BOARD OF DIRECTORS AND MANAGEMENT AFTER THE MERGER
BOARD OF DIRECTORS. Under the merger agreement, upon completion of the
merger the board of directors of PRIMEDIA will be comprised of ten individuals,
nine of whom will be the existing members of PRIMEDIA's board of the directors,
and the tenth of whom will be Scott P. Kurnit of About. The existing members of
the board of directors are Thomas S. Rogers, Beverly C. Chell, Meyer Feldberg,
H. John Greeniaus, Perry Golkin, Henry R. Kravis, Charles G. McCurdy, George R.
Roberts and Michael T. Tokarz.
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Biographical information with respect to the current directors of PRIMEDIA
is contained in PRIMEDIA's annual report on Form 10-K for the year ended
December 31, 1999 and PRIMEDIA's proxy statement for its 2000 annual meeting of
stockholders dated April 19, 2000, and is incorporated herein by reference.
Biographical information with respect to Mr. Kurnit is contained in About's
annual report on Form 10-K for the year ended December 31, 1999 and About's
proxy statement for its 2000 annual meeting of stockholders dated April 10,
2000, and is incorporated herein by reference.
MANAGEMENT. Mr. Kurnit will remain as Chief Executive Officer of About and
he will also become Chief Internet Officer of PRIMEDIA. William C. Day will
remain as Chief Operating Officer of About.
MATERIAL UNITED STATES FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER
In the opinion of Simpson Thacher & Bartlett, special tax counsel to
PRIMEDIA, and Brobeck, Phleger & Harrison LLP, special tax counsel to About, the
following discussion summarizes the material United States federal income tax
consequences of the merger that will generally apply to U.S. holders of About
stock.
For purposes of this discussion, a U.S. holder means:
- an individual citizen or resident of the United States;
- a corporation or other entity taxable as a corporation created or
organized under the laws of the United States or any of its political
subdivisions;
- a trust, if a U.S. court is able to exercise primary supervision over the
administration of the trust and one or more U.S. persons have the
authority to control all substantial decisions of the trust; or
- an estate that is subject to United States federal income tax on its
income regardless of its source.
This discussion does not address any tax consequences arising under the laws
of any state, locality or foreign jurisdiction. This discussion is not a
comprehensive description of all of the tax consequences that may be relevant to
you. For example, we have not described tax consequences that arise from rules
that apply to some classes of taxpayers. We have also not described tax
consequences that we assume to be generally known by investors. This discussion
is based upon the Internal Revenue Code of 1986, as amended (the "Code"), the
regulations of the United States Treasury Department and court and
administrative rulings and judicial decisions in effect on the date of this
prospectus. These laws may change, possibly retroactively, and any change could
affect the continuing validity of this discussion.
This discussion assumes that you hold your shares of About stock as a
capital asset and does not address the tax consequences that may be relevant to
you in light of your particular circumstances. In addition, it does not present
a description of the United States federal income tax laws applicable to you if
you are subject to special treatment under the United States federal income tax
laws, including if you are:
- a financial institution;
- a tax-exempt organization;
- an S corporation or other pass-through entity;
- an insurance company;
- a dealer in securities or foreign currencies;
- a trader in securities that elects the mark-to-market method of accounting
for your securities;
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- a person that has a functional currency other than the U.S. dollar;
- an investor in a pass-through entity;
- an About stockholder who received your About stock through the exercise of
employee stock options or otherwise as compensation;
- an About stockholder who holds About stock as part of a hedge, straddle or
conversion transaction; or
- a person subject to the alternative minimum tax provisions of the Code.
The summary that follows sets out the material United States federal income
tax consequences to U.S. holders who exchange their About stock for PRIMEDIA
common stock. As a condition to the closing, Simpson Thacher & Bartlett, tax
counsel to PRIMEDIA, and Brobeck, Phleger & Harrison LLP, tax counsel to About,
must render tax opinions that the merger will constitute a reorganization with
the meaning of Section 368(a) of the Code. The opinions of counsel will be based
upon (i) certain factual representations made by PRIMEDIA, About and Abracadabra
Acquisition Corporation, and (ii) the assumption that the transactions described
herein will be consummated in accordance with the terms of the merger agreement
and related agreements. PRIMEDIA and About will not seek a ruling from the
Internal Revenue Service concerning the tax consequences of the transactions
described herein. An opinion of counsel is not binding on the Internal Revenue
Service and we can give no assurance that the Internal Revenue Service will not
take a position contrary to one or more positions reflected in the opinions or
that the courts will uphold such opinions if challenged by the Internal Revenue
Service.
If the merger qualifies as a reorganization:
- you will not recognize gain or loss when you exchange your About stock
solely for PRIMEDIA common stock;
- if you receive cash instead of a fractional share of PRIMEDIA common stock
you will be treated as having received the cash in exchange for the
fractional share interest and generally will recognize capital gain or
loss on the deemed exchange in an amount equal to the difference between
the amount of cash received and the basis of the About stock allocable to
that fractional share;
- the aggregate tax basis of PRIMEDIA common stock you receive will be the
same as the aggregate tax basis of the About stock you surrender in the
exchange, decreased by the tax basis allocated to any fractional share
interest exchanged for cash; and
- the holding period of PRIMEDIA common stock you receive will include the
holding period of shares of About stock you surrender in the exchange.
BACKUP WITHHOLDING. If you are a noncorporate holder of About stock you may
be subject to backup withholding at a 31% rate on any cash payments received in
lieu of a fractional share interest in About stock. You will not be subject to
backup withholding, however, if you:
- furnish a correct taxpayer identification number and certify that you are
not subject to backup withholding on the substitute Form W-9 or successor
form included in the letter of transmittal to be delivered to you
following the completion of the merger;
- provide a certification of foreign status on Form W-8 or a successor form;
or
- are otherwise exempt from backup withholding.
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Any amounts withheld under the backup withholding rules will be allowed as a
refund or credit against your United States federal income tax liability,
provided you furnish the required information to the Internal Revenue Service.
REPORTING REQUIREMENTS. You may be required to retain records relating to
your About stock, and file with your U.S. federal income tax return a statement
setting forth facts relating to the merger.
TAX MATTERS ARE VERY COMPLICATED, AND THE TAX CONSEQUENCES OF THE MERGER TO
YOU WILL DEPEND UPON THE FACTS OF YOUR PARTICULAR SITUATION. WE ENCOURAGE YOU TO
CONSULT YOUR OWN TAX ADVISORS REGARDING THE SPECIFIC TAX CONSEQUENCES OF THE
MERGER, INCLUDING TAX RETURN REPORTING REQUIREMENTS, THE APPLICABILITY OF
FEDERAL, STATE, LOCAL AND FOREIGN TAX LAWS AND THE EFFECT OF ANY PROPOSED CHANGE
IN THE TAX LAWS.
ACCOUNTING TREATMENT OF THE MERGER
PRIMEDIA intends to account for the merger as the accounting acquiror in a
purchase business combination for financial reporting and accounting purposes,
under generally accepted accounting principles. After the merger, the results of
operations of About will be included in the consolidated financial statements of
PRIMEDIA.
REGULATORY APPROVALS
HART-SCOTT-RODINO.
Effective November 9, 2000, PRIMEDIA and About filed their respective
Pre-Merger Notification and Report Forms with the Federal Trade Commission or
the Department of Justice under the Hart-Scott-Rodino Act. The companies were
notified on November 22, 2000 that early termination of the waiting period was
granted. The Antitrust Division of the Department of Justice and the Federal
Trade Commission, as well as a state antitrust authority or private person, may
challenge the merger at any time before or after the merger is completed.
OTHER APPROVALS. In addition, the merger will require certain notices to be
filed in Delaware and notices or approvals in certain of the other states where
PRIMEDIA and About are engaged in business.
The approval of an application means only that the regulatory criteria for
approval have been satisfied or waived. It does not mean that the approving
authority has determined that the consideration to be received by About
stockholders is fair. Regulatory approval does not constitute an endorsement or
recommendation of the merger.
EXCHANGE OF ABOUT STOCK CERTIFICATES
When the merger is completed, if you are an About stockholder, the exchange
agent will mail to you a letter of transmittal and instructions for use in
surrendering your About stock certificates in exchange for statements indicating
book-entry ownership of PRIMEDIA stock or, if requested, stock certificates.
When you deliver your stock certificates to the exchange agent along with a
properly executed letter of transmittal and any other required documents, your
stock certificates will be canceled and you will receive statements indicating
book-entry ownership of PRIMEDIA common stock or, if requested, stock
certificates representing the number of full shares of PRIMEDIA stock to which
you are entitled under the merger agreement. About stockholders will receive
payment in cash, without interest, instead of any fractional shares of PRIMEDIA
common stock that would have been otherwise issuable to them as a result of the
merger. The amount of cash payable to any About stockholder will be an amount
equal to the product of any fractional share of PRIMEDIA common stock which the
holder would have been entitled to receive MULTIPLIED BY the closing price on
the New York Stock Exchange for a share of PRIMEDIA common stock as reported by
The Wall Street Journal on the closing date of the merger, rounded down to the
nearest cent.
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YOU SHOULD NOT SUBMIT YOUR ABOUT STOCK CERTIFICATES FOR EXCHANGE UNTIL YOU
RECEIVE THE TRANSMITTAL INSTRUCTIONS AND A FORM OF LETTER OF TRANSMITTAL FROM
THE EXCHANGE AGENT.
You are not entitled to receive any dividends or other distributions on
PRIMEDIA stock until the merger is completed and you have surrendered your About
stock certificates in exchange for PRIMEDIA stock certificates.
If there is any dividend or other distribution on PRIMEDIA stock with a
record date after the date on which the merger is completed and a payment date
prior to the date you surrender your About stock certificates in exchange for
PRIMEDIA stock certificates, you will receive the dividend or distribution,
without interest, with respect to the whole shares of PRIMEDIA stock issued to
you promptly after they are issued. If there is any dividend or other
distribution on PRIMEDIA stock with a record date after the date on which the
merger is completed and a payment date after the date you surrender your About
stock certificates in exchange for PRIMEDIA stock certificates, you will receive
the dividend or distribution, without interest, with respect to the whole shares
of PRIMEDIA stock issued to you promptly after the payment date.
PRIMEDIA will only issue PRIMEDIA shares or cash instead of a fractional
share in a name other than the name in which a surrendered About stock
certificate is registered if you present the exchange agent with all documents
required to show and effect the unrecorded transfer of ownership and show that
you paid any applicable stock transfer taxes.
TREATMENT OF STOCK OPTIONS AND OTHER RIGHTS
When the merger is completed, PRIMEDIA will assume each outstanding About
employee stock option and each option will be deemed to constitute an option to
acquire a number of shares of PRIMEDIA common stock equal to the number of
shares of About subject to the option multiplied by the exchange ratio, rounded
down if necessary to the nearest whole share. The exercise price per share for
the assumed options will be the exercise price per share under the About stock
options divided by the exchange ratio, rounded down to the nearest cent. If an
employee of About is involuntarily terminated or voluntarily terminates for a
permitted reason within 12 months of the merger, the employee's unvested stock
options become vested and exercisable. The other material terms of all assumed
About options referred to above will continue to apply.
If necessary, PRIMEDIA will file a registration statement covering the
issuance of the shares of PRIMEDIA common stock subject to each converted About
option and will maintain the effectiveness of that registration statement for as
long as any of the options remain outstanding.
Immediately prior to the effective time of the merger, the vesting schedule
for options granted to the directors of About (other than Mr. Kurnit) under the
Automatic Option Grant Program under About's Amended and Restated 1998 Stock
Option/Stock Issuance Plan shall accelerate if the About stockholders approve
the adoption of the merger agreement. These options may be exercised immediately
prior to the effective time of the merger and exchanged for shares of PRIMEDIA
common stock in the merger. If they are not exercised, these options will
terminate upon completion of the merger.
Immediately prior to the merger, each outstanding purchase right under
About's employee stock purchase plan will be exercised for shares of About at
the price per share under the plan. The shares will then be considered
outstanding for purposes of the merger.
RESTRICTIONS ON SALES OF SHARES OF AFFILIATES OF PRIMEDIA AND ABOUT
The shares of PRIMEDIA common stock to be issued in connection with the
merger will be registered under the Securities Act and will be freely
transferable under the Securities Act, except for shares issued to any person
who is deemed to be an "affiliate" of About at the time of its special
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meeting. About expects that each of those affiliates will agree with PRIMEDIA
that the affiliate will not transfer any shares of PRIMEDIA stock received in
the merger except in compliance with the Securities Act. This joint proxy
statement-consent solicitation-prospectus does not cover resales of PRIMEDIA
common stock by affiliates of PRIMEDIA and About.
STOCK EXCHANGE LISTING
PRIMEDIA will use its reasonable efforts to cause the following shares of
PRIMEDIA to be approved for listing on the New York Stock Exchange, subject to
official notice of issuance, before the completion of the merger:
- PRIMEDIA common stock to be issued in the merger; and
- PRIMEDIA common stock reserved for issuance upon exercise of About stock
options.
It is a condition to completion of the merger that the listing of the
PRIMEDIA common stock to be issued in the merger be effected.
APPRAISAL RIGHTS
Under Delaware law, the common stockholders of PRIMEDIA and About are not
entitled to appraisal rights in connection with the merger.
DELISTING AND DEREGISTRATION OF ABOUT STOCK AFTER THE MERGER
When the merger is completed, the About stock will be delisted from the
Nasdaq National Market and deregistered under the Securities Exchange Act.
THE MERGER AGREEMENT
This section of the joint proxy statement-consent solicitation-prospectus
describes the material terms of the merger agreement. The following summary is
qualified in its entirety by reference to the complete text of the merger
agreement, which is incorporated by reference and attached as Annex D to this
joint proxy statement-consent solicitation-prospectus. We urge you to read the
full text of the merger agreement.
COMPLETION OF THE MERGER. The merger will be completed when we file a
certificate of merger with the Delaware Secretary of State. However, we may
agree to a later time for completion of the merger and specify that time in the
certificate of merger. We will file the certificate of merger as soon as
practicable after the satisfaction or waiver of the closing conditions in the
merger agreement, which are described below.
We expect to complete the merger by February 26, 2001.
CONDITIONS TO COMPLETION OF THE MERGER.
CONDITIONS TO BOTH PARTIES' OBLIGATIONS. We may not complete the merger
unless each of the following conditions is satisfied:
- the merger agreement has been adopted by the stockholders of About;
- no restraining order or injunction prohibiting completion of the merger is
in effect;
- any waiting period applicable to the merger under the federal antitrust
laws shall have terminated or expired;
- the registration statement of which this joint proxy statement-consent
solicitation-prospectus is a part has been declared effective by the
Securities and Exchange Commission and is not subject
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to any stop order or proceedings seeking a stop order and PRIMEDIA has
received all state securities and blue sky permits necessary to issue the
PRIMEDIA common stock in the merger;
- the shares of PRIMEDIA common stock issuable to the holders of About stock
pursuant to the merger agreement have been approved for listing on the New
York Stock Exchange, subject to official notice of issuance; and
- any waiting period under the proxy rules applicable to PRIMEDIA shall have
expired.
CONDITIONS TO EACH PARTY'S OBLIGATIONS. Each party's obligation to
complete the merger is also subject to the satisfaction or waiver of the
following additional conditions:
- the representations and warranties of the other party must be true and
correct as of the date of the merger agreement and, unless the
representations and warranties speak as of an earlier date, as of the
closing date of the merger, subject, in most cases, to any exceptions that
do not have, and could not reasonably be expected to have, individually or
in the aggregate, a material adverse effect on the other party;
- each party has received an opinion from its tax counsel that the merger
will be treated as a tax-free reorganization for United States federal
income tax purposes;
- at any time on or after the date of the merger agreement no condition or
event has occurred which could, individually or in the aggregate,
reasonably be likely to have a material adverse effect on either party;
- no governmental authority has threatened to or brought an action before
any United States court or other governmental body of competent
jurisdiction which challenges or seeks to restrain or prohibit the
consummation of the merger; and
- all approvals or consents of any governmental authority in connection with
the merger and the other transactions contemplated by the merger agreement
must have been obtained, and all approvals or consents must be in full
force and effect.
In addition, PRIMEDIA's obligation to complete the merger is subject to the
satisfaction or waiver of the following additional conditions:
- PRIMEDIA has received from About a letter identifying all affiliates of
About and a letter from each affiliate;
- PRIMEDIA has received comfort letters from About's accountants;
- Each member of the board of directors of About has delivered to About his
or her written resignation as a director of About; and
- Messrs. Kurnit and Day have been employed by About and shall be ready,
willing and able to begin employment with PRIMEDIA.
For purposes of the merger agreement, the term "material adverse effect"
means, with respect to either of us, a material adverse change or effect that
would be materially adverse to the business, properties, assets, condition
(financial or otherwise), or results of operations of our respective companies
and subsidiaries taken as a whole or that would materially impair the ability of
our respective companies to perform our obligations under the merger agreement.
However, any change or event caused by or resulting from the following will not
be deemed to have a material adverse effect:
- any employee attrition after the date of the merger agreement;
- any change arising from the public announcement of the merger and the
transactions contemplated by the merger agreement;
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- any change in the market price or trading volume of our respective common
stock; or
- any adverse effect attributable solely to conditions affecting the
business-to-consumer Internet industry or the publishing business, as
applicable, the United States economy as a whole or foreign economies in
locations where either of us or our affiliates has material operations or
sales (and not having a disproportionate effect on either of us).
NO SOLICITATIONS OF ALTERNATIVE TRANSACTIONS. The merger agreement contains
detailed provisions prohibiting About from seeking an alternative transaction to
the merger. Under these "no solicitation" provisions, About has agreed that it
will not:
- initiate, solicit, knowingly encourage or otherwise facilitate any
inquires or the making of an acquisition proposal, as described below; or
- have any discussions with, or provide any confidential information or data
to, any person relating to an acquisition proposal, or engage in any
negotiations concerning an acquisition proposal, or knowingly facilitate
any effort or attempt to make or implement an acquisition proposal or
accept an acquisition proposal.
For purposes of the merger agreement, the term "acquisition proposal" means
any proposal or offer with respect to, or a transaction to effect:
- a merger, reorganization, share exchange, consolidation, business
combination, recapitalization, liquidation, dissolution or similar
transaction involving About or any of its subsidiaries; or
- any purchase or sale of all or any significant portion of About's assets
or 15% or more of the equity securities of About or any of its
subsidiaries.
The merger agreement permits About to comply with Rule 14e-2 under the
Securities Exchange Act with regard to an acquisition proposal. In addition, if
About receives an unsolicited bona fide written acquisition proposal, it may
engage in discussions or negotiations with, or provide information to, the
person making that acquisition proposal if:
- About has not yet held its stockholder meeting to vote on the adoption of
the merger agreement;
- the acquisition proposal is a superior proposal, as described below, and
was not solicited by the board of directors or the result of a breach of
About's confidentiality obligations under the merger agreement;
- About's board of directors determines in good faith, based on the advice
of its outside legal advisors, that the failure to participate in
discussions or negotiations with, or to provide information to the person
making the superior proposal would be in violation of its fiduciary duties
under applicable law;
- before providing any information or data, About enters into a
confidentiality agreement with the person making the proposal having terms
that are no less favorable to About than those in the confidentiality
agreement between About and PRIMEDIA; and
- before providing any information or data to any person or entering into
discussions or negotiations with any person, the board of directors of
About notifies PRIMEDIA promptly of:
- inquiries, proposals or offers received by, any information requested
from, or any discussions or negotiations sought to be initiated or
continued with, any of its representatives; and
- the identity of the person and the material terms and conditions of any
proposals or offers.
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About will also inform PRIMEDIA reasonably promptly of any material change in
the terms of any proposal or offer and in any event notify PRIMEDIA 24 hours in
advance before an agreement is reached.
For purposes of the merger agreement, "superior proposal" means a bona fide
written acquisition proposal to acquire a majority of the assets or voting power
of About which the board of directors of About concludes in good faith, after
consultation with a financial advisor, taking into account all legal, financial,
regulatory and other aspects of the proposal and the person making the proposal:
- is more favorable to the stockholders of About from a financial point of
view than the merger; and
- is reasonably capable of being completed.
About has agreed in the merger agreement that:
- it will immediately terminate any activities, discussions or negotiations
existing as of the date of the merger agreement with any parties conducted
before that date with respect to any acquisition proposal; and
- it will promptly inform its directors, officers, employees and
representatives of the foregoing restrictions in the merger agreement.
Nothing contained in the "no solicitation" provisions of the merger
agreement will permit About to terminate the merger agreement or affect any of
its other obligations under the merger agreement.
BOARD OF DIRECTOR'S COVENANT TO RECOMMEND MERGER. In the merger agreement,
About's board of directors agreed to recommend to its stockholders that they
vote to adopt the merger agreement at the special stockholder's meeting that it
will hold for that purpose and to take all reasonable and lawful action to
solicit stockholder approval. About's board of directors may not withdraw, amend
or modify its recommendation in a manner that is adverse to PRIMEDIA, except if:
- it has complied with the "no-solicitation" provisions described above;
- an unsolicited superior proposal is pending at the time of the withdrawal,
amendment or modification;
- it notifies PRIMEDIA of the superior proposal at least three business days
in advance of the withdrawal, amendment or modification; and
- PRIMEDIA has not, during the period before the withdrawal, amendment or
modification, offered to enter into a transaction with About on
substantially the same or more favorable financial terms to About as the
superior proposal.
In the event that About's board of directors makes a withdrawal, amendment
or modification, About still must call a special meeting of its stockholders to
consider and vote upon the merger agreement. About is not relieved from its
obligations described above by the commencement, public proposal, public
disclosure or communication of any acquisition proposal.
TERMINATION. We may terminate the merger agreement at any time prior to the
completion of the merger, whether before or after the About stockholder approval
has been obtained, by mutual written consent.
In addition, either of us may terminate the merger agreement:
- if the merger is not completed on or before June 30, 2001, except that
this right to terminate will not be available to any party whose failure
to perform its obligations under the merger agreement has been the cause
of the failure of the merger to be completed by June 30, 2001;
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- if the approval of the stockholders of About is not obtained by reason of
the failure to obtain the required vote at its stockholders' meeting; or
- if any governmental entity of competent jurisdiction issues a final order
or ruling or takes any other final action restraining, enjoining or
otherwise prohibiting the merger, and the order, ruling or other action
has become final and nonappealable.
About may terminate the merger agreement:
- if PRIMEDIA breaches any of its representations and warranties contained
in the merger agreement which could reasonably be expected to have a
material adverse effect upon PRIMEDIA, as described above, or materially
adversely affect or delay the completion of the merger; or
- if PRIMEDIA fails to cure within ten days following notice of any breach
of a covenant or agreement contained in the merger agreement which could
reasonably be expected to have a material adverse effect upon PRIMEDIA, as
described above, or materially adversely affect or delay the completion of
the merger.
PRIMEDIA may terminate the merger agreement:
- if About breaches any of its representations and warranties contained in
the merger agreement which could reasonably be expected to have a material
adverse effect upon About, as described above, or materially adversely
affect or delay the completion of the merger;
- if About fails to cure within ten days following notice of any breach of a
covenant or agreement contained in the merger agreement which could
reasonably be expected to have a material adverse effect upon About, as
described above, or materially adversely affect or delay the completion of
the merger;
- if About's board of directors fails to recommend or withdraws, modifies or
amends in any respect adverse to PRIMEDIA its approval or recommendation
of the merger agreement, the merger, or any of the transactions
contemplated thereby, or approves or recommends a superior proposal;
- if About breaches any of its obligations under the "no solicitation"
provisions described above; or
- if any person or group becomes the beneficial owner of at least 25% of
About's stock or acquires 25% or more of the assets of About and its
subsidiaries, taken as a whole.
TERMINATION FEES. The merger agreement provides that About may be required
to pay a termination fee to PRIMEDIA of $23.5 million within two business days
in the following circumstances:
- About's board of directors fails to recommend or withdraws, modifies or
amends in any respect adverse to PRIMEDIA its approval or recommendation
of the merger agreement, the merger, or any of the transactions
contemplated thereby, or approves or recommends a superior proposal;
- any person or group becomes the beneficial owner of at least 25% of
About's stock or acquires 25% or more of the assets of About and its
subsidiaries, taken as a whole; or
- About enters into an alternative transaction within 18 months after the
termination of the merger agreement by:
- either party because the approval of the stockholders of About is not
obtained by reason of the failure to obtain the required vote at its
stockholders' meeting;
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- PRIMEDIA because About breaches any of its representations and
warranties contained in the merger agreement which could reasonably be
expected to have a material adverse effect upon About, as described
above, or materially adversely affect or delay the completion of the
merger; or
- PRIMEDIA because About fails to cure within ten days following notice
of any breach of a covenant or agreement contained in the merger
agreement which could reasonably be expected to have a material adverse
effect upon About, as described above, or materially adversely affect
or delay the completion of the merger.
About will also pay PRIMEDIA's out-of-pocket expenses and fees in connection
with the transactions contemplated by the merger agreement up to $1 million
within two business days if the merger agreement is terminated because:
- the approval of the stockholders of About is not obtained by reason of the
failure to obtain the required vote at its stockholders' meeting;
- About breaches any of its representations and warranties contained in the
merger agreement which could reasonably be expected to have a material
adverse effect upon About, as described above, or materially adversely
affect or delay the completion of the merger;
- About fails to cure within ten days following notice of any breach of a
covenant or agreement contained in the merger agreement which could
reasonably be expected to have a material adverse effect upon About, as
described above, or materially adversely affect or delay the completion of
the merger;
- About's board of directors fails to recommend or withdraws, modifies or
amends in any respect adverse to PRIMEDIA its approval or recommendation
of the merger agreement, the merger, or any of the transactions
contemplated thereby, or approves or recommends a superior proposal;
- About breaches any of its obligations under the "no solicitation"
provisions described above; or
- any person or group becomes the beneficial owner of at least 25% of
About's stock or acquires 25% or more of the assets of About and its
subsidiaries, taken as a whole.
CONDUCT OF BUSINESS PENDING THE MERGER. Under the merger agreement, each of
us has agreed to various specific restrictions relating to the conduct of our
businesses before the completion of the merger.
About has agreed to operate its business in the ordinary course and in a
manner consistent with past practice. Among other matters, without the prior
written consent of PRIMEDIA, About or its subsidiaries will not:
- amend its certificate of amendment, by-laws or other organizational
documents;
- issue or sell capital stock other than specified stock options issued to
employees;
- pay dividends;
- reclassify, combine, split, subdivide redeem or otherwise acquire any
capital stock;
- acquire any business or division;
- sell any assets or rights;
- incur any indebtedness;
- enter into, amend or terminate any material contract or agreement except
in the ordinary course of business consistent with past practice;
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- enter into agreements with affiliates;
- enter into material commitments;
- enter into any new material line of business;
- change the form guide agreements used by About and its subsidiaries;
- make capital expenditures in excess of specified amounts;
- increase or amend the compensation or benefits of any of its employees,
grant any severance, establish new employee benefits plans, or amend the
terms of any outstanding options;
- change accounting policies or principles;
- take any action that would prevent the transaction from qualifying as a
reorganization under sections 368(a)(1)(A) and 368(a)(2)(E) of the
Internal Revenue Code;
- make or change any material tax election inconsistent with past practice
or settle or compromise any tax liabilities;
- settle or compromise any pending or threatened material suit, action or
claim;
- adopt a plan of complete or partial liquidation, restructuring or
reorganization;
- pay liabilities other than in the ordinary course of business and
consistent with past practice;
- effectuate a "plant closing" or a "mass layoff" as defined in the WARN
Act;
- fail to maintain existing insurance policies; or
- take any action described above or any action which would make the
representations and warranties of About in the merger agreement untrue and
incorrect.
PRIMEDIA has agreed that, without the prior consent of About, it will not:
- amend its organizational documents in any manner adverse to holders of its
common stock;
- combine, reclassify, split or subdivide the PRIMEDIA common stock;
- take any action that would make any of the representations and warranties
of PRIMEDIA in the merger agreement untrue and incorrect;
- issue or sell shares to a record or beneficial owner of 5% or more of its
voting securities except on an arm's length basis;
- adopt a plan of complete or partial liquidation, restructuring or
reorganization; or
- take any action that would prevent the transaction from qualifying as a
reorganization under sections 368(a)(1)(A) and 368(a)(2)(E) of the
Internal Revenue Code.
ADDITIONAL AGREEMENTS. Each of us has agreed to cooperate with the other
and to use our reasonable best efforts to take all actions necessary to comply
promptly with applicable laws and regulations to complete the merger as soon as
practicable including:
- preparing and filing this joint proxy statement-consent
solicitation-prospectus and required filings under the Hart-Scott-Rodino
Act (which filings have been approved); and
- making all required regulatory filings and applications and obtaining all
licenses, permits, consents, approvals, authorizations, qualifications and
orders of governmental entities and parties to contracts with About and
its subsidiaries as are necessary for the consummation of the transactions
contemplated by the merger agreement and the fulfillment of the conditions
to the merger.
BENEFITS MATTERS. Until December 31, 2001, PRIMEDIA will provide
compensation and benefits to About employees on terms no less favorable in the
aggregate to the benefit plans in effect immediately prior to the completion of
the merger (other than equity-based compensation). For purposes of determining
eligibility to participate and vesting in benefit plans, PRIMEDIA will give
effect to years of service with About in the same manner that credit for years
of service was given by About. No employee electing coverage under the medical
insurance plans of PRIMEDIA will be excluded from coverage on the bases of a
pre-existing condition that was not also excluded under About's medical
insurance plan.
73
AMENDMENT, EXTENSION AND WAIVER. We may amend the merger agreement by
action taken or authorized by our respective boards of directors, at any time
before or after adoption of the merger agreement by About's stockholders. After
adoption of the merger agreement by About's stockholders, no amendment may be
made which by law requires further approval by About's stockholders, unless that
further approval is obtained. All amendments to the merger agreement must be in
writing signed by both of us.
At any time before the completion of the merger, we may:
- extend the time for the performance of any of the obligations or other
acts provided for in the merger agreement;
- waive any inaccuracies in the representations and warranties contained
in the merger agreement or in any document delivered pursuant to the
merger agreement; and
- waive compliance with any of the agreements or conditions contained in
the merger agreement, subject to the requirements of applicable law.
The failure of either of us to assert any of our rights under the merger
agreement or otherwise does not constitute a waiver of those rights.
FEES AND EXPENSES. Except in certain cases where About is responsible for
up to $1 million of PRIMEDIA's expenses, whether or not the merger is completed,
all costs and expenses incurred in connection with the merger agreement and the
merger will be paid by the party incurring the expenses. However, each of
PRIMEDIA and About will pay one-half of the costs and expenses incurred in
printing and mailing this joint proxy statement-consent solicitation-prospectus.
REPRESENTATIONS AND WARRANTIES. The merger agreement contains customary and
generally reciprocal representations and warranties by each of us relating to,
among other things:
- corporate organization and similar corporate matters;
- capital structure;
- authorization and absence of conflicts;
- compliance with applicable laws;
- documents filed with the SEC and the preparation of financial
statements;
- information supplied in connection with this joint proxy
statement-consent solicitation-prospectus and the registration
statement of which it is a part;
- absence of specified changes or events;
- legal proceedings;
- employee benefits;
- taxes;
- opinion of financial advisor;
- brokers and finders;
- affiliate transactions;
- required stockholder approvals; and
- reorganization qualification.
In addition, About has provided representations and warranties relating to:
- subsidiaries;
- environmental matters;
- takeover laws;
- material contracts;
- guide agreements;
- absence of breaches or defaults of material contracts or guide
agreements;
- intellectual property;
74
- insurance; and
- labor matters.
THE VOTING AGREEMENTS
This section of the joint proxy statement-consent solicitation-prospectus
describes the material terms of the voting agreements. The following summary is
qualified in its entirety by reference to the complete text of the voting
agreements, which are incorporated by reference and attached as Annex E,
Annex F and Annex G to this joint proxy statement-consent
solicitation-prospectus. We urge you to read the voting agreements.
PRIMEDIA VOTING AGREEMENT WITH ABOUT STOCKHOLDERS. In order to induce
PRIMEDIA to enter into the merger agreement, Mr. Kurnit, four other directors of
About and Mr. Day entered into a voting agreement with PRIMEDIA under which they
agreed to vote their shares of About stock in favor of the merger and of the
execution and delivery by About of the merger agreement and the approval of the
terms of the merger agreement and each of the other transactions contemplated by
the merger agreement. (The sixth director does not own any shares of About
stock.) These stockholders also agreed to vote their About shares against any
competing transaction or any proposal which would prevent or interfere with or
delay the merger, the merger agreement or any of the transactions contemplated
by the merger agreement. These stockholders also granted to designees of
PRIMEDIA irrevocable proxies to vote their About shares, in the complete
discretion of PRIMEDIA, at any meeting of About stockholders or in any other
circumstances upon which their vote, consent or approval is sought regarding the
matters described above.
These stockholders also agreed not to sell, transfer or otherwise dispose of
their About shares or take any other action that would restrict, limit or
interfere with their performance under this voting agreement. As of the record
date, these stockholders of About own a total of 1,422,088 shares of About
stock, representing approximately 6.4% of the About stock outstanding as of the
record date.
ABOUT VOTING AGREEMENT WITH ABRA LLC. Abra LLC entered into a voting
agreement with About under which Abra LLC agreed to vote its shares of About
stock in favor of the merger and the approval of the terms of the merger
agreement and each of the other transactions contemplated by the merger
agreement. Abra LLC also agreed to vote its About shares against any competing
transaction or any proposal which would prevent or interfere with or delay the
merger, the merger agreement or any of the transactions contemplated by the
merger agreement. Abra LLC also granted to designees of About irrevocable
proxies to vote its About shares, in the complete discretion of About, at any
meeting of About stockholders or in any other circumstances upon which their
vote, consent or approval is sought regarding the matters described above.
Abra LLC also agreed not to sell, transfer or otherwise dispose of its About
shares or take any other action that would restrict, limit or interfere with its
performance under this voting agreement. As of the record date, Abra LLC owned a
total of 2,532,200 shares of About stock, representing approximately 11.4% of
the About stock outstanding as of the record date.
ABOUT VOTING AGREEMENT WITH PRIMEDIA STOCKHOLDERS. In order to induce About
to enter into the merger agreement, the following stockholders of PRIMEDIA
entered into a voting agreement with About: KKR 1996 Fund L.P.; MA Associates,
L.P.; FP Associates, L.P.; Magazine Associates, L.P.; Publishing Associates,
L.P.; Channel One Associates, L.P.; and KKR Partners II, L.P. Under this voting
agreement, these stockholders agreed to deliver to PRIMEDIA their written
consent to authorize the issuance of PRIMEDIA common stock in the merger as
contemplated by the merger agreement, which consent was delivered on
November 9, 2000. These stockholders also agreed to vote their PRIMEDIA shares
against any proposal which would prevent or interfere with or delay the merger,
the merger agreement or any of the transactions contemplated by the merger
agreement.
As of the record date, these stockholders of PRIMEDIA owned a total of
123,552,932 shares of PRIMEDIA common stock, representing approximately 74.0% of
the PRIMEDIA common stock outstanding as of the record date.
75
UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
The unaudited pro forma statements of consolidated operations for the nine
months ended September 30, 2000 and the year ended December 31, 1999 give effect
to the acquisition of all of the outstanding common stock of About as if it had
occurred on January 1, 1999. The unaudited pro forma consolidated balance sheet
as of September 30, 2000 gives effect to the acquisition of About as if it had
occurred on September 30, 2000 based on the purchase method of accounting.
PRIMEDIA believes the accounting used for the pro forma adjustments provides
a reasonable basis on which to present the unaudited pro forma consolidated
financial statements. The pro forma adjustments do not include any synergies
expected to be derived from the merger. In addition, the pro forma adjustments
do not include the pro forma impact of PRIMEDIA's and About's acquisitions
during 1999 and 2000 because the impact of such acquisitions is not significant
to the consolidated entity. The pro forma statements of consolidated operations
and pro forma consolidated balance sheet are unaudited and were derived by
adjusting the historical consolidated financial statements of PRIMEDIA and
About. THE UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS ARE PROVIDED
FOR INFORMATIONAL PURPOSES ONLY AND SHOULD NOT BE CONSTRUED TO BE INDICATIVE OF
PRIMEDIA'S CONSOLIDATED FINANCIAL POSITION OR RESULTS OF OPERATIONS HAD THE
TRANSACTION BEEN CONSUMMATED ON THE DATE ASSUMED AND DO NOT PROJECT PRIMEDIA'S
CONSOLIDATED FINANCIAL POSITION OR RESULTS OF OPERATIONS FOR ANY FUTURE DATE OR
PERIOD.
The unaudited pro forma consolidated financial statements and accompanying
notes should be read in conjunction with the PRIMEDIA historical consolidated
financial statements and notes thereto included in PRIMEDIA's Annual Report on
Form 10-K for the year ended December 31, 1999 and in PRIMEDIA's Quarterly
Report on Form 10-Q for the quarter ended September 30, 2000, as well as the
About historical consolidated financial statements and notes thereto included in
About's Annual Report on Form 10-K for the year ended December 31, 1999 and in
About's Quarterly Report on Form 10-Q for the quarter ended September 30, 2000.
76
PRIMEDIA INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
AT SEPTEMBER 30, 2000
(DOLLARS IN THOUSANDS)
HISTORICAL
------------------------ PRO FORMA PRO FORMA
PRIMEDIA ABOUT ADJUSTMENTS CONSOLIDATED
-------- ---------- ----------- ------------
ASSETS
Current assets:
Cash and cash equivalents........................... $ 29,661 $ 53,225 $ 2,362 (a) $ 85,248
Other investments................................... -- 66,589 -- 66,589
Accounts receivable, net............................ 260,751 14,977 -- 275,728
Inventories, net.................................... 30,150 -- -- 30,150
Net assets held for sale............................ 48,596 -- -- 48,596
Prepaid expenses and other.......................... 53,983 2,466 -- 56,449
----------- --------- --------- -----------
Total current assets.............................. 423,141 137,257 2,362 562,760
Property and equipment, net........................... 160,956 22,716 -- 183,672
Other intangible assets, net.......................... 520,823 -- -- 520,823
Excess of purchase price over net assets acquired,
net................................................. 1,099,295 111,262 (111,262)(a) 1,590,698
491,403 (a)
Deferred income tax asset, net........................ 176,200 -- -- 176,200
Other non-current investments......................... 191,256 21,737 -- 212,993
Other non-current assets.............................. 89,870 5,594 -- 95,464
----------- --------- --------- -----------
$ 2,661,541 $ 298,566 $ 382,503 $ 3,342,610
=========== ========= ========= ===========
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIENCY)
Current liabilities:
Accounts payable.................................... $ 72,377 $ 15,327 $ -- $ 87,704
Accrued interest payable............................ 18,069 -- -- 18,069
Accrued expenses and other.......................... 227,321 1,081 19,000 (a) 247,402
Deferred revenues (a)............................... 263,702 1,666 -- 265,368
Current maturities of long-term debt................ 22,024 579 -- 22,603
----------- --------- --------- -----------
Total current liabilities......................... 603,493 18,653 19,000 641,146
----------- --------- --------- -----------
Long-term debt........................................ 1,605,217 -- -- 1,605,217
----------- --------- --------- -----------
Other non-current liabilities......................... 22,612 149 -- 22,761
----------- --------- --------- -----------
Exchangeable preferred stock.......................... 560,916 -- -- 560,916
----------- --------- --------- -----------
Shareholders' equity (deficiency):
Common stock........................................ 1,669 18 454 (a) 2,123
(18)(b)
Additional paid-in capital.......................... 1,342,626 409,745 642,813 (a) 2,067,684
(409,745)(b)
37,174 (c)
45,071 (d)
Accumulated deficit................................. (1,332,522) (128,372) 128,372 (b) (1,332,522)
Accumulated other comprehensive loss................ (132,619) (40) 40 (b) (132,619)
Unearned stock grant compensation................... (8,188) (1,587) 1,587 (b) (90,433)
(37,174)(c)
(45,071)(d)
Common stock in treasury, at cost................... (1,663) -- -- (1,663)
----------- --------- --------- -----------
Total shareholders' equity (deficiency)........... (130,697) 279,764 363,503 512,570
----------- --------- --------- -----------
$ 2,661,541 $ 298,566 $ 382,503 $ 3,342,610
=========== ========= ========= ===========
See notes to unaudited pro forma consolidated financial statements.
77
PRIMEDIA INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA STATEMENT OF CONSOLIDATED OPERATIONS
YEAR ENDED DECEMBER 31, 1999
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
HISTORICAL
------------------------ PRO FORMA PRO FORMA
PRIMEDIA ABOUT ADJUSTMENTS CONSOLIDATED
-------- ---------- ----------- ------------
Sales, net................................ $ 1,716,102 $ 26,962 $ -- $ 1,743,064
Operating costs and expenses:
Cost of goods sold (excluding $3,630 of
non-cash compensation)................ 392,105 11,779 -- 403,884
Marketing and selling................... 315,380 48,597 -- 363,977
Distribution, circulation and
fulfillment........................... 297,372 -- -- 297,372
Editorial............................... 145,957 -- -- 145,957
Product development..................... -- 8,386 -- 8,386
Other general expenses (excluding $1,099
of non-cash compensation)............. 189,748 8,165 445 (e) 198,358
Corporate administrative expenses....... 34,986 -- -- 34,986
Depreciation of property and
equipment............................. 47,653 2,809 -- 50,462
Amortization of intangible assets,
excess of purchase price over net
assets acquired and other............. 176,361 967 162,834 (f) 340,162
Non-cash compensation................... -- 4,729 19,361 (c) 47,564
23,474 (d)
Gain on the sales of businesses and
other, net............................ (235,580) -- -- (235,580)
Provision for the impairment of
long-lived assets..................... 275,788 -- -- 275,788
Provision for product-line closures..... 22,000 -- -- 22,000
----------- ---------- ----------- -----------
Operating income (loss)................... 54,332 (58,470) (206,114) (210,252)
Other income (expense):
Interest income (expense), net.......... (164,909) 3,280 -- (161,629)
Amortization of deferred financing
costs................................. (3,286) -- -- (3,286)
Other, net.............................. 250 95 -- 345
----------- ---------- ----------- -----------
Loss before income tax expense............ (113,613) (55,095) (206,114) (374,822)
Income tax expense........................ (6,500) -- -- (6,500)
----------- ---------- ----------- -----------
Net loss.................................. (120,113) (55,095) (206,114) (381,322)
Preferred stock dividends:
Cash.................................... (53,062) -- -- (53,062)
Cumulative dividends and accretion of
convertible preferred stock to
liquidation value..................... -- (660) -- (660)
----------- ---------- ----------- -----------
Loss applicable to common shareholders.... $ (173,175) $ (55,755) $ (206,114) $ (435,044)
=========== ========== =========== ===========
Basic and diluted loss applicable to
common shareholders per common share
(g)..................................... $ (1.19) $ (5.30) -- $ (2.51)
=========== ========== =========== ===========
Basic and diluted common shares
outstanding............................. 145,418,441 10,518,713 (10,518,713)(b) 173,167,564
=========== ========== ===========
27,749,123 (g)
===========
See notes to unaudited pro forma consolidated financial statements.
78
PRIMEDIA INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA STATEMENT OF CONSOLIDATED OPERATIONS
NINE MONTHS ENDED SEPTEMBER 30, 2000
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
HISTORICAL
-------------------------- PRO FORMA PRO FORMA
PRIMEDIA ABOUT ADJUSTMENTS CONSOLIDATED
------------ ----------- ----------- ------------
Sales, net.......................................... $ 1,231,624 $ 62,755 $ -- $ 1,294,379
Operating costs and expenses:
Cost of goods sold (excluding $3,049 of non-cash
compensation)................................... 299,560 20,645 -- 320,205
Marketing and selling............................. 289,944 34,675 -- 324,619
Distribution, circulation and fulfillment......... 189,011 -- -- 189,011
Editorial......................................... 94,027 -- -- 94,027
Product development............................... -- 13,973 -- 13,973
Other general expenses (excluding $665 of non-cash
compensation)................................... 162,126 12,457 300(e) 174,883
Corporate administrative expenses (excluding
$19,500 of non-cash compensation)............... 24,632 -- -- 24,632
Depreciation of property and equipment............ 39,760 4,385 -- 44,145
Amortization of intangible assets, excess of
purchase price over net assets acquired and
other........................................... 98,279 26,326 96,525(f) 221,130
Non-cash compensation and non-cash non-recurring
charges......................................... 26,900 3,714 7,551(c) 47,320
9,155(d)
Provision for severance, closures and integration
costs........................................... 19,008 -- -- 19,008
Gain on sale of businesses and other, net......... (26,824) -- -- (26,824)
------------ ----------- ----------- ------------
Operating income (loss)............................. 15,201 (53,420) (113,531) (151,750)
Other income (expense):
Interest income (expense), net.................... (109,434) 6,800 -- (102,634)
Amortization of deferred financing costs.......... (2,899) -- -- (2,899)
Other, net........................................ 7,614 -- -- 7,614
------------ ----------- ----------- ------------
Net loss............................................ (89,518) (46,620) (113,531) (249,669)
Preferred stock dividends--cash..................... (39,797) -- -- (39,797)
------------ ----------- ----------- ------------
Loss applicable to common shareholders.............. $ (129,315) $ (46,620) $ (113,531) $ (289,466)
============ =========== =========== ============
Basic and diluted loss applicable to common
shareholders per common share (g)................. $ (0.81) $ (2.64) -- $ (1.42)
============ =========== =========== ============
Basic and diluted common shares outstanding......... 158,977,115 17,676,390 (17,676,390)(b) 203,481,644
============ =========== ============
44,504,529 (g)
===========
See notes to unaudited pro forma consolidated financial statements.
79
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(a) For purposes of these pro forma consolidated financial statements,
PRIMEDIA has assumed that the value of the total purchase consideration based on
shares to be issued in order to consummate the acquisition of About would be
approximately $536,000. PRIMEDIA has assumed that it will issue 2.3409 shares of
PRIMEDIA common stock for each share of About stock. Under the terms of the
arrangement, stockholders of About will receive approximately 45,200,000 shares
of PRIMEDIA common stock. PRIMEDIA has assumed that the value of its shares of
common stock to be issued will be $11.81 per share, based on the
weighted-average market values for the two days prior and two days succeeding
the acquisition announcement date. In addition, upon the completion of the
merger, certain options previously granted to the About directors will become
immediately vested and exercisable. The shares of PRIMEDIA common stock to be
issued in connection with these stock option exercises were included in the
determination of purchase price, net of the related cash proceeds from the
exercises.
PRIMEDIA will replace outstanding options to purchase shares of About common
stock held by certain individuals with options to purchase shares of PRIMEDIA
common stock. The PRIMEDIA options will have the same terms and conditions as
the About stock options, except that the number of options and their exercise
price will be adjusted based on the exchange ratio (2.3409 to 1) used to
consummate the merger. The following assumptions were used regarding the
PRIMEDIA options to be issued based on About's outstanding options at
September 30, 2000.
WEIGHTED-AVERAGE
EXERCISE PRICE OF
NUMBER OF PRIMEDIA
ORIGINAL NUMBER PRIMEDIA OPTIONS OPTIONS
OF ABOUT OPTIONS TO BE ISSUED TO BE ISSUED
---------------- ---------------- -----------------
Vested................................ 953,613 2,232,312 $ 8.93
Unvested.............................. 4,202,879 9,838,521 $14.94
--------- ----------
Total................................. 5,156,492 12,070,833 $13.83
========= ==========
The estimated fair value of the fully vested and unvested options to be
issued is approximately $107,000. This value was determined using a Black
Scholes pricing model based on the following weighted-average assumptions:
Risk free interest rate of 5.84%;
Volatility of 72.47%;
Expected term ranging from 6.66 to 9.75 years;
Expected dividend yield of 0%; and
Value of PRIMEDIA common stock of $11.81 per share.
It has been assumed that on the date that the Company grants these unvested
replacement options, there is no intrinsic value of the unvested replacement
options since the weighted-average exercise price of the replacement options of
$14.94 per share approximates the assumed fair market value of PRIMEDIA common
stock of $15.25 per share, which corresponds to PRIMEDIA's October 27, 2000 (the
date of the merger agreement) closing price. Further, the annual expense which
would result had any intrinsic value been attributed to the unvested replacement
options is inconsequential and approximates the amortization of the related
goodwill. Accordingly, no allocation of fair value has been made for the
intrinsic value of unvested options.
80
The following is a summary of the calculation of the purchase price, as
described above, as well as the allocation of the purchase price to the fair
value of the net assets acquired:
Total number of shares of PRIMEDIA common stock to be issued
to consummate the acquisition............................. 45,200,000
Shares to be issued in connection with options which are
vested or will become vested prior to or as a result of
the merger................................................ 170,418
-----------
Total shares of PRIMEDIA common stock to be issued.......... 45,370,418
Assumed fair value per share of PRIMEDIA common stock....... $ 11.81
-----------
Value of shares of PRIMEDIA common stock to be issued....... $ 535,825
Fair value of replacement options to be issued.............. 107,442
Estimated direct merger costs............................... 12,000
-----------
Total purchase price........................................ 655,267
Less: Estimated cash proceeds from the exercise of stock
options which are vested or will become vested prior to or
as a result of the merger................................. 2,362
Add: Estimated direct merger costs of About................. 7,000
Less: Fair value of net tangible assets of About............ 168,502
-----------
Excess of purchase price over net assets acquired........... $ 491,403
===========
PRIMEDIA's management determined that the utilization of About's historical
net operating losses was not likely. Therefore, no deferred tax assets have been
recorded in connection with the merger.
The purchase price has been allocated based on management's best estimate of
the fair value of assets acquired and the liabilities assumed based on the
historical financial statements of About as of September 30, 2000. The excess
purchase price over the fair value of net tangible assets acquired has been
allocated to goodwill. This adjustment is based upon preliminary estimates to
reflect the allocation of purchase consideration to the acquired assets and
liabilities of About. The final allocation of the purchase consideration will be
determined after the completion of the merger and will be based on appraisals
and a comprehensive final evaluation of the fair values and useful lives of
About's tangible assets acquired, identifiable intangible assets and excess of
purchase price over net assets acquired at the time of the merger. The final
determination may result in asset and liability fair values that are different
than the preliminary estimates of these amounts. For purposes of purchase price
allocation, it has been assumed that the fair value of deferred revenues
approximates About's historical carrying value. At the merger date, the fair
value of About's deferred revenues will represent the fair value of the
contractual performance obligation based upon the nature of the activities to be
performed and the related costs to be incurred. The adjustment to the historical
carrying value, if any, will not have a material impact on PRIMEDIA's financial
position or results of operations.
(b) To eliminate the historical equity accounts of About.
(c) To reflect the unearned compensation expense in connection with the
employment agreements of Scott P. Kurnit and William C. Day. In connection with
their employment agreements, Messrs. Kurnit and Day will be granted options to
purchase 2,605,300 shares and 877,000 shares, respectively, of PRIMEDIA common
stock at an exercise price equal to thirty percent of the fair market value per
share on that date. Accordingly, the adjustment reflects a 70% market value
discount ($10.68 per share) based on a PRIMEDIA per share market value of $15.25
which was the closing price on October 27, 2000. These options vest at a rate of
25% per year and are subject to Messrs. Kurnit's and Day's continued employment.
Accordingly, the compensation expense reflected for the nine months ended
September 30, 2000 and the year ended December 31, 1999 reflects this pro rata
vesting on a graded basis.
A one dollar change in the fair market value of PRIMEDIA common stock would
change the unearned compensation recognized at September 30, 2000 by
approximately $2,400. This same one dollar change would change the compensation
expense recognized during the nine months ended
81
September 30, 2000 and the year ended December 31, 1999 by approximately $495
($.002 per share) and approximately $1,270 ($.01 per share), respectively.
(d) To reflect the unearned compensation expense in connection with the
employment agreements of Messrs. Kurnit and Day. In connection with their
employment agreements, Messrs. Kurnit and Day will be granted 2,211,100 shares
and 744,350 shares, respectively, of restricted PRIMEDIA common stock.
Accordingly, the adjustment assumes a PRIMEDIA per share market value of $15.25,
which was the closing price on October 27, 2000. These shares of restricted
PRIMEDIA common stock vest at a rate of 25% per year and are subject to
Messrs. Kurnit's and Day's continued employment. Accordingly, the compensation
expense reflected for the nine months ended September 30, 2000 and the year
ended December 31, 1999 reflects this pro rata vesting on a graded basis.
A one dollar change in the fair market value of PRIMEDIA common stock would
change the unearned compensation recognized at September 30, 2000 by
approximately $2,955. This same one dollar change would change the compensation
expense recognized during the nine months ended September 30, 2000 and the year
ended December 31, 1999 by approximately $600 ($.003 per share) and
approximately $1,540 ($.01 per share), respectively.
(e) To reflect additional compensation expense to be incurred in connection
with the employment agreements of Messrs. Kurnit and Day.
Potential pro forma adjustments relating to eligible bonuses, the minimum
amount of which is $2,300 ($.01 per share for the year ended December 31, 1999),
have been omitted since the payment of such bonuses is dependent upon the
achievement of performance goals to be established by PRIMEDIA's management.
Potential pro forma adjustments relating to sign-on bonuses for Messrs.
Kurnit and Day totaling $49 have been omitted since the impact would not be
material to the pro forma financial statements.
In addition, Messrs. Kurnit and Day also entered into share lock-up
agreements with PRIMEDIA, pursuant to which each agreed to specific restrictions
regarding the transferability of his shares of PRIMEDIA common stock issued in
the merger. Under the terms of these agreements, during the first year after the
closing of the merger, Messrs. Kurnit and Day may sell a portion of their shares
of PRIMEDIA common stock, subject to PRIMEDIA's right of first refusal with
respect to any sale. In addition, Messrs. Kurnit and Day were guaranteed a
minimum per share sales price of $15.25 on 1,639,344 shares ($25,000) and
532,786 shares ($8,125), respectively. In the event of any per share shortfall
upon sale, PRIMEDIA will pay them the difference between the $15.25 per share
and the actual per share sales price for each share sold and that difference
will be recorded as additional compensation expense for PRIMEDIA. The pro forma
financial statements do not reflect the impact, if any, of these agreements.
(f) To adjust pro forma amortization expense based on the estimated excess
of purchase price over net assets acquired related to the merger. This excess is
assumed to be amortized over an estimated useful life of three years. PRIMEDIA
believes that a three-year life is responsive to the rapid rate of change in the
Internet industry and is consistent with other recent mergers of a comparable
nature. The final allocation of purchase price may result in amortization
expense that is different than the preliminary estimate of this amount. The pro
forma adjustment represents the difference between the amortization of the
$491,403 excess of purchase price over net assets acquired over a three year
period and About's historical amortization.
(g) The pro forma adjustments reflect the additional shares to be issued
based on the exchange ratio used to consummate the merger, include the
additional shares to be issued in connection with options that will become
vested prior to or as a result of the merger and include the additional shares
of restricted PRIMEDIA common stock to be issued to Messrs. Kurnit and Day in
connection with their employment agreements. Pro forma loss per share has been
determined based on pro forma net loss after preferred stock dividends divided
by the weighted average number of shares of PRIMEDIA common stock outstanding
for all periods presented. Stock options were not included in the computation of
pro forma loss per share because the effect of their inclusion would be
antidilutive.
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DESCRIPTION OF PRIMEDIA CAPITAL STOCK
GENERAL
As of September 30, 2000, PRIMEDIA had 300,000,000 shares of authorized
capital stock. Those shares consisted of:
- 250,000,000 shares of common stock, of which 166,765,849 shares were
outstanding; and
- 50,000,000 shares of preferred stock, of which:
- 2,000,000 shares were designated Series D Exchangeable Preferred Stock,
all which were outstanding;
- 1,250,000 shares were designated Series F Exchangeable Preferred Stock,
all which were outstanding; and
- 2,500,000 shares were designated Series H Exchangeable Preferred Stock,
all which were outstanding.
DESCRIPTION OF PRIMEDIA COMMON STOCK
The rights of About stockholders who acquire shares of PRIMEDIA common stock
offered by this joint proxy statement-consent solicitation-prospectus will be
governed by PRIMEDIA's certificate of incorporation and by-laws and Delaware
corporate law. We have summarized below provisions of our certificate of
incorporation. This summary does not contain all of the provisions that you may
want to consider as an investor in PRIMEDIA's securities. You may wish to review
our certificate of incorporation and by-laws. PRIMEDIA has filed a copy of its
certificate of incorporation and by-laws with the SEC. See "Where You Can Find
More Information."
DIVIDENDS. The owners of PRIMEDIA common stock may receive dividends when
declared by the board of directors out of funds legally available for the
payment of dividends. PRIMEDIA has no present intention of declaring and paying
cash dividends on the common stock at any time in the foreseeable future. The
terms of PRIMEDIA's credit agreements, indentures and preferred stocks restrict
PRIMEDIA from declaring and paying cash dividends on the common stock. See "Risk
Factors."
VOTING RIGHTS. Each share of common stock is entitled to one vote in the
election of directors and all other matters submitted to stockholder vote. There
are no cumulative voting rights.
LIQUIDATION RIGHTS. If PRIMEDIA liquidates, dissolves or winds-up its
business, whether voluntarily or not, PRIMEDIA's common stockholders will share
equally in the distribution of all assets remaining after payment to creditors
and preferred stockholders.
PREEMPTIVE RIGHTS. The common stock has no preemptive or similar rights.
LISTING. PRIMEDIA's common stock is listed on the New York Stock Exchange
under the symbol "PRM."
ANTI-TAKEOVER PROVISIONS. PRIMEDIA is subject to the provisions of Delaware
law described below regarding business combinations with interested
stockholders.
Section 203 of the Delaware General Corporation Law applies to a broad range
of business combinations between a Delaware corporation and an interested
stockholder. The Delaware law definition of "business combination" includes
mergers, sales of assets, issuances of voting stock and certain other
transactions. An "interested stockholder" is defined as any person who owns,
directly or indirectly, 15% or more of the outstanding voting stock of a
corporation.
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Section 203 prohibits a corporation from engaging in a business combination
with an interested stockholder for a period of three years following the date on
which the stockholder became an interested stockholder, unless:
- the board of directors approved the business combination before the
stockholder became an interested stockholder, or the board of directors
approved the transaction that resulted in the stockholder becoming an
interested stockholder;
- upon completion of the transaction which resulted in the stockholder
becoming an interested stockholder, such stockholder owned at least 85% of
the voting stock outstanding when the transaction began other than shares
held by directors who are also officers and other than shares held by
certain employee stock plans; or
- the board of directors approved the business combination after the
stockholder became an interested stockholder and the business combination
was approved at a meeting by at least two-thirds of the outstanding voting
stock not owned by such stockholder.
These limitations on business combinations with interested stockholders do not
apply to a corporation that does not have a class of stock listed on a national
securities exchange, authorized for quotation on an interdealer quotation system
of a registered national securities association or held of record by more than
2,000 stockholders.
DESCRIPTION OF SERIES D EXCHANGEABLE PREFERRED STOCK
RANK. The Series D Preferred Stock ranks as to dividend rights and rights
on liquidation, winding-up or dissolution:
- senior to all classes of common stock and all classes of capital stock or
other series of preferred stock which does not expressly provide that it
ranks senior to or on parity with the Series D Preferred Stock;
- on a parity with the Series F Preferred Stock, the Series H Preferred
Stock, and all classes of capital stock or other series of preferred stock
which expressly provides that it ranks on parity with the Series D
Preferred Stock; and
- junior to each class of capital stock or other series of preferred stock
which expressly provides that it ranks senior to the Series D Preferred
Stock.
DIVIDENDS. Holders of the Series D Preferred Stock are entitled to receive,
when as and if declared by the board of directors of PRIMEDIA, out of funds
legally available for the payment of dividends, dividends in cash at an annual
rate equal to 10% of the liquidation preference. Dividends on the Series D
Preferred Stock are payable quarterly in arrears on February 1, May 1, August 1
and November 1 of each year. Dividends will cumulate without interest until
declared and paid. As of the date of this prospectus, PRIMEDIA has paid all such
dividends.
OPTIONAL REDEMPTION. Subject to contractual and other restrictions and the
existence of legally available funds, PRIMEDIA, at its option, may at any time
on or after February 1, 2001, redeem the Series D Preferred Stock in whole or in
part, at redemption prices declining ratably from $105 beginning on February 1,
2001, to $100 on and after February 1, 2006, plus accrued and unpaid dividends.
MANDATORY REDEMPTION. Subject to contractual and other restrictions and to
the existence of legally available funds, on February 1, 2008, PRIMEDIA will be
required to redeem all outstanding shares of Series D Preferred Stock at a price
equal to $100 per share plus all accumulated and unpaid dividends to the date of
redemption.
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LIQUIDATION PREFERENCE. Upon any voluntary or involuntary liquidation,
dissolution or winding up of PRIMEDIA, holders of Series D Preferred Stock will
be entitled to be paid out of the assets of PRIMEDIA available for distribution
to its stockholders $100 per share, plus any accrued and unpaid dividends to the
date of liquidation, dissolution or winding up.
VOTING RIGHTS. Holders of the Series D Preferred Stock have no voting
rights, except as provided by law or as set forth in the certificate of
designations for the Series D Preferred Stock. Also, when dividends on the
Series D Preferred Stock are in arrears and unpaid for six consecutive quarterly
periods, the board of directors of PRIMEDIA will be increased by two directors
and the holders of a majority of the Series D Preferred Stock, voting as a
class, will be entitled to elect two additional directors of the expanded board
of directors. These voting rights will continue until such time as all dividends
in arrears on the Series D Preferred Stock have been paid in full.
Pursuant to the certificate of designations for the Series D Preferred
Stock, PRIMEDIA may not merge, consolidate with or into, or transfer all or
substantially all of its assets, in one transaction or in a series of related
transactions, to any person without the consent of the holders of a majority of
the issued and outstanding Series D Preferred Stock, voting together with the
holders of all capital stock ranking on parity with the Series D Preferred Stock
issued after the date of issuance of the Series D Preferred Stock, unless:
- PRIMEDIA will be the continuing person, or the person, if other than
PRIMEDIA, formed by the merger or consolidation, or the person to which
the properties and assets of PRIMEDIA are transferred, is a corporation
organized and existing under the laws of the United States or any state in
the United States or the District of Columbia, and the Series D Preferred
Stock will be converted into or exchanged for shares of the successor or
resulting company having substantially the same powers, preferences and
relative participating, optional or other special rights and the same
qualifications, limitations or restrictions that the Series D Preferred
Stock had immediately before the conversion; and
- immediately after giving effect to the transaction on a pro forma basis,
the consolidated net worth of the surviving entity is at least equal to
the lesser of the consolidated net worth of PRIMEDIA immediately before
the transaction and the consolidated net worth of PRIMEDIA on the first
date any Series D Preferred Stock was issued.
The consent of the holders of the Series D Preferred Stock will not be
required if the requisite holders of preferred stock senior to the Series D
Preferred Stock or any indebtedness of PRIMEDIA have consented or granted a
waiver with respect to the transaction in question.
EXCHANGE. PRIMEDIA may, at its option, on any scheduled dividend payment
date, issue 10% Subordinated Debentures due 2008 in exchange for the Series D
Preferred Stock, in whole but not in part. Holders of Series D Preferred Stock
so exchanged will be entitled to receive the principal amount of 10%
Subordinated Debentures equal to $100 for each $100 of liquidation preference of
Series D Preferred Stock held at the time of the exchange plus an amount per
share in cash equal to all accrued but unpaid dividends to the date of the
exchange.
DESCRIPTION OF SERIES F EXCHANGEABLE PREFERRED STOCK
RANK. The Series F Preferred Stock ranks as to dividend rights and rights
on liquidation, winding-up or dissolution:
- senior to all classes of common stock and senior to all classes of capital
stock or other series of preferred stock which does not expressly provide
that it ranks senior to or on parity with the Series F Preferred Stock;
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- on a parity with the Series D Preferred Stock, the Series H Preferred
Stock, and all classes of capital stock or other series of preferred stock
which expressly provides that it ranks on parity with the Series F
Preferred Stock; and
- junior to each class of capital stock or other series of preferred stock
which expressly provides that it ranks senior to the Series F Preferred
Stock.
DIVIDENDS. Holders of the Series F Preferred Stock are entitled to receive,
when, as and if declared by the board of directors of PRIMEDIA, out of funds
legally available for the payment of dividends, dividends in cash at an annual
amount equal to $9.20 per share. Dividends on the Series F Preferred Stock are
payable quarterly in arrears on February 1, May 1, August 1 and November 1 of
each year. Dividends will cumulate without interest until declared and paid. As
of the date of this prospectus, PRIMEDIA has paid all such dividends.
OPTIONAL REDEMPTION. Subject to contractual and other restrictions and to
the existence of legally available funds, prior to November 1, 2002, PRIMEDIA
can redeem the Series F Preferred Stock at its option, in whole or in part, at
any time or from time to time, at a redemption price equal to the amount of the
aggregate liquidation preference of the Series F Preferred Stock plus all
accrued and unpaid dividends plus a specified make-whole premium at the time of
redemption.
Subject to contractual and other restrictions and to the existence of
legally available funds, PRIMEDIA, at its option, may at any time on or after
November 1, 2002, redeem the Series F Preferred Stock, in whole or in part at
redemption prices declining ratably from $104.60 beginning on November 1, 2002
to $100 on and after November 1, 2004, plus accrued and unpaid dividends.
MANDATORY REDEMPTIONS. Subject to contractual and other restrictions and to
the existence of legally available funds, on November 1, 2009, PRIMEDIA will be
required to redeem all outstanding shares of Series F Preferred Stock at a price
equal to $100 per share plus all accumulated dividends to the date of
redemption.
LIQUIDATION PREFERENCE. Upon any voluntary or involuntary liquidation,
dissolution or winding-up of PRIMEDIA, holders of Series F Preferred Stock will
be entitled to be paid out of the assets of PRIMEDIA available for distribution
to its stockholders $100 per share, plus any accrued and unpaid dividends
accrued to the date of liquidation, dissolution or winding-up.
VOTING RIGHTS. Holders of the Series F Preferred Stock have no voting
rights, except as provided by law or as set forth in the certificate of
designations for the Series F Preferred Stock. Also, when dividends on the
Series F Preferred Stock are in arrears and unpaid for six consecutive quarterly
periods, the board of directors of PRIMEDIA will be increased by two directors
and the holders of a majority of the Series F Preferred Stock, voting as a
class, will be entitled to elect two additional directors of the expanded board
of directors.
Without the affirmative vote or consent of the holders of a majority of the
then outstanding shares of Series F Preferred Stock, voting together with the
holders of any capital stock ranking on parity with the Series F Preferred
Stock, PRIMEDIA cannot issue any class of capital stock or series of preferred
stock ranking senior to the Series F Preferred Stock unless PRIMEDIA uses the
proceeds from that issuance to redeem all of the then outstanding shares of
Series F Preferred Stock and any other securities ranking on parity with the
Series F Preferred Stock and entitled to vote on this matter.
Pursuant to the certificate of designations for the Senior F Preferred
Stock, PRIMEDIA may not merge, consolidate with or into, or transfer all or
substantially all of its assets, in one transaction or in a series of related
transactions to any person without the consent of the holders of a majority of
the
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outstanding Series F Preferred Stock, voting together with the holders of all
capital stock ranking on parity with the Series F Preferred Stock, unless:
- PRIMEDIA will be the continuing person, or the person, if other than
PRIMEDIA, formed by the merger or consolidation, or the person to which
the properties and assets of PRIMEDIA are transferred, is a corporation
organized and existing under the laws of the United States or any state in
the United States or the District of Columbia, and the Series F Preferred
Stock will be converted into or exchanged for shares of the successor or
resulting company having substantially the same powers, preferences and
relative participating, optional or other special rights and the same
qualifications, limitations or restrictions that the Series F Preferred
Stock had immediately before the conversion; and
- immediately after giving effect to the transaction on a pro forma basis,
the consolidated net worth of the surviving entity is at least equal to
the lesser of the consolidated net worth of PRIMEDIA immediately prior to
such transaction and the consolidated net worth of PRIMEDIA on the first
date any Series F Preferred Stock was issued.
The consent of the holders of the Series F Preferred Stock will not be
required if the requisite holders of preferred stock senior to the Series F
Preferred Stock or any indebtedness of PRIMEDIA have consented or granted a
waiver with respect to the transaction in question.
EXCHANGE. PRIMEDIA may, at its option, on any scheduled dividend payment
date, issue 9.20% Subordinated Debentures due 2009 in exchange for the Series F
Preferred Stock, in whole but not in part. Holders of Series F Preferred Stock
so exchanged will be entitled to receive the principal amount of 9.20%
Subordinated Debentures equal to $100 for each $100 of liquidation preference of
Series F Preferred Stock held at the time of the exchange plus an amount per
share in cash equal to all accrued but unpaid dividends to the date of the
exchange.
DESCRIPTION OF SERIES H EXCHANGEABLE PREFERRED STOCK
RANK. The Series H Preferred Stock ranks as to dividend rights and rights
on liquidation, winding-up or dissolution:
- senior to all classes of common stock and senior to all classes of capital
stock or other series of preferred stock which does not expressly provide
that it ranks senior to or on parity with the Series H Preferred Stock,
- on a parity with the Series D Preferred Stock, the Series F Preferred
Stock, and all classes of capital stock or other series of preferred stock
which expressly provides that it ranks on parity with the Series H
Preferred Stock; and
- junior to each class of capital stock or other series of preferred stock
which expressly provides that it ranks senior to the Series H Preferred
Stock.
DIVIDENDS. Holders of the Series H Preferred Stock are entitled to receive
when, as and if declared by the board of directors of PRIMEDIA, out of funds
legally available for the payment of dividends, dividends in cash at an annual
amount equal to $8.625 per share. Dividends on the Series H Preferred Stock are
payable quarterly in arrears on February 1, May 1, August 1 and November 1 of
each year. Dividends will cumulate without interest until declared and paid. As
of the date of this prospectus, PRIMEDIA has paid all such dividends.
OPTIONAL REDEMPTION. PRIMEDIA cannot redeem the Series H Preferred Stock
before April 1, 2003. After April 1, 2003, subject to contractual and other
restrictions and the existence of legally available funds, PRIMEDIA, at its
option, may redeem the Series H Preferred Stock, in whole or in part, at
redemption prices declining ratably from $104.313 beginning on April 1, 2003 to
$100 on and after April 1, 2006, plus accrued and unpaid dividends to the date
of redemption.
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In addition, if PRIMEDIA consummates a public equity offering prior to
April 1, 2001, it may redeem at its option up to $125 million of the aggregate
liquidation preference of the Series H Preferred Stock at a price per share of
$108.625 plus accrued and unpaid dividends to the redemption date out of the net
proceeds of the offering. The redemption must occur within 180 days of the
public equity offering.
MANDATORY REDEMPTION. Subject to contractual and other restrictions and to
the existence of legally available funds, on April 1, 2010, PRIMEDIA will be
required to redeem all outstanding shares of Series H Preferred Stock at a price
equal to $100 per share plus all accumulated and unpaid dividends to the date of
redemption.
LIQUIDATION PREFERENCES. Upon any voluntary or involuntary liquidation,
dissolution or winding-up of PRIMEDIA, holders of Series H Preferred Stock will
be entitled to be paid out of the assets of PRIMEDIA available for distribution
to its stockholders $100 per share, plus any unpaid dividends accrued to the
date of liquidation, dissolution or winding-up.
VOTING RIGHTS. Holders of the Series H Preferred Stock have no voting
rights, except as provided by law or as set forth in the certificate of
designations for the Series H Preferred Stock. Also, when dividends on the
Series H Preferred Stock are in arrears and unpaid for six consecutive quarterly
periods, the board of directors of PRIMEDIA will be increased by two directors
and the holders of a majority of the Series H Preferred Stock, voting as a
class, will be entitled to elect two additional directors of the expanded board
of directors.
Without the affirmative vote or consent of the holders of a majority of the
then outstanding Series H Preferred Stock holders, voting together with the
holders of any capital stock ranking on parity with the Series H Preferred
Stock, PRIMEDIA cannot issue any class of capital stock or series of preferred
stock ranking senior to the Series H Preferred Stock unless PRIMEDIA uses the
proceeds from that issuance to redeem all of the then outstanding shares of
Series H Preferred Stock and any other securities ranking on parity with the
Series H Preferred Stock and entitled to vote on this matter.
Pursuant to the certificate of designations for the Series H Preferred
Stock, PRIMEDIA may not merge, consolidate with or into, or transfer all or
substantially all of its assets, in one transaction or in a series of related
transactions, to any person without the consent of the holders of a majority of
the issued and outstanding Series H Preferred Stock, voting together with the
holders of all capital stock ranking on parity with the Series H Preferred
Stock, unless PRIMEDIA will be the continuing person, or the person, if other
than PRIMEDIA, formed by the merger or consolidation, or the person to which the
properties and assets of PRIMEDIA are transferred, is a corporation organized
and existing under the laws of the United States or any state in the United
States or the District of Columbia, and the Series H Preferred Stock will be
converted into or exchanged for shares of the successor or resulting company
having substantially the same powers, preferences and relative participating,
optional or other special rights and the same qualifications, limitations or
restrictions that the Series H Preferred Stock had immediately before the
conversion.
The consent of the holders of the Series H Preferred Stock will not be
required if the requisite holders of preferred stock senior to the Series H
Preferred Stock or any indebtedness of PRIMEDIA have consented or granted a
waiver with respect to the transaction in question.
EXCHANGE. PRIMEDIA may, at its option, on any scheduled dividend payment
date, issue 8 5/8% Subordinated Debentures due 2010 in exchange for the
Series H Preferred Stock, in whole but not in part. Holders of Series H
Preferred Stock so exchanged will be entitled to receive the principal amount of
8 5/8% Subordinated Debentures equal to $100 for each $100 of liquidation
preference of Series H Preferred Stock held at the time of the exchange plus an
amount per share in cash equal to all accrued but unpaid dividends to the date
of the exchange.
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COMPARISON OF STOCKHOLDER RIGHTS
PRIMEDIA and About are both organized under the laws of the State of
Delaware. Any differences, therefore, in the rights of holders of PRIMEDIA
capital stock and About capital stock arise primarily from differences in their
respective certificates of incorporation and by-laws. After the effective time
of the merger, the rights of About stockholders will be determined by reference
to the PRIMEDIA certificate of incorporation and by-laws.
CAPITALIZATION
PRIMEDIA. The authorized capital stock of PRIMEDIA consists of:
- 250,000,000 shares of PRIMEDIA common stock, par value $.01 per share; and
- 50,000,000 shares of preferred stock, par value $.01 per share.
ABOUT. The authorized capital stock of About consists of:
- 100,000,000 shares of common stock, par value $.001 per share; and
- 5,000,000 shares of preferred stock, par value $.001 per share.
VOTING RIGHTS
In the case of both PRIMEDIA and About, each holder of common stock has the
right to cast one vote for each share of common stock held of record on all
matters submitted to a vote of stockholders, including the election of
directors. Holders of common stock have no cumulative voting rights.
For a description of the voting rights of the PRIMEDIA preferred stock, see
"Description of PRIMEDIA Capital Stock--Description of Series D Exchangeable
Preferred Stock," "--Description of Series F Exchangeable Preferred Stock," and
"--Description of Series H Exchangeable Preferred Stock."
NUMBER AND ELECTION OF DIRECTORS
PRIMEDIA. The board of directors of PRIMEDIA currently has nine members.
The amended and restated by-laws provide that the PRIMEDIA board of directors
will consist of not less than one or more than fifteen directors, the number to
be fixed from time to time by the PRIMEDIA board of directors or the
stockholders.
PRIMEDIA's certificate of incorporation and amended and restated by-laws do
not provide for a staggered board of directors.
ABOUT. The board of directors of About currently has six members. About's
second amended and restated certificate of incorporation states that the number
of directors will in no case be less than five nor more than 15 (exclusive of
directors, if any, to be elected by holders of preferred stock of About, voting
separately as a class).
About's second amended and restated certificate of incorporation and amended
and restated by-laws do not provide for a staggered board of directors.
VACANCIES ON THE BOARD OF DIRECTORS AND REMOVAL OF DIRECTORS
PRIMEDIA. The amended and restated by-laws provide that vacancies and newly
created directorships resulting from any increase in the number of directors may
be filled by a vote of the majority of the board of directors then in office or
by the stockholders. A director may be removed with or without cause by the
stockholders.
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ABOUT. The amended and restated by-laws provide that vacancies and newly
created directorships are filled by a vote of 66.67% of the directors then in
office, for a term expiring at the annual meeting of stockholders, at which time
the director's successor is elected by the stockholders. If there are no
directors in office or if the directors then in office constitute less than a
majority, the vacancy shall be filled pursuant to Delaware law. Any director or
the entire board of directors may be removed at any time, but only for cause and
only by the affirmative vote of the holders of not less than 66.67% of the
outstanding shares of About capital stock entitled to vote in the election of
directors.
AMENDMENTS TO THE CERTIFICATE OF INCORPORATION
PRIMEDIA. The provisions of Delaware law regarding amendments to the
certificate of incorporation govern the amendment of certificates of
incorporation of PRIMEDIA. Under Delaware law, an amendment to the certificate
of incorporation of a corporation requires the approval of the corporation's
board of directors and the approval of holders of a majority of the outstanding
stock entitled to vote upon the proposed amendment, unless a higher vote is
required by the corporation's certificate of incorporation.
ABOUT. About's second amended and restated certificate of incorporation
requires a vote of the holders of not less than 66.67% of the outstanding shares
of capital stock of About in order to alter or amend the provisions of the
certificate of incorporation relating to limitations on directors' liability,
indemnification, amendment of the bylaws, or amendment of the certificate of
incorporation. In all other cases, as provided under Delaware law, a vote of the
holders of not less than a majority of the outstanding shares of capital stock
of About is required.
AMENDMENTS TO BY-LAWS
PRIMEDIA. The PRIMEDIA certificate of incorporation, as amended, authorizes
the board of directors to adopt, amend or repeal any provision of PRIMEDIA's
by-laws by majority vote.
ABOUT. The second amended and restated certificate of incorporation of
About authorizes the board of directors to adopt, amend or repeal any provision
of About's by-laws by vote of 66.67% of the board of directors.
ACTION BY WRITTEN CONSENT
PRIMEDIA. The provisions of Delaware law regarding actions by written
consent govern actions by written consent of PRIMEDIA stockholders. Under
Delaware law, any action which may be taken at an annual meeting or special
meeting of stockholders may be taken without a meeting, if a consent in writing
is signed by the holders of the outstanding stock having the minimum number of
votes necessary to authorize the action at a meeting of the stockholders.
ABOUT. About's second amended and restated certificate of incorporation
prohibits action by written consent of the stockholders in lieu of a meeting.
ABILITY TO CALL SPECIAL MEETINGS
PRIMEDIA. Under the amended and restated by-laws, special meetings of
PRIMEDIA stockholders may be called by the president of PRIMEDIA for any purpose
and shall be called by the president or secretary if directed by the board of
directors or requested in writing by the holders of not less than 25% of
PRIMEDIA's capital stock. A stockholder request must state the purpose of the
proposed meeting.
ABOUT. Under the amended and restated by-laws, special meetings of About
stockholders may be called by the president and shall be called by the president
or secretary at the request in writing of the chairman of the board of directors
or two-thirds of the board of directors. Written notice of a special
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meeting shall be given to each stockholder entitled to vote at the special
meeting not fewer than ten nor more than 60 days before the date of the meeting.
Business transacted at any special meeting shall be limited to the purposes
stated in the notice.
NOTICE OF STOCKHOLDER ACTION
PRIMEDIA. Under PRIMEDIA's amended and restated by-laws, in order for a
stockholder to nominate candidates for election to PRIMEDIA's board of directors
at any meeting of the stockholders, timely written notice must be given to the
secretary of PRIMEDIA. To be timely, a stockholder's notice must be received at
the principal executive offices of PRIMEDIA not less than 60 days nor more than
90 days prior to the meeting at which directors are to be elected. In the event
that less than 70 days' notice of the date of the meeting is given to
stockholders, to be timely, notice by a stockholder must be received by the
secretary no later than the close of business on the tenth day following the day
on which the notice of the meeting was given.
A stockholder's notice to PRIMEDIA must set forth all of the following:
- for each person whom the stockholder wishes to nominate for election or
re-election as a director: the nominee's name, age, business address,
residence address, principal occupation or employment, the class and
number of shares of stock of PRIMEDIA beneficially owned by the nominee,
and all information required to be disclosed in solicitations of proxies
for election of directors, or otherwise required by applicable law; and
- the stockholder's name, record address, and the class and number of shares
of PRIMEDIA which are beneficially owned by the stockholder.
ABOUT. Under About's amended and restated by-laws, any stockholder of About
who was a stockholder of record at the time About gave notice of an annual
meeting may nominate persons for election to the board of directors and propose
business to be considered by the stockholders at an annual meeting, provided
that the stockholder gives timely written notice to the secretary of About. To
be timely, the notice must be delivered to the secretary at the principal
executive offices of About not later than the close of business on the 120th day
nor earlier than the close of business on the 150th day prior to the first
anniversary of the date of the proxy statement delivered to stockholders in
connection with the preceding year's annual meeting. If the date of the annual
meeting is more than 30 days before or more than 60 days after the anniversary
date of the proxy statement delivered to stockholders in connection with the
preceding year's annual meeting, or if no proxy statement was delivered to
stockholders in connection with the preceding year's annual meeting, notice will
also be timely if delivered within earlier than the close of business on the
90th day prior to the annual meeting and not later than the close of business on
the later of the 60th day prior to the annual meeting or the close of business
on the tenth day following the day on which public announcement of the date of
the meeting is first made by About.
In addition, if the number of directors to be elected is increased and no
public announcement is made by About naming all of the nominees or specifying
the size of the increased board of directors at least 70 days before the first
anniversary of the preceding year's annual meeting (or, if the annual meeting is
held more than 30 days before or 60 days after such anniversary date, at least
70 days prior to such annual meeting), a stockholder's notice will be considered
timely, with respect to the nominees for any new positions created by the
increase if it is delivered to the secretary of About not later than the close
of business on the tenth day following the day on which the public announcement
is first made by About.
If the board of directors has determined that directors shall be elected at
a special meeting of stockholders, any stockholder of About who is a stockholder
of record at the time of giving of notice of the special meeting and who shall
be entitled to vote at the meeting may nominate persons for election to the
board of directors, provided that the stockholder complies with the notice
procedures described
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below. If About calls a special meeting of stockholders for the purpose of
electing one or more directors to the board of directors, any stockholder may
nominate a person for election to the board if the stockholder's notice is
delivered to the secretary at the principal executive offices of About not
earlier than the 90th day prior to the special meeting and not later than the
later of the close of business of the 60th day before the special meeting or the
close of business of the tenth day following the day on which the public
announcement is first made of the date of the special meeting and of the
nominees proposed by the board of directors to be elected at the special
meeting.
A stockholder's notice to About must set forth all of the following:
- for each person whom the stockholder wishes to nominate for election or
re-election as a director, all information required to be disclosed in
solicitations of proxies for election of directors, or otherwise required
by applicable law, including that person's written consent to being named
in the proxy statement as a nominee and to serving as a director if
elected;
- for other business, a brief description of the business the stockholder
proposes to bring before the meeting, the reasons for conducting that
business at that meeting and any material interest of the stockholder in
the business proposed; and
- the name and address of the stockholder and the beneficial owner, if any,
on whose behalf the nomination or proposal is made, as they appear on
About's books, and the class and number of shares of About which are
beneficially owned by the stockholder and the beneficial owner, if any.
LIMITATION OF PERSONAL LIABILITY OF DIRECTORS AND OFFICERS
Delaware law provides that a corporation may include in its certificate of
incorporation a provision limiting or eliminating the liability of its directors
to the corporation and its stockholders for monetary damages arising from a
breach of fiduciary duty, except for:
- a breach of the duty of loyalty to the corporation or its stockholders;
- acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law;
- payment of a dividend or the repurchase or redemption of stock in
violation of Delaware law; or
- any transaction from which the director derived an improper personal
benefit.
The certificate of incorporation, as amended, of PRIMEDIA and the second
amended and restated certificate of incorporation of About provide that, to the
fullest extent Delaware law permits the limitation or elimination of the
liability of directors, no director will be liable to PRIMEDIA or About, as the
case may be, or their respective stockholders for monetary damages for breach of
fiduciary duty as a director.
INDEMNIFICATION OF DIRECTORS AND OFFICERS
Under Delaware law, a corporation generally may indemnify directors and
officers:
- for actions taken in good faith and in a manner they reasonably believed
to be in, or not opposed to, the best interests of the corporation; and
- with respect to any criminal proceeding, if they had no reasonable cause
to believe that their conduct was unlawful.
In addition, Delaware law provides that a corporation may advance to a
director or officer expenses incurred in defending any action upon receipt of an
undertaking by the director or officer to repay the amount advanced if it is
ultimately determined that he or she is not entitled to indemnification.
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PRIMEDIA. The amended and restated by-laws of PRIMEDIA provide that
PRIMEDIA will indemnify to the fullest extent permitted by Delaware law any
current or former director or officer of the corporation, and may, at the
discretion of the board of directors, indemnify any current or former employee
or agent of PRIMEDIA against all expenses, judgments, fines and amounts paid in
settlement in connection with any threatened, pending or completed action, suit
or proceeding in which the person was involved because of that person's service,
at the request of PRIMEDIA, as a director, officer, partner, trustee, employee
or agent of another corporation, partnership, joint venture, trust, or other
enterprise.
In addition, the amended and restated by-laws provide that the expenses
incurred by a person who is or was a director or officer in connection with any
action, suit or proceeding will be advanced to the director or officer by
PRIMEDIA upon receipt of an undertaking by or on behalf of the director or
officer to repay the amounts advanced if ultimately it is determined that the
director or officer was not entitled to be indemnified against the expenses.
ABOUT. The amended and restated by-laws of About provide that About will
indemnify to the fullest extent permitted by Delaware law any director or
officer made, or threatened to be made, a party to an action or proceeding,
whether criminal, civil, administrative or investigative, by reason of being a
director or officer of About or a predecessor corporation, or, at About's
request, a director or officer of another corporation. The indemnification
provided by About is not exclusive of any other rights to which indemnified
person may be entitled under any bylaw, agreement or vote of stockholders or
disinterested directors or otherwise, continues as to an indemnified person who
has ceased to be a director, and inures to the benefit of the heirs, executors
and administrators of an indemnified person. About's obligation to provide
indemnification is to be offset to the extent of any other source of
indemnification or any otherwise applicable insurance coverage under a policy
maintained by About or by any other person.
In addition, the amended and restated by-laws provide that the expenses
incurred by a director or officer of About in defending a civil or criminal
action, suit or proceeding by reason of the fact that the person is or was a
director of About will be advanced to the person by About upon receipt of an
undertaking by or on behalf of the director to repay the amounts advanced if
ultimately it is determined that the director or officer was not entitled to be
indemnified against the expenses. The indemnification provisions of the amended
and restated by-laws also apply to all directors and officers who are or have
been fiduciaries of any employee benefit plan of About.
STATE ANTI-TAKEOVER STATUTES
Under the business combination statute of Delaware law, a corporation is
prohibited from engaging in any business combination with an interested
stockholder who, together with its affiliates or associates, owns, or who is an
affiliate or associate of the corporation and within a three-year period did
own, 15% or more of the corporation's voting stock for a three-year period
following the time the stockholder became an interested stockholder, unless:
- prior to the time the stockholder became an interested stockholder, the
board of directors of the corporation approved either the business
combination or the transaction which resulted in the stockholder becoming
an interested stockholder;
- the interested stockholder owned at least 85% of the voting stock of the
corporation, excluding specified shares, upon consummation of the
transaction which resulted in the stockholder becoming an interested
stockholder; or
- at or subsequent to the time the stockholder became an interested
stockholder, the business combination is approved by the board of
directors of the corporation and authorized by the affirmative vote, at an
annual or special meeting and not by written consent, of at least 66 2/3%
of
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the outstanding voting shares of the corporation, excluding shares held by
that interested stockholder.
A business combination generally includes:
- mergers, consolidations and sales or other dispositions of 10% or more of
the assets of a corporation to or with an interested stockholder;
- specified transactions resulting in the issuance or transfer to an
interested stockholder of any capital stock of the corporation or its
subsidiaries; and
- other transactions resulting in a disproportionate financial benefit to an
interested stockholder.
The provisions of the Delaware business combination statute do not apply to
a corporation if, subject to certain requirements, the certificate of
incorporation or by-laws of the corporation contain a provision expressly
electing not to be governed by the provisions of the statute or the corporation
does not have voting stock listed on a national securities exchange, authorized
for quotation on an inter-dealer quotation system of a registered national
securities association or held of record by more than 2,000 stockholders.
Neither PRIMEDIA in its certificate of incorporation, as amended, or its
amended and restated by-laws, nor About in its second amended and restated
certificate of incorporation or its amended and restated by-laws, has adopted
any provision to "opt-out" of the Delaware business combination statute and the
statute is applicable to business combinations involving PRIMEDIA and About.
EXECUTIVES; EXECUTIVE COMPENSATION; STOCK OWNERSHIP OF DIRECTORS, EXECUTIVE
OFFICERS AND PRINCIPAL STOCKHOLDERS
Information concerning current directors and officers of PRIMEDIA, executive
compensation and ownership of PRIMEDIA stock by management and principal
stockholders is contained in PRIMEDIA's annual report on Form 10-K for the year
ended December 31, 1999 and PRIMEDIA's proxy statement for its 2000 annual
meeting of stockholders dated April 19, 2000, and is incorporated herein by
reference.
Information concerning current directors and officers of About, executive
compensation and ownership of About stock by management and principal
stockholders is contained in About's annual report on Form 10-K for the year
ended December 31, 1999 and About's proxy statement for its 2000 annual meeting
of stockholders dated April 10, 2000, and is incorporated herein by reference.
See "Where You Can Find More Information."
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
THE FOLLOWING SUMMARIES ARE QUALIFIED BY REFERENCE TO THE COMPLETE TEXT OF
EACH AGREEMENT, WHICH IS INCORPORATED BY REFERENCE. WE ENCOURAGE YOU TO READ THE
AGREEMENTS IN THEIR ENTIRETY.
ADS FOR EQUITY AGREEMENTS
On October 29, 2000, About and PRIMEDIA entered into two agreements,
pursuant to which About agreed to purchase advertising and promotional services
from PRIMEDIA with a total value of $72 million based on a $35.70 pro forma
equivalent per share value of About stock in exchange for a total of 2,016,806
shares of About stock. About has agreed to purchase $14,400,000 of these
services by December 31, 2001 and issued 403,361 shares of About stock to
PRIMEDIA on November 8, 2000. About has agreed to purchase the remainder of
these services between January 1, 2002 and December 31, 2005 and issued the
remaining 1,613,445 shares of About stock to PRIMEDIA on December 5, 2000.
94
Effective as of December 6, 2000, About and PRIMEDIA entered into an
agreement pursuant to which About agreed to purchase additional advertising and
promotional services from PRIMEDIA with a total value of $14,900,000 based on a
$20.25 fair market value per share of About stock in exchange for a total of
735,802 shares of About stock. About has agreed to purchase $14,900,000 of these
services by December 31, 2001 and issued 735,802 shares of About stock to
PRIMEDIA on December 6, 2000.
These agreements will survive termination of the merger agreement.
SALE REPRESENTATION AGREEMENT
On October 29, 2000, About and PRIMEDIA entered into a sales representation
agreement, pursuant to which PRIMEDIA has agreed to serve as the worldwide
advertising sales representative of About for the purpose of selling certain
forms of advertising for specified web sites owned and operated by About. From
November 1, 2000 through April 30, 2001, PRIMEDIA will serve as About's
exclusive third-party sales representative for these sites, with certain
preferences over About's employees or other agents beginning February 1, 2001.
Beginning in the second quarter of 2001 through December 31, 2005, PRIMEDIA will
be the exclusive sales representative with respect to these specified sites.
About has agreed to pay PRIMEDIA commission-based fees equal to 20% of the net
advertising revenues derived only from such forms of advertising sold on these
specific sites. From November 1, 2000 to March 31, 2001, the fees shall be
payable only with respect to those sales actually generated by PRIMEDIA. From
April 1, 2001 to December 31, 2005, the fees shall be payable regardless of
whether the sales were generated by PRIMEDIA. About and PRIMEDIA also agreed
that the number of About web sites to be covered by this agreement may grow to
20% of the total number of About web sites. This agreement is renewable for
additional one-year terms until either party notifies the other party of its
intent not to renew.
RIGHT OF FIRST OFFER AGREEMENT
On October 29, 2000, About and PRIMEDIA entered into a right of first offer
agreement concerning the possible provision of content from publications that
compete with PRIMEDIA publications. Under the terms of the agreement, if About
proposes to enter into a license agreement under which it will pay for content
from publications that compete with PRIMEDIA publications, PRIMEDIA has the
right to provide such content on terms no less favorable to About if, in About's
sole judgment, such content is identical in quality to that provided by the
competitive publication. This agreement terminates on December 31, 2005.
LIST RENTAL AGREEMENT
Effective as of December 6, 2000, About and PRIMEDIA Magazines Inc. entered
into an agreement pursuant to which PRIMEDIA Magazines Inc. granted About the
right to use a mailing list owned by PRIMEDIA Magazines Inc. in exchange for
120,987 shares of About stock. About issued 120,987 shares of About stock to
PRIMEDIA Magazines Inc. on December 6, 2000.
OTHER AGREEMENTS
About and PRIMEDIA have entered into certain agreements pursuant to which
PRIMEDIA has agreed to purchase advertising and promotional services on the
About network. The terms of these agreements expire in November of 2001 and
December of 2002. One of these agreements, a sponsorship and advertising
agreement, provides for payments to About in the aggregate of $5,900,000.
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COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT
Section 16(a) of the Securities Exchange Act requires PRIMEDIA's and About's
directors and executive officers, and persons who own more than 10% of either
PRIMEDIA's or About's stock, to file with the Securities and Exchange Commission
initial reports of ownership on a Form 3 and reports of changes in ownership of
common stock and other equity securities of PRIMEDIA or About, as applicable on
a Form 4 or Form 5. Officers, directors and 10% stockholders are required by SEC
regulations to furnish PRIMEDIA or About, as applicable with, copies of all
Section 16(a) forms they file.
To PRIMEDIA's and About's knowledge, based solely on review of the copies of
the reports furnished to PRIMEDIA and About and written representations from the
executive officers and directors, PRIMEDIA and About believe that all
Section 16(a) filing requirements applicable to its officers, directors, and 10%
stockholders were met during 2000, except with respect to initial statements of
beneficial ownership for two directors of About, Daphne Kis and Stanley Fung,
which statements were not filed on a timely basis but have subsequently been
filed.
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LEGAL MATTERS
Simpson Thacher & Bartlett, New York, New York, will provide an opinion for
PRIMEDIA regarding the validity of the shares of PRIMEDIA offered by this joint
proxy statement-consent solicitation-prospectus.
Simpson Thacher & Bartlett, New York, New York, counsel for PRIMEDIA, and
Brobeck, Phleger & Harrison LLP, New York, New York, counsel for About, will
provide opinions regarding certain United States federal income tax consequences
of the merger for PRIMEDIA and About, respectively.
CHANGE IN INDEPENDENT PUBLIC ACCOUNTANTS
In June 2000, About decided to replace KPMG LLP as its independent
accountants, and retained Ernst & Young LLP as its new independent accountants.
The decision to change About's accountants was recommended by the audit
committee of About's board of directors and approved by About's board of
directors. KPMG LLP's reports on About's financial statements for the two most
recent fiscal years (i.e., the fiscal years ended December 31, 1998 and
December 31, 1999) contained no adverse opinion or a disclaimer of opinion, and
were not qualified or modified as to uncertainty, audit scope or accounting
principles.
During About's last two fiscal years and the subsequent interim period to
the date hereof, there were no disagreements between About and KPMG LLP on any
matter of accounting principles or practices, financial statement disclosure, or
auditing scope or procedure, which disagreements, if not resolved to the
satisfaction of KPMG LLP, would have caused it to make reference to the subject
matter of the disagreements in connection with its reports. Prior to retaining
Ernst & Young LLP, About had not consulted with Ernst & Young LLP regarding
accounting principles.
EXPERTS
PRIMEDIA. The consolidated financial statements as of December 31, 1998 and
1999 and for each of the three years in the period ended December 31, 1999 and
the related financial statement schedule incorporated in this joint proxy
statement-consent solicitation-prospectus by reference from the PRIMEDIA Annual
Report on Form 10-K for the year ended December 31, 1999 have been audited by
Deloitte & Touche LLP, independent auditors, as stated in their reports (which
report on the consolidated financial statements expresses an unqualified opinion
and includes an explanatory paragraph referring to PRIMEDIA's change in 1998 in
the method of accounting for internal use software costs to conform with
Statement of Position 98-1 "Accounting for the Costs of Computer Software
Developed or Obtained for Internal Use" of the American Institute of Certified
Public Accountants), which are incorporated herein by reference, and have been
so incorporated in reliance upon the reports of such firm given upon their
authority as experts in accounting and auditing.
ABOUT. The consolidated financial statements and the related financial
statement schedule of About, as of December 31, 1998 and 1999 and for each of
the three years in the period ended December 31, 1999, incorporated in this
joint proxy statement-consent solicitation-prospectus by reference from About's
Annual Report on Form 10-K for the year ended December 31, 1999, have been
audited by KPMG LLP, independent auditors, as stated in their report, which is
incorporated herein by reference, and has been so incorporated in reliance upon
the report of such firm given upon their authority as experts in accounting and
auditing.
STOCKHOLDER PROPOSALS
PRIMEDIA. For a stockolder to bring matters before PRIMEDIA's 2001 Annual
Meeting, notice must be received by PRIMEDIA within the time limits described
below. The notice must include a description of the proposed business, the
reasons therefore and other specified matters. For a matter to be included in
PRIMEDIA's proxy statement and proxy for the 2001 Annual Meeting, notice must
have been received by PRIMEDIA on or before January 15, 2001. In each case, the
notice must be given to the Secretary of PRIMEDIA, whose address is 745 Fifth
Avenue, New York, New York, 10151. Any
97
stockholder desiring a copy of PRIMEDIA's by-laws will be furnished one without
charge upon written request to the Secretary.
ABOUT. Proposals submitted by stockholders of About for presentation at its
2001 annual meeting of stockholders, to be held if the merger has not been
consummated before then, must have been received by the Secretary of About no
later than the close of business on January 9, 2001 and no earlier than the
close of business on December 10, 2000 for inclusion in the proxy statement and
form of proxy relating to the 2001 annual meeting of stockholders. In addition,
the proxies solicited by the About board of directors for the 2001 annual
meeting of its stockholders will confer discretionary authority to vote on any
stockholder proposal raised at the meeting which is not described in the 2001
proxy statement unless About has received notice of the proposal, as described
above. However, if the date of its 2001 annual meeting of stockholders is more
than 30 days before May 9, 2001 or more than 60 days after May 9, 2001, notice
by the stockholder must be delivered after the close of business on the 90th day
prior to the 2001 annual meeting and by the close of business on the 60th day
prior to the 2001 annual meeting or the close of business on the 10th day
following the date on which a public announcement of the 2001 annual meeting is
first announced. If About determines to change the date of its 2001 annual
meeting of stockholders more than 30 days from May 9, 2001, About will provide
its stockholders with a reasonable time before it begins to print and mail its
proxy materials for the 2001 annual meeting in order to allow its stockholders
an opportunity to make proposals in accordance with the rules and regulations of
the SEC.
WHERE YOU CAN FIND MORE INFORMATION
PRIMEDIA and About file annual, quarterly and current reports, proxy
statements and other information with the SEC. You may read and copy any
document we file at the SEC's public reference rooms in Washington, D.C., New
York, New York and Chicago, Illinois. Please call the SEC at 1-800-SEC-0330 for
further information on the public reference rooms. Our SEC filings are also
available to the public at the SEC's website at HTTP://WWW.SEC.GOV. Copies of
documents filed by PRIMEDIA with the SEC are also available at the offices of
The New York Stock Exchange, 20 Broad Street, New York, New York 10005. Copies
of documents filed by About with the SEC are also available at the Nasdaq Stock
Market, 1735 K Street, NW, Washington, D.C. 20006.
PRIMEDIA has filed a registration statement on Form S-4 under the Securities
Act with the SEC with respect to PRIMEDIA's common stock to be issued in the
merger. This joint proxy statement-consent solicitation-prospectus constitutes
the prospectus of PRIMEDIA filed as part of the registration statement in
addition to being a proxy statement of About for its special meeting of
stockholders and a consent solicitation of PRIMEDIA. This joint proxy
statement-consent solicitation-prospectus does not contain all of the
information set forth in the registration statement because certain parts of the
registration statement are omitted in accordance with the rules and regulations
of the SEC. The registration statement and its exhibits are available for
inspection and copying as set forth above.
The SEC allows us to "incorporate by reference," into this joint proxy
statement-consent solicitation-prospectus documents filed with the SEC by
PRIMEDIA and About. This means that we can disclose important information to you
by referring you to those documents. The information incorporated by reference
is considered to be a part of this joint proxy statement-consent solicitation-
prospectus, and later information that we file with the SEC will update and
supersede that information. We incorporate by reference the documents listed
below and any documents filed by PRIMEDIA or About pursuant to Section 13(a),
13(c), 14 or 15(d) of the Exchange Act after the date of this joint proxy
statement-consent solicitation-prospectus and before the date of About's special
meeting:
PRIMEDIA FILINGS (SEC FILE NUMBER 1-5805): PERIODS
------------------------------------------ -------
Annual Report on Form 10-K Year ended December 31, 1999
Quarterly Reports on Form 10-Q Quarters ended March 31, 2000, June 30, 2000
and September 30, 2000
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PRIMEDIA FILINGS (SEC FILE NUMBER 1-5805): PERIODS
------------------------------------------ -------
Current Reports on Form 8-K Filed April 14, 2000, May 15, 2000,
October 30, 2000 and November 13, 2000
The description of PRIMEDIA's common stock
and preferred stock contained in PRIMEDIA's
registration statements filed under Section
12 of the Securities Exchange Act
PRIMEDIA's proxy statement for its 2000 April 19, 2000
annual meeting of stockholders
ABOUT FILINGS (SEC FILE NUMBER 000-25525): PERIODS
------------------------------------------ -------
Annual Report on Form 10-K Year ended December 31, 1999
Quarterly Reports on Form 10-Q Quarters ended March 31, 2000, June 30, 2000
and September 30, 2000
Current Reports on Form 8-K February 14, 2000, April 10, 2000, June 21,
2000, and October 31, 2000
About's proxy statement for its 2000 annual April 10, 2000
meeting of stockholders
You may request a copy of the documents incorporated by reference into this
joint proxy statement-consent solicitation-prospectus by writing to or
telephoning PRIMEDIA or About.
Requests for documents should be directed to:
- FOR PRIMEDIA DOCUMENTS:
Warren Bimblick Georgeson Shareholder Communications, Inc.
PRIMEDIA Inc. or 17 State Street
745 Fifth Avenue New York, New York 10004
New York, New York 10151 Banks and Brokers (212) 440-9800
(212) 745-0100 All Others (800) 223-2064
- FOR ABOUT DOCUMENTS:
Investor Relations or Beacon Hill Partners, Inc.
About.com, Inc. 90 Broad Street
1440 Broadway, 19th Floor New York, New York 10004
New York, New York 10018 (800) 357-8212
(212) 204-4000
This joint proxy statement-consent solicitation-prospectus does not
constitute an offer to sell, or a solicitation of an offer to purchase, the
securities offered by this joint proxy statement-consent
solicitation-prospectus, or the solicitation of a proxy or consent, in any
jurisdiction to or from any person to whom or from whom it is unlawful to make
such offer, solicitation of an offer or proxy or consent solicitation in such
jurisdiction. Neither the delivery of this joint proxy statement-consent
solicitation-prospectus nor any distribution of securities pursuant to this
joint proxy statement-consent solicitation-prospectus shall, under any
circumstances, create any implication that there has been no change in the
information set forth or incorporated into this joint proxy statement-consent
solicitation-prospectus by reference or in our affairs since the date of this
joint proxy statement-consent solicitation-prospectus. The information contained
in this joint proxy statement-consent solicitation-prospectus with respect to
PRIMEDIA was provided by PRIMEDIA and the information contained in this joint
proxy statement-consent solicitation-prospectus with respect to About was
provided by About.
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ANNEX A
October 29, 2000
The Board of Directors
PRIMEDIA Inc. 745 Fifth Avenue
New York, New York 10151
Dear Members of the Board:
We understand that PRIMEDIA Inc., a Delaware corporation (the "COMPANY"), is
considering a transaction whereby the Company will acquire About.com, Inc., a
Delaware corporation ("ABOUT.COM"). Pursuant to the terms of an Agreement and
Plan of Merger (the "PURCHASE AGREEMENT"), the Company will undertake a series
of transactions whereby About.com will become a wholly owned subsidiary of the
Company (the "TRANSACTION"). Pursuant to the terms of the Purchase Agreement all
of the issued and outstanding shares of the capital stock of About.com, par
value of $.001 per share ("ABOUT.COM COMMON STOCK") will be converted into
2.3409 shares of Common Stock, par value of $.01 per share, of the Company (the
"EXCHANGE RATIO"). No Company Common Stock will be issued to holders of
fractional shares of About.com Common Stock. The terms and conditions of the
Transaction are more fully set forth in the Purchase Agreement.
You have requested our opinion as to whether the Exchange Ratio is fair,
from a financial point of view, to the Company and to the holders of Company
Common Stock.
Wit SoundView Corporation ("WIT") has acted as financial advisor to the
Board of Directors of the Company in connection with the Transaction and will
receive a fee upon the consummation thereof. In the past, Wit and its
predecessors have provided investment banking services to the Company and
received customary compensation for the rendering of such services. In the
ordinary course of business, Wit, its successors and affiliates may trade
securities of the Company for their own accounts and, accordingly, may at any
time hold a long or short position in such securities.
Our opinion does not address the Company's underlying business decision to
effect the Transaction or constitute a recommendation to any shareholder of the
Company as to how such shareholder should vote with respect to the Transaction.
At your direction, we have not been asked to, nor do we, offer any opinion as to
the material terms of the Purchase Agreement or the form of the Transaction. In
rendering this opinion, we have assumed, with your consent, that the Company and
About.com will comply with all the material terms of the Purchase Agreement.
In arriving at our opinion, we have, among other things: (i) reviewed
certain publicly available business and historical financial information
relating to the Company and About.com, (ii) reviewed certain internal financial
information and other data relating to the business and financial prospects of
the Company, including estimates and financial forecasts prepared by management
of the Company, that were provided to us by the Company and not publicly
available, (iii) reviewed certain internal financial information and other data
relating to the business and financial prospects of About.com, including
estimates and financial forecasts prepared by the managements of the Company and
About.com and not publicly available, (iv) conducted discussions with members of
the senior managements of the Company and About.com, (v) reviewed publicly
available financial and stock market data with respect to certain other
companies in lines of business we believe to be generally comparable to those of
the Company, (vi) compared the financial terms of the Transaction with the
publicly available financial terms of certain other transactions which we
believe to be generally relevant, (vii) considered certain pro forma effects of
the Transaction on the Company's financial statements and reviewed certain
estimates of synergies prepared by Company management, (viii) reviewed drafts of
the
Purchase Agreement, and (ix) conducted such other financial studies, analyses,
and investigations, and considered such other information as we deemed necessary
or appropriate.
In connection with our review, at your direction, we have not assumed any
responsibility for independent verification for any of the information reviewed
by us for the purpose of this opinion and have, at your direction, relied on its
being complete and accurate in all material respects. In addition, at your
direction, we have not made any independent evaluation or appraisal of any of
the assets or liabilities (contingent or otherwise) of the Company or About.com,
nor have we been furnished with any such evaluation or appraisal. With respect
to the financial forecasts, estimates, pro forma effects and calculations of
synergies referred to above, we have assumed, at your direction, that they have
been reasonably prepared on a basis reflecting the best currently available
estimates and judgments of the management of each company as to the future
performance of their respective companies. Our opinion is necessarily based on
economic, monetary, market and other conditions as in effect on, and the
information made available to us as of, the date hereof.
Based upon and subject to the foregoing, it is our opinion that, as the date
hereof, the Exchange Ratio is fair, from a financial point of view, to the
Company and to the holders of Company Common Stock.
Very truly yours,
WIT SOUNDVIEW CORPORATION
By: /s/ MACK S. ROSSOFF_______________
Name: Mack S. Rossoff_________________
Title: Managing Director______________
A-2
ANNEX B
October 29, 2000
Board of Directors
PRIMEDIA Inc.
745 Fifth Avenue
New York, New York 10151
Members of the Board of Directors:
PRIMEDIA Inc. (the "ACQUIROR"), Abracadabra Acquisition Corporation, a
wholly owned subsidiary of the Acquiror (the "ACQUISITION SUB"), and
About.com, Inc. (the "COMPANY") propose to enter into an Agreement and Plan of
Merger dated as of October 29, 2000 (the "AGREEMENT") pursuant to which the
Acquisition Sub will be merged with and into the Company in a transaction (the
"MERGER") in which each outstanding share of the Company's common stock, par
value $0.001 per share (the "SHARES"), will be converted into the right to
receive 2.3409 shares (the "EXCHANGE RATIO") of the common stock, par value
$0.01 per share, of the Acquiror (the "ACQUIROR SHARES").
You have asked us whether, in our opinion, as of the date hereof, the
Exchange Ratio is fair from a financial point of view to the Acquiror.
In arriving at the opinion set forth below, we have, among other things:
(1) Reviewed certain publicly available business and financial information
relating to the Company and the Acquiror that we deemed to be relevant;
(2) Reviewed certain information, including financial forecasts, relating to
the business, earnings, cash flow, assets and prospects of the Company
and the Acquiror, as well as the amount and timing of any cost savings
and synergies expected to result from the Merger (the "EXPECTED
SYNERGIES"), furnished to us by the Company and the Acquiror;
(3) Conducted discussions with members of senior management of the Company
and the Acquiror concerning their respective businesses and prospects
before and after giving effect to the Merger and the Expected Synergies;
(4) Reviewed the historical market prices and trading activity for the
Shares and the Acquiror Shares and compared them with that of certain
publicly traded companies which we deemed to be reasonably similar to the
Company and the Acquiror, respectively;
(5) Compared the results of operations of the Company and the Acquiror with
that of certain companies, which we deemed to be reasonably similar to
the Company and the Acquiror, respectively;
(6) Compared the proposed financial terms of the transactions contemplated
by the Agreement with the financial terms of certain other mergers and
acquisitions which we deemed to be relevant;
(7) Considered the pro forma effect of the Merger on the Acquiror;
(8) Reviewed the Agreement; and
(9) Reviewed such other financial studies and analyses and performed such
other investigations and took into account such other matters as we
deemed necessary, including our assessment of general economic, market
and monetary conditions.
In preparing our opinion, we have relied on the accuracy and completeness of
all information supplied or otherwise made available to us, discussed with or
reviewed by or for us, or publicly available, and we have not assumed any
responsibility for independently verifying such information or undertaken an
independent evaluation or appraisal of the assets or liabilities of the Company
or the Acquiror or been furnished with any such evaluation or appraisal. With
respect to the financial forecasts and Expected Synergies furnished by the
Company and the Acquiror, we have assumed that they have been reasonably
prepared and reflect the best currently available estimates and judgment of the
Company's or the Acquiror's management as to the expected future financial
performance of the Company or the Acquiror, as the case may be, and the Expected
Synergies. We have further assumed that the Merger will qualify as a
reorganization within the meaning of Section 368(a) of the Internal Revenue Code
of 1986, as amended.
Our opinion is necessarily based upon market, economic and other conditions
as they exist and can be evaluated on, and on the information made available to
us as of, the date hereof. We have assumed that in the course of obtaining the
necessary regulatory or other consents or approvals (contractual or otherwise)
for the Merger, no restrictions, including any divestiture requirements or
amendments or modifications, will be imposed that will have a material adverse
effect on the contemplated benefits of the Merger. We have also assumed that the
Merger will be consummated in accordance with the terms of the Agreement without
waiver of any material condition.
We are acting as financial advisor to the Acquiror in connection with the
Merger and will receive a fee from the Acquiror for our services, a significant
portion of which is contingent upon the consummation of the Merger. In addition,
the Acquiror has agreed to indemnify us for certain liabilities arising out of
our engagement. We have, in the past, provided certain financial advisory and
financing services to the Acquiror and to affiliates of its principal
shareholder, KKR Associates L.P., and may continue to do so and have received,
and may receive, fees for the rendering of such services. In the ordinary course
of our business, we may actively trade the Company Shares, as well as the
Acquiror Shares, for our own account and for the accounts of customers and,
accordingly, may at any time hold a long or short position in such securities.
This opinion is for the use and benefit of the Board of Directors of the
Acquiror. Our opinion does not address the merits of the underlying decision by
the Acquiror to engage in the Merger and does not constitute a recommendation to
any shareholder of the Acquiror as to how such shareholder should vote on the
proposed issuance of the Acquiror Shares in the Merger or any matter related
thereto.
We are not expressing any opinion herein as to the prices at which the
Acquiror Shares will trade following the announcement or consummation of the
Merger.
On the basis of, and subject to the foregoing, we are of the opinion that,
as of the date hereof, the Exchange Ratio is fair from a financial point of view
to the Acquiror.
Board of Directors
About.com Inc.
1440 Broadway
New York NY 10018
Dear Sirs:
You have requested our opinion as to the fairness from a financial point of
view to the stockholders of About.com Inc. (the "COMPANY") of the consideration
to be received by such stockholders pursuant to the terms of the Agreement and
Plan of Merger, dated as of October 29, 2000 (the "AGREEMENT"), among Primedia
Inc. ("PRIMEDIA"), Abracadabra Acquisition Corporation ("ACQUISITION SUB"), a
wholly owned subsidiary of Primedia, and the Company, pursuant to which
Acquisition Sub will be merged (the "MERGER") with and into the Company.
Pursuant to the Agreement, each share of common stock, par value $0.001 per
share, of the Company ("COMPANY COMMON STOCK") will be converted subject to
certain exceptions into the right to receive 2.341 shares of common stock, par
value $0.01 per share, of Primedia ("PRIMEDIA COMMON STOCK").
In arriving at our opinion, we have reviewed the draft dated October 29,
2000 of the Agreement. We also have reviewed financial and other information
that was publicly available or furnished to us by the Company and Primedia,
including information provided to us during discussions with their respective
managements of the Company and Primedia. Included in the information provided
during discussions with the respective managements were certain financial
projections of the Company for the period beginning October 1, 2000 and ending
December 31, 2001 prepared by the management of the Company and certain
financial projections of Primedia for the period beginning October 1, 2000 and
ending December 31, 2005 prepared by the management of Primedia. In addition, we
have reviewed the reported price and trading activity for the Company Common
Stock and Primedia Common Stock, compared certain financial and securities data
for the Company and Primedia with similar information for certain other
companies the securities of which are publicly traded, reviewed the financial
terms of certain recent business combinations in the Internet content industry
specifically and in other industries generally and performed such other
financial studies, analyses and investigations as we considered appropriate for
the purposes of this opinion.
In rendering our opinion, we have relied upon and assumed the accuracy and
completeness of all of the financial and other information that was available to
us from public sources, that was provided to us by the Company and Primedia or
their respective representatives, or that was otherwise reviewed by us. With
respect to the financial projections supplied to us, we have relied on
representations of the Company or Primedia, as the case may be, that they have
been reasonably prepared on bases reflecting the best currently available
estimates and judgments of the management of the Company and Primedia, as the
case may be, as to the future operating and financial performance of the Company
and Primedia, respectively. We have not assumed any responsibility for making an
independent evaluation of any assets or liabilities or for making any
independent verification of any of the information reviewed by us. We have
relied as to certain legal matters on advice of counsel to the Company.
Our opinion is necessarily based on economic, market, financial and other
conditions as they exist on, and on the information made available to us as of,
the date of this letter. It should be understood that, although subsequent
developments may affect the conclusion reached in this opinion, we do not have
any obligation to update, revise or reaffirm this opinion. We are expressing no
opinion herein as
to what the value of Primedia Common Stock will be when issued to the Company's
stockholders or as to the prices at which Primedia Common Stock will actually
trade at any time. Our opinion does not address the relative merits of the
Merger and any other business strategies being considered by the Board of
Directors of the Company. In addition, it is understood that this letter is
solely for the information of the Board of Directors of the Company in
connection with its consideration of the Merger and that our opinion does not
constitute a recommendation to any stockholder as to how such stockholder should
vote on the Merger. Donaldson, Lufkin, & Jenrette Securities Corporation ("DLJ")
is acting as financial advisor to the Company in connection with the Merger and
will receive a fee for its services, a significant portion of which is
contingent upon the consummation of the Merger. DLJ, as part of its investment
banking services, is regularly engaged in the valuation of businesses and
securities in connection with mergers, acquisitions, underwritings, sales and
distributions of listed and unlisted securities, private placements and
valuations for corporate and other purposes. DLJ has performed investment
banking and other services for the Company in the past, including lead managing
a follow-on offering in October 1999 and has been compensated for such services.
DLJ has also performed investment banking and other services for affiliates of
Kohlberg Kravis Roberts & Co., an affiliate of Primedia, including but not
limited to M&A advisory, equity and debt financings and has been compensated for
such services. In the ordinary course of business, DLJ and its affiliates may
actively trade the debt and equity securities of the Company and Primedia for
its own and such affiliates' accounts and for the accounts of customers and,
accordingly, may at any time hold a long or short position in such securities.
Based upon the foregoing and such other factors as we deem relevant, we are
of the opinion that the consideration to be received by holders of Company
Common Stock pursuant to the Agreement is fair to such holders from a financial
point of view.
By: /s/ ROBERT G. MANN
Robert G. Mann
Senior Vice President
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ANNEX D
AGREEMENT AND PLAN OF MERGER
AMONG
PRIMEDIA INC.,
ABRACADABRA ACQUISITION CORPORATION
AND
ABOUT.COM, INC.
DATED AS OF OCTOBER 29, 2000
TABLE OF CONTENTS
ARTICLE I THE MERGER........................................ D-1
Section 1.1. The Merger................................... D-1
Section 1.2. Effective Time............................... D-1
Section 1.3. Effects of the Merger........................ D-2
Section 1.4. Certificate of Incorporation; By-Laws........ D-2
Section 1.5. Directors and Officers....................... D-2
Section 1.6. Conversion of Securities..................... D-2
Section 1.7. Treatment of Employee Options and Stock
Purchase Plan........................................... D-2
Section 1.8. Fractional Interests......................... D-4
Section 1.9. Surrender of Shares of Company Common Stock;
Stock Transfer Books.................................... D-4
Section 1.10. Lost Certificates........................... D-5
Section 1.11. Withholding Rights.......................... D-5
Section 1.12. Closing and Closing Date.................... D-6
ARTICLE II REPRESENTATIONS AND WARRANTIES OF THE COMPANY.... D-6
Section 2.1. Organization and Qualification............... D-6
Section 2.2. Certificate of Incorporation and By-Laws..... D-6
Section 2.3. Capitalization; Subsidiaries................. D-7
Section 2.4. Authority Relative to This Agreement......... D-8
Section 2.5. No Conflict; Required Filings and Consents... D-8
Section 2.6. Compliance................................... D-9
Section 2.7. SEC Filings; Financial Statements............ D-9
Section 2.8. Absence of Certain Changes or Events......... D-10
Section 2.9. Absence of Litigation........................ D-10
Section 2.10. Employee Benefit Plans...................... D-10
Section 2.11. Tax Matters................................. D-11
Section 2.12. Environmental Matters....................... D-12
Section 2.13. Form S-4; Proxy Statement................... D-13
Section 2.14. Opinion of Financial Advisor................ D-13
Section 2.15. Brokers..................................... D-13
Section 2.16. Affiliate Transactions...................... D-14
Section 2.17. Vote Required............................... D-14
Section 2.18. DGCL Section 203; State Takeover Statutes... D-14
Section 2.19. Material Contracts.......................... D-14
Section 2.20. Absence of Breaches or Defaults............. D-15
Section 2.21. Intellectual Property....................... D-15
Section 2.22. Insurance................................... D-17
Section 2.23. Labor Matters............................... D-17
Section 2.24. Reorganization Qualification................ D-17
Section 2.25. Guides...................................... D-17
ARTICLE III REPRESENTATIONS AND WARRANTIES OF PARENT AND
SUB....................................................... D-18
i
Section 3.1. Corporate Organization....................... D-18
Section 3.2. Capitalization............................... D-18
Section 3.3. Authority Relative to This Agreement......... D-19
Section 3.4. No Conflict; Required Filings and Consents... D-19
Section 3.5. Compliance................................... D-20
Section 3.6. SEC Filings; Financial Statements............ D-20
Section 3.7. Absence of Certain Changes or Events......... D-21
Section 3.8. Form S-4; Proxy Statement.................... D-21
Section 3.9. Absence of Litigation........................ D-21
Section 3.10. Opinion of Financial Advisor................ D-22
Section 3.11. Brokers..................................... D-22
Section 3.12. Affiliate Transactions...................... D-22
Section 3.13. Reorganization Qualification................ D-22
Section 3.14. Stockholders' Consent and Approval
Obtained................................................ D-22
Section 3.15. Employee Benefit Plans...................... D-22
Section 3.16. Tax Matters................................. D-22
ARTICLE IV CONDUCT OF BUSINESS PENDING THE MERGER........... D-22
Section 4.1. Conduct of Business of The Company Pending
The Merger.............................................. D-22
Section 4.2. Conduct of Business of Parent Pending The
Merger.................................................. D-25
ARTICLE V ADDITIONAL AGREEMENTS............................. D-26
Section 5.1. Preparation of Form S-4 and the Proxy
Statement; Stockholder Meeting.......................... D-26
Section 5.2. Accountants' Letters......................... D-27
Section 5.3. Access to Information; Confidentiality....... D-27
Section 5.4. No Solicitation of Transactions.............. D-28
Section 5.5. Employee Benefits Matters.................... D-29
Section 5.6. Directors' and Officers' Indemnification;
Insurance............................................... D-29
Section 5.7. Notification of Certain Matters.............. D-30
Section 5.8. Further Action; Reasonable Best Efforts...... D-30
Section 5.9. Public Announcements......................... D-30
Section 5.10. Stock Exchange Listing...................... D-30
Section 5.11. Affiliates.................................. D-31
Section 5.12. Board of Directors and Officers of Parent... D-31
Section 5.13. Section 16b Approvals....................... D-31
Section 5.14. SEC Documents............................... D-31
Section 5.15. Continued Employment........................ D-31
Section 5.16. Outstanding Company Securities.............. D-31
ARTICLE VI CONDITIONS OF MERGER............................. D-31
Section 6.1. Conditions to Obligation of Each Party to
Effect The Merger....................................... D-31
Section 6.2. Conditions to Obligations of The Company to
Effect The Merger....................................... D-32
Section 6.3. Conditions to Obligations of Parent and Sub
to Effect The Merger.................................... D-33
ii
ARTICLE VII TERMINATION, AMENDMENT AND WAIVER............... D-34
Section 7.1. Termination.................................. D-34
Section 7.2. Effect of Termination........................ D-35
Section 7.3. Fees and Expenses............................ D-35
Section 7.4. Amendment.................................... D-36
Section 7.5. Waiver....................................... D-36
ARTICLE VIII GENERAL PROVISIONS............................. D-36
Section 8.1. Non-Survival of Representations, Warranties
and Agreements.......................................... D-36
Section 8.2. Notices...................................... D-36
Section 8.3. Certain Definitions.......................... D-37
Section 8.4. Severability................................. D-38
Section 8.5. Entire Agreement; Assignment................. D-38
Section 8.6. Parties in Interest.......................... D-38
Section 8.7. Governing Law................................ D-38
Section 8.8. Headings..................................... D-38
Section 8.9. Counterparts................................. D-39
Section 8.10. Interpretation.............................. D-39
iii
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of October 29, 2000 (the
"AGREEMENT"), among PRIMEDIA Inc., a Delaware corporation ("PARENT"),
Abracadabra Acquisition Corporation, a Delaware corporation and a direct wholly
owned subsidiary of Parent ("SUB"), and About.com, Inc., a Delaware corporation
(the "COMPANY").
WHEREAS, the Boards of Directors of Parent and Sub and the Company have
declared this Agreement to be advisable, and the Boards of Directors of Parent,
Sub and the Company have each approved the merger of Sub with and into the
Company and the Company becoming a wholly owned direct subsidiary of Parent (the
"MERGER") in accordance with the General Corporation Law of the State of
Delaware ("DGCL") upon the terms and subject to the conditions set forth herein;
WHEREAS, certain stockholders of Parent holding not less than 70% of the
outstanding voting securities of Parent have entered into a voting agreement,
dated as of the date hereof (the "PARENT VOTING AGREEMENT"), pursuant to which
they have agreed, among other things, to consent to the issuance of Parent
Common Stock (as defined below) in the Merger;
WHEREAS, concurrently with the execution and delivery of this Agreement and
as an inducement to the willingness of Parent and Sub to enter into this
Agreement, certain holders of shares of common stock, par value $.001 per share
(the "COMPANY COMMON STOCK"), of the Company have each entered into a voting
agreement, dated as of the date hereof (the "SHAREHOLDER VOTING AGREEMENT"),
pursuant to which such holders have agreed to vote their shares of Company
Common Stock in the manner set forth therein; and
WHEREAS, for Federal income tax purposes, it is intended that the Merger
shall qualify as a reorganization within the meaning of Section 368(a) of the
Internal Revenue Code of 1986, as amended (the "CODE");
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
and agreements herein contained, and intending to be legally bound hereby,
Parent, Sub and the Company hereby agree as follows:
ARTICLE I
THE MERGER
Section 1.1. THE MERGER. Upon the terms and subject to the conditions of
this Agreement and in accordance with the DGCL, at the Effective Time (as
defined in Section 1.2), Sub shall be merged with and into the Company. As a
result of the Merger, the separate corporate existence of Sub shall cease and
the Company shall continue as the surviving corporation of the Merger (the
"SURVIVING CORPORATION"). At Parent's election, the Merger may alternatively be
structured so that any direct wholly owned subsidiary of Parent may be
substituted for Sub as a constituent corporation in the Merger. In the event of
such an election, the parties agree to execute an appropriate amendment to this
Agreement in order to reflect such election.
Section 1.2. EFFECTIVE TIME. As soon as practicable after the satisfaction
or waiver of the conditions set forth in Article VI, the parties hereto shall
cause the Merger to be consummated by filing a certificate of merger (the
"CERTIFICATE OF MERGER") with the Secretary of State of the State of Delaware,
in such form as required by and executed in accordance with the relevant
provisions of the DGCL (the date and time of the filing of the Certificate of
Merger with the Secretary of State of the State of Delaware (or such later time
as is specified in the Certificate of Merger and agreed upon by the parties
hereto) being the "EFFECTIVE TIME").
D-1
Section 1.3. EFFECTS OF THE MERGER. The Merger shall have the effects set
forth in the applicable provisions of the DGCL. Without limiting the generality
of the foregoing and subject thereto, at the Effective Time all the property,
rights, privileges, immunities, powers and franchises of the Company and Sub
shall vest in the Surviving Corporation, and all debts, liabilities and duties
of the Company and Sub shall become the debts, liabilities and duties of the
Surviving Corporation.
Section 1.4. CERTIFICATE OF INCORPORATION; BY-LAWS. (a) At the Effective
Time and without any further action on the part of the Company and Sub, the
Restated Certificate of Incorporation of the Company (the "CERTIFICATE OF
INCORPORATION") as in effect immediately prior to the Effective Time shall be
the Restated Certificate of Incorporation of the Surviving Corporation until
thereafter and further amended as provided therein and under the DGCL.
(b) At the Effective Time and without any further action on the part of
the Company and Sub, the Amended and Restated By-Laws of the Company (the
"BY-LAWS") shall be the Amended and Restated By-Laws of the Surviving
Corporation and thereafter may be amended or repealed in accordance with
their terms or the Certificate of Incorporation of the Surviving Corporation
and as provided by law.
Section 1.5. DIRECTORS AND OFFICERS. The directors of Sub immediately
prior to the Effective Time shall be the initial directors of the Surviving
Corporation, each to hold office in accordance with the Certificate of
Incorporation and By-Laws of the Surviving Corporation, and the officers of the
Company immediately prior to the Effective Time shall be the initial officers of
the Surviving Corporation, in each case until their respective successors are
duly elected or appointed (as the case may be) and qualified.
Section 1.6. CONVERSION OF SECURITIES. At the Effective Time, by virtue of
the Merger and without any action on the part of Sub, the Company or the holders
of any of the following securities:
(a) Subject to Section 1.8, each share of Company Common Stock issued
and outstanding immediately prior to the Effective Time (other than shares
of Company Common Stock to be canceled in accordance with Section 1.6(b)
hereof) shall be converted into 2.3409 (the "EXCHANGE RATIO") fully paid and
nonassessable shares of Common Stock, par value $0.01 per share (the "PARENT
COMMON STOCK"), of Parent (the "MERGER CONSIDERATION"). As of the Effective
Time, all such shares of Company Common Stock shall no longer be outstanding
and shall automatically be canceled and shall cease to exist, and each
holder of a certificate representing any such shares of Company Common Stock
shall cease to have any rights with respect thereto, except the right to
receive the Merger Consideration and any cash in lieu of fractional shares
of Parent Common Stock to be issued or paid in consideration therefor upon
surrender of such certificate in accordance with Section 1.9, without
interest.
(b) Each share of Company Common Stock that is (i) held in the treasury
of the Company or (ii) owned by Parent immediately prior to the Effective
Time shall be cancelled and retired without any conversion thereof and no
payment or distribution shall be made with respect thereto.
(c) Each share of common stock of Sub issued and outstanding immediately
prior to the Effective Time shall be converted into one validly issued,
fully paid and non-assessable share of common stock of the Surviving
Corporation and shall thereafter constitute all of the issued and
outstanding capital stock of the Surviving Corporation.
Section 1.7. TREATMENT OF EMPLOYEE OPTIONS AND STOCK PURCHASE PLAN.
(a) Prior to the Effective Time, the Board of Directors of the Company
(or, if appropriate, any Committee thereof) and the Board of Directors of
Parent (or, if appropriate, any Committee thereof) shall adopt appropriate
resolutions and take all other actions necessary to provide that as of the
Effective Time all outstanding stock options of the Company (the "COMPANY
STOCK RIGHTS")
D-2
heretofore granted under any stock option plan of the Company or its
acquired subsidiaries (the "STOCK PLANS") and which are outstanding
immediately prior to the Effective Time shall be assumed by Parent and be
deemed to constitute an option to purchase shares of Parent Common Stock or,
in the case of Company Stock Rights which are in the form of restricted
stock, shares of restricted Parent Common Stock (collectively, "NEW STOCK
RIGHTS") in an amount and, if applicable, at an exercise price determined as
provided below:
(i) The number of shares of Parent Common Stock to be subject to the
New Stock Rights shall be equal to the product of the number of shares of
Company Common Stock remaining subject (as of immediately prior to the
Effective Time) to the original Company Stock Right and the Exchange
Ratio, PROVIDED that any fractional shares of Parent Common Stock
resulting from such multiplication shall be rounded down to the nearest
share; and
(ii) The exercise price per share of Parent Common Stock under the
New Stock Right shall be equal to the exercise price per share of the
Company Common Stock under the original Company Stock Right divided by
the Exchange Ratio, PROVIDED that such exercise price shall be rounded
down to the nearest cent.
The adjustment provided herein with respect to any options which are
"incentive stock options" (as defined in Section 422 of the Code) shall be
and is intended to be effected in a manner which is consistent with
Section 424(a) of the Code. Except as may be required by the terms of the
Automatic Option Grant Program under the 1998 Stock Option/Stock Issuance
Plan or any grants thereunder as of the date hereof to directors, the
Company shall not accelerate the vesting, or otherwise amend the terms, of
any unvested Company Stock Rights under any of the Stock Plans. After the
Effective Time, each New Stock Right shall be exercisable and shall vest
upon the same terms and conditions as were applicable to the related Company
Stock Right immediately prior to the Effective Time except that all
references to the Company shall be deemed to be references to the Parent.
(b) Immediately prior to the Effective Time, pursuant to the terms of
the Company's 1999 Employee Stock Purchase Plan (the "ESPP"), each
outstanding purchase right under the ESPP shall be exercised for the
purchase of Company Common Stock at the price per share set forth in the
ESPP. The Company Common Stock purchased under the ESPP shall be considered
issued and outstanding immediately prior to the Effective Time and shall be
converted pursuant to Section 1.6 hereof. In addition, prior to the
Effective Time, the Company shall amend the ESPP to provide for (i) its
continuation from and after the Effective Time and (ii) a new offering
period to commence from and after the Effective Time and to terminate
immediately prior to the start of the next succeeding offering period under
the PRIMEDIA Employee Stock Purchase Plan for which participants in the ESPP
are eligible to particpate.
(c) The Company shall ensure that following the Effective Time no holder
of a Company Stock Right or any participant in any Stock Plans shall have
any right thereunder to acquire capital stock of the Company, Sub, or the
Surviving Corporation. The Company will take all reasonable steps to ensure
that, immediately following the Effective Time, none of Sub, the Company,
the Surviving Corporation or any of their respective subsidiaries is or will
be bound by any Company Stock Rights, other options, warrants, rights or
agreements which would entitle any person, other than Sub or its affiliates,
to own any capital stock of the Company, Sub, the Surviving Corporation or
any of their respective subsidiaries or to receive any payment in respect
thereof.
(d) In connection with the issuance of New Stock Rights and the
assumption of the ESPP, Parent shall (i) reserve for issuance the aggregate
number of shares of Parent Common Stock that will become subject to New
Stock Rights and the ESPP pursuant to this Section 1.7 from and after the
Effective Time, upon exercise of New Stock Rights and the purchase rights
under the ESPP, (ii) make available for issuance all shares of Parent Common
Stock covered thereby, subject to the
D-3
terms and conditions applicable thereto, and (iii) if necessary, as soon as
reasonably practicable following the Effective Time, file a registration
statement on Form S-8 covering the shares to be issued upon exercise of the
New Stock Rights and the purchase rights under the ESPP.
Section 1.8. FRACTIONAL INTERESTS. No certificates or scrip representing
fractional shares of Parent Common Stock shall be issued in connection with the
Merger, and such fractional interests will not entitle the owner thereof to any
rights of a stockholder of Parent. In lieu of any such fractional interests,
each holder of shares of Company Common Stock exchanged pursuant to Section
1.6(a) who would otherwise have been entitled to receive a fraction of a share
of Parent Common Stock (after taking into account all shares of Company Common
Stock then held of record by such holder) shall receive cash (without interest)
in an amount equal to the product of such fractional part of a share of Parent
Common Stock multiplied by the closing price of a share of Parent Common Stock
on the NYSE as reported by The Wall Street Journal (or if not reported thereby,
any other authoritative source) on the Closing Date (as defined in Section
1.12), rounded down to the nearest cent.
Section 1.9. SURRENDER OF SHARES OF COMPANY COMMON STOCK; STOCK TRANSFER
BOOKS. (a) Prior to the Closing Date, Sub shall designate a bank or trust
company to act as agent for the holders of shares of Company Common Stock in
connection with the Merger (the "EXCHANGE AGENT") to receive the shares of
Parent Common Stock (and any cash payable in lieu of any fractional shares of
Parent Common Stock) to which holders of shares of Company Common Stock shall
become entitled pursuant to Sections 1.6(a) and 1.8. When and as needed, Parent
or Sub will make available to the Exchange Agent sufficient shares of Parent
Common Stock and cash to make all exchanges pursuant to Section 1.9(b).
(b) Promptly after the Effective Time, the Surviving Corporation shall
cause to be mailed to each record holder, as of the Effective Time, of an
outstanding certificate or certificates which immediately prior to the
Effective Time represented shares of Company Common Stock (the
"CERTIFICATES"), a form of letter of transmittal (which shall specify that
delivery shall be effected, and risk of loss and title to the Certificates
shall pass, only upon proper delivery of the Certificates to the Exchange
Agent) and instructions for use in effecting the surrender of the
Certificates in exchange for certificates representing shares of Parent
Common Stock therefor and for cash payable in lieu of any fractional shares
of Parent Common Stock. Upon surrender to the Exchange Agent of a
Certificate, together with such letter of transmittal, duly completed and
validly executed in accordance with the instructions thereto, and such other
documents as may be required pursuant to such instructions, the holder of
such Certificate shall be entitled to receive in exchange therefor, (i) 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
Section 1.6(a) and (ii) cash in lieu of any fractional shares of Parent
Common Stock to which such holder is entitled pursuant to Section 1.8, after
giving effect to any required tax withholdings, and the Certificate so
surrendered shall forthwith be cancelled. If the exchange of certificates
representing shares of Parent Common Stock is to be made to a person other
than the person in whose name the surrendered Certificate is registered, it
shall be a condition of exchange that the Certificate so surrendered shall
be properly endorsed or shall be otherwise in proper form for transfer and
that the person requesting such exchange shall have paid any transfer and
other taxes required by reason of the exchange of certificates representing
shares of Parent Common Stock to a person other than the registered holder
of the Certificate surrendered or shall have established to the satisfaction
of the Surviving Corporation that such tax either has been paid or is not
applicable.
(c) At any time following six months after the Effective Time, the
Surviving Corporation shall be entitled to require the Exchange Agent to
deliver to it any shares of Parent Common Stock (and any cash payable in
lieu of any fractional shares of Parent Common Stock) which had been made
available to the Exchange Agent and which have not been disbursed to holders
of Certificates, and thereafter such holders shall be entitled to look to
the Surviving Corporation
D-4
(subject to abandoned property, escheat or other similar laws) only as
general creditors thereof with respect to the shares of Parent Common Stock
(and any cash payable in lieu of any fractional shares of Parent Common
Stock) payable upon due surrender of their Certificates. Notwithstanding the
foregoing, none of the Surviving Corporation, Parent or the Exchange Agent
shall be liable to any holder of a Certificate for shares of Parent Common
Stock (and any cash payable in lieu of any fractional shares of Parent
Common Stock) delivered to a public official pursuant to any applicable
abandoned property, escheat or similar law.
(d) At the Effective Time, the stock transfer books of the Company shall
be closed and thereafter there shall be no further registration of transfers
of shares of Company Common Stock on the records of the Company. From and
after the Effective Time, the holders of Certificates evidencing ownership
of shares of Company Common Stock outstanding immediately prior to the
Effective Time shall cease to have any rights with respect to such shares of
Company Common Stock except as otherwise provided for herein or by
applicable law.
(e) No dividends or other distributions declared or made after the
Effective Time with respect to shares of Parent Common Stock shall be paid
to the holder of any unsurrendered Certificate with respect to the whole
shares of Parent Common Stock it is entitled to receive and no cash payment
in lieu of fractional interests shall be paid pursuant to Section 1.8 until
the holder of such Certificate shall surrender such Certificate in
accordance with the provisions of this Agreement. Upon such surrender, there
shall be paid to the person in whose name the certificates representing such
whole shares of Parent Common Stock shall be issued, any dividends or
distributions with respect to such shares of Parent Common Stock which have
a record date after the Effective Time and shall have become payable between
the Effective Time and the time of such surrender. In no event shall the
person entitled to receive such dividends or distributions be entitled to
receive interest thereon.
(f) If, at any time after the Effective Time, the Surviving Corporation
shall consider or be advised that any deeds, bills of sale, assignments,
assurances or any other actions or things are necessary or desirable to
vest, perfect or confirm of record or otherwise in the Surviving Corporation
its right, title or interest in, to or under any of the rights, properties
or assets of either Sub or the Company acquired or to be acquired by the
Surviving Corporation as a result of, or in connection with, the Merger or
otherwise to carry out this Agreement, the officers of the Surviving
Corporation shall be authorized to execute and deliver, in the name and on
behalf of each of Sub and the Company or otherwise, all such deeds, bills of
sale, assignments and assurances and to take and do, in such names and on
such behalves or otherwise, all such other actions and things as may be
necessary or desirable to vest, perfect or confirm any and all right, title
and interest in, to and under such rights, properties or assets in the
Surviving Corporation or otherwise to carry out the purposes of this
Agreement.
Section 1.10. LOST CERTIFICATES. If any Certificate shall have been lost,
stolen or destroyed, upon the making of an affidavit of that fact by the holder
claiming such Certificate to be lost, stolen or destroyed and, if required by
the Surviving Corporation, the posting by such holder of a bond in such
reasonable amount as the Surviving Corporation may direct as indemnity against
any claim that may be made against it with respect to such Certificate, the
Exchange Agent will deliver in exchange for such lost, stolen or destroyed
Certificate the applicable Merger Consideration with respect to the shares of
Company Common Stock formerly represented thereby, any cash in lieu of
fractional shares of Parent Common Stock and unpaid dividends and distributions
on shares of Parent Common Stock deliverable in respect thereof pursuant to this
Agreement.
Section 1.11. WITHHOLDING RIGHTS. Each of the Surviving Corporation and
Parent 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 it is required to deduct and withhold
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with respect to the making of such payment under the Code and the rules and
regulations promulgated thereunder, or any provision of state, local or foreign
tax law. To the extent that amounts are so withheld by the Surviving Corporation
or Parent, as the case may be, 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 the Surviving Corporation or Parent, as the case may be.
Section 1.12. CLOSING AND CLOSING DATE. Unless this Agreement shall have
been terminated and the transactions herein contemplated shall have been
abandoned pursuant to the provisions of Section 7.1, the closing (the "CLOSING")
of this Agreement shall take place (a) at 10:00 a.m. (New York time) on the
second business day after all of the conditions to the respective obligations of
the parties set forth in Article VI hereof shall have been satisfied or waived
or (b) at such other time and date as Parent and the Company shall agree (such
date and time on and at which the Closing occurs being referred to herein as the
"CLOSING DATE"). The Closing shall take place at such location as Parent and the
Company shall agree.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to Parent and Sub that, except as
set forth in the corresponding sections or subsections of the Disclosure
Schedule delivered by the Company to Parent and Sub prior to the execution of
this Agreement (the "COMPANY DISCLOSURE SCHEDULE") or in any other section or
subsection of the Company Disclosure Schedule if it is reasonably apparent that
such disclosure applies:
Section 2.1. ORGANIZATION AND QUALIFICATION. Each of the Company and each
of its subsidiaries is a corporation duly organized, validly existing and in
good standing under the laws of the jurisdiction of its incorporation and has
the requisite corporate power and authority and any necessary governmental
approvals to own, lease and operate its properties and to carry on its business
as it is now being conducted, except where the failure to have such power,
authority and governmental approvals could not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect (as defined
below). Each of the Company and each of its 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 its properties owned, leased or
operated by it or the nature of its activities makes such qualification or
licensing necessary, except for such failures to be so duly qualified or
licensed or in good standing which could not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect. When used in this
Article II or otherwise in connection with the Company or any of its
subsidiaries, the term "MATERIAL ADVERSE EFFECT" means any change or effect that
would be materially adverse to the business, properties, assets, condition
(financial or otherwise) or results of operations of the Company and its
subsidiaries taken as a whole or that would materially impair the ability of the
Company to perform its obligations hereunder; PROVIDED that none of the
following shall be taken into account in determining whether there has been or
could be a Material Adverse Effect: (w) any employee attrition after the date
hereof; (x) any change arising from the public announcement of the Merger and
the other transactions contemplated by this Agreement; (y) any change in the
market price or trading volume of the Company Common Stock after the date
hereof; or (z) any adverse effect on the Company attributable solely to
conditions affecting the business to consumer Internet industry, the United
States economy as a whole or foreign economies in any locations where the
Company or any of its subsidiaries has material operations or sales (and not
having a materially disproportionate effect on the Company).
Section 2.2. CERTIFICATE OF INCORPORATION AND BY-LAWS. The Company has
heretofore furnished or made available to Parent a complete and correct copy of
the Certificate of Incorporation and the By-
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Laws as currently in effect. Such Certificate of Incorporation and By-Laws are
in full force and effect and no other organizational documents are applicable to
or binding upon the Company.
Section 2.3. CAPITALIZATION; SUBSIDIARIES. (a) The authorized capital
stock of the Company consists of 105,000,000 shares, consisting of (i) 5,000,000
shares of preferred stock, par value $0.001 per share ("PREFERRED STOCK"), and
(ii) 100,000,000 shares of Company Common Stock. As of September 30, 2000,
(i) 18,462,290 shares of Company Common Stock were issued and outstanding, all
of which shares were duly authorized, validly issued, fully paid and
nonassessable and were issued free of preemptive (or similar) rights, (ii) no
shares of Company Common Stock were held in the treasury of the Company,
(iii) no shares of Company Common Stock which are restricted stock issued
pursuant to the ESPP were issued and outstanding, (iv) an aggregate of 8,024,872
shares, of Company Common Stock were reserved and available for issuance in
connection with the exercise of stock options issuable pursuant to the Stock
Plans (other than the ESPP); (v) an aggregate of 125,000 shares of Company
Common Stock were reserved for issuance and issuable upon or otherwise
deliverable in connection with the exercise of purchase rights under the ESPP;
and (vi) an aggregate of 5,369,591 shares of Company Common Stock are issuable
upon or otherwise deliverable in connection with the exercise of all outstanding
Company Stock Rights issued pursuant to the Stock Plans or otherwise identified
on Section 2.3(a) of the Company Disclosure Schedule. All of the shares of
Company Common Stock that may be issued pursuant to the Stock Plans will be,
when issued, duly authorized, validly issued, fully paid and nonassessable and
not subject to preemptive (or similar) rights. No shares of preferred stock of
the Company are outstanding or held in the treasury of the Company. Except as
set forth above or in Section 2.3(a) of the Company Disclosure Schedule, there
are outstanding (A) no shares of capital stock or other voting securities
(including indebtedness having the right to vote) of the Company, (B) no
securities of the Company convertible into or exchangeable for shares of capital
stock or voting securities (including indebtedness having the right to vote) of
the Company, (C) no options, warrants or other rights to acquire from the
Company, and no obligation of the Company to issue, any capital stock, voting
securities (including indebtedness having the right to vote) or securities
convertible into or exchangeable for capital stock or voting securities
(including indebtedness having the right to vote) of the Company and (D) no
equity equivalents, interests in the ownership or earnings of the Company or
other similar rights (collectively, "COMPANY SECURITIES"). Except pursuant to
the Stock Plans and the Company Securities issued thereunder, there are no
outstanding obligations of the Company or any of its subsidiaries to repurchase,
redeem or otherwise acquire any Company Securities and there is no voting trust
or other agreement or understanding to which the Company or any of its
subsidiaries is a party or is bound with respect to the voting of the capital
stock of the Company of any of its subsidiaries. There are no other options,
calls, warrants or other rights, agreements, arrangements or commitments of any
character relating to the issued or unissued capital stock of the Company or any
of its subsidiaries to which the Company or any of its subsidiaries is a party.
(b) Each of the outstanding shares of capital stock of each of the
Company's subsidiaries is duly authorized, validly issued, fully paid and
nonassessable and all such shares are owned by the Company or another wholly
owned subsidiary of the Company and are owned free and clear of all security
interests, liens, claims, pledges, agreements, limitations in voting rights,
licenses, charges or other encumbrances of any nature whatsoever ("LIENS").
There are no outstanding contractual obligations of the Company or any of
its subsidiaries to repurchase, redeem or otherwise acquire any shares of
capital stock of any subsidiary or, except as set forth in Section 2.3(b) of
the Company Disclosure Schedule, to provide funds to or make any investment
(in the form of a loan, capital contribution or otherwise) in any such
subsidiary or any other entity. Section 2.3(b) of the Company Disclosure
Schedule sets forth a complete and correct list of all of the subsidiaries
of the Company and all other entities in which the Company owns, directly or
indirectly, any equity interest. Such list sets forth the amount of capital
stock or other equity interests owned by the Company, directly or
indirectly, in such subsidiaries or other entities.
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(c) The signatories to the Shareholder Voting Agreement hold at least
10% of the outstanding shares of Company Common Stock (on a fully diluted
basis).
Section 2.4. AUTHORITY RELATIVE TO THIS AGREEMENT. The Company has all
necessary corporate power and authority to execute and deliver this Agreement,
to perform its obligations hereunder and to consummate the transactions
contemplated hereby. The execution, delivery and performance of this Agreement
by the Company and the consummation by the Company of the transactions
contemplated hereby has been duly and validly authorized by all necessary
corporate action and no other corporate proceedings on the part of the Company
are necessary to authorize this Agreement, or to consummate the transactions so
contemplated (other than, with respect to the Merger, the adoption of this
Agreement by the holders of a majority of the outstanding shares of Company
Common Stock, and the filing of appropriate merger documents as required by the
DGCL). This Agreement has been duly and validly executed and delivered by the
Company and, assuming the due authorization, execution and delivery hereof by
Parent and Sub (as applicable), constitutes a legal, valid and binding
obligations of the Company enforceable against the Company in accordance with
its terms (except insofar as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting
creditors' rights generally or by principles governing the availability of
equitable remedies).
Section 2.5. NO CONFLICT; REQUIRED FILINGS AND CONSENTS. (a) The
execution, delivery and performance of this Agreement by the Company do not and
will not: (i) conflict with or violate the Certificate of Incorporation or
By-Laws of the Company or the equivalent organizational documents of any of its
subsidiaries; (ii) conflict with or violate any law, statute, rule, regulation,
order, writ, award, judgment, directive, decree, injunction, determination,
settlement or stipulation ("ORDER") applicable to the Company or any of its
subsidiaries or by which its or any of their respective properties are bound or
affected (assuming that all consents, approvals and authorizations contemplated
by clauses (i), (ii) and (iii) of subsection (b) below have been obtained and
all filings described in such clauses have been made); or (iii) result in any
breach or violation of or constitute a default (or an event which with notice or
lapse of time or both could become a default) or result in the loss of a benefit
or creation of additional liabilities or fees under, or give rise to any right
of termination, amendment, acceleration or cancellation of, or result in the
creation of a Lien 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, except, in the case of clauses (ii) and (iii), for any such
conflicts, violations, breaches, defaults or other occurrences which could not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.
(b) The execution, delivery and performance of this Agreement by the
Company and the consummation of the Merger by the Company do not and will
not require any consent, approval, authorization or permit of, action by,
filing with or notification to, any governmental or regulatory authority,
domestic or foreign, except for (i) applicable requirements of the
Securities Act of 1933, as amended (the "SECURITIES ACT"), and the
rules and regulations promulgated thereunder, the Securities Exchange Act of
1934, as amended (the "EXCHANGE ACT"), and the rules and regulations
promulgated thereunder, the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended (the "HSR ACT"), the rules and regulations of the NYSE,
Nasdaq National Market ("NASDAQ") and state securities, takeover and Blue
Sky laws, (ii) the filing and recordation of appropriate merger or other
documents as required by the DGCL and (iii) such consents, approvals,
authorizations, permits, actions, filings or notifications the failure of
which to make or obtain could not, individually or in the aggregate,
reasonably be expected to (x) prevent or delay consummation of the Merger or
(y) have a Material Adverse Effect.
D-8
Section 2.6. COMPLIANCE. The Company and each of its subsidiaries are in
compliance with, and are not in default or violation of, (i) the Certificate of
Incorporation and By-Laws of the Company or the equivalent organizational
documents of such subsidiary, (ii) all laws (including, without limitation,
Environmental Laws) and Orders applicable to them or by which any of their
respective properties or businesses are bound or affected and (iii) all notes,
bonds, mortgages, indentures, contracts, agreements, leases, licenses, permits,
franchises and other instruments or obligations to which any of them are a party
or by which any of them or any of their respective properties are bound or
affected (including all of the foregoing respecting the privacy information of
users or visitors to their web sites, including minors), except, in the case of
clauses (ii) and (iii), for any such failures of compliance, defaults and
violations which could not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect. Except as disclosed with reasonable
specificity prior to the date hereof in the Company SEC Reports (as defined in
Section 2.7), neither the Company nor any of its subsidiaries has received
notice of any revocation or modification of any federal, state, local or foreign
governmental license, certification, tariff, permit, authorization or approval
material to the Company and its subsidiaries taken as a whole. The Company and
its subsidiaries have all permits, licenses, authorizations, consents, approvals
and franchises from governmental agencies required to conduct their businesses
as now being conducted, except for such permits, licenses, authorizations,
consents, approvals, and franchises the absence of which could not, individually
or in the aggregate, reasonably be expected have a Material Adverse Effect.
Section 2.7. SEC FILINGS; FINANCIAL STATEMENTS. (a) The Company and, to
the extent applicable, each of its then or current subsidiaries, has filed all
forms, reports, statements and documents required to be filed with the
Securities and Exchange Commission (the "SEC") since January 1, 1999
(collectively, the "COMPANY SEC REPORTS"), each of which has complied in all
material respects with the applicable requirements of the Securities Act and the
rules and regulations promulgated thereunder, or the Exchange Act and the rules
and regulations promulgated thereunder, each as in effect on the date so filed.
None of such Company SEC Reports (including but not limited to any financial
statements or schedules included or incorporated by reference therein)
contained, when filed, any untrue statement of a material fact or omitted to
state a material fact required to be stated or incorporated by reference therein
or necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading. Except to the extent
revised or superseded by a subsequent filing with the SEC made prior to the date
hereof (a copy of which has been provided or made available to Parent), none of
the Company SEC Reports filed by the Company since January 1, 1999, contains any
untrue statement of a material fact or omits to state a material fact required
to be stated or incorporated by reference therein or necessary in order to make
the statements therein, in the light of the circumstances under which they were
made, not misleading.
(b) Each of the unaudited consolidated financial statements of the
Company and its subsidiaries (including any audited and related notes
thereto) included in the Company SEC Reports, complies or, if not yet filed,
will comply as to form in all material respects with all applicable
accounting requirements and with the published rules and regulations of the
SEC with respect thereto, has been or, if not yet filed, will have been
prepared in accordance with generally accepted accounting principles
(except, in the case of unaudited consolidated quarterly statements, as
permitted by Form 10-Q of the SEC) applied on a consistent basis throughout
the periods involved (except as may be indicated in the notes thereto) and
fairly presents in all material respects or, if not yet filed, will fairly
present in all material respects the consolidated financial position of the
Company and its subsidiaries at the respective date thereof and the
consolidated results of its and their operations and changes in cash flows
for the periods indicated (subject, in the case of unaudited quarterly
statements, to normal year-end audit adjustments).
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(c) Except as and to the extent set forth on the consolidated balance
sheet of the Company and its subsidiaries at June 30, 2000, including the
notes thereto, included in the Company's Quarterly Report on Form 10-Q for
the fiscal quarter ended June 30, 2000 (the "JUNE 30 10Q"), neither the
Company nor any of its subsidiaries has any liabilities or obligations of
any nature (whether accrued, absolute, contingent or otherwise), except for
liabilities or obligations incurred in the ordinary course of business since
June 30, 2000 which could not, individually or in the aggregate, reasonably
be expected to have a Material Adverse Effect.
(d) The Company has heretofore furnished to Parent a complete and
correct copy of any amendments or modifications which have not yet been
filed with the SEC to agreements, documents or other instruments which
previously had been filed by the Company with the SEC pursuant to the
Securities Act and the rules and regulations promulgated thereunder or the
Exchange Act and the rules and regulations promulgated thereunder.
Section 2.8. ABSENCE OF CERTAIN CHANGES OR EVENTS. Since December 31,
1999, except as specifically disclosed in the Company SEC Reports filed and
publicly available prior to the date of this Agreement or set forth in
Section 2.8 of the Company Disclosure Schedule, the Company and its subsidiaries
have conducted their businesses only in the ordinary course and in a manner
consistent with past practice and since such date there has not been (i) any
change in the financial condition, results of operations, assets, business or
operations of the Company or any of its subsidiaries, individually or in the
aggregate, having or which could be reasonably likely to have a Material Adverse
Effect, (ii) any condition, event or occurrence which, individually or in the
aggregate, having or which could reasonably be expected to have a Material
Adverse Effect, (iii) any damage, destruction or loss (whether or not covered by
insurance) with respect to any assets of the Company or any of its subsidiaries,
individually or in the aggregate, having or which could reasonably be expected
to have a Material Adverse Effect or (iv) any other action which, if it had been
taken after June 30, 2000, would have required the consent of Parent under
Section 4.1 hereof.
Section 2.9. ABSENCE OF LITIGATION. Except as specifically disclosed in
the Company SEC Reports filed and publicly available prior to the date of this
Agreement or Section 2.9 of the Company Disclosure Schedule, there are no suits,
claims, actions, arbitrations, proceedings or investigations ("ACTIONS") pending
or, to the best knowledge of the Company, threatened against the Company or any
of its subsidiaries, or any properties or rights of the Company or any of its
subsidiaries, before any court, arbitrator or administrative, governmental or
regulatory authority or body, domestic or foreign. To the Company's knowledge,
neither the Company nor any of its subsidiaries nor any of their respective
properties is or are subject to any Order having, or which could, individually
or in the aggregate, reasonably be expected to have a Material Adverse Effect.
Section 2.10. EMPLOYEE BENEFIT PLANS. (a) Section 2.10(a) of the Company
Disclosure Schedule contains a true and complete list of each "employee benefit
plan" (within the meaning of section 3(3) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), (including without limitation
multiemployer plans within the meaning of ERISA section 3(37)), stock purchase,
stock option, severance, employment, change-of-control, fringe benefit,
collective bargaining, bonus, incentive, deferred compensation and all other
employee benefit plans, agreements, programs, policies or other arrangements,
whether or not subject to ERISA, whether formal or informal, oral or written,
legally binding or not under which any employee or former employee of the
Company or any of its subsidiaries has any present or future right to benefits
(with respect to his or her relationship to the Company or any of its
subsidiaries) or under which the Company or any of its subsidiaries has any
present or future liability. All such plans, agreements, programs, policies and
arrangements shall be collectively referred to as the "PLANS".
(b) With respect to each Plan, the Company has delivered or made
available to Parent a current, accurate and complete copy (or, to the extent
no such copy exists, an accurate description)
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thereof and, to the extent applicable, (i) any related trust agreement,
annuity contract or other funding instrument; (ii) the most recent
determination letter; (iii) any summary plan description and other material
written communications (or a description of any oral communications) by the
Company or any of its subsidiaries to its employees concerning the extent of
the benefits provided under a Plan; and (iv) for the three most recent
years: (I) the Form 5500 and attached schedules; (II) audited financial
statements; and (III) actuarial valuation reports.
(c) Except as could not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect, (i) each Plan has been
established and administered in accordance with its terms, and in compliance
with the applicable provisions of ERISA, the Code and other applicable laws,
rules and regulations and if intended to be qualified within the meaning of
section 401(a) of the Code has received a favorable determination letter (or
opinion or notification letter, if applicable) from the Internal Revenue
Service or there is a period of time remaining under applicable Internal
Revenue Service regulations or pronouncements in which to apply for such a
letter and make any retroactive amendments necessary to obtain a favorable
determination as to the qualified status of each such Plan, and the Company
is not aware of any circumstances which could result in the revocation or
denial of any such favorable determination letter; (ii) with respect to any
Plan, no Actions (other than routine claims for benefits in the ordinary
course) are pending or, to the knowledge of the Company, threatened;
(iii) neither the Company nor any other party has engaged in a prohibited
transaction, as such term is defined under section 4975 of the Code or
section 406 of ERISA, which would subject the Company, the Surviving
Corporation, any of their subsidiaries, Sub or Parent to any taxes,
penalties or other liabilities under section 4975 of the Code or sections
409 or 502(i) of ERISA; (iv) no Plan provides for an increase in benefits on
or after the Closing Date; and (v) each Plan may be amended or terminated
without obligation or liability (other than those obligations and
liabilities for which specific assets have been set aside in a trust or
other funding vehicle or reserved for on the Company's June 30, 2000 balance
sheet included in the June 30 10Q).
(d) No Plan is, or at any time was, subject to Title IV of ERISA, and
neither the Company, nor any member of its "CONTROLLED GROUP" (defined as
any organization which is a member of a controlled group of organizations
within the meaning of sections 414(b), (c), (m) or (o) of the Code), has any
liability or will have any liability under Title IV of ERISA. Neither the
Company, nor any member of its Controlled Group, has any liability or will
have any liability in connection with any multiemployer plan (within the
meaning of section 4001(a)(3) of ERISA).
(e) Except as set forth on Section 2.10(e) of the Company Disclosure
Schedule, no Plan exists which could result in the payment to any employee
of the Company or any of its subsidiaries of any money or other property or
rights or accelerate or provide any other rights or benefits to any such
employee as a result of the transactions contemplated by this Agreement.
Neither the Company nor any of its subsidiaries has made any payments, is
obligated to make any payments, or is a party to any agreement that under
certain circumstances could obligate it to make any payments that will not
be deductible under Sections 162(m) or 280G of the Code.
Section 2.11. TAX MATTERS. (a) The Company and each of its subsidiaries
have (i) filed all material Tax Returns (as hereinafter defined) required to be
filed by them (taking into account extensions) and all such Tax Returns were
true, correct and complete in all material respects, (ii) paid or provided
adequate reserves for all material Taxes whether or not shown to be due on such
Returns or which are otherwise due and payable and (iii) paid or provided
adequate reserves for all material Taxes for which a notice of assessment or
collection has been received. Neither the Internal Revenue Service nor any other
taxing authority has asserted in writing any claim for Taxes, or to the
Company's knowledge, is threatening to assert any claims for Taxes, against the
Company or any of its subsidiaries. The Company and each of its subsidiaries
have withheld or collected and paid over to the appropriate governmental,
administrative or regulatory bodies or authorities (or are properly holding for
such
D-11
payment) all material Taxes required by law to be withheld or collected. There
are no outstanding contracts, undertakings or agreements extending or waiving
the statutory period of limitation applicable to any material Tax Return of the
Company or any of its subsidiaries. Neither the Company nor any of its
subsidiaries has made an election under Section 341(f) of the Code. There are no
Liens for Taxes upon the assets of the Company or any of its subsidiaries, other
than Liens for Taxes that are not yet due, Liens that are being contested in
good faith in accordance with applicable law and disclosed in Section
3.14(a) of the Company Disclosure Schedule (and for which adequate reserves have
been provided) and Liens which would not, individually or in the aggregate, have
a Material Adverse Effect. Neither the Company nor any of its subsidiaries
(i) has been a member of an affiliated group filing a consolidated federal
income Tax Return (other than a group the common parent of which was the
Company), (ii) has any liability for the Taxes of any Person, including under
Treasury Regulation Section 1.1502-6 or analogous state, local or foreign law
for any Taxes, other than for Taxes of the Company or its subsidiaries or
(iii) is a party to, is bound by or has any obligation under a Tax sharing or
Tax indemnity contract, undertaking, or agreement or any other contract of a
similar nature with any entity other than the Company or any of its subsidiaries
that remains in effect. No claim has been made in writing by a taxing authority
in a jurisdiction where the Company or any of its subsidiaries does not file Tax
Returns that the Company or any of its subsidiaries is or may be subject to
taxation by that jurisdiction where such claim, if determined adversely to the
Company or such subsidiary, would, individually or in the aggregate, have a
Material Adverse Effect. Neither the Company nor any of its subsidiaries is the
subject of any currently ongoing audit or examination with respect to Taxes,
nor, to the Company's knowledge, has any such audit been threatened or proposed
by any taxing authority.
(b) The Company does not know of any fact relating to the Company or its
stockholders that could reasonably be expected to prevent the Merger from
qualifying as a reorganization within the meaning of Section 368(a) of the
Code.
(c) For purposes of this Agreement: (i) "TAXES" shall mean any and all
federal, state, local, foreign or other taxes of any kind (together with any
and all interest, penalties, additions to tax and additional amounts imposed
with respect thereto) imposed by any taxing authority, including but not
limited to taxes or other charges on or with respect to income, franchises,
windfall or other profits, gross receipts, property, sales, use, capital
stock, payroll, employment, license, disability, severance, stamp,
occupation, social security, workers' compensation, unemployment
compensation, or net worth, and taxes or other charges in the nature of
excise, withholding, ad valorem or value added, and includes any liability
for Taxes of another person, as a transferee or successor, under Treasury
Regulation Section 1.1502-6 or analogous provision of law or otherwise; and
(ii) "TAX RETURN" shall mean any return, report or similar statement
(including the attached schedules) required to be filed with any
governmental authority with respect to any Tax, including any information
return, claim for refund, amended return or declaration of estimated Tax.
Section 2.12. ENVIRONMENTAL MATTERS. (a) Except as could not, individually
or in the aggregate, reasonably be expected to have a Material Adverse Effect,
(i) the operations of the Company and its subsidiaries has been and is in
compliance with all applicable Environmental Laws and with all Environmental
Permits and (ii) there are no pending or, to the knowledge of the Company,
threatened actions, suits, claims, investigations or other proceedings
(collectively, "ACTIONS") under or pursuant to Environmental Laws against the
Company or any of its subsidiaries or involving any real property currently or
formerly owned, operated or leased by the Company.
(b) For the purpose of this Agreement:
"ENVIRONMENTAL LAWS" means any and all Orders, ordinances, guidelines,
codes, decrees, or other legally enforceable requirements (including,
without limitation, common law) of any international authority, foreign
government, the United States, or any state, local, municipal or
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other governmental authority, regulating, relating to or imposing liability
or standards of conduct concerning protection of the environment or of human
health, or employee health and safety, including without limitation the
Comprehensive Environmental Response, Compensation and Liability Act,
42 U.S.C. Sections 9601 ET SEQ., the Hazardous Materials Transportation Act,
49 U.S.C. Sections 1801 ET SEQ., the Resource Conservation and Recovery Act,
42 U.S.C. Sections 6901 ET SEQ., the Clean Water Act, 33 U.S.C. Sections
1251 ET SEQ., the Clean Air Act, 42 U.S.C. Sections 7401 ET SEQ., the Toxic
Substances Control Act, 15 U.S.C. Sections 2601 ET SEQ., the Federal
Insecticide, Fungicide and Rodenticide Act, 7 U.S.C., Sections 136 ET SEQ.,
Occupational Safety and Health Act 29 U.S.C. Sections 651 ET SEQ. and the
Oil Pollution Act of 1990, 33 U.S.C. Sections 2701 ET SEQ., as such laws
have been amended or supplemented, and the regulations promulgated pursuant
thereto, and all analogous state or local statutes.
"ENVIRONMENTAL PERMITS" means any and all permits, consents, licenses,
approvals, registrations, notifications, exemptions and any other
authorization required under any applicable Environmental Law.
Section 2.13. FORM S-4; PROXY STATEMENT. None of the information supplied
by the Company for inclusion or incorporation by reference in (i) the
registration statement on Form S-4 to be filed with the SEC by Parent in
connection with the issuance of shares of Parent Common Stock in connection with
the Merger, or any of the amendments or supplements thereto (collectively, the
"FORM S-4"), will, at the time the Form S-4 is filed with the SEC, at any time
it is amended or supplemented and at the time it 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 to make the
statements therein not misleading, and (ii) the proxy statement for use relating
to the adoption by the stockholders of the Company of this Agreement and the
proxy or information statement to be sent to the stockholders of Parent in
connection with the Merger, or any of the amendments or supplements thereto
(collectively, the "PROXY STATEMENT"), will, at the date it is first mailed to
the Company's stockholders and Parent's stockholders and at the time of the
meeting of the Company's stockholders held to vote on the adoption of this
Agreement, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they are made, not
misleading. The Proxy Statement will comply as to form in all material respects
with the requirements of the Exchange Act and the rules and regulations
thereunder. No representation is made by the Company in this Section 2.13 with
respect to statements made or incorporated by reference therein or in the
Form S-4 based on information supplied by Parent or Sub specifically for
inclusion or incorporation by reference in the Proxy Statement or in the
Form S-4.
Section 2.14. OPINION OF FINANCIAL ADVISOR. The Company has received the
written opinion of Donaldson, Lufkin & Jenrette Securities Corporation (the
"COMPANY FINANCIAL ADVISOR"), dated the date hereof, to the effect that the
consideration to be received in the Merger by the Company's stockholders is fair
to such stockholders from a financial point of view. An executed copy of such
opinion has been delivered to Parent. The Company has been authorized by the
Company Financial Advisor to permit, subject to prior review and consent by such
Company Financial Advisor (such consent not to be unreasonably withheld), the
inclusion of such fairness opinion in the Form S-4 and the Proxy Statement.
Section 2.15. BROKERS. No broker, finder or investment banker (other than
the Company Financial Advisor) is entitled to any brokerage, finder's or other
fee or commission in connection with the transactions contemplated by this
Agreement based upon arrangements made by or on behalf of the Company. The
Company has heretofore furnished to Parent a complete and correct copy of all
agreements between the Company and the Company Financial Advisor pursuant to
which such firm would be entitled to any payment relating to the transactions
contemplated hereby.
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Section 2.16. AFFILIATE TRANSACTIONS. Except as set forth in Section 2.16
of the Company Disclosure Schedule or as disclosed in the Company SEC Reports
filed and publicly available prior to the date of this Agreement, there are no
material contracts, commitments, agreements, arrangements or other transactions
between the Company or any of its subsidiaries, on the one hand, and any
(i) officer or director of the Company or any of its subsidiaries, (ii) record
or beneficial owner of five percent or more of the voting securities of the
Company or (iii) affiliate (as such term is defined in Regulation 12b-2
promulgated under the Exchange Act) of any such officer, director or beneficial
owner, on the other hand.
Section 2.17. VOTE REQUIRED. The affirmative vote of the holders of a
majority of the outstanding shares of Company Common Stock entitled to vote
thereon is the only vote of the holders of any class or series of the Company's
capital stock necessary to adopt this Agreement. The Board of Directors of the
Company (the "COMPANY BOARD") (at a meeting duly called and held) has
(i) approved and declared advisable this Agreement, (ii) determined that the
transactions contemplated hereby are advisable, fair to and in the best
interests of the holders of Company Common Stock, (iii) resolved to recommend
adoption of this Agreement, the Merger and the other transactions contemplated
hereby to such holders and (iv) directed that adoption of this Agreement be
submitted to the Company's stockholders. Subject to the provisions of
Section 5.4, the Company hereby agrees to the inclusion in the Form S-4 and the
Proxy Statement of the recommendations of the Company Board described in this
Section 2.17.
Section 2.18. DGCL SECTION 203; STATE TAKEOVER STATUTES. Prior to the date
hereof, the Board of Directors of the Company has approved this Agreement and
the Merger and the other transactions contemplated hereby and such approval is
sufficient to render the restrictions on "business combinations" set forth in
Section 203 of the DGCL inapplicable to this Agreement, the Merger and any of
such other transactions contemplated hereby. No other state takeover statute or
similar statute or regulation applies or purports to apply to the Merger, this
Agreement or any of the transactions contemplated by this Agreement, and no
provision of the Certificate of Incorporation or By-Laws of the Company or
similar governing instruments of any of the Company's subsidiaries would,
directly or indirectly, restrict or impair the ability of Parent to vote, or
otherwise to exercise the rights of a stockholder with respect to, shares of the
Company and its subsidiaries that may be acquired or controlled by Parent.
Section 2.19. MATERIAL CONTRACTS. (a) Section 2.19 of the Company
Disclosure Schedule contains a complete list of all material contracts (written
or oral), plans, undertakings, commitments or agreements to which the Company or
any of its subsidiaries is a party or by which any of them is bound as of the
date of this Agreement.
(b) Section 2.19 of the Company Disclosure Schedule contains a complete
and accurate list of the following:
(i) promissory notes, loans, agreements, indentures, evidences of
indebtedness or other instruments providing for the lending of money,
whether as borrower, lender or guarantor (excluding trade payables or
receivables arising in the ordinary course of business);
(ii) contracts or agreements containing covenants limiting the
freedom of the Company or any of its subsidiaries or affiliates to engage
in any line of business or compete with any person or operate at any
location;
(iii) change in control or similar arrangements with any officers,
employees or agents of the Company that will result in any obligation
(absolute or contingent) of the Company or any of its subsidiaries to
make any payment to any officers, employees or agents of the Company
following either the consummation of the transactions contemplated
hereby, termination of
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employment, or both (other than as set forth in Section 2.10(e) of the
Company Disclosure Schedule);
(iv) labor contracts;
(v) license, consent, royalty and other agreements concerning
Intellectual Property (as defined below) (other than agreements with
guides and other providers of content entered into in the ordinary course
of business);
(vi) distribution and syndication partnerships or arrangements;
(vii) joint venture or partnership agreements or joint development or
similar agreements pursuant to which any third party is entitled to
develop any products on behalf of the Company or its subsidiaries (other
than agreements with guides and other providers of content entered into
in the ordinary course of business);
(viii) any contract or agreement for the acquisition, directly or
indirectly (by merger or otherwise), of material assets (other than
inventory) or capital stock of another person; and
(ix) contracts or agreements involving the issuance or repurchase of
any capital stock of the Company or any of its subsidiaries (other than
the Stock Plans and the ESPP and the Company's repurchase rights with
respect to Company Common Stock issued in connection with any of the
foregoing).
(c) For the purpose of this Agreement, the term "CONTRACTS" shall mean
all of the contracts (written or oral), plans, undertakings, commitments and
agreements are, or are required to be, contained in Section 2.19 of the
Company Disclosure Schedule. True and complete copies of the written
Contracts identified on Section 2.19 of the Company Disclosure Schedule have
been delivered or made available to Parent.
Section 2.20. ABSENCE OF BREACHES OR DEFAULTS. Except as set forth in
Section 2.20 of the Company Disclosure Schedule, neither the Company nor any of
its subsidiaries is and, to the knowledge of the Company, no other party is in
default under, or in breach or violation of, any Contract, Guide Agreement (as
defined below) or other content agreement and, to the knowledge of the Company,
no event has occurred which, with the giving of notice or passage of time or
both would constitute a default under any Contract or Guide Agreement except for
defaults, breaches, violations or events which could not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect. Other than
Contracts and Guide Agreements which have terminated or expired in accordance
with their terms, and except as set forth in Section 2.20 of the Company
Disclosure Schedule, each of the Contracts and Guide Agreements is in full force
and effect, and assuming all consents required by the terms thereof or
applicable law have been obtained, such Contracts and Guide Agreements will
continue to be in full force and effect immediately following the consummation
of the transactions contemplated hereby, in each case except where the failure
to be in full force and effect could not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect. No event has occurred
which either entitles, or would, on notice or lapse of time or both, entitle the
holder of any indebtedness for borrowed money affecting the Company or any of
its subsidiaries (except for the execution of this Agreement) to accelerate, or
which does accelerate, the maturity of any indebtedness affecting the Company or
any of its subsidiaries, except as set forth in Section 2.20 of the Company
Disclosure Schedule.
Section 2.21. INTELLECTUAL PROPERTY. Each patent, patent application,
registered trademark, material unregistered trademark, trademark application,
registered service mark, material unregistered service mark, service mark
application, registered trade name, material unregistered trade name, material
domain name, copyright registration and copyright application owned by the
Company is set
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forth on Section 2.21 of the Company Disclosure Schedule. Except as set forth on
Section 2.21 of the Company Disclosure Schedule:
(a) The Company (i) owns all right, title and interest in and to, free
and clear of any Lien, or (ii) has a valid license to use, all the
Intellectual Property necessary to carry out the Company's current
activities. The Company is not in breach of any such licenses except for
breaches which could not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect. To the Company's knowledge, all
registered patents, trademarks, service marks and copyrights listed on
Section 2.21 of the Company Disclosure Schedule are valid and subsisting and
in full force and effect, and all applications are currently pending;
(b) The Company Intellectual Property is all the Intellectual Property
that is necessary for the ownership, maintenance and operation of the
Company's business as currently conducted, and the consummation of the
transactions contemplated hereby will not alter or impair any such rights;
(c) The Company has not, and the continued operation of the Company's
business as presently conducted and as presently proposed to be conducted
will not, to the Company's knowledge, interfere with, infringe upon or
misappropriate ("INFRINGE") any Intellectual Property rights of third
parties. To the best knowledge of the Company, there are no material pending
charges, complaints, claims, demands or notices alleging that the Company's
use of its material Intellectual property Infringes upon the Intellectual
Property rights of any third party;
(d) To the Company's knowledge, no third party has Infringed upon any
material Company Intellectual Property;
(e) No Action or Order has been made, is pending, or, to the knowledge
of the Company, is threatened which challenges the legality, validity,
enforceability, use or ownership of any Company Intellectual Property that,
individually or in the aggregate, could be expected to have a Material
Adverse Effect; and
(f) The Company takes reasonable steps necessary to maintain and protect
its Intellectual Property and has executed non-disclosure agreements and
Intellectual Property assignments with all employees and independent
contractors who contribute to or create Intellectual Property, alone or with
others, that is owned or used by the Company.
(g) As used in this Agreement, "INTELLECTUAL PROPERTY" means (i) all
inventions (whether patentable or unpatentable and whether or not reduced to
practice), all improvements thereon, and all patents, patent applications
and patent disclosures, together with all reissuances, continuations,
continuations-in-part, revisions, extensions and reexaminations thereof,
(ii) all trademarks, service marks, trade dress, logos, trade names, domain
names, and corporate names, together with all translations, adaptations,
derivations and combinations thereof and including all goodwill associated
therewith, and all applications, registrations and renewals in connection
therewith, (iii) all copyrightable works, all copyrights and all
applications, registrations and renewals in connection therewith, (iv) all
trade secrets and confidential business information (including ideas,
know-how, customer and supplier lists, pricing and cost information and
business and marketing plans and proposals), (v) all computer software
(including data and related documentation), (vi) all other proprietary
rights, (vii) all copies and tangible embodiments of the foregoing
categories of intellectual property listed in subsections (i) through
(vi) herein (in whatever form or medium), and (viii) all rights under
licenses, sublicenses, agreements, or permissions related to the foregoing
categories of intellectual property listed in subsections (i) through
(vii) herein. As used in this Agreement, "COMPANY INTELLECTUAL PROPERTY"
means all Intellectual Property currently owned or used by Company.
D-16
(h) The Company utilizes industry standard measures and practices to
protect (i) the security and integrity of its networks, software, Web sites
and related systems from unauthorized use or access and (ii) the privacy of
all information stored thereon.
Section 2.22. INSURANCE. The Company has provided or made available to the
Parent true, correct and complete copies of all policies of insurance to which
the Company or any of its subsidiaries is a party or is a beneficiary or named
insured. The Company and its subsidiaries maintain insurance coverage with
reputable insurers in such amounts and covering such risks as are in accordance
with normal industry practice for companies engaged in businesses similar to
that of the Company (taking into account the cost and availability of such
insurance).
Section 2.23. LABOR MATTERS. The Company and each of its subsidiaries is
in compliance with all applicable laws (domestic and foreign), agreements,
contracts, and policies relating to employment, employment practices, wages,
hours, and terms and conditions of employment except for failures so to comply,
if any, that could not, individually or in the aggregate, reasonably be expected
to have a Material Adverse Effect. The Company has complied in all material
respects with its payment obligations to all employees of the Company and its
subsidiaries in respect of all wages, salaries, commissions, bonuses, benefits
and other compensation due and payable to such employees under any Company
policy, practice, agreement, plan, program or any statute or other law. Except
as set forth in Section 2.23 of the Company Disclosure Schedule, the Company is
not liable for any severance pay or other payments to any employee or former
employee arising from the termination of employment under any benefit or
severance policy, practice, agreement, plan, or program of the Company, nor will
the Company have any liability that exists or arises, or may be deemed to exist
or arise, under any applicable law or otherwise, as a result of or in connection
with the transactions contemplated hereunder or as a result of the termination
by the Company of any persons employed by the Company or any of its subsidiaries
on or prior to the Effective Time of the Merger except as required by Code
Section 4980B. The Company is in compliance with its obligations pursuant to the
Worker Adjustment and Retraining Notification Act of 1988 and part 6 and 7 of
Title I of ERISA, to the extent applicable, and all other employee notification
and bargaining obligations arising under any collective bargaining agreement or
statute. To the knowledge of the Company, the employment of any employee or
independent contractor by the Company does not violate any legal or contractual
rights of any third party, including any rights with respect to Intellectual
Property.
Section 2.24. REORGANIZATION QUALIFICATION. Neither the Company nor, to
its knowledge, any of its affiliates has taken or agreed to take any action, or
knows of any circumstances, that (without regard to any action taken or agreed
to be taken by Parent or any of its affiliates) would prevent the Merger from
qualifying as a reorganization within the meaning of Sections 368(a)(1)(A)
and 368(a)(2)(E) of the Code.
Section 2.25. GUIDES. The Company has made available to Parent forms of
its guide agreements (the "FORM GUIDE AGREEMENTS") and each guide has executed
and delivered to the Company a guide agreement in one of such forms without
material modification (each, a "GUIDE AGREEMENT").
D-17
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF
PARENT AND SUB
Parent and Sub hereby, jointly and severally, represent and warrant to the
Company that, except as set forth in the corresponding sections or subsections
of the Disclosure Schedule delivered by Parent and Sub to the Company prior to
the execution of this Agreement (the "PARENT DISCLOSURE SCHEDULE"), or in any
other section or subsection of the Parent Disclosure Schedule if it is
reasonably apparent that such disclosure applies:
Section 3.1. CORPORATE ORGANIZATION. (a) Each of Parent and Sub is a
corporation duly organized, validly existing and in good standing under the laws
of the jurisdiction in which it is incorporated and has the requisite corporate
power and authority and any necessary governmental authority to own, operate or
lease its properties and to carry on its business as it is now being conducted,
except where the failure to have such power, authority and governmental
approvals could not, individually or in the aggregate, reasonably be expected to
have a Parent Material Adverse Effect (as defined below). Each of Parent and Sub
is duly qualified or licensed as a foreign corporation to do business, and is in
good standing, in each jurisdiction where the character of its properties owned,
leased or operated by it or the nature of its activities makes such
qualification or licensing necessary, except for such failures to be so duly
qualified or licensed or in good standing which could not, individually or in
the aggregate, reasonably be expected to have a Parent Material Adverse Effect.
When used in this Article III or otherwise in connection with Parent or any of
its subsidiaries (including Sub), the term "PARENT MATERIAL ADVERSE EFFECT"
means any change or effect that would be materially adverse to the business,
properties, assets, condition (financial or otherwise) or results of operations
of Parent and its subsidiaries taken as a whole or that would materially impair
the ability of Parent to perform its obligations hereunder; PROVIDED that none
of the following shall be taken into account in determining whether there has
been or could be a Parent Material Adverse Effect: (w) any employee attrition
after the date hereof, (x) any change arising from the public announcement of
the Merger and the other transactions contemplated by this Agreement; (y) any
change in the market price or trading volume of the Parent Common Stock after
the date hereof; or (z) any adverse effect on Parent attributable solely to
conditions affecting the publishing business, the United States economy as a
whole or foreign economies in any locations where Parent or any of its
subsidiaries has material operations or sales (and not having a materially
disproportionate effect on Parent).
(b) Parent has heretofore furnished to or made available to the Company
a complete and correct copy of its certificate of incorporation and by-laws
as currently in effect. Such certificate of incorporation and by-laws are in
full force and effect and no other organizational documents are applicable
to or binding upon Parent.
(c) Sub has heretofore furnished to or made available to the Company a
complete and correct copy of the certificate of incorporation of Sub and the
by-laws of Sub as currently in effect. Such certificate of incorporation and
bylaws are in full force and effect and no other organizational documents
are applicable to or binding upon Sub.
Section 3.2. CAPITALIZATION. (a) The authorized capital stock of Parent
consists of 255,750,000 shares, consisting of 250,000,000 shares of Parent
Common Stock and 5,750,000 shares of preferred stock, par value $.01 per share.
As of September 30, 2000, (i) 166,765,849 shares of Parent Common Stock were
issued and outstanding, all of which were duly authorized, validly issued, fully
paid and nonassessable and were issued free of preemptive (or similar) rights,
(ii) 123,848 shares of Parent Common Stock were held in the treasury of Parent,
(iii) an aggregate of 13,620,464 shares of Parent Common Stock were reserved for
issuance and issuable upon or otherwise deliverable in connection with the
exercise of outstanding stock options to purchase shares of Parent Common Stock
("PARENT OPTIONS") identified on Section 3.2(a) of the Parent Disclosure
Schedule and issued pursuant to the
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employee benefit plans of Parent, (iv) 2,000,000 shares of $10.00 Series D
Exchangeable Preferred Stock of Parent were issued and outstanding,
(v) 1,250,000 shares of $9.20 Series F Exchangeable Preferred Stock of Parent
were issued and outstanding and (vi) 2,500,000 shares of $8.625 Series H
Exchangeable Preferred Stock of Parent were issued and outstanding. Except
(i) as set forth above or (ii) as a result of the exercise of the Parent Options
outstanding as of the date hereof and identified on Section 3.2(a) of the Parent
Disclosure Schedule, as of the date hereof there are outstanding (a) no shares
of capital stock or other voting securities (including indebtedness having the
right to vote) of Parent, (b) no securities of Parent convertible into or
exchangeable for shares of capital stock or voting securities (including
indebtedness having the right to vote) of Parent, (c) no options, warrants, or
other rights to acquire from Parent, and no obligation of Parent to issue, any
capital stock, voting securities (including indebtedness having the right to
vote) or securities convertible into or exchangeable for capital stock or voting
securities (including indebtedness having the right to vote) of Parent and
(d) no equity equivalents, interests in the ownership or earnings of Parent or
other similar rights (collectively, "PARENT SECURITIES"). Except as set forth in
Section 3.2(a) of the Parent Disclosure Schedule, as of the date hereof, there
are no outstanding obligations of Parent or any of its subsidiaries to
repurchase, redeem or otherwise acquire any Parent Securities except pursuant to
existing arrangements with employees. As of the date hereof, there are no other
options, calls, warrants or other rights, agreements, arrangements or
commitments of any character relating to the issued or unissued capital stock of
Parent or any of its subsidiaries to which Parent or any of its subsidiaries is
a party.
(b) The authorized capital stock of Sub consists of 100 shares of common
stock, par value $0.01 per share, 100 shares of which are duly authorized,
validly issued and outstanding, fully paid and nonassessable and owned by
Parent free and clear of all Liens. Sub was formed solely for the purpose of
engaging in a business combination transaction with the Company and has
engaged in no other business activities and has conducted its operations
only as contemplated hereby.
Section 3.3. AUTHORITY RELATIVE TO THIS AGREEMENT. Each of Parent and Sub
has all necessary corporate power and authority to execute and deliver this
Agreement, to perform their respective obligations hereunder and to consummate
the transactions contemplated hereby. The execution, delivery and performance of
this Agreement by each of Parent and Sub and the consummation by each of Parent
and Sub of the transactions contemplated hereby 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 so contemplated
(other than (i) the effectiveness of a registration statement on Form S-4
relating to the Parent Common Stock to be issued in the Merger,
(ii) stockholder approval of the issuance of Parent Common Stock in the Merger,
and (iii) the filing of appropriate merger documents as required by the DGCL).
This Agreement has been duly and validly executed and delivered by Parent and
Sub and, assuming due authorization, execution and delivery hereof by the
Company, constitutes a legal, valid and binding obligation of each such
corporation enforceable against such corporation in accordance with its terms
(except insofar as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting creditors'
rights generally or by principles governing the availability of equitable
remedies).
Section 3.4. NO CONFLICT; REQUIRED FILINGS AND CONSENTS. (a) The
execution, delivery and performance of this Agreement by Parent and Sub do not
and will not: (i) conflict with or violate the respective certificates of
incorporation or by-laws of Parent or Sub; (ii) assuming that all consents,
approvals and authorizations contemplated by clauses (i), (ii) and (iii) of
subsection (b) below have been obtained and all filings described in such
clauses have been made, conflict with or violate any Order applicable to Parent
or Sub or by which either of them or any of their respective properties are
bound or affected; or (iii) result in any breach or violation of or constitute a
default (or an event which with notice or lapse of time or both could become a
default) or result in the loss of a material benefit under, or give rise to any
right of termination, amendment, acceleration or cancellation of, or result in
D-19
the creation of a Lien on any of the property 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 case of clauses (ii) and (iii), for any
such conflicts, violations, breaches, defaults or other occurrences which could
not, individually or in the aggregate, reasonably be expected to prevent the
consummation of the Merger or to have a Parent Material Adverse Effect. All of
the conflicts, violations, breaches, defaults and other occurrences referred to
in the immediately preceding sentence are identified in Section 3.4(a) of the
Parent Disclosure Schedule.
(b) The execution, delivery and performance of this Agreement by Parent
and Sub do not and will not require any consent, approval, authorization or
permit of, action by, filing with or notification to, any governmental or
regulatory authority, domestic or foreign, except (i) for applicable
requirements of the Securities Act and the rules and regulations promulgated
thereunder, the Exchange Act and the rules and regulations promulgated
thereunder, the HSR Act, the rules and regulations of Nasdaq, the NYSE and
state securities, takeover and Blue Sky laws, (ii) the filing and
recordation of appropriate merger or other documents as required by the
DGCL, and (iii) such consents, approvals, authorizations, permits, actions,
filings or notifications the failure of which to make or obtain could not,
individually or in the aggregate, be expected to (x) prevent the
consummation of the Merger or (y) have a Parent Material Adverse Effect.
Section 3.5. COMPLIANCE. Parent is in compliance with, and is not in
default or violation of, its certificate of incorporation and by-laws. Parent
and each of its subsidiaries are in compliance with, and are not in default or
violation of (i) all laws (including, without limitation, Environmental Laws)
and Orders applicable to them or by which any of their respective properties are
bound or affected and (ii) all notes, bonds, mortgages, indentures, contracts,
agreements, leases, licenses, permits, franchises and other instruments or
obligations to which any of them are a party or by which any of them or any of
their respective properties are bound or affected, except, in the case of
clauses (i) and (ii), for any such failures of compliance, defaults and
violations which could not, individually or in the aggregate, reasonably be
expected to have a Parent Material Adverse Effect. Except as disclosed prior to
the date hereof in the Parent SEC Reports (as defined in Section 3.6), neither
Parent nor any of its subsidiaries has received notice of any revocation or
modification of any federal, state, local or foreign governmental license,
certification, tariff, permit, authorization or approval material to Parent and
its subsidiaries taken as a whole. Parent and its subsidiaries have all permits,
licenses, authorizations, consents, approvals and franchises from governmental
agencies required to conduct their businesses as now being conducted, except for
such permits, licenses, authorizations, consents, approvals, and franchises the
absence of which could not, individually or in the aggregate, reasonably be
expected have a Parent Material Adverse Effect.
Section 3.6. SEC FILINGS; FINANCIAL STATEMENTS. (a) Parent and, to the
extent applicable, each of its then or current subsidiaries, has filed all
forms, reports, statements and documents required to be filed with the SEC since
January 1, 1999 (collectively, the "PARENT SEC REPORTS"), each of which has
complied in all material respects with the applicable requirements of the
Securities Act and the rules and regulations promulgated thereunder, or the
Exchange Act and the rules and regulations promulgated thereunder, each as in
effect on the date so filed. None of such Parent SEC Reports (including but not
limited to any financial statements or schedules included or incorporated by
reference therein) contained, when filed, any untrue statement of a material
fact or omitted to state a material fact required to be stated or incorporated
by reference therein or necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not misleading.
Except to the extent revised or superseded by a subsequent filing with the SEC
prior to the date hereof, none of the Parent SEC Reports filed by Parent since
January 1, 1999 and prior to the date hereof contains any untrue statement of a
material fact or omits to state a material fact required to be
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stated or incorporated by reference therein or necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading.
(b) Each of the audited and unaudited consolidated financial statements
of Parent and its subsidiaries (including any related notes thereto)
included in Parent SEC Reports complies or, if not yet filed, will comply as
to form in all material respects with all applicable accounting requirements
and with the published rules and regulations of the SEC with respect
thereto, has been or, if not yet filed, will have been prepared in
accordance with generally accepted accounting principles (except, in the
case of unaudited consolidated quarterly statements, as permitted by
Form 10-Q of the SEC) applied on a consistent basis throughout the periods
involved (except as may be indicated in the notes thereto) and fairly
presents in all material respects or, if not yet filed, will fairly present
in all material respects the consolidated financial position of Parent and
its subsidiaries at the respective date thereof and the consolidated results
of its operations and changes in cash flows for the periods indicated
(subject, in the case of unaudited quarterly statements, to normal year-end
audit adjustments).
Section 3.7. ABSENCE OF CERTAIN CHANGES OR EVENTS. Since December 31,
1999, except as specifically disclosed in the Parent SEC Reports filed and
publicly available prior to the date of this Agreement or disclosed in Section
3.7 of the Parent Disclosure Schedule, Parent and its subsidiaries have
conducted their businesses only in the ordinary course and in a manner
consistent with past practice and since such date there has not been (i) any
change in the financial condition, results of operations, assets, business or
operations of Parent or any of its subsidiaries having or which could be
reasonably likely to have a Parent Material Adverse Effect or (ii) any
condition, event or occurrence which, individually or in the aggregate, having
or which could reasonably be expected to have a Parent Material Adverse Effect.
Section 3.8. FORM S-4; PROXY STATEMENT. None of the information supplied
by Parent or Sub for inclusion or incorporation by reference in (i) the Form S-4
will, at the time the Form S-4 is filed with the SEC, at any time it is amended
or supplemented and at the time it 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 to make the statements therein
not misleading, and (ii) the Proxy Statement will, at the date it is first
mailed to the Company's stockholders and Parent's stockholders and at the time
of the meeting of the Company's stockholders held to vote on adoption of this
Agreement, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they are made, not
misleading. The Form S-4 will comply as to form in all material respects with
the requirements of the Securities Act and the rules and regulations thereunder,
except that no representation is made by Parent or Sub with respect to
statements made or incorporated by reference therein based on information
supplied by the Company specifically for inclusion or incorporation by reference
in the Form S-4.
Section 3.9. ABSENCE OF LITIGATION. Except as specifically disclosed in
the Parent SEC Reports filed and publicly available prior to the date of this
Agreement or in Section 3.9 of the Parent Disclosure Schedule, there are no
Actions pending or, to the best knowledge of Parent, threatened against Parent
or any of its subsidiaries, or any properties or rights of Parent or any of its
subsidiaries, before any court, arbitrator or administrative, governmental or
regulatory authority or body, domestic or foreign, that could, individually or
in the aggregate, reasonably be expected to have a Parent Material Adverse
Effect. To Parent's knowledge, neither Parent nor any of its subsidiaries nor
any of their respective properties is or are subject to any Order having, or
which, insofar as can be reasonably foreseen, in the future could, individually
or in the aggregate, reasonably be expected to have a Parent Material Adverse
Effect or to prevent or delay the consummation of the transactions contemplated
hereby.
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Section 3.10. OPINION OF FINANCIAL ADVISOR. Parent has received the
opinion of Wit SoundView, dated the date of this Agreement, to the effect that
the consideration to be paid by Parent in connection with the Merger is fair to
Parent and the holders of the Parent Common Stock from a financial point of
view, a signed copy of which has been delivered to the Company.
Section 3.11. BROKERS. No broker, finder or investment banker (other than
Wit SoundView, Merrill Lynch & Co. and the others identified on Section 3.11 of
the Parent Disclosure Schedule, the fees and expenses of which shall be paid by
Parent) is entitled to any brokerage, finder's or other fee or commission in
connection with the transactions contemplated by this Agreement based upon
arrangements made by or on behalf of Parent or Sub.
Section 3.12. AFFILIATE TRANSACTIONS. Except as set forth in Section 3.12
of the Parent Disclosure Schedule or as disclosed in the Parent SEC Reports
filed and publicly available prior to the date of this Agreement, as of the date
hereof there are no material contracts, commitments, agreements, arrangements or
other transactions between Parent or any of its subsidiaries, on the one hand,
and any (i) officer or director of Parent or (ii) record or beneficial owner of
five percent or more of the voting securities of Parent, on the other hand.
Section 3.13. REORGANIZATION QUALIFICATION. Neither Parent nor Sub, nor to
Parent's knowledge, any affiliate of Parent, has taken or agreed to take any
action, or knows of any circumstances, that (without regard to any action taken
or agreed to be taken by the Company or any of its affiliates) would prevent the
Merger from qualifying as a reorganization within the meaning of
Sections 368(a)(1)(A) and 368(a)(2)(E) of the Code.
Section 3.14. STOCKHOLDERS' CONSENT AND APPROVAL OBTAINED. Stockholders of
Parent holding not less than 70% of the outstanding shares of Parent Common
Stock have executed voting agreements agreeing to consent to and approve the
issuance of Parent Common Stock in the Merger. Such consent and approval are the
only consent and approval of the holders of any class or series of Parent's
capital stock necessary to adopt and approve of the terms of this Agreement, the
Merger and the transactions contemplated herein.
Section 3.15. EMPLOYEE BENEFIT PLANS. Except as could not, individually or
in the aggregate, reasonably be expected to have a Parent Material Adverse
Effect, each "employee benefit plan" (within the meaning of section 3(3) of
ERISA) under which any employee or former employee of Parent has any present or
future right to benefits or under which Parent has any present or future
liability has been established and administered in accordance with its terms,
and in compliance with the applicable provisions of ERISA, the Code and other
applicable laws, rules and regulations.
Section 3.16. TAX MATTERS. Parent has (i) filed all material Tax Returns
required to be filed by it (taking into account extensions) and all such Tax
Returns were true, correct and complete in all material respects, (ii) paid or
provided adequate reserves for all material Taxes whether or not shown to be due
on such Returns or which are otherwise due and payable and (iii) paid or
provided adequate reserves for all material Taxes for which a notice of
assessment or collection has been received, except, in the case of clause (i),
(ii) or (iii), for any such filings, payments or accruals which would not,
individually or in the aggregate, have a Parent Material Adverse Effect.
ARTICLE IV
CONDUCT OF BUSINESS PENDING THE MERGER
Section 4.1. CONDUCT OF BUSINESS OF THE COMPANY PENDING THE MERGER. The
Company covenants and agrees that, during the period from the date hereof to the
Effective Time, unless Parent shall otherwise consent in writing in advance, the
businesses of the Company and its subsidiaries shall be conducted only in, and
the Company and its subsidiaries shall not take any action except in, the
ordinary course of business and in a manner consistent with past practice and in
compliance with
D-22
applicable laws; and the Company and its subsidiaries shall each use its
commercially reasonable efforts to preserve substantially intact the business
organization of the Company and its subsidiaries, to keep available the services
of the present officers, employees and consultants of the Company and its
subsidiaries and to preserve the present relationships of the Company and its
subsidiaries with customers, suppliers, licensors, licensees, advertisers,
distributors and other persons with which the Company or any of its subsidiaries
has significant business relations. By way of amplification and not limitation,
neither the Company nor any of its subsidiaries shall, between the date of this
Agreement and the Effective Time, directly or indirectly do, or propose or
commit to do, any of the following without the prior written consent of Parent:
(a) Amend its Certificate of Incorporation or By-Laws or equivalent
organizational documents;
(b) Issue, deliver, sell, pledge, dispose of or encumber, or authorize
or commit to the issuance, sale, pledge, disposition or encumbrance of, any
shares of capital stock of any class, or any options, warrants, convertible
securities or other rights of any kind to acquire any shares of capital
stock, or any other ownership interest (including but not limited to stock
appreciation rights or phantom stock), of the Company or any of its
subsidiaries (except for the issuance of shares of Company Common Stock in
accordance with the terms of (i) outstanding Company Stock Rights, (ii)
beginning in November 2000, up to 100,000 options per calendar month to be
issued to new hires and up to 25,000 options (net of options forfeited) per
calendar month to be issued to non-officer employees; PROVIDED that, for the
period from the date hereof until the Closing, no existing employee shall
receive more than 3,000 options pursuant to this clause (ii), (iii) the
ESPP, and (iv) the securities on Section 2.3(a) of the Company Disclosure
Schedule);
(c) Declare, set aside, make or pay any dividend or other distribution,
payable in cash, stock, property or otherwise, with respect to any of its
capital stock;
(d) Reclassify, combine, split, subdivide or redeem, purchase or
otherwise acquire, directly or indirectly, any of its capital stock or any
capital stock of any of its subsidiaries (other than pursuant to the
Company's repurchase rights for departing employees with respect to Company
Common Stock issued in connection with the ESPP or the Company Stock
Rights);
(e) (i) Acquire (by merger, consolidation or acquisition of stock or
assets) any corporation, partnership or other business organization or
division thereof or (except for the purchase of inventory, equipment,
content and other rights or properties in the ordinary course of business)
any material assets; (ii) sell, transfer, lease, mortgage, pledge, license,
encumber or otherwise dispose of or subject to any Lien any of its assets or
rights (including capital stock of subsidiaries), except the disposition of
obsolete assets or otherwise unused or immaterial assets and the licensing
of names in the ordinary course of business consistent with past practice;
(iii) except as set forth in Section 4.1(e) of the Company Disclosure
Schedule, incur any indebtedness for borrowed money or issue any debt
securities or assume, guarantee or endorse, or otherwise as an accommodation
become responsible for, the obligations of any person, or make any loans,
advances or capital contributions to, or investments in, any other person
(other than trade payables and receivables incurred in the ordinary course
of business); (iv) except in the ordinary course of business consistent with
past practice, enter into, amend, terminate or renew any material contract
or agreement (including, without limitation, the Contracts) or enter into,
or amend or terminate any joint venture arrangements (including distribution
and syndication agreements); (v) enter into any transaction, contract,
commitment, arrangement or understanding with any affiliate of the Company
other than with its subsidiaries; (vi) enter into any commitments or
transactions or related commitments or transactions material, individually,
to the Company and its subsidiaries taken as a whole; (vii) enter into any
new material line of business; (viii) change the Form Guide Agreements used
by the Company and its subsidiaries, except for changes consistent with past
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practice; (ix) authorize any single capital expenditure which is in excess
of $500,000 or capital expenditures which are, in the aggregate, in excess
of $4,000,000 for the Company and its subsidiaries taken as a whole; or
(x) enter into or amend any contract, agreement, commitment or arrangement
with respect to any of the matters set forth in this Section 4.1(e);
(f) Except to the extent required under existing employee and director
benefit plans, agreements or arrangements as in effect on the date of this
Agreement, (i) increase or otherwise amend the compensation or fringe
benefits of any of its directors, officers or employees, except for merit
increases in salary or wages of employees of the Company or its subsidiaries
who are not officers of the Company in the ordinary course of business in
accordance with past practice, or (ii) grant any retention, severance or
termination pay not currently required to be paid under existing severance
plans or (iii) enter into, or amend, any employment, consulting or severance
agreement or arrangement with any present or former director, officer or
other employee of the Company or its subsidiaries except for severance
arrangements consistent with past practice offered in the ordinary course to
employees who have been terminated, or (iv) establish, adopt, enter into or
amend or terminate any collective bargaining, bonus, profit sharing, thrift,
compensation, stock option, restricted stock, pension, retirement, deferred
compensation, employment, termination, severance or other plan, agreement,
trust, fund, policy or arrangement for the benefit of any directors,
officers or employees, or (v) amend the terms of any outstanding options to
purchase any equity of the Company or any subsidiary (including accelerating
the vesting or lapse of repurchase rights or obligations);
(g) Except as may be required as a result of a change in law or in
generally accepted accounting principles, change any of the accounting
practices or principles used by it;
(h) Take any action that (without regard to any action taken or agreed
to be taken by Parent or any of its affiliates) would prevent the Merger
from qualifying as a reorganization within the meaning of
Sections 368(a)(1)(A) and 368(a)(2)(E) of the Code;
(i) Make or change any material Tax election, file any amended Tax
Return with respect to any material Taxes, settle or compromise any material
federal, state, local or foreign Tax liability, change any annual Tax
accounting period, change any method of Tax accounting, enter into any
closing agreement relating to any material Tax, surrender any right to claim
a material Tax refund, or consent to any extension or waiver of the
limitations period applicable to any Tax claim or assessment; PROVIDED,
HOWEVER, that an action permitted as a result of the materiality qualifiers
in this clause (i) shall not be taken if such action could be taken after
the Effective Time without causing an adverse effect on the Company;
(j) Settle or compromise any pending or threatened Action which is
material or which relates to the transactions contemplated hereby;
(k) Adopt a plan of complete or partial liquidation, dissolution,
merger, consolidation, restructuring, recapitalization or other
reorganization of the Company or any of its subsidiaries (other than the
Merger);
(l) Pay, discharge or satisfy any claims, liabilities or obligations
(absolute, accrued, asserted or unasserted, contingent or otherwise), other
than the payment, discharge or satisfaction in the ordinary course of
business and consistent with past practice of liabilities reflected or
reserved against in the financial statements of the Company or incurred in
the ordinary course of business and consistent with past practice;
(m) Effectuate a "plant closing" or "mass layoff", as those terms are
defined in WARN, affecting in whole or in part any site of employment,
facility, operating unit or employee of the Company or any of its
subsidiaries;
D-24
(n) Fail to maintain in full force and effect the existing insurance
policies covering the Company and its subsidiaries and their respective
properties, assets and businesses; or
(o) Take, or offer or propose to take, or agree to take in writing or
otherwise, any of the actions described in Section 4.1 clauses (a) through
(n) which would make any of the representations or warranties of the Company
contained in this Agreement untrue and incorrect as of the date when made if
such action had then been taken or would result in any of the conditions set
forth in Article VI not being satisfied.
Section 4.2. CONDUCT OF BUSINESS OF PARENT PENDING THE MERGER. (a) During
the period from the date of this Agreement to the Effective Time (except as
otherwise contemplated by the terms of this Agreement), Parent shall use its
commercially reasonable efforts to preserve intact its and its subsidiaries'
current business organizations, keep available the services of their current
officers and employees and preserve their relationships with customers,
suppliers, licensors, licensees, advertisers, distributors and other persons
with which the Company or any of its subsidiaries has significant business
relations. By way of amplification and not limitation, without limiting the
generality of the foregoing, during the period from the date of this Agreement
to the Effective Time, Parent shall not, without the prior consent of the
Company:
(i) Amend Parent's certificate of incorporation (except to change the
number of authorized shares of capital stock or to permit the issuance of
a series preferred stock) or by-laws in a manner that would be materially
adverse to the holders of Parent Common Stock;
(ii) Reclassify, combine, split or subdivide any of its capital
stock;
(iii) Take, or offer or propose to take, or agree to take in writing
or otherwise, any of the actions described in Sections 4.2(b)(i) and
(ii) or any action which would make any of the representations or
warranties of Parent contained in this Agreement untrue and incorrect as
of the date when made if such action had then been taken or (except as
otherwise provided herein) would result in any of the conditions set
forth in Article VI not being satisfied;
(iv) Issue, deliver, sell, pledge, dispose of or encumber, or
authorize or commit to the issuance, sale, pledge, disposition or
encumbrance of, any shares of capital stock of any class, or any options,
warrants, convertible securities or other rights of any kind to acquire
any shares of capital stock, or any other ownership interest (including,
but not limited to stock appreciation rights or phantom stock) of Parent
or any of its subsidiaries to any record or beneficial owner of five
percent or more of the voting securities of Parent, except on an arms-
length basis; or
(v) Adopt a plan of complete or partial liquidation or dissolution of
Parent (other than the Merger).
(b) Parent shall not, and shall not permit any of its subsidiaries to,
intentionally take any action that (without regard to any action taken or
agreed to be taken by the Company or any of its affiliates) would prevent
the Merger from qualifying as a reorganization within the meaning of
Sections 368(a)(1)(A) and 368(a)(2)(E) of the Code.
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ARTICLE V
ADDITIONAL AGREEMENTS
Section 5.1. PREPARATION OF FORM S-4 AND THE PROXY STATEMENT; STOCKHOLDER
MEETING. (a) Promptly following the date of this Agreement, the Company and
Parent shall prepare and file with the SEC the Proxy Statement, and Parent shall
prepare and file with the SEC the Form S-4, in which the Proxy Statement will be
included as a prospectus. Each of the Company and Parent shall use its
reasonable best efforts to have the Form S-4 declared effective under the
Securities Act as promptly as practicable after such filing. Each of the Company
and Parent will use its reasonable best efforts to cause the Proxy Statement to
be mailed to its respective stockholders as promptly as practicable after the
Form S-4 is declared effective under the Securities Act. Parent shall also take
any action (other than qualifying to do business in any jurisdiction in which it
is not now so qualified) required to be taken under any applicable state
securities law in connection with the issuance of Parent Common Stock in
connection with the Merger, and the Company shall furnish all information
concerning the Company and the holders of the Company Common Stock and rights to
acquire Company Common Stock pursuant to the Stock Plans as may be reasonably
required in connection with any such action. Each of Parent and the Company
shall furnish all information concerning itself to the other as may be
reasonably requested in connection with any such action and the preparation,
filing and distribution of the Form S-4 and the preparation, filing and
distribution of the Proxy Statement. The Company, Parent and Sub each agree to
correct any information provided by it for use in the Form S-4 or the Proxy
Statement that shall have become false or misleading.
(b) The Company, acting through its Board of Directors, shall, subject
to and in accordance with its Certificate of Incorporation and By-Laws,
promptly and duly call, give notice of, convene and hold as soon as
practicable following the date upon which the Form S-4 becomes effective a
meeting of the holders of Company Common Stock for the purpose of voting to
approve and adopt this Agreement and the transactions contemplated hereby,
and (i) recommend approval and adoption of this Agreement and the
transactions contemplated hereby, by the stockholders of the Company and
include in the Proxy Statement such recommendation and (ii) take all
reasonable and lawful action to solicit and obtain such approval. The Board
of Directors of the Company shall not withdraw, amend or modify in a manner
adverse to Parent its recommendation referred to in clause (i) of the
preceding sentence (or announce publicly its intention to do so), except
that such Board of Directors shall be permitted to withdraw, amend or modify
its recommendation (or publicly announce its intention to do so) if:
(i) the Company has complied with Section 5.4; (ii) an unsolicited Superior
Proposal (as defined in Section 5.4) shall have been proposed by any person
other than Parent and such proposal is pending at the time of such
withdrawal, amendment or modification and (iii) the Company shall have
notified Parent of such Superior Proposal at least three business days in
advance of such withdrawal, amendment or modification; PROVIDED that, in the
event that, during the period prior to such withdrawal, amendment or
modification, Parent offers to enter into a transaction with the Company on
substantially the same or more favorable financial terms to the Company as
such Superior Proposal, as determined in good faith by a financial advisor
to the Company of nationally recognized standing, the Company shall not be
permitted to withdraw, amend or modify its recommendation (or publicly
announce its intention to do so) or accept such Superior Proposal. Without
limiting the generality of the foregoing, (i) the Company agrees that its
obligation to duly call, give notice of, convene and hold a meeting of the
holders of Company Common Stock, as required by this Section 5.1, shall not
be affected by the withdrawal, amendment or modification of the Board of
Directors' recommendation of approval and adoption of this Agreement and the
transactions contemplated hereby and (ii) subject to the Company's rights
pursuant to Section 5.4, the Company agrees that its obligations under this
Section 5.1(b) shall not be affected by the commencement, public proposal,
public disclosure or communication to the Company of any Acquisition
Proposal (as defined in Section 5.4).
D-26
(c) The Company will cause its transfer agent to make stock transfer
records relating to the Company available to the extent reasonably necessary
to effectuate the intent of this Agreement.
(d) Parent, acting through its Board of Directors, shall, subject to and
in accordance with its certificate of incorporation and by-laws, duly as
soon as possible, set a record date for the determination of stockholders of
Parent entitled to vote by written consent to approve the issuance of Parent
Common Stock in the Merger. Parents shall take all other actions necessary
or advisable to cause the execution of such consent as soon as possible
thereafter.
(e) Parent, acting through its Board of Directors, shall, in accordance
with its certificate of incorporation and by-laws, send the Proxy Statement
to its other stockholders pursuant to Rule 14C of the Exchange Act.
Section 5.2. ACCOUNTANTS' LETTERS. (a) The Company shall use its
reasonable best efforts to cause to be delivered to Parent a "comfort" letter of
each of Ernst & Young LLP, the Company's independent public accountants, and
KPMG LLP, the Company's previous independent public accountants, dated a date
within two business days before the date on which the Form S-4 shall become
effective and addressed to Parent, in form and substance reasonably satisfactory
to Parent and customary in scope and substance for letters delivered by
independent public accountants in connection with registration statements
similar to the Form S-4. In connection with the Company's efforts to obtain such
letter, if requested by Ernst & Young LLP and/or KPMG LLP, Parent shall provide
a representation letter to Ernst & Young LLP and/or KPMG LLP, complying with the
Statement on Auditing Standards No. 72 ("SAS 72"), if then required.
(b) Parent shall use its reasonable best efforts to cause to be
delivered to the Company a "comfort" letter of Deloitte & Touche LLP,
Parent's independent public accountants, dated a date within two business
days before the date on which the Form S-4 shall become effective and
addressed to the Company, in form and substance reasonably satisfactory to
the Company and customary in scope and substance for letters delivered by
independent public accountants in connection with registration statements
similar to the Form S-4. In connection with the Parent's efforts to obtain
such letter, if requested by Deloitte & Touche LLP, the Company shall
provide a representation letter to Deloitte & Touche LLP complying with
SAS 72, if then required.
Section 5.3. ACCESS TO INFORMATION; CONFIDENTIALITY. (a) From the date
hereof to the Effective Time, each of the Company and Parent shall, and shall
cause its subsidiaries, officers, directors, employees, auditors and other
agents to, afford the officers, employees, auditors and other agents of Parent
or the Company, respectively, who shall agree to be bound by the provisions of
this Section 5.3 as though a party hereto, complete access at all reasonable
times to its officers, employees, agents, properties, offices, plants and other
facilities and to all books and records, and shall furnish Parent or the
Company, respectively, with all financial, operating and other data and
information as Parent or the Company, respectively, through its officers,
employees or agents may from time to time request. In addition, subsequent to
the date of this Agreement, Parent and/or any of its subsidiaries may initiate
communications with any officer or key employee of the Company for the purpose
of addressing the prospective retention of such officer or employee following
the Closing, PROVIDED that Parent believes, in good faith, that there is a
compelling, legitimate business need to initiate such communication prior to the
Closing Date.
(b) Each of the Company and Parent will hold and will cause its
directors, officers, employees, agents, advisors (including, without
limitation, counsel and auditors) and controlling persons to hold any such
information which is nonpublic in confidence on the same terms and
conditions as the confidentiality provisions set forth in the
Confidentiality Agreement dated July 27, 2000, as amended from time to time,
between the Company and Parent (the "CONFIDENTIALITY AGREEMENT").
D-27
(c) No investigation pursuant to this Section 5.3 shall affect any
representations or warranties of the parties herein or the conditions to the
obligations of the parties hereto.
Section 5.4. NO SOLICITATION OF TRANSACTIONS. The Company agrees that
neither it nor any of its subsidiaries nor any of the officers and directors of
it or its subsidiaries shall, and that it shall direct and cause its and its
subsidiaries' employees, agents and representatives (including any investment
banker, attorney or accountant retained by it or any of its subsidiaries) not
to, directly or indirectly, initiate, solicit, knowingly encourage or otherwise
facilitate (including by way of furnishing information) any inquiries or the
making of any proposal or offer with respect to (i) a merger, reorganization,
share exchange, consolidation, business combination, recapitalization,
liquidation, dissolution or similar transaction involving it or any of its
subsidiaries, or (ii) any purchase or sale of all or any significant portion of
the assets or 15% or more of the equity securities of it or any of its
subsidiaries (any such proposal or offer being hereinafter referred to as an
"ACQUISITION PROPOSAL"), and agrees that neither it nor any of its subsidiaries
nor any of the officers and directors of it or its subsidiaries shall, and that
it shall direct and cause its and its subsidiaries' employees, agents and
representatives (including any investment banker, attorney or accountant
retained by it or any of its subsidiaries) not to, directly or indirectly, have
any discussion with or provide any confidential information or data to any
person relating to an Acquisition Proposal, or engage in any negotiations
concerning an Acquisition Proposal, or otherwise knowingly facilitate any effort
or attempt to make or implement an Acquisition Proposal or accept an Acquisition
Proposal. Notwithstanding the foregoing, the Company or its Board of Directors
shall be permitted to (A) to the extent applicable, comply with
Rule 14e-2(a) promulgated under the Exchange Act with regard to an Acquisition
Proposal, or (B) engage in any discussions or negotiations with, or provide any
information to, any person in response to an unsolicited bona fide written
Acquisition Proposal by any such person, if and only to the extent that, in the
case of the actions referred to in clause (B), (i) the Company's stockholders
meeting relating to the adoption of this Agreement by the stockholders of the
Company shall not have occurred, (ii) such Acquisition Proposal constitutes a
Superior Proposal and was not solicited by it and did not otherwise result from
a breach of this Section 5.4, (iii) the Board of Directors of the Company
determines in good faith, based on the advice of its outside legal advisors,
that in light of this Superior Proposal, if the Company fails to participate in
such discussions or negotiations with, or provide such information to, the
person making such Superior Proposal, it would be in violation of its fiduciary
duties under applicable law, (iv) prior to providing any information or data to
any person in connection with an Acquisition Proposal by any such person, the
Board of Directors of the Company receives from such person an executed
confidentiality agreement on terms no less favorable to the Company than those
contained in the Confidentiality Agreement and (v) prior to providing any
information or data to any person or entering into discussions or negotiations
with any person, the Board of Directors of the Company notifies Parent promptly
of such inquiries, proposals or offers received by, any such information
requested from, or any such discussions or negotiations sought to be initiated
or continued with, any of its representatives indicating, in connection with
such notice, the name of such person and the material terms and conditions of
any proposals or offers. The Company agrees that it will keep Parent informed
reasonably promptly of any material change in the terms of any such proposals or
offers and will notify Parent 24 hours in advance before an agreement is
reached. The Company agrees that it will immediately cease and cause to be
terminated any existing activities, discussions or negotiations with any parties
conducted heretofore with respect to any Acquisition Proposal or similar
transaction or arrangement. The Company agrees that it will take the necessary
steps to promptly inform the individuals or entities referred to in the first
sentence of this Section 5.4 of the obligations undertaken in this Section 5.4.
Nothing in this Section 5.4 shall (x) permit the Company to terminate this
Agreement (except as specifically provided in Article VII hereof) or (y) affect
any other obligation of the Company under this Agreement. For purposes of this
Section 5.4, "SUPERIOR PROPOSAL" shall mean a bona fide written Acquisition
Proposal which the Board of Directors of the Company concludes in good faith,
upon the advice of a financial advisor of nationally recognized reputation,
taking into
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account all legal, financial, regulatory and other aspects of the proposal and
the person making the proposal (including any break-up fees, expense
reimbursement provisions and conditions to consummation), (i) would, if
consummated, result in a transaction that is more favorable to all of the
Company's stockholders (in their capacities as stockholders), from a financial
point of view, than the transactions contemplated by this Agreement and (ii) is
reasonably capable of being completed (PROVIDED that for purposes of this
definition of "Superior Proposal," the term Acquisition Proposal shall have the
meaning assigned to such term in this Section 5.4, except that the reference to
"15%" in the definition of "Acquisition Proposal" shall be deemed to be a
reference to "51%" and "Acquisition Proposal" shall only be deemed to refer to a
transaction involving the Company, and the reference to "assets" (including the
shares of any subsidiary of the Company) shall refer to the assets of the
Company and its subsidiaries, taken as a whole, and not the assets of any of the
subsidiaries alone).
Section 5.5. EMPLOYEE BENEFITS MATTERS. (a) The Company shall or Parent
shall cause the Company and the Surviving Corporation to promptly pay or provide
when due all compensation and benefits earned through or prior to the Effective
Time as provided pursuant to the terms of any Plans in existence as of the date
hereof and set forth on Section 2.10 of the Company Disclosure Schedule. Parent
and the Company agree that the Company and the Surviving Corporation shall pay
promptly or provide when due all compensation and benefits required to be paid
pursuant to the terms of any individual agreement with any employee, former
employee, director or former director in effect and disclosed to Parent as of
the date hereof. Nothing herein shall require the continued employment of any
person or prevent the Company and/or the Surviving Corporation from taking any
action or refraining from taking any action that the Company could take or
refrain from taking prior to the Effective Time.
(b) Parent shall, for the period ending on December 31, 2001, maintain
(or cause the Surviving Corporation to maintain) employee benefit plans
(other than with respect to equity-based compensation, except as
contemplated by Section 1.7(b)) for the benefit of each employee of the
Company or its subsidiaries who continues employment with the Surviving
Corporation as of the Effective Time that are no less favorable in the
aggregate to the Plans in effect immediately prior to the Effective Time
with respect to each such employee; provided, that nothing herein shall
require Parent and/or the Surviving Corporation to continue to maintain any
Plan or grant any such employee any equity-based compensation in the
Surviving Corporation or Parent. For purposes of determining eligibility to
participate, eligibility for benefit forms and subsidies and the vesting of
benefits under such plans (without duplication of benefits as a result
thereof), the Surviving Corporation shall give effect to years of service
with the Company and its subsidiaries in respect of years of service for
which credit was given by the Company and its subsidiaries. No employee
electing coverage under the medical insurance plans of the Surviving
Corporation shall be excluded from coverage thereunder (for such employee
and any person covered by virtue of such employee's employment) on the basis
of a pre-existing condition that was not also excluded under the Company's
medical insurance plan.
Section 5.6. DIRECTORS' AND OFFICERS' INDEMNIFICATION; INSURANCE. (a) The
By-Laws of the Surviving Corporation shall contain provisions no less favorable
with respect to indemnification and exculpation from liability than are set
forth in the Certificate of Incorporation of the Company, which provisions shall
not be amended, repealed or otherwise modified for a period of six years from
the Effective Time in any manner that would adversely affect the rights
thereunder of individuals who at the Effective Time were directors, officers or
employees of the Company.
(b) For six years from the Effective Time, the Surviving Corporation
shall, unless Parent agrees in writing to guarantee the indemnification
obligations set forth in Section 5.6(a), maintain in effect the current
directors' and officers' liability insurance covering those persons who are
currently covered by the Company's directors' and officers' liability
insurance policy to the extent that it provides coverage for events
occurring prior to the Effective Time (a copy of which has
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been heretofore delivered to Parent), so long as the annual premium therefor
would not be in excess of 150% of the last annual premium paid prior to the
date of this Agreement (the "COMPANY'S CURRENT PREMIUM"). If such premiums
for such insurance would at any time exceed 150% of the Company's Current
Premium, then the Surviving Corporation shall cause to be maintained
policies of insurance that in the Surviving Corporation's good faith
determination, provide the maximum coverage available at an annual premium
equal to 150% of the Company's Current Premium.
Section 5.7. NOTIFICATION OF CERTAIN MATTERS. The Company shall give
prompt notice to Parent, and Parent shall give prompt notice to the Company, of
(i) the occurrence or non-occurrence of any event the occurrence or
non-occurrence of which could be likely to cause any representation or warranty
contained in this Agreement to be untrue or inaccurate in any material respect
and (ii) any failure of the Company, Parent or Sub, as the case may be, to
comply with or satisfy in any material respect any covenant, condition or
agreement to be complied with or satisfied by it hereunder; PROVIDED, HOWEVER,
that the delivery of any notice pursuant to this Section 5.7 shall not limit or
otherwise affect the remedies available hereunder to the party receiving such
notice.
Section 5.8. FURTHER ACTION; REASONABLE BEST EFFORTS. Upon the terms and
subject to the conditions hereof, each of the parties hereto shall use its
reasonable best efforts to take, or cause to be taken, all appropriate action,
and to do or cause to be done, all things necessary, proper or advisable under
applicable laws and regulations to consummate and make effective the
transactions contemplated by this Agreement as soon as practicable after the
date hereof, including but not limited to (i) cooperation in the preparation and
filing of the Form S-4, the Proxy Statement, and required filings under the HSR
Act and any amendments to any thereof and (ii) using its reasonable best efforts
to make all required regulatory filings and applications and to obtain all
licenses, permits, consents, approvals, authorizations, qualifications and
orders of governmental authorities and parties to contracts with the Company and
its subsidiaries as are necessary for the consummation of the transactions
contemplated by this Agreement and to fulfill the conditions to the Merger. In
furtherance and not in limitation of the foregoing, each party hereto agrees to
make, to the extent it has not already done so, an appropriate filing of a
Notification and Report Form pursuant to the HSR Act with respect to the
transactions contemplated hereby as promptly as practicable and in any event
within five business days of the date hereof and to supply as promptly as
practicable any additional information and documentary material that may be
requested pursuant to the HSR Act. In case at any time after the Effective Time
any further action is necessary or desirable to carry out the purposes of this
Agreement, the proper officers and directors of each party to this Agreement
shall use their reasonable best efforts to take all such necessary action. In
the event that a suit or objection is instituted by any person or governmental
authority challenging this Agreement and the transactions contemplated hereby as
violative of applicable competition and antitrust laws, each of Parent and the
Company shall use their reasonable best efforts to resist or resolve such suit
or objection. Notwithstanding the foregoing, in connection with any such
objection or suit instituted by such person or governmental authority
(including, but not limited to, the Federal Trade Commission or the Antitrust
Division of the Department of Justice), neither Parent nor Sub shall be required
to provide any undertakings or agree to any condition that could reasonably be
expected to result in a substantial detriment to Parent's or the Company's
business or results of operations (a "SUBSTANTIAL DETRIMENT").
Section 5.9. PUBLIC ANNOUNCEMENTS. Parent and the Company shall consult
with each other before issuing any press release or otherwise making any public
statements with respect to the Merger and shall not issue any such press release
or make any such public statement prior to such consultation, except as may be
required by law or any listing agreement with its securities exchange.
Section 5.10. STOCK EXCHANGE LISTING. Parent shall use its reasonable best
efforts to have approved for listing on the NYSE prior to the Effective Time,
subject to official notice of issuance, the Parent Common Stock to be issued
pursuant to the Merger.
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Section 5.11. AFFILIATES. Prior to the Closing Date, the Company shall
deliver to Parent a letter identifying all persons who are, at the time this
Agreement is submitted for adoption by the stockholders of the Company,
"affiliates" of the Company for purposes of Rule 145 under the Securities Act.
The Company shall use its reasonable best efforts to cause each such person to
deliver to Parent on or prior to the Closing Date a written agreement
substantially in the form attached as Exhibit A hereto.
Section 5.12. BOARD OF DIRECTORS AND OFFICERS OF PARENT. Parent shall use
its reasonable efforts to appoint the Company's Chief Executive Officer to the
Board of Directors of Parent, effective immediately following the Effective
Time. The Board of Directors of Parent also shall appoint the Company's Chief
Executive Officer as Chief Internet Officer of Parent, effective immediately
following the Effective Time.
Section 5.13. SECTION 16B APPROVALS. The Board of Directors or
Compensation Committee of Parent shall grant all approvals and take all other
actions required pursuant to Rules 16b-3(d) and 16b-3(e) under the Exchange Act
to cause the Parent Common Stock and New Stock Rights to be exempt from the
provisions of Section 16(b) of the Exchange Act.
Section 5.14. SEC DOCUMENTS. From the date hereof to the Effective Time,
each of Parent and the Company shall furnish to the Company and Parent,
respectively, a complete and correct copy of any agreements, documents or other
instruments, or amendment or modifications thereto, which are filed by Parent or
the Company, respectively, with the SEC pursuant to the Securities Act and the
rules and regulations promulgated thereunder or the Exchange Act and the
rules and regulations promulgated thereunder.
Section 5.15. CONTINUED EMPLOYMENT. The Company shall take no action to
terminate the employment of Messrs. Kurnit and Day in their current jobs and
shall not diminish their respective responsibilities or compensation, except
that the Company may, after consultation with Parent, terminate either
individual "for cause."
Section 5.16. OUTSTANDING COMPANY SECURITIES. The Company shall use
commercially reasonable efforts to cause the Company Securities listed in
Section 5.16 of the Company Disclosure Schedule to be exercised or cancelled,
and the Company's obligations thereunder to be discharged, prior to the Closing.
ARTICLE VI
CONDITIONS OF MERGER
Section 6.1. CONDITIONS TO OBLIGATION OF EACH PARTY TO EFFECT THE
MERGER. The respective obligations of each party to effect the Merger shall be
subject to the satisfaction at or prior to the Closing Date of the following
conditions:
(a) This Agreement shall have been adopted by the affirmative vote of
the holders of a majority of the outstanding shares of Company Common Stock.
(b) No Order (whether temporary, preliminary or permanent) shall have
been enacted, entered, promulgated or enforced by any court or governmental
authority of competent jurisdiction which prohibits, restrains, enjoins or
restricts the consummation of the Merger; PROVIDED, HOWEVER, that the
parties shall use their reasonable best efforts to cause any such Order to
be vacated or lifted.
(c) Any waiting period applicable to the Merger under the HSR Act shall
have terminated or expired.
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(d) The Form S-4 and any required post-effective amendment thereto shall
have become effective under the Securities Act and shall not be the subject
of any stop order or proceedings seeking a stop order, and any material
"blue sky" and other state securities laws applicable to the registration of
the Parent Common Stock to be exchanged for Company Common Stock shall have
been complied with.
(e) The shares of Parent Common Stock issuable to the holders of Company
Common Stock pursuant to this Agreement shall have been approved for listing
on the NYSE, subject to official notice of issuance.
(f) Any waiting period under the proxy rules applicable to Parent shall
have expired.
Section 6.2. CONDITIONS TO OBLIGATIONS OF THE COMPANY TO EFFECT THE
MERGER. The obligation of the Company to effect the Merger shall be subject to
the fulfillment at or prior to the Closing Date of the following additional
conditions:
(a) (i) Parent and Sub shall have performed or complied with in all
material respects their agreements and covenants contained in this Agreement
required to be performed or complied with at or prior to the Closing Date;
(ii) the representations and warranties of Parent and Sub contained in this
Agreement shall be true in all respects (without regard to materiality or
Material Adverse Effect qualifiers), in each case when made and, unless a
representation speaks of a specific date, on and as of the Closing Date with
the same force and effect as if made on and as of such date, except where
failures to be so true could not, individually or in the aggregate,
reasonably be expected to have a Parent Material Adverse Effect; PROVIDED
HOWEVER, such Parent Material Adverse Effect qualification shall be
inapplicable with respect to the representations and warranties contained in
Sections 3.2 and 3.10 (which representations shall be true and correct at
the applicable times in all material respects) and (iii) the Company shall
have received a certificate signed on behalf of Parent by the chief
executive officer and chief financial officer of Parent to such effect.
(b) The opinion, based on appropriate representations of the Company and
Parent, of Brobeck, Phleger & Harrison LLP, counsel to the Company, to the
effect that (i) the Merger will be treated for Federal income Tax purposes
as a reorganization within the meaning of Section 368(a) of the Code and
(ii) Parent, Sub and the Company will each be a party to the reorganization
under the meaning of Section 368(b) of the Code, dated on or about the date
of and referred to in the Proxy Statement as first mailed to stockholders of
the Company, which shall not have been withdrawn or modified in any material
respect as of the Closing Date.
(c) At any time on or after the date of this Agreement there shall not
have occurred any condition, event or occurrence which could, individually
or in the aggregate, reasonably be likely to cause a Parent Material Adverse
Effect.
(d) There shall not be pending or threatened by any governmental
authority any Action before any United States court or other governmental
body of competent jurisdiction, which challenges or seeks to restrain or
prohibit the consummation of the Merger.
(e) All approvals or consents of any governmental authority (whether
domestic, foreign or supranational) in connection with the Merger and the
consummation of the other transactions contemplated hereby (including all
relevant statutory, regulatory or other governmental waiting period
expirations) referred to in Section 2.5(a) of the Company Disclosure
Schedule shall have been obtained, have been declared or filed or be deemed
to have occurred, as the case may be, and all such approvals or consents
shall be in full force and effect.
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Section 6.3. CONDITIONS TO OBLIGATIONS OF PARENT AND SUB TO EFFECT THE
MERGER. The obligations of Parent and Sub to effect the Merger shall be subject
to the fulfillment at or prior to the Closing Date of the following additional
conditions:
(a) (i) The Company shall have performed or complied with in all
material respects its agreements and covenants contained in this Agreement
required to be performed or complied with at or prior to the Closing Date;
(ii) the representations and warranties of the Company contained in this
Agreement shall be true in all respects (without regard to materiality or
Material Adverse Effect qualifiers), in each case when made and unless a
representation speaks of a specific date, on and as of the Closing Date with
the same force and effect as if made on and as of such date, except where
failures to be so true could not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect; PROVIDED HOWEVER,
such Material Adverse Effect qualification shall be inapplicable with
respect to the representations and warranties contained in Sections 2.3,
2.14, 2.17 and 2.18 (which representations shall be true and correct at the
applicable times in all material respects); and (iii) Parent shall have
received a certificate signed on behalf of the Company by the chief
executive officer and chief financial officer of the Company to such effect.
(b) At any time on or after the date of this Agreement there shall not
have occurred any condition, event or occurrence which could, individually
or in the aggregate, reasonably be likely to cause a Material Adverse
Effect.
(c) The opinion, based on appropriate representations of the Company and
Parent, of Simpson Thacher & Bartlett, counsel to Parent, to the effect that
(i) the Merger will be treated for Federal income Tax purposes as a
reorganization within the meaning of Section 368(a) of the Code and
(ii) Parent, Sub and the Company will each be a party to the reorganization
within the meaning of Section 368(b) of the Code, dated on or about the date
of and referred to in the Proxy Statement as first mailed to the
stockholders of the Company, which shall not have been withdrawn or modified
in any material respect as of the Closing Date.
(d) There shall not be pending or threatened by any governmental
authority any Action before any United States court or other governmental
body of competent jurisdiction (i) challenging or seeking to restrain or
prohibit the consummation of the Merger or seeking to obtain from Parent or
any of its subsidiaries or the Company any material damages, (ii) seeking to
prohibit or limit the ownership or operation by the Company, Parent or any
of their respective subsidiaries of any material portion of the business or
assets of the Company, Parent or any of their respective subsidiaries, to
dispose of or hold separate any significant portion of the business or
assets of the Company, Parent or any of their respective subsidiaries, as a
result of the Merger or any of the other transactions contemplated by this
Agreement, or (iii) seeking to prohibit Parent or any of its subsidiaries
from effectively controlling in any material respect the business or
operations of the Company or its subsidiaries.
(e) All approvals or consents of any governmental authority (whether
domestic, foreign or supranational) in connection with the Merger and the
consummation of the other transactions contemplated hereby (including all
relevant statutory, regulatory or other governmental waiting period
expirations), which if not obtained in connection with the consummation of
the transactions contemplated hereby, could reasonably be expected to result
in a Substantial Detriment (each a "REQUIRED REGULATORY APPROVAL"), shall
have been obtained, have been declared or filed or be deemed to have
occurred, as the case may be, and all such Required Regulatory Approvals
shall be in full force and effect; provided, however, that a Required
Regulatory Approval shall not be deemed to have been obtained if in
connection with the grant thereof there shall have been an imposition by any
governmental authority of any condition, requirement, restriction or change
of regulation, or any other action directly or indirectly related to such
grant taken by such
D-33
governmental authority (including with respect to divestitures of assets or
subsidiaries), which could reasonably be expected to result in a Substantial
Detriment.
(f) All third party consents set forth on Schedule 6.3(f) attached
hereto shall have been obtained.
(g) Parent shall have received the agreements referred to in
Section 5.11.
(h) Parent shall have received the letters referred to in
Section 5.2(a).
(i) Each of the members of the Board of Directors of the Company shall
have duly delivered to the Company their written resignations, effective as
of the Effective Time, as directors of the Company, and Parent shall have
received copies of each such resignation and prior to such resignation, the
Board of Directors of the Company shall have fixed the authorized number of
directors of the Company, effective as of the Effective Time, at three (3)
and shall have appointed, effective as of the Effective Time, Thomas Rogers,
Charles McCurdy and Beverly Chell as the members of the Board of Directors
of the Surviving Corporation, and Parent shall have received evidence of
such actions.
(j) For all times prior to the Closing, each of Messrs. Kurnit and Day
(absent death or disability) shall have been employed by the Company in
accordance with the terms of Section 5.15 and, as of the Closing, each of
Messrs. Kurnit and Day shall be ready, willing and able (absent death or
permanent disability) to commence employment with Parent in accordance with
the terms of their respective employment agreements with Parent.
ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER
Section 7.1. TERMINATION. This Agreement may be terminated and the Merger
contemplated hereby may be abandoned at any time prior to the Closing Date,
whether before or after approval of matters presented in connection with the
Merger by the stockholders of the Company (except as otherwise stated herein):
(a) By mutual written consent of Parent and the Company;
(b) By either Parent or the Company, if the Merger shall not have been
consummated on or before June 30, 2001 (other than due to the failure of the
party seeking to terminate this Agreement to perform its obligations under
this Agreement required to be performed at or prior to the Effective Time);
(c) By either Parent or the Company, if any required approval of the
stockholders of the Company for this Agreement or the Merger shall not have
been obtained by reason of the failure to obtain the required vote upon a
vote held at a duly held meeting of stockholders or at any adjournment
thereof;
(d) By either Parent or the Company, if any court or other governmental
body of competent jurisdiction shall have issued a final Order or ruling or
taken any other final action restraining, enjoining or otherwise prohibiting
the Merger and such Order, ruling or other action is or shall have become
final and nonappealable;
D-34
(e) By the Company, if prior to the Closing Date (i) there shall have
been a breach of any representation or warranty on the part of Parent
contained in this Agreement which could reasonably be expected to have a
Parent Material Adverse Effect or which could reasonably be expected to
materially adversely affect (or materially delay) the consummation of the
Merger, or (ii) there shall have been a breach of any covenant or agreement
on the part of Parent contained in this Agreement which could reasonably be
expected to have a Parent Material Adverse Effect or which could reasonably
be expected to materially adversely affect (or materially delay) the
consummation of the Merger, which breach shall not have been cured prior to
10 days following notice thereof; or
(f) By Parent, if prior to the Closing Date (i) there shall have been a
breach of any representation or warranty on the part of the Company
contained in this Agreement which could reasonably be expected to have a
Material Adverse Effect or which could reasonably be expected to materially
adversely affect (or materially delay) the consummation of the Merger, or
(ii) there shall have been a breach of any covenant or agreement on the part
of the Company contained in this Agreement which could reasonably be
expected to have a Material Adverse Effect or which could reasonably be
expected to materially adversely affect (or materially delay) the
consummation of the Merger, which breach shall not have been cured prior to
10 days following notice thereof; or
(g) By Parent, (i) if the Board of Directors of the Company shall have
(A) failed to recommend or withdrawn, modified or amended in any respect
adverse to Parent or Sub its approval or recommendation of this Agreement,
the Merger or any of the other transactions contemplated herein or resolved
to do so, or (B) approved or recommended a Superior Proposal from a person
(other than Parent) or resolved to do so, or (ii) the Company breaches any
of its agreements set forth in Section 5.4; or
(h) By Parent, if any person or group (as defined in
Section 13(d)(3) of the Exchange Act) (other than Parent, Sub or any of
their affiliates) shall have become (x) the beneficial owner (as defined in
Rule 13d-3 promulgated under the Exchange Act) of at least 25% of the
outstanding shares of Company Common Stock or (y) shall have acquired 25% or
more of the assets of the Company and its subsidiaries, taken as a whole.
Section 7.2. EFFECT OF TERMINATION. In the event of the termination of
this Agreement pursuant to Section 7.1, this Agreement shall forthwith become
void and there shall be no liability on the part of any party hereto except as
set forth in Sections 5.3(b), 7.3 and 8.1; provided, however, that nothing
herein shall relieve any party from liability for any willful breach hereof.
Section 7.3. FEES AND EXPENSES. (a) If:
(i) This Agreement is terminated pursuant to Section 7.1(g) or (h);
or
(ii) (x) (A) Parent or the Company terminate this Agreement pursuant
to Section 7.1(c), or (B) Parent terminates this Agreement pursuant to
Section 7.1(f) and (y) in the case of (A) or (B), within 18 months
thereafter, the Company enters into an agreement with respect to an
Alternative Transaction or an Alternative Transaction is consummated;
then the Company shall pay to Parent and Sub, (A) within two business days
following any termination by Parent contemplated by Section 7.3(a)(i) and
(B) within two business days following the occurrence of one of the events
described in clause (y) of Section 7.3(a)(ii), a fee, in cash, of
$23.5 million (the "FEE"), PROVIDED, HOWEVER, that the Company shall in no
event be obligated to pay more than one such fee with respect to all such
occurrences and such termination.
(b) Within two business days after the termination of this Agreement
pursuant to Section 7.1(c), (f), (g) or (h), the Company shall pay all of
Parent's and Sub's Expenses (as defined
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below) up to a maximum payment pursuant to this Section 7.3(b) of
$1.0 million. The term "Expenses" shall include all out-of-pocket expenses
and fees (including without limitation fees and expenses payable to all
banks, investment banking firms and other financial institutions and their
respective agents and counsel for arranging or providing financial advice
with respect to the Merger and all reasonable fees and expenses of counsel,
accountants, experts and consultants to Parent and Sub) actually incurred by
Parent or Sub or on their behalf in connection with the consummation of all
transactions contemplated by this Agreement, including the Merger.
For purposes of this Section 7.3, "ALTERNATIVE TRANSACTION" means any of
the following events: (i) the acquisition of the Company by merger,
reorganization, share exchange, consolidation, business combination,
recapitalization, dissolution or otherwise by any person other than Parent,
Sub or any affiliate thereof (a "THIRD PARTY"); (ii) the acquisition by a
Third Party of 25% or more of the assets of the Company and its
subsidiaries, taken as a whole; (iii) the acquisition by a Third Party of
25% or more of the outstanding shares of Company Common Stock; (iv) the
adoption by the Company of a plan of liquidation or the declaration or
payment of an extraordinary dividend; or (v) the repurchase by the Company
or any of its subsidiaries of 25% or more of the outstanding shares of
Company Common Stock.
(c) Except as otherwise specifically provided herein, each party shall
bear its own expenses in connection with this Agreement and the transactions
contemplated hereby, except that each of Parent and the Company shall bear
and pay one-half of the costs and expenses incurred in connection with the
printing and mailing of the Form S-4 and the Proxy Statement.
Section 7.4. AMENDMENT. This Agreement may be amended by the parties
hereto by action taken by or on behalf of their respective Boards of Directors
at any time before or after any required approval of matters presented in
connection with the Merger by the stockholders of the Company; provided,
however, that after any such approval, there shall be made no amendment that by
law requires further approval by such stockholders without the further approval
of such stockholders. This Agreement may not be amended except by an instrument
in writing signed by the parties hereto.
Section 7.5. WAIVER. At any time prior to the Closing Date, any party
hereto may (a) extend the time for the performance of any of the obligations or
other acts of the other parties hereto, (b) waive any inaccuracies in the
representations and warranties contained herein or in any document delivered
pursuant hereto and (c) waive compliance with any of the agreements or
conditions contained herein, subject to the requirements of applicable law. Any
such extension or waiver shall be valid if set forth in an instrument in writing
signed by the party or parties to be bound thereby. The failure of any party to
this Agreement to assert any of its rights under this Agreement or otherwise
shall not constitute a waiver of such rights.
ARTICLE VIII
GENERAL PROVISIONS
Section 8.1. NON-SURVIVAL OF REPRESENTATIONS, WARRANTIES AND
AGREEMENTS. The representations, warranties and agreements in this Agreement
shall terminate at the Effective Time or upon the termination of this Agreement
pursuant to Section 7.1, as the case may be, except that the agreements set
forth in Article I and Sections 5.5 and 5.6 shall survive the Effective Time and
those set forth in Section 5.3(b) and Section 7.3 shall survive termination of
this Agreement.
Section 8.2. NOTICES. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given (and shall be
deemed to have been duly given upon receipt) by delivery in person, by telecopy
or by registered or certified mail (postage prepaid, return receipt
D-36
requested) to the respective parties at the following addresses (or at such
other address for a party as shall be specified by like notice):
if to Parent or Sub:
PRIMEDIA Inc.
745 Fifth Avenue
New York, New York 10151
Attention: Charles McCurdy
Fax: (212) 745-0199
with an additional copy to:
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, New York 10017
Attention: Gary I. Horowitz, Esq.
Fax: (212) 455-2502
if to the Company:
About.com, Inc.
1440 Broadway, 19th Floor
New York, New York 10018
Attention: Alan Blaustein
President-Corporate Development
Fax: (212) 204-1521
with an additional copy to:
Brobeck, Phleger & Harrison LLP
1633 Broadway, 47th Floor
New York, New York 10019
Attention: Eric Simonson, Esq.
Fax: (212) 586-7878
Section 8.3. CERTAIN DEFINITIONS. For purposes of this Agreement, the
term:
(a) "AFFILIATE" of a person means a person that directly or indirectly,
through one or more intermediaries, controls, is controlled by, or is under
common control with, the first mentioned person;
(b) "BENEFICIAL OWNER" with respect to any shares of Company Common
Stock means a person who shall be deemed to be the beneficial owner of such
shares of Company Common Stock (i) which such person or any of its
affiliates or associates beneficially owns, directly or indirectly,
(ii) which such person or any of its affiliates or associates (as such term
is defined in Rule 12b-2 of the Exchange Act) has, directly or indirectly,
(A) the right to acquire (whether such right is exercisable immediately or
subject only to the passage of time), pursuant to any agreement, arrangement
or understanding or upon the exercise of conversion rights, exchange rights,
warrants or options, or otherwise, or (B) the right to vote pursuant to any
agreement, arrangement or understanding, or (iii) which are beneficially
owned, directly or indirectly, by any other persons with whom such person or
any of its affiliates or person with whom such person or any of its
affiliates or associates has any agreement, arrangement or understanding for
the purpose of acquiring, holding, voting or disposing of any shares;
(c) "CONTROL" (including the terms "CONTROLLED BY" and "UNDER COMMON
CONTROL WITH") means the possession, directly or indirectly or as trustee or
executor, of the power to direct or
D-37
cause the direction of the management policies of a person, whether through
the ownership of stock, as trustee or executor, by contract or credit
arrangement or otherwise;
(d) "GENERALLY ACCEPTED ACCOUNTING PRINCIPLES" means the generally
accepted accounting principles set forth in the opinions and pronouncements
of the Accounting Principles Board of the American Institute of Certified
Public Accountants and statements and pronouncements of the Financial
Accounting Standards Board or in such other statements by such other entity
as may be approved by a significant segment of the accounting profession in
the United States, in each case applied on a basis consistent with the
manner in which the audited financial statements for the fiscal year of the
Company or the Parent ended December 31, 1999 were prepared;
(e) "PERSON" means an individual, corporation, limited liability
company, partnership, association, trust, unincorporated organization, other
entity or group (as defined in Section 13(d)(3) of the Exchange Act); and
(f) "SUBSIDIARY" or "SUBSIDIARIES" of the Company, the Surviving
Corporation, Parent or any other person means any corporation, partnership,
joint venture or other legal entity of which the Company, the Surviving
Corporation, Parent or such other person, as the case may be (either alone
or through or together with any other subsidiary), owns, directly or
indirectly, 50% or more of the stock or other voting or economic equity
interests.
Section 8.4. SEVERABILITY. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of law
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
adverse to any party. Upon such determination that any term or other provision
is invalid, illegal or incapable of being enforced, the parties hereto shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible in an acceptable manner to the end
that the transactions contemplated hereby are fulfilled to the fullest extent
possible.
Section 8.5. ENTIRE AGREEMENT; ASSIGNMENT. This Agreement, together with
the Confidentiality Agreement, the Parent Voting Agreement and the Shareholder
Voting Agreement, constitutes the entire agreement among the parties with
respect to the subject matter hereof and supersedes all prior agreements and
undertakings, both written and oral, among the parties, or any of them, with
respect to the subject matter hereof. This Agreement shall not be assigned by
operation of law or otherwise, except that Parent and Sub may assign all or any
of their respective rights and obligations hereunder to any direct or indirect
wholly owned subsidiary or subsidiaries of Parent, PROVIDED that no such
assignment shall relieve the assigning party of its obligations hereunder if
such assignee does not perform such obligations. Any attempted assignment that
does not comply with the provisions of this Section 8.5 shall be null and void
AB INITIO.
Section 8.6. PARTIES IN INTEREST. This Agreement shall be binding upon and
inure solely to the benefit of each party hereto, and, except as provided in the
following sentence, nothing in this Agreement, express or implied, is intended
to or shall confer upon any other person any rights, benefits or remedies of any
nature whatsoever under or by reason of this Agreement. The parties hereto
expressly intend the provisions of Section 5.6 to confer a benefit upon and be
enforceable by, as third party beneficiaries of this Agreement, the third
persons referred to in, or intended to be benefited by, such provisions.
Section 8.7. GOVERNING LAW. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Delaware, without regard
to principles of conflicts of laws.
Section 8.8. HEADINGS. The descriptive headings contained in this
Agreement are included for convenience of reference only and shall not affect in
any way the meaning or interpretation of this Agreement.
D-38
Section 8.9. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, and by the different parties hereto in separate counterparts, each
of which when executed shall be deemed to be an original but all of which taken
together shall constitute one and the same agreement.
Section 8.10. INTERPRETATION. The parties hereto agree that in
interpreting this Agreement there shall be no inferences against the drafting
party.
IN WITNESS WHEREOF, Parent, Sub and the Company have caused this Agreement
to be executed as of the date first written above by their respective officers
thereunto duly authorized.
PRIMEDIA INC.
By: /s/ BEVERLY C. CHELL
-----------------------------------
Name: Beverly C. Chell
Title: Vice Chairman
ABRACADABRA ACQUISITION CORPORATION
By: /s/ BEVERLY C. CHELL
-----------------------------------
Name: Beverly C. Chell
Title: Vice Chairman
ABOUT.COM, INC.
By: /s/ SCOTT KURNIT
-----------------------------------
Name: Scott Kurnit
Title: Chairman and Chief Executive
Officer
[Signature page to Agreement and Plan of Merger]
D-39
AMENDMENT NO. 1 TO AGREEMENT AND PLAN OF MERGER
AMENDMENT No. 1, dated as of January 2, 2001 ("AMENDMENT NO. 1"), by and
among PRIMEDIA Inc., a Delaware corporation ("PARENT"), Abracadabra Acquisition
Corporation, a Delaware corporation and a direct wholly owned subsidiary of
Parent ("SUB"), and About.com, Inc., a Delaware corporation (the "COMPANY").
W I T N E S S E T H:
WHEREAS, an Agreement and Plan of Merger, dated as of October 29, 2000 (the
"AGREEMENT"), has been entered into by and among Parent, Sub and the Company
providing for, among other matters, the merger of Sub with and into the Company;
WHEREAS, the Agreement provides that the parties thereto may amend such
agreement by written agreement of each party thereto;
NOW, THEREFORE, the parties hereto agree to amend the Agreement as follows:
Section 1. AMENDMENT OF THE AGREEMENT. Section 3.2(a) of the Agreement is
hereby
amended by (a) replacing the number 255,750,000 in the first sentence thereof
with the number 300,000,000, (b) replacing the number 5,750,000 in the first
sentence thereof with the number 50,000,000 and (c) replacing the number
166,765,849 in the second sentence thereof with the number 166,889,697.
Section 2. GOVERNING LAW. This Amendment No. 1 shall be governed by, and
construed in accordance with, the laws of the State of Delaware, without regard
to principles of conflicts of laws.
Section 3. MISCELLANEOUS. Except as otherwise provided herein, all
provisions of the Agreement shall remain in full force and effect.
IN WITNESS WHEREOF, the parties have cause this Amendment No. 1 to be
executed by their duly authorized representatives as of the date first written
above.
PRIMEDIA INC.
By: /s/ BEVERLY C. CHELL
-----------------------------------------
Name: Beverly C. Chell
Title: Vice Chairman
ABRACADABRA ACQUISITION CORPORATION
By: /s/ BEVERLY C. CHELL
-----------------------------------------
Name: Beverly C. Chell
Title: Vice Chairman
ABOUT.COM, INC.
By: /s/ SCOTT KURNIT
-----------------------------------------
Name: Scott Kurnit
Title: Chairman and Chief Executive
Officer
D-40
ANNEX E
VOTING AGREEMENT
Voting Agreement (this "AGREEMENT"), dated as of October 29, 2000, among
those shareholders of About.com, Inc., a Delaware corporation (the "COMPANY"),
listed on the signature page hereof (each, a "SHAREHOLDER," and collectively,
the "SHAREHOLDERS"), PRIMEDIA Inc., a Delaware corporation ("PARENT"), and
Abracadabra Acquisition Corporation, a Delaware corporation and a wholly owned
subsidiary of Parent ("MERGER SUB").
WHEREAS, each Shareholder beneficially owns the number of shares of common
stock, par value $0.001 per share, of the Company set forth below such
Shareholder's name on the signature page hereof (all such shares, together with
any other shares of capital stock of the Company such Shareholder acquires after
the date hereof, including, without limitation, as a result of a stock dividend,
stock split, recapitalization, combination, reclassification, exchange, or
change of such shares, or upon exercise or conversion of any securities, the
"SHARES");
WHEREAS, simultaneously with the execution and delivery hereof, Parent,
Merger Sub and the Company have entered into an Agreement and Plan of Merger
(the "MERGER AGREEMENT"; capitalized terms used herein and not defined shall
have the meanings set forth in the Merger Agreement), dated as of the date
hereof, which Merger Agreement has been approved by the Board of Directors of
the Company, and has been approved by the Boards of Directors of Parent and
Merger Sub. The directors of the Company unanimously voted in favor of the
adoption of the Merger Agreement and the recommendation that shareholders of the
Company approve the merger of Merger Sub with and into the Company (the
"MERGER") as contemplated by the Merger Agreement; and
WHEREAS, as a condition to entering into the Merger Agreement, Parent and
Merger Sub have required that the Shareholders agree, and in order to induce
Parent and Merger Sub to enter into the Merger Agreement, the Shareholders have
agreed, to enter into this Agreement.
NOW, THEREFORE, in consideration of the foregoing and for other good and
valuable consideration, the parties hereby agree as follows
Section 1. REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDERS. Each
Shareholder severally represents and warrants to Parent and Merger Sub as
follows:
(a) The execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby have been duly and
validly authorized by such Shareholder, and no other proceedings on the part
of such Shareholder are necessary to authorize this Agreement or to
consummate the transactions so contemplated.
(b) This Agreement has been duly and validly executed and delivered by
such Shareholder and, assuming this Agreement constitutes a valid and
binding obligation of Parent and Merger Sub, constitutes a legal, valid and
binding obligation of such Shareholder enforceable against such Shareholder
in accordance with its terms (except insofar as enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting creditors' rights generally or by principles
governing the availability of equitable remedies).
(c) The execution, delivery and performance by such Shareholder of this
Agreement and the consummation of the transactions contemplated hereby do
not and will not (i) contravene or conflict with its organizational
documents; (ii) contravene or conflict with or constitute a violation of any
provision of any law, regulation, judgment, injunction, order or decree
binding upon or applicable to such Shareholder or any of its properties; or
(iii) conflict with, or result in the breach or termination of or constitute
a default (with or without the giving of notice or the lapse of time or
both) under, or give rise to any right of termination, cancellation, or loss
of any benefit to which such Shareholder is entitled under any provision of
any agreement, contract, license or other instrument binding upon such
Shareholder or any of its properties, or allow the acceleration of the
performance of any obligation of such Shareholder under any indenture,
mortgage deed of trust,
lease, license, contract, instrument or other agreement to which such
Shareholder is a party or by which such Shareholder, its assets or
properties is subject or bound, other than such contraventions, conflicts,
violations, breaches, defaults or other occurrences that would not
reasonably be expected to prevent, delay or impair such Shareholder's
ability to consummate the transactions contemplated by this Agreement.
(d) Other than any filings required by the Exchange Act or the rules and
regulations promulgated thereunder, the execution, delivery and performance
by such Shareholder of this Agreement and the consummation of the
transactions contemplated hereby by such Shareholder require no filings,
notices, declarations, consents or other actions to be made by such
Shareholder with, nor are any approvals or other confirmations or consents
required to be obtained by such Shareholder from, any governmental
authority.
(e) As of the date hereof, there is no action, suit, claim,
investigation or proceeding pending or, to the knowledge of such
Shareholder, threatened against such Shareholder or its properties before
any court or arbitrator or any governmental authority which challenges or
seeks to prevent, enjoin, alter or delay the Merger or any of the other
transactions contemplated hereby or by the Merger Agreement. As of the date
hereof, such Shareholder is not, and none of its properties is, subject to
any order, writ, judgment, injunction, decree, determination or award which
would prevent, delay or impair the consummation of the transactions
contemplated hereby.
(f) Such Shareholder is, and at the Effective Time will be, the sole
record and beneficial owner of and has, and at the Effective Time such
Shareholder will have, good and valid title to the Shares held by such
Shareholder, free and clear of any Liens, except for any Liens arising
hereunder. Such Shareholder has, and at the Effective Time will have, the
power to vote, dispose of and otherwise transfer such Shares without the
approval, consent or other action of any person.
(g) There are no options or rights to acquire, or understandings or
arrangements to which such Shareholder is a party relating to the Shares
held by such Shareholder, other than this Agreement.
(h) The Shares indicated below such Shareholder's name on the signature
page hereof represent all of the shares of Company Common Stock beneficially
owned (within the meaning of Rule 13d-3 under the Exchange Act) by such
Shareholder.
(i) Such Shareholder understands and acknowledges that Parent and Merger
Sub are entering into the Merger Agreement in reliance on such Shareholder's
execution and delivery of this Agreement.
Section 2. AGREEMENT TO VOTE; PROXY.
(a) Each Shareholder agrees with, and covenants to, Parent and Merger
Sub as follows:
(i) At any meeting of shareholders of the Company called to vote upon
the Merger, the Merger Agreement or the other transactions contemplated
by the Merger Agreement or at which a vote, consent or other approval
with respect to the Merger, the Merger Agreement or the other
transactions contemplated by the Merger Agreement is sought, such
Shareholder shall vote (or cause to be voted) or shall consent, execute a
consent or cause to be executed a consent in respect of the Shares held
by such Shareholder in favor of the Merger, the execution and delivery by
the Company of the Merger Agreement and the approval of the terms thereof
and each of the other transactions contemplated by the Merger Agreement.
(ii) At any meeting of shareholders of the Company or at any
adjournment thereof or in any other circumstances upon which their vote,
consent or other approval is sought, such Shareholder shall vote (or
cause to be voted) the Shares held by such Shareholder against (A) any
Acquisition Proposal or (B) any amendment of the Company's Certificate of
E-2
Incorporation or By-laws which amendment would in any manner prevent or
materially impede, interfere with or delay the Merger, the Merger
Agreement or any of the other transactions contemplated by the Merger
Agreement.
(b) Each Shareholder hereby grants to, and appoints, Beverly Chell and
Charles McCurdy and any other individual who is designated by Parent, until
the termination of this Agreement pursuant to Section 12, an irrevocable
proxy, coupled with an interest, and attorney-in-fact (with full power of
substitution), for and in the name, place and stead of such Shareholder,
with respect to the Shares held by such Shareholder, to vote the Shares held
by such Shareholder, or grant or execute a consent or approval, in complete
discretion of Parent or Merger Sub, a the case may be, at any meeting of
shareholders of the Company or at any adjournment thereof or in any other
circumstances upon which their vote, consent or other approval is sought in
accordance with paragraph (a) of this Section 2. Each Shareholder will take
such further action and execute such other instruments as may be necessary
to effect the intent of this proxy, and hereby revokes any proxy previously
granted by it with respect to the Shares held by it. Each Shareholder agrees
that this Agreement, including the provisions of this Section 2 will be
recorded in the books and records of the Company. Notwithstanding the
foregoing, nothing in this Agreement shall limit or affect any Shareholder's
ability to vote in his, her or its sole discretion on, and no Shareholder
shall grant or be deemed to grant any proxy or power-of-attorney with
respect to, any matter other than those matters specifically referred to in
Section 2(a) above.
Section 3. DISPOSITION OF SHARES. No Shareholder shall, without the prior
written consent of Parent, directly or indirectly, during the term of this
Agreement (i) grant or enter into any Lien, power of attorney or other agreement
or arrangement with respect to the voting of the Shares held by it, (ii) except
by operation of the laws of inheritance, sell, assign, transfer, encumber or
otherwise dispose of, or enter into any contract, option or other arrangement or
understanding with respect to the direct or indirect sale, assignment, transfer,
encumbrance or other disposition of any of the Shares held by it or (iii) take
any other action that would in any way restrict, limit or interfere with
performance of its obligations hereunder or the transactions contemplated
hereby. Each Shareholder hereby irrevocably waives any rights of appraisal or
rights to dissent from the Merger that such Shareholder may have. Each
Shareholder agrees, and shall use reasonable efforts to cause its affiliates to
agree, to exercise any rights that such Shareholder or any of such affiliates
may have to cause any shareholders of the Company, to vote any shares held by
such shareholder in favor of the Merger and to waive any rights of appraisal or
rights of dissent from the Merger that such shareholder may have. Any purported
transfer in violation of the foregoing shall be null and void.
Section 4. NO SOLICITATIONS. Subject to Section 16 below, each Shareholder
and its affiliates (other than the Company and its subsidiaries) will
immediately cease any existing discussions or negotiations with any third
parties conducted on or prior to the date hereof with respect to any Acquisition
Proposal. Each Shareholder agrees that it will not, and will use its best
efforts to cause such affiliates not to, directly or indirectly, solicit,
initiate, encourage or take any other action to facilitate any inquiries or
proposals with respect to, or that could reasonably be expected to lead to, an
Acquisition Proposal or engage in negotiations or discussions concerning, or
provide any confidential information relating to, any Acquisition Proposal. Each
Shareholder agrees that it and any of such affiliates will promptly advise
Parent of, and communicate to Parent the terms of, any such inquiry or proposal
it or any of such affiliates may receive, and will promptly advise Parent if it
or any of such affiliates provides any such information to any such person.
Section 5. GOVERNING LAW. This Agreement shall be governed by the laws of
the State of New York.
Section 6. NOTICES. Notices and other communications under this Agreement
shall be in writing and shall be deemed given as set forth in Section 8.2 of the
Merger Agreement, except that each
E-3
Shareholder shall receive such notices at the address set forth below such
Shareholder's name on the signature page hereof.
Section 7. ENTIRE AGREEMENT; AMENDMENTS. This Agreement constitutes the
entire understanding of the parties with respect to the subject matter hereof.
There are no restrictions, agreements, promises, warranties, covenants or
undertakings with respect to the subject matter hereof other than those
expressly set forth herein. This Agreement supersedes all prior agreements and
understandings between the parties with respect to its subject matter and is not
intended to confer upon any person other than the parties hereto any rights or
remedies hereunder. This Agreement may be amended only by a written instrument
duly executed by Parent, Merger Sub and the Shareholders.
Section 8. ASSIGNMENT. Notwithstanding any other provision of this
Agreement, this Agreement shall not be assignable by any party hereto except by
Parent or Merger Sub to any direct or indirect wholly owned subsidiary of
Parent. Subject to the preceding sentence, this Agreement will be binding upon,
inure to the benefit of and be enforceable against, (i) as to each Shareholder,
such Shareholder and such Shareholder's beneficiaries and representatives, and
(ii) Parent and Merger Sub and their successors and permitted assigns. Each
Shareholder agrees that this Agreement and the obligations of such Shareholder
hereunder shall attach to such Shareholder's Shares and shall be binding upon
any person or entity to which legal or beneficial ownership of such Shares shall
pass, by the laws of inheritance.
Section 9. SEVERABILITY. The provisions of this Agreement shall be deemed
severable and the invalidity or unenforceability of any provision shall not
affect the validity and enforceability of the other provisions hereof. If any
provision of this Agreement, or the application thereof to any person or entity
or any circumstance, is invalid or unenforceable, (a) a suitable and equitable
provision shall be substituted therefor in order to carry out, so far as may be
valid and unenforceable, the intent and purpose of such invalid and
unenforceable provision and (b) the remainder of this Agreement and the
application of such provision to other persons, entities or circumstances shall
not be affected by such invalidity or unenforceability, nor shall such
invalidity and unenforceability affect the validity or enforceability of such
provision, or the application thereof, in any other jurisdiction.
Section 10. STOP TRANSFER ORDER. In furtherance of this Agreement,
concurrently herewith each Shareholder shall and hereby does authorize Parent
and Merger Sub to notify the Company's transfer agent that there is a stop
transfer order with respect to all of the Shares subject to the terms of this
Agreement (and that this Agreement places limits on the voting and transfer of
the Shares). Each Shareholder further agrees to cause the Company not to
register the transfer of any certificate representing any of such Shareholder's
Shares unless such transfer is made in accordance with the terms of this
Agreement.
Section 11. FURTHER ACTION. From time to time, at the request of Parent or
Merger Sub and without further consideration, each Shareholder shall execute and
deliver to Parent and Merger Sub such documents and take such action as Parent
or Merger Sub may reasonably request in order to consummate the transactions
contemplated hereby.
Section 12. TERMINATION. This Agreement shall terminate and be of no
further force and effect upon the earlier to occur of (a) the Effective Time and
(b) upon the termination of the Merger Agreement pursuant to its terms.
Section 13. 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 of the 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 14. SPECIFIC PERFORMANCE. The Shareholders, Parent and Merger Sub
acknowledge that this Agreement and the Shares are unique and that no party will
have an adequate remedy at law if
E-4
any other party breaches any covenant herein or fails to perform its obligations
hereunder. Accordingly, the Shareholders, Parent and Merger Sub agree that the
others shall have the right, in addition to any other rights which it may have,
to specific performance and equitable injunctive relief if any party shall fail
or threaten to fail to perform any of its obligations under this Agreement.
Section 15. EXPENSES. All costs and expenses incurred in connection with
this Agreement and the transactions contemplated hereby shall be paid by the
party incurring such cost or expense.
Section 16. SHAREHOLDER CAPACITY. Each Shareholder signs solely in its
capacity as the record holder and beneficial owner of the Shares and nothing
herein shall limit or affect any actions taken or to be taken by any officer,
director or financial advisor of the Company or its subsidiaries in his, her or
its capacity as an officer, director or financial advisor of the Company,
including, without limitation, any actions permitted by the Merger Agreement.
Section 17. NO WAIVER. No failure or delay by Parent or Merger Sub to
assert any of its rights under this Agreement or otherwise shall constitute a
waiver of such rights. No single or partial exercise of any right, remedy, power
or privilege hereunder shall preclude any other or further exercise thereof or
the exercise of any other right, remedy, power or privilege. Any waiver shall be
effective only in the specific instance and for the specific purpose for which
given and shall not constitute a waiver to any subsequent or other exercise of
any right, remedy, power or privilege hereunder.
Section 18. SUBMISSION TO JURISDICTION. Each of the parties hereto
irrevocably agrees that any legal action or proceeding with respect to this
Agreement or for recognition and enforcement of any judgment in respect hereof
brought by any other party hereto or its successors or assigns may be brought
and determined in the courts of the State of New York, and each party hereto
hereby irrevocably submits with regard to any such action or proceeding for
itself and with respect to its property, generally and unconditionally, to the
nonexclusive jurisdiction of the aforesaid courts. Each of the parties hereto
hereby irrevocably waives, and agrees not to assert, by way of motion, as a
defense, counterclaim or otherwise, in any action or proceeding with respect to
this Agreement, (a) any claim that it is not personally subject to the
jurisdiction of the above-named courts for any reason other than the failure to
lawfully serve process, (b) that it or its property is exempt or immune from
jurisdiction of any such court or from any legal process commenced in such
courts (whether through service of notice, attachment prior to judgment,
attachment in aid of execution of judgment, execution of judgment or otherwise),
and (c) to the fullest extent permitted by applicable law, that (i) the suit,
action or proceeding in any such court is brought in an inconvenient forum, (ii)
the venue of such suit, action or proceeding is improper and (iii) this
Agreement, or the subject matter hereof, may not be enforced in or by such
courts.
Section 19. WAIVER OF JURY TRIAL. Each party hereto hereby irrevocably and
unconditionally waives any rights to a trial by jury in any legal action or
proceeding in relation to this Agreement and for any counterclaim therein.
Section 20. INTERPRETATION. The parties hereto agree that in interpreting
this Agreement there shall be no inferences against the drafting party.
E-5
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to
be executed on its behalf by its representatives thereunto duly authorized, all
as of the day and year first above written.
PRIMEDIA INC.
By: /s/ BEVERLY C. CHELL
-----------------------------------
Name: Beverly C. Chell
Title: Vice Chairman
ABRACADABRA ACQUISITION CORPORATION
By: /s/ BEVERLY C. CHELL
-----------------------------------
Name: Beverly C. Chell
Title: Vice Chairman
By: /s/ SCOTT KURNIT
-----------------------------------
Name: Scott Kurnit
Title: Chairman and Chief Executive
Officer
Address:
Shares Beneficially Held: 1,302,097
Options Held: 128,643
By: /s/ WILLIAM C. DAY
-----------------------------------
Name: William C. Day
Address:
Shares Beneficially Held: 72,780
Options Held: 208,531
By: /s/ KRISTOPHER A. WOOD
-----------------------------------
Name: Kristopher A. Wood
Address:
Shares Beneficially Held: 7,197
Options Held: 0
By: /s/ RONALD UNTERMAN
-----------------------------------
Name: Ronald Unterman
Address:
Shares Beneficially Held: 14,800
Options Held: 0
E-6
By: /s/ STANLEY L. FUNG
--------------------------------------
Name: Stanley L. Fung
Address:
Shares Beneficially Held: 25,214
Options Held: 20,000
By: /s/ FRANK J. BIONDI, JR.
-----------------------------------
Name: Frank J. Biondi, Jr.
Address:
Shares Beneficially Held: 1,000
Options Held: 17,800
By: /s/ DAPHNE KIS
-----------------------------------
Name: Daphne Kis
Address:
Shares Beneficially Held: 0
Options Held: 20,000
E-7
ANNEX F
PARENT VOTING AGREEMENT
Parent Voting Agreement (this "AGREEMENT"), dated as of October 29, 2000,
among those shareholders of PRIMEDIA Inc., a Delaware corporation ("PARENT"),
listed on the signature page hereof (each, a "SHAREHOLDER," and collectively,
the "SHAREHOLDERS"), and About.com, Inc., a Delaware corporation (the
"COMPANY").
WHEREAS, each Shareholder beneficially owns the number of shares of common
stock, par value $0.01 per share, of Parent set forth below such Shareholder's
name on the signature page hereof (all such shares, together with any other
shares of capital stock of the Parent such Shareholder acquires after the date
hereof, including, without limitation, as a result of a stock dividend, stock
split, recapitalization, combination, reclassification, exchange, or change of
such shares, or upon exercise or conversion of any securities, the "SHARES");
WHEREAS, simultaneously with the execution and delivery hereof, Parent, a
direct wholly-owned subsidiary of the Company ("MERGER SUB") and the Company
have entered into an Agreement and Plan of Merger (the "MERGER AGREEMENT";
capitalized terms used herein and not defined shall have the meanings set forth
in the Merger Agreement), dated as of the date hereof, which Merger Agreement
has been approved by the Board of Directors of the Company, and has been
approved by the Boards of Directors of Parent and Merger Sub and pursuant to
which Merger Sub will be merged with and into the Company (the "MERGER"); and
WHEREAS, as a condition to entering into the Merger Agreement, the Company
has required that the Shareholders agree, and in order to induce the Company to
enter into the Merger Agreement the Shareholders have agreed, to enter into this
Agreement.
NOW, THEREFORE, in consideration of the foregoing and for other good and
valuable consideration, the parties hereby agree as follows
Section 1. REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDERS. Each
Shareholder severally represents and warrants to the Company as follows:
(a) The execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby have been duly and
validly authorized by such Shareholder, and no other proceedings on the part
of such Shareholder are necessary to authorize this Agreement or to
consummate the transactions so contemplated.
(b) This Agreement has been duly and validly executed and delivered by
such Shareholder and, assuming this Agreement constitutes a valid and
binding obligation of the Company, constitutes a legal, valid and binding
obligation of such Shareholder enforceable against such Shareholder in
accordance with its terms (except insofar as enforceability may be limited
by applicable bankruptcy, insolvency, reorganization, moratorium or similar
laws affecting creditors' rights generally or by principles governing the
availability of equitable remedies).
(c) The execution, delivery and performance by such Shareholder of this
Agreement and the consummation of the transactions contemplated hereby do
not and will not contravene or conflict with its organizational documents;
contravene or conflict with or constitute a violation of any provision of
any law, regulation, judgment, injunction, order or decree binding upon or
applicable to such Shareholder or any of its properties; or conflict with,
or result in the breach or termination of or constitute a default (with or
without the giving of notice or the lapse of time or both) under, or give
rise to any right of termination, cancellation, or loss of any benefit to
which such Shareholder is entitled under any provision of any agreement,
contract, license or other instrument binding upon such Shareholder or any
of its properties, or allow the acceleration of the performance of any
obligation of such Shareholder under any indenture, mortgage deed of trust,
lease, license, contract, instrument or other agreement to which such
Shareholder is a party or by which such Shareholder, its assets or
properties is subject or bound, other than such contraventions, conflicts,
violations, breaches, defaults or other occurrences that would not
reasonably be expected to prevent, delay or impair such Shareholder's
ability to consummate the transactions contemplated by this Agreement.
(d) Other than any filings required by the Exchange Act or the
rules and regulations promulgated thereunder, the execution, delivery and
performance by such Shareholder of this Agreement and the consummation of
the transactions contemplated hereby by such Shareholder require no filings,
notices, declarations, consents or other actions to be made by such
Shareholder with, nor are any approvals or other confirmations or consents
required to be obtained by such Shareholder from, any governmental
authority.
(e) As of the date hereof, there is no action, suit, claim,
investigation or proceeding pending or, to the knowledge of such
Shareholder, threatened against such Shareholder or its properties before
any court or arbitrator or any governmental authority which challenges or
seeks to prevent, enjoin, alter or delay the Merger or any of the other
transactions contemplated hereby or by the Merger Agreement. As of the date
hereof, such Shareholder is not, and none of its properties is, subject to
any order, writ, judgment, injunction, decree, determination or award which
would prevent, delay or impair the consummation of the transactions
contemplated hereby.
(f) Such Shareholder is, and at the time the Shareholder Consent (as
defined in Section 2(a) below) is delivered to Parent (the "CONSENT TIME")
will be, the sole record and beneficial owner of and has, and at the Consent
Time such Shareholder will have, good and valid title to the Shares held by
such Shareholder, free and clear of any Liens, except for any Liens arising
hereunder. Such Shareholder has, and at the Consent Time will have, the
power to vote, dispose of and otherwise transfer such Shares without the
approval, consent or other action of any person.
(g) There are no options or rights to acquire, or understandings or
arrangements to which such Shareholder is a party relating to the Shares
held by such Shareholder, other than this Agreement and those described in
Section 3.12 of the Parent Disclosure Schedules to the Merger Agreement.
(h) The Shares indicated below such Shareholder's name on the signature
page hereof represent all of the shares of Parent Common Stock beneficially
owned (within the meaning of Rule 13d-3 under the Exchange Act) by such
Shareholder.
(i) Such Shareholder understands and acknowledges that the Company is
entering into the Merger Agreement in reliance on such Shareholder's
execution and delivery of this Agreement.
Section 2. AGREEMENT TO VOTE: PROXY. Each Shareholder agrees with, and
covenants to, the Company as follows:
(a) In accordance with the provisions of Section 251 of the DGCL and the
rules of the New York Stock Exchange, as promptly as practicable after the
date hereof, and in no event later than 11 business days hereafter, such
Shareholder shall deliver to Parent its written consent to authorize the
issuance of Parent Common Stock in the Merger as contemplated by the Merger
Agreement (the "SHAREHOLDER CONSENT").
(b) Such Shareholder shall not withdraw, amend or modify its Shareholder
Consent.
(c) At any meeting of shareholders of Parent or at any adjournment
thereof or in any other circumstances upon which their vote, consent or
other approval is sought, such Shareholder shall vote (or cause to be voted)
the Shares held by such Shareholder against any amendment of Parent's
certificate of incorporation or by-laws or any other proposal which
amendment or proposal would in any manner prevent or materially impede,
interfere with or delay the Merger, the Merger Agreement or any of the other
transactions contemplated by the Merger Agreement (including the issuance of
Parent Common Stock in the Merger).
Section 3. DISPOSITION OF SHARES. No Shareholder shall, without the prior
written consent of the Company, directly or indirectly, at any time prior to the
Consent Time, (i) grant or enter into any Lien,
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power of attorney or other agreement or arrangement with respect to the voting
of the Shares held by it, except by operation of the laws of inheritance,
(ii) sell, assign, transfer, encumber or otherwise dispose of, or enter into any
contract, option or other arrangement or understanding with respect to the
direct or indirect sale, assignment, transfer, encumbrance or other disposition
of, any of the Shares held by it or (iii) take any other action that would in
any way restrict, limit or interfere with performance of its obligations
hereunder or the transactions contemplated hereby, if, in each such case, as a
result of any such action, the Shareholders, collectively, shall no longer have
the ability to vote, or give consent or other approval with respect to, at least
fifty-one percent (51%) of the outstanding voting securities of Parent. Any
purported transfer in violation of the foregoing shall be null and void.
Section 4. GOVERNING LAW. This Agreement shall be governed by the laws of
the State of New York.
Section 5. NOTICES. Notices and other communications under this Agreement
shall be in writing and shall be deemed given as set forth in Section 8.2 of the
Merger Agreement, except that each Shareholder shall receive such notices at the
address set forth below such Shareholder's name on the signature page hereof.
Section 6. ENTIRE AGREEMENT; AMENDMENTS. This Agreement constitutes the
entire understanding of the parties with respect to the subject matter hereof.
There are no restrictions, agreements, promises, warranties, covenants or
undertakings with respect to the subject matter hereof other than those
expressly set forth herein. This Agreement supersedes all prior agreements and
understandings between the parties with respect to its subject matter and is not
intended to confer upon any person other than the parties hereto any rights or
remedies hereunder. This Agreement may be amended only by a written instrument
duly executed by the Company and the Shareholders.
Section 7. ASSIGNMENT. Notwithstanding any other provision of this
Agreement, this Agreement shall not be assignable by any party hereto. Subject
to the preceding sentence, this Agreement will be binding upon, inure to the
benefit of and be enforceable against, as to each Shareholder, such Shareholder
and such Shareholder's beneficiaries and representatives, and the Company and
their successors and permitted assigns. Each Shareholder agrees that this
Agreement and the obligations of such Shareholder hereunder shall attach to such
Shareholder's Shares and shall be binding upon any person or entity to which
legal or beneficial ownership of such Shares shall pass.
Section 8. SEVERABILITY. The provisions of this Agreement shall be deemed
severable and the invalidity or unenforceability of any provision shall not
affect the validity and enforceability of the other provisions hereof. If any
provision of this Agreement, or the application thereof to any person or entity
or any circumstance, is invalid or unenforceable, a suitable and equitable
provision shall be substituted therefor in order to carry out, so far as may be
valid and unenforceable, the intent and purpose of such invalid and
unenforceable provision and the remainder of this Agreement and the application
of such provision to other persons, entities or circumstances shall not be
affected by such invalidity or unenforceability, nor shall such invalidity and
unenforceability affect the validity or enforceability of such provision, or the
application thereof, in any other jurisdiction.
Section 9. STOP TRANSFER ORDER. In furtherance of this Agreement,
concurrently herewith each Shareholder shall and hereby does authorize the
Company to notify Parent's transfer agent that there is a stop transfer order
with respect to all of the Shares subject to the terms of this Agreement (and
that this Agreement places limits on the voting and transfer of the Shares).
Each Shareholder further agrees to cause Parent not to register the transfer of
any certificate representing any of such Shareholder's Shares unless such
transfer is made in accordance with the terms of this Agreement.
Section 10. FURTHER ACTION. From time to time, at the request of the
Company and without further consideration, each Shareholder shall execute and
deliver to the Company such documents and take such action as the Company may
reasonably request in order to consummate the transactions contemplated hereby.
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Section 11. TERMINATION. This Agreement shall terminate and be of no
further force and effect upon the earlier to occur of the Effective Time and
upon the termination of the Merger Agreement pursuant to its terms.
Section 12. 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 of the 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 13. SPECIFIC PERFORMANCE. The Shareholders and the Company
acknowledge that this Agreement and the Shares are unique and that no party will
have an adequate remedy at law if any other party breaches any covenant herein
or fails to perform its obligations hereunder. Accordingly, the Shareholders and
the Company agree that the others shall have the right, in addition to any other
rights which it may have, to specific performance and equitable injunctive
relief if any party shall fail or threaten to fail to perform any of its
obligations under this Agreement.
Section 14. EXPENSES. All costs and expenses incurred in connection with
this Agreement and the transactions contemplated hereby shall be paid by the
party incurring such cost or expense.
Section 15. SHAREHOLDER CAPACITY. Each Shareholder signs solely in its
capacity as the record holder and beneficial owner of the Shares and nothing
herein shall limit or affect any actions taken or to be taken by any officer,
director or financial advisor of Parent or its subsidiaries in his, her or its
capacity as an officer, director or financial advisor of Parent.
Section 16. LIMITATION OF LIABILITY. Notwithstanding any other provision
in this Agreement, none of the managing members, members, general partners or
partners of any of the Shareholders, nor any of the future managing members,
members, general partners or partners or any of the Shareholders, shall have
personal liability for the performance of any of the obligations of the
Shareholders under this Agreement.
Section 17. NO WAIVER. No failure or delay by the Company to assert any of
its rights under this Agreement or otherwise shall constitute a waiver of such
rights. No single or partial exercise of any right, remedy, power or privilege
hereunder shall preclude any other or further exercise thereof or the exercise
of any other right, remedy, power or privilege. Any waiver shall be effective
only in the specific instance and for the specific purpose for which given and
shall not constitute a waiver to any subsequent or other exercise of any right,
remedy, power or privilege hereunder.
Section 18. SUBMISSION TO JURISDICTION. Each of the parties hereto
irrevocably agrees that any legal action or proceeding with respect to this
Agreement or for recognition and enforcement of any judgment in respect hereof
brought by any other party hereto or its successors or assigns may be brought
and determined in the courts of the State of New York, and each party hereto
hereby irrevocably submits with regard to any such action or proceeding for
itself and with respect to its property, generally and unconditionally, to the
nonexclusive jurisdiction of the aforesaid courts. Each of the parties hereto
hereby irrevocably waives, and agrees not to assert, by way of motion, as a
defense, counterclaim or otherwise, in any action or proceeding with respect to
this Agreement, any claim that it is not personally subject to the jurisdiction
of the above-named courts for any reason other than the failure to lawfully
serve process, that it or its property is exempt or immune from jurisdiction of
any such court or from any legal process commenced in such courts (whether
through service of notice, attachment prior to judgment, attachment in aid of
execution of judgment, execution of judgment or otherwise), and to the fullest
extent permitted by applicable law, that the suit, action or proceeding in any
such court is brought in an inconvenient forum, the venue of such suit, action
or proceeding is improper and this Agreement, or the subject matter hereof, may
not be enforced in or by such courts.
Section 19. WAIVER OF JURY TRIAL. Each party hereto hereby irrevocably and
unconditionally waives any rights to a trial by jury in any legal action or
proceeding in relation to this Agreement and for any counterclaim therein.
Section 20. INTERPRETATION. The parties hereto agree that in interpreting
this Agreement there shall be no inferences against the drafting party.
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IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to
be executed on its behalf by its representatives thereunto duly authorized, all
as of the day and year first above written.
ABOUT.COM, INC.
By: /s/ SCOTT KURNIT
--------------------------------------------
Name: Scott Kurnit
Title: Chairman and Chief Executive Officer
KKR 1996 FUND L.P.
By: KKR Associates 1996, L.P.
Its General Partner
By: KKR 1996 GP LLC
Its General Partner
By: /s/ PERRY GOLKIN
--------------------------------------------
Member
MA ASSOCIATES, L.P.
By: KKR Associates, L.P.
Its General Partner
By: /s/ PERRY GOLKIN
--------------------------------------------
A General Partner
FP ASSOCIATES, L.P.
By: KKR Associates, L.P.
Its General Partner
By: /s/ PERRY GOLKIN
--------------------------------------------
A General Partner
MAGAZINE ASSOCIATES, L.P.
By: KKR Associates, L.P.
Its General Partner
By: /s/ PERRY GOLKIN
--------------------------------------------
A General Partner
F-5
PUBLISHING ASSOCIATES, L.P.
By: KKR Associates, L.P.
Its General Partner
By: /s/ PERRY GOLKIN
--------------------------------------------
A General Partner
CHANNEL ONE ASSOCIATES, L.P.
By: KKR Associates, L.P.
Its General Partner
By: /s/ PERRY GOLKIN
--------------------------------------------
A General Partner
KKR PARTNERS II, L.P.
By: KKR Associates, L.P.
Its General Partner
By: /s/ PERRY GOLKIN
--------------------------------------------
A General Partner
F-6
ANNEX G
SHAREHOLDER VOTING AGREEMENT
Shareholder Voting Agreement (this "AGREEMENT"), dated as of December 28,
2000, among About.com, Inc., a Delaware corporation (the "COMPANY"), and those
entities listed on the signature page hereof (each, a "SHAREHOLDER" and,
collectively, the "SHAREHOLDERS").
WHEREAS, PRIMEDIA Inc., a Delaware corporation ("PRIMEDIA"), Abracadabra
Acquisition Corporation, a Delaware corporation and a wholly owned subsidiary of
Primedia ("MERGER SUB"), and the Company have entered into an Agreement and Plan
of Merger (the "MERGER AGREEMENT") (capitalized terms used herein and not
defined shall have the meanings set forth in the Merger Agreement), dated as of
October 29, 2000; and
WHEREAS, each Shareholder beneficially owns the number of shares of common
stock, par value $0.001 per share, of the Company set forth below such
Shareholder's name on the signature page hereof (all such shares, together with
any other shares of capital stock of the Company such Shareholder acquires after
the date hereof, including, without limitation, as a result of a stock dividend,
stock split, recapitalization, combination, reclassification, exchange, or
change of such shares, or upon exercise or conversion of any securities, the
"SHARES").
NOW, THEREFORE, in consideration of the foregoing and for other good and
valuable consideration, the parties hereby agree as follows
Section 1. REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDERS. Each
Shareholder severally represents and warrants to the Company as follows:
(a) The execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby have been duly and
validly authorized by such Shareholder, and no other proceedings on the part
of such Shareholder are necessary to authorize this Agreement or to
consummate the transactions so contemplated.
(b) This Agreement has been duly and validly executed and delivered by
such Shareholder and, assuming this Agreement constitutes a valid and
binding obligation of the Company, constitutes a legal, valid and binding
obligation of such Shareholder enforceable against such Shareholder in
accordance with its terms (except insofar as enforceability may be limited
by applicable bankruptcy, insolvency, reorganization, moratorium or similar
laws affecting creditors' rights generally or by principles governing the
availability of equitable remedies).
(c) The execution, delivery and performance by such Shareholder of this
Agreement and the consummation of the transactions contemplated hereby do
not and will not (i) contravene or conflict with its organizational
documents; (ii) contravene or conflict with or constitute a violation of any
provision of any law, regulation, judgment, injunction, order or decree
binding upon or applicable to such Shareholder or any of its properties; or
(iii) conflict with, or result in the breach or termination of or constitute
a default (with or without the giving of notice or the lapse of time or
both) under, or give rise to any right of termination, cancellation, or loss
of any benefit to which such Shareholder is entitled under any provision of
any agreement, contract, license or other instrument binding upon such
Shareholder or any of its properties, or allow the acceleration of the
performance of any obligation of such Shareholder under any indenture,
mortgage deed of trust, lease, license, contract, instrument or other
agreement to which such Shareholder is a party or by which such Shareholder,
its assets or properties is subject or bound, other than such
contraventions, conflicts, violations, breaches, defaults or other
occurrences that would not reasonably be expected to prevent, delay or
impair such Shareholder's ability to consummate the transactions
contemplated by this Agreement.
(d) Other than any filings required by the Exchange Act or the
rules and regulations promulgated thereunder, the execution, delivery and
performance by such Shareholder of this Agreement and the consummation of
the transactions contemplated hereby by such Shareholder
require no filings, notices, declarations, consents or other actions to be
made by such Shareholder with, nor are any approvals or other confirmations
or consents required to be obtained by such Shareholder from, any
governmental authority.
(e) As of the date hereof, there is no action, suit, claim,
investigation or proceeding pending or, to the knowledge of such
Shareholder, threatened against such Shareholder or its properties before
any court or arbitrator or any governmental authority which challenges or
seeks to prevent, enjoin, alter or delay the Merger or any of the other
transactions contemplated hereby or by the Merger Agreement. As of the date
hereof, such Shareholder is not, and none of its properties is, subject to
any order, writ, judgment, injunction, decree, determination or award which
would prevent, delay or impair the consummation of the transactions
contemplated hereby.
(f) Such Shareholder is, and at the Effective Time will be, the sole
record and beneficial owner of and has, and at the Effective Time such
Shareholder will have, good and valid title to the Shares held by such
Shareholder, free and clear of any Liens, except for any Liens arising
hereunder. Such Shareholder has, and at the Effective Time will have, the
power to vote, dispose of and otherwise transfer such Shares without the
approval, consent or other action of any person.
(g) There are no options or rights to acquire, or understandings or
arrangements to which such Shareholder is a party relating to the Shares
held by such Shareholder, other than this Agreement.
(h) The Shares indicated below such Shareholder's name on the signature
page hereof represent all of the shares of Company Common Stock beneficially
owned (within the meaning of Rule 13d-3 under the Exchange Act) by such
Shareholder.
(i) Such Shareholder has received and read the preliminary Joint Proxy
Statement--Consent Solicitation--Prospectus of the Company and Primedia,
filed on December 7, 2000, relating to the Merger (the "PRELIMINARY PROXY").
Section 2. AGREEMENT TO VOTE; PROXY. Each Shareholder agrees with, and
covenants to, the Company as follows:
(a) At any meeting of shareholders of the Company called to vote upon
the Merger, the Merger Agreement or the other transactions contemplated by
the Merger Agreement or at which a vote, consent or other approval with
respect to the Merger, the Merger Agreement or the other transactions
contemplated by the Merger Agreement is sought, such Shareholder shall vote
(or cause to be voted) or shall consent, execute a consent or cause to be
executed a consent in respect of the Shares held by such Shareholder in
favor of the Merger, the execution and delivery by the Company of the Merger
Agreement and the approval of the terms thereof and each of the other
transactions contemplated by the Merger Agreement;
(b) At any meeting of shareholders of the Company or at any adjournment
thereof or in any other circumstances upon which their vote, consent or
other approval is sought, such Shareholder shall vote (or cause to be voted)
the Shares held by such Shareholder against (A) any Acquisition Proposal or
(B) any amendment of the Company's Certificate of Incorporation or By-laws
which amendment would in any manner prevent or materially impede, interfere
with or delay the Merger, the Merger Agreement or any of the other
transactions contemplated by the Merger Agreement; and
(c) Such Shareholder shall grant to, and appoint, Scott P. Kurnit and
Alan P. Blaustein or any other individual who is designated by the Company,
until the termination of this Agreement pursuant to Section 11, an
irrevocable proxy, coupled with an interest, and attorney-in-fact (with full
power of substitution), for and in the name, place and stead of such
Shareholder, with respect to the Shares held by such Shareholder, to vote
the Shares held by such Shareholder, or grant or
G-2
execute a consent or approval, in complete discretion of the Company, at any
meeting of shareholders of the Company or at any adjournment thereof or in
any other circumstances upon which their vote, consent or other approval is
sought in accordance with paragraph (a) of this Section 2. Such Shareholder
will take such further action and execute such other instruments as may be
necessary to effect the intent of this proxy, and hereby revokes any proxy
previously granted by it with respect to the Shares held by it. Such
Shareholder agrees that this Agreement, including the provisions of this
Section 2, will be recorded in the books and records of the Company.
Notwithstanding the foregoing, nothing in this Agreement shall limit or
affect such Shareholder's ability to vote in his, her or its sole discretion
on, and such Shareholder shall not grant or be deemed to grant any proxy or
power of attorney with respect to any matter other than those matters
specifically referred to in Section 2(a) above;
PROVIDED, HOWEVER, that such Shareholder shall not be obligated to so vote
and no such proxy shall be granted unless, prior to any such meeting, such
Shareholder shall have received the definitive Joint Proxy Statement - Consent
Solicitation - Prospectus of the Company and Primedia relating to the Merger and
the information contained in such definitive Joint Proxy Statement - Consent
Solicitation - Prospectus is not materially adversely different from the
information contained in the Preliminary Proxy.
Section 3. DISPOSITION OF SHARES. No Shareholder shall, without the prior
written consent of the Company, directly or indirectly, during the term of this
Agreement (i) grant or enter into any Lien, power of attorney or other agreement
or arrangement with respect to the voting of the Shares held by it, (ii) except
by operation of the laws of inheritance, sell, assign, transfer, encumber or
otherwise dispose of, or enter into any contract, option or other arrangement or
understanding with respect to the direct or indirect sale, assignment, transfer,
encumbrance or other disposition of any of the Shares held by it or (iii) take
any other action that would in any way restrict, limit or interfere with
performance of its obligations hereunder or the transactions contemplated
hereby. Each Shareholder hereby irrevocably waives any rights of appraisal or
rights to dissent from the Merger that such Shareholder may have. Any purported
transfer in violation of the foregoing shall be null and void.
Section 4. GOVERNING LAW. This Agreement shall be governed by the laws of
the State of New York.
Section 5. NOTICES. Notices and other communications under this Agreement
shall be in writing and shall be deemed given as set forth in Section 8.2 of the
Merger Agreement, except that each Shareholder shall receive such notices at the
address set forth below:
Abra LLC
c/o Kohlberg Kravis Roberts & Co.
9 West 57th Street
New York, New York 10019
Telecopy: (212) 750-0003
Attn: William Janetschek
Section 6. ENTIRE AGREEMENT; AMENDMENTS. This Agreement constitutes the
entire understanding of the parties with respect to the subject matter hereof.
There are no restrictions, agreements, promises, warranties, covenants or
undertakings with respect to the subject matter hereof other than those
expressly set forth herein. This Agreement supersedes all prior agreements and
understandings between the parties with respect to its subject matter and is not
intended to confer upon any person other than the parties hereto any rights or
remedies hereunder. This Agreement may be amended only by a written instrument
duly executed by the Company and the Shareholders.
Section 7. ASSIGNMENT. Notwithstanding any other provision of this
Agreement, this Agreement shall not be assignable by any party hereto. Subject
to the preceding sentence, this Agreement will be binding upon, inure to the
benefit of and be enforceable against, (i) as to each Shareholder, such
G-3
Shareholder and such Shareholder's beneficiaries and representatives, and (ii)
the Company and their successors and permitted assigns. Each Shareholder agrees
that this Agreement and the obligations of such Shareholder hereunder shall
attach to such Shareholder's Shares and shall be binding upon any person or
entity to which legal or beneficial ownership of such Shares shall pass by the
laws of inheritance.
Section 8. SEVERABILITY. The provisions of this Agreement shall be deemed
severable and the invalidity or unenforceability of any provision shall not
affect the validity and enforceability of the other provisions hereof. If any
provision of this Agreement, or the application thereof to any person or entity
or any circumstance, is invalid or unenforceable, (a) a suitable and equitable
provision shall be substituted therefor in order to carry out, so far as may be
valid and unenforceable, the intent and purpose of such invalid and
unenforceable provision and (b) the remainder of this Agreement and the
application of such provision to other persons, entities or circumstances shall
not be affected by such invalidity or unenforceability, nor shall such
invalidity and unenforceability affect the validity or enforceability of such
provision, or the application thereof, in any other jurisdiction.
Section 9. STOP TRANSFER ORDER. In furtherance of this Agreement,
concurrently herewith each Shareholder shall and hereby does authorize the
Company to notify its transfer agent that there is a stop transfer order with
respect to all of the Shares subject to the terms of this Agreement (and that
this Agreement places limits on the voting and transfer of the Shares). Each
Shareholder further agrees to cause the Company not to register the transfer of
any certificate representing any of such Shareholder's Shares unless such
transfer is made in accordance with the terms of this Agreement.
Section 10. FURTHER ACTION. From time to time, at the request of the
Company and without further consideration, each Shareholder shall execute and
deliver to the Company such documents and take such action as the Company may
reasonably request in order to consummate the transactions contemplated hereby.
Section 11. TERMINATION. This Agreement shall terminate and be of no
further force and effect upon the earlier to occur of (a) the Effective Time and
(b) upon the termination of the Merger Agreement pursuant to its terms.
Section 12. 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 of the 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 13. SPECIFIC PERFORMANCE. The Shareholders and the Company
acknowledge that this Agreement and the Shares are unique and that no party will
have an adequate remedy at law if any other party breaches any covenant herein
or fails to perform its obligations hereunder. Accordingly, the Shareholders and
the Company agree that the others shall have the right, in addition to any other
rights which it may have, to specific performance and equitable injunctive
relief if any party shall fail or threaten to fail to perform any of its
obligations under this Agreement.
Section 14. EXPENSES. All costs and expenses incurred in connection with
this Agreement and the transactions contemplated hereby shall be paid by the
party incurring such cost or expense.
Section 15. NO WAIVER. No failure or delay by the Company to assert any of
its rights under this Agreement or otherwise shall constitute a waiver of such
rights. No single or partial exercise of any right, remedy, power or privilege
hereunder shall preclude any other or further exercise thereof or the exercise
of any other right, remedy, power or privilege. Any waiver shall be effective
only in the specific instance and for the specific purpose for which given and
shall not constitute a waiver to any subsequent or other exercise of any right,
remedy, power or privilege hereunder.
G-4
Section 16. SUBMISSION TO JURISDICTION. Each of the parties hereto
irrevocably agrees that any legal action or proceeding with respect to this
Agreement or for recognition and enforcement of any judgment in respect hereof
brought by any other party hereto or its successors or assigns may be brought
and determined in the courts of the State of New York, and each party hereto
hereby irrevocably submits with regard to any such action or proceeding for
itself and with respect to its property, generally and unconditionally, to the
nonexclusive jurisdiction of the aforesaid courts. Each of the parties hereto
hereby irrevocably waives, and agrees not to assert, by way of motion, as a
defense, counterclaim or otherwise, in any action or proceeding with respect to
this Agreement, (a) any claim that it is not personally subject to the
jurisdiction of the above-named courts for any reason other than the failure to
lawfully serve process, (b) that it or its property is exempt or immune from
jurisdiction of any such court or from any legal process commenced in such
courts (whether through service of notice, attachment prior to judgment,
attachment in aid of execution of judgment, execution of judgment or otherwise),
and (c) to the fullest extent permitted by applicable law, that (i) the suit,
action or proceeding in any such court is brought in an inconvenient forum,
(ii) the venue of such suit, action or proceeding is improper and (iii) this
Agreement, or the subject matter hereof, may not be enforced in or by such
courts.
Section 17. WAIVER OF JURY TRIAL. Each party hereto hereby irrevocably and
unconditionally waives any rights to a trial by jury in any legal action or
proceeding in relation to this Agreement and for any counterclaim therein.
Section 18. INTERPRETATION. The parties hereto agree that in interpreting
this Agreement there shall be no inferences against the drafting party.
[The remainder of page intentionally left blank.]
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IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to
be executed on its behalf by its representatives thereunto duly authorized, all
as of the day and year first above written.
ABOUT.COM, INC.
By: /s/ SCOTT KURNIT
--------------------------------------------
Name: Scott Kurnit
Title: Chairman and CEO
ABRA LLC
By: KKR 1996 Fund, L.P.
Its Managing Member
By: KKR Associates 1996, L.P.
Its General Partner
By: KKR 1996 GP LLC
Its General Partner
By: /s/ MICHAEL TOKARZ
--------------------------------------------
Name: Michael Tokarz
Title: Member
Shares Beneficially Held: 2,236,641
G-6
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
PRIMEDIA is a Delaware Corporation. Reference is made to Section 102(b)(7)
of the Delaware General Corporation Law (the "DGCL"), which enables a
corporation in its original certificate of incorporation or an amendment thereto
to eliminate or limit the personal liability of a director for violations of the
director's fiduciary duty, except (i) for any breach of the director's duty of
loyalty to the corporation or its stockholders, (ii) for acts or omissions not
in good faith or which involve intentional misconduct or a knowing violation of
law, (ii) pursuant to Section 174 of the DGCL (providing for liability of
directors for unlawful payment of dividends or unlawful stock purchase or
redemptions) or (iv) for any transaction from which a director derived an
improper personal benefit.
Reference also is made to Section 145 of the DGCL, which provides that a
corporation may indemnify any persons, including officers and directors, who
are, or are threatened to be made, parties to any threatened, pending or
completed legal action, suit or proceeding, whether civil, criminal,
administrative or investigative (other than an action by or in the right of such
corporation), by reason of the fact that such person was an officer, director,
employee or agent of such corporation or is or was serving at the request of
such corporation as a director, officer, employee or agent of another
corporation or enterprise. The indemnity may include expenses (including
attorney's fees), judgments, fines and amounts paid in settlement actually and
reasonably incurred by such person in connection with such action, suit or
proceeding, provided such officer, director, employee or agent acted in good
faith and in a manner he reasonably believed to be in or not opposed to the
corporation's best interest and, for criminal proceedings, had no reasonable
cause to believe that his conduct was unlawful. A Delaware corporation may
indemnify officers and directors in an action by or in the right of the
corporation under the same conditions, except that no indemnification is
permitted without judicial approval if the officer or director is adjudged to be
liable to the corporation. Where an officer or director is successful on the
merits or otherwise in the defense of any action referred to above, the
corporation must indemnify him against the expenses that such officer or
director actually and reasonably incurred.
Article 8 of the Certification of Incorporation of PRIMEDIA provides that
except as provided under the Delaware General Corporation Law, directors of
PRIMEDIA shall not be personally liable to the corporation or its stockholders
for monetary damages for breach of fiduciary duties as a director. Article 4 of
the by-laws of PRIMEDIA provides for indemnification of the officers and
directors of PRIMEDIA to the fullest extent permitted by applicable law and
provides for the advancement of expenses.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENTS
------- ------------------------
2.1 Agreement and Plan of Merger, dated as of October 29, 2000,
by and among PRIMEDIA Inc., Abracadabra Acquisition
Corporation and About.com, Inc. (attached as Annex D to the
joint proxy statement-consent solicitation-prospectus in
this registration statement).
2.2 Amendment No. 1 to the Agreement and Plan of Merger, dated
as of January 2, 2001, by and among PRIMEDIA Inc.,
Abracadabra Acquisition Corporation and About.com, Inc.
(attached as Annex D to the joint proxy statement--consent
solicitation--prospectus in this registration statement).
4.1 Certificate of Designations of the Series D Preferred Stock
(Incorporated by reference to K-III Communications
Corporation's Registration Statement on Form S-4, File
No. 333-03691).
II-1
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENTS
------- ------------------------
4.2 Certificate of Designations of the Series F Preferred Stock
(Incorporated by reference to K-III Communications
Corporation's Registration Statement on Form S-4, File
No. 333-38451).
4.3 Certificate of Designations of the Series H Preferred Stock
(Incorporated by reference to PRIMEDIA Inc.'s Registration
Statement on Form S-4, File No. 333-51891).
4.4 10 1/4% Senior Note Indenture (including form of note and
form of guarantee) (Incorporated by reference to K-III
Communications Corporation's Annual Report filed on Form
10-K for the year ended December 31, 1994, File
No. 1-11106).
4.5 8 1/2% Senior Note Indenture (including form of note and
form of guarantee) (Incorporated by reference to K-III
Communications Corporation's Annual Report filed on Form
10-K for the year ended December 31, 1995, File No.
1-11106).
4.6 7 5/6% Senior Note Indenture (including form of note and
form of guarantee) (Incorporated by reference to PRIMEDIA
Inc.'s Registration Statement on Form S-4, File No.
333-51891).
4.7 Form of Class D Subordinated Debenture (including form of
debenture) (Incorporated by reference to K-III
Communications Corporation's Registration Statement on Form
S-4, File No. 333-03691).
4.8 Form of Class F Subordinated Debenture (including form of
debenture) (Incorporated by reference to K-III
Communications Corporation's Registration Statement on Form
S-4, File No. 333-38451).
4.9 Form of Class H Subordinated Debenture (including form of
debenture) (Incorporated by reference to PRIMEDIA Inc.'s
Registration Statement on Form S-4, File No. 333-51891).
5.1 Opinion of Simpson Thacher & Bartlett.
8.1 Opinion of Simpson Thacher & Bartlett, as to certain federal
income tax consequences of the merger.
8.2 Opinion of Brobeck, Phleger & Harrison LLP, as to certain
federal income tax consequences of the merger.
10.1 Agreement, dated as of October 29, 2000, by and between
PRIMEDIA Inc. and About.com, Inc.*
10.2 Agreement, dated as of October 29, 2000, by and between
PRIMEDIA Inc. and About.com, Inc.*
10.3 Sales Representation Agreement, dated as of October 29,
2000, by and between PRIMEDIA Inc. and About.com, Inc.*
10.4 Right of First Offer Agreement, dated as of October 29,
2000, by and between PRIMEDIA Inc. and About.com, Inc.*
10.5 Amendment, dated as of December 6, 2000, by and between
PRIMEDIA Inc. and About.com, Inc.
10.6 Amendment, dated as of December 6, 2000, by and between
PRIMEDIA Inc. and About.com, Inc.
10.7 Agreement dated as of December 6, 2000, by and between
PRIMEDIA Inc. and About.com, Inc.
10.8 List Rental Agreement, dated as of December 6, 2000, by and
between PRIMEDIA Magazines Inc. and About.com, Inc.
10.9 PRIMEDIA Inc. 2001 Stock Purchase and Option Plan.
10.10 Form of Non-qualified Stock Option Agreement.
10.11 Form of Restricted Stock Award Agreement.
16.1 Letter from KPMG LLP (Incorporated by reference to
About.com, Inc.'s Current Report on Form 8-K filed on
June 21, 2000).
21 List of Subsidiaries of PRIMEDIA.
23.1 Consent of Deloitte & Touche LLP.
23.2 Consent of KPMG LLP.
23.3 Consent of Simpson Thacher & Bartlett (included as part of
its opinion filed as Exhibit 5.1).
23.4 Consent of Simpson Thatcher & Barlett (included as part of
its opinion filed as Exhibit 8.1).
II-2
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENTS
------- ------------------------
23.5 Consent of Brobeck, Phleger & Harrison LLP (included as part
of its opinion filed as
Exhibit 8.2).
24.1 Power of Attorney of certain officers and directors of
PRIMEDIA.*
99.1 Consent of Wit SoundView Corporation.*
99.2 Consent of Merrill Lynch, Pierce, Fenner & Smith
Incorporated.*
99.3 Consent of Donaldson, Lufkin & Jenrette Securities
Corporation.
99.4 Employment Agreement dated as of October 29, 2000, by and
between PRIMEDIA Inc., About.com, Inc. and Scott Kurnit*.
99.5 Employment Agreement as of October 29, 2000, by and between
PRIMEDIA Inc., About.com, Inc. and William Day.*
99.6 Lock-Up Agreement, dated as of October 29, 2000, between
Scott Kurnit and PRIMEDIA Inc.*
99.7 Lock-Up Agreement, dated as of October 29, 2000, between
William Day and PRIMEDIA Inc.*
99.8 Amendment to Employment Agreement, dated as of January 16,
2001, by and among PRIMEDIA Inc., About.com, Inc. and Scott
Kurnit.
99.9 Amendment to Employment Agreement, dated as of January 16,
2001, by and among PRIMEDIA Inc., About.com, Inc. and
William Day.
99.10 Form of About Proxy Card.
99.11 Form of PRIMEDIA Consent.
99.12 Amendment No. 1 to Lock-Up Agreement, dated as of
January 16, 2001, between Scott Kurnit and PRIMEDIA Inc.
99.13 Amendment No. 1 to Lock-Up Agreement, dated as of
January 16, 2001, between William Day and PRIMEDIA Inc.
* Previously filed.
ITEM 22. UNDERTAKINGS.
The undersigned Registrant hereby undertakes:
(1) to file, during any period in which offers or sales are being made,
a post-effective amendment or prospectus supplement to this registration
statement:
(i) to include any prospectus required by Section 10(a)(3) of the
Securities Act;
(ii) to reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth in
the registration statement. Notwithstanding the foregoing, any increase
or decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum offering
range may be reflected in the form of prospectus filed with the
Commission pursuant to Rule 424(b) if, in the aggregate, the changes in
volume and price represent no more than a 20% change in the maximum
aggregate offering price set forth in the "Calculation of Registration
Fee" table in the effective registration statement; and
(iii) to include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or
any material change to such information in the registration statement;
provided, however, that paragraphs (1)(i) and (1)(ii) do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed with
II-3
or furnished to the Commission by the Registrant pursuant to Section 13 or
Section 15(d) of the Securities Exchange Act that are incorporated by reference
in the registration statement;
(2) that, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a
new registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof;
(3) to remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering;
(4) that, for purposes of determining any liability under the Securities
Act, each filing of Registrant's annual report pursuant to Section 13(a) or
15(d) of the Securities Exchange Act that is incorporated by reference in
this registration statement shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of
such securities at that time shall be deemed to be the initial bona fide
offering thereof;
(5) to respond to requests for information that is incorporated by
reference into the prospectus pursuant to Items 4, 10(b), 11, or 13 of this
Form, within one business day of receipt of such request, and to send the
incorporated documents by first class mail or other equally prompt means.
This includes information contained in documents filed subsequent to the
effective date of the registration statement through the date of responding
to the request;
(6) to supply by means of a post-effective amendment all information
concerning a transaction, and the company being acquired involved therein,
that was not the subject of and included in the registration statement when
it became effective;
(7) that prior to any public reoffering of the securities registered
hereunder through use of a prospectus which is a part of this registration
statement, by any person or party who is deemed to be an underwriter within
the meaning of Rule 145(c), the issuer undertakes that such reoffering
prospectus will contain the information called for by the applicable
registration form with respect to reofferings by persons who may be deemed
underwriters, in addition to the information called for by the other Items
of the applicable form; and
(8) that every prospectus (i) that is filed pursuant to paragraph (7)
immediately preceding, or (ii) that purports to meet the requirements of
Section 10(a)(3) of the Securities Act and is used in connection with an
offering of securities subject to Rule 415, will be filed as a part of an
amendment to the registration statement and will not be used until such
amendment is effective, and that, for purposes of determining any liability
under the Securities Act, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to
be the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Commission such indemnification is
against public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Registrant of expenses incurred or
paid by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
II-4
SIGNATURES
Pursuant to the requirements of the Securities Act, the Registrant has duly
caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of New York, State of New
York, on the 17th of January, 2001.
PRIMEDIA INC.
By: /s/ BEVERLY C. CHELL
-----------------------------------------
Beverly C. Chell
Vice Chairman and Secretary
II-5
EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENTS
------- ------------------------
2.1 Agreement and Plan of Merger, dated as of October 29, 2000,
by and among PRIMEDIA Inc., Abracadabra Acquisition
Corporation and About.com, Inc., (attached as Annex D to the
joint proxy statement-consent solicitation-prospectus in
this registration statement).
2.2 Amendment No. 1 to Agreement and Plan of Merger, dated as of
January 2, 2001, by and among PRIMEDIA, Inc., Abracadabra
Acquisition Corporation and About.com, Inc. (attached as
Annex D to the joint proxy statement-consent
solicitation-prospectus in this registration statement).
4.1 Certificate of Designations of the Series D Preferred Stock
(Incorporated by reference to K-III Communications
Corporation's Registration Statement on Form S-4, File
No. 333-03691).
4.2 Certificate of Designations of the Series F Preferred Stock
(Incorporated by reference to K-III Communications
Corporation's Registration Statement on Form S-4, File
No. 333-38451).
4.3 Certificate of Designations of the Series H Preferred Stock
(Incorporated by reference to PRIMEDIA Inc.'s Registration
Statement on Form S-4, File No. 333-51891).
4.4 10 1/4% Senior Note Indenture (including form of note and
form of guarantee) (Incorporated by reference to K-III
Communications Corporation's Annual Report filed on
Form 10-K for the year ended December 31, 1994, File
No. 1-11106).
4.5 8 1/2% Senior Note Indenture (including form of note and
form of guarantee) (Incorporated by reference to K-III
Communications Corporation's Annual Report filed on
Form 10-K for the year ended December 31, 1995, File
No. 1-11106).
4.6 7 5/6% Senior Note Indenture (including form of note and
form of guarantee) (Incorporated by reference to PRIMEDIA
Inc.'s Registration Statement on Form S-4, File
No. 333-51891).
4.7 Form of Class D Subordinated Debenture (including form of
debenture) (Incorporated by reference to K-III
Communications Corporation's Registration Statement on
Form S-4, File No. 333-03691).
4.8 Form of Class F Subordinated Debenture (including form of
debenture) (Incorporated by reference to K-III
Communications Corporation's Registration Statement on
Form S-4, File No. 333-38451).
4.9 Form of Class H Subordinated Debenture (including form of
debenture) (Incorporated by reference to PRIMEDIA Inc.'s
Registration Statement on Form S-4, File No. 333-51891).
5.1 Opinion of Simpson Thacher & Bartlett.
8.1 Opinion of Simpson Thacher & Bartlett, as to certain federal
income tax consequences of the merger.
8.2 Opinion of Brobeck, Phleger & Harrison LLP, as to certain
federal income tax consequences of the merger.
10.1 Agreement, dated as of October 29, 2000, by and between
PRIMEDIA Inc. and About.com, Inc.*
10.2 Agreement, dated as of October 29, 2000, by and between
PRIMEDIA Inc. and About.com, Inc.*
10.3 Sales Representation Agreement, dated as of October 29,
2000, by and between PRIMEDIA Inc. and About.com, Inc.*
10.4 Right of First Offer Agreement, dated as of October 29,
2000, by and between PRIMEDIA Inc. and About.com, Inc.*
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENTS
------- ------------------------
10.5 Amendment, dated as of December 6, 2000, by and between
PRIMEDIA Inc. and
About.com, Inc.
10.6 Amendment, dated as of December 6, 2000, by and between
PRIMEDIA Inc. and
About.com, Inc.
10.7 Agreement, dated as of December 6, 2000, by and between
PRIMEDIA Inc. and
About.com, Inc.
10.8 List Rental Agreement, dated as of December 6, 2000, by and
between PRIMEDIA Magazines Inc. and About.com, Inc.
10.9 PRIMEDIA Inc. 2001 Stock Purchase and Option Plan.
10.10 Form of Non-qualified Stock Option Agreement.
10.11 Form of Restricted Stock Award Agreement.
16.1 Letter from KPMG LLP (Incorporated by reference to
About.com, Inc.'s Current Report on Form 8-K filed on
June 21, 2000).
21 List of Subsidiaries of PRIMEDIA.
23.1 Consent of Deloitte & Touche LLP.
23.2 Consent of KPMG LLP.
23.3 Consent of Simpson Thacher & Bartlett (included as part of
its opinion filed as Exhibit 5.1).
23.4 Consent of Simpson Thacher & Bartlett (included as part of
its opinion filed as Exhibit 8.1).
23.5 Consent of Brobeck, Phleger & Harrison LLP (included as part
of its opinion filed as Exhibit 8.2).
24.1 Power of Attorney of certain officers and directors of
PRIMEDIA.*
99.1 Consent of Wit SoundView Corporation.*
99.2 Consent of Merrill Lynch, Pierce, Fenner & Smith
Incorporated.*
99.3 Consent of Donaldson, Lufkin & Jenrette Securities
Corporation.
99.4 Employment Agreement dated as of October 29, 2000, by and
between PRIMEDIA Inc., About.com, Inc. and Scott Kurnit.*
99.5 Employment Agreement as of October 29, 2000, by and between
PRIMEDIA Inc., About.com, Inc. and William Day.*
99.6 Lock-Up Agreement, dated as of October 29, 2000, between
Scott Kurnit and PRIMEDIA Inc.*
99.7 Lock-Up Agreement, dated as of October 29, 2000, between
William Day and PRIMEDIA Inc.*
99.8 Amendment to Employment Agreement, dated as of January 16,
2001, by and among PRIMEDIA Inc., About.com, Inc. and Scott
Kurnit.
99.9 Amendment to Employment Agreement, dated as of January 16,
2001, by and among PRIMEDIA Inc., About.com, Inc. and
William Day.
99.10 Form of About Proxy Card.
99.11 Form of PRIMEDIA Consent.
99.12 Amendment No. 1 to Lock-Up Agreement, dated as of
January 16, 2001, between Scott Kurnit and PRIMEDIA Inc.
99.13 Amendment No. 1 to Lock-Up Agreement, dated as of
January 16, 2001, between William Day and PRIMEDIA Inc.
* Previously filed.
EXHIBIT 5.1
January 17, 2001
PRIMEDIA Inc.
745 Fifth Avenue
New York, NY 10151
Ladies and Gentlemen:
We have acted as counsel to PRIMEDIA Inc., a Delaware corporation (the
"Company"), in connection with the Registration Statement on Form S-4 of the
Company (the "Registration Statement"), filed with the Securities and Exchange
Commission under the Securities Act of 1933, as amended, relating to the
proposed issuance by the Company of up to 52,600,000 shares of Common Stock, par
value $.01 per share ("Common Stock"). Pursuant to the Agreement and Plan of
Merger dated as of October 29, 2000 as amended as of January 2, 2001 (the
"Merger Agreement") by and between the Company, Abracadabra Acquisition
Corporation and About.com, Inc. ("About.com"), Abracadabra Acquisition
Corporation, a direct wholly owned subsidiary of the Company will merge with and
into About.com (the "Merger") and the Common Stock will be issued in the Merger.
We have examined (i) the Merger Agreement and (ii) the Registration
Statement. We have also examined the originals, or duplicates or certified or
conformed copies, of such records, agreements, instruments and other documents
and have made such other and further investigations as we have deemed relevant
and necessary in connection with the opinions expressed herein. As to questions
of fact material to this opinion, we have relied upon the certificates of public
officials and of officers and representatives of the Company.
In such examination, we have assumed the genuineness of all signatures, the
legal capacity of natural persons, the authenticity of all documents submitted
to us as originals, the conformity to original documents of all documents
submitted to us as duplicates or certified or conformed copies, and the
authenticity of the originals of such latter documents.
Based upon the foregoing, and subject to the qualifications and limitations
stated herein, we are of the opinion that (1) the Board of Directors of the
Company has authorized the issuance of the Common Stock in accordance with the
Merger Agreement, subject to the consent of the Company's stockholders, (2) the
stockholders of the Company have consented to the issuance of the Common Stock
in accordance with the Merger Agreement and (3) when the Common Stock shall have
been issued in accordance with the Merger Agreement upon consummation of the
Merger, the Common Stock will be validly issued, fully paid and nonassessable.
We are members of the Bar of the State of New York and we do not express any
opinion herein concerning any law other than the Delaware General Corporation
Law.
We hereby consent to the filing of this opinion letter as Exhibit 5.1 to the
Registration Statement and to the reference to this firm under the caption
"Legal Matters" in the Joint Proxy Statement-Consent Solicitation-Prospectus
included in the Registration Statement.
PRIMEDIA Inc.
745 Fifth Avenue
New York, New York 10151
Re: Agreement and Plan of Merger among PRIMEDIA Inc.,
Abracadabra Acquisition Corporation and About.com, Inc.,
dated as of October 29, 2000, as amended January 2, 2001
Ladies and Gentlemen:
We have acted as special counsel to PRIMEDIA Inc. ("Parent"), a Delaware
corporation, in connection with the proposed merger (the "Merger") of
Abracadabra Acquisition Corporation ("Merger Sub"), a Delaware corporation and a
direct wholly-owned subsidiary of Parent, with and into About.com, Inc.
("Company"), a Delaware corporation, with the separate corporate existence of
Merger Sub ceasing and Company continuing as the surviving corporation. The
Merger will be consummated pursuant to the Agreement and Plan of Merger dated as
of October 29, 2000, as amended or supplemented through the date hereof, by and
among Parent, Merger Sub and Company (the "Merger Agreement"). For purposes of
this opinion, capitalized terms used and not otherwise defined herein shall have
the meaning ascribed thereto in the Merger Agreement. This opinion is being
delivered in connection with Parent's Registration Statement on Form S-4
relating to the proposed Merger pursuant to the Merger Agreement (the
"Registration Statement") to which this opinion appears as an exhibit. In acting
as counsel to Parent in connection with the Merger, we have, in preparing our
opinion, as hereinafter set forth, participated in the preparation of the Merger
Agreement and the preparation and filing of the Registration Statement.
You have requested that we render the opinion set forth below. In rendering
such opinion, we have assumed with your consent that (i) the Merger will be
effected in accordance with the Merger Agreement, (ii) the statements concerning
the Merger set forth in the Merger Agreement and the Registration Statement are
true, complete and correct and will remain true, complete and correct at all
times up to and including the Effective Time, (iii) the representations made by
Parent, Merger Sub and Company in their respective letters delivered to us for
purposes of this opinion (the "Representation Letters") are true, complete and
correct and will remain true, complete and correct at all times up to and
including the Effective Time, and (iv) any representations made in the
Representation Letters "to the best knowledge of" or similarly qualified are
true, correct and complete without such qualification. We have also assumed that
the parties have complied with and, if applicable, will continue to comply with,
the covenants contained in the Merger Agreement. We have examined the documents
referred to above and the originals, or duplicates or certified or conformed
copies, of such records, documents, certificates or other instruments and made
such other inquiries as in our judgment are necessary or appropriate to enable
us to render the opinion set forth below. We have not, however, undertaken any
independent investigation of any factual matter set forth in any of the
foregoing.
If the Merger is effected on a factual basis different from that
contemplated in the Merger Agreement and the Registration Statement the opinion
expressed herein may be inapplicable. Our opinion is based on the Internal
Revenue Code of 1986, as amended (the "Code"), Treasury Regulations,
administrative interpretations, and judicial precedents as of the date hereof.
If there is any subsequent change in the applicable law or regulations, or if
there are subsequently any new applicable administrative or judicial
interpretations of the law or regulations, the opinion expressed herein may
become inapplicable.
Based on and subject to the foregoing, the discussion contained in the
Registration Statement under the caption "THE MERGER--Material United States
Federal Income Tax Consequences of the Merger," constitutes, in all material
respects, an accurate summary of the United States federal income tax matters
described therein.
We express our opinion herein only as to those matters specifically set
forth above and no opinion should be inferred as to the tax consequences of the
Merger under any state, local or foreign law, or with respect to other areas of
United States federal taxation. We are members of the Bar of the State of New
York, and we do not express any opinion herein concerning any law other than the
federal law of the United States.
We hereby consent to the filing of this opinion as Exhibit 8.1 to the
Registration Statement and to the references to our firm name therein.
About.com, Inc.
1440 Broadway, 19th Floor
New York, New York 10018
Ladies and Gentlemen:
This opinion is being delivered to you in connection with (i) the Agreement
and Plan of Merger (the "Agreement") dated as of October 29, 2000 between
PRIMEDIA Inc., a Delaware corporation ("Parent"), Abracadabra Acquisition
Corporation, a Delaware corporation and a wholly owned subsidiary of Parent
("Merger Sub"), and About.com, Inc., a Delaware corporation ("Target"), and
(ii) the preparation and filing with the Securities and Exchange Commission of a
Form S-4 Registration Statement relating to the Merger (the "Registration
Statement"). Pursuant to the Agreement, Merger Sub will merge with and into
Target (the "Merger"), and Target will become a wholly owned subsidiary of
Parent.
Except as otherwise provided, capitalized terms referred to herein have the
meanings set forth in the Agreement. All section references, unless otherwise
indicated, are to the Internal Revenue Code of 1986, as amended (the "Code").
We have acted as legal counsel to Target in connection with the Merger. As
such, and for the purpose of rendering this opinion, we have examined and are
relying upon (without any independent investigation or review thereof) the truth
and accuracy, at all relevant times, of the statements, covenants,
representations and warranties contained in the following documents (including
all schedules and exhibits thereto):
1. The Agreement;
2. The Registration Statement; and
3. Such other instruments and documents related to Parent, Target, Merger
Sub and the Merger as we have deemed necessary or appropriate.
In connection with rendering this opinion, we have assumed or obtained
representations (and are relying thereon, without any independent investigation
or review thereof) that:
A. Original documents submitted to us (including signatures) are authentic,
documents submitted to us as copies conform to the original documents, and there
has been (or will be by the Effective Time) due execution and delivery of all
documents where due execution and delivery are prerequisites to the
effectiveness thereof; and
B. The Merger will be consummated in accordance with the Agreement without
any waiver or breach of any material provision thereof, and the Merger will be
effective under applicable state law.
Based on our examination of the foregoing items and subject to the
assumptions, exceptions, limitations and qualifications set forth herein, we are
of the opinion that the statements regarding United States federal income tax
consequences set forth in the Registration Statement under the heading "Material
United States Federal Income Tax Consequences of the Merger," insofar as they
constitute statements of law or legal conclusions, are correct in all material
respects. We express no opinion as to any federal, state or local, foreign or
other tax consequences, other than as set forth in the Registration Statement
under the heading "Material United States Federal Income Tax Consequences of the
Merger."
In addition to the assumptions and representations described above, this
opinion is subject to the exceptions, limitations and qualifications set forth
below.
(1) This opinion represents and is based upon our best judgment regarding
the application of federal income tax laws arising under the Code, existing
judicial decisions, administrative regulations and published rulings and
procedures. Our opinion is not binding upon the Internal Revenue Service or the
courts, and there is no assurance that the Internal Revenue Service will not
successfully assert a contrary position. Furthermore, no assurance can be given
that future legislative, judicial or administrative changes, on either a
prospective or retroactive basis, will not adversely affect the accuracy of the
conclusions stated herein. Nevertheless, we undertake no responsibility to
advise you of any new developments in the application or interpretation of the
federal income tax laws.
(2) No opinion is expressed as to any transaction other than the Merger
(whether or not undertaken in connection with the Merger) or as to any
transaction whatsoever, including the Merger, if all the transactions described
in the Agreement are not consummated in accordance with the terms of such
Agreement and without waiver or breach of any material provision thereof or if
all of the statements, representations, warranties and assumptions upon which we
relied are not true and accurate at all relevant times. In the event any one of
the statements, representations, warranties or assumptions upon which we have
relied to issue this opinion is incorrect, our opinion might be adversely
affected and may not be relied upon.
This opinion is rendered to you solely in connection with the filing of the
Registration Statement. We hereby consent to the filing of this opinion as an
exhibit to the Registration Statement. We also consent to the references to our
firm name wherever appearing in the Registration Statement with respect to the
discussion of the federal income tax consequences of the Merger, including any
amendments to the Registration Statement. This opinion may not be relied upon
for any other purpose, and may not be made available to any other person,
without our prior written consent.
Very truly yours,
/s/ BROBECK, PHLEGER & HARRISON LLP
BROBECK, PHLEGER & HARRISON LLP
EXHIBIT 10.5
AMENDMENT
AMENDMENT, dated as of December 6, 2000 (this "AMENDMENT"), with respect
to that certain agreement (the "AGREEMENT"; capitalized terms used herein and
not defined shall have the meanings ascribed to such terms in the Agreement),
dated as of October 29, 2000, between About.com, Inc. ("ABOUT") and PRIMEDIA
Inc. on behalf of itself and its wholly owned subsidiaries (collectively,
"PRIMEDIA") pursuant to which About purchased $14,400,000 of Promotional
Services from PRIMEDIA.
WHEREAS, About has requested and PRIMEDIA has agreed to certain changes to
the schedule of Promotional Services to be provided pursuant to the Agreement;
and
WHEREAS, in consideration of the scheduling changes About has agreed to
certain amendments to the Agreement as set forth herein;
NOW, THEREFORE in consideration of the premises, and for good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the
parties hereto hereby agree as follows:
Section 1. AMENDMENT OF AGREEMENT. (a) The Agreement is hereby amended
such that paragraph 1.4 is deleted in its entirety and replaced with the
following:
1.4 PRICE. About shall be charged for all Promotional Services at
agreed upon rate card rates. With respect to Promotional Services for
which there are no other regular users, the parties agree to negotiate
pricing in good faith consistent with rates charged by PRIMEDIA for
similar services. Except as expressly set forth herein, PRIMEDIA is
not responsible for any expenses or fees relating to the Advertisements
including without limitation any agency commissions or fees.
(b) The Agreement is hereby amended such that paragraph 2 is deleted in
its entirety.
Section 2. GOVERNING LAW. This Amendment shall be governed by, and
construed and enforced in accordance with, the laws of the State of New York.
Section 3. MISCELLANEOUS. Except as otherwise provided herein, all
provisions of the Agreement shall remain in full force and effect.
IN WITNESS WHEREOF, the undersigned have executed this Amendment as of the
date first above written.
About.com, Inc.
/s/ Scott Kurnit
-------------------------------------------
Name: Scott Kurnit
Title: Chairman and Chief Executive Officer
AMENDMENT, dated as of December 6, 2000 (this "AMENDMENT"), with respect
to that certain agreement (the "AGREEMENT"; capitalized terms used herein and
not defined shall have the meanings ascribed to such terms in the Agreement),
dated as of October 29, 2000, between About.com, Inc. ("ABOUT") and PRIMEDIA
Inc. on behalf of itself and its wholly owned subsidiaries (collectively,
"PRIMEDIA") pursuant to which About purchased $57,600,000 of Promotional
Services from PRIMEDIA.
WHEREAS, About has requested and PRIMEDIA has agreed to certain changes to
the schedule of Promotional Services to be provided pursuant to the Agreement;
and
WHEREAS, in consideration of the scheduling changes About has agreed to
certain amendments to the Agreement as set forth herein;
NOW, THEREFORE in consideration of the premises, and for good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the
parties hereto hereby agree as follows:
Section 1. AMENDMENT OF AGREEMENT. (a) The Agreement is hereby
amended such that paragraph 1.4 is deleted in its entirety and replaced with
the following:
1.4 PRICE. About shall be charged for all Promotional Services under this
Agreement at agreed upon rate card rates. With respect to Promotional
Services for which there are no other regular users, the parties agree to
negotiate pricing in good faith consistent with rates charged by PRIMEDIA
for similar services. Except as expressly set forth herein, PRIMEDIA is
not responsible for any expenses or fees relating to the Advertisements
including without limitation any agency commissions or fees.
(b) The Agreement is hereby amended such that paragraph 2 is deleted in
its entirety.
Section 2. GOVERNING LAW. This Amendment shall be governed by, and
construed and enforced in accordance with, the laws of the State of New York.
Section 3. MISCELLANEOUS. Except as otherwise provided herein, all
provisions of the Agreement shall remain in full force and effect.
IN WITNESS WHEREOF, the undersigned have executed this Amendment as of the
date first above written.
About.com, Inc.
/s/ Scott Kurnit
-------------------------------------------
Name: Scott Kurnit
Title: Chairman and Chief Executive Officer
AGREEMENT (this "Agreement"), dated as of the 6th day of December, 2000
between About.com, Inc. ("About") and PRIMEDIA Inc. on behalf of itself and its
wholly owned subsidiaries (collectively, "PRIMEDIA").
WHEREAS, About owns and operates About.com, a platform comprised of a
network of more than 800 targeted, topic-specific web sites;
WHEREAS, PRIMEDIA is an integrated media company which owns and
operates a variety of print, video, Internet products and live event products in
the consumer, enthusiast and business-to-business markets;
WHEREAS, About wishes to use, and PRIMEDIA is willing to provide,
advertising and promotional services through December 31, 2001 with a total
value of $14,900,000 as provided herein and in accordance with the terms hereof;
and
WHEREAS, the parties desire that in consideration for the advertising
and promotional services to be provided hereunder, About shall issue to PRIMEDIA
735,802 shares of About common stock (the "About Stock").
NOW, THEREFORE in consideration of the premises and the respective
representations, warranties, covenants and agreements contained herein, and for
good and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto hereby agree as follows:
1. PROMOTIONAL SERVICES COMMITMENT.
1.1. Definitions. For purposes of this Agreement, the following
definitions shall apply:
(a) "Print Advertising" shall mean print advertising space in
PRIMEDIA's consumer, enthusiast and business-to-business publications (the
"Publications").
(b) "Web Advertising" shall mean advertisements on and
sponsorships, links and other promotions related to PRIMEDIA's consumer,
enthusiast and business-to-business web sites.
(c) "Channel One Advertising" shall mean on-air advertising on
PRIMEDIA's Channel One Network.
(d) "Advertising" shall mean Print Advertising, Web Advertising
and Channel One Advertising.
(e) "Supplemental Promotions" shall mean the publication,
insertion and distribution of promotional inserts or brochures in connection
with the publication of any Publication.
(f) "Market Solutions" shall mean integrated promotional and
marketing packages incorporating Advertising, sponsorships, co-branding
opportunities and other promotional devices within or across PRIMEDIA editorial
focus areas (e.g., teens, babies, automobiles).
(g) "Trade Show Opportunities" shall mean sponsorships and booth
rentals at PRIMEDIA trade shows.
(h) "Promotional Services" shall mean Advertising, Subscriber List
Rentals, Supplemental Promotions, Market Solutions and Trade Show Opportunities
and other forms of print and on-line promotions, sponsorships and links.
1.2. PROMOTIONAL SERVICES COMMITMENT.
(A) ANNUAL COMMITMENT. Subject to the provisions herein,
beginning on the date hereof and continuing through December 31, 2001 (the
"Term"), About agrees to purchase and PRIMEDIA agrees to sell and make
available to About an aggregate of $14,900,000 million of Promotional
Services (the "Commitment"). About shall use its reasonable efforts to use a
minimum of $2,800,000 of the Commitment in calendar year 2000 including a
minimum of $500,000 of banner advertisements on GR8RIDE.com and the Pro
Football Weekly web site and other PRIMEDIA web sites. Of the remaining amount
of the Commitment, About shall use $6,800,000 in the first quarter 2001 and
the rest over the course of the Term as agreed to by the parties. About shall
use the Promotional Services to promote and advertise its own products and
services and shall not rent, resell or otherwise transfer to any third party
any portion of the Promotional Services.
(B) PRIORITY. The first $10,000,000 of PRIMEDIA advertising or
promotional services used by About during the Term shall be charged against the
Commitment hereunder and not against any other advertising agreement between the
parties.
(C) ACQUISITIONS/DIVESTITURES. About acknowledges that from time
to time certain of PRIMEDIA's subsidiaries and/or Publications may be sold
and/or new publications or promotional vehicles purchased. Any such changes in
PRIMEDIA shall be cause for renegotiation of the terms of this Agreement only in
the event that they materially alter the Promotional Services available to About
hereunder.
1.3. TERMS. About's requests for any of the Aggregate Promotional
Services shall be subject to the regular policies and practices of PRIMEDIA in
the ordinary course of business including, without limitation, with respect to
placement, space availability and deadlines for providing creative materials.
All Advertising placed by About hereunder and all promotional materials
distributed by About to any party on any subscriber list from a Subscriber List
Rental shall be acceptable to PRIMEDIA in its reasonable discretion consistent
with its regular practices and policies applicable to other advertisers and
clients. PRIMEDIA reserves the right to reject any Advertising or request for
Subscriber List Rentals that do not comply with the foregoing.
1.4. PRICE. About shall be charged for all Promotional Services at
agreed upon rate card rates. About shall be charged for all Promotional
Services in 2001 at agreed upon rate card rates. With respect to Promotional
Services for which there are no other regular users,
2
the parties agree to negotiate pricing in good faith consistent with rates
charged by PRIMEDIA for similar services. Except as expressly set forth herein,
PRIMEDIA is not responsible for any expenses or fees relating to the
Advertisements including without limitation any agency commissions or fees.
1.5. COMMON STOCK ISSUANCE. In consideration for the Promotional
Services to be provided hereunder, About shall issue to PRIMEDIA735,802
shares of common stock of About, par value $.001 per share on the date hereof
with an aggregate value equal to $14,900,000 (the "Common Stock"). The Common
Stock shall be issued to PRIMEDIA promptly upon the execution of this
Agreement. The Common Stock shall be duly authorized, validly issued and
non-assessable. Within five (5) business days of the date of this Agreement,
About shall execute a customary registration rights agreement in a form
reasonably satisfactory to About and PRIMEDIA providing PRIMEDIA with
piggyback rights for the Vested Portion of the Common Stock (including
standard cut-backs) except in respect of registration on Form S-8 or
registrations for issuing stock in the context of an acquisition.
2. REPRESENTATIONS AND WARRANTIES OF ABOUT.
2.1. ORGANIZATION AND AUTHORITY OF ABOUT. About (i) is a corporation
duly organized and in good standing under the laws of the State of Delaware and
(ii) has all the requisite power and authority to own or lease its assets and to
carry on its business. About has full power and authority to carry out the
transactions contemplated by this Agreement.
2.2. AUTHORIZATION OF AGREEMENT. The execution, delivery and
performance by About of this Agreement and the consummation by About of the
transactions contemplated hereby, have been duly authorized by all necessary
action of About. This Agreement has been duly executed and delivered by About
and constitute legal, valid and binding obligations of About, enforceable in
accordance with its respective terms (except insofar as enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting creditor's rights generally or by principles governing
the availability of equitable remedies).
2.3. NO CONFLICTS. Neither the execution, delivery or performance of
this Agreement, nor the consummation by About of the transactions contemplated
hereby, nor compliance by About with the terms and provisions hereof, will (i)
conflict with About's Certificate of Incorporation (ii) conflict with, or result
in the breach or termination of, or constitute a default (or with notice or
lapse of time or both, constitute a default) under or result in the termination
or suspension of, or accelerate the performance required by any of the terms,
conditions or provisions of, any note, bond, mortgage, indenture, license,
lease, agreement, commitment or other instrument to which About is a party or by
which any of its assets is bound except any such conflict which would not result
in a Material Adverse Effect (as defined in the Merger Agreement); (iii)
constitute a violation by About of any law or statute or any judgment, ruling,
order, writ injunction, decree, rule or regulation of any court or governmental
authority applicable to About except to the extent it does not constitute a
Material Adverse Effect; or (iv) result in the creation of any mortgage, pledge,
security interest, claim, lien, charge or encumbrance of any kind ("Lien") upon
any of the assets of About except to the extent it does not constitute a
Material Adverse Effect.
3
3. REPRESENTATIONS AND WARRANTIES OF PRIMEDIA.
3.1. ORGANIZATION OF PRIMEDIA. PRIMEDIA is a corporation duly
organized, validly existing and in good standing under the laws of the state of
Delaware. PRIMEDIA has the full power and authority to enter into this Agreement
and to carry out the transactions contemplated hereby.
3.2. AUTHORIZATION OF AGREEMENT. The execution, delivery and
performance by PRIMEDIA of this Agreement and the consummation by PRIMEDIA of
the transactions contemplated hereby, have been duly authorized by all necessary
action of PRIMEDIA. This Agreement has been duly executed and delivered by
PRIMEDIA and constitutes the legal, valid and binding obligation of PRIMEDIA,
enforceable in accordance with its terms.
3.3. NO CONFLICTS. Neither the execution, delivery or performance of
this Agreement, nor the consummation by PRIMEDIA of the transactions
contemplated hereby, nor compliance by PRIMEDIA with the terms and provisions
hereof, will (i) conflict with the Certificate of Incorporation or By-Laws of
PRIMEDIA, (ii) conflict with, or result in the breach or termination of, or
constitute a default (or with notice or lapse of time or both, constitute a
default) under or result in the termination or suspension of, or accelerate the
performance required by any of the terms, conditions or provisions of, any note,
bond, mortgage, indenture, license, lease, agreement, commitment or other
instrument to which PRIMEDIA is a party except to the extent it does not
constitute a Parent Material Adverse Effect (as defined in the Purchase
Agreement); or (iii) constitute a violation by PRIMEDIA of any law or statute or
any judgment, ruling, order, writ injunction, decree, rule or regulation of any
court or governmental authority applicable to PRIMEDIA except to the extent it
does not constitute a Parent Material Adverse Effect.
3.4. PURCHASE NOT FOR DISTRIBUTION. PRIMEDIA hereby represents and
warrants to About that any shares of About Common Stock acquired by PRIMEDIA
hereunder will not be taken with a view to the public distribution thereof and
will not be transferred or otherwise disposed of except in a transaction
registered or exempt from registration under the Securities Act of 1933, as
amended.
4. Miscellaneous.
4.1. ENTIRE AGREEMENT. This Agreement (together with the Schedules and
Exhibits hereto and the documents referred to herein) contains, and is intended
as, a complete statement of all of the terms of the arrangements between the
parties with respect to the matters provided for herein, and supersedes any
previous agreements and understandings between the parties with respect to those
matters. Section titles and headings are inserted for convenience of reference
only and are not intended to be a part or to affect the meaning or
interpretation hereof.
4.2. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED
AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
4.3. AMENDMENT; WAIVER. No provision of this Agreement may be amended
or modified except by an instrument or instruments in writing signed by the
parties hereto. Any
4
party may waive compliance by another with any of the provisions of this
Agreement. No waiver of any provision hereof shall be construed as a waiver of
any other provision or subsequent breach. Any waiver must be in writing. The
failure of any party hereto to enforce at any time any provision hereof shall
not be construed to be a waiver of such provision, nor in any way to affect the
validity hereof or any part hereof or the right of any party thereafter to
enforce each and every such provision.
4.4. NOTICES. All notices and other communications under this Agreement
shall be in writing and shall be deemed given when delivered personally, mailed
by registered mail, return receipt requested, sent by documented overnight
delivery service or, to the extent receipt is confirmed, by telecopy to the
parties at the following addresses (or to such other address as a party may have
specified by notice given to the other party pursuant to this provision):
If to About to it at
About.com, Inc.
1440 Broadway, 19th Floor
New York, New York 10018
Attention: Alan Blaustein, Esq.
Fax: (212) 204-1521
with a copy to:
Brobeck, Phleger & Harrison LLP
1633 Broadway, 47th Floor
New York, New York 10019
Attention: Eric Simonson, Esq.
Fax: (212) 586-7878
with a copy to
If to PRIMEDIA, to:
PRIMEDIA Inc.
745 Fifth Avenue
New York, New York 10151
Telecopy No.:
Confirmation No.:
Attention: Mr. Charles McCurdy
with a copy to:
5
PRIMEDIA Inc.
745 Fifth Avenue
New York, New York 10151
Telecopy No.: (212) 745-0131
Confirmation No.: (212) 745-0628
Attention: Christopher A. Fraser, Esq.
4.5. SEPARABILITY. If any provision of this Agreement is held by any
court of competent jurisdiction to be illegal, invalid or unenforceable, such
provision shall be of no force and effect, but the illegality, invalidity or
unenforceability shall have no effect upon and shall not impair the
enforceability of any other provision of this Agreement.
4.6. ASSIGNMENT AND BINDING EFFECT. None of the parties hereto may
assign any of its rights or delegate any of its duties under this Agreement
without the prior written consent of the others. All of the terms and provisions
of this Agreement shall be binding on, and shall inure to the benefit of, the
respective successors and permitted assigns of the parties.
4.7. NO BENEFIT TO OTHERS. The representations, warranties, covenants
and agreements contained in this Agreement are for the sole benefit of the
parties hereto and their respective successors and permitted assigns and they
shall not be construed as conferring and are not intended to confer any rights
on any other persons.
4.8. COUNTERPARTS. This Agreement may be executed in two (2) or more
counterparts, each of which shall be deemed an original, and each party thereto
may become a party hereto by executing a counterpart hereof. This Agreement and
any counterpart so executed shall be deemed to be one and the same instrument.
The exchange (by facsimile) of facsimile copies of executed counterparts of this
Agreement shall be deemed execution and delivery thereof, provided that receipt
of such facsimile is confirmed in writing. Original copies shall follow by
documented overnight delivery.
4.9. EXPENSES. Each party shall pay all of its respective expenses
relating to the transactions contemplated hereby including, without limitation,
the expenses of its attorneys and financial advisors.
4.10. INTERPRETATION. The parties hereto agree that in interpreting
this Agreement there shall be no inference against the drafting party.
6
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the date first above written.
About.com, Inc.
/s/ Scott Kurnit
-----------------------------------
Name: Scott Kurnit
Title: Chairman and Chief Executive
Officer
PRIMEDIA Inc.
/s/ Beverly C. Chell
-----------------------------------
Name: Beverly C. Chell
Title: Vice Chairman
7
Exhibit 10.8
LIST RENTAL AGREEMENT
This list rental agreement (the "Agreement") is entered into on this 6th day of
December 2000 by and between PRIMEDIA Magazines Inc. ("PRIMEDIA") and About.com,
Inc. ("About") with respect to use of the PRIMEDIA consumer and special
interest magazine mailing list owned by PRIMEDIA (the "Mailing List"),
pursuant to the terms and conditions hereinafter set forth.
1. About expressly acknowledges that the Mailing List shall be strictly
limited to no more than three uses, solely and exclusively for
mailings of mailing pieces promoting About (the "Mailing Pieces").
The content of the Mailing Pieces shall be adhere to the same
content standards as advertisements which appear in Seventeen
Magazine and shall be subject to PRIMEDIA's advance approval which
shall not be unreasonably withheld. PRIMEDIA shall deliver the
Mailing List to About no later than December 29, 2000. Upon such
delivery, About shall immediately acknowledge receipt and acceptance
of the Mailing List in writing. About agrees and acknowledges that
upon such delivery, PRIMEDIA's obligations relating to the Mailing
List are fully satisfied.
2. In consideration of the use of the Mailing List, About shall issue
to PRIMEDIA 120,987 shares of common stock of About, par value $.001
per share on the date hereof with an aggregate value equal to
$2,450,000 (the "Common Stock"). The Common Stock shall be issued to
PRIMEDIA promptly upon of the execution of this Agreement. The
Common Stock shall be duly authorized, validly issued and
non-assessable. Within five (5) business days of the date of this
Agreement, About shall execute a customary registration rights
agreement in a form reasonably satisfactory to About and PRIMEDIA
providing PRIMEDIA with piggyback rights for the Vested Portion of
the Common Stock (including standard cut-backs) except in respect of
registration on Form S-8 or registrations for issuing stock in the
context of an acquisition.
3. About hereby unconditionally promises, agrees, represents and
warrants that as a condition to the use of the Mailing List it will
not (i) disclose, transfer, duplicate, reproduce or retain in any
form or manner whatsoever the Mailing List or any part thereof or
permit any third party, agent, employee or contractor of their
respective agents or employees to do any of the foregoing,
regardless of whether the Mailing List takes the form of printed
labels, magnetic tape or otherwise; (ii) disclose the identity of
PRIMEDIA as the list owner or the derivation or source of the
Mailing List to any third party; (iii) use the Mailing List as a
basis for a phone or e-mail solicitation; (iv) use the Mailing List
in connection with "free offers" or for any other offer in which a
negative response is requested or solicited. About shall erase the
Mailing List from all storage devices upon which it is stored
immediately upon processing its mailing.
4. About acknowledges that the Mailing List is the property of
PRIMEDIA.
5. About acknowledges that the Mailing List has and will continue to be
monitored to prevent unauthorized use thereof, by a combination of
one or more methods of computer control and or planted and/or varied
names and addresses. About hereby consents to such controls.
6. PRIMEDIA makes no warranty or representation of any nature regarding
(i) the accuracy of the Mailing List's names and addresses; (ii) the
results to be obtained from the use of the Mailing List or (iii) the
number of mail pieces which are actually deliverable based on the
information contained in the Mailing List.
7. About agrees to indemnify and hold harmless PRIMEDIA from any and
all claims, damages, liabilities, expenses, including but not
limited to attorney fees and expenses, however incurred, relating to
the use of the Mailing List by About or its agents contrary to the
provisions of this Agreement.
8. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
9. No provision of this Agreement may be amended or modified except by
an instrument or instruments in writing signed by the parties
hereto. Any party may waive compliance by another with any of the
provisions of this Agreement. No waiver of any provision hereof
shall be construed as a waiver of any other provision or subsequent
breach. Any waiver must be in writing. The failure of any party
hereto to enforce at any time any provision hereof shall not be
construed to be a waiver of such provision, nor in any way to affect
the validity hereof or any part hereof or the right of any party
thereafter to enforce each and every such provision.
10. If any provision of this Agreement is held by any court of competent
jurisdiction to be illegal, invalid or unenforceable, such provision
shall be of no force and effect, but the illegality, invalidity or
unenforceability shall have no effect upon and shall not impair the
enforceability of any other provision of this Agreement.
11. None of the parties hereto may assign any of its rights or delegate
any of its duties under this Agreement without the prior written
consent of the others. All of the terms and provisions of this
Agreement shall be binding on, and shall inure to the benefit of,
the respective successors and permitted assigns of the parties.
12. The representations, warranties, covenants and agreements contained
in this Agreement are for the sole benefit of the parties hereto and
their respective successors and permitted assigns and they shall not
be construed as conferring and are not intended to confer any rights
on any other persons.
13. This Agreement may be executed in two (2) or more counterparts, each
of which shall be deemed an original, and each party thereto may
become a party hereto by executing a counterpart hereof. This
Agreement and any counterpart so executed shall be deemed to be one
and the same instrument. The exchange (by facsimile) of facsimile
copies of executed counterparts of this Agreement shall be deemed
execution and delivery thereof, provided that receipt of such
facsimile is confirmed in writing. Original copies shall follow by
documented overnight delivery.
14. The parties hereto agree that in interpreting this Agreement there
shall be no inference against the drafting party.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the date
first above written.
/s/ Lawrence Rutkowski
-----------------------------------
Name: Lawrence Rutkowski
Title: Executive Vice President and
Chief Financial Officer
EXHIBIT 10.9
PRIMEDIA INC.
2001 STOCK INCENTIVE PLAN
1. PURPOSE OF PLAN
The PRIMEDIA Inc. 2001 Stock Incentive Plan (the "Plan") is designed:
(a) to promote the long term financial interests and growth of PRIMEDIA
Inc. (the "Corporation") and its Subsidiaries (as defined below) by attracting
and retaining management personnel with the training, experience and ability to
enable them to make a substantial contribution to the success of the
Corporation's business;
(b) to motivate management personnel by means of growth-related
incentives to achieve long range goals; and
(c) to further the identity of interests of participants with those of
the stockholders of the Corporation through opportunities for increased stock,
or stock-based, ownership in the Corporation.
2. DEFINITIONS
As used in the Plan, the following words shall have the following
meanings:
(a) "Affiliate" shall mean, with respect to the Corporation, any entity
directly or indirectly controlling, controlled by, or under common control with,
the Corporation or any other entity designated by the Board of Directors in
which the Corporation or an Affiliate has an interest.
(b) "Board of Directors" means the Board of Directors of the
Corporation.
(c) "Change in Control" shall mean the occurrence of any one of the
following events:
(i) transaction or series of related transactions whereby KKR
Associates and/or its affiliates ("KKR") sells or otherwise disposes of
beneficial ownership (within the meaning of Rule 13 d-3 of the Securities
Exchange Act of 1934, as amended (the "1934 Act")) of securities of the
Corporation representing 35% or more of the combined voting power of all
securities of the Corporation entitled to vote in the election of
directors of the Corporation to any single person or group (within the
meaning of Section 13(d)(3) of the 1934 Act, and the rules and regulations
promulgated thereunder), other than to an Affiliate of KKR, and in
connection with or following such disposition such single person or group
obtains control of a majority of the seats (other than vacant seats) on
the Board;
(ii) the Corporation adopts any plan of liquidation providing
for the distribution of all or substantially all of its assets;
(iii) all or substantially all of the assets or business of the
Corporation are disposed of pursuant to a merger, consolidation or other
transaction (unless the shareholders of the Corporation immediately prior
to such merger, consolidation or other transaction beneficially own,
directly or indirectly, in substantially the same proportion as they owned
the voting securities of the Corporation, all of the voting securities or
other ownership interests of the entity or entities, if any, that succeed
to the business of the Corporation); or
(iv) the Corporation combines with another company and is the
surviving corporation but, immediately after the combination, the
shareholders of the Corporation immediately prior to the combination hold,
directly or indirectly, 50% or less of the voting securities of the
combined company (there being excluded from the number of shares held by
such shareholders, but not from the voting securities of the combined
company, any shares received by Affiliates of such other company in
exchange for stock of such other company).
(d) "Committee" means the Compensation Committee of the Board of
Directors.
(e) "Common Stock" or "Share" means common stock of the Corporation
which may be authorized but unissued, or issued and reacquired.
(f) "Derivative Security" has the meaning given it in Rule 16a-1(c)
under the Exchange Act.
(g) "Employee" means a person, including an officer, in the employment
of the Corporation or one of its Subsidiaries who is selected by the Committee.
(h) "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
(i) "Fair Market Value" means such value of a Share as reported for
stock exchange transactions and/or determined in accordance with any applicable
resolutions or regulations of the Committee in effect at the relevant time.
(j) "Grant" means an award made to a Participant pursuant to the Plan
and described in Paragraph 5, including, without limitation, an award of a Stock
Option, Stock Appreciation Right, Dividend Equivalent Right, Restricted Stock,
Purchase Stock, Performance Units, Performance Shares or Other Stock Based Grant
or any combination of the foregoing.
(k) "Grant Agreement" means an agreement between the Corporation and a
Participant that sets forth the terms, conditions and limitations applicable to
a Grant.
(l) "Participant" means an Employee, or other person having a
relationship with the Corporation or any of its Subsidiaries, to whom one or
more Grants have been made and such Grants have not all been forfeited or
terminated under the Plan; provided, however, a non-employee director of the
Corporation or one of its Subsidiaries may not be a Participant.
2
(m) "Stock-Based Grants" means the collective reference to the grant of
Stock Appreciation Rights, Dividend Equivalent Rights, Restricted Stock,
Performance Units, Performance Shares and Other Stock Based Grants.
(n) "Stock Options" means the collective reference to "Incentive Stock
Options" and "Other Stock Options".
(o) "Subsidiary" means any entity of which the Corporation owns, either
directly or indirectly, at least 50% of the combined voting power or economic
interest of such entity.
3. ADMINISTRATION OF PLAN
(a) The Plan shall be administered by the Committee, which may delegate
its duties and powers in whole or in part to any subcommittee thereof consisting
solely of at least two individuals who are intended to qualify as "non-employee
directors" within the meaning of Rule 16b-3 under the Act (or any successor rule
thereto) and "outside directors" within the meaning of Section 162(m) of the
Code (or any successor section thereto). The Committee may adopt its own rules
of procedure, and the action of a majority of the Committee, taken at a meeting
or taken without a meeting by a writing signed by such majority, shall
constitute action by the Committee. The Committee shall have the power and
authority to administer, construe and interpret the Plan, to make rules for
carrying it out and to make changes in such rules. Any such interpretations,
rules, and administration shall be consistent with the basic purposes of the
Plan.
(b) The Committee may delegate to the Chief Executive Officer and to
other senior officers of the Corporation its duties under the Plan subject to
such conditions and limitations as the Committee shall prescribe except that
only the Committee may designate and make Grants to Participants who are subject
to Section 16 of the Exchange Act or Section 162(m) of the Code.
(c) The Committee may employ attorneys, consultants, accountants,
appraisers, brokers or other persons. The Committee, the Corporation, and the
officers and directors of the Corporation shall be entitled to rely upon the
advice, opinions or valuations of any such persons. No member of the Committee
shall be personally liable for any action, determination or interpretation made
in good faith with respect to the Plan or the Grants, and all members of the
Committee shall be fully protected by the Corporation with respect to any such
action, determination or interpretation.
(d) The Committee may construe and interpret the Plan and the Grants
awarded thereunder and establish, amend and revoke rules and regulations for the
administration of the Plan, including, but not limited to, correcting any defect
or supplying any omission, or reconciling any inconsistency in the Plan or in
any Grant Agreement, in the manner and to the extent it shall deem necessary or
advisable to make the Plan fully effective.
(e) The Committee may determine the duration and purposes for leaves of
absence which may be granted to a Participant on an individual basis without
constituting a termination of employment or service for purposes of the Plan.
3
(f) The Committee may resolve all questions of interpretation arising
under or in connection with the administration of the Plan, exercise its
discretion with respect to the powers and rights granted to it as set forth in
the Plan, and generally, exercise such powers and perform such acts as are
deemed necessary or advisable to promote the best interests of the Company with
respect to the Plan.
(g) All decisions and determinations by the Committee in the exercise of
the powers conferred upon it under the Plan shall be final, binding and
conclusive upon the Company, the Subsidiaries, Participants and all other
persons having any interest therein.
4. ELIGIBILITY
The Committee may from time to time make Grants under the Plan to such
Employees, or other persons having a relationship with the Corporation or any of
its Subsidiaries, and in such form and having such terms, conditions and
limitations as the Committee may determine. No Grants may be made under this
Plan to non-employee directors of the Corporation or any of its Subsidiaries.
Grants may be granted singly, in combination or in tandem. The terms, conditions
and limitations of each Grant under the Plan shall be set forth in a Grant
Agreement, in a form approved by the Committee, consistent, however, with the
terms of the Plan; provided, however, such Grant Agreement shall contain
provisions dealing with the treatment of Grants in the event of the termination,
death or disability of a Participant, and may also include provisions concerning
the treatment of Grants in the event of a change of control of the Corporation.
5. GRANTS
From time to time, the Committee will determine the forms and amounts of
Grants to Participants. Grants shall be subject to such terms and conditions,
including without limitation, vesting and exercisability periods or
restrictions, and the effect on a Grant of a termination or change in employment
status of a Participant (including a termination or change by reason of a sale
of a subsidiary or division of the Corporation), as the Committee may in its
discretion determine. Such Grants may take the following forms in the
Committee's sole discretion:
(a) INCENTIVE STOCK OPTIONS - These are stock options within the meaning
of Section 422 of the Code, to purchase Common Stock. In addition to other
restrictions contained in the Plan, an option granted under this Paragraph 5(a),
(i) may not be exercised more than 10 years after the date it is granted, (ii)
may not have an option price less than the Fair Market Value of Common Stock on
the date the option is granted, (iii) must otherwise comply with Code Section
422, and (iv) must be designated as an "Incentive Stock Option" by the
Committee. The maximum aggregate Fair Market Value of Common Stock (determined
at the time of each Grant) with respect to which any Participant may first
exercise Incentive Stock Options under this Plan and any Incentive Stock Options
granted to the Participant for such year under any plans of the Corporation or
any Subsidiary in any calendar year is $100,000. Payment of the option price
shall be made in cash or in shares of Common Stock, or a combination thereof, in
accordance with the terms of the Plan, the Grant Agreement, and of any
applicable guidelines of the Committee in effect at the time.
4
(b) OTHER STOCK OPTIONS - These are options to purchase Common Stock
which are not designated by the Committee as "Incentive Stock Options". At the
time of the Grant the Committee shall determine, and shall have contained in the
Grant Agreement or other Plan rules, the option exercise period, the option
price, and such other conditions or restrictions on the grant or exercise of the
option as the Committee deems appropriate, which may include the requirement
that the grant of options is predicated on the acquisition by the optionholder
of Purchase Stock under Paragraph 5(e) by the Optionee. In addition to other
restrictions contained in the Plan, an option granted under this Paragraph 5(b),
(i) may not be exercised more than 10 years after the date it is granted and
(ii) may not have an option exercise price less than 30% of the Fair Market
Value of Common Stock on the date it is granted.
(c) STOCK APPRECIATION RIGHTS - These are rights that on exercise
entitle the holder to receive the excess of (i) the Fair Market Value of a share
of Common Stock on the date of exercise over (ii) the Fair Market Value on the
date of Grant (the "base value") multiplied by (iii) the number of rights
exercised as determined by the Committee. Stock Appreciation Rights granted
under the Plan may, but need not be, granted in conjunction with an Option under
Paragraph 5(a) or 5(b). The Committee, in the Grant Agreement or by other Plan
rules, may impose such conditions or restrictions on the exercise of Stock
Appreciation Rights as it deems appropriate, and may terminate, amend, or
suspend such Stock Appreciation Rights at any time. No Stock Appreciation Right
granted under this Plan may be exercised more than 10 years after the date it is
granted.
(d) RESTRICTED STOCK - Restricted Stock is Common Stock delivered to a
Participant with restrictions or conditions on the Participant's right to
transfer or sell such stock; provided that the price of any share of Restricted
Stock delivered for consideration other than services and not as bonus stock may
not be less than 30% of the Fair Market Value of a share of Common Stock on the
date such Restricted Stock is granted or the price of such Restricted Stock may
be the par value of a share of Common Stock. The number of shares of Restricted
Stock and the restrictions on such shares shall be as the Committee determines,
in the Grant Agreement or by other Plan rules, and the certificate for the
Restricted Stock shall bear evidence of the restrictions or conditions.
(e) PURCHASE STOCK - Purchase Stock are shares of Common Stock offered
to a Participant at such price as determined by the Committee; provided,
however, that the price per share of such Purchase Stock may not be less than
30% of the Fair Market Value of the Common Stock on the date such shares of
Purchase Stock are offered.
(f) DIVIDEND EQUIVALENT RIGHTS - These are rights to receive cash
payments from the Corporation at the same time and in the same amount as any
cash dividends paid on an equal number of shares of Common Stock to shareholders
of record during the period such rights are effective. The Committee, in the
Grant Agreement or by other Plan rules, may impose such restrictions and
conditions on the Dividend Equivalent Rights, including the date such rights
will terminate, as it deems appropriate, and may terminate, amend, or suspend
such Dividend Equivalent Rights at any time.
(g) PERFORMANCE UNITS - These are rights to receive at a specified
future date, payment in cash of an amount equal to all or a portion of the value
of a unit granted by the Committee. At
5
the time of the Grant, in the Grant Agreement or by other Plan rules, the
Committee must determine the base value of the unit, the performance factors
applicable to the determination of the ultimate payment value of the unit and
the period over which Corporation performance will be measured. These factors
must include a minimum performance standard for the Corporation below which no
payment will be made and a maximum performance level above which no increased
payment will be made. The term over which Corporation performance will be
measured shall be not less than six months.
(h) PERFORMANCE SHARES - These are rights to receive at a specified
future date, payment in cash or Common Stock, as determined by the Committee, of
an amount equal to all or a portion of the (i) average of the Fair Market Value
of a share of Common Stock on each trading day during the last forty-five (45)
days of such period, multiplied by (ii) a specified number of shares of Common
Stock. At the time of the Grant, the Committee, in the Grant Agreement or by
Plan rules, will determine the factors which will govern the portion of the
rights so payable and the period over which performance will be measured. The
factors will be based on Corporation performance and must include a minimum
performance standard for the Corporation below which no payment will be made and
a maximum performance level above which no increased payment will be made. The
term over which Corporation performance will be measured shall be not less than
six months. Performance Shares will be granted for no consideration other than
services.
(i) OTHER STOCK-BASED GRANTS - The Committee may make other Grants under
the Plan pursuant to which shares of Common Stock (which may, but need not, be
shares of Restricted Stock pursuant to Paragraph 5(d)), are or may in the future
be acquired, or Grants denominated in stock units, including Grants valued using
measures other than market value. Other Stock-Based Grants may be granted with
or without consideration; provided, however, that the price of any such Grant
made for consideration other than services that provides for the acquisition of
shares of Common Stock or other equity securities of the Corporation may not be
less than 30% of the Fair Market Value of a share of the Common Stock or such
other equity securities on the date of grant of such Grant. Such Other
Stock-Based Grants may be made alone, in addition to or in tandem with any Grant
of any type made under the Plan and must be consistent with the purposes of the
Plan.
(j) MANNER OF EXERCISE AND PAYMENT OF STOCK OPTIONS - A Stock Option, or
portion thereof, shall be exercised for whole shares of Common Stock by delivery
of a written notice of exercise to the Corporation and payment of the full
exercise price of the shares being purchased. A Participant may exercise a Stock
Option with respect to less than the full number of shares for which the Stock
Option may then be exercised. The price of Common Stock purchased pursuant to an
Option, or portion thereof, may be paid:
(1) in United States dollars in cash or by check, bank draft or
money order payable to the order of the Corporation,
(2) through the delivery of shares of Common Stock (which the
Participant has held for at least six months prior to delivery of such shares or
where the Participant has purchased on the open market and for which the
Participant holds title free and clear of all liens
6
and encumbrances) with an aggregate Fair Market Value on the date of exercise
equal to the exercise price,
(3) by delivery of an irrevocable notice of exercise to a financial
institution acceptable to the Corporation to deliver promptly to the Corporation
the portion of sale or loan proceeds sufficient to pay the exercise price,
(4) through the written election of the Participant to have shares
of Common Stock withheld by the Corporation from the shares otherwise to be
received, with such withheld shares having an aggregate Fair Market Value on the
date of exercise equal to the exercise price or Federal, state and local tax
withholding obligations in connection with such exercise or
(5) by any combination of the above methods of payment.
The Committee shall have sole discretion to disapprove of an election for
delivering or withholding Common Stock upon exercise of a Stock Option in
accordance with clauses (2)-(5) above and may impose such limitations and
prohibitions on the use of Common Stock to exercise a Stock Option as it deems
appropriate, including, without limitation, any limitation or prohibition
designed to avoid certain accounting consequences which may result from the use
of Common Stock as payment upon exercise of a Stock Option or tax withholding
obligation. If the method of payment in clause (3) is elected, the Stock Option
will be deemed to be exercised simultaneously with the sale of the shares by the
financial institution. If the shares to be acquired on such exercise cannot be
sold for a price equal to or greater than the full Exercise Price, then there
will be no exercise of the Stock Option.
(k) NONTRANSFERABILITY OF DERIVATIVE SECURITIES: No Stock Option or
Stock-Based Grant which constitutes a Derivative Security shall be transferable
otherwise than by will, the laws of descent and distribution or pursuant to
beneficiary designation procedures approved by the Corporation or be subject to
attachment, execution or other similar process. In the event of any attempt by
the Participant to alienate, assign, pledge, hypothecate or otherwise dispose of
a Stock Option or any such Stock-Based Grant or of any right hereunder, except
as provided for herein, or in the event of any levy or any attachment, execution
or similar process upon the rights or interest hereby conferred, the Corporation
may terminate the Stock Option or such Stock-Based Grant by notice to the
Participant and the Stock Option or such Stock-Based Grant shall thereupon
become null and void. Notwithstanding the foregoing, the Committee may provide,
either at the time of grant or otherwise, that a Stock Option or Stock-Based
Grant constituting a Derivative Security is transferrable to the extent that
such transferability is permissible under BOTH Rule 16b-3 under the Exchange Act
and the form of Registration Statement under which securities issued under the
Plan are registered under the Securities Act of 1933.
6. LIMITATIONS AND CONDITIONS
(a) Subject to Paragraph 4, the number of shares available for Grants
under this Plan shall be 6,437,750 shares of Common Stock reduced by the sum of
the aggregate amount of shares issued upon a Grant or become subject to an
outstanding Grant. The number of shares subject to Grants under this Plan to any
one Participant during any calendar year shall not be more than 4,816,400 shares
of Common Stock. To the extent that shares related to outstanding
7
Grants are not issued by reason of Grants being forfeited, terminated,
cancelled, expire unexercised or delivered or withheld to pay the exercise price
or satisfy withholding obligations, then such shares shall again immediately
become available for Grants.
(b) No Grants shall be made under the Plan beyond ten years after the
effective date of the amendment and restatement of the Plan, but the terms of
Grants made on or before the expiration thereof may extend beyond such
expiration. At the time a Grant is made or amended or the terms or conditions of
a Grant are changed, the Committee may provide for limitations or conditions on
such Grant.
(c) Nothing contained herein shall affect the right of the Corporation
to terminate any Participant's employment at any time or for any reason.
(d) Deferrals of Grant payouts may be provided for, at the sole
discretion of the Committee, in the Grant Agreements.
(e) Except as otherwise prescribed by the Committee, the amounts of the
Grants for any employee of a Subsidiary, along with interest, dividend, and
other expenses accrued on deferred Grants shall be charged to the Participant's
employer during the period for which the Grant is made. If the Participant is
employed by more than one Subsidiary or by both the Corporation and a Subsidiary
during the period for which the Grant is made, the Participant's Grant and
related expenses will be allocated between the companies employing the
Participant in a manner prescribed by the Committee.
(f) Participants shall not be, and shall not have any of the rights or
privileges of, stockholders of the Corporation in respect of any Shares subject
to any Grant unless and until certificates representing any such Shares have
been issued by the Corporation to such Participants.
(g) No election as to benefits or exercise of any Grant may be made
during a Participant's lifetime by anyone other than the Participant except by a
legal representative appointed for or by the Participant.
(h) Any Grant shall not be deemed compensation for purposes of computing
benefits or contributions under any retirement plan of the Corporation or its
Subsidiaries and shall not affect any benefits under any other benefit plan of
any kind or subsequently in effect under which the availability or amount of
benefits is related to level of compensation. This Plan is not a "Retirement
Plan" or "Welfare Plan" under the Employee Retirement Income Security Act of
1974, as amended.
(i) Unless the Committee determines otherwise, no benefit or promise
under the Plan shall be secured by any specific assets of the Corporation or any
of its Subsidiaries, nor shall any assets of the Corporation or any of its
Subsidiaries be designated as attributable or allocated to the satisfaction of
the Corporation's obligations under the Plan.
7. TRANSFERS AND LEAVES OF ABSENCE
8
For purposes of the Plan a transfer of a Participant's employment
without an intervening period of separation among the Corporation and any
Subsidiary shall not be deemed a termination of employment.
8. ADJUSTMENTS
In the event of a stock split, spin-off, stock dividend, stock combination
or reclassification, recapitalization or merger, change of control, or similar
event, the Committee may adjust appropriately the number or kind of Shares
subject to the Plan and available for or covered by Grants and Share prices
related to outstanding Grants and make such other revisions to outstanding
Grants as it deems are equitably required.
9. CHANGE IN CONTROL
Except as otherwise provided in a Grant Agreement, in the event of a
Change in Control, the Committee in its sole discretion and without liability to
any person may take such actions, if any, as it deems necessary or desirable
with respect to any award granted under the Plan (including, without limitation,
(i) the acceleration of vesting or exercisability of an award, (ii) the
expiration of an award following a Change in Control, (iii) the payment of a
cash amount in exchange for the cancellation of an award which, in the case of
Stock Options may equal the excess, if any, of the fair market value per share
of Common Stock over the option price, and/or (iv) the requiring of the issuance
of substitute awards that will substantially preserve the value, rights and
benefits of any affected awards previously granted hereunder) effective as of
the date of the consummation of the Change in Control.
10. AMENDMENT AND TERMINATION
The Committee shall have the authority to make such amendments to any
terms and conditions applicable to outstanding Grants as are consistent with
this Plan provided that, except for adjustments under Paragraph 8 or 9 hereof,
no such action shall modify such Grant in a manner adverse to the Participant
without the Participant's consent except as such modification is provided for or
contemplated in the terms of the Grant. The Committee's authority hereunder
shall include, without limitation, amendments to accelerate or waive vesting
periods and to extend the exercisability (including to extend or provide for
post-termination exercisability) of Stock Options or Stock-Based Grants,
provided that such exercisability shall not extend past 10 years from the date
of grant of such Stock Options, Stock-Based Grants or Other Stock-Based Grants.
The Board of Directors may amend, suspend or terminate the Plan except
that no such action, other than an action under Paragraph 8 or 9 hereof, may be
taken which would, without shareholder approval, increase the aggregate number
of Shares available for Grants under the Plan, decrease the price of outstanding
Options or Stock Appreciation Rights, change the requirements relating to the
Committee or extend the term of the Plan.
11. FOREIGN OPTIONS AND RIGHTS
9
The Committee may make Grants to Employees who are subject to the laws of
nations other than the United States, which Grants may have terms and conditions
that differ from the terms thereof as provided elsewhere in the Plan for the
purpose of complying with foreign laws.
12. WITHHOLDING TAXES
The Corporation shall have the right to deduct from any cash payment made
under the Plan any Federal, state or local income or other taxes required by law
to be withheld with respect to such payment. It shall be a condition to the
obligation of the Corporation to deliver shares or pay any cash pursuant to any
Grant that the Participant pay to the Corporation such amount as may be
requested by the Corporation for the purpose of satisfying any liability for
such withholding taxes. Any Grant Agreement may provide that the Participant may
elect, in accordance with any conditions set forth in such Grant Agreement, to
pay a portion or all of such withholding taxes by delivery of in shares of
Common Stock or by having shares of Common Stock withheld by the Corporation
from the shares otherwise to be received. The number of shares so delivered or
withheld shall have an aggregate Fair Market Value sufficient to satisfy the
applicable withholding taxes. The acceptance of any such election by a
Participant shall be at the sole discretion of the Committee, and in the case of
a Participant subject to Section 16 of the Exchange Act, the Corporation may
require that the method of making such payment be in compliance with Section 16
and rules and regulations thereunder.
13. EFFECTIVE DATE AND TERMINATION DATES
The Plan shall be effective on and as of the date of the approval by the
stockholders of the Corporation in its amended and restated form, and shall
terminate ten years later, subject to earlier termination by the Board of
Directors pursuant to Paragraph 10.
10
FORM OF NON-QUALIFIED STOCK OPTION AGREEMENT
THIS AGREEMENT, dated as of _______________ __, 2001, is made by and
between PRIMEDIA Inc., a Delaware corporation hereinafter referred to as the
"Corporation", and [ ], an employee of the Corporation or an Affiliate of
the Corporation, hereinafter referred to as "Optionee".
WHEREAS, the Corporation wishes to afford the Optionee the
opportunity to purchase shares of its common stock, $.01 par value (the "Common
Stock");
WHEREAS, the Corporation wishes to carry out the Plan (as
hereinafter defined), the terms of which are hereby incorporated by reference
and made a part of this Agreement; and
WHEREAS, the Committee (as defined below) has determined that it
would be to the advantage and best interest of the Corporation and its
stockholders to grant the Option (as hereinafter defined) provided for herein to
the Optionee as an incentive for increased efforts during his term of office
with the Corporation or its Affiliates, and has advised the Corporation thereof
and instructed the undersigned officers to issue said Option;
NOW, THEREFORE, in consideration of the mutual covenants herein
contained and other good and valuable consideration, receipt of which is hereby
acknowledged, the parties hereto do hereby agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1 - BOARD
"Board" shall mean the Board of Directors of the Corporation.
SECTION 1.2 - CAUSE
"Cause" shall have the same meaning as in the Employment Agreement.
SECTION 1.3 - CHANGE OF CONTROL
"Change of Control" shall mean the occurrence of any one of the
following events:
(a) a transaction or series of related transactions whereby KKR
Associates and/or its affiliates ("KKR") sells or otherwise disposes of
beneficial ownership (within the meaning of Rule 13d-3 of the Securities
Exchange Act of 1934, as amended (the "1934 Act")) of securities of the
Corporation representing 35% or more of the combined voting power of all
securities of the Corporation entitled to vote in the election of
directors of the Corporation to any single person or group (within the
meaning of Section 13(d)(3) of the 1934 Act, and the rules and regulations
promulgated thereunder), other than to an Affiliate of KKR, and in
connection with or following such disposition such single
person or group obtains control of a majority of the seats (other than
vacant seats) on the Board;
(b) the Corporation adopts any plan of liquidation providing for the
distribution of all or substantially all of its assets;
(c) all or substantially all of the assets or business of the
Corporation are disposed of pursuant to a merger, consolidation or other
transaction (unless the shareholders of the Corporation immediately prior
to such merger, consolidation or other transaction beneficially own,
directly or indirectly, in substantially the same proportion as they owned
the voting securities of the Corporation, all of the voting securities or
other ownership interests of the entity or entities, if any, that succeed
to the business of the Corporation); or
(d) the Corporation combines with another company and is the
surviving corporation but, immediately after the combination, the
shareholders of the Corporation immediately prior to the combination hold,
directly or indirectly, 50% or less of the voting securities of the
combined company (there being excluded from the number of shares held by
such shareholders, but not from the voting securities of the combined
company, any shares received by Affiliates of such other company in
exchange for stock of such other company).
SECTION 1.4 - CODE
"Code" shall mean the Internal Revenue Code of 1986, as amended.
SECTION 1.5 - COMMITTEE
"Committee" shall mean the Compensation Committee of the
Corporation.
SECTION 1.6 - DIMINUTION
"Diminution" shall have the same meaning as in the Employment
Agreement.
SECTION 1.7 - DISABILITY
"Disability" shall have the same meaning as in the Employment
Agreement.
SECTION 1.8 - EMPLOYMENT AGREEMENT
"Employment Agreement" shall mean the employment agreement between
the Corporation and the Optionee dated October 29, 2000.
SECTION 1.9 - GOOD REASON
"Good Reason" shall have the same meaning as in the Employment
Agreement.
SECTION 1.10 - GRANT DATE
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"Grant Date" shall mean the date on which the Option provided for in
this Agreement was granted.
SECTION 1.11 - PLAN
"Plan" shall mean the 2001 PRIMEDIA Inc. Stock Incentive Plan.
SECTION 1.12 - RETIREMENT
"Retirement" shall mean retirement at age 65 or over (or such other
earlier date as the Committee may approve) after having been employed by the
Corporation or any Subsidiary or Affiliate for at least three years after the
Grant Date.
SECTION 1.13 - SECRETARY
"Secretary" shall mean the Secretary of the Corporation.
ARTICLE II
GRANT OF OPTION
SECTION 2.1 - GRANT OF OPTION
For good and valuable consideration, on and as of the date hereof,
the Corporation irrevocable grants to the Optionee an Option to purchase [____]
shares of Common Stock upon the terms and condition set forth in this Agreement.
SECTION 2.2 - EXERCISE PRICE
Subject to Section 2.4, the exercise price of the shares of Common
Stock covered by the Option shall be $[ ] per share.
SECTION 2.3 - CONTINUED EMPLOYMENT
Nothing in which Agreement or in the Plan shall confer upon the
Optionee any right to continue in the employ of the Corporation or any
Subsidiary or Affiliate or shall interfere with or restrict in any way the
rights of the Corporation and its Subsidiaries or Affiliates, which are hereby
expressly reserved, to terminate the employment of the Optionee at any time for
any reason whatsoever, with or without Cause.
SECTION 2.4 - ADJUSTMENTS IN OPTION PURSUANT TO MERGER, CONSOLIDATION, ETC.
Subject to Section 8 of the Plan, in the event that the outstanding
shares of the stock subject to an Option are, from time to time, changed into or
exchanged for a different number of kind of shares of the Corporation or other
securities by reason of a merger, consolidation, recapitalization,
reclassification, change of control, stock split, stock dividend, combination of
shares, or otherwise, the Committee shall make an appropriate and equitable
adjustment in the number of kind of shares or securities and/or the amount of
consideration as to which or for which, as the case may be, such Option, or
portions thereof then unexercised, shall
3
be exercisable. Any such adjustment made by the Committee shall be final and
binding upon the Optionee, the Corporation and all other interested persons.
ARTICLE III
PERIOD OF EXERCISABILITY
SECTION 3.1 - COMMENCEMENT OF EXERCISABILITY
(a) The Option granted hereby shall become exercisable with respect
to 25% of the Shares subject to the Option on and after the first
anniversary of the Grant Date. The Option shall become exercisable with
respect to an additional 25% of the Shares subject to the Option on each
anniversary thereafter.
(b) Notwithstanding the foregoing, the Option shall become
immediately exercisable (A) as to 100% of the shares of Common Stock
subject to such Option upon the Optionee's termination of employment (i)
by the Corporation without Cause, (ii) due to the Optionee's death or
Disability or (iii) due to the Optionee's resignation with Good Reason
(but only to the extent such option has not otherwise terminated or become
exercisable) and (B) as to 50% of the shares of Common Stock subject to
such option that have not otherwise become exercisable upon a termination
of employment by the Optionee due to a Diminution (but only to the extent
such option ahs not otherwise been terminated). Upon any other termination
of employment, no Option shall become exercisable as to any additional
shares of Common Stock. Any option which is non-exercisable as of the
Optionee's termination of employment shall be immediately canceled.
(c) Notwithstanding the foregoing, the Option shall become
immediately exercisable as to 100% of the shares of Common Stock subject
to such option immediately prior to a Change of Control (but only to the
extent such option has not otherwise terminated or become exercisable).
SECTION 3.2 - EXPIRATION OF OPTION
Except as otherwise provided in this Agreement, the Option may not
be exercised to any extent by the Optionee after the first to occur of the
following events:
(a) the tenth anniversary of the Grant Date; or
(b) the first anniversary of the date of the Optionee's termination
of employment by reason of death, Disability or Retirement; or
(c) the 90th business day after termination of employment of the
Optionee for any reason other than for Cause, death, Disability or
Retirement; or
(d) the date of an Optionee's termination of employment by the
Corporation for Cause; or
4
(e) if the Committee so determines pursuant to Section 9 of the
Plan, the effective date of either the merger or consolidation of the
Corporation into another Corporation, or the exchange or acquisition by
another corporation of all or substantially all of the Corporation's
assets or 80% or more of its then outstanding voting stock, or the
recapitalization, reclassification, liquidation or dissolution of the
Corporation. At least ten (10) days prior to the effective date of such
merger, consolidation, exchange, acquisition, recapitalization,
reclassification, liquidation or dissolution, the Committee shall give the
Employee notice of such event if the Option has then neither been fully
exercised nor becomes unexercisable under this Section 3.2.
ARTICLE IV
EXERCISE OF OPTION
SECTION 4.1 - PERSON ELIGIBLE TO EXERCISE
During the lifetime of the Optionee, only he may exercise an Option
or any portion thereof. After the death of the Optionee, any exercisable portion
of an Option may, prior to the time when an Option becomes unexercisable under
Section 3.2, be exercised by his personal representative or by any person
empowered to do so under the Optionee's will or under the then applicable laws
of descent and distribution.
SECTION 4.2 - PARTIAL EXERCISE
Any exercisable portion of an Option or the entire Option, if then
wholly exercisable, may be exercised in whole or in part at any time prior to
the time when the Option or portion thereof becomes unexercisable under Section
3.2; PROVIDED, HOWEVER, that any partial exercise shall be for whole shares of
Common Stock only.
SECTION 4.3 - MANNER OF EXERCISE
The Option, or any exercisable portion thereof, may be exercised
solely be delivering to the Secretary or his office all of the following prior
to the time when the Option or such portion becomes unexercisable under Section
3.2:
(a) notice in writing signed by the Optionee or the other person
then entitled to exercise the Option or portion thereof, stating that the
Option or portion thereof is thereby exercised, such notice complying with
all applicable rules established by the Committee;
(b) full payment (in cash, by check or by a combination thereof) of
the Option Price for the shares with respect to which such Option or
portion thereof is exercised;
(c) a bona fide written representation and agreement, in a form
satisfactory to the Committee, signed by the Optionee or other person then
entitled to exercise such Option or portion thereof, stating that the
shares or stock are being acquired for his own account, for investment and
without any present intention of distributing or reselling said shares or
any of them except as may be permitted under the Securities Act of 1933,
as amended (the "Act"), and then applicable rules and regulations
thereunder, and that the Optionee or other person then entitled to
exercise such Option or portion thereof will indemnify the
5
Corporation against and hold it free and harmless from any loss, damage,
expense or liability resulting to the Corporation if any sale or
distribution o the shares by such person in contrary to the representation
and agreement referred to above; PROVIDED, HOWEVER, that the Committee
may, in its absolute discretion, take whatever addition actions it deems
appropriate to ensure the observance and performance of such
representation and agreement and to effect compliance with the Act and any
other federal or state securities laws or regulations;
(d) full payment to the Corporation of all amounts which, under
federal, state or local law, it is required to withhold upon exercise of
the Option; and
(e) in the event the Option or portion thereof shall be exercised
pursuant to Section 4.1 by any person or persons other than the Optionee,
appropriate proof of the right of such person or persons to exercise the
Option.
Without limiting the generality of the foregoing, the Committee may
require an opinion of counsel acceptable to it to the effect that any subsequent
transfer of shares acquired on exercise of an Option does not violate the Act,
and may issue stop-transfer orders covering such shares. The written
representation and agreement referred to in subsection (c) above shall, however,
not be required if the shares to be issued pursuant to such exercise have been
registered under the Act, and such registration is then effective in respect of
such shares. Share certificates evidencing stock issued on exercise of this
Option shall bear an appropriate legend referring to the provisions of
subsection (c) above and the agreements herein.
SECTION 4.4 - CONDITIONS TO ISSUANCE OF STOCK CERTIFICATES
The shares of stock deliverable upon the exercise of the Option, or
any portion thereof, may be either previously authorized but unissued shares or
issued shares which have then been reacquired by the Corporation. Such shares
shall be fully paid and nonassessable. The Corporation shall not be required to
issue or deliver any certificate or certificates for shares of stock purchased
upon the exercise of the Option or portion thereof prior to fulfillment of all
of the following conditions:
(a) the obtaining of approval or other clearance from any state or
federal governmental agency which the Committee shall, in its absolute
discretion, determine to be necessary or advisable; and
(b) the lapse of such reasonable period of time following the
exercise of the Option as the Committee may from time to time establish
for reasons of administrative convenience.
SECTION 4.5 - RIGHTS AS STOCKHOLDER
The holder of the Option shall not be, nor have any of the rights or
privileges of, a stockholder of the Corporation in respect of any shares
purchasable upon the exercise of the Option or any portion thereof unless and
until certificates representing such shares shall have been issued by the
Corporation to such holder.
6
ARTICLE V
MISCELLANEOUS
SECTION 5.1 - ADMINISTRATION
The Committee shall have the power to interpret the Plan and this
Agreement and to adopt such rules for the administration, interpretation and
applicable of the Plan as are consistent therewith and to interpret or revoke
any such rules. All actions taken and all interpretations and determinations
made by the Committee shall be final and binding upon the Optionee, the
Corporation and all other interested person. No member of the Committee shall be
personally liable for any action, determination or interpretation made in good
faith with respect to the Plan or the Option. In its absolute discretion, the
Board may at any time and from time to time exercise any and all rights and
duties of the Committee under the Plan and Agreement.
SECTION 5.2 - OPTION NOT TRANSFERABLE
Except as otherwise provided by the Committee, neither the Option
nor any interest or right therein or part thereof shall be liable for the debts,
contracts or engagements of the Optionee or his successors in interest or shall
be subject to disposition by transfer, alienation, anticipation, pledge,
encumbrance, assignment or any other means whether such disposition be voluntary
or involuntary or by operation of law by judgment, levy, attachment, garnishment
or any other legal or equitable proceedings (including bankruptcy), and any
attempted disposition thereof shall be null and void and of no effect; PROVIDED,
HOWEVER, that this Section 5.2 shall not prevent transfers made by will or by
the applicable laws of descent and distribution.
SECTION 5.3 - SHARES TO BE RESERVED
The Corporation shall at all times during the term of the Option
reserve and keep available such number of shares of stock as will be sufficient
to satisfy the requirements of this Agreement.
SECTION 5.4 - NOTICES
Any notice to be given under the terms of this Agreement to the
Corporation shall be addressed to the Corporation in case of its Secretary, and
any notice to be given to the Optionee shall be addressed to him at the address
given beneath his signature hereto. By a notice given pursuant to this Section
5.4, either party may hereafter designate a different address for notices to be
given to him. Any notice which is required to be given to the Optionee shall, if
the Optionee is then deceased, be given to the Optionee's personal
representative if such representative has previously informed the Corporation of
his status and address by written notice under this Section 5.4. Any notice
shall have been deemed duly given when enclosed in a properly sealed envelope or
wrapper addressed as aforesaid, deposited (with postage prepaid) in a post
office or branch post office regularly maintained by the United States Postal
Service.
SECTION 5.5 - TITLES
Titles are provided herein for convenience only and are not to serve
as a basis for interpretation or construction of this Agreement.
7
SECTION 5.6 - APPLICABILITY OF PLAN
The Option and the shares of Common stock issued to the Optionee
upon exercise of the Option shall be subject to all of the terms and provisions
of the Plan. In the event of any conflict between this Agreement and the Plan,
the terms of the Plan shall control.
SECTION 5.7 - AMENDMENT
This Agreement may be amended only by a writing executed by the
parties hereto which specifically states that it is amending this Agreement.
SECTION 5.8 - GOVERNING LAW
The laws of the State of Delaware (or if the Corporation
reincorporates in another state, the laws of that state) shall govern the
interpretation, validity and performance of the terms of this Agreement
regardless of the law that might be applied under principles of conflicts of
laws.
SECTION 5.9 - JURISDICTION
Any suit, action or proceedings against the Optionee with respect to
this Agreement, or any judgment entered by any court in respect of any thereof,
may be brought in any court of competent jurisdiction in the State of Delaware
(or if the Corporation reincorporates in another state, in that state), as the
Corporation may elect in its sole discretion, and the Optionee hereby submits to
the non-exclusive jurisdiction of such courts for the purpose of any such suit,
action, proceeding or judgment. The Optionee hereby irrevocably waives any
objections which he may now or hereafter have to the laying of the venue of any
suit, action or proceeding arising out of or relating to this Agreement brought
in any court of competent jurisdiction in the State of Delaware (or if the
Corporation reincorporates in another sate, in that state), and hereby further
irrevocably waives any claim that any such suit, action or proceedings brought
in any such court has been brought in any inconvenient forum. No suit, action or
proceedings against the Corporation with respect to this Agreement may be
brought in any court, domestic or foreign, or before any similar domestic or
foreign authority other than in a court of competent jurisdiction in the State
of Delaware (or if the Corporation reincorporates in another state, in that
state), and the Optionee hereby irrevocably waives any right which he may
otherwise have had to bring such an action in any other court, domestic or
foreign, or before nay similar domestic or foreign authority. The Corporation
hereby submits to the jurisdiction of such courts for the purpose of any such
suit, action or proceeding.
8
IN WITNESS WHEREOF, this Agreement has been executed and delivered
by the parties hereto.
THIS AGREEMENT (the "Agreement"), dated as of [ ],
2001, (the "Grant Date") between PRIMEDIA, INC., a Delaware corporation (the
"Company"), and [ ] (the "Participant").
WHEREAS, the Company has adopted the PRIMEDIA 2001 Stock Incentive
Plan (the "Plan"), which Plan as it may be amended from time to time is
incorporated herein by reference and made a part of this Agreement;
WHEREAS, the Compensation Committee of the Board of Directors has
determined that it would be in the best interests of the Company and its
stockholders to grant the restricted stock award provided for herein (the
"Restricted Stock Award") to the Participant pursuant to the Plan and the terms
set forth herein;
WHEREAS, the Company and the Participant have entered into an
employment agreement dated October 29, 2000 (the "Employment Agreement"); and
WHEREAS, the Employment Agreement provides for the grant of
restricted stock to the Participant;
NOW THEREFORE, in consideration of the mutual covenants hereinafter
set forth, the parties hereto agree as follows:
1. GRANT OF THE RESTRICTED SHARES. Subject to the terms and
conditions of the Plan, and the additional terms and conditions set forth in
this Agreement, the Company hereby grants to the Participant a Restricted Stock
Award consisting of [ ] shares of Common Stock (the "Restricted Shares"), in
consideration of the Participant's payment of the par value of $.01 per share of
Common Stock, for a total payment of $[ ]. The Restricted Shares shall vest and
become nonforfeitable in accordance with Section 2 hereof. Any capitalized terms
not otherwise defined herein shall have the meanings set forth in the Employment
Agreement or the Plan.
2. VESTING
(a) Subject to the Participant's continued employment with the
Company and the terms of this Agreement, the Restricted Shares shall vest and
become nonforfeitable, with respect to twenty-five percent (25%) of the
Restricted Shares initially granted hereunder on the first anniversary of the
Grant Date, and with respect to an additional 25% of the Restricted Shares on
each of the second, third and fourth anniversaries thereof. Notwithstanding the
foregoing, in the event the above vesting schedule results in the vesting of any
fractional Shares, such fractional Shares shall not be deemed vested hereunder
but shall vest and become nonforfeitable when such fractional Shares aggregate
whole Shares.
(b) If the Participant's employment with the Company is terminated
for any reason, the Restricted Shares shall, to the extent not then vested, be
forfeited by the Participant without consideration; PROVIDED, HOWEVER, that if
the Participant is terminated (i) by the Company without Cause (as defined in
the Employment Agreement), (ii) by the Participant with Good Reason (as defined
in the Employment Agreement) or (iii) due to the Participant's death or
Disability (as defined in the Employment Agreement), all Restricted Shares, to
the extent not then vested, shall become immediately vested and nonforfeitable;
PROVIDED, FURTHER, that if the Participant resigns due to a Diminution (as
defined in the Employment Agreement), fifty percent of the Restricted Shares
that were not vested as of the date of termination shall become immediately
vested and nonforfeitable.
(c) Notwithstanding any other provision of this Agreement to the
contrary, in the event of a Change of Control, the Restricted Shares shall, to
the extent not then vested and not previously forfeited, immediately become
fully vested and nonforfeitable.
3. CERTIFICATES. Certificates evidencing the Restricted Shares
shall be issued by the Company and shall be registered in the Participant's name
on the stock transfer books of the Company promptly after the date hereof, but
shall remain in the physical custody of the Company or its designee at all times
prior to the vesting of such Restricted Shares pursuant to Section 2. The
Participant hereby acknowledges and agrees that the Company shall retain custody
of such certificate or certificates until the restrictions imposed by Section 2
on the Common Stock granted hereunder lapse. As a condition to the receipt of
this Restricted Stock Award, the Participant shall deliver to the Company a
stock power or powers, duly endorsed in blank, relating to the Restricted
Shares. No certificates shall be issued for fractional Shares.
4. RIGHTS AS A STOCKHOLDER. The Participant shall be the record
owner of the Restricted Shares until or unless such Shares are forfeited
pursuant to Section 2 hereof and as record owner shall be entitled to all rights
of a common stockholder of the Company, including, without limitation, voting
rights with respect to the Restricted Shares; PROVIDED that (i) any cash or
in-kind dividends paid with respect to the Restricted Shares which have not
previously vested shall be withheld by the Company and shall be paid to the
Participant only when, and if, such Restricted Shares shall become fully vested
pursuant to Section 2 and (ii) the Restricted Shares shall be subject to the
limitations on transfer and encumbrance set forth in Section 6. As soon as
practicable following the vesting of any Restricted Shares pursuant to Section
2, certificates for the Restricted Shares which shall have vested shall be
delivered to the Participant or to the Participant's legal guardian or
representative along with the stock powers relating thereto.
5. LEGEND ON CERTIFICATES. The certificates representing the
unvested Restricted Shares shall bear a legend stating that the Restricted
Shares are subject to the provisions of this Agreement and shall be subject to
such stop transfer orders and other restrictions as the Committee may deem
advisable under the Plan or the rules, regulations, and other requirements of
the Securities and Exchange Commission, any stock exchange upon which such
Shares are listed, and any applicable Federal or state laws, and the Committee
may cause a legend or legends to be put on any such certificates to make
appropriate reference to such restrictions.
6. TRANSFERABILITY. The Restricted Shares may not, at any time
prior to becoming vested pursuant to Section 2, be transferred, sold, assigned,
pledged, hypothecated or otherwise disposed of unless such transfer, sale,
assignment, pledge, hypothecation or other disposition complies with the
provisions of this Agreement or the Plan.
7. PURCHASER'S EMPLOYMENT BY THE COMPANY. Subject to the terms of
the Employment Agreement, nothing contained in this Agreement (i) obligates the
Company or any subsidiary of the Company to employ the Participant in any
capacity whatsoever or (ii) prohibits or restricts the Company (or any such
subsidiary) from terminating the employment of the Participant at any time or
for any reason whatsoever, with or without Cause, and the Participant hereby
acknowledges and agrees that, except as otherwise provided in the Employment
Agreement, neither the Company nor any other person has made any representations
or promises whatsoever to the Participant concerning the Participant's
employment or continued employment by the Company or any subsidiary of the
Company.
8. CHANGE IN CAPITALIZATION. If, prior to the time the
restrictions imposed by Section 2 on the Restricted Shares granted hereunder
lapse, the Company shall be reorganized, or consolidated or merged with another
corporation or any similar event, any stock, securities or other property
exchangeable for such Restricted Shares, or received in connection with such
Shares, pursuant to such reorganization, consolidation, merger or other similar
event shall be deposited with the Company and shall become subject to the
restrictions and conditions of this Agreement to the same extent as if it had
been the original property granted hereby.
9. WITHHOLDING. It shall be a condition of the obligation of the
Company upon delivery of Restricted Shares to the Participant that the
Participant pay to the Company such amount as may be requested by the Company
for the purpose of satisfying any liability for any Federal, state or local
income or other taxes required by law to be withheld with respect to such
Restricted Shares, including the payment to the Company upon the vesting of the
Restricted Shares (or such earlier or later date as may be applicable under
Section 83 of the Code) or other settlement in respect of the Restricted Shares
of all such taxes. The Company shall be authorized to take such action as may be
necessary in the opinion of the Company's counsel (including, without
limitation, withholding vested Restricted Shares otherwise deliverable to
Participant hereunder and/or withholding amounts from any compensation or other
amount owing from the Company to the Participant) to satisfy all obligations for
the payment of any such taxes. The Participant is hereby advised to seek his own
tax counsel regarding the taxation of the grant of Restricted Shares made
hereunder.
10. SECURITIES LAWS. Upon the vesting of any Restricted Shares,
the Company may require the Participant to make or enter into such written
representations, warranties and agreements as the Committee may reasonably
request in order to comply with applicable securities laws or with this
Agreement and appropriate legends may be placed on the certificates. The
granting of the Restricted Shares hereunder shall be subject to all applicable
laws, rules and regulations and to such approvals of any governmental agencies
as may be required and appropriate legends may be placed on the certificates.
11. NOTICES. Any notice to be given under the terms of this
Agreement to the Company shall be addressed to the Company in care of its
General Counsel, and any notice to be given to the Participant shall be
addressed to him at the address given beneath his signature hereto. By a notice
given pursuant to this Section 11, either party may hereafter designate a
different address for notices to be given to him. Any notice which is required
to be given to the Participant shall, if the Participant is then deceased, be
given to the Participant's personal representative if such representative has
previously informed the Company of his status and address by written notice
under this Section 11. Any notice shall have been deemed duly given when
enclosed in a properly sealed envelope or wrapper addressed as aforesaid,
deposited (with postage prepaid) in a post office or branch post office
regularly maintained by the United States Postal Service.
12. GOVERNING LAW. The laws of the State of Delaware (or if the
Company reincorporates in another state, the laws of that state) shall govern
the interpretation, validity and performance of the terms of this Agreement
regardless of the law that might be applied under principles of conflicts of
laws.
13. RESTRICTED STOCK AWARD SUBJECT TO THE EMPLOYMENT AGREEMENT AND
PLAN. The Restricted Stock Award shall be subject to all terms and provisions of
the Plan and the Employment Agreement, to the extent applicable to the
Restricted Shares. In the event of any conflict between this Agreement and the
Plan, the terms of the Plan shall control. In the event of any conflict among
this Agreement, the Plan and the Employment Agreement, the terms of the
Employment Agreement shall control.
14. SIGNATURE IN COUNTERPARTS. This Agreement may be signed
in counterparts, each of which shall be an original, with the same effect as
if the signatures thereto and hereto were upon the same instrument.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement.
PRIMEDIA, INC.
By: ___________________
Its:
Participant
Exhibit 21
List of Subsidiaries of PRIMEDIA
STATE OR OTHER
JURISDICTION OF
INCORPORATION OR
NAME ORGANIZATION
------------------------------------------------------ ------------------------
Abracadabra Acquisition Corporation Delaware
Adams/Intertec International, Inc. Delaware
Adams/Laux Company, Inc. Delaware
AgriClick LLC Delaware
American Heat Video Productions, Inc. Missouri
The Apartment Guide of Nashville, Inc. Tennessee
Bacon's Information, Inc. Delaware
Bankers Consulting Company Missouri
Bowhunter Magazine, Inc. Pennsylvania
Calibre Press, Inc. Illinois
Cambridge Research Group, Ltd. West Virginia
Canadian Red Book, Inc. Canada
Canoe and Kayak, Inc. Delaware
Cardinal Business Media, Inc. Delaware
Cardinal Business Media Holdings, Inc. Delaware
Channel One Communications Corp. Delaware
Channel One Communications Interactive Inc. Delaware
Climbing, Inc. Delaware
CommCorp. LLC California
Communications Concepts, Inc. d/b/a Illustrated Nevada
Graphics Communications
ConsumerClick Corp. Delaware
Cover Concepts Marketing Services, LLC Delaware
Cowles History Group, Inc. Virginia
Creative Technologies LLC Delaware
STATE OR OTHER
JURISDICTION OF
INCORPORATION OR
NAME ORGANIZATION
------------------------------------------------------ ------------------------
CSK Publishing Company, Inc. Delaware
Cumberland Publishing, Inc. Maryland
Digibid LLC Delaware
Electrical Construction LLC Delaware
Films for the Humanities & Sciences, Inc. Delaware
Game and Fish Merger Subsidiary, Inc. Georgia
Go Lo Entertainment, Inc. California
GR8RIDE.com Delaware
Guias do Brasil, Ltda. Brazil
Guinn Communications, Inc. Tennessee
Haas Publishing Companies, Inc. Delaware
Horse & Rider, Inc. California
HPC Brazil, Inc. Delaware
HPC do Brasil Ltda. Brazil
HPC Interactive Inc. Delaware
HPC Interactive, LLC Delaware
IndustryClick Corp. Delaware
Industrial Training Systems Corporation New Jersey
Intellichoice, Inc. California
Intertec Publishing Corporation Delaware
Intertec Publishing (UK) Limited United Kingdom
Kagan Asia Media Ltd. England and Wales
Kagan Media Appraisals, Inc. California
Kagan Seminars, Inc. California
Kagan World Media Inc. Delaware
Kagan World Media Limited England and Wales
Kit Planes Acquisition Company Delaware
STATE OR OTHER
JURISDICTION OF
INCORPORATION OR
NAME ORGANIZATION
------------------------------------------------------ ------------------------
Law Enforcement Television Network, Inc. Texas
Little Rock Apartment Guide, Inc. Arkansas
Lockert Jackson & Associates Washington
Low Rider Publishing Group, Inc. California
Maddux Publishing, Inc. Florida
MarketingClick LLC Delaware
McMullen Argus Publishing, Inc. California
MediaCentral LLC Delaware
The Memphis Apartment Guide, Inc. Tennessee
Meridian Education Corporation Illinois
Metro New York LLC Delaware
Miramar Communications, Inc. California
PKA Acquisition Corp. Delaware
Plaza Communications, Inc. California
PRIMEDIA Digital Video LLC Delaware
PRIMEDIA Enterprises, Inc. Delaware
PRIMEDIA Enthusiast Publications Inc. Pennsylvania
PRIMEDIA Holdings III, Inc. Delaware
PRIMEDIA Information, Inc. Delaware
PRIMEDIA International Inc. Delaware
PRIMEDIA Magazine Finance, Inc. Delaware
PRIMEDIA Magazines, Inc. Delaware
PRIMEDIANet Inc. Delaware
PRIMEDIA Special Interest Publications Delaware
PRIMEDIA TeenClick Corp. Delaware
PRIMEDIA Ventures, Inc. Delaware
PRIMEDIA Workplace Learning LLC Delaware
STATE OR OTHER
JURISDICTION OF
INCORPORATION OR
NAME ORGANIZATION
------------------------------------------------------ ------------------------
PRIMEDIA Workplace Learning LP Delaware
Princeton/American Communications Co. New Jersey
Qwiz, Inc. Delaware
Qwiz (UK) Ltd. United Kingdom
RetailVision, Inc. Delaware
Simba Information, Inc. Connecticut
Symbol of Excellence Publishers, Inc. Alabama
TelecomClick LLC Delaware
TI-IN Acquisition Corporation Texas
TSECRP, Inc. California
Virtual Flyshop, Inc. Colorado
Wescott Communications Michigan, Inc. Michigan
Wescott ECI, Inc. Texas
Wescott PRIMEDIA Limited United Kingdom
EXHIBIT 23.1
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Amendment No. 1 of
Registration Statement No. 333-51432 of PRIMEDIA Inc. on Form S-4 of our reports
dated February 2, 2000 (which report on the consolidated financial statements
expresses an unqualified opinion and includes an explanatory paragraph referring
to PRIMEDIA's change in 1998 in the method of accounting for internal use
software costs to conform with Statement of Position 98-1 "Accounting for the
Costs of Computer Software Developed or Obtained for Internal Use" of the
American Institute of Certified Public Accountants), appearing in the Annual
Report on Form 10-K of PRIMEDIA Inc. for the year ended December 31, 1999 and to
the reference to us under the heading "Experts" in such Registration Statement.
DELOITTE & TOUCHE LLP
New York, New York
January 12, 2001
EXHIBIT 23.2
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors
About.com, Inc.:
We consent to the incorporation by reference in this Amendment No. 1 of
Registration Statement No. 333-51432 of PRIMEDIA Inc. on Form S-4 of our report
dated January 24, 2000, relating to the consolidated balance sheets of
About.com, Inc. and subsidiaries as of December 31, 1998 and 1999, and the
related consolidated statements of operations, stockholders' (deficit) equity
and cash flows for each of the years in the three-year period ended
December 31, 1999, and financial statement schedule, which report appears in the
December 31, 1999 annual report on Form 10-K of About.com, Inc., and to the
reference to our firm under the headings "Change in Independent Public
Accountants" and "Experts" in this registration statement.
CONSENT OF DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
We hereby consent to (i) the inclusion of our opinion letter, dated
October 29, 2000, to the Board of Directors of About.com, Inc. ("About") as
Annex C to the Joint Proxy Statement-Consent Solicitation-Prospectus of
PRIMEDIA Inc. ("PRIMEDIA") and About relating to the proposed merger between
About and a wholly owned subsidiary of PRIMEDIA and (ii) all references to DLJ
in the sections captioned "Summary--Opinions of Financial Advisors", "The
Merger--Background of the Merger", "The Merger--About's Reasons for the Merger;
Recommendation of About's Board of Directors" and "The Merger--Opinion of
Donaldson, Lufkin & Jenrette Securities Corporation" in the Joint Proxy
Statement-Consent Solicitation-Prospectus of PRIMEDIA and About which forms a
part of this Registration Statement on Form S-4. In giving such consent, we do
not admit that we come within the category of persons whose consent is required
under, and we do not admit that we are "experts" for purposes of, the Securities
Act of 1933, as amended, and the rules and regulations promulgated thereunder.
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
By: /s/ JONATHAN TURNER
-----------------------------------------
Jonathan Turner
Vice President
New York, New York
January 17, 2001
Exhibit 99.8
AMENDMENT TO EMPLOYMENT AGREEMENT
AMENDMENT, dated as of January 16, 2001, to the Employment Agreement (the
"AGREEMENT"), dated as of October 29, 2000, by and between PRIMEDIA, Inc.,
About.com, Inc. and Scott Kurnit:
1. Section 4 of the Agreement is hereby amended to read in its
entirety as follows:
"4. BONUS
a. SIGN-ON BONUS. As soon as practicable following the
Commencement Date, the Executive shall receive a Sign-On Bonus
equal to $36,483.
b. ANNUAL BONUS. With respect to each calendar year during the
Employment Term, Executive shall be eligible to earn an annual bonus
award (an "Annual Bonus") in such amount, as determined in the sole
discretion of the CEO based upon the achievement of performance
goals established by the CEO within the first three months of each
calendar year during the Employment Term, provided that the minimum
bonus for any calendar year during the Term shall be $1,650,000 (the
"Minimum Bonus"). Any bonus shall be prorated for any partial
calendar year based on the number of days in such calendar year in
which Executive performed services divided by 365. Such Annual Bonus
shall be paid no later than March 31 of the year following the end
of the measuring calendar year."
2. Section 5(b) of the Agreement is hereby amended to read in its
entirety as follows:
"b. RESTRICTED SHARES. As of the Commencement Date, Executive shall
be granted 2,211,100 shares of restricted stock of the Parent (the
"Restricted Shares") pursuant to the Plan. The Restricted Shares
shall vest, subject to Executive's continued employment with the
Company or an affiliate, with respect to twenty-five percent (25%)
of the Restricted Shares on the first anniversary of the
Commencement Date and with respect to an additional twenty-five
percent (25%) of the Restricted Shares on each anniversary
thereafter, so that the Restricted Shares would become fully vested
on the fourth anniversary of the Commencement Date."
3. Section 8(b)(iv)(C) of the Agreement is hereby amended to read in
its entirety as follows:
"(C) All Options and Restricted Shares not yet vested shall be fully
vested."
4. Section 8(c)(ii)(C) of the Agreement is hereby amended to read in
its entirety as follows:
"(C) One-half of all Options and one-half of all Restricted
Shares not yet vested shall be fully vested,"
5. Section 9(c)(i)(C) of the Agreement is hereby amended to read in
its entirety as follows:
"(C) all Options and Restricted Shares not vested shall become fully
vested."
6. As amended hereby, the Agreement shall continue in full force and
effect in accordance with its terms.
IN WITNESS WHEREOF, the parties hereto have here unto set in their hands
and seal as of the day and year first above written.
PRIMEDIA, Inc.
By /s/ BEVERLY CHELL
---------------------------------
Title Vice Chairman
About.com, Inc.
By /s/ SCOTT KURNIT
---------------------------------
Title Chairman and Chief Executive
Officer
/s/ SCOTT KURNIT
------------------------------
Scott Kurnit
Exhibit 99.9
AMENDMENT TO EMPLOYMENT AGREEMENT
AMENDMENT, dated as of January 16, 2001, to the Employment Agreement (the
"AGREEMENT"), dated as of October 29, 2000, by and between PRIMEDIA, Inc.,
About.com, Inc. and William Day:
1. Section 4 of the Agreement is hereby amended to read in its
entirety as follows:
"4. BONUS
a. SIGN-ON BONUS. As soon as practicable following the
Commencement Date, the Executive shall receive a Sign-On Bonus
equal to $12,282.
b. ANNUAL BONUS. With respect to each calendar year during the
Employment Term, Executive shall be eligible to earn an annual bonus
award (an "Annual Bonus") in such amount, as determined in the sole
discretion of the CEO based upon the achievement of performance
goals established by the CEO within the first three months of each
calendar year during the Employment Term, provided that the minimum
bonus for any calendar year during the Term shall be $650,000 (the
"Minimum Bonus"). Any bonus shall be prorated for any partial
calendar year based on the number of days in such calendar year in
which Executive performed services divided by 365. Such Annual Bonus
shall be paid no later than March 31 of the year following the end
of the measuring calendar year."
2. Section 5(b) of the Agreement is hereby amended to read in its
entirety as follows:
"b. RESTRICTED SHARES. As of the Commencement Date, Executive shall
be granted 744,350 shares of restricted stock of the Parent (the
"Restricted Shares") pursuant to the Plan. The Restricted Shares
shall vest, subject to Executive's continued employment with the
Company or an affiliate, with respect to twenty-five percent (25%)
of the Restricted Shares on the first anniversary of the
Commencement Date and with respect to an additional twenty-five
percent (25%) of the Restricted Shares on each anniversary
thereafter, so that the Restricted Shares would become fully vested
on the fourth anniversary of the Commencement Date."
3. Section 8(b)(iv)(C) of the Agreement is hereby amended to read in
its entirety as follows:
"(C) All Options and Restricted Shares not yet vested shall be fully
vested."
4. Section 8(c)(ii)(C) of the Agreement is hereby amended to read in
its entirety as follows:
"(C) One-half of all Options and one-half of all Restricted Shares
not yet vested shall be fully vested,"
5. Section 9(c)(i)(C) of the Agreement is hereby amended to read in
its entirety as follows:
"(C) all Options and Restricted Shares not vested shall become fully
vested."
6. As amended hereby, the Agreement shall continue in full force and
effect in accordance with its terms.
IN WITNESS WHEREOF, the parties hereto have here unto set in their hands
and seal as of the day and year first above written.
PRIMEDIA, Inc.
By /s/ BEVERLY CHELL
---------------------------------
Title Vice Chairman
About.com, Inc.
By /s/ SCOTT KURNIT
---------------------------------
Title Chairman and Chief Executive
Officer
/s/ WILLIAM DAY
------------------------------
William Day
Exhibit 99.10
ABOUT.COM, INC.
FORM OF PROXY FOR SPECIAL MEETING OF STOCKHOLDERS - FEBRUARY 20, 2001
(THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF THE COMPANY)
The undersigned stockholder of About.com, Inc. hereby appoints Scott P.
Kurnit and Todd B. Sloan, and each of them, with full power of substitution,
proxies to vote the shares of stock which the undersigned could vote if
personally present at the Special Meeting of Stockholders of About.com, Inc. to
be held at the Hotel Intercontinental, 111 East 48th Street, New York, New York
10017 on February 20, 2001 at 10:00 a.m. (New York time).
(CONTINUED AND TO BE SIGNED ON THE REVERSE SIDE.)
PLEASE DATE, SIGN AND MAIL YOUR
PROXY CARD BACK AS SOON AS POSSIBLE!
SPECIAL MEETING OF STOCKHOLDERS
ABOUT.COM, INC.
FEBRUARY 20, 2001
v Please Detach and Mail in the Envelope Provided v
A |X| Please mark your
votes as in this
example.
FOR AGAINST ABSTAIN
1. ADOPTION OF |_| |_| |_|
MERGER AGREEMENT
Proposal to adopt the agreement and
plan of merger by and among
About.com, Inc. ("About"), PRIMEDIA
Inc. ("PRIMEDIA") and Abracadabra
Acquisition Corporation
("Abracadabra"), a newly-formed and
wholly-owned subsidiary of PRIMEDIA,
pursuant to which Abracadabra will
merge with and into About, such that
About will become a wholly-owned
subsidiary of PRIMEDIA.
2. IN THEIR DISCRETION UPON SUCH OTHER
MATTERS AS MAY PROPERLY COME BEFORE
THE MEETING
UNLESS OTHERWISE SPECIFIED, THIS PROXY
WILL BE VOTED FOR PROPOSALS 1 AND 2 AS
SET FORTH IN THE JOINT PROXY STATEMENT
- CONSENT SOLICITATION - PROSPECTUS.
Signature(s) of Stockholder_______________________________________
Printed Name(s) of Stockholder_________________Dated:_____________
Note: Please date and sign exactly as your name appears on the envelope in which
this material was mailed. If shares are held jointly, each stockholder should
sign. Executors, administrators, trustees, etc. should use full title and, if
more than one, all should sign. If the stockholder is a corporation, please sign
full corporate name by an authorized officer. If the stockholder is a
partnership, please sign full partnership name by an authorized
person.
SPECIAL MEETING OF STOCKHOLDERS OF
ABOUT.COM, INC.
FEBRUARY 20, 2001
PROXY VOTING INSTRUCTIONS
TO VOTE BY MAIL
PLEASE DATE, SIGN AND MAIL YOUR PROXY CARD IN THE ENVELOPE PROVIDED AS SOON AS
POSSIBLE.
TO VOTE BY TELEPHONE (TOUCH-TONE PHONE ONLY)
PLEASE CALL TOLL-FREE 1-800-PROXIES AND FOLLOW THE INSTRUCTIONS. HAVE YOUR
CONTROL NUMBER AND THE PROXY CARD AVAILABLE WHEN YOU CALL.
TO VOTE BY INTERNET
PLEASE ACCESS THE WEB PAGE AT "www.voteproxy.com" AND FOLLOW THE ON-SCREEN
INSTRUCTIONS. HAVE YOUR CONTROL NUMBER AVAILABLE WHEN YOU ACCESS THE WEB PAGE.
YOUR CONTROL NUMBER IS --
v Please Detach and Mail in the Envelope Provided v
A |X| Please mark your
votes as in this
example.
FOR AGAINST ABSTAIN
1. ADOPTION OF |_| |_| |_|
MERGER AGREEMENT
Proposal to adopt the agreement and
plan of merger by and among
About.com, Inc. ("About"), PRIMEDIA
Inc. ("PRIMEDIA") and Abracadabra
Acquisition Corporation
("Abracadabra"), a newly-formed and
wholly-owned subsidiary of PRIMEDIA,
pursuant to which Abracadabra will
merge with and into About, such that
About will become a wholly-owned
subsidiary of PRIMEDIA.
2. IN THEIR DISCRETION UPON SUCH OTHER
MATTERS AS MAY PROPERLY COME BEFORE
THE MEETING
UNLESS OTHERWISE SPECIFIED, THIS PROXY
WILL BE VOTED FOR PROPOSALS 1 AND 2 AS
SET FORTH IN THE JOINT PROXY STATEMENT
- CONSENT SOLICITATION - PROSPECTUS.
Signature(s) of Stockholder_______________________________________
Printed Name(s) of Stockholder_________________Dated:_____________
Note: Please date and sign exactly as your name appears on the envelope in which
this material was mailed. If shares are held jointly, each stockholder should
sign. Executors, administrators, trustees, etc. should use full title and, if
more than one, all should sign. If the stockholder is a corporation, please sign
full corporate name by an authorized officer. If the stockholder is a
partnership, please sign full partnership name by an authorized
person.
Exhibit 99-11
PRIMEDIA INC.
FORM OF WRITTEN CONSENT OF STOCKHOLDERS
THE INFORMATION AGENT IS:
[GEORGESON SHAREHOLDER COMMUNICATIONS INC. LOGO]
17 State Street, 10th Floor
New York, NY 10004
Banks and Brokers (212) 440-9800
All others (800) 223-2064
This consent solicitation is being made by PRIMEDIA as described in the
accompanying joint proxy statement-consent solicitation-prospectus. Only
stockholders of record (or their respective legal representatives) as of
November 9, 2000 may execute consents.
STOCKHOLDERS AS OF NOVEMBER 9, 2000 WHO WISH TO CONSENT SHOULD MAIL, HAND
DELIVER OR SEND BY OVERNIGHT COURIER THEIR PROPERLY COMPLETED AND EXECUTED
CONSENT LETTERS TO THE INFORMATION AGENT AT THE ADDRESS SET FORTH ABOVE ON OR
PRIOR TO FEBRUARY 20, 2001 IN ACCORDANCE WITH THE INSTRUCTIONS SET FORTH HEREIN.
By execution hereof, the undersigned acknowledge(s) receipt of the joint proxy
statement-consent solicitation-prospectus. The undersigned hereby take(s) the
action with respect to the proposed issuance of PRIMEDIA common stock in
connection with the merger agreement between PRIMEDIA and About, pursuant to
which a newly formed, wholly owned subsidiary of PRIMEDIA will merge with About
as described in the accompanying joint proxy-statement consent
solicitation-prospectus. The undersigned hereby represent(s) and warrant(s) that
the undersigned has/have full power and authority to execute the consent
contained herein. The undersigned will, upon request, execute and deliver any
additional documents deemed by PRIMEDIA to be necessary or desirable to perfect
such consent or evidence such power and authority.
Please indicate by marking the appropriate box on the reverse of this consent
letter whether you wish to "CONSENT" or "DO NOT CONSENT" to the issuance of the
PRIMEDIA common stock. IF NEITHER OF THE BOXES IS MARKED, BUT THIS CONSENT
LETTER IS OTHERWISE PROPERLY COMPLETED AND SIGNED, YOU WILL BE DEEMED TO HAVE
CONSENTED TO THE ISSUANCE OF THE PRIMEDIA COMMON STOCK. Please sign your name(s)
and fill in the date below to evidence your vote on the issuance of the PRIMEDIA
common stock and to evidence the appointment of Beverly C. Chell, Vice Chairman
and Secretary of PRIMEDIA, as your agent and attorney-in-fact in connection with
this consent letter. The undersigned acknowledge(s) that the undersigned must
comply with the other provisions of this consent letter, and complete the other
information required herein, to validly consent to the issuance of the PRIMEDIA
common stock as described above.
PRIMEDIA INC.
WRITTEN CONSENT OF STOCKHOLDERS
THE INFORMATION AGENT IS:
[GEORGESON SHAREHOLDER COMMUNICATIONS INC. LOGO]
17 State Street, 10th Floor
New York, NY 10004
Banks and Brokers (212) 440-9800
All others (800) 223-2064
THE UNDERSIGNED UNDERSTAND(S) THAT CONSENTS DELIVERED PURSUANT TO THE
INSTRUCTIONS HERETO WILL CONSTITUTE A BINDING AGREEMENT BETWEEN THE UNDERSIGNED
AND PRIMEDIA UPON THE TERMS AND SUBJECT TO THE CONDITIONS OF THE JOINT PROXY
STATEMENT-CONSENT SOLICITATION-PROSPECTUS.
ALL AUTHORITY CONFERRED OR AGREED TO BE CONFERRED BY THIS CONSENT LETTER SHALL
SURVIVE THE DEATH, INCAPACITY, DISSOLUTION OR LIQUIDATION OF THE UNDERSIGNED AND
EVERY OBLIGATION OF THE UNDERSIGNED UNDER THIS CONSENT LETTER SHALL BE BINDING
UPON THE UNDERSIGNED'S HEIRS, PERSONAL REPRESENTATIVES, SUCCESSORS AND ASSIGNS.
With respect to the issuance of the PRIMEDIA common stock in connection with the
merger agreement as described in the joint proxy statement-consent
solicitation-prospectus, the undersigned hereby:
CONSENT(S) DO(ES) NOT CONSENT
/ / / /
Dated: _____________________________,2001
Signatures: _____________________________
NOTE: This consent letter must be
executed by the stockholder(s) in
exactly the same manner as the
name(s) of such stockholder(s)
appear(s) in the records of
PRIMEDIA. If signature is by a
trustee, executor, administrator,
guardian, attorney-in-fact,
officer of a corporation, or other
person acting in a fiduciary or
representative capacity, such
person should so indicate when
signing and must submit proper
evidence satisfactory to PRIMEDIA
of such person's authority so to act.
EXHIBIT 99.12
AMENDMENT NO. 1 TO LOCK-UP AGREEMENT
AMENDMENT No. 1, dated as of January 16, 2001 ("AMENDMENT NO. 1"), with
respect to that certain Lock-up Agreement, dated as of October 29, 2000 (the
"AGREEMENT"), between Scott Kurnit ("SHAREHOLDER") and PRIMEDIA Inc., a Delaware
corporation ("PARENT").
WHEREAS, the Agreement provides that the parties thereto may amend such
agreement by written agreement of each party thereto;
NOW, THEREFORE, the parties hereto agree to amend the Agreement as
follows:
Section 1. AMENDMENT OF THE AGREEMENT.
(a) Section 1(b) of the Agreement is hereby amended by (i)
renumbering subsection b(iv) as subsection (b)(v) and (ii) adding a new
subsection (b)(iv) as follows: "(iv) Transfers that (A) do not and will
not require any consent, approval, authorization or permit of, action by,
filing with or notification to the SEC pursuant to the Securities Act or
the Exchange Act and (B) do not relate to a Transfer during the Restricted
Period (except for Permitted Transfers pursuant to Section (b)(i), (b)(ii)
or (b)(iii)); and".
(b) Section 1(d)(i) of the Agreement is hereby amended by adding the
words "but not including" in the second line of the first sentence,
immediately prior to the words "the first anniversary".
Section 2. GOVERNING LAW. This Amendment No. 1 shall be governed by, and
construed in accordance with, the laws of the State of Delaware, without regard
to principles of conflicts of laws.
Section 3. MISCELLANEOUS. Except as otherwise provided herein, all
provisions of the Agreement shall remain in full force and effect.
IN WITNESS WHEREOF, the parties have caused this Amendment No. 1 to
be executed by their duly authorized representatives as of the date first
written above.
PRIMEDIA INC.
By: /s/ Beverly C. Chell
--------------------
Name: Beverly C. Chell
Title: Vice Chairman
By: /s/ Scott Kurnit
--------------------
Name: Scott Kurnit
EXHIBIT 99.13
AMENDMENT NO. 1 TO LOCK-UP AGREEMENT
AMENDMENT No. 1, dated as of January 16, 2001 ("AMENDMENT NO.
1"), with respect to that certain Lock-up Agreement, dated as of October 29,
2000 (the "AGREEMENT"), between William Day ("SHAREHOLDER") and PRIMEDIA
Inc., a Delaware corporation ("PARENT").
WHEREAS, the Agreement provides that the parties thereto may amend
such agreement by written agreement of each party thereto;
NOW, THEREFORE, the parties hereto agree to amend the Agreement as
follows:
Section 1. AMENDMENT OF THE AGREEMENT.
(a) Section 1(b) of the Agreement is hereby amended by (i)
renumbering subsection b(iv) as subsection (b)(v) and (ii) adding a new
subsection (b)(iv) as follows: "(iv) Transfers that (A) do not and will
not require any consent, approval, authorization or permit of, action by,
filing with or notification to the SEC pursuant to the Securities Act or
the Exchange Act and (B) do not relate to a Transfer during the Restricted
Period (except for Permitted Transfers pursuant to Section (b)(i), (b)(ii)
or (b)(iii)); and".
(b) Section 1(d)(i) of the Agreement is hereby amended by adding the
words "but not including" in the second line of the first sentence,
immediately prior to the words "the first anniversary".
Section 2. GOVERNING LAW. This Amendment No. 1 shall be governed by, and
construed in accordance with, the laws of the State of Delaware, without regard
to principles of conflicts of laws.
Section 3. MISCELLANEOUS. Except as otherwise provided herein, all
provisions of the Agreement shall remain in full force and effect.
IN WITNESS WHEREOF, the parties have caused this Amendment No. 1 to
be executed by their duly authorized representatives as of the date first
written above.
PRIMEDIA INC.
By: /s/ Beverly C. Chell
--------------------
Name: Beverly C. Chell
Title: Vice Chairman
By: /s/ William Day
--------------------
Name: William Day
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