EXHIBIT 2.1
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AGREEMENT AND PLAN OF MERGER
among
ALAMOSA HOLDINGS, INC.,
A-CO MERGER SUB, INC.
and
AIRGATE PCS, INC.
Dated as of December 7, 2004
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TABLE OF CONTENTS
ARTICLE I THE MERGER
1.1. The Merger..........................................................1
1.2. Effective Time......................................................1
1.3. Effects of the Merger...............................................2
1.4. Conversion of Company Common Stock..................................2
1.5. Merger Sub Capital Stock............................................4
1.6. Proration...........................................................4
1.7. Stock Options.......................................................5
1.8. Assumption of Warrants..............................................5
1.9. Restricted Unit Awards..............................................6
1.10. Alternative Transaction Structures..................................6
1.11. Certificate of Incorporation........................................6
1.12. Bylaws..............................................................6
1.13. Tax Consequences....................................................7
1.14. Directors...........................................................7
1.15. Officers............................................................7
ARTICLE II DELIVERY OF MERGER CONSIDERATION
2.1. Election Procedures.................................................7
2.2. Deposit of Merger Consideration.....................................9
2.3. Delivery of Merger Consideration....................................9
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY
3.1. Company Disclosure Schedule........................................11
3.2. Corporate Organization.............................................12
3.3. Capitalization.....................................................14
3.4. Authority; No Violation............................................15
3.5. Consents and Approvals.............................................16
3.6. Reports............................................................17
3.7. Financial Statements...............................................17
3.8. No Undisclosed Liabilities.........................................18
3.9. Absence of Certain Changes or Events...............................18
3.10. Property...........................................................19
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3.11. Leases............................................................20
3.12. Environmental Matters.............................................21
3.13. Certain Contracts.................................................22
3.14. Distributors and Suppliers........................................25
3.15. Insurance.........................................................25
3.16. Legal Proceedings.................................................25
3.17. Compliance with Applicable Law....................................26
3.18. Employees.........................................................27
3.19. Taxes.............................................................28
3.20. Sprint Agreement Compliance.......................................29
3.21. Intellectual Property.............................................30
3.22. Labor Matters.....................................................31
3.23. Reorganization....................................................32
3.24. Broker's Fees.....................................................32
3.25. Opinion...........................................................32
3.26. Related Party Transactions........................................32
3.27. Company Information...............................................33
3.28. Company Indentures................................................33
3.29. Anti-Takeover Provisions..........................................33
3.30. Disclosure Controls and Procedures................................33
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PARENT
4.1. Parent Disclosure Schedule........................................34
4.2. Corporate Organization............................................34
4.3. Capitalization....................................................35
4.4. Authority; No Violation...........................................36
4.5. Consents and Approvals............................................37
4.6. Reports...........................................................38
4.7. Financial Statements..............................................38
4.8. No Undisclosed Liabilities........................................39
4.9. Absence of Certain Changes or Events..............................39
4.10. Property..........................................................40
4.11. Environmental Matters.............................................40
4.12. Legal Proceedings.................................................41
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4.13. Compliance with Applicable Law....................................41
4.14. Employees.........................................................42
4.15. Taxes.............................................................44
4.16. Sprint Agreement Compliance.......................................44
4.17. Intellectual Property.............................................45
4.18. Labor Matters.....................................................46
4.19. Reorganization....................................................47
4.20. Broker's Fees.....................................................47
4.21. Opinion ..........................................................47
4.22. Related Party Transactions........................................47
4.23. Company Information...............................................48
4.24. Disclosure Controls and Procedures................................48
4.25. Ownership of Company Common Stock.................................48
4.26. Adequate Financing................................................48
4.27. Insurance.........................................................48
ARTICLE V COVENANTS RELATING TO CONDUCT OF BUSINESS
5.1. Covenants of the Company..........................................49
5.2. Covenants of Parent...............................................52
ARTICLE VI ADDITIONAL AGREEMENTS
6.1. Regulatory Matters................................................53
6.2. No Solicitation...................................................55
6.3. Access to Information.............................................57
6.4. Stockholder Meetings..............................................58
6.5. Affiliates........................................................59
6.6. Nasdaq Listing....................................................59
6.7. Employee Benefit Plans; Existing Agreements.......................59
6.8. Indemnification...................................................61
6.9. Reasonable Best Efforts; Additional Agreements....................62
6.10. Advice of Changes.................................................63
6.11. Current Information...............................................63
6.12. Shelf Registration of Resales of 9 3/8% Notes.....................63
6.13. Takeover Statute..................................................64
6.14. Supplemental Warrant Agreement....................................64
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6.15. Exchange Offer....................................................65
6.16. Repurchase Offer; Company Indentures..............................65
ARTICLE VII CONDITIONS PRECEDENT
7.1. Conditions to Each Party's Obligation To Effect the Merger........65
7.2. Conditions to Obligations of Parent...............................66
7.3. Conditions to Obligations of the Company..........................67
ARTICLE VIII TERMINATION AND AMENDMENT
8.1. Termination.......................................................68
8.2. Effect of Termination.............................................70
8.3. Amendment.........................................................70
8.4. Extension; Waiver.................................................70
8.5. Termination Fee...................................................70
ARTICLE IX GENERAL PROVISIONS
9.1. Closing...........................................................72
9.2. Nonsurvival of Representations, Warranties and Agreements.........72
9.3. Expenses..........................................................72
9.4. Notices...........................................................72
9.5. Interpretation....................................................73
9.6. Counterparts......................................................73
9.7. Entire Agreement..................................................73
9.8. Governing Law.....................................................74
9.9. Enforcement of Agreement..........................................74
9.10. Severability......................................................74
9.11. Publicity.........................................................74
9.12. Assignment; No Third Party Beneficiaries..........................74
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Index of Defined Terms
2004 Form 10-K.............................7.2(d) Company Stock Certificate..................1.4(d)
9 3/8% Notes.................................6.12 Company Stockholder Approval...............3.4(a)
Acquisition Proposal.......................6.2(e) Company Stockholders Meeting...............6.4(a)
Affected Employees.........................6.7(a) Company Termination Fee....................8.5(a)
Affiliate..................................3.2(c) Company Tower Leases......................3.11(c)
Agreement................................Preamble Company Warrants...........................3.3(a)
Bankers Trust Warrant Agreement............3.3(a) Company's Counsel..........................7.3(c)
Bankers Trust Warrants.....................3.3(a) Confidentiality Agreement..................6.3(c)
Cash Consideration.....................1.4(a)(ii) Delaware Secretary............................1.2
Cash Conversion Number.....................1.6(a) DGCL..........................................1.2
Cash Election..........................1.4(a)(ii) Dissenting Shareholder.....................1.4(b)
Cash Election Number....................1.6(b)(i) Dissenting Shares..........................1.4(b)
Cash Election Shares...................1.4(a)(ii) Effective Time................................1.2
CERCLA....................................3.12(f) Election...................................2.1(a)
Certificate of Merger.........................1.2 Election Deadline..........................2.1(d)
ChaseMellon Warrants.......................3.3(a) Environmental Laws........................3.12(f)
Claim......................................6.8(a) Environmental Permits.....................3.12(f)
Closing.......................................9.1 ERISA.....................................3.18(a)
Closing Date..................................9.1 Exchange Act..................................3.5
Code.....................................Recitals Exchange Agent.............................2.1(d)
Company..................................Preamble Exchange Agent Agreement...................2.1(d)
Company 2004 Financial Statements.............3.7 Exchange Fund..............................2.3(g)
Company Advisor..............................3.24 Exchange Ratio..........................1.4(a)(i)
Company Audited FCC.......................................3.17(c)
Financial Statements........................3.7 Form of Election...........................2.1(b)
Company Common Stock.......................1.4(a) Form S-4...................................6.1(a)
Company Contract..........................3.13(b) GAAP..........................................3.7
Company Disclosure Schedule...................3.1 Governmental Entity...........................3.5
Company Draft 10-K............................3.7 Hazardous Materials.......................3.12(f)
Company ERISA Affiliate...................3.18(a) Holder........................................2.1
Company Financial Statements..................3.7 HSR Act....................................6.1(b)
Company Indentures........................3.28(a) Indemnified Parties........................6.8(a)
Company Lease.............................3.11(a) Injunction.................................7.1(e)
Company Leased Premise....................3.11(b) Insurance Amount...........................6.8(b)
Company Material Intellectual Property.....................3.21(a)
Intellectual Property....................3.21(b) Joint Proxy Statement/Prospectus...........6.1(a)
Company Option................................1.7 KPMG..........................................3.7
Company Option Plans..........................1.7 Letter of Transmittal......................2.3(a)
Company Permit............................3.17(a) Liens......................................3.3(b)
Company Permitted Liens...................3.10(a) Material Adverse Effect....................3.2(c)
Company Plans.............................3.18(a) Merger...................................Recitals
Company Preferred Stock....................3.3(a) Merger Consideration.......................1.4(a)
Company Real Property.....................3.12(e) Merger Sub...............................Preamble
Company Reports...............................3.6 Nasdaq.....................................1.4(a)
Company Sprint Agreements.................3.20(b) Non-Election Shares...................1.4(a)(iii)
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Parent...................................Preamble Person.....................................3.2(d)
Parent Advisor...............................4.20 Public Proposal.........................8.5(a)(2)
Parent Audited Financial Statements...........4.7 PWC...........................................4.7
Parent Closing Price.......................1.4(a) Restricted Stock Unit.........................1.9
Parent Common Stock.....................1.4(a)(i) SEC...........................................3.5
Parent Disclosure Schedule....................4.1 Section 404................................7.2(d)
Parent ERISA Affiliate....................4.14(a) Securities Act................................3.6
Parent Financial Statements...................4.7 Shortfall Number.......................1.6(b)(ii)
Parent Material Intellectual Property........4.17 Sprint Licenses...........................3.17(c)
Parent Permit.............................4.13(a) Sprint PCS....................................3.5
Parent Plans..............................4.14(a) Sprint Warrant.............................3.3(a)
Parent Real Property......................4.11(e) Sprint Warrant Agreement...................3.3(a)
Parent Reports................................4.6 Stock Consideration.....................1.4(a)(i)
Parent Series B Preferred Stock............4.3(a) Stock Election..........................1.4(a)(i)
Parent Series C Preferred Stock............4.3(a) Subsidiary.................................3.2(d)
Parent Sprint Agreements..................4.16(b) Superior Proposal..........................6.2(f)
Parent Stock Certificate...................1.4(d) Surviving Corporation.........................1.1
Parent Stockholder Approval................4.4(a) Tax Return................................3.19(b)
Parent Stockholders Meeting................6.4(b) Taxes.....................................3.19(b)
Parent's Counsel...........................7.2(c) Voting Debt................................3.3(d)
Per Share Amount...........................1.4(a) WARN Act.....................................3.22
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of December 7, 2004 (this
"Agreement"), by and among Alamosa Holdings, Inc., a Delaware corporation
("Parent"), A-Co. Merger Sub, Inc., a Delaware corporation and a direct wholly
owned subsidiary of Parent ("Merger Sub"), and AirGate PCS, Inc., a Delaware
corporation (the "Company").
WHEREAS, the Boards of Directors of Parent, Merger Sub and the Company have
determined that it is advisable and in the best interests of their respective
companies and their stockholders to consummate the business combination
transaction provided for herein in which the Company will, subject to the terms
and conditions set forth herein, merge with and into Merger Sub, with Merger Sub
being the surviving entity (the "Merger");
WHEREAS, the parties intend that the Merger shall qualify as a
reorganization under the provisions of Section 368(a) of the Internal Revenue
Code of 1986, as amended (the "Code"), for federal income tax purposes; and
WHEREAS, the parties desire to make certain representations, warranties and
agreements in connection with the Merger and also to prescribe certain
conditions to the Merger.
NOW, THEREFORE, in consideration of the mutual covenants, representations,
warranties and agreements contained herein, and intending to be legally bound
hereby, the parties agree as follows:
ARTICLE 1
THE MERGER
1.1 The Merger. Upon the terms and subject to the conditions of this
Agreement, at the Effective Time (as defined in Section 1.2 hereof), the Company
shall merge with and into Merger Sub. Merger Sub shall be the surviving
corporation (hereinafter sometimes called the "Surviving Corporation") in the
Merger and shall continue its corporate existence under the laws of the State of
Delaware. The name of the Surviving Corporation shall be "AirGate PCS, Inc."
Upon consummation of the Merger, the separate corporate existence of the Company
shall terminate.
1.2 Effective Time. Subject to the provisions of this Agreement, a
certificate of merger (the "Certificate of Merger") shall be duly prepared,
executed by Merger Sub as the Surviving Corporation and thereafter filed with
the Secretary of State of the State of Delaware (the "Delaware Secretary"), as
provided in the Delaware General Corporation Law (the "DGCL"), on the Closing
Date (as defined in Section 9.1). The Merger shall become effective upon the
filing of the Certificate of Merger with the Delaware Secretary or at such time
thereafter as is provided in the Certificate of Merger and agreed to by the
parties hereto (the "Effective Time").
1.3 Effects of the Merger. At and after the Effective Time, the Merger
shall have the effects set forth in the DGCL.
1.4 Conversion of Company Common Stock. At the Effective Time, by virtue of
the Merger and without any action on the part of the Company, Merger Sub, Parent
or the holder of any of the following securities:
(a) Each share of the common stock, par value $0.01 per share, of the
Company (the "Company Common Stock") issued and outstanding immediately
prior to the Effective Time (except for (x) shares of Company Common Stock
held directly or indirectly by the Company or Parent and (y) Dissenting
Shares), shall be converted, at the election of the holder thereof, in
accordance with the procedure set forth in Article II and subject to
Section 2.3(f), into the right to receive the following:
(i) In the case of a share of Company Common Stock with respect
to which an election to receive common stock, $0.01 par value per
share, of Parent (the "Parent Common Stock") has been effectively made
and not revoked or lost pursuant to Article II (a "Stock Election"),
2.87 (the "Exchange Ratio") shares of Parent Common Stock (the "Stock
Consideration"); and
(ii) In the case of a share of Company Common Stock
(collectively, "Cash Election Shares") with respect to which an
election to receive cash has been effectively made and not revoked or
lost pursuant to Article II (a "Cash Election"), an amount in cash
equal to the Per Share Amount, without interest (the "Cash
Consideration"), subject to Section 1.6; and
(iii) In the case of any share of Company Common Stock other than
shares as to which a Cash Election or a Stock Election has been
effectively made and not revoked or lost pursuant to Article II
(collectively, "Non-Election Shares"), either Stock Consideration or
Cash Consideration, as determined in accordance with Section 1.6.
"Per Share Amount" shall mean the product, rounded to the nearest cent, of
the Exchange Ratio times the Parent Closing Price.
"Parent Closing Price" shall mean the average, rounded to the nearest one
ten thousandth, of the closing sale prices of Parent Common Stock on The Nasdaq
National Market ("Nasdaq") as reported by The Wall Street Journal for the ten
(10) trading days immediately preceding the date of the Effective Time.
The Cash Consideration and the Stock Consideration are sometimes referred
to herein collectively as the "Merger Consideration."
(b) Each outstanding share of Company Common Stock the holder of which
has perfected his appraisal rights under applicable law and has not
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effectively withdrawn or lost such right as of the Effective Time (the
"Dissenting Shares") shall not be converted into or represent a right to
receive shares of Parent Common Stock or cash hereunder, and the holder
thereof shall be entitled only to such rights as are granted by applicable
law. The Company shall give Parent prompt notice upon receipt by the
Company of any such demands for payment of the fair value of such shares of
Company Common Stock and of withdrawals of such notice and any other
instruments provided pursuant to applicable law (any shareholder duly
making such demand being hereinafter called a "Dissenting Shareholder"),
and Parent shall have the right to direct all negotiations and proceedings
with respect to any such demands. The Company shall not, except with the
prior written consent of Parent (which consent shall not be unreasonably
withheld), voluntarily make any payment with respect to, or settle or offer
to settle, any such demand for payment, or waive any failure to timely
deliver a written demand for appraisal or the taking of any other action by
such Dissenting Shareholder as may be necessary to perfect appraisal rights
under the DGCL. Any payments made in respect of Dissenting Shares shall be
made by Parent.
(c) If any Dissenting Shareholder shall effectively withdraw or lose
(through failure to perfect or otherwise) his right to such payment at or
prior to the Effective Time, such holder's shares of Company Common Stock
shall be converted into a right to receive cash or Parent Common Stock in
accordance with the applicable provisions of this Agreement. If such holder
shall effectively withdraw or lose (through failure to perfect or
otherwise) his right to such payment after the Effective Time, each share
of Company Common Stock of such holder shall be converted on a share by
share basis into either the right to receive the Cash Consideration or
Stock Consideration as Parent shall determine in its sole discretion.
(d) All of the shares of Company Common Stock converted into the right
to receive the Merger Consideration pursuant to this Article I shall no
longer be outstanding and shall automatically be cancelled and shall cease
to exist as of the Effective Time, and each certificate previously
representing any such shares of Company Common Stock (each, a "Company
Stock Certificate") shall thereafter represent only the right to receive
(i) a certificate (each, a "Parent Stock Certificate") representing the
number of whole shares of Parent Common Stock, (ii) the aggregate Cash
Consideration and (iii) cash in lieu of fractional shares, into which the
shares of Company Common Stock represented by such Company Stock
Certificate have been converted pursuant to this Section 1.4 and Section
2.3(f). Certificates previously representing shares of Company Common Stock
shall be exchanged for certificates representing whole shares of Parent
Common Stock, the aggregate Cash Consideration deliverable in respect of
the shares of Company Common Stock represented thereby and cash in lieu of
fractional shares issued in consideration therefor upon the surrender of
such Company Stock Certificates in accordance with Article II, without any
interest thereon.
(e) If, between the date of this Agreement and the Effective Time, the
outstanding shares of Parent Common Stock shall have been increased,
decreased, changed into or exchanged for a different number or kind of
shares or securities as a result of a reorganization, recapitalization,
reclassification, stock dividend,
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stock split, reverse stock split, or other similar change in
capitalization, the Exchange Ratio shall be adjusted accordingly to provide
to the holders of Company Common Stock the same economic effect as
contemplated by this Agreement prior to such event.
(f) Notwithstanding anything in this Agreement to the contrary, at the
Effective Time, all shares of Company Common Stock that are held directly
or indirectly by the Company (as treasury shares or otherwise) or Parent
shall be cancelled and shall cease to exist and no Merger Consideration
shall be delivered in exchange therefor.
1.5. Merger Sub Capital Stock. At the Effective Time each share of common
stock, par value $0.01 per share of Merger Sub, issued and outstanding
immediately prior to the Effective Time shall remain issued and outstanding and
shall not be affected by the Merger.
1.6. Proration.
(a) Notwithstanding any other provision contained in this Agreement,
the total number of shares of Company Common Stock to be converted into
Cash Consideration pursuant to Section 1.4 shall be no greater than the
quotient (the "Cash Conversion Number") obtained by dividing (x) $100
million, by (y) the Per Share Amount.
(b) Within five business days after the Effective Time, Parent shall
cause the Exchange Agent (as defined below) to effect the allocation among
holders of Cash Election Shares and Non-Election Shares of rights to
receive the Cash Consideration as follows:
(i) Cash Election Number More Than Cash Conversion Number. If the
aggregate number of shares of Company Common Stock with respect to
which Cash Elections shall have been made (the "Cash Election Number")
exceeds the Cash Conversion Number, then all Non-Election Shares shall
be converted into the right to receive the Stock Consideration, and
each holder of Cash Election Shares shall have the right to receive
the Cash Consideration in respect of that number of such holder's Cash
Election Shares equal to the product obtained by multiplying (x) the
number of Cash Election Shares held by such holder by (y) a fraction,
the numerator of which is the Cash Conversion Number and the
denominator of which is the Cash Election Number, with all of such
holder's remaining Cash Election Shares being converted into the right
to receive the Stock Consideration (subject to Section 2.3(f) hereof);
and
(ii) Cash Election Number Less Than Cash Conversion Number. If
the Cash Election Number is less than the Cash Conversion Number (the
amount by which the Cash Conversion Number exceeds the Cash Election
Number being referred to herein as the
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"Shortfall Number"), then all Cash Election Shares shall be converted
into the right to receive the Cash Consideration, and the Non-Election
Shares shall be treated in the following manner:
(A) If the Shortfall Number is less than the number of
Non-Election Shares, then each holder of Non-Election Shares
shall have the right to receive the Cash Consideration in respect
of that number of such holder's Non-Election Shares equal to the
product obtained by multiplying (x) the number of Non-Election
Shares held by such holder by (y) a fraction, the numerator of
which is the Shortfall Number and the denominator of which is the
total number of Non-Election Shares, with all of such holder's
remaining Non-Election Shares being converted into the right to
receive the Stock Consideration (subject to Section 2.3(f)
hereof); or
(B) If the Shortfall Number equals or exceeds the number of
Non-Election Shares, then all Non-Election Shares shall be
converted into the right to receive the Cash Consideration.
For purposes of making the allocations required pursuant to this Section
1.6(b), any Dissenting Share shall be deemed to be a Cash Election Share and
shall be included in the Cash Election Number (provided that the actual
consideration to be received by holders of Dissenting Shares shall be determined
as set forth in Section 1.4(b) and (c) above).
1.7. Stock Options. Immediately prior to the Effective Time, the Company
shall take all actions necessary (including but not limited to obtaining any
necessary consents) so that each option (a "Company Option") granted by the
Company pursuant to any option plan, agreement or commitment maintained by the
Company (other than the Company's 2001 Employee Stock Purchase Plan)
(collectively the "Company Option Plans") to purchase shares of Company Common
Stock which is outstanding and unexercised shall become fully vested and
exercisable (whether or not currently exercisable) and at the Effective Time
shall be cancelled and all rights thereunder shall be extinguished. The Company
shall make payment immediately prior to the Effective Time to each holder of
such Company Option of an amount determined by multiplying (x) the number of
shares of Company Common Stock underlying such Company Option by (y) the amount
by which the Per Share Amount exceeds the exercise price per share of such
Company Option.
1.8. Assumption of Warrants. At the Effective Time, Parent shall assume and
cause to be performed all obligations of the Company under the Company Warrants
(as defined in Section 3.3(a)). Each Company Warrant so assumed by Parent under
this Agreement will continue to have, and be subject to, the same terms and
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conditions set forth in the applicable warrant agreement immediately prior to
the Effective Time, except that each outstanding Company Warrant will be
exercisable (or will become exercisable in accordance with its terms), for
shares of Parent Common Stock and cash in the same proportion that the holders
of Company Common Stock receive in the aggregate in the Merger as measured as of
the Effective Time. Parent shall use reasonable efforts to cause to become
effective at the Effective Time a shelf registration statement on Form S-3 under
the Securities Act covering the resale of the ChaseMellon Warrants and Parent
Common Stock issuable upon exercise of the ChaseMellon Warrants and the Bankers
Trust Warrants and shall maintain the effectiveness thereof until the
registration requirements set forth in (A) the Warrant Registration Rights
Agreement dated July 12, 2000, by and among iPCS, Inc., Xxxxxxxxx, Xxxxxx &
Xxxxxxxx Securities Corporation and TD Securities (USA) Inc., and (B) the
Bankers Trust Warrant Agreement expire. At the Effective Time Parent shall also
assume all obligations under Section 4(b) of the Sprint Warrant.
1.9. Restricted Unit Awards. Immediately prior to the Effective Time, the
Company shall take all actions necessary (including but not limited to obtaining
any necessary consents) so that each restricted stock unit (a "Restricted Stock
Unit") granted by the Company pursuant to a Company Plan which is outstanding
shall be cancelled and all rights thereunder shall be extinguished. The Company
shall pay to each holder of Restricted Stock Units an amount in cash equal to
the product of (i) the Per Share Amount multiplied by (ii) the number of
Restricted Stock Units held by such holder immediately prior to such
cancellation.
1.10. Alternative Transaction Structures. The parties agree that Parent may
change the method of effecting the business combination with the Company, and
the Company shall cooperate in such efforts, including by entering into an
appropriate amendment to this Agreement (to the extent such amendment only
changes the method of effecting the business combination and does not
substantively affect the rights and obligations of the parties or their
respective stockholders hereunder); provided, however, that no actions taken
pursuant to this Section 1.10 shall (i) alter or change the kind or amount of
consideration to be issued to holders of the Company Common Stock or the
treatment of the Company Options as provided for in this Agreement, (ii)
adversely affect the tax consequences of the transaction to the holders of the
Company Common Stock, (iii) materially delay receipt of any required regulatory
approval, or (iv) otherwise cause any closing condition not to be capable of
being fulfilled (unless duly waived by the party entitled to the benefits
thereof).
1.11. Certificate of Incorporation. Subject to the terms and conditions of
this Agreement, at the Effective Time the Certificate of Incorporation of Merger
Sub shall be the Certificate of Incorporation of the Surviving Corporation until
thereafter amended in accordance with applicable law.
1.12. Bylaws. Subject to the terms and conditions of this Agreement, at the
Effective Time the Bylaws of Merger Sub shall be the Bylaws of the Surviving
Corporation until thereafter amended in accordance with applicable law.
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1.13. Tax Consequences. It is intended that the Merger shall constitute a
"reorganization" within the meaning of Section 368(a) of the Code, and that this
Agreement shall constitute a "plan of reorganization" for the purposes of the
Code.
1.14. Directors. At and immediately after the Effective Time, the directors
of the Surviving Corporation shall consist of the directors of Merger Sub in
office immediately prior to the Effective Time, until their respective
successors are duly elected or appointed and qualified.
1.15. Officers. At and immediately after the Effective Time, the officers
of the Surviving Corporation shall consist of the officers of Merger Sub in
office immediately prior to the Effective Time.
ARTICLE II
DELIVERY OF MERGER CONSIDERATION
2.1. Election Procedures. Each holder of record of shares of Company Common
Stock ("Holder") as of the record date for the Company Stockholders Meeting
shall have the right, subject to the limitations set forth in this Article II,
to submit an election in accordance with the following procedures:
(a) Each Holder may specify in a request made in accordance with the
provisions of this Section 2.1 (herein called an "Election") (x) the number
of shares of Company Common Stock owned by such Holder with respect to
which such Holder desires to make a Stock Election and (y) the number of
shares of Company Common Stock owned by such Holder with respect to which
such Holder desires to make a Cash Election.
(b) Parent shall prepare a form reasonably acceptable to the Company
(the "Form of Election") which shall be mailed to the Company's
shareholders entitled to vote at the Company Stockholders Meeting (as
hereinafter defined) so as to permit Company's shareholders to exercise
their right to make an Election prior to the Election Deadline.
(c) Parent shall make the Form of Election initially available at the
time that the Joint Proxy Statement/Prospectus (as defined herein) is made
available to the shareholders of Company, to such shareholders, and shall
use all reasonable efforts to make available as promptly as possible a Form
of Election to any shareholder of the Company who requests such Form of
Election following the initial mailing of the Forms of Election and prior
to the Election Deadline. In no event shall the Form of Election first be
made available less than twenty (20) days prior to the Election Deadline.
(d) Any Election shall have been made properly only if the Person
authorized to receive Elections and to act as exchange agent under this
Agreement, which Person shall be a bank or trust company designated by
Parent and reasonably acceptable to the Company (the "Exchange Agent"),
pursuant to an agreement (the "Exchange Agent Agreement") entered into
prior to the mailing of the Form of Election to Company shareholders and
reasonably acceptable to the Company, shall have
7
received, by 5:00 p.m. local time in the city in which the principal office
of such Exchange Agent is located, on the date of the Election Deadline, a
Form of Election properly completed and signed and accompanied by Company
Stock Certificates to which such Form of Election relates or by an
appropriate customary guarantee of delivery of such certificates, as set
forth in such Form of Election, from a member of any registered national
securities exchange or a commercial bank or trust company in the United
States; provided, that such certificates are in fact delivered to the
Exchange Agent by the time required in such guarantee of delivery. Failure
to deliver shares of Company Common Stock covered by such a guarantee of
delivery within the time set forth on such guarantee shall be deemed to
invalidate any otherwise properly made Election, unless otherwise
determined by Parent, in its sole discretion. As used herein, "Election
Deadline" means 5:00 p.m. on the date that is the day prior to the date of
the Company Stockholders Meeting. Company and Parent shall cooperate to
issue a press release reasonably satisfactory to each of them announcing
the date of the Election Deadline not more than fifteen (15) business days
before, and at least five (5) business days prior to, the Election
Deadline.
(e) Any Company shareholder may, at any time prior to the Election
Deadline, change or revoke his or her Election by written notice received
by the Exchange Agent prior to the Election Deadline accompanied by a
properly completed and signed revised Form of Election. Subject to the
terms of the Exchange Agent Agreement, if Parent shall determine in its
reasonable discretion that any Election is not properly made with respect
to any shares of Company Common Stock, such Election shall be deemed to be
not in effect, and the shares of Company Common Stock covered by such
Election shall, for purposes hereof, be deemed to be Non-Election Shares,
unless a proper Election is thereafter timely made.
(f) Any Company shareholder may, at any time prior to the Election
Deadline, revoke his or her Election by written notice received by the
Exchange Agent prior to the Election Deadline or by withdrawal prior to the
Election Deadline of his or her Company Stock Certificate, or of the
guarantee of delivery of such certificates, previously deposited with the
Exchange Agent. All Elections shall be revoked automatically if the
Exchange Agent is notified in writing by Parent or Company that this
Agreement has been terminated in accordance with Article VIII.
(g) Subject to the terms of the Exchange Agent Agreement, Parent, in
the exercise of its reasonable discretion, shall have the right to make all
determinations, not inconsistent with the terms of this Agreement,
governing (A) the validity of the Forms of Election and compliance by any
Company shareholder with the Election procedures set forth herein, (B) the
manner and extent to which Elections are to be taken into account in making
the determinations prescribed by Sections 1.4 and 1.6, (C) the issuance and
delivery of Parent Stock Certificates into which shares of Company Common
Stock are converted in the Merger and (D) the method of payment of cash for
shares of Company Common Stock converted into the right to receive the Cash
Consideration and cash in lieu of fractional shares of Parent Common Stock
where the holder of the applicable Company Stock Certificate has no right
to receive whole shares of Parent Common Stock.
8
2.2. Deposit of Merger Consideration. At or prior to the Effective Time,
Parent will deposit with the Exchange Agent (i) certificates representing the
number of shares of Parent Common Stock sufficient to deliver in a timely
manner, and Parent shall instruct the Exchange Agent to timely deliver, the
aggregate Stock Consideration, and (ii) immediately available funds equal to the
aggregate Cash Consideration and Parent shall instruct the Exchange Agent to
timely pay the Cash Consideration, and cash in lieu of fractional shares of
Parent Common Stock where the holder of the applicable Company Stock Certificate
has no right to receive whole shares of Parent Common Stock.
2.3. Delivery of Merger Consideration.
(a) As soon as reasonably practicable, but no later than seven
business days after the Effective Time, the Exchange Agent shall mail to
each holder of record of a Company Stock Certificate(s) which immediately
prior to the Effective Time represented outstanding shares of Company
Common Stock whose shares were converted into the right to receive the
Merger Consideration pursuant to Section 1.4 and any cash in lieu of
fractional shares of Parent Common Stock to be issued or paid in
consideration therefor who did not complete an Election Form, (i) a letter
of transmittal (which shall specify that delivery shall be effected, and
risk of loss and title to Company Stock Certificate(s) shall pass, only
upon delivery of Company Stock Certificate(s) (or affidavits of loss in
lieu of such certificates)) (the "Letter of Transmittal") to the Exchange
Agent and shall be substantially in such form and have such other
provisions as shall be prescribed by the Exchange Agent Agreement and (ii)
instructions for use in surrendering Company Stock Certificate(s) in
exchange for the Merger Consideration and any cash in lieu of fractional
shares of Parent Common Stock to be issued or paid in consideration
therefor upon surrender of such certificate in accordance with Section
2.3(f) and any dividends or distributions to which such holder is entitled
pursuant to Section 2.3(c).
(b) Upon surrender to the Exchange Agent of its Company Stock
Certificate or Certificates, accompanied by a properly completed Form of
Election or a properly completed Letter of Transmittal, a holder of Company
Common Stock will be entitled to receive promptly after the Effective Time
the Merger Consideration (elected or deemed elected by it, subject to
Sections 1.4 and 1.6) in respect of the shares of Company Common Stock
represented by its Company Stock Certificate or Certificates. Until so
surrendered, each such Company Stock Certificate shall represent after the
Effective Time, for all purposes, only the right to receive the Merger
Consideration and any cash in lieu of fractional shares of Parent Common
Stock to be issued or paid in consideration therefor upon surrender of such
certificate in accordance with, and any dividends or distributions to which
such holder is entitled pursuant to, this Article II.
(c) No dividends or other distributions with respect to Parent Common
Stock with a record date after the Effective Time shall be paid to the
holder of any unsurrendered Company Stock Certificate with respect to the
shares of Parent Common Stock represented thereby, and no cash payment in
lieu of fractional
9
shares shall be paid to any such holder pursuant to subsection (f) below,
and all such dividends, other distributions and cash in lieu of fractional
shares of Parent Common Stock shall be paid by Parent to the Exchange Agent
and shall be included in the Exchange Fund, in each case until the
surrender of such Company Stock Certificate in accordance with this Article
II. Subject to the effect of applicable abandoned property, escheat or
similar laws, following surrender of any such Company Stock Certificate
there shall be paid to the Holder of a Parent Stock Certificate
representing whole shares of Parent Common Stock issued in exchange
therefor, without interest, (i) at the time of such surrender, the amount
of dividends or other distributions with a record date after the Effective
Time theretofore paid with respect to such whole shares of Parent Common
Stock and the amount of any cash payable in lieu of a fractional share of
Parent Common Stock to which such Holder is entitled pursuant to subsection
(f), and (ii) at the appropriate payment date, the amount of dividends or
other distributions with a record date after the Effective Time but prior
to such surrender and with a payment date subsequent to such surrender
payable with respect to such whole shares of Parent Common Stock. Parent
shall make available to the Exchange Agent cash for these purposes, if
necessary.
(d) If any portion of the Merger Consideration is to be paid to a
Person other than the Person in whose name a Company Stock Certificate so
surrendered is registered, it shall be a condition to such payment that
such Company Stock Certificate shall be properly endorsed or otherwise be
in proper form for transfer and the Person requesting such payment shall
pay to the Exchange Agent any transfer or other similar Taxes (as defined
herein) required as a result of such payment to a Person other than the
registered holder of such Company Stock Certificate, or establish to the
reasonable satisfaction of the Exchange Agent that such Tax has been paid
or is not payable. The Exchange Agent (or, subsequent to the first
anniversary of the Effective Time, Parent) shall be entitled to deduct and
withhold from the Merger Consideration (including cash in lieu of
fractional shares of Parent Common Stock) otherwise payable pursuant to
this Agreement to any holder of Company Common Stock such amounts as the
Exchange Agent or Parent, as the case may be, is required to deduct and
withhold under the Code, or any provision of state, local or foreign Tax
law, with respect to the making of such payment. To the extent the amounts
are so withheld by the Exchange Agent 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 shares of Company Common Stock in respect
of whom such deduction and withholding was made by the Exchange Agent or
Parent, as the case may be.
(e) After the Effective Time there shall be no further registration or
transfers of shares of Company Common Stock. If after the Effective Time,
Company Stock Certificates are presented to the Surviving Corporation, they
shall be cancelled and exchanged for the Merger Consideration in accordance
with the procedures set forth in this Article II.
(f) No Parent Stock Certificates representing fractional shares of
Parent Common Stock shall be issued upon the surrender for exchange of
Company Stock Certificates; no dividend or distribution by Parent shall
relate to such fractional share interests; and such fractional share
interests will not entitle the owner thereof to
10
vote or to any rights as a shareholder of Parent. In lieu of any such
fractional shares, each Holder of a Company Stock Certificate who would
otherwise have been entitled to receive a fractional share interest in
exchange for such Company Stock Certificate shall receive from the Exchange
Agent an amount in cash equal to the product obtained by multiplying (A)
the fractional share interest to which such Holder (after taking into
account all shares of Company Common Stock held by such holder at the
Effective Time) would otherwise be entitled by (B) the Parent Closing
Price. Notwithstanding any other provision contained in this Agreement,
funds utilized to acquire fractional shares as aforesaid shall be furnished
by Parent on a timely basis and shall in no event be derived from or
diminish the Cash Consideration available for distribution as part of the
Merger Consideration.
(g) At any time following the first anniversary of the Effective Time,
Parent shall be entitled to require the Exchange Agent to deliver to it any
remaining portion of the Merger Consideration not distributed to holders of
Company Stock Certificates that was deposited with the Exchange Agent at
the Effective Time (the "Exchange Fund") (including any interest received
with respect thereto and other income resulting from investments by the
Exchange Agent, as directed by Parent), and holders shall be entitled to
look only to Parent (subject to abandoned property, escheat or other
similar laws) with respect to the Merger Consideration, any cash in lieu of
fractional shares of Parent Common Stock and any dividends or other
distributions with respect to Parent Common Stock payable upon due
surrender of their Company Stock Certificates, without any interest
thereon. Notwithstanding the foregoing, neither Parent nor the Exchange
Agent shall be liable to any holder of a Company Stock Certificate for
Merger Consideration (or dividends or distributions with respect thereto)
or cash from the Exchange Fund in each case delivered to a public official
pursuant to any applicable abandoned property, escheat or similar law.
(h) In the event any Company Stock Certificates shall have been lost,
stolen or destroyed, upon the making of an affidavit of that fact by the
Person claiming such Company Stock Certificate(s) to be lost, stolen or
destroyed and, if required by Parent or the Exchange Agent, the posting by
such Person of a bond in such sum as Parent may reasonably direct as
indemnity against any claim that may be made against it or the Surviving
Corporation with respect to such Company Stock Certificate(s), the Exchange
Agent will issue the Merger Consideration deliverable in respect of the
shares of Company Common Stock represented by such lost, stolen or
destroyed Company Stock Certificates.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE
COMPANY
3.1. Company Disclosure Schedule. Prior to the execution and delivery of
this Agreement, the Company has delivered to Parent a schedule (the "Company
Disclosure Schedule") setting forth, among other things, items the disclosure of
which is necessary or appropriate either in response to an express disclosure
requirement contained in a provision hereof or as an exception to one or more of
the Company's representations or warranties contained in this Article III, or to
one or more of the Company's
11
covenants contained in Section 5.1; provided, however, that notwithstanding
anything in this Agreement to the contrary the mere inclusion of an item in the
Company Disclosure Schedule as an exception to a representation or warranty
shall not be deemed an admission by a party that such item represents a material
exception or material fact, event or circumstance or that such item has had or
is reasonably likely to have a Material Adverse Effect (as defined herein) with
respect to the Company. Each disclosure set forth in the Company Disclosure
Schedule is identified by reference to, or has been grouped under a heading
referring to a specific individual section of this Agreement.
Except as set forth in the Company Disclosure Schedule, the Company hereby
represents and warrants to Parent and Merger Sub as set forth in Sections 3.2
through 3.30:
3.2. Corporate Organization.
(a) The Company is a corporation duly organized, validly existing and
in good standing under the laws of the State of Delaware. The Corrected
Amended and Restated Certificate of Incorporation and Amended and Restated
Bylaws of the Company, copies of which have previously been made available
to Parent, are true, complete and correct copies of such documents as in
effect as of the date of this Agreement.
(b) The Company (i) has all requisite corporate power and authority to
own or lease all of its properties and assets and to carry on its business
as it is now being conducted, and (ii) is duly licensed or qualified to do
business and in good standing in each jurisdiction in which the nature of
the business conducted by it or the character or location of the properties
and assets owned or leased by it makes such licensing or qualification
necessary, except where the failure to be so licensed, qualified or in good
standing, individually or in the aggregate, has not had and would not
reasonably be expected to have a Material Adverse Effect on the Company.
(c) As used in this Agreement, the term "Material Adverse Effect"
means, with respect to any party, a material adverse effect on (i) the
business, assets, liabilities, cash flows, results of operations or
financial condition of such party and its Subsidiaries taken as a whole;
provided, however, that "Material Adverse Effect" shall not be deemed to
include the impact of (A) actions and omissions of such party or any of its
Subsidiaries taken with the prior written informed consent of the other
party in contemplation of the transactions contemplated hereby; (B)
conditions or effects resulting from the announcement of the existence of
this Agreement and the direct effects of compliance with Sections 5.1 or
5.2 of this Agreement on the operating performance of such party, including
expenses incurred in consummating the transactions contemplated hereby; (C)
changes in program requirements implemented by Sprint PCS (as defined
below) which are generally applicable to entities whose sole or predominant
business is operating a personal communications service business pursuant
to arrangements with Sprint PCS and/or its Affiliates, similar to the
Parent Sprint Agreements (as defined below); (D) changes resulting from
actions required by the Settlement and Mutual
12
Release dated September 10, 2004 by an among Spring Spectrum L.P., Sprint
Communications Company L.P., WirelessCo, L.P., the Company and certain of
the Company's Affiliates; (E) changes resulting from the requirements of
Addendum VII to the Company's Sprint PCS Management Agreement and Sprint
PCS Services Agreement; (F) any actions required to be taken by Parent, the
Company or any of their respective Affiliates pursuant to Section 3.9 of
each Company Indenture (as defined below); (G) changes in laws of general
applicability or interpretations thereof by courts or governmental
authorities or changes in GAAP, except to the extent any such change
adversely affects the referenced party to a materially greater degree than
other companies engaged in the same industry or business are affected
generally; or (H) changes in national or international political or social
conditions including the engagement by the United States in hostilities,
whether or not pursuant to the declaration of a national emergency or war,
or the occurrence of any military or terrorist attack upon or within the
United States, or any of its territories, possessions or diplomatic or
consular offices or upon any military installation, equipment or personnel
of the United States; or (ii) the ability of such party and its
Subsidiaries to consummate the transactions contemplated hereby or to
perform its obligations hereunder; provided that in no event shall a change
in the stock price or trading volume of a party, by itself, constitute a
Material Adverse Effect on such party. For purposes of this Agreement, the
word "Affiliate" shall have the meaning set forth in Rule 12b-2 promulgated
under the Exchange Act.
(d) Each of the Company's Subsidiaries is duly organized, validly
existing and in good standing under the laws of its jurisdiction of
incorporation or organization. Each of the Company's Subsidiaries has the
requisite corporate or other power and authority to own or lease all of its
properties and assets and to carry on its business as it is now being
conducted, and is duly licensed or qualified to do business and in good
standing in each jurisdiction in which the nature of the business conducted
by it or the character or the location of the properties and assets owned
or leased by it makes such licensing or qualification necessary, except
where the failure to be so licensed qualified, or in good standing,
individually or in the aggregate, has not had and would not reasonably be
expected to have a Material Adverse Effect on the Company. The articles of
incorporation, bylaws and similar governing documents of each Subsidiary of
the Company, copies of which have previously been made available to Parent,
are true, complete and correct copies of such documents as in effect as of
the date of this Agreement. As used in this Agreement, (i) the word
"Subsidiary" when used with respect to any Person means any corporation,
partnership or other organization, whether incorporated or unincorporated,
which is consolidated with such party for financial reporting purposes and
(ii) the word "Person" means a natural person, partnership, corporation,
limited liability company, business trust, joint stock company, trust,
unincorporated association, joint venture, Governmental Entity or other
entity or organization.
(e) Each of the Company and its Subsidiaries is qualified, authorized,
registered and licensed to do business as a foreign corporation in the
jurisdictions identified in Section 3.2(d) of the Company Disclosure
Schedule. Each of the Company and its Subsidiaries are in good standing as
a foreign corporation in each of the jurisdictions identified in Section
3.2(d) of the Company Disclosure Schedule.
13
(f) The minute books of the Company and each of its Subsidiaries
contain true, complete and accurate records of all meetings and other
corporate actions held or taken since December 31, 2002 of their respective
stockholders and Boards of Directors (including committees of their
respective Boards of Directors).
(g) Neither the Company nor any of its Subsidiaries is in violation of
any provision of its respective certificate of incorporation, bylaws or
similar governing document.
3.3. Capitalization.
(a) The authorized capital stock of the Company consists of 30,000,000
shares of Company Common Stock and 1,000,000 shares of preferred stock, par
value $.01 per share (the "Company Preferred Stock"). As of the date of
this Agreement, there are (i) 11,768,258 shares of Company Common Stock
issued and outstanding, (ii) 104,756 Restricted Stock Units, each of which
represents the right to receive one share of Company Common Stock, (iii) no
shares of Company Preferred Stock outstanding or reserved for issuance,
(iv) no shares of Company Common Stock reserved for issuance upon exercise
of outstanding stock options or otherwise, except for (A) 462,381 shares of
Company Common Stock reserved for issuance pursuant to Company Options
granted pursuant to the Company Option Plans and described in Section
3.3(a) of the Company Disclosure Schedule, (B) 95,070 shares of Company
Common Stock reserved for issuance pursuant to the warrants issued pursuant
to the Warrant Agreement, dated as of July 12, 2000, between iPCS, Inc. and
ChaseMellon Shareholder Services, L.L.C, as warrant agent (the "ChaseMellon
Warrants"), which warrants are exercisable at a price of $172.55 per share
of Company Common Stock, (C) 36,717 shares of Company Common Stock reserved
for issuance pursuant to the warrant, dated July 12, 2000 (the "Sprint
Warrant Agreement"), issued by iPCS, Inc. to Sprint Spectrum L.P. (the
"Sprint Warrant"), which warrant is exercisable at a price of $155.30 per
share of Company Common Stock, and (D) 3,708 shares of Company Common Stock
reserved for issuance pursuant to the warrants issued pursuant to the
Warrant Agreement, dated as of September 30, 1999 (the "Bankers Trust
Warrant Agreement"), between the Company and Bankers Trust Company, as
warrant agent (the "Bankers Trust Warrants, " and, together with the
ChaseMellon Warrants and the Sprint Warrant, the "Company Warrants"), which
warrants are exercisable at a price of $0.05 per share of Company Common
Stock, and (v) no shares of Company Common Stock held by the Company in its
treasury or by the Company's Subsidiaries. All of the issued and
outstanding shares of Company Common Stock have been duly authorized and
validly issued and are fully paid, nonassessable and free of preemptive
rights, with no personal liability attaching to the ownership thereof.
Except as referred to above or reflected in Section 3.3(a) of the Company
Disclosure Schedule, the Company does not have and is not bound by any
outstanding subscriptions, options, warrants, calls, commitments or
agreements of any character calling for the purchase or issuance of any
shares of Company Common Stock or any other equity security or Voting Debt
(as defined below) of the Company or any securities representing the right
to purchase or otherwise receive any shares of Company Common Stock or any
other equity security or Voting Debt of the Company (including any rights
plan or agreement). The names of the optionee of each Company Option, the
14
date of grant of each Company Option, the number of shares subject to each
such Company Option, the expiration date of each such Company Option, and
the price at which each such Company Option may be exercised under the
Company Option Plans are set forth in Section 3.3(a) of the Company
Disclosure Schedule.
(b) Section 3.3(b) of the Company Disclosure Schedule sets forth a
true and correct list of all of the Subsidiaries of the Company. Except as
set forth in Section 3.3(b) of the Company Disclosure Schedule, the Company
owns, directly or indirectly, all of the issued and outstanding shares of
the capital stock (or all of the other equity ownership interests) of each
of its Subsidiaries, free and clear of all liens, charges, encumbrances and
security interests of any kind or nature whatsoever (collectively,
"Liens"), and all of such shares (or other equity or ownership interests)
are duly authorized and validly issued and are fully paid, nonassessable
and free of preemptive rights, with no personal liability attaching to the
ownership thereof. No Subsidiary of the Company has or is bound by any
outstanding subscriptions, options, warrants, calls, commitments or
agreements of any character calling for the purchase or issuance of any
shares of capital stock or any other equity security or Voting Debt of such
Subsidiary or any securities representing the right to purchase or
otherwise receive any shares of capital stock or any other equity security
or Voting Debt of such Subsidiary. Except as described in Section 3.3(b) of
the Company Disclosure Schedule, neither the Company nor any of its
Subsidiaries owns, directly or indirectly, any interest, or has made any
investment in, any partnership, joint venture, corporation, trust or other
entity.
(c) Assuming compliance by Parent with Section 1.4 hereof, at the
Effective Time, there will not be any outstanding subscriptions, options,
warrants, calls, commitments or agreements of any character by which the
Company or any of its Subsidiaries will be bound calling for the purchase
or issuance of any shares of the capital stock or any other equity security
or Voting Debt of the Company or any of its Subsidiaries (other than the
Company Warrants).
(d) No bonds, debentures, notes or other indebtedness of the Company
or any of its Subsidiaries having the right to vote on any matters on which
stockholders may vote ("Voting Debt") are issued or outstanding.
3.4. Authority; No Violation.
(a) The Company has full corporate power and authority to execute and
deliver this Agreement and to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement and the consummation
of the Merger and the other transactions contemplated hereby have been duly
and validly approved by the Board of Directors of the Company, and no other
corporate proceedings on the part of the Company or its stockholders are
necessary to approve this Agreement, and to consummate the Merger and the
other transactions contemplated hereby (other than, with respect to the
Merger, obtaining the approval of this Agreement by the affirmative vote of
the holders of a majority of the outstanding shares of Company Common Stock
in accordance with the DGCL, the Corrected Amended and Restated Certificate
of Incorporation of the Company and the Amended and Restated Bylaws of
15
the Company (the "Company Stockholder Approval")). This Agreement has been
duly and validly executed and delivered by the Company, and (assuming due
authorization, execution and delivery by Parent and Merger Sub) this
Agreement constitutes a valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms, except as
enforcement may be limited by general principles of equity whether applied
in a court of law or a court of equity and by bankruptcy, insolvency and
similar laws affecting creditors' rights and remedies generally.
(b) Except as set forth in Section 3.4(b) of the Company Disclosure
Schedule, neither the execution and delivery of this Agreement by the
Company, nor the consummation by the Company of the Merger or any of the
other transactions contemplated hereby, nor compliance by the Company with
any of the terms or provisions hereof, will (i) violate any provision of
the Corrected Amended and Restated Certificate of Incorporation or Amended
and Restated Bylaws of the Company or the certificate of incorporation,
Bylaws or similar governing documents of any of its Subsidiaries, or (ii)
assuming that the consents and approvals referred to in Section 3.5 hereof
are duly obtained, (x) violate any statute, code, ordinance, rule,
regulation, judgment, order, writ, decree or injunction applicable to the
Company or any of its Subsidiaries, or any of their respective properties
or assets, or (y) violate, conflict with, result in a breach of any
provision of or the loss of any benefit under, constitute a default (or an
event which, with or without notice or lapse of time, or both, would
constitute a default) under, result in the termination of or a right of
termination or cancellation under, accelerate the performance required by,
or result in the creation of any Lien upon any of the respective properties
or assets of the Company or any of its Subsidiaries under, any of the
terms, conditions or provisions of any loan, guarantee of indebtedness,
note, bond, mortgage, indenture, deed of trust, license, permit,
concession, franchise, lease, contract, agreement or other instrument or
obligation to which the Company or any of its Subsidiaries is a party, or
by which they or any of their respective properties or assets may be bound
or affected, except in the case of clauses (x) and (y), for such
violations, conflicts, breaches, losses, defaults, terminations,
cancellations, accelerations or Liens that, individually or in the
aggregate, would not reasonably be expected to have a Material Adverse
Effect on the Company.
3.5. Consents and Approvals. Except for (a) the filing of a notification
under the HSR Act (as defined in Section 6.1(b)), (b) the Company Stockholder
Approval, (c) the filing with the Securities and Exchange Commission (the "SEC")
of (i) the Joint Proxy Statement/Prospectus (as defined in Section 6.1(a)
hereof) and (ii) such reports under Sections 13(a), 13(d), 13(g) and 16(a) of
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), as may be
required in connection with this Agreement and the transactions contemplated
hereby and the obtaining from the SEC of such orders as may be required in
connection therewith, (d) the consent of Sprint Communications Company, L.P.,
Sprint Spectrum L.P. and WirelessCo, L.P. (collectively, "Sprint PCS") required
pursuant to the terms of the Company Sprint Agreements (as defined herein), (e)
such filings, authorizations or approvals as may be set forth in Section 3.5 of
the Company Disclosure Schedule, (f) the filing of the Certificate of Merger
with the Delaware Secretary under the DGCL, and (g) such consents, approvals,
filings or registrations, the failure of which to be made or obtained,
16
individually or in the aggregate, would not reasonably be expected to have a
Material Adverse Effect on the Company, no consents or approvals of, or filings
or registrations with, any court, agency or commission or other governmental
authority or instrumentality (each a "Governmental Entity") or with any third
party are required to be made or obtained by the Company or any of its
Subsidiaries in connection with the execution and delivery by the Company of
this Agreement or the consummation by the Company of the Merger and the other
transactions contemplated hereby.
3.6. Reports. The Company has previously made available to Parent a true,
correct and complete copy of each (a) final registration statement, prospectus,
report, schedule and definitive proxy statement filed since December 31, 2002 by
the Company with the SEC pursuant to the Securities Act of 1933, as amended (the
"Securities Act") or the Exchange Act (collectively, the "Company Reports"), (b)
written communication between the Company and the SEC since December 31, 2002,
and (c) communication mailed by the Company to its stockholders since December
31, 2002, and no such registration statement, prospectus, report, schedule,
proxy statement or communication as of its date of filing contained any untrue
statement of a material fact or omitted to state any material fact required to
be stated therein or necessary in order to make the statements therein, in light
of the circumstances in which they were made, not misleading. Other than as set
forth in Section 3.6 of the Company Disclosure Schedule, the Company has timely
filed all Company Reports and other documents required to be filed by it under
the Securities Act and the Exchange Act, and, as of their respective dates, all
Company Reports complied in all material respects with the published rules and
regulations of the SEC with respect thereto, including rules and regulations
relating to the filing of exhibits thereto. No executive officer of the Company
has failed in any respect to make the certifications required of him or her
under Section 302 or 906 of the Xxxxxxxx-Xxxxx Act of 2002 and no enforcement
action has been initiated against the Company by the SEC relating to disclosures
contained in any Company Report.
3.7. Financial Statements. The Company has previously made available to
Parent copies of (a) the consolidated balance sheets of the Company and its
Subsidiaries as of September 30, 2003 and 2002, and the related consolidated
statements of operations, stockholders' deficit, and cash flows for each of the
years in the three-year period ended September 30, 2003, as reported in the
Company's Annual Report on Form 10-K for the fiscal year ended September 30,
2003 filed with the SEC under the Exchange Act (collectively, and including the
notes thereto, the "Company Audited Financial Statements"), in each case
accompanied by the audit report of KPMG LLP ("KPMG"), independent public
accountants with respect to the Company, (b) the unaudited consolidated balance
sheet of the Company and its Subsidiaries as of September 30, 2004, and the
related unaudited consolidated statements of operations, stockholders' deficit,
and cash flows for each of the years in the three-year period ended September
30, 2004 (collectively, and including the notes thereto, the "Company 2004
Financial Statements"), as presented in the Company's draft Annual Report on
Form 10-K (the "Company Draft 10-K") for the fiscal year ended September 30,
2004 delivered by the Company prior to the date hereof to Parent, and (c) the
unaudited condensed consolidated balance sheet of the Company and its
Subsidiaries as of June 30, 2004 and the related unaudited condensed
consolidated statements of operations for the quarters
17
and nine months ended June 30, 2004 and 2003, and statements of cash flows for
the nine months ended June 30, 2004 and 2003, as reported in the Company's
Quarterly Report on Form 10-Q for the period ended June 30, 2004 filed with the
SEC under the Exchange Act (together with the Company Audited Financial
Statements and the Company 2004 Financial Statements, the "Company Financial
Statements"). The Company Financial Statements (including the related notes,
where applicable) fairly present in all material respects, and the financial
statements to be filed by the Company with the SEC after the date of this
Agreement will fairly present in all material respects, the consolidated
financial position of the Company and its Subsidiaries as of the respective
dates thereof, and the results of their operations and their cash flows for the
fiscal periods set forth therein (subject, in the case of the unaudited
statements, to recurring audit adjustments normal in nature and amount); each of
such statements (including the related notes, where applicable) complies, and
the financial statements to be filed by the Company with the SEC after the date
of this Agreement will comply, with applicable accounting requirements and with
the published rules and regulations of the SEC with respect thereto at the date
of their filing; and each of such statements (including the related notes, where
applicable) has been, and the financial statements to be filed by the Company
with the SEC after the date of this Agreement will be, prepared in accordance
with generally accepted accounting principles ("GAAP") consistently applied
during the periods involved, except as indicated in the notes thereto or, in the
case of unaudited statements, except for normal period-end adjustments that are
not material The 2004 Form 10-K (as defined in Section 7.2(d)) shall be
consistent in all material respects with the Company Draft 10-K. The books and
records of the Company and its Subsidiaries have been, and are being, maintained
in accordance with GAAP and all other applicable legal and accounting
requirements and reflect only actual transactions. KPMG has not resigned or been
dismissed as independent public accountants of the Company as a result of or in
connection with any disagreements with the Company on a matter of accounting
principles or practices, financial statement disclosure or auditing scope or
procedure.
3.8. No Undisclosed Liabilities. Except (a) as disclosed in the Company
Financial Statements and the Company Draft 10-K, (b) for liabilities and
obligations incurred in the ordinary course of business and consistent with past
practice of the Company since September 30, 2003, and (c) liabilities that,
individually or in the aggregate, have not had and would not reasonably be
expected to have a Material Adverse Effect on the Company, neither the Company
nor any of its Subsidiaries has any liability or obligation of any nature,
whether or not absolute, accrued, contingent or otherwise.
3.9. Absence of Certain Changes or Events.
(a) Except (i) as set forth in Section 3.9(a) of the Company
Disclosure Schedule or (ii) as disclosed in any Company Report filed with
the SEC prior to the date of this Agreement, since September 30, 2003,
there has been no change or development or combination of changes or
developments which, individually or in the aggregate, have had, or would
reasonably be expected to have, a Material Adverse Effect on the Company.
18
(b) Except as set forth in Section 3.9(b) of the Company Disclosure
Schedule or as disclosed in any Company Report filed with the SEC prior to
the date of this Agreement, since September 30, 2003, the Company and its
Subsidiaries have carried on their respective businesses in all material
respects only in the ordinary and usual course of business consistent with
their past practices.
(c) Except as set forth in Section 3.9(c) of the Company Disclosure
Schedule or as disclosed in any Company Report filed with the SEC prior to
the date of this Agreement, since September 30, 2003, neither the Company
nor any of its Subsidiaries has (i) increased the wages, salaries,
compensation, pension, or other fringe benefits or perquisites payable to
any officer or director from the amount thereof in effect as of September
30, 2003 (which amounts have been previously disclosed to Parent), granted
any severance or termination pay, entered into any contract to make or
grant any severance or termination pay, or paid any bonus, (ii) declared,
set aside or paid any dividend or other distribution (whether in cash,
stock or property) with respect to any of the Company's capital stock,
(iii) effected or authorized any issuance, split, combination or
reclassification of any of the Company's capital stock or issued any other
securities in respect of, in lieu of or in substitution for shares of the
Company's capital stock, except for issuances of Company Common Stock upon
the exercise of Company Options awarded prior to the date hereof in
accordance with their terms, (iv) changed any accounting methods (or
underlying assumptions), principles or practices of the Company or its
Subsidiaries affecting its assets, liabilities or businesses, including any
reserving, renewal or residual method, practice or policy, (v) made any Tax
election or changed any Tax election, amended any Tax Returns or entered
into any settlement or compromise of any income tax liability of the
Company or its Subsidiaries or entered into any closing agreement with
respect to Taxes, (vi) created, incurred, assumed, or suffered to exist any
indebtedness or issued debt securities or assumed, guaranteed, endorsed or
otherwise as an accommodation became responsible for the obligations of any
Person; (vii) granted any equity compensation to any officer, director,
employee or consultant of the Company or any of its Subsidiaries, or (viii)
made any agreement or commitment (contingent or otherwise) to do any of the
foregoing.
3.10. Property.
(a) Each of the Company and its Subsidiaries has good and marketable
title, free and clear of all Liens to all of the properties and assets,
real and personal, tangible or intangible, which are reflected on the
audited consolidated balance sheet of the Company as of September 30, 2003
or acquired after such date, except for (i) Liens under the Company
Indentures, (ii) Liens for taxes not yet due and payable or contested in
good faith by appropriate proceedings, (iii) pledges to secure deposits and
other Liens incurred in the ordinary course of business, (iv) such
imperfections of title, easements and encumbrances, if any, as do not
interfere with the use of the property as such property is used on the date
of this Agreement, (v) dispositions of and encumbrances on such properties
or assets in the ordinary course of business consistent with past practice
or (vi) mechanics', materialmen's, workmen's, repairmen's, warehousemen's,
carrier's and other similar Liens and encumbrances arising in the
19
ordinary course of business (the items in clauses (i), (ii), (iii), (iv)
and (vi) collectively, the "Company Permitted Liens").
(b) Section 3.10(b) of the Company Disclosure Schedule sets forth an
accurate and complete list and description of all real property owned by
the Company or any of its Subsidiaries and all buildings and improvements
thereon.
3.11. Leases.
(a) Section 3.11(a) of the Company Disclosure Schedule contains an
accurate and complete list of each lease pursuant to which the Company or
any of its Subsidiaries leases any real or personal property (excluding
leases relating solely to personal property calling for rental or similar
periodic payments not exceeding $50,000 per annum) (each a "Company
Lease"). A true and complete copy of each Company Lease has heretofore been
made available to Parent.
(b) Each Company Lease is valid, binding and enforceable against the
Company and each of its Subsidiaries that is a party thereto in accordance
with its terms and, to the knowledge of the Company, is in full force and
effect. The leasehold estate created by each Company Lease of real property
(a "Company Leased Premise") is free and clear of all encumbrances other
than Company Permitted Liens. There are no existing defaults by the Company
or any of its Subsidiaries under any of the Company Leases in any material
respect, and to the knowledge of the Company no event has occurred that
(whether with or without notice, lapse of time or the happening or
occurrence of any other event) would constitute a default under any Company
Lease. The Company has received no notice, and has no other reason to
believe, that any lessor under any Company Lease will not consent (where
such consent is necessary) to the consummation of the Merger without
requiring any material modification of the rights or obligations of the
lessee thereunder.
(c) With respect to leases or licenses of tower space to which the
Company or any of its Subsidiaries is a party ("Company Tower Leases"), (A)
to the knowledge of the Company there are no applications, ordinances,
petitions, resolutions or other matters pending before any governmental
agency having jurisdiction to act on zoning changes that would prohibit or
make nonconforming the use of any of the Company Leased Premises by the
Company or any of its Subsidiaries, (B) either the Company or one of its
Subsidiaries has good and valid easement rights providing reasonable access
and utilities to and from the Company Leased Premises under the Company
Tower Leases, (C) neither the Company nor any of its Subsidiaries has
voluntarily granted any, or is a party to any agreement providing for, or
has knowledge of any, easements, conditions, restrictions, reservations,
rights or options that would materially and adversely affect the use of any
of the Company Leased Premises under the Company Tower Leases for the same
purposes and uses as such Company Leased Premises have been used by the
Company or any of its Subsidiaries, except for Company Permitted Liens.
20
3.12. Environmental Matters. Except as it has not had and would not
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect on the Company or as set forth in Section 3.12 of the Company
Disclosure Schedule:
(a) The Company and each of its Subsidiaries (1) are in compliance
with all, and, to the knowledge of the Company, are not subject to any
liability with respect to any, applicable Environmental Laws, (2) hold or
have applied for all Environmental Permits necessary to conduct their
current operations and (3) are in compliance with their respective
Environmental Permits and such Environmental Permits are in full force and
effect.
(b) Neither the Company nor any of its Subsidiaries has received any
written notice, demand, letter, claim or request for information alleging
that the Company or any of its Subsidiaries is in violation of any
Environmental Law or liable for remediation, cost recovery or contribution
under CERCLA.
(c) Neither the Company nor any of its Subsidiaries (1) has entered
into or agreed to any consent decree or order or is subject to any
judgment, decree or judicial order relating to compliance with
Environmental Laws, Environmental Permits or the investigation, sampling,
monitoring, treatment, remediation, removal or cleanup of Hazardous
Materials and, to the knowledge of the Company, no investigation,
litigation or other proceeding is pending or threatened in writing with
respect thereto, or (2) is an indemnitor in connection with any claim
threatened or asserted in writing by any third-party indemnitee for any
liability under any Environmental Law or relating to any Hazardous
Materials.
(d) None of the real property owned or leased by the Company or any
Company Subsidiary is listed or, to the knowledge of the Company, proposed
for listing on the "National Priorities List" under CERCLA, as updated
through the date hereof, or any similar state or foreign list of sites
requiring investigation or cleanup.
(e) To the knowledge of the Company, there are no underground storage
tanks or above-ground storage tanks located on any Company Real Property
which are now, or in the past were, used to store Hazardous Materials.
"Company Real Property" shall mean all real property (i) that is owned or
used by the Company or any of its Subsidiaries or that is reflected as an
asset of the Company or any of its Subsidiaries on the audited balance
sheet of the Company as of September 30, 2003 and (ii) formerly owned or
operated by the Company or its Subsidiaries.
(f) For purposes of this Agreement:
"CERCLA" means the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended as of the date hereof.
"Environmental Laws" means any federal, state, local or foreign statute,
law, ordinance, regulation, rule, code, treaty, writ or order and any
enforceable judicial or administrative interpretation thereof, including any
judicial or administrative order,
21
consent decree, judgment, stipulation, injunction, authorization, policy,
opinion, or agency requirement, in each case having the force and effect of law,
relating to the pollution, protection, investigation or restoration of the
environment, historic preservations, or health and safety as affected by the
environment or natural resources, including, without limitation, the National
Environmental Policy Act of 1969, as amended as of the date hereof, the National
Historic Preservation Act, and those relating to the use, handling, presence,
transportation, treatment, storage, disposal, release, threatened release or
discharge of Hazardous Materials or noise, odor, wetlands, pollution or
contamination.
"Environmental Permits" means any permit, approval, identification number,
license and other authorization required under any applicable Environmental Law.
"Hazardous Materials" means (a) any petroleum, petroleum products,
byproducts or breakdown products, radioactive materials, asbestos-containing
materials or polychlorinated biphenyls or (b) any chemical, material or other
substance defined or regulated as toxic or hazardous or as a pollutant or
contaminant or waste under any applicable Environmental Law.
3.13. Certain Contracts.
(a) Except for any contract, agreement, arrangement or understanding
described in clauses (i), (iii), (iv), (v), (vii), (xii), (xiii), (xv),
(xvi) and (xix) that provide for aggregate payments to any Person in any
calendar year of less than $100,000, Section 3.13(a) of the Company
Disclosure Schedule contains a complete and accurate list of each of the
following:
(i) any agreement entered into by the Company or any of its
Subsidiaries relating to indebtedness, liability for borrowed money or
the deferred purchase price of property (excluding trade payables in
the ordinary course of business) or any guarantee or other contingent
liability in respect of any indebtedness or obligation of any Person
(other than the endorsement of negotiable instruments for collection
in the ordinary course of business);
(ii) any agreement that contains restrictions with respect to
payment of dividends or any other distribution in respect of the
equity of the Company or any of its Subsidiaries;
(iii) any letters of credit or similar arrangements relating to
the Company or any of its Subsidiaries;
(iv) any employment agreements with any officer, director or
employee of the Company or any of its Subsidiaries or other Person on
a consulting basis;
22
(v) any management, consulting or advisory agreements, or
severance plans or arrangements for any present or former employee of
the Company or any of its Subsidiaries;
(vi) any non-disclosure agreements and non-compete agreements
binding present and former employees of the Company or any of its
Subsidiaries;
(vii) any agreement under which the Company or any of its
Subsidiaries is lessor of or permits any third party to hold or
operate any property, real or personal;
(viii) any agreement relating to the acquisition or divestiture
of the capital stock or other equity securities, assets or business of
any Person involving the Company or any of its Subsidiaries or
pursuant to which or the Company or any of its Subsidiaries has any
liability, contingent or otherwise;
(ix) any powers of attorney granted by or on behalf of the
Company or any of its Subsidiaries;
(x) any agreement, other than agreements entered into in the
ordinary course of the Company's or any of its Subsidiaries' business
consistent with past practice, which prevents the Company or any of
its Subsidiaries from disclosing confidential information;
(xi) any agreement which in any way purports to prohibit the
Company or any of its Subsidiaries from freely engaging in business
anywhere in the world or competing with any other Person;
(xii) any sales distribution agreements, franchise agreements and
advertising agreements relating to the Company or any of its
Subsidiaries;
(xiii) any warranty, guaranty or other similar undertaking with
respect to a contractual performance extended by the Company or any of
its Subsidiaries;
(xiv) any agreement pursuant to which the Company or any of its
Subsidiaries has agreed to defend, indemnify or hold harmless any
other Person, other than Company Tower Leases;
(xv) any agreement pursuant to which the Company or any of its
Subsidiaries has agreed to settle any liability for Taxes;
23
(xvi) any agreement pursuant to which the Company has agreed to
shift or allocate the liability of the Company, any of its
Subsidiaries or any other Person for Taxes;
(xvii) any agreement pursuant to which the Company may be
required to file a registration statement under the Securities Act
with respect to any securities issued by the Company or any of its
Subsidiaries;
(xviii) any joint venture agreement or partnership agreement;
(xix) any private label or other resale arrangement;
(xx) any construction contract or construction management
contracts;
(xxi) any agreement between the Company or any of its
Subsidiaries, on the one hand, and any of their respective
stockholders, on the other hand; and
(xxii) any other agreement to which the Company or any of its
Subsidiaries is a party or by which the Company or any of its
Subsidiaries is bound and which is material to the Company and its
Subsidiaries taken as a whole.
(b) Each contract, arrangement, commitment or understanding of any
type or form described in Section 3.13(a), whether or not set forth in
Section 3.13(a) of the Company Disclosure Schedule, is referred to herein
as a "Company Contract."
(c) With respect to each Company Contract, except as it has not had
and would not reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect on the Company: (i) the Company
Contract is in full force and effect and is valid and binding on the
Company (or, to the extent a Subsidiary of the Company is a party, such
Subsidiary) and, to the knowledge of the Company, any other party thereto,
(ii) neither the Company or any of its Subsidiaries is in breach or default
under any Company Contract, (iii) neither the Company nor any of its
Subsidiaries knows of, or has received notice of, any violation or default
under (nor, to the knowledge of the Company, does there exist any condition
which with the passage of time or the giving of notice or both would result
in such a violation or default under) any Company Contract by any other
party thereto. The Company has made available to Parent a true and complete
copy of each Company Contract.
(d) Neither the Company nor any of its Subsidiaries is a party to any
oral contract, agreement, or other arrangement or understanding which, if
reduced to written form, would be required to be listed on Section 3.13(a)
of the Company Disclosure Schedule under the terms of this Section 3.13(d).
24
3.14. Distributors and Suppliers. Except as set forth on Section 3.14 of
the Company Disclosure Schedule, since September 30, 2003 there has not been any
material adverse change in the business relationship of the Company or any of
its Subsidiaries with any distributor who accounted for more than 2% of the
Company's and its Subsidiaries' sales (on a consolidated basis) during the
period from September 30, 2003 to September 30, 2004, or with any supplier from
whom the Company or any of its Subsidiaries purchased more than 5% of the goods
or services (on a consolidated basis) which it purchased during the period from
September 30, 2003 to September 30, 2004. Except as set forth in Section 3.14 of
the Company Disclosure Schedule, neither the Company nor any of its Subsidiaries
has knowledge of any termination or intended termination by any such 2%
distributor or 5% supplier of its business relationship with the Company or any
of its Subsidiaries or any modification or intended modification of its business
relationship with the Company or any of its Subsidiaries in a manner which is
adverse in any material respect to the Company and its Subsidiaries taken as a
whole, and neither the Company nor any of its Subsidiaries has knowledge of any
facts which would reasonably be expected to form an adequate basis for such
termination or modification.
3.15. Insurance. The Company and its Subsidiaries maintain with reputable
insurers insurance and indemnity bonds providing coverage for the Company and
its Subsidiaries against all risks normally insured and bonded against by
companies in similar lines of business as the Company and its Subsidiaries.
Section 3.15 of the Company Disclosure Schedule lists the material insurance
policies, binders or bonds maintained by the Company or any of its Subsidiaries
as of the date of this Agreement. All premiums required to be paid with respect
thereto covering all periods up to and including the Closing Date have been, or
shall in the ordinary course be, paid. No notice of cancellation or termination
has been received with respect to any such policy as of the date hereof, and all
such insurance policies are in full force and effect and will remain in full
force and effect up to and including the Closing Date and all claims thereunder
have been filed in due and timely fashion.
3.16. Legal Proceedings.
(a) Except as set forth in Section 3.16 of the Company Disclosure
Schedule, neither the Company nor any of its Subsidiaries is a party to
any, and there are no pending or, to the Company's knowledge, threatened,
legal, administrative, arbitral or other proceedings, claims, actions or
governmental or regulatory investigations of any nature against the Company
or any of its Subsidiaries or, to the knowledge of the Company, any of the
Company's or its Subsidiaries' current or former directors or officers or
any other Person whom the Company or its Subsidiaries has agreed to
indemnify, as such, or challenging the validity or propriety of the
transactions contemplated by this Agreement as to which there is reasonable
possibility of adverse determination and which, if adversely determined,
would, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect on the Company. To the knowledge of the Company, no
event has occurred, and no state of facts exists, that could reasonably be
expected to result in any such action, suit or proceeding.
25
(b) There is no injunction, order, judgment, decree or regulatory
restriction imposed upon the Company, any of its Subsidiaries or the assets
of the Company or any of its Subsidiaries, which, individually or in the
aggregate, has had or would reasonably be expected to have, a Material
Adverse Effect on the Company.
3.17. Compliance with Applicable Law.
(a) Except for the Sprint Licenses (as defined below), the Company and
each of its Subsidiaries hold, and have at all times held, all licenses,
franchises, permits, certificates, approvals and authorizations (each a
"Company Permit") necessary for the lawful conduct of their respective
businesses and the lawful ownership, use and operation of its assets, as
presently conducted and used, and neither the Company nor any of its
Subsidiaries knows of, or has received notice of, any violation of any
Company Permit, except where the failure to have any such Company Permit or
such violation has not had and would not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect on the Company.
(b) The Company and each of its Subsidiaries are in compliance with
and are not in default under any, applicable law, statute, order, rule,
regulation, policy and/or guideline of any Governmental Entity relating to
the Company or any of its Subsidiaries, except where any failure to be in
compliance with the terms thereof individually or in the aggregate has not
had and would not reasonably be expected to have a Material Adverse Effect
on the Company.
(c) Except as set forth in Section 3.17 of the Company Disclosure
Schedule, the Company has no knowledge of any investigation, notice of
apparent liability, violation, forfeiture or other order or complaint
issued by or before the Federal Communications Commission (the "FCC") or
any other Governmental Entity or of any other proceedings of or before the
FCC or any other Governmental Entity relating to the Company or any of its
Subsidiaries or to any authorizations under which the Company conducts its
business, not including personal communications service licenses held by
Sprint PCS or its Affiliates (the "Sprint Licenses"). No proceedings are
pending or, to the knowledge of the Company, threatened to revoke or limit
any material Company Permits or any of the Sprint Licenses.
(d) To the knowledge of the Company, no event has occurred which (i)
results in, or after notice or lapse of time or both could reasonably be
expected to result in, revocation, suspension, adverse modification,
non-renewal, impairment, restriction or termination of, or order of
forfeiture or substantial fine with respect to, any material Company
Permits or the Sprint Licenses, or (ii) affects or could reasonably be
expected in the future to affect any of the rights of the Company or its
Subsidiaries under any material Company Permits or any of the rights of
Sprint PCS or its Affiliates under the Sprint Licenses. No facts are known
to the Company or the Company Subsidiaries which if known by a Governmental
Entity of competent jurisdiction would present a substantial risk that any
material Company Permit could be revoked, suspended, adversely modified,
not renewed, impaired, restricted, terminated, forfeited or a substantial
fine imposed against the Company or any of the Company Subsidiaries, and
26
neither the execution by the Company of this Agreement nor the consummation
of the Merger or any of the other transactions contemplated by this
Agreement is reasonably likely to result in the occurrence of any of the
consequences set forth in this Section 3.17(d).
3.18. Employees.
(a) Section 3.18(a) of the Company Disclosure Schedule sets forth a
true and complete list of each deferred compensation, incentive
compensation, equity compensation, severance, health or other "welfare"
plan, fund or program (within the meaning of section 3(1) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA")); "pension"
plan, fund or program (within the meaning of section 3(2) of ERISA); each
employment, termination or severance agreement; and each other employee
benefit plan, fund, program, agreement or arrangement, in each case, that
is sponsored, maintained or contributed to or required to be contributed to
or was entered into by the Company, any of its Subsidiaries or by any trade
or business, whether or not incorporated, that together with the Company
would be deemed a "single employer" within the meaning of Section
4001(b)(1) of ERISA (a "Company ERISA Affiliate"), for the benefit of any
current or former employee of the Company, any Subsidiary or any ERISA
Affiliate (the "Company Plans").
(b) The Company has heretofore made available to Parent true and
complete copies of each of the Company Plans, all amendments thereto and
all other related documents, including but not limited to (i) the most
recent Form 5500 and related exhibits and reports for such Company Plan (if
applicable) for each of the last two years, and (ii) the most recent
determination letter from the Internal Revenue Service (if applicable) for
such Company Plan.
(c) Except as set forth in Section 3.18(c) of the Company Disclosure
Schedule: (i) each of the Company Plans has been operated and administered
in material compliance with its terms and applicable law, including but not
limited to ERISA and the Code; (ii) each of the Company Plans intended to
be "qualified" within the meaning of Section 401(a) of the Code has
received a favorable determination letter from the IRS to that effect and
to the knowledge of the Company there exists no circumstance reasonably
likely to result in the revocation of any such favorable determination
letter; (iii) no Company Plan provides benefits, including without
limitation death or medical benefits (whether or not insured), with respect
to current or former employees of the Company, its Subsidiaries or any
Company ERISA Affiliate beyond their retirement or other termination of
service, other than (w) coverage mandated by applicable law, (x) death
benefits or retirement benefits under any "employee pension plan," as that
term is defined in Section 3(2) of ERISA, (y) deferred compensation
benefits accrued as liabilities on the books of the Company, its
Subsidiaries or Company ERISA Affiliates or (z) benefits which are fully
insured or the full cost of which is borne by the current or former
employee (or his beneficiary); (iv) no Company Plan is subject to Section
302 or Title IV of ERISA, no liability under Title IV of ERISA has been
incurred by the Company, its Subsidiaries or any Company ERISA Affiliate
that has not been satisfied in full, and neither the Company, its
Subsidiaries nor any Company ERISA Affiliate has any contingent liability
under Title IV of ERISA; (v) no Company Plan is a "multiemployer pension
plan," as that term is defined in Section 3(37) of ERISA; (vi) all
contributions or other amounts payable by the Company, its Subsidiaries or
any Company ERISA
27
Affiliate as of the Effective Time with respect to each Company Plan in
respect of current or prior plan years have been paid or accrued in
accordance with GAAP; (vii) neither the Company, its Subsidiaries, any
Company ERISA Affiliate, any Company Plan, any trust created thereunder,
nor any trustee or administrator thereof has engaged in a transaction or
has taken or failed to take any action in connection with which the
Company, its Subsidiaries or any Company ERISA Affiliate reasonably could
be subject to either a civil penalty assessed pursuant to Section 409 or
502(i) of ERISA or a tax imposed pursuant to Section 4975, 4976 or 4980B of
the Code; (viii) there are no pending, or, to the best knowledge of the
Company, threatened or anticipated claims or proceedings (other than
routine claims for benefits) by, on behalf of or against any of the Company
Plans or any trusts related thereto; (ix) the consummation of the
transactions contemplated by this Agreement will not, either alone or in
combination with any other event, (y) entitle any current or former
employee, officer, director or consultant of the Company or any Company
ERISA Affiliate to severance pay, termination pay or any other payment or
benefit or (z) accelerate the time of payment or vesting or increase the
amount or value of compensation or benefits due any such employee, officer,
director or consultant; and (x) no amounts payable under the Company Plans
will fail to be deductible for federal income tax purposes by virtue of
Section 280G of the Code.
3.19. Taxes.
(a) Except as set forth in Section 3.19(a) of the Company Disclosure
Schedule, each of the Company, and its Subsidiaries has (i) duly and timely
filed (including applicable extensions granted without penalty) all Tax
Returns (as hereinafter defined) required to be filed at or prior to the
Effective Time, and such Tax Returns are true, correct and complete in all
material respects, and (ii) paid in full or made adequate provision in the
financial statements of the Company (in accordance with GAAP) for all Taxes
(as hereinafter defined) due to be paid or accrued at or prior to the
Effective Time. No deficiencies for any Taxes have been proposed, asserted,
assessed or, to the knowledge of the Company, threatened against or with
respect to the Company, or any of its Subsidiaries. Except as set forth in
Section 3.19(a) of the Company Disclosure Schedule, (i) there are no liens
for Taxes upon the assets of either the Company or its Subsidiaries except
for statutory liens for current Taxes not yet due, (ii) neither the
Company, nor any of its Subsidiaries has requested any extension of time
within which to file any Tax Returns in respect of any fiscal year which
have not since been filed and no request for waivers of the time to assess
any Taxes are pending or outstanding, (iii) with respect to each taxable
period of the Company, and its Subsidiaries, (A) the federal and state
income Tax Returns of the Company and its Subsidiaries have been audited by
the Internal Revenue Service or appropriate state tax authorities, (B) the
time for assessing and collecting income Tax with respect to such taxable
period has closed and such taxable period is not subject to review, or (C)
the time for assessing and collecting income Tax with respect to such
taxable period has not closed, but no audit or review of such taxable
period has yet been initiated or threatened, (iv) neither the Company nor
any of its Subsidiaries has filed or been included in a combined,
consolidated or unitary
28
income Tax Return other than one in which the Company was the parent of the
group filing such Tax Return, (v) neither the Company nor any of its
Subsidiaries is a party to any agreement providing for the allocation or
sharing of Taxes (other than the allocation of federal income taxes as
provided by Regulation 1.1552-1(a)(1) under the Code), (vi) neither the
Company nor any of its Subsidiaries is required to include in income any
adjustment pursuant to Section 481(a) of the Code (or any similar or
corresponding provision or requirement of state, local or foreign income
Tax law), by reason of the voluntary change in accounting method (nor has
any taxing authority proposed any such adjustment or change of accounting
method), (vii) neither the Company nor its Subsidiaries has any liability
for Taxes of any Person (other than a liability of the Company for Taxes of
any of its Subsidiaries or a liability of any of the Company's Subsidiaries
for Taxes of the Company) under Regulation 1.1502-6 or 1.1502-78(b)(2)
under the Code (or similar provisions of state, local or foreign law), as a
transferee or successor, by contract or otherwise, and (viii) neither the
Company nor any of its Subsidiaries has made any payment or may be
obligated to make any payment (by contract or otherwise) which will not be
deductible by reason of Section 280G or Section 162(m) of the Code.
(b) For the purposes of this Agreement, "Taxes" shall mean all taxes,
charges, fees, levies, penalties or other assessments imposed by any United
States federal, state, local or foreign taxing authority, including, but
not limited to income, excise, property, sales, transfer, franchise,
payroll, withholding, social security or other taxes, including any
interest, penalties or additions attributable thereto. For purposes of this
Agreement, "Tax Return" shall mean any return, report, information return
or other document (including any related or supporting information) with
respect to Taxes.
3.20. Sprint Agreement Compliance.
(a) Neither the Company nor any of its Subsidiaries has violated or
failed to meet any deadline or requirement in the Company Sprint
Agreements, except as has been remedied, waived or modified prior to the
date hereof and previously disclosed to Parent. Section 3.20(a) of the
Company Disclosure Schedule sets forth the extent of the Company's progress
in the completion of its build-out and network launch as of the date of
this Agreement.
(b) Section 3.20(b) of the Company Disclosure Schedule sets forth a
list of all agreements between the Company, its Subsidiaries or any of its
Affiliates, on the one hand, and Sprint PCS and any of its Affiliates, on
the other hand (collectively, the "Company Sprint Agreements"). There are
no unwritten amendments to, or waivers under, any Company Sprint Agreement.
(c) The Company Sprint Agreements are valid, binding and enforceable
against the Company (or, to the extent a Subsidiary of the Company is a
party, such Subsidiary), in accordance with their respective terms, and
shall be in full force and effect without penalty in accordance with their
terms upon consummation of the Merger and the other transactions
contemplated by this Agreement, except as enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium or
29
other laws affecting creditors' rights generally and limitations on the
availability of equitable remedies. The Company and its Subsidiaries have
performed in all material respects all obligations required to be performed
by them under, and they are not in default under or in breach of, nor in
receipt of any claim of default or breach under, any of the Company Sprint
Agreements. To the knowledge of the Company, no event has occurred which
with the passage of time or the giving of notice or both would result in a
default, breach or event of noncompliance by the Company or any Subsidiary,
or would permit termination or modification by the Company, Sprint PCS or
any of its Affiliates, under any of the Company Sprint Agreements. Neither
the Company nor any of its Subsidiaries has knowledge of any cancellation
or anticipated cancellation by Sprint PCS or any of its Affiliates of any
of the Company Sprint Agreements. The Company has provided Parent with
copies of all written notices (excluding e-mail messages) received by it
from Sprint PCS during the last six months (i) delivered pursuant to the
official notice provisions of any of the Company Sprint Agreements or (ii)
alleging a material breach of any of the Company Sprint Agreements.
3.21. Intellectual Property.
(a) "Intellectual Property" means all intellectual property or other
proprietary rights of every kind, including all domestic or foreign
patents, patent rights, domestic or foreign patent applications, inventions
(whether or not patentable), processes, products, technologies,
discoveries, copyrightable and copyrighted works, apparatus, trade secrets,
trademarks, trademark registrations and applications, service marks,
service xxxx registrations and applications, trade names, trade dress,
copyright registrations, customer lists, confidential marketing and
customer information, licenses, confidential technical information,
software, inventions (whether or not patentable) and all documentation
thereof.
(b) The Company owns or has the right to use, whether through
licensing or otherwise, and to authorize others to use, all Intellectual
Property significant to the businesses of the Company and its Subsidiaries
in substantially the same manner as such businesses are conducted on the
date hereof ("Company Material Intellectual Property"). Except as set forth
in Section 3.21 of the Company Disclosure Schedule: (1) no written claim of
invalidity or conflicting ownership rights with respect to any Company
Material Intellectual Property has been made by a third party and no such
Intellectual Property is the subject of any pending or, to the Company's
knowledge, threatened action, suit, claim, investigation, arbitration or
other proceeding; (2) no Person or entity has given notice to the Company
or any of its Subsidiaries that the use of any Company Material
Intellectual Property by the Company, any Company Subsidiary or any
licensee is infringing or has infringed any domestic or foreign patent,
trademark, service xxxx, trade name, or copyright or design right, or that
the Company, any of its Subsidiaries or any licensee has misappropriated or
improperly used or disclosed any trade secret, confidential information or
know-how; (3) to the Company's knowledge after due inquiry for such
purpose, the making, using, selling, manufacturing, marketing, licensing,
reproduction, distribution, or publishing of any process, machine,
manufacture or product related to any Company Material Intellectual
Property, does not and will not infringe any domestic or foreign patent,
trademark, service xxxx, trade name, copyright
30
or other intellectual property right of any third party, and does not and
will not involve the misappropriation or improper use or disclosure of any
trade secrets, confidential information or know-how of any third party; (4)
to the Company's knowledge, there exists no prior act or current conduct or
use by the Company, any of its Subsidiaries or any third party that would
void or invalidate any Company Material Intellectual Property; (5) to the
Company's knowledge, no other Person is interfering with, infringing upon,
misappropriating or otherwise coming into conflict with any Company
Material Intellectual Property; and (6) the execution, delivery and
performance of this Agreement by the Company and the consummation of the
transactions contemplated hereby and thereby will not breach, violate or
conflict with any instrument or agreement concerning any Company Material
Intellectual Property, will not cause the forfeiture or termination of or
give rise to a right of forfeiture or termination of any of the Company
Material Intellectual Property, or trigger additional fees or transfer
costs payable by the Company or any of its Subsidiaries with respect to, or
impair the right of the Surviving Corporation to make, use, sell, license
or dispose of, or to bring any action for the infringement of, any Company
Material Intellectual Property. In addition, the matters disclosed on
Section 3.21 of the Company Disclosure Schedule would not, individually or
in the aggregate, reasonably be expected to have a Material Adverse Effect
on the Company.
3.22. Labor Matters.
(a) Except to the extent set forth in Section 3.22 of the Company
Disclosure Schedule, (i) there is no labor strike, slowdown, stoppage or
lockout actually pending or, to the knowledge of the Company, threatened
against or affecting the Company or any of its Subsidiaries and during the
past three years there has not been any such action; (ii) to the knowledge
of the Company, there is no union claims to represent the employees of the
Company or any of its Subsidiaries; (iii) neither the Company nor any of
its Subsidiaries is a party to or bound by any collective bargaining or
similar agreement with any labor organization, or work rules or practices
agreed to with any labor organization or employee association; (iv) none of
the employees of the Company or any of its Subsidiaries is represented by
any labor organization and the Company does not have any knowledge of any
current union organizing activities among the employees of the Company or
any of its Subsidiaries, nor does any question concerning representation
exist concerning such employees; (v) there are no written personnel
policies, rules or procedures applicable to employees of the Company or any
of its Subsidiaries, other than those set forth in Section 3.22 of the
Company Disclosure Schedule, true and correct copies of which have
heretofore been delivered to Parent; (vi) there is no unfair labor practice
charge or complaint against the Company or any of its Subsidiaries pending
or, to the knowledge of the Company, threatened before the National Labor
Relations Board or any similar state agency; and (vii) there is no
grievance arising out of any collective bargaining agreement or other
grievance procedure. Within the last five years, neither the Company nor
any of its Subsidiaries has effectuated (i) a "plant closing" (as defined
in the Worker Adjustment and Retraining Notification Act (the "WARN Act")
affecting any site of employment or one or more facilities or operating
units within any site of employment or facility of the Company or any of
its Subsidiaries; or (ii) a "mass layoff" (as defined in the WARN Act)
affecting any site of employment or facility of the Company or any of its
Subsidiaries. Except as
31
set forth in Section 3.22 of the Company Disclosure Schedule, none of the
Company's or its Subsidiaries' employees has suffered an "employment loss"
(as defined in the WARN Act) within the period 90 days prior to date of
this Agreement.
3.23. Reorganization. As of the date of this Agreement, the Company has no
reason to believe that the Merger will fail to qualify as a reorganization under
Section 368(a) of the Code. As of the date of this Agreement, the Company knows
of no reason why it will be unable to deliver to Winston & Xxxxxx LLP and to
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP representation letters with respect to
the Company in form and substance sufficient to enable such counsel to render
the opinions required by Sections 7.2(c) and 7.3(c) hereof.
3.24. Broker's Fees. Except as set forth on Section 3.24 of the Company
Disclosure Schedule, neither the Company nor any of its Subsidiaries nor any of
their respective officers or directors has employed any broker or finder or
incurred any liability for any broker's fees, commissions or finder's fees in
connection with the Merger or any of the transactions contemplated by this
Agreement, except that the Company has engaged, and will pay a fee or commission
to, Banc of America LLC (the "Company Advisor") in accordance with the terms of
the letter agreement between the Company and the Company Advisor, a true,
complete and correct copy of which has previously been delivered by the Company
to Parent.
3.25. Opinion. Prior to the execution of this Agreement, the Company has
received an opinion from the Company Advisor to the effect that as of the date
thereof and based upon and subject to the matters set forth therein, the Merger
Consideration is fair, from a financial point of view, to the holders of Company
Common Stock and such opinion has not been amended or rescinded as of the date
of this Agreement.
3.26. Related Party Transactions. Except as set forth on Section 3.26 of
the Company Disclosure Schedule, to the knowledge of the Company, no officer or
director of the Company or any of its Subsidiaries owns or holds, directly or
indirectly, any interest in (excepting holdings solely for passive investment
purposes of securities of publicly held and traded entities constituting less
than 5% of the equity of any such entity), or is an officer, director, employee
or consultant of any Person that is, a competitor, lessor, lessee or supplier of
the Company or which conducts a business similar to any business conducted by
the Company. No officer or director of the Company or any of its Subsidiaries
(a) owns or holds, directly or indirectly, in whole or in part, any Intellectual
Property used by the Company or any of its Subsidiaries, (b) to the knowledge of
the Company has any claim, charge, action or cause of action against the Company
or any of its Subsidiaries, except for claims for reasonable unreimbursed travel
or entertainment expenses, accrued vacation pay or accrued benefits under any
employee benefit plan existing on the date hereof, (c) to the knowledge of the
Company, has made, on behalf of the Company or any of its Subsidiaries, any
payment or commitment to pay any commission, fee or other amount to, or to
purchase or obtain or otherwise contract to purchase or obtain any goods or
services from, any other Person of which any officer or director of the Company
or any of its Subsidiaries is a partner or
32
shareholder (except holdings solely for passive investment purposes of
securities of publicly held and traded entities constituting less than 5% of the
equity of any such entity), (d) owes any money to the Company or any of its
Subsidiaries or (e) has any material interest in any property, real or personal,
tangible or intangible, used in or pertaining to the business of the Company or
any of its Subsidiaries.
3.27. Company Information. The information relating to the Company and its
Subsidiaries which is provided in writing (including transmission via e-mail) to
Parent by the Company or any of its representatives for inclusion in the Joint
Proxy Statement/Prospectus and the Form S-4, or in any other document filed with
any other regulatory agency in connection herewith, will not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements therein, in light of the circumstances in which they are made,
not misleading.
3.28. Company Indentures.
(a) Neither the Company nor any of its Subsidiaries has made any
"Restricted Payments" pursuant to, nor has any of them otherwise utilized
any of the capacity provided for under, clause (11) of Section 4.7 of the
October Indenture or clause (7) of Section 4.7 of the February Indenture.
(b) For purposes of this Agreement, "Company Indentures" means,
collectively, (i) the Indenture, dated as of October 25, 2004, related to
the $175,000,000 aggregate principal amount First Priority Senior Secured
Floating Rate Notes due 2011 issued by the Company (the "October
Indenture"), and (ii) the Indenture, dated as of February 20, 2004, related
to the $159,034,600 aggregate principal amount 9.375% Senior Subordinated
Secured Notes due 2009 issued by the Company (the "February Indenture").
(c) No "Event of Default" (as defined in each of the Company
Indentures) has occurred and is continuing under either of the Company
Indentures and neither the Company nor any of its Subsidiaries has
previously received a waiver of any Event of Default under either of the
Company Indentures.
3.29. Anti-Takeover Provisions. Assuming the accuracy of the representation
and warranty set forth in Section 4.25, the Board of Directors of the Company
has approved the transactions contemplated by this Agreement such that the
provisions of Section 203 of the DGCL and Article VIII of the Company's Amended
and Restated Certificate of Incorporation will not apply to this Agreement or
any of the transactions contemplated hereby. No other "moratorium," "control
share," "fair price" or other antitakeover laws are applicable to the Merger or
any of the other transactions contemplated by this Agreement.
3.30. Disclosure Controls and Procedures. The Company and its Subsidiaries
have designed and maintain a system of internal controls over financial
reporting (as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act)
sufficient to provide reasonable assurances regarding the reliability of
financial reporting and the
33
preparation of financial statements for external purposes in accordance with
generally accepted accounting principles. The Company (A) has designed and
maintains disclosure controls and procedures (as defined in Rules 13a-15(e) and
15d-15(e) of the Exchange Act) to ensure that material information required to
be disclosed by the Company in the reports that it files or submits under the
Exchange Act is recorded, processed, summarized and reported within the time
periods specified in the SEC's rules and forms and is accumulated and
communicated to the Company's management as appropriate to allow timely
decisions regarding required disclosure, and (B) has disclosed, based on its
most recent evaluation of such disclosure controls and procedures prior to the
date hereof, to the Company's auditors and the audit committee of the Company's
Board of Directors (1) any significant deficiencies and material weaknesses in
the design or operation of internal controls over financial reporting that are
reasonably likely to adversely affect in any material respect the Company's
ability to record, process, summarize and report financial information and (2)
any fraud, whether or not material, that involves management or other employees
who have a significant role in the Company's internal controls over financial
reporting. The Company has made available to Parent a summary of any such
disclosure made by management to the Company's auditors and audit committee
since October 1, 2002.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT
4.1. Parent Disclosure Schedule. Prior to the execution and delivery of
this Agreement, Parent has delivered to the Company a schedule (the "Parent
Disclosure Schedule") setting forth, among other things, items the disclosure of
which is necessary or appropriate either in response to an express disclosure
requirement contained in a provision hereof or as an exception to one or more of
Parent's representations or warranties contained in this Article IV, or to one
or more of Parent's covenants contained in Section 5.2; provided, however, that
notwithstanding anything in this Agreement to the contrary the mere inclusion of
an item in a Parent Disclosure Schedule as an exception to a representation or
warranty shall not be deemed an admission by a party that such item represents a
material exception or material fact, event or circumstance or that such item has
had or is reasonably likely to have a Material Adverse Effect (as defined
herein) with respect to the Parent. Each disclosure set forth in the Parent
Disclosure Schedule is identified by reference to, or has been grouped under a
heading referring to a specific individual section of this Agreement.
Except as set forth in Parent Disclosure Schedule, Parent hereby represents
and warrants to the Company as set forth in Sections 4.2 through 4.27:
4.2. Corporate Organization.
(a) Parent is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware. The Amended and
Restated Certificate of Incorporation and Amended and Restated Bylaws of
Parent, copies of which have previously been made available to the Company,
are true, complete and correct copies of such documents as in effect as of
the date of this Agreement.
34
(b) Parent (i) has all requisite corporate power and authority to own
or lease all of its properties and assets and to carry on its business as
it is now being conducted, and (ii) is duly licensed or qualified to do
business and in good standing in each jurisdiction in which the nature of
the business conducted by it or the character or location of the properties
and assets owned or leased by it makes such licensing or qualification
necessary, except where the failure to be so licensed, qualified or in good
standing, individually or in the aggregate, has not had and would not
reasonably be expected to have a Material Adverse Effect on Parent.
(c) Each of Parent's Subsidiaries is duly organized, validly existing
and in good standing under the laws of its jurisdiction of incorporation or
organization. Each of Parent's Subsidiaries has the requisite corporate or
other power and authority to own or lease all of its properties and assets
and to carry on its business as it is now being conducted, and is duly
licensed or qualified to do business and in good standing in each
jurisdiction in which the nature of the business conducted by it or the
character or the location of the properties and assets owned or leased by
it makes such licensing or qualification necessary, except where the
failure to be so licensed qualified, or in good standing, individually or
in the aggregate, has not had and would not reasonably be expected to have
a Material Adverse Effect on Parent. The articles of incorporation, bylaws
and similar governing documents of each Subsidiary of Parent, copies of
which have previously been made available to the Company, are true,
complete and correct copies of such documents as in effect as of the date
of this Agreement.
(d) The minute books of Parent and each of its Subsidiaries contain
true, complete and accurate records of all meetings and other corporate
actions held or taken since December 31, 2002 of their respective
stockholders and Boards of Directors (including committees of their
respective Boards of Directors).
(e) Neither Parent nor any of its Subsidiaries is in violation of any
provision of its respective certificate of incorporation, bylaws or similar
governing document.
4.3. Capitalization.
(a) The authorized capital stock of Parent consists of 290,000,000
shares of Parent Common Stock and 10,000,000 shares of preferred stock, par
value $.01 per share. As of December 3, 2004, there were (i) 114,857,304
shares of Parent Common Stock issued and outstanding, (ii) 300,000 shares
of Series A Preferred Stock reserved for issuance, (iii) 478,987 shares of
Series B Convertible Preferred Stock ("Parent Series B Preferred Stock")
issued and outstanding, (iv) 500,000 shares of Series C Convertible
Preferred Stock ("Parent Series C Preferred Stock") reserved for issuance,
(v) no shares of Parent Common Stock reserved for issuance upon exercise of
outstanding stock options or otherwise, except for (x) 9,760,426 shares of
Parent Common Stock reserved for issuance pursuant to options granted
pursuant to option plans, agreements or commitments maintained by Parent,
and (y) shares of Parent Common Stock reserved for issuance upon conversion
of the outstanding shares of Parent Series B Preferred Stock and Parent
Series C Preferred Stock and (vi) no shares of Parent
35
Common Stock held by Parent in its treasury or by Parent's Subsidiaries.
All of the issued and outstanding shares of Parent Common Stock have been
duly authorized and validly issued and are fully paid, nonassessable and
free of preemptive rights, with no personal liability attaching to the
ownership thereof. As of the date of this Agreement, except as referred to
above or reflected in Section 4.3(a) of the Parent Disclosure Schedule,
Parent does not have and is not bound by any outstanding subscriptions,
options, warrants, calls, commitments or agreements of any character
calling for the purchase or issuance of any shares of Parent Common Stock
or any other equity security or Voting Debt of Parent or any securities
representing the right to purchase or otherwise receive any shares of
Company Common Stock or any other equity security or Voting Debt of Parent
(including any rights plan or agreement). The share of Parent Common Stock
to be issued pursuant to the Merger will be duly authorized and validly
issued and, at the Effective Time, all such shares will be fully paid,
nonassessable and free of preemptive rights, with no personal liability
attaching to the ownership thereof.
(b) Section 4.3(b) of the Parent Disclosure Schedule sets forth a true
and correct list of all of the Subsidiaries of Parent as of the date of
this Agreement. Except as set forth in Section 4.3(b) of the Parent
Disclosure Schedule, as of the date of this Agreement Parent owns, directly
or indirectly, all of the issued and outstanding shares of the capital
stock (or all of the other equity ownership interests) of each of its
Subsidiaries, free and clear of all Liens, and all of such shares (or other
equity or ownership interests) are duly authorized and validly issued and
are fully paid, nonassessable and free of preemptive rights, with no
personal liability attaching to the ownership thereof. As of the date of
this Agreement, no Subsidiary of Parent has or is bound by any outstanding
subscriptions, options, warrants, calls, commitments or agreements of any
character with any party that is not a direct or indirect Subsidiary of
Parent calling for the purchase or issuance of any shares of capital stock
or any other equity security or Voting Debt of such Subsidiary or any
securities representing the right to purchase or otherwise receive any
shares of capital stock or any other equity security or Voting Debt of such
Subsidiary.
(c) As of the date of this Agreement, no Voting Debt of Parent is
issued or outstanding.
4.4. Authority; No Violation.
(a) Each of Parent and Merger Sub has full corporate power and
authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this
Agreement and the consummation of the Merger and the other transactions
contemplated hereby have been duly and validly approved by (i) the Board of
Directors of Parent, and (ii) the Board of Directors of Merger Sub and by
Parent in its capacity as sole stockholder of Merger Sub, and no other
corporate proceedings on the part of Parent or Merger Sub or their
respective stockholders are necessary to approve this Agreement, and to
consummate the Merger and the other transactions contemplated hereby (other
than obtaining the requisite approval of Parent stockholders for the
issuance of shares of Parent Common Stock pursuant to the Merger pursuant
to the listing standards and rules of Nasdaq (the "Parent
36
Stockholder Approval")). This Agreement has been duly and validly executed
and delivered by Parent and Merger Sub, and (assuming due authorization,
execution and delivery by the Company) this Agreement constitutes a valid
and binding obligation of Parent and Merger Sub, enforceable against Parent
and Merger Sub in accordance with its terms, except as enforcement may be
limited by general principles of equity whether applied in a court of law
or a court of equity and by bankruptcy, insolvency and similar laws
affecting creditors' rights and remedies generally.
(b) Except as set forth in Section 4.4(b) of the Parent Disclosure
Schedule, neither the execution and delivery of this Agreement by Parent
and Merger Sub, nor the consummation by Parent and Merger Sub of the Merger
or any of the other transactions contemplated hereby, nor compliance by
Parent and Merger Sub with any of the terms or provisions hereof, will (i)
violate any provision of the Amended and Restated Certificate of
Incorporation or Amended and Restated Bylaws of Parent or the certificate
of incorporation, bylaws or similar governing documents of any of its
Subsidiaries (including Merger Sub), or (ii) assuming that the consents and
approvals referred to in Section 4.5 hereof are duly obtained, (x) violate
any statute, code, ordinance, rule, regulation, judgment, order, writ,
decree or injunction applicable to Parent or any of its Subsidiaries
(including Merger Sub), or any of their respective properties or assets, or
(y) violate, conflict with, result in a breach of any provision of or the
loss of any benefit under, constitute a default (or an event which, with or
without notice or lapse of time, or both, would constitute a default)
under, result in the termination of or a right of termination or
cancellation under, accelerate the performance required by, or result in
the creation of any Lien upon any of the respective properties or assets of
Parent or any of its Subsidiaries (including Merger Sub) under, any of the
terms, conditions or provisions of any loan, guarantee of indebtedness,
note, bond, mortgage, indenture, deed of trust, license, permit,
concession, franchise, lease, contract, agreement or other instrument or
obligation to which Parent or any of its Subsidiaries (including Merger
Sub) is a party, or by which they or any of their respective properties or
assets may be bound or affected, except in the case of clauses (x) and (y),
for such violations, conflicts, breaches, losses, defaults, terminations,
cancellations, accelerations or Liens that, individually or in the
aggregate, would not reasonably be expected to have a Material Adverse
Effect on Parent.
4.5. Consents and Approvals. Except for (a) the filing of a notification
under the HSR Act (as defined in Section 6.1(b)), (b) the Parent Stockholder
Approval, (c) the filing of the Certificate of Merger with the Delaware
Secretary pursuant to the DGCL, (d) the filing with the SEC of (i) the Joint
Proxy Statement/Prospectus and (ii) such reports under Sections 13(a), 13(d),
13(g) and 16(a) of the Exchange Act, as may be required in connection with this
Agreement and the transactions contemplated hereby and the obtaining from the
SEC of such orders as may be required in connection therewith, (e) approval of
the listing of the Parent Common Stock to be issued in the Merger on Nasdaq, (f)
such filings and approvals as are required to be made or obtained under the
securities or "Blue Sky" laws of various states in connection with the issuance
of the shares of the Company Common Stock pursuant to this Agreement, (g) any
consent of Sprint PCS required pursuant to the terms of Parent Sprint
Agreements, (h) such filings, authorizations or approvals as may be set forth in
Section 4.5 of the Parent Disclosure
37
Schedule, and (i) such consents, approvals, filings or registrations, the
failure of which to be made or obtained, individually or in the aggregate, would
not reasonably be expected to have a Material Adverse Effect on Parent, no
consents or approvals of, or filings or registrations with, any Governmental
Entity or with any third party are required to be made or obtained by Parent or
any of its Subsidiaries in connection with the execution and delivery by Parent
and Merger Sub of this Agreement or the consummation by Parent and Merger Sub of
the Merger and the other transactions contemplated hereby.
4.6. Reports. Parent has previously made available to the Company a true,
correct and complete copy of each (a) final registration statement, prospectus,
report, schedule and definitive proxy statement filed since December 31, 2002 by
Parent with the SEC pursuant to the Securities Act or the Exchange Act
(collectively, the "Parent Reports"), (b) written communication between Parent
and the SEC since December 31, 2002, and (c) communication mailed by Parent to
its stockholders since December 31, 2002, and no such registration statement,
prospectus, report, schedule, proxy statement or communication as of its date of
filing contained any untrue statement of a material fact or omitted to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances in which they were made, not
misleading. Parent has timely filed all Parent Reports and other documents
required to be filed by it under the Securities Act and the Exchange Act, and,
as of their respective dates, all Parent Reports complied in all material
respects with the published rules and regulations of the SEC with respect
thereto, including rules and regulations relating to the filing of exhibits
thereto. No executive officer of Parent has failed in any respect to make the
certifications required of him or her under Section 302 or 906 of the
Xxxxxxxx-Xxxxx Act of 2002 and no enforcement action has been initiated against
Parent by the SEC relating to disclosures contained in any Parent Report.
4.7. Financial Statements. Parent has previously made available to the
Company copies of (a) the consolidated balance sheets of Parent and its
Subsidiaries as of December 31, 2003 and 2002, and the related consolidated
statements of operations, stockholders' equity, and cash flows for each of the
years in the three-year period ended December 31, 2003, as reported in Parent's
Annual Report on Form 10-K for the fiscal year ended December 31, 2003 filed
with the SEC under the Exchange Act (collectively, and including the notes
thereto, the "Parent Audited Financial Statements"), in each case accompanied by
the audit report of PricewaterhouseCoopers LLP ("PWC"), independent public
accountants with respect to Parent, and (b) the unaudited consolidated balance
sheet of Parent and its Subsidiaries as of September 30, 2004 and the related
unaudited consolidated statements of operations for the quarters and nine months
ended September 30, 2004 and 2003, and statements of cash flows for the nine
months ended September 30, 2004 and 2003, as reported in Parent's Quarterly
Report on Form 10-Q for the period ended September 30, 2004 filed with the SEC
under the Exchange Act (together with Parent Audited Financial Statements, the
"Parent Financial Statements"). The Parent Financial Statements (including the
related notes, where applicable) fairly present in all material respects, and
the financial statements to be filed by Parent with the SEC after the date of
this Agreement will fairly present in all material respects, the consolidated
financial position of Parent and its Subsidiaries as of the respective dates
thereof, and the results of their operations and their cash flows for the fiscal
periods set forth therein
38
(subject, in the case of the unaudited statements, to recurring audit
adjustments normal in nature and amount); each of such statements (including the
related notes, where applicable) complies, and the financial statements to be
filed by Parent with the SEC after the date of this Agreement will comply, with
applicable accounting requirements and with the published rules and regulations
of the SEC with respect thereto at the date of their filing; and each of such
statements (including the related notes, where applicable) has been, and the
financial statements to be filed by Parent with the SEC after the date of this
Agreement will be, prepared in accordance with GAAP consistently applied during
the periods involved, except as indicated in the notes thereto or, in the case
of unaudited statements, except for normal period-end adjustments that are not
material. The books and records of Parent and its Subsidiaries have been, and
are being, maintained in accordance with GAAP and all other applicable legal and
accounting requirements and reflect only actual transactions. PWC has not
resigned or been dismissed as independent public accountants of Parent as a
result of or in connection with any disagreements with Parent on a matter of
accounting principles or practices, financial statement disclosure or auditing
scope or procedure.
4.8. No Undisclosed Liabilities. Except (a) as disclosed in the Parent
Financial Statements, (b) for liabilities and obligations incurred in the
ordinary course of business and consistent with past practice of Parent since
December 31, 2003, and (c) liabilities that, individually or in the aggregate,
have not had and would not reasonably be expected to have a Material Adverse
Effect on Parent, neither Parent nor any of its Subsidiaries has any liability
or obligation of any nature, whether or not absolute, accrued, contingent or
otherwise.
4.9. Absence of Certain Changes or Events.
(a) Except (i) as set forth in Section 4.9(a) of the Parent Disclosure
Schedule or (ii) as disclosed in any Parent Report filed with the SEC prior
to the date of this Agreement, since December 31, 2003, there has been no
change or development or combination of changes or developments which,
individually or in the aggregate, have had, or would reasonably be expected
to have, a Material Adverse Effect on Parent.
(b) Except as set forth in Section 4.9(b) of the Parent Disclosure
Schedule or as disclosed in any Parent Report filed with the SEC prior to
the date of this Agreement, since December 31, 2003, Parent and its
Subsidiaries have carried on their respective businesses in all material
respects only in the ordinary and usual course of business consistent with
their past practices.
(c) Except as set forth in Section 4.9(c) of the Parent Disclosure
Schedule or as disclosed in any Company Report filed with the SEC prior to
the date of this Agreement, since December 31, 2003, neither Parent nor any
of its Subsidiaries has (i) declared, set aside or paid any dividend or
other distribution (whether in cash, stock or property) with respect to any
of Parent's capital stock (other than shares of Parent Series B Preferred
Stock), (ii) changed any accounting methods (or underlying assumptions),
principles or practices of Parent or its Subsidiaries affecting its assets,
39
liabilities or businesses, including any reserving, renewal or residual
method, practice or policy, (iii) made any Tax election or changed any Tax
election, amended any Tax Returns or entered into any settlement or
compromise of any income tax liability of Parent or its Subsidiaries or
entered into any closing agreement with respect to Taxes, or (iv) made any
agreement or commitment (contingent or otherwise) to do any of the
foregoing.
4.10. Property.
(a) Each of Parent and its Subsidiaries has good and marketable title,
free and clear of all Liens to all of the properties and assets, real and
personal, tangible or intangible, which are reflected on the audited
consolidated balance sheet of Parent as of December 31, 2003 or acquired
after such date, except (i) Liens for taxes not yet due and payable or
contested in good faith by appropriate proceedings, (ii) pledges to secure
deposits and other Liens incurred in the ordinary course of business, (iii)
such imperfections of title, easements and encumbrances, if any, as do not
interfere with the use of the property as such property is used on the date
of this Agreement, (iv) for dispositions of and encumbrances on such
properties or assets in the ordinary course of business or (v) mechanics',
materialmen's, workmen's, repairmen's, warehousemen's, carrier's and other
similar Liens and encumbrances arising in the ordinary course of business.
(b) Section 4.10(b) of the Parent Disclosure Schedule sets forth an
accurate and complete list and description of all real property owned by
Parent or any of its Subsidiaries and all buildings and improvements
thereon as of the date hereof.
4.11. Environmental Matters.
Except as has not had and would not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect on Parent or as set
forth in Section 4.11 of the Parent Disclosure Schedule:
(a) Parent and each of its Subsidiaries (1) are in compliance with
all, and, to the knowledge of Parent, are not subject to any liability with
respect to any, applicable Environmental Laws, (2) hold or have applied for
all Environmental Permits necessary to conduct their current operations and
(3) are in compliance with their respective Environmental Permits and such
Environmental Permits are in full force and effect.
(b) Neither Parent nor any of its Subsidiaries has received any
written notice, demand, letter, claim or request for information alleging
that Parent or any of its Subsidiaries is in violation of any Environmental
Law or liable for remediation, cost recovery or contribution under CERCLA.
(c) Neither Parent nor any of its Subsidiaries (1) has entered into or
agreed to any consent decree or order or is subject to any judgment, decree
or judicial order relating to compliance with Environmental Laws,
Environmental Permits or the investigation, sampling, monitoring,
treatment, remediation, removal or cleanup of
40
Hazardous Materials and, to the knowledge of Parent, no investigation,
litigation or other proceeding is pending or threatened in writing with
respect thereto, or (2) is an indemnitor in connection with any claim
threatened or asserted in writing by any third-party indemnitee for any
liability under any Environmental Law or relating to any Hazardous
Materials.
(d) None of the real property owned or leased by Parent or any Company
Subsidiary is listed or, to the knowledge of Parent, proposed for listing
on the "National Priorities List" under CERCLA, as updated through the date
hereof, or any similar state or foreign list of sites requiring
investigation or cleanup.
(e) To the knowledge of Parent, there are no underground storage tanks
or above-ground storage tanks located on any Parent Real Property which are
now, or in the past were, used to store Hazardous Materials. "Parent Real
Property" shall mean all real property (i) that is owned or used by Parent
or any of its Subsidiaries or that is reflected as an asset of Parent or
any of its Subsidiaries on the audited balance sheet of Parent as of
December 31, 2003 and (ii) formerly owned or operated by Parent or its
Subsidiaries.
4.12. Legal Proceedings.
(a) Except as set forth in Section 4.12 of the Parent Disclosure
Schedule, neither Parent nor any of its Subsidiaries is a party to any, and
there are no pending or, to Parent's knowledge, threatened, legal,
administrative, arbitral or other proceedings, claims, actions or
governmental or regulatory investigations of any nature against Parent or
any of its Subsidiaries or, to the knowledge of Parent, any of Parent's or
its Subsidiaries' current or former directors or officers or any other
Person whom Parent or its Subsidiaries has agreed to indemnify, as such, or
challenging the validity or propriety of the transactions contemplated by
this Agreement as to which there is reasonable possibility of adverse
determination and which, if adversely determined, would, individually or in
the aggregate, reasonably be expected to have a Material Adverse Effect on
Parent. To the knowledge of Parent, no event has occurred, and no state of
facts exists, that could reasonably be expected to result in any such
action, suit or proceeding.
(b) There is no injunction, order, judgment, decree or regulatory
restriction imposed upon Parent, any of its Subsidiaries or the assets of
Parent or any of its Subsidiaries, which, individually or in the aggregate,
has had or would reasonably be expected to have, a Material Adverse Effect
on Parent.
4.13. Compliance with Applicable Law.
(a) Except for the Sprint Licenses, Parent and each of its
Subsidiaries hold, and have at all times held, all licenses, franchises,
permits, certificates, approvals and authorizations (each a "Parent
Permit") necessary for the lawful conduct of their respective businesses
and the lawful ownership, use and operation of its assets, as presently
conducted and used, and neither Parent nor any of its Subsidiaries knows
of, or
41
has received notice of, any violation of any Parent Permit, except where
the failure to have any such Parent Permit or such violation has not had
and would not reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect on Parent.
(b) Parent and each of its Subsidiaries are in compliance with and are
not in default under any, applicable law, statute, order, rule, regulation,
policy and/or guideline of any Governmental Entity relating to Parent or
any of its Subsidiaries, except where any failure to be in compliance with
the terms thereof individually or in the aggregate has not had and would
not reasonably be expected to have a Material Adverse Effect on Parent.
(c) Parent has no knowledge of any investigation, notice of apparent
liability, violation, forfeiture or other order or complaint issued by or
before the FCC or any other Governmental Entity or of any other proceedings
of or before the FCC or any other Governmental Entity relating to Parent or
any of its Subsidiaries or to any authorizations under which Parent
conducts its business, not including the Sprint Licenses. No proceedings
are pending or, to the knowledge of Parent, threatened to revoke or limit
any material Parent Permits or the Sprint Licenses.
(d) To the knowledge of Parent, no event has occurred which (i)
results in, or after notice or lapse of time or both could reasonably be
expected to result in, revocation, suspension, adverse modification,
non-renewal, impairment, restriction or termination of, or order of
forfeiture or substantial fine with respect to, any material Parent Permits
or the Sprint Licenses, or (ii) affects or could reasonably be expected in
the future to affect any of the rights of Parent or its Subsidiaries under
any material Parent Permits or any of the rights of Sprint PCS or its
Affiliates under the Parent Sprint Licenses. No facts are known to Parent
or its Subsidiaries which if known by a Governmental Entity of competent
jurisdiction would present a substantial risk that any material Parent
Permit could be revoked, suspended, adversely modified, not renewed,
impaired, restricted, terminated, forfeited or a substantial fine imposed
against Parent or any of Parent Subsidiaries, and neither the execution by
Parent of this Agreement nor the consummation of the Merger or any of the
other transactions contemplated by this Agreement is reasonably likely to
result in the occurrence of any of the consequences set forth in this
Section 4.13(d).
4.14. Employees.
(a) Section 4.14(a) of the Parent Disclosure Schedule sets forth a
true and complete list of each deferred compensation, incentive
compensation, equity compensation, severance, health or other "welfare"
plan, fund or program (within the meaning of Section 3(1) of ERISA);
"pension" plan, fund or program (within the meaning of Section 3(2) of
ERISA); each employment, termination or severance agreement; and each other
employee benefit plan, fund, program, agreement or arrangement, in each
case, that is sponsored, maintained or contributed to or required to be
contributed to or was entered into by Parent, any of its Subsidiaries or by
any trade or business, whether or not incorporated, that together with
Parent would be deemed a "single employer" within the meaning of Section
4001(b)(1) of ERISA (a "Parent ERISA
42
Affiliate"), for the benefit of any current or former employee of Parent,
any Subsidiary or any Parent ERISA Affiliate (the "Parent Plans").
(b) Parent has heretofore made available to the Company true and
complete copies of each of the Parent Plans, all amendments thereto and all
other related documents, including but not limited to (i) the most recent
Form 5500 and related exhibits and reports for such Parent Plan (if
applicable) for each of the last two years, and (ii) the most recent
determination letter from the Internal Revenue Service (if applicable) for
such Parent Plan.
(c) Except as set forth in Section 4.14(c) of the Parent Disclosure
Schedule: (i) each of the Parent Plans has been operated and administered
in material compliance with its terms and applicable law, including but not
limited to ERISA and the Code; (ii) each of the Parent Plans intended to be
"qualified" within the meaning of Section 401(a) of the Code has received a
favorable determination letter from the Internal Revenue Service to that
effect and to the knowledge of Parent there exists no circumstance
reasonably likely to result in the revocation of any such favorable
determination letter; (iii) no Parent Plan provides benefits, including
without limitation death or medical benefits (whether or not insured), with
respect to current or former employees of Parent, its Subsidiaries or any
Parent ERISA Affiliate beyond their retirement or other termination of
service, other than (w) coverage mandated by applicable law, (x) death
benefits or retirement benefits under any "employee pension plan," as that
term is defined in Section 3(2) of ERISA, (y) deferred compensation
benefits accrued as liabilities on the books of Parent, its Subsidiaries or
Parent ERISA Affiliates or (z) benefits which are fully insured or the full
cost of which is borne by the current or former employee (or his
beneficiary); (iv) no Parent Plan is subject to Section 302 or Title IV of
ERISA, no liability under Title IV of ERISA has been incurred by Parent,
its Subsidiaries or any Parent ERISA Affiliate that has not been satisfied
in full, and neither Parent, its Subsidiaries nor any Parent ERISA
Affiliate has any contingent liability under Title IV of ERISA; (v) no
Parent Plan is a "multiemployer pension plan," as that term is defined in
Section 3(37) of ERISA; (vi) all contributions or other amounts payable by
Parent, its Subsidiaries or any Parent ERISA Affiliate as of the Effective
Time with respect to each Parent Plan in respect of current or prior plan
years have been paid or accrued in accordance with GAAP; (vii) neither
Parent, its Subsidiaries, any Parent ERISA Affiliate, any Parent Plan, any
trust created thereunder, nor any trustee or administrator thereof has
engaged in a transaction or has taken or failed to take any action in
connection with which Parent, its Subsidiaries or any Parent ERISA
Affiliate reasonably could be subject to either a civil penalty assessed
pursuant to Section 409 or 502(i) of ERISA or a tax imposed pursuant to
Section 4975, 4976 or 4980B of the Code; (viii) there are no pending, or,
to the best knowledge of Parent, threatened or anticipated claims or
proceedings (other than routine claims for benefits) by, on behalf of or
against any of the Parent Plans or any trusts related thereto; (ix) the
consummation of the transactions contemplated by this Agreement will not,
either alone or in combination with any other event, (y) entitle any
current or former employee, officer, director or consultant of Parent or
any Parent ERISA Affiliate to severance pay, termination pay or any other
payment or benefit or (z) accelerate the time of payment or vesting or
increase the amount or value of compensation or benefits due any such
employee, officer, director or
43
consultant; and (x) no amounts payable under the Parent Plans will fail to
be deductible for federal income tax purposes by virtue of Section 280G of
the Code.
4.15. Taxes. Except as set forth in Section 4.15 of the Parent Disclosure
Schedule, each of Parent, and its Subsidiaries has (i) duly and timely filed
(including applicable extensions granted without penalty) all Tax Returns (as
hereinafter defined) required to be filed at or prior to the Effective Time, and
such Tax Returns are true, correct and complete in all material respects, and
(ii) paid in full or made adequate provision in the financial statements of
Parent (in accordance with GAAP) for all Taxes (as hereinafter defined) due to
be paid or accrued at or prior to the Effective Time. No deficiencies for any
Taxes have been proposed, asserted, assessed or, to the knowledge of Parent,
threatened against or with respect to Parent, or any of its Subsidiaries. Except
as set forth in Section 4.15 of the Parent Disclosure Schedule, (i) there are no
liens for Taxes upon the assets of either Parent or its Subsidiaries except for
statutory liens for current Taxes not yet due, (ii) neither Parent, nor any of
its Subsidiaries has requested any extension of time within which to file any
Tax Returns in respect of any fiscal year which have not since been filed and no
request for waivers of the time to assess any Taxes are pending or outstanding,
(iii) with respect to each taxable period of Parent, and its Subsidiaries, (A)
the federal and state income Tax Returns of Parent and its Subsidiaries have
been audited by the Internal Revenue Service or appropriate state tax
authorities, (B) the time for assessing and collecting income Tax with respect
to such taxable period has closed and such taxable period is not subject to
review, or (C) the time for assessing and collecting income Tax with respect to
such taxable period has not closed, but no audit or review of such taxable
period has yet been initiated or threatened, (iv) neither Parent nor any of its
Subsidiaries has filed or been included in a combined, consolidated or unitary
income Tax Return other than one in which Parent was the parent of the group
filing such Tax Return, (v) neither Parent nor any of its Subsidiaries is a
party to any agreement providing for the allocation or sharing of Taxes (other
than the allocation of federal income taxes as provided by Regulation
1.1552-1(a)(1) under the Code), (vi) neither Parent nor any of its Subsidiaries
is required to include in income any adjustment pursuant to Section 481(a) of
the Code (or any similar or corresponding provision or requirement of state,
local or foreign income Tax law), by reason of the voluntary change in
accounting method (nor has any taxing authority proposed any such adjustment or
change of accounting method), (vii) neither Parent nor its Subsidiaries has any
liability for Taxes of any Person (other than a liability of Parent for Taxes of
any of its Subsidiaries or a liability of any of Parent's Subsidiaries for Taxes
of Parent) under Regulation 1.1502-6 or 1.1502-78(b)(2) under the Code (or
similar provisions of state, local or foreign law), as a transferee or
successor, by contract or otherwise, and (viii) neither Parent nor any of its
Subsidiaries has made any payment or may be obligated to make any payment (by
contract or otherwise) which will not be deductible by reason of Section 280G or
Section 162(m) of the Code.
4.16. Sprint Agreement Compliance.
(a) Neither Parent nor any of its Subsidiaries has violated or failed
to meet any deadline or requirement in the Parent Sprint Agreements, except
as has been remedied, waived or modified prior to the date hereof and
previously disclosed to
44
the Company. Section 4.16(a) of the Parent Disclosure Schedule sets forth
the extent of Parent's progress in the completion of its build-out and
network launch as of the date of this Agreement.
(b) Section 4.16(b) of the Parent Disclosure Schedule sets forth a
list of all agreements between Parent, its Subsidiaries or any of its
Affiliates, on the one hand, and Sprint PCS and any of its Affiliates, on
the other hand (collectively, the "Parent Sprint Agreements"). As of the
date hereof there are no unwritten amendments to, or waivers under, any
Parent Sprint Agreement.
(c) The Parent Sprint Agreements are valid, binding and enforceable
against Parent (or, to the extent a Subsidiary of Parent is a party, such
Subsidiary), in accordance with their respective terms, and shall be in
full force and effect without penalty in accordance with their terms upon
consummation of the Merger and the other transactions contemplated by this
Agreement, except as enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium or other laws affecting creditors'
rights generally and limitations on the availability of equitable remedies.
Parent and its Subsidiaries have performed in all material respects all
obligations required to be performed by them under, and they are not in
default under or in breach of, nor in receipt of any claim of default or
breach under, any of the Parent Sprint Agreements. To the knowledge of
Parent, no event has occurred which with the passage of time or the giving
of notice or both would result in a default, breach or event of
noncompliance by Parent or any Subsidiary, or would permit termination or
modification by Parent, Sprint PCS or any of its Affiliates, under any of
the Parent Sprint Agreements. Neither Parent nor any of its Subsidiaries
has knowledge of any cancellation or anticipated cancellation by Sprint PCS
or any of its Affiliates of any of the Parent Sprint Agreements. Parent has
provided the Company with copies of all written notices (excluding e-mail
messages) received by it from Sprint PCS during the last six months (i)
delivered pursuant to the official notice provisions of Parent Sprint
Agreements or (ii) alleging a material breach of any of the Parent Sprint
Agreements.
4.17. Intellectual Property. Parent owns or has the right to use, whether
through licensing or otherwise, and to authorize others to use, all Intellectual
Property significant to the businesses of Parent and its Subsidiaries in
substantially the same manner as such businesses are conducted on the date
hereof ("Parent Material Intellectual Property"). Except as set forth in Section
4.17 of the Parent Disclosure Schedule: (1) no written claim of invalidity or
conflicting ownership rights with respect to any Parent Material Intellectual
Property has been made by a third party and no such Intellectual Property is the
subject of any pending or, to Parent's knowledge, threatened action, suit,
claim, investigation, arbitration or other proceeding; (2) no Person or entity
has given notice to Parent or any of its Subsidiaries that the use of any Parent
Material Intellectual Property by Parent, any Parent Subsidiary or any licensee
is infringing or has infringed any domestic or foreign patent, trademark,
service xxxx, trade name, or copyright or design right, or that Parent, any of
its Subsidiaries or any licensee has misappropriated or improperly used or
disclosed any trade secret, confidential information or know-how; (3) to
Parent's knowledge after due inquiry for such purpose, the making, using,
selling, manufacturing, marketing, licensing, reproduction, distribution, or
publishing of any
45
process, machine, manufacture or product related to any Parent Material
Intellectual Property, does not and will not infringe any domestic or foreign
patent, trademark, service xxxx, trade name, copyright or other intellectual
property right of any third party, and does not and will not involve the
misappropriation or improper use or disclosure of any trade secrets,
confidential information or know-how of any third party; (4) to Parent's
knowledge, there exists no prior act or current conduct or use by Parent, any of
its Subsidiaries or any third party that would void or invalidate any Parent
Material Intellectual Property; (5) to Parent's knowledge, no other Person is
interfering with, infringing upon, misappropriating or otherwise coming into
conflict with any Parent Material Intellectual Property; and (6) the execution,
delivery and performance of this Agreement by Parent and the consummation of the
transactions contemplated hereby and thereby will not breach, violate or
conflict with any instrument or agreement concerning any Parent Material
Intellectual Property, will not cause the forfeiture or termination of or give
rise to a right of forfeiture or termination of any of the Parent Material
Intellectual Property, or trigger additional fees or transfer costs payable by
Parent or any of its Subsidiaries with respect to, or impair the right of Parent
to make, use, sell, license or dispose of, or to bring any action for the
infringement of, any Parent Material Intellectual Property. In addition, the
matters disclosed on Section 4.17 of the Parent Disclosure Schedule would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect on Parent.
4.18. Labor Matters.
Except to the extent set forth in Section 4.18 of the Parent Disclosure
Schedule, (i) there is no labor strike, slowdown, stoppage or lockout actually
pending or, to the knowledge of Parent, threatened against or affecting Parent
or any of its Subsidiaries and during the past three years there has not been
any such action; (ii) to the knowledge of Parent, there is no union claims to
represent the employees of Parent or any of its Subsidiaries; (iii) neither
Parent nor any of its Subsidiaries is a party to or bound by any collective
bargaining or similar agreement with any labor organization, or work rules or
practices agreed to with any labor organization or employee association; (iv)
none of the employees of Parent or any of its Subsidiaries is represented by any
labor organization and Parent does not have any knowledge of any current union
organizing activities among the employees of Parent or any of its Subsidiaries,
nor does any question concerning representation exist concerning such employees;
(v) there are no written personnel policies, rules or procedures applicable to
employees of the Company or any of its Subsidiaries, other than those set forth
in Section 4.18 of the Company Disclosure Schedule, true and correct copies of
which have heretofore been delivered to the Company; (vi) there is no unfair
labor practice charge or complaint against Parent or any of its Subsidiaries
pending or, to the knowledge of Parent, threatened before the National Labor
Relations Board or any similar state agency; and (vii) there is no grievance
arising out of any collective bargaining agreement or other grievance procedure.
Within the last five years, neither Parent nor any of its Subsidiaries has
effectuated (i) a "plant closing" (as defined in the WARN Act) affecting any
site of employment or one or more facilities or operating units within any site
of employment or facility of the Company or any of its Subsidiaries; or (ii) a
"mass layoff" (as defined in the WARN Act) affecting any site of employment or
facility of the Company or any of its Subsidiaries. Except as set forth in
46
Section 4.18 of the Company Disclosure Schedule, none of the Company's or its
Subsidiaries' employees has suffered an "employment loss" (as defined in the
WARN Act) within the period 90 days prior to date of this Agreement.
4.19. Reorganization. As of the date of this Agreement, Parent has no
reason to believe that the Merger will fail to qualify as a reorganization under
Section 368(a) of the Code. As of the date of this Agreement, Parent knows of no
reason why it will be unable to deliver to Winston & Xxxxxx LLP and to Skadden,
Arps, Slate, Xxxxxxx & Xxxx LLP representation letters with respect to Parent in
form and substance sufficient to enable such counsel to render the opinions
required by Sections 7.2(c) and 7.3(c) hereof.
4.20. Broker's Fees. Neither Parent nor any of its Subsidiaries nor any of
their respective officers or directors has employed any broker or finder or
incurred any liability for any broker's fees, commissions or finder's fees in
connection with the Merger or any of the transactions contemplated by this
Agreement, except that Parent has engaged, and will pay a fee or commission to,
UBS Investment Bank (the "Parent Advisor").
4.21. Opinion. Prior to the execution of this Agreement, Parent has
received an opinion from the Parent Advisor to the effect that as of the date
thereof and based upon and subject to the matters set forth therein, the
aggregate Merger Consideration is fair, from a financial point of view, to
Parent and such opinion has not been amended or rescinded as of the date of this
Agreement.
4.22. Related Party Transactions. Except as set forth on Section 4.22 of
the Parent Disclosure Schedule, to the knowledge of Parent, no officer or
director of Parent or any of its Subsidiaries owns or holds, directly or
indirectly, any interest in (excepting holdings solely for passive investment
purposes of securities of publicly held and traded entities constituting less
than 5% of the equity of any such entity), or is an officer, director, employee
or consultant of any Person that is, a competitor, lessor, lessee or supplier of
Parent or which conducts a business similar to any business conducted by Parent.
No officer or director of Parent or any of its Subsidiaries (a) owns or holds,
directly or indirectly, in whole or in part, any Intellectual Property used by
Parent or any of its Subsidiaries, (b) to the knowledge of Parent has any claim,
charge, action or cause of action against Parent or any of its Subsidiaries,
except for claims for reasonable unreimbursed travel or entertainment expenses,
accrued vacation pay or accrued benefits under any employee benefit plan
existing on the date hereof, (c) to the knowledge of Parent, has made, on behalf
of Parent or any of its Subsidiaries, any payment or commitment to pay any
commission, fee or other amount to, or to purchase or obtain or otherwise
contract to purchase or obtain any goods or services from, any other Person of
which any officer or director of Parent or any of its Subsidiaries is a partner
or shareholder (except holdings solely for passive investment purposes of
securities of publicly held and traded entities constituting less than 5% of the
equity of any such entity), (d) owes any money to Parent or any of its
Subsidiaries or (e) has any material interest in any property, real or personal,
tangible or intangible, used in or pertaining to the business of Parent or any
of its Subsidiaries.
47
4.23. Company Information. The information relating to Parent and its
Subsidiaries which is included in the Joint Proxy Statement/Prospectus and the
Form S-4, or in any other document filed with any other regulatory agency in
connection herewith, will not contain any untrue statement of a material fact or
omit to state a material fact necessary to make the statements therein, in light
of the circumstances in which they are made, not misleading.
4.24. Disclosure Controls and Procedures. Parent and its Subsidiaries have
designed and maintain a system of internal controls over financial reporting (as
defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) sufficient to
provide reasonable assurances regarding the reliability of financial reporting
and the preparation of financial statements for external purposes in accordance
with generally accepted accounting principles. Parent (A) has designed and
maintains disclosure controls and procedures (as defined in Rules 13a-15(e) and
15d-15(e) of the Exchange Act) to ensure that material information required to
be disclosed by Parent in the reports that it files or submits under the
Exchange Act is recorded, processed, summarized and reported within the time
periods specified in the SEC's rules and forms and is accumulated and
communicated to Parent's management as appropriate to allow timely decisions
regarding required disclosure, and (B) has disclosed, based on its most recent
evaluation of such disclosure controls and procedures prior to the date hereof,
to Parent's auditors and the audit committee of Parent's Board of Directors (1)
any significant deficiencies and material weaknesses in the design or operation
of internal controls over financial reporting that are reasonably likely to
adversely affect in any material respect Parent's ability to record, process,
summarize and report financial information and (2) any fraud, whether or not
material, that involves management or other employees who have a significant
role in Parent's internal controls over financial reporting. Parent has made
available to the Company a summary of any such disclosure made by management to
Parent's auditors and audit committee since January 1, 2003.
4.25. Ownership of Company Common Stock. At no time during the three year
period ending on the date immediately preceding the date of this Agreement, was
Parent or Merger Sub (or any of the Affiliates or associates of either) an
"interested stockholder" of the Company as defined in Section 203 of the DGCL.
Neither Parent nor any of its Affiliates or associates (as such term is defined
under the Exchange Act), (a) beneficially owns, directly or indirectly, or (b)
is a party to any agreement, arrangement or understanding for the purpose of
acquiring, holding, voting or disposing of, in each case, shares of Company
Common Stock representing in the aggregate more than 5% of the outstanding
shares of Company Common Stock.
4.26. Adequate Financing. Parent has, and will have as of the Effective
Time, adequate cash financing to enable it to pay (i) the aggregate Cash
Consideration required by Section 1.4 hereof and (ii) the amounts necessary for
it to comply with the repurchase offer obligations of Section 6.16 hereof.
4.27. Insurance. Parent maintains with reputable insurers insurance and
indemnity bonds providing coverage for Parent and its Subsidiaries against all
risks normally insured and bonded against by companies in similar lines of
business as Parent.
48
All premiums required to be paid with respect thereto covering all periods up to
and including the Closing Date have been, or shall in the ordinary course be,
paid. No notice of cancellation or termination has been received with respect to
any such policy as of the date hereof, and all such insurance policies are in
full force and effect and will remain in full force and effect up to and
including the Closing Date and all claims thereunder have been filed in due and
timely fashion.
ARTICLE V
COVENANTS RELATING TO CONDUCT OF BUSINESS
5.1. Covenants of the Company. During the period from the date of this
Agreement and continuing until the Effective Time, except as expressly
contemplated or permitted by this Agreement or with the prior written consent of
Parent, the Company shall, and shall cause its Subsidiaries to, carry on their
respective businesses in the ordinary course consistent with past practice and
in compliance in all material respects with all applicable laws and regulations.
The Company will use its reasonable best efforts to (x) preserve its business
organization and that of its Subsidiaries intact, (y) keep available to itself
and Parent the present services of the current officers and employees of the
Company and its Subsidiaries, and (z) preserve for itself and Parent the
existing business relationships and the goodwill of the customers, vendors and
distributors of the Company and its Subsidiaries and others with whom business
relationships exist. Without limiting the generality of the foregoing, and
except as set forth in Section 5.1 of the Company Disclosure Schedule or as
otherwise contemplated by this Agreement or consented to in writing by Parent,
the Company shall not, and shall not permit any of its Subsidiaries to:
(a) other than dividends from one Subsidiary to another Subsidiary or
to the Company, declare, set aside, or pay any dividends on, or make any
other distributions in respect of, any of its capital stock;
(b) (i) split, combine or reclassify any shares of its capital stock,
or issue or authorize or propose the issuance of any other securities in
respect of, in lieu of or in substitution for shares of its capital stock;
(ii) repurchase, redeem or otherwise acquire any shares of the capital
stock of the Company or any of its Subsidiaries, or any securities
convertible into or exercisable for any shares of the capital stock of the
Company or any of its Subsidiaries; or (iii) issue, deliver or sell, or
authorize or propose the issuance, delivery or sale of, any shares of its
capital stock or any securities convertible into or exercisable for, or any
rights, warrants or options to acquire, any such shares, or enter into any
agreement with respect to any of the foregoing, except, in the case of this
clause (iii), for the issuance of Company Common Stock upon the exercise of
options, warrants or other rights to purchase Company Common Stock
outstanding and in existence on the date of this Agreement in accordance
with their terms in existence as of the date of this Agreement;
49
(c) amend its Corrected Amended and Restated Certificate of
Incorporation, Amended and Restated Bylaws or other similar governing
documents;
(d) acquire or agree to acquire, by merging or consolidating with, or
by purchasing a substantial equity interest in or a substantial portion of
the assets of, or by any other manner, any business or any corporation,
partnership, association or other business organization or division thereof
or otherwise acquire any material amount of assets;
(e) take any action or fail to take any action that is intended or may
reasonably be expected to result in any of its representations and
warranties set forth in this Agreement being or becoming untrue in any
material respect, or in any of the conditions to the Merger set forth in
Article VII not being satisfied;
(f) change its methods of accounting in effect at September 30, 2004,
except as required to comply with changes in GAAP as concurred with by the
Company's independent auditors;
(g) (i) except as required by applicable law or as required to
maintain qualification pursuant to the Code, adopt, enter into, amend,
renew or terminate any employee benefit plan (including, without
limitation, any Company Benefit Plan) or any agreement, arrangement, plan
or policy between the Company or any Subsidiary of the Company and one or
more of its current or former directors, officers or employees, (ii) except
for normal increases to employees other than directors and officers of the
Company that are made in the ordinary course of business consistent with
past practice and except as required by applicable law, increase in any
manner the compensation or fringe benefits of any director, officer or
employee or pay any benefit not required by any Company Benefit Plan or
agreement as in effect as of the date hereof (including, without
limitation, the granting of stock options, stock appreciation rights,
restricted stock, restricted stock units or performance units or shares) or
(iii) make any loans to any of its officers, directors, employees,
Affiliates, agents or consultants or make any change in its existing
borrowing or lending arrangements for or on behalf of any of such Persons,
whether pursuant to an employee benefit plan or otherwise;
(h) take or cause to be taken, or fail to take or cause to be taken,
any action that could reasonably be expected to disqualify the Merger as a
reorganization under Section 368(a) of the Code;
(i) sell, lease, encumber, assign or otherwise dispose of, or agree to
sell, lease, encumber, assign or otherwise dispose of, abandon or fail to
maintain any of its assets, properties or other rights or agreements, other
than dispositions of inventory;
(j) create, incur, assume, or suffer to exist any indebtedness or
issuances of debt securities or assume, guarantee, endorse or otherwise as
an accommodation become responsible for the obligations of any Person;
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(k) (i) enter into, renew, amend or waive in any material manner, or
fail to perform any obligation under, or terminate or give notice of a
proposed renewal or material amendment, waiver or termination of, any
Company Contract, agreement or lease to which the Company or any of its
Subsidiaries is a party or by which the Company or any of its Subsidiaries
or their respective properties is bound, other than in the ordinary course
of business (and as to which the Company shall provide prior notice to
Parent), (ii) enter into, renew, amend, waive or terminate, or give notice
of a proposed renewal, amendment, waiver or termination of, any Company
Sprint Agreement or (iii) enter into any agreement, letter of intent or
agreement in principle (whether or not binding) relating to any Acquisition
Proposal (other than a confidentiality agreement of the type contemplated
by Section 6.2 in accordance with the terms of such Section 6.2);
(l) take or cause to be taken any action that could reasonably be
expected to delay the consummation of the transactions contemplated hereby,
including without limitation, the consummation of the Merger and the filing
and the effectiveness of the Form S-4;
(m) make any material election relating to Taxes, change any material
election relating to Taxes already made, adopt any new accounting method
relating to Taxes, change any accounting method relating to Taxes unless
required by GAAP, enter into any closing agreement relating to Taxes,
settle any claim or assessment relating to Taxes or consent to any claim or
assessment relating to Taxes or any waiver of the statute of limitations
for any such claim or assessment;
(n) enter into or amend in any material manner any contract, agreement
or arrangement with any officer, director, employee, consultant or
stockholder of the Company or any of its Subsidiaries or with any Affiliate
or associate (as such term is defined under the Exchange Act) of any of the
foregoing;
(o) (i) acquire additional territory or related assets from Sprint
PCS, or (ii) acquire, or participate in any auction or other process
related to the acquisition of, personal communications service licenses or
wireless spectrum, in each case notwithstanding anything to the contrary
set forth in this Agreement or the Company Disclosure Schedule;
(p) authorize for issuance, issue, deliver, sell, pledge, dispose of,
encumber or grant any lien on, or authorize or propose the issuance,
delivery, sale, pledge, disposition of, encumbrance or grant of any lien
on, any shares of its capital stock or capital stock of any of its
Subsidiaries, or other voting securities or any securities convertible into
or exercisable for, or any rights, warrants or options to acquire, any such
securities or voting securities or any other ownership interest (or
interest the value of which is derived by reference to any of the
foregoing);
(q) pay, satisfy, discharge or settle any claims, liabilities or
obligations (absolute, accrued, contingent or otherwise), other than in the
ordinary course of business and consistent with past practice;
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(r) make any loans, advances or capital contributions to, or
investments in any other Person;
(s) enter into any new line of business;
(t) enter into, implement, or otherwise become subject to or bound by
any new employment agreement, arrangement, commitment or program which
provides for severance payments or benefits, individually or in the
aggregate, or amend any existing employment agreement, arrangement,
commitment or program in a manner that increases any severance payments or
benefits;
(u) make any capital expenditures other than those which are in the
budget set forth in Section 5.1(u) of the Company Disclosure Schedule,
provided that the Company shall, and shall cause its Subsidiaries to,
consult with Parent prior to making, or committing to make, any capital
expenditures on its network;
(v) voluntarily permit any material insurance policy naming the
Company or any Subsidiary of the Company as a beneficiary or a loss payee
to be canceled or terminated other than in the ordinary course of business;
(w) fund any trust under any indemnity agreement or any other
agreement or arrangement with any current or former director, officer or
other employee of the Company or any of its Subsidiaries;
(x) agree or commit to do any of the foregoing.
5.2. Covenants of Parent. During the period from the date of this Agreement
and continuing until the Effective Time, except as expressly contemplated or
permitted by this Agreement or with the prior written consent of the Company,
Parent shall use its reasonable best efforts to (x) preserve its business
organization and that of its Subsidiaries intact, (y) keep available to itself
the present services of the current officers and employees of Parent and its
Subsidiaries and (z) preserve for itself the existing business relationships and
the goodwill of the customers, vendors and distributors of Parent and its
Subsidiaries and others with whom business relationships exist. Without limiting
the generality of the foregoing, and except as set forth in Section 5.2 of the
Parent Disclosure Schedule or as otherwise contemplated by this Agreement or
consented to in writing by the Company, Parent shall not, and shall not permit
any of its Subsidiaries to:
(a) declare or pay any dividends on or make any other distributions in
respect of any of its capital stock, other than (i) dividends from one
Subsidiary to another Subsidiary or to Parent, and (ii) regular dividends
in respect of shares of Parent Series B Preferred Stock and Parent Series C
Preferred Stock;
(b) take any action or fail to take any action that is intended or may
reasonably be expected to result in any of its representations and
warranties set forth in this Agreement being or becoming untrue in any
material respect, or in any of the conditions to the Merger set forth in
Article VII not being satisfied on a timely basis;
52
(c) change its methods of accounting in effect at December 31, 2003
except as required by changes in GAAP as concurred to by Parent's
independent auditors;
(d) (i) amend the certificate of incorporation of Parent (except to
authorize additional common shares) or (ii) amend the Certificate of
Incorporation of Merger Sub;
(e) take or cause to be taken, or fail to take or cause to be taken,
any action which would reasonably be expected to disqualify the Merger as a
tax free reorganization under Section 368(a) of the Code;
(f) enter into any agreement to acquire or purchase (whether by
merger, acquisition of equity or assets, joint venture or otherwise) any
Person or any interest in any Person if such acquisition or purchase would
cause a material delay in or prevent the receipt of any antitrust or
competition law approval necessary for the consummation of the Merger,
unless prior to taking such action Parent reasonably determines that such
action would not be reasonably expected to cause such effect; or
(g) authorize, or commit or agree to do any of the foregoing.
ARTICLE VI
ADDITIONAL AGREEMENTS
6.1. Regulatory Matters.
(a) As promptly as reasonably practicable following the date hereof,
Parent and the Company shall cooperate in preparing and shall cause to be
filed with the SEC mutually acceptable proxy materials which shall
constitute the joint proxy statement/prospectus relating to the matters to
be submitted to the Company stockholders at the Company Stockholders
Meeting and to the Parent stockholders at the Parent Stockholders Meeting
(such joint proxy statement/prospectus, and any amendments or supplements
thereto, the "Joint Proxy Statement/Prospectus") and Parent shall prepare
and file with the SEC a registration statement on Form S-4 (of which the
Joint Proxy Statement/Prospectus shall be a part) with respect to the
issuance of Parent Common Stock in the Merger (such Form S-4, and any
amendments or supplements thereto, the "Form S-4"). Each of Parent and the
Company shall use reasonable best efforts to have the Joint Proxy
Statement/Prospectus cleared by the SEC and the Form S-4 declared effective
by the SEC and to keep the Form S-4 effective as long as is necessary to
consummate the Merger and the transactions contemplated thereby. Parent and
the Company shall, as promptly as practicable after receipt thereof,
provide the other party copies of any written comments and advise the other
party of any oral comments with respect to the Joint Proxy
Statement/Prospectus or Form S-4 received from the SEC. Each party shall
cooperate and provide the other party with a reasonable opportunity to
review and comment on any amendment or supplement to the Joint Proxy
Statement/Prospectus and the Form S-4 prior to filing such with the SEC,
and each party will provide the other party with a copy of all such filings
made with the SEC. Parent
53
shall use its reasonable best efforts to take any action required to be
taken under any applicable state securities laws in connection with the
Merger and each party shall furnish all information concerning it and the
others of its capital stock as may be reasonably requested in connection
with any such action. Each party will advise the other party, promptly
after it receives notice thereof, of the time when the Form S-4 has become
effective, the issuance of any stop order, the suspension of the
qualification of the Parent Common Stock issuable in connection with the
Merger for offering or sale in any jurisdiction, or any request by the SEC
for amendment of the Joint Proxy Statement/Prospectus or the Form S-4. If
at any time prior to the Effective Time any information relating to either
of the parties, or their respective Affiliates, officers or directors,
should be discovered by either party which should be set forth in an
amendment or supplement to any of the Form S-4 or the Joint Proxy
Statement/Prospectus so that such documents would not include any
misstatement of a material fact or omit to state any material fact
necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading, the party which discovers such
information shall promptly notify the other party hereto and, to the extent
required by law, rules or regulations, an appropriate amendment or
supplement describing such information shall be promptly filed with the SEC
and disseminated to the stockholders of Parent and the Company. Parent
shall also use its reasonable best efforts to obtain prior to the effective
date of the Form S-4 all necessary state securities law or "Blue Sky"
permits and approvals required in connection with the Merger and the other
transactions contemplated by this Agreement and will pay all expenses
incident thereto; provided, that Parent shall not be required to qualify to
do business in any jurisdiction in which it is not now so qualified to do
business, to file a general consent to service of process in any
jurisdiction in which it is not now so qualified or to subject itself to
taxation in any jurisdiction in which it is not now so qualified to do
business.
(b) The parties hereto shall cooperate with each other and use their
reasonable best efforts to promptly prepare and file all necessary
documentation, to effect all applications, notices, petitions and filings
and to obtain as promptly as practicable all permits, consents, approvals
and authorizations of all third parties or Governmental Entities that are
necessary or advisable to consummate the transactions contemplated by this
Agreement (including, without limitations, any filings required under the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended (the "HSR
Act")). The Company and Parent shall have the right to review in advance,
and to the extent practicable each will consult the other on, in each case
subject to applicable laws relating to the exchange of information, all the
information relating to the Company or Parent, as the case may be, and any
of their respective Subsidiaries, that appears in any filing made with, or
written materials submitted to, any third party or any Governmental Entity
in connection with the transactions contemplated by this Agreement. The
terms of this Section 6.1(b) shall not apply to documents filed pursuant to
Item 4(c) of the Pre-Merger Notification and Report Form filed under the
HSR Act or communications regarding the same or documents or information
submitted in response to any request for additional information or
documents pursuant to the HSR Act which reveal Parent's or the Company's
negotiating objectives or strategies or purchase price expectations. In
exercising the foregoing right, each of the parties hereto shall act
reasonably and as promptly as practicable. The parties hereto agree that
they will consult with each other
54
with respect to the obtaining of all permits, consents, approvals and
authorizations of all third parties or Governmental Entities necessary or
advisable to consummate the transactions contemplated by this Agreement and
each party will keep the other apprised of the status of matters relating
to consummation of the transactions contemplated hereby.
(c) Parent and the Company shall, upon request, furnish each other
with all information concerning themselves, their Subsidiaries, directors,
officers and stockholders and such other matters as may be reasonably
necessary or advisable in connection with the Joint Proxy
Statement/Prospectus, the Form S-4 or any other statement, filing, notice
or application made by or on behalf of Parent, the Company or any of their
respective Subsidiaries to any Governmental Entity in connection with the
Merger and the other transactions contemplated by this Agreement
(including, without limitation, any such statement, filing notice or
application mode under the HSR Act).
(d) Parent and the Company shall promptly furnish each other with
copies of written communications received by Parent or the Company, as the
case may be, or any of their respective Subsidiaries from, or delivered by
any of the foregoing to, any Governmental Entity in respect of the
transactions contemplated by this Agreement.
(e) Each of Parent and the Company shall use its reasonable best
efforts to take such action as may be required to cause the expiration of
the notice periods under the HSR Act with respect to the Merger and the
other transactions contemplated herein as promptly as possible after the
date hereof; provided, however, that nothing in this Section 6.1 shall
require Parent or Merger Sub to agree to the imposition of conditions of
any requirement of divestiture as a result of antitrust concerns.
6.2. No Solicitation.
(a) The Company shall, and shall cause its Subsidiaries and each of
their respective Affiliates, directors, officers, employees, agents and
representatives (including any investment banker, financial advisor,
attorney, accountant or other representative retained by the Company or any
of its Subsidiaries) shall immediately cease any discussions or
negotiations with any other parties that may be ongoing with respect to the
possibility or consideration of any Acquisition Proposal. From the date of
this Agreement through the Effective Time, the Company shall not, nor shall
it permit any of its Subsidiaries to, nor shall it authorize or permit any
of its or its Subsidiaries' directors, officers or employees or any
investment banker, financial advisor, attorney, accountant or other
representative retained by it or any of its Subsidiaries to, directly or
indirectly through another Person, (i) solicit, initiate or encourage
(including by way of furnishing information or assistance), or take any
other action designed to facilitate or encourage any inquiries or the
making of any proposal that constitutes, or is reasonably likely to lead
to, any Acquisition Proposal, (ii) participate in any discussions or
negotiations regarding any Acquisition Proposal or (iii) make or authorize
any statement, recommendation or solicitation in support of any Acquisition
Proposal. Any violation of
55
the foregoing restrictions by any representative of the Company, whether or
not such representative is so authorized and whether or not such
representative is purporting to act on behalf of the Company or otherwise,
shall be deemed to be a breach of this Agreement by the Company.
(b) (i) Notwithstanding the foregoing, the Board of Directors of the
Company shall be permitted, prior to obtaining the Company Stockholder
Approval, to engage in discussions and negotiations with, or provide any
nonpublic information or data to, any Person in response to an unsolicited
bona fide written Acquisition Proposal by such Person first made after the
date of this Agreement which its Board of Directors concludes in good faith
(after consultation with outside counsel and its financial advisor)
constitutes or could reasonably be expected to lead to a Superior Proposal,
if and only to the extent that the Board of Directors of the Company
reasonably determines in good faith (after consultation with outside legal
counsel) that it is required to do so in order to comply with its fiduciary
duties under applicable law and subject to compliance with the other terms
of this Section 6.2 and to first entering into a confidentiality agreement
having provisions that are no less restrictive to such Person than those
contained in the Confidentiality Agreement.
(ii) The Company shall notify Parent promptly (but in no event
later than 24 hours) after receipt of any Acquisition Proposal, or any
request for nonpublic information relating to the Company or any of
its Subsidiaries by any Person that informs the Company or any of its
Subsidiaries that it is considering making, or has made, an
Acquisition Proposal, or any inquiry from any Person seeking to have
discussions or negotiations with the Company relating to a possible
Acquisition Proposal. Such notice shall be made orally and confirmed
in writing, and shall indicate the identity of the Person making the
Acquisition Proposal, inquiry or request and the material terms and
conditions of any inquiries, proposals or offers (including a copy
thereof if in writing and any related documentation or
correspondence). The Company shall also promptly, and in any event
within 24 hours, notify Parent, orally and in writing, if it enters
into discussions or negotiations concerning any Acquisition Proposal
or provides nonpublic information or data to any Person in accordance
with this Section 6.2(b) and keep Parent informed of the status and
terms of any such proposals, offers, discussions or negotiations on a
current basis, including by providing a copy of all material
documentation or correspondence relating thereto.
(iii) Nothing contained in this Section 6.2 shall prohibit the
Company or its Subsidiaries from taking and disclosing to its
shareholders a position as required by Rule 14e-2(a) or Rule 14d-9
promulgated under the Exchange Act; provided, however, that compliance
with such rules shall not in any way limit or modify the effect that
any action taken pursuant to such rules has under any other provision
of this Agreement.
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(c) The Company agrees that (i) it will and will cause its
Subsidiaries, and its and their officers, directors, agents,
representatives and advisors to, cease immediately and terminate any and
all existing activities, discussions or negotiations with any third parties
conducted heretofore with respect to any Acquisition Proposal, and (ii) it
will not release any third party from, or waive any provisions of, any
confidentiality or standstill agreement to which it or any of its
Subsidiaries is a party with respect to any Acquisition Proposal.
(d) Nothing in this Section 6.2 shall (x) permit the Company to
terminate this Agreement or (y) affect any other obligation of the Company
under this Agreement. The Company shall not submit to the vote of its
shareholders any Acquisition Proposal other than the Merger.
(e) For purposes of this Agreement, the term "Acquisition Proposal"
means any inquiry, proposal or offer, filing of any regulatory application
or notice (whether in draft or final form) or disclosure of an intention to
do any of the foregoing from any Person relating to any (w) direct or
indirect acquisition or purchase of a business that constitutes a
substantial portion of the net revenues, net income or assets of the
Company or any of its Subsidiaries, (x) direct or indirect acquisition or
purchase of any class of equity securities representing 10% or more of the
voting power of the Company or any of its Subsidiaries, (y) tender offer or
exchange offer that if consummated would result in any Person beneficially
owning 10% or more of the voting power of the Company, or (z) merger,
consolidation, business combination, recapitalization, liquidation,
dissolution or similar transaction involving the Company or any of its
Subsidiaries, in each case other than the transactions contemplated by this
Agreement.
(f) For purposes of this Agreement, "Superior Proposal" means a bona
fide written Acquisition Proposal which the Board of Directors of the
Company determines in good faith, after consultation with its financial
advisors and legal advisors, taking into account all legal, financial,
regulatory and other aspects of the proposal and the Person making the
proposal (including any break-up fees, expense reimbursement provisions and
conditions to consummation), (i) is more favorable to the shareholders of
the Company from a financial point of view than the transactions
contemplated by this Agreement and (ii) is fully financed or reasonably
capable of being fully financed, reasonably likely to receive all required
governmental approvals on a timely basis and otherwise reasonably capable
of being completed on the terms proposed; provided that, for purposes of
this definition of "Superior Proposal," the term Acquisition Proposal shall
have the meaning assigned to such term in Section 6.2(e) except that any
reference to "10% or more" in the definition of "Acquisition Proposal"
shall be deemed to be a reference to "a majority" and "Acquisition
Proposal" shall only be deemed to refer to a transaction involving the
Company.
6.3. Access to Information.
(a) Upon reasonable notice and subject to applicable laws relating to
the exchange of information, the Company shall, and shall cause each of its
57
Subsidiaries to, afford to the officers, employees, accountants, counsel
and other representatives of Parent, access, during normal business hours
during the period prior to the Effective Time, to all its properties,
books, contracts, commitments, records, officers, employees, accountants,
counsel and other representatives and, during such period, the Company
shall, and shall cause its Subsidiaries to, make available to Parent all
information concerning its business, properties and personnel as Parent may
reasonably request. Neither the Company nor any of its Subsidiaries shall
be required to provide access to or to disclose information where such
access or disclosure would violate or prejudice the rights of the Company's
customers, jeopardize any attorney-client privilege or contravene any law,
rule, regulation, order, judgment, decree, fiduciary duty or binding
agreement entered into prior to the date of this Agreement. The parties
hereto will make appropriate substitute disclosure arrangements under
circumstances in which the restrictions of the preceding sentence apply.
The Company shall consult with Parent's management on a regular basis
regarding the conduct of the business and operations of the Company and its
Subsidiaries.
(b) Upon reasonable notice and subject to applicable laws relating to
the exchange of information, Parent shall, and shall cause its Subsidiaries
to, afford to the officers, employees, accountants, counsel and other
representatives of the Company, access, during normal business hours during
the period prior to the Effective Time, to such information, properties and
personnel regarding Parent and its Subsidiaries as shall be reasonably
necessary for the Company to fulfill its obligations pursuant to this
Agreement or that may be reasonably necessary for the Company to confirm
that the representations and warranties of Parent contained herein are true
and correct and that the covenants of Parent contained herein have been
performed in all material respects. Neither Parent nor any of its
Subsidiaries shall be required to provide access to or to disclose
information where such access or disclosure would violate or prejudice the
rights of Parent's customers, jeopardize any attorney-client privilege or
contravene any law, rule, regulation, order, judgment, decree, fiduciary
duty or binding agreement entered into prior to the date of this Agreement.
The parties hereto will make appropriate substitute disclosure arrangements
under circumstances in which the restrictions of the preceding sentence
apply.
(c) All information furnished by either party to the other party or
its representatives pursuant hereto shall be subject to, and the parties
shall hold such information in confidence in accordance with, the
provisions of the confidentiality agreement, dated as of November 26, 2004
(the "Confidentiality Agreement"), between the Company and Parent.
(d) No investigation by either of the parties or their respective
representatives shall affect the representations, warranties, covenants or
agreements of the other set forth herein.
6.4. Stockholder Meetings.
(a) The Company shall take all steps necessary to duly call, give
notice of, convene and hold a meeting of its stockholders (the "Company
58
Stockholders Meeting") to be held as soon as is reasonably practicable
after the date on which the Form S-4 becomes effective for the purpose of
voting upon the adoption of this Agreement and the consummation of the
transactions contemplated hereby. The Company will, through its Board of
Directors, recommend to its stockholders approval and adoption of this
Agreement and the transactions contemplated hereby; provided, however, that
the Company's Board of Directors may withdraw, modify, condition or refuse
to make such recommendation if (i) the Company is not in breach of, and has
not breached, any of the provisions of Section 6.2, (ii) the Company
receives an unsolicited, bona fide written takeover proposal which
constitutes a Superior Proposal, and (iii) the Company's Board of Directors
determines in good faith after consultation with its outside financial and
legal advisors that the failure to take such action would reasonably be
likely to breach its fiduciary obligations under applicable law.
Notwithstanding anything to the contrary herein, unless this Agreement has
been terminated, this Agreement shall be submitted to the stockholders of
the Company at such meeting for the purpose of voting on the approval and
adoption of this Agreement and nothing contained herein shall be deemed to
relieve the Company of such obligations.
(b) Parent shall take all steps necessary to duly call, give notice
of, convene and hold a meeting of its stockholders (the "Parent
Stockholders Meeting") to be held as soon as is reasonably practicable
after the date on which the Form S-4 becomes effective for the purpose of
voting upon the approval of the issuance of shares of Parent Common Stock
pursuant to the Merger. Parent will, through its Board of Directors,
recommend to its stockholders approval of the issuance of shares of Parent
Common Stock pursuant to the Merger; provided, however, that Parent's Board
of Directors may withdraw, modify, condition or refuse to make such
recommendation if it determines in good faith after consultation with its
outside financial and legal advisors that the failure to take such action
would reasonably be likely to breach its fiduciary obligations under
applicable law. Notwithstanding anything to the contrary herein, unless
this Agreement has been terminated, this Agreement shall be submitted to
the stockholders of Parent at such meeting for the purpose of voting on the
approval and adoption of this Agreement and nothing contained herein shall
be deemed to relieve Parent of such obligations.
6.5. Affiliates. The Company shall use its reasonable best efforts to cause
each director, executive officer and other Person who is an "affiliate" (for
purposes of Rule 145 under the Securities Act) of the Company to deliver to
Parent, as soon as practicable after the date of this Agreement, a written
agreement in the form of Exhibit 6.5 hereto.
6.6. Nasdaq Listing. Parent shall use reasonable best efforts to cause the
shares of Parent Common Stock to be issued in the Merger and upon exercise of
the Company Warrants to be approved for listing on Nasdaq.
6.7. Employee Benefit Plans; Existing Agreements.
(a) Following the Effective Time, Parent shall continue to provide to
individuals who are employed by the Company and its Subsidiaries as of the
59
Effective Time who remain employed with Parent or any Subsidiary of Parent
("Affected Employees"), for so long as such Affected Employees remain
employed by Parent or any Subsidiary of Parent, employee benefits (i)
pursuant to the Company Plans as in effect immediately prior to the
Effective Time or (ii) pursuant to Parent Plans provided to similarly
situated employees of Parent (it being understood that inclusion of
Affected Employees in the employee benefit plans of Parent or a Subsidiary
of Parent may occur at different times with respect to different plans) on
terms no less favorable in the aggregate than the employee benefits
provided to similarly situated employees of Parent.
(b) Parent shall, or shall cause its Affiliates to, give Affected
Employees full credit for purposes of eligibility, vesting and
determination of the level of benefits under (but not for accrual of
pension benefits) any Parent Plan for such Affected Employees' service with
the Company or any Subsidiary of the Company (or any predecessor entity) to
the same extent that such service was credited for purposes of any Company
Plan immediately prior to the Effective Time.
(c) Parent shall, or shall cause its Affiliates to, (i) waive all
limitations as to pre-existing conditions, exclusions and waiting periods
with respect to participation and coverage requirements applicable to the
Affected Employees under any welfare benefit plans in which such employees
may participate after the Effective Time, to the extent such limitations or
periods have been satisfied as of the Effective Time (or date of
participation in any such plan if later) under any analogous Company Plan,
and (ii) provide each Affected Employee with credit for any co-payments and
deductibles paid prior to the Effective Time (or date of participation in
any such plan if later) during the calendar year in which the Effective
Time (or date of participation in any such plan if later) occurs for
purposes of satisfying any applicable deductible or out-of-pocket
requirements under any welfare plans that such employees participate in
after the Effective Time.
(d) Following the Effective Time, Parent shall honor, fulfill and
discharge and shall cause the appropriate Subsidiaries of Parent to honor,
fulfill and discharge in accordance with their terms the Company Plans (as
in effect as of Effective Time) which have been disclosed in the Company
Disclosure Schedule and previously have been made available or delivered to
Parent; provided, however, that nothing herein shall prevent Parent from
amending or terminating any Company Plans in accordance with the terms of
such Company Plans.
(e) Nothing in this Agreement shall be construed as requiring Parent
or any of its Affiliates to employ any Affected Employee for any length of
time following the Closing Date. Nothing in this Section 6.7 shall be
construed as conferring upon any Person other than the parties hereto
(including but not limited to any Affected Employee) any rights or remedies
hereunder.
(f) The Company shall use reasonable best efforts to receive on or
prior to the Effective Time from each of the individuals listed on Section
6.7(f) of the Company Disclosure Schedule written acknowledgements (in form
and substance
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reasonably satisfactory to Parent) of the full satisfaction of their rights
under the agreements listed on such Section 6.7(f) of the Company
Disclosure Schedule.
6.8. Indemnification.
(a) In the event of any threatened or actual claim, action, suit,
proceeding or investigation, whether civil, criminal or administrative,
including any such claim, action, suit, proceeding or investigation in
which any Person who is now, or has been at any time prior to the date of
this Agreement, or who becomes prior to the Effective Time, a director or
officer of the Company or any of its Subsidiaries (the "Indemnified
Parties") is, or is threatened to be, made a party based in whole or in
part on, or arising in whole or in part out of, or pertaining to (i) the
fact that he is or was a director or officer of the Company or any of its
Subsidiaries or (ii) this Agreement or any of the transactions contemplated
hereby, whether in any case asserted or arising before or after the
Effective Time, the parties hereto agree to cooperate and use their best
efforts to defend against and respond thereto. It is understood and agreed
that after the Effective Time, Parent shall, and shall cause the Surviving
Corporation to, indemnify and hold harmless, to the fullest extent
permitted by law, each such Indemnified Party against any losses, claims,
damages, liabilities, costs, expenses (including advances of reasonable
attorney's fees and expenses prior to the final disposition of any claim,
suit, proceeding or investigation to each Indemnified Party to the fullest
extent permitted by law upon receipt of any undertaking required by
applicable law), judgments, fines and amounts paid in settlement in
connection with any such threatened or actual claim, action, suit,
proceeding or investigation, and in the event of any such threatened or
actual claim, action, suit, proceeding or investigation (whether asserted
or arising before or after the Effective Time), the Indemnified Parties may
retain counsel reasonably satisfactory to them after consultation with
Parent; provided, however, that (1) Parent shall have the right to assume
the defense thereof and upon such assumption Parent shall not be liable to
any Indemnified Party for any legal expenses of other counsel or any other
expenses subsequently incurred by any Indemnified Party in connection with
the defense thereof, except that if Parent elects not to assume such
defense or counsel for the Indemnified Parties reasonably advises that
there are issues which raise conflicts of interest between Parent and the
Indemnified Parties, the Indemnified Parties may retain counsel reasonably
satisfactory to them after consultation with Parent, and Parent shall pay
the reasonable fees and expenses of such counsel for the Indemnified
Parties, (2) Parent shall in all cases be obligated pursuant to this
paragraph to pay for only one firm of counsel and any necessary local
counsel for all Indemnified Parties, (3) Parent shall not be liable for any
settlement effected without its prior written consent (which consent shall
not be unreasonably withheld or delayed) and (4) Parent shall have no
obligation hereunder to any Indemnified Party when and if a court of
competent jurisdiction shall ultimately determine, and such determination
shall have become final and nonappealable, that indemnification of such
Indemnified Party in the manner contemplated hereby is prohibited by
applicable law. Any Indemnified Party wishing to claim Indemnification
under this Section 6.8, upon learning of any such claim, action, suit,
proceeding or investigation, shall notify promptly Parent thereof, provided
that the failure to so notify shall not affect the obligations of Parent
under this Section 6.8 except to the extent such failure to notify
prejudices Parent. Parent's obligations under this Section 6.8 shall
61
continue in full force and effect for a period of six (6) years from the
Effective Time; provided, however, that all rights to indemnification in
respect of any claim (a "Claim") asserted or made within such period shall
continue until the final disposition of such Claim.
(b) Parent shall cause the Persons serving as officers and directors
of the Company immediately prior to the Effective Time to be covered for a
period of six years from the Effective Time by the directors' and officers'
liability insurance policy maintained by the Company (provided that Parent
may substitute therefor policies of at least the same coverage and amounts
containing terms and conditions which are not less advantageous than such
policy) with respect to acts or omissions occurring prior to the Effective
Time which were committed by such officers and directors in their capacity
as such; provided, however, that in no event shall Parent be required to
expend on an annual basis more than 300% of the current amount expended by
the Company (the "Insurance Amount") to maintain or procure insurance
coverage, and further provided that if Parent is unable to maintain or
obtain the insurance called for by this Section 6.8(b) Parent shall use all
reasonable efforts to obtain as much comparable insurance as is available
for the Insurance Amount.
(c) Until six years from the Effective Time, unless otherwise required
by applicable law, the certificate of incorporation and bylaws of the
Surviving Corporation shall contain provisions no less favorable with
respect to the elimination of liability of directors and the
indemnification of directors and officers (including as to advancement of
expenses) than are set forth in the Corrected Amended and Restated
Certificate of Incorporation and Amended and Restated Bylaws of the
Company, as in effect on the date hereof.
(d) In the event Parent, the Surviving Corporation or any of their
successors or assigns (i) consolidates with or merges into any other Person
and shall not be the continuing or Surviving Company or entity of such
consolidation or merger, or (ii) transfers or conveys all or substantially
all of its properties and assets to any Person, then, and in each such
case, to the extent necessary, proper provision shall be made so that the
successors and assigns of Parent or the Surviving Corporation, as the case
may be, assume the obligations set forth in this Section 6.8.
(e) The provisions of this Section 6.8 are intended to be for the
benefit of, and shall be enforceable by, each Indemnified Party and his or
her heirs and representatives and shall not be deemed exclusive of any
other rights to which an Indemnified Party is entitled, whether pursuant to
law, contract or otherwise.
6.9. Reasonable Best Efforts; Additional Agreements.
(a) Subject to the terms and conditions of this Agreement, each of
Parent and the Company agrees to cooperate fully with each other and to use
reasonable best efforts to take, or cause to be taken, all actions, and to
do, or cause to be done, all things necessary, proper or advisable to
consummate and make effective, at the time and in the manner contemplated
by this Agreement, the Merger, including using
62
reasonable best efforts to lift or rescind any injunction or restraining
order or other order adversely affecting the ability of the parties to
consummate the Merger.
(b) In case at any time after the Effective Time any further action is
necessary or desirable to carry out the purposes of this Agreement or to
vest the Surviving Corporation with full title to all properties, assets,
rights, approvals, immunities and franchises of any of the parties to the
Merger, the proper officers and directors of each party to this Agreement
and their respective Subsidiaries shall take all such necessary action as
may be reasonably requested by Parent.
(c) Parent and the Company shall use reasonable best efforts to cause
the Merger to qualify as a reorganization within the meaning of Section
368(a) of the Code. Officers of Parent and the Company shall execute and
deliver to Winston & Xxxxxx LLP, counsel to the Company, and Skadden, Arps,
Slate, Xxxxxxx & Xxxx LLP, counsel to Parent, certificates containing
appropriate representations at such time or times as may be reasonably
requested by such law firms, including the effective date of the Form S-4
and the Effective Time, in connection with their respective deliveries of
opinions with respect to the Tax treatment of the Merger.
(d) The Company shall consult with Parent prior to sending any written
communications to its employees regarding the Merger or this Agreement.
6.10. Advice of Changes. Parent and the Company shall promptly advise the
other party of any change or event having, or which could be reasonably expected
to have, a Material Adverse Effect on it or which it believes would, or which
could reasonably be expected to, cause or constitute a material breach of any of
its representations, warranties or covenants contained herein. From time to time
prior to the Effective Time (and on the date prior to the Closing Date), each
party will supplement or amend its Disclosure Schedules delivered in connection
with the execution of this Agreement to reflect any matter which, if existing,
occurring or known at the date of this Agreement, would have been required to be
set forth or described in such Disclosure Schedules or which is necessary to
correct any information in such Disclosure Schedules which has been rendered
inaccurate thereby. No supplement or amendment to such Disclosure Schedules
shall have any effect for the purpose of determining the accuracy of the
representations and warranties of the parties contained in Articles III and IV
in order to determine the fulfillment of the conditions set forth in Sections
7.2(a) or 7.3(a) hereof, as the case may be, or the compliance by the Company or
Parent, as the case may be, with the respective covenants and agreements of such
parties contained herein. Notwithstanding anything to the contrary contained
herein, no failure to advise the other party of any change or event referred to
in the first sentence of this Section 6.10, or any failure to provide any
supplement or amendment referred to in the second sentence of this Section 6.10,
shall constitute the failure of any condition set forth in Article VII to be
satisfied unless the underlying Material Adverse Effect, breach or inaccuracy
would independently result in the failure of a condition set forth in Article
VII to be satisfied.
6.11. Current Information. During the period from the date of this
Agreement to the Effective Time, each party will cause one or more of its
designated
63
representatives to confer on a regular and frequent basis with representatives
of the other party and to report the general status of the ongoing operations of
such party and its Subsidiaries. Each party will promptly notify the other party
of any material change in the normal course of business or in the operation of
the properties of such party or any of its Subsidiaries and of any governmental
complaints, investigations or hearings (or communications indicating that the
same may be contemplated), or the institution or the threat of significant
litigation involving such party or any of its Subsidiaries, and will keep the
other party fully informed of such events.
6.12. Shelf Registration of Resales of 9 3/8% Notes. In addition to
Parent's requirement to file the Form S-4 and in addition to Parent's
obligations to file a registration statement on Form S-3 pursuant to Section 1.8
with respect to the Company Warrants, the Surviving Corporation shall assume the
Company's shelf registration statement on Form S-3 under the Securities Act
covering the resales by certain selling noteholders of the Company's restricted
9 3/8% Senior Subordinated Discount Notes due 2009 (the "9 3/8% Notes"). Parent
shall use reasonable best efforts to maintain the effectiveness of such
registration statement until the requirements set forth in the Registration
Rights Agreement dated as of February 20, 2004 among the Company and certain
holders of the 9 3/8% Notes expire.
6.13. Takeover Statute. If any Takeover Statute is or may become applicable
to the Merger or any of the other transactions contemplated by this Agreement,
Parent, the Company and their respective Board of Directors shall grant such
approvals and take such actions as are necessary so that such transactions may
be consummated as promptly as practicable on the terms contemplated by this
Agreement or by the Merger and otherwise act to eliminate or minimize the
effects of such statute or regulation on such transactions.
6.14. Supplemental Warrant Agreement.
(a) At least 20 days prior to the Effective Date, the Company shall
provide ChaseMellon and each holder of ChaseMellon Warrants at the address
on file with ChaseMellon with the notice required by Section 10(b)(iii) of
the ChaseMellon Warrant Agreement. Pursuant to Section 8(m) of the
ChaseMellon Warrant Agreement, if the Company is not the surviving company
in the Merger, then at the Effective Time, the surviving company and Parent
must enter into a Supplemental Warrant Agreement and promptly mail to
ChaseMellon and the holders of the ChaseMellon Warrants a description of
the supplemental warrant agreement.
(b) Promptly after the Effective Date, the Company must deliver the
notice required by Section 2(d) of the Sprint Warrant Agreement. If the
Company is not the surviving company in the Merger, then at least 10 days
prior to the Effective Time, the Company must deliver the notice required
by Section 5 of the Sprint Warrant Agreement.
(c) At least 20 days prior to the Effective Date, the Company shall
provide Bankers Trust Company and each holder of Bankers Trust Warrants at
the
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address on file with Bankers Trust Company with the notice required by
Section 10(b)(iii) of the Bankers Trust Warrant Agreement. Pursuant to
Section 8(m) of the Bankers Trust Warrant Agreement, if the Company is not
the surviving company in the Merger, then at the Effective Time, the
surviving company and Parent must enter into a supplemental warrant
agreement and promptly mail to Bankers Trust and the holders of the Bankers
Trust Warrants a description of the supplemental warrant agreement
6.15. Exchange Offer. Parent shall cause the Surviving Corporation to
assume all of the Company's obligations set forth in the Registration Rights
Agreement dated as of October 25, 2004 among the Company and holders of the
Company's First Priority Senior Secured Floating Rate Notes due 2009, including,
without limitation, the requirement to consummate the exchange offer described
therein. Parent expressly agrees that, to the extent such exchange offer has not
been consummated prior to the Effective Time, Parent shall cause the Surviving
Corporation to complete such exchange offer on the terms set forth therein.
6.16. Repurchase Offer; Company Indentures.
(a) Parent shall, or shall cause the surviving company in the Merger
to, comply with all requirements of the Company Indentures. Without
limiting the foregoing, Parent shall, or shall cause the surviving company,
to effect the repurchase offers which may be required pursuant to Section
3.9 of each of the Company Indentures.
(b) The Company and Merger Sub shall, at or prior to the Effective
Time, enter into such supplemental indentures as may be required pursuant
to the terms of the Company Indentures in connection with the Merger.
ARTICLE VII
CONDITIONS PRECEDENT
7.1. Conditions to Each Party's Obligation To Effect the Merger. The
respective obligations of each party to effect the Merger shall be subject to
the satisfaction at or prior to the Effective Time of the following conditions:
(a) Stockholder Approval. The Company shall have obtained the Company
Stockholder Approval and Parent shall have obtained the Parent Stockholder
Approval.
(b) Nasdaq Listing. The shares of Parent Common Stock that shall be
issued to the stockholders of the Company upon consummation of the Merger
shall have been authorized for listing on Nasdaq.
(c) Regulatory Approvals. All waiting periods, if any, under the HSR
Act with respect to the Merger shall have expired or been terminated.
65
(d) Form S-4. The Form S-4 shall have become effective under the
Securities Act and no stop order suspending the effectiveness of the Form
S-4 shall have been issued and no proceedings for that purpose shall have
been initiated or threatened by the SEC.
(e) No Injunctions or Restraints; Illegality. No judgment, order,
injunction or decree issued by any court or agency of competent
jurisdiction or other legal restraint or prohibition (an "Injunction")
preventing the consummation of the Merger shall be in effect. No statute,
rule, regulation, order, injunction or decree shall have been enacted,
entered, promulgated or enforced by any Governmental Entity that prohibits
or makes illegal the consummation of the Merger.
(f) Sprint Consent. The consent of Sprint PCS required pursuant to the
terms of the Company Sprint Agreements shall have been obtained and not
revoked.
7.2. Conditions to Obligations of Parent. The obligation of Parent and
Merger Sub to effect the Merger is also subject to the satisfaction or waiver by
Parent and Merger Sub at or prior to the Effective Time of the following
conditions:
(a) Representations and Warranties. (1) The representations and
warranties of the Company set forth in Sections 3.2(a), 3.3, 3.4, 3.7,
3.9(a), 3.25, 3.27, 3.28, 3.29 and 3.30 shall be true and correct in all
material respects (except that all representations and warranties qualified
by materiality or Material Adverse Effect shall be true and correct in all
respects) at and as of the date of this Agreement and at and as of the
Effective Time as though made at and as of the Effective Time (except to
the extent expressly made as of an earlier date, in which case as of such
date); (2) the representations and warranties of the Company set forth
herein shall be true and correct at and as of the date of this Agreement
and at and as of the Effective Time as though made at and as of the
Effective Time (except to the extent expressly made as of an earlier date,
in which case as of such date), provided that no representation or warranty
of the Company shall be deemed untrue or incorrect for purposes of this
clause (2) as a consequence of the existence of any fact, event or
circumstance inconsistent with such representation or warranty, unless such
fact, event or circumstance, individually or taken together with all other
facts, events or circumstances inconsistent with any representation or
warranty of the Company, has had or would reasonably be expected to have, a
Material Adverse Effect on the Company, disregarding for these purposes (x)
any qualification or exception for, or reference to, materiality in any
such representation or warranty and (y) any use of the terms "material,"
"materiality," "in all material respects," "material adverse change,"
"Material Adverse Effect" or similar terms or phrases in any such
representation or warranty; and (3) Parent and Merger Sub shall have
received a certificate, dated the Closing Date, signed on behalf of the
Company by the Chief Executive Officer and the Chief Financial Officer of
the Company to such effect.
(b) Performance of Obligations of the Company. The Company shall have
performed in all material respects the obligations required to be performed
by it under this Agreement at or prior to the Closing Date, and Parent and
Merger Sub shall
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have received a certificate signed on behalf of the Company by the Chief
Executive Officer and the Chief Financial Officer of the Company to such
effect.
(c) Federal Income Tax Opinion. Parent shall have received an opinion
of Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP, counsel to Parent ("Parent's
Counsel"), dated the Closing Date, in form and substance reasonably
satisfactory to Parent, substantially to the effect that, on the basis of
facts, representations and assumptions set forth in such opinion that are
consistent with the state of facts existing at the Effective Time, the
Merger will be treated as a reorganization within the meaning of Section
368(a) of the Code. In rendering such opinion, Parent's Counsel may require
and rely upon representations and covenants, including those contained in
certificates of officers of Parent, the Company and others, reasonably
satisfactory in form and substance to such counsel.
(d) 2004 Form 10-K. The Company shall have timely filed its 2004
Annual Report on Form 10-K with the SEC (the "2004 Form 10-K"), and such
2004 Form 10-K shall contain (i) the unqualified opinion of KPMG to the
effect that the consolidated balance sheets of the Company and its
Subsidiaries as of September 30, 2004 and 2003, and the related
consolidated statements of operations, stockholders' deficit, and cash
flows for each of the years in the three-year period ended September 30,
2004, as reported in the 2004 Form 10-K fairly present in all material
respects, the consolidated financial position of the Company and its
Subsidiaries as of the respective dates thereof, and the results of their
operations and their cash flows for the fiscal periods set forth therein,
in accordance with GAAP and (ii) a report of the Company's management on
the Company's internal control over financial reporting, as required by
Section 404 of the Xxxxxxxx-Xxxxx Act of 2002 ("Section 404"), and such
report (x) shall not reveal any material weakness in the Company's internal
control over financing reporting not previously disclosed to Parent and (y)
be attested by KPMG, pursuant to the requirements of Section 404.
7.3. Conditions to Obligations of the Company. The obligation of the
Company to effect the Merger is also subject to the satisfaction or waiver by
the Company at or prior to the Effective Time of the following conditions:
(a) Representations and Warranties. (1) The representations and
warranties of the Company set forth in Sections 4.2(a), 4.3, 4.4, 4.7,
4.9(a), 4.21, 4.23, 4.24 and 4.25 shall be true and correct in all material
respects (except that all representations and warranties qualified by
materiality or Material Adverse Effect shall be true and correct in all
respects) at and as of the date of this Agreement and at and as of the
Effective Time as though made at and as of the Effective Time (except to
the extent expressly made as of an earlier date, in which case as of such
date); (2) the representations and warranties of Parent and Merger Sub set
forth herein shall be true and correct at and as of the date of this
Agreement and at and as of the Effective Time as though made at and as of
the Effective Time (except to the extent expressly made as of an earlier
date, in which case as of such date), provided that no representation or
warranty of Parent and Merger shall be deemed untrue or incorrect for
purposes of this clause (2) as a consequence of the existence of any fact,
event or circumstance inconsistent with such
67
representation or warranty, unless such fact, event or circumstance,
individually or taken together with all other facts, events or
circumstances inconsistent with any representation or warranty of Parent
and Merger Sub, has had or would reasonably be expected to have, a Material
Adverse Effect on Parent, disregarding for these purposes (x) any
qualification or exception for, or reference to, materiality in any such
representation or warranty and (y) any use of the terms "material,"
"materiality," "in all material respects," "material adverse change,"
"Material Adverse Effect" or similar terms or phrases in any such
representation or warranty; and (3) the Company shall have received a
certificate, dated the Closing Date, signed on behalf of Parent by the
Chief Executive Officer and the Chief Financial Officer of Parent to such
effect.
(b) Performance of Obligations of Parent. Parent and Merger Sub shall
have performed in all material respects the obligations required to be
performed by them under this Agreement at or prior to the Closing Date, and
the Company shall have received a certificate signed on behalf of Parent by
the Chief Executive Officer and the Chief Financial Officer of Parent to
such effect.
(c) Federal Income Tax Opinion. The Company shall have received an
opinion of Winston & Xxxxxx LLP (the "Company's Counsel"), in form and
substance reasonably satisfactory to the Company, dated the Closing Date,
substantially to the effect that, on the basis of facts, representations
and assumptions set forth in such opinion that are consistent with the
state of facts existing at the Effective Time, the Merger will be treated
as a reorganization within the meaning of Section 368(a) of the Code. In
rendering such opinion, the Company's Counsel may require and rely upon
representations and covenants, including those contained in certificates of
officers of Parent, the Company and others, reasonably satisfactory in form
and substance to such counsel.
ARTICLE VIII
TERMINATION AND AMENDMENT
8.1. Termination. This Agreement may be terminated at any time prior to the
Effective Time, whether before or after approval of the matters presented in
connection with the Merger by the stockholders of the Company and Parent:
(a) by mutual consent of the Company, Parent and Merger Sub in a
written instrument, if the Board of Directors of each so determines by a
vote of a majority of the members of its entire Board;
(b) by either Parent or the Company upon written notice to the other
party if any Governmental Entity of competent jurisdiction shall have
issued a final nonappealable order enjoining or otherwise prohibiting the
Merger;
(c) by either Parent or the Company if the Merger shall not have been
consummated on or before June 30, 2005, unless the failure of the Closing
to occur by such date shall be due to the failure of the party seeking to
terminate this
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Agreement to perform or observe any of the covenants and agreements of such
party set forth herein;
(d) by either the Company or Parent (provided that the party
terminating shall not be in material breach of any of its obligations under
Section 6.4) if any approval of the stockholders of the Company or Parent
required for the consummation of the Merger shall not have been obtained
upon a vote taken thereon at a duly held meeting of such stockholders or at
any adjournment or postponement thereof;
(e) by either Parent or the Company (provided that the terminating
party is not then in material breach of any representation, warranty,
covenant or other agreement contained herein) if there shall have been a
breach of any of the representations or warranties set forth in this
Agreement by the other party, which breach is not cured within thirty days
following written notice to the party committing such breach, or which
breach, by its nature, cannot be cured prior to the Closing; provided,
however, that neither party shall have the right to terminate this
Agreement pursuant to this Section 8.1(e) unless the breach of
representation or warranty, together with all other such breaches, would
entitle the party receiving such representation not to consummate the
transactions contemplated hereby under Section 7.2(a) (in the case of a
breach of a representation or warranty by the Company) or Section 7.3(a)
(in the case of a breach of a representation or warranty by Parent);
(f) by either Parent or the Company (provided that the terminating
party is not then in material breach of any representation, warranty,
covenant or other agreement contained herein) if there shall have been a
breach of any of the covenants or agreements set forth in this Agreement on
the part of the other party, which breach shall not have been cured within
thirty days following receipt by the breaching party of written notice of
such breach from the other party hereto, or which breach, by its nature,
cannot be cured prior to the Closing; provided, however, that neither party
shall have the right to terminate this Agreement pursuant to this Section
8.1(f) unless the breach of covenant, together with all other such
breaches, would entitle the party entitled to the benefit of such covenant
not to consummate the transactions contemplated hereby under Section 7.2(b)
(in the case of a breach of covenant by the Company) or Section 7.3(b) (in
the case of a breach of covenant by Parent);
(g) by either Parent or the Company, if (i) the Board of Directors of
the other does not publicly recommend in the Joint Proxy
Statement/Prospectus that its stockholders either approve and adopt this
Agreement (in the case of the Company) or approve the issuance of shares of
Parent Common Stock pursuant to this Agreement (in the case of Parent),
(ii) after recommending in the Joint Proxy Statement/Prospectus that such
stockholders approve and adopt this Agreement (in the case of the Company)
or approve the issuance of shares of Parent Common Stock pursuant to this
Agreement (in the case of Parent), the Board of Directors of the other
shall have withdrawn, modified or amended such recommendation in any manner
adverse to Parent or the Company, as the case may be, or (iii) the other
party materially breaches its obligations under this Agreement by reason of
a failure to call a meeting of its
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stockholders or a failure to prepare and mail to its stockholders the Joint
Proxy Statement/Prospectus in accordance with Sections 6.1 and 6.4; or
(h) by Parent, if the Board of Directors of the Company has
authorized, recommended, proposed or publicly announced its intention to
authorize, recommend or propose any Acquisition Proposal with any Person
other than Parent.
8.2. Effect of Termination. In the event of termination of this Agreement
by either Parent or the Company as provided in Section 8.1, this Agreement shall
forthwith become void and have no effect except that (i) Sections 6.3(c), 8.2
and 8.5, and Article IX (other than Section 9.1), shall survive any termination
of this Agreement, and (ii) notwithstanding anything to the contrary contained
in this Agreement, no party shall be relieved of or released from any
liabilities or damages arising out of its willful breach of any provision of
this Agreement.
8.3. Amendment. Subject to compliance with applicable law, this Agreement
may be amended by the parties hereto, by action taken or authorized by their
respective Boards of Directors, at any time before or after approval of the
matters presented in connection with the Merger by the stockholders of the
Company and Parent; provided, however, that after any approval of the
transactions contemplated by this Agreement by the Company's stockholders, there
may not be, without further approval of such stockholders, any amendment of this
Agreement which reduces the amount or changes the form of the consideration to
be delivered to the Company's stockholders hereunder. This Agreement may not be
amended except by an instrument in writing signed on behalf of each of the
parties hereto.
8.4. Extension; Waiver. At any time prior to the Effective Time, each of
the parties hereto, by action taken or authorized by its Board of Directors,
may, to the extent legally allowed, (a) extend the time for the performance of
any of the obligations or other acts of the other party hereto, (b) waive any
inaccuracies in the representations and warranties of the other party contained
herein or in any document delivered pursuant hereto and (c) waive compliance by
the other party with any of its agreements contained herein, or waive compliance
with any of the conditions to its obligations hereunder. Any agreement on the
part of a party hereto to any such extension or waiver shall be valid only if
set forth in a written instrument signed on behalf of such party, but such
extension or waiver or failure to insist on strict compliance with an
obligation, covenant, agreement or condition shall not operate as a waiver of,
or estoppel with respect to, any subsequent or other failure.
8.5. Termination Fee.
(a) The Company shall pay to Parent, by wire transfer of immediately
available funds, the sum of $11,000,000 (the "Company Termination Fee") if
this Agreement is terminated as follows:
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(1) if Parent shall terminate this Agreement pursuant to Section
8.1(g) or 8.1(h), then the Company shall pay the Company Termination
Fee on the business day following such termination;
(2) if (A) either party shall terminate this Agreement pursuant
to Section 8.1(d) because the Company Stockholder Approval shall not
have been received and (B) at any time after the date of this
Agreement and at or before the date of the Company Shareholders
Meeting a bona fide Acquisition Proposal shall have been publicly
announced or otherwise communicated to the Board of Directors of the
Company (a "Public Proposal"), then (x) the Company shall pay
one-third of the Company Termination Fee on the business day following
such termination, and (y) if within twelve (12) months following the
date of such termination of this Agreement, the Company or any of its
Subsidiaries enters into any definitive Agreement with respect to, or
consummates, any Acquisition Proposal, then the Company shall pay the
remaining two-thirds of the Company Termination Fee on the date of
such execution or consummation; and
(3) if (A) either party shall terminate this Agreement pursuant
to Section 8.1(c) or Parent shall terminate this Agreement pursuant to
Section 8.1(e) or (f), (B) at any time after the date of this
Agreement and before such termination there shall have been a Public
Proposal, and (C) following the occurrence of such Public Proposal,
the Company shall have willfully breached (and not cured after notice
thereof) any of its representations, warranties, covenants or
agreements set forth in this Agreement, which breach shall have
materially contributed to the failure of the Effective Time to occur
prior to the termination of this Agreement, then the Company shall (x)
pay one-third of the Company Termination Fee on the business day
immediately following such termination, and (y) if within twelve (12)
months following the date of such termination of this Agreement, the
Company or any of its Subsidiaries executes a definitive agreement
with respect to, or consummates, any Acquisition Proposal, then the
Company shall pay the remaining two-thirds of the Company Termination
Fee upon the date of such execution or consummation.
(b) Parent shall pay to the Company, by wire transfer of immediately
available funds, the sum of $11,000,000 on the business day following such
termination if (1) this Agreement is terminated by Parent or the Company as
a result of the failure to obtain the required vote of Parent stockholders
as provided in Section 8.1(d), or (2) this Agreement is terminated by the
Company pursuant to Section 8.1(g).
(c) If any party fails to pay any amounts due to another party on the
dates specified in this Section 8.5, then the defaulting party shall pay
all costs and expenses (including legal fees and expenses) incurred by the
other party in connection
71
with any action or proceeding (including the filing of any lawsuit) taken
by it to collect such unpaid amounts, together with interest on such unpaid
amounts at the prime lending rate prevailing at such time, as published in
The Wall Street Journal, from the date such amounts were required to be
paid until the date actually received by such other party.
(d) The parties acknowledge that the agreements contained in this
Section 8.5 are an integral part of the transactions contemplated by this
Agreement and constitute liquidated damages and not a penalty, and that,
without these agreements, the parties would not have entered into this
Agreement.
ARTICLE IX
GENERAL PROVISIONS
9.1. Closing. Subject to the terms and conditions of this Agreement, the
closing of the Merger (the "Closing") will take place at 10:00 a.m. on the
second business day after the satisfaction or waiver (subject to applicable law)
of the latest to occur of the conditions set forth in Article VII hereof (other
than those conditions which relate to actions to be taken at the Closing) (the
"Closing Date"), at the offices of Parent's Counsel, unless another time, date
or place is agreed to in writing by the parties hereto.
9.2. Nonsurvival of Representations, Warranties and Agreements. None of the
representations, warranties, covenants and agreements in this Agreement or in
any instrument delivered pursuant to this Agreement shall survive the Effective
Time, except for those covenants and agreements contained herein which by their
terms apply in whole or in part after the Effective Time.
9.3. Expenses. Whether or not the Merger is consummated, all costs and
expenses incurred in connection with this Agreement and the transactions
contemplated hereby shall be paid by the party incurring such expense; provided,
however, that the costs and expenses of printing and mailing the Joint Proxy
Statement/Prospectus and the Form S-4 to the stockholders of the Company and
Parent, and all filing and other fees paid to the SEC or any other Governmental
Entity in connection with the Merger (including the HSR Act) and the other
transactions contemplated hereby, shall be borne equally by Parent and the
Company. Nothing contained herein shall limit either party's rights to recover
any liabilities or damages arising out of the other party's willful breach of
any provision of this Agreement.
9.4. Notices. All notices and other communications hereunder shall be in
writing and shall be deemed given if delivered personally, telecopied (with
confirmation), mailed by registered or certified mail (return receipt requested)
or delivered by an express courier (with confirmation) to the parties at the
following addresses (or at such other address for a party as shall be specified
by like notice):
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(a) if to Parent or Merger Sub, to:
Alamosa Holdings, Inc.
0000 X. Xxxx 000
Xxxxxxx, XX 00000
Attention: Chief Executive Officer
with a copy to:
Skadden, Arps Slate, Xxxxxxx & Xxxx LLP
Xxxx Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx X. Xxxxx, III, Esq.
Fax: (000) 000-0000
and
(b) if to the Company, to:
AirGate PCS, Inc.
000 Xxxxxxxxx Xxxxxx, XX, Xxxxx 0000
Xxxxxxx, XX 00000
Attention: Chief Executive Officer
with a copy to:
Winston & Xxxxxx LLP
00 Xxxx Xxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxx X. Xxxx, Esq.
Fax.: (000) 000-0000
9.5. Interpretation. When a reference is made in this Agreement to
Sections, Exhibits or Schedules, such reference shall be to a Section of or
Exhibit or Schedule to this Agreement unless otherwise indicated. The table of
contents and headings contained in this Agreement are for reference purposes
only and shall not affect in any way the meaning or interpretation of this
Agreement. Whenever the words "include," "includes" or "including" are used in
this Agreement, they shall be deemed to be followed by the words "without
limitation." The phrases "the date of this Agreement," "the date hereof" and
terms of similar import, unless the context otherwise requires, shall be deemed
to refer to the date set forth in the first paragraph of this Agreement.
9.6. Counterparts. This Agreement may be executed in counterparts, all of
which shall be considered one and the same agreement and shall become effective
when counterparts have been signed by each party hereto and delivered to the
other party, it being understood that all parties need not sign the same
counterpart.
9.7. Entire Agreement. This Agreement (including the documents and the
instruments referred to herein) constitutes the entire agreement and supersedes
all prior agreements and understandings, both written and oral, between the
parties with respect to the subject matter hereof, other than the
Confidentiality Agreement.
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9.8. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware.
9.9. Enforcement of Agreement. The parties hereto agree that irreparable
damage would occur in the event that the provisions contained in Section 6.3(c)
of this Agreement were not performed in accordance with its specific terms or
were otherwise breached. It is accordingly agreed that the parties shall be
entitled to an injunction or injunctions to prevent breaches of Section 6.3(c)
of this Agreement and to enforce specifically the terms and provisions thereof
in any court of the United States or any state having jurisdiction, this being
in addition to any other remedy to which they are entitled at law or in equity.
9.10. Severability. Any term or provision of this Agreement that is invalid
or unenforceable in any jurisdiction shall, as to that jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction. If any provision of this
Agreement is so broad as to be unenforceable, the provision shall be interpreted
to be only so broad as is enforceable.
9.11. Publicity. Except as otherwise required by law or by the rules of
Nasdaq, so long as this Agreement is in effect, neither Parent nor the Company
shall, nor shall either party permit any of its Subsidiaries to, issue or cause
the publication of any press release or other public announcement with respect
to, or otherwise make any public statement concerning, the transactions
contemplated by this Agreement without the consent of the other party, which
consent shall not be unreasonably withheld.
9.12. Assignment; No Third Party Beneficiaries. Neither this Agreement nor
any of the rights, interests or obligations hereunder shall be assigned by
either of the parties hereto (whether by operation of law or otherwise) without
the prior written consent of the other party. Subject to the preceding sentence,
this Agreement will be binding upon, inure to the benefit of and be enforceable
by the parties and their respective successors and assigns. Except as otherwise
expressly provided herein, this Agreement (including the documents and
instruments referred to herein) is not intended to confer upon any Person other
than the parties hereto any rights or remedies hereunder.
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IN WITNESS WHEREOF, Parent, Merger Sub and the Company have caused this
Agreement to be executed by their respective officers thereunto duly authorized
as of the date first above written.
ALAMOSA HOLDINGS, INC.
By: /s/ Xxxxx X. Xxxxxxxx
----------------------------------
Name: Xxxxx X. Xxxxxxxx
Title: Chairman and Chief Executive Officer
A-CO. MERGER SUB, INC.
By: /s/ Xxxxx X. Xxxxxxxx
----------------------------------
Name: Xxxxx X. Xxxxxxxx
Title: President
AIRGATE PCS, INC.
By: /s/ Xxxxxx X. Xxxxxxxxx
--------------------------------
Name: Xxxxxx X. Xxxxxxxxx
Title: Chief Executive Officer
