reasonably capable of being
completed, including, without limitation, a conclusion that its financing, to
the extent required, is then committed or is in the good faith judgment of the
Board of Directors of the Company, reasonably capable of being financed by such
third party.
"Surviving Corporation" has the meaning set forth in Section 1.1.
"Tax" shall mean any federal, state, local, foreign or provincial
income, gross receipts, property, sales, service, use, license, lease, excise,
franchise, employment, payroll, withholding, employment, unemployment insurance,
workers' compensation, social security, alternative or added minimum, ad
valorem, value added, stamp, business license, occupation, premium,
environmental, windfall profit, customs, duties, estimated, transfer or excise
tax, or any other tax, custom, duty, premium, governmental fee or other
assessment or charge of any kind whatsoever, together with any interest or
penalty imposed by any Governmental Entity.
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"Termination Fee" has the meaning set forth in Section 9.3(b).
"Upset Date" has the meaning set forth in Section 9.1(e).
"Ventures" has the meaning set forth in Section 4.2(c).
"Violation" has the meaning set forth in Section 4.4(a) and "Violate"
shall have a correlative meaning.
"Year 2000 Ready" has the meaning set forth in Section 4.16(c).
(b) Other Rules of Construction.
(i) References in this Agreement to any gender shall include
references to all genders. Unless the context otherwise
requires, references in the singular include references in the
plural and vice versa. References to a party to this Agreement
or to other agreements described herein means those Persons
executing such agreements.
(ii) The words "include", "including" or "includes" shall be
deemed to be followed by the phrase "without limitation" or
the phrase "but not limited to" in all places where such words
appear in this Agreement.
(iii) This Agreement is the joint drafting product of Parent
and the Company and each provision has been subject to
negotiation and agreement and shall not be construed for or
against either party as drafter thereof.
(iv) Each case in this Agreement where a contract or agreement
is represented or warranted to be enforceable will be deemed
to include as a limitation to the extent that enforceability
may be subject to applicable bankruptcy, insolvency,
reorganization, fraudulent conveyance, moratorium or similar
Laws affecting the enforcement of creditors' rights generally
and to general equitable principles, whether applied in equity
or at law.
(v) All references in the Agreement to financial terms shall
be deemed to refer to such terms as they are defined under
GAAP, consistently applied.
Section 10.9 Counterparts. This Agreement may be executed in two or
more counterparts which together shall constitute a single agreement.
Section 10.10 Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of law
or public policy, all other terms and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economics or legal
substance of the transactions contemplated hereby are not affected in any manner
materially adverse to any party. Upon determination that any term or other
provision hereof is invalid, illegal or incapable of being enforced, the parties
hereto shall negotiate in good faith to modify this Agreement so as to effect
the original intent of the parties as closely as possible to the fullest extent
permitted by applicable law in an acceptable manner to the end that the
transactions contemplated hereby are fulfilled to the extent possible.
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IN WITNESS WHEREOF, Parent, Merger Subsidiary and the Company have
caused this Agreement to be signed by their respective officers thereunder duly
authorized all as of the date first written above.
PARENT
PSINET INC.
By /s/ William L . Schrader
--------------------------------
William L. Schrader
Chairman and Chief Executive Officer
MERGER SUBSIDIARY
PSINET SHELF I, INC.
By /s/ William L . Schrader
--------------------------------
William L. Schrader
Chairman
COMPANY
TRANSACTION NETWORK SERVICES, INC.
By /s/ John J .McDonnell,Jr.
---------------------------------
Title: John J. McDonnell, Jr.
Disclosure schedules delivered by the parties contain certain information
required by the text of the Agreement. PSINet Inc. will file such schedules with
the Securities and Exchange Commission as supplemental information, upon
request.
Exhibit 99.1
PSINET WILL HOST A PRESS BRIEFING BY TELEPHONE AUGUST 23, AT 1:00 P.M. U.S. EDT.
THOSE INTERESTED IN PARTICIPATING SHOULD CALL 1-800-230-1092 NO LATER THAN 12:55
P.M.
FOR PSINET: FOR TNS:
MEDIA CONTACTS: ANALYST CONTACT: MEDIA/ANALYST CONTACT:
Robert Leahy David Lerch Karen Kazmark
(703) 375-1063 (703) 375-1577 (703) 453-8406
[email protected] [email protected] [email protected]
Reid Walker
(703) 375-1103
[email protected]
PSINET TO ACQUIRE TRANSACTION NETWORK SERVICES, INC.
Global eCommerce and Internet Service Powerhouse Created
HERNDON, VA, AUGUST 23, 1999 - PSINet Inc. (NASDAQ: PSIX), the first and largest
independent facilities based commercial Internet Service Provider (ISP), today
announced it had entered into a definitive agreement to acquire Transaction
Network Services, Inc. (NYSE: TNI). TNI, headquartered in Reston, Virginia, is
the leading worldwide provider of eCommerce data communications processing more
than 20 million transactions per day from 2 million businesses. The company
handles over 70 percent of the electronic Point of Sale transactions in the U.S.
During its quarter ended June 30, 1999, TNI reported revenue of $42.7 million,
EBITDA of $10.5 million and a net profit of $3.1 million.
The purchase of TNI is expected to be immediately accretive to PSINet's EBITDA
and EPS measures. The $720 million aggregate purchase price consists of $351
million in cash and up to 7.8 million PSINet common shares. TNI shareholders may
elect to receive cash, PSINet stock, or both. The stock portion of the
transaction has been designed to achieve tax-free treatment for federal income
tax purposes.
TNI operates the leading data transport network used by credit card processors
in the U.S. to carry account and purchase information between merchants and the
processors' data centers for authorization. TNI is a leader in processing
transactions over the Internet, and has experienced a 20 percent growth rate per
month in transaction volumes in 1999.
"We are very excited to welcome TNI to the PSINet global family of companies,"
said William L. Schrader, PSINet chairman and CEO. "This transaction represents
the first combination of a market-leading eCommerce enterprise with a global
facilities-based Internet service provider. Combining PSINet and TNI creates the
leading global provider of eCommerce and Internet solutions to businesses
worldwide, and enables PSINet to better access the $1 trillion marketplace for
eCommerce services."
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TNI currently has operations in Ireland, the UK, Sweden, France, Australia, and
Japan and is expanding its business worldwide. The purchase by PSINet will allow
TNI to greatly expand its international reach of services while operating over
PSINet's global backbone.
"PSINet's global reach significantly enhances TNI's market presence by
immediately adding 16 global markets for their services. As financial
institutions continue to outsource their critical web hosting capabilities to
both TNI and PSINet, we can exploit this vertical marketplace by providing
end-to-end solutions over our worldwide network," said Schrader.
"TNI is known for its ability to deliver leading edge technology to its
customers as they expand their businesses. It is clear that virtually all of our
customers are playing an increasing role in the electronic commerce space," said
John McDonnell Jr., president and CEO of Transaction Network Services. "TNI is
committed to providing an innovative transport infrastructure to support them as
they move their businesses forward. We see this acquisition by PSINet as a
strategic way for TNS to meet that objective."
Shareholders representing approximately 15 percent of TNI's outstanding shares
(including those of McDonnell) have entered into an agreement to vote their
shares in favor of the PSINet acquisition. Completion of the transaction is
subject to a number of conditions, including receipt of TNI shareholder approval
and regulatory approvals. The transaction is expected to close in the fourth
quarter of 1999.
PSINet was represented in the transaction by Donaldson, Lufkin & Jenrette
Securities Corporation and Wasserstein Perella & Co., Inc., investment bankers,
and Nixon Peabody LLP, outside counsel. TNI was represented on the transaction
by Morgan Stanley & Co. Incorporated, investment bankers, and Arent Fox Kinter
Plotkin & Kahn PLLC, outside counsel.
Transaction Network Services, Inc., headquartered in Reston, Virginia, provides
data communications services for transaction-oriented applications. The company
is listed on the New York Stock Exchange under the symbol TNI. Additional
company information is available on the TNI website at www.tnsi.com.
Headquartered in Herndon, VA, PSINet is a global facilities-based Internet
Protocol (IP) data communications carrier focused on the business marketplace.
As the first and largest independent commercial Internet service provider in the
world, PSINet offers a broad set of high-speed corporate LAN connectivity
services supporting managed security and guaranteed Internet, Intranet,
electronic commerce, Web hosting services, and services for other carriers and
ISPs. PSINet operates an international state-of-the-art frame relay and
ATM-based, IP-optimized network consisting of over 600 POPs around the world
serving primary markets in Argentina, Austria, Belgium, Brazil, Canada, France,
Germany, Hong Kong, Italy, Japan, Luxembourg, Mexico, the Netherlands, Panama,
Republic of Korea, Spain, Switzerland, the United States, and the United
Kingdom. PSINet information can be obtained by e-mail at [email protected], by
accessing the Web site at http://www.psinet.com or by calling toll-free in the
U.S. 1-800-799-0676.
# # #
Statements made in this press release that state the company or management's
intentions, beliefs, expectations, or predictions for the future are
forward-looking statements. It is important to note that the company's actual
results could differ materially from those projected in such forward- looking
statements. Information concerning factors that could cause actual results to
differ materially from those in the forward-looking statements is contained from
time to time in the company's filings with the Securities and Exchange
Commission (SEC). Copies of these filings may be obtained by contacting the
company or the SEC.
