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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): July 2, 1998
Centennial Cellular Corp.
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(Exact name of registrant as specified in its charter)
0-19603
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(Commission File Number)
Delaware 06-1158179
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(State other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification Number)
50 Locust Avenue
New Canaan, Connecticut 06840
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(Address of principal (Zip Code)
executive offices)
Registrant's telephone number, including area code (203) 972-2000
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(Former name or former address, if changed since last report)
Page 1 of 58 Pages
Exhibit Index on Page 4
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Item 5. Other Events
Centennial Cellular Corp., (the "Company") issued a press release on July
2, 1998 regarding the signing of an Agreement and Plan of Merger (the
"Agreement") dated as of July 2, 1998 between the Company and CCW Acquisition
Corp. ("CCW"), a newly formed company formed at the direction of Welsh, Carson,
Anderson & Stowe VIII, L.P., with the Company as the surviving corporation.
The Agreement provides for the merger of the Company with CCW. Century
Communications Corp., a Delaware corporation that holds an approximate 33%
interest in the Company and approximately 74% of the voting power of the
Company, has entered into an agreement pursuant to which it has agreed to vote
its shares of the Company in favor of the merger.
Item 7. Financial Statements and Exhibits
(c) Exhibits.
The following exhibits are filed as part of this Current Report on Form
8-K:
2.1 Agreement and Plan of Merger, dated as of July 2, 1998, between Centennial
Cellular Corp. and CCW Acquisition Corp. (Schedules omitted).
99.1 Press release of Centennial Cellular Corp. dated July 2, 1998.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
CENTENNIAL CELLULAR CORP.
By: /s/ Scott N. Schneider
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Name: Scott N. Schneider
Title: Chief Financial Officer, Senior
Vice President and Treasurer
Date: July 16, 1998
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EXHIBIT INDEX
Exhibit Page
No. Description No.
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2.1 Agreement and Plan of Merger, dated as of July 2,
1998, between Centennial Cellular Corp. and CCW
Acquisition Corp. (Schedules omitted).
99.1 Press release of Centennial Cellular Corp. dated
July 2, 1998.
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EXECUTION COPY
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AGREEMENT AND PLAN OF MERGER
by and between
CCW ACQUISITION CORP.
and
CENTENNIAL CELLULAR CORP.
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Dated as of July 2, 1998
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TABLE OF CONTENTS
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ARTICLE I THE MERGER................................................2
1.1 The Merger..............................................2
1.2 Conversion of Shares....................................3
1.3 Common Share Elections..................................4
1.4 Proration...............................................5
1.5 Surrender and Payment...................................7
1.6 Dissenting Shares.......................................8
1.7 Stock Options...........................................9
ARTICLE II THE SURVIVING CORPORATION.................................9
2.1 Certificate of Incorporation............................9
2.2 Bylaws..................................................9
2.3 Directors...............................................9
2.4 Officers................................................9
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY............10
3.1 Corporate Existence and Power..........................10
3.2 Corporate Authorization................................10
3.3 Governmental Authorization.............................11
3.4 Non-contravention......................................11
3.5 Capitalization.........................................12
3.6 Subsidiaries...........................................13
3.7 SEC Filings............................................14
3.8 Financial Statements...................................14
3.9 Disclosure Documents...................................14
3.10 Absence of Certain Changes or Events...................15
3.11 Litigation.............................................16
3.12 Taxes..................................................16
3.13 Employee Benefit Plans.................................17
3.14 Brokers................................................19
3.15 FCC Matters............................................19
3.16 Compliance with Applicable Laws........................20
3.17 Environmental Matters..................................20
3.18 Opinion of Financial Advisor...........................20
3.19 Affiliate Transactions.................................20
3.20 Intellectual Property..................................21
3.21 No Other Representations...............................22
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF ACQUISITION............22
4.1 Corporate Existence and Power..........................22
4.2 Corporate Authorization................................22
4.3 Governmental Authorization.............................22
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4.4 Non-contravention......................................23
4.5 Information............................................23
4.6 Brokers................................................23
4.7 Qualification of Acquisition...........................23
4.8 Acquisition Not an Interested Stockholder..............24
4.9 Financing..............................................24
ARTICLE V COVENANTS OF THE COMPANY.................................25
5.1 Conduct of the Company.................................25
5.2 Access to Information..................................27
5.3 No Solicitation........................................27
5.4 Communications Licenses and Authorizations.............28
5.5 Debt Offers............................................28
5.6 Notices of Certain Events..............................29
5.7 State Takeover Laws....................................30
ARTICLE VI COVENANTS OF ACQUISITION.................................30
6.1 Confidentiality........................................30
6.2 Indemnification; Directors' and Officers' Insurance....30
6.3 Employee Benefit Arrangements..........................31
6.4 Financing..............................................32
6.5 NASDAQ Listing.........................................32
ARTICLE VII COVENANTS OF ACQUISITION AND THE COMPANY.................32
7.1 Reasonable Best Efforts................................32
7.2 Stockholder Meeting....................................32
7.3 Consents...............................................33
7.4 Public Announcements...................................34
7.5 Notification of Certain Matters........................35
7.6 Further Assurances.....................................35
7.7 FCC Applications.......................................35
7.8 HSR Act Matters........................................36
ARTICLE VIII CONDITIONS TO THE MERGER.................................37
8.1 Conditions to the Obligations of Each Party............37
8.2 Conditions Precedent to the Obligations of Acquisition.37
8.3 Conditions Precedent to the Obligations of the Company.38
ARTICLE IX TERMINATION..............................................39
9.1 Termination............................................39
9.2 Effect of Termination..................................40
9.3 Fees and Expenses......................................40
ARTICLE X MISCELLANEOUS............................................41
10.1 Notices................................................41
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10.2 Survival of Representations and Warranties and
Agreements...........................................42
10.3 Amendment..............................................42
10.4 Extension; Waiver......................................42
10.5 Successors and Assigns.................................43
10.6 Governing Law..........................................43
10.7 Jurisdiction...........................................43
10.8 Counterparts; Effectiveness............................43
10.9 Entire Agreement; No Third-party Beneficiaries.........43
10.10 Headings...............................................43
10.11 Schedules..............................................44
10.12 Severability...........................................44
10.13 WAIVER OF JURY TRIAL...................................44
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Schedules
Schedule 3.4 Violations Caused by Consummation of the Merger
Schedule 3.5(f) Minority Interests in Limited Partnerships of the
Company and its Subsidiaries and Other Outstanding
Obligations
of the Company and its Subsidiaries
Schedule 3.5(e) Voting, Transfer and Registration Rights
Schedule 3.6(a) Significant Subsidiaries of the Company
Schedule 3.6(b) Other Ownership Interests in Subsidiaries
of the Company
Schedule 3.10 Liabilities and Obligations of the Company and
its Subsidiaries
Schedule 3.11 Litigation of the Company and its Subsidiaries
Schedule 3.12 Tax Matters
Schedule 3.13(a) Employee Benefit Plans of the Company
Schedule 3.13(g) Severance Benefits
Schedule 3.15(a) Communications Licenses of the Company and its
Subsidiaries
Schedule 3.15(b) Communications Licenses Exceptions
Schedule 3.19 Affiliate Transactions
Schedule 3.20 Intellectual Property
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INDEX OF DEFINED TERMS
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Term Section
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Acquisition....................................................Preamble
Acquisition Material Adverse Effect............................4.1
Acquisition Transaction........................................5.3
Affiliate......................................................3.13(f)
Antitrust Laws.................................................7.3(b)
Board..........................................................3.2
Cash Election Price............................................1.2(b)
Cash Merger Consideration......................................1.2
Class B Shares.................................................Preamble
Closing........................................................1.1(b)
Closing Date...................................................1.1(b)
Code...........................................................1.5(c)
Commitment Letters.............................................4.9(b)
Common Shares .................................................Preamble
Company Securities.............................................3.5(c)
Communications Act.............................................3.3
Communications Licenses........................................3.15(a)
Company........................................................Preamble
Company Securities.............................................3.5(c)
Confidentiality Agreement......................................5.2
Convertible Preferred Shares...................................Preamble
Debt Offers....................................................5.5(a)
Delaware Law...................................................Preamble
Dissenting Shares .............................................1.6
Effective Time.................................................1.1(c)
Electing Shares................................................1.2(b)
Election Date..................................................1.3(b)
Eligible Institution...........................................1.3(b)
Employee Benefit Arrangement...................................5.1(e)
Employee Plan..................................................3.13(a)
Environmental Law..............................................3.17(a)
ERISA..........................................................3.13(c)
Excess Proration Factor........................................1.4(b)
Exchange Act...................................................3.3
Exchange Agent.................................................1.5(a)
FCC............................................................1.1(a)
FCC Applications...............................................7.7(a)
FCC Licenses...................................................3.15(a)
FCC Transfer Approvals.........................................8.2(c)
Financing .....................................................4.9(b)
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Term Section
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Form of Election...............................................1.3(b)
Form S-4.......................................................7.2(b)
Governmental Entity ...........................................1.5(f)
Hazardous Substance............................................3.17
HSR Act........................................................3.3
Indemnified Parties............................................6.2(a)
Intellectual Property..........................................3.20(a)
Interested Stockholder.........................................4.8
Lien...........................................................3.4
Material Adverse Effect........................................3.1
Merger.........................................................1.1(a)
Merger Consideration...........................................1.2
Non-Cash Election..............................................1.3(a)
Non-Cash Election Number.......................................1.4(a)
Non-Cash Election Share........................................1.2(b)
Offer Documents ...............................................5.5(b)
Option ........................................................1.7(a)
Option Plans ..................................................1.7(a)
Person.........................................................1.5(d)
Preferred Shares ..............................................Preamble
Proxy Statement/Prospectus.....................................7.2(b)
Returns .......................................................3.12(a)
SEC............................................................1.3(b)
SEC Reports....................................................3.7(a)
Second Series Convertible Preferred Shares ...................Preamble
Securities Act.................................................3.3
Senior Notes...................................................5.5(a)
Shares.........................................................Preamble
Shortfall Proration Factor.....................................1.4(c)
Significant Subsidiary.........................................3.6(a)
State Licenses.................................................3.15(a)
State PUC......................................................3.15(a)
State PUC Applications.........................................7.7(b)
Stockholder Meeting ...........................................7.2(a)
Stockholders Agreement.........................................Preamble
Subsidiary.....................................................3.1
Subsidiary Securities..........................................3.6(b)
Surviving Corporation..........................................3.1(a)
Tax............................................................3.12(d)
Violation......................................................3.4
WCAS...........................................................3.4
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER dated as of July 2, 1998 by and between
CCW ACQUISITION CORP., a Delaware corporation ("Acquisition"), and CENTENNIAL
CELLULAR CORP., a Delaware corporation (the "Company").
WHEREAS, Acquisition and the Company desire that Acquisition merge
with and into the Company, upon the terms and conditions set forth herein and in
accordance with the General Corporation Law of the State of Delaware (the
"Delaware Law") with the result that the Company shall continue as the surviving
corporation and the separate existence of Acquisition shall cease;
WHEREAS, Acquisition and the Company desire that upon the Merger (as
hereinafter defined), at the Effective Time (as hereinafter defined), all issued
and outstanding shares of capital stock of the Company (collectively, the
"Shares"), other than Shares owned by Acquisition or the Company and Dissenting
Shares (as hereinafter defined), be converted as follows: (i) all outstanding
shares of Class A Common Stock, par value $.01 per share, of the Company (the
"Common Shares"), be converted into the right to (a) retain Common Shares or (b)
receive cash; (ii) all outstanding shares of Class B Common Stock, par value
$0.01 per share, of the Company (the "Class B Shares") be converted into the
right to receive cash and, after the conversion thereof into Common Shares, to
retain a number of Common Shares, if any, such that the aggregate number of
Common Shares retained pursuant to clauses (i) and (ii) shall equal 7.1% of the
total number of Common Shares issued and outstanding immediately after the
Effective Time; and (iii) all outstanding shares of (x) Convertible Preferred
Stock, par value $.01 per share, of the Company (the "Convertible Preferred
Shares") and (y) Second Series Convertible Preferred Stock, par value $.01 per
share, of the Company (the "Second Series Convertible Preferred Shares" and,
together with the Convertible Preferred Shares, the "Preferred Shares") be
converted into the right to receive cash;
WHEREAS, Acquisition and the Company desire that upon the Merger, at
the Effective Time, all issued and outstanding shares of capital stock of
Acquisition be converted into a number of Common Shares equal to 92.9% of the
total number of Common Shares issued and outstanding immediately after the
Effective Time;
WHEREAS, the respective Boards of Directors of the Company and
Acquisition have each approved the Merger and declared it to be in the best
interests of their respective stockholders;
WHEREAS, the sole stockholder of Acquisition has approved and
adopted this Agreement and the Merger;
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WHEREAS, Acquisition has required, as a condition to its willingness
to enter into this Agreement, that Century Communications Corp., a stockholder
of the Company, contemporaneously enter into a stockholder agreement (the
"Stockholder Agreement"), which includes, among other things, an agreement to
vote in favor of this Agreement and the Merger;
WHEREAS, it is intended that the Merger be accounted for as a
recapitalization for financial reporting purposes;
NOW, THEREFORE, in consideration of the promises and the respective
representations, warranties, covenants, and agreements set forth herein, the
parties hereto agree as follows:
ARTICLE I
THE MERGER
1.1 The Merger.
(a) Upon the terms and subject to the conditions set forth in
this Agreement (including approval of the Federal Communications Commission (the
"FCC") as set forth in Article VIII hereof), at the Effective Time, Acquisition
shall be merged (the "Merger") with and into the Company in accordance with
Delaware Law whereupon the separate existence of Acquisition shall cease, and
the Company shall be the surviving corporation (the "Surviving Corporation").
(b) Upon the terms and subject to the conditions of this
Agreement, the closing of the Merger (the "Closing") shall take place at 10:00
a.m. on a date to be specified by the parties (the "Closing Date"), which shall
be no later than the second business day after satisfaction of the conditions
set forth in Article VIII, at the offices of Paul, Weiss, Rifkind, Wharton &
Garrison, 1285 Avenue of the Americas, New York, New York 10019, unless another
time, date or place is agreed to in writing by the parties hereto.
(c) Upon the Closing, the Company and Acquisition will file a
certificate of merger with the Secretary of State of the State of Delaware and
make all other filings or recordings required by Delaware Law in connection with
the Merger. The Merger shall become effective at such time as the certificate of
merger is duly filed with the Secretary of State of the State of Delaware or at
such later time as is specified in the certificate of merger (the "Effective
Time").
(d) The Merger shall have the effects set forth in Section 259
of the Delaware Law.
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1.2 Conversion of Shares. At the Effective Time:
(a) each Share held by the Company as treasury stock or owned
by any Subsidiary (as hereinafter defined) or Acquisition immediately prior to
the Effective Time shall be canceled, and no payment shall be made with respect
thereto;
(b) except as otherwise provided in Section 1.2(a) or as
provided in Section 1.6 with respect to Shares as to which appraisal rights have
been exercised, each Common Share issued and outstanding immediately prior to
the Effective Time shall be converted into the following:
(i) in the case of Common Shares with respect to which
an election to retain has been effectively made and not revoked or
forfeited pursuant to Sections 1.3(c), (d) and (e) ("Electing Shares"),
and subject to Section 1.4 below, the right to retain one fully paid and
nonassessable Common Share (a "Non-Cash Election Share"); and
(ii) in the case of Common Shares other than Electing
Shares, and subject to Section 1.4 below, the right to receive a cash
payment of $43.50 per Common Share (the "Cash Election Price");
(c) except as otherwise provided in Section 1.2(a), each Class
B Share issued and outstanding immediately prior to the Effective Time shall be
converted into the right to receive the following:
(i) after conversion thereof into Common Shares, the
right to retain a number of Common Shares equal to the "Shortfall
Proration Factor" (as hereinafter defined), which Common Shares, if any,
shall be deemed to be Non-Cash Election Shares; and
(ii) an amount in cash equal to the Cash Election Price
multiplied by a fraction, the numerator of which is the number of Class B
Shares issued and outstanding immediately prior to the Effective Time less
the aggregate number, if any, of Common Shares retainable pursuant to
clause (c)(i), and the denominator of which is the number of Class B
Shares issued and outstanding immediately prior to the Effective Time;
(d) except as otherwise provided in Section 1.2(a), each
Preferred Share issued and outstanding immediately prior to the Effective Time
shall be converted into the right to receive a cash payment equal to the product
of the Cash Election Price and the number of Common Shares into which such
Preferred Share could have been converted immediately prior to the Effective
Time; and
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(e) the shares of common stock of Acquisition issued and
outstanding immediately prior to the Effective Time shall be converted into a
total number of Shares equal to 92.9% of the outstanding Shares as of the
Effective Time (excluding Options).
The cash amounts payable pursuant to paragraphs (b), (c) and (d) above are
collectively referred to as the "Cash Merger Consideration," and including the
Non-Cash Election Shares, the "Merger Consideration."
1.3 Common Share Elections.
(a) Each Person (as hereinafter defined) who, on the Election
Date (as hereinafter defined), is a record holder of Common Shares will be
entitled, with respect to all or any portion of such Shares, to make an
unconditional election (a "Non-Cash Election") on or prior to the Election Date
to retain Non-Cash Election Shares, on the basis hereinafter set forth.
(b) The Company shall prepare a form of election, which form
shall be subject to the reasonable approval of Acquisition (as the same may be
amended or supplemented, the "Form of Election"), to be mailed by the Company
with the Proxy Statement/Prospectus (as hereinafter defined) to the record
holders of Common Shares as of the record date for the Stockholder Meeting (as
hereinafter defined) and otherwise distributed in accordance with the
requirements of the Securities and Exchange Commission ("SEC"), which Form of
Election shall be used by each record holder of Common Shares who wishes to
elect, subject to the provisions of Section 1.4, to retain Non-Cash Election
Shares for any or all Common Shares as to which it is the record holder. The
Company will use its reasonable efforts to make the Form of Election and the
Proxy Statement/Prospectus available to all Persons who become holders of Common
Shares during the period between the record date and the Election Date. Any such
holder's election to retain Non-Cash Election Shares shall have been properly
made only if the Exchange Agent (as hereinafter defined) shall have received at
its designated office, by 5:00 p.m., local time for the Exchange Agent, on the
second business day prior to the date of the Stockholder Meeting (the "Election
Date"), pursuant to (i) a Form of Election properly completed and signed and
accompanied by certificates representing the Common Shares to which such Form of
Election relates, duly endorsed in blank or otherwise in form acceptable for
transfer on the books of the Company (or by an appropriate guarantee of delivery
of such certificates as set forth in such Form of Election from a firm which is
an "eligible guarantor institution" (as defined in Rule 17Ad-15 under the
Exchange Act (as hereinafter defined)) (an "Eligible Institution"), provided
such certificates are in fact delivered to the Exchange Agent within three
Nasdaq trading days after the date of execution of such guarantee of delivery)
or (ii) such other procedures as may be set forth in the Proxy
Statement/Prospectus.
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(c) Any Form of Election may be revoked by the holder
submitting it to the Exchange Agent only by notice received by the Exchange
Agent prior to 5:00 p.m., local time for the Exchange Agent, on the Election
Date in accordance with the procedures set forth in the Proxy
Statement/Prospectus (unless Acquisition and the Company determine not less than
two Business Days prior to the Election Date that the Closing Date is not likely
to occur within five Business Days following the Election Date, in which case
any Form of Election will remain revocable until a subsequent date which shall
be a date prior to the Closing Date determined by Acquisition and the Company).
In addition, all Forms of Election shall automatically be revoked if the
Exchange Agent is notified in writing by Acquisition and the Company that this
Agreement has been terminated. If a Form of Election is properly revoked, the
certificate or certificates (or guarantees of delivery, as appropriate) for the
Common Shares to which such Form of Election relates shall be promptly returned
by the Exchange Agent to the shareholder submitting the same, or pursuant to
such other procedures as are set forth in the Proxy Statement/Prospectus.
(d) The determination of the Exchange Agent (or the Company if
the Exchange Agent declines to make such determination) shall be binding as to
whether elections to retain Non-Cash Election Shares have been properly made or
revoked pursuant to this Section 1.3 with respect to Common Shares and as to
when elections and revocations were received by it. If the Exchange Agent
reasonably determines in good faith that any election to retain Non-Cash
Election Shares was not properly made with respect to Common Shares, such shares
shall be treated by the Exchange Agent as shares that were not Electing Shares
at the Effective Time, and such shares shall be exchanged in the Merger for cash
pursuant to Section 1.2(b)(ii), subject to proration as provided in Section 1.4.
The Exchange Agent (or the Company if the Exchange Agent declines to make such
determination) shall also make all computations as to the allocation and the
proration contemplated by Section 1.4, and any such computation shall be
conclusive and binding on the holders of Common Shares and the Class B Common
Shares. The Exchange Agent may, with the mutual written agreement of Acquisition
and the Company, establish procedures as are consistent with this Section 1.3
for the implementation of the elections provided for herein as shall be
necessary or desirable fully to effect such elections.
1.4 Proration.
(a) Notwithstanding anything in this Agreement to the
contrary, the aggregate number of Common Shares to be retained pursuant to
paragraphs (b) and (c) of Section 1.2 at the Effective Time shall be equal to
7.1% of the Common Shares to be issued and outstanding immediately after the
Effective Time (the "Non-Cash Election Number").
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(b) If the number of Electing Shares exceeds the Non-Cash
Election Number, then each Electing Share shall be converted into the right to
retain Non-Cash Election Shares or receive cash in accordance with the terms of
Section 1.2(b) in the following manner:
(i) a proration factor (the "Excess Proration Factor")
shall be determined by dividing the Non-Cash Election Number by the total
number of Electing Shares;
(ii) the number of Electing Shares covered by each
Non-Cash Election shall be determined by multiplying the Excess Proration
Factor by the total number of Electing Shares covered by such Non-Cash
Election (subject to rounding, to avoid the issuance of fractional
shares); and
(iii) all Electing Shares, other than those Shares
converted into the right to retain Non-Cash Election Shares in accordance
with Section 1.4(b)(ii), shall be converted into cash in accordance with
the terms of Section 1.2(b)(ii), as if such Shares were not Electing
Shares.
(c) If the number of Electing Shares is less than the Non-Cash
Election Number, then:
(i) all Electing Shares shall be converted into the
right to retain Common Shares in accordance with the terms of Section
1.2(b)(i);
(ii) additional Common Shares (other than Electing
Shares and Dissenting Shares) shall be converted into the right to retain
Non-Cash Election Shares in accordance with the terms of Section 1.2(b) in
the following manner:
(A) a proration factor (the "Shortfall Proration
Factor") shall be determined by dividing (x) the difference between the
Non-Cash Election Number and the number of Electing Shares, by (y) the
total number of Common Shares outstanding at the Effective Time (other
than Electing Shares and Dissenting Shares) and including, as if they had
been converted into Common Shares, all Class B Shares issued and
outstanding at the Effective Time; and
(B) the number of Common Shares (other than
Electing Shares and Dissenting Shares) held by each stockholder that shall
be converted into the right to retain Non-Cash Election Shares shall be
determined by multiplying the Shortfall Proration Factor by the total
number of Common Shares (other than Electing Shares and Dissenting Shares)
held by such holder (subject to rounding to avoid the issuance of
fractional shares) and
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(iii) Common Shares subject to clause (ii) of this
Section 1.4(c) shall be converted into the right to retain Non-Cash
Election Shares in accordance with Section 1.2(b)(i), as if such shares
were Electing Shares.
1.5 Surrender and Payment.
(a) Prior to the Effective Time, Acquisition shall authorize
one or more commercial banks (acceptable to the Company) organized under the
laws of the United States or any state thereof with capital, surplus and
undivided profits of at least $500,000,000 to act as Exchange Agent hereunder
(the "Exchange Agent") for the purpose of exchanging certificates representing
Shares for the Merger Consideration. Acquisition will make available to the
Exchange Agent prior to the Effective Time the Merger Consideration to be paid
in respect of the Shares. Promptly after the Effective Time, Acquisition will
send, or will cause the Exchange Agent to send, to each holder of Shares at the
Effective Time a letter of transmittal for use in such exchange (which shall
specify that the delivery shall be effected, and risk of loss and title shall
pass, only upon proper delivery of the certificates representing Shares to the
Exchange Agent).
(b) Each holder of Shares that have been converted into a
right to receive the Merger Consideration, upon surrender to the Exchange Agent
of a certificate or certificates representing such Shares, together with a
properly completed letter of transmittal covering such Shares, will be entitled
to receive the Merger Consideration payable in respect of such Shares. Until so
surrendered, each such certificate shall, after the Effective Time, represent
for all purposes, only the right to receive such Merger Consideration.
(c) Acquisition shall be entitled to deduct and withhold from
the consideration otherwise payable pursuant to this Agreement to any holder of
Shares such amounts as Acquisition is required to deduct and withhold with
respect to the making of such payment under the Internal Revenue Code of 1986,
as amended (the "Code"), or any provision of state, local or foreign tax law. To
the extent that amounts are so withheld by Acquisition, such withheld amounts
shall be treated for all purposes of this Agreement as having been paid to the
holder of the Shares in respect of which such deduction and withholding was made
by Acquisition.
(d) If any portion of the Merger Consideration is to be paid
to a Person other than the registered holder of the Shares represented by the
certificate or certificates surrendered in exchange therefor, it shall be a
condition to such payment that the certificate or certificates so surrendered
shall be properly endorsed or otherwise be in proper form for transfer and that
the Person requesting such payment shall pay to the Exchange Agent any transfer
or other taxes required as a result of such payment to a Person other than the
registered holder of such Shares or establish to the satisfaction of the
Exchange Agent that such tax has been paid or is
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not payable. For purposes of this Agreement, "Person" means an individual, a
corporation, a limited liability company, a partnership, an association, a trust
or any other entity or organization, including a government or political
subdivision or any agency or instrumentality thereof.
(e) After the Effective Time, there shall be no further
registration of transfers of Shares. If, after the Effective Time, certificates
representing Shares are presented to the Surviving Corporation, they shall be
canceled and exchanged for the consideration provided for, and in accordance
with the procedures set forth, in this Article I.
(f) Any portion of the Merger Consideration made available to
the Exchange Agent pursuant to Section 1.5(a) that remains unclaimed by the
holders of Shares six months after the Effective Time shall be returned to the
Surviving Corporation, upon demand, and any such holder who has not exchanged
its Shares for the Merger Consideration in accordance with this Section 1.5
prior to that time shall thereafter look only to the Surviving Corporation for
payment of the Merger Consideration in respect of its Shares. Notwithstanding
the foregoing, neither Acquisition nor the Surviving Corporation shall be liable
to any holder of Shares for any amount paid to a public official pursuant to
applicable abandoned property laws. Any amounts remaining unclaimed by holders
of Shares two years after the Effective Time (or such earlier date immediately
prior to such time as such amounts would otherwise escheat to or become property
of any Governmental Entity) shall, to the extent permitted by applicable law,
become the property of the Surviving Corporation free and clear of any claims or
interest of any Person previously entitled thereto. As used in this Agreement,
"Governmental Entity" means any government or subdivision thereof, or any
administrative, governmental or regulatory authority, agency, commission,
tribunal or body, domestic, foreign or supranational.
1.6 Dissenting Shares. Notwithstanding Section 1.2, Shares
outstanding immediately prior to the Effective Time and held by a holder who has
not voted in favor of the Merger or consented thereto in writing and who has
demanded appraisal for such Shares in accordance with Section 262 of the
Delaware Law ("Dissenting Shares") shall not be converted into a right to
receive the Merger Consideration, unless such holder fails to perfect or
withdraws or otherwise loses its right to appraisal. If after the Effective
Time, any such holder fails to perfect or withdraws or loses its right to
appraisal, such Dissenting Shares shall be treated as if they had been converted
as of the Effective Time into the right to receive the Cash Merger Consideration
to which such holder is entitled, without interest or dividends thereon. The
Company shall give Acquisition prompt notice of any demands received by the
Company for appraisal of Shares, and, prior to the Effective Time, Acquisition
shall have the right to participate in all negotiations and proceedings with
respect to such demands. Prior to the Effective Time, the Company shall not,
except with the prior written consent of Acquisition, make any payment with
respect to, or settle or offer to settle, any such demands.
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1.7 Stock Options. The Company shall take all actions necessary so
that, immediately prior to the Effective Time, (i) each outstanding option to
purchase Class A Shares (an "Option") granted under the Company's 1991 Employee
Stock Option Plan, as amended, and Non-Employee/Officer Director Option Plan
(collectively, the "Option Plans"), whether or not then exercisable or vested,
shall become fully exercisable and vested, (ii) each Option which is then
outstanding shall be canceled and (iii) in consideration of such cancellation,
and except to the extent that Acquisition and the holder of any such Option
otherwise agree, the Company shall pay to such holders of Options an amount in
respect thereof equal to the product of (x) the excess of the Cash Merger
Consideration over the exercise price thereof and (y) the number of Common
Shares subject thereto (such payment to be net of taxes required by law to be
withheld with respect thereto); provided that the foregoing shall be subject to
the obtaining of any necessary consents of holders of Options, it being agreed
that the Company and Acquisition will use their reasonable best efforts to
obtain any such consents.
ARTICLE II
THE SURVIVING CORPORATION
2.1 Certificate of Incorporation. The certificate of incorporation
of Acquisition in effect at the Effective Time shall be the certificate of
incorporation of the Surviving Corporation until amended in accordance with
applicable law.
2.2 Bylaws. Subject to Section 6.2 hereof, the bylaws of Acquisition
in effect at the Effective Time shall be the bylaws of the Surviving Corporation
until amended in accordance with applicable law.
2.3 Directors. From and after the Effective Time, until successors
are duly elected or appointed and qualified in accordance with applicable law,
the directors of Acquisition at the Effective Time shall be the directors of the
Surviving Corporation.
2.4 Officers. From and after the Effective Time, until successors
are duly elected or appointed and qualified in accordance with applicable law,
the officers of the Company at the Effective Time shall be the officers of the
Surviving Corporation.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Acquisition that:
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3.1 Corporate Existence and Power. The Company is a corporation duly
incorporated, validly existing and in good standing under the laws of the State
of Delaware, and has all corporate powers required to carry on its business as
now conducted. The Company is duly qualified to do business as a foreign
corporation and is in good standing in each jurisdiction where the character of
the property owned or leased by it or the nature of its activities makes such
qualification necessary, except for those jurisdictions where the failure to be
so qualified would not have a material adverse effect on the business, assets,
operations or financial condition of the Company and its Subsidiaries, taken as
a whole, or upon the ability of the Company to consummate the transactions
contemplated by this Agreement or perform its obligations hereunder (a "Material
Adverse Effect"). The Company has heretofore delivered to Acquisition complete
and correct copies of the Company's certificate of incorporation and bylaws as
currently in effect. For purposes of this Agreement, a "subsidiary" of any
Person means any other Person of which securities or other ownership interests
having ordinary voting power to elect a majority of the board of directors or
other Persons performing similar functions are directly or indirectly owned or
controlled by such Person, and unless otherwise specified, "Subsidiary" means a
subsidiary of the Company.
3.2 Corporate Authorization. The execution, delivery and performance
by the Company of this Agreement and the consummation by the Company of the
transactions contemplated hereby are within the Company's corporate powers and,
except for the approval by the Company's stockholders of this Agreement and the
Merger, have been duly authorized by all necessary corporate action. This
Agreement has been duly and validly executed and delivered by the Company and,
assuming the due and valid authorization, execution and delivery of this
Agreement by Acquisition and receipt of all required approvals by the Company's
stockholders in connection with the consummation of the Merger, constitutes a
valid and binding agreement of the Company, enforceable against it in accordance
with its terms except as may be limited by bankruptcy, insolvency,
reorganization, moratorium, fraudulent transfer and other similar laws affecting
creditors' rights generally and by equitable principles of general
applicability. The Board of Directors of the Company (the "Board") has approved
the Merger, this Agreement and the transactions contemplated hereby and such
approval, assuming the accuracy of Acquisition's representation in Section 4.8
hereof, is sufficient to render the provisions of Section 203 of Delaware Law
inapplicable to the Merger, this Agreement and the transactions contemplated
hereby. No other corporate proceedings on the part of the Company are necessary
to authorize or approve this Agreement or to consummate the transactions
contemplated hereby (other than the approval and adoption of the Merger and this
Agreement by holders of the Shares to the extent required by the Company's
certificate of incorporation and by applicable law).
3.3 Governmental Authorization. The execution, delivery and
performance by the Company of this Agreement and the consummation by the Company
of the Merger and the other transactions contemplated hereby require no
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consent, waiver, approval, authorization or permit by or from, or action by or
in respect of, or filing with, any Governmental Entity, other than (i) the
filing of a certificate of merger in accordance with Delaware Law; (ii)
compliance with any applicable requirements of state takeover laws; (iii)
compliance with the applicable requirements of the Hart-Scott-Rodino Antitrust
Improvements Act of 1976 (the "HSR Act"); (iv) compliance with any applicable
requirements of the Securities Act of 1933, as amended (together with the rules
and regulations promulgated thereunder, the "Securities Act") and the Securities
Exchange Act of 1934, as amended (together with the rules and regulations
promulgated thereunder, the "Exchange Act"); (v) compliance with any applicable
requirements of the Communications Act of 1934, as amended (together with the
rules, regulations and published decisions of the FCC, the "Communications
Act"); (vi) compliance with the applicable requirements of state and local
public utility commissions or similar entities; and (vii) any action, filing,
consent, waiver, approval, authorization or permit that would not in the
aggregate prevent or delay consummation of the Merger in any material respect,
or otherwise prevent the Company from performing its obligations under this
Agreement in any material respect or would not in the aggregate have a Material
Adverse Effect.
3.4 Non-contravention. Except as described in Schedule 3.4 and
assuming compliance with the matters referred to in Section 3.3, the execution,
delivery and performance by the Company of this Agreement and the consummation
by the Company of the transactions contemplated hereby do not and will not (i)
assuming receipt of the approval of stockholders referred to in Section 3.2,
contravene or conflict with the certificate of incorporation or bylaws of the
Company, (ii) contravene or conflict with or constitute a violation of any
provision of any law, regulation, judgment, injunction, order or decree binding
upon or applicable to the Company or any Subsidiary, (iii) result in a breach or
violation of or constitute a default under (or an event which with the giving of
notice or the lapse of time or both would constitute a default under) or give
rise to a right of termination, amendment, cancellation or acceleration of any
right or obligation of the Company or any Subsidiary or to a loss of any benefit
to which the Company or any Subsidiary is entitled or require any consent,
approval or authorization under any provision of any material agreement,
contract or other instrument binding upon the Company or any Subsidiary or any
of their respective assets (including any material license, franchise, permit or
other similar authorization held by the Company or any Subsidiary) or (iv)
result in the creation or imposition of any Lien (as defined below) on any
material asset of the Company or any Subsidiary, except for such contraventions,
conflicts or violations referred to in clause (ii) and breaches, violations,
defaults, rights of termination, cancellation or acceleration, losses, Liens or
other occurrences referred to in clauses (iii) and (iv) (each, a "Violation")
that in the aggregate would not have a Material Adverse Effect or prevent or
materially delay the consummation of the Merger in any material respect or
otherwise prevent the Company from performing its obligations under this
Agreement in any material respect. For purposes of this Agreement, "Lien" means,
with respect to any asset, any mortgage,
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lien, pledge, charge, security interest or encumbrance of any kind in respect of
such asset.
3.5 Capitalization.
(a) The authorized capital stock of the Company consists of
the following, as of June 25, 1998: (i) 100,000,000 Class A Shares, of which
15,070,470 are issued and outstanding; (ii) 50,000,000 Class B Shares, of which
10,544,113 were issued and outstanding; (iii) 102,187 Convertible Preferred
Shares, of which 102,187 are issued and outstanding; (iv) 3,978 Second Series
Convertible Preferred Shares, of which 3,978 are issued and outstanding; (v)
250,000 shares of Senior Preferred Stock, par value $0.01 per share, of which no
shares are issued and outstanding; and (vi) 9,996,022 shares of Additional
Preferred Stock, par value $0.01 per share, of which no shares are issued and
outstanding.
(b) As of June 25, 1998, there were outstanding, under the
Option Plans, Options to purchase an aggregate of 1,503,643 Common Shares.
(c) All outstanding shares of capital stock of the Company
have been duly authorized and validly issued and are fully paid and
nonassessable. Except as set forth in this Section 3.5 and except for changes
since June 25, 1998, resulting from the exercise of Options outstanding on such
date, there are outstanding (i) no shares of capital stock or other voting
securities of the Company, (ii) no securities of the Company convertible into or
exchangeable for shares of capital stock or voting securities of the Company and
(iii) no options or other rights to acquire from the Company, and no obligation
of the Company to issue, any capital stock, voting securities or securities
convertible into or exchangeable for capital stock or voting securities of the
Company (the items in clauses (a) and (b) of this Section 3.5 being referred to
collectively as the "Company Securities"). Except pursuant to the terms of the
Company Securities as set forth in the Company's Certificate of Incorporation,
there are no outstanding obligations of the Company or any Subsidiary to
repurchase, redeem or otherwise acquire any Company Securities or pay any
dividend or make any other distribution in respect thereof.
(d) Upon consummation of the Merger, neither any outstanding
Convertible Preferred Shares, Second Series Convertible Preferred Shares nor any
other outstanding securities of the Company shall be convertible into or
exchangeable for any equity security of the Surviving Corporation other than
Options that have not been canceled.
(e) Except as set forth in Schedule 3.5(e), upon consummation
of the Merger, the Company shall have no obligations due under any contracts
entered into by the Company on or prior to the Closing Date with regard to the
voting, transfer or registration under the Securities Act of any equity
securities of
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the Company or that grant any preemptive rights with respect to its equity
securities (other than any such contracts executed with Acquisition).
(f) Except with respect to the minority interests in the
limited partnerships listed in Schedule 3.5(f), there are no outstanding
obligations of the Company or any Subsidiary to provide funds to, or make any
investment (in the form of a loan, capital contribution or otherwise) in, any
Subsidiary or any other Person, other than to wholly owned Subsidiaries of the
Company in the ordinary course of business consistent with past practice.
3.6 Subsidiaries.
(a) Each Subsidiary is a corporation duly incorporated,
validly existing and in good standing under the laws of its jurisdiction of
incorporation, has all corporate powers required to carry on its business as now
conducted and is duly qualified to do business as a foreign corporation and is
in good standing in each jurisdiction where the character of the property owned
or leased by it or the nature of its activities makes such qualification
necessary, except for such qualifications the failure of which to obtain would
not, individually or in the aggregate, have a Material Adverse Effect. All
significant Subsidiaries within the meaning of Regulation S-X under the Exchange
Act (a "Significant Subsidiary") and their respective jurisdictions of
incorporation are identified in Schedule 3.6(a).
(b) Except as set forth in Schedule 3.6(b), all of the
outstanding capital stock of, or other ownership interests in, each Subsidiary
of the Company, is owned by the Company, directly or indirectly, free and clear
of any Lien and free of any other limitation or restriction (including any
restriction on the right to vote, sell or otherwise dispose of such capital
stock or other ownership interests). There are no outstanding (i) securities of
the Company or any Subsidiary convertible into or exchangeable for shares of
capital stock or other voting securities or ownership interests in any
Subsidiary and (ii) options or other rights to acquire from the Company or any
Subsidiary, and no other obligation of the Company or any Subsidiary to issue,
any capital stock, voting securities or other ownership interests in, or any
securities convertible into or exchangeable for any capital stock, voting
securities or ownership interests in, any Subsidiary (the items in clauses
3.6(b)(i) and 3.6(b)(ii) being referred to collectively as the "Subsidiary
Securities"). There are no outstanding obligations of the Company or any
Subsidiary to repurchase, redeem or otherwise acquire any outstanding Subsidiary
Securities or pay any dividend or make any other distribution in respect thereof
to a Person other than the Company or a wholly-owned Subsidiary except as set
forth in the Company Securities.
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3.7 SEC Filings.
(a) The Company has filed with the SEC all forms, reports,
definitive proxy statements, schedules and registration statements (the "SEC
Reports") required to be filed with the SEC since February 28, 1997.
(b) No Subsidiary is required to file any report, form or
document with the SEC pursuant to the Exchange Act or the Securities Act.
(c) As of their respective filing dates, none of the SEC
Reports contained any untrue statement of a material fact or omitted to state
any material fact required to be stated therein or necessary to make the
statements made therein, in the light of the circumstances under which they were
made, not misleading.
(d) The SEC Reports (including, without limitation, any
financial statements and schedules included therein) when filed complied in all
material respects with applicable requirements of the Securities Act and the
Exchange Act.
3.8 Financial Statements. The audited consolidated financial
statements and unaudited consolidated interim financial statements of the
Company included in the SEC Reports filed since May 31, 1997 fairly present, in
conformity with generally accepted accounting principles applied on a consistent
basis (except as may be indicated in the notes thereto or in the case of
unaudited interim financial statements as permitted by Form 10-Q of the SEC),
the consolidated financial position of the Company and its consolidated
Subsidiaries as of the dates thereof and its consolidated statements of
operations, stockholders' equity and cash flows for the periods then ended
(subject to normal year-end adjustments in the case of any unaudited interim
financial statements which would not be material in amount or effect). Except as
and to the extent set forth on the consolidated balance sheet of the Company and
the Subsidiaries as of May 31, 1997, including the notes thereto, neither the
Company nor any Subsidiary has any liability or obligation of any nature
(whether accrued, absolute, contingent or otherwise) which would be required to
be reflected on a balance sheet prepared in accordance with generally accepted
accounting principles, except for liabilities and obligations (i) incurred in
the ordinary course of business consistent with past practice since May 31,
1997, (ii) that would not be material to the Company or the Subsidiaries or
(iii) as set forth on Schedule 3.8.
3.9 Disclosure Documents. None of the information supplied or to be
supplied by the Company for inclusion or incorporation by reference in:
(a) the Form S-4 (as hereinafter defined) will, at the time
the Form S-4 is filed with the SEC, at any time it is amended or supplemented
and at the
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time it 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, in light of the
circumstances under which they are made, not misleading;
(b) the Proxy Statement/Prospectus will, at the date it is
first mailed to the Company's stockholders or at the time of the Stockholder
Meeting, 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, in light of the circumstances under which they are made, not
misleading; or
(c) the Offer Documents (as hereinafter defined) will, at the
time the Offer Documents (or any amendments or supplements thereto) are first
published, sent or given to holders of the Senior Notes, or at the time the
applicable Debt Offer is consummated, 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, in light of the circumstances under
which they are made, not misleading;
provided, that in each case no representation is made by the Company with
respect to statements made therein based on information supplied in writing by
Acquisition specifically for inclusion therein. The Form S-4, as of its
effective date, and the Proxy Statement/Prospectus and the Offer Documents, as
of their respective dates, will comply as to form with the applicable
requirements of the Securities Act and the Exchange Act, as the case may be;
provided, that in each case no representation is made by the Company with
respect to statements made therein based on information supplied in writing by
Acquisition specifically for inclusion therein.
3.10 Absence of Certain Changes or Events. Since May 31, 1997,
neither the Company nor any Subsidiary has (i) incurred or agreed to incur any
indebtedness for borrowed money other than in the ordinary course of business,
(ii) discharged or satisfied any material lien (prior to the time it is due and
payable) or any material obligation or liability (absolute or contingent) which
would have a Material Adverse Effect other than current liabilities shown on the
consolidated balance sheet of the Company as of May 31, 1997 or which are
required to be discharged, satisfied or paid by any law, (iii) declared or made
any payment or distribution to stockholders or purchased or redeemed any shares
of its capital stock or other securities, (iv) sold, assigned or transferred any
of its tangible assets material to the consolidated business of the Company and
its Subsidiaries, or canceled any material debts or claims, except in the
ordinary course of business or as otherwise contemplated hereby, (v) granted any
general or uniform increase in the rates of pay of employees other than in the
ordinary course of business or any material increase in salary payable or to
become payable by the Company or any of its Subsidiaries to any officer,
director or senior executive of the Company (other than normal increases
consistent with past practices or as required under any existing employment
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agreement), (vi) agreed, in writing or otherwise, to take any of the actions
listed in clauses (i) through (v) above, or (vii) suffered any Material Adverse
Effect.
3.11 Litigation. Except as set forth in the Company's SEC Reports
filed prior to the date hereof or in Schedule 3.11, there is no action, suit or
proceeding pending, or to the knowledge of the Company threatened, against the
Company or any Subsidiary before any court, arbitrator or other Governmental
Entity which, if adversely decided, individually or in the aggregate, would
reasonably be expected to have a Material Adverse Effect.
3.12 Taxes.
(a) Except as set forth on Schedule 3.12 hereto and except to
the extent that failure to do so would not have a Material Adverse Effect, each
of the Company, the Subsidiaries and any affiliated, combined or unitary group
of which any such corporation or other Person is or was a member has (i) timely
filed all Federal, state, local and foreign returns, declarations, reports,
estimates, information returns and statements ("Returns") required to be filed
by it in respect of any Taxes (as hereinafter defined), which Returns correctly
reflect the facts regarding the income, business, assets, operations, activities
and status of the Company and the Subsidiaries, (ii) timely paid or withheld all
Taxes that are due and payable with respect to the Returns referred to in clause
(i) (other than Taxes that are being contested in good faith by appropriate
proceedings and are adequately reserved for in the Company's most recent
consolidated financial statements described in Section 3.8 hereof), (iii)
established reserves that are adequate for the payment of all Taxes not yet due
and payable with respect to the results of operations of the Company and the
Subsidiaries through the date hereof, and (iv) complied with all applicable
laws, rules and regulations relating to the payment and withholding of Taxes and
has timely withheld from employee wages and paid over to the proper governmental
authorities all material amounts required to be so withheld and paid over.
(b) Except as set forth on Schedule 3.12 hereto and except as
would not have a Material Adverse Effect, (i) there is no deficiency, claim,
audit, action, suit, proceeding, or investigation now pending against or with
respect to the Company or any Subsidiary in respect of any Taxes; and (ii) there
are no requests for rulings or determinations in respect of any Taxes pending
between the Company or any Subsidiary and any taxing authority.
(c) Except as set forth on Schedule 3.12 hereto and except as
would not have a Material Adverse Effect, neither the Company nor any Subsidiary
has executed or entered into (or prior to the Effective Time will execute or
enter into) with the Internal Revenue Service or any taxing authority (i) any
agreement or other document extending or having the effect of extending the
period for assessments or collection of any Taxes for which the Company or any
Subsidiary would be liable or (ii) a closing agreement pursuant to Section 7121
of the Code, or any predecessor
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provision thereof or any similar provision of foreign, state or local Tax law
that relates to the assets or operations of the Company or any Subsidiary.
(d) For purposes of this Agreement, "Tax" (and with
correlative meaning, "Taxes") shall mean all federal, state, local, foreign or
other taxing authority net income, franchise, sales, use, ad valorem, property,
payroll, withholding, excise, severance, transfer, employment, alternative or
add-on minimum, stamp, occupation, premium, environmental or windfall profits
taxes, and other taxes, charges, fees, levies, imposts, customs, duties,
licenses or other assessments, together with any interest and any penalties,
additions to tax or additional amounts imposed by any taxing authority.
3.13 Employee Benefit Plans.
(a) Schedule 3.13(a) identifies each employment, severance or
similar contract or arrangement whether or not written or any plan, policy,
fund, program or contract or arrangement (whether or not written) providing for
compensation, bonus, profit-sharing, stock option, or other stock related rights
or other forms of incentive or deferred compensation, vacation benefits,
insurance coverage (including any self-insured arrangements), health or medical
benefits, disability benefits, workers' compensation, supplemental unemployment
benefits, severance benefits and post-employment or retirement benefits
(including compensation, pension, health, medical or life insurance or other
benefits) that (i) is entered into, maintained, administered or contributed to,
as the case may be, by the Company or any Subsidiary and (ii) covers any
employee or former employee of any Company or Subsidiary employed in the United
States or Puerto Rico (each, an "Employee Plan").
(b) The Company has furnished or made available to Acquisition
copies of the Employee Plans (and, if applicable, related trust agreements) and
all amendments thereto and written interpretations thereof together with the
most recent annual report (Form 5500 including, if applicable, Schedule B
thereto) and the most recent actuarial valuation report prepared in connection
with any Employee Plan.
(c) Each Employee Plan that is intended to be qualified under
Section 401(a) of the Code has been determined by the Internal Revenue Service
to be qualified under Section 401(a) of the Code and each trust related thereto
has been determined to be exempt from tax pursuant to Section 501(a) of the
Code, and the Company is not aware of any event that has occurred since the date
of such determinations that would adversely affect such qualification or tax
exempt status. The Company has provided Acquisition with the most recent
determination letter of the Internal Revenue Service relating to each such
Employee Plan. Each Employee Plan has been maintained in compliance in all
material respects with its terms and with the requirements prescribed by any and
all applicable statutes, orders, rules and
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regulations, including but not limited to the Employee Retirement Income
Security Act of 1974, as amended ("ERISA") and the Code.
(d) No Employee Plan is a multiemployer plan as defined in
Section 3(37) of ERISA or is a plan subject to Title IV of ERISA and neither the
Company nor any Subsidiary has ever maintained, adopted or established,
contributed or been required to contribute to, or otherwise participated or been
required to participate in, any such plan.
(e) Neither the Company nor any Subsidiaries has any current
or projected liability in respect of post-employment or post-retirement health
or medical or life insurance benefits for retired, former or current employees
of the Company, except as required to avoid excise tax under Section 4980B of
the Code.
(f) There has been no amendment to, written interpretation of
or announcement (whether or not written) by the Company, any Subsidiary or their
respective Affiliates relating to, or change in employee participation or
coverage under, any Employee Plan that would increase materially the expense of
maintaining such Employee Plan above the level of the expense incurred in
respect thereof for the most recent fiscal year ended prior to the date hereof.
As used in this Agreement, unless the context requires otherwise, "Affiliate,"
as applied to any Person, shall mean any other Person directly or indirectly
controlling, controlled by, or under common control with, that Person. For the
purposes of this definition, "control" (including, with correlative meanings,
the terms "controlling," "controlled by" and "under common control with"), as
applied to any Person, means the possession, directly or indirectly, of the
power to direct or cause the direction of the management and policies of that
Person, whether through the ownership of voting securities, by contract or
otherwise.
(g) Other than as described in Schedule 3.13(g), no employee
or former employee of the Company or any Subsidiary will become entitled to any
bonus, retirement, severance, job security or similar benefit or an enhancement
of such benefit (including acceleration of vesting or exercise of an incentive
award) under any Employee Plan as a result of the transactions contemplated
hereby.
(h) Notwithstanding anything else set forth herein, other than
routine claims for benefits and liability for premiums due to the Pension
Benefit Guaranty Corporation, neither the Company nor any Subsidiary has
incurred any material liability with respect to any Employee Plan that is
currently due and owing and has not yet been satisfied, including without
limitation under ERISA (including without limitation Title I or Title IV
thereof), the Code or other applicable law, and no event has occurred, and, to
the knowledge of the Company, there exists no condition or set of circumstances
(other than the accrual of benefits under the normal terms of the Employee
Plans), that could result in the imposition of any material liability on the
Company or any Subsidiary with respect to any Employee Plan, including without
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limitation under ERISA (including without limitation Title I or Title IV of
ERISA), the Code or other applicable law with respect to any Employee Plan.
3.14 Brokers. Except for the engagement of Donaldson, Lufkin &
Jenrette Securities Corporation and Peter J. Solomon & Co. pursuant to
engagement letters that have been provided to Acquisition, none of the Company
or any of its Subsidiaries, or any of their respective officers, directors or
employees has employed any investment banker, broker, finder or other
intermediary or incurred any liability for any brokerage fees, commissions or
finder's fees in connection with the transactions contemplated by this
Agreement.
3.15 FCC Matters.
(a) The Company and its Subsidiaries hold all licenses,
permits, certificates, franchises, registrations and other authorizations issued
by the FCC (the "FCC Licenses") or by any governmental entity asserting
jurisdiction over the Company or one of its Subsidiaries (the "State Licenses"),
including, without limitation, any state public service or public utilities
commission and the Telecommunications Regulatory Board of Puerto Rico ("State
PUC"), that are required for the conduct of their businesses as presently
conducted, and for the holding of their assets, except where the failure to
obtain or hold such licenses would not have a Material Adverse Effect. All of
the FCC Licenses and the State Licenses (collectively the "Communications
Licenses") are set forth in Schedule 3.15(a) hereto.
(b) Except as set forth on Schedule 3.15(b), each of the
Communications Licenses was duly issued, and is valid and in full force and
effect except where failure to be in full force and effect would not have a
Material Adverse Effect, and to the Company's knowledge, each of the
Communications Licenses has not been modified, canceled, revoked, or conditioned
in any manner which would have a Material Adverse Effect.
(c) Each holder of a Communications License has operated in
compliance with all terms thereof, and each holder is in compliance with, and
its businesses have operated in compliance with, the Communications Act or any
applicable state regulations, and has filed all registrations and reports,
including any renewal applications, required by the Communications Act or any
applicable state regulations, except where the failure to so comply or file
would not have a Material Adverse Effect. To the Company's knowledge, there is
no pending or threatened action by or before the FCC or any State PUC to revoke,
cancel, suspend, modify or refuse to renew any of the Communications Licenses.
There is not now issued or outstanding or, to the Company's knowledge,
threatened any notice of violation or complaint against the Company or any of
its Subsidiaries with respect to the operation of its respective businesses, the
resolution of which violation or complaint could reasonably be expected to have
a Material Adverse Effect.
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(d) No event has occurred which permits the revocation or
termination of any of the Communications Licenses or the imposition of any
restriction thereon of such a nature as would have a Material Adverse Effect.
3.16 Compliance with Applicable Laws. The Company and its
Subsidiaries are in substantial compliance with all laws, regulations and orders
of any Governmental Entity applicable to it or such Subsidiaries, except for
such failures so to comply which would not have a Material Adverse Effect.
Except as set forth in the Schedules hereto, neither the Company nor any
Subsidiary has failed to obtain any licenses, permits, franchises or other
governmental authorizations necessary to the ownership of its properties or to
the conduct of its business, which failure would have a Material Adverse Effect.
3.17 Environmental Matters. Except as would not have a Material
Adverse Effect, (i) no real property currently or formerly owned or operated by
the Company or any current Subsidiary is contaminated with any Hazardous
Substances (as defined herein) to an extent or in a manner or condition now
requiring remediation under any Environmental Law (as defined herein), (ii) no
judicial or administrative proceeding is pending or, to the knowledge of the
Company, threatened relating to liability for any off-site disposal or
contamination and (iii) the Company and its Subsidiaries have not received in
writing any claims or notices alleging liability under any Environmental Law.
Neither the Company nor any Subsidiary is in violation of any applicable
Environmental Law and no condition or event has occurred with respect to the
Company or any Subsidiary that would constitute a violation of such
Environmental Law, excluding in any event, such violations, conditions and
events that would not have a Material Adverse Effect. "Environmental Law" means
any applicable federal, state or local law, regulation, order, decree or
judicial opinion or other agency requirement having the force and effect of law
and relating to noise, odor, Hazardous Substances or the protection of the
environment. "Hazardous Substance" means any toxic or hazardous substance that
is regulated by or under authority of any Environmental Law.
3.18 Opinion of Financial Advisor. The Company has received the
written opinion of Donaldson, Lufkin & Jenrette Securities Corporation to the
effect that the Merger Consideration is fair from a financial point of view to
the stockholders of the Company (other than Acquisition and stockholders who are
Affiliates of the Company).
3.19 Affiliate Transactions. Except as described in the SEC Reports,
there are no existing or proposed material transactions or arrangements between
the Company or any Subsidiary and any Affiliate of the Company (including,
without limitation, Century Communications Corp., Citizens Utility Company and
the Company's directors and executive officers, but excluding wholly owned
Subsidiaries). Except as set forth in Schedule 3.19 hereto, there are no
payments due from the Company or any Subsidiary to any such Affiliate between
May 31, 1998 and the
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Effective Time for which adequate reserves are not reflected in the Company's
consolidated balance sheet as of May 31, 1998 except for those payments that
would not be material to the operations of the Company and the Subsidiaries.
3.20 Intellectual Property. Except as set forth in Schedule 3.20
hereto:
(a) The Company and its Subsidiaries own or have the right to
use all material copyrights, trade names, trademarks, service marks, trade
secrets, know-how, designs, software, patents, licenses and other intellectual
property rights (collectively, the "Intellectual Property") that are necessary
to conduct the business of the Company and its Subsidiaries as presently
conducted, free and clear of all Liens, other than those rights the absence of
which individually or in the aggregate would not have a Material Adverse Effect.
There are no material trade names, trademarks or service marks owned by the
Company or any of its Subsidiaries that are not registered or the subject of
applications therefor.
(b) There is no suit, action or proceeding pending or, to the
Company's knowledge, threatened against or affecting the Company or any of its
Subsidiaries, which challenges the legality, validity, enforceability of, or the
Company's or any of its Subsidiaries' use or ownership of, any of the
Intellectual Property owned by the Company or any of its Subsidiaries or, to the
Company's knowledge, licensed to the Company or to any of its Subsidiaries,
other than any such suit, action or proceeding that individually or in the
aggregate would not have a Material Adverse Effect.
(c) To the knowledge of the Company, neither the Company nor
any Subsidiary has infringed upon or otherwise violated the intellectual
property rights of third parties or has received or has been the subject of any
claim, charge or notice alleging any such infringement or other violation, other
than any such infringement, violation or appropriation that individually or in
the aggregate would not have a Material Adverse Effect.
(d) The Company has taken steps that are reasonable to ensure
that the occurrence of the year 2000 will not materially and adversely affect
the information and business systems of the Company or the Subsidiaries and no
expenditures in excess of currently budgeted items are expected to cause such
systems to operate properly following the change of the year 1999 to 2000.
3.21 No Other Representations. Except as specifically set forth in
this Article III, the Company has not made, and Acquisition has not relied upon,
any other representations or warranties, whether express or implied.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF ACQUISITION
Acquisition represents and warrants to the Company that:
4.1 Corporate Existence and Power. Acquisition is a corporation duly
incorporated, validly existing and in good standing under the laws of the State
of Delaware. Acquisition has all corporate powers and all governmental licenses,
authorizations, consents and approvals required to carry on its businesses as
now conducted, except for such licenses, authorizations, consents and approvals
the failure of which to obtain would not, individually or in the aggregate, have
a material adverse effect on the business, assets, operations or financial
condition of Acquisition or upon the ability of Acquisition to consummate the
transactions contemplated by this Agreement or perform its obligations hereunder
(an "Acquisition Material Adverse Effect"). Since the date of its incorporation,
Acquisition has not engaged in any activities other than in connection with or
as contemplated by this Agreement or in connection with arranging any financing
required to consummate the transactions contemplated hereby.
4.2 Corporate Authorization. The execution, delivery and performance
by Acquisition of this Agreement and the consummation by Acquisition of the
transactions contemplated hereby are within the corporate powers of Acquisition
and have been duly authorized by all necessary corporate action. Assuming the
due and valid authorization, execution and delivery of this Agreement by the
Company, this Agreement constitutes a valid and binding agreement of
Acquisition, enforceable against each in accordance with its terms except as may
be limited by bankruptcy, insolvency, reorganization, moratorium, fraudulent
transfer and other similar laws affecting creditors' rights generally and by
equitable principles of general applicability.
4.3 Governmental Authorization. The execution, delivery and
performance by Acquisition of this Agreement and the consummation by Acquisition
of the transactions contemplated by this Agreement require no action by or in
respect of, or filing with, any Governmental Entity other than (i) the filing of
a certificate of merger in accordance with Delaware Law, (ii) compliance with
any applicable requirements of the HSR Act, (iii) compliance with any applicable
requirements of the Securities Act and Exchange Act, (iv) compliance with any
applicable requirements of the Communications Act, (v) compliance with the
applicable requirements of state and local utility commissions or similar
entities and (vi) compliance with applicable state takeover statutes.
4.4 Non-contravention. The execution, delivery and performance by
Acquisition of this Agreement and the consummation by Acquisition of the
transactions contemplated hereby do not and will not (i) contravene or conflict
with
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the certificate of incorporation or bylaws of Acquisition, (ii) assuming
compliance with the matters referred to in Section 4.3, contravene or conflict
with or constitute a violation of any provision of law, regulation, judgment,
order or decree binding upon Acquisition or (iii) result in a breach or
violation of or constitute a default under (or an event which with the giving of
notice or the lapse of time or both would constitute a default under) or give
rise to any right of termination, cancellation or acceleration of any right or
obligation of Acquisition or to a loss of any benefit to which it is entitled or
require any consent, approval or authorization under any provision of any
material agreement, contract or other instrument binding upon Acquisition or any
of its assets, except for such contraventions, conflicts or violations referred
to in clause (ii) and breaches, violations, defaults, rights of termination,
cancellation or acceleration or losses referred to in clause (iii) that in the
aggregate would not have an Acquisition Material Adverse Effect or prevent or
delay the consummation of the Merger in any material respect or otherwise
prevent Acquisition from performing their obligations under this Agreement in
any material respect.
4.5 Information. None of the information supplied or to be supplied
by Acquisition in writing specifically for inclusion in (i) the Offer Documents,
(ii) the Form S-4, (iii) the Proxy Statement/Prospectus or (iv) any other
filings will, at the respective times filed with the SEC or such other
Governmental Entity, and, in addition, in the case of the Proxy
Statement/Prospectus, at the date it or any amendment or supplement is mailed to
stockholders and at the time of the Special Meeting, or in the case of the Offer
Documents, at the date such documents are mailed to the holders of the Senior
Notes, 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
made therein, in light of the circumstances under which they were made, not
misleading.
4.6 Brokers. None of Acquisition or any of its respective
subsidiaries, officers, directors or employees has employed any investment
banker, broker, finder or other intermediary or incurred any liability for any
brokerage fees, commissions or finder's fees in connection with the transactions
contemplated by this Agreement for or with respect to which the Company or any
Subsidiary is or might be liable prior to the Effective Time.
4.7 Qualification of Acquisition. Acquisition is and at the
Effective Time will be legally, technically and otherwise qualified under the
Communications Act to acquire, own and operate the assets and business of the
Company and its Subsidiaries. To the best of Acquisition's knowledge, there are
no facts or proceedings which would reasonably be expected to disqualify
Acquisition under the Communications Act or otherwise from acquiring or
operating any of the assets and business of the Company and its Subsidiaries or
would cause the FCC not to approve the FCC Applications (as defined herein).
Acquisition has no knowledge of any fact or circumstance relating to Acquisition
or any of its Affiliates that would be reasonably be expected to (a) cause the
filing of any meritorious objection to the FCC
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Applications which is likely to prevail or (b) lead to a material delay in the
processing by the FCC of the FCC Applications. No waiver of any FCC rule or
policy is necessary to be obtained for the approval of the FCC Applications, and
no processing pursuant to any exception or rule of general applicability will be
requested or required in connection with the consummation of the transaction
herein.
4.8 Acquisition Not an Interested Stockholder. As of the date of
this Agreement, neither Acquisition nor any of its Affiliates is an "Interested
Stockholder" as such term is defined in Section 203 of the Delaware Law.
4.9 Financing. Acquisition has received and executed commitment
letters each dated July 2, 1998 (the "Commitment Letters"), from (i) Merrill
Lynch Capital Corporation, pursuant to which it has committed, subject to the
terms and conditions set forth therein, to provide Acquisition and certain
existing or future subsidiaries of the Company with up to $1.21 billion of
financing under available senior secured credit facilities and $350.0 million in
aggregate principal amount of financing in the form of an unsecured senior
bridge loan, (ii) WCAS Capital Partners III, L.P., pursuant to which it has
committed, subject to the terms and conditions set forth therein, to purchase
$150.0 million in aggregate principal amount of subordinated notes of
Acquisition and (iii) Welsh, Carson, Anderson & Stowe VIII, L.P. ("WCAS")
pursuant to which it has committed to provide to Acquisition $350.0 million in
equity to consummate the Merger, pay the Merger Consideration and pay the
related transaction expenses (the financings referred to in clauses (i), (ii)
and (iii) above being collectively referred to as the "Financing"). Such
Financing is adequate to pay in full in cash at closing the Cash Merger
Consideration together with all fees and expenses of Acquisition associated with
the transactions contemplated hereby, and to make any other payments necessary
to consummate the transactions contemplated hereby. True and complete copies of
the Commitment Letters have been furnished to the Company. Neither Acquisition,
WCAS nor their affiliates will terminate, amend or modify in any respect the
Commitment Letters in a manner which will adversely affect the probability that
such financing will be actually funded, or the timing thereof, without prior
written consent of the Company. Acquisition or WCAS has fully paid any and all
commitment fees or other fees required by such Commitment Letters to be paid as
of the date hereof (and will duly pay any such fees after the date hereof). The
Commitment Letters are valid and in full force and effect and no event has
occurred which (with or without notice, lapse of time or both) would constitute
a default on the part of WCAS or Acquisition thereunder or would adversely
affect the probability that such financing will actually be funded. The $350.0
million equity investment of WCAS will be used solely to acquire common stock of
Acquisition at a price of $43.50 per share.
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ARTICLE V
COVENANTS OF THE COMPANY
The Company agrees that:
5.1 Conduct of the Company. From the date hereof until the Effective
Time, except as contemplated by this Agreement or with the prior written consent
of Acquisition (which consent shall not be unreasonably withheld or delayed),
the Company and its Subsidiaries shall conduct their business in the ordinary
course consistent with past practice and shall use reasonable efforts to
preserve intact their business organizations and relationships with third
parties and to keep available the services of their present officers and key
employees. Without limiting the generality of the foregoing, the Company will
not, and will not permit any of its Subsidiaries to, do any of the following:
(a) adopt any amendment to its certificate of incorporation or
bylaws;
(b) except for issuances of capital stock of the Company's
Subsidiaries to the Company or a wholly-owned Subsidiary of the Company, issue,
reissue or sell, or authorize the issuance, reissuance or sale of (i) additional
shares of capital stock of any class, or securities convertible into capital
stock of any class, or any rights, warrants or options to acquire any
convertible securities or capital stock, other than the issue of Common Shares,
in accordance with the terms of the instruments governing such issuance on the
date hereof, pursuant to the exercise of Options outstanding on the date hereof
or pursuant to the conversion of Convertible Preferred Shares, Second Series
Convertible Preferred Shares or Class B Common Shares outstanding on the date
hereof, or (ii) any other securities in respect of, in lieu of, or in
substitution for, Common Shares outstanding on the date hereof;
(c) redeem or otherwise repurchase, or declare, set aside or
pay any dividend or other distribution (whether in cash, securities or property
or any combination thereof) in respect of any class or series of its capital
stock other than between any of the Company and any of its wholly owned
Subsidiaries;
(d) split, combine, subdivide, reclassify or redeem, purchase
or otherwise acquire, or propose to redeem or purchase or otherwise acquire, any
shares of its capital stock, or any of its other securities;
(e) (i) except for (x) increases in salary, wages and benefits
of non-executive officers or employees of the Company or its Subsidiaries in
accordance with past practice and (y) increases in salary, wages and benefits
granted to non-executive officers and employees of the Company or its
Subsidiaries in conjunction with new hires, promotions or other changes in job
status, increase the
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compensation or fringe benefits payable or to become payable to its directors,
officers or key employees (whether from the Company or any of its Subsidiaries);
(ii) pay any benefit not required by any existing plan or arrangement
(including, without limitation, the granting of stock options, stock
appreciation rights, shares of restricted stock or performance units); (iii)
grant any severance or termination pay to (except pursuant to existing
agreements, plans or policies), or enter into any employment or severance
agreement with, any director, officer or other employee of the Company or any of
its Subsidiaries; or (iv) establish, adopt, enter into, or amend any collective
bargaining, bonus, profit sharing, thrift, compensation, stock option,
restricted stock, pension, retirement, savings, welfare, deferred compensation,
employment, termination, severance or other employee benefit plan, agreement,
trust, fund, policy or arrangement for the benefit or welfare of any directors,
officers or current or former employees (any of the foregoing being an "Employee
Benefit Arrangement"), except in each case to the extent required by applicable
law or regulation; provided, however, that nothing herein will be deemed to
prohibit the payment of benefits payable under terms of plans existing on or
prior to the date hereof as they become payable;
(f) acquire, sell, lease or dispose of any assets (other than
in the ordinary course of business consistent with past practice) or securities
which are material to the Company and its Subsidiaries, taken as a whole, or
enter into any commitment to do any of the foregoing or enter into any material
commitment or transaction outside the ordinary course of business other than
transactions between any wholly owned Subsidiary of the Company and the Company
or another wholly owned Subsidiary of the Company;
(g) (i) incur, assume or pre-pay any long-term debt or incur
or assume any short-term debt, except that the Company and its Subsidiaries may
incur, assume or pre-pay debt in the ordinary course of business consistent with
past practice under existing lines of credit, (ii) assume, guarantee, endorse or
otherwise become liable or responsible (whether directly, contingently or
otherwise) for the obligations of any other Person or Persons that are
individually or in the aggregate material, or (iii) make any loans, advances or
capital contributions to, or investments in, any other Person or Persons that
are individually or in the aggregate material except for loans, advances,
capital contributions or investments between any wholly owned Subsidiary of the
Company and the Company or another wholly owned Subsidiary of the Company; or
(h) terminate, modify, assign, waive, release or relinquish
any material contract rights or amend any material rights or claims not in the
ordinary course of business;
(i) make any capital expenditures, except in the ordinary
course of business and consistent with past practice or as currently budgeted;
or
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(j) agree in writing or otherwise to take any of the foregoing
actions.
5.2 Access to Information. From the date hereof until the Effective
Time, the Company will (i) give Acquisition and its counsel, financial advisors,
auditors and other authorized representatives reasonable access during normal
business hours to the offices, properties, books and records of the Company and
its Subsidiaries as such Persons may reasonably request, and furnish such
Persons with such financial and operating data and other information as such
Persons may reasonably request and (ii) instruct the Company's employees,
counsel and financial advisors to cooperate with Acquisition in its
investigation of the business of the Company and its Subsidiaries; provided that
no investigation pursuant to this Section 5.2 shall affect any representation or
warranty given by the Company to Acquisition hereunder. The foregoing
information shall be held in confidence to the extent required by, and in
accordance with, the provisions of the letter agreement between Donaldson,
Lufkin & Jenrette Securities Corporation and WCAS (the "Confidentiality
Agreement") .
5.3 No Solicitation. The Company (i) agrees that, prior to the
Effective Time, it shall not, and shall not authorize or permit any of its
Subsidiaries or any of its or its Subsidiaries' directors, officers, employees,
agents or representatives, directly or indirectly, to solicit, initiate or
encourage any inquiries or the making of any proposal with respect to any
merger, consolidation or other business combination, tender or exchange offer,
recapitalization transaction or other similar transaction involving the Company
or any of its Significant Subsidiaries, acquisition of all or any material
portion of the assets or capital stock of the Company or the acquisition of all
or substantially all of the assets or capital stock of any Significant
Subsidiary (an "Acquisition Transaction") or provide information to or
negotiate, explore or otherwise engage in discussions with any Person (other
than Acquisition or its directors, officers, employees, agents and
representatives) with respect to any Acquisition Transaction or enter into any
agreement, arrangement or understanding requiring it to abandon, terminate or
fail to consummate the Merger or any other transactions contemplated by this
Agreement, provided, however, that the Company may, in response to an
unsolicited proposal with respect to an Acquisition Transaction from a third
party, furnish information to, and negotiate, explore and otherwise engage in
substantive discussions with such third party, and enter into any such
agreement, arrangement or understanding (so long as immediately after entering
into any such agreement the Company terminates this Agreement), in each case, if
the Board determines in its good faith judgment, after consultation with its
independent legal counsel, that the failure to do so would result in a breach of
its fiduciary obligations; and (ii) represents that, as of the date of this
Agreement, the Company has discontinued, and has caused its Subsidiaries and its
and their respective directors, officers, employees, agents and representatives
to discontinue, discussions or negotiations with all persons or groups with whom
discussions or negotiations have previously been held concerning any proposal
with respect to an Acquisition
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Transaction. The Company shall promptly notify Acquisition if any proposal or
offer is received by, or any information is requested from, or any discussions
or negotiations are sought to be initiated or continued with, the Company in
respect of an Acquisition Proposal, and shall, in any such notice to
Acquisition, indicate the identity of the third party and the terms and
conditions of any proposals or offers; provided, however, that such notice shall
be given only to the extent the Board may disclose such information without
breaching its fiduciary duties as advised by counsel and as determined in good
faith and without violating any of the conditions of such Acquisition Proposal.
Thereafter, the Company shall keep Acquisition informed (subject to such
fiduciary duties), on a current basis, of the status and terms of any such
proposals or offers and the status of any such discussions or negotiations.
5.4 Communications Licenses and Authorizations. The Company shall,
and shall cause its Subsidiaries to, use commercially reasonable efforts to
obtain and maintain in full force and effect all approvals, consents, permits,
licenses and other authorizations, and any renewals thereof, from the FCC and
any appropriate State PUC, and to make all filings and reports, reasonably
necessary or required for the continued operation of the Company's and its
Subsidiaries' businesses, as and when such approvals, consents, permits,
licenses, filings or reports or other authorizations are necessary or required.
5.5 Debt Offers.
(a) Provided that this Agreement shall not have been
terminated in accordance with Section 9.1 hereof, the Company shall, within 20
days of receiving any request by Acquisition to do so (but in no event earlier
than twenty calendar days after the date hereof), commence offers to purchase,
accompanied by related solicitations of consent regarding covenant amendments,
all of the Company's outstanding 8 7/8% Senior Notes due 2001 and the Company's
outstanding 10 1/8% Senior Notes due 2005 (collectively, the "Senior Notes") on
such customary terms and conditions as are acceptable to Acquisition, in the
exercise of its judgment in making Debt Offers on commercially reasonable terms
to the Company and the holders of the Senior Notes (the "Debt Offers"). The
Company shall waive any of the conditions to the Debt Offers and make any other
changes in the terms and conditions of the Debt Offers as may be requested by
Acquisition to the extent that after giving effect to such requests the Debt
Offers will be made on commercially reasonable terms to the Company and the
holders of the Senior Notes, and the Company shall not, without Acquisition's
prior consent, which shall not be unreasonably withheld or delayed, waive any
material condition to the Debt Offers, make any changes to the terms and
conditions of the Debt Offers set forth in Schedule 5.5(a) hereto or make any
other material changes in the terms and conditions of the Debt Offers.
Notwithstanding the immediately preceding sentence, Acquisition shall not
request that the Company make any change to the terms and conditions of the Debt
Offers that decreases the price per Senior Note payable in the Debt Offers or
imposes conditions to the Debt Offers in addition to those set forth in Schedule
5.5(a) hereto that are materially adverse to
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holders of Senior Notes, unless such change was previously approved by the
Company in writing. The Company covenants and agrees that, subject to the terms
and conditions of this Agreement, including but not limited to the conditions in
the Debt Offers, it will accept for payment and pay for the Senior Notes as soon
as reasonably practicable after such conditions to the Debt Offers are satisfied
and it is permitted to do so under applicable law, provided that the Company
shall use reasonable best efforts to coordinate the timing of any such purchase
with Acquisition in order to obtain the greatest participation in the Debt
Offers.
(b) Promptly following the date of this Agreement, the Company
shall prepare, subject to advice and comments of Acquisition, an offer to
purchase for each of the issues of Senior Notes and forms of the related letters
of transmittal and summary advertisement, as well as all other information and
exhibits (collectively, the "Offer Documents"). All mailings to the holders of
Senior Notes in connection with the Debt Offers shall be subject to the prior
review, comment and approval of Acquisition (which approval shall not be
unreasonably withheld or delayed). The Company will use its reasonable best
efforts to cause the Offer Documents to be mailed to the holders of the Senior
Notes as promptly as practicable following receipt of the request from
Acquisition under paragraph (a) above to do so. The Company agrees promptly to
correct any information in the Offer Documents that shall be or have become
false or misleading in any material respect.
5.6 Notices of Certain Events. The Company shall promptly notify
Acquisition of:
(a) any notice or other communication from any Person alleging
that the consent of such Person is or may be required in connection with the
transactions contemplated by this Agreement;
(b) any notice or other communication from any Governmental
Entity in connection with the transactions contemplated by this Agreement;
(c) any actions, suits, claims, investigations or proceedings
commenced or, to its knowledge, threatened against the Company or any Subsidiary
which, if pending on the date of this Agreement, would have been required to
have been disclosed pursuant to Section 3.11 or which relate to the consummation
of the transactions contemplated by this Agreement; and
(d) any filings with, or notices from, or the initiation of
any complaint or other proceedings by, the FCC or any State PUC relating to the
Communications Licenses held by the Company or any of its Subsidiaries.
5.7 State Takeover Laws. The Company shall, upon the request of
Acquisition, take all reasonable steps to assist in any challenge by Acquisition
to the
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validity or applicability to the transactions contemplated by this Agreement,
including the Merger, of any state takeover law.
ARTICLE VI
COVENANTS OF ACQUISITION
Acquisition agrees that:
6.1 Confidentiality. Acquisition acknowledges and agrees that all
information received from or on behalf of the Company or any of the Company's
Subsidiaries in connection with the Merger shall be deemed received pursuant to
the Confidentiality Agreement and Acquisition shall, and shall cause its
Affiliates and representatives, to comply with the provisions of the
Confidentiality Agreement with respect to such information and the provisions of
the Confidentiality Agreement are hereby incorporated herein by reference with
the same effect as if fully set forth herein.
6.2 Indemnification; Directors' and Officers' Insurance.
(a) Acquisition agrees that all rights to indemnification now
existing in favor of any employee, agent, director or officer of the Company and
its Subsidiaries (the "Indemnified Parties") as provided in their respective
charters or bylaws, in an agreement between an Indemnified Party and the Company
or one of its Subsidiaries, or otherwise in effect on the date hereof shall
survive the Merger and shall continue in full force and effect for a period of
not less than six years from the Effective Time; provided that in the event any
claim or claims are asserted or made within such six-year period, all rights to
indemnification in respect of any such claim or claims shall continue until
final disposition of any and all such claims. Acquisition also agrees to
indemnify all Indemnified Parties to the fullest extent permitted by applicable
law with respect to all acts and omissions arising out of such individuals'
services as officers, directors, employees or agents of the Company or any of
its Subsidiaries or as trustees or fiduciaries of any plan for the benefit of
employees, or otherwise on behalf of, the Company or any of its Subsidiaries,
occurring prior to the Effective Time including, without limitation, the
transactions contemplated by this Agreement. Without limitation of the
foregoing, in the event any such Indemnified Party is or becomes involved in any
capacity in any action, proceeding or investigation in connection with any
matter, including, without limitation, the transactions contemplated by this
Agreement, occurring prior to, and including, the Effective Time, Acquisition
will pay as incurred such Indemnified Party's legal and other expenses
(including the cost of any investigation and preparation) incurred in connection
therewith. Acquisition shall pay all expenses, including attorneys' fees, that
may be incurred by any Indemnified Party in enforcing the indemnity and other
obligations provided for in this Section 6.2.
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(b) Acquisition agrees that the Company and, from and after
the Effective Time, the Surviving Corporation shall cause to be maintained in
effect for not less than six years from the Effective Time the current policies
of the directors' and officers' liability insurance maintained by the Company;
provided that (i) the Surviving Corporation may substitute therefor policies of
at least the same coverage containing terms and conditions which are no less
advantageous; (ii) such substitution shall not result in any gaps or lapses in
coverage with respect to matters occurring prior to the Effective Time; and
(iii) the Surviving Corporation shall not be required to pay an annual premium
in excess of 200% of the last annual premium paid by the Company prior to the
date hereof and if the Surviving Corporation is unable to obtain the insurance
required by this Section 6.2(b) it shall obtain as much comparable insurance as
possible for an annual premium equal to such maximum amount.
6.3 Employee Benefit Arrangements.
(a) Acquisition agrees that the Company will honor and, from
and after the Effective Time, Acquisition will cause the Surviving Corporation
to honor, all Employee Benefit Arrangements to which the Company or any of its
Subsidiaries is currently a party.
(b) Acquisition will cause the Surviving Corporation to take
such actions as are necessary so that, for a period of at least two years from
the Effective Time, employees of the Company and its Subsidiaries will be
provided cash compensation, employee benefit and incentive compensation and
similar plans and programs (other than equity-based compensation plans and
programs) as will provide compensation and benefits which in the aggregate are
no less favorable than those provided to such employees as of the date hereof.
(c) Nothing in this Section 6.3 shall be construed to limit
the ability of the Surviving Corporation or any of its subsidiaries to terminate
the employment of any employee (it being understood that such employment shall,
to the maximum extent permitted by law, be at will) or to review Employee
Benefit Arrangements from time to time and make such changes as it or they deem
appropriate.
6.4 Financing. Acquisition shall use commercially reasonable efforts
to consummate the Financing or alternative financing on terms no more onerous
than the terms of the Financing.
6.5 NASDAQ Listing. Acquisition will, for at least three years after
the Effective Time of the Merger, use reasonable best efforts to cause the
Common Shares to be listed on the NASDAQ National Market System and registered
under the Exchange Act.
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ARTICLE VII
COVENANTS OF ACQUISITION AND THE COMPANY
Each of the parties hereto agrees that:
7.1 Reasonable Best Efforts. Subject to the terms and conditions
herein provided, each of the parties hereto agrees to use its reasonable best
efforts to take, or cause to be taken, all action, and to do, or cause to be
done, in the case of the Company, subject to the limitations provided herein
regarding the fiduciary duties of the Board, and to assist and cooperate with
the other party hereto in doing, as promptly as practicable, all things
necessary or advisable under applicable laws and regulations to ensure that the
conditions set forth in Article VIII are satisfied and to consummate and make
effective the transactions contemplated by this Agreement.
If at any time after the Effective Time any further action is
necessary or desirable to carry out the purposes of this Agreement, including
the execution of additional instruments, the proper officers and directors of
each party to this Agreement shall take all such necessary action.
7.2 Stockholder Meeting.
(a) Promptly upon the request of Acquisition, the Company
shall take all action necessary in accordance with the Delaware Law and its
certificate of incorporation and bylaws to call, give notice of and convene a
meeting (the "Stockholder Meeting") of its stockholders to consider and vote
upon the approval and adoption of this Agreement and the Merger and for such
other purposes as may be necessary or desirable.
(b) Promptly upon the request of Acquisition, the Company
shall prepare a Registration Statement on Form S-4 covering the Electing Shares
(the "Form S-4") and a proxy or information statement pertaining to the Merger,
which shall also constitute the prospectus included in the Form S-4 (the "Proxy
Statement/Prospectus"). Subject to the Board's determination that in its good
faith judgment, after consultation with its independent legal counsel, that the
failure to do so would result in a breach of its fiduciary obligations, the
Board shall recommend that the stockholders of the Company vote to approve and
adopt this Agreement and the Merger and any other matters to be submitted to
stockholders in connection therewith and the Company include such recommendation
in the Proxy Statement/Prospectus. Acquisition and its stockholders shall
cooperate fully with the Company in the preparation of the Proxy
Statement/Prospectus and any amendments and supplements thereto. The Proxy
Statement/Prospectus shall not be distributed, and no amendment or supplement
thereto shall be made by the Company, without the prior consent of Acquisition
and its counsel. The Company shall use its reasonable best efforts to have the
Form S-4 declared effective by the SEC as promptly as practicable and shall
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cause a definitive Proxy Statement/Prospectus to be distributed to its
stockholders entitled to vote upon the Merger as promptly as practicable
thereafter.
(c) The Company shall notify Acquisition of the receipt of the
comments of the SEC and of any requests by the SEC for amendments or supplements
to the Form S-4 or the Proxy Statement/Prospectus, or for additional
information, and shall promptly supply the Company with copies of all
correspondence between the Company (or its representatives) and the SEC (or its
staff) with respect thereto. If, at any time prior to the Meeting, any event
should occur relating to or affecting the Company or Acquisition, or to their
respective officers or directors, which event should be described in an
amendment or supplement to the Form S-4 or the Proxy Statement/Prospectus, the
parties shall promptly inform one another and shall cooperate in promptly
preparing, filing and having declared effective or clearing with the SEC and, if
required by applicable securities laws, distributing to the Company's
stockholders such amendment or supplement.
7.3 Consents.
(a) Each of the parties will use its reasonable best efforts
to obtain as promptly as practicable all consents, waivers, approvals,
authorizations or permits of any Governmental Entity or any other Person
required in connection with, and waivers of any Violations that may be caused
by, the consummation of the transactions contemplated by this Agreement.
(b) In furtherance and not in limitation of the foregoing,
Acquisition shall use its best efforts to resolve such objections, if any, as
may be asserted with respect to the transactions contemplated by this Agreement
under any antitrust, competition or trade regulatory laws, rules or regulations
of any domestic or foreign government or governmental authority ("Antitrust
Laws"). If any suit is threatened or instituted challenging any of the
transactions contemplated by this Agreement as violative of any Antitrust Law,
Acquisition shall take such action (including, without limitation, agreeing to
hold separate or to divest any of the businesses, product lines or assets of
Acquisition or any of its Affiliates controlled by it or of any of the Company,
its Subsidiaries or Affiliates) as may be required (i) by the applicable
government or governmental authority (including, without limitation, the
Antitrust Division of the United States Department of Justice or the Federal
Trade Commission) in order to resolve such objections as such government or
authority may have to such transactions under such Antitrust Law or (ii) by any
domestic or foreign court or similar tribunal, in any suit brought by a private
party or governmental authority challenging the transactions contemplated by
this Agreement as violative of any Antitrust Law, in order to avoid the entry
of, or to effect the dissolution of, any injunction, temporary restraining order
or other order that has the effect of preventing the consummation of any of such
transactions. The entry by a court, in any suit brought by a private party or
governmental authority challenging the transactions contemplated by this
Agreement as violative of any Antitrust Law, of an order or
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decree permitting the transactions contemplated by this Agreement, but requiring
that any of the businesses, product lines or assets of any of Acquisition or its
Affiliates controlled by it or the Company or its Subsidiaries or Affiliates be
divested or held separate by Acquisition, or that would otherwise limit
Acquisition's freedom of action with respect to, or its ability to retain, the
Company and its Subsidiaries or any portion thereof or any of Acquisition's or
its Affiliates' other assets or businesses, shall not be deemed a failure to
satisfy the conditions specified in Section 8.1(d) hereof.
(c) Each party hereto shall promptly inform the other party of
any material communication from the Federal Trade Commission, the Department of
Justice, the FCC or any other domestic or foreign government or governmental
authority regarding any of the transactions contemplated by this Agreement. If
any party or any Affiliate thereof receives a request for additional information
or documentary material from any such government or authority with respect to
the transactions contemplated by this Agreement, then such party will endeavor
in good faith to make, or cause to be made, as soon as reasonably practicable
and after consultation with the other parties, an appropriate response in
compliance with such request. Acquisition will advise the Company promptly in
respect of any understandings, undertakings or agreements (oral or written)
which Acquisition proposes to make or enter into with the Federal Trade
Commission, the Department of Justice, the FCC or any other domestic or foreign
government or governmental authority in connection with the transactions
contemplated by this Agreement.
7.4 Public Announcements. So long as this Agreement is in effect,
the Company and Acquisition agree that they will not issue any press release or
make any other public announcement concerning this Agreement, the Merger or the
transactions contemplated hereby or thereby without the prior consent of the
other party, except that the Company or Acquisition may make such public
disclosure that it believes in good faith to be required by law (in which event
such party shall notify the other party prior to making such disclosure).
7.5 Notification of Certain Matters. Acquisition and the Company
shall promptly notify the other party of (i) the occurrence or non-occurrence of
any fact or event which would be reasonably likely (x) to cause any
representation or warranty contained in this Agreement to be untrue or
inaccurate in any material respect at any time from the date hereof to the
Effective Time or (y) to cause any material covenant, condition or agreement
hereunder not to be complied with or satisfied in all material respects and (ii)
any failure of the Company or Acquisition, as the case may be, to comply with or
satisfy any covenant, condition or agreement to be complied with or satisfied by
it hereunder in any material respect; provided, however, that no such
notification shall affect the representations or warranties of any party or the
conditions to the obligations of any party hereunder.
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7.6 Further Assurances. At and after the Effective Time, the
officers and directors of the Surviving Corporation will be authorized to
execute and deliver, in the name and on behalf of the Company or Acquisition,
any deeds, bills of sale, assignments or assurances and to take and do, in the
name and on behalf of the Company or Acquisition, any other actions and things
to vest, perfect or confirm of record or otherwise in the Surviving Corporation
any and all right, title and interest in, to and under any of the rights,
properties or assets of the Company acquired or to be acquired by the Surviving
Corporation as a result of, or in connection with, the Merger.
7.7 FCC Applications.
(a) As promptly as practicable after the execution and
delivery of this Agreement, Acquisition and the Company shall prepare all
appropriate applications for FCC approval, and such other documents as may be
required, with respect to the transfer of control of the Company to Acquisition
(collectively, the "FCC Applications"). As promptly as practicable following
execution and delivery of this Agreement, the Company shall deliver to
Acquisition its completed portion of the FCC Applications. Not later than the
fifth business day following the delivery of the FCC Applications to
Acquisition, Acquisition shall file, or cause to be filed, the FCC Applications.
If the Closing shall not have occurred for any reason within any applicable
initial consummation period relating to the FCC's grant of the FCC Applications,
and neither Acquisition nor the Company shall have terminated this Agreement
pursuant to Section 9.1, Acquisition and the Company shall jointly request one
or more extensions of the consummation period of such grant. No party hereto
shall knowingly take, or fail to take, any action if the intent or reasonably
anticipated consequence of such action or failure to act is, or would be, to
cause the FCC not to grant approval of the FCC Applications or materially delay
either such approval or the consummation of the transfer of control of the
Company.
(b) As promptly as practicable after the execution and
delivery of this Agreement, Acquisition and the Company shall prepare all
required applications for approval by State PUCs, and such other documents as
may be required, with respect to the transfer of control of the Company
(collectively, the "State PUC Applications"). Not later than the twentieth
business day following execution and delivery of this Agreement, the Company
shall deliver to Acquisition its completed portion of the State PUC
Applications. Not later than the thirtieth business day following execution and
delivery of this Agreement, Acquisition and the Company shall file, or cause to
be filed, the State PUC Applications. If the Closing shall not have occurred for
any reason within any applicable consummation period relating to any State PUC's
grant of any State PUC Application, and neither Acquisition nor the Company
shall have terminated this Agreement pursuant to Section 9.1, Acquisition and
the Company shall jointly request one or more extensions of the consummation
period of such grant. No party hereto shall knowingly take, or fail to take, any
action if the intent or reasonably anticipated
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consequence of such action or failure to act is, or would be, to cause any State
PUC not to grant approval of any State PUC Application or materially delay
either such approval or the consummation of the transfer of control of the
Company.
(c) Acquisition and the Company shall each pay one-half (1/2)
of any FCC fees that may be payable in connection with the filing or granting of
approval of the FCC Applications. Each of Acquisition and Company shall bear its
own expenses in connection with the preparation and prosecution of the FCC
Applications and the State PUC Applications. Acquisition and the Company shall
each use its best efforts to prosecute the FCC Applications and the State PUC
Applications in good faith and with due diligence before the FCC and the State
PUCs and in connection therewith shall take such action or actions as may be
necessary or reasonably required in connection with the FCC Applications and the
State PUC Applications, including furnishing to the FCC and the State PUCs any
documents, materials or other information requested by the FCC and the State
PUCs in order to obtain such approvals as expeditiously as practicable.
7.8 HSR Act Matters. Promptly after the date hereof, Acquisition and
the Company (as may be required pursuant to the HSR Act) will complete all
documents required to be filed with the Federal Trade Commission and the
Department of Justice in order to comply with the HSR Act and, not later than 15
business days after the date hereof, together with the Persons who are required
to join in such filings, shall file the same with the appropriate Governmental
Entities. Acquisition and the Company shall promptly furnish all materials
thereafter required by any of the Governmental Entities having jurisdiction over
such filings, and shall take all reasonable actions and shall file and use all
reasonable efforts to have declared effective or approved all documents and
notifications with any such Governmental Entities, as may be required under the
HSR Act or other federal antitrust laws for the consummation of the Merger and
any other transactions contemplated hereby.
ARTICLE VIII
CONDITIONS TO THE MERGER
8.1 Conditions to the Obligations of Each Party. The respective
obligations of Acquisition and the Company to consummate the Merger are subject
to the satisfaction, at or before the Effective Time, of each of the following
conditions:
(a) Stockholder Approval. The stockholders of the Company
shall have duly approved the transactions contemplated by this Agreement,
pursuant to the requirements of the Company's certificate of incorporation and
applicable law.
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(b) HSR Act. The waiting period (and any extension thereof)
applicable to the Merger under the HSR Act shall have expired or been
terminated.
(c) Form S-4. The Form S-4 shall have been declared effective
and no stop order with respect thereto shall be in effect at the Effective Time.
(d) Injunctions; Illegality. The consummation of the Merger
shall not be restrained, enjoined or prohibited by any order, judgment, decree,
injunction or ruling of a court of competent jurisdiction or any Governmental
Entity entered after the parties have used reasonable best efforts to prevent
such entry and there shall not have been any statute, rule or regulation
enacted, promulgated or deemed applicable to the Merger by any Governmental
Entity which prevents the consummation of the Merger.
8.2 Conditions Precedent to the Obligations of Acquisition.
(a) Representations and Warranties. Each of the
representations and warranties of the Company contained in this Agreement that
is qualified as to materiality or Material Adverse Effect shall have been true
and correct when made and on and as of the Closing Date as if made on and as of
such date, and each of the other representations and warranties of Company
contained in this Agreement shall have been true and correct in all material
respects when made and on and as of the Closing Date as if made on and as of
such date, and Acquisition shall have received a certificate to such effect of
the Chief Executive Officer of the Company.
(b) Performance. The Company shall have performed and complied
in all material respects with all agreements and covenants required to be
performed and complied with by it under this Agreement on or prior to the
Closing Date, and Acquisition shall have received a certificate to such effect
of the Chief Executive Officer of the Company.
(c) FCC Approvals. All consents, waivers, approvals and
authorizations required to be obtained from the FCC ("FCC Transfer Approvals")
prior to the consummation of the transactions contemplated hereby shall have
been obtained by a "Final Order" (as hereinafter defined) without the imposition
of any condition that Acquisition, in its sole discretion, deems materially
adverse to the Company's or its Subsidiaries' continued operation of their
businesses from and after the Effective Time. All filings and notices required
to be made by the Company or Acquisition prior to the consummation of the
transactions contemplated hereby shall have been made. For purposes of this
Agreement, "Final Order" shall mean an action by the FCC: (i) that is not
reversed, stayed, enjoined, set aside, annulled or suspended within the
deadline, if any, provided by applicable statute or regulation,
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(ii) with respect to which no request for stay, motion or petition for
reconsideration or rehearing, application or request for review, or notice of
appeal or other judicial petition for review that is filed within such period is
pending and (iii) as to which the deadlines, if any, for filing any such
request, motion, petition, application, appeal or notice, and for the entry by
the FCC of orders staying, reconsidering or reviewing on its own motion have
expired. Notwithstanding anything to the contrary contained herein or otherwise,
Acquisition may, at its option by written notice to the Company, waive on behalf
of both parties hereto the requirement that each of the FCC Transfer Approvals
shall have become a Final Order.
(d) Debt Offers. On or prior to the Closing Date, the Company
shall have consummated the Debt Offers, unless failure to consummate the Debt
Offers was a result of a failure by Acquisition to perform any covenant or
condition contained in the Offer Documents or this Agreement or the inaccuracy
of any representation or warranty of Acquisition contained therein.
(e) Financing. Acquisition shall have obtained the Financing
substantially on the terms contemplated by the Commitment Letters or alternative
financing on terms no less favorable than those set forth in the Commitment
Letters, unless the failure to obtain such financing was the result of a failure
by Acquisition to perform any covenant or condition contained therein or the
inaccuracy of any representation or warranty of Acquisition.
(f) Option Plans. The number of Common Shares purchasable upon
the exercise of Options that have not been cancelled in accordance with Section
1.7 shall not exceed 750,000.
8.3 Conditions Precedent to the Obligations of the Company.
(a) Representations and Warranties. Each of the
representations and warranties of Acquisition contained in this Agreement that
is qualified as to materiality or Material Adverse Effect shall have been true
and correct when made and on and as of the Closing Date as if made on and as of
such date, and each of the other representations and warranties of Acquisition
contained in this Agreement shall have been true and correct in all material
respects when made and on and as of the Closing Date as if made on and as of
such date, and the Company shall have received a certificate to such effect of
the President of Acquisition.
(b) Performance. Acquisition shall have performed and complied
in all material respects with all agreements and covenants required to be
performed and complied with by it under this Agreement on or prior to the
Closing Date, and the Company shall have received a certificate to such effect
of the President of Acquisition.
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ARTICLE IX
TERMINATION
9.1 Termination. This Agreement may be terminated and the Merger
contemplated hereby may be abandoned at any time prior to the Effective Time,
notwithstanding approval thereof by the stockholders of the Company:
(a) by the mutual written consent of Acquisition and the
Company;
(b) by Acquisition or the Company if any court or other
Governmental Entity shall have issued, enacted, entered, promulgated or enforced
any order, judgment, decree, injunction, or ruling or taken any other action
restraining, enjoining or otherwise prohibiting the Merger and such order,
judgment, decree, injunction, ruling or other action shall have become final and
nonappealable after the parties have used reasonable best efforts to prevent
such issuance, enactment, entry, promulgation or enforcement;
(c) by the Company if (i) (A) any of the representations and
warranties of the Acquisition set forth herein shall not be true and correct (in
the case of representations and warranties qualified as to materiality or
Acquisition Material Adverse Effect) or true and correct in all material
respects (in the case of other representations and warranties), in each case
when made, or (B) there shall have occurred, on the part of Acquisition, a
breach of any covenant or agreement contained in this Agreement which if not
cured would have a Material Adverse Effect and which, in the case of (A) or (B),
is not curable or, if curable, is not cured within 30 calendar days after
written notice of such breach is given by the Company to Acquisition, (ii) the
Company shall enter into a definitive written agreement with respect to an
Acquisition Transaction, with a third party, or a third party has commenced a
tender offer which, in either case, the Board of Directors of the Company
believes in good faith is more favorable to the Company's stockholders than the
transactions contemplated by this Agreement or (iii) if the Board shall have
withdrawn, modified or amended in any manner adverse to Acquisition or the
stockholders of Acquisition its approval or recommendation of this Agreement and
the Merger, or approved, recommended or endorsed any proposal for an Acquisition
Transaction with a third party;
(d) by Acquisition if (i) (A) any of the representations and
warranties of the Company set forth herein shall not be true and correct (in the
case of representations and warranties qualified as to materiality or Material
Adverse Effect) or true and correct in all material respects (in the case of
other representations and warranties), in each case when made, or (B) there
shall have occurred, on the part of the Company and its Subsidiaries, taken as a
whole, a breach of any covenant or agreement contained in this Agreement which
if not cured would have a Material
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Adverse Effect and which, in the case of (A) or (B), is not curable or, if
curable, is not cured within 30 calendar days after written notice of such
breach is given by Acquisition to the Company, (ii) the Company shall enter into
a definitive written agreement with respect to an Acquisition Transaction, with
a third party, or a third party has commenced a tender offer which, in either
case, the Board of Directors of the Company believes in good faith is more
favorable to the Company's stockholders than the transactions contemplated by
this Agreement or (iii) if the Board shall have withdrawn, modified or amended
in any manner adverse to Acquisition or the stockholders of Acquisition its
approval or recommendation of this Agreement and the Merger or approved,
recommended or endorsed any proposal for an Acquisition Transaction with a third
party; or
(e) by either party if it shall not have breached any of its
obligations hereunder on January 31, 1999; provided, however, that neither party
may terminate this Agreement pursuant to this Section 9.1(e) on or before April
30, 1999 if the conditions to Acquisition's obligations to consummate the
transactions contemplated hereunder have not been satisfied on account of the
failure to receive FCC Transfer Approvals.
9.2 Effect of Termination. If this Agreement is terminated pursuant
to Section 9.1, this Agreement shall become void and of no effect with no
liability on the part of any party hereto or its respective directors, officers
or stockholders, except that the agreements contained in Sections 6.1 and 9.3
shall survive the termination hereof, and except that nothing herein shall
relieve any party from liability for any breach of this Agreement or the
Confidentiality Agreement.
9.3 Fees and Expenses.
(a) Whether or not the Merger is consummated, all costs and
expenses incurred in connection with the Merger, this Agreement and the
transactions contemplated by this Agreement shall be paid by the party incurring
such expenses.
(b) In the event the Company shall have terminated this
Agreement pursuant to Section 9.1(c)(ii) or (iii), or Acquisition shall have
terminated this Agreement pursuant to Section 9.1(d)(ii) or (iii), then the
Company shall simultaneously with such termination reimburse Acquisition for the
documented fees and expenses of Acquisition related to this Agreement and the
transactions contemplated hereby (including, without limitation, any fees and
expenses of counsel, accountants and other professional advisors, commitment
fees and other financing costs and interest, underwriting discounts, debt tender
payments and fees, expenses and other costs of consummating and unwinding any
issuance of securities) (subject to a maximum of $25.0 million) and
simultaneously with such termination pay Acquisition a termination fee of $40
million.
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ARTICLE X
MISCELLANEOUS
10.1 Notices. All notices, requests and other communications to any
party hereunder shall be in writing and shall be deemed to have been duly given
when delivered in person, by overnight courier or by facsimile to the respective
parties as follows:
If to Acquisition, to:
c/o Welsh, Carson, Anderson & Stowe VIII, L.P.
320 Park Avenue
Suite 2500
New York, New York 10022-6815
Attn: Thomas E. McInerney
Facsimile: (212) 893-9575
with a copy to:
Robert A. Schwed, Esq.
Karen C. Wiedemann, Esq.
Reboul, MacMurray, Hewitt, Maynard & Kristol
45 Rockefeller Plaza
New York, New York 10111
Facsimile: (212) 841-5725
If to the Company, to:
Centennial Cellular Corp.
50 Locust Avenue
New Canaan, Connecticut 06840
Facsimile: (203) 972-2013
Attn: Bernard P. Gallagher
with a copy to:
Toby S. Myerson, Esq.
Kenneth M. Schneider, Esq.
Paul, Weiss, Rifkind, Wharton & Garrison
1285 Avenue of the Americas
New York, NY 10019
Facsimile: (212) 757-3990
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or such other address or facsimile number as such party may hereafter specify
for the purpose by written notice to the other parties hereto. Each such notice,
request or other communication shall be effective (i) if delivered in person,
when such delivery is made at the address specified in this Section 10.1; (ii)
if delivered by overnight courier, the next business day after such delivery is
sent to the address specified in this Section 10.1; or (iii) if delivered by
facsimile, when such facsimile is transmitted to the facsimile number specified
in this Section 10.1 and the appropriate confirmation is received.
10.2 Survival of Representations and Warranties and Agreements. The
representations and warranties and agreements contained herein and in any
certificate or other writing delivered pursuant hereto shall not survive beyond
the Effective Time except for the agreements set forth in Sections 6.2 and 6.3,
which shall survive the Effective Time, and Sections 6.1 and 9.3 and this
Article X, which shall survive the termination of this Agreement.
10.3 Amendment. This Agreement may be amended by the Company and
Acquisition at any time before or after any approval of this Agreement by the
stockholders of the Company but, after any such approval, no amendment shall be
made which decreases the Merger Consideration or which adversely affects the
rights of the Company's stockholders hereunder without the approval of such
stockholders. This Agreement may not be amended except by an instrument in
writing signed on behalf of all the parties.
10.4 Extension; Waiver. At any time prior to the Effective Time, the
parties hereto may (i) extend the time for the performance of any of the
obligations or other acts of any other party hereto, (ii) waive any inaccuracies
in the representations and warranties contained herein by any other party or in
any document, certificate or writing delivered pursuant hereto by any other
party or (iii) waive compliance with any of the agreements of any other party or
with any conditions to its own obligations. Any agreement on the part of any
party to any such extension or waiver shall be valid only if set forth in an
instrument in writing signed on behalf of such party.
10.5 Successors and Assigns. The provisions of this Agreement shall
be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns, provided that no party may assign, delegate
or otherwise transfer any of its rights or obligations under this Agreement
without the prior written consent of the other parties hereto.
10.6 Governing Law. This Agreement shall be construed in accordance
with and governed by the law of the State of Delaware applicable to agreements
entered into and to be performed wholly within such State.
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10.7 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 hereby in any court other than a federal or state court sitting in
the State of Delaware.
10.8 Counterparts; Effectiveness. This Agreement may be signed in
any number of counterparts, each of which shall be an original, with the same
effect as if the signatures thereto and hereto were upon the same instrument.
This Agreement shall become effective when each party hereto shall have received
counterparts hereof signed by all of the other parties hereto.
10.9 Entire Agreement; No Third-party Beneficiaries. This Agreement
and the other agreements referred to herein or executed contemporaneously
herewith constitute the entire agreement, and supersede all prior agreements and
understandings, both written and oral, between the parties with respect to the
subject matter of this Agreement. No representation, inducement, promise,
understanding, condition or warranty not set forth herein has been made or
relied upon by any party hereto. This Agreement, other than as provided in
Sections 6.2 and 6.3, is not intended to confer upon any Person other than the
parties hereto any rights or remedies.
10.10 Headings. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
10.11 Schedules. Schedule references contained in Article III of
this Agreement are for convenience only and matters disclosed pursuant to one
section, subsection or other provision of Article III are deemed disclosed for
all purposes of Article III to the extent this Agreement requires such
disclosure.
10.12 Severability. In the event that any one or more of the
provisions contained in this Agreement or in any other instrument referred to
herein, shall, for any reason, be held to be invalid, illegal or unenforceable
in any respect, such invalidity, illegality or unenforceability shall not affect
any other provision of this Agreement or any other such instrument.
10.13 WAIVER OF JURY TRIAL. EACH OF THE COMPANY AND ACQUISITION
HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ALL RIGHTS TO
TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON
CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO
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THIS AGREEMENT OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREBY.
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IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be duly executed by its respective authorized officer as of the day
and year first above written.
CCW ACQUISITION CORP.
By:
---------------------------
Name:
Title:
CENTENNIAL CELLULAR CORP.
By:
---------------------------
Name:
Title:
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FOR IMMEDIATE RELEASE
Contact: Centennial Cellular Corp.
Scott N. Schneider
Chief Financial Officer
(203) 972-2002
Welsh, Carson, Anderson & Stowe
Thomas E. McInerney
General Partner
(212) 893-9500
CENTENNIAL CELLULAR CORP. ANNOUNCES $43.50 PER SHARE
MERGER AGREEMENT WITH
WELSH, CARSON, ANDERSON & STOWE
New Canaan, CT and New York, NY. July 2, 1998. Centennial Cellular
Corp. ("Centennial") (Nasdaq National Market-CYCL), a leading independent
cellular provider, and Welsh, Carson, Anderson & Stowe and funds managed by it
("WCAS") today jointly announced the signing of an Agreement and Plan of Merger
providing for the merger of Centennial with CCW Acquisition Corp., a Delaware
corporation formed by WCAS. The transaction is valued at approximately $2.0
billion, including indebtedness of approximately $515 million to be refinanced.
Centennial will continue to operate as an independent company under its current
name and management.
Pursuant to the Merger Agreement, outstanding shares of Class A
Common Stock of Centennial would be converted into the right to receive $43.50
in cash or to retain up to 7.1% of the Class A Common Stock outstanding after
the merger. Class B Common Stock of Centennial would be converted into the right
to receive $43.50 in cash and a number of shares of Class A Common Stock, if
any, such that the aggregate number of shares of Class A Common Stock held by
Centennial's existing shareholders will equal 7.1% of the shares outstanding
after the merger. All outstanding shares of Convertible Redeemable Preferred
Stock and Second Series Convertible Redeemable Preferred Stock of Centennial
shall be converted into the right to receive $43.50 in cash on an as converted
basis. The transaction was structured to be accounted for as a recapitalization.
Centennial acquires, operates and invests in cellular telephone
systems throughout the United States and the Commonwealth of Puerto Rico.
Centennial's current wireless telephone interests represent approximately 10.1
million Net Pops. Approximately 6.5 million of these Net Pops are represented by
Centennial's wireless telephone systems located in the continental United
States, including approximately 1.1 million Net Pops related to Centennial's
minority equity investments in partnerships owning wireless telephone
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systems. The balance of approximately 3.6 million Net Pops represents
Centennial's interest in its wireless telephone systems in Puerto Rico.
Following the Merger, investment partnerships affiliated with WCAS
will own 92.9% of Centennial's outstanding shares. WCAS partnerships will invest
approximately $350 million of equity and $150 million of subordinated debt. WCAS
is a private investment firm based in New York and founded in 1979. WCAS
currently manages over $7 billion in private equity capital and focuses
primarily on the information services and healthcare industries. Thomas E.
McInerney, a general partner of WCAS, stated that WCAS' investment in Centennial
reflects its view that the communications and information industries are rapidly
converging and that leading providers of wireless communications services will
benefit from increasing demand resulting from higher penetration rates and new
services involving wireless data transmission.
Merrill Lynch & Co. acted as financial adviser to WCAS in connection
with the transaction. Merrill Lynch Capital Corporation has underwritten and is
acting as lead arranger and syndication agent for $1.56 billion of credit
facilities, including $350 million of bridge commitments backstopping $340
million of senior note offerings to be lead managed by Merrill Lynch & Co.
Peter J. Solomon Company advised Centennial with respect to certain
aspects of the transaction.
Donaldson, Lufkin & Jenrette Securities Corporation acted as
financial advisor to Centennial and rendered a fairness opinion in connection
with the transaction.
The merger is subject to certain conditions, including the approval
of Centennial's shareholders, the receipt of certain approvals from the Federal
Communications Commission, the expiration of antitrust regulatory waiting
periods and the funding of the committed financing arrangements. Simultaneously
with the execution of the Merger Agreement, Century Communications Corp., the
holder of a majority of the voting power of Centennial, agreed to vote its
shares of Centennial in favor of the merger so long as the Merger Agreement
remains in effect. The merger agreement provides for the payment of certain fees
and the reimbursement of certain expenses to CCW Acquisition Corp. in the event
of a termination of the merger agreement under certain circumstances.
Any offering of securities in connection with the merger will be
made only by means of a prospectus.
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