Exhibit 2.1
[Execution Version]
AGREEMENT AND PLAN OF MERGER
Among
BELLSOUTH CORPORATION,
AT&T INC.
and
ABC CONSOLIDATION CORP.
Dated as of March 4, 2006
TABLE OF CONTENTS
PAGE
ARTICLE I
THE MERGER; CLOSING; EFFECTIVE TIME
1.1 The Merger...................................................... 1
1.2 Closing......................................................... 2
1.3 Effective Time.................................................. 2
ARTICLE II
ARTICLES OF INCORPORATION AND BY-LAWS OF THE SURVIVING CORPORATION
2.1 The Articles of Incorporation................................... 2
2.2 The By-Laws..................................................... 2
ARTICLE III
OFFICERS AND DIRECTORS
3.1 Directors of Surviving Corporation.............................. 2
3.2 Officers of Surviving Corporation............................... 2
3.3 Parent Board of Directors/Company Executive Officers............ 3
ARTICLE IV
EFFECT OF THE MERGER ON CAPITAL STOCK; EXCHANGE OF CERTIFICATES
4.1 Effect on Capital Stock......................................... 3
4.2 Exchange of Certificates for Shares............................. 4
4.3 Adjustments to Prevent Dilution................................. 7
4.4 Company Stock Based Plans....................................... 7
ARTICLE V
REPRESENTATIONS AND WARRANTIES
5.1 Representations and Warranties of the Company................... 9
5.2 Representations and Warranties of Parent and Merger Sub......... 24
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PAGE
ARTICLE VI
COVENANTS
6.1 Interim Operations.............................................. 35
6.2 Acquisition Proposals........................................... 42
6.3 Information Supplied............................................ 48
6.4 Shareholders/Stockholders Meetings.............................. 48
6.5 Filings; Other Actions; Notification............................ 49
6.6 Access; Consultation............................................ 51
6.7 Affiliates...................................................... 52
6.8 Stock Exchange Listing and De-listing........................... 52
6.9 Publicity....................................................... 52
6.10 Employee Benefits............................................... 52
6.11 Expenses........................................................ 54
6.12 Indemnification; Directors' and Officers' Insurance............. 54
6.13 Regulatory Compliance........................................... 56
6.14 Takeover Statute; Rights Agreement.............................. 56
6.15 Dividends....................................................... 56
6.16 Control of the Company's or Parent's Operations................. 56
6.17 Section 16(b)................................................... 57
6.18 Tax-Free Qualification.......................................... 57
6.19 Tax Representation Letters...................................... 57
6.20 Cingular Headquarters........................................... 58
6.21 Direct Investment Plan.......................................... 58
ARTICLE VII
CONDITIONS
7.1 Conditions to Each Party's Obligation to Effect the Merger...... 58
7.2 Conditions to Obligations of Parent and Merger Sub.............. 59
7.3 Conditions to Obligation of the Company......................... 61
7.4 Invoking Certain Conditions..................................... 62
ARTICLE VIII
TERMINATION
8.1 Termination by Mutual Consent................................... 62
8.2 Termination by Either Parent or the Company..................... 62
8.3 Termination by the Company...................................... 62
8.4 Termination by Parent........................................... 63
8.5 Effect of Termination and Abandonment........................... 64
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PAGE
ARTICLE IX
MISCELLANEOUS AND GENERAL
9.1 Survival........................................................ 66
9.2 Modification or Amendment....................................... 66
9.3 Waiver of Conditions............................................ 67
9.4 Counterparts.................................................... 67
9.5 GOVERNING LAW AND VENUE; WAIVER OF JURY TRIAL................... 67
9.6 Notices......................................................... 68
9.7 Entire Agreement................................................ 69
9.8 No Third Party Beneficiaries.................................... 69
9.9 Obligations of Parent and of the Company........................ 69
9.10 Severability.................................................... 69
9.11 Interpretation.................................................. 70
9.12 Captions........................................................ 70
9.13 Specific Performance............................................ 70
9.14 Assignment...................................................... 70
Exhibit A Form of Amended and Restated Charter of Surviving Corporation
Exhibit B Form of Affiliate Agreement
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Index of Defined Terms
Defined Term Section
------------ -------
Acquiring Person 8.5(b)
Acquisition Proposal 6.2(b)
Affected Employees 6.10(a)
Agreement Preamble
Bankruptcy and Equity Exception 5.1(c)
By-Laws 2.2
Certificate 4.1(a)
Certificate of Merger 1.3
Charter 2.1
Cingular 5.1(a)(i)
Closing 1.2
Closing Date 1.2
Code Recitals
Common Stock Unit 5.1(b)(i)
Communications Act 5.1(d)(i)
Company Preamble
Company Awards 4.4(b)
Company Compensation and Benefit Plans 5.1(h)(i)
Company Current Properties 5.1(l)(ii)
Company Direct Investment Plan 5.1(b)(i)
Company Disclosure Letter 5.1
Company Employees 5.1(h)(i)
Company ERISA Affiliate 5.1(h)(iii)
Company Former Properties 5.1(l)(iii)
Company Material Adverse Effect 5.1(a)(ii)
Company Non U.S. Compensation and Benefit Plans 5.1(h)(i)
Company Option 4.4(a)
Company Preferred Shares 5.1(b)(i)
Company Recommendation 5.1(c)
Company Recommendation Change 6.2(c)(ii)
Company Region 5.1(a)
Company Reports 5.1(e)(i)
Company Requisite Vote 5.1(c)
Company Share 4.1(a)
Company Shares 4.1(a)
Company Stock Plans 4.4(a)
Company Shareholders Meeting 6.4(a)
Company Superior Proposal Action 6.2(c)(ii)
Company U.S. Compensation and Benefit Plans 5.1(h)(ii)
Computer Software 5.1(p)(1)
Confidentiality Agreement 6.2(a)
Contracts 5.1(d)(ii)
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Defined Term Section
------------ -------
Covered Proposal 8.5(b)
Current Premium 6.12(c)
D&O Insurance 6.12(c)
EC Merger Regulation 5.1(d)(i)
Effective Time 1.3
Environmental Law 5.1(l)
ERISA 5.1(h)(i)
ERISA Plans 5.1(h)(ii)
Exchange Act 5.1(d)(i)
Exchange Agent 4.2(a)
Exchange Fund 4.2(a)
Exchange Ratio 4.1(a)
Excluded Company Shares 4.1(a)
FCC 5.1(d)(i)
FCC Rules 6.13(a)
Final Order 7.2(e)
GAAP 5.1(e)(iii)
GBCC 1.1
Governmental Consents 7.1(c)
Governmental Entity 5.1(d)(i)
Hazardous Substance 5.1(l)
HSR Act 5.1(b)(ii)
Indemnified Parties 6.12(a)
Information Technology 5.1(p)(2)
Intellectual Property 5.1(p)(3)
IRS 5.1(h)(i)
Laws 5.1(i)
Licenses 5.1(i)
Lien 5.1(b)(ii)
Merger Recitals
Merger Consideration 4.1(a)
Merger Sub Preamble
Multiemployer Plan 5.1(h)(ii)
New Plans 6.10(b)
Order 7.1(d)
Parent Preamble
Parent Acquiring Person 8.5(c)
Parent Covered Proposal 8.5(c)
Parent Recommendation Change 6.2(d)
Parent Common Stock 4.1(a)
Parent Common Stock Unit 5.2(b)(i)
Parent Compensation and Benefit Plan 5.2(h)(i)
Parent Current Properties 5.2(k)
Parent Disclosure Letter 5.2
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Defined Term Section
------------ -------
Parent Employees 5.2(h)(i)
Parent ERISA Affiliate 5.2(h)(iii)
Parent Former Properties 5.2(k)
Parent Material Adverse Effect 5.2(a)
Parent Non U.S. Compensation and Benefit Plans 5.2(h)(i)
Parent Option 5.2(b)(i)
Parent Preferred Stock 5.2(b)(i)
Parent Recommendation 5.2(c)
Parent Regions 5.2(a)
Parent Reports 5.2(e)(i)
Parent Requisite Vote 5.2(c)
Parent Stockholders Meeting 6.4(a)
Parent Superior Proposal Action 6.2(d)
Parent U.S. Compensation and Benefit Plans 5.2(h)(ii)
Pension Plan 5.1(h)(ii)
Person 4.2(b)
Prior Plan 6.10(b)
Prospectus/Proxy Statement 6.3(a)
PUC 5.1(d)(i)
Receiving Party 6.2(g)
Regulatory Material Adverse Effect 6.5(b)
Representatives 6.2(a)
Required Governmental Consents 7.1(c)
Rights Agreement 5.1(b)(i)
S-4 Registration Statement 6.3(a)
▇▇▇▇▇▇▇▇-▇▇▇▇▇ 5.1(e)(i)
SEC 4.4(c)
Securities Act 4.4(c)
Significant Subsidiary 5.1(b)(ii)
Subsidiary 5.1(a)(i)
Successor Plan 6.10(b)
Superior Proposal 6.2(b)
Surviving Corporation 1.1
Takeover Statute 5.1(k)
T 5.2(e)(i)
T Reports 5.2(e)(i)
Tax 5.1(n)
Tax Return 5.1(n)
Taxes 5.1(n)
Termination Date 8.2
Termination Fee 8.5(b)
Uncertificated Company Share 4.1(a)
Utilities Laws 5.1(d)(i)
▇▇.▇▇▇ 5.1(a)(i)
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER (hereinafter called this "Agreement"),
dated as of March 4, 2006 among BellSouth Corporation, a Georgia corporation
(the "Company"), AT&T Inc., a Delaware corporation ("Parent"), and ABC
Consolidation Corp., a Georgia corporation and a wholly-owned Subsidiary of
Parent ("Merger Sub").
RECITALS
WHEREAS, the Board of Directors of Parent has approved, and the
Boards of Directors of the Company and Merger Sub have adopted, this Agreement
providing for the merger of Merger Sub with and into the Company (the "Merger");
WHEREAS, the Board of Directors of Parent has resolved to submit to
the stockholders of Parent for their approval the issuance of shares of Parent
Common Stock (as defined below) in the Merger and the Board of Directors of the
Company has resolved to submit this Agreement to the shareholders of the Company
for their approval;
WHEREAS, it is intended that, for federal income tax purposes, the
Merger shall qualify as a reorganization under the provisions of Section 368(a)
of the Internal Revenue Code of 1986, as amended, and the rules and regulations
promulgated thereunder (the "Code"), and that this Agreement will be, and hereby
is, adopted as a plan of reorganization; and
WHEREAS, the Company, Parent and Merger Sub desire to make certain
representations, warranties, covenants and agreements in connection with this
Agreement.
NOW, THEREFORE, in consideration of the premises, and of the
representations, warranties, covenants and agreements contained herein, the
parties hereto agree as follows:
ARTICLE I
THE MERGER; CLOSING; EFFECTIVE TIME
1.1 The Merger. Upon the terms and subject to the conditions set
forth in this Agreement, at the Effective Time, Merger Sub shall be merged with
and into the Company and the separate corporate existence of Merger Sub shall
thereupon cease. The Company shall be the surviving corporation in the Merger
(sometimes hereinafter referred to as the "Surviving Corporation"), and the
Company shall continue its separate corporate existence under the laws of the
state of Georgia, and all its rights, privileges, immunities, powers and
franchises shall continue unaffected by the Merger, except as set forth in
Article III hereof. The Merger shall have the effects specified in the Georgia
Business Corporation Code, as amended (the "GBCC").
1.2 Closing. The closing of the Merger (the "Closing") shall take
place (i) at the offices of ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇,
▇▇▇ ▇▇▇▇ ▇▇▇▇▇ at 8:00 a.m. local time on the first business day after the date
on which the last to be satisfied or waived of the conditions set forth in
Article VII shall be satisfied or waived in accordance with this Agreement
(other than those conditions that by their nature are to be satisfied at the
Closing, but subject to the satisfaction or waiver of those conditions), or (ii)
at such other place and time and/or on such other date as the Company and Parent
may otherwise agree in writing (the date on which the Closing occurs, the
"Closing Date").
1.3 Effective Time. At the Closing, the Company and Merger Sub will
cause a Certificate of Merger (the "Certificate of Merger") to be completed,
executed, acknowledged and filed with the Secretary of State of the State of
Georgia as provided in Sections 14-2-1105(b) and Section 14-2-1105.1 of the
GBCC. The Merger shall become effective at the time when the Certificate of
Merger has been duly filed with the Secretary of State of Georgia or such other
time as shall be agreed upon by the parties hereto in writing and set forth in
the Certificate of Merger in accordance with the GBCC (the "Effective Time").
ARTICLE II
ARTICLES OF INCORPORATION AND BY-LAWS
OF THE SURVIVING CORPORATION
2.1 The Articles of Incorporation. At the Effective Time, the
articles of incorporation of the Surviving Corporation (the "Charter") shall be
amended in its entirety to read as set forth in Exhibit A hereto, until
thereafter amended as provided therein or by applicable Law.
2.2 The By-Laws. The by-laws of Merger Sub in effect at the
Effective Time shall be the by-laws of the Surviving Corporation (the
"By-Laws"), until thereafter amended as provided therein or by applicable Law.
ARTICLE III
OFFICERS AND DIRECTORS
3.1 Directors of Surviving Corporation. The directors of Merger Sub
at the Effective Time shall, from and after the Effective Time, be the directors
of the Surviving Corporation until their successors have been duly elected or
appointed and qualified or until their earlier death, resignation or removal in
accordance with the Charter and the By-Laws.
3.2 Officers of Surviving Corporation. The officers of the Company
at the Effective Time shall, from and after the Effective Time, be the officers
of the Surviving Corporation until their successors have been duly elected or
appointed and
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qualified or until their earlier death, resignation or removal in accordance
with the Charter and the By-Laws.
3.3 Parent Board of Directors/Company Executive Officers. (a) The
Board of Directors of Parent shall take all actions necessary under the
certificate of incorporation and bylaws of Parent to appoint three members of
the Board of Directors of the Company selected by mutual agreement of Parent and
the Company as directors of Parent as of the Effective Time, to serve as
directors of Parent until their successors shall have been duly elected or
appointed and qualified or until their earlier death, resignation or removal in
accordance with the certificate of incorporation and bylaws of Parent and
applicable Law.
(b) Parent shall offer to each "Executive Officer" of the Company
(as listed in the Company's Form 10-K for the period ended December 31, 2005)
(other than the Chief Executive Officer of the Company), the opportunity to
become a senior officer of Parent or a Subsidiary of Parent immediately after
the Effective Time on the basis described in Section 3.3(b) of the Company
Disclosure Letter.
ARTICLE IV
EFFECT OF THE MERGER ON CAPITAL STOCK; EXCHANGE OF CERTIFICATES
4.1 Effect on Capital Stock. At the Effective Time, as a result of
the Merger and without any action on the part of the holder of any capital stock
of the Company:
(a) Merger Consideration. Each share of Common Stock, par value
$1.00 per share, of the Company (each, a "Company Share", and together, the
"Company Shares") issued and outstanding immediately prior to the Effective Time
(other than Company Shares that are owned by Parent or by the Company or any
direct or indirect wholly-owned Subsidiary of the Company and in each case not
held on behalf of third parties (collectively, "Excluded Company Shares")) shall
be converted into and become exchangeable for 1.325 (the "Exchange Ratio")
common shares, par value $1.00 per share, of Parent ("Parent Common Stock") (the
shares of Parent Common Stock into which each Company Share is to be converted,
the "Merger Consideration"). At the Effective Time, all Company Shares shall no
longer be outstanding, shall be cancelled and retired and shall cease to exist,
and (A) each certificate (a "Certificate") formerly representing any of such
Company Shares (other than Excluded Company Shares) and (B) each uncertificated
Company Share (an "Uncertificated Company Share") registered to a holder on the
stock transfer books of the Company (other than Excluded Company Shares), shall
thereafter represent only the right to the Merger Consideration and the right,
if any, to receive pursuant to Section 4.2(e) cash in lieu of fractional shares
into which such Company Shares have been converted pursuant to this Section
4.1(a) and any distribution or dividend pursuant to Section 4.2(c), in each case
without interest.
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(b) Cancellation of Shares. Each Excluded Company Share shall, by
virtue of the Merger and without any action on the part of the holder thereof,
no longer be outstanding, shall be cancelled and retired without payment of any
consideration therefor and shall cease to exist.
(c) Merger Sub. At the Effective Time, each share of Common Stock,
par value $1.00 per share, of Merger Sub issued and outstanding immediately
prior to the Effective Time shall be converted into one share of Common Stock of
the Surviving Corporation.
4.2 Exchange of Certificates for Shares.
(a) Exchange Agent. As of the Closing, Parent shall deposit, or
shall cause to be deposited, with an exchange agent selected by Parent (the
"Exchange Agent"), for the benefit of the holders of Company Shares (other than
Excluded Company Shares), certificates representing the shares of Parent Common
Stock to be exchanged for Company Shares (other than Excluded Company Shares) in
respect of the aggregate Merger Consideration to be issued in the Merger and any
dividends or other distributions with respect to the Parent Common Stock to be
paid or to be issued pursuant to Section 4.2(c) or 4.2(e) in exchange for
Company Shares (other than Excluded Company Shares) (such cash and certificates
for shares of Parent Common Stock, together with the amount of any cash payable
pursuant to Section 4.2(e) in lieu of fractional shares and dividends or other
distributions payable with respect thereto pursuant to Section 4.2(c), being
hereinafter referred to as the "Exchange Fund"). With respect to the amount of
cash to be deposited as of the Closing to satisfy its obligations under Section
4.2(e), Parent shall only be required to make a reasonable estimate of the
amount of such cash that will be necessary.
(b) Exchange Procedures. Parent shall cause transmittal materials
reasonably agreed upon by Parent and the Company prior to the Closing to be
mailed as soon as reasonably practicable after the Effective Time by the
Exchange Agent to each holder of record as of the Effective Time of Company
Shares (other than Excluded Company Shares) represented by Certificates. Such
transmittal materials shall advise the holders of such Company Shares of the
effectiveness of the Merger and the procedure for surrendering the Certificates
to the Exchange Agent. Upon the surrender of a Certificate (or affidavit of loss
in lieu thereof in accordance with Section 4.2(g)) to the Exchange Agent in
accordance with the terms of the transmittal materials, the holder of the
Certificate shall be entitled to receive in exchange, and in respect of, such
Certificate (i) a certificate representing that number of whole shares of Parent
Common Stock that such holder is entitled to receive pursuant to this Article
IV, (ii) a check in the amount (after giving effect to any required tax
withholdings) of (A) any cash payable pursuant to Section 4.2(e) in lieu of
fractional shares plus (B) any unpaid dividends or other distributions with
respect to the Parent Common Stock that such holder has the right to receive
pursuant to Section 4.2(c), and, in each case, the Certificate so surrendered
shall forthwith be cancelled. No interest will be paid or accrued on any amount
payable upon
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due surrender of the Certificates. In the event of a transfer of ownership of
Company Shares that is not registered in the transfer records of the Company, a
certificate representing the proper number of shares of Parent Common Stock,
together with a check for any cash to be paid upon due surrender of the
Certificate and any other dividends or distributions in respect thereof, may be
issued and/or paid to such a transferee if the Certificate formerly representing
such Company Shares is presented to the Exchange Agent, accompanied by all
documents required to evidence and effect such transfer and to evidence that any
applicable stock transfer Taxes have been paid. If any certificate for shares of
Parent Common Stock is to be issued in a name other than that in which the
Certificate surrendered in exchange therefor is registered, it shall be a
condition of such exchange that the Person requesting such exchange shall pay
any transfer or other Taxes required by reason of the issuance of certificates
representing shares of Parent Common Stock in a name other than that of the
registered holder of the Certificate surrendered, or shall establish to the
satisfaction of Parent or the Exchange Agent that such Tax has been paid or is
not applicable.
For the purposes of this Agreement, the term "Person" shall mean any
individual, corporation (including not-for-profit), general or limited
partnership, limited liability company, joint venture, estate, trust,
association, organization, Governmental Entity or other entity of any kind or
nature.
(c) Distributions with Respect to Unexchanged Shares; Voting.
(i) Whenever a dividend or other distribution is declared by Parent
in respect of Parent Common Stock, the record date for which is at or after the
Effective Time, that declaration shall include dividends or other distributions
in respect of all shares of Parent Common Stock issuable pursuant to this
Agreement. No dividends or other distributions in respect of such Parent Common
Stock shall be paid to any holder of any unsurrendered Certificate until such
Certificate is surrendered for exchange in accordance with this Article IV.
Subject to the effect of applicable Laws, following surrender of any such
Certificate, there shall be issued and/or paid to the holder of the certificates
representing whole shares of Parent Common Stock issued in exchange therefor,
without interest, (A) at the time of such surrender, the dividends or other
distributions with a record date after the Effective Time and a payment date on
or prior to the date of issuance of such whole shares of Parent Common Stock and
not previously paid with respect to such shares and (B) at the appropriate
payment date, the dividends or other distributions payable with respect to such
whole shares of Parent Common Stock with a record date after the Effective Time
but with a payment date subsequent to surrender.
(ii) Registered holders of unsurrendered Certificates shall be
entitled to vote after the Effective Time at any meeting of Parent's
stockholders with a record date at or after the Effective Time the number of
whole shares of Parent Common Stock represented by such Certificates, as the
case may be, regardless of whether such holders have surrendered their
Certificates or delivered duly executed transmittal materials.
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(d) Transfers. After the Effective Time, there shall be no transfers
on the stock transfer books of the Company of the Company Shares that were
outstanding immediately prior to the Effective Time.
(e) Fractional Shares. Notwithstanding any other provision of this
Agreement, no fractional shares of Parent Common Stock will be issued and any
holder of Company Shares entitled to receive a fractional share of Parent Common
Stock but for this Section 4.2(e) shall be entitled to receive an amount in cash
(without interest) determined by multiplying such fraction (rounded to the
nearest one-hundredth of a share) by the average of the closing price of a share
of Parent Common Stock, as reported in the Wall Street Journal, New York City
edition, for the five trading days ending on the trading day immediately prior
to the Effective Time.
(f) Termination of Exchange Period; Unclaimed Stock. Any portion of
the Exchange Fund (including the proceeds of any investments thereof and any
shares of Parent Common Stock) that remains unclaimed by the shareholders of the
Company 180 days after the Effective Time shall be delivered, at Parent's
option, to Parent. Any shareholders of the Company who have not theretofore
complied with this Article IV shall thereafter look only to Parent for delivery
of any shares of Parent Common Stock and payment of any cash, dividends and
other distributions in respect thereof payable or deliverable pursuant to
Section 4.1, Section 4.2(c) and Section 4.2(e) upon due surrender of their
Certificates (or affidavits of loss in lieu thereof), in each case, without any
interest thereon. Notwithstanding the foregoing, none of Parent, the Surviving
Corporation, the Exchange Agent or any other Person shall be liable to any
former holder of Company Shares for any amount properly delivered to a public
official pursuant to applicable abandoned property, escheat or similar Laws.
(g) Lost, Stolen or Destroyed Certificates. In the event 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 the posting by such Person of a bond in the form
customarily required by Parent as indemnity against any claim that may be made
against it with respect to such Certificate, Parent will issue the shares of
Parent Common Stock, and the Exchange Agent will issue any cash, dividends and
other distributions in respect thereof issuable and/or payable in exchange for
such lost, stolen or destroyed Certificate pursuant to this Agreement.
(h) Uncertificated Company Shares. Parent shall cause the Exchange
Agent to (i) issue in registered form, as of the Effective Time, to each holder
of Uncertificated Company Shares that number of whole shares of Parent Common
Stock that such holder is entitled to receive in respect of each such
Uncertificated Company Share pursuant to this Article IV and (ii) mail to each
such holder materials (to be reasonably agreed by Parent and the Company prior
to the Effective Time) advising such holder of the effectiveness of the Merger
and the conversion of their Company Shares into Merger Consideration pursuant to
the Merger and a check in the amount (after giving effect to any required tax
withholdings) for any cash payable pursuant to Section 4.2(e) in
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lieu of fractional shares in respect of each such Uncertificated Company Share,
in each case without any action by such holders.
4.3 Adjustments to Prevent Dilution. In the event that prior to the
Effective Time there is a change in the number of Company Shares or shares of
Parent Common Stock or securities convertible or exchangeable into or
exercisable for Company Shares or shares of Parent Common Stock issued and
outstanding as a result of a distribution, reclassification, stock split
(including a reverse split), stock dividend or distribution, recapitalization,
merger, subdivision, issuer tender or exchange offer, or other similar
transaction, the Merger Consideration shall be equitably adjusted to eliminate
the effects of such event on the Merger Consideration.
4.4 Company Stock Based Plans.
(a) At the Effective Time, each outstanding option to purchase
Company Shares (a "Company Option") under the Company Compensation and Benefit
Plans identified in Section 5.1(b) of the Company Disclosure Letter as being the
only Company Compensation and Benefit Plans pursuant to which Company Shares may
be issued or benefits measured by the value of Company Shares may be obtained
(the "Company Stock Plans"), whether vested or unvested, shall be converted into
an option to acquire a number of shares of Parent Common Stock equal to the
product (rounded up to the nearest whole number) of (x) the number of Company
Shares subject to the Company Option immediately prior to the Effective Time and
(y) the Exchange Ratio, at an exercise price per share (rounded down to the
nearest whole cent) equal to (A) the exercise price per Company Share of such
Company Option immediately prior to the Effective Time divided by (B) the
Exchange Ratio; provided, however, that the exercise price and the number of
shares of Parent Common Stock purchasable pursuant to the Company Options shall
be determined in a manner consistent with the requirements of Section 409A of
the Code; provided, further, that in the case of any Company Option to which
Section 422 of the Code applies, the exercise price and the number of shares of
Parent Common Stock purchasable pursuant to such option shall be determined in
accordance with the foregoing, subject to such adjustments as are necessary in
order to satisfy the requirements of Section 424(a) of the Code. Except as
specifically provided above, following the Effective Time, each Company Option
shall continue to be governed by the same terms and conditions as were
applicable under such Company Option immediately prior to the Effective Time. At
or prior to the Effective Time, the Company shall adopt appropriate amendments
to the Company Stock Plans, if necessary, and the Board of Directors of the
Company shall adopt appropriate resolutions, if necessary, to effectuate the
provisions of this Section 4.4(a). Parent shall take all actions as are
necessary for the assumption of the Company Stock Plans pursuant to this Section
4.4, including the issuance (subject to Section 4.4(c)) and listing of Parent
Common Stock as necessary to effect the transactions contemplated by this
Section 4.4.
(b) At the Effective Time, each right of any kind, contingent or
accrued, to acquire or receive Company Shares or benefits measured by the value
of
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Company Shares, and each award of any kind consisting of Company Shares that may
be held, awarded, outstanding, payable or reserved for issuance under the
Company Stock Plans, other than Company Options and outstanding performance
shares (the "Company Awards"), shall be deemed to be converted into the right to
acquire or receive benefits measured by the value of (as the case may be) the
number of shares of Parent Common Stock equal to the product of (x) the number
of Company Shares subject to such Company Award immediately prior to the
Effective Time and (y) the Exchange Ratio, and each such right shall otherwise
be subject to the terms and conditions applicable to such right under the
relevant Company Stock Plan. At or prior to the Effective Time, the Company
shall adopt appropriate amendments to the Company Stock Plans, if necessary, and
the Board of Directors of the Company shall adopt appropriate resolutions, if
necessary, to effectuate the provisions of this Section 4.4(b).
(c) If registration of any interests in the Company Stock Plans or
the shares of Parent Common Stock issuable thereunder is required under the
Securities Act of 1933, as amended (the "Securities Act"), Parent shall file
with the Securities and Exchange Commission (the "SEC"), by the business day
following the Effective Time, a registration statement on Form S-8 (or any
successor form), with respect to such interests or Parent Common Stock, and
shall use its commercially reasonable best efforts to maintain the effectiveness
of such registration statement (and to maintain the current status of the
prospectus or prospectuses contained therein and comply with any applicable
state securities or "blue sky" laws) for so long as the relevant Company Stock
Plans remain in effect and such registration of interests therein or the shares
of Parent Common Stock issuable thereunder (and compliance with any such state
laws) continues to be required. As soon as reasonably practicable after the
registration of such interests or shares, as applicable, Parent shall deliver to
the holders of Company Options and Company Awards by any permissible method
appropriate notices setting forth such holders' rights pursuant to the
respective Company Stock Plans and agreements evidencing the grants of such
Company Options and Company Awards, and stating that such Company Options and
Company Awards and agreements have been assumed by Parent in accordance with the
applicable terms.
(d) Without limiting the applicability of the preceding paragraph,
the Company shall take all necessary action to ensure that the Surviving
Corporation will not be bound at the Effective Time by any options, or other
rights, awards or arrangements under the Company Stock Plans that would entitle
any Person after the Effective Time to beneficially own any Company Shares or to
receive any payments in respect thereof, and at or prior to the Effective Time,
the Company shall adopt appropriate amendments to all Company Stock Plans
conferring any rights to Company Shares or other capital stock of the Company,
if necessary, and the Board of Directors of the Company shall adopt appropriate
resolutions, if applicable, to effectuate the provisions of this Section 4.5(d).
-8-
ARTICLE V
REPRESENTATIONS AND WARRANTIES
5.1 Representations and Warranties of the Company. Except as set
forth in the disclosure letter delivered to Parent by the Company at the time of
entering into this Agreement (the "Company Disclosure Letter"), or, to the
extent the qualifying nature of such disclosure with respect to a specific
representation and warranty is reasonably apparent therefrom, as set forth in
the Company Reports filed with the SEC on or after January 1, 2005 and prior to
the date of this Agreement (excluding all disclosures in any "Risk Factors"
Section) (it being understood that the exclusion with respect to the "Risk
Factors" section in the prior parenthetical shall not be deemed a qualification
of the matters expressly set out in the Company Disclosure Letter or the
exceptions in the definition of "Company Material Adverse Effect"), the Company
hereby represents and warrants to Parent and Merger Sub as of the date of this
Agreement and as of the Closing that:
(a) Organization, Good Standing and Qualification. Each of the
Company and its Subsidiaries is a legal entity duly organized, validly existing
and in good standing under the Laws of its respective jurisdiction of
organization and has all requisite corporate or similar power and authority to
own, lease and operate its properties and assets and to carry on its business as
presently conducted and is qualified to do business and is in good standing as a
foreign legal entity in each jurisdiction where the ownership, leasing or
operation of its assets or properties or conduct of its business requires such
qualification, except where the failure to be so organized, qualified or in good
standing, or to have such power or authority, would not, individually or in the
aggregate, reasonably be likely to have a Company Material Adverse Effect. Prior
to the date of this Agreement, the Company has made available to Parent a
complete and correct copy of the Company's articles of incorporation and
by-laws, each as in effect and as amended through the date of this Agreement.
As used in this Agreement, (i) the term "Subsidiary" means, with
respect to any Person, any other Person of which at least a majority of the
securities or ownership interests having by their terms ordinary voting power to
elect a majority of the board of directors or other persons performing similar
functions is directly or indirectly owned or controlled by such Person and/or
one or more of its respective Subsidiaries, and shall be deemed not to include
Cingular Wireless Corporation or Cingular Wireless LLC (together "Cingular") or
▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ LLC ("▇▇.▇▇▇") or any of their respective Subsidiaries, except
where expressly specified; (ii) the term "Company Material Adverse Effect" means
(x) an effect that would prevent or materially delay or impair the ability of
the Company to consummate the Merger or (y) a material adverse effect on the
financial condition, properties, assets, liabilities, business or results of
operations of the Company and its Subsidiaries, including its interest in
Cingular, ▇▇.▇▇▇ and their respective Subsidiaries, taken as a whole, excluding
any such effect resulting from or arising in connection with changes or
conditions (A) generally affecting (I) the United States
-9-
economy or financial or securities markets, (II) political conditions in the
United States or (III) the United States telecommunications industry or any
generally recognized business segment of such industry, (B) generally affecting
the telecommunications industry (or any generally recognized business segment of
such industry) in the Company Region, taken as a whole, (C) resulting from any
hurricane, earthquake, or other natural disasters in the Company Region, (D)
resulting from the execution, announcement or performance of this Agreement, or
(E) resulting from or arising in connection with the financial condition,
properties, assets, liabilities, business or results of operations of Cingular,
▇▇.▇▇▇ or any of their respective Subsidiaries; and (iii) the "Company Region"
means the states of Alabama, Florida, Georgia, Kentucky, Louisiana, Mississippi,
North Carolina, South Carolina and Tennessee.
(b) Capital Structure. (i) The authorized capital stock of the
Company consists of 8.65 billion Company Shares, of which 1,801,734,512 Company
Shares were issued and outstanding as of March 1, 2006, and 100 million shares
of First Preferred Stock, par value $1.00 per share (the "Company Preferred
Shares"), none of which were outstanding as of the date of this Agreement. All
of the outstanding Company Shares have been duly authorized and validly issued
and are fully paid and nonassessable. The Company has no Company Shares or
Company Preferred Shares reserved for issuance, except that (A) as of the date
of this Agreement, there are an aggregate of 30 million Company Preferred
Shares, designated "Series B First Preferred Stock", reserved for issuance
pursuant to the Rights Agreement, dated as of November 22, 1999, between the
Company and ChaseMellon Shareholder Services, L.L.C., as Rights Agent, as
amended by Amendment No. 1 thereto, dated as of March 2, 2005 (the "Rights
Agreement") and (B) as of March 1, 2006, there were an aggregate of 166,891,548
Company Shares reserved for issuance pursuant to the Company Stock Plans.
Section 5.1(b) of the Company Disclosure Letter contains a correct and complete
list as of March 1, 2006 of (x) the number of outstanding Company Options, the
exercise price of all Company Options and number of Company Shares issuable at
such exercise price and (y) the number of outstanding rights, including those
issued under the Company Stock Plans, to receive, or rights the value of which
is determined by reference to, Company Shares, the date of grant and number of
Company Shares subject thereto (including without limitation restricted stock,
restricted stock units and performance shares) (each a "Common Stock Unit").
From March 1, 2006 to the date of this Agreement, the Company has not issued any
Company Shares except pursuant to the exercise of Company Options and the
settlement of Common Stock Units outstanding on March 1, 2006 in accordance with
their terms and pursuant to the Company's Direct Investment Plan, dated November
16, 2004 (the "Company Direct Investment Plan"), and since March 1, 2006, the
Company has not issued any Company Options or Common Stock Units. All
outstanding grants of Company Options and Common Stock Units were made under the
Company Stock Plans. Except as set forth in this Section 5.1(b) and the right to
purchase Company Shares pursuant to the Company Direct Investment Plan, as of
the date of this Agreement, there are no preemptive or other outstanding rights,
options, warrants, conversion rights, stock appreciation rights, redemption
rights, repurchase rights, agreements, arrangements, calls, commitments or
rights of any kind that obligate
-10-
the Company or any of its Subsidiaries to issue or sell any shares of capital
stock or other equity securities of the Company or any securities or obligations
convertible or exchangeable into or exercisable for, or giving any Person a
right to subscribe for or acquire from the Company or any of its Subsidiaries,
any other securities of the Company and no securities or obligations of the
Company or any of its Subsidiaries evidencing such rights are authorized, issued
or outstanding. Except (x) as set forth in this Section 5.1(b) or (y) pursuant
to the Company Direct Investment Plan, as of the date of this Agreement, the
Company does not have outstanding any bonds, debentures, notes or other
obligations the holders of which have the right to vote (or convertible into or
exercisable for securities having the right to vote) with the shareholders of
the Company on any matter.
(ii) As of the date of this Agreement, each of the outstanding
shares of capital stock or other securities of each of the Company's
Subsidiaries that constitute a "Significant Subsidiary" (as defined in Rule
1.02(w) of Regulation S-X promulgated pursuant to the Exchange Act), which term
shall not be deemed to include Cingular, ▇▇.▇▇▇ or any of their respective
Subsidiaries, has been duly authorized and validly issued and is fully paid and
nonassessable and owned by the Company or by a direct or indirect wholly-owned
Subsidiary of the Company, free and clear of any lien, charge, pledge, security
interest, claim or other encumbrance (each, a "Lien"), except for such Liens as
would not, individually or in the aggregate, reasonably be likely to have a
Company Material Adverse Effect. As of the date of this Agreement, there are no
preemptive or other outstanding rights, options, warrants, conversion rights,
stock appreciation rights, redemption rights, repurchase rights, agreements,
arrangements, calls, commitments or rights of any kind that obligate the Company
or any of its Subsidiaries to issue or sell any shares of capital stock or other
equity securities of any of the Company's Subsidiaries (including Cingular) or
any securities or obligations convertible or exchangeable into or exercisable
for, or giving any Person a right to subscribe for or acquire from the Company
or any of its Subsidiaries, any equity securities of any of the Company's
Subsidiaries (including Cingular), and no securities or obligations of the
Company or any of its Subsidiaries evidencing such rights are authorized, issued
or outstanding. Section 5.1(b) of the Company Disclosure Letter contains, to the
knowledge of the executive officers of the Company, a true and complete list as
of the date of this Agreement of each Person in which the Company owns, directly
or indirectly, (other than through Cingular, ▇▇.▇▇▇ and their respective
Subsidiaries) any voting interest that may require a filing by Parent or any
affiliate of Parent under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of
1976, as amended (the "HSR Act") other than voting interests that are owned,
directly or indirectly, by the Company or any of its Subsidiaries the
acquisition of which will be exempt from the filing requirements under the HSR
Act or was exempt at the time of the Company's direct or indirect acquisition of
such interests pursuant to 16 C.F.R. Section 802.9. To the knowledge of the
Company's executive officers, as of the date of this Agreement, no Person or
group beneficially owns 5% or more of the Company's voting securities, with the
terms "group" and "beneficially owns" having the meanings ascribed to them under
Rule 13d-3 and Rule 13d-5 under the Exchange Act.
-11-
(c) Corporate Authority; Approval and Fairness. The Company has all
requisite corporate power and authority and has taken all corporate action
necessary in order to execute, deliver and perform its obligations under this
Agreement and to consummate, subject only to approval of this Agreement by the
holders of a majority of the outstanding Company Shares (the "Company Requisite
Vote"), the Merger. This Agreement has been duly executed and delivered by the
Company and is a valid and binding agreement of the Company enforceable against
the Company in accordance with its terms, subject to bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium and similar Laws of general
applicability relating to or affecting creditors' rights and to general equity
principles (the "Bankruptcy and Equity Exception"). The Board of Directors of
the Company (A) has unanimously adopted this Agreement and approved the Merger
and the other transactions contemplated hereby and resolved to recommend the
approval of this Agreement by the holders of Company Common Shares by the
Company Requisite Vote (the "Company Recommendation"), (B) has received the
opinions of its financial advisors, Citigroup Global Markets Inc. and ▇▇▇▇▇▇▇,
Sachs & Co. each, dated as of the date of this Agreement, to the effect that, as
of the date of this Agreement, the Exchange Ratio is fair, from a financial
point of view, to the holders of Company Shares and (C) directed that this
Agreement be submitted to the holders of Company Shares for their approval.
(d) Governmental Filings; No Violations. (i) Other than the
necessary notices, reports, filings, consents, registrations, approvals, permits
or authorizations (A) pursuant to Section 1.3, (B) required under the HSR Act,
European Union Council Regulation (EC) No. 139/2000 of January 20, 2004 (the "EC
Merger Regulation") (if applicable), the Securities Exchange Act of 1934, as
amended (the "Exchange Act") and the Securities Act, (C) to comply with state
securities or "blue-sky" laws, (D) with or to the Federal Communications
Commission ("FCC") pursuant to the Communications Act of 1934, as amended (the
"Communications Act"), and (E) with or to the local, state and foreign public
utility commissions or similar local or state regulatory bodies (each, a "PUC")
and the local and state Governmental Entities pursuant to applicable local,
state or foreign Laws regulating the telecommunications business ("Utilities
Laws") and (F) foreign regulatory bodies pursuant to applicable foreign laws
regulating actions having the purpose or effect of monopolization or restraint
of trade, no filings, notices and/or reports are required to be made by the
Company with, nor are any consents, registrations, approvals, permits or
authorizations required to be obtained by the Company from, any governmental or
regulatory authority, court, agency, commission, body or other legislative,
executive or judicial governmental entity ("Governmental Entity"), in connection
with the execution, delivery and performance of this Agreement by the Company
and the consummation by the Company of the Merger and the other transactions
contemplated hereby, except those that the failure to make or obtain would not,
individually or in the aggregate, reasonably be likely to have a Company
Material Adverse Effect.
(ii) The execution, delivery and performance of this Agreement by
the Company do not, and the consummation by the Company of the Merger and the
other
-12-
transactions contemplated hereby will not, constitute or result in (A) a breach
or violation of, a termination (or right of termination) or a default under the
Company's articles of incorporation or by-laws, (B) a breach or violation of, a
termination (or right of termination) or a default under the articles of
incorporation, by-laws or the comparable governing instruments of any of the
Company's Significant Subsidiaries, (C) a breach or violation of, or a default
or termination (or right of termination) under, the acceleration of any
obligations or the creation of an obligation, Lien or pledge, security interest
or other encumbrance on its assets or the assets of any of its Subsidiaries
(with or without notice, lapse of time or both) pursuant to, any agreement,
lease, license granted by a Person other than a Governmental Entity, contract,
note, mortgage, indenture, or other contractual obligation ("Contracts") binding
upon the Company or any of its Subsidiaries or, assuming the filings, notices
and/or approvals referred to in Section 5.1(d)(i) are made or obtained, any Law
or governmental or non-governmental permit or license to which the Company or
any of its Subsidiaries is subject or (D) any change in the rights or
obligations of any party under any of its Contracts, except, in the case of
clauses (C) and (D), for any breach, violation, termination, default,
acceleration, creation or change that would not, individually or in the
aggregate, reasonably be likely to have a Company Material Adverse Effect. The
Company Disclosure Letter sets forth a correct and complete list of Contracts of
the Company and its Subsidiaries pursuant to which consents or waivers are or
may be required prior to consummation of the transactions contemplated by this
Agreement other than those where the failure to obtain such consents or waivers
would not, individually or in the aggregate, reasonably be likely to have a
Company Material Adverse Effect.
(e) Reports; Financial Statements. (i) The Company has filed and
furnished all forms, statements, reports and documents required to be filed or
furnished by it with or to the SEC pursuant to applicable securities statutes,
regulations, policies and rules since December 31, 2004 (collectively, such
forms, statements, reports and documents filed with or furnished to the SEC
since December 31, 2004, or those filed with or furnished to the SEC subsequent
to the date of this Agreement, and as amended, the "Company Reports"). Each of
the Company Reports, at the time of its filing or being furnished complied, or
if not yet filed or furnished, will comply, as to form, in all material respects
with the applicable requirements of the Securities Act, the Exchange Act and the
▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of 2002, as amended ("▇▇▇▇▇▇▇▇-▇▇▇▇▇"), and any rules and
regulations promulgated thereunder applicable to the Company Reports. As of
their respective dates (and, if amended, as of the date of such amendment) the
Company Reports did not, and any of the Company Reports filed with or furnished
to the SEC subsequent to the date of this Agreement will not, contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements made therein, in light of the
circumstances in which they were made, not misleading.
(ii) The Company maintains disclosure controls and procedures as
required by Rule 13a-15 under the Exchange Act. Such disclosure controls and
procedures are designed to ensure that information required to be disclosed by
the
-13-
Company in the reports it files or submits under the Exchange Act is recorded,
processed, summarized and reported within the time frames specified by the SEC's
rules and forms. The Company maintains internal control over financial reporting
as required by Rule 13a-15 under the Exchange Act. Such internal control over
financial reporting were designed, to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements
for external purposes in accordance with generally accepted accounting
principles and includes policies and procedures that (i) pertain to the
maintenance of records that in reasonable detail accurately and fairly reflect
the transactions and dispositions of the assets of the Company, (ii) provide
reasonable assurance that transactions are recorded as necessary to permit
preparation of financial statements in accordance with generally accepted
accounting principles, and that receipts and expenditures of the Company are
being made only in accordance with authorizations of management and directors of
the Company, and (iii) provide reasonable assurance regarding prevention or
timely detection of unauthorized acquisition, use or disposition of the
Company's assets that could have a material effect on its financial statements.
The Company has disclosed, based on the most recent evaluation of its chief
executive officer and its chief financial officer prior to the date of this
Agreement, to the Company's auditors and the audit committee of the Company's
board of directors (A) any significant deficiencies in the design or operation
of its internal controls over financial reporting that are reasonably likely to
adversely affect the Company's ability to record, process, summarize and report
financial information and has identified for the Company's auditors and audit
committee of the Company's board of directors any material weaknesses in
internal control over financial reporting and (B) any fraud, whether or not
material, that involves management or other employees who have a significant
role in the Company's internal control over financial reporting. The Company has
made available to Parent prior to the date of this Agreement a summary of any
such disclosure made by management to the Company's auditors and audit committee
since December 31, 2004. Since December 31, 2004 and prior to the date of this
Agreement, no material complaints from any source regarding accounting, internal
accounting controls or auditing matters, and no material concerns from Company
Employees regarding questionable accounting or auditing matters, have been
received by the Company. The Company has made available to Parent prior to the
date of this Agreement a summary of all material complaints or concerns relating
to other matters made since December 31, 2004 and through the date of this
Agreement through the Company's whistleblower hot-line or equivalent system for
receipt of employee concerns regarding possible violations of Law by the Company
or any of its Subsidiaries or any of their respective employees in respect of
such employee's employment with the Company or its Subsidiaries. No attorney
representing the Company or any of its Subsidiaries, whether or not employed by
the Company or any of its Subsidiaries, has reported evidence of a violation of
securities laws, breach of fiduciary duty or similar violation by the Company or
any of its officers, directors, employees or agents to the Company's chief legal
officer, audit committee (or other committee designated for the purpose) of the
board of directors or the board of directors pursuant to the rules adopted
pursuant to Section 307 of ▇▇▇▇▇▇▇▇-▇▇▇▇▇ or any Company policy contemplating
such reporting, including in instances not required by those rules.
-14-
(iii) Each of the consolidated balance sheets included in or
incorporated by reference into the Company Reports (including the related notes
and schedules) fairly presents the consolidated financial position of the
Company and its consolidated Subsidiaries, as of its date, and each of the
consolidated statements of operations, cash flows and of changes in
shareholders' equity included in or incorporated by reference into the Company
Reports (including any related notes and schedules) fairly presents the results
of operations, retained earnings and changes in financial position, as the case
may be, of the Company and its consolidated Subsidiaries for the periods set
forth therein (subject, in the case of unaudited statements, to notes and normal
year-end audit adjustments that will not be material in amount or effect), in
each case in accordance with U.S. generally accepted accounting principles
("GAAP") consistently applied during the periods involved, except as may be
noted therein.
(f) Absence of Certain Changes. Since December 31, 2005 there has
not been any event, occurrence, discovery or development which has had or would,
individually or in the aggregate, reasonably be likely to have a Company
Material Adverse Effect. Since December 31, 2005, and through the date of this
Agreement: (i) the Company and its Subsidiaries have conducted their respective
businesses only in, and have not engaged in any material transaction other than
in accordance with, the ordinary and usual course of such businesses; (ii)
except for normal quarterly cash dividends in an amount equal to $0.29 per
Company Share, the Company and its non-wholly-owned Subsidiaries have not
declared, set aside or paid any dividend or distribution payable in cash, stock
or property in respect of any capital stock; (iii) the Company and its
Subsidiaries have not incurred any material indebtedness for borrowed money or
guaranteed such indebtedness of another Person, or issued or sold any debt
securities or warrants or other rights to acquire any debt security of the
Company or any of its Subsidiaries other than issuing commercial paper in the
ordinary course of business; (iv) the Company and its Subsidiaries have not
transferred, leased, licensed, sold, mortgaged, pledged, placed a Lien upon or
otherwise disposed of any of the Company's or its Subsidiaries' property or
assets (including capital stock of any of the Company's Subsidiaries) outside of
the ordinary course of business consistent with past practice with a fair market
value in excess of $10 million; (v) the Company and its Subsidiaries have not
acquired any business, whether by merger, consolidation, purchase of property or
assets or otherwise; (vi) there has not been (A) any material increase in the
compensation payable or to become payable to the Company's officers or (B) any
establishment, adoption, entry into or amendment of any collective bargaining,
bonus, profit sharing, thrift, compensation, employment, termination, severance
or other plan, agreement, trust, fund, policy or arrangement for the benefit of
any director, officer or employee, except to the extent required by Law; and
(vii) the Company and its Subsidiaries have not made any change with respect to
accounting policies, except as required by changes in GAAP or by Law.
(g) Litigation and Liabilities. There are no (i) civil, criminal or
administrative actions, suits, claims, hearings, investigations or proceedings
pending or, to the knowledge of the Company's executive officers, threatened
against the Company
-15-
or any of its Subsidiaries, except for those that would not, individually or in
the aggregate, reasonably be likely to have a Company Material Adverse Effect or
(ii) obligations or liabilities, whether or not accrued, contingent or otherwise
and whether or not required to be disclosed, or any other facts or circumstances
that are reasonably likely to result in any obligations or liabilities of the
Company or any of its Subsidiaries, except for (A) liabilities or obligations to
the extent (x) reflected on the consolidated balance sheets of the Company or
(y) readily apparent in the notes thereto, in each case included in the
Company's annual report on Form 10-K for the year ended December 31, 2005, (B)
liabilities or obligations incurred in the ordinary course of business since
December 31, 2005, none of which has had or would, individually or in the
aggregate, reasonably be likely to have a Company Material Adverse Effect, (C)
payment or performance obligations under Contracts required in accordance with
their terms, or performance obligations, to the extent required under applicable
Law; or (D) those liabilities or obligations that would not, individually or in
the aggregate, reasonably be likely to have a Company Material Adverse Effect.
(h) Employee Benefits.
(i) Section 5.1(h)(i) of the Company Disclosure Letter sets forth a
list of each benefit and compensation plan, contract, policy or arrangement
maintained, sponsored or contributed to by the Company or any of its
Subsidiaries covering current or former employees of the Company and its
Subsidiaries ("Company Employees") and current or former directors of the
Company, including, but not limited to, "employee benefit plans" within the
meaning of Section 3(3) of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA"), and incentive and bonus, deferred compensation, stock
purchase, restricted stock, stock option, stock appreciation rights or stock
based compensation plans (the "Company Compensation and Benefit Plans"), except
that such Section of the Company Disclosure Letter does not set forth (A) those
plans that did not require (x) the payment to any individual covered thereby of
more than $500,000 during the year ending December 31, 2005 or (y) the payment
to all individuals covered thereby of more than $2,500,000 during the year
ending December 31, 2005 in the aggregate (unless (i) more than 50 employees are
eligible to participate in the plan, program, contract, policy or arrangement or
(ii) the plan, program, contract, policy or arrangement contains a
change-in-control or similar provision or (iii) the plan, program, contract,
policy or arrangement covers Persons required to file beneficial ownership
statements pursuant to Section 16 of the Exchange Act) and (B) Company
Compensation and Benefit Plans maintained outside of the United States primarily
for the benefit of Company Employees working outside of the United States (such
plans covered by clause (B) hereinafter being referred to as the "Company Non
U.S. Compensation and Benefit Plans"). Each Company Compensation and Benefit
Plan which has received a favorable or unfavorable determination letter from the
Internal Revenue Service ("IRS") has been separately identified. True and
complete copies of each Company Compensation and Benefit Plan listed in Section
5.1(h)(i) of the Company Disclosure Letter, including, but not limited to, any
trust agreement or insurance contract forming a part of any Company
-16-
Compensation and Benefit Plan, and all amendments thereto, have been provided or
made available to Parent.
(ii) Each Company Compensation and Benefit Plan, other than
"multiemployer plans" within the meaning of Section 3(37) of ERISA (each, a
"Multiemployer Plan") and the Company Non U.S. Compensation and Benefit Plans
(collectively, the "Company U.S. Compensation and Benefit Plans"), is in
compliance with, to the extent applicable, ERISA, the Code, and other applicable
Laws, in each case except for such failures as would not, individually or in the
aggregate, reasonably be likely to have a Company Material Adverse Effect. Each
Company U.S. Compensation and Benefit Plan which is subject to ERISA (an "ERISA
Plan") that is an "employee pension benefit plan" within the meaning of Section
3(2) of ERISA (a "Pension Plan") and that is intended to be qualified under
Section 401(a) of the Code has received a favorable determination letter from
the IRS covering all tax Law changes prior to the Economic Growth and Tax Relief
Reconciliation Act of 2001 or has applied to the IRS for such favorable
determination letter within the applicable remedial amendment period under
Section 401(b) of the Code, and the Company is not aware of any circumstances
likely to result in a loss of the qualification of such plan under Section
401(a) of the Code. As of the date of this Agreement, there is no pending or, to
the knowledge of the Company's executive officers, threatened litigation
relating to the Company U.S. Compensation and Benefit Plans, except as would
not, individually or in the aggregate, reasonably be likely to have a Company
Material Adverse Effect. Any voluntary employees' beneficiary association within
the meaning of Section 501(c)(9) of the Code which provides benefits under a
Company Compensation and Benefit Plan has received an opinion letter from the
IRS recognizing its exempt status under Section 501(c)(9) of the Code, has
timely filed notice under Section 505(c) of the Code, and the Company is not
aware of circumstances likely to result in the loss of such exempt status under
Section 501(c)(9) of the Code, except as would not, individually or in the
aggregate, reasonably be likely to result in a Company Material Adverse Effect.
Neither the Company nor any of its Subsidiaries has engaged in a transaction
with respect to any ERISA Plan that would subject the Company or any of its
Subsidiaries to a tax or penalty imposed by either Section 4975 of the Code or
Section 502(i) of ERISA except as would not, individually or in the aggregate,
reasonably be likely to have a Company Material Adverse Effect. Neither the
Company nor any of its Subsidiaries has incurred or reasonably expects to incur
a tax or penalty imposed by Section 4980F of the Code or Section 502 of ERISA,
except as would not, individually or in the aggregate, reasonably be likely to
have a Company Material Adverse Effect.
(iii) No liability under Subtitle C or D of Title IV of ERISA has
been or is expected to be incurred by the Company or any of its Subsidiaries
with respect to any ongoing, frozen or terminated "single-employer plan", within
the meaning of Section 4001(a)(15) of ERISA, currently or formerly maintained by
any of them, or the single-employer plan of any entity which is considered one
employer with the Company under Section 4001 of ERISA or Section 414 of the Code
(a "Company ERISA Affiliate"), except as would not, individually or in the
aggregate, reasonably be likely to
-17-
have a Company Material Adverse Effect. The Company and its Subsidiaries have
not incurred and do not expect to incur any withdrawal liability with respect to
a Multiemployer Plan under Subtitle E of Title IV of ERISA (regardless of
whether based on contributions of a Company ERISA Affiliate), except as would
not, individually or in the aggregate, reasonably be likely to have a Company
Material Adverse Effect. No notice of a "reportable event", within the meaning
of Section 4043 of ERISA, for which the 30-day reporting requirement has not
been waived or extended, other than pursuant to Pension Benefit Guaranty
Corporation Reg. Section 4043.66, has been required to be filed for any Company
Pension Plans or by any Company ERISA Affiliates within the 12-month period
ending on the date of this Agreement.
(iv) All contributions required to be made under each Company U.S.
Compensation and Benefit Plan have been timely made and all obligations in
respect of each Company Compensation and Benefit Plan have been properly accrued
and reflected on the most recent consolidated balance sheet filed or
incorporated by reference in the Company Reports prior to the date of this
Agreement to the extent required by GAAP except, in the case of each of the
foregoing, as would not individually or in the aggregate, reasonably be likely
to have a Company Material Adverse Effect. Neither any Company Pension Plan nor
any single-employer plan of any Company ERISA Affiliate has an "accumulated
funding deficiency" (whether or not waived) within the meaning of Section 412 of
the Code or Section 302 of ERISA and no Company ERISA Affiliate has an
outstanding funding waiver. Neither the Company nor any of its Subsidiaries has
provided, or is required to provide, security to any Pension Plans or to any
single-employer plan of any Company ERISA Affiliate pursuant to Section
401(a)(29) of the Code.
(v) Under each Company Pension Plan which is a single-employer plan,
as of the last day of the most recent plan year ended prior to the date of this
Agreement, the actuarially determined present value of all "benefit
liabilities", within the meaning of Section 4001(a)(16) of ERISA (as determined
on the basis of the actuarial assumptions contained in the Company Pension
Plan's most recent actuarial valuation), did not exceed the then current value
of the assets of such Company Pension Plan, and there has been no material
adverse change in the financial condition of such Company Pension Plan since the
last day of the most recent plan year.
(vi) Neither the Company nor its Subsidiaries have any obligations
for retiree health or life benefits under any ERISA Plan or collective
bargaining agreement, except as required by Section 4980B of the Code or Section
601 of ERISA.
(vii) There has been no amendment to, announcement by the Company or
any of its Subsidiaries relating to, or change in employee participation or
coverage under, any of the Company Compensation and Benefit Plans that would
increase materially the expense of maintaining such plan above the level of the
expense incurred therefor for the most recent fiscal year, except as required by
Law. Except as provided in this Agreement or as may be required by Law or by any
of the Company Compensation
-18-
and Benefit Plans listed on Section 5.1(h)(vii) of the Company Disclosure
Letter, none of the execution of this Agreement, shareholder approval of this
Agreement, receipt of approval or clearance from any one or more Governmental
Entities of the Merger or the other transactions contemplated by this Agreement,
or the consummation of the Merger and the other transactions contemplated by
this Agreement will (A) entitle any employees of the Company or its Subsidiaries
to severance pay or any increase in severance pay upon any termination of
employment after the date of this Agreement; (B) accelerate the time of payment
or vesting or result in any payment or funding (through a grantor trust or
otherwise) of compensation or benefits under, increase the amount payable or
result in any other material obligation pursuant to, any Company U.S.
Compensation and Benefit Plan; or (C) limit or restrict the right of the
Company, or, after the consummation of the transactions contemplated by this
Agreement, Parent, to merge, amend or terminate any of the Company U.S.
Compensation and Benefit Plans.
(viii) All Company Non-U.S. Compensation and Benefit Plans are
listed in Section 5.1(h)(viii) of the Company Disclosure Letter and comply with
applicable local Law except as would not, individually or in the aggregate,
reasonably be likely to have a Company Material Adverse Effect. The Company and
its Subsidiaries have no unfunded liabilities with respect to any such Company
Non-U.S. Compensation and Benefit Plans that are not set forth in the
consolidated balance sheets included in or incorporated by reference into the
Company Reports filed prior to the date of this Agreement, except as would not,
individually or in the aggregate, reasonably be likely to have a Company
Material Adverse Effect. There is no pending or, to the knowledge of the
Company's executive officers, threatened material litigation relating to the
Company Non-U.S. Compensation and Benefit Plans, except as would not,
individually or in the aggregate, reasonably be likely to have a Company
Material Adverse Effect.
(i) Compliance with Laws. The businesses of each of the Company and
its Subsidiaries have not been conducted in violation of any law, rule, statute,
ordinance, regulation, judgment, determination, order, decree, injunction,
arbitration award, license, authorization, opinion, agency requirement or permit
of any Governmental Entity or common law (collectively, "Laws"), except for
violations that would not, individually or in the aggregate, reasonably be
likely to have a Company Material Adverse Effect. No investigation or review by
any Governmental Entity with respect to the Company or any of its Subsidiaries
is pending or, to the knowledge of the Company's executive officers, threatened,
nor has any Governmental Entity indicated an intention to conduct the same,
except for those the outcome of which would not, individually or in the
aggregate, reasonably be likely to have a Company Material Adverse Effect. The
executive officers of the Company have not received any notice or communication
of any material noncompliance with any such Laws that has not been cured as of
the date of this Agreement, except for such changes and noncompliance that would
not, individually or in the aggregate, reasonably be likely to have a Company
Material Adverse Effect. Each of the Company and its Subsidiaries has obtained
and is in substantial compliance with all permits, licenses, certifications,
approvals, registrations, consents, authorizations, franchises, variances,
exemptions and orders
-19-
issued or granted by a Governmental Entity (collectively, "Licenses") necessary
to conduct its business as presently conducted, except for those the absence of
which or failure to be in compliance with, would not, individually or in the
aggregate, reasonably be likely to have a Company Material Adverse Effect.
(j) Certain Contracts. Section 5.1(j) of the Company Disclosure
Letter sets forth a list as of the date of this Agreement of each Contract
(other than material Contracts with Parent, Cingular, ▇▇.▇▇▇ and/or their
respective Subsidiaries) to which either the Company or any of its Subsidiaries
is a party or bound which, to the knowledge of the executive officers of the
Company (i) provides that any of them will not compete in any material respect
with any other Person, (ii) purports to limit in any material respect either the
type of business in which the Company or its Subsidiaries, including Cingular
(or, after the Effective Time, Parent or its Subsidiaries), may engage or the
manner or locations in which any of them may so engage in any business or would
reasonably be likely to require the disposition of any material assets or line
of business of the Company or its Subsidiaries, including Cingular or, Parent or
its Subsidiaries after the Effective Time, (iii) requires them to deal
exclusively in any material respect with any Person or group of related Persons
or (iv) provides for a material indemnification obligation by the Company or any
of its Subsidiaries. A true and complete copy of each such Contract has been
made available to Parent prior to the date of this Agreement.
(k) Takeover Statutes. The Board of Directors of the Company has
taken all appropriate and necessary actions such that Parts 2 and 3 of Article
11 of the GBCC shall not apply to the Merger or the other transactions
contemplated hereby. No other "fair price", "moratorium", "control share
acquisition" or other similar anti-takeover statute or regulation (each, a
"Takeover Statute") as in effect on the date of this Agreement is applicable to
the Company, the Company Shares, the Merger or the other transactions
contemplated by this Agreement. No anti-takeover provision contained in the
Company's articles of incorporation, including Article Tenth thereof, or its
by-laws is, or at the Effective Time will be, applicable to the Merger or the
other transactions contemplated hereby.
(l) Environmental Matters. Except for such matters that would not,
individually or in the aggregate, reasonably be likely to have a Company
Material Adverse Effect: (i) each of the Company and its Subsidiaries has
complied, and is in compliance, with all applicable Environmental Laws; (ii) the
properties currently owned, leased or operated by the Company or any of its
Subsidiaries (including soils, groundwater, surface water, buildings or other
structures) ("Company Current Properties") are not contaminated with any
Hazardous Substances; (iii) the properties formerly owned or operated by the
Company or any of its Subsidiaries ("Company Former Properties") were not
contaminated with Hazardous Substances during the period of ownership or
operation by the Company or any of its Subsidiaries; (iv) neither the Company
nor any of its Subsidiaries is subject to liability for the transportation,
disposal or arranging for the transportation or disposal of any Hazardous
Substance at any third party property; (v) there have been no releases or
threatened releases of any Hazardous
-20-
Substance (x) at any Company Current Property or, to the knowledge of the
Company's executive officers, Company Former Properties or (y) caused by the
Company or any of its Subsidiaries at any third party property; (vi) neither the
Company nor any of its Subsidiaries has received any notice, demand, letter,
claim or request for information alleging that the Company or any of its
Subsidiaries may be in violation of or liable under any Environmental Law
(including any claims relating to electromagnetic fields or microwave
transmissions); (vii) neither the Company nor any of its Subsidiaries is subject
to any orders, decrees or injunctions with any Governmental Entity or is subject
to any indemnity or other agreement with any third party relating to liability
under any Environmental Law; and (viii) to the knowledge of the Company's
executive officers, there are no circumstances or conditions involving the
Company or any of its Subsidiaries that could reasonably be likely to result in
any claims, liability, investigations, costs or restrictions on the Company or
any of its Subsidiaries or on the ownership, use, or transfer of Company Current
Property or Company Former Property, in each case, pursuant to any Environmental
Law.
As used herein, the term "Environmental Law" means any Law relating
to: (A) the protection, investigation or restoration of the environment, health,
safety, or natural resources, (B) the handling, use, presence, disposal, release
or threatened release of any Hazardous Substance or (C) noise, odor, wetlands,
pollution, contamination or any injury or threat of injury to persons or
property in connection with any Hazardous Substance.
As used herein, the term "Hazardous Substance" means any substance
that is: listed, classified or regulated pursuant to any Environmental Law,
including any petroleum product or by-product, asbestos-containing material,
lead-containing paint or plumbing, polychlorinated biphenyls, radioactive
materials or radon.
(m) Tax Matters. As of the date of this Agreement, neither the
Company nor any of its affiliates has taken or agreed to take any action, nor do
the executive officers of the Company have any knowledge of any fact or
circumstance, that would prevent the Merger and the other transactions
contemplated by this Agreement from qualifying as a "reorganization" within the
meaning of Section 368(a) of the Code.
(n) Taxes. Except as would not, individually or in the aggregate,
reasonably be likely to have a Company Material Adverse Effect, the Company and
each of its Subsidiaries (i) have duly and timely filed (taking into account any
extension of time within which to file) all Tax Returns (as defined below)
required to be filed by any of them on or prior to the date of this Agreement
and all such filed Tax Returns are complete and accurate in all material
respects; (ii) have paid all Taxes (as defined below) that are required to be
paid or that the Company or any of its Subsidiaries are obligated to withhold
from amounts owing to any employee, creditor or third party, except with respect
to matters contested in good faith or for which adequate reserves have been
established; and (iii) have not waived any statute of limitations with respect
to Taxes or agreed to any extension of time with respect to a Tax assessment or
deficiency. Except
-21-
as would not, individually or in the aggregate, reasonably be likely to have a
Company Material Adverse Effect, as of the date of this Agreement there are no
audits, examinations, investigations or other proceedings in respect of Taxes or
Tax matters, in each case, pending or, to the knowledge of the executive
officers or Controller of the Company, threatened. Except as would not,
individually or in the aggregate, reasonably be likely to have a Company
Material Adverse Effect, neither the Company nor any member of its "affiliated
group" (within the meaning of Section 1504 of the Code) has any item of income
or gain, arising from an intercompany transaction within the meaning of Treasury
Regulation Section 1.1502-13 that has not yet been taken into account pursuant
to Treasury Regulation Section 1.1502-13. 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) except as would not,
individually or in the aggregate, reasonably be likely to have a Company
Material Adverse Effect. Neither the Company nor any of its Subsidiaries is a
party to any Tax sharing agreement (with any Person other than the Company
and/or any of its wholly-owned Subsidiaries), except as would not, individually
or in the aggregate, reasonably be likely to have a Company Material Adverse
Effect. Neither the Company nor any of its Subsidiaries has constituted either a
"distributing corporation" or a "controlled corporation" within the meaning of
Section 355(a)(1)(A) of the Code in any distribution intended to qualify for
tax-free treatment under Section 355 of the Code occurring during the last 30
months. No payments to be made to any of the officers and employees of the
Company or its Subsidiaries will, as a result of consummation of the Merger, be
subject to the deduction limitations under Section 280G of the Code.
As used in this Agreement, (i) the term "Tax" (including, with
correlative meaning, the term "Taxes") includes 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 and additions imposed with respect to such
amounts and any interest in respect of such penalties and additions, and (ii)
the term "Tax Return" includes all returns and reports (including elections,
declarations, disclosures, schedules, estimates and information returns)
required to be supplied to a Tax authority relating to Taxes.
(o) Labor Matters. Section 5.1(o) of the Company Disclosure Letter
sets forth a list, as of the date of this Agreement, of each material collective
bargaining agreement or other similar Contract with a labor union or labor
organization to which the Company or any of its Subsidiaries is a party. Except
in each case as would not, individually or in the aggregate, reasonably be
likely to have a Company Material Adverse Effect, (i) (except for proceedings
involving individual employees arising in the ordinary course of business)
neither the Company or any of its Subsidiaries is the subject of any proceeding
asserting that the Company or any of its Subsidiaries has committed an unfair
labor practice or is seeking to compel the Company to bargain with any labor
union or labor organization and (ii) there is no pending or, to the knowledge of
the
-22-
Company's executive officers, threatened in writing, nor has there been for the
past five years, any labor strike, dispute, walkout, work stoppage, slow-down or
lockout involving the Company or any of its Subsidiaries.
(p) Intellectual Property. Each of the Company and its Subsidiaries
owns or has a valid right to use, or can acquire on reasonable terms, all
Intellectual Property and Information Technology necessary to carry on its
business as operated by it on the date of this Agreement, except where the
absence of such rights would not, individually or in the aggregate, have a
Company Material Adverse Effect. Neither the Company nor any of its Subsidiaries
has received any notice of infringement of or conflict with asserted rights of
others with respect to any Intellectual Property of third parties which would
reasonably be likely, individually or in the aggregate, to have a Company
Material Adverse Effect.
As used herein,
(1) "Computer Software" means all computer software and databases (including
without limitation source code, object code and all related documentation).
(2) "Information Technology" means the computers, Computer Software, firmware,
middleware, servers, workstations, routers, hubs, switches, data communications
lines, and all other information technology equipment and elements, and
associated documentation, in each case, which are necessary for the operation of
the business of the Company or any of its Subsidiaries as conducted as of the
date of this Agreement.
(3) "Intellectual Property" means, collectively, all United States and foreign
(A) trademarks, service marks, brand names, certification marks, collective
marks, d/b/a's, Internet domain names, logos, symbols, trade dress, assumed
names, fictitious names, trade names, and other indicia of origin, all
applications and registrations for the foregoing, and all goodwill associated
therewith and symbolized thereby, including all renewals of same; (B) inventions
and discoveries, whether patentable or not, and all patents, registrations,
invention disclosures and applications therefor, including divisions,
continuations, continuations-in-part and renewal applications, and including
renewals, extensions and reissues; (C) trade secrets and confidential
information and know-how, including processes, schematics, business methods,
formulae, drawings, prototypes, models, designs, customer lists and supplier
lists; (D) published and unpublished works of authorship, whether copyrightable
or not (including without limitation databases and other compilations of
information), copyrights therein and thereto, and registrations and applications
therefor, and all renewals, extensions, restorations and reversions thereof; (E)
moral rights, rights of publicity and rights of privacy; and (F) all other
intellectual property or proprietary rights.
(q) Affiliate Transactions. As of the date of this Agreement, there
are no transactions, arrangements or Contracts between the Company and its
Subsidiaries, on the one hand, and its affiliates (other than its wholly-owned
Subsidiaries) or other
-23-
Persons, on the other hand, that would be required to be disclosed under Item
404 of Regulation S-K under the Securities Act.
(r) Insurance. The Company and its Subsidiaries maintain insurance
coverage with reputable insurers in such amounts and covering such risks as are
in accordance with normal industry practice for companies engaged in businesses
similar to that of the Company or its Subsidiaries (taking into account the cost
and availability of such insurance).
(s) Rights Agreement. The Board of Directors of the Company has
approved Parent and its Affiliates (as defined in the Rights Agreement) and
Associates (as defined the Rights Agreement) as the Beneficial Owner (as defined
in the Rights Agreement) of all of the Voting Securities (as defined in the
Rights Agreement) and as the holder of all of the Voting Power (as defined in
the Rights Agreement) and such approval has not been revoked, withdrawn or
modified. Neither Parent nor Merger Sub shall be deemed to be an Acquiring
Person (as such term is defined in the Rights Agreement) and the Distribution
Date (as defined in the Rights Agreement) shall not be deemed to occur and the
Rights will not separate from the Company Shares, as a result of entering into
this Agreement or consummating the Merger and/or the other transactions
contemplated hereby.
(t) Brokers and Finders. Neither the Company nor any of the
Company's officers, directors or employees has employed any broker or finder or
incurred any liability for any brokerage fees, commissions or finders, fees in
connection with the Merger or the other transactions contemplated in this
Agreement, except that the Company has employed ▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co. and
Citigroup Global Markets Inc. as the Company's financial advisors, the
arrangements with which have been disclosed to Parent prior to the date of this
Agreement.
(u) No Other Representations and Warranties. Except for the
representations and warranties of the Company contained in this Agreement, the
Company is not making and has not made, and no other Person is making or has
made on behalf of the Company, any express or implied representation or warranty
in connection with this Agreement or the transactions contemplated hereby, and
no Person is authorized to make any such representations and warranties on
behalf of the Company.
5.2 Representations and Warranties of Parent and Merger Sub. Except
as set forth in the disclosure letter delivered to the Company by Parent at the
time of entering into this Agreement (the "Parent Disclosure Letter"), or, to
the extent the qualifying nature of such disclosure with respect to a specific
representation and warranty is reasonably apparent therefrom, as set forth in
the Parent Reports or the T Reports filed with the SEC, on or after January 1,
2005 and prior to the date of this Agreement, (excluding all disclosures in any
"Risk Factors" Section) (it being understood that the exclusion with respect to
the "Risk Factors" section in the prior parenthetical and in Section 7.3(d)
shall not be deemed a qualification of the matters expressly set out in the
-24-
Parent Disclosure Letter or the exceptions in the definition of "Parent Material
Adverse Effect"), Parent and Merger Sub hereby represent and warrant to the
Company as of the date of this Agreement and as of the Closing that:
(a) Organization, Good Standing and Qualification. Each of Parent
and its Subsidiaries is a legal entity duly organized, validly existing and in
good standing under the Laws of its respective jurisdiction of organization and
has all requisite corporate or similar power and authority to own, lease and
operate its properties and assets and to carry on its business as presently
conducted and is qualified to do business and is in good standing as a foreign
legal entity in each jurisdiction where the ownership, leasing or operation of
its assets or properties or conduct of its business requires such qualification,
except where the failure to be so organized, qualified or in good standing, or
to have such power or authority, would not, individually or in the aggregate,
reasonably be likely to have a Parent Material Adverse Effect. Prior to the date
of this Agreement, Parent has made available to the Company a complete and
correct copy of the Parent's certificate of incorporation and by-laws, each as
in effect and as amended through the date of this Agreement.
As used in this Agreement "Parent Material Adverse Effect" means (x)
an effect that would prevent or materially delay or impair the ability of Parent
to consummate the Merger or (y) a material adverse effect on the financial
condition, properties, assets, liabilities, business or results of operations of
Parent and its Subsidiaries, including its interest in Cingular, ▇▇.▇▇▇ and any
of their respective Subsidiaries, taken as a whole, excluding any such effect
resulting from or arising in connection with changes or conditions (A) generally
affecting (I) the United States economy or financial or securities markets, (II)
political conditions in the United States or (III) the United States
telecommunications industry or any generally recognized business segment of such
industry, (B) generally affecting the telecommunications industry (or any
generally recognized business segment of such industry) in any of the Parent
Regions, each taken as a whole, (C) resulting from any hurricane, earthquake or
other natural disaster in any of the Parent Regions, (D) resulting from the
execution, announcement or performance of this Agreement, or (E) resulting from
or arising in connection with the financial condition, properties, assets,
liabilities, business or results of operations of Cingular, ▇▇.▇▇▇ or any of
their respective Subsidiaries; and (iii) the "Parent Regions" means each of the
states of (A) California and Nevada, (B), Illinois, Indiana, Michigan, Ohio,
Wisconsin; (C) Kansas, Missouri, Oklahoma, Arkansas and Texas and (D)
Connecticut.
(b) Capital Structure. (i) The authorized capital stock of Parent
consists of 7,000,000,000 shares of Parent Common Stock, of which 3,884,566,072
shares of Parent Common Stock were issued and outstanding as of February 28,
2006, and 1,000,000,000 shares of Preferred Stock, par value $1.00 per share
(the "Parent Preferred Stock"), of which 768,390.4 shares were outstanding as of
the date of this Agreement. All of the outstanding shares of Parent Common Stock
and Parent Preferred Stock have been duly authorized and validly issued and are
fully paid and nonassessable.
-25-
Section 5.2(b) of the Parent Disclosure Letter contains a correct and complete
list as of February 28, 2006 of (x) the number of outstanding options to
purchase Parent Common Stock (each, a "Parent Option") under the Parent
Compensation and Benefit Plans, the exercise price of all Parent Options and
number of shares of Parent Common Stock issuable at such exercise price and (y)
the number of outstanding rights to receive Parent Common Stock (including
without limitation restricted stock and restricted stock units), under the
Parent Compensation and Benefit Plans (each a "Parent Common Stock Unit"). From
February 28, 2006 to the date of this Agreement, Parent has not issued any
Parent Common Stock except pursuant to the exercise of Parent Options and the
settlement of Parent Common Stock Units outstanding on February 28, 2006 in
accordance with their terms and since February 28, 2006 Parent has not issued
any Parent Options or Parent Common Stock Units. Except as set forth in this
Section 5.2(b), as of the date of this Agreement, there are no preemptive or
other outstanding rights, options, warrants, conversion rights, stock
appreciation rights, redemption rights, repurchase rights, agreements,
arrangements, calls, commitments or rights of any kind that obligate Parent or
any of its Subsidiaries to issue or sell any shares of capital stock or other
equity securities of Parent or any securities or obligations convertible or
exchangeable into or exercisable for, or giving any Person a right to subscribe
for or acquire from Parent or any of its Subsidiaries, any equity securities of
Parent, and no securities or obligations of Parent or any of its Subsidiaries
evidencing such rights are authorized, issued or outstanding. Except as set
forth in this Section 5.2(b), as of the date of this Agreement, Parent does not
have outstanding any bonds, debentures, notes or other obligations the holders
of which have the right to vote (or convertible into or exercisable for
securities having the right to vote) with the stockholders of Parent on any
matter.
(ii) As of the date of this Agreement, each of the outstanding
shares of capital stock or other securities of each of Parent's Subsidiaries
that constitute a Significant Subsidiary, which term shall not be deemed to
include Cingular, ▇▇.▇▇▇ or any of their respective Subsidiaries, has been duly
authorized and validly issued and is fully paid and nonassessable and owned by
Parent or by a direct or indirect wholly-owned Subsidiary of Parent, free and
clear of any Lien, except for such Liens as would not, individually or in the
aggregate, reasonably be likely to have a Parent Material Adverse Effect. As of
the date of this Agreement, there are no preemptive or other outstanding rights,
options, warrants, conversion rights, stock appreciation rights, redemption
rights, repurchase rights, agreements, arrangements, calls, commitments or
rights of any kind that obligate Parent or any of its Subsidiaries to issue or
sell any shares of capital stock or other equity securities of any of Parent's
Subsidiaries (including Cingular) or any securities or obligations convertible
or exchangeable into or exercisable for, or giving any Person a right to
subscribe for or acquire from Parent or any of its Subsidiaries any equity
securities of any of Parent's Subsidiaries (including Cingular), and no
securities or obligations of Parent or any of its Subsidiaries evidencing such
rights are authorized, issued or outstanding. To the knowledge of Parent's
executive officers, as of the date of this Agreement, no Person or group
beneficially owns 5% or more of Parent's outstanding voting securities, with the
terms "group" and "beneficially owns"
-26-
having the meanings ascribed to them under Rule 13d-3 and Rule 13d-5 under the
Exchange Act.
(iii) The authorized capital stock of Merger Sub consists of 1,000
shares of Common Stock, par value $1.00 per share, all of which are validly
issued and outstanding. All of the issued and outstanding capital stock of
Merger Sub is, and at the Effective Time will be, owned, directly or indirectly,
by Parent, and there are (i) no other shares of capital stock or other voting
securities of Merger Sub, (ii) no securities of Merger Sub convertible into or
exchangeable for shares of capital stock or other voting securities of Merger
Sub and (iii) no options or other rights to acquire from Merger Sub, and no
obligations of Merger Sub to issue, any capital stock, other voting securities
or securities convertible into or exchangeable for capital stock or other voting
securities of Merger Sub. Merger Sub has not conducted any business prior to the
date of this Agreement and has no, and prior to the Effective Time will have no,
assets, liabilities or obligations of any nature other than those incident to
its formation and pursuant to this Agreement and the Merger and the other
transactions contemplated by this Agreement.
(c) Corporate Authority; Approval and Fairness. Parent and Merger
Sub each have all requisite corporate power and authority and each has taken all
corporate action necessary in order to execute, deliver and perform its
obligations under this Agreement and to consummate, subject only to the approval
by the stockholders of Parent by a majority of votes cast on the proposal to
issue the shares of Parent Common Stock required to be issued in the Merger;
provided that the total vote cast represents over 50% of all of the outstanding
shares of Parent Common Stock (the "Parent Requisite Vote"). This Agreement has
been duly executed and delivered by Parent and Merger Sub and is a valid and
binding agreement of Parent and Merger Sub, enforceable against each of Parent
and Merger Sub in accordance with its terms, subject to the Bankruptcy and
Equity Exception. The shares of Parent Common Stock, when issued pursuant to
this Agreement, will be validly issued, fully paid and nonassessable, and no
stockholder of Parent will have any preemptive right of subscription or purchase
in respect thereof. The Board of Directors of Parent has (A) unanimously
approved this Agreement and the other transactions contemplated hereby and
resolved to recommend that the holders of Parent Common Stock vote in favor of
the issuance of Parent Common Stock required to be issued in the Merger pursuant
to this Agreement (the "Parent Recommendation"), (B) received the opinions of
its financial advisors, ▇▇▇▇▇▇ Brothers Inc. and Evercore Financial Advisors
LLC, Inc., dated as of the date of this Agreement, to the effect that the
Exchange Ratio is fair from a financial point of view to Parent and (C) directed
that the proposal to issue shares of Parent Common Stock required to be issued
in the Merger be submitted to the holders of Parent Common Stock for their
approval.
(d) Governmental Filings; No Violations. (i) Other than the
necessary notices, reports, filings, consents, registrations, approvals, permits
or authorizations (A) pursuant to Section 1.3, (B) required under the HSR Act,
the EC Merger Regulation (if applicable), the Exchange Act and the Securities
Act, (C) to comply with state securities or "blue-sky" laws, (D) with or to the
FCC pursuant to the Communications
-27-
Act, (E) with or to the local, state and foreign PUCs and local, state and
foreign Governmental Entities pursuant to applicable local, state or foreign
Utilities Laws and (F) if any, of the foreign regulatory bodies pursuant to
applicable foreign laws regulating actions having the purpose or effect of
monopolization or restraint of trade, no filings, notices and/or reports are
required to be made by Parent or Merger Sub with, nor are any consents,
registrations, approvals, permits or authorizations required to be obtained by
Parent or Merger Sub from, any Governmental Entity, in connection with the
execution, delivery and performance of this Agreement by Parent and Merger Sub
and the consummation by Parent and Merger Sub of the Merger and the other
transactions contemplated hereby, except those that the failure to make or
obtain would not, individually or in the aggregate, reasonably be likely to have
a Parent Material Adverse Effect.
(ii) The execution, delivery and performance of this Agreement by
Parent and Merger Sub do not, and the consummation by Parent and Merger Sub of
the Merger and the other transactions contemplated hereby will not, constitute
or result in (A) a breach or violation of, a termination (or right of
termination) or a default under Parent's certificate of incorporation or
by-laws, (B) a breach or violation of, a termination (or right of termination)
or a default under, the certificate of incorporation, by-laws or the comparable
governing instruments of any of Parent's Significant Subsidiaries, (C) a breach
or violation of, or a default or termination (or right of termination) under,
the acceleration of any obligations or the creation of an obligation, Lien or
pledge, security interest or other encumbrance on Parent's assets or the assets
of any of its Subsidiaries (with or without notice, lapse of time or both)
pursuant to, any Contract binding upon Parent or any of its Subsidiaries or,
assuming the filings, notices and/or approvals referred to in Section 5.2(d)(i)
are made or obtained, any Law or governmental or non-governmental permit or
license to which Parent or any of its Subsidiaries is subject or (D) any change
in the rights or obligations of any party under any of its Contracts, except, in
the case of clauses (C) and (D), for any breach, violation, termination,
default, acceleration, creation or change that would not, individually or in the
aggregate, reasonably be likely to have a Parent Material Adverse Effect. The
Parent Disclosure Letter sets forth a correct and complete list of Contracts of
Parent and its Subsidiaries pursuant to which consents or waivers are or may be
required prior to consummation of the transactions contemplated by this
Agreement other than those where the failure to obtain such consents or waivers
would not, individually or in the aggregate, reasonably be likely to have a
Parent Material Adverse Effect.
(e) Reports; Financial Statements. (i) Each of Parent and, to the
knowledge of the executive officers of Parent, AT&T Corporation, a New York
corporation ("T"), has filed and furnished all forms, statements, reports and
documents required to be filed or furnished by it with or to the SEC pursuant to
applicable securities statutes, regulations, policies and rules since December
31, 2004 (collectively, such forms, statements, reports and documents filed with
or furnished to the SEC since December 31, 2004, or those filed with or
furnished to the SEC subsequent to the date of this Agreement, and as amended,
the "Parent Reports" and the "T Reports", respectively).
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Each of the Parent Reports and, to the knowledge of the executive officers of
Parent, the T Reports at the time of its filing or being furnished complied, or
if not yet filed or furnished in the case of Parent Reports, will comply, as to
form, in all material respects with the applicable requirements of the
Securities Act, the Exchange Act and ▇▇▇▇▇▇▇▇-▇▇▇▇▇, and any rules and
regulations promulgated thereunder applicable to the Parent Reports and the T
Reports, as the case may be. As of their respective dates (and, if amended, as
of the date of such amendment) the Parent Reports and, to the knowledge of the
executive officers of Parent, the T Reports did not, and any of the Parent
Reports filed with or furnished to the SEC subsequent to the date of this
Agreement will not, contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements made therein, in light of the circumstances in which they were made,
not misleading.
(ii) Parent maintains, and, to the knowledge of the executive
officers of Parent, prior to its acquisition by Parent, T maintained, disclosure
controls and procedures as required by Rule 13a-15 under the Exchange Act. Such
disclosure controls and procedures are or were, as applicable, designed to
ensure that information required to be disclosed by Parent and T, as applicable,
in the reports it files or filed, as applicable, or submits or submitted, as
applicable, under the Exchange Act is or were, as applicable, recorded,
processed, summarized and reported within the time frames specified by the SEC's
rules and forms. Parent maintains, and, to the knowledge of the executive
officers of Parent, prior to its acquisition by Parent, T maintained, internal
control over financial reporting as required by Rule 13a-15 under the Exchange
Act. Such internal control over financial reporting are or were, as applicable,
in the case of Parent, in the case of T, to the knowledge of the executive
officers of Parent, designed to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements
for external purposes in accordance with generally accepted accounting
principles and includes policies and procedures that (i) pertain to the
maintenance of records that in reasonable detail accurately and fairly reflect
or reflected, as applicable, the transactions and dispositions of the assets of
Parent or T, as applicable, (ii) provide or provided, as applicable, reasonable
assurance that transactions are or were, as applicable, recorded as necessary to
permit preparation of financial statements in accordance with generally accepted
accounting principles, and that receipts and expenditures of Parent or T, as
applicable, are being made or were made, as applicable, only in accordance with
authorizations of management and directors of the Parent or T, as applicable,
and (iii) provide or provided, as applicable, reasonable assurance regarding
prevention or timely detection of unauthorized acquisition, use or disposition
of the assets of Parent or T, as applicable, that could have a material effect
on its financial statements. Parent has disclosed, based on the most recent
evaluation of its chief executive officer and its chief financial officer prior
to the date of this Agreement, to Parent's auditors and the audit committee of
Parent's board of directors (A) any significant deficiencies in the design or
operation of its internal controls over financial reporting that are or were, as
applicable, reasonably likely to adversely affect Parent's ability to record,
process, summarize and report financial information and has identified for
Parent's auditors and audit committee of Parent's board of directors any
material weaknesses in its internal control over
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financial reporting and (B) any fraud, whether or not material, that involves
management or other employees who have a significant role in Parent's internal
control over financial reporting. Parent has made available to the Company prior
to the date of this Agreement a summary of any such disclosure made by
management of Parent to Parent's auditors and audit committee since December 31,
2004. Since December 31, 2004 and prior to the date of this Agreement, no
material complaints from any source regarding accounting, internal accounting
controls or auditing matters, and no material concerns from Parent employees
(including former employees of T and its Subsidiaries) regarding questionable
accounting or auditing matters, have been received by Parent or, to the
knowledge of the executive officers of Parent, T. Parent has made available to
the Company prior to the date of this Agreement a summary of all material
complaints or concerns relating to other matters made since December 31, 2004
and through the date of this Agreement through Parent's and, to the knowledge of
the executive officers of Parent, T's whistleblower hot-lines or equivalent
systems for receipt of employee concerns regarding possible violations of Law by
Parent, T or any of their Subsidiaries or any of their respective employees. No
attorney representing Parent, T or any of their respective Subsidiaries, whether
or not employed by Parent, T or any of their Subsidiaries, has, in the case of T
to the knowledge of the executive officers of Parent, reported evidence of a
violation of securities laws, breach of fiduciary duty or similar violation by
Parent or T or any of their respective officers, directors, employees or agents
to Parent's or T's chief legal officer, audit committee (or other committee
designated for the purpose) of the board of directors or the board of directors
pursuant to the rules adopted pursuant to Section 307 of ▇▇▇▇▇▇▇▇-▇▇▇▇▇ or any
Parent or T policy contemplating such reporting, including in instances not
required by those rules.
(iii) Each of the consolidated balance sheets included in or
incorporated by reference into the Parent Reports and the T Reports (including
the related notes and schedules) fairly presents the consolidated financial
position of Parent and its consolidated Subsidiaries or T and its consolidated
Subsidiaries, as applicable, as of its date, and each of the consolidated
statements of operations, cash flows and of changes in stockholders' equity
included in or incorporated by reference into the Parent Reports and the T
Reports (including any related notes and schedules) fairly presents the results
of operations, retained earnings and changes in financial position, as the case
may be, of Parent and its consolidated Subsidiaries or T and its consolidated
Subsidiaries, as applicable, for the periods set forth therein (subject, in the
case of unaudited statements, to notes and normal year-end audit adjustments
that will not be material in amount or effect), in each case in accordance with
GAAP consistently applied during the periods involved, except as may be noted
therein; provided that with respect to T Reports such representations are made
only to the knowledge of the executive officers of Parent.
(f) Absence of Certain Changes. Since December 31, 2005 there has
not been any event, occurrence, discovery or development which has had or would,
individually or in the aggregate, reasonably be likely to have a Parent Material
Adverse Effect. Since December 31, 2005, and through the date of this Agreement:
(i) Parent and its Subsidiaries have conducted their respective businesses only
in, and have not engaged
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in any material transaction other than in accordance with, the ordinary and
usual course of such businesses; (ii) except for normal quarterly cash dividends
in an amount equal to $.3325 per share of Parent Common Stock, Parent and its
non-wholly-owned Subsidiaries have not declared, set aside or paid any dividend
or distribution payable in cash, stock or property in respect of any capital
stock; (iii) Parent and its Subsidiaries have not incurred any material
indebtedness for borrowed money or guaranteed such indebtedness of another
Person, or issued or sold any debt securities or warrants or other rights to
acquire any debt security of Parent or any of its Subsidiaries other than in the
ordinary course of business; (iv) Parent and its Subsidiaries have not acquired
any business, whether by merger, consolidation, purchase of property or assets
or otherwise; and (v) Parent and its Subsidiaries have not made any material
change with respect to accounting policies except as required by changes in GAAP
or by Law.
(g) Litigation and Liabilities. There are no (i) civil, criminal or
administrative actions, suits, claims, hearings, investigations or proceedings
pending or, to the knowledge of Parent's executive officers, threatened against
Parent or any of its Subsidiaries, except for those that would not, individually
or in the aggregate, reasonably be likely to have a Parent Material Adverse
Effect or (ii) obligations or liabilities, whether or not accrued, contingent or
otherwise and whether or not required to be disclosed, or any other facts or
circumstances that are reasonably likely to result in any obligations or
liabilities of Parent or any of its Subsidiaries, except for (A) liabilities or
obligations to the extent (x) reflected on the consolidated balance sheets of
Parent or (y) readily apparent in the notes thereto, in each case included in
Parent's annual report on Form 10-K for the year ended December 31, 2005, (B)
liabilities or obligations incurred in the ordinary course of business since
December 31, 2005, none of which has had or would, individually or in the
aggregate, reasonably be likely to have a Parent Material Adverse Effect, (C)
payment or performance obligations under Contracts required in accordance with
their terms, or performance obligations, to the extent required under applicable
Law or (D) those liabilities or obligations that would not, individually or in
the aggregate, reasonably be likely to have a Parent Material Adverse Effect.
(h) Employee Benefits
(i) For purposes of this Section 5.2(h), "Parent Compensation and
Benefit Plan" means each material benefit and compensation plan, contract,
policy or arrangement maintained, sponsored or contributed to by Parent or any
of its Subsidiaries covering current or former employees of Parent and its
Subsidiaries ("Parent Employees") and current or former directors of Parent,
including, but not limited to, "employee benefit plans" within the meaning of
Section 3(3) of ERISA, and incentive and bonus, deferred compensation, stock
purchase, restricted stock, stock option, stock appreciation rights or stock
based compensation plans, other than those Parent Compensation and Benefit Plans
maintained outside of the United States primarily for the benefit of Parent
Employees working outside of the United States (the "Parent Non U.S.
Compensation and Benefit Plans"). For all purposes under this Agreement other
than
-31-
Section 5.2(h), Parent Compensation and Benefit Plans shall be read without the
word material.
(ii) Each Parent Compensation and Benefit Plan, other than
Multiemployer Plans (collectively, the "Parent U.S. Compensation and Benefit
Plans"), is in compliance with, to the extent applicable, ERISA, the Code, and
other applicable Laws, in each case except for such failures as would not,
individually or in the aggregate, reasonably be likely to have a Parent Material
Adverse Effect. Each Parent U.S. Compensation and Benefit Plan which an ERISA
Plan that is a Pension Plan and that is intended to be qualified under Section
401(a) of the Code has received a favorable determination letter from the IRS
covering all tax Law changes prior to the Economic Growth and Tax Relief
Reconciliation Act of 2001 or has applied to the IRS for such favorable
determination letter within the applicable remedial amendment period under
Section 401(b) of the Code and Parent is not aware of any circumstances likely
to result in the loss of the qualification of such plan under Section 401(a) of
the Code.
(iii) No liability under Subtitle C or D of Title IV of ERISA has
been or is expected to be incurred by Parent or any of its Subsidiaries with
respect to any ongoing, frozen or terminated "single-employer plan", within the
meaning of Section 4001(a)(15) of ERISA, currently or formerly maintained by any
of them, or the single-employer plan of any entity which is considered one
employer with the Parent under Section 4001 of ERISA or Section 414 of the Code
("Parent ERISA Affiliate"), except as would not, individually or in the
aggregate, reasonably be likely to have a Parent Material Adverse Effect. Parent
and its Subsidiaries have not incurred and do not expect to incur any withdrawal
liability with respect to a Multiemployer Plan under Subtitle E of Title IV of
ERISA (regardless of whether based on contributions of Parent ERISA Affiliate),
except as would not, individually or in the aggregate, reasonably be likely to
have a Parent Material Adverse Effect.
(iv) Except as provided in this Agreement or as may be required by
Law, none of the execution of this Agreement, shareholder approval of this
Agreement, receipt of approval or clearance from any one or more Governmental
Entities of the Merger, or the consummation of the Merger will (A) entitle any
employees of Parent or its Subsidiaries to severance pay or any increase in
severance pay upon any termination of employment after the date of this
Agreement; or (B) accelerate the time of payment or vesting or result in any
payment or funding (through a grantor trust or otherwise) of compensation or
benefits under, increase the amount payable or result in any other substantial
obligation pursuant to, any Parent U.S. Compensation and Benefit Plan, in either
case, which would be reasonably likely to result in a Parent Material Adverse
Effect.
(i) Compliance with Laws. The businesses of each of Parent and its
Subsidiaries have not been conducted in violation of any Law, except for
violations that would not, individually or in the aggregate, reasonably be
likely to have a Parent Material Adverse Effect. No investigation or review by
any Governmental Entity with respect to
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Parent or any of its Subsidiaries is pending or, to the knowledge of Parent's
executive officers, threatened, nor has any Governmental Entity indicated an
intention to conduct the same, except for those the outcome of which would not,
individually or in the aggregate, reasonably be likely to have a Parent Material
Adverse Effect. Each of Parent and its Subsidiaries has obtained and is in
substantial compliance with all Licenses necessary to conduct its business as
presently conducted, except for those the absence of which, or failure to be in
compliance with, would not, individually or in the aggregate, reasonably be
likely to have a Parent Material Adverse Effect.
(j) Takeover Statutes. No Takeover Statute or any anti-takeover
provision in the Parent's certificate of incorporation or by-laws is, or at the
Effective Time will be, applicable to the Merger or the other transactions
contemplated by this Agreement.
(k) Environmental Matters. Except for such matters that would not,
individually or in the aggregate, reasonably be likely to have a Parent Material
Adverse Effect: (i) each of Parent and its Subsidiaries has complied, and is in
compliance, with all applicable Environmental Laws; (ii) the properties
currently owned, leased or operated by Parent or any of its Subsidiaries
(including soils, groundwater, surface water, buildings or other structures)
("Parent Current Properties") are not contaminated with any Hazardous
Substances; (iii) the properties formerly owned or operated by Parent or any of
its Subsidiaries ("Parent Former Properties") were not contaminated with
Hazardous Substances during the period of ownership or operation by Parent or
any of its Subsidiaries; (iv) neither Parent nor any of its Subsidiaries is
subject to liability for the transportation, disposal or arranging for the
transportation or disposal of any Hazardous Substance at any third party
property; (v) there have been no releases or threatened releases of any
Hazardous Substance (x) at any Parent Current Property or, to the knowledge of
Parent's executive officers, Parent Former Properties or (y) caused by Parent or
any of its Subsidiaries at any third party property; (vi) neither Parent nor any
of its Subsidiaries has received any notice, demand, letter, claim or request
for information alleging that Parent or any of its Subsidiaries may be in
violation of or liable under any Environmental Law (including any claims
relating to electromagnetic fields or microwave transmissions); (vii) neither
Parent nor any of its Subsidiaries is subject to any orders, decrees or
injunctions with any Governmental Entity or is subject to any indemnity or other
agreement with any third party relating to liability under any Environmental
Law; and (viii) to the knowledge of Parent's executive officers, there are no
circumstances or conditions involving Parent or any of its Subsidiaries that
could reasonably be likely to result in any claims, liability, investigations,
costs or restrictions on Parent or any of its Subsidiaries or on the ownership,
use, or transfer of Parent Current Property or Parent Former Property, in each
case, pursuant to any Environmental Law.
(l) Tax Matters. As of the date of this Agreement, neither Parent
nor any of its affiliates has taken or agreed to take any action, nor do the
executive officers of Parent have any knowledge of any fact or circumstance,
that would prevent the Merger
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and the other transactions contemplated by this Agreement from qualifying as a
"reorganization" within the meaning of Section 368(a) of the Code.
(m) Taxes. Except as would not, individually or in the aggregate,
reasonably be likely to have a Parent Material Adverse Effect, Parent and each
of its Subsidiaries (i) have duly and timely filed (taking into account any
extension of time within which to file) all Tax Returns required to be filed by
any of them on or prior to the date of this Agreement and all such filed Tax
Returns are complete and accurate in all material respects; (ii) have paid all
Taxes that are required to be paid or that Parent or any of its Subsidiaries are
obligated to withhold from amounts owing to any employee, creditor or third
party, except with respect to matters contested in good faith or for which
adequate reserves have been established; and (iii) have not waived any statute
of limitations with respect to Taxes or agreed to any extension of time with
respect to a Tax assessment or deficiency. Except as would not, individually or
in the aggregate, reasonably be likely to have a Parent Material Adverse Effect,
as of the date of this Agreement there are no audits, examinations,
investigations or other proceedings in respect of Taxes or Tax matters, in each
case, pending or, to the knowledge of the executive officers of Parent or its
Controller, threatened. Except as would not, individually or in the aggregate,
reasonably be likely to have a Parent Material Adverse Effect, neither Parent
nor any member of its "affiliated group" (within the meaning of Section 1504 of
the Code) has any item of income or gain, arising from an intercompany
transaction within the meaning of Treasury Regulation Section 1.1502-13 that has
not yet been taken into account pursuant to Treasury Regulation Section
1.1502-13. Neither Parent nor any of its Subsidiaries has any liability for
Taxes of any Person (other than Parent and its Subsidiaries) under Treasury
Regulation Section 1.1502-6 (or any comparable provision of state, local or
foreign Law) except as would not, individually or in the aggregate, reasonably
be likely to have a Parent Material Adverse Effect. Neither Parent nor any of
its Subsidiaries is a party to any Tax sharing agreement (with any Person other
than Parent and/or any of its wholly-owned Subsidiaries), except as would not,
individually or in the aggregate, reasonably be likely to have a Parent Material
Adverse Effect. Neither Parent nor any of its Subsidiaries has constituted
either a "distributing corporation" or a "controlled corporation" within the
meaning of Section 355(a)(1)(A) of the Code in any distribution intended to
qualify for tax-free treatment under Section 355 of the Code occurring during
the last 30 months.
(n) Labor Matters. Section 5.2(n) of the Parent Disclosure Letter
sets forth a list, as of the date of this Agreement, of each material collective
bargaining agreement or other similar Contract with a labor union or labor
organization to which Parent or any of its Subsidiaries is a party. Except in
each case as would not, individually or in the aggregate, reasonably be likely
to have a Parent Material Adverse Effect, (i) (except for proceedings involving
individual employees arising in the ordinary course of business) neither Parent
or any of its Subsidiaries is the subject of any proceeding asserting that
Parent or any of its Subsidiaries has committed an unfair labor practice or is
seeking to compel Parent to bargain with any labor union or labor organization
and (ii) there is no pending or, to the knowledge of Parent's executive
officers, threatened in
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writing, nor has there been for the past five years, any labor strike, dispute,
walkout, work stoppage, slow-down or lockout involving Parent or any of its
Subsidiaries.
(o) Intellectual Property. Each of the Parent and its Subsidiaries
owns or has a valid right to use, or can acquire on reasonable terms, all
Intellectual Property and Information Technology necessary to carry on its
business as operated by it on the date of this Agreement, except where the
absence of such rights would not, individually or in the aggregate, have a
Parent Material Adverse Effect. Neither the Parent nor any of its Subsidiaries
has received any notice of infringement of or conflict with asserted rights of
others with respect to any Intellectual Property of third parties which would
reasonably be likely, individually or in the aggregate, to have a Parent
Material Adverse Effect.
(p) Affiliate Transactions. As of the date of this Agreement, there
are no transactions, arrangements or Contracts between Parent and its
Subsidiaries, on the one hand, and its affiliates (other than its wholly-owned
Subsidiaries) or other Persons, on the other hand, that would be required to be
disclosed under Item 404 of Regulation S-K under the Securities Act.
(q) Insurance. Parent and its Subsidiaries maintain insurance
coverage with reputable insurers in such amounts and covering such risks as are
in accordance with normal industry practice for companies engaged in businesses
similar to that of Parent or its Subsidiaries (taking into account the cost and
availability of such insurance).
(r) Brokers and Finders. Neither Parent nor any of Parent's
officers, directors or employees has employed any broker or finder or incurred
any liability for any brokerage fees, commissions or finders, fees in connection
with the Merger or the other transactions contemplated in this Agreement, except
that Parent has employed ▇▇▇▇▇▇ Brothers Inc., Evercore Financial Advisors LLC,
and Rohatyn & Associates as its financial advisers, the arrangements with which
have been disclosed to the Company prior to the date of this Agreement.
(s) No Other Representations and Warranties. Except for the
representations and warranties of Parent and Merger Sub contained in this
Agreement, Parent and Merger Sub are not making and have not made, and no other
Person is making or has made on behalf of Parent or Merger Sub, any express or
implied representation or warranty in connection with this Agreement or the
transactions contemplated hereby, and no Person is authorized to make any such
representations and warranties on behalf of Parent or Merger Sub.
ARTICLE VI
COVENANTS
6.1 Interim Operations. (a) The Company covenants and agrees as to
itself and its Subsidiaries that from and after the date of this Agreement and
prior to the Effective Time, the business of the Company and its Subsidiaries
shall be conducted in
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the ordinary and usual course and, to the extent consistent therewith, the
Company and its Subsidiaries shall use reasonable best efforts to preserve its
business organization intact and maintain the Company's existing relations and
goodwill with customers, suppliers, regulators, distributors, creditors,
lessors, employees and business associates in each case unless Parent shall
approve in writing (which approval will not be unreasonably withheld or delayed)
and except as expressly contemplated by this Agreement. Nothing contained in
this Section 6.1(a) shall require the Company, any of its Subsidiaries or any of
their respective directors or officers to approve or consent to the taking of
any action by Cingular, ▇▇.▇▇▇ or any of their respective Subsidiaries. For the
avoidance of doubt, any reference in this Section 6.1(a) to an aggregate amount
with respect to the Company and its Subsidiaries shall be deemed to refer to the
Company and its Subsidiaries on a consolidated basis. The Company covenants and
agrees as to itself and its Subsidiaries that, from and after the date of this
Agreement and prior to the Effective Time (unless Parent shall otherwise approve
in writing (which approval will not be unreasonably withheld or delayed), and
except as otherwise expressly contemplated by this Agreement or disclosed in the
Company Disclosure Letter):
(i) the Company shall not (A) amend the Company's articles of
incorporation or by-laws; (B) amend, modify or terminate the Rights Agreement in
any manner adverse to Parent's rights hereunder or exempt any other Person as an
Acquiring Person (as defined in the Rights Agreement) thereunder, (C) amend,
modify, terminate or waive any provision under any standstill agreement unless
an amendment, modification, termination or waiver which is the same in all
substantive respects is unconditionally offered to be made with respect to the
standstill agreement applicable to Parent (provided, that any such amendment to
the standstill agreement with Parent need remain in effect only until the
termination of this Agreement), (D) split, combine, subdivide or reclassify its
outstanding shares of capital stock; (C) declare, set aside or pay any dividend
or distribution payable in cash, stock or property in respect of any capital
stock, other than regular quarterly cash dividends on the Company Shares in
amounts not to exceed $0.29 per fiscal quarter; or (D) repurchase, redeem or
otherwise acquire or permit any of the Company's Subsidiaries to purchase or
otherwise acquire any shares of its capital stock or any securities convertible
into or exchangeable or exercisable for any shares of its capital stock, except
that the Company may repurchase Company Shares in the ordinary course of
business (x) as necessary to effect (I) the issuance of Company Shares in
respect of Company Options and Company Awards or otherwise under Company Stock
Plans and (II) the issuance of Company Shares under the Company Direct
Investment Plan and (y) not to exceed $500 million in any fiscal quarter;
(ii) the Company shall not merge, consolidate or adopt a plan of
liquidation, or permit any of its Subsidiaries to merge or consolidate or adopt
a plan of liquidation, except for any such transactions among wholly-owned
Subsidiaries of the Company and the Company and except for acquisitions
permitted by clause (ix) below effected by a means of a merger or consolidation
of a Subsidiary of the Company;
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(iii) neither the Company nor any of its Subsidiaries shall take any
action that would prevent the Merger from qualifying as a "reorganization"
within the meaning of Section 368(a) of the Code;
(iv) neither the Company nor any of its Subsidiaries shall
terminate, establish, adopt, enter into, make any new grants or awards of
stock-based compensation or other benefits under, amend or otherwise modify, any
Company Compensation and Benefit Plans or increase the salary, wage, bonus or
other compensation of any directors, officers or key employees except (A) for
grants or awards to directors, officers and employees of the Company or its
Subsidiaries under Company Compensation and Benefit Plans in existence as of the
date of this Agreement in such amounts and on such terms as are consistent with
past practice; (B) in the normal and usual course of business (which shall
include normal periodic performance reviews and related Company Compensation and
Benefit Plan increases in compensation and employee benefits and the provision
of compensation and employee benefits under the Company Compensation and Benefit
Plans consistent with past practice for current, promoted or newly hired
officers and employees and the adoption of Company Compensation and Benefit
Plans for employees of new Subsidiaries in amounts and on terms consistent with
past practice), provided that in no event shall the Company (x) institute a
broad based change in compensation or, (y) increase or institute any new
severance, change in control, termination or deferred compensation benefits, or
(C) for actions necessary to satisfy existing contractual obligations under
Company Compensation and Benefit Plans existing as of the date of this
Agreement, provided that in no event shall the Company or any of its
Subsidiaries (i) take any action to fund or in any other way secure the payment
of compensation or benefits (other than rabbi trusts listed in Section 5.1(h)(i)
of the Company Disclosure Letter in accordance with their terms), (ii) take any
action to accelerate the vesting or payment of any compensation or benefits
(other than with respect to officers and other employees whose employment
terminates prior to the Effective Time (x) as required by the terms of a Company
Compensation and Benefit Plan in effect on the date of this Agreement or (y) in
the ordinary course of business consistent with past practice (but in the case
of (y) excluding officers of the Company who are subject to Section 16 of the
Exchange Act)), (iii) other than in the ordinary course of business consistent
with past practice, materially change any actuarial or other assumptions used to
calculate funding obligations with respect to any Compensation and Benefit Plan
or change the manner in which contributions to such plans are made or the basis
on which such contributions are determined, except as may be required by GAAP or
applicable Law, or (iv) amend the terms of any outstanding equity-based award
(other than with respect to officers and other employees whose employment
terminates prior to the Effective Time (x) as required by the terms of a Company
Compensation and Benefit Plan in effect on the date of this Agreement or (y) in
the ordinary course of business consistent with past practice (but in the case
of (y) excluding officers of the Company who are subject to Section 16 of the
Exchange Act));
(v) neither the Company nor any of its Subsidiaries shall incur any
indebtedness for borrowed money or guarantee such indebtedness of another
Person, or
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issue or sell any debt securities or warrants or other rights to acquire any
debt security of the Company or any of its Subsidiaries, except for (A)
indebtedness for borrowed money incurred in the ordinary course of business not
to exceed $1.5 billion in the aggregate; (B) indebtedness for borrowed money in
replacement of existing indebtedness for borrowed money or any indebtedness
permitted to be incurred under this clause (v), (C) guarantees by the Company of
indebtedness of its wholly-owned Subsidiaries or (D) interest rate swaps on
customary commercial terms consistent with past practice and not to exceed $750
million of notional debt in the aggregate in addition to notional debt currently
under swap or similar agreements;
(vi) neither the Company nor any of its Subsidiaries shall make or
commit to any capital expenditures other than in the ordinary course of business
and in any event not in excess of 110% of the aggregate amount reflected in the
Company's capital expenditure budget for the year in which such capital
expenditures are made, a copy of which capital expenditure budget for 2006 and
2007 is attached to the Company Disclosure Letter;
(vii) neither the Company nor any of its Subsidiaries shall (A)
transfer, lease, license, sell, mortgage, pledge, place a Lien upon or otherwise
dispose of any of the Company's or its Subsidiaries' interest in Cingular (other
than transfers to the Company or wholly-owned Subsidiaries of the Company) or
(B) otherwise transfer, lease, license, sell, mortgage, pledge, place a Lien
upon or otherwise dispose of any other property or assets (including capital
stock of any of its Subsidiaries) with a fair market value in excess of $500
million in the aggregate, except in the case of the clause (B) for (x)
transfers, leases, licenses, sales, mortgages, pledges, Liens, or other
dispositions in the ordinary course of business and (y) mortgages, pledges and
Liens to secure indebtedness for borrowed money permitted to be incurred
pursuant to clause (v) above and of a type and under circumstances consistent
with past practice;
(viii) neither the Company nor any of its Subsidiaries shall issue,
deliver, sell, or encumber shares of its capital stock or any securities
convertible into, or any rights, warrants or options to acquire, any such shares
except: (A) any Company Shares issued pursuant to Company Options and Company
Awards outstanding on the date of this Agreement under the Company Stock Plans,
Company Awards and awards of performance shares granted hereafter under the
Company Stock Plans in accordance with this Agreement and Company Shares
issuable pursuant to such Company Awards; (B) any Company Shares issued pursuant
to the Company Direct Investment Plan; (C) Company Awards or performance shares
issued in the ordinary course of business under the Company Stock Plans;
provided that Company Awards and performance shares in respect of no more than
400,000 Company Shares may be issued in the aggregate and (D) issuances of
capital stock by wholly-owned Subsidiaries of the Company to the Company or any
wholly-owned Subsidiary of the Company;
(ix) neither the Company nor any of its Subsidiaries shall spend in
excess of $1 billion in the aggregate to acquire any business, whether by
merger,
-38-
consolidation, purchase of property or assets or otherwise (valuing any non-cash
consideration at its fair market value as of the date of the agreement for such
acquisition); provided that neither the Company nor any of its Subsidiaries
shall make, or agree to make, any acquisition that would reasonably be likely to
prevent or materially delay or impair the Merger or the Company's ability to
consummate the transactions contemplated hereby. For purposes of this clause
(ix), the amount spent with respect to any acquisition shall be deemed to
include the aggregate amount of capital expenditures that the Company is
obligated to make at any time or is reasonably likely to make as a result of
such acquisition within two years after the date of acquisition;
(x) neither the Company nor any of its Subsidiaries shall make any
change with respect to accounting policies, except as required by changes in
GAAP or by Law, or except as the Company, based upon the advice of its
independent auditors, and after consultation with Parent, determines in good
faith is advisable to conform to best accounting practices;
(xi) except as required by Law, neither the Company nor any of its
Subsidiaries shall (i) make any material Tax election or take any material
position on any material Tax Return filed on or after the date of this Agreement
or adopt any material method therefor that is inconsistent with elections made,
positions taken or methods used in preparing or filing similar Tax Returns in
prior periods or (ii) settle or resolve any material Tax controversy;
(xii) neither the Company nor any of its Subsidiaries shall (a)
enter into any material line of business in any geographic area other than the
current businesses of the Company or any of its Subsidiaries in the geographic
areas where they are conducted, as of the date of this Agreement or except as
conducted as of the date of this Agreement, engage in the conduct of any
business in any geographic area which would require a License issued or granted
by a Governmental Entity to be obtained by the Company or any of its
Subsidiaries, or file for any License to be issued by a Governmental Entity
outside of the ordinary course of business, if in each such case a filing would
be required to be made with, or a consent or approval would be required to be
obtained from, a Government Entity prior to the Effective Time with respect to
transfer of such License and such conduct or filing for such License would
reasonably be likely to prevent or delay the Merger or result in the Merger
being prevented or delayed;
(xiii) other than investments in marketable securities in the
ordinary course of business, neither the Company nor any of its Subsidiaries
shall make any loans, advances or capital contributions to or investments in any
Person (other than the Company or any direct or indirect wholly-owned Subsidiary
of the Company or Cingular, ▇▇.▇▇▇ or any of their respective Subsidiaries) in
excess of $25 million, individually or $100 million in the aggregate;
(xiv) neither the Company nor any of its Subsidiaries shall enter
into (i) any non-competition Contract or other Contract that purports to limit
in any material
-39-
respect either the type of business in which the Company or its Subsidiaries
(or, after the Effective Time, Parent or its Subsidiaries) may engage or the
manner or locations in which any of them may so engage in any business or (ii)
any Contract requiring the Company or its Subsidiaries to, in any material
respect, deal exclusively with a Person or related group of Persons;
(xv) neither the Company nor any of its Subsidiaries shall settle
any litigation or other proceedings before or threatened to be brought before a
Governmental Entity for an amount to be paid by the Company or any of its
Subsidiaries (excluding amounts paid or reimbursed by insurance) in excess of
$50 million or, in the case of non-monetary settlements, which would be
reasonably likely to have an adverse impact in any material respect on the
operations of the Company and its Subsidiaries taken as a whole; and
(xvi) neither the Company nor any of its Subsidiaries shall
authorize or enter into any agreement to do any of the foregoing.
(b) Parent covenants and agrees as to itself and its Subsidiaries
that from and after the date of this Agreement and prior to the Effective Time,
the business of Parent and its Subsidiaries shall be conducted in the ordinary
and usual course and, to the extent consistent therewith, Parent and its
Subsidiaries shall use commercially reasonable efforts to preserve its business
organization intact and maintain Parent's existing relations and goodwill with
customers, suppliers, regulators, distributors, creditors, lessors, employees
and business associates, in each case unless the Company shall approve in
writing (which approval will not be unreasonably withheld or delayed) and except
as expressly contemplated by this Agreement. Nothing contained in this Section
6.1(b) shall require Parent, any of its Subsidiaries or any of their respective
directors or officers to approve or consent to the taking of any action by
Cingular, ▇▇.▇▇▇ or any of their respective Subsidiaries. For the avoidance of
doubt, any reference in this Section 6.1(b) to an aggregate amount with respect
to Parent and its Subsidiaries shall be deemed to refer to Parent and its
Subsidiaries on a consolidated basis. Parent covenants and agrees as to itself
and its Subsidiaries that, from and after the date of this Agreement and prior
to the Effective Time (unless the Company shall otherwise approve in writing
(which approval will not be unreasonably withheld or delayed), and except as
otherwise expressly contemplated by this Agreement or disclosed in the Parent
Disclosure Letter):
(i) Parent shall not (A) amend Parent's certificate of incorporation
or by-laws in any manner that would reasonably be likely to prevent or
materially delay or impair the Merger or the consummation of the transactions
contemplated hereby; provided that any amendment to its certificate of
incorporation to increase the authorized number of shares of any class or series
of the capital stock of Parent shall in no way be restricted by the foregoing;
(B) split, combine, subdivide or reclassify its outstanding shares of capital
stock; (C) declare, set aside or pay any dividend or distribution payable in
cash, stock or property in respect of any capital stock, other than regular
quarterly cash dividends on the Parent Common Stock in amounts not to exceed
$0.3325 per fiscal
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quarter, as the same may be increased from time to time in a manner consistent
with past practice; or (D) repurchase, redeem or otherwise acquire or permit any
of Parent's Subsidiaries to purchase or otherwise acquire any shares of its
capital stock or any securities convertible into or exchangeable or exercisable
for any shares of its capital stock except that (x) Parent may repurchase shares
of Parent Common Stock in the ordinary course of business in connection with the
issuance of shares of Parent Common Stock in respect of Parent Options or
otherwise under Parent Compensation and Benefit Plans and (y) Parent may
repurchase shares of Parent Common Stock pursuant to open market purchases not
to exceed $1 billion per fiscal quarter;
(ii) Parent shall not (A) merge or consolidate, or permit any of its
Subsidiaries to merge or consolidate, with any other Person, or adopt a plan of
liquidation, except for any such transactions among wholly-owned Subsidiaries of
Parent and except for acquisitions permitted by clause (viii) below;
(iii) neither Parent nor any of its Subsidiaries shall take any
action that would prevent the Merger from qualifying as a "reorganization"
within the meaning of Section 368(a) of the Code;
(iv) neither Parent nor any of its Subsidiaries shall incur any
indebtedness for borrowed money or guarantee such indebtedness of another
Person, or issue or sell any debt securities or warrants or other rights to
acquire any debt security of Parent or any of its Subsidiaries, except for (A)
indebtedness for borrowed money incurred in the ordinary course of business not
to exceed $4 billion in the aggregate; (B) indebtedness for borrowed money in
replacement of existing indebtedness for borrowed money or any indebtedness
permitted to be incurred under this clause (iv), (C) guarantees by Parent of
indebtedness of its wholly-owned Subsidiaries or (D) interest rate swaps on
customary commercial terms consistent with past practice;
(v) neither Parent nor any of its Subsidiaries shall make or commit
to any capital expenditures in excess of 110% of the aggregate amount reflected
in Parent's capital expenditure budget for the year in which such capital
expenditures are made, a copy of which capital expenditure budget for 2006 and
2007 is attached to Parent Disclosure Letter;
(vi) neither Parent nor any of its Subsidiaries shall transfer,
lease, license, sell, mortgage, pledge, place a Lien upon or otherwise dispose
of any of Parent's or its Subsidiaries' (A) interest in Cingular (other than
transfers to Parent or wholly-owned Subsidiaries of Parent or (B) any other
property or assets (including capital stock of any of its Subsidiaries), with a
fair market value in excess of $2 billion in the aggregate, except in the case
of the clause (B) for (w) dispositions of minority interests and real estate no
longer being utilized or needed, (x) transfers, leases, licenses, sales,
mortgages, pledges, Liens, or other dispositions in the ordinary course of
business, or transfers, leases, licenses, sales, mortgages, pledges, Liens, or
other dispositions in connection with sale/leaseback transactions (y) mortgages,
pledges and Liens to secure
-41-
indebtedness for borrowed money permitted to be incurred pursuant to clause (v)
above or (z) dispositions of assets used as consideration for acquisitions that
are permitted pursuant to clause (viii) below;
(vii) neither Parent nor any of its Subsidiaries shall issue,
deliver, sell, or encumber shares of its capital stock or any securities
convertible into, or any rights, warrants or options to acquire, any such shares
except: (A) any Parent Common Stock issued pursuant to options and other awards
outstanding on the date of this Agreement under the Parent Compensation and
Benefit Plans, awards of options and other awards granted hereafter under the
Parent Compensation and Benefit Plans in accordance with this Agreement and
shares of Parent Common Stock issuable pursuant to such awards; (B) any Parent
Options and other stock payable awards issued in the ordinary course of business
under the Parent Compensation and Benefit Plans; provided that such Parent
Options and other awards issued after the date hereof shall not be, or be
exercisable, for more than 121,000,000 shares of Parent Common Stock in the
aggregate and (C) issuances of Parent Common Stock with an aggregate fair market
value not in excess of $1 billion (as of the date of the commitment to issue) in
transactions described in clause (viii) below;
(viii) neither Parent nor any of its Subsidiaries shall spend in
excess of $4 billion in the aggregate to acquire any business, whether by
merger, consolidation, purchase of property or assets or otherwise (valuing any
non-cash consideration at its fair market value as of the date of the agreement
for such acquisition); provided that neither Parent nor any of its Subsidiaries
shall make any acquisition that would, or would reasonably be likely to prevent
or materially delay or impair the Merger or consummation of the transactions
contemplated hereby;
(ix) neither Parent nor any of its Subsidiaries shall enter into any
material line of business other than the current businesses of Parent and its
Subsidiaries if entering into such line of business would prevent or materially
delay or impair the Merger; and
(x) neither Parent nor any of its Subsidiaries shall authorize or
enter into any agreement to do any of the foregoing.
6.2 Acquisition Proposals
(a) No Solicitation or Negotiation. The Company agrees that neither
it nor any of its Subsidiaries nor any of its or its Subsidiaries' officers and
directors shall, and that it shall use its reasonable best efforts to instruct
and cause its and its Subsidiaries' directors, officers, employees, investment
bankers, attorneys, accountants and other advisors or representatives (such
directors, officers, employees, investment bankers, attorneys, accountants and
other advisors or representatives, collectively, "Representatives") not to,
directly or indirectly:
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(i) initiate, solicit, or knowingly facilitate or encourage, any
inquiries or the making of any proposal or offer that constitutes or could
reasonably be likely to lead to an Acquisition Proposal (as defined below); or
(ii) engage in, continue or otherwise participate in any discussions
or negotiations regarding, or provide any non-public information or data to any
Person who has made, or proposes to make, or otherwise knowingly facilitate, or
encourage an Acquisition Proposal.
Notwithstanding anything in this Agreement to the contrary, prior to
the time, but not after, this Agreement is approved by the Company's
shareholders pursuant to the Company Requisite Vote, the Company may (A) provide
information in response to a request therefor by a Person who has made a bona
fide written Acquisition Proposal that was not initiated, solicited, facilitated
or encouraged, in violation of this Section 6.2 or by the Company's
Representatives, prior to the time such Acquisition Proposal was first made
after the date hereof, if the Company receives from the Person so requesting
such information an executed confidentiality agreement on terms substantially
similar to those contained in the Non-Disclosure Agreement, dated as of February
16, 2006, (the "Confidentiality Agreement"), by and between Parent and the
Company together with a customary standstill agreement on terms no more
favorable to such Person than the standstill applicable to Parent except that
the term of such standstill agreement may be shorter than the time of the
standstill applicable to Parent (but not less than 9 months) and other
provisions of the standstill may be more favorable to such Person (to the extent
customary) in which case the term and other provisions of the standstill
applicable to Parent shall, for so long as this Agreement is in effect,
automatically be reduced to be as favorable to Parent as such other standstill
agreement is to such Person or made more favorable to Parent; or (B) engage in
discussions or negotiations with any Person who has made a bona fide written
Acquisition Proposal that was not initiated, solicited, facilitated or
encouraged, in violation of this Section 6.2 or by the Company's
representatives, prior to the time such Acquisition Proposal was first made
after the date hereof, if, in each case referred to in clause (A) or (B) above,
the Board of Directors of the Company determines in good faith (after
consultation with its financial advisers and legal counsel) that such action is
necessary in order for the directors of the Company to comply with their
fiduciary duties under applicable Law; and in the case referred to in clause (B)
above, if the Board of Directors of the Company, has determined in good faith
based on all the information then available and after consultation with its
financial advisers and legal counsel that such Acquisition Proposal either
constitutes a Superior Proposal or is reasonably likely to result in a Superior
Proposal.
(b) Definitions. For purposes of this Agreement:
"Acquisition Proposal" means (i) any proposal or offer with respect
to a merger, joint venture, partnership, consolidation, dissolution,
liquidation, tender offer, recapitalization, reorganization, share exchange,
business combination, acquisition, distribution or similar transaction outside
the ordinary course of business involving the
-43-
Company or any direct or indirect interest in Cingular or any of the Company's
Significant Subsidiaries; provided that in no event shall any transaction
involving the Company or any of the Company's Significant Subsidiaries that is
expressly permitted by Sections 6.1(a)(ix) or (xiii) and which proposal could
not reasonably be expected to result in a Superior Proposal be deemed to
constitute an "Acquisition Proposal", or (ii) any proposal or offer to acquire
in any manner, directly or indirectly, 15% or more of the Company Shares or 15%
or more of the consolidated assets (including, without limitation, equity
interests in Subsidiaries of the Company); provided that in no event shall a
proposal or offer made by or on behalf of Parent or any of its Subsidiaries, be
deemed to constitute an "Acquisition Proposal."
"Superior Proposal" means a bona fide Acquisition Proposal involving
assets of the Company or its Subsidiaries representing at least 50% of the fair
market value of the consolidated assets of the Company (including its interest
in Cingular and ▇▇.▇▇▇) or at least 50% of the outstanding Company Shares and
otherwise for the purpose of this definition substituting 50% for each reference
to 15% in the definition of "Acquisition Proposal", that was not initiated,
solicited, facilitated or encouraged, in violation of this Section 6.2 or by the
Company's Representatives prior to the time such Acquisition Proposal was first
made after the date hereof, that the Board of Directors of the Company
determines in good faith (after consultation with its financial advisers and
legal counsel) is reasonably likely to be consummated in accordance with its
terms, taking into account all legal, financial and regulatory aspects of the
proposal and the Person making the proposal, and if consummated, would result in
a transaction more favorable to the Company's shareholders from a financial
point of view than the transaction contemplated by this Agreement (after taking
into account any revisions to the terms of the transaction contemplated by this
Agreement agreed to by Parent pursuant to Section 6.2(c)).
(c) Company Recommendation. (i) The Board of Directors of the
Company, and each committee thereof, shall not:
(x) except as expressly permitted by this Section 6.2, withhold or
withdraw, or qualify or modify in a manner reasonably likely to be
understood to be adverse to Parent (or publicly resolve to withhold or
withdraw or so publicly qualify or modify), the Company Recommendation or
approve or recommend to the Company's shareholders any Acquisition
Proposal; or
(y) cause or permit the Company to enter into any letter of intent,
memorandum of understanding, agreement in principle, acquisition
agreement, merger agreement or other agreement (other than a
confidentiality agreement referred to in Section 6.2(a) entered into in
the circumstances referred to in Section 6.2(a)) for any Acquisition
Proposal.
(ii) Notwithstanding anything to the contrary set forth in this
Agreement, prior to the time, but not after, this Agreement is approved by the
Company's
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shareholders by the Company Requisite Vote, the Company's Board of Directors
shall be permitted (A) to withhold or withdraw, or qualify or modify in a manner
reasonably likely to be understood to be adverse to Parent, the Company
Recommendation (a "Company Recommendation Change") if but only if (i) the
Company has received a Superior Proposal, (ii) the Board of Directors of the
Company determines in good faith (after consultation with its financial advisers
and outside legal counsel), that, as a result of such Superior Proposal, a
Company Recommendation Change is necessary in order for the directors of the
Company to comply with their fiduciary duties under applicable Law, (iii) three
business days have elapsed following delivery by the Company to Parent of
written notice advising Parent that the Board of Directors of the Company
intends to so make a Company Recommendation Change, specifying the material
terms and conditions of the Superior Proposal and identifying the Person making
the Superior Proposal, (iv) the Company has given Parent the opportunity to
propose to the Company revisions to the terms of the transactions contemplated
by this Agreement (notwithstanding section 12.10 of the Limited Liability
Company Agreement of Cingular, dated as of October 2, 2000, as amended), and the
Company and its Representatives shall have, if requested by Parent, negotiated
in good faith with Parent and its Representatives regarding any revisions to the
terms of the transactions contemplated by this Agreement proposed by Parent and
the Board of Directors of the Company shall continue to believe in good faith,
as a result of such Acquisition Proposal, that a Company Recommendation Change
is necessary in order for the directors of the Company to comply with their
fiduciary duties under applicable Law and in light of any revisions to the terms
of the transaction contemplated by this Agreement to which Parent shall have
agreed and (v) the Company shall have complied with its obligations set forth in
Section 6.2 of this Agreement in all material respects or (B) to approve, or
recommend to the shareholders of the Company, any Superior Proposal made after
the date of this Agreement (any such action, a "Company Superior Proposal
Action") if the Board of Directors of the Company determines in good faith
(after consultation with its financial advisers and legal counsel) that such
action is necessary in order for the directors of the Company to comply with
their fiduciary duties under applicable Law, provided that the Company's Board
of Directors may not take a Company Superior Proposal Action unless all of the
conditions in clause (A) above have been satisfied (substituting the term
"Company Superior Proposal Action" for the term "Company Recommendation Change"
in clauses (A)(ii) and (iii)) and the Acquisition Proposal continues to be a
Superior Proposal in light of any revisions to the terms of the transaction
contemplated by this Agreement to which Parent shall have agreed.
(d) Parent Recommendation. The Board of Directors of Parent, and
each committee thereof, shall not, except as expressly permitted by this Section
6.2, withhold or withdraw, or qualify or modify in a manner reasonably likely to
be understood to be adverse to the Company (or publicly resolve to withhold or
withdraw or so publicly qualify or modify), the Parent Recommendation or approve
or recommend to the Parent's stockholders any Acquisition Proposal.
Notwithstanding anything to the contrary set forth in this Agreement, prior to
the time, but not after, the issuance of Parent Common Stock required to be
issued in the Merger is approved by Parent's stockholders
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by the Parent Requisite Vote, Parent's Board of Directors shall be permitted (A)
to withhold or withdraw, or qualify or modify in a manner reasonably likely to
be understood to be adverse to the Company, the Parent Recommendation (a "Parent
Recommendation Change") if and only if (i) Parent has received a Superior
Proposal, (ii) the Board of Directors of Parent determines in good faith, after
receiving the advice of its financial advisers and of outside legal counsel,
that, as a result of such Superior Proposal, a Parent Recommendation Change is
necessary in order for the directors of Parent to comply with their fiduciary
duties under applicable Law, (iii) three business days have elapsed following
delivery by Parent to the Company of written notice advising the Company that
the Board of Directors of Parent has resolved to so make a Parent Recommendation
Change, specifying the material terms and conditions of the Superior Proposal
and identifying the Person making the Superior Proposal, (iv) Parent has given
the Company the opportunity to propose to Parent revisions to the terms of the
transactions contemplated by this Agreement, and Parent and its Representatives
shall have, if requested by the Company, negotiated in good faith with the
Company and its Representatives regarding any revisions to the terms of the
transactions contemplated by this Agreement proposed by the Company, and the
Board of Directors of Parent shall continue to believe in good faith, as a
result of such Acquisition Proposal, that a Parent Recommendation Change is
necessary in order for the directors of Parent to comply with their fiduciary
duties under applicable Law in light of any revisions to the terms of the
transaction contemplated by this Agreement to which the Company shall have
agreed or (B) to approve, or recommend to the shareholders of Parent, any
Superior Proposal made after the date of this Agreement (any such action, a
"Parent Superior Proposal Action") if the Board of Directors of Parent
determines in good faith (after consultation with its financial advisers and
legal counsel) that such action is necessary in order for the directors of
Parent to comply with their fiduciary duties under applicable Law, provided that
Parent's Board of Directors may not take a Parent Superior Proposal Action
unless all of the conditions in clause (A) above have been satisfied
(substituting the term "Parent Superior Proposal Action" for the term "Parent
Recommendation Change" in clauses (A)(ii) and (iii)) and the Acquisition
Proposal continues to be a Superior Proposal in light of any revisions to the
terms of the transaction contemplated by this Agreement to which the Company
shall have agreed. Solely for purposes of Sections 6.2(d), 6.2(g) and 8.3(a) to
the extent applicable to an Acquisition Proposal made to Parent all references
to "Acquisition Proposal" and "Superior Proposal" shall be read as if all
references to "the Company" in those terms as defined in Section 6.2(b) were
references instead to "Parent," as if all references to "Company Shares" were
references to "Parent Common Stock," as if all references to "Parent" were
references to "the Company," as if the reference in the definition of
"Acquisition Proposal" to "Section 6.1(a)(ix) or (xiii)" was instead a reference
to "Section 6.1(b)(viii)," and as if the reference in the definition of
"Superior Proposal" to "Section 6.2(c)" was instead a reference to "Section
6.2(d)."
(e) Certain Permitted Disclosure. Nothing contained in this Section
6.2 shall be deemed to prohibit the Company from complying with its disclosure
obligations under U.S. federal or state Law, including under Sections 14d-9 and
14e-2 of the Exchange Act; provided, however, that if such disclosure has the
substantive effect of
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withholding; or withdrawing; or qualifying or modifying in a manner reasonably
likely to be understood to be adverse to Parent, the Company Recommendation,
Parent shall have the right to terminate this Agreement as set forth in Section
8.4(a). Nothing contained in this Section 6.2 shall be deemed to prohibit Parent
from complying with its disclosure obligations under U.S. federal or state Law,
including under Sections 14d-9 and 14e-2 of the Exchange Act; provided, however,
that if such disclosure has the substantive effect of withholding; or
withdrawing; or qualifying or modifying in a manner reasonably likely to be
understood to be adverse to the Company the Parent Recommendation, the Company
shall have the right to terminate this Agreement as set forth in Section 8.3(a).
(f) Existing Discussions. The Company agrees that it will
immediately cease and cause to be terminated any existing activities,
discussions or negotiations with any Persons conducted heretofore with respect
to any Acquisition Proposal. The Company agrees that it will take the necessary
steps to promptly inform the individuals or entities referred to in the first
sentence hereof of the obligations undertaken in this Section 6.2. The Company
also agrees that it will promptly request each Person that has heretofore
executed a confidentiality agreement in connection with its consideration of
acquiring it or any of its Subsidiaries to return or destroy all confidential
information heretofore furnished to such Person by or on behalf of it or any of
its Subsidiaries.
(g) Notice. Each of the Company and Parent (the "Receiving Party")
agrees that it will promptly (and, in any event, within 24 hours) notify the
other if any inquiries, proposals or offers with respect to an Acquisition
Proposal with respect to it or its Subsidiaries are received by it from any
Person, any non-public information is requested from the Receiving Party who has
made, or proposes to make, an Acquisition Proposal with respect to it or its
Subsidiaries, or any discussions or negotiation with the Receiving Party are
sought to be initiated or continued by a Person who has made, or proposes to
make, an Acquisition Proposal with respect to it or its Subsidiaries,
indicating, in connection with such notice, the name of such Person and the
material terms and conditions of any such Acquisition Proposal (including, if
applicable, copies of any written requests, proposals or offers, including
proposed agreements) and thereafter shall keep the other informed, on a current
basis, of the status and terms of any such Acquisition Proposal (including any
amendments thereto that are of, or are related to, any material term) and the
status of any such discussions or negotiations, including any change in the
Receiving Party's intentions as previously notified. The Receiving Party agrees
that it will deliver to Parent or the Company, as the case may be, a new notice
with respect to each Acquisition Proposal with respect to it or its Subsidiaries
that has been materially revised or modified and, prior to taking any Company
Superior Proposal Action or Parent Superior Proposal Action, as the case may be,
or any Company Recommendation Change or Parent Recommendation Change, as the
case may be, with respect to any such materially revised or modified Acquisition
Proposal, a new three-business-day period shall commence, for purposes of
Section 6.2(c) or 6.2(d), as the case may be, from the time Parent or the
Company, as the case may be, receives such notice. The Company also agrees to
provide any information to Parent that it is providing to
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another Person pursuant to this Section 6.2 as soon as practicable after it
provides such information to such other Person if the Company has not previously
furnished such information to Parent.
6.3 Information Supplied. (a) Parent and the Company shall promptly
prepare and file with the SEC the Prospectus/Proxy Statement, and Parent shall
prepare and file with the SEC the Registration Statement on Form S-4 to be filed
with the SEC by Parent in connection with the issuance of shares of Parent
Common Stock in the Merger (including the joint proxy statement and prospectus
(the "Prospectus/Proxy Statement") constituting a part thereof) (the "S-4
Registration Statement") as promptly as practicable. Parent and the Company each
shall use its best efforts to have the S-4 Registration Statement declared
effective under the Securities Act as promptly as practicable after such filing,
and promptly thereafter mail the Prospectus/Proxy Statement to the respective
stockholders of each of the Company and Parent. The Company and Parent shall
also use their respective best efforts to satisfy prior to the effective date of
the S-4 Registration Statement all necessary state securities law or "blue sky"
notice requirements in connection with the Merger and to consummate the other
transactions contemplated by this Agreement and will pay all expenses incident
thereto.
(b) The Company and Parent each agrees, as to itself and its
Subsidiaries, that none of the information supplied or to be supplied by it or
its Subsidiaries for inclusion or incorporation by reference in (i) the S-4
Registration Statement will, at the time the S-4 Registration Statement becomes
effective under the Securities Act, contain any untrue statement of a material
fact or omit to state any 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, and (ii) the Prospectus/Proxy Statement
and any amendment or supplement thereto will, at the date of mailing to
stockholders and at the times of the Company Shareholders Meeting and the Parent
Stockholders Meeting, contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they were
made, not misleading. The Company and Parent will cause the Form S-4 to comply
as to form in all material respects with the applicable provisions of the
Securities Act and the rules and regulations thereunder.
6.4 Shareholders/Stockholders Meetings. The Company will take, in
accordance with applicable Law and its articles of incorporation and by-laws,
all action necessary to convene and hold a meeting of holders of Company Shares
to consider and vote upon the approval of this Agreement (the "Company
Shareholders Meeting") as promptly as practicable after the S-4 Registration
Statement is declared effective. Parent will take, in accordance with applicable
Law and its certificate of incorporation and by-laws, all action necessary to
convene and hold a meeting of holders of Parent Common Stock (the "Parent
Stockholders Meeting") as promptly as practicable after the S-4 Registration
Statement is declared effective to consider and vote upon the approval of the
issuance of Parent Common Stock required to be issued pursuant to the Merger.
Subject
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to the provisions of Section 6.2 hereof, (i) the Company's Board of Directors
shall recommend in the Prospectus/Proxy Statement and at the Company
Shareholders Meeting that the holders of Company Shares approve this Agreement
and shall take all lawful action to solicit such approval; and (ii) Parent's
Board of Directors shall recommend in the Prospectus/Proxy Statement and at
Parent Stockholders Meeting that the holders of Parent Common Stock approve the
issuance of Parent Common Stock required to be issued pursuant to the Merger and
shall take all lawful action to solicit such approval. The parties shall
cooperate in an effort to hold the Company Shareholders Meeting and the Parent
Stockholders Meeting on the same day at the same time.
6.5 Filings; Other Actions; Notification.
(a) The Company will, within 15 days after the date of this
Agreement, provide Parent with a schedule setting forth a true and complete list
as of the date of this Agreement of (i) all Licenses issued or granted by the
FCC, Licenses issued or granted by a U.S. state PUC, and all Licenses issued or
granted by a local Governmental Entity in respect of cable franchises, in each
case issued or granted to the Company or any of its Subsidiaries and all other
Licenses issued or granted to the Company by any Governmental Entity regulating
telecommunications businesses or services or the use of radio spectrum; (ii) all
pending applications for Licenses by the Company or any of its Subsidiaries that
would be such types of Licenses if issued or granted; (iii) all pending
applications by the Company or any of its Subsidiaries for modification,
extension or renewal of any such License; and (iv) any agreements to acquire a
License that upon acquisition by the Company would become such a type of
License.
(b) Parent and the Company shall cooperate with each other and use,
and shall cause their respective Subsidiaries (including Cingular, ▇▇.▇▇▇ and
their respective Subsidiaries, which shall be deemed a Subsidiary of Parent and
the Company for this purpose) to use, their respective 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 its part under this Agreement and applicable
Laws to consummate and make effective the Merger and the other transactions
contemplated by this Agreement as promptly as reasonably practicable, including
preparing and filing as promptly as reasonably practicable all documentation to
effect all necessary notices, reports and other filings (including by filing no
later than 15-days after the date of the receipt by Parent of the schedule
described in Section 6.5(b), all applications required to be filed with the FCC
and the notification and required form under the HSR Act; provided, however,
that the failure to file within such 15 day period will not constitute a breach
of this Agreement) and to obtain as promptly as reasonably practicable all
consents, registrations, approvals, permits and authorizations necessary 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. Each of Parent's and the Company's obligations under this Section
6.5(b) shall include, without limitation, (a) the obligation to use its
reasonable best efforts to defend any lawsuits or other legal proceedings,
whether judicial
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or administrative, challenging consummation of the Merger or the other
transactions contemplated hereby, including seeking to avoid the entry of, or
have reversed, terminated or vacated, any stay or other injunctive relief which
could prevent or delay the Merger or the consummation of the transactions
contemplated hereby and (b) the obligation to use its reasonable best efforts to
avoid or eliminate each impediment to obtaining the Required Governmental
Approvals, in each of clauses (a) and (b) so as to enable the Closing to occur
if reasonably practicable by the initial Termination Date or as promptly
thereafter as is reasonably practicable. Nothing in this Section 6.5 shall
require, or be construed to require (a) Parent or the Company to take or refrain
from taking, or to cause any of its Subsidiaries to take or refrain from taking
any action, or to agree or consent to the Company, Cingular, ▇▇.▇▇▇ or any of
their respective Subsidiaries taking any action, or agreeing to any restriction
or condition, with respect to any of the businesses, assets or operations of
Parent, the Company, Cingular, ▇▇.▇▇▇ or any of their respective Subsidiaries,
if such action, restriction or condition would take effect prior to the Closing
or is not conditioned on the Closing occurring, or (b) Parent or the Company to
take or to refrain from taking any action, to agree to any condition or
restriction with respect to any assets or operations of Parent or the Company or
their respective Subsidiaries (including Cingular, ▇▇.▇▇▇ and their respective
Subsidiaries), or to cause their respective Subsidiaries (including Cingular,
▇▇.▇▇▇ and their respective Subsidiaries) to do or agree to do any of the
foregoing, if any such action, failure to act, restriction or agreement,
individually or in the aggregate, would reasonably be likely to have a material
adverse effect on the financial condition, properties, assets, liabilities,
business or results of operations of Parent and its Subsidiaries (including
Cingular and ▇▇.▇▇▇ and their respective Subsidiaries) after the Merger (it
being understood that for this purpose only, materiality shall be determined by
referring to the equity market value of Parent on the date of this Agreement) (a
"Regulatory Material Adverse Effect"), it being understood that, for purposes of
determining whether a Regulatory Material Adverse Effect would reasonably be
likely to occur, both the positive and negative effects of any such actions,
restrictions and conditions, including any sale, divesture, licensing, lease or
disposition, shall be taken into account, and any loss of synergies anticipated
from the Merger as a result of any such actions, restrictions or conditions,
including any sale, divestiture, licensing, lease or disposition shall not be
taken into account. Subject to applicable Laws relating to the exchange of
information, Parent and the Company shall have the right to review in advance,
and to the extent practicable each will consult the other on, all of the
information relating to Parent or the Company, as the case may be, and any of
their respective Subsidiaries, and ▇▇.▇▇▇ and Cingular and any of their
respective Subsidiaries, that appears in any filing made with, or written
materials submitted to, any third party and/or any Governmental Entity in
connection with the Merger and the other transactions contemplated by this
Agreement (including the S-4 Registration Statement). To the extent permitted by
Law, each party shall provide the other with copies of all correspondence
between it (or its advisors) and any Governmental Entity relating to the
transactions contemplated by this Agreement and, to the extent reasonably
practicable, all telephone calls and meetings with a Governmental Entity
regarding the transactions contemplated by this Agreement shall include
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representatives of Parent and the Company. In exercising the foregoing rights,
each of the Company and Parent shall act reasonably and as promptly as
practicable.
(c) 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 stockholders, as the case may be, and
such other matters as may be reasonably necessary or advisable in connection
with the Prospectus/Proxy Statement, the S-4 Registration Statement or any other
statement, filing, notice or application made by or on behalf of Parent, the
Company or any of their respective Subsidiaries to any third party and/or any
Governmental Entity in connection with the Merger and the transactions
contemplated by this Agreement.
(d) The Company and Parent each shall keep the other apprised of the
status of matters relating to completion of the transactions contemplated
hereby, including promptly furnishing the other with copies of notice or other
communications received by Parent or the Company, as the case may be, or any of
its Subsidiaries or Cingular, ▇▇.▇▇▇ and any of their respective Subsidiaries,
from any third party and/or any Governmental Entity with respect to the Merger
and the other transactions contemplated by this Agreement.
(e) Each of the Company and Parent shall use reasonable best efforts
to cause to be delivered to the other and the other's directors a letter of its
independent auditors, dated (i) the date on which the S-4 Registration Statement
shall become effective and (ii) the Closing Date, and addressed to the other and
its directors, in form and substance customary for "comfort" letters delivered
by independent public accountants in connection with registration statements
similar to the S-4 Registration Statement.
6.6 Access; Consultation. Upon reasonable notice, and except as may
otherwise be required by applicable Law, the Company and Parent each shall (and
shall cause its Subsidiaries to) afford the Parent Representatives or the
Company Representatives, as the case may be, reasonable access, during normal
business hours throughout the period prior to the Effective Time, to its
properties, books, contracts and records and, during such period, each shall
(and shall cause its Subsidiaries to) furnish promptly to the other all
information concerning its or any of its Subsidiaries' business, properties and
personnel as may reasonably be requested; provided that no investigation
pursuant to this Section 6.6 shall affect or be deemed to modify any
representation or warranty made by the Company, Parent or Merger Sub hereunder;
and provided further that the foregoing shall not require the Company or Parent
to permit any inspection, or to disclose any information, that in the reasonable
judgment of the Company or Parent, as the case may be, would result in the
disclosure of any trade secrets of third parties or violate any of its
obligations with respect to confidentiality if the Company or Parent, as the
case may be, shall have used all reasonable best efforts to obtain the consent
of such third party to such inspection or disclosure. All requests for
information made pursuant to this Section 6.6 shall be directed to an executive
officer of the Company or Parent, as
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the case may be, or such Person as may be designated by any such executive
officer, as the case may be.
6.7 Affiliates. The Company shall, prior to the Company Shareholders
Meeting, deliver to Parent a list identifying all persons who, to the knowledge
of the Company's executive officers, may be deemed as of the date of the Company
Shareholders Meeting to be affiliates of the Company for purposes of Rule 145
under the Securities Act and such list shall be updated as necessary to reflect
changes from the date thereof until the Company Shareholders Meeting. The
Company shall use its reasonable best efforts to cause each person identified on
such list to deliver to Parent, not later than five business days prior to
Closing, a written agreement substantially in the form attached as Exhibit B
hereto.
6.8 Stock Exchange Listing and De-listing. Parent shall use its best
efforts to cause the shares of Parent Common Stock to be issued in the Merger
and in respect of Company Options and Company Awards and other outstanding
equity awards under the Company Stock Plans to be approved for listing on the
NYSE, subject to official notice of issuance, prior to the Closing Date. The
Company shall take all actions necessary to permit the Company Shares to be
de-listed from the NYSE and de-registered under the Exchange Act as promptly as
reasonably practicable following the Effective Time.
6.9 Publicity. The initial press release with respect to the Merger
shall be a joint press release and thereafter the Company and Parent shall
consult with each other prior to issuing any press releases or otherwise making
public announcements with respect to the Merger and the other transactions
contemplated by this Agreement and prior to making any filings with any third
party and/or any Governmental Entity (including any national securities
exchange) with respect thereto, except as may be required by Law or by
obligations pursuant to any listing agreement with or rules of any national
securities exchange, and except any consultation that would not be reasonably
practicable as a result of requirements of Law.
6.10 Employee Benefits. (a) Parent agrees that it shall cause the
Surviving Corporation to honor all Company Compensation and Benefit Plans in
accordance with their terms as in effect immediately before the Effective Time
subject to any amendment or termination thereof that may be permitted by the
terms of such plan and applicable Law. Parent agrees that, commencing at the
Effective Time and extending through at least the later to occur of 12 months
after the Effective Time and December 31, 2007, it shall provide or cause to be
provided to those individuals who as of the Effective Time are employees of the
Company and its Subsidiaries (other than employees covered by a collective
bargaining agreement) (the "Affected Employees") compensation and employee
benefits (excluding equity compensation awards or payments or benefits made by
reason of the Merger and the other transactions contemplated by this Agreement)
that are no less favorable in the aggregate than provided to the Affected
Employees immediately before the Effective Time, provided,
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further, that in determining the timing, amount and terms and conditions of
equity compensation and other incentive awards to be granted to Affected
Employees, Parent shall, and shall cause its Subsidiaries to, treat in a
substantially similar manner those Affected Employees and those other employees
of Parent and its Subsidiaries who are substantially similar to such Affected
Employees (including, without limitation, by reason of job duties and years of
service). Notwithstanding the foregoing, except as provided in this Agreement,
nothing contained herein shall obligate Parent, the Surviving Corporation or any
affiliate of either of them to (i) maintain any particular Company Compensation
and Benefit Plan, (ii) grant or issue any equity or equity-based awards or (iii)
retain the employment of any Affected Employee. Notwithstanding the foregoing,
Parent shall or shall cause the Surviving Corporation to continue until the
second anniversary of the Effective Time, each of the Company Compensation and
Benefit Plans identified in Section 6.10 of the Company Disclosure Letter
without any change that is adverse to the participants therein as of the
Effective Time.
(b) For all purposes under the compensation and employee benefit
plans, policies or arrangements of Parent and its affiliates providing benefits
to any Affected Employees after the Effective Time (the "New Plans"), each
Affected Employee shall receive credit for his or her service with the Company
and its affiliates before the Effective Time (including predecessor or acquired
entities or any other entities for which the Company and its affiliates have
given credit for prior service), for purposes of eligibility, vesting and
benefit accrual (but not (i) for purposes of benefit accrual under defined
benefit pension or other retirement plans or (ii) for any new program for which
credit for benefit accrual for service prior to the effective date of such
program is not given to similarly situated employees of Parent other than the
Affected Employees) to the same extent that such Affected Employee was entitled,
before the Effective Time, to credit for such service under any similar or
comparable Compensation and Benefit Plans (except to the extent such credit
would result in a duplication of accrual of benefits). In addition, if Affected
Employees or their dependents are included in any medical, dental, health or
other welfare benefit plan, program or arrangement (a "Successor Plan") other
than the plan or plans in which they participated immediately prior to the
Effective Time (a "Prior Plan"), each Affected Employee immediately shall be
eligible to participate, without any waiting time, in any and all Successor
Plans and such Successor Plans shall not include any restrictions, limitations
or exclusionary provisions with respect to pre-existing conditions, exclusions,
any actively-at-work requirements or any proof of insurability requirements
(except to the extent such exclusions or requirements were applicable under any
similar Prior Plan at the time of commencement of participation in such
Successor Plan), and any eligible expenses incurred by any Affected Employee and
his or her covered dependents during the portion of the plan year of the Prior
Plan ending on the date of the Affected Employee's commencement of participation
in this Successor Plan begins shall be taken into account under this Successor
Plan for purposes of satisfying all deductible, coinsurance and maximum
out-of-pocket requirements applicable to the Affected Employee and his or her
covered dependents for the applicable plan year as if these amounts had been
paid in accordance with the Successor Plan.
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(c) Without limiting the generality of this Section 6.10, Parent and
the Company agree to the employee matters set forth in Section 6.10 of the
Company Disclosure Letter.
(d) Prior to making any written or oral communications to the
directors, officers or employees of the Company or any of its Subsidiaries
pertaining to the compensation and employee benefits of the current and former
employees of the Company and its affiliates that are affected by the
transactions contemplated by this Agreement, the Company shall provide Parent
with a copy of the intended written communication or any written script or notes
in respect of oral communications and Parent shall have a reasonable period of
time to review and comment on the communication or script, and the Company shall
consider in good faith comments of Parent.
6.11 Expenses. Subject to Section 8.5, whether or not the Merger is
consummated, all costs and expenses incurred in connection with this Agreement
and the Merger and the other transactions contemplated by this Agreement shall
be paid by the party incurring such expense, except that expenses incurred in
connection with the filing fee for the S-4 Registration Statement and printing
and mailing the Prospectus/Proxy Statement and the S-4 Registration Statement
shall be shared equally by Parent and the Company.
6.12 Indemnification; Directors' and Officers' Insurance. (a) From
and after the Effective Time, Parent shall, and shall cause the Surviving
Corporation to, jointly and severally, indemnify and hold harmless, and provide
advancement of expenses to, each present and former director and officer of the
Company (when acting in such capacity) determined as of the Effective Time (the
"Indemnified Parties") against any costs or expenses (including reasonable
attorney's fees), judgments, fines, losses, claims, damages or liabilities
incurred in connection with any claim, action, suit, proceeding or
investigation, whether civil, criminal, administrative or investigative, arising
out of or pertaining to matters existing or occurring at or prior to the
Effective Time (including for acts or omissions occurring in connection with the
approval of this Agreement and the consummation of the transactions contemplated
hereby), whether asserted or claimed prior to, at or after the Effective Time,
(i) to the same extent such individuals are indemnified or have the right to
advancement of expenses as of the date of this Agreement by the Company pursuant
to its articles of incorporation and by-laws and indemnification agreements
identified in Section 5.1(h)(i) of the Company Disclosure Letter with, or for
the benefit of, any such individuals and (ii) without regard to the limitations
in subclause (i) above, to the fullest extent permitted by Law.
(b) Any Indemnified Party wishing to claim indemnification under
Section 6.12(a), upon learning of any such claim, action, suit, proceeding or
investigation, shall promptly notify Parent and the Surviving Corporation
thereof, but the failure to so notify shall not relieve Parent and the Surviving
Corporation of any liability they may have to such Indemnified Party if such
failure does not materially prejudice
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Parent or the Surviving Corporation, as the case may be. In the event of any
such claim, action, suit, proceeding or investigation (whether arising before or
after the Effective Time), (i) the Surviving Corporation shall have the right to
assume the defense thereof and the Surviving Corporation shall not be liable to
such Indemnified Parties for any legal expenses of other counsel or any other
expenses subsequently incurred by such Indemnified Parties in connection with
the defense thereof, except that if the Surviving Corporation elects not to
assume such defense or counsel for the Indemnified Parties advises that there
are issues which raise conflicts of interest between the Surviving Corporation
and the Indemnified Parties, the Indemnified Parties may retain counsel
satisfactory to them, and the Surviving Corporation shall pay all reasonable
fees and expenses of such counsel for the Indemnified Parties promptly;
provided, however, that the Surviving Corporation shall be obligated pursuant to
this paragraph (b) to pay for only one firm of counsel for all Indemnified
Parties in any jurisdiction (unless there is a conflict of interest as provided
above, (ii) the Indemnified Parties will cooperate in the defense of any such
matter and (iii) the Surviving Corporation shall not be liable for any
settlement effected without its prior written consent.
(c) Parent shall cause the Surviving Corporation to and the
Surviving Corporation shall maintain a policy or policies of officers' and
directors' liability insurance for acts and omissions occurring prior to the
Effective Time ("D&O Insurance") with coverage in amount and scope at least as
favorable as the Company's existing directors' and officers' liability insurance
coverage for a period of six years after the Effective Time; provided, however,
that, if the existing D&O Insurance expires, is terminated or cancelled, or if
the annual premium therefor is increased to an amount in excess of 300% of the
last annual premium paid prior to the date of this Agreement (such amount, as
stated in Section 6.12 of the Company Disclosure Letter, the "Current Premium"),
in each case during such six year period, the Surviving Corporation will use its
reasonable best efforts to obtain D&O Insurance in an amount and scope as great
as can be obtained for the remainder of such period for a premium not in excess
(on an annualized basis) of 300% of the Current Premium; and provided further
that in lieu of such coverage, Parent may substitute a prepaid "tail" policy for
such coverage, which it may cause the Company to obtain prior to the Closing.
(d) If Parent or any of its successors or assigns (i) shall
consolidate with or merge into any other corporation or entity and shall not be
the continuing or surviving corporation or entity of such consolidation or
merger or (ii) shall transfer all or substantially all of its properties and
assets to any individual, corporation or other entity, then and in each such
case, proper provisions shall be made so that the successors and assigns of
Parent shall assume all of the obligations set forth in this Section 6.12.
(e) The provisions of this Section are intended to be for the
benefit of, and shall be enforceable by, each of the Indemnified Parties, their
heirs and their representatives, notwithstanding any release executed by any
Indemnified Party in connection with his or her departure from the Company or
its Subsidiaries unless a release of the provisions of this Section is
specifically provided for in such release.
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6.13 Regulatory Compliance. The Company and each of its Subsidiaries
agrees to use its reasonable best efforts to (a) cure no later than the
Effective Time any material violations and defaults by any of them under any
applicable rules and regulations of the FCC ("FCC Rules"), (b) comply in all
material respects with the terms of the FCC Licenses and file or cause to be
filed with the FCC all reports and other filings to be filed under applicable
FCC Rules and (c) to the extent reasonably requested by Parent in writing, take
all actions for each of them to be in compliance upon the consummation of the
Closing with the provisions of Sections 271 and 272 of the Communications Act
(including any orders issued by the FCC interpreting or implementing such
provisions). Parent agrees that, if this Agreement is terminated by the Company
pursuant to Section 8.3(b), it shall promptly thereafter reimburse the Company
for any reasonable out-of-pocket expenses incurred by the Company following
incurrence and delivery of reasonable documents by the Company at the direction
of Parent pursuant to clause (c) of this Section 6.13. The Parent and each of
its Subsidiaries agrees to use its reasonable best efforts to (a) cure no later
than the Effective Time any material violations and defaults by any of them
under any applicable FCC Rules, and (b) comply in all material respects with the
terms of the FCC Licenses and file or cause to be filed with the FCC all reports
and other filings to be filed under applicable FCC Rules.
6.14 Takeover Statute; Rights Agreement. (a) If any Takeover Statute
is or may become applicable to the Merger or the other transactions contemplated
by this Agreement, each of Parent and the Company and their respective Boards of
Directors shall grant such approvals and take such actions as are necessary so
that such transactions may be consummated as promptly as practicable on the
terms contemplated by this Agreement or by the Merger and otherwise use
reasonable best efforts to act to eliminate or minimize the effects of such
statute or regulation on such transactions.
(b) The Company will take, by no later than the fifth business day
after the date of this Agreement, all necessary action with respect to all of
the outstanding Rights (as defined in the Rights Agreement) so that, as of
immediately prior to the Effective Time, as a result of entering into this
Agreement or consummating the Merger and/or the other transactions contemplated
by this Agreement, (A) neither the Company nor Parent will have any obligations
under the Rights or the Rights Agreement, (B) the holders of the Rights will
have no rights under the Rights or the Rights Agreement and (C) the Rights
Agreement will expire.
6.15 Dividends. The Company shall coordinate with Parent the
declaration, setting of record dates and payment dates of dividends on Company
Shares so that holders of Company Shares do not receive dividends on both
Company Shares and Parent Common Stock received in the Merger in respect of any
calendar quarter or fail to receive a dividend on either Company Shares or
Parent Common Stock received in the Merger in respect of any calendar quarter.
6.16 Control of the Company's or Parent's Operations. Nothing
contained in this Agreement shall give Parent or the Company, directly or
indirectly,
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rights to control or direct the operations of the other prior to the Effective
Time. Prior to the Effective Time, each of Parent and the Company shall
exercise, consistent with the terms and conditions of this Agreement, complete
control and supervision of its operations.
6.17 Section 16(b). The Board of Directors of each of the Company
and Parent shall, prior to the Effective Time, take all such actions as may be
necessary or appropriate pursuant to Rule 16b-3(d) and Rule 16b-3(e) under the
Exchange Act to exempt from Section 16 of the Exchange Act (i) the disposition
of Company Shares and "derivative securities" (as defined in Rule 16a-1(c) under
the Exchange Act) with respect to Company Shares and (ii) the acquisition of
Parent Common Stock and derivative securities with respect to Parent Common
Stock pursuant to the terms of this Agreement by officers and directors of the
Company subject to the reporting requirements of Section 16(a) of the Exchange
Act or by employees or directors of the Company who may become an officer or
director of Parent subject to the reporting requirements of Section 16(a) of the
Exchange Act.
6.18 Tax-Free Qualification. (a) Each of the Company and Parent
shall use its reasonable best efforts to and to cause each of its Subsidiaries
to, (i) cause the Merger to qualify as a "reorganization" within the meaning of
Section 368(a) of the Code and (ii) obtain the opinions of counsel referred to
in Sections 7.2(d) and 7.3(c) of this Agreement.
(b) From and after the Effective Time, Parent shall not take any
action that is reasonably likely to cause the Merger to fail to qualify as a
"reorganization" within the meaning of Section 368(a) of the Code, including any
action that is reasonably likely to cause the Merger to fail to satisfy the
"continuity of business enterprise" requirement described in Treasury Regulation
Section 1.368-1(d). If the opinion conditions contained in Sections 7.2(d) and
7.3(c) of this Agreement have been satisfied, each of the Company and Parent
shall report the Merger for U.S. federal income tax purposes as a
"reorganization" within the meaning of Section 368(a) of the Code.
6.19 Tax Representation Letters. The Company shall use its
reasonable best efforts to deliver to Fried, Frank, Harris, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
LLP and to ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP a "Tax Representation Letter," dated as of
the Closing Date and signed by an officer of the Company, containing
representations of the Company, and Parent shall use its reasonable best efforts
to deliver to Fried, Frank, Harris, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP and to ▇▇▇▇▇▇▇▇ &
▇▇▇▇▇▇▇▇ LLP a "Tax Representation Letter," dated as of the Closing Date and
signed by an officer of Parent, containing representations of Parent, in each
case as shall be reasonably necessary or appropriate to enable ▇▇▇▇▇▇▇▇ &
▇▇▇▇▇▇▇▇ LLP to render the opinion described in Section 7.2(d) of this Agreement
and Fried, Frank, Harris, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP to render the opinion described
in Section 7.3(c) of this Agreement.
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6.20 Cingular Headquarters. From and after the Effective Time until
at least the 5th anniversary of the Effective Time, Parent agrees to maintain
the corporate headquarters of Cingular in Atlanta, Georgia.
6.21 Direct Investment Plan. As promptly as reasonably practicable
after the date of this Agreement, the Company will cease to allow Persons who
are not participants in the Company Direct Investment Plan during the five
business days prior to the date of this Agreement into the Company Direct
Investment Plan. In addition, from and after the date of this Agreement all
Company Shares sold under such plan shall be acquired by the Company in an open
market purchase.
ARTICLE VII
CONDITIONS
7.1 Conditions to Each Party's Obligation to Effect the Merger. The
respective obligation of each party to effect the Merger is subject to the
satisfaction or waiver at or prior to the Closing of each of the following
conditions:
(a) Shareholder/Stockholder Approval. This Agreement shall have been
duly approved by holders of Company Shares constituting the Company Requisite
Vote, and the issuance of Parent Common Stock required to be issued in the
Merger shall have been duly approved by the holders of shares of Parent Common
Stock constituting Parent Requisite Vote.
(b) NYSE Listing. The shares of Parent Common Stock issuable to the
Company stockholders pursuant to the Merger shall have been authorized for
listing on the NYSE upon official notice of issuance.
(c) Regulatory Consents. (i) The waiting period applicable to the
consummation of the Merger under the HSR Act and the EC Merger Regulation (if
applicable) shall have expired or been earlier terminated, (ii) all Governmental
Consents required to be obtained from the FCC for the consummation of the Merger
shall have been obtained, (iii) all Governmental Consents required to be
obtained, from any U.S. state PUC in order to consummate the Merger shall have
been obtained, and (iv) all other Governmental Consents, the failure of which to
make or obtain would, (A) individually or in the aggregate, reasonably be likely
to result in a Regulatory Material Adverse Effect or (B) be reasonably likely to
result in an officer or director of Parent or the Company being subject to
criminal liability, shall have been made or obtained (such Governmental
Consents, together with those described in Section 7.1(c)(i), 7.1(c)(ii) and
7.1(c)(iii), the "Required Governmental Consents"). For purposes of this
Agreement, the term "Governmental Consents" shall mean all notices, reports, and
other filings required to be made prior to the Effective Time by the Company or
Parent or any of their respective Subsidiaries (including Cingular) with, and
all consents, registrations, approvals, permits, clearances and authorizations
required to be obtained prior to the Effective Time by the Company or Parent or
any of their respective Subsidiaries (including Cingular) from, any
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Governmental Entity in connection with the execution and delivery of this
Agreement and the consummation of the Merger and the other transactions
contemplated hereby.
(d) Orders. No court in the U.S. or U.S. federal or state
legislature or other Qualifying Governmental Entity shall have enacted, issued,
promulgated, enforced or entered after the date of this Agreement any Law,
order, decree or injunction (whether temporary, preliminary or permanent) that
is in effect and enjoins or otherwise prohibits consummation of the Merger
(collectively, an "Order"). No Governmental Entity not referred to in the prior
sentence shall have enacted, issued, promulgated, enforced or entered an Order
which is, individually or in the aggregate, reasonably likely to result in a
Regulatory Material Adverse Effect or subject any officer or director of Parent
or the Company to criminal liability.
(e) S-4 Registration Statement. The S-4 Registration Statement shall
have become effective under the Securities Act. No stop order suspending the
effectiveness of the S-4 Registration Statement shall have been issued.
7.2 Conditions to Obligations of Parent and Merger Sub. The
obligations of Parent and Merger Sub to effect the Merger are also subject to
the satisfaction or waiver by Parent at or prior to the Closing of the following
conditions:
(a) Representations and Warranties. (i) The representations and
warranties of the Company set forth in Section 5.1(b)(i) relating to the capital
stock of the Company shall be true and correct in all material respects (A) on
the date of this Agreement and (B) at the Closing (except to the extent that
such representation and warranty expressly speaks as of a particular date, in
which case such representation and warranty shall be true and correct in all
material respects as of such earlier date); (ii) the representations and
warranties of the Company set forth in this Agreement that are qualified by
Company Material Adverse Effect shall be true and correct (A) on the date of
this Agreement and (B) at the Closing (except to the extent that any such
representation and warranty expressly speaks as of a particular date, in which
case such representation and warranty shall be true and correct as of such
earlier date); (iii) the other representations and warranties of the Company set
forth in this Agreement shall be true and correct (A) on the date of this
Agreement and (B) at the Closing (except to the extent that any such
representation and warranty speaks as of a particular date, in which case such
representation and warranty shall be so true and correct as of such date);
provided, however, that notwithstanding anything herein to the contrary, the
condition set forth in this Section 7.2(a)(iii) shall be deemed to have been
satisfied even if any representations and warranties of the Company are not so
true and correct unless the failure of such representations and warranties of
the Company to be so true and correct (read for purposes of this Section
7.2(a)(iii) without any materiality qualification), individually or in the
aggregate, has had or would reasonably be likely to have a Company Material
Adverse Effect; and (iv) Parent shall have received at the Closing a certificate
signed on behalf of the Company by an executive officer of the Company to the
effect that the condition set forth in this Section 7.2(a) has been satisfied.
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(b) Performance of Obligations of the Company. The Company shall
have performed in all material respects all obligations required to be performed
by it under this Agreement at or prior to the Closing, and Parent shall have
received a certificate signed on behalf of the Company by an executive officer
of the Company to such effect.
(c) Consents Under Agreements. The Company shall have obtained the
consent or approval of each Person whose consent or approval shall be required
in order to consummate the transactions contemplated by this Agreement under any
Contract to which the Company or any of its Subsidiaries is a party, except
those for which the failure to obtain such consent or approval would not,
individually or in the aggregate, reasonably be likely to have a Company
Material Adverse Effect.
(d) Tax Opinion. Parent shall have received the written opinion of
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP, counsel to Parent, or other counsel reasonably
satisfactory to Parent, dated the Closing Date, to the effect that the Merger
will be treated for Federal income tax purposes as a reorganization within the
meaning of Section 368(a) of the Code. In rendering such opinion, counsel to
Parent shall be entitled to rely upon assumptions, representations, warranties
and covenants, including those contained in this Agreement and in the Tax
Representation Letters described in Section 6.19 of this Agreement.
(e) Governmental Consents. All Governmental Consents that have been
obtained shall have been obtained without the imposition of any term,
restriction, condition or consequence that would, individually or in the
aggregate, reasonably be likely to have or result in a Regulatory Material
Adverse Effect, and all Required Governmental Consents obtained from the FCC
shall have been obtained by Final Order. For the purpose of this Agreement,
"Final Order" means an action or decision that has been granted as to which (i)
no request for a stay or any similar request is pending, no stay is in effect,
the action or decision has not been vacated, reversed, set aside, annulled or
suspended and any deadline for filing such a request that may be designated by
statute or regulation has passed, (ii) no petition for rehearing or
reconsideration or application for review is pending and the time for the
filings of any such petition or application has passed, (iii) no Governmental
Entity has undertaken to reconsider the action on its own motion and the time
within which it may effect such reconsideration has passed and (iv) no appeal is
pending (including other administrative or judicial review) or in effect and any
deadline for filing any such appeal that may be specified by statute or rule has
passed, which in any such case (i), (ii), (iii) or (iv) is reasonably likely to
result in vacating, reversing, setting aside, annulling, suspending or modifying
such action or decision (in the case of any modification in a manner that would
impose any term, condition or consequence that would, individually or in the
aggregate, reasonably be likely to have or result in a Regulatory Material
Adverse Effect).
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7.3 Conditions to Obligation of the Company. The obligation of the
Company to effect the Merger is also subject to the satisfaction or waiver by
the Company at or prior to the Closing of the following conditions:
(a) Representations and Warranties. (i) The representations and
warranties of Parent and Merger Sub set forth in Section 5.2(b)(i) relating to
the capital stock of Parent and Merger Sub shall be true and correct in all
material respects (A) on the date of this Agreement and (B) at the Closing
(except to the extent that any such representation and warranty expressly speaks
as of a particular date, in which case such representation and warranty shall be
true and correct in all material respects as of such date); (ii) the
representations and warranties of Parent and Merger Sub set forth in this
Agreement that are qualified by Parent Material Adverse Effect shall be true and
correct (A) on the date of this Agreement and (B) at the Closing (except to the
extent that any such representation and warranty expressly speaks as of a
particular date, in which case such representation and warranty shall be so true
and correct as of such date); (iii) the other representations and warranties of
Parent set forth in this Agreement shall be so true and correct (A) on the date
of this Agreement and (B) at the Closing (except to the extent that any such
representation or warranty speaks as of a particular date, in which case such
representation and warranty shall be true and correct as of such date) as of
such date; provided, however, that notwithstanding anything herein to the
contrary, the condition set forth in this Section 7.3(a)(iii) shall be deemed to
have been satisfied even if any representations and warranties of Parent and
Merger Sub are not so true and correct unless the failure of such
representations and warranties of Parent and Merger Sub to be so true and
correct (read for purposes of this Section 7.3(a)(iii) without any materiality
qualification), individually or in the aggregate, has had or would reasonably be
likely to have a Parent Material Adverse Effect; and (iv) the Company shall have
received at the Closing a certificate signed on behalf of Parent by an executive
officer of Parent to the effect that the condition set forth in this Section
7.3(a) has been satisfied.
(b) Performance of Obligations of Parent and Merger Sub. Each of
Parent and Merger Sub shall have performed in all material respects all
obligations required to be performed by it under this Agreement at or prior to
the Closing, and the Company shall have received a certificate signed on behalf
of Parent by an executive officer of Parent to such effect.
(c) Tax Opinion. The Company shall have received the written opinion
of Fried Frank, Harris, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP, counsel to the Company, or other
counsel reasonably satisfactory to the Company, dated the Closing Date, to the
effect that the Merger will be treated for Federal income tax purposes as a
reorganization within the meaning of Section 368(a) of the Code. In rendering
such opinion, counsel to the Company shall be entitled to rely upon assumptions,
representations, warranties and covenants, including those contained in this
Agreement and in the Tax Representation Letters described in Section 6.19 of
this Agreement.
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7.4 Invoking Certain Conditions. Any party seeking to claim that a
condition to its obligation to effect the Merger has not been satisfied by
reason of the fact that a Company Material Adverse Effect, a Parent Material
Adverse Effect or Regulatory Material Adverse Effect has occurred or is
reasonably likely to occur or result shall have the burden of proof to establish
that fact.
ARTICLE VIII
TERMINATION
8.1 Termination by Mutual Consent. This Agreement may be terminated
and the Merger may be abandoned at any time prior to the Effective Time, whether
before or after the approval by shareholders or stockholders of the Company and
Parent, respectively, referred to in Section 7.1(a), by mutual written consent
of the Company and Parent, by action of their respective Boards of Directors.
8.2 Termination by Either Parent or the Company. This Agreement may
be terminated and the Merger may be abandoned at any time prior to the Effective
Time by action of the Board of Directors of either Parent or the Company if (a)
the Merger shall not have been consummated by March 6, 2007 (the "Termination
Date"), whether such date is before or after the date of approval by the
shareholders or stockholders of the Company or Parent, respectively; provided,
however, that, if Parent or the Company determines that additional time is
necessary in order to obtain a Required Governmental Consent, the Termination
Date may be extended from time to time by Parent or the Company one or more
times by written notice to the other party up to a date not beyond September 6,
2007, which date shall thereafter be deemed to be the Termination Date, (b) the
approval of this Agreement by the Company's shareholders required by Section
7.1(a) shall not have occurred at a meeting duly convened therefor or at any
adjournment or postponement thereof at which a vote upon this Agreement was
taken, (c) the approval of Parent's stockholders necessary for the issuance of
Parent Common Stock required to be issued pursuant to the Merger as required by
Section 7.1(a) shall not have been obtained at a meeting duly convened therefor
or at any adjournment or postponement thereof at which a vote on such issuance
was taken or (d) any Order permanently restraining, enjoining or otherwise
prohibiting consummation of the Merger shall become final and non-appealable,
except for any Order the existence of which would not result in the failure of
the condition set forth in Section 7.1(c) or (d) (whether before or after the
approval by the shareholders or stockholders of the Company or Parent,
respectively); provided that the right to terminate this Agreement pursuant to
clause (a) above shall not be available to any party that has breached in any
material respect its obligations under this Agreement in any manner that shall
have proximately contributed to the failure of the Merger to be consummated.
8.3 Termination by the Company. This Agreement may be terminated and
the Merger may be abandoned at any time prior to the Effective Time, whether
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before or after the approval of this Agreement by the shareholders of the
Company referred to in Section 7.1(a), by action of the Board of Directors of
the Company if:
(a) the Board of Directors of Parent shall have withheld or
withdrawn, or qualified or modified in a manner reasonably likely to be
understood to be adverse to the Company, the Parent Recommendation prior to the
receipt of the approval of Parent's stockholders satisfying the relevant portion
of the condition set forth in Section 7.1(a);
(b) prior to the receipt of the approval of the Company's
shareholders satisfying the relevant portion of the condition set forth in
Section 7.1(a), the Board of Directors of the Company approves a Superior
Proposal in accordance with Section 6.2(c) and authorizes the Company to enter
into a binding written agreement providing for such Superior Proposal and, prior
to or simultaneous with entering into such agreement pays to Parent in
immediately available funds the Termination Fee required to be paid as set forth
in Section 8.5; or
(c) there has been a breach of any representation, warranty,
covenant or agreement made by Parent or Merger Sub in this Agreement, or any
such representation and warranty shall have become untrue after the date of this
Agreement, such that Section 7.3(a) or 7.3(b) would not be satisfied and such
breach or failure to be true is not curable or, if curable, is not curable by
the Termination Date (as the same may be extended).
8.4 Termination by Parent. This Agreement may be terminated and the
Merger may be abandoned at any time prior to the Effective Time, before or after
the approval by the stockholders of Parent referred to in Section 7.1(a), by
action of the Board of Directors of Parent if:
(a) the Board of Directors of the Company shall have withheld or
withdrawn, or qualified or modified in a manner reasonably likely to be
understood to be adverse to Parent, the Company Recommendation, or shall have
approved or recommended to the shareholders of the Company any Acquisition
Proposal, in any such case prior to the receipt of the approval of the Company's
shareholders satisfying the relevant portion of the condition set forth in
Section 7.1(a);
(b) there has been a breach of any representation, warranty,
covenant or agreement made by the Company in this Agreement, or any such
representation and warranty shall have become untrue after the date of this
Agreement, such that Section 7.2(a) or 7.2(b) would not be satisfied and such
breach or failure to be true is not curable or, if curable, is not curable by
the Termination Date (as the same may be extended), or
(c) the Company shall have willfully or intentionally breached in
any material respect its obligations under Section 6.2.
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8.5 Effect of Termination and Abandonment. (a) In the event of
termination of this Agreement and the abandonment of the Merger pursuant to this
Article VIII, this Agreement (other than as set forth in Section 6.2 (as to the
Parent-Company standstill agreement), Section 6.11, this Section 8.5 and Article
IX) shall become void and of no effect with no liability on the part of any
party hereto (or of any of its directors, officers, employees, agents, legal or
financial advisors or other representatives); provided, however, that no such
termination shall relieve any party hereto from any liability for damages to any
other party resulting from any prior willful or intentional breach of this
Agreement or from any obligation to pay, if applicable, the fees and
reimbursement of expenses in accordance with Sections 6.11, 8.5(b) or 8.5(c).
(b) If this Agreement is terminated by the Company pursuant to
Section 8.3(b), the Company shall pay to Parent a fee equal to $1.7 billion (the
"Termination Fee") at the time set forth in Section 8.3(b). If this Agreement is
terminated by Parent pursuant to Section 8.4(c) the Company shall promptly, but
in no event later than two days after such termination, pay to Parent the
Termination Fee by wire transfer of same day funds. If (i) this Agreement is
terminated (x) by Parent or the Company pursuant to Section 8.2(b) or (y) by
Parent pursuant to Section 8.4(a) or pursuant to Section 8.4(b) (solely with
respect to a willful and intentional breach), (ii) in the case of clause (x),
prior to the vote on adoption of this Agreement at the Company Shareholders
Meeting, but after the date of this Agreement, one or more bona fide Acquisition
Proposals (other than from Parent or any of its Subsidiaries) involving 50% or
more of the outstanding Company Shares or assets of the Company (including its
interests in Cingular) representing 50% or more of the fair market value of the
consolidated assets of the Company (including its interests in Cingular) or
otherwise involving a transaction or series of transactions that could
reasonably be expected to result in value to holders of Company Shares
comparable to or more favorable than the transactions contemplated by this
Agreement (a "Covered Proposal") shall have been publicly made or any Person
shall have publicly announced an intention (whether or not conditional) to make
a Covered Proposal and, in the case of clause (y), a Covered Proposal shall have
been made after the date of this Agreement and (iii) within 12 months after the
date of a termination, any Person (other than Parent or any of its affiliates or
the Company and any of its Subsidiaries) (an "Acquiring Person") has acquired,
or has entered into an agreement to acquire, by acquisition, merger,
consolidation or other business combination transaction or by purchase, sale,
assignment, lease, transfer or otherwise, in one transaction or in a series of
related transactions, at least 50% of the outstanding Company Shares (or
shareholders of the Company immediately prior to such transaction cease to hold
at least 50% of the Company Shares (or any successor shares) after such
transaction) or at least 50% of the fair market value of the Company's
consolidated assets (including its interests in Cingular) or the Company or one
or more of its Subsidiaries transfers or otherwise disposes of at least 50% of
the fair market value of the Company's consolidated assets or the Company or one
or more of its Subsidiaries publicly announces its intention to effect any such
acquisition, transfer or disposition that in, one or a series of related
transactions, includes as the principal part thereof an extraordinary dividend,
spin-off, split-off, distribution, reclassification, issuer tender offer
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or similar transaction and thereafter completes such transaction or a
substantially similar transaction (it being understood that a difference in
consideration shall not be taken into account in determining if the completed
transaction is substantially similar), then the Company shall promptly, but in
no event later than two days after the completion of such transaction or the
time such agreement is entered into as the case may be, pay Parent the
Termination Fee (less any amounts reimbursed to Parent pursuant to the next
sentence), payable by wire transfer of same day funds. If this Agreement is
terminated by Parent or the Company pursuant to Section 8.2(b) or by Parent
pursuant to Section 8.4(a), then the Company shall promptly, but in no event
later than two days after a request from Parent, reimburse Parent for all fees
and expenses (up to a maximum of $120 million) incurred by Parent and its
Subsidiaries (plus 60% of all fees and expenses incurred by Cingular and its
Subsidiaries) in connection with this Agreement and the transactions
contemplated hereby, such reimbursement amount to be payable by wire transfer of
same day funds. The Company acknowledges that the agreements contained in this
Section 8.5(b) are an integral part of the transactions contemplated by this
Agreement, and that, without these agreements, Parent and Merger Sub would not
enter into this Agreement; accordingly, if the Company fails to pay promptly the
amount due pursuant to this Section 8.5(b), and, in order to obtain such
payment, Parent or Merger Sub commences a suit which results in a judgment
against the Company for the fee set forth in this Section 8.5(b), the Company
shall pay to Parent or Merger Sub its costs and expenses (including attorneys'
fees) in connection with such suit, together with interest on the amount of the
fee at the prime rate of Citibank N.A. in effect on the date such payment should
have been made.
(c) If (i) this Agreement is terminated by Parent or the Company
pursuant to Section 8.2(c) or by the Company pursuant to Section 8.3(a), (ii)
prior to Parent Stockholders Meeting, but after the date of this Agreement, a
Covered Proposal (for this purpose substituting therein Parent for each
reference to the Company and Parent Common Stock for each reference to Company
Shares and disregarding the second proviso in the definition of "Acquisition
Proposal" and substituting "Section 6.1(b)(viii)" for "Section 6.1(a)(ix) or
(xiii)" in the definition of "Acquisition Proposal") other than any such
Acquisition Proposal from the Company or any of its Subsidiaries (a "Parent
Covered Proposal") shall have been publicly made or any Person shall have
publicly announced an intention (whether or not conditional) to make a Parent
Covered Proposal and (iii) within 12 months after the date of a termination, any
Person (other than Parent or any of its Subsidiaries or the Company and any of
its Subsidiaries) (a "Parent Acquiring Person") has acquired, or has entered
into an agreement to acquire, by acquisition, merger, consolidation or other
business combination transaction or by purchase, sale, assignment, lease,
transfer or otherwise, in one transaction or in a series of related
transactions, at least 50% of the outstanding shares of Parent Common Stock (or
stockholders of Parent immediately prior to such transactions cease to hold at
least 50% of the shares of Parent Common Stock (or successor shares) after such
transaction) or at least 50% of the fair market value of Parent's consolidated
assets (including its interest in Cingular) or Parent or one or more of its
Subsidiaries transfers or otherwise disposes of at least 50% of the fair market
value of Parent's consolidated assets or Parent or one or
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more of its Subsidiaries publicly announces its intention to effect any such
acquisition, transfer or disposition that, in one or a series of related
transactions, includes as the principal part thereof an extraordinary dividend,
spin-off, split-off, distribution, reclassification, issuer tender offer or
similar transaction and thereafter completes such transaction or a substantially
similar transaction (it being understood that a difference in consideration
shall not be taken into account in determining if the completed transaction is
substantially similar), then Parent shall promptly, but in no event later than
two days after the date of consummation of such acquisition or at the time such
agreement is entered into, as the case may be, pay to the Company the
Termination Fee (less any amounts reimbursed to the Company pursuant to the next
sentence), payable by wire transfer of same day funds. If this Agreement is
terminated by Parent or the Company pursuant to Section 8.2(c) or by the Company
pursuant to Section 8.3(a), then Parent shall promptly, but in no event later
than two days after a request from the Company, reimburse the Company for all
fees and expenses (up to a maximum of $120 million) incurred by the Company and
its Subsidiaries (plus 40% of all fees and expenses incurred by Cingular and its
Subsidiaries) in connection with this Agreement and the transactions
contemplated hereby, such reimbursement amount to be payable by wire transfer of
same day funds. Parent acknowledges that the agreements contained in this
Section 8.5(c) are an integral part of the transactions contemplated by this
Agreement, and that, without these agreements, the Company would not enter into
this Agreement; accordingly, if Parent fails to pay promptly the amount due
pursuant to this Section 8.5(c), and, in order to obtain such payment, the
Company commences a suit which results in a judgment against Parent for the fee
or reimbursement set forth in this Section 8.5(c), Parent shall pay to the
Company its costs and expenses (including attorneys' fees) in connection with
such suit, together with interest on the amount of the fee at the prime rate of
Citibank N.A. in effect on the date such payment should have been made.
ARTICLE IX
MISCELLANEOUS AND GENERAL
9.1 Survival. None of the covenants or agreements of the Company,
Parent or Merger Sub contained in this Agreement shall survive the consummation
of the Merger, except for those covenants and agreements contained herein that
by their terms apply or are to be performed in whole or in part after the
consummation of the Merger, including without limitation, the agreements of the
Company, Parent and Merger Sub contained in Section 3.3 (Parent Board of
Directors), Article IV, Section 6.12 (Indemnification; Directors' and Officers'
Insurance), Section 6.10 (Employee Benefits), Section 6.18(b) (Tax-Free
Qualification), and Section 6.20 (Cingular Headquarters), and this Article IX,
which shall survive the consummation of the Merger. All other representations,
warranties, covenants and agreements in this Agreement shall not survive the
consummation of the Merger or the termination of this Agreement.
9.2 Modification or Amendment. Subject to any limitations under
applicable Law, at any time prior to the Effective Time, the parties hereto may
modify or
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amend this Agreement, by written agreement executed and delivered by duly
authorized officers of the respective parties.
9.3 Waiver of Conditions. (a) Any provision of this Agreement may be
waived prior to the Effective Time if, and only if, such waiver is in writing
and signed by the party against whom the waiver is to be effective.
(b) No failure or delay by any party in exercising any right, power
or privilege hereunder shall operate as a waiver thereof nor shall any single or
partial exercise thereof preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. Except as otherwise herein
provided, the rights and remedies herein provided shall be cumulative and not
exclusive of any rights or remedies provided by Law.
9.4 Counterparts. This Agreement may be executed in any number of
counterparts, each such counterpart being deemed to be an original instrument,
and all such counterparts shall together constitute the same agreement.
9.5 GOVERNING LAW AND VENUE; WAIVER OF JURY TRIAL.
(a) THIS AGREEMENT SHALL BE DEEMED TO BE MADE IN AND IN ALL RESPECTS
SHALL BE INTERPRETED, CONSTRUED AND GOVERNED BY AND IN ACCORDANCE WITH THE LAW
OF THE STATE OF DELAWARE, except that with respect to matters mandatorily
governed by the GBCC, the GBCC shall govern. The parties hereby irrevocably
submit exclusively to the jurisdiction of the State of Delaware and the Federal
courts of the United States of America located in the State of Delaware, and
agree not to assert, as a defense in any action, suit or proceeding for the
interpretation or enforcement hereof or of any such document, that it is not
subject thereto or that such action, suit or proceeding may not be brought or is
not maintainable in said courts or that the venue thereof may not be appropriate
or that this Agreement or any such document may not be enforced in or by such
courts, and the parties hereto irrevocably agree that all claims with respect to
such action or proceeding shall be heard and determined in such a Federal or
state court. The parties hereby consent to and grant any such court jurisdiction
over the Person of such parties and over the subject matter of such dispute and
agree that mailing of process or other papers in connection with any such action
or proceeding in the manner provided in Section 9.6 or in such other manner as
may be permitted by Law, shall be valid and sufficient service thereof.
(b) EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH
MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT
ISSUES, AND THEREFORE EACH SUCH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY
WAIVES ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY
LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT,
OR THE TRANSACTIONS CONTEMPLATED
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BY THIS AGREEMENT. EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT (i) NO
REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY
OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK
TO ENFORCE THE FOREGOING WAIVER, (ii) EACH SUCH PARTY UNDERSTANDS AND HAS
CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (iii) EACH SUCH PARTY MAKES THIS
WAIVER VOLUNTARILY, AND (iv) EACH SUCH PARTY HAS BEEN INDUCED TO ENTER INTO THIS
AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS
SECTION 9.5.
9.6 Notices. Notices, requests, instructions or other documents to
be given under this Agreement shall be in writing and shall be deemed given, (i)
when sent if sent by facsimile, provided that the fax is promptly confirmed by
telephone confirmation thereof, (ii) when delivered, if delivered personally to
the intended recipient, and (iii) one business day later, if sent by overnight
delivery via a national courier service, and in each case, addressed to a party
at the following address for such party:
if to Parent or Merger Sub
AT&T Inc.
▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇, Esq.,
Senior Vice President and Associate General Counsel
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
if to the Company
BellSouth Corporation
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇, Esq.
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
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with a copy to:
Fried, Frank, Harris, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇.
▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
or to such other persons or addresses as may be designated in writing by the
party to receive such notice as provided above.
9.7 Entire Agreement. This Agreement (including any exhibits
hereto), the Confidentiality Agreement, the Company Disclosure Letter and the
Parent Disclosure Letter constitute the entire agreement, and supersede all
other prior agreements, understandings, representations and warranties both
written and oral, among the parties, with respect to the subject matter hereof.
9.8 No Third Party Beneficiaries. Except as provided in Section 6.12
(Indemnification; Directors' and Officers' Insurance), this Agreement is not
intended to, and does not, confer upon any Person other than the parties hereto
any rights or remedies hereunder.
9.9 Obligations of Parent and of the Company. Whenever this
Agreement requires a Subsidiary of Parent (including Cingular) to take any
action, such requirement shall be deemed to include an undertaking on the part
of Parent to cause such Subsidiary to take such action. Whenever this Agreement
requires a Subsidiary of the Company (including Cingular) to take any action,
such requirement shall be deemed to include an undertaking on the part of the
Company to cause such Subsidiary to take such action and, after the Effective
Time, on the part of the Surviving Corporation to cause such Subsidiary to take
such action.
9.10 Severability. The provisions of this Agreement shall be deemed
severable and the invalidity or unenforceability of any provision shall not
affect the validity or enforceability or the other provisions hereof. If any
provision of this Agreement, or the application thereof to any Person or any
circumstance, is invalid or unenforceable, (a) a suitable and equitable
provision shall be substituted therefor in order to carry out, so far as may be
valid and enforceable, the intent and purpose of such invalid or unenforceable
provision and (b) the remainder of this Agreement and the application of such
provision to other Persons or circumstances shall not, subject to clause (a), be
affected by such invalidity or unenforceability, except as a result of such
substitution, nor shall such invalidity or unenforceability affect the validity
or enforceability of such provision, or the application thereof, in any other
jurisdiction.
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9.11 Interpretation. (a) The table of contents and headings herein
are for convenience of reference only, do not constitute part of this Agreement
and shall not be deemed to limit or otherwise affect any of the provisions
hereof. Where a reference in this Agreement is made to a Section or Exhibit,
such reference shall be to a Section of or Exhibit to this Agreement unless
otherwise indicated. Whenever the words "include," "includes" or "including" are
used in this Agreement, they shall be deemed to be followed by the words
"without limitation." The term "Qualifying Governmental Entity" shall have the
meaning set out on Section 9.11(a) of the Parent Disclosure Letter.
(b) The parties have participated jointly in negotiating and
drafting this Agreement. In the event that an ambiguity or a question of intent
or interpretation arises, this Agreement shall be construed as if drafted
jointly by the parties, and no presumption or burden of proof shall arise
favoring or disfavoring any party by virtue of the authorship of any provision
of this Agreement.
9.12 Captions. The Article, Section and paragraph captions herein
are for convenience of reference only, do not constitute part of this Agreement
and shall not be deemed to limit or otherwise affect any of the provisions
hereof.
9.13 Specific Performance. The parties acknowledge and agree that
any breach of this Agreement would give rise to irreparable harm for which
monetary damages would not be an adequate remedy. The parties accordingly agree
that, in addition to other remedies, the parties shall be entitled to enforce
the terms of this Agreement by decree of specific performance without the
necessity of proving the inadequacy of monetary damages as a remedy and to
obtain injunctive relief against any breach or threatened breach hereof.
9.14 Assignment. This Agreement shall not be assignable by operation
of law or otherwise; provided, however, that Parent may designate prior to the
Effective Time, by written notice to the Company, another wholly-owned direct or
indirect Subsidiary to be a party to the Merger in lieu of Merger Sub (unless
doing so would prevent or delay or impair the Merger or consummation of the
transactions contemplated hereby), in which event all references herein to
Merger Sub shall be deemed references to such other Subsidiary (except with
respect to representations and warranties made herein with respect to Merger Sub
as of the date of this Agreement) and all representations and warranties made
herein with respect to Merger Sub as of the date of this Agreement shall also be
made with respect to such other Subsidiary as of the date of such designation.
Any assignment in contravention of the preceding sentence shall be null and
void.
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IN WITNESS WHEREOF, this Agreement has been duly executed and
delivered by the duly authorized officers of the parties hereto as of the date
first written above.
BELLSOUTH CORPORATION
By: /s/ F. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
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Name: F. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Chairman and Chief
Executive Officer
AT&T INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇.
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Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇.
Title: Chairman of the Board and
Chief Executive Officer
ABC CONSOLIDATION CORP.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
-------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Title: President
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