AGREEMENT AND PLAN OF MERGER
dated as of
July 28, 1998
among
SYGNET WIRELESS, INC.
and
FRONT NINE OPERATING COMPANY
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER dated as of July 28, 1998 between Sygnet
Wireless, Inc., an Ohio corporation (the "Company"), and Front Nine Operating
Company, an Ohio corporation ("Purchaser").
WHEREAS, the respective Boards of Directors of the Company and
Purchaser have approved, and deem it advisable and in the best interests of
their respective stockholders that Purchaser merge with and into the Company,
pursuant to and subject to the terms and conditions set forth herein; and
WHEREAS, as a condition and inducement to Purchaser entering into this
Agreement and incurring the obligations set forth herein, concurrently with the
execution and delivery of this Agreement, Purchaser is entering into a
stockholder voting agreement with certain holders of securities of the Company
pursuant to which, among other things, such holders have agreed to vote all
shares of capital stock of the Company owned by such holders in favor of this
Agreement, the Merger provided for herein, the transactions contemplated by this
Agreement and certain other matters (the "Voting Agreement");
NOW, THEREFORE, in consideration of the promises and the respective
representations, warranties, covenants, and agreements set forth herein and in
the aforesaid Voting Agreement, the parties hereto agree as follows:
ARTICLE 1
THE MERGER
SECTION 1.1. THE MERGER.
(a) Upon the terms and subject to the conditions set forth in this
Agreement (including approval of the Federal Communications Commission (the
"FCC")), at the Effective Time (as defined below), Purchaser shall be merged
(the "Merger") with and into the Company in accordance with Chapter 1701 of the
Ohio Revised Code (the "Ohio Law") whereupon the separate existence of Purchaser
shall cease, and the Company shall be the surviving corporation (the "Surviving
Corporation").
(b) Upon the terms and subject to the conditions of this Agreement,
the closing of the Merger (the "Closing") shall take place at 10:00 a.m. on a
date to be specified by the parties (the "Closing Date"), which shall be no
later than the tenth business day after satisfaction of the conditions set forth
in Sections 7.1(a), (b), (c), (f), and (g), at the offices of ▇▇▇▇▇ ▇▇▇▇ LLP,
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇.▇., ▇▇▇▇▇▇▇▇▇▇, ▇.▇., unless another time, date or place is
agreed to in writing by the parties hereto.
(c) Upon the Closing, the Company and Purchaser will file a
certificate of merger with the Secretary of State of the State of Ohio and make
all other filings or recordings required by Ohio Law in connection with the
Merger. The Merger shall become effective at such
time as the certificate of merger is duly filed with the Secretary of State
of the State of Ohio or at such later time as is specified in the certificate
of merger (the "Effective Time").
(d) From and after the Effective Time, the Surviving Corporation
shall possess all the rights, privileges, powers and franchises and be subject
to all of the restrictions, disabilities and duties of the Company and
Purchaser, all as provided under Ohio Law.
SECTION 1.2. CONVERSION OF SHARES. At the Effective Time:
(a) all shares of capital stock of the Company held by the Company as
treasury stock or owned by Purchaser or any subsidiary of Purchaser immediately
prior to the Effective Time shall be canceled, and no payment shall be made with
respect thereto;
(b) each share of common stock of Purchaser outstanding immediately
prior to the Effective Time shall be converted into and become one share of
common stock of the Surviving Corporation with the same rights, powers and
privileges as the shares so converted and shall constitute the only outstanding
shares of capital stock of the Surviving Corporation;
(c) except as otherwise provided in Section 1.2(a) or as provided in
Section 1.4 with respect to Shares (as defined below) as to which appraisal
rights have been exercised, each share of (i) Class A Common Stock, par value
$0.01 per share, of the Company ("Class A Shares") issued and outstanding
immediately prior to the Effective Time and (ii) Class B Common Stock, par value
$0.01 per share, of the Company (the "Class B Shares" and, together with the
Class A Shares, the "Shares") issued and outstanding immediately prior to the
Effective Time, shall in each case be converted into the right to receive the
Merger Consideration (as defined below) in cash, without interest. The Merger
Consideration shall mean the quotient of (i) the sum of (x) $337,500,000 plus
(y) the sum of the aggregate exercise prices of Company Options (as defined
below) outstanding immediately prior to the Effective Time, divided by (ii) the
sum of (x) the number of Shares issued and outstanding immediately prior to the
Effective Time plus (y) the number of Shares issuable upon exercise of all
options to acquire Shares outstanding immediately prior to the Effective Time
(collectively, the "Company Options" and individually a "Company Option"); and
(d) all shares of the Company's preferred stock which are authorized
and unissued shall cease to exist.
SECTION 1.3. SURRENDER AND PAYMENT.
(a) Prior to the Effective Time, Purchaser shall appoint an agent
satisfactory to the Company (the "Exchange Agent") for the purpose of exchanging
certificates representing Shares for the Merger Consideration and for the
purpose of making payments to holders of Company Options in accordance with
Section 1.5. At the Effective Time, Purchaser shall deposit with the Exchange
Agent, the Merger Consideration to be paid in respect of the Shares and the
amount to be paid in respect of the Company Options held by holders electing to
receive cash in accordance with Section 1.5. For purposes of determining the
Merger Consideration to be deposited, Purchaser shall assume that no holder of
Shares will perfect his right to appraisal of his
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Shares. Prior to the Effective Time, Purchaser will send, or will cause the
Exchange Agent to send, to each holder of record of Shares a letter of
transmittal for use in such exchange (which shall specify that the delivery
shall be effected, and risk of loss and title shall pass, only upon proper
delivery of the certificates representing Shares to the Exchange Agent).
(b) Each holder of Shares that have been converted into a right to
receive the Merger Consideration, upon surrender to the Exchange Agent of a
certificate or certificates representing such Shares, together with a properly
completed letter of transmittal covering such Shares, will be entitled to
receive, and shall be paid by the Exchange Agent promptly, the Merger
Consideration payable in respect of such Shares. Until so surrendered, each
such certificate shall, after the Effective Time, represent for all purposes,
only the right to receive such Merger Consideration.
(c) The Merger Consideration shall be paid to each holder of Shares
free and clear of any withholding under Section 1445 of the Code; PROVIDED that
Purchaser receives (x) a certification from such holder of non-foreign status as
described in Treasury Regulation Section 1.1445-2(b) or (y) other documentation
reasonably satisfactory to Purchaser establishing an exemption from such
withholding, in either such case at or prior to the Closing Date.
(d) If any portion of the Merger Consideration is to be paid to a
Person other than the registered holder of the Shares represented by the
certificate or certificates surrendered in exchange therefor, it shall be a
condition to such payment that the certificate or certificates so surrendered
shall be properly endorsed or otherwise be in proper form for transfer and that
the Person requesting such payment shall pay to the Exchange Agent any transfer
or other taxes required as a result of such payment to a Person other than the
registered holder of such Shares or establish to the satisfaction of the
Exchange Agent that such tax has been paid or is not payable. For purposes of
this Agreement, "Person" means an individual, a corporation, a limited liability
company, a partnership, an association, a trust or any other entity or
organization, including a government or political subdivision or any agency or
instrumentality thereof.
(e) After the Effective Time, there shall be no further registration
of transfers of Shares. If, after the Effective Time, certificates representing
Shares are presented to the Surviving Corporation, they shall be canceled and
exchanged for the consideration provided for, and in accordance with the
procedures set forth, in this Article 1.
(f) Any portion of the Merger Consideration made available to the
Exchange Agent pursuant to Section 1.3(a) that remains unclaimed by the holders
of Shares six months after the Effective Time shall be returned to Purchaser,
upon demand, and any such holder who has not exchanged his Shares for the Merger
Consideration in accordance with this Section prior to that time shall
thereafter look only to Purchaser for payment of the Merger Consideration in
respect of his Shares. Notwithstanding the foregoing, Purchaser shall not be
liable to any holder of Shares for any amount paid to a public official pursuant
to applicable abandoned property laws. Any amounts remaining unclaimed by
holders of Shares two years after the Effective Time (or such earlier date
immediately prior to such time as such amounts would otherwise escheat to or
become property of any governmental entity) shall, to the extent permitted by
applicable law,
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become the property of the Surviving Corporation free and clear of any claims
or interest of any Person previously entitled thereto.
(g) Any portion of the Merger Consideration made available to the
Exchange Agent pursuant to Section 1.3(a) to pay for Shares for which appraisal
rights have been perfected shall be returned to the Surviving Corporation, upon
demand.
SECTION 1.4. DISSENTING SHARES. Notwithstanding Section 1.2, Shares
outstanding immediately prior to the Effective Time and held by a holder who has
not voted in favor of the Merger or consented thereto in writing and who has
demanded appraisal for such Shares in accordance with Ohio Law shall not be
converted into a right to receive the Merger Consideration, unless such holder
fails to perfect or withdraws or otherwise loses his right to appraisal. If
after the Effective Time such holder fails to perfect or withdraws or loses his
right to appraisal, such Shares shall be treated as if they had been converted
as of the Effective Time into a right to receive the Merger Consideration. The
Company shall give Purchaser prompt notice of any demands received by the
Company for appraisal of Shares, and Purchaser shall have the right to
participate in all negotiations and proceedings with respect to such demands.
The Company shall not, except with the prior written consent of Purchaser, make
any payment with respect to, or settle or offer to settle, any such demands.
SECTION 1.5. STOCK OPTIONS. At the Effective Time, each holder of an
outstanding Company Option, including without limitation any employee stock
option to purchase Shares granted under the Company's 1996 Stock Option Plan, as
amended (the "Employee Plan"), and the Company's 1996 Stock Option Plan for
Non-Employee Directors, as amended (the "Director Plan") (collectively, the
Employee Plan and the Director Plan are referred to herein as the "Company
Option Plans"), will be given the opportunity to receive cash for such
Company Option. Each holder of a Company Option who so requests prior to the
Effective Time, whether or not such Company Option is then vested or
exercisable, will be entitled to receive, and shall be paid by the Exchange
Agent promptly after the Effective Time for each Company Option an amount
determined by multiplying (i) the excess, if any, of the Merger Consideration
over the applicable exercise price of such option by (ii) the number of
Shares such holder could have purchased (assuming full vesting of all
options) had such holder exercised such option in full immediately prior to
the Effective Time. Prior to the Effective Time, the Company shall send to
each holder of a Company Option a letter seeking the consent of such holder
to receive cash for such option. To consent to receive cash for a Company
Option as described in this Section 1.5, any such holder must deposit with
the Exchange Agent a letter of consent and assignment and the original option
agreements relating to the options for which such consent is given, and such
holder shall be entitled to receive payment for such options after the
Effective Time. Such consent shall be irrevocable unless this Agreement is
terminated before the Effective Time. Any such payment shall be subject to
all applicable federal, state and local tax withholding requirements. If
this Agreement is terminated before the Effective Time, the option agreements
shall be returned to each such holder.
SECTION 1.6. ARTICLES OF INCORPORATION. The articles of
incorporation of Purchaser in effect at the Effective Time shall be the Articles
of Incorporation of the Surviving
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Corporation until amended in accordance with applicable law, except that the
name of the Surviving Corporation shall be changed to "Sygnet Wireless, Inc."
SECTION 1.7. CODE OF REGULATIONS. The code of regulations of
Purchaser in effect at the Effective Time shall be the code of regulations of
the Surviving Corporation until amended in accordance with applicable law.
SECTION 1.8. DIRECTORS AND OFFICERS. From and after the Effective
Time, until successors are duly elected or appointed and qualified in accordance
with applicable law, the directors and officers of Purchaser at the Effective
Time shall be the directors and officers of the Surviving Corporation.
SECTION 1.9. ESCROW DEPOSIT.
(a) The Company and Purchaser shall appoint PNC Bank, National
Association (the "Escrow Agent") for the purpose of holding Purchaser's ▇▇▇▇▇▇▇
money deposit hereunder.
(b) Purchaser shall cause to be delivered to the Escrow Agent
$25,000,000 (the "Deposit") in immediately available funds as Purchaser's
▇▇▇▇▇▇▇ money deposit within three (3) business days after the execution of this
Agreement, to be held and applied pursuant to the terms of an escrow agreement
(the "Escrow Agreement") to be entered into by the Company, Purchaser and the
Escrow Agent. If the Closing occurs, then the Deposit and all earnings on the
Deposit shall be paid to the Exchange Agent at Closing pursuant to the Escrow
Agreement as a portion of the total Merger Consideration. If the Company
terminates this Agreement in accordance with the provisions of Section 8.1(d),
unless at the time of such termination the Company is in material breach of this
Agreement or the requisite vote of the stockholders of the Company under the
Ohio Law for the approval of this Agreement, the Merger and the transactions
contemplated by this Agreement shall not have been obtained at the meeting (or
any adjournment thereof) called for such purpose, the Company shall be entitled
to and shall be paid the Deposit as liquidated damages (the "Liquidated Damages
Amount"), which Liquidated Damages Amount the parties agree is a fair and
reasonable measure of the damages that the Company would sustain as a result of
such termination. Notwithstanding anything else set forth in this Agreement,
the Company's sole and exclusive recourse for Purchaser's breach of its
representations or obligations under this Agreement shall be to receive the
Liquidated Damages Amount on the terms and conditions set forth in this Section
1.9. In any other case if the Closing does not occur, then, pursuant to the
Escrow Agreement, the Deposit and all earnings thereon shall be paid to
Purchaser. All payments by the Escrow Agent shall be made in accordance with
the procedures and other provisions set forth in the Escrow Agreement.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES
OF THE COMPANY
The Company represents and warrants to Purchaser that, except as
otherwise disclosed in the Schedules to this Agreement or in any Company Filings
(as defined herein):
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SECTION 2.1. CORPORATE EXISTENCE AND POWER. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Ohio, and has all corporate powers required to carry on its
business as now conducted. The Company is duly qualified to do business as a
foreign corporation and is in good standing in each jurisdiction where the
character of the property owned or leased by it or the nature of its activities
makes such qualification necessary, except for those jurisdictions where the
failure to be so qualified would not reasonably be expected to have,
individually or in the aggregate, a Company Material Adverse Effect. The
Company has heretofore delivered to Purchaser true and complete copies of the
Company's Articles of Incorporation and Code of Regulations as currently in
effect. For purposes of this Agreement, a "Company Material Adverse Effect"
means a material adverse effect on the assets, liabilities, business,
operations, condition (financial or otherwise), or results of operations of the
Company and its subsidiary, Sygnet Communications, Inc., an Ohio corporation
("SCI"), taken as a whole, or on the ability of the Company to perform its
obligations hereunder. For purposes of this Agreement, any reference to any
event, change or effect being "material" with respect to any Person means an
event, change or effect that is material in relation to the assets, liabilities,
business, operations, condition (financial or otherwise), or results of
operations of such Person (and its subsidiaries, if any) taken as a whole or on
the ability of such Person to perform its obligations hereunder.
Notwithstanding anything to the contrary herein, a Company Material Adverse
Effect shall not include events, changes or effects (i) caused by general
economic conditions or (ii) affecting the cellular telephone industry generally.
SECTION 2.2. SUBSIDIARIES. SCI is a corporation duly organized,
validly existing and in good standing under the laws of the State of Ohio, and
has all corporate powers required to carry on its business as now conducted.
The Company has heretofore delivered to Purchaser true and complete copies of
SCI's Articles of Incorporation and Code of Regulations as currently in effect.
The authorized capital stock of SCI consists of 750 shares of Common Stock, $.01
par value per share, of which 200 shares are issued and outstanding, all of
which are held beneficially and of record by the Company. Except as set forth
in SCHEDULE 2.2, the shares of capital stock of SCI owned by the Company are
validly issued, fully paid and non-assessable (subject to statutory obligations
of holders, if any), and are owned free and clear of all options, pledges,
restrictions on transfer (other than pursuant to federal and state securities
laws), taxes, warrants, contracts, purchase rights, commitments, equities,
claims, demands, obligations, security interests, liens, mortgages, charges,
rights of third parties, community property rights and other encumbrances
(collectively, "Encumbrances"). Except as set forth in this Section 2.2, there
are outstanding (i) no other shares or capital stock or other voting securities
of SCI, (ii) no securities of SCI convertible into or exchangeable for shares of
capital stock or voting securities of SCI, (iii) no options or other rights to
acquire from SCI, and no obligation of SCI to issue, any capital stock, voting
securities or securities convertible into or exchangeable for capital stock or
voting securities of SCI, and (iv) no obligations of SCI to repurchase, redeem,
or otherwise acquire shares of its capital stock or other equity securities.
The Company (i) does not have any direct or indirect Subsidiaries (as defined
below) other than SCI, and (ii) except as set forth in SCHEDULE 2.2, has not
made any advances to or investments in, and does not own any securities of or
equity or other interests in, any Person other than SCI. SCI is duly qualified
as a foreign corporation to do business, and is in good standing, in each
jurisdiction where the character of its properties owned or held under lease or
the nature of its activities makes such qualification necessary, except where
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the failure so to qualify would not reasonably be expected to have a Company
Material Adverse Effect. For purposes of this Agreement, a "Subsidiary" of any
Person means any corporation, partnership, joint venture or other legal entity
of which such Person (either alone or through or together with any other
Subsidiary) (i) owns, directly or indirectly, fifty percent (50%) or more of the
stock, partnership interests or other equity interests the holders of which are
generally entitled to vote for the election of the board of directors or other
governing body of such corporation, partnership, joint venture or other legal
entity; or (ii) possesses, directly or indirectly, control over the direction of
management or policies of such corporation, partnership, joint venture or other
legal entity (whether through ownership of voting securities, by agreement or
otherwise).
SECTION 2.3. CORPORATE RECORDS. The corporate minute books, transfer
books and stock ledgers of the Company and SCI are complete and accurate in all
material respects.
SECTION 2.4. CORPORATE AUTHORIZATION. The execution, delivery and
performance by the Company of this Agreement and the Voting Agreement and the
consummation by the Company of the transactions contemplated hereby and thereby
are within the Company's corporate powers, subject to the conditions set forth
in this Agreement. The Board of Directors of the Company has approved this
Agreement and the Voting Agreement, has determined that the transactions
contemplated by this Agreement and the Voting Agreement are in the best
interests of the Company and its stockholders and has resolved to recommend to
such stockholders that they vote in favor of the Merger. The affirmative vote
of a majority of the votes entitled to be cast by the holders of outstanding
shares of the Class A Common Stock and Class B Common Stock, voting together as
a single class, is the only vote of any class or series of capital stock of the
Company necessary to amend the Company's Code of Regulations to effect the
Opt-Out Amendment (as defined in Section 4.8 below). The affirmative vote of
two-thirds of the votes entitled to be cast by the holders of outstanding
shares of the Class A Common Stock and Class B Common Stock, voting together
as a single class, is the only vote of any class or series of capital stock
of the Company necessary to approve the Merger and other transactions
contemplated under this Agreement (other than to effect the Opt-Out
Amendment). Except as set forth in this Section 2.4, no other corporate
proceedings on the part of the Company are necessary to authorize this
Agreement and the Voting Agreement and the transactions contemplated hereby.
This Agreement and the Voting Agreement have been duly executed and delivered
by the Company and, subject to approval of the Merger by the Company's
stockholders, constitute valid and binding agreements of the Company,
enforceable against the Company in accordance with their terms, except as
limited by bankruptcy, insolvency, reorganization, moratorium or similar laws
relating to or affecting generally the enforcement of creditors rights and by
the availability of equitable remedies.
SECTION 2.5. GOVERNMENTAL AUTHORIZATION.
(a) The execution, delivery and performance by the Company of this
Agreement and the consummation of the transactions contemplated hereby by the
Company require no action by or in respect of, or filing with, any federal,
state or local governmental body, agency, commission, department, board,
official, administration, or authority or any judicial body thereof
("Governmental Authority") other than (a) compliance with any applicable
requirements of the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976, as
amended (the "HSR Act");
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(b) compliance with the Communications Act of 1934, as amended (the
"Communications Act") and applicable rules, regulations, practices and
policies of the Federal Communications Commission (the "FCC"); (c) compliance
with any applicable laws, rules, regulations, practices and orders of any
state public utility commissions ("PUCs") or similar state regulatory bodies;
(d) compliance with any applicable federal securities laws, state securities
or Blue Sky laws or state takeover laws; and (e) such actions by or filings
with Governmental Authorities, the failure of which to obtain or make would
not reasonably be expected to: (1) have, individually or in the aggregate, a
Company Material Adverse Effect; (2) impair the ability of the Company to
perform its obligations under this Agreement; or (3) prevent the consummation
of the transactions contemplated by this Agreement.
(b) The Company or SCI holds all licenses, permits, certificates,
franchises, ordinances, registrations, or other rights, applications and
authorizations filed with, granted or issued by, or entered by the FCC, or any
state or local public service commission or PUC asserting jurisdiction over the
Company's or SCI's business or operations (each a "State Authority"), that are
required for the conduct of their businesses as now being conducted, and the
Company or SCI holds all licenses, permits, certificates, franchises,
ordinances, registrations, or other rights, applications and authorizations
filed with, granted or issued by, or entered by any other Governmental Authority
that are required for the conduct of their businesses as now being conducted,
except for those the absence of which would not, individually or in the
aggregate, have a Company Material Adverse Effect (all of the Company's and
SCI's licenses, permits, certificates, franchises, ordinances, registrations,
rights, applications and authorizations may sometimes hereinafter be referred to
collectively as the "Company Licenses"). The Company Licenses are valid, in
full force and effect, and the terms of said Company Licenses are not subject to
any restrictions or conditions that materially limit or would materially limit
the operations of the business of the Company or SCI as presently conducted,
other than restrictions or conditions generally applicable to licenses of that
type. There are no proceedings pending or, to the knowledge of the Company,
complaints or petitions by others, or threatened proceedings, before the FCC or
any other Governmental Authority relating to the business or operations of the
Company or SCI or the Company Licenses, and there are no facts or conditions
that reasonably could constitute grounds for the FCC to revoke, terminate,
suspend, deny, annul, or impose conditions on any renewal of any Company
Licenses, that would reasonably be expected to: (1) have, individually or in the
aggregate, a Company Material Adverse Effect; (2) impair the ability of the
Company to perform its obligations under this Agreement; or (3) prevent the
consummation of the transactions contemplated by this Agreement. Each of the
Company and SCI is operating its business in all material respects in accordance
with the Company Licenses and the applicable requirements of the Communications
Act.
(c) SCHEDULE 2.5(c) contains a true and complete list of (i) each
application of the Company and SCI pending before the FCC, and each FCC permit
and FCC license in which the Company or SCI has an interest; and (ii) all
licenses, certificates, consents, permits, approvals, and authorizations pending
before or issued by any State Authority (the "Company State Certificates"). The
Company has provided the Purchaser with a copy of each of the Company Licenses
and Company State Certificates listed in SCHEDULE 2.5(c). For all of the
Company Licenses that are cellular licenses in which the five-year fill-in
period expired prior to the date of this Agreement, the Company or SCI (as
appropriate) timely filed appropriate applications or
8
notifications with the FCC such that none of the original authorized area
became "unserved area" as defined in 47 C.F.R. Part 22, except where all such
unserved areas have subsequently been added to the Company's Cellular
Geographic Service Area pursuant to Phase 2 applications and Form 489
notifications or as identified in SCHEDULE 2.5(c). SCHEDULE 2.5(c) identifies
all of the Company Licenses that are cellular licenses for which the
five-year fill-in period has not yet expired as of the date of this Agreement.
Except where a lack of compliance individually or in the aggregate
would not have or would not reasonably be expected to have a Company Material
Adverse Effect, (i) all reports required by the Communications Act or required
to be filed with the FCC by the Company or SCI have been filed and are accurate
and complete and (ii) all reports required to be filed by the Company or SCI
with all other Governmental Authorities have been filed and are accurate and
complete.
SECTION 2.6. NON-CONTRAVENTION. Except as set forth in SCHEDULE 2.6,
the execution, delivery and performance by the Company of this Agreement and the
consummation by the Company of the transactions contemplated hereby do not and
will not (a) assuming approval of the Merger by the Company's stockholders,
contravene or conflict with the Articles of Incorporation or Code of Regulations
of the Company or SCI; or (b) except for any such matters that, individually or
in the aggregate, have not had, and would not reasonably be expected to have, a
Company Material Adverse Effect, (i) assuming compliance with the matters
referred to in Section 2.5, contravene or conflict with or constitute a
violation of any provision of any law, regulation, judgment, injunction, order
or decree binding upon or applicable to the Company, SCI or any of their
respective properties or assets; (ii) assuming compliance with the matters
referred to in Section 2.5 and assuming satisfaction or waiver of all of the
conditions of the Indenture dated as of September 26, 1996, between the Company
and Fleet National Bank, as trustee (the "Indenture") to permit the consummation
of the Merger, result in a violation or breach of, or constitute a default
under, or give rise to a right of termination, cancellation or acceleration of
any right or obligation of the Company or SCI or to a loss of any benefit to
which the Company or SCI is entitled under any provision of any Company Material
Contract, any Company License or Company State Certificate; or (iii) result in
the creation or imposition of any Encumbrance on any asset of the Company or
SCI.
SECTION 2.7. CAPITALIZATION.
(a) The authorized capital stock of the Company consists of (i)
60,000,000 shares of Class A Common Stock, $.01 par value per share, each of
which is entitled to one vote per share; (ii) 10,000,000 shares of Class B
Common Stock, $.01 par value per share, each of which is entitled to ten votes
per share; (iii) 5,000,000 shares of Nonvoting Preferred Stock, $.01 par value
per share, of which 500,000 are designated as Series A Senior Cumulative
Nonvoting Preferred Stock; and (d) 10,000,000 shares of Voting Preferred Stock,
$.01 par value per share. As of the date of this Agreement, there are
outstanding 4,730,091 shares of Class A Common Stock; 4,440,539 shares of Class
B Common Stock; no shares of Nonvoting or Voting Preferred Stock; and options
to purchase an aggregate of 926,700 shares of Class A Common Stock. SCHEDULE
2.7(a) accurately sets forth the record and beneficial owners (as reflected
on the
9
Company's books) of the Company's outstanding shares of Class A Common Stock
and Class B Common Stock and the number of shares owned by each such
shareholder.
(b) Except as set forth in SCHEDULE 2.7(b), all of the Company
Options were issued pursuant to the Company Option Plans. SCHEDULE 2.7(a)
accurately sets forth the record and beneficial owners (as reflected in the
Company's books) of the Company Options and the number of Company Options owned
by each optionholder. The exercise prices of the Company Options as of the
Company Balance Sheet Date are set forth in SCHEDULE 2.7(b).
(c) All outstanding shares of capital stock of the Company have been
duly authorized and validly issued and are fully paid and nonassessable and free
of pre-emptive rights. Except as set forth in this Section 2.7, there are
outstanding (i) no other shares of capital stock or other voting securities of
the Company; (ii) no securities of the Company convertible into or exchangeable
for shares of capital stock or voting securities of the Company; (iii) except
for the Company Options set forth on SCHEDULE 2.7(a) and except as set forth in
SCHEDULE 2.7(c), no other options, warrants or other rights to acquire from the
Company, and no obligation of the Company to issue, any capital stock, voting
securities or securities convertible into or exchangeable for capital stock or
voting securities of the Company; and (iv) no obligations of the Company to
repurchase, redeem or otherwise acquire shares of its capital stock or other
equity securities.
SECTION 2.8. SEC FILINGS.
(a) The Company has timely filed all reports, forms, statements and
documents required to be filed with the Securities and Exchange Commission (the
"SEC") pursuant to the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), and has delivered or made available to Purchaser (i) its annual
report on Form 10-K for its fiscal year ended December 31, 1997; (ii) its
quarterly report on Form 10-Q for its fiscal quarter ended June 30, 1998
("Company June 10-Q"); and (iii) all of its other reports, statements, schedules
and registration statements filed with the SEC since June 30, 1998 (collectively
the "Company Filings").
(b) As of their respective filing dates, the Company Filings (i)
complied as to form in all material respects with the requirements of the
Exchange Act and (ii) did not contain any untrue statement of a material fact or
omit to state any material fact necessary in order to make the statements made
therein, in the light of the circumstances under which they were made, not
misleading.
SECTION 2.9. FINANCIAL STATEMENTS.
(a) The audited consolidated financial statements and unaudited
consolidated interim financial statements of the Company, including all related
notes and schedules, included in the Company Filings fairly present, in
conformity with generally accepted accounting principles applied on a consistent
basis (except as may be indicated in the notes thereto), the consolidated
financial position of the Company and SCI as of the dates thereof and their
consolidated results of operations and cash flow for the periods then ended
(subject to normal year-end adjustments in the case of any unaudited interim
financial statements). For purposes of this Agreement,
10
"Company Balance Sheet" means the Company's balance sheet dated as of June
30, 1998, as set forth in the Company June 10-Q, and "Company Balance Sheet
Date" means June 30, 1998.
(b) Except as and to the extent set forth on the Company Balance
Sheet, the Company and SCI do not have any liability or obligation of any nature
(whether accrued, absolute, contingent or otherwise) that would be required to
be reflected on the Company Balance Sheet, except for liabilities and
obligations incurred since the Company Balance Sheet Date in the ordinary course
of business which would not reasonably be expected to have, individually or in
the aggregate, a Company Material Adverse Effect.
SECTION 2.10. ABSENCE OF CERTAIN CHANGES. Except as set forth in
SCHEDULE 2.10, since the Company Balance Sheet Date, the Company and SCI have
conducted their business in the ordinary course consistent with their past
practices and there has not been:
(a) any event that has had a Company Material Adverse Effect;
(b) any declaration, setting aside or payment of any dividend or
other distribution with respect to any shares of capital stock of the Company,
or any repurchase, redemption or other acquisition by the Company of any
outstanding shares of capital stock or other ownership interests in, the
Company;
(c) any incurrence, assumption or guarantee by the Company or SCI of
any outstanding amount of indebtedness for borrowed money other than in the
ordinary course of business;
(d) any material transaction or commitment made, or any material
contract or agreement entered into, by the Company or SCI relating to their
respective assets or businesses (including the acquisition or disposition of any
assets) or any loss or relinquishment by the Company or SCI of any material
contract or other material right, other than transactions and commitments in the
ordinary course of business in accordance with their customary practices;
(e) any material change in any method of accounting or accounting
practice or policy or application thereof by the Company or SCI;
(f) any material increase in (or commitment, oral or written, to
increase) the rate or terms (including, without limitation, any acceleration of
the right to receive payment) of compensation payable or to become payable by
the Company or SCI to their directors, officers, employees or consultants,
except increases occurring in the ordinary course of business; or
(g) any material increase in (or commitment, oral or written, to
increase) the rate or terms (including, without limitation, any acceleration of
the right to receive payment) of any bonus, insurance, pension or other employee
benefit plan or contract, payment or arrangement made to, for or with any
director, officer, employee or consultant of the Company or SCI, except
increases occurring in the ordinary course of business.
SECTION 2.11. LITIGATION. There is no action, suit, investigation or
proceeding pending against, or to the knowledge of the Company threatened
against or affecting, the
11
Company or SCI or any of their respective properties before any court or
arbitrator or any Governmental Authority that, would reasonably be expected
to have a Company Material Adverse Effect or which in any manner challenges
or seeks to prevent, enjoin, alter or delay any of the transactions
contemplated hereby. There are no judgments, decrees, injunctions or orders
of any Governmental Authority outstanding against the Company or SCI that
would reasonably be expected to have a Company Material Adverse Effect.
SECTION 2.12. EMPLOYEE BENEFIT PLANS.
(a) SCHEDULE 2.12 contains a list of each employee benefit plan (as
defined in Section 3(3) of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA"), which are hereinafter referred to individually as a "Plan"
and collectively as the "Plans") pursuant to which the Company or SCI has any
present or future obligations or liabilities with respect to its employees or
former employees or their dependents or beneficiaries. There are no
investigations by any Governmental Authority, termination proceedings, suits or
proceedings, negotiations, demands or proposals (other than routine claims for
benefits) that are pending or threatened that concern matters now covered, or
that would be covered, by the foregoing types of Plans.
(b) The Company has delivered or made available to Purchaser, or will
deliver or make available prior to the Closing, copies of the following
documents, as they may have been amended to the date of this Agreement,
embodying or relating to the Plans: (i) each of the Plans listed on SCHEDULE
2.12, including all amendments thereto, and any related trust agreements, group
annuity contracts, insurance policies or other funding agreements; (ii) the most
recent determination letter, if any, from the Internal Revenue Service with
respect to the plans that are benefit pension plans as defined in Section
3(2)(A) of ERISA (hereinafter referred to as "Pension Plans"); (iii) current
summary plan descriptions and prospectuses; (iv) the two most recently filed
annual returns/reports on Form 5500 for each of the Plans; and (v) general
notification to employees of their rights under Code Section 4980B and form of
letter(s) distributed upon the occurrence of a qualifying event described in
Code Section 4980B, in the case of a plan that is a "group health plan" as
defined in Code Section 5000(b)(1).
(c) Except as set forth in SCHEDULE 2.12: (i) the written terms of
each of the Plans and any related trust agreement, group annuity contract,
insurance policy or other funding arrangement are in substantial compliance with
ERISA, the Code and all other applicable legal requirements, and each of the
Plans has been administered in substantial compliance with, and has no direct or
indirect material liability in connection with such regulatory requirements;
(ii) each of the Plans has been administered in substantial compliance with its
terms; (iii) each Plan that is a Pension Plan meets the requirements of Section
401(a), and, if applicable, Sections 409 and 4975(e), of the Code and has been
so qualified since its inception date to the date of this Agreement, and each
trust forming a part thereof is exempt from income tax pursuant to Section
501(a) of the Code; (iv) the Company has not engaged in any "prohibited
transaction" (as defined in Section 4975 of the Code or Section 406 or 407 of
ERISA) that could subject the Company to any tax or penalty under Section 4975
of the Code or Title I of ERISA; (v) as of the date of this Agreement, there are
no actions, suits, arbitrations or claims pending (other than routine claims for
benefits), legal, administrative or other proceedings or governmental
investigations pending or, to the Company's knowledge, threatened, against (X)
the Plans, the Plan fiduciaries or the
12
Plan assets, or (Y) the Company or SCI with respect to claims related to such
Plans, (vi) all contributions due and payable from the Company with respect
to each of the Plans have been made and all expenses and liabilities relating
to each of the Plans for all calendar (plan) years through December 31, 1997
are reflected on the financial statements of the Company and of SCI; (vii) no
Pension Plan that is a "single-employer plan," within the meaning of Section
4001(a)(15) of ERISA, nor any single-employer plan of any entity which is
considered a predecessor of the Company or one employer with the Company
under Section 4001 of ERISA or Section 414 of the Code (an "ERISA Affiliate")
is subject to Section 412 of the Code or Title IV of ERISA; (viii) no Plan
currently maintained by the Company or an ERISA affiliate, and no other
"employee benefit plan" under which the Company or an ERISA affiliate has any
liability or other obligation, is or was a "multiple employer plan" (within
the meaning of Section 413(c) of the Code and Section 4063 of ERISA) or a
"multiemployer plan" (as defined in Section 3(37) of ERISA); (ix) neither the
Company nor any of its ERISA Affiliates has incurred any withdrawal liability
under Subtitle E of Title IV of ERISA with respect to a multiemployer plan;
(x) neither the Company nor SCI has any current or projected obligations for
retiree health, life or other welfare benefits under any Plan; (xi) with
respect to the qualified status of each Pension Plan under Section 401(a) of
the Code, a favorable determination letter has been received, or an
application for a favorable determination letter has been filed, is pending,
and no indication of an adverse response has been received; and (xii) the
Company and the Company's ERISA Affiliates have materially complied with all
applicable notice requirements and have provided group health care
continuation and conversion coverage under Section 4980B of the Code and/or
any other applicable law.
(d) SCHEDULE 2.12 lists each employment, severance or other similar
contract, arrangement or policy, each cafeteria, educational assistance,
dependent care assistance, and fringe benefit plan or arrangement, and each plan
or arrangement (written or oral) providing for insurance coverage (including any
self-insured arrangements), workers' compensation, disability benefits,
supplemental unemployment benefits, vacation benefits, retirement benefits or
deferred compensation, profit-sharing, bonuses, stock options, stock
appreciation or other forms of incentive compensation or post retirement
insurance, compensation or benefits that (i) is not one of the Company's Plans
and (ii) is entered into, maintained or contributed to, as the case may be, by
the Company or SCI. Such contracts, plans and arrangements as are described
above are referred to collectively herein as the "Benefit Arrangements." Each
Benefit Arrangement has been maintained in material compliance with its terms
and with the requirements prescribed by any and all statutes, orders, rules and
regulations that are applicable to such Benefit Arrangement. Neither the
Company nor SCI has any obligations for post-retirement benefits under any
Benefit Arrangement. There are no investigations by any Governmental Authority,
termination proceedings, suits, negotiations, demands or proposals (other than
routine claims for benefits) that are pending or threatened that concern matters
now covered, or that would be covered, by the foregoing types of Benefit
Arrangements. The Company has delivered or made available to Purchaser, or will
deliver or make available prior to the Closing, copies of documents evidencing
or describing the Benefit Arrangements, including documents of the type listed
in Section 2.12(b). The Company, SCI and each of their respective executive
officers have agreed to terminate such officer's employment agreement as of the
Effective Time.
(e) Except as set forth in SCHEDULE 2.12, the Company is not a party
to or subject to any collective bargaining agreement with any union or any
employment contract or
13
arrangement providing for annual future compensation of any officer,
consultant, director or employee.
(f) Except as set forth in SCHEDULE 2.12, no Plan or Benefit
Arrangement (including any Plan or Benefit Arrangement covering former employees
of the Company) restricts the ability of either the Company or Purchaser to
amend or terminate the Plan on or any time after the Closing.
(g) Except as set forth in SCHEDULE 2.12, there will be no
acceleration of vesting, benefit accrual or benefit entitlement under either the
Plans or the Benefit Arrangements as a result of the transactions contemplated
by this Agreement, and there will be no incidence of severance payments or any
other termination benefits for which Purchaser will be responsible as a result
of the transaction contemplated hereby or otherwise.
(h) Except as set forth in SCHEDULE 2.12, the Company is not liable
for any future payment to any current or former employee resulting from the
long- or short-term disability of such person, whether such payments are to be
made pursuant to the Company's disability plan, if any, or otherwise.
(i) Except as set forth in SCHEDULE 2.12, there is no contract,
agreement or arrangement covering any employee that, individually or
collectively could give rise to the payment of any amount that would not be
deductible pursuant to the terms of Section 280G of the Code.
(j) Neither the Company nor SCI has communicated to employees or
other persons any additional Plan or Benefit Arrangement not set forth in
SCHEDULE 2.12 or any change in or termination of any existing Plan or Benefit
Arrangement.
SECTION 2.13. TAXES.
(a) All tax returns, including estimated tax and informational
returns ("Tax Returns"), of or relating to any Taxes heretofore required to be
filed by the Company or SCI have been duly filed on a timely basis, other than
any such Tax Returns, the failure of which to file would not reasonably be
expected to, individually or in the aggregate, have a Company Material Adverse
Effect. All such Tax Returns were complete and accurate in all material
respects and the Company and SCI have timely paid or made adequate provision (by
establishing adequate reserves on its books and records) for the payment of all
Taxes shown as due and payable on such Tax Returns. There are no grounds for
the assertion or assessment of any additional Taxes against the Company, SCI or
their assets with respect to such periods. All unpaid Taxes are properly
accrued on the Company's or SCI's books. Set forth in SCHEDULE 2.13 are all Tax
Returns for periods up to and including the date hereof (whether the period ends
on such date) that have not been filed as of the date hereof. Except as set
forth in SCHEDULE 2.13, there are no claims or assessments pending against the
Company or SCI for any alleged deficiency in any Tax, and the Company has not
been notified in writing of any proposed Tax claims or assessments against the
Company or SCI (other than, in each case, those for which adequate reserves have
been established or which are being contested in good faith as reflected in
records made available
14
to Purchaser prior to the date of this Agreement or are immaterial in
amount). Except as set forth in SCHEDULE 2.13, neither the Company nor SCI
has made an election under Section 338 of the Code or has taken any action
that would result in any Tax liability of the Company or SCI as a result of a
deemed election within the meaning of Section 338 of the Code. Except as set
forth in SCHEDULE 2.13, neither the Company nor SCI has any waivers or
extensions of any applicable statute of limitations to assess any material
amount of Taxes. Except as set forth in SCHEDULE 2.13, there are no
outstanding requests by the Company or SCI for any extension of time within
which to file any material Tax Return or within which to pay any material
amount of Taxes shown to be due on any Tax Return. Except as set forth in
SCHEDULE 2.13, no taxing authority is conducting or has notified or, to the
knowledge of the Company, has threatened the Company or SCI that it intends
to conduct, an audit of any prior Tax period of the Company or any of its
past or present Subsidiaries. SCI has never been an "S" corporation under
the Code. The Company terminated its "S" corporation status in 1996. The
Company and SCI have withheld from each payment made to any of its present or
former employees, officers and directors all amounts required by applicable
law to be withheld and have, where required, remitted such amounts within the
applicable periods to the appropriate Governmental Authorities.
(b) Except as set forth in SCHEDULE 2.13, there are no
investigations, audits or administrative proceedings, court proceedings or
claims pending or, to the Company's knowledge, threatened against the Company or
SCI with respect to any Taxes and no assessment, deficiency or adjustment has
been asserted or, to the knowledge of the Company, proposed with respect to any
Tax Return of or with respect to the Company or SCI and there are no liens for
Taxes upon the assets or properties of the Company or SCI, except for liens for
Taxes not yet due and owing.
(c) Except as set forth in SCHEDULE 2.13, neither the Company nor SCI
are a party to or bound by any affiliated group consolidated return tax
allocation agreement, tax sharing agreement or tax indemnification agreement.
(d) Except as set forth in SCHEDULE 2.13, neither the Company nor SCI
has made or become obligated to make, or will, as a result of the transactions
contemplated by this Agreement, make or become obligated to make, any "excess
parachute payment" as defined in Section 280G of the Code (without regard to
Subsection (b)(4) thereof).
(e) Except as set forth in SCHEDULE 2.13, neither the Company nor SCI
is or has been a United States real property holding company (as defined in
Section 897(c)(2) of the Code) during the applicable period specified in Section
897(c)(1)(A)(ii) of the Code.
(f) None of the assets of the Company or of SCI is property which the
Company or SCI is required to treat as being owned by any other Person pursuant
to the so-called "safe harbor lease" provisions of former Section 168(f)(8) of
the Code.
(g) The Company and SCI have disclosed on their federal income Tax
Returns all positions taken therein that could give rise to a substantial
understatement of federal income Tax liability within the meaning of
Section 6662(d) of the Code.
15
(h) Except as set forth in SCHEDULE 2.13, the Company and SCI are not
and have never been includable corporations in an affiliated group of
corporations, within the meaning of Section 1504 of the Code, other than in the
affiliated group of which the Company is the common parent corporation.
(i) Except as set forth in SCHEDULE 2.13, neither the Company nor SCI
is a partner or member in or subject to any joint venture, partnership, limited
liability company or other arrangement or contract that is or should be treated
as a partnership for federal income tax purposes.
(j) As used in this Agreement, "Taxes" means all taxes, charges,
fees, levies, or other like assessments, including without limitation income,
gross receipts, ad valorem, value added, premium, excise, real property,
personal property, windfall profit, sales, use, transfer, license, withholding,
employment, payroll, and franchise taxes imposed by any Governmental Authority,
and shall include any interest, fines, penalties, assessments, or additions to
tax resulting from, attributable to, or incurred in connection with any such
Taxes or any contest or dispute thereof.
SECTION 2.14. COMPLIANCE WITH LAWS. Except as disclosed in the
Company Filings, and except for matters that individually or in the aggregate
would not reasonably be expected to have a Company Material Adverse Effect,
neither the Company nor SCI is in violation of any applicable provisions of any
laws, statutes, ordinances or regulations; provided that no representation or
warranty is made in this Section 2.14 with respect to Environmental Laws (as
hereafter defined).
SECTION 2.15. FINDERS' FEES. ▇▇▇▇▇▇ Brothers, Inc. ("▇▇▇▇▇▇") is
entitled to fees and expenses in an amount not to exceed $5,000,000 from the
Company by virtue of the transactions contemplated hereby. Except for ▇▇▇▇▇▇,
there is no investment banker, broker, finder or other intermediary that has
been retained by or is authorized to act on behalf of the Company who might be
entitled to any fee or commission upon consummation of the transactions
contemplated by this Agreement.
SECTION 2.16. ENVIRONMENTAL MATTERS.
(a) Except for matters which individually and in the aggregate would
not reasonably be expected to have a Company Material Adverse Effect, (i) the
Company and SCI are in compliance with all applicable Environmental Laws (as
defined below); (ii) neither the Company nor SCI has received any written
communication that alleges that the Company or SCI is not in compliance in all
material respects with all applicable Environmental Laws; (iii) all material
permits and other governmental authorizations held by the Company and SCI
pursuant to the Environmental Laws are in full force and effect, the Company and
SCI are in compliance with all of the terms of such permits and authorizations,
and no other permits or authorizations are required by the Company or SCI for
the conduct of their respective businesses; and (iv) the management, handling,
storage, transportation, treatment, and disposal by the Company and SCI of any
Hazardous Materials (as defined below) have been in compliance with all
applicable Environmental Laws.
16
(b) Except for Environmental Claims (as defined below) which
individually and in the aggregate would not reasonably be expected to have a
Company Material Adverse Effect, there is no Environmental Claim pending or, to
the knowledge of the Company, threatened against or involving the Company or SCI
or against any Person whose liability for any Environmental Claim the Company or
SCI has or may have retained or assumed or be liable for either contractually or
by operation of law.
(c) Except for matters which individually and in the aggregate would
not reasonably be expected to have a Company Material Adverse Effect, to the
knowledge of the officers, directors and managerial employees of the Company and
SCI, there are no past or present actions or activities by the Company or SCI,
including, without limitation, the storage, treatment, release, emission,
discharge, disposal or arrangement for disposal of any Hazardous Materials, that
could reasonably form the basis of any Environmental Claim against the Company
or SCI or against any Person whose liability for any Environmental Claim the
Company or SCI may have retained or assumed or be liable for either
contractually or by operation of law.
(d) As used herein, these terms shall have the following meanings:
(i) "Environmental Claim" means any and all administrative,
regulatory, or judicial actions, suits, demands, demand letters,
directives, claims, liens, investigations, proceedings or notices of
noncompliance or violation (written or oral) by any Governmental Authority
or other person alleging potential liability arising out of, based on or
resulting from the present, or release or threatened release into the
environment, of any Hazardous Materials at any location owned or leased by
the Company or SCI or other circumstances forming the basis of any
violation or alleged violation of any Environmental Law.
(ii) "Environmental Laws" means all applicable federal, state
and local laws, statutes, codes, rules, regulations, ordinances, judgments,
orders and decrees of any Governmental Authority relating to pollution, the
environment (including, without limitation, ambient air, surface water,
groundwater, land surface or subsurface strata) or protection of human
health as it relates to the environment including, without limitation,
federal, state and local laws, statutes, codes, rules, regulations,
ordinances, judgments, orders and decrees of any Governmental Authority
relating to releases of Hazardous Materials, or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of Hazardous Materials or relating to management of
asbestos in buildings.
(iii) "Hazardous Materials" means wastes, substances, PCBs,
asbestos, petroleum products or byproducts, or materials (whether solids,
liquids or gases) that are deemed hazardous, toxic, pollutants, or
contaminants, including without limitation, substances defined as
"hazardous substances", "toxic substances", "radioactive materials", or
other similar designations in, or otherwise subject to regulation under,
any Environmental Laws.
17
SECTION 2.17. MATERIAL CONTRACTS.
(a) SCHEDULE 2.17 sets forth a complete and correct list, as of the
date of this Agreement, of all agreements of the following type to which the
Company or SCI is a party or may be bound (collectively, the "Company Material
Contracts"): (i) each agreement filed as an exhibit to the Company Filings and
each agreement that has been entered into since the Company Balance Sheet Date
that would be required to be filed as an exhibit to the Company Filings; (ii)
each employment, severance, termination, consulting and retirement agreement not
otherwise disclosed elsewhere in this Agreement; (iii) each loan agreement,
indenture, letter of credit, lease required to be capitalized under GAAP,
mortgage, note and other debt instrument evidencing, individually, indebtedness
or an annual obligation to pay in excess of Two Hundred Fifty Thousand Dollars
($250,000); and (iv) each other agreement that requires annual payments of more
than Two Hundred Fifty Thousand Dollars ($250,000) (other than purchase orders
and advertising sales contracts entered into in the ordinary course of
business).
(b) Except as set forth in SCHEDULE 2.17, all the Company Material
Contracts are valid and in full force and effect except to the extent they have
previously expired in accordance with their terms, and neither the Company nor
SCI has (or has any knowledge that any other party thereto has) violated any
provision of, or committed or failed to perform any act which with or without
notice, lapse of time or both would constitute a default under the provisions
of, any Company Material Contract, except for defaults which individually or in
the aggregate would not reasonably be expected to have a Company Material
Adverse Effect. True and complete copies of all Company Material Contracts have
been delivered to Purchaser or made available for inspection.
SECTION 2.18. SEVERANCE. Set forth in SCHEDULE 2.18 is a complete
and accurate description of all severance payments or other compensation under
any Company or SCI severance policy, employment agreement or other commitment to
be paid on or after the Closing Date, the amounts due, and the terms under which
such amounts are to be paid.
SECTION 2.19. INTELLECTUAL PROPERTY. Except as set forth in
SCHEDULE 2.19, the Company and SCI own or possess all rights to use the service
marks, copyrights, franchises, trademarks, trade names, jingles, slogans,
logotypes, patents and other similar intangible assets (the "Intellectual
Property") maintained, owned, used, held for use or otherwise held or used by
the Company and SCI, and all of the rights, benefits and privileges associated
therewith material to the conduct of the business of the Company and SCI as
currently conducted. To the knowledge of the Company, except as set forth in
SCHEDULE 2.19, neither the Company nor SCI is infringing upon any Intellectual
Property right or other legally protectable right of any other Person. The
Company and SCI are taking reasonable action to assess, evaluate and correct
their hardware, software, embedded microchips and other processing capabilities
that they use directly or indirectly, to ensure that they will be able to
function accurately and without interruption or ambiguity using date information
before, during and after January 1, 2000.
SECTION 2.20. PROPERTIES; ASSETS. Except as set forth in
SCHEDULE 2.20, the Company or SCI (a) has good and marketable title to all the
assets reflected in the Company Balance Sheet as being owned by the Company or
SCI except properties sold or otherwise
18
disposed of since the date thereof in the ordinary course of business, or
acquired after the date thereof which are material to the Company's business
on a consolidated basis, free and clear of all Encumbrances except (i)
Encumbrances arising in connection with those matters set forth on SCHEDULE
2.20, (ii) statutory liens securing payments not yet due, and (iii) such
imperfections or irregularities of title, claims, liens, charges, security
interests or encumbrances as do not materially affect the use of the
properties or assets subject thereto or affected thereby or otherwise
materially impair business operations at such properties (the items described
in clauses (i), (ii) and (iii) being "Permitted Encumbrances"), and (b) is
the lessee of all leasehold estates reflected in the Company Balance Sheet
(except for leases that have expired by their terms since the date thereof)
or acquired after the date thereof which are material to its business on a
consolidated basis and is in possession of the properties purported to be
leased thereunder, and to the knowledge of the Company, each such lease is
valid without default thereunder by the lessee or, to the Company's
knowledge, lessor. The assets are in such operating condition as to permit
the operation of the business of the Company and SCI as being conducted as of
the date hereof, constitute all of the assets, rights and properties which
are required for the conduct of the business of the Company and SCI as of the
date hereof, except for such assets, rights and properties, the lack of which
would not reasonably be expected to have a Company Material Adverse Effect.
SECTION 2.21. INSURANCE. SCHEDULE 2.21 contains a list of all
insurance policies of title, property, fire, casualty, liability, life,
workmen's compensation, business interruption, libel and slander, and other
forms of insurance in force at the date hereof with respect to the Company and
SCI. All such insurance polices: (a) insure against such risks, and are in
such amounts, as appropriate and reasonable considering the Company and SCI's
properties, businesses and operations; (b) are in full force and effect; and (c)
are valid, outstanding, and enforceable. Neither the Company nor SCI has
received or given notice of cancellation with respect to any of the material
insurance policies.
SECTION 2.22. REAL PROPERTY.
(a) SCHEDULE 2.22 contains a true, correct and complete list and
brief description of each parcel of real property owned by the Company and SCI
(the "Owned Real Property"). The Company or SCI has good and marketable title
to all such Owned Real Property.
(b) SCHEDULE 2.22 contains a true, correct and complete list and
brief description of all real property leased by the Company and SCI, all of
which are hereinafter referred to as the "Leased Real Property". The Company
has made available to Purchaser true, correct and complete copies of all leases
of the Leased Real Property (the "Leases"). No option has been exercised under
any Lease except options whose exercise has been evidenced by a written
document, a true, correct and complete copy of which has been made available to
Purchaser with the corresponding Lease.
SECTION 2.23. RELATED PARTY TRANSACTIONS.
(a) Except as set forth in the Company Filings or as set forth in
SCHEDULE 2.23, no beneficial owner of 5% or more of the Company's outstanding
equity securities or officer or director of the Company or any Person (other
than the Company) in which any such Person owns
19
any beneficial interest (other than a publicly held corporation whose stock
is traded on a national securities exchange or in the over-the-counter market
and less than 1% of the stock of which is beneficially owned by all such
Persons) (collectively, "Related Parties") has any interest in: (i) any
contract, arrangement or understanding with, or relating to, the business or
operations of, the Company or SCI, or (ii) any loan, arrangement,
understanding, agreement or contract for or relating to indebtedness of the
Company or SCI, or any property (real, personal or mixed), tangible or
intangible, used in the business or operations of the Company or SCI;
excluding any such contract, arrangement, understanding or agreement
disclosed in this Agreement.
(b) Following the Effective Time, except as set forth in this
Agreement, neither the Company nor SCI will have any obligations of any kind to
any Related Party except for (i) accrued salary for the pay period commencing
immediately prior to the Effective Time and (ii) the obligations set forth in
the Company Filings.
SECTION 2.24. DISCLOSURE.
(a) No representation or warranty of the Company herein and no
information contained or referenced in a Schedule delivered by the Company to
the Purchaser pursuant hereto or in any other document subsequently delivered by
the Company to Purchaser pursuant hereto contains or will contain any untrue
statement of a material fact or omits or will omit to state a material fact
necessary in order to make the statements contained herein or therein not
misleading.
(b) At the time the Company Proxy Statement (as defined in Section
4.8) or any amendment or supplement thereto is first mailed to stockholders of
the Company and at the time such stockholders vote on adoption of this
Agreement, the Company Proxy Statement, as supplemented or amended, if
applicable, will not contain any untrue statement of a material fact or omit to
state any material fact necessary in order to make the statements made therein,
in the light of the circumstances under which they were made, not misleading.
The representations and warranties contained in this Section 2.24(b) shall not
apply to statements in, or omissions from, the Company Proxy Statement based
upon information furnished to the Company, or omitted therefrom, by Purchaser
for use therein, or in information concerning Purchaser or any of its affiliates
that is incorporated therein, all with the prior written consent of Purchaser.
SECTION 2.25. NO OTHER REPRESENTATIONS. Neither the Company nor any
Person affiliated therewith shall be deemed to have made to Purchaser or any
other Person affiliated therewith any representation or warranty in connection
with this Agreement or the transactions contemplated hereby other than as
expressly set forth in this Article 2. Neither the Company nor any Person
affiliated therewith makes any representation or warranty regarding any
projections, estimates, budgets or forward-looking information heretofore
delivered to or made available to Purchaser or any other Person regarding future
revenues, expenses or expenditures, future results of operations or, except as
expressly set forth in this Article 2, any other information or documents made
available to Purchaser or any other Person with respect to the Company or SCI.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES
20
OF PURCHASER
Purchaser represents and warrants to the Company that:
SECTION 3.1. CORPORATE EXISTENCE AND POWER. Purchaser is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Ohio and has all corporate powers required to carry on its
business as now conducted. Purchaser is duly qualified to do business as a
foreign corporation and is in good standing in each jurisdiction where the
character of the property owned or leased by it or the nature of its activities
makes such qualification necessary, except for those jurisdictions where the
failure to be so qualified would not reasonably be expected to have,
individually or in the aggregate, an Purchaser Material Adverse Effect. For
purposes of this Agreement, an "Purchaser Material Adverse Effect" means a
material adverse effect, on the assets, liabilities, business, operations,
condition (financial or otherwise), or results of operations of Purchaser, or on
the ability of Purchaser to perform its obligations hereunder.
SECTION 3.2. CORPORATE AUTHORIZATION. The execution, delivery and
performance by Purchaser of this Agreement and the consummation by Purchaser of
the transactions contemplated hereby are within Purchaser's corporate powers
subject to the conditions set forth in this Agreement, and have been duly
authorized by the Board of Directors of Purchaser, and no other corporate
proceedings on the part of Purchaser are necessary to authorize this Agreement
and the transactions contemplated hereby. This Agreement constitutes a valid
and binding agreement of Purchaser, enforceable against Purchaser in accordance
with its terms, except as limited by bankruptcy, insolvency, reorganization,
moratorium or similar laws relating to or affecting generally the enforcement of
creditors rights and by the availability of equitable remedies.
SECTION 3.3. GOVERNMENTAL AUTHORIZATION.
(a) The execution, delivery and performance by Purchaser of this
Agreement and the consummation of the transactions contemplated hereby by
Purchaser require no action by or in respect of, or filing with, any
Governmental Authority other than (a) compliance with any applicable
requirements of the HSR Act; (b) compliance with any applicable requirements
under the Communications Act and the rules, regulations and policies of the FCC;
(c) compliance with any applicable laws, rules, regulations, practices, and
orders of any PUCs or similar state regulatory bodies; (d) compliance with any
applicable federal securities laws, state securities or Blue Sky laws or state
takeover laws; and (e) such actions by or filings with Governmental Authorities,
the failure of which to obtain or make would not reasonably be expected to: (1)
have, individually or in the aggregate, a Purchaser Material Adverse Effect; (2)
impair the ability of Purchaser to perform its obligations under this Agreement;
or (3) prevent the consummation of the transactions contemplated by this
Agreement.
(b) Purchaser will be fully qualified under the Communications Act
and applicable rules, regulations, practices and policies of the FCC and any
comparable state law to be a licensee under the Company Licenses granted by the
FCC and the Company State Certificates, and to be approved as an assignee of the
Company Licenses and the Company State Certificates.
21
Purchaser knows of no reason why the FCC or any State Authority will not
grant its consent to the transfer of control of the Company Licenses and the
Company State Certificates to Purchaser. Neither Purchaser, nor any "real
party in interest" (as defined by Section 22.13 of the FCC's rules) (i) has
had the FCC or any State Authority deny an application for an authorization
or revoke any authorization granted to it; or (ii) has been the subject of an
investigation by the FCC or any State Authority.
SECTION 3.4. NON-CONTRAVENTION. The execution, delivery and
performance by Purchaser of this Agreement and the consummation by Purchaser of
the transactions contemplated hereby do not and will not: (a) contravene or
conflict with the Articles of Incorporation or Bylaws of Purchaser; or (b)
except for any such matters that, individually or in the aggregate, have not had
and would not reasonably be expected to have, an Purchaser Material Adverse
Effect, (i) assuming compliance with the matters referred to in Section 3.3 and
the adoption of the Opt-Out Amendment by the Company and its stockholders,
contravene or conflict with or constitute a violation of any provision of any
law, regulation, judgment, injunction, order or instrument binding upon or
applicable to Purchaser or any of its properties or assets; (ii) result in a
violation or breach of, or constitute a default under, or give rise to a right
of termination, cancellation or acceleration of any right or obligation of
Purchaser or to a loss of any benefit to which Purchaser is entitled under any
provision of any agreement, contract or other decree binding upon Purchaser or
to which Purchaser is a party or by which it is affected or any license,
franchise, permit or other similar authorization held by Purchaser an or to
which Purchaser an is a party or by which it is affected; or (iii) result in the
creation or imposition of any Encumbrance on any asset of Purchaser.
SECTION 3.5. FINANCIAL STATEMENTS. Purchaser has delivered to the
Company audited consolidated financial statements for the fiscal year ended
December 31, 1997, of Purchaser's indirect parent, ▇▇▇▇▇▇ Communications
Corporation ("DCC"), and unaudited consolidated interim financial statements of
DCC for its fiscal quarter ended June 30, 1998 (the "Purchaser Financial
Statements").
SECTION 3.6. FINDERS' FEES. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ & Co. is
entitled to fees from Purchaser by virtue of the transactions contemplated
hereby. Except for ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ & Co., there is no investment
banker, broker, finder or other intermediary which has been retained by or is
authorized to act on behalf of Purchaser who might be entitled to any fee or
commission upon consummation of the transactions contemplated by this
Agreement.
SECTION 3.7. FINANCING. Purchaser has delivered to the Company
true and complete copies of all commitment letters (the "Commitment Letters")
entered into by Purchaser in order for Purchaser to perform its obligations
under this Agreement. Between the date hereof and the Effective Time,
Purchaser shall keep the Company reasonably informed of the status of the
financings contemplated by the Commitment Letters.
SECTION 3.8. DUE DILIGENCE INVESTIGATION. Purchaser has had an
opportunity to discuss the business, management, operations and finances of the
Company and SCI with officers and employees of the Company and has had an
opportunity to inspect the facilities of the
22
Company and SCI. Purchaser has made its own independent investigation of the
Company. In executing this Agreement and consummating the transactions
contemplated hereby, Purchaser has relied solely on the written
representations and warranties of the Company set forth in Article 2, and has
not relied on any other information provided by or on behalf of the Company.
ARTICLE 4
COVENANTS OF THE COMPANY
SECTION 4.1. CONFIDENTIALITY. Prior to the Effective Time and after
any termination of this Agreement, the Company will, and the Company will cause
SCI to, hold, and will use their reasonable best efforts to cause their
officers, directors, employees, accountants, counsel, consultants, advisors and
agents to hold, in confidence, unless compelled to disclose by judicial or
administrative process or by other requirements of law, all non-public documents
and information concerning Purchaser furnished to the Company and identified as
confidential in connection with the transactions contemplated by this Agreement,
except to the extent that such information can be shown to have been (a)
previously known on a nonconfidential basis by the Company, (b) in the public
domain through no fault of the Company or (c) later lawfully acquired by the
Company from sources other than Purchaser (not owing a duty of confidentiality
to Purchaser); provided that the Company may disclose such information to its
officers, directors, employees, accountants, counsel, consultants, advisors and
agents, in connection with the transactions contemplated by this Agreement so
long as such Persons are informed by the Company of the confidential nature of
such information and are directed by the Company to treat such information
confidentially. The Company's obligation to hold any such information in
confidence shall be satisfied if it exercises the same care with respect to such
information as it would take to preserve the confidentiality of its own similar
information. If this Agreement is terminated, the Company will cause its
officers, directors, employees, accountants, counsel, consultants, advisors and
agents to, destroy or deliver to Purchaser, upon request, all documents and
other materials, and all copies thereof, obtained by the Company or on its
behalf from Purchaser in connection with this Agreement that are subject to such
confidence. The Company shall be responsible for the breach by any of its
officers, directors, employees, accountants, counsel, consultants, advisors or
agents of any confidentiality obligation. Notwithstanding the foregoing, the
Company shall have the right to disclose any information regarding the Purchaser
in the Company Proxy Statement to the extent required by applicable law.
SECTION 4.2. CONDUCT OF THE COMPANY. During the period from the date
of this Agreement and continuing until the Effective Time, the Company agrees
(except as expressly contemplated or permitted by this Agreement, or to the
extent that Purchaser shall otherwise consent in writing) as follows:
(a) The Company shall and shall cause SCI to carry on their
respective businesses in the ordinary course and use all reasonable efforts to
preserve intact their present business organizations, keep available the
services of their present officers and employees and preserve their
relationships with customers, suppliers and others having business dealings with
them to the end that their goodwill and ongoing business shall not be impaired
in any material respect at the Effective Time;
23
(b) The Company shall not (i) declare or pay any dividends on or make
other distributions in respect of any of its capital stock; (ii) split, combine
or reclassify 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; (iii) repurchase, redeem or otherwise acquire, any shares of
capital stock of the Company or SCI; or (iv) commit to any of the actions
described in clauses (i)-(iii) of this subsection (b). It is understood that
the foregoing shall not prevent the Company from taking any action required by
the terms of the Company Options;
(c) The Company shall not, nor shall it permit SCI to, issue, deliver
or sell, or authorize or propose the issuance, delivery or sale of, any shares
of its capital stock of any class or any securities convertible into, or any
rights, warrants, calls, subscriptions or options to acquire, any such shares or
convertible securities, other than (i) the issuance of shares of Company Common
Stock in connection with the transfer of outstanding Class B Shares or upon the
exercise of Company Options, and (ii) issuance by SCI of its capital stock to
the Company;
(d) The Company shall not amend or propose to amend its Articles of
Incorporation or Code of Regulations except the Opt-Out Amendment and as may be
necessary to accomplish the transactions contemplated by this Agreement on the
terms and conditions of this Agreement;
(e) The Company shall promptly provide Purchaser copies of all
filings made by the Company or SCI with any Governmental Authority whether or
not related to this Agreement or the transactions contemplated hereby, other
than the portions of such filings that include confidential information not
directly related to the transactions contemplated by this Agreement;
(f) The Company shall not and shall cause SCI not to enter into,
adopt, amend in any material respect (except as may be required by law) or
terminate any Company Benefit Plan or other employee benefit plan or any
agreement, arrangement, plan or policy between the Company or SCI and one or
more of its directors or officers, except in the ordinary course of business
consistent with past practice that, in the aggregate, does not result in a
material increase in benefits or compensation expense to the Company or SCI;
(g) The Company shall not, and shall cause SCI not to (i) increase
the periodic compensation payable to or to become payable to any of its
directors, officers or employees, except for increases in salary, wages or
bonuses payable or to become payable in the ordinary course of business and
consistent with past practice; (ii) grant any severance or termination pay
(other than pursuant to existing severance arrangements or policies as in effect
on the date of this Agreement and disclosed in SCHEDULE 2.12 or SCHEDULE 2.18)
to, or enter into any employment or severance agreement with, any of its
directors, officers or employees; or (iii) adopt any employee benefit plan or
arrangement, except as may be required by applicable law;
(h) Except for the acquisition of the license and any related assets
for the Pennsylvania 2 market, the Company shall not, and shall cause SCI not
to, acquire or agree to acquire, by merging or consolidation with, by purchasing
an equity interest in or a portion of the assets of, or by any other manner, any
business or any corporation, partnership, limited liability
24
company, association or other business organization or division thereof, or
otherwise acquire or agree to acquire any assets of any other person (other
than the purchase of inventory, supplies, equipment and other similar assets
in the ordinary course of business and consistent with past practice) in the
case of asset purchases which are material in the aggregate to the Company
and SCI, taken as a whole, or make or commit to make any capital expenditures
other than capital expenditures in the ordinary course of business consistent
with past practice and in amounts which are set forth and described in
budgets made available to Purchaser;
(i) The Company shall not, and shall cause SCI not to, sell, lease,
exchange, mortgage, pledge, transfer or otherwise dispose of, or agree to sell,
lease, exchange, mortgage, pledge, transfer, or otherwise dispose of or permit
any Encumbrance to be placed or come into existence upon, any of its material
assets except for (i) Permitted Encumbrances, (ii) the grant of purchase money
security interests, (iii) dispositions of inventory in the ordinary course of
business and consistent with past practice and (iv) dispositions of equipment
which is replaced with other equipment with greater or equal value and utility;
(j) The Company shall not, and shall cause SCI not to, (i) change any
of its methods of accounting in effect on the Company Balance Sheet Date, or
(ii) make or rescind any express or deemed election relating to Taxes, settle or
compromise any claim, action, suit, litigation, proceeding, arbitration,
investigation, audit or controversy relating to Taxes (except where the amount
of such settlements or controversies, individually or in the aggregate, does not
exceed Five Hundred Thousand Dollars ($500,000), or change any of its methods of
reporting income or deductions for federal income tax purposes from those
employed in the preparation of the federal income tax returns for the taxable
year ending December 31, 1997, except, in the case of clause (i) or clause (ii),
as may be required by applicable law or GAAP;
(k) The Company shall not, and shall cause SCI not to, incur any
obligation for borrowed money other than purchase money indebtedness, whether or
not evidenced by a note, bond, debenture or similar instrument, except in the
ordinary course of business under existing loan agreements or capitalized
leases, or prepay, before the scheduled maturity thereof, any of its long-term
debt;
(l) Except for the acquisition of the license and any related assets
for the Pennsylvania-2 market, the Company shall not, and shall cause SCI not
to, acquire any ownership interest in or make any other investment in any other
Person (other than a wholly-owned Subsidiary) or enter into or establish any
joint venture;
(m) The Company shall not, and shall cause SCI not to, enter into any
transaction with any Related Party or beneficiary of any Related Party, or any
Person known by the Company to be an affiliate of any of them;
(n) The Company shall, and the Company shall cause SCI to, obtain and
maintain in full force and effect all approvals, consents, permits, licenses and
other authorizations, and any renewals thereof, from the FCC and any appropriate
PUCs reasonably necessary or required for the continued operation of the
Company's and SCI's businesses, and when such approvals, consents, licenses or
other authorizations are necessary or required; and
25
(o) The Company shall not, and shall cause SCI not to, agree in
writing or otherwise to do any of the foregoing.
SECTION 4.3. ACCESS TO INFORMATION. From the date of this Agreement
until the Effective Time, the Company will provide Purchaser, its counsel,
financial advisors, auditors and other authorized representatives reasonable
supervised access during normal business hours to the offices, properties, books
and records of the Company and of SCI and will furnish to Purchaser, its
counsel, financial advisors, auditors and other authorized representatives such
financial and operating data and other information as such Persons may
reasonably request and will instruct the Company's and SCI's employees, counsel
and financial advisors to cooperate with Purchaser in its investigation of the
business of the Company and of SCI.
SECTION 4.4. NOTICES OF CERTAIN EVENTS. The Company shall promptly
notify Purchaser of:
(a) any notice or other communication from any Person alleging that
the consent of such Person is or may be required in connection with the
transactions contemplated by this Agreement;
(b) any notice or other communication from any Governmental Authority
in connection with the transactions contemplated by this Agreement; and
(c) any actions, suits, claims, investigations or proceedings
commenced or, to the best of its knowledge threatened against, relating to or
involving or otherwise affecting the Company that, if pending on the date of
this Agreement, would have been required to have been disclosed pursuant to
Section 2.11 or that relate to the consummation of the transactions contemplated
by this Agreement.
SECTION 4.5. HSR ACT FILING. As soon as practicable after the date
of this Agreement, the Company shall file with the Federal Trade Commission
("FTC") and the Department of Justice ("DOJ") any applicable notification and
report or similar required form and shall file any supplemental information that
may be requested in connection therewith pursuant to the HSR Act, which report
and notification form and supplemental information has complied or will comply
in all material respects with the requirements of the HSR Act.
SECTION 4.6. FEDERAL AND STATE REGULATORY FILINGS. As soon as
practicable after the date of this Agreement, the Company shall file with any
other Governmental Authority, any and all required filings regarding the
transactions contemplated by this Agreement, and shall file any supplemental
information that may be requested in connection therewith, which filings and
supplemental information has complied or will comply in all material respects
with statutory or regulatory requirements relating thereto.
SECTION 4.7. NEGOTIATIONS WITH OTHERS. The Company shall not (and
shall cause each affiliate, employee, officer, director, shareholder, agent or
other Person acting on or purporting to act on its behalf not to) solicit any
other Person (other than Purchaser and its officers, directors, affiliates and
representatives) regarding a possible sale of all or substantially all
26
of the Company's stock, assets or business, whether such transaction takes
the form of a sale of stock, merger, liquidation, dissolution,
reorganization, recapitalization, consolidation, sale of assets outside the
ordinary course of business, or otherwise, (an "Acquisition Proposal"). None
of the Company or any affiliate, employee, officer, director, shareholder,
agent or other person acting on its behalf has any agreement, arrangement or
understanding with respect to any Acquisition Proposal, and each of them
shall (a) cease and cause to be terminated any and all current discussions
regarding any Acquisition Proposal and (b) notify Purchaser if any
Acquisition Proposal, or any inquiry or contact with any person with respect
thereto, is made, and disclose to Purchaser the substance thereof.
SECTION 4.8. STOCKHOLDER MEETINGS; PROXY MATERIAL.
(a) The directors of the Company shall submit this Agreement, the
Merger, and the transactions contemplated hereby for approval ("Merger
Approval") by the Company's stockholders and the Company shall cause (i) a
meeting of its stockholders (the "Opt-Out Meeting") to be duly called and held
as soon as reasonably practicable for the purpose of voting on an amendment to
the Company's Code of Regulations to provide that Section 1701.831 of the Ohio
Law (pertaining to control share acquisitions) shall not apply (the "Opt-Out
Amendment"), and (ii) a meeting of its stockholders (the "Company Merger
Meeting" and, together with the Opt-Out Meeting, the "Company Stockholder
Meetings") to be duly called and held as soon as reasonably practicable for the
purpose of voting on the Merger Approval.
(b) In connection with the Company Stockholder Meetings, the Company
(i) as soon as reasonably practicable, will take steps to prepare and mail to
its stockholders a proxy or information statement of the Company (the "Company
Proxy Statement") and all other proxy materials for such meeting; (ii) subject
to Section 4.8(c), will use its reasonable best efforts to obtain the requisite
vote of stockholders in favor of the Opt-Out Amendment and the Merger Approval,
and (iii) otherwise will comply with all legal requirements applicable to such
meeting. Purchaser shall have the right to review the Company Proxy Statement
and other proxy materials before the mailing thereof to the Company's
stockholders. Without limiting the generality of the foregoing, the Company and
Purchaser shall each notify the other as promptly as practicable upon becoming
aware of any event or circumstance that should be described in an amendment of,
or supplement to, the Company Proxy Statement.
(c) The Board of Directors of the Company may withdraw or modify, or
propose to withdraw or modify, its approval or recommendation of this Agreement
or the Merger if it determines in good faith, after consultation with counsel,
that it is necessary or advisable to do so in order to comply with its fiduciary
duties to the Company's stockholders.
(d) Nothing contained in this Agreement shall prohibit the Company
from taking and disclosing to its stockholders a position contemplated by
Rule 14e-2(a) promulgated under the Exchange Act or from making any disclosure
to the Company's stockholders if, in the opinion of the Board of Directors of
the Company, after consultation with counsel, failure so to disclose would be
inconsistent with its fiduciary duties to the Company's stockholders.
ARTICLE 5
27
COVENANTS OF PURCHASER
SECTION 5.1. CONFIDENTIALITY. Prior to the Effective Time and after
any termination of this Agreement, Purchaser will hold, and will use its
reasonable best efforts to cause its officers, directors, employees,
accountants, counsel, consultants, advisors and agents to hold, in confidence,
unless compelled to disclose by judicial or administrative process or by other
requirements of law, all non-public documents and information concerning the
Company and SCI furnished to Purchaser in connection with the transactions
contemplated by this Agreement, except to the extent that such information can
be shown to have been (a) previously known on a nonconfidential basis by
Purchaser, (b) in the public domain through no fault of Purchaser or (c) later
lawfully acquired by Purchaser from sources other than the Company; provided
that Purchaser may disclose such information to its officers, directors,
employees, accountants, counsel, consultants, advisors and agents in connection
with the transactions contemplated by this Agreement so long as such Persons are
informed by Purchaser of the confidential nature of such information and are
directed by Purchaser to treat such information confidentially. Purchaser's
obligation to hold any such information in confidence shall be satisfied if it
exercises the same care with respect to such information as it would take to
preserve the confidentiality of its own similar information. If this Agreement
is terminated, Purchaser will, and will use its reasonable best efforts to cause
its officers, directors, employees, accountants, counsel, consultants, advisors
and agents to, destroy or deliver to the Company, upon request, all documents
and other materials, and all copies thereof, obtained by Purchaser or on its
behalf from the Company in connection with this Agreement that are subject to
such confidence. The Purchaser shall be responsible for the breach of any of
its officers, directors, employees, accountants, counsel, consultants, advisors
or agents of any confidentiality obligation. Notwithstanding the foregoing,
Purchaser and its affiliates shall have the right to disclose any and all such
information regarding the Company and SCI in connection with Purchaser's
financing requirements, including, without limitation, customary disclosures
made in connection with public high yield debt financings, and the Company will
provide, and cause its employees, auditors and agents to provide, reasonable
cooperation in connection with such financings, including any necessary consents
of the Company's auditors to include their report on the Company's audited
financial statements in such customary disclosures.
SECTION 5.2. FILINGS. Purchaser shall promptly provide the Company
copies of all filings made by Purchaser with any Governmental Authority in
connection with this Agreement and the transactions contemplated hereby, other
than the portions of such filings that include confidential information not
directly related to the transactions contemplated by this Agreement.
SECTION 5.3. NOTICES OF CERTAIN EVENTS. Purchaser shall promptly
notify the Company of:
(a) any notice or other communication from any Person alleging that
the consent of such Person is or may be required in connection with the
transactions contemplated by this Agreement;
(b) any notice or other communication from any Governmental Authority
in connection with the transactions contemplated by this Agreement;
28
(c) any actions, suits, claims, investigations or proceedings
commenced or, to the best of its knowledge threatened against, relating to or
involving or otherwise affecting Purchaser that would materially delay or
impair the consummation of the transactions contemplated by this Agreement;
and
(d) any breach of any representation, warranty or covenant of the
Company that Purchaser determines may exist based upon information provided
to Purchaser or through its own investigation.
SECTION 5.4. EMPLOYEE BENEFITS. For one year after the Effective
Time, Purchaser shall provide the eligible employees of the Company and its
Subsidiaries with employment benefits, including but not limited to, health
benefits, dental benefits, life insurance and disability benefits, medical
reimbursement benefits, 401(k) plan benefits, deferred compensation and
similar benefits, vacation benefits, severance benefits and the like that are
materially no less favorable, in the aggregate, than the benefits provided to
eligible employees by the Company on the date of this Agreement. Purchaser
shall pay any severance, change of control or similar payments contemplated
herein to employees and directors of the Company and SCI, if any, who are
entitled thereto pursuant to agreements or plans of the Company or SCI
existing as of the date of this Agreement and disclosed to Purchaser in
SCHEDULE 2.12 or in SCHEDULE 2.18.
SECTION 5.5. INDEMNIFICATION.
(a) The Company shall, and Purchaser shall cause the Company to,
honor any obligation of the Company immediately prior to the Effective Time
to indemnify and hold harmless the present and former officers and directors
of the Company and of SCI (the "Indemnitees") to the full extent allowed by
the Company's Articles of Incorporation and Code of Regulations or the Ohio
Law in effect immediately prior to the Effective Time.
(b) The Company shall, and Purchaser shall cause the Company to,
indemnify and hold harmless any Indemnitee who was or is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit, or proceeding, whether civil, criminal, administrative or
investigative, including without limitation derivative actions, against
expenses (including attorneys' fees and expenses), judgments, fines and
amounts paid in settlement to the full extent allowed by law.
(c) To the full extent allowed by the Company's Articles of
Incorporation and Code of Regulations or the Ohio Law in effect immediately
prior to the Effective Time, the Company shall, and Purchaser shall cause the
Company to, pay expenses as incurred by an Indemnitee in defending a civil or
criminal action, suit or proceeding in advance of the final disposition of
the action, suit, or proceeding upon receipt of an undertaking by or on
behalf of the Indemnitee to repay such amount if it shall be determined that
such Indemnitee was not entitled to indemnification as provided in this
Section 5.5.
(d) The Company shall, and Purchaser shall cause the Company to,
reimburse all expenses, including reasonable attorneys' fees, incurred by any
person required to enforce the indemnity and other obligations of the Company
and Purchaser under this Section 5.5.
29
(e) For three years after the Effective Time, the Company shall,
and Purchaser will cause the Company to, maintain in effect officers' and
directors' liability insurance in respect of acts or omissions occurring
prior to the Effective Time covering each such Indemnitee on terms with
respect to coverage and amounts roughly comparable to the coverage and
amounts currently provided by the Company's policy as of the date of this
Agreement.
(f) The rights under this Section 5.5 shall be in addition to any
other rights under applicable law or otherwise. This Section 5.5 shall
survive the consummation of the transactions contemplated hereby.
SECTION 5.6. HSR ACT FILING. As soon as practicable after the
date of this Agreement, Purchaser shall file with the FTC and DOJ any
applicable notification and report or similar required form, has paid or
shall pay any required filing fee in connection therewith (as its sole and
separate expense), and shall file any supplemental information which may be
requested in connection therewith pursuant to the HSR Act, which report and
notification form and supplemental information has complied or will comply in
all material respects with the requirements of the HSR Act.
SECTION 5.7. FEDERAL AND STATE REGULATORY FILINGS. As soon as
practicable after the date of this Agreement, Purchaser shall file with any
other Governmental Authority, any and all required filings regarding the
transactions contemplated hereby and shall file any supplemental information
that may be requested in connection therewith, which filings and supplemental
information has complied or will comply in all material respects with
statutory or regulatory requirements relating thereto.
SECTION 5.8. COMPANY INDENTURE. Prior to or at the Effective
Time, Purchaser shall have purchased the Company's outstanding 11 1/2% Senior
Notes due October 1, 2006 (the "Senior Notes"), obtained waivers from the
holders thereof or otherwise assured that the terms and conditions of the
Indenture permit the consummation of the Merger.
ARTICLE 6
COVENANTS OF THE COMPANY AND PURCHASER
The parties hereto agree that:
SECTION 6.1. REASONABLE BEST EFFORTS. Subject to the terms and
conditions of this Agreement, each of the Company and Purchaser will use its
reasonable best efforts to take, or cause to be taken, all actions and to do,
or cause to be done, all things necessary, proper or advisable to consummate
the transactions contemplated by this Agreement.
SECTION 6.2. COOPERATION; CERTAIN FILINGS.
(a) The Company and Purchaser shall cooperate with each other (a)
in determining whether any action by or in respect of, or filing with, any
Governmental Authority is required, or any actions, consents, approvals or
waivers are required to be obtained from parties to any material contracts,
in connection with the consummation of the transactions contemplated by this
Agreement; and (b) in seeking any such actions, consents, approvals or
waivers or making
30
any such filings, furnishing information required in connection therewith and
seeking timely to obtain any such actions, consents, approvals or waivers.
(b) As soon as practicable after the date of this Agreement, the
Company and Purchaser shall prepare and make all filings (the "Regulatory
Filings") required to be made with the FCC pursuant to the Communications Act
and with any State Authority as are required to permit the consummation of
the transactions contemplated by this Agreement and shall thereafter promptly
make any additional or supplemental submissions required or requested by the
FCC and any such State Authority. With respect to Regulatory Filings,
counsel to the Company shall be responsible for preparing, with the advice
and consent of counsel to Purchaser, the transferor's portion of the
submissions with respect to the Company Licenses, and counsel to Purchaser
shall be responsible for preparing, with the advice and consent of counsel to
the Company, the transferee's portion of such submissions. All filing fees
associated with the filing of Regulatory Filings pursuant to this Section
6.2(b) shall be shared equally by the Company and Purchaser. Each party
shall bear its own counsel fees in connection with the Regulatory Filings.
(c) Purchaser shall not assume, either directly or indirectly, DE
JURE or DE FACTO control of the Company without the prior consent of the FCC
and any State Authority of competent jurisdiction.
SECTION 6.3. PUBLIC ANNOUNCEMENTS. Neither the Company nor
Purchaser will issue any press release or make any public statement with
respect to this Agreement and the transactions contemplated hereby without
the prior approval of the other party, except as may be required by
applicable law (including, without limitation, to the extent required in the
Company Proxy Statement), any listing agreement with any national securities
exchange or in connection with Purchaser's financing requirements, including,
without limitation, customary disclosures made in connection with public high
yield debt financings. Purchaser and the Company shall consult with each
other concerning, and endeavor in good faith to agree on, the content of any
such required announcement or disclosure.
ARTICLE 7
CONDITIONS TO THE CLOSING
SECTION 7.1. CONDITIONS TO THE OBLIGATIONS OF THE COMPANY AND
PURCHASER. The obligations of the Company and Purchaser to consummate the
transactions contemplated hereby are subject to the satisfaction or waiver at
or prior to the Closing of the following conditions:
(a) any applicable waiting period under the HSR Act shall have
expired or terminated;
(b) the transactions contemplated by this Agreement shall have
been approved by any Governmental Authority or self-regulatory body the
approval of which is required to permit the consummation thereof without the
imposition of any condition, requirement or commitment that would reasonably
be expected to have a Company Material Adverse Effect;
31
(c) The FCC shall have issued a Final Order (as defined below)
granting the FCC's consent to the transfer of control of the Company Licenses
granted by the FCC to Purchaser. For the purposes of this Agreement, the
term "Final Order" shall mean action by the FCC as to which (i) no request
for stay by the FCC, as applicable, of the action is pending, no such stay is
in effect, and, if any deadline for filing any such request is designated by
statute or regulation, such deadline has passed; (ii) no petition for
rehearing or reconsideration of the action is pending before the FCC, and the
time for filing any such petition has passed; (iii) the FCC does not have the
action under reconsideration on its own motion and the time for such
reconsideration has passed; and (iv) no appeal to a court, or request for
stay by a court, of the FCC's action is pending or in effect, and if any
deadline for filing any such appeal or request is designated by statute or
rule, it has passed.
(d) no provision of any applicable law or regulation and no
judgment, injunction, order or decree shall prohibit the consummation of the
transactions contemplated hereby;
(e) no court, arbitrator or Governmental Authority shall have
issued any order, and there shall not be any statute, rule or regulation,
restraining or prohibiting the consummation of the transactions contemplated
hereby or the effective operation of the business of the Company or SCI,
after the Effective Time;
(f) all actions by or in respect of or filings with any
Governmental Authority required to permit the consummation of the
transactions contemplated hereby, including but not limited to the FCC and
any other federal regulatory agency or regulatory agency in any state in
which the Company, SCI or Purchaser do business, shall have been completed;
and
(g) this Agreement, the Merger and the transactions contemplated
by this Agreement shall have been approved and adopted by the requisite vote
of the stockholders of the Company.
SECTION 7.2. CONDITIONS TO OBLIGATIONS OF PURCHASER. The
obligation of Purchaser to consummate the transactions contemplated by this
Agreement shall be subject to the satisfaction or waiver at or prior to the
Closing of the following additional conditions:
(a) The representations and warranties of the Company set forth in
Article 2 shall be true and correct in all respects (except that those
representations and warranties that do not contain materiality qualifiers
shall be true and correct in all material respects) as of the Closing with
the same effect as though made on and as of the date of the Closing;
(b) The Company shall have performed in all material respects all
obligations required to be performed by it under this Agreement at or prior
to the Effective Time;
(c) Purchaser shall have received a certificate dated as of the
date of the Closing and signed on behalf of Company by the Chief Executive
Officer and Chief Financial Officer of the Company to the effect that the
conditions to Purchaser's obligations set forth in Sections 7.2(a) and (b)
have been satisfied;
32
(d) Purchaser shall have received from ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ &
▇▇▇▇▇▇▇▇, Ltd., special counsel to the Company, and ▇▇▇▇▇ ▇▇▇▇ LLP, special
FCC counsel to the Company, written opinions, dated as of the Effective Time
and substantially in the respective forms contained in Exhibits A and B
attached hereto or otherwise in form and substance reasonably satisfactory to
Purchaser;
(e) There shall not have occurred any Company Material Adverse
Effect from the Company Balance Sheet Date to the Effective Time;
(f) All consents required of third parties in respect of Company
Material Contracts shall have been obtained except for such consents, the
failure of which to obtain would not reasonably be expected to have a Company
Material Adverse Effect;
(g) The shares owned by stockholders of the Company who have
exercised their dissenters rights under Ohio Law shall constitute not greater
than five percent (5%) of the outstanding shares of the Company Common Stock
on the Closing Date;
(h) Holders of at least two-thirds of the outstanding Company
Options shall have consented to receive cash for such Company Options in
accordance with the provisions of Section 1.5; and
(i) The Stockholders' Agreement and Registration Rights Agreement,
each dated June 20, 1997 among the Company, ▇. ▇. ▇▇▇▇▇▇▇▇▇▇, ▇▇, ▇. ▇.
▇▇▇▇▇▇▇▇▇▇, III and Boston Ventures Limited Partnership V, as amended, the
Employment Agreements referenced in SCHEDULE 2.12(d) (other than ▇▇▇▇ ▇▇▇▇'▇
Employment Agreement) and any agreement between the Company or SCI and Boston
Ventures Limited Partnership V or any of its affiliates shall have been
terminated without cost or obligation to the Company other than as set forth
in this Agreement, and Purchaser shall have received written confirmation
thereof.
SECTION 7.3. CONDITIONS TO OBLIGATIONS OF THE COMPANY. The
obligation of the Company to consummate the transactions contemplated by this
Agreement shall be subject to the satisfaction or waiver at or prior to the
Closing of the following additional conditions:
(a) The representations and warranties of Purchaser set forth in
Article 3 shall be true and correct in all respects (except that those
representations and warranties that do not contain materiality qualifiers
shall be true and correct in all material respects) as of the date of the
Closing;
(b) Purchaser shall have performed in all material respects all
obligations required to be performed by it under this Agreement at or prior
to the Effective Time;
(c) The Company shall have received a certificate dated as of the
date of the Closing and signed on behalf of Purchaser by the Chief Executive
Officer and Chief Financial Officer of Purchaser to the effect that the
conditions to the Company's obligations set forth in Sections 7.3(a) and (b)
have been satisfied;
33
(d) The Company shall have received from ▇▇▇▇▇, Day, ▇▇▇▇▇▇ &
▇▇▇▇▇, special counsel for Purchaser, and ▇▇▇▇, ▇▇▇▇▇ & ▇▇▇▇▇, corporate
counsel for Purchaser, written opinions dated as of the Effective Time and
substantially in the forms contained in Exhibits C and D attached hereto or
otherwise in form and substance reasonably satisfactory to the Company; and
(e) All conditions of the Indenture to permit the consummation of
the Merger shall have been satisfied or waived by the holders of the Senior
Notes, and all actions required by or in respect of the Indenture to be taken
prior to or at the Effective Time in connection with the Merger shall have
been taken.
ARTICLE 8
TERMINATION
SECTION 8.1. TERMINATION. This Agreement may be terminated and
the transactions contemplated hereby may be abandoned at any time prior to
the filing of the certificate of merger:
(a) by mutual written consent of the Company and Purchaser;
(b) by the Company or Purchaser, if there shall be any law or
regulation that makes consummation of the transactions contemplated hereby
illegal or otherwise prohibited or if any judgment, injunction, order or
decree enjoining the Company or Purchaser from consummating the transactions
contemplated hereby is entered and such judgment, injunction, order or decree
shall become final and nonappealable;
(c) by the Company or Purchaser if the Effective Time shall not
have occurred on or before March 31, 1999; provided, that, no party may
terminate this Agreement under this Section 8.1(c) if such party's breach of
this Agreement has caused or resulted in the failure of the Effective Time to
occur on or before such date;
(d) by the Company if (i) the condition specified in Section
7.3(a) has not been satisfied or waived, or (ii) Purchaser has breached or
failed to perform, in any material respect, notwithstanding satisfaction or
due waiver of all conditions thereto, any of its material covenants or
agreements contained herein as to which notice specifying such breach or
failure has been given to Purchaser and Purchaser has failed to cure or
otherwise resolve the same to the reasonable satisfaction of the Company
within 30 days after receipt of such notice; PROVIDED, HOWEVER, that the
right to terminate this Agreement under this Section 8.1(d) shall not be
available to the Company if the Company is in breach of this Agreement in any
material respect;
(e) by Purchaser if (i) the condition specified in Section 7.2(a)
has not been satisfied or waived, or (ii) the Company has breached or failed
to perform, in any material respect, notwithstanding satisfaction or due
waiver of all conditions thereto, any of its material covenants or agreements
contained herein as to which notice specifying such breach or failure has
been given to the Company and the Company has failed to cure or otherwise
resolve the same to the reasonable satisfaction of Purchaser within 30 days
after receipt of such notice; PROVIDED,
34
HOWEVER, that the right to terminate this Agreement under this Section 8.1(e)
shall not be available to Purchaser if (x) Purchaser is in breach of this
Agreement in any material respect or (y) the financing under any of the
commitment letters referred to in Section 3.7 (or comparable commitments in
an amount adequate to consummate the Merger) is no longer available to
Purchaser otherwise than as the result of the Company's breach or failure
referred to in clause (i) or (ii) or the fact that the requisite vote of the
stockholders of the Company under the Ohio Law for the approval of this
Agreement, the Merger and the transactions contemplated by this Agreement
shall not have been obtained at the meeting (or any adjournment thereof)
called for such purpose; and
(f) by Purchaser if the requisite vote of the stockholders of the
Company under the Ohio Law for the approval of this Agreement, the Merger and
the transactions contemplated by this Agreement shall not have been obtained
at the meeting (or any adjournment thereof) called for such purpose.
Any action under this Section 8.1 may be taken by Purchaser or the
Company by the Company's Board of Directors. The party desiring to terminate
this Agreement pursuant to clauses (b), (c), (d), (e) or (f) shall give
written notice of such termination to the other party in accordance with
Section 9.1.
SECTION 8.2. TERMINATION FEES. In recognition of the considerable
time and expense that the parties have expended and will expend in entering
into this Agreement, and pursuing the transactions contemplated hereby, the
following fees shall be payable and shall accrue in the event of termination
of this Agreement:
(a) To the extent this Agreement is terminated solely pursuant to
Sections 8.1(a), (b) or (c), no termination fees shall be payable to any
party, and this Agreement shall become void and of no effect with no
liability on the part of any party hereto (or any of its directors, officers,
employees, agents, or representatives); provided, that no such termination
shall relieve any party hereto from any liability under Sections 4.1, 5.1 or
9.4.
(b) In the event that this Agreement is terminated by the Company
pursuant to Section 8.1(d), the Escrow Agent shall deliver the Liquidated
Damages Amount to the Company in accordance with the provisions of the Escrow
Agreement and Section 1.9, which Liquidated Damages Amount shall be the
Company's sole and exclusive recourse upon termination of this Agreement
pursuant to Section 8.1(d).
(c) In the event that this Agreement is terminated by Purchaser
pursuant to Section 8.1(e), Purchaser shall have the right to seek money
damages from the Company not to exceed $25,000,000.
(d) In the event that this Agreement is terminated by Purchaser
solely pursuant to Section 8.1(f), the Company shall promptly pay to
Purchaser as liquidated damages and not as a penalty an amount equal to
$12,500,000. The liquidated damages provided for in this Section 8.2(d)
shall be Purchaser's sole and exclusive remedy against the Company (Purchaser
being free
35
to pursue any rights it may have under the Voting Agreement against the
stockholder parties thereto) upon termination of this Agreement pursuant to
Section 8.1(f).
SECTION 8.3. PROCEDURE UPON TERMINATION. In the event of
termination and abandonment pursuant to this Article 8, this Agreement shall
terminate and the transactions contemplated hereby shall be abandoned without
further action by the parties hereto, provided that the agreements contained
in Sections 4.1 (Confidentiality (by the Company)), 5.1 (Confidentiality (by
Purchaser)), 6.3 (Public Announcements) and 9.4 (Expenses) shall remain in
full force and effect. If this Agreement is terminated as provided herein,
each party shall use its reasonable best efforts to redeliver all documents,
work papers and other material (including any copies thereof) of any other
party relating to the transactions contemplated hereby, whether so obtained
before or after the execution of this Agreement, to the party furnishing the
same.
ARTICLE 9
MISCELLANEOUS
SECTION 9.1. NOTICES. All notices, requests and other communications
to any party hereunder shall be in writing (including telecopy or similar
writing) and shall be given,
If to Purchaser, to: ▇▇▇▇▇▇ Communications Corporation
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, President
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
WITH A COPY TO: ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, LLP
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
If to the Company, to: Sygnet Communications, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇., President
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
36
WITH A COPY TO: ▇▇▇▇▇ ▇▇▇▇ LLP
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
or such other address or telecopy number as such party may hereafter specify
by notice to the other parties hereto. Each such notice, request or other
communication shall be effective (a) if given by telecopy, when such telecopy
is transmitted to the telecopy number specified in this Section 9.1 and the
appropriate telecopy confirmation is received or (b) if given by any other
means, when delivered at the address specified in this Section 9.1.
SECTION 9.2. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. If this
Agreement is not terminated pursuant to Section 8.1, the representations and
warranties and agreements of the Company contained herein and in any
certificate or other writing delivered pursuant hereto shall not survive the
Effective Time, provided that covenants that by their nature are to be
performed after the Effective Time shall in any such case survive.
SECTION 9.3. AMENDMENTS; NO WAIVERS.
(a) Any provision of this Agreement may be amended or waived prior
to the filing of the certificate of merger if, and only if, such amendment or
waiver is in writing and signed by the directors of the Company and Purchaser
or in the case of a waiver, by the party against whom the waiver is to be
effective.
(b) No failure or delay by any party in exercising any right,
power or privilege hereunder shall operate as a waiver thereof nor shall any
single or partial exercise thereof preclude any other or further exercise
thereof or the exercise of any other right, power or privilege. The rights
and remedies herein provided shall be cumulative and not exclusive of any
rights or remedies provided by law.
SECTION 9.4. EXPENSES. Whether or not the transactions
contemplated hereby are consummated, except as otherwise provided in this
Agreement, each party hereto shall pay its own legal, accounting and
investment banking fees, costs and expenses in connection with the
negotiation and execution of this Agreement and the transactions contemplated
hereby.
SECTION 9.5. ENTIRE AGREEMENT; THIRD PARTY BENEFICIARIES. Except
for that certain confidentiality agreement between the Company and ▇▇▇▇▇▇
Communications Corporation dated May 8, 1998, all prior negotiations and
agreements between the parties hereto relating to the subject matter of this
Agreement are superseded by this Agreement and as of the date of this
Agreement there are no representations, warranties, understandings or
agreements, whether written or oral, expressed or implied, other than those
specifically set forth herein. Nothing in this Agreement, expressed or
implied, is intended to or shall confer on any person other than the parties
hereto any rights, remedies, obligations or liabilities under or by reason of
this Agreement.
37
SECTION 9.6. WAIVERS. Any failure by any of the parties hereto to
comply with any of the obligations, agreements or conditions set forth herein
may be waived by the other party or parties, provided, however, that any such
waiver shall not be deemed a waiver of any other obligation, agreement or
condition.
SECTION 9.7. FURTHER ACTIONS. Each of the parties agrees to
cooperate fully in the effectuation of the transactions contemplated hereby
and to execute any and all additional documents or take such additional
actions as shall be reasonably necessary or appropriate for such purpose.
SECTION 9.8. SUCCESSORS AND ASSIGNS. The provisions of this
Agreement shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and assigns, provided that no party
may assign, delegate or otherwise transfer any of its rights or obligations
under this Agreement without the prior written consent of the other parties
hereto.
SECTION 9.9. GOVERNING LAW. This Agreement shall be governed by
and construed in accordance with the internal laws and not the conflicts of
laws provisions of the State of Ohio.
SECTION 9.10. EXCLUSIVE JURISDICTION. The Company and Purchaser
agree that any legal action, suit or proceeding arising out of or relating to
this Agreement or the agreements and transactions contemplated hereby shall
be instituted in the Federal District Court for the Northern District of
Ohio, Eastern Division, or an Ohio state court located in Mahoning County,
Ohio, which shall be the exclusive jurisdiction and venue of said legal
proceedings, and each of the Company and Purchaser consents to the personal
jurisdiction of such courts and waives any objection that such party may now
or hereafter have to the personal jurisdiction of such courts or the laying
of venue of any such action, suit or proceeding.
SECTION 9.11. DISCLOSURE SCHEDULES. Notwithstanding anything
herein to the contrary, any matter disclosed in any Schedule shall be deemed
to be disclosed in all Schedules regardless of whether such matter is
specifically cross-referenced. The disclosure of any matter in a Schedule is
not to be deemed determinative of or an indication that such matter is
material to the operations of the Company or Purchaser, as the case may be.
SECTION 9.12. COUNTERPARTS; EFFECTIVENESS. This Agreement may be
signed in any number of counterparts, each of which shall be an original,
with the same effect as if the signatures thereto and hereto were upon the
same instrument. This Agreement shall become effective with respect to the
Company and Purchaser when each shall have received counterparts of this
Agreement signed by the other.
SECTION 9.13. SEVERABILITY. If any term or other provision of
this Agreement is invalid, illegal, or incapable of being enforced by any
rule or law, or public policy, all other conditions 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 by this
Agreement are 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
38
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible in mutually acceptable manner in
order that the transactions contemplated by this Agreement be consummated as
originally contemplated to the fullest extent possible.
SECTION 9.14. INCORPORATION OF SCHEDULES AND EXHIBITS. All
Schedules and all Exhibits attached hereto and referred to herein are hereby
incorporated herein and made a part of this Agreement for all purposes as if
fully set forth herein.
SECTION 9.15. HEADINGS. The descriptive headings contained in
this Agreement are included for convenience of reference only and shall not
affect in any way the meaning or interpretation of this Agreement.
SECTION 9.16. SPECIFIC PERFORMANCE. The parties recognize and
acknowledge that in the event the Company shall fail to perform its
obligations under the terms of this Agreement, money damages alone will not
be adequate to compensate the Purchaser. The parties, therefore, agree and
acknowledge that in the event the Company fails to perform its obligations
under this Agreement prior to Closing, Purchaser shall be entitled to
specific performance of the terms of this Agreement and of the covenants and
obligations hereunder, provided that Purchaser shall not be entitled to
terminate this Agreement pursuant to Section 8.2(c) based upon any breach or
failure with respect to which specific performance is granted, and not
subsequently reversed, by a court of competent jurisdiction.
[SIGNATURES ARE ON THE FOLLOWING PAGE.]
39
IN WITNESS WHEREOF, the Company and Purchaser have caused this
Agreement to be duly executed by their respective authorized officers as of
the day and year first above written.
SYGNET WIRELESS, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
Title: President
FRONT NINE OPERATING COMPANY
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Chairman and Chief
Executive Officer
40