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