Exhibit 2.1
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
NTELOS INC.
NTELOS ACQUISITION CORP.
and
CONESTOGA ENTERPRISES, INC.
July 24, 2001
TABLE OF CONTENTS
ARTICLE I. THE MERGER; EFFECTIVE TIME; CLOSING.................................................................. 1
1.1. The Merger........................................................................................... 1
1.2. Effective Time....................................................................................... 2
1.3. Effects of the Merger................................................................................ 2
1.4. Closing.............................................................................................. 2
ARTICLE II. SURVIVING CORPORATION............................................................................... 2
2.1. Articles of Incorporation............................................................................ 2
2.2. Bylaws............................................................................................... 2
2.3. Directors............................................................................................ 2
2.4. Officers............................................................................................. 2
ARTICLE III. MERGER CONSIDERATION; CONVERSION OR CANCELLATION OF COMPANY SHARES IN THE MERGER................... 2
3.1. Merger Consideration; Conversion or Cancellation of Company Shares in the Merger..................... 2
3.2. Election Procedure................................................................................... 4
3.3. Issuance of Parent Stock Consideration and Payment of Cash Consideration; Proration.................. 7
3.4. Issuance of Parent Stock Consideration............................................................... 8
3.5. Payment of Cash Consideration........................................................................ 8
3.6. Letters of Transmittal............................................................................... 9
3.7. Missing Certificates................................................................................. 9
3.8. Dissenting Shares.................................................................................... 9
3.9. No Further Rights or Transfers; Cancellation of Treasury Shares...................................... 10
3.10. Stock Options........................................................................................ 10
3.11. Certain Company Actions.............................................................................. 11
ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF THE COMPANY....................................................... 11
4.1. Corporate Organization and Qualification............................................................. 11
4.2. Capitalization....................................................................................... 12
4.3. Authority Relative to This Agreement................................................................. 12
4.4. Consents and Approvals; No Violation................................................................. 13
4.5. SEC Reports; Financial Statements.................................................................... 14
4.6. Absence of Certain Changes or Events................................................................. 14
4.7. Litigation........................................................................................... 15
4.8. Insurance............................................................................................ 15
4.9. Taxes................................................................................................ 15
4.10. Employee Benefit Plans; Labor Matters................................................................ 17
4.11. Environmental Laws and Regulations................................................................... 20
4.12. Intangible Property.................................................................................. 22
4.13. Compliance with Laws and Orders...................................................................... 22
4.14. Rights Agreement..................................................................................... 22
4.15. Certain Agreements................................................................................... 23
4.16. Brokers and Finders.................................................................................. 23
4.17. Opinion of Financial Advisor......................................................................... 23
4.18. Accuracy of Information Furnished................................................................... 23
4.19. Equity Investments.................................................................................. 23
4.20. No Default.......................................................................................... 23
4.21. Material Contracts.................................................................................. 24
4.22. State Takeover Statutes; Anti-Takeover Provisions................................................... 25
4.23. Transactions With Affiliates........................................................................ 25
4.24. Licenses............................................................................................ 25
4.25. Information Supplied................................................................................ 25
4.26. Title to and Condition of Assets.................................................................... 26
4.27. Undisclosed Liabilities and Commitments............................................................. 26
ARTICLE V. REPRESENTATIONS AND WARRANTIES OF PARENT AND NEWCO.................................................. 27
5.1. Corporate Organization and Qualification............................................................ 27
5.2. Capitalization...................................................................................... 27
5.3. Authority Relative to This Agreement................................................................ 28
5.4. Consents and Approvals; No Violation................................................................ 28
5.5. SEC Reports; Financial Statements................................................................... 29
5.6. Absence of Certain Changes or Events................................................................ 30
5.7. Litigation.......................................................................................... 30
5.8. Insurance........................................................................................... 30
5.9 Taxes............................................................................................... 30
5.10. Employee Benefit Plans; Labor Matters............................................................... 31
5.11. Environmental Laws and Regulations.................................................................. 33
5.12. Compliance with Laws and Orders..................................................................... 33
5.13. Rights Agreement.................................................................................... 33
5.14. Certain Agreements.................................................................................. 33
5.15. Brokers and Finders................................................................................. 34
5.16. Opinion of Financial Advisor........................................................................ 34
5.17. Accuracy of Information Furnished................................................................... 34
5.18. No Default.......................................................................................... 34
5.19 Transactions With Affiliates........................................................................ 34
5.20. Licenses............................................................................................ 35
5.21. Information Supplied................................................................................ 35
5.22. Title to and Condition of Assets.................................................................... 35
5.23. Undisclosed Liabilities and Commitments............................................................. 36
5.24. Financing........................................................................................... 36
5.25 Share Ownership..................................................................................... 36
5.26. Interim Operations of Newco......................................................................... 36
ARTICLE VI. ADDITIONAL COVENANTS AND AGREEMENTS................................................................ 37
6.1. Conduct of Business of the Company.................................................................. 37
6.2. No Solicitation of Transactions..................................................................... 40
6.3. Reasonable Efforts.................................................................................. 41
6.4. Access to Information............................................................................... 42
6.5. Publicity........................................................................................... 42
6.6. Indemnification of Directors and Officers........................................................... 42
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6.7. Employees........................................................................................... 44
6.8. Registration Statement; Joint Proxy Statement....................................................... 45
6.9. Shareholders' Approvals............................................................................. 46
6.10. Reorganization Treatment............................................................................ 47
ARTICLE VII. CONDITIONS TO CONSUMMATION OF THE MERGER.......................................................... 47
7.1. Conditions to Each Party's Obligations to Effect the Merger......................................... 47
7.2. Conditions to the Company's Obligations to Effect the Merger........................................ 48
7.3. Conditions to the Parent's and Newco's Obligations to Effect the Merger............................. 49
ARTICLE VIII. TERMINATION; AMENDMENT; WAIVER................................................................... 50
8.1. Termination by Mutual Consent....................................................................... 50
8.2. Termination by Either Parent or the Company......................................................... 50
8.3. Termination by Parent............................................................................... 50
8.4. Termination by the Company.......................................................................... 50
8.5. Effect of Termination............................................................................... 51
8.7. Extension; Waiver................................................................................... 52
ARTICLE IX. MISCELLANEOUS AND GENERAL.......................................................................... 52
9.1. Payment of Expenses................................................................................. 52
9.2. Survival of Representations and Warranties; Survival of Confidentiality............................. 52
9.3. Modification or Amendment........................................................................... 52
9.4. Waiver of Conditions................................................................................ 52
9.5. Counterparts........................................................................................ 53
9.6. Governing Law....................................................................................... 53
9.7. Notices............................................................................................. 53
9.8. Entire Agreement; Assignment........................................................................ 54
9.9. Parties in Interest................................................................................. 54
9.10. Certain Definitions................................................................................. 54
9.11. Obligation of Parent................................................................................ 58
9.12. Validity............................................................................................ 58
9.13. Captions............................................................................................ 58
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SCHEDULES
Schedule 4.2 Company Capitalization
Schedule 4.4(a)(iii) Company Consents and Approvals
Schedule 4.6 Company Changes
Schedule 4.7 Company Litigation
Schedule 4.9 Company Taxes
Schedule 4.10 Company Employee Benefit Plans
Schedule 4.10(a) Company Aggregate Accumulated Benefit Obligations
Schedule 4.10(b) Employee Labor Matters
Schedule 4.11 Company Environmental Matters
Schedule 4.12 Company Intangible Property
Schedule 4.15 Certain Company Agreements
Schedule 4.19 Company Equity Investments
Schedule 4.20 Company Defaults
Schedule 4.21 Company Contracts
Schedule 4.23 Company Affiliate Transactions
Schedule 4.24 Company Licenses
Schedule 4.26 Company Title to Assets
Schedule 4.27 Company Liabilities
Schedule 5.2 Parent Capitalization
Schedule 5.3(c) Parent Consents and Approvals
Schedule 5.5 Parent Changes
Schedule 5.7 Parent Litigation
Schedule 5.10 Parent Employee Benefit Plans
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Schedule 5.11 Parent Environmental Matters
Schedule 5.14 Certain Parent Agreements
Schedule 5.18 Parent Defaults
Schedule 5.19 Parent Affiliate Transactions
Schedule 5.22 Parent Title to Assets
Schedule 5.23 Parent Liabilities
Schedule 6.1 Company Conduct of Business
Schedule 6.1(k) Employment Severance and Termination Agreements
Schedule 6.2 Parent Conduct of Business Schedule 6.8(b)
Post-closing Employee Benefits
Schedule 6.8(c) Employment and Other Agreements
Exhibit A Form of Voting Agreement
Exhibit B Financing Letter
Exhibit C Form of Affiliate Letter
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER (this "Agreement"), dated as of July 24,
2001, by and among NTELOS Inc., a Virginia corporation ("Parent"), NTELOS
Acquisition Corp., a Virginia corporation and wholly owned subsidiary of
Parent ("Newco") and CONESTOGA ENTERPRISES, INC., a Pennsylvania corporation
(the "Company").
RECITALS
WHEREAS, the Board of Directors of the Company (the "Board of Directors")
has, subject to the conditions of this Agreement, determined that the Merger (as
defined in Section 1.1 below) is in the best interests of the shareholders of
the Company and approved and adopted this Agreement and the transactions
contemplated hereby in accordance with the Pennsylvania Business Corporation Law
of 1988, as amended (the "PBCL") and the Virginia Stock Corporation Act (the
"VSCA"); and
WHEREAS, Parent, Newco and the Company desire to make certain
representations, warranties, covenants and agreements in connection with the
Merger; and
WHEREAS, for federal income tax purposes, it is intended that the Merger
shall qualify as a reorganization within the meaning of Section 368(a) of the
Internal Revenue Code of 1986, as amended (the "Code"); and
WHEREAS, the Company and Parent have each obtained voting agreements in
the form of Exhibit A attached hereto, from the directors, executive officers
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and shareholders listed on Exhibit A, who have agreed to vote shares of voting
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capital stock owned by them in the Company and Parent, respectively, in favor of
this Agreement, the Merger and, to the extent required, all transactions
incident thereto (collectively, the "Voting Agreements").
NOW, THEREFORE, in consideration of the foregoing and the mutual
representations, warranties, covenants and agreements set forth herein, and
intending to be legally bound, Parent, Newco and the Company hereby agree as
follows:
ARTICLE I. -- THE MERGER; EFFECTIVE TIME; CLOSING
1.1 The Merger. Subject to the terms and conditions of this Agreement, at
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the Effective Time (as defined in Section 1.2 below), the Company and Newco
shall consummate a merger (the "Merger") in which (a) the Company shall be
merged with and into Newco and the separate corporate existence of the Company
shall thereupon cease, (b) Newco shall be the successor or surviving corporation
in the Merger and shall be governed by the laws of the Commonwealth of Virginia,
and (c) the separate corporate existence of Newco with all its rights,
privileges, immunities, powers and franchises shall continue unaffected by the
Merger. The corporation surviving the Merger is sometimes hereinafter referred
to as the "Surviving Corporation."
1.2 Effective Time. As soon as practicable after the satisfaction or waiver
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of the conditions set forth in Article VII hereof, the appropriate parties
hereto shall execute in the manner required by the PBCL and the VSCA and file
with the Pennsylvania Department of State and the Virginia State Corporation
Commission ("VSCC") appropriate articles of merger relating to the Merger, and
the parties shall take such other and further actions as may be required by Law
(as defined in Section 4.13 below) to make the Merger effective. The time the
Merger becomes effective in accordance with applicable Law is hereinafter
referred to as the "Effective Time."
1.3 Effects of the Merger. The Merger shall have the effects set forth in
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Section 1929 of the PBCL.
1.4 Closing. The closing of the Merger (the "Closing") shall take place (a)
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at the offices of Barley, Snyder, ▇▇▇▇▇ & ▇▇▇▇▇, LLC, ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, at 10:00 a.m. on the first business day following
the date on which the last of the conditions set forth in Article VII hereof
shall be fulfilled or waived in accordance with this Agreement or (b) at such
other place, time and date as Parent and the Company may agree.
ARTICLE II. -- SURVIVING CORPORATION
2.1 Articles of Incorporation. The Articles of Incorporation of Newco, as
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in effect immediately prior to the Effective Time, shall be the Articles of
Incorporation of the Surviving Corporation.
2.2 Bylaws. The Bylaws of Newco, as in effect immediately prior to the
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Effective Time, shall be the Bylaws of the Surviving Corporation.
2.3 Directors. The directors of Newco at the Effective Time shall, from and
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after the Effective Time, be the initial 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
Surviving Corporation's Certificate of Incorporation and Bylaws.
2.4 Officers. The officers of the Company at the Effective Time shall, from
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and after the Effective Time, be the initial officers 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 Surviving Corporation's Certificate of Incorporation and Bylaws.
ARTICLE III. -- MERGER CONSIDERATION; CONVERSION OR CANCELLATION OF COMPANY
SHARES IN THE MERGER
3.1 Merger Consideration; Conversion or Cancellation of Company Shares in the
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Merger.
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(a) At the Effective Time, by virtue of the Merger and without any
action on the part of Parent, Newco, the Company, the Surviving Corporation or
the holders of any outstanding shares of capital stock of the Company (together
with any associated Company Rights (as defined below), the "Company Shares") or
capital stock of Newco:
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(i) Each Company Share, together with any associated right to
purchase one common share (a "Company Right"), issued pursuant to the
Rights Agreement, dated as of March 1, 2000, by and between the Company and
First Union National Bank, as Rights Agent (the "Company Rights
Agreement"), issued and outstanding immediately prior to the Effective Time
(other than (A) Dissenting Shares (as defined in Section 3.8 below),
(B)Company Shares owned by Parent, Newco or any direct or indirect wholly
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owned subsidiary of Parent (collectively, "Parent Companies") and (C)
Company Shares owned by any of the Company's direct or indirect wholly
owned subsidiaries or held in the treasury of the Company ("Treasury
Shares")) shall, by virtue of the Merger, be cancelled and extinguished and
converted into the right to receive, the Parent Stock Consideration or the
combination of Parent Stock Consideration and Cash Consideration, without
any interest thereon, as specified in Section 3.3 hereof (the "Merger
Consideration").
(ii) For purposes hereof, the following terms have the following
respective meanings:
"Cash Consideration" means a per Company Share amount in cash equal to
$40.00.
"Closing Market Price" shall be the volume weighted average of the per
share sales price (excluding after-market trading) for Parent Stock,
calculated to two decimal places, for the twenty (20) consecutive trading
days immediately preceding the date which is two (2) business days before
the Effective Time, as reported on the National Market System of the
National Association of Securities Dealers Automated Quotation System
("Nasdaq"), the foregoing period of twenty (20) trading days being
hereinafter sometimes referred to as the "Price Determination Period" (For
example, if December 31, 2001 were to be the Effective Date, then the Price
Determination Period would be November 28, 29 and 30 and December 3, 4, 5,
6, 7, 10, 11, 12, 13, 14, 17, 18, 19, 20, 21, 24 and 26, 2001).
"Conversion Ratio" means (calculated to the nearest 0.0001):
(a) 2.2222, if the Closing Market Price is less than $18.00;
(b) $40.00 / the Closing Market Price, if the Closing Market Price is
equal to or greater than $18.00 and equal to or less than $30.00; or
(c) 1.3333, if the Closing Market Price is greater than $30.00.
"Outstanding Shares" means the aggregate number of Company Shares
outstanding immediately prior to the Effective Time, but excluding Company
Shares to be cancelled pursuant to Section 3.1(d) which number will not be
greater than the number of shares of Company Common Stock outstanding on
the date of this Agreement (except for shares issuable upon exercise of
stock options or on conversion of Company Preferred Stock outstanding on
the date of this Agreement).
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"Parent Rights" means rights to purchase Junior Participating
Cumulative Preferred Stock, Series A of Parent ("Series A Preferred")
distributed to holders of Parent Stock pursuant to a Rights Agreement dated
February 26, 2000, as amended, between Parent and Registrar and Transfer
Company (the "Parent Rights Agreement").
"Parent Stock" means the common stock, no par value, of Parent and
associated Parent Rights. For clarification, each reference herein to
Parent Stock shall include the associated Parent Rights.
"Parent Stock Consideration" means that number of shares of Parent
Stock equal to one share multiplied by the Conversion Ratio. In the event
that between the date of this Agreement and the Effective Time, the issued
and outstanding shares of Parent Stock shall have been affected or changed
into a different number of shares or a different class of shares as a
result of a stock split, reverse stock split, stock dividend, spin-off,
extraordinary dividend, recapitalization, reclassification, subdivision,
combination of shares or other similar transaction, or there shall have
been a record date declared for any such matter, the Parent Stock
Consideration shall be proportionately adjusted.
(b) No fractional shares of Parent Stock shall be issued pursuant to
the Merger. If the Parent Stock Consideration to be issued to a holder of
Company Shares in the Merger is not otherwise a whole number of shares, such
number shall be rounded to the nearest whole number, with a number equal to .5
being rounded up to the nearest whole number.
(c) Each share of Parent Stock and any and all shares of Preferred
Stock of Parent outstanding immediately prior to the Merger shall remain issued
and outstanding.
(d) Any shares of Company Stock owned by the Parent Companies and
Treasury Shares shall be cancelled and retired at the Effective Time and shall
cease to exist and no Parent Stock or other consideration shall be delivered in
exchange therefor.
(e) On or after the Effective Time, holders of certificates
representing Company Shares (the "Certificates") immediately prior to the
Effective Time shall cease to have any rights as stockholders of the Company,
except the right to receive the Merger Consideration for each Company Share held
by them.
3.2 Election Procedure. Each holder of Company Shares (other than holders
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of Company Shares to be cancelled as set forth in Section 3.1(d)) shall have the
right to submit a request specifying either that such holder's Company Shares
shall be converted into the Parent Stock Consideration, Cash Consideration or a
combination of Cash Consideration and Parent Stock Consideration, without
interest, in the Merger in accordance with the following procedure:
(a) Each holder of Parent Stock may specify in a request made in
accordance with the provisions of this Section 3.2 (herein called an "Election")
to either: (i) convert each Company Share owned by such holder into the right to
receive the Parent Stock Consideration in the Merger (a "Stock Election"); (ii)
convert each Company Share owned by such holder into
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the right to receive the Cash Consideration in the Merger (a "Cash Election");
or (iii) convert a portion of the Company Shares owned by such holder into the
right to receive the Cash Consideration in the Merger, and a portion of the
Company Shares owned by each such holder into the right to receive the Parent
Stock Consideration in the Merger (a "Cash/Stock Election"). A Form of Election
(as defined in (b) below) shall be included with each copy of the Proxy
Statement (as defined in Section 4.10) mailed to shareholders of the Company in
connection with the meeting of shareholders called to consider the approval of
this Agreement. Parent and the Company shall each use its reasonable best
efforts to mail or otherwise make available the Form of Election to all persons
who become holders of Company Shares during the period between the record date
for such shareholder meeting and the Election Deadline (as defined in Section
3.2(d)).
(b) Parent shall prepare a form (the "Form of Election"), which shall be in
form and substance acceptable to the Company, pursuant to which each holder of
Company Shares at the close of business on the Election Deadline may make an
Election and which shall be mailed to the Company's shareholders in accordance
with Section 3.2(a) so as to permit the Company's shareholders to exercise their
right to make an Election prior to the Election Deadline.
(c) Holders of record of Company Shares who hold such shares as nominees,
trustees, or in other representative capacities may submit multiple Forms of
Election, provided that such representative certifies that each Form of Election
covers all Shares held by such representative for a particular beneficial owner.
(d) Not later than the filing of the Joint Proxy Statement with the
Securities and Exchange Commission (the "SEC") (as defined below), as
contemplated in Section 6.9 hereof, Parent shall appoint a bank acceptable to
the Company as the person to receive Forms of Election and to act as exchange
agent under this Agreement, which bank shall be acceptable to the Company (the
"Exchange Agent"). Any Company shareholder's Election shall have been made
properly only if the Exchange Agent shall have received, by 5:00 p.m. local time
in the city in which the principal office of such Exchange Agent is located, on
the date of the Election Deadline, a Form of Election properly completed and
signed and accompanied by certificates for the Company Shares to which such Form
of Election relates (or by an appropriate guarantee of delivery of such
certificates, as set forth in such Form of Election, from a member of any
registered national securities exchange or of the National Association of
Securities Dealers, Inc. or a commercial bank or trust company in the United
States provided such certificates are in fact delivered to the Exchange Agent by
the time required in such guarantee of delivery). Failure to deliver Company
Shares covered by such a guarantee of delivery within the time set forth on such
guarantee shall be deemed to invalidate any otherwise properly made Election. As
used herein, "Election Deadline" means the date announced by Parent (which date
shall be agreed upon by the Company), as the last day on which Forms of Election
will be accepted; provided, that such date shall be a business day no earlier
than ten (10) business days prior to the Effective Time and no later than the
date on which the Effective Time occurs. In the event this Agreement shall have
been terminated prior to the Effective Time, the Exchange Agent shall
immediately return all Election Forms and Certificates for Company Shares to the
appropriate Company shareholders.
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(e) Any Company shareholder may at any time prior to the Election
Deadline change his Election by written notice received by the Exchange Agent
prior to the Election Deadline accompanied by a revised Form of Election
properly completed and signed.
(f) Any Company shareholder may, at any time prior to the Election
Deadline, revoke his Election by written notice received by the Exchange Agent
prior to the Election Deadline or by withdrawal prior to the Election Deadline
of his certificates for Parent Stock, or of the guarantee of delivery of such
certificates, previously deposited with the Exchange Agent. All Elections shall
be revoked automatically if the Exchange Agent is notified in writing by Parent
or the Company that this Agreement has been terminated. Any Company shareholder
who shall have deposited certificates for Company Shares with the Exchange Agent
shall have the right to withdraw such certificates by written notice received by
the Exchange Agent prior to the Election Deadline and thereby revoke his
Election as of the Election Deadline if the Merger shall not have been
consummated prior thereto.
(g) Parent shall have the right to make rules, not inconsistent with
the terms of this Agreement, governing the validity of the Forms of Election,
the manner and extent to which Elections are to be taken into account in making
the determinations prescribed by Section 3.3, the issuance and delivery of
certificates for Parent Stock into which Company Shares are converted in the
Merger and the payment of cash for Company Shares converted into the right to
receive the Cash Consideration in the Merger.
3.3 Conversion of Outstanding Shares Into Parent Stock Consideration and
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Cash Consideration; Proration. The manner in which each Company Share (except
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Company Shares to be cancelled as set forth in Section 3.1(d)) shall be
converted in the Merger into Parent Stock Consideration, Cash Consideration or a
combination of Parent Stock Consideration and Cash Consideration shall be as set
forth in this Section 3.3.
(a) As is more fully set forth below, the number of Company Shares to
be converted into the right to receive Cash Consideration in the Merger pursuant
to this Agreement shall not exceed the product of (i) the number of Outstanding
Shares and (ii) the Maximum Cash Percentage. "Maximum Cash Percentage" shall
mean the excess of 58% over the percentage of Outstanding Shares that are
Dissenting Shares (as defined in Section 3.8); provided, however,
notwithstanding anything to the contrary contained herein, in order that the
Merger will not fail to satisfy continuity of interest requirements under
applicable federal income tax principles relating to reorganizations under
Section 368(a) of the Code, the Maximum Cash Percentage shall be reduced to the
extent necessary to satisfy such requirements as reasonably determined by Hunton
& ▇▇▇▇▇▇▇▇, and consequently the number of Outstanding Shares that will be
converted into Parent Stock Consideration will be increased and the number of
Outstanding Shares that will be converted into the right to receive Cash
Consideration will be reduced.
(b) Each Company Share that the holder has elected to have converted
into Parent Stock Consideration pursuant to a Stock Election or a Cash/Stock
Election shall be converted into Parent Stock Consideration.
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(c) If Cash Elections and Cash/Stock Elections request the conversion
into Cash Consideration of a number of Company Shares less than the number
constituting the Maximum Cash Percentage, each Company Share for which
conversion into Cash Consideration has been requested shall be converted into
the right to receive Cash Consideration.
(d) If Cash Elections and Cash/Stock Elections request the conversion
into Cash Consideration of a number of Company Shares more than the number
constituting the Maximum Cash Percentage, the Company Shares for which
conversion into Cash Consideration have been requested shall be converted into
the right to receive Cash Consideration and Parent Stock Consideration in the
following manner:
(i) Each Company Share that the holder has requested be converted
into Cash Consideration pursuant to a Cash/Stock Election requesting Cash
Consideration for a percentage of all of the holder's Company Shares equal
to or less than the Maximum Cash Percentage shall be converted into Cash
Consideration.
(ii) In the case of each Cash/Stock Election not described in the
preceding clause (i) and each Cash Election, the number of Company Shares
converted into the right to receive Cash Consideration shall equal the
product of (A) the number of Company Shares that the Election requests be
converted into Cash Consideration and (B) a fraction, the numerator of
which will be the number of Company Shares constituting the Remaining Cash
Percentage and the denominator of which will be the aggregate number of
Company Shares requested to be converted into Cash Consideration pursuant
to all Elections subject to this clause (ii). "Remaining Cash Percentage"
shall mean the excess of the Maximum Cash Percentage over the percentage of
Outstanding Shares represented by the aggregate number of Company Shares to
be converted into Cash Consideration pursuant to the preceding clause (i).
(iii) Each Company Share covered by an Election described in the
preceding clause (ii) and not converted into the right to receive Cash
Consideration pursuant to such clause (ii) shall be converted in the Merger
into Parent Stock Consideration.
(e) Each Non-Electing Company Share shall be converted in the Merger
into Parent Stock Consideration. "Non-Electing Company Share" shall mean any
Outstanding Share for which an Election is not in effect at the Election
Deadline. If Parent shall determine that any Election is not properly made with
respect to any Company Shares, such Election shall be deemed to be not in
effect, and the Company Shares covered by such Election shall, for purposes
hereof, be deemed to be Non-Electing Company Shares. Parent and the Exchange
Agent shall have no obligation to notify any person of any defect in any Form of
Election submitted to the Exchange Agent.
(f) Subject to Section 3.3(a), the Exchange Agent shall make all
computations contemplated by this Section 3.3 and all such computations shall be
conclusive and binding on the holders of Company Shares absent manifest error.
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3.4 Issuance of Parent Stock Consideration.
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(a) Immediately prior to the Effective Time, Parent shall deliver to
the Exchange Agent, in trust for the benefit of the holders of Company Shares,
certificates representing an aggregate number of shares of Parent Stock as
nearly as practicable equal to the number of shares to be converted into Parent
Stock as determined in Section 3.3.
(b) As soon as practicable on the day of the Closing (but after the
Effective Time), each holder of Company Shares converted into Parent Stock
Consideration pursuant to Article III, upon surrender to the Exchange Agent with
a properly completed Letter of Transmittal (to the extent not previously
surrendered with a Form of Election ) of one or more Certificates for such
Company Shares for cancellation, shall be entitled to receive (and the Exchange
Agent shall deliver) certificates representing the number of shares of Parent
Stock into which such Company Shares shall have been converted in the Merger.
(c) No dividends or distributions that have been declared, if any,
will be paid to persons entitled to receive certificates for shares of Parent
Stock until such persons surrender their Certificates at which time all such
dividends and distributions shall be paid. In no event shall the persons
entitled to receive such dividends be entitled to receive interest on such
dividends. If any certificate for such Parent 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 to the Exchange Agent any transfer taxes or other taxes
required by reason of issuance in a name other than the registered holder of the
certificate surrendered, or shall establish to the satisfaction of the Exchange
Agent that such tax has been paid or is not applicable. Notwithstanding the
foregoing, neither the Exchange Agent nor any party hereto shall be liable to a
holder of Company Shares for any Parent Stock or dividends thereon delivered to
a public official pursuant to any applicable abandoned property, escheat or
similar law.
3.5 Payment of Cash Consideration. Immediately prior to the Effective Time,
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Parent shall deposit with the Exchange Agent, in trust for the benefit of the
holders of Company Shares, an amount in cash equal to the Cash Consideration to
be paid to holders of Company Shares to be converted into the right to receive
the Cash Consideration as determined in Section 3.3. As soon as practicable on
the day of the Closing (but after the Effective Time), the Exchange Agent shall
distribute to holders of Company Shares converted into the right to receive the
Cash Consideration and determined in accordance with Section 3.3, upon proper
surrender to the Exchange Agent (to the extent not previously surrendered with a
Form of Election) of one or more Certificates for such Company Shares for
cancellation, a bank check for an amount equal to the Cash Consideration times
the number of Company Shares so converted. In no event shall the holder of any
such surrendered certificates be entitled to receive interest on any of the Cash
Consideration to be received in the Merger. If such check is to be issued in the
name of a person other than the person in whose name the Certificates
surrendered for exchange therefor are registered, it shall be a condition of the
exchange that the person requesting such exchange shall pay to the Exchange
Agent any transfer or other taxes required by reason of issuance of such
-8-
check to a person other than the registered holder of the certificates
surrendered, or shall establish to the satisfaction of the Exchange Agent that
such tax has been paid or is not applicable. Notwithstanding the foregoing,
neither the Exchange Agent nor any party hereto shall be liable to a holder of
Company Shares for any amount paid to a public official pursuant to any
applicable abandoned property, escheat or similar law.
3.6 Letters of Transmittal. Parent will instruct the Exchange Agent to mail
----------------------
to each holder of record of Certificates who has not previously surrendered such
holder's Certificates with a validly executed Form of Election as soon as
reasonably practical after the Effective Time, (i) a Letter of Transmittal
(which shall specify that delivery shall be effected, and risk of loss and title
to such holder's Certificates shall pass, only upon proper delivery of the
Certificates to the Exchange Agent and shall be in such form and have such other
provisions as shall be agreed upon by the Company prior to the Effective Time)
and (ii) instructions for use in effecting the surrender of Certificates in
exchange for the Merger Consideration (the "Letter of Transmittal").
3.7 Missing Certificates.
--------------------
(a) If any holder of Company Shares convertible into the right to
receive the Merger Consideration is unable to deliver the certificate which
represents such shares, the Exchange Agent shall deliver to such holder the
Merger Consideration to which the holder is entitled for such shares upon
presentation of the following:
(i) evidence to the reasonable satisfaction of Parent that any
such certificate has been lost, wrongfully taken or destroyed;
(ii) such security or indemnity as may be reasonably requested
by the Parent to indemnify and hold harmless Parent and the Exchange Agent;
and
(iii) evidence satisfactory to Parent that such person is the
owner of the shares theretofore represented by each certificate claimed to be
lost, wrongfully taken or destroyed and that the holder is the person who
would be entitled to present such certificate for payment pursuant to this
Agreement.
(b) Parent shall receive any remaining Cash Consideration and Parent
Stock Consideration on deposit with the Exchange Agent on the date which is one
year after the Effective Date and any shareholder of the Company who does not
hold Dissenting Shares who has not surrendered his certificate(s) to the
Exchange Agent prior to such time shall be entitled to receive the Merger
Consideration without interest upon the surrender of such certificate(s) to
Parent, subject to applicable escheat or abandoned property laws.
3.8 Dissenting Shares. Notwithstanding anything in this Agreement to the
-----------------
contrary, Company Shares outstanding immediately prior to the Effective Time and
held by a holder who has not voted in favor of the Merger or consented thereto
in writing and who has demanded payment for such shares in accordance with
Sections 1571 to 1580 of the PBCL, if such Sections provide for dissenters'
rights for such Company Shares in the Merger ("Dissenting Shares"),
-9-
shall not be converted into the right to receive the Merger Consideration as
provided in Section 3.1, unless and until such holder fails to perfect or
withdraws or otherwise loses his or her right to dissent and demand payment
under the PBCL. If, after the Effective Time, any such holder fails to perfect
or withdraws or loses his or her right to demand payment, then such Dissenting
Shares shall thereupon be treated as if they had been converted as of the
Effective Time into the right to receive the Merger Consideration, if any, to
which such holder is entitled, without interest or dividends thereon, and such
Company Shares shall no longer be Dissenting Shares. The Company shall give
Parent prompt notice of any demands received by the Company for payment of
Dissenting Shares and, prior to the Effective Time, Parent shall have the right
to participate in all negotiations and proceedings with respect to such demands.
Prior to the Effective Time, the Company shall not, except with the prior
written consent of Parent, make any payment with respect to, or settle or offer
to settle, any such demands.
3.9 No Further Rights or Transfers; Cancellation of Treasury Shares. Except
---------------------------------------------------------------
for the surrender of the certificate(s) representing the Company Shares in
exchange for the right to receive the Merger Consideration with respect to each
Share or the perfection of dissenters' rights with respect to the Dissenting
Shares, at and after the Effective Time, each holder of Company Shares shall
cease to have any rights as a shareholder of the Company, and no transfer of
Company Shares shall thereafter be made on the stock transfer books of the
Surviving Corporation. Each Share held in the Company's treasury immediately
prior to the Effective Time shall, by virtue of the Merger, be canceled and
retired and cease to exist without any conversion thereof.
3.10 Stock Options. At the Effective Time, each option or other right to
-------------
purchase shares of Company Common Stock pursuant to stock options (a "Company
Option"), whether granted by the Company under the 1999 Stock Option Plan (the
"Company Option Plan") or any other plan or agreement, which is outstanding at
the Effective Time, whether or not exercisable, shall be converted into options
and become rights with respect to Parent Stock ("Parent Options"), and the
Company Option Plan or any such other plan or agreement which is outstanding at
the Effective Time shall be terminated, and Parent shall assume each Option, in
accordance with the terms of the Option Plan and stock option agreement by which
it is evidenced, except that from and after the Effective Time, (i) Parent and
its Compensation Committee shall be substituted for the Company and the
Committee of the Company's Board of Directors (including, if applicable, the
entire Board of Directors of the Company) administering such Option Plan, (ii)
each Option assumed by Parent may be exercised solely for shares of Parent
Stock, (iii) the number of shares of Parent Stock subject to such Option shall
be equal to the number of Company Shares subject to such Option immediately
prior to the Effective Time multiplied by the Conversion Ratio, (iv) the per
share exercise price under each such Option shall be adjusted by dividing the
per share exercise price under each such Option by the Conversion Ratio and
rounding up any fraction of a cent to the nearest cent and (v) all Parent
Options issuable pursuant to this Section 3.10 shall be fully exercisable to the
extent set forth in the applicable Company Option or Company Option Plan or as
stipulated by the Company's Board of Directors pursuant to the applicable
Company Option Plan. Notwithstanding the provisions of clause (iii) of the
preceding sentence, Parent shall not be obligated to issue any fraction of a
share of Parent Stock upon exercise of a Parent Option and any fraction of a
share
-10-
of Parent Stock that otherwise would be subject to a Parent Option shall
represent the right to receive a cash payment upon exercise of such Parent
Option equal to the product of such fraction and the difference between the
market value of one share of Parent Stock at the time of exercise and the per
share exercise price of such Option. The market value of one share of Parent
Stock at the time of exercise of a Parent Option shall be the closing price of
such common stock on the Nasdaq (as reported by The Wall Street Journal or, if
-----------------------
not reported thereby, any other authoritative source selected by Parent) on the
last trading day preceding the date of exercise. Each of the Company and Parent
agrees to take all necessary steps to effectuate the foregoing provisions of
this Section 3.10, including using its reasonable efforts to obtain from each
holder of an Option any consent or contract that may be deemed necessary or
advisable in order to effect the transactions contemplated by this Section 3.10
3.11 Certain Company Actions. Prior to the Effective Time, the Company
-----------------------
shall take all such steps as may be required to cause any dispositions of
Company Shares (including derivative securities with respect to Company Shares)
resulting from the transactions contemplated by Article III of this Agreement by
each individual who is subject to the reporting requirements of Section 16(a) of
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), with
respect to the Company to be exempt under Rule 16b-3 promulgated under the
Exchange Act, such steps to be taken in accordance with the No-Action Letter
dated January 12, 1999 issued by the SEC to Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇
LLP.
3.12 Withholding. The Exchange Agent or Parent shall be entitled to deduct
-----------
and withhold from the consideration otherwise payable pursuant to this Agreement
to any holder of Company Shares such amounts as the Exchange Agent, Parent or
the Surviving Corporation, as the case may be, is required to deduct and
withhold with respect to such payment under the Code or any provisions of state,
local or foreign tax law. Any amounts so withheld shall be treated for all
purposes of this Agreement as having been paid to the holder of the Company
Shares in respect of which such deduction and withholding was made.
ARTICLE IV. -- REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to Parent and Newco that:
4.1 Corporate Organization and Qualification. Each of the Company and its
----------------------------------------
Significant Subsidiaries (as defined in Section 9.10 below) is a corporation
duly organized, validly existing and in good standing under the laws of its
respective jurisdiction of incorporation and is qualified and in good standing
as a foreign corporation in each jurisdiction where the properties owned, leased
or operated or the business conducted by it require such qualification, except
where failure to so qualify or be in good standing would not have a Company
Material Adverse Effect (as defined in Section 9.10 below) or materially
adversely affect the consummation of the transactions contemplated hereby. Each
of the Company and its subsidiaries has all requisite power and authority
(corporate or otherwise) to own its properties and to carry on its business as
it is now being conducted except where failure to have such power and authority
would not have a Company Material Adverse Effect. The Company has heretofore
made available to Parent complete and correct copies of its Amended and Restated
Articles of Incorporation and Bylaws, each as amended.
-11-
4.2 Capitalization. The authorized capital stock of the Company consists
--------------
of 200,000,000 Company Shares of common stock, par value $1.00 per share (the
"Company Common Stock"), of which, as of the date of this Agreement, 7,890,709
shares were issued and outstanding, and 900,000 Company Shares of
Convertible/Redeemable Preferred Stock, par value $65.00 per share (the "Company
Preferred Stock"), of which, as of the date of this Agreement, 138,163 shares
were issued and outstanding. All of the outstanding shares of capital stock of
the Company have been duly authorized and validly issued and are fully paid and
nonassessable, except as otherwise provided in Section 1524(c) of the PBCL. As
of the date of this Agreement, 150,750 shares of the Company Common Stock were
reserved for issuance upon exercise of outstanding awards pursuant to the Option
Plan, 79,001 shares of the Company Common Stock were reserved for issuance under
the Company's Employee Stock Purchase Plan (the "Company ESPP"), 205,461 shares
of the Company Common Stock were reserved for issuance under the Company's
Dividend Reinvestment Plan and 7,890,709 shares of the Company Common Stock were
reserved for issuance pursuant to the Rights Agreement. Except as set forth on
Schedule 4.2, all outstanding shares of capital stock of the Company's
------------
subsidiaries are owned by the Company or a direct or indirect wholly owned
subsidiary of the Company, free and clear of all liens, charges, encumbrances,
claims and options of any nature. Except as set forth above and on Schedule 4.2
------------
and except for the Company Rights, there are not, as of the date hereof, any
outstanding or authorized options, warrants, calls, rights (including preemptive
rights), commitments or any other agreements of any character to which the
Company or any of its subsidiaries is a party, or by which they may be bound,
requiring it to issue, transfer, sell, purchase, redeem or acquire any shares of
capital stock or any securities or rights convertible into, exchangeable for, or
evidencing the right to subscribe for, any shares of capital stock of the
Company or any of its subsidiaries. Except for the Voting Agreements, there are
not as of the date hereof and there will not be at the Effective Time of the
Merger any registration rights agreements, shareholder agreements, voting trusts
or other agreements or understandings to which the Company is a party or by
which it is bound relating to the voting of any Company Shares. There are no
restrictions on the Company with respect to voting the stock of any of its
subsidiaries.
4.3 Authority Relative to This Agreement.
------------------------------------
(a) The Company has the requisite corporate power and authority
to execute and deliver this Agreement and to consummate the transactions
contemplated hereby. This Agreement and the consummation by the Company of the
transactions contemplated hereby have been duly and validly authorized by the
Board of Directors, and no other corporate proceedings on the part of the
Company are necessary to authorize this Agreement or to consummate the
transactions contemplated hereby (other than, with respect to the Merger, the
approval and adoption of the Merger and this Agreement by holders of the Company
Shares in accordance with the PBCL). This Agreement has been duly and validly
executed and delivered by the Company and, assuming this Agreement constitutes
the valid and binding agreement of Parent and Newco, constitutes the valid and
binding agreement of the Company, enforceable against the Company in accordance
with its terms, except that such enforceability may be limited by (1)
bankruptcy, insolvency, reorganization, moratorium or other similar laws now or
hereafter in
-12-
effect relating to creditors' rights generally and (ii) general principles of
equity (regardless of whether enforceability is considered in a proceeding in
equity or at law).
(b) The Board of Directors has duly and validly approved and
taken all corporate action required to be taken by the Board of Directors for
the consummation of the transactions contemplated herein, including but not
limited to all actions required to prevent the Company Rights from distributing
or becoming exercisable pursuant to the Rights Agreement as a result of such
transactions.
4.4 Consents and Approvals; No Violation.
------------------------------------
(a) Neither the execution and delivery of this Agreement nor the
consummation by the Company of the transactions contemplated hereby will:
(i) conflict with or result in any breach of any
provision of the respective Amended and Restated Articles of Incorporation
or Bylaws, each as amended, of the Company or any of its subsidiaries;
(ii) require any consent, approval, authorization or
permit of, or filing with or notification to, any governmental or
regulatory authority, except (A) in connection with the applicable
requirements of the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976,
as amended (the "HSR Act"), (B) pursuant to the applicable requirements of
the Exchange Act, (C) the filing of the articles of merger pursuant to the
PBCL and appropriate documents with the relevant authorities of other
states in which the Company or any of its subsidiaries is authorized to do
business, (D) such filings and consents as may be required by the Federal
Communications Commission (the "FCC") or the rules and regulations
promulgated by the FCC (the "FCC Rules") and the Pennsylvania Public
Utilities Commission (the "PPUC") or the rules and regulations promulgated
by the PPUC (the "PPUC Rules"), (E) as may be required by any applicable
state securities or "blue sky" laws or state takeover laws, (F) such
filings and consents as may be required under any environmental, health or
safety law or regulation pertaining to any notification, disclosure or
required approval triggered by the Merger or the transactions contemplated
by this Agreement, or (G) where the failure to obtain such consent,
approval, authorization or permit, or to make such filing or notification,
would not individually or in the aggregate have a Company Material Adverse
Effect or materially adversely affect the consummation of the transactions
contemplated hereby, or (H) such filings, consents, approvals, orders,
registrations and declarations as may be required as a result of the status
or identity of Parent and/or Newco;
(iii) except as set forth in Schedule 4.4(a)(iii),
--------------------
result in a violation or breach of, or constitute (with or without due
notice or lapse of time or both) a default (or give rise to any right of
termination, cancellation or acceleration or lien or other charge or
encumbrance) under any of the terms, conditions or provisions of any note,
license, agreement or other instrument or obligation to which the Company
or any of its subsidiaries or any of their assets may be bound, except for
such violations, breaches and defaults (or rights of termination,
cancellation or acceleration or lien or other charge or
-13-
encumbrance) as to which requisite waivers or consents have been obtained,
or which individually or in the aggregate would not have a Company Material
Adverse Effect ; or
(iv) assuming the consents, approvals, authorizations
or permits and filings or notifications referred to in this Section 4.4 are
duly and timely obtained or made and, with respect to the Merger, the
approval of the Merger and this Agreement by the Company's shareholders has
been obtained, violate any material order, writ, injunction, decree,
statute, rule or regulation applicable to the Company or any of its
subsidiaries or to any of their respective assets.
(b) The affirmative vote of a majority of the voting power of the
outstanding Company Shares in favor of the approval and adoption of this
Agreement (the "Company Shareholder Approval") is the only vote of the holders
of any class or series of the Company's or its subsidiaries' securities
necessary to approve this Agreement, the Merger and the other transactions
contemplated hereby.
4.5 SEC Reports; Financial Statements.
---------------------------------
(a) The Company has filed all forms, reports and documents required
to be filed by it with the SEC since January 1, 1996, pursuant to the federal
securities laws and the SEC's rules and regulations thereunder, all of which, as
of their respective dates, complied in all material respects with all applicable
requirements of the Exchange Act (collectively, the "Company SEC Reports"). None
of the Company SEC Reports, including, without limitation, any financial
statements or schedules included therein, as of their respective dates,
contained any untrue statement of a material fact or omitted to state a 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.
(b) The consolidated balance sheets and the related consolidated
statements of income and cash flows (including the related notes thereto) of the
Company included in the Company SEC Reports, as of their respective dates,
complied in all material respects with applicable accounting requirements and
the published rules and regulations of the SEC with respect thereto, were
prepared in accordance with generally accepted accounting principles applied on
a basis consistent with prior periods (except as otherwise noted therein), and
present fairly, in all material respects, the consolidated financial position of
the Company and its consolidated subsidiaries as of their respective dates, and
the consolidated results of their operations and their cash flows for the
periods presented therein (subject, in the case of the unaudited interim
financial statements, to normal year-end adjustments).
4.6 Absence of Certain Changes or Events. Except as disclosed in the
------------------------------------
Company SEC Reports, as set forth in Schedule 4.6 to this Agreement or as
------------
contemplated by this Agreement, since December 31, 2000, there has not been (i)
any Company Material Adverse Effect with respect to the Company and its
subsidiaries; (ii) any declaration, setting aside or payment of any dividend
(whether in cash, stock or property) with respect to any Company Shares; (iii)
(A) any granting by the Company or any of its subsidiaries to any officer of the
Company or any of its subsidiaries of any increase in compensation, except in
the ordinary course of business consistent
-14-
with prior practice or as was required under employment agreements described in
Schedule 6.8(c), (B) any granting by the Company or any of its subsidiaries to
---------------
any such officer of any increase in severance or termination pay, except as was
required under employment, severance or termination agreements listed in
Schedule 6.8(c), true copies of which have been provided to Parent, or (C) any
---------------
entry by the Company or any of its subsidiaries into any employment, severance
or termination agreement with any such officer; (iv) any amendment of any
material term of any outstanding equity security of the Company or any
subsidiary; (v) any repurchase, redemption or other acquisition by the Company
or any subsidiary of any outstanding shares of capital stock or other equity
securities of, or other ownership interests in, the Company or any subsidiary,
except as contemplated by Company Benefit Plans (as defined in Section 4.10
herein); (vi) any material damage, destruction or other property loss, whether
or not covered by insurance; or (vii) any change in accounting methods,
principles or practices by the Company materially affecting its assets,
liabilities or business, except insofar as may have been required by a change in
GAAP.
4.7 Litigation. Schedule 4.7 accurately discloses in all material respects
----------
as of the date of this Agreement all actions, claims, suits, proceedings and
governmental investigations pending or, to the knowledge of the Company,
threatened, which (i) are required to be disclosed therein by the Exchange Act
or (ii) individually or in the aggregate are reasonably likely to have a Company
Material Adverse Effect.
4.8 Insurance. The Company maintains insurance coverage reasonably adequate
---------
for the operation of the business of the Company and each of its subsidiaries,
and the transactions contemplated hereby will not materially adversely affect
such coverage.
4.9 Taxes.
-----
(a) Except as set forth on Schedule 4.9:
------------
(i) the Company and its subsidiaries are members of the
affiliated group, within the meaning of Section 1504(a) of the Code, of
which the Company is the common parent; such affiliated group files a
consolidated federal income Tax Return; and neither the Company, any of its
subsidiaries, any of its former subsidiaries, nor any entity to whose
liabilities the Company or any of its subsidiaries or any of its former
subsidiaries has succeeded, has ever filed a consolidated federal income
Tax Return with (or been included in a consolidated return of) a different
affiliated group;
(ii) each of the Company, its subsidiaries and its former
subsidiaries has filed or caused to be filed all Tax Returns required to
have been filed by or for it, and all information set forth in such Tax
Returns is correct and complete in all material respects;
(iii) each of the Company, its subsidiaries and its former
subsidiaries has paid all Taxes due and payable by it;
-15-
(iv) there are no unpaid Taxes due and payable by the
Company, its subsidiaries or its former subsidiaries or by any other person
that are or could become a lien on any asset of the Company, or otherwise
materially adversely affect the business, properties or financial
condition, of the Company, any of its subsidiaries or any of its former
subsidiaries;
(v) each of the Company, its subsidiaries and its former
subsidiaries is in material compliance with, and the records of each of
them contain all information and documents (including, without limitation,
properly completed IRS Forms W-9) necessary to comply with, all applicable
Tax information reporting and Tax withholding requirements;
(vi) each of the Company, its subsidiaries and its former
subsidiaries has collected or withheld all amounts required to be collected
or withheld by it for any Taxes, and all such amounts have been paid to the
appropriate governmental agencies or set aside in appropriate accounts for
future payment when due;
(vii) the balance sheets and financial statements included
in the Company SEC Reports fully and properly reflect, as of their dates,
the liabilities of the Company and its subsidiaries and (insofar as the
Company or any of its subsidiaries may be liable therefor) the former
subsidiaries for all Taxes for all periods ending on or before such dates,
and the books and records of the Company and its subsidiaries fully and
properly reflect all liabilities for Taxes for all periods after December
31, 2000;
(viii) none of the Company or its subsidiaries has granted
(nor is any of them subject to) any waiver currently in effect of the
period of limitations for the assessment of Tax, no unpaid Tax deficiency
has been asserted against or with respect to any of the Company or its
subsidiaries or (insofar as the Company or any of its subsidiaries may be
liable therefor) the former subsidiaries by any taxing authority, and there
is no pending examination, administrative or judicial proceeding, or
deficiency or refund litigation, with respect to any Taxes of the Company
or any of its subsidiaries or (insofar as the Company or any of its
subsidiaries may be liable therefor) any of the former subsidiaries;
(ix) none of the Company or its subsidiaries has made or
entered into, or holds any asset subject to, a consent filed pursuant to
Section 341(f) of the Code and the regulations thereunder or a "safe harbor
lease" subject to former Section 168(f)(8) of the Internal Revenue Code of
1954, as amended before the Tax Reform Act of 1984, and the regulations
thereunder;
(x) none of the Company or its subsidiaries is required
to include in income any amount from an adjustment pursuant to Section 481
of the Code or the regulations thereunder or any similar provision of state
law;
-16-
(xi) none of the Company or its subsidiaries is a party
to, or obligated under, any agreement or other arrangement providing for
the payment of any amount that would be an "excess parachute payment" under
Section 280G of the Code;
(xii) there are no excess loss accounts or deferred
intercompany gains with respect to any member of the affiliated group of
which the Company is the common parent or any subgroup thereof;
(xiii) neither the Company, any of its subsidiaries nor any
of its former subsidiaries has distributed to its stockholders or security
holders stock or securities of a controlled corporation in a transaction to
which Section 355(a) of the Code applies; and
(xiv) none of the Company or its subsidiaries is, or has
been at any time within the last five years, a "United States real property
holding corporation" for purposes of Section 897 of the Code.
(b) Schedule 4.9 sets forth all Tax elections, consents and
------------
agreements made by or affecting any of the Company and its subsidiaries that
will be in effect after the Closing Date, all material types of Taxes paid and
Tax Returns filed by or on behalf of the Company and its subsidiaries, and all
examinations, administrative or judicial proceedings, and litigation with
respect to any Taxes of the Company, any of its subsidiaries or any of its
former subsidiaries.
(c) As used herein, "Tax" or "Taxes" shall mean all taxes of any
--- -----
kind, including, without limitation, those on or measured by or referred to as
income, gross receipts, sales, use, ad valorem, franchise, profits, license,
withholding, payroll, employment, estimated, excise, severance, stamp,
occupation, premium, value added, property or windfall profits taxes, customs,
duties or similar fees, assessments or charges of any kind whatsoever, together
with any interest and any penalties, additions to tax or additional amounts
imposed by any governmental entity, domestic or foreign. As used herein, "Tax
---
Return" shall mean any return, report, statement or information required to be
------
filed with any governmental entity with respect to Taxes.
4.10 Employee Benefit Plans; Labor Matters.
-------------------------------------
(a) Schedule 4.10 contains a true and complete list of (A) all
-------------
employee welfare benefit and employee pension benefit plans as defined in
sections 3(1) and 3(2) of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA"), including, but not limited to, plans that provide
-----
retirement income or result in a deferral of income by employees for periods
extending to termination of employment or beyond, and plans that provide
medical, surgical, or hospital care benefits or benefits in the event of
sickness, accident, disability, death or unemployment and (B) all other material
employee benefit agreements or arrangements, including without limitation
deferred compensation plans, incentive plans, bonus plans or arrangements, stock
option plans, stock purchase plans, stock award plans, golden parachute
agreements, severance pay plans, dependent care plans, cafeteria plans, employee
assistance programs, scholarship programs, employee discount programs,
employment contracts, retention
-17-
incentive agreements, noncompetition agreements, consulting agreements,
confidentiality agreements, vacation policies, and other similar plans,
agreements and arrangements that are currently in effect as of the date of this
Agreement, or have been approved before this date but are not yet effective, for
the benefit of any director, officer, employee or former employee (or any of
their beneficiaries) of the Company or any of its subsidiaries (collectively, a
"Company Beneficiary"), or with respect to which the Company or any of its
-------------------
subsidiaries may have any liability ("Company Benefit Plans").
---------------------
(b) With respect to each Company Benefit Plan, the Company has
heretofore delivered to Parent, as applicable, complete and correct copies of
each of the following documents which the Company has prepared or has been
required to prepare:
(i) the Company Benefit Plans and any amendments thereto
(or if a Company Benefit Plan is not a written agreement, a description
thereof);
(ii) the three most recent annual Form 5500 reports filed
with the Internal Revenue Service (the "IRS");
---
(iii) the most recent statement filed with the Department
of Labor (the "DOL") pursuant to 29 U.S.C. (S) 2520.104-23;
---
(iv) the three most recent annual Form 990 and 1041
reports filed with the IRS;
(v) the three most recent actuarial reports;
(vi) the three most recent reports prepared in accordance
with Statement of Financial Accounting Standards No. 106;
(vii) the most recent summary plan description and
summaries of material modifications thereto;
(viii) the trust agreement, group annuity contract or other
funding agreement that provides for the funding of the Company Benefit
Plan;
(ix) the most recent financial statement;
(x) the most recent determination letter received from
the IRS; and
(xi) any agreement pursuant to which the Company or any
subsidiaries is obligated to indemnify any person.
(c) All contributions and other payments required to have been made
by the Company or any entity (whether or not incorporated) that is treated as a
single employer with the Company under Section 414 of the Code (a "Company ERISA
-------------
Affiliate") with respect to any Company Benefit Plan (or to any person pursuant
---------
to the terms thereof) have been or will be
-18-
timely made and all such amounts properly accrued through the date of the
Company SEC Reports have been reflected therein.
(d) The terms of all Company Benefit Plans that are intended to be
"qualified" within the meaning of Section 401(a) of the Code have been
determined by the IRS to be so qualified or the applicable remedial periods will
not have ended prior to the Effective Time of the Merger. Except as disclosed in
Schedule 4.10, no event or condition exists or has occurred that could cause the
-------------
IRS to disqualify any Company Benefit Plan that is intended to be qualified
under Section 401(a) of the Code. Except as disclosed in Schedule 4.10, with
-------------
respect to each Company Benefit Plan, the Company and each Company ERISA
Affiliate are in compliance in all material respects with, and each Company
Benefit Plan and related source of benefit payment is and has been operated in
compliance with, its terms, all applicable laws, rules and regulations governing
such plan or source, including, without limitation, ERISA, the Code and
applicable local law. To the knowledge of the Company, except as set forth in
Schedule 4.10, no Company Benefit Plan is subject to any ongoing audit,
-------------
investigation, or other administrative proceeding of the IRS, the DOL, or any
other federal, state, or local governmental entity or is scheduled to be subject
to such an audit investigation or proceeding.
(e) With respect to each Company Benefit Plan, to the knowledge of
the Company, there exists no condition or set of circumstances that could
subject the Company or any Company ERISA Affiliate to any liability arising
under the Code, ERISA or any other applicable law (including, without
limitation, any liability to or under any such plan or under any indemnity
agreement to which the Company or any Company ERISA Affiliate is a party), which
liability, excluding liability for benefit claims and funding obligations, each
payable in the ordinary course, could reasonably be expected to have a Material
Adverse Effect on the Company. No claim, action or litigation has been made,
commenced or, to the knowledge of the Company, threatened, by or against and
Company Benefit Plan or the Company or any of its subsidiaries with respect to
any Company Benefit Plan (other than for benefits in the ordinary course) that
could reasonably be expected to have a Material Adverse Effect on the Company.
(f) Except as disclosed in Schedule 4.10, no Company Benefit Plan
-------------
that is a "welfare benefit plan" (within the meaning of Section 3(1) of ERISA)
------------
provides benefits for any retired or former employees (other than as required
under the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended, or
other applicable state or local law that specifically mandates continued health
coverage).
(g) Except as disclosed in Schedule 4.10, the consummation or
-------------
announcement of any transaction contemplated by this Agreement will not (either
alone or in conjunction with another event, including termination of employment)
result in (A) any payment (whether of severance pay or otherwise) becoming due
from the Company or any of its subsidiaries to any Company Beneficiary or to the
trustee under any "rabbi trust" or similar arrangement, or (B) any benefit under
any Company Benefit Plan being established or increased, or becoming
accelerated, vested or payable.
(h) Except as described on Schedule 4.10, neither the Company nor any
entity that was at any time during the six-year period ending on the date of
this Agreement a Company
-19-
ERISA Affiliate has ever maintained, had an obligation to contribute to,
contributed to, or had any liability with respect to any plan that (A) is or was
a pension plan (as defined in Section 3(2) of ERISA) that is or was subject to
Title IV of ERISA, Section 412 of the Code or Section 302 of ERISA or (B) that
is or was a multiemployer plan (as defined in Section 414(f) of the Code or
Sections 3(37) or 4001(a)(31) of ERISA). With respect to each Company Benefit
Plan subject to Section 412 of the Code or Section 302 of ERISA, (i) each such
Company Benefit Plan uses a funding method permissible under the Code and ERISA
and the actuarial assumptions used in connection therewith are reasonable
individually and in the aggregate, (ii) no such Company Benefit Plan has
incurred an accumulated funding deficiency, whether or not waived, and (iii)
except as otherwise disclosed on Schedule 4.10, as of the Effective Time, the
fair market value of the assets of each such Company Benefit Plan will exceed or
equal the "projected benefit obligation" (as defined in Statement of Financial
Accounting Standard No. 87) and the "amount of unfunded benefit liabilities" as
defined in Section 4001(a)(18) of ERISA is zero. With respect to each Company
Benefit Plan that is or was subject to Title IV of ERISA, no such Company
Benefit Plan has been terminated, no filing of a notice of intent to terminate
such Company Benefit Plan has been made, and the PBGC has not initiated any
proceeding to terminate any such Company Benefit Plan. To the knowledge of the
Company, no event has occurred and there exists no condition or set of
circumstances which presents a material risk that any Company Benefit Plan has
or is likely to experience a partial termination. No assets of the Company or
any of its subsidiaries are subject to any lien under Section 302 of ERISA or
Section 412 of the Code.
4.11 Environmental Laws and Regulations. When used in this Section 4.11
----------------------------------
and Section 5.11:
(a) "Environmental Laws" shall mean any and all federal, state or
------------------
local laws, rules, orders, regulations, statutes, common law, ordinances, codes,
decrees or requirements of any Governmental Authority regulating, relating to or
imposing liability or standards of conduct concerning any Regulated Materials,
environmental protection, or human health protection involving Regulated
Materials as in effect as of the Effective Time of the Merger or at any time in
the past;
(b) "Governmental Authority" shall mean any federal, state, or local
----------------------
governmental body, department, agency or subdivision responsible for the due
administration and/or enforcement of any Environmental Law.
(c) "Permits" shall mean all governmental approvals, authorizations,
-------
registrations, permits and licenses, including those related to environmental
quality and the emission, discharge, storage, handling, treatment, use,
generation or transportation of Regulated Materials required by Environmental
Laws or otherwise required for the Company to conduct its business.
(d) "Regulated Materials" shall mean any pollutant, contaminant,
-------------------
hazardous material, hazardous waste, infectious medical waste, hazardous or
toxic substance defined or regulated as such in or under any Environmental Law,
including, without limitation, petroleum, crude oil or fractions thereof,
petroleum products, waste or used oil, natural or synthetic gas,
-20-
materials exhibiting the characteristics of ignitability, corrosivity,
reactivity or extraction procedure toxicity, as such terms are defined in
connection with hazardous materials or hazardous wastes or hazardous or toxic
substances in any Environmental Law; and
(e) "Release" shall have the same meaning as provided in the
-------
Comprehensive Environmental Response, Compensation, and Liability Act, as
amended, (S) 101(22), 42 U.S.C. (S) 9601(22).
(i) Except as set forth in Schedule 4.11, the Company is
-------------
now in compliance in all material respects with all Environmental Laws, and
has been in compliance with Environmental Laws. The conduct of the
businesses of the Company or Parent, as applicable, does not violate or
conflict with in any material respect any Environmental Laws.
(ii) Except as set forth in Schedule 4.11, the Company has
-------------
obtained all necessary Permits. The Permits are in full force and effect,
and are being complied with in all material respects. The Permits are
transferable and will remain in effect or will be replaced, renewed or
transferred as appropriate immediately following the Closing. No other
governmental authorizations are necessary for the day to day operations of
the Company.
(iii) Except as set forth in Schedule 4.11, (A) the Company
-------------
has not received any formal complaint or notice from any Governmental
Entity or any other person alleging any past or present violation of any
Environmental Law in connection with the operation of its business that is
currently unresolved, (B) as of the date hereof, to the knowledge of the
Company, there is no investigative proceeding against the Company by any
governmental authority in connection with the past or present operation of
its business, and (C) there are no claims under any Environmental Law
against the Company.
(iv) Except as set forth in Schedule 4.11, the Company has
-------------
not been subject to any administrative or judicial enforcement action
pursuant to any Environmental Law either now or at any time during the past
three years in connection with its business or the Company.
(v) Except as set forth in Schedule 4.11, the Company is
-------------
not subject to any remedial obligation or other response action under a
currently issued and applicable administrative order, decree, or agreement
pursuant to any Environmental Law.
(vi) Except as set forth in Schedule 4.11, (A) no real
-------------
property currently or formerly owned, leased, operated or used by the
Company (including real property used for off-site disposal of any
Regulated Material) is listed on any federal list of Superfund or National
Priorities List sites or similar governmental lists, (B) to the Company's
knowledge, there exist no circumstances that could result in any such
property being listed on any federal list of Superfund or National
Priorities List sites or similar governmental lists regarding waste sites
at which there has been a Release or
-21-
threatened Release of Regulated Materials, and (C) to the Company's
knowledge, none of its real property been used at any time by any person as
a hazardous waste treatment, storage or disposal site.
(vii) Except as set forth in Schedule 4.11, there are no
-------------
(A) underground storage tanks (as defined under the Resource Conservation
and Recovery Act or any equivalent Environmental Law), or (B) capacitors,
transformers or other equipment or fixtures containing polychlorinated
biphenyls ("PCBs") (other than light fixtures which contain PCBs), located
----
in, at, under or on the real property owned or leased by the Company.
(viii) Except as set forth in Schedule 4.11, there are no
-------------
facts, actions, activities, circumstances, conditions, occurrences, events,
liabilities, or incidents, including any Release, threatened Release,
generation, use, treatment, storage, disposal, arranging for disposal,
transportation, or the presence of Regulated Materials, that are likely to
(A) result in any environmental liability, (B) prevent or interfere with
the operation of the Company's business as it is currently being conducted,
in compliance with all applicable Environmental Laws, (C) materially affect
the assets, business or financial conditions of the Company, or (D)
adversely impact or affect the use of any real property owned, operated, or
leased by the Company.
4.12 Intangible Property. The Company or a subsidiary of the Company is
-------------------
the owner of, or a licensee under a valid license for, all items of intangible
property which are material to the business of the Company and its subsidiaries
as currently conducted, taken as a whole, including, without limitation, trade
names, unregistered trademarks and service marks, brand names, patents and
copyrights. As of the date of this Agreement, except as disclosed on Schedule
--------
4.12, there are no claims pending or, to the Company's knowledge, threatened,
----
that the Company or any subsidiary is in violation of any such intangible
property rights of any third party which is reasonably likely to have a Company
Material Adverse Effect.
4.13 Compliance with Laws and Orders. Except with respect to the matters
-------------------------------
described in Sections 4.9, 4.10 and 4.11, neither the Company nor any subsidiary
is in violation of or in default under any law, statute, rule or regulation
having the effect of law of the United States or any state, county, city or
other political subdivision thereof or of any government or regulatory authority
("Laws") or writ, judgment, decree, injunction or similar order of any
governmental or regulatory authority, in each case, whether preliminary or final
(an "Order"), applicable to the Company or any Subsidiary or any of their
respective assets and properties the effect of which, individually, or in the
aggregate with other such violations and defaults, could reasonably be expected
to have a Company Material Adverse Effect.
4.14 Rights Agreement. Assuming the accuracy of Parent's and Newco's
----------------
representations in Section 5.25 of this Agreement, neither the execution nor the
delivery of this Agreement will result in a "Distribution Date" (as defined in
the Company Rights Agreement). The Company has irrevocably taken all actions
necessary to make the Company Rights inapplicable to the Merger and the
transactions contemplated hereby.
-22-
4.15 Certain Agreements. Except as set forth in Schedule 4.15, neither the
------------------ -------------
Company nor any of its subsidiaries is a party to any oral or written agreement
or plan, including any stock option plan, stock appreciation rights plan,
restricted stock plan or stock purchase plan, any of the benefits of which will
be increased, or the vesting of the benefits of which will be accelerated, by
the occurrence of any of the transactions contemplated by this Agreement or the
value of any of the benefits of which will be calculated on the basis of any of
the transactions contemplated by this Agreement. Except as described in Schedule
--------
4.15 or except for any such as would not result in a Company Material Adverse
----
Effect , the transactions contemplated by this Agreement will not constitute a
"change of control" under, require the consent from or the giving of notice to
any third party pursuant to, or accelerate the vesting or repurchase rights
under, the terms, conditions or provisions of any loan or credit agreement,
note, bond, mortgage, indenture, license, or any material lease, contract,
agreement or other instrument or obligation to which the Company or any of its
subsidiaries is a party or by which any of them or any of their properties or
assets may be bound. Except as set forth in Schedule 4.15, there are no amounts
-------------
payable by the Company or its subsidiaries to any officers of the Company or its
subsidiaries (in their capacity as officers) as a result of the transactions
contemplated by this Agreement and/or any subsequent employment termination.
4.16 Brokers and Finders. Except for the fees and expenses payable to ▇▇▇▇
-------------------
▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, Incorporated, which fees and expenses are reflected in its
agreement with the Company, a true and correct copy of which has been furnished
to Parent, the Company has not employed any investment banker, broker, finder,
consultant or intermediary in connection with the transactions contemplated by
this Agreement which would be entitled to any investment banking, brokerage,
finder's or other fee or commission in connection with this Agreement or the
transactions contemplated hereby.
4.17 Opinion of Financial Advisor. The Company has received the opinion of
----------------------------
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, Incorporated, dated as of the date of this Agreement, to
the effect that, as of such date, the Merger Consideration to be received by the
shareholders of the Company pursuant to the Merger is fair to such shareholders
from a financial point of view.
4.18 Accuracy of Information Furnished. No representation, statement, or
---------------------------------
information made or furnished by the Company to Parent or any of Parent's
representatives, including those contained in this Agreement and the various
Schedules attached hereto and the other information and statements referred to
herein and previously furnished by the Company, contains or shall contain any
untrue statement of a material fact or omits or shall omit any material fact
necessary to make the information contained therein not misleading. The Company
has provided Parent with true, accurate and complete copies of all documents
listed or described in the various Schedules attached hereto.
4.19 Equity Investments. Except as set forth in Schedule 4.19, the Company
------------------ -------------
does not own, directly or indirectly, any capital stock or other ownership
interest in any Person. Schedule 4.19 contains a complete and accurate list of
-------------
the Company's direct and indirect subsidiaries.
4.20 No Default. Except as set forth in Schedule 4.20, neither the Company
---------- -------------
nor any of its subsidiaries is in material breach, default or violation (and no
event has occurred which with
-23-
notice or the lapse of time or both would constitute a breach, default or
violation) of any term, condition or provision of (i) its Articles of
Incorporation or Bylaws (or similar governing documents), or (ii) any Law
applicable to Company or its subsidiaries or any of their respective properties
or assets.
4.21 Material Contracts. Schedule 4.21 lists all written or oral
------------------ -------------
contracts, agreements, leases, instruments or legally binding contractual
commitments ("Contracts") that are of a type described below (collectively, the
"Company Material Contracts"):
(a) any Contract with a customer of the Company or its subsidiaries
or with any entity that purchases goods or services from the Company or its
subsidiaries for consideration paid to the Company or its subsidiaries of
$100,000 or more in any fiscal year;
(b) any Contract for capital expenditures or the acquisition or
construction of fixed assets in excess of $100,000;
(c) any Contract for the purchase or lease of goods or services
(including without limitation, equipment, materials, software, hardware,
supplies, merchandise, parts or other property, assets or services), requiring
aggregate future payments in excess of $100,000, other than standard inventory
purchase orders executed in the ordinary course of business;
(d) any Contract relating to the borrowing of money or guaranty of
indebtedness;
(e) any collective bargaining or other arrangement with any labor
union;
(f) any Contract granting a first refusal, first offer or similar
preferential right to purchase or acquire any of the Company's capital stock or
assets;
(g) any Contract limiting, restricting or prohibiting the Company
from conducting business anywhere in the United States or elsewhere in the world
or any Contract limiting the freedom of the Company to engage in any line of
business or to compete with any other Person;
(h) any joint venture or partnership Contract;
(i) any Contracts requiring future payments of $100,000 or more; and
(j) any written employment Contract, severance agreement or other
similar binding agreement or policy with any employee.
The Company has delivered to Parent a true and complete copy of each written
Company Material Contract (and a written description of each oral Company
Material Contract), including all amendments or other modifications thereto.
Except as set forth in Schedule 4.21, each Company Material Contract is a valid
-------------
and legally binding obligation of the Company, enforceable against the Company
in accordance with its terms, subject only to bankruptcy, reorganization,
receivership or other laws affecting creditors' rights generally and general
principles of equity (whether applied in an action at law or in equity). Except
as set forth in Schedule 4.21, the Company is in compliance with all obligations
required to be performed by it
-24-
under the Company Material Contracts, and the Company is not and, to the
knowledge of the Company, no other party to a Company Material Contract is, in
breach or default thereunder in any material respect.
4.22 State Takeover Statutes; Anti-Takeover Provisions. The Company has
-------------------------------------------------
taken all actions with respect to any anti-takeover provisions of the Company's
Bylaws or Articles of Incorporation or applicable provisions of the PBCL
necessary to enter into and consummate the Merger on the terms set forth in this
Agreement.
4.23 Transactions With Affiliates. Except as set forth in Schedule 4.23,
---------------------------- -------------
or as contemplated by this Agreement, since December 31, 2000, the Company has
not, in the ordinary course of business or otherwise, purchased, leased or
otherwise acquired any material property or assets or obtained any material
services from, or sold, leased or otherwise disposed of any material property or
assets or provided any material services to (except with respect to remuneration
for services rendered as a director, officer or employee of the Company in the
ordinary course), (i) any employee of the Company, (ii) any shareholder of the
Company, (iii) any person, firm or corporation that directly or indirectly
controls, is controlled by or is under common control with the Company, or (iv)
any member of the immediate family of any of the foregoing persons
(collectively, "Company Affiliates"). Except as set forth in Schedule 4.23, (a)
-------------
the Company's Material Contracts do not include any obligation or commitment
between the Company and any Company Affiliate, (b) the assets of the Company do
not include any receivable or other obligation or commitment from a Company
Affiliate to the Company and (c) the liabilities reflected on the Company SEC
Reports do not include any obligation or commitment to any Company Affiliate.
4.24 Licenses. All licenses issued by the FCC and any applicable state
--------
agencies (the "Licenses") required for the operation of the business of the
Company and its subsidiaries are set forth in Schedule 4.24 and are in full
-------------
force and effect and there are no pending modifications, amendments or
revocation proceedings which would materially adversely affect the operations of
the Company. All material fees due and payable to governmental authorities
pursuant to the rules governing the Licenses have been paid and no event has
occurred with respect to the Licenses held by the Company which, with the giving
of notice or the lapse of time or both, would constitute grounds for revocation
thereof. The Company is in compliance in all material respects with the terms of
the Licenses, as applicable, and there is no condition, event or occurrence
existing, nor is there any proceeding being conducted of which the Company has
received notice, nor, to the Company's knowledge, is there any proceeding
threatened, by any governmental entity, including the PPUC or the FCC, which
would cause the termination, suspension, cancellation or nonrenewal of any of
the Licenses, or the imposition of any penalty or fine by any regulatory
authority.
4.25 Information Supplied. None of the information supplied or to be
-------------------
supplied by the Company for inclusion in (i) the Registration Statement will, at
the time the Registration Statement is filed with the SEC, and at any time it is
amended or supplemented or at the time it becomes effective under the Securities
Act of 1933, as amended (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 not misleading, and (ii) the Joint
Proxy
-25-
Statement will, at the date the Joint Proxy Statement is first mailed to the
Company's and Parent's shareholders and at the time of the Company Shareholders
Meeting and Parent's Shareholders 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 are made, not misleading. The Joint Proxy
Statement, as it relates to the Company Shareholders Meeting, will comply as to
form in all material respects with the applicable requirements of the Exchange
Act and the rules and regulations thereunder, except that no representation or
warranty is made by the Company with respect to statements made or incorporated
by reference therein based on information supplied by Parent for inclusion or
incorporation by reference therein.
4.26 Title to and Condition of Assets.
--------------------------------
(a) Each of the Company and its subsidiaries has good title to, or
valid leasehold interests in, all its material properties and assets,
except for minor defects in title, easements, restrictive covenants and
similar encumbrances or impediments that, in the aggregate do not and will
not materially interfere with its ability to conduct its business as
currently conducted. Except as set forth in Schedule 4.26, all such assets
-------------
and properties, other than assets and properties in which the Company or
any of the subsidiaries has leasehold interests, are free and clear of all
liens, pledges, security interests, charges, claims, rights of third
parties and other encumbrances of any kind or nature ("Liens"), and except
-----
for minor Liens, that, in the aggregate, do not and will not materially
interfere with the ability of the Company or any of its subsidiaries to
conduct business as currently conducted or as reasonably expected to be
conducted.
(b) Each of the Company and each of its subsidiaries has complied in
all material respects with the terms of all leases to which it is a party
and under which it is in occupancy, and all such leases are in full force
and effect. Each of the Company and each of its subsidiaries enjoys
peaceful and undisturbed possession under all such leases.
(c) Except as set forth in Schedule 4.26, to the knowledge of the
-------------
Company, the buildings and premises of the Company and each of its
subsidiaries that are used in its business are in adequate operating
condition and in a state of adequate maintenance and repair, normal wear
and tear excepted, are adequate for the purpose for which they are
currently being used, and have access to adequate utility services
necessary for the conduct of the business. All items of operating equipment
of the Company and its subsidiaries are in adequate operating condition and
in a state of reasonable maintenance and repair, ordinary wear and tear
excepted.
4.27 Undisclosed Liabilities and Commitments. Except as set forth in
---------------------------------------
Schedule 4.27, at the date of the most recent Company SEC Report, neither the
-------------
Company nor any of its subsidiaries had, and since such date neither the Company
nor any of such subsidiaries has incurred (except in the ordinary course of
business consistent with past practice), any liabilities, commitments or
obligations of any nature (whether accrued, absolute, contingent or otherwise),
required by GAAP to be set forth on a financial statement or in the notes
thereto or which, individually or in the aggregate, could reasonably be expected
to have a Company Material Adverse Effect.
-26-
ARTICLE V. -- REPRESENTATIONS AND WARRANTIES OF PARENT AND NEWCO
Each of Parent and Newco represent and warranty jointly and severally to
the Company that:
5.1 Corporate Organization and Qualification. Each of Parent and its
----------------------------------------
Significant Subsidiaries and Newco is a corporation duly organized, validly
existing and in good standing under the laws of its respective jurisdiction of
incorporation and is qualified and in good standing as a foreign corporation in
each jurisdiction where the properties owned, leased or operated, or the
business conducted, by it require such qualification, except where the failure
to so qualify or be in such good standing would not have a Parent Material
Adverse Effect or adversely affect the consummation of the transactions
contemplated hereby. Each of Parent and its Significant Subsidiaries has all
requisite power and authority (corporate or otherwise) to own its properties and
to carry on its business as it is now being conducted except where failure to
have such power and authority would not have a Parent Material Adverse Effect or
materially adversely affect the consummation of the transactions contemplated
hereby. Parent and Newco have heretofore made available to the Company complete
and correct copies of their respective Articles of Incorporation and Bylaws,
each as amended.
5.2 Capitalization. The authorized capital stock of Parent consists of (a)
--------------
75,000,000 Shares of common stock, no par value per share (the "Parent Common
Stock"), of which, as of the date of this Agreement, 16,874,616 shares were
issued and outstanding, and (b) 1,000,000 shares of preferred stock, of which
(i) 100,000 shares are designated as Series A Preferred (none of which are
issued and outstanding), (ii) 112,500 shares are designated as Senior Cumulative
Convertible Preferred Stock, Series B ("Series B Preferred") (all of which are
issued and outstanding), (iii) 137,500 shares are designated as Senior
Cumulative Convertible Preferred Stock, Series C ("Series C Preferred") (all of
which are issued and outstanding), and (iv) 77,200 shares are designated as
Senior Cumulative Convertible Preferred Stock, Series D (none of which are
issued and outstanding) (collectively, "Parent Preferred Stock"). All of the
outstanding shares of capital stock of Parent have been duly authorized and
validly issued and are fully paid and nonassessable. As of June 30, 2001,
6,486,433 shares of Parent Common Stock have been reserved for issuance upon
conversion of the Series B Preferred and Series C Preferred shares of Parent
Common Stock were reserved for issuance upon exercise of outstanding awards
pursuant to Parent's option plans, and 72,179 shares of Parent Common Stock were
reserved for issuance under Parent's Employee Stock Purchase Plan. Except as set
forth on Schedule 5.2, all outstanding shares of capital stock of Parent's
------------
subsidiaries are owned by Parent or a direct or indirect wholly owned subsidiary
of Parent, free and clear of all liens, charges, encumbrances, claims and
options of any nature. Except as set forth above and on Schedule 5.2 and except
------------
for the Parent Rights, there are not, as of the date hereof, any outstanding or
authorized options, warrants, calls, rights (including preemptive rights),
commitments or any other agreements of any character to which Parent or any of
its subsidiaries is a party, or by which they may be bound, requiring it to
issue, transfer, sell, purchase, redeem or acquire any shares of capital stock
or any securities or rights convertible into, exchangeable for, or evidencing
the right to subscribe for, any shares of capital stock of Parent or any of its
-27-
subsidiaries. Except for the Voting Agreements and as set forth on Schedule 5.2,
------------
there are not as of the date hereof and there will not be at the Effective Time
of the Merger any registration rights agreements, shareholder agreements, voting
trusts or other agreements or understandings to which Parent is a party or by
which it is bound relating to the voting of any shares of Parent capital stock .
There are no restrictions on Parent with respect to voting the stock of any of
its subsidiaries. The shares of Parent Common Stock to be issued to shareholders
of the Company will be duly authorized, validly issued, fully paid and
nonassessable.
5.3 Authority Relative to This Agreement. Each of Parent and Newco has the
------------------------------------
requisite corporate power and authority to execute and deliver this Agreement
and to consummate the transactions contemplated hereby. This Agreement and the
consummation by Parent and Newco of the transactions contemplated hereby have
been duly and validly authorized by the respective Boards of Directors of Parent
and Newco and by Parent as sole shareholder of Newco, and no other corporate
proceedings on the part of Parent and Newco are necessary to authorize this
Agreement or to consummate the transactions contemplated hereby. This Agreement
has been duly and validly executed and delivered by each of Parent and Newco
and, assuming this Agreement constitutes the valid and binding agreement of the
Company, constitutes the valid and binding agreement of each of Parent and
Newco, enforceable against each of them in accordance with its terms, except
that such enforceability may be limited by (a) bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in effect
relating to creditors' rights generally and (b) general principles of equity
(regardless of whether enforceability is considered in a proceeding at law or in
equity).
5.4 Consents and Approvals; No Violation.
------------------------------------
(a) Neither the execution and delivery of this Agreement by
Parent or Newco nor the consummation by Parent and Newco of the transactions
contemplated hereby will:
(i) conflict with or result in any breach of any
provision of the Articles of Incorporation or the Bylaws, as amended,
respectively, of Parent or Newco;
(ii) require any consent, approval, authorization or
permit of, or filing with or notification to, any governmental or
regulatory authority, except (A) in connection with the applicable
requirements of the HSR Act, (B) pursuant to the applicable requirements of
the Exchange Act, (C) the filing of the articles of merger pursuant to the
PBCL and the VSCC and appropriate documents with the relevant authorities
of other states in which Parent is authorized to do business, (D) such
filings and consents as may be required by the FCC or the FCC Rules and the
VSCC or the rules and regulations promulgated by the VSCC (the "VSCC
Rules"), (E) as may be required by any applicable state securities or "blue
sky" laws or state takeover laws, (F) such filings and consents as may be
required under any environmental, health or safety law or regulation
pertaining to any notification, disclosure or required approval triggered
by the Merger or the transactions contemplated by this Agreement, (G) where
the failure to obtain such consent, approval, authorization or permit, or
to make such filing or notification, would not individually or in the
aggregate have a Parent Material Adverse Effect or materially adversely
affect the consummation of the transactions contemplated
-28-
hereby or (H) such filings, consents, approvals, orders, registrations and
declarations as may be required as a result of the status or identity of
the Company;
(iii) except as set forth in Schedule 5.4(c), result
---------------
in a violation or breach of, or constitute (with or without due notice or
lapse of time or both) a default (or give rise to any right of termination,
cancellation or acceleration or lien or other charge or encumbrance) under
any of the terms, conditions or provisions of any note, license, agreement
or other instrument or obligation to which Parent or any of its Significant
Subsidiaries may be bound, except for such violations, breaches and
defaults (or rights of termination, cancellation or acceleration or lien or
other charge or encumbrance) as to which requisite waivers or consents have
been obtained or which individually or in the aggregate would not have a
Parent Material Adverse Effect; or
(iv) assuming the consents, approvals, authorizations
or permits and filings or notifications referred to in this Section 5.3 are
duly and timely obtained or made, and, with respect to this Agreement, the
approval by Parent's Shareholders has been obtained violate any material
order, writ, injunction, decree, statute, rule or regulation applicable to
Parent or any of its subsidiaries or to any of their respective assets.
(b) The affirmative vote of (i) a majority of the voting power of the
outstanding shares of Parent's voting capital stock in favor of the issuance of
shares of Parent capital stock in connection with the Merger ("Parent
Shareholder Approval") and (ii) the holders of Parent Preferred Stock in favor
of the issuance of preferred stock by Parent and modifications to Parent
Preferred Stock contemplated by the Financing Letter (as such term is defined in
Section 5.24 herein), are the only votes of the holders of any class or series
of Parent's or its subsidiaries' securities necessary to approve this Agreement
and the transactions contemplated hereby.
5.5 SEC Reports; Financial Statements.
---------------------------------
(a) Parent has filed all forms, reports and documents required
to be filed by it with the SEC since January 1, 1998 pursuant to the federal
securities laws and the SEC rules and regulations thereunder, all of which as of
their respective dates complied in all material respects with all applicable
requirements of the Exchange Act (collectively, the "Parent SEC Reports"). None
of the Parent SEC Reports, including, without limitation, any financial
statements or schedules included therein, as of their respective dates,
contained any untrue statement of a material fact or omitted to state a 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.
(b) The consolidated balance sheets and the related consolidated
statements of operations, shareholders' equity and cash flows (including the
related notes thereto) of Parent included in the Parent SEC Reports, as of their
respective dates, complied in all material respects with applicable accounting
requirements and the published rules and regulations of the SEC with respect
thereto, were prepared in accordance with generally accepted accounting
principles applied on a basis consistent with prior periods (except as otherwise
noted therein), and present
-29-
fairly, in all material respects, the consolidated financial position of Parent
and its consolidated subsidiaries as of their respective dates, and the
consolidated results of their operations and their cash flows for the periods
presented therein (subject, in the case of the unaudited interim financial
statements, to normal year-end adjustments).
5.6 Absence of Certain Changes or Events. Except as disclosed in the
------------------------------------
Parent SEC Reports, as set forth in Schedule 5.6 to this Agreement or as
contemplated by this Agreement, since December 31, 2000, there has not been (i)
any Parent Material Adverse Effect with respect to Parent and its subsidiaries;
(ii) any declaration, setting aside or payment of any dividend (whether in cash,
stock or property) with respect to any Parent Stock; (iii) any amendment of any
material term of any outstanding equity security of Parent or any subsidiary;
(v) any repurchase, redemption or other acquisition by Parent or any subsidiary
of any outstanding shares of capital stock or other equity securities of, or
other ownership interests in, Parent or any subsidiary, except as contemplated
by Parent Benefit Plans (as defined in Section 5.10 herein); (vi) any material
damage, destruction or other property loss, whether or not covered by insurance;
or (vii) any change in accounting methods, principles or practices by Parent
materially affecting its assets, liabilities or business, except insofar as may
have been required by a change in GAAP.
5.7 Litigation. Schedule 5.7 accurately discloses in all material respects
---------- ------------
as of the date of this Agreement all actions, claims, suits, proceedings and
governmental investigations pending or, to the knowledge of Parent or Newco,
threatened, which (i) are required to be disclosed therein by the Exchange Act
or (ii) individually or in the aggregate are reasonably likely to have a Company
Material Adverse Effect.
5.8 Insurance. Parent maintains insurance coverage reasonably adequate for
---------
the operation of the business of Parent and each of its subsidiaries, and the
transactions contemplated hereby will not materially adversely affect such
coverage
5.9 Taxes.
-----
(a) Except as set forth on Schedule 5.9:
------------
(i) both Parent and Newco, their subsidiaries and their
former subsidiaries has filed or caused to be filed all Tax Returns
required to have been filed by or for them, and all information set forth
in such Tax Returns is correct and complete in all material respects;
(ii) both Parent and Newco, their subsidiaries and their
former subsidiaries have paid all Taxes due and payable by each;
(iii) the balance sheets and financial statements included
in the Parent SEC Reports fully and properly reflect, as of their dates,
the liabilities of Parent and Newco and their subsidiaries and (insofar as
Parent or Newco or any of their subsidiaries may be liable therefor) the
former subsidiaries for all Taxes for all periods ending on or before such
dates, and the books and records of Parent and Newco and their subsidiaries
fully and properly reflect all liabilities for Taxes for all periods after
December 31, 2000;
-30-
(iv) none of Parent's or Newco's or their subsidiaries
have granted (nor is any of them subject to) any waiver currently in effect
of the period of limitations for the assessment of Tax, no unpaid Tax
deficiency has been asserted against or with respect to any of Parent or
Newco or their subsidiaries or (insofar as Parent and Newco or any of their
subsidiaries may be liable therefor) the former subsidiaries by any taxing
authority, and there is no pending examination, administrative or judicial
proceeding, or deficiency or refund litigation, with respect to any Taxes
of Parent and Newco or any of their subsidiaries or (insofar as Parent and
Newco or any of their subsidiaries may be liable therefor) any of the
former subsidiaries.
5.10 Employee Benefit Plans; Labor Matters.
-------------------------------------
(a) Schedule 5.10 contains a true and complete list of (A) all
employee welfare benefit and employee pension benefit plans as defined in
sections 3(1) and 3(2) of ("ERISA"), including, but not limited to, plans that
-----
provide retirement income or result in a deferral of income by employees for
periods extending to termination of employment or beyond, and plans that provide
medical, surgical, or hospital care benefits or benefits in the event of
sickness, accident, disability, death or unemployment and (B) all other material
employee benefit agreements or arrangements, including without limitation
deferred compensation plans, incentive plans, bonus plans or arrangements, stock
option plans, stock purchase plans, stock award plans, golden parachute
agreements, severance pay plans, dependent care plans, cafeteria plans, employee
assistance programs, scholarship programs, employee discount programs,
employment contracts, retention incentive agreements, noncompetition agreements,
consulting agreements, confidentiality agreements, vacation policies, and other
similar plans, agreements and arrangements that are currently in effect as of
the date of this Agreement, or have been approved before this date but are not
yet effective, for the benefit of any director, officer, employee or former
employee (or any of their beneficiaries) of Parent or Newco or any of their
subsidiaries (collectively, a "Parent Beneficiary"), or with respect to which
Parent or Newco or any of their subsidiaries may have any liability ("Parent
Benefit Plans").
(b) With respect to each Parent Benefit Plan, Parent has heretofore
delivered to the Company, as applicable, complete and correct copies of each of
the following documents which Parent has prepared or has been required to
prepare:
(i) the Parent Benefit Plans and any amendments thereto
(or if a Parent Benefit Plan is not a written agreement, a description
thereof);
(ii) the three most recent annual Form 5500 reports filed
with the IRS;
---
(iii) the most recent statement filed with the DOL pursuant
---
to 29 U.S.C. (S) 2520.104-23;
(iv) the three most recent annual Form 990 and 1041
reports filed with the IRS;
(v) the three most recent actuarial reports;
-31-
(vi) the three most recent reports prepared in accordance
with Statement of Financial Accounting Standards No. 106;
(vii) the most recent summary plan description and
summaries of material modifications thereto;
(viii) the trust agreement, group annuity contract or other
funding agreement that provides for the funding of the Parent Benefit Plan;
(ix) the most recent financial statement;
(x) the most recent determination letter received from
the IRS; and
(xi) any agreement pursuant to which Parent or any
subsidiaries is obligated to indemnify any person.
(c) All contributions and other payments required to have been made
by Parent or Newco or any entity (whether or not incorporated) that is treated
as a single employer with Parent or Newco under Section 414 of the Code (a
"Parent ERISA Affiliate") with respect to any Parent Benefit Plan (or to any
---------------
person pursuant to the terms thereof) have been or will be timely made and all
such amounts properly accrued through the date of the Parent SEC Reports have
been reflected therein.
(d) The terms of all Parent Benefit Plans that are intended to be
"qualified" within the meaning of Section 401(a) of the Code have been
determined by the IRS to be so qualified or the applicable remedial periods will
not have ended prior to the Effective Time of the Merger. Except as disclosed in
Schedule 5.10, no event or condition exists or has occurred that could cause the
-------------
IRS to disqualify any Parent Benefit Plan that is intended to be qualified under
Section 401(a) of the Code. Except as disclosed in Schedule 5.10, with respect
-------------
to each Parent Benefit Plan, Parent and Newco and each Parent ERISA Affiliate
are in compliance in all material respects with, and each Parent Benefit Plan
and related source of benefit payment is and has been operated in compliance
with, its terms, all applicable laws, rules and regulations governing such plan
or source, including, without limitation, ERISA, the Code and applicable local
law. To the knowledge of Parent or Newco, except as set forth in Schedule 5.10,
-------------
no Parent Benefit Plan is subject to any ongoing audit, investigation, or other
administrative proceeding of the IRS, the DOL, or any other federal, state, or
local governmental entity or is scheduled to be subject to such an audit
investigation or proceeding.
(e) With respect to each Parent Benefit Plan, to the knowledge of
Parent and Newco, there exists no condition or set of circumstances that could
subject Parent or Newco or any Parent ERISA Affiliate to any liability arising
under the Code, ERISA or any other applicable law (including, without
limitation, any liability to or under any such plan or under any indemnity
agreement to which Parent or Newco or any Parent ERISA Affiliate is a party),
which liability, excluding liability for benefit claims and funding obligations,
each payable in the ordinary course, could reasonably be expected to have a
Material Adverse Effect on Parent or Newco. No claim, action or litigation has
been made, commenced or, to the knowledge of Parent
-32-
or Newco, threatened, by or against and Parent Benefit Plan or Parent or Newco
or any of its subsidiaries with respect to any Parent Benefit Plan (other than
for benefits in the ordinary course) that could reasonably be expected to have a
Material Adverse Effect on Parent or Newco.
(f) Except as disclosed in Schedule 5.10, no Parent Benefit Plan that
-------------
is a "welfare benefit plan" (within the meaning of Section 3(1) of ERISA)
------------
provides benefits for any retired or former employees (other than as required
under the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended, or
other applicable state or local law that specifically mandates continued health
coverage).
(g) The consummation or announcement of any transaction contemplated
by this Agreement will not (either alone or in conjunction with another event,
including termination of employment) result in (A) any payment (whether of
severance pay or otherwise) becoming due from Parent or Newco or any of their
subsidiaries to any Parent Beneficiary or to the trustee under any "rabbi trust"
or similar arrangement, or (B) any benefit under any Parent Benefit Plan being
established or increased, or becoming accelerated, vested or payable.
5.11 Neither Parent nor Newco nor any entity that was at any time during
the six-year period ending on the date of this Agreement a Parent ERISA
Affiliate has ever maintained, had an obligation to contribute to, contributed
to, or had any liability with respect to any plan that (A) is or was a pension
plan (as defined in Section 3(2) of ERISA) that is or was subject to Title IV of
ERISA, Section 412 of the Code or Section 302 of ERISA or (B) that is or was a
multiemployer plan (as defined in Sections 414(f) of the Code or 3(37) or
4001(a)(31) of ERISA). Environmental Laws and Regulations. Except as set forth
----------------------------------
in Schedule 5.11, Parent and Newco are in compliance in all material respects
-------------
with all Environmental Laws. The conduct of the businesses of Parent and Newco
do not violate or conflict with, in any material respect, any Environmental
Laws.
5.12 Compliance with Laws and Orders. Except with respect to the matters
-------------------------------
described in Section 5.9, 5.10 and 5.11, neither Parent nor Newco nor any
subsidiary is in violation of or in default under any Law or Order, applicable
to Parent or Newco or any subsidiary or any of their respective assets and
properties the effect of which, individually or in the aggregate with other such
violations and defaults could not reasonably be expected to have a Parent
Material Adverse Effect.
5.13 Rights Agreement. Neither the execution nor the delivery of this
----------------
Agreement will result in a "Distribution Date" (as defined in the Parent Rights
Agreement). Parent has irrevocably taken all actions necessary to make the
Parent Rights inapplicable to the Merger and the transactions contemplated
hereby.
5.14 Certain Agreements. Except as set forth in Schedule 5.14, neither
------------------ -------------
Parent nor Newco nor any of their subsidiaries are a party to any oral or
written agreement or plan, including any stock option plan, stock appreciation
rights plan, restricted stock plan or stock purchase plan, any of the benefits
of which will be increased, or the vesting of the benefits of which will be
accelerated, by the occurrence of any of the transactions contemplated by this
Agreement or the value of any of the benefits of which will be calculated on the
basis of any of
-33-
the transactions contemplated by this Agreement. Except as described in Schedule
--------
5.14 or except for any such as would not result in a Parent Material Adverse
----
Effect, the transactions contemplated by this Agreement will not constitute a
"change of control" under, require the consent from or the giving of notice to
any third party pursuant to, or accelerate the vesting or repurchase rights
under, the terms, conditions or provisions of any loan or credit agreement,
note, bond, mortgage, indenture, license, or any material lease, contract,
agreement or other instrument or obligation to which Parent or Newco or any of
their subsidiaries is a party or by which any of them or any of their properties
or assets may be bound. Except as set forth in Schedule 5.14, there are no
-------------
amounts payable by Parent or Newco or their subsidiaries to any officers of
Parent or Newco or their subsidiaries (in their capacity as officers) as a
result of the transactions contemplated by this Agreement and/or any subsequent
employment termination.
5.15 Brokers and Finders. Except for the fees and expenses payable to
-------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated which fees and expenses are reflected in its
agreement with Parent, a true and correct copy of which has been furnished to
the Company, Parent has not employed any investment banker, broker, finder,
consultant or intermediary in connection with the transactions contemplated by
this Agreement which would be entitled to any investment banking, brokerage,
finder's or other fee or commission in connection with this Agreement or the
transactions contemplated hereby.
5.16 Opinion of Financial Advisor. Parent has received the opinion of
----------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated, dated as of the date of this Agreement, to
the effect that, as of such date, the Merger Consideration, taking into account
the terms of the Financing Letter (as defined in Section 5.24), is fair to
Parent from a financial point of view.
5.17 Accuracy of Information Furnished. No representation, statement, or
---------------------------------
information made or furnished by the Company to Parent or any of Parent's
representatives, including those contained in this Agreement and the various
Schedules attached hereto and the other information and statements referred to
herein and previously furnished by the Company, contains or shall contain any
untrue statement of a material fact or omits or shall omit any material fact
necessary to make the information contained therein not misleading. Parent has
provided the Company with true, accurate and complete copies of all documents
listed or described in the various Schedules attached hereto.
5.18 No Default. Except as set forth in Schedule 5.18, neither Parent nor
----------
any of its subsidiaries is in material breach, default or violation (and no
event has occurred which with notice or the lapse of time or both would
constitute a breach, default or violation) of any term, condition or provision
of (i) its Articles of Incorporation or Bylaws (or similar governing documents),
(ii) any Law applicable to Parent or its subsidiaries or any of their respective
properties or assets or (iii) any material contract.
5.19 Transactions With Affiliates. Except as set forth in Schedule 5.19, or
---------------------------- -------------
as contemplated by this Agreement, since December 31, 2000, Parent has not, in
the ordinary course of business or otherwise, purchased, leased or otherwise
acquired any material property or assets or obtained any material services from,
or sold, leased or otherwise disposed of any material property or assets or
provided any material services to (except with respect to
-34-
remuneration for services rendered as a director, officer or employee of Parent
in the ordinary course), (i) any employee of Parent, (ii) any shareholder of
Parent, (iii) any Person, firm or corporation that directly or indirectly
controls, is controlled by or is under common control with Parent, or (iv) any
member of the immediate family of any of the foregoing persons (collectively,
"Parent Affiliates"). Except as set forth in Schedule 5.19, (a) Parent's
-------------
Material Contracts do not include any obligation or commitment between Parent
and any Parent Affiliate, (b) the assets of Parent do not include any receivable
or other obligation or commitment from a Parent Affiliate to Parent and (c) the
liabilities reflected on Parent SEC Reports do not include any obligation or
commitment to any Parent Affiliate.
5.20 Licenses. All licenses issued by the FCC and any applicable state
--------
agencies (the "Licenses") required for the operation of the business of Parent
and its subsidiaries are in full force and effect and there are no pending
modifications, amendments or revocation proceedings which would materially
adversely affect the operations of Parent. All material fees due and payable to
governmental authorities pursuant to the rules governing the Licenses have been
paid and no event has occurred with respect to the Licenses held by Parent
which, with the giving of notice or the lapse of time or both, would constitute
grounds for revocation thereof. Parent is in compliance in all material
respects with the terms of the Licenses, as applicable, and there is no
condition, event or occurrence existing, nor is there any proceeding being
conducted of which Parent has received notice, nor, to Parent's knowledge, is
there any proceeding threatened, by any governmental entity, including the VSCC
or the FCC, which would cause the termination, suspension, cancellation or
nonrenewal of any of the Licenses, or the imposition of any penalty or fine by
any regulatory authority.
5.21 Information Supplied. None of the information supplied or to be
--------------------
supplied by Parent for inclusion in (i) the Registration Statement will, at the
time the Registration Statement is filed with the SEC, and at any time it is
amended or supplemented or at the time it becomes effective under the Securities
Act 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 not misleading, and (ii) the Joint Proxy Statement will, at
the date the Joint Proxy Statement is first mailed to the Company's and Parent's
shareholders and at the time of the Company Shareholders Meeting and Parent's
Shareholders 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 are
made, not misleading. The Joint Proxy Statement, as it relates to the Parent
Shareholders Meeting, will comply as to form in all material respects with the
applicable requirements of the Exchange Act, and the rules and regulations
thereunder, except that no representation or warranty is made by Parent with
respect to statements made or incorporated by reference therein based on
information supplied by the Company for inclusion or incorporation by reference
therein.
5.22 Title to and Condition of Assets.
--------------------------------
(a) Each of Parent and its subsidiaries has good title to, or valid
leasehold interests in, all its material properties and assets, except for minor
defects in title, easements, restrictive covenants and similar encumbrances or
impediments that, in the aggregate do not and
-35-
will not materially interfere with its ability to conduct its business as
currently conducted. Except as set forth in Schedule 5.22, all such assets and
-------------
properties, other than assets and properties in which Parent or any of the
subsidiaries has leasehold interests, are free and clear of all Liens, and
except for minor Liens, that, in the aggregate, do not and will not materially
interfere with the ability of Parent or any of its subsidiaries to conduct
business as currently conducted or as reasonably expected to be conducted.
(b) Each of Parent and each of its subsidiaries has complied in all
material respects with the terms of all leases to which it is a party and under
which it is in occupancy, and all such leases are in full force and effect. Each
of Parent and each of its subsidiaries enjoys peaceful and undisturbed
possession under all such leases.
(c) Except as set forth in Schedule 5.22, to the knowledge of Parent,
-------------
the buildings and premises of Parent and each of its subsidiaries that are used
in its business are in adequate operating condition and in a state of adequate
maintenance and repair, normal wear and tear excepted, and are adequate for the
purpose for which they are currently being used, have access to adequate utility
services necessary for the conduct of the business. All items of operating
equipment of Parent and its subsidiaries are in adequate operating condition and
in a state of reasonable maintenance and repair, ordinary wear and tear
excepted.
5.23 Undisclosed Liabilities and Commitments. Except as set forth in
---------------------------------------
Schedule 5.23, at the date of the most recent Parent SEC Report, neither Parent
-------------
nor any of its subsidiaries had, and since such date neither Parent nor any of
such subsidiaries has incurred (except in the ordinary course of business
consistent with past practice), any liabilities, commitments or obligations of
any nature (whether accrued, absolute, contingent or otherwise), required by
GAAP to be set forth on a financial statement or in the notes thereto or which,
individually or in the aggregate, could reasonably be expected to have a Parent
Material Adverse Effect.
5.24 Financing. Parent has provided to the Company a copy of the binding
---------
commitment letter from ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ in the form of Exhibit B
attached hereto, including all exhibits, schedules or amendments thereto (the
"Financing Letter"). The Financing Letter is effective and has not been
withdrawn or modified. To the knowledge of Parent, the conditions set forth in
the Financing Letter (including commitment fees) will be able to be satisfied
prior to the Effective Time and Parent or Newco will have available at the
Effective Time all funds necessary to consummate the Merger, the Agreement and
the other transactions contemplated hereby subject to the conditions set forth
in the Financing Letter . Parent shall keep the Company reasonably informed of
the status of its financing for the Merger in a timely manner.
5.25 Share Ownership. Neither Parent, Newco nor any of their affiliates
---------------
beneficially owns, directly or indirectly, more than twenty percent (20%) of the
Company Shares.
5.26 Interim Operations of Newco. Newco was formed solely for the purpose
---------------------------
of engaging in the transactions contemplated hereby and has not engaged in any
business activities or conducted any operations other than in connection with
the transactions contemplated hereby.
-36-
ARTICLE VI. -- ADDITIONAL COVENANTS AND AGREEMENTS
6.1 Conduct of Business of the Company. The Company agrees that during the
----------------------------------
period from the date of this Agreement to the Effective Time (unless Parent
shall otherwise agree in writing and except as otherwise contemplated by this
Agreement), the Company will, and will cause each of its subsidiaries to,
conduct its operations according to its ordinary and usual course of business
consistent with past practice and, to the extent consistent therewith, with no
less diligence and effort than would be applied in the absence of this
Agreement, seek to preserve intact its current business organizations, keep
available the service of its current officers and employees and preserve its
relationships with customers, suppliers and others having business dealings with
it to the end that goodwill and ongoing businesses shall not be impaired in any
material respect at the Effective Time. Without limiting the generality of the
foregoing, and except as otherwise permitted in this Agreement, as set forth in
Schedule 6.1 or as set forth in the Company's 2001 operating and capital budget
------------
as submitted in writing to Parent prior to the date hereof (or as otherwise set
forth with respect to such budget in Schedule 6.1) (and, if applicable, the
------------
Company's 2002 operating and capital budget as approved by Parent, in its
reasonable discretion) prior to the Effective Time, neither the Company nor any
of its subsidiaries will, without the prior written consent of Parent:
(a) except for shares to be issued or delivered pursuant to the
Company Option Plan with respect to options or commitments outstanding on the
date of this Agreement, issue, deliver, sell, dispose of, pledge or otherwise
encumber, or authorize or propose the issuance, sale, disposition or pledge or
other encumbrance of (i) any additional shares of capital stock of any class
(including the Company Shares), or any securities or rights convertible into,
exchangeable for, or evidencing the right to subscribe for any shares of capital
stock, or any rights, warrants, options, calls, commitments or any other
agreements of any character to purchase or acquire any shares of capital stock
or any securities or rights convertible into, exchangeable for, or evidencing
the right to subscribe for, any shares of capital stock, or (ii) any other
securities in respect of, in lieu of, or in substitution for, Company Shares
outstanding on the date hereof,
(b) redeem, purchase or otherwise acquire, or propose to redeem,
purchase or otherwise acquire, any of its outstanding Company Shares; provided,
however, that the Company may in its discretion redeem the outstanding Company
Rights at any time;
(c) split, combine, subdivide or reclassify any Company Shares or
declare, set aside for payment or pay any dividend, or make any other actual,
constructive or deemed distribution in respect of any Company Shares or
otherwise make any payments to shareholders in their capacity as such, other
than the declaration and payment of regular quarterly cash dividends not in
excess of $0.21 per share per quarter and except for dividends by a wholly owned
subsidiary of the Company to the Company;
(d) adopt a plan of complete or partial liquidation, dissolution,
merger, consolidation, restructuring, recapitalization or other reorganization
of the Company or any of its subsidiaries not constituting an inactive
subsidiary (other than the Merger);
-37-
(e) adopt any amendments to its Articles of Incorporation or
Bylaws or alter through merger, liquidation, reorganization, restructuring or in
any other fashion the corporate structure or ownership of any subsidiary not
constituting an inactive subsidiary of the Company;
(f) except in accordance with the Asset Acquisition Agreement
among the Company (and certain of its affiliates) and Mountain Union Telecom,
LLC dated March 15, 2001 (as in effect on the date hereof, with any
modifications, amendments or waivers as Parent may agree in writing), make any
material divestiture or acquisition, by means of merger, consolidation or
otherwise, or material disposition, of assets or securities;
(g) other than as set forth in the Company's 2002 capital and
operating budget, incur any indebtedness for borrowed money or guarantee any
such indebtedness or make any loans, advances or capital contributions to, or
investments in, any other person, other than to the Company or any wholly owned
subsidiary of the Company;
(h) authorize, recommend, propose or announce an intention to do
any of the foregoing, or enter into any contract, agreement, commitment or
arrangement to do any of the foregoing;
(i) grant any increases in the compensation of any of its
directors, officers or employees, except in the ordinary course of business and
in accordance with past practice;
(j) pay or agree to pay any pension, retirement allowance or other
employee benefit not required or contemplated by any of the existing benefit,
severance, termination, pension or employment plans, agreements or arrangements
as in effect on the date hereof;
(k) except as set forth on Schedule 6.1(k), enter into any new or
---------------
materially amend any existing employment or severance or termination agreement
with any director, officer or employee;
(l) except as may be required to comply with applicable law,
become obligated under any new pension plan, welfare plan, multiemployer plan,
employee benefit plan, severance plan, benefit arrangement, or similar plan or
arrangement, which was not in existence on the date hereof, or amend any such
plan or arrangement in existence on the date hereof if such amendment would have
the effect of materially enhancing any benefits thereunder;
(m) make or agree to make any capital expenditures or material
commitments;
(n) neither the Company nor any executive officer or director of
the Company or any Subsidiary nor any shareholder of the Company who may be
deemed to be an "affiliate" (as that term is defined for purposes of Rules 145
and 405 promulgated by the SEC under the Securities Act) of Company shall
purchase or sell or submit a bid to purchase or an offer to sell directly or
indirectly any shares of Parent Common Stock or any options rights or other
securities convertible into shares of Parent Common Stock during the Price
Determination Period; or
-38-
(o) take any action or fail to take any action which could
reasonably be expected to result in a breach of any representation warranty or
covenant hereunder.
6.2 Conduct of Business of Parent.
-----------------------------
(a) Parent agrees that during the period from the date of this
Agreement to the Effective Time (unless the Company shall otherwise agree in
writing and except as otherwise contemplated by this Agreement), Parent will,
and will cause each of its Subsidiaries to conduct its operations according to
its ordinary and usual course of business consistent with past practice. Without
limiting the generality of the foregoing, and except as otherwise permitted in
this Agreement, as set forth in Schedule 6.2 or as set forth in Parent's 2001
------------
operating budget as submitted in writing to the Company prior to the date hereof
(and, if applicable, Parent's 2002 operating and capital budget), prior to the
Effective Time, neither Parent nor any of its Subsidiaries will, without the
prior written consent of the Company:
(i) enter into any agreement relating to a transaction
which would require the approval of its shareholders under the VSCA or the
listing standards of the Nasdaq, including, without limitation, (A)
entering into an agreement to effect, or effecting, a Change in Control
with respect to Parent, (B) altering through merger, liquidation,
reorganization, restructuring or in any other fashion the corporate
structure or organization of Parent or any Subsidiary or (C) adopt any
amendments to its Articles of Incorporation or Bylaws which would alter the
terms of the Parent Common Stock;
(ii) adopt a plan of complete or partial liquidation,
dissolution, restructuring, recapitalization or other reorganization of
Parent or of its Subsidiaries (other than with respect to the Merger);
(iii) other than with respect to the Preferred Stock
contemplated by the Financing Letter, adopt any amendments to its Articles
of Incorporation or otherwise alter its capital structure;
(iv) other than in the ordinary course of business
consistent with past practice, incur any indebtedness for borrowed money or
guarantee any such indebtedness or make any loans, advances or capital
contributions to, or investments in, any other person, other than to Parent
or any wholly owned subsidiary of Parent;
(v) authorize, recommend, propose or announce an
intention to do any of the foregoing, or enter into any contract,
agreement, commitment or arrangement to do any of the foregoing; or
(vi) take any action or fail to take any action which
could reasonably be expected to result in a breach of any representation
warranty or covenant hereunder.
(b) In addition, during the period from the date of this Agreement
until the Effective Time:
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(i) Parent shall not amend the Financing Letter in any
material respect and shall use its best efforts to do or cause to be done
all things necessary or appropriate on its part in order to fulfill the
conditions precedent set forth in the Financing Letter and to consummate
the transactions contemplated by such Financing Letter; or
(ii) Neither Parent nor any Subsidiary, nor any
executive officer or director of Parent or any Subsidiary, nor any
shareholder of Parent who may be deemed to be an "affiliate" (as that term
is defined for purposes of Rules 145 and 405 promulgated by the SEC under
the Securities Act) of Parent shall purchase or sell on Nasdaq, or submit a
bid to purchase or an offer to sell on Nasdaq, directly or indirectly, any
shares of Parent Common Stock or any options, rights or other securities
convertible into shares of Parent Common Stock during the Price
Determination Period.
6.3 No Solicitation of Transactions.
-------------------------------
(a) The Company agrees that, as of the date of this Agreement,
it has, and has caused each officer, director or employee of, or any investment
banker, attorney or other advisor or representative of the Company or any
subsidiary (the "Company Representatives"), to immediately cease and cause to be
terminated any existing activities, discussions or negotiations with any Third
Party (as defined below) conducted heretofore with respect to any Competing
Transaction (as defined below). The Company shall not, nor shall it permit any
of its Subsidiaries to, nor shall it authorize or permit any Company
Representatives to (i) solicit or initiate, encourage, or facilitate, directly
or indirectly, any inquiries relating to, or the submission of, any proposal or
offer, whether in writing or otherwise, from any person other than Parent, Newco
or any affiliates thereof (a "Third Party") to acquire beneficial ownership (as
defined under Rule 13(d) of the Exchange Act) of all or more than 5% of the
assets of the Company and its subsidiaries, taken as a whole, or 5% or more of
any class of equity securities of the Company pursuant to a merger,
consolidation or other business combination, sale of shares of stock, sale of
assets, tender offer, exchange offer or similar transaction or series of related
transactions, which is structured to permit such Third Party to acquire
beneficial ownership of more than 5% of the assets of the Company and its
Subsidiaries, taken as a whole, or 5% or more of any class of equity securities
of the Company (a "Competing Transaction"); (ii) participate in any discussions
or negotiations regarding, or furnish to any person any information or data with
respect to or access to the properties of, or take any other action to knowingly
facilitate the making of any proposal that constitutes, or may reasonably be
expected to lead to, any Competing Transaction; or waive the provisions of any
"standstill" or similar agreement or (iii) enter into any agreement with respect
to any Competing Transaction, approve or recommend or resolve to approve or
recommend any Competing Transaction or enter into any agreement requiring it to
abandon, terminate or fail to consummate the Merger and the other transactions
contemplated by this Agreement.
Notwithstanding the foregoing sentence, if the Company receives a
bona fide, unsolicited, written proposal or offer for a Competing Transaction by
a Third Party, which the Board of Directors determines in good faith (after
consulting the Board of Directors' independent financial advisor) (A) will
result in terms which are more favorable from a financial point of view to the
holders of Company Shares than the Merger and the other transactions
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contemplated by this Agreement and, after consultation with counsel, determines
that failure to take such action may result in a breach of its fiduciary duties
under applicable laws; and (B) is reasonably capable of being consummated
(provided that the Company, including the Board of Directors, and any of its
advisors shall be permitted to contact such Third Party and its advisors solely
for the purpose of clarifying the proposal and any material contingencies and
the capability of consummation) and (C) is subject to a confidentiality
agreement with such Third Party on terms no less favorable to the Company, in
all material respects, than the confidentiality agreement with Parent (each if
amended or restated a "Superior Competing Transaction"), then the Company may,
in response to an unsolicited request therefor and subject to compliance with
Section 6.2(b), furnish information with respect to the Company and its
subsidiaries to and participate in discussions and negotiations directly or
through its representatives with, such Third Party, provided that the Company
shall have delivered to Parent prior written notice that it intends to take such
action.
The Board of Directors of the Company shall be permitted to
withhold, withdraw or modify in a manner adverse to Parent, its recommendation
to the holders of the Company Shares, but only if (i) such Third Party submits
an unsolicited Competing Transaction that the Board of Directors believes, in
its good faith judgment, is reasonably likely to result in a Superior Competing
Transaction and after consultation with counsel, determines that failure to take
such action may result in a breach of fiduciary duties under applicable law and
(ii) the Company shall have delivered to Parent prior written notice that it
intends to take such action, including therein the identity of such Third Party
and the terms and conditions of such Superior Competing Transaction. The
Company, its officers, directors, advisors, and representatives shall
immediately cease all activities, discussions and negotiations, if any, with any
person conducted prior to the date hereof. Nothing contained in this Agreement
shall prevent the Board of Directors from complying with Rule 14d-9 and Rule
14e-2 promulgated under the Exchange Act.
(b) The Company shall promptly advise Parent orally and in
writing of (i) any Competing Transaction or any inquiry with respect to or which
could reasonably be expected to lead to any Competing Transaction received by
any officer or director of the Company or, to the knowledge of the Company, any
financial advisor, attorney or other advisor or representative of the Company;
(ii) the identity of the Third Party submitting such Competing Transactions or
making such inquiry, and (iii) the material terms and conditions of such
Competing Transaction. The Company will keep Parent reasonably informed on a
current basis of the status and details of any such Competing Transaction
(including amendments and proposed amendments) proposal or inquiry in a timely
manner.
6.4 Reasonable Efforts. Subject to the terms and conditions herein
------------------
provided, each of the parties hereto shall use all reasonable efforts to take,
or cause to be taken, all action and to do, or cause to be done, all things
necessary, proper or advisable under applicable laws and regulations to
consummate and make effective the transactions contemplated by this Agreement,
including using its reasonable efforts to obtain all necessary or appropriate
waivers, consents and approvals, to effect all necessary registrations, filings
and submissions (including, but not limited to, (i) filings under the HSR Act
and any other submissions requested by the PPUC, VSCC, FCC, Federal Trade
Commission or Department of Justice and (ii) such filings, consents,
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approvals, orders registrations and declarations as may be required under the
laws of any foreign country in which the Company or any of its subsidiaries
conducts any business or owns any assets) and to lift any injunction or other
legal bar to the Merger (and, in such case, to proceed with the Merger as
expeditiously as possible), subject, however, to the requisite votes of the
shareholders of any or all of the Company, Newco and Parent.
(a) Notwithstanding the foregoing, the Company shall not be
obligated to use its reasonable efforts or take any action pursuant to this
Section 6.4 if in the good faith opinion of the Board of Directors in accordance
with Section 6.3(a) after consultation with its counsel such actions might be
inconsistent with its fiduciary duties to the Company's shareholders under
applicable law.
6.5 Access to Information. Upon reasonable notice, each party shall (and
---------------------
shall cause each of its subsidiaries to) afford to officers, employees, counsel,
accountants and other authorized representatives of such party
("Representatives"), in order to evaluate the transactions contemplated by this
Agreement, reasonable access, during normal business hours and upon reasonable
notice throughout the period prior to the Effective Time, to its properties,
books and records and, during such period, shall (and shall cause each of its
subsidiaries to) furnish or make available reasonably promptly to such
Representatives all information concerning its business, properties and
personnel as may reasonably be requested. Each party agrees that it will not,
and will cause its Representatives not to, use any information obtained pursuant
to this Section 6.5 for any purpose unrelated to the consummation of the
transactions contemplated by this Agreement. The confidentiality agreements,
dated May 2, 2001 and June 20, 2001, respectively (the "Confidentiality
Agreements"), by and between the Company and Parent shall apply with respect to
information furnished by each party, its subsidiaries and its Representatives to
the other hereunder.
6.6 Publicity. The parties will consult with each other and will mutually
---------
agree upon any press releases or public announcements pertaining to the Merger
and shall not issue any such press releases or make any such public
announcements prior to such consultation and agreement, except as may be
required by applicable law or by obligations pursuant to any agreement with any
national securities exchange or automated quotation system, in which case the
party proposing to issue such press release or make such public announcement
shall consult in good faith with the other party before issuing any such press
releases or making any such public announcements.
6.7 Indemnification of Directors and Officers.
-----------------------------------------
(a) In the event of any threatened or actual claim, action,
suit, demand, proceeding or investigation, whether civil, criminal or
administrative, including, without limitation, any such claim, action, suit,
demand, proceeding or investigation in which any person who is now, or has been
at any time prior to the date hereof, or who becomes prior to the Effective
Time, a director, officer, employee, fiduciary or agent of the Company or any
subsidiary of the Company (the "Indemnified Parties") is, or is threatened to
be, made a party based in whole or in part on, or arising in whole or in part
out of, or pertaining to (i) the fact that he is or was a director, officer,
employee, fiduciary or agent of the Company or any subsidiary of
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the Company, or is or was serving at the request of the Company or any
subsidiary of the Company as a director, officer, employee, fiduciary or agent
of another corporation, partnership, joint venture, trust or other enterprise or
(ii) the negotiation, execution or performance of this Agreement or any of the
transactions contemplated hereby, whether in any case asserted or arising before
or after the Effective Time, the parties hereto agree to cooperate and use their
commercially reasonable efforts to defend against and respond thereto. It is
understood and agreed that the Company shall indemnify and hold harmless, and
after the Effective Time, Parent shall cause the Surviving Corporation to, and
the Surviving Corporation shall, indemnify and hold harmless, as and to the full
extent permitted by applicable Law, each Indemnified Party against any losses,
claims, damages, liabilities, costs, expenses (including reasonable attorneys'
fees and expenses), judgments, fines and amounts paid in settlement in
connection with any such threatened or actual claim, action, suit, demand,
proceeding or investigation, and in the event of any such threatened or actual
claim, action, suit, demand, proceeding or investigation (whether asserted or
arising before or after the Effective Time), (A) the Company, and after the
Effective Time, Parent shall cause the Surviving Corporation to, and the
Surviving Corporation shall, promptly pay expenses in advance of the final
disposition of any claim, suit, proceeding or investigation to each Indemnified
Party to the full extent permitted by law, subject to the provision by such
Indemnified Party of an undertaking to reimburse the amounts so advanced in the
event of a final non-appealable determination by a court of competent
jurisdiction that such Indemnified Party is not entitled to such amounts, (B)
the Indemnified Parties may retain one counsel satisfactory to them (except in
case of a conflict of interest among two or more Indemnified Parties, in which
case more than one counsel may be retained), and the Company, and after the
Effective Time, Parent shall cause the Surviving Corporation to, and the
Surviving Corporation shall, pay all reasonable fees and expenses of such
counsel for the Indemnified Parties within 30 days after statements therefor are
received and (C) the Company and the Surviving Corporation will, and Parent will
cause the Surviving Corporation to, use their commercially reasonable efforts to
assist in the defense of any such matter; provided that neither the Company nor
the Surviving Corporation shall be liable for any settlement effected without
its prior written consent (which consent shall not be unreasonably withheld);
and provided further, that the Surviving Corporation shall have no obligation
hereunder to any Indemnified Party when and if, but only to the extent that, a
court of competent jurisdiction shall ultimately determine, and such
determination shall have become final and non-appealable, that indemnification
of such Indemnified Party in the manner contemplated hereby is prohibited by
applicable law. Any Indemnified Party wishing to claim indemnification under
this Section 6.6, upon learning of any such claim, action, suit, demand,
proceeding or investigation, shall notify the Company and, after the Effective
Time, the Surviving Corporation, thereof, provided, that the failure to so
notify shall not affect the obligations of the Company and the Surviving
Corporation except to the extent such failure to notify materially prejudices
such party.
(b) Parent and Newco agree that all rights to indemnification
existing in favor of, and all exculpations and limitations of the personal
liability of, the directors, officers, employees and agents of the Company and
the subsidiaries of the Company in the Articles of Incorporation and Bylaws of
the Company as in effect as of the date hereof with respect to matters occurring
at or prior to the Effective Time, including the Merger, shall continue in full
force and effect for a period of not less than six years from the Effective
Time; provided, however, that all rights to
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indemnification in respect of any claims (each, a "Claim") asserted or made
within such period shall continue until the disposition of such Claim. For a
period of six years after the Effective Time, the Surviving Corporation shall,
and Parent shall cause the Surviving Corporation to, cause to be maintained in
effect the existing directors' and officers' liability insurance and fiduciary
insurance policies with an amount of coverage not less than 100% of the amount
of existing coverage, or policies that are no less favorable to the Indemnified
Parties, and with an amount of coverage not less than 100% of the amount of
existing coverage, than the policies which are currently maintained by the
Company, with respect to claims arising from facts or events which occurred at
or before the Effective Time, so long as such policies are available for an
annual premium which is no more than 200% of the current annual premium for the
existing policies; provided, that if such policies are not available for an
annual premium of no more than 200% of the current annual premium, then policies
in an amount and scope as great as can be obtained for an annual premium of 200%
of the current annual premium shall be obtained.
(c) This Section 6.7 is intended for the irrevocable benefit of,
and to grant third party rights to, the Indemnified Parties and shall be binding
on all successors and assigns of Parent, the Company and the Surviving
Corporation. Each of the Indemnified Parties shall be entitled to enforce the
covenants contained in this Section 6.7.
(d) In the event that the Surviving Corporation or any of its
successors or assigns (i) consolidates with or merges into any other person or
entity and shall not be the continuing or surviving entity of such consolidation
or merger or (ii) transfers or conveys a majority of its properties and assets
to any person or entity, then, and in each such case, proper provision shall be
made so that the successors, assigns and transferees of the Surviving
Corporation, as the case may be, assume the obligations set forth in this
Section 6.7.
(e) To the extent permitted by law, all rights of
indemnification for the benefit of any Indemnified Party shall be mandatory
rather than permissive.
6.8 Employees.
---------
(a) Following the Effective Time, (i) Parent shall cause Newco
and its successors: (A) to satisfy each of the agreements and arrangements (the
"Employment Obligations") described in subsection (c) below with respect to the
employees (the "Contract Employees") subject to such agreements and
arrangements, (B) use its commercially reasonable efforts to retain each present
full-time employee of the Company at such employee's current position with such
current responsibilities(or, if offered to, and accepted by, an employee, a
position for which the employee is qualified with Newco or Parent at a salary
commensurate with the position), (C) pay compensation to each person who was
employed as of the Effective Time and who continues to be employed by Newco or
Parent on and after the Effective Time, that is at least equal to the aggregate
compensation that such person was receiving from the Company prior to the
Effective Time (unless there is a material change in the duties and
responsibilities of such employee), (ii) in the event that Parent causes Parent
or Newco to continue to employ officers or employees of the Company as of the
Effective Time, Newco or Parent or their successors shall employ such persons on
the Effective Time who are not Contract Employees as "at will" employees, (iii)
officers and employees of the Company who continue
-44-
employment with Newco or Parent or their successors after the Effective Time and
who are Contract Employees will be employed pursuant to the terms and conditions
of their respective Employment Obligations, and (iv) in the event Newco or
Parent or their successors do not employ, or terminate the employment (other
than as a result of unsatisfactory performance of their respective duties or for
cause) of any officers or employees of the Company as of the Effective Time who
are not Contract Employees, Parent shall cause Parent or Newco or their
successors to pay the following severance benefits to such employees: a minimum
of 2 weeks' salary, with an additional one week for each year of service, with a
maximum of 26 weeks' salary.
(b) Except as set forth on Schedule 6.8(b), for a period of two
---------------
(2) years following the Effective Time, Parent agrees to provide employee
benefit plans, programs, arrangements and policies for the benefit of employees
and retired employees of the Company and its subsidiaries that in the aggregate
are no less favorable to such employees and retired employees than the Company
Plans. In the case of benefit plans and programs under which benefits are paid
or determined by reference to the value of Company Shares, Parent agrees that
such benefits shall be paid or determined by reference to the value of shares of
common stock of Parent in an equitable manner. All service credited to each
employee and retired employee by the Company through the Effective Time shall be
recognized by Parent for purposes of eligibility and vesting under the Parent
Benefit Plans. Without limiting the foregoing, Parent shall not treat any
Company employee as a "new" employee or retired employee for purposes of any
pre-existing condition exclusions, waiting periods, evidence of insurability
requirements or similar provision under any health or other welfare plan, and
will use commercially reasonable efforts to make appropriate arrangements with
its insurance carrier(s), to the extent applicable, to ensure such result.
(c) Parent and the Surviving Corporation hereby agree to honor
(without modification) and assume the employment agreements, executive
termination agreements and individual benefit arrangements listed on Schedule
--------
6.8(c)(except to the extent that such agreements have been waived prior to the
------
Effective Time), all as in effect at the Effective Time.
6.9 Registration Statement; Joint Proxy Statement.
---------------------------------------------
(a) As promptly as practicable after the execution of this
Agreement, (i) Parent and the Company shall prepare and file with the SEC a
Joint Proxy Statement, and (ii) Parent shall prepare and file with the SEC a
registration statement on Form S-4 (together with all amendments thereto, the
"Registration Statement") in which the Joint Proxy Statement shall be included
as a prospectus in connection with the registration under the Securities Act of
the shares of Parent Common Stock to be issued to the shareholders of the
Company pursuant to the Merger. Parent and the Company shall each use all
commercially reasonable efforts to cause the Registration Statement to become
effective as promptly as practicable, and, prior to the effective date of the
Registration Statement, Parent shall take all or any action required under any
applicable federal or state securities laws in connection with the issuance of
shares of Parent Common Stock pursuant to the Merger. In connection with the
preparation of the Registration Statement and Joint Proxy Statement, the Company
shall furnish all information concerning the Company as Parent may reasonably
request, and Parent shall furnish all information concerning
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Parent as the Company may reasonably request. As promptly as practicable after
the Registration Statement shall have become effective, each of Parent and the
Company shall mail the Joint Proxy Statement to its respective shareholders.
(b) Subject to Section 6.3, the Joint Proxy Statement shall include
the unanimous recommendation of the Board of Directors of the Company to the
shareholders of the Company in favor of Company Shareholder Approval;
notwithstanding anything to the contrary in this Agreement, the Board of
Directors of the Company may withhold, withdraw, modify or amend its
recommendation if in the good faith opinion of the Board of Directors, arrived
at in accordance with the provisions of Section 6.3(a), after consultation with
counsel, such recommendation might be inconsistent with its fiduciary duties to
the Company's shareholders under applicable law; and any such withholding,
withdrawal, modification or amendment shall not constitute a breach of this
Agreement.
(c) The Joint Proxy Statement shall include the unanimous
recommendation of the Board of Directors of Parent to the shareholders of Parent
in favor of Parent Shareholder Approval.
(d) Except as may be required by law, no amendment or supplement to
the Joint Proxy Statement or the Registration Statement will be made by Parent
or the Company without the approval of the other party, which will not be
unreasonably withheld or delayed. Parent and the Company each will advise the
other, promptly after it receives notice thereof, of the time when the
Registration Statement has become effective or any supplement or amendment has
been filed, the issuance of any stop order, the suspension of the qualification
of the Parent Common Stock issuable in connection with the Merger for offering
or sale in any jurisdiction, any request by the SEC for amendment of the Joint
Proxy Statement or the Registration Statement or comments thereon or requests
for additional information by the SEC.
(e) Parent shall promptly prepare and submit to the Nasdaq a listing
application covering the shares of Parent Common Stock issuable in the Merger,
and shall use commercially reasonable efforts to obtain, prior to the Effective
Time of the Merger, approval for the listing of such Parent Common Stock,
subject to official notice of issuance, and the Company shall cooperate with
Parent with respect to such listing.
6.10 Shareholders' Approvals.
-----------------------
(a) The Company, acting through its Board of Directors, shall, in
accordance with the provisions of this Agreement, the PBCL, any other applicable
law and its Articles of Incorporation and Bylaws, promptly and duly call, give
notice of, and convene and hold as soon as practicable following the date upon
which the Registration Statement becomes effective the meeting of the Company's
shareholders (the "Company Shareholders Meeting") for the purpose of obtaining
the Company Shareholder Approval.
(b) Parent, acting through its Board of Directors, shall, in
accordance with the provisions of this Agreement, the VSCA, any other applicable
law and its Articles of Incorporation and Bylaws, promptly and duly call, give
notice of, and convene and hold as soon
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as practicable following the date upon which the Registration Statement becomes
effective the meeting of Parent's shareholders (the "Parent Shareholders
Meeting", together with any Company Shareholders Meeting, the "Shareholders
Meetings") for the purpose of obtaining the Parent Shareholder Approval.
(c) Parent and the Company shall use commercially reasonable efforts
to solicit from their respective shareholders proxies in favor of such
approvals, and shall take all other action necessary or advisable to secure the
vote or consent of shareholders required by the PBCL, VSCA or the Nasdaq, as
applicable, to obtain such approvals, in accordance with the provisions of this
Agreement unless, in the good faith opinion of the Company's Board of Directors,
arrived at in accordance with the provisions of Section 6.3(a), after
consultation with its counsel, obtaining such approvals might be inconsistent
with its fiduciary duties to the Company's shareholders under applicable law.
6.11 Reorganization Treatment. Each of Parent, Newco and the Company shall
------------------------
use its reasonable efforts to cause the Merger to constitute a "reorganization"
within the meaning of Section 368(a) of the Code for federal income Tax
purposes, including, without limitation, providing reasonable representations
requested by counsel in connection with the tax opinions to be provided by
counsel pursuant to Sections 7.1(h). Unless otherwise required by law, each
party shall (i) report the Merger on all Tax Returns and other filings as a
reorganization within the meaning of Section 368(a) of the Code and (ii) not
take any position or action that is inconsistent with the characterization of
the Merger as such a reorganization in any audit, administrative proceeding,
litigation or otherwise.
ARTICLE VII. -- CONDITIONS TO CONSUMMATION OF THE MERGER
7.1 Conditions to Each Party's Obligations to Effect the Merger. The
-----------------------------------------------------------
respective obligations of each party to effect the Merger are subject to the
satisfaction at or prior to the Effective Time of the following conditions:
(a) There shall not be in effect any statute, rule, regulation,
executive order, decree, ruling or injunction or other order of a court or
governmental or regulatory agency of competent jurisdiction directing that the
transactions contemplated herein not be consummated; provided, however, that
prior to invoking this condition each party shall use all commercially
reasonable efforts to have any such decree, ruling, injunction or order vacated.
(b) All governmental consents, orders and approvals legally required
for the consummation of the Merger and the transactions contemplated hereby
shall have been obtained and be in effect at the Effective Time, and the waiting
periods under the HSR Act shall have expired or been terminated.
(c) Company Shareholder Approval shall have been obtained.
(d) Parent Shareholder Approval shall have been obtained in
accordance with applicable law, the Nasdaq and Parent's Articles of
Incorporation.
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(e) The shares of Parent Common Stock issuable in connection with the
Merger shall have been approved for trading on the Nasdaq, subject to official
notice of issuance.
(f) The Registration Statement shall have become effective under the
Securities Act, and all post-effective amendments shall have been declared
effective or shall have been withdrawn; and no stop order suspending the
effectiveness thereof shall have been issued and no proceedings for that purpose
shall have been initiated or, to the knowledge of the parties, threatened by the
SEC.
(g) There shall have been obtained any and all material permits,
approvals and consents of securities or "blue sky" authorities of any
jurisdiction that are necessary so that the consummation of the Merger and the
transactions contemplated thereby will be in compliance with applicable laws,
the failure to comply with which would have a Parent Material Adverse Effect.
(h) The Company and Parent shall have received the opinion of Hunton & ▇▇▇▇▇▇▇▇,
counsel to Parent, dated the Closing Date and in form and substance reasonably
satisfactory to each of the Company and Parent, to the effect that, for federal
income tax purposes: (i) the Merger will be a reorganization within the meaning
of Section 368(a) of the Code; (ii) neither the Company, Parent nor Newco will
recognize any gain or loss upon consummation of the Merger; (iii) a Company
shareholder will not recognize any gain or loss upon the exchange of shares of
Company Shares solely for shares of Parent Stock in the Merger, and (iv) a
Company shareholder who receives cash and shares of Parent stock in exchange for
shares of Company Shares in the Merger will recognize any gain realized
(including any gain treated as a dividend) up to the amount of cash received,
but will not recognize any loss. Such opinion may be conditioned upon the
receipt of representations of the Company, Parent and Newco, all in form and
substance reasonably satisfactory to such counsel, and reasonable assumptions
set forth therein.
7.2 Conditions to the Company's Obligations to Effect the Merger. The
------------------------------------------------------------
obligations of the Company to effect the Merger are subject to the satisfaction
at or prior to the Effective Time of the following additional conditions:
(a) The representations and warranties of Parent and Newco contained
in this Agreement shall be true and correct (in all material respects, in the
case of representations and warranties not already qualified as to materiality
by their terms) at and as of the Effective Time as though made on and as of such
date (except (i) for changes specifically permitted by this Agreement and (ii)
that those representations and warranties which address matters only as of a
particular date shall remain true and correct as of such date), and the Company
shall have received a certificate of the President or a Vice President of Parent
to the foregoing effect.
(b) Parent and Newco shall have performed and complied with in all
material respects their obligations under this Agreement to be performed or
complied with on or prior to the Effective Time, and the Company shall have
received a certificate of the President or a Vice President of Parent to the
foregoing effect.
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(c) No Distribution Date (as defined in the Parent Rights Agreement)
shall have arrived.
(d) There shall have been no Parent Material Adverse Effect since the
date of this Agreement.
7.3 Conditions to Parent's and Newco's Obligations to Effect the Merger.
-------------------------------------------------------------------
The obligations of Parent and Newco to effect the Merger are subject to the
satisfaction at or prior to the Effective Time of the following additional
conditions:
(a) The representations and warranties of the Company contained in
this Agreement shall be true and correct (in all material respects, in the case
of representations and warranties not already qualified as to materiality by
their terms) at and as of the Effective Time as though made on and as of such
date (except (i) for changes specifically permitted by this Agreement and (ii)
that those representations and warranties which address matters only as of a
particular date shall remain true and correct as of such date), and Parent shall
have received a certificate of the President or a Vice President of the Company
to the foregoing effect.
(b) The Company shall have performed and complied with in all
material respects its obligations under this Agreement to be performed or
complied with on or prior to the Effective Time, and Parent shall have received
a certificate of the President or a Vice President of the Company to the
foregoing effect.
(c) No Distribution Date (as defined in the Company Rights Agreement)
shall have occurred.
(d) All of the Company's Preferred Stock shall have been converted
into shares of the Company's Common Stock.
(e) The Company shall have delivered to Parent agreements in the form
of Exhibit C ("Company Affiliate Agreements") executed by each person who could
---------
reasonably be deemed to be an "affiliate" of the Company (as that term is used
in Rule 145 of the Securities Act).
(f) ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ and ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ shall have been elected as
members of the Board of Directors and officers of the Surviving Corporation as
of the Effective Time.
(g) There shall have been no Company Material Adverse Effect since
the date of this Agreement.
(h) Notwithstanding anything to the contrary in this Agreement,
holders of no more than five percent (5%) of the Outstanding Shares shall have
demanded appraisal rights for their shares in accordance with the PBCL.
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ARTICLE VIII. -- TERMINATION; AMENDMENT; WAIVER
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, by the
mutual written consent of Parent and the Company.
8.2 Termination by Either Parent or the Company. This Agreement may be
-------------------------------------------
terminated and the Merger may be abandoned by Parent or the Company if (i) any
court of competent jurisdiction in the United States or some other governmental
body or regulatory authority shall have issued an order, decree or ruling or
taken any other action permanently restraining, enjoining or otherwise
prohibiting the Merger and such order, decree, ruling or other action shall have
become final and nonappealable or (ii) the Company Shareholder Approval shall
not have been received at the Company Shareholders Meeting duly called and held,
or (iii) the Parent Shareholder Approval shall not have been received at the
Parent Shareholder Meeting duly called and held, or (iv) the Effective Time
shall not have occurred on or before June 30, 2002, unless otherwise extended in
accordance with the terms of this Agreement (the "Termination Date"); provided,
that the right to terminate this Agreement pursuant to this Section 8.2(iii)
shall not be available to any party whose failure to fulfill any of its
obligations under this Agreement results in such failure to close.
8.3 Termination by Parent. This Agreement may be terminated by Parent
---------------------
prior to the Effective Time, if (i) the Company shall have failed to perform in
any material respect any of its material obligations under this Agreement to be
performed at or prior to such date of termination, which failure is not cured,
or is incapable of being cured, within 30 days after the receipt by the Company
of written notice of such failure, (ii) any representation or warranty of the
Company contained in this Agreement shall not be true and correct as of the
Effective Time (in all material respects in the case of representations and
warranties not already qualified as to materiality by their terms and except for
changes permitted by this Agreement and those representations which address
matters only as of a particular date shall remain true and correct as of such
date and except, in any case, such failures to be true and correct which are not
reasonably likely to have a Company Material Adverse Effect); provided, that
such failure is not cured, or is incapable of being cured, within 30 days after
the receipt by the Company of written notice of such failure or (iii) the
Company breaches the provisions of Section 6.3 or the Board of Directors of the
Company withholds, withdraws or materially modifies or amends its recommendation
of this Agreement or the Merger.
8.4 Termination by the Company. This Agreement may be terminated by the
--------------------------
Company and the Merger may be abandoned at any time prior to the Effective Time
if (i) Newco or Parent shall have failed in any material respect any of their
material obligations under this Agreement to be performed at or prior to such
date of termination, which failure to perform is not cured, or is incapable of
being cured, within 30 days after the receipt by Parent of written notice of
such failure, (ii) any representation or warranty of Newco or Parent contained
in this Agreement shall not be true and correct as of the Effective Time (in all
material respects, in the case of representations and warranties not already
qualified as to materiality by their terms and except for changes permitted by
this Agreement and those representations which address matters only as of a
particular date shall remain true and correct as of such date and except, in any
case, such
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failures to be true and correct which are not reasonably likely to have a Parent
Material Adverse Effect); provided, that such failure to be true and correct is
not cured), or is incapable of being cured, within 30 days after receipt by
Parent of written notice of such failure, or (iii) the Board of Directors of the
Company withholds, withdraws or materially modifies or changes its
recommendation of this Agreement or the Merger if there exists at such time a
proposal or offer for a Competing Transaction that constitutes a Superior
Competing Transaction; provided, that the Company may not terminate this
Agreement pursuant to this Section 8.4 (iii) unless and until (A) ten (10)
business days have elapsed following delivery to Parent of written notice of
such determination by the Board of Directors and during such ten (10) business
day period the Company has given Parent reasonable opportunity to discuss with
the Company the Superior Competing Transaction and any proposed amendments to
this Agreement; (B) at the of end such ten (10) business day period the Superior
Competing Transaction continues to constitute a Superior Proposal (taking into
consideration any modifications to the terms hereof proposed by Parent) and the
Board of Directors confirms its determination, after consultation with its
counsel and its independent financial advisor, that it is a Superior Competing
Transaction, and (C) it shall be a condition to termination pursuant to this
Section 8.4(iii) that the Company shall have made the payment of the fee to
Parent required by Section 8.5(b).
8.5 Effect of Termination.
---------------------
(a) In the event of the termination and abandonment of this Agreement
pursuant to Article VIII, this Agreement shall forthwith become void and have no
effect, without any liability on the part of any party hereto or its affiliates,
directors, officers or shareholders, other than the provisions of this Section
8.5 and the provisions of Sections 9.1 and 9.2 and the last two sentences of
Section 6.3. Nothing contained in this Section 8.5 shall relieve any party from
liability for any willful breach of any covenant or other agreement contained in
this Agreement.
(b) In the event of termination of this Agreement without
consummation of the transactions contemplated hereby:
(i) by Parent pursuant to Section 8.3(iii); or
(ii) by the Company pursuant to Section 8.4(iii);
, then the Company shall make payment to Parent by wire transfer of
immediately available funds of a fee in the amount equal to $10,000,000
(the "Termination Fee"), such amount to constitute liquidated damages, in
the case of clause (i) above, within two business days following such
termination, or, in the case of clause (ii) above, concurrently with such
termination; or
(iii) by either Parent or the Company pursuant to Section
8.2(ii) if prior to such termination the Company receives a proposal or
offer for a Superior Competing Transaction, then the Company shall make
payment to Parent by wire transfer of immediately available funds in an
amount equal to Parent's documented expenses incurred in connection with
the transactions contemplated by this Agreement ("Parent's Expenses")
within five business days following receipt of such documentation; and
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further, if, within nine months after the termination of this Agreement
pursuant to this Section 8.5(b)(iii) the Company enters into a definitive
agreement in respect of, or approves or recommends any Competing
Transaction or agrees or resolves to do the foregoing, then the Company
shall make payment to Parent by wire transfer of immediately available
funds in an amount equal to the Termination Fee less Parent's Expenses not
later than the earliest of the date of such definitive agreement, approval,
recommendation, agreement or resolution.
8.6 Extension; Waiver. At any time prior to the Effective Time, each of
-----------------
Parent, Newco and the Company may (i) extend the time for the performance of any
of the obligations or other acts of the other party, (ii) waive any inaccuracies
in the representations and warranties of the other party contained herein or in
any document, certificate or writing delivered pursuant hereto or (iii) waive
compliance by the other party with any of the agreements or conditions contained
herein. Any agreement on the part of either party hereto to any such extension
or waiver shall be valid only if set forth in any instrument in writing signed
on behalf of such party. The failure of either party hereto to assert any of its
rights hereunder shall not constitute a waiver of such rights.
ARTICLE IX. -- MISCELLANEOUS AND GENERAL
9.1 Payment of Expenses. Whether or not the Merger shall be consummated,
-------------------
each party hereto shall pay its own expenses incident to preparing for, entering
into and carrying out this Agreement and the consummation of the transactions
contemplated hereby, provided that the Surviving Corporation shall pay, with
funds of the Company and not with funds provided by any of Parent Companies, any
and all property or transfer taxes imposed on the Surviving Corporation.
9.2 Survival of Representations and Warranties; Survival of
-------------------------------------------------------
Confidentiality. The representations and warranties made herein shall not
---------------
survive beyond the earlier of (i) termination of this Agreement or (ii) the
Effective Time. This Section 9.2 shall not limit any covenant or agreement of
the parties hereto which by its terms contemplates performance after the
Effective Time. The Confidentiality Agreements shall survive any termination of
this Agreement, and the provisions of such Confidentiality Agreements shall
apply to all information and material delivered by any party hereunder.
9.3 Modification or Amendment. Subject to the applicable provisions of the
-------------------------
PBCL, at any time prior to the Effective Time, the parties hereto may modify or
amend this Agreement, by written agreement executed and delivered by duly
authorized officers of the respective parties; provided, however, that after
approval of this Agreement by the shareholders of the Company, no amendment
shall be made which changes the consideration payable in the Merger or adversely
affects the rights of the Company's shareholders hereunder without the approval
of such shareholders.
9.4 Waiver of Conditions. The conditions to each of the parties'
--------------------
obligations to consummate the Merger are for the sole benefit of such party and
may be waived by such party in whole or in part to the extent permitted by
applicable law.
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9.5 Counterparts. For the convenience of the parties hereto, 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.
9.6 Governing Law. This Agreement shall be governed by and construed in
-------------
accordance with the laws of the Commonwealth of Pennsylvania, without giving
effect to the principles of conflicts of law thereof.
9.7 Notices. Any notice, request, instruction or other document to be
-------
given hereunder by any party to the other parties shall be in writing and
delivered personally or sent by registered or certified mail, postage prepaid,
or by facsimile transmission (with a confirming copy sent by overnight courier),
as follows:
(a)If to the Company, to
Conestoga Enterprises, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, President
(▇▇▇) ▇▇▇-▇▇▇▇ (telephone)
(▇▇▇) ▇▇▇-▇▇▇▇ (telecopier)
with copies to:
Barley, Snyder, ▇▇▇▇▇ & ▇▇▇▇▇, LLC
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Esquire
(▇▇▇) ▇▇▇-▇▇▇▇ (telephone)
(▇▇▇) ▇▇▇-▇▇▇▇ (telecopier)
and
Barley, Snyder, ▇▇▇▇▇ & ▇▇▇▇▇, LLC
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esquire
(▇▇▇) ▇▇▇-▇▇▇▇ (telephone)
(▇▇▇) ▇▇▇-▇▇▇▇ (telecopier)
(b) If to Parent or Newco, to
Attention:
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, CEO
NTELOS Inc.
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
-▇▇-
▇.▇. ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
(▇▇▇) ▇▇▇-▇▇▇▇ (telephone)
(▇▇▇) ▇▇▇-▇▇▇▇ (telecopier)
with copies to:
Attention:
▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esquire
Hunton & ▇▇▇▇▇▇▇▇
Bank of America Plaza, Suite 4100
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
(▇▇▇) ▇▇▇-▇▇▇▇ (telephone)
(▇▇▇) ▇▇▇-▇▇▇▇ (telecopier)
or to such other persons or addresses as may be designated in writing by the
party to receive such notice.
9.8 Entire Agreement; Assignment. This Agreement (including the documents
----------------------------
and the instruments referred to herein) and the Confidentiality Agreements (a)
constitute the entire agreement among the parties with respect to the subject
matter hereof and supersede all other prior agreements and understandings, both
written and oral, among the parties or any of them with respect to the subject
matter hereof, and (b) shall not be assigned by operation of law or otherwise.
9.9 Parties in Interest. This Agreement shall be binding upon and inure
-------------------
solely to the benefit of each party hereto and their respective successors and
assigns. Nothing in this Agreement, express or implied, other than the right to
receive the consideration payable in the Merger pursuant to Article III hereof
following the Effective Time, is intended to or shall confer upon any other
person any rights, benefits or remedies of any nature whatsoever under or by
reason of this Agreement; provided, however, that the provisions of Section 6.6
shall inure to the benefit of and be enforceable by the Indemnified Parties.
9.10 Certain Definitions.
-------------------
(a) As used herein:
(i) "Company Material Adverse Effect" shall mean any adverse
change in the financial condition, business, assets or results of
operations of the Company or any of its subsidiaries which is material to
the Company or any of its Significant Subsidiaries, taken as a whole,
excluding any changes or effects (i) resulting from general changes in
economic, market, regulatory or political conditions or changes in
conditions generally applicable to the industries in which the Company and
its subsidiaries are
-54-
involved, (ii) resulting from the execution of this Agreement or the
transactions contemplated hereby, or (iii) identified in the Company's 2001
operating and capital budget, as amended, and other forecasted financial
information, in each case in the form furnished to Parent in writing prior
to the date hereof.
(ii) "Parent Material Adverse Effect" shall mean any adverse
change in the financial condition, business, assets or results of
operations of Parent or any of its Significant Subsidiaries which is
material to Parent and its subsidiaries, taken as a whole, excluding any
changes or effects (i) resulting from general changes in economic, market,
regulatory or political conditions or changes in conditions generally
applicable to the industries in which Parent and its subsidiaries are
involved, (ii) resulting from the execution of this Agreement or the
transactions contemplated hereby, or (iii) identified in Parent's 2001
operating and capital budget, as amended, and other forecasted financial
information, in each case in the form furnished to the Company in writing
prior to the date hereof.
(iii) "Significant Subsidiary" shall have the meaning ascribed
to it under Rule 1-02 of Regulation S-X of the SEC.
(iv) "Subsidiary" shall mean, when used with reference to any
entity, any corporation a majority of the outstanding voting securities of
which are owned directly or indirectly by such former entity.
(b) The following capitalized terms defined elsewhere in this
Agreement are defined in the sections indicated below.
Term Section
---- -------
Agreement Introduction
Board of Directors Recitals
Cash Consideration 3.1
Cash Election 3.2
Cash/Stock Election 3.2
Certificates 3.1
Claim 6.7
Closing 1.4
Closing Market Price 3.1
Code Recitals
Company Introduction
Company Affiliate Agreements 7.3
Company Affiliates 4.23
Company Beneficiary 4.10
Company Benefit Plans 4.10
Company Common Stock 4.2
Company ERISA Affiliate 4.10
Company ESPP 4.2
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Company Material Adverse Effect 9.10
Company Material Contracts 4.21
Company Option 3.10
Company Option Plan 3.10
Company Preferred Stock 4.2
Company Right 3.1
Company Right Agreement 3.1
Company SEC Reports 4.5
Company Shareholder Approval 4.4
Company Shareholders Meeting 6.10
Company Shares 3.1
Competing Transaction 6.3
Confidentiality Agreements 6.5
Contract Employees 6.8
Contracts 4.21
Conversion Ratio 3.1
Dissenting Shares 3.8
Distribution Date 4.14
DOL 4.10
Effective Time 1.2
Election 3.2
Election Deadline 3.2
Employment Obligations 6.8
Environmental Laws 4.11
ERISA 4.10
Exchange Act 3.11
Exchange Agent 3.2
FCC 4.4
FCC Rules 4.4
Financing Letter 5.24
Form of Election 3.2
Governmental Authority 4.11
HSR Act 4.4
Indemnified Parties 6.7
IRS 4.10
Laws 4.13
Letter of Transmittal 3.6
Licenses 4.24
Liens 4.26
Maximum Cash Percentage 3.3
Merger 1.1
Merger Consideration 3.1
Nasdaq 3.1
Newco Introduction
Non-Electing Company Share 3.3
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Option 3.6
Order 4.13
Outstanding Shares 3.1
Parent Introduction
Parent Beneficiary 5.11
Parent Benefit Plan 5.11
Parent Common Stock 5.2
Parent Companies 3.1
Parent Material Adverse Effect 9.10
Parent Options 3.10
Parent Rights 3.1
Parent Rights Agreement 3.1
Parent SEC Reports 5.5
Parent Shareholder Approval 5.4
Parent Shareholders Meeting 6.10
Parent Significant Subsidiary 9.10
Parent Stock 3.1
Parent Stock Consideration 3.1
Parent Affiliates 5.19
PBCL Recitals
PCBs 4.11
Permits 4.11
PPUC 4.4
PPUC Rules 4.4
Price Determination Period 3.1
Registration Statement 6.9
Regulated Materials 4.11
Release 4.11
Parent Representatives 6.5
Remaining Cash Percentage 3.3
SEC 3.1
Securities Act 4.25
Shareholders Meeting 6.10
Stock Election 3.2
Subsidiary 9.10
Significant Subsidiary 9.10
Superior Competing Transaction 6.3
Surviving Corporation 1.1
Tax Returns 4.9
Tax, Taxes 4.9
Termination Date 8.2
Third Party 6.3
Treasury Shares 3.1
Voting Agreements Recitals
VSCC 5.4
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VSCC Rules 5.4
VSCA Recitals
9.11 Obligation of Parent. Whenever this Agreement requires Newco to take
--------------------
any action, such requirement shall be deemed to include an undertaking on the
part of Parent to cause Newco to take such action and a guarantee of the
performance thereof.
9.12 Validity. The invalidity or unenforceability of any provision of this
--------
Agreement shall not affect the validity or enforceability of any other
provisions of this Agreement, each of which shall remain in full force and
effect.
9.13 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.
-58-
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective duly authorized officers as of the date first above
written.
CONESTOGA ENTERPRISES, INC.
By: _______________________________________
Name:
Title:
NTELOS INC.
By: _______________________________________
Name:
Title:
NTELOS Acquisition Corp.
By: ______________________________________
Name:
Title:
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