UNITED STATES
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): April 10, 2003
USA INTERACTIVE
(Exact name of Registrant as specified in charter)
Delaware 0-20570 59-2712887
(State or other (Commission File (IRS Employer
jurisdiction Number) Identification No.)
of incorporation)
152 West 57th Street, New York, NY 10019
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code:
(212) 314-7300
ITEM 5. OTHER EVENTS AND REGULATION FD DISCLOSURE
On April 10, 2003, USA Interactive, a Delaware corporation (the
"Company"), issued a joint press release with Hotels.com, a Delaware corporation
("Hotels") announcing that the Company had entered into an Agreement and Plan of
Merger, dated as of April 9, 2003 (the "Merger Agreement"), by and among the
Company, Hermitage Merger Corp., a Delaware corporation and wholly owned
subsidiary of the Company, and Hotels. Copies of the Merger Agreement and the
joint press release issued by the Company and Hotels are attached as Exhibits
2.1 and 99.1 hereto, respectively, and are incorporated herein by reference.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
(c) Exhibits.
2.1 Agreement and Plan of Merger, dated as of April 9, 2003, by and among
USA Interactive, Hermitage Merger Corp. and Hotels.com.
99.1 Joint Press Release issued by USA Interactive and Hotels.com.
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.
USA INTERACTIVE
By: /s/ Julius Genachowski
-----------------------------------
Name: Julius Genachowski
Title: Executive Vice President,
General Counsel and Secretary
Date: April 10, 2003
EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION
2.1 Agreement and Plan of Merger, dated as of April 9, 2003, by and
among USA Interactive, Hermitage Merger Corp. and Hotels.com.
99.1 Joint Press Release issued by USA Interactive and Hotels.com.
Exhibit 2.1
EXECUTION COPY
=============================================================================
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
USA INTERACTIVE
HERMITAGE MERGER CORP.
AND
HOTELS.COM
AS OF APRIL 9, 2003
=============================================================================
TABLE OF CONTENTS
PAGE
ARTICLE 1 THE MERGER.....................................................2
Section 1.1. The Merger..............................................2
Section 1.2. Effective Time of the Merger............................2
Section 1.3 Closing.................................................2
Section 1.4. Effects of the Merger...................................2
Section 1.5. Certificate of Incorporation and Bylaws of Surviving
Corporation; Directors and Officers.....................2
ARTICLE 2 EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE
CONSTITUENT CORPORATIONS; EXCHANGE OF CERTIFICATES.............3
Section 2.1. Effect of Merger on Capital Stock.......................3
Section 2.2. Exchange of Certificates................................4
Section 2.3. Stock Compensation Awards...............................7
Section 2.4. Company Warrants........................................8
Section 2.5. Further Assurances......................................8
ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF THE COMPANY..................9
Section 3.1. Organization and Qualification..........................9
Section 3.2. Capitalization..........................................9
Section 3.3. Authority Relative to this Agreement; Board Approval...10
Section 3.4. No Conflict; Required Filings and Consents.............11
Section 3.5. Compliance with Laws...................................12
Section 3.6. SEC Filings; Financial Statements......................12
Section 3.7. Registration Statement; Information Statement..........13
Section 3.8. Brokers................................................13
Section 3.9. Opinion of Financial Advisor...........................13
Section 3.10. Employee Benefit Plans.................................14
Section 3.11. Tax Matters............................................15
Section 3.12. Litigation.............................................15
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB..............15
Section 4.1. Organization and Qualification.........................15
Section 4.2. Capitalization.........................................16
Section 4.3. Authority Relative to this Agreement;
Board Approval.........................................17
Section 4.4. No Conflict; Required Filings and Consents.............17
Section 4.5. Compliance with Laws...................................18
Section 4.6. SEC Filings; Financial Statements......................18
Section 4.7. Registration Statement; Information Statement..........19
Section 4.8. Brokers................................................19
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Section 4.9. Interim Operations of Sub..............................19
Section 4.10. Tax Matters............................................19
Section 4.11. Litigation.............................................20
Section 4.12. Ownership of Company Shares............................20
ARTICLE 5 CONDUCT AND TRANSACTIONS PRIOR TO EFFECTIVE TIME;
ADDITIONAL AGREEMENTS.........................................20
Section 5.1. Information and Access.................................20
Section 5.2. Conduct of Business of the Company.....................20
Section 5.3. Conduct of Business of Parent..........................22
Section 5.4. Preparation of S-4 and Information
Statement; Other Filings...............................22
Section 5.5. Written Consent........................................23
Section 5.6. Agreements to Take Reasonable Action...................24
Section 5.7. Consents...............................................24
Section 5.8. NASDAQ Quotation.......................................25
Section 5.9. Affiliates.............................................25
Section 5.10. Indemnification........................................25
Section 5.11. Notification of Certain Matters........................26
Section 5.12. Employee Agreements....................................26
Section 5.13. Reorganization.........................................27
Section 5.14. Public Announcements...................................27
Section 5.15. Stockholder Litigation.................................27
Section 5.16. Section 16b-3..........................................27
ARTICLE 6 CONDITIONS PRECEDENT..........................................27
Section 6.1. Conditions to Each Party's Obligation
to Effect the Merger...................................27
Section 6.2. Conditions of Obligations of Parent and Sub............28
Section 6.3. Conditions of Obligations of the Company...............29
ARTICLE 7 TERMINATION...................................................29
Section 7.1. Termination............................................29
Section 7.2. Effect of Termination..................................30
Section 7.3. Fees and Expenses......................................30
ARTICLE 8 GENERAL PROVISIONS............................................30
Section 8.1. Amendment..............................................30
Section 8.2. Extension; Waiver......................................30
Section 8.3. Nonsurvival of Representations,
Warranties and Agreements..............................31
Section 8.4. Entire Agreement.......................................31
Section 8.5. Severability...........................................31
Section 8.6. Notices................................................31
Section 8.7. Headings; Interpretation...............................33
Section 8.8. Counterparts...........................................33
Section 8.9. Benefits; Assignment...................................33
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Section 8.10. Governing Law..........................................33
EXHIBIT A Form of Restated Certificate of Incorporation of
Hotels.com
EXHIBIT B Form of Company Affiliate Letter
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INDEX OF DEFINED TERMS
TERM SECTION
"Agreement"..................................... Preamble
"Approved Matter"............................... Section 3.1
"Business Day".................................. Section 1.3
"Certificate of Merger"......................... Section 1.2
"Certificates".................................. Section 2.2(b)
"Closing"....................................... Section 1.3
"Closing Date".................................. Section 1.3
"Code".......................................... Recitals
"Common Shares Trust"........................... Section 2.2(e)(iii)
"Company"....................................... Preamble
"Company Banker"................................ Section 3.8
"Company Benefit Plans"......................... Section 3.10(a)
"Company Class B Common Stock".................. Section 2.1(a)
"Company Common Stock".......................... Section 2.1(a)
"Company Disclosure Letter"..................... Section 3.2
"Company Material Adverse Effect"............... Section 3.1
"Company Option"................................ Section 2.3(a)
"Company Preferred Stock"....................... Section 3.2
"Company SEC Reports"........................... Section 3.6(a)
"Company Significant Subsidiaries".............. Section 3.1
"Company Stock-Based Award"..................... Section 2.3(b)
"Company Warrant"............................... Section 2.4
"Constituent Corporations"...................... Section 1.1
"Covered Persons"............................... Section 5.10(c)
"Delaware Statute".............................. Recitals
"D&O Insurance"................................. Section 5.10(c)
"Effective Time"................................ Section 1.2
"ERISA"......................................... Section 3.10(a)
"ERISA Plan".................................... Section 3.10(a)
"Excess Shares"................................. Section 2.2(e)(ii)
"Exchange Act".................................. Section 3.4(b)
"Exchange Agent"................................ Section 2.2(a)
"Exchange Fund"................................. Section 2.2(a)
"Exchange Ratio"................................ Section 2.1(c)
"GAAP".......................................... Section 3.6(b)
"Governmental Entity"........................... Section 3.4(b)
"Information Statement/Prospectus".............. Section 5.4
"Merger"........................................ Recitals
"Merger Consideration".......................... Section 2.1(c)
"Multiemployer Plan"............................ Section 3.10(a)
"NASD".......................................... Section 2.2(e)(iii)
"Other Filings" ................................ Section 5.4
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"Parent"........................................ Preamble
"Parent Banker"................................. Section 4.8
"Parent Class B Common Stock"................... Section 4.2
"Parent Common Stock"........................... Section 2.1(c)
"Parent Disclosure Letter"...................... Section 4.2
"Parent Material Adverse Effect"................ Section 4.1
"Parent Preferred Stock"........................ Section 4.2
"Parent Proxy Statement"........................ Section 4.2
"Parent SEC Reports"............................ Section 4.6(a)
"Parent Significant Subsidiaries"............... Section 4.1
"Parent Stock-Based Award"...................... Section 2.3(b)
"Parent Warrant"................................ Section 2.4
"S-4"........................................... Section 3.7
"SEC"........................................... Section 3.1
"Securities Act"................................ Section 3.6(a)
"Special Committee"............................. Recitals
"Stock Plans"................................... Section 2.3(a)
"Sub"........................................... Preamble
"Sub Common Stock".............................. Section 2.1(a)
"subsidiary".................................... Section 8.7
"Surviving Corporation"......................... Section 1.1
"Surviving Corporation Common Stock"............ Section 2.1(a)
"Transactions".................................. Sections 3.3(a)
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AGREEMENT AND PLAN OF MERGER, dated as of April 9, 2003 (this
"AGREEMENT"), by and among USA INTERACTIVE, a Delaware corporation ("PARENT"),
HERMITAGE MERGER CORP., a Delaware corporation and direct wholly owned
subsidiary of Parent ("SUB"), and HOTELS.COM, a Delaware corporation (the
"COMPANY").
W I T N E S S E T H:
WHEREAS, the Boards of Directors of Parent, Sub, and the Company deem
it advisable and in the best interests of their respective corporations and
stockholders that Parent and the Company enter into a business combination
pursuant to which Parent would acquire the issued and outstanding shares of the
Company that it does not already own;
WHEREAS, to effect such business combination, upon the terms and
subject to the conditions set forth herein and the General Corporation Law of
the State of Delaware (the "DELAWARE STATUTE"), Sub will merge with and into the
Company with the Company continuing as the surviving corporation (the "MERGER");
WHEREAS, upon consummation of the Merger, the Company will become a
wholly owned subsidiary of Parent;
WHEREAS, simultaneously with the execution hereof, Parent has entered
into an amendment to that certain Amended and Restated Asset Purchase Agreement
by and among the Company, Parent, TMF, Inc., HRN Marketing Corp., David Litman
and Robert Diener, providing for the transfer restrictions on the shares of
Company Common Stock beneficially owned by them to continue with respect to
shares of Parent Common Stock received in respect of their shares of restricted
Company Common Stock;
WHEREAS, for U.S. federal income tax purposes, it is intended that
the Merger and the transactions contemplated thereby shall qualify as a
"reorganization" within the meaning of Section 368(a) of the Internal Revenue
Code of 1986, as amended (the "CODE"); and
WHEREAS, the Board of Directors of the Company has established a
Special Committee thereof (the "SPECIAL COMMITTEE") and has delegated to the
Special Committee the authority to, among other things, negotiate the terms and
conditions of this Agreement, retain separate outside legal counsel and a
separate financial advisor and recommend to the full Board of Directors of the
Company whether the Board of Directors of the Company should approve and declare
the advisability of this Agreement; and
WHEREAS, the Special Committee, after having consulted with its legal
and financial advisors, has determined that the Merger is fair to, and in the
best interests of, the holders of Company Common Stock (as defined herein) other
than Parent and its subsidiaries, and has recommended to the full Board of
Directors of the Company that the Board of Directors of the Company approve and
declare the advisability of this Agreement, and a majority of the directors of
the Company has approved and declared the advisability of this Agreement;
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth in this
Agreement, and intending to be legally bound hereby, the parties hereto agree as
follows:
ARTICLE 1
THE MERGER
SECTION 1.1. THE MERGER. Upon the terms and subject to the conditions of
this Agreement and in accordance with the Delaware Statute, at the Effective
Time, Sub shall be merged with and into the Company. Following the Merger, the
Company shall continue as the surviving corporation (the "SURVIVING
CORPORATION") and the separate corporate existence of Sub shall cease. Sub and
the Company are collectively referred to as the "CONSTITUENT CORPORATIONS."
SECTION 1.2. EFFECTIVE TIME OF THE MERGER. Subject to the provisions of
this Agreement, the Merger shall become effective (the "EFFECTIVE TIME") upon
the filing of a properly executed certificate of merger (the "CERTIFICATE OF
MERGER") with the Secretary of State of the State of Delaware in accordance with
the Delaware Statute, or at such later time as agreed to by the parties and set
forth in the Certificate of Merger.
SECTION 1.3. CLOSING. Unless this Agreement shall have been terminated
pursuant to Section 7.1, the closing of the Merger (the "CLOSING") will take
place at 10:00 a.m. on a date (the "CLOSING DATE") to be mutually agreed upon by
the parties hereto, which date shall be no later than the third Business Day
after satisfaction of the latest to occur of the conditions set forth in Article
6 (other than those conditions that by their terms are to be satisfied at the
Closing), unless another date is agreed to in writing by the parties hereto. The
Closing shall take place at the offices of Wachtell, Lipton, Rosen & Katz, 51
West 52nd Street, New York, New York 10019, unless another place is agreed to in
writing by the parties hereto. "BUSINESS DAY" shall mean any day, other than a
Saturday, Sunday or legal holiday on which banks are permitted to close in the
City and State of New York.
SECTION 1.4. EFFECTS OF THE MERGER. At the Effective Time: (a) the separate
existence of Sub shall cease and Sub shall be merged with and into the Company,
with the result that the Company shall be the Surviving Corporation, and (b) the
Merger shall have all of the effects provided by the Delaware Statute.
SECTION 1.5. CERTIFICATE OF INCORPORATION AND BYLAWS OF SURVIVING
CORPORATION; DIRECTORS AND OFFICERS. At the Effective Time, (a) the Certificate
of Incorporation of the Company shall be amended so as to read in its entirety
in the form set forth as EXHIBIT A hereto, and, as so amended, until thereafter
and further amended as provided therein and under the Delaware Statute it shall
be the Certificate of Incorporation of the Surviving Corporation, (b) the Bylaws
of Sub shall become the Bylaws of the Surviving Corporation until altered,
amended or repealed as provided under the Delaware Statute or in the Certificate
of Incorporation or Bylaws of the Surviving Corporation, (c) the directors of
Sub shall become the initial directors of the Surviving Corporation, such
directors to hold office from the Effective Time until their respective
successors are duly elected or appointed as provided in the Certificate of
Incorporation and Bylaws of the Surviving Corporation, and (d) the officers of
the Company shall continue as the officers of the Surviving Corporation until
such time as their respective successors are duly elected as provided in the
Bylaws of the Surviving Corporation.
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ARTICLE 2
EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE
CONSTITUENT CORPORATIONS; EXCHANGE OF CERTIFICATES
SECTION 2.1. EFFECT OF MERGER ON CAPITAL STOCK. At the Effective Time,
subject and pursuant to the terms of this Agreement, by virtue of the Merger and
without any action on the part of the Constituent Corporations or the holders of
any shares of capital stock of the Constituent Corporations:
(a) CAPITAL STOCK OF SUB. Each issued and outstanding share of common
stock, $0.01 par value per share, of Sub ("SUB COMMON STOCK") shall be converted
into and exchanged for a one share of common stock, $0.01 par value per share,
of the Surviving Corporation ("SURVIVING CORPORATION COMMON STOCK") with the
same rights, powers and privileges as the shares so converted and shall
constitute the only outstanding shares of capital stock of the Surviving
Corporation.
(b) TREATMENT OF CERTAIN COMPANY SHARES. Each share of Class A common stock
of the Company, par value $0.01 per share ("COMPANY COMMON STOCK") that is owned
by the Company as treasury stock or by Parent, and each share of Class B common
stock, par value $0.01 per share of the Company ("COMPANY CLASS B COMMON
STOCK"), shall be cancelled and retired and shall cease to exist.
(c) EXCHANGE RATIO FOR COMPANY STOCK. Each share of Company Common Stock
issued and outstanding immediately prior to the Effective Time (other than
shares of Company Common Stock subject to Section 2.1(b)) shall, subject to
Section 2.1(d), be converted into the right to receive 2.4 (the "EXCHANGE
RATIO") fully paid and nonassessable shares of common stock, $0.01 par value per
share, of Parent ("PARENT COMMON STOCK") (the "MERGER CONSIDERATION"). At the
Effective Time, all such shares of Company Common Stock shall no longer be
outstanding, and shall automatically be cancelled and retired and cease to
exist, and each holder of a certificate representing any such shares of Company
Stock shall cease to have any rights with respect thereto, except the right to
receive the shares of Parent Common Stock to be issued in consideration therefor
upon the surrender of such certificate in accordance with Section 2.2, without
interest. No fractional shares of Parent Common Stock shall be issued; and, in
lieu thereof, a cash payment shall be made pursuant to Section 2.2(e).
(d) ADJUSTMENT OF EXCHANGE RATIO FOR DILUTION AND OTHER MATTERS. If,
between the date of this Agreement and the Effective Time, the outstanding
shares of Parent Common Stock or Company Common Stock shall have been changed
into a different number of shares or a different class by reason of any
reclassification, recapitalization, reorganization, split-up, stock dividend
(including any dividend or distribution of securities convertible into, or
exercisable or exchangeable for, Parent Common Stock or Company Common Stock),
stock combination, exchange of shares, readjustment or otherwise, as the case
may be, or either Parent or the Company declares any other dividend or
distribution with respect to Parent Common Stock or Company Common Stock,
respectively, with a record date occurring prior to the Effective Time, then the
Exchange Ratio and the Merger Consideration shall, without duplication, be
correspondingly adjusted.
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SECTION 2.2. EXCHANGE OF CERTIFICATES.
(a) EXCHANGE AGENT. Prior to the Closing Date, Parent shall select the Bank
of New York or another bank or trust company reasonably acceptable to the
Company to act as exchange agent in the Merger (the "EXCHANGE AGENT"). Prior to
the Effective Time, Parent shall deposit with the Exchange Agent, for the
benefit of the holders of shares of Company Common Stock, for exchange in
accordance with this Article 2, certificates representing the shares of Parent
Common Stock (such shares of Parent Common Stock, together with any dividends or
distributions with respect thereto, the "EXCHANGE FUND") issuable pursuant to
Section 2.1(c) at the Effective Time in exchange for outstanding shares of
Company Common Stock, which shall include such shares of Parent Common Stock to
be sold by the Exchange Agent pursuant to Section 2.2(e).
(b) EXCHANGE PROCEDURES. As soon as practicable after the Effective Time,
Parent shall cause the Exchange Agent to mail to each holder of record (other
than the Company, Parent, Sub and any wholly owned subsidiary of the Company) of
a certificate or certificates that immediately prior to the Effective Time
represented issued and outstanding shares of Company Common Stock (collectively,
the "CERTIFICATES") whose shares were converted into the right to receive Parent
Common Stock pursuant to Section 2.1(c), (i) a letter of transmittal (which
shall specify that delivery shall be effected, and risk of loss and title to the
Certificates shall pass, only upon delivery of the Certificates to the Exchange
Agent and shall be in such form and have such other provisions as Parent and the
Company may reasonably specify) and (ii) instructions for use in effecting the
surrender of the Certificates in exchange for certificates representing Parent
Common Stock and any cash in lieu of fractional shares of Parent Common Stock.
Upon surrender of a Certificate for cancellation to the Exchange Agent, together
with a duly executed letter of transmittal and such other documents as may be
reasonably required by the Exchange Agent, the holder of such Certificate shall
be entitled to receive in exchange therefor a certificate representing that
number of whole shares of Parent Common Stock which such holder has the right to
receive pursuant to the provisions of this Article 2 and any cash in lieu of
fractional shares of Parent Common Stock, and the Certificate so surrendered
shall forthwith be cancelled. In the event of a transfer of ownership of shares
of Company Common Stock which is not registered on the transfer records of the
Company, a certificate representing the proper number of shares of Parent Common
Stock and any cash in lieu of fractional shares of Parent Common Stock may be
issued and paid to a transferee if the Certificate representing such Company
Common Stock is presented to the Exchange Agent, accompanied by all documents
required to evidence and effect such transfer and by evidence that any
applicable stock transfer taxes have been paid. Until surrendered as
contemplated by this Section 2.2, each Certificate shall be deemed, from and
after the Effective Time, to represent only the right to receive upon such
surrender the certificate representing shares of Parent Common Stock and cash in
lieu of any fractional shares of Parent Common Stock as contemplated by this
Article 2 and the Delaware Statute. The consideration to be issued in the Merger
will be delivered by the Exchange Agent as promptly as practicable following
surrender of a Certificate and any other required documents. No interest will be
payable on such consideration, regardless of any delay in making payments.
(c) DISTRIBUTIONS WITH RESPECT TO UNSURRENDERED CERTIFICATES. No dividends
or other distributions declared or made after the Effective Time with respect to
Parent Common Stock with a record date after the Effective Time shall be paid to
the holder of any unsurrendered
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Certificate with respect to the shares of Parent Common Stock represented
thereby, and no cash payment in lieu of fractional shares shall be paid to any
such holder pursuant to Section 2.2(e) until the holder of record of such
Certificate shall surrender such Certificate. Subject to the effect, if any, of
applicable laws, following surrender of any such Certificate, there shall be
paid to the record holder of the certificates representing whole shares of
Parent Common Stock issued in exchange therefor or such holder's transferee
pursuant to Section 2.2(e), without interest, (i) at the time of such surrender,
the amount of any cash payable in lieu of a fractional share of Parent Common
Stock to which such holder is entitled pursuant to Section 2.2(e) and the amount
of dividends or other distributions on Parent Common Stock with a record date
after the Effective Time theretofore paid with respect to such whole shares of
Parent Common Stock, and (ii) at the appropriate payment date, the amount of
dividends or other distributions on Parent Common Stock with a record date after
the Effective Time but prior to surrender and a payment date subsequent to
surrender payable with respect to such whole shares of Parent Common Stock.
(d) NO FURTHER OWNERSHIP RIGHTS IN COMPANY COMMON STOCK. All shares of
Parent Common Stock issued upon the surrender for exchange of shares of Company
Common Stock in accordance with the terms of this Article 2 (plus any cash paid
pursuant to Section 2.2(c) or 2.2(e)) shall be deemed to have been issued (and
paid) in full satisfaction of all rights pertaining to such shares of Company
Common Stock. From and after the Effective Time, the stock transfer books of the
Company shall be closed with respect to the shares of Company Common Stock that
are outstanding immediately prior to the Effective Time, and there shall be no
further registration of transfers on the stock transfer books of the Company or
the Surviving Corporation of the shares of Company Common Stock that were
outstanding immediately prior to the Effective Time. If, after the Effective
Time, Certificates are presented to the Surviving Corporation for any reason,
they shall be cancelled and exchanged as provided in this Article 2.
(e) NO ISSUANCE OF FRACTIONAL SHARES.
(i) No certificates or scrip for fractional shares of Parent Common
Stock shall be issued upon the surrender for exchange of Certificates, and
such fractional share interests will not entitle the owner thereof to vote
or to any rights of a stockholder of Parent.
(ii) As promptly as practicable following the Effective Time, the
Exchange Agent shall determine the excess of (A) the number of full shares
of Parent Common Stock delivered to the Exchange Agent by Parent pursuant
to Section 2.2(a) over (B) the aggregate number of full shares of Parent
Common Stock to be distributed to holders of Company Common Stock pursuant
to Section 2.2(b) (such excess, the "EXCESS SHARES"). As soon after the
Effective Time as practicable, the Exchange Agent, as agent for the holders
of Company Common Stock, shall sell the Excess Shares at then prevailing
prices in the over-the-counter market, all in the manner provided in clause
(iii) of this Section 2.2(e).
(iii) The sale of the Excess Shares by the Exchange Agent shall be
executed in the over-the-counter market through one or more member firms of
the National Association of Securities Dealers, Inc. (the "NASD") and shall
be executed in round lots to the extent practicable. Until the net proceeds
of such sale or sales have been
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distributed to the holders of Company Common Stock, the Exchange Agent will
hold such proceeds in trust for the holders of Company Common Stock (the
"COMMON SHARES TRUST"). Parent shall pay all commissions, transfer taxes
and other out-of-pocket transaction costs, including the expenses and
compensation of the Exchange Agent incurred in connection with such sale of
the Excess Shares. The Exchange Agent shall determine the portion of the
Common Shares Trust to which each holder of Company Common Stock shall be
entitled, if any, by multiplying the amount of the aggregate net proceeds
comprising the Common Shares Trust by a fraction, the numerator of which is
the amount of the fractional share interest to which such holder of Company
Common Stock is entitled and the denominator of which is the Excess Shares.
(iv) As soon as practicable after the determination of the amount of
cash, if any, to be paid to the holders of Company Common Stock in lieu of
any fractional share interests and subject to clause (v) of this Section
2.2(e), the Exchange Agent shall make available such amounts to such
holders of Company Common Stock.
(v) Parent or the Exchange Agent shall be entitled to deduct and
withhold from the consideration otherwise payable pursuant to this
Agreement to any holder of shares of Company Common Stock such amounts as
Parent or the Exchange Agent is required to deduct and withhold with
respect to the making of such payment under the Code, or any provision of
state, local or foreign tax law. To the extent that amounts are so withheld
by Parent or the Exchange Agent, such withheld amounts shall be treated for
all purposes of this Agreement as having been paid to the holder of the
shares of Company Common Stock in respect of which such deduction and
withholding was made by Parent or the Exchange Agent.
(f) TERMINATION OF EXCHANGE FUND. Any portion of the Exchange Fund and
Common Shares Trust that remains undistributed to the stockholders of the
Company for 12 months after the Effective Time shall be delivered to Parent,
upon demand, and any former stockholders of the Company that have not
theretofore complied with this Article 2 shall thereafter look only to Parent
for payment of their claim for Parent Common Stock, any cash in lieu of
fractional shares of Parent Common Stock and any dividends or distributions with
respect to Parent Common Stock.
(g) NO LIABILITY. To the fullest extent permitted by law, neither the
Exchange Agent, Parent, Sub nor the Company shall be liable to any holder of
shares of Company Common Stock or Parent Common Stock, as the case may be, for
shares (or dividends or distributions with respect thereto) from the Exchange
Fund or cash from the Common Shares Trust delivered to a public official
pursuant to any applicable abandoned property, escheat or similar law. Subject
to applicable law and public policy, if any Certificate shall not have been
surrendered immediately prior to the date on which any Merger Consideration in
respect of such Certificate would otherwise escheat to or become the property of
any Governmental Entity, then any Merger Consideration payable in respect of
such Certificate shall, to the extent permitted by applicable law and public
policy, become the property of the Surviving Corporation, free and clear of all
claims or interest of any person previously entitled thereto.
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(h) LOST, STOLEN OR DESTROYED CERTIFICATES. In the event any Certificates
shall have been lost, stolen or destroyed, the holder of such lost, stolen or
destroyed Certificates shall execute an affidavit of that fact upon request. The
holder of any such lost, stolen or destroyed Certificates shall also deliver a
reasonable indemnity against any claim that may be made against Parent or the
Exchange Agent with respect to the Certificates alleged to have been lost,
stolen or destroyed. The affidavit and any indemnity that may be required
hereunder shall be delivered to the Exchange Agent, who shall be responsible for
making payment for such lost, stolen or destroyed Certificate(s).
SECTION 2.3. STOCK COMPENSATION AWARDS.
(a) Each option to purchase shares of Company Common Stock (a "COMPANY
OPTION") granted under the employee and director stock plans of the Company (the
"STOCK PLANS"), whether vested or unvested, that is outstanding immediately
prior to the Effective Time shall, at the Effective Time, cease to represent a
right to acquire shares of Company Common Stock and shall be converted, at the
Effective Time, into an option to purchase shares of Parent Common Stock (a
"PARENT OPTION") on the same terms and conditions as were applicable under such
Company Option. The number of shares of Parent Common Stock subject to each such
Parent Option shall be the number of shares of Company Common Stock subject to
each such Company Option immediately prior to the Effective Time multiplied by
the Exchange Ratio, rounded, if necessary, to the nearest whole share of Parent
Common Stock, and such Parent Option shall have an exercise price per share
(rounded to the nearest cent) equal to the per share exercise price specified in
such Company Option divided by the Exchange Ratio; PROVIDED, HOWEVER, that, in
the case of any Company Option to which Section 421 of the Code applies
immediately prior to the Effective Time by reason of its qualification under
Section 422 of the Code, the exercise price, the number of shares of Parent
Common Stock subject to such option and the terms and conditions of exercise of
such option shall be determined in a manner consistent with the requirements of
Section 424(a) of the Code.
(b) At the Effective Time, each right of any kind, contingent or accrued,
to receive shares of Company Common Stock or benefits measured by the value of a
number of shares of Company Common Stock, and each award of any kind consisting
of shares of Company Common Stock, granted under the Stock Plans (including
restricted stock, restricted stock units, deferred stock units and dividend
equivalents), other than Company Options (each, a "COMPANY STOCK-BASED AWARD"),
whether vested or unvested, which is outstanding immediately prior to the
Effective Time shall cease to represent a right or award with respect to shares
of Company Common Stock and shall be converted, at the Effective Time, into a
right or award with respect to Parent Common Stock (a "PARENT STOCK-BASED
AWARD"), on the same terms and conditions as were applicable under the Company
Stock-Based Awards. The number of shares of Parent Common Stock subject to each
such Parent Stock-Based Award shall be equal to the number of shares of Company
Common Stock subject to the Company Stock-Based Award, multiplied by the
Exchange Ratio, rounded, if necessary, to the nearest whole share of Parent
Common Stock. All dividend equivalents credited to the account of each holder of
a Company Stock-Based Award as of the Effective Time shall remain credited to
such holder's account immediately following the Effective Time, subject to
adjustment in accordance with the foregoing.
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(c) As soon as practicable after the Effective Time, Parent shall deliver
to the holders of Company Options and Company Stock-Based Awards appropriate
notices setting forth such holders' rights pursuant to the respective Stock
Plans and agreements evidencing the grants of such Company Options and the
Company Stock-Based Awards, and stating that such Company Options and Company
Stock-Based Awards and agreements have been assumed by Parent and shall continue
in effect on the same terms and conditions (subject to the adjustments required
by this Section 2.3 after giving effect to the Merger and the terms of the Stock
Plans).
(d) Prior to the Effective Time, the Company shall take all necessary
action for the adjustment of the Company Options and the Company Stock-Based
Awards under this Section 2.3. Parent shall reserve for issuance a number of
shares of Parent Common Stock at least equal to the number of shares of Parent
Common Stock that will be subject to Parent Options and Parent Stock-Based
Awards as a result of the actions contemplated by this Section 2.3. As soon as
practicable following the Effective Time (and in any event not later than two
Business Days following the Effective Time), Parent shall file a registration
statement on Form S-8 (or any successor form, or if Form S-8 is not available,
other appropriate forms) with respect to the shares of Parent Common Stock
subject to such Parent Options and Parent Stock-Based Awards and shall maintain
the effectiveness of such registration statement or registration statements (and
maintain the current status of the prospectus or prospectuses contained therein)
for so long as such Parent Options or Parent Stock-Based Awards remain
outstanding.
SECTION 2.4. COMPANY WARRANTS. Each warrant to purchase shares of Company
Common Stock (a "COMPANY WARRANT") granted under a warrant agreement of the
Company that is outstanding immediately prior to the Effective Time shall, at
the Effective Time, cease to represent a right to purchase shares of Company
Common Stock and shall at the election of Parent and at the Effective Time,
either represent a right to purchase shares of Parent Common Stock or be
converted into a warrant to purchase shares of Parent Common Stock (a "PARENT
WARRANT"), in each case on substantially the same terms and conditions as were
applicable under such Company Warrant. The number of shares of Parent Common
Stock subject to each such Company Warrant or Parent Warrant, as the case may
be, shall be the number of shares of Company Common Stock subject to each such
Company Warrant immediately prior to the Effective Time multiplied by the
Exchange Ratio, rounded, if necessary, to the nearest whole share of Parent
Common Stock, and such Company Warrant or Parent Warrant, as the case may be
shall have an exercise price per share (rounded to the nearest cent) equal to
the per share exercise price specified in such Company Warrant divided by the
Exchange Ratio. Notwithstanding the foregoing, any adjustment to the number of
shares receivable upon exercise of a Parent Warrant or a Company Warrant or to
the exercise price pursuant to this Section 2.4 shall not be duplicative of any
such adjustments that occur pursuant to the terms of the underlying Company
Warrant.
SECTION 2.5. FURTHER ASSURANCES. If, at any time after the Effective Time,
any such further action is necessary or desirable to carry out the purposes of
this Agreement, or to vest, perfect or confirm of record or otherwise establish
in the Surviving Corporation full right, title and interest in, to or under any
of the assets, property, rights, privileges, powers and franchises of the
Company and Sub, the officers and directors of the Surviving Corporation are
fully authorized in the name and on behalf of each of the Constituent
Corporations or otherwise to take all such lawful and reasonably necessary or
desirable action.
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ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Parent and Sub as follows:
SECTION 3.1. ORGANIZATION AND QUALIFICATION. Each of the Company and its
"Significant Subsidiaries" (as defined in Regulation S-X promulgated by the
Securities and Exchange Commission (the "SEC") and which are referred to herein
as the "COMPANY SIGNIFICANT SUBSIDIARIES") is a corporation or other entity duly
incorporated or organized, validly existing and, as applicable, in good standing
under the laws of the jurisdiction of its incorporation or organization, and has
the requisite corporate or other power and authority to own, lease and operate
its assets and properties and to carry on its business as it is now being
conducted. Each of the Company and the Company Significant Subsidiaries is in
possession of all franchises, grants, authorizations, licenses, permits,
easements, consents, certificates, approvals and orders necessary to own, lease
and operate the properties it purports to own, operate or lease and to carry on
its business as it is now being conducted, except where the failure to have such
franchises, grants, authorizations, licenses, permits, easements, consents,
certificates, approvals and orders would not, individually or in the aggregate,
have a Company Material Adverse Effect. Each of the Company and its subsidiaries
is, as applicable, duly qualified or licensed as a foreign corporation to do
business, and is in good standing, in each jurisdiction where the character of
the properties owned, leased or operated by it or the nature of its business
makes such qualification or licensing necessary, except for such failures to be
so duly qualified or licensed and in good standing that would not, either
individually or in the aggregate, have a Company Material Adverse Effect.
"COMPANY MATERIAL ADVERSE EFFECT" shall mean any change, event or effect that is
materially adverse to the business, financial condition or results of operations
of the Company and its subsidiaries taken as a whole, excluding (i) any changes
or effects resulting from any matter, which matter has been or is expressly
approved by the Board of Directors of the Company unless, with respect to such
matter, the directors of the Company who are also executive officers of Parent
either voted against or abstained from voting (such matter and related
contemplated transactions, an "APPROVED MATTER"), (ii) changes in economic or
regulatory conditions in the industries in which the Company carries on business
as of the date hereof, and changes in general economic, regulatory or political
conditions, including, without limitation, acts of war or terrorism, and (iii)
changes resulting from the announcement of the Transactions and any other public
announcement of Parent during the term of this Agreement to the extent not
covered in any other public announcement of the Company during the term of this
Agreement or based upon information provided to Parent by the Company. Other
than wholly owned subsidiaries and except as disclosed in the Company SEC
Reports or Section 3.1 of the Company Disclosure Letter, the Company does not
directly or indirectly own any equity or similar interest in, or any interest
convertible or exchangeable or exercisable for any equity or similar interest
in, any corporation, partnership, limited liability company, joint venture or
other business, association or entity.
SECTION 3.2. CAPITALIZATION. The authorized capital stock of the Company
consists solely of 600,000,000 shares of Company Common Stock, 150,000,000
shares of Company Class B Common Stock, and 20,000,000 shares of preferred
stock, par value $.01 per share, of the Company ("COMPANY PREFERRED STOCK"). No
shares of Company Preferred Stock
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are issued or outstanding. At the close of business on April 4, 2003, (a)
17,936,574 shares of Company Common Stock and 38,999,100 shares of Company Class
B Common Stock were issued and outstanding, and (b) 1,606,394 shares of Company
Common Stock and no shares of Company Class B Common Stock were held in treasury
by the Company or by wholly owned subsidiaries of the Company. All shares of
Company Common Stock and Company Class B Common Stock that are issued and
outstanding on the date hereof are duly authorized, validly issued and fully
paid and nonassessable. Except as set forth in this Section 3.2 or as disclosed
in Section 3.2 of the disclosure letter delivered by the Company to Parent on or
prior to the date hereof (the "COMPANY DISCLOSURE LETTER"), as of April 4, 2003,
there are no options, warrants, rights, puts, calls, commitments, or other
contracts, arrangements or understandings issued by or binding upon the Company
requiring or providing for, and there are no outstanding debt or equity
securities of the Company which upon the conversion, exchange or exercise
thereof would require or provide for the issuance by the Company of any new or
additional shares of Company Common Stock, Company Class B Common Stock or
Company Preferred Stock (or any other securities of the Company) which, with or
without notice, lapse of time and/or payment of monies, are or would be
convertible into or exercisable or exchangeable for shares of Company Common
Stock, Company Class B Common Stock or Company Preferred Stock (or any other
securities of the Company). Since April 4, 2003, the Company has not issued any
shares of its capital stock or any securities convertible into or exercisable
for any shares of its capital stock, other than pursuant to the exercise of
employee stock options granted prior to such date or in connection with the
conversion, if any, of shares of Company Class B Common Stock into shares of
Company Common Stock. There are no preemptive or other similar rights available
to the existing holders of Company Common Stock or Company Class B Common Stock.
SECTION 3.3. AUTHORITY RELATIVE TO THIS AGREEMENT; BOARD APPROVAL.
(a) The Company has all necessary corporate power and authority to execute
and deliver this Agreement and to perform its obligations hereunder and, subject
to obtaining the approval of the stockholders of the Company of this Agreement,
to consummate the transactions contemplated by this Agreement (the
"TRANSACTIONS"). The execution and delivery of this Agreement by the Company and
the consummation by the Company of the Transactions have been duly and validly
authorized by all necessary corporate action on the part of the Company and no
other corporate proceedings on the part of the Company are necessary to
authorize this Agreement or to consummate the Transactions (other than, with
respect to the Merger, the approval of this Agreement by the holders of a
majority of the voting power of Company Common Stock and Company Class B Common
Stock, voting together as a single class, which approval is the only approval
required to consummate the Transactions under the Company's Certificate of
Incorporation and the Delaware Statute). This Agreement has been duly and
validly executed and delivered by the Company and, assuming the due
authorization, execution and delivery by Parent and Sub, constitutes the legal
and binding obligation of the Company, enforceable against the Company in
accordance with its terms, subject to (i) bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting or relating to
creditors rights generally and (ii) the availability of specific performance or
injunctive relief and other equitable remedies.
(b) The Board of Directors of the Company, based on the recommendation of
the Special Committee (which recommendation was a condition to the approval of
the Company's
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Board of Directors set forth in clause (i) of this sentence) has, prior to the
execution of this Agreement, (i) approved this Agreement and the Transactions
(including for purposes of Section 144 of the Delaware Statute), (ii) determined
that the Transactions are fair to and in the best interests of its public
stockholders, (iii) declared this Agreement and the Transactions advisable, and
(iv) recommended that the stockholders of the Company approve this Agreement and
the Transactions. This Agreement and the Transactions have been approved by the
unanimous vote of the members of the Special Committee, the unanimous vote of
the members of the Board of Directors of the Company (excluding the directors of
the Company that are also directors or officers of Parent), and by the vote of a
majority of the members of the Board of Directors of the Company.
SECTION 3.4. NO CONFLICT; REQUIRED FILINGS AND CONSENTS.
(a) The execution and delivery of this Agreement by the Company do not, and
the performance of its obligations hereunder and the consummation of the
Transactions by the Company will not, (i) conflict with or violate the
Certificate of Incorporation, Bylaws or equivalent organizational documents of
the Company or any of the Company Significant Subsidiaries; (ii) subject to
obtaining the approval of the Company's stockholders of this Agreement in
accordance with the Delaware Statute and the Company's Certificate of
Incorporation and Bylaws and compliance with the requirements set forth in
Section 3.4(b), conflict with or violate any law, rule, regulation, order,
judgment or decree applicable to the Company or any of its subsidiaries or by
which any of their respective properties is bound or affected; or (iii) except
as set forth in Section 3.4(a) of the Company Disclosure Letter, result in any
breach of or constitute a default (or an event that with notice or lapse of time
or both would become a default) under, or alter the rights or obligations of any
third party or the Company or its subsidiaries under, or give to others any
rights of termination, amendment, acceleration, increased payments or
cancellation of, or result in the creation of a lien or other encumbrance on any
of the properties or assets of the Company or any of its subsidiaries pursuant
to, any note, bond, mortgage, indenture, contract, agreement, lease, license,
permit, franchise or other instrument or obligation to which the Company or any
of its subsidiaries is a party or by which the Company or any of its
subsidiaries or any of their respective properties are bound or affected, in
each case having value or requiring payments over the term thereof equal to or
greater than $2.5 million, except, in the case of clause (ii) above, for any
such conflicts or violations that would not prevent or delay consummation of the
Merger in any material respect, or otherwise prevent the Company from performing
its obligations under this Agreement in any material respect, and would not
have, individually or in the aggregate, a Company Material Adverse Effect.
Section 3.4(a) of the Company Disclosure Letter lists all material consents,
waivers and approvals under any agreements, contracts, licenses or leases
required to be obtained by the Company or the Company Significant Subsidiaries
in connection with entering into of this Agreement or the consummation of the
Transactions.
(b) The execution and delivery of this Agreement by the Company do not, and
the performance of its obligations hereunder and the consummation of the
Transactions by the Company will not, require any consent, approval,
authorization or permit of, or registration or filing with or notification to,
any court, administrative agency, commission, governmental or regulatory
authority, domestic or foreign (a "GOVERNMENTAL ENTITY"), except (i) the filing
of documents to satisfy the applicable requirements, if any, of the Securities
Exchange Act of 1934,
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as amended (the "EXCHANGE ACT"), and state takeover laws, (ii) the filing and
effectiveness of the S-4, including the Information Statement/Prospectus in
definitive form relating to the Transactions, (iii) the filing of the
Certificate of Merger with the Secretary of State of the State of Delaware and
appropriate corresponding documents with the Secretary of State of other states
in which the Company is qualified to transact business as a foreign corporation,
(iv) filings under the rules and regulations of the NASD, and (v) where the
failure to obtain such consents, approvals, authorizations or permits, or to
make such filings or notifications (A) would not prevent or delay consummation
of the Merger in any material respect or otherwise prevent or delay in any
material respect the Company from performing its obligations under this
Agreement or (B) would not, individually or in the aggregate, have a Company
Material Adverse Effect.
SECTION 3.5. COMPLIANCE WITH LAWS.
Except as set forth in Section 3.5 of the Company Disclosure Letter,
neither the Company nor any of its subsidiaries is in conflict with, or in
default or violation of (a) any law, rule, regulation, order, judgment or decree
applicable to the Company or any of its subsidiaries or by which any of their
respective properties is bound, or (b) whether after the giving of notice or
passage of time or both, any note, bond, mortgage, indenture, contract,
agreement, lease, license, permit, franchise or other instrument or obligation
to which the Company or any of its subsidiaries is a party or by which the
Company or any of its subsidiaries or any of their respective properties is
bound, except for any conflicts, defaults or violations that do not and would
not have, individually or in the aggregate, a Company Material Adverse Effect.
SECTION 3.6. SEC FILINGS; FINANCIAL STATEMENTS.
(a) The Company has made available to Parent a correct and complete copy of
each report, schedule, registration statement (but only such registration
statements that have become effective prior to the date hereof) and definitive
proxy statement filed by the Company with the SEC on or since January 1, 2002
and prior to the date of this Agreement (the "COMPANY SEC REPORTS"), which are
all the forms, reports and documents required to be filed by the Company with
the SEC since such date; PROVIDED that, if the Company amends any of the Company
SEC Reports, such amendment shall not mean or imply that any representation or
warranty in this Agreement was not true when made or became untrue thereafter.
As of their respective dates, the Company SEC Reports and any forms, reports and
other documents filed by the Company with the SEC after the date of this
Agreement (i) complied or will comply in all material respects with the
requirements of the Securities Act of 1933, as amended (the "SECURITIES ACT"),
or the Exchange Act, as the case may be, and the rules and regulations of the
SEC thereunder applicable thereto, and (ii) did not at the time they were filed
(or if amended or superseded by a filing prior to the date of this Agreement
then on the date of such filing) or will not at the time they are filed contain
any untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements made, in light of the circumstances
under which they were made, not misleading, PROVIDED, HOWEVER, that no
representation is made with respect to information included in the Company SEC
Reports that was provided in writing by Parent or Sub. None of the Company's
subsidiaries is required to file any reports or other documents with the SEC.
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(b) Each of the consolidated financial statements (including, in each case,
any related notes thereto) contained in the Company SEC Reports complied as to
form in all material respects with applicable accounting requirements and with
the published rules and regulations of the SEC with respect thereto, had been
prepared in accordance with generally accepted accounting principles ("GAAP")
applied on a consistent basis throughout the periods involved (except as may be
indicated in the notes thereto or, in the case of the unaudited statements, as
permitted by Form 10-Q or the Exchange Act regulations promulgated by the SEC),
and each fairly presented the consolidated financial position of the Company and
its consolidated subsidiaries in all material respects as at the respective
dates thereof and the consolidated results of its operations and cash flows for
the periods indicated (subject, in the case of the unaudited interim financial
statements, to normal audit adjustments which were not and are not expected,
individually or in the aggregate, to be material in amount).
SECTION 3.7. REGISTRATION STATEMENT; INFORMATION STATEMENT. Subject to the
following sentence, none of the information supplied or to be supplied by the
Company specifically for inclusion or incorporation by reference in (a) the
registration statement on Form S-4 to be filed with the SEC by Parent in
connection with the issuance of the Parent Common Stock in or as a result of the
Merger (as supplemented or amended prior to the Effective Time, the "S-4") will,
at the time the S-4 is initially filed with the SEC and at the time the S-4
initially becomes effective under the Securities Act, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements made therein, in
light of the circumstances under which they were made, not misleading; and (b)
the Information Statement/Prospectus will, at the date the Information
Statement/Prospectus is mailed to the stockholders of the Company and as of the
Effective Time, contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary in order to make
the statements made therein, in light of the circumstances under which they were
made, not misleading. Notwithstanding the foregoing, the Company makes no
representation or warranty with respect to any information included in the S-4
or Information Statement/Prospectus other than information supplied by the
Company, its auditors, legal counsel, financial advisors or other consultants or
advisors for inclusion or incorporation by reference therein. The definitive
information statement (as supplemented or amended prior to the Effective Time)
relating to this Agreement and the Transactions will comply as to form in all
material respects with the provisions of the Exchange Act and the rules and
regulations promulgated by the SEC thereunder.
SECTION 3.8. BROKERS. Other than Lazard, Freres & Co. LLC (the "COMPANY
BANKER"), no broker, finder or investment banker is entitled to any brokerage,
finders' or other fee or commission in connection with the Merger and the other
Transactions based upon arrangements made by or on behalf of the Company or the
Special Committee. The Company heretofore has furnished to Parent a complete
copy of all agreements between the Company Banker and the Company or the Special
Committee pursuant to which such firm would be entitled to any payment relating
to the Merger and the other Transactions.
SECTION 3.9. OPINION OF FINANCIAL ADVISOR. The Special Committee and the
Company's Board of Directors have received the written opinion, dated April 9,
2003, of the Company Banker that, as of April 9, 2003, the Exchange Ratio is
fair to the public holders of
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Company Common Stock from a financial point of view, a copy of which opinion has
been delivered to Parent.
SECTION 3.10. EMPLOYEE BENEFIT PLANS.
(a) The Company has delivered a true and complete list of all material
pension, retirement, profit-sharing, deferred compensation, stock option,
employee stock ownership, severance pay, vacation, bonus or other material
incentive or employee benefit plans, arrangements or agreements, whether arrived
at through collective bargaining or otherwise, including, without limitation,
all "employee benefit plans" (as defined in Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA")), currently
adopted, maintained by, sponsored in whole or in part by, or contributed to by
the Company or any entity required to be aggregated with the Company pursuant to
Section 414 of the Code for the benefit of current or former employees,
retirees, dependents, spouses, directors, independent contractors or other
beneficiaries and under which current or former employees, retirees, dependents,
spouses, directors, independent contractors or other beneficiaries are eligible
to participate, excluding any such plans, arrangements or agreements that are
offered or maintained by Parent (collectively, the "COMPANY BENEFIT PLANS"). Any
of the Company Benefit Plans which is an "employee pension benefit plan," as
that term is defined in Section 3(2) of ERISA, is referred to herein as an
"ERISA PLAN." No Company Benefit Plan is or has been a multiemployer plan within
the meaning of Section 3(37) of ERISA (a "MULTIEMPLOYER PLAN").
(b) (i) Each of the Company Benefit Plans has been operated and
administered in all material respects in compliance with applicable laws,
including, but not limited to, ERISA (as defined herein) and the Code, (ii)
except as set forth on Section 3.10(b) of the Company Disclosure Letter, each of
the Company Benefit Plans intended to be "qualified" within the meaning of
Section 401(a) of the Code has received a favorable determination letter, and
there are no existing circumstances or any events that have occurred that would
be reasonably expected to affect adversely the qualified status of any such
Company Benefit Plan, (iii) no Company Benefit Plan provides benefits,
including, without limitation, death or medical benefits (whether or not
insured), with respect to current or former employees or directors of Company or
its subsidiaries beyond their retirement or other termination of service, other
than (A) coverage mandated by applicable law, (B) death benefits or retirement
benefits under any "employee pension plan" (as such term is defined in Section
3(2) of ERISA, (C) deferred compensation benefits accrued as liabilities on the
books of the Company or its subsidiaries, or (D) benefits the full cost of which
is borne by the current or former employee or director (or his beneficiary), and
(vi) to the best knowledge of the Company there are no pending, threatened or
anticipated claims (other than routine claims for benefits) by, on behalf of or
against any of the Company Benefit Plans or any trusts related thereto.
(c) No Company Benefit Plan is subject to Title IV or Section 302 of ERISA,
and no circumstances exist that could result in material liability to the
Company under Title IV or Section 302 of ERISA.
(d) Except as set forth in Section 3.10 of the Company Disclosure Letter,
neither the execution and delivery of this Agreement nor the consummation of the
Transactions (or any termination of employment in connection with the
Transactions) will (i) result in any payment
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becoming due to any current or former director or employee of the Company or any
of its affiliates from the Company or any of its affiliates under any Company
Benefit Plan or otherwise, (ii) increase any benefits otherwise payable under
any Company Benefit Plan or (iii) result in any acceleration of the time of
payment or vesting of any such benefits, except for any payments or vesting
which would occur upon a termination of employment absent the consummation of
the Transactions or which arise under any plan, agreement or arrangement offered
or maintained by Parent.
SECTION 3.11. TAX MATTERS. Neither the Company nor any of its subsidiaries
has taken or agreed to take any action that would prevent the Merger from
constituting a reorganization qualifying under the provisions of Section 368(a)
of the Code.
SECTION 3.12. LITIGATION. Except as disclosed in the Company SEC Reports or
Section 3.12 of the Company Disclosure Letter, there are no claims, actions,
suits, investigations or proceedings pending or, to the best knowledge of the
Company, threatened against the Company or any of its subsidiaries, before any
court, arbitrator or administrative, governmental or regulatory authority or
body, domestic or foreign, that, individually or in the aggregate, would, or
would reasonably be anticipated to, have a Company Material Adverse Effect.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB
Parent and Sub jointly and severally represent and warrant to the Company,
as follows:
SECTION 4.1. ORGANIZATION AND QUALIFICATION. Each of Parent, Sub and
Parent's "Significant Subsidiaries" (as defined in Regulation S-X promulgated by
the SEC), other than the Company or any of its subsidiaries (the "PARENT
SIGNIFICANT SUBSIDIARIES") has been duly incorporated and is validly existing as
a corporation in good standing under the laws of the jurisdiction of its
incorporation, and has the requisite corporate power and authority to own, lease
and operate its assets and properties and to carry on its business as it is now
being conducted. Each of Parent and the Parent Significant Subsidiaries is in
possession of all franchises, grants, authorizations, licenses, permits,
easements, consents, certificates, approvals and orders necessary to own, lease
and operate the properties it purports to own, operate or lease and to carry on
its business as it is now being conducted, except where the failure to have such
franchises, grants, authorizations, licenses, permits, easements, consents,
certificates, approvals and orders would not, individually or in the aggregate,
have a Parent Material Adverse Effect. Each of Parent, Sub and the Parent
Significant Subsidiaries is duly qualified or licensed as a foreign corporation
to do business and is in good standing, in each jurisdiction where the character
of the properties owned, leased or operated by it or the nature of its business
makes such qualification or licensing necessary, except for such failures to be
so duly licensed or qualified and in good standing that would not, individually
or in the aggregate, have a Parent Material Adverse Effect. "PARENT MATERIAL
ADVERSE EFFECT" shall mean any change, event or effect that is materially
adverse to the business, financial condition or results of operations of Parent
and its subsidiaries taken as a whole, in each case excluding (i) changes in
economic or regulatory conditions in the industries in which Parent carries on
business as of the date hereof,
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and changes in general economic, regulatory or political conditions, including,
without limitation, acts of war or terrorism, and (ii) changes resulting from
the announcement of the Transactions and any other public announcement of the
Company during the term of this Agreement.
SECTION 4.2. CAPITALIZATION. As of the date hereof, the authorized capital
stock of Parent consists of 1,600,000,000 shares of common stock, par value
$0.01 per share ("PARENT COMMON STOCK"), 400,000,000 shares of Class B common
stock, par value $0.01 per share ("PARENT B COMMON STOCK") and 100,000,000
shares of preferred stock, par value $0.01 per share ("PARENT PREFERRED STOCK").
At the close of business on March 31, 2003, (a) 439,940,745 shares of Parent
Common Stock were issued and 433,293,733 shares of Parent Common Stock were
outstanding, 64,629,996 shares of Parent Class B Common Stock and 13,118,182
shares of Parent Preferred Stock were issued and outstanding, in each case,
except as disclosed in the Parent's proxy statement dated March 25, 2002 (the
"PARENT PROXY STATEMENT"), not subject to any preemptive rights, and (b)
6,647,012 shares of Parent Common Stock, no shares of Parent Class B Common
Stock and no shares of Parent Preferred Stock were held in treasury by Parent or
by subsidiaries of Parent. Other than (a) options to purchase 74,502,354 shares
of Parent Common Stock issued pursuant to employee benefit plans and agreements
of Parent, (b) 79,280,240 shares of Parent Common Stock issuable upon exercise
of outstanding warrants, (c) up to 25,720,819 shares of Parent Common Stock
issuable upon conversion of Parent Preferred Stock, (d) 539,169 restricted
shares of Parent Common Stock, and (e) 2,425,500 shares of Parent Common Stock
issuable in respect of restricted units, (f) 97,814 shares of Parent Common
Stock issuable pursuant to Parent's Bonus Stock Purchase Program, and (g) shares
of Parent Common Stock issuable in connection with the Agreement and Plan of
Merger, by and among Parent, Equinox Merger Corp. and Expedia, Inc., except in
connection with this Agreement, as disclosed in the disclosure letter delivered
by Parent to the Company on or prior to the date hereof (the "PARENT DISCLOSURE
LETTER"), or in connection with the agreements described in the Parent Proxy
Statement, as of March 31, 2003, (y) there were no options, warrants, rights,
puts, calls, commitments or other contracts, arrangements or understandings
issued by or binding upon Parent requiring or providing for, and (z) there are
no outstanding debt or equity securities of Parent which upon the conversion,
exchange or exercise thereof would require or provide for the issuance by Parent
of any new or additional shares of Parent Common Stock (or any other securities
of Parent) which, with or without notice, lapse of time and/or payment of
monies, are or would be convertible into or exercisable or exchangeable for
Parent Common Stock (or any other securities of Parent). Since March 31, 2003
through the date hereof, Parent has not issued any shares of its capital stock
or any securities convertible into or exercisable for any shares of its capital
stock, other than as disclosed in Section 4.2 to the Company Disclosure
Schedule, pursuant to the exercise of employee stock options granted prior to
such date and the vesting of restricted stock units. The authorized capital
stock of Sub consists of 100 shares of Sub Common Stock, of which, as of the
date hereof, 100 shares of Sub Common Stock are issued and outstanding. The
shares of Parent Common Stock to be issued in the Merger will, upon issuance, be
validly issued, fully paid, nonassessable, except as disclosed in the Parent
Proxy Statement, not subject to any preemptive rights, and free and clear of all
security interests, liens, claims, pledges or other encumbrances of any nature
whatsoever (in each case to which Parent is a party).
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SECTION 4.3. AUTHORITY RELATIVE TO THIS AGREEMENT; BOARD APPROVAL.
(a) Each of Parent and Sub has all necessary corporate power and authority
to execute and deliver this Agreement, and to perform its obligations hereunder
and, subject to obtaining the approval of the stockholders of Sub of this
Agreement, to consummate the Transactions. The execution and delivery of this
Agreement by Parent and Sub and the consummation by Parent and Sub of the
Transactions have been duly and validly authorized by all necessary corporate
action on the part of Parent and Sub and no other corporate proceedings on the
part of Parent or Sub are necessary to authorize this Agreement, or to
consummate the Transactions (other than, with respect to the Merger, the
approval of this Agreement by the holders of a majority of the voting power of
Sub Common Stock, which approval is the only approval of Sub required to
consummate the Transactions under Sub's certificate of incorporation and the
Delaware Statute, and other than the approval of the NASD listing application
with respect to the issuance of shares of Parent Common Stock in the Merger).
This Agreement has been duly and validly executed and delivered by Parent and
Sub and, assuming the due authorization, execution and delivery by the Company,
constitutes the legal and binding obligations of Parent and Sub, enforceable
against Parent and Sub in accordance with its terms, subject to (i) bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting or
relating to creditors rights generally and (ii) the availability of specific
performance or injunctive relief and other equitable remedies.
(b) The Board of Directors of Parent has (i) approved this Agreement and
the Transactions and (ii) determined that the Transactions are fair to and in
the best interests of the stockholders of Parent. Parent has not taken any
action in its capacity as a stockholder of the Company that would cause Section
203 of the Delaware Statute to be applicable to this Agreement. No vote of
Parent's stockholders is required in connection with the Transactions.
SECTION 4.4. NO CONFLICT; REQUIRED FILINGS AND CONSENTS.
(a) The execution and delivery of this Agreement by Parent and Sub do not,
and the performance of their respective obligations hereunder and the
consummation of the Transactions by Parent and Sub will not, (i) conflict with
or violate the Certificate of Incorporation, Bylaws or equivalent organizational
documents of Parent or Sub; (ii) subject to compliance with the requirements set
forth in Section 4.4(b), conflict with or violate any law, rule, regulation,
order, judgment or decree applicable to Parent or Sub or by which their
respective properties are bound or affected; or (iii) result in any breach of or
constitute a default (or an event that with notice or lapse of time or both
would become a default) under, or alter the rights or obligations of any third
party or of Parent or Sub under, or give to others any rights of termination,
amendment, acceleration, increased payments or cancellation of, or result in the
creation of a lien or other encumbrance on any of the properties or assets of
Parent or Sub pursuant to, any note, bond, mortgage, indenture, contract,
agreement, lease, license, permit, franchise or other instrument or obligation
to which Parent or Sub is a party or by which Parent or Sub or any of their
respective properties are bound or affected, except in the cases of clauses (ii)
and (iii) above, for any such conflicts, violations, breaches, defaults or other
alterations or occurrences that would not prevent or delay consummation of the
Merger in any material respect, or otherwise prevent Parent and Sub from
performing their respective obligations under this Agreement in any material
respect, and would not have, individually or in the aggregate, a
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Parent Material Adverse Effect. There are no material consents, waivers, and
approvals under any agreements, contracts, licenses or leases required to be
obtained by Parent or Sub in connection with entering into of this Agreement and
the consummation of the Transactions.
(b) The execution and delivery of this Agreement by Parent and Sub do not,
and the performance of their respective obligations hereunder and the
consummation of the Transactions by Parent and Sub will not, require any
consent, approval, authorization or permit of, or registration or filing with or
notification to, any Governmental Entity except (i) the filing of documents to
satisfy the applicable requirements, if any, of the Exchange Act and state
takeover laws, (ii) the filing and effectiveness of the S-4, including the
Information Statement/Prospectus, (iii) the filing of the Certificate of Merger
with the Secretary of State of the State of Delaware and appropriate
corresponding documents with the Secretary of State of other states in which the
Company is qualified to transact business as a foreign corporation, (iv) filings
under the rules and regulations of the NASD, (v) filings under state securities
laws, and (vi) where the failure to obtain such consents, approvals,
authorizations or permits, or to make such filings or notifications (A) would
not prevent or delay consummation of the Merger in any material respect or
otherwise prevent or delay in any material respect Parent or Sub from performing
their respective obligations under this Agreement or (B) would not, individually
or in the aggregate, have a Parent Material Adverse Effect.
SECTION 4.5. COMPLIANCE WITH LAWS. Except as set forth in Section 4.5 of
the Parent Disclosure Letter, neither Parent nor any of its subsidiaries is in
conflict with, or in default or violation of (a) any law, rule, regulation,
order, judgment or decree applicable to Parent or any of its subsidiaries or by
which any of their respective properties is bound, or (b) whether after the
giving of notice or passage of time or both, any note, bond, mortgage,
indenture, contract, agreement, lease, license, permit, franchise or other
instrument or obligation to which Parent or any of its subsidiaries is a party
or by which Parent or any of its subsidiaries or any of their respective
properties is bound, except for any such conflicts, defaults or violations which
do not and would not have, individually or in the aggregate, a Parent Material
Adverse Effect.
SECTION 4.6. SEC FILINGS; FINANCIAL STATEMENTS.
(a) Parent has made available to the Company a correct and complete copy of
each report, schedule, registration statement and definitive proxy statement
filed by Parent with the SEC on or after January 1, 2002 and prior to the date
of this Agreement (the "PARENT SEC REPORTS"), which are all the forms, reports
and documents required to be filed by Parent with the SEC since such date;
PROVIDED that, if Parent amends any of the Parent SEC Reports, such amendment
shall not mean or imply that any representation or warranty in this Agreement
was not true when made or became untrue thereafter. As of their respective
dates, the Parent SEC Reports and any forms, reports and other documents filed
by Parent and Sub after the date of this Agreement (i) complied or will comply
in all material respects with the requirements of the Securities Act or the
Exchange Act, as the case may be, and the rules and regulations of the SEC
thereunder applicable thereto, and (ii) did not at the time they were filed (or
if amended or superseded by a filing prior to the date of this Agreement then on
the date of such filing) or will not at the time they are filed contain any
untrue statement of a material fact or omit to state a material fact necessary
in order to make the statements made, in light of the circumstances under which
they were made, not misleading, PROVIDED, HOWEVER, that no representation is
made with
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respect to information included in the Parent SEC Reports that was provided in
writing by the Company.
(b) Each of the consolidated financial statements (including, in each case,
any related notes thereto) contained in the Parent SEC Reports complied as to
form in all material respects with applicable accounting requirements and with
the published rules and regulations of the SEC with respect thereto, had been
prepared in accordance with GAAP applied on a consistent basis throughout the
periods involved (except as may be indicated in the notes thereto or, in the
case of the unaudited statements, as permitted by Form 10-Q or the Exchange Act
regulations promulgated by the SEC) and each fairly presented the consolidated
financial position of Parent and its consolidated subsidiaries in all material
respects as at the respective dates thereof and the consolidated results of its
operations and cash flows for the periods indicated (subject, in the case of the
unaudited interim financial statements, to normal audit adjustments which were
not and are not expected, individually or in the aggregate, to be material in
amount).
SECTION 4.7. REGISTRATION STATEMENT; INFORMATION STATEMENT. Subject to
following sentence, the S-4 will not, at the time the S-4 is initially filed
with the SEC and at the time it initially becomes effective under the Securities
Act, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements made therein, in light of the circumstances under which they were
made, not misleading, and the Information Statement/Prospectus will not, at the
date the Information Statement/Prospectus is mailed to the stockholders of the
Company and as of the Effective Time, contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements made therein, in light of the
circumstances under which they were made, not misleading. Notwithstanding the
foregoing, Parent and Sub make no representation or warranty with respect to any
information supplied by the Company and/or its auditors, legal counsel,
financial advisors or other consultants or advisors specifically for inclusion
or incorporation by reference in the S-4 or the Information
Statement/Prospectus. The S-4, including the prospectus contained therein (as
supplemented or amended prior to the Effective Time), will comply as to form in
all material respects with the provisions of the Securities Act and the rules
and regulations promulgated by the SEC thereunder.
SECTION 4.8. BROKERS. Other than Allen & Company Incorporated (the "PARENT
BANKER"), no broker, finder or investment banker is entitled to any brokerage,
finder's or other fee or commission in connection with the Merger and the other
Transactions based upon arrangements made by or on behalf of Parent or Sub.
SECTION 4.9. INTERIM OPERATIONS OF SUB. Sub is a direct wholly owned
subsidiary of Parent and was formed solely for the purpose of engaging in the
Merger and the Transactions, has engaged in no other business activities and has
conducted its operations only as contemplated hereby.
SECTION 4.10. TAX MATTERS. Neither Parent nor any of its affiliates has
taken or agreed to take any action that would prevent the Merger from
constituting a reorganization qualifying under the provisions of Section 368(a)
of the Code.
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SECTION 4.11. LITIGATION. Except as disclosed in the Parent SEC Reports or
Section 4.11 of the Parent Disclosure Letter, there are no claims, actions,
suits, investigations or proceedings pending or, to the best knowledge of
Parent, threatened against Parent, before any court, arbitrator or
administrative, governmental or regulatory authority or body, domestic or
foreign, that, individually or in the aggregate, would, or would reasonably be
anticipated to, have a Parent Material Adverse Effect.
SECTION 4.12. OWNERSHIP OF COMPANY SHARES. As of the date hereof, Parent
owns no shares of Company Common Stock and 38,999,100 shares of Company Class B
Common Stock. No subsidiary of Parent, including Sub, owns any shares of Company
Common Stock or Company Class B Common Stock.
ARTICLE 5
CONDUCT AND TRANSACTIONS PRIOR TO
EFFECTIVE TIME; ADDITIONAL AGREEMENTS
SECTION 5.1. INFORMATION AND ACCESS. From the date of this Agreement and
continuing until the Effective Time, Parent, as to itself and Sub, on the one
hand, and the Company, as to itself and its subsidiaries, on the other hand,
each agrees that it shall afford and, with respect to clause (b) below, shall
cause its independent auditors to afford, (a) to the officers, independent
auditors, counsel and other representatives of the other reasonable access, upon
reasonable advance notice, to its (and in the case of Parent, Sub's, and in the
case of the Company, its subsidiaries') properties, books, records (including
tax returns filed and those in preparation) and executives and personnel in
order that the other may have a full opportunity to make such investigation as
it reasonably desires to make of the other consistent with their rights under
this Agreement, and (b) to the independent auditors of the other, reasonable
access to the audit work papers and other records of its independent auditors.
No investigation pursuant to this Section 5.1 shall affect or otherwise obviate
or diminish any representations and warranties of any party or conditions to the
obligations of any party. No party shall be required to provide access to or to
disclose information where such access or disclosure would violate or prejudice
the rights of its customers, jeopardize the attorney-client privilege or the
institution in possession or control of such information or contravene any law,
rule, regulations, order, judgment, decree, fiduciary duty or binding agreement
entered into prior to the date of this Agreement. The parties hereto will make
appropriate substitute disclosure arrangements under circumstances in which the
restrictions of the preceding sentence apply.
SECTION 5.2. CONDUCT OF BUSINESS OF THE COMPANY. Except as contemplated by
this Agreement (including Section 5.2 of the Company Disclosure Letter) or with
respect to Approved Matters, during the period from the date of this Agreement
and continuing until the Effective Time or until the termination of this
Agreement pursuant to Section 7.1, (a) the Company and its subsidiaries shall
conduct their respective businesses in the ordinary and usual course consistent
with past practice, including, without limitation, consulting with, advising and
obtaining the approval of Parent, in each case consistent with past practice,
and (b) without limiting the provisions of clause (a) in this paragraph, neither
the Company nor any of its subsidiaries shall without the prior written consent
of Parent (or, to the extent consistent with past practice with regard to the
matter at issue, the prior oral consent of Parent):
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(i) declare, set aside or pay any dividends on or make any other
distribution in respect of any of its capital stock, except dividends
or distributions declared and paid by a wholly owned subsidiary of the
Company only to the Company or another wholly owned subsidiary of the
Company;
(ii) split, combine or reclassify any of its capital stock or
issue or authorize or propose the issuance or authorization of any
other securities in respect of, in lieu of, or in substitution for
shares of its capital stock or repurchase, redeem or otherwise acquire
any shares of its capital stock;
(iii) issue, deliver, pledge, encumber or sell, or authorize or
propose the issuance, delivery, pledge, encumbrance or sale of, or
purchase or propose the purchase of, any shares of its capital stock
or securities convertible into, or rights, warrants or options to
acquire, any such shares of capital stock or other convertible
securities (other than the issuance of such capital stock to the
Company or a wholly owned subsidiary of the Company, or upon the
exercise or conversion of outstanding options or warrants in
accordance with the Stock Plan in effect on the date of this Agreement
or other convertible or exchangeable securities outstanding on the
date hereof, in each case in accordance with their present terms),
authorize or propose any change in its equity capitalization, or amend
any of the financial or other economic terms of such securities or the
financial or other economic terms of any agreement relating to such
securities;
(iv) amend its Certificate of Incorporation, Bylaws or other
organizational documents in any manner;
(v) take any action that would reasonably be expected to result
in any of the conditions to the Transactions set forth in Article 6
not being satisfied;
(vi) merge or consolidate with any other person, or acquire any
assets or capital stock of any other person, other than acquisitions
of assets in the ordinary course of business, such as for inventory or
relating to the ordinary operations of the Company;
(vii) incur any indebtedness for money borrowed or guarantee any
such indebtedness of another person or increase indebtedness for money
borrowed outstanding under any current agreement relating to
indebtedness for money borrowed, except as disclosed on Section 5.2 of
the Company Disclosure Letter or in the ordinary course of business;
(viii) make or authorize any capital expenditures of the Company
and its subsidiaries taken as a whole, other than capital expenditures
permitted pursuant to Section 5.2 of Company Disclosure Letter and
other than capital expenditures that are part of the Company's then
existing budget, which has previously been approved by the Company's
Board of Directors;
(ix) except as may be required by changes in applicable law or
GAAP, change any method, practice or principle of accounting, or
change in any material respect its method of reporting income and
deductions for United States federal income tax
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purposes from those employed in the preparation of its federal income
tax returns for the year ended December 31, 2001, except as required
by changes in law or regulation;
(x) enter into any new employment agreements, or increase the
compensation of any officer or director of the Company or any senior
executive of any of its subsidiaries or operating units (including
entering into any bonus, severance, change of control, termination,
reduction-in-force or consulting agreement or other employee benefits
arrangement or agreement pursuant to which such person has the right
to any form of compensation from the Company or any of its
subsidiaries), other than as required by law or by written agreements
in effect on the date hereof with such person, or otherwise amend in
any material respect any existing agreements with any such person or
use its discretion to amend any Company Benefit Plan or accelerate the
vesting or any payment under any Company Benefit Plan;
(xi) enter into any transaction with any officer or director of
the Company or any senior executive of any of its subsidiaries or
operating units, other than as provided for in the terms of any
agreement in effect on or prior to the date hereof and described in
the Company Disclosure Letter;
(xii) settle or otherwise compromise any material litigation,
arbitration or other judicial or administrative dispute or proceeding
relating to the Company or any of its subsidiaries; or
(xiii) authorize or enter into any contract, agreement,
commitment or arrangement to do any of the foregoing.
SECTION 5.3. CONDUCT OF BUSINESS OF PARENT. Except as contemplated by this
Agreement (including the Parent Disclosure Letter), and agreements described in
the Parent Proxy Statement or any Parent SEC Report, during the period from the
date of this Agreement and continuing until the Effective Time or until the
termination of this Agreement pursuant to Section 7.1, Parent shall not, without
the prior written consent of the Company, take any action that would reasonably
be expected to result in any of the conditions to the Transactions set forth in
Article 6 not being satisfied.
SECTION 5.4. PREPARATION OF S-4 AND INFORMATION STATEMENT; OTHER FILINGS.
As promptly as practicable after the date of this Agreement, Parent and the
Company shall prepare, and Parent shall file with the SEC, the S-4, which shall
include a preliminary information statement of the Company relating to the
Merger as well as a prospectus of Parent. Each of Parent and the Company shall
use its reasonable best efforts to respond to any comments of the SEC, to have
the S-4 declared effective under the Securities Act as promptly as practicable
after such filing and to cause the information statement of the Company and
prospectus of Parent in definitive form (as supplemented or amended prior to the
Effective Time, the "INFORMATION STATEMENT/PROSPECTUS") to be mailed to the
Company's stockholders at the earliest practicable time after the S-4 is
declared effective under the Securities Act. At the option of Parent, Parent may
combine the Information Statement/Prospectus with the proxy and information
statement/prospectus relating to USA's acquisition of Expedia, Inc. As promptly
as practicable after the date of this Agreement, Parent and the Company shall
prepare and file any other filings
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required under the Exchange Act, the Securities Act or any other federal laws
relating to the Transactions (the "OTHER FILINGS"). Each of the Company and
Parent will notify each other promptly upon the receipt of any comments, whether
oral or written, from the SEC or its staff and upon any request by the SEC or
its staff or any other government officials for amendments or supplements to the
S-4 or the Information Statement/Prospectus or any Other Filing or for
additional information, and will supply the other with copies of all
correspondence between it or any of its representatives, on the one hand, and
the SEC, or its staff or any other government officials, on the other hand, with
respect to the S-4, the Information Statement/Prospectus or the Merger. No
amendment or supplement to the Information Statement/Prospectus or S-4 will be
made by the Company or Parent without the prior approval of the other party,
except as required by applicable laws and then only to the extent necessary, or
without providing the other party the opportunity to review and comment thereon.
Parent shall advise the Company, promptly after it receives notice thereof, of
the time when the S-4 has been declared effective, the issuance of any stop
order, or the suspension of the qualification of Parent Common Stock issuable in
connection with the Merger for offering or sale in any jurisdiction. If, at any
time prior to the Effective Time, any information relating to the Company or
Parent, or any of their respective affiliates, officers or directors should be
discovered by the Company or Parent which should be set forth in an amendment or
supplement to any of the S-4, the Information Statement/Prospectus or any Other
Filing so that any of such documents would not include any misstatement of a
material fact or omit to state any material fact necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading, or an event occurs which is required to be set forth in an
amendment or supplement to the Information Statement/Prospectus, the S-4 or any
Other Filing, the party that discovers such information shall promptly notify
the other party and an amendment or supplement describing such information shall
be promptly filed with the SEC and, to the extent required by law, disseminated
to the Company's stockholders. The Company and Parent each shall promptly
provide the other (or its counsel) copies of all filings made by it with any
Governmental Entity in connection with this Agreement and the Transactions.
SECTION 5.5. WRITTEN CONSENT.
(a) Parent agrees that immediately following the execution and delivery of
this Agreement, it shall deliver to the Company a duly executed irrevocable
written consent with respect to all shares of Company Class B Common Stock owned
by it adopting the Agreement as approved by the Board of Directors of the
Company. Parent agrees that it shall not transfer, other than to an affiliate of
Parent, any shares of Company Class B Common Stock beneficially owned by Parent
on the date hereof until the earlier to occur of the Effective Time and the
termination of this Agreement in accordance with its terms. If this Agreement is
subsequently amended and such amendment is approved by the Board of Directors of
Parent and the Company or if a subsequent consent is deemed necessary to
consummate the Transactions contemplated by this Agreement, then Parent shall as
soon thereafter as practicable either (a) execute and deliver a written consent
with respect to all shares of Company Class B Common Stock owned directly or
indirectly by it on the date hereof adopting this Agreement, or (b) at a meeting
of the Company's stockholders at which any proposal to adopt the Merger
Agreement is proposed, cause all shares of Company Class B Common Stock owned
directly or indirectly by it on the date hereof (i) to appear, in person or by
proxy, so that all such shares are counted for the purpose of obtaining a quorum
at any such meeting of stockholders of the Company, and at any adjournment or
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adjournments thereof, and (ii) to vote, in person or by proxy, with respect to
such shares to adopt such amendment to this Agreement. Parent shall cause all
shares of Company Class B Common Stock owned directly or indirectly by it on the
date hereof to vote against, and refrain from executing and delivering written
consents in favor of, any proposal that is contrary to the adoption of this
Agreement and the Transactions contemplated hereby. Following delivery of any
written consent of Parent contemplated by this Section 5.5, the Company shall
promptly provide to its stockholders the notice required pursuant to Section
228(e) of the Delaware Statute.
(b) Parent agrees that immediately following the execution and delivery of
this Agreement, it shall deliver to Sub a duly executed irrevocable written
consent (with a copy being delivered to the Company) with respect to all shares
of Sub Common Stock owned by it adopting the Agreement as approved by the Board
of Directors of Sub.
SECTION 5.6. AGREEMENTS TO TAKE REASONABLE ACTION.
(a) The parties shall take, and shall cause their respective subsidiaries
to take, all reasonable actions necessary to comply promptly with all legal
requirements which may be imposed on them with respect to the Merger and shall
take all reasonable actions necessary to cooperate promptly with and furnish
information to the other parties in connection with any such requirements
imposed upon them or any of their subsidiaries in connection with the Merger.
Each party shall take, and shall cause its subsidiaries to take, all reasonable
actions necessary (i) to obtain (and will take all reasonable actions necessary
to promptly cooperate with the other parties in obtaining) any clearance,
consent, authorization, order or approval of, or any exemption by, any
Governmental Entity, or other third party, required to be obtained or made by it
(or by the other parties or any of their respective subsidiaries) in connection
with the Transactions or the taking of any action contemplated by this
Agreement; (ii) to lift, rescind or mitigate the effect of any injunction or
restraining order or other order adversely affecting its ability to consummate
the Transactions; (iii) to fulfill all conditions applicable to the parties
pursuant to this Agreement; (iv) to prevent, with respect to a threatened or
pending temporary, preliminary or permanent injunction or other order, decree or
ruling or statute, rule, regulation or executive order, the entry, enactment or
promulgation thereof, as the case may be; (v) to defend any lawsuit or other
legal proceeding, whether judicial or administrative, challenging the Agreement,
the consummation of the Transactions or the terms thereof; and (vi) to execute
and deliver any additional agreements or instruments necessary to consummate the
Transactions and fully carry out the purposes of the Agreement PROVIDED,
HOWEVER, that with respect to clauses (i) through (vi) above, the parties will
take only such curative measures (such as licensing and divestiture) as the
parties determine to be reasonable.
(b) Subject to the terms and conditions of this Agreement, each of the
parties shall use all reasonable efforts to take, or cause to be taken, all
actions and to do, or cause to be done, all things necessary, proper or
advisable under applicable laws and regulations to consummate and make effective
as promptly as practicable the Merger, subject to the appropriate approval of
the stockholders of the Company.
SECTION 5.7. CONSENTS. Parent and the Company shall each use all reasonable
efforts to obtain the consent and approval of, or effect the notification of or
filing with, each
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person or authority whose consent or approval is required in order to permit the
consummation of the Merger and the Transactions and to enable Parent and the
Surviving Corporation to conduct and operate the business of Parent and the
Company and their respective subsidiaries substantially as presently conducted
and as contemplated to be conducted.
SECTION 5.8. NASDAQ QUOTATION. Parent shall use its reasonable best efforts
to cause the shares of Parent Common Stock issuable to the stockholders of the
Company in the Merger (including the shares of Parent Common Stock reserved for
issuance with respect to Company Stock Options and Company Stock-Based Awards)
to be eligible for quotation on the Nasdaq National Market (or other national
market or exchange on which Parent Common Stock is then traded or quoted) prior
to the Effective Time.
SECTION 5.9. AFFILIATES. At least ten Business Days prior to the
anticipated Closing Date, the Company shall deliver to Parent a list of names
and addresses of those persons who, on the date hereof, are "affiliates" of the
Company within the meaning of Rule 145 under the Securities Act and applicable
rules and regulations. The Company shall use its reasonable best efforts to
deliver or cause to be delivered to Parent, prior to the Effective Time, from
each of the affiliates of the Company identified in the foregoing list,
agreements substantially in the form attached to this Agreement as EXHIBIT B.
SECTION 5.10. INDEMNIFICATION.
(a) Parent shall maintain in effect for the benefit of individuals who at
or prior to the Effective Time were directors or officers of the Company the
current provisions regarding indemnification and exculpation of officers and
directors (including with respect to advancement of expenses) contained in the
Certificate of Incorporation and Bylaws of the Company on the date hereof, which
provisions shall not be amended, modified or otherwise repealed for a period of
six (6) years from the Effective Time in any manner that would adversely affect
the rights thereunder as of the Effective Time of such individuals, unless such
modification is required after the Effective Time by applicable law and then
only to the minimum extent required by such applicable law or except to make
changes permitted by applicable law that would enlarge the exculpation or rights
of indemnification thereunder; PROVIDED, HOWEVER, that if any claims are
asserted or made within such six-year period, all rights to indemnification (and
to advancement of expenses) hereunder in respect of such claims shall continue,
without diminution, until disposition of all such claims.
(b) The Surviving Corporation shall (and Parent shall cause the Surviving
Corporation to), to the maximum extent permitted under applicable law, provide
to the current directors and officers of the Company the maximum indemnification
protection (including with respect to advancement of expenses, including
advancing expenses as incurred) permitted under the Delaware Statute for a
period of six (6) years after the Effective Time; PROVIDED, HOWEVER, that if any
claims are asserted or made within such six-year period, all rights to
indemnification (and to advancement of expenses) hereunder in respect of such
claims shall continue, without diminution, until disposition of all such claims.
(c) The Surviving Corporation shall (and Parent shall cause the Surviving
Corporation to) assume, honor and fulfill in all respects the obligations of the
Company pursuant
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to any indemnification agreements, including those contained in employment
agreements (the employee parties under such agreements being referred to as the
"COVERED PERSONS") with the Company's directors, officers and other employees
(if any) existing at the Effective Time. In addition, Parent shall provide, or
cause the Surviving Corporation to provide, for a period of not less than six
(6) years after the Effective Time, the Company's current and former directors
and officers who are currently covered by the Company's existing insurance and
indemnification policy with an insurance and indemnification policy (including,
without limitation, by arranging for run-off coverage, if necessary) that
provides coverage for events occurring at or prior to the Effective Time (the
"D&O INSURANCE") that is no less favorable than the existing policy (it being
acknowledged and understood that the Company currently self-insures for legally
indemnifiable claims and maintains liability insurance solely for claims not so
indemnifiable or in circumstances in which the Company cannot provide
indemnification), or, if substantially equivalent insurance coverage is
unavailable, the most advantageous D&O Insurance obtainable for an annual
premium equal to 200% of the annual premium currently in place for the Company
for such insurance; PROVIDED, HOWEVER, that Parent and the Surviving Corporation
shall not be required to pay an annual premium for the D&O Insurance in excess
of 200% of the annual premium currently in place for the Company for such
insurance, calculated on the basis of a fair allocation of the portion of such
premium if Parent arranges such coverage on a group basis.
(d) This Section 5.10 shall survive the Effective Time, is intended to
benefit the Surviving Corporation and the Covered Persons and shall be
enforceable by the Covered Persons, their heirs, assigns and representatives and
are in addition to, and not in substitution for, any other rights to
indemnification or contribution that any such person may have by contract or
otherwise. In the event the Corporation or any of its successors or assigns (i)
consolidates with or merges into any other person and shall not be the
continuing or surviving corporation or entity of such consolidation or merger,
or (ii) transfers or conveys all or substantially all of its properties and
assets to any person, then, and in each such case, proper provision shall be
made so that the successors and assigns of the Surviving Corporation, or at
Parent's option, Parent, shall assume the obligations set forth in this Section
5.10.
SECTION 5.11. NOTIFICATION OF CERTAIN MATTERS. Each of the Company and
Parent shall give prompt notice to the other party of the occurrence, or failure
to occur, of any event, which occurrence or failure to occur would be likely to
cause (a) any representation or warranty contained in this Agreement to be
untrue or inaccurate in any material respect at any time from the date of this
Agreement to the Effective Time, or (b) any material failure of the Company or
Parent, as the case may be, or of any officer, director, employee or agent
thereof, to comply with or satisfy any covenant, condition or agreement to be
complied with or satisfied by it under this Agreement. Notwithstanding the
foregoing, the delivery of any notice pursuant to this Section 5.11 shall not
limit or otherwise affect the remedies available hereunder to the party
receiving such notice.
SECTION 5.12. EMPLOYEE AGREEMENTS. From and after the Effective Time,
Parent shall cause the Surviving Corporation to fulfill all written employment,
severance, termination, consulting and retirement agreements, as in effect on
the date hereof, to which the Company or any of its subsidiaries is a party,
pursuant to the terms thereof and applicable law.
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SECTION 5.13. REORGANIZATION. From and after the date hereof, each of
Parent and the Company and their respective subsidiaries shall not, and shall
use reasonable efforts to cause their affiliates not to, take any action, or
fail to take any action, which action or failure to act would jeopardize
qualification of the Merger as a reorganization within the meaning of Section
368(a) of the Code or enter into any contract, agreement, commitment or
arrangement that would have such effect. Each of Parent and the Company shall,
and shall cause each of their respective subsidiaries to, use reasonable efforts
to obtain the opinions of counsel referred to in Section 6.2(c) and 6.3(c),
including the execution of the officers' certificates referred to therein.
SECTION 5.14. PUBLIC ANNOUNCEMENTS. The initial press release relating to
the Transactions shall be a joint press release, to be agreed upon by the Parent
and the Company (including the Special Committee). Thereafter and until the
Closing, Parent and the Company shall use their reasonable efforts to consult
with each other before issuing any press release with respect to this Agreement
or the Transactions.
SECTION 5.15. STOCKHOLDER LITIGATION. Each of the Company and the Parent
shall give the other the reasonable opportunity to participate in the defense of
any stockholder litigation against the Company or the Parent and their
respective directors and officers, as applicable, relating to the Transactions
or this Agreement.
SECTION 5.16. SECTION 16B-3. Parent and the Company shall take all
reasonable steps to cause the transactions contemplated by Section 2.3 and any
other disposition of equity securities of the Company (including derivative
securities) or acquisitions of equity securities of Parent by each individual
who (a) is a director or officer of the Company, or (b) at the Effective Time
will become a director or officer of Parent, to be exempt under Rule 16b-3
promulgated under the Exchange Act.
ARTICLE 6
CONDITIONS PRECEDENT
SECTION 6.1. CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER.
The respective obligations of each party to effect the Merger are subject to the
satisfaction prior to the Closing Date of the following conditions:
(a) INFORMATION STATEMENT/PROSPECTUS. Twenty (20) business days shall
have elapsed from the mailing of the Information Statement/Prospectus to
the Company's stockholders.
(b) EFFECTIVENESS OF THE S-4. The S-4 shall have been declared
effective by the SEC under the Securities Act and shall not be the subject
of any stop order or proceeding by the SEC seeking a stop order.
(c) GOVERNMENTAL ENTITY APPROVALS. All material authorizations,
consents, orders or approvals of, or declarations or filings with, or
expiration of waiting periods imposed by, any Governmental Entity, if any,
necessary for the consummation of the Merger shall have been filed, expired
or been obtained, other than those that, individually or in the aggregate,
the failure to be filed, expired or obtained would not be reasonably
-27-
expected to have a Parent Material Adverse Effect or a Company Material
Adverse Effect.
(d) NO INJUNCTIONS OR RESTRAINTS; ILLEGALITY. No temporary restraining
order, preliminary or permanent injunction or other order issued by any
court of competent jurisdiction or other legal restraint or prohibition
preventing the consummation of the Merger shall be in effect, nor shall any
proceeding brought by a Governmental Entity be pending which would
reasonably be expected to restrain or prohibit the consummation of the
Merger; and there shall not be any action taken, or any statute, rule,
regulation or order (whether temporary, preliminary or permanent) enacted,
entered or enforced which makes the consummation of the Merger illegal or
prevents or prohibits the Merger.
(e) NASDAQ QUOTATION. The shares of Parent Common Stock issuable to
the holders of Company Common Stock pursuant to the Merger (including the
shares of Parent Common Stock reserved for issuance with respect to Company
Stock Options and Company Stock-Based Awards) shall have been authorized
for quotation on the Nasdaq National Market (or other national market or
exchange on which Parent Common Stock is then traded or quoted), upon
official notice of issuance.
SECTION 6.2. CONDITIONS OF OBLIGATIONS OF PARENT AND SUB. The obligations
of Parent and Sub to effect the Merger are subject to the satisfaction of the
following additional conditions, unless waived in writing by Parent:
(a) REPRESENTATIONS AND WARRANTIES. (i) The representations and
warranties of the Company set forth in Sections 3.2 and 3.7 shall be true
and correct as of the Closing Date as if made on such date (except with
respect to Section 3.2 for inaccuracies that are not significant in amount
and to Section 3.7 for inaccuracies on the date the S-4 is initially
filed), (ii) except to the extent that the failure of the representations
and warranties of the Company set forth in this Agreement to be true and
correct, in the aggregate, would not have a Company Material Adverse
Effect, the representations and warranties of the Company made in this
Agreement, without regard to any materiality or "Material Adverse Effect"
qualification therein, shall be true and correct as of the date hereof, and
(iii) Parent shall have received a certificate signed by a senior executive
officer of the Company certifying the fulfillment of the conditions set
forth in clauses (i) and (ii) of this Section 6.2(a).
(b) PERFORMANCE OF OBLIGATIONS OF THE COMPANY. The Company shall have
performed in all material respects all of its obligations and covenants,
taken as a whole, required to be performed by it under this Agreement prior
to or as of the Closing Date, and Parent shall have received a certificate
to such effect signed by a senior executive officer of the Company.
(c) TAX OPINION. Parent shall have received a written opinion of
Wachtell, Lipton, Rosen & Katz, special counsel to Parent, dated the
Closing Date, to the effect that for U.S. federal income tax purposes the
Merger will constitute a "reorganization" within the meaning of Section
368(a) of the Code. In rendering such opinion, counsel to Parent shall be
entitled to rely upon customary assumptions and representations reasonably
-28-
satisfactory to such counsel, including representations set forth in
certificates of officers of Parent and the Company.
SECTION 6.3. CONDITIONS OF OBLIGATIONS OF THE COMPANY. The obligation of
the Company to effect the Merger is subject to the satisfaction of the following
conditions, unless waived in writing by the Company:
(a) REPRESENTATIONS AND WARRANTIES. (i) The representations and
warranties of Parent set forth in Section 4.7 shall be true and correct as
of the Closing Date as if made on such date, (ii) the representations and
warranties of Parent set forth in Section 4.2 shall be true and correct as
of the date hereof (except for inaccuracies that are not significant in
amount and to Section 4.7 for inaccuracies on the date the S-4 is initially
filed), and (iii) except to the extent that the failure of the
representations and warranties of Parent and Sub set forth in this
Agreement to be true and correct, in the aggregate, would not have a Parent
Material Adverse Effect, the representations and warranties of Parent and
Sub made in this Agreement, without regard to any materiality or "Material
Adverse Effect" qualification therein, shall be true and correct as of the
date hereof, and (iii) the Company shall have received a certificate signed
by a senior executive officer of Parent certifying the fulfillment of the
conditions set forth in clauses (i) through (iii) of this Section 6.3(a).
(b) PERFORMANCE OF OBLIGATIONS OF PARENT AND SUB. Each of Parent and
Sub shall have performed in all material respects all of their respective
obligations and covenants, taken as a whole, required to be performed by
such party under this Agreement prior to or as of the Closing Date, and the
Company shall have received a certificate to such effect signed by a senior
executive officer of Parent.
(c) TAX OPINION. The Company shall have received a written opinion of
Akin, Gump, Strauss, Hauer & Feld, L.L.P., special counsel to the Company,
dated the Closing Date, to the effect that for U.S. federal income tax
purposes the Merger will constitute a "reorganization" within the meaning
of Section 368(a) of the Code. In rendering such opinion, counsel to the
Company shall be entitled to rely upon customary assumptions and
representations reasonably satisfactory to such counsel, including
representations set forth in certificates of officers of Parent and the
Company.
ARTICLE 7
TERMINATION
SECTION 7.1. TERMINATION. This Agreement may be terminated at any time
prior to the Effective Time, whether before or after approval of the Merger by
the stockholders of the Company:
(a) by mutual written consent duly authorized by the Board of
Directors of Parent and the Board of Directors of the Company;
(b) by either Parent or the Company if the Merger shall not have been
consummated by November 15, 2003 (PROVIDED, that the right to terminate
this Agreement under this Section 7.1(b) shall not be available to any
party whose action or
-29-
failure to act has been the cause of or resulted in the failure of the
Merger to occur on or before such date and such action or failure to act
constitutes a breach of this Agreement);
(c) by either Parent or the Company, if a court of competent
jurisdiction or other Governmental Entity shall have issued an order,
decree or ruling or taken any other action, in any case having the effect
of permanently restraining, enjoining or otherwise prohibiting the Merger,
which order, decree or ruling is final and nonappealable;
(d) by the Company, upon a breach of any representation, warranty,
covenant or agreement on the part of Parent set forth in this Agreement
such that the conditions set forth in Section 6.3(a) or Section 6.3(b)
shall have become incapable of fulfillment and such breach shall not have
been waived by the Company; or
(e) by Parent, upon a breach of any representation, warranty,
covenant or agreement on the part of the Company set forth in this
Agreement such that the conditions set forth in Section 6.2(a) or Section
6.2(b) shall have become incapable of fulfillment and such breach shall
not have been waived by Parent.
Any termination pursuant to this Section 7.1 shall, in the case of the Company
or the Board of Directors of the Company, be based on the recommendation of the
Special Committee.
SECTION 7.2. EFFECT OF TERMINATION. In the event of the termination of this
Agreement as provided in Section 7.1, this Agreement shall be of no further
force or effect, except (a) as set forth in the last sentence of this Section
7.2, Section 7.3, and Article 8, each of which shall survive the termination of
this Agreement, and (b) nothing herein shall relieve any party from liability
for any breach of this Agreement.
SECTION 7.3. FEES AND EXPENSES. All fees and expenses incurred in
connection with this Agreement and the Transactions shall be paid by the party
incurring such expenses, whether or not the Merger is consummated.
ARTICLE 8
GENERAL PROVISIONS
SECTION 8.1. AMENDMENT. This Agreement (including the Exhibits and
Disclosure Letters hereto) may be amended prior to the Effective Time by Parent
and the Company, by action taken by the Board of Directors of Parent and the
Board of Directors of the Company (PROVIDED, that no amendment shall be approved
by the Board of Directors of the Company unless such amendment shall have been
recommended by the Special Committee and, when applicable, approved by the
disinterested directors of the Company), at any time before or after approval of
the Merger by the stockholders of the Company but, after any such approval, no
amendment shall be made which by law requires further approval by such
stockholders without such further approval. This Agreement may not be amended
except by an instrument in writing signed on behalf of each of the parties.
SECTION 8.2. EXTENSION; WAIVER. At any time prior to the Effective Time
(whether before or after approval of the stockholders of the Company), Parent
and the Company
-30-
may (a) extend the time for the performance of any of the obligations or other
acts of the other parties, (b) waive any inaccuracies in the representations and
warranties contained in this Agreement or in any document delivered pursuant to
this Agreement and (c) waive compliance with any of the agreements or conditions
contained in this Agreement. Any extension or waiver on behalf of the Company
shall be taken only upon the recommendation of the Special Committee (and, when
applicable, by the disinterested directors of the Company). Any agreement on the
part of a party to any such extension or waiver shall be valid only if set forth
in an instrument in writing signed on behalf of such party.
SECTION 8.3. NONSURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS. All
representations, warranties and agreements in this Agreement or in any
instrument or certificate delivered pursuant to this Agreement shall not survive
the Merger, except for the agreements contained in Article 1 (The Merger),
Article 2 (Effect of the Merger on the Capital Stock of the Constituent
Corporations; Exchange of Certificates), Section 5.10 (Indemnification), 5.12
(Employee Agreements), 5.13 (Reorganization) and Article 8 (General Provisions),
each of which shall survive the Merger.
SECTION 8.4. ENTIRE AGREEMENT. This Agreement (including the Exhibits and
disclosure letters hereto) contains the entire agreement among all of the
parties with respect to the subject matter hereof and supersedes all prior
arrangements and understandings, both written and oral, with respect thereto,
but shall not supersede any agreements among any group of the parties hereto
entered into on or after the date hereof.
SECTION 8.5. SEVERABILITY. It is the desire and intent of the parties that
the provisions of this Agreement be enforced to the fullest extent permissible
under the law and public policies applied in each jurisdiction in which
enforcement is sought. Accordingly, in the event that any provision of this
Agreement would be held in any jurisdiction to be invalid, prohibited or
unenforceable for any reason, such provision, as to such jurisdiction, shall be
ineffective, without invalidating the remaining provisions of this Agreement or
affecting the validity or enforceability of such provision in any other
jurisdiction. Notwithstanding the foregoing, if such provision could be more
narrowly drawn so as not to be invalid, prohibited or unenforceable in such
jurisdiction, it shall, as to such jurisdiction, be so narrowly drawn, without
invalidating the remaining provisions of this Agreement or affecting the
validity or enforceability of such provision in any other jurisdiction.
SECTION 8.6. NOTICES. All notices and other communications pursuant to this
Agreement shall be in writing and shall be deemed to be sufficient if contained
in a written instrument and shall be deemed given if delivered personally,
telecopied, sent by nationally recognized, overnight courier or mailed by
registered or certified mail (return receipt requested), postage prepaid, to the
parties at the following addresses (or at such other address for a party as
shall be specified by like notice):
(a) if to Parent or Sub, to:
USA Interactive
Carnegie Hall Tower
152 West 57th Street
-31-
42nd Floor
New York, New York 10019
Attention: General Counsel
Telecopier: 212-314-7329
with a copy to:
Wachtell, Lipton, Rosen & Katz
51 West 52nd Street
New York, New York 10019
Attention: Pamela S. Seymon
Andrew J. Nussbaum
Telecopier: (212) 403-2000
(b) if to the Company, to:
Hotels.com
10440 North Central Expressway
Suite 400
Dallas, Texas 75231
Attention: General Counsel
Telecopier: (214) 369-7409
with a copy to:
Akin, Gump, Strauss, Hauer & Feld, L.L.P.
1333 New Hampshire Avenue, N.W.
Suite 400
Washington, DC 20036
Attention: Bruce S. Mendelsohn
Telecopier: (202) 887-4288
and to:
Akin, Gump, Strauss, Hauer & Feld, L.L.P.
590 Madison Avenue
New York, New York 10022
Attention: Patrick J. Dooley
Telecopier: (212) 872-1002
All such notices and other communications shall be deemed to have been received
(a) in the case of personal delivery, on the date of such delivery, (b) in the
case of a telecopy, when the party receiving such telecopy shall have confirmed
receipt of the communication, (c) in the case of delivery by nationally
recognized overnight courier, on the Business Day following dispatch and (d) in
the case of mailing, on the third Business Day following such mailing.
-32-
SECTION 8.7. HEADINGS; INTERPRETATION. The headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement. As used in this Agreement,
"subsidiary" with respect to any person shall mean any entity which such person
controls the voting power thereof, either through the ownership of equity
interests or otherwise, PROVIDED that under no circumstances shall the Company
and its subsidiaries be deemed to be subsidiaries of Parent.
SECTION 8.8. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other parties, it being understood that all
parties need not sign the same counterpart.
SECTION 8.9. BENEFITS; ASSIGNMENT. This Agreement is not intended to confer
upon any person other than the parties any rights or remedies hereunder and
shall not be assigned by operation of law or otherwise; PROVIDED, HOWEVER, that
the officers and directors of the Company and other Covered Persons are intended
beneficiaries of the covenants and agreements contained in Section 5.10.
SECTION 8.10. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware applicable to
contracts made and to be performed therein, without giving effect to laws that
might otherwise govern under applicable principles of conflicts of law.
-33-
IN WITNESS WHEREOF, the parties have caused this Agreement to be
signed by their respective officers thereunto duly authorized, as of the date
first written above.
USA INTERACTIVE
By: /s/ Julius Genachowski
----------------------------------
Name: Julius Genachowski
Title: Executive Vice President,
General Counsel and Secretary
HOTELS.COM
By: /s/ David Litman
---------------------------------
Name: David Litman
Title: Chief Executive Officer
HERMITAGE MERGER CORP.
By: /s/ Julius Genachowski
---------------------------------
Name: Julius Genachowski
Title: Vice President
[SIGNATURE PAGE TO AGREEMENT AND PLAN OF MERGER]
Exhibit 99.1
USA INTERACTIVE [logo] HOTELS.COM [logo]
*SEE IMPORTANT NOTES AT END OF RELEASE
USA INTERACTIVE AND HOTELS.COM ANNOUNCE MERGER AGREEMENT
USA TO ACQUIRE THE HOTELS.COM SHARES IT DOES NOT ALREADY OWN IN A
$1.1 BILLION TRANSACTION
TRANSACTION COMPLETES USA CORPORATE RESTRUCTURING
New York, NY and Dallas, TX - April 10, 2003 -- USA Interactive (Nasdaq: USAI)
and Hotels.com (Nasdaq: ROOM) announced today that they have entered into an
agreement by which USA, already the majority owner of Hotels.com, would acquire
the Hotels.com shares it does not currently own in a tax-free, stock-for-stock
transaction. The transaction is valued at approximately $1.1 billion based on
the closing price of USA common stock on April 9, 2003.
The transaction would represent the final step in USA's efforts, begun in June
2002, to simplify its corporate structure by buying in its public subsidiaries.
As a result of these transactions, all of USA's interests will be indivisible
inside USA's public security.
The transaction would not change the current operating structure of Hotels.com,
and USA's intention is for Hotels.com and Expedia to continue to be operated
separately. Travel is, however, its own sector and USA would continue to review
strategy and over time may decide to make changes.
The Hotels.com transaction is expected to be slightly accretive to USA's
budgeted adjusted earnings per share for 2003.
The Hotels.com Board of Directors approved the agreement following the unanimous
recommendation and approval of an independent Special Committee of the
Hotels.com Board. Under the agreement, Hotels.com shareholders will receive 2.4
shares of USA common stock for each share of Hotels.com stock that they own.
This represents approximately a 20% premium based on the closing price of USA
stock and Hotels.com stock on March 18th, 2003, the day prior to the
announcement of USA's merger with Expedia. In the transaction, USA would issue
to Hotels.com public shareholders approximately 43.0 million basic shares and
45.2 million shares on a fully diluted, treasury method basis.
Barry Diller, Chairman and CEO of USA Interactive, said, "David Litman and Bob
Diener, in classic entrepreneurial fashion, have created a great company. We
were lucky enough to know that at an early stage, so we've watched their
determination and fierce dedication in building up the enterprise...and we
believe all that will continue because the incentives are all in place and our
interests completely aligned for the future."
"The Special Committee carefully reviewed the transaction in consultation with
our financial and legal advisors and we believe that the merger is in the best
interests of Hotels.com's minority shareholders," said Elan Blutinger, Chairman
of the Special Committee of Hotels.com's Board of Directors. "Hotels.com's
shareholders have an opportunity to participate in the continued growth
potential of USA, which is further enhanced by its full ownership of
Hotels.com."
David Litman, Chairman and CEO of Hotels.com, commented, "Bob Diener and I are
thrilled at the opportunity for Hotels.com to participate on a broader scale in
the future success of USA Interactive. We are convinced that this merger will
enhance the growth prospects for Hotels.com, and we are more determined than
ever to achieve our company goals through this exciting combination with USA.
Bob and I would like to thank the more than 1,200 employees of Hotels.com that
have helped to make this possible and we look forward to an exciting future."
In connection with the merger, Hotels.com options would be converted into
options to acquire USA common stock, and Hotels.com warrants would be converted
into warrants to acquire, or exercisable for, USA common stock. David Litman,
Chairman and CEO, and Bob Diener, President, will continue in their current
positions, and the new USA shares they receive in the transaction in respect of
their Hotels.com shares that are currently subject to transfer restrictions will
be subject to those same transfer restrictions. The transfer restrictions remain
in effect until March 2004.
USA currently owns approximately 68% of the outstanding Hotels.com stock and
controls approximately 97% of the combined voting power of the outstanding
Hotels.com shares. USA, as the holder of a majority of the voting power of
Hotels.com has acted by written consent to approve the transaction. An
Information Statement will be mailed to Hotels.com shareholders in connection
with the transaction. No separate USA shareholder approval is required. The
transaction, which is subject to customary conditions, is expected to be
completed in the summer of 2003. The transaction is not subject to any material
adverse effect conditions (including the possible effects of war).
ABOUT USA INTERACTIVE
USA Interactive (Nasdaq: USAI) engages worldwide in the business of
interactivity via the Internet, the television and the telephone. USA's multiple
brands are organized across three areas: Electronic Retailing, Information &
Services and Travel Services. Electronic Retailing is comprised of HSN,
America's Store, HSN.com, and Home Shopping Europe and Euvia in Germany.
Information & Services includes Ticketmaster, Match.com, uDate, Citysearch,
Evite, Entertainment Publications and Precision Response Corporation. Travel
Services consists of Expedia (Nasdaq: EXPE), Hotels.com (Nasdaq:
ROOM), Interval International, TV Travel Group and USA's forthcoming U.S. cable
travel network.
ABOUT HOTELS.COM.
Hotels.com (Nasdaq:ROOM) is the largest specialized provider of discount lodging
worldwide, providing service through its own websites (including www.hotels.com
and others), more than 33,000 affiliated websites, and its toll-free call
centers (1-800-2-HOTELS). Hotels.com provides accommodations to travelers at
over 7,700 properties in more than 325 markets in North America, Europe, the
Caribbean and Asia. The company offers a one-stop shopping source for hotel
pricing, amenities and availability, and also specializes in providing travelers
with accommodations for sold-out periods. Hotels.com is a majority-owned
subsidiary of USA Interactive (Nasdaq:USAI).
SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES
LITIGATION REFORM ACT OF 1995
This press release contains "forward-looking statements" within the meaning of
the Private Securities Litigation Reform Act of 1995. These forward-looking
statements include statements relating to our anticipated financial performance,
business prospects, new developments, new merchandising strategies and similar
matters, and/or statements preceded by, followed by or that include the words
"believes," "could," "expects," "anticipates," "estimates," "intends," "plans,"
"projects," "seeks," or similar expressions. These forward- looking statements
are necessarily estimates reflecting the best judgment of our senior management
and involve a number of risks and uncertainties that could cause actual results
to differ materially from those suggested by the forward- looking statements.
These forward- looking statements are subject to risks, uncertainties and
assumptions that could have a material adverse effect on the proposed
transaction between USA and Hotels.com and/or on our businesses, financial
condition or results of operations. You should understand that the following
important factors could affect our future results and could cause those results
to differ materially from those expressed in the forward- looking statements:
(1) the risk that USA's and Hotels.com's businesses will not be integrated
successfully; (2) costs related to the proposed transaction; (3) material
adverse changes in economic conditions generally or in our markets or
industries; (4) future regulatory and legislative actions and conditions
affecting our operating areas; (5) competition from others; (6) successful
integration of our divisions' management structures; (7) product demand and
market acceptance; (8) the ability to protect proprietary information and
technology or to obtain necessary licenses on commercially reasonable terms; (9)
the ability to expand into and successfully operate in foreign markets; (10)
obtaining and retaining skilled workers and key executives; (11) acts of
terrorism; and (12) war or political instability. In addition, investors should
consider the other information contained in or incorporated by reference into
USA's and Hotels.com's filings with the U.S. Securities and Exchange Commission
(the "SEC"), including their Annual Reports on Form 10-K for the fiscal year
ended 2001, especially in the Management's Discussion and Analysis section,
their most recent Quarterly Reports on Form 10-Q and their Current Reports on
Form 8-K. Other unknown or unpredictable factors also could have material
adverse effects on our future results, performance or achievements. In light of
these risks, uncertainties, assumptions and factors, the forward-
looking events discussed in this press release may not occur. You are cautioned
not to place undue reliance on these forward- looking statements, which speak
only as of the date stated, or if no date is stated, as of the date of this
press release. We are not under any obligation and do not intend to make
publicly available any update or other revisions to any of the forward- looking
statements contained in this press release to reflect circumstances existing
after the date of this press release or to reflect the occurrence of future
events even if experience or future events make it clear that any expected
results expressed or implied by those forward-looking statements will not be
realized.
ADDITIONAL INFORMATION AND WHERE TO FIND IT
In connection with the proposed transaction, USA Interactive and Hotels.com will
file an Information Statement/Prospectus with the Securities and Exchange
Commission. Investors and security holders are urged to read carefully the
Information Statement/Prospectus regarding the proposed transaction when it
becomes available, because it will contain important information. Investors and
security holders may obtain a free copy of the Information Statement/Prospectus
(when it is available) and other documents containing information about USA
Interactive and Hotels.com, without charge, at the SEC's web site at
http://www.sec.gov. Free copies of USA Interactive's filings may be obtained by
directing a request to USA Interactive, 152 West 57th Street, New York, New
York, 10019, Attention: Investor Relations, and free copies of Hotels.com's
filings may be obtained by directing a request to Hotels.com, 8140 Walnut Hill
Lane, Suite 203, Dallas, TX 75231, Attention: Investor Relations.
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CONTACTS:
FOR USA INTERACTIVE: FOR HOTELS.COM:
Ron Sato Lois Fuhr
USA Interactive Corporate Communications Fuhr & Associates
212/314-7254 206/236-0606
Roger Clark/Lauren Rosenfield Molly Branch
USA Interactive Investor Relations Hotels.com Investor
212/314-7400 214/361-7311, ext. 1331