CONFORMED COPY
AGREEMENT AND PLAN OF MERGER
Among
CLEAR CHANNEL COMMUNICATIONS, INC.,
UH MERGER SUB, INC.
and
UNIVERSAL OUTDOOR HOLDINGS, INC.
Dated as of October 23, 1997
TABLE OF CONTENTS
Page
ARTICLE I
THE MERGER
SECTION 1.1. The Merger . . . . . . . . . . . . . . . 2
SECTION 1.2. Closing . . . . . . . . . . . . . . . . . 2
SECTION 1.3. Effective Time . . . . . . . . . . . . . 2
SECTION 1.4. Effects of the Merger . . . . . . . . . . 2
SECTION 1.5. Certificate of Incorporation and
By-Laws of the Surviving Corporation . . 2
SECTION 1.6. Directors . . . . . . . . . . . . . . . . 2
SECTION 1.7. Officers . . . . . . . . . . . . . . . . 3
ARTICLE II
EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE CONSTITUENT
CORPORATIONS; EXCHANGE OF CERTIFICATES
SECTION 2.1. Capital Stock of Merger Sub . . . . . . . 3
SECTION 2.2. Cancellation of Treasury Stock and
Parent Owned Stock . . . . . . . . . . . 3
SECTION 2.3. Conversion of Company Common Stock . . . 3
SECTION 2.4. Exchange of Certificates . . . . . . . . 4
SECTION 2.5. Stock Transfer Books . . . . . . . . . . 8
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
SECTION 3.1. Organization, Qualification, Etc. . . . . 8
SECTION 3.2. Capital Stock . . . . . . . . . . . . . . 9
SECTION 3.3. Corporate Authority Relative to this
Agreement; No Violation . . . . . . . . . 9
SECTION 3.4. Reports and Financial Statements . . . . 10
SECTION 3.5. No Undisclosed Liabilities . . . . . . . 11
SECTION 3.6. No Violation of Law . . . . . . . . . . . 11
SECTION 3.7. Environmental Laws and Regulations . . . 11
SECTION 3.8. No Undisclosed Employee Benefit Plan
Liabilities or Severance Arrangements . . 12
SECTION 3.9. Absence of Certain Changes or Events . . 13
SECTION 3.10. Investigations; Litigation . . . . . . . 13
SECTION 3.11. Proxy Statement; Registration
Statement; Other Information . . . . . . 14
SECTION 3.12. Lack of Ownership of Parent Common
Stock . . . . . . . . . . . . . . . . . . 14
SECTION 3.13. Tax Matters . . . . . . . . . . . . . . . 14
SECTION 3.14. Opinion of Financial Advisor . . . . . . 15
SECTION 3.15. Required Vote of the Company
Stockholders . . . . . . . . . . . . . . 15
SECTION 3.16. Insurance . . . . . . . . . . . . . . . . 15
SECTION 3.17. Real Property; Title . . . . . . . . . . 16
SECTION 3.18. Collective Bargaining Agreements
and Labor . . . . . . . . . . . . . . . . 16
SECTION 3.19. Material Contracts . . . . . . . . . . . 16
SECTION 3.20. Takeover Statute . . . . . . . . . . . . 16
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
SECTION 4.1. Organization, Qualification, Etc . . . . 16
SECTION 4.2. Capital Stock . . . . . . . . . . . . . . 17
SECTION 4.3. Corporate Authority Relative to this
Agreement; No Violation . . . . . . . . . 17
SECTION 4.4. Reports and Financial Statements . . . . 18
SECTION 4.5. No Undisclosed Liabilities . . . . . . . 19
SECTION 4.6. No Violation of Law . . . . . . . . . . . 19
SECTION 4.7. Environmental Laws and Regulations . . . 19
SECTION 4.8. No Undisclosed Employee Benefit Plan
Liabilities or Severance Arrangements . . 19
SECTION 4.9. Absence of Certain Changes or Events . . 20
SECTION 4.10. Investigations; Litigation . . . . . . . 20
SECTION 4.11. Proxy Statement; Registration
Statement; Other Information . . . . . . 20
SECTION 4.12. Lack of Ownership of the Company
Common Stock . . . . . . . . . . . . . . 21
SECTION 4.13. Tax Matters . . . . . . . . . . . . . . . 21
ARTICLE V
COVENANTS RELATING TO CONDUCT OF BUSINESS
SECTION 5.1. Conduct of Business by the Company
or Parent . . . . . . . . . . . . . . . . 21
SECTION 5.2. Proxy Material; Registration
Statement . . . . . . . . . . . . . . . . 24
SECTION 5.3. Stockholders' Meeting . . . . . . . . . . 25
SECTION 5.4. Approvals and Consents; Cooperation . . . 25
SECTION 5.5. Access to Information;
Confidentiality . . . . . . . . . . . . . 26
SECTION 5.6. Affiliates . . . . . . . . . . . . . . . 26
SECTION 5.7. Warrants; Stock Options . . . . . . . . . 27
SECTION 5.8. 1994 Warrants . . . . . . . . . . . . . . 27
SECTION 5.9. Filings; Other Action . . . . . . . . . . 28
SECTION 5.10. Further Assurances . . . . . . . . . . . 29
SECTION 5.11. No Solicitation . . . . . . . . . . . . . 29
SECTION 5.12. Director and Officer Liability . . . . . 30
SECTION 5.13. Accountants' "Comfort" Letters . . . . . 32
SECTION 5.14. Additional Reports . . . . . . . . . . . 32
SECTION 5.15. Plan of Reorganization . . . . . . . . . 32
SECTION 5.16. Employment Agreements . . . . . . . . . . 32
SECTION 5.17. Parent Board of Directors . . . . . . . . 33
SECTION 5.18. Conveyance Taxes; Fees . . . . . . . . . 33
SECTION 5.19. Public Announcements . . . . . . . . . . 33
SECTION 5.20. Employee Matters. . . . . . . . . . . . . 33
ARTICLE VI
CONDITIONS TO THE MERGER
SECTION 6.1. Conditions to the Obligations of
Each Party . . . . . . . . . . . . . . . 34
SECTION 6.2. Conditions to the Obligations of
Parent and Merger Sub . . . . . . . . . . 35
SECTION 6.3. Conditions to the Obligations of the
Company . . . . . . . . . . . . . . . . . 36
ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER
SECTION 7.1. Termination or Abandonment. . . . . . . . 36
SECTION 7.2. Amendment or Supplement. . . . . . . . . 38
SECTION 7.3. Effect of Termination . . . . . . . . . . 38
SECTION 7.4. Fees and Expenses . . . . . . . . . . . . 38
SECTION 7.5. Extension; Waiver . . . . . . . . . . . . 39
ARTICLE VIII
GENERAL PROVISIONS
SECTION 8.1. Nonsurvival of Representations . . . . . 39
SECTION 8.2. Notices . . . . . . . . . . . . . . . . . 39
SECTION 8.3. Definitions . . . . . . . . . . . . . . . 40
SECTION 8.4. Counterparts . . . . . . . . . . . . . . 43
SECTION 8.5. Entire Agreement; No Third-Party
Beneficiaries . . . . . . . . . . . . . . 43
SECTION 8.6. Assignment . . . . . . . . . . . . . . . 43
SECTION 8.7. Governing Law . . . . . . . . . . . . . . 43
SECTION 8.8. Enforcement . . . . . . . . . . . . . . . 43
SECTION 8.9. Severability. . . . . . . . . . . . . . . 44
SECTION 8.10. Headings. . . . . . . . . . . . . . . . . 44
SECTION 8.11. Finders or Brokers. . . . . . . . . . . . 44
EXHIBIT A Form of Company Tax Opinion Representation Letter
EXHIBIT B Form of Parent Tax Opinion Representation Letter
EXHIBIT C Form of Simon Employment Agreement
EXHIBIT D Form of Stockholder Representation Letter
This AGREEMENT AND PLAN OF MERGER, dated October 23,
1997, is entered into by and among Clear Channel Communications,
Inc., a Texas corporation ("Parent"), UH Merger Sub, Inc., a
Delaware corporation and a wholly owned subsidiary of Parent
("Merger Sub"), and Universal Outdoor Holdings, Inc., a Delaware
corporation (the "Company").
W I T N E S S E T H :
WHEREAS, the respective Boards of Directors of Parent,
Merger Sub and the Company have approved the acquisition of the
Company by Parent upon the terms and subject to the conditions
set forth in this Agreement and Plan of Merger, including,
without limitation, the exhibits attached hereto (collectively,
this "Agreement");
WHEREAS, the respective Boards of Directors of Parent,
Merger Sub and the Company have approved the merger of Merger Sub
with and into the Company as set forth below (the "Merger") upon
the terms and subject to the conditions set forth in this
Agreement, whereby each issued and outstanding share of common
stock, par value $0.01 per share, of the Company ("Company Common
Stock"), other than shares owned directly or indirectly by Parent
or by the Company will be converted into shares of common stock,
par value $0.10 per share, of Parent ("Parent Common Stock") in
accordance with the provisions of Article II of this Agreement;
WHEREAS, for federal income tax purposes, the Merger is
intended to qualify as a reorganization under the provisions of
Section 368(a) of the United States Internal Revenue Code of
1986, as amended (the "Code"); and
WHEREAS, Parent, Merger Sub and the Company desire to
make certain representations, warranties, covenants and
agreements in connection with the Merger and also to prescribe
certain conditions to the Merger.
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
THE MERGER
SECTION 1.1. The Merger. Upon the terms and subject
to the conditions set forth in this Agreement and the Delaware
General Corporation Law (the "DGCL"), Merger Sub shall be merged
with and into the Company at the Effective Time (as defined in
Section 1.3) of the Merger. Following the Merger, the separate
corporate existence of Merger Sub shall cease, and the Company
shall continue as the surviving corporation (the "Surviving
Corporation") and shall succeed to and assume all the rights and
obligations of Merger Sub in accordance with the DGCL.
SECTION 1.2. Closing. The closing of the Merger shall
take place at 10:00 a.m. on a date to be specified by the parties
which shall be no later than the second business day after the
satisfaction or waiver of the conditions set forth in Article VI
(the "Closing Date") at the offices of Skadden, Arps, Slate,
Xxxxxxx & Xxxx, Chicago, Illinois, unless another date or place
is agreed to in writing by the parties hereto.
SECTION 1.3. Effective Time. On the Closing Date, the
parties shall execute and file in the office of the Secretary of
State of Delaware a certificate of merger (a "Certificate of
Merger") executed in accordance with the DGCL and shall make all
other filings or recordings, if any, required under DGCL. The
Merger shall become effective at the time of filing of the
Certificate of Merger, or at such later time as is agreed upon by
the parties hereto and set forth therein (such time as the Merger
becomes effective is referred to herein as the "Effective Time").
SECTION 1.4. Effects of the Merger. The Merger shall
have the effects set forth in the DGCL.
SECTION 1.5. Certificate of Incorporation and By-Laws
of the Surviving Corporation. (a) The Certificate of
Incorporation of the Company as in effect immediately prior to
the Effective Time shall become the Certificate of Incorporation
of the Surviving Corporation after the Effective Time, and
thereafter may be amended as provided therein and as permitted by
law and this Agreement.
(b) The By-Laws of the Company as in effect
immediately prior to the Effective Time shall become the By-Laws
of the Surviving Corporation after the Effective Time, and
thereafter may be amended as provided therein and as permitted by
law and this Agreement.
SECTION 1.6. Directors. The directors of the Merger
Sub immediately prior to the Effective Time shall become the
directors of the Surviving Corporation, until the earlier of
their resignation or removal or until their respective successors
are duly elected and qualified, as the case may be.
SECTION 1.7. Officers. The officers of the Company
immediately prior to the Effective Time shall become the officers
of the Surviving Corporation, until the earlier of their
resignation or removal or until their respective successors are
duly elected and qualified, as the case may be.
ARTICLE II
EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE CONSTITUENT
CORPORATIONS; EXCHANGE OF CERTIFICATES
SECTION 2.1. Capital Stock of Merger Sub. As of the
Effective Time, by virtue of the Merger and without any action on
the part of the holder of any shares of Company Common Stock or
any shares of capital stock of Merger Sub, each share of common
stock, par value $0.01 per share, of Merger Sub issued and
outstanding immediately prior to the Effective Time shall be
converted into and become one fully paid and nonassessable share
of common stock, par value $0.01 per share, of the Surviving
Corporation.
SECTION 2.2. Cancellation of Treasury Stock and Parent
Owned Stock. As of the Effective Time, by virtue of the Merger
and without any action on the part of the holder of any shares of
Company Common Stock or any shares of capital stock of Merger
Sub, each share of Company Common Stock issued and held,
immediately prior to the Effective Time, in the Company's
treasury or by any of the Company's direct or indirect wholly
owned subsidiaries, and each share of Company Common Stock that
is owned by Parent, Merger Sub or any other subsidiary of Parent,
shall automatically be cancelled and retired and shall cease to
exist, and no consideration shall be delivered in exchange
therefor.
SECTION 2.3. Conversion of Company Common Stock. (a)
As of the Effective Time, by virtue of the Merger and without any
action on the part of the holder of any shares of Company Common
Stock or any shares of capital stock of Merger Sub, subject to
this Section 2.3 and Section 2.4(f), each share of Company Common
Stock issued and outstanding immediately prior to the Effective
Time (other than shares to be cancelled in accordance with
Section 2.2 (the "Cancelled Shares")) shall be converted into
(the "Merger Consideration") 0.67 (the "Conversion Number") duly
authorized, validly issued and non-assessable shares of Parent
Common Stock ; provided, however, that, in any event, if between
the date of this Agreement and the Effective Time, the
outstanding shares of Parent Common Stock shall have been changed
into a different number of shares or a different class, by reason
of any stock dividend, subdivision, reclassification,
recapitalization, split, combination or exchange of shares, the
Conversion Number shall be correspondingly adjusted to the extent
appropriate to reflect such stock dividend, subdivision,
reclassification, recapitalization, split, combination or
exchange of shares. As of the Effective Time, all such shares of
Company Common Stock shall no longer be outstanding and shall
automatically be cancelled and retired and shall cease to exist,
and each holder of a certificate or a certificate which
immediately prior to the Effective Time represented outstanding
shares of Company Common Stock shall cease to have any rights
with respect thereto, except the right to receive the Merger
Consideration.
SECTION 2.4. Exchange of Certificates. (a) Exchange
Agent. From and after the Effective Time, Parent shall make
available to a bank or trust company designated by Parent and
reasonably satisfactory to the Company (the "Exchange Agent"),
for the benefit of the holders of shares of Company Common Stock
for exchange in accordance with this Article II, through the
Exchange Agent, certificates evidencing such number of shares of
Parent Common Stock issuable to holders of Company Common Stock
in the Merger pursuant to Section 2.3 (such certificates for
shares of Parent Common Stock, together with any dividends or
distributions with respect thereto and cash, being hereinafter
referred to as the "Exchange Fund"). The Exchange Agent shall,
pursuant to irrevocable instructions, deliver the Parent Common
Stock contemplated to be issued pursuant to Section 2.3 and the
cash in lieu of fractional shares of Parent Common Stock to which
such holders are entitled to pursuant to Section 2.4(f) hereof
out of the Exchange Fund. Except as contemplated by Section
2.4(g) hereof, the Exchange Fund shall not be used for any other
purpose.
(b) Exchange Procedures. As promptly as practicable
after the Effective Time, Parent shall cause the Exchange Agent
to mail to each holder of a certificate or certificates which
immediately prior to the Effective Time represented outstanding
shares of Company Common Stock (the "Certificates") (i) a letter
of transmittal (which shall be in customary form and shall
specify that delivery shall be effected, and risk of loss and
title to the Certificates shall pass, only upon proper delivery
of the Certificates to the Exchange Agent) and (ii) instructions
for use in effecting the surrender of the Certificates in
exchange for certificates evidencing shares of Parent Common
Stock, or cash in lieu of fractional shares of Parent Common
Stock to which such holder is entitled pursuant to Section 2.4(f)
hereof.
(c) Exchange of Certificates. Upon surrender to the
Exchange Agent of a Certificate for cancellation, together with
such letter of transmittal, duly executed and completed in
accordance with the instructions thereto, and such other
documents as may be reasonably required pursuant to such
instructions, the holder of such Certificate shall be entitled to
receive in exchange therefor a certificate representing that
number of whole shares of Parent Common Stock which such holder's
shares of Company Common Stock have been converted into pursuant
to this Article II (and any cash in lieu of any fractional shares
of Parent Common Stock to which such holder is entitled pursuant
to Section 2.4(f) and any dividends or other distributions to
which such holder is entitled pursuant to Section 2.4(d)), and
the Certificate so surrendered shall forthwith be cancelled. In
the event of a transfer of ownership of shares of Company Common
Stock which is not registered in the transfer records of the
Company, shares of Parent Common Stock, cash in lieu of any
fractional shares of Parent Common Stock to which such holder is
entitled pursuant to Section 2.4(f) and any dividends or other
distributions to which such holder is entitled pursuant to
Section 2.4(d) may be issued to a transferee if the Certificate
representing such shares of Company Common Stock is presented to
the Exchange Agent, accompanied by all documents required to
evidence and effect such transfer and by evidence that any
applicable stock transfer taxes have been paid. Until
surrendered as contemplated by this Section 2.4, each Certificate
shall be deemed at all times after the Effective Time to
represent only the right to receive upon such surrender the
number of whole shares of Parent Common Stock into which the
shares of Company Common Stock formerly represented thereby have
been converted, cash in lieu of any fractional shares of Parent
Common Stock to which such holder is entitled pursuant to Section
2.4(f) and any dividends or other distributions to which such
holder is entitled pursuant to Section 2.4(d).
(d) Distributions with Respect to Unexchanged Shares
of Parent Common Stock. No dividends or other distributions
declared or made after the Effective Time with respect to Parent
Common Stock with a record date after the Effective Time shall be
paid to the holder of any unsurrendered Certificate with respect
to the shares of Parent Common Stock represented thereby, and no
cash payment in lieu of any fractional shares shall be paid to
any such holder pursuant to Section 2.4(f), until the holder of
such Certificate shall surrender such Certificate. Subject to
the effect of escheat, tax or other applicable laws, following
surrender of any such Certificate, there shall be paid to the
holder of the certificates representing whole shares of Parent
Common Stock issued in exchange therefor, without interest,
(i) promptly, the amount of any cash payable with respect to a
fractional share of Parent Common Stock to which such holder is
entitled pursuant to Section 2.4(f) and the amount of dividends
or other distributions with a record date after the Effective
Time and theretofore paid with respect to such whole shares of
Parent Common Stock, and (ii) at the appropriate payment date,
the amount of dividends or other distributions, with a record
date after the Effective Time but prior to surrender and a
payment date occurring after surrender, payable with respect to
such whole shares of Parent Common Stock.
(e) No Further Rights in Company Common Stock. All
shares of Parent Common Stock issued upon conversion of the
shares of Company Common Stock in accordance with the terms
hereof (including any cash paid pursuant to Section 2.4(d) or
(f)) shall be deemed to have been issued in full satisfaction of
all rights pertaining to such shares of Company Common Stock.
(f) No Fractional Shares. (i) No certificates or
scrip representing fractional shares of Parent Common Stock shall
be issued upon the surrender for exchange of Certificates, no
dividend or distribution of Parent shall relate to such
fractional share interests and such fractional share interests
will not entitle the owner thereof to vote or to any rights of a
stockholder of Parent.
(ii) As promptly as practicable following the
Effective Time, the Exchange Agent will determine the excess of
(A) the number of whole shares of Parent Common Stock delivered
to the Exchange Agent by Parent pursuant to Section 2.4(a) over
(B) the aggregate number of whole shares of Parent Common Stock
to be distributed to holders of Company Common Stock pursuant to
Section 2.4(b) (such excess being herein called the "Excess
Shares"). Following the Effective Time, the Exchange Agent will,
on behalf of former stockholders of Company, sell the Excess
Shares at then prevailing prices on the New York Stock Exchange,
Inc. (the "NYSE"), all in the manner provided in Section
2.4(f)(iii).
(iii) The sale of the Excess Shares by the Exchange
Agent will be executed on the NYSE through one or more member
firms of the NYSE and will be executed in round lots to the
extent practicable. The Exchange Agent will use reasonable
efforts to complete the sale of the Excess Shares as promptly
following the Effective Time as, in the Exchange Agent's sole
judgment, is practicable consistent with obtaining the best
execution of such sales in light of prevailing market conditions.
Until the net proceeds of such sale or sales have been
distributed to the holders of Company Common Stock, the Exchange
Agent will hold such proceeds in trust for the holders of Company
Common Stock (the "Common Shares Trust"). The Surviving
Corporation will pay all commissions, transfer taxes and other
out-of-pocket transaction costs, including the expenses and
compensation of the Exchange Agent incurred in connection with
such sale of the Excess Shares. The Exchange Agent will
determine the portion of the Common Shares Trust to which each
holder of Company Common Stock is entitled, if any, by
multiplying the amount of the aggregate net proceeds comprising
the Common Shares Trust by a fraction, the numerator of which is
the amount of the fractional share interest to which such holder
of Company Common Stock is entitled (after taking into account
all shares of Company Common Stock held at the Effective Time by
such holder) and the denominator of which is the aggregate amount
of fractional share interests to which all holders of Company
Common Stock are entitled.
(iv) Notwithstanding the provisions of Section
2.4(f)(ii) and (iii), the Surviving Corporation may elect at its
option, exercised prior to the Effective Time, in lieu of the
issuance and sale of Excess Shares and the making of the payments
hereinabove contemplated, to pay each holder of Company Common
Stock an amount in cash equal to the product obtained by
multiplying (A) the fractional share interest to which such
holder (after taking into account all shares of Company Common
Stock held at the Effective Time by such holder) would otherwise
be entitled by (B) the closing price for a share of Parent Common
Stock as reported on the NYSE Composite Transaction Tape (as
reported in The Wall Street Journal, or, if not reported thereby,
any other authoritative source) on the Closing Date, and, in such
case, all references herein to the cash proceeds of the sale of
the Excess Shares and similar references will be deemed to mean
and refer to the payments calculated as set forth in this Section
2.4(f)(iv).
(v) As soon as practicable after the determination of
the amount of cash, if any, to be paid to holders of Company
Common Stock with respect to any fractional share interests, the
Exchange Agent will make available such amounts to such holders
of Company Common Stock subject to and in accordance with the
terms of Section 2.4(d).
(g) Termination of Exchange Fund. Any portion of the
Exchange Fund (including any shares of Parent Common Stock) which
remains undistributed to the holders of Company Common Stock for
six months after the Effective Time shall be delivered to Parent,
upon demand, and any holders of Company Common Stock who have not
theretofore complied with this Article II shall thereafter look
only to Parent for the applicable Merger Consideration, any cash
in lieu of fractional shares of Parent Common Stock to which they
are entitled pursuant to Section 2.4(f) and any dividends or
other distributions with respect to the Parent Common Stock to
which they are entitled pursuant to Section 2.4(d). Any portion
of the Exchange Fund remaining unclaimed by holders of shares of
Company Common Stock as of a date which is immediately prior to
such time as such amounts would otherwise escheat to or become
property of any government entity shall, to the extent permitted
by applicable law, become the property of Parent free and clear
of any claims or interest of any person previously entitled
thereto.
(h) No Liability. None of the Exchange Agent, Parent
nor the Surviving Corporation shall be liable to any holder of
shares of Company Common Stock for any such shares of Parent
Common Stock (or dividends or distributions with respect
thereto) or cash delivered to a public official pursuant to any
abandoned property, escheat or similar law.
(i) Withholding Rights. Each of the Surviving
Corporation and Parent shall be entitled to deduct and withhold
from the consideration otherwise payable pursuant to this
Agreement to any holder of shares of Company Common Stock such
amounts as it is required to deduct and withhold with respect to
the making of such payment under the Code, or any provision of
state, local or foreign tax law. To the extent that amounts are
so withheld by the Surviving Corporation or Parent, as the case
may be, such withheld amounts shall be treated for all purposes
of this Agreement as having been paid to the holder of the shares
of Company Common Stock in respect of which such deduction and
withholding was made by the Surviving Corporation or Parent, as
the case may be.
(j) Lost Certificates. If any Certificate shall have
been lost, stolen or destroyed, upon the making of an affidavit
of that fact by the person claiming such Certificate to be lost,
stolen or destroyed and, if required by the Surviving
Corporation, the posting by such person of a bond, in such
reasonable amount as the Surviving Corporation may direct, as
indemnity against any claim that may be made against it with
respect to such Certificate, the Exchange Agent will issue in
exchange for such lost, stolen or destroyed Certificate the
applicable Merger Consideration, any cash in lieu of fractional
shares of Parent Common Stock to which the holders thereof are
entitled pursuant to Section 2.4(f) and any dividends or other
distributions to which the holders thereof are entitled pursuant
to this Agreement.
(k) Further Assurances. If, at any time after the
Effective Time, the Surviving Corporation shall consider or be
advised that any deeds, bills of sale, assignments, assurances or
any other actions or things are necessary or desirable to vest,
perfect or confirm of record or otherwise in the Surviving
Corporation its right, title or interest in, to or under any of
the rights, properties or assets of either of the Merger Sub or
the Company acquired or to be acquired by the Surviving
Corporation as a result of, or in connection with, the Merger or
otherwise to carry out this Agreement, the officers of the
Surviving Corporation shall be authorized to execute and deliver,
in the name and on behalf of each of the Merger Sub and the
Company or otherwise, all such deeds, bills of sale, assignments
and assurances and to take and do, in such names and on such
behalves or otherwise, all such other actions and things as may
be necessary or desirable to vest, perfect or confirm any and all
right, title and interest in, to and under such rights,
properties or assets in the Surviving Corporation or otherwise to
carry out the purposes of this Agreement.
SECTION 2.5. Stock Transfer Books. At the Effective
Time, the stock transfer books of the Company shall be closed and
there shall be no further registration of transfers of shares of
Company Common Stock thereafter on the records of the Company.
From and after the Effective Time, the holders of Certificates
representing shares of Company Common Stock outstanding
immediately prior to the Effective Time shall cease to have any
rights with respect to such shares of Company Common Stock,
except as otherwise provided herein or by law. On or after the
Effective Time, any Certificates presented to the Exchange Agent
or Parent for any reason shall be converted into shares of Parent
Common Stock, any cash in lieu of fractional shares of Parent
Common Stock to which the holders thereof are entitled pursuant
to Section 2.4(f) and any dividends or other distributions to
which the holders thereof are entitled pursuant to
Section 2.4(d).
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to Parent
and Merger Sub as follows:
SECTION 3.1. Organization, Qualification, Etc. The
Company is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware and has the
corporate power and authority to own its properties and assets
and to carry on its business as it is now being conducted and is
duly qualified to do business and is in good standing in each
jurisdiction in which the ownership of its properties or the
conduct of its business requires such qualification, except for
jurisdictions in which such failure to be so qualified or to be
in good standing would not in the aggregate have a Material
Adverse Effect on the Company. The copies of the Company's
charter and by-laws which have been delivered to Parent are
complete and correct and in full force and effect on the date
hereof. Each of the Company's Subsidiaries is a corporation duly
organized, validly existing and in good standing under the laws
of its jurisdiction of incorporation or organization, has the
power and authority to own its properties and to carry on its
business as it is now being conducted, and is duly qualified to
do business and is in good standing in each jurisdiction in which
the ownership of its property or the conduct of its business
requires such qualification, except for jurisdictions in which
such failure to be so qualified or to be in good standing would
not in the aggregate have a Material Adverse Effect on the
Company. The Company has previously provided to Parent true and
correct copies of the articles and by-laws of each Material
Subsidiary (as defined in Regulation S-K promulgated under the
Securities Act of 1933) and each such organizational document is
in full force and effect on the date hereof. All the outstanding
shares of capital stock of, or other ownership interests in, the
Company's Subsidiaries are validly issued, fully paid and non-
assessable and are owned by the Company, directly or indirectly,
free and clear of all liens, claims, charges or encumbrances,
except for restrictions contained in credit agreements and
similar instruments to which the Company is a party. There are
no existing options, rights of first refusal, preemptive rights,
calls or commitments of any character relating to the issued or
unissued capital stock or other securities of, or other ownership
interests in, any Subsidiary of the Company.
SECTION 3.2. Capital Stock. The authorized stock of
the Company consists of 75,000,000 shares of the Company Common
Stock, and 10,000,000 shares of preferred stock, par value $0.01
per share (the "Company Preferred Stock"). As of October 22,
1997, 26,327,757 shares of the Company Common Stock and no
shares of the Company Preferred Stock were issued and
outstanding. All the outstanding shares of the Company Common
Stock have been validly issued and are fully paid and non-
assessable. As of October 22, 1997, there were no outstanding
subscriptions, options, warrants, rights or other arrangements or
commitments obligating the Company to issue any shares of its
stock other than:
(a) rights to acquire 2,177,078 shares of the Company
Common Stock pursuant to the Company Amended and Restated 1996
Warrant Plan (the "1996 Warrant Plan");
(b) rights to acquire 387,200 shares of Company Common
Stock pursuant to the Warrant Agreement, dated June 30, 1994,
between the Company and the United States Trust Company of New
York (the "1994 Warrant Agreement");
(c) options or other rights to receive or acquire
271,499 shares of Company Common Stock pursuant to the 1997
Equity Incentive Plan (the "1997 Incentive Plan") which includes
options, stock awards and restricted stock awards to be granted
under the 1997 Incentive Plan subsequent to the date hereof in
accordance with Section 5.1(a)(ix); and
(d) options or other rights issued to an employee of
the Company to acquire 44,000 shares of Company Common Stock (the
"Employee Options").
Except for the issuance of shares of the Company Common
Stock pursuant to the options and other rights referred to in
Sections 3.2(a)-(d) above and except as provided for in 5.1(a),
(viii) and (ix), since October 22, 1997, no shares of the Company
Common Stock have been issued.
SECTION 3.3. Corporate Authority Relative to this
Agreement; No Violation. The Company has the corporate power and
authority to enter into this Agreement and to carry out its
obligations hereunder. The execution and delivery of this
Agreement and the consummation of the transactions contemplated
hereby have been duly and validly authorized by the Board of
Directors of the Company and, except for the approval of its
stockholders, no other corporate proceedings on the part of the
Company are necessary to authorize this Agreement and the
transactions contemplated hereby. The Board of Directors of the
Company has determined that the transactions contemplated by this
Agreement are in the best interest of its stockholders and to
recommend to such stockholders that they vote in favor thereof.
This Agreement has been duly and validly executed and delivered
by the Company and, assuming this Agreement has been duly and
validly executed and delivered by the other parties hereto, this
Agreement constitutes a valid and binding agreement 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).
The Company is not subject to or obligated under any charter,
bylaw or contract provision or any licenses, franchise or permit,
or subject to any order or decree, which would be breached or
violated by its executing or, subject to the approval of its
stockholders, carrying out this Agreement, except as otherwise
previously disclosed in writing to Parent and for any breaches or
violations which would not, in the case of any contract
provision, license, franchise, permit, order or decree, in the
aggregate, have a Material Adverse Effect on the Company. Other
than in connection with or in compliance with the provisions of
the DGCL, the Securities Act of 1933 (the "Securities Act"), the
Securities Exchange Act of 1934, as amended (the "Exchange Act"),
the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as
amended (the "HSR Act"), Section 4043 of ERISA (as defined in
Section 3.8), any other competition, antitrust and investment
laws and the securities or blue sky laws of the various states,
and, other than the filing of the Certificate of Merger with the
Delaware Secretary of State and any necessary state filings to
maintain the good standing or qualification of the Surviving
Corporation (collectively, the "Company Required Approvals"), no
authorization, consent or approval of, or filing with, any
governmental body or authority is necessary for the consummation
by the Company of the transactions contemplated by this
Agreement, except for such authorizations, consents, approvals or
filings, the failure to obtain or make which would not, in the
aggregate, have a Material Adverse Effect on the Company;
provided that the Company makes no representation with respect to
such of the foregoing as are required by reason of the regulatory
status of Parent or any of its Subsidiaries or facts specifically
pertaining to any of them.
SECTION 3.4. Reports and Financial Statements. The
Company has previously furnished to Parent true and complete
copies of:
(a) the Company's Annual Report on Form 10-K filed
with the Securities and Exchange Commission (the "SEC") for the
year ended December 31, 1996;
(b) the Company's Quarterly Reports on Form 10-Q filed
with the SEC for the quarters ended March 31, 1997 and June 30,
1997;
(c) the definitive proxy statement filed by the
Company with the SEC on May 13, 1997;
(d) each final prospectus filed by the Company with
the SEC since July 23, 1996, except any final prospectus on Form
S-8; and
(e) all Current Reports on Form 8-K filed by the
Company with the SEC since December 31, 1996.
Except as previously disclosed in writing to Parent, as
of their respective dates, such reports, proxy statement, and
prospectuses (collectively, the "Company SEC Reports") (i)
complied as to form in all material respects with the applicable
requirements of the Securities Act, the Exchange Act and the
rules and regulations promulgated thereunder and (ii) did not
contain any untrue statement of a material fact or omit to state
a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under
which they were made, not misleading; provided, that the
foregoing clause (ii) shall not apply to the financial statements
included in the Company SEC Reports (which are covered by the
following sentence). The audited consolidated financial
statements and unaudited consolidated interim financial
statements included in the Company SEC Reports (including any
related notes and schedules) fairly present the financial
position of the Company and its Subsidiaries as of the dates
thereof and the results of operations and cash flows for the
periods or as of the dates then ended (subject, where
appropriate, to normal year-end adjustments), in each case in
accordance with past practice and generally accepted accounting
principles in the United States ("GAAP") consistently applied
during the periods involved (except as otherwise disclosed in the
notes thereto and except that the unaudited financial statements
therein do not contain all of the footnote disclosures required
by GAAP). Since July 23, 1996, the Company has timely filed all
material reports, registration statements and other filings
required to be filed by it with the SEC under the rules and
regulations of the SEC.
SECTION 3.5. No Undisclosed Liabilities. Except as
previously disclosed in writing to Parent, neither the Company
nor any of its Subsidiaries has any liabilities or obligations of
any nature, whether or not accrued, contingent or otherwise, of a
type required by GAAP to be reflected on a consolidated balance
sheet and has no indebtedness for borrowed money outstanding,
except, in each case, (a) liabilities, obligations or
indebtedness reflected in any of the Company SEC Reports or
disclosed in writing to Parent and (b) liabilities, obligations
or indebtedness, which would not in the aggregate have a Material
Adverse Effect on the Company.
SECTION 3.6. No Violation of Law. The businesses of
the Company and its Subsidiaries are not being conducted in
violation of any law, ordinance or regulation of any governmental
body or authority (provided that no representation or warranty is
made in this Section 3.6 with respect to Environmental Laws (as
defined in Section 3.7 below)) except (a) as described in any of
the Company SEC Reports and (b) for violations or possible
violations which would not in the aggregate have a Material
Adverse Effect on the Company. The Company and its Subsidiaries
have all permits, licenses and governmental authorizations
material to ownership or occupancy of their respective properties
and assets and the carrying on of their respective businesses,
except for such permits, licenses and governmental authorizations
the failure of which to have would not have in the aggregate a
Material Adverse Effect on the Company.
SECTION 3.7. Environmental Laws and Regulations.
Except as described in any of the Company SEC Reports, (a) the
Company and each of its Subsidiaries is in material compliance
with all applicable federal, state, local and foreign laws and
regulations relating to pollution or protection of human health
or the environment (including, without limitation, ambient air,
surface water, ground water, land surface or subsurface strata)
(collectively, "Environmental Laws"), except for non-compliance
which would not in the aggregate have a Material Adverse Effect
on the Company, which compliance includes, but is not limited to,
the possession by the Company and its Subsidiaries of material
permits and other governmental authorizations required under
applicable Environmental Laws, and compliance with the terms and
conditions thereof, (b) neither the Company nor any of its
Subsidiaries has received written notice of, or, to the knowledge
of the Company, is the subject of, any actions, causes of action,
claims, investigations, demands or notices by any Person alleging
liability under or non-compliance with any Environmental Law or
that the Company or any Subsidiary is a potentially responsible
party at any Superfund site or state-equivalent site
("Environmental Claims") which would in the aggregate have a
Material Adverse Effect on the Company, (c) to the knowledge of
the Company, there are no circumstances that are reasonably
likely to prevent or interfere with such material compliance in
the future, (d) to the knowledge of the Company, the Company and
its Subsidiaries have not disposed of or released hazardous
materials (at a concentration or level which requires remedial
action under any Environmental Law) at any real property
currently owned or leased by the Company or any Subsidiary or at
any other real property, except for such disposals or releases as
would not in the aggregate have a Material Adverse Effect on the
Company, and (e) neither the Company nor its Subsidiaries have
agreed to indemnify any predecessor or other party with respect
to any environmental liability, other than (i) customary
indemnity agreements contained in leases and licenses and (ii)
such agreements as would not in the aggregate have a Material
Adverse Effect on the Company.
SECTION 3.8. No Undisclosed Employee Benefit Plan
Liabilities or Severance Arrangements. Except as described in
any of the Company SEC Reports, all "employee benefit plans," as
defined in Section 3(3) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA") (including any multi-
employer plan as defined in Section 3(37) of ERISA), maintained
or contributed to by the Company or its Subsidiaries are in
compliance with all applicable provisions of ERISA, the Code and
any other applicable laws and to the knowledge of the Company,
none of the Company nor its Subsidiaries with respect to such
plans has engaged in a "prohibited transaction" within the
meaning of Section 4975 of the Code or Title I, Part 4 of ERISA
except for transactions (i) which are exempt under applicable
law, regulations and administrative exemptions or (ii) which in
the aggregate would not have a Material Adverse Effect on the
Company, and the Company and its Subsidiaries do not have any
liabilities or obligations with respect to any such employee
benefit plans, whether or not accrued, contingent (including any
potential material withdrawal liability with respect to any such
multi-employer plans) or otherwise, except (a) as described in
any of the Company SEC Reports or previously disclosed in writing
to Parent and (b) for instances of non-compliance transactions or
liabilities or obligations that would not in the aggregate have a
Material Adverse Effect on the Company. Except with respect to
awards granted (or granted subsequent to the date hereof in
accordance with the provision of Section 5.1(a)(ix) or (x)) under
(i) the Company 1997 Incentive Plan, (ii) 0000 Xxxxxxx Plan and
(iii) 1994 Warrant Agreement, no employee of the Company will be
entitled to any additional benefits or any acceleration of the
time of payment or vesting of any benefits under any employee
incentive or benefit plan, program or arrangement as a result of
the transactions contemplated by this Agreement. The Company has
previously provided to Parent a true and correct copy of the
Company's 401(k) plan and the Form 5500 and the audit report
(which fairly represents the financial condition and results of
operations of such plan) related thereto. The Company and its
Subsidiaries do not maintain any employee benefit pension plan
which is subject to Title IV of ERISA. The Company's 401(k) Plan
is exempt from federal income taxation under Section 501 of the
Code, and, to the knowledge of the Company, nothing has occurred
with respect to the operation of such plan which could cause the
loss of such qualification or exemption or the imposition of any
lien, penalty, or tax under ERISA or the Code which would in the
aggregate have a Material Adverse Effect on the Company, and the
Company and its Subsidiaries have not received any material
adverse notice concerning the 401(k) plan from the Internal
Revenue Service, the Department of Labor or the Pension Benefit
Guaranty Corporation ("PBGC") within the four years preceding the
date of this Agreement. None of the Company nor any Subsidiary
has incurred any outstanding liability under Section 4062 of
ERISA to the PBGC, to a trust established under Section 4041 or
4042 of ERISA, or to a trustee appointed under Section 4042 of
ERISA, except for such liabilities as would not in the aggregate
have a Material Adverse Effect on the Company. None of the
Company's employee benefit plans contain any provisions which
would prohibit the transactions contemplated by this Agreement.
As of the Closing Date, except for stock and restricted stock
awards described in Section 5.1(a)(ix), no payment that is owed
or may become due any director, officer, employee, or agent of
the Company or a Subsidiary will be non-deductible by the Company
or any Subsidiary by reason of Section 280G of the Code or under
Section 4999 of the Code, except for such liabilities or non-
deductions as would not in the aggregate have a Material Adverse
Effect on the Company. Except as previously disclosed in writing
to Parent or as set forth in the Company SEC Reports, the Company
has not prepaid or prefunded any material welfare plan through a
trust, reserve, premium stabilization or similar account, other
than pursuant to any insurance contract which does not include a
"fund" as defined in Sections 419(e)(3) and (4) of the Code.
SECTION 3.9. Absence of Certain Changes or Events.
Other than as disclosed in the Company SEC Reports or previously
disclosed in writing to Parent, since June 30, 1997, the
businesses of the Company and its Subsidiaries have been
conducted in all material respects in the ordinary course and
there has not been any event, occurrence, development or state of
circumstances or facts that has had a Material Adverse Effect on
the Company. Since June 30, 1997, no dividends or distributions
have been declared or paid on or made with respect to the shares
of capital stock or other equity interests of the Company or its
Subsidiaries nor have any such shares been repurchased or
redeemed, other than dividends or distributions paid to the
Company or a Subsidiary.
SECTION 3.10. Investigations; Litigation. Except as
described in any of the Company SEC Reports or previously
disclosed in writing to Parent:
(a) no investigation or review by any governmental
body or authority with respect to the Company or any of its
Subsidiaries which would in the aggregate have a Material Adverse
Effect on the Company is pending nor has any governmental body or
authority notified the Company of an intention to conduct the
same; and
(b) there are no actions, suits or proceedings pending
(or, to the Company's knowledge, threatened) against or affecting
the Company or its Subsidiaries, or any of their respective
properties at law or in equity, or before any federal, state,
local or foreign governmental body or authority, which, in the
aggregate, is reasonably likely to have a Material Adverse Effect
on the Company.
SECTION 3.11. Proxy Statement; Registration Statement;
Other Information. None of the information with respect to the
Company or its Subsidiaries to be included in the Proxy Statement
(as defined in Section 5.2) or the Registration Statement (as
defined in Section 5.2) will, in the case of the Proxy Statement
or any amendments thereof or supplements thereto, at the time of
the mailing of the Proxy Statement or any amendments or
supplements thereto, and at the time of the Company Meeting (as
defined in Section 5.3), or, in the case of the Registration
Statement, at the time it becomes effective, contain any untrue
statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which
they were made, not misleading, except that no representation is
made by the Company with respect to information supplied in
writing by Parent or any affiliate of Parent specifically for
inclusion in the Proxy Statement. The Proxy Statement will
comply as to form in all material respects with the provisions of
the Exchange Act and the rules and regulations promulgated
thereunder.
SECTION 3.12. Lack of Ownership of Parent Common
Stock. Neither the Company nor any of its Subsidiaries owns any
shares of Parent Common Stock or other securities convertible
into shares of Parent Common Stock (exclusive of any shares owned
by the Company's employee benefit plans).
SECTION 3.13. Tax Matters. (a) All federal, state,
local and foreign Tax Returns required to be filed by or on
behalf of the Company, each of its Subsidiaries, and each
affiliated, combined, consolidated or unitary group of which the
Company or any of its Subsidiaries is a member (a "Company
Group") have been timely filed, and all returns filed are
complete and accurate except to the extent any failure to file or
any inaccuracies in filed returns would not, individually or in
the aggregate, have a Material Adverse Effect on the Company.
All Taxes due and owing by the Company, any Subsidiary of the
Company or any Company Group have been paid, or adequately
reserved for, except to the extent any failure to pay or reserve
would not, individually or in the aggregate, have a Material
Adverse Effect on the Company. There is no audit examination,
deficiency, refund litigation, proposed adjustment or matter in
controversy with respect to any Taxes due and owing by the
Company, any Subsidiary of the Company or any Company Group nor
has the Company or any Subsidiary filed any waiver of the statute
of limitations applicable to the assessment or collection of any
Tax, in each case, which would, individually or in the aggregate,
have a Material Adverse Effect on the Company. All assessments
for Taxes due and owing by the Company, any Subsidiary of the
Company or any Company Group with respect to completed and
settled examinations or concluded litigation have been paid.
Neither the Company nor any Subsidiary is a party to any tax
indemnity agreement, tax sharing agreement or other agreement
under which the Company or any Subsidiary could become liable to
another person as a result of the imposition of a Tax upon any
person, or the assessment or collection of such a Tax, except for
such agreements as would not in the aggregate have a Material
Adverse Effect. As soon as practicable after the public
announcement of the Agreement, the Company will provide Parent
with written schedules of (i) the taxable years of the Company
for which the statutes of limitations with respect to federal
income Taxes have not expired, and (ii) with respect to federal
income Taxes, those years for which examinations have been
completed, those years for which examinations are presently being
conducted, and those years for which examinations have not yet
been initiated. The Company and each of its Subsidiaries has
complied in all material respects with all rules and regulations
relating to the withholding of Taxes, except to the extent any
such failure to comply would not, individually or in the
aggregate, have a Material Adverse Effect on the Company.
(b) Neither the Company nor any of its Subsidiaries
knows of any fact or has taken any action that could reasonably
be expected to prevent the Merger from qualifying as a
reorganization within the meaning of Section 368(a) of the Code.
SECTION 3.14. Opinion of Financial Advisor. The Board
of Directors of the Company has received the opinion of BT Xxxx
Xxxxx & Sons, Inc. and Bear Xxxxxxx & Co., Inc., dated the date
of this Agreement, to the effect that, as of such date, the
Merger Consideration is fair to the Company's stockholders from a
financial point of view. A copy of the written opinion of BT
Xxxx Xxxxx & Sons, Inc. and Bear Xxxxxxx & Co., Inc. will be
delivered to Parent as soon as practicable after the date of this
Agreement.
SECTION 3.15. Required Vote of the Company
Stockholders. The affirmative vote of the holders of a majority
of the outstanding shares of the Company Common Stock is required
to approve the Merger. No other vote of the stockholders of the
Company is required by law, the charter or By-Laws of the Company
or otherwise in order for the Company to consummate the Merger
and the transactions contemplated hereby.
SECTION 3.16. Insurance. The Company and its
Subsidiaries have insurance policies, including without
limitation policies of life, fire, health and other casualty and
liability insurance, that are customary and appropriate for the
industry in which it operates and such policies are in full force
and effect, except for the failure to have or maintain in full
force and effect such policies as would not in the aggregate have
a Material Adverse Effect on the Company.
SECTION 3.17. Real Property; Title. The Company has
previously provided to Parent a true and complete list of all
real property owned by the Company or its Subsidiaries which is
material to the business of the Company and its Subsidiaries
taken as a whole. The Company has good and marketable title to
all such properties except where the failure to have such title
would not in the aggregate have a Material Adverse Effect.
SECTION 3.18. Collective Bargaining Agreements and
Labor. The Company has previously provided to Parent all labor
or collective bargaining agreements which pertain to a material
number of the employees of the Company and its Subsidiaries.
There are no pending complaints, charges or claims against the
Company or its Subsidiaries filed with any public or governmental
authority, arbitrator or court based upon the employment or
termination by the Company of any individual, except for such
complaints, charges or claims which if adversely determined would
not in the aggregate have a Material Adverse Effect on the
Company.
SECTION 3.19. Material Contracts. Except as set forth
in the Company SEC Reports, neither the Company nor any of its
Subsidiaries is a party to or bound by any "material contract"
(as such term is defined in item 601(b)(10) of Regulation S-K of
the SEC) (all contracts of the type described in this Section
3.19 being referred to herein as "Company Material Contracts").
Each Company Material Contract is valid and binding on the
Company and is in full force and effect, and the Company and each
of its Subsidiaries have in all material respects performed all
obligations required to be performed by them to date under each
Company Material Contract, except where such noncompliance, in
the aggregate, would not have a Material Adverse Effect on the
Company. Neither the Company nor any of its Subsidiaries know
of, or has received notice of, any violation or default under any
Company Material Contract except for such violations or defaults
as would not in the aggregate have a Material Adverse Effect on
the Company.
SECTION 3.20. Takeover Statute. The Board of
Directors of the Company has approved this Agreement and the
transactions contemplated hereby and, assuming the accuracy of
Parent's representation and warranty contained in Section 4.12,
such approval constitutes approval of the Merger and the other
transactions contemplated hereby by the Board of Directors of the
Company under the provisions of Section 203 of the DGCL such that
Section 203 of the DGCL does not apply to this Agreement and the
transactions contemplated hereby. To the knowledge of the
Company, no other state takeover statute is applicable to the
Merger or the other transactions contemplated hereby.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
Parent and Merger Sub hereby jointly and severally
represent and warrant to the Company as follows:
SECTION 4.1. Organization, Qualification, Etc. Each
of Parent and Merger Sub is a corporation duly organized, validly
existing and in good standing under the laws of its jurisdiction
of organization and has the corporate power and authority to own
its properties and assets and to carry on its business as it is
now being conducted and is duly qualified to do business and is
in good standing in each jurisdiction in which the ownership of
its properties or the conduct of its business requires such
qualification, except for jurisdictions in which such failure to
be so qualified or to be in good standing would not in the
aggregate have a Material Adverse Effect on Parent or Merger Sub.
The copies of Parent's Articles of Incorporation, as amended, and
Amended and Restated By-laws and Merger Sub's charter and by-laws
which have been delivered to the Company are complete and correct
and in full force and effect on the date hereof. Each of
Parent's Subsidiaries is a corporation or partnership duly
organized, validly existing and in good standing under the laws
of its jurisdiction of incorporation or organization, has the
power and authority to own its properties and to carry on its
business as it is now being conducted, and is duly qualified to
do business and is in good standing in each jurisdiction in which
the ownership of its property or the conduct of its business
requires such qualification, except for jurisdictions in which
such failure to be so qualified or to be in good standing would
not in the aggregate have a Material Adverse Effect on Parent or
Merger Sub. All the outstanding shares of capital stock of, or
other ownership interests in, Parent's Subsidiaries and Merger
Sub are validly issued, fully paid and non-assessable and are
owned by Parent, directly or indirectly, free and clear of all
liens, claims, charges or encumbrances, except for restrictions
contained in credit agreements and similar instruments to which
Parent is a party. There are no existing options (except for
those set forth in Section 4.2 below), rights of first refusal,
preemptive rights, calls or commitments of any character relating
to the issued or unissued capital stock or other securities of,
or other ownership interests in, any Subsidiary of Parent or
Merger Sub.
SECTION 4.2. Capital Stock. The authorized capital
stock of Parent consists of 150,000,000 shares of Parent Common
Stock, and 2,000,000 shares of preferred stock, par value $1.00
per share ("Parent Preferred Stock"). The shares of Parent
Common Stock to be issued in the Merger or upon the exercise of
the Company stock options, warrants, conversion rights or other
rights or upon vesting or payment of other Company equity-based
awards thereafter will, when issued, be validly issued fully paid
and non-assessable. As of October 22, 1997, 98,056,977 shares of
Parent Common Stock and no shares of Parent Preferred Stock were
issued and outstanding. All the outstanding shares of Parent
Common Stock have been validly issued and are fully paid and non-
assessable. As of October 22, 1997, there were no outstanding
subscriptions, options, warrants, rights or other arrangements or
commitments obligating Parent to issue any shares of its capital
stock other than options and other rights to receive or acquire
an aggregate of 4,263,017 shares of Parent Common Stock pursuant
to:
(a) the 1984 Incentive Stock Option Plan of Parent;
(b) the 1994 Incentive Stock Option Plan of Parent;
(c) the 1994 Non-Qualified Stock Option Plan;
(d) the Parent Director's Non-Qualified Stock Option
Plan;
(e) the Stockholders Agreement, dated April 9, 1997,
by and among Parent, Xxxxx Media Corporation, and EM Holdings,
L.L.C.; and
(f) various other option agreements with officers or
employees of the Parent or the Parent's Subsidiaries, option
assumption agreements, and incentive compensation grants.
SECTION 4.3. Corporate Authority Relative to this
Agreement; No Violation. Each of Parent and Merger Sub has the
corporate power and authority to enter into this Agreement and to
carry out its obligations hereunder. The execution and delivery
of this Agreement and the consummation of the transactions
contemplated hereby have been duly and validly authorized by the
Boards of Directors of Parent and Merger Sub and no other
corporate or stockholder proceedings on the part of Parent or
Merger Sub are necessary to authorize this Agreement, the
issuance of the Parent Common Stock and the other transactions
contemplated hereby. This Agreement has been duly and validly
executed and delivered by Parent and Merger Sub and, assuming
this Agreement has been duly and validly executed and delivered
by the other parties hereto, this Agreement constitutes a valid
and binding agreement of Parent and Merger Sub, enforceable
against each of them 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). Neither Parent nor Merger
Sub is subject to or obligated under any charter, by-law or
contract provision or any license, franchise or permit, or
subject to any order or decree, which would be breached or
violated by its executing or carrying out this Agreement, except
for any breaches or violations which would not, in the aggregate,
have a Material Adverse Effect on Parent. Other than in
connection with or in compliance with the provisions of the DGCL,
the Securities Act, the Exchange Act, the HSR Act, Section 4043
of ERISA, any non-United States competition, antitrust and
investments laws and the securities or blue sky laws of the
various states, and, other than the filing of the Certificate of
Merger with the Delaware Secretary of State and any necessary
state filings to maintain the good standing or qualification of
the Surviving Corporation (collectively, the "Parent Required
Approvals"), no authorization, consent or approval of, or filing
with, any governmental body or authority is necessary for the
consummation by Parent of the transactions contemplated by this
Agreement, except for such authorizations, consents, approvals or
filings, the failure to obtain or make which would not, in the
aggregate, have a Material Adverse Effect on Parent; provided
that Parent makes no representation with respect to such of the
foregoing as are required by reason of the regulatory status of
the Company or any of its Subsidiaries or facts specifically
pertaining to any of them.
SECTION 4.4. Reports and Financial Statements. Parent
has previously furnished to the Company true and complete copies
of:
(a) Parent's Annual Reports on Form 10-K filed with
the SEC for each of the years ended December 31, 1994 through
1996;
(b) Parent's Quarterly Reports on Form 10-Q filed with
the SEC for the quarters ended March 31, 1997 and June 30, 1997;
(c) each definitive proxy statement filed by Parent
with the SEC since December 31, 1994;
(d) each final prospectus filed by Parent with the SEC
since December 31, 1994, except any final prospectus on Form S-8;
and
(e) all Current Reports on Form 8-K filed by Parent
with the SEC since December 31, 1996.
As of their respective dates, such reports, proxy
statements and prospectuses (collectively, "Parent SEC Reports")
(i) complied as to form in all material respect with the
applicable requirements of the Securities Act, the Exchange Act,
and the rules and regulations promulgated thereunder and (ii) did
not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary
to make the statements therein, in light of the circumstances
under which they were made, not misleading; provided, that the
foregoing clause (ii) shall not apply to the financial statements
included in the Parent SEC Reports (which are covered by the
following sentence). The audited consolidated financial
statements and unaudited consolidated interim financial
statements included in the Parent SEC Reports (including any
related notes and schedules) fairly present the financial
position of Parent and its consolidated Subsidiaries as of the
dates thereof and the results of their operations and their cash
flows for the periods or as of the dates then ended (subject,
where appropriate, to normal year-end adjustments), in each case
in accordance with past practice and GAAP consistently applied
during the periods involved (except as otherwise disclosed in the
notes thereto and except that the unaudited financial statements
therein do not contain all of the footnote disclosures required
by GAAP). Since September 30, 1996, Parent has timely filed all
material reports, registration statements and other filings
required to be filed by it with the SEC under the rules and
regulations of the SEC.
SECTION 4.5. No Undisclosed Liabilities. Neither
Parent nor any of its Subsidiaries has any liabilities or
obligations of any nature, whether or not accrued, contingent or
otherwise, of a type required by GAAP to be reflected on a
consolidated balance sheet except (a) liabilities or obligations
reflected in any of the Parent SEC Reports and (b) liabilities or
obligations which would not in the aggregate have a Material
Adverse Effect on Parent.
SECTION 4.6. No Violation of Law. The businesses of
Parent and its Subsidiaries are not being conducted in violation
of any law, ordinance or regulation of any governmental body or
authority (provided that no representation or warranty is made in
this Section 4.6 with respect to Environmental Laws) except (a)
as described in any of the Parent SEC Reports and (b) for
violations or possible violations which would not in the
aggregate have a Material Adverse Effect on Parent.
SECTION 4.7. Environmental Laws and Regulations.
Except as described in any of the Parent SEC Reports, (a) Parent
and each of its Subsidiaries is in material compliance with all
applicable Environmental Laws, except for non-compliance which
would not in the aggregate have a Material Adverse Effect on
Parent, which compliance includes, but is not limited to, the
possession by Parent and its Subsidiaries of material permits and
other governmental authorizations required under applicable
Environmental Laws, and compliance with the terms and conditions
thereof; (b) neither Parent nor any of its Subsidiaries has
received written notice of, or, to the knowledge of Parent, is
the subject of, any Environmental Claims which would in the
aggregate have a Material Adverse Effect on Parent; and (c) to
the knowledge of Parent, there are no circumstances that are
reasonably likely to prevent or interfere with such material
compliance in the future.
SECTION 4.8. No Undisclosed Employee Benefit Plan
Liabilities or Severance Arrangements. Except as described in
any of the Parent SEC Reports, all "employee benefit plans," as
defined in Section 3(3) of ERISA, maintained or contributed to by
Parent or its Subsidiaries are in compliance with all applicable
provisions of ERISA and the Code, and Parent and its Subsidiaries
do not have any liabilities or obligations with respect to any
such employee benefit plans, whether or not accrued, contingent
or otherwise, except (a) as described in any of the Parent SEC
Reports and (b) for instances of non-compliance or liabilities or
obligations that would not in the aggregate have a Material
Adverse Effect on Parent. No employee of Parent will be entitled
to any additional benefits or any acceleration of the time of
payment or vesting of any benefits under any employee incentive
or benefit plan, program or arrangement as a result of the
transactions contemplated by this Agreement.
SECTION 4.9. Absence of Certain Changes or Events.
Other than as disclosed in the Parent SEC Reports, since June 30,
1997 the businesses of Parent and its Subsidiaries have been
conducted in all material respects in the ordinary course and
there has not been any event, occurrence, development or state of
circumstances or facts that has had a Material Adverse Effect on
Parent.
SECTION 4.10. Investigations; Litigation. Except as
described in any of the Parent SEC Reports or previously
disclosed in writing to the Company:
(a) no investigation or review by any governmental
body or authority with respect to Parent or any of its
Subsidiaries which would in the aggregate have a Material Adverse
Effect on Parent is pending nor has any governmental body or
authority notified Parent of an intention to conduct the same;
and
(b) there are no actions, suits or proceedings pending
(or, to Parent's knowledge, threatened) against or affecting
Parent or its Subsidiaries, or any of their respective properties
at law or in equity, or before any federal, state, local or
foreign governmental body or authority which in the aggregate is
reasonably likely to have a Material Adverse Effect on Parent.
SECTION 4.11. Proxy Statement; Registration Statement;
Other Information. None of the information with respect to
Parent or its Subsidiaries to be included in the Proxy Statement
(as defined in section 5.2) or the Registration Statement (as
defined in section 5.2) will, in the case of the Proxy Statement
or any amendments thereof or supplements thereto, at the time of
the mailing of the Proxy Statement or any amendments or
supplements thereto, and at the time of the Company Meeting, or,
in the case of the Registration Statement, at the time it becomes
effective or at the time of any post-effective amendment, contain
any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order
to make the statements therein, in light of the circumstances
under which they were made, not misleading, except that no
representation is made by Parent with respect to information
supplied in writing by the Company or any affiliate of the
Company specifically for inclusion in the Proxy Statement. The
Registration Statement will each comply as to form in all
material respects with the provisions of the Exchange Act and the
rules and regulations promulgated thereunder.
SECTION 4.12. Lack of Ownership of the Company Common
Stock. Neither Parent nor any of its Subsidiaries owns any
shares of the Company Common Stock or other securities
convertible into shares of the Company Common Stock (exclusive of
any shares owned by Parent's employee benefit plans).
SECTION 4.13. Tax Matters. (a) All federal, state,
local and foreign Tax Returns required to be filed by or on
behalf of Parent, each of its Subsidiaries, and each affiliated,
combined, consolidated or unitary group of which Parent or any of
its Subsidiaries is a member (a "Parent Group") have been timely
filed, and all returns filed are complete and accurate except to
the extent any failure to file or any inaccuracies in filed
returns would not, individually or in the aggregate, have a
Material Adverse Effect on Parent. All Taxes due and owing by
Parent, any Subsidiary of Parent or any Parent Group have been
paid, or adequately reserved for, except to the extent any
failure to pay or reserve would not, individually or in the
aggregate, have a Material Adverse Effect on Parent. There is no
audit examination, deficiency, refund litigation, proposed
adjustment or matter in controversy with respect to any Taxes due
and owing by Parent, any Subsidiary of Parent or any Parent Group
which would, individually or in the aggregate, have a Material
Adverse Effect on Parent. All assessments for Taxes due and
owing by Parent, any Subsidiary of Parent or any Parent Group
with respect to completed and settled examinations or concluded
litigation have been paid. As soon as practicable after the
public announcement of the Merger Agreement, Parent will provide
the Company with written schedules of (i) the taxable years of
Parent for which the statutes of limitations with respect to
federal income Taxes have not expired, and (ii) with respect to
federal income Taxes, those years for which examinations have
been completed, those years for which examinations are presently
being conducted, and those years for which examinations have not
yet been initiated. Parent and each of its Subsidiaries has
complied in all material respects with all rules and regulations
relating to the withholding of Taxes, except to the extent any
such failure to comply would not, individually or in the
aggregate, have a Material Adverse Effect on Parent.
(b) Neither Parent nor any of its Subsidiaries knows
of any fact or has taken any action that could reasonably be
expected to prevent the Merger from qualifying as a
reorganization within the meaning of Section 368(a) of the Code.
ARTICLE V
COVENANTS RELATING TO CONDUCT OF BUSINESS
SECTION 5.1. Conduct of Business by the Company or
Parent. Prior to the Effective Time or the date, if any, on
which this Agreement is earlier terminated pursuant to Section
7.1 (the "Termination Date"), and except as may be agreed to by
the other parties hereto or as may be permitted pursuant to this
Agreement:
(a) The Company:
(i) shall, and shall cause each of its Subsidiaries
to, conduct its operations according to their ordinary and usual
course of business;
(ii) shall use its reasonable best efforts, and cause
each of its Subsidiaries to use its reasonable best efforts, to
(A) preserve intact its business organizations and goodwill in
all material respects, (B) keep available the services of its
officers and employees as a group, subject to changes in the
ordinary course, and (C) maintain satisfactory relationships with
suppliers, distributors, customers and others having business
relationships with them;
(iii) shall notify Parent of any emergency or other
change in the normal course of its or its Subsidiaries'
respective businesses or in the operation of its or its
Subsidiaries' respective properties and of any complaints,
investigations or hearings (or communications indicating that the
same may be contemplated) of any governmental body or authority
if such emergency, change, complaint, investigation or hearing
would have a Material Adverse Effect on the Company;
(iv) shall not authorize or pay any dividends on or
make any distribution with respect to its outstanding shares of
stock;
(v) except as previously disclosed in writing to
Parent or as otherwise provided in this Agreement, shall not, and
shall not permit any of its Subsidiaries to, enter into or amend
any employment, severance or similar agreements or arrangements
with any of their respective directors or executive officers;
(vi) except as previously disclosed in writing to
Parent, shall not, and shall not permit any of its Subsidiaries
to, authorize, propose or announce an intention to authorize or
propose, or enter into an agreement with respect to, any merger,
consolidation or business combination any acquisition of a
material amount of assets or securities, any disposition of
assets or securities or any release or relinquishment of any
material contract rights not in the ordinary course of business,
except for (A) acquisitions previously disclosed in writing to
Parent and Merger Sub and (B) asset acquisitions for cash within
the scope of or related to the Company's existing business in
which the aggregate consideration is less than $5 million in any
single acquisition or series of related transactions and less
than $25 million in the aggregate for all such acquisitions, in
each case which would not materially delay or impair the ability
of the Company to perform its obligations under this Agreement;
(vii) shall not propose or adopt any amendments to its
corporate charter or by-laws;
(viii) shall not, and shall not permit any of its
Subsidiaries to, (A) issue any shares of their capital stock,
except upon exercise of rights or options issued pursuant to
existing employee incentive or benefit plans, programs or
arrangements and non-employee director plans (including, without
limitation, shares issued in connection with stock grants or
awards or the exercise of rights or options granted in the
ordinary course of business consistent with past practice
pursuant to such plans, programs or arrangements) or (B) effect
any stock split not previously announced or (C) otherwise change
its capitalization as it existed on September 30, 1997, except as
contemplated herein;
(ix) shall not, and shall not permit any of its
Subsidiaries to, grant, confer or award any options, warrants,
conversion rights or other rights, not existing on the date
hereof, to acquire any shares of its capital stock, except for
grants of options, stock awards or restricted stock under the
1997 Incentive Plan with respect to not more than 180,000 shares;
(x) shall not, and shall not permit any of its
Subsidiaries to, except in the ordinary course of business in
connection with employee incentive and benefit plans, programs or
arrangements in existence on the date hereof, purchase or redeem
any shares of its stock or pay any cash bonuses in excess of 133%
of the Company's reserves for bonuses as of September 30, 1997;
provided, however, the Company may adopt a bonus plan to
incentive employees to remain with the Company through and until
the Closing Date in an amount to be mutually agreed to by Parent
and the Company;
(xi) shall not, and shall not permit any of its
Subsidiaries to, except as contemplated by this Section 5.1 or
Section 5.4, amend in any significant respect the terms of their
respective employee benefit plans, programs or arrangements or
any severance or similar agreements or arrangements in existence
on the date hereof, or adopt any new employee benefit plans,
programs or arrangements or any severance or similar agreements
or arrangements;
(xii) shall not, and shall not permit any of its
Subsidiaries to, enter into any loan agreement;
(xiii) except in connection with (A) acquisitions
previously disclosed in writing to Parent or as contemplated
pursuant to clause (vi) above and (B) interest payments on any of
the Company's outstanding public debt, shall not, and shall not
permit any of its Subsidiaries to, incur any additional
indebtedness for borrowed money, other than incurrences in an
amount in the aggregate not to exceed at any one time outstanding
$1,000,000;
(xiv) shall not, and shall not permit any of its
Subsidiaries to, incur any capital expenditures in excess of
$15,000,000;
(xv) shall not, and shall not permit any of its
Subsidiaries to, except with respect to sign location related
contracts or leases, sales or advertising contracts or other
agreements contemplated by or permitted pursuant to this
Agreement, enter into any material agreement;
(xvi) shall not, and shall not permit any of its
Subsidiaries, to enter into an agreement with any Affiliate of
the Company, any family member of any Affiliate of the Company or
any stockholder who owns more than 10% of the outstanding capital
stock of the Company;
(xvii) shall not, and shall not permit any of its
Subsidiaries to make any material Tax election or settle or
compromise any material Tax liability, other than in connection
with currently pending proceedings or other than in the ordinary
course of business; and
(xviii) shall not, and shall not permit any of its
Subsidiaries to agree, in writing or otherwise, to take any of
the foregoing actions or take any action which would make any
representation or warranty in Article III hereof untrue or
incorrect.
(b) The Parent:
(i) shall, and shall cause each of its Subsidiaries to,
conduct its operations according to their ordinary and usual
course of business; provided, however, that nothing contained in
this proviso shall limit Parent's ability to authorize or
propose, or enter into, an agreement with respect to any
acquisitions or to issue any debt or equity securities;
(ii) shall take all action necessary to cause Merger
Sub to perform its obligations under this Agreement and to
consummate the Merger on the terms and conditions set forth in
this Agreement;
(iii) shall and shall cause Merger Sub to vote all
shares of Company Common Stock, if any, beneficially owned by
Merger Sub or its affiliates in favor of adoption and approval of
the Merger and this Agreement at the Company Meeting (as defined
in Section 5.3); and
(iv) shall not, and shall not permit any of its
Subsidiaries to agree, in writing or otherwise, to take any of
the foregoing actions or take any action which would make any
representation or warranty in Article IV hereof untrue or
incorrect.
SECTION 5.2. Proxy Material; Registration Statement.
(a) The Company will (i) as promptly as practicable following the
date of this Agreement, prepare and file with the SEC, will use
its reasonable efforts to have cleared by the SEC and thereafter
mail to its stockholders as promptly as practicable, a proxy
statement that will be the same proxy statement/prospectus
contained in the Registration Statement (as hereinafter defined)
and a form of proxy, in connection with the vote of the Company's
stockholders with respect to the Merger (such proxy
statement/prospectus, together with any amendments thereof or
supplements thereto, in each case in the form or forms mailed to
the Company's stockholders, is herein called the "Proxy
Statement"), (ii) use its reasonable efforts to obtain the
necessary approvals by its stockholders of this Agreement and the
transactions contemplated hereby and (iii) otherwise comply in
all material respects with all legal requirements applicable to
such meeting. The Company may, if it withdraws, modifies or
changes its recommendation in accordance with Section 5.3 below,
delay the filing or mailing, as the case may be, of the Proxy
Statement or delay the holding of the Company Meeting (as defined
below in Section 5.3). In addition, the Company will upon
reasonable advance notice provide Parent with all financial and
other data regarding the Company as may be reasonably requested
by Parent in connection with the Registration Statement.
(b) Parent will as promptly as practicable following
the date of this Agreement, prepare and file with the SEC a
registration statement of the Parent on Form S-4 (such
registration statement together with all and any amendments and
supplements thereto, being herein referred to as the
"Registration Statement"), which shall include the Proxy
Statement. Such Registration Statement shall be used for the
purposes of registering with the SEC and with applicable state
securities authorities the issuance of Parent Common Stock to
holders of Company Common Stock in connection with the Merger.
(c) The Parent shall furnish such information
concerning the Parent as is necessary in order to cause the Proxy
Statement, insofar as it is related to the Parent, to be prepared
in accordance with Section 5.2(a). The Parent agrees promptly to
advise the Company if at any time prior to the Company Meeting
any information provided by the Parent in the Proxy Statement
becomes incorrect or incomplete in any material respect, and to
provide the information needed to correct such inaccuracy or
omission.
(d) The Parent shall use its best efforts to cause the
Registration Statement to become effective under the Securities
Act and applicable state securities laws at the earliest
practicable date and to remain effective until the Effective
Time.
SECTION 5.3. Stockholders' Meeting. The Company
shall, in accordance with applicable law and the Articles of
Incorporation and the By-Laws of the Company, and subject to the
fiduciary duties of the Board of Directors of the Company, duly
call, give notice of, convene and hold a special meeting of its
stockholders (the "Company Meeting") as promptly as practicable
after the date hereof for the purpose of voting upon the adoption
of this Agreement and considering and taking any other action
upon this Agreement and the Merger and such other matters as may
be required at the Company Meeting and the Company shall use its
reasonable efforts to hold the Company Meeting as soon as
practicable after the date on which the Registration Statement
becomes effective. The Board of Directors of the Company shall
recommend approval and adoption of this Agreement and the Merger
by the Company's stockholders; provided, that, the Board of
Directors of the Company may withdraw, modify or change such
recommendation if it has determined in good faith, after
consultation with outside legal counsel, that the failure to
withdraw, modify or change such recommendation would be
reasonably likely to be inconsistent with the fiduciary duties of
the Board of Directors of the Company to the stockholders under
applicable law.
SECTION 5.4. Approvals and Consents; Cooperation. (a)
The Company and Parent shall together, or pursuant to an
allocation of responsibility to be agreed upon between them:
(i) as soon as is reasonably practicable take all such
action as may be required under state blue sky or securities laws
in connection with the transactions contemplated by this
Agreement;
(ii) promptly prepare and file with the NYSE and such
other stock exchanges as shall be agreed upon listing
applications covering the shares of Parent Common Stock issuable
in the Merger or upon exercise of the Company stock options,
warrants, conversion rights or other rights or vesting or payment
of other Company equity-based awards and use its reasonable best
efforts to obtain, prior to the Effective Time, approval for the
listing of such Parent Common Stock, subject only to official
notice of issuance;
(iii) cooperate with one another in order to lift any
injunctions or remove any other impediment to the consummation of
the transactions contemplated herein; and
(iv) cooperate with one another in obtaining opinions
of Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP, counsel to the
Company, and Akin, Gump, Strauss, Hauer, & Xxxx, L.L.P., counsel
to Parent, dated as of the Closing Date and the Effective Time,
to the effect that the Merger qualifies as a reorganization under
the provisions of Section 368(a) of the Code. In connection
therewith, each of the Company and Parent shall deliver to
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP and Akin, Gump, Strauss,
Hauer, & Xxxx, L.L.P. representation letters substantially in
the form attached hereto as Exhibits A and B, respectively.
(b) Subject to the limitations contained in Section
5.2, the Company and Parent shall each furnish to one another and
to one another's counsel all such information as may be required
in order to effect the foregoing actions and each represents and
warrants to the other that no information furnished by it in
connection with such actions or otherwise in connection with the
consummation of the transactions contemplated by this Agreement
will contain any untrue statement of a material fact or omit to
state a material fact required to be stated in order to make any
information so furnished, in light of the circumstances under
which it is so furnished, not misleading.
SECTION 5.5. Access to Information; Confidentiality.
As permitted by law, the Company shall afford to Parent, and to
Parent's officers, employees, accountants, counsel, financial
advisors and other representatives, reasonable access during
normal business hours during the period prior to the Effective
Time to all the properties, books, contracts, commitments and
records of the Company and its subsidiaries, and during such
period, the Company shall furnish promptly to Parent (a) a copy
of each report, schedule, registration statement and other
document filed by it or its subsidiaries during such period
pursuant to the requirements of applicable federal or state
securities laws and (b) all other information concerning its
business, properties and personnel as Parent may reasonably
request. Notwithstanding anything to the contrary in this
Agreement, neither the Company nor any or its Subsidiaries shall
be required to disclose any information to Parent or its
authorized representatives if doing so could violate any federal,
state, local or foreign law, rule or regulation to which the
Company or any of its Subsidiaries is subject. The Parent will
keep such information provided to it by the Company confidential
in accordance with the terms of the Confidentiality Agreement,
dated October 6, 1997, between the Parent and the Company (the
"Confidentiality Agreement").
SECTION 5.6. Affiliates. The Company shall, prior to
the Effective Time, deliver to Parent a list (reasonably
satisfactory to counsel for Parent), setting forth the names and
addresses of all persons who are, at the time of the Company
Meeting, in the Company's reasonable judgment, "affiliates" of
the Company for purposes of Rule 145 under the Securities Act.
The Company shall furnish such information and documents as
Parent may reasonably request for the purpose of reviewing such
list.
SECTION 5.7. Warrants; Stock Options. (a)
Simultaneously with the Merger, each outstanding right to acquire
shares of the Company Common Stock pursuant to the 1996 Warrant
Plan ("Management Warrants") and each Employee Option shall
automatically be cancelled and Parent shall deliver to the holder
of such Management Warrants or Employee Option, as the case may
be, in exchange for the cancellation thereof, the number of
validly issued, fully paid and non-assessable shares of Parent
Common Stock determined by multiplying (X) the difference between
(i) the total number of shares of Company Common Stock subject to
such Management Warrant or Employment Option, as the case may be,
and (ii) the number obtained by dividing (A) the aggregate
exercise price of such Management Warrant or Employee Option, as
the case may be, by, (B) $41.50 by (Y) 0.67.
(b) The Company and Parent agree that each of their
respective employee incentive or benefit plans, programs and
arrangements and non-employee director plans shall be amended, to
the extent necessary and appropriate, to reflect the transactions
contemplated by this Agreement, including, but not limited to the
conversion of shares of any awards of Company Common Stock or
restricted stock under the 1997 Incentive Plan (but excluding any
stock options granted under such plan) held or to be awarded or
paid pursuant to such benefit plans, programs or arrangements
into shares of Parent Common Stock on a basis consistent with the
transactions contemplated by this Agreement. The actions to be
taken by the Company and Parent pursuant to this Section 5.7
shall include the submission by the Company or Parent of the
amendments to the plans, programs or arrangements referred to
herein to their respective stockholders at the Company Meeting
or, as soon as practicable, at a meeting of Parent stockholders,
respectively, if such submission is determined to be necessary or
advisable by counsel to the Company or Parent after consultation
with one another; provided, however, that such approval shall not
be a condition to the consummation of the Merger.
(c) Each option granted under the 1997 Incentive Plan
to an employee or director of the Company to acquire shares of
Company Common Stock ("Company Option") that is outstanding
immediately prior to the Merger, whether or not then vested or
exercisable, shall, simultaneously with the Merger, be cancelled
in exchange for a single lump cash payment equal to the product
of (1) the number of shares of Company Common Stock subject to
such Company Option and (2) the excess, if any, of $41.50 over
the exercise price per share of such Company Option.
SECTION 5.8. 1994 Warrants. Simultaneously with the
Merger, each outstanding right to acquire shares of the Company
Common Stock pursuant to the 1994 Warrant Agreement ("1994
Warrants") shall automatically be cancelled and Parent shall
deliver to the holder of such 1994 Warrants, in exchange for the
cancellation thereof, (A) the number of validly issued, fully
paid and non-assessable shares of Parent Common Stock determined
by multiplying (X) the difference between (i) the total number of
shares of Company Common Stock subject to such 0000 Xxxxxxx and
(ii) the number obtained by dividing (A) the aggregate exercise
price of such 1994 Warrant by (B) $41.50 by (Y) 0.67.
SECTION 5.9. Filings; Other Action. (a) Subject to
the terms and conditions herein provided, the Company and Parent
shall (i) promptly make their respective filings and thereafter
make any other required submissions under the HSR Act, (ii) use
reasonable efforts to cooperate with one another in (A)
determining whether any filings are required to be made with, or
consents, permits, authorizations or approvals are required to be
obtained from, any third party, the United States government or
any agencies, departments or instrumentalities thereof or other
governmental or regulatory bodies or authorities of federal,
state, local and foreign jurisdictions in connection with the
execution and delivery of this Agreement and the consummation of
the transactions contemplated hereby and thereby and (B) timely
making all such filings and timely seeking all such consents,
permits, authorizations or approvals, and (iii) use reasonable
efforts to take, or cause to be taken, all other actions and do,
or cause to be done, all other things necessary, proper or
advisable to consummate and make effective the transactions
contemplated hereby, including, without limitation, taking all
such further action as reasonably may be necessary to resolve
such objections, if any, as the Federal Trade Commission, the
Antitrust Division of the Department of Justice, state antitrust
enforcement authorities or competition authorities of any other
nation or other jurisdiction or any other person may assert under
relevant antitrust or competition laws with respect to the
transactions contemplated hereby.
(b) Without limiting the generality of the
undertakings pursuant to this Section 5.9, Parent and the Company
agree to take or cause to be taken the following actions: (i)
provide promptly to Governmental Entities with regulatory
jurisdiction over enforcement of any applicable antitrust laws
("Government Antitrust Entity") information and documents
requested by any Government Antitrust Entity or necessary, proper
or advisable to permit consummation of the transactions
contemplated by this Agreement; (ii) without in any way limiting
the provisions of Section 5.9(b)(i) above, file any Notification
and Report Form and related material required under the HSR Act
as soon as practicable after the date hereof, and thereafter use
its reasonable efforts to certify as soon as practicable its
substantial compliance with any requests for additional
information or documentary material that may be made under the
HSR Act; (iii) the proffer by Parent of its willingness to (A)
sell or otherwise dispose of, or hold separate and agree to sell
or otherwise dispose of, such assets, categories of assets or
businesses of the Company or Parent or either's respective
Subsidiaries, (B) terminate such existing relationships and
contractual rights and obligations and (C) amend or terminate
such existing licenses or other intellectual property agreements
and to enter into such new licenses or other intellectual
property agreements (and, in each case, to enter into agreements
with the relevant Government Antitrust Entity giving effect
thereto) in each case with respect to the foregoing clauses (A),
(B) or (C), if such action is necessary or reasonably advisable
for the purpose of avoiding or preventing any action by any
Government Antitrust Entity which would restrain, enjoin or
otherwise prevent or materially delay consummation of the
transactions contemplated by this Agreement prior to the deadline
specified in Section 7.1(b) hereof; and (iv) Parent shall take
promptly, in the event that any permanent or preliminary
injunction or other order is entered or becomes reasonably
foreseeable to be entered in any proceeding that would make
consummation of the transactions contemplated hereby in
accordance with the terms of this Agreement unlawful or that
would prevent or delay consummation of the transactions
contemplated hereby, any and all steps (including the appeal
thereof, the posting of a bond or the taking of the steps
contemplated by clause (iii) of this subsection (b)) necessary to
vacate, modify or suspend such injunction or order so as to
permit such consummation prior to the deadline specified in
Section 7.1(b). Each of the Company and Parent will provide to
the other copies of all correspondence between it (or its
advisors) and any Government Antitrust Entity relating to this
Agreement or any of the matters described in this Section 5.9(b).
The Company and Parent agree to use its reasonable best efforts
to ensure that all telephonic calls and meetings with a
Government Antitrust Entity regarding the transactions
contemplated hereby or any of the matters described in this
Section 5.9(b) shall include representatives of each of the
Company and Parent. Notwithstanding any of the foregoing, no
failure to obtain termination of the waiting period under the HSR
Act shall be deemed to be a breach hereunder by the Company.
SECTION 5.10. Further Assurances. 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 of the Company and Parent shall take all such necessary
action.
SECTION 5.11. No Solicitation. From the date hereof
until the termination of this Agreement, the Company and its
Subsidiaries shall not (whether directly or indirectly through
advisors, agents or other intermediaries), and the Company shall
use its reasonable efforts to ensure that the respective
officers, directors, employees, advisors, representatives or
other agents of the Company or its Subsidiaries will not,
directly or indirectly, (a) solicit, initiate, encourage or take
any other action to knowingly facilitate, any Acquisition
Proposal or (b) engage or participate in negotiations or
substantive discussions with, or disclose any non-public
information relating to the Company or its Subsidiaries or afford
access to the properties, books or records of the Company or its
Subsidiaries to, any Person that has made, or has indicated its
interest in making or considering or intending to make, an
Acquisition Proposal; provided, that, to the extent the Board of
Directors of the Company determines in good faith, after
consultation with outside legal counsel, that the failure to
engage or participate in such negotiations or discussions or
provide such information or afford such access would be
reasonably likely to be inconsistent with the fiduciary duties of
the Board of Directors of the Company under applicable law, the
Company may furnish information and afford access to any such
Person with respect to the Company and its Subsidiaries and
participate in negotiations and enter into agreements with any
such Person regarding such Acquisition Proposal; provided, if the
Board of Directors of the Company receives an Acquisition
Proposal, then, subject to the fiduciary duties of the Board of
Directors of the Company, the Company shall promptly inform
Parent of the terms and conditions of such proposal and the
identity of the Person making it. The Company will immediately
cease and cause to be terminated any existing activities,
discussions or negotiations with any other Person that have been
conducted heretofore with respect to a potential Acquisition
Proposal. Furthermore, nothing contained in this Section 5.11
shall prohibit the Company or the Board of Directors of the
Company from taking and disclosing to the Company's stockholders
a position with respect to a tender or exchange offer by a third
party pursuant to Rules 14d-9 and 14e-2(a) promulgated under the
Exchange Act or from making such disclosure to the Company's
stockholders as may be required by applicable law.
SECTION 5.12. Director and Officer Liability. (a)
Parent, Merger Sub and the Company agree that all rights to
indemnification and all limitations on liability existing in
favor of any Indemnitee (as defined below) as provided in the
Company Certificate of Incorporation, Company By-laws or any
Indemnity Agreement (as defined below) shall survive the Merger
and continue in full force and effect. To the extent permitted
by (i) the DGCL, (ii) the Company's Certificate of Incorporation
and the Company's By-laws or (iii) any agreement providing for
indemnification by the Company or any Subsidiary of the Company
of any Indemnitee previously disclosed in writing to Parent in
effect on the date of this Agreement (including any indemnity
provisions contained in any agreement providing for the
registration of securities) (each, an "Indemnity Agreement"),
advancement of Expenses (as defined below) pursuant to this
Section 5.12 shall be mandatory rather than permissive and the
Surviving Corporation and the Parent shall advance Costs (as
defined below) in connection with such indemnification. Parent
shall, and shall cause the Surviving Corporation to, expressly
assume and honor in accordance with their terms all Indemnity
Agreements.
(b) In addition to the other rights provided for in
this Section 5.12 and not in limitation thereof, for six years
from and after the Effective Time, Parent shall, and shall cause
the Surviving Corporation to, to the fullest extent permitted by
applicable law, (i) indemnify and hold harmless the individuals
who on or prior to the Effective Time were officers, directors or
employees of the Company or any of its Subsidiaries, and the
heirs, executors, trustees, fiduciaries and administrators of
such officers, directors or employees (collectively, the
"Indemnitees") against all losses, Expenses (as hereinafter
defined), claims, damages, liabilities, judgments, or amounts
paid in settlement (collectively, "Costs") in respect to any
threatened, pending or completed claim, action, suit or
proceeding, whether criminal, civil, administrative or
investigative based on, or arising out of or relating to the fact
that such person is or was a director, officer or employee of the
Company or any of its Subsidiaries and arising out of acts or
omissions occurring on or prior to the Effective Time (including,
without limitation, in respect of acts or omissions in connection
with this Agreement and the transactions contemplated hereby) (an
"Indemnifiable Claim") and (ii) advance to such Indemnitees all
Expenses incurred in connection with any Indemnifiable Claim
promptly after receipt of reasonably detailed statements
therefor; provided, that, except as otherwise provided pursuant
to any Indemnity Agreement, the person to whom Expenses are to be
advanced provides an undertaking to repay such advances if it is
ultimately determined that such person is not entitled to
indemnification from Parent or the Surviving Corporation. In the
event any Indemnifiable Claim is asserted or made within such six
year period, all rights to indemnification and advancement of
Expenses in respect of any such Indemnifiable Claim shall
continue until such Indemnifiable Claim is disposed of or all
judgments, orders, decrees or other rulings in connection with
such Indemnifiable Claim are fully satisfied; provided, however,
that Parent shall not be liable for any settlement effected
without its written consent (which consent shall not be
unreasonably withheld or delayed). Except as otherwise may be
provided pursuant to any Indemnity Agreement, the Indemnitees as
a group may retain only one law firm with respect to each related
matter except to the extent there is, in the opinion of counsel
to an Indemnitee, under applicable standards of professional
conduct, a conflict on any significant issue between positions of
any two or more Indemnitees. For the purposes of this Section
5.12, "Expenses" shall include reasonable attorneys' fees and all
other costs, charges and expenses paid or incurred in connection
with investigating, defending, being a witness in or
participating in (including on appeal), or preparing to defend,
be a witness in or participate in any Indemnifiable Claim.
(c) Notwithstanding any other provisions hereof, the
obligations of the Company, the Surviving Corporation and Parent
contained in this Section 5.12 shall be binding upon the
successors and assigns of Parent and the Surviving Corporation.
In the event the Company or the Surviving Corporation or any of
their respective successors or assigns (i) consolidates with or
merges into any other Person or (ii) transfers all or
substantially all of its properties or assets to any Person,
then, and in each case, proper provision shall be made so that
successors and assigns of the Company or the Surviving
Corporation, as the case may be, honor the indemnification
obligations set forth in this Section 5.12.
(d) The obligations of the Company, the Surviving
Corporation, and Parent under this Section 5.12 shall not be
terminated or modified in such a manner as to adversely affect
any Indemnitee to whom this Section 5.12 applies without the
consent of such affected Indemnitee (it being expressly agreed
that the Indemnitees to whom this Section 5.12 applies shall be
third party beneficiaries of this Section 5.12).
(e) Parent shall, and shall cause the Surviving
Corporation to, advance all Expenses to any Indemnitee incurred
by enforcing the indemnity or other obligations provided for in
this Section 5.12.
SECTION 5.13. Accountants' "Comfort" Letters. The
Company and Parent will each use reasonable best efforts to cause
to be delivered to each other letters from their respective
independent accountants, dated a date within two business days
before the effective date of the Registration Statement, in form
reasonably satisfactory to the recipient and customary in scope
for comfort letters delivered by independent accountants in
connection with registration statements on Form S-4 under the
Securities Act.
SECTION 5.14. Additional Reports. The Company and
Parent shall each furnish to the other copies of any reports of
the type referred to in Sections 3.4 and 4.4 which it files with
the SEC on or after the date hereof, and the Company and Parent,
as the case may be, represents and warrants that as of the
respective dates thereof, such reports will not contain any
untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the
statement therein, in light of the circumstances under which they
were made, not misleading; provided, that the foregoing shall not
apply to the financial statements contained therein (which are
covered by the following sentence). Any consolidated financial
statements included in such reports (including any related notes
and schedules) will fairly present the financial position of the
Company and its consolidated Subsidiaries or Parent and its
consolidated Subsidiaries, as the case may be, as of the dates
thereof and the results of operations and changes in financial
position or other information included therein for the periods or
as of the date then ended (subject, where appropriate, to normal
year-end adjustments), in each case in accordance with past
practice and GAAP consistently applied during the periods
involved (except as otherwise disclosed in the notes thereto and
except that such financial statements will not include all of the
notes required by GAAP).
SECTION 5.15. Plan of Reorganization. This Agreement
is intended to constitute a "plan of reorganization" within the
meaning of Section 1.368-2(g) of the income tax regulations
promulgated under the Code. From and after the date of this
Agreement and until the Effective Time, each party hereto shall
use its reasonable efforts to cause the Merger to qualify, and
will not knowingly take any actions or cause any actions to be
taken which could prevent the Merger from qualifying, as a
reorganization under the provisions of Section 368(a) of the
Code. Following the Effective Time, neither the Surviving
Corporation, Parent nor any of their affiliates shall knowingly
take any action or knowingly cause any action to be taken which
would cause the Merger to fail to qualify as a reorganization
under Section 368(a) of the Code.
SECTION 5.16. Employment Agreements. At or prior to
the Effective Time, the Parent shall enter into an employment
agreement individually with Xxxxxx Xxxxx substantially in the
form attached hereto as Exhibit C, the terms of which are
incorporated herein by reference and made a part hereof.
SECTION 5.17. Parent Board of Directors. Parent shall
take all necessary action to cause Xxxxxx Xxxxx to be appointed
to the Board of Directors of Parent as of the Effective Time and
to serve until the next annual election of directors of Parent.
In connection with such election, Parent shall take all necessary
action to include Xxxxxx Xxxxx as a nominee for the Board of
Directors of Parent recommended by such Board of Directors of
Parent for election by Parent's stockholders to such Board of
Directors.
SECTION 5.18. Conveyance Taxes; Fees. Each of the
Parent and the Company, respectively, shall timely pay any real
property transfer or gains, sales, use, transfer, value added,
stock transfer and stamp taxes, any transfer, recording,
registration and other fees, and any similar taxes or fees not
including any income tax, gross receipt tax or any similar tax
measured with respect to gross or net income (collectively, the
"Conveyance Taxes") imposed on it at or prior to the Effective
Time in connection with the transactions contemplated hereunder
that are required to be paid in connection therewith. Parent and
the Company shall cooperate in the preparation, execution and
filing of all Tax Returns, questionnaires, applications, or other
documents regarding any such Conveyance Taxes.
SECTION 5.19. Public Announcements. Unless otherwise
required by applicable law or the requirements of any listing
agreement with any applicable stock exchange, Parent and the
Company shall each use their reasonable efforts to consult with
each other before issuing any press release or otherwise making
any public statements with respect to this Agreement or any
transaction contemplated by this Agreement and shall not issue
any such press release or make any such public statement prior to
such consultation.
SECTION 5.20. Employee Matters. (a) For a period of
no more than one year immediately following the Effective Time,
Parent agrees to cause the Surviving Corporation and its
Subsidiaries to provide to all active employees of the Company as
of the Effective Time who continue to be employed by the Company
coverage under group medical, dental, 401(k) savings, disability
insurance, life insurance, accidental death and disability, and
vacation plans or arrangements which are, in the aggregate,
substantially similar to the plans providing such benefits to the
employees of Company immediately prior to the Effective Time;
provided, however, that Parent may at its option at any time
during such year provide to such employees the aforementioned
benefits in a form which are substantially similar to the
benefits provided to employees of the Parent at such time.
(b) Parent shall, and shall cause its Subsidiaries to,
honor in accordance with their terms all agreements, contracts,
arrangements, commitments and understanding described in the
Company SEC Reports.
ARTICLE VI
CONDITIONS TO THE MERGER
SECTION 6.1. Conditions to the Obligations of Each
Party. The obligations of the Company, Parent and Merger Sub to
consummate the Merger are subject to the satisfaction or waiver
on or prior to the Closing Date of the following conditions:
(a) Registration Statement. The Registration
Statement shall have become effective under the Securities
Act and no stop order suspending the effectiveness of the
Registration Statement shall have been issued by the SEC and
no proceeding for that purpose shall have been initiated by
the SEC.
(b) Company Stockholder Approval. This Agreement
shall have been approved by the requisite affirmative vote
of the stockholders of the Company in accordance with the
Company's Articles of Incorporation, as amended, and the
DGCL.
(c) No Injunction or Restraint. No statute, rule,
regulation, executive order, decree, preliminary or
permanent injunction or restraining order shall have been
enacted, entered, promulgated or enforced by any
Governmental Entity which prohibits the consummation of the
transactions contemplated hereby. No action or proceeding
(other than any action or proceeding pursuant to or in
connection with the Antitrust Laws) by any Governmental
Entity shall have been commenced (and be pending), or, to
the knowledge of the parties hereto, threatened, against the
Company or Parent or any of their respective affiliates,
partners, associates, officers or directors, or any officers
or directors of such partners, seeking to prevent or delay
the transactions contemplated hereby or challenging any of
the terms of provisions of this Agreement or seeking
material damages in connection therewith.
(d) Consents. All consents and approvals (other than
any consent or approval required pursuant to or in
connection with the Antitrust Laws) of Governmental Entities
or any Person necessary for consummation of the transactions
contemplated hereby shall have been obtained, other than
those which, if not obtained, would not in the aggregate
have a Material Adverse Effect.
(e) HSR Act. Any waiting period (and any extension
thereof) applicable to the consummation of the Merger under
the HSR Act shall have expired or been terminated.
(f) Stock Exchange Listing. The shares of Parent
Common Stock to be issued in the Merger shall have been
authorized for listing on the NYSE, subject to official
notice of listing.
(g) Tax Opinion. Each of the Company and Parent shall
have received an opinion of its tax counsel, Skadden, Arps,
Slate, Xxxxxxx & Xxxx LLP and Akin, Gump, Strauss, Xxxxx &
Xxxx, L.L.P., respectively, in form and substance reasonably
satisfactory to it, and dated on or about the Closing Date,
to the effect that the Merger will qualify for federal
income tax purposes as a reorganization within the meaning
of Section 368(a) of the Code and that none of the Company,
Parent and Merger Sub shall recognize gain or loss for
federal income tax purposes as a result of the Merger and
stockholders of the Company will not recognize gain or loss
for federal income tax purposes except to the extent they
receive cash in lieu of fractional shares of Parent Common
Stock. In rendering such opinions, Skadden, Arps, Slate,
Xxxxxxx & Xxxx LLP and Akin, Gump, Strauss, Xxxxx & Xxxx,
L.L.P. may rely upon representations of officers of the
Company and Parent substantially in the form of Exhibits A
and B.
SECTION 6.2. Conditions to the Obligations of Parent
and Merger Sub. The obligations of Parent and Merger Sub to
consummate the Merger are subject to the satisfaction or waiver
by Parent on or prior to the Closing Date of the following
further conditions:
(a) Company Representations and Warranties. The
obligation of Parent to effect the Merger is further subject
to the conditions that (a) the representations and
warranties of the Company contained herein shall be true and
correct in all respects as of the Effective Time with the
same effect as though made as of the Effective Time except
for such exceptions and qualifications which, in the
aggregate, for all such representations and warranties would
not have a Material Adverse Effect on the Company and except
(i) for changes specifically permitted by the terms of this
Agreement and (ii) that the accuracy of representations and
warranties that by their terms speak as of the date of this
Agreement or some other date will be determined as of such
date, and (b) the Company shall have performed in all
material respects (except with respect to the covenants
contained in Sections 5.1(a)(ix) and 5.1(a)(xiii) which
shall be performed in all respects) all obligations and
complied with all covenants required by this Agreement to be
performed or complied with by it prior to the Effective Time
and (c) the Company shall have delivered to Parent a
certificate, dated the Effective Time and signed by its
Chief Executive Officer, Chief Financial Officer or a Senior
Vice President, certifying to both such effects. Material
Adverse Effect with respect solely to the satisfaction of
the closing condition set forth in this Section 6.2(a)
relating to the accuracy of the representation of the
Company with respect to the aggregate number (the "Disclosed
Number") of fully-diluted shares of capital stock of the
Company set forth in Section 3.2 hereof shall be an
additional number of shares in excess of 10,000.
SECTION 6.3. Conditions to the Obligations of the
Company. The obligations of the Company to consummate the Merger
are subject to the satisfaction or waiver by the Company on or
prior to the Closing Date of the following further conditions:
(a) Parent and Merger Sub Representations and
Warranties. The obligation of the Company to effect the Merger
is further subject to the conditions that (a) the representations
and warranties of Parent contained herein shall be true and
correct in all respects as of the Effective Time with the same
effect as though made as of the Effective Time except (i) for
changes specifically permitted by the terms of this Agreement and
(ii) that the accuracy of representations and warranties that by
their terms speak as of the date of this Agreement or some other
date will be determined as of such date, (b) Parent shall have
performed in all material respects all obligations and complied
with all covenants required by this Agreement to be performed or
complied with by it prior to the Effective Time and (c) Parent
shall have delivered to the Company a certificate, dated the
Effective Time and signed by its Chief Executive Officer, Chief
Financial Officer or a Senior Vice President, certifying to both
such effects.
ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER
SECTION 7.1. Termination or Abandonment.
Notwithstanding anything contained in this Agreement to the
contrary, this Agreement may be terminated and abandoned at any
time prior to the Effective Time, whether before or after any
approval of the matters presented in connection with the Merger
by the stockholders of the Company:
(a) by the mutual written consent of the Company and
Parent;
(b) by either the Company or Parent if the Effective
Time shall not have occurred on or before August 30, 1998;
provided, that the party seeking to terminate this Agreement
pursuant to this clause 7.1(b) shall not have breached in any
material respect its obligations under this Agreement in any
manner that shall have proximately contributed to the failure to
consummate the Merger on or before such date;
(c) by either the Company or Parent if (i) a statute,
rule, regulation or executive order shall have been enacted,
entered or promulgated prohibiting the consummation of the Merger
substantially on the terms contemplated hereby or (ii) an order,
decree, ruling or injunction shall have been entered permanently
restraining, enjoining or otherwise prohibiting the consummation
of the Merger substantially on the terms contemplated hereby and
such order, decree, ruling or injunction shall have become final
and non-appealable; provided, that the party seeking to terminate
this Agreement pursuant to this clause 7.1(c)(ii) shall have used
its reasonable best efforts to remove such order, decree, ruling
or injunction;
(d) by either the Company or Parent if the approval of
the stockholders of the Company contemplated by this Agreement
shall not have been obtained by reason of the failure to obtain
the required vote at the Company Meeting or any postponement or
adjournment thereof;
(e) by Parent if the Board of Directors of the Company
shall have (i) withdrawn, modified or amended in any respect
adverse to Parent its approval or recommendation of this
Agreement or any of the transactions contemplated herein, (ii)
failed to include in the Proxy Statement when mailed the
recommendation of the Board of Directors of the Company or (iii)
recommended to its stockholders any Acquisition Proposal of a
Person other than Parent;
(f) by the Company (i) if the Board of Directors of
the Company determines to accept an Acquisition Proposal that
such Board has determined in good faith, after consultation with
its outside legal counsel and financial advisor, to be more
favorable to its stockholders than the transactions contemplated
hereby, (ii) if the Board of Directors of the Company takes any
action set forth in subsection (e) of this Section 7.1; or (iii)
upon notice to Parent, authorized by the Board of Directors of
the Company, if at any time during the period between the date
hereof and the two days prior to the Effective Time, the average
of the Parent Common Stock closing prices, regular way, on the
NYSE for any fifteen (15) consecutive trading day period is less
than or equal to $49.85 (the "Floor Price") and, in the event the
Custom Index at the time of any such calculation declines from
the date hereof, the amount by which the percentage decrease in
the average of the Parent Common Stock from $62.3125 exceeds the
percentage decrease, if any, in the Custom Index from $36.0375 is
greater than or equal to 20 percentage points; provided, however,
that no right of termination shall arise under this Section
7.1(f)(iii) if (x) Parent elects within 5 business days of
receipt of such notice to increase the number of shares of Parent
Common Stock included in the Merger Consideration such that the
per share value of the Parent Common Stock consideration (valued
at the Floor Price) is at least equal to the per share
consideration that would have been received if the Conversion
Number had been equal to a number such that the per share value
of the Company Common Stock is equal to $41.50, (y) the issuance
of the additional shares of stock does not necessitate a vote of
the shareholders of the Parent to approve such issuance and (z)
in the opinion of Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP and
Akin, Gump, Strauss, Xxxxx & Xxxx, L.L.P., the transaction as
adjusted qualifies as a tax-free "reorganization" within the
meaning of Section 368 of the Code; provided, further, however,
that no right of termination shall arise under Section
7.1(f)(iii) if, prior to the delivery of notice by Company to
Parent provided for in this Section 7.1(f)(iii), the average of
closing prices for a subsequent fifteen (15) consecutive trading
day period is not less than or equal to the Floor Price or for
the same period the amount by which the percentage decrease in
the average prices of the Parent Common Stock exceeds the
percentage decrease in the Custom Index is not greater than or
equal to 20 percentage points.
The party desiring to terminate this Agreement pursuant
to this Section 7.1 shall give written notice of such termination
to the other party.
SECTION 7.2. Amendment or Supplement. At any time
before or after approval of the matters presented in connection
with the Merger by the stockholders of the Company and prior to
the Effective Time, this Agreement may be amended or supplemented
in writing by the Company and Parent with respect to any of the
terms contained in this Agreement; provided, however, that
following approval by the stockholders of the Company, there
shall be no amendment or change to the provisions hereof with
respect to any matter not permitted under applicable law without
further approval by the stockholders of the Company unless such
approval is first obtained.
SECTION 7.3. Effect of Termination. In the event of
termination of this Agreement by either the Company or Parent as
provided in Section 7.1, this Agreement shall forthwith become
void and have no effect, without any liability or obligation on
the part of Parent, Merger Sub or the Company, other than the
provisions of the last sentence of Section 5.5, this Section 7.3,
Section 7.4 and Article VIII, and except to the extent that such
termination results from the wilful and material breach by a
party of any of its representations, warranties, covenants or
agreements set forth in this Agreement.
SECTION 7.4. Fees and Expenses. (a) In addition to
any other amounts that may be payable or become payable pursuant
to any other paragraph of this Section 7.4, if this Agreement is
terminated pursuant to Section 7.1(e) hereof and Parent or Merger
Sub is not then in material breach of its obligations under this
Agreement, then the Company shall promptly, but in no event later
than one business day after the termination of this Agreement (or
from time to time after the Closing Date), reimburse Parent and
Merger Sub for all documented out-of-pocket expenses and fees
(including, without limitation, reasonable fees payable to all
banks, investment banking firms and other financial institutions,
and their respective agents and counsel, and all reasonable fees
of counsel, accountants, financial printers, experts and
consultants to Parent and Merger Sub and their affiliates),
whether incurred prior to, on or after the date hereof, in
connection with the Merger and the consummation of all
transactions contemplated by this Agreement; provided, that, in
no event shall the Company be required to pay in excess of an
aggregate of $1.5 million pursuant to this subsection (a);
provided, further, that in no event shall any payment be due
pursuant to this subsection (a) in the event that a fee is
payable pursuant to Section 7.4(b), and if a fee becomes payable
pursuant to such subsection (b) following such time as a payment
has been made pursuant to this subsection (a), then the amount of
such prior expense reimbursement payment shall be credited
against, and shall reduce, the fee otherwise payable pursuant to
subsection (b).
(b) If this Agreement is terminated either pursuant to
(i) Section 7.1(f)(i) or (f)(ii), or (ii) Section 7.1(b) and in
the case of this clause (ii), (x) prior to such date (A) the
Board of Directors of the Company shall have taken any of the
actions as contemplated by clauses (i), (ii) or (iii) of Section
7.1(e) hereof such that Parent could have terminated this
Agreement but elected not to and (B) either (i) the Company
Meeting shall have been held and the approval of the stockholders
at the Company Meeting shall not have been obtained or (ii) the
Company Meeting shall not have been held as of the date of such
termination as a result of the Company delaying such meeting in
accordance with the provisions of Section 5.2(a), and (y) on or
prior to twelve months after the termination of this Agreement,
the Company enters into an agreement with a Person regarding a
transaction the proposal of which would otherwise qualify as an
Acquisition Proposal under Section 5.11 hereof and such
transaction is subsequently consummated; then in any such event,
the Company shall, promptly following, but in no event later than
one business day after (I) in the case of clause (i) above, the
date of such termination and (II) in the case of clause (ii)
above, the consummation of the third party Acquisition Proposal,
pay Parent a fee of $40 million in cash, which amount shall be
payable in same day funds. Only one fee in the aggregate of $40
million shall be payable pursuant to this Section 7.4(b).
(c) Except as provided otherwise in this Section 7.4,
all costs and expenses incurred in connection with this Agreement
and the transactions contemplated hereby shall be paid by the
party incurring such expenses.
SECTION 7.5. Extension; Waiver. At any time prior to
the Effective Time, the parties may (a) extend the time for the
performance of any of the obligations or other acts of the other
parties, (b) waive any inaccuracies in the representations and
warranties contained in this Agreement or in any document
delivered pursuant to this Agreement or (c) subject to the
proviso of Section 7.2, waive compliance with any of the
agreements or conditions of the other party contained in this
Agreement. Any agreement on the part of a party to any such
extension or waiver shall be valid only if set forth in an
instrument in writing signed on behalf of such party. The
failure of any party to this Agreement to assert any of its
rights under this Agreement or otherwise shall not constitute a
waiver of those rights. Notwithstanding the foregoing, no
failure or delay by the Company or Parent in exercising any right
hereunder shall operate as a waiver thereof nor shall any single
or partial exercise thereof preclude any other or further
exercise of any other right hereunder.
ARTICLE VIII
GENERAL PROVISIONS
SECTION 8.1. Nonsurvival of Representations. None of
the representations and warranties in this Agreement or in any
instrument delivered pursuant to this Agreement shall survive the
Effective Time. This Section 8.1 shall not limit any covenant or
agreement of the parties which by its terms contemplates
performance after the Effective Time. Nothing contained in this
Section 8.1 shall relieve any party from liability for any
willful breach of this Agreement.
SECTION 8.2. Notices. All notices, requests, claims,
demands and other communications under this Agreement shall be in
writing and shall be deemed given if delivered personally or sent
by overnight courier (providing proof of delivery) to the parties
at the following addresses (or at such address for a party as
shall be specified by like notice):
(a) if to the Company, to:
Universal Outdoor Holdings, Inc.
000 Xxxxx Xxxxxx Xxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxx X. Xxxxx
Facsimile No.: (000) 000-0000
with a copy to:
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxx X. Xxxxx, Esq.
Xxxxxx X. Xxxxx, Esq.
Facsimile No.: (000) 000-0000
(b) if to Parent or Merger Sub, to:
Clear Channel Communications, Inc.
000 Xxxxxxx Xxxxx
Xxxxx 000
Xxx Xxxxxxx, Xxxxx 00000
Attention: Xxxxxxx Xxxx
Facsimile No.: (000) 000-0000
with a copy to:
Akin, Gump, Strauss, Xxxxx & Xxxx, L.L.P.
0000 Xxxxxxx Xxxxxx
Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attention: Xxxx Xxxx P.C.
Facsimile No.: (000) 000-0000
SECTION 8.3. Definitions. For purposes of this
Agreement:
(a) "Acquisition Proposal" means any offer or proposal
for a merger, consolidation, recapitalization, liquidation,
business combination or similar transaction involving the
Company or any of its Subsidiaries or the acquisition or
purchase of 50% or more of the voting power of any class of
equity securities of the Company or any of its Subsidiaries,
or any tender offer (including self-tenders) or exchange
offer that if consummated would result in any Person
beneficially owning 50% or more of the voting power of any
class of equity securities of the Company or any of its
Subsidiaries, or a substantial portion of the assets of the
Company or any of its Subsidiaries outside of the ordinary
course of business, other than the transactions contemplated
by this Agreement.
(b) "Advertiser Effect" means any and all legal,
financial, or other effects, on or to this Agreement, the
Merger, the Company, or its business, the Merger Sub, the
Parent or any of their stockholders or Affiliates, that may
arise from or are in any way related to: any public or non-
public discussion initiated by or involving public
officials, announcement, development, action or potential
action, settlement, negotiation, legislation, proposed or
enacted, judicial decision, order, judgment or change in
status of any nature or type, which contemplates, proposes,
threatens or results in any voluntary or non-voluntary
cessation of or a legal ban or restrictions on the use of
the outdoor advertising services of any person or entity,
including the Company, any of its Subsidiaries, Merger Sub
or Parent, by any person or entity or group of persons or
entities seeking to advertise tobacco products or products
containing alcohol.
(c) "Affiliate" of any person means another person
that directly or indirectly, through one or more
intermediaries, controls, is controlled by, or is under
common control with, such first person.
(d) "Antitrust Laws" mean and include the Xxxxxxx Act,
as amended, the Xxxxxxx Act, as amended, the HSR Act, the
Federal Trade Commission Act, as amended, and all other
federal, state or foreign statutes, rules, regulations,
orders, decrees, administrative and judicial doctrines and
other laws that are designed or intended to prohibit,
restrict or regulate actions having the purpose or effect
of monopolization or restraint of trade.
(e) "Control" (including the terms "controlled by" and
"under common control with") means the possession, directly
or indirectly, of the power to direct or cause the direction
of the management and policies of a person, whether through
the ownership of voting securities, by contract or
otherwise.
(f) "Custom Index" means the average of the closing
prices, regular way, on the NYSE for the fifteen day period
used to calculate the average of the closing prices referred
to in Section 7.1(f)(iii) for the following companies:
Closing Price on
Company(1) October 23, 1997 Symbol
---------- ---------------- ------
Westinghouse-CBS(2) $28.75 WX
Chancellor Broadcasting 58 AMFM
Xxx Radio Inc. 34.43750 CXR
Xxxxx Advertising Company 31 LAMR
Outdoor Systems 28 OSI
Average Price $36.03750
---------------
1 When any company on this list is sold, it shall be deleted
from the Custom Index and replaced with the common stock
of a company operating in the radio broadcasting industry
mutually agreeable to both the Company and Parent which
shall be substituted in the Custom Index on the date of
the termination of trading of the company being sold and
the price on such day of the common stock of the Company
being added to the Custom Index shall be substituted for
the price of the company being sold for the prior 14 days
of any calculation period.
2 When CBS is spun off from Westinghouse, CBS shall be
substituted in the Custom Index for Westinghouse effective
as of the date CBS commences trading regular way and the
price of CBS on such day shall be substituted for the price
of Westinghouse for the prior 14 days of any calculation
period.
(g) "Governmental Entity" means any government or any
agency, bureau, board, commission, court, department,
official, political subdivision, tribunal or other
instrumentality of any government, whether federal, state or
local, domestic or foreign.
(h) "Knowledge" or "Known" means, with respect to the
matter in question, if any of the executive officers of the
Company or Parent, as the case may be, has actual knowledge
of such matter.
(i) "Lien" means any encumbrance, hypothecation,
infringement, lien, mortgage, pledge, restriction, security
interest, title retention or other security arrangement, or
any adverse right or interest, charge or claim of any nature
whatsoever of, on, or with respect to any asset, property or
property interest; provided, however, that the term "lien"
shall not include (i) liens for water and sewer charges and
current taxes not yet due and payable or being contested in
good faith, (ii) mechanics', carriers', workers',
repairers', materialmen's, warehousemen's and other similar
liens arising or incurred in the ordinary course of business
(iii) all liens approved in writing by the other party
hereto or (iv) restrictions on transfer imposed by federal
or state securities laws.
(j) "Material Adverse Change" or "Material Adverse
Effect" means, when used in connection with the Company,
Parent or Merger Sub, any change or effect that (i) is
materially adverse to the business, financial condition or
results of operations of such party and its subsidiaries
taken as a whole or (ii) substantially impairs or delays the
consummation of the transactions contemplated hereby, but,
in either such event, shall not include any change or effect
that results from an Advertiser Effect.
(k) "Person" means any natural person, firm,
individual, business trust, trust, association, corporation,
partnership, joint venture, company, unincorporated entity
or Governmental Entity.
(l) "Subsidiary" or "Subsidiaries" of any Person means
another Person, an amount of the voting securities, other
voting ownership or voting partnership interests of which is
sufficient to elect at least a majority of its board of
directors or other governing body (or, if there are no such
voting interests, 50% or more of the equity interests of
which) is owned directly or indirectly by such first Person.
(m) "Taxes" means any and all federal, state, local,
foreign or other taxes of any kind (together with any and
all interest, penalties, additions to tax and additional
amounts imposed with respect thereto) imposed by any taxing
authority, including, without limitation, taxes or other
charges on or with respect to income, franchises, windfall
or other profits, gross receipts, property, sales, use,
transfer, capital stock, payroll, employment, social
security, workers' compensation, unemployment compensation,
or net worth, and taxes or other charges in the nature of
excise, withholding, ad valorem or value added.
(n) "Tax Return" means any return, report or similar
statement (including the attached schedules) required to be
filed with respect to any Tax, including, without
limitation, any information return, claim for refund,
amended return or declaration of estimated Tax.
SECTION 8.4. Counterparts. This Agreement may be
executed in one or more counterparts, all of which shall be
considered one and the same agreement and shall become effective
when one or more counterparts have been signed by each of the
parties and delivered to the other parties, it being understood
that all parties need not sign the same counterpart.
SECTION 8.5. Entire Agreement; No Third-Party
Beneficiaries. This Agreement constitutes the entire agreement,
and supersedes all prior agreements and understandings, both
written and oral, among the parties with respect to the subject
matter of this Agreement (provided, however, that the provisions
of the Confidentiality Agreement shall remain valid and in
effect) and, except for the provisions of Article II and Sections
5.7, 5.8, 5.12 and 5.16, is not intended to confer upon any
person other than the parties any rights or remedies hereunder.
SECTION 8.6. Assignment. Neither this Agreement nor
any of the rights, interests or obligations under this Agreement
shall be assigned, in whole or in part, by operation of law or
otherwise by any of the parties hereto without the prior written
consent of the other parties, except that Merger Sub may assign,
in its sole discretion, any or all of its rights, interests and
obligations under this Agreement to Parent or to any direct or
indirect wholly owned subsidiary of Parent, but no such
assignment shall relieve Merger Sub of any of its obligations
under this Agreement. 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.
SECTION 8.7. Governing Law. This Agreement shall be
governed by, and construed in accordance with, the laws of the
State of Delaware, without regard to any applicable conflicts of
law.
SECTION 8.8. 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 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 located in the State
of Delaware 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 personal 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, (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 and (c)
agrees that it will not bring any action relating to this
Agreement or any of the transactions contemplated by this
Agreement in any court other than a federal or state court
sitting in the State of Delaware.
SECTION 8.9. Severability. Any term or provision of
this Agreement which is invalid or unenforceable in any
jurisdiction shall, as to that jurisdiction, be ineffective to
the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and
provisions of this Agreement in any other jurisdiction. If any
provision of this Agreement is so broad as to be unenforceable,
such provision shall be interpreted to be only so broad as is
enforceable.
SECTION 8.10. Headings. Headings of the Articles and
Sections of this Agreement are for convenience of the parties
only, and shall be given no substantive or interpretive effect
whatsoever.
SECTION 8.11. Finders or Brokers. Except for BT Xxxx
Xxxxx & Sons, Inc., and Bear, Xxxxxxx & Co., Inc., with respect
to the Company, a copy of whose engagement agreement has been or
will be provided to Parent, neither the Company nor Parent nor
any of their respective Subsidiaries has employed any investment
banker, broker, finder or intermediary in connection with the
transactions contemplated hereby who might be entitled to any fee
or any commission in connection with or upon consummation of the
Merger.
IN WITNESS WHEREOF, Parent, Merger Sub and the Company
have caused this Agreement to be signed by their respective
officers thereunto duly authorized, all as of the date first
written above.
CLEAR CHANNEL COMMUNICATIONS, INC.
By: /s/ XXXXXXX XXXX
--------------------------------
Name: Xxxxxxx Xxxx
Title: Chief Financial Officer
UH MERGER SUB, INC.
By: /s/ XXXXXXX XXXX
--------------------------------
Name: Xxxxxxx Xxxx
Title: Chief Financial Officer
UNIVERSAL OUTDOOR HOLDINGS, INC.
By: /s XXXXX X. XXXXXXX
-------------------------------
Name: Xxxxx X. Xxxxxxx
Title: Vice President and Chief
Financial Officer
EXHIBIT A
FORM OF COMPANY TAX OPINION REPRESENTATION LETTER
____________, 1997
[Parents Counsel]
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Dear Sirs:
On behalf of the Company, the undersigned, in connection with the
opinions to be delivered by your firms pursuant to Sections [ ]
of the Agreement and Plan of Merger, dated [ ], 1997,
among Parent, Merger Sub and the Company,(1) hereby certifies that the
descriptions of the facts contained in the Registration Statement and
the Proxy Statement completely and accurately describe the Merger and
the transactions leading up thereto and further that:
1. Neither the Company nor any of its subsidiaries has acquired
any shares of Company Common Stock in contemplation of the Merger, or
otherwise as part of a plan of which the Merger is a part. For
purposes of this representation, Company Common Stock acquired in the
ordinary course of business in connection with employee incentive and
benefit plans, programs or arrangements in existence on the date hereof
shall not be treated as an acquisition in contemplation of the Merger
or otherwise as part of which the Merger is a part.
----------------
1 For purposes of this certificate, capitalized terms used and
not otherwise defined herein shall have the meaning ascribed
thereto in the Agreement and Plan of Merger.
2. There is no present plan or intention on the part of the
stockholders of the Company that own 5% or more of the common stock of
the Company Common Stock, and the Company knows of no present plan or
intention on the part of the remaining holders of Company Common Stock,
to sell, exchange or otherwise dispose of (each of the foregoing, a
"disposition"), shares of Parent Common Stock received in the Merger in
exchange for such Company Common Stock that would reduce the ownership
of Parent Common Stock by former holders of Company Common Stock (other
than public shareholders) to a number of shares having a value, as of
immediately prior to the Merger, of less than 50% of the value of all
of the outstanding shares of Company Common Stock as of such date. For
purposes of this representation, any disposition (as defined above) of
Parent Common Stock will be treated as a reduction in ownership
thereof. In addition, for purposes of this representation, shares of
Company Common Stock exchanged by holders of Company Common Stock for
cash in lieu of fractional shares of Parent Common Stock will be
treated as outstanding Company Common Stock immediately prior to the
Merger. Moreover, for purposes of this representation, shares of
Company Common Stock and shares of Parent Common Stock received in the
Merger and sold, redeemed or disposed of prior to or subsequent to the
Merger, in contemplation thereof or as part of a plan therewith, will
be considered in making this representation.
3. The Company and the stockholders of the Company will each pay
their respective expenses, if any, incurred in connection with the
Merger, except in the case of Conveyance Taxes for which such
stockholders are liable, which shall be paid by the Company.
4. Following the Merger, the Company will hold at least 90
percent of the fair market value of the net assets and at least 70
percent of the fair market value of the gross assets that the Company
held immediately prior to the Merger, and the Company will hold at
least 90 percent of the fair market value of the net assets and at
least 70 percent of the fair market value of the gross assets that the
Merger Sub held immediately prior to the Merger. For purposes of this
representation, Company assets used to pay its reorganization expenses
and all redemptions and distributions (except for regular, normal
dividends) made by the Company immediately preceding or in
contemplation of, the Merger will be included as assets of the Company
prior to the Merger.
5. Except as provided in Annex I attached herewith, immediately
prior to the time of the Merger, the Company will not have outstanding
any warrants, options, convertible securities or any other type of
right pursuant to which any person could acquire stock of the Company
("Company Stock").
6. In the Merger, shares of Company Stock representing at least
80% of the total combined voting power of all classes of Company Stock
outstanding on the date of the Merger, and at least 80% of the total
number of each other class of Company Stock outstanding on the date of
the Merger will be exchanged solely for Parent Common Stock. For
purposes of this representation, shares of Company Stock exchanged for
cash or other property originating with Parent will be treated as
outstanding stock of the Company on the date of the Merger.
7. The Company is not an investment company as defined in
Section 368(a)(2)(F)(iii) and (iv) of the Internal Revenue Code of
1986, as amended (the "Code").
8. The Company will not take, and the Company is not aware of
any plan or intention of Company stockholders to take, any position on
any Federal, state or local income or franchise tax return, or take any
other tax reporting position, that is inconsistent with the treatment
of the Merger as a reorganization within the meaning of Section 368(a)
of the Code, unless otherwise required by a "determination" (as defined
in Section 1313(a)(1) of the Code) or by applicable state or local
income or franchise tax law.
9. None of the compensation received by any stockholder-employee
of the Company in respect of periods at or prior to the Effective Time
represents separate consideration for, or is allocable to, any of their
Company Common Stock. None of the Parent Common Stock that will be
received by Company stockholder-employees in the Merger represents
separately bargained-for consideration which is allocable to any
employment agreement or arrangement. The compensation paid to any
shareholder-employees will be for services actually rendered and will
be determined by bargaining at arm's-length.
10. There is no intercorporate indebtedness existing between
Parent and the Company or between Sub and the Company that was issued
or acquired, or will be settled, at a discount.
11. The Company is not under jurisdiction of a court in a Title
11 or similar case within the meaning of Section 368(a)(3)(A) of the
Code.
12. The Merger Agreement and the documents described in Sections
5.5 and 5.16 of the Merger Agreement represent the entire understanding
of the Company, Parent and Merger Sub with respect to the Merger.
13. The Company Common Stock will be surrendered pursuant to the
Merger in an arms-length exchange, and the Parent Common Stock received
in exchange therefor represents the sole bargained-for consideration
therefor. The fair market value of the Parent Common Stock received by
each holder of Company Common Stock will be approximately equal to the
fair market value of the Company Common Stock surrendered in the
Merger.
14. There will be no dissenters to the Merger.
15. On the date of the Merger, the fair market value of the
assets of the Company will exceed the sum of its liabilities plus the
liabilities, if any, to which the assets are subject.
I understand that Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP, as
counsel for the Company, and [ ], as counsel
for Parent, will rely on this certificate in rendering their respective
opinions concerning certain of the federal income tax consequences of
the Merger and hereby commit to inform them if, for any reason, any of
the foregoing representations ceases to be true prior to the Effective
Time.
UNIVERSAL OUTDOOR HOLDINGS, INC.
By: _____________________________
Name:
Title:
Annex I
Beneficially Percent
Beneficial Owner* Owned Shares of Class
--------------- ------------ --------
______________
* [Attach SEC filings]
EXHIBIT B
FORM OF PARENT TAX OPINION REPRESENTATION LETTER
_________, 1997
[PARENT COUNSEL]
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Dear Sirs:
On behalf of Parent and Merger Sub, the undersigned, in connection
with the opinions to be delivered by your firms pursuant to Section
[ ] of the Agreement and Plan of Merger, dated [ ],
1997, among Parent, Merger Sub and the Company,(1) hereby certifies that
the descriptions of the facts contained in the Registration Statement
and the Proxy Statement completely and accurately describe the Merger
and the transactions leading up thereto and further that:
1. Except in the Merger, neither Parent nor Merger Sub (nor any
other subsidiary of Parent) has acquired or prior to the Merger will
acquire, or has owned in the past five years, any shares of common
stock of the Company.
----------------
1 For purposes of this certificate, capitalized terms used
and not otherwise defined herein shall have the meaning
ascribed thereto in the Agreement and Plan of Merger.
2. Cash payments to be made to stockholders of the Company in
lieu of fractional shares of Parent Common Stock that would otherwise
be issued to such stockholders in the Merger will be made for the
purpose of saving Parent the expense and inconvenience of issuing and
transferring fractional shares of Parent Common Stock, and do not
represent separately bargained for consideration.
3. Prior to the Merger, Parent will own all the capital stock of
Merger Sub. Parent has no plan or intention to cause the Company to
issue additional shares of its stock that would result in Parent owning
less than all the capital stock of the Company after the Merger.
4. Parent has no plan or intention, following the Merger, to
reacquire any of the Parent Common Stock issued in the Merger.
5. Parent has no plan or intention, following the Merger, to
liquidate the Company, to merge the Company with and into another
corporation, to sell or otherwise dispose of any of the stock of the
Company, or to cause the Company to sell or otherwise dispose of any of
the assets held by the Company at the time of the Merger, except for
dispositions of such assets in the ordinary course of business;
provided, however, that Parent may transfer assets or stock of the
Company in a manner that is consistent with Section 368(a)(2)(C) of the
Internal Revenue Code of 1986, as amended (the "Code").
6. Parent and Merger Sub will each pay their respective
expenses, if any, incurred in connection with the Merger.
7. Following the Merger, Parent intends to cause the Company to
continue its historic business or use a significant portion of its
historic business assets in a business.
8. Neither Parent nor Merger Sub is an investment company as
defined in Section 368(a)(2)(F)(iii) and (iv) of the Code.
9. Neither Parent nor Merger Sub will take any position on any
Federal, state or local income or franchise tax return, or take any
other tax reporting position, that is inconsistent with the treatment
of the Merger as a reorganization within the meaning of Section 368(a)
of the Code, unless otherwise required by a "determination" (as defined
in Section 1313(a)(1) of the Code) or by applicable state or local
income or franchise tax law.
10. None of the compensation received by any stockholder-employee
of the Company in respect of periods after the Effective Time
represents separate consideration for, or is allocable to, any of their
Company Common Stock. None of the Parent Common Stock that will be
received by Company stockholder-employees in the Merger represents
separately bargained-for consideration which is allocable to any
employment agreement or arrangement. The compensation paid to any
shareholder-employees will be for services actually rendered and will
be determined by bargaining at arm's-length.
11. No stock of Merger Sub will be issued in the Merger.
12. There is no intercorporate indebtedness existing between
Parent and the Company or between Merger Sub and the Company that was
issued or acquired, or will be settled, at a discount.
13. The Merger Agreement and the documents described in Sections
5.5 and 5.16 of the Merger Agreement represent the entire understanding
of the Company, Parent and Merger Sub with respect to the Merger.
14. Merger Sub is a corporation newly formed for the purpose of
participating in the Merger and at no time prior to the Merger has had
assets (other than nominal assets contributed upon the formation of
Merger Sub, which assets will be held by the Company following the
Merger) or business operation. Merger Sub will have no liabilities
assumed by the Company, and will not transfer to the Company any assets
subject to liabilities in the Merger.
15. Following the Merger, the Company will hold at least 90
percent of the fair market value of the net assets and at least 70
percent of the fair market value of the gross assets that the Company
held immediately prior to the Merger, and the Company will hold at
least 90 percent of the fair market value of the net assets and at
least 70 percent of the fair market value of the gross assets that the
Merger Sub held immediately prior to the Merger. For purposes of this
representation, Company assets used to pay its reorganization expenses
and all redemptions and distributions (except for regular, normal
dividends) made by the Company immediately preceding or in
contemplation of, the Merger will be included as assets of the Company
prior to the Merger.
16. Parent will not assume any liabilities of the Company or any
of the Company's Subsidiaries.
17. The Company Common Stock will be surrendered pursuant to the
Merger in an arms-length exchange, and the Parent Common Stock received
in exchange therefor represents the sole bargained-for consideration
therefor. The fair market value of the Parent Common Stock received by
each holder of Company Common Stock will be approximately equal to the
fair market value of the Company Common Stock surrendered in the
Merger.
18. There will be no dissenters to the Merger.
I understand that Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP, as
counsel for the Company, and [ ] , as counsel for Parent,
will rely on this certificate in rendering their opinion concerning
certain of the federal income tax consequences of the Merger and hereby
commit to inform them if, for any reason, any of the foregoing
representations ceases to be true prior to the Effective Time.
___________________________, INC.
By: _____________________________
Name:
Title:
EXHIBIT D
_______________, 1997
[PARENT COUNSEL]
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Dear Sirs:
In connection with the opinion to be delivered by you pursuant to
the Agreement and Plan of Merger, dated [ ], 1997, among
Parent, Merger Sub and the Company,(1) the undersigned hereby
certifies (to the best of its knowledge and belief, where indicated),
after due inquiry and investigation, as follow :
1. The Undersigned has no present plan or intention to
sell, exchange or otherwise dispose of (each of the foregoing, a
"disposition"), more than ___% shares of Parent Common Stock received
in the merger contemplated by the Merger Agreement (the "Merger"). For
purposes of this representation, shares of Company Common Stock and
shares of Parent Common Stock received in the Merger and sold, redeemed
or disposed of prior to or subsequent to the Merger, in contemplation
thereof or as part of a plan therewith, will be considered in making
this representation.
2. The undersigned will not take any position on any
Federal, state or local income or franchise tax return, or take any
other tax reporting position, that is inconsistent with the treatment
of the Merger as a reorganization within the meaning of Section 368(a)
of the Internal Revenue Code of 1986, as amended (the "Code"), unless
otherwise required by a "determination" (as defined in Section
1313(a)(1) of the Code) or by applicable state or local income or
franchise tax law.
[THE COMPANY STOCKHOLDER]
-------------------
1 For purposes of this certificate, capitalized terms used
and not otherwise defined herein shall have the meaning
ascribed thereto in the Agreement and Plan of Merger.
