1
EXHIBIT D
===============================================================================
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
CAI WIRELESS SYSTEMS, INC.,
MCI WORLDCOM, INC.
AND
CARDINAL ACQUISITION SUBSIDIARY INC.
Dated as of
April 26, 1999
===============================================================================
2
TABLE OF CONTENTS
Page
----
ARTICLE I - TERMS OF THE MERGER...............................................1
1.1 The Merger.........................................................1
1.2 Effective Time......................................................2
1.3 Merger Consideration................................................2
1.4 Shareholders' Rights upon Merger....................................2
1.5 Dissenting Shares...................................................3
1.6 Surrender and Exchange of Shares....................................3
1.7 Options and Warrants................................................5
1.8 Certificate of Incorporation........................................5
1.9 By-Laws.............................................................6
1.10 Other Effects of Merger............................................6
1.11 Additional Actions.................................................6
ARTICLE II - REPRESENTATIONS, WARRANTIES AND CERTAIN COVENANTS OF TARGET......6
2.1 Organization and Good Standing......................................6
2.2 Capitalization......................................................7
2.3 Subsidiaries........................................................8
2.4 Authorization; Binding Agreement....................................8
2.5 Governmental Approvals.............................................10
2.6 No Violations......................................................10
2.7 Securities Filings and Litigation..................................11
2.8 Target Financial Statements........................................12
2.9 Absence of Certain Changes or Events...............................13
2.10 Compliance with Laws..............................................14
2.11 Permits, FCC Licenses; Channel Leases; System Agreements; and the
Systems; Interference; Households.................................14
2.12 Finders and Investment Bankers....................................20
2.13 Contracts.........................................................20
2.14 Employee Benefit Plans............................................21
2.15 Taxes and Tax Returns.............................................23
2.16 Liabilities.......................................................25
2.17 Environmental Matters.............................................25
2.18 Intellectual Property.............................................26
2.19 Real Estate.......................................................27
2.20 Corporate Records.................................................27
2.21 Title to and Condition of Personal Property.......................28
2.22 No Adverse Actions................................................28
2.23 Labor Matters.....................................................28
2.24 Change of Control Agreements......................................29
2.25 Insurance.........................................................29
2.26 Information Supplied..............................................29
ii
3
2.27 Takeover Statutes.................................................30
2.28 Target Rights Plan................................................30
2.29 Year 2000.........................................................30
2.30 Target Options....................................................31
2.31 Transactions with Affiliates......................................31
2.32 No Existing Discussions...........................................32
2.33 TelQuest..........................................................32
2.34 Disclosure........................................................33
ARTICLE III - REPRESENTATIONS, WARRANTIES AND CERTAIN COVENANTS OF ACQUIROR..33
3.1 Organization and Good Standing.....................................33
3.2 Authorization; Binding Agreement...................................34
3.3 Governmental Approvals.............................................34
3.4 No Violations......................................................34
3.5 Finders and Investment Bankers.....................................35
3.6 Information Supplied...............................................35
3.7 Acquiror Ownership.................................................35
ARTICLE IV - ADDITIONAL COVENANTS OF TARGET..................................36
4.1 Conduct of Business of Target and Target Subsidiaries..............36
4.2 Notification of Certain Matters....................................40
4.3 Access and Information.............................................40
4.4 Shareholder Approval; Proxy Statement; Shareholder Lists...........41
4.5 Reasonable Business Efforts........................................42
4.6 Public Announcements...............................................42
4.7 Compliance.........................................................43
4.8 Benefit Plans......................................................43
4.9 No Solicitation of Takeover Proposal...............................43
4.10 Securities and Shareholder Materials..............................44
4.11 Resignations......................................................44
4.12 Noncompete and Confidentiality Agreements; Consulting Agreement...45
4.13 Comfort Letters...................................................45
4.14 Takeover Statutes.................................................45
4.15 Year 2000 Plan....................................................45
4.16 Purchase of Target Common Stock...................................45
4.17 Conversion of Options.............................................46
ARTICLE V - ADDITIONAL COVENANTS OF ACQUIROR.................................46
5.1 Public Announcements...............................................46
5.2 Compliance.........................................................46
5.3 Proxy Statement....................................................46
5.4 Target Senior Secured Credit Facility..............................47
5.5 CS Borrowing.......................................................47
5.6 Indemnification and Insurance......................................47
iii
4
ARTICLE VI - CONDITIONS......................................................48
6.1 Conditions to Each Party's Obligations.............................48
6.1.1 Shareholder Approval..........................................48
6.1.2 No Injunction or Action.......................................49
6.1.3 HSR Act.......................................................49
6.1.4 Opinion of Financial Advisor..................................49
6.1.5 Governmental Approvals........................................49
6.2 Conditions to Obligations of Target................................50
6.2.1 Acquiror Representations and Warranties.......................50
6.2.2 Performance by Acquiror.......................................50
6.2.3 Certificate...................................................50
6.3 Conditions to Obligations of Acquiror..............................50
6.3.1 Target Representations and Warranties.........................50
6.3.2 Performance by Target.........................................51
6.3.3 No Material Adverse Change....................................51
6.3.4 No Pending Action.............................................51
6.3.5 Dissenting Shares.............................................52
6.3.6 Required Consents.............................................52
6.3.7 Certificates and Other Deliveries.............................52
6.3.8 Opinion of Target Counsel.....................................53
6.3.9 Comfort Letters...............................................53
ARTICLE VII - TERMINATION AND ABANDONMENT....................................53
7.1 Termination........................................................53
7.2 Termination Fees and Rights........................................54
7.3 Procedure Upon Termination.........................................55
ARTICLE VIII - MISCELLANEOUS.................................................55
8.1 Confidentiality....................................................55
8.2 Amendment and Modification.........................................56
8.3 Waiver of Compliance; Consents.....................................56
8.4 Survival of Representations and Warranties.........................56
8.5 Notices............................................................56
8.6 Binding Effect; Assignment.........................................57
8.7 Expenses...........................................................58
8.8 Governing Law......................................................59
8.9 Counterparts.......................................................58
8.10 Interpretation....................................................58
8.11 Entire Agreement..................................................58
8.12 Severability......................................................58
8.13 Specific Performance..............................................59
8.14 Third Parties.....................................................59
8.15 Schedules.........................................................59
8.16 Control...........................................................59
iv
5
LIST OF SCHEDULES*
SCHEDULE DESCRIPTION
-------- -----------
2.2(a) Rights, Subscriptions, Warrants, Options, etc., with Respect to Stock
2.2(b) Restrictions with Respect to Stock
2.3(a) Target Ownership Interests
2.3(b) Claims as to Capital Stock and Other Interests Held
2.3(c) Rights with respect to Target Subsidiary Securities
2.3(d) CS Limitations
2.5 Regulatory Consents
2.6 Target Required Approvals
2.7 Target Litigation
2.9 Target Subsequent Events
2.10 Compliance with Laws
2.11(a) Target Markets
2.11(b) Target Channel Leases
2.11(c) Target FCC Licenses
2.11(d) Target Systems Status
2.11(f) Target Systems
2.11(g) Target Systems Licenses, Permits
2.11(h) Target Systems Electrical Interference
2.11(i) Target Collocation and Other Applications
2.11(j) Target Fees
2.11(k) Target Total Households
2.11(l) Target License Judgments, Orders, Complaints & Proceedings
2.11(m) Target Regulatory Reports
2.13 Target Material Contracts
2.14 Target Employee Benefit Plans
2.15 Target Tax Matters
2.16 Target Liabilities
2.17 Target Environmental Matters
2.18(a)(1) Target Intellectual Property
2.18(a)(2) Target Intellectual Property Exceptions
2.19(b) Target Leased Real Property
2.20 Target Records Off Premises
2.22 Target Adverse Actions
2.23 Target Labor Matters
2.24 Target Change In Control Agreements
2.31 Target Affiliate Transactions
*The reporting person undertakes to furnish supplementally a copy of any omitted
schedule to the Securities and Exchange Commission upon request.
iv
6
2.33(a)(1) TelQuest Capitalization
2.33(a)(2) TelQuest Capitalization Exceptions
2.33(b) TelQuest Subsidiaries
2.33(d) TelQuest Investment Exceptions
4.12(a) Form of Noncompete and Confidentiality Agreement
4.12(b) Designated Persons for Noncompete and Confidentiality Agreement
6.3.8 Opinion of Counsel to Acquiror
v
7
GLOSSARY OF DEFINED TERMS
Term Page Where
---- Defined
----------
Acquiror.....................................................................1
Acquiror Ancillary Agreements...............................................34
Acquiror Material Adverse Effect............................................34
Acquiror Material Contract .................................................35
Acquiror Modified Representation............................................51
Acquiror Nonmodified Representation.........................................51
Acquisition Subsidiary.......................................................1
affiliate...................................................................59
Agreement....................................................................1
Alternative Use.............................................................19
Alternative Use Application.................................................19
associate...................................................................59
Benefit Plan................................................................22
Booster Application.........................................................19
Booster License.............................................................19
BTA.........................................................................19
BTA Authorization...........................................................19
Certificate of Merger........................................................1
Certificates.................................................................3
Channel Leases..............................................................19
Channel License.............................................................19
Channels....................................................................19
Claim Notice................................................................26
Closing......................................................................2
Closing Date.................................................................2
Code.........................................................................4
Collocation Application.....................................................17
Collocation Site............................................................19
Connecticut Code.............................................................1
Consent.....................................................................10
CS..........................................................................11
CS Approved Budget..........................................................13
CS Borrowing................................................................40
CS Subsidiaries.............................................................13
Effective Time...............................................................2
Enforceability Exceptions....................................................9
Environmental Laws..........................................................26
ERISA.......................................................................22
vii
8
Event.......................................................................13
Exchange Agent...............................................................3
FCC Licenses................................................................19
FCC Rules...................................................................20
Final Order.................................................................50
GAAP........................................................................13
Governmental Authority......................................................10
HSR Act.....................................................................10
Intellectual Property.......................................................26
IRS.........................................................................22
ITFS........................................................................20
Law.........................................................................11
Letter of Transmittal.......................................................3
Licensee....................................................................20
Litigation..................................................................12
MDS.........................................................................20
Merger.......................................................................1
Merger Consideration.........................................................2
MMDS........................................................................20
Multi-employer Plan.........................................................22
NASD........................................................................10
Noncompete and Confidentiality Agreements...................................45
Other Application...........................................................18
person......................................................................59
Proxy Statement.............................................................42
Rights Plan.................................................................31
SEC.........................................................................11
Securities Act...............................................................8
Securities Exchange Act......................................................8
Senior Secured Credit Facility..............................................36
Senior Secured Notes........................................................36
shareholder.................................................................59
Subsidiary...................................................................7
Surviving Corporation........................................................1
Surviving Corporation Common Stock...........................................2
Surviving Corporation Material Adverse Effect...............................50
System......................................................................20
System Agreements...........................................................20
Takeover Statute............................................................30
Target.......................................................................1
Target Ancillary Agreements..................................................8
Target Approved Budget......................................................13
Target Common Stock..........................................................2
Target Financial Statements.................................................12
Target Material Adverse Effect...............................................7
ii
9
Target Material Contract....................................................21
Target Minority Entity.......................................................8
Target Modified Representation..............................................51
Target Nonmodified Representation...........................................51
Target Permits..............................................................14
Target Real Property Leases.................................................27
Target Securities Filings...................................................11
Target Shares................................................................2
Target Subsidiaries..........................................................6
Tax.........................................................................23
Tax Return..................................................................23
TelQuest....................................................................32
TelQuest Subsidiaries.......................................................33
Termination Fee.............................................................55
Tower Site Leases...........................................................27
Wireless Cable Service......................................................20
Wireless Telecommunications Service.........................................20
Year 2000 Compliant.........................................................31
Year 2000 Plan..............................................................31
Year 2000 Problem...........................................................31
iii
10
AGREEMENT AND PLAN OF MERGER
This Agreement and Plan of Merger (the "Agreement") is made and
entered into as of April 26, 1999, by and among MCI WORLDCOM, Inc., a Georgia
corporation ("Acquiror"), Cardinal Acquisition Subsidiary, Inc., a Connecticut
corporation and wholly owned subsidiary of Acquiror ("Acquisition Subsidiary"),
and CAI Wireless Systems, Inc., a Connecticut corporation ("Target").
Recitals
A. The respective Boards of Directors of Target, Acquisition
Subsidiary and Acquiror have approved the merger (the "Merger") of Acquisition
Subsidiary with and into Target in accordance with the laws of the State of
Connecticut and the provisions of this Agreement.
B. Target, Acquisition Subsidiary and Acquiror desire to make
certain representations, warranties and agreements in connection with, and
establish various conditions precedent to, the Merger.
C. As a condition and inducement to Acquiror and Acquisition
Subsidiary entering into this Agreement, concurrently with the execution and
delivery of this Agreement, Target has granted an option to Acquiror to
purchase 6,090,481 shares of common stock of Target pursuant to the terms and
conditions of a Stock Option Agreement between Target and Acquiror dated as of
even date herewith (the "Stock Option Agreement").
NOW, THEREFORE, in consideration of the premises and the
representations, warranties, covenants and agreements hereinafter set forth,
the parties hereto agree as follows:
ARTICLE I
TERMS OF THE MERGER
1.1 THE MERGER. Upon the terms and subject to the conditions of
this Agreement, the Merger shall be consummated in accordance with the
Connecticut Business Corporation Act (the "Connecticut Code"). At the Effective
Time (as defined in Section 1.2, below), upon the terms and subject to the
conditions of this Agreement, Acquisition Subsidiary shall be merged with and
into Target in accordance with the Connecticut Code and the separate existence
of Acquisition Subsidiary shall thereupon cease, and Target, as the surviving
corporation in the Merger (the "Surviving Corporation"), shall continue its
corporate existence under the laws of the State of Connecticut as a subsidiary
of Acquiror. Acquiror shall prepare and Target shall execute a certificate of
merger (the "Certificate of Merger") in order to comply in all respects with
the requirements of the Connecticut Code and with the provisions of this
Agreement.
1.2 EFFECTIVE TIME. The Merger shall become effective at the time
of the filing of the Certificate of Merger with Secretary of State of the State
of Connecticut in accordance with the applicable provisions of the Connecticut
Code or at such later time as may be specified in the
11
Certificate of Merger. The Certificate of Merger shall be filed as soon as
practicable after all of the conditions set forth in this Agreement have been
satisfied or waived by the party or parties entitled to the benefit of the
same. Acquiror, after consultation with Target, shall determine the time of
such filing and the place where the closing of the Merger (the "Closing") shall
occur. The time when the Merger shall become effective is herein referred to as
the "Effective Time" and the date on which the Effective Time occurs is herein
referred to as the "Closing Date."
1.3 MERGER CONSIDERATION.
(a) Subject to the provisions of this Agreement and any
applicable backup or other withholding requirements, each of the issued and
outstanding shares ("Target Shares") of common stock, par value $0.01 per
share, of Target ("Target Common Stock") (other than shares canceled pursuant
to Section 1.3(b) and Dissenting Shares (as hereinafter defined), if any) as of
the Effective Time shall by virtue of the Merger and without any action on part
of the holder thereof, be converted into the right to receive, and there shall
be paid as hereinafter provided, in exchange for each of the Target Shares,
$28.00 in cash (the "Merger Consideration"), payable to the holder thereof,
without interest thereon, upon the surrender of the certificate formerly
representing such Target Share in the manner provided in Section 1.6.
(b) Each share of Target Common Stock issued and outstanding
immediately prior to the Effective Time that is owned by Acquiror or
Acquisition Subsidiary and each share of Target Common Stock held in the
treasury of Target or by a wholly owned subsidiary of Target shall be canceled
as of the Effective Time and no Merger Consideration shall be payable with
respect thereto. From and after the Effective Time, there shall be no further
transfers on the stock transfer books of Target of any of the Target Shares
outstanding prior to the Effective Time. If, after the Effective Time,
Certificates (as hereinafter defined) are presented to the Surviving
Corporation, they shall be canceled and exchanged for the Merger Consideration
provided for in, and in accordance with the procedures set forth in, this
Agreement.
(c) Subject to the provisions of this Agreement, at the Effective
Time, the shares of Acquisition Subsidiary common stock outstanding immediately
prior to the Merger shall be converted, by virtue of the Merger and without any
action on the part of the holder thereof, into one validly issued, fully paid
and nonassessable share of the common stock of the Surviving Corporation (the
"Surviving Corporation Common Stock"), which share of the Surviving Corporation
Common Stock shall constitute all of the issued and outstanding capital stock
of the Surviving Corporation.
1.4 SHAREHOLDERS' RIGHTS UPON MERGER. Upon consummation of the
Merger, the certificates which theretofore represented Target Shares (other
than Dissenting Shares) (the "Certificates") shall cease to represent any
rights with respect thereto, and, subject to applicable Law (as hereinafter
defined) and this Agreement, the Certificates shall only represent the right to
receive the Merger Consideration.
1.5 DISSENTING SHARES. (a) Notwithstanding anything in this
Agreement to the contrary, Shares which are issued and outstanding immediately
prior to the Effective Time and which are held by holders of Target Common
Stock who have demanded and exercised any
2
12
dissenters' rights in the manner provided under the Connecticut Code, if
applicable and, as of the Effective Time, have neither effectively withdrawn
nor lost their rights to payment under the Connecticut Code (the "Dissenting
Shares"), shall not be converted into or be exchangeable for the right to
receive the Merger Consideration, unless and until such holder shall have
failed to exercise or shall have effectively withdrawn or lost such holder's
right to payment under the Connecticut Code. If such holder shall have so
failed to exercise or shall have effectively withdrawn or lost such right, such
holder's Shares shall thereupon be deemed to have been converted into and to
have become exchangeable for, at the Effective Time, the right to receive the
Merger Consideration provided for in this Agreement, without any interest
thereon.
(b) Target shall give Acquiror (i) prompt notice of any demands
for appraisal and payment pursuant to Section 33-861 of the Connecticut Code
received by Target, withdrawals of such demands, and any other instruments
served pursuant to the Connecticut Code, and received by Target and (ii) the
opportunity to direct all negotiations and proceedings with respect to demands
for appraisal and payment under the Connecticut Code. Target shall not, except
with the prior written consent of Acquiror or as otherwise required by
applicable law, make any payment with respect to any such demands for appraisal
and payment or offer to settle or settle any such demands.
1.6 SURRENDER AND EXCHANGE OF SHARES.
(a) Prior to the Effective Time, Acquiror shall designate The
Bank of New York or such other bank or trust company as it may designate to act
as exchange agent in the Merger (the "Exchange Agent"). Immediately prior to
the Effective Time, Acquiror will deposit with the Exchange Agent the funds
necessary to make the payments contemplated herein on a timely basis. After the
Effective Time, each holder of a Target Share (other than Dissenting Shares)
shall surrender and deliver the Certificates to the Exchange Agent together
with a duly completed and executed transmittal letter provided by the Exchange
Agent (the "Letter of Transmittal") and any other required documents. Upon such
surrender and delivery, the holder shall be entitled to receive in exchange
therefor the Merger Consideration, and such Certificate shall forthwith be
canceled. No interest will be paid or accrued on the cash payable upon the
surrender of the Certificates. If payment is to be made to a person other than
the person in whose name the Certificate surrendered is registered, it shall be
a condition of payment that the Certificate so surrendered shall be properly
endorsed or otherwise in proper form for transfer and that the person
requesting such payment shall pay any transfer or other taxes required by
reason of the payment to a person other than the registered holder of the
Certificate surrendered or establish to the satisfaction of the Surviving
Corporation that such tax has been paid or is not applicable. Until surrendered
in accordance with the provisions of this Section 1.6 and exchanged, each
outstanding Certificate after the Effective Time (other than Certificates
representing Dissenting Shares) shall be deemed for all purposes only to
evidence the right to receive Merger Consideration, without any interest
thereon.
(b) At any time following the sixth (6th) month after the
Effective Time, the Surviving Corporation shall be entitled to require the
Exchange Agent to deliver to it any portion of the funds which had been made
available to the Exchange Agent and not disbursed to holders of shares of
Target Common Stock (including, without limitation, all interest and other
income
3
13
received by the Exchange Agent in respect of all amounts of funds made
available to it), and thereafter each such holder shall be entitled to look
only to the Surviving Corporation (subject to abandoned property, escheat and
other similar laws), and only as general creditors thereof, with respect to any
Merger Consideration that may be payable upon due surrender of the Certificates
held by such holder. If any Certificates representing shares of Target Common
Stock shall not have been surrendered immediately prior to such date on which
the Merger Consideration in respect of such Certificate would otherwise escheat
to or become the property of any Governmental Entity (as hereinafter defined),
any such cash, shares, dividends or distributions payable in respect of such
Certificate shall, to the extent permitted by applicable Law, become the
property of the Surviving Corporation, free and clear of all claims or interest
of any person previously entitled thereto. Notwithstanding the foregoing, none
of the Surviving Corporation, Acquiror, Acquisition Subsidiary or the Exchange
Agent shall be liable to any holder of a share of Target Common Stock for any
Merger Consideration delivered in respect of such share of Target Common Stock
to a public official pursuant to any abandoned property, escheat or other
similar Law.
(c) At the Effective Time, the stock transfer books of the Target
shall be closed and thereafter there shall be no further registration of
transfers of shares of Target Common Stock on the records of the Target. Except
for Acquiror and Acquisition Subsidiary, the holders of shares of Target Common
Stock outstanding immediately prior to the Effective Time shall cease to have
any rights, from and after the Effective Time, with respect to such shares of
Target Common Stock except as otherwise provided herein or by applicable Law,
and all cash paid pursuant to this Article I upon the surrender or exchange of
Certificates shall be deemed to have been paid in full satisfaction of all
rights pertaining to the shares of the Target Common Stock theretofore
represented by such Certificate.
(d) Acquiror, Acquisition Subsidiary, the Surviving Corporation
and the Exchange Agent, as the case may be, shall be entitled to deduct and
withhold from the Merger Consideration otherwise payable pursuant to this
Agreement to any holder of shares of Target Common Stock and Target Options (as
hereinafter defined) such amounts that Acquiror, Acquisition Subsidiary, the
Surviving Corporation or the Exchange Agent is required to deduct and withhold
with respect to the making of such payment under the Internal Revenue Code of
1986, as amended (the "Code"), the rules and regulations promulgated thereunder
or any provision of state, local or foreign tax Law. To the extent that amounts
are so withheld by Acquiror, Acquisition Subsidiary, the Surviving Corporation
or the Exchange Agent, such amounts shall be treated for all purposes of this
Agreement as having been paid to the holder of the shares of Target Common
Stock and Target Options in respect of which such deduction and withholding was
made by Acquiror, Acquisition Subsidiary, the Surviving Corporation or the
Exchange Agent.
1.7 OPTIONS AND WARRANTS.
(a) Prior to the Effective Time, Target shall cause each
outstanding and unexpired option or warrant to purchase Shares described in
Schedule 2.2 (an "Option" and, collectively, the "Options"), if such Option is
exercisable as of the Effective Time, to be converted into the right to receive
from the Surviving Corporation an amount of cash equal to the product of (i)
the
4
14
number of Shares subject to the Option and (ii) the excess, if any, of the
Merger Consideration over the exercise price per Share of such Option (the
"Option Consideration"), as contemplated by Section 4.17. Prior to the
Effective Time, the Target shall cause each Option to be converted as described
herein, and shall take all steps necessary to give written notice to each
holder of an Option that, as applicable: (i) all Options which are exercisable
as of the Effective Time shall be canceled effective as of the Effective Time;
(ii) the Option Consideration for such Options which are exercisable as of the
Effective Time held by such holder shall be payable as described in Section
1.7(b); (iii) all Options which are not exercisable as of the Effective Time
shall be converted, immediately prior to the Effective Time, to the right to
receive, when exercisable, solely the Option Consideration, with such Option
otherwise becoming exercisable in accordance with its terms; and (iv) the
Option Consideration for such Options which are not exercisable as of the
Effective Time held by such holder shall be payable as described in Section
1.7(b). The Board of Directors of Target or any committee thereof responsible
for the administration of any plans under which Options have been granted shall
take any and all action necessary to effectuate matters described in this
Section 1.7 and Section 4.17 on or before the Effective Time.
(b) The Option Consideration shall be payable by the Surviving
Corporation to each holder of Options promptly following the Effective Time, in
the case of Options which are exercisable as of the Effective Time, or promptly
following exercise, in the case of Options which become exercisable after the
Effective Time, only after (i) verification by the Acquiror and the Surviving
Corporation of the ownership and terms of the particular Option by reference to
the Surviving Corporation's records, and (ii) delivery of a written instrument
duly executed by the holder of the applicable Option, in a form provided by the
Target and acceptable to Acquiror and setting forth (x) the aggregate number of
Options owned by that person and their respective issue dates and exercise
prices, (y) a representation by the person that he or she is the owner of all
Options described pursuant to clause (x) and that none of those Options has
expired or ceased to be exercisable and (z) a confirmation of, and consent to,
the cancellation and/or conversion of all Options held by such person effective
as of the Effective Time, as contemplated by this Section 1.7 and Section 4.17.
(c) Any amounts payable pursuant to this Section 1.7 shall be
subject to any required withholding of taxes and shall be paid without interest.
1.8 CERTIFICATE OF INCORPORATION. At and after the Effective
Time, the Certificate of Incorporation of the Surviving Corporation shall be
amended and restated in its entirety to read as the Certificate of
Incorporation of the Acquisition Subsidiary in effect at the Effective Time
except that Article First shall be amended to read as follows: "The name of the
corporation is CAI Wireless Systems, Inc." (subject to any subsequent
amendment).
1.9 BY-LAWS. At and after the Effective Time, the By-Laws of
Acquisition Subsidiary in effect at the Effective Time shall be the By-Laws of
the Surviving Corporation (subject to any subsequent amendment).
1.10 OTHER EFFECTS OF MERGER. The directors and officers of
Acquisition Subsidiary at the Effective Time shall be the initial directors and
officers of the Surviving Corporation and will hold office from the Effective
Time until their respective successors are duly elected or appointed
5
15
and qualify in the manner provided in the Certificate of Incorporation and
By-Laws of the Surviving Corporation, or as otherwise provided by Law. The
Merger shall have all further effects as specified in the applicable provisions
of the Connecticut Code.
1.11 ADDITIONAL ACTIONS. If, at any time after the Effective Time,
the Surviving Corporation shall consider or be advised that any deeds, bills of
sale, assignments, assurances or any other actions or things are necessary or
desirable to vest, perfect or confirm of record or otherwise in the Surviving
Corporation its right, title or interest in, to or under any of the rights,
properties or assets of Acquisition Subsidiary or Target or otherwise to carry
out this Agreement, the officers and directors of the Surviving Corporation
shall be authorized to execute and deliver, in the name and on behalf of
Acquisition Subsidiary or Target, as the case may be, all such deeds, bills of
sale, assignments and assurances and to take and do, in the name and on behalf
of Acquisition Subsidiary or Target, as the case may be, all such other actions
and things as may be necessary or desirable to vest, perfect or confirm any and
all right, title and interest in, to and under such rights, properties or
assets in the Surviving Corporation or otherwise to carry out this Agreement.
ARTICLE II
REPRESENTATIONS, WARRANTIES AND CERTAIN COVENANTS OF TARGET
Target represents, warrants and/or covenants to and with Acquiror as
follows:
2.1 ORGANIZATION AND GOOD STANDING. Target and, except for
TelQuest (as hereinafter defined), each of its Subsidiaries (as defined below)
(the "Target Subsidiaries") is a corporation, limited liability company or
partnership duly organized, validly existing and in good standing under the
laws of the jurisdiction of its incorporation or organization and has all
requisite corporate, limited liability company or partnership power and
authority to own, lease and operate its properties and to carry on its business
as now being conducted. Target and each of the Target Subsidiaries is duly
qualified and in good standing to do business in each jurisdiction in which the
character of the property owned, leased or operated by it or the nature of the
business conducted by it makes such qualification necessary, except where the
failure to be so duly qualified and in good standing would not have a Target
Material Adverse Effect (as defined below). For purposes of this Agreement,
"Target Material Adverse Effect" shall mean a material adverse effect on (i)
the business, assets, condition (financial or otherwise), properties,
liabilities, prospects or the results of operations of Target and the Target
Subsidiaries taken as a whole, (ii) the ability of Target to perform its
obligations set forth in this Agreement and the Target Ancillary Agreements (as
hereinafter defined), or (iii) the ability to timely consummate the
transactions contemplated by this Agreement and the Target Ancillary
Agreements. Target has delivered to Acquiror a complete and accurate list of
the jurisdictions of incorporation or organization and qualification of Target
and the Target Subsidiaries. Target has heretofore delivered to Acquiror
accurate and complete copies of the Certificates or Articles of Incorporation
and By-Laws, or equivalent governing instruments, as currently in effect, of
Target and each of the Target Subsidiaries. "Subsidiary" means, with respect to
any person, any affiliate controlled by such person directly, or indirectly
through one or more intermediaries, and shall include, without limitation, any
corporation, partnership, joint venture, limited liability company,
6
16
trust, estate or other organization or entity, of which (or in which) 50% or
more of: (i) the issued and outstanding shares of capital stock having ordinary
voting power to elect a majority of the board of directors or others performing
similar functions with respect thereto of such corporation or other
organization (irrespective of whether at the time shares of capital stock or
other interests of any other class or classes of such corporation shall or
might have voting power upon the occurrence of any contingency); (ii) the
interest in the capital or profits of such partnership, joint venture, limited
liability company or other organization or entity; or (iii) the beneficial
interest in such trust or estate; is at the time, directly or indirectly, owned
or controlled by such person, by such person and one or more of its other
subsidiaries or by one or more of such person's other subsidiaries;
2.2 CAPITALIZATION. As of the date hereof, the authorized capital
stock of Target consists of 25,000,000 shares of Target Common Stock and
5,000,000 shares of preferred stock, of which 2,000,000 shares have been
designated by the Board of Directors of Target as Series A Preferred Stock and
are reserved for issuance under the Rights Plan (as hereinafter defined). As of
the opening of business on the date hereof, (a) 17,241,379 shares of Target
Common Stock were issued and outstanding, and (b) no shares of Target Common
Stock were issued and held in the treasury of Target. No other capital stock of
Target is issued or outstanding. All issued and outstanding shares of the
Target Common Stock are duly authorized, validly issued, fully paid and
non-assessable and were issued free of preemptive rights and in compliance with
applicable corporate and securities Laws (as hereinafter defined). Except as
set forth on Schedule 2.2(a) attached hereto, as of the date of this Agreement
there are no outstanding rights, reservations of shares, subscriptions,
warrants, puts, calls, unsatisfied preemptive rights, options or other
agreements of any kind relating to any of the capital stock or any other
security of Target, and there is no authorized or outstanding security of any
kind convertible into or exchangeable for any such capital stock or other
security. There are no restrictions upon the transfer of or otherwise
pertaining to the securities (including, but not limited to, the ability to pay
dividends thereon) or retained earnings of Target and the Target Subsidiaries
or the ownership thereof other than those, if any, described on Schedule 2.2(b)
attached hereto or those imposed generally by the Securities Act of 1933, as
amended (the "Securities Act"), the Securities Exchange Act of 1934, as amended
(the "Securities Exchange Act"), applicable state or foreign securities Laws or
applicable corporate Law.
2.3 SUBSIDIARIES. Schedule 2.3(a) attached hereto sets forth the
name and percentages of outstanding capital stock or other interest held,
directly or indirectly, by Target and other persons, with respect to Target's
Subsidiaries or other persons in which Target or a Target Subsidiary holds,
directly or indirectly, any capital stock or other interest (a "Target Minority
Entity"). Except as set forth on Schedule 2.3(b) attached hereto, all of the
capital stock and other interests so held by Target are owned by it or a Target
Subsidiary as indicated on said Schedule 2.3(a), free and clear of any claim,
lien, encumbrance, security interest or agreement with respect thereto. All of
the outstanding shares of capital stock in each of the Target Subsidiaries are
duly authorized, validly issued, fully paid and non-assessable and were issued
free of preemptive rights and in compliance with applicable Laws. Except as set
forth on Schedule 2.3(c) attached hereto, there are no irrevocable proxies,
voting agreements or similar obligations with respect to such capital stock of
the Target Subsidiaries or a Target Minority Entity held by Target or any of
the Target Subsidiaries and no equity securities or other interests
7
17
of any of the Target Subsidiaries are or may become required to be issued or
purchased by reason of any options, warrants, rights to subscribe to, puts,
calls, reservation of shares or commitments of any character whatsoever
relating to, or securities or rights convertible into or exchangeable for,
shares of any capital stock of any Target Subsidiary, and there are no
contracts, commitments, understandings or arrangements by which any Target
Subsidiary is bound to issue additional shares of its capital stock, or
options, warrants or rights to purchase or acquire any additional shares of its
capital stock or securities convertible into or exchangeable for such shares.
Except as set forth on Schedule 2.3(d), Target is not aware of any provision of
the Certificate of Incorporation or By-Laws of CS (as hereinafter defined) or
Target or any other agreement, contract, understanding or arrangement or of any
Law that would restrict, limit or condition, or otherwise adversely affect, the
ability of Target, as the holder of over 90% of the capital stock of CS, to
cause CS, immediately following the Effective Time, to merge with and into
Target or a direct or indirect wholly-owned subsidiary of Target or Acquiror.
2.4 AUTHORIZATION; BINDING AGREEMENT. (a) Target has all
requisite corporate power and authority to execute and deliver this Agreement
and the Stock Option Agreement and to consummate the transactions contemplated
hereby and thereby. The execution and delivery of this Agreement and the other
agreements and documents referred to herein and to be executed in connection
herewith to which Target is or will be a party or a signatory, including,
without limitation, the Stock Option Agreement (the "Target Ancillary
Agreements") and the consummation of the transactions contemplated hereby and
thereby including, but not limited to, the Merger have been duly and validly
authorized by Target's Board of Directors and no other corporate proceedings on
the part of Target or any Target Subsidiary are necessary to authorize the
execution and delivery of this Agreement and the Target Ancillary Agreements or
to consummate the transactions contemplated hereby or thereby (other than the
adoption of this Agreement by the shareholders of Target in accordance with the
Connecticut Code and the Certificate of Incorporation and By-Laws of Target).
This Agreement and the Stock Option Agreement have been duly and validly
executed and delivered by Target and constitute, and upon execution and
delivery thereof as contemplated by this Agreement, the Target Ancillary
Agreements will constitute, the legal, valid and binding agreements of Target,
enforceable against Target in accordance with its and their respective terms,
except to the extent that enforceability thereof may be limited by applicable
bankruptcy, insolvency, reorganization or other similar laws affecting the
enforcement of creditors' rights generally and by principles of equity
regarding the availability of remedies ("Enforceability Exceptions").
(b) At a meeting duly called and held on April 26, 1999, the
Board of Directors of Target, after consideration of (A) the long-term as well
as the short-term interests of Target, (B) the interests of the shareholders,
long-term as well as short-term, including the possibility that those interests
may be best served by the continued independence of Target, (C) the interests
of Target's employees, customers, creditors and suppliers, and (D) community
and societal considerations including those of any community in which any
office or other facility of Target is located, unanimously (i) determined that
this Agreement and the other transactions contemplated hereby, including the
Merger, are fair to and in the best interests of Target and the holders of
Target Shares, (ii) approved, authorized and adopted this Agreement, the Target
Ancillary Agreements, the Merger and the other transactions contemplated hereby
and thereby, and (iii)
8
18
resolved to recommend approval and adoption of this Agreement and the Merger
and the other transactions contemplated hereby and thereby by the holders of
Target Shares.
(c) Target's Board of Directors has received from Target's
financial advisor, BT Alex. Xxxxx Incorporated, a written opinion addressed to
it for inclusion in the Proxy Statement (as hereinafter defined) to the effect
that the Merger Consideration is fair to the holders of the Target Shares
(other than Acquiror and its affiliates) from a financial point of view. An
accurate and complete copy of such opinion has been provided to Acquiror.
(d) The affirmative vote of the holders of two-thirds of the
outstanding Target Shares is required to adopt this Agreement and the Merger
and the other transactions contemplated hereby and thereby. No other vote of
the holders of Target Common Stock or any other capital stock of Target is
required by Law or the Certificate of Incorporation or By-Laws of Target or
otherwise in order for Target to consummate the Merger and the transactions
contemplated hereby and by the Target Ancillary Agreements.
(e) The Certificate of Incorporation of Target, as amended
through the date hereof, specifically provides that Target has elected not to
be governed by Sections 33-840 to 33-845, inclusive, of the Connecticut Code.
Such provisions of the Certificate of Incorporation have been duly adopted by
vote of the Board of Directors and shareholders of Target, as necessary and
appropriate to ensure the effectiveness of such provisions, in the case of
Sections 33-840 to 33-843, inclusive, of the Connecticut Code such that such
provisions are inapplicable to the Merger, the Target Ancillary Agreements and
the transactions contemplated hereby and thereby, and the execution, delivery
and performance of any agreement to acquire, or any other acquisition of,
Target Common Stock by Acquiror or any of its affiliates or associates, and, in
the case of Sections 33-844 to 33-845, inclusive, of the Connecticut Code such
that such provisions are, in Target's reasonable business judgment,
inapplicable to the Merger, the Target Ancillary Agreements and the
transactions contemplated hereby and thereby and the execution, delivery and
performance of any agreement to acquire, or any other acquisition of, Target
Common Stock by Acquiror or any of its affiliates or associates. The Board of
Directors of Target and a majority of the nonemployee directors (as described
in Section 33-844 of the Connecticut Code), of which there are at least two,
have approved this Agreement, the Target Ancillary Agreements and the
consummation of the transactions contemplated hereby and thereby, including,
but not limited to, the Merger. Accordingly, the restrictions on "business
combinations" under the provisions of Sections 33-840 to 33-845, inclusive, of
the Connecticut Code are inapplicable to the Merger, the Target Ancillary
Agreements and the transactions contemplated hereby and thereby and the
execution, delivery and performance of any agreement to acquire, or any other
acquisition of, Target Common Stock by Acquiror or any of its affiliates or
associates.
2.5 GOVERNMENTAL APPROVALS. No consent, approval, waiver or
authorization of, notice to or registration, declaration or filing with or
other action by ("Consent") any nation or government, any state or other
political subdivision thereof, any person, authority or body exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government including, without limitation, any governmental or
regulatory authority, agency, department, board, commission or instrumentality,
any court, tribunal or arbitrator and any self-regulatory organization
("Governmental Authority") on the part of Target or any of the
9
19
Target Subsidiaries is required in connection with any change of control of
Target or any of the Target Subsidiaries, including, without limitation, any
acquisition of Target Common Stock by Acquiror or any of its affiliates or
associates, or the execution or delivery by Target of this Agreement and the
Target Ancillary Agreements or the consummation by Target of the transactions
contemplated hereby or thereby, other than (i) the filing of the Certificate of
Merger with the Secretary of the State of Connecticut in accordance with the
Connecticut Code, (ii) filings with the SEC, state securities laws
administrators and the National Association of Securities Dealers, Inc. (the
"NASD"), (iii) Consents from or with Governmental Authorities set forth on
Schedule 2.5 attached hereto, (iv) filings under the Xxxx-Xxxxx-Xxxxxx
Antitrust Improvements Act of 1976, as amended, and the rules and regulations
promulgated thereunder (the "HSR Act"), and (v) Consents described in Section
2.11 below, and (vi) those Consents that, if they were not obtained or made, do
not or would not have a Target Material Adverse Effect, provided that the
failure to obtain any Consent relating to any FCC License (as hereinafter
defined) shall be deemed to have a Target Material Adverse Effect and the
failure to obtain Consents relating to Channel Leases (as hereinafter defined)
or Tower Site Leases (as hereinafter defined), which, in the aggregate, are or
would be material to Target and the Target Subsidiaries or are or would be
material to the future plans or objectives of Acquiror, or the failure of which
to obtain would otherwise have a Target Material Adverse Effect, shall be
deemed to have a Target Material Adverse Effect.
2.6 NO VIOLATIONS. The execution and delivery of this Agreement
and the Target Ancillary Agreements, the consummation of the transactions
contemplated hereby and thereby and compliance by Target with any of the
provisions hereof or thereof and any change of control of Target or any of the
Target Subsidiaries, including, without limitation, any acquisition of Target
Common Stock by Acquiror or any of its affiliates or associates, will not (i)
conflict with or result in any breach of any provision of the Certificate
and/or Articles of Incorporation or By-Laws or other governing instruments of
Target or any of the Target Subsidiaries, (ii) except as set forth on Schedule
2.6(a) attached hereto, require any Consent under or result in a violation or
breach of, or constitute (with or without due notice or lapse of time or both)
a default (or give rise to any right of termination, cancellation or
acceleration or augment the performance required) under any of the terms,
conditions or provisions of any Target Material Contract (as hereinafter
defined) or other obligation to which Target or any Target Subsidiary is a
party or by which any of them or any of their properties or assets may be
bound, (iii) result in the creation or imposition of any lien or encumbrance of
any kind upon any of the assets of Target or any Target Subsidiary, or (iv)
subject to obtaining the Consents from Governmental Authorities referred to in
Section 2.5, above, contravene any applicable provision of any constitution,
treaty, statute, law, code, rule, regulation, tariff, ordinance, policy, permit
or order of any Governmental Authority or other matters having the force of law
including, but not limited to, any orders, decisions, injunctions, judgments,
awards and decrees of or agreements with any court, tribunal, arbitrator,
mediator or other Governmental Authority ("Law") currently in effect to which
Target or any Target Subsidiary or its or any of their respective assets or
properties are subject, except in the case of clauses (ii), (iii) and (iv),
above, for any deviations from the foregoing which do not or would not have a
Target Material Adverse Effect.
2.7 SECURITIES FILINGS AND LITIGATION. Target has made available
to Acquiror true and complete copies of (i) its Annual Reports on Form 10-K, as
amended, for the years ended
10
20
March 31, 1996, 1997 and 1998, as filed with the Securities and Exchange
Commission (the "SEC"), (ii) the Annual Reports on Form 10-K, as amended, for
the years ended December 31, 1996, 1997 and 1998, as filed by CS Wireless
Systems, Inc. ("CS") with the SEC, (iii) the proxy statements relating to all
of the meetings of shareholders (whether annual or special) of Target and the
Target Subsidiaries (including CS) since January 1, 1996, as filed with the
SEC, and (iv) all other reports, statements, schedules, registration statements
and other filings or documents and amendments thereto (including, without
limitation, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, as
amended) filed by Target or CS with the SEC since January 1, 1996. The reports,
statements, schedules, registration statements, and other filings and documents
set forth in clauses (i) through (iv), above, and those subsequently provided
or required to be provided pursuant to this Section, are referred to
collectively herein as the "Target Securities Filings."
Target and the Target Subsidiaries have filed with the SEC all Target
Securities Filings required to be filed therewith on or prior to the date of
this Agreement and, as of the Closing, Target and the Target Subsidiaries shall
have filed with the SEC all Target Securities Filings required to be filed on
or prior thereto. As of their respective dates, or as of the date of the last
amendment thereof, if amended after filing, none of the Target Securities
Filings (including all schedules thereto and disclosure documents incorporated
by reference therein), contained or, as to Target Securities Filings subsequent
to the date hereof, will contain any untrue statement of a material fact or
omitted or, as to Target Securities Filings subsequent to the date hereof, will
omit to state a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they
were made, not misleading. Each of the Target Securities Filings at the time of
filing or as of the date of the last amendment thereof, if amended after
filing, complied or, as to Target Securities Filings subsequent to the date
hereof, will comply in all material respects with the Securities Exchange Act
or the Securities Act, as applicable. Except as set forth in Schedule 2.7
attached hereto, there is no action, cause of action, claim, demand, suit,
proceeding, citation, summons, subpoena, inquiry or investigation of any
nature, civil, criminal, regulatory or otherwise, in law or in equity, by or
before any court, tribunal, arbitrator, mediator or other Governmental
Authority ("Litigation") pending or, to the knowledge of Target, threatened
against Target, any Target Subsidiary or any Target Minority Entity, or any
officer, director, employee or agent thereof, in his or her capacity as such,
or as a fiduciary with respect to any Benefit Plan (as hereinafter defined) of
Target, or otherwise relating, in a manner that could have a Target Material
Adverse Effect, to Target, any Target Subsidiary, any Target Minority Entity or
the securities of any of them, or any properties or rights of Target, any of
the Target Subsidiaries or any Target Minority Entity or any Benefit Plan. No
event has occurred as a consequence of which Target would be required to file a
Current Report on Form 8-K pursuant to the requirements of the Securities
Exchange Act as to which such a report has not been timely filed with the SEC.
Any reports, statements, schedules, registration statements and other filings
and documents and amendments thereto (including, without limitation, Reports on
Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, as
amended) filed by Target with the SEC after the date hereof shall be provided
to Acquiror no later than the date of such filing.
2.8 TARGET FINANCIAL STATEMENTS. The audited consolidated and
unaudited interim financial statements of Target and the Target Subsidiaries
included in the Target Securities
11
21
Filings and, as prepared by Target, the unaudited financial statements of
Target and the Target Subsidiaries as of and for the months ended January 31,
1999, February 28, 1999 and March 31, 1999 (the "Target Financial Statements")
have been provided to Acquiror. Except as noted therein, the Target Financial
Statements were or, as to those Target Financial Statements provided or
required to be provided subsequent to the date hereof pursuant to this Section,
will be prepared in accordance with generally accepted accounting principles
applicable to the businesses of Target and the Target Subsidiaries consistently
applied in accordance with past accounting practices and fairly present
(including, but not limited to, the inclusion of all adjustments with respect
to interim periods which are necessary to present fairly the financial
condition and assets and liabilities or the results of operations of Target and
the Target Subsidiaries except as may be indicated therein or in the notes
thereto, subject to normal year-end adjustments in the ordinary course with
respect to certain items immaterial in amount or effect and the exclusion of
footnote disclosure in interim Target Financial Statements) the financial
condition and assets and liabilities and the results of operations of Target
and the Target Subsidiaries as of the dates and for the periods indicated.
Except as reflected in the Target Financial Statements, as of their respective
dates, neither Target nor any Target Subsidiary had any debts, obligations,
guaranties of obligations of others or liabilities (contingent or otherwise)
that would be required in accordance with generally accepted accounting
principles to be disclosed in the Target Financial Statements. Any financial
statements prepared with respect to Target or a Target Subsidiary subsequent to
the date hereof promptly shall be provided to Acquiror and shall constitute
Target Financial Statements for purposes hereof.
2.9 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as set forth in
the Target Securities Filings made available by Target to Acquiror prior to the
date of this Agreement or in Schedule 2.9 attached hereto, since December 31,
1998, through the date of this Agreement, there has not been: (i) any event,
occurrence, fact, condition, change, development or effect ("Event") that has
had or could reasonably be expected to have a Target Material Adverse Effect
(except for (A) any decrease in monthly average revenues, as determined based
on generally accepted accounting principles ("GAAP") , of Target and the Target
Subsidiaries (other than CS and its Subsidiaries (the "CS Subsidiaries") ) of
no more than 5.5% per month, subject to adjustment by percentage increase or
decrease of 0.7% for seasonal trends (e.g., college population subscribers),
(B) deviations of cash flow from operations of Target and the Target
Subsidiaries (other than CS and the CS Subsidiaries) of 25% or less on a
month-to-month basis as compared to cash flow from operations projected in the
budget of Target dated March 22, 1999 for the period from April 1, 1999 to
October 31, 2000 delivered by Target pursuant to that certain Note Purchase
Agreement dated as of October 14, 1998, a copy of which budget has been
delivered to Acquiror (the "Target Approved Budget")), (C) any decrease in
monthly average GAAP-based revenues of CS and the CS Subsidiaries of no more
than 5.5% per month, subject to adjustment by percentage increase or decrease
of 0.7% for seasonal trends (e.g., college population subscribers), and (D)
deviations of cash flow from operations of CS and the CS Subsidiaries of 25% or
less on a month-to-month basis as compared to cash flow from operations
projected in the budget of CS dated April 20, 1999 (the "CS Approved Budget"),
a copy of which has been delivered to Acquiror); (ii) any declaration, payment
or setting aside for payment of any dividend (except to Target or a Target
Subsidiary wholly owned by Target) or other distribution or any redemption,
purchase or other acquisition of any shares of capital stock or securities of
or
12
22
interest in Target or any Target Subsidiary; (iii) any return of any capital or
other distribution of assets to shareholders of Target or any Target Subsidiary
(except to Target or a Target Subsidiary wholly owned by Target); (iv) other
than in the ordinary course of business and consistent with the Target Approved
Budget, with respect to Target and any Target Subsidiary other than CS and the
CS Subsidiaries, and the CS Approved Budget, with respect to CS and the CS
Subsidiaries, any investment of a capital nature by the purchase of any
property or assets by Target or any Target Subsidiary; (v) any acquisition (by
merger, consolidation, acquisition of stock or assets or otherwise) of any
person or business; (vi) any sale, disposition, pledge, mortgage or other
transfer of assets or properties of Target or any Target Subsidiary other than
in the ordinary course of business consistent with past practice or having a
net book value in excess of $250,000 individually or $500,000 in the aggregate;
(vii) any action or agreement or undertaking by Target or any Target Subsidiary
to take any action that, if taken or done on or after the date hereof, would
result in a breach of Section 4.1, below; (viii) any change in accounting
methods or practices or any change in depreciation or amortization policies or
rates of or applicable to Target or any Target Subsidiary; (viii) any
employment, severance or consulting agreement entered into by Target or any
Target Subsidiary with any shareholder, officer, director, agent, employee or
consultant of Target or any Target Subsidiary or any amendment or modification
to, or termination of, any current employment, severance or consulting
agreement to which Target or any Target Subsidiary is a party or by which it is
bound; (ix) any forgiveness, cancellation, compromise, settlement, waiver or
release of any debts, claims, rights or Litigation; (x) any agreement,
authorization or commitment to take, whether in writing or otherwise, any
action which, if taken prior to the date hereof, would have made any
representation or warranty of Target in this Agreement untrue or incorrect in
any material respect; or (xi) any failure by Target or any Target Subsidiary to
conduct its business in the ordinary course consistent with past practice.
2.10 COMPLIANCE WITH LAWS. Other than as may be set forth on
Schedule 2.10, the business of Target and each Target Subsidiary has been
operated in compliance with all Laws applicable thereto, except for any
instances of non-compliance which do not and would not have a Target Material
Adverse Effect.
2.11 PERMITS, FCC LICENSES; CHANNEL LEASES; SYSTEM AGREEMENTS; THE
SYSTEMS; INTERFERENCE; Households. Target and the Target Subsidiaries have all
permits, certificates, licenses, approvals, tariffs and other authorizations
required in connection with the operation of their respective businesses
(collectively, "Target Permits"), (ii) neither Target nor any Target Subsidiary
is in violation of any Target Permit, and (iii) no proceedings are pending or,
to the knowledge of Target, threatened, to revoke or limit any Target Permit,
except, in the case of clause (i) or (ii) above, those the absence or violation
of which do not and would not have a Target Material Adverse Effect. Without
limiting the generality of the foregoing:
(a) Schedule 2.11(a) sets forth a description of each of the
markets in which Target and each of its Target Subsidiaries has a System.
(b) Schedule 2.11(b) lists all Channel Leases by name of
underlying lessee and the monthly payment obligations thereunder. Except as set
forth in Schedule 2.11(b), (A) each Channel Lease constitutes a legal, valid,
and binding obligation of the parties thereto and is in
13
23
full force and effect and enforceable in accordance with its terms, subject to
the Enforceability Exceptions, and materially complies with all applicable Laws
and has been filed with the FCC, to the extent required by the FCC Rules, and
no other Consent of any Governmental Authority is required to enable Target or
any of the Target Subsidiaries to operate under such Channel Lease to recognize
the benefits thereunder, or to comply with applicable Laws; (B) none of Target
or any of the Target Subsidiaries has assigned its rights and interests under
any Channel Lease to any other Person; (C) none of Target or any of the Target
Subsidiaries is in material breach or default under any such Channel Lease,
which breach or default could result in the termination, impairment, or
forfeiture of any rights under or any payments being made with respect to any
such Channel Lease, nor has an event occurred with respect to any Channel Lease
which (whether with or without notice, the lapse of time, or the happening or
occurrence of any other event) would constitute a breach or default under such
Channel Lease; (D) to the knowledge of Target, no third party has any rights to
assert any interest in any Channel Lease or the rights and benefits granted to
Target or any of the Target Subsidiaries pursuant thereto; (E) there are no
contractual restrictions relating to any such Channel Lease that reasonably
could be expected to materially adversely affect or delay the collocation of
the Channels (as hereinafter defined) at their respective Collocation Sites (as
hereinafter defined) or the implementation of digital technology or Alternative
Use (as hereinafter defined) services; (F) there are no material provisions of
any such Channel Lease that are the subject of negotiation, nor has any party
to any such Channel Lease requested the renegotiation of any material term
thereof; (G) none of the Channel Leases contain a put or call option with
respect to the subject matter thereof; and (H) none of the Channel Leases
contains any provisions granting the other party thereto the right to terminate
the Channel Leases upon, or otherwise limiting or adversely affecting the
ability of Acquiror or any of its affiliates or associates to effect, a change
in control of Target or any of the Target Subsidiaries, including, without
limitation, any acquisition of Target Common Stock by Acquiror or any of its
affiliates or associates, or the execution and delivery of this Agreement or
the Target Ancillary Agreements or the consummation of the transactions
contemplated hereby and thereby. Except as set forth on Schedule 2.11(b), upon
any such change in control and upon the closing of the transactions
contemplated by this Agreement, all such Channel Leases shall continue in force
and effect in accordance with their terms without penalty, acceleration or
rights of early termination and Acquisition Subsidiary will have the sole right
to use the transmission capacity of the FCC License under each of the Channel
Leases (other than the transmission capacity expressly reserved by such Channel
Lease for the holder of an FCC License). Target has delivered or made available
to Acquiror complete and accurate copies of each of the Channel Leases and none
of such have been amended in any respect.
(c) Schedule 2.11(c) lists all FCC Licenses and applications for
FCC Licenses. Except as set forth in Schedule 2.11(c), (A) each of such FCC
Licenses has been duly and validly issued and is enforceable in accordance with
its terms, subject to the Enforceability Exceptions, and is in full force and
effect; (B) neither Target nor any of the Target Subsidiaries has assigned its
rights and interest under any of the FCC Licenses or any application for an FCC
License; (C) neither Target, any of the Target Subsidiaries nor any lessor
under any Channel Lease, as the case may be, is in violation of the terms under
the corresponding FCC License, which violation could result in the termination
or forfeiture of any rights under, or any payments being made with respect to,
such FCC License, nor has an event occurred with respect to any of the FCC
Licenses
14
24
which (whether with or without notice, the lapse of time, or the happening or
occurrence of any other event) would constitute such a violation of the terms
of such FCC License that could result in the termination or forfeiture of such
FCC License; (D) to the knowledge of Target, except with respect to the lessors
under the Channel Leases, no third party has any rights to assert any interest
in any of the FCC Licenses or applications for FCC Licenses; and (E) there are
no contractual restrictions relating to any of the FCC Licenses which
reasonably could be expected to materially adversely affect the collocation of
the Channels that are the subject thereof at their respective Collocation Site
(as hereinafter defined) or the implementation of an Alternative Use (as
hereinafter defined). Upon a change in control of Target or any of the Target
Subsidiaries, including, without limitation, any acquisition of Target Common
Stock by Acquiror or any of its affiliates or associates, or the execution and
delivery of this Agreement or the Target Ancillary Agreements or the
consummation of the transactions contemplated hereby and thereby, all such FCC
Licenses shall continue in full force and effect in accordance with their terms
without penalty, acceleration or rights of termination and Acquisition
Subsidiary will have full rights and benefits under and to the FCC Licenses.
Target has delivered or made available to Acquiror complete and accurate copies
of each of the FCC Licenses and none of them have been amended in any respect.
(d) Schedule 2.11(d) accurately lists, with respect to each of
the Systems, all Channels, and accurately describes the following:
(i) the status of each FCC License, including (A) the
expiration date of the license, (B) the renewal deadline and any pending
construction deadline and the status of compliance therewith (including whether
one or more extensions of the filing deadline have been requested or obtained),
(C) the status of any pending applications (including assignment and transfer
of control applications) including whether the application has been accepted
for filing by the FCC and any pending deadline for filing timely petitions to
deny such FCC applications, (D) whether there are any threatened or pending
interference issues, petitions to deny, informal objections, competing or
conflicting applications, outstanding no-objection letters, comments or waiver
requests, and (E) with respect to any licensed service areas of Target or any
of the Target Subsidiaries that otherwise qualify as protected service areas
pursuant to 47 C.F.R. Section 21.902(d), whether there are any currently
pending FCC applications that were also pending on September 9, 1983 that
Target has identified as causing harmful interference to its service area;
(ii) the status of each Collocation Application (as
hereinafter defined), Booster Application (as hereinafter defined) and
Alternative Use Application (as hereinafter defined) and any amendments
thereto, including (A) the relevant Collocation Site or other transmission site
and proposed technical parameters and conditions for analog and digital
operations, (B) whether the application has been accepted for filing by the
FCC, (C) whether there are any threatened or pending interference issues,
petitions to deny, informal objections, competing or conflicting applications,
outstanding no-objection letters, outstanding consent letters, comments or
waiver requests, and (D) with respect to any licensed service areas of Target
or any of the Target Subsidiaries that otherwise qualify as protected service
areas pursuant to 47 C.F.R. Section 21.902(d), whether there are any currently
pending FCC applications that were also pending on September 9, 1983 that
Target has identified as causing harmful interference to its service area; and
15
25
(iii) the market trials and operations that Target or any of
the Target Subsidiaries are conducting, or intend to conduct, pursuant to the
Target Approved Budget, with respect to Target and any Target Subsidiary other
than CS and the CS Subsidiaries, and the CS Approved Budget, with respect to CS
and the CS Subsidiaries, with respect to Alternative Uses of the Channels or
the Systems and the relevant authorizations used, or to be used, in conjunction
with such trial and operations and the conditions contained therein.
(e) Complete and correct copies of all of the Target Permits,
including, without limitation, Booster Applications, Collocation Applications,
Alternative Use Applications and amendments thereto (with the FCC file date
stamped thereon), FCC Licenses and material related thereto, including pending
applications filed with the FCC relating to the Systems and other Target
Permits owned, held or possessed by Target or any of the Target Subsidiaries
have been provided to Acquiror.
(f) Except as set forth on Schedule 2.11(f) and except for
Channel Licenses held by third parties, with respect to each of the Systems,
all of the assets, Target Permits and System Agreements relating to each System
are owned by one or more of Target and the Target Subsidiaries.
(g) Except as disclosed in Schedule 2.11(g), (i) Target and each
of the Target Subsidiaries have obtained and possess all System Agreements,
patents, copyrights, certificates of confirmation, licenses, permits,
trademarks, and trade names, or rights thereto, necessary to conduct its
business as currently conducted by Target and each of the Target Subsidiaries
and none of Target or any of the Target Subsidiaries is in violation of any
valid rights of others with respect to any of the foregoing; (ii) no other
license, permit or franchise is necessary to the operation by Target or any of
the Target Subsidiaries of the Systems as currently conducted by Target and
each of its Target Subsidiaries; and (iii) Target and each of the Target
Subsidiaries have obtained and possess or applied for all licenses, and have
obtained and possess all leases, conduit use, equipment rental and microwave or
satellite relay agreements necessary for the operation of the Systems as
required by the System Agreements.
(h) Except as set forth on Schedule 2.11(h), neither any of
Target, any of the Target Subsidiaries, nor any Licensee of a Channel has
contractually accepted or will contractually accept any electrical interference
from any source that is likely to result in material adverse electrical
interference to any of the Channels in any of the Systems now operating or
expected to be operated, including the BTA Authorizations (as hereinafter
defined) or any newly licensed Channel in any BTA (as hereinafter defined) in
which any System operates or Target or any of the Target Subsidiaries expect to
operate. Except as set forth in Schedule 2.11(h), neither Target nor any of the
Target Subsidiaries has filed a petition currently pending before the FCC
against any application filed with the FCC by a third party applicant and no
third party has filed a petition currently pending before the FCC against any
application filed with the FCC by Target or any of the Target Subsidiaries.
(i) Except as set forth in Schedule 2.11(i), (i) each Collocation
Application and Other Application (as hereinafter defined) complies with the
FCC rules (including the interference protection requirements), has been
accepted for filing by the FCC, and cut-off from competing
16
26
and conflicting applications; (ii) the deadline for filing timely petitions to
deny each Collocation Application and each Other Application has lapsed; (iii)
there are no threatened or pending petitions to deny, informal objections,
competing or conflicting applications, outstanding no-objection letters,
comments, petitions for reconsideration, petitions for review or waiver
requests relating to such Collocation Applications and Other Applications; and
(iv) a protected service area for the FCC License has been granted or
requested. For purposes hereof, (i) a "Collocation Application" shall mean any
application filed with, or granted by, the FCC to authorize the operation of
the facilities associated with each FCC License at a common transmitter site
with other ITFS (as hereinafter defined) and Multichannel Multipoint
Distribution Service and Multipoint Distribution Service stations pursuant to
common technical parameters of the FCC License and (ii) "Other Application"
shall mean any other applications, in addition to Collocation Applications,
filed with or granted by the FCC to authorize the provision of digital services
and/or two-way services on the facilities associated with each FCC License.
(j) Except as set forth in Schedule 2.11(j), all regulatory fees
and expenses due and payable associated with the FCC Licenses have been paid to
the FCC, including all fees and costs associated with the FCC Licenses held by
the Target or any of the Target Subsidiaries to provide MMDS (as hereinafter
defined) or MDS (as hereinafter defined) service in BTAs. Schedule 2.11(j)
discloses any discounts or bidding credits that the Target or any of the Target
Subsidiaries received from the FCC in conjunction with the licensing of the BTA
Authorizations.
(k) Schedule 2.11(k) lists the total number of households for
each BTA in which Target or any of the Target Subsidiaries has been granted or
is leasing an FCC License and describes any material assumptions for arriving
at such determinations.
(l) Except as disclosed on Schedule 2.11(l), all FCC Licenses are
in full force and effect and there are no outstanding adverse judgments,
injunctions, decrees or orders that have been issued by the FCC against the
Target or any Target Subsidiary or affiliate thereof or the holder of an FCC
License and there are no pending or threatened complaints, investigations,
inquiries or proceedings by or before the FCC or other Governmental Authority
or any actions or events that (i) could result in the revocation, cancellation,
adverse modification or non-renewal of any FCC License or the imposition of a
material fine or forfeiture, (ii) materially impair Target's or any of the
Target Subsidiaries' ability to develop or operate any of the Channels or
Systems, or (iii) otherwise result in a Target Material Adverse Change. The
Systems, Channels, FCC Licenses and related facilities are currently providing
and, to the knowledge of Target, have been providing service to the public
(rather than a test signal or color bar) and are being operated and/or
developed in material compliance with the respective FCC License and other
Target Permits and with all other Laws.
(m) Except as set forth on Schedule 2.11(m), since January 1,
1996 all material reports and other documents required to be filed with the FCC
or other Governmental Authority with respect to the Systems, Channels, FCC
Licenses, System Agreements and Channel Leases have been timely filed,
including, without limitation certifications of completion of construction.
Notwithstanding anything contained herein to the contrary, to the knowledge of
Target, except as set forth on Schedule 2.11(m), there have been no failures to
make filings with the FCC or any Governmental Authority at any time that would
reasonably be likely to have a material adverse
17
27
effect on any of the Channels, FCC Licenses, System Agreements or Systems, or
any of Target or any of the Target Subsidiaries, or what would reasonably be
likely to result in the imposition of a material fine or forfeiture, including
copyright filings, extension requests, and reports required by Sections
21.11(a), 21.911 and 21.920 of the FCC Rules.
(n) As used in this Agreement, the following terms have the
respective meanings set forth below (such meanings to be equally applicable to
both the singular and plural forms of the term defined):
"Alternative Use" means the provision of service other than Wireless
Cable Service through the use of, among others, ITFS, MDS, and MMDS channels,
including two-way transmission services and fixed or mobile telecommunications
services.
"Alternative Use Application" means an application filed by Target or
any of the Target Subsidiaries or the Licensee of a Channel to provide an
Alternative Use, including an application for developmental authority,
experimental authority, or special temporary authority or any Booster
Application requesting to provide an Alternative Use.
"Booster Application" means any application filed with, or granted by,
the FCC to authorize the operation of a booster station.
"Booster License" means a license for a booster station.
"BTA" means basic trading area, as defined by Rand XxXxxxx and used by
the FCC in licensing MDS and MMDS channels pursuant to the competitive bidding
process.
"BTA Authorization" means the Target Permit granted by the FCC to
apply for individual MDS and MMDS channels with a certain BTA.
"Channel Leases" means all leases to use transmission capacity held by
or for benefit of one or more of Target or any of the Target Subsidiaries of
transmission capacity on ITFS, MDS, or MMDS frequencies licensed by the FCC.
"Channel License" means any Target Permits for a Channel granted by
the FCC to any one or more of Target or the Target Subsidiaries or leased to
Target or any of the Target Subsidiaries by a lessor of a Channel Lease, or any
application pending before the FCC for such Target Permit.
"Channels" means the ITFS, MDS, or MMDS frequencies licensed, or
expected to be licensed, to one or more of Target or any of the Target
Subsidiaries by the FCC pursuant to an FCC License or made available to one or
more of Target or any of the Target Subsidiaries by an ITFS, MDS, or MMDS
applicant, permittee, conditional licensee or licensee pursuant to a Channel
lease, including any frequencies associated with any booster station, repeater
station, response station hub or any facility used to provide an Alternative
Use.
"Collocation Site" means the site at which the facilities for the
corresponding Channel are, or are to be, collocated at a common transmitter
site with other Channels that are used to
18
28
provide Wireless Telecommunications Service (as hereinafter defined) on the
System.
"FCC Licenses" means the Target Permits, including, without
limitation, any Channel Licenses, Booster Licenses and any other related
facility licenses and construction permits, issued by the FCC to Target or any
of the Target Subsidiaries or any lessor under a Channel Lease, or that are the
subject of an application filed with the FCC by Target or any of the Target
Subsidiaries or any such lessor under a Channel Lease, to operate one or more
of the Channels, including, without limitation, any BTA Authorization,
individual Target Permit to construct or operate Channels within a BTA, and any
Alternative Use permit.
"FCC Rules" means Title 47 of the Code of Federal Regulations, as
amended at any time and from time to time, and FCC decisions issued pursuant to
the adoption of such regulations.
"ITFS" means the Instructional Television Fixed Service, a class of
microwave frequencies licensed by the FCC pursuant to Part 74 of the FCC Rules.
"Licensee" means an applicant, permittee, conditional licensee, or
licensee of a facility regulated by the FCC.
"MDS" means the Multipoint Distribution Service, a domestic
transmission service licensed by the FCC pursuant to Part 21 of the FCC Rules.
"MMDS" means Multichannel Multipoint Distribution Service, a domestic
transmission service licensed by the FCC pursuant to Part 21 of the FCC Rules.
"System Agreements" means, collectively, all FCC Licenses for Channels
and booster stations, Channel Leases, Tower Site Leases, programming
agreements, retransmission agreements, non-interference or cooperation
agreements (excluding no-objection letters issued in the ordinary course of
business), equipment agreements or instruments, licenses, permits, and other
material agreements pertaining to the transmission of video, voice, or data
signals through wireless cable transmission facilities, of each of Target and
each of the Target Subsidiaries now existing or hereafter acquired or obtained,
relative to the Channels or the construction and operation of the Systems.
"Systems" means the wireless telecommunications systems constructed
and operated by one or more of Target and each of the Target Subsidiaries for
the provision of Wireless Telecommunications Service.
"Tower Site Leases" is defined in Section 2.19(b).
"Wireless Cable Service" means the provision of subscription video or
entertainment and additional programming services and services ancillary
thereto through the use of, among other, ITFS, MDS, and MMDS channels.
"Wireless Telecommunications Service" means any service that is
permitted under FCC rules and regulations or authorized by the FCC to be
provided on or by means of the transmission capacity on an ITFS, MDS, or MMDS
channel, including Wireless Cable Services and
19
29
Alternative Use services.
2.12 FINDERS AND INVESTMENT BANKERS. Neither Target nor any of the
Target Subsidiaries nor any of their officers or directors or other affiliates
has employed any broker or finder or incurred any liability for any brokerage
fees, commissions or finders' fees in connection with the acquisition of Target
Common Stock by Acquiror or any of its affiliates or associates, the Merger,
the Target Ancillary Agreements or the transactions contemplated hereby or
thereby, other than pursuant to the agreement with BT Alex. Xxxxx Incorporated,
an accurate and complete copy of which has been provided to Acquiror.
2.13 CONTRACTS. Schedule 2.13 attached hereto sets forth a
complete and accurate list of all material notes, bonds, mortgages, indentures,
contracts, leases, licenses, agreements, understandings, arrangements,
commitments, instruments, bids or proposals to which Target or any Target
Subsidiary is a party or is subject ("Target Material Contract") . For purposes
of this Section 2.13, a note, bond, mortgage, indenture, contract, lease,
license, agreement, understanding, arrangement, commitment, instrument, bid or
proposal shall be considered material if (i) it is with an affiliate or
associate of Target or of a Target Subsidiary or with a Target Minority Entity,
(ii) it is required to be described in or filed as an exhibit to any document
filed under the Securities Act or the Securities Exchange Act by an issuer
subject thereto, (iii) the financial obligation of Target or a Target
Subsidiary thereunder or applicable to the assets or properties of Target or a
Target Subsidiary could exceed $250,000, (iv) it provides for recurring monthly
revenues to Target or a Target Subsidiary in excess of $20,000, (v) it includes
any exclusivity or non-competition restrictions applicable to Target or a
Target Subsidiary, (vi) it is for the purchase or sale of any assets otherwise
than in the ordinary course of business, or (vii) it is a collective bargaining
or similar agreement or an agreement relating to which employees of Target or
any of the Target Subsidiaries are represented by a union in their employment
relationship with Target and any of the Target Subsidiaries. Target has made
available to Acquiror true and accurate copies of all Target Material
Contracts. Target Material Contracts are valid and binding and are in full
force and effect and enforceable in accordance with their respective terms
(assuming the other parties thereto are bound, as to which Target has no basis
to believe otherwise), subject to the Enforceability Exceptions. Any and all
transactions between or involving Target or a Target Subsidiary and an
affiliate or associate thereof were entered into in the ordinary course of
business and are upon fair and reasonable terms not materially less favorable
than Target or such Target Subsidiary could obtain or become entitled to in an
arm's-length transaction with a person that is not an affiliate or an
associate. Except as set forth in Schedule 2.6(b) attached hereto, (i) no
Consent of any person is needed in order that each such Target Material
Contract shall continue in full force and effect in accordance with its terms
without penalty, acceleration or rights of early termination by reason of any
change of control of Target or any of the Target Subsidiaries, including,
without limitation, any acquisition of Target Common Stock by Acquiror or any
of its affiliates or associates, or the execution, delivery or performance of
this Agreement and the Target Ancillary Agreements or the consummation of the
transactions contemplated hereby or thereby, and (ii) neither Target nor any
Target Subsidiary is in violation or breach of or default under any such Target
Material Contract, nor to Target's knowledge is any other party to any such
Target Material Contract in violation or breach of or default under any such
Target Material Contract.
20
30
2.14 EMPLOYEE BENEFIT PLANS.
(a) Except as set forth in Schedule 2.14 attached hereto, there
are no Benefit Plans (as defined below) maintained or contributed to by Target
or a Target Subsidiary under which Target, a Target Subsidiary or the Surviving
Corporation could incur any liability. A "Benefit Plan" shall include (i) an
employee benefit plan as defined in Section 3(3) of the Employee Retirement
Income Security Act of 1974, as amended, together with all regulations
thereunder ("ERISA"), even if, because of some other provision of ERISA, such
plan is not subject to any or all of ERISA's provisions, and (ii) whether or
not described in the preceding clause, (a) any pension, profit sharing, stock
bonus, deferred or supplemental compensation, retirement, thrift, stock
purchase, stock appreciation or stock option plan, or any other compensation,
welfare, fringe benefit or retirement plan, program, policy, course of conduct,
understanding or arrangement of any kind whatsoever, whether formal or
informal, oral or written, providing for benefits for or the welfare of any or
all of the current or former employees or agents of Target or a Target
Subsidiary or their beneficiaries or dependents, (b) a multi-employer plan as
defined in Section 3(37) of ERISA (a "Multi-employer Plan"), or (c) a multiple
employer plan as defined in Section 413 of the Code.
(b) With respect to each Benefit Plan (where applicable): Target
has made available to Acquiror complete and accurate copies of (i) all plan and
trust texts and agreements, insurance contracts and other funding arrangements;
(ii) annual reports on the Form 5500 series for the last three (3) years; (iii)
financial statements and/or annual and periodic accountings of plan assets for
the last three (3) years; (iv) the most recent determination letter received
from the Internal Revenue Service ("IRS"); (v) actuarial valuations for the
last three (3) years; and (vi) the most recent summary plan description as
defined in ERISA.
(c) With respect to each Benefit Plan while maintained or
contributed to by Target or a Target Subsidiary: (i) if intended to qualify
under Code Sections 401(a) or 403(a), such Benefit Plan has received a
favorable determination letter from the IRS that it so qualifies, and its trust
is exempt from taxation under Code Section 501(a) and nothing has since
occurred to cause the loss of the Benefit Plan's qualification; (ii) except for
payment of benefits made in the ordinary course of the plan administration, no
event has occurred and there exists no circumstance under which Target, a
Target Subsidiary or the Surviving Corporation could incur material liability
under ERISA, the Code or otherwise; (iii) no accumulated funding deficiency as
defined in Code Section 412 has occurred or exists; (iv) no material non-exempt
prohibited transaction as defined under ERISA and the Code has occurred; (v) no
reportable event as defined in Section 4043 of ERISA has occurred; (vi) all
contributions and premiums due have fully been made and paid on a timely basis;
and (vii) except as set forth on Schedule 2.14 attached hereto, all
contributions made or required to be made under any Benefit Plan meet the
requirements for deductibility under the Code, and all contributions accrued
prior to the Effective Time which have not been made have been properly
recorded on the Target Financial Statements.
(d) No Benefit Plan of Target or a Target Subsidiary is a defined
benefit pension plan subject to Title IV of ERISA or Section 412 of the Code.
Each of such Benefit Plans has been maintained in compliance with its terms and
all applicable Law, except where the failure to do so would not result in a
Target Material Adverse Effect or a Surviving Corporation Material
21
31
Adverse Effect (as hereinafter defined). Neither Target nor any of the Target
Subsidiaries contributes to, or has any outstanding liability with respect to,
any Multi-employer Plan.
(e) With respect to each Benefit Plan which is a welfare plan (as
defined in ERISA Section 3(1)): (i) any liability for medical or death benefits
with respect to current or former employees beyond their termination of
employment is set forth in the Target Financial Statements (or footnotes
thereto) to the extent required to be so set forth by applicable accounting
principles; (ii) there are no reserves, assets, surplus or prepaid premiums
under any such plan; (iii) except as set forth in Schedule 2.14 attached
hereto, no term or provision of any such plan prohibits the amendment or
termination thereof; and (iv) Target and the Target Subsidiaries have complied
with Code Section 4980B, except for any deviations from the foregoing which do
not and would not have a Target Material Adverse Effect or a Surviving
Corporation Material Adverse Effect.
(f) Except as set forth in Schedule 2.14 attached hereto, the
consummation of the Merger or the other transactions contemplated by this
Agreement or the Target Ancillary Agreements or any change of control of Target
or any of the Target Subsidiaries, including, without limitation, any
acquisition of Target Common Stock by Acquiror or any of its affiliates or
associates, will not, either alone or in conjunction with another Event: (i)
entitle any individual to severance pay, or (ii) accelerate the time of payment
or vesting of benefits or increase the amount of compensation or benefits due
to any individual.
2.15 TAXES AND TAX RETURNS.
(a) Except as disclosed in Schedule 2.15 attached hereto,
Target and each of the Target Subsidiaries has timely filed, or caused to be
timely filed, all federal, state, local and foreign income, gross receipts,
sales, use, property, production, payroll, franchise, withholding, employment,
social security, license, excise, transfer, gains, and other tax returns or
reports required to be filed by it (any of the foregoing being referred to
herein as a "Tax Return"), and each such Tax Return is true, correct and
complete, and further, Target and each of the Target Subsidiaries has paid,
collected or withheld, or caused to be paid, collected or withheld, all taxes
and governmental charges, assessments and contributions of any nature
whatsoever including, but not limited to, any related penalties, interest and
liabilities (any of the foregoing being referred to herein as a "Tax"),
required to be paid, collected or withheld, other than such Taxes for which
adequate reserves in the Target Financial Statements have been established or
which are being contested in good faith and have been disclosed in writing to
Acquiror prior to the date of this Agreement. Except as set forth in Schedule
2.15 attached hereto, there are no claims or assessments pending against Target
or any Target Subsidiary for any alleged deficiency in any Tax, and Target does
not know of any threatened Tax claims or assessments against Target or any
Target Subsidiary (other than those for which adequate reserves in the Target
Financial Statements have been established or which are being contested in good
faith and have been disclosed in writing to Acquiror prior to the date of this
Agreement). Except as set forth in Schedule 2.15 attached hereto, neither
Target nor any Target Subsidiary has made an election under Section 338 of the
Code or has taken any action that would result in any Tax liability of Target
or any Target Subsidiary as a result of a deemed election within the meaning of
Section 338 of the Code. Except as set forth in Schedule 2.15 attached hereto,
neither Target nor any
22
32
Target Subsidiary has any waivers or extensions of any applicable statute of
limitations to assess any Taxes. Except as set forth in Schedule 2.15 attached
hereto, there are no outstanding requests by Target or a Target Subsidiary for
any extension of time within which to file any Tax Return or within which to
pay any Taxes shown to be due on any Tax Return. Except as set forth on
Schedule 2.15 attached hereto, no taxing authority is conducting or has
notified or, to the knowledge of Target, has threatened Target or any Target
Subsidiary that it intends to conduct, an audit of any prior Tax period of
Target or any of its past or present subsidiaries. Except as disclosed in
Schedule 2.15 attached hereto, neither Target nor any Target Subsidiary has
ever been an "S" corporation under the Code.
(b) Neither Target nor any Target Subsidiary is a party to
any Tax sharing agreements or similar arrangements with respect to or involving
Target or a Target Subsidiary.
(c) Neither Target nor any Target Subsidiary has made or
become obligated to make, or will, as a result of the transactions contemplated
by this Agreement, make or become obligated to make, any "excess parachute
payment" as defined in Section 280G of the Code.
(d) Neither Target nor any Target Subsidiary is or has been a
United States real property holding company (as defined in Section 897(c)(2) of
the Code) during the applicable period specified in Section 897(c)(1)(A)(ii) of
the Code.
(e) Neither Target nor any Target Subsidiary is a person
other than a United States person within the meaning of the Code.
(f) None of the assets of Target or of any Target Subsidiary
is property which Target or any Target Subsidiary is required to treat as being
owned by any other person pursuant to the so-called "safe harbor lease"
provisions of former Section 168(f)(8) of the Code.
(g) Target and each Target Subsidiary have disclosed on their
federal income Tax Returns all positions taken therein that could give rise to
a substantial understatement of federal income tax liability within the meaning
of Section 6662(d) of the Code.
(h) There are no liens for Taxes on the assets of Target or
any Target Subsidiary except for statutory liens for current Taxes not yet due
and payable.
(i) All elections with respect to Taxes affecting Target and
the Target Subsidiaries are set forth in Schedule 2.15 attached hereto or, with
respect to elections made on or before March 31, 1999, are reflected in the Tax
Returns of Target filed and provided to Acquiror prior to the date of this
Agreement. Neither Target nor any Target Subsidiary: (i) has made or will make
a deemed dividend election under former Treas. Reg. Section 1.1502-32(f)(2) or
a consent dividend election under Section 565 of the Code; (ii) has consented
at any time under Section 341(f)(l) of the Code to have the provisions of
Section 341(f)(2) of the Code apply to any disposition of the assets of Target
or any Target Subsidiary; (iii) has agreed, or is required, to make any
adjustment under Section 481(a) of the Code by reason of a change in accounting
method or otherwise; (iv) has made an express election, or is required, to
treat any asset of Target or any Target Subsidiary as owned by another person
for federal income tax purposes or as
23
33
tax-exempt bond financed property or tax-exempt use property within the meaning
of Section 168 of the Code; or (v) has made any of the foregoing elections or is
required to apply any of the foregoing rules under any comparable state, foreign
or local income Tax provision.
(j) Target and the Target Subsidiaries are not and have never
been includible corporations in an affiliated group of corporations, within the
meaning of Section 1504 of the Code, other than in the affiliated group of
which Target is the common parent corporation.
(k) Except as set forth in Schedule 2.15 attached hereto, the
consolidated net operating losses, net capital losses, foreign tax credits,
investment and other tax credits set forth in the Target Financial Statements
are not subject to any limitations under Section 382, Section 383 or the
Treasury regulations (whether temporary, proposed or final) under Section 1502
of the Code.
(l) Except as set forth in Schedule 2.15 attached hereto,
neither Target nor any Target Subsidiary is a partner or member in or subject
to any joint venture, partnership, limited liability company or other
arrangement or contract that is or could be treated as a partnership for
federal income tax purposes.
(m) Except as set forth in Schedule 2.15 attached hereto,
neither Target nor any Target Subsidiary is a party to or otherwise subject to
any arrangement having the effect of or giving rise to the recognition of a
deduction or loss before the Effective Time, and a corresponding recognition of
taxable income or gain after the Effective Time, or any other arrangement that
would have the effect of or give rise to the recognition of taxable income or
gain by Target or a Target Subsidiary after the Effective Time without the
receipt of or entitlement to a corresponding amount of cash.
2.16 LIABILITIES. From December 31, 1998, through the date of this
Agreement, except as expressly disclosed in the Target Securities Filings made
available by Target to Acquiror prior to the date of this Agreement or in
Schedule 2.16 attached hereto, Target and the Target Subsidiaries do not have
any direct or indirect indebtedness, liability, claim, loss, damage,
deficiency, obligation or responsibility, fixed or unfixed, xxxxxx or inchoate,
liquidated or unliquidated, secured or unsecured, accrued, absolute, contingent
or otherwise, whether or not of a kind required by generally accepted
accounting principles to be set forth in a financial statement other than those
incurred in the ordinary course of business and in an amount not in excess of
$500,000 individually or $2,000,000 in the aggregate. Except as set forth on
Schedule 2.16 attached hereto or reflected in the Target Securities Filings
made available by Target to Acquiror prior to the date of this Agreement, as of
the date of this Agreement, neither Target nor the Target Subsidiaries have any
(i) obligations in respect of borrowed money, (ii) obligations evidenced by
bonds, debentures, notes or other similar instruments, (iii) obligations which
would be required by generally accepted accounting principles to be classified
as "capital leases," (iv) obligations to pay the deferred purchase price of
property or services, except trade accounts payable arising in the ordinary
course of business and payable not more than twelve (12) months from the date
of incurrence, and (v) any guaranties of any obligations of any other person.
24
34
2.17 ENVIRONMENTAL MATTERS. As of the date of this Agreement, (i)
Target and the Target Subsidiaries are in compliance in all material respects
with all applicable Environmental Laws (as hereinafter defined), (ii) there is
no civil, criminal or administrative judgment, action, suit, demand, claim,
hearing, notice of violation, investigation, proceeding, notice or demand
letter pending or, to the knowledge of Target, threatened against Target, a
Target Subsidiary or any of their properties pursuant to Environmental Laws,
and (iii) except as set forth on Schedule 2.17 attached hereto, there are no
past or present Events which reasonably may be expected to prevent compliance
with, or which have given rise to or will give rise to material liability on
the part of Target or a Target Subsidiary under, Environmental Laws. As used
herein the term "Environmental Laws" shall mean Laws relating to pollution,
chemical usage, waste or emission control, the management, generation, presence
or disposal of asbestos, hazardous or toxic wastes or substances, the
protection or remediation of the environment, environmental activity, product
stewardship or public health and safety.
2.18 INTELLECTUAL PROPERTY.
(a) For purposes of this Agreement, "Intellectual Property" shall
mean all U.S. and foreign patents, trademarks, service marks, trade names,
copyrights, franchises and similar rights of or used by Target or a Target
Subsidiary, all applications for any of the foregoing and all permits, grants
and licenses or other rights running to or from Target or any of the Target
Subsidiaries relating to any of the foregoing and any and all goodwill
associated therewith. Target or one of the Target Subsidiaries owns, or is
licensed to, or otherwise has, the full and exclusive rights to use all right,
title and interest in, to and under any and all Intellectual Property
identified on Schedule 2.18(a)(1) and any and all goodwill associated
therewith. Except as set forth on Schedule 2.18(a)(2), Target or one of the
Target Subsidiaries owns, or is licensed to use, or otherwise has, legally
enforceable rights to all of the Intellectual Property currently used or
proposed to be used in, and necessary for the conduct of the business of Target
and the Target Subsidiaries as presently or proposed to be conducted. The
rights of Target and the Target Subsidiaries in the Intellectual Property are,
subject to the rights of any licensor thereof, free and clear of any liens or
other encumbrances and restrictions and Target and the Target Subsidiaries have
not received, as of the date of this Agreement, notice of any adversely-held
Intellectual Property of any other person, or notice of any charge or claim of
any person relating to such Intellectual Property or any process or
confidential information of Target or any Target Subsidiary ("Claim Notice")
and do not know of any basis for any such charge or claim. Target, the Target
Subsidiaries and their respective predecessors, if any, have not conducted
business at any time during the period beginning five (5) years prior to the
date hereof under any corporate, trade or fictitious names other than their
current corporate names. Target shall promptly notify, and shall cause the
Target Subsidiaries to promptly notify, Acquiror of any Claim Notice received
by Target or a Target Subsidiary after the date of this Agreement. The business
of each of Target and the Target Subsidiaries, presently conducted, does not
conflict with and, to the knowledge of Target, has not been alleged to conflict
with any patents, trademarks, trade names, service marks, copyrights or other
intellectual property rights of others. The execution and delivery of this
Agreement, the Target Ancillary Agreements, the consummation of the
transactions contemplated hereby and thereby and any change of control of
Target or any of the Target Subsidiaries, including, without limitation, any
acquisition of Target Common Stock by Acquiror or any of its affiliates or
associates, will not result in the loss or impairment of any of
25
35
the Intellectual Property rights or Target's or any Target Subsidiaries' right
to use any of the licensed Intellectual Property rights. To the knowledge of
Target, there are no third parties using any of the Intellectual Property
rights material to the business of Target or any Target Subsidiaries as
presently conducted.
(b) Without limiting the generality of paragraph (a) above,
except as disclosed in Schedule 2.18(b), each of Target and the Target
Subsidiaries owns, or possesses valid rights to, all computer software programs
that are material to the conduct of the business of the Target and Target
Subsidiaries. To Target's knowledge, there are no infringement suits, actions
or proceedings pending or threatened against the Target or any Target
Subsidiary with respect to any software owned or licensed by the Target or any
Target Subsidiary.
2.19 REAL ESTATE.
(a) Neither Target nor any of the Target Subsidiaries owns or
has any agreement or other right to acquire any real property as of the date of
this Agreement.
(b) Schedule 2.19(b) attached hereto sets forth a true,
correct and complete schedule as of the date of this Agreement of all material
leases, subleases, easements, rights-of-way, licenses or other agreements under
which Target or any of the Target Subsidiaries uses or occupies, or has the
right to use or occupy, now or in the future, any real property or improvements
thereon (the "Target Real Property Leases"), including, without limitation, all
agreements relating to the location of towers and transmitters (the "Tower Site
Leases") . Schedule 2.19(b) accurately and completely lists and sets forth a
description (including location of premises, term and assignability) of the
Tower Site Leases and office and studio space and the same constitute the only
Tower Site Leases and other leases necessary in connection with the conduct of
business by Target and any of the Target Subsidiaries as currently conducted.
Each of Target and the Target Subsidiaries enjoys quiet possession under all
leases (including Tower Site Leases) to which it is a party as lessee, and all
of such leases are valid, subsisting, and in full force and effect. Except as
set forth in Schedule 2.19(b), upon a any change of control of Target or the
Target Subsidiaries, including, without limitation, any acquisition of Target
Common Stock by Acquiror or any of its affiliates or associates, or the
execution or delivery of this Agreement and the Target Ancillary Agreements or
the consummation of the Merger or the transactions contemplated hereby or
thereby, all such Target Real Property Leases shall continue in full force and
effect in accordance with their terms, without penalty, acceleration or rights
of early termination. Except for the matters listed on said Schedule 2.19(b),
Target or a Target Subsidiary, as indicated thereon, holds the leasehold estate
under or other interest in each Target Real Property Lease free and clear of
all liens, encumbrances and other rights of occupancy other than statutory
landlords or mechanics' liens which have not been executed upon.
(c) All of the existing towers owned by Target or any Target
Subsidiaries and, to the best of Target's knowledge, all of the other existing
towers, used in the operation of the Systems are obstruction-marked and lighted
to the extent required by, and in accordance with, the rules and regulations of
the Federal Aviation Administration (the "FAA") or the FCC. Appropriate
notification to the FAA has been filed for each tower where required by the
rules and regulations of the FAA or FCC.
26
36
2.20 CORPORATE RECORDS. The respective corporate record books of
or relating to Target and each of the Target Subsidiaries have been made
available to Acquiror by Target and contain materially accurate and complete
records of (i) all corporate actions of the respective shareholders and
directors (and committees thereof) of Target and the Target Subsidiaries, (ii)
the Certificate and/or Articles of Incorporation, By-Laws and/or other
governing instruments, as amended, of Target and the Target Subsidiaries, and
(iii) the issuance and transfer of stock of Target and the Target Subsidiaries.
Except as set forth on Schedule 2.20 attached hereto, neither Target nor any
Target Subsidiary has any of its material records or information recorded,
stored, maintained or held off the premises of Target and the Target
Subsidiaries.
2.21 TITLE TO AND CONDITION OF PERSONAL PROPERTY. Target and each
of the Target Subsidiaries have good and marketable title to, or a valid
leasehold interest in, all material items of any personal property reflected in
the Target Financial Statements dated December 31, 1998, or currently used in
the operation of their respective businesses, and such property or leasehold
interests are free and clear of all liens, claims, charges, security interests,
options, or other title defects or encumbrances, except for property disposed
of in the ordinary course since the date thereof consistent with the provisions
of Section 2.9, above, and such exceptions to title and liens, claims, charges,
security interests, options, title defects or encumbrances which do not and
would not have a Target Material Adverse Effect or interfere with the use and
enjoyment of such property and interests. As of the date of this Agreement, all
such personal property is in good operating condition and repair (ordinary wear
and tear excepted), is suitable for the use to which the same is customarily
put by Target or any Target Subsidiary, is, to the knowledge of Target, free
from inherent or latent manufacturing defects, and is free from all other
material defects and is of a quality and quantity presently usable in the
ordinary course of the operation of the business of Target and the Target
Subsidiaries.
2.22 NO ADVERSE ACTIONS. Except as set forth on Schedule 2.22
attached hereto, there is no existing, pending or, to the knowledge of Target,
threatened termination, cancellation, limitation, modification or change in the
business relationship of Target or any of the Target Subsidiaries, with any
supplier, customer or other person except as are immaterial individually and in
the aggregate and are in the ordinary course of business. None of Target, any
Target Subsidiary or, to the knowledge of Target, any director, officer, agent,
employee or other person acting on behalf of any of the foregoing has used any
corporate funds for unlawful contributions, payments, gifts, entertainment or
other unlawful expenses relating to political activity, or made any direct or
indirect unlawful payments to governmental or regulatory officials or others.
2.23 LABOR MATTERS. Except as set forth on Schedule 2.13 or
Schedule 2.23 attached hereto, neither Target nor any of the Target
Subsidiaries has any obligations, contingent or otherwise, under any
employment, severance or consulting agreement, collective bargaining agreement
or other contract with a labor union or other labor or employee group. To the
knowledge of Target, as of the date of this Agreement, there are no efforts
presently being made or threatened by or on behalf of any labor union with
respect to the unionizing of employees of Target or any Target Subsidiary. As
of the date of this Agreement, there is no unfair labor practice complaint
against Target or any Target Subsidiary pending or, to the knowledge of Target,
threatened before the National Labor Relations Board or comparable agency;
there is no labor strike, dispute, slowdown or stoppage pending or, to the
knowledge of Target, threatened
27
37
against or involving Target or any Target Subsidiary; no representation
question exists respecting the employees of Target or any Target Subsidiary; no
grievance or internal or informal complaint exists, no arbitration proceeding
arising out of or under any collective bargaining agreement is pending and no
claim therefor has been asserted; no collective bargaining agreement is
currently being negotiated by Target or any Target Subsidiary; and neither
Target nor any Target Subsidiary is experiencing any work stoppage, strike,
slowdown or other labor difficulty. As of the date of this Agreement, there has
not been, and to the knowledge of Target there will not be, any material
adverse change in relations with employees or agents of Target or any Target
Subsidiary as a result of any announcement or consummation of the transactions
contemplated by this Agreement or the Target Ancillary Agreements or any change
of control of Target or the Target Subsidiaries, including, without limitation,
any acquisition of Target Common Stock by Acquiror or any of its affiliates or
associates. Target shall promptly notify, and shall cause the Target
Subsidiaries to promptly notify, Acquiror upon knowledge by Target or a Target
Subsidiary of the occurrence after the date hereof of any matter referenced in
this Section.
2.24 CHANGE OF CONTROL AGREEMENTS. Except as set forth in Schedule
2.24, neither the execution and delivery of this Agreement or the Target
Ancillary Agreements nor the consummation of the Merger or the other
transactions contemplated hereby or thereby, nor any change of control of
Target or the Target Subsidiaries, including without limitation, any
acquisition of Target Common Stock by Acquiror or any of its affiliates or
associates will (either alone or in conjunction with any other Event) result
in, cause the accelerated vesting or delivery of, or increase the amount of
value of, any payment or benefit to any director, officer or employee of Target
or any Target Subsidiary. Except as set forth in Schedule 2.24, without
limiting the generality of the foregoing, (x) no amount paid or payable by
Target in connection with the Merger or the other transactions contemplated by
this Agreement or the Target Ancillary Agreements, including accelerated
vesting of options, (either solely as a result thereof or as a result of such
transactions in conjunction with any other event) will be an "excess parachute
payment" within the meaning of Section 280G of the Code and (y) there are no
agreements or arrangements on behalf of any officer, director or employee
providing for payment or other benefits to such person contingent upon the
execution of this Agreement or the Target Ancillary Agreements or the
transactions contemplated hereby or thereby or a transaction involving a change
control of the Target or the Target Subsidiaries, including, without
limitation, any acquisition of Target Common Stock by Acquiror or any of its
affiliates or associates.
2.25 INSURANCE. Target and each of the Target Subsidiaries has
obtained and maintains in full force and effect insurance with responsible and
reputable insurance companies or associations in such amounts, on such terms
and covering such risks, including fire and other risks insured against by
extended coverage, public liability insurance and insurance against claims for
personal injury or death or property damage occurring in connection with the
activities of Target or the Target Subsidiaries or any properties owned,
occupied or controlled by them, as is customary and prudent. Neither Target nor
any of the Target Subsidiaries has received notice of default under, or
intended cancellation or nonrenewal of, any policies of insurance. Neither
Target nor any Target Subsidiary has been refused any insurance for coverage by
an insurance carrier to which it has applied for insurance.
28
38
2.26 INFORMATION SUPPLIED. The Proxy Statement (as hereinafter
defined) to be mailed to the holders of Target Common Stock in connection with
the Shareholders' Meeting (as hereinafter defined) to be called to consider the
Merger at the date such document is first published, sent or delivered to the
holders of Target Common Stock or at any time prior to or during the pendency
of the Shareholders' Meeting, will not contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements made therein, in light of the
circumstances under which they were made, not misleading. The Proxy Statement
and any related schedules or other filings made with the SEC, as contemplated
hereby, will comply as to form and substance in all material respects with the
requirements of the Securities Exchange Act and the applicable rules and
regulations of the SEC thereunder and other applicable Laws. Notwithstanding
the foregoing, no representation or warranty is made by Target with respect to
statements made or incorporated by reference therein based on information
relating solely to Acquiror or Acquisition Subsidiary supplied by Acquiror or
Acquisition Subsidiary in writing expressly for inclusion or incorporation by
reference in the foregoing document.
2.27 TAKEOVER STATUTES. No "business combination," "fair price,"
"moratorium," "control share acquisition" or other similar antitakeover statute
or regulation enacted under state or federal laws in the United States (each a
"Takeover Statute"), including, without limitation, Sections 33-840 et seq. of
the Connecticut Code (inasmuch as Target has taken all requisite corporate
action thereunder), applicable to Target or any of the Target Subsidiaries is
applicable to the Merger, this Agreement, the Target Ancillary Agreements or
the other transactions contemplated hereby or thereby or any change of control
of Target or the Target Subsidiaries, including, without limitation, any
acquisition of Target Common Stock by Acquiror or any of its affiliates or
associates.
2.28 TARGET RIGHTS PLAN. Under the Rights Agreement dated April
16, 1999, between Target and ChaseMellon Shareholder Services LLC, as Rights
Agent (the "Rights Plan"), Acquiror will not become an "Acquiring Person", no
"Stock Acquisition Date" or "Distribution Date" will occur and the "Rights"
will not separate from the Target Common Stock (as such terms are defined in
the Rights Plan), and Target's shareholders will not be entitled to receive any
benefits under the Rights Plan as a result of the approval, execution or
delivery of this Agreement, the Target Ancillary Agreements or the consummation
of the transactions contemplated hereby or thereby or the execution, delivery
or performance of any other agreement to acquire, or any other acquisition of,
Target Common Stock by Acquiror or any affiliate or associate. As of the
Effective Time, the Rights Plan will terminate and the "Rights" thereunder will
be of no further force or effect.
2.29 YEAR 2000. (a) The Target has initiated a review and
assessment of the Year 2000 Problem (as hereinafter defined), has developed a
plan for addressing the Year 2000 Problem on a timely basis and is implementing
such plan on a timely basis. Except as would not reasonably be expected to have
a Target Material Adverse Effect, to the best knowledge of the Target after due
inquiry, none of the assets or equipment owned or utilized by Target or any of
the Target Subsidiaries will fail to perform because of, or due in any way to,
a Year 2000 Problem. To the best knowledge of the Target based on responses to
written inquiries made by Target or otherwise based on information brought
specifically to the attention of the Target, no
29
39
vendor, supplier or customer of Target or any of the Target Subsidiaries is
reasonably expected to experience Year 2000 Problem that, individually or in
the aggregate, could constitute a Target Material Adverse Effect. The term
"Year 2000 Problem" means the inability of any hardware, software or process to
recognize or correctly calculate dates on and after January 1, 2000, or the
failure of computer systems, products or services to perform any of their
intended functions in a proper manner in connection with data containing any
date on or after January 1, 2000.
(b) Target has made available to Acquiror Target's plan to
address the Year 2000 Problem (the "Year 2000 Plan"). To the Target's
knowledge, the Year 2000 Plan will enable the Target and the Target
Subsidiaries to be Year 2000 Compliant in a timely manner except as to matters
which are not reasonably likely to result in a Target Material Adverse Effect
and the aggregate cost for the Target and the Target Subsidiaries to become
Year 2000 Compliant is estimated to be $800,000. "Year 2000 Compliant" means
that (a) the products, services, or other item(s) at issue accurately process,
provide and/or receive date/time data (including calculating, comparing, and
sequencing), within, from, into, and between centuries (including the twentieth
and twenty-first centuries and the years 1999 and 2000), including leap year
calculations, and (b) neither performance nor the functionality nor the supply
of the products, services, and other items at issue will be affected by
dates/times prior to, on, after, or spanning January 1, 2000. The design of the
products, services, and other items at issue to ensure compliance with the
foregoing warranties and representations includes proper date/time data century
recognition and recognition of 1999 and 2000, calculations that accommodate
same century and multicentury formulae and date/time values before, on, after,
and spanning January 1, 2000, and date/time data interface values that reflect
the century, 1999 and 2000.
2.30 TARGET OPTIONS. Upon the consummation of the Merger, each of
Target's outstanding Options to acquire shares of Target Common Stock shall,
pursuant to their terms as amended as contemplated hereby, if vested as of the
Effective Time, become converted into the right to receive an amount in cash
equal to the Option Consideration, as contemplated by Section 1.7, or, if
unvested, shall become converted into the right to receive an amount in cash
equal to the Option Consideration, as contemplated by Section 1.7, and shall
become vested following the Effective Time in accordance with their terms.
2.31 TRANSACTION WITH AFFILIATES. Except as set forth in Schedule
2.31 (other than compensation and benefits received in the ordinary course of
business as an employee or director of Target or the Target Subsidiaries), no
director, officer or any other affiliate or associate of Target or any of the
Target Subsidiaries or any entity in which, to the knowledge of Target, any
such director, officer or other affiliate or associate, owns any beneficial
interest (other than a publicly held corporation whose stock is traded on a
national securities exchange or in the over-the-counter market and less than 1%
of the stock of which is beneficially owned by such persons), (A) has any
interest in: (i) any contract, arrangement or understanding with, or relating
to the business or operations of Target or any of the Target Subsidiaries; (ii)
any loan, arrangement, understanding, agreement or contract for or relating to
indebtedness of Target or any of the Target Subsidiaries, or (ii) any property
(real, personal or mixed), tangible or intangible, used or currently intended
to be used in, the business or operations of Target or any of the Target
Subsidiaries or (B) is an obligor under any notes receivable of Target or any
of the Target Subsidiaries.
30
40
2.32 NO EXISTING DISCUSSIONS. As of the date hereof, Target is not
engaged, directly or indirectly, in any negotiations or discussions with any
other party with respect to a Takeover Proposal (as hereinafter defined).
2.33 TELQUEST
(a) TelQuest Satellite Services LLC ("TelQuest") is a limited
liability company duly organized, validly existing and in good standing under
the laws of Delaware and has all requisite limited liability company power and
authority to own, lease and operate its properties and to carry on its
business. TelQuest is in good standing to do business in each jurisdiction in
which the character of the property owned, leased or operated by it or the
nature of the business conducted by it makes such qualification necessary,
except where the failure to be so qualified and in good standing would not have
a Target Material Adverse Effect. As of the date hereof, the authorized
capitalization of TelQuest is as set forth on Schedule 2.33(a)(1) and each of
Target and CS has a 28.34% membership interest, subject to dilution as set
forth on Schedule 2.33(a)(2); and all outstanding interests in TelQuest are
duly authorized, validly issued and fully paid and non-assessable and issued
free of preemptive rights and in compliance with applicable Laws. Except as set
forth on Schedule 2.33(a)(2), there are no outstanding rights, reservations of
shares, subscriptions, warrants, puts, calls, unsatisfied preemptive rights,
options or other agreements of any kind relating to any of the interests in or
any other security of TelQuest, and there is no authorized or outstanding
interest or other security of any kind convertible into or exchangeable for any
such interest or other security.
(b) Except as set forth on Schedule 2.33(b), TelQuest has no
Subsidiaries, and holds no direct or indirect capital stock or other interest
in any other person. The business, affairs, financial condition or results of
operations are not, and are not required to be, reported in the Target
Financial Statements and are not reflected in the Target Approved Budget or the
CS Approved Budget, except to the extent reported on an equity basis.
(c) The execution and delivery of this Agreement and the Target
Ancillary Agreements, the consummation of the transactions contemplated hereby
and thereby and compliance by Target with any of the provisions hereof or
thereof, and any change of control of Target or any of the Target Subsidiaries,
including, without limitation, any acquisition of Target Common Stock by
Acquiror or any of its affiliates or associates, will not (i) conflict with or
result in any breach of any provision of any governing instruments of TelQuest
or any of its Subsidiaries ("TelQuest Subsidiaries") , (ii) require any Consent
relating directly or indirectly to TelQuest or any of the TelQuest Subsidiaries
or result in a violation or breach of, or constitute (with or without due
notice or lapse of time or both) a default (or give rise to any right of
termination, cancellation or acceleration or augment the performance required)
under any of the terms, conditions or provisions of any note, bond, mortgage,
indenture, contract, lease, license, agreement, understanding, instrument, bid
or proposal or other obligation relating directly or indirectly to TelQuest or
any of the TelQuest Subsidiaries, or (iii) result in the creation or imposition
of any lien or encumbrance of any kind upon any of the assets of TelQuest or
any of the TelQuest Subsidiaries, or (iv) contravene any applicable Law
currently in effect to which TelQuest or any of the TelQuest Subsidiaries or
any of its assets or properties is subject.
31
41
(d) Except as set forth on Schedule 2.33(d), neither Target nor
any Target Subsidiary has any direct or indirect obligation or liability, fixed
or unfixed, xxxxxx or inchoate, liquidated or unliquidated, secured or
unsecured, accrued, absolute, contingent or otherwise, to invest, contribute,
loan, borrow, sell, assign, convey or otherwise transfer or dispose of, or to
provide, purchase or otherwise acquire, any funds, property or services, or
make any payments, to or from TelQuest or any of the TelQuest Subsidiaries or
otherwise to directly or indirectly participate in any transaction with or
relating to TelQuest or any of the TelQuest Subsidiaries, directly or
indirectly. No Event relating to or in connection with TelQuest or any of the
TelQuest Subsidiaries, directly or indirectly, does or could give rise to any
direct or indirect indebtedness, liability, claim, loss, damage, deficiency,
obligation or responsibility of, against or on the part of Target or any of the
Target Subsidiaries, fixed or unfixed, xxxxxx or inchoate, liquidated or
unliquidated, secured or unsecured, accrued, absolute, contingent or otherwise,
whether or not of a kind required by generally accepted accounting principles
to be set forth in a financial statement.
2.34 DISCLOSURE. All information and documents provided prior to
the date of this Agreement, and all information and documents subsequently
provided, to Acquiror or its representatives or lenders by or on behalf of
Target in connection with the transactions contemplated by this Agreement are
or contain, or will be or will contain as to subsequently provided information
or documents, true, accurate and complete information in all material respects
with respect to the subject matter thereof and are, or will be as to
subsequently provided information or documents, reasonably responsive to any
specific request made by or on behalf of Acquiror or its representatives or
lenders.
ARTICLE III
REPRESENTATIONS, WARRANTIES AND
CERTAIN COVENANTS OF ACQUIROR
Acquiror represents, warrants and/or covenants to and with Target as
follows:
3.1 ORGANIZATION AND GOOD STANDING. Acquiror is a corporation
duly organized and validly existing under the laws of the State of Georgia.
Acquisition Subsidiary is a corporation duly organized and validly existing
under the laws of the State of Connecticut. Acquiror and Acquisition Subsidiary
have all requisite corporate power and authority to own, lease and operate its
properties and to carry on their businesses as now being conducted, except
where the failure to have such power and authority would not have an Acquiror
Material Adverse Effect (as hereinafter defined). Acquiror and Acquisition
Subsidiary are duly qualified and in good standing to do business in each
jurisdiction in which the character of the property owned, leased or operated
by it or the nature of the business conducted by it makes such qualification
necessary, except where the failure to be so duly qualified and in good
standing would not have an Acquiror Material Adverse Effect. For purposes of
this Agreement, "Acquiror Material Adverse Effect" shall mean a material
adverse effect on (i) the business, assets, condition (financial or otherwise),
properties, liabilities, prospects or the results of operations of Acquiror and
its subsidiaries (including Acquisition Subsidiary) taken as a whole, (ii) the
ability of Acquiror to perform its obligations set forth in this Agreement and
the Acquiror Ancillary Agreements (as hereinafter
32
42
defined), or (iii) the ability to timely consummate the transactions
contemplated by this Agreement and the Acquiror Ancillary Agreements.
3.2 AUTHORIZATION; BINDING AGREEMENT. Acquiror and Acquisition
Subsidiary have all requisite corporate power and authority to execute and
deliver this Agreement and to consummate the transactions contemplated hereby.
The execution and delivery of this Agreement and the other agreements and
documents referred to herein and to be executed in connection herewith to which
Acquiror or Acquisition Subsidiary is or will be a party or a signatory (the
"Acquiror Ancillary Agreements") and the consummation of the transactions
contemplated hereby and thereby including, but not limited to, the Merger have
been duly and validly authorized by the respective Boards of Directors of
Acquiror and Acquisition Subsidiary, as appropriate, and no other corporate
proceedings on the part of Acquiror or Acquisition Subsidiary are necessary to
authorize the execution and delivery of this Agreement and the Acquiror
Ancillary Agreements or to consummate the transactions contemplated hereby or
thereby. This Agreement has been duly and validly executed and delivered by
each of Acquiror and Acquisition Subsidiary and constitutes, and upon execution
and delivery thereof as contemplated by this Agreement, the Acquiror Ancillary
Agreements will constitute, the legal, valid and binding agreements of Acquiror
and Acquisition Subsidiary, enforceable against each of Acquiror and
Acquisition Subsidiary in accordance with its and their respective terms,
subject to the Enforceability Exceptions.
3.3 GOVERNMENTAL APPROVALS. No Consent from or with any
Governmental Authority on the part of Acquiror or Acquisition Subsidiary is
required in connection with the execution or delivery by Acquiror and
Acquisition Subsidiary of this Agreement and the Acquiror Ancillary Agreements
or the consummation by Acquiror and Acquisition Subsidiary of the transactions
contemplated hereby or thereby other than (i) filings with the SEC, state
securities laws administrators and the NASD and filing and recordation of
appropriate merger documents as required by the Connecticut Code, (ii) Consents
from or with Governmental Authorities, (iii) filings under the HSR Act, and
(iv) those Consents that, if they were not obtained or made, do not or would
not have an Acquiror Material Adverse Effect.
3.4 NO VIOLATIONS. The execution and delivery of this Agreement
and the Acquiror Ancillary Agreements, the consummation of the transactions
contemplated hereby and thereby and compliance by Acquiror and Acquisition
Subsidiary with any of the provisions hereof or thereof will not (i) conflict
with or result in any breach of any provision of the Certificate and/or
Articles of Incorporation or By-Laws or other governing instruments of Acquiror
or Acquisition Subsidiary, (ii) require any Consent under or result in a
violation or breach of, or constitute (with or without due notice or lapse of
time or both) a default (or give rise to any right of termination, cancellation
or acceleration or augment the performance required) under any of the terms,
conditions or provisions of any Acquiror Material Contract (as hereinafter
defined) or other obligation to which Acquiror or the Acquisition Subsidiary is
a party or by which any of them or any of their properties or assets may be
bound, (iii) result in the creation or imposition of any lien or encumbrance of
any kind upon any of the assets of Acquiror or the Acquisition Subsidiary, or
(iv) subject to obtaining the Consents from Governmental Authorities referred
to in Section 3.3, above, contravene any Law currently in effect to which
Acquiror or the Acquisition Subsidiary or its or any of their respective assets
or properties are subject, except in the case of clauses (ii), (iii)
33
43
and (iv), above, for any deviations from the foregoing which do not or would
not have an Acquiror Material Adverse Effect. An "Acquiror Material Contract"
is any material note, bond, mortgage, indenture, contract, lease, license,
agreement, understanding, instrument, bid or proposal that is required to be
described in or filed as an exhibit to any reports, statements or registration
statements filed, or required be filed, by Acquiror pursuant to the Securities
Act or the Securities Exchange Act.
3.5 FINDERS AND INVESTMENT BANKERS. Neither Acquiror nor any of
its officers or directors has employed any broker or finder other than
Xxxxxxxxx, Xxxxxx & Xxxxxxxx Securities Corporation or otherwise incurred any
liability for any brokerage fees, commissions or finders' fees in connection
with the transactions contemplated hereby.
3.6 INFORMATION SUPPLIED. None of the information relating solely
to Acquiror or Acquisition Subsidiary supplied or to be supplied by Acquiror or
Acquisition Subsidiary in writing expressly for inclusion or incorporation by
reference in the Proxy Statement (as hereinafter defined) will, at the date
such document is first published, sent or delivered to holders of Target Common
Stock or, at any time during the pendency of the Shareholders' Meeting, contain
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements made
therein, in light of the circumstances under which they were made, not
misleading. Notwithstanding the foregoing, no representation or warranty is
made by the Acquiror or Acquisition Subsidiary with respect to statements made
or incorporated by reference therein based on information supplied by the
Target for inclusion or incorporation by reference in the foregoing document.
3.7 ACQUIROR OWNERSHIP. As of the date of this Agreement,
Acquiror is a party to agreements to purchase an aggregate of approximately
10,555,140 shares of Target Common Stock, $35,418,097 face amount of 13% Senior
Notes due 2004 of Target and $86,750,000 face amount of 11.375% Senior Discount
Notes due 2006 of CS. The agreements provide, among other things, that
Acquiror's obligation to purchase such securities is subject to certain
conditions, including one or more of the following conditions generally
relating to the delivery of the shares, the accuracy of representations and
warranties of the sellers, the performance of certain covenants by the sellers,
the expiration of any waiting period under the HSR Act, the receipt of the
Consent of the FCC, the absence of certain actions or proceedings or orders or
decrees, and the failure of the agreement to be terminated. The agreements
provide, among other things, that the sellers' obligations to sell such
securities are subject to certain conditions, including one or more of the
following conditions generally relating to payment, the accuracy of
representations and warranties of Acquiror, the performance of certain
covenants by Acquiror, the absence of certain actions or proceedings or orders
or decrees, and the failure of the agreement to be terminated. As of the date
of this Agreement, Acquiror is the beneficial owner (as assignee or otherwise)
of approximately (i) $83,994,512 aggregate principal amount of 13% Senior Notes
due 2004 issued by Target, and (ii) $30.0 million principal amount of the
Senior Secured A Note due October 14, 2000 and $50.0 million principal amount
of the Senior Secured B Note due October 14, 2000 (the "Senior Secured Notes"),
each issued under the Note Purchase Agreement dated as of October 14, 1998 of
Target (the "Senior Secured Credit Facility"), and (iii) $129,000,000 aggregate
principal amount of 11.375% Senior Notes due 2006 issued by CS.
34
44
ARTICLE IV
ADDITIONAL COVENANTS OF TARGET
Target represents, covenants and agrees as follows:
4.1 CONDUCT OF BUSINESS OF TARGET AND TARGET SUBSIDIARIES. Except
as expressly contemplated by this Agreement, during the period from the date of
this Agreement to the Effective Time, Target shall conduct, and it shall cause
the Target Subsidiaries to conduct, its or their respective businesses in the
ordinary course and consistent with past practice, subject to the limitations
contained in this Agreement, and Target shall, and it shall cause the Target
Subsidiaries to, use its or their respective reasonable business efforts to
preserve intact its or their respective business organizations, to maintain and
protect the FCC Licenses and Channel Leases, to keep available the services of
its officers, agents and employees and to maintain satisfactory relationships
with all persons with whom any of them does business. Without limiting the
generality of the foregoing, and except as otherwise expressly provided in this
Agreement, after the date of this Agreement and prior to the Effective Time,
neither Target nor any Target Subsidiary will, without the prior written
consent of Acquiror:
(i) amend or propose to amend its Certificate or Articles
of Incorporation or By-Laws (or comparable governing instruments) in any
material respect;
(ii) authorize for issuance, issue, grant, sell, pledge,
dispose of or propose to issue, grant, sell, pledge or dispose of any shares
of, or any options, warrants, commitments, subscriptions or rights of any kind
to acquire or sell any shares of, the capital stock or other securities of
Target or any Target Subsidiary including, but not limited to, any securities
convertible into or exchangeable for shares of stock of any class of Target or
any Target Subsidiary, except for the issuance of shares of Target Common Stock
pursuant to the exercise of stock options or warrants outstanding on the date
of this Agreement or under the Rights Plan in accordance with their present
terms;
(iii) split, combine or reclassify any shares of its capital
stock or declare, pay or set aside any dividend or other distribution (whether
in cash, stock or property or any combination thereof) in respect of its
capital stock, other than dividends or distributions to Target or a Target
Subsidiary wholly owned by Target, or directly or indirectly redeem, purchase
or otherwise acquire or offer to acquire any shares of its capital stock or
other securities;
(iv) (a) except for debt (including, but not limited to,
obligations in respect of capital leases) not in excess of the amounts set
forth in the Target Approved Budget (except as contemplated in the last
paragraph of this Section 4.1), with respect to Target and the Target
Subsidiaries (other than CS and the CS Subsidiaries), or the CS Approved
Budget, with respect to CS and the CS Subsidiaries, create, incur or assume any
short-term debt, long-term debt or obligations in respect of capital leases;
(b) assume, guarantee, endorse or otherwise become liable or responsible
(whether directly, indirectly, contingently or otherwise) for the obligations
of any person, except for obligations permitted by this Agreement of any wholly
owned Target Subsidiary in the ordinary course of business consistent with past
practice; (c) make any capital expenditures or make any loans, advances or
capital contributions to, or investments in, any other
35
45
person (other than customary advances to employees made in the ordinary course
of business consistent with past practice), provided that Target will continue
to make capital expenditures, maintain, upgrade and expand its facilities and
those of the Target Subsidiaries (other than CS and the CS Subsidiaries) and
otherwise operate in accordance with the Target Approved Budget and that CS
will continue to make capital expenditures, maintain, upgrade and expand its
facilities and those of the CS Subsidiaries and otherwise operate in accordance
with the CS Approved Budget; (d) acquire the stock or assets of, or merge or
consolidate with, any other person or business; or (e) voluntarily incur any
material liability or obligation (absolute, accrued, contingent or otherwise);
(v) sell, transfer, mortgage, pledge or otherwise dispose
of, or encumber, or agree to sell, transfer, mortgage, pledge or otherwise
dispose of or encumber, any material assets or properties, real, personal or
mixed;
(vi) increase in any manner the compensation of any of its
officers, agents or employees other than any increases required pursuant to the
Target Material Contracts in accordance with their terms in effect on the date
of this Agreement and increases in the ordinary course of business consistent
with past practice not in excess on an individual basis of the lesser of 8.0%
of the current compensation of such individual or $10,000 per annum, or
increase in any manner the compensation of any director;
(vii) except as required by ERISA and only after reasonable
prior consultation with Acquiror, enter into, establish, amend, make
non-routine or material interpretations or determinations with respect to, or
terminate any employment, consulting, retention, change in control, collective
bargaining, bonus or other incentive compensation, profit sharing, health or
other welfare, stock option, stock purchase, restricted stock, or other equity,
pension, retirement, vacation, severance, deferred compensation or other
compensation or benefit plan, policy, agreement, trust, fund or arrangement
with, for or in respect of, any shareholder, officer, director, other employee,
agent, consultant, affiliate or associate;
(viii) make any elections with respect to Taxes that are
inconsistent with the prior elections reflected in the Target Financial
Statements as of and to the period ended December 31, 1998;
(ix) compromise, settle, forgive, cancel, grant any waiver
or release relating to or otherwise adjust any debts, claims, rights or
Litigation, except routine debts, claims, rights or Litigation in the ordinary
course of business consistent with past practice, involving only a payment not
in excess of $250,000 individually or $1,000,000 when aggregated with all such
payments by Target and the Target Subsidiaries combined;
(x) take any action or omit to take any action, which
action or omission, if taken prior to, on or after the date hereof, would
result in a breach of any of the covenants, representations or warranties of
Target set forth in this Agreement or would have a Target Material Adverse
Effect;
36
46
(xi) enter into any lease or other agreement, or amend any
lease or other agreement, with respect to real property;
(xii) subject to clauses (xiv) and (xv) below, enter into or
amend any agreement or transaction (a) pursuant to which the aggregate
financial obligation of Target or a Target Subsidiary or the value of the
services to be provided could exceed $500,000 individually or $2,000,000 in the
aggregate for all such agreements or transactions, and (b) which is not
terminable upon no more than 30 days' notice by Target or the Target Subsidiary
involved without penalty in excess of $50,000 individually or $250,000 when
aggregated with the penalties under all such agreements or transactions;
(xiii) terminate any Channel Lease;
(xiv) enter into, amend, modify or waive any rights under
any Channel Lease (a) outside the ordinary course of business, provided,
however, that Acquiror shall not unreasonably withhold its consent, taking into
account the plans and objectives of Acquiror regarding Target and the Target
Subsidiaries, or (b) without providing notice to, and reasonable consultation
with, Acquiror prior to taking such action;
(xv) enter into, amend, modify, terminate or waive any
rights under (a) any Target Material Contract, including, without limitation,
any Tower Site Lease or System Agreement, other than Channel Leases and FCC
Licenses; or (b) any material agreement or other material obligation that
restricts, in any material respect, the activities of Target or a Target
Subsidiary; or (c) any agreement or obligation that restricts in any material
respect any other person;
(xvi) enter into any leasing or licensing agreements,
take-or-pay arrangements or other affiliations, alignments or agreements with
respect to any Channel Leases, provided, that Acquiror shall not unreasonably
withhold its consent, taking into account the plans and objectives of Acquiror
regarding Target and the Target Subsidiaries, and, provided further, that
Target or any of the Target Subsidiaries may, without the prior written consent
of Acquiror, renegotiate any Channel Leases in the ordinary course of business
and after prior notice to, and reasonable consultation with, Acquiror;
(xvii) take any action with respect to the indemnification of
any person;
(xviii) change any accounting practices or policies or
depreciation or amortization rates, except as required by generally accepted
accounting principles or Laws or as agreed to or requested by Target's auditors
after consultation with Acquiror's auditors;
(xix) adopt a plan of liquidation, dissolution, merger,
consolidation, share exchange, restructuring, recapitalization, or other
reorganization; or
(xx) resolve, agree, commit or arrange to do any of the
foregoing.
37
47
Furthermore, Target covenants, represents and warrants that from and
after the date hereof, unless Acquiror shall otherwise expressly consent in
writing, Target shall, and Target shall cause each Target Subsidiary to, use
its or their reasonable business efforts to:
(i) keep in full force and effect insurance comparable in
amount and scope of coverage to insurance now carried by it or them;
(ii) pay all accounts payable and other obligations, when
they become due and payable, in the ordinary course of business
consistent with past practice and with the provisions of this
Agreement, except if the same are contested in good faith, and, in the
case of the failure to pay any material accounts payable or other
obligations which are contested in good faith, only after consultation
with Acquiror; and
(iii) comply in all material respects with all Laws
applicable to it or any of them or their respective properties, assets
or businesses and maintain in full force and effect all Target Permits
necessary for, or otherwise material to, such businesses.
Notwithstanding the foregoing and subject to certain conditions
described in the following sentence, Target may borrow up to $22.0 million from
CS on terms that are reasonably acceptable to Acquiror by increasing the
maximum principal amount of the Senior Secured B Notes due October 14, 2000
under the Senior Secured Credit Facility, and a non-transferable Senior Secured
B Note in such amount will be issued by Target to CS to evidence such borrowing
(the "CS Borrowing") , provided CS shall waive its right to participate in the
Facility B Fee (as such term is defined in the Senior Secured Credit Facility).
The proceeds of the CS Borrowing shall be used for the purpose of funding
general working capital purposes pursuant to the Target Approved Budget and
expenses incurred in connection with the transactions contemplated hereby prior
to the consummation of the Merger. Target's ability to borrow such sum from CS
shall be subject to the necessary documentation of the CS Borrowing on terms
satisfactory to Acquiror, the compliance with all applicable Laws, the
Certificate of Incorporation and the By-Laws of Target and CS, the obtaining of
all necessary Consents of Governmental Authorities and third parties and the
delivery of appropriate legal opinions, certificates, information and other
documentation, each in form and substance to the satisfaction of Acquiror.
Target hereby represents and warrants that the CS Borrowing shall not give rise
to liability or obligation for any brokerage fees, commissions, finder's fees
or other similar fees or expenses. Subject to and upon satisfaction of the
foregoing, Acquiror agrees that it will grant its consent to the CS Borrowing
as a holder of the Senior Secured Notes, the 13% Senior Notes due 2004 of
Target and the 11.375% Senior Notes due 2006 of CS, to the extent permitted
thereunder.
4.2 NOTIFICATION OF CERTAIN MATTERS. Target shall give prompt
notice to Acquiror if any of the following occur after the date of this
Agreement: (i) any notice of, or other communication relating to, a default or
Event which, with notice or lapse of time or both, would become a default under
any Target Material Contract; (ii) receipt of any notice or other communication
from any third party alleging that the Consent of such third party is or may be
required in connection with the transactions contemplated by this Agreement;
(iii) receipt of any material notice or other communication from any
Governmental Authority (including, but not limited to, the FCC, the NASD or any
other securities exchange) in connection with the
38
48
transactions contemplated by this Agreement; (iv) the occurrence of an Event
which would have a Target Material Adverse Effect; (v) the commencement or
threat of any Litigation involving or affecting Target or any Target Subsidiary
or any affiliate, or any of their respective properties or assets, or, to its
knowledge, any employee, agent, director or officer of Target or any Target
Subsidiary, in his or her capacity as such or as a fiduciary under a Benefit
Plan of Target, which, if pending on the date hereof, would have been required
to have been disclosed in or pursuant to this Agreement or which relates to the
consummation of the Merger or any material development in connection with any
Litigation disclosed by Target in or pursuant to this Agreement or the Target
Securities Filings; and (vi) the occurrence of any Event that would cause a
breach by Target of any provision of this Agreement or a Target Ancillary
Agreement, including such a breach that would occur if such Event had taken
place on or prior to the date of this Agreement.
4.3 ACCESS AND INFORMATION. Between the date of this Agreement
and the Effective Time, Target and the Target Subsidiaries, upon reasonable
notice, will give, and shall direct its accountants and legal counsel to give,
Acquiror, its lenders and their respective authorized representatives
(including, without limitation, financial advisors, accountants and legal
counsel) at all reasonable times full access to all offices and other
facilities, to all personnel and to all contracts, agreements, commitments,
books and records (including, but not limited to, Tax Returns) of or pertaining
to Target and the Target Subsidiaries, will permit the foregoing to make such
inspections as they may reasonably require and will cause its officers and
employees promptly to furnish Acquiror with (a) such financial and operating
data and other information with respect to the business, assets, liabilities,
obligations and operations of Target and the Target Subsidiaries as Acquiror
may from time to time reasonably request including, but not limited to, data
and information required for inclusion in any of Acquiror's registration
statements and/or other filings with the SEC, and (b) a copy of each material
report, schedule and other document filed or received by Target or any Target
Subsidiary pursuant to the requirements of applicable securities Laws, the NASD
or other securities exchange or the FCC.
4.4 SHAREHOLDER APPROVAL; PROXY STATEMENT; SHAREHOLDER LISTS.
(a) As soon as practicable, Target will in accordance with
applicable Law, its Certificate of Incorporation and its By-Laws take all steps
necessary to duly call, give notice of, convene and hold a meeting of its
shareholders (the "Shareholders' Meeting") for the purpose of adopting this
Agreement and the Merger and the other transactions contemplated hereby and for
such other purposes as may be necessary or desirable in connection with
effectuating the transactions contemplated hereby. Except as otherwise
contemplated in this Agreement, the Board of Directors of Target (i) will take
all steps necessary to present and recommend to the shareholders of Target that
they adopt this Agreement and approve the transactions contemplated hereby, and
(ii) will use its reasonable best efforts to obtain any necessary adoption and
approval by Target's shareholders of this Agreement and the Merger and the
other transactions contemplated hereby, including, without limitation, voting
the Target Shares held by such Directors for such adoption and approval.
(b) Acquiror and Target will as promptly as practicable following
the execution of this Agreement jointly prepare, and Target shall file, a proxy
statement on an appropriate schedule or other form for distribution to holders
of Target Shares in advance of the
39
49
Shareholders' Meeting and such other schedules and other filings as may be
necessary or appropriate (collectively, together with any amendments or
supplements thereto, the "Proxy Statement") with the SEC and will use its
reasonable best efforts to respond to the comments of the SEC and to cause the
Proxy Statement to be mailed to the holders of Target Shares at the earliest
practical time. Target shall furnish all information concerning it and the
holders of its capital stock as Acquiror may reasonably request in connection
with such actions. Target will notify Acquiror promptly of the receipt of the
comments of the SEC, if any, and of any request by the SEC for amendments or
supplements to the Proxy Statement or for additional information with respect
thereto, and will supply Acquiror with copies of all correspondence between
Target or its representatives, on the one hand, and the SEC or members of its
staff, on the other hand, with respect to the Proxy Statement or the Merger or
this Agreement, the Target Ancillary Targets or the other transactions
contemplated hereby or thereby. If (A) at any time prior to the Shareholders'
Meeting, any event should occur relating to Target or any of the Target
Subsidiaries which should be set forth in an amendment of, or a supplement to,
the Proxy Statement, Target will promptly inform Acquiror and (B) if at any
time prior to the Shareholders' Meeting, any event should occur relating to
Acquiror or Acquisition Subsidiary or any of their respective associates or
affiliates, or relating to the plans of any such persons for Target after the
Effective Time that should be set forth in an amendment of, or a supplement to,
the Proxy Statement, Acquiror will promptly inform Target and in the case of
(A) or (B) Target and Acquiror shall file and, if required, mail such amendment
or supplement to holders of Target Shares; provided, prior to such filing or
mailing, Target and Acquiror shall consult with each other with respect to such
amendment or supplement and shall incorporate the other's comments thereon.
Target will not distribute or file the Proxy Statement, or any amendment
thereof or supplement thereto, to which Acquiror reasonably objects.
(c) Target hereby consents to the inclusion in the Proxy
Statement of the recommendation of the Board of Directors of Target described
in Section 2.4, subject to any modification, amendment or withdrawal thereof
permitted hereby, and represents that its financial advisers have, subject to
the terms of their engagement letters with Target and the Board of Directors of
Target, consented to the inclusion of references to their opinions in the Proxy
Statement. Target and its counsel shall permit Acquiror and its counsel to
participate in all communications with the SEC and its staff, including any
meetings and telephone conferences, relating to the Proxy Statement, the Merger
or this Agreement or the other transactions contemplated hereby.
(d) Target shall promptly upon the request by Acquiror, or shall
cause its transfer agent to promptly, furnish Acquiror and Acquisition
Subsidiary with mailing labels containing the names and addresses of all record
holders of shares of Target Common Stock and with security position listings of
shares of Target Common Stock held in stock depositories, each as of the most
recent practicable 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 of Target Common Stock. Target
shall furnish Acquiror and Acquisition Subsidiary with such additional
information, including, without limitation, updated listings and computer files
of the holders of Target Common Stock, mailing labels and security position
listings, and such other assistance as Acquiror or their agents may reasonably
request.
40
50
4.5 REASONABLE BUSINESS EFFORTS. Subject to the terms and
conditions herein provided, Target agrees to use its reasonable best efforts to
take, or cause to be taken, all actions, and to do, or cause to be done, all
things necessary, proper or advisable to consummate and make effective as
promptly as practicable the Merger and the other transactions contemplated by
this Agreement and the Target Ancillary Agreements, including, without
limitation, any acquisition of Target Common Stock by Acquiror or any of its
affiliates or associates, including, but not limited to (i) obtaining the
Consent of others to this Agreement, the Target Ancillary Agreements and the
transactions contemplated hereby and thereby, including, without limitation,
any acquisition of Target Common Stock by Acquiror or any of its affiliates or
associates, (ii) the defending of any Litigation against Target or any Target
Subsidiary challenging this Agreement, the Target Ancillary Agreements or the
consummation of the transactions contemplated hereby or thereby, including,
without limitation, any acquisition of Target Common Stock by Acquiror or any
of its affiliates or associates, (iii) obtaining all Consents from Governmental
Authorities required for the consummation of the Merger and the transactions
contemplated hereby or thereby, including, without limitation, any acquisition
of Target Common Stock by Acquiror or any of its affiliates or associates, and
(iv) timely making all necessary filings under the HSR Act. Upon the terms and
subject to the conditions hereof, Target agrees to use its reasonable best
efforts to take, or cause to be taken, all actions and to do, or cause to be
done, all things necessary to satisfy the other conditions of the Closing set
forth herein. Target will consult with counsel for Acquiror as to, and will
permit such counsel to participate in, at Acquiror's expense, any Litigation
referred to in clause (ii) above brought against or involving Target or any
Target Subsidiary.
4.6 PUBLIC ANNOUNCEMENTS. So long as this Agreement is in effect,
Target shall not, and shall cause its affiliates not to, without the written
consent of Acquiror, make any announcement or other disclosure relating to this
Agreement, the terms hereof, the Merger or negotiations with respect thereto,
except to their legal, accounting and financial advisers engaged in connection
with the Merger, unless otherwise required by Law or pursuant to any applicable
listing agreement with, or rules of, the NASD or other securities exchange;
provided, that the Target shall give Acquiror notice a reasonable time prior to
any such disclosure required by Law or otherwise, as referred to above, and
shall cooperate with and consult with Acquiror regarding the contents of any
such disclosure.
4.7 COMPLIANCE. In consummating the Merger and the transactions
contemplated hereby and by the Target Ancillary Agreements, Target shall comply
in all material respects with the applicable provisions of the Securities
Exchange Act and shall comply, and/or cause the Target Subsidiaries to comply
or to be in compliance, in all material respects, with all other applicable
Laws.
4.8 BENEFIT PLANS. Between the date of this Agreement and through
the Effective Time, no discretionary award or grant under any Benefit Plan of
Target or a Target Subsidiary shall be made without the prior written consent
of Acquiror; nor shall Target or a Target Subsidiary take any action or permit
any action to be taken to accelerate the vesting of any warrants or options
previously granted pursuant to any such Benefit Plan. Neither Target nor any
Target Subsidiary shall make any amendment to any Benefit Plan, any awards
thereunder or the
41
51
terms of any security convertible into or exchangeable for capital stock
without the prior written consent of Acquiror.
4.9 NO SOLICITATION OF TAKEOVER PROPOSAL.
(a) Target shall, and shall direct and cause its officers,
directors, employees, representatives and agents to, immediately cease any
discussions or negotiations with any parties that may be ongoing with respect
to a Takeover Proposal (as hereinafter defined). Target shall not, nor shall it
permit any of the Target Subsidiaries to, nor shall it authorize or permit any
of its officers, directors or employees or any investment banker, financial
advisor, attorney, accountant or other representative retained by it or any of
the Target Subsidiaries to, directly or indirectly, (i) solicit, initiate or
encourage (including by way of furnishing information), or take any other
action designed or reasonably likely to facilitate, any inquiries or the making
of any proposal which constitutes, or may reasonably be expected to lead to,
any Takeover Proposal, or (ii) participate in any discussions or negotiations
regarding any Takeover Proposal. Without limiting the generality of the
foregoing, it is understood that any violation of the restrictions set forth in
the previous two sentences by any director, officer, employee, agent or
representative of Target or any of the Target Subsidiaries, including, without
limitation, any investment banker, financial advisor, attorney, accountant or
other representative retained by Target or any of the Target Subsidiaries,
whether or not acting on behalf of Target or any of the Target Subsidiaries,
shall be deemed to be a breach of this Section by Target. For all purposes of
this Agreement, "Takeover Proposal" means any inquiry, proposal or offer
relating to any direct or indirect acquisition or purchase, in one transaction
or a series of related transactions, of 15% or more of the assets of Target or
any of the Target Subsidiaries or 5% or more of any class of equity securities
of Target or any of the Target Subsidiaries, any tender offer or exchange offer
that if consummated would result in any person beneficially owning 15% or more
of any class of equity securities of Target or any Target Subsidiary, any
merger, consolidation, share exchange, business combination, recapitalization,
liquidation, dissolution or similar transaction involving Target or any Target
Subsidiary, other than the transactions contemplated by this Agreement, or any
other transaction the consummation of which could reasonably be expected to
impede, interfere with, prevent or materially delay the Merger or which could
reasonably be expected to dilute materially the benefits to Acquiror of the
transactions contemplated by this Agreement.
(b) The Board of Directors of Target shall promptly recommend to
the shareholders of Target that they adopt this Agreement and approve the
transactions contemplated hereby. Neither the Board of Directors of Target nor
any committee thereof shall (i) withdraw or modify, or propose publicly to
withdraw or modify, the approval or recommendation by such Board of Directors
or such committee of the Merger or this Agreement, (ii) approve or recommend,
or propose publicly to approve or recommend, any Takeover Proposal or (iii)
cause Target to enter into any letter of intent, agreement in principle,
acquisition agreement or other similar agreement related to any Takeover
Proposal.
(c) In addition to the obligations of Target set forth in
paragraphs (a) and (b) of this Section 4.9, Target shall immediately advise
Acquiror orally and in writing of any request for information or of any
Takeover Proposal, the material terms and conditions of such request or
Takeover Proposal and the identity of the person making such request or
Takeover Proposal.
42
52
Target will keep Acquiror fully informed of the status and details (including
amendments or proposed amendments) of any such request or Takeover Proposal.
(d) Nothing contained in this Section 4.9 shall prohibit Target
from taking and disclosing to its shareholders a position consistent with its
obligations hereunder contemplated by Rule 14e-2(a) promulgated under the
Securities Exchange Act or from making any disclosure consistent with its
obligations hereunder to Target's shareholders if, in the good faith judgment
of the Board of Directors of Target, after consultation with outside counsel,
failure so to disclose would be inconsistent with applicable Law; provided,
however, neither Target nor its Board of Directors nor any committee thereof
shall withdraw or modify, or propose publicly to withdraw or modify, its
position with respect to the Merger or this Agreement or approve or recommend,
or propose publicly to approve or recommend, a Takeover Proposal.
4.10 SECURITIES AND SHAREHOLDER MATERIALS. Target and the Target
Subsidiaries shall send to Acquiror a copy of all material public reports and
materials as and when it sends the same to its shareholders, the SEC, the NASD
or any other securities commission, exchange or market.
4.11 RESIGNATIONS. Target shall cause the officers and/or
directors of Target and the Target Subsidiaries as Acquiror may request to
voluntarily resign their positions as such prior to and as of the Effective
Time. The instruments effecting such resignations are herein referred to as the
"Resignations." Target shall cause such directors, prior to their resignation,
to appoint new directors nominated by Acquiror to fill such vacancies.
4.12 NONCOMPETE AND CONFIDENTIALITY AGREEMENTS. Target shall use
its reasonable business efforts to obtain, at or prior to the Closing, duly
executed noncompete and confidentiality agreements in substantially the form
attached hereto as Schedule 4.12(a) (the "Noncompete and Confidentiality
Agreements") from the persons designated on Schedule 4.12(b) attached hereto.
4.13 COMFORT LETTERS. Upon the request of Acquiror, Target shall
use reasonable business efforts to provide to Acquiror prior to the Effective
Time "comfort letters" from the independent certified public accountants for
Target dated as of the date of the Proxy Statement and the Closing Date,
addressed to the Board of Directors of each of Target and Acquiror, covering
such matters as Acquiror shall reasonably request with respect to facts
concerning the financial condition and results of operations of Target and the
Target Subsidiaries and customary for such certified public accountants to
deliver in connection with a transaction similar to the Merger.
4.14 TAKEOVER STATUTES. If any Takeover Statute is or may become
applicable to the Merger or this Agreement or the Target Ancillary Agreements
or the transactions contemplated hereby or thereby or the execution, delivery
or performance of any other agreement to acquire, or any other acquisition of,
Target Common Stock by Acquiror or any of its affiliates or associates, Target
and the members of its Board of Directors will grant such approvals, and will
take such other actions as are necessary so that the Merger, this Agreement,
the Target Ancillary Agreements and the other transactions contemplated by
hereby or thereby or the execution,
43
53
delivery or performance of any other agreement to acquire, or any other
acquisition of, Target Common Stock by Acquiror or any of its affiliates or
associates may be consummated as promptly as practicable on the terms
contemplated hereby and will otherwise act to eliminate or minimize the effects
of any Takeover Statute on the Merger, this Agreement, the Target Ancillary
Agreements and any of the transactions contemplated hereby or thereby or the
execution, delivery or performance of any other agreement to acquire, or any
other acquisition of, Target Common Stock by Acquiror or any of its affiliates
or associates.
4.15 YEAR 2000 PLAN. Target shall use all commercially reasonable
efforts to ensure that the Year 2000 Plan shall be completed in a timely
manner. Target shall (i) allow Acquiror to monitor Target's Year 2000
compliance issues and Year 2000 Plan, (ii) provide prompt notice to Acquiror if
Target does not achieve, or reasonably expects it shall not achieve, milestones
and objectives identified in the Year 2000 Plan and (iii) cooperate in good
faith with Acquiror's efforts to cause Target to be Year 2000 Compliant.
4.16 PURCHASE OF TARGET COMMON STOCK. Target shall in no way
prohibit Acquiror or any of its affiliates or associates from purchasing shares
of Target Common Stock or entering into option, lock-up, voting or proxy
agreements or any other similar agreements with respect to Target Common Stock
(including, but not limited to, amending the Rights Plan to cause such
acquisition or agreement to trigger a "Stock Acquisition Date" or "Distribution
Date" or cause Acquiror or any of its affiliates or associates to become an
"Acquiring Person" (as such terms are defined in the Rights Plan) at any time
prior to the consummation of the Merger.
4.17 CONVERSION OF OPTIONS. Target shall offer to modify, and
shall obtain such modification to, each outstanding Option which is exercisable
on or prior to the Effective Time, to cause each such Option either to be
exercised (if otherwise exercisable) prior to the Effective Time, or to be
canceled as of the Effective Time in exchange for the Option Consideration, as
contemplated by Section 1.7(b). Target shall offer to modify, and shall obtain
such modification to, each outstanding Option which is not exercisable on or
prior to the Effective Time to be converted, as of the Effective Time, to the
right to receive solely the Option Consideration, with such Option otherwise
becoming exercisable following the Effective Time, in accordance with its
terms, as contemplated by Section 1.7(b). Target shall effect the foregoing
after reasonable consultation with Acquiror pursuant to written agreements in
form and substance reasonably satisfactory to Acquiror, including, without
limitation, in a form consistent with Section 1.7(b) hereof.
ARTICLE V
ADDITIONAL COVENANTS OF ACQUIROR
Acquiror covenants and agrees as follows:
5.1 PUBLIC ANNOUNCEMENTS. So long as this Agreement is in effect,
Acquiror shall not, and shall cause its affiliates not to, without the written
consent of Target, make any announcement or other disclosure relating to this
Agreement, the terms hereof, the Merger or negotiations with respect thereto,
except to their legal, accounting and financial advisers
44
54
engaged in connection with the Merger, unless otherwise required by Law or
pursuant to any applicable listing agreement with, or rules and regulations of,
the NASD or other securities exchange; provided, that the Acquiror shall give
Target notice a reasonable time prior to any such disclosure required by Law or
otherwise, as referred to above, and shall cooperate with and consult with
Target regarding the contents of any such disclosure
5.2 COMPLIANCE. In consummating the Merger and the transactions
contemplated hereby, Acquiror shall comply in all material respects with the
applicable provisions of the Securities Exchange Act and shall comply, and/or
cause the Acquisition Subsidiary to comply or to be in compliance, in all
material respects, with all other applicable Laws applicable thereto.
5.3 PROXY STATEMENT. Acquiror shall cooperate with Target with
respect to the preparation of the Proxy Statement as set forth in Section 4.4.
and shall provide Target with such information concerning Acquiror and
Acquisition Subsidiary as shall be required to be included therein. Acquiror
shall vote, or cause to be voted, in favor of the Merger and this Agreement all
shares of Target Common Stock directly or indirectly beneficially owned by it.
5.4 TARGET SENIOR SECURED CREDIT FACILITY. Acquiror shall give
its consent to the Merger in Acquiror's capacity as the assignee of the holder
of the Senior Secured Notes issued by Target under the Senior Secured Credit
Facility, at the Closing, subject to satisfaction of the conditions to
Acquiror's obligations to effect the Merger.
5.5 CS BORROWING. Acquiror shall use its reasonable efforts to
request consents to the CS Borrowing from the sellers of any notes from which
Acquiror has agreements to purchase such notes that are described in Section
3.7, above, to the extent that Acquiror shall not have purchased such notes.
5.6 INDEMNIFICATION AND INSURANCE.
(a) The Certificate of Incorporation and By-Laws of the
Surviving Corporation shall contain provisions with respect to indemnification
and exculpation similar to those set forth in the Certificate of Incorporation
and By-Laws of Target, which provisions the Acquiror shall not and shall cause
the Surviving Corporation not to amend, repeal or otherwise modify for a period
of six (6) years from the Effective Time in any manner that would materially
and adversely affect the rights thereunder of individuals who at the Effective
Time were directors, officers, employees or agents of Target, unless such
amendment, repeal or other modification is required by applicable Law.
(b) From and after the Effective Time, Acquiror agrees that
it will indemnify and hold harmless each present director and officer of Target
(when acting in such capacity) determined as of the Effective Time (the
"Indemnified Parties"), against any costs or expenses (including reasonable
attorneys' fees), judgments, fines, losses, claims, damages or liabilities
(collectively, "Costs") incurred in connection with any claim, action, suit,
proceeding or investigation whether civil, criminal, administrative or
investigative, arising out of or pertaining to matters existing or occurring at
or prior to the Effective Time, whether asserted or claimed prior to, at or
after the Effective Time, to the fullest extent that Target would have been
permitted
45
55
under the Connecticut Code and its Certificate of Incorporation or By-Laws in
effect on the date of this Agreement to indemnify such person (and Acquiror
shall also advance expenses as incurred to the fullest extent permitted under
applicable Law and the Certificate of Incorporation and the By-Laws of Target,
provided that the person to whom expenses are advanced provides an undertaking
to repay such advances if it is ultimately determined that such person is not
entitled to indemnification).
(c) Any Indemnified Party wishing to claim indemnification
under paragraph (b) of this Section 5.6, upon learning of any such claim,
action, suit, proceeding or investigation, shall promptly notify Acquiror
thereof in writing, but the failure to so notify shall not relieve Acquiror of
any liability it may have to such Indemnified Party if such failure does not
materially prejudice Acquiror. In the event of any such claim, action, suit,
proceeding or investigation (whether arising before or after the Effective
Time), (i) Acquiror or the Surviving Corporation shall have the right to assume
the defense thereof, and Acquiror shall not be liable to such Indemnified
Parties for any legal expenses of other counsel or any other expenses
subsequently incurred by such Indemnified Parties in connection with the
defense thereof, except that if Acquiror or the Surviving Corporation elects
not to assume such defense, or if there are any issues which raise material
conflicts of interest between Acquiror or the Surviving Corporation and the
Indemnified Parties, the Indemnified Parties may retain counsel reasonably
satisfactory to Acquiror, and Acquiror or the Surviving Corporation shall pay
all reasonable fees and expenses of such counsel for the Indemnified Parties;
provided, however, that Acquiror shall be obligated pursuant to this paragraph
(c) to pay for only one firm or counsel for all Indemnified Parties, (ii) the
Indemnified Parties will cooperate in the defense of any such matter, and (iii)
Acquiror shall not be liable for any settlement effected without its prior
written consent.
(d) For a period of six (6) years after the Effective Time
and to the extent available, Acquiror or the Surviving Corporation shall
maintain in effect policies of directors' and officers' liability insurance
covering those persons who are currently covered by Target's directors' and
officers' liability insurance policy on terms (including the amounts of
coverage and the amounts of deductibles, if any) that are no less favorable to
them in any material respect than the terms now applicable to them under
Target's current insurance policies; provided that the Surviving Corporation
shall not be required to pay an annual premium for such insurance in excess of
175% of the last annual premium paid prior to the date hereof, but in such case
shall purchase as much coverage as possible for such amount.
(e) If Acquiror or the Surviving Corporation or any of their
successors or assigns (i) shall consolidate with or merge into any other
corporation or entity and shall not be the continuing or surviving corporation
or entity in such consolidation or merger or (ii) shall transfer all or
substantially all of its properties and assets to any individual, corporation
or other entity, then and in each case, proper provisions shall be made so that
the successors and assigns of Acquiror or the Surviving Corporation, as the
case may be, shall assume all of the obligations set forth in this Section 5.6;
provided, that the failure to make such provisions shall not affect the
validity of any such consolidation, merger or transfer.
(f) The provisions of this Section 5.6 are intended to be for
the benefit of, and shall be enforceable by, each of the Indemnified Parties,
their heirs and representatives.
46
56
ARTICLE VI
CONDITIONS
6.1 CONDITIONS TO EACH PARTY'S OBLIGATIONS. The respective
obligations of each party to effect the Merger shall be subject to the
fulfillment or waiver at or prior to the Effective Time of the following
conditions:
6.1.1 SHAREHOLDER APPROVAL. This Agreement and the Merger and
the other transactions contemplated hereby shall have been duly
adopted at or prior to the Effective Time by the requisite vote of the
shareholders of Target in accordance with the Certificate of
Incorporation and By-Laws of Target, the Connecticut Code and the
Securities Exchange Act.
6.1.2 NO INJUNCTION OR ACTION. No order, statute, rule,
regulation, executive order, stay, decree, judgment or injunction
shall have been enacted, entered, promulgated or enforced by any court
or other Governmental Authority, which prohibits or prevents the
consummation of the Merger or the other transactions contemplated
hereby and which has not been vacated, dismissed or withdrawn by the
Effective Time. Target and Acquiror shall use their reasonable best
efforts to have any of the foregoing vacated, dismissed or withdrawn
by the Effective Time.
6.1.3 HSR ACT. Any waiting period applicable to the Merger
under the HSR Act shall have expired or earlier termination thereof
shall have been granted and no action shall have been instituted by
either the United States Department of Justice or the Federal Trade
Commission to prevent the consummation of the transactions
contemplated by this Agreement or to modify or amend such transactions
in any material manner, or if any such action shall have been
instituted, it shall have been withdrawn or a final judgment shall
have been entered against such Department or Commission, as the case
may be.
6.1.4 OPINION OF FINANCIAL ADVISOR. The fairness opinion
referenced in Section 2.4(c) above shall not have been withdrawn at or
prior to the Effective Time.
6.1.5 GOVERNMENTAL APPROVALS. All Consents, other than
Consents the failure of which to be obtained or made, in the judgment
of Acquiror, would not have a material adverse effect on the business,
assets, condition (financial or otherwise), properties, liabilities,
prospects or the result of operations of the Surviving Corporation and
its subsidiaries taken as a whole ("Surviving Corporation Material
Adverse Effect"), of any Governmental Authority required for the
consummation of the Merger and the transactions contemplated by this
Agreement shall have been obtained by Final Order (as hereinafter
defined), provided that any Consent relating to any FCC License shall
be so obtained or made by Final Order. The term "Final Order" with
respect to any Consent of a Governmental Authority shall mean an
action by the appropriate Governmental Authority as to which: (i) no
request for stay by such Governmental Authority of the action is
pending, no such stay is in effect, and, if any deadline for filing
any such request is designated by statute or regulation, it has
passed; (ii) no petition for rehearing or
47
57
reconsideration of the action is pending before such Governmental
Authority, and no appeal or comparable administrative remedy is
pending before such Governmental Authority, and the time for filing
any such petition, appeal or administrative remedy has passed; (iii)
such Governmental Authority does not have the action under
reconsideration on its own motion and the time for such
reconsideration has passed; and (iv) no appeal to a court, or request
for stay by a court, of the Governmental Authority action is pending
or in effect, and if any deadline for filing any such appeal or
request is designated by statute or rule, it has passed. The condition
contained in this Subsection 6.1.5 may be waived by Acquiror, in its
sole judgment.
6.2 CONDITIONS TO OBLIGATIONS OF TARGET. The obligation of Target
to effect the Merger shall be subject to the fulfillment at or prior to the
Effective Time of the following additional conditions, any one or more of which
may be waived by Target:
6.2.1 ACQUIROR REPRESENTATIONS AND WARRANTIES. The
representations and warranties of Acquiror contained in this Agreement
that are modified by materiality or Acquiror Material Adverse Effect
("Acquiror Modified Representation") shall be true and correct in all
respects and those that are not so modified ("Acquiror Nonmodified
Representation") shall be true and correct in all material respects,
on the date hereof and, except for changes not prohibited by this
Agreement, as of the Effective Time as if made at the Effective Time.
Furthermore, none of the representations or warranties of Acquiror
contained in this Agreement, disregarding any qualifications therein
or in this Section 6.2.1 regarding materiality or Acquiror Material
Adverse Effect, shall be untrue or incorrect to the extent that such
untrue or incorrect representations or warranties, when taken together
as a whole, have had or would have an Acquiror Material Adverse
Effect.
6.2.2 PERFORMANCE BY ACQUIROR. Acquiror shall have performed
and complied with all of the covenants and agreements in all material
respects and satisfied in all material respects all of the conditions
required by this Agreement to be performed or complied with or
satisfied by Acquiror at or prior to the Effective Time.
6.2.3 CERTIFICATE. Acquiror shall have delivered to Target a
certificate executed on its behalf by its President or another
authorized officer to the effect that the conditions set forth in
Subsections 6.2.1 and 6.2.2, above, have been satisfied.
6.3 CONDITIONS TO OBLIGATIONS OF ACQUIROR. The obligations of
Acquiror to effect the Merger shall be subject to the fulfillment at or prior
to the Effective Time of the following additional conditions, any one or more
of which may be waived by Acquiror:
6.3.1 TARGET REPRESENTATIONS AND WARRANTIES. The
representations and warranties of Target contained in this Agreement
that are modified by materiality or Target Material Adverse Effect
("Target Modified Representation") shall be true and correct in all
respects, and those that are not so modified ("Target Nonmodified
Representation") shall be true and correct in all material respects,
on the date hereof and, except for changes not prohibited by this
Agreement, as of the Effective Time as if made at the Effective Time.
Furthermore, none of the representations or warranties of Target
48
58
contained in this Agreement, disregarding any qualifications therein
or in this Section 6.3.1 regarding materiality or Target Material
Adverse Effect, shall be untrue or incorrect to the extent that such
untrue or incorrect representations or warranties, when taken together
as a whole, have had or would have a Target Material Adverse Effect.
6.3.2 PERFORMANCE BY TARGET. Target shall have performed and
complied with all the covenants and agreements in all material
respects and satisfied in all material respects all the conditions
required by this Agreement to be performed or complied with or
satisfied by Target at or prior to the Effective Time.
6.3.3 NO MATERIAL ADVERSE CHANGE. There shall have not
occurred after the date hereof any Event that has or reasonably could
be expected to have a Target Material Adverse Effect or a Surviving
Corporation Material Adverse Effect (as hereinafter defined) (except
for (A) any decrease in monthly average GAAP-based revenues of Target
and the Target Subsidiaries (other than CS and the CS Subsidiaries) of
no more than 5.5% per month, subject to adjustment by percentage
increase or decrease of 0.7% for seasonal trends (e.g., college
population subscribers), (B) deviations of cash flow from operations
of Target and the Target Subsidiaries (other than CS and the CS
Subsidiaries) of 25% or less on a month-to-month basis as compared to
cash flow from operations projected in the Target Approved Budget, (C)
any decrease in monthly average GAAP-based revenues of CS and the CS
Subsidiaries of no more than 5.5% per month, subject to adjustment by
percentage increase or decrease of 0.7% for seasonal trends (e.g.,
college population subscribers), and (D) deviations of cash flow from
operations of CS and the CS Subsidiaries of 25% or less on a
month-to-month basis as compared to cash flow from operations
projected in the CS Approved Budget).
6.3.4 NO PENDING ACTION There shall not be instituted,
pending or threatened any action, investigation or proceeding by any
Governmental Authority, and there shall not be instituted, pending or
threatened any action or proceeding by any other person, domestic or
foreign, before any Governmental Authority, which is reasonably likely
to be determined adversely to Acquiror or Acquisition Subsidiary, (A)
challenging or seeking to make illegal, to delay materially or
otherwise, directly or indirectly, to restrain or prohibit the
consummation of the Merger, seeking to obtain material damages or
imposing any material adverse conditions in connection therewith or
otherwise, directly or indirectly relating to the transactions
contemplated by the Merger, (B) seeking to restrain, prohibit or delay
the exercise of full rights of ownership or operation by Acquiror or
Acquisition Subsidiary or their affiliates of all or any portion of
the business or assets of Target and the Target Subsidiaries, taken as
a whole, or of Acquiror or Acquisition Subsidiary or any of their
affiliates, or to compel Acquiror or Acquisition Subsidiary or any of
their affiliates to dispose of or hold separate all or any material
portion of the business or assets of Target and the Target
Subsidiaries, taken as a whole, or of Acquiror or Acquisition
Subsidiary or any of their affiliates, (C) seeking to impose or
confirm material limitations on the ability of Acquiror or Acquisition
Subsidiary or any of their affiliates to exercise full rights of the
ownership of the shares of Target Common Stock, including, without
limitation, the right to vote the shares of Target Common Stock
acquired or owned by Acquiror or Acquisition Subsidiary or any of
their affiliates on all
49
59
matters properly presented to the holders of Target Common Stock, (D)
seeking to require divestiture by Acquiror or Acquisition Subsidiary
or any of their affiliates of the shares of Target Common Stock, or
(E) that otherwise would reasonably be expected to have a Target
Material Adverse Effect.
6.3.5 DISSENTING SHARES. At the Effective Time, Dissenting
Shares shall not exceed 10% of the Target Shares.
6.3.6 REQUIRED CONSENTS. All required Consents of any person
(other than a Governmental Authority) to the Merger or the
transactions contemplated hereby shall have been obtained or made on
terms and conditions reasonably acceptable to Acquiror and be in full
force and effect, except for those the failure of which to obtain or
be made, in the judgment of Acquiror, would not have a Surviving
Corporation Material Adverse Effect; provided that any Consents
relating to any Channel Leases or Tower Site Leases, the failure of
which to obtain, in the aggregate, are or would be material to Target
and the Target Subsidiaries or are or would be material to the future
plans or objectives of Acquiror or the failure of which to obtain
would otherwise have a Target Material Adverse Effect shall be so
obtained or made.
6.3.7 CERTIFICATES AND OTHER DELIVERIES. Target shall have
delivered, or caused to be delivered, to Acquiror (i) a certificate
executed on its behalf by its President or another duly authorized
officer to the effect that the conditions set forth in Subsections
6.1.1, 6.1.4, 6.1.5, 6.3.1, 6.3.2, 6.3.3, 6.3.4, 6.3.5 and 6.3.6,
above, have been satisfied; (ii) a certificate of good standing or of
legal existence, as applicable, from the Secretary of State of each
state or comparable authority in other jurisdictions in which Target
and the Target Subsidiaries are incorporated or qualified to do
business stating that each is a validly existing corporation in good
standing or of legal existence, as applicable; (iii) duly adopted
resolutions of the Board of Directors and shareholders of Target
approving the execution, delivery and performance of this Agreement,
the Target Ancillary Agreements and the instruments contemplated
hereby and thereby, certified by the Secretary or Assistant Secretary
of Target; (iv) a true and complete copy of the Articles or
Certificate of Incorporation or comparable governing instruments, as
amended, of Target and each of the Target Subsidiaries certified by
the Secretary of State of the state of incorporation or comparable
authority in other jurisdictions, and a true and complete copy of the
By-Laws or comparable governing instruments, as amended, of Target and
each of the Target Subsidiaries certified by the Secretary thereof;
(v) the duly executed Noncompete and Confidentiality Agreements; (vi)
the duly executed Resignations on terms and conditions reasonably
acceptable to Acquiror; (vii) a list of the shareholders of Target
entitled to vote on the adoption of this Agreement and an undertaking
from Target's transfer agent to deliver a list of the shareholders of
Target as of the Effective Time as soon thereafter as it is available,
each such list to be certified by the transfer agent of Target; and
(viii) such other documents and instruments as Acquiror reasonably may
request.
6.3.8 OPINION OF TARGET COUNSEL. Acquiror shall have received
the opinion of Day, Xxxxx & Xxxxxx LLP, counsel to the Target, in form
and substance reasonably satisfactory to Acquiror, covering the
matters set forth in Schedule 6.3.8 attached hereto.
50
60
6.3.9 COMFORT LETTERS. Acquiror shall have received "comfort
letters" from the independent certified public accountants for Target
dated as of the date of the Proxy Statement and the Closing Date,
addressed to the Board of Directors of each of Target and Acquiror,
covering such matters as Acquiror shall reasonably request with
respect to facts concerning the financial condition and results of
operations of Target and the Target Subsidiaries and customary for
such certified public accountants to deliver in connection with a
transaction similar to the Merger.
ARTICLE VII
TERMINATION AND ABANDONMENT
7.1 TERMINATION. This Agreement may be terminated at any time
prior to the Effective Time, whether before or after approval of the
shareholders of Target described herein, only:
(a) by mutual written consent of Acquiror and Target;
(b) by either Acquiror or Target if:
(i) the Merger shall not have been consummated on or prior to
February 1, 2000; provided, however, that if Target or Acquiror determines that
additional time is necessary in connection with obtaining a Consent from the
FCC or, solely with respect to the HSR Act, any other Governmental Authority or
satisfying any related waiting period, such date may be extended by Target or
Acquiror from time to time by written notice to the other party to a date no
later than May 1, 2000; and provided further, however, that the right to
terminate this Agreement pursuant to this Section 7.1(b)(i) shall not be
available to any party whose failure to perform any of its obligations under
this Agreement results in the failure of the Merger to be consummated by such
time;
(ii) the approval of holders of Target Common Stock required
by Section 6.1.1 shall not have been obtained at a meeting duly convened
therefor or at any adjournment or postponement thereof;
(iii) any court of competent jurisdiction or other
Governmental Authority shall have issued an order, decree or ruling or taken
any other action permanently enjoining, restraining or otherwise prohibiting
the consummation of the Merger and such order, decree or ruling or other action
shall have become final and nonappealable;
(c) by Acquiror, if (i) there are any breaches of any Target
Modified Representation or there are any material breaches of any Target
Nonmodified Representation, or (ii) Target shall have breached or failed to
perform, notwithstanding satisfaction or due waiver of all conditions thereto,
any of its material covenants or agreements contained herein as to which notice
specifying such breach or failure has been given to Target promptly after the
discovery thereof and Target has failed to cure or otherwise resolve the same
to the reasonable satisfaction of Acquiror within twenty (20) days after
receipt of such notice;
51
61
(d) by Acquiror, if Section 4.9 shall be breached by Target in
any material respect, including, without limitation, by failing to promptly
notify Acquiror as required thereunder;
(e) by Target, if (i) there are any breaches of any Acquiror
Modified Representation or there are any material breaches of any Acquiror
Nonmodified Representation, or (ii) Acquiror shall have breached or failed to
perform, notwithstanding satisfaction or due waiver of all conditions thereto,
any of its material covenants or agreements contained herein as to which notice
specifying such breach or failure has been given to Acquiror promptly after the
discovery thereof and Acquiror has failed to cure or otherwise resolve the same
to the reasonable satisfaction of Target within twenty (20) days after receipt
of such notice.
The party desiring to terminate this Agreement pursuant to
the preceding paragraphs (b), (c), (d) or (e), shall give written notice of
such termination to the other party in accordance with Section 8.5 below.
7.2 TERMINATION FEES AND RIGHTS.
(a) In the event of termination of this Agreement and the
abandonment of the Merger pursuant to this Article VII, this Agreement (other
than as set forth in this Section 7.2, Section 7.3, Section 8.1 and Section
8.7) shall become void and of no effect with no liability on the part of any
party hereto (or of any of its directors, officers, employees, agents, legal or
financial advisers or other representatives); provided, however, that no such
termination shall relieve any party hereto from any liability for breach of
this Agreement.
(b) In the event that (A) a bona fide Takeover Proposal shall
have been made known to Target or any of the Target Subsidiaries and made known
to the holders of Target Common Stock generally or has been made directly to
holders of Target Common Stock generally or any person shall have publicly
announced an intention (whether or not conditional) to make a bona fide
Takeover Proposal and such Takeover Proposal or announced intention shall not
have been withdrawn and thereafter this Agreement is terminated by either
Acquiror or Target pursuant to Section 7.1(b)(i), or (B) this Agreement is
terminated by Acquiror pursuant to Section 7.1(d), then Target shall promptly,
but in no event later than two days after the date of such termination, pay
Acquiror a fee equal to $18 million (the "Termination Fee"), payable by wire
transfer of same day funds. Target acknowledges that the agreements contained
in this Section 7.2(b) are an integral part of the transactions contemplated by
this Agreement, and that, without these agreements, Acquiror would not enter
into this Agreement; accordingly, if Target fails to promptly pay the amount
due pursuant to this Section 7.2(b), and in order to obtain such payment,
Acquiror commences a suit which results in a judgment against Target for the
Termination Fee set forth in this paragraph (b), Target shall also pay to
Acquiror its costs and expenses (including attorneys' fees) in connection with
such suit, together with interest on the amount of the Termination Fee at the
prime rate of NationsBank, N.A. in effect on the date such payment was required
to be made.
7.3 PROCEDURE UPON TERMINATION. In the event of termination
pursuant to this Article VII, this Agreement shall terminate and the Merger
shall be abandoned without further action by Target or Acquiror, provided that
the agreements contained in Sections 7.2, 7.3, 8.1 and
52
62
8.7 hereof shall remain in full force and effect. If this Agreement is
terminated as provided herein, each party shall use its reasonable best efforts
to redeliver all documents, work papers and other material (including any
copies thereof) of any other party relating to the transactions contemplated
hereby, whether obtained before or after the execution hereof, to the party
furnishing the same. Nothing contained in this Agreement shall relieve any
party from any liability for any inaccuracy, misrepresentation or breach of
this Agreement prior to termination.
ARTICLE VIII
MISCELLANEOUS
8.1 CONFIDENTIALITY. Unless (i) otherwise expressly provided in
this Agreement, (ii) required by applicable Law or any listing agreement with,
or the rules and regulations of, any applicable securities exchange or the
NASD, (iii) necessary to secure any required Consents as to which the other
party has been advised, or (iv) consented to in writing by Acquiror and Target,
this Agreement and any information or documents furnished in connection
herewith shall be kept strictly confidential by Target and the Target
Subsidiaries, Acquiror and Acquisition Subsidiary and their respective
officers, directors, employees and agents. Prior to any disclosure pursuant to
the preceding sentence, the party intending to make such disclosure shall
consult with the other party regarding the nature and extent of the disclosure.
Nothing contained herein shall preclude disclosures to the extent necessary to
comply with accounting, SEC and other disclosure obligations imposed by
applicable Law. In connection with any filing with the SEC under the Securities
Exchange Act, Target or Acquiror, after consultation with the other party, may
include any information required to be included therein with respect to the
Merger. Acquiror and Target shall cooperate with the other and provide such
information and documents as may be required in connection with any such
filings. In the event the Merger is not consummated, Acquiror and Target shall
return to the other all documents furnished by the other and will hold in
absolute confidence all information obtained from the other party except to the
extent (i) such party is required to disclose such information by Law or such
disclosure is necessary or desirable in connection with the pursuit or defense
of a claim, (ii) such information was known by such party prior to such
disclosure or was thereafter developed or obtained by such party independent of
such disclosure, (iii) such party received such information on a
non-confidential basis from a source, other than the other party, which is not
known by such party to be bound by a confidentiality obligation with respect
thereto or (iv) such information becomes generally available to the public or
is otherwise no longer confidential. Prior to any disclosure of information
pursuant to the exception in clause (i) of the preceding sentence, the party
intending to disclose the same shall so notify the party which provided the
same in order that such party may seek a protective order or other appropriate
remedy should it choose to do so.
8.2 AMENDMENT AND MODIFICATION. To the extent permitted by
applicable Law, this Agreement may be amended, modified or supplemented only by
a written agreement among Target, Acquiror and Acquisition Subsidiary, whether
before or after approval of the Merger and this Agreement by the holders of
Target Common Stock and the holders of the common stock of Acquisition
Subsidiary.
53
63
8.3 WAIVER OF COMPLIANCE; CONSENTS. Any failure of Target on the
one hand, or Acquiror on the other hand, to comply with any obligation,
covenant, agreement or condition herein may be waived by Acquiror on the one
hand, or Target on the other hand, only by a written instrument signed by the
party granting such waiver, but such waiver or failure to insist upon strict
compliance with such obligation, covenant, agreement or condition shall not
operate as a waiver of, or estoppel with respect to, any subsequent or other
failure. Whenever this Agreement requires or permits consent by or on behalf of
any party hereto, such consent shall be given in writing in a manner consistent
with the requirements for a waiver of compliance as set forth in this Section
8.3.
8.4 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The respective
representations and warranties of Target and Acquiror contained herein or in
any certificates or other documents delivered prior to or at the Closing shall
survive the execution and delivery of this Agreement, notwithstanding any
investigation made or information obtained by the other party, but shall
terminate at the Effective Time.
8.5 NOTICES. All notices and other communications hereunder shall
be in writing and shall be deemed to have been duly given when delivered in
person, by facsimile, receipt confirmed, or on the next business day when sent
by overnight courier or on the second succeeding business day when sent by
registered or certified mail (postage prepaid, return receipt requested) to the
respective parties at the following addresses (or at such other address for a
party as shall be specified by like notice):
(i) if to Target, to:
CAI Wireless Systems, Inc.
00 Xxxxxxxxx Xxxxx Xxxx., Xxxxx Xxxxx
Xxxxxx, XX 00000
Attention: Xxxxx X. Xxxxxx, Executive Vice President
Telecopy: 000-000-0000
with a copy to:
Day, Xxxxx & Xxxxxx LLP
Xxx Xxxxxxxxxx Xxxxx
Xxxxxxxx, XX 00000
Attention: Xxxxxx Xxxxxxxxx III, Esq.
Telecopy: 000-000-0000
and
Skadden, Arps, Slate, Xxxxxxx & Xxxx
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: J. Xxxxxxx Xxxxxx, Esq.
Telecopy: 000-000-0000
54
64
and
(ii) if to Acquiror or Acquisition Subsidiary, to:
Xxxxxx X. Xxxxx
Vice President - Strategic Development
MCI WORLDCOM, Inc.
0000 Xxxxxxxx Xxxxx, Xxxxx 000
Xxxxxxx, XX 00000
Telecopy: 000-000-0000
with copies to:
P. Xxxxx Xxxxxxxxx, Esq.
General Counsel - Corporate Development
MCI WORLDCOM, Inc.
00000 Xxxxxx Xxxxxx Xxxxx, Xxxxx 000
Xx. Xxxxx, XX 00000
Telecopy: 000-000-0000
and
Xxxxx Xxxx LLP
000 X. Xxxxxxxx, Xxxxx 0000
Xx. Xxxxx, XX 00000
Attention: R. Xxxxxxx Xxxx, Esq.
Telecopy: 000-000-0000
8.6 BINDING EFFECT; ASSIGNMENT. This Agreement and all of the
provisions hereof shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and permitted assigns. Neither this
Agreement nor any of the rights, interests or obligations hereunder shall be
assigned by any of the parties hereto prior to the Effective Time without the
prior written consent of the other party hereto, except that Acquisition
Subsidiary may assign to Acquiror or any other Subsidiary of Acquiror any and
all rights, interests and obligations of Acquisition Subsidiary under this
Agreement.
8.7 EXPENSES. All costs and expenses incurred in connection with this
Agreement and the transactions contemplated hereby shall be paid by the party
incurring such costs or expenses, subject to the rights of such party
contemplated under Section 7.2, above.
8.8 GOVERNING LAW. This Agreement shall be deemed to be made in, and
in all respects shall be interpreted, construed and governed by and in
accordance with the internal laws of, the State of New York (without regard for
its choice of law rules), except for matters governed by the Connecticut Code,
which shall be interpreted, construed and governed by the Connecticut Code.
55
65
8.9 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
8.10 INTERPRETATION. The article and section headings contained in
this Agreement are solely for the purpose of reference, are not part of the
agreement of the parties and shall not in any way affect the meaning or
interpretation of this Agreement. No rule of construction shall apply to this
Agreement which construes ambiguous language in favor of or against any party
by reason of that party's role in drafting this Agreement. As used in this
Agreement, (i) the term "person" shall mean and include an individual, a
partnership, a joint venture, a corporation, a limited liability company, a
trust, an association, an unincorporated organization, a Governmental Authority
and any other entity; (ii) the terms "affiliate" and "associate" shall have the
same meanings as set forth in Rule 12b-2 under the Securities Exchange Act; and
(iii) the term "shareholder" of any specified person shall mean any holder of
capital stock or other equity interest in such person.
8.11 ENTIRE AGREEMENT. This Agreement and the other agreements,
documents or instruments referred to herein or executed in connection herewith
including, but not limited to, the Schedules attached hereto, which Schedules
are incorporated herein by reference, embody the entire agreement and
understanding of the parties hereto in respect of the subject matter contained
herein. There are no restrictions, promises, representations, warranties,
covenants, or undertakings, other than those expressly set forth or referred to
herein. This Agreement supersedes all prior agreements and the understandings
between the parties with respect to such subject matter, including, without
limitation, the letter agreement dated April 15, 1999 between Acquiror and
Target.
8.12 SEVERABILITY. In case any provision in this Agreement or in any
of the other agreements, documents or instruments referred to herein shall be
held invalid, illegal or unenforceable in any jurisdiction, such provision
shall be modified or deleted, as to the jurisdiction involved, only to the
extent necessary to render the same valid, legal and enforceable, and the
validity, legality and enforceability of the remaining provisions hereof or
thereof shall not in any way be affected or impaired thereby nor shall the
validity, legality or enforceability of such provision be affected thereby in
any other jurisdiction.
8.13 SPECIFIC PERFORMANCE. The parties hereto 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. Accordingly, the parties further agree that each party shall be
entitled to an injunction or restraining order to prevent breaches of this
Agreement and to enforce specifically the terms and provisions hereof in any
court of the United States or any state having jurisdiction, this being in
addition to any other right or remedy to which such party may be entitled under
this Agreement, at law or in equity.
8.14 THIRD PARTIES. Nothing contained in this Agreement or in any
instrument or document executed by any party in connection with the
transactions contemplated hereby shall create any rights in, or be deemed to
have been executed for the benefit of, any person that is not
56
66
a party hereto or thereto, or, a successor or permitted assign of such a party,
provided that the Indemnified Parties shall be entitled to the benefits of
Section 5.6 hereof.
8.15 SCHEDULES. The Schedules in this Agreement shall be arranged in
separate parts corresponding to the numbered and lettered sections, and the
disclosure in any numbered or lettered part shall be deemed to relate to and to
qualify only the particular representation or warranty set forth in the
corresponding numbered or lettered section, and not any other representation or
warranty (unless an express and specific reference to any other Schedule which
clearly identifies the particular item being referred is set forth therein).
8.16 CONTROL. Neither Acquiror nor Acquisition Subsidiary have
exercised, and neither shall exercise, any control over Target, the Target
Subsidiaries or the FCC Licenses held by Target or any of the Target
Subsidiaries prior to the grant of necessary approvals by the FCC, to the
extent such approvals are required by Law prior to the exercise of any such
control.
[The remainder of this page is intentionally left blank.]
57
67
IN WITNESS WHEREOF, Acquiror, Acquisition Subsidiary and Target have
caused this Agreement to be signed and delivered by their respective duly
authorized officers as of the date first above written.
CAI WIRELESS SYSTEMS, INC.
By: /s/ XXXXX X. XXXXXXXXXX
-----------------------------------------
Name: Xxxxx X. Xxxxxxxxxx
---------------------------------------
Title: Chairman and Chief Executive Officer
---------------------------------------
MCI WORLDCOM, INC.
By: /s/ XXXX XXXXXXXX
-----------------------------------------
Name: Xxxx Xxxxxxxx
---------------------------------------
Title:
---------------------------------------
CARDINAL ACQUISITION SUBSIDIARY, INC.
By: /s/ XXXX XXXXXXXX
-----------------------------------------
Name: Xxxx Xxxxxxxx
---------------------------------------
Title:
---------------------------------------
58
