Exhibit 2.1
AGREEMENT AND PLAN OF MERGER
dated as of
September 10, 1998
among
MERCOM, INC.,
CABLE MICHIGAN, INC.
and
MERCOM ACQUISITION, INC.
TABLE OF CONTENTS(1)
----------
Page
----
ARTICLE 1
The Merger
Section 1.01. The Merger ..................................................1
Section 1.02. Conversion of Shares..........................................2
Section 1.03. Surrender and Payment.........................................2
Section 1.04. Dissenting Shares.............................................4
ARTICLE 2
The Surviving Corporation
Section 2.01. Certificate of Incorporation..................................5
Section 2.02. Bylaws........................................................5
Section 2.03. Directors and Officers........................................5
ARTICLE 3
Representations and Warranties of the Company
Section 3.01. Corporate Existence and Power.................................5
Section 3.02. Corporate Authorization; Approval of the Board................6
Section 3.03. Governmental Authorization....................................6
Section 3.04. Non-contravention.............................................7
Section 3.05. Capitalization................................................7
Section 3.06. Subsidiaries..................................................7
Section 3.07. SEC Filings...................................................8
Section 3.08. Financial Statements..........................................9
Section 3.09. Proxy Statement; Schedule 13E-3...............................9
Section 3.10. Absence of Certain Changes...................................10
Section 3.11. Litigation...................................................11
Section 3.12. No Undisclosed Material Liabilities..........................12
Section 3.13. Compliance with Laws.........................................12
Section 3.14. Finders' Fees................................................12
Section 3.15. Taxes........................................................12
Section 3.16. Employee Benefits............................................13
Section 3.17. Environmental Matters........................................14
Section 3.18. Systems, Franchises and Material Agreements..................15
Section 3.19. Title to Properties; Encumbrances............................16
ARTICLE 4
Representations and Warranties of Buyer
Section 4.01. Corporate Existence and Power................................17
Section 4.02. Corporate Authorization......................................17
Section 4.03. Governmental Authorization...................................18
Section 4.04. Non-contravention............................................18
Section 4.05. Proxy Statement; Schedule 13E-3..............................18
Section 4.06. Finders' Fees................................................18
Section 4.07. Financing....................................................19
Section 4.08. Ownership of Shares..........................................19
ARTICLE 5
Covenants of the Company
Section 5.01. Conduct of the Company.......................................19
Section 5.02. Stockholder Meeting; Proxy Material..........................20
Section 5.03. Access to Information........................................20
ARTICLE 6
Covenants of Buyer
Section 6.01. Obligations of Merger Subsidiary.............................21
Section 6.02. Voting of Shares.............................................21
Section 6.03. Director and Officer Liability...............................21
Section 6.04. Absence of Actions Causing Breach............................22
ARTICLE 7
Covenants of Buyer and the Company
Section 7.01. Best Efforts; SEC Filings....................................22
Section 7.02. Public Announcements.........................................22
Section 7.03. Further Assurances...........................................23
Section 7.04. Notices of Certain Events....................................23
ARTICLE 8
Closing; Conditions to the Merger
Section 8.01. Closing......................................................23
Section 8.02. Conditions to the Obligations of Each Party..................23
Section 8.03. Conditions to the Obligations of Buyer and Merger
Subsidiary.................................................24
Section 8.04. Conditions to the Obligations of the Company.................25
ARTICLE 9
Termination
Section 9.01. Termination .................................................26
Section 9.02. Effect of Termination........................................27
ARTICLE 10
Miscellaneous
Section 10.01. Notices.....................................................27
Section 10.02. Survival....................................................28
Section 10.03. Amendments; No Waivers......................................28
Section 10.04. Expenses....................................................29
Section 10.05. Successors and Assigns......................................29
Section 10.06. Governing Law...............................................29
Section 10.07. Counterparts; Effectiveness.................................29
Section 10.08. Parties in Interest.........................................29
Section 10.09. No Personal Liability.......................................29
Section 10.10. Jurisdiction................................................30
Section 10.11. Interpretation..............................................30
Section 10.12. Specific Performance........................................30
Section 10.13. Entire Agreement; Schedules.................................30
Section 10.14. Severability................................................31
--------
1 The Table of Contents is not a part of this Agreement.
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER dated as of September 10, 1998 among
MERCOM, INC., a Delaware corporation (the Company), CABLE MICHIGAN, INC., a
Pennsylvania corporation (Buyer), and MERCOM ACQUISITION, INC., a Delaware
corporation and a wholly owned subsidiary of Buyer (Merger Subsidiary).
WHEREAS, Buyer owns approximately 61.92% of the outstanding common
stock of the Company;
WHEREAS, Buyer and the Company desire that Merger Subsidiary be merged
with and into the Company with the Company being the surviving corporation and
a wholly owned subsidiary of Buyer as contemplated hereby; and
WHEREAS, a special committee of the Board of Directors of the Company
composed solely of directors unaffiliated with Buyer (the Special Committee)
has unanimously approved this Agreement and the transactions contemplated
hereby;
NOW, THEREFORE, in consideration of the mutual promises contained
herein, the parties hereto agree as follows:
ARTICLE 1
The Merger
Section 1.01. The Merger. (a) At the Effective Time (as defined
below), Merger Subsidiary shall be merged (the Merger) with and into the
Company in accordance with the General Corporation Law of the State of Delaware
(the Delaware Law) whereupon the separate existence of Merger Subsidiary shall
cease, and the Company shall be the surviving corporation (the Surviving
Corporation). At the election of Buyer, the Merger may be structured so that
the Company shall be merged with and into Merger Subsidiary with the result
that Merger Subsidiary shall be the Surviving Corporation.
(b) As soon as practicable after the satisfaction or, to the extent
permitted hereunder, waiver of all conditions to the Merger, the Company and
Merger Subsidiary will file a certificate of merger with the Secretary of State
of the State of Delaware and make all other filings or recordings required by
Delaware Law in connection with the Merger. The Merger shall become effective
at such time as the certificate of merger is duly filed with the Secretary of
State of the State of Delaware or at such later time as is specified in the
certificate of merger by agreement of Buyer and the Company (the Effective
Time).
(c) From and after the Effective Time, the Surviving Corporation
shall possess all the rights, privileges, powers and franchises and be subject
to all of the restrictions, disabilities and duties of the Company and Merger
Subsidiary, all as provided under Delaware Law.
Section 1.02. Conversion of Shares. At the Effective Time by virtue
of the Merger and without any other action on the part of the Company, Merger
Sub or the holder of any Shares (as defined below):
(a) each share of common stock, par value $1.00 per share, of the
Company (the Shares) held by the Company as treasury stock or owned by
Buyer or any subsidiary of Buyer immediately prior to the Effective
Time shall be canceled, and no payment shall be made with respect
thereto;
(b) each share of common stock of Merger Subsidiary outstanding
immediately prior to the Effective Time shall be converted into and
become one share of common stock of the Surviving Corporation with the
same rights, powers and privileges as the shares so converted and
shall constitute the only outstanding shares of capital stock of the
Surviving Corporation; and
(c) each Share outstanding immediately prior to the Effective Time
shall, except as otherwise provided in Section 1.02(a) or as provided
in Section 1.04 below with respect to Shares as to which appraisal
rights have been exercised, be converted into the right to receive
$12.00 in cash, without interest (the Merger Consideration).
Section 1.03. Surrender and Payment. (a) Prior to the Effective
Time, Buyer shall appoint an agent (the Transfer Agent) for the purpose of
exchanging certificates representing Shares for the Merger Consideration, and
the Company shall provide Buyer and the Transfer Agent with a complete and
accurate list of names and addresses for the stockholders of record of the
Company at the Effective Time. Buyer will deliver to the Transfer Agent, at
the Effective Time, the Merger Consideration to be paid in respect of the
Shares. For purposes of determining the Merger Consideration to be made
available, Buyer shall assume that no holder of Shares will perfect his right
to appraisal of his Shares. Promptly (and in any event within three business
days) after the Effective Time, Buyer will send, or will cause the Transfer
Agent to send, to each holder of Shares at the Effective Time a letter of
transmittal for use in such exchange (which shall specify that the delivery
shall be effected, and risk of loss and title shall pass, only upon proper
delivery of the certificates representing Shares to the Transfer Agent).
(b) Each holder of Shares that have been converted into a right to
receive the Merger Consideration, upon surrender to the Transfer Agent of a
certificate or certificates representing such Shares, together with a properly
completed letter of transmittal covering such Shares, will be entitled to
receive the Merger Consideration payable in respect of such Shares. Until so
surrendered, each such certificate shall, after the Effective Time, represent
for all purposes, only the right to receive such Merger Consideration. The
Transfer Agent or Buyer, as the case may be, shall be entitled to deduct and
withhold from the consideration otherwise payable pursuant to this Agreement
such amounts as the Transfer Agent or Buyer are required to deduct and withhold
under the Internal Revenue Code of 1986, as amended (the Code), or any
applicable provision of state, local or foreign tax law, with respect to the
making of any payment in respect of the Merger Consideration hereunder. To the
extent such amounts are so withheld, such amounts shall be treated for all
purposes of this Agreement as having been paid to the Person with respect to
whom such deduction and withholding was made by the Transfer Agent or Buyer.
No such deduction or withholding shall be made if the relevant Person shall
provide documentation reasonably satisfactory to the Transfer Agent and Buyer
establishing an exemption from withholding, and Buyer shall take customary
actions to obtain such documentation prior to such deduction or withholding.
(c) If any portion of the Merger Consideration is to be paid to a
Person other than the registered holder of the Shares represented by the
certificate or certificates surrendered in exchange therefor, it shall be a
condition to such payment that the certificate or certificates so surrendered
shall be properly endorsed or otherwise be in proper form for transfer and that
the Person requesting such payment shall pay to the Transfer Agent any transfer
or other taxes required as a result of such payment to a Person other than the
registered holder of such Shares or establish to the satisfaction of the
Transfer Agent that such tax has been paid or is not payable. For purposes of
this Agreement, Person means an individual, a corporation, a limited liability
company, a partnership, an association, a trust or any other entity or
organization, including a government or political subdivision or any agency or
instrumentality thereof.
(d) After the Effective Time, there shall be no further
registration of transfers of Shares. If, after the Effective Time, certificates
representing Shares are presented to the Surviving Corporation, they shall be
canceled and exchanged for the consideration provided for, and in accordance
with the procedures set forth, in this Article 1.
(e) Any portion of the Merger Consideration made available to the
Transfer Agent pursuant to Section 1.03(a) that remains unclaimed by the
holders of Shares three months after the Effective Time shall be returned to
Buyer, upon demand, and any such holder who has not exchanged his Shares for
the Merger Consideration in accordance with this Section prior to that time
shall thereafter look only to Buyer for payment of the Merger Consideration in
respect of his Shares. Notwithstanding the foregoing, Buyer shall not be liable
to any holder of Shares for any amount paid to a public official pursuant to
applicable abandoned property laws. Any amounts remaining unclaimed by holders
of Shares two years after the Effective Time (or such earlier date immediately
prior to such time as such amounts would otherwise escheat to or become
property of any governmental entity) shall, to the extent permitted by
applicable law, become the property of Buyer free and clear of any claims or
interest of any Person previously entitled thereto.
(f) Any portion of the Merger Consideration made available to the
Transfer Agent pursuant to Section 1.03(a) to pay for Shares for which
appraisal rights have been perfected shall be returned to Buyer, upon demand.
Section 1.04. Dissenting Shares. Notwithstanding Section 1.02,
Shares outstanding immediately prior to the Effective Time and held by a holder
who has not voted in favor of the Merger or consented thereto in writing and
who has demanded appraisal for such Shares in accordance with Delaware Law
shall not be converted into a right to receive the Merger Consideration, unless
such holder fails to perfect or withdraws or otherwise loses his right to
appraisal. If after the Effective Time such holder fails to perfect or
withdraws or loses his right to appraisal, such Shares shall be treated as if
they had been converted as of the Effective Time into a right to receive the
Merger Consideration. The Company shall give Buyer prompt notice of any demands
received by the Company for appraisal of Shares, and Buyer shall have the right
to participate in all negotiations and proceedings with respect to such
demands. The Company shall not, except with the prior written consent of Buyer,
make any payment with respect to, or settle or offer to settle, any such
demands.
ARTICLE 2
The Surviving Corporation
Section 2.01. Certificate of Incorporation. At the Effective Time,
the certificate of incorporation of the Surviving Corporation shall be amended
and restated as set forth in Annex A attached hereto.
Section 2.02. Bylaws. The bylaws of Merger Subsidiary in effect at
the Effective Time shall be the bylaws of the Surviving Corporation until
amended in accordance with applicable law.
Section 2.03. Directors and Officers. From and after the Effective
Time, until successors are duly elected or appointed and qualified in
accordance with applicable law, (a) the directors of Merger Subsidiary at the
Effective Time shall be the directors of the Surviving Corporation, and (b) the
officers of the Company at the Effective Time shall be the officers of the
Surviving Corporation.
ARTICLE 3
Representations and Warranties of the Company
The Company represents and warrants to Buyer that:
Section 3.01. Corporate Existence and Power. The Company is a
corporation duly incorporated, validly existing and in good standing under the
laws of the State of Delaware, and has all corporate powers and all material
governmental licenses, authorizations, consents and approvals required to carry
on its business as now conducted. The Company is duly qualified to do business
as a foreign corporation and is in good standing in each jurisdiction where the
character of the property owned or leased by it or the nature of its activities
makes such qualification necessary, except for those jurisdictions where the
failure to be so qualified would not, individually or in the aggregate, have a
Material Adverse Effect. As used herein, the term Material Adverse Effect
means a material adverse effect on the business, assets, operations, condition
(financial or otherwise), results of operations or the conduct of the business
of the Company and the Company Subsidiaries taken as a whole. For purposes of
this Agreement, a Subsidiary, as to any Person, means any corporation or other
entity of which securities or other ownership interests having ordinary voting
power to elect a majority of the board of directors or other persons performing
similar functions are directly or indirectly owned by such Person and Company
Subsidiary means any Subsidiary of the Company.
Section 3.02. Corporate Authorization; Approval of the Board. The
execution, delivery and performance by the Company of this Agreement and the
consummation by the Company of the transactions contemplated hereby are within
the Companys corporate powers and, except for any required approval by the
Companys stockholders in connection with the consummation of the Merger, have
been duly authorized by all necessary corporate action of the Company. This
Agreement constitutes a valid and binding agreement of the Company enforceable
against the Company in accordance with its terms, except (x) as the same may be
limited by applicable bankruptcy, insolvency, moratorium or similar laws of
general application relating to or affecting creditors rights, and (y) for the
limitations imposed by general principles of equity. The foregoing exceptions
(x) and (y) are hereinafter referred to as the Enforceability Exceptions. The
Board of Directors of the Company has, by resolutions duly adopted at a meeting
duly called and held, unanimously approved this Agreement, the Merger and the
other transactions contemplated hereby on the material terms and conditions set
forth herein. The Special Committee has, by resolutions duly adopted at a
meeting duly called and held, unanimously approved this Agreement, the Merger
and the other transactions contemplated hereby on the material terms and
conditions set forth herein. The Special Committee has received the opinion as
of the date of this Agreement of CIBC Xxxxxxxxxxx Corp. (Xxxxxxxxxxx), as
financial advisor to the Special Committee, that the consideration to be
received by the Companys stockholders (other than Buyer and its Subsidiaries)
in the Merger is fair to such stockholders from a financial point of view.
Section 3.03. Governmental Authorization. The execution, delivery
and performance by the Company of this Agreement and the consummation of the
Merger by the Company require no material action by or in respect of, or filing
with, any governmental body, agency, official or authority other than (a) the
filing of a certificate of merger in accordance with Delaware Law; (b)
compliance with any applicable requirements of the Securities Exchange Act of
1934, as amended, and the rules and regulations promulgated thereunder (the
Exchange Act); (c) for notices to, or consents or waivers from, the relevant
Franchising Authorities (as defined below) pursuant to certain Franchises of
the Company and its Subsidiaries, and (d) where the failure to take such action
or make such filing would not have, and would not reasonably be expected to
have, a Material Adverse Effect or materially interfere with or delay the
transactions contemplated hereby. For purposes hereof, Franchising Authority
has the meaning that term is given by Section 602(10) of the Cable
Communications Policy Act of 1984 (47 U.S.C. Section 522(10)). For purposes of
this Agreement, Franchise means a written franchise within the meaning of
Section 602(9) of the Cable Communications Policy Act of 1984 (47 U.S.C.
Section 522(9)).
Section 3.04. Non-contravention. The execution, delivery and
performance by the Company of this Agreement and the consummation by the
Company of the transactions contemplated hereby do not and will not (a)
contravene or conflict with the certificate of incorporation or bylaws of the
Company, (b) assuming compliance with the matters referred to in clauses (a),
(b) and (c) of Section 3.03, contravene or conflict in any material respect
with any provision of any law, regulation, judgment, injunction, order or
decree binding upon or applicable to the Company or any Company Subsidiary, (c)
except as set forth on Schedule 3.04 and with such other exceptions as would
not individually or in the aggregate have a Material Adverse Effect, constitute
a default under or give rise to a right of termination, cancellation or
acceleration of any right or obligation of the Company or any Company
Subsidiary or to a loss of any benefit to which the Company or any Company
Subsidiary is entitled under any provision of any agreement, contract or other
instrument binding upon the Company or any Company Subsidiary or any license,
franchise, permit or other similar authorization held by the Company or any
Company Subsidiary, or (d) with such exceptions as would not individually or in
the aggregate have a Material Adverse Effect, result in the creation or
imposition of any Lien on any asset of the Company or any Company Subsidiary.
For purposes of this Agreement, Lien means, with respect to any asset, any
mortgage, lien, pledge, charge, security interest or encumbrance of any kind in
respect of such asset.
Section 3.05. Capitalization. The authorized capital stock of the
Company consists of 5,000,000 shares of common stock, par value $1.00 per share
(defined above as Shares), and 150,000 shares of preferred stock, par value
$100.00 per share. There are outstanding 4,787,060 Shares and no shares of
preferred stock. All outstanding Shares have been duly authorized and validly
issued and are fully paid and nonassessable. Except as set forth in the second
preceding sentences there are outstanding (a) no shares of capital stock or
other voting securities of the Company, (b) no securities of the Company
convertible into or exchangeable for shares of capital stock or voting
securities of the Company, (c) no options or other rights to acquire from the
Company, and no obligation of the Company to issue, any capital stock, voting
securities or securities convertible into or exchangeable for capital stock or
voting securities of the Company and (d) no stock appreciation rights or
similar rights with respect to any securities of the Company (the items in
clauses 3.05(a), 3.05(b), 3.05(c) and 3.05(d) being referred to collectively as
the Company Securities). There are no outstanding obligations of the Company or
any Company Subsidiary to repurchase, redeem or otherwise acquire any Company
Securities.
Section 3.06. Subsidiaries. (a) Each Company Subsidiary is a
corporation duly incorporated, validly existing and in good standing under the
laws of its jurisdiction of incorporation, has all corporate powers and all
material governmental licenses, authorizations, consents and approvals required
to carry on its business as now conducted and is duly qualified to do business
as a foreign corporation and is in good standing in each jurisdiction where the
character of the property owned or leased by it or the nature of its activities
makes such qualification necessary, except for those jurisdictions where
failure to be so qualified would not, individually or in the aggregate, have a
Material Adverse Effect. All Company Subsidiaries and their respective
jurisdictions of incorporation are identified on Schedule 3.06(a).
(b) All of the outstanding capital stock of, or other ownership
interests in, each Company Subsidiary, is owned by the Company, directly or
indirectly, free and clear of any Lien and free of any other limitation or
restriction (including any restriction on the right to vote, sell or otherwise
dispose of such capital stock or other ownership interests). There are no
outstanding (i) securities of the Company or any Company Subsidiary convertible
into or exchangeable for shares of capital stock or other voting securities or
ownership interests in any Company Subsidiary, (ii) options or other rights to
acquire from the Company or any Company Subsidiary, and no other obligation of
the Company or any Company Subsidiary to issue, any capital stock, voting
securities or other ownership interests in, or any securities convertible into
or exchangeable for any capital stock, voting securities or ownership interests
in, any Company Subsidiary or (iii) stock appreciation rights or similar rights
with respect to any securities of any Company Subsidiary (the items in clauses
3.06(b)(i), 3.06(b)(ii) and 3.06(b)(iii) being referred to collectively as the
Company Subsidiary Securities). There are no outstanding obligations of the
Company or any Company Subsidiary to repurchase, redeem or otherwise acquire
any outstanding Company Subsidiary Securities.
Section 3.07. SEC Filings. (a) The Company has made available to
Buyer (i) the annual reports on Form 10-K for its fiscal years ended December
31, 1997 (as amended through May 6, 1998), 1996 and 1995, (ii) its quarterly
reports on Form 10-Q for its fiscal quarters ended Xxxxx 00, xxx Xxxx 00, 0000,
(xxx) its proxy or information statements relating to meetings of, or actions
taken without a meeting by, the stockholders of the Company held since December
31, 1995, and (iv) all of its other reports, statements, schedules and
registration statements filed with the Securities and Exchange Commission (the
SEC) since December 31, 1995. As used herein, the term Form 10-K means the
Companys annual report on Form 10-K for the fiscal year ended December 31, 1997
(as amended through May 6, 1998), and the term Form 10-Q means the Companys
quarterly report on Form 10-Q for the fiscal quarter ended June 30, 1998.
(b) As of its filing date (or in the case of the Form 10-K, as of
May 6, 1998), each such report or statement filed pursuant to the Exchange Act
complied in all material respects with the applicable requirements of the
Exchange Act and did not contain any untrue statement of a material fact or
omit to state any material fact necessary in order to make the statements made
therein, in the light of the circumstances under which they were made, not
misleading.
(c) Each such registration statement, as amended or supplemented,
if applicable, filed pursuant to the Securities Act of 1933, as amended (the
Securities Act), as of the date such statement or amendment became effective,
complied in all material respects with the applicable requirements of the
Securities Act and did not contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary to
make the statements therein not misleading.
Section 3.08. Financial Statements. The audited consolidated
financial statements and unaudited consolidated interim financial statements of
the Company included in its annual reports on Form 10-K and the quarterly
reports on Form 10-Q referred to in Section 3.07 fairly present, in all
material respects and in conformity with generally accepted accounting
principles (GAAP) applied on a consistent basis (except as may be indicated in
the notes thereto), the consolidated financial position of the Company and its
consolidated subsidiaries as of the dates thereof and their consolidated
results of operations and changes in financial position for the periods then
ended (subject to normal year-end adjustments in the case of any unaudited
interim financial statements).
Section 3.09. Proxy Statement; Schedule 13E-3. The proxy statement
of the Company (the Company Proxy Statement) to be mailed to the shareholders
of the Company in connection with the meeting of such shareholders to vote on
the approval and adoption of this Agreement (the Company Shareholder Meeting),
and any amendments or supplements to such proxy statement will, when filed with
the SEC, comply as to form in all material respects with the applicable
requirements of the Exchange Act. At the time the Company Proxy Statement or
any amendment or supplement thereto is first mailed to stockholders of the
Company and at the time such stockholders vote on adoption of this Agreement,
the information supplied by the Company for inclusion or incorporation by
reference in the Company Proxy Statement or in the Rule 13e-3 Transaction
Statement on Schedule 13E-3 to be filed with the SEC in connection with the
Merger (the Schedule 13E-3), as either such document may be supplemented or
amended, if applicable, will not contain any untrue statement of a material
fact or omit to state any material fact necessary in order to make the
statements made therein, in the light of the circumstances under which they
were made, not misleading.
Section 3.10. Absence of Certain Changes. Except as set forth on
Schedule 3.10 or as otherwise permitted by this Agreement, since June 30, 1998,
the Company and Subsidiaries have in all material respects conducted their
business in the ordinary course consistent with past practice and there has not
been:
(a) any event or occurrence which has had or reasonably would be
expected to have a Material Adverse Effect (other than those arising
from general economic or industry-wide events or occurrences);
(b) any declaration, setting aside or payment of any dividend or
other distribution with respect to any shares of capital stock of the
Company, or any repurchase, redemption or other acquisition by the
Company or any Company Subsidiary of any outstanding shares of capital
stock or other securities of, or other ownership interests in, the
Company or any Company Subsidiary;
(c) any amendment of any material term of any outstanding security
of the Company or any Company Subsidiary;
(d) any incurrence, assumption or guarantee by the Company or any
Company Subsidiary of any indebtedness for borrowed money with a
principal amount in excess of $190,000 (other than refinancings of
existing borrowings in the ordinary course of business under existing
facilities and other than borrowings in the ordinary course of
business from Buyer);
(e) any creation or assumption by the Company or any Company
Subsidiary of any Lien (other than Permitted Liens (as defined below))
on any material asset;
(f) any transaction or commitment made, or any contract or
agreement entered into, by the Company or any Company Subsidiary
relating to its assets or business (including the acquisition or
disposition of any assets) or any relinquishment by the Company or any
Company Subsidiary of any contract or other right, in either case,
involving more than $375,000, other than those contemplated by this
Agreement and additions of subscribers to existing programming
agreements;
(g) any making of any loan, advance or capital contributions to or
investment in any Person other than advances to employees in the
ordinary course of business consistent with past practice and loans,
advances or capital contributions to or investments in wholly owned
Subsidiaries made in the ordinary course of business consistent with
past practices;
(h) any material change in any method of accounting or accounting
practice by the Company or any Company Subsidiary, except for any such
change required by reason of a concurrent change in generally accepted
accounting principles;
(i) any (A) grant of any severance or termination pay to any
director, officer or employee of the Company or any of the Company
Subsidiaries, (B) entering into of any employment, deferred
compensation or other similar agreement (or any amendment to any such
existing agreement) with any director, officer or employee of the
Company or any of the Company Subsidiaries, (C) increase in benefits
payable under any existing severance or termination pay policies or
(D) increase in compensation, bonus or other benefits payable to
directors or officers (who are not employees) of the Company or any of
the Company Subsidiaries, or, other than in the ordinary course of
business consistent with past practice, to employees (including
officers who are employees) of the Company or any of the Company
Subsidiaries; or
(j) any damage, destruction or other casualty loss (to the extent
not covered by insurance) affecting the business or assets of the
Company or any Company Subsidiary in excess of $375,000;
For purposes of this Agreement, Permitted Liens means (i) materialmens,
mechanics, carriers, workmens, warehousemens, repairmens, and other like Liens
arising in the ordinary course of business for payments which are not material
in amount, and deposits to obtain the release of such Liens; (ii) Liens for
current taxes not yet due and payable or which are being contested in good
faith by appropriate proceedings and for which appropriate reserves have been
established and (iii) other Liens or minor imperfections of title that, taken
in the aggregate, do not materially impair the conduct of the Companys and the
Company Subsidiaries business or the use of any material assets.
Section 3.11. Litigation. Except as set forth in Schedule 3.11,
there is no action, suit, investigation or proceeding pending against, or to
the knowledge of the Company threatened against, the Company or any Company
Subsidiary or any of their respective properties before any court or arbitrator
or any governmental body, agency or official which would reasonably be expected
to have a Material Adverse Effect.
Section 3.12. No Undisclosed Material Liabilities. Neither the
Company nor any of the Company Subsidiaries has any indebtedness, liability or
obligation of any type, whether or not required by GAAP to be reflected on a
balance sheet and whether or not due, except (i) liabilities reflected or
reserved against in the balance sheet set forth in the Form 10-Q, or otherwise
disclosed in the Form 10-K or the Form 10-Q, (ii) liabilities incurred in the
ordinary course of business since June 30, 1998, (iii) for other liabilities
which do not and will not have, and would not reasonably be expected to have, a
Material Adverse Effect and (iv) as set forth on any Schedule hereto or any
contract or agreement set forth thereon (other than for breach thereof).
Section 3.13. Compliance with Laws. Except as set forth on Schedule
3.13, the Company and the Company Subsidiaries hold all licenses, franchises,
certificates, consents, permits, qualifications and authorizations from all
governmental authorities necessary for the lawful conduct of their businesses,
except where the failure to hold any of the foregoing would not have, and would
not reasonably be expected to have, a Material Adverse Effect. To the Companys
knowledge, neither the Company nor any of its Subsidiaries has violated, or is
in violation of, any such licenses, franchises, certificates, consents,
permits, qualifications or authorizations or any applicable statutes, laws,
ordinances, rules and regulations (including, without limitation, any of the
foregoing related to occupational safety, storage, disposal, discharge into the
environment of hazardous wastes, environmental protection, conservation, unfair
competition, labor practices or corrupt practices) of any governmental
authorities, except where such violations do not have, and would not reasonably
be expected to have, a Material Adverse Effect.
Section 3.14. Finders' Fees. Except for Xxxxxxxxxxx, the terms of
whose engagement are set forth in the engagement letter provided to Buyer,
there is no investment banker, broker, finder or other intermediary which has
been retained by or is authorized to act on behalf, of the Company or any
Company Subsidiary who might be entitled to any fee or commission from Buyer or
any of its affiliates upon consummation of the transactions contemplated by
this Agreement.
Section 3.15. Taxes. Except as set forth on Schedule 3.15 and except
as to any items that would not, individually or in the aggregate, have a
Material Adverse Effect: (a) the Company and each of the Company Subsidiaries
has (i) timely paid all taxes of any nature whatsoever (together with any
related penalties and interest) (any of the foregoing, a Tax) required to be
paid by it and (ii) timely filed all federal, state, local and foreign income
and other Tax returns or reports (including declarations of estimated Tax)
required to be filed by it and all such returns have been completed in
accordance with applicable law and are true and correct; (b) there are no
claims or assessments pending against the Company or any of the Company
Subsidiaries for any alleged deficiency in Tax, and the Company does not know
of any threatened Tax claims or assessments against the Company or any of the
Company Subsidiaries; (c) the Company and each of the Company Subsidiaries has
established adequate accruals for Taxes and for any liability for deferred
Taxes in accordance with GAAP; (d) there are no Liens for Taxes (other than for
current Taxes not yet due and payable) on the assets of the Company or any of
the Companys Subsidiaries; and (e) from December 31, 1997, there have not been
any Tax elections, any settlements or compromises of any income Tax liabilities
or any changes in Tax attributes (except that net operating losses are being
used to offset current taxable income).
Section 3.16. Employee Benefits. Except as set forth on Schedule
3.16:
(a) The Company does not maintain, contribute to or have any
material liability (whether direct or indirect, including, without limitation,
as a result of an indemnification obligation) under, or with respect to, and no
ERISA Affiliate has any liability which has or will create any material
obligation by, or result in any material liability to, Buyer with respect to or
under, any Employee Benefit Plan. No material liability (whether direct or
indirect, including, without limitation, as a result of an indemnification
obligation) with respect to any Employee Benefit Plan has been or is reasonably
expected to be incurred by the Company or any ERISA Affiliate under or pursuant
to Title I or Title IV of ERISA or the penalty, excise tax or joint and several
liability provisions of the Code relating to employees, employee compensation
or employee benefit plans that could, following the Effective Time, become or
remain a material liability of Buyer or of any Employee Benefit Plan
established or contributed to by Buyer, and no event, transaction or condition
has occurred or exists that could result in any such liability to their
operations or, following the Effective Time, Buyers.
(b) Neither the execution and delivery by the Company of this
Agreement nor the consummation of the transactions contemplated by this
Agreement will result in the acceleration or creation of any rights of any
person to benefits under any Employee Benefit Plan (including, without
limitation, the acceleration of the accrual or vesting under any Employee
Benefit Plan or the acceleration or creation under any severance, parachute or
change of control agreement) which could result in a material liability to
Buyer.
(c) To the knowledge of the Company, there is no action, order,
writ, injunction, judgment or decree outstanding or claim, suit, litigation,
proceeding arbitration, governmental audit or investigation relating to or
seeking material benefits under any Employee Benefit Plan that is pending or
threatened or anticipated against the Company, any ERISA Affiliate or any
Employee Benefit Plan, other than claims for benefits in the ordinary course.
(d) Except as set forth in the Form 10-K or the Form 10-Q, no
provision of any Employee Benefit Plan or any contract (whether or not
written), nor any transaction, condition or other event exists or has occurred
that would require Buyer to provide any material compensation, payments or
benefits (including, without limitation, severance payments) to or on behalf of
any former or current employee of the Company or any ERISA Affiliate.
(e) As used herein, the term Employee Benefit Plan means any
pension, retirement, profit-sharing, deferred compensation, bonus, incentive,
performance, stock option, phantom stock, stock purchase, restricted stock,
premium conversion, medical, hospitalization, vision, dental or other health,
life, disability, severance, termination or other employee benefit plan,
program, arrangement, agreement or policy, whether written or unwritten, to
which the Company or any Company Subsidiary contributes, is obligated to
contribute to, is a party to or is otherwise bound, or with respect to which
the Company or any Company Subsidiary may have any liabilities. As used
herein, the term ERISA Affiliate means (i) a member of any controlled group (as
defined in Section 414(b) of the Code) of which the Company is a member, (ii) a
trade or business, whether or not incorporated, under common control (within
the meaning of Section 414(c) of the Code) with the Company, or (iii) a member
of any affiliated service group (within the meaning of Section 414(m) of the
Code) of which the Company is a member.
Section 3.17. Environmental Matters. There are no material
Environmental Liabilities (as defined below) of the Company or any of the
Company Subsidiaries. The Company and the Company Subsidiaries are in
compliance and have been in compliance, in all material respects, with all
Environmental Laws. There has been no report regarding any material
environmental assessment, investigation, study, audit, test, review or other
analysis conducted of which the Company has knowledge in relation to the
current or prior business of the Company or the Company Subsidiaries or any
property or facility now or previously owned by the Company or the Company
Subsidiaries which has not been delivered to Buyer. For purposes of this
Agreement, Environmental Liabilities means any and all liabilities of the named
entity, which (i) arise under or relate to matters covered by Environmental
Laws and (ii) relate to actions occurring or conditions existing on or prior to
the Effective Time, and includes but is not limited to fines, penalties, and
costs of correcting any compliance deficiencies, and obligations for site
cleanup or investigation or cleanup resulting from the disposal, release or
threatened release of hazardous substances, pollutants, contaminants, or
wastes. Environmental Laws means any federal, state, and local laws, judicial
decisions, regulations, rules, judgments, orders, decrees, permits, licenses,
agreements and governmental restrictions, relating to human health, the
environment or to emissions, discharges or releases of pollutants, contaminants
or other hazardous substances or wastes into the environment, including without
limitation ambient air, surface water, ground water or land, or otherwise
relating to the manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling of pollutants, contaminants or other hazardous
substances or wastes or the clean-up or other remediation thereof.
Section 3.18. Systems, Franchises and Material Agreements. (a) As
of June 30, 1998, the cable television systems owned by the Company and the
Company Subsidiaries (the Systems) (i) had approximately 41,504 Basic
Subscribers, (ii) passed approximately 65,886 residential dwelling units and
(iii) included approximately 211 underground plant miles and approximately
1,133 aerial plant miles. For purposes hereof, Basic Subscriber means a
customer of the Company or any of the Company Subsidiaries who as of the
relevant date satisfies all of the following requirements:
(i) such customer is connected to and receiving Basic Service from
the Company or any of the Company Subsidiaries;
(ii) such customer is being charged for the services received at the
rate that the Company or the relevant Company Subsidiary generally
charges to its customers in that location;
(iii) such customer has paid to the applicable provider the
applicable rate for all services received for one month (or more) of
service prior to the relevant date;
(iv) such customer does not have any outstanding xxxx or any service
charges more than sixty (60) days delinquent from the due date
therefore in excess of $10.00; and
(v) provided that a hotel, motel or other multiple dwelling unit
customer which pays less per dwelling unit than the rates charged in
the relevant area by the applicable provider for detached single
family homes shall be considered to be that number of Basic
Subscribers which is equal to revenues from Basic Service generated by
such hotel, motel or other customer for the month ending on the
relevant date (or if such date is not the end of a month, the month
ending immediately prior to such date) (without regard to
non-recurring revenues from ancillary services such as installation
fees) divided by the full rate charged to detached single family homes
for such service in the relevant area by the applicable provider.
For purposes hereof, Basic Service means, for any given Franchise (as defined
below) area the cable television service tier or tiers provided by the Company
or the relevant Company Subsidiary in such Franchise area which include the
retransmission of local off air television broadcast signals.
(b) Except for (i) those contracts listed on Schedule 3.18(b) (the
Material Agreements), and (ii) the Company Franchises (as defined below),
neither the Company nor any of the Company Subsidiaries is a party to or is
bound by a contract, commitment or agreement which is material to the Company
and the Company Subsidiaries taken as a whole or which involves payments of
more than $375,000 in the aggregate or which restricts the Company and its
affiliates from engaging in any business or which involves the purchase of
programming by the Company. Schedule 3.18(b) sets forth a list, complete in
all material respects, of the Franchises of the Company or any of the Company
Subsidiaries (the Company Franchises). Each Company Franchise and each
Material Agreement is in all material respects the validly existing, legally
enforceable obligation of the Company or one of the Company Subsidiaries, as
the case may be, and, to the knowledge of the Company, of the other parties
thereto, subject to the Enforceability Exceptions. The Company and the Company
Subsidiaries are validly and lawfully operating in all material respects under
the Company Franchises and the Material Agreements to which they are a party.
The Company and the Company Subsidiaries have duly complied in all material
respects with all of the terms and conditions of each of the Company Franchises
and Material Agreement to which they are a party. Except as set forth on
Schedule 3.18(b), each System operates pursuant to a Franchise.
(c) Except as set forth on Schedule 3.18(c) and subject to such
other exceptions as would not have a Material Adverse Effect, no Person
(including any governmental authority) has any right to acquire any interest in
any System or any assets of the Company or any of the Company Subsidiaries
(including any right of first refusal or similar right) upon an assignment or
transfer of control of a Company Franchise, other than rights of condemnation
or eminent domain afforded by law.
(d) Neither the Company nor any of the Company Subsidiaries has
made or is bound by any material written commitments to any state, municipal,
local or other governmental commission, agency or body with respect to the
operation and construction of the Systems which are not fully reflected in a
Company Franchise or a Material Agreement.
Section 3.19. Title to Properties; Encumbrances. Except as set forth
on Schedule 3.19, the Company and each of the Company Subsidiaries has good and
marketable title to (or in the case of leased assets, valid and existing
leasehold interests in) the material assets set forth on the balance sheet
included in the Form 10-Q (other than those disposed of in the ordinary course
of business since the June 30, 1998), free and clear of all Liens other than
Permitted Liens. Except as set forth on Schedule 3.19, the Company and each of
the Company Subsidiaries owns or has the lawful right to use all assets,
properties, operating rights, easements, contracts, leases, and other
instruments necessary to operate its business as presently conducted in all
material respects. Schedule 3.19 sets forth a list of all real property which
is owned or leased by the Company or any of the Company Subsidiaries. Except
as set forth in Schedule 3.19 and with such other exceptions as would not have
a Material Adverse Effect, all buildings, improvements, central receiving
apparatus, distribution equipment, cables, converters, origination equipment
and other operating assets of the Company and the Company Subsidiaries are in
good working order and condition, normal wear and tear excepted.
ARTICLE 4
Representations and Warranties of Buyer
Buyer represents and warrants to the Company that:
Section 4.01. Corporate Existence and Power. Each of Buyer and
Merger Subsidiary is a corporation duly incorporated, validly existing and in
good standing under the laws of its jurisdiction of incorporation and has all
corporate powers required to carry on its business as now conducted. Since the
date of its incorporation, Merger Subsidiary has not engaged in any activities
other than in connection with or as contemplated by this Agreement or in
connection with arranging any financing required to consummate the transactions
contemplated hereby. Buyer has heretofore delivered to the Company true and
complete copies of Buyers and Merger Subsidiarys certificate or articles of
incorporation and bylaws as in effect on the date hereof.
Section 4.02. Corporate Authorization. The execution, delivery and
performance by Buyer and Merger Subsidiary of this Agreement and the
consummation by Buyer and Merger Subsidiary of the transactions contemplated
hereby are within the corporate powers of Buyer and Merger Subsidiary and have
been duly authorized by all necessary corporate action of Buyer and Merger
Subsidiary. This Agreement constitutes a valid and binding agreement of each
of Buyer and Merger Subsidiary enforceable against it in accordance with its
terms, subject to the Enforceability Exceptions.
Section 4.03. Governmental Authorization. The execution, delivery
and performance by Buyer and Merger Subsidiary of this Agreement and the
consummation by Buyer and Merger Subsidiary of the transactions contemplated by
this Agreement require no material action by or in respect of, or filing with,
any governmental body, agency, official or authority other than (a) the filing
of a certificate of merger in accordance with Delaware Law, (b) compliance with
any applicable requirements of the Exchange Act; and (c) where the failure to
obtain such consents, approvals, authorizations or permits, or to make such
filings or notifications, would not have, and would not reasonably be expected
to have, a Buyer MAE or materially interfere with or delay the transactions
contemplated hereby. As used herein, the term Buyer MAE means a material
adverse effect on the business, assets, operations, condition (financial or
otherwise), results of operations or the conduct of the business of Buyer and
its Subsidiaries taken as a whole.
Section 4.04. Non-contravention. The execution, delivery and
performance by Buyer and Merger Subsidiary of this Agreement and the
consummation by Buyer and Merger Subsidiary of the transactions contemplated
hereby do not and will not (a) contravene or conflict with the certificate or
articles of incorporation or bylaws of Buyer or Merger Subsidiary, (b) assuming
compliance with the matters referred to in Section 4.03, contravene or conflict
in any material respect with any provision of law, regulation, judgment, order
or decree binding upon Buyer or any Subsidiary of Buyer, or (c) except as set
forth in Schedule 4.04, and with such exceptions as would not individually or
in the aggregate have a Buyer MAE, constitute a default under or give rise to
any right of termination, cancellation or acceleration of any right or
obligation of Buyer or any Subsidiary of Buyer or to a loss of any benefit to
which Buyer or any Subsidiary of Buyer is entitled under any agreement,
contract or other instrument binding upon Buyer or any Subsidiary of Buyer.
Section 4.05. Proxy Statement; Schedule 13E-3. At the time the
Company Proxy Statement or any amendment or supplement thereto is first mailed
to stockholders of the Company and at the time such stockholders vote on
adoption of this Agreement, the information supplied by Buyer for inclusion or
incorporation by reference in the Company Proxy Statement or the Schedule
13E-3, as either such document may be amended or supplemented, if applicable,
will not contain any untrue statement of a material fact or omit to state any
material fact necessary in order to make the statements made therein, in the
light of the circumstances under which they were made, not misleading.
Section 4.06. Finders' Fees. There is no investment banker, broker,
finder or other intermediary which has been retained by or is authorized to act
on behalf, of Buyer or any Buyer Subsidiary (other than the Company or any
Company Subsidiary as set forth in Section 3.15) who might be entitled to any
fee or commission from the Company or any of its affiliates upon consummation
of the transactions contemplated by this Agreement.
Section 4.07. Financing. Buyer has, or will have prior to the
Effective Time, sufficient funds available to pay the Merger Consideration in
respect of all of the Shares (other than Shares owned by Buyer or any
Subsidiary of Buyer) and to pay all related fees and expenses pursuant to the
Merger and this Agreement.
Section 4.08. Ownership of Shares. Buyer is the record and
beneficial owner of 2,964,250 Shares.
ARTICLE 5
Covenants of the Company
The Company agrees that:
Section 5.01. Conduct of the Company. Except as set forth in
Schedule 5.01 or as otherwise contemplated herein, from the date hereof until
the Effective Time, the Company and the Company Subsidiaries shall conduct
their business in the ordinary course consistent with past practice in all
material respects and shall use their best efforts to preserve intact their
business organizations and relationships with third parties and to keep
available the services of their present officers and employees in all material
respects. Without limiting the generality of the foregoing, from the date
hereof until the Effective Time and except as set forth in Schedule 5.01:
(a) the Company will not and will not permit any Company Subsidiary
adopt or propose any change in its certificate of incorporation or
bylaws;
(b) the Company will not, and will not permit any Company
Subsidiary to, merge or consolidate with any other Person or acquire
assets from any other Person in excess of $375,000;
(c) the Company will not, and will not permit any Company
Subsidiary to, sell, lease, license or otherwise dispose of any
material assets or property except (i) pursuant to existing contracts
or commitments disclosed herein or (ii) not in excess of $375,000;
(d) the Company will not, and will not permit any Company
Subsidiary to, make any capital expenditure in excess of $375,000;
(e) the Company will not, and will not permit any Company
Subsidiary to, enter into or amend in any material respect any
agreement that would be required to be disclosed on Schedule 3.18;
(f) the Company will not, and will not permit any Company
Subsidiary to, take any action described in subsections (b) through
(i) of Section 3.10;
(g) the Company will not, and will not permit any Company
Subsidiary to, agree or commit to do any of the foregoing; or
(h) the Company will not, and will not permit any Company
Subsidiary to take or agree or commit to take any action that would
make any representation and warranty of the Company hereunder
inaccurate in any respect at the Effective Time.
Section 5.02. Stockholder Meeting; Proxy Material. The Company shall
cause the Company Stockholder Meeting to be duly called and held as soon as
reasonably practicable for the purpose of voting on the approval and adoption
of this Agreement and the Merger. The Directors of the Company shall, subject
to their fiduciary duties as advised by counsel, recommend approval and
adoption of this Agreement and the Merger by the Companys stockholders and
include such recommendation in the Company Proxy Statement. In connection with
such meeting, the Company (a) will use its best efforts to obtain the necessary
approvals by its stockholders of this Agreement and the transactions
contemplated hereby and (b) will otherwise comply with all legal requirements
applicable to such meeting.
Section 5.03. Access to Information. From the date hereof until the
Effective Time, the Company will give Buyer, its counsel, financial advisors,
auditors and other authorized representatives full access to the offices,
properties, books and records of the Company and the Company Subsidiaries, will
furnish to Buyer, its counsel, financial advisors, auditors and other
authorized representatives such financial and operating data and other
information as such Persons may reasonably request and will instruct the
Companys employees, counsel and financial advisors to cooperate with Buyer in
its investigation of the business of the Company and the Company Subsidiaries;
provided that no investigation pursuant to this Section shall affect any
representation or warranty given by the Company to Buyer hereunder.
ARTICLE 6
Covenants of Buyer
Buyer agrees that:
Section 6.01. Obligations of Merger Subsidiary. Buyer will take all
action necessary to cause Merger Subsidiary to perform its obligations under
this Agreement.
Section 6.02. Voting of Shares. Buyer agrees to vote all Shares
beneficially owned by it in favor of adoption of this Agreement and the Merger
at the Company Stockholder Meeting.
Section 6.03. Director and Officer Liability. For six years after
the Effective Time, Buyer will, and will cause the Surviving Corporation to,
(i)indemnify and hold harmless the present and former officers, directors and
employees of the Company in respect of acts or omissions occurring prior to the
Effective Time (including, without limitation, in respect of acts or omissions
in connection with this Agreement and the transactions contemplated hereby) to
the fullest extent permitted under the Companys Certificate of Incorporation
and Bylaws and (ii) to the fullest extent permitted under applicable law,
advance to such Persons expenses incurred in defending any action or suit with
respect to which indemnity may be available under the Companys Certificate of
Incorporation or Bylaws upon receipt from each such Person to whom expenses are
advanced of an undertaking reasonably satisfactory to Buyer to repay such
advances if it is ultimately determined that such Person is not entitled to
indemnification. In the event any claim or claims are asserted or made within
such six year period, all rights to indemnification in respect of any such
claim or claims shall continue until disposition of any and all such claims.
Any determination required to be made with respect to whether any of the
foregoing Persons is entitled to indemnification or advancement of expenses as
set forth above shall be made by independent legal counsel selected mutually by
such Person and Buyer. For six years after the Effective Time, Buyer will use
its best efforts to provide officers and directors liability insurance and
fiduciary liability insurance in respect of acts or omissions occurring on or
prior to the Effective Time covering each such Person currently covered by the
Companys officers and directors liability insurance policy and fiduciary
liability insurance policy on terms with respect to coverage and amount no less
favorable in any material respect than those of such policies in effect on the
date hereof; provided that in satisfying its obligation under this Section,
Buyer shall not be obligated to pay annual premiums in excess of $76,740 (which
is approximately 200% of the current annual premiums allocated to the Company
as of the date hereof); provided further that if the premiums would exceed such
amount in a given year, Buyer shall use its best efforts to purchase coverage
that in the reasonable opinion of Buyer is the best available for such amount
per year. Buyer may satisfy such obligation by purchasing officers and
directors liability and fiduciary liability run-off coverage for such six-year
period.
Section 6.04. Absence of Actions Causing Breach. Buyer agrees that
it will not knowingly cause the Company or any Company Subsidiary to take any
action that would cause the Company to breach any of its representations,
warranties, agreements or covenants under this Agreement.
ARTICLE 7
Covenants of Buyer and the Company
The parties hereto agree that:
Section 7.01. Best Efforts; SEC Filings. Each of the parties hereto
agrees to use its best efforts to take, or cause to be taken, all appropriate
action, and to do, or cause to be done, all things necessary, proper or
advisable under applicable laws and regulations to consummate and make
effective the transactions contemplated by this Agreement in the most
expeditious manner practicable, including but not limited to the satisfaction
of all conditions to the Merger and seeking to remove promptly any injunction
or other legal barrier that may prevent or delay such consummation. Each of
the parties shall promptly notify the other whenever a consent is obtained and
shall keep the other informed as to the progress in obtaining such consents.
The Company and Buyer will promptly prepare and file with the SEC, and
thereafter promptly mail to the stockholders of the Company as promptly as
practicable the Company Proxy Statement and all other proxy materials for the
Company Stockholder Meeting. The Schedule 13E-3, and any amendments or
supplements thereto, will, when filed with the SEC, comply as to form in all
material respects with the applicable requirements of the Exchange Act. The
Company Proxy Statement will include therein the information required to be
provided to the Companys shareholders by Rule 13e-3(e) under the Exchange Act.
Section 7.02. Public Announcements. Buyer and the Company will
consult with each other before issuing any press release or making any public
statement with respect to this Agreement and the transactions contemplated
hereby and, except as may be required by applicable law or any listing
agreement with any national quotation system, will not issue any such press
release or make any such public statement prior to such consultation.
Section 7.03. Further Assurances. At and after the Effective Time,
the officers and directors of the Surviving Corporation will be authorized to
execute and deliver, in the name and on behalf of the Company or Merger
Subsidiary, any deeds, bills of sale, assignments or assurances and to take and
do, in the name and on behalf of the Company or Merger Subsidiary, any other
actions and things to vest, perfect or confirm of record or otherwise in the
Surviving Corporation any and all right, title and interest in, to and under
any of the rights, properties or assets of the Company acquired or to be
acquired by the Surviving Corporation as a result of, or in connection with,
the Merger.
Section 7.04. Notices of Certain Events. The parties shall promptly
notify each other of:
(a) any notice or other communication from any Person alleging that
the consent of such Person is or may be required in connection with
the transactions contemplated by this Agreement;
(b) any notice or other communication from any governmental or
regulatory agency or authority in connection with the transactions
contemplated by this Agreement; and
(c) the occurrence, or threatened occurrence, of any fact or
circumstance that would cause or constitute, or would be reasonably
likely to cause or constitute, a material breach of any of its
representations and warranties set forth herein.
ARTICLE 8
Closing; Conditions to the Merger
Section 8.01. Closing. The closing of the transactions contemplated
hereby shall take place at the offices of counsel to Buyer in New York, New
York, or at such other location as the parties may agree in writing.
Section 8.02. Conditions to the Obligations of Each Party. The
obligations of the Company, Buyer and Merger Subsidiary to consummate the
Merger are subject to the satisfaction of the following conditions:
(a) this Agreement and the Merger shall have been adopted by the
stockholders of the Company in accordance with such Law;
(b) no provision of any applicable law or regulation and no
judgment, injunction, order or decree shall prohibit the consummation
of the Merger; and
(c) (i) no federal, state or foreign court, arbitrator or
governmental body, agency, or official shall have issued any order,
and there shall not have been adopted or promulgated any statute, rule
or regulation, prohibiting the consummation of the Merger, or, except
for orders, statutes, rules and regulations of general effect,
limiting or restricting Buyers conduct or operation of the business of
the Company after the Merger in a manner that would have a Material
Adverse Effect, and (ii) no proceeding seeking to prohibit, alter,
prevent or materially delay the Merger shall have been instituted by
any governmental agency or authority before any court, arbitrator or
governmental body, agency or official and be pending.
Section 8.03. Conditions to the Obligations of Buyer and Merger
Subsidiary. The obligations of Buyer and Merger Subsidiary to consummate the
Merger are subject to the satisfaction of the following further conditions:
(a) (i) the Company shall have performed in all material respects
all of its obligations hereunder required to be performed by it at or
prior to the Effective Time and the representations and warranties of
the Company contained in this Agreement shall be true (disregarding
all exceptions therein for materiality and Material Adverse Effect) at
and as of the Effective Time as if made at and as of such time (except
for representations and warranties made as of a specific date, which
shall be true (disregarding all exceptions therein for materiality and
Material Adverse Effect) at and as of such date) with such exceptions
as would not, individually or in the aggregate, have a Material
Adverse Effect and (ii)Buyer shall have received a certificate signed
by an executive officer on behalf of the Company to the foregoing
effect;
(b) Buyer shall have received all customary documents it may
reasonably request relating to the existence of the Company and the
authority of the Company for this Agreement, all in form and substance
reasonably satisfactory to Buyer; and
(c) 120 calendar days shall have elapsed after the effective time
of the merger of Avalon Cable of Michigan Inc. (Avalon Cable) into
Buyer shall have occurred in accordance with the Agreement and Plan of
Merger dated as of June 3, 1998, amended and restated on July 15,
1998, and further amended on August 11, 1998 (as amended from time to
time, the Buyer Merger Agreement), among Buyer, Avalon Cable of
Michigan Holdings Inc. and Avalon Cable.
Section 8.04. Conditions to the Obligations of the Company. The
obligations of the Company to consummate the Merger are subject to the
satisfaction of the following further conditions:
(a) (i) each of Buyer and Merger Subsidiary shall have performed in
all material respects all of its obligations hereunder required to be
performed by it at or prior to the Effective Time and the
representations and warranties of Buyer and Merger Subsidiary
contained in this Agreement shall be true (disregarding all exceptions
therein for materiality and Buyer MAE) at and as of the Effective Time
as if made at and as of such time (except for representations and
warranties made as of a specific date, which shall be true
(disregarding all exceptions therein for materiality and Buyer MAE) at
and as of such date) with such exceptions as would not, individually
or in the aggregate, have a Buyer MAE and (ii) the Company shall have
received a certificate signed by an executive officer on behalf of
Buyer to the foregoing effect;
(b) the Company shall have received all customary documents it may
reasonably request relating to the existence of Buyer or Merger
Subsidiary and the authority of Buyer or Merger Subsidiary for this
Agreement, all in form and substance reasonably satisfactory to the
Company; and
(c) the fairness opinion, dated as of the date hereof, delivered by
Xxxxxxxxxxx shall not have been withdrawn or modified in any
materially adverse respect.
ARTICLE 9
Termination
Section 9.01. Termination. This Agreement may be terminated and the
Merger may be abandoned at any time prior to the Effective Time
(notwithstanding any approval of this Agreement by the stockholders of the
Company):
(a) by mutual written consent of the Company and Buyer;
(b) by either the Company or Buyer, if the Merger has not been
consummated by March 31, 1999; provided that no party that has
materially breached its obligations hereunder shall be entitled to
terminate this Agreement under this subsection;
(c) by Buyer, if the Buyer Merger Agreement is terminated;
(d) by either the Company or Buyer (so long as such party has
complied in all material respects with its obligations under Section
7.01), if there shall be any law or regulation that makes consummation
of the Merger illegal or if any judgment, injunction, order or decree
enjoining Buyer or the Company from consummating the Merger is entered
and such judgment, injunction, order or decree shall become final and
nonappealable;
(e) by the Company (provided that at the time Buyer would not be
entitled to terminate this Agreement under Section 9.01(f)
disregarding the notice provision therein) if Buyer or Merger
Subsidiary is (i) in material breach of any of its obligations
hereunder or (ii) in breach of one or more of its representations and
warranties hereunder (disregarding any exceptions therein for
materiality or Buyer MAE) with such exceptions as would not
individually or in the aggregate have a Buyer MAE, and does not cure,
or proceed in good faith to cure, such breach within ten business days
after the Company delivers written notice thereof; or
(f) by Buyer (provided that at the time the Company would not be
entitled to terminate this Agreement under Section 9.01(e)
disregarding the notice provisions thereof) if the Company is (i) in
material breach of any of its obligations hereunder or (ii) in breach
of one or more of its representations or warranties hereunder
(disregarding any exceptions therein for materiality or Material
Adverse Effect) with such exceptions as would not individually or in
the aggregate have a Material Adverse Effect, and does not cure, or
proceed in good faith to cure, such breach within ten business days
after notice by Buyer thereof.
The party desiring to terminate this Agreement pursuant to clauses 9.01(b)
9.01(c), 9.01(d), 9.01(e) or 9.01(f) shall give written notice of such
termination to the other party in accordance with Section 10.01.
Section 9.02. Effect of Termination. If this Agreement is terminated
pursuant to Section 9.01, this Agreement shall become void and of no effect
with no liability on the part of any party hereto, except that the agreements
contained in Section 10.04 shall survive the termination hereof.
ARTICLE 10
Miscellaneous
Section 10.01. Notices. All notices, requests and other
communications to any party hereunder shall be in writing (including telecopy
or similar writing) and shall be given,
if to Buyer or Merger Subsidiary, to:
Cable Michigan, Inc.
000 Xxxxxxxx Xxxxxx
Xxxxxxxxx, Xxx Xxxxxx 00000
Telecopy: 000-000-0000
Attention: General Counsel
with a copy to:
Xxxxx Xxxx & Xxxxxxxx
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopy: 000-000-0000
Attention: Xxxxxxx X. Xxxxxx
if to the Company, to:
Mercom, Inc.
000 Xxxxxxxx Xxxxxx
Xxxxxxxxx, Xxx Xxxxxx 00000
Telecopy: 000-000-0000
Attention: General Counsel
with a copy to:
Xxxxxxx Berlin Shereff Xxxxxxxx, LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Telecopy: 000-000-0000
Attention: Xxxxxxx X. Xxxxxxxx
or such other address or telecopy number as such party may hereafter specify
for the purpose by notice to the other parties hereto. Each such notice,
request or other communication shall be effective (a) if given by telecopy,
when such telecopy is transmitted to the telecopy number specified in this
Section and the appropriate telecopy confirmation is received or (b) if given
by any other means, when delivered at the address specified in this Section.
Section 10.02. Survival. The representations and warranties
contained herein and in any certificate or other writing delivered pursuant
hereto shall not survive the Effective Time or the termination of this
Agreement. The parties agree (i)that the Company shall have no liability
whatsoever for any breach of the representations and warranties set forth in
Article 3 and (ii)that such representations and warranties are provided only
for the purpose of the condition set forth in Section 8.03(a) and the
termination provision set forth in Section 9.01(f). All covenants and
agreements contained herein which by their terms are to be performed in whole
or in part after the Effective Time shall survive the Effective Time and be
enforceable in accordance with their terms.
Section 10.03. Amendments; No Waivers. (a) Any provision of this
Agreement may be amended or waived prior to the Effective Time if, and only if,
such amendment or waiver is in writing and signed, in the case of an amendment,
by the Company, Buyer and Merger Subsidiary or in the case of a waiver, by the
party against whom the waiver is to be effective; provided that after the
adoption of this Agreement by the stockholders of the Company, no such
amendment or waiver shall, without the further approval of such stockholders,
alter or change (i) the amount or kind of consideration to be received in
exchange for any shares of capital stock of the Company or (ii) any of the
terms or conditions of this Agreement if such alteration or change would
adversely affect the holders of any shares of capital stock of the Company.
(b) No failure or delay by any party in exercising any right, power
or privilege 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, power or privilege. The rights and remedies
herein provided shall be cumulative and not exclusive of any rights or remedies
provided by law.
(c) The Company shall not amend or waive any right under this
Agreement, or consent to or exercise any right to terminate this Agreement,
unless such action is approved by the Special Committee.
Section 10.04. Expenses. All costs and expenses incurred in
connection with this Agreement shall be paid by the party incurring such cost
or expense.
Section 10.05. Successors and Assigns. The provisions of this
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns, provided that no party may assign,
delegate or otherwise transfer any of its rights or obligations under this
Agreement without the consent of the other parties hereto except that the
rights and obligations of Merger Subsidiary may be assigned to any affiliates
of Buyer and each of Buyer and Merger Subsidiary may pledge their rights
hereunder to any person or entity providing financing to Buyer or Merger
Subsidiary.
Section 10.06. Governing Law. This Agreement shall be construed in
accordance with and governed by the law of the State of Delaware.
Section 10.07. Counterparts; Effectiveness. This Agreement may be
signed in any number of counterparts, each of which shall be an original, with
the same effect as if the signatures thereto and hereto were upon the same
instrument. This Agreement shall become effective when each party hereto shall
have received counterparts hereof signed by all of the other parties hereto.
Section 10.08. Parties in Interest. This Agreement shall be binding
upon and inure solely to the benefit of each party hereto, and nothing in this
Agreement, express or implied, is intended to confer upon any other person any
rights or remedies of any nature whatsoever under or by reason of this
Agreement, except for Sections 6.03 and 10.09 (which are also intended to be
for the benefit of the persons provided for therein and may also be enforced by
such persons).
Section 10.09. No Personal Liability. Neither this Agreement nor any
certificate delivered hereunder shall create or be deemed to create or permit
any personal liability or obligation on the part of any direct or indirect
shareholder of any party hereto (except the Buyer to the extent set forth
herein) or any officer, director, employee, agent, representative or investor
of any party hereto.
Section 10.10. Jurisdiction. Any suit, action or proceeding seeking
to enforce any provision of, or based on any matter arising out of or in
connection with, this Agreement or the transactions contemplated by this
Agreement shall be brought in any federal court in the State of Delaware or any
Delaware state court sitting in Wilmington, and each of the parties hereto
hereby consents to the exclusive jurisdiction of such courts (and of the
appropriate appellate courts therefrom) in any such suit, action or proceeding
and waives any objection to venue laid therein. Process in any such suit,
action or proceeding may be served on any party anywhere in the world, whether
within or without the State of Delaware. Without limiting the generality of
the foregoing, each party hereto agrees that service of process upon such party
at the address referred to in Section 10.01, together with written notice of
such service to such party, shall be deemed effective service of process upon
such party.
Section 10.11. Interpretation. When a reference is made in this
Agreement to a Section or Schedule, such reference shall be to a Section of or
a Schedule to this Agreement unless otherwise indicated. The table of contents
and headings contained in this Agreement are for reference purposes only and
shall not affect in any way the meaning or interpretation of this Agreement.
Whenever the words include, includes or including are used in this Agreement
they shall be deemed to be followed by the words without limitation. The
phrases the date of this Agreement, the date hereof, and terms of similar
import, unless the context otherwise requires, shall be deemed to refer to
September 10, 1998.
Section 10.12. Specific Performance. The parties hereto agree that
irreparable damage would occur in the event any provision of this Agreement was
not performed in accordance with the terms hereof and 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 any
federal court located in the State of Delaware or any Delaware state court
sitting in Wilmington, in addition to any other remedy to which they are
entitled at law or in equity.
Section 10.13. Entire Agreement; Schedules. This Agreement
constitutes the entire agreement among the parties with respect to the subject
matter hereof and supersedes all prior written and oral and all contemporaneous
oral agreements and understandings with respect to the subject matter hereof.
Each party acknowledges and agrees that no other party hereto makes any
representations or warranties, whether express or implied, other than the
express representations and warranties contained herein or in the certificates
to be delivered at the Effective Time. The fact that any item of information
is disclosed in any Schedule to this Agreement shall not be construed to mean
that such information is required to be disclosed by this Agreement. Such
information and the dollar thresholds set forth herein shall not be used as a
basis for interpreting the terms material or Material Adverse Effect or other
similar terms in this Agreement. A matter set forth in one section of the
Schedules need not be set forth in any other section or Schedule so long as its
relevance to the latter section or Schedule is reasonably clear.
Section 10.14. Severability. If any term or other provision of this
Agreement is determined to be invalid, illegal or incapable of being enforced
by any rule of law, or public policy, all other conditions and provisions of
this Agreement shall nevertheless remain in full force and effect so long as
the economic or legal substance of the transactions contemplated herein is not
affected in any manner materially adverse to any party hereto. Upon such
determination that any term or other provision is invalid, illegal or incapable
of being enforced, the parties hereto shall negotiate in good faith to modify
this Agreement so as to effect the original intent of the parties as closely as
possible in a mutually acceptable manner.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed by their respective authorized officers as of the day and year
first above written.
MERCOM, INC.
By: /s/ Xxxx Xxxxxxxxx
-------------------------------
Name: Xxxx Xxxxxxxxx
Title: President and
Chief Executive Officer
CABLE MICHIGAN, INC.
By: /s/ Xxxxx X. XxXxxxx
-------------------------------
Name: Xxxxx X. XxXxxxx
Title: Chairman,
Chief Executive Officer
MERCOM ACQUISITION, INC.
By: /s/ Xxxxx X. XxXxxxx
-------------------------------
Name: Xxxxx X. XxXxxxx
Title: Chairman,
Chief Executive Officer
