AGREEMENT AND PLAN OF MERGER
among
ALLTEL CORPORATION,
PINNACLE MERGER SUB, INC.
and
360 COMMUNICATIONS COMPANY
Dated as of March 16, 1998
TABLE OF CONTENTS
ARTICLE I THE MERGER
Section 1.1. The Merger...............................................2
Section 1.2. Closing..................................................2
Section 1.3. Effective Time............................... ..........2
Section 1.4. Effects of the Merger....................................2
Section 1.5. Certificate of Incorporation and By-Laws
of the Surviving Corporation.............................2
Section 1.6. Directors................................................3
Section 1.7. Officers.................................................3
ARTICLE II CONVERSION OF
SHARES; EXCHANGE OF CERTIFICATES
Section 2.1. Effect on Stock..........................................3
Section 2.2. Exchange of Certificates.................................4
ARTICLE III REPRESENTATIONS AND
WARRANTIES OF THE COMPANY
Section 3.1. Organization, Qualification, Etc.........................8
Section 3.2. Capital Stock............................................9
Section 3.3. Corporate Authority Relative to this Agreement;
No Violation............................................11
Section 3.4. Reports and Financial Statements........................12
Section 3.5. No Undisclosed Liabilities..............................13
Section 3.6. No Violation of Law.....................................13
Section 3.7. Environmental Laws and Regulations......................13
Section 3.8. No Undisclosed Employee Benefit Plan
Liabilities or Severance Arrangements...................14
Section 3.9. Absence of Certain Changes or Events....................14
Section 3.10. Investigations; Litigation..............................14
Section 3.11. Joint Proxy Statement; Registration
Statement; Other Information............................15
Section 3.12. The Company Rights Plan.................................15
Section 3.13. Lack of Ownership of Parent Common Stock................15
Section 3.14. Tax Matters.............................................16
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Section 3.15. Opinion of Financial Advisor............................17
Section 3.16. Required Vote of the Company Stockholders...............18
Section 3.17. Material Contracts......................................18
Section 3.18. Takeover Statute........................................18
Section 3.19. Finders or Brokers......................................18
Section 3.20. Pooling of Interests....................................18
ARTICLE IV REPRESENTATIONS AND
WARRANTIES OF PARENT
Section 4.1. Organization, Qualification, Etc........................19
Section 4.2. Capital Stock...........................................20
Section 4.3. Corporate Authority Relative to this Agreement;
No Violation........................................... 21
Section 4.4. Reports and Financial Statements........................22
Section 4.5. No Undisclosed Liabilities..............................23
Section 4.6. No Violation of Law.....................................23
Section 4.7. Environmental Laws and Regulations......................23
Section 4.8. No Undisclosed Employee Benefit Plan
Liabilities or Severance Arrangements...................24
Section 4.9. Absence of Certain Changes or Events....................24
Section 4.10. Investigations; Litigation..............................24
Section 4.11. Joint Proxy Statement; Registration Statement;
Other Information.......................................25
Section 4.12. Lack of Ownership of the Company Common Stock 25
Section 4.13. Required Vote of Parent Stockholders....................25
Section 4.14. Finders or Brokers......................................25
Section 4.15. Pooling of Interests....................................25
Section 4.16. Opinions of Financial Advisors..........................26
Section 4.17. Tax Matters.............................................26
Section 4.18. Material Contracts......................................27
ARTICLE V
COVENANTS AND AGREEMENTS
Section 5.1. Conduct of Business by the Company or Parent 27
Section 5.2. Investigation...........................................32
Section 5.3. Joint Proxy Material; Registration Statement 32
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Section 5.4. Affiliate Agreements....................................34
Section 5.5. Employee Stock Options, Incentive and Benefit Plans 34
Section 5.6. Filings; Other Action...................................36
Section 5.7. Further Assurances......................................37
Section 5.8. Takeover Statute........................................37
Section 5.9. No Solicitation.........................................37
Section 5.10. Public Announcements....................................38
Section 5.11. Indemnification and Insurance...........................38
Section 5.12. Accountants' "Comfort" Letters..........................39
Section 5.13. Additional Reports......................................39
Section 5.14. Company Rights Plans....................................40
Section 5.15. Control of Other Party's Business.......................40
Section 5.16. Board Seats and Officers................................40
ARTICLE VI CONDITIONS TO THE MERGER
Section 6.1. Conditions to Each Party's Obligation to Effect
the Merger..............................................40
Section 6.2. Conditions to Obligation of the Company to Effect
the Merger..............................................41
Section 6.3. Conditions to Obligation of Parent to Effect
the Merger..............................................42
ARTICLE VII
TERMINATION
Section 7.1. Termination or Abandonment..............................43
Section 7.2. Termination Fee.........................................45
Section 7.3. Amendment or Supplement.................................45
Section 7.4. Extension of Time, Waiver, Etc..........................46
ARTICLE VIII
MISCELLANEOUS
Section 8.1. No Survival of Representations and Warranties 46
Section 8.2. Expenses................................................46
Section 8.3. Counterparts; Effectiveness.............................47
Section 8.4. Governing Law...........................................47
Section 8.5. Jurisdiction............................................47
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Section 8.6. Notices.................................................48
Section 8.7. Assignment; Binding Effect..............................49
Section 8.8. Severability............................................49
Section 8.9. Enforcement of Agreement................................49
Section 8.10. Entire Agreement; No Third-Party Beneficiaries 49
Section 8.11. Headings................................................49
Section 8.12. Definitions.............................................49
Exhibit A - Form of the Company Affiliate Agreement
Exhibit B - Form of Parent Affiliate Agreement
Exhibit C - Form of Amendment to the Company Rights
Plan
iv
AGREEMENT AND PLAN OF MERGER, dated as of March 16, 1998
(the "Agreement"), among ALLTEL Corporation, a Delaware corporation
("Parent"), Pinnacle Merger Sub, Inc., a Delaware corporation and a wholly
owned subsidiary of Parent ("Merger Sub"), and 360 Communications Company, a
Delaware corporation (the "Company").
W I T N E S S E T H :
WHEREAS, the respective Boards of Directors of Parent,
Merger Sub and the Company have approved the acquisition of the Company by
Parent upon the terms and subject to the conditions set forth in this
Agreement;
WHEREAS, the respective Boards of Directors of Parent,
Merger Sub and the Company have approved this Agreement and the merger of
Merger Sub with and into the Company (the "Merger") in accordance with the
General Corporation Law of the State of Delaware (the "DGCL") and upon the
terms and subject to the conditions set forth in this Agreement;
WHEREAS, for United States federal income tax purposes, the
Merger is intended to qualify as a reorganization within the meaning of
Section 368(a) of the United States Internal Revenue Code of 1986, as amended
(the "Code"), and this Agreement is hereby adopted as a plan of reorganization
for purposes of Section 368 of the Code;
WHEREAS, for financial accounting purposes, it is intended
that the Merger will be accounted for as a pooling of interests transaction;
and
WHEREAS, immediately following the execution and delivery of
this Agreement, the Company and Parent will enter into a stock option
agreement (the "Option Agreement"), pursuant to which the Company will grant
Parent the option to purchase shares of Company Common Stock (as hereinafter
defined), upon the terms and subject to the conditions set forth therein.
NOW THEREFORE, in consideration of the foregoing and the
representations, warranties, covenants and agreements contained herein, and
intending to be legally bound hereby, Parent, Merger Sub and the Company agree
as follows:
ARTICLE I
1
THE MERGER
Section I.1. The Merger. Upon the terms and subject to the
conditions set forth in this Agreement and in accordance with the DGCL, Merger
Sub shall be merged with and into the Company at the Effective Time (as defined
in Section 1.3) of the Merger. Following the Merger, the separate corporate
existence of Merger Sub shall cease, and the Company shall continue as the
surviving corporation (the "Surviving Corporation") and shall succeed to and
assume all the rights and obligations of Merger Sub in accordance with the
DGCL.
Section I.2. Closing. The closing of the Merger shall take
place at 10:00 a.m. on a date to be specified by the parties (the "Closing
Date") which shall be no later than the second business day after the
satisfaction or waiver of the conditions set forth in Article VI at the offices
of Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP, New York, New York, unless another
date or place is agreed to in writing by the parties hereto.
Section I.3. Effective Time. On the Closing Date, the
parties shall execute and file in the office of the Secretary of State of the
State of Delaware a certificate of merger (the "Certificate of Merger")
executed in accordance with the DGCL and shall make all other filings or
recordings, if any, required under the DGCL. The Merger shall become effective
at the time of filing of the Certificate of Merger, or at such later time as is
agreed upon by the parties hereto and set forth therein (such time as the
Merger becomes effective is referred to herein as the "Effective Time").
Section I.4. Effects of the Merger. The Merger shall have
the effects set forth in Section 259 of the DGCL.
Section I.5. Certificate of Incorporation and By-Laws of the
Surviving Corporat.on
(a) The certificate of incorporation of the Company as in
effect immediately prior to the Effective Time shall become the certificate of
incorporation of the Surviving Corporation after the Effective Time, until
thereafter amended as provided by the DGCL and such certificate of
incorporation.
(b) The by-laws of the Company as in effect immediately
prior to the Effective Time shall become the by-laws of the Surviving
Corporation after the Effective Time, until thereafter amended as provided by
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the DGCL, the certificate of incorporation of the Surviving Corporation and
such by-laws.
Section I.6. Directors. The directors of Merger Sub
immediately prior to the Effective Time shall become the directors of the
Surviving Corporation, until the earlier of their death, resignation or removal
or until their respective successors are duly elected and qualified.
Section I.7. Officers. The officers of the Company
immediately prior to the Effective Time shall become the officers of the
Surviving Corporation, until the earlier of their resignation or removal or
until their respective successors are duly elected and qualified.
ARTICLE II
CONVERSION OF SHARES; EXCHANGE OF CERTIFICATES
Section II.1. Effect on Stock. At the Effective Time, by
virtue of the Merger and without any action on the part of the Company, Merger
Sub or the holders of any securities of the Company or Merger Sub:
(a) Each share of common stock, par value $0.01 per
share, of the Company (the "Company Common Stock") issued and held,
immediately prior to the Effective Time, in the Company's treasury or by any
of the Company's direct or indirect wholly owned subsidiaries, and each share
of Company Common Stock that is owned by Parent, Merger Sub or any other
subsidiary of Parent, shall automatically be cancelled and retired and shall
cease to exist, and no consideration shall be delivered in exchange therefor.
(b) Subject to Section 2.2(e), each issued and outstanding
share of Company Common Stock (other than shares to be cancelled in accordance
with Section 2.1(a)) shall thereupon be converted into and shall thereafter
represent .74 (the "Conversion Fraction") fully paid and nonassessable share
of Parent Common Stock (the "Merger Consideration"). As of the Effective Time,
all such shares of Company Common Stock shall no longer be outstanding and
shall automatically be cancelled and retired and shall cease to exist, and
each holder of a certificate or certificates which immediately prior to the
Effective Time represented outstanding shares of Company Common Stock
(the "Certificates") shall cease to have any rights with respect thereto,
except the right to receive (i) certificates representing the
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number of whole shares of Parent Common Stock into which such shares have been
converted (the "Parent Certificates"), (ii) certain dividends and other
distributions in accordance with Section 2.2(c), and (iii) cash in lieu of
fractional shares of Parent Common Stock in accordance with Section 2.2(e),
without interest.
(c) Each issued and outstanding share of common stock,
par value $0.01 per share, of Merger Sub shall be converted into one validly
issued, fully paid and nonassessable share of common stock of the Surviving
Corporation.
Section II.2. Exchange of Certificates
(a) Exchange Agent. As of the Effective Time, Parent shall
enter into an agreement with First Union National Bank of North Carolina or
such other bank or trust company as may be designated by Parent and as shall
be reasonably satisfactory to the Company (the "Exchange Agent"), which shall
provide that Parent shall deposit with the Exchange Agent as necessary from
time to time following the Effective Time, for the benefit of the holders of
shares of Company Common Stock, for exchange in accordance with this Article
II, through the Exchange Agent, the Parent Certificates. The Parent
Certificates (together with any dividends or distributions with respect
thereto with a record date after the Effective Time) and any cash payable in
lieu of any fractional shares of Parent Common Stock are hereinafter referred
to as the "Exchange Fund."
(b) Exchange Procedures. As soon as reasonably practicable
after the Effective Time, the Exchange Agent shall mail to each holder of
record of a Certificate whose shares were converted into the Merger
Consideration, pursuant to Section 2.1, (i) a letter of transmittal (which
shall specify that delivery shall be effected, and risk of loss and title to
the Certificates shall pass, only upon delivery of the Certificates to the
Exchange Agent and shall be in such form and have such other provisions as the
Company and Parent may reasonably specify), and (ii) instructions for use in
effecting the surrender of the Certificates in exchange for the Merger
Consideration. Upon surrender of a Certificate for cancellation to the
Exchange Agent, together with such letter of transmittal, duly executed, and
such other documents as may reasonably be required by the Exchange Agent, the
holder of such Certificate shall be entitled to receive in exchange therefor a
Parent Certificate representing that number of whole shares of Parent Common
Stock which such holder has the right to receive pursuant to the provisions of
this Article II, certain dividends or other distributions in accordance with
Section 2.2(c) and cash in lieu of any fractional share in accordance with
Section 2.2(e), and the Certificate so surrendered shall forthwith be
cancelled. In the event of a transfer of ownership of Company Common Stock
4
which is not registered in the transfer records of the Company, a Parent
Certificate representing the proper number of shares of Parent Common Stock
may be issued to a person other than the person in whose name the Certificate
so surrendered is registered if such Certificate shall be properly endorsed or
otherwise be in proper form for transfer and the person requesting such
issuance shall pay any transfer or other non-income taxes required by reason
of the issuance of shares of Parent Common Stock to a person other than the
registered holder of such Certificate or establish to the satisfaction of
Parent that any such tax has been paid or is not applicable. Parent or the
Exchange Agent shall be entitled to deduct and withhold from the consideration
otherwise payable pursuant to this Agreement to any holder of Company Common
Stock such amounts as Parent or the Exchange Agent are required to withhold or
deduct under the Code or any provision of state, local or foreign tax law with
respect to the making of such payment. To the extent that amounts are so
withheld by Parent or the Exchange Agent, such withheld amounts shall be
treated for all purposes of this Agreement as having been paid to the holder
of the Company Common Stock in respect of whom such deduction and withholding
were made by Parent or the Exchange Agent. Until surrendered as contemplated
by this Section 2.2, each Certificate shall be deemed at any time after the
Effective Time to represent only the right to receive upon such surrender
Parent Certificates representing the number of whole shares of Parent Common
Stock into which the shares of Company Common Stock formerly represented by
such Certificate have been converted, certain dividends or other distributions
in accordance with Section 2.2(c) and cash in lieu of any fractional share in
accordance with Section 2.2(e). No interest will be paid or will accrue on
any cash payable to holders of Certificates pursuant to the provisions of this
Article II.
(c) Distributions with Respect to Unexchanged Shares. 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 Certificate with respect to the shares of Parent Common Stock
represented thereby, and no cash payment in lieu of fractional shares shall be
paid to any such holder pursuant to Section 2.2(e), 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 Certificate in
accordance with this Article II. Subject to the effect of applicable escheat
or similar laws and laws with respect to the withholding of Taxes (as defined
in Section 3.14), following surrender of any such Certificate there shall be
paid to the holder of the Parent 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
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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 Section 2.2(e) 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.
(d) No Further Ownership Rights in Company Common Stock.
The transfer of shares of Parent Common Stock issued upon the surrender
for exchange of Certificates in accordance with the terms of this Article II
(including distributions and dividends paid pursuant to Section 2.2(c) and any
cash paid in lieu of fractional shares pursuant to Section 2.2(e)) shall be
deemed payment in full satisfaction of all rights pertaining to the shares of
Company Common Stock theretofore represented by such Certificates, subject,
however, to the Surviving Corporation's obligation to pay any dividends or
make any other distributions with a record date prior to the Effective Time
which may have been authorized or made by the Company on such shares of
Company Common Stock which remain unpaid at the Effective Time, and there
shall be no further registration of transfers on the stock transfer books of
the applicable Surviving Corporation of the shares of Company Common Stock
which were outstanding immediately prior to the Effective Time. If, after the
Effective Time, Certificates are presented to the Surviving Corporation or the
Exchange Agent for any reason, they shall be cancelled and exchanged as
provided in this Article II, except as otherwise provided by law.
(e) No Fractional Shares. (i) No Parent Certificates or
scrip representing fractional shares of Parent Common Stock shall be issued
upon the surrender for exchange of Certificates, no dividend or distribution
of Parent shall relate to such fractional share interests and such fractional
share interests will not entitle the owner thereof to vote or to any rights of
a stockholder of Parent.
(ii) As promptly as practicable following the Effective
Time, the Surviving Company shall pay to each holder of Company Common Stock
an amount in cash, if any, equal to the product obtained by multiplying (A)
the fractional share interest to which such holder (after taking into account
all shares of Company Common Stock held at the Effective Time by such holder)
would otherwise be entitled by (B) the closing price for a share of Parent
Common Stock as reported on the NYSE Composite Transactions Tape (as reported
in The Wall Street Journal, or, if not reported thereby, any other
authoritative source) on the day of the Effective Time.
6
(iii) As soon as practicable after the determination of the
amount of cash, if any, to be paid to holders of Company Common Stock with
respect to any fractional share interests, the Exchange Agent will make
available such amounts to such holders of Company Common Stock subject to the
terms of Section 2.2(c).
(f) Termination of Exchange Fund. Any portion of the
Exchange Fund which remains undistributed to the holders of the Certificates
for six months after the Effective Time shall be delivered to Parent upon
demand, and any holders of the Certificates who have not theretofore complied
with this Article II shall thereafter look only to Parent for payment of their
claim for Merger Consideration, any cash in lieu of fractional shares of
Parent Common Stock and any dividends or distributions with respect to Parent
Common Stock.
(g) No Liability. None of the Company, Parent, Merger Sub,
the Surviving Corporation or the Exchange Agent shall be liable to any person
in respect of any shares of Parent Common Stock (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. If any Certificate shall not have been surrendered prior to one
year after the Effective Time (or immediately prior to such earlier date on
which any Merger Consideration, any cash payable to the holder of such
Certificate pursuant to this Article II or any dividends or distributions
payable to the holder of such Certificate would otherwise escheat to or become
the property of any governmental body or authority) any such Merger
Consideration or cash, dividends or distributions in respect of such
Certificate shall, to the extent permitted by applicable law, become the
property of the Surviving Corporation, free and clear of all claims or
interest of any person previously entitled thereto.
(h) Investment of Exchange Fund. The Exchange Agent shall
invest all cash included in the Exchange Fund, as directed by Parent. Any
interest and other income resulting from such investments shall be paid to
Parent.
(i) Lost Certificates. If any Certificate shall have been
lost, stolen or destroyed, upon the making of an affidavit of that fact by the
person claiming such Certificate to be lost, stolen or destroyed and, if
required by the Surviving Corporation, the posting by such person of a bond in
such reasonable amount as the Surviving Corporation may direct as indemnity
against any claim that may be made against it with respect to such
Certificate, the Exchange Agent will issue in exchange for such lost, stolen
or destroyed Certificate the Merger Consideration and, if applicable, any cash
7
in lieu of fractional shares, and unpaid dividends and distributions on shares
of Parent Common Stock deliverable in respect thereof, pursuant to this
Agreement.
(j) Adjustments. If at any time during the period between
the date of this Agreement and the Effective Time, any change in the
outstanding shares of capital stock of Parent or the Company shall occur as a
result of any reclassification, recapitalization, stock split (including a
reverse stock split) or combination, exchange or readjustment of shares, or
any stock dividend or stock distribution with a record date during such
period, the Merger Consideration shall be equitably adjusted.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as set forth on the Disclosure Schedule delivered by
the Company to Parent prior to the execution of this Agreement (the "Company
Disclosure Schedule"), the Company represents and warrants to Parent and
Merger Sub as follows:
Section III.1. Organization, Qualification, Etc. The Company
is a corporation duly organized, validly existing and in good standing under
the laws of the State of Delaware and has the corporate power and authority to
own its properties and assets and to carry on its business as it is now being
conducted and is duly qualified to do business and is in good standing in each
jurisdiction in which the ownership of its properties or the conduct of its
business requires such qualification, except for jurisdictions in which the
failure to be so qualified or in good standing would not, individually or in
the aggregate, have a Material Adverse Effect (as hereinafter defined) on the
Company. As used in this Agreement, any reference to any state of facts,
event, change or effect having a "Material Adverse Effect" on or with respect
to the Company or Parent, as the case may be, means such state of facts,
event, change or effect that has had, or would reasonably be expected to have,
a material adverse effect on the business, results of operations or financial
condition of the Company and its Subsidiaries (as defined in Section 8.12),
taken as a whole, or Parent and its Subsidiaries, taken as a whole, as the case
may be. The copies of the Company's certificate of incorporation and by-laws
which have been delivered to Parent are complete and correct and in full force
and effect. Each of the Company's Subsidiaries is a corporation or partnership
duly organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation or organization, has the power and authority to
own its properties and to carry on its business as it is now being conducted,
and is duly qualified to do business and is in good standing in each
8
jurisdiction in which the ownership of its property or the conduct of its
business requires such qualification, except for jurisdictions in which the
failure to be so qualified or in good standing would not, individually or in
the aggregate, have a Material Adverse Effect on the Company. All the
outstanding shares of capital stock of, or other ownership interests in, the
Company's Subsidiaries which are corporations are validly issued, fully paid
and non-assessable and all the outstanding shares of capital stock of, or other
ownership interests in, the Company's Subsidiaries are owned by the Company,
directly or indirectly, free and clear of all liens, claims, mortgages,
encumbrances, pledges, security interests, equities or charges of any kind
(each, a "Lien"). Other than as set forth in partnership agreements relating
to partnerships involving the Company or any of its Subsidiaries, there are no
existing options (other than the Option Agreement), rights of first refusal,
preemptive rights, calls, claims or commitments of any character relating to
the issued or unissued capital stock or other securities of, or other
ownership interests in, any Subsidiary of the Company.
Section III.2. Capital Stock
(a) The authorized stock of the Company consists of
1,000,000,000 shares of Company Common Stock and 100,000,000 shares of
preferred stock, par value $0.01 per share ("Company Preferred Stock"), of
which 4,000,000 shares have been designated as First Series Junior
Participating Preferred Stock ("Company Series B Preferred Stock"). As of
March 10, 1998, 121,300,000 shares of Company Common Stock were issued and
outstanding and no shares of Company Preferred Stock were issued or
outstanding. All the outstanding shares of Company Common Stock have been
validly issued and are fully paid and non-assessable. There are no
outstanding subscriptions, options, warrants, rights or other arrangements or
commitments obligating the Company to issue any shares of its stock other than:
(i) rights to acquire shares of Company Series B Preferred
Stock pursuant to the Rights Agreement, dated as of March 5, 1996, between the
Company and The Chase Manhattan Bank, as successor in interest to Chemical
Bank (the "Company Rights Plan");
(ii) rights to acquire an undetermined number of shares of
Company Common Stock pursuant to the Company Employee Stock Purchase Plan,
which options are completely and accurately listed as of March 6, 1998 (the
most recent withholding date) by plan participant, payroll withholding
percentage, and cumulative amount withheld on Section 3.2(a)(ii) of the
Company Disclosure Schedule, it being understood that the actual number of
9
shares to be acquired pursuant to such rights will equal the aggregate amount
credited to participants' accounts (and not withdrawn) through April 30, 1998
divided by a purchase price equal to the lesser of (x) 85% of the closing
price of the Company Common Stock on May 1, 1997 (for the six-month purchase
period commencing on such date) or October 31, 1997 (for the six-month
purchase period commencing on November 1, 1997) or (y) 85% of such closing
price on April 30, 1998;
(iii) options to acquire 2,157,135 shares of Company Common
Stock pursuant to the Company Amended and Restated 1996 Equity Incentive Plan,
which options are completely and accurately listed by optionee, price per
share, date of grant and number of shares covered thereby on Section
3.2(a)(iii) of the Company Disclosure Schedule;
(iv) options to acquire, or stock appreciation rights in
respect of, 878,936 shares of Company Common Stock pursuant to the Company
1996 Replacement Stock Option Plan, which options and stock appreciation
rights are completely and accurately listed by optionee, exercise or strike
price per share, date of grant and number of shares covered thereby on Section
3.2(a)(iv) of the Company Disclosure Schedule;
(v) restricted stock awards (as to which the restrictions
have not lapsed) relating to 106,900 shares of Company Common Stock pursuant
to the Company Amended and Restated 1996 Equity Incentive Plan, which awards
are completely and accurately listed by grantee, date of grant and number of
shares covered thereby on Section 3.2(a)(v) of the Company Disclosure Schedule;
(vi) restricted stock awards (as to which the restrictions
have not lapsed) relating to 5,626 shares of Company Common Stock pursuant to
the Company Director Equity and Deferred Compensation Plan, which awards are
completely and accurately listed by grantee, date of grant and number of
shares covered thereby on Section 3.2(a)(vi) of the Company Disclosure
Schedule;
(vii) "phantom stock" units equivalent to 2,559 shares of
Company Common Stock awarded through March 6, 1998 (the most recent
withholding date) pursuant to the Company Retirement Savings Restoration Plan,
the Company Deferred Compensation Plan and the Company Director Equity and
Deferred Compensation Plan, which units are completely and accurately listed
by grantee and number of shares covered thereby on Section 3.2(a)(vii) of the
Company Disclosure Schedule, it being understood that the actual number of
such units to be awarded pursuant to such Plans will reflect deferrals through
the Effective Time; and
10
(viii) the Option Agreement.
(b) As of the date of this Agreement, no bonds, debentures,
notes or other indebtedness of the Company having the right to vote on any
matters on which stockholders may vote are issued or outstanding.
Section III.3. Corporate Authority Relative to this
Agreement; No Violation.
(a) The Company has the corporate power and authority to
enter into this Agreement and the Option Agreement and to carry out its
obligations hereunder and thereunder. The execution and delivery of this
Agreement and the Option Agreement and the consummation of the transactions
contemplated hereby and thereby have been duly and validly authorized by the
Board of Directors of the Company and by Continuing Director Action (as
defined in Article EIGHTH of the Company's Amended and Restated Certificate of
Incorporation) and, except for the approval and adoption of this Agreement by
its stockholders, no other corporate proceedings on the part of the Company
are necessary to authorize the consummation of the transactions contemplated
hereby and thereby. The Board of Directors of the Company has taken all
necessary and appropriate action so that Section 203 of the DGCL will be
inapplicable to this Agreement and the Option Agreement and the transactions
contemplated hereby and thereby. The Board of Directors of the Company has
determined that the transactions contemplated by this Agreement and the Option
Agreement are in the best interest of the Company and its stockholders and to
recommend to such stockholders that they approve and adopt this Agreement.
This Agreement and the Option Agreement have been duly and validly executed
and delivered by the Company and, assuming this Agreement and the Option
Agreement constitute valid and binding agreements of the other parties hereto
and thereto, this Agreement and the Option Agreement constitute valid and
binding agreements of the Company, enforceable against the Company in
accordance with their terms (except to the extent that enforceability may be
limited by applicable bankruptcy, insolvency, reorganization or other laws
affecting the enforcement of creditors' rights generally, or by principles
governing the availability of equitable remedies).
(b) The Company is not subject to or obligated under any
charter, by-law or contract provision or any license, franchise or permit, or
subject to any order or decree, which, by its terms, would be breached or
violated or would accelerate any payment or obligation, trigger any right of
first refusal or other purchase right as a result of the Company executing or,
subject to the adoption of this Agreement by its stockholders, carrying out
11
the transactions contemplated by this Agreement and the Option Agreement,
except for any breaches or violations which would not, individually or in the
aggregate, have a Material Adverse Effect on the Company. Other than in
connection with or in compliance with (i) the provisions of the DGCL, (ii) the
Securities Act of 1933, as amended (the "Securities Act"), (iii) the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), (iv) the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended (the "HSR
Act"), (v) Section 4043 of ERISA (as defined in Section 3.8), (vi) the
Communications Act of 1934, as amended (the "Communications Act") and
applicable rules, regulations, practices and policies promulgated by the
Federal Communications Commission (the "FCC"), (vii) any applicable laws,
rules, regulations, practices and orders of any state public utility
commissions ("PUCs") or similar state or foreign regulatory bodies, (viii) any
applicable non-United States competition, antitrust and investment laws and
(ix) the securities or blue sky laws of the various states (collectively, the
"Company Required Approvals"), no authorization, consent or approval of, or
filing with, any governmental body or authority is necessary for the
consummation by the Company of the transactions contemplated by this Agreement
and the Option Agreement, except for such authorizations, consents, approvals
or filings, the failure to obtain or make which would not, individually or in
the aggregate, have a Material Adverse Effect on the Company or substantially
impair or delay the consummation of the transactions contemplated hereby and
thereby.
Section III.4. Reports and Financial Statements. The Company
has previously furnished to Parent true and complete copies of:
(a) the Company's Annual Reports on Form 10-K filed with
the Securities and Exchange Commission (the "SEC") for each of the years ended
December 31, 1995 and 1996;
(b) each definitive proxy statement filed by the Company
with the SEC since February 14, 1996;
(c) each final prospectus filed by the Company with the SEC
since February 14, 1996, except any final prospectus on Form S-8; and
(d) all Current Reports on Form 8-K and Quarterly Reports
on Form 10-Q filed by the Company with the SEC since January 1, 1997.
As of their respective dates, such reports, proxy statements and prospectuses
12
(collectively, the "Company SEC Reports") (i) complied as to form in all
material respects with the applicable requirements of the Securities Act, the
Exchange Act and the rules and regulations promulgated thereunder and (ii) did
not contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading. Except to the extent that information contained in any
Company SEC Report has been revised or superseded by a later filed Company SEC
Report, none of the Company SEC Reports contains any untrue statement of a
material fact or omits to state any material fact required to be stated
therein or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. The audited
consolidated financial statements and unaudited consolidated interim financial
statements included in the Company SEC Reports (including any related notes
and schedules) fairly present the financial position of the Company and its
consolidated Subsidiaries as of the dates thereof and the results of
operations and cash flows for the periods or as of the dates then ended
(subject, in the case of the unaudited interim financial statements, to normal
recurring year-end adjustments), in each case in accordance with past practice
and generally accepted accounting principles in the United States ("GAAP")
consistently applied during the periods involved (except as otherwise
disclosed in the notes thereto). Since March 7, 1996, the Company has timely
filed all reports, registration statements and other filings required to be
filed by it with the SEC under the rules and regulations of the SEC. None of
the Company's Subsidiaries is required to file any forms, reports or other
documents with the SEC.
Section III.5. No Undisclosed Liabilities. Neither the
Company nor any of its Subsidiaries has any liabilities or obligations of any
nature, whether or not accrued, contingent or otherwise, and there is no
existing condition, situation or set of circumstances which would reasonably be
expected to result in such a liability or obligation, except (a) liabilities
or obligations reflected in the Company SEC Reports and (b) liabilities or
obligations which would not, individually or in the aggregate, have a Material
Adverse Effect on the Company.
Section III.6. No Violation of Law. The businesses of the
Company and its Subsidiaries are not being conducted in violation of any law,
ordinance or regulation of any governmental body or authority (provided that no
representation or warranty is made in this Section 3.6 with respect to
Environmental Laws (as hereinafter defined)) except (a) as described in the
Company SEC Reports and (b) for violations or possible violations which would
not, individually or in the aggregate, have a Material Adverse Effect on the
Company.
13
Section III.7. Environmental Laws and Regulations. Except as
described in the Company SEC Reports, (a) the Company and each of its
Subsidiaries is in compliance with all applicable international, federal,
state, local and foreign laws and regulations relating to pollution or
protection of human health or the environment (including, without limitation,
ambient air, surface water, ground water, land surface or subsurface strata)
(collectively, "Environmental Laws"), which compliance includes, but is not
limited to, the possession by the Company and its Subsidiaries of all material
permits and other governmental authorizations required under applicable
Environmental Laws, and compliance with the terms and conditions thereof,
except for non-compliance which would not, individually or in the aggregate,
have a Material Adverse Effect on the Company; (b) neither the Company nor any
of its Subsidiaries has received written notice of, or, is the subject of, any
actions, causes of action, claims, investigations, demands or notices by any
person asserting an obligation to conduct investigations or clean-up activities
under Environmental Law or alleging liability under or non-compliance with any
Environmental Law (collectively, "Environmental Claims") which would,
individually or in the aggregate, have a Material Adverse Effect on the
Company; and (c) there are no facts, circumstances or conditions in connection
with the operation of its business or any currently or formerly owned, leased
or operated facilities that are reasonably likely to lead to any Environmental
Claims in the future which would, individually or in the aggregate, have a
Material Adverse Effect on the Company.
Section III.8. No Undisclosed Employee Benefit Plan
Liabilities or Severance Arrangements
(a) Except as described in the Company SEC Reports, all
"employee benefit plans," as defined in Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), maintained or
contributed to by the Company or its Subsidiaries are in compliance with all
applicable provisions of each of the Code and ERISA and the rules and
regulations thereunder, and the Company and its Subsidiaries do not have any
liabilities or obligations with respect to any such employee benefit plans,
whether or not accrued, contingent or otherwise, except as described in the
Company SEC Reports. No employee of the Company will be entitled to any
additional benefits or any acceleration of the time of payment or vesting of
any benefits under any employee incentive or benefit plan, program or
arrangement as a result of the transactions contemplated by this Agreement.
(b) Any amount or other entitlement that could be received
14
(whether in cash or property or the vesting of property) as a result of any of
the transactions contemplated by this Agreement by any employee, officer or
director of the Company or any of its affiliates who is a "disqualified
individual" (as such term is defined in proposed Treasury Regulation Section
1.280G-1) under any employee benefit plan or other compensation arrangement
currently in effect would not be characterized as an "excess parachute
payment" or a "parachute payment" (as such terms are defined in Section
280G(b)(1) of the Code).
Serction III.9. Absence of Certain Changes or Events. Other
than the transactions contemplated by this Agreement or as disclosed in the
Company SEC Reports, since December 31, 1996, the businesses of the Company and
its Subsidiaries have been conducted in the ordinary course consistent with
past practice, and there has not been any event, occurrence, development or
state of circumstances or facts that has had, or would have, a Material Adverse
Effect on the Company.
Section III.10. Investigations; Litigation. Except as
described in the Company SEC Reports:
(a) there is no investigation or review pending by any
governmental body or authority with respect to the Company or any of its
Subsidiaries which would, individually or in the aggregate, have a Material
Adverse Effect on the Company, nor has any governmental body or authority
notified the Company of an intention to conduct the same; and
(b) there are no actions, suits or proceedings pending (or,
to the Company's knowledge, threatened) against or affecting the Company or
its Subsidiaries, or any of their respective properties at law or in equity,
or before any federal, state, local or foreign governmental body or authority,
which, individually or in the aggregate, are reasonably likely to have a
Material Adverse Effect on the Company.
Section III.11. Joint Proxy Statement; Registration
Statement; Other Information. None of the information with respect to the
Company or its Subsidiaries to be included in the Joint Proxy Statement (as
defined below) or the Registration Statement (as defined in Section 5.3(a)(i))
will, in the case of the Joint Proxy Statement or any amendments thereof or
supplements thereto, at the time of the mailing of the Joint Proxy Statement
or any amendments or supplements thereto, and at the time of the Company
Meeting and the Parent Meeting, or, in the case of the Registration Statement,
at the time it becomes effective, contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the
15
circumstances under which they were made, not misleading, except that no
representation is made by the Company with respect to information supplied in
writing by Parent or any affiliate of Parent specifically for inclusion in the
Joint Proxy Statement. The Joint Proxy Statement will comply as to form in
all material respects with the provisions of the Exchange Act and the rules
and regulations promulgated thereunder. The letters to stockholders, notices
of meeting, joint proxy statement and forms of proxies to be distributed to
stockholders in connection with the Merger and any schedules required to be
filed with the SEC in connection therewith are collectively referred to herein
as the "Joint Proxy Statement."
Section III.12. The Company Rights Plan. The Board of
Directors of the Company has adopted a resolution authorizing the Company
Rights Plan to be duly amended to effect the changes thereto contemplated by
the form of amendment attached hereto as Exhibit C, and as a result thereof,
the rights provided thereunder will be inapplicable to this Agreement and the
Option Agreement, and the consummation of the Merger and the other transactions
contemplated by this Agreement and the Option Agreement.
Section III.13. Lack of Ownership of Parent Common Stock.
Neither the Company nor any of its Subsidiaries owns any shares of Parent
Common Stock or other securities convertible into shares of Parent Common Stock
(exclusive of any shares owned by the Company's employee benefit plans).
Section III.14. Tax Matters. (a) All federal, state, local
and foreign Tax Returns required to be filed by or on behalf of the Company,
each of its Subsidiaries, and each affiliated, combined, consolidated or
unitary group of which the Company or any of its Subsidiaries (i) is a member
(a "Current Company Group") or (ii) has been a member within six years prior to
the date hereof but is not currently a member, but only insofar as any such Tax
Return relates to a taxable period ending on a date within the last six years
(a "Past Company Group," together with Current Company Groups, a "Company
Affiliated Group") have been timely filed, and all such Tax Returns are
complete and accurate except to the extent any failure to file or any
inaccuracies in filed returns would not, individually or in the aggregate,
have a Material Adverse Effect on the Company (it being understood that the
representations made in this Section, to the extent that they relate to Past
Company Groups, are made to the knowledge of the Company). All Taxes due and
owing by the Company, any Subsidiary of the Company or any Company Affiliated
Group have been timely paid, or adequately reserved for, except to the extent
any failure to pay or reserve would not, individually or in the aggregate, have
a Material Adverse Effect on the Company. There is no audit examination,
deficiency, refund litigation, proposed adjustment or matter in controversy
16
with respect to any Taxes due and owing by the Company, any Subsidiary of the
Company or any Affiliated Group which would, individually or in the aggregate,
have a Material Adverse Effect on the Company. All assessments for Taxes due
and owing by the Company, any Subsidiary of the Company or any Company
Affiliated Group with respect to completed and settled examinations or
concluded litigation have been paid. Prior to the date of this Agreement, the
Company has provided Parent with written schedules of (i) the taxable years of
the Company for which the statutes of limitations with respect to federal
income Taxes have not expired, and (ii) with respect to federal income Taxes,
for all taxable years for which the statute of limitations has not yet expired,
those years for which examinations have been completed, those years for which
examinations are presently being conducted, and those years for which
examinations have not yet been initiated. The Company and each of its
Subsidiaries have complied in all material respects with all rules and
regulations relating to the payment and withholding of Taxes, except to the
extent any such failure to comply would not, individually or in the aggregate,
have a Material Adverse Effect on the Company. Neither the Company nor any of
its Subsidiaries is a party to, bound by, or has any obligation under any Tax
sharing, allocation, indemnity, or similar contract or arrangement (other than
(i) the tax sharing agreement, dated as of March 7, 1996, between Sprint
Corporation and the Company (the "Tax Sharing Agreement") or (ii) the tax
assurance agreement, dated as of March 7, 1996, between Sprint Corporation and
the Company (the "Tax Assurance Agreement")).
(b) Neither the Company nor any of its Subsidiaries knows
of any fact or has taken any action that could reasonably be expected to
prevent the Merger from qualifying as a reorganization within the meaning of
Section 368(a) of the Code.
(c) Neither the Company nor any of its Subsidiaries knows
of any fact or has taken (or failed to take) any action that could constitute
a breach of its obligations or otherwise result in a liability to the Company
or any of its Subsidiaries under (i) the Tax Sharing Agreement or (ii) the Tax
Assurance Agreement. Neither the Company nor any of its Subsidiaries is a
party to or bound by (or has any obligation under) any Tax sharing,
allocation, indemnity, or similar contract or arrangement with Sprint
Corporation or any affiliate of Sprint Corporation other than the Tax Sharing
Agreement and the Tax Allocation Agreement (or under either such agreement).
To the knowledge of the Company, without independent investigation, the
private letter ruling issued on February 14, 1996 to Sprint Corporation,
Centel Corporation, Sprint Cellular Company and various other parties in
response to the request filed with the Internal Revenue Service on September
8, 1995, as supplemented, and any supplemental rulings issued with respect
thereto have not been modified, amended or supplemented and continue to be
17
valid in all respects.
(d) For purposes of this Agreement: (i) "Taxes" means any
and all federal, state, local, foreign, provincial, territorial or other
taxes, imposts, rates, levies, assessments and other charges of any kind
whatsoever whether imposed directly or through withholding (together with any
and all interest, penalties, additions to tax and additional amounts
applicable with respect thereto), including, without limitation, income,
franchise, windfall or other profits, gross receipts, property, sales, use,
capital stock, payroll, employment, social security, workers' compensation,
unemployment compensation, net worth, excise, withholding, ad valorem and
value added taxes; (ii) "Tax Return" means any declaration, return, report,
schedule, certificate, statement or other similar document (including relating
or supporting information) required to be filed or, where none is required to
be filed with a taxing authority, the statement or other document issued by a
taxing authority in connection with any Tax, including, without limitation,
any information return, claim for refund, amended return or declaration of
estimated Tax; and (iii) "Material State" means any state for which the
average allocation percentage of the Company and its Subsidiaries for the past
three years exceeds ten percent (10%).
Section III.15. Opinion of Financial Advisor. The Board of
Directors of the Company has received the opinion of Lazard Freres & Company
LLC, dated the date of this Agreement, substantially to the effect that, as of
such date, the Merger Consideration is fair to the holders of the Company
Common Stock from a financial point of view. The Company has delivered a
complete and accurate copy of such opinion to the Parent.
Section III.16. Required Vote of the Company Stockholders.
The affirmative vote of the holders of a majority of the outstanding shares of
Company Common Stock (the "Company Stockholder Approval") is required to
approve and adopt this Agreement. No other vote of the stockholders of the
Company, or of the holders of any other securities of the Company (equity or
otherwise), is required by law, the certificate of incorporation or by-laws of
the Company or otherwise in order for the Company to consummate the Merger and
the transactions contemplated hereby and by the Option Agreement.
Section III.17. Material Contracts. Except as set forth in
the Company SEC Reports, neither the Company nor any of its Subsidiaries is a
party to or bound by any "material contract" (as such term is defined in item
601(b)(10) of Regulation S-K of the SEC) (all contracts of the type described
in this Section 3.17 being referred to herein as "Company Material Contracts").
Each Company Material Contract is valid and binding on the Company and is in
18
full force and effect, and the Company and each of its Subsidiaries have in all
material respects performed all obligations required to be performed by them to
date under each Company Material Contract, except where such noncompliance,
individually or in the aggregate, would not have a Material Adverse Effect on
the Company. Neither the Company nor any of its Subsidiaries knows of, or has
received notice of, any violation or default under any Company Material
Contract except for such violations or defaults as would not in the aggregate
have a Material Adverse Effect on the Company.
Section III. 18. Takeover Statute. The Board of Directors of
the Company has approved this Agreement and the transactions contemplated
hereby and, assuming the accuracy of the representation and warranty contained
in Section 4.12, such approval constitutes approval of the Merger and the other
transactions contemplated hereby by the Board of Directors of the Company under
the provisions of Section 203 of the DGCL such that Section 203 of the DGCL
does not apply to this Agreement and the transactions contemplated hereby.
To the knowledge of the Company, no other state takeover statute is applicable
to the Merger or the other transactions contemplated hereby.
Section III. 19. Finders or Brokers. Except for Lazard Freres
& Company LLC, a copy of whose engagement agreement has been or will be
provided to Parent, neither the Company nor any of its Subsidiaries has
employed any investment banker, broker, finder or intermediary in connection
with the transactions contemplated hereby who might be entitled to any fee or
any commission in connection with or upon consummation of the Merger.
Section III. 20. Pooling of Interests. Neither the Company
nor any of its Subsidiaries has taken any action or failed to take any action
which action or failure (without giving effect to any actions or failures to
act by Parent or any of its Subsidiaries) would prevent the treatment of the
Merger as a pooling of interests for accounting purposes.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT
Except as set forth on the Disclosure Schedule delivered by
Parent to the Company prior to the execution of this Agreement (the "Parent
19
Disclosure Schedule," and together with the Company Disclosure Schedule, the
"Disclosure Schedule"), Parent and Merger Sub represent and warrant to the
Company as follows:
Section IV.1. Organization Qualification, Etc. Parent is a
corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware and has the corporate power and authority to own
its properties and assets and to carry on its business as it is now being
conducted and is duly qualified to do business and is in good standing in each
jurisdiction in which the ownership of its properties or the conduct of its
business requires such qualification, except for jurisdictions in which the
failure to be so qualified or in good standing would not, individually or in
the aggregate, have a Material Adverse Effect on Parent. The copies of the
Parent's certificate of incorporation and by-laws which have been delivered to
the Company are complete and correct and in full force and effect. Each of the
Parent's Subsidiaries (including Merger Sub) is duly organized, validly
existing and in good standing under the laws of its jurisdiction of
incorporation or organization, has the power and authority to own its
properties and to carry on its business as it is now being conducted, and is
duly qualified to do business and is in good standing in each jurisdiction in
which the ownership of its property or the conduct of its business requires
such qualification, except for jurisdictions in which the failure to be so
qualified or in good standing would not, individually or in the aggregate,
have a Material Adverse Effect on the Parent. All the outstanding shares of
capital stock of, or other ownership interests in, the Parent's Subsidiaries
are validly issued, fully paid and non-assessable and are owned by Parent,
directly or indirectly, free and clear of all Liens. There are no existing
options, rights of first refusal, preemptive rights, calls, claims or
commitments of any character relating to the issued or unissued capital stock
or other securities of, or other ownership interests in, any Subsidiary of
Parent.
Section IV.2. Capital Stock
(a) The authorized capital stock of Parent consists of
500,000,000 shares of common stock, par value $1.00 per share ("Parent Common
Stock"), 50,000,000 shares of cumulative preferred stock, par value $25.00 per
share ("Par Preferred Stock"), and 50,000,000 shares of no par cumulative
preferred stock ("No Par Preferred Stock," and together with Par Preferred
Stock, "Parent Preferred Stock"). As of February 23, 1998, 184,263,179 shares
of Parent Common Stock, 340,792 shares of Par Preferred Stock and 123,490
shares of No Par Preferred Stock were issued and outstanding. All the
outstanding shares of Parent Common Stock and Parent Preferred Stock have been
validly issued and are fully paid and non-assessable. As of February 23, 1998,
20
there are no outstanding subscriptions, options, warrants, rights or other
arrangements or commitments obligating Parent to issue any shares of its
capital stock other than:
(i) rights to acquire shares of Parent's Series K
Cumulative Voting Preferred Stock pursuant to the Rights Agreement, dated as
of January 30, 1997, between Parent and First Union National Bank of North
Carolina;
(ii) options and other rights to receive or acquire
291,169 shares of Parent Common Stock pursuant to the Amended and Restated
1975 Incentive Stock Option Plan;
(iii) options and other rights to receive or acquire
2,464,841 shares of Parent Common Stock pursuant to the 1991 Stock Option Plan;
(iv) options and other rights to receive or acquire
6,032,161 shares of Parent Common Stock pursuant to the 1994 Employee
Stock Option Plan;
(v) options and other rights to receive or acquire
167,701 shares of Parent Common Stock pursuant to the 1994 Non-Employee
Directors Stock Option Plan, as amended; and
(vi) options and other rights (including restricted
stock awards as to which the restrictions have not lapsed) to receive or
acquire 11,730 shares of Parent Common Stock pursuant to other employee
incentive or benefit plans, programs and arrangements and non-employee
director plans.
(b) As of the date of this Agreement, no bonds, debentures,
notes or other indebtedness of Parent having the right to vote on any matters
on which stockholders may vote are issued or outstanding.
Section IV.3. Corporate Authority Relative to this
Agreement; No Violation.
(a) Each of Parent and Merger Sub has the corporate power
and authority to enter into this Agreement and the Option Agreement and to
carry out its obligations hereunder and thereunder. The execution and delivery
of this Agreement and the Option Agreement and the consummation of the
transactions contemplated hereby and thereby have been duly and validly
authorized by the Board of Directors of Parent and Merger Sub and, except for
21
the approval by its stockholders of the issuance by Parent of the Merger
Consideration, no other corporate proceedings on the part of Parent or Merger
Sub are necessary to authorize the consummation of the transactions
contemplated hereby and thereby. The Board of Directors of Parent has
determined that the transactions contemplated by this Agreement and the Option
Agreement are in the best interest of Parent and its stockholders and to
recommend to such stockholders that they approve the issuance of the Merger
Consideration. This Agreement and the Option Agreement have been duly and
validly executed and delivered by Parent and Merger Sub and, assuming this
Agreement and the Option Agreement constitute valid and binding agreements of
the other parties hereto, this Agreement and the Option Agreement constitute
valid and binding agreements of Parent and Merger Sub, enforceable against
Parent and Merger Sub in accordance with their terms (except to the extent
that enforceability may be limited by applicable bankruptcy, insolvency,
reorganization or other laws affecting the enforcement of creditors' rights
generally, or by principles governing the availability of equitable remedies).
(b) Neither Parent nor Merger Sub is subject to or obligated
under any charter, by-law or contract provision or any license, franchise or
permit, or subject to any order or decree, which, by its terms, would be
breached or violated or would accelerate any payment or obligation, trigger
any right of first refusal or other purchase right as a result of Parent or
Merger Sub executing or, subject to approval of the issuance of the Merger
Consideration by Parent's stockholders, carrying out the transactions
contemplated by this Agreement and the Option Agreement, except for any
breaches or violations which would not, individually or in the aggregate, have
a Material Adverse Effect on Parent. Other than in connection with or in
compliance with (i) the provisions of the DGCL, (ii) the Securities Act,
(iii) the Exchange Act, (iv) the XXX Xxx, (x) Xxxxxxx 0000 xx XXXXX, (xx)
the Communications Act and applicable rules, regulations, practices and
policies promulgated by the FCC, (vii) any applicable laws, rules, regulations,
practices and orders of any PUCs or similar state or foreign regulatory bodies,
(viii) any applicable non-United States competition, antitrust and investments
laws, (ix) the securities or blue sky laws of the various states and (x) the
rules and regulations of the NYSE (collectively, the "Parent Required
Approvals"), no authorization, consent or approval of, or filing with, any
governmental body or authority is necessary for the consummation by Parent of
the transactions contemplated by this Agreement and the Option Agreement,
except for such authorizations, consents, approvals or filings, the failure
to obtain or make which would not, individually or in the aggregate, have a
Material Adverse Effect on Parent or substantially impair or delay the
22
consummation of the transactions contemplated hereby and thereby.
Section IV.4. Reports and Financial Statements. Parent has
previously furnished to the Company true and complete copies of:
(a) Parent's Annual Reports on Form 10-K filed with the
SEC for each of the years ended December 31, 1995 through 1997;
(b) each definitive proxy statement filed by Parent with
the SEC since December 31, 1995;
(c) each final prospectus filed by Parent with the
SEC since December 31, 1995, except any final prospectus on Form S-8; and
(d) all Current Reports on Form 8-K filed by Parent with
the SEC since January 1, 1998.
As of their respective dates, such reports, proxy statements and prospectuses
(collectively, "Parent SEC Reports") (i) complied as to form in all material
respects with the applicable requirements of the Securities Act, the Exchange
Act, and the rules and regulations promulgated thereunder and (ii) did not
contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading.
Except to the extent that information contained in any Parent SEC Report has
been revised or superseded by a later filed Parent SEC Report, none of the
Parent SEC Reports contains any untrue statement of a material fact or
omits to state any material fact required to be stated therein or necessary in
order to make the statement therein, in light of the circumstances under which
they were made, not misleading. The audited consolidated financial statements
and unaudited consolidated interim financial statements included in the Parent
SEC Reports (including any related notes and schedules) fairly present the
financial position of Parent and its consolidated Subsidiaries as of the dates
thereof and the results of their operations and their cash flows for the
periods or as of the dates then ended (subject, in the case of the unaudited
interim financial statements, to normal recurring year-end adjustments), in
each case in accordance with past practice and GAAP consistently applied
during the periods involved (except as otherwise disclosed in the notes
thereto). Since January 1, 1996, Parent has timely filed all reports,
registration statements and other filings required to be filed by it
with the SEC under the rules and regulations of the SEC. None of Parent's
23
Subsidiaries is required to file any forms, reports or other documents with
the SEC.
Section IV.5. No Undisclosed Liabilities. Neither Parent nor
any of its Subsidiaries has any liabilities or obligations of any nature,
whether or not accrued, contingent or otherwise, and there is no existing
condition, situation or set of circumstances which would reasonably be
expected to result in such a liability or obligation, except (a) liabilities
or obligations reflected in the Parent SEC Reports and (b) liabilities or
obligations which would not, individually or in the aggregate, have a Material
Adverse Effect on Parent.
Section IV.6. No Violation of Law. The businesses of Parent
and its Subsidiaries are not being conducted in violation of any law, ordinance
or regulation of any governmental body or authority (provided that no
representation or warranty is made in this Section 4.6 with respect to
Environmental Laws) except (a) as described in the Parent SEC Reports and (b)
for violations or possible violations which would not, individually or in the
aggregate, have a Material Adverse Effect on Parent.
Section IV.7. Environmental Laws and Regulations. Except as
described in the Parent SEC Reports, (a) Parent and each of its Subsidiaries
is in compliance with all applicable Environmental Laws, which compliance
includes, but is not limited to, the possession by Parent and its Subsidiaries
of all material permits and other governmental authorizations required under
applicable Environmental Laws, and compliance with the terms and conditions
thereof, except for non-compliance which would not, individually or in the
aggregate, have a Material Adverse Effect on Parent; (b) neither Parent nor
any of its Subsidiaries has received written notice of, or, is the subject of,
any Environmental Claims which would, individually or in the aggregate, have a
Material Adverse Effect on Parent; and (c) there are no facts, circumstances
or conditions in connection with the operation of its business or any
currently or formerly owned, leased or operated facilities that are reasonably
likely to lead to any Environmental Claims in the future which would,
individually or in the aggregate, have a Material Adverse Effect on Parent.
Section IV.8. No Undisclosed Employee Benefit Plan
Liabilities or Severance Arrangements. Except as described in the Parent SEC
Reports, all "employee benefit plans," as defined in Section 3(3) of ERISA,
maintained or contributed to by Parent or its Subsidiaries are in compliance
with all applicable provisions of each of the Code and ERISA and the rules and
regulations thereunder, and Parent and its Subsidiaries do not have any
24
liabilities or obligations with respect to any such employee benefit plans,
whether or not accrued, contingent or otherwise, except as described in the
Parent SEC Reports. No employee of Parent will be entitled to any additional
benefits or any acceleration of the time of payment or vesting of any benefits
under any employee incentive or benefit plan, program or arrangement as a
result of the transactions contemplated by this Agreement.
Section IV.9. Absence of Certain Changes or Events. Other
than the transactions contemplated by this Agreement or as disclosed in the
Parent SEC Reports, since December 31, 1997, the businesses of Parent and its
Subsidiaries have been conducted in the ordinary course consistent with past
practice, and there has not been any event, occurrence, development or state
of circumstances or facts that has had, or would have, a Material Adverse
Effect on Parent.
Section IV.10. Investigations; Litigation. Except as
described in the Parent SEC Reports:
(a) there is no investigation or review pending by any
governmental body or authority with respect to Parent or any of its
Subsidiaries which would, individually or in the aggregate, have a Material
Adverse Effect on Parent, nor has any governmental body or authority notified
Parent of an intention to conduct the same; and
(b) there are no actions, suits or proceedings pending (or,
to Parent's knowledge, threatened) against or affecting Parent or its
Subsidiaries, or any of their respective properties at law or in equity, or
before any federal, state, local or foreign governmental body or authority
which, individually or in the aggregate, are reasonably likely to have a
Material Adverse Effect on Parent.
Section IV.11. Joint Proxy Statement; Registration
Statement; Other Information. None of the information with respect to Parent to
be included in the Joint Proxy Statement or the Registration Statement will,
in the case of the Joint Proxy Statement or any amendments thereof or
supplements thereto, at the time of the mailing of the Joint Proxy Statement
or any amendments or supplements thereto, and at the time of the Company
Meeting and the Parent Meeting, or, in the case of the Registration Statement,
at the time it becomes effective, contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading, except that no
25
representation is made by Parent with respect to information supplied in
writing by the Company or any affiliate of the Company specifically for
inclusion in the Joint Proxy Statement. The Joint Proxy Statement will comply
as to form in all material respects with the provisions of the Exchange Act
and the rules and regulations promulgated thereunder.
Section IV.12. Lack of Ownership of the Company Common
Stock. Neither Parent nor any of its Subsidiaries owns any shares of the
Company Common Stock or other securities convertible into shares of the
Company Common Stock (exclusive of any shares owned by Parent's employee
benefit plans).
Section IV.13. Required Vote of Parent Stockholders. The
affirmative vote of the holders of a majority of the shares of Parent Common
Stock and Par Preferred Stock (voting together as a single class) present in
person or represented by proxy at the Parent Meeting (as hereinafter defined)
and entitled to vote (the "Parent Stockholder Approval") is required to approve
the issuance of the Merger Consideration by Parent. No other vote of the
stockholders of Parent, or of the holders of any other securities of Parent
(equity or otherwise), is required by law, the certificate of incorporation or
by-laws of Parent or otherwise in order for Parent to consummate the
Merger and the transactions contemplated hereby and by the Option
Agreement.
Section IV.14. Finders or Brokers. Except for Xxxxxxx Lynch,
Pierce, Xxxxxx & Xxxxx Incorporated and Xxxxxxxx Inc., a copy of whose
engagement agreements have been or will be provided to the Company, neither
Parent nor any of its Subsidiaries has employed any investment banker, broker,
finder or intermediary in connection with the transactions contemplated hereby
who might be entitled to any fee or any commission in connection with or
upon consummation of the Merger.
Section IV.15. Pooling of Interests. Neither Parent nor any
of its Subsidiaries has taken any action or failed to take any action which
action or failure (without giving effect to any actions or failures to act by
the Company or any of its Subsidiaries) would prevent the treatment of the
Merger as a pooling of interests for accounting purposes.
Section 4.16. Opinions of Financial Advisors. The Board of
Directors of Parent has received the opinions of Xxxxxxx Lynch, Pierce, Xxxxxx
& Xxxxx Incorporated and of Xxxxxxxx Inc., dated the date of this Agreement,
26
substantially to the effect that, as of such date, the Conversion Fraction is
fair to Parent from a financial point of view. Parent has delivered a complete
and accurate copy of such opinion to the Company.
Section 4.17. Tax Matters. (a) All federal, state, local
and foreign Tax Returns required to be filed by or on behalf of Parent, each of
its Subsidiaries, and each affiliated, combined, consolidated or unitary
group of which Parent or any of its Subsidiaries (i) is a member (a
"Current Parent Group") or (ii) has been a member within six years prior
to the date hereof but is not currently a member, but only insofar as
any such Tax Return relates to a taxable period ending on a date within
the last six years (a "Past Parent Group," together with Current Parent
Groups, a "Parent Affiliated Group") have been timely filed, and all
such Tax Returns are complete and accurate except to the extent any
failure to file or any inaccuracies in filed returns would not,
individually or in the aggregate, have a Material Adverse Effect on
Parent (it being understood that the representations made in this
Section, to the extent that they relate to Past Parent Groups, are made
to the knowledge of Parent). All Taxes due and owing by Parent, any
Subsidiary of Parent or any Parent Affiliated Group have been timely
paid, or adequately reserved for, except to the extent any failure to
pay or reserve would not, individually or in the aggregate, have a
Material Adverse Effect on Parent. There is no audit examination,
deficiency, refund litigation, proposed adjustment or matter in
controversy with respect to any Taxes due and owing by Parent, any
Subsidiary of Parent or any Affiliated Group which would, individually
or in the aggregate, have a Material Adverse Effect on Parent. All
assessments for Taxes due and owing by Parent, any Subsidiary of Parent
or any Parent Affiliated Group with respect to completed and settled
examinations or concluded litigation have been paid. Parent and each of
its Subsidiaries have complied in all material respects with all rules
and regulations relating to the payment and withholding of Taxes, except
to the extent any such failure to comply would not, individually or in
the aggregate, have a Material Adverse Effect on Parent.
(b) Neither Parent nor any of its Subsidiaries knows
of any fact or has taken any action that could reasonably be expected to
prevent the Merger from qualifying as a reorganization within the
meaning of Section 368(a) of the Code.
(c) Neither Parent nor any of its Subsidiaries is a
party to or bound by (or has any obligation under) any Tax sharing,
allocation, indemnity, or similar contract.
Section 4.18. Material Contracts. Except as set forth in the
27
Parent SEC Reports, neither Parent nor any of its Subsidiaries is a party to or
bound by any "material contract" (as such term is defined in item 601(b)(10)
of Regulation S-K of the SEC)(all contracts of the type described in this
Section 4.18 being referred to herein as "Parent Material Contracts").
Each Parent Material Contract is valid and binding on Parent and is in
full force and effect, and Parent and each of its Subsidiaries have in
all material respects performed all obligations required to be performed
by them to date under each Parent Material Contract, except where such
noncompliance, individually or in the aggregate, would not have a
Material Adverse Effect on Parent. Neither Parent nor any of its
Subsidiaries knows of, or has received notice of, any violation or
default under any Parent Material Contract except for such violations or
defaults as would not in the aggregate have a Material Adverse Effect on
the Parent.
ARTICLE V
COVENANTS AND AGREEMENTS
Section V.1. Conduct of Business by the Company or
Parent. From and after the date hereof and prior to the Effective Time or the
date, if any, on which this Agreement is earlier terminated pursuant to
Section 7.1 (the "Termination Date"), and except (i) as may be required by
law (provided that any party availing itself of such exception must first
consult with the other party), (ii) as may be agreed in writing by Parent
and the Company, (iii) as may be expressly permitted pursuant to this
Agreement, or (iv) as set forth in Section 5.1 of the Company Disclosure
Schedule or the Parent Disclosure Schedule, as the case may be:
(a) the Company:
(i) shall, and shall cause each of its Subsidiaries
to, conduct its operations according to their ordinary and usual course
of business in substantially the same manner as heretofore conducted;
(ii) shall use its reasonable best efforts, and shall
cause each of its Subsidiaries to use its reasonable best efforts, to
preserve intact its business organization and goodwill (except that any
of its Subsidiaries may be merged with or into, or be consolidated with
any of its other Subsidiaries or may be liquidated into the Company or
any of its Subsidiaries), keep available the services of its current
28
officers and other key employees and preserve its relationships with
those persons having business dealings with the Company and its
Subsidiaries;
(iii) shall confer at such times as Parent may
reasonably request with one or more representatives of Parent to report
material operational matters and the general status of ongoing
operations (to the extent Parent reasonably requires such information);
(iv) shall notify Parent of any emergency or other
change in the normal course of its or its Subsidiaries' respective
businesses or in the operation of its or its Subsidiaries' respective
properties and of any complaints, investigations or hearings (or
communications indicating that the same may be contemplated) of any
governmental body or authority if such emergency, change, complaint,
investigation or hearing could have a Material Adverse Effect on the
Company;
(v) shall not, and shall not (except in the ordinary
course of business consistent with past practice) permit any of its
Subsidiaries that is not wholly owned to, authorize or pay any dividends
on or make any distribution with respect to its outstanding shares of
stock;
(vi) shall not, and shall not permit any of its
Subsidiaries to, split, combine or reclassify any 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, except for any such transaction by a wholly owned Subsidiary of
the Company which remains a wholly owned Subsidiary after consummation
of such transaction;
(vii) shall not, and shall not permit any of its
Subsidiaries to, except in the ordinary course of business consistent
with past practice, enter into or amend any employment, severance or
similar agreements or arrangements with any of their respective
directors or executive officers;
(viii) shall not, and shall not permit any of its
Subsidiaries to, authorize, propose or announce an intention to
authorize or propose, or enter into an agreement with respect to, any
merger, consolidation or business combination (other than (A) the Merger
and (B) any mergers, consolidations or business combinations with the
Company's Subsidiaries entered into in the ordinary course of business
consistent with past practice or which comply with the size of
transactions limitations set forth at the end of this clause (viii)),
any acquisition of assets or securities, any disposition of assets or
29
securities or any release or relinquishment of material contract rights,
in each case not in the ordinary course of business consistent with past
practice, except that the Company may acquire or dispose of assets or
securities in transactions where the fair market value of the
consideration paid or received does not exceed $25 million in any single
transaction or $100 million in all such transactions;
(ix) shall not propose or adopt any amendments to its
corporate charter or by-laws;
(x) shall not, and shall not permit any of its
Subsidiaries to, issue or authorize the issuance of, or agree to issue
or sell any shares of their capital stock of any class (whether through
the issuance or granting of options, warrants, commitments,
subscriptions, rights to purchase or otherwise);
(xi) shall not, and shall not permit any of its
Subsidiaries to, grant, confer or award any options, warrants,
conversion rights or other rights, not existing on the date hereof, to
acquire any shares of its capital stock;
(xii) shall not, and shall not permit any of its
Subsidiaries to, purchase or redeem any shares of its stock or any
rights, warrants or options to acquire any such shares;
(xiii) shall not, and shall not permit any of its
Subsidiaries to, amend in any respect the terms of their respective
employee benefit plans, programs or arrangements or any severance or
similar agreements or arrangements in existence on the date hereof, or
adopt any new employee benefit plans, programs or arrangements or any
severance or similar agreements or arrangements;
(xiv) shall not, and shall not permit any of its
Subsidiaries to, incur, assume or prepay any indebtedness or any other
material liabilities, other than in the ordinary course of business
consistent with past practice;
(xv) shall not, and shall not permit any of its
Subsidiaries to, (i) make any loans, advances or capital contributions
to, or investments in, any other person, other than by the Company or a
Subsidiary of the Company to or in the Company or any wholly-owned
Subsidiary of the Company or (ii) pay, discharge or satisfy any claims,
liabilities or obligations (absolute, accrued, asserted or unasserted,
contingent or otherwise), other than indebtedness, issuances of debt
30
securities, guarantees, loans, advances, capital contributions,
investments, payments, discharges or satisfactions incurred or committed
to in the ordinary course of business consistent with past practice;
(xvi) shall not sell, lease, license, mortgage or
otherwise encumber or subject to any Lien or otherwise dispose of any of
its properties or assets (including securitizations), other than in the
ordinary course of business consistent with past practice;
(xvii) shall not, and shall not permit any of its
Subsidiaries to, (i) make any Tax election or settle or compromise any
Tax liability or (ii) change its fiscal year;
(xviii) except as disclosed in the Company SEC
Reports filed prior to the date of this Agreement, or as required by a
governmental body or authority, shall not change its methods of
accounting (including, without limitation, make any material write-off
or reduction in the carrying value of any assets) in effect at December
31, 1997, except as required by changes in GAAP as concurred in by the
Company's independent auditors;
(xix) shall not, and shall not permit any of its
Subsidiaries to, take any action or fail to take any action which action
or failure to act would, or would be reasonably likely to, prevent the
parties hereto from accounting for the Merger in accordance with the
pooling of interests method of accounting under the requirements of
Opinion No. 16 "Business Combinations" of the Accounting Principles
Board of the American Institute of Certified Public Accountants, as
amended by applicable pronouncements by the Financial Accounting
Standards Board ("APB No. 16"); and
(xx) shall not, and shall not permit any of its
Subsidiaries to, agree, in writing or otherwise, to take any of the
foregoing actions or take any action which would (x) make any
representation or warranty in Article III hereof untrue or incorrect or
(y) result in any of the conditions to the Merger set forth in Article
VI not being satisfied; and
(b) the Parent:
(i) shall, and shall cause each of its Subsidiaries
to, conduct its operations according to their ordinary and usual course
of business in substantially the same manner as heretofore conducted,
31
except that nothing contained in this subsection 5.1(b)(i) shall limit
Parent's ability to authorize or propose, or enter into, an agreement
with respect to any (A) acquisitions in which the aggregate value of the
consideration paid does not exceed $900 million, (B) dispositions of
assets held for sale and other assets in which the aggregate value of
the consideration received does not exceed 10% of Parent's total assets,
or (C) issuance of debt or equity securities;
(ii) shall use its reasonable best efforts, and shall
cause each of its Subsidiaries to use its reasonable best efforts, to
preserve intact its business organization (except that any of its
Subsidiaries may be merged with or into, or be consolidated with any of
its other Subsidiaries or may be liquidated into Parent or any of its
Subsidiaries), and to preserve its relationships with those person
having business dealings with Parent and its Subsidiaries;
(iii) shall notify the Company of any emergency or
other change in the normal course of its or its Subsidiaries' respective
businesses or in the operation of its or its Subsidiaries' respective
properties and of any complaints, investigations or hearings (or
communications indicating that the same may be contemplated) of any
governmental body or authority if such emergency, change, complaint,
investigation or hearing would reasonably be expected to have a Material
Adverse Effect on Parent;
(iv) shall not, and shall not (except in the ordinary
course of business consistent with past practice) permit any of its
Subsidiaries that is not wholly owned to, authorize or pay any dividends
on or make any distribution with respect to its outstanding shares of
stock, except that Parent may continue to pay dividends on the Parent
Common Stock at times consistent with past practice and in per share
amounts not in excess of 150% of the per share amount of the most recent
dividend paid on the Parent Common Stock prior to the date of this
Agreement;
(v) shall not propose or adopt any amendments to its
corporate charter or by-laws;
(vi) shall not, and shall not permit any of its
Subsidiaries to, take any action or fail to take any action which action
or failure to act would, or would be reasonably likely to, prevent the
parties hereto from accounting for the Merger in accordance with the
pooling of interests method of accounting under the requirements of APB
No. 16; and
32
(vii) shall not, and shall not permit any of its
Subsidiaries to agree, in writing or otherwise, to take any of the
foregoing actions or to take any action which would (x) make any
representation or warranty in Article IV hereof untrue or incorrect or
(y) result in any of the conditions to the Merger set forth in Article
VI not being satisfied.
Section V.2. Investigation. Each of the Company and Parent
shall afford to one another and to one another's officers, employees,
accountants, counsel and other authorized representatives full and complete
access during normal business hours, throughout the period prior to the earlier
of the Effective Time or the Termination Date, to its and its Subsidiaries'
properties, contracts, commitments, books and records and any report,
schedule or other document filed or received by it pursuant to the
requirements of federal or state securities laws and shall use their
reasonable best efforts to cause their respective representatives to
furnish promptly to one another such additional financial and operating
data and other information as to its and its Subsidiaries' respective
businesses and properties as the other or its duly authorized
representatives may from time to time reasonably request, except that
nothing herein shall require either the Company or Parent or any of
their respective Subsidiaries to disclose any information to the other
that would cause significant competitive harm to such disclosing party
or its affiliates if the transactions contemplated by this Agreement are
not consummated. The parties hereby agree that each of them will treat
any such information in accordance with the Confidentiality and
Standstill Agreement, dated as of August 26, 1997, between the Company
and Parent (the "Confidentiality Agreement"). Notwithstanding any
provision of this Agreement to the contrary, no party shall be obligated
to make any disclosure in violation of applicable laws or regulations,
including any such laws or regulations pertaining to the treatment of
classified information.
Section V.3. Joint Proxy Material; Registration
Statement. (a) The Company and Parent shall together, or
pursuant to an allocation of responsibility to be agreed upon between
them:
(i) prepare and file with the SEC as soon as is
reasonably practicable the Joint Proxy Statement and a registration
statement on Form S-4 under the Securities Act with respect to the
Parent Common Stock issuable in the Merger (the "Registration
Statement"), and shall use their reasonable best efforts to have the
Joint Proxy Statement cleared by the SEC under the Exchange Act and the
Registration Statement declared effective by the SEC under the
Securities Act;
33
(ii) as soon as is reasonably practicable take all
such action as may be required under state blue sky or securities laws
in connection with the transactions contemplated by this Agreement;
(iii) promptly prepare and file with the NYSE and
such other stock exchanges as shall be agreed upon listing applications
covering the shares of Parent Common Stock issuable in the Merger and
use their reasonable best efforts to obtain, prior to the Effective
Time, approval for the listing of such Parent Common Stock, subject only
to official notice of issuance;
(iv) cooperate with one another in order to lift any
injunctions or remove any other impediment to the consummation of the
transactions contemplated herein; and
(v) cooperate with one another in obtaining opinions
of Xxxxxxxxxxxx Xxxx & Xxxxxxxxx, counsel to the Company, and Skadden,
Arps, Slate, Xxxxxxx & Xxxx LLP, counsel to Parent, dated as of the
Effective Time, to the effect that the Merger will qualify as a
reorganization within the meaning of Section 368(a) of the Code. In
connection therewith, each of the Company, Parent and Merger Sub shall
deliver to Xxxxxxxxxxxx Xxxx & Xxxxxxxxx and Skadden, Arps, Slate,
Xxxxxxx & Xxxx LLP, respectively, representation letters in form and
substance reasonably satisfactory to such tax counsel.
(b) Subject to the limitations contained in Section
5.2, the Company and Parent shall each furnish to one another and to one
another's counsel all such information as may be required in order to
effect the foregoing actions and each represents and warrants to the
other that no information furnished by it in connection with such
actions or otherwise in connection with the consummation of the
transactions contemplated by this Agreement will contain any untrue
statement of a material fact or omit to state a material fact required
to be stated in order to make any information so furnished, in light of
the circumstances under which it is so furnished, not misleading.
(c) The Company and Parent shall cause the Joint
Proxy Statement to be mailed to their respective stockholders, in each
case as promptly as practicable after the Registration Statement is
declared effective under the Securities Act.
(d) The Company shall, as soon as practicable
following the date of this Agreement, duly call, give notice of, convene
34
and hold a meeting of its stockholders (the "Company Meeting") for the
purpose of obtaining the Company Stockholder Approval and shall, through
its Board of Directors, recommend to its stockholders the adoption of
this Agreement, the Merger and the other transactions contemplated
hereby. Without limiting the generality of the foregoing but subject to
its rights to terminate this Agreement pursuant to Section 7.1, the
Company agrees that its obligations pursuant to the first sentence of
this Section 5.3(d) shall not be affected by the commencement, public
proposal, public disclosure or communication to the Company of any
Takeover Proposal (as defined in Section 5.9).
(e) Parent shall, as soon as practicable following
the date of this Agreement, duly call, give notice of, convene and hold
a meeting of its stockholders (the "Parent Meeting") for the purpose of
obtaining the Parent Stockholder Approval and shall, through its Board
of Directors, recommend to its stockholders that they approve the
issuance of the Merger Consideration.
(f) Each of the Company and Parent will use their
reasonable best efforts to hold the Company Meeting and the Parent
Meeting on the same date and as soon as practicable after the date
hereof.
Section V.4. Affiliate Agreements.
(a) The Company shall, prior to the Effective Time,
deliver to Parent a list (reasonably satisfactory to counsel for
Parent), setting forth the names and addresses of all persons who are,
at the time of the Company Meeting, in the Company's reasonable
judgment, "affiliates" of the Company for purposes of Rule 145 under the
Securities Act or under applicable SEC accounting releases with respect
to pooling of interests accounting treatment. The Company shall furnish
such information and documents as Parent may reasonably request for the
purpose of reviewing such list. The Company shall use its reasonable
best efforts to cause each person who is identified as an "affiliate" in
the list furnished pursuant to this Section 5.4 to execute a written
agreement on or prior to the mailing of the Joint Proxy Statement,
substantially in the form of Exhibit A hereto.
(b) Parent shall, prior to the Effective Time,
deliver to the Company a list (reasonably satisfactory to counsel for
the Company), setting forth the names and addresses of all persons who
are, at the time of the Parent Meeting, in Parent's reasonable judgment,
"affiliates" of Parent for purposes of Rule 145 under the Securities Act
or under applicable SEC accounting releases with respect to pooling of
35
interests accounting treatment. Parent shall furnish such information
and documents as the Company may reasonably request for the purpose of
reviewing such list. Parent shall use its reasonable best efforts to
cause each person who is identified as an "affiliate" in the list
furnished pursuant to this Section 5.4 to execute a written agreement on
or prior to the mailing of the Joint Proxy Statement, substantially in
the form of Exhibit B hereto.
Section V.5. Employee Stock Options, Incentive and
Benefit Plans.
(a) Simultaneously with the Merger, (i) each
outstanding option (the "Company Stock Options"), and related stock
appreciation right (the "Company SAR"), if any, to purchase or acquire a
share of Company Common Stock under employee incentive or benefit plans,
programs or arrangements and non-employee director plans presently
maintained by the Company (the "Company Option Plans") shall be
converted into an option (together with a related stock appreciation
right of Parent, if applicable) to purchase the number of shares of
Parent Common Stock equal to the product of (x) the Conversion Fraction
multiplied by (y) the number of shares of Company Common Stock which
could have been obtained prior to the Effective Time upon the exercise
of each such option, at an exercise price per share (rounded upward to
the nearest cent) equal to the exercise price for each such share of
Company Common Stock subject to an option (and related Company SAR, if
any) under the Company Option Plans divided by the Conversion Fraction,
and all references in each such option (and related Company SAR, if any)
to the Company shall be deemed to refer to Parent, where appropriate,
and (ii) Parent shall assume the obligations of the Company under the
Company Option Plans. The other terms of each such option and Company
SAR, and the plans under which they were issued, shall continue to apply
in accordance with their terms, including any provisions providing for
acceleration.
(b) Simultaneously with the Merger, each outstanding
award, including restricted stock, stock equivalents and stock units
(each, a "Company Award"), under any employee incentive or benefit
plans, programs or arrangements and non-employee director plans
presently maintained by the Company which provide for grants of
equity-based awards shall be amended or converted into a similar
instrument of Parent, in each case with such adjustments to the terms of
such Company Awards as are appropriate to preserve the value inherent in
such Company Awards with no detrimental effects on the holders thereof
resulting from such conversion. The other terms of each Company Award,
and the plans or agreements under which they were issued, shall continue
to apply in accordance with their terms, including any provisions
36
providing for acceleration. With respect to any restricted stock awards
as to which the restrictions shall have lapsed on or prior to the
Effective Time in accordance with the terms of the applicable plans or
award agreements, shares of such previously restricted stock shall be
converted into the Merger Consideration in accordance with the
provisions of Section 2.1(b). The Company agrees to use its reasonable
best efforts to obtain any consents (in a form acceptable to Parent)
required of the holders of Company Stock Options or Company Awards to
the conversion described in Sections 5.5(a) and (b) hereof.
(c) Simultaneously with the Merger, Parent shall
assume and agree to perform the Company's obligations under the
termination benefit agreements (the "Termination Benefit
Agreements")(complete and accurate copies of which have been provided to
Parent) listed in Section 5.5(c) of the Company Disclosure Schedule.
This Section 5.5(c) shall satisfy any requirement in the Termination
Benefit Agreements that Parent expressly assume and agree to perform the
Company's obligations under such Termination Benefit Agreements.
Section V.6. Filings; Other Action
(a) Subject to the terms and conditions herein
provided, the Company and Parent shall (i) promptly make their
respective filings and thereafter make any other required submissions
under the HSR Act, (ii) promptly make their respective filings and
thereafter make any other required submissions under the Communications
Act, (iii) use their reasonable best efforts to cooperate with one
another in (x) determining whether any filings are required to be made
with, or consents, permits, authorizations or approvals are required to
be obtained from, any third party or other governmental or regulatory
bodies or authorities of federal, state, local and foreign jurisdictions
in connection with the execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby and (y) timely
making all such filings and timely seeking all such consents, permits,
authorizations or approvals, (iv) use their reasonable best efforts to
take, or cause to be taken, all other actions and do, or cause to be
done, all other things necessary, proper or advisable to consummate and
make effective the transactions contemplated hereby, including, without
limitation, taking all such further action as reasonably may be
necessary to resolve such objections, if any, as the Federal Trade
Commission, the Antitrust Division of the Department of Justice, state
antitrust enforcement authorities or competition authorities of any
other nation or other jurisdiction or any other person may assert under
relevant antitrust or competition laws with respect to the transactions
contemplated hereby and to ensure that each of the Company and Parent is
37
a "poolable entity" eligible to participate in a transaction to be
accounted for under the pooling of interests method of accounting.
(b) In furtherance and not in limitation of the
covenants of the parties contained in this Section 5.6, if any
administrative or judicial action or proceeding, including any
proceeding by a private party, is instituted (or threatened to be
instituted) challenging any transaction contemplated by this Agreement
as violative of any Regulatory Law (as defined below), each of the
Company and Parent shall cooperate in all respects with each other and
use its respective reasonable best efforts to contest and resist any
such action or proceeding and to have vacated, lifted, reversed or
overturned any decree, judgment, injunction or other order, whether
temporary, preliminary or permanent, that is in effect and that
prohibits, prevents or restricts consummation of the transactions
contemplated by this Agreement. Notwithstanding the foregoing or any
other provision of this Agreement, nothing in this Section 5.6 shall
limit a party's right to terminate this Agreement pursuant to Section
7.1(b) or 7.1(c) so long as such party has up to then complied in all
respects with its obligations under this Section 5.6.
(c) If any objections are asserted with respect to the
transactions contemplated hereby under any Regulatory Law or if any suit
is instituted by any governmental body or authority or any private party
challenging any of the transactions contemplated hereby as violative of
any Regulatory Law, each of the Company and Parent shall use its
reasonable best efforts to resolve any such objections or challenge as
such governmental body or authority or private party may have to such
transactions under such Regulatory Law so as to permit consummation of
the transactions contemplated hereby. For purposes of this Agreement,
"Regulatory Law" means the Xxxxxxx Act, as amended, the Xxxxxxx Act, as
amended, the HSR Act, the Federal Trade Commission Act, as amended, the
Communications Act and all other federal, state or foreign, if any,
statutes, rules, regulations, orders, decrees, administrative and
judicial doctrines and other laws that are designed or intended to
prohibit, restrict or regulate actions having the purpose or effect of
monopolization or restraint of trade or lessening competition, whether
in the communications industry or otherwise, through merger or
acquisition.
Section V.7. Further Assurances. In case at any time after
the Effective Time any further action is necessary or desirable to carry out
the purposes of this Agreement, the proper officers of the Company and Parent
shall take all such necessary action.
38
Section V.8. Takeover Statute. If any "fair price,"
"moratorium," "control share acquisition" or other form of antitakeover statute
or regulation shall become applicable to the transactions contemplated hereby,
each of the Company and Parent and the members of their respective Boards of
Directors shall grant such approvals and take such actions as are
reasonably necessary so that the transactions contemplated hereby may be
consummated as promptly as practicable on the terms contemplated hereby
and otherwise act to eliminate or minimize the effects of such statute
or regulation on the transactions contemplated hereby.
Section V.9. No Solicitation. From and after the date
hereof, the Company will not, and shall use its reasonable best efforts not
to permit, any of its officers, directors, employees, attorneys, financial
advisors, agents or other representatives or those of any of its Subsidiaries
to, directly or indirectly, solicit, initiate or knowingly encourage
(including by way of furnishing information) any Takeover Proposal from any
person or engage in or continue discussions or negotiations relating thereto,
except that, so long as the Company is in compliance with its
obligations under this Section 5.9, the Company may engage in
discussions or negotiations with, and furnish information concerning the
Company and its Subsidiaries, businesses, properties or assets to, any
third party which has made an unsolicited Takeover Proposal if and only
to the extent that the Board of Directors of the Company concludes in
good faith after consultation with, and based upon the advice of, its
outside counsel (who may be its regularly engaged outside counsel) at a
meeting of the Board that the failure to take such action would present
a reasonable possibility of violating the obligations of such Board to
the Company or to the Company's stockholders under applicable law. The
Company will promptly (but in no case later than 36 hours) notify Parent
of the receipt of any Takeover Proposal, including the material terms
and conditions thereof (and any change in the material terms and
conditions thereof) and the identity of the person making such Takeover
Proposal, and will promptly (but in no case later than 36 hours) notify
Parent of any determination by the Company's Board of Directors that a
Superior Proposal (as hereinafter defined) has been made. As used in
this Agreement, (i) "Takeover Proposal" shall mean any bona fide
proposal or offer made by any third party prior to the stockholder vote
at the Company Meeting (other than a proposal or offer by Parent or any
of its Subsidiaries) for a merger, consolidation or other business
combination involving, or any purchase of, all or substantially all of
the assets or more than 50% of the voting securities of, the Company,
and (ii) "Superior Proposal" shall mean a bona fide Takeover Proposal
made by a third party on terms that a majority of the members of the
Board of Directors of the Company determines in their good faith
39
reasonable judgment (based on the advice of an independent financial
advisor) is more favorable to the Company and to its stockholders than
the transactions contemplated hereby and for which any required
financing is fully committed.
Section V.10. Public Announcements. The Company and Parent
will consult with and provide each other the opportunity to review and comment
upon any press release or other public statement or comment prior to the
issuance of such press release or other public statement or comment relating
to this Agreement or the transactions contemplated herein and shall not issue
any such press release or other public statement or comment prior to
such consultation except as may be required by law or by obligations
pursuant to any listing agreement with any national securities exchange.
Section V.11. Indemnification and Insurance. Parent and
Merger Sub agree that all rights to exculpation and indemnification for acts
or omissions occurring prior to the Effective Time now existing in favor of
the current or former directors or officers (the "Indemnified Parties") of the
Company as provided in its certificate of incorporation or by-laws or in any
agreement shall survive the Merger and shall continue in full force and
effect in accordance with their terms. For six years from the Effective
Time, Parent shall indemnify the Indemnified Parties to the same extent
as such Indemnified Parties are entitled to indemnification pursuant to
the preceding sentence. For a period of five years from the Effective
Time, Parent shall either cause to be maintained in effect the current
policies of directors' and officers' liability insurance and fiduciary
liability insurance maintained by the Company or provide substitute
policies of at least the same coverage and amounts containing terms and
conditions which are, in the aggregate, no less advantageous to the
insured with respect to claims arising from facts or events that
occurred on or before the Effective Time, except that in no event shall
Parent be required to pay with respect to such insurance policies in any
one year more than $750,000.
Section V.12. Accountants' "Comfort" Letters. The Company
and Parent will each use reasonable best efforts to cause to be delivered to
each other letters from their respective independent accountants, dated as of
a date within two business days before the date of the Registration Statement,
in form reasonably satisfactory to the recipient and customary in scope for
comfort letters delivered by independent accountants in connection with
registration statements on Form S-4 under the Securities Act.
40
Section V.13. Additional Reports and Information.
(a) The Company and Parent shall each furnish to the
other copies of any reports of the type referred to in Sections 3.4 and
4.4 which it files with the SEC on or after the date hereof, and each of
the Company and Parent, as the case may be, represents and warrants that
as of the respective dates thereof, such reports will not contain any
untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statement
therein, in light of the circumstances under which they were made, not
misleading. Any unaudited consolidated interim financial statements
included in such reports (including any related notes and schedules)
will fairly present the financial position of the Company and its
consolidated Subsidiaries or Parent and its consolidated Subsidiaries,
as the case may be, as of the dates thereof and the results of
operations and changes in financial position or other information
included therein for the periods or as of the date then ended (subject,
where appropriate, to normal year-end adjustments), in each case in
accordance with past practice and GAAP consistently applied during the
periods involved (except as otherwise disclosed in the notes thereto).
(b) The financial statements and management's
discussion and analysis contained in the Company's Annual Report on Form
10-K for the year ended December 31, 1997 (the "Company 1997 10-K"),
when filed with the SEC, will not vary in any material respect from the
financial statements and management's discussion and analysis contained
in the draft of the Company's Annual Report to Stockholders provided to
Parent prior to the date hereof.
(c) The Company shall provide Parent with a copy of
the Company 1997 10-K no less than three business days prior to filing
it with the SEC and provide as soon as practicable any changes thereto.
(d) Within seven days of the date hereof, the Company
shall provide a written schedule to Parent setting forth (i) the taxable
years of the Company for which the statute of limitations with respect
to Material State income Taxes have not expired, and (ii) with respect
to Material State income Taxes, for all taxable years for which the
statute of limitations has not expired, those years for which
examinations have been completed, those years for which examinations are
presently being conducted, and those years for which examinations have
not yet been initiated.
41
Section V.14. Company Rights Plans. No later than the date
hereof, the Company shall amend the Company Rights Plan to effect the changes
thereto contemplated by the form of amendment attached hereto as Exhibit C.
Except as setforth in Exhibit C, the Company shall not amend, modify or
supplement the Company Rights Plan without the prior written consent of Parent.
Section V. 15. Control of Other Party's Business. Nothing
contained in this Agreement shall give the Company, directly or indirectly, the
right to control or direct the Parent's operations prior to the Effective Time.
Nothing contained in this Agreement shall give the Parent, directly or
indirectly, the right to control or direct the Company's operations prior to
the Effective Time. Prior to the Effective Time, each of the Company and the
Parent shall exercise, consistent with the terms and conditions of this
Agreement, complete control and supervision over its respective
operations.
Section 5.16. Board Seats and Officers. Prior to the
Effective Time, Parent will take all actions necessary to elect certain Company
directors as directors of Parent and certain Company officers as officers of
Parent (or of a Subsidiary of Parent), in the manner specified in Section 5.16
of the Parent Disclosure Schedule.
ARTICLE VI
CONDITIONS TO THE MERGER
Section VI.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 fulfillment at or prior to the
Effective Time of the following conditions:
(a) The Company Stockholder Approval and the
Parent Stockholder Approval shall have been obtained all in accordance
with applicable law and the rules of the NYSE.
(b) No statute, rule, regulation, executive order,
decree, ruling or injunction shall have been enacted, entered,
promulgated or enforced by any court or other tribunal or governmental
body or authority which prohibits the consummation of the Merger
substantially on the terms contemplated hereby and shall continue to be
in effect.
42
(c) The Registration Statement shall have become
effective in accordance with the provisions of the Securities Act and no
stop order suspending such effectiveness shall have been issued and
remain in effect.
(d) The shares of Parent Common Stock issuable in
the Merger shall have been approved for listing on the NYSE, subject
only to official notice of issuance.
(e) Any applicable waiting period under the HSR
Act shall have expired or been terminated and any other Company Required
Approvals and Parent Required Approvals shall have been obtained, except
where the failure to obtain such other Company Required Approvals and
Parent Required Approvals would not have a Material Adverse Effect on
the Company or Parent, as the case may be.
(f) Parent and the Company shall have received a
letter of Parent's independent public accountants, dated as of the
Effective Time, in form and substance reasonably satisfactory to Parent,
stating that Parent's independent public accountants concur with
management's conclusion that the Merger will qualify as a transaction to
be accounted for by the parties hereto in accordance with the pooling of
interests method of accounting under the requirements of APB No. 16.
Section VI.2.Conditions to Obligation of the Company
to Effect the Merger. The obligation of the Company to effect the Merger
is further subject to the fulfillment of the following conditions:
(a)(i) The representations and warranties of Parent
contained herein shall be true and correct in all respects (but without
regard to any materiality qualifications or references to Material
Adverse Effect contained in any specific representation or warranty) as
of the Effective Time with the same effect as though made as of the
Effective Time except (x) for changes specifically permitted by the
terms of this Agreement, (y) that the accuracy of representations and
warranties that by their terms speak as of the date of this Agreement or
some other date will be determined as of such date and (z) where any
such failure of the representations and warranties in the aggregate to
be true and correct in all respects would not have a Material Adverse
Effect on Parent, (ii) Parent shall have performed in all material
respects all obligations and complied with all covenants required by
this Agreement to be performed or complied with by it prior to the
Effective Time and (iii) Parent shall have delivered to the Company a
43
certificate, dated the Effective Time and signed by its Chief Executive
Officer or President certifying to both such effects.
(b) The Company shall have received an opinion of
Xxxxxxxxxxxx Xxxx & Xxxxxxxxx, tax counsel to the Company, dated as of
the Effective Time, to the effect that the Merger will qualify as a
reorganization within the meaning of Section 368(a) of the Code. The
issuance of such opinion shall be conditioned upon the receipt by such
tax counsel of representation letters from each of Parent, Merger Sub
and the Company, in each case, in form and substance reasonably
satisfactory to such tax counsel. The specific provisions of each such
representation letter shall be in form and substance reasonably
satisfactory to such tax counsel, and each such representation letter
shall be dated on or before the date of such opinion and shall not have
been withdrawn or modified in any material respect.
Section VI.3.Conditions to Obligation of Parent to
Effect the Merger. The obligation of Parent to effect the Merger is
further subject to the fulfillment of the following conditions:
(a)(i) The representations and warranties of the
Company contained herein shall be true and correct in all respects (but
without regard to any materiality qualifications or references to
Material Adverse Effect contained in any specific representation or
warranty) as of the Effective Time with the same effect as though made
as of the Effective Time except (x) for changes specifically permitted
by the terms of this Agreement, (y) that the accuracy of representations
and warranties that by their terms speak as of the date of this
Agreement or some other date will be determined as of such date and (z)
where any such failure of the representations and warranties in the
aggregate to be true and correct in all respects would not have a
Material Adverse Effect on the Company, (ii) the Company shall have
performed in all material respects all obligations and complied with all
covenants required by this Agreement to be performed or complied with by
it prior to the Effective Time and (iii) the Company shall have
delivered to Parent a certificate, dated the Effective Time and signed
by its Chief Executive Officer or Executive Vice President certifying to
both such effects.
(b) Parent shall have received an opinion of
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP, tax counsel to Parent, dated
as of the Effective Time, to the effect that the Merger will qualify as
a reorganization within the meaning of Section 368(a) of the Code. The
issuance of such opinion shall be conditioned upon the receipt by such
tax counsel of representation letters from each of Parent, Merger Sub
44
and the Company, in each case, in form and substance reasonably
satisfactory to such tax counsel. The specific provisions of each such
representation letter shall be in form and substance reasonably
satisfactory to such tax counsel, and each such representation letter
shall be dated on or before the date of such opinion and shall not have
been withdrawn or modified in any material respect.
ARTICLE VII
TERMINATION
Section VII.1. Termination or Abandonment. Notwithstanding
anything contained in this Agreement to the contrary, this Agreement may be
terminated and abandoned at any time prior to the Effective Time, whether
before or after any approval of the matters presented in connection with the
Merger by the respective stockholders of the Company and Parent:
(a) by the mutual written consent of the Company and Parent;
(b) by either the Company or Parent if (i) the
Effective Time shall not have occurred on or before November 30, 1998
and (ii) the party seeking to terminate this Agreement pursuant to this
clause 7.1(b) shall not have breached in any material respect its
obligations under this Agreement or the Option Agreement in any manner
that shall have proximately contributed to the failure to consummate the
Merger on or before such date, except that if, as of November 30, 1998,
all conditions set forth in Section 6.1, 6.2 and 6.3 of this Agreement
have been satisfied or waived other than receipt of the requisite
approval of the FCC, then either Parent or the Company may extend the
Termination Date to February 28, 1999, by providing written notice to
the other party on November 30, 1998;
(c) by either the Company or Parent if (i) a statute,
rule, regulation or executive order shall have been enacted, entered or
promulgated prohibiting the consummation of the Merger substantially on
the terms contemplated hereby or (ii) an order, decree, ruling or
injunction shall have been entered permanently restraining, enjoining or
otherwise prohibiting the consummation of the Merger substantially on
the terms contemplated hereby and such order, decree, ruling or
injunction shall have become final and non-appealable and the party
seeking to terminate this Agreement pursuant to this clause 7.1(c)(ii)
shall have used its reasonable best efforts to remove such injunction,
45
order or decree;
(d) by either the Company or Parent if the approvals
of the stockholders of either the Company or Parent contemplated by this
Agreement shall not have been obtained by reason of the failure to
obtain the required vote at a duly held meeting of stockholders or of
any adjournment thereof;
(e) by either the Company or Parent if the Board of
Directors of the Company reasonably determines that a Takeover Proposal
constitutes a Superior Proposal, except that the Company may not
terminate this Agreement pursuant to this clause 7.1(e) unless and until
(i) three business days have elapsed following delivery to Parent of a
written notice of such determination by the Board of Directors of the
Company and during such three business day period the Company (x)
informs Parent of the terms and conditions of the Takeover Proposal and
the identity of the person making the Takeover Proposal and (y)
otherwise cooperates with Parent with respect thereto (subject, in the
case of this clause (y), to the condition that the Board of Directors of
the Company shall not be required to take any action that it believes,
after consultation with outside legal counsel, would present a
reasonable possibility of violating its obligations to the Company or
the Company's stockholders under applicable law) with the intent of
enabling Parent to agree to a modification of the terms and conditions
of this Agreement so that the transactions contemplated hereby may be
effected, (ii) at the end of such three business day period the Board of
Directors of the Company continues reasonably to believe that the
Takeover Proposal constitutes a Superior Proposal, (iii) simultaneously
with such termination the Company enters into a definitive acquisition,
merger or similar agreement to effect the Superior Proposal and (iv) the
Company pays to Parent the amount specified and within the time period
specified in Section 7.2;
(f) by Parent if the Board of Directors of the
Company shall have (i) withdrawn or modified in a manner adverse to
Parent its approval or recommendation of this Agreement and the
transactions contemplated hereby or (ii) approved or recommended, or
proposed publicly to approve or recommend, any Takeover Proposal;
(g) by Parent if a tender offer or exchange offer for
50% or more of the outstanding shares of capital stock of the Company is
commenced prior to the Company Meeting, and the Board of Directors of
the Company fails to recommend against acceptance of such tender offer
46
or exchange offer by its stockholders (including by taking no position
with respect to the acceptance of such tender offer or exchange offer by
its stockholders) within the time period specified by Rule 14e-2; or
(h) by either the Company or Parent if there shall
have been a material breach by the other of any of its representations,
warranties, covenants or agreements contained in this Agreement or the
Option Agreement, which if not cured would cause the conditions set
forth in Sections 6.2(a) or 6.3(a), as the case may be, not to be
satisfied, and such breach shall not have been cured within 30 days
after notice thereof shall have been received by the party alleged to be
in breach.
In the event of termination of this Agreement pursuant to this Section
7.1, this Agreement shall terminate (except for the confidentiality
agreement referred to in Section 5.2 and the provisions of Sections 7.2,
8.2, 8.4 and 8.5), and there shall be no other liability on the part of
the Company or Parent to the other except liability arising out of an
intentional breach of this Agreement or as provided for in the
Confidentiality Agreement.
Section VII.2. Termination Fee. Notwithstanding any
provision in this Agreement to the contrary, if (i) this Agreement is
terminated by the Company or Parent pursuant to Section 7.1(e), (ii) this
Agreement is terminated by Parent pursuant to Section 7.1(f), or (iii) (x)
prior to the termination of this Agreement, a bona fide Takeover Proposal is
commenced, publicly proposed or publicly disclosed and not withdrawn, (y) this
Agreement is terminated by the Company pursuant to Section 7.1(b) or by Parent
or the Company pursuant to Section 7.1(d) (but only due to the failure of the
Company stockholders to approve the Merger) or by Parent pursuant to
Section 7.1(g) and (z) concurrently with or within twelve months after
such termination a Takeover Proposal shall have been consummated, then,
in each case, the Company shall (without prejudice to any other rights
of Parent against the Company) pay to Parent a fee (the "Termination
Fee") of $100 million in cash, such payment to be made simultaneously
with such termination in the case of a termination by the Company
pursuant to Section 7.1(e) and promptly, but in no event later than the
second business day following a termination by Parent pursuant to
Section 7.1(e) or 7.1(f) and, in the case of clause (iii), upon the
consummation of such Takeover Proposal.
Section VII.3. Amendment or Supplement. At any time before
or after approval of the matters presented in connection with the Merger by the
47
respective stockholders of the Company and Parent and prior to the Effective
Time, this Agreement may be amended or supplemented in writing by the Company
and Parent with respect to any of the terms contained in this Agreement,
except that following approval by the stockholders of the Company and
Parent there shall be no amendment or change to the provisions hereof
which by law or in accordance with the rules of any relevant stock
exchange requires further approval by such stockholders without such
further approval nor any amendment or change not permitted under
applicable law.
Section VII.4. Extension of Time, Waiver, Etc. At any time
prior to the Effective Time, the Company and Parent may:
(a) extend the time for the performance of any of the
obligations or acts of the other party;
(b) waive any inaccuracies in the representations and
warranties of the other party contained herein or in any document
delivered pursuant hereto; or
(c) waive compliance with any of the agreements or
conditions of the other party contained herein.
Notwithstanding the foregoing, no failure or delay by the Company or
Parent in exercising any right hereunder shall operate as a waiver
thereof nor shall any single or partial exercise thereof preclude any
other or further exercise of any other right hereunder. Any agreement
on the part of a party hereto to any such extension or waiver shall be
valid only if set forth in an instrument in writing signed on behalf of
such party.
ARTICLE VIII
MISCELLANEOUS
Section VIII.1. No Survival of Representations and
Warranties. None of the representations and warranties in this
Agreement or in any instrument delivered pursuant to this Agreement
shall survive the Merger.
Section VIII.2. Expenses. Whether or not the Merger is
consummated, all costs and expenses incurred in connection with the Merger,
this Agreement and the transactions contemplated hereby shall be paid by the
party incurring or required to incur such expenses, except expenses incurred
48
in connection with the printing and filing of the Registration Statement
and the printing and mailing of the Joint Proxy Statement (including
applicable SEC filing fees) shall be shared equally by the Company and
Parent.
Section VIII.3. Counterparts; Effectiveness. This Agreement
may be executed in two or more consecutive counterparts, each of which shall be
an original, with the same effect as if the signatures thereto and hereto were
upon the same instrument, and shall become effective when one or more
counterparts have been signed by each of the parties and delivered (by telecopy
or otherwise) to the other parties.
Section VIII.4. Governing Law. This Agreement shall be
governed by and construed in accordance with the laws of the State of Delaware,
without regard to the principles of conflicts of laws thereof.
Section VIII.5. Jurisdiction. Each of the parties hereto
(i) consents to submit itself to the personal jurisdiction of any Federal court
located in the State of Delaware or any Delaware state court in the event any
dispute arises out of this Agreement or any of the transactions contemplated by
this Agreement, (ii) agrees that it will not attempt to deny or defeat
such personal jurisdiction by motion or other request for leave from any
such court, and (iii) agrees that it will not bring any action relating
to this Agreement or any of the transactions contemplated by this
Agreement in any court other than a Federal court sitting in the State
of Delaware or a Delaware state court.
Section VIII.6. Notices. All notices and other
communications hereunder shall be in writing (including telecopy or similar
writing) and shall be effective (a) if given by telecopy, when such telecopy
is transmitted to the telecopy number specified in this Section 8.6 and the
appropriate telecopy confirmation is received or (b) if given by any other
means, when delivered at the address specified in this Section 8.6:
To Parent or Merger Sub:
ALLTEL Corporation
Xxx Xxxxxx Xxxxx
Xxxxxx Xxxx, Xxxxxxxx 00000
Attention: Chief Executive Officer
49
(with a copy to the General Counsel)
Telecopy: (000) 000-0000
copy to:
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: J. Xxxxxxx Xxxxxx, Esq.
Telecopy: (000) 000-0000
To the Company:
360E Communications Company
0000 Xxxx Xxxxxxx Xxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxx X. Xxxxxxxxx, Esq.
Telecopy: (000) 000-0000
copy to:
Xxxxxxxxxxxx Xxxx & Xxxxxxxxx
0000 Xxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxx X. Xxxxx, Esq.
Telecopy: (000) 000-0000
Section VIII.7. Assignment; Binding Effect. Neither this
Agreement nor any of the rights, interests or obligations hereunder shall be
assigned by any of the parties hereto (whether by operation of law or
otherwise) without the prior written consent of the other parties. Subject to
the preceding sentence, this Agreement shall be binding upon and shall inure to
the benefit of the parties hereto and their respective successors and assigns.
Section VIII.8. Severability. Any term or provision of this
Agreement which is invalid or unenforceable in any jurisdiction shall, as to
that jurisdiction, be ineffective to the extent of such invalidity or
unenforceability without rendering invalid or unenforceable the remaining
terms and provisions of this Agreement in any other jurisdiction. If any
50
provision of this Agreement is so broad as to be unenforceable, such provision
shall be interpreted to be only so broad as is enforceable.
Section VIII.9. Enforcement of Agreement. The parties hereto
agree that money damages or other remedy at law would not be a sufficient or
adequate remedy for any breach or violation of, or a default under, this
Agreement by them and that in addition to all other remedies available to them,
each of them shall be entitled to the fullest extent permitted by law to an
injunction restraining such breach, violation or default or threatened
breach, violation or default and to any other equitable relief,
including, without limitation, specific performance, without bond or
other security being required.
Section VIII.10. Entire Agreement; No Third-Party
Beneficiaries. This Agreement, the Option Agreement and the
Confidentiality Agreement constitute the entire agreement, and supersede
all other prior agreements and understandings, both written and oral,
between the parties, or any of them, with respect to the subject matter
hereof and thereof and except for the provisions of Section 5.11 hereof,
is not intended to and shall not confer upon any Person other than the
parties hereto any rights or remedies hereunder.
Section VIII.11. Headings. Headings of the Articles and
Sections of this Agreement are for convenience of the parties only, and shall
be given no substantive or interpretive effect whatsoever.
Section VIII.12. Definitions. (a) References in this
Agreement to "Subsidiaries" of any party shall mean any corporation,
partnership, association, trust or other form of legal entity of which (i) more
than 50% of the outstanding voting securities are on the date hereof directly
or indirectly owned by such party, or (ii) such party or any Subsidiary of
such party is a general partner (excluding partnerships in which such
party or any Subsidiary of such party does not have a majority of the
voting interests in such partnership). References in this Agreement
(except as specifically otherwise defined) to "affiliates" shall mean,
as to any person, any other person which, directly or indirectly,
controls, or is controlled by, or is under common control with, such
person. As used in this definition, "control" (including, with its
correlative meanings, "controlled by" and "under common control with")
shall mean the possession, directly or indirectly, of the power to
direct or cause the direction of management or policies of a person,
whether through the ownership of securities or partnership of other
ownership interests, by contract or otherwise. References in the
Agreement to "person" shall mean an individual, a corporation, a
51
partnership, an association, a trust or any other entity, group (as such
term is used in Section 13 of the Exchange Act) or organization,
including, without limitation, a governmental body or authority.
(b) Each of the following terms is defined on the
pages set forth opposite such term:
affiliates................................................................49
Agreement..................................................................1
APB No. 16................................................................30
Certificate of Merger......................................................2
Certificates...............................................................3
Closing Date...............................................................2
Code..................................................................... .1
Communications Act........................................................11
Company....................................................................1
Company Affiliated Group..................................................16
Company Award.............................................................35
Company Common Stock.......................................................3
Company Disclosure Schedule................................................8
Company Material Contracts................................................18
Company Meeting.......................................................... 33
Company Option Plans......................................................35
Company Preferred Stock....................................................9
Company Required Approvals............................................... 11
Company Rights Plan........................................................9
Company SAR...............................................................34
Company SEC Reports.......................................................12
Company Series B Preferred Stock...........................................9
Company Stockholder Approval..............................................18
Company Stock Options.....................................................34
Company 1997 10-K.........................................................40
Confidentiality Agreement.................................................32
control...................................................................49
Conversion Fraction........................................................3
Current Company Group.....................................................16
Current Parent Group......................................................26
DGCL.......................................................................1
Disclosure Schedule.......................................................19
52
Effective Time.............................................................2
Environmental Claims......................................................13
Environmental Laws........................................................13
ERISA.....................................................................14
Exchange Act..............................................................11
Exchange Agent.............................................................4
Exchange Fund..............................................................4
FCC.......................................................................11
GAAP......................................................................12
HSR Act...................................................................11
Indemnified Parties...................................................... 38
Joint Proxy Statement.....................................................15
Lien.......................................................................9
Material Adverse Effect....................................................8
Material State............................................................17
Merger................................................................... 1
Merger Consideration.................................................... ..3
Merger Sub.................................................................1
No Par Preferred Stock....................................................20
Option Agreement...........................................................1
Par Preferred Stock.......................................................20
Parent.....................................................................1
Parent Affiliated Group...................................................26
Parent Certificates........................................................4
Parent Common Stock.......................................................20
Parent Disclosure Schedule................................................19
Parent Material Contracts.................................................27
Parent Meeting............................................................34
Parent Preferred Stock....................................................20
Parent Required Approvals.................................................22
Parent SEC Reports........................................................22
Parent Stockholder Approval...............................................25
Past Company Group........................................................16
Past Parent Group.........................................................26
PUC.......................................................................11
Registration Statement....................................................32
Regulatory Law ...........................................................37
SEC.......................................................................12
Securities Act............................................................11
53
Subsidiaries..............................................................49
Superior Proposal.........................................................38
Surviving Corporation......................................................2
Takeover Proposal.........................................................38
Tax Assurance Agreement...................................................16
Tax Return................................................................17
Tax Sharing Agreement.....................................................16
Taxes.....................................................................17
Termination Benefit Agreements............................................35
Termination Date..........................................................27
Termination Fee...........................................................45
54
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and delivered as of the date first above
written.
360 COMMUNICATIONS COMPANY
By: /s/Xxxxxx X. Xxxxxx
Name: Xxxxxx X. Xxxxxx
Title: President and Chief Executive
Officer
ALLTEL CORPORATION
By: /s/Xxx Xxxx
Name: Xxx Xxxx
Title: Chairman and Chief Executive
Officer
PINNACLE MERGER SUB, INC.
By: /s/Xxx Xxxx
Name: Xxx Xxxx
Title: Chairman and Chief Executive
Officer
55
