EXHIBIT 2.1
[conformed as executed]
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement") is made as of
this 26th day of August, 2003, by and among Liberty Media Corporation, a
Delaware corporation ("Parent"), Liberty Satellite Acquisition Co., a Delaware
corporation ("Merger Sub"), and Liberty Satellite & Technology, Inc., a Delaware
corporation (the "Company").
RECITALS
WHEREAS, Parent beneficially owns approximately 87% of the Company's
issued and outstanding common stock;
WHEREAS, Merger Sub is an indirect controlled subsidiary of Parent;
WHEREAS, Parent, acting through Merger Sub, desires to acquire all of
the common stock of the Company that it does not beneficially own;
WHEREAS, the Boards of Directors of Parent, Merger Sub and the Company
each have determined that it is advisable and in the best interests of their
respective stockholders for Parent to so acquire such common stock and, to that
end, for Merger Sub to merge with and into the Company (the "Merger") upon the
terms and subject to the conditions of this Agreement; and
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants, representations, warranties and agreements contained herein, the
parties hereto agree as follows:
ARTICLE I
DEFINITIONS AND CONSTRUCTION
1.1 CERTAIN DEFINITIONS. As used in this Agreement, the following
terms will have the following meanings unless the context otherwise requires:
"ACQUISITION PROPOSAL" means any offer or proposal by any Person or
group of Persons concerning (i) any tender or exchange offer, (ii) any merger,
share exchange, recapitalization, consolidation or other business combination
involving the Company or (iii) an acquisition in any manner, directly or
indirectly, of a significant equity interest in, or a substantial portion of the
assets of, the Company, other than pursuant to the transactions contemplated by
this Agreement.
"AFFILIATE" of any Person has the meaning ascribed to such term in
Rule 12b-2 under the Exchange Act. For purposes of this Agreement, unless
otherwise specified, (A) neither the Company nor any of its Subsidiaries will be
deemed to be Affiliates of Parent or any of Parent's Subsidiaries; (B) neither
Parent nor any of its Subsidiaries will be deemed to be Affiliates of the
Company or any of the Company's Subsidiaries; (C) none of the Affiliates of the
Company or any of its Subsidiaries (the "Company Affiliates") will be deemed to
be an Affiliate of Parent or any of Parent's Subsidiaries, unless such Company
Affiliate would be such an Affiliate if neither Parent nor any of its
Subsidiaries (1) owned any capital stock of the Company, (2) designated or
nominated, or possessed any contractual right to designate or nominate, any
directors of the Company or any of its Subsidiaries or (3) otherwise possessed,
directly or indirectly, the power to direct or cause the direction of the
management or policies of the Company or any of its Subsidiaries; and (D) none
of the Affiliates of Parent or any of Parent's Subsidiaries ("Parent
Affiliates") will be deemed to be an Affiliate of the Company or any of the
Company's Subsidiaries, unless such Parent Affiliate would be such an Affiliate
if neither Parent nor any of its Subsidiaries (1) owned any capital stock of the
Company, (2) designated or nominated, or possessed any contractual right to
designate or nominate, any directors of the Company or any of its Subsidiaries
or (3) otherwise possessed, directly or indirectly, the power to direct or cause
the direction of the management or policies of the Company or any of its
Subsidiaries.
"AFFILIATE CONTRACT" has the meaning specified in Section 4.12(a).
"AGREEMENT" has the meaning specified in the preamble.
"ASSUMED OPTION" has the meaning specified in Section 2.6(a).
"ASSUMED SAR" has the meaning specified in Section 2.6(b).
"CERTIFICATES" has the meaning specified in Section 2.4(b).
"CERTIFICATE OF MERGER" means the certificate of merger with respect
to the Merger, containing the provisions required by, and executed in accordance
with, Section 251 of the DGCL.
"CHANGE OF CONTROL" shall mean any (i) change in the direct or
indirect record or beneficial ownership of any of the equity securities of the
Company or any of its Subsidiaries, (ii) merger, consolidation, statutory share
exchange or other transaction involving the Company or any of its Subsidiaries
or (iii) change in the composition of the board of directors or other governing
body of the Company or any of its Subsidiaries.
"CHANGE OF CONTROL COVENANT" shall mean any covenant, agreement or
other provision pursuant to which the occurrence or existence of a Change of
Control would result in a violation or breach of, constitute (with or without
due notice or lapse of time or both) or permit any Person to declare a default
or event of default under, give rise to any right of termination, cancellation,
amendment, acceleration, repurchase, prepayment or repayment or to increased
payments under, give rise to or accelerate any material obligation (including
any obligation to, or to offer to, repurchase, prepay, repay or make increased
payments) or result in the loss or modification of any material right or benefit
under, or result in any Restriction or give any Person the right to obtain any
Restriction on any capital stock or other securities or ownership interests
pursuant to, or result in any Lien or give any Person the right to obtain any
Lien on any material asset pursuant to, any Contract to which the Company or any
of its Subsidiaries is or becomes a party or to which the Company or any of its
Subsidiaries or any of their respective assets are or become subject or bound.
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"CLOSING" means the consummation of the transactions contemplated by
this Agreement.
"CLOSING DATE" means the date on which the Closing occurs pursuant to
Section 2.2.
"CODE" means the Internal Revenue Code of 1986, as amended. "COMPANY"
has the meaning specified in the preamble.
"COMPANY BOARD" means the Board of Directors of the Company.
"COMPANY CHARTER" means the Amended and Restated Certificate of
Incorporation of the Company, including any certificate of designations filed
with respect to the Company Preferred Stock, as amended to the date hereof.
"COMPANY COMMON STOCK" means the Company Series A Common Stock and the
Company Series B Common Stock.
"COMPANY EQUITY AFFILIATES" has the meaning specified in Section 4.1.
"COMPANY OPTION" has the meaning specified in Section 2.6(a).
"COMPANY PLAN" means each bonus, deferred compensation, incentive
compensation, stock purchase, stock option, severance or termination pay,
hospitalization, medical, life or other insurance, supplemental unemployment
benefits, profit-sharing, pension or retirement plan, program, agreement or
arrangement, and each other employee benefit plan, program, agreement or
arrangement, sponsored, maintained or contributed to or required to be
contributed to at any time since December 31, 1999 by the Company or by any
trade or business, whether or not incorporated ("ERISA Affiliate"), that
together with the Company would be deemed a "controlled group" within the
meaning of Section 4001(a)(14) of ERISA, for the benefit of any employee,
director or former employee or director of the Company or any ERISA Affiliate
including any such type of plan established, maintained or contributed to under
the laws of any foreign country; provided, however, that Company Plan will not
include any such plan or arrangement maintained by Liberty Media Corporation.
"COMPANY PREFERRED STOCK" means the preferred stock, par value $.01
per share, of the Company, including the Company Series A Preferred Stock and
the Company Series B Preferred Stock.
"COMPANY RESTRICTED STOCK" has the meaning specified in Section
2.6(c).
"COMPANY SAR" has the meaning specified in Section 2.6(b).
"COMPANY SEC FILINGS" has the meaning specified in Section 4.4.
"COMPANY SERIES A COMMON STOCK" means the Series A Common Stock, par
value $1.00 per share, of the Company.
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"COMPANY SERIES B COMMON STOCK" means the Series B Common Stock, par
value $1.00 per share, of the Company.
"COMPANY SERIES A PREFERRED STOCK" means the Series A Cumulative
Preferred Stock, par value $.01 per share, of the Company.
"COMPANY SERIES B PREFERRED STOCK" means the Series B Cumulative
Convertible Voting Preferred Stock, par value $.01 per share, of the Company.
"COMPANY STOCK" means the Company Common Stock and the Company
Preferred Stock.
"CONSOLIDATED PERIOD" means any period from and including March 16,
2000 through the date of this Agreement (1) during which the Company was a
member of the affiliated group (within the meaning of Section 1504 of the Code)
the common parent of which is Parent or (2) with respect to which the Company or
any of its Subsidiaries otherwise was or will be required to file a consolidated
or unitary Tax Return pursuant to which the Company or any of its Subsidiaries
were or will be combined with Parent on the same Tax Return.
"CONSOLIDATED PERIOD TAXES" means any Taxes of the Company or any of
its Subsidiaries related to any Consolidated Period, which were or will be
required to be included on any Consolidated Tax Return.
"CONSOLIDATED TAX RETURN" means any consolidated or unitary income Tax
Return related to any Consolidated Period on which the Company or any of its
Subsidiaries were or will be combined with Parent on the same Tax Return.
"CONTRACT CONSENT" has the meaning specified in Section 4.5(iii).
"CONTRACT NOTICE" has the meaning specified in Section 4.5(iii).
"CONTRACT" has the meaning specified in Section 4.5(iv).
"CONTRIBUTED CONTRACT" has the meaning specified in Section 4.12(a).
"CONTROL" means, with respect to any Person, the possession, direct or
indirect, of the power to direct or cause the direction of the management and
policies of such Person, whether through the ownership of voting securities, by
contract or otherwise.
"CONVERTIBLE SECURITIES" has the meaning specified in Section 4.3(e).
"DGCL" means the General Corporation Law of the State of Delaware.
"DISSENTING SHARES" has the meaning specified in Section 2.7.
"EFFECTIVE TIME" means the time when the Merger of Merger Sub with and
into the Company becomes effective under applicable law as provided in Section
2.1(a).
"ENVIRONMENTAL LAWS" has the meaning specified in Section 4.9(b).
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"EQUITY AFFILIATE" of a Person shall mean any other Person in which
the first Person directly or indirectly through a Subsidiary owns an investment
accounted for by the equity method within the meaning of GAAP.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and all regulations promulgated thereunder, as in effect from time to
time.
"ERISA AFFILIATE" has the meaning specified in the definition of the
term "Company Plan".
"EXCHANGE AGENT" has the meaning specified in Section 2.4(a).
"EXCHANGE AGENT AGREEMENT" has the meaning specified in Section
2.4(a).
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations thereunder.
"EXCHANGE RATIO" has the meaning specified in Section 2.3(a)(i).
"FAIRNESS OPINION" has the meaning specified in Section 4.14.
"GAAP" means generally accepted accounting principles as accepted by
the accounting profession in the United States as in effect from time to time.
"GOVERNMENT CONSENT" has the meaning specified in Section 4.5(ii).
"GOVERNMENTAL ENTITY" means any court, arbitrator, administrative or
other governmental department, agency, commission, authority or instrumentality,
domestic or foreign.
"GOVERNMENTAL FILING" has the meaning specified in Section 4.5(ii).
"INDEBTEDNESS" shall mean, with respect to any Person, without
duplication (whether or not the recourse of the lender is to the whole of the
assets of such Person or only to a portion thereof), (i) every liability of such
Person (excluding intercompany accounts between the Company and any wholly-owned
Subsidiary of the Company or between wholly-owned Subsidiaries of the Company)
(A) for borrowed money, (B) evidenced by notes, bonds, debentures or other
similar instruments (whether or not negotiable), (C) for reimbursement of
amounts drawn under letters of credit, bankers' acceptances or similar
facilities issued for the account of such Person, (D) issued or assumed as the
deferred purchase price of property or services (excluding accounts payable) or
(E) relating to a capitalized lease obligation and all debt attributable to
sale/leaseback transactions of such Person; and (ii) every liability of others
of the kind described in the preceding clause (i) that such Person has
guaranteed or which is otherwise its legal liability.
"INDEMNIFIED LIABILITIES" has the meaning specified in Section 6.6(a).
"INDEMNIFIED PARTIES" has the meaning specified in Section 6.6(a).
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"INDEMNIFIED PARTY" has the meaning specified in Section 6.6(a).
"INJUNCTION" has the meaning specified in Section 3.4.
"LEGAL PROCEEDING" shall mean any private or governmental action,
suit, complaint, arbitration, mediation, legal or administrative proceeding or
investigation.
"LICENSE" means any license, franchise, ordinance, authorization,
permit, certificate, variance, exemption, concession, lease, right of way,
easement, instrument, order and approval, domestic or foreign.
"LIEN" means any security interest, mortgage, pledge, hypothecation,
charge, claim, option, right to acquire, adverse interest, assignment, deposit
arrangement, encumbrance, restriction, lien (statutory or other), or preference,
priority or other security agreement or preferential arrangement of any kind or
nature whatsoever (including any conditional sale or other title retention
agreement, any financing lease involving substantially the same economic effect
as any of the foregoing, and the filing of any financing statement under the
Uniform Commercial Code or comparable law of any jurisdiction).
"LOCAL APPROVALS" has the meaning specified in Section 4.5(ii).
"MATERIAL ADVERSE EFFECT" means (A) with respect to Parent, a material
adverse effect on the business, properties, operations or financial condition of
Parent and its Subsidiaries (including the Company and its Subsidiaries) taken
as a whole, other than any such effect arising out of or resulting from general
business or economic conditions or from general changes in or affecting the
industries in which Parent operates in areas where Parent does business directly
or through its Subsidiaries (including the Company and its Subsidiaries), and
(B) with respect to the Company, a material adverse effect on the business,
properties, operations or financial condition of the Company and its
Subsidiaries taken as a whole, other than any such effect arising out of or
resulting from general business or economic conditions or from general changes
in or affecting the industries in which the Company operates in areas where the
Company does business directly or through its Subsidiaries.
"MATERIAL CONTRACT" has the meaning specified in Section 4.12(a).
"MERGER" has the meaning specified in the recitals.
"MERGER SUB" has the meaning specified in the preamble hereto.
"NYSE" means The New York Stock Exchange.
"PARENT" has the meaning set forth in the preamble.
"PARENT CHARTER" means the Restated Certificate of Incorporation of
Parent, as amended.
"PARENT MARKET PRICE," on any date of determination, means the average
of the closing sales prices of a share of Parent Series A Stock on the NYSE on
each of the five
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consecutive trading days immediately preceding the trading day prior to the date
of such determination.
"PARENT PREFERRED STOCK" means the preferred stock, $.01 par value per
share, of Parent.
"PARENT SEC FILINGS" has the meaning specified in Section 5.4.
"PARENT SERIES A STOCK" means the Series A common stock, $.01 par
value per share, of Parent, or such other securities as may be issuable to
holders of Company Common Stock in the Merger in accordance with Section 2.5.
"PARENT SERIES B STOCK" means the Series B common stock, $.01 par
value per share, of Parent.
"PERMITS" has the meaning specified in Section 4.9(a).
"PERSON" means an individual, partnership, corporation, limited
liability company, trust, unincorporated organization, association, joint
venture or other entity or a government, agency, political subdivision, or
instrumentality thereof.
"PROXY STATEMENT" has the meaning specified in Section 3.2(a).
"REGISTRATION STATEMENT" has the meaning specified in Section 3.2(a).
"REPRESENTATIVES" has the meaning specified in Section 6.2.
"RESTRICTION", with respect to any capital stock or other security,
shall mean any voting or other trust or agreement, option, warrant, escrow
arrangement, proxy, buy-sell agreement, power of attorney or other Contract, or
any law, rule, regulation, order, judgment or decree which, conditionally or
unconditionally: (i) grants to any Person the right to purchase or otherwise
acquire, or obligates any Person to purchase or sell or otherwise acquire,
dispose of or issue, or otherwise results in or, whether upon the occurrence of
any event or with notice or lapse of time or both or otherwise, may result in,
any Person acquiring, (A) any of such capital stock or other security; (B) any
of the proceeds of, or any distributions paid or which are or may become payable
with respect to, any of such capital stock or other security; or (C) any
interest in such capital stock or other security or any such proceeds or
distributions; (ii) restricts or, whether upon the occurrence of any event or
with notice or lapse of time or both or otherwise, may restrict the transfer or
voting of, or the exercise of any rights or the enjoyment of any benefits
arising by reason of ownership of, any such capital stock or other security or
any such proceeds or distributions; or (iii) creates or, whether upon the
occurrence of any event or with notice or lapse of time or both or otherwise,
may create a Lien or purported Lien affecting such capital stock or other
security, proceeds or distributions.
"SEC" means the Securities and Exchange Commission.
"SECURITIES ACT" means the Securities Act of 1933, as amended, and the
rules and regulations thereunder.
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"SIGNIFICANT STOCKHOLDER" shall mean any Person known to the Company
to be the beneficial owner of 5% of more of the outstanding shares of Company
Common Stock other than Parent or any of its Affiliates.
"SPECIAL MEETING" has the meaning specified in Section 3.1.
"SUBSIDIARY" when used with respect to any Person, means any other
Person: (1) of which (x) in the case of a corporation, at least (A) a majority
of the equity and (B) a majority of the voting interests are owned or
Controlled, directly or indirectly, by such first Person, by any one or more of
its Subsidiaries, or by such first Person and one or more of its Subsidiaries or
(y) in the case of any Person other than a corporation, such first Person, one
or more of its Subsidiaries, or such first Person and one or more of its
Subsidiaries (A) owns a majority of the equity interests thereof and (B) has the
power to elect or direct the election of a majority of the members of the
governing body thereof or otherwise has Control over such organization or
entity; or (2) that is required to be consolidated with such first Person for
financial reporting purposes under GAAP.
"SURVIVING CORPORATION" means the Company as the Surviving Corporation
after the Merger as provided in Section 2.1(a).
"TAX" or "TAXES" shall mean (i) any and all federal, state, local and
foreign taxes and other assessments, governmental charges, duties, fees, levies,
impositions and liabilities in the nature of a tax, including taxes based upon
or measured by gross receipts, income, profits, sales, use and occupation, and
value added, ad valorem, transfer, franchise, withholding, payroll, recapture,
employment, excise and property taxes and (ii) all interest, penalties and
additions imposed with respect to such amounts in clause (i).
"TAX RETURN" shall mean a report, return or other information required
to be supplied to or filed with a Governmental Entity with respect to any Tax
including an information return, claim for refund, amended Tax return or
declaration of estimated Tax.
"TREASURY REGULATIONS" shall mean the regulations promulgated under
the Code in effect on the date hereof and the corresponding sections of any
regulations subsequently issued that amend or supersede such regulations.
"VIOLATION" has the meaning specified in Section 4.5(iv).
"VOTING DEBT" has the meaning specified in Section 4.3(d).
"WHOLLY-OWNED SUBSIDIARY" means, as to any Person, a Subsidiary of
such Person, 100% of the equity and voting interest in which is owned, directly
and/or indirectly, by such Person.
1.2 TERMS GENERALLY. The definitions in Section 1.1 will apply equally
to both the singular and plural forms of the terms defined. Whenever the context
may require, any pronoun will include the corresponding masculine, feminine and
neuter forms. The words "include", "includes" and "including" will be deemed to
be followed by the phrase "without limitation". The words "herein", "hereof" and
"hereunder" and words of similar import refer to
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this Agreement (including the Exhibits and Schedules) in its entirety and not to
any part hereof unless the context otherwise requires. As used herein, the term
"to the knowledge of the Company" or any similar term relating to the Company's
knowledge means the actual knowledge, without investigation, of either of Xxxxxx
Xxxxxxx or Xxxxxxx X. Xxxxxxx, and the term "to the knowledge of Parent" or any
similar term relating to Parent's knowledge means the actual knowledge, without
investigation, of any of the officers or directors of Parent. All references
herein to Articles, Sections, Exhibits and Schedules will be deemed references
to Articles and Sections of, and Exhibits and Schedules to, this Agreement
unless the context otherwise requires. Unless the context otherwise requires,
any references to any agreement or other instrument or statute or regulation are
to it as amended and supplemented from time to time (and, in the case of a
statute or regulation, to any successor provisions). Any reference in this
Agreement to a "day" or number of "days" (without the explicit qualification of
"business") will be interpreted as a reference to a calendar day or number of
calendar days. If any action or notice is to be taken or given on or by a
particular calendar day, and such calendar day is not a business day, then such
action or notice will be deferred until, or may be taken or given on, the next
business day. As used herein, the phrase "made available" means that the
information referred to has been made available if requested by the party to
whom such information is to be made available.
ARTICLE II
THE MERGER AND RELATED MATTERS
2.1 THE MERGER.
(a) MERGER; EFFECTIVE TIME. At the Effective Time and subject to and
upon the terms and conditions of this Agreement, Merger Sub will merge with and
into the Company in accordance with the provisions of the DGCL, the separate
corporate existence of Merger Sub will cease and the Company will continue as
the Surviving Corporation. The Effective Time will occur on the date and at the
time that the Certificate of Merger has been accepted for filing by the Delaware
Secretary of State (or such later date and time as may be agreed to by Parent
and the Company and specified in the Certificate of Merger). Provided that this
Agreement has not been terminated pursuant to Article VIII, the parties will
cause the Certificate of Merger to be filed with the Delaware Secretary of State
as soon as practicable after the Closing.
(b) EFFECTS OF THE MERGER. From and after the Effective Time, the
Merger will have the effects set forth in the DGCL (including, without
limitation, Sections 259, 260 and 261 thereof). Without limiting the generality
of the foregoing, and subject thereto, at the Effective Time, all the
properties, rights, privileges, powers and franchises of the Company and Merger
Sub will vest in the Surviving Corporation, and all debts, liabilities and
duties of the Company and Merger Sub will become the debts, liabilities and
duties of the Surviving Corporation.
(c) CERTIFICATE OF INCORPORATION OF THE SURVIVING CORPORATION. At
the Effective Time, the Company Charter will remain as the Certificate of
Incorporation of the Surviving Corporation until thereafter amended in
accordance with the terms thereof and the DGCL and all certificates of
designation filed by the Company with respect to the Company Preferred Stock
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will remain as certificates of designation of the Surviving Corporation until
thereafter amended in accordance with the terms thereof and the DGCL.
(d) BYLAWS OF THE SURVIVING CORPORATION. The Bylaws of the Company
will remain as the Bylaws of the Surviving Corporation until thereafter amended
in accordance with the terms thereof, the Certificate of Incorporation of the
Surviving Corporation and the DGCL.
(e) DIRECTORS AND OFFICERS OF THE SURVIVING CORPORATION. Parent, the
Company and the Surviving Corporation will take such action as is necessary to
ensure that the directors of Merger Sub at the Effective Time will, from and
after the Effective Time, be the directors of the Surviving Corporation until
their respective successors are duly elected or appointed and qualified in
accordance with the Certificate of Incorporation and Bylaws of the Surviving
Corporation, or as otherwise provided by applicable law. Parent, the Company and
the Surviving Corporation will take such action as is necessary to ensure that
the officers of the Company at the Effective Time will, from and after the
Effective Time, be the officers of the Surviving Corporation until their
respective successors are duly appointed and qualified in accordance with the
Certificate of Incorporation and Bylaws of the Surviving Corporation, or as
otherwise provided by applicable law.
2.2 CLOSING. Unless this Agreement has been terminated pursuant to
Section 8.1 and subject to the satisfaction or, when permissible, waiver of the
conditions set forth in Article VII, the Closing will take place (i) at 10:00
a.m. (Denver time) at the executive offices of Parent in Englewood, Colorado, on
the date on which the last of the conditions set forth in Article VII (other
than the filing of the Certificate of Merger and other than any such conditions
which by their terms are not capable of being satisfied until the Closing Date
or thereafter) is satisfied or, when permissible, waived, or (ii) on such other
date and/or at such other time and/or place as the parties may mutually agree.
2.3 CONVERSION OF SECURITIES.
(a) CONVERSION OF COMPANY SECURITIES. At the Effective Time, by
virtue of the Merger and without any action on the part of Parent, Merger Sub,
the Company or the holders of shares of Company Common Stock:
(i) Each share of Company Common Stock issued and
outstanding immediately prior to the Effective Time (other than any shares of
Company Common Stock to be canceled pursuant to Section 2.3(a)(ii) and other
than Dissenting Shares, if any) will be converted into and represent the right
to receive, and will be exchangeable for, .2750 (the "Exchange Ratio") of a
validly issued, fully paid and nonassessable share of Parent Series A Stock. At
the Effective Time, all such shares of Company Common Stock will no longer be
outstanding and will automatically be canceled and retired and will cease to
exist, and each holder of a certificate representing any such shares will cease
to have any rights with respect thereto, except the right to receive the shares
of Parent Series A Stock to be issued pursuant to this Section 2.3(a)(i) (and
any dividends or other distributions and any cash in lieu of a fractional share
payable pursuant to Sections 2.4(f) and 2.4(g)) with respect thereto upon the
surrender of such certificate in accordance with Section 2.4, without interest.
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(ii) Each share of Company Common Stock (not including any
common stock of the Surviving Corporation that is issued under Section 2.3(b))
that immediately prior to the Effective Time is (x) owned of record by Parent,
Merger Sub or any Wholly-Owned Subsidiary of Parent or (y) held in the treasury
of the Company or held by any Wholly-Owned Subsidiary of the Company will
automatically be canceled, retired and cease to exist without payment of any
consideration thereof and without any conversion thereof into Parent Series A
Stock.
(iii) Each share of Company Preferred Stock issued and
outstanding immediately prior to the Effective Time, will, by virtue of the
Merger, and without any further act on the part of any holder thereof, remain as
an issued and outstanding share of preferred stock of the Surviving Corporation
that will have the powers, designations, preferences and relative,
participating, optional or other rights, if any, and the qualifications
limitations and restrictions thereof, as are set forth in the certificate of
designations for such Company Preferred Stock immediately prior to the Effective
Time.
(b) CONVERSION OF MERGER SUB STOCK. At the Effective Time, by virtue
of the Merger and without any action on the part of Parent, Merger Sub or the
Company, each share of capital stock of Merger Sub outstanding immediately prior
to the Effective Time will be converted into and become one share of common
stock of the Surviving Corporation and will constitute the only outstanding
shares of capital stock of the Surviving Corporation (other than Dissenting
Shares, if any, and the preferred stock of the Surviving Corporation described
in Section 2.3(a)(iii)).
2.4 EXCHANGE OF SHARES.
(a) APPOINTMENT OF EXCHANGE AGENT. On or before the Closing Date,
Parent will enter into an agreement (the "Exchange Agent Agreement") with an
exchange agent selected by Parent and reasonably acceptable to the Company (the
"Exchange Agent"), authorizing such Exchange Agent to act as Exchange Agent
hereunder.
(b) LETTER OF TRANSMITTAL. As soon as reasonably practicable after
the Effective Time, Parent will instruct the Exchange Agent to mail to each
holder of record of a certificate or certificates which immediately prior to the
Effective Time evidenced issued and outstanding shares of Company Common Stock
(other than shares to be canceled pursuant to Section 2.3(a)(ii)) (the
"Certificates"): (i) a notice of the effectiveness of the Merger and (ii) a
letter of transmittal (which will state that delivery will be effected, and risk
of loss and title to the Certificates will pass, only upon proper delivery of
the Certificates to the Exchange Agent) with instructions for use in effecting
the surrender and exchange of the Certificates. Such notice, letter of
transmittal and instructions will contain such provisions and be in such form as
Parent and the Company may jointly specify.
(c) EXCHANGE PROCEDURE. Promptly following the surrender, in
accordance with such instructions, of a Certificate to the Exchange Agent (or
such other agent or agents as may be appointed by the Exchange Agent or Parent
pursuant to the Exchange Agent Agreement), together with such letter of
transmittal (duly executed) and any other documents required by such
instructions or letter of transmittal, Parent will, subject to Section 2.4(d),
cause to be distributed
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to the Person in whose name such Certificate has been issued (i) a certificate
registered in the name of such Person representing the number of whole shares of
Parent Series A Stock into which the shares previously represented by the
surrendered Certificate are to have been converted at the Effective Time
pursuant to this Article II and (ii) payment (which will be made by check) of
any cash payable in lieu of a fractional share of Parent Series A Stock pursuant
to Section 2.4(f). Each Certificate so surrendered will immediately be canceled.
(d) UNREGISTERED TRANSFERS OF COMPANY COMMON STOCK. 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, a certificate representing
the proper number of whole shares of Parent Series A Stock may be issued (and
cash in lieu of a fractional share of Parent Series A Stock may be paid) to the
transferee of such shares if the Certificate evidencing such shares of Company
Common Stock surrendered to the Exchange Agent in accordance with Section 2.4(c)
is properly endorsed for transfer or is accompanied by appropriate and properly
endorsed stock powers and is otherwise in proper form to effect such transfer,
if the Person requesting such transfer pays to the Exchange Agent any transfer
or other taxes payable by reason of such transfer or establishes to the
satisfaction of the Exchange Agent that such taxes have been paid or are not
required to be paid and if such Person establishes to the satisfaction of Parent
that such transfer would not violate applicable federal or state securities
laws.
(e) LOST, STOLEN OR DESTROYED CERTIFICATES. In the event any
Certificate has 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 satisfactory to Parent and complying with any other reasonable
requirements imposed by Parent, Parent will cause to be delivered to such Person
in respect of such lost, stolen or destroyed Certificate the shares of Parent
Series A Stock or other property deliverable in respect thereof as determined in
accordance with this Article II. Parent may, in its discretion, require the
owner of such lost, stolen or destroyed Certificate to give Parent a bond in
such sum as it may direct as indemnity against any claim that may be made
against Parent or the Surviving Corporation with respect to the Certificate
alleged to have been lost, stolen or destroyed.
(f) NO FRACTIONAL SHARES. No certificates or scrip representing
fractional shares of Parent Series A Stock will be issued upon the surrender for
exchange of Certificates for Company Common Stock; and no such fractional share
interest will entitle the owner thereof to vote as, or to any other rights of, a
stockholder of Parent. In lieu of such fractional shares, any holder of Company
Common Stock who would otherwise be entitled to a fractional share of Parent
Series A Stock will, upon surrender of his Certificate to the Exchange Agent in
accordance with Section 2.4(c), be entitled to receive cash in an amount
determined by multiplying such fraction by the Parent Market Price as of the
Closing Date and rounding the product to the nearest whole cent. No interest
will accrue or be paid with respect to fractional share interests or with
respect to cash payable in lieu of fractional share interests.
(g) NO DIVIDENDS BEFORE SURRENDER OF CERTIFICATES. No dividends or
other distributions declared or made after the Effective Time with respect to
Parent Series A Stock with a record date after the Effective Time will be paid
to the holder of any unsurrendered Certificate with respect to the shares of
Parent Series A Stock for which such Certificate is then entitled to be
exchanged, until the holder of record of such Certificate will surrender such
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Certificate as provided herein. Subject to the effect of applicable laws,
following surrender of any such Certificate, there will be paid to the record
holder of the certificates representing whole shares of Parent Series A Stock
issued in exchange therefor, without interest, (i) at the time of such
surrender, the amount of dividends or other distributions, if any, with a record
date after the Effective Time that were previously paid by Parent with respect
to such whole shares of Parent Series A Stock, and (ii) at the appropriate
payment date, the amount of dividends or other distributions, if any, with a
record date after the Effective Time but prior to surrender and with a payment
date subsequent to surrender payable with respect to such whole shares of Parent
Series A Stock.
(h) NO FURTHER OWNERSHIP RIGHTS IN COMPANY COMMON STOCK. All shares
of Parent Series A Stock issued and all cash in lieu of fractional shares paid
upon the surrender for exchange of shares of Company Common Stock in accordance
with the terms hereof will be deemed to have been issued and paid in full
satisfaction of all rights pertaining to such shares of Company Common Stock,
and there will be no further registration of transfers on the stock transfer
books of the Surviving Corporation of the shares of Company Common Stock which
were outstanding immediately prior to the Effective Time. Subject to Section
2.4(i), if, after the Effective Time, Certificates are presented to the
Surviving Corporation for any reason, they will be canceled and exchanged as
provided in this Article II.
(i) ABANDONED PROPERTY LAWS. Payment or delivery of the shares of
Parent Series A Stock, any cash in lieu of fractional shares thereof and any
dividends or distributions with respect thereto in accordance with the terms
hereof will be subject to applicable abandoned property, escheat and similar
laws and none of Parent, Merger Sub, the Surviving Corporation or the Company
will be liable to any holder of shares of Company Common Stock or Parent Series
A Stock for any such shares, for any dividends or distributions with respect
thereto or for any cash in lieu of fractional shares which may be delivered to
any public official pursuant to any abandoned property, escheat or similar law.
(j) WITHHOLDING RIGHTS. Each of the Surviving Corporation and Parent
will 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 were
made by the Surviving Corporation or Parent, as the case may be.
2.5 CHANGES IN PARENT SERIES A STOCK. If, after the date hereof and
prior to the Effective Time, the Parent Series A Stock is recapitalized or
reclassified or Parent will effect any stock dividend, stock split, or reverse
stock split of Parent Series A Stock or otherwise effect any transaction that
changes the Parent Series A Stock into any other securities (including
securities of another corporation) or any other dividend or distribution is made
on the Parent Series A Stock (or such other securities), then the shares of
Parent Series A Stock to be delivered under this Agreement to the holders of
Company Common Stock will be appropriately and equitably adjusted to the kind
and amount of shares of stock and other securities and property which the
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holders of such shares of Parent Series A Stock would have been entitled to
receive had such shares been issued and outstanding as of the record date for
determining stockholders entitled to participate in such corporate event.
2.6 STOCK OPTIONS, SARS AND RESTRICTED STOCK.
(a) STOCK OPTIONS. Each of the then outstanding stock options, if
any, to purchase shares of Company Common Stock (each, a "Company Option")
issued by the Company pursuant to any Company Plan, and any non-plan options to
acquire shares of Company Common Stock set forth in Schedule 2.6 issued by the
Company pursuant to an option agreement or otherwise issued by the Company,
will, by virtue of the Merger, and without any further action on the part of any
holder thereof, be assumed by Parent and converted into an option (an "Assumed
Option") to purchase that number of shares of Parent Series A Stock determined
by multiplying the number of shares of Company Common Stock subject to such
Company Option at the Effective Time by the Exchange Ratio, at an exercise price
per share of Parent Series A Stock equal to the exercise price per share of such
Company Option immediately prior to the Effective Time divided by the Exchange
Ratio, rounded down to the nearest whole cent. If the foregoing calculation
results in an Assumed Option being exercisable for a fraction of a share of
Parent Series A Stock, then the number of shares of Parent Series A Stock
subject to such option will be rounded up to the nearest whole number of shares,
with no cash being payable for such fractional share. The terms and conditions
of each Assumed Option will otherwise remain as set forth in the Company Option
converted into such Assumed Option. The adjustment provided for in this Section
2.6(a) with respect to any options that are "incentive stock options" (as
defined in Section 422 of the Code) will be and is intended to be effected in a
manner which is consistent with Section 424(a) of the Code.
(b) STOCK APPRECIATION RIGHTS. Each of the then outstanding stock
appreciation rights, if any, with respect to shares of Company Common Stock
(each, a "Company SAR") issued by the Company pursuant to any Company Plan, and
any non-plan stock appreciation rights with respect to shares of Company Common
Stock set forth in Schedule 2.6 or otherwise issued by the Company, will, by
virtue of the Merger, and without any further action on the part of any holder
thereof, be assumed by Parent and converted into a stock appreciation right (an
"Assumed SAR") with respect to that number of shares of Parent Series A Stock
equal to the number of shares of Company Common Stock that were subject to such
Company SAR at the Effective Time multiplied by the Exchange Ratio, at an
exercise or base price per stock appreciation right equal to (i) in the case of
a Company SAR issued in tandem with, and at the same base or exercise price as,
Company Options, the exercise price per share of the related Company Option
assumed by Parent as determined above and (ii) in the case of a free standing
Company SAR or a Company SAR issued in tandem with, and at a different base or
exercise price as, Company Options, the amount determined by dividing the base
price per share of such Company SAR immediately prior to the Effective Time by
the Exchange Ratio, rounded down to the nearest whole cent. If the foregoing
calculation results in an Assumed SAR being exercisable with respect to a
fraction of a share of Parent Series A Stock, then the number of shares of
Parent Series A Stock in respect of such stock appreciation right will be
rounded up to the nearest whole number of shares, with no cash being payable for
such fractional share. The terms and conditions of each Assumed SAR will
otherwise remain as set forth in the Company SAR converted into such Assumed
SAR.
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(c) RESTRICTED STOCK. Each restricted share of Company Common Stock
("Company Restricted Stock") granted pursuant to any Company Plan and each
restricted share of Company Common Stock issued pursuant to individual awards
not granted pursuant to any Company Plan will, by virtue of the Merger, and
without any further action on the part of any holder thereof, be converted into
a number of restricted shares of Parent Series A Stock at the Exchange Ratio,
and will remain subject to the same restrictions applicable to such restricted
share of Company Common Stock immediately prior to the Effective Time. If the
foregoing calculation results in a restricted share of Company Common Stock
being convertible for a fraction of a share of Parent Series A Stock, then the
number of shares of Parent Series A Stock to be issued will be rounded up to the
nearest whole number of shares, with no cash being payable for such fractional
share.
2.7 APPRAISAL RIGHTS. Holders of Company Common Stock are entitled to
appraisal rights in the Merger under Section 262 of the DGCL. Notwithstanding
anything to the contrary in this Agreement, each outstanding share of Company
Common Stock, the holder of which has demanded and perfected his demand for
appraisal of the fair value of such shares in accordance with Section 262 and
has not effectively withdrawn or lost his right to such appraisal (the
"Dissenting Shares"), shall not be converted into or represent a right to
receive the Merger consideration specified in Section 2.3, but the holder
thereof shall be entitled only to such rights as are granted by Section 262. The
Company shall give Parent prompt notice upon receipt of any such written demands
for appraisal of the fair value of shares of Company Common Stock and of
withdrawals of such demands and any other instruments provided to the Company
pursuant to Section 262. Any payment to a holder of Company Common Stock ordered
by the Delaware Court of Chancery pursuant to Section 262 of the DGCL shall be
made by the Surviving Corporation out of its own funds. Parent and Merger Sub
acknowledge that they have received a copy of Section 262 of the DGCL and that,
as a result of their consent to the Merger as set forth in Section 6.9, they
will have no right to exercise appraisal rights under Section 262 of the DGCL
with respect to any Company Stock that immediately prior to the Effective Time
is owned of record by Parent or any Wholly-Owned Subsidiary of Parent.
ARTICLE III
CERTAIN ACTIONS
3.1 STOCKHOLDER MEETING. Except as otherwise required by the fiduciary
duties of the Company Board, as determined in good faith by the Company Board
following the receipt of advice of the Company's outside legal counsel thereon,
(A) the Company, acting through the Company Board, will, in accordance with
applicable law, the Company Charter and the Company's Bylaws, duly call, give
notice of, convene and hold, as soon as reasonably practicable after the date
hereof, a meeting of the Company's stockholders (the "Special Meeting") for the
purpose of considering and voting upon this Agreement and (B) the Company will,
through the Company Board, recommend to its stockholders the adoption of this
Agreement.
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3.2 REGISTRATION STATEMENT AND OTHER SEC FILINGS.
(a) REGISTRATION STATEMENT AND PROXY STATEMENT. As soon as
reasonably practicable after the execution of this Agreement, the Company will
prepare and file with the SEC a preliminary proxy statement in form and
substance reasonably satisfactory to Parent, and Parent will prepare and file
with the SEC a Registration Statement on Form S-4 (the "Registration Statement")
in connection with the registration under the Securities Act of the Parent
Series A Stock issuable in the Merger and upon exercise of the Assumed Options.
The proxy statement furnished to the Company's stockholders in connection with
the Special Meeting (the "Proxy Statement") will be included as part of the
prospectus forming part of the Registration Statement. Each party hereto agrees
to use commercially reasonable efforts to cooperate with each other party in
connection with the preparation and filing of the preliminary proxy statement,
the Proxy Statement and the Registration Statement, including providing
information to the other party with respect to itself as may be reasonably
required in connection therewith. Each of Parent and the Company will use
commercially reasonable efforts to respond to any comments of the SEC, to cause
the Registration Statement to be declared effective under the Securities Act as
soon as reasonably practicable after such filing and to continue to be effective
as of the Effective Time and to cause the Proxy Statement approved by the SEC to
be mailed to the Company's stockholders at the earliest practicable time. Parent
also will use commercially reasonable efforts to take any reasonable action
(other than qualifying to do business in any jurisdiction in which it is not now
so qualified, subjecting itself to taxation in any jurisdiction in which it is
not now so subject, giving any consent to general service of process in any
jurisdiction in which it is not now subject to such service or changing in any
respect its authorized or outstanding capital stock or the composition of its
assets) required to be taken under any applicable state securities or blue sky
laws in connection with the issuance of the Parent Series A Stock to be covered
by the Registration Statement.
(b) SEC COMMENTS; AMENDMENTS AND SUPPLEMENTS. Each of Parent and the
Company will notify the other party promptly of the receipt of any comments of
the SEC or its staff and of any request by the SEC or its staff or any other
governmental officials for amendments or supplements to the preliminary proxy
statement, the Proxy Statement, the Registration Statement or any other related
filing or for additional information related thereto, and will supply the other
with copies of all correspondence between it and any of its representatives, on
the one hand, and the SEC or its staff or any other governmental officials, on
the other hand, with respect to the preliminary proxy statement, the Proxy
Statement, the Registration Statement, the Merger or any other filing relating
thereto. The Proxy Statement, the Registration Statement and such other filings
will comply in all material respects with all applicable requirements of law. If
at any time prior to the Effective Time, any event occurs relating to Parent or
the Company, as the case may be, or its Subsidiaries or any of their respective
officers, directors, partners or Affiliates which should be described in an
amendment or supplement to the Proxy Statement, the Registration Statement or
any other related filing, Parent or the Company, as the case may be, will inform
the other party promptly after becoming aware of such event and cooperate in
filing with the SEC or its staff or any other government officials, and/or
mailing to stockholders of the Company, such amendment or supplement.
3.3 [Reserved]
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3.4 REASONABLE EFFORTS. Subject to the terms and conditions of this
Agreement and applicable law and, in the case of the Company, except as
otherwise required by the fiduciary duties of the Company Board (as determined
in good faith by the Company Board following the receipt of advice of the
Company's outside legal counsel thereon), each of the parties hereto will use
commercially reasonable efforts to take, or cause to be taken, all actions, and
to do, or cause to be done, all things reasonably necessary, proper or advisable
under applicable laws and regulations or otherwise to consummate and make
effective the Merger and the other transactions contemplated by this Agreement
as soon as reasonably practicable, including such actions or things as any other
party hereto may reasonably request in order to cause any of the conditions to
such other party's obligation to consummate such transactions specified in
Article VII to be fully satisfied. Without limiting the generality of the
foregoing, the parties will, and will cause their respective directors, officers
and Subsidiaries, and use commercially reasonable efforts to cause their
respective Affiliates, employees, agents, attorneys, accountants and
representatives, to consult and fully cooperate with and provide reasonable
assistance to each other in (i) obtaining all necessary consents, approvals,
waivers, licenses, permits, authorizations, registrations, qualifications, or
other permission or action by, and giving all necessary notices to and making
all necessary filings with and applications and submissions to, any Governmental
Entity or other Person; (ii) lifting any permanent or preliminary injunction or
restraining order or other similar order issued or entered by any court or
Governmental Entity (an "Injunction") of any type referred to in Section 7.1(c);
(iii) subject to the last sentence of Section 3.2(a), taking such actions as may
reasonably be required under applicable state securities or blue sky laws in
connection with the issuance of the Parent Series A Stock to be covered by the
Registration Statement; and (iv) in general, consummating and making effective
the transactions contemplated hereby. Prior to making any application to or
filing with any Governmental Entity or other Person in connection with this
Agreement, each party will provide the other party with drafts thereof and
afford the other party a reasonable opportunity to comment on such drafts.
3.5 NO SOLICITATIONS; OTHER OFFERS.
(a) The Company shall not, nor shall it knowingly permit any of its
officers, directors, representatives or agents to, directly or indirectly, (i)
take any action to solicit, initiate or knowingly encourage the submission of
any Acquisition Proposal or (ii) engage in discussions or negotiations with any
other Person to facilitate an Acquisition Proposal. From and after the date
hereof, the Company and all of its officers, directors, employees, agents and
advisors shall cease doing any of the foregoing. Nothing contained in this
Agreement shall prevent the Company Board from complying with Rule 14d-9 or Rule
14e-2 under the Exchange Act with respect to any Acquisition Proposal.
(b) Notwithstanding the foregoing, the Company may, subject to a
confidentiality agreement containing customary terms, engage in discussions or
negotiations with, and furnish nonpublic information or access to, any Person in
response to an unsolicited Acquisition Proposal or a request for information or
access made incident to an unsolicited Acquisition Proposal if (i) the Company
has complied with the terms of Section 3.5(a) hereof and (ii) the Company Board
determines in good faith, after consultation with outside legal counsel, that
the taking of such action is necessary to discharge its fiduciary duties under
applicable law.
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(c) The Company will promptly (but in no event later than 48 hours)
notify Parent if any Acquisition Proposal is made, indicating the identity of
the offeror and the terms and conditions of such Acquisition Proposal. The
Company shall keep Parent fully informed of all material developments that could
result in the Company Board withdrawing, modifying or amending its
recommendation to its stockholders referred to in Section 3.1(B) hereof.
(d) The Company Board shall be permitted to withdraw, or modify in a
manner adverse to Parent, its recommendation to its stockholders referred to in
Section 3.1(B) and Section 4.15 hereof if the Company has complied with the
terms of this Section 3.5.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to Parent and Merger Sub as
follows:
4.1 ORGANIZATION AND QUALIFICATION. Each of the Company and its
Subsidiaries (i) is a corporation, partnership, limited liability company or
other business association duly organized, validly existing and in good standing
under the laws of the jurisdiction of its incorporation or organization, (ii)
has all requisite corporate, partnership, limited liability company or other
business association power and authority to own, lease and operate its
properties and to carry on its business as it is now being conducted and (iii)
is duly qualified or licensed and in good standing to do business in each
jurisdiction in which the property owned, leased or operated by it or the nature
of the business conducted by it makes such qualification or license necessary,
except in such jurisdictions where the failure to be so duly qualified or
licensed or in good standing has not had and could not have, individually or in
the aggregate, a Material Adverse Effect on the Company. To the Company's
knowledge, each entity in which the Company, directly or through one or more of
its Subsidiaries, owns an investment accounted for by the equity method within
the meaning of GAAP (the "Company Equity Affiliates") is a corporation,
partnership, limited liability company or other business association (A) duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation or organization, (B) has all requisite
corporate, partnership, limited liability company or other business association
power and authority to own, lease and operate its properties and to carry on its
business as it is now being conducted and (C) is duly qualified to do business
and is in good standing in each jurisdiction in which the property owned, leased
or operated by it, or the nature of its activities, makes such qualification
necessary, except in each case where such failure to be so existing and in good
standing or to have such power and authority or to be so qualified to do
business and be in good standing has not had and could not have, in the
aggregate, a Material Adverse Effect on the Company. The Company has heretofore
furnished or made available to Parent a true and complete copy of the Company
Charter and the Company's Bylaws, each as amended through and in effect on the
date hereof.
4.2 AUTHORIZATION AND VALIDITY OF AGREEMENT. The Company has all
requisite corporate power and authority to enter into this Agreement and,
subject to obtaining the approval of its stockholders specified in Section 4.11,
to perform its obligations hereunder and to consummate the transactions
contemplated hereby. The execution, delivery and performance by the Company of
this Agreement and the consummation of the transactions contemplated hereby
18
have been duly authorized by the Company Board and by all other necessary
corporate action on the part of the Company, subject, in the case of the
consummation by it of the Merger, to such approval of the Company's
stockholders. This Agreement has been duly executed and delivered by the Company
and (assuming the due execution and delivery of this Agreement by the other
parties hereto) 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).
4.3 CAPITALIZATION.
(a) The authorized capital stock of the Company consists of (i)
170,000,000 shares of Company Common Stock, of which 100,000,000 shares are
designated Company Series A Common Stock and 70,000,000 shares are designated
Company Series B Common Stock and (ii) 5,000,000 shares of Company Preferred
Stock, issuable in series, of which 150,000 are designated as Company Series A
Preferred Stock and 150,000 are designated as Company Series B Preferred Stock.
(b) As of the close of business on August 21, 2003, (i) 14,304,794
shares of Company Series A Common Stock and 34,764,921 shares of Company Series
B Common Stock were issued and outstanding, (ii) 150,000 shares of Company
Series A Preferred Stock and 150,000 shares of Company Series B Preferred Stock
were issued and outstanding, (iii) 213,353 shares of Company Series A Common
Stock were reserved for issuance upon conversion of outstanding Company Series B
Common Stock, (iv) 5,150 shares of Company Series B Common Stock were reserved
for issuance upon conversion of outstanding Company Series B Preferred Stock;
(v) 320,938 shares of Company Series A Common Stock and no shares of Company
Series B Common Stock were reserved for issuance upon conversion, exchange or
exercise of outstanding Company Options, Company SARs and Company Restricted
Stock issued pursuant to Company Plans, (vi) 479,911 shares of Company Series A
Common Stock and no shares of Company Series B Common Stock were reserved for
issuance upon conversion, exchange or exercise of Company Options, Company SARs
and Company Restricted Stocks available for grant pursuant to Company Plans
(vii) no shares of Company Preferred Stock other than the Company Series A
Preferred Stock and the Company Series B Preferred Stock were issued and
outstanding and no action had been taken by the Company Board with respect to
the designation of the rights and preferences of any series of Company Preferred
Stock other than the Company Series A Preferred Stock and the Company Series B
Preferred Stock, and (viii) 2,954 shares of Company Series A Common Stock, no
shares of Company Series B Common Stock and no Company Preferred Stock were held
in the treasury of the Company or held by Subsidiaries of the Company. Except as
set forth in the preceding sentence, at the close of business on August 21,
2003, no shares of capital stock or other securities or other equity interests
of the Company and no phantom shares, phantom equity interests, or stock or
equity appreciation rights relating to the Company or any of its divisions or
Subsidiaries were issued, reserved for issuance or outstanding. Since the close
of business on August 21, 2003, no shares of capital stock or other securities
or other equity interests of the Company and no phantom shares, phantom equity
interests, or stock or equity appreciation rights relating to the Company or any
of its divisions or Subsidiaries have been issued other than shares of Company
Common Stock issued upon exercise of Company Options, Company SARs and Company
Restricted Stock outstanding at the
19
close of business on August 21, 2003 referred to in clause (v) of the second
preceding sentence in accordance with their terms.
(c) All outstanding shares of Company Common Stock and Company
Preferred Stock are, and all shares of Company Common Stock which may be issued
upon the exercise of Company Options, Company SARs or Company Restricted Stock
will be, duly authorized, validly issued, fully paid and nonassessable, and no
class of capital stock of the Company is entitled to preemptive rights. All
outstanding shares of Company Common Stock and Company Options, Company SARs or
Company Restricted Stock issued pursuant to the Company Plans were issued, and
all shares of Company Common Stock which may be issued upon the exercise of
Company Options or Company SARs issued pursuant to the Company Plans will be,
when issued, in compliance with all applicable state and federal laws concerning
the offer, sale and issuance of such securities.
(d) There are no issued or outstanding bonds, debentures, notes or
other Indebtedness of the Company or any of its Subsidiaries which have the
right to vote (or which are convertible into other securities having the right
to vote) on any matters on which stockholders of the Company may vote (the
"Voting Debt").
(e) Except as described on Schedule 4.3(e), there are no, and
immediately after the Effective Time there will be no, outstanding or authorized
subscriptions, options, warrants, securities, calls, rights, commitments or any
other contracts of any character to or by which the Company or any of its
Subsidiaries is a party or is bound that, directly or indirectly, obligate the
Company or any of its Subsidiaries (contingently or otherwise) to issue, deliver
or sell or cause to be issued, delivered or sold any shares of Company Common
Stock or any Company Preferred Stock or other capital stock, securities, equity
interests or Voting Debt of the Company or any Subsidiary of the Company, any
securities convertible into, or exercisable or exchangeable for, or evidencing
the right (contingent or otherwise) to subscribe for any such shares,
securities, interests or Voting Debt, or any phantom shares, phantom equity
interests or stock or equity appreciation rights, or obligating the Company or
any of its Subsidiaries to grant, extend or enter into any such subscription,
option, warrant, security, call, right or Contract (collectively, "Convertible
Securities"). Schedule 4.3(e) sets forth with respect to each outstanding
Company Option, Company SAR and each Company Restricted Stock share (i) the name
of the Person that holds such Company Option, Company SAR or Company Restricted
Stock and (ii) the total number of shares of Company Common Stock issuable upon
exercise of such Company Option or Company SAR or subject to such Company
Restricted Stock (assuming that all conditions to the exercise thereof,
including the passage of time, had been met). Neither the Company nor any
Subsidiary thereof is subject to any obligation (contingent or otherwise) to
repurchase or otherwise acquire or retire any shares of its capital stock. The
Company has delivered to Parent true and complete copies of the Company
Restricted Stock documents and the Company Option and Company SAR documents
which copies (together, with the provisions of the applicable Company Plans)
represent the complete terms, conditions, provisions, obligations and
undertakings of the Company with respect to all the Company Restricted Stock,
the Company Options and the Company SARs.
(f) Except as described on Schedule 4.3(f), neither the Company nor
any of its Subsidiaries has adopted, authorized or assumed any plans,
arrangements or practices for the
20
benefit of its officers, employees or directors that require or permit the
issuance, sale, purchase or grant of any capital stock, securities or other
equity interests or Voting Debt of the Company or any Subsidiary of the Company,
any phantom shares, phantom equity interests or stock or equity appreciation
rights or any Convertible Securities.
4.4 REPORTS AND FINANCIAL STATEMENTS.
(a) The Company has filed on a timely basis all forms, reports and
documents with the SEC required to filed by it under the Securities Act or the
Exchange Act since January 1, 1999 (collectively, the "Company SEC Filings").
The Company has heretofore furnished or made available to Parent true and
complete copies of all the Company SEC Filings filed prior to the date hereof.
As of their respective dates, each of the Company SEC Filings complied in all
material respects with the applicable requirements of the Exchange Act and the
rules and regulations thereunder, and none of the Company SEC Filings contained
as of such date any untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading (except that no representation or warranty is made with respect to
any information regarding Parent or its Affiliates included in the Company SEC
Filings which was furnished by Parent or its Affiliates expressly for use
therein). When filed with the SEC, the financial statements (including the
related notes) included in the Company SEC Filings complied as to form in all
material respects with the applicable requirements of the Exchange Act and the
applicable rules and regulations thereunder and were prepared in accordance with
GAAP applied on a consistent basis (except as may be indicated therein or in the
schedules thereto), and such financial statements fairly present, in all
material respects, the consolidated financial position of the Company and its
consolidated Subsidiaries as of the respective dates thereof and the
consolidated results of their operations and their consolidated cash flows for
the respective periods then ended, subject, in the case of the unaudited interim
financial statements, to normal, recurring year-end audit adjustments.
(b) Except as and to the extent reflected or reserved against in the
financial statements included in the Company's quarterly report on Form 10-Q for
the quarter ended June 30, 2003 or as disclosed therein or in Schedule 4.4, none
of the Company or any of its Subsidiaries, or to its knowledge, any of its
Equity Affiliates, had as of such date any actual or potential liability or
obligation of any kind, whether accrued, absolute, contingent, unliquidated or
other, or whether due or to become due (including any liability for breach of
contract, breach of warranty, torts, infringements, claims or lawsuits), that in
the aggregate, insofar as the Company can reasonably foresee, could have, a
Material Adverse Effect on the Company or that individually is required by the
applicable rules and regulations of the SEC and GAAP to be disclosed, reflected
or reserved against in the Company's consolidated financial statements
(including the notes thereto). Except as set forth on Schedule 4.4, neither the
Company nor any of its Subsidiaries has guaranteed or otherwise agreed to become
responsible for any Indebtedness of any other Person.
4.5 NO APPROVALS OR NOTICES REQUIRED; NO CONFLICT WITH INSTRUMENTS.
Except as set forth on Schedule 4.5, the execution and delivery by the Company
of this Agreement do not, and the performance by the Company of its obligations
hereunder and the consummation of the transactions contemplated hereby will not:
21
(i) assuming adoption of this Agreement at the Special
Meeting by the requisite vote of the Company's stockholders, conflict with or
violate the Company Charter or Bylaws or the charter or bylaws of any corporate
Subsidiary of the Company, or any other instrument or document governing any
Subsidiary of the Company that is not a corporation or partnership;
(ii) require any consent, approval, order or authorization of
or other action by any Governmental Entity (a "Government Consent") or any
registration, qualification, declaration or filing with or notice to any
Governmental Entity (a "Governmental Filing"), in each case on the part of or
with respect to the Company, any Subsidiary of the Company or, to the knowledge
of the Company, any Company Equity Affiliate, except for (A) the filing with the
SEC of the Registration Statement and the Proxy Statement and such reports under
Sections 13(a) and 16(a) of the Exchange Act as may be required in connection
with this Agreement and the transactions contemplated hereby, (B) the filing of
the Certificate of Merger with the Delaware Secretary of State and appropriate
documents with the relevant authorities of other states in which the Company is
qualified to do business, (C) such Government Consents and Governmental Filings
with federal, foreign, state and local governmental authorities (the "Local
Approvals") as may be required with respect to the Licenses held by the Company,
any of its Subsidiaries or, to the knowledge of the Company, any of the Company
Equity Affiliates or as may otherwise be required under laws applicable to the
conduct of the businesses of the Company and its Subsidiaries in the ordinary
course, all of which are listed on Schedule 4.5, (D) the Governmental Filings to
be made on the part of or with respect to Parent and Merger Sub referred to in
clause (ii) of Section 5.5, (E) such Government Consents and Governmental
Filings as may be required in connection with the issuance of the Parent Series
A Stock to be covered by the Registration Statement pursuant to state securities
and blue sky laws, and (F) such Government Consents and Government Filings the
absence or omission of which could not, in the aggregate, have a Material
Adverse Effect on the Company or prevent or materially delay the consummation of
the Merger;
(iii) assuming adoption of this Agreement at the Special
Meeting by the requisite vote of the Company's stockholders, require, on the
part of the Company, any Subsidiary of the Company or, to the knowledge of the
Company, any Company Equity Affiliate, any consent by or approval or
authorization of (a "Contract Consent") or notice to (a "Contract Notice") any
other Person (other than a Governmental Entity), whether under any License or
other Contract or otherwise, except (A) as set forth on Schedule 4.5 and (B)
such Contract Consents and Contract Notices the absence or omission of which
could not, in the aggregate, have a Material Adverse Effect on the Company or
prevent or materially delay the consummation of the Merger;
(iv) assuming that the Contract Consents and Contract Notices
described on Schedule 4.5 are obtained and given and that any Government
Consents and Governmental Filings required under any Licenses are obtained or
made, conflict with or result in any violation or breach of or default (with or
without notice or lapse of time, or both) under, or give rise to a right of
termination, cancellation, suspension, modification or acceleration of any
obligation or any increase in any payment required by or the impairment, loss or
forfeiture of any material benefit, rights or privileges under or the creation
of a Lien, Restriction or other encumbrance on any assets pursuant to (any such
conflict, violation, breach, default, right of
22
termination, cancellation or acceleration, loss or creation, a "Violation") any
contract (including any note, bond, indenture, mortgage, deed of trust, lease,
franchise, permit, authorization, license, contract, instrument, employee
benefit plan or practice, or other agreement, obligation, commitment or
concession of any nature (each, a "Contract")) to which the Company, any
Subsidiary of the Company or, to the knowledge of the Company, any Company
Equity Affiliate is a party, by which the Company, any Subsidiary of the Company
or, to the knowledge of the Company, any Company Equity Affiliate or any of
their respective assets or properties is bound or affected or pursuant to which
the Company, any Subsidiary of the Company or, to the knowledge of the Company,
any Company Equity Affiliate is entitled to any rights or benefits (including
the Licenses), except such Violations which could not, in the aggregate, have a
Material Adverse Effect on the Company or prevent or materially delay the
consummation of the Merger; or
(v) assuming adoption of this Agreement at the Special
Meeting by the requisite vote of the Company's stockholders and assuming that
the Government Consents and Governmental Filings specified in clause (ii) of
this Section 4.5 are obtained, made and given, result in a Violation of, under
or pursuant to any law, rule, regulation, order, judgment or decree applicable
to the Company, any Subsidiary of the Company or, to the knowledge of the
Company, any Company Equity Affiliate, or by which any of their respective
properties or assets are bound or affected, except for such Violations which
could not, in the aggregate, have a Material Adverse Effect on the Company or
prevent or materially delay the consummation of the Merger.
4.6 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as otherwise
disclosed in the Company SEC Filings filed with the SEC and publicly available
prior to the date hereof or as set forth on Schedule 4.6, from December 31, 2002
through the date of this Agreement, (a) there has not been any material adverse
change in the business, properties, operations or financial condition of the
Company and its Subsidiaries taken as a whole, and no event has occurred and no
condition exists which, individually or together with other events or
conditions, has had or, insofar as the Company can reasonably foresee, could
have, a Material Adverse Effect on the Company and (b) no action has been taken
by the Company or any Subsidiary of the Company that, if Section 6.4 of this
Agreement had then been in effect, would have been prohibited by such Section
without the consent or approval of Parent, and no Contract to take any such
action was entered into during such period, except for such actions which could
not, in the aggregate, have a Material Adverse Effect on the Company or prevent
or materially delay the consummation of the Merger.
4.7 REGISTRATION STATEMENT; PROXY STATEMENT. None of the information
supplied or to be supplied by the Company in writing specifically for inclusion
or incorporation by reference in, and which is included or incorporated by
reference in, (i) the Registration Statement (including the Proxy Statement
forming part of the prospectus included therein) or any amendment or supplement
thereto or (ii) any other documents filed or to be filed with the SEC or any
other Governmental Entity in connection with the transactions contemplated
hereby, will, at the respective times such documents are filed, and, in the case
of the Registration Statement (including the Proxy Statement forming part of the
prospectus included therein) or any amendment or supplement thereto, when the
same becomes effective, at the time of the Special Meeting and at the Effective
Time, be false or misleading with respect to any material fact, or
23
omit to state any material fact necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading or necessary to correct any statement in any earlier communication.
4.8 LEGAL PROCEEDINGS. Except as otherwise disclosed in the Company
SEC Filings filed with the SEC and publicly available prior to the date hereof
or as set forth on Schedule 4.8, there is no (a) Legal Proceeding pending or, to
the knowledge of the Company, threatened, against, involving or affecting the
Company, any Subsidiary of the Company or, to the knowledge of the Company, any
Equity Affiliate of the Company or any of its or their respective assets or
rights, (b) judgment, decree, Injunction, rule, or order of any Governmental
Entity applicable to the Company or any Subsidiary of the Company, or to the
knowledge of the Company, any Equity Affiliate of the Company that has had or
could have, either individually or in the aggregate, a Material Adverse Effect
on the Company, (c) Legal Proceeding pending or, to the knowledge of the
Company, threatened, against the Company, any Subsidiary of the Company or, to
the knowledge of the Company, any Equity Affiliate of the Company that seeks to
restrain, enjoin or delay the consummation of the Merger or any of the other
transactions contemplated by this Agreement or that seeks damages in connection
therewith, or (d) Injunction of any type referred to in Section 7.1(c).
4.9 LICENSES; COMPLIANCE WITH REGULATORY REQUIREMENTS.
(a) The Company and its Subsidiaries, and to the knowledge of the
Company, its Equity Affiliates hold all Licenses required for or which are
material to the ownership of the assets and the operation of the businesses of
the Company or any of its Subsidiaries, except for those Licenses which the
failure to hold has not had and could not have, in the aggregate, a Material
Adverse Effect. The Company and each of its Subsidiaries, and to the knowledge
of the Company, each of its Equity Affiliates, are in compliance with, and have
conducted their respective businesses so as to comply with, the terms of their
respective Licenses and with all applicable laws, rules, regulations, ordinances
and codes (domestic or foreign), except where the failure so to comply has not
had and could not have, in the aggregate, a Material Adverse Effect. Without
limiting the generality of the foregoing, the Company and its Subsidiaries, and
to the knowledge of the Company, its Equity Affiliates (i) have all Licenses of
foreign, state and local Governmental Entities required for the operation of the
facilities being operated on the date hereof by the Company or any of its
Subsidiaries or Equity Affiliates (the "Permits"), (ii) have duly and currently
filed all reports and other information required to be filed with any
Governmental Entity in connection with such Permits and (iii) are not in
violation of any of such Permits, other than the lack of Permits, delays in
filing reports or possible violations that have not had and, could not have, a
Material Adverse Effect.
(b) Except as set forth in Schedule 4.9(b), (i) the Company and its
Subsidiaries and to the knowledge of the Company, its Equity Affiliates, and the
operation of their respective businesses, equipment and other assets and the
facilities owned or leased by them are in compliance in all material respects
with all applicable Environmental Laws, (ii) the Company and its Subsidiaries
and to the knowledge of the Company, its Equity Affiliates, hold all material
Licenses required under Environmental Laws necessary to enable them to own,
lease or otherwise hold their assets and to carry on their businesses as
presently conducted, (iii) there are no investigations, administrative
proceedings, judicial actions, orders, claims or notices that
24
are pending or, to the knowledge of the Company, threatened against the Company
or any of its Subsidiaries or to the knowledge of the Company, its Equity
Affiliates, relating to or arising under any Environmental Laws, (iv) there is
no ongoing remediation of or other response activity to address contamination or
any other adverse environmental or indoor air quality condition and no condition
that would be reasonably expected to give rise to a requirement under applicable
Environmental Laws to conduct such remediation or response activities, and no
Governmental Entity has proposed or threatened any such remediation or response,
at any real property currently or formerly leased or owned by the Company or any
of its Subsidiaries or to the knowledge of the Company, any of its Equity
Affiliates, or resulting from any activity of the Company or any of its
Subsidiaries or to the knowledge of the Company, any of its Equity Affiliates,
(v) neither the Company nor any of its Subsidiaries nor to the knowledge of the
Company, any of its Equity Affiliates, has received any notice alleging a
violation of or liability of the Company or any of its Subsidiaries or any of
its Equity Affiliates, under any Environmental Laws, and (vi) neither the
Company nor any of its Subsidiaries nor to the knowledge of the Company, any of
its Equity Affiliates, have contractually agreed to assume or provide an
indemnity for environmental liabilities of any third party. For purposes of this
Agreement, the term "Environmental Laws" means any federal, state, local or
foreign law, statute, rule or regulation or the common law relating to the
environment, the management of hazardous or toxic substances, the protection of
natural resources or wildlife, or occupational or public health and safety,
including the federal Comprehensive Environmental Response, Compensation, and
Liability Act of 1980, as amended and the federal Occupational Safety and Health
Act of 1970, as amended, and any state or foreign law counterpart.
4.10 TAX MATTERS. Except as set forth on Schedule 4.10:
(a) The Company and each of its Subsidiaries (except with respect to
any Consolidated Tax Return) have timely filed all Tax Returns that they were
required to file. All such Tax Returns were correct and complete in all
respects. All Taxes owed by the Company and each of its Subsidiaries (except any
Consolidated Period Taxes) (whether or not shown on any Tax Return) have been
timely paid. A reserve, which the Company reasonably believes to be adequate,
has been set up for the payment of all such Taxes anticipated to be payable by
the Company and each of its Subsidiaries in respect of periods through the date
hereof. Neither the Company nor any of its Subsidiaries (except with respect to
any Consolidated Tax Return) is currently the beneficiary of any extension of
time within which to file any Tax Return.
(b) No claim has ever been made by an authority in a jurisdiction
where the Company or any of its Subsidiaries does not file Tax Returns that the
Company or any of its Subsidiaries is or may be subject to taxation by that
jurisdiction.
(c) There are no Liens or Restrictions on any of the assets or
properties of the Company or any of its Subsidiaries that arose in connection
with any failure (or alleged failure) to pay any Tax, except any Liens or
Restrictions on any of the assets or properties of the Company or any of its
Subsidiaries that arose in connection with any failure (or alleged failure) by
Parent to pay any Consolidated Period Taxes.
(d) The Company and its Subsidiaries have withheld and paid over to
the relevant taxing authority all Taxes required to have been withheld and paid
in connection with
25
amounts paid or owing to any employee, independent contractor, creditor,
shareholder, or other third party.
(e) None of the Tax Returns filed by the Company or any of its
Subsidiaries (except with respect to any Consolidated Tax Return) has been or is
currently being examined by the Internal Revenue Service or relevant state,
local or foreign taxing authorities. Except with respect to any Consolidated
Period Taxes, (i) there are no examinations or other administrative or court
proceedings relating to Taxes of the Company or any of its Subsidiaries in
progress or pending, (ii) neither the Company nor any of its Subsidiaries has
received any notice or report asserting a Tax deficiency with respect to the
Company or any of its Subsidiaries and (iii) there are no current or threatened
actions, suits, proceedings, investigations, audits or claims relating to or
asserted for Taxes of the Company or any of its Subsidiaries.
(f) Except with respect to any Consolidated Period Taxes, all
deficiencies or assessments asserted against the Company or any of its
Subsidiaries by any taxing authority have been paid or fully and finally settled
and, to the knowledge of the Company, no issue previously raised in writing by
any such taxing authority reasonably could be expected to result in a material
assessment for any taxable period (or portion of a period) beginning on or after
the Closing Date.
(g) Except with respect to any Consolidated Period Taxes, the
Company and its Subsidiaries have not waived any statute of limitations in
respect of Taxes or agreed to any extension of time with respect to a Tax
assessment or deficiency.
(h) Neither the Company nor any of its Subsidiaries (A) has filed a
consent under Section 341(f) of the Code concerning collapsible corporations, or
(B) is required to include in income any adjustment pursuant to Section 481(a)
of the Code by reason of a change in accounting method.
(i) There is no contract, agreement, plan or arrangement to which
the Company or any of its Subsidiaries is a party covering any employee, former
employee, officer, director, shareholder or contract worker of the Company or
any of its Subsidiaries, which, individually or collectively, could give rise to
the payment of any amount that would not be deductible pursuant to Sections 280G
or 162(m) of the Code.
(j) Neither the Company nor any of its Subsidiaries (A) is or has
been a member of an affiliated group (within the meaning of Section 1504 of the
Code) filing a consolidated federal income Tax Return other than an affiliated
group the common parent of which is the Company or Parent, (B) is or has been a
member of any affiliated, combined, consolidated, unitary, or similar group for
state, local or foreign Tax purposes other than a group the common parent of
which is the Company or Parent, (C) is or has been a party to any Tax allocation
or Tax sharing agreement except with Parent, or (D) has any liability for the
Taxes of any Person (other than any of the Company and its Subsidiaries or
pursuant to any agreement between the Company and Parent) under Treasury
Regulations Section 1.1502-6 (or any similar provision of state, local, or
foreign law), as a transferee or successor, by Contract, or otherwise.
(k) Neither the Company nor any of its Subsidiaries (except with
respect to any Consolidated Period Taxes) has requested a ruling from, or
entered into a closing agreement
26
with, the Internal Revenue Service or any other taxing authority which will have
an effect on the Surviving Corporation or any of its Subsidiaries in any taxable
period ending after the Closing Date.
(l) None of the assets of the Company or any of its Subsidiaries is
"tax-exempt use property" within the meaning of Section 168(h)(1) of the Code,
"tax-exempt bond financed property" within the meaning of Section 168(g)(5) of
the Code, or may be treated as owned by any other Person pursuant to the
provisions of Section 168(f)(8) of the Internal Revenue Code of 1954, as amended
and in effect immediately prior to the enactment of the Tax Reform Act of 1986.
(m) Neither the Company nor any of its Subsidiaries has participated
in a corporate tax shelter within the meaning of Treasury Regulations Section
1.6011-4T or participated in a transaction that it has disclosed pursuant to
Internal Revenue Services Announcement 2002-2, 2002-2 I.R.B. 304. The Company
and its Subsidiaries (except with respect to any Consolidated Tax Return) have
disclosed on their U.S. federal Tax Returns all positions taken therein that are
likely to give rise to a substantial understatement of federal income Tax within
the meaning of Section 6662 of the Code.
4.11 EMPLOYEE MATTERS.
(a) Schedule 4.11(a) contains a true and complete list of all of the
Company Plans, except for any such plans that relate exclusively to On Command
Corporation and/or its Subsidiaries. The Company has heretofore delivered to
Parent true and complete copies of (i) each Company Plan and, if the Company
Plan is funded through a trust or any third party funding vehicle, a copy of the
trust or other funding document, (ii) the most recent determination letter
issued by the Internal Revenue Service with respect to each Company Plan for
which such a letter has been obtained, (iii) annual reports on Form 5500
required to be filed with any Governmental Entity for each Company Plan for the
three most recent plan years and all required actuarial reports for the last
three plan years of each Company Plan.
(b) No Company Plan is subject to Title IV of ERISA or section 412
of the Code and neither the Company nor any ERISA Affiliate made, or was
required to make, contributions to any employee benefit plan subject to Title IV
of ERISA or section 412 of the Code during the six year period ending on the
Effective Time.
(c) Each Company Plan that utilizes a funding vehicle described in
Section 501(c)(9) of the Code or is subject to the provisions of Section 505 of
the Code has been the subject of a notification by the Internal Revenue Service
that such funding vehicle (i) qualifies for tax-exempt status under Section
501(c)(9) of the Code and (ii) complies with Section 505 of the Code, except for
those Company Plans listed on Schedule 4.11(c) which the Internal Revenue
Service does not as a matter of policy issue such notification with respect to
that particular type of plan. Each such Company Plan satisfies, where
appropriate, the requirements of Sections 501(c)(9) and 505 of the Code.
(d) There has been no event or circumstance which has resulted in
any liability being asserted by any Company Plan, the Pension Benefit Guaranty
Corporation or any
27
other Person under Title IV of ERISA or section 412 of the Code against the
Company or any ERISA Affiliate and there has not been any event or circumstance
which could reasonably be expected to result in such liability.
(e) Neither the Company nor any Subsidiary of the Company is a party
to or bound by the terms of any collective bargaining agreement. The Company and
each of its Subsidiaries is in compliance in all material respects with all
applicable laws respecting the employment and employment practices, terms and
conditions of employment and wage and hours of its employees and is not engaged
in any unfair labor practice. There is no labor strike or labor disturbance
pending or, to the knowledge of the Company, threatened against the Company or
any Subsidiary of the Company, and during the past five years neither the
Company nor any Subsidiary of the Company has experienced a work stoppage.
(f) Each Company Plan has been operated and administered in
accordance with its terms and applicable law, including Section 406 of ERISA and
Section 4975 of the Code.
(g) Each Company Plan which is intended to be "qualified" within the
meaning of Section 401(a) of the Code is so qualified and the trusts maintained
thereunder are exempt from taxation under Section 501(a) of the Code.
(h) No Company Plan provides welfare benefits, including death or
medical benefits, with respect to current or former employees or consultants of
the Company or any Subsidiary of the Company beyond their retirement or other
termination of service (other than coverage mandated by applicable law).
(i) There are no pending, or the Company's knowledge threatened
claims by or on behalf of any Company Plan, by any employee or beneficiary
covered under any such Company Plan with respect to such Company Plan, or
otherwise involving any such Company Plan (other than routine claims for
benefits).
(j) Schedule 4.11(j) sets forth a true and complete list as of the
date hereof of each of the following material agreements, arrangements and
commitments to which the Company or any of its Subsidiaries is a party or by
which any of them may be bound (true and complete copies of which have been
delivered to Parent), except for any of such agreements, arrangements or
commitments that have been filed by the Company with the SEC as an exhibit to
its Annual Report on Form 10-K: (i) each employment, consulting, agency or
commission agreement not terminable without liability to the Company or any of
its Subsidiaries upon 60 days' or less prior notice to the employee, consultant
or agent; (ii) each agreement with any employee of the Company or any Subsidiary
of the Company the benefits of which are contingent, or the terms of which are
materially altered, upon the consummation of the transactions contemplated by
this Agreement (whether alone or in conjunction with other actions); (iii) each
agreement with respect to any employee of the Company or any Subsidiary of the
Company providing any term of employment or compensation guarantee extending for
a period longer than one year; and (iv) each other agreement or Company Plan any
of the benefits of which will be increased, or the vesting of the benefits of
which will be accelerated, by the occurrence of any of the transactions
contemplated by this Agreement (whether alone or in
28
conjunction with other actions) or the value of any of the benefits of which
will be calculated on the basis of any of the transactions contemplated by this
Agreement.
(k) Except as set forth in Schedule 4.11(k), (i) no employee of the
Company or any of its Subsidiaries will be entitled to any additional benefits
or any acceleration of the time of payment or vesting of any benefits under any
Company Plan as a result of the consummation of the transactions contemplated by
this Agreement (whether alone or in conjunction with other actions), (ii) no
amount payable, or economic benefit provided, by the Company or any of its
Subsidiaries (including any acceleration of the time of payment or vesting of
any benefit) as a result of the consummation of the transactions contemplated by
this Agreement (whether alone or in conjunction with other actions) could be
considered an "excess parachute payment" under Section 280G of the Code, (iii)
no Person is entitled to receive any additional payment from the Company, any of
its Subsidiaries or any other Person (a "Parachute Gross-Up Payment") in the
event that the excise tax of Section 4999 of the Code is imposed on such Person,
and (iv) neither the Company nor any of its Subsidiaries has granted to any
Person any right to receive any Parachute Gross-Up Payment.
4.12 CERTAIN AGREEMENTS, AFFILIATE TRANSACTIONS AND INSURANCE.
(a) Schedule 4.12(a) lists or describes each Contract to which the
Company or any of its Subsidiaries is a party, or by which any of their
respective assets are subject or bound, of the following nature, except for (x)
any of such Contracts that have previously been filed by the Company with the
SEC as an exhibit to its Annual Report on Form 10-K, (y) any of such Contracts
that Parent or any of its Affiliates are a party to (each, an "Affiliate
Contract") and (z) any of such Contracts that were directly or indirectly
contributed to or assumed by the Company or any of its Subsidiaries by virtue of
the transactions consummated pursuant to either (1) the Purchase Agreement dated
as of August 16, 2001 by and among the Company, Liberty AEG, Inc. and for
certain limited purposes, Parent, or (2) the Purchase Agreement dated as of
August 16, 2001 by and among LMC/LSAT Holdings, Inc., Liberty Brazil DTH Inc.,
Liberty Mexico DTH Inc., Liberty Multicountry DTH, Inc., Liberty International
DTH, Inc., Liberty Latin Partners, Inc., the Company, and for certain limited
purposes, Parent (each Contract referenced in subclause (1) or (2), a
"Contributed Contract") (each Contract listed or required to be listed on
Schedule 4.12(a), along with each Contract listed or described, or required to
be listed or described, on Schedules 4.3(e), 4.3(f), 4.12(b) or 4.12(c), each
contract which has previously been filed with the SEC as an exhibit to its
Annual Report on Form 10-K and each Affiliate Contract and Contributed Contract,
a "Material Contract"):
(i) Contracts that have not previously been filed and are
required to be filed with the SEC pursuant to the Exchange Act as an exhibit to
the Company's Annual Report on Form 10-K;
(ii) Contracts that were entered into outside the ordinary
course of business and pursuant to which any obligations or liabilities (whether
absolute, contingent or otherwise) remain outstanding;
(iii) employment, bonus or consulting agreements involving
potential payments in excess of $100,000 over any period of 12 months or more;
29
(iv) Contracts evidencing or securing Indebtedness of the
Company or any of its Subsidiaries (other than trade accounts arising in the
ordinary course of business that do not exceed $10,000 individually or $250,000
in the aggregate);
(v) Contracts in which the Company or any of its
Subsidiaries has guaranteed the obligations of any Person;
(vi) Contracts that may require the Company or any of its
Subsidiaries to indemnify any other Person;
(vii) any Contract involving the potential payment (A) by the
Company or any of its Subsidiaries of $100,000 or more or (B) to the Company or
any of its Subsidiaries of an amount that is reasonably likely to be $100,000 or
more;
(viii) Contracts that contain any "most favored nations"
provisions, as such term is commonly understood in the cable television and
satellite television industries;
(ix) Contracts that guarantee any Person a particular amount
of payment from the Company or any of the Company's Subsidiaries irrespective of
such Person's performance of any of its obligations under such Contract;
(x) Contracts between the Company or any of its
Subsidiaries, on the one hand, and any director, officer or Significant
Stockholder of the Company or any of its Subsidiaries or Equity Affiliates, on
the other hand;
(xi) Contracts that contain a Change of Control Covenant; and
(xii) Contracts giving any Person the right (contingent or
otherwise) to require the Company or any of its Subsidiaries to register under
the Securities Act any securities or to participate in any registration of such
securities.
Except as set forth in Schedule 4.12(a), each Material Contract is in full force
and effect and is valid and enforceable in accordance with its terms (except
insofar as enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors' rights
generally, or by principles governing the availability of equitable remedies and
except that employees' covenants not to compete may not be enforceable in
accordance with their terms in Colorado and certain other jurisdictions), and
the Company or the applicable Subsidiary of the Company, as the case may be, has
taken all actions necessary to comply in all material respects with such
Material Contract and is not in material breach or violation of or default under
(with or without notice or lapse of time or both) any such Material Contract. To
the knowledge of the Company, except as set forth in Schedule 4.12(a), all
parties to the Material Contracts other than the Company and its Subsidiaries
have complied in all material respects with the provisions thereof and no party
is in breach or violation of, or in default (with or without notice or lapse of
time, or both) under, such Material Contracts. The Company has not received
notice of any actual or threatened termination, cancellation or limitation to,
and there has not been any other adverse development in respect of, any of the
Material Contracts. The Company has delivered to Parent a true and correct copy
of each Material Contract (other than the Contributed Contracts and the
Contracts that have previously
30
been filed with the SEC as an exhibit to the Company's Annual Report on Form
10-K) that is in writing, and a description of all material terms of each
Material Contract or arrangement that is not in writing, listed or described or
required to be listed or described on Schedule 4.12(a).
(b) Except as set forth in Schedule 4.12(b), (i) there is no
Contract or any judgment, injunction, order or decree binding upon the Company
or any of its Subsidiaries that has or would reasonably be likely to have the
effect of prohibiting or materially restricting or limiting the ability of the
Company to conduct its business as the same is currently conducted or
contemplated to be conducted and (ii) none of the Company or any of the
Company's Subsidiaries is a party to, and none of their respective assets is
bound by, any Contract or any judgment, injunction, order or decree that, after
the consummation of the transactions contemplated by this Agreement, would be or
would purport to be binding upon Parent or any of its Affiliates (other than the
Surviving Corporation) or any Contract or any judgement, injunction, order or
decree in respect of which any act or omission of Parent or any of its
Affiliates (other than the Surviving Corporation) would result in a breach or
violation thereof or, in the case of any Contract, constitute (with or without
notice or lapse of time or both) a default or event of default thereunder, or
give rise to any right of termination, cancellation, amendment, acceleration,
repurchase, prepayment or repayment or to increased payments thereunder, or give
rise to or accelerate any material obligation or result in the loss or
modification of any material rights or benefits thereunder or result in any Lien
or Restriction on any of the material assets of the Surviving Corporation or any
of its Subsidiaries. The Company has delivered to Parent a true and correct copy
of each Contract that is in writing, a description of all material terms of each
Contract or arrangement that is not in writing, and a true and correct copy of
each judgment, injunction, order or decree, listed or described, or required to
be listed or described, on Schedule 4.12(b).
(c) Schedule 4.12(c) lists or describes all transactions and
Contracts between the Company or any of its Subsidiaries, on the one hand, and
any director, executive officer or Significant Stockholder of the Company or any
of its Subsidiaries or Equity Affiliates, on the other hand, other than any of
such transactions that have previously been described in the Company SEC Filings
filed with the SEC and publicly available prior to the date hereof. The Company
has delivered to Parent a true and correct copy of each Contract and arrangement
that is in writing, and a description of all material terms of each transaction
and each Contract that is not in writing, listed or described, or required to be
listed or described, on Schedule 4.12(c).
(d) The directors' and officers', errors and omissions, fire and
casualty, general liability, business interruption, product liability, and
sprinkler and water damage insurance policies maintained by the Company or any
of its Subsidiaries provide adequate coverage for all normal risks incident to
the business of the Company and its Subsidiaries and their respective properties
and assets, and are in character and amount at least equivalent to that carried
by Persons engaged in similar businesses and subject to the same or similar
perils or hazards, except for any such failures to maintain insurance policies
that, in the aggregate, could not have a Material Adverse Effect on the Company.
4.13 BROKERS OR FINDERS. No investment banker, broker, finder,
consultant or intermediary (other than Xxxxxx Xxxxxxx) is entitled to any
brokerage, finder's or other fee or
31
commission in connection with this Agreement, the Merger and the other
transactions contemplated hereby based upon arrangements made by or on behalf of
the Company.
4.14 FAIRNESS OPINION. The Company Board has received the opinion,
dated August 22, 2003, of Xxxxxx Xxxxxxx to the effect that the Exchange Ratio
contemplated by Section 2.3(a) for the conversion of Company Common Stock into
Parent Series A Stock pursuant to the Merger is fair, from a financial point of
view, to the holders of Company Common Stock (other than Parent or its
Affiliates) (the "Fairness Opinion"). A true and complete copy of the Fairness
Opinion (which includes a consent to the inclusion in its entirety of a copy of
the Fairness Opinion in any documents required to be filed by the Company with
the SEC with respect to the Merger, which consent has not been withdrawn) has
been delivered to Parent.
4.15 RECOMMENDATION OF THE COMPANY BOARD. The Company Board, at a
meeting duly called and held, unanimously (a) determined that this Agreement and
the Merger are fair to and in the best interests of the Company's stockholders
(other than Parent and its Subsidiaries), (b) approved this Agreement, the
Merger and the other transactions contemplated hereby and (c) resolved to
recommend adoption of this Agreement by the stockholders of the Company.
4.16 VOTE REQUIRED. The only vote of stockholders of the Company
required under the DGCL, the Company Charter and the Company's Bylaws in order
to adopt this Agreement is the affirmative vote of a majority of the aggregate
voting power of the issued and outstanding shares of Company Series A Common
Stock, the Company Series B Common Stock and the Company Series B Preferred
Stock voting together as a single class, and no other vote or approval of or
other action by the holders of any capital stock or other securities of the
Company is required.
4.17 FULL DISCLOSURE. No statement in this Agreement or in any
certificate delivered pursuant to the requirements of this Agreement by or on
behalf of the Company to Parent contains or will contain an untrue statement of
a material fact or omits or will omit to state a material fact necessary in
order to make the statements herein or therein, in light of the circumstances
under which they were made, not misleading.
4.18 DOCUMENTS DELIVERED. All documents which have been or shall be
delivered to Parent by or on behalf of the Company pursuant to this Agreement or
in connection with the transactions contemplated hereby (including all documents
and agreements referenced in any schedules or provided to Parent in connection
with its due diligence investigation of the Company) are or when so delivered
shall be correct, current and complete copies of the originals thereof.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PARENT
Parent hereby represents and warrants to the Company as follows:
5.1 ORGANIZATION. Each of Merger Sub and Parent (i) is a corporation
duly organized, validly existing and in good standing under the laws of the
jurisdiction of its
32
incorporation or organization, (ii) has all requisite corporate power and
authority to own, lease and operate its properties and to carry on its business
as it is now being conducted and (iii) is duly qualified or licensed and in good
standing to do business in each jurisdiction in which the property owned, leased
or operated by it or the nature of the business conducted by it makes such
qualification or license necessary, except in such jurisdictions where the
failure to be so duly qualified or licensed or in good standing has not had and
could not have, in the aggregate, a Material Adverse Effect on Parent.
5.2 AUTHORIZATION AND VALIDITY OF AGREEMENT. Each of Parent and Merger
Sub has all requisite corporate power and authority to enter into this
Agreement, to perform its obligations hereunder and to consummate the
transactions contemplated hereby. The execution, delivery and performance by
each of Parent and Merger Sub of this Agreement and the consummation by each of
Parent and Merger Sub of the transactions contemplated hereby have been approved
by the respective Boards of Directors of Parent and Merger Sub and by Parent as
the sole stockholder of Merger Sub, and have been duly authorized by all other
necessary corporate action on the part of Parent or Merger Sub. This Agreement
has been duly executed and delivered by Parent and Merger Sub and (assuming the
due execution and delivery of this Agreement by the Company) constitutes a valid
and binding agreement of Parent and Merger Sub, enforceable against Parent and
Merger Sub in accordance with its terms (except insofar as enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting creditors' rights generally, or by principles governing
the availability of equitable remedies).
5.3 CAPITALIZATION OF PARENT AND MERGER SUB.
(a) As of the date hereof, the authorized capital stock of Parent
consists of (i) 4,400,000,000 shares of common stock, $.01 par value, of which
4,000,000,000 are designated Parent Series A Stock and 400,000,000 shares are
designated Parent Series B Stock and (ii) 50,000,000 shares of Parent Preferred
Stock.
(b) As of the close of business on July 30, 2003, (A) 2,473,846,455
shares of Parent Series A Stock and 211,818,776 shares of Parent Series B Stock
(in each case net of shares held in treasury and shares held by Subsidiaries of
Parent all of the common stock of which is beneficially owned by Parent) were
issued and were outstanding, and (B) no shares of preferred stock were issued
and were outstanding.
(c) All outstanding shares of Parent Series A Stock and Parent
Series B Stock are duly authorized, validly issued, fully paid and
nonassessable, and no class of capital stock of Parent is entitled to preemptive
rights.
(d) As of the close of business on July 30, 2003, there were no
options, warrants or other rights to acquire Parent Series A Stock (or
securities convertible into or exercisable or exchangeable for Parent Series A
Stock) from Parent, other than (i) the right of the holders of Parent Series B
Stock to convert shares of Parent Series B Stock into Parent Series A Stock,
pursuant to the Parent Charter, and (ii) options or other rights representing in
the aggregate the right to purchase or otherwise acquire up to 77,418,789 shares
of Parent Series A Stock (which includes 28,165,255 options that can be
exercised for either Parent Series A Stock
33
or Parent Series B Stock) and 28,165,255 shares of Parent Series B Stock (all of
which are options that can be exercised for either Parent Series A Stock or
Parent Series B Stock), pursuant to a parent employee benefit plan or otherwise.
All other material information about the capitalization of Parent has been
disclosed in the Parent SEC Filings.
(e) The authorized capital stock of Merger Sub consists of 1,000
shares of common stock, all of which is owned beneficially and of record by
Parent or any Wholly Owned Subsidiary of Parent.
5.4 PARENT REPORTS AND FINANCIAL STATEMENTS.
(a) Parent has filed on a timely basis all forms, reports and
documents with the SEC required to filed by it under the Securities Act or the
Exchange Act since August 11, 2001 (collectively, the "Parent SEC Filings").
Parent has heretofore furnished or made available to the Company true and
complete copies of all the Parent SEC Filings filed prior to the date hereof.
The Parent SEC Filings constitute all of the documents (other than preliminary
material) that Parent was required to file with the SEC under the Exchange Act
since such date. As of their respective dates, each of the Parent SEC Filings
complied in all material respects with the applicable requirements of the
Exchange Act and the rules and regulations thereunder, and none of the Parent
SEC Filings contained as of such date any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading (except that no representation or warranty is made with
respect to any information regarding the Company included in the Parent SEC
Filings which was furnished by the Company expressly for use therein). When
filed with the SEC, the financial statements (including the related notes)
included in the Parent SEC Filings complied as to form in all material respects
with the applicable requirements of the Exchange Act and the applicable rules
and regulations thereunder and were prepared in accordance with GAAP applied on
a consistent basis (except as may be indicated therein or in the schedules
thereto), and such financial statements fairly present, in all material
respects, the consolidated financial position of Parent and its consolidated
Subsidiaries as of the respective dates thereof and the consolidated results of
their operations and their consolidated cash flows for the respective periods
then ended, subject, in the case of the unaudited interim financial statements,
to normal, recurring year-end audit adjustments.
(b) Except as and to the extent reflected or reserved against in the
financial statements included in Parent's quarterly report on Form 10-Q for the
quarter ended June 30, 2003 or as disclosed therein or in Schedule 5.4, none of
Parent or any of its Subsidiaries, or to its knowledge, any of its Equity
Affiliates, had as of such date any actual or potential liability or obligation
of any kind, whether accrued, absolute, contingent, unliquidated or other, or
whether due or to become due (including any liability for breach of contract,
breach of warranty, torts, infringements, claims or lawsuits), that in the
aggregate has had or would have a Material Adverse Effect on Parent or that
individually is required by the applicable rules and regulations of the SEC and
GAAP to be disclosed, reflected or reserved against in Parent's consolidated
financial statements (including the notes thereto).
5.5 NO APPROVALS OR NOTICES REQUIRED; NO CONFLICT WITH INSTRUMENTS.
The execution and delivery by Parent and Merger Sub of this Agreement do not,
and the performance
34
by Parent and Merger Sub of their obligations hereunder and the consummation of
the transactions contemplated hereby will not:
(i) conflict with or violate the Parent Charter or Parent's
Bylaws or the Certificate of Incorporation or Bylaws of Merger Sub;
(ii) require any Government Consent or Governmental Filing on
the part of or with respect to Parent, Merger Sub or any other Subsidiary
(except for the Company and its Subsidiaries) of Parent, except for (A) the
filing with the SEC of the Registration Statement and such reports under
Sections 12(g), 13(a), 13(d) and 16(a) of the Exchange Act as may be required in
connection with this Agreement and the transactions contemplated hereby, (B) the
filing of the Certificate of Merger with the Delaware Secretary of State and
appropriate documents with the relevant authorities of other states in which the
Company or Merger Sub is qualified to do business, (C) the Local Approvals, (D)
such Government Consents and Governmental Filings as may be required in
connection with the issuance of the Parent Series A Stock to be covered by the
Registration Statement pursuant to state securities and blue sky laws, (E) the
Governmental Filings to be made on the part of or with respect to the Company
and its Subsidiaries referred to in clause (ii) of Section 4.5 or in Schedule
4.5, and (F) such Government Consents and Governmental Filings the absence or
omission of which could not in the aggregate, have a Material Adverse Effect on
Parent or prevent or materially delay the consummation of the Merger;
(iii) require on the part of Parent, Merger Sub or any other
Subsidiary of Parent (other than the Company or its Subsidiaries), any Contract
Consent or Contract Notice, except such Contract Consents and Contract Notices
the absence or omission of which could not, in the aggregate, have a Material
Adverse Effect on Parent or prevent or materially delay the consummation of the
Merger;
(iv) assuming that any Government Consents and Governmental
Filings required under any Licenses are obtained or made, result in a Violation
by Parent, Merger Sub or any other Subsidiary of Parent (other than the Company
or any of its Subsidiaries) of any Contract to which Parent, Merger Sub, or any
other Subsidiary of Parent (other than the Company or any of its Subsidiaries)
is a party, by which Parent, Merger Sub or any other Subsidiary of Parent (other
than the Company or any of its Subsidiaries) or any of their respective assets
or properties is bound or affected or pursuant to which Parent, Merger Sub or
any other Subsidiary of Parent (other than the Company or any of its
Subsidiaries) is entitled to any rights or benefits, except for such Violations
which could not, in the aggregate, have a Material Adverse Effect on Parent or
prevent or materially delay the consummation of the Merger; or
(v) assuming that this Agreement is adopted by the Company's
stockholders as required by the DGCL and the Company Charter and Bylaws, and
that the Government Consents and Governmental Filings specified in clause (ii)
of this Section 5.5 are obtained, made and given, result in a Violation of,
under or pursuant to any law, rule, regulation, order, judgment or decree
applicable to Parent, Merger Sub or any other Subsidiary of Parent (other than
the Company or any of its Subsidiaries) or by which any of their respective
properties or assets are bound or affected, except for such Violations which
could not, in the aggregate,
35
have a Material Adverse Effect on Parent or prevent or materially delay the
consummation of the Merger.
5.6 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as otherwise
disclosed in the Parent SEC Filings filed with the SEC prior to the date hereof,
from December 31, 2002 through the date of this Agreement, there has not been
any material adverse change in the business, properties, operations or financial
condition of Parent and its Subsidiaries taken as a whole, and no event has
occurred and no condition exists which, individually or together with other
events or conditions, has had or could have a Material Adverse Effect on Parent.
5.7 REGISTRATION STATEMENT. None of the information supplied or to be
supplied by Parent or Merger Sub in writing specifically for inclusion or
incorporation by reference in, and which is included or incorporated by
reference in, (i) the Registration Statement (including the Proxy Statement
forming part of the prospectus included therein) or any amendment or supplement
thereto, or (ii) any other documents filed or to be filed with the SEC or any
other Governmental Entity in connection with the transactions contemplated
hereby, will, at the respective times such documents are filed, and, in the case
of the Registration Statement (including the Proxy Statement forming part of the
prospectus included therein) or any amendment or supplement thereto, when the
same becomes effective, at the time of the Special Meeting and at the Effective
Time, be false or misleading with respect to any material fact, or omit to state
any material fact necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading or necessary to
correct any statement in any earlier communication.
5.8 BROKERS OR FINDERS. No investment banker, broker, finder,
consultant or intermediary is entitled to any brokerage, finder's or other fee
or commission in connection with this Agreement, the Merger and the other
transactions contemplated hereby based upon arrangements made by or on behalf of
Parent or Merger Sub.
5.9 VOTE REQUIRED. No vote of stockholders of Parent is required under
the DGCL, the Parent Charter, Parent's Bylaws or the rules and regulations of
the NYSE in order for Parent to validly perform its obligations under this
Agreement (including, without limitation, its obligation to issue the Parent
Series A Stock pursuant to Article II hereof).
5.10 FULL DISCLOSURE. No statement in this Agreement or in any
certificate delivered pursuant to the requirements of this Agreement by or on
behalf of Parent or Merger Sub to the Company contains or will contain an untrue
statement of a material fact or omits or will omit to state a material fact
necessary in order to make the statements herein or therein, in light of the
circumstances under which they were made, not misleading.
5.11 INTERIM OPERATIONS OF MERGER SUB. Merger Sub has been formed
solely for the purpose of engaging in the transactions contemplated hereby, and
immediately prior to the Effective Time will have engaged in no other business
activities, will have no Subsidiaries (other than the Company), and will have
conducted its operations only as contemplated hereby.
5.12 PARENT SERIES A STOCK. The Parent Series A Stock is duly listed on
the NYSE and no inquiry or proceeding has been initiated or, to Parent's
knowledge, threatened for the
36
purpose of causing such listing to be terminated or restricted. The shares of
Parent Series A Stock to be issued and delivered pursuant to Section 2.4 will
be, when the Merger has become effective and such shares are issued and
delivered as provided in Section 2.4 and as described in the Registration
Statement, duly authorized, validly issued, fully paid and nonassessable and no
stockholder of Parent will have any preemptive right of subscription or purchase
in respect thereof granted by Parent or under applicable law. The shares of
Parent Series A Stock to be issued in the Merger, will, when issued, be
registered under the Securities Act and the Exchange Act and registered or
exempt from registration under any applicable state securities laws.
ARTICLE VI
TRANSACTIONS PRIOR TO CLOSING
6.1 ACCESS TO INFORMATION. From the date hereof to the Effective Time,
upon reasonable notice, the Company will (and will cause its Subsidiaries, and
use commercially reasonable efforts to cause its other Affiliates, to) afford to
the officers, employees, counsel, accountants and other authorized
representatives of Parent reasonable access during normal business hours to all
its properties, personnel, books and records and furnish promptly to such
Persons such information concerning its business, properties, personnel and
affairs as such Persons will from time to time reasonably request.
6.2 CONFIDENTIALITY. Unless otherwise agreed to in writing by the
party disclosing (or whose Representatives disclosed) the same (a "disclosing
party"), each receiving party (a "receiving party") will, and will cause its
Affiliates, directors, officers, employees, agents and Controlling Persons (such
Affiliates and other Persons with respect to any party being collectively
referred to as such party's "Representatives") to, (i) keep all Proprietary
Information (as defined below) of the disclosing party confidential and not
disclose or reveal any such Proprietary Information to any Person other than
those Representatives of the receiving party who are participating in effecting
the transactions contemplated hereby or who otherwise need to know such
Proprietary Information, (ii) use such Proprietary Information only in
connection with consummating the transactions contemplated hereby and enforcing
the receiving party's rights hereunder, and (iii) not use Proprietary
Information in any manner detrimental to the disclosing party. In the event that
a receiving party is requested pursuant to, or required by, applicable law or
regulation or by legal process to disclose any Proprietary Information of the
disclosing party, the receiving party will provide the disclosing party with
prompt notice of such request(s) to enable the disclosing party to seek an
appropriate protective order. A party's obligations hereunder with respect to
Proprietary Information that (A) is disclosed to a third party with the
disclosing party's written approval, (B) is required to be produced under order
of a court of competent jurisdiction or other similar requirements of a
governmental agency, or (C) is required to be disclosed by applicable law or
regulation, will, subject in the case of clauses (B) and (C) above to the
receiving party's compliance with the preceding sentence, cease to the extent of
the disclosure so consented to or required, except to the extent otherwise
provided by the terms of such consent or covered by a protective order. If a
receiving party uses a degree of care to prevent disclosure of the Proprietary
Information that is at least as great as the care it normally takes to preserve
its own information of a similar nature, it will not be liable for any
disclosure that occurs despite the exercise of that degree of care, and in no
event will a receiving party be liable for any indirect, punitive, special or
consequential damages unless such disclosure resulted
37
from its willful misconduct or gross negligence in which event it will be liable
in damages for the disclosing party's lost profits resulting directly and solely
from such disclosure. In the event this Agreement is terminated, each party
will, if so requested by the other party, promptly return or destroy all of the
Proprietary Information of such other party, including all copies,
reproductions, summaries, analyses or extracts thereof or based thereon in the
possession of the receiving party or its Representatives; provided, however,
that the receiving party will not be required to return or cause to be returned
summaries, analyses or extracts prepared by it or its Representatives, but will
destroy (or cause to be destroyed) the same upon request of the disclosing
party.
For purposes of this Section 6.2, "Proprietary Information" of a party
means all proprietary or confidential information about such party that is
furnished by it or its Representatives to the other party or the other party's
Representatives, regardless of the manner in which it is furnished. "Proprietary
Information" does not include, however, information which (a) has been or in the
future is published or is now or in the future is otherwise in the public domain
through no fault of the receiving party or its Representatives, (b) was
available to the receiving party or its Representatives on a non-confidential
basis prior to its disclosure by the disclosing party, (c) becomes available to
the receiving party or its Representatives on a non-confidential basis from a
Person other than the disclosing party or its Representatives who is not
otherwise bound by a confidentiality agreement with the disclosing party or its
Representatives, or is not otherwise prohibited from transmitting the
information to the receiving party or its Representatives, or (d) is
independently developed by the receiving party or its Representatives through
Persons who have not had, either directly or indirectly, access to or knowledge
of such information.
6.3 PUBLIC ANNOUNCEMENTS. No party will or will permit any of its
Subsidiaries to (and each party will use commercially reasonable efforts to
cause its Affiliates, directors, officers, employees, agents and representatives
not to) issue any press release, make any public announcement or furnish any
written statement to its employees or stockholders generally concerning the
transactions contemplated by this Agreement without the consent of the other
party (which consent will not be unreasonably withheld), except to the extent
required by applicable law or the applicable requirements of the NYSE (and in
either such case such party will, to the extent consistent with timely
compliance with such requirement, consult with the other party prior to making
the required release, announcement or statement).
6.4 CONDUCT OF THE COMPANY'S BUSINESS PENDING THE EFFECTIVE TIME. The
Company will, and will cause each of its Subsidiaries to, except as permitted,
required or specifically contemplated by this Agreement or by Schedule 6.4,
required by any change in applicable law or consented to or approved in writing
by Parent (which consent or approval will not be unreasonably withheld) during
the period commencing on the date hereof and ending at the Effective Time:
(a) conduct its business only in, and not take any action except in,
the ordinary and usual course of its business and consistent with past
practices;
(b) use commercially reasonable efforts, in the ordinary and usual
course of business and consistent with past practices, to preserve intact its
current business organizations,
38
to preserve its Licenses in full force and effect, to keep available the
services of its present officers and key employees, and to preserve the good
will of those having business relationships with it;
(c) not (i) make any change or amendments in its charter, bylaws or
partnership agreement or other governing instrument or document (as the case may
be); (ii) authorize for issuance, issue, grant, sell, deliver, dispose of,
pledge or otherwise encumber any shares of its capital stock or any securities
or rights convertible into, exchangeable for, or evidencing the right to
subscribe for any shares of its capital stock or other equity or voting
interests, or any rights, options, warrants, calls, commitments or other
agreements of any character to purchase or acquire any shares of its capital
stock or other equity or voting interests, or any securities or rights
convertible into, exchangeable for, or evidencing the right to subscribe for,
any shares of its capital stock or other equity or voting interests, other than
(A) shares of Company Common Stock issued upon exercise of Company Options or
other rights outstanding as of the date hereof under Company Plans or otherwise
disclosed pursuant to this Agreement, in accordance with the terms thereof, (B)
shares of Company Series B Common Stock issued upon conversion of shares of
Company Series B Preferred Stock outstanding on the date hereof and shares of
Company Series A Common Stock issued upon conversion of shares of Company Series
B Common Stock outstanding on the date hereof, each in accordance with the terms
of the Company Charter as in effect on the date hereof, (C) shares of Company
Common Stock issued in connection with the conversion of convertible or
exchangeable securities of the Company or its Subsidiaries, outstanding as of
the date hereof, in accordance with the terms of such securities, and (D) shares
of Company Series B Common Stock issued as payment of dividends on Company
Series B Preferred Stock; (iii) split, combine, subdivide or reclassify the
outstanding shares of its capital stock or other equity or voting interests, or
declare, set aside for payment or pay any dividend (except as provided in
Section 6.4(c)(ii)(D)), or make any other actual, constructive or deemed
distribution in respect of any shares of its capital stock or other equity or
voting interests, or otherwise make any payments to stockholders or owners of
equity or voting interests in their capacity as such (other than dividends or
distributions paid by any Wholly-Owned Subsidiary of the Company to the Company
or another Wholly-Owned Subsidiary); (iv) except for conversions of shares of
Company Series B Common Stock issued upon conversion of shares of Company Series
B Preferred Stock outstanding on the date hereof and conversion of shares of
Company Series B Common Stock outstanding on the date hereof into shares of
Company Series A Common Stock, each in accordance with the terms of the Company
Charter as in effect on the date hereof, redeem, purchase or otherwise acquire,
directly or indirectly, any outstanding shares of capital stock or other
securities or equity or voting interests of the Company or any Subsidiary of the
Company; (v) make any other changes in its capital or ownership structure; (vi)
sell or xxxxx x Xxxx or Restriction with respect to any stock, equity or
partnership interest owned by it in any Subsidiary of the Company; or (vii)
enter into or assume any contract, agreement, obligation, commitment or
arrangement with respect to any of the foregoing;
(d) not (i) modify or change in any material respect any material
License or other material Contract, other than in the ordinary course of
business; (ii) enter into any new employment, consulting, agency or commission
agreement, make any amendment or modification to any existing such agreement or
grant any increases in compensation, (A) in each case other than in the ordinary
course of business and consistent with past practice and with or
39
granted to Persons who are not officers or directors of the Company or any
Subsidiary of the Company and which do not, in the aggregate, materially
increase the compensation or benefit expense of the Company or any Subsidiary of
the Company or any Company Equity Affiliate and (B) other than the regular
annual salary increase granted in the ordinary course of business and consistent
with past practice to officers of the Company or its Subsidiaries who are not
directors or executive officers of the Company; (iii) establish, amend or modify
any Company Plan or any other employee benefit plan, except in the ordinary
course of business, consistent with past practice and to the extent not material
and except to the extent required by any applicable law or the existing terms of
such Company Plan or by the provisions of this Agreement; (iv) pay, discharge or
satisfy claims, liabilities or obligations (absolute, accrued, contingent or
otherwise), other than the payment, discharge or satisfaction in the ordinary
course of business and consistent with past practice of liabilities reflected or
reserved against in, or contemplated by, the consolidated financial statements
(or the notes thereto) of the Company included in the Company SEC Filings, or
incurred in the ordinary course of business and consistent with past practice;
(v) cancel any debts or waive any claims or rights, except in the ordinary
course of business and consistent with past practice; (vi) make any capital
expenditures which individually or in the aggregate are in excess of the amount
provided for capital expenditures in the most recent capital budget for the
Company and its Subsidiaries approved by the Company Board prior to December 31,
2002 (the "2003 capital budget"); (vii) accelerate the payment of, or otherwise
prepay, any existing outstanding indebtedness for borrowed money; (viii) other
than the normal cash management practices of the Company and its Subsidiaries
conducted in the ordinary and usual course of their business and consistent with
past practice, make any advance or loan to or engage in any transaction with any
director, officer, partner or Affiliate not required by the terms of an existing
Contract; or (ix) enter into or assume any contract, agreement, obligation,
commitment or arrangement with respect to any of the foregoing;
(e) not (i) incur (which will not be deemed to include entering into
credit agreements, lines of credit or similar arrangements until borrowings are
made under such arrangements) any material amount of indebtedness for borrowed
money or guarantee any such indebtedness; (ii) issue or sell any debt securities
or warrants or rights to acquire any debt securities of the Company or any of
its Subsidiaries or guarantee any debt securities of others other than in the
ordinary course of business consistent with past practice; (iii) provide any
security for outstanding Indebtedness that was previously unsecured; (iv)
increase any security for outstanding secured Indebtedness; or (v) grant any
Liens or Restrictions on any of the assets of Company or its Subsidiaries;
provided, however, that the foregoing will not prohibit (A) any guarantees in
effect on the date of this Agreement that are referred to in the Company SEC
Filings or in Schedule 6.4 or that are required to be given under existing
agreements referred to in the Company SEC Filings, (B) the incurrence or
guarantee of the indebtedness set forth on Schedule 6.4, and (C) any renewal,
extension, amendment or refinancing of existing indebtedness (provided there is
no increase in the interest rate or the principal amount of such indebtedness);
(f) not acquire or agree to acquire by merging or consolidating
with, or by purchasing a substantial equity interest in or a substantial portion
of the assets of, or by any other manner, any business or any corporation,
partnership, association or other business organization
40
or division thereof or otherwise acquire or agree to otherwise acquire any
assets that are material, individually or in the aggregate, to the Company and
its Subsidiaries taken as a whole;
(g) not sell, lease or encumber or otherwise voluntarily dispose of,
or agree to sell, lease, encumber or otherwise dispose of, any of its assets
that are material, individually or in the aggregate, to the Company and its
Subsidiaries taken as a whole;
(h) not (i) make, revoke or amend any Tax election, (ii) make any
material change in any accounting, financial reporting or Tax practice or
policy, (iii) execute any waiver of restrictions on assessment or collection of
any Tax, (iv) enter into or amend any agreement or settlement with any Tax
authority, (v) change the Company's auditors or (vi) permit any insurance policy
naming it as a beneficiary or loss-payable payee to be cancelled or terminated,
except, in the case of clause (v), in the ordinary course of business consistent
with past practice; and
(i) not take any action that would cause its representations and
warranties contained in Section 4.1 to be untrue in any respect.
6.5 EXPENSES. Whether or not the Merger is consummated, all costs and
expenses incurred or to be incurred in connection with this Agreement and the
transactions contemplated hereby will be paid by the party incurring such cost
or expense, except that the costs and expenses incurred in connection with
printing and mailing the Proxy Statement, the Registration Statement (and any
amendment or supplement thereto) and the prospectus included in the Registration
Statement (and any amendment or supplement thereto) will be borne 50% by Parent
and 50% by the Company.
6.6 INDEMNIFICATION.
(a) INDEMNIFICATION OF COMPANY DIRECTORS AND OFFICERS. From and
after the Effective Time, the Surviving Corporation will indemnify, defend and
hold harmless the present and former directors and officers of the Company (when
acting in such capacity) and any of its Subsidiaries, and any Person who is or
was serving at the request of the Company as a director or officer of another
Person (when acting in such capacity) (individually an "Indemnified Party" and,
collectively, the "Indemnified Parties") against all losses, claims, damages,
costs, expenses (including fees and expenses of counsel properly retained by an
Indemnified Party under this Section 6.6), liabilities or judgments or amounts
that are paid in settlement with the approval of the Surviving Corporation
(which approval will not be unreasonably withheld) of or in connection with any
claim, action, suit, proceeding or investigation based in whole or in part on or
arising in whole or in part out of the fact that such Person was at any time
prior to the Effective Time a director or officer, of the Company, pertaining to
any matter existing or occurring at or prior to the Effective Time and whether
asserted or claimed prior to, at or after the Effective Time ("Indemnified
Liabilities"), to the fullest extent that (x) a corporation is permitted under
Delaware law to indemnify or advance expenses to its own directors or officers,
as the case may be, (y) such Indemnified Party would have been entitled to be
indemnified by the Company, if such Indemnified Party was a director or officer
of the Company, with respect to the Indemnified Liabilities in question under
the Company Charter and the Company's Bylaws as in effect on the date hereof and
under any indemnification agreement with the Company in a form
41
disclosed to Parent prior to the date hereof and (z) such indemnification
otherwise is permitted by applicable law. In the event any such claim, action,
suit, proceeding or investigation is asserted or commenced against any
Indemnified Party (whether before or after the Effective Time), the Surviving
Corporation will be entitled to participate and, to the extent that it may wish,
to assume the defense thereof, except that if the Surviving Corporation also is
a subject of such claim, action, suit, proceeding or investigation and there is,
under applicable standards of professional conduct, a conflict on any
significant issue between the position of the Surviving Corporation and the
position of such Indemnified Party, or if the Surviving Corporation will fail to
assume responsibility for such defense, such Indemnified Party may, subject to
Section 6.6(b), retain counsel who will represent such Indemnified Party, and
the Surviving Corporation will pay all fees and expenses of such counsel
promptly as statements therefor are received; provided that such Indemnified
Party will vigorously defend (or, if the defense is assumed by the Surviving
Corporation, use commercially reasonable efforts to assist in the vigorous
defense of) any such matter; provided, further, that the Surviving Corporation
will not be liable for any settlement effected without its written consent,
which consent, however, will not be unreasonably withheld; and provided,
further, that the Surviving Corporation will not have any obligation hereunder
to any Indemnified Party when and if a court of competent jurisdiction will
ultimately determine, after exhaustion of all avenues of appeal, that such
Indemnified Party is not entitled to indemnification hereunder.
(b) INDEMNIFICATION PROCEDURES. Any Indemnified Party wishing to
claim indemnification or advancement of expenses under Section 6.6(a), upon
learning of any such claim, action, suit, proceeding or investigation, will
promptly notify the Surviving Corporation thereof (provided that the failure so
to notify the Surviving Corporation will not relieve the Surviving Corporation
from any liability which it may have under this Section 6.6, except to the
extent such failure materially prejudices the Surviving Corporation) and will
deliver to the Surviving Corporation an undertaking to repay any amounts
advanced pursuant thereto when and if a court of competent jurisdiction
ultimately determines, after exhaustion of all avenues of appeal, that such
Indemnified Party is not entitled to indemnification hereunder. In no event may
the Indemnified Parties retain more than one lead law firm and one local counsel
to represent them with respect to any such matter unless the independent
directors of the Company determine that under applicable standards of
professional conduct, there is a conflict on any significant issue between the
position of the independent directors and any other Indemnified Parties in which
case the independent directors may (unless the defense of such matter has been
assumed by the Surviving Corporation as provided herein) retain, at the expense
of the Surviving Corporation, one lead law firm and one local counsel to
represent the independent directors
(c) SURVIVAL OF EXISTING INDEMNIFICATION RIGHTS. The Surviving
Corporation and Merger Sub agree that all rights to indemnification, including
provisions relating to advances of expenses incurred in defense of any action,
suit or proceeding, whether civil, criminal, administrative or investigative
(each, a "Claim"), existing in favor of the Indemnified Parties as provided in
the Company Charter or the Company's Bylaws or pursuant to other agreements, or
certificates of incorporation or bylaws or similar documents of any of the
Company's Subsidiaries, as in effect as of the date hereof, will survive the
Merger and will continue in full force and effect for a period of not less than
six years from the Effective Time; provided, however, that all rights to
indemnification in respect of any Claim asserted, made or commenced within such
period will continue until the final disposition of such Claim.
42
(d) SURVIVAL. This Section 6.6 will survive the consummation of the
Merger. The provisions of this Section 6.6 are intended to be for the benefit of
and will be enforceable by each of the Indemnified Parties and his heirs and
legal representatives, and will be binding on Parent, Merger Sub and the
Surviving Corporation and their respective successors and assigns.
6.7 NOTIFICATION OF CERTAIN MATTERS. Between the date hereof and the
Effective Time, each party will give prompt notice in writing to the other party
of: (i) any information that indicates that any of its representations or
warranties contained herein was not true and correct as of the date hereof or
will not be true and correct at and as of the Effective Time with the same force
and effect as if made at and as of the Effective Time (except for changes
permitted or contemplated by this Agreement), (ii) the occurrence or
non-occurrence of any event which will result, or has a reasonable prospect of
resulting, in the failure of any condition, covenant or agreement contained in
this Agreement to be complied with or satisfied, (iii) any failure of the
Company or Parent (or Merger Sub), as the case may be, to comply with or satisfy
any condition, covenant or agreement to be complied with or satisfied by it
hereunder, (iv) any notice or other communication from any third party alleging
that the consent of such third party is or may be required in connection with
the transactions contemplated by this Agreement or that such transactions
otherwise may violate the rights of or confer remedies upon such third party and
(v) any notice of, or other communication relating to, any litigation referred
to in Section 6.8 or any order or judgment entered or rendered therein;
provided, however, that the delivery of any notice pursuant to this Section 6.7
will not limit or otherwise affect the remedies available hereunder to the party
receiving such notice.
6.8 DEFENSE OF LITIGATION. Each of the parties agrees, except, in the
case of the Company, as otherwise required by the fiduciary duties of the
Company Board (as determined in good faith by the Company Board following the
receipt of advice of the Company's outside legal counsel thereon), to vigorously
defend against all actions, suits or proceedings in which such party is named as
a defendant which seek to enjoin, restrain or prohibit the transactions
contemplated hereby or seek damages with respect to such transactions. No party
will settle any such action, suit or proceeding or fail to perfect on a timely
basis any right to appeal any judgment rendered or order entered against such
party therein without the consent of the other party (which consent will not be
withheld unreasonably). Each of the parties further agrees to use commercially
reasonable efforts to cause each of its Affiliates, directors and officers to
vigorously defend any action, suit or proceeding in which such Affiliate,
director or officer is named as a defendant and which seeks any such relief to
comply with this Section to the same extent as if such Person were a party
hereto.
6.9 ACTIONS BY PARENT AND MERGER SUB. In its capacity as a beneficial
owner of Company Stock, Parent hereby consents to the adoption of this Agreement
and agrees to cause the Company Stock beneficially owned by Parent, Merger Sub
and Wholly Owned Subsidiaries of Parent to be voted in favor of the adoption of
this Agreement at the Special Meeting. In its capacity as the sole stockholder
of Merger Sub, (i) Parent hereby consents to the adoption of this Agreement by
Merger Sub and agrees that such consent will be treated for all purposes as a
vote in favor of this Agreement duly adopted at a meeting of the stockholders of
Merger Sub held for such purpose, and (ii) Parent will cause Merger Sub to take
all commercially reasonable corporate action necessary on its part to consummate
the Merger and the transactions contemplated hereby. Merger Sub will not conduct
any other business.
43
6.10 LISTING. Parent shall use commercially reasonable efforts to cause
the shares of Parent Series A Stock to be issued pursuant to this Agreement and
upon exercise of the Assumed Options to be approved for listing on the NYSE,
subject to official notice of issuance, prior to the Closing Date.
6.11 TRANSFER TAXES. All stock transfer, real estate transfer,
documentary, stamp, recording and other similar taxes incurred in connection
with the Merger shall be paid either by Merger Sub or the Surviving Corporation,
and the Company shall cooperate with Merger Sub and Parent in preparing,
executing and filing any tax returns with respect to such taxes.
ARTICLE VII
CONDITIONS PRECEDENT
7.1 CONDITIONS PRECEDENT TO THE OBLIGATIONS OF PARENT, MERGER SUB AND
THE COMPANY. The respective obligations of Parent, Merger Sub and the Company to
consummate the transactions contemplated by this Agreement are subject to the
satisfaction at or prior to the Effective Time of each of the following
conditions, any or all of which, to the extent permitted by applicable law, may
be waived by Parent, for itself and Merger Sub (but not for the Company), or by
the Company for itself (but not for Parent or Merger Sub):
(a) STOCKHOLDER APPROVAL. This Agreement will have been duly adopted
by the requisite vote of the stockholders of the Company at the Special Meeting,
in accordance with the DGCL, the Company Charter and the Company's Bylaws.
(b) REGISTRATION. The Registration Statement (as amended or
supplemented) will have been declared effective and will be effective under the
Securities Act at the Effective Time, and no stop order suspending effectiveness
will have been issued, and no action, suit, proceeding or investigation seeking
a stop order or to suspend the effectiveness of the Registration Statement will
have been initiated and be continuing or will have been threatened and be
unresolved. Parent will have received all state securities law or blue sky
permits and authorizations necessary to carry out the transactions contemplated
hereby, such permits and authorizations will be in full force and effect and no
action, suit, proceeding or investigation seeking to revoke or suspend the
effectiveness of any such permit or authorization will have been initiated and
be continuing or will have been threatened and be unresolved.
(c) ABSENCE OF INJUNCTIONS. No permanent or preliminary Injunction
or restraining order or other order by any court or other Governmental Entity of
competent jurisdiction, or other legal restraint or prohibition, preventing
consummation of the transactions contemplated hereby as provided herein will be
in effect, or permitting such consummation only subject to any condition or
restriction that has or would have a Material Adverse Effect on the Company.
7.2 CONDITIONS PRECEDENT TO THE OBLIGATIONS OF MERGER SUB AND PARENT.
The obligations of Merger Sub and Parent to consummate the transactions
contemplated by this
44
Agreement are also subject to the satisfaction at or prior to the Closing Date
of each of the following conditions, unless waived by Parent:
(a) ACCURACY OF REPRESENTATIONS AND WARRANTIES. Each of the
representations and warranties of the Company contained in Sections 4.1, 4.2,
4.3, 4.4(a), 4.5, 4.6, 4.7, 4.13, 4.14, 4.15, 4.16, 4.17 and 4.18 of this
Agreement will, if specifically qualified by materiality, be true and correct
and, if not so qualified, be true and correct in all material respects in each
case as of the date of this Agreement and (except to the extent such
representations and warranties, including without limitation Section 4.6, speak
as of a specified earlier date) on and as of the Closing Date as though made on
and as of the Closing Date, except for changes permitted or contemplated by this
Agreement. In addition, each of the representations and warranties of the
Company contained in Sections 4.4(b), 4.8, 4.9, 4.10, 4.11 and 4.12 of this
Agreement will be true and correct as of the date of this Agreement and (except
to the extent such representations and warranties speak as of a specified
earlier date) on and as of the Closing Date as though made on and as of the
Closing Date, except for changes permitted or contemplated by this Agreement and
except for any inaccuracies which could not, in the aggregate, have a Material
Adverse Effect on the Company or prevent or materially delay the consummation of
the Merger.
(b) PERFORMANCE OF AGREEMENTS. The Company will have performed in
all material respects all obligations and agreements, and complied in all
material respects with all covenants and conditions, contained in this Agreement
to be performed or complied with by it prior to or on the Closing Date.
(c) OFFICERS' CERTIFICATES. Parent and Merger Sub will have received
such certificates of the Company, dated the Closing Date, in each case signed by
an executive officer of the Company (but without personal liability thereto), to
evidence satisfaction of the conditions set forth in Sections 7.1(a), 7.1(c),
7.2(a) and 7.2(b)(insofar as each relates to the Company), as may be reasonably
requested by Parent.
(d) NO ADVERSE ENACTMENTS. There will not have been any action
taken, or any statute, rule, regulation, order, judgment or decree proposed,
enacted, promulgated, entered, issued, enforced or deemed applicable by any
foreign or United States federal, state or local Governmental Entity, and there
will be no action, suit or proceeding pending or threatened, which (i) makes or
may make this Agreement, the Merger, or any of the other transactions
contemplated by this Agreement illegal or imposes or may impose material damages
or penalties in connection therewith; (ii) requires or may require the
divestiture of a material portion of the business of Parent or any of its
Subsidiaries, if the Merger is consummated, (iii) imposes or may result in
imposition of material limitations on the ability of Parent effectively to
exercise full rights of ownership of shares of capital stock of the Surviving
Corporation (including the right to vote such shares on all matters properly
presented to the stockholders of the Surviving Corporation) or makes the holding
by Parent of any such shares illegal or subject to any materially burdensome
requirement or condition, (iv) requires or may require Parent or the Company or
any of their respective material Subsidiaries or Affiliates to cease or refrain
from engaging in any material business, including any material business
conducted by the Company or any of its Subsidiaries, if the Merger is
consummated, or (v) increases or may increase in any material respect the
liabilities or obligations of Parent arising out of this Agreement, the Merger,
or any of the other transactions contemplated by this Agreement.
45
(e) RECEIPT OF LICENSES, PERMITS AND CONSENTS. Other than the filing
of the Certificate of Merger with the Delaware Secretary of State and filings
due after the Effective Time, all Local Approvals and all other Government
Consents as are required in connection with the consummation of the transactions
contemplated hereby will have been obtained and will be in full force and effect
and all Governmental Filings as are required in connection with the consummation
of such transactions will have been made, and all waiting periods, if any,
applicable to the consummation of such transactions imposed by any Governmental
Entity will have expired, other than those which, if not obtained, in force or
effect, made or expired (as the case may be) could not, in the aggregate, (i)
have a material adverse effect on the transactions contemplated hereby or (ii)
assuming consummation of the Merger, have a Material Adverse Effect, as of or
after the Effective Time, on the Company or Parent.
(f) CONTRACT CONSENTS. The Company shall have obtained or made, and
shall have provided Parent and Merger Sub with copies of, all Contract Consents
and Contract Notices set forth on Schedule 4.5, other than those which, if not
obtained or made (as the case may be) would not, either individually or in the
aggregate, (i) have a material adverse effect on the transactions contemplated
hereby or (ii) assuming consummation of the Merger, have a Material Adverse
Effect, as of or after the Effective Time, on the Company or Parent.
7.3 CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE COMPANY. The
obligation of the Company to consummate the transactions contemplated by this
Agreement is also subject to the satisfaction at or prior to the Closing Date of
each of the following conditions, unless waived by the Company:
(a) ACCURACY OF REPRESENTATIONS AND WARRANTIES. Each of the
representations and warranties of Parent contained in Sections 5.1, 5.2, 5.3,
5.4(a), 5.5, 5.6, 5.7, 5.8, 5.9, 5.10, 5.11 and 5.12 of this Agreement will, if
specifically qualified by materiality, be true and correct and, if not so
qualified, be true and correct in all material respects in each case as of the
date of this Agreement and (except to the extent such representations and
warranties, including without limitation Section 5.6, speak as of a specified
earlier date) on and as of the Closing Date as though made on and as of the
Closing Date, except for changes permitted or contemplated by this Agreement. In
addition, each of the representations and warranties of Parent contained in
Section 5.4(b) of this Agreement will be true and correct as of the date of this
Agreement and (except to the extent such representations and warranties speak as
of a specified earlier date) on and as of the Closing Date as though made on and
as of the Closing Date, except for changes permitted or contemplated by this
Agreement and except for any inaccuracies which could not, in the aggregate,
have a Material Adverse Effect on Parent or prevent or materially delay the
consummation of the Merger.
(b) PERFORMANCE OF AGREEMENTS. Each of Merger Sub and Parent will
have performed in all material respects all obligations and agreements, and
complied in all material respects with all covenants and conditions, contained
in this Agreement to be performed or complied with by it prior to or on the
Closing Date.
(c) OFFICERS' CERTIFICATES. The Company will have received such
certificates of Parent, dated the Closing Date, in each case signed by an
executive officer of Parent (but without personal liability thereto) to evidence
satisfaction of the conditions set forth in Sections
46
7.1(b), 7.1(c), 7.3(a), 7.3(b) and 7.3(d) (insofar as each relates to Parent or
Merger Sub), as may be reasonably requested by the Company.
(d) NO ADVERSE ENACTMENTS. There will not have been any action
taken, or any statute, rule, regulation, order, judgment or decree proposed,
enacted, promulgated, entered, issued, enforced or deemed applicable by any
foreign or United States federal, state or local Governmental Entity, and there
will be no action, suit or proceeding pending or threatened, which (i) makes or
may make this Agreement, the Merger, or any of the other transactions
contemplated by this Agreement illegal or imposes or may impose material damages
or penalties in connection therewith or (ii) has or, in the reasonable judgment
of the Company, assuming consummation of the Merger, could have a Material
Adverse Effect, as of or after the Effective Time, on Parent (including any
potential change or event disclosed on any Schedule which, subsequent to the
date hereof, actually occurs).
(e) RECEIPT OF LICENSES, PERMITS AND CONSENTS. Other than the filing
of the Certificate of Merger with the Delaware Secretary of State and filings
due after the Effective Time, all Local Approvals and all other Government
Consents as are required in connection with the consummation of the transactions
contemplated hereby will have been obtained and will be in full force and
effect, all Governmental Filings as are required in connection with the
consummation of such transactions will have been made, and all waiting periods,
if any, applicable to the consummation of such transactions imposed by any
Governmental Entity will have expired, other than those which, if not obtained,
in force or effect, made or expired (as the case may be), could not, in the
aggregate, assuming consummation of the Merger, have a Material Adverse Effect,
as of or after the Effective Time, on Parent.
(f) NYSE LISTING. The shares of Parent Series A Stock to be issued
pursuant to this Agreement and upon exercise of the Assumed Options will have
been approved for listing on the NYSE, subject only to official notice of
issuance.
ARTICLE VIII
TERMINATION
8.1 TERMINATION AND ABANDONMENT. This Agreement may be terminated and
the transactions contemplated hereby may be abandoned at any time prior to the
Effective Time, whether before or after adoption of this Agreement by the
stockholders of the Company:
(i) by mutual consent of Parent and the Company;
(ii) by either the Company, on the one hand, or Parent and
Merger Sub, on the other hand: (A) if the Merger has not been consummated before
March 31, 2004, provided that the right to terminate this Agreement pursuant to
this clause (ii)(A) will not be available to any party whose failure to perform
any of its obligations under this Agreement required to be performed by it at or
prior to the Effective Time has been the cause of or resulted in the failure of
the Merger to be consummated before such date, (B) if there has been a material
breach of any representation, warranty, covenant or agreement on the part of the
other party (or by Merger Sub, if the party seeking to terminate this Agreement
is the Company) contained in
47
this Agreement and such breach is incapable of being cured, (C) if any court of
competent jurisdiction or other competent governmental authority will have
issued an order, decree or ruling or taken any other action permanently
restraining, enjoining or otherwise prohibiting the Merger and such order,
decree, ruling or other action will have become final and nonappealable, or (D)
if the required adoption of this Agreement by the stockholders of the Company
has not been duly obtained in accordance with the provisions of Section 7.1(a)
hereof, provided that the terminating party has complied with its obligations
under Section 3.1 or 3.2 (as the case may be); or
(iii) by either Parent or the Company if the Company Board has
(i) withdrawn or modified in any manner adverse to Parent its recommendation to
the Company stockholders referred to in Section 3.1(B) and Section 4.16, (ii)
recommended an Acquisition Proposal or (iii) resolved to do any of the
foregoing.
8.2 EFFECT OF TERMINATION. In the event of any termination of this
Agreement by the Company or Parent pursuant to Section 8.1, this Agreement
(other than as set forth in Sections 6.2, 6.5, 8.2 and Article 9, each of which
will survive the termination of this Agreement) immediately will become void and
there will be no liability or obligation on the part of Parent, Merger Sub, the
Company or their respective Affiliates, stockholders, directors, officers,
agents or representatives; PROVIDED, that no such termination will relieve any
party of any liability or damages resulting from any willful or intentional
breach of any of its representations, warranties, covenants or agreements
contained in this Agreement.
ARTICLE IX
MISCELLANEOUS
9.1 EFFECTIVENESS OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS.
Except as set forth in the next sentence, the respective representations,
warranties and agreements of the parties contained herein or in any certificate
or other instrument delivered pursuant hereto prior to or at the Closing will
remain operative and in full force and effect, regardless of any investigation
made by or on behalf of the other parties hereto, after the execution of this
Agreement. The representations, warranties, covenants or agreements contained in
this Agreement or in any certificate or other instrument delivered pursuant to
this Agreement will terminate at the Effective Time, except for the agreements
contained in Article II, Sections 6.5 and 6.6, and in this Article IX.
9.2 NOTICES. All notices, requests, demands, waivers and other
communications required or permitted to be given under this Agreement will be in
writing and will be deemed to have been duly given if delivered personally or
mailed, certified or registered mail with postage prepaid, or sent by telegram,
overnight courier or confirmed telex or telecopier, as follows:
48
(a) if to Parent or Merger Sub, to:
Liberty Media Corporation
00000 Xxxxxxx Xxxxxxxxx
Xxxxxxxxx, Xxxxxxxx 00000
Attn: Xxxxxxxxx X. Xxxxxxxxx, Esq.
Telecopier: (000) 000-0000
and with a copy to:
Xxxxxxx & Xxxxxx L.L.C.
000 Xxxxxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxxxxx 00000
Attn: Xxxxxx X. Xxxxxx, Esq.
Telecopier: (000) 000-0000
(b) if to the Company, to:
Liberty Satellite & Technology, Inc.
00000 Xxxxxxx Xxxxxxxxx
Xxxxxxxxx, Xxxxxxxx 00000
Attn: Xxxxxx Xxxxxxx, Esq.
Telecopier: (000) 000-0000
with a copy to:
Xxxx Xxxxxxx LLP
0000 X Xxxxxx, XX
Xxxxxxxxxx, XX 00000
Attn: Xxxxxx X. XxXxxxxxx, Esq.
Telecopier: (000) 000-0000
or to such other Person or address as any party will specify by notice in
writing to the other party. All such notices, requests, demands, waivers and
communications will be deemed to have been received on the date of delivery or
on the third business day after the mailing thereof, except that any notice of a
change of address will be effective only upon actual receipt thereof.
9.3 ENTIRE AGREEMENT. This Agreement (including the Schedules,
Exhibits and other documents delivered in connection herewith) constitutes the
entire agreement of the parties and supersedes all prior agreements and
understandings, oral and written, between the parties with respect to the
subject matter hereof.
9.4 ASSIGNMENT; BINDING EFFECT; BENEFIT. Neither this Agreement nor
any of the rights, benefits or obligations hereunder may be assigned by any
party (whether by operation of law or otherwise) without the prior written
consent of the other party. Subject to the preceding sentence, this Agreement
will be binding upon, inure to the benefit of and be enforceable by the parties
and their respective successors and assigns. Nothing in this Agreement,
expressed or implied, is intended to confer on, or to make enforceable by, any
Person other than the parties or their respective successors and assigns, any
rights, remedies, obligations or liabilities under or by
49
reason of this Agreement, other than rights conferred upon Indemnified Parties
under Section 6.6 and upon stockholders, directors, officers, Affiliates, agents
and representatives of the parties under Section 9.11. Notwithstanding anything
to the contrary contained in this Agreement, the provisions of Section 6.6 of
this Agreement may not be amended or altered in any manner with respect to any
Indemnified Party without the written consent of such Indemnified Party. No
assignment of this Agreement will relieve the Surviving Corporation from its
obligations to any Indemnified Party contained in Section 6.6 of this Agreement.
9.5 AMENDMENT. Before or after adoption of this Agreement by the
stockholders of the Company, this Agreement may be amended by the parties
hereto, by action taken or authorized by their respective Boards of Directors,
at any time prior to the Effective Time; provided, however, that after adoption
of this Agreement by the stockholders of the Company, no amendment may be made
without the further requisite approval of such stockholders if such amendment by
law requires the further approval of such stockholders. This Agreement may not
be amended except by an instrument in writing signed by the parties hereto.
9.6 EXTENSION; WAIVER. At any time prior to the Effective Time, either
of the parties, by action taken or authorized by such party's Board of
Directors, may, to the extent legally allowed, (i) extend the time specified
herein for the performance of any of the obligations of the other party, (ii)
waive any inaccuracies in the representations and warranties of the other party
contained herein or in any document delivered pursuant hereto, (iii) waive
compliance by the other party with any of the agreements or covenants of such
other party contained herein or (iv) waive any condition to such waiving party's
obligation to consummate the transactions contemplated hereby or to any of such
waiving party's other obligations hereunder. Any such extension or waiver will
be valid only if set forth in a written instrument signed by the party or
parties to be bound thereby. Any such extension or waiver by any party will be
binding on such party but not on the other party entitled to the benefits of the
provision of this Agreement affected unless such other party also has agreed to
such extension or waiver. No such waiver will constitute a waiver of, or
estoppel with respect to, any subsequent or other breach or failure to strictly
comply with the provisions of this Agreement. The failure of any party to
exercise any of its rights, powers or remedies hereunder or with respect hereto
or to insist on strict compliance with this Agreement will not constitute a
waiver by such party of its right to exercise any such or other rights, powers
or remedies or to demand such compliance. Whenever this Agreement requires or
permits consent or approval by any party, such consent or approval will be
effective if given in writing in a manner consistent with the requirements for a
waiver of compliance as set forth in this Section 9.6.
9.7 HEADINGS. The headings contained in this Agreement are for
reference purposes only and will not affect in any way the meaning or
interpretation of this Agreement.
9.8 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which will be deemed to be an original, and all of which
together will be deemed to be one and the same instrument.
9.9 APPLICABLE LAW. This Agreement and the legal relations between the
parties will be governed by and construed in accordance with the laws of the
State of Delaware, without regard to the conflict of laws rules thereof.
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9.10 WAIVER OF JURY TRIAL. EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY
CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE
COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE EACH SUCH PARTY HEREBY
IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL
BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR
RELATING TO THIS AGREEMENT, OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT.
EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT (i) NO REPRESENTATIVE, AGENT OR
ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH
OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING
WAIVER, (ii) EACH PARTY UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF THIS
WAIVER, (iii) EACH PARTY MAKES THIS WAIVER VOLUNTARILY, AND (iv) EACH PARTY HAS
BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY AMONG OTHER THINGS, THE MUTUAL
WAIVERS AND CERTIFICATIONS IN THIS SECTION 9.10.
9.11 JOINT PARTICIPATION IN DRAFTING THIS AGREEMENT. The parties
acknowledge and confirm that each of their respective attorneys has participated
jointly in the drafting, review and revision of this Agreement and that it has
not been written solely by counsel for one party and that each party has had the
benefit of its independent legal counsel's advice with respect to the terms and
provisions hereof and its rights and obligations hereunder. Each party hereto,
therefore, stipulates and agrees that the rule of construction to the effect
that any ambiguities are to be or may be resolved against the drafting party
shall not be employed in the interpretation of this Agreement to favor any party
against another and that no party shall have the benefit of any legal
presumption or the detriment of any burden of proof by reason of any ambiguity
or uncertain meaning contained in this Agreement.
9.12 ENFORCEMENT OF THIS AGREEMENT. The parties hereto agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement were not performed in accordance with their specific terms or were
otherwise breached. It is accordingly agreed that the parties will be entitled
to an injunction or injunctions to prevent breaches of this Agreement and to
enforce specifically the terms and provisions hereof, this being in addition to
any other remedy to which they are entitled at law or in equity.
9.13 LIMITED LIABILITY. Notwithstanding any other provision of this
Agreement, no stockholder, director, officer, Affiliate, agent or representative
of any party (other than Parent as the sole stockholder of Merger Sub) will have
any liability in respect of or relating to the covenants, obligations,
representations or warranties of such party hereunder or in respect of any
certificate delivered with respect thereto and, to the fullest extent legally
permissible, each party, for itself and its stockholders, directors, officers
and Affiliates, waives and agrees not to seek to assert or enforce any such
liability which any such Person otherwise might have pursuant to applicable law.
9.14 SEVERABILITY. If any term or other provision of this Agreement is
invalid, illegal or incapable of being enforced by any rule of law or public
policy, all other conditions and provisions of this Agreement will nevertheless
remain in full force and effect so long as the economic or legal substance of
the transactions contemplated hereby is not affected in any
51
manner materially adverse to any party. Upon such determination that any term or
other provision is invalid, illegal or incapable of being enforced, the parties
hereto will negotiate in good faith to modify this Agreement so as to effect the
original intent of the parties as closely as possible to the fullest extent
permitted by applicable law in an acceptable manner to the end that the
transactions contemplated hereby are fulfilled to the extent possible.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement
and Plan of Merger as of the date first above written.
LIBERTY MEDIA CORPORATION
By: /s/ Xxxxxxxxx X. Xxxxxxxxx
-------------------------------------------
Name: Xxxxxxxxx X. Xxxxxxxxx
Title: Senior Vice President and Assistant
Secretary
ATTEST:
------------------------
Secretary
LIBERTY SATELLITE & TECHNOLOGY,
INC.
By: /s/ Xxxxxxx X. Xxxxxxx
-------------------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: President, Chief Financial Officer and
Treasurer
ATTEST:
------------------------
Secretary
LIBERTY SATELLITE ACQUISITION CO.
By: /s/ Xxxxxxxxx X. Xxxxxxxxx
-------------------------------------------
Name: Xxxxxxxxx X. Xxxxxxxxx
Title: Senior Vice President and Assistant
Secretary
ATTEST:
------------------------
Secretary
53
SCHEDULES
The following table lists schedules to the Agreement and Plan of
Merger which have not been included in this Exhibit 2.1 to Form 8-K:
SCHEDULE DESCRIPTION
-------- -----------
2.6 Company Options and Company SARs
4.3(e) Options, Restricted Stock, Other Rights or Contracts
4.3(f) Stock Option Plans
4.4 Liabilities and Obligations; Guarantees
4.5 Approvals or Notices Required; Conflict with Instruments
4.6 Material Adverse Changes
4.8 Legal Proceedings
4.9(b) Exceptions to Compliance with Environmental Laws
4.10 Tax Matters
4.11(a) Company Plans
4.11(c) Company Plans and Sections 501(c)(9) and 505 of the Internal Revenue Code
4.11(j) Employment Agreements, Arrangements or Commitments and Company Plans
4.11(k) Employees with Additional Benefits
4.12(a) Material Contracts
4.12(b) Contracts, Judgments, Injunctions, Orders or Decrees Prohibitive or Binding
4.12(c) Transactions and Contracts with Directors, Executive Officers, et al.
6.4 Permitted Conduct Pending Effective Time
Liberty Satellite & Technology, Inc. hereby agrees to furnish
supplementally a copy of any omitted schedule to the Securities and Exchange
Commission upon request.
