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AGREEMENT AND PLAN OF MERGER
among
LIBERTY AEG ACQUISITION, INC.,
LIBERTY MEDIA CORPORATION
and
ASCENT ENTERTAINMENT GROUP, INC.
Dated as of February 22, 2000
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TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS AND CONSTRUCTION....................................2
1.1 Certain Definitions.......................................2
1.2 Terms Generally...........................................6
ARTICLE II THE OFFER AND RELATED MATTERS...................................7
2.1 The Offer.................................................7
2.2 Company Action............................................9
ARTICLE III THE MERGER AND RELATED MATTERS.................................11
3.1 The Merger...............................................11
3.2 Closing..................................................12
3.3 Conversion of Securities.................................12
3.4 Options; SARs............................................13
3.5 Dissenting Shares........................................13
3.6 Surrender of Shares; Stock Transfer Books................14
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE COMPANY..................15
4.1 Organization and Qualification...........................15
4.2 Authorization and Validity of Agreement..................16
4.3 Capitalization...........................................16
4.4 Reports and Financial Statements.........................17
4.5 No Approvals or Notices Required; No Conflict with
Instruments..............................................18
4.6 Absence of Certain Changes or Events.....................20
4.7 Information Supplied.....................................20
4.8 Legal Proceedings........................................21
4.9 Licenses; Compliance with Regulatory Requirements........21
4.10 Brokers or Finders.......................................22
4.11 Tax Matters..............................................23
4.12 Employee Matters.........................................24
4.13 Fairness Opinion.........................................26
4.14 Recommendation of the Company Board......................26
4.15 Vote Required............................................27
4.16 Intangible Property; Copyrights..........................27
4.17 Investment Securities....................................27
4.18 Transactions with Affiliates and Certain Agreements......27
4.19 No Investment Company....................................28
4.20 State Takeover Statutes..................................28
4.21 Rights Agreement.........................................28
4.22 Sale of Entertainment Assets.............................28
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ARTICLE V REPRESENTATIONS AND WARRANTIES OF PARENT
AND MERGER SUB..................................................29
5.1 Organization and Qualification..................................29
5.2 Authorization and Validity of Agreement.........................29
5.3 No Prior Activities of Merger Sub...............................29
5.4 Information Supplied............................................29
5.5 Brokers.........................................................30
5.6 Financing.......................................................30
ARTICLE VI COVENANTS AND AGREEMENTS........................................30
6.1 Stockholders Meetings...........................................30
6.2 Access to Information Concerning Properties and Records.........32
6.3 Confidentiality.................................................32
6.4 Public Announcements............................................33
6.5 Conduct of the Company's Business Pending Merger Sub's
Election Date...................................................33
6.6 No Solicitation.................................................36
6.7 Reasonable Efforts..............................................38
6.8 Rights Agreement................................................39
6.9 Certain Litigation..............................................39
6.10 Indemnification of Directors and Officers.......................40
6.11 Directors.......................................................42
6.12 Stock Options; SARs.............................................42
6.13 Employee Matters................................................43
6.14 Severance Obligations...........................................43
6.15 Competitor Transaction..........................................43
ARTICLE VII CONDITIONS TO THE MERGER........................................44
7.1 Conditions to the Merger........................................44
ARTICLE VIII TERMINATION.....................................................44
8.1 Termination and Abandonment.....................................44
8.2 Termination Fee; Effects of Termination.........................45
ARTICLE IX MISCELLANEOUS...................................................46
9.1 No Waiver or Survival of Representations, Warranties,
Covenants and Agreements........................................46
9.2 Notices.........................................................47
9.3 Entire Agreement................................................48
9.4 Assignment; Binding Effect; Benefit.............................48
9.5 Amendment.......................................................48
9.6 Extension; Waiver...............................................48
9.7 Headings........................................................49
9.8 Counterparts....................................................49
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9.9 Applicable Law.................................................49
9.10 No Remedy in Certain Circumstances.............................49
9.11 Severability...................................................49
9.12 Disclosure Schedule............................................50
9.13 Enforcement....................................................50
EXHIBITS
Exhibit 3.1(a) Form of Certificate of Merger
SCHEDULES
Company Disclosure Schedules
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AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement") is made as of
this 22nd day of February, 2000, by and among Liberty AEG Acquisition, Inc., a
Delaware corporation ("Merger Sub"), Liberty Media Corporation, a Delaware
corporation ("Parent"), and Ascent Entertainment Group, Inc., a Delaware
corporation (the "Company").
WHEREAS, the Boards of Directors of Parent, Merger Sub and the Company
have each determined that it is in the best interests of their respective
stockholders for Parent, through Merger Sub, to acquire the Company upon the
terms and subject to the conditions set forth herein; and
WHEREAS, in furtherance of such acquisition, it is proposed that
Merger Sub shall make a cash tender offer (the "Offer") to acquire all the
issued and outstanding shares of Common Stock, par value $.01 per share, of the
Company and the associated Rights ("Company Common Stock"; shares of Company
Common Stock being hereinafter collectively referred to as the "Shares"), at a
purchase price of $15.25 per Share (such amount, or any greater amount per Share
paid pursuant to the Offer, being hereinafter referred to as the "Per Share
Amount") net to the seller in cash, without interest thereon, upon the terms and
subject to the conditions of this Agreement and the Offer; and
WHEREAS, the Board of Directors of Parent and Merger Sub have approved
the making of the Offer and the transactions related thereto; and
WHEREAS, the Board of Directors of the Company (the "Board") has
approved the making of the Offer and resolved and agreed, subject to the terms
and conditions contained herein, to recommend that holders of Shares tender
their Shares pursuant to the Offer; and
WHEREAS, in furtherance of such acquisition, the Boards of Directors
of Parent, Merger Sub and the Company have each approved the merger (the
"Merger") of Merger Sub with and into the Company in accordance with the General
Corporation Law of the State of Delaware following the consummation of the Offer
and upon the terms and subject to the conditions set forth herein; and
WHEREAS, pursuant to the Merger, all Shares that remain outstanding
after the expiration of the Offer will be converted into and exchangeable for
$15.25 in cash per Share.
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements herein contained, and intending to be legally bound
hereby, Parent, Merger Sub and the Company hereby agree as follows:
ARTICLE I
DEFINITIONS AND CONSTRUCTION
1.1 Certain Definitions. As used in this Agreement, the following terms
shall have the following meanings unless the context otherwise requires:
An "Affiliate" of any Person shall mean any other Person which,
directly or indirectly, controls or is controlled by or is under common control
with such Person. A Person shall be deemed to "control," be "controlled by" or
be "under common control with" any other Person if such other Person possesses,
directly or indirectly, power to direct or cause the direction of the management
or policies of such Person whether through the ownership of voting securities or
partnership interests, by contract or otherwise. Notwithstanding the foregoing,
for purposes of this Agreement, neither AT&T Corp. nor any of its Affiliates
shall be deemed an Affiliate of Parent or any of its Affiliates.
"Agreement" shall mean this Agreement and Plan of Merger, including
all Exhibits and Schedules hereto.
"Alternative Proposal" shall mean any proposal, other than as
contemplated by this Agreement or otherwise proposed by Parent or its
Affiliates, for (A) a merger, consolidation, share exchange, reorganization,
other business combination, recapitalization or similar transaction involving
the Company or any of its Subsidiaries, (B) the acquisition, directly or
indirectly, of an equity interest representing greater than 20% of the voting
securities of the Company or any of its Subsidiaries, (C) the acquisition of a
substantial portion of any of the assets of the Company or any of its
Subsidiaries (including without limitation the Company's interests in OCC), (D)
any transfer or sale of all or any material part of the Entertainment Assets or
any interest therein; or (E) any transaction the effect of which would be
reasonably likely to prohibit, restrict or delay the consummation of the Offer
or the Merger or any of the other transactions contemplated by this Agreement.
"Closing" shall mean the consummation of the Merger.
"Closing Date" shall mean the date on which the Closing occurs
pursuant to Section 3.2.
"Commission" shall mean the Securities and Exchange Commission and the
staff of the Securities and Exchange Commission.
"Company Common Stock" shall have the meaning specified in the
preamble hereto.
"Company Disclosure Schedule" shall mean the disclosure schedule,
dated as of the date of this Agreement, delivered by the Company to Parent.
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"Company Stock Plans" shall mean the following: (i) the Ascent
Entertainment Group, Inc. 1995 Non-Employee Directors Stock Plan; (ii) the
Ascent Entertainment Group, Inc. 1995 Key Employee Stock Plan; and (iii) the
Ascent Entertainment Group, Inc. 1997 Non-Employee Directors Stock Appreciation
Rights Plan.
"Control" (including the terms "controlling," "controlled by" and
"under common control with") shall have the meaning given to such term in Rule
405 under the Securities Act.
"DGCL" shall mean the General Corporation Law of the State of
Delaware.
"Effective Time" shall mean the time when the Merger of Merger Sub
with and into the Company becomes effective under applicable law as provided in
Section 3.1(a).
"Entertainment Assets" shall mean the assets of, or the interests of
the Company in, the following entities: (i) The Denver Nuggets Limited
Partnership; (ii) Colorado Avalanche, LLC; (iii) Ascent Sports, Inc.; (iv)
Ascent Arena and Development Corporation; (v) Ascent Sports Holdings, Inc.; (vi)
Ascent Arena Company, LLC; (vii) Ascent Arena Operating Company, LLC; (viii) The
Denver Arena Trust; (ix) NBG Arena LLC; and (x) NBG Sports LLC.
"Exchange Act" shall mean the Securities Exchange Act of 1934, and the
rules and regulations thereunder.
"GAAP" shall mean generally accepted accounting principles as accepted
by the accounting profession in the United States as in effect from time to
time.
"Xxxx-Xxxxx Act" shall mean the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976, and the rules and regulations thereunder.
"Indebtedness" shall mean, with respect to any Person, without
duplication (whether or not the recourse of the lender is to the whole of the
assets of such Person or only to a portion thereof), (i) every liability of such
Person (excluding intercompany accounts between the Company and any wholly owned
Subsidiary of the Company or between wholly owned Subsidiaries of the Company)
(A) for borrowed money, (B) evidenced by notes, bonds, debentures or other
similar instruments (whether or not negotiable), (C) for reimbursement of
amounts drawn under letters of credit, bankers' acceptances or similar
facilities issued for the account of such Person, (D) issued or assumed as the
deferred purchase price of property or services (excluding contingent payment
obligations and accounts payable) and (E) relating to a capitalized lease
obligation and all debt attributable to sale/leaseback transactions of such
Person; and (ii) every liability of others of the kind described in the
preceding clause (i) which such Person has guaranteed or which is otherwise its
legal liability, in either case to the extent required pursuant to GAAP to be
set forth as a liability on a balance sheet of such Person.
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"Indenture" shall mean the Indenture, dated as of December 22, 1997,
between the Company and The Bank of New York, as trustee, pursuant to which the
Company issued its 11-7/8% Senior Secured Discount Notes Due 2004.
"Injunction" shall mean any permanent or preliminary injunction or
restraining order or decree or other similar order or decree issued or entered
by any court or Governmental Entity.
"Lien" shall mean any security interest, mortgage, pledge,
hypothecation, charge, claim, option, right to acquire, adverse interest,
assignment, deposit arrangement, encumbrance, restriction, lien (statutory or
other), or preference, priority or other security agreement or preferential
arrangement of any kind or nature whatsoever (including any conditional sale or
other title retention agreement, any financing lease involving substantially the
same economic effect as any of the foregoing, and the filing of any financing
statement under the Uniform Commercial Code or comparable law of any
jurisdiction).
"Material Adverse Effect" on any Person shall mean a material adverse
effect on such Person's business, assets, result of operations or financial
condition, provided that any effects of changes, either individually or in the
aggregate, that are generally applicable to (A) such Person's primary industry,
(B) the United States economy or (C) the United States securities markets, shall
not be considered a Material Adverse Effect.
"Merger" shall have the meaning specified in the preamble hereto.
"OCC" shall mean On Command Corporation, a Delaware corporation.
"OCC Stock" shall mean the Common Stock, par value $0.01 per share, of
OCC.
"OCC Stock Plans" shall mean the following (i) the On Command
Corporation 1996 Key Employee Stock Plan; (ii) the On Command Corporation 1997
Employee Stock Purchase Plan; and (iii) the On Command Corporation 1997 Non-
Employee Directors Stock Plan.
"OCC Warrants" shall mean the SpectraVision Warrants, the Series A
Warrants and the Series C Warrants, collectively, as such terms are defined in
the Warrant Agreement, dated as of October 8, 1996, between OCC and The Bank of
New York, as warrant agent.
"Permitted Encumbrances" shall mean the following Liens with respect
to the properties and assets of the Company: (a) Liens for taxes, assessments
or other governmental charges or levies not at the time delinquent or thereafter
payable without penalty or being contested in good faith by appropriate
proceedings and for which adequate reserves in accordance with GAAP shall have
been set aside on the Company's books; (b) Liens of carriers, warehousemen,
mechanics, materialmen and landlords incurred in the ordinary course of business
for sums not overdue or being contested in good faith by appropriate proceedings
and for which adequate reserves in accordance with GAAP shall have been set
aside on the Company's books; (c) Liens incurred in the ordinary course of
business in connection with workmen's compensation, unemployment insurance or
other forms of governmental insurance or benefits, or to secure performance of
tenders, statutory
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obligations, leases and contracts (other than for borrowed money) entered into
in the ordinary course of business or to secure obligations on surety or appeal
bonds; (d) purchase money security interests or Liens on property acquired or
held by the Company in the ordinary course of business to secure the purchase
price of such property or to secure Indebtedness incurred solely for the purpose
of financing the acquisition of such property; (e) easements, restrictions and
other defects of title which are not, in the aggregate, material and which do
not, individually or in the aggregate, materially and adversely affect the
Company's use or occupancy of the property affected thereby; (f) Liens incurred
under the Company's $50 million Amended and Restated Credit Facility, dated as
of December 22, 1997, among the Company, the Lenders named therein and
NationsBank, N.A., as Administrative Agent, as amended through January 15, 1999;
(g) Liens incurred under OCC's $200 million First Amended and Restated Credit
Facility, dated as of November 24, 1997, among OCC, the Lenders named therein
and NationsBank, N.A., as Administrative Agent; (h) Liens incurred under the
$139,835,000 Denver Arena Trust 6.94% Arena Revenue Backed Notes, dated as of
July 29, 1998, among Ascent Arena Company, LLC, the Denver Arena Trust,
Wilmington Trust Company, as Owner Trustee, and The Bank of New York, as
Indenture Trustee; and (i) Liens related to the Company's holdings of OCC Stock
incurred in connection with the Indenture.
"Person" shall mean an individual, partnership, corporation, limited
liability company, trust, unincorporated organization, association, or joint
venture or a government, agency, political subdivision, or instrumentality
thereof.
"Proxy Statement" shall mean the proxy statement, as amended and
supplemented, to be sent to the stockholders of the Company in connection with
the Stockholders Meeting (as defined in Section 6.1).
"Restriction", with respect to any capital stock or other security,
shall mean any voting or other trust or agreement, option, warrant, escrow
arrangement, proxy, buy-sell agreement, power of attorney or other Contract, or
any law, rule, regulation, order, judgment or decree which, conditionally or
unconditionally: (i) grants to any Person the right to purchase or otherwise
acquire, or obligates any Person to purchase or sell or otherwise acquire,
dispose of or issue, or otherwise results in or, whether upon the occurrence of
any event or with notice or lapse of time or both or otherwise, may result in,
any Person acquiring, (A) any of such capital stock or other security; (B) any
of the proceeds of, or any distributions paid or which are or may become payable
with respect to, any of such capital stock or other security; or (C) any
interest in such capital stock or other security or any such proceeds or
distributions; (ii) restricts or, whether upon the occurrence of any event or
with notice or lapse of time or both or otherwise, may restrict the transfer or
voting of, or the exercise of any rights or the enjoyment of any benefits
arising by reason of ownership of, any such capital stock or other security or
any such proceeds or distributions; or (iii) creates or, whether upon the
occurrence of any event or with notice or lapse of time or both or otherwise,
may create a Lien or purported Lien affecting such capital stock or other
security, proceeds or distributions.
"Rights" shall mean the rights issued under the Rights Agreement.
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"Rights Agent" shall mean The Bank of New York or its successor, in
its capacity as Rights Agents under the Rights Agreement.
"Rights Agreement" shall mean the Rights Agreement, dated June 27,
1997, between the Company and The Bank of New York, as amended through the date
hereof.
"Securities Act" shall mean the Securities Act of 1933, as amended,
and the rules and regulations thereunder.
"Subsidiary," when used with respect to any Person, shall mean any
corporation or other organization, whether incorporated or unincorporated, of
which such Person or any other Subsidiary of such Person is a general partner or
at least 50% of the securities or other interests having by their terms ordinary
voting power to elect at least 50% of the Board of Directors or others
performing similar functions with respect to such corporation or other
organization is directly or indirectly owned or controlled by such Person, by
any one or more of its Subsidiaries, or by such Person and one or more of its
Subsidiaries. Notwithstanding the foregoing, for purposes of this Agreement,
the Company's Subsidiaries shall be deemed to include OCC, whether or not it
otherwise would be a Subsidiary of the Company under the foregoing definition.
"Superior Proposal" shall mean any bona fide written Alternative
Proposal to acquire, directly or indirectly, more than 50% of the shares of
Company Common Stock then outstanding or all or substantially all the assets of
the Company and that the Company Board determines in good faith, after taking
into account the advice of a financial advisor of nationally recognized
reputation, and taking into account all the terms and conditions of the
Alternative Proposal, is more favorable to the Company's stockholders than the
Offer and the Merger and for which financing, to the extent required, is then
fully committed or reasonably determined to be available by the Company Board.
"Surviving Entity" shall mean the Company as the surviving entity in
the Merger as provided in Section 3.1(a).
"Tender Offer Acceptance Date" shall mean the date on which Merger Sub
shall have accepted for payment all Shares validly tendered and not withdrawn
pursuant to the expiration date with respect to the Offer.
1.2 Terms Generally. The definitions set forth or referenced in this
Agreement shall apply equally to both the singular and plural forms of the terms
defined. Whenever the context may require, any pronoun shall include the
corresponding masculine, feminine and neuter forms. The words "include",
"includes" and "including" shall be deemed to be followed by the phrase "without
limitation". The words "herein", "hereof" and "hereunder" and words of similar
import refer to this Agreement (including the Exhibits and Schedules) in its
entirety and not to any part hereof unless the context shall otherwise require.
As used herein, the term "to the Company's knowledge" or any similar term
relating to the knowledge of the Company means the actual knowledge of any of
the officers (determined in accordance with Rule 16a-1(f) under the Exchange Act
as in effect on the
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date hereof) or directors of the Company. All references herein to Articles,
Sections, Exhibits and Schedules shall be deemed references to Articles and
Sections of, and Exhibits and Schedules to, this Agreement unless the context
shall otherwise require. Unless the context shall otherwise require, any
references to any agreement or other instrument or statute or regulation are to
it as amended and supplemented from time to time (and, in the case of a statute
or regulation, to any successor provisions). Any reference in this Agreement to
a "day" or number of "days" (without the explicit qualification of "business")
shall be interpreted as a reference to a calendar day or number of calendar
days. If any action or notice is to be taken or given on or by a particular
calendar day, and such calendar day is not a business day, then such action or
notice shall be deferred until, or may be taken or given on, the next business
day. References to the term "business day" shall mean any day which is not a
Saturday, Sunday or day on which banks in New York, New York are authorized or
required by law to close. As applied to Parent, the phrases "as soon as
reasonably practicable," "as promptly as practicable" and similar phrases shall
mean "reasonably promptly under the circumstances, in light of the other burdens
on the time and attention of the directors, officers, employees and agents of
Parent and the relative benefits to Parent of this Agreement and such other
burdens."
ARTICLE II
THE OFFER AND RELATED MATTERS
2.1 The Offer.
(a) Provided that this Agreement shall not have been terminated in
accordance with Article VIII and none of the events set forth in Annex A shall
have occurred or be existing (unless such event shall have been waived by Merger
Sub), Parent shall cause Merger Sub to commence, and Merger Sub shall commence,
the Offer at the Per Share Amount as promptly as reasonably practicable after
the date hereof, but in no event later than five business days after the public
announcement of Merger Sub's intention to commence the Offer. The Offer will be
made pursuant to an Offer to Purchase and related Letter of Transmittal
containing the terms and conditions set forth in this Agreement. The initial
expiration date of the Offer shall be the twentieth business day from and after
the date the Offer is commenced (the "Initial Expiration Date"). The obligation
of Merger Sub to accept for payment and pay for Shares tendered pursuant to the
Offer shall be subject only to (i) the condition (the "Minimum Condition") that
at least the number of Shares that, when combined with the Shares already owned
by Parent and its direct or indirect Subsidiaries, constitute a majority of the
then outstanding Shares on a fully diluted basis, including, without limitation,
all Shares issuable upon the conversion of any convertible securities or upon
the exercise of any options, warrants or rights (other than the Rights (as
defined in the Rights Agreement)) shall have been validly tendered and not
withdrawn prior to the expiration of the Offer and (ii) the satisfaction or
waiver of the other conditions set forth in Annex A hereto. Merger Sub
expressly reserves the right to waive any such condition (other than the Minimum
Condition), to increase the price per Share payable in the Offer, and to make
any other changes in the terms and
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conditions of the Offer; provided, however, that (notwithstanding Section 9.5)
no change may be made which (A) decreases the price per Share payable in the
Offer, (B) reduces the maximum number of Shares to be purchased in the Offer,
(C) imposes conditions to the Offer in addition to those set forth in Annex A,
(D) amends or changes the terms and conditions of the Offer in any manner
adverse to the holders of Shares (other than Parent and its Subsidiaries), (E)
changes or waives the Minimum Condition, (F) changes the form of consideration
payable in the Offer or (G) except as provided below or required by any rule,
regulation, interpretation or position of the Commission applicable to the
Offer, changes the expiration date of the Offer. Notwithstanding the foregoing,
Merger Sub may, without the consent of the Company, (A) extend the Offer, if at
the scheduled expiration date of the Offer any of the conditions set forth in
Annex A (the "Offer Conditions") shall not be satisfied or waived, until such
time as such conditions are satisfied or waived, (B) extend the Offer for any
period required by any rule, regulation, interpretation or position of the
Commission applicable to the Offer and (C) extend the Offer to provide for a
subsequent offering period pursuant to Rule 14d-11 under the Exchange Act for an
aggregate period of not more than 20 business days (for all such extensions)
beyond the latest expiration date that would otherwise be permitted under clause
(A) or (B) of this sentence. In addition, Parent and Merger Sub agree that
Merger Sub shall from time to time extend the Offer, if requested by the
Company, (i) if at the Initial Expiration Date (or any extended expiration date
of the Offer, if applicable), any of the conditions to the Offer other than the
Minimum Condition shall not have been waived or satisfied, and the Minimum
Condition shall have been satisfied, until (taking into account all such
extensions) the earlier of August 31, 2000 or such earlier date upon which any
such condition shall not be reasonably capable of being satisfied prior to
August 31, 2000; or (ii) if at the Initial Expiration Date (or any extended
expiration date of the Offer, if applicable), all of the conditions to the Offer
other than the Minimum Condition shall have been waived or satisfied and the
Minimum Condition shall not have been satisfied, until the earlier of ten (10)
business days after such expiration date or August 31, 2000. Upon the prior
satisfaction or waiver of all the conditions to the Offer, and subject to the
terms and conditions of this Agreement, Merger Sub will, and Parent will cause
Merger Sub to, accept for payment, purchase and pay for, in accordance with the
terms of the Offer, all shares of Company Common Stock validly tendered and not
withdrawn pursuant to the Offer as soon as reasonably practicable after the
expiration of the Offer. The Per Share Amount shall, subject to applicable
withholding of taxes, be net to the seller in cash, without interest thereon,
upon the terms and subject to the conditions of the Offer. Subject to the terms
and conditions of the Offer (including, without limitation, the Minimum
Condition), Merger Sub shall accept for payment and pay, as promptly as
practicable after expiration of the Offer, for all Shares validly tendered and
not withdrawn.
(b) As soon as reasonably practicable on the date of commencement of
the Offer, Merger Sub shall file with the Commission and disseminate to holders
of Shares to the extent required by law a Tender Offer Statement on Schedule TO
(together with all amendments and supplements thereto, the "Schedule TO") with
respect to the Offer and the other Transactions (as hereinafter defined). The
Schedule TO shall contain or shall incorporate by reference an offer to purchase
(the "Offer to Purchase") and forms of the related letter of transmittal and any
related summary advertisement (the Schedule TO, the Offer to Purchase and such
other documents, together
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with all supplements and amendments thereto, being referred to herein
collectively as the "Offer Documents"). Parent, Merger Sub and the Company agree
to correct promptly any information provided by any of them for use in the Offer
Documents which shall have become false or misleading, and Parent and Merger Sub
further agree to take all steps necessary to cause the Schedule TO as so
corrected to be filed with the Commission and the other Offer Documents as so
corrected to be disseminated to holders of Shares, in each case as and to the
extent required by applicable federal securities laws. The Company and its
counsel shall be given an opportunity to review and comment on the Offer
Documents and any amendments thereto prior to the filing thereof with the
Commission. Parent and Merger Sub will provide the Company and its counsel with
a copy of any written comments or telephonic notification of any verbal comments
Parent or Merger Sub may receive from the Commission with respect to the Offer
Documents promptly after the receipt thereof and will provide the Company and
its counsel with a copy of any written responses and telephonic notification of
any verbal response of Parent, Merger Sub or their counsel. In the event that
the Offer is terminated or withdrawn by Merger Sub, Parent and Merger Sub shall
cause all tendered Shares to be returned to the registered holders of the Shares
represented by the certificate or certificates surrendered to the Paying Agent.
2.2 Company Action.
(a) The Company hereby approves of and consents to the Offer and
represents that (i) the Board, at a meeting duly called and held on February 21,
2000 (the "February 21 Meeting"), has unanimously (with one director having
recused himself) (A) determined that this Agreement and the transactions
contemplated hereby, including, without limitation, each of the Offer and the
Merger (the "Transactions"), are fair to and in the best interests of the
holders of Shares, (B) approved and adopted this Agreement and the Transactions,
(C) resolved to recommend, subject to the conditions set forth herein, that the
stockholders of the Company accept the Offer and approve and adopt this
Agreement and the Transactions and (D) took all action necessary to render the
limitations on business combinations contained in Section 203 of the DGCL
inapplicable to this Agreement and the transactions contemplated hereby; (ii)
Xxxxxxxxx, Xxxxxx & Xxxxxxxx Securities Corporation ("DLJ") has delivered to the
Board a written opinion that the consideration to be received by the holders of
Shares pursuant to each of the Offer and the Merger is fair to such holders from
a financial point of view; and (iii) the Board, at the February 21 Meeting,
determined upon receipt of the opinion referred to in clause (ii) of this
sentence that the terms of the Offer (including the Per Share Amount) are fair
to, and in the best interests of, the Company and the holders of Shares. The
Company has been authorized by DLJ, subject to prior review by such financial
advisor, to include such fairness opinion (or references thereto) in the Offer
Documents and in the Schedule 14D-9 (as defined in paragraph (b) of this Section
2.2), the Proxy Statement and the Section 14(c) Information Statement (as
defined in Section 4.7). Subject to the fiduciary duties of the Board under
applicable law after taking into account the advice of the Company's outside
legal counsel, the Company hereby consents to the inclusion in the Offer
Documents of the recommendation of the Board described above. The Company has
been advised by each of its directors and executive officers that they intend
either to tender all Shares beneficially owned by them to Merger Sub pursuant to
the Offer or to vote such Shares in favor of the approval and adoption by the
stockholders of the
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Company of this Agreement and the Transactions; provided, however, that such
directors and executive officers shall have no obligation under this Agreement
to so tender or vote their Shares if this Agreement is terminated.
(b) As soon as reasonably practicable on the date of commencement of
the Offer, the Company shall file with the Commission a
Solicitation/Recommendation Statement on Schedule 14D-9 (together with all
amendments and supplements thereto, the "Schedule 14D-9") containing, subject
only to the fiduciary duties of the Board under applicable law after taking into
account the advice of the Company's outside legal counsel, the recommendation of
the Board described in Section 2.2(a) and shall disseminate the Schedule 14D-9
to the extent required by Rule 14d-9 promulgated under the Exchange Act and any
other applicable federal securities laws. The Company, Parent and Merger Sub
agree to correct promptly any information provided by any of them for use in the
Schedule 14D-9 which shall have become false or misleading, and the Company
further agrees to take all steps necessary to cause the Schedule 14D-9 as so
corrected to be filed with the Commission and disseminated to holders of Shares,
in each case as and to the extent required by applicable federal securities
laws. Parent, Merger Sub and their counsel shall be given an opportunity to
review and comment on the Schedule 14D-9 and any amendments thereto prior to the
filing thereof with the Commission. The Company will provide Parent and Merger
Sub and their counsel with a copy of any written comments or telephonic
notification of any verbal comments the Company may receive from the Commission
with respect to the Offer Documents promptly after the receipt thereof and will
provide Parent and Merger Sub and their counsel with a copy of any written
responses and telephonic notification of any verbal response of the Company or
its counsel.
(c) The Company shall promptly furnish Merger Sub with mailing labels
containing the names and addresses of all record holders of Shares and with
security position listings of Shares held in stock depositories, each as of the
most recent date reasonably practicable, together with all other available
listings and computer files containing names, addresses and security position
listings of record holders and non-objecting beneficial owners of Shares as of
the most recent date reasonably practicable. The Company shall furnish Merger
Sub with such additional information, including, without limitation, updated
listings and computer files of stockholders, mailing labels and security
position listings, and such other assistance as Parent, Merger Sub or their
agents may reasonably request. Subject to the requirements of applicable law,
and except for such steps as are necessary to disseminate the Offer Documents
and any other documents necessary to consummate the Offer or the Merger, Parent
and Merger Sub shall hold in confidence the information contained in such
labels, listings and files, shall use such information only in connection with
the Offer and the Merger, and, if this Agreement shall be terminated in
accordance with Article VIII, shall deliver promptly to the Company all copies
of such information then in their possession and shall certify in writing to the
Company its compliance with this Section 2.2(c).
10
ARTICLE III
THE MERGER AND RELATED MATTERS
3.1 The Merger.
(a) Merger; Effective Time. At the Effective Time and subject to and
upon the terms and conditions of this Agreement, Merger Sub shall, and Parent
shall cause Merger Sub to, merge with and into the Company in accordance with
the provisions of the DGCL, the separate corporate existence of Merger Sub shall
cease and the Company shall continue as the Surviving Entity. The Effective
Time shall occur upon the filing with the Secretary of State of the State of
Delaware a Certificate of Merger (the "Certificate of Merger") substantially in
the form of Exhibit 3.1(a) and executed in accordance with the applicable
provisions of the DGCL, or at such later time as may be agreed to by Parent and
the Company and specified in the Certificate of Merger. Provided that this
Agreement has not been terminated pursuant to Article VIII, the parties will
cause the Certificate of Merger to be filed as soon as practicable after the
Closing. At the election of Parent, any direct or indirect wholly owned
subsidiary of Parent may be substituted for Merger Sub as a constituent
corporation in the Merger, provided that no such substitution shall be made if
it would delay or impede the transactions contemplated hereby. In such event,
the parties agree to execute an appropriate amendment to this Agreement in order
to reflect the foregoing.
(b) Effects of the Merger. The Merger shall have the effect set forth
in the DGCL. Without limiting the generality of the foregoing, and subject
thereto, at the Effective Time, all the properties, rights, privileges, powers
and franchises of the Company and Merger Sub shall vest in the Surviving Entity,
and all debts, liabilities and duties of the Company and Merger Sub shall become
the debts, liabilities and duties of the Surviving Entity. If, at any time
after the Effective Time, the Surviving Entity considers or is 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 Entity its right, title or interest in, to or under any of the rights,
properties, or assets of either the Company or Merger Sub, or otherwise to carry
out the intent and purposes of this Agreement, the officers and directors of the
Surviving Entity will be authorized to execute and deliver, in the name and on
behalf of each of the Company and Merger Sub, all such deeds, bills of sale,
assignments and assurances and to take and do, in the name and on behalf of each
of the Company and Merger Sub, all such other actions and things as the Board of
Directors of the Surviving Entity may determine to 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 Entity or otherwise to carry
out the intent and purposes of this Agreement.
(c) Certificate of Incorporation and Bylaws of Surviving Entity. At
the Effective Time, the Company's Amended and Restated Certificate of
Incorporation ("Company Charter") shall be amended pursuant to the Certificate
of Merger to be identical to the Certificate of Incorporation of Merger Sub in
effect immediately prior to the Effective Time, except that Article I thereof
shall read as follows: "The name of the corporation is: Ascent Entertainment
Group, Inc." Such Company
11
Charter as so amended shall be the Certificate of Incorporation of the Surviving
Entity until thereafter duly amended in accordance with the terms thereof and
the DGCL. At the Effective Time, the Company's Amended and Restated Bylaws
("Company Bylaws") shall be amended to be identical to the bylaws of Merger Sub
in effect immediately prior to the Effective Time and, in such amended form,
shall be the bylaws of the Surviving Entity until thereafter duly amended in
accordance with the terms thereof, the terms of the Certificate of Incorporation
of the Surviving Entity and the DGCL.
(d) Directors and Officers of Surviving Entity. At the Effective
Time, the directors of Merger Sub immediately prior to the Effective Time shall
be the directors of the Surviving Entity, and all such directors will hold
office from the Effective Time until their respective successors are duly
elected or appointed and qualify in the manner provided in the Certificate of
Incorporation and Bylaws of the Surviving Entity, or as otherwise provided by
applicable law. At the Effective Time, the officers of Merger Sub immediately
prior to the Effective Time shall be the officers of the Surviving Entity, and
all such officers will hold office until their respective successors are duly
appointed and qualify in the manner provided in the Bylaws of the Surviving
Entity, or as otherwise provided by applicable law.
3.2 Closing. The Closing shall take place (i) at 10:00 a.m. (New York
time) at the offices of Xxxxx Xxxxx L.L.P., 000 Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx
Xxxx 00000, on the first business day following the date on which the last of
the conditions set forth in Article VII (other than the filing of the
Certificate of Merger and other than any such conditions which by their terms
are not capable of being satisfied until the Closing Date) is satisfied or, if
permissible, waived, or (ii) on such other date and at such other time or place
as is mutually agreed by Parent and the Company.
3.3 Conversion of Securities. At the Effective Time, by virtue of the
Merger and without any action on the part of Merger Sub, the Company or the
holders of any of the Shares:
(a) Each Share issued and outstanding immediately prior to the
Effective Time (other than any Shares to be cancelled pursuant to Section 3.3(b)
and any Dissenting Shares (as hereinafter defined)) shall be cancelled and shall
be converted automatically into the right to receive an amount equal to the Per
Share Amount in cash (the "Merger Consideration") payable, without interest, to
the holder of such Share, upon surrender, in the manner provided in Section 3.6,
of the certificate that formerly evidenced such Share;
(b) Each Share held in the treasury of the Company and each Share
owned by Merger Sub, Parent or any direct or indirect wholly owned subsidiary of
Parent or of the Company immediately prior to the Effective Time shall be
cancelled without any conversion thereof and no payment or distribution shall be
made with respect thereto; and
(c) Each share of common stock, par value $.01 per share, of Merger
Sub issued and outstanding immediately prior to the Effective Time shall be
converted into and exchanged for
12
one validly issued, fully paid and nonassessable share of common stock, par
value $.01 per share, of the Surviving Entity.
3.4 Options; SARs.
(a) Company Stock Options. Prior to the Initial Expiration Date, the
Company shall take all actions necessary and appropriate to provide that, upon
the Effective Time, each outstanding option to purchase Shares or other similar
interest (collectively, the "Options") granted under any Company Stock Plan,
whether or not then exercisable or vested, shall be cancelled and, in exchange
therefor, each holder of such Option shall receive an amount in cash in respect
thereof, if any, equal to the product of (i) the excess, if any, of the Merger
Consideration over the per share exercise price thereof and (ii) the number of
shares subject thereto.
(b) Stock Appreciation Rights. Prior to the Initial Expiration Date,
the Company shall take all actions necessary and appropriate to provide that,
upon the Effective Time, each outstanding stock appreciation right ("SAR")
granted under any Company Stock Plan, whether or not then exercisable or vested,
shall be cancelled and, in exchange therefor, each holder of such SAR shall
receive an amount in cash in respect thereof, if any, equal to the product of
(i) the excess, if any, of the Merger Consideration over the per share exercise
price thereof and (ii) the number of shares subject thereto.
3.5 Dissenting Shares.
(a) Notwithstanding any provision of this Agreement to the
contrary, Shares that are outstanding immediately prior to the Effective Time
and which are held by stockholders who shall have not voted in favor of the
Merger or consented thereto in writing and who shall have demanded properly in
writing appraisal for such Shares in accordance with Section 262 of the DGCL
(insofar as such Section is applicable to the Merger and provides for appraisal
rights with respect to it) (collectively, the "Dissenting Shares") shall not be
converted into or represent the right to receive the Merger Consideration. Such
stockholders shall be entitled to receive payment of the appraised value of such
Shares held by them in accordance with the provisions of Section 262 of the DGCL
(insofar as such Section is applicable to the Merger and provides for appraisal
rights with respect to it), except that all Dissenting Shares held by
stockholders who shall have failed to perfect or who effectively shall have
withdrawn or lost their rights to appraisal of such Shares under the DGCL shall
thereupon be deemed to have been converted into and to have become exchangeable
for, as of the Effective Time, the right to receive the Merger Consideration,
without any interest thereon, upon surrender, in the manner provided in Section
3.6, of the certificate or certificates that formerly evidenced such Shares.
(b) The Company shall give Parent (i) prompt notice of any demands for
appraisal received by the Company, withdrawals of such demands, and any other
instruments served pursuant to Section 262 of the DGCL in respect of Dissenting
Shares and received by the Company and (ii) the opportunity to direct all
negotiations and proceedings with respect to demands for appraisal
13
under the DGCL. The Company shall not, except with the prior written consent of
Parent, make any payment with respect to any demands for appraisal or offer to
settle or settle any such demands.
(c) The right of any stockholder to receive the Merger Consideration
shall be subject to and reduced by the amount of any required tax withholding
obligation.
3.6 Surrender of Shares; Stock Transfer Books.
(a) Prior to the Effective Time, Merger Sub shall designate a bank or
trust company reasonably satisfactory to the Company to act as agent (the
"Paying Agent") for the holders of Shares in connection with the Merger to
receive the funds to which holders of Shares shall become entitled pursuant to
Section 3.3(a). Immediately prior to the Effective Time, Parent shall cause
Surviving Entity to have sufficient funds to deposit, and shall cause Surviving
Entity to deposit in trust with the Paying Agent, cash in the aggregate amount
equal to the product of (i) the number of shares outstanding immediately prior
to the Effective Time (other than Shares owned by Parent or Merger Sub and
Shares as to which dissenters' rights have been exercised as of the Effective
Time) and (ii) the Per Share Amount.
(b) Promptly after the Effective Time, Parent shall cause the
Surviving Entity to mail to each Person who was, at the Effective Time, a holder
of record of Shares entitled to receive the Merger Consideration pursuant to
Section 3.6(a) a form of letter of transmittal (which shall specify that
delivery shall be effected, and risk of loss and title to the certificates
evidencing such Shares (the "Certificates") shall pass, only upon proper
delivery of the Certificates to the Paying Agent) and instructions for use in
effecting the surrender of the Certificates pursuant to such letter of
transmittal. Upon surrender to the Paying Agent of a Certificate, together with
such letter of transmittal, duly completed and validly executed in accordance
with the instructions thereto, and such other documents as may be required
pursuant to such instructions, the holder of such Certificate shall be entitled
to receive in exchange therefor the Merger Consideration for each Share formerly
evidenced by such Certificate, and such Certificate shall then be cancelled. No
interest shall accrue or be paid on the Merger Consideration payable upon the
surrender of any Certificate for the benefit of the holder of such Certificate.
If payment of the Merger Consideration is to be made to a Person other than the
Person in whose name the surrendered Certificate is registered on the stock
transfer books of the Company, it shall be a condition of payment that the
Certificate so surrendered shall be endorsed properly or otherwise be in proper
form for transfer and that the Person requesting such payment shall have paid
all transfer and other taxes required by reason of the payment of the Merger
Consideration to a Person other than the registered holder of the Certificate
surrendered or shall have established to the satisfaction of the Surviving
Entity that such taxes either have been paid or are not applicable. The
Surviving Entity shall pay all charges and expenses, including those of the
Paying Agent, in connection with the distribution of the Merger Consideration.
Until surrendered as contemplated by this Section 3.6, each Certificate shall be
deemed at any time after the Effective Time to represent only the right to
receive upon such surrender the amount of cash, without interest, into which the
Shares theretofore represented by such Certificate shall have been converted
pursuant to Section 3.3.
14
(c) At any time following the twelfth month after the Effective Time,
the Surviving Entity shall be entitled to require the Paying Agent to deliver to
it any funds which had been made available to the Paying Agent and not disbursed
to holders of Shares (including, without limitation, all interest and other
income received by the Paying Agent in respect of all funds made available to
it) and, thereafter, such holders shall be entitled to look to the Surviving
Entity (subject to abandoned property, escheat and other similar laws) only as
general creditors thereof with respect to any Merger Consideration that may be
payable upon due surrender of the Certificates held by them. Notwithstanding
the foregoing, neither the Surviving Entity nor the Paying Agent shall be liable
to any holder of a Share for any Merger Consideration delivered in respect of
such Share to a public official pursuant to any abandoned property, escheat or
other similar law.
(d) At the close of business on the day of the Effective Time, the
stock transfer books of the Company shall be closed and, thereafter, there shall
be no further registration of transfers of Shares on the records of the Company.
From and after the Effective Time, the holders of Shares outstanding immediately
prior to the Effective Time shall cease to have any rights with respect to such
Shares except as otherwise provided herein or by applicable law.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to Parent and Merger Sub as
follows:
4.1 Organization and Qualification. Each of the Company and each of its
Subsidiaries (i) is a corporation, partnership or limited liability company duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation or organization, (ii) has all requisite
corporate, partnership or limited liability company power and authority to own,
lease and operate its properties and to carry on its business as it is now being
conducted and (iii) is duly qualified or licensed to do business and is in good
standing in each jurisdiction in which the properties owned, leased or operated
by it or the nature of its activities makes such qualification necessary, except
in such jurisdictions where the failure to be so duly qualified or licensed and
in good standing has not had and is not reasonably likely to have, individually
or in the aggregate, a Material Adverse Effect on the Company and its
Subsidiaries taken as a whole. Section 4.1 of the Company Disclosure Schedule
sets forth a complete and accurate list of each of the Company's Subsidiaries
and reflects the percentage and nature of the Company's ownership of each such
Subsidiary.
The Company owns 17,159,085 shares of OCC Stock and OCC Warrants
exercisable for 1,123,823 shares of OCC Stock. The shares of OCC Stock owned by
the Company have been validly issued, fully paid and non-assessable and are not
and, from the date hereof through and including the Effective Time, will not be
subject to any Liens or Restrictions, except as created by this Agreement or as
set forth on Section 4.1 of the Company Disclosure Schedule. The foregoing
15
representations regarding the Company's ownership of shares of OCC Stock are
made subject to any changes that may affect the holders of OCC Stock generally.
The Company has delivered to Parent true and complete copies of the
Company Charter and Company Bylaws in effect on the date hereof. The Company's
minute books, true and complete copies of which have been made available to
Parent, contain the minutes (or draft copies of the minutes) of all meetings of
directors and stockholders of the Company since January 1, 1996.
4.2 Authorization and Validity of Agreement. The Company has all
requisite corporate power and authority to enter into this Agreement and,
subject to obtaining the approval of its stockholders specified in Section 4.15,
to perform its obligations hereunder and consummate the Merger. The execution,
delivery and performance by the Company of this Agreement and the consummation
by the Company of the Merger have been duly and validly authorized by the
Company Board and by all other necessary corporate action on the part of the
Company, subject to the approval of the Company's stockholders specified in the
previous sentence. This Agreement has been duly executed and delivered by the
Company and is a legal, valid and binding obligation of the Company, enforceable
against the Company in accordance with its terms (except insofar as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors' rights
generally, or by principles governing the availability of equitable remedies).
4.3 Capitalization. The authorized capital stock of the Company consists
of 60,000,000 shares of Company Common Stock and 5,000,000 shares of preferred
stock, par value $0.01 per share (the "Company Preferred Stock"). As of the
date hereof, (i) 29,755,600 shares of Company Common Stock were issued and
outstanding and no shares were issued and held by the Company in its treasury or
by Subsidiaries of the Company and (ii) no shares of Company Preferred Stock
were issued and outstanding or were issued and held by the Company in its
treasury or by Subsidiaries of the Company. All issued and outstanding shares
of Company Common Stock have been validly issued and are fully paid and non-
assessable, and have not been issued in violation of any preemptive rights or of
any federal or state securities laws. There are no issued or outstanding bonds,
debentures, notes or other Indebtedness of the Company or any of its
Subsidiaries which have the right to vote (or which are convertible into other
securities having the right to vote) on any matters on which stockholders may
vote ("Voting Debt"). Section 4.3 of the Company Disclosure Schedule describes
all outstanding or authorized subscriptions, options, warrants, calls, rights,
commitments or any other agreements of any character to or by which the Company
or any of its Subsidiaries is a party or is bound which, directly or indirectly,
obligate the Company or any of its Subsidiaries to issue, deliver or sell or
cause to be issued, delivered or sold any additional shares of Company Common
Stock or any other capital stock, equity interest or Voting Debt of the Company
or any Subsidiary of the Company, any securities convertible into, or
exercisable or exchangeable for, or evidencing the right to subscribe for any
such shares, interests or Voting Debt, or any phantom shares, phantom equity
interests or stock or equity appreciation rights, or obligating the Company or
any of its Subsidiaries to grant, extend or enter into any such subscription,
option, warrant, call or right (collectively, "Convertible Securities").
Neither the Company nor any
16
Subsidiary thereof is subject to any obligation (contingent or otherwise) to
repurchase or otherwise acquire or retire any shares of its capital stock.
Neither the Company nor any of its Subsidiaries has adopted, authorized or
assumed any plans, arrangements or practices for the benefit of its officers,
employees or directors which require or permit the issuance, sale, purchase or
grant of any capital stock, other equity interests or Voting Debt of the Company
or any Subsidiary of the Company, any other securities convertible into, or
exercisable or exchangeable for, any such stock, interests or Voting Debt, or
any phantom shares, phantom equity interests or stock or equity appreciation
rights, other than the Company Stock Plans and the OCC Stock Plans. Other than
Permitted Encumbrances, all shares of capital stock of and all partnership or
other equity interests in each Subsidiary of the Company are owned free and
clear of any Lien or Restriction and the shares of capital stock of each
corporate Subsidiary of the Company are validly issued, fully paid and non-
assessable. Except as set forth on Section 4.3 of the Company Disclosure
Schedule, there are not, and immediately after the Effective Time, there will
not be, any outstanding or authorized subscriptions, options, warrants, calls,
rights, commitments or other agreements of any character to or by which the
Company or any of its Subsidiaries is a party or is bound that, directly or
indirectly, (x) call for or relate to the sale, pledge, transfer or other
disposition by the Company or any Subsidiary of the Company of any shares of
capital stock, any partnership or other equity interests or any Voting Debt of
any Subsidiary of the Company or (y) relate to the voting or control of such
capital stock, partnership or other equity interests or Voting Debt.
4.4 Reports and Financial Statements. (a) The Company has filed all
forms, reports and documents, including all Reports on Form 10-K, Form 10-Q and
Form 8-K, registration statements and proxy statements required to be filed with
the Commission since January 1, 1997 (collectively, the "Company SEC Reports").
None of the Company SEC Reports, as of their respective dates, contained any
untrue statement of material fact or omitted 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
consolidated balance sheets (including the related notes) included in the
Company SEC Reports presents fairly, in all material respects, the consolidated
financial position of the Company and its Subsidiaries as of the respective
dates thereof, and the other related financial statements (including the related
notes) included in the Company SEC Reports present fairly, in all material
respects, the results of operations and the changes in financial position of the
Company and its Subsidiaries for the respective periods or as of the respective
dates set forth therein, all in conformity with GAAP consistently applied during
the periods involved, except as otherwise noted therein and subject, in the case
of the unaudited interim financial statements, to normal year-end adjustments.
All of the Company SEC Reports, as of their respective dates, complied as to
form in all material respects with the requirements of the Exchange Act, the
Securities Act and the applicable rules and regulations thereunder.
(b) OCC has filed all forms, reports and documents, including all
Reports on Form 10-K, Form 10-Q and Form 8-K, registration statements and proxy
statements required to be filed with the Commission since January 1, 1997
(collectively, the "OCC SEC Reports"). None of the OCC SEC Reports, as of their
respective dates, contained any untrue statement of material fact or omitted to
state a material fact required to be stated therein or necessary to make the
statements
17
therein, in light of the circumstances under which they were made, not
misleading. Each of the consolidated balance sheets (including the related
notes) included in the OCC SEC Reports presents fairly, in all material
respects, the consolidated financial position of OCC and its Subsidiaries as of
the respective dates thereof, and the other related statements (including the
related notes) included in the OCC SEC Reports present fairly, in all material
respects, the results of operations and the changes in financial position of OCC
and its Subsidiaries for the respective periods or as of the respective dates
set forth therein, all in conformity with GAAP consistently applied during the
periods involved, except as otherwise noted therein and subject, in the case of
the unaudited interim financial statements, to normal year-end adjustments. All
of the OCC SEC Reports, as of their respective dates, complied as to form in all
material respects with requirements of the Exchange Act, the Securities Act and
the applicable rules and regulations thereunder.
(c) Except as set forth on Section 4.4 of the Company Disclosure
Schedule, the Company and its Subsidiaries have not made any misstatements of
fact, or omitted to disclose any fact, to any Governmental Entity, or taken or
failed to take any action, which misstatements or omissions, actions or failures
to act, individually or in the aggregate, subject or would subject any Licenses
held by the Company or any of its Subsidiaries to revocation or failure to
renew, except where such revocation or failure to renew, individually or in the
aggregate, does not and would not be reasonably likely to have a Material
Adverse Effect on the Company and its Subsidiaries taken as a whole.
(d) Except as set forth on Section 4.4 of the Company Disclosure
Schedule, neither the Company nor any of its Subsidiaries has guaranteed or
otherwise agreed to become responsible for any Indebtedness of any other Person.
(e) Except as set forth on Section 4.4 of the Company Disclosure
Schedule, neither the Company nor any Subsidiary of the Company has any
obligation to contribute any additional capital to, or acquire any additional
interest in, any of its Affiliates.
(f) Except as and to the extent set forth in the Company SEC
Reports or in any Section of the Company Disclosure Schedules, neither the
Company nor any of its Subsidiaries has any liabilities or obligations of any
nature, whether or not accrued, contingent or otherwise, that would be required
by generally accepted accounting principles to be reflected on a consolidated
balance sheet of the Company and its Subsidiaries (including the notes thereto),
except for liabilities or obligations incurred in the ordinary course of
business since September 30, 1999, that would not, individually or in the
aggregate, have a Material Adverse Effect on the Company and its Subsidiaries
taken as a whole.
4.5 No Approvals or Notices Required; No Conflict with Instruments. The
execution and delivery by the Company of this Agreement do not, and the
performance by the Company of its obligations hereunder and the consummation by
the Company of the Offer and Merger will not:
18
(i) assuming approval by the Company's stockholders as
contemplated by Section 4.15, conflict with or violate the Company Charter or
Company Bylaws or the charter or bylaws of any corporate Subsidiary of the
Company or the partnership agreement of any partnership Subsidiary of the
Company;
(ii) require any consent, approval, order or authorization of
or other action by any Governmental Entity (a "Governmental Consent") or any
registration, qualification, declaration or filing with or notice to any
Governmental Entity (a "Governmental Filing"), in each case on the part of the
Company or any Subsidiary of the Company, except for (A) the filing of the
Certificate of Merger with the Secretary of State of the State of Delaware and
appropriate documents with the relevant authorities of other states in which the
Company is qualified to do business, (B) the Governmental Consents and
Governmental Filings with foreign, state and local governmental authorities set
forth on Section 4.5 of the Company Disclosure Schedule (the "Local Approvals"),
(C) the Governmental Filings required to be made pursuant to the pre-merger
notification requirements of the Xxxx-Xxxxx Act, (D) the filing with the
Commission of (1) the Schedule 14D-9 and the Proxy Statement and (2) such
reports under Section 13(a), 13(d), 14(c), 15(d) or 16(a) of the Exchange Act as
may be required in connection with this Agreement or the transactions
contemplated hereby and (E) such other Governmental Consents and Government
Filings the absence or omission of which will not, either individually or in the
aggregate, have a material adverse effect on the Transactions or a Material
Adverse Effect on the Company and its Subsidiaries taken as a whole or the
Surviving Entity and its Subsidiaries taken as a whole;
(iii) except as set forth on Section 4.5 of the Company
Disclosure Schedule, require, on the part of the Company or any Subsidiary of
the Company, any consent by or approval or authorization of (a "Contract
Consent") or notice to (a "Contract Notice") any other Person (other than a
Governmental Entity), under any License or other Contract, except for such
Contract Consents and Contract Notices the absence or omission of which will
not, either individually or in the aggregate, have a material adverse effect on
the Transactions or a Material Adverse Effect on the Company and its
Subsidiaries taken as a whole or the Surviving Entity and its Subsidiaries taken
as a whole;
(iv) assuming that the Contract Consents and Contract Notices
described on Section 4.5 of the Company Disclosure Schedule are obtained and
given, conflict with or result in any violation or breach of or default (with or
without notice or lapse of time, or both) under, or give rise to a right of
termination, cancellation, suspension, modification or acceleration of any
obligation or any increase in any payment required by, or the impairment, loss
or forfeiture of any material benefit, rights or privileges under, or the
creation of a Lien or other encumbrance on any assets pursuant to (any such
conflict, violation, breach, default, right of termination, cancellation or
acceleration, loss or creation, a "Violation"), any "Contract" (which term shall
mean and include any note, bond, indenture, mortgage, deed of trust, lease,
franchise, permit, authorization, license, contract, instrument, employee
benefit plan or practice, or other agreement, obligation, commitment or
concession of any nature to which the Company or any Subsidiary of the Company
is a party, by which the Company, any Subsidiary of the Company or any of their
respective assets or properties
19
is bound or affected or pursuant to which the Company or any Subsidiary of the
Company is entitled to any rights or benefits (including the Licenses)), except
for such Violations which would not, individually or in the aggregate, be
reasonably likely to have a material adverse effect on the transactions
contemplated hereby or a Material Adverse Effect on the Company and its
Subsidiaries taken as a whole or the Surviving Entity and its Subsidiaries taken
as a whole; or
(v) assuming that the Governmental Consents and Governmental Filings
specified in clause (ii) of this Section 4.5 are obtained, made and given,
result in a Violation of, under or pursuant to any law, rule, regulation, order,
judgment or decree applicable to the Company or any Subsidiary of the Company or
by which any of their respective properties or assets are bound, except for such
Violations which would not, individually or in the aggregate, be reasonably
likely to have a material adverse effect on the transactions contemplated hereby
or a Material Adverse Effect on the Company and its Subsidiaries taken as a
whole or the Surviving Entity and its Subsidiaries taken as a whole. As used
herein, the term "Governmental Entity" means and includes any court,
arbitrators, administrative, regulatory or other governmental department,
agency, commission, authority or instrumentality, domestic or foreign.
4.6 Absence of Certain Changes or Events. (a) Except as otherwise
disclosed in the Company SEC Reports or the OCC SEC Reports filed with the
Commission prior to the date hereof or as set forth on Section 4.6 of the
Company Disclosure Schedule, since September 30, 1999 through the date of this
Agreement, (i) there has not been any adverse change in, and no event has
occurred and no condition exists which, individually or together with all other
such changes, events and conditions, has had or, insofar as the Company can
reasonably foresee, is reasonably likely to have, a Material Adverse Effect on
the Company and its Subsidiaries taken as a whole; and (ii) through the date
hereof, other than actions that in the ordinary course of the Company's business
consistent with prior practice would not have required, and would have been
taken without, the approval of the Company Board, no action has been taken by
the Company or any Subsidiary of the Company which, if Section 6.5 had then been
in effect, would have been prohibited by such Section without the consent or
approval of Parent, and no agreements, understandings, obligations or
commitments, whether in writing or otherwise, to take any such action were
entered into during such period.
(b) Prior to the date hereof, the Company delivered to Parent a
schedule setting forth a detailed estimate of the amount of cash which the
Company expects to have retained after giving effect to, among other things, the
payment of the severance obligations contemplated by Section 6.14 hereof and
the other transactions contemplated hereby, and the Company has no reason to
believe that such estimate is materially inaccurate.
4.7 Information Supplied. None of the information supplied or to be
supplied by the Company for inclusion or incorporation by reference in any
documents filed or to be filed with the Commission or any other Governmental
Entity in connection with the transactions contemplated hereby, including (i)
the Offer Documents, (ii) the Schedule 14D-9, (iii) the information to be filed
by the Company in connection with the Offer pursuant to Rule 14f-1 promulgated
under the
20
Exchange Act (the "Information Statement"), (iv) the Proxy Statement and (v) the
information to be filed by the Company in connection with the Merger pursuant to
Section 14(c) of the Exchange Act (the "Section 14(c) Information Statement"),
will, at the respective times such documents are filed, and also in the case of
the Offer Documents, the Schedule 14D-9, the Information Statement and the
Section 14(c) Information Statement, at the respective times the Offer
Documents, the Schedule 14D-9, the Information Statement and the Section 14(c)
Information Statement are first published, sent or given to the Company's
stockholders, and also, in the case of the Proxy Statement, at the time the
Proxy Statement is first mailed to the Company's stockholders, contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they are made, not misleading (or
necessary to correct any statement in any earlier communication), except that no
representation or warranty is made by the Company with respect to statements
made or incorporated by reference therein based on information supplied by
Parent or Merger Sub in writing specifically for inclusion or incorporation by
reference therein. The Schedule 14D-9, the Information Statement, the Proxy
Statement and the Section 14(c) Information Statement will comply as to form in
all material respects with the requirements of the Exchange Act and the rules
and regulations thereunder and will comply in all respects with the applicable
requirements of the DGCL.
4.8 Legal Proceedings. As of the date hereof, there is no (i) suit,
action or proceeding pending of which the Company has received notice or, to the
knowledge of the Company, any investigation pending or any suit, action,
proceeding or investigation threatened, against, involving or affecting the
Company, any Subsidiary of the Company or any of its or their properties or
rights (including without limitation the Company's interests in OCC), which, if
adversely determined, is, insofar as the Company can reasonably foresee,
reasonably likely to have, either individually or in the aggregate, a Material
Adverse Effect on the Company and its Subsidiaries taken as a whole; (ii)
judgment, order, decree, Injunction or order of any Governmental Entity entered
against and binding on the Company or any Subsidiary of the Company of which the
Company has received notice, which, insofar as the Company can reasonably
foresee, is reasonably likely to have, either individually or in the aggregate,
a Material Adverse Effect on the Company and its Subsidiaries taken as a whole;
(iii) suit, action or proceeding pending of which the Company has received
notice or, to the knowledge of the Company, any investigation pending or any
suit, action, proceeding or investigation threatened, against the Company or any
Subsidiary of the Company which seeks to restrain, enjoin or delay the
consummation of the Merger, the Offer or any of the other transactions
contemplated hereby or which seeks damages in connection therewith; and (iv)
Injunction of any type referred to in Section 7.1(c) of which the Company has
received notice which has been entered or issued and is in effect.
4.9 Licenses; Compliance with Regulatory Requirements. The Company and
its Subsidiaries hold all licenses, franchises, ordinances, authorizations,
permits, certificates, variances, exemptions, concessions, leases, rights of
way, easements, instruments, orders and approvals, domestic or foreign required
for the ownership of the assets and operation of the businesses of the Company
or any of its Subsidiaries, except for the failure to hold any of the foregoing
as would not be reasonably likely to have, either individually or in the
aggregate, a Material Adverse Effect on
21
the Company and its Subsidiaries taken as a whole (collectively, the
"Licenses"). Each of the Company and its Subsidiaries is in compliance with, and
has conducted its business so as to comply with, the terms of their respective
Licenses and with all applicable laws, rules, regulations, ordinances and codes,
except where the failure so to comply has not had and, insofar as reasonably can
be foreseen by the Company, in the future is not reasonably likely to have,
either individually or in the aggregate, a Material Adverse Effect on the
Company and its Subsidiaries taken as a whole. Without limiting the generality
of the foregoing, the Company and its Subsidiaries, (i) have all Licenses of
foreign, state and local governmental authorities required for the operation of
the facilities being operated on the date hereof by the Company or any of its
Subsidiaries (the "Permits"), (ii) have duly and currently filed all reports and
other information required to be filed by any other Governmental Entity in
connection with such Permits and (iii) are not in violation of any of such
Permits, other than the lack of Permits, delays in filing reports or possible
violations which have not had and, insofar as can reasonably be foreseen by the
Company, in the future are not reasonably likely to have, a Material Adverse
Effect on the Company and its Subsidiaries taken as a whole. Without limiting
the generality of the foregoing, to the knowledge of the Company, the Company
and its Subsidiaries have duly complied with, and the operation of their
respective businesses, equipment and other assets and the facilities owned or
leased by them are in compliance with the provisions of all applicable federal,
state and local environmental, health and safety laws, statutes, ordinances,
rules and regulations of any governmental or a quasi governmental authority
relating to (i) errors or omissions, (ii) discharges to surface water or ground
water, (iii) solid or liquid waste disposal, (iv) the use, storage, generation,
handling, transport, discharge, release or disposal of toxic or hazardous
substances or waste, (v) the emission of non-ionizing electromagnetic radiation
or (vi) other environmental, health or safety matters, including without
limitation all matters set forth in the Comprehensive Environmental Response
Compensation and Liability Act of 1980 as amended by the Superfund Amendments
and Authorization Act of 1986, the Occupational Safety and Health Act, the
Resource Conservation Recovery Act of 1976, the Federal Water Pollution Control
Act of 1970, the Safe Drinking Water Act of 1974, the Toxic Substances Control
Act of 1976, the Emergency Planning Community Right to Know Act of 1986, as
amended, and the Clean Air Act, as amended (collectively "Environmental and
Health Laws"); except, with respect to any of the foregoing, where the failure
to be or have been in such compliance would not be reasonably likely to have,
either individually or in the aggregate, a Material Adverse Effect on the
Company and its Subsidiaries taken as a whole. To the knowledge of the Company,
there are no investigations, administrative proceedings, judicial actions,
orders, claims or notices that are pending or threatened against the Company or
any of its Subsidiaries relating to violations of the Environmental and Health
Laws, except for such matters as would not be reasonably likely to have, either
individually or in the aggregate, a Material Adverse Effect on the Company and
its Subsidiaries taken as a whole.
4.10 Brokers or Finders. No agent, broker, investment banker, financial
advisor or other Person is or will be entitled, by reason of any agreement, act
or statement by the Company or any of its Subsidiaries, directors, officers,
employees or Affiliates, to any financial advisory, broker's, finder's or
similar fee or commission, to reimbursement of expenses or to indemnification or
contribution in connection with any of the transactions contemplated by this
Agreement, except DLJ, Xxxxx & Company Incorporated and Xxxxxxxxxxx Xxxxxxx &
Co., Inc., whose fees and expenses will
22
be paid by the Company in accordance with the Company's agreement with such
firms (a schedule which has been delivered by the Company to Parent prior to the
date of this Agreement), and the Company agrees to indemnify and hold Parent and
Merger Sub harmless from and against any and all claims, liabilities or
obligations with respect to any other such fees, commissions, expenses or claims
for indemnification or contribution asserted by any Person on the basis of any
act or statement made or alleged to have been made by the Company or any of its
Subsidiaries, directors, officers, employees or Affiliates.
4.1 Tax Matters. (a) Except as set forth on Section 4.11, paragraph 1
of the Company Disclosure Schedule, (i) there has been duly filed by or on
behalf of the Company and each of its Subsidiaries (and each of their respective
predecessors, if any), or filing extensions from the appropriate federal, state,
foreign and local Governmental Entities have been obtained with respect to, all
material federal, state, foreign and local tax returns and reports required to
be filed on or prior to the date hereof; (ii) payment in full or adequate
provision for the payment of all material taxes required to be paid in respect
of the periods covered by such tax returns and reports has been made; (iii) a
reserve which the Company reasonably believes to be adequate has been set up for
the payment of all such material taxes anticipated to be payable in respect of
periods through the most recent fiscal quarter end; (iv) none of the income tax
returns required to be filed by or on behalf of the Company and each of its
Subsidiaries consolidated in such returns (the "Company Consolidated Returns")
or by or on behalf of OCC and each of its Subsidiaries consolidated in such
returns (the "OCC Consolidated Returns") have been examined by or settled with
the Internal Revenue Service ("IRS") or other Governmental Entity; (v) there are
no material "deferred intercompany transactions" or "intercompany transactions"
the gain or loss in which has not yet been taken into account under the Company
Consolidated Returns or the OCC Consolidated Returns; (vi) there are no Liens
for material taxes on the assets of the Company and each of its Subsidiaries,
except for statutory liens for current taxes not yet due and payable; and (vii)
there have been no claims or assessments against the Company or any of its
Subsidiaries asserted in writing by any Governmental Entity with respect to any
alleged deficiency in any tax, other than those claims or assessments that would
not have a Material Adverse Effect on the Company or its Subsidiaries taken as a
whole. For the purpose of this Agreement, the term "tax" (including, with
correlative meaning, the terms "taxes" and "taxable") shall include all federal,
state, local and foreign income, profits, franchise, gross receipts, payroll,
sales, employment, use, property, withholding, value added, alternative or added
minimum, ad valorem, transfer, excise and other taxes, duties or assessments of
any nature whatsoever, together with all interest, penalties and additions
imposed with respect to such amounts. The term "tax return" means a report,
return or other information required to be supplied to or filed with a
Governmental Entity with respect to any tax including an information return,
claim for refund, amended tax return or declaration of estimated tax.
23
(b) Except as set forth on Section 4.11, paragraph 2 of the Company
Disclosure Schedule, the Company Plans and other Company employee compensation
arrangements in effect as of the date of this Agreement have been designed so
that the disallowance of a material deduction under Section 162(m) of the Code
for employee remuneration will not apply to any amounts paid or payable by the
Company or any of its Subsidiaries under any such plan or arrangement and, to
the best knowledge of the Company, no fact or circumstance exists that could
reasonably be expected to cause such disallowance to apply to any such amounts.
(c) Except as set forth on Section 4.11, paragraph 3 of the Company
Disclosure Schedule, neither the Company nor any of its Subsidiaries (i) is a
party to any tax allocation or tax sharing agreement, (ii) has been a member of
an affiliated group filing a consolidated federal income tax return other than a
group the common parent of which was the Company or (iii) has any liability for
taxes of any Person (other than the Company and its Subsidiaries) under Reg.
(S)1.1502-6 (or any similar provision of state, local or foreign law), as
transferee or successor, by contract or otherwise.
4.12 Employee Matters.
(a) Section 4.12(a) of the Company Disclosure Schedule contains a true
and complete list of each bonus, deferred compensation, incentive compensation,
stock purchase, stock option, severance or termination pay, hospitalization,
medical, life or other insurance, supplemental unemployment benefits, profit-
sharing, pension or retirement plan, program, agreement or arrangement, and each
other employee benefit plan, program, agreement or arrangement, sponsored,
maintained or contributed to or required to be contributed to at any time since
January 1, 1997 by the Company or by any trade or business, whether or not
incorporated ("ERISA Affiliate"), that together with the Company would be deemed
a "controlled group" within the meaning of Section 4001 of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), for the benefit of
any employee or former employee of the Company, including any such type of plan
established, maintained or contributed to under the laws of any foreign country
(the "Company Plans"). Section 4.12(a) of the Company Disclosure Schedule
identifies each Company Plan that is an "employee benefit plan," as defined in
Section 3(3) of ERISA. Except as set forth on Section 4.12(a) of the Company
Disclosure Schedule, the Company has heretofore delivered to Parent true and
complete copies of each Company Plan and, if the Company Plan is funded through
a trust or any third party funding vehicle, a copy of the trust or other funding
document, the most recent determination letter issued by the IRS with respect to
each Company Plan for which such a letter has been obtained, annual reports on
Form 5500 required to be filed with any Governmental Entity for each Company
Plan which is an employee pension benefit plan for the three most recent plan
years and all required actuarial reports for the last two plan years of each
Company Plan.
(b) No Company Plan is subject to Title IV of ERISA or Section 412 of
the Code and neither the Company nor any ERISA Affiliate made, or was required
to make, contributions to any employee benefit plan subject to Title IV of ERISA
during the five year period ending on the Effective Time.
24
(c) Except as set forth on Section 4.12(c) of the Company Disclosure
Schedule, each Company Plan that utilizes a funding vehicle described in Section
501(c)(9) of the Code or is subject to the provisions of Section 505 of the Code
has been the subject of a notification by the IRS that such funding vehicle
qualifies for tax-exempt status under Section 501(c)(9) of the Code and/or such
Company Plan complies with Section 505 of the Code, unless the IRS does not as a
matter of policy issue such notification with respect to that particular type of
plan. To the Company's knowledge, each such Company Plan satisfies, where
appropriate, the requirements of Sections 501(c)(9) and 505 of the Code.
(d) There has been no event or circumstance which has resulted in any
liability being asserted by any Company Plan, the Pension Benefit Guaranty
Corporation ("PBGC") or any other Person or entity under Title IV of ERISA
against the Company or any ERISA Affiliate nor, except as would not have a
material adverse effect on the business, assets, results of operations,
financial condition or prospects of the Company and its Subsidiaries taken as a
whole, is there or has there been any event or circumstance which could
reasonably be expected to result in such liability.
(e) Except for the NBA Collective Bargaining Agreement dated September
1995 and the NHL Collective Bargaining Agreement dated September 16, 1993, as
delivered to Parent, neither the Company nor any Subsidiary of the Company is a
party to or bound by the terms of any collective bargaining agreement. The
Company and each of its Subsidiaries is in compliance in all material respects
with all applicable laws respecting the employment and employment practices,
terms and conditions of employment and wage and hours of its employees and is
not engaged in any unfair labor practice. There is no labor strike or labor
disturbance pending or, to the knowledge of the Company, threatened against the
Company or any Subsidiary of the Company, and during the past five years neither
the Company nor any Subsidiary of the Company has experienced a work stoppage.
(f) Each Company Plan has been operated and administered in all
material respects in accordance with its terms and applicable law, including,
but not limited to, Section 406 of ERISA and Section 4975 of the Code.
(g) To the Company's knowledge, each Company Plan which is intended to
be "qualified" within the meaning of Section 401(a) of the Code is so qualified
and the trusts maintained thereunder are exempt from taxation under Section
501(a) of the Code.
(h) No Company Plan provides welfare benefits, including without
limitation death or medical benefits, with respect to current or former
employees or consultants of the Company or any Subsidiary of the Company beyond
their retirement or other termination of service (other than coverage mandated
by applicable law).
(i) There are no material pending, threatened or anticipated claims by
or on behalf of any Company Plan, by any employee or beneficiary covered under
any such Company Plan
25
with respect to such Company Plan, or otherwise involving any such Company Plan
(other than routine claims for benefits).
(j) Section 4.12(j) of the Company Disclosure Schedule sets forth a
true and complete list as of the date hereof of each of the following
agreements, arrangements and commitments to which the Company or any of its
Subsidiaries is a party or by which any of them may be bound (true and complete
copies of which have been made available to Parent): (i) each employment,
consulting, agency or commission agreement not terminable without liability to
the Company or any of its Subsidiaries upon 60 days' or less prior notice to the
employee, consultant or agent and involving compensation or remuneration of more
than $200,000 per annum; (ii) each agreement with any executive officer or other
key employee of the Company or any Subsidiary of the Company the benefits of
which are contingent, or the terms of which are materially altered, upon the
consummation of the transactions contemplated by this Agreement; (iii) each
agreement with respect to any officer or other key employee of the Company or
any Subsidiary of the Company providing any term of employment or compensation
guarantee extending for a period longer than one year; and (iv) each other
material agreement or Company Plan any of the benefits of which will be
increased, or the vesting of the benefits of which will be accelerated, by the
occurrence of any of the transactions contemplated by this Agreement or the
value of any of the benefits of which will be calculated on the basis of any of
the transactions contemplated by this Agreement.
(k) No employee of the Company or any of its Subsidiaries will be
entitled to any additional benefits or any acceleration of the time of payment
or vesting of any benefits under any Company Plan as a result of the
consummation of the transactions contemplated by this Agreement or otherwise.
Except as set forth in Section 4.12(k) of the Company Disclosure Schedule, no
amount payable, or economic benefit provided, by the Company or any of its
Subsidiaries (including any acceleration of the time of payment or vesting of
any benefit) could be considered an "excess parachute payment" under Section
280G of the Code as a result of the consummation of the transactions
contemplated by this Agreement. No Person is entitled to receive any additional
payment from the Company or any of its Subsidiaries or any other Person (a
"Parachute Gross-Up Payment") in the event that the excise tax of Section 4999
of the Code is imposed on such Person. Other than as disclosed in a schedule to
this Agreement, neither the Company nor any of its Subsidiaries has granted to
any Person any right to receive any Parachute Gross-Up Payment.
4.13 Fairness Opinion. The Company Board has received the oral opinion of
DLJ to the effect that, as of the date hereof, the consideration to be received
in the Offer and the Merger by the Company's stockholders is fair, from a
financial point of view, to the stockholders of the Company (the "Fairness
Opinion"). The Company has provided Parent with a true and complete copy of the
executed Fairness Opinion. In addition, the Company will include an executed
copy of the Fairness Opinion in or as an annex to the Offer Documents, the
Schedule 14D-9, the Proxy Statement and the Section 14(c) Information Statement.
4.14 Recommendation of the Company Board. The Company Board, by vote at a
meeting duly called and held, has approved the Offer, the Merger and this
Agreement, and has
26
determined that the consideration to be paid to the Company's stockholders is
fair to and in the best interests of the Company's stockholders and has adopted
resolutions recommending approval and adoption of this Agreement and the
transactions contemplated hereby to the stockholders of the Company.
4.15 Vote Required. The only vote of stockholders of the Company required
under the DGCL, NASDAQ Stock Market requirements and the Company Charter and
Company Bylaws in order to approve the Merger is the affirmative vote of a
majority of the total number of votes entitled to be cast by the holders of the
issued and outstanding shares of Company Common Stock voting as a single class,
and no other vote or approval of or other action by the holders of any capital
stock of the Company is required for such approval and adoption.
4.16 Intangible Property; Copyrights. The Company and its Subsidiaries own
or have adequate rights to use all patents, trademarks, trade names, service
marks, brands, logos, copyrights, trade secrets, customer lists and other
proprietary intellectual property rights required for, used in or incident to
the businesses of the Company and its Subsidiaries as now conducted, except
where the failure to so own or have such rights to use, individually or in the
aggregate, would not be reasonably likely to have a Material Adverse Effect on
the Company and its Subsidiaries taken as a whole. Except as set forth on
Section 4.16 of the Company Disclosure Schedule, the Company does not have
knowledge, and the Company has not received any notice alleging, that it or any
of its Subsidiaries is infringing upon or otherwise violating, or has in the
past infringed upon or otherwise violated, the rights of any third party with
respect to any patent, trademark, trade name, service xxxx or copyright.
4.17 Investment Securities. Section 4.17 of the Company Disclosure
Schedule sets forth a complete and accurate list of each capital, participating,
equity or other interest owned of record or beneficially by the Company in any
corporation, partnership, joint venture or other Person, other than the
Subsidiaries of the Company listed on Section 4.1 of the Company Disclosure
Schedule (each, an "Investment Security" and collectively, the "Investment
Securities"). Section 4.17 of the Company Disclosure Schedule includes, with
respect to each Investment Security, the name of the corporation, partnership,
joint venture or other Person in respect of which such Investment Security
relates, the amount and nature of such interest, and a description of the
material terms of any Liens and Restrictions with respect to such Investment
Securities. The Company's representations in this Section 4.17 with respect to
any such Investment Securities are made subject to any events, Liens and
Restrictions that affect the holders of the applicable class(es) or series of
such Investment Securities generally.
4.18 Transactions with Affiliates and Certain Agreements. Section 4.18 of
the Company Disclosure Schedule sets forth an accurate and complete listing, (a)
as of the date hereof, of all contracts, leases, agreements or understandings,
whether written or oral, to which the Company or any of its Subsidiaries is a
party, or by which the Company, any of its Subsidiaries or any of their
respective assets is bound, which contain any material restrictions or
limitation on the ability of the Company or any of its Subsidiaries or
Affiliates to engage in any business anywhere in the world,
27
and (b) of all contracts, leases, agreements or understandings, whether written
or oral, giving any Person the right to require the Company to register under
the Securities Act any securities of the Company or to participate in any
registration of such securities. Each of the Company SEC Reports and the OCC SEC
Reports complies as to form in all material respects with Item 404 of Regulation
S-K promulgated under the Securities Act and is true and correct in all material
respects with regard to its disclosure of any relationships or transactions
involving the Company or any Subsidiary or Affiliate of the Company of a type
required to be disclosed in the Company SEC Reports or the OCC SEC Reports, as
applicable, pursuant to such item.
4.19 No Investment Company. The Company is not an "investment company"
subject to the registration requirements of, and regulation as an investment
company under, the Investment Company Act of 1940, as amended.
4.20 State Takeover Statutes. The Boards of Directors of the Company and
OCC have approved the Offer, the Merger and this Agreement and the Transactions,
and such approvals are sufficient to render inapplicable to the Offer, the
Merger and this Agreement and the Transactions the provisions of Section 203 of
the DGCL. To the best of the Company's knowledge, no other state takeover
statute or similar statute or regulation applies or purports to apply to the
Offer, the Merger, this Agreement or any of the Transactions.
4.21 Rights Agreement. The Company has heretofore provided Parent with a
complete and correct copy of the Rights Agreement, including all amendments and
exhibits thereto. The amendment to the Rights Agreement attached hereto as
Section 4.21 to the Company Disclosure Schedule has been duly authorized by the
Board of Directors of the Company and has been duly executed by the Company,
and, accordingly, the execution of this Agreement, the announcement or making of
the Offer, the acquisition of Shares pursuant to the Offer and the Merger and
the other transactions contemplated in this Agreement will not cause the Rights
to become exercisable or result in either Parent or Merger Sub or any of their
Affiliates being considered to be an "Acquiring Person" (as defined in the
Rights Agreement) or the occurrence of a "Distribution Date" (as such term is
defined in the Rights Agreement) or an event described in Sections 11(a)(ii) or
13 of the Rights Agreement.
4.22 Sale of Entertainment Assets. Except as heretofore disclosed to
Parent in the Company Disclosure Schedules, (i) the Company is not a party to
any agreement which provides for the sale of the Entertainment Assets and (ii)
no broker, investment banker, financial advisor or other Person is entitled to
any broker's, finder's, financial advisor's or other similar fee or commission
in connection with the sale of the Entertainment Assets.
28
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
Parent and Merger Sub hereby represent and warrant to the Company as
follows:
5.1 Organization and Qualification. Each of Parent and Merger Sub (i) is
a corporation duly organized, validly existing and in good standing under the
laws of the jurisdiction of its incorporation, (ii) has all requisite corporate
power and authority to own, lease and operate its properties and to carry on its
business as now being conducted and (iii) is duly qualified or licensed and is
in good standing to do business in each jurisdiction in which the properties
owned, leased or operated by it or the nature of its activities makes such
qualification necessary, except in such jurisdictions where the failure to be so
duly qualified or licensed and in good standing has not had and is not
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on Parent and its Subsidiaries taken as a whole.
5.2 Authorization and Validity of Agreement. This Agreement has been duly
executed and delivered by Parent and Merger Sub. Each of Parent and Merger Sub
has all requisite corporate power and authority to enter into this Agreement and
each of Parent and Merger Sub has all requisite corporate power and authority to
perform its obligations hereunder and to consummate the transactions
contemplated hereby. The execution, delivery and performance by Parent and
Merger Sub of this Agreement and the consummation by each of Parent and Merger
Sub of the transactions contemplated hereby have been duly and validly
authorized by all necessary corporate action on the part of Parent and Merger
Sub (including in the case of Merger Sub, approval and adoption of this
Agreement and the Merger by Parent, as the sole stockholder of Merger Sub).
This Agreement is a legal, valid and binding obligation of Parent and Merger
Sub, enforceable in accordance with its terms (except insofar as enforceability
may be limited by applicable bankruptcy, insolvency, reorganization, moratorium
or similar laws affecting creditors' rights generally, or by principles
governing the availability of equitable remedies).
5.3 No Prior Activities of Merger Sub. Merger Sub was formed by Parent
solely for the purpose of engaging in the transactions contemplated hereby, and
has engaged in no other business activities and has conducted its operations
only as contemplated hereby.
5.4 Information Supplied. None of the information supplied or to be
supplied by Parent or Sub for inclusion or incorporation by reference in any
documents filed or to be filed with the Commission or any other Governmental
Entity in connection with the transactions contemplated hereby, including (i)
Offer Documents, (ii) the Schedule 14D-9, (iii) the Information Statement, (iv)
the Proxy Statement and (v) the Section 14(c) Information Statement, will, at
the respective times such documents are filed, and also, in the case of the
Offer Documents, the Schedule 14D-9, the Information Statement and the Section
14(c) Information Statement, at the respective times the Offer Documents, the
Schedule 14D-9, the Information Statement and the Section 14(c) Information
Statement are first published, sent or given to the Company's stockholders, and
also, in the case of
29
the Proxy Statement, at the date the Proxy Statement is first mailed to the
Company's stockholders or at the time of the meeting of the Company's
stockholders held to vote upon the approval and adoption of this Agreement,
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they are made, not misleading
(or necessary to correct any statement in any earlier communication), except
that no representation is made by Parent or Merger Sub with respect to
information supplied by the Company in writing specifically for inclusion or
incorporation by reference therein. The Offer Documents comply as to form in all
material respects with the Exchange Act and the rules and regulations
promulgated thereunder.
5.5 Brokers. No broker, investment banker, financial advisor or other
Person is entitled to any broker's, finder's, financial advisor's or other
similar fee or commission in connection with the transactions contemplated by
this Agreement based upon arrangements made by or on behalf of Parent or Merger
Sub.
5.6 Financing. Parent has, or will have available to it at the time
Merger Sub is required to pay for Shares under the terms of the Offer, and will
make available to Merger Sub, sufficient funds to permit Merger Sub to acquire
all the outstanding Shares in the Offer and the Merger. Parent has obtained
commitments for such funds.
5.7 Sale of Entertainment Assets. Parent is not a party to any agreement
which provides for the sale of the Entertainment Assets.
ARTICLE VI
COVENANTS AND AGREEMENTS
6.1 Stockholders Meetings. (a) If the Company Stockholder Approval (as
hereinafter defined) is required by law, the Company will, at Parent's request,
subject to the fiduciary duties of the Board of Directors of the Company under
applicable law, as soon as practicable following the expiration of the Offer,
duly call, give notice of, convene and hold a meeting of its stockholders (the
"Stockholders Meeting") for the purpose of approving and adopting this Agreement
and the Transactions (the "Company Stockholder Approval"). The Company will,
through its Board of Directors, recommend to its stockholders that the Company
Stockholder Approval be given. Notwithstanding the foregoing, (1) if Merger Sub
or any other Subsidiary of Parent shall acquire at least a majority of the
outstanding Shares, the parties shall, at the request of Parent, take all
necessary and appropriate action to cause the Merger to be approved by a written
consent of stockholders pursuant to Section 228 of the DGCL, the Company Charter
and the Company Bylaws (the "Written Consent") and for the Merger to become
effective as soon as practicable as permitted by applicable law after purchase
of such Shares in the Offer without a Stockholders Meeting in accordance with
Sections 228 and 251 of the DGCL, and (2) if Merger Sub or any other subsidiary
of Parent shall acquire at least 90% of the outstanding Shares, the parties
shall, at the request of
30
Parent, take all necessary and appropriate action to cause the Merger to become
effective as soon as practicable after the expiration of the Offer without a
Stockholders Meeting in accordance with Section 253 of the DGCL. Without
limiting the generality of the foregoing, the Company agrees that its
obligations pursuant to the first sentence of this Section 6.1(a) shall not be
affected by (i) the commencement, public proposal, public disclosure or
communication to the Company of any Acquisition Proposal or (ii) the withdrawal
or modification by the Board of Directors of the Company of its approval or
recommendation of the Offer, this Agreement or the Merger.
(b) If the Company Stockholder Approval is required by law, the
Company will, at Parent's request, as soon as practicable following the
expiration of the Offer, prepare and file a preliminary Proxy Statement with the
Commission and will use its best efforts to respond to any comments of the
Commission and to cause the Proxy Statement to be mailed to the Company's
stockholders as promptly as practicable after responding to all such comments to
the satisfaction of the Commission. The Company will notify Parent promptly of
the receipt of any comments from the Commission and of any request by the
Commission for amendments or supplements to the Proxy Statement or for
additional information and will supply Parent with copies of all correspondence
between the Company or any of its representatives, on the one hand, and the
Commission, on the other hand, with respect to the Proxy Statement or the
Merger. If at any time prior to the Stockholders Meeting there shall occur any
event that should be set forth in an amendment or supplement to the Proxy
Statement, the Company will promptly prepare and mail to its stockholders such
an amendment or supplement. The Company will not mail any Proxy Statement, or
any amendment or supplement thereto, to which Parent reasonably objects after
being afforded the opportunity to review the same.
(c) Parent agrees to cause all Shares purchased pursuant to the Offer
and all other Shares owned by Parent or any Subsidiary of Parent to be voted in
favor of the Company Stockholder Approval.
(d) If Merger Sub or any other Subsidiary of Parent shall acquire at
least a majority of the outstanding Shares, the Company will, at Parent's
request, as soon as practicable following purchase of such Shares in the Offer,
prepare and file a preliminary Section 14(c) Information Statement with the
Commission and will use its best efforts to respond to any comments of the
Commission and to cause the Section 14(c) Information Statement to be mailed to
the Company's stockholders as promptly as practicable after responding to all
such comments to the satisfaction of the Commission. The Company will notify
Parent promptly of the receipt of any comments from the Commission and of any
request by the Commission for amendments or supplements to the Section 14(c)
Information Statement or for additional information and will supply Parent with
copies of all correspondence between the Company or any of its representatives,
on the one hand, and the Commission, on the other hand, with respect to the
Section 14(c) Information Statement or the Merger. If at any time prior to the
effective date of the Written Consent there shall occur any event that should
be set forth in an amendment or supplement to the Section 14(c) Information
Statement, the Company will promptly prepare and mail to its stockholders such
an amendment or supplement. The Company will not mail any Section 14(c)
Information Statement,
31
or any amendment or supplement thereto, to which Parent reasonably objects after
being afforded the opportunity to review the same.
6.2 Access to Information Concerning Properties and Records. During the
period from the date of this Agreement and continuing until the earlier of the
termination of this Agreement or the Effective Time, upon reasonable notice, the
Company will (and will use reasonable efforts to cause each of its Subsidiaries
to) afford to the officers, employees, counsel, accountants and other authorized
representatives of Parent reasonable access during normal business hours to all
its properties, personnel, books and records and furnish promptly to such
Persons such financial and operating data and other information concerning its
business, properties, personnel and affairs as such Persons will from time to
time reasonably request and instruct the officers, directors, employees, counsel
and financial advisors of the Company to discuss the business operations,
affairs and assets of the Company and otherwise fully cooperate with the other
party in its investigation of the business of the Company. Parent agrees that
it will not, and will cause its officers, employees, counsel, accountants and
other authorized representatives not to, use any information obtained pursuant
to this Section 6.2 for any purpose unrelated to the consummation of the
transactions contemplated by this Agreement. No investigation pursuant to this
Section 6.2 will affect any representation or warranty given by the Company to
Parent hereunder.
6.3 Confidentiality. Except as otherwise agreed to in writing by the
party disclosing (or whose Representatives disclosed) the same (a "disclosing
party"), and unless and until Parent and Merger Sub shall have purchased a
majority of the outstanding Shares pursuant to this Offer, and notwithstanding
the termination of this Agreement, each party (a "receiving party") will, and
will cause its Affiliates, directors, officers, employees, agents and
controlling Persons (such Affiliates and other Persons with respect to any party
being collectively referred to as such party's "Representatives") to, (i) keep
all Confidential Information of the disclosing party confidential and not
disclose or reveal any such Confidential Information to any Person other than
those Representatives of the receiving party who are participating in effecting
the transactions contemplated hereby or who otherwise need to know such
Confidential Information, (ii) use such Confidential Information only in
connection with consummating the transactions contemplated hereby and enforcing
the receiving party's rights hereunder, and (iii) not use Confidential
Information in any manner detrimental to the disclosing party. In the event
that a receiving party is requested pursuant to, or required by, applicable law
or regulation or by legal process to disclose any Confidential Information of
the disclosing party, the receiving party will provide the disclosing party with
prompt notice of such request(s) to enable the disclosing party to seek an
appropriate protective order. A party's obligations hereunder with respect to
Confidential Information that (i) is disclosed to a third party with the
disclosing party's written approval, (ii) is required to be produced under order
of a court of competent jurisdiction or other similar requirements of a
governmental agency, or (iii) is required to be disclosed by applicable law or
regulation, will, subject in the case of clauses (ii) and (iii) above to the
receiving party's compliance with the preceding sentence, cease to the extent of
the disclosure so consented to or required, except to the extent otherwise
provided by the terms of such consent or covered by a protective order. If a
receiving party uses a degree of care to prevent disclosure of the Confidential
Information that is at least as great as the care it
32
normally takes to preserve its own information of a similar nature, it will not
be liable for any disclosure that occurs despite the exercise of that degree of
care, and in no event will a receiving party be liable for any indirect,
punitive, special or consequential damages unless such disclosure resulted from
its willful misconduct or gross negligence in which event it will be liable in
damages for the disclosing party's lost profits resulting directly and solely
from such disclosure; provided, however, that notwithstanding the foregoing,
Parent will not be liable under any circumstances for damages other than direct
damages (and not lost profits or indirect, special, punitive or consequential
damages) resulting directly and solely from such wrongful disclosure by Parent.
In the event this Agreement is terminated, each party will, if so requested by
the other party, promptly return or destroy all of the Confidential Information
of such other party, including all copies, reproductions, summaries, analyses or
extracts thereof or based thereon in the possession of the receiving party or
its Representatives; provided, however, that the receiving party will not be
required to return or cause to be returned summaries, analyses or extracts
prepared by it or its Representatives, but will destroy (or cause to be
destroyed) the same upon request of the disclosing party.
For purposes of this Section 6.3, "Confidential Information" of a
party means all confidential or proprietary information about such party that is
furnished by it or its Representatives to the other party or the other party's
Representatives, regardless of the manner in which it is furnished.
"Confidential Information" does not include, however, information which (a) has
been or in the future is published or is now or in the future is otherwise in
the public domain through no fault of the receiving party or its
Representatives, (b) was available to the receiving party or its Representatives
on a non-confidential basis prior to its disclosure by the disclosing party, (c)
becomes available to the receiving party or its Representatives on a non-
confidential basis from a Person other than the disclosing party or its
Representatives who is not otherwise bound by a confidentiality agreement with
the disclosing party or its Representatives, or is not otherwise prohibited from
transmitting the information to the receiving party or its Representatives, or
(d) is independently developed by the receiving party or its Representatives
through Persons who have not had, either directly or indirectly, access to or
knowledge of such information.
6.4 Public Announcements. The Company and Parent shall use commercially
reasonable efforts to develop a joint communications plan and each party hereto
shall use reasonable efforts to ensure that all press releases and other public
statements with respect to the transactions contemplated hereby shall be
consistent with such joint communications plan. Unless otherwise required by
applicable law or by obligations pursuant to any listing agreement with or rules
of any securities exchange, the National Association of Securities Dealers, Inc.
or the NASDAQ Stock Market, each party shall use commercially reasonable efforts
to consult with, and use commercially reasonable efforts to accommodate the
comments of the other parties before issuing any press release or otherwise
making any public statement with respect to this Agreement or the transactions
contemplated hereby.
6.5 Conduct of the Company's Business Pending Merger Sub's Election Date.
Except as set forth on Section 6.5 of the Company Disclosure Schedule, the
Company will, and will use its commercially reasonable efforts to cause each of
its Subsidiaries to, except as permitted, required
33
or specifically contemplated by this Agreement, including without limitation
Section 6.6 hereof, or consented to or approved in writing by Parent, during the
period commencing on the date hereof and ending at the election or appointment
or Merger Sub's designees to the Board pursuant to Section 6.11 upon the
purchase by Merger Sub of any shares pursuant to the Offer (the "Merger Sub's
Election Date"):
(a) conduct its business only in, and not take any action except in,
the ordinary and usual course of its business and consistent with past
practices;
(b) use reasonable efforts to preserve intact its business
organization, to preserve its Licenses in full force and effect, to keep
available the services of its present officers and key employees, and to
preserve the goodwill of those having business relationships with it;
(c) not (i) make any change or amendments in its charter, bylaws or
partnership agreement (as the case may be); (ii) issue, grant, sell or deliver
any shares of its capital stock or any of its other equity interests or
securities (other than shares of Company Common Stock issued upon the exercise
of any Company Stock Options or shares of OCC Stock issued upon the valid
exercise of any OCC Warrant or any options to purchase shares of OCC Stock
issued pursuant to any OCC Stock Plan or otherwise ("OCC Stock Options")), or
any Convertible Securities (other than OCC Stock Options to purchase up to an
aggregate of 300,000 shares of OCC Stock; provided, however, that OCC shall not
grant to any one Person OCC Stock Options to purchase in excess of 100,000
shares of OCC Stock without the prior written consent of Parent) or any phantom
shares, phantom equity interests or stock or equity appreciation rights; (iii)
split, combine or reclassify the outstanding shares of its capital stock or any
of its other outstanding equity interests or securities or issue any capital
stock or other equity interests or securities in exchange for any such shares or
interests; (iv) redeem, purchase or otherwise acquire, directly or indirectly,
any shares of capital stock or any other securities of the Company or any
Subsidiary of the Company; (v) amend or modify any outstanding options,
warrants, or rights to acquire, or securities convertible into shares of its
capital stock or other equity interests or securities, or any phantom shares,
phantom equity interests or stock or equity appreciation rights, or adopt or
authorize any other stock or equity appreciation rights, restricted stock or
equity, stock or equity purchase, stock or equity bonus or similar plan,
arrangement or agreement; (vi) make any changes in its equity capital structure;
(vii) declare, set aside, pay or make any dividend or other distribution or
payment (whether in cash, property or securities) with respect to its capital
stock or other securities, except for dividends by a Subsidiary of the Company
other than OCC paid ratably to its stockholders or the partners thereof, as the
case may be (provided in the case of any non-wholly owned Subsidiary of the
Company that the other stockholders of or partners in such Subsidiary are not
officers, directors, employees or Affiliates of the Company or any of its
Subsidiaries); (viii) sell, transfer or otherwise dispose of, or pledge any
stock, equity or partnership interest owned by it in any Subsidiary of the
Company, except for dispositions permitted by Section 6.5(f) hereof; (ix) sell,
transfer or otherwise dispose of any securities of OCC owned beneficially or of
record by the Company or any Subsidiary of the Company or create or permit to
exist any Lien or Restriction thereon not listed on Section 4.17 of the Company
Disclosure Schedule (other than any sale, Lien or Restriction arising from any
change
34
or transaction affecting the holders of such securities generally); or (x) enter
into or assume any contract, agreement, obligation, commitment or arrangement
with respect to any of the foregoing;
(d) not (i) modify or change in any material respect any material
License or other material Contract, other than in the ordinary course of
business; (ii) enter into any new employment, consulting, agency or commission
agreement, make any amendment or modification to any existing such agreement or
grant any increases in compensation, (A) in each case other than in the ordinary
course of business and consistent with past practice and with or granted to
Persons who are not officers or directors of the Company or any Subsidiary of
the Company and which do not, in the aggregate, materially increase the
compensation or benefit expense of the Company or any Subsidiary of the Company,
and (B) other than the regular annual salary increase granted in the ordinary
course of business and consistent with past practice to employees of the Company
or its Subsidiaries who are not directors or executive officers of the Company;
and (iii) establish, amend or modify any employee benefit plan of any kind
referred to in Section 4.12(a), except to the extent required by any applicable
law, the existing terms of any such plan or the provisions of this Agreement;
(iv) secure any of its outstanding unsecured Indebtedness, provide additional
security for any of its outstanding secured Indebtedness or grant, create or
suffer to exist any Lien on or with respect to any property, assets or rights of
the Company or any Subsidiary of the Company, except in any such case for
Permitted Encumbrances; (v) pay, discharge or satisfy claims, liabilities or
obligations (absolute, accrued, contingent or otherwise), other than any
payment, discharge or satisfaction in the ordinary course of business consistent
with past practice; (vi) cancel any Indebtedness or waive any claims or rights,
except in the ordinary course of business and consistent with past practice;
(vii) make any material capital expenditures (other than in accordance with the
capital expenditure budget for the year 2000 (the "2000 Budget") approved by the
OCC Board and in effect on the date hereof, a copy of which has been delivered
to Parent); (viii) accelerate the payment of, or otherwise prepay, any existing
outstanding Indebtedness except in the ordinary course of business consistent
with past practice; (ix) other than as contemplated or otherwise permitted by
this Agreement and other than the normal cash management practices of the
Company and its Subsidiaries conducted in the ordinary and usual course of their
business and consistent with past practice, make any advance or loan to or
engage in any material transaction with any director, officer, partner or
Affiliate not required by the terms of an existing Contract described in Section
4.18 of the Company Disclosure Schedule; (x) guarantee or otherwise become
responsible for any Indebtedness of any other Person; or (xi) enter into or
assume any contract, agreement, obligation, commitment or arrangement with
respect to any of the foregoing;
(e) not acquire or agree to acquire by merging or consolidating with,
or by purchasing a substantial equity interest in or a substantial portion of
the assets of, or by any other manner, any business or any corporation,
partnership, association or other business organization or division thereof or
otherwise acquire or agree to otherwise acquire any assets which are material,
individually or in the aggregate, to the Company and its Subsidiaries taken as a
whole or OCC and its Subsidiaries taken as a whole;
35
(f) except (i) as described on Section 6.5 of the Company Disclosure
Schedule and (ii) for dispositions in the ordinary course of business consistent
with prior practice, not sell, lease or encumber or otherwise voluntarily
dispose of, or agree to sell, lease, encumber or otherwise dispose of, any of
its assets which are material, individually or in the aggregate, to the Company
and its Subsidiaries taken as a whole or OCC and its Subsidiaries taken as
whole;
(g) not incur any Indebtedness;
(h) not take any action that would cause its representations and
warranties contained in Section 4.1 to be untrue in any respect or, except as
otherwise contemplated by this Agreement, make any changes to the corporate
structure of the Company and its Subsidiaries (including the structure of the
ownership by the Company of the direct and indirect interests in its
Subsidiaries and of the ownership by the Company and its Subsidiaries of their
respective businesses, properties and assets);
(i) not enter into any agreement that would (after the Effective Time)
purport to bind Parent or any of its Subsidiaries (other than the Company or any
of its Subsidiaries);
(j) not amend or modify in any respect the Corporate Agreement, dated
as of October 8, 1996, between the Company and OCC;
(k) not make any tax election or settle or compromise any material
federal, state, local or foreign income tax liability;
(l) not settle or comprise any pending or threatened suit, action or
claim which is material or which relates to any of the Transactions; and
(m) confer on a regular and frequent basis with Parent, report on
operational matters and promptly advise Parent orally and in writing of any
material adverse change; and promptly provide to Parent (or its counsel) copies
of all filings made by the Company with any federal, state, foreign or
supranational Governmental Entity in connection with this Agreement and the
transactions contemplated hereby.
Notwithstanding this Section 6.5, but subject to the provisions of
Section 6.6 (to the extent applicable), the foregoing provisions of this Section
6.5 shall not prohibit or restrict in any way the Company from entering into an
agreement with respect to a Superior Proposal.
6.6 No Solicitation. (a) After the date hereof and prior to the
Effective Time, the Company will not, directly or indirectly, through any
Subsidiary, Affiliate, officer, director, employee, agent or representative or
otherwise (i) solicit or initiate the submission of proposals or offers from any
Person relating to any Alternative Proposal, (ii) cooperate with, or furnish or
cause to be furnished any non-public information concerning the business,
properties, or assets of the Company or any of its Subsidiaries, to any Person
in connection with any Alternative Proposal,
36
(iii) negotiate with any Person with respect to any Alternative Proposal, (iv)
approve, recommend or permit the Company or any Subsidiary to enter into an
agreement or understanding with any Person relating to any Alternative Proposal,
or (v) vote for, execute a written consent (or equivalent instrument) in favor
of, or otherwise approve or enter into any agreements or understandings with
respect to any of the foregoing; provided, however, that this Section 6.6(a)
shall not prohibit the Company or the Company Board, to the extent the Company
Board determines in its good faith judgment that it is required by its fiduciary
duties under applicable law after taking into account the advice of the
Company's outside legal counsel, from providing information to, participating in
discussions or negotiating with any third party that delivers a Superior
Proposal that was not solicited in violation of this Section 6.6(a). Nothing
contained in this Agreement shall prevent the Company Board from complying with
Rule 14e-2 and Rule 14d-9 under the Exchange Act with regard to an Alternative
Proposal, provided that the Company Board shall not recommend that the
stockholders of the Company tender their shares in connection with a tender
offer except to the extent the Company Board determines in its good faith
judgment that such a recommendation is required to comply with the fiduciary
duties of the Company Board to stockholders under applicable law, after taking
into account the advice of outside legal counsel (it being understood that
disclosure by the Company of its receipt of an Alternative Proposal and the
terms thereof shall not alone constitute a withdrawal or modification of such
position or an approval or recommendation of such Alternative Proposal).
(b) The Company will notify Parent promptly (but in no event later
than 24 hours) after receipt by the Company (or any of its advisors) of any
Alternative Proposal or of any request (other than in the ordinary course of
business and not related to an Alternative Proposal) for non-public information
relating to the Company or any of its Subsidiaries or for access to the
properties, books or records of the Company or any Subsidiary thereof by any
Person who is known to be considering making, or has made, an Alternative
Proposal. The Company shall provide such notice orally and in writing and shall
identify the Person making, and the terms and conditions of, any such
Alternative Proposal, indication or request. The Company shall keep Parent fully
informed, on a prompt basis (but in any event no later than 24 hours), of the
status and details of any such Alternative Proposal, indication or request. The
Company shall, and shall cause its Subsidiaries and the directors, employees and
other agents of the Company and its Subsidiaries to, cease immediately and cause
to be terminated all activities, discussions or negotiations, if any, with any
Persons conducted prior to the date hereof with respect to any Alternative
Proposal.
(c) Except as set forth above in this Section 6.6, the Company
covenants and agrees with Parent that prior to the Effective Time the Company
will not, and will not cause or permit any Subsidiary of the Company to, (i)
voluntarily sell, dispose of, tender or exchange or agree to sell, dispose of,
tender or exchange any shares of OCC Stock owned by the Company or any
Subsidiary of the Company on the date hereof or hereafter acquired (including
without limitation any such sale or disposition in connection with a tender
offer, exchange offer or similar transaction) (the "Company OCC Shares"), (ii)
vote, or execute a written consent or proxy with respect to the Company OCC
Shares, which the Company or any such Subsidiary is entitled to vote, in favor
of any acquisition by any Person of OCC, of any equity interest in OCC, or of a
material portion of the
37
assets of OCC (an "OCC Alternative Transaction") or agree with any other Person
to vote, or execute a written consent or proxy, with respect to any such Company
OCC Shares or (iii) publicly recommend any OCC Alternative Transaction or
otherwise express an intention to take any of the actions otherwise prohibited
by this Section 6.6(c) (it being understood that disclosure by the Company or
any of its Subsidiaries of the receipt of a proposal for an OCC Alternative
Transaction shall not alone constitute a recommendation of such OCC Alternative
Transaction or an expression of intent prohibited by this Section 6.6(c));
provided that the Company's obligations to cause its representatives on the
Board of Directors of OCC (or any committee thereof) to take any action (or to
refrain from taking any action) in compliance with this Section 6.6(c) shall be
subject in all respects to such Persons' fiduciary duties under applicable law.
6.7 Reasonable Efforts. (a) Each of the Company, Parent and Merger Sub
agree to use reasonable efforts to take, or cause to be taken, all actions, and
to do, or cause to be done, all things reasonably necessary, proper or advisable
to consummate and make effective the transactions contemplated by this Agreement
as soon as reasonably practicable, including such actions or things as any party
hereto may reasonably request in order to cause any of the conditions to any
other party's obligation to consummate such transactions specified in Article
VII and Annex A to be fully satisfied, and to promptly cooperate with and
furnish information to each other in connection with any requirements imposed
upon any of them with respect thereto. Without limiting the generality of the
foregoing, the parties shall (and shall cause their respective directors,
officers and Subsidiaries, and use their reasonable efforts to cause their
respective Affiliates, employees, agents, attorneys, accountants and
representatives, to) consult and fully cooperate with and provide reasonable
assistance to each other in (i) the preparation and filing of any documents with
the Commission contemplated hereby (including any necessary amendments or
supplements); (ii) using commercially reasonable efforts to obtain all necessary
consents, approvals, waivers, licenses, permits, authorizations, registrations,
qualifications, or other permission or action by, and giving all necessary
notices to and making all necessary filings with and applications and
submissions to, any Governmental Entity or other Person required to be obtained
or made by Parent, Merger Sub, the Company or any of their Subsidiaries in
connection with the Offer, the Merger or the taking of any action contemplated
thereby or by this Agreement; (iii) filing all pre-merger notification and
report forms required under the Xxxx-Xxxxx Act and responding to any requests
for additional information made by any Governmental Entity pursuant to the Xxxx-
Xxxxx Act; (iv) using commercially reasonable efforts to lift any Injunction of
any type referred to in Section 7.1(c); (v) providing all such information about
such party, its Subsidiaries and its officers, directors, partners and
Affiliates and making all applications and filings as may be necessary or
reasonably requested in connection with any of the foregoing; and (vi) in
general, using commercially reasonable efforts to consummate and make effective
the transactions contemplated thereby; provided, however, that in making any
such filing and in order to obtain any consent, approval, waiver, license,
permit, authorization, registration, qualification, or other permission or
action or the lifting of any Injunction referred to in this sentence, (A) no
party shall be required to pay any consideration, to divest itself of any of, or
otherwise rearrange the composition of, any of its assets or to agree to any of
the foregoing or any other condition or requirement that is materially adverse
or burdensome; (B) Parent shall not be required to take any action pursuant to
the foregoing if the taking of such action is reasonably likely
38
to result in the imposition of a condition or restriction of the type referred
to in paragraphs (a), (b) or (c) of Annex A; and (C) without Parent's prior
consent, the Company shall not, and shall not permit any of its Subsidiaries to,
amend any material License or material Contract, pay any consideration or make
any agreement or reach any understanding or arrangement other than in the
ordinary course of business consistent with prior practice. Prior to making any
application to or filing with any Governmental Entity or other Person in
connection with this Agreement, each party shall provide the other party with
drafts thereof and afford the other party a reasonable opportunity to comment on
such drafts. In case at any time after the Effective Time any further action is
necessary or desirable to carry out the purposes of this Agreement, the proper
officers and directors of each party to this Agreement then in office shall use
their reasonable best efforts to take all such action.
(b) In its capacity as the sole stockholder of Merger Sub, Parent
will cause Merger Sub to approve and adopt this Agreement and the Transactions
and to take all corporate action necessary on its part to consummate the
Transactions and its obligations under this Agreement. Except as contemplated by
this Agreement, Merger Sub will not conduct any other business, and will have no
other assets or liabilities.
(c) The Company shall not, and shall not permit any of its
Subsidiaries to, take any action that would result in (i) any of the
representations and warranties of the Company set forth in this Agreement that
are qualified as to materiality becoming untrue, (ii) any of such
representations and warranties that are not so qualified becoming untrue in any
material respect or (iii) any of the Offer Conditions not being satisfied
(subject to the Company's right to take actions specifically permitted by
Section 6.6).
(d) The Company shall give prompt notice to Parent, and Parent
shall give prompt notice to the Company, of (i) the occurrence, or non-
occurrence, of any event the occurrence, or non-occurrence, of which would be
likely to cause any representation or warranty contained in this Agreement to be
untrue or inaccurate and (ii) any failure of the Company, Parent or Merger Sub,
as the case may be, to comply with or satisfy any covenant, condition or
agreement to be complied with or satisfied by it hereunder; provided, however,
that the delivery of any notice pursuant to this Section shall not limit or
otherwise affect the remedies available hereunder to the party receiving such
notice.
6.8 Rights Agreement. Except as otherwise provided in Section 4.21, the
Company shall not redeem the Rights or amend (other than to delay the
Distribution Date (as defined therein) or to render the Rights inapplicable to
the Offer and the Merger) or terminate the Rights Agreement prior to the
Effective Time unless required to do so by order of a court of competent
jurisdiction.
6.9 Certain Litigation. (a) Each of the Company and Parent agrees to
vigorously defend against all actions, suits or proceedings in which such party
is named as a defendant which seek to enjoin, restrain or prohibit the
transactions contemplated hereby or seek damages with respect to such
transactions. The Company will not settle any such action, suit or proceeding
or fail to perfect
39
on a timely basis any right to appeal any judgment rendered or order entered
against the Company therein without the consent of Parent (which consent will
not be withheld or delayed unreasonably). Each of Parent and the Company further
agrees to use its reasonable efforts to cause each of its Affiliates, directors
and officers to vigorously defend any action, suit or proceeding in which such
Affiliate, director or officer is named as a defendant and which seeks any such
relief to comply with this Section 6.9 to the same extent as if such Person were
a party hereto.
(b) The Company will not voluntarily cooperate with any third party
which has sought or may hereafter seek to restrain or prohibit or otherwise
oppose the Offer or the Merger and will cooperate with Parent and Merger Sub to
resist any such effort to restrain or prohibit or otherwise oppose the Offer or
the Merger, unless the Board of Directors of the Company determines in good
faith, after consultation with counsel, that failing so to cooperate with such
third party or cooperating with Parent or Merger Sub, as the case may be, would
constitute a breach of the Board's fiduciary duties under applicable law.
6.10 Indemnification of Directors and Officers. (a) From and after the
Effective Time, Parent and the Surviving Entity will jointly and severally
indemnify, defend and hold harmless the present and former officers, directors
and employees of the Company and any of its Subsidiaries, and any Person who is
or was serving at the request of the Company as an officer, director or employee
or agent of another Person (each, an "Indemnified Party" and together, the
"Indemnified Parties") (and will also, subject to Section 6.10(b), advance
expenses as incurred to the fullest extent permitted under the DGCL, 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), against (i) all losses, costs, expenses, claims, damages,
judgments or liabilities arising out of, or in connection with, any claim,
action, suit, proceeding or investigation based in whole or in part on the fact
that the Indemnified Party is or was an officer, director or employee of the
Company or any of its Subsidiaries, or is or was serving at the request of the
Company as an officer, director or employee or agent of another Person,
pertaining to any matter existing or occurring before or at the Effective Time
and whether asserted or claimed before, at or after, the Effective Time (the
"Indemnified Liabilities") and (ii) all Indemnified Liabilities based in whole
or in part on, or arising in whole or in part out of, or pertaining to this
Agreement, the Offer, the Merger or any other transactions contemplated hereby
or thereby, in each case to the fullest extent permitted under the DGCL
(notwithstanding the charter, bylaws or similar organizational documents of the
Company, the Surviving Entity or Parent); provided, however, that such
indemnification will be provided only to the extent any directors' and officers'
liability insurance policy of the Company or its Subsidiaries does not provide
coverage and actual payment thereunder with respect to the matters that would
otherwise be subject to indemnification hereunder (it being understood that
Parent or the Surviving Entity shall, subject to Section 6.10(b), advance
expenses on a current basis as provided in this paragraph (a) notwithstanding
such insurance coverage to the extent that payments thereunder have not yet been
made, in which case Parent or the Surviving Entity, as the case may be, shall be
entitled to repayment of such advances from the proceeds of such insurance
coverage). Parent and Merger Sub agree that all rights to indemnification,
including provisions relating to advances of expenses incurred in defense of any
action, suit or proceeding, whether civil, criminal, administrative
40
or investigative (each, a "Claim"), existing in favor of the Indemnified Parties
as provided in the Company Charter or Company Bylaws or pursuant to other
agreements, or certificates of incorporation or bylaws or similar documents of
any Subsidiaries of the Company, as in effect as of the date hereof, with
respect to matters occurring through the Effective Time, will survive the Merger
and will continue in full force and effect. The Surviving Entity shall, and
Parent shall cause the Surviving Entity to, maintain in effect for not less than
three years after the Effective Time the current policies of directors' and
officers' liability insurance maintained by the Company and the Company's
Subsidiaries with respect to matters occurring prior to or at the Effective
Time; provided, however, that (i) the Surviving Entity may substitute therefor
policies of at least the same coverage containing terms and conditions which are
no less advantageous to the Indemnified Parties with an insurance company or
companies, the claims paying ability of which is substantially equivalent to the
claims paying ability of the insurance company or companies providing currently
such insurance coverage for directors and officers of the Company, and (ii) the
Surviving Entity shall not be required to pay an annual premium for such
insurance in excess of three times the last annual premium paid prior to the
date hereof, but in such case shall purchase as much coverage as possible for
such amount.
(b) If any Claim relating hereto or to the transactions
contemplated by this Agreement is commenced before the Effective Time, the
Company, Parent and the Surviving Entity agree to cooperate and use their
respective reasonable efforts to vigorously defend against and respond thereto.
Any Indemnified Party wishing to claim indemnification under paragraph (a) of
this Section 6.10, upon learning of any such claim, action, suit, proceeding or
investigation (whether arising before, at or after the Effective Time), will
promptly notify Parent thereof (but the failure so to notify will not relieve
the Company, Parent or the Surviving Entity from any liability which it may have
under this Section 6.10 except to the extent such failure materially prejudices
such party), whereupon Parent or the Surviving Entity will have the right, from
and after the Effective Time, to assume from such Indemnified Party and control
the defense thereof on behalf of such Indemnified Party, and upon such
assumption, the Surviving Entity will 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.
Notwithstanding the foregoing, if counsel for the Indemnified Parties advises
that there are issues which raise conflicts of interest between Parent or the
Surviving Entity and the Indemnified Parties, the Indemnified Parties may retain
separate counsel and Parent will pay or cause to be paid all reasonable fees and
expenses of such counsel; provided that Parent will not be obligated pursuant to
this Section 6.10(b) to pay or cause to be paid for more than one firm or
counsel to represent all Indemnified Parties in any jurisdiction unless there
is, under applicable standards of professional conduct, a conflict on any
significant issue between the positions of any two or more Indemnified Parties.
Neither Parent nor the Surviving Entity will be liable for any settlement
effected without its prior written consent, which consent, however, will not be
unreasonably withheld or delayed.
(c) This Section 6.10 is intended to benefit the Indemnified
Parties and will be enforceable by each Indemnified Party, his or her heirs and
representatives and will be binding on all successors and assigns of Parent,
Merger Sub and the Surviving Entity.
41
6.11 Directors. (a) Promptly upon the purchase by Merger Sub of Shares
pursuant to the Offer, and from time to time thereafter, Merger Sub shall be
entitled to designate up to such number of directors, rounded up to the next
whole number, on the Board as shall give Merger Sub representation on the Board
equal to the product of the total number of directors on the Board (giving
effect to the directors elected pursuant to this sentence) multiplied by the
percentage that the aggregate number of Shares beneficially owned by Merger Sub
or any Affiliate of Merger Sub at such time bears to the total number of Shares
then outstanding, and the Company shall, at such time, promptly take all actions
necessary to cause Merger Sub's designees to be elected as directors of the
Company, including increasing the size of the Board or securing the resignations
of incumbent directors or both. At such times, the Company shall use its best
efforts to cause Persons designated by Merger Sub to constitute the same
percentage as Persons designated by Merger Sub shall constitute of the Board of
(i) each committee of the Board (some of whom may be required to be independent
as required by applicable law), (ii) each board of directors of each domestic
Subsidiary (including OCC, realizing that the Company has the right to appoint
only a majority of the OCC board) and (iii) each committee of each such board,
in each case only to the extent permitted by applicable law. Notwithstanding the
foregoing, until the time Merger Sub acquires a majority of the then outstanding
Shares on a fully diluted basis, the Company shall use its best efforts to
ensure that all the members of the Board and each committee of the Board and
such boards and committees of the domestic Subsidiaries as of the date hereof
who are not employees of the Company shall remain members of the Board and of
such boards and committees.
(b) The Company shall promptly take all actions required pursuant
to Section 14(f) of the Exchange Act and Rule 14f-1 promulgated thereunder in
order to fulfill its obligations under this Section 6.11 and shall include in
the Schedule 14D-9 such information with respect to the Company and its officers
and directors as is required under Section 14(f) and Rule 14f-1 to fulfill such
obligations. Parent or Merger Sub shall supply to the Company and be solely
responsible for any information with respect to either of them and their
nominees, officers, directors and affiliates required by such Section 14(f) and
Rule 14f-1.
(c) Following the election or appointment of designees of Merger
Sub pursuant to this Section 6.11, prior to the Effective Time, any amendment of
this Agreement or the Company Charter or Company Bylaws, any termination of this
Agreement by the Company, any extension by the Company of the time for the
performance of any of the obligations or other acts of Parent or Merger Sub or
waiver of any of the Company's rights hereunder shall require the concurrence of
a majority of the directors of the Company then in office who neither were
designated by Merger Sub nor are employees of the Company or if no such
directors are then in office, no such amendment, termination, extension or
waiver shall be effected which is materially adverse to the holders of Shares
(other than Parent and its Subsidiaries).
6.12 Stock Options; SARs. Prior to the Effective Time, the parties to this
Agreement shall take all such actions as shall be necessary to effectuate the
provisions of Sections 3.4(a) and 3.4(b).
42
6.13 Employee Matters. Neither Parent nor the Surviving Entity shall be
required to maintain any Company Plan after the Effective Time. Each employee of
the Surviving Entity who was an employee of the Company immediately prior to the
Effective Time (i) shall be entitled to participate in the "employee benefit
plans", as defined in Section 3(3) of ERISA, maintained by Parent (the "Parent
Plans") to the same extent, if any, as similarly situated employees of Parent,
(ii) shall receive credit for such employee's past service with the Company as
of the Effective Time for purposes of eligibility and vesting under the Parent
Plans, including for purposes of eligibility and participation under Parent's
severance policies and plans, to the extent such service was credited under the
Company Plans on the Closing Date, and (iii) shall not be subject to any waiting
periods or limitations on benefits for pre-existing conditions under the Parent
Plans, including any group health and disability plans, except to the extent
such employees were subject to such limitations under the Company Plans;
provided, however, that clauses (ii) and (iii) shall not apply to employees who
become eligible to participate in Parent Plans as a result of transfer of
employment to Parent or one of its Subsidiaries other than the Surviving Entity.
6.14 Severance Obligations. (a) Parent agrees to cause the Surviving
Entity to assume and honor without modification the severance and cash severance
payment provisions of the employment agreements and change of control severance
plan listed in Section 6.14 of the Company Disclosure Schedule (the "Employee
Severance Agreements"), with any cash severance payments pursuant thereto to be
made in a lump sum not later than the Effective Time. Each of Parent and the
Company acknowledges that the consummation of the Offer as provided herein will
constitute a "Change of Control" for purposes of the Employee Severance
Agreements and, accordingly, as of the Effective Time, each of the individuals
party to such agreements will be entitled to (x) a cash severance payment as
provided in such agreements in the manner described in the previous sentence,
(y) provision of the other fringe benefits provided in such agreements and (z)
accelerated vesting of the stock appreciation rights and options with respect to
the Company Common Stock held by such individuals as provided in such
agreements.
(b) Prior to the Closing, the Company shall take such action as is
necessary in accordance with the terms of the Employee Severance Agreements to
terminate all individuals covered by such agreements, effective as of the
Effective Time, subject to the making of the cash severance payments and
provisions for the other benefits referred to in Section 6.14(a).
6.15 Competitor Transaction. During the period from the date of this
Agreement and continuing until the earlier of the termination of this Agreement
or the Effective Time, neither Parent nor any of its controlled Subsidiaries
will effect or enter into an agreement with any Person to effect, directly or
indirectly, a merger, consolidation, asset disposition, recapitalization or
another transaction resulting in the transfer of securities or assets of
LodgeNet Entertainment Corporation.
43
ARTICLE VII
CONDITIONS TO THE MERGER
7.1 Conditions to the Merger. The respective obligations of each party to
effect the Merger shall be subject to the satisfaction at or prior to the
Effective Time of the following conditions and only the following conditions:
(a) Stockholder Approval. This Agreement and the Merger shall have
been approved and adopted by the affirmative vote of the stockholders of the
Company to the extent required by Delaware Law (including Section 203 thereof)
and the Company Charter;
(b) HSR Act. Any waiting period (and any extension thereof)
applicable to the consummation of the Merger under the Xxxx-Xxxxx Act shall have
expired or been terminated;
(c) No Order. No permanent or preliminary Injunction or restraining
order by any court or other Government Entity of competent jurisdiction, or
other legal restraint or prohibition, shall be in effect preventing consummation
of the transactions contemplated hereby as provided herein, or permitting such
consummation only subject to any condition or restriction that has had or would
have (x) a material adverse effect on the transactions contemplated hereby or
(y) a Material Adverse Effect on Parent and its Subsidiaries taken as a whole or
the Surviving Entity and its Subsidiaries taken as a whole; and
(d) Offer. Merger Sub or its permitted assignee shall have
purchased all Shares validly tendered and not withdrawn pursuant to the Offer;
provided, however, that neither Parent nor Merger Sub shall be entitled to
assert the failure of this condition if, in breach of this Agreement or the
terms of the Offer, Merger Sub fails to purchase any Shares validly tendered and
not withdrawn pursuant to the Offer.
ARTICLE VII
TERMINATION
8.1 Termination and Abandonment. This Agreement may be terminated and the
Merger and the other Transactions may be abandoned at any time prior to the
Effective Time, notwithstanding any requisite approval and adoption of this
Agreement and the transactions contemplated hereby by the stockholders of the
Company:
(a) By mutual written consent duly authorized by the Boards of
Directors of Parent, Merger Sub and the Company prior to Merger Sub's Election
Date; or
44
(b) By Parent or the Company if (i) the Minimum Condition has not
been satisfied during a ten (10) business day extension of the Offer following
the Initial Expiration Date, but all other conditions have been satisfied or
(ii) any court of competent jurisdiction in the United States or other
governmental authority shall have issued an order, decree, ruling or taken any
other action restraining, enjoining or otherwise prohibiting the acceptance for
payment of, or payment for, shares of Company Common Stock pursuant to the Offer
or the Merger and such order, decree, ruling or other action shall have become
final and nonappealable; or
(c) By Parent, if due to an occurrence or circumstance that results
in a failure to satisfy any condition set forth in Annex A, Merger Sub shall
have (A) failed to commence the Offer within 10 days following the date of this
Agreement or (B) terminated the Offer without having accepted any Shares for
payment thereunder, unless any such failure listed above shall have been caused
by or resulted from the failure of Parent or Merger Sub to perform in any
material respect any material covenant or agreement of either of them contained
in this Agreement or the material breach by Parent or Merger Sub of any material
representation or warranty of either of them contained in this Agreement; or
(d) By the Company, upon approval of the Board, if (i) Merger Sub
shall have (A) failed to commence the Offer within 10 days following the date of
this Agreement or (B) terminated the Offer without having accepted any Shares
for payment thereunder, unless such failure to pay for Shares shall have been
caused by or resulted from the failure of the Company to satisfy the conditions
set forth in paragraphs (f) or (g) of Annex A, (ii) prior to the purchase of
Shares pursuant to the Offer, the Board shall have withdrawn or modified in a
manner adverse to Merger Sub or Parent its approval or recommendation of the
Offer, this Agreement or the Merger in order to approve a Superior Proposal;
provided, however, that such termination under this clause (ii) shall not be
effective until the Company has made payment to Parent of the Termination Fee
(as hereinafter defined) required to be paid pursuant to Section 8.2(a) and has
deposited with a mutually acceptable escrow agent $2 million for reimbursement
to Parent and Merger Sub of Expenses (as hereinafter defined) or (iii) Parent or
Merger Sub shall have breached in any material respect any of their respective
representations, warranties, covenants or other agreements contained in this
Agreement, which failure to perform is incapable of being cured or has not been
cured within 20 days after the giving of written notice to Parent or Merger Sub,
as applicable, except, in any case, such failures which are not reasonably
likely to affect adversely Parent's or Merger Sub's ability to complete the
Offer or the Merger.
The party desiring to terminate this Agreement pursuant to this Section 8.1
(other than pursuant to Section 8.1(a)) shall give notice of such termination to
the other party.
8.2 Termination Fee; Effects of Termination.
(a) The Company shall pay, or cause to be paid, in same day funds
to Parent the sum of (x) Parent's Expenses (as hereinafter defined) actually
incurred in an amount not to exceed $2 million and (y) $18 million (the
"Termination Fee") upon demand if (i) Parent or Merger Sub
45
terminates this Agreement pursuant to Section 8.1(c), as a result of conditions
set forth in paragraph (e) (ii), (iii) or (iv) of Annex A; or (ii) prior to any
termination of this Agreement (other than by the Company pursuant to Section
8.1(d)(iii)), an Alternative Proposal or OCC Alternative Transaction shall have
been made and within 12 months of such termination, a transaction constituting
an Alternative Proposal or OCC Alternative Transaction is consummated or the
Company enters into or causes OCC to enter into an agreement with respect to,
approves or recommends or takes any action to facilitate such proposal.
(b) "Expenses" means all out-of-pocket expenses and fees
(including, without limitation, fees and expenses payable to all banks,
investment banking firms, other financial institutions and other Persons and
their respective agents and counsel for arranging, committing to provide or
providing any financing for the Transactions or structuring the Transactions and
all fees of counsel, accountants, experts and consultants to Parent and Merger
Sub, and all printing and advertising expenses) actually incurred or accrued by
either of them or on their behalf in connection with the Transactions,
including, without limitation, the financing thereof, and actually incurred or
accrued by banks, investment banking firms, other financial institutions and
other Persons and assumed by Parent and Merger Sub in connection with the
negotiation, preparation, execution and performance of this Agreement, the
structuring and financing of the Transactions and any financing commitments or
agreements relating thereto.
(c) Except as set forth in this Section 8.2, all costs and expenses
incurred in connection with this Agreement and the Transactions shall be paid by
the party incurring such expenses, whether or not any Transaction is
consummated.
(d) In the event that the Company shall fail to pay the Termination
Fee or any Expenses when due, the Company shall pay the costs and expenses
(including legal fees and expenses) incurred in connection with any action,
including the prosecution of any lawsuit or other legal action, taken to collect
payment.
(e) In the event of the termination of this Agreement pursuant to
Section 8.1, this Agreement shall forthwith become void, and there shall be no
liability on the part of any party hereto, except as set forth in (1) Sections
4.10, 5.5 and 8.2, (2) the penultimate sentence of Section 6.2, and (3) Article
IX, and nothing herein shall relieve any party from liability for any breach
hereof.
ARTICLE IX
MISCELLANEOUS
9.1 No Waiver or Survival of Representations, Warranties, Covenants and
Agreements. The respective representations and warranties of Parent, Merger Sub,
and the Company contained herein or in any certificate or other instrument
delivered pursuant hereto prior to or at the Closing
46
shall not be deemed waived or otherwise affected by any investigation made by
any party hereto. All representations and warranties made by each of the parties
herein shall expire at the Effective Time or termination of the Agreement, as
the case may be, and shall thereafter be of no further force or effect; provided
that the representations of the Company in Article IV and Parent and Merger Sub
in Article V shall expire upon acceptance for payment of, and payment for, the
Shares by Merger Sub pursuant to the Offer. The respective covenants and
agreements of the parties contained herein or in any other documents delivered
prior to or at the Closing shall survive execution and delivery of this
Agreement and shall only terminate in accordance their respective terms.
9.2 Notices. All notices, requests, demands, waivers and other
communications required or permitted to be given under this Agreement shall be
in writing and shall be deemed to have been duly given if delivered personally
(by courier service or otherwise) or mailed, certified or registered mail with
postage prepaid, or sent by confirmed telecopier, as follows:
(b) If to Parent or Merger Sub:
Liberty Media Corporation
0000 Xxxxx Xxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxx, Esq.
Facsimile: (000) 000-0000
with a copy to:
Xxxxx Xxxxx L.L.P.
000 Xxxxxxxxx
Xxxxxxx, Xxxxx 00000
Attention: Xxxxxx X. Xxxxxxx, XX Esq.
Facsimile: (000) 000-0000
(c) If to the Company:
Ascent Entertainment Group, Inc.
0000 Xxxxxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxxxxx 00000
Attention: Xxxxxx X. Xxxxx
Facsimile: (000) 000-0000
47
with a copy to:
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
Xxxx Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Xxxxxxx, Esq.
Facsimile: (000) 000-0000
or to such other Person or address as any party shall specify by notice in
writing to the other party. All such notices, requests, demands, waivers and
communications shall be deemed to have been received on the date of delivery if
delivered on a business day, on the business day following delivery if not
delivered on a business day, or on the third business day after the mailing
thereof, except that any notice of a change of address shall be effective only
upon actual receipt thereof.
9.3 Entire Agreement. This Agreement (including the Schedules, Annexes,
Exhibits and other documents referred to herein) constitutes the entire
agreement between the parties and supersedes all prior agreements and
understandings, oral and written, between the parties with respect to the
subject matter hereof.
9.4 Assignment; Binding Effect; Benefit. Neither this Agreement nor any
of the rights, benefits or obligations hereunder may be assigned by any party
(whether by operation of law or otherwise) without the prior written consent of
the other party. Subject to the preceding sentence, this Agreement will be
binding upon, inure to the benefit of and be enforceable by the parties and
their respective successors and assigns. Except for the provisions of Section
6.10 (which may be enforced by the Indemnified Parties), nothing in this
Agreement, expressed or implied, is intended to confer on any Person other than
the parties or their respective successors and assigns, any rights, remedies,
obligations or liabilities under or by reason of this Agreement.
9.5 Amendment. This Agreement may be amended by action of all the
parties, by action taken or authorized by their respective Boards of Directors,
at any time before or after approval and adoption of this Agreement and the
Merger by the stockholders of the Company, but, after any such approval by the
stockholders of the Company, no amendment shall be made which by law requires
further approval by such stockholders of the Company without such further
approval. This Agreement may not be amended except by an instrument in writing
signed on behalf of each of the parties.
9.6 Extension; Waiver. At any time prior to the Effective Time, the
parties, by action taken or authorized by each such party's Board of Directors,
may, to the extent legally allowed, (i) extend the time specified herein for the
performance of any of the obligations of the other party, (ii) waive any
inaccuracies in the representations and warranties of the other party contained
herein or in any document delivered pursuant hereto, (iii) waive compliance by
the other party with any of the agreements or covenants of such other party
contained herein or (iv) waive any condition to such waiving party's obligation
to consummate the transactions contemplated hereby or to any of such
48
waiving party's other obligations hereunder. Any agreement on the part of a
party hereto to any such extension or waiver shall be valid only if set forth in
a written instrument signed by such party. Any such extension or waiver by any
party shall be binding on such party but not on the other party entitled to the
benefits of the provision of this Agreement affected unless such other party
also has agreed to such extension or waiver. No such waiver shall constitute a
waiver of, or estoppel with respect to, any subsequent or other breach or
failure to strictly comply with the provisions of this Agreement. The failure of
any party to insist on strict compliance with this Agreement or to assert any of
its rights or remedies hereunder or with respect hereto shall not constitute a
waiver of such rights or remedies. Whenever this Agreement requires or permits
consent or approval by any party, such consent or approval shall be effective if
given in writing in a manner consistent with the requirements for a waiver of
compliance as set forth in this Section 9.6.
9.7 Headings. The table of contents and headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement. The phrase "made available" in
this Agreement shall mean that the information referred to has been made
available if requested by the party to whom such information is to be made
available.
9.8 Counterparts. This Agreement may be executed in counterparts, each of
which shall be deemed to be an original, and all of which together shall be
deemed to be one and the same instrument.
9.9 Applicable Law. This Agreement and the legal relations between the
parties hereunder shall be governed by and construed in accordance with the laws
of the State of Delaware, without regard to the conflict of laws rules thereof.
9.10 No Remedy in Certain Circumstances. Each party agrees that, should
any court or other competent governmental authority hold any provision of this
Agreement or part hereof to be null, void or unenforceable, or order any party
to take any action inconsistent herewith or not to take any action required
herein, the other party shall not be entitled to specific performance of such
provision or part hereof or to any other remedy, including but not limited to
money damages, for breach thereof or of any other provision of this Agreement or
part hereof as a result of such holding or order.
9.11 Severability. The provisions of this Agreement shall be deemed
severable and the invalidity or unenforceability of any provision shall not
affect the validity or enforceability of the other provisions hereof. If any
provisions of this Agreement, or the application thereof to any Person or entity
or any circumstance, is invalid or unenforceable, (a) a suitable and equitable
provision shall be substituted therefor in order to carry out, so far as may be
valid and enforceable, the intent and purpose of such invalid or unenforceable
provision and (b) the remainder of this Agreement and the application of such
provision to other Persons, entities or circumstances shall not be affected by
such
49
invalidity or unenforceability, nor shall such invalidity or unenforceability
affect the validity or enforceability of such provision, or the application
thereof, in any other jurisdiction.
9.12 Disclosure Schedule. The parties acknowledge that the Company
Disclosure Schedule to this Agreement (i) relates to certain matters concerning
the disclosures required and transactions contemplated by this Agreement, (ii)
is qualified in its entirety by reference to specific provisions of this
Agreement and (iii) is not intended to constitute and shall not be construed as
indicating that such matter is required to be disclosed, nor shall such
disclosure be construed as an admission that such information is material with
respect to the Company or any of its Subsidiaries or will have or is likely to
have a Material Adverse Effect on the Company and its Subsidiaries taken as a
whole, OCC and its Subsidiaries taken as a whole, or Parent and its Subsidiaries
taken as a whole. Disclosure of the information contained in one section or
part of the Company Disclosure Schedule shall be deemed as proper disclosure for
other sections or parts of the Company Disclosure Schedule only if appropriately
cross-referenced or if the relevance thereof is reasonably apparent from the
context in which it appears.
9.13 Enforcement. The parties agree that irreparable damage would occur in
the event that any of the provisions of this Agreement were not performed in
accordance with their specific terms or were otherwise breached. It is
accordingly agreed that the parties shall be entitled to seek an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions of this Agreement in any court of the United States or
in Delaware state court, this being in addition to any other remedy to which
they are entitled at law or in equity. In addition, each of the parties hereto
(a) consents to submit itself to the non-exclusive jurisdiction of any Federal
court located in the State of Delaware or any Delaware state court in the event
any dispute arises out of this Agreement or any of the transactions contemplated
by this Agreement, and (b) agrees that it will not attempt to deny or defeat
such personal jurisdiction by motion or other request for leave from any such
court.
50
IN WITNESS WHEREOF, the parties hereto have executed this Agreement and
Plan of Merger as of the date first above written.
LIBERTY AEG ACQUISITION, INC.
By: /s/ Xxxx X. Xxxxxx
------------------------
Name: Xxxx X. Xxxxxx
Title: Vice President
LIBERTY MEDIA CORPORATION
By: /s/ Xxxx X. Xxxxxx
------------------------
Name: Xxxx X. Xxxxxx
Title: Executive Vice President &
Chief Operating Officer
ASCENT ENTERTAINMENT GROUP, INC.
By: /s/ Xxxxxx X. Xxxxx
-------------------------
Name: Xxxxxx X. Xxxxx
Title: Executive Vice President -
Business Affairs
ANNEX A
CONDITIONS TO THE OFFER
Notwithstanding any other provision of the Offer, Merger Sub shall not be
required to accept for payment or, subject to any applicable rules and
regulations of the Commission, including Rule 14e-1(c) promulgated under the
Exchange Act (relating to the obligation of Merger Sub to pay for or return
tendered shares of Company Common Stock promptly after termination or withdrawal
of the Offer), pay for any Shares tendered pursuant to the Offer, and (subject
to any such rules or regulations and except as provided in the Agreement) may
terminate or amend the Offer and may postpone the acceptance for payment of and
payment for Shares tendered, if (i) the Minimum Condition shall not have been
satisfied, (ii) any applicable waiting period under the HSR Act shall not have
expired or been terminated prior to the expiration of the Offer or (iii) at any
time on or after the date of this Agreement, and prior to the acceptance for
payment of Shares, any of the following conditions shall exist:
(a) there shall have been instituted or be pending any action or
proceeding brought by any Governmental Entity (i) challenging or seeking to
make illegal, materially delay or otherwise directly or indirectly restrain
or prohibit or make materially more costly the making of the Offer, the
acceptance for payment of, or payment for, any Shares by Parent, Merger Sub
or any other Affiliate of Parent pursuant to the Offer, or the consummation
of the Merger, or seeking to obtain material damages in connection with the
Merger; (ii) seeking to prohibit or limit materially the ownership or
operation by the Company, Parent or any of their Subsidiaries of all or any
material portion of the business or assets of the Company, or to compel the
Company, to dispose of or hold separate all or any material portion of the
business or assets of the Company, as a result of the Transactions; (iii)
seeking to impose or confirm limitations on the ability of Parent, Merger
Sub or any other Affiliate of Parent to exercise effectively full rights of
ownership of any Shares, including, without limitation, the right to vote
any Shares acquired by Merger Sub pursuant to the Offer, or otherwise on
all matters properly presented to the Company's stockholders, including,
without limitation, the approval and adoption of this Agreement and the
Transactions, or making the holding of such Shares illegal or subject to
any materially burdensome requirement or condition; (iv) seeking to
prohibit Parent or any of its Subsidiaries from effectively controlling in
any material respect any material portion of the business or operations of
the Company and its Subsidiaries; (v) seeking to require divestiture by
Parent, Merger Sub or any other Affiliate of Parent of any Shares; (vi)
prohibiting or unreasonably delaying consummation of the Offer, the Merger
or increasing in any material respect the liabilities or obligations of
Parent arising out of this Agreement, the Offer or the Merger; or (vii)
otherwise is reasonably likely to materially adversely affect the Company
and its Subsidiaries taken as a whole;
(b) there shall have been issued any Injunction resulting from any
action or proceeding brought by any Person other than any Governmental
Entity that is reasonably
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likely to result, directly or indirectly, in any of the consequences
referred to in clauses (i) through (v) of paragraph (a) above;
(c) there shall have been any statute, rule, regulation, order or
injunction enacted, entered, enforced, promulgated, amended, issued or
deemed applicable to (i) Parent, the Company or any Subsidiary or Affiliate
of Parent or the Company or (ii) the Offer or the Merger, by any
Governmental Entity, in the case of both (i) and (ii) other than (A) the
routine application of the waiting period provisions of the HSR Act to the
Offer or the Merger that is reasonably likely to result, directly or
indirectly, in any of the consequences referred to in clauses (i) through
(v) of paragraph (a) above;
(d) there shall have occurred (i) any general suspension of trading
in, or limitation on prices for, securities on a national securities
exchange in the U.S. (ii) a declaration of a banking moratorium or any
suspension of payments in respect of banks in the United States, (iii) any
limitation (whether or not mandatory) by any government or governmental,
administrative or regulatory authority or agency, domestic or foreign, on
the extension of credit by banks or other lending institutions, (iv) a
commencement of a war or armed hostilities or other national or
international calamity directly or indirectly involving the United States
or (v) in the case of any of the foregoing existing on the date hereof, a
material acceleration or worsening thereof;
(e) (i) it shall have been publicly disclosed or Parent or Merger
Sub shall have otherwise learned that beneficial ownership (determined for
the purposes of this paragraph as set forth in Rule 13d-3 promulgated under
the Exchange Act) of 20% or more of the then outstanding Shares has been
acquired by any Person, other than Parent or any of its Affiliates; (ii)
the Board shall have withdrawn or modified in a manner adverse to Parent or
Merger Sub the approval or recommendation of the Offer, the Merger or this
Agreement or approved or recommended any Alternative Proposal or OCC
Alternative Transaction, or any other takeover proposal or any other
acquisition of Shares or OCC Shares other than the Offer and the Merger;
(iii) the Company shall have entered into any agreement with respect to a
Superior Proposal; or (iv) the Board shall have resolved to do any of the
foregoing;
(f) any of the representations and warranties of the Company set
forth in this Agreement shall not have been true and correct at the date of
this Agreement, and as a result thereof there shall have been, or it is
reasonable to foresee that there will be, a Material Adverse Effect on the
Company and its Subsidiaries taken as a whole;
(g) the Company shall have failed to perform in any material
respect any material obligation or to comply in any material respect with
any material agreement or covenant of the Company to be performed or
complied with by it under this Agreement;
(h) this Agreement shall have been terminated in accordance with
its terms; and
A-2
(i) Merger Sub and the Company shall have agreed that Merger Sub
shall terminate the Offer or postpone the acceptance for payment of or
payment for Shares thereunder.
The foregoing conditions are for the sole benefit of Merger Sub and
Parent and may be asserted by Merger Sub or Parent regardless of the
circumstances giving rise to any such condition or may be waived by Merger Sub
or Parent in whole or in part at any time and from time to time in their sole
discretion. The failure by Parent or Merger Sub at any time to exercise any of
the foregoing rights shall not be deemed a waiver of any such right; the waiver
of any such right with respect to particular facts and other circumstances shall
not be deemed a waiver with respect to any other facts and circumstances; and
each such right shall be deemed an ongoing right that may be asserted at any
time and from time to time.
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