Exhibit 2.1
================================================================================
AGREEMENT AND PLAN OF MERGER
among
LEUCADIA NATIONAL CORPORATION,
WRANGLER ACQUISITION CORP.
and
WILTEL COMMUNICATIONS GROUP, INC.
Dated as of August 21, 2003
================================================================================
TABLE OF CONTENTS
PAGE
ARTICLE I - THE OFFER.......................................................................................3
1.1 The Offer............................................................................................3
1.2 Company Actions......................................................................................5
1.3 Stockholder Meeting..................................................................................6
ARTICLE II - THE MERGER......................................................................................7
2.1 The Merger...........................................................................................7
2.2 Closing..............................................................................................7
2.3 Effective Time.......................................................................................7
2.4 Effects of the Merger................................................................................8
2.5 Articles of Incorporation and By-laws of the Surviving Corporation...................................8
2.6 Directors and Officers of the Surviving Corporation..................................................8
2.7 Conversion of Securities.............................................................................8
2.8 Exchange of Certificates.............................................................................9
2.9 Appraisal Rights....................................................................................12
2.10 Exchange Ratio......................................................................................12
2.11 CSRs................................................................................................12
ARTICLE III - REPRESENTATIONS AND WARRANTIES OF THE COMPANY..................................................16
3.1 Organization........................................................................................16
3.2 Capitalization......................................................................................17
3.3 Authority...........................................................................................17
3.4 Consents and Approvals; No Violations...............................................................18
3.5 SEC Documents; Undisclosed Liabilities..............................................................19
3.6 Absence of Certain Changes or Events................................................................19
3.7 Schedule 14D-9; Offer Documents; and Proxy Statement................................................19
3.8 Tax Matters.........................................................................................20
3.9 Opinion of Financial Advisor........................................................................20
3.10 Finders or Brokers..................................................................................20
ARTICLE IV - REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB........................................20
4.1 Organization........................................................................................21
4.2 Authority...........................................................................................21
i
TABLE OF CONTENTS
(CONTINUED)
PAGE
4.3 Consents and Approvals; No Violations...............................................................21
4.4 Offer Documents; Schedule 14D-9; Proxy Statement....................................................22
4.5 Capitalization......................................................................................22
4.6 Parent Common Stock.................................................................................22
4.7 SEC Documents; Undisclosed Liabilities..............................................................23
4.8 Absence of Certain Changes or Events................................................................23
4.9 Tax Matters.........................................................................................23
4.10 Ownership and Operations of Merger Sub..............................................................23
4.11 Finders or Brokers..................................................................................24
ARTICLE V - ADDITIONAL COVENANTS AND AGREEMENTS............................................................24
5.1 Conduct of Business.................................................................................24
5.2 Recommendation......................................................................................26
5.3 Reasonable Best Efforts.............................................................................26
5.4 Public Announcements................................................................................27
5.5 Access; Confidentiality.............................................................................28
5.6 Notification of Certain Matters.....................................................................28
5.7 Director and Officer Indemnification................................................................28
5.8 Securityholder Litigation...........................................................................29
5.9 Offer Documents; Schedule 14D-9; Proxy Statement....................................................29
5.10 Other Offers........................................................................................29
5.11 Rule 16b-3..........................................................................................31
5.12 Tax Matters.........................................................................................31
ARTICLE VI - CONDITIONS TO THE MERGER.......................................................................31
6.1 Conditions to Each Party's Obligation to Effect the Merger..........................................31
ARTICLE VII - TERMINATION....................................................................................32
7.1 Termination.........................................................................................32
7.2 Effect of Termination...............................................................................34
7.3 Expenses............................................................................................34
ARTICLE VIII - MISCELLANEOUS..................................................................................34
8.1 No Survival of Representations and Warranties; etc..................................................34
8.2 Amendment or Supplement.............................................................................34
ii
TABLE OF CONTENTS
(CONTINUED)
PAGE
8.3 Extension of Time, Waiver, Etc......................................................................35
8.4 Assignment; Binding Effect..........................................................................35
8.5 Counterparts; Effectiveness.........................................................................35
8.6 Entire Agreement; No Third-Party Beneficiaries......................................................35
8.7 Governing Law; Enforcement; Jurisdiction; Waiver of Jury Trial......................................35
8.8 Notices.............................................................................................36
8.9 Severability........................................................................................37
8.10 Headings............................................................................................37
8.11 Definitions; Construction...........................................................................37
ANNEX A Conditions to the Offer
iii
AGREEMENT AND PLAN OF MERGER (this "Agreement"), dated as of August
21, 2003 (the "Execution Date"), among LEUCADIA NATIONAL CORPORATION, a New York
corporation ("Parent"), WRANGLER ACQUISITION CORP., a Nevada corporation and
wholly owned subsidiary of Parent ("Merger Sub"), and WILTEL COMMUNICATIONS
GROUP, INC., a Nevada corporation (the "Company"). Certain terms used in this
Agreement are used as defined in Section 8.11.
WHEREAS, the respective Boards of Directors of Parent, Merger Sub and
the Company each deems it advisable that Parent acquire the Company on the terms
and subject to the conditions provided for in this Agreement;
WHEREAS, in furtherance thereof it is proposed that such acquisition
be accomplished by (a) Parent commencing an exchange offer to acquire all of the
shares of common stock, $.01 par value, of the Company ("Company Common Stock")
issued and outstanding (each, a "Share" and, collectively, the "Shares") that
are not beneficially owned (within the meaning of Rule 13d-3 under the
Securities Exchange Act of 1934, as amended, and the rules and regulations
promulgated thereunder (the "Exchange Act")) by Parent (each, a "Public Share"
and, collectively, the "Public Shares"), in which exchange offer each Public
Share validly tendered and not properly withdrawn would be exchanged for (i)
0.4242 (such exchange ratio, or any greater exchange ratio, per Public Share
paid pursuant to the Offer being hereinafter referred to as the "Exchange
Ratio") of a common share, $1.00 par value, of Parent ("Parent Common Stock")
(such amount of shares, or any greater amount of shares, of Parent Common Stock
paid per Public Share pursuant to the Offer being hereinafter referred to as the
"Base Offer Consideration") and (ii) one Contingent Sale Right having the terms
described in Section 2.11 hereof (as it may be amended in accordance with this
Agreement, a "CSR" and, together with the Base Offer Consideration, the "Offer
Consideration"), in each case, subject to any required withholding of taxes, on
the terms and subject to the conditions provided for in this Agreement (such
exchange offer, as it may be amended from time to time as permitted by this
Agreement, the "Offer"), and (b) following the consummation of the Offer, the
merger of Merger Sub with and into the Company, with the Company being the
surviving corporation, in accordance with the Nevada Revised Statutes (the
"NRS"), pursuant to which Shares (other than certain shares as provided in
Section 2.7(b) hereof) will be converted into the right to receive the Offer
Consideration, subject to any required withholding of taxes, on the terms and
subject to the conditions provided for in this Agreement (the "Merger");
WHEREAS, for federal income tax purposes, it is intended that the
Offer and 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");
and
WHEREAS, the respective Boards of Directors of Parent (on its own
behalf and as the sole stockholder of Merger Sub), Merger Sub and the Company
have each adopted this Agreement and approved the Offer and the Merger.
NOW, THEREFORE, in consideration of the representations, warranties,
covenants and agreements contained in this Agreement, and intending to be
legally bound hereby, Parent, Merger Sub and the Company hereby agree as
follows:
2
ARTICLE I - THE OFFER
1.1 The Offer.
(a) Provided that (i) none of the events or circumstances set forth
in paragraphs (a) through (f) of Annex A hereto shall have occurred and be
existing (and shall not have been waived by Parent) and (ii) the Company shall
have complied with its obligations under Section 1.2 hereof, Parent shall
commence (within the meaning of Rule 14d-2 under the Exchange Act) the Offer as
promptly as reasonably practicable after the Execution Date, but in no event
later than 10 business days after the Execution Date.
(b) The obligation of Parent to accept for exchange, and to exchange
the Offer Consideration for, Public Shares tendered pursuant to the Offer shall
be subject only (i) to the satisfaction of the condition that at the expiration
of the Offer there be validly tendered in accordance with the terms of the Offer
(other than Shares tendered by guaranteed delivery where actual delivery has not
occurred) and not withdrawn that number of Public Shares which represents more
than 50% of the Public Shares then outstanding, subject to Section 1.1(g) hereof
the "Minimum Condition"), and (ii) to the satisfaction (or waiver by Parent) of
the other conditions set forth in Annex A hereto. Parent expressly reserves the
right to waive any of such conditions (other than the Minimum Condition and the
condition set forth in clause (vi) of the second paragraph of Annex A hereto),
to increase the consideration per Public Share payable in the Offer and to make
any other changes in the terms of the Offer; provided, however, that no change
may be made without the prior written consent of the Company which decreases the
Exchange Ratio for the Offer from that set forth in the second "Whereas" clause
hereof (or decreases the number of shares of Parent Common Stock issuable
pursuant to the CSRs), changes the form of consideration to be paid in the
Offer, reduces the maximum number of Shares sought to be acquired in the Offer,
imposes conditions to the Offer in addition to the conditions set forth in Annex
A hereto, waives the Minimum Condition or the condition set forth in clause (vi)
of the second paragraph of Annex A hereto, or modifies or amends any of the
conditions set forth in Annex A hereto or makes other changes in the terms of
the Offer that are in any manner adverse to the holders of Public Shares or,
except as provided below, extends the expiration date of the Offer.
Notwithstanding the foregoing, Parent may (A) extend the Offer beyond the
initial scheduled expiration date, which shall be 20 business days following the
date of commencement of the Offer, or any subsequent scheduled expiration date,
if, at the scheduled expiration of the Offer, any of the conditions to Parent's
obligation to accept for exchange, and to exchange the Offer Consideration for,
Public Shares tendered shall not be satisfied or, to the extent permitted by
this Agreement, waived, subject, however, to the parties' respective rights to
terminate this Agreement pursuant to Section 7.1, and (B) extend the Offer for
any period required by any rule, regulation or interpretation of the Securities
and Exchange Commission (the "SEC") or the staff thereof applicable to the
Offer. Each extension of the Offer pursuant to clause (A) of the preceding
sentence shall not exceed the lesser of ten business days (or such longer period
as the Company and Parent may agree in writing in any particular instance) or
such fewer number of days that Parent reasonably believes are necessary to cause
the conditions of the Offer set forth in Annex A hereto to be satisfied. In
addition, if, at the expiration date of the Offer, all of the conditions to the
Offer have been satisfied (or, to the extent permitted by this Agreement, waived
by Parent) but the number of Public Shares validly tendered and not withdrawn
pursuant to the Offer, when taken together with Shares, if any, then
beneficially owned by Parent, constitutes less than 90% of the Shares then
outstanding, without the consent of the Company, Parent shall (subject to
applicable law) have the right to provide for a "subsequent offering period" (as
3
contemplated by Rule 14d-11 under the Exchange Act) for up to 20 business days
after Parent's acceptance for exchange of the Public Shares then tendered and
not withdrawn pursuant to the Offer, in which event Parent shall (I) give the
required notice of such subsequent offering period and (II) immediately accept
for exchange, and promptly exchange the Offer Consideration for, all Public
Shares tendered and not withdrawn as of such expiration date.
(c) Subject to the terms of the Offer and this Agreement and the
satisfaction or earlier waiver of all the conditions of the Offer set forth in
Annex A hereto as of any expiration date of the Offer, Parent shall accept for
exchange, and exchange the Offer Consideration (subject to any required
withholding of taxes) for, all Public Shares validly tendered and not withdrawn
pursuant to the Offer promptly after it is permitted to do so under applicable
law.
(d) Notwithstanding anything to the contrary set forth herein, no
certificates or scrip representing fractional shares of Parent Common Stock
shall be issued in connection with the Offer, no dividends or other
distributions with respect to Parent Common Stock shall be payable on or with
respect to any such fractional share interest and such fractional share
interests will not entitle the owner thereof to vote or to any other rights of a
stockholder of Parent. In lieu thereof, each tendering stockholder who would
otherwise be entitled to a fractional share of Parent Common Stock (after
aggregating all fractional shares of Parent Common Stock that otherwise would
have been received by such stockholder) will be entitled to receive an amount in
cash (without interest) equal to such holder's proportionate interest in the net
proceeds from the sale or sales in the open market by the Exchange Agent (as
hereinafter defined), on behalf of such holders, of the aggregated fractional
shares of Parent Common Stock issued pursuant to this paragraph. Promptly
following the Purchase Date, (i) the Exchange Agent shall determine the total
amount of the fractional shares of Parent Common Stock to which all such
tendering stockholders would otherwise be entitled, and aggregate the same into
whole shares of Parent Common Stock (rounded up to the nearest whole share),
(ii) Parent shall issue such whole shares of Parent Common Stock to the Exchange
Agent, as agent for such tendering stockholders, and (iii) the Exchange Agent
shall sell such shares of Parent Common Stock at the then prevailing prices on
the New York Stock Exchange through one or more member firms of the New York
Stock Exchange (which sales shall be executed in round lots to the extent
practicable). Until the net proceeds of such sales have been distributed to such
tendering stockholders, the Exchange Agent will hold such proceeds in trust for
such holders. Promptly after the determination of the amount of cash to be paid
to such holders in lieu of any fractional interests in Parent Common Stock, the
Exchange Agent shall pay such amounts to such holders (subject to any required
withholding of taxes).
(e) The Company agrees that no Shares held by the Company or any of
its subsidiaries will be tendered to Parent pursuant to the Offer.
(f) As promptly as practicable on the date of commencement of the
Offer, Parent shall file with the SEC (i) a Tender Offer Statement on Schedule
TO with respect to the Offer (together with all amendments, supplements and
exhibits thereto, the "Schedule TO") and (ii) a registration statement on Form
S-4 to register, under the Securities Act of 1933, as amended, and the rules and
regulations promulgated thereunder (the "Securities Act"), the offer and sale of
Parent Common Stock pursuant to the Offer and the Merger (together with all
amendments, supplements and exhibits thereto, the "Registration Statement"). The
Registration Statement shall include a prospectus (the "Prospectus") containing
the information required under Rule 14d-4(b) promulgated under the Exchange Act.
The Schedule TO shall include or contain as an exhibit an offer to exchange and
4
form of the related letter of transmittal and all other ancillary Offer
documents (collectively with the Prospectus, and together with all amendments,
supplements and exhibits thereto and to the Prospectus, the "Offer Documents ").
Parent shall cause the Offer Documents to be disseminated to the holders of the
Public Shares as and to the extent required by applicable federal securities
laws. Parent, on the one hand, and the Company, on the other hand, shall
promptly correct any information provided by it for use in the Offer Documents
if and to the extent that it shall be or shall have become false or misleading
in any material respect, and Parent shall cause the Offer Documents as so
corrected to be filed with the SEC and disseminated to holders of the Public
Shares, in each case, as and to the extent required by applicable federal
securities laws. The Company and its counsel shall be given a reasonable
opportunity to review and comment upon the Offer Documents before they are filed
with the SEC and disseminated to holders of Public Shares. In addition, Parent
agrees to provide the Company and its counsel with any comments, whether written
or oral, that Parent or its counsel may receive from time to time from the SEC
or its staff with respect to the Offer Documents promptly after the receipt of
such comments, to consult with the Company and its counsel prior to responding
to any such comments and to provide the Company with copies of all such
responses, whether written or oral. Following the time the Registration
Statement is declared effective, Parent shall file the final prospectus included
therein under Rule 424(b) promulgated pursuant to the Securities Act.
(g) If none of the Shares held by the securities holder channeling
fund established in connection with Second Amended and Restated Joint Plan of
Reorganization of Xxxxxxxx Communications Group, Inc. and CG Austria Inc. are
validly tendered in accordance with the terms of the Offer and not withdrawn at
the expiration of the Offer, then the Shares in such fund shall be deemed not
outstanding for purposes of the Minimum Condition.
1.2 Company Actions.
(a) The Company hereby represents and warrants that the Company's
Board of Directors, at a meeting duly called and held, has (i) adopted this
Agreement and approved the Transactions, including the Offer and the Merger, and
(ii) resolved (subject to Section 5.2 hereof) to recommend that holders of
Public Shares accept the Offer, tender their Public Shares to Parent pursuant
thereto and approve this Agreement. The Company hereby consents to the inclusion
in the Offer Documents of the recommendation of the Company's Board of Directors
described in the immediately preceding sentence. The Company hereby further
represents and warrants that (A) the Board of Directors of the Company has
received the opinion of XX Xxxxxx, dated the Execution Date, to the effect that,
as of such date, and subject to the various assumptions and qualifications set
forth therein, the consideration to be received by the holders of the Public
Shares in the Offer and the Merger is fair to such holders from a financial
point of view (the "Fairness Opinion") and (B) the Company has been authorized
by JPMorgan to permit the inclusion of the Fairness Opinion and/or references
thereto in the Offer Documents, the Schedule 14D-9 and any Proxy Statement,
subject to prior review and consent by JPMorgan (such consent not to be
unreasonably withheld or delayed).
(b) As promptly as practicable on the date of commencement of the
Offer, the Company shall file with the SEC a Solicitation/Recommendation
Statement on Schedule 14D-9 (together with all amendments, supplements and
exhibits thereto, the "Schedule 14D-9") which shall contain the recommendation
of the Board of Directors of the Company referred to in Section 1.2(a). The
Company shall cause the Schedule 14D-9 to be disseminated to holders of the
5
Public Shares as and to the extent required by applicable federal securities
laws. The Company, on the one hand, and Parent, on the other hand, shall
promptly correct any information provided by it for use in the Schedule 14D-9 if
and to the extent that it shall be or shall have become false or misleading in
any material respect, and the Company shall cause the Schedule 14D-9 as so
corrected to be filed with the SEC and disseminated to holders of the Public
Shares, in each case, as and to the extent required by applicable federal
securities laws. Parent and its counsel shall be given a reasonable opportunity
to review and comment upon the Schedule 14D-9 before it is filed with the SEC
and disseminated to holders of Public Shares. In addition, the Company agrees to
provide Parent and its counsel with any comments, whether written or oral, that
the Company or its counsel may receive from time to time from the SEC or its
staff with respect to the Schedule 14D-9 promptly after the receipt of such
comments, to consult with Parent and its counsel prior to responding to any such
comments and to provide Parent with copies of all such responses, whether
written or oral.
(c) The Company agrees (i) to promptly upon Parent's request provide
all information about the Company required to be disclosed in the Offer
Documents, (ii) to promptly deliver to Parent a duly executed consent of the
Company's accountants to allow Parent to include in the Registration Statement
the Company's financial statements and such accountants' report thereon, (iii)
that all information provided by the Company for inclusion or incorporation by
reference in the Offer Documents will not (at the respective times such
materials, or any amendments or supplements thereto, are filed with the SEC,
first published, sent or given to stockholders of the Company, the Offer expires
or shares of Parent Common Stock are delivered in connection with the Offer, or
at the Effective Time, as the case may be) 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 were made, not misleading, and (iv) to promptly
correct any information provided by the Company for the Offer Documents if and
to the extent that such information shall have become false or misleading in any
material respect.
(d) The Company shall promptly furnish Parent with mailing labels
containing the names and addresses of all record holders of Shares and with
security position listings of Shares held in stock depositories, each as of a
recent date, together with all other available listings and computer files
containing names, addresses and security position listings of record holders and
beneficial owners of Shares. The Company shall furnish Parent with such
additional information, including updated listings and computer files of
stockholders, mailing labels and security position listings, and such other
assistance as Parent or its agents may reasonably require in communicating the
Offer to the record and beneficial holders of Shares.
1.3 Stockholder Meeting.
(a) As promptly as practicable following the acquisition of Public
Shares pursuant to the Offer, if required by applicable law in order to
consummate the Merger, the Company, acting through its Board of Directors,
shall, in accordance with applicable law and the Company's articles of
incorporation and by-laws:
(i) duly call, give notice of, convene and hold a meeting of the
Company's stockholders for the purposes of considering and taking action upon
the approval of this Agreement (the "Company Shareholders Meeting"); and
6
(ii) in consultation with Parent, prepare and file with the SEC a
preliminary proxy or information statement relating to the Merger and this
Agreement and obtain and furnish the information required by the SEC to be
included therein and, after consultation with Parent, respond promptly to any
comments made by the SEC with respect to the preliminary proxy or information
statement and cause a definitive proxy or information statement (together with
all amendments, supplements and exhibits thereto, the "Proxy Statement") to be
mailed to the Company's stockholders at the earliest practicable date; provided
that no amendments or supplements to the Proxy Statement shall be made by the
Company without consultation with Parent. Parent shall provide the Company with
such information with respect to Parent and its directors and officers as shall
be required to be included in the Proxy Statement.
(b) Notwithstanding the provisions of Section 1.3(a), in the event
that Parent and its subsidiaries shall acquire in the aggregate at least 90% of
the outstanding Shares pursuant to the Offer or otherwise, the parties hereto
shall, subject to Article VI hereof, take all necessary and appropriate action
to cause the Merger to become effective as soon as practicable after such
acquisition, without a meeting of stockholders of the Company, in accordance
with Section 92A.180 of the NRS.
(c) Parent shall vote, or cause to be voted, all of the Shares
acquired in the Offer or otherwise then owned by it or any of its subsidiaries
in favor of the approval of this Agreement.
ARTICLE II - THE MERGER
2.1 The Merger. Upon the terms and subject to the conditions set
forth in this Agreement, and in accordance with Chapter 92A of the NRS, at the
Effective Time Merger Sub shall merge with and into the Company, and the
separate corporate existence of Merger Sub shall thereupon cease, and the
Company shall be the surviving corporation in the Merger (the "Surviving
Corporation").
2.2 Closing. The closing of the Merger (the "Closing") shall take
place at 10:00 a.m. (New York City time) on a date to be specified by the
parties, which date shall be no later than the second business day after
satisfaction or waiver of the conditions set forth in Article VI (other than
conditions that by their nature are to be satisfied at the Closing, but subject
to the satisfaction or waiver of such conditions), unless another time or date,
or both, are agreed to in writing by the parties hereto. The date on which the
Closing is held is herein referred to as the "Closing Date". The Closing will be
held at the offices of Weil, Gotshal & Xxxxxx LLP, 000 Xxxxx Xxxxxx, Xxx Xxxx,
Xxx Xxxx, unless another place is agreed to by the parties hereto.
2.3 Effective Time. Subject to the provisions of this Agreement, on
the Closing Date the parties shall file with the Secretary of State of the State
of Nevada articles of merger pursuant to the applicable provisions of the NRS
(the "Certificate of Merger"), executed in accordance with the relevant
provisions of the NRS, and shall make all other filings or recordings required
under the NRS in order to effect the Merger. The Merger shall become effective
upon the filing of the Certificate of Merger or at such other time as is agreed
by the parties hereto and specified in the Certificate of Merger (the time at
which the Merger becomes effective is herein referred to as the "Effective
Time").
7
2.4 Effects of the Merger. From and after the Effective Time, the
Merger shall have the effects set forth in the NRS. Without limiting the
generality of the foregoing, and subject thereto, at the Effective Time, all the
properties, rights, privileges, powers and franchises of the Company and Merger
Sub shall vest in the Surviving Corporation, and all debts, liabilities and
duties of the Company and Merger Sub shall become the debts, liabilities and
duties of the Surviving Corporation.
(h) At the Effective Time, each of (i) the Stockholders Rights and
Co-Sale Agreement, dated as of October 15, 2002, between Parent and the Company
and (ii) the Stockholders Agreement (as hereinafter defined) shall terminate and
be of no further force or effect.
2.5 Articles of Incorporation and By-laws of the Surviving
Corporation. At the Effective Time, (a) the articles of incorporation of the
Company as in effect immediately prior to the Effective Time shall be the
articles of incorporation of the Surviving Corporation until thereafter amended
as provided by law and such articles of incorporation, and (b) the by-laws of
Merger Sub as in effect immediately prior to the Effective Time shall be the
by-laws of the Surviving Corporation until thereafter amended as provided by law
and such by-laws.
2.6 Directors and Officers of the Surviving Corporation. The
directors of Merger Sub and the officers of the Company, respectively,
immediately prior to the Effective Time shall be the directors and officers,
respectively, of the Surviving Corporation until their respective successors are
duly elected or appointed and qualified or their earlier death, resignation or
removal in accordance with the articles of incorporation and by-laws of the
Surviving Corporation.
2.7 Conversion of Securities. At the Effective Time, by virtue of the
Merger and without any action on the part of the holders of any securities of
Merger Sub or the Company:
(a) Each then issued and outstanding share of capital stock of Merger
Sub shall be converted into and become one validly issued, fully paid and
nonassessable share of common stock, $.01 par value, of the Surviving
Corporation.
(b) Any Shares that are owned by the Company as treasury stock, and
all Shares owned by Parent or any subsidiary of Parent, shall be automatically
canceled and retired and shall cease to exist and no consideration shall be
delivered in exchange therefor.
(c) Each issued and outstanding Share (other than (i) Shares to be
canceled in accordance with Section 2.7(b) and (ii) any Dissenting Shares (as
hereinafter defined)), shall be converted into the right to receive (A) one CSR
and (B) the Exchange Ratio of a share of Parent Common Stock, issuable to the
holder thereof upon surrender, in the manner provided in this Agreement, of the
certificate formerly representing such Share, without interest (the "Merger
Consideration"). As of the Effective Time, all such Shares shall no longer be
outstanding and shall automatically be canceled and retired and shall cease to
exist, and each holder of a certificate which immediately prior to the Effective
Time represented any such Shares (each, a "Certificate") shall cease to have any
rights with respect thereto, except the right to receive the Merger
Consideration, any dividends or other distributions to which such holder is
entitled pursuant to Section 2.8(c) and cash in lieu of any fractional shares of
Parent Common Stock to which such holder is entitled pursuant to Section 2.8(e),
in each case to be issued or paid in consideration therefor upon surrender of
such Certificate in accordance with Section 2.8(b), without interest.
8
2.8 Exchange of Certificates.
(a) Exchange Agent. As of the Effective Time, Parent shall deposit
with American Stock Transfer & Trust Company or such other bank or trust company
as may be designated by Parent (the "Exchange Agent"), for exchange in
accordance with this Article II, through the Exchange Agent, certificates
representing the shares of Parent Common Stock issuable pursuant to Section 2.7
in exchange for shares of Company Common Stock (such shares of Parent Common
Stock, together with any dividends or other distributions with respect thereto
with a record date after the Effective Time and any cash payments in lieu of any
fractional shares of Parent Common Stock, being hereinafter referred to as the
"Exchange Fund"). The Exchange Agent shall invest any cash included in the
Exchange Fund as directed by Parent. Any interest and other income resulting
from such investments shall be the property of, and shall be paid to, Parent.
(b) Exchange Procedures. As soon as reasonably practicable after the
Effective Time, Parent shall cause the Exchange Agent to mail to each holder of
record of a Certificate whose shares of Company Common Stock were converted into
the right to receive the Merger Consideration pursuant to Section 2.7(c), (i) 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
delivery of the Certificates to the Exchange Agent and which shall be in such
form and shall have such other provisions as Parent may specify) and (ii)
instructions for use in surrendering the Certificates in exchange for
certificates representing the Merger Consideration, any dividends or other
distributions to which holders of Certificates are entitled pursuant to Section
2.8(c) and cash in lieu of any fractional shares of Parent Common Stock to which
such holders are entitled pursuant to Section 2.8(e). Upon surrender of a
Certificate for cancellation to the Exchange Agent, together with such letter of
transmittal, duly completed and validly executed, and such other documents as
may be reasonably required by the Exchange Agent, the holder of such Certificate
shall be entitled to receive in exchange therefor (A) a certificate representing
that number of whole shares of Parent Common Stock that such holder has the
right to receive pursuant to the provisions of this Article II after taking into
account all the shares of Company Common Stock held by such holder under all
such Certificates so surrendered, (B) any dividends or other distributions to
which such holder is entitled pursuant to Section 2.8(c) and (C) cash in lieu of
any fractional shares of Parent Common Stock to which such holder is entitled
pursuant to Section 2.8(e), and the Certificate so surrendered shall forthwith
be canceled. In the event of a transfer of ownership of shares of Company Common
Stock that is not registered in the transfer records of the Company, a
certificate representing the proper number of shares of Parent Common Stock may
be issued to a person other than the person in whose name the Certificate so
surrendered is registered, if, upon presentation to the Exchange Agent, such
Certificate shall be properly endorsed or otherwise be in proper form for
transfer and the person requesting such issuance shall pay any transfer or other
taxes required by reason of the issuance of shares of Parent Common Stock to a
person other than the registered holder of such Certificate or establish to the
reasonable satisfaction of the Exchange Agent that such tax has been paid or is
not applicable. Until surrendered as contemplated by this Section 2.8(b), each
Certificate shall be deemed at any time after the Effective Time to represent
only the right to receive upon such surrender the Merger Consideration, any
dividends or other distributions to which the holder of such Certificate is
entitled pursuant to Section 2.8(c) and cash in lieu of any fractional shares of
Parent Common Stock to which such holder is entitled pursuant to Section 2.8(e).
No interest will be paid or will accrue on any cash payable to holders of
Certificates pursuant to Section 2.8(c) or (e).
9
(c) Distributions with Respect to Unexchanged Shares. No dividends or
other distributions with respect to Parent Common Stock with a record date after
the Effective Time shall be paid to the holder of any unsurrendered Certificate
with respect to the shares of Parent Common Stock that the holder thereof has
the right to receive upon the surrender thereof, and no cash payment in lieu of
any fractional shares of Parent Common Stock shall be paid to any such holder
pursuant to Section 2.8(e), in each case until the holder of such Certificate
shall surrender such Certificate in accordance with this Article II. Following
surrender of any Certificate, there shall be paid to the record holder thereof
the certificate representing whole shares of Parent Common Stock issued in
exchange therefor, without interest, (i) at the time of such surrender, the
amount of cash payable in lieu of any fractional shares of Parent Common Stock
to which such holder is entitled pursuant to Section 2.8(e) and the amount of
dividends or other distributions payable with respect to such whole shares of
Parent Common Stock with a record date after the Effective Time and paid with
respect to Parent Common Stock prior to such surrender and (ii) at the
appropriate payment date, the amount of dividends or other distributions with a
record date after the Effective Time but prior to such surrender and a payment
date subsequent to such surrender payable with respect to such whole shares of
Parent Common Stock.
(d) No Further Ownership Rights in Company Common Stock. All shares
of Parent Common Stock issued upon the surrender for exchange of Certificates in
accordance with the terms of this Article II (including any dividends or other
distributions paid pursuant to Section 2.8(c) and cash paid in lieu of any
fractional shares pursuant to Section 2.8(e)) shall be deemed to have been
issued (and paid) in full satisfaction of all rights pertaining to the shares of
Company Common Stock previously represented by such Certificates, and at the
close of business on the day on which the Effective Time occurs, the stock
transfer books of the Company shall be closed and there shall be no further
registration of transfers on the stock transfer books of the Surviving
Corporation of the shares of Company Common Stock that were outstanding
immediately prior to the Effective Time. Subject to the last sentence of Section
2.8(f), if, at any time after the Effective Time, Certificates are presented to
the Surviving Corporation or the Exchange Agent for any reason, they shall be
canceled and exchanged as provided in this Article II.
(e) No Fractional Shares. Notwithstanding anything to the contrary
set forth herein, no certificates or scrip representing fractional shares of
Parent Common Stock shall be issued in connection with the Merger, no dividends
or other distributions with respect to Parent Common Stock shall be payable on
or with respect to any such fractional share interest and such fractional share
interests will not entitle the owner thereof to vote or to any other rights of a
stockholder of Parent. In lieu thereof, each former holder of shares of Company
Common Stock who would otherwise have been entitled to such a fractional share
interest (after aggregating all fractional shares of Parent Common Stock that
otherwise would have been received by such holder) will be entitled to receive
an amount in cash (without interest) equal to such holder's proportionate
interest in the net proceeds from the sale or sales in the open market by the
Exchange Agent, on behalf of such holders, of the aggregated fractional shares
of Parent Common Stock issued pursuant to this paragraph. Promptly following the
Effective Time, (i) the Exchange Agent shall determine the total amount of the
fractional shares of Parent Common Stock to which all such former Company
stockholders would otherwise be entitled, and aggregate the same into whole
shares of Parent Common Stock (rounded up to the nearest whole share), (ii)
Parent shall issue such whole shares of Parent Common Stock to the Exchange
10
Agent, as agent for such former stockholders, and (iii) the Exchange Agent shall
sell such shares of Parent Common Stock at the then prevailing prices on the New
York Stock Exchange through one or more member firms of the New York Stock
Exchange (which sales shall be executed in round lots to the extent
practicable). Until the net proceeds of such sales have been distributed to such
former stockholders, the Exchange Agent will hold such proceeds in trust for
such holders. Promptly after the determination of the amount of cash to be paid
to such former stockholders in lieu of any fractional interests in Parent Common
Stock, the Exchange Agent shall pay such amounts to such former stockholders
(subject to any required withholding of taxes).
(f) Termination of Exchange Fund. Any portion of the Exchange Fund
that remains undistributed to the holders of the Certificates for six months
after the Effective Time shall be delivered to Parent, upon demand, and any
holders of Certificates who have not theretofore complied with this Article II
shall thereafter look only to Parent for payment of their claim for the Merger
Consideration, any dividends or other distributions with respect to shares of
Parent Common Stock and cash in lieu of any fractional shares of Parent Common
Stock in accordance with this Article II. If any Certificate shall not have been
surrendered immediately prior to such date on which any Merger Consideration
(and dividends or other distributions payable pursuant to Section 2.8(c) and
cash payable in lieu of fractional shares pursuant to Section 2.8(e)) would
otherwise escheat to or become the property of any Governmental Entity, any such
Merger Consideration (and dividends or other distributions payable pursuant to
Section 2.8(c) and cash payable in lieu of fractional shares pursuant to Section
2.8(e)) in respect thereof shall, to the extent permitted by applicable law,
become the property of Parent, free and clear of all claims or interest of any
person previously entitled thereto.
(g) No Liability. None of Parent, Merger Sub, the Company or the
Exchange Agent shall be liable to any person in respect of any CSRs or any
shares of Parent Common Stock (or dividends or other distributions with respect
thereto) or cash in lieu of any fractional shares of Parent Common Stock or cash
from the Exchange Fund, in each case delivered to a public official pursuant to
any applicable abandoned property, escheat or similar law.
(h) Lost Certificates. If any Certificate shall have been lost,
stolen or destroyed, upon the making of an affidavit of that fact by the person
claiming such Certificate to be lost, stolen or destroyed and, if required by
Parent, the posting by such person of a bond in such reasonable amount as Parent
may direct as indemnity against any claim that may be made against it with
respect to such Certificate, the Exchange Agent will issue in exchange for such
lost, stolen or destroyed Certificate the Merger Consideration, any dividends or
other distributions to which the holder of such Certificate would be entitled
pursuant to Section 2.8(c) and cash in lieu of any fractional shares of Parent
Common Stock to which such holder would be entitled pursuant to Section 2.8(e),
in each case pursuant to this Agreement.
(i) Withholding Rights. The Exchange Agent shall be entitled to
deduct and withhold from the consideration otherwise payable to any holder of
shares of Company Common Stock pursuant to this Agreement such amounts as may be
required to be deducted and withheld with respect to the making of such payment
under the Code or under any provision of state or foreign tax law. To the extent
that amounts are so withheld and paid over to the appropriate taxing authority,
the Exchange Agent will be treated as though it withheld from the type of
consideration from which withholding is required an appropriate amount otherwise
11
payable pursuant to this Agreement to any holder of shares of Company Common
Stock in order to provide for such withholding obligation. If withholding is
required from shares of Parent Common Stock, the Exchange Agent shall be treated
as having sold such consideration for an amount of cash equal to the fair market
value of such consideration at the time of such deemed sale and paid such cash
proceeds to the appropriate taxing authority.
2.9 Appraisal Rights. Notwithstanding anything in this Agreement to
the contrary, if appraisal rights are available under Section 92A.380 of the NRS
in respect of the Merger, then Shares that are issued and outstanding
immediately prior to the Effective Time and which are held by stockholders who
have demanded and perfected their demands for appraisal of such Shares in the
time and manner provided in Sections 92A.300 through 92A.500 (inclusive) of the
NRS and, as of the Effective Time, have neither effectively withdrawn nor lost
their rights to such appraisal and payment under the NRS (the "Dissenting
Shares"), shall not be converted as described in Section 2.7(c) hereof, but
shall, by virtue of the Merger, be entitled to only such rights as are granted
by Section 92A.380 of the NRS; provided, that if such holder shall have failed
to perfect or shall have effectively withdrawn or lost his, her or its right to
appraisal and payment under the NRS, such holder's Shares shall thereupon be
deemed to have been converted, at the Effective Time, as described in Section
2.7(c), into the right to receive the Merger Consideration, without any interest
thereon. The Company shall give Parent (i) prompt notice of any written demands
for appraisal of any Shares, attempted withdrawals of such demands and any other
instruments served pursuant to the NRS and received by the Company relating to
stockholders' rights of appraisal, and (ii) the opportunity to participate in
all negotiations and proceedings with respect to demands for appraisal under the
NRS. Prior to the Effective Time, the Company shall not, except with the prior
written consent of Parent, voluntarily make any payment with respect to, or
settle, or offer or agree to settle, any such demand for payment. Any funds paid
to holders of Dissenting Shares shall be paid solely out of the assets of the
Surviving Corporation and Parent shall not contribute funds to Merger Sub or the
Surviving Corporation to fund payments to holders of Dissenting Shares, assume
the Surviving Corporation's obligation to make such payment, or otherwise
reimburse the Surviving Corporation, directly or indirectly, for such payment.
Any portion of the Merger Consideration made available to the Exchange Agent
pursuant to Section 2.8 to pay for Shares for which appraisal rights have been
perfected shall be returned to Parent upon demand.
2.10 Exchange Ratio. Notwithstanding anything to the contrary, if
between the Execution Date and the Effective Time, the outstanding shares of
Parent Common Stock shall have been changed into a different number of shares or
a different class, by reason of the occurrence or record date of any stock
dividend, subdivision, reclassification, recapitalization, split, combination,
exchange of shares or similar transaction, the Exchange Ratio shall be
appropriately adjusted to reflect such stock dividend, subdivision,
reclassification, recapitalization, split, combination, exchange of shares or
similar transaction.
2.11 CSRs.
(a) Subject to the terms and conditions of this Agreement, the
consideration payable by Parent per share of Company Common Stock in the Offer
and Merger will include one CSR. As described in greater detail below, the
purpose of the CSRs is to give Company stockholders who participate in the Offer
and Merger the opportunity to receive additional Parent Common Stock in
connection with any Sale of the Company (as hereinafter defined) consummated
after the Effective Time and on or before the Maturity Date (as hereinafter
defined) in which Parent or its subsidiaries receive Net Proceeds (as
hereinafter defined) in excess of the Deal Price (as hereinafter defined).
12
(b) The CSRs will be uncertificated contract rights and will be
non-assignable and non-transferable by any holder thereof, except as required by
any applicable community property laws or laws of descent and distribution.
(c) The CSRs will become effective at the Effective Time and will
mature at 11:59 p.m. New York City time on the earlier of (i) the date, if any,
on which a Sale of the Company for Net Proceeds in excess of the Deal Price is
consummated and (ii) October 15, 2004, provided that if after the Effective Time
and prior to the first anniversary of the Execution Date Parent or the Surviving
Corporation shall have entered into a definitive agreement with an unaffiliated
third party providing for a Sale of the Company (a "Sale Contract"), the date in
this clause (ii) shall be the later of (A) October 15, 2004 and (B) the earlier
of (x) the date the Sale of the Company pursuant to such Sale Contract is
consummated and (y) the date such Sale of the Company is abandoned (the earlier
of (i) and (ii) being the "Maturity Date").
For purposes of the CSRs, "Sale of the Company" means the occurrence
of any of the following events: (i) a sale by the Surviving Corporation of all
or substantially all of the assets of the Surviving Corporation and its
subsidiaries to another entity (other than Parent or one or more of its
subsidiaries ("Permitted Holders")), including any such sale of assets to a
Permitted Holder that is done as part of a related sale of such assets to an
entity that is not a Permitted Holder; (ii) any "person" or "group", other than
Permitted Holders, is or becomes the "beneficial owner", directly or indirectly,
of more than 50% of the issued and outstanding shares of capital stock of the
Surviving Corporation having general voting power under ordinary circumstances
("Voting Stock"); or (iii) the Surviving Corporation consolidates with, or
merges with or into, another Person (other than a Permitted Holder), other than
any such transaction where (A) the outstanding Voting Stock of the Surviving
Corporation is converted into or exchanged for voting securities of the
surviving entity and (B) immediately after such transaction Permitted Holders
are the "beneficial owners", directly or indirectly, of more than 50% of the
total voting power of the surviving entity. For purposes of this definition, the
term "beneficial owner" is used as defined in Rules 13d-3 and 13d-5 under the
Exchange Act and the terms "person" or "group" are used as such terms are used
in Section 13(d) and 14(d) of the Exchange Act. For the avoidance of doubt, only
the consummation of the transactions described above in this definition shall
constitute a "Sale of the Company" and neither any discussions, negotiations or
preparations, nor entering into any agreement, relating to any such transaction
shall be deemed a "Sale of the Company".
(d) If there is consummated after the Effective Time and on or before
the Maturity Date a Sale of the Company for Net Proceeds in excess of the Deal
Price, then, following the Maturity Date, Parent will issue for each CSR that
number of whole shares of Parent Common Stock (after aggregating all CSRs held
by the holder thereof) determined under the following formula (calculated to the
fourth decimal point) and paragraphs (e) and (f) of this Section 2.11:
13
Sale Profit
------------------------- divided by Parent Price
50,000,000
PROVIDED, HOWEVER, that in no event shall more than a total
of the Cap Number (as hereinafter defined) of shares of
Parent Common Stock be issuable in respect of all CSRs in
the aggregate, and the number of shares of Parent Common
Stock issuable to each CSR holder shall be reduced pro rata
to the extent necessary to give effect to this limitation
where,
"Sale Profit" means the amount of Net Proceeds in excess of
the Deal Price;
"Net Proceeds" means the US$ amount (expressed as a whole
number) of aggregate proceeds (with any non-cash proceeds to be
valued at their fair market value as determined in good faith by
the Board of Directors of Parent) received by Parent, the
Surviving Corporation or any of their subsidiaries in respect of
a Sale of the Company consummated after the Effective Time and on
or before the Maturity Date, plus the fair market value (to be
determined in good faith by the Board of Directors of Parent) of
any assets of the Surviving Corporation or its subsidiaries
retained by Parent upon consummation of such Sale of the Company,
net of (i) the costs relating to such transaction (including,
without limitation, regulatory filing fees, legal, accounting and
investment banking fees, and brokerage and sales commissions),
(ii) taxes paid or payable as a result of such transaction, (iii)
amounts required to be applied to the repayment of principal,
premium (if any) and interest on any indebtedness required to be
paid as a result of such transaction, (iv) deduction of
appropriate amounts to be provided as a reserve in accordance
with GAAP against any liabilities associated with such
transaction (including, without limitation, pension and other
post-employment benefit liabilities and liabilities related to
environmental matters or against any indemnification obligations
associated with such transaction) and (v) all liabilities of the
Surviving Corporation or its subsidiaries that are retained by
Parent or any of its subsidiaries following consummation of such
transaction;
"Deal Price" equals (A) 800,000,000, plus (B) the aggregate
US$ amount (expressed as a whole number) of contributions to
capital and other investments made by Parent or any of its
affiliates (other than the Surviving Corporation and its
subsidiaries) in, and expenditures funded by Parent or any of its
affiliates (other than the Surviving Corporation and its
subsidiaries) in support of, the Surviving Corporation or its
subsidiaries after the Effective Time and prior to the Maturity
Date, minus (C) the aggregate US$ amount (expressed as a whole
number) of dividends paid by the Surviving Corporation to Parent
after the Effective Time and prior to the Maturity Date, plus (D)
an amount equal to notional interest on the excess, if any, of
(i) the amounts described in clause (B) above over (ii) the
amount described in clause (C) above, at a rate per annum of 8%,
determined based on the number of days elapsed from the Closing
Date to the Maturity Date and a 360-day year;
"Parent Price" equals 37.72, reduced to reflect the amount
(if any) of cash dividends per share of Parent Common Stock paid
(or with a record date) between the Execution Date and the
Maturity Date in excess of Parent's regular $0.25 per share
annual dividend; and
14
"Cap Number" means the lesser of (A) 11,000,000 and (B) the
number of shares of Parent Common Stock issued by Parent in the
Offer and the Merger (excluding consideration paid to holders of
Dissenting Shares) minus one.
(e) If, on the Maturity Date, Net Proceeds are equal to or less than
the Deal Price, the CSRs shall automatically terminate and no consideration
shall be deliverable in respect thereof. If, on the Maturity Date, the amount
determined pursuant to the formula in Section 2.11(d) above is greater than
zero, Parent will thereafter issue to each CSR holder the number of whole shares
of Parent Common Stock to which such holder is entitled as herein described
(rounded down to the nearest whole share, after aggregating all CSRs held by
such holder), and the CSRs shall be automatically cancelled.
(f) Notwithstanding anything to the contrary, if between the
Effective Time and the Maturity Date the outstanding shares of Parent Common
Stock shall have been changed into a different number of shares or a different
class, by reason of the occurrence or record date of any stock dividend,
subdivision, reclassification, recapitalization, split, combination, exchange of
shares or similar transaction, then the number of and kind of shares issuable in
respect of the CSRs shall be appropriately adjusted to reflect such stock
dividend, subdivision, reclassification, recapitalization, split, combination,
exchange of shares or similar transaction.
(g) If shares of Parent Common Stock become issuable under the CSRs,
Parent will determine the amount required under applicable tax laws to be
treated as interest income, and may, at its option, issue two stock certificates
to each holder of CSRs, one certificate in respect of the shares treated as
interest and the other certificate in respect of the remaining shares; provided,
however, that in no event will Leucadia issue any fractional share interests.
(h) All computations and determinations relating to the CSRs shall be
made by Parent in good faith. Promptly after the Maturity Date, Parent shall
notify holders of CSRs in writing (which notification may be made through a
press release which will be attached to a submission that is made publicly
available on the SEC's XXXXX system) of Parent's determination as to (i) whether
a Sale of the Company occurred after the Effective Time and on or before the
Maturity Date, (ii) the amount of any Net Proceeds received in respect thereof,
(iii) the amount (if any) of any resulting Sale Profit, and (iv) the number of
shares of Parent Common Stock (if any) due and payable to CSR holders under this
Agreement ((i) through (iv) collectively, the "Relevant Determinations").
Following such notice, CSR holders shall have 180 days to communicate to Parent
in writing any objections to Parent's determination of the Relevant
Determinations; provided that a CSR holder may object to Parent's determinations
only (A) on the basis that Parent's determinations, including determinations
regarding fair market value in the definition of "Net Proceeds" being made in
good faith, were not made in accordance with this Agreement, (B) to the extent
that if such holder's objection was upheld, Parent would be required to issue an
aggregate of at least 25,000 more shares of Parent Common Stock in respect of
the CSRs than would be issuable according to Parent's determinations and (C) if
the bases for such holder's objection are specified in writing and in reasonable
detail (an "Objection Notice"). If Parent receives one or more Objection
Notices, then Parent and the CSR holders who delivered such Objection Notice
shall discuss the objections set forth therein in good faith and Parent agrees,
and each CSR holder, by accepting a CSR agrees, to use all reasonable efforts to
15
ensure that any final resolution of such objections will be applicable to, and
binding on, all CSR holders (and not only those CSR holders who objected to
Parent's determinations). If shares are issued or other amounts are paid in
settlement of one or more Objection Notices, then all objecting and
non-objecting CSR holders shall, to the extent practicable, be treated equally
by Parent and receive the same amount and form of consideration as the objecting
CSR holders, based on and in proportion to the number of CSRs held by each such
holder. If any such objections are not resolved by the date that is 270 days
after the Maturity Date, then Parent and the CSR holders shall submit the matter
to an Agreed Court for resolution through appropriate proceedings, provided that
Parent and such holders shall use all reasonable efforts to ensure that such
proceedings are conducted as a class action such that any final resolution in
such proceedings will be applicable to, and binding on, all CSR holders (and not
only those CSR holders who objected to Parent's determinations), provided
further that, if class action status is not available for such proceedings,
Parent agrees, and each CSR holder, by accepting a CSR agrees, to use all
reasonable efforts to ensure that any final resolution in such proceedings will
be applicable to, and binding on, all CSR holders (and not only those CSR
holders who objected to Parent's determinations). By accepting a CSR, each CSR
holder irrevocably waives any rights to trial by jury in any legal proceeding
related to the CSRs.
(i) The holder of a CSR will not be entitled to any of the rights of
a stockholder in Parent (including, without limitation, voting and dividend
rights).
(j) No dividends or other distributions with respect to Parent Common
Stock with a record date before the Maturity Date will be paid in respect of,
and no interest will be paid or will accrue on, any shares of Parent Common
Stock issuable in respect of CSRs. None of Parent or any of its subsidiaries
shall be liable to any person in respect of any shares of Parent Common Stock
issuable in respect of CSRs delivered to a public official pursuant to any
applicable abandoned property, escheat or similar law.
(k) Notwithstanding anything to the contrary, Parent shall be free to
conduct its business (including, without limitation, all decisions relating to
whether, when, how and for what consideration to dispose of any assets) as it in
its sole discretion shall determine.
ARTICLE III - REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Parent and Merger Sub as
follows:
3.1 Organization. The Company is a corporation duly organized,
validly existing and in good standing under the laws of the State of Nevada and
has the requisite corporate power and authority necessary to own or lease all of
its properties and assets and to carry on its business as it is now being
conducted. The Company has heretofore made available to Parent a complete and
correct copy of its articles of incorporation and by-laws as amended to date
(the "Company Charter Documents"). The Company is duly licensed or qualified to
do business and is in good standing in each jurisdiction in which the nature of
the business conducted by it or the character or location of the properties and
assets owned or leased by it makes such licensing or qualification necessary,
except where the failure to be so licensed, qualified or in good standing has
not had and would not reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect (as defined below) on the Company ("Company
Material Adverse Effect"). For purposes of this Agreement, the term "Material
Adverse Effect" shall mean, with respect to any party, a state of facts, effect,
event or change which has or would reasonably be expected to have a material
adverse effect on the business, properties, net assets, results of operations or
financial condition of such party and its subsidiaries taken as a whole.
16
3.2 Capitalization. The authorized capital stock of the Company
consists of 200,000,000 shares of Company Common Stock and 100,000,000 shares of
preferred stock, $.01 par value ("Company Preferred Stock"). At the close of
business on the Execution Date, there were 50,000,000 Shares issued and
outstanding (of which no Shares are held by the Company in its treasury and no
Shares are held by any subsidiary of the Company) and no shares of Company
Preferred Stock issued and outstanding. All Shares have been duly authorized and
validly issued and are fully paid and nonassessable. Since the Execution Date,
the Company has not issued any shares of its capital stock, voting securities or
equity interests, or any securities convertible into or exchangeable or
exercisable for any shares of its capital stock, voting securities or equity
interests. Except as set forth above in this Section 3.2, as of the Execution
Date there are not, and as of the Effective Time there will not be, any shares
of capital stock, voting securities or equity interests of the Company issued
and outstanding or any subscriptions, options, warrants, calls, convertible or
exchangeable securities, rights, commitments or agreements of any character
providing for the issuance of any shares of capital stock, voting securities or
equity interests of the Company, including any representing the right to
purchase or otherwise receive any Company Common Stock.
3.3 Authority.
(a) The Company has all necessary corporate power and authority to
execute and deliver this Agreement and, subject to obtaining the approval of its
stockholders to the adoption of this Agreement as contemplated by Section 1.3
(to the extent required by the NRS), to perform its obligations hereunder and to
consummate the Transactions. The execution, delivery and performance by the
Company of this Agreement, and the consummation by it of the Transactions, have
been duly authorized and approved by its Board of Directors and, except for
obtaining the approval of its stockholders to the adoption of this Agreement as
contemplated by Section 1.3 (to the extent required by the NRS), no other
corporate action on the part of the Company is necessary to authorize the
execution, delivery and performance by the Company of this Agreement and the
consummation by it of the Transactions. This Agreement has been duly executed
and delivered by the Company and, assuming due authorization, execution and
delivery hereof by the other parties hereto, constitutes a valid and binding
obligation of the Company, enforceable against the Company in accordance with
its terms, except that such enforceability (i) may be limited by bankruptcy,
insolvency, fraudulent transfer, moratorium or other similar laws of general
application affecting or relating to the enforcement of creditors' rights
generally and (ii) is subject to general principles of equity, whether
considered in a proceeding at law or in equity (the "Bankruptcy and Equity
Exception").
(b) The Company's Board of Directors, at a meeting duly called and
held, has duly adopted resolutions (i) adopting this Agreement and approving the
Transactions, including the Offer and the Merger, and (ii) resolving (subject to
Section 5.2 hereof) to recommend that holders of Public Shares accept the Offer,
tender their Public Shares to Parent pursuant thereto and approve this
Agreement.
(c) All action has been taken to render inapplicable to this
Agreement and the Transactions the restrictive provisions of (x) Sections 3.C
and 3.G of Article IV of the articles of incorporation of the Company and (y)
Article II of the Stockholders Agreement, dated as of October 15, 2002, between
Parent and the Company (the "Stockholders Agreement"), to the extent, if any,
such provisions would otherwise be applicable to this Agreement or any of the
Transactions.
17
(d) The affirmative vote (in person or by proxy) of the holders of a
majority of the outstanding shares of Company Common Stock in favor of the
approval of this Agreement is the only vote or approval of the holders of any
class or series of capital stock of the Company or any of its subsidiaries which
is necessary to adopt and approve this Agreement and approve the Transactions.
3.4 Consents and Approvals; No Violations.
(a) Except for (i) the filing with the SEC of the Schedule 14D-9 and,
if necessary, of a Proxy Statement in definitive form relating to the Company
Shareholders Meeting, and other filings required under, and compliance with
other applicable requirements of, the Exchange Act and the rules of the Nasdaq
National Market System, (ii) the filing of the Certificate of Merger with the
Secretary of State of the State of Nevada pursuant to the NRS, (iii) filings
required under, and compliance with other applicable requirements of, the HSR
Act and (iv) filings with, and approvals of, the Federal Communications
Commission (the "FCC") and applicable State regulatory authorities for the
change of control of the Company ("FCC Filings"), no consents or approvals of,
or filings, declarations or registrations with, any Governmental Entity are
necessary for the consummation by the Company of the Transactions, other than
such other consents, approvals, filings, declarations or registrations that, if
not obtained, made or given, would not reasonably be expected to have,
individually or in the aggregate, a Company Material Adverse Effect.
(b) Neither the execution and delivery of this Agreement by the
Company nor the consummation by the Company of the Transactions, nor compliance
by the Company with any of the terms or provisions hereof, will (i) conflict
with or violate any provision of the Company Charter Documents or the governing
documents of any subsidiary of the Company or (ii) assuming that the
authorizations, consents and approvals referred to in Section 3.4(a) (and the
approval of the Company's stockholders contemplated by Section 1.3) are obtained
and the filings referred to in Section 3.4(a) are made, (x) violate any Law,
judgment, writ or injunction of any Governmental Entity applicable to the
Company or any of its subsidiaries or any of their respective properties or
assets, or (y) violate, conflict with, result in the loss of any material
benefit under, constitute a default (or an event which, with notice or lapse of
time, or both, would constitute a default) under, result in the termination of
or a right of termination or cancellation under, accelerate the performance
required by, or result in the creation of any Lien upon any of the respective
properties or assets of, the Company or any of its subsidiaries under, any of
the terms, conditions or provisions of any note, bond, mortgage, indenture, deed
of trust, license, permit, lease, agreement or other instrument or obligation to
which the Company or any of its subsidiaries is a party, or by which they or any
of their respective properties or assets may be bound or affected except, in the
case of clause (ii), for such violations, conflicts, losses, defaults,
terminations, cancellations, accelerations or Liens as would not reasonably be
expected to have, individually or in the aggregate, a Company Material Adverse
Effect.
18
3.5 SEC Documents; Undisclosed Liabilities.
(a) The Company has filed all required reports, schedules, forms,
prospectuses, and registration, proxy and other statements with the SEC since
October 15, 2002 (collectively, and in each case including all exhibits and
schedules thereto and documents incorporated by reference therein, the "Company
SEC Documents"). As of their respective effective dates (in the case of Company
SEC Documents that are registration statements filed pursuant to the Securities
Act) and as of their respective SEC filing dates (in the case of all other
Company SEC Documents), the Company SEC Documents complied in all material
respects with the requirements of the Exchange Act and the Securities Act, as
the case may be, and the rules and regulations of the SEC promulgated
thereunder, applicable to such Company SEC Documents, and none of the Company
SEC Documents as of such respective dates, contained any untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading.
(b) The consolidated financial statements of the Company included in
the Company SEC Documents comply as to form in all material respects with
applicable accounting requirements and the published rules and regulations of
the SEC with respect thereto, have been prepared in accordance with GAAP
(except, in the case of unaudited quarterly statements, as indicated in the
notes thereto) applied on a consistent basis during the periods involved (except
as may be indicated in the notes thereto) and fairly present in all material
respects the consolidated financial position of the Company and its consolidated
subsidiaries as of the dates thereof and the consolidated results of their
operations and cash flows for the periods then ended (subject, in the case of
unaudited quarterly statements, to normal year-end audit adjustments, none of
which has been or will be, individually or in the aggregate, material).
(c) Neither the Company nor any of its subsidiaries has any
liabilities which, if known, would be required to be reflected or reserved
against on a consolidated balance sheet of the Company prepared in accordance
with GAAP or the notes thereto, except liabilities (i) reflected or reserved
against on the balance sheet of the Company and its subsidiaries as of June 30,
2003 included in the Company's Quarterly Report on Form 10-Q for the period then
ended or (ii) incurred after June 30, 2003 in the ordinary course of business
consistent with past practice that have not had and would not reasonably be
expected to have, individually or in the aggregate, a Company Material Adverse
Effect.
3.6 Absence of Certain Changes or Events. Since December 31, 2002,
there has not occurred any event or change that has had or would reasonably be
expected to have, individually or in the aggregate, a Company Material Adverse
Effect.
3.7 Schedule 14D-9; Offer Documents; and Proxy Statement. Subject to
the accuracy of the representations and warranties of Parent and Merger Sub set
forth in Section 4.4, neither the Schedule 14D-9 nor any information supplied
(or to be supplied) in writing by or on behalf of the Company for inclusion in
the Offer Documents will (at the respective times such materials, or any
amendments or supplements thereto, are filed with the SEC, first published, sent
or given to stockholders of the Company, the Offer expires or shares of Parent
Common Stock are delivered in connection with the Offer, or at the Effective
Time, as the case may be) contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary in
order to make the statements made therein, in the light of the circumstances
under which they are made, not misleading. The Proxy Statement (if any) will
not, on the date the Proxy Statement (or any amendment or supplement thereto) is
first mailed to stockholders of the Company, 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 the light of the
19
circumstances under which they are made, not misleading and will not, at the
time of the Company Shareholders Meeting (if such a meeting is held), omit to
state any material fact necessary to correct any statement in any earlier
communication from the Company with respect to the solicitation of proxies for
the Company Shareholders Meeting which shall have become false or misleading in
any material respect. The Proxy Statement (if any) and the Schedule 14D-9 will
comply as to form in all material respects with the applicable requirements of
the Exchange Act. Notwithstanding the foregoing, the Company makes no
representation or warranty with respect to information supplied by or on behalf
of Parent for inclusion in any of the foregoing documents.
3.8 Tax Matters.
(a) Neither the Company nor any of its subsidiaries knows of any
facts or circumstances that should reasonably be expected to prevent the Offer
and the Merger from qualifying as a reorganization within the meaning of Section
368(a) of the Code.
(b) To the knowledge (within the meaning of Treasury Regulation
Section 1.382-2T(k)) of the Company, no Person or "entity" (within the meaning
of Treasury Regulation Section 1.382-3(a)(1)), other than any Person or entity
that currently has on file a Schedule 13D under the Exchange Act in respect of
the Company Common Stock (each a "13D Filer"), owns (or has owned at any time
since October 15, 2002) actually or constructively (within the meaning of
Treasury Regulation Section 1.382-2T(h)) an amount of Company Common Stock that
results in it, or any other Person or entity, being treated as a "5%
Shareholder" of the Company under Treasury Regulation Section 1.382-2T(g), and
the ownership of Company Common Stock by each 13D Filer (other than Parent and
its subsidiaries) is as reported in the Schedule 13D(s) filed by such 13D Filer.
3.9 Opinion of Financial Advisor. The Board of Directors of the
Company has received the Fairness Opinion and the Company has delivered to
Parent a true and complete copy of the Fairness Opinion.
3.10 Finders or Brokers. Except for JPMorgan, whose fees and expenses
will be paid by the Company, no broker, investment banker, financial advisor or
other Person is entitled to any broker's, finder's, financial advisor's or other
similar fee or commission in connection with the Transactions based upon
arrangements made by or on behalf of the Company or any of its subsidiaries. The
Company has heretofore delivered to Parent a complete copy of the Company's
engagement letter with JPMorgan, which letter describes all fees payable by the
Company to JPMorgan (the "Engagement Letter").
ARTICLE IV - REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
Parent and Merger Sub jointly and severally represent and warrant to
the Company as follows:
20
4.1 Organization. Parent is a corporation duly organized, validly
existing and in good standing under the laws of the State of New York and has
the requisite corporate power and authority necessary to own or lease all of its
properties and assets and to carry on its business as it is now being conducted.
Parent has heretofore made available to the Company a complete and correct copy
of its certificate of incorporation and by-laws as amended to date. Parent is
duly licensed or qualified to do business and is in good standing in each
jurisdiction in which the nature of the business conducted by it or the
character or location of the properties and assets owned or leased by it makes
such licensing or qualification necessary, except where the failure to be so
licensed, qualified or in good standing has not had and would not reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect on
Parent ("Parent Material Adverse Effect"). Merger Sub is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Nevada.
4.2 Authority. Each of Parent and Merger 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. The
execution, delivery and performance by Parent and Merger Sub of this Agreement,
and the consummation by Parent and Merger Sub of the Transactions, have been
duly authorized and approved by their respective Boards of Directors and adopted
by Parent as the sole stockholder of Merger Sub, and no other corporate action
on the part of Parent and Merger Sub is necessary to authorize the execution,
delivery and performance by Parent and Merger Sub of this Agreement and the
consummation by them of the Transactions. This Agreement has been duly executed
and delivered by Parent and Merger Sub and, assuming due authorization,
execution and delivery hereof by the Company, constitutes a valid and binding
obligation of each of Parent and Merger Sub, enforceable against each of them in
accordance with its terms, subject to the Bankruptcy and Equity Exception.
4.3 Consents and Approvals; No Violations.
(a) Except for (i) the filing of the Offer Documents and, if
necessary, a Proxy Statement in definitive form relating to the Company
Shareholders Meeting with, and the requirement that the Registration Statement
be declared effective by, the SEC, and other filings required under, and
compliance with other applicable requirements of, the Securities Act, the
Exchange Act and the rules of The New York Stock Exchange, (ii) the filing of
the Certificate of Merger with the Secretary of State of the State of Nevada
pursuant to the NRS, (iii) FCC Filings and (iv) filings required under, and
compliance with other applicable requirements of, the HSR Act, no consents or
approvals of, or filings, declarations or registrations with, any Governmental
Entity are necessary for the consummation by Parent and Merger Sub of the
Transactions, other than such other consents, approvals, filings, declarations
or registrations that, if not obtained, made or given, would not reasonably be
expected to have, individually or in the aggregate, a Parent Material Adverse
Effect.
(b) Neither the execution and delivery of this Agreement by Parent or
Merger Sub, nor the consummation by Parent or Merger Sub of the Transactions,
nor compliance by Parent or Merger Sub with any of the terms or provisions
hereof, will (i) conflict with or violate any provision of the certificate of
incorporation or bylaws of Parent or Merger Sub or (ii) assuming that the
authorizations, consents, approvals and filings referred to in Section 4.3(a)
are obtained and made, (x) violate any Law, judgment, writ or injunction of any
Governmental Entity applicable to Parent or any of its subsidiaries or any of
their respective properties or assets, or (y) violate, conflict with, result in
the loss of any material benefit under, constitute a default (or an event which,
21
with notice or lapse of time, or both, would constitute a default) under, result
in the termination of or a right of termination or cancellation under,
accelerate the performance required by, or result in the creation of any Lien
upon any of the respective properties or assets of, Parent or any of its
subsidiaries under, any of the terms, conditions or provisions of any note,
bond, mortgage, indenture, deed of trust, license, permit, lease, agreement or
other instrument or obligation to which Parent or any of its subsidiaries is a
party, or by which they or any of their respective properties or assets may be
bound or affected, except, in the case of clause (ii), for such violations,
conflicts, losses, defaults, terminations, cancellations, accelerations or Liens
as would not reasonably be expected to have, individually or in the aggregate, a
Parent Material Adverse Effect.
4.4 Offer Documents; Schedule 14D-9; Proxy Statement. Subject to the
accuracy of the representations and warranties of the Company set forth in
Section 3.7, neither the Offer Documents nor any information supplied (or to be
supplied) in writing by or on behalf of Parent or Merger Sub for inclusion in
the Schedule 14D-9 will (at the respective times such materials, or any
amendments or supplements thereto, are filed with the SEC, first published, sent
or given to stockholders of the Company, the Offer expires or shares of Parent
Common Stock are delivered in connection with the Offer, or at the Effective
Time, as the case may be) contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary in
order to make the statements made therein, in the light of the circumstances
under which they are made, not misleading. The information supplied by Parent
for inclusion in the Proxy Statement (if any) will not, on the date the Proxy
Statement (or any amendment or supplement thereto) is first mailed to
stockholders of the Company, 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 the light of the circumstances under
which they are made, not misleading, and will not, at the time of the Company
Shareholders Meeting (if such a meeting is held), omit to state any material
fact necessary to correct any statement in any earlier communication with
respect to the solicitation of proxies for the Company Shareholders Meeting
which shall have become false or misleading in any material respect. The Offer
Documents will comply as to form in all material respects with the applicable
requirements of the Securities Act and the Exchange Act. Notwithstanding the
foregoing, Parent and Merger Sub make no representation or warranty with respect
to any information supplied by or on behalf of the Company for inclusion in any
of the foregoing documents.
4.5 Capitalization. The authorized capital stock of Parent consists
of 150,000,000 shares of Parent Common Stock and 6,000,000 shares of preferred
stock, $1.00 par value ("Parent Preferred Stock"). At the close of business on
August 15, 2003, there were 118,503,871 shares of Parent Common Stock issued and
outstanding (of which 58,867,179 shares were held by Parent in its treasury) and
no shares of Parent Preferred Stock issued and outstanding. As of August 15,
2003, there were 1,318,570 shares of Parent Common Stock reserved for issuance
upon the exercise of outstanding options and warrants.
4.6 Parent Common Stock. The shares of Parent Common Stock issuable
in the Offer and the Merger as contemplated by this Agreement have been duly
authorized and, when issued as contemplated by this Agreement, will be validly
issued, fully paid and nonassessable (except, where applicable, as provided by
Section 630 of the New York Business Corporation Law).
22
4.7 SEC Documents; Undisclosed Liabilities.
(a) Parent has filed all required reports, schedules, forms,
prospectuses, and registration, proxy and other statements with the SEC since
January 1, 2002 (collectively, and in each case including all exhibits and
schedules thereto and documents incorporated by reference therein, the "Parent
SEC Documents"). As of their respective effective dates (in the case of Parent
SEC Documents that are registration statements filed pursuant to the Securities
Act) and as of their respective SEC filing dates (in the case of all other
Parent SEC Documents), the Parent SEC Documents complied in all material
respects with the requirements of the Exchange Act and the Securities Act, as
the case may be, and the rules and regulations of the SEC promulgated
thereunder, applicable to such Parent SEC Documents, and none of the Parent SEC
Documents as of such respective dates, contained any untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading.
(b) The consolidated financial statements of Parent included in the
Parent SEC Documents comply as to form in all material respects with applicable
accounting requirements and the published rules and regulations of the SEC with
respect thereto, have been prepared in accordance with GAAP (except, in the case
of unaudited quarterly statements, as indicated in the notes thereto) applied on
a consistent basis during the periods involved (except as may be indicated in
the notes thereto) and fairly present in all material respects the consolidated
financial position of Parent and its consolidated subsidiaries as of the dates
thereof and the consolidated results of their operations and cash flows for the
periods then ended (subject, in the case of unaudited quarterly statements, to
normal year-end audit adjustments, none of which has been or will be,
individually or in the aggregate, material).
(c) Neither Parent nor any of its subsidiaries has any liabilities
which, if known, would be required to be reflected or reserved against on a
consolidated balance sheet of Parent prepared in accordance with GAAP or the
notes thereto, except liabilities (i) reflected or reserved against on the
balance sheet of Parent and its subsidiaries as of June 30, 2003 included in
Parent's Quarterly Report on Form 10-Q for the period then ended or (ii)
incurred after June 30, 2003 in the ordinary course of business consistent with
past practice that have not had and would not reasonably be expected to have,
individually or in the aggregate, a Parent Material Adverse Effect.
4.8 Absence of Certain Changes or Events. Since December 31, 2002,
there has not occurred any event or change that has had or would reasonably be
expected to have, individually or in the aggregate, a Parent Material Adverse
Effect.
4.9 Tax Matters. Neither Parent nor any of its subsidiaries knows of
any facts or circumstances that should reasonably be expected to prevent the
Offer and the Merger from qualifying as a reorganization within the meaning of
Section 368(a) of the Code.
4.10 Ownership and Operations of Merger Sub. Parent beneficially owns
all of the outstanding capital stock of Merger Sub. Merger Sub was formed solely
for the purpose of engaging in the Transactions, has engaged in no other
business activities and had conducted its operations only as contemplated
hereby.
23
4.11 Finders or Brokers. No broker, investment banker, financial
advisor or other Person is entitled to any broker's, finder's, financial
advisor's or other similar fee or commission in connection with the Transactions
based upon arrangements made by or on behalf of Parent or any of its
subsidiaries.
ARTICLE V - ADDITIONAL COVENANTS AND AGREEMENTS
5.1 Conduct of Business.
(a) Except as expressly permitted by this Agreement or as required by
applicable Law, during the period from the Execution Date until the Effective
Time, unless Parent otherwise agrees in writing, the Company shall, and shall
cause each of its subsidiaries to (1) conduct its business in the ordinary
course consistent with past practice, (2) use commercially reasonable efforts to
maintain and preserve intact the goodwill of those having business relationships
with it to the end that its goodwill and ongoing business shall be unimpaired at
the Effective Time, and (3) comply in all material respects with all applicable
Laws and the requirements of all licenses, Permits, leases, agreements and other
instruments that are material to the Company and its subsidiaries taken as a
whole. Any transaction specifically approved by Xxx X. Xxxxxxx and Xxxxxx X.
Xxxxxxxxx acting in their capacities as directors of the Company shall
constitute Parent approval for purposes of this Section 5.1(a). Without limiting
the generality of the foregoing, during the period from the Execution Date to
the Effective Time, the Company shall not, and shall not permit any of its
subsidiaries to, without the prior written consent of Parent:
(i) (A) issue, sell, grant, dispose of, pledge or otherwise
encumber any shares of its capital stock, voting securities or equity interests,
or any securities or rights convertible into, exchangeable or exercisable for,
or evidencing the right to subscribe for any shares of its capital stock, voting
securities or equity interests, or any rights, warrants, options, calls,
commitments or any other agreements of any character to purchase or acquire any
shares of its capital stock, voting securities or equity interests or any
securities or rights convertible into, exchangeable or exercisable for, or
evidencing the right to subscribe for, any shares of its capital stock, voting
securities or equity interests; (B) redeem, purchase or otherwise acquire any of
its outstanding shares of capital stock, voting securities or equity interests,
or any rights, warrants, options, calls, commitments or any other agreements of
any character to acquire any shares of its capital stock, voting securities or
equity interests; (C) declare, set aside for payment or pay any dividend on, or
make any other distribution in respect of, any shares of its capital stock or
otherwise make any payments to its stockholders in their capacity as such (other
than dividends by a direct or indirect wholly owned subsidiary of the Company to
its parent); (D) split, combine, subdivide or reclassify any shares of its
capital stock; or (E) approve any transfer of shares under Article IV, Section 3
of the Company's articles of incorporation (other than the Transactions);
(ii) (A) enter into, terminate or amend any agreement that is
material to the Company and its subsidiaries taken as a whole, except in the
ordinary course of business consistent with past practice, (B) enter into or
extend the term or scope of any contract or agreement that purports to restrict
the Company, or any subsidiary or affiliate of the Company, from engaging in any
line of business or in any geographic area, (C) amend or modify the Engagement
Letter, (D) enter into any contract or agreement that would be breached by, or
require the consent of any third party in order to continue in full force
following, consummation of the Transactions, or (E) release any Person from, or
modify or waive any provision of, any confidentiality or similar agreement;
24
(iii) make (x) any changes in financial or tax accounting
methods, principles or practices, except insofar as may be required by a change
in GAAP or applicable Law, or (y) any material Tax election;
(iv) adopt a plan or agreement of complete or partial
liquidation, dissolution, restructuring, recapitalization, merger, consolidation
or other reorganization (other than transactions exclusively between wholly
owned subsidiaries of the Company);
(v) settle or compromise any litigation or proceeding material to
the Company and its subsidiaries taken as a whole (this covenant being in
addition to the Company's agreement set forth in Section 5.8 hereof); or
(vi) agree, in writing or otherwise, to take any of the foregoing
actions or take any action or agree, in writing or otherwise, to take any
action, which would cause any of the representations or warranties of the
Company set forth in this Agreement (A) that are qualified as to materiality or
Material Adverse Effect to be untrue and (B) that are not so qualified to be
untrue in any material respect.
(b) Parent agrees that, during the period from the Execution Date
until the Effective Time, except as expressly contemplated or permitted by this
Agreement or as required by applicable Law, or unless the Company otherwise
agrees in writing, Parent shall, and shall cause each of its subsidiaries to,
conduct their business in compliance in all material respects with all
applicable laws and regulations and shall use their commercially reasonable
efforts to preserve intact their business organizations and relationships with
third parties and shall not (1) take any action or engage in any transactions
that would materially delay the consummation of the transactions contemplated by
this Agreement, (2) engage in any material recapitalization or restructuring of
Parent or (3) pay or set a record date prior to the Effective Time relating to
any extraordinary dividend or extraordinary distribution, other than dividends
and distributions declared and paid in the ordinary course and consistent with
historical dividends and distributions by Parent and its subsidiaries. Without
limiting the generality of the foregoing, during the period from the Execution
Date to the Effective Time, Parent shall not, and shall not permit any of its
subsidiaries to, without the prior written consent of the Company:
(i) adopt a plan or agreement or complete or partial liquidation,
dissolution, recapitalization or reclassification relating to Parent or its
capital stock (excluding liquidations of subsidiaries and inter-corporate
transactions by and between one or more of Parent's subsidiaries);
(ii) adopt or propose any change in Parent's certification of
incorporation (other than the filing of a certificate of designations);
(iii) dispose of, or enter into any agreement to dispose of (by
sale, merger, consolidation or disposition of stock or assets for cash or
capital stock) any corporation, partnership or other person or division or
business unit thereof or any equity interest therein of Parent or its
subsidiaries if such disposition would relate to assets that have, individually
or in the aggregate, a market or assigned value in excess of $750 million;
25
(iv) offer, sell or otherwise issue or agree to issue any capital
stock of Parent or its subsidiaries, including securities convertible into or
exchangeable for Parent Common Stock or stock of one or more of Parent's
subsidiaries, that have, individually or in the aggregate, a market or assigned
value in excess of $750 million (other than in connection with the transactions
contemplated by this Agreement);
(v) redeem, purchase or otherwise acquire directly or indirectly
shares of capital stock of Parent that have a market value in excess of $50
million, other than pursuant to transactions contemplated by this Agreement or
consistent with past repurchases, redemptions or acquisitions;
(vi) engage in any action with the intent to directly or
indirectly adversely impact any of the transactions contemplated by this
Agreement; or
(vii) take, agree in writing, publicly announce or otherwise take
any of the actions described in paragraph (i) through (v) above.
5.2 Recommendation. Except as expressly permitted by this Section
5.2, the Board of Directors of the Company shall not withdraw or modify, or
propose publicly to withdraw or modify, in a manner adverse to Parent, the
approval or recommendation by such Board of Directors described in the first
sentence of Section 1.2(a) hereof. Notwithstanding the foregoing, the Board of
Directors of the Company may withdraw or modify its recommendation described in
Section 1.2(a) if such Board determines in good faith, after reviewing
applicable provisions of state law and after consulting with outside counsel,
that such action is necessary in order for such Board to comply with its
fiduciary duties under applicable law.
5.3 Reasonable Best Efforts.
(a) Subject to the terms and conditions of this Agreement (including
Section 5.3(d)), the Company and Parent shall each cooperate with the other and
use (and shall cause their respective subsidiaries to use) their respective
reasonable best efforts to promptly (i) take or cause to be taken all actions,
and do or cause to be done all things, necessary, proper or advisable under this
Agreement and applicable Laws to consummate the Transactions as soon as
practicable, including preparing and filing promptly and fully all documentation
to effect all necessary filings, notices, petitions, statements, registrations,
submissions of information, applications and other documents (including any
required or recommended filings under applicable Antitrust Laws (as hereinafter
defined)) and (ii) obtain all approvals, consents, registrations, permits,
authorizations and other confirmations from any Governmental Entity or third
party necessary, proper or advisable to consummate the Transactions. For
purposes hereof, "Antitrust Laws" means the Xxxxxxx Act, as amended, the Xxxxxxx
Act, as amended, the HSR Act, the Federal Trade Commission Act, as amended, and
all other applicable Laws issued by a Governmental Entity that are designed or
intended to prohibit, restrict or regulate actions having the purpose or effect
of monopolization or restraint of trade or lessening of competition through
merger or acquisition.
(b) In furtherance and not in limitation of the foregoing, (i) each
party hereto agrees to make an appropriate filing of a Notification and Report
Form pursuant to the HSR Act with respect to the Transactions as promptly as
26
practicable and in any event within five business days of the Execution Date and
to supply as promptly as practicable any additional information and documentary
material that may be requested pursuant to the HSR Act and use its reasonable
best efforts to take, or cause to be taken, all other actions consistent with
this Section 5.3 necessary to cause the expiration or termination of the
applicable waiting periods under the HSR Act as soon as practicable; (ii) each
of the parties shall use its reasonable best efforts to have the Registration
Statement declared effective under the Securities Act as promptly as practicable
and keep the Registration Statement effective for so long as necessary to
consummate the Merger (it being understood that this covenant shall not be
construed to require Parent to file a general consent to service of process, or
to qualify to do business in any jurisdiction in which it is not now so
qualified); and (iii) the Company shall use its reasonable best efforts to (x)
take all action necessary to ensure that no state takeover statute or similar
Law is or becomes applicable to any of the Transactions and (y) if any state
takeover statute or similar Law becomes applicable to any of the Transactions,
take all action necessary to ensure that the Transactions may be consummated as
promptly as practicable on the terms contemplated by this Agreement and
otherwise minimize the effect of such Law on the Transactions.
(c) Each of Parent and the Company shall use its reasonable best
efforts to (i) cooperate in all respects with each other in connection with any
filing or submission with a Governmental Entity in connection with the
Transactions and in connection with any investigation or other inquiry by or
before a Governmental Entity relating to the Transactions, including any
proceeding initiated by a private party, and (ii) keep the other party informed
in all material respects and on a reasonably timely basis of any material
communication received by such party from, or given by such party to, the
Federal Trade Commission, the Antitrust Division of the Department of Justice or
any other Governmental Entity and of any material communication received or
given in connection with any proceeding by a private party, in each case
regarding any of the Transactions.
(d) In furtherance and not in limitation of the covenants of the
parties contained in this Section 5.3, each of Parent and the Company shall use
its reasonable best efforts to resolve such objections, if any, as may be
asserted by a Governmental Entity or other Person with respect to the
Transactions. Notwithstanding the foregoing or any other provision of this
Agreement, the Company shall not, without Parent's prior written consent, commit
to any divestiture transaction, and nothing in this Section 5.3 shall (i) limit
any applicable rights a party may have to terminate this Agreement pursuant to
Section 7.1 so long as such party has up to then complied in all material
respects with its obligations under this Section 5.3, (ii) require Parent to
offer, accept or agree to (A) dispose or hold separate any part of its or the
Company's businesses, operations, assets or product lines (or a combination of
Parent's and the Company's respective businesses, operations, assets or product
lines), (B) not compete in any geographic area or line of business, and/or (C)
restrict the manner in which, or whether, Parent, the Company, the Surviving
Corporation or any of their affiliates may carry on business in any part of the
world or (iii) require any party to this Agreement to contest or otherwise
resist any administrative or judicial action or proceeding, including any
proceeding by a private party, challenging any Transaction as violative of any
Antitrust Law.
5.4 Public Announcements. The initial press release with respect to
the execution of this Agreement shall be a joint press release to be reasonably
agreed upon by Parent and the Company. Thereafter, except as may be required by
Law or by any applicable listing agreement with a national securities exchange
or Nasdaq as determined in the good faith judgment of the party proposing to
27
make such release, neither the Company nor Parent shall issue or cause the
publication of any press release or other public announcement (to the extent not
previously issued or made in accordance with this Agreement) with respect to the
Offer, the Merger, this Agreement or the other Transactions without the prior
consent of the other party (which consent shall not be unreasonably withheld or
delayed).
5.5 Access; Confidentiality. Upon reasonable notice and subject to
applicable Laws relating to the exchange of information, the Company shall, and
shall cause each of its subsidiaries to, afford to the officers, employees,
accountants, counsel, financial advisors and other representatives of Parent,
during the period from the Execution Date until the Effective Time, access to
all its properties, books, contracts, commitments and records, and to its
officers, employees, accountants, counsel, financial advisors and other
representatives and, during such period, the Company shall, and shall cause its
subsidiaries to, make available to Parent (a) a copy of each report, schedule,
registration statement and other document filed or received by it during such
period pursuant to the requirements of Federal securities laws and (b) all other
information concerning its business, properties and personnel as Parent may
reasonably request; provided that no investigation shall affect or modify any
representation or warranty of the Company. Until the Effective Time, such
information provided will be subject to the terms of Section 3.6 of the
Stockholders Agreement.
5.6 Notification of Certain Matters. The Company shall give prompt
notice to Parent, and Parent shall give prompt notice to the Company, of (i) any
notice or other communication received by such party from any Governmental
Entity in connection with the Transactions or from any Person alleging that the
consent of such Person is or may be required in connection with the
Transactions, if the subject matter of such communication or the failure of such
party to obtain such consent could be material to the Company, the Surviving
Corporation or Parent, (ii) any orders, actions, suits, claims, investigations
or proceedings commenced or, to such party's knowledge, threatened against,
relating to or involving or otherwise affecting such party or any of its
subsidiaries which relate to the Transactions, (iii) the discovery of any fact
or circumstance that, or the occurrence or non-occurrence of any event the
occurrence or non-occurrence of which, would cause any representation or
warranty made by such party contained in this Agreement (A) that is qualified as
to materiality or Material Adverse Effect to be untrue and (B) that is not so
qualified to be untrue in any material respect, and (iv) any material failure of
such party to comply with or satisfy any covenant or agreement to be complied
with or satisfied by it hereunder; provided, however, that the delivery of any
notice pursuant to this Section 5.6 shall not (x) (nor shall any information
provided pursuant to Section 5.5) be considered in determining whether any
representation or warranty is true for purposes of Section 7.1 or the conditions
to the Offer, (y) cure any breach or non-compliance with any other provision of
this Agreement or (z) limit the remedies available to the party receiving such
notice.
5.7 Director and Officer Indemnification.
(a) From and after the Effective Time, Parent and the Surviving
Corporation shall (i) indemnify the individuals who at or prior to the Effective
Time were directors or officers of the Company (collectively, the "Indemnitees")
with respect to all acts or omissions by them in their capacities as such at any
time prior to the Effective Time, to the fullest extent (A) required by the
Company Charter Documents as in effect on the Execution Date and (B) permitted
under applicable Law.
28
(b) For a three year period commencing immediately after the
Effective Time, Parent and the Surviving Corporation shall maintain in effect
directors' and officers' liability insurance covering acts or omissions
occurring prior to the Effective Time with respect to those persons who are
currently covered by the Company's current primary directors' and officers'
liability insurance policy, on terms with respect to such coverage not less
favorable to the Company's directors and officers currently covered by such
insurance than those of such policy in effect on the Execution Date (or Parent
or the Surviving Corporation may substitute therefore insurance policies, issued
by reputable carriers, with respect to matters occurring prior to the Effective
Time); provided, however, that the aggregate amount of coverage under such
insurance shall be limited to $10 million. For those amounts of directors' and
officers' liability insurance in excess of the insurance described in the
preceding sentence which are currently provided under the Company's other
current directors' and officers' liability insurance policies (the "Other
Policies"), for a six year period commencing immediately after the Effective
Time, Parent agrees to make payments to those persons who are currently covered
by such Other Policies to the extent such payments otherwise would have been
made under such Other Policies (as in effect on the Execution Date) had such
Other Policies remained in effect for a period of six years following the
Effective Time, with respect to acts or omissions occurring prior to the
Effective Time; provided, however, that the maximum amount of payments that
Parent and the Surviving Corporation shall be required to make shall not exceed
$50 million in the aggregate.
(c) The Indemnitees to whom this Section 5.7 applies shall be third
party beneficiaries of this Section 5.7. The provisions of this Section 5.7 are
intended to be for the benefit of each Indemnitee and his heirs.
5.8 Securityholder Litigation. The Company shall give Parent the
opportunity to participate in the defense or settlement of any securityholder
litigation against the Company and/or its directors relating to the
Transactions, and no such settlement shall be agreed to without Parent's prior
consent.
5.9 Offer Documents; Schedule 14D-9; Proxy Statement. Without
limiting any other provision of this Agreement, whenever any party hereto
becomes aware of any matter, event or change which is required to be set forth
in an amendment or supplement to the Offer Documents, the Schedule 14D-9 and/or
the Proxy Statement, such party shall promptly inform the other parties thereof
and each of the parties shall cooperate in the preparation, filing with the SEC
and (as and to the extent required by applicable federal securities laws)
dissemination to the Company's stockholders of such amendment or supplement.
5.10 Other Offers.
(a) The Company shall immediately cease, and shall cause its
subsidiaries and the Company's and its subsidiaries' respective directors,
officers, employees, investment bankers, attorneys, accountants and other
representatives to cease, any discussions or negotiations with any Person that
may be ongoing with respect to a Takeover Proposal (as hereinafter defined) and
demand in writing the return from all such Persons or the destruction of all
copies of confidential information provided to such Persons by the Company or
its representatives that are still in the possession of such Persons. The
Company shall not, and shall cause its subsidiaries and the Company's and its
subsidiaries' respective directors, officers, employees, investment bankers,
attorneys, accountants and other representatives not to, directly or indirectly
(i) solicit, initiate or knowingly encourage the initiation of (including by way
29
of furnishing information that has not been previously publicly disseminated)
any inquiries or proposals that constitute, or may reasonably be expected to
lead to, any Takeover Proposal or (ii) participate in any discussions with any
third party regarding, or furnish to any third party any non-public information
with respect to, or assist or facilitate, any Takeover Proposal; provided,
however, that if the Board of Directors of the Company receives an unsolicited,
bona fide written Takeover Proposal that was made in circumstances not involving
a breach of this Agreement and that the Board of Directors of the Company
determines in good faith constitutes a Superior Proposal (as hereinafter
defined), then the Company may (but only prior to the Purchase Date), in
response to such Takeover Proposal and after providing Parent not less than 24
hours written notice of its intention to take such actions, (A) furnish to the
Person making such Takeover Proposal information (including non-public
information, provided that the Company shall use its best efforts to avoid
providing information that may be competitively harmful to the Company, taking
into consideration the identity of such Person) with respect to the Company, but
only after such Person enters into a customary confidentiality agreement with
the Company, provided that (1) such confidentiality agreement may not include
any provision calling for an exclusive right to negotiate with the Company and
(2) the Company advises Parent of all such non-public information delivered to
such Person concurrently with its delivery to such Person and concurrently with
its delivery to such Person the Company delivers to Parent all such information
not previously provided to Parent, and (B) participate in discussions and
negotiations with such Person regarding such Takeover Proposal.
(b) In addition to the other obligations of the Company set forth in
this Section, the Company shall promptly advise Parent, orally and in writing,
and in no event later than 48 hours after receipt, if any proposal, offer,
inquiry or other contact is received by, any information is requested from, or
any discussions or negotiations are sought to be initiated or continued with,
the Company in respect of any Takeover Proposal, and shall, in any such notice
to Parent, identify the Person making such proposal, offer, inquiry or other
contact and the terms and conditions of any proposals or offers or the nature of
any inquiries or contacts, and thereafter shall keep Parent informed, on a
reasonably current basis, of all material developments affecting the status and
terms of any such proposals, offers, inquiries or requests and of the status of
any such discussions or negotiations.
(c) For purposes of this Agreement:
"Takeover Proposal" shall mean any bona fide written proposal or
offer from any Person (other than Parent and its subsidiaries) relating to any
(A) direct or indirect acquisition (whether in a single transaction or a series
of related transactions) of assets of the Company and its subsidiaries
(including securities of subsidiaries, but excluding sales of assets held for
sale in the ordinary course of business consistent with past practice) equal to
20% or more of the Company's consolidated assets or to which 20% or more of the
Company's revenues or earnings on a consolidated basis are attributable, (B)
direct or indirect acquisition (whether in a single transaction or a series of
related transactions) of 20% or more of any class of equity securities of the
Company, (C) tender offer or exchange offer that if consummated would result in
any Person beneficially owning 20% or more of any class of equity securities of
the Company or (D) merger, consolidation, share exchange, business combination,
recapitalization, liquidation, dissolution or similar transaction involving the
Company or involving any subsidiary (or subsidiaries) or any assets of the
Company and its subsidiaries equal to 20% or more of the Company's consolidated
assets or to which 20% or more of the Company's revenues or earnings on a
consolidated basis are attributable; in each case, other than the Transactions.
30
"Superior Proposal" shall mean a bona fide written proposal made
not in breach of this Agreement by a third party to acquire, directly or
indirectly, for consideration consisting of cash and/or securities, more than
50% of any class of equity securities of the Company or more than 50% of the
assets of the Company and its subsidiaries on a consolidated basis, which is
otherwise on terms and conditions which the Board of Directors of the Company
determines in its good faith and reasonable judgment (after consultation with a
financial advisor of national reputation) to be more favorable to the holders of
Shares from a financial point of view than the Offer, the Merger and the other
Transactions, taking into account at the time of determination any changes to
the terms of this Agreement that as of that time had been proposed by Parent in
writing and the ability and likelihood of the Person making such proposal to
consummate the transactions contemplated by such proposal in a timely manner
(based upon, among other things, the availability of financing and the
expectation of obtaining required approvals). Any action required to be taken by
the Company's Board of Directors pursuant to this Section 5.10 shall be
performed with Director Approval.
5.11 Rule 16b-3. Parent and the Company shall take such steps as may
be reasonably requested by any party hereto to cause dispositions of Company
equity securities pursuant to the transactions contemplated by this Agreement by
each individual who is a director or officer of the Company to be exempt under
Rule 16b-3 promulgated under the Exchange Act and the rules and regulations
promulgated thereunder in accordance with that certain No-Action Letter dated
January 12, 1999 issued by the SEC regarding such matters.
5.12 Tax Matters.
(a) Each of Parent, Merger Sub and the Company shall provide to Weil,
Gotshal & Xxxxxx LLP and Xxxxxx, Xxxx & Xxxxxxxx LLP a certificate containing
representations reasonably requested by such counsel in connection with the
opinion referred to in clause (vi) of the second paragraph of Annex A hereto.
(b) During the period from the Execution Date until the Effective
Time, none of Parent, Merger Sub or the Company shall take any action, or permit
their respective subsidiaries to take any action, that should reasonably be
expected to prevent the Offer and the Merger from qualifying as a reorganization
within the meaning of Section 368(a) of the Code.
ARTICLE VI - CONDITIONS TO THE MERGER
6.1 Conditions to Each Party's Obligation to Effect the Merger. The
respective obligations of each party hereto to effect the Merger shall be
subject to the satisfaction (or waiver, if permissible under applicable Law) at
or prior to the Effective Time of the following conditions:
(a) This Agreement shall have been duly adopted by the requisite vote
of the holders of Company Common Stock, if and to the extent required by
applicable Law and the articles of incorporation of the Company, in order to
consummate the Merger;
(b) No Law, injunction, judgment or ruling enacted, promulgated,
issued, entered, amended or enforced by any Governmental Entity shall be in
effect enjoining, restraining, preventing or prohibiting consummation of the
Merger or making the consummation of the Merger illegal;
31
(c) The Registration Statement shall have become effective under the
Securities Act and shall not be the subject of any stop order or proceedings
seeking a stop order;
(d) If such approval is necessary, the shares of Parent Common Stock
issuable to the stockholders of the Company in the Merger as contemplated by
this Agreement shall have been approved for listing on the New York Stock
Exchange, subject to official notice of issuance; and
(e) The Minimum Condition shall have been satisfied and Parent shall
have purchased Public Shares pursuant to the Offer, provided that this condition
shall be deemed satisfied with respect to Parent if Parent shall have failed to
purchase Public Shares pursuant to the Offer in breach of its obligations under
this Agreement.
ARTICLE VII - TERMINATION
7.1 Termination. This Agreement may be terminated and the
Transactions abandoned at any time prior to the Effective Time, whether before
or after stockholder approval thereof:
(a) By the mutual written consent of the Company and Parent duly
authorized by the respective Boards of Directors of the Company (including the
Director Approval contemplated by Section 8.2(b)) and Parent.
(b) By either of the Company or Parent:
(i) if any Governmental Entity shall have enacted, promulgated,
issued, entered, amended or enforced (A) a Law prohibiting the Offer or the
Merger or making the Offer or the Merger illegal, or (B) an injunction,
judgment, order, decree or ruling, or taken any other action, in each case,
permanently enjoining, restraining, preventing or prohibiting the Offer or the
Merger and such injunction, judgment, order, decree or ruling or other action
shall have become final and non-appealable; provided, that the right to
terminate this Agreement under this Section 7.1(b)(i) shall not be available to
a party if the issuance of such final, non-appealable injunction, judgment,
order, decree or ruling was primarily due to the failure of such party to
perform any of its obligations under this Agreement;
(ii) if the Offer shall have expired pursuant to its terms (and
not have been extended by Parent in accordance with Section 1.1 hereof) without
any Public Shares being purchased therein, provided, that the right to terminate
this Agreement under this Section 7.1(b)(ii) shall not be available to any party
whose failure to perform any of is obligations under this Agreement resulted in
the failure of Parent to purchase Public Shares in the Offer; or
(iii) if no Public Shares shall have been purchased pursuant to
the Offer on or before the Walk-Away Date; provided, that the right to terminate
this Agreement under this Section 7.1(b)(iii) shall not be available to any
party whose failure to perform any of is obligations under this Agreement
resulted in the failure of the Offer to be so consummated by the Walk-Away Date.
32
(c) By the Company:
(i) if Parent shall have failed to commence the Offer on or prior
to the date provided therefor in Section 1.1; provided, that the Company may not
terminate this Agreement pursuant to this Section 7.1(c)(i) if the Company is in
material breach of this Agreement; or
(ii) if (A) there shall have occurred any events or changes that,
individually or in the aggregate, have had or would reasonably be expected to
have a Parent Material Adverse Effect or (B)(x) the representations and
warranties of Parent or Merger Sub set forth in this Agreement that are
qualified as to "materiality" or "Material Adverse Effect" shall not be true and
correct, or the representations and warranties of Parent or Merger Sub set forth
in this Agreement that are not so qualified shall not be true and correct in all
material respects, in each case, on and as of the Execution Date and on and as
of the date of such determination as if made on such date (other than those
representations and warranties that address matters only as of a particular date
which are true and correct as of such date), or (y) Parent or Merger Sub shall
have breached or failed in any material respect to perform or comply with any
obligation, agreement or covenant required by this Agreement to be performed or
complied with by them, which inaccuracy, breach or failure (in each case under
clauses (x) and (y)) cannot be cured or has not been cured by the later of (I)
the next scheduled expiration date of the Offer pursuant to Section 1.1 and (II)
ten business days after Parent receives notice of such inaccuracy, breach or
failure; provided, however, that the Company may only exercise this termination
right prior to the Purchase Date.
(d) By Parent:
(i) if, due to a circumstance or occurrence that if occurring
after the commencement of the Offer would make it impossible to satisfy one or
more of the conditions set forth in Annex A hereto, Parent shall have failed to
commence the Offer on or prior to the date provided therefor in Section 1.1;
provided, that Parent may not terminate this Agreement pursuant to this Section
7.1(d)(i) if Parent is in material breach of this Agreement;
(ii) if the Board of Directors of the Company shall have
withdrawn or modified, in a manner adverse to Parent, its approval or
recommendation of any of the Transactions; provided, however, that Parent may
only exercise this termination right prior to the Purchase Date; or
(iii) if (A) there shall have occurred any events or changes
that, individually or in the aggregate, have had or would reasonably be expected
to have a Company Material Adverse Effect or (B)(x) the representations and
warranties of the Company set forth in this Agreement that are qualified as to
"materiality" or "Material Adverse Effect" shall not be true and correct, or the
representations and warranties of the Company set forth in this Agreement that
are not so qualified shall not be true and correct in all material respects, in
each case, on and as of the Execution Date and on and as of the date of such
determination as if made on such date (other than those representations and
warranties that address matters only as of a particular date which are true and
correct as of such date), or (y) the Company shall have breached or failed in
any material respect to perform or comply with any obligation, agreement or
covenant required by this Agreement to be performed or complied with by it,
which inaccuracy, breach or failure (in each case under clauses (x) and (y))
33
cannot be cured or has not been cured by the later of (I) the next scheduled
expiration date of the Offer pursuant to Section 1.1 and (II) ten business days
after the Company receives notice of such inaccuracy, breach or failure;
provided, however, that Parent may only exercise this termination right prior to
the Purchase Date.
7.2 Effect of Termination. In the event of the termination of this
Agreement as provided in Section 7.1, written notice thereof shall be given to
the other party or parties, specifying the provision hereof pursuant to which
such termination is made, and this Agreement shall forthwith become null and
void (other than Sections 5.8, 7.2 and 7.3, Article VIII and the last sentence
of Section 5.5, all of which shall survive termination of this Agreement), and
there shall be no liability on the part of Parent or the Company or their
respective directors, officers and affiliates, except (i) as provided in Section
7.3 and (ii) nothing shall relieve any party from liability for fraud or any
willful breach of this Agreement.
7.3 Expenses. All fees and expenses incurred by the parties in
connection with this Agreement and the Transactions shall be borne solely and
entirely by the party that incurred such fees and expenses, irrespective of
whether or not the Transactions are consummated.
ARTICLE VIII - MISCELLANEOUS
8.1 No Survival of Representations and Warranties; etc. Except as
otherwise provided in this Agreement, the representations, warranties and
agreements of each party hereto shall remain operative and in full force and
effect regardless of any investigation made by or on behalf of any other party
hereto, any Person controlling any such party or any of their officers,
directors or representatives, whether prior to or after the execution of this
Agreement, and no information provided or made available shall be deemed to be
disclosed in this Agreement except to the extent actually set forth herein. The
representations, warranties and agreements in this Agreement shall terminate at
the Effective Time or, except as otherwise provided in Section 7.2, upon the
termination of this Agreement pursuant to Section 7.1, as the case may be,
except that the agreements set forth in Article II and Sections 5.7 and 5.8 and
any other agreement in this Agreement which contemplates performance after the
Effective Time shall survive the Effective Time indefinitely and those set forth
in Sections 5.8, 7.2 and 7.3 and this Article VIII shall survive termination
indefinitely.
8.2 Amendment or Supplement.
(a) At any time prior to the Effective Time, this Agreement may be
amended or supplemented in any and all respects, whether before or after
approval of any of the transactions contemplated hereby by stockholders of the
Company, by written agreement of the parties hereto, by action taken by their
respective Boards of Directors (which in the case of the Company shall include
the Director Approval contemplated by Section 8.2(b)); provided, however, that
following approval of the transactions contemplated hereby by stockholders of
the Company there shall be no amendment or change to the provisions hereof which
by Law would require stockholder approval without such approval.
(b) Until the Effective Time, the approval by affirmative vote or
written consent of a majority of the members of the Special Committee of the
Board of Directors of the Company established May 27, 2003 then in office
("Director Approval") shall be required to authorize (i) any amendment or
termination of this Agreement by the Company, (ii) any extension by the Company
of time for performance of any obligation or action under this Agreement by
Parent or (iii) any waiver, exercise or enforcement of any of the Company's
rights under this Agreement.
34
8.3 Extension of Time, Waiver, Etc. At any time prior to the
Effective Time, any party may, subject to applicable law, (a) waive any
inaccuracies in the representations and warranties of any other party hereto,
(b) extend the time for the performance of any of the obligations or acts of any
other party hereto or (c) waive compliance by the other party with any of the
agreements contained herein or, except as otherwise provided herein, waive any
of such party's conditions; provided, however, in the case of the Company until
the Effective Time, the Director Approval contemplated by Section 8.2(b) is
obtained. Notwithstanding the foregoing, no failure or delay by the Company,
Parent or Merger Sub in exercising any right hereunder shall operate as a waiver
thereof nor shall any single or partial exercise thereof preclude any other or
further exercise thereof or the exercise of any other right hereunder. Any
agreement on the part of a party hereto to any such extension or waiver shall be
valid only if set forth in an instrument in writing signed on behalf of such
party.
8.4 Assignment; Binding Effect. Neither this Agreement nor any of the
rights, interests or obligations hereunder shall be assigned by any of the
parties hereto (whether by operation of law or otherwise) without the prior
written consent of the other parties. Subject to the preceding sentence, this
Agreement shall be binding upon and shall inure to the benefit of the parties
hereto and their respective successors and permitted assigns. Any purported
assignment not permitted under this Section shall be null and void.
8.5 Counterparts; Effectiveness. This Agreement may be executed in
two or more separate counterparts, each of which shall be deemed to be an
original but all of which taken together shall constitute one and the same
agreement. This Agreement shall become effective when each party hereto shall
have received counterparts hereof signed by the other parties hereto.
8.6 Entire Agreement; No Third-Party Beneficiaries. This Agreement,
together with Annex A hereto, constitute the entire agreement, and supersede all
other prior agreements and understandings, both written and oral, among the
parties, or any of them, with respect to the subject matter hereof and thereof.
This Agreement, except for the provisions of Section 5.7, is not intended to and
shall not confer upon any Person other than the parties hereto any rights
hereunder.
8.7 Governing Law; Enforcement; Jurisdiction; Waiver of Jury Trial.
(a) This Agreement shall be governed by and construed in accordance
with the laws of the State of New York, without regard to the principles of
conflicts of laws thereof.
(b) The parties agree that irreparable damage would occur in the
event that any of the provisions of this Agreement were not performed in
accordance with their specific terms or were otherwise breached. It is
accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions of this Agreement in the United States District Court
for the Southern District of New York or in any New York State court located in
the City of New York (each, an "Agreed Court") this being in addition to any
other remedy to which they are entitled at law or in equity.
35
(c) Each of the parties hereto (i) consents to submit itself to the
personal jurisdiction of any Agreed Court in the event any dispute arises out of
this Agreement or any of the transactions contemplated hereby, (ii) agrees that
it will not attempt to deny or defeat such personal jurisdiction by motion or
other request for leave from any such court and (iii) agrees that it will not
bring any action relating to this Agreement or any of the transactions
contemplated hereby in any court other than an Agreed Court.
(d) Each of the parties hereto hereby irrevocably waives any and all
rights to trial by jury in any legal proceeding arising out of or related to
this Agreement or the transactions contemplated hereby.
8.8 Notices. All notices, requests and other communications to any
party hereunder shall be in writing (including facsimile transmission) and shall
be given,
If to Parent or Merger Sub, to:
Leucadia National Corporation
000 Xxxx Xxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: President
Facsimile: (000) 000-0000
with a copy (which shall not constitute notice) to:
Weil, Gotshal & Xxxxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Xxxxxx, Esq.
Facsimile: (000) 000-0000
If to the Company, to:
WilTel Communications Group, Inc.
Xxx Xxxxxxxxxx Xxxxxx
Xxxxx, Xxxxxxxx 00000
Attention: President
Facsimile: (000) 000-0000
with a copy (which shall not constitute notice) to:
Xxxxxx, Xxxx & Xxxxxxxx LLP
000 Xxxxx Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxx X. Xxxxx, Esq. and
Xxxxxxxx Xxxxxx-Xxxxxxx, Esq.
Facsimile: (000) 000-0000
or such other address or facsimile number as such party may hereafter specify
for the purpose by notice to the other parties hereto. All such notices,
requests and other communications shall be deemed received on the date of
36
receipt by the recipient thereof if received prior to 5 P.M. in the place of
receipt and such day is a business day in the place of receipt. Otherwise, any
such notice, request or communication shall be deemed not to have been received
until the next succeeding business day in the place of receipt.
8.9 Severability. If any term or other provision of this Agreement is
determined by a court of competent jurisdiction to be invalid, illegal or
incapable of being enforced by any rule of law or public policy, all other
terms, provisions and conditions of this Agreement shall nevertheless remain in
full force and effect. 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 to the fullest extent permitted by
applicable law in an acceptable manner to the end that the transactions
contemplated hereby are fulfilled to the extent possible.
8.10 Headings. Headings of the Articles and Sections of this
Agreement are for convenience of the parties only, and shall be given no
substantive or interpretive effect whatsoever.
8.11 Definitions; Construction.
(a) As used in this Agreement, the following terms have the meanings
ascribed thereto below:
"AFFILIATE" shall mean, as to any Person, any other Person which,
directly or indirectly, controls, or is controlled by, or is under common
control with, such Person. For this purpose, "control" (including, with its
correlative meanings, "controlled by" and "under common control with") shall
mean the possession, directly or indirectly, of the power to direct or cause the
direction of management or policies of a Person, whether through the ownership
of securities or partnership or other ownership interests, by contract or
otherwise.
"BUSINESS DAY" shall mean a day except a Saturday, a Sunday or other
day on which the SEC or banks in the City of New York are authorized or required
by Law to be closed.
"GAAP" shall mean generally accepted accounting principles in the
United States.
"GOVERNMENTAL ENTITY" shall mean any government, court, arbitrator,
regulatory or administrative agency, commission or authority or other
governmental instrumentality, federal, state or local, domestic, foreign or
multinational.
"HSR ACT" shall mean the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act
of 1976, as amended.
"LAWS" shall mean all laws, statutes, ordinances, codes, rules,
regulations, decrees and orders of Governmental Entities.
"LIENS" shall mean all liens, pledges, charges, mortgages,
encumbrances, adverse rights or claims and security interests whatsoever.
37
"PERSON" shall mean an individual, a corporation, a limited liability
company, a partnership, an association, a trust or any other entity, including a
Governmental Entity.
"PURCHASE DATE" shall mean the first date on which Parent accepts for
exchange Public Shares tendered and not withdrawn pursuant to the Offer.
"SUBSIDIARY" when used with respect to any party, shall mean any
corporation, limited liability company, partnership, association, trust or other
entity the accounts of which would be consolidated with those of such party in
such party's consolidated financial statements if such financial statements were
prepared in accordance with GAAP, as well as any other corporation, limited
liability company, partnership, association, trust or other entity of which
securities or other ownership interests representing more than 50% of the equity
or more than 50% of the ordinary voting power (or, in the case of a partnership,
more than 50% of the general partnership interests) are, as of such date, owned
by such party or one or more subsidiaries of such party or by such party and one
or more subsidiaries of such party. For purposes of this Agreement, the Company
shall not be considered a subsidiary of Parent.
"TRANSACTIONS" refers collectively to this Agreement and the
transactions contemplated hereby, including the Offer and the Merger.
"WALK-AWAY DATE" shall mean January 15, 2004.
(b) The following terms are defined on the page of this Agreement set
forth after such term below:
Agreed Court...........................................36
Agreement...............................................2
Antitrust Laws.........................................26
Bankruptcy and Equity Exception........................17
Base Offer Consideration................................2
Certificate.............................................9
Certificate of Merger...................................7
Closing.................................................7
Closing Date............................................7
Code....................................................2
Company.................................................2
Company Charter Documents..............................16
Company Common Stock....................................2
Company Material Adverse Effect........................17
Company SEC Documents..................................19
Company Shareholders Meeting............................7
CSR.....................................................2
Director Approval......................................35
Dissenting Shares......................................12
Effective Time..........................................8
Engagement Letter......................................20
Exchange Act............................................2
Exchange Ratio..........................................2
Execution Date..........................................2
Fairness Opinion........................................5
FCC....................................................18
FCC Filings............................................18
Material Adverse Effect................................17
Merger..................................................2
Merger Consideration....................................8
Merger Sub..............................................2
Minimum Condition.......................................3
NRS.....................................................2
Offer...................................................2
Offer Consideration.....................................2
Offer Documents.........................................5
Parent..................................................2
Parent Common Stock.....................................2
Parent Material Adverse Effect.........................21
Parent SEC Documents...................................23
Proxy Statement.........................................7
Public Share............................................2
Registration Statement..................................4
Schedule 14D-9..........................................5
SEC.....................................................3
Securities Act..........................................4
Share...................................................2
Stockholders Agreement.................................18
Surviving Corporation...................................7
38
As used in this Agreement, "INCLUDING" shall mean "including, without
limitation."
(c) The parties hereto have participated jointly in the negotiation
and drafting of this Agreement and, in the event an ambiguity or question of
intent or interpretation arises, this Agreement shall be construed as jointly
drafted by the parties hereto and no presumption or burden of proof shall arise
favoring or disfavoring any party by virtue of the authorship of any provision
of this Agreement.
[signature page follows]
39
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and delivered as of the date first above written.
LEUCADIA NATIONAL CORPORATION
By: /s/ Xxxxxx X. Xxxxxxxxx
-----------------------------------
Name: Xxxxxx X. Xxxxxxxxx
Title: President
WRANGLER ACQUISITION CORP.
By: /s/ Xxxxx Xxxxxxxx
-----------------------------------
Name: Xxxxx X. Xxxxxxxx
Title: Vice President
WILTEL COMMUNICATIONS GROUP, INC.
By: /s/ Xxxx X. Xxxxxx
-----------------------------------
Name: Xxxx X. Xxxxxx
Title: President & CEO
40
ANNEX A
-------
Conditions to the Offer
-----------------------
The capitalized terms used in this Annex A have the meanings set
forth in the attached Agreement, except that the term "the Agreement" shall be
deemed to refer to the attached Agreement.
Notwithstanding any other provision of the Offer, Parent shall not be
required to accept for payment or, subject to any applicable rules and
regulations of the SEC, including Rule 14e-l(c) under the Exchange Act (relating
to Parent's obligation to pay for or return tendered Shares promptly after
termination or withdrawal of the Offer), pay for, and may delay the acceptance
for payment of or, subject to the restriction referred to above, the payment
for, any tendered Shares, and (subject to the provisions of the Agreement) may
terminate the Offer and not accept for payment any tendered shares if (i) the
Minimum Condition shall not have been satisfied at the expiration of the Offer,
(ii) any applicable waiting period under the HSR Act shall not have expired or
been terminated prior to the expiration of the Offer, (iii) FCC and applicable
State regulatory approval of the change of control of the Company shall not have
been obtained prior to the expiration of the Offer or such approval shall not be
in full force and effect at the expiration of the Offer, (iv) the Registration
Statement shall not have become effective under the Securities Act prior to the
expiration of the Offer or shall be the subject of any stop order or proceedings
seeking a stop order at the expiration of the Offer, (v) the shares of Parent
Common Stock issuable in exchange for Shares in the Offer shall not have been
approved (if such approval is necessary), prior to the expiration of the Offer,
for listing on the New York Stock Exchange (subject to official notice of
issuance), (vi) the Company shall not have received, prior to the expiration of
the Offer, a written opinion of Weil, Gotshal & Xxxxxx LLP (or, if Weil, Gotshal
& Xxxxxx LLP shall not have delivered such opinion, the Company shall not have
received, prior to the expiration of the Offer, a written opinion of Xxxxxx,
Xxxx & Xxxxxxxx LLP) to the effect that the Offer and the Merger should
constitute a reorganization within the meaning of Section 368(a) of the Code
(which opinion may rely on such assumptions and representations as such counsel
reasonably deems appropriate) or (vii) at any time on or after the date of the
Agreement and prior to the expiration of the Offer, any of the following
conditions shall exist:
(a) there shall be any injunction, judgment, ruling, order or decree
issued or entered by any Governmental Entity that (i) restrains, enjoins,
prevents, prohibits or makes illegal the acceptance for payment, payment for or
purchase of some or all of the Shares by Parent or the consummation of the
Transactions, (ii) imposes material limitations on the ability of Parent or any
of its affiliates effectively to exercise full rights of ownership of 100% of
the Shares, including, without limitation, the right to vote the Shares
purchased by them on all matters properly presented to the Company's
stockholders on an equal basis with all other stockholders (including, without
limitation, the adoption of the Agreement and approval of the Transactions),
(iii) restrains, enjoins, prevents, prohibits or makes illegal, or imposes
material limitations on, Parent's or any of its affiliates' ownership or
operation of all or any portion of the businesses and assets of the Company and
its subsidiaries, or, as a result of the Transactions, of Parent and its
subsidiaries, (iv) compels Parent or any of its affiliates to dispose of any
Shares or, as a result of the Transactions, compels Parent or any of its
affiliates to hold separate any portion of the businesses or assets of the
Company and its subsidiaries, or of Parent and its subsidiaries, or (v) imposes
damages on Parent, the Company or any of their respective affiliates as a result
of the Transactions in amounts that are material with respect to the
Transactions;
A-1
(b) there shall be any Law enacted, issued, promulgated, amended or
enforced by any Governmental Entity applicable to (i) Parent, the Company or any
of their respective affiliates or (ii) the Transactions (other than the routine
application of the waiting period provisions of the HSR Act) that results, or is
reasonably likely to result, directly or indirectly, in any of the consequences
referred to in paragraph (a) above;
(c) (i) there shall have occurred any events or changes that,
individually or in the aggregate, have had or would reasonably be expected to
have a Company Material Adverse Effect or (ii) (A) the representations and
warranties of the Company set forth in the Agreement that are qualified as to
"materiality" or "Material Adverse Effect" shall not be true and correct, or the
representations and warranties of the Company set forth in the Agreement that
are not so qualified shall not be true and correct in all material respects, in
each case, at and as of the date of such determination as if made on such date
(other than those representations and warranties that address matters only as of
a particular date which are true and correct as of such date), or (B) the
Company shall have breached or failed in any material respect to perform or
comply with any obligation, agreement or covenant required by the Agreement to
be performed or complied with by it;
(d) the Board of Directors of the Company shall have withdrawn or
modified, in a manner adverse to Parent, its approval or recommendation of any
of the Transactions;
(e) there shall have occurred (1) any general suspension of trading
in securities on the New York Stock Exchange, the American Stock Exchange or in
the Nasdaq National Market System, for a period in excess of three hours
(excluding suspensions or limitations resulting solely from physical damage or
interference with such exchanges not related to market conditions), (2) a
declaration of a banking moratorium or any suspension of payments in respect of
banks in the United States (whether or not mandatory), (3) any limitation or
proposed limitation (whether or not mandatory) by any United States Governmental
Entity that has a material adverse effect generally on the extension of credit
by banks or other financial institutions, (4) the commencement of a war directly
or indirectly involving the United States or (5) in the case of any of the
situations in clauses (1) through (4) of this paragraph existing at the time of
the commencement of the Offer, a material acceleration or worsening thereof; or
(f) the Agreement shall have been terminated in accordance with its
terms or the Offer shall have been terminated with the consent of the Company.
The foregoing conditions are for the sole benefit of Parent and may
be asserted by Parent regardless of the circumstances giving rise to such
conditions or may be waived by Parent, in whole or in part at any time and from
time to time in the sole discretion of Parent (except for any condition which,
pursuant to Section 1.1 of the Agreement, may only be waived with the Company's
consent). The failure by Parent at any time to exercise any of the foregoing
rights will not be deemed a waiver of any right, the waiver of such right with
respect to any particular facts or circumstances shall not be deemed a waiver
with respect to any other facts or circumstances, and each right will be deemed
an ongoing right which may be asserted at any time and from time to time prior
to the expiration of the Offer.
If the Offer is terminated, all tendered Shares not theretofore
accepted for payment shall forthwith be returned to the tendering stockholders.
A-2
