(..continued)
CONFORMED COPY
AGREEMENT AND PLAN OF MERGER
Among
CLEAR CHANNEL COMMUNICATIONS, INC.,
UH MERGER SUB, INC.
and
UNIVERSAL OUTDOOR HOLDINGS, INC.
Dated as of October 23, 1997
TABLE OF CONTENTS
Page
ARTICLE I
THE MERGER
SECTION 1.1. The Merger.................................................. 2
SECTION 1.2. Closing..................................................... 2
SECTION 1.3. Effective Time.............................................. 2
SECTION 1.4. Effects of the Merger....................................... 2
SECTION 1.5. Certificate of Incorporation and By-Laws of the Surviving
Corporation................................................. 2
SECTION 1.6. Directors................................................... 2
SECTION 1.7. Officers.................................................... 3
ARTICLE II
EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE CONSTITUENT
CORPORATIONS; EXCHANGE OF CERTIFICATES
SECTION 2.1. Capital Stock of Merger Sub................................. 3
SECTION 2.2. Cancellation of Treasury Stock and Parent Owned Stock....... 3
SECTION 2.3. Conversion of Company Common Stock.......................... 3
SECTION 2.4. Exchange of Certificates.................................... 4
SECTION 2.5. Stock Transfer Books........................................ 8
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
SECTION 3.1. Organization, Qualification, Etc............................ 8
SECTION 3.2. Capital Stock............................................... 9
SECTION 3.3. Corporate Authority Relative to this Agreement;
No Violation................................................ 9
SECTION 3.4. Reports and Financial Statements............................. 10
SECTION 3.5. No Undisclosed Liabilities................................... 11
SECTION 3.6. No Violation of Law.......................................... 11
SECTION 3.7. Environmental Laws and Regulations........................... 11
SECTION 3.8. No Undisclosed Employee Benefit Plan Liabilities or
Severance Arrangements....................................... 12
SECTION 3.9. Absence of Certain Changes or Events......................... 13
SECTION 3.10. Investigations; Litigation................................... 13
SECTION 3.11. Proxy Statement; Registration Statement; Other Information... 14
SECTION 3.12. Lack of Ownership of Parent Common Stock..................... 14
SECTION 3.13. Tax Matters.................................................. 14
SECTION 3.14. Opinion of Financial Advisor................................. 15
SECTION 3.15. Required Vote of the Company Stockholders.................... 15
SECTION 3.16. Insurance.................................................... 15
SECTION 3.17. Real Property; Title......................................... 16
SECTION 3.18. Collective Bargaining Agreements and Labor................... 16
SECTION 3.19. Material Contracts........................................... 16
SECTION 3.20. Takeover Statute............................................. 16
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
SECTION 4.1. Organization, Qualification, Etc............................. 16
SECTION 4.2. Capital Stock................................................ 17
SECTION 4.3. Corporate Authority Relative to this Agreement;No Violation.. 17
SECTION 4.4. Reports and Financial Statements............................. 18
SECTION 4.5. No Undisclosed Liabilities................................... 19
SECTION 4.6. No Violation of Law.......................................... 19
SECTION 4.7. Environmental Laws and Regulations........................... 19
SECTION 4.8. No Undisclosed Employee Benefit Plan Liabilities or
Severance Arrangements....................................... 19
SECTION 4.9. Absence of Certain Changes or Events......................... 20
SECTION 4.10. Investigations; Litigation................................... 20
SECTION 4.11. Proxy Statement; Registration Statement; Other Information... 20
SECTION 4.12. Lack of Ownership of the Company Common Stock................ 21
SECTION 4.13. Tax Matters.................................................. 21
ARTICLE V
COVENANTS RELATING TO CONDUCT OF BUSINESS
SECTION 5.1. Conduct of Business by the Company or Parent................. 21
SECTION 5.2. Proxy Material; Registration Statement....................... 24
SECTION 5.3. Stockholders' Meeting........................................ 25
SECTION 5.4. Approvals and Consents; Cooperation.......................... 25
SECTION 5.5. Access to Information; Confidentiality....................... 26
SECTION 5.6. Affiliates................................................... 26
SECTION 5.7. Warrants; Stock Options...................................... 27
SECTION 5.8. 1994 Warrants................................................ 27
SECTION 5.9. Filings; Other Action........................................ 28
SECTION 5.10. Further Assurances........................................... 29
SECTION 5.11. No Solicitation.............................................. 29
SECTION 5.12. Director and Officer Liability............................... 30
SECTION 5.13. Accountants' "Comfort" Letters............................... 32
SECTION 5.14. Additional Reports........................................... 32
SECTION 5.15. Plan of Reorganization....................................... 32
SECTION 5.16. Employment Agreements........................................ 32
SECTION 5.17. Parent Board of Directors.................................... 33
SECTION 5.18. Conveyance Taxes; Fees....................................... 33
SECTION 5.19. Public Announcements......................................... 33
SECTION 5.20. Employee Matters............................................. 33
ARTICLE VI
CONDITIONS TO THE MERGER
SECTION 6.1. Conditions to the Obligations of Each Party.................. 34
SECTION 6.2. Conditions to the Obligations of Parent and Merger Sub....... 35
SECTION 6.3. Conditions to the Obligations of the Company................. 36
ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER
SECTION 7.1. Termination or Abandonment................................... 36
SECTION 7.2. Amendment or Supplement...................................... 38
SECTION 7.3. Effect of Termination........................................ 38
SECTION 7.4. Fees and Expenses............................................ 38
SECTION 7.5. Extension; Waiver............................................ 39
ARTICLE VIII
GENERAL PROVISIONS
SECTION 8.1. Nonsurvival of Representations............................... 39
SECTION 8.2. Notices...................................................... 39
SECTION 8.3. Definitions.................................................. 40
SECTION 8.4. Counterparts................................................. 43
SECTION 8.5. Entire Agreement; No Third-Party Beneficiaries............... 43
SECTION 8.6. Assignment................................................... 43
SECTION 8.7. Governing Law................................................ 43
SECTION 8.8. Enforcement.................................................. 43
SECTION 8.9. Severability................................................. 44
SECTION 8.10. Headings..................................................... 44
SECTION 8.11. Finders or Brokers........................................... 44
EXHIBIT A Form of Company Tax Opinion Representation Letter
EXHIBIT B Form of Parent Tax Opinion Representation Letter
EXHIBIT C Form of Simon Employment Agreement
EXHIBIT D Form of Stockholder Representation Letter
This AGREEMENT AND PLAN OF MERGER, dated October 23, 1997, is
entered into by and among Clear Channel Communications, Inc., a Texas
corporation ("Parent"), UH Merger Sub, Inc., a Delaware corporation and a wholly
owned subsidiary of Parent ("Merger Sub"), and Universal Outdoor Holdings, Inc.,
a Delaware corporation (the "Company").
W I T N E S S E T H :
WHEREAS, the respective Boards of Directors of Parent, Merger
Sub and the Company have approved the acquisition of the Company by Parent upon
the terms and subject to the conditions set forth in this Agreement and Plan of
Merger, including, without limitation, the exhibits attached hereto
(collectively, this "Agreement");
WHEREAS, the respective Boards of Directors of Parent, Merger
Sub and the Company have approved the merger of Merger Sub with and into the
Company as set forth below (the "Merger") upon the terms and subject to the
conditions set forth in this Agreement, whereby each issued and outstanding
share of common stock, par value $0.01 per share, of the Company ("Company
Common Stock"), other than shares owned directly or indirectly by Parent or by
the Company will be converted into shares of common stock, par value $0.10 per
share, of Parent ("Parent Common Stock") in accordance with the provisions of
Article II of this Agreement;
WHEREAS, for federal income tax purposes, the Merger is
intended to qualify as a reorganization under the provisions of Section 368(a)
of the United States Internal Revenue Code of 1986, as amended (the "Code"); and
WHEREAS, Parent, Merger Sub and the Company desire to make
certain representations, warranties, covenants and agreements in connection with
the Merger and also to prescribe certain conditions to the Merger.
NOW, THEREFORE, in consideration of the foregoing and the
mutual covenants and agreements herein contained, and intending to be legally
bound hereby, Parent, Merger Sub and the Company hereby agree as follows:
ARTICLE I
THE MERGER
SECTION I.1. The Merger. Upon the terms and subject to the
conditions set forth in this Agreement and the Delaware General Corporation Law
(the "DGCL"), Merger Sub shall be merged with and into the Company at the
Effective Time (as defined in Section 1.3) of the Merger. Following the Merger,
the separate corporate existence of Merger Sub shall cease, and the Company
shall continue as the surviving corporation (the "Surviving Corporation") and
shall succeed to and assume all the rights and obligations of Merger Sub in
accordance with the DGCL.
SECTION 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 which shall be no
later than the second business day after the satisfaction or waiver of the
conditions set forth in Article VI (the "Closing Date") at the offices of
Skadden, Arps, Slate, Xxxxxxx & Xxxx, Chicago, Illinois, unless another date or
place is agreed to in writing by the parties hereto.
SECTION I.3. Effective Time. On the Closing Date, the parties
shall execute and file in the office of the Secretary of State of Delaware a
certificate of merger (a "Certificate of Merger") executed in accordance with
the DGCL and shall make all other filings or recordings, if any, required under
DGCL. The Merger shall become effective at the time of filing of the Certificate
of Merger, or at such later time as is agreed upon by the parties hereto and set
forth therein (such time as the Merger becomes effective is referred to herein
as the "Effective Time").
SECTION I.4. Effects of the Merger. The Merger shall have
the effects set forth in the DGCL.
SECTION I.5. Certificate of Incorporation and By-Laws of the
Surviving Corporation. (a) The Certificate of Incorporation of the Company as in
effect immediately prior to the Effective Time shall become the Certificate of
Incorporation of the Surviving Corporation after the Effective Time, and
thereafter may be amended as provided therein and as permitted by law and this
Agreement.
(b) The By-Laws of the Company as in effect immediately prior
to the Effective Time shall become the By-Laws of the Surviving Corporation
after the Effective Time, and thereafter may be amended as provided therein and
as permitted by law and this Agreement.
SECTION I.6. Directors. The directors of the Merger Sub
immediately prior to the Effective Time shall become the directors of the
Surviving Corporation, until the earlier of their resignation or removal or
until their respective successors are duly elected and qualified, as the case
may be.
SECTION 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, as the case may be.
ARTICLE II
EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE CONSTITUENT
CORPORATIONS; EXCHANGE OF CERTIFICATES
SECTION II.1. Capital Stock of Merger Sub. As of the Effective
Time, by virtue of the Merger and without any action on the part of the holder
of any shares of Company Common Stock or any shares of capital stock of Merger
Sub, each share of common stock, par value $0.01 per share, of Merger Sub issued
and outstanding immediately prior to the Effective Time shall be converted into
and become one fully paid and nonassessable share of common stock, par value
$0.01 per share, of the Surviving Corporation.
SECTION II.2. Cancellation of Treasury Stock and Parent Owned
Stock. As of the Effective Time, by virtue of the Merger and without any action
on the part of the holder of any shares of Company Common Stock or any shares of
capital stock of Merger Sub, each share of Company Common Stock issued and held,
immediately prior to the Effective Time, in the Company's treasury or by any of
the Company's direct or indirect wholly owned subsidiaries, and each share of
Company Common Stock that is owned by Parent, Merger Sub or any other subsidiary
of Parent, shall automatically be cancelled and retired and shall cease to
exist, and no consideration shall be delivered in exchange therefor.
SECTION II.3. Conversion of Company Common Stock. (a) As of
the Effective Time, by virtue of the Merger and without any action on the part
of the holder of any shares of Company Common Stock or any shares of capital
stock of Merger Sub, subject to this Section 2.3 and Section 2.4(f), each share
of Company Common Stock issued and outstanding immediately prior to the
Effective Time (other than shares to be cancelled in accordance with Section 2.2
(the "Cancelled Shares")) shall be converted into (the "Merger Consideration")
0.67 (the "Conversion Number") duly authorized, validly issued and
non-assessable shares of Parent Common Stock ; provided, however, that, in any
event, if between the date of this Agreement and the Effective Time, the
outstanding shares of Parent Common Stock shall have been changed into a
different number of shares or a different class, by reason of any stock
dividend, subdivision, reclassification, recapitalization, split, combination or
exchange of shares, the Conversion Number shall be correspondingly adjusted to
the extent appropriate to reflect such stock dividend, subdivision,
reclassification, recapitalization, split, combination or exchange of shares. As
of the Effective Time, all such shares of Company Common Stock shall no longer
be outstanding and shall automatically be cancelled and retired and shall cease
to exist, and each holder of a certificate or a certificate which immediately
prior to the Effective Time represented outstanding shares of Company Common
Stock shall cease to have any rights with respect thereto, except the right to
receive the Merger Consideration.
SECTION II.4. Exchange of Certificates. (a) Exchange Agent.
From and after the Effective Time, Parent shall make available to a bank or
trust company designated by Parent and reasonably satisfactory to the Company
(the "Exchange Agent"), for the benefit of the holders of shares of Company
Common Stock for exchange in accordance with this Article II, through the
Exchange Agent, certificates evidencing such number of shares of Parent Common
Stock issuable to holders of Company Common Stock in the Merger pursuant to
Section 2.3 (such certificates for shares of Parent Common Stock, together with
any dividends or distributions with respect thereto and cash, being hereinafter
referred to as the "Exchange Fund"). The Exchange Agent shall, pursuant to
irrevocable instructions, deliver the Parent Common Stock contemplated to be
issued pursuant to Section 2.3 and the cash in lieu of fractional shares of
Parent Common Stock to which such holders are entitled to pursuant to Section
2.4(f) hereof out of the Exchange Fund. Except as contemplated by Section 2.4(g)
hereof, the Exchange Fund shall not be used for any other purpose.
(b) Exchange Procedures. As promptly as practicable after the
Effective Time, Parent shall cause the Exchange Agent to mail to each holder of
a certificate or certificates which immediately prior to the Effective Time
represented outstanding shares of Company Common Stock (the "Certificates") (i)
a letter of transmittal (which shall be in customary form and shall specify that
delivery shall be effected, and risk of loss and title to the Certificates shall
pass, only upon proper delivery of the Certificates to the Exchange Agent) and
(ii) instructions for use in effecting the surrender of the Certificates in
exchange for certificates evidencing shares of Parent Common Stock, or cash in
lieu of fractional shares of Parent Common Stock to which such holder is
entitled pursuant to Section 2.4(f) hereof.
(c) Exchange of Certificates. Upon surrender to the Exchange
Agent of a Certificate for cancellation, together with such letter of
transmittal, duly executed and completed in accordance with the instructions
thereto, and such other documents as may be reasonably required pursuant to such
instructions, the holder of such Certificate shall be entitled to receive in
exchange therefor a certificate representing that number of whole shares of
Parent Common Stock which such holder's shares of Company Common Stock have been
converted into pursuant to this Article II (and any cash in lieu of any
fractional shares of Parent Common Stock to which such holder is entitled
pursuant to Section 2.4(f) and any dividends or other distributions to which
such holder is entitled pursuant to Section 2.4(d)), and the Certificate so
surrendered shall forthwith be cancelled. In the event of a transfer of
ownership of shares of Company Common Stock which is not registered in the
transfer records of the Company, shares of Parent Common Stock, cash in lieu of
any fractional shares of Parent Common Stock to which such holder is entitled
pursuant to Section 2.4(f) and any dividends or other distributions to which
such holder is entitled pursuant to Section 2.4(d) may be issued to a transferee
if the Certificate representing such shares of Company Common Stock is presented
to the Exchange Agent, accompanied by all documents required to evidence and
effect such transfer and by evidence that any applicable stock transfer taxes
have been paid. Until surrendered as contemplated by this Section 2.4, each
Certificate shall be deemed at all times after the Effective Time to represent
only the right to receive upon such surrender the number of whole shares of
Parent Common Stock into which the shares of Company Common Stock formerly
represented thereby have been converted, cash in lieu of any fractional shares
of Parent Common Stock to which such holder is entitled pursuant to Section
2.4(f) and any dividends or other distributions to which such holder is entitled
pursuant to Section 2.4(d).
(d) Distributions with Respect to Unexchanged Shares of Parent
Common Stock. No dividends or other distributions declared or made after the
Effective Time with respect to Parent Common Stock with a record date after the
Effective Time shall be paid to the holder of any unsurrendered Certificate with
respect to the shares of Parent Common Stock represented thereby, and no cash
payment in lieu of any fractional shares shall be paid to any such holder
pursuant to Section 2.4(f), until the holder of such Certificate shall surrender
such Certificate. Subject to the effect of escheat, tax or other applicable
laws, following surrender of any such Certificate, there shall be paid to the
holder of the certificates representing whole shares of Parent Common Stock
issued in exchange therefor, without interest, (i) promptly, the amount of any
cash payable with respect to a fractional share of Parent Common Stock to which
such holder is entitled pursuant to Section 2.4(f) and the amount of dividends
or other distributions with a record date after the Effective Time and
theretofore paid with respect to such whole shares of Parent Common Stock, and
(ii) at the appropriate payment date, the amount of dividends or other
distributions, with a record date after the Effective Time but prior to
surrender and a payment date occurring after surrender, payable with respect to
such whole shares of Parent Common Stock.
(e) No Further Rights in Company Common Stock. All shares of
Parent Common Stock issued upon conversion of the shares of Company Common Stock
in accordance with the terms hereof (including any cash paid pursuant to Section
2.4(d) or (f)) shall be deemed to have been issued in full satisfaction of all
rights pertaining to such shares of Company Common Stock.
(f) No Fractional Shares. (i) No certificates or scrip
representing fractional shares of Parent Common Stock shall be issued upon the
surrender for exchange of Certificates, no dividend or distribution of Parent
shall relate to such fractional share interests and such fractional share
interests will not entitle the owner thereof to vote or to any rights of a
stockholder of Parent.
(ii) As promptly as practicable following the Effective Time,
the Exchange Agent will determine the excess of (A) the number of whole shares
of Parent Common Stock delivered to the Exchange Agent by Parent pursuant to
Section 2.4(a) over (B) the aggregate number of whole shares of Parent Common
Stock to be distributed to holders of Company Common Stock pursuant to Section
2.4(b) (such excess being herein called the "Excess Shares"). Following the
Effective Time, the Exchange Agent will, on behalf of former stockholders of
Company, sell the Excess Shares at then prevailing prices on the New York Stock
Exchange, Inc. (the "NYSE"), all in the manner provided in Section 2.4(f)(iii).
(iii) The sale of the Excess Shares by the Exchange Agent will
be executed on the NYSE through one or more member firms of the NYSE and will be
executed in round lots to the extent practicable. The Exchange Agent will use
reasonable efforts to complete the sale of the Excess Shares as promptly
following the Effective Time as, in the Exchange Agent's sole judgment, is
practicable consistent with obtaining the best execution of such sales in light
of prevailing market conditions. Until the net proceeds of such sale or sales
have been distributed to the holders of Company Common Stock, the Exchange Agent
will hold such proceeds in trust for the holders of Company Common Stock (the
"Common Shares Trust"). The Surviving Corporation will pay all commissions,
transfer taxes and other out-of-pocket transaction costs, including the expenses
and compensation of the Exchange Agent incurred in connection with such sale of
the Excess Shares. The Exchange Agent will determine the portion of the Common
Shares Trust to which each holder of Company Common Stock is entitled, if any,
by multiplying the amount of the aggregate net proceeds comprising the Common
Shares Trust by a fraction, the numerator of which is the amount of the
fractional share interest to which such holder of Company Common Stock is
entitled (after taking into account all shares of Company Common Stock held at
the Effective Time by such holder) and the denominator of which is the aggregate
amount of fractional share interests to which all holders of Company Common
Stock are entitled.
(iv) Notwithstanding the provisions of Section 2.4(f)(ii) and
(iii), the Surviving Corporation may elect at its option, exercised prior to the
Effective Time, in lieu of the issuance and sale of Excess Shares and the making
of the payments hereinabove contemplated, to pay each holder of Company Common
Stock an amount in cash equal to the product obtained by multiplying (A) the
fractional share interest to which such holder (after taking into account all
shares of Company Common Stock held at the Effective Time by such holder) would
otherwise be entitled by (B) the closing price for a share of Parent Common
Stock as reported on the NYSE Composite Transaction Tape (as reported in The
Wall Street Journal, or, if not reported thereby, any other authoritative
source) on the Closing Date, and, in such case, all references herein to the
cash proceeds of the sale of the Excess Shares and similar references will be
deemed to mean and refer to the payments calculated as set forth in this Section
2.4(f)(iv).
(v) As soon as practicable after the determination of the
amount of cash, if any, to be paid to holders of Company Common Stock with
respect to any fractional share interests, the Exchange Agent will make
available such amounts to such holders of Company Common Stock subject to and in
accordance with the terms of Section 2.4(d).
(g) Termination of Exchange Fund. Any portion of the Exchange
Fund (including any shares of Parent Common Stock) which remains undistributed
to the holders of Company Common Stock for six months after the Effective Time
shall be delivered to Parent, upon demand, and any holders of Company Common
Stock who have not theretofore complied with this Article II shall thereafter
look only to Parent for the applicable Merger Consideration, any cash in lieu of
fractional shares of Parent Common Stock to which they are entitled pursuant to
Section 2.4(f) and any dividends or other distributions with respect to the
Parent Common Stock to which they are entitled pursuant to Section 2.4(d). Any
portion of the Exchange Fund remaining unclaimed by holders of shares of Company
Common Stock as of a date which is immediately prior to such time as such
amounts would otherwise escheat to or become property of any government entity
shall, to the extent permitted by applicable law, become the property of Parent
free and clear of any claims or interest of any person previously entitled
thereto.
(h) No Liability. None of the Exchange Agent, Parent nor the
Surviving Corporation shall be liable to any holder of shares of Company Common
Stock for any such shares of Parent Common Stock (or dividends or distributions
with respect thereto) or cash delivered to a public official pursuant to any
abandoned property, escheat or similar law.
(i) Withholding Rights. Each of the Surviving Corporation and
Parent shall be entitled to deduct and withhold from the consideration otherwise
payable pursuant to this Agreement to any holder of shares of Company Common
Stock such amounts as it is required to deduct and withhold with respect to the
making of such payment under the Code, or any provision of state, local or
foreign tax law. To the extent that amounts are so withheld by the Surviving
Corporation or Parent, as the case may be, such withheld amounts shall be
treated for all purposes of this Agreement as having been paid to the holder of
the shares of Company Common Stock in respect of which such deduction and
withholding was made by the Surviving Corporation or Parent, as the case may be.
(j) Lost Certificates. If any Certificate shall have been
lost, stolen or destroyed, upon the making of an affidavit of that fact by the
person claiming such Certificate to be lost, stolen or destroyed and, if
required by the Surviving Corporation, the posting by such person of a bond, in
such reasonable amount as the Surviving Corporation may direct, as indemnity
against any claim that may be made against it with respect to such Certificate,
the Exchange Agent will issue in exchange for such lost, stolen or destroyed
Certificate the applicable Merger Consideration, any cash in lieu of fractional
shares of Parent Common Stock to which the holders thereof are entitled pursuant
to Section 2.4(f) and any dividends or other distributions to which the holders
thereof are entitled pursuant to this Agreement.
(k) Further Assurances. If, at any time after the Effective
Time, the Surviving Corporation shall consider or be advised that any deeds,
bills of sale, assignments, assurances or any other actions or things are
necessary or desirable to vest, perfect or confirm of record or otherwise in the
Surviving Corporation its right, title or interest in, to or under any of the
rights, properties or assets of either of the Merger Sub or the Company acquired
or to be acquired by the Surviving Corporation as a result of, or in connection
with, the Merger or otherwise to carry out this Agreement, the officers of the
Surviving Corporation shall be authorized to execute and deliver, in the name
and on behalf of each of the Merger Sub and the Company or otherwise, all such
deeds, bills of sale, assignments and assurances and to take and do, in such
names and on such behalves or otherwise, all such other actions and things as
may be necessary or desirable to vest, perfect or confirm any and all right,
title and interest in, to and under such rights, properties or assets in the
Surviving Corporation or otherwise to carry out the purposes of this Agreement.
SECTION II.5. Stock Transfer Books. At the Effective Time, the
stock transfer books of the Company shall be closed and there shall be no
further registration of transfers of shares of Company Common Stock thereafter
on the records of the Company. From and after the Effective Time, the holders of
Certificates representing shares of Company Common Stock outstanding immediately
prior to the Effective Time shall cease to have any rights with respect to such
shares of Company Common Stock, except as otherwise provided herein or by law.
On or after the Effective Time, any Certificates presented to the Exchange Agent
or Parent for any reason shall be converted into shares of Parent Common Stock,
any cash in lieu of fractional shares of Parent Common Stock to which the
holders thereof are entitled pursuant to Section 2.4(f) and any dividends or
other distributions to which the holders thereof are entitled pursuant to
Section 2.4(d).
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to Parent and
Merger Sub as follows:
SECTION 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 such
failure to be so qualified or to be in good standing would not in the aggregate
have a Material Adverse Effect on the Company. The copies of the Company's
charter and by-laws which have been delivered to Parent are complete and correct
and in full force and effect on the date hereof. Each of the Company's
Subsidiaries is a corporation duly organized, validly existing and in good
standing under the laws of its jurisdiction of incorporation or organization,
has the power and authority to own its properties and to carry on its business
as it is now being conducted, and is duly qualified to do business and is in
good standing in each jurisdiction in which the ownership of its property or the
conduct of its business requires such qualification, except for jurisdictions in
which such failure to be so qualified or to be in good standing would not in the
aggregate have a Material Adverse Effect on the Company. The Company has
previously provided to Parent true and correct copies of the articles and
by-laws of each Material Subsidiary (as defined in Regulation S-K promulgated
under the Securities Act of 1933) and each such organizational document is in
full force and effect on the date hereof. All the outstanding shares of capital
stock of, or other ownership interests in, the Company's Subsidiaries are
validly issued, fully paid and non-assessable and are owned by the Company,
directly or indirectly, free and clear of all liens, claims, charges or
encumbrances, except for restrictions contained in credit agreements and similar
instruments to which the Company is a party. There are no existing options,
rights of first refusal, preemptive rights, calls or commitments of any
character relating to the issued or unissued capital stock or other securities
of, or other ownership interests in, any Subsidiary of the Company.
SECTION III.2. Capital Stock. The authorized stock of the
Company consists of 75,000,000 shares of the Company Common Stock, and
10,000,000 shares of preferred stock, par value $0.01 per share (the "Company
Preferred Stock"). As of October 22, 1997, 26,327,757 shares of the Company
Common Stock and no shares of the Company Preferred Stock were issued and
outstanding. All the outstanding shares of the Company Common Stock have been
validly issued and are fully paid and non-assessable. As of October 22, 1997,
there were no outstanding subscriptions, options, warrants, rights or other
arrangements or commitments obligating the Company to issue any shares of its
stock other than:
(a) rights to acquire 2,177,078 shares of the Company Common
Stock pursuant to the Company Amended and Restated 1996 Warrant Plan (the "1996
Warrant Plan");
(b) rights to acquire 387,200 shares of Company Common Stock
pursuant to the Warrant Agreement, dated June 30, 1994, between the Company and
the United States Trust Company of New York (the "1994 Warrant Agreement");
(c) options or other rights to receive or acquire 271,499
shares of Company Common Stock pursuant to the 1997 Equity Incentive Plan (the
"1997 Incentive Plan") which includes options, stock awards and restricted stock
awards to be granted under the 1997 Incentive Plan subsequent to the date hereof
in accordance with Section 5.1(a)(ix); and
(d) options or other rights issued to an employee of the
Company to acquire 44,000 shares of Company Common Stock (the "Employee
Options").
Except for the issuance of shares of the Company Common Stock
pursuant to the options and other rights referred to in Sections 3.2(a)-(d)
above and except as provided for in 5.1(a), (viii) and (ix), since October 22,
1997, no shares of the Company Common Stock have been issued.
SECTION III.3. Corporate Authority Relative to this Agreement;
No Violation. The Company has the corporate power and authority to enter into
this Agreement and to carry out its obligations hereunder. The execution and
delivery of this Agreement and the consummation of the transactions contemplated
hereby have been duly and validly authorized by the Board of Directors of the
Company and, except for the approval of its stockholders, no other corporate
proceedings on the part of the Company are necessary to authorize this Agreement
and the transactions contemplated hereby. The Board of Directors of the Company
has determined that the transactions contemplated by this Agreement are in the
best interest of its stockholders and to recommend to such stockholders that
they vote in favor thereof. This Agreement has been duly and validly executed
and delivered by the Company and, assuming this Agreement has been duly and
validly executed and delivered by the other parties hereto, this Agreement
constitutes a valid and binding agreement of the Company, enforceable against
the Company in accordance with its terms (except insofar as enforceability may
be limited by applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting creditors' rights generally, or by principles governing
the availability of equitable remedies). The Company is not subject to or
obligated under any charter, bylaw or contract provision or any licenses,
franchise or permit, or subject to any order or decree, which would be breached
or violated by its executing or, subject to the approval of its stockholders,
carrying out this Agreement, except as otherwise previously disclosed in writing
to Parent and for any breaches or violations which would not, in the case of any
contract provision, license, franchise, permit, order or decree, in the
aggregate, have a Material Adverse Effect on the Company. Other than in
connection with or in compliance with the provisions of the DGCL, the Securities
Act of 1933 (the "Securities Act"), the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act
of 1976, as amended (the "HSR Act"), Section 4043 of ERISA (as defined in
Section 3.8), any other competition, antitrust and investment laws and the
securities or blue sky laws of the various states, and, other than the filing of
the Certificate of Merger with the Delaware Secretary of State and any necessary
state filings to maintain the good standing or qualification of the Surviving
Corporation (collectively, the "Company Required Approvals"), no authorization,
consent or approval of, or filing with, any governmental body or authority is
necessary for the consummation by the Company of the transactions contemplated
by this Agreement, except for such authorizations, consents, approvals or
filings, the failure to obtain or make which would not, in the aggregate, have a
Material Adverse Effect on the Company; provided that the Company makes no
representation with respect to such of the foregoing as are required by reason
of the regulatory status of Parent or any of its Subsidiaries or facts
specifically pertaining to any of them.
SECTION III.4. Reports and Financial Statements. The
Company has previously furnished to Parent true and complete copies of:
(a) the Company's Annual Report on Form 10-K filed with the
Securities and Exchange Commission (the "SEC") for the year ended December 31,
1996;
(b) the Company's Quarterly Reports on Form 10-Q filed with
the SEC for the quarters ended March 31, 1997 and June 30, 1997;
(c) the definitive proxy statement filed by the Company with
the SEC on May 13, 1997;
(d) each final prospectus filed by the Company with the SEC
since July 23, 1996, except any final prospectus on Form S-8; and
(e) all Current Reports on Form 8-K filed by the Company
with the SEC since December 31, 1996.
Except as previously disclosed in writing to Parent, as of
their respective dates, such reports, proxy statement, and prospectuses
(collectively, the "Company SEC Reports") (i) complied as to form in all
material respects with the applicable requirements of the Securities Act, the
Exchange Act and the rules and regulations promulgated thereunder and (ii) did
not contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading;
provided, that the foregoing clause (ii) shall not apply to the financial
statements included in the Company SEC Reports (which are covered by the
following sentence). The audited consolidated financial statements and unaudited
consolidated interim financial statements included in the Company SEC Reports
(including any related notes and schedules) fairly present the financial
position of the Company and its Subsidiaries as of the dates thereof and the
results of operations and cash flows for the periods or as of the dates then
ended (subject, where appropriate, to normal year-end adjustments), in each case
in accordance with past practice and generally accepted accounting principles in
the United States ("GAAP") consistently applied during the periods involved
(except as otherwise disclosed in the notes thereto and except that the
unaudited financial statements therein do not contain all of the footnote
disclosures required by GAAP). Since July 23, 1996, the Company has timely filed
all material reports, registration statements and other filings required to be
filed by it with the SEC under the rules and regulations of the SEC.
SECTION III.5. No Undisclosed Liabilities. Except as
previously disclosed in writing to Parent, neither the Company nor any of its
Subsidiaries has any liabilities or obligations of any nature, whether or not
accrued, contingent or otherwise, of a type required by GAAP to be reflected on
a consolidated balance sheet and has no indebtedness for borrowed money
outstanding, except, in each case, (a) liabilities, obligations or indebtedness
reflected in any of the Company SEC Reports or disclosed in writing to Parent
and (b) liabilities, obligations or indebtedness, which would not in the
aggregate have a Material Adverse Effect on the Company.
SECTION 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 defined in Section 3.7 below)) except (a) as described in
any of the Company SEC Reports and (b) for violations or possible violations
which would not in the aggregate have a Material Adverse Effect on the Company.
The Company and its Subsidiaries have all permits, licenses and governmental
authorizations material to ownership or occupancy of their respective properties
and assets and the carrying on of their respective businesses, except for such
permits, licenses and governmental authorizations the failure of which to have
would not have in the aggregate a Material Adverse Effect on the Company.
SECTION III.7. Environmental Laws and Regulations. Except as
described in any of the Company SEC Reports, (a) the Company and each of its
Subsidiaries is in material compliance with all applicable federal, state, local
and foreign laws and regulations relating to pollution or protection of human
health or the environment (including, without limitation, ambient air, surface
water, ground water, land surface or subsurface strata) (collectively,
"Environmental Laws"), except for non-compliance which would not in the
aggregate have a Material Adverse Effect on the Company, which compliance
includes, but is not limited to, the possession by the Company and its
Subsidiaries of material permits and other governmental authorizations required
under applicable Environmental Laws, and compliance with the terms and
conditions thereof, (b) neither the Company nor any of its Subsidiaries has
received written notice of, or, to the knowledge of the Company, is the subject
of, any actions, causes of action, claims, investigations, demands or notices by
any Person alleging liability under or non-compliance with any Environmental Law
or that the Company or any Subsidiary is a potentially responsible party at any
Superfund site or state-equivalent site ("Environmental Claims") which would in
the aggregate have a Material Adverse Effect on the Company, (c) to the
knowledge of the Company, there are no circumstances that are reasonably likely
to prevent or interfere with such material compliance in the future, (d) to the
knowledge of the Company, the Company and its Subsidiaries have not disposed of
or released hazardous materials (at a concentration or level which requires
remedial action under any Environmental Law) at any real property currently
owned or leased by the Company or any Subsidiary or at any other real property,
except for such disposals or releases as would not in the aggregate have a
Material Adverse Effect on the Company, and (e) neither the Company nor its
Subsidiaries have agreed to indemnify any predecessor or other party with
respect to any environmental liability, other than (i) customary indemnity
agreements contained in leases and licenses and (ii) such agreements as would
not in the aggregate have a Material Adverse Effect on the Company.
SECTION III.8. No Undisclosed Employee Benefit Plan
Liabilities or Severance Arrangements. Except as described in any of the Company
SEC Reports, all "employee benefit plans," as defined in Section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA") (including
any multi-employer plan as defined in Section 3(37) of ERISA), maintained or
contributed to by the Company or its Subsidiaries are in compliance with all
applicable provisions of ERISA, the Code and any other applicable laws and to
the knowledge of the Company, none of the Company nor its Subsidiaries with
respect to such plans has engaged in a "prohibited transaction" within the
meaning of Section 4975 of the Code or Title I, Part 4 of ERISA except for
transactions (i) which are exempt under applicable law, regulations and
administrative exemptions or (ii) which in the aggregate would not have a
Material Adverse Effect on the Company, and the Company and its Subsidiaries do
not have any liabilities or obligations with respect to any such employee
benefit plans, whether or not accrued, contingent (including any potential
material withdrawal liability with respect to any such multi-employer plans) or
otherwise, except (a) as described in any of the Company SEC Reports or
previously disclosed in writing to Parent and (b) for instances of
non-compliance transactions or liabilities or obligations that would not in the
aggregate have a Material Adverse Effect on the Company. Except with respect to
awards granted (or granted subsequent to the date hereof in accordance with the
provision of Section 5.1(a)(ix) or (x)) under (i) the Company 1997 Incentive
Plan, (ii) 0000 Xxxxxxx Plan and (iii) 1994 Warrant Agreement, no employee of
the Company will be entitled to any additional benefits or any acceleration of
the time of payment or vesting of any benefits under any employee incentive or
benefit plan, program or arrangement as a result of the transactions
contemplated by this Agreement. The Company has previously provided to Parent a
true and correct copy of the Company's 401(k) plan and the Form 5500 and the
audit report (which fairly represents the financial condition and results of
operations of such plan) related thereto. The Company and its Subsidiaries do
not maintain any employee benefit pension plan which is subject to Title IV of
ERISA. The Company's 401(k) Plan is exempt from federal income taxation under
Section 501 of the Code, and, to the knowledge of the Company, nothing has
occurred with respect to the operation of such plan which could cause the loss
of such qualification or exemption or the imposition of any lien, penalty, or
tax under ERISA or the Code which would in the aggregate have a Material Adverse
Effect on the Company, and the Company and its Subsidiaries have not received
any material adverse notice concerning the 401(k) plan from the Internal Revenue
Service, the Department of Labor or the Pension Benefit Guaranty Corporation
("PBGC") within the four years preceding the date of this Agreement. None of the
Company nor any Subsidiary has incurred any outstanding liability under Section
4062 of ERISA to the PBGC, to a trust established under Section 4041 or 4042 of
ERISA, or to a trustee appointed under Section 4042 of ERISA, except for such
liabilities as would not in the aggregate have a Material Adverse Effect on the
Company. None of the Company's employee benefit plans contain any provisions
which would prohibit the transactions contemplated by this Agreement. As of the
Closing Date, except for stock and restricted stock awards described in Section
5.1(a)(ix), no payment that is owed or may become due any director, officer,
employee, or agent of the Company or a Subsidiary will be non-deductible by the
Company or any Subsidiary by reason of Section 280G of the Code or under Section
4999 of the Code, except for such liabilities or non-deductions as would not in
the aggregate have a Material Adverse Effect on the Company. Except as
previously disclosed in writing to Parent or as set forth in the Company SEC
Reports, the Company has not prepaid or prefunded any material welfare plan
through a trust, reserve, premium stabilization or similar account, other than
pursuant to any insurance contract which does not include a "fund" as defined in
Sections 419(e)(3) and (4) of the Code.
SECTION III.9. Absence of Certain Changes or Events. Other
than as disclosed in the Company SEC Reports or previously disclosed in writing
to Parent, since June 30, 1997, the businesses of the Company and its
Subsidiaries have been conducted in all material respects in the ordinary course
and there has not been any event, occurrence, development or state of
circumstances or facts that has had a Material Adverse Effect on the Company.
Since June 30, 1997, no dividends or distributions have been declared or paid on
or made with respect to the shares of capital stock or other equity interests of
the Company or its Subsidiaries nor have any such shares been repurchased or
redeemed, other than dividends or distributions paid to the Company or a
Subsidiary.
SECTION III.10. Investigations; Litigation. Except as
described in any of the Company SEC Reports or previously disclosed in writing
to Parent:
(a) no investigation or review by any governmental body or
authority with respect to the Company or any of its Subsidiaries which would in
the aggregate have a Material Adverse Effect on the Company is pending nor has
any governmental body or authority notified the Company of an intention to
conduct the same; and
(b) there are no actions, suits or proceedings pending (or, to
the Company's knowledge, threatened) against or affecting the Company or its
Subsidiaries, or any of their respective properties at law or in equity, or
before any federal, state, local or foreign governmental body or authority,
which, in the aggregate, is reasonably likely to have a Material Adverse Effect
on the Company.
SECTION III.11. Proxy Statement; Registration Statement; Other
Information. None of the information with respect to the Company or its
Subsidiaries to be included in the Proxy Statement (as defined in Section 5.2)
or the Registration Statement (as defined in Section 5.2) will, in the case of
the Proxy Statement or any amendments thereof or supplements thereto, at the
time of the mailing of the Proxy Statement or any amendments or supplements
thereto, and at the time of the Company Meeting (as defined in Section 5.3), or,
in the case of the Registration Statement, at the time it becomes effective,
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading, except that no representation is made by the Company with respect to
information supplied in writing by Parent or any affiliate of Parent
specifically for inclusion in the Proxy Statement. The Proxy Statement will
comply as to form in all material respects with the provisions of the Exchange
Act and the rules and regulations promulgated thereunder.
SECTION III.12. Lack of Ownership of Parent Common Stock.
Neither the Company nor any of its Subsidiaries owns any shares of Parent Common
Stock or other securities convertible into shares of Parent Common Stock
(exclusive of any shares owned by the Company's employee benefit plans).
SECTION III.13. Tax Matters. (a) All federal, state, local and
foreign Tax Returns required to be filed by or on behalf of the Company, each of
its Subsidiaries, and each affiliated, combined, consolidated or unitary group
of which the Company or any of its Subsidiaries is a member (a "Company Group")
have been timely filed, and all returns filed are complete and accurate except
to the extent any failure to file or any inaccuracies in filed returns would
not, individually or in the aggregate, have a Material Adverse Effect on the
Company. All Taxes due and owing by the Company, any Subsidiary of the Company
or any Company Group have been paid, or adequately reserved for, except to the
extent any failure to pay or reserve would not, individually or in the
aggregate, have a Material Adverse Effect on the Company. There is no audit
examination, deficiency, refund litigation, proposed adjustment or matter in
controversy with respect to any Taxes due and owing by the Company, any
Subsidiary of the Company or any Company Group nor has the Company or any
Subsidiary filed any waiver of the statute of limitations applicable to the
assessment or collection of any Tax, in each case, which would, individually or
in the aggregate, have a Material Adverse Effect on the Company. All assessments
for Taxes due and owing by the Company, any Subsidiary of the Company or any
Company Group with respect to completed and settled examinations or concluded
litigation have been paid. Neither the Company nor any Subsidiary is a party to
any tax indemnity agreement, tax sharing agreement or other agreement under
which the Company or any Subsidiary could become liable to another person as a
result of the imposition of a Tax upon any person, or the assessment or
collection of such a Tax, except for such agreements as would not in the
aggregate have a Material Adverse Effect. As soon as practicable after the
public announcement of the Agreement, the Company will provide Parent with
written schedules of (i) the taxable years of the Company for which the statutes
of limitations with respect to federal income Taxes have not expired, and (ii)
with respect to federal income Taxes, those years for which examinations have
been completed, those years for which examinations are presently being
conducted, and those years for which examinations have not yet been initiated.
The Company and each of its Subsidiaries has complied in all material respects
with all rules and regulations relating to the withholding of Taxes, except to
the extent any such failure to comply would not, individually or in the
aggregate, have a Material Adverse Effect on the Company.
(b) Neither the Company nor any of its Subsidiaries knows of
any fact or has taken any action that could reasonably be expected to prevent
the Merger from qualifying as a reorganization within the meaning of Section
368(a) of the Code.
SECTION III.14. Opinion of Financial Advisor. The Board of
Directors of the Company has received the opinion of BT Xxxx Xxxxx & Sons, Inc.
and Bear Xxxxxxx & Co., Inc., dated the date of this Agreement, to the effect
that, as of such date, the Merger Consideration is fair to the Company's
stockholders from a financial point of view. A copy of the written opinion of BT
Xxxx Xxxxx & Sons, Inc. and Bear Xxxxxxx & Co., Inc. will be delivered to Parent
as soon as practicable after the date of this Agreement.
SECTION III.15. Required Vote of the Company Stockholders. The
affirmative vote of the holders of a majority of the outstanding shares of the
Company Common Stock is required to approve the Merger. No other vote of the
stockholders of the Company is required by law, the charter or By-Laws of the
Company or otherwise in order for the Company to consummate the Merger and the
transactions contemplated hereby.
SECTION III.16. Insurance. The Company and its Subsidiaries
have insurance policies, including without limitation policies of life, fire,
health and other casualty and liability insurance, that are customary and
appropriate for the industry in which it operates and such policies are in full
force and effect, except for the failure to have or maintain in full force and
effect such policies as would not in the aggregate have a Material Adverse
Effect on the Company.
SECTION III.17. Real Property; Title. The Company has
previously provided to Parent a true and complete list of all real property
owned by the Company or its Subsidiaries which is material to the business of
the Company and its Subsidiaries taken as a whole. The Company has good and
marketable title to all such properties except where the failure to have such
title would not in the aggregate have a Material Adverse Effect.
SECTION III.18. Collective Bargaining Agreements and Labor.
The Company has previously provided to Parent all labor or collective bargaining
agreements which pertain to a material number of the employees of the Company
and its Subsidiaries. There are no pending complaints, charges or claims against
the Company or its Subsidiaries filed with any public or governmental authority,
arbitrator or court based upon the employment or termination by the Company of
any individual, except for such complaints, charges or claims which if adversely
determined would not in the aggregate have a Material Adverse Effect on the
Company.
SECTION III.19. Material Contracts. Except as set forth in the
Company SEC Reports, neither the Company nor any of its Subsidiaries is a party
to or bound by any "material contract" (as such term is defined in item
601(b)(10) of Regulation S-K of the SEC) (all contracts of the type described in
this Section 3.19 being referred to herein as "Company Material Contracts").
Each Company Material Contract is valid and binding on the Company and is in
full force and effect, and the Company and each of its Subsidiaries have in all
material respects performed all obligations required to be performed by them to
date under each Company Material Contract, except where such noncompliance, in
the aggregate, would not have a Material Adverse Effect on the Company. Neither
the Company nor any of its Subsidiaries know of, or has received notice of, any
violation or default under any Company Material Contract except for such
violations or defaults as would not in the aggregate have a Material Adverse
Effect on the Company.
SECTION III.20. Takeover Statute. The Board of Directors of
the Company has approved this Agreement and the transactions contemplated hereby
and, assuming the accuracy of Parent's representation and warranty contained in
Section 4.12, such approval constitutes approval of the Merger and the other
transactions contemplated hereby by the Board of Directors of the Company under
the provisions of Section 203 of the DGCL such that Section 203 of the DGCL does
not apply to this Agreement and the transactions contemplated hereby. To the
knowledge of the Company, no other state takeover statute is applicable to the
Merger or the other transactions contemplated hereby.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
Parent and Merger Sub hereby jointly and severally represent and
warrant to the Company as follows:
SECTION IV.1. Organization, Qualification, Etc. Each of Parent
and Merger Sub is a corporation duly organized, validly existing and in good
standing under the laws of its jurisdiction of organization and has the
corporate power and authority to own its properties and assets and to carry on
its business as it is now being conducted and is duly qualified to do business
and is in good standing in each jurisdiction in which the ownership of its
properties or the conduct of its business requires such qualification, except
for jurisdictions in which such failure to be so qualified or to be in good
standing would not in the aggregate have a Material Adverse Effect on Parent or
Merger Sub. The copies of Parent's Articles of Incorporation, as amended, and
Amended and Restated By-laws and Merger Sub's charter and by-laws which have
been delivered to the Company are complete and correct and in full force and
effect on the date hereof. Each of Parent's Subsidiaries is a corporation or
partnership duly organized, validly existing and in good standing under the laws
of its jurisdiction of incorporation or organization, has the power and
authority to own its properties and to carry on its business as it is now being
conducted, and is duly qualified to do business and is in good standing in each
jurisdiction in which the ownership of its property or the conduct of its
business requires such qualification, except for jurisdictions in which such
failure to be so qualified or to be in good standing would not in the aggregate
have a Material Adverse Effect on Parent or Merger Sub. All the outstanding
shares of capital stock of, or other ownership interests in, Parent's
Subsidiaries and Merger Sub are validly issued, fully paid and non-assessable
and are owned by Parent, directly or indirectly, free and clear of all liens,
claims, charges or encumbrances, except for restrictions contained in credit
agreements and similar instruments to which Parent is a party. There are no
existing options (except for those set forth in Section 4.2 below), rights of
first refusal, preemptive rights, calls or commitments of any character relating
to the issued or unissued capital stock or other securities of, or other
ownership interests in, any Subsidiary of Parent or Merger Sub.
SECTION IV.2. Capital Stock. The authorized capital stock of
Parent consists of 150,000,000 shares of Parent Common Stock, and 2,000,000
shares of preferred stock, par value $1.00 per share ("Parent Preferred Stock").
The shares of Parent Common Stock to be issued in the Merger or upon the
exercise of the Company stock options, warrants, conversion rights or other
rights or upon vesting or payment of other Company equity-based awards
thereafter will, when issued, be validly issued fully paid and non-assessable.
As of October 22, 1997, 98,056,977 shares of Parent Common Stock and no shares
of Parent Preferred Stock were issued and outstanding. All the outstanding
shares of Parent Common Stock have been validly issued and are fully paid and
non-assessable. As of October 22, 1997, there were no outstanding subscriptions,
options, warrants, rights or other arrangements or commitments obligating Parent
to issue any shares of its capital stock other than options and other rights to
receive or acquire an aggregate of 4,263,017 shares of Parent Common Stock
pursuant to:
(a) the 1984 Incentive Stock Option Plan of Parent;
(b) the 1994 Incentive Stock Option Plan of Parent;
(c) the 1994 Non-Qualified Stock Option Plan;
(d) the Parent Director's Non-Qualified Stock Option Plan;
(e) the Stockholders Agreement, dated April 9, 1997, by
and among Parent, Xxxxx Media Corporation, and EM Holdings, L.L.C.; and
(f) various other option agreements with officers or employees
of the Parent or the Parent's Subsidiaries, option assumption agreements, and
incentive compensation grants.
SECTION IV.3. Corporate Authority Relative to this Agreement;
No Violation. Each of Parent and Merger Sub has the corporate power and
authority to enter into this Agreement and to carry out its obligations
hereunder. The execution and delivery of this Agreement and the consummation of
the transactions contemplated hereby have been duly and validly authorized by
the Boards of Directors of Parent and Merger Sub and no other corporate or
stockholder proceedings on the part of Parent or Merger Sub are necessary to
authorize this Agreement, the issuance of the Parent Common Stock and the other
transactions contemplated hereby. This Agreement has been duly and validly
executed and delivered by Parent and Merger Sub and, assuming this Agreement has
been duly and validly executed and delivered by the other parties hereto, this
Agreement constitutes a valid and binding agreement of Parent and Merger Sub,
enforceable against each of them in accordance with its terms (except insofar as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors' rights
generally, or by principles governing the availability of equitable remedies).
Neither Parent nor Merger Sub is subject to or obligated under any charter,
by-law or contract provision or any license, franchise or permit, or subject to
any order or decree, which would be breached or violated by its executing or
carrying out this Agreement, except for any breaches or violations which would
not, in the aggregate, have a Material Adverse Effect on Parent. Other than in
connection with or in compliance with the provisions of the DGCL, the Securities
Act, the Exchange Act, the HSR Act, Section 4043 of ERISA, any non-United States
competition, antitrust and investments laws and the securities or blue sky laws
of the various states, and, other than the filing of the Certificate of Merger
with the Delaware Secretary of State and any necessary state filings to maintain
the good standing or qualification of the Surviving Corporation (collectively,
the "Parent Required Approvals"), no authorization, consent or approval of, or
filing with, any governmental body or authority is necessary for the
consummation by Parent of the transactions contemplated by this Agreement,
except for such authorizations, consents, approvals or filings, the failure to
obtain or make which would not, in the aggregate, have a Material Adverse Effect
on Parent; provided that Parent makes no representation with respect to such of
the foregoing as are required by reason of the regulatory status of the Company
or any of its Subsidiaries or facts specifically pertaining to any of them.
SECTION 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, 1994 through 1996;
(b) Parent's Quarterly Reports on Form 10-Q filed with the SEC
for the quarters ended March 31, 1997 and June 30, 1997;
(c) each definitive proxy statement filed by Parent with the
SEC since December 31, 1994;
(d) each final prospectus filed by Parent with the SEC since
December 31, 1994, except any final prospectus on Form S-8; and
(e) all Current Reports on Form 8-K filed by Parent with the
SEC since December 31, 1996.
As of their respective dates, such reports, proxy statements
and prospectuses (collectively, "Parent SEC Reports") (i) complied as to form in
all material respect with the applicable requirements of the Securities Act, the
Exchange Act, and the rules and regulations promulgated thereunder and (ii) did
not contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading;
provided, that the foregoing clause (ii) shall not apply to the financial
statements included in the Parent SEC Reports (which are covered by the
following sentence). The audited consolidated financial statements and unaudited
consolidated interim financial statements included in the Parent SEC Reports
(including any related notes and schedules) fairly present the financial
position of Parent and its consolidated Subsidiaries as of the dates thereof and
the results of their operations and their cash flows for the periods or as of
the dates then ended (subject, where appropriate, to normal year-end
adjustments), in each case in accordance with past practice and GAAP
consistently applied during the periods involved (except as otherwise disclosed
in the notes thereto and except that the unaudited financial statements therein
do not contain all of the footnote disclosures required by GAAP). Since
September 30, 1996, Parent has timely filed all material reports, registration
statements and other filings required to be filed by it with the SEC under the
rules and regulations of the SEC.
SECTION 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, of a type required by GAAP to
be reflected on a consolidated balance sheet except (a) liabilities or
obligations reflected in any of the Parent SEC Reports and (b) liabilities or
obligations which would not in the aggregate have a Material Adverse Effect on
Parent.
SECTION 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 any of the Parent SEC Reports and
(b) for violations or possible violations which would not in the aggregate have
a Material Adverse Effect on Parent.
SECTION IV.7. Environmental Laws and Regulations. Except as
described in any of the Parent SEC Reports, (a) Parent and each of its
Subsidiaries is in material compliance with all applicable Environmental Laws,
except for non-compliance which would not in the aggregate have a Material
Adverse Effect on Parent, which compliance includes, but is not limited to, the
possession by Parent and its Subsidiaries of material permits and other
governmental authorizations required under applicable Environmental Laws, and
compliance with the terms and conditions thereof; (b) neither Parent nor any of
its Subsidiaries has received written notice of, or, to the knowledge of Parent,
is the subject of, any Environmental Claims which would in the aggregate have a
Material Adverse Effect on Parent; and (c) to the knowledge of Parent, there are
no circumstances that are reasonably likely to prevent or interfere with such
material compliance in the future.
SECTION IV.8. No Undisclosed Employee Benefit Plan Liabilities
or Severance Arrangements. Except as described in any of the Parent SEC Reports,
all "employee benefit plans," as defined in Section 3(3) of ERISA, maintained or
contributed to by Parent or its Subsidiaries are in compliance with all
applicable provisions of ERISA and the Code, and Parent and its Subsidiaries do
not have any liabilities or obligations with respect to any such employee
benefit plans, whether or not accrued, contingent or otherwise, except (a) as
described in any of the Parent SEC Reports and (b) for instances of
non-compliance or liabilities or obligations that would not in the aggregate
have a Material Adverse Effect on Parent. No employee of Parent will be entitled
to any additional benefits or any acceleration of the time of payment or vesting
of any benefits under any employee incentive or benefit plan, program or
arrangement as a result of the transactions contemplated by this Agreement.
SECTION IV.9. Absence of Certain Changes or Events. Other than
as disclosed in the Parent SEC Reports, since June 30, 1997 the businesses of
Parent and its Subsidiaries have been conducted in all material respects in the
ordinary course and there has not been any event, occurrence, development or
state of circumstances or facts that has had a Material Adverse Effect on
Parent.
SECTION IV.10. Investigations; Litigation. Except as
described in any of the Parent SEC Reports or previously disclosed in writing to
the Company:
(a) no investigation or review by any governmental body or
authority with respect to Parent or any of its Subsidiaries which would in the
aggregate have a Material Adverse Effect on Parent is pending nor has any
governmental body or authority notified Parent of an intention to conduct the
same; and
(b) there are no actions, suits or proceedings pending (or, to
Parent's knowledge, threatened) against or affecting Parent or its Subsidiaries,
or any of their respective properties at law or in equity, or before any
federal, state, local or foreign governmental body or authority which in the
aggregate is reasonably likely to have a Material Adverse Effect on Parent.
SECTION IV.11. Proxy Statement; Registration Statement; Other
Information. None of the information with respect to Parent or its Subsidiaries
to be included in the Proxy Statement (as defined in section 5.2) or the
Registration Statement (as defined in section 5.2) will, in the case of the
Proxy Statement or any amendments thereof or supplements thereto, at the time of
the mailing of the Proxy Statement or any amendments or supplements thereto, and
at the time of the Company Meeting, or, in the case of the Registration
Statement, at the time it becomes effective or at the time of any post-effective
amendment, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading, except that no representation is made by Parent with respect to
information supplied in writing by the Company or any affiliate of the Company
specifically for inclusion in the Proxy Statement. The Registration Statement
will each comply as to form in all material respects with the provisions of the
Exchange Act and the rules and regulations promulgated thereunder.
SECTION 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. Tax Matters. (a) All federal, state, local and
foreign Tax Returns required to be filed by or on behalf of Parent, each of its
Subsidiaries, and each affiliated, combined, consolidated or unitary group of
which Parent or any of its Subsidiaries is a member (a "Parent Group") have been
timely filed, and all returns filed are complete and accurate except to the
extent any failure to file or any inaccuracies in filed returns would not,
individually or in the aggregate, have a Material Adverse Effect on Parent. All
Taxes due and owing by Parent, any Subsidiary of Parent or any Parent Group have
been paid, or adequately reserved for, except to the extent any failure to pay
or reserve would not, individually or in the aggregate, have a Material Adverse
Effect on Parent. There is no audit examination, deficiency, refund litigation,
proposed adjustment or matter in controversy with respect to any Taxes due and
owing by Parent, any Subsidiary of Parent or any Parent Group which would,
individually or in the aggregate, have a Material Adverse Effect on Parent. All
assessments for Taxes due and owing by Parent, any Subsidiary of Parent or any
Parent Group with respect to completed and settled examinations or concluded
litigation have been paid. As soon as practicable after the public announcement
of the Merger Agreement, Parent will provide the Company with written schedules
of (i) the taxable years of Parent for which the statutes of limitations with
respect to federal income Taxes have not expired, and (ii) with respect to
federal income Taxes, those years for which examinations have been completed,
those years for which examinations are presently being conducted, and those
years for which examinations have not yet been initiated. Parent and each of its
Subsidiaries has complied in all material respects with all rules and
regulations relating to the withholding of Taxes, except to the extent any such
failure to comply would not, individually or in the aggregate, have a Material
Adverse Effect on Parent.
(b) Neither Parent nor any of its Subsidiaries knows of any
fact or has taken any action that could reasonably be expected to prevent the
Merger from qualifying as a reorganization within the meaning of Section 368(a)
of the Code.
ARTICLE V
COVENANTS RELATING TO CONDUCT OF BUSINESS
SECTION V.1. Conduct of Business by the Company or Parent.
Prior to the Effective Time or the date, if any, on which this Agreement is
earlier terminated pursuant to Section 7.1 (the "Termination Date"), and except
as may be agreed to by the other parties hereto or as may be permitted pursuant
to this Agreement:
(a) The Company:
(i) shall, and shall cause each of its Subsidiaries to,
conduct its operations according to their ordinary and usual course of business;
(ii) shall use its reasonable best efforts, and cause each of
its Subsidiaries to use its reasonable best efforts, to (A) preserve intact its
business organizations and goodwill in all material respects, (B) keep available
the services of its officers and employees as a group, subject to changes in the
ordinary course, and (C) maintain satisfactory relationships with suppliers,
distributors, customers and others having business relationships with them;
(iii) shall notify Parent of any emergency or other change in
the normal course of its or its Subsidiaries' respective businesses or in the
operation of its or its Subsidiaries' respective properties and of any
complaints, investigations or hearings (or communications indicating that the
same may be contemplated) of any governmental body or authority if such
emergency, change, complaint, investigation or hearing would have a Material
Adverse Effect on the Company;
(iv) shall not authorize or pay any dividends on or make any
distribution with respect to its outstanding shares of stock;
(v) except as previously disclosed in writing to Parent or as
otherwise provided in this Agreement, shall not, and shall not permit any of its
Subsidiaries to, enter into or amend any employment, severance or similar
agreements or arrangements with any of their respective directors or executive
officers;
(vi) except as previously disclosed in writing to Parent,
shall not, and shall not permit any of its Subsidiaries to, authorize, propose
or announce an intention to authorize or propose, or enter into an agreement
with respect to, any merger, consolidation or business combination any
acquisition of a material amount of assets or securities, any disposition of
assets or securities or any release or relinquishment of any material contract
rights not in the ordinary course of business, except for (A) acquisitions
previously disclosed in writing to Parent and Merger Sub and (B) asset
acquisitions for cash within the scope of or related to the Company's existing
business in which the aggregate consideration is less than $5 million in any
single acquisition or series of related transactions and less than $25 million
in the aggregate for all such acquisitions, in each case which would not
materially delay or impair the ability of the Company to perform its obligations
under this Agreement;
(vii) shall not propose or adopt any amendments to its
corporate charter or by-laws;
(viii) shall not, and shall not permit any of its Subsidiaries
to, (A) issue any shares of their capital stock, except upon exercise of rights
or options issued pursuant to existing employee incentive or benefit plans,
programs or arrangements and non-employee director plans (including, without
limitation, shares issued in connection with stock grants or awards or the
exercise of rights or options granted in the ordinary course of business
consistent with past practice pursuant to such plans, programs or arrangements)
or (B) effect any stock split not previously announced or (C) otherwise change
its capitalization as it existed on September 30, 1997, except as contemplated
herein;
(ix) shall not, and shall not permit any of its Subsidiaries
to, grant, confer or award any options, warrants, conversion rights or other
rights, not existing on the date hereof, to acquire any shares of its capital
stock, except for grants of options, stock awards or restricted stock under the
1997 Incentive Plan with respect to not more than 180,000 shares;
(x) shall not, and shall not permit any of its Subsidiaries
to, except in the ordinary course of business in connection with employee
incentive and benefit plans, programs or arrangements in existence on the date
hereof, purchase or redeem any shares of its stock or pay any cash bonuses in
excess of 133% of the Company's reserves for bonuses as of September 30, 1997;
provided, however, the Company may adopt a bonus plan to incentive employees to
remain with the Company through and until the Closing Date in an amount to be
mutually agreed to by Parent and the Company;
(xi) shall not, and shall not permit any of its Subsidiaries
to, except as contemplated by this Section 5.1 or Section 5.4, amend in any
significant respect the terms of their respective employee benefit plans,
programs or arrangements or any severance or similar agreements or arrangements
in existence on the date hereof, or adopt any new employee benefit plans,
programs or arrangements or any severance or similar agreements or arrangements;
(xii) shall not, and shall not permit any of its Subsidiaries
to, enter into any loan agreement;
(xiii) except in connection with (A) acquisitions previously
disclosed in writing to Parent or as contemplated pursuant to clause (vi) above
and (B) interest payments on any of the Company's outstanding public debt, shall
not, and shall not permit any of its Subsidiaries to, incur any additional
indebtedness for borrowed money, other than incurrences in an amount in the
aggregate not to exceed at any one time outstanding $1,000,000;
(xiv) shall not, and shall not permit any of its Subsidiaries
to, incur any capital expenditures in excess of $15,000,000;
(xv) shall not, and shall not permit any of its Subsidiaries
to, except with respect to sign location related contracts or leases, sales or
advertising contracts or other agreements contemplated by or permitted pursuant
to this Agreement, enter into any material agreement;
(xvi) shall not, and shall not permit any of its Subsidiaries,
to enter into an agreement with any Affiliate of the Company, any family member
of any Affiliate of the Company or any stockholder who owns more than 10% of the
outstanding capital stock of the Company;
(xvii) shall not, and shall not permit any of its Subsidiaries
to make any material Tax election or settle or compromise any material Tax
liability, other than in connection with currently pending proceedings or other
than in the ordinary course of business; and
(xviii) shall not, and shall not permit any of its
Subsidiaries to agree, in writing or otherwise, to take any of the foregoing
actions or take any action which would make any representation or warranty in
Article III hereof untrue or incorrect.
(b) The Parent:
(i) shall, and shall cause each of its Subsidiaries to,
conduct its operations according to their ordinary and usual course of business;
provided, however, that nothing contained in this proviso shall limit Parent's
ability to authorize or propose, or enter into, an agreement with respect to any
acquisitions or to issue any debt or equity securities;
(ii) shall take all action necessary to cause Merger Sub to
perform its obligations under this Agreement and to consummate the Merger on the
terms and conditions set forth in this Agreement;
(iii) shall and shall cause Merger Sub to vote all shares of
Company Common Stock, if any, beneficially owned by Merger Sub or its affiliates
in favor of adoption and approval of the Merger and this Agreement at the
Company Meeting (as defined in Section 5.3); and
(iv) shall not, and shall not permit any of its Subsidiaries
to agree, in writing or otherwise, to take any of the foregoing actions or take
any action which would make any representation or warranty in Article IV hereof
untrue or incorrect.
SECTION V.2. Proxy Material; Registration Statement. (a) The
Company will (i) as promptly as practicable following the date of this
Agreement, prepare and file with the SEC, will use its reasonable efforts to
have cleared by the SEC and thereafter mail to its stockholders as promptly as
practicable, a proxy statement that will be the same proxy statement/prospectus
contained in the Registration Statement (as hereinafter defined) and a form of
proxy, in connection with the vote of the Company's stockholders with respect to
the Merger (such proxy statement/prospectus, together with any amendments
thereof or supplements thereto, in each case in the form or forms mailed to the
Company's stockholders, is herein called the "Proxy Statement"), (ii) use its
reasonable efforts to obtain the necessary approvals by its stockholders of this
Agreement and the transactions contemplated hereby and (iii) otherwise comply in
all material respects with all legal requirements applicable to such meeting.
The Company may, if it withdraws, modifies or changes its recommendation in
accordance with Section 5.3 below, delay the filing or mailing, as the case may
be, of the Proxy Statement or delay the holding of the Company Meeting (as
defined below in Section 5.3). In addition, the Company will upon reasonable
advance notice provide Parent with all financial and other data regarding the
Company as may be reasonably requested by Parent in connection with the
Registration Statement.
(b) Parent will as promptly as practicable following the date
of this Agreement, prepare and file with the SEC a registration statement of the
Parent on Form S-4 (such registration statement together with all and any
amendments and supplements thereto, being herein referred to as the
"Registration Statement"), which shall include the Proxy Statement. Such
Registration Statement shall be used for the purposes of registering with the
SEC and with applicable state securities authorities the issuance of Parent
Common Stock to holders of Company Common Stock in connection with the Merger.
(c) The Parent shall furnish such information concerning the
Parent as is necessary in order to cause the Proxy Statement, insofar as it is
related to the Parent, to be prepared in accordance with Section 5.2(a). The
Parent agrees promptly to advise the Company if at any time prior to the Company
Meeting any information provided by the Parent in the Proxy Statement becomes
incorrect or incomplete in any material respect, and to provide the information
needed to correct such inaccuracy or omission.
(d) The Parent shall use its best efforts to cause the
Registration Statement to become effective under the Securities Act and
applicable state securities laws at the earliest practicable date and to remain
effective until the Effective Time.
SECTION V.3. Stockholders' Meeting. The Company shall, in
accordance with applicable law and the Articles of Incorporation and the By-Laws
of the Company, and subject to the fiduciary duties of the Board of Directors of
the Company, duly call, give notice of, convene and hold a special meeting of
its stockholders (the "Company Meeting") as promptly as practicable after the
date hereof for the purpose of voting upon the adoption of this Agreement and
considering and taking any other action upon this Agreement and the Merger and
such other matters as may be required at the Company Meeting and the Company
shall use its reasonable efforts to hold the Company Meeting as soon as
practicable after the date on which the Registration Statement becomes
effective. The Board of Directors of the Company shall recommend approval and
adoption of this Agreement and the Merger by the Company's stockholders;
provided, that, the Board of Directors of the Company may withdraw, modify or
change such recommendation if it has determined in good faith, after
consultation with outside legal counsel, that the failure to withdraw, modify or
change such recommendation would be reasonably likely to be inconsistent with
the fiduciary duties of the Board of Directors of the Company to the
stockholders under applicable law.
SECTION V.4. Approvals and Consents; Cooperation. (a) The
Company and Parent shall together, or pursuant to an allocation of
responsibility to be agreed upon between them:
(i) as soon as is reasonably practicable take all such action
as may be required under state blue sky or securities laws in connection with
the transactions contemplated by this Agreement;
(ii) promptly prepare and file with the NYSE and such other
stock exchanges as shall be agreed upon listing applications covering the shares
of Parent Common Stock issuable in the Merger or upon exercise of the Company
stock options, warrants, conversion rights or other rights or vesting or payment
of other Company equity-based awards and use its reasonable best efforts to
obtain, prior to the Effective Time, approval for the listing of such Parent
Common Stock, subject only to official notice of issuance;
(iii) cooperate with one another in order to lift any
injunctions or remove any other impediment to the consummation of the
transactions contemplated herein; and
(iv) cooperate with one another in obtaining opinions of
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP, counsel to the Company, and Akin,
Gump, Strauss, Hauer, & Xxxx, L.L.P., counsel to Parent, dated as of the Closing
Date and the Effective Time, to the effect that the Merger qualifies as a
reorganization under the provisions of Section 368(a) of the Code. In connection
therewith, each of the Company and Parent shall deliver to Skadden, Arps, Slate,
Xxxxxxx & Xxxx LLP and Akin, Gump, Strauss, Hauer, & Xxxx, L.L.P. representation
letters substantially in the form attached hereto as Exhibits A and B,
respectively.
(b) Subject to the limitations contained in Section 5.2, the
Company and Parent shall each furnish to one another and to one another's
counsel all such information as may be required in order to effect the foregoing
actions and each represents and warrants to the other that no information
furnished by it in connection with such actions or otherwise in connection with
the consummation of the transactions contemplated by this Agreement will contain
any untrue statement of a material fact or omit to state a material fact
required to be stated in order to make any information so furnished, in light of
the circumstances under which it is so furnished, not misleading.
SECTION V.5. Access to Information; Confidentiality. As
permitted by law, the Company shall afford to Parent, and to Parent's officers,
employees, accountants, counsel, financial advisors and other representatives,
reasonable access during normal business hours during the period prior to the
Effective Time to all the properties, books, contracts, commitments and records
of the Company and its subsidiaries, and during such period, the Company shall
furnish promptly to Parent (a) a copy of each report, schedule, registration
statement and other document filed by it or its subsidiaries during such period
pursuant to the requirements of applicable federal or state securities laws and
(b) all other information concerning its business, properties and personnel as
Parent may reasonably request. Notwithstanding anything to the contrary in this
Agreement, neither the Company nor any or its Subsidiaries shall be required to
disclose any information to Parent or its authorized representatives if doing so
could violate any federal, state, local or foreign law, rule or regulation to
which the Company or any of its Subsidiaries is subject. The Parent will keep
such information provided to it by the Company confidential in accordance with
the terms of the Confidentiality Agreement, dated October 6, 1997, between the
Parent and the Company (the "Confidentiality Agreement").
SECTION V.6. Affiliates. The Company shall, prior to the
Effective Time, deliver to Parent a list (reasonably satisfactory to counsel for
Parent), setting forth the names and addresses of all persons who are, at the
time of the Company Meeting, in the Company's reasonable judgment, "affiliates"
of the Company for purposes of Rule 145 under the Securities Act. The Company
shall furnish such information and documents as Parent may reasonably request
for the purpose of reviewing such list.
SECTION V.7. Warrants; Stock Options. (a) Simultaneously with
the Merger, each outstanding right to acquire shares of the Company Common Stock
pursuant to the 1996 Warrant Plan ("Management Warrants") and each Employee
Option shall automatically be cancelled and Parent shall deliver to the holder
of such Management Warrants or Employee Option, as the case may be, in exchange
for the cancellation thereof, the number of validly issued, fully paid and
non-assessable shares of Parent Common Stock determined by multiplying (X) the
difference between (i) the total number of shares of Company Common Stock
subject to such Management Warrant or Employment Option, as the case may be, and
(ii) the number obtained by dividing (A) the aggregate exercise price of such
Management Warrant or Employee Option, as the case may be, by, (B) $41.50 by (Y)
0.67.
(b) The Company and Parent agree that each of their respective
employee incentive or benefit plans, programs and arrangements and non-employee
director plans shall be amended, to the extent necessary and appropriate, to
reflect the transactions contemplated by this Agreement, including, but not
limited to the conversion of shares of any awards of Company Common Stock or
restricted stock under the 1997 Incentive Plan (but excluding any stock options
granted under such plan) held or to be awarded or paid pursuant to such benefit
plans, programs or arrangements into shares of Parent Common Stock on a basis
consistent with the transactions contemplated by this Agreement. The actions to
be taken by the Company and Parent pursuant to this Section 5.7 shall include
the submission by the Company or Parent of the amendments to the plans, programs
or arrangements referred to herein to their respective stockholders at the
Company Meeting or, as soon as practicable, at a meeting of Parent stockholders,
respectively, if such submission is determined to be necessary or advisable by
counsel to the Company or Parent after consultation with one another; provided,
however, that such approval shall not be a condition to the consummation of the
Merger.
(c) Each option granted under the 1997 Incentive Plan to an
employee or director of the Company to acquire shares of Company Common Stock
("Company Option") that is outstanding immediately prior to the Merger, whether
or not then vested or exercisable, shall, simultaneously with the Merger, be
cancelled in exchange for a single lump cash payment equal to the product of (1)
the number of shares of Company Common Stock subject to such Company Option and
(2) the excess, if any, of $41.50 over the exercise price per share of such
Company Option.
SECTION V.8. 1994 Warrants. Simultaneously with the Merger,
each outstanding right to acquire shares of the Company Common Stock pursuant to
the 1994 Warrant Agreement ("1994 Warrants") shall automatically be cancelled
and Parent shall deliver to the holder of such 1994 Warrants, in exchange for
the cancellation thereof, (A) the number of validly issued, fully paid and
non-assessable shares of Parent Common Stock determined by multiplying (X) the
difference between (i) the total number of shares of Company Common Stock
subject to such 0000 Xxxxxxx and (ii) the number obtained by dividing (A) the
aggregate exercise price of such 1994 Warrant by (B) $41.50 by (Y) 0.67.
SECTION V.9. Filings; Other Action. (a) Subject to the terms
and conditions herein provided, the Company and Parent shall (i) promptly make
their respective filings and thereafter make any other required submissions
under the HSR Act, (ii) use reasonable efforts to cooperate with one another in
(A) determining whether any filings are required to be made with, or consents,
permits, authorizations or approvals are required to be obtained from, any third
party, the United States government or any agencies, departments or
instrumentalities thereof or other governmental or regulatory bodies or
authorities of federal, state, local and foreign jurisdictions in connection
with the execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby and thereby and (B) timely making all such
filings and timely seeking all such consents, permits, authorizations or
approvals, and (iii) use reasonable efforts to take, or cause to be taken, all
other actions and do, or cause to be done, all other things necessary, proper or
advisable to consummate and make effective the transactions contemplated hereby,
including, without limitation, taking all such further action as reasonably may
be necessary to resolve such objections, if any, as the Federal Trade
Commission, the Antitrust Division of the Department of Justice, state antitrust
enforcement authorities or competition authorities of any other nation or other
jurisdiction or any other person may assert under relevant antitrust or
competition laws with respect to the transactions contemplated hereby.
(b) Without limiting the generality of the undertakings
pursuant to this Section 5.9, Parent and the Company agree to take or cause to
be taken the following actions: (i) provide promptly to Governmental Entities
with regulatory jurisdiction over enforcement of any applicable antitrust laws
("Government Antitrust Entity") information and documents requested by any
Government Antitrust Entity or necessary, proper or advisable to permit
consummation of the transactions contemplated by this Agreement; (ii) without in
any way limiting the provisions of Section 5.9(b)(i) above, file any
Notification and Report Form and related material required under the HSR Act as
soon as practicable after the date hereof, and thereafter use its reasonable
efforts to certify as soon as practicable its substantial compliance with any
requests for additional information or documentary material that may be made
under the HSR Act; (iii) the proffer by Parent of its willingness to (A) sell or
otherwise dispose of, or hold separate and agree to sell or otherwise dispose
of, such assets, categories of assets or businesses of the Company or Parent or
either's respective Subsidiaries, (B) terminate such existing relationships and
contractual rights and obligations and (C) amend or terminate such existing
licenses or other intellectual property agreements and to enter into such new
licenses or other intellectual property agreements (and, in each case, to enter
into agreements with the relevant Government Antitrust Entity giving effect
thereto) in each case with respect to the foregoing clauses (A), (B) or (C), if
such action is necessary or reasonably advisable for the purpose of avoiding or
preventing any action by any Government Antitrust Entity which would restrain,
enjoin or otherwise prevent or materially delay consummation of the transactions
contemplated by this Agreement prior to the deadline specified in Section 7.1(b)
hereof; and (iv) Parent shall take promptly, in the event that any permanent or
preliminary injunction or other order is entered or becomes reasonably
foreseeable to be entered in any proceeding that would make consummation of the
transactions contemplated hereby in accordance with the terms of this Agreement
unlawful or that would prevent or delay consummation of the transactions
contemplated hereby, any and all steps (including the appeal thereof, the
posting of a bond or the taking of the steps contemplated by clause (iii) of
this subsection (b)) necessary to vacate, modify or suspend such injunction or
order so as to permit such consummation prior to the deadline specified in
Section 7.1(b). Each of the Company and Parent will provide to the other copies
of all correspondence between it (or its advisors) and any Government Antitrust
Entity relating to this Agreement or any of the matters described in this
Section 5.9(b). The Company and Parent agree to use its reasonable best efforts
to ensure that all telephonic calls and meetings with a Government Antitrust
Entity regarding the transactions contemplated hereby or any of the matters
described in this Section 5.9(b) shall include representatives of each of the
Company and Parent. Notwithstanding any of the foregoing, no failure to obtain
termination of the waiting period under the HSR Act shall be deemed to be a
breach hereunder by the Company.
SECTION V.10. Further Assurances. In case at any time after
the Effective Time any further action is necessary or desirable to carry out the
purposes of this Agreement, the proper officers of the Company and Parent shall
take all such necessary action.
SECTION V.11. No Solicitation. From the date hereof until the
termination of this Agreement, the Company and its Subsidiaries shall not
(whether directly or indirectly through advisors, agents or other
intermediaries), and the Company shall use its reasonable efforts to ensure that
the respective officers, directors, employees, advisors, representatives or
other agents of the Company or its Subsidiaries will not, directly or
indirectly, (a) solicit, initiate, encourage or take any other action to
knowingly facilitate, any Acquisition Proposal or (b) engage or participate in
negotiations or substantive discussions with, or disclose any non-public
information relating to the Company or its Subsidiaries or afford access to the
properties, books or records of the Company or its Subsidiaries to, any Person
that has made, or has indicated its interest in making or considering or
intending to make, an Acquisition Proposal; provided, that, to the extent the
Board of Directors of the Company determines in good faith, after consultation
with outside legal counsel, that the failure to engage or participate in such
negotiations or discussions or provide such information or afford such access
would be reasonably likely to be inconsistent with the fiduciary duties of the
Board of Directors of the Company under applicable law, the Company may furnish
information and afford access to any such Person with respect to the Company and
its Subsidiaries and participate in negotiations and enter into agreements with
any such Person regarding such Acquisition Proposal; provided, if the Board of
Directors of the Company receives an Acquisition Proposal, then, subject to the
fiduciary duties of the Board of Directors of the Company, the Company shall
promptly inform Parent of the terms and conditions of such proposal and the
identity of the Person making it. The Company will immediately cease and cause
to be terminated any existing activities, discussions or negotiations with any
other Person that have been conducted heretofore with respect to a potential
Acquisition Proposal. Furthermore, nothing contained in this Section 5.11 shall
prohibit the Company or the Board of Directors of the Company from taking and
disclosing to the Company's stockholders a position with respect to a tender or
exchange offer by a third party pursuant to Rules 14d-9 and 14e-2(a) promulgated
under the Exchange Act or from making such disclosure to the Company's
stockholders as may be required by applicable law.
SECTION V.12. Director and Officer Liability. (a) Parent,
Merger Sub and the Company agree that all rights to indemnification and all
limitations on liability existing in favor of any Indemnitee (as defined below)
as provided in the Company Certificate of Incorporation, Company By-laws or any
Indemnity Agreement (as defined below) shall survive the Merger and continue in
full force and effect. To the extent permitted by (i) the DGCL, (ii) the
Company's Certificate of Incorporation and the Company's By-laws or (iii) any
agreement providing for indemnification by the Company or any Subsidiary of the
Company of any Indemnitee previously disclosed in writing to Parent in effect on
the date of this Agreement (including any indemnity provisions contained in any
agreement providing for the registration of securities) (each, an "Indemnity
Agreement"), advancement of Expenses (as defined below) pursuant to this Section
5.12 shall be mandatory rather than permissive and the Surviving Corporation and
the Parent shall advance Costs (as defined below) in connection with such
indemnification. Parent shall, and shall cause the Surviving Corporation to,
expressly assume and honor in accordance with their terms all Indemnity
Agreements.
(b) In addition to the other rights provided for in this
Section 5.12 and not in limitation thereof, for six years from and after the
Effective Time, Parent shall, and shall cause the Surviving Corporation to, to
the fullest extent permitted by applicable law, (i) indemnify and hold harmless
the individuals who on or prior to the Effective Time were officers, directors
or employees of the Company or any of its Subsidiaries, and the heirs,
executors, trustees, fiduciaries and administrators of such officers, directors
or employees (collectively, the "Indemnitees") against all losses, Expenses (as
hereinafter defined), claims, damages, liabilities, judgments, or amounts paid
in settlement (collectively, "Costs") in respect to any threatened, pending or
completed claim, action, suit or proceeding, whether criminal, civil,
administrative or investigative based on, or arising out of or relating to the
fact that such person is or was a director, officer or employee of the Company
or any of its Subsidiaries and arising out of acts or omissions occurring on or
prior to the Effective Time (including, without limitation, in respect of acts
or omissions in connection with this Agreement and the transactions contemplated
hereby) (an "Indemnifiable Claim") and (ii) advance to such Indemnitees all
Expenses incurred in connection with any Indemnifiable Claim promptly after
receipt of reasonably detailed statements therefor; provided, that, except as
otherwise provided pursuant to any Indemnity Agreement, the person to whom
Expenses are to be advanced provides an undertaking to repay such advances if it
is ultimately determined that such person is not entitled to indemnification
from Parent or the Surviving Corporation. In the event any Indemnifiable Claim
is asserted or made within such six year period, all rights to indemnification
and advancement of Expenses in respect of any such Indemnifiable Claim shall
continue until such Indemnifiable Claim is disposed of or all judgments, orders,
decrees or other rulings in connection with such Indemnifiable Claim are fully
satisfied; provided, however, that Parent shall not be liable for any settlement
effected without its written consent (which consent shall not be unreasonably
withheld or delayed). Except as otherwise may be provided pursuant to any
Indemnity Agreement, the Indemnitees as a group may retain only one law firm
with respect to each related matter except to the extent there is, in the
opinion of counsel to an Indemnitee, under applicable standards of professional
conduct, a conflict on any significant issue between positions of any two or
more Indemnitees. For the purposes of this Section 5.12, "Expenses" shall
include reasonable attorneys' fees and all other costs, charges and expenses
paid or incurred in connection with investigating, defending, being a witness in
or participating in (including on appeal), or preparing to defend, be a witness
in or participate in any Indemnifiable Claim.
(c) Notwithstanding any other provisions hereof, the
obligations of the Company, the Surviving Corporation and Parent contained in
this Section 5.12 shall be binding upon the successors and assigns of Parent and
the Surviving Corporation. In the event the Company or the Surviving Corporation
or any of their respective successors or assigns (i) consolidates with or merges
into any other Person or (ii) transfers all or substantially all of its
properties or assets to any Person, then, and in each case, proper provision
shall be made so that successors and assigns of the Company or the Surviving
Corporation, as the case may be, honor the indemnification obligations set forth
in this Section 5.12.
(d) The obligations of the Company, the Surviving Corporation,
and Parent under this Section 5.12 shall not be terminated or modified in such a
manner as to adversely affect any Indemnitee to whom this Section 5.12 applies
without the consent of such affected Indemnitee (it being expressly agreed that
the Indemnitees to whom this Section 5.12 applies shall be third party
beneficiaries of this Section 5.12).
(e) Parent shall, and shall cause the Surviving Corporation
to, advance all Expenses to any Indemnitee incurred by enforcing the indemnity
or other obligations provided for in this Section 5.12.
SECTION V.13. Accountants' "Comfort" Letters. The Company and
Parent will each use reasonable best efforts to cause to be delivered to each
other letters from their respective independent accountants, dated a date within
two business days before the effective date of the Registration Statement, in
form reasonably satisfactory to the recipient and customary in scope for comfort
letters delivered by independent accountants in connection with registration
statements on Form S-4 under the Securities Act.
SECTION V.14. Additional Reports. The Company and Parent shall
each furnish to the other copies of any reports of the type referred to in
Sections 3.4 and 4.4 which it files with the SEC on or after the date hereof,
and the Company and Parent, as the case may be, represents and warrants that as
of the respective dates thereof, such reports will not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statement therein, in light of the
circumstances under which they were made, not misleading; provided, that the
foregoing shall not apply to the financial statements contained therein (which
are covered by the following sentence). Any consolidated financial statements
included in such reports (including any related notes and schedules) will fairly
present the financial position of the Company and its consolidated Subsidiaries
or Parent and its consolidated Subsidiaries, as the case may be, as of the dates
thereof and the results of operations and changes in financial position or other
information included therein for the periods or as of the date then ended
(subject, where appropriate, to normal year-end adjustments), in each case in
accordance with past practice and GAAP consistently applied during the periods
involved (except as otherwise disclosed in the notes thereto and except that
such financial statements will not include all of the notes required by GAAP).
SECTION V.15. Plan of Reorganization. This Agreement is
intended to constitute a "plan of reorganization" within the meaning of Section
1.368-2(g) of the income tax regulations promulgated under the Code. From and
after the date of this Agreement and until the Effective Time, each party hereto
shall use its reasonable efforts to cause the Merger to qualify, and will not
knowingly take any actions or cause any actions to be taken which could prevent
the Merger from qualifying, as a reorganization under the provisions of Section
368(a) of the Code. Following the Effective Time, neither the Surviving
Corporation, Parent nor any of their affiliates shall knowingly take any action
or knowingly cause any action to be taken which would cause the Merger to fail
to qualify as a reorganization under Section 368(a) of the Code.
SECTION V.16. Employment Agreements. At or prior to the
Effective Time, the Parent shall enter into an employment agreement individually
with Xxxxxx Xxxxx substantially in the form attached hereto as Exhibit C, the
terms of which are incorporated herein by reference and made a part hereof.
SECTION V.17. Parent Board of Directors. Parent shall take all
necessary action to cause Xxxxxx Xxxxx to be appointed to the Board of Directors
of Parent as of the Effective Time and to serve until the next annual election
of directors of Parent. In connection with such election, Parent shall take all
necessary action to include Xxxxxx Xxxxx as a nominee for the Board of Directors
of Parent recommended by such Board of Directors of Parent for election by
Parent's stockholders to such Board of Directors.
SECTION V.18. Conveyance Taxes; Fees. Each of the Parent and
the Company, respectively, shall timely pay any real property transfer or gains,
sales, use, transfer, value added, stock transfer and stamp taxes, any transfer,
recording, registration and other fees, and any similar taxes or fees not
including any income tax, gross receipt tax or any similar tax measured with
respect to gross or net income (collectively, the "Conveyance Taxes") imposed on
it at or prior to the Effective Time in connection with the transactions
contemplated hereunder that are required to be paid in connection therewith.
Parent and the Company shall cooperate in the preparation, execution and filing
of all Tax Returns, questionnaires, applications, or other documents regarding
any such Conveyance Taxes.
SECTION V.19. Public Announcements. Unless otherwise required
by applicable law or the requirements of any listing agreement with any
applicable stock exchange, Parent and the Company shall each use their
reasonable efforts to consult with each other before issuing any press release
or otherwise making any public statements with respect to this Agreement or any
transaction contemplated by this Agreement and shall not issue any such press
release or make any such public statement prior to such consultation.
SECTION V.20. Employee Matters. (a) For a period of no more
than one year immediately following the Effective Time, Parent agrees to cause
the Surviving Corporation and its Subsidiaries to provide to all active
employees of the Company as of the Effective Time who continue to be employed by
the Company coverage under group medical, dental, 401(k) savings, disability
insurance, life insurance, accidental death and disability, and vacation plans
or arrangements which are, in the aggregate, substantially similar to the plans
providing such benefits to the employees of Company immediately prior to the
Effective Time; provided, however, that Parent may at its option at any time
during such year provide to such employees the aforementioned benefits in a form
which are substantially similar to the benefits provided to employees of the
Parent at such time.
(b) Parent shall, and shall cause its Subsidiaries to, honor
in accordance with their terms all agreements, contracts, arrangements,
commitments and understanding described in the Company SEC Reports.
ARTICLE VI
CONDITIONS TO THE MERGER
SECTION VI.1. Conditions to the Obligations of Each Party. The
obligations of the Company, Parent and Merger Sub to consummate the Merger are
subject to the satisfaction or waiver on or prior to the Closing Date of the
following conditions:
(a) Registration Statement. The Registration Statement shall
have become effective under the Securities Act and no stop order
suspending the effectiveness of the Registration Statement shall have
been issued by the SEC and no proceeding for that purpose shall have
been initiated by the SEC.
(b) Company Stockholder Approval. This Agreement shall have
been approved by the requisite affirmative vote of the stockholders of
the Company in accordance with the Company's Articles of Incorporation,
as amended, and the DGCL.
(c) No Injunction or Restraint. No statute, rule, regulation,
executive order, decree, preliminary or permanent injunction or
restraining order shall have been enacted, entered, promulgated or
enforced by any Governmental Entity which prohibits the consummation of
the transactions contemplated hereby. No action or proceeding (other
than any action or proceeding pursuant to or in connection with the
Antitrust Laws) by any Governmental Entity shall have been commenced
(and be pending), or, to the knowledge of the parties hereto,
threatened, against the Company or Parent or any of their respective
affiliates, partners, associates, officers or directors, or any
officers or directors of such partners, seeking to prevent or delay the
transactions contemplated hereby or challenging any of the terms of
provisions of this Agreement or seeking material damages in connection
therewith.
(d) Consents. All consents and approvals (other than any
consent or approval required pursuant to or in connection with the
Antitrust Laws) of Governmental Entities or any Person necessary for
consummation of the transactions contemplated hereby shall have been
obtained, other than those which, if not obtained, would not in the
aggregate have a Material Adverse Effect.
(e) HSR Act. Any waiting period (and any extension thereof)
applicable to the consummation of the Merger under the HSR Act shall
have expired or been terminated.
(f) Stock Exchange Listing. The shares of Parent Common Stock
to be issued in the Merger shall have been authorized for listing on
the NYSE, subject to official notice of listing.
(g) Tax Opinion. Each of the Company and Parent shall have
received an opinion of its tax counsel, Skadden, Arps, Slate, Xxxxxxx &
Xxxx LLP and Akin, Gump, Strauss, Xxxxx & Xxxx, L.L.P., respectively,
in form and substance reasonably satisfactory to it, and dated on or
about the Closing Date, to the effect that the Merger will qualify for
federal income tax purposes as a reorganization within the meaning of
Section 368(a) of the Code and that none of the Company, Parent and
Merger Sub shall recognize gain or loss for federal income tax purposes
as a result of the Merger and stockholders of the Company will not
recognize gain or loss for federal income tax purposes except to the
extent they receive cash in lieu of fractional shares of Parent Common
Stock. In rendering such opinions, Skadden, Arps, Slate, Xxxxxxx & Xxxx
LLP and Akin, Gump, Strauss, Xxxxx & Xxxx, L.L.P. may rely upon
representations of officers of the Company and Parent substantially in
the form of Exhibits A and B.
SECTION VI.2. Conditions to the Obligations of Parent and
Merger Sub. The obligations of Parent and Merger Sub to consummate the Merger
are subject to the satisfaction or waiver by Parent on or prior to the Closing
Date of the following further conditions:
(a) Company Representations and Warranties. The obligation of
Parent to effect the Merger is further subject to the conditions that
(a) the representations and warranties of the Company contained herein
shall be true and correct in all respects as of the Effective Time with
the same effect as though made as of the Effective Time except for such
exceptions and qualifications which, in the aggregate, for all such
representations and warranties would not have a Material Adverse Effect
on the Company and except (i) for changes specifically permitted by the
terms of this Agreement and (ii) that the accuracy of representations
and warranties that by their terms speak as of the date of this
Agreement or some other date will be determined as of such date, and
(b) the Company shall have performed in all material respects (except
with respect to the covenants contained in Sections 5.1(a)(ix) and
5.1(a)(xiii) which shall be performed in all respects) all obligations
and complied with all covenants required by this Agreement to be
performed or complied with by it prior to the Effective Time and (c)
the Company shall have delivered to Parent a certificate, dated the
Effective Time and signed by its Chief Executive Officer, Chief
Financial Officer or a Senior Vice President, certifying to both such
effects. Material Adverse Effect with respect solely to the
satisfaction of the closing condition set forth in this Section 6.2(a)
relating to the accuracy of the representation of the Company with
respect to the aggregate number (the "Disclosed Number") of
fully-diluted shares of capital stock of the Company set forth in
Section 3.2 hereof shall be an additional number of shares in excess of
10,000.
SECTION VI.3. Conditions to the Obligations of the Company.
The obligations of the Company to consummate the Merger are subject to the
satisfaction or waiver by the Company on or prior to the Closing Date of the
following further conditions:
(a) Parent and Merger Sub Representations and Warranties. The
obligation of the Company to effect the Merger is further subject to the
conditions that (a) the representations and warranties of Parent contained
herein shall be true and correct in all respects as of the Effective Time with
the same effect as though made as of the Effective Time except (i) for changes
specifically permitted by the terms of this Agreement and (ii) that the accuracy
of representations and warranties that by their terms speak as of the date of
this Agreement or some other date will be determined as of such date, (b) Parent
shall have performed in all material respects all obligations and complied with
all covenants required by this Agreement to be performed or complied with by it
prior to the Effective Time and (c) Parent shall have delivered to the Company a
certificate, dated the Effective Time and signed by its Chief Executive Officer,
Chief Financial Officer or a Senior Vice President, certifying to both such
effects.
ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER
SECTION 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 stockholders of the Company:
(a) by the mutual written consent of the Company and Parent;
(b) by either the Company or Parent if the Effective Time
shall not have occurred on or before August 30, 1998; provided, that the party
seeking to terminate this Agreement pursuant to this clause 7.1(b) shall not
have breached in any material respect its obligations under this Agreement in
any manner that shall have proximately contributed to the failure to consummate
the Merger on or before such date;
(c) by either the Company or Parent if (i) a statute, rule,
regulation or executive order shall have been enacted, entered or promulgated
prohibiting the consummation of the Merger substantially on the terms
contemplated hereby or (ii) an order, decree, ruling or injunction shall have
been entered permanently restraining, enjoining or otherwise prohibiting the
consummation of the Merger substantially on the terms contemplated hereby and
such order, decree, ruling or injunction shall have become final and
non-appealable; provided, that the party seeking to terminate this Agreement
pursuant to this clause 7.1(c)(ii) shall have used its reasonable best efforts
to remove such order, decree, ruling or injunction;
(d) by either the Company or Parent if the approval of the
stockholders of the Company contemplated by this Agreement shall not have been
obtained by reason of the failure to obtain the required vote at the Company
Meeting or any postponement or adjournment thereof;
(e) by Parent if the Board of Directors of the Company shall
have (i) withdrawn, modified or amended in any respect adverse to Parent its
approval or recommendation of this Agreement or any of the transactions
contemplated herein, (ii) failed to include in the Proxy Statement when mailed
the recommendation of the Board of Directors of the Company or (iii) recommended
to its stockholders any Acquisition Proposal of a Person other than Parent;
(f) by the Company (i) if the Board of Directors of the
Company determines to accept an Acquisition Proposal that such Board has
determined in good faith, after consultation with its outside legal counsel and
financial advisor, to be more favorable to its stockholders than the
transactions contemplated hereby, (ii) if the Board of Directors of the Company
takes any action set forth in subsection (e) of this Section 7.1; or (iii) upon
notice to Parent, authorized by the Board of Directors of the Company, if at any
time during the period between the date hereof and the two days prior to the
Effective Time, the average of the Parent Common Stock closing prices, regular
way, on the NYSE for any fifteen (15) consecutive trading day period is less
than or equal to $49.85 (the "Floor Price") and, in the event the Custom Index
at the time of any such calculation declines from the date hereof, the amount by
which the percentage decrease in the average of the Parent Common Stock from
$62.3125 exceeds the percentage decrease, if any, in the Custom Index from
$36.0375 is greater than or equal to 20 percentage points; provided, however,
that no right of termination shall arise under this Section 7.1(f)(iii) if (x)
Parent elects within 5 business days of receipt of such notice to increase the
number of shares of Parent Common Stock included in the Merger Consideration
such that the per share value of the Parent Common Stock consideration (valued
at the Floor Price) is at least equal to the per share consideration that would
have been received if the Conversion Number had been equal to a number such that
the per share value of the Company Common Stock is equal to $41.50, (y) the
issuance of the additional shares of stock does not necessitate a vote of the
shareholders of the Parent to approve such issuance and (z) in the opinion of
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP and Akin, Gump, Strauss, Xxxxx & Xxxx,
L.L.P., the transaction as adjusted qualifies as a tax-free "reorganization"
within the meaning of Section 368 of the Code; provided, further, however, that
no right of termination shall arise under Section 7.1(f)(iii) if, prior to the
delivery of notice by Company to Parent provided for in this Section
7.1(f)(iii), the average of closing prices for a subsequent fifteen (15)
consecutive trading day period is not less than or equal to the Floor Price or
for the same period the amount by which the percentage decrease in the average
prices of the Parent Common Stock exceeds the percentage decrease in the Custom
Index is not greater than or equal to 20 percentage points.
The party desiring to terminate this Agreement pursuant to
this Section 7.1 shall give written notice of such termination to the other
party.
SECTION VII.2. Amendment or Supplement. At any time before or
after approval of the matters presented in connection with the Merger by the
stockholders of the Company and prior to the Effective Time, this Agreement may
be amended or supplemented in writing by the Company and Parent with respect to
any of the terms contained in this Agreement; provided, however, that following
approval by the stockholders of the Company, there shall be no amendment or
change to the provisions hereof with respect to any matter not permitted under
applicable law without further approval by the stockholders of the Company
unless such approval is first obtained.
SECTION VII.3. Effect of Termination. In the event of
termination of this Agreement by either the Company or Parent as provided in
Section 7.1, this Agreement shall forthwith become void and have no effect,
without any liability or obligation on the part of Parent, Merger Sub or the
Company, other than the provisions of the last sentence of Section 5.5, this
Section 7.3, Section 7.4 and Article VIII, and except to the extent that such
termination results from the wilful and material breach by a party of any of its
representations, warranties, covenants or agreements set forth in this
Agreement.
SECTION VII.4. Fees and Expenses. (a) In addition to any other
amounts that may be payable or become payable pursuant to any other paragraph of
this Section 7.4, if this Agreement is terminated pursuant to Section 7.1(e)
hereof and Parent or Merger Sub is not then in material breach of its
obligations under this Agreement, then the Company shall promptly, but in no
event later than one business day after the termination of this Agreement (or
from time to time after the Closing Date), reimburse Parent and Merger Sub for
all documented out-of-pocket expenses and fees (including, without limitation,
reasonable fees payable to all banks, investment banking firms and other
financial institutions, and their respective agents and counsel, and all
reasonable fees of counsel, accountants, financial printers, experts and
consultants to Parent and Merger Sub and their affiliates), whether incurred
prior to, on or after the date hereof, in connection with the Merger and the
consummation of all transactions contemplated by this Agreement; provided, that,
in no event shall the Company be required to pay in excess of an aggregate of
$1.5 million pursuant to this subsection (a); provided, further, that in no
event shall any payment be due pursuant to this subsection (a) in the event that
a fee is payable pursuant to Section 7.4(b), and if a fee becomes payable
pursuant to such subsection (b) following such time as a payment has been made
pursuant to this subsection (a), then the amount of such prior expense
reimbursement payment shall be credited against, and shall reduce, the fee
otherwise payable pursuant to subsection (b).
(b) If this Agreement is terminated either pursuant to (i)
Section 7.1(f)(i) or (f)(ii), or (ii) Section 7.1(b) and in the case of this
clause (ii), (x) prior to such date (A) the Board of Directors of the Company
shall have taken any of the actions as contemplated by clauses (i), (ii) or
(iii) of Section 7.1(e) hereof such that Parent could have terminated this
Agreement but elected not to and (B) either (i) the Company Meeting shall have
been held and the approval of the stockholders at the Company Meeting shall not
have been obtained or (ii) the Company Meeting shall not have been held as of
the date of such termination as a result of the Company delaying such meeting in
accordance with the provisions of Section 5.2(a), and (y) on or prior to twelve
months after the termination of this Agreement, the Company enters into an
agreement with a Person regarding a transaction the proposal of which would
otherwise qualify as an Acquisition Proposal under Section 5.11 hereof and such
transaction is subsequently consummated; then in any such event, the Company
shall, promptly following, but in no event later than one business day after (I)
in the case of clause (i) above, the date of such termination and (II) in the
case of clause (ii) above, the consummation of the third party Acquisition
Proposal, pay Parent a fee of $40 million in cash, which amount shall be payable
in same day funds. Only one fee in the aggregate of $40 million shall be payable
pursuant to this Section 7.4(b).
(c) Except as provided otherwise in this Section 7.4, all
costs and expenses incurred in connection with this Agreement and the
transactions contemplated hereby shall be paid by the party incurring such
expenses.
SECTION VII.5. Extension; Waiver. At any time prior to the
Effective Time, the parties may (a) extend the time for the performance of any
of the obligations or other acts of the other parties, (b) waive any
inaccuracies in the representations and warranties contained in this Agreement
or in any document delivered pursuant to this Agreement or (c) subject to the
proviso of Section 7.2, waive compliance with any of the agreements or
conditions of the other party contained in this Agreement. Any agreement on the
part of a party to any such extension or waiver shall be valid only if set forth
in an instrument in writing signed on behalf of such party. The failure of any
party to this Agreement to assert any of its rights under this Agreement or
otherwise shall not constitute a waiver of those rights. Notwithstanding the
foregoing, no failure or delay by the Company or Parent in exercising any right
hereunder shall operate as a waiver thereof nor shall any single or partial
exercise thereof preclude any other or further exercise of any other right
hereunder.
ARTICLE VIII
GENERAL PROVISIONS
SECTION VIII.1. Nonsurvival of Representations. None of the
representations and warranties in this Agreement or in any instrument delivered
pursuant to this Agreement shall survive the Effective Time. This Section 8.1
shall not limit any covenant or agreement of the parties which by its terms
contemplates performance after the Effective Time. Nothing contained in this
Section 8.1 shall relieve any party from liability for any willful breach of
this Agreement.
SECTION VIII.2. Notices. All notices, requests, claims,
demands and other communications under this Agreement shall be in writing and
shall be deemed given if delivered personally or sent by overnight courier
(providing proof of delivery) to the parties at the following addresses (or at
such address for a party as shall be specified by like notice):
(a) if to the Company, to:
Universal Outdoor Holdings, Inc.
000 Xxxxx Xxxxxx Xxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxx X. Xxxxx
Facsimile No.: (000) 000-0000
with a copy to:
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxx X. Xxxxx, Esq.
Xxxxxx X. Xxxxx, Esq.
Facsimile No.: (000) 000-0000
(b) if to Parent or Merger Sub, to:
Clear Channel Communications, Inc.
000 Xxxxxxx Xxxxx
Xxxxx 000
Xxx Xxxxxxx, Xxxxx 00000
Attention: Xxxxxxx Xxxx
Facsimile No.: (000) 000-0000
with a copy to:
Akin, Gump, Strauss, Xxxxx & Xxxx, L.L.P.
0000 Xxxxxxx Xxxxxx
Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attention: Xxxx Xxxx P.C.
Facsimile No.: (000) 000-0000
SECTION VIII.3. Definitions. For purposes of this Agreement:
(a) "Acquisition Proposal" means any offer or proposal for a
merger, consolidation, recapitalization, liquidation, business
combination or similar transaction involving the Company or any of its
Subsidiaries or the acquisition or purchase of 50% or more of the
voting power of any class of equity securities of the Company or any of
its Subsidiaries, or any tender offer (including self-tenders) or
exchange offer that if consummated would result in any Person
beneficially owning 50% or more of the voting power of any class of
equity securities of the Company or any of its Subsidiaries, or a
substantial portion of the assets of the Company or any of its
Subsidiaries outside of the ordinary course of business, other than the
transactions contemplated by this Agreement.
(b) "Advertiser Effect" means any and all legal, financial, or
other effects, on or to this Agreement, the Merger, the Company, or its
business, the Merger Sub, the Parent or any of their stockholders or
Affiliates, that may arise from or are in any way related to: any
public or non-public discussion initiated by or involving public
officials, announcement, development, action or potential action,
settlement, negotiation, legislation, proposed or enacted, judicial
decision, order, judgment or change in status of any nature or type,
which contemplates, proposes, threatens or results in any voluntary or
non-voluntary cessation of or a legal ban or restrictions on the use of
the outdoor advertising services of any person or entity, including the
Company, any of its Subsidiaries, Merger Sub or Parent, by any person
or entity or group of persons or entities seeking to advertise tobacco
products or products containing alcohol.
(c) "Affiliate" of any person means another person that
directly or indirectly, through one or more intermediaries, controls,
is controlled by, or is under common control with, such first person.
(d) "Antitrust Laws" mean and include the Xxxxxxx Act, as
amended, the Xxxxxxx Act, as amended, the HSR Act, the Federal Trade Commission
Act, as amended, and all other federal, state or foreign statutes, rules,
regulations, orders, decrees, administrative and judicial doctrines and other
laws that are designed or intended to prohibit, restrict or regulate actions
having the purpose or effect of monopolization or restraint of trade.
(e) "Control" (including the terms "controlled by" and "under
common control with") means the possession, directly or indirectly, of
the power to direct or cause the direction of the management and
policies of a person, whether through the ownership of voting
securities, by contract or otherwise.
(f) "Custom Index" means the average of the closing prices,
regular way, on the NYSE for the fifteen day period used to calculate
the average of the closing prices referred to in Section 7.1(f)(iii)
for the following companies:
Closing Price on
Company1 October 23, 1997 Symbol
Westinghouse-CBS2 $28.75 WX
Chancellor Broadcasting 58 AMFM
Xxx Radio Inc. 34.43750 CXR
Xxxxx Advertising Company 31 LAMR
Outdoor Systems 28 OSI
Average Price $36.03750
(g) "Governmental Entity" means any government or any agency,
bureau, board, commission, court, department, official, political
subdivision, tribunal or other instrumentality of any government,
whether federal, state or local, domestic or foreign.
(h) "Knowledge" or "Known" means, with respect to the matter
in question, if any of the executive officers of the Company or Parent,
as the case may be, has actual knowledge of such matter.
(i) "Lien" means any encumbrance, hypothecation, infringement,
lien, mortgage, pledge, restriction, security interest, title retention
or other security arrangement, or any adverse right or interest, charge
or claim of any nature whatsoever of, on, or with respect to any asset,
property or property interest; provided, however, that the term "lien"
shall not include (i) liens for water and sewer charges and current
taxes not yet due and payable or being contested in good faith, (ii)
mechanics', carriers', workers', repairers', materialmen's,
warehousemen's and other similar liens arising or incurred in the
ordinary course of business (iii) all liens approved in writing by the
other party hereto or (iv) restrictions on transfer imposed by federal
or state securities laws.
(j) "Material Adverse Change" or "Material Adverse Effect"
means, when used in connection with the Company, Parent or Merger Sub,
any change or effect that (i) is materially adverse to the business,
financial condition or results of operations of such party and its
subsidiaries taken as a whole or (ii) substantially impairs or delays
the consummation of the transactions contemplated hereby, but, in
either such event, shall not include any change or effect that results
from an Advertiser Effect.
(k)(_) "Person" means any natural person, firm, individual,
business trust, trust, association, corporation, partnership, joint
venture, company, unincorporated entity or Governmental Entity.
(l) "Subsidiary" or "Subsidiaries" of any Person means another
Person, an amount of the voting securities, other voting ownership or
voting partnership interests of which is sufficient to elect at least a
majority of its board of directors or other governing body (or, if
there are no such voting interests, 50% or more of the equity interests
of which) is owned directly or indirectly by such first Person.
(m) "Taxes" means any and all federal, state, local, foreign
or other taxes of any kind (together with any and all interest,
penalties, additions to tax and additional amounts imposed with respect
thereto) imposed by any taxing authority, including, without
limitation, taxes or other charges on or with respect to income,
franchises, windfall or other profits, gross receipts, property, sales,
use, transfer, capital stock, payroll, employment, social security,
workers' compensation, unemployment compensation, or net worth, and
taxes or other charges in the nature of excise, withholding, ad valorem
or value added.
(n) "Tax Return" means any return, report or similar statement
(including the attached schedules) required to be filed with respect to
any Tax, including, without limitation, any information return, claim
for refund, amended return or declaration of estimated Tax.
SECTION VIII.4. Counterparts. This Agreement may be executed
in one or more counterparts, all of which shall be considered one and the same
agreement and shall become effective when one or more counterparts have been
signed by each of the parties and delivered to the other parties, it being
understood that all parties need not sign the same counterpart.
SECTION VIII.5. Entire Agreement; No Third-Party
Beneficiaries. This Agreement constitutes the entire agreement, and supersedes
all prior agreements and understandings, both written and oral, among the
parties with respect to the subject matter of this Agreement (provided, however,
that the provisions of the Confidentiality Agreement shall remain valid and in
effect) and, except for the provisions of Article II and Sections 5.7, 5.8, 5.12
and 5.16, is not intended to confer upon any person other than the parties any
rights or remedies hereunder.
SECTION VIII.6. Assignment. Neither this Agreement nor any of
the rights, interests or obligations under this Agreement shall be assigned, in
whole or in part, by operation of law or otherwise by any of the parties hereto
without the prior written consent of the other parties, except that Merger Sub
may assign, in its sole discretion, any or all of its rights, interests and
obligations under this Agreement to Parent or to any direct or indirect wholly
owned subsidiary of Parent, but no such assignment shall relieve Merger Sub of
any of its obligations under this Agreement. Subject to the preceding sentence,
this Agreement will be binding upon, inure to the benefit of, and be enforceable
by, the parties and their respective successors and assigns.
SECTION VIII.7. Governing Law. This Agreement shall be
governed by, and construed in accordance with, the laws of the State
of Delaware, without regard to any applicable conflicts of law.
SECTION VIII.8. Enforcement. The parties agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement were not performed in accordance with their specific terms or were
otherwise breached. It is accordingly agreed that the parties shall be entitled
to an injunction or injunctions to prevent breaches of this Agreement and to
enforce specifically the terms and provisions of this Agreement in any court of
the United States located in the State of Delaware or in Delaware state court,
this being in addition to any other remedy to which they are entitled at law or
in equity. In addition, each of the parties hereto (a) consents to submit itself
to the personal jurisdiction of any federal court located in the State of
Delaware or any Delaware state court in the event any dispute arises out of this
Agreement or any of the transactions contemplated by this Agreement, (b) agrees
that it will not attempt to deny or defeat such personal jurisdiction by motion
or other request for leave from any such court and (c) agrees that it will not
bring any action relating to this Agreement or any of the transactions
contemplated by this Agreement in any court other than a federal or state court
sitting in the State of Delaware.
SECTION VIII.9. Severability. Any term or provision of this
Agreement which is invalid or unenforceable in any jurisdiction shall, as to
that jurisdiction, be ineffective to the extent of such invalidity or
unenforceability without rendering invalid or unenforceable the remaining terms
and provisions of this Agreement in any other jurisdiction. If any provision of
this Agreement is so broad as to be unenforceable, such provision shall be
interpreted to be only so broad as is enforceable.
SECTION VIII.10. Headings. Headings of the Articles and
Sections of this Agreement are for convenience of the parties only, and shall be
given no substantive or interpretive effect whatsoever.
SECTION VIII.11. Finders or Brokers. Except for BT Xxxx Xxxxx
& Sons, Inc., and Bear, Xxxxxxx & Co., Inc., with respect to the Company, a copy
of whose engagement agreement has been or will be provided to Parent, neither
the Company nor Parent nor any of their respective Subsidiaries has employed any
investment banker, broker, finder or intermediary in connection with the
transactions contemplated hereby who might be entitled to any fee or any
commission in connection with or upon consummation of the Merger.
IN WITNESS WHEREOF, Parent, Merger Sub and the Company have
caused this Agreement to be signed by their respective officers thereunto duly
authorized, all as of the date first written above.
CLEAR CHANNEL COMMUNICATIONS, INC.
By: \s\ XXXXXXX XXXX
Name: Xxxxxxx Xxxx
Title: Chief Financial Officer
UH MERGER SUB, INC.
By: \s\ XXXXXXX XXXX
Name: Xxxxxxx Xxxx
Title: Chief Financial Officer
UNIVERSAL OUTDOOR HOLDINGS, INC.
By: \s\ XXXXX X. XXXXXXX
Name: Xxxxx X. Xxxxxxx
Title: Vice President and
Chief Financial Officer
EXHIBIT A
FORM OF COMPANY TAX OPINION REPRESENTATION LETTER
____________, 1997
[Parents Counsel]
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Dear Sirs:
On behalf of the Company, the undersigned, in connection with the
opinions to be delivered by your firms pursuant to Sections [ ] of the Agreement
and Plan of Merger, dated [ ], 1997, among Parent, Merger Sub and the Company,3
hereby certifies that the descriptions of the facts contained in the
Registration Statement and the Proxy Statement completely and accurately
describe the Merger and the transactions leading up thereto and further that:
1. Neither the Company nor any of its subsidiaries has acquired any
shares of Company Common Stock in contemplation of the Merger, or otherwise as
part of a plan of which the Merger is a part. For purposes of this
representation, Company Common Stock acquired in the ordinary course of business
in connection with employee incentive and benefit plans, programs or
arrangements in existence on the date hereof shall not be treated as an
acquisition in contemplation of the Merger or otherwise as part of which the
Merger is a part.
2. There is no present plan or intention on the part of the
stockholders of the Company that own 5% or more of the common stock of the
Company Common Stock, and the Company knows of no present plan or intention on
the part of the remaining holders of Company Common Stock, to sell, exchange or
otherwise dispose of (each of the foregoing, a "disposition"), shares of Parent
Common Stock received in the Merger in exchange for such Company Common Stock
that would reduce the ownership of Parent Common Stock by former holders of
Company Common Stock (other than public shareholders) to a number of shares
having a value, as of immediately prior to the Merger, of less than 50% of the
value of all of the outstanding shares of Company Common Stock as of such date.
For purposes of this representation, any disposition (as defined above) of
Parent Common Stock will be treated as a reduction in ownership thereof. In
addition, for purposes of this representation, shares of Company Common Stock
exchanged by holders of Company Common Stock for cash in lieu of fractional
shares of Parent Common Stock will be treated as outstanding Company Common
Stock immediately prior to the Merger. Moreover, for purposes of this
representation, shares of Company Common Stock and shares of Parent Common Stock
received in the Merger and sold, redeemed or disposed of prior to or subsequent
to the Merger, in contemplation thereof or as part of a plan therewith, will be
considered in making this representation.
3. The Company and the stockholders of the Company will each pay their
respective expenses, if any, incurred in connection with the Merger, except in
the case of Conveyance Taxes for which such stockholders are liable, which shall
be paid by the Company.
4. Following the Merger, the Company will hold at least 90 percent of
the fair market value of the net assets and at least 70 percent of the fair
market value of the gross assets that the Company held immediately prior to the
Merger, and the Company will hold at least 90 percent of the fair market value
of the net assets and at least 70 percent of the fair market value of the gross
assets that the Merger Sub held immediately prior to the Merger. For purposes of
this representation, Company assets used to pay its reorganization expenses and
all redemptions and distributions (except for regular, normal dividends) made by
the Company immediately preceding or in contemplation of, the Merger will be
included as assets of the Company prior to the Merger.
5. Except as provided in Annex I attached herewith, immediately prior
to the time of the Merger, the Company will not have outstanding any warrants,
options, convertible securities or any other type of right pursuant to which any
person could acquire stock of the Company ("Company Stock").
6. In the Merger, shares of Company Stock representing at least 80% of
the total combined voting power of all classes of Company Stock outstanding on
the date of the Merger, and at least 80% of the total number of each other class
of Company Stock outstanding on the date of the Merger will be exchanged solely
for Parent Common Stock. For purposes of this representation, shares of Company
Stock exchanged for cash or other property originating with Parent will be
treated as outstanding stock of the Company on the date of the Merger.
7. The Company is not an investment company as defined in Section
368(a)(2)(F)(iii) and (iv) of the Internal Revenue Code of 1986, as amended (the
"Code").
8. The Company will not take, and the Company is not aware of any plan
or intention of Company stockholders to take, any position on any Federal, state
or local income or franchise tax return, or take any other tax reporting
position, that is inconsistent with the treatment of the Merger as a
reorganization within the meaning of Section 368(a) of the Code, unless
otherwise required by a "determination" (as defined in Section 1313(a)(1) of the
Code) or by applicable state or local income or franchise tax law.
9. None of the compensation received by any stockholder-employee of the
Company in respect of periods at or prior to the Effective Time represents
separate consideration for, or is allocable to, any of their Company Common
Stock. None of the Parent Common Stock that will be received by Company
stockholder-employees in the Merger represents separately bargained-for
consideration which is allocable to any employment agreement or arrangement. The
compensation paid to any shareholder-employees will be for services actually
rendered and will be determined by bargaining at arm's-length.
10. There is no intercorporate indebtedness existing between Parent and
the Company or between Sub and the Company that was issued or acquired, or will
be settled, at a discount.
11. The Company is not under jurisdiction of a court in a Title 11 or
similar case within the meaning of Section 368(a)(3)(A) of the Code.
12. The Merger Agreement and the documents described in Sections 5.5
and 5.16 of the Merger Agreement represent the entire understanding of the
Company, Parent and Merger Sub with respect to the Merger.
13. The Company Common Stock will be surrendered pursuant to the Merger
in an arms-length exchange, and the Parent Common Stock received in exchange
therefor represents the sole bargained-for consideration therefor. The fair
market value of the Parent Common Stock received by each holder of Company
Common Stock will be approximately equal to the fair market value of the Company
Common Stock surrendered in the Merger.
14. There will be no dissenters to the Merger.
15. On the date of the Merger, the fair market value of the assets of
the Company will exceed the sum of its liabilities plus the liabilities, if any,
to which the assets are subject.
I understand that Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP, as counsel
for the Company, and
[ ], as counsel for Parent, will rely on this certificate in rendering their
respective opinions concerning certain of the federal income tax consequences of
the Merger and hereby commit to inform them if, for any reason, any of the
foregoing representations ceases to be true prior to the Effective Time.
UNIVERSAL OUTDOOR HOLDINGS, INC.
By:
Name:
Title:
Annex I
Beneficially Percent
Beneficial Owner* Owned Shares of Class
--------------
* [Attach SEC filings]
EXHIBIT B
FORM OF PARENT TAX OPINION REPRESENTATION LETTER
_________, 1997
[PARENT COUNSEL]
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Dear Sirs:
On behalf of Parent and Merger Sub, the undersigned, in connection with
the opinions to be delivered by your firms pursuant to Section [ ] of the
Agreement and Plan of Merger, dated [ ], 1997, among Parent, Merger Sub and the
Company,4 hereby certifies that the descriptions of the facts contained in the
Registration Statement and the Proxy Statement completely and accurately
describe the Merger and the transactions leading up thereto and further that:
1. Except in the Merger, neither Parent nor Merger Sub (nor any other
subsidiary of Parent) has acquired or prior to the Merger will acquire, or has
owned in the past five years, any shares of common stock of the Company.
2. Cash payments to be made to stockholders of the Company in lieu of
fractional shares of Parent Common Stock that would otherwise be issued to such
stockholders in the Merger will be made for the purpose of saving Parent the
expense and inconvenience of issuing and transferring fractional shares of
Parent Common Stock, and do not represent separately bargained for
consideration.
3. Prior to the Merger, Parent will own all the capital stock of Merger
Sub. Parent has no plan or intention to cause the Company to issue additional
shares of its stock that would result in Parent owning less than all the capital
stock of the Company after the Merger.
4. Parent has no plan or intention, following the Merger, to reacquire
any of the Parent Common Stock issued in the Merger.
5. Parent has no plan or intention, following the Merger, to liquidate
the Company, to merge the Company with and into another corporation, to sell or
otherwise dispose of any of the stock of the Company, or to cause the Company to
sell or otherwise dispose of any of the assets held by the Company at the time
of the Merger, except for dispositions of such assets in the ordinary course of
business; provided, however, that Parent may transfer assets or stock of the
Company in a manner that is consistent with Section 368(a)(2)(C) of the Internal
Revenue Code of 1986, as amended (the "Code").
6. Parent and Merger Sub will each pay their respective expenses, if
any, incurred in connection with the Merger.
7. Following the Merger, Parent intends to cause the Company to
continue its historic business or use a significant portion of its historic
business assets in a business.
8. Neither Parent nor Merger Sub is an investment company as defined
in Section 368(a)(2)(F)(iii) and (iv) of the Code.
9. Neither Parent nor Merger Sub will take any position on any Federal,
state or local income or franchise tax return, or take any other tax reporting
position, that is inconsistent with the treatment of the Merger as a
reorganization within the meaning of Section 368(a) of the Code, unless
otherwise required by a "determination" (as defined in Section 1313(a)(1) of the
Code) or by applicable state or local income or franchise tax law.
10. None of the compensation received by any stockholder-employee of
the Company in respect of periods after the Effective Time represents separate
consideration for, or is allocable to, any of their Company Common Stock. None
of the Parent Common Stock that will be received by Company
stockholder-employees in the Merger represents separately bargained-for
consideration which is allocable to any employment agreement or arrangement. The
compensation paid to any shareholder-employees will be for services actually
rendered and will be determined by bargaining at arm's-length.
11. No stock of Merger Sub will be issued in the Merger.
12. There is no intercorporate indebtedness existing between Parent and
the Company or between Merger Sub and the Company that was issued or acquired,
or will be settled, at a discount.
13. The Merger Agreement and the documents described in Sections 5.5
and 5.16 of the Merger Agreement represent the entire understanding of the
Company, Parent and Merger Sub with respect to the Merger.
14. Merger Sub is a corporation newly formed for the purpose of
participating in the Merger and at no time prior to the Merger has had assets
(other than nominal assets contributed upon the formation of Merger Sub, which
assets will be held by the Company following the Merger) or business operation.
Merger Sub will have no liabilities assumed by the Company, and will not
transfer to the Company any assets subject to liabilities in the Merger.
15. Following the Merger, the Company will hold at least 90 percent of
the fair market value of the net assets and at least 70 percent of the fair
market value of the gross assets that the Company held immediately prior to the
Merger, and the Company will hold at least 90 percent of the fair market value
of the net assets and at least 70 percent of the fair market value of the gross
assets that the Merger Sub held immediately prior to the Merger. For purposes of
this representation, Company assets used to pay its reorganization expenses and
all redemptions and distributions (except for regular, normal dividends) made by
the Company immediately preceding or in contemplation of, the Merger will be
included as assets of the Company prior to the Merger.
16. Parent will not assume any liabilities of the Company or any of the
Company's Subsidiaries.
17. The Company Common Stock will be surrendered pursuant to the Merger
in an arms-length exchange, and the Parent Common Stock received in exchange
therefor represents the sole bargained-for consideration therefor. The fair
market value of the Parent Common Stock received by each holder of Company
Common Stock will be approximately equal to the fair market value of the Company
Common Stock surrendered in the Merger.
18. There will be no dissenters to the Merger.
I understand that Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP, as counsel
for the Company, and [ ] , as counsel for Parent, will rely on this certificate
in rendering their opinion concerning certain of the federal income tax
consequences of the Merger and hereby commit to inform them if, for any reason,
any of the foregoing representations ceases to be true prior to the Effective
Time.
___________________________, INC.
By: ______________________
Name:
Title:
EXHIBIT D
_______________, 1997
[PARENT COUNSEL]
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Dear Sirs:
In connection with the opinion to be delivered by you pursuant to the
Agreement and Plan of Merger, dated [ ], 1997, among Parent, Merger Sub and the
Company,5 the undersigned hereby certifies (to the best of its knowledge and
belief, where indicated), after due inquiry and investigation, as follow :
1. The Undersigned has no present plan or intention to sell,
exchange or otherwise dispose of (each of the foregoing, a "disposition"), more
than ___% shares of Parent Common Stock received in the merger contemplated by
the Merger Agreement (the "Merger"). For purposes of this representation, shares
of Company Common Stock and shares of Parent Common Stock received in the Merger
and sold, redeemed or disposed of prior to or subsequent to the Merger, in
contemplation thereof or as part of a plan therewith, will be considered in
making this representation.
2. The undersigned will not take any position on any Federal,
state or local income or franchise tax return, or take any other tax reporting
position, that is inconsistent with the treatment of the Merger as a
reorganization within the meaning of Section 368(a) of the Internal Revenue Code
of 1986, as amended (the "Code"), unless otherwise required by a "determination"
(as defined in Section 1313(a)(1) of the Code) or by applicable state or local
income or franchise tax law.
[THE COMPANY STOCKHOLDER]
1 When any company on this list is sold, it shall be deleted from the
Custom Index and replaced with the common stock of a company operating
in the radio broadcasting industry mutually agreeable to both the
Company and Parent which shall be substituted in the Custom Index on
the date of the termination of trading of the company being sold and
the price on such day of the common stock of the Company being added to
the Custom Index shall be substituted for the price of the company
being sold for the prior 14 days of any calculation period.
2 When CBS is spun off from Westinghouse, CBS shall be substituted in the
Custom Index for Westinghouse effective as of the date CBS commences
trading regular way and the price of CBS on such day shall be
substituted for the price of Westinghouse for the prior 14 days of any
calculation period.
3 For purposes of this certificate, capitalized terms used and not
otherwise defined herein shall have the meaning ascribed thereto in the
Agreement and Plan of Merger.
4 For purposes of this certificate, capitalized terms used and not
otherwise defined herein shall have the meaning ascribed thereto in the
Agreement and Plan of Merger.
5 For purposes of this certificate, capitalized terms used and not
otherwise defined herein shall have the meaning ascribed thereto in the
Agreement and Plan of Merger.
