STRICTLY CONFIDENTIAL
EXECUTION COPY
AGREEMENT AND PLAN OF MERGER
DATED AS OF OCTOBER 2, 1998
AMONG
AT&T CORP.,
WINSTON, INC.
AND
VANGUARD CELLULAR SYSTEMS, INC.
TABLE OF CONTENTS
Page
ARTICLE I.
PLAN OF MERGER
1.1 The Merger 2
1.2 Effective Time 2
1.3 Effects of the Merger 2
1.4 Certificate of Incorporation 2
1.5 By-Laws 2
1.6 Directors and Officers of Surviving Corporation 2
1.7 Effect on Capital Stock 2
1.8 Adjustment of Merger Consideration 7
1.9 No Further Ownership Rights in Company Common Stock 8
1.10 No Fractional Shares 8
1.11 Shares of Dissenting Shareholders 8
1.12 The Company Options 8
ARTICLE II.
EXCHANGE OF CERTIFICATES
2.1 Closing 9
2.2 Exchange Agent 9
2.3 Exchange and Payment Procedures 10
2.4 Distributions with Respect to Unexchanged Shares 10
2.5 Termination of Exchange Fund 11
2.6 No Liability 11
2.7 Lost Certificates 11
2.8 Withholding Rights 11
2.9 Further Assurances 11
2.10 Stock Transfer Books 12
ARTICLE III.
REPRESENTATIONS AND WARRANTIES
3.1 Representations and Warranties of the Company 12
3.2 Joint and Several Representations and Warranties of
Parent and Merger Sub 25
ARTICLE IV.
COVENANTS RELATING TO CONDUCT OF BUSINESS
4.1 Covenants of the Company 28
4.2 Reasonable Efforts 32
4.3 NYSE Listing 32
4.4 Advice of Changes; Government Filings 32
4.5 Control of Other Party's Business 33
ARTICLE V.
ADDITIONAL AGREEMENTS
5.1 Preparation of Proxy Statement/Registration; Company Shareholder
Meeting 33
5.2 Access to Information 34
5.3 Approvals and Consents; Cooperation 35
5.4 Acquisition Proposals 36
5.5 Employee Benefits 37
5.6 Fees and Expenses 37
5.7 Indemnification; Directors' and Officers' Insurance 38
5.8 Public Announcements 38
5.9 Debentures 38
5.10 Affiliate Letters 38
ARTICLE VI.
CONDITIONS PRECEDENT
6.1 Conditions to Each Party's Obligation to Effect the Merger 39
6.2 Additional Conditions to Obligations of Parent and Merger Sub 40
6.3 Additional Conditions to Obligations of the Company 42
ARTICLE VII.
TERMINATION AND AMENDMENT
7.1 Termination 42
7.2 Effect of Termination 45
7.3 Amendment 46
7.4 Extension; Waiver 46
ARTICLE VIII.
GENERAL PROVISIONS
8.1 No Survival of Representations, Warranties and Agreements 46
8.2 Notices 47
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8.3 Interpretation 47
8.4 Counterparts 47
8.5 Entire Agreement; No Third Party Beneficiaries 47
8.6 Governing Law 48
8.7 Severability 48
8.8 Assignment 48
8.9 Enforcement 48
8.10 Definitions 48
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GLOSSARY OF DEFINED TERMS
Definition Location of
Defined Term
Acquisition Proposal.............................Section 5.4
Adjustment Shares................................Section 1.8
Affiliate Letter................................Section 5.10
Agreement...........................................Preamble
Approval Satisfaction Date...................Section 8.10(d)
Articles of Merger...............................Section 1.2
Board of Directors...........................Section 8.10(a)
Business Day.................................Section 8.10(b)
Cash Election.................................Section 1.7(e)
Cash Fraction...........................Section 1.7(f)(C)(1)
Certificate of Merger............................Section 1.2
Certificates..................................Section 1.7(e)
Closing..........................................Section 2.1
Closing Date.....................................Section 2.1
Code................................................Preamble
Communications Act.......................Section 3.1(c)(iii)
Company.............................................Preamble
Company Benefit Plans.....................Section 3.1(1)(ii)
Company Common Stock...................Recitals; Section 1.7
Company Disclosure Schedule..................Section 8.10(m)
Company Material Contracts.................Section 3.1(k)(i)
Company Options..............................Section 1.12(a)
Company Permits..............................Section 3.1(f)
Company Required Regulatory Approvals........Section 6.2(e)
Company SEC Reports........................Section 3.1(d)(i)
Company Stock Option Plans.....................Section 1.12
Company Shareholders Meeting.................Section 5.1(e)
Company Voting Debt.....................Section 3.1(b)(iii)
Controlled Group Liability................Section 3.1(l)(i)
Debentures......................................Section 5.9
Debentures Indenture............................Section 5.9
Defeasance....................................Section 5.9(b)
DGCL............................................Section 1.1
Dissenting Shares..............................Section 1.11
Effective Time..................................Section 1.2
Election.....................................Section 1.7(e)
Election Deadline............................Section 1.7(i)
Environmental Law............................Section 3.1(q)
ERISA.....................................Section 3.1(l)(i)
ERISA Affiliate...........................Section 3.1(l)(i)
ESPP.........................................Section 5.5(a)
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Exchange Act................................Section 3.1(c)(iii)
Exchange Agent...............................Section 2.2
Exchange Fund................................Section 2.2
Expenses.....................................Section 5.6
Extension Conditions......................Section 7.1(b)
FCC..................................Section 3.1(c)(iii)
FCC Consents..............................Section 6.1(c)
Final Order..............................Section 8.10(e)
Form of Election..........................Section 1.7(e)
GAAP...................................Section 3.1(d)(i)
Governmental Entity..................Section 3.1(c)(iii)
Guaranty of Delivery.............Section 1.7(h)(C)(2)(i)
Hazardous Substance.......................Section 3.1(q)
HSR Act..............................Section 3.1(c)(iii)
Intellectual Property.....................Section 3.1(r)
IRS....................................Section 3.1(l)(i)
Knowledge................................Section 8.10(f)
Law.......................................Section 3.1(f)
Liens.................................Section 3.1(b)(ii)
Material Adverse Effect..................Section 8.10(c)
Merger.............................Recitals; Section 1.1
Merger Consideration......................Section 1.7(b)
Merger Sub......................................Preamble
Nasdaq...............................Section 3.1(c)(iii)
NCBCA........................................Section 1.1
NOLs......................................Section 3.1(h)
Non-Election..............................Section 1.7(e)
Non-Election Fraction...............Section 1.7(h)(C)(1)
NYSE.............................Section 1.7(h)(C)(2)(i)
Option Agreement ...............................Preamble
Organizational Documents.................Section 8.10(h)
Outside Date..............................Section 7.1(b)
Parent..........................................Preamble
Parent Common Stock.......................Section 1.7(b)
Parent Required Regulatory Approvals......Section 6.3(c)
Parent SEC Reports.....................Section 3.2(e)(i)
PCS..........................................Section 4.2
Per Share Cash Amount.....................Section 1.7(b)
Per Share Stock Amount....................Section 1.7(b)
Person...................................Section 8.10(i)
Proposed Amendment.......................Section 5.9
Proprietary Technology....................Section 3.1(r)
Proxy Statement...........................Section 5.1(a)
Registration Statement....................Section 5.1(a)
Reorganization............................Section 4.1(f)
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Representative..............................Section 1.7(e)
Required Company Vote.......................Section 3.1(i)
Required Consents..........................Section 8.10(j)
Required Regulatory Approvals...............Section 5.3(e)
SEC......................................Section 3.1(d)(i)
Securities Act.........................Section 3.1(c)(iii)
Stock Election..............................Section 1.7(e)
Stock Fraction........................Section 1.7(g)(C)(1)
Subsidiary.................................Section 8.10(k)
Superior Proposal..............................Section 5.4
Surviving Corporation..........................Section 1.1
Tax........................................Section 8.10(l)
Taxable....................................Section 8.10(l)
Taxes......................................Section 8.10(l)
Tax Return.................................Section 8.10(l)
Tender Offer...................................Section 5.9
Terminating Company Breach..................Section 7.1(g)
Terminating Parent Breach...................Section 7.1(h)
the other party............................Section 8.10(g)
to the knowledge...........................Section 8.10(e)
Violation...............................Section 3.1(c)(ii)
Voting Agreements.................................Preamble
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AGREEMENT AND PLAN OF MERGER, dated as of October 2, 1998 (this "Agreement"), by
and among AT&T Corp., a New York corporation ("Parent"), Winston, Inc., a
Delaware corporation and a wholly owned subsidiary of Parent ("Merger Sub"), and
Vanguard Cellular Systems, Inc., a North Carolina corporation (the "Company").
WITNESSETH.
WHEREAS, the respective Boards of Directors of Parent, Merger Sub and the
Company have each determined that the Merger is in the best interests of
their respective shareholders and have approved the Merger upon the terms
and subject to the conditions set forth in this Agreement, whereby each
issued and outstanding share of Class A Common Stock, par value $.01 per
share, of the Company ("Company Common Stock"), other than shares owned
directly or indirectly by the Company, will be converted into the right to
receive the consideration set forth herein;
WHEREAS, in order to effectuate the foregoing, the Company, upon the terms and
subject to the conditions of this Agreement and in accordance with the
Business Corporation Act of the State of North Carolina, will merge with
and into Merger Sub in a merger in which Merger Sub shall be the surviving
corporation;
WHEREAS, for federal income tax purposes, it is intended that the Merger qualify
as a reorganization within the meaning of Section 368(a) of the Internal
Revenue Code of 1986, as amended (the "Code");
WHEREAS, Parent has requested, and the Company has agreed, as a condition to
Parent's willingness to enter into this Agreement, that the Company enter
into that certain Option Agreement, dated as of the date hereof and
attached hereto as Annex A (the "Option Agreement");
WHEREAS, Parent has requested, and the certain stockholders of the Company have
agreed, as a condition to Parent's willingness to enter into this
Agreement, that certain stockholders of the Company enter into those
certain Voting and Option Agreements dated as of the date hereof and
attached hereto as Annex B ("Voting Agreements"); 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 various conditions to the Merger.
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth herein, and
intending to be legally bound hereby, the parties hereto agree as follows:
ARTICLE I.
PLAN OF MERGER
1.1 The Merger. In accordance with the North
Carolina Business Corporation Act (the "NCBCA") and the Delaware General
Corporation Law (the "DGCL"), the Company shall be merged with and into
Winston, Inc., a Delaware corporation and wholly owned subsidiary of Parent
("Merger Sub") (the "Merger"). Following the Merger, the separate corporate
existence of the Company shall cease and Merger Sub shall continue as the
surviving corporation (the "Surviving Corporation") in accordance with
Section 55-11-07 of the NCBCA and Section 252 of the DGCL.
1.2 Effective Time. The Merger shall
become effective when (i) articles of merger (the "Articles of Merger") are
filed with the Secretary of State of North Carolina in such form as is
required by and executed in accordance with Section 55-11-05 of the NCBCA
and a certificate of merger (a "Certificate of Merger") is filed with the
Secretary of State of Delaware in accordance with Sections 251 and 252 of
the DGCL or (ii) such other time as Parent and the Company shall agree in
writing should be specified in the Articles of Merger (the date and time
the Merger become s effective being the "Effective Time").
1.3 Effects of the Merger. At and
after the Effective Time, the Merger will have the effects set forth in
Section 55-11-06 of the NCBCA and Section 259 of the DGCL. Without limiting
the generality of the foregoing, and subject thereto, at the Effective Time
all the property, rights, privileges, powers and franchises of the Company
and Merger Sub shall be vested in the Surviving Corporation, and all debts,
liabilities and duties of the Company and Merger Sub shall become the
debts, liabilities and duties of the Surviving Corporation.
1.4 Certificate of Incorporation.
The certificate of incorporation of Merger Sub in effect
immediately prior to the Effective Time shall be the certificate of
incorporation of the Surviving Corporation until thereafter changed or
amended as provided therein or by appli cable law.
1.5 By-Laws. The by-laws of Merger Sub in
effect at the Effective Time shall be the by-laws of the Surviving
Corporation until thereafter changed or amended as provided therein or by
applicable law.
1.6 Directors and Officers of Surviving
Corporation. The
directors and officers of Merger Sub shall be the directors and officers,
respectively, of the Surviving Corporation, until the earlier of their
resignation or removal or otherwise ceasing to be a director or officer, as
the case may be, or until their respective successors are duly elected and
qualified, as the case may be.
1.7 Effect on Capital Stock. As of the Effective Time,
by virtue of the Merger and without any action on the part of the holders
of any shares of the Company's Class A Company
Common Stock, par value $.01 per share (the "Company Common Stock")
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(a) Cancellation of Stock. Each share of Company Common Stock
that is owned by the Company or any wholly owned subsidiary of the
Company (as treasury stock or otherwise) shall automatically be
cancelled and retired and shall cease to exist and no consideration
shall be delivered in exchange therefor.
(b) Consideration for Company Common Stock. Subject to Section
1.11, each issued and outstanding share of Company Common Stock (other
than Dissenting Shares and shares to be cancelled in accordance with
Section 1.7(a)) shall be converted into either (i) the right to receive
0.3987 fully paid and nonassessable shares of common stock, par value
$1.00 per share, of Parent ("Parent Common Stock") (the "Per Share
Stock Amount"), or (ii) the right to receive $23.00 in cash, without
interest (the "Per Share Cash Amount"), or (iii) a combination of
shares of Parent Common Stock and cash, each as determined in
accordance with Section 1.7(f), Section 1.7(g) or Section 1.7(h). 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 representing
any such shares of Company Common Stock shall cease to have any rights
with respect thereto, except the right to receive, upon surrender of
such certificate in accordance with Section 2.3, the Per Share Stock
Amount, the Per Share Cash Amount or a combination of cash and Parent
Common Stock, each in accordance with this Section 1.7. The
consideration to be received in the Merger under this Article for one
share of Company Common Stock shall be referred to herein as the
"Merger Consideration."
(c) Merger Sub Capital Stock. Each share of capital stock
of Merger Sub issued and outstanding immediately prior to the
Effective Time shall remain outstanding and shall be unchanged as a
share of capital stock of the Surviving Corporation.
(d) The aggregate number of shares of Company Common Stock
which may be converted into the right to receive cash in the Merger
shall be equal to 50% of the number of shares of Company Common Stock
outstanding immediately prior to the Effective Time (other than
Dissenting Shares and shares to be cancelled in accordance with Section
1.7(a)). The aggregate number of shares of Company Common Stock which
may be converted into the right to receive Parent Common Stock in the
Merger shall be equal to 50% of the number of shares of Company Common
Stock outstanding immediately prior to the Effective Time (other than
Dissenting Shares and shares to be cancelled in accordance with Section
1.7(a)).
(e) Subject to the allocation and election procedures set
forth in this Section 1.7, each record holder (or beneficial owner
through appropriate and customary documentation and instructions)
immediately prior to the Effective Time of shares of Company Common
Stock shall be entitled either (i) to elect to receive the Per Share
Cash Amount for each such share of Company Common Stock (a "Cash
Election"), or (ii) to elect to receive the Per Share Stock Amount for
each such share of Company Common Stock (a "Stock Election"), or (iii)
to indicate that such record holder has no preference as to the receipt
of cash, Parent Common Stock or a combination thereof with respect to
3
such holder's shares of Company Common Stock (a "Non-Election", and any
Cash Election, Stock Election or Non-Election shall be referred to
herein as an "Election"). All such elections shall be made on a form
furnished by Parent for that purpose (a "Form of Election") and
reasonably satisfactory to the Company. If more than one certificate
which immediately prior to the Effective Time represented outstanding
shares of Company Common Stock (a "Certificate") shall be surrendered
for the account of the same holder, the number of shares of Parent
Common Stock, if any, to be issued to such holder in exchange for the
Certificates which have been surrendered shall be computed on the basis
of the aggregate number of shares of Company Common Stock represented
by all of the Certificates surrendered for the account of such holder.
Holders of record of shares of Company Common Stock who hold such
shares of Company Common Stock as nominees, trustees or in other
representative capacities (each, a "Representative") may submit
multiple Forms of Election, provided that such Representative certifies
that each such Form of Election covers all shares of Company Common
Stock held by such Representative for a particular beneficial owner.
(f) If the aggregate number of shares of Company
Common Stock with respect
to which Cash Elections have been made exceeds the aggregate number of
shares of Company Common Stock which may be converted into the right
to receive cash in the Merger, then:
A. Each share of Company Common Stock with respect
to which a Stock Election shall have been made shall be converted into the
right to receive the Per Share Stock Amount;
B. Each share of Company Common Stock with respect to
which a Non-Election shall have been made (or deemed to have been made) shall be
converted into the right to receive the Per Share Stock Amount; and
C. Each share of Company Common Stock with respect to
which a Cash Election shall have been made shall be converted into the right to
receive:
(1) the amount in cash, without interest, equal
to the product of (i) the Per Share Cash Amount and
(ii) a fraction (the "Cash Fraction"), the numerator
of which shall be the aggregate number of shares of
Company Common Stock which may be converted into the
right to receive cash in the Merger, and the
denominator of which shall be the aggregate number of
shares of Company Common Stock with respect to which
Cash Elections shall have been made, and
(2) the number of shares of Parent Common Stock equal to the
product of (x) the Per Share Stock Amount and (y) a fraction
equal to one minus the Cash Fraction.
(g) If the aggregate number of shares of Company Common Stock with respect
to which Stock Elections have been made exceeds the aggregate number
of shares
4
of Company Common Stock which may be converted into the
right to receive Parent Common Stock in the Merger, then:
A. Each share of Company Common Stock with respect to which a
Cash Election shall have been made shall be converted into
the right to receive the Per Share Cash Amount;
B. Each share of Company Common Stock with respect to
which a Non-Election shall have been made (or deemed to have been made) shall be
converted into the right to receive the Per Share Cash Amount; and
C. Each share of Company Common Stock with respect to
which a Stock Election shall have been made shall be converted into the right to
receive:
(1) the number of shares of Parent Common Stock
equal to the product of (i) the Per Share Stock
Amount and (ii) a fraction (the "Stock Fraction"),
the numerator of which shall be the aggregate number
of shares of Company Common Stock which may be
converted into the right to receive Parent Common
Stock in the Merger, and the denominator of which
shall be the aggregate number of shares of Company
Common Stock with respect to which Stock Elections
shall have been made, and
(2) the amount in cash, without interest, equal to the
product of (x) the Per Share Cash Amount and (y) a fraction
equal to one minus the Stock Fraction.
(h) In the event that neither Section 1.7(f) nor
Section 1.7(g) above is applicable, then:
A. Each share of Company Common Stock with respect to
which a Cash Election shall have been made (or deemed to have been made) shall
be converted into the right to receive the Per Share Cash Amount;
B. Each share of Company Common Stock with respect to
which a Stock Election shall have been made (or deemed to have been made) shall
be converted into the right to receive the Per Share Stock Amount; and
C. Each share of Company Common Stock with respect to
which a Non-Election shall have been made (or deemed to have been made), if any,
shall be converted into the right to receive:
(1) the amount in cash, without interest, equal
to the product of (i) the Per Share Cash Amount and
(ii) a fraction (the "Non-Election Fraction"), the
numerator of which shall be the excess of the (A)
aggregate number of shares of Company Common Stock
which may be converted into the right to receive cash
in the Merger over (B) the sum of the aggregate
number of
5
shares of Company Common Stock with respect
to which a Cash Election shall have been made, and
the denominator of which shall be the excess of (A)
the aggregate number of shares of Company Common
Stock outstanding immediately prior to the Effective
Time (other than shares to be cancelled in accordance
with Section 1.7(a)) over (B) the sum of the
aggregate number of shares of Company Common Stock
with respect to which a Cash Election and a
Stock Election shall have been made plus Dissenting
Shares, and
(2) the number of shares of Parent Common Stock
equal to the product of (x) the Per Share Stock Amount and (y) a fraction equal
to one minus the Non-Election Fraction.
(i) Elections shall be made by holders of shares of Company
Common Stock by delivering the Form of Election to the exchange agent.
To be effective, a Form of Election must be properly completed, signed
and submitted to the Exchange Agent by 5:00 p.m. (New York City time)
on the last business day prior to the Company Shareholder Meeting (the
"Election Deadline") (provided that if the Closing is not reasonably
expected to occur within 5 business days of such date, Parent and the
Company shall agree to a later date, reasonably expected to be at least
5 business days prior to the Closing, as the Election Deadline and
shall publish appropriate advance notice of such Election Deadline),
and accompanied by (1)(x) the Certificates representing the shares of
Company Common Stock as to which the election is being made or (y) an
appropriate guarantee of delivery of such Certificates as set forth in
such Form of Election from a firm which is a member of a registered
national securities exchange or of the National Association of
Securities Dealers, Inc. or a commercial bank or trust company having
an office or correspondent in the United States, provided such
Certificates are in fact delivered to the Exchange Agent within three
New York Stock Exchange ("NYSE") trading days after the date of
execution of such guarantee of delivery (a "Guarantee of Delivery"),
and (2) a properly completed and signed letter of transmittal. Failure
to deliver Certificates covered by any Guarantee of Delivery within
three NYSE trading days after the date of execution of such Guarantee
of Delivery shall be deemed to invalidate any otherwise properly made
Cash Election or Stock Election. Parent will have the discretion, which
it may delegate in whole or in part to the Exchange Agent, to determine
whether Forms of Election have been properly completed, signed and
submitted or revoked and to disregard immaterial defects in Forms of
Election. The good faith decision of Parent (or the Exchange Agent) in
such matters shall be conclusive and binding. Neither Parent nor the
Exchange Agent will be under any obligation to notify any person of any
defect in a Form of Election submitted to the Exchange Agent. The
Exchange Agent shall also make all computations contemplated by this
Section 1.7 and all such computations shall be conclusive and binding
on the holders of shares of Company Common Stock in the absence of
manifest error. Any Form of Election may be changed or revoked prior to
the Election Deadline. In the event a Form of Election is revoked prior
to the Election Deadline, Parent shall, or shall cause the Exchange
Agent to, cause the Certificates representing the shares of Company
Common Stock covered by
6
such Form of Election to be promptly returned
without charge to the person submitting the Form of Election upon
written request to that effect from such person.
(j) For the purposes hereof, a holder of shares of Company
Common Stock who does not submit a Form of Election which is received
by the Exchange Agent prior to the Election Deadline (including a
holder who submits and then revokes his or her Form of Election and
does not resubmit a Form of Election which is timely received by the
Exchange Agent), or who submits a Form of Election without the
corresponding Certificates or a Guarantee of Delivery, shall be deemed
to have made a Non-Election. If any Form of Election is defective in
any manner such that the Exchange Agent cannot reasonably determine the
election preference of the shareholder submitting such Form of
Election, the purported Cash Election or Stock Election set forth
therein shall be deemed to be of no force and effect and the
shareholder making such purported Cash Election or Stock Election sha
ll, for purposes hereof, be deemed to have made a Non-Election.
(k) A Form of Election and a letter of transmittal shall be
included with each copy of the Proxy Statement mailed to shareholders
of the Company in connection with the Company Meeting. Parent and the
Company shall each use its reasonable best efforts to mail or otherwise
make available the Form of Election and a letter of transmittal to all
persons who become holders of shares of Company Common Stock during the
period between the record date for the Company Meeting and the Election
Deadline.
1.8 Adjustment of Merger Consideration. In the event that
pursuant to a transaction announced after the
date hereof and becoming effective prior to the Effective Time (i) any
distribution is made in respect of Parent Common Stock other than a regular
quarterly cash dividend or (ii) any stock dividend, stock split,
reclassification, recapitalization, combination or mandatory exchange of shares
occurs with respect to, or rights (other than non-mandatory offers to exchange)
are issued in respect of, Parent Common Stock, then, the Per Share Stock Amount
shall be adjusted accordingly. In the event of a dividend or distribution to all
holders of Parent Common Stock of any class of capital stock of Parent or any
Subsidiary of Parent ("Adjustment Shares"), the record date for which is prior
to the Effective Time (it is agreed that the appropriate adjustment, in addition
to the right to receive the Per Share Stock Amount prior to such adjustment,
shall be either, at Parent's option (provided that Parent shall use reasonable
efforts to be able to elect (A) before electing (B)), (A) the right to receive,
at the Effective Time, the number of Adjustment Shares that such recipient would
have received in respect of the Per Share Stock Amount had such recipient owned
the Per Share Stock Amount in Parent Common Stock as of the date of this
Agreement and held such through the Effective Time or and no further adjustment
shall be required under this Section 1.8 for such dividend or distribution, or
(B) the right to receive an amount of Parent Common Stock equal in market value
at the Effective Time to the market value at the Effective Time of the number of
Adjustment Shares that would have been received in respect of the Per Share
Stock Amount had the recipient thereof owned the Per Share Stock Amount in
Parent Common Stock as of the date of this Agreement and held such through the
Effective Time, and no further adjustment shall be required under this Section
1.8 for such dividend distribution. For the purposes of the prior sentence,
"market value" means, with respect to any securities listed on a national
securities exchange or quoted on an interdealer
7
quotation system, the average of
the closing prices on the five trading days prior to the Effective Time, or if
not so listed, the fair market value of such securities re asonably determined
by the Board of Directors of Parent on such date.
1.9 No Further Ownership Rights in Company Common Stock.
All shares of Parent Common
Stock issued upon the surrender for exchange of Certificates in accordance with
the terms hereof (including any cash paid pursuant to Sections 1.7, 1.10 or 2.4)
shall be deemed to have been issued in full satisfaction of all rights
pertaining to such shares of Company Common Stock, and from and after the
Effective Time there shall be no further registration of transfers of the shares
of Company Common Stock which were outstanding immediately prior to the
Effective Time. If, after the Effective Time, Certificates are presented to the
Surviving Corporation for any reason, they shall be cancelled and exchanged as
provided in Article II.
1.10 No Fractional Shares. No
certificate or scrip representing fractional shares of Parent Common Stock shall
be issued upon the surrender for exchange of Certificates, and such fractional
share interests will not entitle the owner thereof to vote or to any other
rights of a stockholder of Parent. Notwithstanding any other provision of this
Agreement, each holder of shares of Company Common Stock exchanged pursuant to
the Merger who would otherwise have been entitled to receive a fraction of a
share of Parent Common Stock (after taking into account all Certificates
delivered by such holder) shall receive, in lieu thereof, cash (without
interest) in an amount equal to such fractional part of a share of Parent Common
Stock multiplied by the Per Share Cash Amount.
1.11 Shares of Dissenting Shareholders. Notwithstanding
anything in this Agreement to the contrary, any
shares of Company Common Stock that are outstanding immediately prior to the
Effective Time and that are held by shareholders who shall not have voted in
favor of the Merger and who shall have demanded properly in writing payment for
such shares (and not withdrawn such demand) in accordance with Article 13 of the
NCBCA (collectively, the "Dissenting Shares") shall not be converted into or
represent the right to receive the Merger Consideration. Such shareholders shall
be entitled to receive the amounts determined in accordance with the provisions
of such Article 13. If, after the Effective Time, any such holder fails to
perfect or effectively withdraws or loses such rights, such Dissenting Shares
shall thereupon be deemed to have been converted into and to have become
exchangeable for, as of the Effective Time, the right to receive, without any
interest thereon, the consideration provided for in Section 1.7 and to have made
a Non-Election. The Company shall give Parent prompt notice of any notice or
demands for payment in accordance with Article 13 of the NCBCA for shares of
Company Common Stock received by the Company, and Parent shall have the right to
direct all proceedings, negotiations and actions taken by the Company in respect
thereof.
1.12 The Company Options. At the
Effective Time, each unexpired and unexercised outstanding option, whether or
not then vested or exercisable in accordance with its terms, to purchase shares
of Company Common Stock (the "Company Options") previously granted by the
Company or its Subsidiaries under the Company's Amended and Restated Stock
Compensation Plan, the 1989 Stock Plan and the Amended and Restated 1994 Long
Term Incentive Plan (collectively, the "Company Stock Option Plans") shall be
cancelled and
8
converted into the right to receive from the Parent, within 10
days following the Effective Time, cash in an amount equal to the product of (a)
the Per Share Cash Amount minus the exercise price per share of such Company
Option, times (b) the number of shares of Common Stock which may be purchased
upon exercise of such Company Option (whether or not then exercisable). Prior to
(but effective at) the Effective Time, the Company shall use its reasonable best
efforts to (i) obtain any consents from all holders of Company Options and (ii)
make any amendments to the terms of such stock option or compensation plans or
arrangements that, in the case of either clause (i) or (ii), are necessary to
give effect to the transactions contemplated by this Section 1.12. Immediately
prior to the Effective Time, the Company shall terminate the Company Stock
Option Plans effective as of the Effective Time.
ARTICLE II.
EXCHANGE OF CERTIFICATES
2.1 Closing. The closing of the Merger (the
"Closing") will take place on the fifth Business Day after satisfaction or
waiver (as permitted by this Agreement and applicable law) of the
conditions (excluding conditions that, by their terms, cannot be satisfied
until the Closing Date) set forth in Article VI (the "Closing Date"),
unless (a) Parent elects a later date (because, in its good faith judgment,
Parent believes that such delay is necessary in connection with avoiding
interference with a material transaction) that is not later than the
Outside Date or (b) another time or date is agreed to in writing by the
parties hereto. The Closing shall be held at the offices of Latham &
Watkins, 885 Third Avenue, Suite 1000, New York, NY 10022-4802, unless
another place is agreed to in writing by the parties hereto. The Articles
of Merger and the Certificate of Merger shall be filed on or as promptly as
practicable following the Closing Date, and each shall contemplate the same
Effective Time.
2.2 Exchange Agent. As of the Effective
Time, Parent shall deposit with such bank or trust company as may be
designated by Parent and be reasonably acceptable to the Company (the
"Exchange Agent") for the benefit of the holders of shares of Company
Common Stock and the holders of the Company Options, for exchange or
payment in accordance with this Section 2.2, through the Exchange Agent,
(i) certificates evidencing such number of shares of Parent Common Stock
equal to (x) the Per Share Stock Amount multiplied by (y) the aggregate
number of shares of Company Common Stock which may be converted into the
right to receive Parent Common Stock in the Merger, and (ii) (1) cash in an
amount equal to (x) the Per Share Cash Amount multiplied by (y) the
aggregate number of shares of Company Common Stock which may be converted
into the right to receive cash in the Merger, and (2) any cash necessary to
pay amounts due pursuant to Section 1.10 and Section 1.12 (such
certificates for shares of Parent Common Stock and such cash being
hereinafter referred to as the "Exchange Fund"). The Exchange Agent shall,
pursuant to irrevocable instructions in accordance with these Articles I
and II, deliver the Parent Common Stock and cash contemplated to be issued
pursuant to Section 1.7 out of the Exchange Fund. The Exchange Fund shall
not be used for any other purpose. The Exchange Agent shall invest any cash
included in the Exchange Fund, as directed by Parent, on a daily basis. Any
interest and other income resulting from such investments shall be paid to
Parent.
9
2.3 Exchange and Payment Procedures.
(a) As soon as reasonably practicable after the
Effective Time, the Exchange Agent shall mail to each holder of record of a
Certificate or Certificates that were converted into the right to receive
shares of Parent Common Stock and/or cash pursuant to Section 1.7(b), (i) a
letter of transmittal (which shall specify that delivery shall be effected,
and risk of loss and title to the Certificates shall pass, only upon proper
delivery of the Certificates to the Exchange Agent, and which shall be in
such form and have such other provisions as Parent may reasonably specify)
and (ii) instructions for use in effecting the surrender of the
Certificates in exchange for shares of Parent Common Stock and/or cash.
Upon surrender of a Certificate for cancellation to the Exchange Agent
together with such letter of transmittal, duly executed and completed in
accordance with the instructions thereto, and such other documents as may
reasonably be required by the Exchange Agent, the holder of such
Certificate shall be entitled to receive in exchange therefor a certificate
representing that number of whole shares of Parent Common Stock and/or cash
which such holder has the right to receive pursuant to the provisions of
Article I and this Article II and the Certificate so surrendered shall
forthwith be cancelled. In the event of a transfer of ownership of Company
Common Stock that is not registered in the transfer records of the Company,
a certificate representing the proper number of shares of Parent Common
Stock and/or cash may be issued to a Person other than the Person in whose
name the Certificate so surrendered is registered if the Certificate
representing such Company Common Stock is presented to the Exchange Agent,
accompanied by all documents required to evidence and effect such transfer
and evidence that any applicable stock transfer taxes have been paid. Until
surrendered as contemplated by this Article II, each Certificate shall be
deemed at any time after the Effective Time to represent only the right to
receive upon surrender the certificate representing shares of Parent Common
Stock and/or cash as contemplated by this Article II.
(b) As soon as reasonably practicable after the Effective
Time, but no later than five business days after the Effective Time, the
Company, after approval by Parent (which approval shall not be unreasonably
withheld or delayed), shall deliver to the Exchange Agent, a list of the
holders of the Company Options, their addresses and the amounts to be paid
to each of them. Promptly after receipt of such list, but no later than
three days after receipts of such list, the Exchange Agent shall pay the
amounts shown on such schedule.
2.4 Distributions with Respect to Unexchanged
Shares. 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 to which such holder is entitled hereunder
and no cash payment paid to any such holder pursuant to Sections 1.7 and
1.10 until the holder of record of such Certificate shall surrender such
Certificate. Subject to the effect of applicable laws, following surrender
of any such Certificate, there shall be given to the record holder of the
certificates representing whole shares of Parent Common Stock to which such
holder is entitled hereunder, without interest, (i) at the time of such
surrender, a certificate representing the number of whole shares of Parent
Common Stock and the amount of any cash to which such holder is entitled
pursuant to Sections 1.7 and 1.10 and the amount of dividends or other
distributions with respect to such whole shares of Parent Common Stock with
a record date after the Effective Time and a payment date prior to their
date of issuance to such holder, and (ii)
10
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 subsequent to
surrender payable with respect to such whole shares of Parent Common Stock.
2.5 Termination of Exchange Fund. Any portion of
the Exchange Fund which remains undistributed
to the holders of Certificates for six months after the Effective Time
shall be delivered to Parent, upon demand, and any shareholders or
optionholders of the Company who have not previously complied with the
provisions of this Article II shall thereafter look only to Parent for
payment of their claim for Parent Common Stock and/or cash and any
dividends or distributions with respect to Parent Common Stock. Any portion
of the Exchange Fund remaining unclaimed by holders of Company Common Stock
five years after the Effective Time (or such earlier date immediately prior
to such time as such portion would otherwise escheat to or become property
of any Governmental Entity) shall, to the extent permitted by applicable
law, become the property of the Surviving Corporation free and clear of any
claims or interest of any Person previously entitled therein.
2.6 No Liability. To the fullest extent
permitted by law, none of Parent, Merger Sub, the Company or the Surviving
Corporation shall be liable to any holder of Company Common Stock or Parent
Common Stock, as the case may be, for any shares (or dividends or
distributions with respect thereto) and/or cash delivered to a public
official pursuant to any applicable abandoned property, escheat or similar
law.
2.7 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 Parent, the posting by such
Person of a bond in such reasonable amount as Parent may direct as
indemnity against any claim that may be made against it with respect to
such Certificate, the Exchange Agent will deliver in exchange for such
lost, stolen or destroyed Certificate the shares of Parent Common Stock
and/or any cash.
2.8 Withholding Rights. Parent and
the Exchange Agent 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 or holders of Company Options such amounts
as Parent or the Exchange Agent, as applicable, 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 Parent or the Exchange Agent, such withheld amounts
shall be treated for all purposes of this Agreement as having been paid to
the holder of the shares of Company Common Stock in respect of which such
deduction and withholding was made by such party.
2.9 Further Assurances. At and after
the Effective Time, the officers and directors of the Surviving Corporation
will be authorized to execute and deliver, in the name and on behalf of the
Company or Merger Sub, any deeds, bills of sale, assignments or assurances
and to take and do, in the name and on behalf of the Company of Merger Sub,
any other actions and things to vest, perfect or confirm of record or
otherwise in the Surviving Corporation any and all
11
right, title and
interest in, to and under any of the rights, properties or assets acquired
or to be acquired by the Surviving Corporation as a result of, or in
connection with, the Merger.
2.10 Stock Transfer Books. At
5:00 p.m., New York City time, on the day the Effective Time occurs, 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 shall cease to have any rights with
respect to such shares of Company Common Stock formerly represented
thereby, 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 the Merger Consideration with
respect to the shares of Company Common Stock formerly represented thereby.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES
3.1 Representations and Warranties of the
Company. The Company represents and warrants to Parent and Merger Sub as
follows:
(a) Organization, Standing and Power. The Company is a
corporation duly organized and validly existing and in good standing
under the laws of its jurisdiction of incorporation. Each of the
Company's Subsidiaries has been duly formed and is validly existing
under the laws of the jurisdiction of its formation except where the
failure of a Subsidiary to be duly formed and validly existing in such
jurisdictions could not reasonably be expected, either individually or
in the aggregate, to have a Material Adverse Effect on the Company.
Each of the Company and its Subsidiaries is duly qualified and in good
standing to do business in each jurisdiction in which the nature of its
business or the ownership or leasing of its properties makes such
qualification necessary, other than, with respect to the Subsidiaries,
in such jurisdictions where the failure so to qualify could not
reasonably be expected, either individually or in the aggregate, to
have a Material Adverse Effect on the Company. Each of the Company and
its Subsidiaries has the requisite corporate power and authority to
own, lease and operate its properties and conduct its business as
currently or proposed to be conducted, except, with respect to the
Subsidiaries, where the lack of such requisite power could not
reasonably be expected, either individually or in the aggregate, to
have a Material Adverse Effect on the Company. The Company has
previously furnished to Parent true, complete and correct copies of the
Organizational Documents of the Company and its Subsidiaries as in
effect on the date of this Agreement, and neither the Company nor its
Subsidiary is in default thereunder or acting in conflict therewith.
(b) Capital Structure.
(i) The authorized capital stock of the Company
consists of (A) 250,000,000 shares of Company Common Stock, of
which 36,780,009, shares are issued and outstanding as of the
date hereof and of which 36,780,009 shares plus such number of
shares as may be issued consistent with Section 4.1(b) shall
be
12
issued and outstanding as of the Effective Time, and no
shares are held by the Company or its Subsidiaries as treasury
stock, (B) 30,000,000 shares of Class B Common Stock, par
value $.01 per share, of which no shares are issued or
outstanding, and (C) 1,000,000 shares of preferred stock, par
value $.01 per share, of which no shares are issued or
outstanding. All issued and outstanding shares of the capital
stock of the Company are duly authorized, validly issued,
fully paid and nonassessable, and no class of capital stock is
entitled to preemptive rights. Except pursuant to the Option
Agreement or as set forth on Schedule 3.1(b)(i), there are no
outstanding options, warrants or other rights to acquire
capital stock from the Company (or securities convertible into
or exchangeable or exercisable for such capital stock) other
than options representing in the aggregate the right to
purchase 5,987,693 shares of Company Common Stock under the
Company Stock Option Plans.
(ii) Schedule 3.1 (b)(ii) lists all Subsidiaries of
the Company as of the date of this Agreement. Except as set
forth in Schedule 3.1(b)(ii), (a) all of the issued and
outstanding shares of capital stock of each Subsidiary of the
Company that is a corporation are duly authorized, validly
issued, fully paid and nonassessable and are owned, directly
or indirectly, by the Company and where owned by the Company
or one or more of its Subsidiaries, are owned free and clear
of any liens, claims, encumbrances, restrictions, preemptive
rights, security interests, charges, voting and disposition
restrictions or any other claims of any third party ("Liens"),
(b) all capital, membership or voting interests of each
Subsidiary of the Company that is not a corporation have been
validly created pursuant to its Organizational Documents and,
where owned by the Company or one or more of its Subsidiaries,
are owned, directly or indirectly, by the Company free and
clear of any Liens and (c) none of the Company or its
Subsidiaries has any agreement or obligation to provide funds
to, or make any investment (in the form of a loan, capital
contribution or otherwise) in any other Person or owns any
interests in any Person other than a wholly owned Subsidiary
(except, as of the Effective Time, as may be agreed or allowed
consistent with Section 4.1(d)).
(iii) No bonds, debentures, notes or other
indebtedness of the Company having the right to vote on any
matters on which shareholders may vote ("Company Voting Debt")
are issued or outstanding.
(iv) Schedule 3.1(b)(iv) sets forth a true and
complete list as of the date hereof of all holders of options
to purchase Company Common Stock, including the number of
shares of Company Common Stock subject to each such option,
the exercise or vesting schedule, the exercise price per share
and the term of each such option.
(v) Except as otherwise set forth in the last
sentence of Section 3.1(b)(i) or as set forth in Schedule
3.1(b)(v), there are no securities, options, warrants, calls,
subscriptions, rights, commitments, agreements, arrangements
or
13
undertakings of any kind to which the Company or any of its
Subsidiaries is a party or by which any of them is bound
obligating the Company or any of its Subsidiaries to issue,
deliver or sell, or cause to be issued, delivered or sold,
additional shares of capital stock or other voting securities
of the Company or any of its Subsidiaries or obligating the
Company or any of its Subsidiaries to issue, grant, extend or
enter into any such security, option, warrant, subscriptions,
call, right, commitment, agreement, arrangement or
undertaking. Except as disclosed on Schedule 3.1(b)(i), there
are no outstanding obligations of the Company or any of its
Subsidiaries to repurchase, redeem or otherwise acquire any
shares of capital stock of the Company or any of its
Subsidiaries.
(c) Authority; No Conflicts.
(i) The Company has all requisite corporate power and
authority to execute and deliver this Agreement and the Option
Agreement and, subject, in the case of the consummation of the
Merger only, to the adoption of this Agreement by the Required
Company Vote, to consummate the transactions contemplated
hereby and thereby. The execution, delivery and performance of
this Agreement and the Option Agreement and the consummation
of the transactions contemplated hereby and thereby have been
duly authorized by the unanimous vote of the Board of
Directors of the Company (at a meeting duly called and a
quorum being present) and all necessary corporate action on
the part of the Company, subject, in the case of the
consummation of the Merger only, to the Required Company Vote.
This Agreement has been duly executed and delivered by the
Company and constitutes the legal, valid and binding
obligation of the Company, enforceable against it in
accordance with its terms, except as such enforceability may
be limited by bankruptcy, insolvency, reorganization,
moratorium and similar laws relating to or affecting creditors
generally, by general equity principles (regardless of whether
such enforceability is considered in a proceeding in equity or
at law) or by an implied covenant of good faith and fair
dealing. The Board of Directors of the Company has (i)
unanimously approved and adopted this Agreement, the Option
Agreement and the transactions contemplated hereby and thereby
and has declared that the Merger and this Agreement and the
other transactions contemplated hereby are advisable and in
the best interests of the Company and its shareholders and
(ii) unanimously taken all action necessary to render
inapplicable to the transactions contemplated by this
Agreement, by the Option Agreement and by the Voting
Agreement, the provisions of Article VII of the Company's
Articles of Incorporation and any state anti-takeover or
similar law, including any such law relating to the voting of
shares or a moratorium on the consummation of any business
combination. The Board of Directors of the Company has
directed that this Agreement and the transactions contemplated
hereby be submitted to the holders of the Company Common Stock
to obtain the Required Company Vote and, subject to the terms
hereof, has unanimously recommended that such holders vote for
approval and adoption of this Agreement and the transactions
contemplated hereby. Neither
14
Article 9 nor Article 9A of
Chapter 55 of the General Statut es of North Carolina apply to
the Company.
(ii) Except as set forth in Schedule 3.1(c)(ii), the
execution and delivery of this Agreement, the Option Agreement
or the Voting Agreements does not or will not, as the case may
be, and the consummation of the transactions contemplated
hereby and thereby will not, conflict with, require any
filing, waiver, permit, approval or consent under, or result
in any violation of, or constitute a default (with or without
notice or lapse of time, or both) under, or give rise to a
right of termination, amendment, cancellation or acceleration
of any obligation or the loss of a material benefit under, or
the creation of a lien, pledge, security interest, charge or
other encumbrance on any assets (any such conflict,
requirement, violation, default, right of termination,
amendment, cancellation or acceleration, loss or creation, a
"Violation") pursuant to: (A) any provision of the
Organizational Documents of the Company or any of its
Subsidiaries and (B) subject to obtaining or making the
consents, approvals, orders, authorizations, registrations,
declarations and filings referred to in paragraph (iii) below,
(x) any Company Material Contract (other than any cell site
lease) except any such Violations, which individually or in
the aggregate are not material, or (y) any other contract,
agreement or binding obligation to which the Company or any
Subsidiary is a party or to which any of its or their assets
are bound, except as could not, individually or in the
aggregate together with any violations pursuant to any Company
Material Contract, be reasonably expected to result in a
Material Adverse Effect on the Company.
(iii) No consent, waiver, permit, approval, order or
authorization of, or registration, declaration or filing with,
any supranational, national, state, municipal or local
government, any instrumentality, subdivision, court,
administrative agency or commission or other authority
thereof, or any quasi-governmental or private body exercising
any regulatory, taxing, importing or other governmental or
quasi-governmental authority (a "Governmental Entity") is
required by or with respect to the Company or any of its
Subsidiaries in connection with the execution and delivery of
this Agreement or the Option Agreement by the Company or the
consummation by the Company of the transactions contemplated
hereby or thereby, except for (x) those required under or in
relation to (A) the Hart-Scott Rodino Antitrust Improvements
Act of 1976, as amended (the "HSR Act"), (B) the
Communications Act of 1934, as amended (the "Communications
Act"), and any rules and regulations promulgated by the
Federal Communications Commission ("FCC"), (C) state
securities or "blue sky" laws, (D) the Securities Act of 1933,
as amended (the "Securities Act"), (E) the Securities Exchange
Act of 1934, as amended ("Exchange Act"), (F) the NCBCA with
respect to the filing and recordation of appropriate documents
to effect the Merger, (G) the Public Utilities Commission of
Ohio, Public Competitive Telecommunications Service Provider,
563 Registration Form, (H) rules and regulations of any state
public service or utility commissions or similar state
15
regulatory bodies, (I) rules and regulations of the NYSE or
Nasdaq National Market ("Nasdaq"), and (J) antitrust or other
competition laws of other jurisdictions, and (y) such
consents, approvals, orders, authorizations, registrations,
declarations and filings the failure of which to make or
obtain, excluding those which, prior to the Effective Time,
have been made or obtained, could not reasonably be expected
to hav e a Material Adverse Effect on the Company.
(d) Reports and Financial Statements.
(i) The Company has filed all required reports,
schedules, forms, statements and other documents required to
be filed by it with the Securities and Exchange Commission
(the "SEC") since January 1, 1996 (collectively, including all
exhibits thereto and documents incorporated by reference
therein, the "Company SEC Reports"). No Subsidiary of the
Company is required to file any form, report or other document
with the SEC. None of the Company SEC Reports, as of their
respective dates (and, if amended or superseded by a filing
prior to the date of this Agreement, then on the date of such
filing), contained or will contain any untrue statement of a
material fact or omitted or will omit to state a material fact
required to be stated therein or necessary to make the
statements therein, in light of the circumstances e under
which they were made, not misleading. Each of the financial
statements (including the related notes) included in the
Company SEC Reports presents fairly, in all material respects,
the consolidated financial position and consolidated results
of operations and cash flows of the Company and its
Subsidiaries as of the respective dates or for the respective
periods set forth therein, all in conformity with generally
accepted accounting principles ("GAAP") consistently applied
during the periods involved except as otherwise noted therein,
and subject, in the case of the unaudited interim financial
statements, to normal and recurring year-end adjustments that
have not been and are not expected to be material in amount.
All of such the Company SEC Reports, as of their respective
dates (and as of the date of any amendment to the respective
the Company SEC Report), complied as to form in all material
respects with the applicable requirements of the Securities
Act and the Exchange Act and the rules and regulations
promulgated thereunder.
(ii) Except for, and to the extent of, those
liabilities that are reflected or reserved against, to the
extent reflected or reserved against, on the consolidated
balance sheet of the Company and its Subsidiaries included in
the Company's Quarterly Report on Form 10-Q for the fiscal
period ended June 30, 1998, or the Company's Annual Report on
Form 10-K for the year ended December 31, 1997, and except for
liabilities and obligations incurred in the ordinary course of
business consistent with past practice since June 30, 1998,
and except and as to the extent disclosed in Schedule 3.1(d)
(ii), neither the Company nor any of its Subsidiaries has any
liabilities or obligations of any nature whatsoever (whether
fixed, absolute, accrued, contingent or otherwise and whether
due or to become
16
due) that individually or in the aggregate
could re asonably be expected to have a Material Adverse
Effect on the Company.
(e) Proxy Statement/Registration Statement. The information to
be supplied by the Company for inclusion in the Registration Statement
shall not at the time the Registration Statement is filed with or
declared effective by the SEC or at the date of the Company
Shareholders Meeting contain any untrue statement of a material fact or
omit to state any material fact required to be stated in the
Registration Statement or necessary in order to make the statements in
the Registration Statement, in light of the circumstances under which
they were made, not misleading. The Proxy Statement shall not, on the
date the Proxy Statement is first mailed to shareholders of the
Company, at the time of the Company Shareholders' Meeting and at the
Effective Time, contain any statement which, at such time and in light
of the circumstances under which it shall be made, is false or
misleading with respect to any material fact, or omit to state any
material fact necessary in order to make the statements made in the
Proxy Statement not false or misleading (excluding any statement based
upon information supplied by Parent for inclusion in the Proxy
Statement).
(f) Compliance with Applicable Laws; Regulatory Matters. The
Company and its Subsidiaries hold all permits, licenses, certificates,
franchises, registrations, variances, exemptions, orders and approvals
of all Governmental Entities which are necessary or advisable to the
operation of their businesses, other than those which, individually or
in the aggregate, the failure to hold could not reasonably be expected
to have a Material Adverse Effect on the Company (the "Company
Permits"). All such Company Permits are valid and in full force and
effect, and no suspension or cancellation of any such Company Permit is
pending or, to the knowledge of the Company, threatened, except as
could not reasonably be expected to, individually or in the aggregate,
have a Material Adverse Effect on the Company. The business of the
Company and its Subsidiaries (including, without limitation, operation
of each Company Benefit Plan) are not being and have not been conducted
in violation of any law, ordinance, regulation, judgment, decree,
injunction, rule or order of any Governmental Entity ("Law") except for
violations that individually or in the aggregate (1) would not result
in a material penalty or fine, (2) would not constitute a material
criminal violation, (3) would not result in cognizable damage to the
business reputation of the Company or the Parent, and (4) which,
individually or in the aggregate, could not otherwise reasonably be
expected to have a Material Adverse Effect on the Company. As of the
date of this Agreement, no investigation by any Governmental Entity
with respect to the Company or any of its Subsidiaries is pending or,
to the knowledge of the Company, threatened, other than investigations
which, individually or in the aggregate, could not reasonably be
expected to have a Material Adverse Effect on the Company.
(g) Litigation. Schedule 3.1(g) is a true and complete list of
all material litigation as of the date hereof that is pending, or to
the knowledge of the Company, threatened. Other than rulemaking or
other proceedings of general applicability affecting the cellular
telephone industry, which would not have a materially disproportionate
effect
17
on the Company, there is no litigation, arbitration, claim,
suit, action, investigation or proceeding pending, affecting or, to the
knowledge of the Company, threatened, against the Company or any of its
Subsidiaries or e their assets, which individually, or except for the
matters disclosed in Schedule 3.1 (g) in the aggregate, as of the date
hereof could be reasonably expected to result in a material liability,
and there is no litigation, claim, suit, action, investigation or
proceeding pending, affecting or, to the knowledge of the Company or
any of its Subsidiaries, which individually, or in the aggregate could
be reasonably expected to result in a Material Adverse Effect on the
Company. There is no judgment, award, decree, injunction, rule or order
of any Governmental Entity or arbitrator outstanding against the
Company or any of its Subsidiaries or their assets, which, individually
or in the aggregate, as of the date hereof could be reasonably expected
to result in a material liability, or as of the Closing Date, could
reasonably be expected to have a Material Adverse Effect on the
Company.
(h) Taxes. Except as set forth in Schedules 3.1(h)(i)-(x): (i)
the Company and each of its Subsidiaries have duly and timely filed
(taking into account any extension of time within which to file) all
Tax Returns with respect to material Taxes required to be filed by any
of them and all such filed Tax Returns are complete and accurate in all
respects, except for incompletenesses and inaccuracies that could not,
individually or in the aggregate, be reasonably expected to result in
material Tax liability that has not been paid; (ii) the Company and
each of its Subsidiaries have paid all material Tax liabilities that
are shown as due on such filed Tax Returns or that the Company or any
of its Subsidiaries is obligated to withhold from amounts owing to any
employee, creditor or third party, except with respect to matters
contested in good faith; (iii) as of the date hereof, except as could
not individually or in the aggregate be reasonably expected to result
in material Tax liability that has not been paid, and as of the Closing
Date, except as could not, individually or in the aggregate, reasonably
be expected to result in a Material Adverse Effect on the Company: (A)
there are no pending or, to the knowledge of the Company, threatened in
writing audits, examinations, investigations or other proceedings in
respect of Taxes or Tax matters relating to the Company or any of its
Subsidiaries, (B) there are no deficiencies or claims for any Taxes
that have been proposed, asserted or assessed against the Company or
any of its Subsidiaries, (C) there are no Liens for Taxes upon the
assets of the Company or any of its Subsidiaries, other than Liens for
current Taxes not yet due and payable and Liens for Taxes that are
being contested in good faith by appropriate proceedings, and (D)
neither the Company nor any of its Subsidiaries has requested any
extension of time within which to file any Tax Returns in respect of
any taxable year which have not since been filed, and no request for
waivers of the time to assess any Taxes are pending or outstanding;
(iv) none of the Company or any of its Subsidiaries has made an
election under Section 341(f) of the Code; (v) as of the date hereof,
the consolidated federal income Tax Returns for the Company and its
Subsidiaries have never been examined by the Internal Revenue Service;
(vi) the net operating loss carryforwards ("NOLs") of the Company and
its Subsidiaries as of December 31, 1997 are reasonably expected to
equal the amount of NOLs set forth on the most recent consolidated
federal income Tax Return of the Company and its Subsidiaries, and,
except for limitations that may apply by reason of the
18
Merger or
related transactions contemplated by this Agreement, such NOLs are not
subject to limitation under Section 382 of the Code, Treasury
Regulation Section 1.1502-15T or -21T or otherwise; (vii) neither the
Company nor any of its Subsidiaries is a party to any agreement,
contract or arrangement that could result, on account of the
transactions contemplated hereunder, separately or in the aggregate, in
the payment of any "excess parachute payments" within the meaning of
Section 280G of the Code or any payment that would be nondeductible
under Section 162(m) of the Code; (viii) neither the Company nor any of
its Subsidiaries has any liability for Taxes of any person (other than
the Company and its Subsidiaries) under Treasury Regulation Section
1.1502-6 (or any comparable provision of state, local or foreign law);
(ix) neither the Company nor any Subsidiary is a party to any agreement
relating to the allocation or sharing of Taxes (other than informal
arrangements among the Company and its Subsidiaries); and (x) as of the
date hereof, neither the Company nor any of its Subsidiaries knows of
any facts with respect to the Company or its Subsidiaries that would
reasonably be expected to prevent or materially or burdensomely impede
the Merger from qualifying as a reorganization within the meaning of
Section 368(a) of the Code.
(i) Absence of Certain Changes or Events. Since June 30, 1998
through the date of this Agreement, (A) each of the Company and its
Subsidiaries has conducted its business in the ordinary course
consistent with its past practice, except for the execution and
delivery of this Agreement; (B) there has not been any event,
development or change of circumstance that constitutes, has had, or
could reasonably be expected to have, individually or in the aggregate,
a Material Adverse Effect on the Company; and (C) except as disclosed
in Schedule 3.1(i)(C), through the date of this Agreement, none of the
Company or its Subsidiaries has taken or failed to take any action
which, if taken after the date hereof, would have required the consent
of Parent under Section 4.1 hereof.
(j) Vote Required. The affirmative vote of the holders of a
majority of the outstanding shares of Company Common Stock (the
"Required Company Vote") is the only vote of the holders of any class
or series of the Company capital stock necessary to approve this
Agreement and the transactions c ontemplated hereby.
(k) Certain Agreements.
(i) Schedule 3.1(k) contains a true and complete list
of all agreements, arrangements or understandings (a) listed
or which would be required to be listed as an exhibit to the
Company's Annual Report on Form 10-K for the year ended
December 31, 1997 under the rules and regulations of the SEC,
(b) relating to indebtedness for money borrowed by the Company
or any Subsidiary, which individually or in the aggregate
represent an amount greater than $1,000,000 excluding trade
credit or payables in the ordinary course of business, (c)
creating any guarantee or keepwell arrangement or other
agreement to be liable for the obligations of another Person
other than the Company or its wholly owned Subsidiaries, (d)
providing for payments or the receipt of payments or the sale,
purchase or exchange of goods or services worth in excess of
$1,000,000 (or in
19
fact resulting in such payments for 1997),
(e) with any agent/dealer/retailer for the Company's products
or services, (f) any joint venture or partnership agreement,
(g) with any paging enterprise for the reselling of products
or services, (h) which is an interest rate, equity or other
swap or derivative instrument, (i) containing any provision or
covenant limiting the ability of the Company or its
Subsidiaries or any of its or their affiliates to sell any
products or services of or to any other person, engage in any
line of business or compete with or to obtain products or
services from any person or limiting the ability of any person
to provide products or services to the Company or any of its
Subsidiaries or affiliates and (j) cell site leases
(collectively, the "Company Material Contracts"). The Company
has previously provided Parent with true and correct copies of
each of the Company Material Contracts, as in effect on the
date hereof.
(ii) All Company Material Contracts are valid and
enforceable and in full force and effect except to the extent
they have previously expired in accordance with their terms,
and neither the Company nor any of its Subsidiaries has
violated any provision of, or committed or failed to perform
any act which, with or without notice, lapse of time, or both,
could reasonably be expected to constitute a default under the
provisions of, any such Company Material Contract, except for
any invalidity, unenforceability or defaults which,
individually or in the aggregate, could not reasonably be
expected to have a Material Adverse Effect on the Company. To
the knowledge of the Company, no counterparty to any such
Company Material Contract has violated any provision of, or
committed or failed to perform any act which, with or without
notice, lapse of time, or both, could reasonably be expected
to constitute a default or other breach under the provisions
of, such the Company Material Contract, except for defaults or
breaches which, individually or in the aggregate, could not
reasonably be expected to have a Material Adverse Effect on
the Company. The Company has no obligations under that certain
Joint Venture Agreement, dated as of January 19, 1990, as
amended.
(l) Employee Benefit Plans; Labor Matters; Options.
(i) For purposes of this Agreement, the following
definitions apply: "Controlled Group Liability" means any and
all liabilities under (A) Title IV of ERISA, (B) section 302
of ERISA, (C) sections 412 and 4971 of the Code, (D) the
continuation coverage requirements of section 601 et seq. of
ERISA and section 4980B of the Code, and (E) corresponding or
similar provisions of foreign laws or regulations, other than
such liabilities that arise solely out of, or relate solely
to, the Plans; "ERISA" means the Employee Retirement Income
Security Act of 1974, as amended, and the regulations
thereunder; "ERISA Affiliate" means, with respect to any
entity, trade or business, any other entity, trade or business
that is a member of a group described in Section 414(b), (c),
(m) or (o) of the Code or Section 4001(b)(1) of ERISA that
includes the first entity, trade or business, or that is a
member of the same "controlled group" as the first entity,
trade or business pursuant to Section 4001(a)(14) of ERISA.
20
(ii) With respect to each employee benefit plan,
program, arrangement and contract (including, without
limitation, any "employee benefit plan," as defined in Section
3(3) of ERISA and any bonus, deferred compensation, stock
bonus, stock purchase, restricted stock, stock option,
employment, termination, change in control and severance plan,
program, arrangement and contract), to which the Company or
any of its Subsidiaries is a party, which is maintained or
contributed to by the Company or any of its Subsidiaries, or
with respect to which the Company or any of its Subsidiaries
could incur material liability under Section 4069, 4201 or
4212(c) of ERISA (the "Company Benefit Plans"), the Company
has made available to Parent a true and complete copy of (A)
such Company Benefit Plan, (B) the most recent annual report
(Form 5500) filed with the Internal Revenue Service (the
"IRS"), (C) each trust or other funding arrangement relating
to such Company Benefit Plan, (D) the most recent summary plan
description related to each Company Benefit Plan for which a
summary plan description is required, (E) the most recent
actuarial report (if applicable) relating to a Company Benefit
Plan and (F) the most recent determination letter, if any,
issued by the IRS with respect to any Company Benefit Plan
qualified under Section 401(a) of the Code. Schedule 3.1(l) of
the Company Disclosure Schedul e sets forth a true and
complete list of Company Benefit Plans.
(iii) Each of the Company Benefit Plans that is an
"employee pension benefit plan" within the meaning of Section
3(2) of ERISA and that is intended to be qualified under
Section 401(a) of the Code has received a favorable
determination letter from the IRS, and the Company is not
aware of any circumstances likely to result in the revocation
of any such favorable determination letter that could
reasonably be expected to have a Material Adverse Effect on
the Company.
(iv) All contributions, except for contributions
which are not, individually or in the aggregate, material,
required to be made to any Company Benefit Plan by applicable
law have been timely made.
(v) The Company does not maintain or contribute
to any Company Benefit Plan that is subject to Title IV or
Section 302 of ERISA or Sections 412 or 4971 of the Code.
(vi) There does not now exist, nor do any
circumstances exist that could result in, any Controlled
Group Liability that would be a material liability to the
Company following the Effective Date.
(vii) The Company has no material liability for life,
health, medical or other welfare benefits to former employees
or beneficiaries or dependents thereof, except for health
continuation coverage as required by Section 4980B of the Code
or Part 6 of Title I of ERISA and at no expense to the
Company.
21
(viii) No Company Benefit Plan covers foreign
employees, other than resident aliens.
(ix) No Company Benefit Plan provides for the
reimbursement of any excise taxes under Section 4999 of the
Code or any income taxes under the Code.
(x) As of the date hereof, to the knowledge of
the Company there are no actions, proceedings, arbitrations,
suits or claims (other than claims for benefits) pending or
threatened with respect to any Company Benefit Plan.
(xi) With respect to the Company Benefit Plans, no
event has occurred and, to the knowledge of the Company, there
exists no condition or set of circumstances, in connection
with which the Company or any of its Subsidiaries could be
subject to any material liability under the terms of such
Company Benefit Plans, ERISA, the Code or any other applicable
law (other than ordinary course liabilities to fund such
Company Benefit Plans pursuant to their terms).
(xii) None of the Company or its Subsidiaries is a
party to any collective bargaining or other labor union
contracts, no collective bargaining agreement is being
negotiated by the Company or any of its Subsidiaries, and as
of the date hereof to the knowledge of the Company no campaign
or other attempt for recognition has been made by any labor
organization or employee with respect to employees of the
Company and to the knowledge of the Company at the date
hereof, no such campaign or other attempt has been threatened
or made in the past three years. As of the date hereof, there
is no pending labor dispute, strike or work stoppage against
the Company or any of its Subsidiaries which may interfere in
any material respect with the respective business activities
of the Company or any of its Subsidiaries. There is no
material pending charge or complaint against the Company or
any of its Subsidiaries by the National Labor Relations Board
or any comparable state agency.
(xiii) Except as set forth in Schedule 3.1(l)
(xiii), all employment and consulting agreements to which the
Company is a party have been made available to Parent, and as
of the date hereof there are no other written agreements
obligating the Company to employ any individual.
(xiv) At the Effective Time, any outstanding
Company Options will be exercisable only for cash or the
Merger Consideration and not for capital stock of the Company
or Merger Sub.
(m) Brokers or Finders. No agent, broker, investment banker,
financial advisor or other firm or Person engaged by the Company or any
of its Affiliates is or will be entitled to any broker's or finder's
fee or any other similar commission or fee in connection with any of
the transactions contemplated by this Agreement from the Company or any
Subsidiary, except Wasserstein Perella & Co., Inc. A true and complete
22
copy of the engagement letter of Wasserstein Perella & Co., Inc. has
been delivered to Parent prior to the date hereof.
(n) Opinion of Financial Advisor. The Company has
received the opinion of Wasserstein Perella & Co., Inc. dated the
date of this Agreement to the effect that, as of such date, the Merger
Consideration is fair, from a financial point of view, to the holders
of Company Common Stock.
(o) Year 2000 Compliance. The Company has taken steps
(summarized in Schedule 3.1(o)) that are reasonable to ensure that the
occurrence of the year 2000 will not materially and adversely affect
the information and business systems of the Company or the
Subsidiaries, and no expenditures in excess of currently budgeted items
will be required in order to cause such systems to operate properly
following the change of the year 1999 to 2000. The Company has taken
the actions described in such Schedule (to the extent described
therein), has resolved (or is in the process of resolving) any issues
arising as a result of tests taken or otherwise to the knowledge of the
Company, and is not aware of any fact that would lead one to reasonably
conclude that the Company will be unable to resolve any of such issues
on the timetable set forth in Schedule 3.1(o) (and in any event on a
timely basis in order to be resolved before the year 2000).
(p) Affiliated Transactions and Certain Other Agreements. Set
forth in Schedule 3.1(p) is a list of (a) all contracts, arrangements,
agreements or understandings that would be required to be described
pursuant to Item 404 of Regulation S-K of the Securities Act of 1933,
as amended, except for those contracts, arrangements, agreements or
understandings disclosed in the Company's 1998 Proxy Statement or
Annual Report on Form 10-K for the year ended December 31, 1997, and
(b) all agreements or understandings, whether written or oral, giving
any Person the right to require the Company to register shares of
capital stock or to participate in any such registration. The Company
has previously provided to Parent true and complete copies of each of
the foregoing agreements.
(q) Environmental Matters. Except as disclosed in the Company
SEC Reports filed prior to the date hereof, and except as could not
reasonably be expected to result in a Material Adverse Effect on the
Company: (i) the Company and its Subsidiaries have complied with all
applicable Environmental Laws; (ii) the properties currently owned or
operated by the Company and its Subsidiaries (including soils,
groundwater, surface water, buildings or other structures) are not
contaminated with any Hazardous Substance to an extent reasonably
likely to give rise to liability or remediation obligations for the
Company or any Subsidiary under any applicable Environmental Law; (iii)
the properties formerly owned or operated by the Company or any of its
Subsidiaries were not contaminated with any Hazardous Substance during
the period of ownership or operation by the Company or any of its
Subsidiaries to an extent reasonably likely to give rise to liability
or remediation obligations for the Company or any Subsidiary; (iv)
neither the Company nor any of its Subsidiaries is reasonably likely to
be subject to liability or remediation obligations for any Hazardous
Substance disposal or management or
23
contamination at any other property
to an extent reasonably likely to give rise to liability or remediation
obligations for the Company or any Subsidiary under any Environmental
Laws; (v) neither the Company nor any of its Subsidiaries has received
any notice, demand, letter, claim or request for information indicating
that the Company or any of its Subsidiaries may be in violation of or
subject to liability under any Environmental Law; (vi) neither the
Company nor any of its Subsidiaries is subject to any orders, decrees,
injunctions or other arrangements with any Governmental Entity or any
indemnity or other agreement with any third party relating to any
Environmental Law or Hazardous Substances; and (vii) there are no other
circumstances or conditions involving the Company or any of its
Subsidiaries that could reasonably be expected to result in any claims,
liability, investigations, costs or restrictions on the ownership, use,
or transfer of any property of the Company pursuant to any
Environmental Law. As used herein, the term "Environmental Law" means
any federal, state, local or foreign law, statute, ordinance,
regulation, judgment, order, decree, arbitration award, agency
requirement, license, permit, authorization or common law, relating to
the protection. investigation or restoration of the environment, health
and safety, or natural resources.
As used herein, the term "Hazardous Substance" means any substance
that is: (A) a pollutant or contaminant or a hazardous or toxic
chemical, waste, substance or material, including any petroleum product
or by-product, asbestos-containing material, lead-containing paint or
plumbing, polychlorinated biphenyls, radioactive materials or radon; or
(B) any other substance that may be the subject of regulatory action by
any Governmental Entity pursuant to any Environmental Law.
(r) Intellectual Property. The Company and its Subsidiaries
own, or have the defensible right to use, the Intellectual Property
used in their respective businesses, except where the failure to own or
have the right to use such Intellectual Property, individually or in
the aggregate, does not and would not have a Material Adverse Effect on
the Company. As used herein, "Intellectual Property" means all
industrial and intellectual property rights, including Proprietary
Technology, patents, patent applications, trademarks, trademark
applications and registrations, service marks, service mark
applications and registrations, copyrights, know-how, licenses, trade
secrets, proprietary processes, formulae and customer lists; and
"Proprietary Technology" means all proprietary processes, formulae,
inventions, trade secrets, know-how, development tools and other
proprietary rights used by the Company and its Subsidiaries pertaining
to any product, software or service manufactured, marketed, licensed or
sold by the Company and its Subsidiaries or Parent and its
Subsidiaries, as the case may be, in the conduct of their business or
used, employed or exploited in the development, license, sale,
marketing, distribution or maintenance thereof, and all documentation
and media constituting, describing or relating to the above, including
manuals, memoranda, know-how, notebooks, software, records and
disclosures.
(s) Properties. Schedule 3.1(s) lists all material real
property and material interests in real property owned by the Company
or its Subsidiaries or leased by the Company or its Subsidiaries as
lessee or lessor, as well as all material real property and material
interests in real property used or held for use as cell sites.
24
(t) Assets. All assets of the Company are in good operating
condition and sufficient for the Company's use thereof, normal wear and
tear excepted, except where such failure to be in good operating
condition could not reasonably be expected to result in a Material
Adverse Effect. The Company owns or has rights to use all assets
necessary for the conduct of its business and operations or reflected
on the balance sheet included in the most recent Form 10-Q filed by the
Company with the SEC, except where the lack of such ownership or rights
could not reasonably be expected, individually or in the aggregate, to
have a Material Adverse Effect on the Company.
(u) Insurance. The Company and its Subsidiaries are insured,
and shall continue to maintain insurance, in such amounts and against
such losses and risks as are consistent with industry practice and, in
the reasonable judgment of senior management of the Company, are
adequate to protect the properties and business of the Company and its
Subsidiaries. As of the date hereof, no written notice of cancellation
or nonrenewal with respect to any material insurance policy has been
received by the Company or any of its Subsidiaries. Copies of all such
insurance policies have been furnished or made available to Parent. e
(v) Foreign Operations. Schedule 3.1(v) contains a
complete list of foreign nations in which the Company has a current
investment or operation (and the nature of Persons conducting such
operations.)
3.2 Joint and Several Representations and Warranties of
Parent and Merger Sub. Parent and Merger Sub jointly and severally
represent and warrant to the Company as follows:
(a) Organization, Standing and Power. Each of Parent and
Merger Sub is a corporation duly organized and is validly existing and
in good standing under the laws of the jurisdiction of its
incorporation, and has the requisite corporate power and corporate
authority to own, lease, and operate its properties and assets and to
carry on its business as it is now being conducted. Each of Parent and
Merger Sub is duly qualified and in good standing to do business in
each jurisdiction in which the nature of its business or the ownership
or leasing of its properties makes such qualification necessary, other
than in such jurisdictions where the failure so to qualify or be in
good standing could not reasonably be expected, individually or in the
aggregate, to have a Material Adverse Effect on Parent.
(b) Authorization and Execution. Each of Parent and Merger Sub
has the requisite corporate power and authority to execute and deliver
this Agreement and to consummate the transactions contemplated hereby.
The execution, delivery, and performance by each of Parent and Merger
Sub of this Agreement have been duly authorized by the Board of
Directors of such corporation and by Parent as sole stockholder of
Merger Sub, and no further corporate action of Parent or Merger Sub is
necessary to consummate the transactions contemplated hereby. Each of
Parent and Merger Sub have duly executed and delivered this Agreement,
and this agreement
25
constitutes the legal, valid, and binding obligation
of such party enforceable against it in accordance with its terms,
except as such enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium and similar laws relating to or affecting
creditors generally, by general equity principles (regardless of
whether such enforceability is considered in a proceeding in equity or
at law) or by an implied covenant of good faith and fair dealing.
(c) Parent Common Stock. The shares of Parent Common Stock to
be issued pursuant to Article I will, when issued, be duly authorized,
validly issued, fully paid and nonassessable, and no stockholder of
Parent is entitled to preemptive rights as a result of the issuance of
the Parent Company Stock hereunder. The Parent Common Stock to be
issued in the Merger will, when issued, be registered under the
Securities Act and the Exchange Act and registered or exempt from
registration under any applicable state securities laws, in each case
for delivery hereunder to holders of Company Common Stock. The Parent
has available for issuance under its Organization Documents a
sufficient number of shares of authorized Parent Common Stock necessary
to satisfy Parent's obligations under this Agreement.
(d) No Conflicts. The execution and delivery of this Agreement
does not or will not, as the case may be, (i) conflict with or result
in a breach of the Articles or Certificate of Incorporation, Bylaws or
similar organizational documents, as currently in effect, of Parent or
any of its "Significant Subsidiaries" (as such term is defined in
regulations promulgated under the Securities Act or the Exchange Act),
(ii) except for (A) the consents, approvals, orders, authorizations,
registrations, declarations and filing required under or in relation to
clause (x) of Section 3.1(c)(iii) and (B) such consents, approvals,
orders, authorizations, registrations, declarations and filings the
failure of which to make or obtain could not reasonably be expected to
have a Material Adverse Effect on Parent or impair or delay the ability
of Parent or consummate the transactions contemplated hereby, require
any filing with, or consent or approval of, any Government Entity
having jurisdiction over any of the business or assets of Parent or any
of its Significant Subsidiaries, (iii) violate any statute, law,
ordinance, rule or regulation applicable to Parent or any of its
Significant Subsidiaries or any injunction, judgment, order, writ, or
decree to which Parent or any of its Significant Subsidiaries is
subject, or (iv) result in a breach of, or constitute a default or an
event which, with the passage of time or the giving of notice, or both,
would constitute a default, give rise to a right of termination,
cancellation, or acceleration, create any entitlement of any third
party to any material payment or benefit, require the consent of any
third party, or result in the creation of any lien on the assets or
stock of Parent or any of its Significant Subsidiaries, except, in the
case of clauses (ii), (iii) and (iv), where the violation, breach,
default, termination, cancellation, acceleration, payment, benefit, or
lien, or the failure to make such filing or obtain such consent or
approval could not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect on Parent.
26
(e) Reports and Financial Statements.
(i) Parent has filed all required reports, schedules,
forms, statements and other documents required to be filed by
it with the SEC since January 1, 1996 (collectively, including
all exhibits thereto and documents incorporated by reference
therein, the "Parent SEC Reports"). None of the Parent SEC
Reports, as of their respective dates (and, if amended or
superseded by a filing prior to the date of this Agreement,
then on the date of such filing), contained or will contain
any untrue statement of a material fact or omitted or will
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. Each
of the financial statements (including the related notes)
included in the Parent SEC Reports presents fairly, in all
material respects, the consolidated financial position and
consolidated results of operations and cash flows of Parent
and its Subsidiaries as of the respective dates or for the
respective periods set forth therein, all in conformity with
GAAP consistently applied during the periods involved except
as otherwise noted therein, and subject, in the case of the
unaudited interim financial statements, to normal and
recurring year-end adjustments that have not been and are not
expected to be material in amount. All of such Parent SEC
Reports, as of their respective dates (and as of the date of
any amendment to the respective Parent SEC Report), complied
as to form in all material respects with the applicable
requirements of the Securities Act and the Exchange Act and
the rules and regulations promulgated thereunder.
(f) Proxy Statement/Registration Statement. The Registration
Statement shall not at the time the Registration Statement is declared
effective by the SEC contain any untrue statement of a material fact or
omit to state any material fact required to be stated in the
Registration Statement or necessary in order to make the statements in
the Registration Statement, in light of the circumstances under which
they were made, not misleading (excluding any statement based upon
information supplied by the Company for inclusion in the Proxy
Statement). The information to be supplied by Parent for inclusion in
the Registration Statement shall not on the date the Proxy Statement is
first mailed to shareholders of the Company, at the time of the Company
Shareholders' Meeting, and at the Effective Time, contain any statement
that, at such time and in light of the circumstances under which it
shall be made, is false or misleading with respect to any material
fact, or omit to state any material fact necessary in order to make the
statements made in the Proxy Statement not false or misleading.
(g) Absence of Certain Changes or Events. Except as expressly
disclosed in the Parent SEC Reports filed prior to the date of this
Agreement, since June 30, 1998, there has not been a Material Adverse
Effect on Parent or any development or combination of developments of
which management of Pare nt has knowledge which is reasonably likely to
result in such an effect.
27
(h) No Vote Required. No vote or approval of the holders
of any class of Parent shares is necessary to approve this Agreement
and the transactions contemplated hereby.
(i) Brokers or Finders. No agent, broker, investment banker,
financial advisor or other firm or Person engaged by Parent or Merger
Sub is or will be entitled to any broker's or finder's fee or any other
similar commission or fee from the Company or its Subsidiary in
connection with any of the transactions contemplated by this
Agreement.
(j) Ownership of Company Common Stock. Except for Company
Common Shares which Parent may acquire pursuant to the terms of the
Option Agreement and the Voting Agreements, Parent "beneficially owns"
(as such terms are used in connection with Rule 13d-3 under the
Exchange Act) less than 1% of the outstanding Company Common Shares.
(k) Merger Sub. Merger Sub was formed solely for the purpose
of effecting the Merger and has not engaged in any business activities
or conducted any operations other than in connection with the Merger.
Except for obligations or liabilities incurred in connection with its
incorporation or organization and the transactions contemplated by this
Agreement, and except for this Agreement and any other agreements or
arrangements contemplated by this Agreement, Merger Sub has not
incurred, directly or indirectly, through any subsidiary or affiliate,
any s obligations or lia bilities or entered into any agreement or
arrangements with any person.
ARTICLE IV.
COVENANTS RELATING TO CONDUCT OF BUSINESS
4.1 Covenants of the Company.
During the period from the date of this Agreement and continuing until the
Effective Date (except as expressly permitted by this Agreement or as
otherwise indicated in Schedules 4.1 or to the extent that s Parent shall
otherwise consent in writing), the Company and its Subsidiaries shall carry
on their respective businesses in the usual, regular and ordinary course in
all material respects, in substantially the same manner as heretofore
conducted, and shall use reasonable best efforts to s preserve their
relationships with employees, Governmental Entities, customers, suppliers
and others having business dealings with them with the objective that their
ongoing businesses shall not be impaired at the Effective Time. In
furtherance and not in limitation of the foregoing, until the Effective
Time (except as expressly permitted by this Agreement or as otherwise
indicated in the Company Disclosure Schedule or to the extent that Parent
shall otherwise consent in writing):
(a) Dividends; Changes in Share Capital. The Company shall
not, and shall not permit any of its Subsidiaries to, and shall not
propose to, (i) declare or pay any dividends on or make other
distributions in respect of any of its capital stock, except dividends
by the Company's wholly-owned Subsidiaries in the ordinary course of
business consistent with past practice, (ii) split, combine, subdivide
or reclassify any of its capital stock or issue or authorize or
propose the issuance of any other securities in respect of, in lieu of
or in substitution for, shares of its capital stock,
28
except for any such transaction by a wholly-owned
Subsidiary of the Company which remains a wholly-owned Subsidiary after
consummation of such transaction, or (iii) repurchase, redeem or
otherwise acquire any shares of its capital stock or any securities
convertible into or exercisabl e for any shares of its capital stock.
(b) Securities. The Company and its Subsidiaries shall not
issue, deliver, sell, dispose, pledge or encumber, or authorize or
propose the issuance, delivery, sale, disposition, pledge or
encumbrance of, any shares of its capital stock of any class or other
securities or any securities convertible into or exercisable or
exchangeable for, or any rights, warrants, calls, commitments or
options to acquire, any such shares or securities, or enter into any
agreement with respect to any of the foregoing and shall not amend any
equity-related awards issued pursuant to the Company Benefit Plans,
other than the issuance of Company Common Stock upon the exercise of
stock options issued in the ordinary course of business and consistent
with past practice in accordance with the terms of the Company Stock
Option Plans as in effect on the date of this Agreement.
(c) Organizational Documents and Funding. The Company
and its Subsidiaries shall not amend or propose to amend their
respective Organizational Documents.
(d) Investments and Loans. The Company shall not, and shall
not permit any of its Subsidiaries to, (i) incur any indebtedness for
borrowed money or guarantee, endorse or assume any obligation of other
Persons other than indebtedness of the Company or any of its
Subsidiaries to the Company or any wholly owned Subsidiary of the
Company; provided, however, that the Company may incur indebtedness
under its current bank credit facilities such that the total amount
outstanding thereunder does not exceed the amounts set forth on
Schedule 4.1 (d)(i) to the extent and for the purposes set forth on
such schedule plus any amounts necessary to comply with Section 5.9,
(ii) make any loans, advances or capital contributions to, or
investments in, any other Person, other than by the Company or any of
its Subsidiaries to or in the Company or any of its wholly-owned
Subsidiaries, except for loans, advances, capital contributions or
investments in Persons that are entities in whom the Company has
investments as of the date of this Agreement, made in the ordinary
course of business, consistent with past practice, in respect of the
Company's current line of business (and after consultation with Parent)
which in the aggregate do not exceed two million dollars, or (iii) pay,
discharge or satisfy any claims, liabilities or obligations (absolute,
accrued, asserted or unasserted, contingent or otherwise), other than
in the ordinary course of business consistent with past practice.
(e) Compensation. The Company and its Subsidiaries shall not
(i) grant any increases in the compensation of any of its directors,
officers or employees, except in the ordinary course of business
consistent with past practice, (ii) pay or award or agree to pay or
award any pension, retirement allowance, or other nonequity incentive
awards, or other employee benefit, not required by any outstanding
employee benefit plans or arrangements to any current or former
director, officer or employees, whether past or present, or to any
other Person, except for payments or awards that are in the ordinary
29
course of business, consistent with past practice, and that are not
material; provided, however, that the Company and its Subsidiaries may
pay cash bonuses for 1998 in the ordinary course of business consistent
with past practice not to exceed the amount set forth in Schedule
4.1(e)(ii), (iii) reprice, pay or award or agree to reprice, pay or
award any stock option or equity incentive awards, (iv) enter into any
new or amend any existing employment agreement with any director,
officer or employee, except for employment agreements with new
employees entered into in the ordinary course of business consistent
with past practice and except with respect to employees who are not
officers, executives or directors of the Company or its Subsidiaries,
for amendments in the ordinary course of business, consistent with past
practice, that do not materially increase benefits or payments, (v)
enter into any new or amend any existing severance agreement with any
current or former director, officer or employee, except with respect to
employees who are not officers, executives or directors of the Company
or its Subsidiaries, for agreements or amendments in the ordinary
course of business, consistent with past practice, that do not provide
for materially increased benefits, (vi) other than the acceleration of
outstanding Company Stock Options and payments under the Company's Five
Year Incentive Plan, and other payments, in each case as set forth in
Schedule 4.1(e)(vi), enter into any agreement or exercise any
discretion providing for acceleration of payment or performance as a
result of a change of control of the Company or its Subsidiaries or
(vii) become obligated under any new employee benefit plan or
arrangement, which was not in existence on the date hereof or amend or
exercise discretion pursuant to any such employee benefit plan or
arrangement in existence on the date hereof, except for any such
amendment applicable only to employees who are not officers, executives
or directors of the Company or its Subsidiaries or exercise of
discretion in the ordinary course of business, consistent with past
practice (that does not disproportionately effect officers, executives
or directors as opposed to other employees);
(f) Extraordinary Transactions. The Company and its
Subsidiaries shall not adopt a plan of complete or partial liquidation,
dissolution, merger, consolidation, restructuring, recapitalization or
other reorganization of the Company or any of its Subsidiaries;
(g) Acquisitions; Other Uses of Funds. The Company and
its Subsidiaries shall not make any acquisition, by means of merger,
consolidation or otherwise, of (i) any direct or indirect ownership
interest in or assets comprising any business enterprise or operation
or spectrum or (ii) except in the ordinary course and consistent with
past practice, any other assets;
(h) Wireless Assets. The Company and its Subsidiaries shall
not make any disposition of any direct or indirect ownership interest
in or assets comprising any tower or wireless system or part thereof or
cell site or any other local service or access system (including any
shares of capital stock of any Subsidiary holding any such interest) or
other investment (other than cash equivalents) or material business
enterprise or operation (except for the replacement or upgrade of
assets, or disposition of redundant assets, in each case in the
ordinary course and consistent with past practice), except sales of
30
individual assets (other than inventory) in the ordinary course and
consistent with past practice not exceeding, in the aggregate,
$1,000,000;
(i) Line of Business. The Company and its Subsidiaries shall
not (i) make any investment in a Person with operations in any foreign
nation other than in those Persons listed Schedule 4.1(i) (and only if
such Persons continue to operate only in the nations listed on Schedule
3.1(v)) or (ii) engage in the conduct of any business or in any nation
other than the wireless telecommunications and related businesses
conducted as of the date hereof and in the nations where so conducted
or in any planned expansion thereof as disclosed to Parent in writing
prior to the date hereof;
(j) Expenditures. For any quarter, the Company and its
Subsidiaries shall not make any capital expenditures in excess of the
total amount set forth for capital expenditures for such quarter in
Schedule 4.1(j); provided that any amounts not spent in prior quarters
permitted hereunder may be spent in succeeding quarters, and any
amounts set forth for a particular quarter may be accelerated and spent
in the immediately preceding quarter. The Company shall not enter into
any contracts, arrangements or understandings requiring capital
expenditures at times or in amounts other than as set forth in the
preceding sentence;
(k) Affiliates. The Company and its Subsidiaries shall
not enter into, or amend or waive any right under, any agreement with
any Affiliates of the Company (other than its Subsidiaries) or with
International Wireless Communications Holdings, Inc. or its Affiliates;
(l) Claims. The Company and its Subsidiaries shall not (i)
settle or compromise any material claims (including without limitation
Tax claims) or material litigation; (ii) except in the ordinary course
of business consistent with past practice, prepay or terminate any
Company Material Contracts; or (iii) except in the ordinary course of
business, modify, prepay, amend or terminate any other material
agreement of the Company or any Subsidiary or waive, release or assign
any material rights or claims;
(m) Certain Agreements. The Company and its Subsidiaries shall
not enter into any agreement containing any provision or covenant
limiting the ability of the Company or its Subsidiary to (i) sell any
products or services of or to any other person, (ii) engage in any line
of business or (iii) compete with or to obtain products or services
from any person or limiting the ability of any person to provide
products or services to the Company or any of its Subsidiaries;
(n) Tax and Accounting. Neither the Company nor any of its
Subsidiaries shall make or rescind any material Tax election (other
than the making of such elections in the ordinary course of business
consistent with past practice, which elections are required to be made
on a periodic basis), settle or compromise any material Tax liability
or change any of its methods of accounting for Tax or other purposes,
except as may be required by applicable law or by the rules and
pronouncements of the Securities and Exchange Commission;
31
(o) Other Actions. The Company shall not, and shall not permit
any of its Subsidiaries to, take any action that could reasonably be
expected to result in (i) any of the representations or warranties of
the Company set forth in this Agreement that are qualified as to
materiality becoming untrue, or any of the representations or
warranties of the Company set forth in this Agreement that are not so
qualified becoming untrue in any material respect or (ii) except as
otherwise permitted by Section 5.4, any of the conditions to the Merger
set forth in Article VI not being satisfied.
(p) Intention. The Company and its Subsidiaries shall
not enter into any agreement, commitment, or obligation to take any
action prohibited by this Section.
4.2 Reasonable Efforts. Subject
to Parent's rights to delay the Closing as set forth in Section 2.1,
each of the Company and Parent and their respective Subsidiaries shall
use their reasonable commercial efforts to effectuate the transactions
contemplated hereby and to cause to be fulfilled the conditions to
Closing under this Agreement, and the Company shall use its
commercially reasonable efforts to comply with and to effectuate the
Voting Agreements and the Option Agreement. Notwithstanding the
foregoing or anything in this Agreement to the contrary, (i) (A)
neither the Company nor any of its Subsidiaries shall, without Parent's
prior written consent, commit to any divestiture or hold separate or
similar transaction and each of the Company and its Subsidiaries shall
commit to, and shall use reasonable efforts to effect, such thereof
(which may, at the Company's option, be conditioned upon and effective
as of the Effective Time) as Parent shall request, and (B) neither
Parent nor any of its Subsidiaries shall be required to divest or hold
separate or otherwise take (or refrain from taking) or commit to take
(or refrain from taking) any action that limits its freedom of action
with respect to, or its ability to retain, the Company or any of its
Subsidiaries or any material portion of the assets of the Company and
its Subsidiaries, or any of the business, product lines or assets of
Parent or any of its Subsidiaries, except (1) Parent shall take such
action with respect to personal communications services ("PCS")
spectrum in the Company's geographic cellular service areas as is
required to comply with the FCC's spectrum aggregation rules and
policies or shall obtain a timely waiver of such rules and policies and
(2) any such divestiture, requirement to hold separate, or limitation
that arises after Parent or any of its Subsidiaries engages in, or
agrees to engage in, a merger, acquisition or other business
combination transaction after the date hereof (and which has not been
publicly announced prior to the date hereof), but would not have arisen
but for Parent engaging in or agreeing to engage in such transaction,
and (ii) nothing in this Agreement shall prevent or restrict Parent and
its Subsidiaries from engaging in any merger, acquisition or business
combination transaction; provided that such merger, acquisition or,
business combination transaction would not (x) prevent, or delay beyond
the Outside Date the ability of Parent to consummate the Merger or (y)
cause the Merger to fail to qualify as a reorganization within the
meaning of Secti on 368(a) of the Code.
4.3 NYSE Listing. Parent will use reasonable
best efforts to cause the shares of Parent Common Stock to be listed
at the Effective Time on the NYSE.
4.4 Advice of Changes; Government Filings.
Each party shall (a) confer on a regular
and frequent basis with the other, (b) report (to the extent permitted
by law, regulation
32
and any applicable confidentiality agreement) on the
Company's operational matters and (c) promptly advise the other orally
and in writing of (i) any representation or warranty made by it
contained in this Agreement that is qualified as to materiality or
Material Adverse Effect becoming untrue or inaccurate in any respect or
any such representation or warranty that is not so qualified becoming
untrue and inaccurate in may material respect, (ii) the failure by it
(A) to comply with or satisfy in any respect any covenant, condition or
agreement required to be complied with or satisfied by it under this
Agreement that is qualified as to materiality or Material Adverse
Effect or (B) to comply with or satisfy in any material respect any
covenant, condition or agreement required to be complied with or
satisfied by it under this Agreement that is not so qualified as to
materiality or (iii) any change, event or circumstance that has had or
could reasonably be expected to have a Material Adverse Effect on such
party or materially adversely affect its ability to consummate the
Merger in a timely manner; provided, however, that no such notification
shall affect the representations, warranties, covenants or agreements
of the parties or the conditions to the obligations of the parties
under this Agreement. The Company and Parent shall file all reports
required to be filed by each of them with the FCC and the SEC (and all
other Governmental Entities) between the date of this Agreement and the
Effective Time and shall (to the extent permitted by law or regulation
or any applicable confidentiality agreement) deliver to the other party
copies of all such reports promptly after the same are filed. Each
party agrees that, to the extent practicable, it will consult with the
other party with respect to the obtaining of all permits, consents,
approvals and authorizations of all third parties and Governmental
Entities necessary or advisable to consummate the transactions
contemplated by this Agreement and each party will keep the other party
apprised of the status of matters relat ing to completion of the
transactions contemplated hereby.
4.5 Control of Other Party's Business.
Nothing contained in this Agreement shall give
the Company, directly or indirectly, the right to control or direct
Parent's operations prior to the Effective Time. Nothing contained in
this Agreement shall be given Parent, directly or indirectly, the right
to control or direct the Company's operations prior to the Effective
Time. Prior to the Effective Time, each of the Company and Parent shall
exercise, consistent with the terms and conditions this Agreement,
complete control and supervision ove r its respective operations.
ARTICLE V.
ADDITIONAL AGREEMENTS
5.1 Preparation of Proxy Statement/Registration;
Company Shareholder Meeting.
(a) As promptly as practicable after the execution of this
Agreement, Parent and the Company shall prepare and file with the SEC a
proxy statement/prospectus (the "Proxy Statement") to be sent to the
shareholders of the Company in connection with the Company
Shareholders' Meeting to consider the Merger and the issuance of Parent
Common Stock in connection therewith, and Parent shall prepare and file
with the SEC a registration statement on Form S-4 pursuant to which the
shares of Parent Common Stock to be issued in the Merger will be
registered under the Securities Act (the "Registration
33
Statement"), in
which the Proxy Statement will be included as a prospectus. Parent may
delay the filing of the Registration Statement until after the Proxy
Statement has been declared effective. Parent and the Company shall use
reasonable best efforts to cause the Registration Statement to become
effective as soon after the filing as practicable. The Proxy Statement
shall include the unanimous recommendation of the Board of Directors of
the Company in favor of this Agreement and the Merger unless the Board
is not required to make such o recommendation pursuant to clause (e)
below. Parent and the Company shall make all other necessary filings
with respect to the Merger under the Securities Act and the Exchange
Act and the rules and regulations thereunder. If at any time before the
Effective Time any event relating to the Company or Parent, or any of
its affiliates, officers, or directors, is discovered by the Company or
Parent, respectively, that should be set forth in an amendment to the
Registration Statement or a supplement to the Proxy Statement, such
party shall promptly so inform the other.
(b) The Company shall take all action necessary to cause
the representation set forth in Section 3.1(e) to be true and correct
at all applicable times with respect to each of the Proxy Statement
and the Registration Statement.
(c) Parent shall take all action necessary to cause the
representation set forth in Section 3.2(f) to be true and correct at
all applicable times with respect to each of the Proxy Statement and
the Registration Statement.
(d) As soon as reasonably practicable, the Company and
Parent shall take all such actions as may be necessary to comply with
state "blue sky" or securities laws in connection with the transactions
contemplated by this Agreement.
(e) The Company shall, as soon as practicable following the
date of this Agreement, duly call, give notice of, convene and hold a
meeting of its shareholders (the "Company Shareholders Meeting") for
the purpose of obtaining the Required Company Votes with respect to
this e Agreement. The Board of Directors of the Company shall
unanimously recommend adoption of this Agreement by the shareholders of
the Company and, upon Parent's request, reconfirm such recommendation
(provided that the Board of Directors of the Company need not(1)make
or reconfirm such recommendation (x) if at the time that it would
otherwise be required to make or reconfirm such recommendation the
Company is not then in breach of its obligations under Section 5.4 and
(y) in such event, if and only to the extent that the Board of
Directors of the Company concludes in good faith (after having
consulted with and considered the advice of outside legal counsel) in
connection with the receipt of a Superior Proposal that such action is
necessary in order for its directors to comply with their respective
fiduciary duties under applicable law, or (2)reconfirm such
recommendation if no other Acquisition
Proposal is pending or in Parent's reasonable judgment likely to become
pending. Subject to the foregoing, the Company shall use reasonable
best efforts to solicit such adoption.
5.2 Access to Information.
Upon reasonable notice, the Company and its Subsidiaries shall afford
to the officers, employees, accountants, counsel, financial advisors
and
34
other representatives of Parent reasonable access during normal
business hours, during the period prior to the Effective Time, to all
its personnel, properties, books, contracts, commitments and records
and, during such period, the Company and its Subsidiaries shall furnish
promptly to Parent (a) a copy of each report, schedule, registration
statement and other document filed, published, announced or received by
it during such period pursuant to the requirements of Federal or state
securities laws, as applicable (other than reports or documents which
such party is not permitted to disclose under applicable law) and (b)
consistent with its legal obligations, all other information concerning
its business, properties and personnel as Parent may reasonably
request; provided, however, the Company may restrict the foregoing
access to the extent that (i) a Governmental Entity requires the
Company or any of its Subsidiaries to restrict access to any properties
or information reasonably related to any such contract on the basis of
applicable laws and regulations with respect to national security
matters or (ii) any law, treaty, rule or regulation of any Governmental
Entity applicable to the Company or its Subsidiaries requires the
Company or its Subsidiaries to restrict access to any properties or
information.
5.3 Approvals and Consents; Cooperation.
Subject to Section 4.2, each of the Company
and Parent shall cooperate with each other and use (and shall cause
their respective Subsidiaries to use) its reasonable best efforts to
take or cause to be taken all actions, and do or cause to be done all
things, necessary, proper or advisable on their part under this
Agreement and applicable laws to consummate and make effective the
Merger and the other transactions contemplated by this Agreement as
soon as practicable, including (i) preparing and filing promptly, after
consulting with the other party and providing an opportunity to review
related documentation in advance, all documentation to effect all
necessary applications, notices, petitions, filings, tax ruling
requests and other documents and to obtain all consents, waivers,
licenses, registrations, permits, authorizations, tax rulings and
authorizations necessary or advisable to be obtained from any third
party and/or any Governmental Entity in order to consummate the Merger
or any of the other transactions contemplated by this Agreement and
(ii) taking all reasonable steps as may be necessary to obtain all such
consents, waivers, licenses, registrations, permits, authorizations,
tax rulings, orders and approvals. Without limiting the generality of
the foregoing, the Company and Parent agree to make all necessary
filings in connection with the Required Regulatory Approvals promptly
following the date of this Agreement, and to use its reasonable best
efforts to furnish or cause to be furnished, as promptly as
practicable, all information and documents requested with respect to
such Required Regulatory Approvals and shall otherwise cooperate with
the applicable Governmental Entity in order to obtain any Required
Regulatory Approvals. Subject to Section 4.2, each of the Company and
Parent shall use its reasonable best efforts to resolve such
objections, if any, as any Governmental Entity may assert with respect
to this Agreement and the transactions contemplated hereby in
connection with the Required Regulatory Approvals in as expeditious a
manner as possible. Subject to Section 4.2, in the event that a suit is
instituted by a Person or Governmental Entity challenging this
Agreement and the transactions contemplated hereby as violative of
applicable antitrust or competition laws or the Communications Act,
each of the Company and Parent shall use its reasonable best efforts to
resist or resolve such suit. The Company and Parent each shall, upon
request by the other, furnish the other with all information concerning
itself, its Subsidiaries, directors, officers and shareholders and such
other matters as may be reasonably be necessary or advisable in
connection with the Proxy Statement or any
35
other statement, filing, tax
ruling request, notice or application made by or on behalf of the
Company, Parent or any of their respective Subsidiaries to any third
party and/or any Governmental Entity in connection with the Merger or
the other transactions contemplated by this Agreement.
5.4 Acquisition Proposals.
The Company agrees that it and its Subsidiaries, officers, directors,
employees, agents and representatives (including any investment banker,
attorney or accountant retained by it) shall not, directly or
indirectly, initiate, solicit, encourage or otherwise facilitate any
inquiries or the making of any proposal or offer with respect to a
merger, reorganization, share exchange, consolidation, business
combination, recapitalization, liquidation, dissolution or similar
transaction involving, or any purchase of any substantial portion of
the assets of, or any equity securities of, or any transaction that
would involve the transfer or potential transfer of control of, the
Company (any such proposal or offer being hereinafter referred to as an
"Acquisition Proposal") and has terminated any discussions or
negotiations with, and the provision of information or data to, any
Person (other than Parent) respecting an Acquisition Proposal. The
Company further agrees that it and its Subsidiaries, officers,
directors, employees, agents and representatives (including any
investment banker, attorney or accountant retained by it) shall not,
directly or indirectly, provide any confidential information or data to
any Person relating to or in contemplation of an Acquisition Proposal
or engage in any negotiations or discussions relating to or in
contemplation of an Acquisition Proposal; provided, however, that
nothing contained in this Agreement shall prevent the Company or its
Board of Directors from (a) complying with Rule 14e-2 promulgated under
the Exchange Act with regard to any Acquisition Proposal; and (b) if
any only to the extent that the Board of Directors of the Company
concludes in good faith (after having consulted with and considered the
advice of outside legal counsel) that such Acquisition Proposal would,
if consummated, result in a transaction more favorable to the Company
shareholders from a financial point of view than the transaction
contemplated by this Agreement (any such more favorable Acquisition
Proposal being referred to in this Agreement as a "Superior Proposal"),
until the Required Company Vote has been obtained, the Company may
furnish or cause to be furnished confidential information or data and
may participate in such negotiations and discussions but only if (i)
the Company is not then in breach of its obligations under this
Section, (ii) (and only to the extent that) the Board of Directors of
the Company concludes in good faith (after having consulted with and
considered the advice of outside legal counsel) that such action is
necessary in order for its directors to comply with their respective
fiduciary duties under applicable law and (iii) confidentiality
arrangements on terms no less beneficial to the Company as those
entered into by Parent are entered into with respect thereto. The
Company will notify Parent immediately if any inquiries, proposals or
offers respecting an Acquisition Proposal are received by, any such
information or data is requested from, or any such discussions or
negotiations are sought to be initiated or continued with, it or any
such Persons indicating, in connection with such notice, the name of
such Person and the material terms and conditions of any proposals or
offers, and shall keep Parent apprised with respect to the status and
terms thereof. The Company also will promptly request each Person that
has heretofore executed a confidentiality agreement in connection with
its consideration of an Acquisition Proposal to return all confidential
information heretofore furnished to such Person by or on behalf of it
or any of its Subsidiaries and will not waive any "standstill "
provision of any such, or any other,
36
agreement. The Company shall
provide Parent at least two business days advance notice of its
intention to present to its Board of Directors or accept any Superior
Proposal and shall provide Parent with a summary of the terms and
conditions thereof.
Notwithstanding the foregoing, none of the actions set forth on
Schedule 5.4 shall constitute an Acquisition Proposal.
5.5 Employee Benefits.
(a) For a period of two years immediately following the
Closing Date, Parent shall or shall cause the Surviving Corporation to
maintain in effect employee benefit plans and arrangements which
provide benefits which have a value substantially comparable, in the
aggregate, to the benefits provided by the Company Benefit Plans (not
taking into account the value of any benefits under any such plans
which are equity based); provided, that Parent at its sole option may
provide employee benefits to the Surviving Corporation which, in the
aggregate, are substantially comparable to those applicable to
similarly situated employees of Parent or its Subsidiaries. At the
request of Parent, the Company shall, prior to the Effective Time,
terminate the Company's 401(k) Plan effective immediately prior to the
Effective Time. The Company shall terminate the Company's Employee
Stock Purchase Plan (the "ESPP") for each fiscal quarter beginning on
or after October 1, 1998 and shall cease all offering periods that
begin on or after September 30, 1998.
(b) For purposes of determining eligibility to participate,
vesting and accrual or entitlement to benefits where length of service
is relevant under any employee benefit plan or arrangement of Parent,
the Surviving Corporation or any of their respective Subsidiaries, e
employees of the Company and its Subsidiaries as of the Effective Time
shall receive service credit for service with the Company and any of
its Subsidiaries to the same extent such service credit was granted
under the Company Benefit Plans, subject to offsets for previously
accrued e benefits and no duplication of benefits (except that no such
credit shall be applied for (i) benefit accrual or entitlement purposes
under defined benefit pension plans or the schedule of benefits under
Parent's severance pay and short term disability plans and policies,
(ii) eligibility to receive post-retirement ancillary benefits
(consisting at this time of medical, dental, death and telephone
concession benefits) or (iii) calculating Parent service for purposes
of "bridging" prior Parent service under Parent benefit plans).
(c) Parent shall cause the Surviving Corporation to assume and
honor in accordance with their terms (i) all written employment,
severance and termination plans and agreements (including change in
control provisions) of employees of the Company and its Subsidiaries
provided to Parent on or prior to the date of this Agreement and (ii)
the Tax Reimbursement Agreements identified in Schedule 5.5(c)(ii).
5.6 Fees and Expenses. Whether or
not the Merger is consummated, all Expenses incurred in connection with
this Agreement and the transactions contemplated hereby shall be paid
by the party incurring such Expenses, except (a) if the Merger is
consummated, the Surviving Corporation shall pay, or cause to be paid,
any and all property or transfer taxes
37
imposed on the Company or its
Subsidiaries (b) the Expenses incurred in connection with printing,
filing and mailing to shareholders of the Proxy Statement and the
solicitation of shareholder approvals shall be borne by the Company,
and (c) as provided in Section 7.2. As used in this Agreement,
"Expenses" includes all reasonable out-of-pocket expenses (including,
without limitation, all fees and expenses of counsel, accountants,
investment bankers, experts and consultants to a party hereto and its
affiliates) incurred by a party or on its behalf in connection with or
related to the authorization, preparation, negotiation, execution and
performance of this Agreement and the transactions contemplated hereby,
including the preparation, printing, filing and mailing of the Proxy
Statement and the solicitation of shareholder approvals and all other
matters related to the transactions contemplated hereby.
5.7 Indemnification; Directors' and Officers'
Insurance. The
Surviving Corporation shall cause to be maintained in effect (i) for a
period of six years after the Effective Time, the current provisions
regarding indemnification of officers and directors contained in the
Organizational Documents of the Company and its Subsidiaries and (ii)
for a period of six years, the current policies of directors' and
officers' liability insurance and fiduciary liability insurance
maintained by the Company (provided that the Surviving Corporation may
substitute therefor policies of at least the same coverage and amounts
containing terms and conditions which are, in the aggregate, no less
advantageous to the insured) with respect to claims arising from facts
or events that occurred on or before the Effective Time, provided that
the annual premium therefor is not in excess of 200% of the last annual
premium paid by the Company prior to the date hereof, or if such
premium is in excess of such amount, such policies of directors' and
officers' liability insurance and fiduciary liability insurance providi
ng for as much coverage as can be obtained for such amount.
5.8 Public Announcements. The
Company and Parent shall use reasonable best efforts to develop a joint
communications plan and each party shall use reasonable best efforts to
ensure that, all press releases and other public statements with
respect to the transactions contemplated hereby shall be consistent
with such joint communications plan. Unless otherwise required by
applicable law or by obligations pursuant to any listing agreement with
or rules of any securities exchange, the Company shall consult with,
and use reasonable best efforts to accommodate the comments of, Parent
before issuing any press release or otherwise making any public
statement with respect to this Agreement or the transactions
contemplated hereby.
5.9 Debentures. The Company shall use
its reasonable best efforts to satisfy all of the conditions to the
"covenant defeasance" provisions of Sections 6.1 and 6.1A of the
Indenture as amended by that First Supplemental Indenture, dated as of
April 1, 1996 relating to its 9 3/8% Debentures due 2006 (the
"Debentures") so that such covenant defeasance shall become effective
prior to the Effective Date.
5.10 Affiliate Letters. Prior
to the mailing of the Joint Proxy Statement/Prospectus, the Company
shall deliver to Parent a list of names and addresses of those Persons,
that to the knowledge of the Company, are or may be deemed to be as of
the time of the Company Shareholders' Meeting "affiliates" of the
Company within the meaning of Rule 145
38
under the Securities Act and who
own Company Common Stock. There shall be added to such list the names
and addresses of any other Person subsequently identified by either
Parent or the Company, as the case may be, (unless, in the case of
Parent, an opinion of outside counsel to the Company reasonably
acceptable to Parent is provided to Parent that such Person is not an
affiliate), as a Person who may be deemed to be such an affiliate;
provided, however, that no such Person identified by Parent or the
Company, as the case may be, shall remain on such list of affiliates if
Parent or the Company, as the case may be, shall receive from the other
party, on or before the date of the Company Shareholders' Meeting, an
opinion of outside counsel reasonably satisfactory to Parent to the
effect that such Person is not such an affiliate. The Company shall use
reasonable best efforts to deliver or cause to be delivered to the
other party, prior to the date of the Company Shareholders' Meeting,
from each such affiliate identified in the foregoing lists (as the same
may be supplemented as aforesaid) a letter dated as of the Company
Shareholders' Meeting in the form attached as Annex C hereto
(collectively, the "Affiliate Letter"). Parent shall not be required to
maintain the effectiveness of the S-4 Registration Statement or any
other registration statement under the Securities Act for the purposes
of resale of Parent Common Stock by such affiliates received in the
Merger.
5.11 Year 2000 Compliance The Company will use
reasonable best efforts to continue to take the actions set forth
on Schedule 3.1(o).
ARTICLE VI.
CONDITIONS PRECEDENT
6.1 Conditions to Each Party's Obligation to Effect the
Merger. The
obligations of the Company, Parent and Merger Sub to effect the Merger are
subject to the satisfaction or waiver (by the party benefiting by such
condition) on the Closi ng Date of the following conditions:
(a) Shareholder Approval. The Company shall have
obtained the Required Company Vote.
(b) HSR Act. The waiting period (and any extension
thereof) applicable to the Merger under the HSR Act shall have been
terminated or shall have expired.
(c) No Injunctions or Restraints, Illegality. No temporary
restraining order, preliminary or permanent injunction or other order
issued by a court or other Governmental Entity of competent
jurisdiction shall be in effect and have the effect of making the
Merger illegal or otherwise prohibit ing consummation of the Merger.
(d) Registration Statements/Proxy Statement. The
Registration Statement shall have become effective under the Securities
Act and shall not be the subject of any stop order or proceedings
seeking a stop order. The Proxy Statement shall have been delivered to
the shareholders of the Company in accordance with the requirements
of the Securities Act and the Exchange Act.
39
(e) Tax Opinions. The Company shall have received the opinion
of Latham & Watkins and Parent shall have received the opinion of
Wachtell, Lipton, Rosen & Katz, which opinions shall be dated as of the
Closing Date, to the effect that the Merger will be treated for federal
s income tax purposes as a reorganization within the meaning of Section
368(a) of the Code and substantially in the forms attached to the
Company's and Parent's respective Disclosure Schedules. In rendering
such opinions, such firms may rely upon representations and covenants,
including s those contained in certificates of officers of the Company,
Merger Sub and Parent, which representations and covenants are in form
and substance reasonably acceptable to such counsel.
(f) Listing. The shares of Parent Common Stock to be
issued in the Merger shall have been approved for listing on the
New York Stock Exchange, subject to official notice of issuance.
6.2 Additional Conditions to Obligations of Parent
and Merger Sub. The obligations of Parent and Merger Sub to effect
the Merger are subject to the satisfaction of, or waiver by Parent,
on the Closing s Date, of the following addi tional conditions:
(a) Representations and Warranties. Each of the
representations and warranties of the Company set forth in this
Agreement that is qualified as to materiality or Material Adverse
Effect shall have been true and correct when made and shall be true and
correct on and as of the Closing Date as if made on and as of such date
(other than representations and warranties which address matters only
as of a certain date which shall be true and correct as of such certain
date); and each of the representations and warranties of the Company
that is not so qualified shall have been true and correct in all
material respects when made and shall be true and correct in all
material respects on and as of the Closing Date as if made on and as of
such date (other than representations and warranties which address
matters only as of a certain date which shall be true and correct in
all material respects as of such certain date); and each of the
representations and warranties of the Company set forth in this
Agreement shall be true and correct when made and shall be true and
correct on and as of the Closing Date (ignoring, for such purposes, any
qualification as to materiality, Material Adverse Effect or similar
language), except as could not, individually or in the aggregate with
all other failures to be true and correct, reasonably be expected to
have a Material Adverse Effect on the Company; and Parent and Merger
Sub shall have received a certificate of the chief executive officer
and the chief financial officer of the Company to such effect.
(b) Performance of Obligations. The Company shall have
performed or complied with all agreements and covenants required to be
performed by it under this Agreement at or prior to the Closing Date
that are qualified as to materiality or Material Adverse Effect and
shall have performed or complied in all material respects with all
agreements and covenants required to be performed by it under this
Agreement at or prior to the Closing Date that are not so qualified as
to materiality or Material Adverse Effect, and Parent and Merger Sub
shall have received a certificate of the chief executive officer and
the chief financial officer of the Company to such effect.
40
(c) Contractual Consents. All (i) Required Consents and (ii)
other consents of any Person the failure of which to receive or obtain
(individually or on the aggregate) could reasonably be expected to have
a Material Adverse Effect on the Company shall have been obtained or
given, in each case at not more than immaterial cost and expense to the
Company and Parent and with not more than immaterial alteration of the
Company's or its Subsidiary's rights or obligations under any
agreement, arrangement or instrument.
(d) Dissenting Shares. The number of shares with respec
to which dissenters' rights have been asserted shall not exceed 5% of
the number of outstanding shares of Company Common Stock.
(e) Required Regulatory Approvals. All authorizations,
consents, orders and approvals of, and declarations and filings with,
and all expirations of waiting periods imposed by, any Governmental
Entity (other than the FCC or the appropriate Governmental Entity under
the HSR Act) which, if not obtained in connection with the consummation
of the transactions contemplated hereby, could reasonably be expected
to have a Material Adverse Effect on the Parent or Company
(collectively, "Company Required Regulatory Approvals"), shall have
been obtained, have been declared or filed or have occurred, as the
case may be, and all such Company Required Regulatory Approvals shall
be in full force and effect and shall not have any term, condition or
restriction unacceptable to Parent in its sole discretion (except as
provided in Section 4.2).
(f) FCC Consents. The FCC shall have granted its consent to
the consummation of the transactions contemplated hereby ("FCC
Consents"), such FCC Consents shall have become a Final Order and be in
full force and effect and such FCC Consents shall not have any term,
condition or restriction una cceptable to Parent in its sole discretion
except as provided in Section 4.2.
(g) Affiliate Letters. Parent shall have received an
Affiliate Letter from each Person identified as an affiliate pursuant
to Section 5.10.
(h) Absence of Certain Changes or Events. Since the date of
this Agreement, there shall not have been any event, development or
change of circumstance that constitutes, has had, or could reasonably
be expected to have, individually or in the aggregate, a Material
Adverse Effect on the Comp any.
(j) Suits; Actions. No suit, action, investigation or other
proceeding by any Governmental Entity shall have been instituted and be
pending which imposes, seeks to impose or reasonably would be expected
to impose any remedy, condition or restriction that would have a
Material Adverse Effect on the Company or that would materially
restrict Parent's ownership or operation of the Company (except as
provided in Section 4.2).
(k) Debentures. The Debentures shall have been defeased
(and all conditions thereto satisfied) in
accordance with the covenant defeasance provisions of Sections 6.1 and
6.1A of the Indenture, as
41
amended by that first Supplemental Indenture,
dated as of April 1, 1996, or the Company shall have taken the actions
requested in writi ng by Parent respecting the Debentures (if any) in
lieu thereof.
6.3 Additional Conditions to Obligations of the Company.
The obligations of the Company to effect the Merger are subject to the
satisfaction of, or waiver by the Company on or prior to the Closing
Date of the following additional conditions:
(a) Representations and Warranties. Each of the
representations and warranties of Parent and Merger Sub set forth in
this Agreement that is qualified as to materiality or Material Adverse
Effect shall have been true and correct when made and shall be true and
correct on and as of the Closing Date as if made on and as of such date
(other than representations and warranties which address matters only
as of a certain date which shall be true and correct as of such certain
date), and each of the representations and warranties of each of Parent
and Merger Sub that is not so qualified shall have been true and
correct in all material respects when made and shall be true and
correct in all material respects on and as of the Closing Date as if
made on and as of such date (other than representations and warranties
which address matters only as of a certain date which shall be true and
correct in all material respects as of such certain date), and the
Company shall have received a certificate of and executive officer of
Parent to such effect.
(b) Performance of Obligations of Parent. Parent shall have
performed or complied with all agreements and covenants required to be
performed by it under this Agreement at or prior to the Closing Date
that are qualified as to materiality or Material Adverse Effect and
shall have performed or complied in all material respects with all
agreements and covenants required to be performed by it under this
Agreement at or prior to the Closing Date that are not so qualified as
to materiality, and the Company shall have received a certificate of an
executive officer of Parent to such effect.
(c) Required Regulatory Approvals. All authorizations,
consents, orders and approvals of, and declarations and filings with,
and all expirations of waiting periods imposed by, any Governmental
Entity (other than the FCC or the appropriate Governmental Entity under
the HSR Act) which, if not obtained in connection with the consummation
of the transactions contemplated hereby, could reasonably be expected
to have a Material Adverse Effect on the Parent (collectively, "Parent
Required Regulatory Approvals"), shall have been obtained, have been
declared or filed or have occurred, as the case may be, and all such
Parent Required Regulatory Approvals shall be in full force and effect.
ARTICLE VII.
TERMINATION AND AMENDMENT
7.1 Termination. This Agreement may be
terminated at any time prior to the Effective Time, by action taken or
authorized by the Board of Directors of the terminating party or parties,
whether before or after approval of the matters presented in connection
with the Merger by the shareholders of the Company:
42
(a) By mutual written consent of Parent and the Company,
by action of their respective Boards of Directors;
(b) By either the Company or Parent if the Merger shall not
have been consummated by the date which is 12 months from the date of
this Agreement; provided, however, that such date shall be extended to
the date which is 18 months from the date of this Agreement in the
event all conditions to effect the Merger other than those set forth in
Sections 6.1 (b), 6.1 (c), 6.2 (c), 6.2 (d), 6.2 (e), 6.2 (f), 6.2(j)
and 6.3 (c) (the "Extension Conditions") have been or are capable of
being satisfied at the time of such extension and the Extension
Conditions have been or are reasonably capable of being satisfied on or
prior to the date which is 18 months from the date of this Agreement,
as it may be so extended, shall be referred to herein as the "Outside
Date"); provided further that the right to terminate this Agreement
under this Section 7.1(b) shall not be available to any party whose
failure to fulfill any obligation under this Agreement has been the
cause of, or resulting in, the failure of the Merger to occur on or
before such date;
(c) By either the Company or Parent if any Governmental Entity
shall have issued an order, decree or ruling or taken any other action
(which order, decree, ruling or other action the parties shall have
used their reasonable best effort to resist, resolve or lift, as
applicable, subject to the provisions of Section 5.3 and 4.2)
permanently restraining, enjoining or otherwise prohibiting the
transactions contemplated by this Agreement, and such order, decree,
ruling or other action shall have become final and nonappealable;
(d) By either Parent or the Company if the approval by the
shareholders of the Company required for the consummation of the Merger
or the other transactions contemplated hereby shall not have been
obtained by reason of the failure to obtain the required vote at a duly
held meeting of shareho lders or at any adjournment thereof;
(e) By Parent if (i) the Board of Directors of the Company
shall have withdrawn, or adversely modified, or failed (upon Parent's
request) to reconfirm its recommendation of the Merger or this
Agreement (or determined to do so); (ii) the Board of Directors of the
Company shall have determined to recommend to the shareholders of the
Company that they approve an Acquisition Proposal other than that
contemplated by this Agreement or shall have determined to accept a
Superior Proposal; (iii) a tender offer or exchange officer that, if
successful, would result in any person or "group" becoming a
"beneficial owner" (such terms having the meaning in this Agreement as
is ascribed under Regulation 13D under the Exchange Act) of 20% or more
of the outstanding shares of Company Common Stock is commenced (other
than by Parent or an affiliate of Parent) and the Board of Directors of
the Company fails to recommend that the shareholders of the Company not
tender their shares in such tender or exchange offer; (iv) any person
(other than Parent or an Affiliate of Parent) or "group" becomes the
"beneficial owner" of 20% or more of the outstanding shares of Company
Common Stock; (v) for any reason the Company fails to call or hold the
Company Shareholders Meeting by the Outside Date (provided that
Parent's right to terminate this Agreement under such clause (vi) shall
not be available if at such time the Company would be entitled to
terminate this
43
Agreement under Section 7.1(h)) or (vii) the Company
shall have furnished or caused to be furnished confidential information
or data, or engaged in negotiations or discussions with, another Person
pursuant to clause (b) of the proviso to the second sentence of Section
5.4;
(f) By the Company, prior to the Required Company Vote having
been obtained, if the Board of Directors of the Company determines to
accept a Superior Proposal, but only after the Company (i) provides
Parent with not less than 48 hours notice of its determination to
accept such Superior Proposal including all material terms thereof and
(ii) fulfills its obligations under Section 7.2 hereof upon such
termination (provided that the Company's right to terminate this
Agreement under this paragraph (f) shall not be available if the
Company is then in breach of Section 5.4);
(g) By Parent, if since the date of this Agreement, there
shall have been any event, development or change of circumstance that
constitutes, has had or could reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect on the
Company and such Material Adverse Effect is not cured within 30 days
after written notice thereof or if (i)(A) the Company has breached any
covenant or agreement on the part of the Company or any of its
Subsidiaries set forth in this Agreement, the Voting Agreements or the
Option Agreement, (B) any representation or warranty of the Company or
any of its Subsidiaries set forth in this Agreement, the Voting
Agreements or the Option Agreement that is qualified as to materiality
or Material Adverse Effect shall have become untrue or (C) any
representation or warranty of the Company or any of its Subsidiaries
set forth in this Agreement, the Voting Agreements or the Option
Agreement that is not so qualified shall have become untrue in any
material respect, (ii) such breach or misrepresentation is not cured
within 30 days after written notice thereof and (iii) such breach of
misrepresentation would cause the conditions set forth in Section
6.2(a) or Section 6.2(b) not to be satisfied (a "Terminating Company
Breach");
(h) By the Company, if (i)(A) Parent has breached any covenant
or agreement on the part of Parent or Merger Sub set forth in this
Agreement, the Voting Agreements or the Option Agreement, (B) any
representation or warranty of Parent or Merger Sub that is qualified as
to materiality or Material Adverse Effect shall have become untrue or
(C) any representation or warranty of Parent or Merger Sub that is not
so qualified shall have become untrue in any material respect, (ii)
such breach or misrepresentation is not cured within 30 days after
written notice thereof and (iii) such breach or misrepresentation would
cause the conditions set forth in Section 6.3(a) or Section 6.3(b) not
to be satisfied (a "Terminating Parent Breach"). If at any time after
the Company Shareholders Meeting has been called, a Terminating Parent
Breach exists, and the Company has given Parent notice thereof, the
Company shall have the right to adjourn or delay the Company
Shareholders Meeting until up to 10 days after the Terminating Parent
Breach has been cured or the 30 day cure period has expired.
44
7.2 Effect of Termination.
(a) 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 (other than covenants in Section 4.2 respecting
the Voting Agreements and the Option Agreement) and there shall be no
liability or obligation on the part of Parent or the Company or their
respective officers or directors except (i) with respect to Section
5.6, this Section 7.2 and Article VIII and (ii) with respect to any
liabilities or damages incurred or suffered by a party as a result of
the willful and material breach by the other party of any of its
representations, warranties, covenants or other agreements set forth in
this Agreement.
(b) Parent and the Company agree that if this Agreement
is terminated pursuant to Section 7.1(d), (e), (f) or (g), then the
Company shall pay Parent an amount equal to the sum of Parent's Expenses
up to an amount equal to $2 million.
(c) Parent and the Company agree that if this Agreement
is terminated pursuant to Section 7.1 (h), then Parent shall pay to the
Company an amount equal to the sum of all of the Company's Expenses up
to an amount equal to $2 million.
(d) Payment of expenses pursuant to Section 7.2(b) or 7.2(c)
shall be made not later than two Business Days after delivery to the
other party of notice of demand for payment and a documented
itemization setting forth in reasonable detail all Expenses of the
party entitled to receive payment (which itemization may be
supplemented and updated from time to time by such party until the 60th
day after such party delivers such notice of demand for payment). All
payments under this Section 7.2 shall be made by wire transfer of
immediately available funds to an account designated by the party
entitled to receive payment.
(e) In addition to any payment required by the foregoing
provisions of this Section: (1) in the event that this Agreement is
terminated pursuant to Section 7.1(e) (other than clause (vii) thereof)
or 7.1(f), then the Company shall pay to Parent immediately prior to
such termination, in the case of a termination by the Company, or
within two business days thereafter, in the case of a termination by
Parent, a termination fee of $52.5 million; (2), in the event that this
Agreement is terminated pursuant to Section 7.1(g) or clause (vii) of
Section 7.1(e), then the Company shall pay Parent, no later than two
days after the earlier to occur of (i) the date of entrance by the
Company or any of its Subsidiaries into an agreement concerning a
transaction that constitutes an Acquisition Proposal or (ii) the date
any Person or Persons (other than Parent) purchases 20% or more of the
assets or voting securities (in one or a series of transactions) of the
Company and its Subsidiaries (provided that the entering of any
definitive agreement referred to in clauses (i) and (ii) of this
sentence is entered into by the Company or any of its Subsidiaries, or
if there is no such agreement with respect to a purchase contemplated
by clause (ii), any tender, exchange or other offer or arrangement for
the Company's voting securities is first publicly disclosed, within 12
months of such termination of this Agreement; (provided further,
however, that a financing transaction constituting a sale
45
and leaseback
of communications towers and related equipment shall not constitute a
transaction under clause (i) or (ii) above.)), a termination fee of
$52.5 million; and (3) in the event the Agreement is terminated
pursuant to Section 7.1(d), and none of the events described in clauses
(i) and (ii) of subsection (2) of this Section 7.2(e) has occurred,
then the Company shall pay to Parent, upon such termination, a
termination fee of $30 million, provided however that if, within 12
months of such termination of this Agreement, an event described in
clauses (i) and (ii) of subsection (2) of this Section 7.2(e) occurs
(other than a financing transaction constituting a sale and leaseback
of communications towers and related equipment), then, no later than
two days after the occurrence of any such event, the Company shall pay
Parent an additional termination fee of $22.5 million.
(f) If this Agreement is terminated pursuant to Section
7.1(h) and the Company has defeased the Debentures, then Parent will
pay the Company an amount equal to $4.5 million, plus all Company
Expenses owed pursuant to Section 7.2(c).
(g) If this Agreement is terminated pursuant to Section
7.1(b) and the Company has defeased the Debentures, then Parent will
pay the Company an amount equal to $2.25 million, plus all Company
expenses owed pursuant to Section 7.2(c).
7.3 Amendment. This Agreement may be
amended by the parties hereto, by action taken or authorized by their
respective Boards of Directors, at any time before or after approval of
the matters presented in connection with the Merger by the shareholders
of the Company, but after any such approval, no amendment shall be made
which by law or in accordance with the rules of Nasdaq required further
approval by such shareholders without such further approval. This
Agreement may not be amended except by an instrument in writing signed
on behalf of each of the parties here to.
7.4 Extension; Waiver. At any
time prior to the Effective Time, the parties hereto) by action taken
or authorized by their respective Boards of Directors, may, to the
extent legally allowed) (i) extend the time for the performance of any
of the obligations or other acts of the other parties hereto, (ii)
waive any inaccuracies in the representation and warranties contained
herein or in any document delivered pursuant hereto and (iii) waive
compliance with any of the agreements or conditions contained herein.
Any agreement on the part of a party hereto to any such extension or
waiver shall be valid only if set forth in a written instrument signed
on behalf of such party. 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.
ARTICLE VIII.
GENERAL PROVISIONS
8.1 No Survival of Representations, Warranties and
Agreements.
None of the representations, warranties, covenants and other agreements in
this Agreement or in any instrument delivered pursuant to this Agreement,
including any rights arising out of any breach of such representations,
warranties, covenants and other agreements, shall survive the Effective
Time, except for those covenants and agreements contained herein and
therein that by their terms apply or are to be performed in whole or in
part after the Effective Time and this Article VIII.
46
Nothing in this Section
8.1 shall relieve any party for any breach of any representation, warranty,
covenant or other agreement in this Agreement occurring prior to
termination.
8.2 Notices. All notices and other
communications hereunder shall be in writing and shall be deemed duly given
(a) on the date of delivery if delivered personally, (b) on the first
Business Day following the date of dispatch if delivered by a recognized
next-day courier service, or (c) on the tenth Business Day following the
date of mailing if delivered by registered or certified mail, return
receipt requested, postage prepaid. All notices hereunder shall be
delivered as set forth below, or pursuant to such other instructions as may
he designated in writing by the pa rty to receive such notice:
(a) if to Parent or Merger Sub, to AT&T Corp., 295 North
Maple Avenue, Basking Ridge, New Jersey, 07920,
Attention: Marilyn Wasser, Facsimile No. (908) 221-6618
with copies to Wachtell, Lipton, Rosen & Katz, 51 West
52nd Street, New York, New York, 10019, Attention:
David M. Silk, Facsimile No . (212) 403-2000;
(b) if to the Company, to Vanguard Cellular Systems, Inc.,
2002 Pisgah Church Road, Suite 300, Greensboro, North
Carolina, 27455, Attention: Richard C. Rowlenson,
Facsimile No. (336) 545-2219 with a copy to Latham &
Watkins, 885 Third Avenue, New York, New York, 10022,
Attention: Raymond Y. Lin, Facsimile No.: (212)
751-4864.
8.3 Interpretation. When a reference
is made in this Agreement to Sections, Exhibits or Schedules, such
reference shall be to a Section of or Exhibit or Schedule to this
Agreement unless otherwise indicated. The table of Contents, glossary
of defined terms and headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. Whenever the words "include",
"includes" or "including" are used in this Agreement, they shall be
deemed to be followed by the words "without limit ation".
8.4 Counterparts. This Agreement may
be executed in one or more counterparts, all of which shall be
considered one and the same agreement and shall become effective when
one or more counterparts have been signed by each of the parties and
delivered to the other party, it being u nderstood that both parties
need not sign the same counterpart.
8.5 Entire Agreement; No Third Party
Beneficiaries.
(a) 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 hereof,
other than the confidentiality agreement and Option Agreement entered
into by Parent and the Company in connection with the transactions
contemplated hereby, which shall survive the execution and delivery of
this Agreement.
(b) This Agreement shall be binding upon and inure solely to
the benefit of each party hereto, and nothing in this Agreement,
express or implied, is intended to or shall confer upon any other
Person any right, benefit or remedy of any nature whatsoever
47
under or
by reason of this Agreement, other than Section 5.7 (which is intended
to be for the benefit of the Persons covered thereby and may be
enforced by such Persons).
8.6 Governing Law. Except as to
matters of internal corporation law, which shall be governed by the
laws of the State of North Carolina, in the case of the Company, New
York in the case of Parent and Delaware in the case of Merger Sub, this
Agreement shall be governed and construed in accordance with the laws
of the State of New York without giving effect to the principles of
choice-of-law thereof.
8.7 Severability. If any term or other
provision of this Agreement is invalid, illegal or incapable of being
enforced by any law or public policy, all other terms and provisions of
this Agreement shall nevertheless remain in full force and effect so
long as the economic or legal substance of the transactions
contemplated hereby is not affected in any manner materially adverse to
any party. Upon such determination that any term or other provision is
invalid, illegal or incapable of being enforced, the parties hereto
shall negotiate in good faith to modify this Agreement so as to effect
the original intent of the parties as closely as possible in an
acceptable manner in order that the transactions contemplated hereby
are consummated as originally contemplated to the greatest extent
possible.
8.8 Assignment. Neither this Agreement
nor any of the rights, interests or obligations hereunder shall be
assigned by any of the parties hereto, in whole or in part (whether by
operation of law or otherwise), without the prior written consent of
the other parties, and any attempt to make any such assignment without
such consent shall be null and void, except that Merger Sub may assign,
in its sole discretion, any or all of its rights, interests and
obligations under this Agreement to any direct or indirect wholly owned
Subsidiary of Parent without the consent of the Company, 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.
8.9 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. It is accordingly agreed that the parties shall be entitled to
specific performance of the terms hereof, this being in addition to any
other remedy to which they are entitled at law or in equity. o
8.10 Definitions. As used in this Agreement:
(a) "Board of Directors" means the Board of Directors
of any specified Person and any properly serving and acting committees
thereof.
(b) "Business Day" means any day on which banks are not
required or authorized to close in the City of New York.
(c) "Material Adverse Effect" means, with respect to any
entity, any adverse change, circumstance or effect that, individually
or in the aggregate with all other adverse
48
changes, circumstances and
effects, is or is reasonably likely to be materially adverse to the
business, o operations, assets, liabilities (including, without
limitation, contingent liabilities), financial condition or results of
operations of such entity and its Subsidiaries taken as a whole or
could reasonably be expected to prevent or materially delay (beyond the
Outside Date) consummation of the transactions contemplated by this
Agreement, other than any such changes, circumstances and effects to
the extent arising out of changes, circumstances or effects occurring
after, which did not occur before, the Approval Satisfaction Date from
(i) general economic conditions, or (ii) changes in the wireless
communications business generally that do not, in either case,
significantly disproportionately affect the Company.
(d) "Approval Satisfaction Date" means the date not before six
months from the date hereof, on which all conditions to the Closing
under Section 6.1 and 6.2 have been satisfied or waived (other than
6.1(d), 6.1(e), 6.1(f) and 6.1(a), provided that the failure to satisfy
6.1(a) is due to Parent's failure to cause 6.1(d) to occur and not as a
result of the Company's actions or failure to take action).
(e) "Final Order" means an order of the FCC approving the
transfer of control with respect to all FCC licenses, permits and other
authorizations held by the Company, and shall be deemed to be a Final
Order when the time for the filing of any protest, request for stay,
petition or request for reconsideration, petition for rehearing or
appeal of such FCC order to the FCC or any Governmental Authority
having jurisdiction over such order, and the time for review or
reconsideration by the FCC on its own motion, has expired and no
protest, request for stay, petition or request for reconsideration,
petition for rehearing or appeal or review of such order is pending.
(f) "Knowledge" or "to the knowledge" of the Company
means the actual knowledge of the any of the persons specified in
Schedule 8.10(f) after reasonable inquiry.
(g) "the other party" means, with respect to the Company,
Parent and means, with respect to Parent, the Company.
(h) "Organizational Documents" means, with respect to
any entity, the articles of incorporation, by-laws, partnership or
limited liability company agreement and other governing documents of
such entity, as applicable.
(i) "Person" means an individual, corporation, partnership,
association, trust, unincorporated organization, entity or group
(as defined in the Exchange Act).
(j) "Required Consents" means the consents to the
agreements set forth in Schedule 8.10(j).
(k) "Subsidiary" when used with respect to any party means any
corporation, partnership or other organization, whether incorporated or
unincorporated, (i) of which such party or any other Subsidiary of such
party is a general partner (excluding
49
partnerships, the general
partnership interests of which held by such party or any Subsidiary of
such party do not have a majority of the voting and economic interests
in such partnership) or (ii) at least a majority of the securities or
other interests of which having by their terms ordinary voting power to
elect a majority of the Board of Directors or others performing similar
functions with respect to such corporation, partnership or other
organization is directly or indirectly owned or control led by such
party or by any one or more of its Subsidiaries, or by such party and
one or more of its Subsidiaries. Not withstanding the above, nothing
contained in this Agreement shall be construed such that International
Wireless Corporation Holdings, Inc. or any of its subsidiaries may be
deemed to be a Subsidiary of the Company.
(l) (i) "Tax" (including, with correlative meaning, the terms
"Taxes" and "Taxable") means all federal, state, local and foreign
income, profits, franchise, gross receipts, environmental, customs
duty, capital stock, severance, stamp, payroll, sales, employment,
unemployment disability, use, property, withholding, excise,
production, value added, occupancy and other taxes, duties or
assessments of any nature whatsoever, together with all interest,
penalties, fines and additions to tax imposed with respect to such
amounts and any interest in respect of such penalties and additions to
tax, and (ii) "Tax Return" means all returns and reports (including
elections, claims, declarations, disclosures, schedules, estimates,
computations and information returns) required to be supplied to a Tax
authority in any jurisdiction relating to Taxes.
(m) "Company Disclosure Schedule" means a disclosure schedule
delivered by the Company to Parent at the execution of this Agreement,
which is incorporated by reference into, and constitutes a part of,
this Agreement. Reference to particular "Schedules" are references to
schedules contained in the Company Disclosure Schedule.
50
IN WITNESS WHEREOF, Parent, the Company and Merger Sub have caused this
Agreement to be signed by their respective officers thereunto duly authorized,
all as of October 2, 1998.
AT&T CORP.
By:/s/ Michael Berg
Name: Michael Berg
Title: Assistant Secretary
WINSTON, INC.
By: /s/Michael Berg
Name: Michael Berg
Title: Vice President
VANGUARD CELLULAR SYSTEMS, INC.
By:
Name:
Title:
Confirmed and accepted as of the date first written above:
By: /s/Stephen R. Leeolou
Name:Stephen R. Leeolou
Title: President and
Chief Executive Officer