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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): June 28, 1996
SITEL CORPORATION
(Exact name of registrant as specified in its charter)
Minnesota 0-26152 47-0684333
(State or jurisdiction of (Commission File (I.R.S. Employer
incorporation or organization) Number) Identification No.)
13215 BIRCH STREET
OMAHA, NEBRASKA 68164
(402) 498-6810
(Address, including zip code, and telephone number, including area code,
of registrant's principal executive offices)
------------------------------------------
This 8-K consists of 85 pages. The Exhibit Index is on page 4.
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ITEM 2. ACQUISITION OF ASSETS.
On June 28, 1996, SITEL completed the acquisition of National Action
Financial Services, Inc. ("NAFS"), a Georgia corporation with headquarters
in Atlanta, Georgia. Founded in 1994, NAFS provides telephone-based accounts
receivable management services, collections, and unique customer service
applications for over 20 large corporations in the United States. The Company
issued 1,371,226 shares of its Common Stock in exchange for all of the
outstanding NAFS stock and stock options in a merger through which NAFS
became a wholly-owned subsidiary of the Company. The holders of the
outstanding NAFS stock and options were Michael W. Fletcher, Walter J.
Berthiaume, Cordova Capital Partners, L.P.-Enhanced Appreciation, Terrance W.
Meder, Howard M. Gibbs and James P. Rich, Jr. (the "NAFS Stockholders").
The underlying assets of NAFS over which SITEL acquired control through the
acquisition consisted principally of cash, accounts receivable, fixed assets,
leasehold improvements and contract rights. The Company expects to account
for the transaction as a pooling-of-interests.
The Company expects NAFS to continue the same business activities under
the Company's ownership as prior to the acquisition. The Company based the
purchase price for NAFS principally upon a multiple of the past and
forecasted operating income of NAFS.
The terms of the acquisition are described in more detail in the
Agreement and Plan of Reorganization dated June 6, 1996, a conformed copy of
which is attached as an exhibit to this Form 8-K. The Company granted the
NAFS Stockholders certain registration rights in connection with the Common
Stock they received in the merger. Such registration rights are described in
more detail in the Registration Rights Agreement dated June 28, 1996, a
conformed copy of which is attached as an exhibit to this Form 8-K.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial statements of businesses acquired.
It is impracticable for the Company to provide the required
financial statements at this time. The Company will file the required
financial statements as an amendment to this Form 8-K as soon as
practicable, and no later than 60 days after the due date of this
Form 8-K.
(b) Pro forma financial information.
It is impracticable for the Company to provide the required pro
forma financial information at this time. The Company will file the
required pro forma financial information as an amendment to this Form
8-K as soon as practicable, and no later than 60 days after the due
date of this Form 8-K.
(c) Exhibits.
The exhibits filed as a part of this Form 8-K are:
Exhibit
No.
-------
2.3(a) Agreement and Plan of Reorganization dated June 6, 1996
regarding the acquisition of National Action Financial
Services, Inc. (conformed copy)
2.3(b) Registration Rights Agreement dated June 28, 1996 between
the Company and Michael W. Fletcher, as Stockholders'
Representative (conformed copy)
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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, thereunto duly authorized.
Date: July 12, 1996 SITEL Corporation
By: /s/ James F. Lynch
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James F. Lynch, Chairman and
Chief Executive Officer
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SITEL CORPORATION
EXHIBIT INDEX
Page Number
In Sequential
Exhibit Numbering
No. System
------- ------------
2.3(a) Agreement and Plan of Reorganization
regarding the acquisition of National
Action Financial Services, Inc.
(conformed copy)
2.3(b) Registration Rights Agreement dated
June 28, 1996 between the Company and
Michael W. Fletcher, as Stockholders'
Representative (conformed copy)
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EXHIBIT 2.3(a)
Agreement and Plan of Reorganization dated June 6, 1996
regarding the acquisition of National Action Financial Services, Inc.
(conformed copy)
The exhibits to the Agreement and Plan of Reorganization,
which are identified in the index on page v thereof, have been
omitted pursuant to Item 601 of Regulation S-K.
The registrant undertakes to furnish supplementally
a copy of any of such omitted exhibits to the
Securities and Exchange Commission upon request.
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AGREEMENT AND PLAN OF REORGANIZATION
by and among
NATIONAL ACTION FINANCIAL SERVICES, INC.,
SITEL CORPORATION
SC ACQUISITION CORP.
and
MICHAEL W. FLETCHER,
individually and in his capacity as
Stockholders' Representative
Dated as of June 6, 1996
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INDEX TO AGREEMENT AND PLAN OF REORGANIZATION
PAGE
ARTICLE I DEFINED TERMS 1
ARTICLE II THE MERGER 6
Section: 2.1 Merger 6
2.2 Plan of Merger 6
2.3 Effective Time 6
2.4 Effect of Merger 7
2.5 Articles of Incorporation and Bylaws 7
2.6 Directors 7
2.7 Officers 7
ARTICLE III MERGER CONSIDERATION; CONVERSION OF SHARES 7
Section: 3.1 Conversion or Cancellation of Shares 7
3.1.1 Adjusted Merger Consideration 7
3.1.2 Per Share Merger Consideration 8
3.1.3 Cancellation of Outstanding
NAFS Common Shares Including
Rich Option 8
3.1.4 Cancellation of NAFS Treasury
Shares 9
3.1.5 Continuation of Merger Sub Shares 9
3.1.6 Adjustment Because of Capital
Events 9
3.2 Exchange of Certificates 10
3.2.1 Surrender of Certificates 10
3.2.2 Status of Certificates Prior
to Surrender 10
3.3 No Fractional Shares 10
3.4 Closing of NAFS Stock Transfer Books 11
3.5 No Dissenting Shares 11
ARTICLE IV RELATED TRANSACTIONS 11
Section: 4.1 Stockholders' Representative Agreement 11
4.2 Private Placement 11
4.3 Registration Rights Regarding SITEL
Common Shares 12
4.4 Non-Competition Agreements 12
4.5 Employment Agreements 12
4.6 Escrow Agreement 12
4.7 Cordova Agreements 12
4.8 Stock and Voting Agreements 13
4.9 Sale Bonus to James P. Rich, Jr. 13
4.10 Release of Principal Stockholders'
Personal Guarantees 13
4.11 First Union Agreements 14
4.12 Determination of Net Book Value 14
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ARTICLE V THE CLOSING 15
Section: 5.1 Time and Place 15
5.2 Closing Deliveries 15
5.2.1 Deliveries by NAFS,
Stockholders' Representative
and NAFS Stockholders 15
5.2.2 Deliveries by SITEL and
Merger Sub to NAFS and
Stockholders' Representative 17
5.2.3 Deliveries by Surviving
Corporation 18
ARTICLE VI REPRESENTATIONS AND WARRANTIES OF NAFS AND
NAFS STOCKHOLDERS 18
Section: 6.1 Corporate Existence 18
6.2 Corporate Power; Authorization;
Enforceable Obligations 18
6.3 Capitalization 19
6.4 No Subsidiaries 20
6.5 Validity of Contemplated Transactions 20
6.6 No Third Party Options 20
6.7 Financial Statements 21
6.8 Accounts Receivable 21
6.9 Inventory 22
6.10 Absence of Undisclosed Liabilities 22
6.11 Tax and Other Returns and Reports 22
6.12 Books of Account 23
6.13 Existing Condition 23
6.14 Title to Properties 25
6.15 Compliance with Law; Authorizations 25
6.16 Condition of Tangible Assets 26
6.17 Transactions With Affiliates 26
6.18 Litigation 26
6.19 Insurance 27
6.20 Contracts and Commitments 27
6.21 Additional Information 29
6.22 Labor Matters 29
6.23 Employee Benefit Plans and Arrangements 30
6.24 Intellectual Property Matters 31
6.25 Software 31
6.26 Environmental Matters 32
6.27 Real Property 33
6.28 Availability of Documents 34
6.29 Necessary Assets 34
6.30 Restrictions Affecting NAFS 34
6.31 Conditions Affecting NAFS 34
6.32 Pooling-of-Interests Accounting Matters 34
6.33 Director Action 35
6.34 Stockholder Action;
Stockholders' Representative Agreement 35
6.35 Material Interests of Certain Persons 35
6.36 Investment Representations and Covenants 35
6.37 Completeness of Disclosure 37
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ARTICLE VII REPRESENTATIONS AND WARRANTIES OF SITEL
AND MERGER SUB 37
Section: 7.1 Corporate Existence 37
7.2 Corporate Power and Authorization 38
7.3 Validity of Contemplated Transactions 38
7.4 Capitalization 38
7.5 Litigation 39
7.6 SEC Filings 39
7.7 Existing Registration Rights 40
7.8 No Capital Events Anticipated 40
7.9 Securities Law Matters 40
7.10 Current Public Information 40
7.11 Completeness of Disclosure 40
ARTICLE VIII AGREEMENTS PENDING CLOSING 41
Section: 8.1 Agreements of All Parties Pending the
Closing 41
8.1.1 Actions of Parties 41
8.1.2 Pooling-of-Interests and
Tax-Free Reorganization
Treatment 41
8.1.3 Public Announcements 41
8.2 Additional Agreements of NAFS and
NAFS Stockholders Pending the Closing 41
8.2.1 Business in the Ordinary Course 41
8.2.2 Employees and Business Relations 41
8.2.3 Compliance with Laws 42
8.2.4 Existing Condition 42
8.2.5 Updated Schedules 42
8.2.6 Sale of Assets; Negotiations 42
8.2.7 Access 42
8.2.8 Rule 145 Affiliates 43
8.2.9 Documents and Certificates 43
8.3 Additional Agreements of SITEL and
Merger Sub Pending the Closing 43
8.3.1 Confidentiality 43
8.3.2 Nasdaq Listing 43
ARTICLE IX CONDITIONS PRECEDENT 44
Section: 9.1 Conditions Precedent to Each
Party's Obligations 44
9.1.1 Governmental Approvals and
Third Party Consents 44
9.1.2 No Threatened or Pending
Litigation 44
9.2 Additional Conditions Precedent
to the Obligations of SITEL and
Merger Sub 44
9.2.1 Performance of Covenants 44
9.2.2 Representations and Warranties
True and Correct 44
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9.2.3 Material Adverse Changes 45
9.2.4 Pooling Letters 45
9.2.5 Approval of Counsel; Corporate
Matters 45
9.3 Additional Conditions Precedent
to the Obligations of NAFS and
NAFS Stockholders 45
9.3.1 Performance Covenants 45
9.3.2 Representations and Warranties
True and Correct 45
9.3.3 Approval of Counsel; Corporate
Matters 46
9.3.4 Tax Opinion 46
ARTICLE X INDEMNIFICATION 46
Section: 10.1 General Indemnification Obligation of
NAFS Stockholders 46
10.2 General Indemnification Obligation of
SITEL and Merger Sub 47
10.3 Method of Asserting Claims; Limitations
on Indemnification 47
10.3.1 Claim Notice 47
10.3.2 Dispute of Liability 50
10.3.3 Defense 50
10.3.4 Claims by Indemnified NAFS
Party 51
10.4 Payment of Indemnity Claims 51
10.5 Application or Release of Indemnity
Escrow Shares 52
10.5.1 Application to Pay Indemnity
Claims 52
10.5.2 Release Immediately Following
First Year Anniversary of
the Closing Date 53
10.5.3 Non-Limitation of Liability 53
10.6 Right of Setoff 53
10.7 Other Rights and Remedies Not Affected 53
ARTICLE XI POST CLOSING MATTERS 54
Section: 11.1 Maintenance of Books and Records 54
11.2 Payments Received 54
11.3 Confidentiality 55
11.4 Further Assurances 55
11.5 Insurance Policies 55
ARTICLE XII MISCELLANEOUS 55
Section: 12.1 Termination 55
12.2 Amendment 56
12.3 Brokers' and Finders' Fees 57
12.4 Expenses 57
12.5 Contents of Agreement 57
12.6 Assignment and Binding Effect 57
12.7 Waiver 58
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12.8 Notices 58
12.9 Governing Law 58
12.10 No Benefit to Others 58
12.11 Headings, Gender and Meanings of
Certain Non-Capitalized Terms 59
12.12 Schedules and Exhibits 59
12.13 Severability 59
12.14 References to Articles, Sections,
Schedules and Exhibits 59
12.15 Joint and Several 59
12.16 Survival of Representations and
Warranties 59
12.17 Counterparts 60
EXHIBITS
Exhibit A Form of Registration Rights Agreement
Exhibit B Form of Non-Competition Agreements
Exhibit C Form of Employment Agreement
Exhibit D Opinion of Cohen Pollock Merlin & Axelrod
Exhibit E Opinion of Abrahams, Kaslow & Cassman
SCHEDULES
NAFS Disclosure Statement (separate from this Agreement)
SITEL Disclosure Statement (separate from this Agreement)
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AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION ("Agreement") is made June 6,
1996 among NATIONAL ACTION FINANCIAL SERVICES, INC., a Georgia corporation
("NAFS"), SC Acquisition Corp., a Nebraska corporation ("Merger Sub"), SITEL
CORPORATION, a Minnesota corporation which is the parent corporation of Merger
Sub ("SITEL"), and MICHAEL W. FLETCHER, individually and also in his capacity as
Stockholders' Representative ("Stockholders' Representative").
RECITALS:
Capitalized terms used in these Recitals are defined above or in Article I.
A. NAFS, Merger Sub and SITEL have each determined that it is in the best
interests of their respective stockholders for Merger Sub to merge with and into
NAFS upon the terms and subject to the conditions set forth herein and in the
Plan of Merger.
B. For Federal income tax purposes, it is intended that the merger shall
qualify as a reorganization under the provisions of Section 368 of the Code.
C. For accounting purposes, it is intended that the business combination
resulting from the Merger shall be accounted for by the "pooling-of-interests"
method under the requirements of Accounting Principles Board Opinion (APB) No.
16, BUSINESS COMBINATIONS, and the related published interpretations of the
American Institute of Certified Public Accountants and the Financial Accounting
Standards Board, and the published rules and regulations of the SEC.
D. The Principal Stockholders collectively own, of record and
beneficially, approximately 76% of NAFS's issued and outstanding capital stock
and will benefit from the merger.
In consideration of the recitals and provisions herein, and intending to be
legally bound, the parties agree as follows:
ARTICLE I - DEFINED TERMS
These are the definitions of certain capitalized terms used in this
Agreement:
"Adjusted Merger Consideration" means the aggregate number of SITEL Common
Shares into which the NAFS Common Shares (on an as converted and fully diluted
basis) outstanding immediately prior to the Effective Time are convertible
pursuant to the Merger in accordance with Section 3.1.1.
"Assets" means all assets, rights and properties of any nature or kind,
real, personal or mixed, tangible or intangible,
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contingent or non-contingent, owned or used by or otherwise inuring to the
benefit of NAFS, including without limitation those reflected in NAFS's
financial statements and books and records or used or acquired by NAFS in the
operation of the Business.
"Authorizations" means all franchises, licenses, permits, easements,
servitudes, rights, applications, filings, registrations and other
authorizations which are in any manner necessary for NAFS to conduct its
Business as now or previously conducted, for the ownership and use of the Assets
owned or used by NAFS in the conduct of the Business free and clear of all
liens, charges, restrictions and encumbrances, or for the operation of the
Business and Assets in compliance with all Regulations.
"Average Price", with reference to any Business Day, means the average of
the high and low reported sales prices of one SITEL Common Share on the Nasdaq
Stock Market.
"Business" means the business operations of NAFS.
"Business Day" means a day other than Saturday, Sunday or any day on which
the Nasdaq Stock Market is not open for business.
"Certificates" means, collectively, the certificates which, immediately
prior to the Effective Time, represented outstanding NAFS Common Shares (on an
as converted and fully diluted basis).
"Closing" and "Closing Date" have the respective meanings specified in
Section 5.1.
"Code" means the Internal Revenue Code of 1986, as amended, and all
regulations promulgated thereunder, as in effect from time to time.
"Cordova" means Cordova Capital Partners, L.P.-Enhanced Appreciation, a
Georgia limited partnership.
"Effective Time" has the meaning specified in Section 2.3.
"Employment Agreements" means, collectively, the Employment Agreement
entered into as of the Closing Date by each of the Key Employees and the
Surviving Corporation pursuant to Section 4.5.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, or any successor law, and regulations and rules issued pursuant to that
Act or any successor law.
"Escrow Agent" has the meaning specified in Section 4.6.
"Escrow Agreement" means the escrow agreement entered into as of the
Closing Date among SITEL, NAFS, the Stockholders' Representative and the Escrow
Agent pursuant to Section 4.6.
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"Escrow Period" means the period beginning on the Closing Date and ending
on the one year anniversary of the Closing Date.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Exchange Price" means $27.375.
"Exchange Ratio" means (a) the Adjusted Merger Consideration divided by the
Exchange Price, divided by (b) the number of NAFS Common Shares outstanding (on
an as converted and fully diluted basis) immediately prior to the Effective
Time.
"GAAP" means generally accepted accounting principles consistently applied.
"Georgia Code" means the Georgia Business Corporation Code.
"Governmental Approvals" means all authorizations, consents, orders or
approvals of, and all expirations of waiting periods imposed by, any federal,
state, local, foreign or other government and any agency, court or political
subdivision thereof required in order to enter into this Agreement or the Plan
of Merger or to consummate the transactions contemplated hereby or thereby,
including without limitation all approvals or new licenses which are required by
applicable state laws or regulations governing collection agencies to be in
place on or before Closing in regard to the change in control which will be
effected by the Merger.
"Indemnified NAFS Party" and "Indemnified NAFS Parties" have the meanings
specified in Section 10.2.
"Indemnified SITEL Party" and "Indemnified SITEL Parties" have the meanings
specified in Section 10.1.
"Indemnity Escrow Shares" means the SITEL Common Shares constituting five
percent (5%) of the Adjusted Merger Consideration which are to be delivered to
the Escrow Agent at Closing and deposited in the escrow established pursuant to
Section 4.6.
"Interim Balance Sheet" and "Interim Balance Sheet Date" have the
respective meanings specified in Section 6.7(a).
"Key Employees" means, collectively, Walter J. Berthiaume, Roger E. Carney,
Michael W. Fletcher, Howard M. Gibbs, Terrance W. Meder, James P. Rich, Jr., and
Scott A. Whiteley, all of whom are NAFS employees. "Key Employee" means each of
such persons, individually.
"Merger" has the meaning specified in Section 2.1.
"NAFS Closing Documents" means all agreements, certificates, instruments
and other documents required by this Agreement to be executed and delivered by
NAFS, Stockholders' Representative, or
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the NAFS Stockholders, as the case may be, at or before the Closing, as
specified in Section 5.2.1.
"NAFS Common Shares" means, collectively, shares of the voting Common
Stock, no par value, of NAFS. "NAFS Common Share" means such shares
individually. References to outstanding NAFS Common Shares "on an as converted
and fully diluted basis" mean that they include the shares of Common Stock of
NAFS which Cordova may acquire upon exercise of its right to convert its
Preferred Stock and which James P. Rich, Jr. may acquire upon exercise of the
Rich Option. References to outstanding NAFS Common Shares "on an as converted
but NOT fully diluted basis" mean they include the shares of Common Stock of
NAFS which Cordova may acquire upon exercise of its right to convert its
Preferred Stock but not which James P. Rich, Jr. may acquire upon exercise of
the Rich Option.
"NAFS Disclosure Statement" means the disclosure statement dated the date
of this Agreement delivered by NAFS to SITEL and Merger Sub prior to this
Agreement being entered into by the parties.
"NAFS Stockholder Claim" means any claim or demand for which SITEL and
Merger Sub would be liable to an Indemnified NAFS Party pursuant to Article X.
"NAFS Stockholder Claims" refers to all such claims or demands in the aggregate.
"NAFS Stockholders" means the holders of all outstanding NAFS Common Shares
on an as converted and fully diluted basis, including for this purpose Cordova
whether or not it has theretofore exercised its right to convert its shares of
Preferred Stock to NAFS Common Shares and James P. Rich, Jr., whether or not he
has theretofore exercised the Rich Option to purchase NAFS Common Shares.
"Nebraska Act" means Nebraska's Business Corporation Act.
"Net Book Value Shortfall" means the dollar amount, if any, by which NAFS's
Net Book Value (determined in accordance with Section 4.12) as of the close of
business on May 31, 1996 is less than $1,000,000.
"Non-Competition Agreements" means, collectively, the Non-Competition
Agreement entered into as of the Closing Date by each of the Key Employees and
the Surviving Corporation pursuant to Section 4.4.
"Permitted Liens" means those liens and encumbrances permitted on the
Assets by Section 6.14.
"Per Share Merger Consideration" has the meaning specified in Section
3.1.2.
"Pooling Letters" means the letters from the independent accountants for
SITEL and NAFS concerning the qualification of the
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Merger for "pooling-of-interests" treatment as described in Section 9.2.4.
"Principal Stockholders" means Michael W. Fletcher and Walter J.
Berthiaume, collectively. "Principal Stockholder" refers to eahc of them,
individually.
"Principal Stockholders' Guarantees" has the meaning specified in Section
4.10.
"Registration Rights Agreement" has the meaning specified in Section 4.3.
"Regulations" means all laws, ordinances, codes, rules and regulations,
whether federal, state, local or foreign, to which the Business or Assets are
subject.
"Rich Option" has the meaning specified in Section 6.3(b).
"Sale Bonus" has the meaning specified in Section 4.9.
"SEC" means the Securities and Exchange Commission.
"SEC Filings" has the meaning specified in Section 7.6.
"Securities Act" means the Securities Act of 1933, as amended.
"SITEL Claim" means any claim or demand for which the NAFS Stockholders
would be liable to an Indemnified SITEL Party pursuant to Article X. "SITEL
Claims" refers to all such claims or demands in the aggregate.
"SITEL Closing Documents" means all agreements, certificates, instruments
and other documents required by this Agreement to be executed and delivered by
SITEL or Merger Sub, as the case may be, at or before the Closing, as specified
in Section 5.2.2.
"SITEL Common Shares" means, collectively, shares of the voting Common
Stock, $.001 par value per share, of SITEL. "SITEL Common Share" means such
shares individually.
"SITEL Disclosure Statement" means the disclosure statement dated June 5,
1996 delivered by SITEL and the Merger Sub to NAFS and Stockholders'
Representative (for further delivery by Stockholders' Representative to each
NAFS Stockholder prior to the Stockholders' Representative Agreement becoming
effective as to such NAFS Stockholder) prior to this Agreement being entered
into by the parties.
"Stay Bonuses" has the meaning specified in Section 4.5.
"Stockholders' Representative" means Michael W. Fletcher, and his successor
or successors, who has been appointed as attorney-in-fact of each of the NAFS
Stockholders pursuant to the Stockholders'
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Representative Agreement prior to this Agreement being entered into by the
parties.
"Stockholders' Representative Agreement" means the Stockholders
Representative Agreement dated June 6, 1996 among Michael W. Fletcher and each
of the NAFS Stockholders.
"Survival Period" has the meaning specified in Section 10.3.1(b).
"Surviving Corporation" means the surviving corporation in the Merger,
which will be NAFS.
"Taxes" and "Tax Returns" have the respective meanings specified in Section
6.11.
"Third Party Consents" means the approvals, consents, ratifications,
waivers, or other authorizations (other than Governmental Approvals) required
from persons not a party to this Agreement in order to enter into this Agreement
or the Plan of Merger or to consummate the transactions contemplated hereby or
thereby, which consents shall be in writing and in form reasonably satisfactory
to the party entitled to be delivered such Third Party Consents.
"$" or "Dollars", as used in this Agreement, means United States dollars.
ARTICLE II - THE MERGER
2.1 MERGER. Subject to the terms and conditions of this Agreement, at the
Effective Time, Merger Sub will be merged with and into NAFS and the separate
corporate existence of Merger Sub will thereupon cease (the "Merger") in
accordance with the applicable provisions of the Georgia Code and the Nebraska
Act.
2.2 PLAN OF MERGER. Contemporaneously with the execution and delivery of
this Agreement, NAFS and Merger Sub shall execute and deliver a Plan of Merger
(the "Plan of Merger") in the form required by Section 21-20,128 of the Nebraska
Act for filing with the Nebraska Secretary of State in accordance with the
Nebraska Act. The Plan of Merger will be in a form acceptable under the Georgia
Code.
2.3 EFFECTIVE TIME. As soon as practicable after satisfaction or waiver
of all conditions to the Merger as set forth in Article IX, NAFS and Merger Sub
shall cause articles of merger complying with the requirements of the Nebraska
Act (the "Articles of Merger") to be filed with the Nebraska Secretary of State
and a certificate of merger complying with the requirements of the Georgia Code
to be filed with the Georgia Secretary of State ("Certificate of Merger"). The
Merger will become effective at the time upon which the later of the following
occurs: (a) the filing of the Articles of Merger with the Nebraska Secretary of
State and
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(b) the filing of the Certificate of Merger with the Georgia Secretary of State
or such later time as shall be specified in such filings ("Effective Time").
2.4 EFFECT OF MERGER. The Merger will have the effects specified in the
Nebraska Act and the Georgia Code. Without limiting the generality of the
foregoing, NAFS will be the surviving corporation in the Merger and will
continue to be governed by the laws of the State of Georgia, and the separate
corporate existence of NAFS and all of its rights, privileges, powers and
franchises, public as well as private, and all of its debts, liabilities and
duties as a corporation organized under the Georgia Code, will continue
unaffected by the Merger.
2.5 ARTICLES OF INCORPORATION AND BYLAWS. The Articles of Incorporation
and Bylaws of NAFS in effect immediately prior to the Effective Time, which
shall be in the form previously delivered by NAFS to SITEL, together with such
amendments thereto as SITEL may request be filed together with the Certificate
of Merger, shall be the Articles of Incorporation and Bylaws of the Surviving
Corporation, until amended in accordance with applicable law.
2.6 DIRECTORS. The directors of Merger Sub immediately prior to the
Effective Time together with Michael W. Fletcher shall be the directors of the
Surviving Corporation, from and after the Effective Time, until their successors
have been duly elected or appointed and qualified or until their earlier death,
resignation or removal in accordance with the terms of the Surviving
Corporation's Articles of Incorporation and Bylaws and the Georgia Code.
2.7 OFFICERS. The officers of NAFS immediately prior to the Effective
Time shall be the officers of the Surviving Corporation, from and after the
Effective Time, until their successors have been duly elected or appointed and
qualified or until their earlier death, resignation or removal in accordance
with the terms of the Surviving Corporation's Articles of Incorporation and
Bylaws and the Georgia Code.
ARTICLE III - MERGER CONSIDERATION;
CONVERSION OF SHARES
3.1 CONVERSION OR CANCELLATION OF SHARES. Subject to the terms and
conditions of this Agreement, including without limitation Section 3.2, in
reliance upon the representations, warranties and agreements of NAFS and the
Stockholders Representatives contained herein, and in full consideration of the
Merger and the other transactions contemplated by this Agreement and the Plan of
Merger, at the Effective Time, by virtue of the Merger and without any action on
the part of the holders thereof:
3.1.1 ADJUSTED MERGER CONSIDERATION. The aggregate NAFS Common
Shares (on an as converted and fully diluted basis) outstanding immediately
prior to the Effective Time shall be
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converted into that aggregate number of SITEL Common Shares, rounded to the
nearest whole share, or if there shall not be a nearest whole share, next higher
whole share, having an aggregate Exchange Price equal to (a) $37,537,316 less
(b) the Net Book Value Shortfall (such aggregate number of SITEL Common Shares
being referred to as the "Adjusted Merger Consideration"). At the Closing, five
percent (5%) of the Adjusted Merger Consideration shall be delivered to the
Escrow Agent and deposited in the escrow established pursuant to Section 4.6 and
the balance of the Adjusted Merger Consideration shall be delivered to the NAFS
Stockholders upon surrender of Certificates in accordance with Section 3.2.
3.1.2 PER SHARE MERGER CONSIDERATION. Each NAFS Common Share (on
an as converted but NOT fully diluted basis) outstanding immediately prior to
the Effective Time and each NAFS Common Share covered by the Rich Option shall
be converted into the right to receive a portion of the Adjusted Merger
Consideration (the "Per Share Merger Consideration"), as follows:
(a) The Rich Option, if outstanding immediately prior to the
Effective Time, shall be converted (whether or not the Rich Option was then
exercisable) into the right to receive, in cancellation of the Rich Option,
that number of SITEL Common Shares, rounded to the nearest thousandth of a
share, or if there shall not be a nearest thousandth of a share, next
higher thousandth of a share, having an aggregate Exchange Price equal to
(i) the Exchange Ratio multiplied by the Exchange Price, minus (ii) the
$73.126143 per share exercise price of the Rich Option, multiplied by (iii)
the number of shares of NAFS Common Shares remaining covered by the Rich
Option (the "Rich Option Merger Shares"). The Rich Option thus represents,
with respect to each NAFS Common Share covered by the Rich Option, the
right to receive the number of SITEL Common Shares equal to the Rich Option
Merger Shares divided by the number of NAFS Common Shares covered by the
Rich Option immediately prior to the Effective Time.
(b) Each NAFS Common Share (on an as converted but NOT fully diluted
basis) outstanding immediately prior to the Effective Time shall be
converted into that number of SITEL Common Shares, rounded to the nearest
thousandth of a share, or if there shall not be a nearest thousandth of a
share, next higher thousandth of a share, equal to (i) the Adjusted Merger
Consideration less (ii) the Rich Option Merger Shares divided by (iii) the
aggregate number of NAFS Common Shares (on an as converted but NOT fully
diluted basis) outstanding immediately prior to the Effective Time.
The Per Share Merger Consideration, less the five percent (5%) portion thereof
delivered to the Escrow Agent at Closing, shall be delivered to the NAFS
Stockholders upon surrender of Certificates in accordance with Section 3.2.
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3.1.3 CANCELLATION OF OUTSTANDING NAFS COMMON SHARES INCLUDING
RICH OPTION. All NAFS Common Shares and the Rich Option to be converted into
SITEL Common Shares pursuant to Sections 3.1.1 and 3.1.2 shall cease to be
outstanding, shall be cancelled and retired and shall cease to exist, and each
holder of a Certificate or the Rich Option representing such NAFS Common Shares
shall thereafter cease to have any rights with respect to such NAFS Common
Shares and the Rich Option, except the right to receive for each of such NAFS
Common Shares and the Rich Option the number of whole SITEL Common Shares
provided in Section 3.1.2 and cash in lieu of fractional SITEL Common Shares as
contemplated by Section 3.2. Upon the surrender of Certificates and duly
completed letters of transmittal in accordance with Section 3.2.3, the holders
of such Certificates shall be delivered the number of whole SITEL Common Shares
provided in Section 3.1.2 (exclusive of the number of whole SITEL Common Shares
delivered to the Escrow Agent) for each of the NAFS Common Shares represented by
such Certificates and the cash in lieu of fractional SITEL Common Shares
provided in Section 3.2.
3.1.4 CANCELLATION OF NAFS TREASURY SHARES. NAFS Common Shares,
if any, held by NAFS as treasury stock immediately prior to the Effective Time
shall cease to be outstanding and shall be cancelled and retired without payment
of any consideration therefor.
3.1.5 CONTINUATION OF MERGER SUB SHARES. Each share of common
stock, $1.00 par value per share, of Merger Sub issued and outstanding
immediately prior to the Effective Time shall continue to be one share of common
stock of the Surviving Corporation, with the same rights, powers and privileges
as such share of common stock of Merger Sub immediately prior to the Effective
Time.
3.1.6 ADJUSTMENT BECAUSE OF CAPITAL EVENTS. If between the date
of this Agreement and the Effective Time, the outstanding SITEL Common Shares
shall be changed into a different number of SITEL Common Shares by reason of any
reclassification, recapitalization, split-up, combination or exchange of shares,
or declaration of a stock dividend or other stock distribution thereon, or if a
record date within such period with respect to any of the foregoing shall have
been set, then the Exchange Ratio (as defined in Section 3.1.2) shall be
appropriately adjusted to reflect such reclassification, recapitalization,
split-up, combination, exchange, stock dividend or other stock distribution.
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3.2 EXCHANGE OF CERTIFICATES.
3.2.1 SURRENDER OF CERTIFICATES. Prior to the Effective Time,
SITEL shall make available to Stockholders' Representative to deliver to each
record holder of Certificates (a) a form of letter of transmittal (which shall
specify that delivery shall be effected, and risk of loss and title to the
Certificates shall pass, only upon proper delivery of the Certificates to SITEL)
and (b) instructions for use in effecting the surrender of the Certificates for
exchange for SITEL Common Shares. The Stockholders' Representative shall use
its best efforts to obtain for delivery to SITEL at the Closing from each record
holder of Certificates all of the Certificates for cancellation, together with
such letter of transmittal duly executed and completed in accordance with the
instructions thereon and such other documents as may be reasonably requested by
SITEL.
3.2.2 STATUS OF CERTIFICATES PRIOR TO SURRENDER. Subject to
Section 3.5, from and after the Effective Time until a Certificate or
Certificates has been surrendered in accordance with the provisions of Section
3.2.1:
(a) Such Certificates shall be deemed for all purposes to
represent solely (a) the ownership of the number of whole SITEL Common Shares
into which the NAFS Common Shares represented by such Certificates have been
converted in accordance with Section 3.1.1 and (b) if applicable, the right to
receive cash in lieu of fractional shares pursuant to Section 3.3 hereof;
(b) The holders of such Certificates shall not be entitled to
vote the SITEL Common Shares;
(c) The holders of such Certificates shall not be entitled to
receive any dividend or other distribution payable to holders of SITEL Common
Shares; provided, however, that upon the surrender of such Certificates in
exchange for certificates representing SITEL Common Shares, there shall be paid
to the record holder of the certificates representing SITEL Common Shares issued
upon such exchange the amount of dividends or other distributions which became
payable following the Effective Time and which were not paid with respect to the
number of SITEL Common Shares represented by the certificate(s) issued upon such
surrender. In no event shall the persons entitled to receive such dividends or
other distributions be entitled to receive interest thereon. At the end of six
months following the Effective Time, any holder of Certificates who has not
theretofore surrendered such certificates in accordance with the provisions of
Section 3.2.1 shall, subject to applicable law, have the status of only a
general creditor of the Surviving Corporation with respect to the payment or
delivery of such dividends or other distributions.
3.3 NO FRACTIONAL SHARES. No certificates or scrip representing
fractional SITEL Common Shares shall be issued upon the surrender for exchange
of a Certificate or Certificates. No
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dividends or distributions by SITEL shall be payable on or with respect to any
fractional shares and any such fractional share interest will not entitled the
owner thereof to vote or to any rights of stockholders of SITEL. In lieu of any
such fractional shares, holders of Certificates otherwise entitled to fractional
shares shall be entitled to receive from SITEL at Closing a cash payment in an
amount equal to the fraction of such share of SITEL Common Shares to which such
holder would otherwise be entitled multiplied by the Exchange Price.
3.4 CLOSING OF NAFS STOCK TRANSFER BOOKS. The stock transfer books of
NAFS shall be closed at the close of business on the Business Day immediately
preceding the date of the Effective Time. The Surviving Corporation shall be
entitled to rely upon the stock transfer books of NAFS to establish the identity
of those persons entitled to receive the Adjusted Merger Consideration specified
in this Agreement and the Plan of Merger for their NAFS Common Shares, which
books shall be conclusive with respect to the ownership of such shares. In the
event of a dispute with respect to the ownership of any such NAFS Common Shares,
the Surviving Corporation shall be entitled to deposit the portion of the
Adjusted Merger Consideration represented by the disputed NAFS Common Shares in
escrow with an independent party and shall thereafter be relieved with respect
to any claims to such portion of the Adjusted Merger Consideration.
3.5 NO DISSENTING SHARES. NAFS has advised SITEL and Merger Sub that all
NAFS Stockholders other than James P. Rich, Jr. have duly voted their NAFS
Common Shares in favor of the adoption of this Agreement or duly consented
thereto in writing and therefore have affirmatively and irrevocably elected not
to exercise their right to appraisal and payment for their NAFS Common Shares
under the Georgia Code in connection with the Merger and the other transactions
contemplated by this Agreement. NAFS has advised SITEL and Merger Sub that
James P. Rich, Jr. has duly consented in writing to the adoption of this
Agreement.
ARTICLE IV - RELATED TRANSACTIONS
4.1 STOCKHOLDERS' REPRESENTATIVE AGREEMENT. Pursuant to a Stockholders'
Representative Agreement dated June 6, 1996 (the "Stockholders' Representative
Agreement"), the NAFS Stockholders each have appointed Michael W. Fletcher as
Stockholders' Representative to sign this Agreement and the NAFS Closing
Documents and to take all other actions on behalf of the NAFS Stockholders which
are necessary or appropriate in connection with the Merger.
4.2 PRIVATE PLACEMENT. At the Closing, the SITEL Common Shares to be
issued in connection with the Merger will be issued pursuant to exemptions from
registration under the Securities Act and applicable state blue sky laws for
private placements. Such SITEL Common Shares will constitute "restricted stock"
within the meaning of the Securities Act, will contain the restrictive legends
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indicated in Section 6.36(b), and may be resold, transferred or assigned by the
NAFS Stockholders only pursuant to an effective registration or pursuant to
exemptions from registration under the Securities Act, including Rules 144 and
145, and applicable state blue sky laws. Stockholders' Representative
acknowledges receipt from SITEL of the SITEL Disclosure Statement which
Stockholders' Representative delivered to each of the NAFS Stockholders prior to
the Stockholders' Representative Agreement becoming effective as to such NAFS
Stockholder.
4.3 REGISTRATION RIGHTS REGARDING SITEL COMMON SHARES. At the Closing,
SITEL and Stockholders' Representative shall enter into a Registration Rights
Agreement substantially in the form provided in Exhibit A (the "Registration
Rights Agreement").
4.4 NON-COMPETITION AGREEMENTS. At the Closing, each of the Key Employees
shall execute and deliver a Confidentiality and Non-Competition Agreement
(Employment) and each of the NAFS Stockholders other than Cordova shall execute
and deliver a Confidentiality and Non-Competition Agreement (Sale of Business)
substantially in the forms provided in Exhibit B (collectively, the "Non-
Competition Agreements").
4.5 EMPLOYMENT AGREEMENTS. At the Closing, each of the Key Employees
shall execute and deliver an Employment Agreement substantially in the form
provided in Exhibit C (collectively, the "Employment Agreements"). The form of
Employment Agreement for each of the Key Employees other than Michael W.
Fletcher and Walter J. Berthiaume includes provisions for a "Stay Bonus"
(collectively, the "Stay Bonuses") payable in accordance with and subject to the
terms and conditions in such Employment Agreements.
4.6 ESCROW AGREEMENT. At the Closing, SITEL, Stockholders'
Representative, and an escrow agent to be mutually agreed upon by the parties
prior to Closing (the "Escrow Agent") shall execute and deliver an Escrow
Agreement in mutually satisfactory form (the "Escrow Agreement"). Pursuant to
the Escrow Agreement, at the Closing SITEL shall deliver the Indemnity Escrow
Shares to the Escrow Agent. The Indemnity Escrow Shares shall secure the NAFS
Stockholders' indemnification obligations to SITEL and its affiliates for the
NAFS Stockholders' representations, warranties and covenants under or pursuant
to this Agreement for the Escrow Period. As will be provided in the Escrow
Agreement, during the Escrow Period, the NAFS Stockholders shall be entitled to
vote the Indemnity Escrow Shares and to receive any cash dividends paid on the
Indemnity Escrow Shares. As will be provided in the Escrow Agreement, to the
extent not applied to any indemnification obligations of the NAFS Stockholders
during the Escrow Period, the Indemnity Escrow Shares shall be immediately
released to the NAFS Stockholders following the Escrow Period.
4.7 CORDOVA AGREEMENTS. At the Closing, the following agreements between
NAFS and Cordova (collectively, the "Cordova Agreements") shall be terminated
without liability or cost to NAFS,
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SITEL or Merger Sub (other than the repayment of principal and accrued interest
under the referenced loan documents): the Series A Convertible Preferred Stock
Purchase Agreement; the Amended and Restated Shareholders Agreement dated
December 29, 1994; the Loan Agreement, Promissory Note, and Security Agreement
each dated December 29, 1994, and the related financing statements, relating to
a $500,000 loan made by Cordova to NAFS; and all contingent warrants to purchase
additional shares of common stock pursuant to the Loan Agreement. NAFS shall
obtain and deliver to SITEL prior to Closing a payoff letter from Cordova for
the $500,000 loan.
4.8 STOCK AND VOTING AGREEMENTS. At the Closing, the Stock and Voting
Agreements as defined in Section 6.1 shall be terminated, in form reasonably
satisfactory to SITEL and Merger Sub, by NAFS and the NAFS Stockholders who are
party thereto, which terminations shall be without liability or cost to NAFS,
SITEL or Merger Sub.
4.9 SALE BONUS TO JAMES P. RICH, JR. Prior to the Closing, NAFS shall pay
to James P. Rich, Jr. in cash the amount of $1,182,684, less applicable
withholding taxes, in full payment and satisfaction of the "Sale Bonus" to which
Mr. Rich is entitled under Section 4.4 of his existing employment agreement
which is being replaced at Closing with an Employment Agreement. Mr. Rich shall
execute and deliver an acknowledgement and receipt which confirms acceptance of
such amount in full payment and satisfaction of such "Sale Bonus" commitment.
4.10 RELEASE OF PRINCIPAL STOCKHOLDERS' PERSONAL GUARANTEES. The Principal
Stockholders have personally guaranteed obligations of NAFS to the following
creditors of NAFS: Koger Equity, Inc. (Atlanta leases), Uniland Development
Company (Buffalo lease), AT&T Credit Corporation (two equipment leases), First
Union National Bank of Georgia (term loans and credit line), Cordova (term loan)
and Colonial Pacific (equipment lease) (collectively, the "Principal
Stockholders' Guarantees"). SITEL and Merger Sub shall use their best efforts
to obtain release of all of the Principal Stockholders' Guarantees at or
promptly following the Closing. Effective as of the Closing, if any of the
Principal Stockholders' Guarantees have not yet been released by their
recipients or other holders, SITEL and Merger Sub shall upon demand indemnify
and hold harmless the Principal Stockholders and their respective successors
against any future liability, cost or expense associated with such Principal
Stockholders' Guarantees. The Principal Stockholders believe that the listing
of Principal Stockholders' Guarantees is complete; however, if it is later
discovered that a Principal Stockholder had provided a personal guarantee of
other NAFS obligations, which other NAFS obligations were fully disclosed in the
NAFS Disclosure Statement or in this Agreement ("Additional Principal
Stockholders' Guarantees"), SITEL and Merger Sub shall indemnify and hold
harmless the Principal Stockholders against any future liability, cost or
expense associated with such Additional Principal Stockholders' Guarantees.
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4.11 FIRST UNION AGREEMENTS. At the Closing, at SITEL's option, the
following agreements between NAFS and First Union National Bank of Georgia shall
be terminated without liability or cost to NAFS, SITEL or Merger Sub, other than
the payment of principal and accrued interest in accordance with the terms of
such agreements: (1) $62,000 TERM LOAN: Loan Commitment and Agreement dated June
1, 1994; Promissory Note and Security Agreement dated June 3, 1994; and
Financing Statement; (2) $500,000 TERM LOAN: Commitment Letter and Agreement
dated December 12, 1995 and January 9, 1996 modification letter; Loan Agreement
dated January 29, 1996; Promissory Note dated January 29, 1996; Security
Agreement dated January 29, 1996; and Financing Statements; and (3) $600,000
CREDIT LINE: Loan Commitment and Agreement dated April 30, 1996, Loan Agreement
dated May 1, 1996, Renewal and Increase Promissory Note dated May 1, 1996, (4)
Security Agreement dated May 1, 1996. It is contemplated that at least the
$600,000 line of credit and possibly also the term loans from First Union will
remain in place following the Closing. If SITEL elects to have one or more of
the First Union loans paid off at Closing, SITEL will cooperate with NAFS in
loaning funds as needed to NAFS at Closing to cover the loan pay off.
4.12 DETERMINATION OF NET BOOK VALUE. The Net Book Value Shortfall shall
be determined by subtracting $1,000,000 from NAFS's Net Book Value (as defined
below) as of the close of business on May 31, 1996. "Net Book Value" as used
herein means NAFS's total assets minus total liabilities. NAFS's Net Book Value
as of the close of business on May 31, 1996 shall be determined by NAFS in
accordance with GAAP (subject to the adjustments provided below) from its books
and records, shall be certified by the President of NAFS and the Stockholders'
Representative to SITEL and the Merger Sub at the Closing and such determination
shall be subject to the reasonable approval of SITEL and Merger Sub and their
independent accountants. NAFS shall provide such substantiation of its
determination of such Net Book Value as may be reasonably requested by SITEL and
Merger Sub. If SITEL and Merger Sub dispute NAFS's determination of Net Book
Value, they shall promptly notify NAFS of such dispute and then the parties
shall use their best efforts to resolve the dispute prior to the date scheduled
for Closing. If the parties are unable to resolve the dispute prior to such
date, then the date for Closing shall be postponed until the parties have either
resolved the dispute or have agreed upon a satisfactory escrow for the
discrepancy in the respective determinations of Net Book Value to be put in
place at Closing. In determining such Net Book Value, (1) the amount of any
accruals on NAFS's books and records as of May 31, 1996 for the following items
and any associated payroll taxes shall be disregarded (i.e. added back): Rich
Option, Sale Bonus, Section 83 compensation to Terrance Meder, special bonuses
of up to $159,000 to employees other than NAFS Stockholders or Key Employees,
salary continuation payments to Lee Miller, change to a three year depreciation
schedule for equipment from five years to coincide with SITEL's accounting
procedures; (2) the amount of any accruals on NAFS's books and records as of May
31, 1996 for tax benefits associated with the items described in
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the foregoing provision (1) shall be disregarded (i.e. deducted); and (3) all
legal, accounting and other expenses to be paid by NAFS in connection with this
Merger transaction shall be accrued on or before May 31, 1996.
ARTICLE V - THE CLOSING
5.1 TIME AND PLACE. The closing of the Merger and other transactions
contemplated by this Agreement (the "Closing") shall be held at such location
which is mutually agreeable to the parties and on a date ("Closing Date") which
is the first business day after the last of the conditions precedent set forth
in Article IX of this Agreement have been determined to be satisfied (or are
duly waived). If all conditions are determined to be satisfied (or are duly
waived) at the Closing, the Closing shall be consummated by filing the Articles
of Merger and Certificate of Merger, respectively, provided for in Section 2.3
with the Nebraska and Georgia Secretaries of State.
5.2 CLOSING DELIVERIES.
5.2.1 DELIVERIES BY NAFS, STOCKHOLDERS' REPRESENTATIVE AND NAFS
STOCKHOLDERS. At the Closing and subject to the terms and conditions in this
Agreement, NAFS, Stockholders' Representative and/or the NAFS Stockholders, as
the case may be, shall deliver or cause to be delivered to SITEL and Merger Sub
the following:
(a) actual possession and operating control of NAFS, its Business and
Assets;
(b) certified copies of the resolutions of the NAFS Stockholders and
the directors of NAFS authorizing the execution and delivery of this
Agreement and the Plan of Merger and the consummation of the transactions
contemplated hereby and thereby;
(c) a certificate of the President and Secretary of NAFS certifying
that the conditions specified in Sections 9.1 and 9.2 to SITEL's and Merger
Sub's obligations have been fulfilled;
(d) all Third Party Consents required in order for NAFS and
Stockholders' Representative to enter into this Agreement or the Plan of
Merger or to consummate the transactions contemplated hereby or thereby;
(e) all Governmental Approvals required in order for NAFS and
Stockholders' Representative to enter into this Agreement or the Plan of
Merger or to consummate the transactions contemplated hereby or thereby;
(f) the Employment Agreements and Non-Competition Agreements; and
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(g) the Escrow Agreement;
(h) the Registration Rights Agreement;
(i) the Pooling Letter from Arthur Andersen & Co.;
(j) the Rule 145 Affiliate Letters described in Section 8.2.8;
(k) the opinion of Cohen Pollock Merlin & Axelrod, P.C., counsel to
NAFS and the Stockholders' Representative, dated the Closing Date, in form
reasonably satisfactory to SITEL and Merger Sub, as to the matters in
Exhibit E;
(l) documents evidencing termination of the Cordova Agreements (as
defined in Section 4.7) and repayment of the Cordova loan in accordance
with Section 4.7, which documents shall be in form reasonably satisfactory
to SITEL and Merger Sub;
(m) documents evidencing termination of the Stock and Voting
Agreements in accordance with Section 4.8, which documents shall be in form
reasonably satisfactory to SITEL and Merger Sub;
(n) documents evidencing James P. Rich, Jr.'s acknowledgement and
agreement that (i) NAFS's commitments to him under Sections 4.4 and 9.4 of
his existing employment agreement have been fully satisfied by NAFS's
payment of the amounts specified in Section 4.9 of this Agreement and (ii)
the Rich Option shall be converted at the Effective Time solely into the
right to receive SITEL Common Shares as specified in Section 3.1.2(b) and
cancelled;
(o) if not previously delivered, the Stockholders' Representative
Agreement;
(p) resignations of all current directors of NAFS other than Michael
W. Fletcher;
(q) if not previously delivered, the financial statements described
in Sections 6.7(a)(iii) and (iv) and 6.7(b); and
(r) confirmation that NAFS has paid to James P. Rich, the Sale Bonus;
and
(s) any other NAFS Closing Documents which are necessary in order to
consummate the Merger or the other transactions contemplated by this
Agreement or to cause the Effective Time, subject to the consummation of
the Closing, to occur as soon as practicable.
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5.2.2 DELIVERIES BY SITEL AND MERGER SUB TO NAFS AND STOCKHOLDERS'
REPRESENTATIVE. At the Closing and subject to the terms and conditions herein
contained, SITEL and Merger Sub shall deliver or cause to be delivered to NAFS
and Stockholders' Representative or, where indicated, to the NAFS Stockholders
or Escrow Agent, the following:
(a) to the Stockholders' Representative for delivery to the NAFS
Stockholders in exchange for the Certificates surrendered for cancellation,
the Adjusted Merger Consideration less the Indemnity Escrow Shares;
(b) to the Escrow Agent, the Indemnity Escrow Shares;
(c) certified copies of the resolutions of the shareholders and
directors of Merger Sub and of the directors of SITEL authorizing the
execution and delivery of this Agreement and the Plan of Merger and the
consummation of the transactions contemplated hereby and thereby;
(d) a certificate of the President and Secretary of each of SITEL and
Merger Sub certifying that the conditions specified in Sections 9.1 and 9.3
to NAFS's and the NAFS Stockholders' obligations have been fulfilled;
(e) all Third Party Consents required in order for SITEL and/or
Merger Sub to enter into this Agreement or the Plan of Merger or to
consummate the transactions contemplated hereby or thereby;
(f) all Governmental Approvals required in order for SITEL, Merger
Sub, NAFS, and/or the Stockholders' Representative to enter into this
Agreement or the Plan of Merger or to consummate the transactions
contemplated hereby or thereby;
(g) the Pooling Letter from Coopers & Lybrand L.L.P.;
(h) to the extent available as of Closing, releases of Principal
Stockholders' Guarantees, with any unreleased Principal Stockholders'
Guarantees being indemnified against in accordance with Section 4.10;
(i) the opinion of Abrahams, Kaslow & Cassman, counsel to SITEL and
Merger Sub, dated the Closing Date, in form reasonably satisfactory to NAFS
and Stockholders' Representative, as to the matters in Exhibit F; and
(j) any other SITEL Closing Documents which are necessary in order to
consummate the Merger or the other transactions contemplated by this
Agreement or to cause the Effective Time, subject to the consummation of
the Closing, to occur as soon as practicable.
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5.2.3 DELIVERIES BY SURVIVING CORPORATION. At the Closing and
subject to the terms and conditions herein contained, immediately following the
Effective Time, NAFS as the Surviving Corporation shall deliver or cause to be
delivered to the Key Employees other than Michael W. Fletcher, Walter J.
Berthiaume and James P. Rich, 50% of the Stay Bonuses provided for in such Key
Employees' Employment Agreements.
ARTICLE VI - REPRESENTATIONS AND WARRANTIES
OF NAFS AND NAFS STOCKHOLDERS
NAFS and the NAFS Stockholders, jointly and severally, hereby represent and
warrant to SITEL and Merger Sub that, except as set forth in the NAFS Disclosure
Statement, each of which exceptions shall be deemed to be representations and
warranties as if made hereunder:
6.1 CORPORATE EXISTENCE. NAFS is a corporation duly organized, validly
existing and in good standing, under the Georgia Business Corporation Code.
NAFS has all requisite corporate power and authority and is entitled to carry on
its Business as now being conducted and to own, lease or operate its properties
as and in the places where such Business is now conducted and such properties
are now owned, leased or operated. NAFS is duly qualified, licensed or
domesticated and in good standing as a foreign corporation authorized to do
business in the jurisdictions listed in the NAFS Disclosure Statement, which
constitute all of the jurisdictions in which its activities or properties make
such qualification and licensure necessary, except for jurisdictions in which
the failure to qualify or be licensed will have no material adverse effect on
the Business, Assets or financial condition of NAFS.
6.2 CORPORATE POWER; AUTHORIZATION; ENFORCEABLE OBLIGATIONS. NAFS has the
corporate power, authority and legal right to execute, deliver and perform this
Agreement. The execution, delivery and performance of this Agreement by NAFS
and the NAFS Stockholders have been duly authorized by all necessary corporate
and shareholder action. This Agreement has been, and the NAFS Closing Documents
will be, duly executed and delivered on behalf of NAFS and the NAFS Stockholders
by their duly authorized officers or representatives or attorney-in-fact, and
this Agreement constitutes, and the NAFS Closing Documents when executed and
delivered will constitute, the legal, valid and binding obligations of each of
NAFS and the NAFS Stockholders which are a party thereto, enforceable against
such party in accordance with their respective terms.
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6.3 CAPITALIZATION.
(a) The authorized capital stock of NAFS consists of 310,000 shares,
divided into 250,000 shares of Common Stock, no par value, and 60,000 shares of
Series A Convertible Preferred Stock ("Preferred Stock"), $10.00 par value per
share. The outstanding capital stock of NAFS consists of 119,989 shares of
Common Stock and 30,000 shares of Preferred Stock. NAFS has 5,947 shares of
Common Stock held as treasury stock. On an as converted and fully diluted
basis, the outstanding capital stock of NAFS consists of 136,717 shares of
Common Stock.
(b) All of the outstanding shares of the capital stock of NAFS are
duly authorized, validly issued, fully paid and non-assessable, and were not
issued in violation of any preemptive or similar rights. Except for an existing
Option Agreement dated May 31, 1996 pursuant to which James P. Rich, Jr. is
entitled to purchase 2,735 shares of Common Stock of NAFS as more fully
described in the NAFS Disclosure Statement (the "Rich Option") and certain Stock
and Voting Agreements among the Company and certain of the NAFS Stockholders as
more fully described in the NAFS Disclosure Statement (collectively, the "Stock
and Voting Agreements"), there are no outstanding subscriptions, conversion
privileges, warrants, options, rights, calls, demands or other agreements,
arrangements or commitments of any character under which NAFS, or any of the
NAFS Stockholders, is or may become obligated to issue, assign or transfer any
shares of such NAFS's capital stock or other securities of such NAFS or any
securities or obligations of any kind convertible into any shares of the capital
stock of such NAFS. NAFS has not violated any federal or state law or
regulation with respect to the issuance, offer, or sale of its outstanding
securities or the redemption or repurchase of any of its securities. Except as
disclosed in the NAFS Disclosure Statement, there are no voting trusts, proxies
or other contracts, arrangements or plans restricting voting or dividend rights
with respect to any of the outstanding shares of capital stock of NAFS.
(c) The outstanding capital stock of NAFS is held, beneficially and
of record, with marketable title free and clear of all liens, encumbrances, and
claims whatsoever (except that such outstanding shares constitute restricted
stock within the meaning of the Securities Act), as follows:
Before conversion and option exercise:
- --------------------------------------
Michael W. Fletcher 62,800 shares Common Stock
Walter J. Berthiaume 41,867 shares Common Stock
Terrance W. Meder 5,947 shares Common Stock
Howard M. Gibbs 2,379 shares Common Stock
Cordova 6,996 shares Common Stock
Cordova 30,000 shares Preferred Stock
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On an as converted and fully diluted basis:
- -------------------------------------------
Michael W. Fletcher 62,800 shares Common Stock
Walter J. Berthiaume 41,867 shares Common Stock
Terrance W. Meder 5,947 shares Common Stock
Howard M. Gibbs 2,379 shares Common Stock
James P. Rich, Jr. 2,735 shares Common Stock
Cordova 20,989 shares Common Stock
------
136,717 shares Common Stock
6.4 NO SUBSIDIARIES. NAFS owns no shares of any corporation or any
ownership or other investment interest, either of record, beneficially or
equitably, in any association, partnership, joint venture or other legal entity,
other than, if applicable, shares of capital stock representing immaterial,
non-controlling interests in publicly-traded companies obtained by NAFS in the
ordinary course of the Business. NAFS has no commitment to purchase any equity
interest in any corporation or in any partnership, joint venture or other
business enterprise or entity.
6.5 VALIDITY OF CONTEMPLATED TRANSACTIONS. The execution, delivery and
performance of this Agreement by NAFS, the Stockholders' Representative and the
NAFS Stockholders does not and will not violate, conflict with or result in the
breach of any term, condition or provision of, or require the consent of any
other person under, (a) to the knowledge of NAFS and the NAFS Stockholders, any
existing law, ordinance, or governmental rule or regulation to which NAFS or a
NAFS Stockholder is subject, (b) any judgment, order, writ, injunction, decree
or award of any court, arbitrator or governmental or regulatory official, body
or authority which is applicable to NAFS or a NAFS Stockholder, (c) the charter
documents of NAFS or a NAFS Stockholder or any securities issued by NAFS or any
NAFS Stockholder, or (d) any mortgage, indenture, agreement, contract,
commitment, lease, plan, Authorization, or other instrument, document or
understanding, oral or written, to which NAFS or any NAFS Stockholder is a
party, by which NAFS or a NAFS Stockholder may have rights or by which any of
the Assets may be bound or affected, or give any party with rights thereunder
the right to terminate, modify, accelerate or otherwise change the existing
rights or obligations of NAFS or an NAFS Stockholder thereunder, except for such
violations, conflicts or breaches or failures of consent, if any, which would
not cause a material adverse effect upon NAFS, SITEL or Merger Sub. Except for
the approvals of the Board of Directors of NAFS and the NAFS Stockholders
described in Sections 6.33 and 6.34 and the filings with the Georgia and
Nebraska Secretaries of State contemplated by Sections 2.2 and 2.3, no
authorization, approval or consent of, and no registration or filing with, any
governmental or regulatory official, body or authority is required in connection
with the execution, delivery or performance of this Agreement by NAFS or the
NAFS Stockholders. The total assets of NAFS as shown on its last regularly
prepared balance sheet are less than $10,000,000.
6.6 NO THIRD PARTY OPTIONS. There are no existing agreements, options,
commitments or rights with, of or to any person (a) to
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acquire any of NAFS's assets, properties or rights or any interest therein, (b)
except for the Stock and Voting Agreements and the Cordova Agreements, which are
to be terminated at Closing, and the Rich Option, to acquire any of the
outstanding stock of NAFS, or (c) to merge or consolidate with NAFS.
6.7 FINANCIAL STATEMENTS. NAFS has delivered to SITEL true and complete
copies of the following financial statements (except that NAFS shall deliver the
financial statements described in Sections 6.7(a)(iii) and (iv) and 6.7(b) to
SITEL on or before Closing):
(a) (i) its balance sheets at December 31, 1995 and 1994 and the
related statements of operations and changes in financial position for
the fiscal years then ended, and the auditors' report thereon by its
auditors, (ii) its unaudited, internally-prepared, balance sheet at
March 31, 1996 and 1995 and the related statements of operations and
changes in financial position for the three-month periods then ended,
(iii) its unaudited, internally-prepared, statement of operations for
the twelve-month period ended June 30, 1995, and (iv) its unaudited,
internally-prepared, statement of operations for the nine-month period
ended March 31, 1996; and
(b) its unaudited, internally-prepared, balance sheet at May 31,
1996 (such balance sheet and such date are respectively referred to in
this Agreement as the "Interim Balance Sheet" and the "Interim Balance
Sheet Date") and the related statement of income for the five-month
period then ended;
all of which have been prepared in accordance with GAAP throughout the
periods involved. All of the foregoing balance sheets, including the
related notes, fairly present in all material respects the financial
position, assets and liabilities (whether accrued, absolute, contingent or
otherwise) of NAFS at the dates indicated (subject, in the case of
unaudited statements, to normal year-end audit adjustments which would not
be material in amount or effect). All of the foregoing statements of
income and changes in financial position fairly present in all material
respects the results of operations and changes in financial position of
NAFS for the periods indicated (subject, in the case of unaudited
statements, to normal year-end audit adjustments which would not be
material in amount or effect).
6.8 ACCOUNTS RECEIVABLE. The accounts receivable of NAFS arising from the
Business as set forth on the Interim Balance Sheet or arising since the date
thereof are valid and genuine; have arisen solely out of bona fide sales and
deliveries of goods, performance of services and other business transactions in
the
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ordinary course of business consistent with past practice; are not subject to
valid defenses, set-offs or counterclaims; and are collectible within eleven
months after Closing at the full recorded amount thereof less, in the case of
accounts receivable appearing on the Interim Balance Sheet, the recorded
allowance for collection losses on the Interim Balance Sheet. The allowance for
collection losses on the Interim Balance Sheet has been determined in accordance
with GAAP consistent with past practice.
6.9 INVENTORY. NAFS has no inventory.
6.10 ABSENCE OF UNDISCLOSED LIABILITIES. NAFS does not have any material
liabilities or obligations with respect to its Business or Assets, either direct
or indirect, matured or unmatured or absolute, contingent or otherwise, except:
(a) those liabilities or obligations set forth on the Interim Balance
Sheet and not heretofore paid or discharged;
(b) liabilities arising in the ordinary course of business under any
agreement, contract, commitment, lease or plan specifically disclosed on
the NAFS Disclosure Statement or not required to be disclosed pursuant to
other representations or warranties in this Agreement because of the term
or amount involved; and
(c) those liabilities or obligations incurred, consistently with past
business practice, in or as a result of the normal and ordinary course of
business since the Interim Balance Sheet Date.
For purposes of this Agreement, the term "liabilities" shall include,
without limitation, any direct or indirect indebtedness; guaranty, endorsement,
claim, loss, damage, deficiency, cost, expense, obligation or responsibility,
fixed or unfixed, known or unknown, asserted or unasserted, choate or inchoate,
liquidated or unliquidated, secured or unsecured.
6.11 TAX AND OTHER RETURNS AND REPORTS. All tax returns and all other
material tax reports, statements and other similar filings required to be filed
by NAFS (the "Tax Returns") with respect to any federal, state, municipal, local
or foreign taxes, assessments, interest, penalties, deficiencies, fees and other
governmental charges or impositions (including without limitation all income,
unemployment compensation, social security, payroll, capital, sales and use,
excise, privilege, property, ad valorem, franchise, license, school and any
other tax or similar governmental charge or imposition under federal, state or
local laws or under the laws of any foreign country or political subdivision
thereof) (the "Taxes") have been filed with the appropriate governmental
agencies in all jurisdictions in which such Tax Returns are required to be
filed, and all such Tax Returns
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properly reflect in all material respects the liabilities of NAFS for Taxes for
the periods, property or events covered thereby. All Taxes, including those
without limitation which are called for by the Tax Returns, or heretofore or
hereafter determined (following assessment and resolution of any duly filed
challenges or appeals) to be due by any taxing authority from NAFS, have been
properly accrued or paid. The accruals for Taxes contained in the Interim
Balance Sheet are adequate in all material respects to cover the tax liabilities
of NAFS with respect to its business operations as of that date and include
adequate provision in all material respects for all deferred taxes, and nothing
has occurred subsequent to that date to make any of such accruals inadequate.
NAFS has not received any notice of assessment or proposed assessment in
connection with any Tax Returns and there are not pending tax examinations of or
tax claims asserted against NAFS or any of its assets or properties. NAFS has
not extended, or waived the application of, any statute of limitations of any
jurisdiction regarding the assessment or collection of any Taxes. There are no
tax liens (other than any lien for current taxes not yet due and payable) on any
of the assets or properties of NAFS. NAFS has no knowledge of any basis for any
additional material assessment of any Taxes. NAFS has made all deposits
required by law to be made with respect to employees' withholding and other
employment taxes, including without limitation the portion of such deposits
relating to taxes imposed upon NAFS. NAFS is not a party to any tax-sharing or
allocation agreement, nor does any NAFS owe any amount under any tax-sharing or
allocation agreement. NAFS has delivered to SITEL true and correct copies of all
Tax Returns for years ended and filed on or before the Closing.
6.12 BOOKS OF ACCOUNT. The books, records and accounts of NAFS maintained
with respect to its Business accurately and fairly reflect, in all material
respects, the transactions and the assets and liabilities of NAFS with respect
to its Business. NAFS has not engaged in any transaction with respect to its
business operations, maintained any bank account for its Business or used any of
the funds of NAFS in the conduct of its Business except for transactions, bank
accounts and funds which have been and are reflected in the normally maintained
books and records of the Business.
6.13 EXISTING CONDITION. Since the Interim Balance Sheet Date, NAFS, with
respect to its Business, has not:
(a) incurred any obligations or liabilities, other than obligations or
liabilities incurred in the ordinary course of business consistent with
past practice, or incurred in accordance with this Agreement in connection
with the transactions contemplated by this Agreement, or discharged or
satisfied any lien or encumbrance, or paid any liabilities, other than in
the ordinary course of business consistent with past practice, or failed to
pay or discharge when due any
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liabilities of which the failure to pay or discharge has caused or will cause
any material damage or risk of material loss to it or any of its assets or
properties;
(b) sold, encumbered, assigned or transferred any assets or properties
which would have been included in the Assets if the Closing had been held
on the Interim Balance Sheet Date or on any date since then, except for the
sale of inventory in the ordinary course of business consistent with past
practice, or transferred or granted any rights under any concessions,
leases, licenses, sublicenses, agreements, patents, inventions, trademarks,
trade names, service marks or copyrights or with respect to any know-how,
except in the ordinary course of business consistent with past practice;
(c) created, incurred, assumed or guaranteed any indebtedness for
money borrowed, or mortgaged, pledged or subjected any of its Assets to any
mortgage, lien, pledge, security interest, conditional sales contract or
other encumbrance of any nature whatsoever, except for Permitted Liens;
(d) except in accordance with this Agreement in connection with the
transactions contemplated by this Agreement, made or suffered any amendment
or termination of any material agreement, contract, commitment, lease or
plan to which it is a party or by which it is bound, or canceled, modified
or waived any substantial debts or claims held by it or waived any rights
of substantial value, whether or not in the ordinary course of business;
(e) except for dividends paid or payable to Cordova in accordance with
NAFS's Articles of Incorporation, as amended, declared, set aside or paid
any dividend or made or agreed to make any other distribution or payment in
respect of its capital shares or redeemed, purchased or otherwise acquired
or agreed to redeem, purchase or acquire any of its capital shares;
(f) suffered any damage, destruction or loss, whether or not covered
by insurance, which affects in any material respect, its Business, Assets,
or prospects, or suffered any repeated, recurring or prolonged shortage,
cessation or interruption of supplies or utility or other services required
to conduct its business and operations;
(g) suffered any material adverse change in its Business, Assets,
prospects or condition (financial or otherwise);
(h) received notice or had knowledge of any actual or threatened labor
trouble, strike or other occurrence, event or
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condition of any similar character which has had or might have an adverse
effect on its Business, Assets, or prospects;
(i) made commitments or agreements for capital expenditures or capital
additions or betterments exceeding in the aggregate $50,000 except such as
may be involved in ordinary repair, maintenance or replacement of its
Assets;
(j) except in accordance with this Agreement in connection with the
transactions contemplated by this Agreement increased the salaries or other
compensation of, or made any advance (excluding advances for ordinary and
necessary business expenses) or loan to, any of its employees or made any
increase in, or any addition to, other benefits to which any of its
employees may be entitled, except for increases granted in the ordinary
course of business and reflected in the NAFS Disclosure Statement pursuant
to Section 6.1.21;
(k) changed in any material respect any of the accounting principles
followed by it or the methods of applying such principles; or
(l) entered into any transaction other than in the ordinary course of
business consistent with past practice.
6.14 TITLE TO PROPERTIES. NAFS has good, valid and marketable title to all
of its Assets which it purports to own, including without limitation all Assets
reflected in the Interim Balance Sheet (except for inventory sold since the date
thereof in the ordinary course of business consistent with past practice), the
books and records of NAFS, or the NAFS Disclosure Statement, free and clear of
all mortgages, liens, pledges, security interests, charges, claims, restrictions
and other encumbrances and defects of title of any nature whatsoever, except for
(i) liens for current real or personal property taxes not yet due and payable,
(ii) liens disclosed in the NAFS Disclosure Statement in response to this
Section, (iii) worker's, carrier's and materialman's liens and privileges, (iv)
capitalized leases which are disclosed in the NAFS Disclosure Statement in
response to Section 6.1.20, and (v) liens that are immaterial in character,
amount, and extent, and which do not detract from the value or interfere with
the present or proposed use of the properties they affect ("Permitted Liens").
6.15 COMPLIANCE WITH LAW; AUTHORIZATIONS. NAFS has complied in all material
respects with all Regulations, and is not currently in violation of any
Regulation, except only for such non-compliance or violations, if any, which
individually or in the aggregate have not and would not result in a material
adverse effect on the Business or the Assets. NAFS owns, holds, possesses or
lawfully uses in the operation of its business all Authorizations. All such
Authorizations are listed and described in the NAFS Disclosure
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Statement. NAFS is not in default, nor has it received any notice of any claim
of default, with respect to any such Authorization. None of such Authorizations
will be adversely affected by consummation of the transactions contemplated
hereby, except that because of the change in control of NAFS resulting from the
Merger NAFS may be required to apply for new state collection agency licenses or
to advise certain states of changes in the information underlying its existing
state collection agency licenses. No shareholder, director, officer, employee or
former employee of NAFS or any affiliates of NAFS, or any other person, firm or
corporation owns or has any proprietary, financial or other interest (direct or
indirect) in any Authorization which NAFS owns, possesses or uses in its
Business as now or previously conducted.
6.16 CONDITION OF TANGIBLE ASSETS. To the knowledge of NAFS and the NAFS
Stockholders, without obligation of inquiry, all buildings, structures,
facilities, equipment and other material items of tangible property and assets,
whether owned or leased, comprising part of the Assets are in good operating
condition and repair, subject to normal wear and maintenance, are usable in the
regular and ordinary course of business and conform in all material respects to
all applicable Regulations and Authorizations relating to their use and
operation by NAFS. No person other than NAFS owns any equipment or other
tangible assets or properties situated on the premises of NAFS or necessary to
the operation of the respective businesses of NAFS, except for leased items
disclosed in the NAFS Disclosure Statement, property owned personally by an NAFS
Stockholder which is disclosed in the NAFS Disclosure Statement, and for items
having a value of $1,000 or less.
6.17 TRANSACTIONS WITH AFFILIATES. Except as set forth in the NAFS
Disclosure Statement, no shareholder, director, officer or employee of NAFS, or
any member of his or her immediate family or any other of its, his or her
affiliates, owns or has a 5% or more ownership interest in any corporation or
other entity that is or was during the last three years a party to, or in any
property which is or was during the last three years the subject of, any
material contract, agreement or understanding, business arrangement or
relationship with NAFS.
6.18 LITIGATION. Except as disclosed in the NAFS Disclosure Statement, no
litigation, including any arbitration, investigation or other proceeding of or
before any court, arbitrator or governmental or regulatory official, body or
authority, is pending or, to the knowledge of NAFS and the NAFS Stockholders,
threatened against NAFS or which relates to the Assets or the transactions
contemplated by this Agreement, nor does NAFS or any NAFS Stockholder know of
any reasonably likely basis for any such litigation, arbitration, investigation
or proceeding, the result of which could materially adversely affect NAFS, the
Assets or the transactions contemplated hereby. NAFS is not a party to or
subject to the provisions of any judgment, order, writ, injunction,
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decree or award of any court, arbitrator or governmental or regulatory official,
body or authority which may adversely affect NAFS, the Assets or the
transactions contemplated hereby. All pending litigation is covered in full by
NAFS's errors and omissions liability insurance, subject to applicable
deductibles, and is being defended by the insurance carrier.
6.19 INSURANCE. The Assets and operations of NAFS are insured under various
policies of general liability and other forms of insurance, all of which are
described to the knowledge of NAFS and the NAFS Stockholders in the NAFS
Disclosure Statement and true and correct copies of which have been provided to
SITEL. All such policies are in full force and effect in accordance with their
terms, no notice of cancellation has been received, and there is no existing
default or event which, with the giving of notice or lapse of time or both,
would constitute a default thereunder. Such policies are in amounts which are
adequate in relation to the Business and Assets and all premiums to date have
been paid in full. NAFS has not been refused any insurance, nor has its coverage
been limited, by any insurance carrier to which it has applied for insurance or
with which it has carried insurance during the past five years. Except for bonds
required solely in connection with state licenses for collection activities, the
NAFS Disclosure Statement also contains a true and complete description of all
outstanding bonds and other surety arrangements issued or entered into in
connection with the Business, Assets and liabilities of NAFS.
6.20 CONTRACTS AND COMMITMENTS. Except as specified in the NAFS Disclosure
Statement, NAFS is not a party to any written or oral:
(a) agreement, contract or commitment with any person or entity in the
capacity of an employee or consultant, or for the employment of any
employee or consultant, who is engaged in the conduct of the Business;
(b) agreement, contract or commitment for the future purchase of, or
payment for, supplies or products, or for the performance of services by a
third party, which supplies, products or services are used in the conduct
of the Business involving in any one case $10,000 or more;
(c) agreement, contract or commitment to sell or supply products
("Goods Contracts") or to perform services ("Services Contracts") in
connection with the Business involving in any one case $10,000 or more;
(d) agreement, contract or commitment relating to the Business not
otherwise listed on the NAFS Disclosure Statement and continuing over a
period of more than six months from the date hereof or involving in any one
case $10,000 or more;
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(e) distribution, dealer, representative or sales agency agreement,
contract or commitment relating to the Business;
(f) lease under which any NAFS is either lessor or lessee relating to
the Assets or any property at which the Assets are located;
(g) note, debenture, bond, equipment trust agreement, letter of credit
agreement, loan agreement or other contract or commitment for the borrowing
or lending of money relating to the Business or agreement or arrangement
for a line of credit or guarantee, pledge or undertaking of the
indebtedness of any other person relating to the Business;
(h) agreement, contract or commitment for any charitable or political
contribution relating to the Business;
(i) commitment or agreement for any capital expenditure or leasehold
improvement in excess of $10,000 relating to the Business;
(j) agreement, contract or commitment limiting or restraining NAFS,
the Business or any successor thereto from engaging or competing in any
manner or in any business, nor, to the knowledge of NAFS and the NAFS
Stockholders, is any employee of NAFS engaged in the conduct of the
Business subject to any such agreement, contract or commitment;
(k) license, franchise, distributorship or other agreement which
relates in whole or in part to any patent, trademark, trade name, service
mark or copyright, to any material software, or to any ideas, technical
assistance or other know-how of or used by NAFS in the conduct of the
Business; or
(l) material agreement, contract or commitment relating to the
Business not made in the ordinary course of business.
Each of the agreements, contracts, commitments, leases, plans and other
instruments, documents and undertakings listed in the NAFS Disclosure Statement
in response to this Section, or not required to be listed therein because of the
amount thereof, under which Merger Sub is to acquire rights or obligations
hereunder is valid and enforceable in accordance with its terms; true and
correct copies of such written agreements, contracts, commitments, leases, plans
and other instruments, documents and undertakings have been delivered to SITEL;
NAFS is, and, to the knowledge of NAFS and the NAFS Stockholders, all other
parties thereto are in compliance with the material provisions thereof; NAFS is
not, and to the knowledge of NAFS and the NAFS Stockholders, no other party
thereto is, in default in the performance, observance or fulfillment of any
material obligation, covenant or condition
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contained therein; in the case of loan agreements and related financing
agreements which are listed in the NAFS Disclosure Statement in response to this
Section, such agreements may be prepaid without penalty; and no event has
occurred which with or without the giving of notice or lapse of time, or both,
would constitute a material default thereunder. No written or oral agreement,
contract or commitment described therein requires the consent of any party to
its assignment in connection with the transactions contemplated hereby.
6.21 ADDITIONAL INFORMATION. The NAFS Disclosure Statement contains lists
and summary descriptions, which are accurate in all material respects, of the
following:
(a) all inventory, equipment and furniture and fixtures of NAFS
included in the Assets as of the Interim Balance Sheet Date which are
leased by NAFS (NAFS does not maintain a list of fixed assets owned by it);
(b) all interests in real property owned, leased or otherwise held by
NAFS in the conduct of the Business or upon which the Assets are located as
of the Interim Balance Sheet Date, specifying which are owned and which are
leased and, with respect to the leased property, specifying the identity of
the lessor;
(c) the name and address of every bank and other financial institution
in which NAFS maintains an account (whether checking, savings or
otherwise), lock box or safe deposit box for their respective businesses,
and the account numbers and names of persons having signing authority or
other access thereto;
(d) the names and titles of and current annual base salary or hourly
rates for all employees of NAFS engaged in the conduct of its business and
having a current annual compensation rate (inclusive of salary, bonuses and
commissions) of $40,000 or more based on an annualized computation of such
compensation year-to-date, together with a statement of the nature and rate
of any other remuneration paid or payable to each such person during the
current fiscal year (or in the future if none during the current fiscal
year), the nature and rate of the bonuses, vacation and other benefits paid
or payable or provided or to be provided to each such person during the
current fiscal year (or in the future if none during the current fiscal
year); and
(e) all names under which NAFS has conducted any business or which it
has otherwise used during the last five years.
6.22 LABOR MATTERS. NAFS has not suffered any strike, slowdown, picketing
or work stoppage by any union or other group of
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employees affecting its Business. NAFS is not and has never been a party to any
collective bargaining agreement, no such agreement determines the terms and
conditions of employment of any employee of NAFS, no collective bargaining agent
has been certified as a representative of any of the employees of NAFS, and no
representation campaign or election is now in progress with respect to any of
the employees of NAFS.
6.23 EMPLOYEE BENEFIT PLANS AND ARRANGEMENTS.
(a) The NAFS Disclosure Statement contains a complete list of all
employee benefit plans, whether formal or informal, whether or not set
forth in writing, and whether covering one person or more than one person,
sponsored or maintained by NAFS. For the purposes hereof, the term
"employee benefit plan" includes all plans, funds, programs, policies,
arrangements, practices, customs and understandings providing benefits of
economic value to any employee, or present or former beneficiary, dependent
or assignee of any such employee other than regular salary, wages or
commissions paid substantially concurrently with the performance of the
services for which paid. Without limitation, the term "employee benefit
plan" includes all employee welfare benefit plans ("Welfare Plans") and all
employee pension benefit plans ("Pension Plans") within the meaning of the
Regulations governing such plans. Each plan providing benefits which are
funded through a policy of insurance is indicated by the word "insured"
placed by the listing of the plan in the NAFS Disclosure Statement. NAFS
provides no employee benefits of any kind to any former employees.
(b) NAFS does not now and has never had any Pension Plans.
(c) With respect to each Welfare Plan affecting employees of NAFS or
of the Business: (i) there is no fact, including, without limitation, any
reportable event, that exists that would constitute grounds for termination
of such Welfare Plan or for the appointment by the appropriate United
States District Court of a trustee to administer such Welfare Plan, in each
case as contemplated by ERISA; and (ii) neither NAFS nor the NAFS
Stockholders nor any fiduciary, trustee or administrator of any such
Welfare Plan has engaged in a prohibited transaction that could subject
NAFS to any material tax or any material penalty imposed by ERISA or the
Code and there exists no condition or set of facts which presents a
material risk of the imposition of any liability under ERISA or the Code
with respect to any Welfare Plan; and (iii) such Welfare Plan has been
administered in substantial compliance with its terms, ERISA and, where
applicable, the Code.
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(d) There has been no termination of any Welfare Plan of NAFS since
NAFS's inception.
(e) No Welfare Plan affecting employees of NAFS or of the Business is
funded with a trust or other funding vehicle, other than insurance
policies.
(f) None of the Welfare Plans is a "multiemployer plan" within the
meaning of ERISA.
(g) There are no material pending or, to the knowledge of NAFS and
NAFS Stockholders, threatened claims by or on behalf of any of the Welfare
Plans, by any employee or beneficiary covered by such Welfare Plan, or
otherwise involving any such Welfare Plan (other than routine claims for
benefits).
6.24 INTELLECTUAL PROPERTY MATTERS. NAFS, in the conduct of the Business,
has not utilized any patent, trademark, trade name, service mark, copyright,
trade secret or know-how (exclusive of software, which is covered by Section
6.25) except for those listed on the NAFS Disclosure Statement, all of which are
owned by NAFS free and clear of any liens, claims, charges or encumbrances. To
the knowledge of NAFS and the NAFS Stockholders, NAFS does not infringe upon or
unlawfully or wrongfully use any patent, trademark, trade name, service mark,
copyright or trade secret owned or claimed by another. NAFS is not in default
under and has not received any notice of any claim of infringement or any other
claim or proceeding relating to any such patent, trademark, trade name, service
mark, copyright or trade secret. No present or former employee of NAFS, and no
other person, owns or has any proprietary, financial or other interest, direct
or indirect, in whole or in part, in any patent, trademark, trade name, service
mark or copyright, or in any application therefor, or in any trade secret, which
NAFS owns, possesses or uses in its Business as now or heretofore conducted. The
NAFS Disclosure Statement lists all confidentiality or nondisclosure agreements
to which NAFS or any of its employees is a party which relates to the Business.
6.25 SOFTWARE. Except to the extent provided in Section 6.25 of the NAFS
Disclosure Statement, NAFS, in the conduct of the Business, utilizes only
software which it licenses from third parties. Any software which is indicated
in Section 6.25 of the NAFS Disclosure Statement as not licensed from third
parties has been developed entirely by the employees of NAFS during the time
they were employees only of NAFS and does not include any inventions of the
employees made prior to the time such employees became employees of NAFS nor any
intellectual property of any previous employer of such employee. To the
knowledge of NAFS and NAFS Stockholders, NAFS's development, use, sale or
exploitation of any software, whether licensed or owned, does not violate any
rights of any other person or entity and NAFS has not received any communication
alleging such a violation.
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6.26 ENVIRONMENTAL MATTERS.
(a) Except as set forth in the NAFS Disclosure Statement, NAFS has
obtained all permits, licenses and other authorizations which are required
in connection with the conduct of the Business under Regulations relating
to pollution or protection of the environment, including Regulations
relating to emissions, discharges, releases or threatened releases of
pollutants, contaminants, chemicals, or industrial, toxic or hazardous
substances or wastes into the environment (including without limitation
ambient air, surface water, groundwater, or land), or otherwise relating to
the manufacture, processing, distribution, use, treatment, storage,
disposal, transport, or handling of pollutants, contaminants, chemicals, or
industrial, toxic or hazardous substances or wastes.
(b) Except as set forth in the NAFS Disclosure Statement, NAFS is in
compliance in all material respects in the conduct of the Business with all
terms and conditions of the required permits, licenses and authorizations,
and are also in compliance in all material respects with all other
limitations, restrictions, conditions, standards, prohibitions,
requirements, obligations, schedules and timetables contained in those
Regulations or contained in any regulation, code, plan, order, decree,
judgment, injunction, notice or demand letter issued, entered, promulgated
or approved thereunder.
(c) Except as set forth in the NAFS Disclosure Statement, NAFS is not
aware of, nor has NAFS received notice of, any past, present or future
events, conditions, circumstances, activities, practices, incidents,
actions or plans which may interfere with or prevent compliance or
continued compliance with those laws or any regulations, code, plan, order,
decree, judgment, injunction, notice or demand letter issued, entered,
promulgated or approved thereunder, or which may give rise to any common
law or legal liability, or otherwise form the basis of any claim, action,
demand, suit, proceeding, hearing, study or investigation, based on or
related to the manufacture, processing, distribution, use, treatment,
storage, disposal, transport, or handling, or the emission, discharge,
release or threatened release into the environment, of any pollutant,
contaminant, chemical, or industrial, toxic or hazardous substance or
waste.
(d) Except as set forth in the NAFS Disclosure Statement, there is no
civil, criminal or administrative action, suit, demand, claim, hearing,
notice or demand letter, notice of violation, investigation, or proceeding
pending or threatened against NAFS in connection with the conduct of the
Business relating in any way to those laws or any regulation, code,
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plan, order, decree, judgment, injunction, notice or demand letter issued,
entered, promulgated or approved thereunder.
6.27 REAL PROPERTY.
(a) As used herein, the term "Real Property" means all immovable and
real property (including, without limitation, interests in and rights to
real property) and improvements located thereon which is owned by NAFS or
used by NAFS in connection with the Business.
(b) NAFS does not own any Real Property.
(c) All Real Property that is leased by NAFS is so identified on the
NAFS Disclosure Statement. With respect to such Real Property:
(i) NAFS has delivered to Merger Sub a true and complete copy of
every lease and sublease to which NAFS is a tenant or subtenant
("Leases"), and has identified each such Lease on the NAFS Disclosure
Statement by listing the name of the landlord or sublandlord, the name
of the tenant, and the civic address of the leased premises;
(ii) each Lease is, and at Closing shall be, in full force and
effect and has not been assigned, modified, supplemented or amended
except as listed on the NAFS Disclosure Statement, and neither the
tenant nor the landlord or sublandlord under any Lease is in default
in any material respect under any of the Leases and, to the knowledge
of NAFS and the NAFS Stockholders, no circumstances or state of facts
presently exists which, with the giving of notice or passage of time,
or both, would permit the landlord or sublandlord under any Lease to
terminate any Lease;
(iii) NAFS has not received any notices, oral or written, and has
no reason to believe, that any governmental body having the power of
eminent domain over the Real Property that is the subject of the
Leases has commenced or intends to exercise the power of eminent
domain or a similar power with respect to all or any part of such Real
Property; and
(v) no condition exists requiring material repairs, alterations
or corrections which are the responsibility of NAFS as tenant or
subtenant under the Leases.
(d) To the knowledge of NAFS and the NAFS Stockholders, without
obligation of inquiry, the uses of the Real Property by NAFS comply in all
material respects with all Regulations
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of all governmental bodies having jurisdiction over the Real Property, and
NAFS has not received any notices, oral or written, from any governmental
body of non-compliance with Regulations.
6.28 AVAILABILITY OF DOCUMENTS. NAFS has made available to SITEL copies of
all material documents, including without limitation all of the following which
are listing or referred to in the NAFS Disclosure Statement and which are of a
material nature: agreements, contracts, commitments, insurance policies,
leases, plans, instruments, undertakings, authorizations, permits, licenses,
patents, trademarks, trade names, service marks, copyrights and applications
therefor. Such copies are true and complete in all material respects and include
all amendments, supplements and modifications thereto or waivers currently in
effect thereunder.
6.29 NECESSARY ASSETS. The Assets include all property and rights
reasonably required for the conduct of the Business in the manner it is
presently conducted by NAFS.
6.30 RESTRICTIONS AFFECTING NAFS. NAFS is not a party to any indenture,
agreement, contract, commitment, lease, plan, license, permit, authorization or
other instrument, document or understanding, oral or written, or subject to any
charter or other corporate restriction or any judgment, order, writ, injunction,
decree or award which materially adversely affects or materially restricts or
may in the future materially adversely affect or materially restrict, the
business, operations, assets, properties, prospects or condition (financial or
otherwise) of the Business after consummation of the transactions contemplated
hereby.
6.31 CONDITIONS AFFECTING NAFS. Except as disclosed in the NAFS Disclosure
Statement, there is no fact, development or threatened development with respect
to the markets, products, services, employees, clients, suppliers, facilities,
Business, Assets or prospects of NAFS which are known to NAFS or any NAFS
Stockholder which would materially adversely affect the Business, Assets or
prospects of NAFS considered as a whole, other than such conditions as may
affect as a whole the economy or the particular industry generally and other
than such conditions as SITEL has actual knowledge of prior to the Closing.
NAFS has and will continue through Closing to use its best efforts to keep
available for SITEL the services of its employees, agents, clients and
suppliers. Neither NAFS nor any NAFS Stockholder has any reason to believe that
any loss of any employee, agent, client or supplier or other disadvantageous
arrangement will result because of the consummation of the Merger.
6.32 POOLING-OF-INTERESTS ACCOUNTING MATTERS. Neither NAFS, the NAFS
Stockholders nor, to their knowledge, any of NAFS's affiliates (as defined in
Rule 405 under the Securities Act), has,
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through the date of this Agreement, taken or agreed to take any action described
in Section 6.36(d). As of the time that the NAFS Stockholders approved the
Merger, the following persons were and remain "affiliates" of NAFS within the
meaning of paragraphs (c) and (d) of Rule 145 under the Securities Act
(collectively, the "Rule 145 Affiliates"): Michael W. Fletcher, Walter J.
Berthiaume, Howard M. Gibbs, and Cordova.
6.33 DIRECTOR ACTION. The Board of Directors of NAFS (at a meeting duly
called and held) has by the requisite vote of all directors present (a)
determined that the Merger is advisable and in the best interests of NAFS and
the NAFS Stockholders, (b) approved this Agreement, the Plan of Merger and the
transactions contemplated hereby, and (c) directed that the Merger be submitted
for consideration by the NAFS Stockholders.
6.34 STOCKHOLDER ACTION; STOCKHOLDERS' REPRESENTATIVE AGREEMENT. The NAFS
Stockholders other than James P. Rich, Jr. (at a meeting duly called and held or
by written consent duly obtained) have by unanimous affirmative vote approved
this Agreement, the Plan of Merger and the transactions contemplated hereby.
The submission of such matter to the NAFS Stockholders was done in compliance
with applicable securities and other laws. The Stockholders' Representative
Agreement has been duly executed and delivered by and is a valid and binding
obligation of each NAFS Stockholder, enforceable against such NAFS Stockholder
in accordance with its terms. James P. Rich, Jr., as a holder of the options
rather than shares, has duly approved this Agreement, the Plan of Merger and the
transactions contemplated hereby by appropriate written consent.
6.35 MATERIAL INTERESTS OF CERTAIN PERSONS. Except as disclosed in the
NAFS Disclosure Statement, no officer or director of NAFS, or any "associate"
(as defined in Rule 405 under the Securities Act) of any such officer or
director, has any material interest in any material contracts or Assets used in
or pertaining to the Business.
6.36 INVESTMENT REPRESENTATIONS AND COVENANTS. Each NAFS Stockholder
severally represents, warrants and covenants that:
(a) Such NAFS Stockholder is an accredited investor within the
meaning of Rule 501 of Regulation D under the Securities Act or (b) if such
NAFS Stockholder is not an accredited investor, such NAFS Stockholder alone
or with such NAFS Stockholder's purchaser representative has such knowledge
and experience in financial and business matters that such NAFS Stockholder
is capable of evaluating the merits and risks of the prospective investment
within the meaning of Rule 506(b)(2)(ii).
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(b) Such NAFS Stockholder understands that the certificates for SITEL
Common Shares issued to such NAFS Stockholder will bear the following
restrictive legends, as well as any additional legends required by
applicable exemptions under state blue sky laws:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"ACT") OR APPLICABLE STATE SECURITIES LAWS. THE SHARES MAY NOT
BE SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION FOR THESE SHARES UNDER THE ACT AND APPLICABLE STATE
SECURITIES LAWS OR AN OPINION OF COUNSEL SATISFACTORY TO THE
CORPORATION THAT REGISTRATION IS NOT REQUIRED UNDER THE ACT OR
SUCH STATE SECURITIES LAWS.
(For Georgia residents only):
THESE SECURITIES HAVE BEEN ISSUED OR SOLD IN RELIANCE ON
PARAGRAPH (13) OF CODE SECTION 10-5-9 OF THE GEORGIA SECURITIES
ACT OF 1973, AND MAY NOT BE SOLD OR TRANSFERRED EXCEPT IN A
TRANSACTION WHICH IS EXEMPT UNDER SUCH ACT OR PURSUANT TO AN
EFFECTIVE REGISTRATION UNDER SUCH ACT.
(c) Such NAFS Stockholder understands that the SITEL Common Shares
which such NAFS Stockholder receives in the Merger in exchange for such
NAFS Stockholder's NAFS Common Shares may not be sold, transferred or
assigned in the absence of an effective registration for such SITEL Common
Shares under the Securities Act and applicable state blue sky laws or an
exemption from such registration under the Securities Act and applicable
state blue sky laws such as Rule 144.
(d) If such NAFS Stockholder has been identified by NAFS in Section
6.32 as a Rule 145 Affiliate, such NAFS Stockholder will not sell, pledge,
transfer or otherwise dispose of any of such NAFS Stockholder's NAFS Common
Shares and the SITEL Common Shares to be received by him in the Merger and
will not sell short any SITEL Common Shares or purchase a "put" option for
SITEL Common Shares: (1) in the case of SITEL Common Shares only, except
in compliance with the applicable provisions of the Securities Act and the
rules and regulations thereunder; and (2) during the periods during which
any such sale, pledge, transfer or other disposition would, under GAAP or
the rules, regulations or interpretations of the Commission, disqualify the
Merger for "pooling-of-interests" accounting treatment. Such NAFS
Stockholder understands that such periods in general encompass the period
commencing thirty (30) days prior to the Merger and ending at the time of
publication of financial results covering at least 30 days of
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combined operations of NAFS and SITEL within the meaning of Section 201.01
of the Commission's Codification of Financial Reporting Policies.
(e) Such NAFS Stockholder acknowledges receipt of the SEC Filings
identified in Section 7.6 as well as the SITEL Disclosure Statement prior
to the date of this Agreement.
(f) Such NAFS Stockholder is acquiring the SITEL Common Shares to be
delivered to such NAFS Stockholder pursuant to this Agreement for its own
account for investment purposes only and not with a present view toward
resale or further distribution.
(g) Each NAFS Stockholder other than James P. Rich, Jr. represents
and warrants that such NAFS Stockholder is a resident of the State of
Georgia. James P. Rich, Jr. represents and warrants that he is a resident
of the State of New York.
6.37 COMPLETENESS OF DISCLOSURE. No representation or warranty by NAFS or
the NAFS Stockholders in this Agreement nor in any certificate, schedule,
statement, document or instrument required to be furnished to SITEL or Merger
Sub pursuant hereto or in connection with the negotiation, execution or
performance of this Agreement, contains or will contain any untrue statement of
a material fact or omits or will omit to state a material fact required to be
stated herein or therein or necessary to make any statement herein or therein
not misleading. A disclosure in any section of the NAFS Disclosure Schedule
shall suffice, without repetition or cross-reference, as a disclosure to the
same effect in any other relevant section of the NAFS Disclosure Schedule. NAFS
and the NAFS Stockholders have attempted in good faith to make disclosure in
each section required under the Agreement.
ARTICLE VII - REPRESENTATIONS AND WARRANTIES
OF SITEL AND MERGER SUB
SITEL and Merger Sub jointly and severally represent and warrant to NAFS and the
NAFS Stockholders as follows:
7.1 CORPORATE EXISTENCE.
(a) SITEL is a corporation duly organized, validly existing and in
good standing under the laws of Minnesota. SITEL has the requisite
corporate power, authority and legal right to carry on its business as now
being conducted. SITEL is duly qualified, licensed or domesticated and in
good standing as a foreign corporation authorized to do business in all of
the jurisdictions in which its activities or properties make such
qualification and licensure necessary, except for jurisdictions in which
the failure to qualify or be licensed
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will have no material adverse effect on the Business, Assets or financial
condition of NAFS.
(b) Merger Sub is a corporation duly organized, validly existing and
in good standing as a Nebraska corporation. Merger Sub is an indirect
wholly-owned subsidiary of SITEL.
7.2 CORPORATE POWER AND AUTHORIZATION. SITEL and Merger Sub, respectively,
have the full corporate power, authority and legal right to execute, deliver and
perform this Agreement. The execution, delivery and performance of this
Agreement by SITEL and Merger Sub have been duly authorized by all necessary
corporate action. This Agreement has been duly executed and delivered by SITEL
and Merger Sub and constitutes the legal, valid and binding obligation of SITEL
and Merger Sub enforceable against SITEL and Merger Sub in accordance with its
terms.
7.3 VALIDITY OF CONTEMPLATED TRANSACTIONS. The execution, delivery and
performance of this Agreement by SITEL and Merger Sub does not and will not
violate, conflict with or result in the breach of any term, condition or
provision of, or require the consent of any other party to, (a) any existing
law, ordinance, or governmental rule or regulation to which SITEL or Merger Sub
is subject, (b) any judgment, order, writ, injunction, decree or award of any
court, arbitrator or governmental or regulatory official, body or authority
which is applicable to SITEL or Merger Sub, (c) the charter documents or bylaws
of, or any securities issued by, SITEL or Merger Sub, or (d) any mortgage,
indenture, agreement, contract, commitment, lease, plan or other instrument,
document or understanding, oral or written, to which SITEL or Merger Sub is a
party or by which SITEL or Merger Sub is otherwise bound, except for such
violations, conflicts or breaches or failures of consent which would not cause a
material adverse effect upon SITEL and Merger Sub. Except for the approvals of
the Board of Directors of SITEL and the Board of Directors and sole stockholder
of Merger Sub, the filings with the Georgia and Nebraska Secretaries of State
contemplated by Sections 2.2 and 2.3, and those which may be required under the
Securities Act and Exchange Act and applicable blue sky laws and by Nasdaq Stock
Market requirements in connection with the issuance and listing of the SITEL
Common Shares in the Merger and the performance of SITEL's obligations under the
Registration Rights Agreement, no authorization, approval or consent of, and no
registration or filing with, any governmental or regulatory official, body or
authority is required in connection with the execution, delivery and performance
of this Agreement by SITEL or Merger Sub.
7.4 CAPITALIZATION. The authorized capital stock of SITEL consists of
50,000,000 shares, par value $.001 each, of undesignated capital stock. Until
otherwise designated by the Board of Directors of SITEL, all authorized shares
are deemed to be Common Stock. As of May 31, 1996, there were 18,621,779 shares
of
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Common Stock outstanding. Since such date, no additional shares of capital
stock have been issued except pursuant to SITEL's existing stock option plans.
At the Effective Time, the SITEL Common Shares issued to the NAFS Stockholders
in the Merger will be duly authorized, validly issued, fully paid and
nonassessable and subject to no preemptive rights and free and clear of any and
all liens, claims and encumbrances (except for restrictions imposed by the
Securities Act of 1933 and Section 6.36 of this Agreement). The authorized
capital stock of Merger Sub consists of 10,000 shares of common stock, $1.00 par
each, of which 1 share is issued and outstanding. All such issued and
outstanding shares of capital stock of Merger Sub are owned of record and
beneficially by SITEL.
7.5 LITIGATION. No litigation (including any arbitration, investigation or
other proceeding of or before any court, arbitrator or governmental or
regulatory official, body or authority) is pending or, to the knowledge of SITEL
or Merger Sub, threatened against SITEL or Merger Sub or which relates to the
assets of SITEL or Merger Sub or the transactions contemplated by this
Agreement, nor does SITEL or Merger Sub know of any reasonably likely basis for
any such litigation, which is likely to have a materially adverse effect on
SITEL's or Merger Sub's financial condition, assets or the transactions
contemplated by this Agreement if decided adversely to SITEL or Merger Sub.
SITEL and Merger Sub are not a party to or subject to the provisions of any
judgment, order, writ, injunction, decree or award of any court, arbitrator or
governmental or regulatory official, body or authority which is likely to have a
materially adverse effect on SITEL's or Merger Sub's financial condition, assets
or the transactions contemplated by this Agreement if decided adversely to SITEL
or Merger Sub.
7.6 SEC FILINGS. SITEL has previously furnished NAFS and Stockholders'
Representative with true and complete copies of SITEL's Registration Statement
on Form S-1 which became effective January 31, 1996, its Quarterly Reports on
Form 10-Q for the quarters ended November 30, 1995 and February 29, 1996, its
Current Reports on Form 8-K and 8-K(A) dated February 9, 1996 and April 24,
1996, and its Forms 10-C reporting certain increases in outstanding shares as of
February 2, 1996 and May 3, 1996, in each case as filed with or furnished to the
SEC (collectively, the "SEC Filings"). The financial statements and schedules
contained in the SEC Filings (or incorporated therein by reference) were
prepared in accordance with GAAP applied on a consistent basis throughout the
periods involved (except as specifically disclosed therein and subject, in the
case of unaudited statements, to normal year-end audit adjustments which would
not be material in amount or effect) and fairly presented the information
purported to be shown therein. As of their respective dates, each SEC Filing
complied in all material respects with the requirements of the Securities Act
and the Exchange Act and the rules and regulations of the SEC thereunder and did
not contain any untrue statement of a material fact or omit to state a material
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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. None
of SITEL's subsidiaries is required to file any forms, reports or documents with
the SEC.
7.7 EXISTING REGISTRATION RIGHTS. Except for registration rights which
have been granted to James F. Lynch in connection with his employment agreement,
SITEL does not presently have any existing obligations to register shares of
other stockholders of SITEL.
7.8 NO CAPITAL EVENTS ANTICIPATED. At this time, SITEL is not
contemplating any of the capital events described in Section 3.1.6.
7.9 SECURITIES LAW MATTERS. SITEL is issuing the SITEL Common Shares to
NAFS Stockholders pursuant to this Agreement in reliance upon Section 4(2) of
the Securities Act and Rule 506 promulgated thereunder and the representations,
warranties and covenants of the NAFS Stockholders in Section 6.36 and, assuming
the accuracy of such representations, warranties and covenants, has complied
with the provisions thereof and will file a notice on Form D as required by the
provisions of Regulation D promulgated under the Securities Act.
7.10 CURRENT PUBLIC INFORMATION. SITEL has been subject to the reporting
requirements of Section 13 of the Exchange Act for a period of at least 90 days
and has filed all reports required to be filed thereunder in the 12 month period
preceding the date of this Agreement.
7.11 COMPLETENESS OF DISCLOSURE. No representation or warranty by SITEL or
Merger Sub in this Agreement nor in any certificate, schedule, statement,
document or instrument required to be furnished by SITEL or Merger Sub to NAFS
or the NAFS Stockholders pursuant hereto, or in connection with the negotiation,
execution or performance of this Agreement, contains or will contain any untrue
statement of a material fact or omits or will omit to state a material fact
required to be stated herein or therein or necessary to make any statement
herein or therein not misleading.
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ARTICLE VIII - AGREEMENTS PENDING CLOSING
8.1 AGREEMENTS OF ALL PARTIES PENDING THE CLOSING. NAFS, NAFS
Stockholders, SITEL and Merger Sub covenant that, pending the Closing and except
as otherwise agreed to in writing by NAFS, Stockholders' Representative, SITEL
and Merger Sub:
8.1.1 ACTIONS OF PARTIES. No party shall knowingly take any action
which would result in a breach of any of its representations and warranties
hereunder. Furthermore, subject to fiduciary obligations under applicable law,
each party shall cooperate with all other parties and use its best efforts to
cause all of the conditions to the obligations of such party under this
Agreement to be satisfied on or prior to the Closing Date.
8.1.2 POOLING-OF-INTERESTS AND TAX-FREE REORGANIZATION TREATMENT.
No party shall intentionally take or cause to be taken any action, whether
before or after the Effective Time, which would disqualify the Merger as a
"pooling-of-interests" for accounting purposes or as a "reorganization"
within the meaning of Section 368 of the Code.
8.1.3 PUBLIC ANNOUNCEMENTS. NAFS and SITEL shall consult with each
other before issuing any press releases or otherwise making any public
statements with respect to the Merger and shall not issue any such press release
or make any such public statement prior to such consultation, except as may be
required by law.
8.2 ADDITIONAL AGREEMENTS OF NAFS AND NAFS STOCKHOLDERS PENDING THE
CLOSING. In additional to the covenants in Section 8.1, NAFS and NAFS
Stockholders, jointly and severally, covenant that, pending the Closing and
except as otherwise agreed to in writing by SITEL and Merger Sub:
8.2.1 BUSINESS IN THE ORDINARY COURSE. NAFS shall conduct the Business
solely in the ordinary course consistent with past practice, including without
limitation (a) the payment of liabilities and obligations relating to the
Business in the ordinary course when due; (b) maintenance of physical Assets in
the same manner as was its past practice; (c) maintenance of insurance on its
Assets in the same manner as was its past practice; (d) using its best efforts
to maintain in full force and effect all Authorizations currently in effect used
in the conduct of the Business.
8.2.2 EMPLOYEES AND BUSINESS RELATIONS. NAFS shall use its reasonable
efforts consistent with past practices to keep available the services of its
present employees, consultants and agents of the Business and to maintain its
relations and goodwill with the suppliers, clients, distributors and any others
having business relations with the Business.
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8.2.3 COMPLIANCE WITH LAWS. NAFS shall comply in all material respects
with all laws, ordinances, rules, regulations and orders applicable to the
Business, or the operations, assets or properties in respect thereof, the
noncompliance with which might materially affect the Business or the Assets.
NAFS shall use all reasonable efforts to make application for new or amended
collection agency licenses, as applicable, and temporary licenses or grace
periods, as applicable, as soon as possible following the public announcement of
this Agreement with the objective of obtaining such new or amended collection
agency licenses and/or temporary licenses or grace periods on or before Closing.
8.2.4 EXISTING CONDITION. NAFS and NAFS Stockholders shall not cause
or permit to occur any of the events or occurrences described in Section 6.13.
8.2.5 UPDATED SCHEDULES. NAFS and Stockholders' Representative shall
promptly disclose to SITEL any information contained in the representations and
warranties in this Agreement or the schedules which, because of an event
occurring after the date hereof, is incomplete or is no longer correct as of all
times after the date hereof until the Closing Date; provided, however, that none
of such subsequent disclosures shall be deemed to modify, amend or supplement
the representations and warranties of the NAFS or NAFS Stockholders or the
schedules hereto for the purposes of Article VI, unless SITEL and Merger Sub
shall have consented thereto in writing in their sole discretion. No such
subsequent disclosures shall affect the indemnification obligations of the NAFS
Stockholders to SITEL and Merger Sub hereunder.
8.2.6 SALE OF ASSETS; NEGOTIATIONS. NAFS shall not, directly or
indirectly, (a) sell or encumber all or any part of the Assets, other than in
the ordinary course of the Business consistent with past practice, or (b)
initiate or participate in any discussions or negotiations of the sale of the
Assets, the Business, or the stock of NAFS to any person other than SITEL or
Merger Sub, or of a merger or consolidation of NAFS with any person other than
SITEL or Merger Sub, or (c) enter into any agreement to do any of the foregoing.
NAFS shall not provide any confidential information concerning the Business or
the Assets to any person other than SITEL or Merger Sub, other than in the
ordinary course of business and consistent with past practice.
8.2.7 ACCESS. NAFS shall give to SITEL's officers, employees, counsel,
accountants and other representatives full access to and the right to inspect,
during normal business hours, all of the premises, properties, assets, records,
contracts and other documents relating to the Business and shall permit them to
consult with the officers, employees, accountants, counsel and agents of NAFS
for the purpose of making such investigation of the Business, including without
limitation the Interim Balance Sheet, as SITEL shall desire to make, provided
that such investigation
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shall not unreasonably interfere with the Business. Furthermore, NAFS shall
furnish to SITEL all such documents and copies of documents and records and
information with respect to the Business and copies of any working papers
relating thereto as SITEL shall from time to time reasonably request and shall
permit SITEL and its agents to make such physical inventories and inspections of
the Assets as SITEL may request from time to time.
8.2.8 RULE 145 AFFILIATES. NAFS shall obtain from each Rule 145
Affiliate an acknowledgement and agreement signed by such Rule 145 Affiliate in
form reasonably satisfactory to SITEL and Merger Sub as to the matters set forth
in Section 6.32 (the "Rule 145 Affiliate Letters").
8.2.9 DOCUMENTS AND CERTIFICATES. NAFS, NAFS Stockholders, SITEL and
Merger Sub shall use their respective best efforts, on or prior to Closing, to
execute and deliver all such instruments, documents or certificates as may be
necessary or advisable, on the advice of counsel, for the consummation at the
Closing of the transactions contemplated by this Agreement and the Plan of
Merger or to cause the Effective Time, subject to the consummation at the
Closing, to occur as soon as practicable.
8.3 ADDITIONAL AGREEMENTS OF SITEL AND MERGER SUB PENDING THE CLOSING. In
addition to the covenants in Section 8.1, SITEL and Merger Sub jointly and
severally covenant that, pending the Closing and except as otherwise agreed to
in writing by NAFS and the Stockholders' Representative:
8.3.1 CONFIDENTIALITY. Unless and until the Closing has been
consummated, SITEL and Merger Sub shall hold, and shall cause their counsel,
independent certified public accountants, appraisers and investment bankers to
hold in confidence any confidential data or information made available to SITEL
and Merger Sub in connection with this Agreement with respect to the Business
using the same standard of care to protect such confidential data or information
as is used to protect SITEL and Merger Sub's confidential information. If the
transactions contemplated by this Agreement are not consummated, SITEL and
Merger Sub agree that they shall return or cause to be returned to NAFS all
written materials and all copies thereof that were supplied to SITEL and Merger
Sub by NAFS and that contain any such confidential data or information.
8.3.2 NASDAQ LISTING. SITEL shall use its best efforts to list on the
Nasdaq Stock Market, upon official notice of issuance, the SITEL Common Shares
to be issued pursuant to the Merger, including the filing no later than fifteen
(15) days after the Closing of an application for additional listing and payment
of all application and additional listing fees.
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ARTICLE IX - CONDITIONS PRECEDENT
9.1 CONDITIONS PRECEDENT TO EACH PARTY'S OBLIGATIONS. The respective
obligations of each party to effect the Merger and the other transactions
contemplated by this Agreement shall be subject to the fulfillment at or prior
to the Effective Time of the following conditions:
9.1.1 GOVERNMENTAL APPROVALS AND THIRD PARTY CONSENTS. All
Governmental Approvals and Third Party Consents which are necessary for the
consummation of the Merger and the other transactions contemplated hereby,
(other than immaterial Governmental Approvals and immaterial Third Party
Consents, of which the failure to obtain would not be materially adverse to the
combined businesses of NAFS and Merger Sub taken as a whole) shall have been
obtained or shall have occurred and shall be in full force and effect at the
Effective Time; provided, however, that no such Governmental Approval or Third
Party Consent shall be deemed to have been received if it shall include any
conditions or requirements which would so materially adversely impact the
economic or business benefits of the transactions contemplated by this Agreement
so as to render consummation of the Merger inadvisable in the reasonable opinion
of the Board of Directors of either SITEL or NAFS.
9.1.2 NO THREATENED OR PENDING LITIGATION. On the Closing Date, no
suit, action or other proceeding, or injunction or final judgment relating
thereto, shall be threatened or be pending before any court or governmental or
regulatory official, body or authority in which it is sought to restrain or
prohibit or to obtain damages or other relief in connection with this Agreement
or the consummation of the transactions contemplated hereby, and no
investigation that might result in any such suit, action or proceeding shall be
pending or threatened.
9.2 ADDITIONAL CONDITIONS PRECEDENT TO THE OBLIGATIONS OF SITEL AND MERGER
SUB. In addition to the conditions precedent in Section 9.1, all obligations of
SITEL and Merger Sub to effect the Merger and the other transactions
contemplated by this Agreement are subject to the fulfillment or satisfaction,
at or prior to the Effective Time, of each of the following additional
conditions precedent:
9.2.1 PERFORMANCE OF COVENANTS. NAFS and the NAFS Stockholders
shall have performed in all material respects their covenants contained in this
Agreement required to be performed at or prior to the Effective Time, including
execution and delivery of the NAFS Closing Documents.
9.2.2 REPRESENTATIONS AND WARRANTIES TRUE AND CORRECT. The
representations and warranties of NAFS and the NAFS Stockholders contained in
this Agreement, or in any schedule,
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certificate or document delivered by NAFS or the NAFS Stockholders to SITEL or
Merger Sub pursuant to the provisions hereof, shall have been true on the date
hereof without regard to any schedule updates furnished by NAFS and the NAFS
Stockholders after the date hereof and shall be true at the Effective Time with
the same effect as though such representations and warranties were made as of
such date.
9.2.3 MATERIAL ADVERSE CHANGES. The Business, Assets and prospects
of NAFS shall not have been, and shall not be threatened to be, materially
adversely affected in any way as a result of any event or occurrence and there
shall not have been any schedule updates to the NAFS Disclosure Statement which
SITEL in its sole judgment deems to materially adversely affect SITEL or Merger
Sub or this proposed transaction.
9.2.4 POOLING LETTERS. SITEL shall have received letters, dated
the date of the Closing, from Coopers & Lybrand, L.L.P., SITEL's independent
accountants, and Arthur Andersen & Co., NAFS's independent accountants, to the
effect that, for financial reporting purposes, the Merger qualifies for pooling-
of-interests accounting treatment under GAAP if consummated in accordance with
this Agreement (collectively, the "Pooling Letters").
9.2.5 APPROVAL OF COUNSEL; CORPORATE MATTERS. All actions,
proceedings, resolutions, instruments and documents required to carry out this
Agreement or incidental hereto and all other related legal matters shall have
been approved on or before the Closing Date by Abrahams, Kaslow & Cassman,
counsel for SITEL and Merger Sub, in the exercise of their reasonable judgment.
9.3 ADDITIONAL CONDITIONS PRECEDENT TO THE OBLIGATIONS OF NAFS AND NAFS
STOCKHOLDERS. In addition to the conditions precedent in Section 9.1, all
obligations of NAFS and the NAFS Stockholders to effect the Merger and the other
transactions contemplated by this Agreement are subject to the fulfillment or
satisfaction, at or prior to the Effective Time, of each of the following
additional conditions precedent:
9.3.1 PERFORMANCE OF COVENANTS. SITEL and Merger Sub shall have
performed in all material respects their covenants contained in this Agreement
required to be performed at or prior to the Effective Time, including execution
and delivery of the SITEL Closing Documents.
9.3.2 REPRESENTATIONS AND WARRANTIES TRUE AND CORRECT. The
representations and warranties of SITEL and Merger Sub contained in this
Agreement, or in any schedule, certificate or document delivered by SITEL or
Merger Sub to NAFS or Stockholders' Representative pursuant to the provisions
hereof, shall have been true on the date hereof without regard to any schedule
updates furnished by SITEL and Merger Sub after the date hereof and shall
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be true at the Effective Time with the same effect as though such
representations and warranties were made as of such date.
9.3.3 APPROVAL OF COUNSEL; CORPORATE MATTERS. All actions,
proceedings, resolutions, instruments and documents required to carry out this
Agreement or incidental hereto and all other related legal matters shall have
been approved on or before the Closing Date by Cohen Pollock Merlin & Axelrod,
P.C., counsel to NAFS and the Stockholders' Representative, in the exercise of
their reasonable judgment.
9.3.4 TAX OPINION. The NAFS Stockholders shall have received the
opinion of Cohen Pollock Merlin & Axelrod, P.C., counsel to the NAFS
Stockholders, to the effect that the Merger will be treated as a reorganization
described in Section 368(a) of the Code.
ARTICLE X - INDEMNIFICATION
10.1 GENERAL INDEMNIFICATION OBLIGATION OF NAFS STOCKHOLDERS. Subject to
the provisions of Section 10.3, from and after the Closing:
(a) Each of the NAFS Stockholders, jointly and severally, shall
reimburse, indemnify and hold harmless SITEL, its affiliates (including
NAFS after the Merger) and their respective successors and assigns (each an
"Indemnified SITEL Party" and collectively the "Indemnified SITEL Parties")
against and in respect of:
(i) any and all actual damages (excluding consequential damages
relating to lost profits or adverse effects on stock price), losses,
deficiencies, liabilities, reasonable costs and expenses incurred or
suffered by any Indemnified SITEL Party that result from, relate to or
arise out of any misrepresentation, breach of warranty or
nonfulfillment of any agreement or covenant on the part of any NAFS
Stockholder and, with respect to periods prior to and including the
Closing, on the part of NAFS, (A) under this Agreement or (B) under
any NAFS Closing Documents other than the Employment Agreements and
Non-Competition Agreements;
(ii) any and all actions, suits, claims, proceedings,
investigations, demands, assessments, audits, fines, judgments, costs
and other expenses (including, without limitation, reasonable legal
fees and expenses) incident to any of the foregoing or to the
enforcement of this Section 10.1(a).
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(b) Each of the NAFS Stockholders severally shall reimburse,
indemnify and hold harmless the Indemnified SITEL Parties against and in
respect of:
(i)any breach on the part of such NAFS Stockholder of any
Non-Competition Agreement or Employment Agreement furnished by such
NAFS Stockholder to SITEL and NAFS pursuant to this Agreement; and
(ii) any and all actions, suits, claims, proceedings,
investigations, demands, assessments, audits, fines, judgments, costs
and other expenses (including, without limitation, reasonable legal
fees and expenses) incident to any of the foregoing or to the
enforcement of this Section 10.1(b).
10.2 GENERAL INDEMNIFICATION OBLIGATION OF SITEL AND MERGER SUB. Subject to
the provisions of Section 10.3.1(b) and (c), from and after the Closing, SITEL
shall reimburse, indemnify and hold harmless the NAFS Stockholders and their
successors or assigns (each an "Indemnified NAFS Party" and collectively the
"Indemnified NAFS Parties") against and in respect of:
(a) any and all actual damages (excluding consequential damages
relating to lost profits or adverse effects on stock price), losses,
deficiencies, liabilities, reasonable costs and expenses incurred or
suffered by any Indemnified NAFS Party that result from, relate to or arise
out of any misrepresentation, breach of warranty or non-fulfillment of any
agreement or covenant on the part of SITEL or Merger Sub under this
Agreement or the SITEL Closing Documents; and
(b) any and all actions, suits, claims, proceeding, investigations,
demands, assessments, audits, fines, judgments, costs and other expenses
(including, without limitation, reasonable legal fees and expenses)
incident to any of the foregoing or to the enforcement of this Section
10.2.
10.3 METHOD OF ASSERTING CLAIMS; LIMITATIONS ON INDEMNIFICATION.
10.3.1 CLAIM NOTICE.
(a) In the event that (1) any SITEL Claim is asserted against or
sought to be collected from an Indemnified SITEL Party by a third party, or
(2) an Indemnified SITEL Party has a SITEL Claim against NAFS Stockholders
which does not involve a claim or demand being asserted against or sought
to be collected from it by a third party, the Indemnified SITEL Party shall
promptly notify the Stockholders' Representative of such SITEL Claim,
specifying the nature of such SITEL Claim
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and the amount or the estimated amount thereof to the extent then feasible
(which estimate shall not be conclusive of the final amount of such SITEL
Claim) (the "Claim Notice"). The Stockholders' Representative shall have
thirty (30) days from the personal delivery or mailing of the Claim Notice
(the "Notice Period") to notify the Indemnified SITEL Party, (i) whether or
not they dispute their liability to the Indemnified SITEL Party hereunder
with respect to such SITEL Claim and (ii) in the case of a SITEL Claim
involving a third party, notwithstanding any such dispute, whether or not
they desire, at their sole cost and expense, to defend the Indemnified
SITEL Party against such SITEL Claim.
(b) (1) A Claim Notice for a SITEL Claim relating to Taxes must be
given to NAFS and Stockholders' Representative prior to the expiration of
the applicable statute of limitations pertaining to assertion of liability
with respect to such Taxes and (2) a Claim Notice for a SITEL Claim
relating to any other matter must be given to NAFS and Stockholders'
Representative on or before the date which is two (2) years after the
Closing Date (collectively, the "Survival Period"). The NAFS Stockholders
shall not have any indemnification obligations under this Article X with
respect to SITEL Claims for which a Claim Notice is not given to them
within the applicable Survival Period.
(c) The NAFS Stockholders shall be obligated to indemnify the SITEL
Indemnified Parties with respect to SITEL Claims only to the extent of the
excess of such SITEL Claims (which either have been paid to third parties
or, if the claim originates with SITEL or NAFS, then which have been
presented and for which the NAFS Stockholders would have liability in
accordance with this Section 10.3 (without regard to this Section 10.3(c))
over $200,000 in the aggregate; provided, however, that this claims
"basket" shall not apply to the NAFS Stockholders' obligation to indemnify
the SITEL Indemnified Parties with respect to any misrepresentation in or
omission from the certificate with respect to the Net Book Value.
(d) the NAFS Stockholders' obligations for indemnification under this
Article X shall not exceed in the aggregate the product of (i) the Adjusted
Merger Consideration multiplied by (ii) the Exchange Price (the "Aggregate
Indemnification Limit"). An individual NAFS Stockholder's obligations for
indemnification under this Article X shall not exceed such NAFS
Stockholder's pro rata share of the Aggregate Indemnification Limit, based
upon such NAFS Stockholder's percentage share of the NAFS Common Shares
outstanding (on an as converted and fully diluted basis) immediately prior
to the Effective Time.
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(e) The amount of any SITEL Claim shall be reduced by the Federal and
state income tax benefits (computed using the then maximum marginal
corporate income tax rates) realized by the SITEL Indemnified Parties with
respect to such SITEL Claim. At the time the SITEL Indemnified Parties
give the Stockholders' Representative a Claim Notice, the SITEL Indemnified
Parties shall make a good faith estimate of any Federal and state income
tax benefits that will result from the Claim, and such Claim Notice shall
set forth in reasonable detail the computation of such estimated tax
benefits. If such estimated tax benefits and the SITEL Indemnified
Parties' actual tax benefits with respect to a Claim differ, prompt
adjustment shall be made for the amount of the difference at the time the
actual tax benefit is determined; provided that no adjustment shall be made
with respect to any difference which cannot reasonably be determined until
after the Survival Period applicable to such Claim.
(f) Notwithstanding anything to the contrary in this Agreement, the
NAFS Stockholders's representations, warranties and covenants do not extend
to and NAFS Stockholders shall not be obligated to indemnify the
Indemnified SITEL Parties with respect to any damages, losses,
deficiencies, liabilities, costs and expenses associated with the
termination of any NAFS state collection agency licenses at or following
the Closing solely because of the Merger.
(g) The amount of a SITEL Claim shall not bear interest except after
it has been reduced to a judgment, settlement or arbitration award and then
it shall bear interest at the judgment rate provided by Nebraska law.
(h) If an accounts receivable included on the Interim Balance Sheet
is not collected by NAFS within eleven months after the Closing Date, then
the SITEL Indemnified Parties shall be entitled to present a claim to the
NAFS Stockholders and the Escrow Agent for indemnification with respect to
such uncollected accounts receivable. Upon receipt from the NAFS
Stockholders or Escrow Agent of full indemnification for such uncollected
accounts receivable, NAFS shall reassign to Stockholders' Representative on
behalf of the NAFS Stockholders without recourse such uncollected accounts
receivable. If the SITEL Indemnified Parties receive full indemnification
for an uncollected accounts receivable and thereafter receives any payment
from a third party in respect of such uncollected accounts receivable, the
SITEL Indemnified Parties shall promptly remit to the Stockholders'
Representative the full amount of such payment from the third party.
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10.3.2 DISPUTE OF LIABILITY.
(a) With respect to any SITEL Claim asserted against or sought to be
collected from an Indemnified SITEL Party by a third party, if
Stockholders' Representative dispute their liability with respect to such
SITEL Claim or the amount thereof (whether or not Stockholders'
Representative desire to defend the Indemnified SITEL Party against such
claim or demand as provided in Section 10.3.3 below), such dispute shall be
resolved in accordance with Section 1.4.3 of the Escrow Agreement. Pending
the resolution of any dispute by Stockholders' Representative of the NAFS
Stockholders' liability with respect to any SITEL Claim, such SITEL Claim
shall not be settled without the prior written consent of the Indemnified
SITEL Party or Stockholders' Representative.
(b) With respect to any SITEL Claim by an Indemnified SITEL Party
against Stockholders' Representative which does not involve a claim or
demand being asserted against or sought to be collected from the
Indemnified SITEL Party by a third party, if Stockholders' Representative
dispute the NAFS Stockholders' liability with respect to such SITEL Claim,
such dispute shall be resolved in accordance with Section 1.4.3 of the
Escrow Agreement; if Stockholders' Representative do not notify the
Indemnified SITEL Party within the Notice Period that they dispute such
SITEL Claim, the amount of such SITEL Claim shall be conclusively deemed a
liability of the NAFS Stockholders hereunder.
10.3.3 DEFENSE.
(a) In the event that Stockholders' Representative notify the
Indemnified SITEL Party within the Notice Period that they desire to defend
the Indemnified SITEL Party against such SITEL Claim then, except as
hereinafter provided, the Stockholders' Representative shall have the right
to defend the Indemnified SITEL Party by appropriate proceedings, which
proceedings shall be promptly settled or prosecuted by them to a final
conclusion in such a manner as to avoid any risk of Indemnified SITEL Party
becoming subject to liability for any other matter; provided, however,
Stockholders' Representative shall not, without the prior written consent
of the Indemnified SITEL Party, consent to the entry of any judgment
against the Indemnified SITEL Party or enter into any settlement or
compromise which does not include, as an unconditional term thereof, the
giving by the claimant or plaintiff to the Indemnified SITEL Party of a
release, in form reasonably satisfactory to the Indemnified SITEL Party, as
the case may be, from all liability in respect of such SITEL Claim or
litigation. To the extent that any defense must be pursued in the name of
NAFS, NAFS shall provide reasonable cooperation to Stockholders'
Representative in the defense of such SITEL
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Claim. If any Indemnified SITEL Party desires to participate in, but not
control, any such defense or settlement, it may do so at its sole cost and
expense. If, in the reasonable opinion of the Indemnified SITEL Party, any
such SITEL Claim or the litigation or resolution of any such SITEL Claim
involves an issue or matter which could have a materially adverse effect on
the business, operations, assets, properties or prospects of the
Indemnified SITEL Party, including without limitation a temporary or
permanent injunction against the Indemnified SITEL Party or the
administration of the tax returns and responsibilities under the tax laws
of any Indemnified SITEL Party, then the Indemnified SITEL Party shall have
the right to control the defense or settlement of any such SITEL Claim and
its reasonable costs and expenses shall be included as part of the
indemnification obligation of NAFS Stockholders hereunder; provided,
however, that the Indemnified SITEL Party shall not settle any such SITEL
Claim without the prior written consent of the Stockholders' Representative
which consent shall not be unreasonably withheld. If the Indemnified SITEL
Party should elect to exercise such right, Stockholders' Representative
shall have the right to participate in, but not control, the defense or
settlement of such SITEL Claim at their sole cost and expense.
(b) If Stockholders' Representative elect not to defend the
Indemnified SITEL Party against such SITEL Claim, whether by not giving the
Indemnified SITEL Party timely notice as provided above or otherwise, then
the amount of any such SITEL Claim, or if the same be defended by
Stockholders' Representative or by the Indemnified SITEL Party (but none of
the Indemnified SITEL Party shall have any obligation to defend any such
SITEL Claim), then that portion thereof as to which such defense is
unsuccessful, in each case shall be conclusively deemed to be a liability
of NAFS Stockholders hereunder, unless Stockholders' Representative shall
have disputed the liability of NAFS Stockholders to the Indemnified SITEL
Party hereunder, as provided in Section 10.3.2 above, in which event such
dispute shall be resolved as provided in Section 1.4.3 of the Escrow
Agreement.
10.3.4 CLAIMS BY INDEMNIFIED NAFS PARTY. All claims for
indemnification by an Indemnified NAFS Party under this Agreement shall be
asserted and resolved under the procedures set forth above in this Section 10.3
substituting in the appropriate place "Indemnified NAFS Party" for "Indemnified
SITEL Party" and variations thereof, "SITEL and Merger Sub" for "Stockholders'
Representative" (or NAFS Stockholders, as the case may be), and "NAFS Claim" for
"SITEL Claim".
10.4 PAYMENT OF INDEMNITY CLAIMS. Upon the determination of the liability
under Section 10.3 or 1.4.3 of the Escrow Agreement, the appropriate party shall
pay to the other, as the case may be,
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within ten (10) days after such determination, the amount of any claim for
indemnification made hereunder. In the event that the indemnified party is not
paid in full for any such indemnity claim pursuant to the foregoing provisions
promptly after the other party's obligation to indemnify has been determined in
accordance herewith, it shall have the right, notwithstanding any other rights
that it may have against any other person, to setoff the unpaid amount of any
such indemnity claim against any amounts owed by it under this Agreement or
under any agreements entered into pursuant to this Agreement. Upon the payment
in full of any indemnity claim, either by setoff or otherwise, the person making
payment shall be subrogated to the rights of the indemnified party against any
person with respect to the subject matter of such indemnity claim.
10.5 APPLICATION OR RELEASE OF INDEMNITY ESCROW SHARES.
10.5.1 APPLICATION TO PAY INDEMNITY CLAIMS. Prior to the first
year anniversary date of the Closing Date, the Escrow Agent shall deliver the
Indemnity Escrow Shares from time to time upon receipt of any of the following:
(a) A joint statement signed by SITEL and Stockholders'
Representative stating that an indemnity claim of an Indemnified SITEL
Party shall be paid out of the Indemnity Escrow Shares, indicating the
amount of the indemnity claim, the number of Indemnity Escrow Shares
to be applied to pay such indemnity claim and the person or persons to
whom such Indemnity Escrow Shares are to be delivered; or
(b) An award rendered by an arbitrator, pursuant to an
arbitration conducted in accordance with Section 1.4.3 of the Escrow
Agreement, directing that an indemnity claim of an Indemnified SITEL
Party shall be paid out of the Indemnity Escrow Shares, indicating the
amount of the indemnity claim, the number of Indemnity Escrow Shares
to be applied to pay such indemnity claim and the person or persons to
whom such Indemnity Escrow Shares are to be delivered; or
(c) An order of a court of competent jurisdiction, which has not
been appealed within the applicable time period or is non-appealable,
directing that an indemnity claim of an Indemnified SITEL Party shall
be paid out of the Indemnity Escrow Shares, indicating the amount of
the indemnity claim, the number of Indemnity Escrow Shares to be
applied to pay such indemnity claim and the person or persons to whom
such Indemnity Escrow Shares are to be delivered.
For purposes of this Section 10.5, unless otherwise agreed by the Indemnified
SITEL Parties and Stockholders' Representative, each
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Indemnity Escrow Share shall have a deemed value of $27.375 (the price at
which such shares were valued for purposes of the Merger) and the indemnity
claims shall be paid pro rata out of the NAFS Stockholders' respective SITEL
Common Shares included within the Indemnity Escrow Shares. Delivery of shares
in respect of indemnity claims shall be effected by the Escrow Agent
delivering the certificates evidencing the Indemnity Escrow Shares to the
transfer agent for the Company together with the related stock powers (duly
completed by the Escrow Agent as to the pro rata number of shares being
delivered out of each certificate) with instructions to deliver the
appropriate number of shares from the certificates to the Company and the
balance to be reissued in the names of the NAFS Stockholders named on the
certificates and redelivered to the Escrow Agent.
10.5.2 RELEASE IMMEDIATELY FOLLOWING FIRST YEAR ANNIVERSARY OF THE
CLOSING DATE. To the extent not previously delivered pursuant to Section
10.5.1, the Indemnity Escrow Shares shall be delivered on the first
business day after the first year anniversary of the Closing Date. The
Indemnified SITEL Parties shall receive therefrom, to the extent not
previously paid by Stockholders' Representative or NAFS Stockholders,
disbursed from the Indemnity Escrow Shares, or designated for disbursement
from the Indemnity Escrow Shares, the number of Indemnity Escrow Shares
necessary to satisfy the aggregate sum of all indemnity claims resolved in
favor of the Indemnified SITEL Parties reduced by the aggregate sum of all
indemnity claims resolved in favor of the Indemnified NAFS Parties. The
balance of the Indemnity Escrow Shares shall be distributed to the NAFS
Stockholders pro rata, in accordance with their percentage ownership of the
NAFS Common Shares (on an as converted and fully diluted basis) outstanding
immediately prior to the Effective Time.
10.5.3 NON-LIMITATION OF LIABILITY. Nothing in this Section 10.5
or in the Escrow Agreement shall be construed to limit the liability of the
NAFS Stockholders under Section 10.1, or under any other provisions of this
Agreement, to the amount of the Indemnity Escrow Shares or to the Escrow
Period.
10.6 RIGHT OF SETOFF. SITEL, its affiliates (including NAFS after the
Merger) and their successors and assigns shall have the right to setoff against
any amounts whatsoever which SITEL, its affiliates (including NAFS after the
Merger), or their successors and assigns now or hereafter owes or may owe to any
NAFS Stockholder pursuant to this Agreement, or pursuant to any other contract
or obligation with any NAFS Stockholder entered into pursuant to this Agreement
except for employment agreements, any amounts (whether liquidated or contingent,
matured or unmatured) which such NAFS Stockholder may now or hereafter owe
SITEL, its affiliates (including NAFS after the Merger) or its successors and
assigns; provided, however, that in the case of setoff effected in
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respect of contingent amounts, the amount taken as a setoff in
respect of contingent amounts shall be deposited with a mutually satisfactory
escrow agent on mutually agreed terms pending resolution of the contingency.
10.7 OTHER RIGHTS AND REMEDIES NOT AFFECTED. The indemnification rights of
the parties under this Article X are independent of and in addition to such
rights and remedies as the parties may have at law or in equity or otherwise for
any misrepresentation, breach of warranty or failure to fulfill any agreement or
covenant hereunder on the part of any party hereto, including without limitation
the right to seek specific performance, rescission or restitution, and the right
of setoff, none of which rights or remedies shall be affected or diminished
hereby.
ARTICLE XI - POST CLOSING MATTERS
11.1 MAINTENANCE OF BOOKS AND RECORDS. NAFS shall preserve until the fifth
(5th) year anniversary of the Closing Date all records possessed or to be
possessed by such party relating to any of the assets, liabilities or business
of the Business prior to the Closing Date. After the Closing Date, where there
is a legitimate purpose, such party shall provide the other parties with access,
upon prior reasonable written request specifying the need therefor, during
regular business hours, to (a) the officers and employees of such party and (b)
the books of account and records of such party, but, in each case, only to the
extent relating to the assets, liabilities or business of the Business prior to
the Closing Date, and the other parties and their representatives shall have the
right to make copies of such books and records; provided, however, that the
foregoing right of access shall not be exercisable in such a manner as to
interfere unreasonably with the normal operations and business of such party;
and further, provided, that, as to so much of such information as constitutes
trade secrets or confidential business information of such party, the requesting
party and its officers, directors and representatives will use due care to not
disclose such information except (i) as required by law, (ii) with the prior
written consent of such party, which consent shall not be unreasonably withheld,
or (iii) where such information becomes available to the public generally, or
becomes generally known to competitors of such party, through sources other than
the requesting party, its affiliates or its officers, directors or
representatives. Such records may nevertheless be destroyed by a party if such
party sends to the other parties written notice of its intent to destroy
records, specifying with particularity the contents of the records to be
destroyed. Such records may then be destroyed after the 30th day after such
notice is given unless another party objects to the destruction in which case
the party seeking to destroy the records shall deliver such records to the
objecting party.
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11.2 PAYMENTS RECEIVED. Stockholders' Representative agree that after the
Closing they will hold and will promptly transfer and deliver to NAFS, from time
to time as and when received by them, any cash, checks with appropriate
endorsements (using their best efforts not to convert such checks into cash), or
other property that they may receive on or after the Closing which properly
belongs to NAFS, including without limitation any insurance proceeds, and will
account to NAFS for all such receipts.
11.3 CONFIDENTIALITY. The NAFS Stockholders agree that following the
Closing and for a period of three (3) years thereafter, all Confidential
Information (as defined herein) shall be maintained in strict confidence by them
and shall be used by them solely in the performance of their duties to NAFS and
for the benefit of NAFS. The Confidential Information shall not be disclosed by
the NAFS Stockholders after the Closing except to the extent that information
about the operating results of the Business is required to be furnished in
filings and other reports to tax and other governmental authorities. For
purposes of this Section 11.4, "Confidential Information" has the same meaning
as under the Employment Agreements.
11.4 FURTHER ASSURANCES. Stockholders' Representative from time to time
after the Closing, at SITEL's or its affiliates (including NAFS, after the
Effective Time) shall execute, acknowledge and deliver to SITEL or NAFS such
other instruments of conveyance and transfer, and take such other actions and
execute and deliver such other documents, certifications and further assurances,
as SITEL may reasonably require in order to restore to NAFS any rights under
Assets which are impaired by reason of the failure of NAFS and the Stockholders'
Representative to deliver required Third Party Consents or Governmental
Approvals at Closing as promptly as possible.
11.5 INSURANCE POLICIES. From and after the Effective Time, SITEL and NAFS
agree that (a) they will not intentionally take any actions which would
materially and adversely affect any insurance coverage that is available for an
indemnity claim pursuant to Article X, (b) they will cooperate and take steps
needed to make a claim against their insurance policies relating to indemnity
claims under Article X, and (c) they will use reasonable efforts to cause NAFS
to maintain current (or comparable replacement) claims-made insurance policies
until the expiration of the applicable statute of limitations for claims of that
kind, provided that this shall not require NAFS to continue coverage which has
become unavailable on comparable terms (subject to normal premium increases) or
which is with a carrier that it deems inadvisable or which has become
excessively costly in the reasonable judgment of NAFS management.
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ARTICLE XII - MISCELLANEOUS
12.1 TERMINATION.
(a) Anything herein or elsewhere to the contrary notwithstanding, this
Agreement may be terminated by written notice of termination at any time
before the Closing Date only as follows:
(i) by mutual consent of NAFS, Stockholders' Representative,
SITEL and Merger Sub;
(ii) by SITEL and Merger Sub, (A) at any time if the
representations and warranties of NAFS and NAFS Stockholders contained
in Section 6.1 were incorrect in any material respect when made or at
any time thereafter until Closing or (B) upon written notice to NAFS
and Stockholders' Representative given at any time after August 31,
1996 (or such later date as shall have been specified in a writing
authorized on behalf of NAFS, Stockholders' Representative, SITEL and
Merger Sub) if all of the conditions precedent set forth in Sections
9.1 and 9.2 have not been met; or
(iii) by NAFS and Stockholders' Representative, (A) at any time
if the representations and warranties of SITEL and Merger Sub
contained in Sections 6.2 were incorrect in any material respect when
made or at any time thereafter until Closing, or (B) upon written
notice to SITEL and Merger Sub given at any time after August 31, 1996
(or such later date as shall have been specified in a writing
authorized on behalf of NAFS, Stockholders' Representative, SITEL and
Merger Sub) if all of the conditions precedent set forth in Sections
9.1 and 9.2 have not been met.
(b) In the event of the termination and abandonment hereof pursuant to
the provisions of this Section 12.1, this Agreement (except for Section
8.3.1 which shall continue) shall become void and have no effect, without
any liability on the part of any of the parties or their directors or
officers or stockholders in respect of this Agreement, unless the
termination was the result of the representations and warranties of a party
being materially incorrect when made or the material breach by such party
of a covenant hereunder in which event the party whose representations and
warranties were incorrect or who breached such covenant shall be liable to
the other party for all costs and expenses of the other party in connection
with the preparation, negotiation, execution and performance of this
Agreement.
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12.2 AMENDMENT. This Agreement may be amended by the parties hereto
pursuant to authority granted by the Boards of Directors of NAFS, SITEL and
Merger Sub, at any time before or after approval of the Merger by the
stockholders of NAFS, but after any such approval no amendment shall be made
that modifies the Adjusted Merger Consideration to be received by the NAFS
Stockholders or that in any other way materially adversely affects the rights of
the NAFS Stockholders (other than a termination of this Agreement in accordance
with Section 12.1) without the further approval of such NAFS Stockholders. This
Agreement may be amended only by an instrument in writing signed by the parties
hereto.
12.3 BROKERS' AND FINDERS' FEES.
(a) NAFS and Stockholders' Representative, jointly and severally,
represent and warrant to SITEL and Merger Sub that all negotiations
relative to this Agreement have been carried on by them directly without
the intervention of any person who may be entitled to any brokerage or
finder's fee or other commission in respect of this Agreement or the
consummation of the transactions contemplated hereby, and NAFS and
Stockholders' Representative, jointly and severally, agree to indemnify and
hold harmless SITEL and Merger Sub against any and all claims, losses,
liabilities and expenses which may be asserted against or incurred by SITEL
and Merger Sub as a result of NAFS' or Stockholders' Representative'
dealings, arrangements or agreements with any such person.
(b) SITEL and Merger Sub, jointly and severally, represent and warrant
that all negotiations relative to this Agreement have been carried on by
them directly without the intervention of any person who may be entitled to
any brokerage or finder's fee or other commission in respect of this
Agreement or the consummation of the transactions contemplated hereby, and
SITEL and Merger Sub, jointly and severally, agree to indemnify and hold
harmless NAFS and Stockholders' Representative against any and all claims,
losses, liabilities and expenses which may be asserted against or incurred
by NAFS or Stockholders' Representative as a result of SITEL's or Merger
Sub's dealings, arrangements or agreements with any such person.
12.4 EXPENSES. Except as otherwise provided in this Agreement, each party
hereto shall pay its own expenses associated with the due diligence process, the
negotiation and preparation of this Agreement and related documents, and the
consummation of the Merger and the other transactions contemplated by this
Agreement.
12.5 CONTENTS OF AGREEMENT. This Agreement sets forth the entire
understanding of the parties hereto with respect to the transactions
contemplated hereby. This Agreement shall not be amended or modified except by
written instrument duly executed by
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each of the parties hereto. Any and all previous agreements and
understandings between or among the parties regarding the subject matter
hereof, whether written or oral, are superseded by this Agreement.
12.6 ASSIGNMENT AND BINDING EFFECT. This Agreement may not be assigned
prior to the Closing by any party hereto without the prior written consent of
the other parties. Subject to the foregoing, all of the terms and provisions of
this Agreement shall be binding upon and inure to the benefit of and be
enforceable by the successors and assigns of NAFS, Stockholders' Representative,
SITEL and Merger Sub.
12.7 WAIVER. Any term or provision of this Agreement may be waived at any
time by the party entitled to the benefit thereof by a written instrument duly
executed by such party.
12.8 NOTICES. Any notice, request, demand, waiver, consent, approval or
other communication which is required or permitted hereunder shall be in writing
and shall be deemed given only if delivered personally or sent by telegram or by
registered mail, postage prepaid, as follows:
If to SITEL or Merger Sub, to:
SITEL Corporation
13215 Birch Street, Suite 100
Omaha, Nebraska 68164
Attention: James F. Lynch, CEO
With a required copy to:
Abrahams, Kaslow & Cassman
8712 West Dodge Road
Suite 300
Omaha, Nebraska 68114
Attention: Teresa A. Beaufait
If to NAFS, Stockholders' Representative, Principal Stockholders or NAFS
Stockholders, to:
National Action Financial Services, Inc.
2877 Brandywine Road, Suite 300
Atlanta, Georgia 30341
Attention: Michael W. Fletcher, CEO
With a required copy to:
Cohen Pollock Merlin & Axelrod, P.C.
2100 Riveredge Parkway, N.W., Suite 300
Atlanta, Georgia 30328
Attention: Michael E. Axelrod
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or to such other address as the addressee may have specified in a notice duly
given to the sender as provided herein. Such notice, request, demand, waiver,
consent, approval or other communication will be deemed to have been given as of
the date so delivered, telegraphed or mailed.
12.9 GOVERNING LAW. This Agreement shall be governed by and interpreted and
enforced in accordance with the laws of the State of Nebraska, without regard to
its conflicts of laws principles.
12.10 NO BENEFIT TO OTHERS. The representations, warranties, covenants and
agreements contained in this Agreement are for the sole benefit of the parties
hereto and, in the case of Article X, the other SITEL Indemnified Parties or
NAFS Indemnified Parties, as the case may be, and their heirs, executors,
administrators, legal representatives, successors and assigns, and they shall
not be construed as conferring any rights on any other persons. Except as
stated above, there are no third party beneficiaries of this Agreement.
12.11 HEADINGS, GENDER AND MEANINGS OF CERTAIN NON-CAPITALIZED TERMS. All
section headings contained in this Agreement are for convenience of reference
only, do not form a part of this Agreement and shall not affect in any way the
meaning or interpretation of this Agreement. Words used herein, regardless of
the number and gender specifically used, shall be deemed and construed to
include any other number, singular or plural, and any other gender, masculine,
feminine, or neuter, as the context requires. Any reference to a "person" herein
shall include an individual, firm, corporation, partnership, trust, governmental
authority or body, association, unincorporated organization or any other entity.
Any reference to an "affiliate" herein, unless otherwise specified, shall have
the meaning given such term under Rule 405 of the Securities Act. Any reference
herein to a "covenant" or "covenants" shall include all undertakings and
agreements whether or not denominated in this Agreement as a covenant or
covenants.
12.12 SCHEDULES AND EXHIBITS. All Exhibits and Schedules referred to herein
are intended to be and hereby are specifically made a part of this Agreement,
whether or not attached hereto.
12.13 SEVERABILITY. Any provision of this Agreement which is invalid or
unenforceable in any jurisdiction shall be ineffective to the extent of such
invalidity or unenforceability without invalidating or rendering unenforceable
the remaining provisions hereof, and any such invalidity or unenforceability in
any jurisdiction shall not invalidate or render unenforceable such provision in
any other jurisdiction.
12.14 REFERENCES TO ARTICLES, SECTIONS, SCHEDULES AND EXHIBITS. All
references in this Agreement to Articles, Sections,
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Schedules and Exhibits mean the referenced part of this Agreement, unless
otherwise specifically provided.
12.15 JOINT AND SEVERAL. Except as otherwise expressly set forth herein,
(a) all representations, warranties, covenants, indemnities and obligations of
the NAFS Stockholders under this Agreement are joint and several and (b) all
representations, warranties, covenants, indemnities and obligations of SITEL and
Merger Sub under this Agreement are joint and several.
12.16 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All representations and
warranties made by the parties in this Agreement or in any certificate,
schedule, statement, document or instrument furnished hereunder or in connection
with negotiation, execution and performance of this Agreement shall survive the
Closing for the Survival Period. Notwithstanding any investigation or audit
conducted before or after the Closing Date or the decision of any party to
complete the Closing, each party shall be entitled to rely upon the
representations and warranties set forth herein and therein.
12.17 COUNTERPARTS. This Agreement may be executed in any number of
counterparts and any party hereto may execute any such counterpart, each of
which when executed and delivered shall be deemed to be an original and all of
which counterparts taken together shall constitute but one and the same
instrument. This Agreement shall become binding when one or more counterparts
taken together shall have been executed and delivered by the parties. It shall
not be necessary in making proof of this Agreement or any counterpart hereof to
produce or account for any of the other counterparts.
[Signature Page Follows]
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IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement on
the date first written.
NATIONAL ACTION FINANCIAL SERVICES, INC.
By: /S/
---------------------------
Michael W. Fletcher
Chief Executive Officer
SC ACQUISITION CORP.
By: /S/ James F. Lynch
---------------------------
Title: President
------------------------
SITEL CORPORATION
By: /S/ James F. Lynch
---------------------------
Title: CEO
------------------------
Stockholders' Representative
/S/
------------------------------------------------
Michael W. Fletcher, individually and in his
capacity as a Stockholders' Representative
pursuant to a Stockholders' Representative
Agreement dated as of June 6, 1996, by and among
Michael W. Fletcher and the NAFS Stockholders
signatory thereto
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EXHIBIT 2.3(b)
Registration Rights Agreement dated June 28, 1996
between the Company and Michael W. Fletcher,
as Stockholders' Representative
(conformed copy)
<PAGE>
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT ("Agreement") is entered into as of June
28, 1996, by and among SITEL CORPORATION, a Minnesota corporation ("SITEL") and
MICHAEL W. FLETCHER as Stockholders' Representative ("Stockholders'
Representative").
This Agreement is made in connection with a reverse triangular merger
involving a wholly-owned subsidiary of SITEL and National Action Financial
Services, Inc. ("NAFS"). In connection with such merger, SITEL has issued to
the Holders in the aggregate 1,371,226 shares of the Common Stock of SITEL (the
"Shares") and SITEL has agreed to grant to the Holders certain registration
rights with respect to a portion of the Shares as set forth in this Agreement.
The parties agree as follows:
Section 1. CERTAIN DEFINITIONS. In addition to the other terms defined
elsewhere in this Agreement, as used in this Agreement, the following terms
shall have the following respective meanings:
a. "ACT" means the Securities Act of 1933, as amended.
b. "COMMISSION" means the Securities and Exchange Commission or any
other federal agency at the time administering the Act.
c. "HOLDERS" means, collectively, the holders of Registrable
Securities, presently comprised of Michael W. Fletcher and the other
stockholders of NAFS, all of whom who are signatory to a Stockholders'
Representative Agreement dated as of June 6, 1996. The term "HOLDER"
refers to each of the Holders individually.
d. "REGISTRABLE SECURITIES" means sixty percent (60%) of (1) the
Shares held by Holders and (2) any shares of SITEL's Common Stock issued to
Holders as a dividend or other distribution with respect to, or in exchange
for or in replacement of such Shares, which Registrable Securities shall be
pro rata among the Holders in the same proportions as they hold Shares;
PROVIDED that Shares which would otherwise constitute Registrable
Securities shall cease to be Registrable Securities once they have been
sold to the public or otherwise sold, transferred or conveyed by a Holder.
e. The terms "REGISTER," "REGISTERED" and "REGISTRATION" refer to a
registration effected by preparing and filing a registration statement in
compliance with the Act
<PAGE>
and the declaration or ordering of effectiveness of such registration
statement.
Section 2. SHELF REGISTRATION. SITEL shall file a registration statement
with the Commission covering the Registrable Securities for a non-underwritten
offering to be made on a continuous or delayed basis in the future pursuant to
Rule 415 of the Act ("shelf registration"). SITEL may file such shelf
registration on such registration form as it may elect. SITEL shall use its
best efforts to cause such registration statement to become effective under the
Act as soon as practicable following the filing by SITEL of its 10-Q for its
first fiscal quarter ending August 31, 1996 with the Commission. Such 10-Q is
expected to contain the minimum 30 days post-merger combined results for NAFS
and SITEL which, under "pooling-of-interests" requirements, must be reported
before the Registrable Securities may be transferred. SITEL shall use its best
efforts to cause the shelf registration statement to remain effective until the
earliest of the following events (the "Expiration Date"): (i) expiration of two
(2) years after the effective time of the merger in which the Registrable
Securities were issued, (ii) expiration of the minimum holding period under
subsection (d) of Rule 144, as amended from time to time, after which persons
including affiliates may resell such Registrable Securities pursuant to Rule
144, or (iii) less than five percent (5%) of the Registrable Securities have not
been sold to the public and remain covered by the shelf registration statement.
Section 3. LIMITATIONS ON SHELF REGISTRATION. SITEL shall not be
required to prepare and file a registration statement pursuant to Section 2
hereof which would become effective within six (6) months following the
effective date of a registration statement (other than a registration statement
filed on Form S-8 or any successor form) filed by SITEL with the Commission
pertaining to an underwritten public offering of securities for cash for the
account of SITEL. SITEL shall have the right to suspend or delay for up to and
including ninety (90) consecutive days (the "Delay Period") the effectiveness of
the shelf registration filed pursuant to Section 2 at any time under certain
circumstances described in this Section 3 upon five (5) days advance written
notice to the Stockholders' Representative (the "Delay Notice"), and the Holders
agree that they shall not make any offers or sales of their Registrable
Securities pursuant to the shelf registration during the Delay Period and the
Stockholders' Representative shall execute and deliver to SITEL any documents
reasonably requested by SITEL to further evidence such agreement on the part of
the Holders; PROVIDED that if SITEL exercises its right to delay the shelf
registration under such circumstances SITEL shall either (a) use its best
efforts to cause the shelf registration to become effective as to the remaining
Registrable Securities as soon as practicable following the conclusion of such
Delay Period and to remain in effect until the Expiration Date or (b) include
the
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<PAGE>
remaining Registrable Securities in another registration statement filed by
SITEL and use its best efforts to cause such other registration statement to
become effective as soon as practicable following the conclusion of such Delay
Period and to remain in effect for a period of not less than ninety (90) days
(or such shorter period in which all of the Registrable Securities of the
Holders included in such registration statement shall have been sold
thereunder); and PROVIDED further that during the period beginning with the date
of this Agreement and ending six months after the date that the shelf
registration first becomes effective (plus such number of additional days
comprising the total of any Delay Periods that occur during such six month
period) SITEL shall not be entitled to give a Delay Notice with respect to
another registered offering unless all of the remaining Registrable Securities
which the Holders desire to be included are included on a firmly underwritten
basis or, in the case of a best efforts underwritten offering, are all included
in such offering and are sold on the same basis as that of all other selling
stockholders of SITEL. The certain circumstances permitting delay by SITEL
include the determination in good faith by SITEL's Board of Directors, legal
counsel, and, if applicable, the managing underwriter that continuing the shelf
registration's effectiveness at such time would force premature disclosure of
major transactions or preclude SITEL from engaging in or impede significant
transactions which SITEL's Board of Directors deems advisable such as additional
registered offerings, additional pooling acquisitions, or share buy-backs.
Section 4. PIGGYBACK REGISTRATION. If, at any time and from time to time
during a period commencing on the date hereof and ending on the Expiration Date,
SITEL shall propose to register in a public offering any of its common stock to
be offered for cash pursuant thereto (whether for SITEL's account or for the
account of other shareholders, other than (i) any registration on Form S-4 or
Form S-8 or any successor form, or (ii) a registration solely for the account of
James F. Lynch following termination of his employment with SITEL pursuant to
the demand registration rights granted to him in connection with his employment
agreement, it shall give written notice ("SITEL's Notice") to all Holders of
Registrable Securities of its intention to file such registration statement (a
"SITEL registered offering") at least thirty (30) days prior to filing such
registration statement with the Commission. If any Holder of Registrable
Securities desires to dispose of all or part of such Holder's Registrable
Securities in connection with such SITEL registered offering, it may request
inclusion of all or part of such Holder's Registrable Securities in the
registration statement for such SITEL registered offering by delivering to
SITEL, within twenty (20) days after receipt of SITEL's Notice, written notice
of such request (collectively, the "Holder's Notices" and individually a
"Holder's Notice") stating the number of shares of Holder's Registrable
Securities to be included. SITEL shall use its best efforts to cause all shares
of Registrable
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<PAGE>
Securities specified in the Holder's Notice to be included in the registration
statement for SITEL's registered offering so as to permit the sale or other
disposition by such Holder of such shares of Registrable Securities in SITEL's
registered offering (in which case such Holder's shares of Registrable
Securities would be deregistered from any concurrent shelf registration in
Section 2), subject however, to the limitations set forth in Section 5 hereof.
Section 5. LIMITATIONS ON PIGGYBACK REGISTRATION. SITEL shall have the
right to limit the aggregate size of the public offering to be made by SITEL or
the number of shares of Registrable Securities to be included therein pursuant
to Section 4 by holders of Registrable Securities if requested to do so in good
faith by the managing underwriter of the offering on the grounds that such size
offering or the inclusion of such shares would jeopardize the success of the
offering. Whenever the number of shares of Registrable Securities which may be
registered pursuant to Section 4 is limited by the provisions of this Section 5,
SITEL shall include in such registration (i) first, the securities SITEL
proposes to sell, and (ii) second, the shares of Registrable Securities
requested to be sold by the Holders and all other selling stockholders of SITEL,
pro rata among such Holders and such other selling stockholders in proportion to
the aggregate number of shares of SITEL owned by such Holders and such other
selling stockholders which they proposed to be sold in such offering; provided,
however, in the event of a registration requested by persons other than the
Holders pursuant to a demand registration right, the securities requested to be
sold by such persons shall have priority for inclusion over the securities
requested to be sold by the Holders and by all other selling stockholders.
Section 6. REGISTRATION PROCEDURES.
a. If and when SITEL is required by the provisions of this Agreement
to use its best efforts to effect the registration of shares of Registrable
Securities, SITEL shall:
(i) Prepare and file with the Commission a registration
statement with respect to such shares and use its best efforts to
cause such registration statement to become and remain effective by
the times and for the periods provided herein;
(ii) Prepare and file with the Commission such supplements
or amendments to such registration statement and supplements to the
prospectuses used in connection therewith as may be necessary to keep
such registration statement effective and current for the periods
provided herein;
(iii) Furnish to the Holders such reasonable number of copies
of the registration statement,
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<PAGE>
preliminary prospectus, final prospectus and such other documents as the
Holders may reasonably request to facilitate the public offering of the
Registrable Securities;
(iv) Use its best efforts to register or qualify the shares
covered by such registration statement under such other securities or
Blue Sky or other applicable laws of such jurisdictions as the Holders
shall reasonably request; provided, however, SITEL shall not be
obligated to qualify to do business in such jurisdiction or consent to
general service of process in such jurisdiction;
(v) Notify counsel for the Holders, promptly after it shall
receive notice thereof, of the time when such registration statement
has become effective under the Securities Act and the blue sky laws or
a supplement to any prospectus forming a part of such registration
statement has been filed;
(vi) Notify counsel for the Holders promptly of any request
by the Commission for the amending or supplementing of such
registration statement or prospectus or for additional information;
(vii) Prepare and file with the Commission and blue sky
authorities, promptly upon the request of the Holders, any amendments
or supplements to such registration statement or prospectus which, in
the reasonable opinion of counsel for the Holders (and reasonably
concurred in by counsel for SITEL), is required under the Securities
Act or the rules and regulations thereunder in connection with the
distribution of the Registrable Securities;
(viii) Prepare and promptly file with the Commission and
promptly notify counsel for the Holders of the filing of such
amendment or supplement to any such registration statement or
prospectus as may be necessary to correct any statements or omissions
if, at the time when a prospectus relating to the Registrable
Securities is required to be delivered under the Securities Act, any
event shall have occurred as the result of which any such prospectus
or any other prospectus as then in effect would include an untrue
statement of a material fact or omit to state any material fact
necessary to make the statements therein, in the light of the
circumstances in which they were made, not misleading;
(ix) Advise counsel for the Holders, promptly after it shall
receive notice or obtain knowledge
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<PAGE>
thereof, of the issuance of any stop order by the Commission
suspending the effectiveness of such registration statement under the
Securities Act or the initiation or threatening of any proceeding for
such purpose, and promptly use its best efforts to prevent the
issuance of any stop order or to obtain its withdrawal if such stop
order should be issued;
(x) Not file any amendment or supplement to such
registration statement or prospectus if, in the opinion of counsel for
the Holders, such amendment or supplement does not comply in all
material respects with the requirements of the Act or the rules and
regulations thereunder, after having been furnished with a copy
substantially in the form thereof at least five business days before
the filing thereof; provided, however, that if in the opinion of
counsel for SITEL the filing of such amendment or supplement is
reasonably necessary to protect SITEL from any liabilities under any
applicable federal or state law and such filing will not violate
applicable law, SITEL may make such filings; and
(xi) Use its best efforts to cause all such Registrable
Securities to be listed on each securities exchange or over-the-counter
market on which similar securities issued by SITEL are then listed and
file all required listing applications and pay all required fees in
connection with such listings.
(xii) Cooperate with Holders in effecting the transfer of any
shares sold pursuant to a registration effected hereunder.
Section 7. EXPENSES OF REGISTRATION. Except as provided below, all
expenses incurred by SITEL in effecting any registration requested pursuant to
Section 2 and all expenses incurred by SITEL in effecting any registration
requested pursuant to Section 4 hereof, including, without limitation, all
registration and filing fees, printing expenses, expenses of compliance with
Blue Sky laws (including, without limitation, fees and disbursements of
underwriters counsel relating thereto), fees and disbursements of counsel for
SITEL, and expenses of any audits incidental to or required by any such
registration ("Registration Expenses") shall be borne by SITEL. However, SITEL
shall have no obligation to pay or otherwise bear (i) any underwriting discounts
or brokerage fees or commissions relating to the sale of Registrable Securities
by the Holders, or (ii) any Registration Expenses if the payment of such
expenses by SITEL is prohibited by the laws of a state in which such offering is
qualified and only to the extent so prohibited, or (iii) any expenses of any
compliance with Blue Sky laws which pertains only to an individual Holder, which
expenses
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<PAGE>
shall be borne by such individual Holder, or (iv) any fees and disbursements of
counsel for the Holders.
Section 8. INDEMNIFICATION.
(a) SITEL shall indemnify, hold harmless and defend each Holder, its
officers, directors, partners, legal counsel and accountants, each underwriter
of the Registrable Securities and each person who controls a Holder or any such
underwriter within the meaning of Section 15 of the Act and will reimburse such
Holder against any and all expenses, claims, losses, damages and liabilities (or
actions in respect thereof), including any of the foregoing incurred in
settlement of any litigation, commenced or threatened, arising out of or based
on any untrue statement (or alleged untrue statement) of a material fact
contained in any registration statement, prospectus, offering circular or other
document, or any amendment or supplement thereof, incident to any registration
or qualification of the Registrable Securities, or which arise out of or are
based on any omission (or alleged omission) to state therein a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances in which they were made, not misleading, or any
violation by SITEL of any rule or regulation promulgated under the Act or any
state securities laws applicable to SITEL and relating to action or inaction
required of SITEL in connection with any such registration, qualification or
compliance, and will reimburse each such indemnified party for any legal and any
other expenses reasonably incurred by them in connection with investigating,
preparing or defending any such claim, loss, damage, liability or action,
provided that SITEL will not be liable in any such case to the extent that any
such claim, loss, damage, liability or expense arises out of or is based on any
untrue statement or omission, made in reliance upon and in conformity with
written information furnished to SITEL by an instrument duly executed by or on
behalf of such Holder or and such underwriter and stated to be specifically for
use therein.
(b) Each Holder shall, if Registrable Securities held by such Holder
are included in the securities as to which such registration, qualification or
compliance is being effected, indemnify SITEL, and each of its officers,
directors, legal counsel and accountants, and each person who controls SITEL
within the meaning of Section 15 of the Act, against all claims, losses, damages
and liabilities (or actions in respect thereof) arising out of or based on any
untrue statement (or alleged untrue statement) of a material fact contained in
any such registration statement, prospectus, offering circular or other
document, or any omission (or alleged omission) to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, and will reimburse each such indemnified person for any legal or any
other expenses reasonably incurred in connection with investigating or defending
any such claim, loss, damage, liability
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<PAGE>
or action, in each case to the extent, but only to the extent, that such untrue
statement (or alleged omission) is made in such registration statement,
prospectus, offering circular or other document in reliance upon and in strict
conformity with written information furnished to SITEL by an instrument duly
executed by or on behalf of such Holder and stated to be specifically for use
therein. Each Holder's obligation for indemnification pursuant to this Section
8(b) is several in the proportion that the proceeds of the offering received by
such Holder bears to the total proceeds of the offering received by all such
Holders and not joint.
(c) Each person to be indemnified pursuant to this Section 8 (the
"Indemnified Party") shall, promptly after its receipt of written notice of the
commencement of any action against such Indemnified Party in respect of which
indemnity may be sought from an indemnifying person under this Section 8 (the
"Indemnifying Party") notify the Indemnifying Party in writing of the
commencement thereof, PROVIDED, however, that the failure of any person to give
notice as provided herein shall not relieve the Indemnifying Party of its
obligations under this Agreement except to the extent that such Indemnifying
Party is actually prejudiced by such failure to give notice. If any such action
shall be brought against any Indemnified Party and it shall notify an
Indemnifying Party of the commencement thereof, the Indemnifying Party will be
entitled to participate therein and, to the extent it may desire, jointly with
any other Indemnifying Party similarly notified, to assume the defense thereof
with counsel satisfactory to such Indemnified Party, and after notice from the
Indemnifying Party to such Indemnified Party of its election so to assume the
defense thereof, the Indemnifying Party will not be liable to such Indemnified
Party under this Section 8 for any legal or other expenses subsequently incurred
by such Indemnified Party in connection with the defense thereof other than
reasonable costs of investigation unless (i) the Indemnified Party shall have
employed counsel in an action in which the Indemnified Party and Indemnifying
Party are both defendants and there is a conflict of interest between such
parties that would prevent counsel from adequately representing both parties,
(ii) the Indemnifying Party shall not have employed counsel satisfactory within
the exercise of reasonable judgment of the Indemnified Party to represent the
Indemnified Party within a reasonable time after the notice of the commencement
of the action or (iii) the Indemnifying Party has authorized the employment of
counsel for the Indemnified Party at the expense of the Indemnifying Party. The
undertaking contained in this Section 8 shall be in addition to any liabilities
which the Indemnifying Party may have pursuant to law.
(d) If the indemnification provided for in this Section 8 is held by
a court of competent jurisdiction to be unavailable to an Indemnified Party with
respect to any loss, liability, claim, damage or expense referred to therein,
then the Indemnifying Party, in lieu of indemnifying such Indemnified Party
thereunder, shall
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<PAGE>
contribute to the amount paid or payable by such Indemnified Party as a result
of such loss, liability, claim, damage or expense in such proportion as is
appropriate to reflect the relative fault of the Indemnifying Party on the one
hand and of the Indemnified Party on the other in connection with the
statements, actions or omissions which resulted in such loss, liability, claim,
damage or expense as well as any other relevant equitable considerations. The
relative fault of the Indemnifying Party and of the Indemnified Party shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission to state a material fact
relates to information supplied by the Indemnifying Party or by the Indemnified
Party and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission.
Section 9. NO TRANSFER OF REGISTRATION RIGHTS. The rights to cause SITEL
to register securities granted to a Holder under Sections 2 and 4 may not be
transferred or assigned by any Holder.
Section 10. LOCK-UP AGREEMENT. Each Holder of Registrable Securities
agrees in connection with any firmly underwritten public offering of SITEL's
common stock that, upon request of SITEL or the underwriters managing any
underwritten offering of SITEL's securities, such Holder shall not sell, make
any short sale of, loan, grant any option for the purchase of, or otherwise
dispose of any Registrable Securities (other than those included in such firmly
underwritten public offering) without the prior written consent of SITEL or such
underwriters, as the case may be, for such period of time (not to exceed 90
days) from the effective date of such registration as may be requested by such
managing underwriters; provided, however, that the Holders shall have no
obligation to enter into such lock-up agreement described herein unless all
executive officers, directors and holders of more than 10% of the SITEL's
outstanding Common Stock enter into similar agreements. In order to enforce the
foregoing covenant, SITEL may impose stop-transfer instructions with respect to
the Registrable Securities until the end of such lock-up period.
Section 11. RULE 144 AVAILABILITY. With a view to making available to the
Holders the benefits of certain rules and regulations of the Commission which at
any time permit the sale of the Registrable Securities to the public without
registration, SITEL agrees, for a period of three years after the date of this
Agreement, to:
(a) make and keep adequate current public information available, as
such terms are understood and defined in Rule 144 under the Act, at all
times;
(b) file with the Commission in a timely manner all reports and other
documents required of SITEL under the Act and the Securities and Exchange
Act of 1934, as amended; and
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(c) so long as any Holder owns any unregistered Registrable
Securities, furnish to such Holder forthwith upon request a written
statement by SITEL as to its compliance with the reporting requirements of
said Rule 144 and of the Act and Exchange Act, a copy of the most recent
annual or quarterly report of SITEL and such other reports and documents of
SITEL as the Holder may reasonably request in availing Holder of any rule
or regulation of the Commission allowing the sale of any such securities
without registration.
Section 12. AMENDMENT. Any modification, amendment, or waiver of this
Agreement or any provision hereof shall be effective only if in writing and
executed by the Holders and SITEL.
Section 13. GOVERNING LAW. This Agreement shall be governed in all
respects by the laws of the State of Nebraska without regard to its conflicts of
laws principles.
Section 14. SUCCESSORS AND ASSIGNS. Except as otherwise expressly
provided herein, the provisions hereof shall inure to the benefit of, and be
binding upon, the successors, assigns, heirs, executors and administrators of
the parties hereto.
Section 15. NOTICES. All notices and other communications required or
permitted hereunder shall be in writing and shall either be delivered personally
or by facsimile or be mailed by first class mail, postage prepaid, addressed as
follows:
If to a Holder, to such Holder in care of:
Michael W. Fletcher
Stockholders' Representative
National Action Financial Services, Inc.
2877 Brandywine Road, Suite 300
Atlanta, Georgia 30341
Facsimile: (770) 936-0699
If to SITEL:
SITEL Corporation
13215 Birch Street, Suite 100
Omaha, Nebraska 68164
Attention: President
Facsimile: (402) 498-2699
or at such other address as either party shall have furnished to the other party
in writing. All notices shall be deemed effective (a) when received, if
personally delivered or sent by facsimile or sent by overnight delivery, or (b)
three days after deposit in the regular U.S. mail, if mailed as set forth above.
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Section 16. SEVERABILITY. If any provision of this Agreement shall be
judicially determined to be invalid, illegal or unenforceable, the validity,
legality and enforceability of the remaining provisions of this Agreement shall
not in any way be affected or impaired thereby.
Section 17. ENTIRE AGREEMENT. This Agreement constitutes the full and
entire understanding and agreement between the parties with regard to the
subject matter hereof.
Section 18. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.
[SIGNATURES ON FOLLOWING PAGE]
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IN WITNESS WHEREOF, the parties have caused this Registration Rights
Agreement to be executed by their respective representatives thereunto duly
authorized as of the date first above written.
SITEL Corporation, a Minnesota corporation
By: /S/ MICHAEL P. MAY
----------------------------------
Title: PRESIDENT
-------------------------------
STOCKHOLDERS' REPRESENTATIVE
/S/
----------------------------------------------
Michael W. Fletcher, individually and in his
capacity as a Stockholders' Representative
pursuant to a Stockholders' Representative
Agreement dated as of June 6, 1996, by and among
Michael W. Fletcher and the NAFS Stockholders
signatory thereto
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