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EXECUTION COPY
AGREEMENT AND PLAN OF MERGER
Among
WORLDCOM, INC.,
WILDCAT ACQUISITION CORP.
and
INTERMEDIA COMMUNICATIONS INC.
Dated September 1, 2000
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AGREEMENT AND PLAN OF MERGER (the "Agreement") being made and
entered into as of this 1st day of September 2000 by and among WORLDCOM, INC., a
Georgia corporation ("Wildcat"), WILDCAT ACQUISITION CORP., a Delaware
corporation ("Merger Sub") and a wholly owned Subsidiary of Wildcat, and
INTERMEDIA COMMUNICATIONS INC., a Delaware corporation ("Target").
WHEREAS, the Boards of Directors of Wildcat, Merger Sub and
Target have each determined that it is in the best interests of their respective
stockholders for Merger Sub to merge with and into Target (the "Merger") upon
the terms and subject to the conditions set forth herein;
WHEREAS, the Boards of Directors of Wildcat, Merger Sub and
Target have each approved the Merger upon the terms and subject to the
conditions set forth herein;
WHEREAS, simultaneously with the execution and delivery of
this Agreement and as a condition and inducement to the willingness of Wildcat
to enter into this Agreement, Wildcat and certain stockholders of Target are
entering into a certain stockholders agreement (the "Voting Agreement") pursuant
to which such stockholders have agreed, among other things, to vote to approve
the Merger upon the terms and subject to the conditions set forth in the Voting
Agreement; and
WHEREAS, the parties desire to qualify the Merger as a
reorganization under Section 368(a) of the Internal Revenue Code of 1986, as
amended (the "Code").
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE I
THE MERGER
1.1 Merger; Surviving Corporation. In accordance with the
provisions of this Agreement and the Delaware General Corporation Law (the
"DGCL"), at the Effective Time (as such term and other capitalized terms used
herein without definition are defined in Section 7.1) Merger Sub shall be merged
with and into Target, and Target shall be the surviving corporation (hereinafter
sometimes called the "Surviving Corporation") and shall continue its corporate
existence under the laws of the State of Delaware. At the Effective Time the
separate corporate existence of Merger Sub shall cease. All properties,
franchises and rights belonging to Target and Merger Sub, by virtue of the
Merger and without further act or deed, shall be deemed to be vested in the
Surviving Corporation, which shall thenceforth be responsible for all the
liabilities and obligations of each of Merger Sub and Target.
1.2 Certificate of Incorporation. The Certificate of
Incorporation of Target as in effect immediately prior to the Effective Time
shall thereafter continue in full force and effect
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as the Certificate of Incorporation of the Surviving Corporation until altered
or amended as provided therein or by law.
1.3 By-Laws. The By-Laws of Merger Sub in effect immediately
prior to the Effective Time shall be the By-Laws of the Surviving Corporation
until altered, amended or repealed as provided therein and in the Certificate of
Incorporation of the Surviving Corporation.
1.4 Directors. The Directors of Merger Sub immediately prior
to the Effective Time shall be the directors of Surviving Corporation. Each of
such directors shall hold office in accordance with the Certificate of
Incorporation and By-Laws of the Surviving Corporation.
1.5 Effective Time. The Merger shall become effective at the
time of filing of a certificate of merger (the "Certificate of Merger") with the
Secretary of State of the State of Delaware in accordance with the provisions of
Section 251 of the DGCL, or at such later time as Wildcat and Target shall agree
and specify as the effective time in the Certificate of Merger, which shall be
so filed as soon as practicable after the satisfaction or, if permissible,
waiver of the conditions set forth in Article V. The date and time when the
Merger shall become effective are referred to herein as the "Effective Date" and
the "Effective Time", respectively. Prior to such filing, a closing shall be
held at the offices of Kronish Lieb Weiner & Hellman LLP, 1114 Avenue of the
Americas, New York, New York 10036, or such other place as shall be agreed to by
the parties, for the purpose of confirming the satisfaction or waiver, as the
case may be, of the conditions set forth in Article V.
1.6 Conversion of Shares. (a) Each share of Target Common
Stock, issued and outstanding immediately prior to the Effective Time (other
than shares to be canceled in accordance with Sections 1.6(c) and 1.6(d)) shall,
by virtue of the Merger and without any action on the part of the holder
thereof, be converted into the right to receive a number of fully paid and
nonassessable shares of Wildcat Common Stock equal to the Exchange Ratio (the
"Common Stock Merger Consideration"), subject to the limitations set forth in
Section 1.9. The "Exchange Ratio" means the quotient (rounded to the nearest
1/10,000) determined by dividing $39 by the Average Price (as defined below);
provided that the Exchange Ratio shall not be less than 0.8904 or greater than
1.1872; and provided further that in the event that the Exchange Ratio would
otherwise be greater than 1.0685, Wildcat shall have the right (the "Wildcat
Cash Election") to cause the Exchange Ratio to be equal to 1.0685 by adding to
the Common Stock Merger Consideration an amount of cash per share of Target
Common Stock equal to the product of (x) the difference between the Exchange
Ratio without giving effect to the Wildcat Cash Election and 1.0685 and (y) the
Average Price. "Average Price" means the average (rounded to the nearest
1/10,000) of the volume weighted averages (rounded to the nearest 1/10,000) of
the trading prices of Wildcat Common Stock on the Nasdaq National Market, as
reported by Bloomberg Financial Markets (or such other source as the parties
shall agree in writing), for the
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15 trading days randomly selected by lot by Wildcat and Target together from the
30 consecutive trading days ending on the third trading day immediately
preceding the Effective Date. Notwithstanding anything to the contrary set forth
in this Section 1.6, Wildcat shall not exercise the Wildcat Cash Election to the
extent such exercise will result in the Merger ceasing to qualify as a
reorganization under Section 368(a) of the Code.
(b) (i) Subject to Sections 1.6(e) and 1.9, each
share of Target Series D Preferred Stock (other than shares to be canceled in
accordance with Sections 1.6(c) and (d)) shall, by virtue of the Merger and
without any action on the part of the holder thereof, be converted into the
right to receive one fully paid and nonassessable share of 7% Series D Junior
Convertible Preferred Stock of Wildcat (the "Wildcat Series D Preferred Stock")
(the "Series D Preferred Stock Merger Consideration"), which Wildcat Series D
Preferred Stock shall have terms that are identical to Target Series D Preferred
Stock except that (w) the issuer thereof shall be Wildcat rather than Target,
(x) the Wildcat Series D Preferred Stock shall become convertible into Wildcat
Common Stock as required by Paragraph 3 of the Certificate of Designation for
the Target Series D Preferred Stock, (y) dividends will accrue from the last
dividend payment date of the Target Series D Preferred Stock prior to the
Effective Time and be payable in Wildcat Common Stock or cash and (z) each share
of Wildcat Series D Preferred Stock shall be entitled to one-tenth of one vote
per share on all matters, voting together with the Wildcat Common Stock and the
other classes of Wildcat voting securities as a single class.
(ii) Subject to Sections 1.6(e) and 1.9, each
share of Target Series E Preferred Stock (other than shares to be canceled in
accordance with Sections 1.6(c) and (d)) shall, by virtue of the Merger and
without any action on the part of the holder thereof, be converted into the
right to receive one fully paid and nonassessable share of 7% Series E Junior
Convertible Preferred Stock of Wildcat (the "Wildcat Series E Preferred Stock")
(the "Series E Preferred Stock Merger Consideration"), which Wildcat Series E
Preferred Stock shall have terms that are identical to Target Series E Preferred
Stock except that (w) the issuer thereof shall be Wildcat rather than Target,
(x) the Wildcat Series E Preferred Stock shall become convertible into Wildcat
Common Stock as required by Paragraph 3 of the Certificate of Designation for
the Target Series E Preferred Stock, (y) dividends will accrue from the last
dividend payment date of the Target Series E Preferred Stock prior to the
Effective Time and be payable in Wildcat Common Stock or cash and (z) each share
of Wildcat Series E Preferred Stock shall be entitled to one-tenth of one vote
per share on all matters, voting together with the Wildcat Common Stock and the
other classes of Wildcat voting securities as a single class.
(iii) Subject to Sections 1.6(e) and 1.9, each
share of Target Series F Preferred Stock (other than shares to be canceled in
accordance with Sections 1.6(c) and (d)) shall, by virtue of the Merger and
without any action on the part of the holder thereof, be converted into the
right to receive one fully paid and nonassessable share of 7% Series F Junior
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Convertible Preferred Stock of Wildcat (the "Wildcat Series F Preferred Stock")
(the "Series F Preferred Stock Merger Consideration"), which Wildcat Series F
Preferred Stock shall have terms that are identical to Target Series F Preferred
Stock except that (w) the issuer thereof shall be Wildcat rather than Target,
(x) the Wildcat Series F Preferred Stock shall become convertible into Wildcat
Common Stock as required by Paragraph 3 of the Certificate of Designation for
the Target Series F Preferred Stock, (y) dividends will accrue from the last
dividend payment date of the Target Series F Preferred Stock prior to the
Effective Time and be payable in Wildcat Common Stock or cash and (z) each share
of Wildcat Series F Preferred Stock shall be entitled to one-tenth of one vote
per share on all matters, voting together with the Wildcat Common Stock and the
other classes of Wildcat voting securities as a single class.
(iv) Subject to Sections 1.6(e) and 1.9,
each share of Target Series G Preferred Stock (other than shares to be canceled
in accordance with Sections 1.6(c) and (d)) shall, by virtue of the Merger and
without any action on the part of the holder thereof, be converted into the
right to receive one fully paid and nonassessable share of 7% Series G Junior
Convertible Preferred Stock of Wildcat (the "Wildcat Series G Preferred Stock")
(the "Series G Preferred Stock Merger Consideration"), which Wildcat Series G
Preferred Stock shall have terms that are identical to Target Series G Preferred
Stock except that (v) the issuer thereof shall be Wildcat rather than Target,
(w) the Wildcat Series G Preferred Stock shall become convertible into Wildcat
Common Stock as required by Paragraph 3 of the Certificate of Designation for
the Target Series G Preferred Stock, (x) dividends will accrue from the last
dividend payment date of the Target Series G Preferred Stock prior to the
Effective Time and be payable in Wildcat Common Stock or cash, (y) there shall
be the other modifications thereto set forth in Section 5 of the Voting
Agreement and (z) the optional redemption provisions set forth in Paragraph 5(i)
of the Certificate of Designation for the Target Series G Preferred Stock may be
exercised within 45 days after the Effective Time. The Common Stock Merger
Consideration, the Series D Preferred Stock Merger Consideration, the Series E
Preferred Stock Merger Consideration, the Series F Preferred Stock Merger
Consideration and the Series G Preferred Stock Merger Consideration shall be
referred to collectively in this Agreement as the "Merger Consideration".
(c) Each share of Target Common Stock or Target
Preferred Stock issued and outstanding immediately prior to the Effective Time
which is then owned beneficially or of record by Wildcat or Merger Sub shall, by
virtue of the Merger, be canceled and retired and cease to exist, without any
conversion thereof.
(d) Each share of Target Common Stock or Target
Preferred Stock held in the treasury of Target immediately prior to the
Effective Time shall, by virtue of the Merger, be canceled and retired and cease
to exist, without any conversion thereof.
(e) Notwithstanding anything in this Section 1.6 to
the contrary, shares
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of Target Preferred Stock issued and outstanding immediately prior to the
Effective Time and held by any stockholder of Target who is entitled to demand
and properly demands appraisal of such shares pursuant to, and who complies in
all respects with, the provisions of Section 262 of the DGCL ("Appraisal
Shares") shall not be converted into the right to receive the Preferred Stock
Merger Consideration with respect thereto, if any, as provided in Section
1.6(b), but rather the holders of Appraisal Shares shall be entitled to payment
of the fair value of such Appraisal Shares in accordance with the provisions of
Section 262 of the DGCL; provided, however, that if any such holder shall fail
to perfect or otherwise shall waive, withdraw or lose the right to appraisal
under Section 262 of the DGCL or a court of competent jurisdiction shall
determine that such holder is not entitled to the relief provided by Section 262
of the DGCL, then the right of such holder of Appraisal Shares to be paid the
fair value of such holder's Appraisal Shares shall cease and such Appraisal
Shares shall be treated as if they had been converted as of the Effective Time
into the right to receive the Preferred Stock Merger Consideration with respect
thereto as provided in Section 1.6(b).
1.7 Capital Stock of Merger Sub. Each share of common stock,
par value $0.01 per share, of Merger Sub (the "Merger Sub Common Stock") issued
and outstanding immediately prior to the Effective Time shall be converted into
one validly issued, fully paid and nonassessable share of common stock, par
value $0.01 per share, of the Surviving Corporation. Following the Effective
Time, each certificate evidencing ownership of shares of Merger Sub Common Stock
shall evidence ownership of shares of capital stock of the Surviving
Corporation.
1.8 Effect on Target Series B Preferred Stock. Subject to
Section 1.6(e), each share of Target Series B Preferred Stock issued and
outstanding immediately prior to the Effective Time shall remain outstanding as
Series B Preferred Stock of the Surviving Corporation, without any change to the
powers, preferences or special rights of such Target Series B Preferred Stock
provided for in the Certificate of Designation for the Target Series B Preferred
Stock, except that each share of Target Series B Preferred Stock shall be
entitled to one-tenth of one vote per share on all matters, voting together with
the common stock and other classes of voting securities of the Surviving
Corporation as a single class.
1.9 Exchange of Target Common Stock and Target Preferred
Stock. (a) Prior to the Effective Time, Wildcat shall enter into an agreement
with a bank or trust company reasonably acceptable to Target (the "Exchange
Agent"), which shall provide that Wildcat shall deposit with the Exchange Agent
as of the Effective Time, for the benefit of the holders of shares of Target
Common Stock and Target Preferred Stock (other than the Target Series B
Preferred Stock), certificates representing the Common Stock Merger
Consideration and Preferred Stock Merger Consideration, issuable in exchange for
outstanding shares of Target Common Stock and Target Preferred Stock (other than
the Target Series B Preferred Stock), as the case may be. Wildcat shall make
available to the Exchange Agent from time to time as required after the
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Effective Time cash and/or securities necessary to pay dividends and other
distributions in accordance with Section 1.9(e) and to make payments in lieu of
any fractional shares of Wildcat Common Stock in accordance with Section 1.9(f).
(b) As soon as practicable after the Effective Time,
the Exchange Agent shall mail to each holder of record (other than to holders of
Target Common Stock or Target Preferred Stock to be canceled as set forth in
Section 1.6(c) or 1.6(d) or Appraisal Shares and other than to holders of the
Target Series B Preferred Stock) of a certificate or certificates that
immediately prior to the Effective Time represented outstanding shares of Target
Common Stock or Target Preferred Stock (other than the Target Series B Preferred
Stock) (the "Certificates") (i) a form letter of transmittal (which shall be in
customary form and shall specify that delivery shall be effected, and risk of
loss and title to the Certificates shall pass, only upon proper delivery of the
Certificates to the Exchange Agent) and (ii) instructions for effecting the
surrender of the Certificates in exchange for certificates representing the
applicable Merger Consideration.
(c) Upon surrender of a Certificate for cancellation
to the Exchange Agent, together with such letter of transmittal, duly executed,
and such other agreements as the Exchange Agent shall reasonably request, the
holder of such Certificate shall be entitled to receive in exchange therefor,
(i) the applicable Common Stock Merger Consideration or Preferred Stock Merger
Consideration into which the shares of Target Common Stock or Target Preferred
Stock theretofore represented by the Certificate so surrendered shall have been
converted pursuant to the provisions of this Article I, and (ii) any dividends
or other distributions and cash in lieu of fractional shares payable in
accordance with this Section 1.9, and the Certificate so surrendered shall
forthwith be canceled. Until surrendered as contemplated by this Section 1.9,
each Certificate shall be deemed at any time after the Effective Time to
represent only the right to receive the applicable Common Stock Merger
Consideration or Preferred Stock Merger Consideration with respect to the shares
of Target Common Stock or Target Preferred Stock formerly represented thereby
and any dividends or other distributions and cash in lieu of fractional shares
payable in accordance with this Section 1.9.
(d) If any Certificate representing shares of Wildcat
Common Stock or Wildcat Preferred Stock is to be issued in a name other than
that in which the Certificate surrendered is registered, it shall be a condition
of payment that the Certificate so surrendered shall be properly endorsed or
otherwise in proper form for transfer and that the person requesting such
payment shall pay any transfer or other taxes required by reason of the payment
to a person other than the registered holder of the Certificate surrendered or
establish to the reasonable satisfaction of the Surviving Corporation that such
tax has been paid or is not applicable.
(e) No dividends or other distributions declared
after the Effective
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Time with respect to Wildcat Common Stock or Wildcat Preferred Stock and payable
to holders of record thereof after the Effective Time shall be paid to the
holder of any unsurrendered Certificate with respect to the shares of Wildcat
Common Stock or Wildcat Preferred Stock represented thereby until the holder of
record shall surrender such Certificate. Subject to the effect, if any, of
applicable law, after the subsequent surrender and exchange of a Certificate,
the holder thereof shall be entitled to receive any such dividends or other
distributions, without any interest thereon, which theretofore became payable
with respect to shares of Wildcat Common Stock or Wildcat Preferred Stock
represented by such Certificate.
(f) No certificates or scrip representing fractional
shares of Wildcat Common Stock shall be issued upon the surrender for exchange
of Certificates, and any such fractional share interest will not entitle the
owner thereof to vote or to any rights of the stockholders of Surviving
Corporation. In lieu thereof, Wildcat shall pay cash for such fractional shares
based upon the Closing Price on the trading day preceding the Effective Date.
(g) Any cash or certificates held by the Exchange
Agent that remain undistributed to the holders of the Certificates for one year
after the Effective Time shall be delivered to Wildcat, upon demand, and any
holders of the Certificates who have not theretofore exchanged their
Certificates in accordance with this Section 1.9 shall thereafter look only to
Wildcat for payment of their claim for the Merger Consideration, any dividends
or distributions with respect to Wildcat Common Stock or Wildcat Preferred Stock
and any cash in lieu of fractional shares of Wildcat Common Stock.
(h) All shares of Wildcat Common Stock and Wildcat
Preferred Stock into which and for which shares of Target Common Stock and
Target Preferred Stock shall have been converted or exchanged pursuant to this
Article I shall be deemed to have been issued in full satisfaction of all rights
pertaining to such converted and exchanged shares of Target Common Stock and
Target Preferred Stock, as applicable.
(i) After the Effective Time, there shall be no
further registration of transfers on the stock transfer books of the Surviving
Corporation of shares of Target Common Stock or Target Preferred Stock (other
than the Target Series B Preferred Stock) that were outstanding immediately
prior to the Effective Time. If, after the Effective Time, Certificates
representing such shares are presented to the Surviving Corporation, they shall
be canceled and exchanged for the applicable Merger Consideration as provided in
this Article I.
(j) 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
Wildcat, the posting by such person of a bond in such reasonable amount as
Wildcat may direct as indemnity against any claim that may be made against it
with
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respect to such Certificate, the Exchange Agent shall issue in exchange for such
lost, stolen or destroyed Certificate the Merger Consideration and any unpaid
dividends and distributions in respect thereof and any cash in lieu of
fractional shares of Wildcat Common Stock, in each case pursuant to this
Agreement.
1.10 Adjustments. (a) If, between the date of this Agreement
and the Effective Time, the outstanding shares of Target Common Stock or Target
Preferred Stock shall have been changed into a different number of shares or a
different class of shares by reason of any reclassification, recapitalization,
split-up, subdivision, stock dividend, combination, exchange of shares or
similar adjustment, or if any such transaction shall be declared with a record
date within such period, the consideration to be paid in the Merger in exchange
for each outstanding share of Target Common Stock or Target Preferred Stock as
provided in this Agreement shall be correspondingly adjusted.
(b) If, between the date of this Agreement and the
Effective Time, the outstanding shares of Wildcat Common Stock shall have been
changed into a different number of shares or a different class by reason of any
reclassification, recapitalization, split-up, subdivision, stock dividend,
combination, exchange of shares or similar adjustment, or if any such
transaction shall be declared with a record date within such period, the Common
Stock Merger Consideration to be paid in the Merger in exchange for each
outstanding share of Target Common Stock as provided in this Agreement shall be
correspondingly adjusted. In addition, in the event Wildcat pays (or establishes
a record date for payment of) any dividend on, or makes any other distribution
in respect of, Wildcat Common Stock, the Common Stock Merger Consideration shall
be appropriately adjusted to reflect such dividend or distribution.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF TARGET
Except (i) with respect to matters contemplated by Section
4.1, (ii) as disclosed in Target SEC Documents filed and publicly available
prior to the date of this Agreement (the "Target Filed SEC Documents"), or (iii)
as set forth on the disclosure schedule delivered by Target to Wildcat prior to
the execution of this Agreement (the "Target Disclosure Schedule"), Target
represents and warrants to Wildcat as follows:
2.1 Organization, Standing and Corporate Power. Target and
each of its Subsidiaries is a corporation or other legal entity duly organized,
validly existing and in good standing under the laws of the jurisdiction in
which it is organized and has the requisite corporate or other power and
authority, as the case may be, to carry on its business as now being
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conducted. Each of Target and its Subsidiaries is duly qualified or licensed to
do business and is in good standing in each jurisdiction in which the nature of
its business or the ownership, leasing or operation of its properties makes such
qualification or licensing necessary, except for those jurisdictions in which
the failure to be so qualified or licensed or to be in good standing,
individually or in the aggregate, is not reasonably likely to have a Material
Adverse Effect on Target. Copies of Target's Certificate of Incorporation and
By-laws, in each case as amended to and in effect on the date of this Agreement,
have been filed as exhibits to the Target Filed SEC Documents.
2.2 Capital Structure. (a) The authorized capital stock of
Target consists of 152,000,000 shares of capital stock consisting of: (1)
150,000,000 shares of common stock, par value $.01 per share (the "Target Common
Stock"), and (2) 2,000,000 shares of preferred stock, par value $1.00 per share,
of which (A) 600,000 shares have been designated as the Target Series B
Preferred Stock, (B) 69,000 shares have been designated as the Target Series D
Preferred Stock, (C) 87,500 shares have been designated as the Target Series E
Preferred Stock, (D) 92,000 shares have been designated as the Target Series F
Preferred Stock, (E) 200,000 shares have been designated as the Target Series G
Preferred Stock and (F) 40,000 shares have been designated as Series C Preferred
Stock, par value $1.00 per share (the "Target Series C Preferred Stock"). At the
close of business on August 25, 2000, (i) 54,170,682 shares of Target Common
Stock were issued and outstanding; (ii) no shares of Target Common Stock were
held by Target in its treasury; (iii) 466,062 shares of the Target Series B
Preferred Stock were issued and outstanding; (iv) 53,724 shares of the Target
Series D Preferred Stock were issued and outstanding; (v) 64,047 shares of the
Target Series E Preferred Stock were issued and outstanding; (vi) 79,600 shares
of the Target Series F Preferred Stock were issued and outstanding; (vii)
200,000 shares of the Target Series G Preferred Stock were issued and
outstanding; (viii) 40,000 shares of the Target Series C Preferred Stock were
reserved for issuance in connection with the rights (the "Target Rights") to
purchase shares of the Target Series C Preferred Stock issued pursuant to the
Rights Agreement dated as of March 7, 1996 (as amended, the "Target Rights
Agreement"), between Target and Continental Stock Transfer & Trust Company, as
rights agent; (ix) no other shares of Target Preferred Stock were issued and
outstanding; (x) 2,200,000 shares of Target Common Stock were reserved for
issuance pursuant to three warrants issued and outstanding to purchase Target
Common Stock (the "Target Warrants"); (xi) 12,363,567 shares of Target Common
Stock were reserved for issuance pursuant to Target's 1992 Stock Option Plan,
1996 Long-Term Incentive Plan, 1997 Equity Participation Plan for the Benefit of
Employees of Dove (as defined in Section 2.2(b)), and 1997 Stock Option Plan for
the Benefit of Employees of Dove (collectively, the "Target Stock Plans") (of
which 9,437,582 shares of Target Common Stock are subject to outstanding stock
options or other rights to purchase or to receive Target Common Stock granted
under the Target Stock Plans (collectively, "Target Stock Options")); and (xii)
22,530,969 shares of Target Common Stock were reserved for issuance upon
conversion of (A) the Target Series D Preferred Stock, (B) the
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Target Series E Preferred Stock, (C) the Target Series F Preferred Stock and (D)
the Target Series G Preferred Stock. Since August 25, 2000, and prior to the
date hereof, no shares of capital stock of, or any other interest in, or any
options, warrants, convertible, exchangeable or similar securities or other
rights, agreements, arrangements or commitments relating to the capital stock
of, Target were issued other than in connection with the exercise of Target
Stock Options and Target Warrants in accordance with their respective terms.
Other than Target Preferred Stock, regularly scheduled dividend payments on the
Target Preferred Stock, the Target Stock Options and the Target Warrants, there
are no options, warrants, convertible, exchangeable or similar securities or
other rights, agreements, arrangements or commitments of any character relating
to the capital stock of Target or obligating Target to issue or sell any shares
of capital stock of, or any other interest in, Target. No bonds, debentures or
other indebtedness having the right to vote on any matter on which stockholders
of Target may vote are issued or outstanding or subject to issuance. There are
no outstanding contractual obligations of Target to repurchase, redeem or
otherwise acquire any shares of capital stock of Target or to provide funds to,
or make any investment (in the form of a loan, capital contribution or
otherwise) in, any other Person. All of the outstanding shares of capital stock
of Target are, and all such shares that may be issued will be, when issued duly
authorized, validly issued, fully paid and nonassessable.
(b) The authorized capital stock of Digex,
Incorporated, a Delaware corporation ("Dove"), consists of 100,000,000 shares of
Class A Common Stock, par value $.01 per share ("Dove Class A Common Stock"), of
which 24,303,163 shares are issued and outstanding, 50,000,000 shares of Class B
Common Stock, par value $.01 per share ("Dove Class B Common Stock" and,
together with Dove Class A Common Stock, "Dove Common Stock"), of which
39,350,000 shares are issued and outstanding and 5,000,000 shares of preferred
stock, par value $.01 per share, of which 100,000 shares have been designated as
Series A Convertible Preferred Stock, all of which are issued and outstanding.
As of August 25, 2000, (i) 15,000,000 shares of Dove Class A Common Stock were
reserved for issuance pursuant to Dove's 1999 Long-Term Incentive Plan (the
"Dove Stock Plan") (of which 8,405,507 shares of Dove Class A Common Stock are
subject to outstanding stock options or other rights to purchase or to receive
Dove Class A Common Stock granted under the Dove Stock Plan (collectively, "Dove
Stock Options")), and (ii) 1,065,000 shares of Dove Class A Common Stock were
reserved for issuance pursuant to 1,065,000 warrants issued and outstanding to
purchase Dove Common Stock (the "Dove Warrants").
2.3 Subsidiaries. Section 2.3 of the Target Disclosure
Schedule sets forth a true and complete list of each of Target's Subsidiaries as
of the date hereof. All the outstanding shares of capital stock of, or other
equity interests in, each Subsidiary of Target have been validly issued and are
fully paid and nonassessable and are owned directly or indirectly by Target,
free and clear of all Encumbrances. Other than the Dove Stock Options and Dove
Warrants, there are no options, warrants, convertible securities or other
rights, agreements, arrangements or
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commitments of any character relating to the capital stock of any Subsidiary of
Target or obligating any Subsidiary of Target to issue or sell any shares of
capital stock or, or any other interest in, such Subsidiary. There are no
outstanding contractual obligations on the part of any Subsidiary of Target to
repurchase, redeem or otherwise acquire any shares of its capital stock or to
provide funds to, or make any investment (in the form of a loan, capital
contribution or otherwise) in, any other Person. Except for the capital stock or
other ownership interests of its Subsidiaries, as of the date hereof, Target
does not beneficially own directly or indirectly any material capital stock,
membership interest, partnership interest, joint venture interest or other
material equity interest in any person.
2.4 Authority. Target has the requisite corporate power and
corporate authority to enter into this Agreement and to consummate the
transactions contemplated hereby, subject to the receipt of the Target
Stockholder Approval. The execution and delivery of this Agreement and the
consummation of the transactions contemplated by this Agreement have been duly
authorized by all necessary corporate action on the part of Target, subject to
receipt of the Target Stockholder Approval. This Agreement has been duly
executed and delivered by Target and, assuming the due authorization, execution
and delivery by each of the other parties hereto, constitutes the legal, valid
and binding obligations of Target, enforceable against it in accordance with its
terms, subject to applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and similar laws affecting creditors' rights and
remedies generally, and subject, as to enforceability, to general principles of
equity, including principles of commercial reasonableness, good faith and fair
dealing (regardless of whether enforcement is sought in a proceeding at law or
in equity).
2.5 No Conflicts. The execution and delivery of this Agreement
does not, and the consummation of the transactions contemplated hereby and
compliance with the provisions hereof will not, conflict with, or result in any
violation of or default under (with or without notice or lapse of time or both),
or give rise to a right of termination, cancellation or acceleration of any
obligation or loss of a benefit under, or result in the creation of any
Encumbrance upon any of the properties or assets of Target or any of its
Subsidiaries under (i) the organizational documents of Target or any of its
Subsidiaries, (ii) any loan or credit agreement, note, bond, mortgage,
indenture, lease or other agreement, instrument, permit, concession, franchise,
license or similar authorization applicable to Target or any of its Subsidiaries
or their respective properties or assets or (iii) subject to the governmental
filings and other matters referred to in Section 2.6, any judgment, order,
decree, statute, law, ordinance, rule or regulation applicable to Target or any
of its Subsidiaries or their respective properties or assets, other than, in the
case of clauses (ii) and (iii), any such conflicts, violations, defaults,
rights, losses or Encumbrances that, individually or in the aggregate, are not
reasonably likely to (x) have a Material Adverse Effect on Target or (y) prevent
or materially delay the consummation of the transactions contemplated by this
Agreement.
<PAGE> 13
13
2.6 Consents; Approvals. No consent, approval, order or
authorization of, action by or in respect of, or registration, declaration or
filing with, any Governmental Authority is required by or with respect to Target
or any of its Subsidiaries in connection with the execution and delivery of this
Agreement by Target or the consummation by Target of the transactions
contemplated by this Agreement, except for (i) the filing of a premerger
notification and report form by Target under the HSR Act and any applicable
filings and approvals under similar foreign antitrust or competition laws and
regulations; (ii) the filing with the SEC of the Proxy Statement and such
reports under Section 13(a), 13(d), 15(d) or 16(a) of the Exchange Act as may be
required in connection with this Agreement and the transactions contemplated by
this Agreement; (iii) the filing of: (A) the Certificate of Merger with the
Delaware Secretary of State, (B) appropriate documents with the relevant
authorities of other states in which Target is qualified to do business, and (C)
such filings with Governmental Authorities as are necessary to satisfy the
applicable requirements of state securities or "blue sky" laws; (iv) filings
with and approvals of the Federal Communications Commission (the "FCC") as
required under the Communications Act of 1934, as amended (the "Communications
Act"), and the rules and regulations promulgated thereunder; (v) filings with
and approvals of any state public utility commissions ("PUCs") or similar
regulatory bodies as required by applicable statutes, laws, rules, ordinances
and regulations; and (vi) such other consents, approvals, orders or
authorizations the failure of which to be made or obtained, individually or in
the aggregate, is not reasonably likely to (x) have a Material Adverse Effect on
Target or (y) prevent or materially delay the consummation of the transactions
contemplated by this Agreement.
2.7 SEC Documents; Undisclosed Liabilities. Target has filed
all required reports, schedules, forms, statements and other documents
(including exhibits and all other information incorporated therein) with the SEC
since January 1, 1998, and Dove has filed all such reports since August 1, 1999
(collectively, the "Target SEC Documents"). As of their respective dates, the
Target SEC Documents complied as to form in all material respects with the
requirements of the Securities Act or the Exchange Act, as the case may be, and
the rules and regulations of the SEC promulgated thereunder applicable to such
Target SEC Documents, and none of the Target SEC Documents when filed (or, if
amended or superseded by a filing prior to the date of this Agreement, as of the
date of such filing) contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading. Except to the extent that information contained
in any Target SEC Document has been revised or superseded by a later filed
Target SEC Document, none of the Target SEC Documents 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 financial
statements included in the Target SEC Documents comply as to form, as of their
respective dates of filing with the SEC, in all material respects with the
applicable accounting requirements and the published rules
<PAGE> 14
14
and regulations of the SEC with respect thereto ("Accounting Rules"), have been
prepared in accordance with GAAP (except, in the case of unaudited statements,
as permitted by Form 10-Q of the SEC) applied on a consistent basis during the
periods involved (except as may be indicated in the notes thereto) and fairly
present in all material respects the respective consolidated financial position
of Target and Dove and their respective consolidated Subsidiaries as of the
dates thereof and their respective consolidated results of their operations and
cash flows for the periods then ended (subject, in the case of unaudited
statements, to normal recurring year-end audit adjustments and the absence of
footnotes if applicable). Except (i) as reflected in the Target Filed SEC
Documents or (ii) for liabilities incurred in connection with this Agreement or
the transactions contemplated by this Agreement, neither Target nor any of its
Subsidiaries has any liabilities or obligations of any nature (whether accrued,
absolute, contingent or otherwise) that would be required to be disclosed on a
balance sheet of Target and its consolidated Subsidiaries or the footnotes
thereto prepared in accordance with GAAP which, individually or in the
aggregate, are reasonably likely to have a Material Adverse Effect on Target.
2.8 Information Supplied. None of the information supplied or
to be supplied by Target specifically for inclusion or incorporation by
reference in (i) the Form S-4 will, at the time the Form S-4 becomes effective
under the Securities Act, contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary to
make the statements therein not misleading or (ii) the Proxy Statement will, at
the date it is first mailed to the stockholders of Target or at the time of the
Target Stockholders Meeting, contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they are made, not misleading. The Proxy Statement will comply as to form in all
material respects with the requirements of the Exchange Act and the respective
rules and regulations promulgated thereunder. No representation or warranty is
made by Target with respect to statements made or incorporated by reference in
the Proxy Statement based on information supplied by Wildcat specifically for
inclusion or incorporation by reference in the Proxy Statement.
2.9 No Material Adverse Effect. Except for liabilities
incurred in connection with or expressly permitted by this Agreement, since June
30, 2000, there has not been (1) any event, occurrence or development (other
than those relating to the economy or securities markets in general or the
industries in which Target and its Subsidiaries operate in general or resulting
from the announcement of this Agreement) which has resulted in or could
reasonably be expected to result in a Material Adverse Effect on Target, (2) any
declaration, setting aside or payment of any dividend or other distribution
(whether in cash, stock or property) with respect to any of Target's capital
stock, except for dividends or other distributions declared, set aside or paid
by Target as required by and in accordance with the respective terms of such
capital stock as of the date hereof, (3) any split, combination or
reclassification of any of Target's capital stock or
<PAGE> 15
15
any issuance or the authorization of any issuance of any other securities in
respect of, in lieu of or in substitution for shares of Target's capital stock
and (4) (A) any granting by Target or any of its Subsidiaries to any current or
former director, executive officer or other employee of Target or its
Subsidiaries of any increase in compensation, bonus or other benefits, except
for increases in cash compensation and other non-equity-based benefits in the
ordinary course of business or as was required by law or under any employment
agreement in effect as of the date of the most recent audited financial
statements included in the Target Filed SEC Documents, (B) any granting by
Target or any of its Subsidiaries to any such current or former director,
executive officer or employee of any increase in severance or termination pay,
(C) any entry by Target or any of its Subsidiaries into, or any amendments of,
any employment, deferred compensation, consulting, severance, termination or
indemnification agreement with any such current or former director, executive
officer or employee or (D) any amendment to, or modification of, any Target
Stock Plans, Target Stock Options or Target Warrants.
2.10 Litigation. There is no suit, action, proceeding, claim,
grievance or investigation pending or, to the Knowledge of Target or any of its
Subsidiaries, threatened against or affecting Target or any of its Subsidiaries
that, individually or in the aggregate, is reasonably likely to have a Material
Adverse Effect on Target, nor is there any judgment, decree, injunction, rule or
order of any Governmental Authority or arbitrator outstanding against Target or
any of its Subsidiaries having, or that is reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on Target. There are
no facts, circumstances or conditions that are reasonably likely to give rise to
any liability of, or form the basis of a claim against, Target or any of its
Subsidiaries under any applicable statutes, laws, ordinances, rules or
regulations, which liability or claim is reasonably likely to have, individually
or in the aggregate, a Material Adverse Effect on Target.
2.11 Voting Requirements. The affirmative vote (the "Target
Stockholder Approval") of (i) the holders of a majority of the voting power
represented by the outstanding shares of Target Common Stock and Target Series G
Preferred Stock, voting together as a single class, entitled to vote at the
Target Stockholders Meeting to adopt this Agreement and (ii) the holders of a
majority of the voting power represented by the outstanding shares of the Target
Series G Preferred Stock, voting as a separate class, entitled to vote at the
Target Stockholders Meeting to adopt this Agreement, are the only votes of the
holders of any class or series of Target's capital stock necessary to adopt this
Agreement and approve the Merger and the other transactions contemplated by this
Agreement. No other approval of the stockholders of Target is required with
respect to this Agreement, the Stockholders Agreement or the transactions
contemplated hereby or thereby.
2.12 Brokers. No broker, investment banker, financial advisor
or other person, other than Bear, Stearns & Co. Inc. and Credit Suisse First
Boston Corporation, the fees,
<PAGE> 16
16
commissions and expenses of each of which will be paid by Target, is entitled to
any broker's, finder's, financial advisor's or other similar fee or commission,
or the reimbursement of expenses, in connection with the transactions
contemplated by this Agreement, based upon arrangements made by or on behalf of
Target.
2.13 Opinion of Financial Advisor. Target has received the
opinion of Bear, Stearns & Co. Inc., dated the date of this Agreement, to the
effect that, as of such date, the Exchange Ratio is fair, from a financial point
of view, to the holders of Target Common Stock.
2.14 Approval of Boards of Directors. The Board of Directors
of Target has approved the terms of this Agreement, the Voting Agreement and the
consummation of the transactions contemplated by this Agreement and the Voting
Agreement. The Board of Directors of Dove has approved the Merger and the
transactions pursuant to which Wildcat and Merger Sub would become interested
shareholders under Section 203 under the DGCL. Such approvals represent all the
action necessary to ensure that the restrictions on "business combinations" (as
defined in such Section 203 of the DGCL) contained in Section 203 of the DGCL do
not apply to Wildcat or Merger Sub in respect of Target or Dove in connection
with the Merger and the other transactions contemplated by this Agreement and
the Voting Agreement. To the Knowledge of Target, no other state takeover
statute or similar statute or regulation is applicable to this Agreement, the
Voting Agreement, the Merger or the other transactions contemplated by this
Agreement and the Voting Agreement.
2.15 Compliance with Applicable Laws. Target and its
Subsidiaries hold all permits, licenses, variances, exemptions, orders,
registrations and approvals of all Governmental Authorities which are required
for them to own, lease or operate their assets and to carry on their businesses
(the "Target Permits"), except where the failure to hold any thereof is not
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on Target. Target and its Subsidiaries are in compliance with the terms
of the Target Permits and all applicable statutes, laws, ordinances, rules and
regulations, except where the failure so to comply is not reasonably likely to
have, individually or in the aggregate, a Material Adverse Effect on Target.
2.16 Absence of Changes in Target Benefit Plans. Since June
30, 2000, there has not been any adoption or amendment by Target or any of its
Subsidiaries of any employment agreement with any director, officer or employee
of Target or any of its Subsidiaries or of any collective bargaining agreement
or any adoption or amendment of any Target Benefit Plans which, in each case,
are reasonably likely to have, individually or in the aggregate, a Material
Adverse Effect on Target.
<PAGE> 17
17
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF WILDCAT
Except as disclosed in the Wildcat SEC Documents filed and
publicly available prior to the date of this Agreement (the "Wildcat Filed SEC
Documents"), Wildcat represents and warrants to Target as follows:
3.1 Organization, Standing and Corporate Power. Each of
Wildcat and its Subsidiaries is a corporation or other legal entity duly
organized, validly existing and in good standing under the laws of the
jurisdiction in which it is organized and has the requisite corporate or other
power and authority, as the case may be, to carry on its business as now being
conducted. Each of Wildcat and its Subsidiaries is duly qualified or licensed to
do business and is in good standing in each jurisdiction in which the nature of
its business or the ownership, leasing or operation of its properties makes such
qualification or licensing necessary, except for those jurisdictions in which
the failure to be so qualified or licensed or to be in good standing,
individually or in the aggregate, is not reasonably likely to have a Material
Adverse Effect on Wildcat. Copies of Wildcat's Certificate of Incorporation and
By-laws, in each case as amended to and in effect on the date of this Agreement,
have been filed as exhibits to the Wildcat SEC Documents.
3.2 Capital Structure. The authorized capital stock of Wildcat
consists of 5,000,000,000 shares of common stock, par value $.01 per share
("Wildcat Common Stock"), of which 2,881,952,220 shares are issued and
outstanding, and 50,000,000 shares of preferred stock, par value $.01 per share,
of which 10,757,448 shares are issued or outstanding. As of the date hereof,
there are 369,051,165 options, warrants, convertible securities or other rights,
agreements, arrangements or commitments of any character relating to the capital
stock of Wildcat or obligating Wildcat to issue or sell any shares of capital
stock of, or any other interest in, Wildcat. As of the date hereof, there are
879,825 incentive stock units outstanding. As of the date hereof, there are no
outstanding contractual obligations of Wildcat to repurchase, redeem or
otherwise acquire any shares of capital stock of Wildcat. All of the outstanding
shares of capital stock of Wildcat are, and all such shares that may be issued
will be, when issued, duly authorized, validly issued, fully paid and
nonassessable.
3.3 Authority. Wildcat has the requisite corporate power and
corporate authority to enter into this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
and the consummation of the transactions contemplated by this Agreement have
been duly authorized by all necessary corporate action on the part of Wildcat.
This Agreement has been duly executed and delivered by Wildcat and, assuming the
due authorization, execution and delivery by each of the other parties hereto,
constitutes the
<PAGE> 18
18
legal, valid and binding obligations of Wildcat, enforceable against it in
accordance with its terms, subject to applicable bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and similar laws affecting
creditors' rights and remedies generally, and subject, as to enforceability, to
general principles of equity, including principles of commercial reasonableness,
good faith and fair dealing (regardless of whether enforcement is sought in a
proceeding at law or in equity).
3.4 No Conflicts. The execution and delivery of this Agreement
does not, and the consummation of the transactions contemplated by this
Agreement, and compliance with the provisions hereof will not, conflict with, or
result in any violation of or default under (with or without notice or lapse of
time or both), or give rise to a right of termination, cancellation or
acceleration of any obligation or loss of a benefit under, or result in the
creation of any Encumbrance upon any of the properties or assets of Wildcat or
any of its Subsidiaries under (i) the organizational documents of Wildcat or any
of its Subsidiaries, (ii) any loan or credit agreement, note, bond, mortgage,
indenture, lease or other agreement, instrument, permit, concession, franchise,
license or similar authorization applicable to Wildcat or any of its
Subsidiaries or their respective properties or assets or (iii) subject to the
governmental filings and other matters referred to in Section 3.6, any judgment,
order, decree, statute, law, ordinance, rule or regulation applicable to Wildcat
or any of its Subsidiaries or their respective properties or assets, other than,
in the case of clauses (ii) and (iii), any such conflicts, violations, defaults,
rights, losses or Encumbrances that, individually or in the aggregate, are not
reasonably likely to (x) have a Material Adverse Effect on Wildcat or (y)
prevent or materially delay the consummation of the transactions contemplated
by this Agreement.
3.5 Consents; Approvals. No consent, approval, order or
authorization of, action by or in respect of, or registration, declaration or
filing with, any Governmental Authority is required by or with respect to
Wildcat or any of its Subsidiaries in connection with the execution and delivery
of this Agreement by Wildcat or the consummation by Wildcat of the transactions
contemplated by this Agreement, except for (i) the filing of a premerger
notification and report form by Wildcat under the HSR Act and any applicable
filings and approvals under similar foreign antitrust or competition laws and
regulations; (ii) the filing with the SEC of the Form S-4 and such reports under
Section 13(a), 13(d), 15(d) or 16(a) of the Exchange Act as may be required in
connection with this Agreement and the transactions contemplated by this
Agreement; (iii) the filing of: (A) the Certificate of Merger with the Delaware
Secretary of State, (B) appropriate documents with the relevant authorities of
other states in which Wildcat is qualified to do business and (C) such filings
with Governmental Authorities as are necessary to satisfy the applicable
requirements of state securities or "blue sky" laws; (iv) filings with and
approvals of the FCC as required under the Communications Act, and the rules and
regulations promulgated thereunder; (v) filings with and approvals of any PUCs
or similar regulatory bodies as required by applicable statutes, laws, rules,
ordinances and regulations; (vi) filings with and
<PAGE> 19
19
approvals of the Nasdaq National Market to permit the shares of Wildcat Common
Stock issued as Common Stock Merger Consideration to be listed for trading; and
(vii) such other consents, approvals, orders or authorizations the failure of
which to be made or obtained, individually or in the aggregate, is not
reasonably likely to (x) have a Material Adverse Effect on Wildcat or (y)
prevent or materially delay the consummation of the transactions contemplated by
this Agreement.
3.6 SEC Documents; Undisclosed Liabilities. Wildcat has filed
all required reports, schedules, forms, statements and other documents
(including exhibits and all other information incorporated therein) with the SEC
since January 1, 1998 (collectively, the "Wildcat SEC Documents"). As of their
respective dates, the Wildcat SEC Documents complied as to form in all material
respects with the requirements of the Securities Act or the Exchange Act, as the
case may be, and the rules and regulations of the SEC promulgated thereunder
applicable to such Wildcat SEC Documents, and none of the Wildcat SEC Documents
when filed (or, if amended or superseded by a filing prior to the date of this
Agreement, as of the date of such filing) contained any untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. Except to the extent
that information contained in any Wildcat SEC Document has been revised or
superseded by a later filed Wildcat SEC Document, none of the Wildcat SEC
Documents 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 financial statements of Wildcat included in the Wildcat SEC
Documents comply as to form, as of their respective dates of filing with the
SEC, in all material respects with the Accounting Rules, have been prepared in
accordance with GAAP (except, in the case of unaudited statements, as permitted
by Form 10-Q of the SEC) applied on a consistent basis during the periods
involved (except as may be indicated in the notes thereto) and fairly present in
all material respects the consolidated financial position of Wildcat and its
consolidated Subsidiaries as of the dates thereof and the consolidated results
of their operations and cash flows for the periods then ended (subject, in the
case of unaudited statements, to normal recurring year-end audit adjustments and
the absence of footnotes if applicable). Except (i) as reflected in the Wildcat
Filed SEC Documents or (ii) for liabilities incurred in connection with this
Agreement or the transactions contemplated by this Agreement, neither Wildcat
nor any of its Subsidiaries has any liabilities or obligations of any nature
(whether accrued, absolute, contingent or otherwise) that would be required to
be disclosed on a balance sheet of Wildcat and its consolidated Subsidiaries or
the footnotes thereto prepared in accordance with GAAP which individually or in
the aggregate are reasonably likely to have a Material Adverse Effect on
Wildcat.
3.7 Information Supplied. None of the information supplied or
to be supplied
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by Wildcat specifically for inclusion or incorporation by reference in (i) the
Form S-4 will, at the time the Form S-4 becomes effective under the Securities
Act, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the statements
therein not misleading or (ii) the Proxy Statement will, at the date it is first
mailed to the stockholders of Target or at the time of the Target Stockholders
Meeting, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they are made, not
misleading. The Form S-4 and the Proxy Statement will comply as to form in all
material respects with the requirements of the Securities Act and the Exchange
Act, as applicable, and the respective rules and regulations promulgated
thereunder. No representation or warranty is made by Wildcat with respect to
statements made or incorporated by reference in the Form S-4 and the Proxy
Statement based on information supplied by Target specifically for inclusion or
incorporation by reference in the Form S-4 or the Proxy Statement, as the case
may be.
3.8 Absence of Material Adverse Effect. Except for liabilities
incurred in connection with or expressly permitted by this Agreement, since June
30, 2000, there has not been any event, occurrence or development (other than
those relating to the economy or securities markets in general or the industries
in which Wildcat and its Subsidiaries operate in general or resulting from the
announcement of this Agreement) which has resulted in or could reasonably be
expected to result in a Material Adverse Effect on Wildcat.
3.9 Litigation. There is no suit, action, proceeding, claim,
grievance or investigation pending or, to the Knowledge of Wildcat or any of its
Subsidiaries, threatened against or affecting Wildcat or any of its Subsidiaries
that, individually or in the aggregate, is reasonably likely to have a Material
Adverse Effect on Wildcat, nor is there any judgment, decree, injunction, rule
or order of any Governmental Authority or arbitrator outstanding against Wildcat
or any of its Subsidiaries having, or that is reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on Wildcat. There
are no facts, circumstances or conditions that are reasonably likely to give
rise to any liability of, or form the basis of a claim against, Wildcat or any
of its Subsidiaries under any applicable statutes, laws, ordinances, rules or
regulations, which liability or claim is reasonably likely to have, individually
or in the aggregate, a Material Adverse Effect on Wildcat.
3.10 Brokers. No broker, investment banker, financial advisor
or other person, other than Chase Securities Inc., the fees, commissions and
expenses of which will be paid by Wildcat, is entitled to any broker's,
finder's, financial advisor's or other similar fee or commission, or the
reimbursement of expenses, in connection with the transactions contemplated by
this Agreement, based upon arrangements made by or on behalf of Wildcat.
<PAGE> 21
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3.11 Shares of Wildcat Common Stock and Wildcat Preferred
Stock. At the Effective Time, the shares of Wildcat Common Stock and Wildcat
Preferred Stock to be issued pursuant to the Merger will be duly authorized,
validly issued, fully paid and non-assessable and will be delivered free and
clear of all Encumbrances.
ARTICLE IV
COVENANTS
4.1 Conduct of Business by Target. Except as set forth in the
Target Disclosure Schedule, as contemplated by this Agreement or with the prior
written consent of Wildcat, which consent shall not be unreasonably withheld,
delayed or conditioned, from the date hereof to the Effective Time, (i) Target
shall, and shall cause its Subsidiaries (other than Dove) to, carry on their
respective businesses in the ordinary course consistent with past practice, and
(ii) Target, solely in its capacity as a stockholder of Dove, shall not vote its
shares of Dove in any meeting or by written consent, shall use its best efforts
to ensure that its representatives on Dove's Board of Directors not vote or act
by written consent (or, if such best efforts are insufficient, use its best
efforts to remove its representatives), to cause or permit Dove to take any of
the actions set forth in paragraphs (a) - (l) of this Section 4.1 relating to
Target and its Subsidiaries. Without limiting the generality of the foregoing,
during the period from the date hereof to the Effective Time, except as set
forth in the Target Disclosure Schedule, as contemplated by this Agreement or
with the prior written consent of Wildcat, which consent shall not be
unreasonably withheld, delayed or conditioned, Target shall not, and shall not
permit any of its Subsidiaries (other than Dove) to:
(a) amend its certificate of incorporation or By-Laws;
(b) authorize for issuance, issue, sell, deliver, grant
any options for, pledge, encumber, or otherwise agree
or commit to issue, sell or deliver any shares of any
class of its capital stock or any securities
convertible into shares of any class of its capital
stock, except (i) for dividends and distributions
declared, set aside or paid by Target in accordance
with the respective terms of its capital stock as of
the date hereof, (ii) pursuant to and in accordance
with the present terms of currently outstanding
convertible securities, warrants and options of
Target, (iii) for the issuance of employee options to
purchase shares of (x) Target Common Stock in the
ordinary course of business in the aggregate not to
exceed 750,000 shares in any calendar quarter (net of
option cancellations made during such quarter), and
the issuance of shares of Target Common Stock upon
the
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exercise thereof and (y) Dove Class A Common Stock in
the ordinary course of business in the aggregate not
to exceed 500,000 shares in any calendar quarter (net
of option cancellations made during such quarter),
and the issuance of shares of Dove Class A Common
Stock upon the exercise thereof and (iv) pursuant to
Section 4.25;
(c) split, combine or reclassify any shares of its
capital stock, declare, set aside or pay any dividend
or other distribution (whether in cash, stock or
property or any combination thereof) in respect of
its capital stock or purchase, redeem or otherwise
acquire any shares of its own capital stock or of any
of its Subsidiaries, or any rights, warrants or
options to acquire any such shares except for (i) the
purchase from time to time by Target of Target Common
Stock in the ordinary course of business in
connection with the cashless exercise of options or
the funding of employee incentive plans, profit
sharing plans or other benefit plans of Target, (ii)
dividends and distributions declared, set aside or
paid by Target in accordance with the respective
terms of its capital stock as of the date hereof, and
(iii) dividends and distributions (including
liquidating distributions) by a direct or indirect
Subsidiary of Target to its parent;
(d) (i) create, incur, assume, maintain or permit to
exist any debt for borrowed money other than (A)
under the Revolving Credit Agreement among Target,
Bank of America, N.A. and the other lenders named
therein, dated as of December 22, 1999 (the "Credit
Facility"), in accordance with its present terms in
the ordinary course of business, (B) intercompany
indebtedness between Target and any of its wholly
owned Subsidiaries or between such wholly owned
Subsidiaries and (C) intercompany indebtedness
between Target or any of its wholly owned
Subsidiaries, on the one hand, and Dove, on the other
hand, to fund operating expenses in the ordinary
course of business consistent with past practice;
(ii) assume, guarantee, endorse or otherwise become
liable or responsible (whether directly, contingently
or otherwise) for the obligations of any other Person
except for Target pursuant to the Credit Facility; or
(iii) make any loans, advances or capital
contributions to, or investments in, any other Person
(other than advances to employees of Target and its
Subsidiaries in the ordinary course of business);
(e) (i) increase in any manner the cash compensation and
other non-equity based benefits of (x) any employee
except in the ordinary course of business consistent
with past practice or (y) any of its directors or
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executive officers; (ii) pay or agree to pay any
pension, retirement allowance or other employee
benefit not required, or enter into or agree to enter
into any agreement or arrangement with any director
or officer or employee, whether past or present,
relating to any such pension, retirement allowance or
other employee benefit, except as required under
currently existing agreements, plans or arrangements
in accordance with their present terms; (iii) grant
any severance or termination pay to, or enter into
any employment or severance agreement with, any
director, executive officer or employee, except as
required under currently existing plans in accordance
with their present terms; or (iv) except as may be
required to comply with applicable law, become
obligated under any new pension plan, welfare plan,
multiemployer plan, employee benefit plan, benefit
arrangement, or similar plan or arrangement, that was
not in existence on the date hereof, including any
bonus, incentive, deferred compensation, stock
purchase, stock option, stock appreciation right,
group insurance, severance pay, retirement or other
benefit plan, agreement or arrangement, or employment
or consulting agreement with or for the benefit of
any person, or amend, terminate or take any
discretionary action with respect to any of such
plans or any of such agreements in existence on the
date hereof; provided, however, that this clause (iv)
shall not prohibit Target or its Subsidiaries from
renewing any such plan, agreement or arrangement
already in existence on terms no more favorable to
the parties to such plan, agreement or arrangement;
(f) authorize, recommend, propose or announce an
intention to authorize, recommend or propose, or
enter into any agreement in principle or an agreement
with respect to, any plan of liquidation or
dissolution, any acquisition (including by merger,
consolidation or otherwise) of assets or securities
(other than purchases of raw materials or supplies in
the ordinary course of business), any sale, transfer,
lease, license, Encumbrance, or other disposition of
assets or securities (other than (i) sales or
licenses of finished goods and services in the
ordinary course of business, (ii) any Encumbrance
granted pursuant to the Credit Facility as in effect
on the date of this Agreement or (iii) pursuant to
Section 4.25), or any release or relinquishment of
any material contract rights;
(g) authorize or commit to make capital expenditures for
Target and its Subsidiaries on a consolidated basis
in excess of $165 million per calendar quarter, with
unused amounts being rolled over to succeeding
quarters;
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24
(h) make any change in the accounting methods or
accounting practices followed by Target;
(i) settle any action, suit, claim, investigation or
proceeding (legal, administrative or arbitrative) in
excess of $5,000,000 in the aggregate for all such
matters above the amount of any specific reserves
included in Target's financial statements;
(j) enter into, amend or expand any agreement with any
backbone network provider relating to the use by
Target or any of its Subsidiaries of any backbone
network other than Wildcat's network, except after
offering Wildcat a reasonable opportunity to timely
provide Target with adequate backbone network
capacity on market terms (including pricing and
timely provisioning of access to Target's
points-of-presence);
(k) make any election under the Code which, individually
or in the aggregate, is reasonably likely to have a
Material Adverse Effect on Target or settle or
compromise any material tax liability; or
(l) agree to do any of the foregoing.
4.2 Intentionally Omitted.
4.3 No Solicitation. (a) From the date hereof to the Effective
Time, Target shall not, nor shall it permit any of its Subsidiaries to, nor
shall it authorize any of its directors, officers or employees or any investment
banker, financial advisor, attorney, accountant or other representative retained
by it to, directly or indirectly through another Person, (i) solicit, initiate
or encourage (including by way of furnishing information), or take any other
action designed to facilitate, the making of any proposal that constitutes a
Takeover Proposal, or (ii) participate in any discussions or negotiations
regarding any Takeover Proposal. Target shall immediately cease and cause to be
terminated all existing discussions or negotiations with any parties conducted
heretofore with respect to any Takeover Proposal and request the prompt return
or destruction of all confidential information previously furnished. Target
shall not release any third party from, or waive any provision of, any
confidentiality or standstill agreement to which Target is a party.
Notwithstanding the foregoing, if prior to the date the Target Stockholder
Approval is obtained, Target receives a Takeover Proposal, Target may, to the
extent the Board of Directors of Target determines in good faith that there is a
reasonable likelihood that such Takeover Proposal would constitute a Superior
Proposal, participate in discussions or negotiations with, or provide
information to, any Person in response to such Takeover Proposal. In such event,
Target shall (i) prior to participating in any such discussions or negotiations
or providing any information,
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25
inform Wildcat of the material terms and conditions of such Takeover Proposal,
including the identity of the Person making such Takeover Proposal, and (ii)
keep Wildcat reasonably informed of the status of any such Takeover Proposal.
For purposes of this Agreement, "Takeover Proposal" means any bona fide proposal
or offer from any Person relating to any direct or indirect acquisition or
purchase of a business that constitutes 35% or more of the net revenues, net
income or the assets of Target and its Subsidiaries, taken as a whole, or 35% or
more of the voting power of Target or any of its Subsidiaries, any tender offer
or exchange offer that if consummated would result in any Person beneficially
owning 35% or more of the voting power of Target or any of its Subsidiaries, or
any merger, consolidation, business combination, recapitalization, liquidation,
dissolution or similar transaction involving Target or any of its Subsidiaries
pursuant to which any third party or the shareholders of any third party would
own 35% or more of the voting power of Target or any resulting parent company of
Target, other than the transactions contemplated by this Agreement. For purposes
of this Agreement, "Superior Proposal" means any Takeover Proposal which the
Board of Directors of Target determines in good faith (based on the advice of a
financial advisor), taking into account the estimated time required to
consummate the offer, the Person making the offer and the legal, financial,
regulatory and other aspects of the offer deemed appropriate by the Board of
Directors of Target, is reasonably capable of being completed, and if
consummated, would result in a transaction that provides consideration to the
holders of Target Common Stock with a greater value than the consideration
payable in the Merger.
(b) Neither the Board of Directors of Target nor any
committee thereof shall (i) except, prior to the date the Target Stockholder
Approval is obtained, to the extent the Board of Directors of Target determines
in good faith (after consultation with outside counsel) that such action would
be prudent to assure compliance with their fiduciary obligations, and subject to
providing three business days' prior written notice to Wildcat, (x) withdraw or
modify, or propose publicly to withdraw or modify, in a manner adverse to
Wildcat, the approval or recommendation by such Board of Directors or such
committee of the Merger or this Agreement or (y) approve or recommend, or
propose publicly to approve or recommend, any Takeover Proposal, or (ii) cause
Target to enter into any acquisition agreement or other similar agreement (an
"Acquisition Agreement") related to any Takeover Proposal.
(c) In addition to the obligations of Target set
forth in paragraphs (a) and (b) of this Section 4.3, Target shall immediately
advise Wildcat orally and in writing of any request for information or of any
Takeover Proposal, the material terms and conditions of such request or Takeover
Proposal and the identity of the person making such request or Takeover
Proposal. Target will keep Wildcat informed of the status and details (including
amendments or proposed amendments) of any such request or Takeover Proposal.
(d) Nothing contained in this Section 4.3 shall
prohibit Target from
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26
taking and disclosing to its stockholders a position contemplated by Rule 14d-9
or 14e-2 promulgated under the Exchange Act or from making any disclosure to
Target's stockholders if, in the good faith judgment of the Board of Directors
of Target, after consultation with outside counsel, failure so to disclose would
be inconsistent with its obligations under applicable law; provided, however,
that neither Target nor its Board of Directors nor any committee thereof shall
withdraw or modify, or propose publicly to withdraw or modify, its position with
respect to this Agreement or the Merger or approve or recommend, or propose
publicly to approve or recommend, a Takeover Proposal.
4.4 Compliance with Conditions Precedent, Etc. Each of the
parties will use its best efforts to cause the conditions precedent to the
Merger set forth in Article V to be fulfilled and, subject to the terms and
conditions herein provided, to take, or cause to be taken, all action, and to do
or cause to be done all things necessary, proper or advisable under applicable
laws and regulations to consummate and make effective the transactions
contemplated by this Agreement and the Merger, including to lift any injunction
or remove any other impediment to the consummation of such transactions or the
Merger. 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 and/or directors of the parties hereto shall take all such necessary
action. Nothing in this Agreement shall be deemed to require Wildcat or Target
to agree to, or proffer to, divest or hold separate (x) any assets or any
portion of any business of Target or any of its Subsidiaries if the Board of
Directors of Wildcat determines that so doing could reasonably be expected to
have a Material Adverse Effect on Target, (y) any assets or any portion of any
business of Wildcat or any of its Subsidiaries or (z) any assets of or any
portion of Target's ownership interests in Dove. Without limiting the generality
of the foregoing, Target shall give Wildcat the opportunity to participate in
the defense of any litigation against Target and/or its directors relating to
the transactions contemplated by this Agreement or the Voting Agreement.
4.5 Certain Notifications. At all times from the date hereof
until the Effective Time, each party shall promptly notify the others in writing
of the occurrence of any event which will or may result in the failure to
satisfy the conditions specified in Article V.
4.6 Expenses. (a) Except as set forth in this Section 4.6,
whether or not the Merger is consummated, all costs and expenses incurred in
connection with this Agreement and the transactions contemplated hereby shall be
paid by the party incurring such expense.
(b) In the event that (i) following the date of this
Agreement and prior to the date of the Target Stockholders Meeting, a Takeover
Proposal shall have been made to Target or shall have been made directly to the
stockholders of Target generally or shall have otherwise become publicly known
or any Person shall have publicly announced an intention (whether or not
conditional) to make a Takeover Proposal and thereafter this Agreement is
<PAGE> 27
27
terminated by either Wildcat or Target pursuant to Section 6.1(d) without a
Target Stockholders Meeting having occurred or Section 6.1(e), or (ii) this
Agreement is terminated by Wildcat pursuant to Section 6.1(g), then Target shall
pay Wildcat a termination fee equal to $135 million (the "Termination Fee"),
payable by wire transfer of same-day funds within two business days of the date
of such termination; provided, however, that no Termination Fee shall be payable
to Wildcat pursuant to clause (i) of this paragraph (b) unless and until within
12 months of such termination Target enters into any Acquisition Agreement with
respect to, or consummates, any Takeover Proposal, in which event the
Termination Fee shall be payable upon the first to occur of the entering into
such Acquisition Agreement or the consummation of such Takeover Proposal.
(c) All stock transfer, real estate transfer,
documentary, stamp, recording and other similar taxes (including interest,
penalties and additions to any such taxes) incurred in connection with this
Agreement and the transactions contemplated hereby shall be paid by Target.
4.7 Public Announcements. Wildcat and Target shall consult
with each other before issuing any press release or otherwise making any public
statements with respect to this Agreement or any transaction contemplated herein
and shall not issue any such press release or make any such public statement
prior to such consultation, except as may be required by law or any listing
agreement with the Nasdaq National Market or any exchange upon which the capital
stock of Wildcat is listed.
4.8 Preparation of the Form S-4 and Proxy Statement;
Stockholders Meetings. (a) As soon as practicable following the date of this
Agreement, Wildcat and Target shall prepare and file with the SEC the Proxy
Statement, and Wildcat shall prepare and file with the SEC the Form S-4, in
which the Proxy Statement, will be included as a prospectus. Each of Target and
Wildcat shall use reasonable efforts to have the Form S-4 declared effective
under the Securities Act as promptly as practicable after such filing and to
keep the Form S-4 effective for so long as necessary to complete the Merger.
Target will use all reasonable efforts to cause the Proxy Statement to be mailed
to Target's stockholders as promptly as practicable after the Form S-4 is
declared effective under the Securities Act. Wildcat shall take any action
(other than qualifying to do business in any jurisdiction in which it is not now
so qualified or to file a general consent to service of process) required to be
taken under any applicable state securities laws in connection with the issuance
of Wildcat Common Stock and Wildcat Preferred Stock (including the issuance by
Wildcat of depositary shares with respect thereto) in the Merger, and Target
shall furnish all information concerning Target as may be reasonably requested
in connection with any such action. No filing of, or amendment or supplement to,
or correspondence to the SEC or its staff with respect to the Form S-4 will be
made by Wildcat, or with respect to the Proxy Statement will be made by Wildcat
or Target, without providing the other party a reasonable
<PAGE> 28
28
opportunity to review and comment thereon. Wildcat will advise Target, promptly
after it receives notice thereof, of the time when the Form S-4 has become
effective or any supplement or amendment thereto has been filed, the issuance of
any stop order, the suspension of the qualification of the Wildcat Common Stock
or Wildcat Preferred Stock issuable or issued in connection with the Merger for
offering or sale in any jurisdiction, or any request by the SEC for amendment of
the Form S-4 or the Proxy Statement or comments thereon and responses thereto or
requests by the SEC for additional information and will, as promptly as
practicable, provide to Target copies of all correspondence and filings with the
SEC with respect to the Form S-4. Target will inform Wildcat, promptly after it
receives notice thereof, of any request by the SEC for the amendment of the
Proxy Statement or comments thereon and responses thereto or requests by the SEC
for additional information and will, as promptly as practicable, provide to
Wildcat copies of all correspondence and filings with the SEC with respect to
the Proxy Statement. If at any time prior to the Effective Time any information
relating to Target or Wildcat, or any of their respective Affiliates, directors
or officers, should be discovered by Target or Wildcat that should be set forth
in an amendment or supplement to the Form S-4 or the Proxy Statement, so that
any of such documents would not include any misstatement of a material fact or
omit to state any material fact necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading, the party
that discovers such information shall promptly notify the other parties hereto,
and an appropriate amendment or supplement describing such information shall be
promptly filed with the SEC and, to the extent required by law, disseminated to
the shareholders of Wildcat and Target.
(b) Target shall (i) as soon as practicable following
the date of this Agreement, establish a record date (which shall be as soon as
practicable following the date of this Agreement) for, duly call, give notice
of, convene and hold a meeting of its stockholders (the "Target Stockholders
Meeting") for the purpose of obtaining the Target Stockholder Approval, (ii)
through its Board of Directors, recommend to its stockholders the approval and
adoption of this Agreement, the Merger and the other transactions contemplated
hereby and (iii) use its reasonable efforts to solicit the Target Stockholder
Approval. Target agrees that its obligations pursuant to clause (i) of the first
sentence of this Section 4.8(b) shall not be affected by the commencement,
public proposal, public disclosure or communication to Target of any Takeover
Proposal, and such obligations shall not be affected by any action that Target
takes under Section 4.3(b).
4.9 Letters of Target's Accountants. Target shall use
reasonable efforts to cause to be delivered to Wildcat two letters from Target's
independent accountants, one dated a date within two business days before the
date on which the Form S-4 shall become effective and one dated a date within
two business days before the Effective Date, each addressed to Wildcat, in form
and substance reasonably satisfactory to Wildcat and customary in scope and
substance for comfort letters delivered by independent public accountants in
connection with registration
<PAGE> 29
29
statements similar to the Form S-4.
4.10 Letters of Wildcat's Accountants. Wildcat shall use
reasonable efforts to cause to be delivered to Target two letters from Wildcat's
independent accountants, one dated a date within two Business Days before the
date on which the Form S-4 shall become effective and one dated a date within
two Business Days before the Effective Date, each addressed to Target, in form
and substance reasonably satisfactory to Target and customary in scope and
substance for comfort letters delivered by independent public accountants in
connection with registration statements similar to the Form S-4.
4.11 HSR and Other Filings. Target and Wildcat shall promptly
make their respective filings and any other required or requested submissions
under the HSR Act and shall cooperate with one another and use their best
efforts, as required by and subject to Section 4.4, to determine whether, in
connection with the consummation of the transactions contemplated by this
Agreement, any other filings are required to be made with, or any consents are
required to be obtained from, any third party or any Governmental Authority
prior to the Effective Time and to make any such filings promptly and to obtain
any such consents on a timely basis.
4.12 Access to Information; Confidentiality. Subject to the
existing confidentiality agreement dated as of August 3, 2000 (the
"Confidentiality Agreement"), among Target, Dove and Wildcat, upon reasonable
notice, each of Target and Wildcat shall, and shall cause each of its respective
Subsidiaries to, afford to the other party and to the officers, employees,
accountants, counsel, financial advisors and other representatives of such other
party, reasonable access during normal business hours during the period prior to
the Effective Time to all their respective properties, books, contracts,
commitments, personnel and records and, during such period, each of Target and
Wildcat shall, and shall cause each of its respective Subsidiaries to, furnish
promptly to the other party all other information concerning its business,
properties and personnel as such other party may reasonably request. Neither
Target nor Wildcat shall be required to provide access to or disclose
information where such access or disclosure would contravene any applicable law,
rule, regulation, order or decree or would, with respect to any pending matter,
result in a waiver of the attorney-client privilege or the protection afforded
attorney work-product. Target and Wildcat shall use reasonable efforts to obtain
from third parties any consents or waivers of confidentiality restrictions with
respect to any such information being provided by it. No review pursuant to this
Section 4.12 shall have an effect for the purpose of determining the accuracy of
any representation or warranty given by any party hereto to the other parties
hereto. Each of Target and Wildcat will hold, and will cause its respective
officers, employees, accountants, counsel, financial advisors and other
representatives and Affiliates to hold, any nonpublic information in accordance
with the terms of the Confidentiality Agreement.
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30
4.13 Indemnification, Exculpation and Insurance. (a) Wildcat
agrees that all rights to indemnification and exculpation from liabilities for
acts or omissions occurring at or prior to the Effective Time (and rights for
advancement of expenses) now existing in favor of the current or former
directors or officers of Target or its Subsidiaries as provided in their
respective certificate of incorporation or by-laws (or comparable organizational
documents) and any indemnification or other agreements of Target or its
Subsidiaries as in effect on the date hereof shall be assumed by Surviving
Corporation in the Merger, without further action, as of the Effective Time and
shall survive the Merger and shall continue in full force and effect in
accordance with their terms.
(b) In the event that Wildcat or any of its
successors or assigns (i) consolidates with or merges into any other Person and
is not the continuing or surviving corporation or entity of such consolidation
or merger or (ii) transfers or conveys all or substantially all its properties
and assets to any Person, then, and in each such case, Wildcat shall cause
proper provision to be made so that its successors and assigns assume the
obligations set forth in this Section 4.13.
(c) For six years from and after the Effective Time,
Wildcat shall cause the Surviving Corporation to maintain in effect directors'
and officers' liability insurance covering acts or omissions occurring prior to
the Effective Time covering each person currently covered by the directors' and
officers' liability insurance policy maintained by Target or any Affiliate of
Target on behalf of Target and its Subsidiaries on terms with respect to such
coverage and amounts no less favorable than those of such policy in effect on
the date hereof; provided that the Surviving Corporation may substitute therefor
other policies of at least the same coverage and amount and such other terms
which are, in the aggregate, no less favorable to such directors and officers;
provided, however, that in no event shall the Surviving Corporation be required
to pay aggregate premiums for insurance under this Section 5.08(c) in excess of
200% of the amount of the aggregate premiums paid by Target in 1999 for such
purpose (which 1999 aggregate premiums Target represents and warrants to be
$372,500); and provided further that the Surviving Corporation shall
nevertheless be obligated to provide such coverage as may be obtained for such
200% amount.
(d) The provisions of this Section 4.13 are (i)
intended to be for the benefit of, and will be enforceable by, each party
currently covered by such insurance or such indemnification agreements or
provisions, his or her heirs and his or her representatives and (ii) are in
addition to, and not in substitution for, any other rights to indemnification or
contribution that any such person may have by contract or otherwise.
4.14 Stock Exchange Listings. Wildcat shall use reasonable
efforts to cause the Wildcat Common Stock issuable in the Merger and issuable
upon conversion and as dividends
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on the Wildcat Preferred Stock to be approved for listing on the Nasdaq National
Market, subject to official notice of issuance, as promptly as practicable after
the date hereof, and in any event prior to the Effective Date.
4.15 Tax Treatment. Each of Wildcat and Target shall use
reasonable best efforts to cause the Merger to qualify as a reorganization under
the provisions of Section 368 of the Code.
4.16 Target Series B Preferred Stock. Prior to the Effective
Time, Target shall cause the Certificate of Designation for the Target Series B
Preferred Stock to be amended to provide that each share of Target Series B
Preferred Stock shall be entitled to one-tenth of one vote per share on all
matters, voting together with the Target Common Stock and the other classes of
Target voting securities as a single class.
4.17 Target Stock Options and Warrants. (a) As soon as
practicable following the date of this Agreement, the Board of Directors of
Target (or, if appropriate, any committee administering Target Stock Plans)
shall adopt such resolutions or take such other actions as may be required to
effect the following:
(i) adjust the terms of all outstanding Target Stock Options,
whether vested or unvested, as necessary to provide that, at the
Effective Time, each Target Stock Option outstanding immediately prior
to the Effective Time shall be amended and converted into an option to
acquire, on the same terms and conditions as were applicable under the
Target Stock Option, the number of shares of Wildcat Common Stock
(rounded up to the nearest whole share) determined by multiplying the
number of shares of Target Common Stock subject to such Target Stock
Option by the Exchange Ratio (assuming, for this purpose, that Wildcat
failed to make the Wildcat Cash Election), at a price per share of
Wildcat Common Stock equal to (A) the aggregate exercise price for the
shares of Target Common Stock otherwise purchasable pursuant to such
Target Stock Option divided by (B) the aggregate number of shares of
Wildcat Common Stock deemed purchasable pursuant to such Target Stock
Option (each, as so adjusted, an "Adjusted Option"); provided that such
exercise price shall be rounded down to the nearest whole cent; and
(ii) make such other changes to the Target Stock Plans as
Wildcat and Target may agree are appropriate to give effect to the
Merger.
(b) The adjustments provided herein with respect to
any Target Stock Options to which Section 421(a) of the Code applies shall be
and are intended to be effected in a manner which is consistent with Section
424(a) of the Code.
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(c) At the Effective Time, by virtue of the Merger
and without the need of any further corporate action, each Target Stock Option
outstanding at the Effective Time shall be converted into an option relating to
Wildcat Common Stock following the Effective Time so as to substitute Wildcat
Common Stock for Target Common Stock purchasable thereunder (subject to the
adjustments required by this Section 4.17 after giving effect to the Merger).
(d) As soon as practicable following the Effective
Time, Wildcat shall prepare and file with the SEC a registration statement on
Form S-8 (or another appropriate form) registering a number of shares of Wildcat
Common Stock equal to the number of shares subject to the Adjusted Options. Such
registration statement shall be kept effective (and the current status of the
prospectus or prospectuses required thereby shall be maintained) at least for so
long as any Adjusted Options or any unsettled awards granted under Target Stock
Plans after the Effective Time may remain outstanding.
(e) As soon as practicable following the Effective
Time, Wildcat shall deliver to the holders of Target Stock Options appropriate
notices setting forth such holders' rights pursuant to the respective Target
Stock Plans and the agreements evidencing the grants of such Target Stock
Options and that such Target Stock Options and agreements shall be assumed by
Wildcat and shall continue in effect on the same terms and conditions (subject
to the adjustments required by this Section 4.17 after giving effect to the
Merger and to vesting, if any, caused by the Merger).
(f) Except as otherwise expressly provided in this
Section 4.17 and except to the extent required under the respective terms of
Target Stock Options, all restrictions or limitations on transfer and vesting
with respect to Target Stock Options awarded under Target Stock Plans or any
other plan, program or arrangement of Target or any of its Subsidiaries, to the
extent that such restrictions or limitations shall not have already lapsed, and
all other terms thereof, shall remain in full force and effect with respect to
such options after giving effect to the Merger and the assumption by Wildcat as
set forth above.
(g) At the Effective Time, by virtue of the Merger
and without the need for any further corporate action, each Target Warrant
outstanding immediately prior to the Effective Time shall be automatically
converted into an option or warrant to acquire, on the same terms and
conditions, including registration rights, as were applicable under such Target
Warrant, the number of shares of Wildcat Common Stock (rounded up to the nearest
whole share) determined by multiplying the number of shares of Target Common
Stock subject to such Target Warrant by the Exchange Ratio (assuming, for this
purpose, that Wildcat failed to make the Wildcat Cash Election), at a price per
share of Wildcat Common Stock equal to (A) the aggregate exercise price for
shares of Target Common Stock otherwise purchasable pursuant to such Target
Warrant divided by (B) the aggregate number of shares of Wildcat Common Stock
deemed purchasable
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pursuant to such Target Warrant; provided, however, that such exercise price
shall be rounded down to the nearest whole cent.
4.18 Employee Benefit Plans; Existing Agreements. (a) For the
six-month period following the Effective Date, Wildcat shall cause the Surviving
Corporation to either maintain the employee benefit programs (other than
equity-based arrangements) provided by Target and its Subsidiaries before the
Effective Time or replace all or any such programs with programs maintained for
similarly situated employees of Wildcat; provided that the aggregate level of
benefits (other than equity-based arrangements) provided to Target employees
during this period shall be substantially similar to the aggregate level of
benefits (other than equity-based arrangements) provided by Target and its
Subsidiaries before the Effective Time. To the extent that any employee benefit
plan of Wildcat or any of its Affiliates (a "Wildcat Plan") becomes applicable
to any employee or former employee of Target or its Subsidiaries, Wildcat shall
grant, or cause to be granted, to such employees or former employees credit for
their service with Target and its Subsidiaries (and any of their predecessors)
for the purpose of determining eligibility to participate and nonforfeitability
of benefits under such Wildcat Plan and for purposes of benefit accrual under
vacation and severance pay plans (but only to the extent such service was
credited under similar plans of Target and its Subsidiaries).
(b) With respect to any Wildcat Plan that is a
welfare benefit plan and is made available to individuals who immediately prior
to the Effective Time were employees of Target or any of its Subsidiaries (a
"Wildcat Welfare Plan"), Wildcat shall cause the Surviving Corporation to (i)
waive any waiting periods, pre-existing condition exclusions and
actively-at-work requirements to the extent such provisions were inapplicable
immediately before such Wildcat Welfare Plan was so made available and (ii)
provide that any eligible expenses incurred by any such individual and his or
her covered dependents during the portion of the plan year of the corresponding
Target Benefit Plan ending on the date such plan was made available shall be
taken into account for purposes of satisfying applicable deductible,
co-insurance and maximum out-of-pocket requirements applicable to such
individual and his or her covered dependents for the applicable plan year as if
such amounts had been paid in accordance with such Wildcat Welfare Plan.
(c) Subject to compliance by Wildcat with its
obligations under Sections 4.18(a) and 4.18(b), nothing contained in this
Section 4.18 or elsewhere in this Agreement shall be construed to prevent the
termination of employment of any individual employee of Target and its
Subsidiaries or any change in the employee benefits available to any such
individual employee or the amendment or termination of any particular Target
Benefit Plan to the extent permitted by its terms as in effect immediately prior
to the Effective Time.
4.19 Section 16 Matters. Prior to the Effective Time, Wildcat
and Target shall
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take all such steps as may be required to cause any dispositions of Target
Common Stock or Target Preferred Stock (including derivative securities with
respect to Target Common Stock or Target Preferred Stock) or acquisitions of
Wildcat Common Stock or Wildcat Preferred Stock (including derivative securities
with respect to Wildcat Common Stock or Wildcat Preferred Stock) resulting from
the transactions contemplated by Article I and Section 4.17 of this Agreement by
each Person who is subject to the reporting requirements of Section 16(a) of the
Exchange Act with respect to Target, to be exempt under Rule 16b-3 promulgated
under the Exchange Act.
4.20 Voting Agreement Legend. Target will inscribe upon any
certificate representing shares of capital stock subject to the Voting Agreement
tendered by a stockholder in connection with any proposed transfer of such
shares by such stockholder in accordance with the terms of the Voting Agreement,
the following legend: "THE SHARES OF COMMON STOCK, PAR VALUE $0.01 PER SHARE, OF
INTERMEDIA COMMUNICATIONS INC., REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO A
VOTING AGREEMENT DATED AS OF SEPTEMBER 1, 2000, AND ARE SUBJECT TO THE TERMS
THEREOF. COPIES OF SUCH AGREEMENT MAY BE OBTAINED AT THE PRINCIPAL EXECUTIVE
OFFICES OF INTERMEDIA COMMUNICATIONS INC."; and Target will return such
certificate containing such inscription to such Stockholder within three
business days following Target's receipt thereof.
4.21 Target Rights Agreement. The Board of Directors of Target
shall take all action necessary or desirable (including redeeming the Target
Rights immediately prior to the Effective Time or amending the Target Rights
Agreement) in order to render the Target Rights inapplicable to the Merger and
to the other transactions contemplated by this Agreement and the Voting
Agreement to the extent provided herein.
4.22 Target Securities. Following the Effective Time, Wildcat
shall comply with the applicable terms of the Credit Facility, the outstanding
indentures and the certificates of designation of Target and its Subsidiaries,
including the applicable provisions thereof relating to a "change of control".
4.23 Prepayment of Indebtedness. Target shall provide Wildcat
with reasonable advance notice of, and shall consult with Wildcat regarding, its
intention to prepay any notes, bonds, loans or similar indebtedness.
4.24 Dove Certificate of Incorporation. The Board of Directors
of Dove shall propose that the Certificate of Incorporation of Dove be amended
to include a provision prohibiting Dove from entering into a material
transaction with any of its affiliates, including transactions that would have
been covered by Section 203 of the DGCL had the approval under
<PAGE> 35
35
such section not been granted as described in Section 2.14 of this Agreement,
unless such transaction is approved by a special committee of its independent
directors. Pending the adoption of such amendment, the Surviving Corporation
shall use its best efforts to cause the Board of Directors of Dove to give
effect to such amendment as though it had been adopted.
4.25 Wildcat Financing Commitments. Wildcat shall provide
financing to Target in the form of equity or subordinated indebtedness upon
terms and conditions to be agreed upon by Wildcat and Target which shall
constitute unrestricted funds for purposes of Target's debt instruments. Such
financing shall be in an aggregate amount not to exceed (a) during September
2000, $40 million; or (b) during any calendar quarter following September 2000,
$110 million; provided, however, that Wildcat shall not be required to advance
such financing unless Target is unable to meet its monthly cash requirements to
fund its operating expenses and working capital after using all unrestricted
cash available to Target, including amounts available under the Credit Facility
(in accordance with the terms of Target's outstanding debt instruments). The
parties also acknowledge that Target may use available cash and borrowing under
the Credit Facility as restricted funds for purposes of Target's debt
instruments in an amount up to $60 million during September 2000 and in an
amount up to $140 million during any calendar quarter thereafter.
ARTICLE V
CONDITIONS
5.1 Conditions to the Merger. The obligations of each party to
effect the Merger and carry out its respective obligations hereunder shall be
subject to the satisfaction, at or prior to the Effective Time, of each of the
following conditions:
(a) all notifications required pursuant to the HSR
Act to carry out the transactions contemplated by this Agreement shall have been
made, and the applicable waiting period and any extensions thereof shall have
expired or been terminated;
(b) no preliminary or permanent injunction or other
order of any Governmental Authority shall have been issued and be in effect, and
no United States Federal or state statute, rule or regulation shall have been
enacted or promulgated after the date hereof and be in effect that prohibits the
consummation of the Merger;
(c) there shall not be pending any action, suit or
proceeding commenced by any Governmental Authority in the United States
prohibiting the consummation of the Merger;
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36
(d) the Form S-4 shall have become effective under
the Securities Act and shall not be the subject of any stop order or proceedings
seeking a stop order;
(e) the shares of Wildcat Common Stock issuable as
Merger Consideration shall have been approved for listing on the Nasdaq National
Market, subject only to official notice of issuance;
(f) (i) all material consents, approvals or orders of
authorization of, or actions by the FCC, and (ii) all material PUC approvals
required to consummate the Merger and the other transactions contemplated
hereby, the failure of which to be obtained, individually or in the aggregate,
are reasonably likely to have a Material Adverse Effect on Target, shall have
been obtained; and
(g) the Target Stockholder Approval shall have been
obtained.
5.2 Additional Conditions to the Obligations of Target. The
obligations of Target to consummate the transactions contemplated by this
Agreement shall be subject to the fulfillment or waiver, at or prior to the
Effective Time, of each of the following conditions:
(a) The representations and warranties of Wildcat
contained in this Agreement that are qualified as to materiality shall be true
and correct, and those that are not so qualified shall be true and correct in
all material respects, in each case as of the Effective Time, with the same
effect as if made as of the Effective Time (except to the extent expressly made
as of an earlier date, in which case as of such date), and all the covenants
contained in this Agreement to be complied with by Wildcat on or before the
Effective Time shall have been complied with in all material respects, and
Target shall have received a certificate of Wildcat to such effect signed by a
duly authorized officer of Wildcat.
(b) Target shall have received an opinion from its
counsel stating that the Merger will be treated for U.S. Federal income tax
purposes as a reorganization within the meaning of Section 368(a) of the Code
and that Wildcat, Target and Merger Sub will each be a party to that
reorganization within the meaning of Section 368(b) of the Code. In rendering
such opinion, counsel for Target shall be entitled to rely upon customary
representations of officers of Wildcat and Target.
5.3 Additional Conditions to the Obligations of Wildcat and
Merger Sub. The obligations of Wildcat and Merger Sub to consummate the
transactions contemplated by this Agreement shall be subject to the fulfillment
or waiver, at or prior to the Effective Time, of the following condition:
<PAGE> 37
37
The representations and warranties of Target contained in this
Agreement that are qualified as to materiality shall be true and correct, and
those that are not so qualified shall be true and correct in all material
respects, in each case as of the Effective Time, with the same effect as if made
as of the Effective Time (except to the extent expressly made as of an earlier
date, in which case as of such date), and all the covenants contained in this
Agreement to be complied with by Target on or before the Effective Time shall
have been complied with in all material respects, and Wildcat shall have
received a certificate of Target to such effect signed by a duly authorized
officer of Target.
5.4 Frustration of Closing Conditions. Neither Wildcat, Merger
Sub nor Target may rely on the failure of any condition set forth in this
Article V to be satisfied if such failure was caused by such party's failure to
use its best efforts to consummate the Merger and the other transactions
contemplated by this Agreement, as required by and subject to Section 4.4.
ARTICLE VI
TERMINATION, AMENDMENT AND WAIVER
6.1 Termination. This Agreement may be terminated at any time
prior to the Effective Time, whether before or after receipt of the Target
Stockholder Approval:
(a) by consent of the Boards of Directors of Wildcat
and Target;
(b) by Wildcat upon written notice to Target, if
Target shall have materially breached or failed to perform in any material
respect any of its representations, warranties, covenants or other agreements or
conditions of this Agreement, which breach shall not have been cured on or
before the Termination Date;
(c) by Target upon written notice to Wildcat, if
Wildcat shall have materially breached or failed to perform in any material
respect any of its representations, warranties, covenants or other agreements or
conditions of this Agreement, which breach shall not have been cured on or
before the Termination Date;
(d) by Target or Wildcat upon notice to the other, if
(i) the Merger shall not have become effective on or before June 30, 2001 (the
"Termination Date"), unless such date is extended by the consent of the Boards
of Directors of Target and Wildcat evidenced by appropriate resolutions;
provided, however, that the right to terminate this Agreement under this Section
6.1(d) shall not be available to any party whose failure to fulfill any
obligation under this Agreement has been the cause of, or resulted in, the
failure of the Effective Time to occur on or
<PAGE> 38
38
before such date;
(e) by Target or Wildcat, if the Target Stockholder
Approval shall not have been obtained at the Target Stockholders Meeting duly
convened therefor or at any adjournment or postponement thereof;
(f) by Target or Wildcat, if any injunction, order,
statute, rule or regulation having the effects set forth in Section 5.1(b) shall
be in effect and shall have become final and nonappealable; provided that the
party seeking to terminate this Agreement pursuant to this Section 6.1(f) shall
have used reasonable efforts to prevent the entry of and to remove such
injunction, order, statute, rule or regulation; or
(g) by Wildcat, if the Board of Directors of Target
or any committee thereof shall (i) withdraw or modify, or propose publicly to
withdraw or modify, in a manner adverse to Wildcat, the approval or
recommendation by such Board of Directors or such committee of the Merger or
this Agreement, or (ii) approve or recommend, or propose publicly to approve or
recommend, any Takeover Proposal.
6.2 Effect of Termination. In the event of the termination of
this Agreement pursuant to the provisions of Section 6.1, the provisions of this
Agreement (other than Section 4.6, the last sentence of Section 4.12 and this
Section 6.2 hereof) shall become void and have no effect, with no liability on
the part of any party hereto or its stockholders or directors or officers in
respect thereof; provided that nothing contained herein shall be deemed to
relieve any party of any liability it may have to any other party with respect
to a willful breach of its obligations under this Agreement.
6.3 Amendment. This Agreement may be amended by the parties at
any time before or after the Target Stockholder Approval. This Agreement may not
be amended except by an instrument in writing signed on behalf of all of the
parties.
6.4 Waiver. Any term or provision of this Agreement (other
than the requirements set forth in Sections 6.1(a) and 6.1(f)) may be waived in
writing at any time by the party or parties entitled to the benefits thereof.
<PAGE> 39
39
ARTICLE VII
DEFINITIONS; INTERPRETATION
7.1 Definitions. As used in this Agreement, the following
terms have the following respective meanings:
Accounting Rules: as defined in Section 2.7.
Acquisition Agreement: as defined in section 4.3(a).
Adjusted Option: as defined in Section 4.17(a).
Affiliate: with respect to any specified Person, any other
Person that directly, or indirectly through one or more intermediaries,
controls, is controlled by, or is under common control with, such specified
Person, where "control" means the possession, directly or indirectly, of the
power to direct or cause the direction of the management policies of a Person,
whether through the ownership of voting securities, by contract, as trustee or
executor, or otherwise.
Agreement: as defined in the first paragraph of this
Agreement.
Appraisal Shares: as defined in Section 1.6(e).
Average Price: as defined in Section 1.6(a).
Certificate of Merger: as defined in Section 1.5.
Certificates: as defined in Section 1.9(b).
Closing Price: with respect to one share of Wildcat Common
Stock, for any day, the last reported sale price regular way or, in case no such
reported sale takes place on such day, the average of the closing bid and asked
prices regular way for such day, in each case (i) on the principal national
securities exchange on which the shares of Wildcat Common Stock are listed or to
which such shares are admitted to trading, (ii) if the Wildcat Common Stock is
not listed or admitted to trading on a national securities exchange, in the
over-the-counter market as reported by the Nasdaq Market or any comparable
system or (iii) if the Wildcat Common Stock is not listed on the Nasdaq Market
or a comparable system, as furnished by two members of the National Association
of Securities Dealers selected from time to time in good faith by the Board of
Directors of Wildcat for that purpose. In the absence of all of the foregoing,
or if for any other reason the Closing Price cannot be determined pursuant to
the provisions of the preceding
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40
sentence, the Closing Price shall be the fair market value thereof as determined
in good faith by the Board of Directors of Wildcat.
Code: as defined in the recitals.
Common Stock Merger Consideration: as defined in Section
1.6(a).
Communications Act: as defined in Section 2.6.
Confidentiality Agreement: as defined in Section 4.12.
Credit Facility: as defined in Section 4.1(d).
DGCL: as defined in Section 1.1.
Dove: as defined in Section 2.2(b).
Dove Class A Common Stock: as defined in Section 2.2(b).
Dove Class B Common Stock: as defined in Section 2.2(b).
Dove Common Stock: as defined in Section 2.2(b).
Dove Preferred Stock: as defined in Section 2.2(b).
Dove Stock Options: as defined in Section 2.2(b).
Dove Stock Plan: as defined in Section 2.2(b).
Dove Warrants: as defined in Section 2.2(b).
Effective Date: as defined in Section 1.5.
Effective Time: as defined in Section 1.5.
Encumbrance: any security interest, pledge, mortgage, lien
(including environmental and tax liens), charge, encumbrance, adverse claim,
preferential arrangement or restriction of any kind, including any restriction
on the use, voting, transfer, receipt of income or other exercise of any
attributes of ownership.
<PAGE> 41
41
Exchange Act: the Securities Exchange Act of 1934, as amended.
Exchange Agent: as defined in Section 1.9.
Exchange Ratio: as defined in Section 1.6(a).
FCC: as defined in Section 2.6.
Form S-4: the registration statement on Form S-4 filed by
Wildcat to register under the Securities Act (i) the issuance of the shares of
Wildcat Common Stock to be issued as Common Stock Merger Consideration and (ii)
the shares of Wildcat Preferred Stock to be issued as the Preferred Stock Merger
Consideration (including the issuance by Wildcat of depositary shares with
respect thereto).
GAAP: United States generally accepted accounting principles
and practices as in effect from time to time and applied consistently throughout
the periods involved.
Governmental Authority: means any United States Federal, state
or local or any foreign government, governmental, regulatory or administrative
authority, agency or commission or any court, tribunal or judicial or arbitral
body.
HSR Act: the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended.
Knowledge: with respect to any Person that is not an
individual, as to any specific matter, the knowledge of such Person's executive
officers and other officers having primary responsibility for such matter.
Material Adverse Effect: any change or effect that,
individually or in the aggregate with all other changes or effects, is or is
reasonably likely to be materially adverse to the business, operations,
properties, financial condition, assets, liabilities or prospects of Target and
its Subsidiaries, taken as a whole, when used with respect to Target, or of
Wildcat and its Subsidiaries, taken as a whole, when used with respect to
Wildcat; other than those relating to the economy or securities markets in
general or the industries in which Wildcat, Target and their respective
Subsidiaries operate in general.
Merger: as defined in the recitals.
Merger Consideration: as defined in Section 1.6(b).
<PAGE> 42
42
Merger Sub: as defined in the first paragraph of this
Agreement.
Merger Sub Common Stock: as defined in Section 1.7.
Person: an individual, general or limited partnership, joint
venture, corporation, limited liability company, trust, unincorporated
organization or government or any department or agency thereof.
Preferred Stock Merger Consideration: collectively, the Series
D Preferred Stock Merger Consideration, the Series E Preferred Stock Merger
Consideration, the Series F Preferred Stock Merger Consideration and the Series
G Preferred Stock Merger Consideration.
Proxy Statement: the proxy statement relating to the
solicitation of the approval of the Merger by the holders of the outstanding
Target Common Stock which is included in the Form S-4.
PUC: as defined in Section 2.6.
SEC: the Securities and Exchange Commission.
Securities Act: the Securities Act of 1933, as amended.
Series D Preferred Stock Merger Consideration: as defined in
Section 1.6(b).
Series E Preferred Stock Merger Consideration: as defined in
Section 1.6(b).
Series F Preferred Stock Merger Consideration: as defined in
Section 1.6(b).
Series G Preferred Stock Merger Consideration: as defined in
Section 1.6(b).
Subsidiary: with respect to any Person, any corporation or
other business entity, of which a majority (by number of votes) of the shares of
capital stock (or other voting interests) at the time outstanding is owned by
such Person directly or indirectly through Subsidiaries.
Superior Proposal: as defined in Section 4.3(a).
Surviving Corporation: as defined in Section 1.1.
Takeover Proposal: as defined in Section 4.3(a).
<PAGE> 43
43
Target: as defined in the first paragraph of this Agreement.
Target Benefit Plan: any bonus, pension, profit sharing,
deferred compensation, incentive compensation, stock ownership, stock purchase,
stock option, phantom stock, retirement, vacation, severance, disability, death
benefit, hospitalization, medical, welfare benefit or other plan, arrangement or
understanding providing compensation or benefits to any current or former
director, officer or employee of Target or any of its Subsidiaries.
Target Common Stock: as defined in Section 2.2(a).
Target Disclosure Schedule: as defined in Article II.
Target Filed SEC Documents: as defined in Article II.
Target Permits: as defined in Section 2.15.
Target Preferred Stock: collectively, Target Series B
Preferred Stock, Target Series D Preferred Stock, Target Series E Preferred
Stock, Target Series F Preferred Stock and Target Series G Preferred Stock.
Target Rights: as defined in Section 2.2(a).
Target Rights Agreement: as defined in Section 2.2(a).
Target Series B Preferred Stock: 13.5% Series B Redeemable
Exchangeable Preferred Stock of Target.
Target Series C Preferred Stock: as defined in Section 2.2.
Target Series D Preferred Stock: 7% Series D Junior
Convertible Preferred Stock of Target.
Target Series E Preferred Stock: 7% Series E Junior
Convertible Preferred Stock of Target.
Target Series F Preferred Stock: 7% Series F Junior
Convertible Preferred Stock of Target.
Target Series G Preferred Stock: 7% Series G Junior
Convertible Participating Preferred Stock of Target.
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Target SEC Documents: as defined in Section 2.7.
Target Stock Options: as defined in Section 2.2(a).
Target Stock Plans: as defined in Section 2.2(a).
Target Stockholder Approval: as defined in Section 2.11.
Target Stockholders Meeting: as defined in Section 4.8(b).
Target Warrants: as defined in Section 2.2(a).
Termination Date: as defined in Section 6.1(d).
Termination Fee: as defined in Section 4.6(b).
Voting Agreement: as defined in the recitals.
Wildcat: as defined in the first paragraph of this Agreement.
Wildcat Cash Election: as defined in Section 1.6(a).
Wildcat Common Stock: as defined in Section 3.2.
Wildcat Preferred Stock: collectively, the Wildcat Series D
Preferred Stock, the Wildcat Series E Preferred Stock, the Wildcat Series F
Preferred Stock and the Wildcat Series G Preferred Stock.
Wildcat Series D Preferred Stock: as defined in Section
1.6(b)(i).
Wildcat Series E Preferred Stock: as defined in Section
1.6(b)(ii).
Wildcat Series F Preferred Stock: as defined in Section
1.6(b)(iii).
Wildcat Series G Preferred Stock: as defined in Section
1.6(b)(iv).
Wildcat SEC Documents: as defined in Section 3.6.
Wildcat Welfare Plan: as defined in Section 4.18(b).
<PAGE> 45
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7.2 Interpretation. When a reference is made in this Agreement
to a recital, Article, Section, Schedule or Exhibit, such reference shall be to
a recital, Article or Section of, or Schedule or Exhibit to, this Agreement
unless otherwise indicated. The table of contents and headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement. Whenever the words "include",
"includes" or "including" are used in this Agreement, they shall be deemed to be
followed by the words "without limitation." The words "hereof", "herein" and
"hereunder" and words of similar import when used in this Agreement shall refer
to this Agreement as a whole and not to any particular provision of this
Agreement. The definitions contained in this Agreement are applicable to the
singular as well as the plural forms of such terms and to the masculine as well
as to the feminine and neuter genders of such term.
ARTICLE VIII
GENERAL PROVISIONS
8.1 Nonsurvival of Representations and Warranties. None of the
representations, warranties, covenants or agreements in this Agreement or in any
instrument delivered pursuant to this Agreement shall survive the Effective
Time. This Section 8.1 shall not limit any covenant or agreement of the parties
which by its terms contemplates performance after the Effective Time.
8.2 Notices. All notices, consents, instructions and other
communications required or permitted under this Agreement shall be effective
only if given in writing and shall be considered to have been duly given when
(i) delivered by hand, (ii) sent by telecopier (with receipt confirmed),
provided that a copy is mailed (on the same date) by certified or registered
mail, return receipt requested, postage prepaid, or (iii) received by the
addressee, if sent by Express Mail, Federal Express or other reputable express
delivery service (receipt requested), or by first class certified or registered
mail, return receipt requested, postage prepaid. Notice shall be sent in each
case to the appropriate addresses or telecopier numbers set forth below (or to
such
<PAGE> 46
46
other addresses and telecopier numbers as a party may from time to time
designate as to itself by notice similarly given to the other parties in
accordance herewith, which shall not be deemed given until received by the
addressee). Notice shall be given:
if to Target:
INTERMEDIA COMMUNICATIONS INC.
One Intermedia Way
Tampa, FL 33647
Attention: Robert M. Manning
Facsimile: 813-829-2470
and a copy to:
Kronish Lieb Weiner & Hellman LLP
1114 Avenue of the Americas
New York, NY 10036
Attention: Ralph J. Sutcliffe, Esq.
Facsimile: 212-479-6275
if to Wildcat or Merger Sub:
WORLDCOM, INC.
500 Clinton Center Drive
Clinton, MS 39056
Attention: K. William Grothe, Jr.
Facsimile: 601-460-5239
and a copy to:
Cravath, Swaine & Moore
825 Eighth Avenue
New York, NY 10019
Attention: Robert I. Townsend, III, Esq.
Facsimile: (212) 765-1047
8.3 Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of law,
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any
<PAGE> 47
47
manner materially adverse to any party. Upon a determination that any term or
other provision is invalid, illegal or incapable of being enforced, the parties
hereto shall negotiate in good faith to modify this Agreement so as to effect
the original intent of the parties as closely as possible in a mutually
acceptable manner in order that the transactions contemplated by this Agreement,
including the Merger, be consummated as originally contemplated to the fullest
extent possible.
8.4 Entire Agreement; Third Party Beneficiaries. This
Agreement and the Voting Agreement (including the exhibits, schedules, documents
and instruments referred to herein or therein) (a) constitute the entire
agreement and supersede all other prior agreements and understandings, both
written and oral, among the parties, or any of them, with respect to the subject
matter hereof and thereof and (b) except with respect to Sections 4.13 and 4.17
of this Agreement, are not intended to confer upon any Person other than the
parties hereto any rights or remedies hereunder.
8.5 Governing Law. This Agreement shall be governed in all
respects, including validity, interpretation and effect, by the internal laws of
the State of Delaware, without regard to conflicts of laws provisions.
8.6 Counterparts. This Agreement may be executed in two or
more counterparts which together shall constitute a single instrument and shall
become effective when one or more counterparts have been signed by each of the
parties and delivered to the other parties.
8.7 Assignment. Neither this Agreement nor any of the rights,
interest or obligations under this Agreement shall be assigned, in whole or in
part, by operation of law or otherwise by any of the parties hereto without the
prior written consent of the other parties. Any assignment in violation of the
preceding sentence shall be void. Subject to the preceding two sentences, this
Agreement will be binding upon, inure to the benefit of, and be enforceable by,
the parties and their respective successors and assigns.
8.8 Specific Performance. The parties agree that due to the
unique subject matter of this transaction, monetary damages will be insufficient
to compensate the non-breaching parties in the event of a breach of any part of
this Agreement. Accordingly, the parties agree that any non-breaching party
shall be entitled (without prejudice to any other right or remedy to which it
may be entitled) to an appropriate decree of specific performance, or an
injunction restraining any violation of this Agreement or other equitable
remedies to enforce this Agreement (without establishing the likelihood of
irreparable injury or posting bond or other security), and the breaching party
waives in any action or proceeding brought to enforce this Agreement the defense
that there exists an adequate remedy at law.
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48
8.9 Jurisdiction. Each of the parties hereto (a) 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,
(b) 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 (c) 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.
8.10 WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO
HEREBY WAIVES TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM BROUGHT BY
OR AGAINST IT ON ANY MATTERS WHATSOEVER, IN CONTRACT OR IN TORT, ARISING OUT OF
OR IN ANY WAY CONNECTED WITH THIS AGREEMENT.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the parties have caused this Agreement to
be executed, by their respective duly authorized officers, on the date first
above written.
WORLDCOM, INC.
By: / s / BERNARD J. EBBERS
-------------------------------------
Name: Bernard J. Ebbers
Title: Director, President & Chief
Executive Officer
WILDCAT ACQUISITION CORP.
By: / s / BERNARD J. EBBERS
-------------------------------------
Name: Bernard J. Ebbers
Title: Director, President & Chief
Executive Officer
INTERMEDIA COMMUNICATIONS INC.
By: / s / DAVID C. RUBERG
-------------------------------------
Name: David C. Ruberg
Title: Chairman of the Board,
President & Chief Executive
Officer
