SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
-------------------
FORM 8-K/A
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
March 16, 1998
- - --------------------------------------------------------------------------------
Date of Report (Date of earliest event reported)
360 COMMUNICATIONS COMPANY
- - --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 1-14108 47-0649117
- - ----------------------- ------------------- ---------------------------------
(State of Incorporation) (Commission File No.) (IRS Employer Identification No.)
8725 W. Higgins Road, Chicago, Illinois 60631
- - --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(773) 399-2500
- - --------------------------------------------------------------------------------
(Registrant's telephone number, including area code)
<PAGE>
This report amends the registrant's Current Report on 8-K dated March 16, 1998
filed with the Securities and Exchange Commission on March 16, 1998.
Item 7. Financial Statements and Exhibits.
(c) Exhibits.
2.1 Agreement and Plan of Merger dated as of March 16, 1998 among
ALLTEL Corporation, Pinnacle Merger Sub, Inc. and 360
Communications Company.
2.2 Stock Option Agreement dated as of March 16, 1998 between
ALLTEL Corporation and 360 Communications Company.
4.9 First Amendment to Rights Agreement dated as of March 16, 1998
to Rights Agreement dated as of March 5, 1996 between 360
Communications Company and The Chase Manhattan Bank, as
successor in interest to Chemical Bank, as Rights Agent.
99.1 Press Release issued by 360 Communications Company and ALLTEL
Corporation on March 16, 1998 announcing the execution of the
Agreement and Plan of Merger. (Previously filed.)
-2-
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities and Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.
360 COMMUNICATIONS COMPANY
By: /S/ Gary L. Burge
Gary L. Burge
Senior Vice President - Engineering
and Network Operations
Date: March 16, 1998
-3-
<PAGE>
EXHIBIT INDEX
Exhibit
No. Description of Exhibits
--------- -------------------------
2.1 Agreement and Plan of Merger dated as of March 15, 1998 among
ALLTEL Corporation, Merger Sub, Inc. and 360 Communications
Company.
2.2 Stock Option Agreement dated as of March 15, 1998 between ALLTEL
Corporation and 360 Communications Company. (
4.9 First Amendment to Rights Agreement dated as of March 16, 1998
to Rights Agreement dated as of March 5, 1996 between 360
Communications Company and The Chase Manhattan Bank, as
successor in interest to Chemical Bank, as Rights Agent.
99.1 Press Release issued by 360 Communications Company and ALLTEL
Corporation on March 16, 1998 announcing the execution of the
Agreement and Plan of Merger. (Previously filed.)
EXECUTION COPY
AGREEMENT AND PLAN OF MERGER
among
ALLTEL CORPORATION,
PINNACLE MERGER SUB, INC.
and
360 COMMUNICATIONS COMPANY
Dated as of March 16, 1998
i
<PAGE>
TABLE OF CONTENTS
ARTICLE I
THE MERGER
Section 1.1. The Merger............................................2
Section 1.2. Closing...............................................2
Section 1.3. Effective Time........................................2
Section 1.4. Effects of the Merger.................................2
Section 1.5. Certificate of Incorporation and By-Laws
of the Surviving Corporation..........................2
Section 1.6. Directors.............................................3
Section 1.7. Officers..............................................3
ARTICLE II
CONVERSION OF SHARES; EXCHANGE OF CERTIFICATES
Section 2.1. Effect on Stock.......................................3
Section 2.2. Exchange of Certificates..............................4
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Section 3.1. Organization, Qualification, Etc......................8
Section 3.2. Capital Stock.........................................9
Section 3.3. Corporate Authority Relative to this Agreement;
No Violation.........................................11
Section 3.4. Reports and Financial Statements.....................12
Section 3.5. No Undisclosed Liabilities...........................13
Section 3.6. No Violation of Law..................................13
Section 3.7. Environmental Laws and Regulations...................13
Section 3.8. No Undisclosed Employee Benefit Plan
Liabilities or Severance Arrangements................14
Section 3.9. Absence of Certain Changes or Events.................14
Section 3.10. Investigations; Litigation...........................14
i
<PAGE>
Section 3.11. Joint Proxy Statement; Registration Statement;
Other Information....................................15
Section 3.12. The Company Rights Plan..............................15
Section 3.13. Lack of Ownership of Parent Common Stock.............15
Section 3.14. Tax Matters..........................................16
Section 3.15. Opinion of Financial Advisor.........................17
Section 3.16. Required Vote of the Company Stockholders............18
Section 3.17. Material Contracts...................................18
Section 3.18. Takeover Statute.....................................18
Section 3.19. Finders or Brokers...................................18
Section 3.20. Pooling of Interests.................................18
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT
Section 4.1. Organization, Qualification, Etc.....................19
Section 4.2. Capital Stock........................................20
Section 4.3. Corporate Authority Relative to this Agreement;
No Violation.........................................21
Section 4.4. Reports and Financial Statements.....................22
Section 4.5. No Undisclosed Liabilities...........................23
Section 4.6. No Violation of Law..................................23
Section 4.7. Environmental Laws and Regulations...................23
Section 4.8. No Undisclosed Employee Benefit Plan
Liabilities or Severance Arrangements................24
Section 4.9. Absence of Certain Changes or Events.................24
Section 4.10. Investigations; Litigation...........................24
Section 4.11. Joint Proxy Statement; Registration Statement;
Other Information....................................25
Section 4.12. Lack of Ownership of the Company Common Stock........25
Section 4.13. Required Vote of Parent Stockholders.................25
Section 4.14. Finders or Brokers...................................25
Section 4.15. Pooling of Interests.................................25
Section 4.16. Opinions of Financial Advisors.......................26
Section 4.17. Tax Matters..........................................26
Section 4.18. Material Contracts...................................27
ii
<PAGE>
ARTICLE V
COVENANTS AND AGREEMENTS
Section 5.1. Conduct of Business by the Company or Parent.........27
Section 5.2. Investigation........................................32
Section 5.3. Joint Proxy Material; Registration Statement.........32
Section 5.4. Affiliate Agreements.................................34
Section 5.5. Employee Stock Options, Incentive and Benefit Plans..34
Section 5.6. Filings; Other Action................................36
Section 5.7. Further Assurances...................................37
Section 5.8. Takeover Statute.....................................37
Section 5.9. No Solicitation......................................37
Section 5.10. Public Announcements.................................38
Section 5.11. Indemnification and Insurance........................38
Section 5.12. Accountants' "Comfort" Letters.......................39
Section 5.13. Additional Reports...................................39
Section 5.14. Company Rights Plans.................................40
Section 5.15. Control of Other Party's Business....................40
Section 5.16. Board Seats and Officers.............................40
ARTICLE VI
CONDITIONS TO THE MERGER
Section 6.1. Conditions to Each Party's Obligation to Effect
the Merger...........................................40
Section 6.2. Conditions to Obligation of the Company to Effect
the Merger...........................................41
Section 6.3. Conditions to Obligation of Parent to Effect
the Merger...........................................42
ARTICLE VII
TERMINATION
Section 7.1. Termination or Abandonment...........................43
Section 7.2. Termination Fee......................................45
Section 7.3. Amendment or Supplement..............................45
Section 7.4. Extension of Time, Waiver, Etc.......................46
iii
<PAGE>
ARTICLE VIII
MISCELLANEOUS
Section 8.1. No Survival of Representations and Warranties........46
Section 8.2. Expenses.............................................46
Section 8.3. Counterparts; Effectiveness..........................47
Section 8.4. Governing Law........................................47
Section 8.5. Jurisdiction.........................................47
Section 8.6. Notices..............................................48
Section 8.7. Assignment; Binding Effect...........................49
Section 8.8. Severability.........................................49
Section 8.9. Enforcement of Agreement.............................49
Section 8.10. Entire Agreement; No Third-Party Beneficiaries.......49
Section 8.11. Headings.............................................49
Section 8.12. Definitions..........................................49
Exhibit A - Form of the Company Affiliate Agreement
Exhibit B - Form of Parent Affiliate Agreement
Exhibit C - Form of Amendment to the Company Rights Plan
iv
<PAGE>
AGREEMENT AND PLAN OF MERGER, dated as of March 16, 1998 (the
"Agreement"), among ALLTEL Corporation, a Delaware corporation ("Parent"),
Pinnacle Merger Sub, Inc., a Delaware corporation and a wholly owned subsidiary
of Parent ("Merger Sub"), and 360 Communications Company, a Delaware corporation
(the "Company").
W I T N E S S E T H :
WHEREAS, the respective Boards of Directors of Parent, Merger
Sub and the Company have approved the acquisition of the Company by Parent upon
the terms and subject to the conditions set forth in this Agreement;
WHEREAS, the respective Boards of Directors of Parent, Merger
Sub and the Company have approved this Agreement and the merger of Merger Sub
with and into the Company (the "Merger") in accordance with the General
Corporation Law of the State of Delaware (the "DGCL") and upon the terms and
subject to the conditions set forth in this Agreement;
WHEREAS, for United States federal income tax purposes, the
Merger is intended to qualify as a reorganization within the meaning of Section
368(a) of the United States Internal Revenue Code of 1986, as amended (the
"Code"), and this Agreement is hereby adopted as a plan of reorganization for
purposes of Section 368 of the Code;
WHEREAS, for financial accounting purposes, it is intended
that the Merger will be accounted for as a pooling of interests transaction; and
WHEREAS, immediately following the execution and delivery of
this Agreement, the Company and Parent will enter into a stock option agreement
(the "Option Agreement"), pursuant to which the Company will grant Parent the
option to purchase shares of Company Common Stock (as hereinafter defined), upon
the terms and subject to the conditions set forth therein.
NOW THEREFORE, in consideration of the foregoing and the
representa tions, warranties, covenants and agreements contained herein, and
intending to be legally bound hereby, Parent, Merger Sub and the Company agree
as follows:
1
<PAGE>
ARTICLE I
THE MERGER
Section 1.1. The Merger. Upon the terms and subject to the
conditions set forth in this Agreement and in accordance with the DGCL, Merger
Sub shall be merged with and into the Company at the Effective Time (as defined
in Section 1.3) of the Merger. Following the Merger, the separate corporate
existence of Merger Sub shall cease, and the Company shall continue as the
surviving corporation (the "Surviving Corporation") and shall succeed to and
assume all the rights and obligations of Merger Sub in accordance with the DGCL.
Section 1.2. Closing. The closing of the Merger 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 second business day after the
satisfaction or waiver of the conditions set forth in Article VI at the offices
of Skadden, Arps, Slate, Meagher & Flom LLP, New York, New York, unless another
date or place is agreed to in writing by the parties hereto.
Section 1.3. Effective Time. On the Closing Date, the parties
shall execute and file in the office of the Secretary of State of the State of
Delaware a certificate of merger (the "Certificate of Merger") executed in
accordance with the DGCL and shall make all other filings or recordings, if any,
required under the DGCL. The Merger shall become effective at the time of filing
of the Certificate of Merger, or at such later time as is agreed upon by the
parties hereto and set forth therein (such time as the Merger becomes effective
is referred to herein as the "Effective Time").
Section 1.4. Effects of the Merger. The Merger shall have the
effects set forth in Section 259 of the DGCL.
Section 1.5. Certificate of Incorporation and By-Laws of the
Surviving Corporation.
(a) The certificate of incorporation of the Company as in
effect immediately prior to the Effective Time shall become the certificate of
incorporation of the Surviving Corporation after the Effective Time, until
thereafter amended as provided by the DGCL and such certificate of
incorporation.
(b) The by-laws of the Company as in effect immediately prior
to the Effective Time shall become the by-laws of the Surviving Corporation
after the Effective
2
<PAGE>
Time, until thereafter amended as provided by the DGCL, the certificate of
incorporation of the Surviving Corporation and such by-laws.
Section 1.6. Directors. The directors of Merger Sub
immediately prior to the Effective Time shall become the directors of the
Surviving Corporation, until the earlier of their death, resignation or removal
or until their respective successors are duly elected and qualified.
Section 1.7. Officers. The officers of the Company immediately
prior to the Effective Time shall become the officers of the Surviving
Corporation, until the earlier of their resignation or removal or until their
respective successors are duly elected and qualified.
ARTICLE II
CONVERSION OF SHARES; EXCHANGE OF CERTIFICATES
Section 2.1. Effect on Stock. At the Effective Time, by virtue
of the Merger and without any action on the part of the Company, Merger Sub or
the holders of any securities of the Company or Merger Sub:
(a) Each share of common stock, par value $0.01 per share, of
the Company (the "Company Common Stock") issued and held, immediately prior to
the Effective Time, in the Company's treasury or by any of the Company's direct
or indirect wholly owned subsidiaries, and each share of Company Common Stock
that is owned by Parent, Merger Sub or any other subsidiary of Parent, shall
automatically be cancelled and retired and shall cease to exist, and no
consideration shall be delivered in exchange therefor.
(b) Subject to Section 2.2(e), each issued and outstanding
share of Company Common Stock (other than shares to be cancelled in accordance
with Section 2.1(a)) shall thereupon be converted into and shall thereafter
represent .74 (the "Conversion Fraction") fully paid and nonassessable share of
Parent Common Stock (the "Merger Consideration"). As of the Effective Time, all
such shares of Company Common Stock shall no longer be outstanding and shall
automatically be cancelled and retired and shall cease to exist, and each holder
of a certificate or certificates which immediately prior to the Effective Time
represented outstanding shares of Company Common Stock (the "Certificates")
shall cease to have any rights with respect thereto, except the right to receive
(i) certificates representing the number of whole shares of Parent Common Stock
into which
3
<PAGE>
such shares have been converted (the "Parent Certificates"), (ii) certain
dividends and other distributions in accordance with Section 2.2(c), and (iii)
cash in lieu of fractional shares of Parent Common Stock in accordance with
Section 2.2(e), without interest.
(c) Each issued and outstanding share of common stock, par
value $0.01 per share, of Merger Sub shall be converted into one validly issued,
fully paid and nonassessable share of common stock of the Surviving Corporation.
Section 2.2. Exchange of Certificates.
(a) Exchange Agent. As of the Effective Time, Parent shall
enter into an agreement with First Union National Bank of North Carolina or such
other bank or trust company as may be designated by Parent and as shall be
reasonably satisfactory to the Company (the "Exchange Agent"), which shall
provide that Parent shall deposit with the Exchange Agent as necessary from time
to time following the Effective Time, for the benefit of the holders of shares
of Company Common Stock, for exchange in accordance with this Article II,
through the Exchange Agent, the Parent Certificates. The Parent Certificates
(together with any dividends or distributions with respect thereto with a record
date after the Effective Time) and any cash payable in lieu of any fractional
shares of Parent Common Stock are hereinafter referred to as the "Exchange
Fund."
(b) Exchange Procedures. As soon as reasonably practicable
after the Effective Time, the Exchange Agent shall mail to each holder of record
of a Certificate whose shares were converted into the Merger Consideration,
pursuant to Section 2.1, (i) a letter of transmittal (which shall specify that
delivery shall be effected, and risk of loss and title to the Certificates shall
pass, only upon delivery of the Certificates to the Exchange Agent and shall be
in such form and have such other provisions as the Company and Parent may
reasonably specify), and (ii) instructions for use in effecting the surrender of
the Certificates in exchange for the Merger Consideration. Upon surrender of a
Certificate for cancellation to the Exchange Agent, together with such letter of
transmittal, duly executed, and such other documents as may reasonably be
required by the Exchange Agent, the holder of such Certificate shall be entitled
to receive in exchange therefor a Parent Certificate representing that number of
whole shares of Parent Common Stock which such holder has the right to receive
pursuant to the provisions of this Article II, certain dividends or other
distributions in accordance with Section 2.2(c) and cash in lieu of any
fractional share in accordance with Section 2.2(e), and the Certificate so
surrendered shall forthwith be cancelled. In the event of a transfer of
ownership of Company Common Stock which is not registered in the transfer
records of the Company, a Parent Certificate representing the proper number of
shares of Parent Common Stock may be issued to a person other than the person in
whose name the Certificate so surrendered is registered if such Certificate
4
<PAGE>
shall be properly endorsed or otherwise be in proper form for transfer and the
person requesting such issuance shall pay any transfer or other non-income taxes
required by reason of the issuance of shares of Parent Common Stock to a person
other than the registered holder of such Certificate or establish to the
satisfaction of Parent that any such tax has been paid or is not applicable.
Parent or the Exchange Agent shall be entitled to deduct and withhold from the
consideration otherwise payable pursuant to this Agreement to any holder of
Company Common Stock such amounts as Parent or the Exchange Agent are required
to withhold or deduct under the Code or any provision of state, local or foreign
tax law with respect to the making of such payment. To the extent that amounts
are so withheld by Parent or the Exchange Agent, such withheld amounts shall be
treated for all purposes of this Agreement as having been paid to the holder of
the Company Common Stock in respect of whom such deduction and withholding were
made by Parent or the Exchange Agent. Until surrendered as contemplated by this
Section 2.2, each Certificate shall be deemed at any time after the Effective
Time to represent only the right to receive upon such surrender Parent
Certificates representing the number of whole shares of Parent Common Stock into
which the shares of Company Common Stock formerly represented by such
Certificate have been converted, certain dividends or other distributions in
accordance with Section 2.2(c) and cash in lieu of any fractional share in
accordance with Section 2.2(e). No interest will be paid or will accrue on any
cash payable to holders of Certificates pursuant to the provisions of this
Article II.
(c) Distributions with Respect to Unexchanged Shares. No
dividends or other distributions with respect to Parent Common Stock with a
record date after the Effective Time shall be paid to the holder of any
unsurrendered Certificate with respect to the shares of Parent Common Stock
represented thereby, and no cash payment in lieu of fractional shares shall be
paid to any such holder pursuant to Section 2.2(e), and all such dividends,
other distributions and cash in lieu of fractional shares of Parent Common Stock
shall be paid by Parent to the Exchange Agent and shall be included in the
Exchange Fund, in each case until the surrender of such Certificate in
accordance with this Article II. Subject to the effect of applicable escheat or
similar laws and laws with respect to the withholding of Taxes (as defined in
Section 3.14), following surrender of any such Certificate there shall be paid
to the holder of the Parent Certificate representing whole shares of Parent
Common Stock issued in exchange therefor, without interest, (i) at the time of
such surrender, the amount of dividends or other distributions with a record
date after the Effective Time theretofore paid with respect to such whole shares
of Parent Common Stock and the amount of any cash payable in lieu of a
fractional share of Parent Common Stock to which such holder is entitled
pursuant to Section 2.2(e) and (ii) at the appropriate payment date, the amount
of dividends or other distributions with a record date after the Effective Time
but prior to such surrender and with a payment date subsequent to such
5
<PAGE>
surrender payable with respect to such whole shares of Parent Common Stock.
Parent shall make available to the Exchange Agent cash for these purposes.
(d) No Further Ownership Rights in Company Common Stock. The
transfer of shares of Parent Common Stock issued upon the surrender for exchange
of Certificates in accordance with the terms of this Article II (including
distributions and dividends paid pursuant to Section 2.2(c) and any cash paid in
lieu of fractional shares pursuant to Section 2.2(e)) shall be deemed payment in
full satisfaction of all rights pertaining to the shares of Company Common Stock
theretofore represented by such Certificates, subject, however, to the Surviving
Corporation's obligation to pay any dividends or make any other distributions
with a record date prior to the Effective Time which may have been authorized or
made by the Company on such shares of Company Common Stock which remain unpaid
at the Effective Time, and there shall be no further registration of transfers
on the stock transfer books of the applicable Surviving Corporation of the
shares of Company Common Stock which were outstanding immediately prior to the
Effective Time. If, after the Effective Time, Certificates are presented to the
Surviving Corporation or the Exchange Agent for any reason, they shall be
cancelled and exchanged as provided in this Article II, except as otherwise
provided by law.
(e) No Fractional Shares. (i) No Parent Certificates or scrip
representing fractional shares of Parent Common Stock shall be issued upon the
surrender for exchange of Certificates, no dividend or distribution of Parent
shall relate to such fractional share interests and such fractional share
interests will not entitle the owner thereof to vote or to any rights of a
stockholder of Parent.
(ii) As promptly as practicable following the Effective Time,
the Surviving Company shall pay to each holder of Company Common Stock an amount
in cash, if any, equal to the product obtained by multiplying (A) the fractional
share interest to which such holder (after taking into account all shares of
Company Common Stock held at the Effective Time by such holder) would otherwise
be entitled by (B) the closing price for a share of Parent Common Stock as
reported on the NYSE Composite Transactions Tape (as reported in The Wall Street
Journal, or, if not reported thereby, any other authoritative source) on the day
of the Effective Time.
(iii) As soon as practicable after the determination of the
amount of cash, if any, to be paid to holders of Company Common Stock with
respect to any fractional share interests, the Exchange Agent will make
available such amounts to such holders of Company Common Stock subject to the
terms of Section 2.2(c).
6
<PAGE>
(f) Termination of Exchange Fund. Any portion of the Exchange
Fund which remains undistributed to the holders of the Certificates for six
months after the Effective Time shall be delivered to Parent upon demand, and
any holders of the Certificates who have not theretofore complied with this
Article II shall thereafter look only to Parent for payment of their claim for
Merger Consideration, any cash in lieu of fractional shares of Parent Common
Stock and any dividends or distributions with respect to Parent Common Stock.
(g) No Liability. None of the Company, Parent, Merger Sub, the
Surviving Corporation or the Exchange Agent shall be liable to any person in
respect of any shares of Parent Common Stock (or dividends or distributions with
respect thereto) or cash from the Exchange Fund in each case delivered to a
public official pursuant to any applicable abandoned property, escheat or
similar law. If any Certificate shall not have been surrendered prior to one
year after the Effective Time (or immediately prior to such earlier date on
which any Merger Consideration, any cash payable to the holder of such
Certificate pursuant to this Article II or any dividends or distributions
payable to the holder of such Certificate would otherwise escheat to or become
the property of any governmental body or authority) any such Merger
Consideration or cash, dividends or distributions in respect of such Certificate
shall, to the extent permitted by applicable law, become the property of the
Surviving Corporation, free and clear of all claims or interest of any person
previously entitled thereto.
(h) Investment of Exchange Fund. The Exchange Agent shall
invest all cash included in the Exchange Fund, as directed by Parent. Any
interest and other income resulting from such investments shall be paid to
Parent.
(i) Lost Certificates. If any Certificate shall have been
lost, stolen or destroyed, upon the making of an affidavit of that fact by the
person claiming such Certificate to be lost, stolen or destroyed and, if
required by the Surviving Corporation, the posting by such person of a bond in
such reasonable amount as the Surviving Corporation may direct as indemnity
against any claim that may be made against it with respect to such Certificate,
the Exchange Agent will issue in exchange for such lost, stolen or destroyed
Certificate the Merger Consideration and, if applicable, any cash in lieu of
fractional shares, and unpaid dividends and distributions on shares of Parent
Common Stock deliverable in respect thereof, pursuant to this Agreement.
(j) Adjustments. If at any time during the period between the
date of this Agreement and the Effective Time, any change in the outstanding
shares of capital stock of Parent or the Company shall occur as a result of any
reclassification, recapitalization, stock split (including a reverse stock
split) or combination, exchange or readjustment of
7
<PAGE>
shares, or any stock dividend or stock distribution with a record date during
such period, the Merger Consideration shall be equitably adjusted.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as set forth on the Disclosure Schedule delivered by
the Company to Parent prior to the execution of this Agreement (the "Company
Disclosure Schedule"), the Company represents and warrants to Parent and Merger
Sub as follows:
Section 3.1. Organization, Qualification, Etc. The Company is
a corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware and has the corporate power and authority to own
its properties and assets and to carry on its business as it is now being
conducted and is duly qualified to do business and is in good standing in each
jurisdiction in which the ownership of its properties or the conduct of its
business requires such qualification, except for jurisdictions in which the
failure to be so qualified or in good standing would not, individually or in the
aggregate, have a Material Adverse Effect (as hereinafter defined) on the
Company. As used in this Agreement, any reference to any state of facts, event,
change or effect having a "Material Adverse Effect" on or with respect to the
Company or Parent, as the case may be, means such state of facts, event, change
or effect that has had, or would reasonably be expected to have, a material
adverse effect on the business, results of operations or financial condition of
the Company and its Subsidiaries (as defined in Section 8.12), taken as a whole,
or Parent and its Subsidiaries, taken as a whole, as the case may be. The copies
of the Company's certificate of incorporation and by-laws which have been
delivered to Parent are complete and correct and in full force and effect. Each
of the Company's Subsidiaries is a corporation or partnership duly organized,
validly existing and in good standing under the laws of its jurisdiction of
incorporation or organization, has the power and authority to own its properties
and to carry on its business as it is now being conducted, and is duly qualified
to do business and is in good standing in each jurisdiction in which the
ownership of its property or the conduct of its business requires such
qualification, except for jurisdictions in which the failure to be so qualified
or in good standing would not, individually or in the aggregate, have a Material
Adverse Effect on the Company. All the outstanding shares of capital stock of,
or other ownership interests in, the Company's Subsidiaries which are
corporations are validly issued, fully paid and non-assessable and all the
outstanding shares of capital stock of, or other ownership interests in, the
Company's Subsidiaries are owned by the Company, directly or indirectly, free
and clear of all liens, claims, mortgages, encumbrances, pledges, security
interests, equities or charges of any
8
<PAGE>
kind (each, a "Lien"). Other than as set forth in partnership agreements
relating to partnerships involving the Company or any of its Subsidiaries, there
are no existing options (other than the Option Agreement), rights of first
refusal, preemptive rights, calls, claims or commitments of any character
relating to the issued or unissued capital stock or other securities of, or
other ownership interests in, any Subsidiary of the Company.
Section 3.2. Capital Stock.
(a) The authorized stock of the Company consists of
1,000,000,000 shares of Company Common Stock and 100,000,000 shares of preferred
stock, par value $0.01 per share ("Company Preferred Stock"), of which 4,000,000
shares have been designated as First Series Junior Participating Preferred Stock
("Company Series B Preferred Stock"). As of March 10, 1998, 121,300,000 shares
of Company Common Stock were issued and outstanding and no shares of Company
Preferred Stock were issued or outstanding. All the outstanding shares of
Company Common Stock have been validly issued and are fully paid and
non-assessable. There are no outstanding subscriptions, options, warrants,
rights or other arrangements or commitments obligating the Company to issue any
shares of its stock other than:
(i) rights to acquire shares of Company Series B Preferred
Stock pursuant to the Rights Agreement, dated as of March 5, 1996, between the
Company and The Chase Manhattan Bank, as successor in interest to Chemical Bank
(the "Company Rights Plan");
(ii) rights to acquire an undetermined number of shares of
Company Common Stock pursuant to the Company Employee Stock Purchase Plan, which
options are completely and accurately listed as of March 6, 1998 (the most
recent withholding date) by plan participant, payroll withholding percentage,
and cumulative amount withheld on Section 3.2(a)(ii) of the Company Disclosure
Schedule, it being understood that the actual number of shares to be acquired
pursuant to such rights will equal the aggregate amount credited to
participants' accounts (and not withdrawn) through April 30, 1998 divided by a
purchase price equal to the lesser of (x) 85% of the closing price of the
Company Common Stock on May 1, 1997 (for the six-month purchase period
commencing on such date) or October 31, 1997 (for the six-month purchase period
commencing on November 1, 1997) or (y) 85% of such closing price on April 30,
1998;
(iii) options to acquire 2,157,135 shares of Company Common
Stock pursuant to the Company Amended and Restated 1996 Equity Incentive Plan,
which options are completely and accurately listed by optionee, price per share,
date of grant and number of shares covered thereby on Section 3.2(a)(iii) of the
Company Disclosure Schedule;
9
<PAGE>
(iv) options to acquire, or stock appreciation rights in
respect of, 878,936 shares of Company Common Stock pursuant to the Company 1996
Replacement Stock Option Plan, which options and stock appreciation rights are
completely and accurately listed by optionee, exercise or strike price per
share, date of grant and number of shares covered thereby on Section 3.2(a)(iv)
of the Company Disclosure Schedule;
(v) restricted stock awards (as to which the restrictions have
not lapsed) relating to 106,900 shares of Company Common Stock pursuant to the
Company Amended and Restated 1996 Equity Incentive Plan, which awards are
completely and accurately listed by grantee, date of grant and number of shares
covered thereby on Section 3.2(a)(v) of the Company Disclosure Schedule;
(vi) restricted stock awards (as to which the restrictions
have not lapsed) relating to 5,626 shares of Company Common Stock pursuant to
the Company Director Equity and Deferred Compensation Plan, which awards are
completely and accurately listed by grantee, date of grant and number of shares
covered thereby on Section 3.2(a)(vi) of the Company Disclosure Schedule;
(vii) "phantom stock" units equivalent to 2,559 shares of
Company Common Stock awarded through March 6, 1998 (the most recent withholding
date) pursuant to the Company Retirement Savings Restoration Plan, the Company
Deferred Compensation Plan and the Company Director Equity and Deferred
Compensation Plan, which units are completely and accurately listed by grantee
and number of shares covered thereby on Section 3.2(a)(vii) of the Company
Disclosure Schedule, it being understood that the actual number of such units to
be awarded pursuant to such Plans will reflect deferrals through the Effective
Time; and
(viii) the Option Agreement.
(b) As of the date of this Agreement, no bonds, debentures,
notes or other indebtedness of the Company having the right to vote on any
matters on which stockholders may vote are issued or outstanding.
Section 3.3. Corporate Authority Relative to this Agreement;
No Violation.
(a) The Company has the corporate power and authority to enter
into this Agreement and the Option Agreement and to carry out its obligations
hereunder and thereunder. The execution and delivery of this Agreement and the
Option Agreement and the consummation of the transactions contemplated hereby
and thereby have been duly and
10
<PAGE>
validly authorized by the Board of Directors of the Company and by Continuing
Director Action (as defined in Article EIGHTH of the Company's Amended and
Restated Certificate of Incorporation) and, except for the approval and adoption
of this Agreement by its stockholders, no other corporate proceedings on the
part of the Company are necessary to authorize the consummation of the
transactions contemplated hereby and thereby. The Board of Directors of the
Company has taken all necessary and appropriate action so that Section 203 of
the DGCL will be inapplicable to this Agreement and the Option Agreement and the
transactions contemplated hereby and thereby. The Board of Directors of the
Company has determined that the transactions contemplated by this Agreement and
the Option Agreement are in the best interest of the Company and its
stockholders and to recommend to such stockholders that they approve and adopt
this Agreement. This Agreement and the Option Agreement have been duly and
validly executed and delivered by the Company and, assuming this Agreement and
the Option Agreement constitute valid and binding agreements of the other
parties hereto and thereto, this Agreement and the Option Agreement constitute
valid and binding agreements of the Company, enforceable against the Company in
accordance with their terms (except to the extent that enforceability may be
limited by applicable bankruptcy, insolvency, reorganization or other laws
affecting the enforcement of creditors' rights generally, or by principles
governing the availability of equitable remedies).
(b) The Company is not subject to or obligated under any
charter, by-law or contract provision or any license, franchise or permit, or
subject to any order or decree, which, by its terms, would be breached or
violated or would accelerate any payment or obligation, trigger any right of
first refusal or other purchase right as a result of the Company executing or,
subject to the adoption of this Agreement by its stockholders, carrying out the
transactions contemplated by this Agreement and the Option Agreement, except for
any breaches or violations which would not, individually or in the aggregate,
have a Material Adverse Effect on the Company. Other than in connection with or
in compliance with (i) the provisions of the DGCL, (ii) the Securities Act of
1933, as amended (the "Securities Act"), (iii) the Securities Exchange Act of
1934, as amended (the "Exchange Act"), (iv) the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended (the "HSR Act"), (v) Section 4043 of ERISA
(as defined in Section 3.8), (vi) the Communications Act of 1934, as amended
(the "Communications Act") and applicable rules, regulations, practices and
policies promulgated by the Federal Communications Commission (the "FCC"), (vii)
any applicable laws, rules, regulations, practices and orders of any state
public utility commissions ("PUCs") or similar state or foreign regulatory
bodies, (viii) any applicable non-United States competition, antitrust and
investment laws and (ix) the securities or blue sky laws of the various states
(collectively, the "Company Required Approvals"), no authorization, consent or
approval of, or filing with, any governmental body or authority is necessary for
the consummation by the Company of the
11
<PAGE>
transactions contemplated by this Agreement and the Option Agreement, except for
such authorizations, consents, approvals or filings, the failure to obtain or
make which would not, individually or in the aggregate, have a Material Adverse
Effect on the Company or substantially impair or delay the consummation of the
transactions contemplated hereby and thereby.
Section 3.4. Reports and Financial Statements. The Company has
previously furnished to Parent true and complete copies of:
(a) the Company's Annual Reports on Form 10-K filed with the
Securities and Exchange Commission (the "SEC") for each of the years ended
December 31, 1995 and 1996;
(b) each definitive proxy statement filed by the Company with
the SEC since February 14, 1996;
(c) each final prospectus filed by the Company with the SEC
since February 14, 1996, except any final prospectus on Form S-8; and
(d) all Current Reports on Form 8-K and Quarterly Reports on
Form 10-Q filed by the Company with the SEC since January 1, 1997.
As of their respective dates, such reports, proxy statements and prospectuses
(collectively, the "Company SEC Reports") (i) complied as to form in all
material respects with the applicable requirements of the Securities Act, the
Exchange Act and the rules and regulations promulgated thereunder and (ii) did
not contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading. Except
to the extent that information contained in any Company SEC Report has been
revised or superseded by a later filed Company SEC Report, none of the Company
SEC Reports contains any untrue statement of a material fact or omits to state
any material fact required to be stated therein or necessary in order to make
the statements therein, in light of the circumstances under which they were
made, not misleading. The audited consolidated financial statements and
unaudited consolidated interim financial statements included in the Company SEC
Reports (including any related notes and schedules) fairly present the financial
position of the Company and its consolidated Subsidiaries as of the dates
thereof and the results of operations and cash flows for the periods or as of
the dates then ended (subject, in the case of the unaudited interim financial
statements, to normal recurring year-end adjustments), in each case in
accordance with past practice and generally accepted accounting principles in
the United States ("GAAP") consistently applied during
12
<PAGE>
the periods involved (except as otherwise disclosed in the notes thereto). Since
March 7, 1996, the Company has timely filed all reports, registration statements
and other filings required to be filed by it with the SEC under the rules and
regulations of the SEC. None of the Company's Subsidiaries is required to file
any forms, reports or other documents with the SEC.
Section 3.5. No Undisclosed Liabilities. Neither the Company
nor any of its Subsidiaries has any liabilities or obligations of any nature,
whether or not accrued, contingent or otherwise, and there is no existing
condition, situation or set of circumstances which would reasonably be expected
to result in such a liability or obligation, except (a) liabilities or
obligations reflected in the Company SEC Reports and (b) liabilities or
obligations which would not, individually or in the aggregate, have a Material
Adverse Effect on the Company.
Section 3.6. No Violation of Law. The businesses of the
Company and its Subsidiaries are not being conducted in violation of any law,
ordinance or regulation of any governmental body or authority (provided that no
representation or warranty is made in this Section 3.6 with respect to
Environmental Laws (as hereinafter defined)) except (a) as described in the
Company SEC Reports and (b) for violations or possible violations which would
not, individually or in the aggregate, have a Material Adverse Effect on the
Company.
Section 3.7. Environmental Laws and Regulations. Except as
described in the Company SEC Reports, (a) the Company and each of its
Subsidiaries is in compliance with all applicable international, federal, state,
local and foreign laws and regulations relating to pollution or protection of
human health or the environment (including, without limitation, ambient air,
surface water, ground water, land surface or subsurface strata) (collectively,
"Environmental Laws"), which compliance includes, but is not limited to, the
possession by the Company and its Subsidiaries of all material permits and other
governmental authorizations required under applicable Environmental Laws, and
compliance with the terms and conditions thereof, except for non-compliance
which would not, individually or in the aggregate, have a Material Adverse
Effect on the Company; (b) neither the Company nor any of its Subsidiaries has
received written notice of, or, is the subject of, any actions, causes of
action, claims, investigations, demands or notices by any person asserting an
obligation to conduct investigations or clean-up activities under Environmental
Law or alleging liability under or non-compliance with any Environmental Law
(collectively, "Environmental Claims") which would, individually or in the
aggregate, have a Material Adverse Effect on the Company; and (c) there are no
facts, circumstances or conditions in connection with the operation of its
business or any currently or formerly owned, leased or operated facilities that
are reasonably likely to lead to any Environmental
13
<PAGE>
Claims in the future which would, individually or in the aggregate, have a
Material Adverse Effect on the Company.
Section 3.8. No Undisclosed Employee Benefit Plan Liabilities
or Severance Arrangements.
(a) Except as described in the Company SEC Reports, all
"employee benefit plans," as defined in Section 3(3) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"), maintained or contributed to
by the Company or its Subsidiaries are in compliance with all applicable
provisions of each of the Code and ERISA and the rules and regulations
thereunder, and the Company and its Subsidiaries do not have any liabilities or
obligations with respect to any such employee benefit plans, whether or not
accrued, contingent or otherwise, except as described in the Company SEC
Reports. No employee of the Company will be entitled to any additional benefits
or any acceleration of the time of payment or vesting of any benefits under any
employee incentive or benefit plan, program or arrangement as a result of the
transactions contemplated by this Agreement.
(b) Any amount or other entitlement that could be received
(whether in cash or property or the vesting of property) as a result of any of
the transactions contemplated by this Agreement by any employee, officer or
director of the Company or any of its affiliates who is a "disqualified
individual" (as such term is defined in proposed Treasury Regulation Section
1.280G-1) under any employee benefit plan or other compensation arrangement
currently in effect would not be characterized as an "excess parachute payment"
or a "parachute payment" (as such terms are defined in Section 280G(b)(1) of the
Code).
Section 3.9. Absence of Certain Changes or Events. Other than
the transactions contemplated by this Agreement or as disclosed in the Company
SEC Reports, since December 31, 1996, the businesses of the Company and its
Subsidiaries have been conducted in the ordinary course consistent with past
practice, and there has not been any event, occurrence, development or state of
circumstances or facts that has had, or would have, a Material Adverse Effect on
the Company.
Section 3.10. Investigations; Litigation. Except as described
in the Company SEC Reports:
(a) there is no investigation or review pending by any
governmental body or authority with respect to the Company or any of its
Subsidiaries which would, individually or in the aggregate, have a Material
Adverse Effect on the Company, nor has
14
<PAGE>
any governmental body or authority notified the Company of an intention to
conduct the same; and
(b) there are no actions, suits or proceedings pending (or, to
the Company's knowledge, threatened) against or affecting the Company or its
Subsidiaries, or any of their respective properties at law or in equity, or
before any federal, state, local or foreign governmental body or authority,
which, individually or in the aggregate, are reasonably likely to have a
Material Adverse Effect on the Company.
Section 3.11. Joint Proxy Statement; Registration Statement;
Other Information. None of the information with respect to the Company or its
Subsidiaries to be included in the Joint Proxy Statement (as defined below) or
the Registration Statement (as defined in Section 5.3(a)(i)) will, in the case
of the Joint Proxy Statement or any amendments thereof or supplements thereto,
at the time of the mailing of the Joint Proxy Statement or any amendments or
supplements thereto, and at the time of the Company Meeting and the Parent
Meeting, or, in the case of the Registration Statement, at the time it becomes
effective, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading, except that no representation is made by the Company with
respect to information supplied in writing by Parent or any affiliate of Parent
specifically for inclusion in the Joint Proxy Statement. The Joint Proxy
Statement will comply as to form in all material respects with the provisions of
the Exchange Act and the rules and regulations promulgated thereunder. The
letters to stockholders, notices of meeting, joint proxy statement and forms of
proxies to be distributed to stockholders in connection with the Merger and any
schedules required to be filed with the SEC in connection therewith are
collectively referred to herein as the "Joint Proxy Statement."
Section 3.12. The Company Rights Plan. The Board of Directors
of the Company has adopted a resolution authorizing the Company Rights Plan to
be duly amended to effect the changes thereto contemplated by the form of
amendment attached hereto as Exhibit C, and as a result thereof, the rights
provided thereunder will be inapplicable to this Agreement and the Option
Agreement, and the consummation of the Merger and the other transactions
contemplated by this Agreement and the Option Agreement.
Section 3.13. Lack of Ownership of Parent Common Stock.
Neither the Company nor any of its Subsidiaries owns any shares of Parent Common
Stock or other securities convertible into shares of Parent Common Stock
(exclusive of any shares owned by the Company's employee benefit plans).
15
<PAGE>
Section 3.14. Tax Matters. (a) All federal, state, local and
foreign Tax Returns required to be filed by or on behalf of the Company, each of
its Subsidiaries, and each affiliated, combined, consolidated or unitary group
of which the Company or any of its Subsidiaries (i) is a member (a "Current
Company Group") or (ii) has been a member within six years prior to the date
hereof but is not currently a member, but only insofar as any such Tax Return
relates to a taxable period ending on a date within the last six years (a "Past
Company Group," together with Current Company Groups, a "Company Affiliated
Group") have been timely filed, and all such Tax Returns are complete and
accurate except to the extent any failure to file or any inaccuracies in filed
returns would not, individually or in the aggregate, have a Material Adverse
Effect on the Company (it being understood that the representations made in this
Section, to the extent that they relate to Past Company Groups, are made to the
knowledge of the Company). All Taxes due and owing by the Company, any
Subsidiary of the Company or any Company Affiliated Group have been timely paid,
or adequately reserved for, except to the extent any failure to pay or reserve
would not, individually or in the aggregate, have a Material Adverse Effect on
the Company. There is no audit examination, deficiency, refund litigation,
proposed adjustment or matter in controversy with respect to any Taxes due and
owing by the Company, any Subsidiary of the Company or any Affiliated Group
which would, individually or in the aggregate, have a Material Adverse Effect on
the Company. All assessments for Taxes due and owing by the Company, any
Subsidiary of the Company or any Company Affiliated Group with respect to
completed and settled examinations or concluded litigation have been paid. Prior
to the date of this Agreement, the Company has provided Parent with written
schedules of (i) the taxable years of the Company for which the statutes of
limitations with respect to federal income Taxes have not expired, and (ii) with
respect to federal income Taxes, for all taxable years for which the statute of
limitations has not yet expired, those years for which examinations have been
completed, those years for which examinations are presently being conducted, and
those years for which examinations have not yet been initiated. The Company and
each of its Subsidiaries have complied in all material respects with all rules
and regulations relating to the payment and withholding of Taxes, except to the
extent any such failure to comply would not, individually or in the aggregate,
have a Material Adverse Effect on the Company. Neither the Company nor any of
its Subsidiaries is a party to, bound by, or has any obligation under any Tax
sharing, allocation, indemnity, or similar contract or arrangement (other than
(i) the tax sharing agreement, dated as of March 7, 1996, between Sprint
Corporation and the Company (the "Tax Sharing Agreement") or (ii) the tax
assurance agreement, dated as of March 7, 1996, between Sprint Corporation and
the Company (the "Tax Assurance Agreement")).
16
<PAGE>
(b) Neither the Company nor any of its Subsidiaries knows of
any fact or has taken any action that could reasonably be expected to prevent
the Merger from qualifying as a reorganization within the meaning of Section
368(a) of the Code.
(c) Neither the Company nor any of its Subsidiaries knows of
any fact or has taken (or failed to take) any action that could constitute a
breach of its obligations or otherwise result in a liability to the Company or
any of its Subsidiaries under (i) the Tax Sharing Agreement or (ii) the Tax
Assurance Agreement. Neither the Company nor any of its Subsidiaries is a party
to or bound by (or has any obligation under) any Tax sharing, allocation,
indemnity, or similar contract or arrangement with Sprint Corporation or any
affiliate of Sprint Corporation other than the Tax Sharing Agreement and the Tax
Allocation Agreement (or under either such agreement). To the knowledge of the
Company, without independent investigation, the private letter ruling issued on
February 14, 1996 to Sprint Corporation, Centel Corporation, Sprint Cellular
Company and various other parties in response to the request filed with the
Internal Revenue Service on September 8, 1995, as supplemented, and any
supplemental rulings issued with respect thereto have not been modified, amended
or supplemented and continue to be valid in all respects.
(d) For purposes of this Agreement: (i) "Taxes" means any and
all federal, state, local, foreign, provincial, territorial or other taxes,
imposts, rates, levies, assessments and other charges of any kind whatsoever
whether imposed directly or through withholding (together with any and all
interest, penalties, additions to tax and additional amounts applicable with
respect thereto), including, without limitation, income, franchise, windfall or
other profits, gross receipts, property, sales, use, capital stock, payroll,
employment, social security, workers' compensation, unemployment compensation,
net worth, excise, withholding, ad valorem and value added taxes; (ii) "Tax
Return" means any declaration, return, report, schedule, certificate, statement
or other similar document (including relating or supporting information)
required to be filed or, where none is required to be filed with a taxing
authority, the statement or other document issued by a taxing authority in
connection with any Tax, including, without limitation, any information return,
claim for refund, amended return or declaration of estimated Tax; and (iii)
"Material State" means any state for which the average allocation percentage of
the Company and its Subsidiaries for the past three years exceeds ten percent
(10%).
Section 3.15. Opinion of Financial Advisor. The Board of
Directors of the Company has received the opinion of Lazard Freres & Company
LLC, dated the date of this Agreement, substantially to the effect that, as of
such date, the Merger Consideration is fair to the holders of the Company Common
Stock from a financial point of view. The Company has delivered a complete and
accurate copy of such opinion to the Parent.
17
<PAGE>
Section 3.16. Required Vote of the Company Stockholders. The
affirmative vote of the holders of a majority of the outstanding shares of
Company Common Stock (the "Company Stockholder Approval") is required to approve
and adopt this Agreement. No other vote of the stockholders of the Company, or
of the holders of any other securities of the Company (equity or otherwise), is
required by law, the certificate of incorporation or by-laws of the Company or
otherwise in order for the Company to consummate the Merger and the transactions
contemplated hereby and by the Option Agreement.
Section 3.17. Material Contracts. Except as set forth in the
Company SEC Reports, neither the Company nor any of its Subsidiaries is a party
to or bound by any "material contract" (as such term is defined in item
601(b)(10) of Regulation S-K of the SEC) (all contracts of the type described in
this Section 3.17 being referred to herein as "Company Material Contracts").
Each Company Material Contract is valid and binding on the Company and is in
full force and effect, and the Company and each of its Subsidiaries have in all
material respects performed all obligations required to be performed by them to
date under each Company Material Contract, except where such noncompliance,
individually or in the aggregate, would not have a Material Adverse Effect on
the Company. Neither the Company nor any of its Subsidiaries knows of, or has
received notice of, any violation or default under any Company Material Contract
except for such violations or defaults as would not in the aggregate have a
Material Adverse Effect on the Company.
Section 3.18. Takeover Statute. The Board of Directors of the
Company has approved this Agreement and the transactions contemplated hereby
and, assuming the accuracy of the representation and warranty contained in
Section 4.12, such approval constitutes approval of the Merger and the other
transactions contemplated hereby by the Board of Directors of the Company under
the provisions of Section 203 of the DGCL such that Section 203 of the DGCL does
not apply to this Agreement and the transactions contemplated hereby. To the
knowledge of the Company, no other state takeover statute is applicable to the
Merger or the other transactions contemplated hereby.
Section 3.19. Finders or Brokers. Except for Lazard Freres &
Company LLC, a copy of whose engagement agreement has been or will be provided
to Parent, neither the Company nor any of its Subsidiaries has employed any
investment banker, broker, finder or intermediary in connection with the
transactions contemplated hereby who might be entitled to any fee or any
commission in connection with or upon consummation of the Merger.
Section 3.20. Pooling of Interests. Neither the Company nor
any of its Subsidiaries has taken any action or failed to take any action which
action or failure
18
<PAGE>
(without giving effect to any actions or failures to act by Parent or any of its
Subsidiaries) would prevent the treatment of the Merger as a pooling of
interests for accounting purposes.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT
Except as set forth on the Disclosure Schedule delivered by
Parent to the Company prior to the execution of this Agreement (the "Parent
Disclosure Schedule," and together with the Company Disclosure Schedule, the
"Disclosure Schedule"), Parent and Merger Sub represent and warrant to the
Company as follows:
Section 4.1. Organization, Qualification, Etc. Parent is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware and has the corporate power and authority to own its
properties and assets and to carry on its business as it is now being conducted
and is duly qualified to do business and is in good standing in each
jurisdiction in which the ownership of its properties or the conduct of its
business requires such qualification, except for jurisdictions in which the
failure to be so qualified or in good standing would not, individually or in the
aggregate, have a Material Adverse Effect on Parent. The copies of the Parent's
certificate of incorporation and by-laws which have been delivered to the
Company are complete and correct and in full force and effect. Each of the
Parent's Subsidiaries (including Merger Sub) is duly organized, validly existing
and in good standing under the laws of its jurisdiction of incorporation or
organization, has the power and authority to own its properties and to carry on
its business as it is now being conducted, and is duly qualified to do business
and is in good standing in each jurisdiction in which the ownership of its
property or the conduct of its business requires such qualification, except for
jurisdictions in which the failure to be so qualified or in good standing would
not, individually or in the aggregate, have a Material Adverse Effect on the
Parent. All the outstanding shares of capital stock of, or other ownership
interests in, the Parent's Subsidiaries are validly issued, fully paid and
non-assessable and are owned by Parent, directly or indirectly, free and clear
of all Liens. There are no existing options, rights of first refusal, preemptive
rights, calls, claims or commitments of any character relating to the issued or
unissued capital stock or other securities of, or other ownership interests in,
any Subsidiary of Parent.
19
<PAGE>
Section 4.2. Capital Stock.
(a) The authorized capital stock of Parent consists of
500,000,000 shares of common stock, par value $1.00 per share ("Parent Common
Stock"), 50,000,000 shares of cumulative preferred stock, par value $25.00 per
share ("Par Preferred Stock"), and 50,000,000 shares of no par cumulative
preferred stock ("No Par Preferred Stock," and together with Par Preferred
Stock, "Parent Preferred Stock"). As of February 23, 1998, 184,263,179 shares of
Parent Common Stock, 340,792 shares of Par Preferred Stock and 123,490 shares of
No Par Preferred Stock were issued and outstanding. All the outstanding shares
of Parent Common Stock and Parent Preferred Stock have been validly issued and
are fully paid and non-assessable. As of February 23, 1998, there are no
outstanding subscriptions, options, warrants, rights or other arrangements or
commitments obligating Parent to issue any shares of its capital stock other
than:
(i) rights to acquire shares of Parent's Series K Cumulative
Voting Preferred Stock pursuant to the Rights Agreement, dated as of January 30,
1997, between Parent and First Union National Bank of North Carolina;
(ii) options and other rights to receive or acquire 291,169
shares of Parent Common Stock pursuant to the Amended and Restated 1975
Incentive Stock Option Plan;
(iii) options and other rights to receive or acquire 2,464,841
shares of Parent Common Stock pursuant to the 1991 Stock Option Plan;
(iv) options and other rights to receive or acquire 6,032,161
shares of Parent Common Stock pursuant to the 1994 Employee Stock Option Plan;
(v) options and other rights to receive or acquire 167,701
shares of Parent Common Stock pursuant to the 1994 Non-Employee Directors Stock
Option Plan, as amended; and
(vi) options and other rights (including restricted stock
awards as to which the restrictions have not lapsed) to receive or acquire
11,730 shares of Parent Common Stock pursuant to other employee incentive or
benefit plans, programs and arrangements and non-employee director plans.
20
<PAGE>
(b) As of the date of this Agreement, no bonds, debentures,
notes or other indebtedness of Parent having the right to vote on any matters on
which stockholders may vote are issued or outstanding.
Section 4.3. Corporate Authority Relative to this Agreement;
No Violation.
(a) Each of Parent and Merger Sub has the corporate power and
authority to enter into this Agreement and the Option Agreement and to carry out
its obligations hereunder and thereunder. The execution and delivery of this
Agreement and the Option Agreement and the consummation of the transactions
contemplated hereby and thereby have been duly and validly authorized by the
Board of Directors of Parent and Merger Sub and, except for the approval by its
stockholders of the issuance by Parent of the Merger Consideration, no other
corporate proceedings on the part of Parent or Merger Sub are necessary to
authorize the consummation of the transactions contemplated hereby and thereby.
The Board of Directors of Parent has determined that the transactions
contemplated by this Agreement and the Option Agreement are in the best interest
of Parent and its stockholders and to recommend to such stockholders that they
approve the issuance of the Merger Consideration. This Agreement and the Option
Agreement have been duly and validly executed and delivered by Parent and Merger
Sub and, assuming this Agreement and the Option Agreement constitute valid and
binding agreements of the other parties hereto, this Agreement and the Option
Agreement constitute valid and binding agreements of Parent and Merger Sub,
enforceable against Parent and Merger Sub in accordance with their terms (except
to the extent that enforceability may be limited by applicable bankruptcy,
insolvency, reorganization or other laws affecting the enforcement of creditors'
rights generally, or by principles governing the availability of equitable
remedies).
(b) Neither Parent nor Merger Sub is subject to or obligated
under any charter, by-law or contract provision or any license, franchise or
permit, or subject to any order or decree, which, by its terms, would be
breached or violated or would accelerate any payment or obligation, trigger any
right of first refusal or other purchase right as a result of Parent or Merger
Sub executing or, subject to approval of the issuance of the Merger
Consideration by Parent's stockholders, carrying out the transactions
contemplated by this Agreement and the Option Agreement, except for any breaches
or violations which would not, individually or in the aggregate, have a Material
Adverse Effect on Parent. Other than in connection with or in compliance with
(i) the provisions of the DGCL, (ii) the Securities Act, (iii) the Exchange Act,
(iv) the HSR Act, (v) Section 4043 of ERISA, (vi) the Communications Act and
21
<PAGE>
applicable rules, regulations, practices and policies promulgated by the FCC,
(vii) any applicable laws, rules, regulations, practices and orders of any PUCs
or similar state or foreign regulatory bodies, (viii) any applicable non-United
States competition, antitrust and investments laws, (ix) the securities or blue
sky laws of the various states and (x) the rules and regulations of the NYSE
(collectively, the "Parent Required Approvals"), no authorization, consent or
approval of, or filing with, any governmen tal body or authority is necessary
for the consummation by Parent of the transactions contemplated by this
Agreement and the Option Agreement, except for such authorizations, consents,
approvals or filings, the failure to obtain or make which would not,
individually or in the aggregate, have a Material Adverse Effect on Parent or
substantially impair or delay the consummation of the transactions contemplated
hereby and thereby.
Section 4.4. Reports and Financial Statements. Parent has
previously furnished to the Company true and complete copies of:
(a) Parent's Annual Reports on Form 10-K filed with the SEC
for each of the years ended December 31, 1995 through 1997;
(b) each definitive proxy statement filed by Parent with the
SEC since December 31, 1995;
(c) each final prospectus filed by Parent with the SEC since
December 31, 1995, except any final prospectus on Form S-8; and
(d) all Current Reports on Form 8-K filed by Parent with the
SEC since January 1, 1998.
As of their respective dates, such reports, proxy statements and prospectuses
(collectively, "Parent SEC Reports") (i) complied as to form in all material
respects with the applicable requirements of the Securities Act, the Exchange
Act, and the rules and regulations promulgated thereunder and (ii) did not
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading. Except to
the extent that information contained in any Parent SEC Report has been revised
or superseded by a later filed Parent SEC Report, none of the Parent SEC Reports
contains any untrue statement of a material fact or omits to state any material
fact required to be stated therein or necessary in order to make the statement
therein, in light of the circumstances under which they were made, not
misleading. The audited consolidated financial statements and
22
<PAGE>
unaudited consolidated interim financial statements included in the Parent SEC
Reports (including any related notes and schedules) fairly present the financial
position of Parent and its consolidated Subsidiaries as of the dates thereof and
the results of their operations and their cash flows for the periods or as of
the dates then ended (subject, in the case of the unaudited interim financial
statements, to normal recurring year-end adjustments), in each case in
accordance with past practice and GAAP consistently applied during the periods
involved (except as otherwise disclosed in the notes thereto). Since January 1,
1996, Parent has timely filed all reports, registration statements and other
filings required to be filed by it with the SEC under the rules and regulations
of the SEC. None of Parent's Subsidiaries is required to file any forms, reports
or other documents with the SEC.
Section 4.5. No Undisclosed Liabilities. Neither Parent nor
any of its Subsidiaries has any liabilities or obligations of any nature,
whether or not accrued, contingent or otherwise, and there is no existing
condition, situation or set of circumstances which would reasonably be expected
to result in such a liability or obligation, except (a) liabilities or
obligations reflected in the Parent SEC Reports and (b) liabilities or
obligations which would not, individually or in the aggregate, have a Material
Adverse Effect on Parent.
Section 4.6. No Violation of Law. The businesses of Parent and
its Subsidiaries are not being conducted in violation of any law, ordinance or
regulation of any governmental body or authority (provided that no
representation or warranty is made in this Section 4.6 with respect to
Environmental Laws) except (a) as described in the Parent SEC Reports and (b)
for violations or possible violations which would not, individually or in the
aggregate, have a Material Adverse Effect on Parent.
Section 4.7. Environmental Laws and Regulations. Except as
described in the Parent SEC Reports, (a) Parent and each of its Subsidiaries is
in compliance with all applicable Environmental Laws, which compliance includes,
but is not limited to, the possession by Parent and its Subsidiaries of all
material permits and other governmental authorizations required under applicable
Environmental Laws, and compliance with the terms and conditions thereof, except
for non-compliance which would not, individually or in the aggregate, have a
Material Adverse Effect on Parent; (b) neither Parent nor any of its
Subsidiaries has received written notice of, or, is the subject of, any
Environmental Claims which would, individually or in the aggregate, have a
Material Adverse Effect on Parent; and (c) there are no facts, circumstances or
conditions in connection with the operation of its business or any currently or
formerly owned, leased or operated facilities that are reasonably likely to
23
<PAGE>
lead to any Environmental Claims in the future which would, individually or in
the aggregate, have a Material Adverse Effect on Parent.
Section 4.8. No Undisclosed Employee Benefit Plan Liabilities
or Severance Arrangements. Except as described in the Parent SEC Reports, all
"employee benefit plans," as defined in Section 3(3) of ERISA, maintained or
contributed to by Parent or its Subsidiaries are in compliance with all
applicable provisions of each of the Code and ERISA and the rules and
regulations thereunder, and Parent and its Subsidiaries do not have any
liabilities or obligations with respect to any such employee benefit plans,
whether or not accrued, contingent or otherwise, except as described in the
Parent SEC Reports. No employee of Parent will be entitled to any additional
benefits or any acceleration of the time of payment or vesting of any benefits
under any employee incentive or benefit plan, program or arrangement as a result
of the transactions contemplated by this Agreement.
Section 4.9. Absence of Certain Changes or Events. Other than
the transactions contemplated by this Agreement or as disclosed in the Parent
SEC Reports, since December 31, 1997, the businesses of Parent and its
Subsidiaries have been conducted in the ordinary course consistent with past
practice, and there has not been any event, occurrence, development or state of
circumstances or facts that has had, or would have, a Material Adverse Effect on
Parent.
Section 4.10. Investigations; Litigation. Except as described
in the Parent SEC Reports:
(a) there is no investigation or review pending by any
governmental body or authority with respect to Parent or any of its Subsidiaries
which would, individually or in the aggregate, have a Material Adverse Effect on
Parent, nor has any governmental body or authority notified Parent of an
intention to conduct the same; and
(b) there are no actions, suits or proceedings pending (or, to
Parent's knowledge, threatened) against or affecting Parent or its Subsidiaries,
or any of their respective properties at law or in equity, or before any
federal, state, local or foreign governmental body or authority which,
individually or in the aggregate, are reasonably likely to have a Material
Adverse Effect on Parent.
24
<PAGE>
Section 4.11. Joint Proxy Statement; Registration Statement;
Other Information. None of the information with respect to Parent to be included
in the Joint Proxy Statement or the Registration Statement will, in the case of
the Joint Proxy Statement or any amendments thereof or supplements thereto, at
the time of the mailing of the Joint Proxy Statement or any amendments or
supplements thereto, and at the time of the Company Meeting and the Parent
Meeting, or, in the case of the Registration Statement, at the time it becomes
effective, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading, except that no representation is made by Parent with respect to
information supplied in writing by the Company or any affiliate of the Company
specifically for inclusion in the Joint Proxy Statement. The Joint Proxy
Statement will comply as to form in all material respects with the provisions of
the Exchange Act and the rules and regulations promulgated thereunder.
Section 4.12. Lack of Ownership of the Company Common Stock.
Neither Parent nor any of its Subsidiaries owns any shares of the Company Common
Stock or other securities convertible into shares of the Company Common Stock
(exclusive of any shares owned by Parent's employee benefit plans).
Section 4.13. Required Vote of Parent Stockholders. The
affirmative vote of the holders of a majority of the shares of Parent Common
Stock and Par Preferred Stock (voting together as a single class) present in
person or represented by proxy at the Parent Meeting (as hereinafter defined)
and entitled to vote (the "Parent Stockholder Approval") is required to approve
the issuance of the Merger Consider ation by Parent. No other vote of the
stockholders of Parent, or of the holders of any other securities of Parent
(equity or otherwise), is required by law, the certificate of incorporation or
by-laws of Parent or otherwise in order for Parent to consummate the Merger and
the transactions contemplated hereby and by the Option Agreement.
Section 4.14. Finders or Brokers. Except for Merrill Lynch,
Pierce, Fenner & Smith Incorporated and Stephens Inc., a copy of whose
engagement agreements have been or will be provided to the Company, neither
Parent nor any of its Subsidiaries has employed any investment banker, broker,
finder or intermediary in connection with the transactions contemplated hereby
who might be entitled to any fee or any commission in connection with or upon
consummation of the Merger.
Section 4.15. Pooling of Interests. Neither Parent nor any of
its Subsidiaries has taken any action or failed to take any action which action
or failure (without giving effect to any actions or failures to act by the
Company or any of its
25
<PAGE>
Subsidiaries) would prevent the treatment of the Merger as a pooling of
interests for accounting purposes.
Section 4.16. Opinions of Financial Advisors. The Board of
Directors of Parent has received the opinions of Merrill Lynch, Pierce, Fenner &
Smith Incorporated and of Stephens Inc., dated the date of this Agreement,
substantially to the effect that, as of such date, the Conversion Fraction is
fair to Parent from a financial point of view. Parent has delivered a complete
and accurate copy of such opinion to the Company.
Section 4.17. Tax Matters. (a) All federal, state, local and
foreign Tax Returns required to be filed by or on behalf of Parent, each of its
Subsidiaries, and each affiliated, combined, consolidated or unitary group of
which Parent or any of its Subsidiaries (i) is a member (a "Current Parent
Group") or (ii) has been a member within six years prior to the date hereof but
is not currently a member, but only insofar as any such Tax Return relates to a
taxable period ending on a date within the last six years (a "Past Parent
Group," together with Current Parent Groups, a "Parent Affiliated Group") have
been timely filed, and all such Tax Returns are complete and accurate except to
the extent any failure to file or any inaccuracies in filed returns would not,
individually or in the aggregate, have a Material Adverse Effect on Parent (it
being understood that the representations made in this Section, to the extent
that they relate to Past Parent Groups, are made to the knowledge of Parent).
All Taxes due and owing by Parent, any Subsidiary of Parent or any Parent
Affiliated Group have been timely paid, or adequately reserved for, except to
the extent any failure to pay or reserve would not, individually or in the
aggregate, have a Material Adverse Effect on Parent. There is no audit
examination, deficiency, refund litigation, proposed adjustment or matter in
controversy with respect to any Taxes due and owing by Parent, any Subsidiary of
Parent or any Affiliated Group which would, individually or in the aggregate,
have a Material Adverse Effect on Parent. All assessments for Taxes due and
owing by Parent, any Subsidiary of Parent or any Parent Affiliated Group with
respect to completed and settled examinations or concluded litigation have been
paid. Parent and each of its Subsidiaries have complied in all material respects
with all rules and regulations relating to the payment and withholding of Taxes,
except to the extent any such failure to comply would not, individually or in
the aggregate, have a Material Adverse Effect on Parent.
(b) Neither Parent nor any of its Subsidiaries knows of any
fact or has taken any action that could reasonably be expected to prevent the
Merger from qualifying as a reorganization within the meaning of Section 368(a)
of the Code.
26
<PAGE>
(c) Neither Parent nor any of its Subsidiaries is a party to
or bound by (or has any obligation under) any Tax sharing, allocation,
indemnity, or similar contract.
Section 4.18. Material Contracts. Except as set forth in the
Parent SEC Reports, neither Parent nor any of its Subsidiaries is a party to or
bound by any "material contract" (as such term is defined in item 601(b)(10) of
Regulation S-K of the SEC)(all contracts of the type described in this Section
4.18 being referred to herein as "Parent Material Contracts"). Each Parent
Material Contract is valid and binding on Parent and is in full force and
effect, and Parent and each of its Subsidiaries have in all material respects
performed all obligations required to be performed by them to date under each
Parent Material Contract, except where such noncompliance, individually or in
the aggregate, would not have a Material Adverse Effect on Parent. Neither
Parent nor any of its Subsidiaries knows of, or has received notice of, any
violation or default under any Parent Material Contract except for such
violations or defaults as would not in the aggregate have a Material Adverse
Effect on the Parent.
ARTICLE V
COVENANTS AND AGREEMENTS
Section 5.1. Conduct of Business by the Company or Parent.
From and after the date hereof and prior to the Effective Time or the date, if
any, on which this Agreement is earlier terminated pursuant to Section 7.1 (the
"Termination Date"), and except (i) as may be required by law (provided that any
party availing itself of such exception must first consult with the other
party), (ii) as may be agreed in writing by Parent and the Company, (iii) as may
be expressly permitted pursuant to this Agreement, or (iv) as set forth in
Section 5.1 of the Company Disclosure Schedule or the Parent Disclosure
Schedule, as the case may be:
(a) the Company:
(i) shall, and shall cause each of its Subsidiaries to,
conduct its operations according to their ordinary and usual course of business
in substantially the same manner as heretofore conducted;
(ii) shall use its reasonable best efforts, and shall cause
each of its Subsidiaries to use its reasonable best efforts, to preserve intact
its business organiza tion and goodwill (except that any of its Subsidiaries may
be merged with or into, or be consolidated with any of its other Subsidiaries or
may be liquidated into the
27
<PAGE>
Company or any of its Subsidiaries), keep available the services of its current
officers and other key employees and preserve its relationships with those
persons having business dealings with the Company and its Subsidiaries;
(iii) shall confer at such times as Parent may reasonably
request with one or more representatives of Parent to report material
operational matters and the general status of ongoing operations (to the extent
Parent reasonably requires such information);
(iv) shall notify Parent of any emergency or other change in
the normal course of its or its Subsidiaries' respective businesses or in the
operation of its or its Subsidiaries' respective properties and of any
complaints, investigations or hearings (or communications indicating that the
same may be contemplated) of any governmen tal body or authority if such
emergency, change, complaint, investigation or hearing could have a Material
Adverse Effect on the Company;
(v) shall not, and shall not (except in the ordinary course of
business consistent with past practice) permit any of its Subsidiaries that is
not wholly owned to, authorize or pay any dividends on or make any distribution
with respect to its outstanding shares of stock;
(vi) shall not, and shall not permit any of its Subsidiaries
to, split, combine or reclassify any of its capital stock or issue or authorize
or propose the issuance of any other securities in respect of, in lieu of or in
substitution for, shares of its capital stock, except for any such transaction
by a wholly owned Subsidiary of the Company which remains a wholly owned
Subsidiary after consummation of such transaction;
(vii) shall not, and shall not permit any of its Subsidiaries
to, except in the ordinary course of business consistent with past practice,
enter into or amend any employment, severance or similar agreements or
arrangements with any of their respective directors or executive officers;
(viii) shall not, and shall not permit any of its Subsidiaries
to, authorize, propose or announce an intention to authorize or propose, or
enter into an agreement with respect to, any merger, consolidation or business
combination (other than (A) the Merger and (B) any mergers, consolidations or
business combinations with the Company's Subsidiaries entered into in the
ordinary course of business consistent with past practice or which comply with
the size of transactions limitations set forth at the end of this clause
(viii)), any acquisition of assets or securities, any
28
<PAGE>
disposition of assets or securities or any release or relinquishment of material
contract rights, in each case not in the ordinary course of business consistent
with past practice, except that the Company may acquire or dispose of assets or
securities in transactions where the fair market value of the consideration paid
or received does not exceed $25 million in any single transaction or $100
million in all such transactions;
(ix) shall not propose or adopt any amendments to its
corporate charter or by-laws;
(x) shall not, and shall not permit any of its Subsidiaries
to, issue or authorize the issuance of, or agree to issue or sell any shares of
their capital stock of any class (whether through the issuance or granting of
options, warrants, commit ments, subscriptions, rights to purchase or
otherwise);
(xi) shall not, and shall not permit any of its Subsidiaries
to, grant, confer or award any options, warrants, conversion rights or other
rights, not existing on the date hereof, to acquire any shares of its capital
stock;
(xii) shall not, and shall not permit any of its Subsidiaries
to, purchase or redeem any shares of its stock or any rights, warrants or
options to acquire any such shares;
(xiii) shall not, and shall not permit any of its Subsidiaries
to, amend in any respect the terms of their respective employee benefit plans,
programs or arrangements or any severance or similar agreements or arrangements
in existence on the date hereof, or adopt any new employee benefit plans,
programs or arrangements or any severance or similar agreements or arrangements;
(xiv) shall not, and shall not permit any of its Subsidiaries
to, incur, assume or prepay any indebtedness or any other material liabilities,
other than in the ordinary course of business consistent with past practice;
(xv) shall not, and shall not permit any of its Subsidiaries
to, (i) make any loans, advances or capital contributions to, or investments in,
any other person, other than by the Company or a Subsidiary of the Company to or
in the Company or any wholly-owned Subsidiary of the Company or (ii) pay,
discharge or satisfy any claims, liabilities or obligations (absolute, accrued,
asserted or unasserted, contingent or otherwise), other than indebtedness,
issuances of debt securities, guarantees, loans, advances, capital
contributions, investments, payments, discharges or satisfactions
29
<PAGE>
incurred or committed to in the ordinary course of business consistent with past
practice;
(xvi) shall not sell, lease, license, mortgage or otherwise
encumber or subject to any Lien or otherwise dispose of any of its properties or
assets (including securitizations), other than in the ordinary course of
business consistent with past practice;
(xvii) shall not, and shall not permit any of its Subsidiaries
to, (i) make any Tax election or settle or compromise any Tax liability or (ii)
change its fiscal year;
(xviii) except as disclosed in the Company SEC Reports filed
prior to the date of this Agreement, or as required by a governmental body or
authority, shall not change its methods of accounting (including, without
limitation, make any material write-off or reduction in the carrying value of
any assets) in effect at December 31, 1997, except as required by changes in
GAAP as concurred in by the Company's independent auditors;
(xix) shall not, and shall not permit any of its Subsidiaries
to, take any action or fail to take any action which action or failure to act
would, or would be reasonably likely to, prevent the parties hereto from
accounting for the Merger in accordance with the pooling of interests method of
accounting under the requirements of Opinion No. 16 "Business Combinations" of
the Accounting Principles Board of the American Institute of Certified Public
Accountants, as amended by applicable pronouncements by the Financial Accounting
Standards Board ("APB No. 16"); and
(xx) shall not, and shall not permit any of its Subsidiaries
to, agree, in writing or otherwise, to take any of the foregoing actions or take
any action which would (x) make any representation or warranty in Article III
hereof untrue or incorrect or (y) result in any of the conditions to the Merger
set forth in Article VI not being satisfied; and
(b) the Parent:
(i) shall, and shall cause each of its Subsidiaries to,
conduct its operations according to their ordinary and usual course of business
in substantially the same manner as heretofore conducted, except that nothing
contained in this subsection 5.1(b)(i) shall limit Parent's ability to authorize
or propose, or enter into, an agreement with respect to any (A) acquisitions in
which the aggregate value of the consideration paid does not exceed $900
million, (B) dispositions of assets held for sale and other
30
<PAGE>
assets in which the aggregate value of the consideration received does not
exceed 10% of Parent's total assets, or (C) issuance of debt or equity
securities;
(ii) shall use its reasonable best efforts, and shall cause
each of its Subsidiaries to use its reasonable best efforts, to preserve intact
its business organiza tion (except that any of its Subsidiaries may be merged
with or into, or be consolidated with any of its other Subsidiaries or may be
liquidated into Parent or any of its Subsidiaries), and to preserve its
relationships with those person having business dealings with Parent and its
Subsidiaries;
(iii) shall notify the Company of any emergency or other
change in the normal course of its or its Subsidiaries' respective businesses or
in the operation of its or its Subsidiaries' respective properties and of any
complaints, investigations or hearings (or communications indicating that the
same may be contemplated) of any governmental body or authority if such
emergency, change, complaint, investigation or hearing would reasonably be
expected to have a Material Adverse Effect on Parent;
(iv) shall not, and shall not (except in the ordinary course
of business consistent with past practice) permit any of its Subsidiaries that
is not wholly owned to, authorize or pay any dividends on or make any
distribution with respect to its outstanding shares of stock, except that Parent
may continue to pay dividends on the Parent Common Stock at times consistent
with past practice and in per share amounts not in excess of 150% of the per
share amount of the most recent dividend paid on the Parent Common Stock prior
to the date of this Agreement;
(v) shall not propose or adopt any amendments to its corporate
charter or by-laws;
(vi) shall not, and shall not permit any of its Subsidiaries
to, take any action or fail to take any action which action or failure to act
would, or would be reasonably likely to, prevent the parties hereto from
accounting for the Merger in accordance with the pooling of interests method of
accounting under the requirements of APB No. 16; and
(vii) shall not, and shall not permit any of its Subsidiaries
to agree, in writing or otherwise, to take any of the foregoing actions or to
take any action which would (x) make any representation or warranty in Article
IV hereof untrue or incorrect or (y) result in any of the conditions to the
Merger set forth in Article VI not being satisfied.
31
<PAGE>
Section 5.2. Investigation. Each of the Company and Parent
shall afford to one another and to one another's officers, employees,
accountants, counsel and other authorized representatives full and complete
access during normal business hours, throughout the period prior to the earlier
of the Effective Time or the Termination Date, to its and its Subsidiaries'
properties, contracts, commitments, books and records and any report, schedule
or other document filed or received by it pursuant to the requirements of
federal or state securities laws and shall use their reasonable best efforts to
cause their respective representatives to furnish promptly to one another such
additional financial and operating data and other information as to its and its
Subsidiaries' respective businesses and properties as the other or its duly
authorized representatives may from time to time reasonably request, except that
nothing herein shall require either the Company or Parent or any of their
respective Subsidiaries to disclose any information to the other that would
cause significant competitive harm to such disclosing party or its affiliates if
the transactions contem plated by this Agreement are not consummated. The
parties hereby agree that each of them will treat any such information in
accordance with the Confidentiality and Standstill Agreement, dated as of August
26, 1997, between the Company and Parent (the "Confidentiality Agreement").
Notwithstanding any provision of this Agreement to the contrary, no party shall
be obligated to make any disclosure in violation of applicable laws or
regulations, including any such laws or regulations pertaining to the treatment
of classified information.
Section 5.3. Joint Proxy Material; Registration Statement. (a)
The Company and Parent shall together, or pursuant to an allocation of
responsibility to be agreed upon between them:
(i) prepare and file with the SEC as soon as is reasonably
practicable the Joint Proxy Statement and a registration statement on Form S-4
under the Securities Act with respect to the Parent Common Stock issuable in the
Merger (the "Registration Statement"), and shall use their reasonable best
efforts to have the Joint Proxy Statement cleared by the SEC under the Exchange
Act and the Registration Statement declared effective by the SEC under the
Securities Act;
(ii) as soon as is reasonably practicable take all such action
as may be required under state blue sky or securities laws in connection with
the transactions contemplated by this Agreement;
(iii) promptly prepare and file with the NYSE and such other
stock exchanges as shall be agreed upon listing applications covering the shares
of Parent Common Stock issuable in the Merger and use their reasonable best
efforts to obtain,
32
<PAGE>
prior to the Effective Time, approval for the listing of such Parent Common
Stock, subject only to official notice of issuance;
(iv) cooperate with one another in order to lift any
injunctions or remove any other impediment to the consummation of the
transactions contemplated herein; and
(v) cooperate with one another in obtaining opinions of
Sonnenschein Nath & Rosenthal, counsel to the Company, and Skadden, Arps, Slate,
Meagher & Flom LLP, counsel to Parent, dated as of the Effective Time, to the
effect that the Merger will qualify as a reorganization within the meaning of
Section 368(a) of the Code. In connection therewith, each of the Company, Parent
and Merger Sub shall deliver to Sonnenschein Nath & Rosenthal and Skadden, Arps,
Slate, Meagher & Flom LLP, respectively, representation letters in form and
substance reasonably satisfactory to such tax counsel.
(b) Subject to the limitations contained in Section 5.2, the
Company and Parent shall each furnish to one another and to one another's
counsel all such information as may be required in order to effect the foregoing
actions and each represents and warrants to the other that no information
furnished by it in connection with such actions or otherwise in connection with
the consummation of the transactions contemplated by this Agreement will contain
any untrue statement of a material fact or omit to state a material fact
required to be stated in order to make any information so furnished, in light of
the circumstances under which it is so furnished, not misleading.
(c) The Company and Parent shall cause the Joint Proxy
Statement to be mailed to their respective stockholders, in each case as
promptly as practicable after the Registration Statement is declared effective
under the Securities Act.
(d) The Company shall, as soon as practicable following the
date of this Agreement, duly call, give notice of, convene and hold a meeting of
its stockholders (the "Company Meeting") for the purpose of obtaining the
Company Stockholder Approval and shall, through its Board of Directors,
recommend to its stockholders the adoption of this Agreement, the Merger and the
other transactions contemplated hereby. Without limiting the generality of the
foregoing but subject to its rights to terminate this Agreement pursuant to
Section 7.1, the Company agrees that its obligations pursuant to the first
sentence of this Section 5.3(d) shall not be affected by the commencement,
public proposal, public disclosure or communication to the Company of any
Takeover Proposal (as defined in Section 5.9).
33
<PAGE>
(e) Parent shall, as soon as practicable following the date of
this Agreement, duly call, give notice of, convene and hold a meeting of its
stockholders (the "Parent Meeting") for the purpose of obtaining the Parent
Stockholder Approval and shall, through its Board of Directors, recommend to its
stockholders that they approve the issuance of the Merger Consideration.
(f) Each of the Company and Parent will use their reasonable
best efforts to hold the Company Meeting and the Parent Meeting on the same date
and as soon as practicable after the date hereof.
Section 5.4. Affiliate Agreements.
(a) The Company shall, prior to the Effective Time, deliver to
Parent a list (reasonably satisfactory to counsel for Parent), setting forth the
names and addresses of all persons who are, at the time of the Company Meeting,
in the Company's reasonable judgment, "affiliates" of the Company for purposes
of Rule 145 under the Securities Act or under applicable SEC accounting releases
with respect to pooling of interests accounting treatment. The Company shall
furnish such information and documents as Parent may reasonably request for the
purpose of reviewing such list. The Company shall use its reasonable best
efforts to cause each person who is identified as an "affiliate" in the list
furnished pursuant to this Section 5.4 to execute a written agreement on or
prior to the mailing of the Joint Proxy Statement, substantially in the form of
Exhibit A hereto.
(b) Parent shall, prior to the Effective Time, deliver to the
Company a list (reasonably satisfactory to counsel for the Company), setting
forth the names and addresses of all persons who are, at the time of the Parent
Meeting, in Parent's reasonable judgment, "affiliates" of Parent for purposes of
Rule 145 under the Securities Act or under applicable SEC accounting releases
with respect to pooling of interests accounting treatment. Parent shall furnish
such information and documents as the Company may reasonably request for the
purpose of reviewing such list. Parent shall use its reasonable best efforts to
cause each person who is identified as an "affiliate" in the list furnished
pursuant to this Section 5.4 to execute a written agreement on or prior to the
mailing of the Joint Proxy Statement, substantially in the form of Exhibit B
hereto.
Section 5.5. Employee Stock Options, Incentive and Benefit
Plans.
(a) Simultaneously with the Merger, (i) each outstanding
option (the "Company Stock Options"), and related stock appreciation right (the
"Company
34
<PAGE>
SAR"), if any, to purchase or acquire a share of Company Common Stock under
employee incentive or benefit plans, programs or arrangements and non-employee
director plans presently maintained by the Company (the "Company Option Plans")
shall be converted into an option (together with a related stock appreciation
right of Parent, if applicable) to purchase the number of shares of Parent
Common Stock equal to the product of (x) the Conversion Fraction multiplied by
(y) the number of shares of Company Common Stock which could have been obtained
prior to the Effective Time upon the exercise of each such option, at an
exercise price per share (rounded upward to the nearest cent) equal to the
exercise price for each such share of Company Common Stock subject to an option
(and related Company SAR, if any) under the Company Option Plans divided by the
Conversion Fraction, and all references in each such option (and related Company
SAR, if any) to the Company shall be deemed to refer to Parent, where
appropriate, and (ii) Parent shall assume the obligations of the Company under
the Company Option Plans. The other terms of each such option and Company SAR,
and the plans under which they were issued, shall continue to apply in
accordance with their terms, including any provisions providing for
acceleration.
(b) Simultaneously with the Merger, each outstanding award,
including restricted stock, stock equivalents and stock units (each, a "Company
Award"), under any employee incentive or benefit plans, programs or arrangements
and non-employee director plans presently maintained by the Company which
provide for grants of equity-based awards shall be amended or converted into a
similar instrument of Parent, in each case with such adjustments to the terms of
such Company Awards as are appropriate to preserve the value inherent in such
Company Awards with no detrimental effects on the holders thereof resulting from
such conversion. The other terms of each Company Award, and the plans or
agreements under which they were issued, shall continue to apply in accordance
with their terms, including any provisions providing for acceleration. With
respect to any restricted stock awards as to which the restrictions shall have
lapsed on or prior to the Effective Time in accordance with the terms of the
applicable plans or award agreements, shares of such previously restricted stock
shall be converted into the Merger Consideration in accordance with the
provisions of Section 2.1(b). The Company agrees to use its reasonable best
efforts to obtain any consents (in a form acceptable to Parent) required of the
holders of Company Stock Options or Company Awards to the conversion described
in Sections 5.5(a) and (b) hereof.
(c) Simultaneously with the Merger, Parent shall assume and
agree to perform the Company's obligations under the termination benefit
agreements (the "Termination Benefit Agreements")(complete and accurate copies
of which have been provided to Parent) listed in Section 5.5(c) of the Company
Disclosure Schedule. This
35
<PAGE>
Section 5.5(c) shall satisfy any requirement in the Termination Benefit
Agreements that Parent expressly assume and agree to perform the Company's
obligations under such Termination Benefit Agreements.
Section 5.6. Filings; Other Action.
(a) Subject to the terms and conditions herein provided, the
Company and Parent shall (i) promptly make their respective filings and
thereafter make any other required submissions under the HSR Act, (ii) promptly
make their respective filings and thereafter make any other required submissions
under the Communications Act, (iii) use their reasonable best efforts to
cooperate with one another in (x) determining whether any filings are required
to be made with, or consents, permits, authorizations or approvals are required
to be obtained from, any third party or other governmental or regulatory bodies
or authorities of federal, state, local and foreign jurisdictions in connection
with the execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby and (y) timely making all such filings and
timely seeking all such consents, permits, authorizations or approvals, (iv) use
their reasonable best efforts to take, or cause to be taken, all other actions
and do, or cause to be done, all other things necessary, proper or advisable to
consummate and make effective the transactions contemplated hereby, including,
without limitation, taking all such further action as reasonably may be
necessary to resolve such objections, if any, as the Federal Trade Commission,
the Antitrust Division of the Department of Justice, state antitrust enforcement
authorities or competition authorities of any other nation or other jurisdiction
or any other person may assert under relevant antitrust or competition laws with
respect to the transactions contemplated hereby and to ensure that each of the
Company and Parent is a "poolable entity" eligible to participate in a
transaction to be accounted for under the pooling of interests method of
accounting.
(b) In furtherance and not in limitation of the covenants of
the parties contained in this Section 5.6, if any administrative or judicial
action or proceeding, including any proceeding by a private party, is instituted
(or threatened to be instituted) challenging any transaction contemplated by
this Agreement as violative of any Regulatory Law (as defined below), each of
the Company and Parent shall cooperate in all respects with each other and use
its respective reasonable best efforts to contest and resist any such action or
proceeding and to have vacated, lifted, reversed or overturned any decree,
judgment, injunction or other order, whether temporary, preliminary or
permanent, that is in effect and that prohibits, prevents or restricts
consummation of the transactions contemplated by this Agreement. Notwithstanding
the foregoing or any other provision of this Agreement, nothing in this Section
5.6
36
<PAGE>
shall limit a party's right to terminate this Agreement pursuant to Section
7.1(b) or 7.1(c) so long as such party has up to then complied in all respects
with its obligations under this Section 5.6.
(c) If any objections are asserted with respect to the
transactions contemplated hereby under any Regulatory Law or if any suit is
instituted by any governmental body or authority or any private party
challenging any of the transactions contemplated hereby as violative of any
Regulatory Law, each of the Company and Parent shall use its reasonable best
efforts to resolve any such objections or challenge as such governmental body or
authority or private party may have to such transactions under such Regulatory
Law so as to permit consummation of the transactions contemplated hereby. For
purposes of this Agreement, "Regulatory Law" means the Sherman Act, as amended,
the Clayton Act, as amended, the HSR Act, the Federal Trade Commission Act, as
amended, the Communications Act and all other federal, state or foreign, if any,
statutes, rules, regulations, orders, decrees, administrative and judicial
doctrines and other laws that are designed or intended to prohibit, restrict or
regulate actions having the purpose or effect of monopolization or restraint of
trade or lessening competition, whether in the communications industry or
otherwise, through merger or acquisition.
Section 5.7. Further Assurances. In case at any time after the
Effective Time any further action is necessary or desirable to carry out the
purposes of this Agreement, the proper officers of the Company and Parent shall
take all such necessary action.
Section 5.8. Takeover Statute. If any "fair price,"
"moratorium," "control share acquisition" or other form of antitakeover statute
or regulation shall become applicable to the transactions contemplated hereby,
each of the Company and Parent and the members of their respective Boards of
Directors shall grant such approvals and take such actions as are reasonably
necessary so that the transactions contemplated hereby may be consummated as
promptly as practicable on the terms contemplated hereby and otherwise act to
eliminate or minimize the effects of such statute or regulation on the
transactions contemplated hereby.
Section 5.9. No Solicitation. From and after the date hereof,
the Company will not, and shall use its reasonable best efforts not to permit,
any of its officers, directors, employees, attorneys, financial advisors, agents
or other representatives or those of any of its Subsidiaries to, directly or
indirectly, solicit, initiate or knowingly encourage (including by way of
furnishing information) any Takeover Proposal from any person or engage in or
continue discussions or
37
<PAGE>
negotiations relating thereto, except that, so long as the Company is in
compliance with its obligations under this Section 5.9, the Company may engage
in discussions or negotiations with, and furnish information concerning the
Company and its Subsidiar ies, businesses, properties or assets to, any third
party which has made an unsolicited Takeover Proposal if and only to the extent
that the Board of Directors of the Company concludes in good faith after
consultation with, and based upon the advice of, its outside counsel (who may be
its regularly engaged outside counsel) at a meeting of the Board that the
failure to take such action would present a reasonable possibility of violating
the obligations of such Board to the Company or to the Company's stockholders
under applicable law. The Company will promptly (but in no case later than 36
hours) notify Parent of the receipt of any Takeover Proposal, including the
material terms and conditions thereof (and any change in the material terms and
conditions thereof) and the identity of the person making such Takeover
Proposal, and will promptly (but in no case later than 36 hours) notify Parent
of any determination by the Company's Board of Directors that a Superior
Proposal (as hereinafter defined) has been made. As used in this Agreement, (i)
"Takeover Proposal" shall mean any bona fide proposal or offer made by any third
party prior to the stockholder vote at the Company Meeting (other than a
proposal or offer by Parent or any of its Subsidiaries) for a merger,
consolidation or other business combination involving, or any purchase of, all
or substantially all of the assets or more than 50% of the voting securities of,
the Company, and (ii) "Superior Proposal" shall mean a bona fide Takeover
Proposal made by a third party on terms that a majority of the members of the
Board of Directors of the Company determines in their good faith reasonable
judgment (based on the advice of an independent financial advisor) is more
favorable to the Company and to its stockholders than the transactions
contemplated hereby and for which any required financing is fully committed.
Section 5.10. Public Announcements. The Company and Parent
will consult with and provide each other the opportunity to review and comment
upon any press release or other public statement or comment prior to the
issuance of such press release or other public statement or comment relating to
this Agreement or the transactions contemplated herein and shall not issue any
such press release or other public statement or comment prior to such
consultation except as may be required by law or by obligations pursuant to any
listing agreement with any national securities exchange.
Section 5.11. Indemnification and Insurance. Parent and Merger
Sub agree that all rights to exculpation and indemnification for acts or
omissions occurring prior to the Effective Time now existing in favor of the
current or former directors or officers (the "Indemnified Parties") of the
Company as provided in its certificate of
38
<PAGE>
incorporation or by-laws or in any agreement shall survive the Merger and shall
continue in full force and effect in accordance with their terms. For six years
from the Effective Time, Parent shall indemnify the Indemnified Parties to the
same extent as such Indemnified Parties are entitled to indemnification pursuant
to the preceding sentence. For a period of five years from the Effective Time,
Parent shall either cause to be maintained in effect the current policies of
directors' and officers' liability insurance and fiduciary liability insurance
maintained by the Company or provide substitute policies of at least the same
coverage and amounts containing terms and conditions which are, in the
aggregate, no less advantageous to the insured with respect to claims arising
from facts or events that occurred on or before the Effective Time, except that
in no event shall Parent be required to pay with respect to such insurance
policies in any one year more than $750,000.
Section 5.12. Accountants' "Comfort" Letters. The Company and
Parent will each use reasonable best efforts to cause to be delivered to each
other letters from their respective independent accountants, dated as of a date
within two business days before the date of the Registration Statement, in form
reasonably satisfactory to the recipient and customary in scope for comfort
letters delivered by independent accountants in connection with registration
statements on Form S-4 under the Securities Act.
Section 5.13. Additional Reports and Information.
(a) The Company and Parent shall each furnish to the other
copies of any reports of the type referred to in Sections 3.4 and 4.4 which it
files with the SEC on or after the date hereof, and each of the Company and
Parent, as the case may be, represents and warrants that as of the respective
dates thereof, such reports will not contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary
to make the statement therein, in light of the circumstances under which they
were made, not misleading. Any unaudited consolidated interim financial
statements included in such reports (including any related notes and schedules)
will fairly present the financial position of the Company and its consolidated
Subsidiaries or Parent and its consolidated Subsidiaries, as the case may be, as
of the dates thereof and the results of operations and changes in financial
position or other information included therein for the periods or as of the date
then ended (subject, where appropriate, to normal year-end adjustments), in each
case in accordance with past practice and GAAP consistently applied during the
periods involved (except as otherwise disclosed in the notes thereto).
39
<PAGE>
(b) The financial statements and management's discussion and
analysis contained in the Company's Annual Report on Form 10-K for the year
ended December 31, 1997 (the "Company 1997 10-K"), when filed with the SEC, will
not vary in any material respect from the financial statements and management's
discussion and analysis contained in the draft of the Company's Annual Report to
Stockholders provided to Parent prior to the date hereof.
(c) The Company shall provide Parent with a copy of the
Company 1997 10-K no less than three business days prior to filing it with the
SEC and provide as soon as practicable any changes thereto.
(d) Within seven days of the date hereof, the Company shall
provide a written schedule to Parent setting forth (i) the taxable years of the
Company for which the statute of limitations with respect to Material State
income Taxes have not expired, and (ii) with respect to Material State income
Taxes, for all taxable years for which the statute of limitations has not
expired, those years for which examinations have been completed, those years for
which examinations are presently being conducted, and those years for which
examinations have not yet been initiated.
Section 5.14. Company Rights Plans. No later than the date
hereof, the Company shall amend the Company Rights Plan to effect the changes
thereto contemplated by the form of amendment attached hereto as Exhibit C.
Except as set forth in Exhibit C, the Company shall not amend, modify or
supplement the Company Rights Plan without the prior written consent of Parent.
Section 5.15. Control of Other Party's Business. Nothing
contained in this Agreement shall give the Company, directly or indirectly, the
right to control or direct the Parent's operations prior to the Effective Time.
Nothing contained in this Agreement shall give the Parent, directly or
indirectly, the right to control or direct the Company's operations prior to the
Effective Time. Prior to the Effective Time, each of the Company and the Parent
shall exercise, consistent with the terms and conditions of this Agreement,
complete control and supervision over its respective operations.
Section 5.16. Board Seats and Officers. Prior to the Effective
Time, Parent will take all actions necessary to elect certain Company directors
as directors of Parent and certain Company officers as officers of Parent (or of
a Subsidiary of Parent), in the manner specified in Section 5.16 of the Parent
Disclosure Schedule.
40
<PAGE>
ARTICLE VI
CONDITIONS TO THE MERGER
Section 6.1. Conditions to Each Party's Obligation to Effect
the Merger. The respective obligations of each party to effect the Merger shall
be subject to the fulfillment at or prior to the Effective Time of the following
conditions:
(a) The Company Stockholder Approval and the Parent
Stockholder Approval shall have been obtained all in accordance with applicable
law and the rules of the NYSE.
(b) No statute, rule, regulation, executive order, decree,
ruling or injunction shall have been enacted, entered, promulgated or enforced
by any court or other tribunal or governmental body or authority which prohibits
the consummation of the Merger substantially on the terms contemplated hereby
and shall continue to be in effect.
(c) The Registration Statement shall have become effective in
accordance with the provisions of the Securities Act and no stop order
suspending such effectiveness shall have been issued and remain in effect.
(d) The shares of Parent Common Stock issuable in the Merger
shall have been approved for listing on the NYSE, subject only to official
notice of issuance.
(e) Any applicable waiting period under the HSR Act shall have
expired or been terminated and any other Company Required Approvals and Parent
Required Approvals shall have been obtained, except where the failure to obtain
such other Company Required Approvals and Parent Required Approvals would not
have a Material Adverse Effect on the Company or Parent, as the case may be.
(f) Parent and the Company shall have received a letter of
Parent's independent public accountants, dated as of the Effective Time, in form
and substance reasonably satisfactory to Parent, stating that Parent's
independent public accountants concur with management's conclusion that the
Merger will qualify as a transaction to be accounted for by the parties hereto
in accordance with the pooling of interests method of accounting under the
requirements of APB No. 16.
41
<PAGE>
Section 6.2. Conditions to Obligation of the Company to Effect
the Merger. The obligation of the Company to effect the Merger is further
subject to the fulfillment of the following conditions:
(a)(i) The representations and warranties of Parent contained
herein shall be true and correct in all respects (but without regard to any
materiality qualifications or references to Material Adverse Effect contained in
any specific representation or warranty) as of the Effective Time with the same
effect as though made as of the Effective Time except (x) for changes
specifically permitted by the terms of this Agreement, (y) that the accuracy of
representations and warranties that by their terms speak as of the date of this
Agreement or some other date will be determined as of such date and (z) where
any such failure of the representations and warranties in the aggregate to be
true and correct in all respects would not have a Material Adverse Effect on
Parent, (ii) Parent shall have performed in all material respects all
obligations and complied with all covenants required by this Agreement to be
performed or complied with by it prior to the Effective Time and (iii) Parent
shall have delivered to the Company a certificate, dated the Effective Time and
signed by its Chief Executive Officer or President certifying to both such
effects.
(b) The Company shall have received an opinion of Sonnenschein
Nath & Rosenthal, tax counsel to the Company, dated as of the Effective Time, to
the effect that the Merger will qualify as a reorganization within the meaning
of Section 368(a) of the Code. The issuance of such opinion shall be conditioned
upon the receipt by such tax counsel of representation letters from each of
Parent, Merger Sub and the Company, in each case, in form and substance
reasonably satisfactory to such tax counsel. The specific provisions of each
such representation letter shall be in form and substance reasonably
satisfactory to such tax counsel, and each such representation letter shall be
dated on or before the date of such opinion and shall not have been withdrawn or
modified in any material respect.
Section 6.3. Conditions to Obligation of Parent to Effect the
Merger. The obligation of Parent to effect the Merger is further subject to the
fulfillment of the following conditions:
(a)(i) The representations and warranties of the Company
contained herein shall be true and correct in all respects (but without regard
to any materiality qualifications or references to Material Adverse Effect
contained in any specific representation or warranty) as of the Effective Time
with the same effect as though made as of the Effective Time except (x) for
changes specifically permitted by the terms of this Agreement, (y) that the
accuracy of representations and warranties that
42
<PAGE>
by their terms speak as of the date of this Agreement or some other date will be
determined as of such date and (z) where any such failure of the representations
and warranties in the aggregate to be true and correct in all respects would not
have a Material Adverse Effect on the Company, (ii) the Company shall have
performed in all material respects all obligations and complied with all
covenants required by this Agreement to be performed or complied with by it
prior to the Effective Time and (iii) the Company shall have delivered to Parent
a certificate, dated the Effective Time and signed by its Chief Executive
Officer or Executive Vice President certifying to both such effects.
(b) Parent shall have received an opinion of Skadden, Arps,
Slate, Meagher & Flom LLP, tax counsel to Parent, dated as of the Effective
Time, to the effect that the Merger will qualify as a reorganization within the
meaning of Section 368(a) of the Code. The issuance of such opinion shall be
conditioned upon the receipt by such tax counsel of representation letters from
each of Parent, Merger Sub and the Company, in each case, in form and substance
reasonably satisfactory to such tax counsel. The specific provisions of each
such representation letter shall be in form and substance reasonably
satisfactory to such tax counsel, and each such representation letter shall be
dated on or before the date of such opinion and shall not have been withdrawn or
modified in any material respect.
ARTICLE VII
TERMINATION
Section 7.1. Termination or Abandonment. Notwithstanding
anything contained in this Agreement to the contrary, this Agreement may be
terminated and abandoned at any time prior to the Effective Time, whether before
or after any approval of the matters presented in connection with the Merger by
the respective stockholders of the Company and Parent:
(a) by the mutual written consent of the Company and Parent;
(b) by either the Company or Parent if (i) the Effective Time
shall not have occurred on or before November 30, 1998 and (ii) the party
seeking to terminate this Agreement pursuant to this clause 7.1(b) shall not
have breached in any material respect its obligations under this Agreement or
the Option Agreement in any manner that shall have proximately contributed to
the failure to consummate the Merger on or
43
<PAGE>
before such date, except that if, as of November 30, 1998, all conditions set
forth in Section 6.1, 6.2 and 6.3 of this Agreement have been satisfied or
waived other than receipt of the requisite approval of the FCC, then either
Parent or the Company may extend the Termination Date to February 28, 1999, by
providing written notice to the other party on November 30, 1998;
(c) by either the Company or Parent if (i) a statute, rule,
regulation or executive order shall have been enacted, entered or promulgated
prohibiting the consummation of the Merger substantially on the terms
contemplated hereby or (ii) an order, decree, ruling or injunction shall have
been entered permanently restraining, enjoining or otherwise prohibiting the
consummation of the Merger substantially on the terms contemplated hereby and
such order, decree, ruling or injunction shall have become final and
non-appealable and the party seeking to terminate this Agreement pursuant to
this clause 7.1(c)(ii) shall have used its reasonable best efforts to remove
such injunction, order or decree;
(d) by either the Company or Parent if the approvals of the
stockholders of either the Company or Parent contemplated by this Agreement
shall not have been obtained by reason of the failure to obtain the required
vote at a duly held meeting of stockholders or of any adjournment thereof;
(e) by either the Company or Parent if the Board of Directors
of the Company reasonably determines that a Takeover Proposal constitutes a
Superior Proposal, except that the Company may not terminate this Agreement
pursuant to this clause 7.1(e) unless and until (i) three business days have
elapsed following delivery to Parent of a written notice of such determination
by the Board of Directors of the Company and during such three business day
period the Company (x) informs Parent of the terms and conditions of the
Takeover Proposal and the identity of the person making the Takeover Proposal
and (y) otherwise cooperates with Parent with respect thereto (subject, in the
case of this clause (y), to the condition that the Board of Directors of the
Company shall not be required to take any action that it believes, after
consultation with outside legal counsel, would present a reasonable possibility
of violating its obligations to the Company or the Company's stockholders under
applicable law) with the intent of enabling Parent to agree to a modification of
the terms and conditions of this Agreement so that the transactions contemplated
hereby may be effected, (ii) at the end of such three business day period the
Board of Directors of the Company continues reasonably to believe that the
Takeover Proposal constitutes a Superior Proposal, (iii) simultaneously with
such termination the Company enters into a definitive acquisition, merger or
similar agreement to effect the
44
<PAGE>
Superior Proposal and (iv) the Company pays to Parent the amount specified and
within the time period specified in Section 7.2;
(f) by Parent if the Board of Directors of the Company shall
have (i) withdrawn or modified in a manner adverse to Parent its approval or
recommendation of this Agreement and the transactions contemplated hereby or
(ii) approved or recommended, or proposed publicly to approve or recommend, any
Takeover Proposal;
(g) by Parent if a tender offer or exchange offer for 50% or
more of the outstanding shares of capital stock of the Company is commenced
prior to the Company Meeting, and the Board of Directors of the Company fails to
recommend against acceptance of such tender offer or exchange offer by its
stockholders (including by taking no position with respect to the acceptance of
such tender offer or exchange offer by its stockholders) within the time period
specified by Rule 14e-2; or
(h) by either the Company or Parent if there shall have been a
material breach by the other of any of its representations, warranties,
covenants or agreements contained in this Agreement or the Option Agreement,
which if not cured would cause the conditions set forth in Sections 6.2(a) or
6.3(a), as the case may be, not to be satisfied, and such breach shall not have
been cured within 30 days after notice thereof shall have been received by the
party alleged to be in breach.
In the event of termination of this Agreement pursuant to this Section 7.1, this
Agreement shall terminate (except for the confidentiality agreement referred to
in Section 5.2 and the provisions of Sections 7.2, 8.2, 8.4 and 8.5), and there
shall be no other liability on the part of the Company or Parent to the other
except liability arising out of an intentional breach of this Agreement or as
provided for in the Confidentiality Agreement.
Section 7.2. Termination Fee. Notwithstanding any provision in
this Agreement to the contrary, if (i) this Agreement is terminated by the
Company or Parent pursuant to Section 7.1(e), (ii) this Agreement is terminated
by Parent pursuant to Section 7.1(f), or (iii) (x) prior to the termination of
this Agreement, a bona fide Takeover Proposal is commenced, publicly proposed or
publicly disclosed and not withdrawn, (y) this Agreement is terminated by the
Company pursuant to Section 7.1(b) or by Parent or the Company pursuant to
Section 7.1(d) (but only due to the failure of the Company stockholders to
approve the Merger) or by Parent pursuant to Section 7.1(g) and (z) concurrently
with or within twelve months after such
45
<PAGE>
termination a Takeover Proposal shall have been consummated, then, in each case,
the Company shall (without prejudice to any other rights of Parent against the
Company) pay to Parent a fee (the "Termination Fee") of $100 million in cash,
such payment to be made simultaneously with such termination in the case of a
termination by the Company pursuant to Section 7.1(e) and promptly, but in no
event later than the second business day following a termination by Parent
pursuant to Section 7.1(e) or 7.1(f) and, in the case of clause (iii), upon the
consummation of such Takeover Proposal.
Section 7.3. Amendment or Supplement. At any time before or
after approval of the matters presented in connection with the Merger by the
respective stockholders of the Company and Parent and prior to the Effective
Time, this Agreement may be amended or supplemented in writing by the Company
and Parent with respect to any of the terms contained in this Agreement, except
that following approval by the stockholders of the Company and Parent there
shall be no amendment or change to the provisions hereof which by law or in
accordance with the rules of any relevant stock exchange requires further
approval by such stockholders without such further approval nor any amendment or
change not permitted under applicable law.
Section 7.4. Extension of Time, Waiver, Etc. At any time prior
to the Effective Time, the Company and Parent may:
(a) extend the time for the performance of any of the
obligations or acts of the other party;
(b) waive any inaccuracies in the representations and
warranties of the other party contained herein or in any document delivered
pursuant hereto; or
(c) waive compliance with any of the agreements or conditions
of the other party contained herein.
Notwithstanding the foregoing, no failure or delay by the
Company or Parent in exercising any right hereunder shall operate as a waiver
thereof nor shall any single or partial exercise thereof preclude any other or
further exercise of any other right hereunder. Any agreement on the part of a
party hereto to any such extension or waiver shall be valid only if set forth in
an instrument in writing signed on behalf of such party.
46
<PAGE>
ARTICLE VIII
MISCELLANEOUS
Section 8.1. No Survival of Representations and Warranties.
None of the representations and warranties in this Agreement or in any
instrument delivered pursuant to this Agreement shall survive the Merger.
Section 8.2. Expenses. Whether or not the Merger is
consummated, all costs and expenses incurred in connection with the Merger, this
Agreement and the transactions contemplated hereby shall be paid by the party
incurring or required to incur such expenses, except expenses incurred in
connection with the printing and filing of the Registration Statement and the
printing and mailing of the Joint Proxy Statement (including applicable SEC
filing fees) shall be shared equally by the Company and Parent.
Section 8.3. Counterparts; Effectiveness. This Agreement may
be executed in two or more consecutive counterparts, each of which shall be an
original, with the same effect as if the signatures thereto and hereto were upon
the same instrument, and shall become effective when one or more counterparts
have been signed by each of the parties and delivered (by telecopy or otherwise)
to the other parties.
Section 8.4. Governing Law. This Agreement shall be governed
by and construed in accordance with the laws of the State of Delaware, without
regard to the principles of conflicts of laws thereof.
Section 8.5. Jurisdiction. Each of the parties hereto (i)
consents to submit itself to the personal jurisdiction of any Federal court
located in the State of Delaware or any Delaware state court in the event any
dispute arises out of this Agreement or any of the transactions contemplated by
this Agreement, (ii) agrees that it will not attempt to deny or defeat such
personal jurisdiction by motion or other request for leave from any such court,
and (iii) agrees that it will not bring any action relating to this Agreement or
any of the transactions contemplated by this Agreement in any court other than a
Federal court sitting in the State of Delaware or a Delaware state court.
Section 8.6. Notices. All notices and other communications
hereunder shall be in writing (including telecopy or similar writing) and shall
be effective (a) if
47
<PAGE>
given by telecopy, when such telecopy is transmitted to the telecopy number
specified in this Section 8.6 and the appropriate telecopy confirmation is
received or (b) if given by any other means, when delivered at the address
specified in this Section 8.6:
To Parent or Merger Sub:
ALLTEL Corporation
One Allied Drive
Little Rock, Arkansas 72202
Attention: Chief Executive Officer
(with a copy to the General Counsel)
Telecopy: (501) 905-0962
copy to:
Skadden, Arps, Slate, Meagher & Flom LLP
919 Third Avenue
New York, New York 10022
Attention: J. Michael Schell, Esq.
Telecopy: (212) 735-2000
To the Company:
360 Communications Company
8725 West Higgins Road
Chicago, Illinois 60631
Attention: Kevin C. Gallagher, Esq.
Telecopy: (773) 693-7432
copy to:
Sonnenschein Nath & Rosenthal
8000 Sears Tower
Chicago, Illinois 60606
Attention: Donald G. Lubin, Esq.
Telecopy: (312) 876-7934
Section 8.7. Assignment; Binding Effect. Neither this
Agreement nor any of the rights, interests or obligations hereunder shall be
assigned by any of the
48
<PAGE>
parties hereto (whether by operation of law or otherwise) without the prior
written consent of the other parties. Subject to the preceding sentence, this
Agreement shall be binding upon and shall inure to the benefit of the parties
hereto and their respective successors and assigns.
Section 8.8. Severability. Any term or provision of this
Agreement which is invalid or unenforceable in any jurisdiction shall, as to
that jurisdiction, be ineffective to the extent of such invalidity or
unenforceability without rendering invalid or unenforceable the remaining terms
and provisions of this Agreement in any other jurisdiction. If any provision of
this Agreement is so broad as to be unenforceable, such provision shall be
interpreted to be only so broad as is enforceable.
Section 8.9. Enforcement of Agreement. The parties hereto
agree that money damages or other remedy at law would not be a sufficient or
adequate remedy for any breach or violation of, or a default under, this
Agreement by them and that in addition to all other remedies available to them,
each of them shall be entitled to the fullest extent permitted by law to an
injunction restraining such breach, violation or default or threatened breach,
violation or default and to any other equitable relief, including, without
limitation, specific performance, without bond or other security being required.
Section 8.10. Entire Agreement; No Third-Party Beneficiaries.
This Agreement, the Option Agreement and the Confidentiality Agreement
constitute the entire agreement, and supersede all other prior agreements and
understandings, both written and oral, between the parties, or any of them, with
respect to the subject matter hereof and thereof and except for the provisions
of Section 5.11 hereof, is not intended to and shall not confer upon any Person
other than the parties hereto any rights or remedies hereunder.
Section 8.11. Headings. Headings of the Articles and Sections
of this Agreement are for convenience of the parties only, and shall be given no
substantive or interpretive effect whatsoever.
Section 8.12. Definitions. (a) References in this Agreement to
"Subsidiaries" of any party shall mean any corporation, partnership,
association, trust or other form of legal entity of which (i) more than 50% of
the outstanding voting securities are on the date hereof directly or indirectly
owned by such party, or (ii) such party or any Subsidiary of such party is a
general partner (excluding partnerships in which such party or any Subsidiary of
such party does not have a majority of the
49
<PAGE>
voting interests in such partnership). References in this Agreement (except as
specifically otherwise defined) to "affiliates" shall mean, as to any person,
any other person which, directly or indirectly, controls, or is controlled by,
or is under common control with, such person. As used in this definition,
"control" (including, with its correlative meanings, "controlled by" and "under
common control with") shall mean the possession, directly or indirectly, of the
power to direct or cause the direction of management or policies of a person,
whether through the ownership of securities or partnership of other ownership
interests, by contract or otherwise. References in the Agreement to "person"
shall mean an individual, a corporation, a partnership, an association, a trust
or any other entity, group (as such term is used in Section 13 of the Exchange
Act) or organization, including, without limitation, a governmental body or
authority.
(b) Each of the following terms is defined on the pages set
forth opposite such term:
affiliates....................................................................49
Agreement......................................................................1
APB No. 16....................................................................30
Certificate of Merger..........................................................2
Certificates...................................................................3
Closing Date...................................................................2
Code...........................................................................1
Communications Act............................................................11
Company........................................................................1
Company Affiliated Group......................................................16
Company Award.................................................................35
Company Common Stock...........................................................3
Company Disclosure Schedule....................................................8
Company Material Contracts....................................................18
Company Meeting.............................................................. 33
Company Option Plans..........................................................35
Company Preferred Stock........................................................9
Company Required Approvals....................................................11
Company Rights Plan............................................................9
Company SAR...................................................................34
Company SEC Reports...........................................................12
Company Series B Preferred Stock...............................................9
Company Stockholder Approval..................................................18
50
<PAGE>
Company Stock Options.........................................................34
Company 1997 10-K.............................................................40
Confidentiality Agreement.....................................................32
control.......................................................................49
Conversion Fraction............................................................3
Current Company Group.........................................................16
Current Parent Group..........................................................26
DGCL...........................................................................1
Disclosure Schedule...........................................................19
Effective Time.................................................................2
Environmental Claims..........................................................13
Environmental Laws............................................................13
ERISA.........................................................................14
Exchange Act..................................................................11
Exchange Agent.................................................................4
Exchange Fund..................................................................4
FCC...........................................................................11
GAAP..........................................................................12
HSR Act.......................................................................11
Indemnified Parties...........................................................38
Joint Proxy Statement.........................................................15
Lien...........................................................................9
Material Adverse Effect........................................................8
Material State................................................................17
Merger.........................................................................1
Merger Consideration...........................................................3
Merger Sub.....................................................................1
No Par Preferred Stock........................................................20
Option Agreement...............................................................1
Par Preferred Stock...........................................................20
Parent.........................................................................1
Parent Affiliated Group.......................................................26
Parent Certificates............................................................4
Parent Common Stock...........................................................20
Parent Disclosure Schedule....................................................19
Parent Material Contracts.....................................................27
Parent Meeting................................................................34
Parent Preferred Stock........................................................20
Parent Required Approvals.....................................................22
51
<PAGE>
Parent SEC Reports............................................................22
Parent Stockholder Approval...................................................25
Past Company Group............................................................16
Past Parent Group.............................................................26
PUC...........................................................................11
Registration Statement........................................................32
Regulatory Law ...............................................................37
SEC...........................................................................12
Securities Act................................................................11
Subsidiaries..................................................................49
Superior Proposal.............................................................38
Surviving Corporation..........................................................2
Takeover Proposal.............................................................38
Tax Assurance Agreement.......................................................16
Tax Return....................................................................17
Tax Sharing Agreement.........................................................16
Taxes.........................................................................17
Termination Benefit Agreements................................................35
Termination Date..............................................................27
Termination Fee...............................................................45
52
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and delivered as of the date first above written.
360 COMMUNICATIONS COMPANY
By:
Name:
Title:
ALLTEL CORPORATION
By:
Name:
Title:
PINNACLE MERGER SUB, INC.
By:
Name:
Title:
53
<PAGE>
[The Schedules and Exhibits to the Agreement and Plan of Merger have been
omitted in reliance on Item 601(b)(2) of Regulation S-K of the Securities and
Exchange Commission (the "Commission"). The Company agrees to furnish to the
Commission a copy of any omitted Schedule or Exhibit upon request.]
STOCK OPTION AGREEMENT
STOCK OPTION AGREEMENT, dated as of March 16, 1998 (the "Agree ment"),
between 360 Communications Company, a Delaware corporation ("Issuer"), and
ALLTEL Corporation, a Delaware corporation ("Grantee").
RECITALS
A. Issuer and Grantee have entered into an Agreement and Plan of
Merger, dated as of the date hereof (the "Merger Agreement"; defined terms used
but not defined herein have the meanings set forth in the Merger Agreement),
providing for, among other things, the merger of Merger Sub with and into Issuer
pursuant to the terms of the Merger; and
B. As a condition and inducement to Grantee's willingness to enter into
the Merger Agreement, Grantee has requested that Issuer agree, and Issuer has
agreed, to grant Grantee the Option (as defined below).
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth herein, Issuer
and Grantee agree as follows:
1. Grant of Option. Subject to the terms and conditions set forth
herein, Issuer hereby grants to Grantee an irrevocable option (the "Option") to
purchase up to 19.9% of the number of shares (the "Option Shares") of common
stock, par value $0.01 per share ("Issuer Common Stock"), of Issuer issued and
outstanding immediately prior to the grant of the Option at a purchase price of
$33.90 (as adjusted as set forth herein) per Option Share (the "Purchase
Price").
2. Exercise of Option. (a) Grantee may exercise the Option, with
respect to any or all of the Option Shares at any one time, subject to the
provisions of Section 2(c), upon the occurrence of a Purchase Event (as defined
in Section 7(c)), except that (i) subject to the last sentence of this Section
2(a), the Option will terminate and be of no further force and effect upon the
earliest to occur of (A) the Effective Time, (B)
1
<PAGE>
six months after the date on which a Purchase Event (as defined herein) occurs,
and (C) termination of the Merger Agreement in accordance with its terms prior
to the occurrence of a Purchase Event, unless, in the case of clause (C), the
Grantee has the right to receive a Termination Fee following such termination
upon the occurrence of certain events, in which case the Option will not
terminate until the later of (x) six months following the time such Termination
Fee becomes payable and (y) the expiration of the period in which the Grantee
has such right to receive a Termination Fee, and (ii) any purchase of Option
Shares upon exercise of the Option will be subject to compliance with the HSR
Act and the obtaining or making of any consents, approvals, orders,
notifications or authorizations, the failure of which to have obtained or made
would have the effect of making the issuance of Option Shares illegal (the
"Regulatory Approvals") and no preliminary or permanent injunction or other
order by any court of competent jurisdiction prohibiting or otherwise
restraining such issuance shall be in effect. Notwithstanding the termination of
the Option, Grantee will be entitled to purchase the Option Shares if it has
exercised the Option in accordance with the terms hereof prior to the
termination of the Option, and the termination of the Option will not affect any
rights hereunder which by their terms do not terminate or expire prior to or as
of such termination.
(b) In the event that Grantee wishes to exercise the Option, it will
send to Issuer a written notice (an "Exercise Notice"; the date of which being
herein referred to as the "Notice Date") to that effect which Exercise Notice
also specifies the number of Option Shares, if any, Grantee wishes to purchase
pursuant to this Section 2(b), the number of Option Shares, if any, with respect
to which Grantee wishes to exercise its Cash-Out Right (as defined herein)
pursuant to Section 7(c), the denominations of the certificate or certificates
evidencing the Option Shares which Grantee wishes to purchase pursuant to this
Section 2(b) and a date not earlier than 20 business days nor later than 30
business days from the Notice Date for the closing of such purchase (an "Option
Closing Date"). Any Option Closing will be at an agreed location and time in New
York, New York on the applicable Option Closing Date or at such later date as
may be necessary so as to comply with clause (ii) of Section 2(a).
(c) Notwithstanding anything to the contrary contained herein, any
exercise of the Option and purchase of Option Shares shall be subject to
compliance with applicable laws and regulations, which may prohibit the purchase
of all the Option Shares specified in the Exercise Notice without first
obtaining or making certain Regulatory Approvals. In such event, if the Option
is otherwise exercisable and Grantee wishes to exercise the Option, the Option
may be exercised in accordance with Section 2(b) and Grantee shall acquire the
maximum number of Option Shares
2
<PAGE>
specified in the Exercise Notice that Grantee is then permitted to acquire under
the applicable laws and regulations, and if Grantee thereafter obtains the
Regulatory Approvals to acquire the remaining balance of the Option Shares
specified in the Exercise Notice, then Grantee shall be entitled to acquire such
remaining balance. Issuer agrees to use its reasonable best efforts to assist
Grantee in seeking the Regulatory Approvals.
In the event (i) Grantee receives official notice that a Regulatory
Approval required for the purchase of any Option Shares will not be issued or
granted or (ii) such Regulatory Approval has not been issued or granted within
six months of the date of the Exercise Notice, Grantee shall have the right to
exercise its Cash-Out Right pursuant to Section 7(c) with respect to the Option
Shares for which such Regulatory Approval will not be issued or granted or has
not been issued or granted.
3. Payment and Delivery of Certificates. (a) At any Option Closing,
Grantee will pay to Issuer in immediately available funds by wire transfer to a
bank account designated in writing by Issuer an amount equal to the Purchase
Price multiplied by the number of Option Shares to be purchased at such Option
Closing.
(b) At any Option Closing, simultaneously with the delivery of
immediately available funds as provided in Section 3(a), Issuer will deliver to
Grantee a certificate or certificates representing the Option Shares to be
purchased at such Option Closing, which Option Shares will be free and clear of
all liens, claims, charges and encumbrances of any kind whatsoever. If at the
time of issuance of Option Shares pursuant to an exercise of the Option
hereunder, Issuer shall not have issued any securities similar to rights under a
shareholder rights plan, then each Option Share issued pursuant to such exercise
will also represent such a corresponding right with terms substantially the same
as and at least as favorable to Grantee as are provided under any Issuer
shareholder rights agreement or any similar agreement then in effect.
(c) Certificates for the Option Shares delivered at an Option Closing
will have typed or printed thereon a restrictive legend which will read
substantially as follows:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1993, AND MAY BE OFFERED, SOLD,
PLEDGED OR OTHERWISE TRANSFERRED ONLY IF SO REGISTERED OR IF ANY
EXEMPTION FROM SUCH REGISTRA TION IS AVAILABLE. SUCH SECURITIES ARE
ALSO SUBJECT TO ADDITIONAL RESTRICTIONS ON TRANSFER AS SET FORTH IN THE
3
<PAGE>
STOCK OPTION AGREEMENT, DATED AS OF MARCH 16, 1998, A COPY OF WHICH MAY
BE OBTAINED FROM THE SECRETARY OF 360 COMMUNICATIONS COMPANY AT ITS
PRINCIPAL EXECUTIVE OFFICES."
It is understood and agreed that (i) the reference to restrictions arising under
the Securities Act in the above legend will be removed by delivery of substitute
certificate(s) without such reference if such Option Shares have been sold in
compliance with the registration and prospectus delivery requirements of the
Securities Act, such Option Shares have been sold in reliance on and in
accordance with Rule 144 under the Securities Act or Grantee has delivered to
Issuer a copy of a letter from the staff of the SEC, or an opinion of counsel in
form and substance reasonably satisfactory to Issuer and its counsel, to the
effect that such legend is not required for purposes of the Securities Act and
(ii) the reference to restrictions pursuant to this Agreement in the above
legend will be removed by delivery of substitute certificate(s) without such
reference if the Option Shares evidenced by certificate(s) containing such
reference have been sold or transferred in compliance with the provisions of
this Agreement under circumstances that do not require the retention of such
reference.
4. Incorporation of Representations and Warranties of Issuer. The
representations and warranties of Issuer contained in Article III of the Merger
Agreement are hereby incorporated by reference herein with the same force and
effect as though made pursuant to this Agreement.
5. Representations and Warranties of Issuer. Issuer hereby represents
and warrants to Grantee as follows:
(a) Corporate Authorization. Issuer has the corporate power and
authority to enter into this Agreement and to carry out its obligations
hereunder. The execution and delivery of this Agreement and the consum
mation of the transactions contemplated hereby have been duly and
validly authorized by the Board of Directors of Issuer, and no other
corporate proceedings on the part of Issuer are necessary to authorize
this Agreement and the transactions contemplated hereby. This Agreement
has been duly and validly executed and delivered by Issuer, and
assuming this Agreement consti tutes a valid and binding agreement of
Grantee, this Agreement constitutes a valid and binding agreement of
Issuer, enforceable against Issuer in accor dance with its terms
(except insofar as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws
4
<PAGE>
affecting creditors' rights generally, or by principles governing the
availability of equitable remedies).
(b) Authorized Stock. Issuer has taken all necessary corporate
and other action to authorize and reserve and, subject to the
expiration or termination of any required waiting period under the HSR
Act, to permit it to issue, and, at all times from the date hereof
until the obligation to deliver Option Shares upon the exercise of the
Option terminates, shall have reserved for issuance, upon exercise of
the Option, shares of Issuer Common Stock necessary for Grantee to
exercise the Option, and Issuer will take all necessary corporate
action to authorize and reserve for issuance all additional shares of
Issuer Common Stock or other securities which may be issued pursuant to
Section 7 upon exercise of the Option. The shares of Issuer Common
Stock to be issued upon due exercise of the Option, including all
additional shares of Issuer Common Stock or other securities which may
be issuable upon exercise of the Option or any other securities which
may be issued pursuant to Section 7, upon issuance pursuant hereto,
will be duly and validly issued, fully paid and nonassessable, and will
be delivered free and clear of all liens, claims, charges and
encumbrances of any kind or nature whatsoever, including without
limitation any preemptive rights of any stockholder of Issuer.
6. Representations and Warranties of Grantee. Grantee hereby represents
and warrants to Issuer that:
(a) Corporate Authorization. Grantee has the corporate power and
authority to enter into this Agreement and to carry out its obligations
hereunder. The execution and delivery of this Agreement and the consum
mation of the transactions contemplated hereby have been duly and
validly authorized by the Board of Directors of Grantee, and no other
corporate proceedings on the part of Grantee are necessary to authorize
this Agreement and the transactions contemplated hereby. This Agreement
has been duly and validly executed and delivered by Grantee, and
assuming this Agreement constitutes a valid and binding agreement of
Issuer, this Agreement constitutes a valid and binding agreement of
Grantee, enforceable against Grantee in accordance with its terms
(except insofar as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting creditors' rights generally, or by principles governing the
availability of equitable remedies).
5
<PAGE>
(b) Purchase Not For Distribution. Any Option Shares or other
securities acquired by Grantee upon exercise of the Option will not be,
and the Option is not being, acquired by Grantee with a view to the
public distribution thereof. Neither the Option nor any of the Option
Shares will be offered, sold, pledged or otherwise transferred except
in compliance with, or pursuant to an exemption from, the registration
requirements of the Securities Act.
7. Adjustment upon Changes in Capitalization, Etc. (a) In the event of
any changes in Issuer Common Stock by reason of a stock dividend, reverse stock
split, merger, recapitalization, combination, exchange of shares, or similar
transaction, the type and number of shares or securities subject to the Option,
and the Purchase Price therefor, will be adjusted appropriately, and proper
provision will be made in the agreements governing such transaction, so that
Grantee will receive upon exercise of the Option the number and class of shares
or other securities or property that Grantee would have received with respect to
Issuer Common Stock if the Option had been exercised immediately prior to such
event or the record date therefor, as applicable.
(b) Without limiting the parties' relative rights and obligations under
the Merger Agreement, in the event that the Issuer enters into an agreement (i)
to consoli date with or merge into any person, other than Grantee or one of its
subsidiaries, and Issuer will not be the continuing or surviving corporation in
such consolidation or merger, (ii) to permit any person, other than Grantee or
one of its subsidiaries, to merge into Issuer and Issuer will be the continuing
or surviving corporation, but in connection with such merger, the shares of
Issuer Common Stock outstanding immediately prior to the consummation of such
merger will be changed into or exchanged for stock or other securities of Issuer
or any other person or cash or any other property, or the shares of Issuer
Common Stock outstanding immediately prior to the consummation of such merger
will, after such merger represent less than 50% of the outstanding voting
securities of the merged company, or (iii) to sell or otherwise transfer all or
substantially all of its assets to any person, other than Grantee or one of its
subsidiaries, then, and in each such case, the agreement governing such
transaction will make proper provision so that the Option will, upon the
consumma tion of any such transaction and upon the terms and condition set forth
herein, be con verted into, or exchanged for, an option with identical terms
appropriately adjusted to acquire the number and class of shares or other
securities or property that Grantee would have received in respect of Issuer
Common Stock if the Option had been exercised immediately prior to such
consolidation, merger, sale, or transfer, or the record date therefor, as
applicable and make any other necessary adjustments.
6
<PAGE>
(c) If, at any time during the period commencing on the occurrence of
an event as a result of which Grantee is entitled to receive the Termination Fee
pursuant to Section 7.2 of the Merger Agreement (the "Purchase Event") and
ending on the termination of the Option in accordance with Section 2, Grantee
sends to Issuer an Exercise Notice indicating Grantee's election to exercise its
right (the "Cash-Out- Right") pursuant to this Section 7(c), then Issuer shall
pay to Grantee, on the Option Closing Date, in exchange for the cancellation of
the Option with respect to such number of Option Shares as Grantee specifies in
the Exercise Notice, an amount in cash equal to such number of Option Shares
multiplied by the difference between (i) the average closing price for the 10
NYSE trading days commencing on the 12th NYSE trading day immediately preceding
the Notice Date, per share of Issuer Common Stock as reported on the NYSE
Composite Transactions Tape (or, if not listed on the NYSE, as reported on any
other national securities exchange or national securities quotation system on
which the Issuer Common Stock is listed or quoted, as reported in The Wall
Street Journal (Northeast edition), or, if not reported thereby, any other
authoritative source) (the "Closing Price") and (ii) the Purchase Price, except
that in no event shall the Issuer be required to pay to the Grantee pursuant to
this Section 7(c) an amount exceeding the product of (x) $2.00 and (y) such
number of Option Shares. Notwithstanding the termination of the Option, Grantee
will be entitled to exercise its rights under this Section 7(c) if it has
exercised such rights in accordance with the terms hereof prior to the
termination of the Option.
8. Repurchase Option. In the event that Grantee notifies Issuer of its
intention to exercise the Option pursuant to Section 2(a), Issuer may require
Grantee upon the delivery to Grantee of written notice during the period
beginning on the Notice Date and ending two days prior to the Option Closing
Date, to sell to Issuer the Option Shares acquired by Grantee pursuant to such
exercise of the Option at a purchase price per share for such sale equal to the
Purchase Price plus $2.00. The Closing of any repurchase of Option Shares
pursuant to this Section 8 shall take place immediately following consummation
of the sale of the Option Shares to Grantee on the Option Closing Date at the
location and time agreed upon with respect to such Option Closing Date.
9. Registration Rights.
(a) Grantee may by written notice (a "Registration Notice") to
Issuer request Issuer to register under the Securities Act all or any part of
the Option Shares or other securities acquired by Grantee pursuant to this
Agreement (collectively, the "Registrable Securities") in order to permit the
sale or other disposition of such securities pursuant to a bona fide, firm
commitment underwritten public offering in which Grantee
7
<PAGE>
and the underwriters shall effect as wide a distribution of such Registrable
Securities as is reasonably practicable and shall use reasonable efforts to
prevent any person or group from purchasing through such offering shares
representing more than 3% of the shares of Issuer Common Stock then outstanding
on a fully-diluted basis; provided, however, that any such Registration Notice
must relate to a number of shares equal to at least 2% of the shares of Issuer
Common Stock then outstanding on a fully-diluted basis and that any rights to
require registration hereunder shall terminate with respect to any shares that
may be sold pursuant to Rule 144(k) under the Securities Act.
(b) Issuer shall use reasonable best efforts to effect, as
promptly as practicable, the registration under the Securities Act of the
Registrable Securities requested to be registered in the Registration Notice;
provided, however, that (i) Grantee shall not be entitled to more than an
aggregate of two effective registration statements hereunder and (ii) Issuer
will not be required to file any such registration statement during any period
of time (not to exceed 40 days after a Registration Notice in the case of clause
(A) below or 90 days after a Registration Notice in the case of clauses (B) and
(C) below) when (A) Issuer is in possession of material non-public information
which it reasonably believes would be detrimental to be disclosed at such time
and, based upon the advice of outside securities counsel to Issuer, such
information would have to be disclosed if a registration statement were filed at
that time; (B) Issuer would be required under the Securities Act to include
audited financial statements for any period in such registration statement and
such financial statements are not yet available for inclusion in such
registration statement; or (C) Issuer determines, in its reasonable judgment,
that such registration would interfere with any financing, acquisition or other
material transaction involving Issuer. If the consummation of the sale of any
Registrable Securities pursuant to a registration hereunder does not occur
within 180 days after the filing with the Securities and Exchange Commission of
the initial registration statement therefor, the provisions of this Section
shall again be applicable to any proposed registration, it being understood that
Grantee shall not be entitled to more than an aggregate of two effective
registration statements hereunder. Issuer will use reasonable efforts to cause
each such registration statement to become effective, to obtain all consents or
waivers of other parties which are required therefor, and to keep such
registration statement effective for such period not in excess of 180 calendar
days from the day such registration statement first becomes effective as may be
reasonably necessary to effect such sale or other disposition. Issuer shall use
reasonable best efforts to cause any Registrable Securities registered pursuant
to this Section to be qualified for sale under the securities or blue sky laws
of such jurisdictions as Grantee may reasonably request and shall continue such
registration or qualification in effect in such jurisdictions; provided,
however, that Issuer shall not be required to qualify to do business in, or
consent to general service of process in, any jurisdiction.
8
<PAGE>
(c) If Issuer effects a registration under the Securities Act of
Issuer Common Stock for its own account or for any other stockholders of Issuer
(other than on Form S-4 or Form S-8, or any successor form), it will allow
Grantee the right to participate in such registration, and such participation
will not affect the obligation of Issuer to effect demand registration
statements for Grantee under this Section 9, except that, if the managing
underwriters of such offering advise Issuer in writing that in their opinion the
number of shares of Issuer Common Stock requested to be included in such
registration exceeds the number which can be sold in such offering, Issuer will
include the shares requested to be included therein by Grantee pro rata with the
shares intended to be included therein by Issuer.
(d) The registration rights set forth in this Section are subject
to the condition that Grantee shall provide Issuer with such information with
respect to Grantee Registrable Securities, the plan for distribution thereof,
and such other information with respect to Grantee as, in the reasonable
judgment of counsel for Issuer, is necessary to enable Issuer to include in a
registration statement all material facts required to be disclosed with respect
to a registration hereunder.
(e) A registration effected under this Section shall be effected
at Issuer's expense, except for underwriting discounts and commissions and the
fees and expenses of Grantee's counsel, and Issuer shall provide to the
underwriters such documentation (including certificates, opinions of counsel and
"comfort" letters from auditors) as are customary in connection with
underwritten public offerings and as such underwriters may reasonably require.
In connection with any registration, Grantee and Issuer agree to enter into an
underwriting agreement reasonably acceptable to each such party, in form and
substance customary for transactions of this type.
10. Transfers. The Option Shares may not be sold, assigned,
transferred, or otherwise disposed of except (i) pursuant to Section 8 hereof,
(ii) in an underwritten public offering as provided in Section 9 or (iii) to any
purchaser or transferee who would not, to the knowledge of the Grantee after
reasonable inquiry, immediately following such sale, assignment, transfer or
disposal beneficially own more than 4.9% of the then-outstanding voting power of
the Issuer, except that Grantee shall be permitted to sell any Option Shares if
such sale is made pursuant to a tender or exchange offer that has been approved
or recommended by a majority of the members of the Board of Directors of Issuer
(which majority shall include a majority of directors who were directors as of
the date hereof).
9
<PAGE>
11. Listing. If Issuer Common Stock or any other securities to be
acquired upon exercise of the Option are then listed on the NYSE (or any other
national securities exchange or national securities quotation system), Issuer,
upon the request of Grantee, will promptly file an application to list the
shares of Issuer Common Stock or other securities to be acquired upon exercise
of the Option on the NYSE (and any such other national securities exchange or
national securities quotation system) and will use reasonable efforts to obtain
approval of such listing as promptly as practicable.
12. Miscellaneous. (a) Expenses. Except as otherwise provided in the
Merger Agreement, each of the parties hereto will pay all costs and expenses
incurred by it or on its behalf in connection with the transactions contemplated
hereunder, including fees and expenses of its own financial consultants,
investment bankers, accountants and counsel.
(b) Amendment. This Agreement may not be amended, except by an
instrument in writing signed on behalf of each of the parties.
(c) Extension; Waiver. Any agreement on the part of a party to waive
any provision of this Agreement, or to extend the time for performance, will be
valid only if set forth in an instrument in writing signed on behalf of such
party. The failure of any party to this Agreement to assert any of its rights
under this Agreement or otherwise will not constitute a waiver of such rights.
(d) Entire Agreement; No Third-Party Beneficiaries. This Agreement, the
Merger Agreement (including the documents and instruments attached thereto as
exhibits or schedules or delivered in connection therewith) and the
Confidentiality Agreement (i) constitute the entire agreement, and supersede all
prior agreements and understandings, both written and oral, between the parties
with respect to the subject matter of this Agreement, and (ii) except as
provided in Section 8.10 of the Merger Agreement, are not intended to confer
upon any person other than the parties any rights or remedies.
(e) Governing Law. This Agreement will be governed by, and construed in
accordance with, the laws of the State of Delaware, regardless of the laws that
might otherwise govern under applicable principles of conflict of laws thereof.
(f) Notices. All notices, requests, claims, demands, and other
communica tions under this Agreement must be in writing and will be deemed given
if delivered personally, telecopied (which is confirmed), or sent by overnight
courier (providing
10
<PAGE>
proof of delivery) to the parties at the following addresses (or at such other
address for a party as shall be specified by like notice):
If to Issuer to:
360 Communications Company
8725 West Higgins Road
Chicago, Illinois 60631
Attention: Kevin C. Gallagher, Esq.
Telecopy: (773) 693-7432
with a copy to:
Sonnenschein Nath & Rosenthal
8000 Sears Tower
Chicago, Illinois 60606
Attention: Donald G. Lubin, Esq.
Telecopy: (312) 876-7934
If to Grantee to:
ALLTEL Corporation
One Allied Drive
Little Rock, Arkansas 72202
Attention: Chief Executive Officer
(with a copy to the General Counsel)
Telecopy: (501) 905-0962
with a copy to:
Skadden, Arps, Slate, Meagher & Flom LLP
919 Third Avenue
New York, New York 10022
Attention: J. Michael Schell
Telecopy: (212) 735-2000
(g) Assignment. Neither this Agreement, the Option nor any of the
rights, interests, or obligations under this Agreement may be assigned,
transferred or
11
<PAGE>
delegated, in whole or in part, by operation of law or otherwise, by Issuer or
Grantee without the prior written consent of the other. Any assignment, transfer
or delegation in violation of the preceding sentence will be void. Subject to
the first and second sentences of this Section 12(g), this Agreement will be
binding upon, inure to the benefit of, and be enforceable by, the parties and
their respective successors and assigns.
(h) Further Assurances. In the event of any exercise of the Option by
Grantee, Issuer and Grantee will execute and deliver all other documents and
instruments and take all other action that may be reasonably necessary in order
to consummate the transactions provided for by such exercise.
(i) Enforcement. The parties agree that irreparable damage would occur
and that the parties would not have any adequate remedy at law in the event that
any of the provisions of this Agreement were not performed in accordance with
their specific terms or were otherwise breached. It is accordingly agreed that
the parties will be entitled to an injunction or injunctions to prevent breaches
of this Agreement and to enforce specifically the terms and provisions of this
Agreement in any Federal court located in the State of Delaware or in Delaware
state court, the foregoing being in addition to any other remedy to which they
are entitled at law or in equity. In addition, each of the parties hereto (i)
consents to submit itself to the personal jurisdiction of any Federal court
located in the State of Delaware or any Delaware state court in the event any
dispute arises out of this Agreement or any of the transactions contemplated by
this Agreement, (ii) agrees that it will not attempt to deny or defeat such
personal jurisdiction by motion or other request for leave from any such court,
and (iii) agrees that it will not bring any action relating to this Agreement or
any of the transactions contemplated by this Agreement in any court other than a
Federal court sitting in the State of Delaware or a Delaware state court.
12
<PAGE>
IN WITNESS WHEREOF, Issuer and Grantee have caused this Agreement to be
signed by their respective officers thereunto duly authorized as of the day and
year first written above.
360 COMMUNICATIONS COMPANY
By:
Name:
Title:
ALLTEL CORPORATION
By:
Name:
Title:
FIRST AMENDMENT TO RIGHTS AGREEMENT
First Amendment (this "Amendment") dated as of March 16, 1998 to the
Rights Agreement dated as of March 5, 1996 (the "Rights Agreement") between 360
Communications Company, a Delaware corporation (the "Company"), and The Chase
Manhattan Bank, as successor in interest to Chemical Bank, as Rights Agent (the
"Rights Agent").
WHEREAS, the Board of Director of the Company has determined it
advisable and in the best interest of the Company and its stockholders to amend
the Rights Agreement as set forth herein immediately prior to and in connection
with the execution and delivery of (i) that certain Agreement and Plan of Merger
dated as of the date hereof among Alltel Corporation, a Delaware corporation
("Parent"), Pinnacle Merger Sub, Inc., a Delaware corporation and a wholly-owned
subsidiary of Parent, and the Company and (ii) the Stock Option Agreement dated
as of March 16, 1998 between the Company and Parent; and
WHEREAS, the Company has delivered to the Rights Agent a certificate
from an appropriate officer of the Company stating that this Amendment is in
compliance with the terms of Section 26 of the Rights Agreement and directing
the Rights Agent to execute this Amendment pursuant to Section 26 of the Rights
Agreement;
NOW, THEREFORE, in consideration of the premises and mutual agreements
set forth herein and in the Rights Agreement, the parties hereby agree as
follows:
Section 1. Amendment to Rights Agreement. The Rights Agreement is
hereby amended as set forth in this Section 1.
(a) The definition of "Exempt Person" set forth in Section 1(o)
of the Rights Agreement is hereby amended and restated to read in its entirety
as follows:
"(o) "Exempt Person" shall mean (i) the Company, (ii) any
Subsidiary of the Company, (iii) any employee benefit plan of the
Company or of any Subsidiary of the Company, or any Person or entity
organized, appointed or established by the Company for or pursuant to
the terms of any such plan, or (iv) ALLTEL or any Affiliate or Associate
of ALLTEL; provided that ALLTEL and any such Affiliate or Associate will
cease to be an Exempt Person in the event that any of ALLTEL, Merger Sub
or any Affiliate or Associate of ALLTEL or Merger Sub becomes the
Beneficial Owner of 15% or more of the shares of Common Stock then
outstanding other than pursuant to the terms of the Merger Agreement or
the Option Agreement."
(b) The definition of "Final Expiration Date" set forth in
Section 1(q) of the Rights Agreement is hereby amended and restated to read in
its entirety as follows:
- 1 -
<PAGE>
"(q) "Final Expiration Date" shall be the earlier of (i) March 5,
2006 and (ii) the time immediately prior to the Effective Time (as defined in
the Merger Agreement)."
(c) A new Section 1(mm) of the Rights Agreement is hereby added
to read in its entirety as follows:
"(mm) "ALLTEL" shall mean ALLTEL Corporation, a Delaware
corporation."
(d) A new Section 1(nn) of the Rights Agreement is hereby added
to read in its entirety as follows:
"(nn) "Merger Agreement" shall mean the Agreement and Plan
of Merger dated as of March 16, 1998 among ALLTEL, Merger Sub and the
Company, as the same may be from time to time amended."
(e) A new Section 1(oo) of the Rights Agreement is hereby added
to read in its entirety as follows:
"(oo) "Merger Sub" shall mean Pinnacle Merger Sub, Inc., a
Delaware corporation and a wholly-owned-subsidiary of ALLTEL."
(f) A new Section 1(pp) of the Rights Agreement is hereby added
to read in its entirety as follows:
"(pp) "Option Agreement" shall mean the Stock Option
Agreement dated as of March 16, 1998 between ALLTEL and the Company, as
the same may be from time to time amended."
Section 2. Miscellaneous.
(a) Capitalized terms used and not otherwise defined herein shall
have the meaning assigned to such terms in the Rights Agreement.
(b) The term "Agreement" as used in the Rights Agreement shall be
deemed to refer to the Rights Agreement as amended hereby.
(c) This Amendment shall be effective as of the time immediately
prior to the execution and delivery of the Merger Agreement, and, except as set
forth herein, the Rights Agreement shall remain in full force and effect and
shall be otherwise unaffected hereby.
(d) This Amendment may be executed in two or more counterparts,
each of which shall be deemed to be an original, but all of which together shall
constitute one and the same instrument.
(e) This Amendment shall be deemed to be a contract made under
the laws of the State of Delaware and for all purposes shall be governed by and
construed in accordance with the laws of the State of Delaware applicable to
contracts to be made and performed entirely within the State of Delaware.
- 2 -
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Amendment
to be duly executed and attested, all as of the date first above written.
360 COMMUNICATIONS COMPANY
By:
Name: Kevin C. Gallagher
Title: Senior Vice President
Attest:
By:
Name: William M. Kochlefl
Title: Assistant Secretary
CHASE MANHATTAN BANK, as successor
to Chemical Bank, as Rights Agent
By:
Name:
Title:
Attest:
By:
Name:
Title:
- 3 -
