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SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
Form 8-K
Current Report
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report: June 5, 1996
AT&T CAPITAL CORPORATION
A Delaware Commission File I.R.S. Employer
Corporation No. 1-11237 No. 22-3211453
44 Whippany Road, Morristown, New Jersey 07962-1983
Telephone Number (201) 397-3000
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Form 8-K AT&T Capital Corporation
June 5, 1996
Item 5. Other Events
On June 5, 1996, AT&T Capital Corporation entered into a definitive
merger agreement with a leasing consortium. Certain members of AT&T
Capital's senior management plan to participate in the consortium that will
own AT&T Capital upon completion of the merger.
Upon consummation of the merger, AT&T Capital's stockholders will
receive $45 in cash for each outstanding share of the company's common
stock. The total purchase price for the outstanding shares and stock
options will be approximately $2.2 billion. It is expected that the
merger, which is subject to customary closing conditions, including
regulatory approvals, will be consummated in late September.
AT&T, the company's 86-percent stockholder, is a party to and has
executed the merger agreement, along with a written consent to the merger,
thereby assuring stockholder approval of the transaction.
In addition to management, the consortium will include GRS Holding
Company, Ltd., owner of a U.K. rail leasing company. Babcock & Brown, a
San Francisco-based leasing, asset and project financing advisory firm,
also plans to participate. The company will continue to be led by AT&T
Capital's current management team, with no significant changes in business
strategies or operations planned.
Financing for the consortium is being arranged by the U.K.-based
Nomura International plc, a wholly owned subsidiary of the Nomura
Securities Co., Ltd. Nomura International plc has irrevocably and
unconditionally agreed to underwrite or purchase securities of the
consortium entity sufficient to allow the consortium entity to meet all of
its obligations under the merger agreement.
The transaction has been approved by AT&T Capital's board of directors
and a special committee of the board composed of independent directors.
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<PAGE>3
Form 8-K AT&T Capital Corporation
June 5, 1996
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 thereunto duly authorized.
AT&T CAPITAL CORPORATION
By: Edward Dwyer
Chief Financial Officer
June 6, 1996
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Form 8-K AT&T Capital Corporation
June 5, 1996
EXHIBIT INDEX
Exhibit
Number
_______
10. Merger Agreement dated as of June 5, 1996 between AT&T Capital
Corportion, AT&T Corp., Hercules Limited and Antigua
Acquisition Corporation.
99. AT&T Capital Corporation Press Release issued June 6, 1996.
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<PAGE>1 Exhibit 99
AT&T Capital Corporation
CONSORTIUM TO PURCHASE AT&T CAPITAL
For Immediate Release: June 6, 1996
_____________________________________
Morristown, N.J. -- AT&T Capital Corporation (NYSE - TCC) today
announced that the company has entered into a definitive merger agreement
with a leasing consortium. Certain members of AT&T Capital's senior
management, led by Chairman and CEO Tom Wajnert, plan to participate in the
consortium that will own AT&T Capital upon completion of the merger.
When the merger is consummated, AT&T Capital's stockholders will receive
$45 in cash for each outstanding share of the company's common stock. The
total purchase price for the outstanding shares and stock options will be
approximately $2.2 billion. It is expected that the merger, which is
subject to customary closing conditions, including regulatory approvals,
will be consummated in September.
AT&T, the company's 86-percent stockholder, is a party to and has
executed the merger agreement, along with a written consent to the merger,
thereby assuring stockholder approval of the transaction.
In addition to management, the consortium will include GRS Holding
Company Ltd., owner of a U.K. rail leasing company. Babcock & Brown, a San
Francisco-based leasing, asset and project financing advisory firm, also
plans to participate. The company will continue to be led by AT&T
Capital's current management team, with no significant changes in business
strategies or operations planned.
Financing for the consortium is being arranged by the London-based
Nomura International plc, a wholly owned subsidiary of The Nomura
Securities Co., Ltd., one of the world's leading investment banks. The
transaction is not conditioned on financing.
"I am extremely pleased with this transaction and what it means for AT&T
Capital and its various constituencies," said Tom Wajnert. "This is an
outstanding opportunity and I am thrilled from a number of perspectives --
stockholders will receive exceptional value for their ownership interest
and customers will continue to receive outstanding service from one of the
world's foremost global leasing and finance companies. At the same time,
members (employees) will continue to operate the company and AT&T Capital's
core leadership team will remain in place and continue to pursue the
company's long term strategic objectives.
"AT&T Capital's more than 2,800 members have created a worldwide leasing
business of enormous strategic significance," Wajnert said. "We believe
our capabilities for serving some 500,000 customers -- from sole
proprietorships to multinational manufacturing clients around the globe --
are unparalleled in our industry."
Goldman, Sachs & Co. has advised AT&T Capital's board of directors in
connection with this transaction and has provided a fairness opinion. The
transaction has been approved by AT&T Capital's board of directors and a
special committee of the board composed of independent directors.
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<PAGE>2 Exhibit 99
AT&T Capital Corporation
AT&T Capital was founded in 1985 principally to finance sales of AT&T
equipment and has since become one of the largest providers of vendor
financing programs to manufacturers, including AT&T, Lucent Technologies
and NCR. The company's financial programs and products help multinational,
domestic and foreign companies increase sales, gain market share and build
customer loyalty. AT&T Capital now operates in 20 countries in North and
South America, Europe and the Asia/Pacific region -- significant markets
for many of its global vendor clients.
A fully diversified leasing and finance company, AT&T Capital also
offers financing and leasing directly to customers, including SBA (Small
Business Administration) guaranteed lending and other commercial financing
and leasing, as well as such specialized equipment financing and services
as vehicle leasing and fleet management.
Wajnert noted that AT&T Capital will continue to serve as preferred
vendor financing provider not only for the newly structured AT&T, but also
for Lucent Technologies and NCR, under operating agreements that continue
into the year 2000.
AT&T Capital Corporation's headquarters will remain in Morristown,
New Jersey.
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Exhibit 10
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AGREEMENT AND PLAN OF MERGER
Among
AT&T CAPITAL CORPORATION,
AT&T CORP.,
HERCULES LIMITED
and
ANTIGUA ACQUISITION CORPORATION
Dated as of June 5, 1996
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER (hereinafter called this
"Agreement"), dated as of June 5, 1996, among AT&T Capital Corporation, a
Delaware corporation (the "Company"), AT&T Corp., a New York corporation
("AT&T"), Hercules Limited, a Cayman Island corporation ("Parent"), and
Antigua Acquisition Corporation, a Delaware corporation and a wholly owned
subsidiary of Parent ("Merger Sub," the Company and Merger Sub sometimes
being hereinafter collectively referred to as the "Constituent
Corporations").
RECITALS
WHEREAS, the respective boards of directors of each of the
Company, Parent and Merger Sub have approved the merger of Merger Sub with
and into the Company (the "Merger") and approved the Merger upon the terms
and subject to the conditions set forth in this Agreement;
WHEREAS, the Company's board of directors, upon the
recommendation of the special committee of the Company's board of
directors, has approved this Agreement and submitted this Agreement to
AT&T, as the indirect owner of approximately 86% of the currently
outstanding shares of voting common stock of the Company (the "AT&T
Shares"), for its consent, and AT&T has caused to be executed a written
stockholder consent (the "Stockholders' Consent") pursuant to Section 228
of the DGCL (as defined below) approving this Agreement;
WHEREAS, the Company, AT&T, Parent and Merger Sub desire to
make certain representations, warranties, covenants and agreements in
connection with this Agreement.
NOW, THEREFORE, in consideration of the premises, and of the
representations, warranties, covenants and agreements contained herein, the
parties hereto agree as follows:
ARTICLE I
The Merger; Closing; Effective Time
1.1. The Merger. Upon the terms and subject to the conditions
set forth in this Agreement, at the Effective Time (as defined in Section
1.3) Merger Sub shall be merged with and into the Company and the separate
corporate existence of Merger Sub shall thereupon cease. The Company shall
be the surviving corporation in the Merger (sometimes hereinafter referred
to as the "Surviving Corporation") and shall continue to be governed by the
laws of the State of Delaware, and the separate corporate
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existence of the Company with all its rights, privileges, immunities,
powers and franchises shall continue unaffected by the Merger, except as set
forth in Articles II and III hereof. The Merger shall have the effects specified
in the Delaware General Corporation Law, as amended (the "DGCL").
1.2. Closing. The closing of the Merger (the "Closing") shall
take place (i) at the offices of Sullivan & Cromwell, 125 Broad Street, New
York, New York at 9:00 A.M. on the later of (A) September 17, 1996 and (B)
the first business day on which the last to be fulfilled or waived of the
conditions set forth in Article VII hereof (other than those conditions
that by their nature are to be satisfied at the Closing, but subject to the
fulfillment or waiver of those conditions) shall be satisfied or waived in
accordance with this Agreement or (ii) at such other place and time and/or
on such other date as the Company and Parent may agree in writing (the
"Closing Date").
1.3. Effective Time. As soon as practicable following the
Closing, the Company and Parent will cause a Certificate of Merger (the
"Delaware Certificate of Merger") to be executed, acknowledged and filed
with the Secretary of State of Delaware as provided in Section 251 of the
DGCL. The Merger shall become effective at the time when the Delaware
Certificate of Merger has been duly filed with the Secretary of State of
Delaware (the "Effective Time").
ARTICLE II
Certificate of Incorporation and By-Laws
of the Surviving Corporation
2.1. The Certificate of Incorporation. The certificate of
incorporation of Merger Sub as in effect immediately prior to the Effective
Time shall be the certificate of incorporation of the Surviving Corporation
(the "Charter"), until duly amended as provided therein or by applicable
law, provided that Article I of the certificate of incorporation of the
Surviving Corporation shall be amended in its entirety to read as follows:
"The name of the corporation is AT&T Capital Corporation."
2.2. The By-Laws. The by-laws of Merger Sub in effect at the Effective Time
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shall be the by-laws of the Surviving Corporation (the "By-Laws"), until
thereafter amended as provided therein or by applicable law.
ARTICLE III
Officers and Directors
of the Surviving Corporation
3.1. Directors. The directors of Merger Sub at the Effective
Time shall, from and after the Effective Time, be the directors of the
Surviving Corporation until their successors have been duly elected or
appointed and qualified or until their earlier death, resignation or
removal in accordance with the Charter and By-Laws.
3.2. Officers. Except as provided in Schedule 3.2, the officers
of the Company at the Effective Time shall, from and after the Effective
Time, be the officers of the Surviving Corporation until their successors
have been duly elected or appointed and qualified or until their earlier
death, resignation or removal in accordance with the Charter and By-Laws.
ARTICLE IV
Effect of the Merger on Capital Stock;
Exchange of Certificates
4.1. Effect on Capital Stock. At the Effective Time, as a result of the
Merger and without any action on the part of the holder of any capital stock of
the Company:
(a) Merger Consideration. Each share of the Common Stock, par
value $.01 per share, of the Company (the "Shares") issued and outstanding
at the Effective Time (other than Shares owned by Parent, Merger Sub or any
other direct or indirect wholly owned subsidiary of Parent (collectively,
the "Parent Companies") or Shares that are owned by the Company or any
direct or indirect wholly owned subsidiary of the Company or Shares
("Dissenting Shares") that are held by stockholders ("Dissenting
Stockholders") properly exercising appraisal rights pursuant to Section 262
of the DGCL (collectively, "Excluded Shares")) shall be converted into the
right to receive, without interest, an amount in cash equal to $45.00 (the
"Merger Consideration"). At the Effective Time, all Shares shall no longer
be outstanding and shall be cancelled and retired and shall cease to exist,
and each certificate (a "Certificate") representing any of such Shares
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(other than Excluded Shares) shall thereafter represent only the right to
the Merger Consideration for such Shares upon the surrender of such
Certificate in accordance with Section 4.2.
(b) Options and Restricted Shares. The Parent and Surviving
Corporation, with the cooperation of the Company, shall take all necessary
action to provide that at the Effective Time, each option or right to
acquire Shares (each, a "Company Option") (other than those Company Options
("Roll-over Options") held by certain members of management of the Company
who enter into agreements with Parent prior to the Effective Time pursuant
to which such members agree to roll-over such Roll-over Options for options
or rights to acquire shares of Surviving Corporation), shall, without any
action on the part of the holder thereof, and whether or not then
exercisable, be converted into the right to receive an amount in cash (the
"Option Amount"), if any, equal to the product of (x) (1) the excess of the
Merger Consideration over (2) the current exercise price per Share of such
Company Option and (y) the number of Shares subject to such Company Option,
payable to the holder thereof at the Effective Time, and such Company
Option will be cancelled and retired and shall cease to exist; provided
further, that the Company shall be entitled to withhold, in accordance with
applicable law, from any such cash payment any amounts required to be
withheld under applicable law. If and to the extent required by the terms
of the plans governing such Company Options or pursuant to the terms of any
Company Option granted thereunder, the Company shall use all reasonable
efforts to obtain the consent of each holder of outstanding Company Options
to the foregoing treatment of such Company Options and to take any other
action reasonably necessary to effectuate the foregoing provisions. Any
cash payment received pursuant to Section 4.2 with respect to shares of
restricted Common Stock ("Restricted Shares") held under the Company's 1993
Long-Term Incentive Plan (the "1993 LTIP") that have not been purchased by
the holder shall not be subject to any restrictions following the Effective
Time. Any cash payment received pursuant to Section 4.2 with respect to
purchased Restricted Shares held under the 1993 LTIP or under the Company's
1993 Leveraged Stock Purchase Plan (the "1993 LSPP") shall first be applied
to payment of any outstanding loan balances for such Restricted Shares
including accrued interest and the Company shall withhold and deduct an
amount equal to any such loan balance and accrued interest from the amount
to be paid to the respective holder of Restricted Shares, and any remaining
cash (after payment of any such loan balances) shall not be subject to any
restrictions following the Effective Time; provided, however, that with
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respect to Restricted Shares held under the 1993 LSPP by executive officers
of the Company subject to Section 16 ("Section 16") of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), to the extent
restrictions must remain on such cash payment to avoid short-swing
liability under Section 16, the Parent shall cause the Surviving
Corporation to hold such payments with respect to such Restricted Shares
pursuant to the provisions of the 1993 LSPP until such restrictions lapse.
(c) Cancellation of Shares. At the Effective Time, each Share
issued and outstanding at the Effective Time and owned by any of the Parent
Companies, or owned by the Company or by any direct or indirect wholly
owned subsidiary of the Company, shall, by virtue of the Merger and without
any action on the part of the holder thereof, cease to be outstanding, be
cancelled and retired without payment of any consideration therefor and
shall cease to exist.
(d) Merger Sub. At the Effective Time, each share of Common
Stock, par value $.01 per share, of Merger Sub issued and outstanding
immediately prior to the Effective Time shall be converted into one share
of common stock of the Surviving Corporation.
4.2. Payment for Shares. Parent shall make available or cause
to be made available to the paying agent appointed by Parent with the
Company's prior approval (the "Paying Agent") amounts sufficient in the
aggregate to provide all funds necessary for the Paying Agent to make
payments pursuant to Section 4.1(a) hereof to holders of Shares (other than
Excluded Shares) issued and outstanding immediately prior to the Effective
Time. Promptly after the Effective Time, the Surviving Corporation shall
cause to be mailed to each person who was, at the Effective Time, a holder
of record (other than any of the Parent Companies) of issued and
outstanding Shares a form (mutually agreed to by Parent and the Company) of
letter of transmittal and instructions for use in effecting the surrender
of the Certificates which, immediately prior to the Effective Time,
represented any of such Shares in exchange for payment therefor. Upon
surrender to the Paying Agent of such Certificates for cancellation,
together with such letter of transmittal, duly executed and completed in
accordance with the instructions thereto, the Surviving Corporation shall
promptly cause to be paid to the persons entitled thereto a check in the
amount to which such persons are entitled, after giving effect to any
withholdings required under Section 3406 of the Internal Revenue Code of
1986, as amended (the "Code") or any other provisions of state, local or
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foreign tax law. To the extent that amounts are so withheld by Parent or
the Paying Agent, such withheld amounts shall be treated for all purposes
of this Agreement as having been paid to the holder of Shares with respect
to whom such deduction and withholding was made by Parent or the Paying
Agent. No interest will be paid or will accrue on the amount payable upon
the surrender of any such Certificate. Pending such payments, the Paying
Agent shall invest the funds made available to it in U.S. government
securities as directed by Parent, and any interest or other income
resulting from such investments shall be paid to Parent. If payment is to
be made to a person other than the registered holder of the Certificate
surrendered, it shall be a condition of such payment that the Certificate
so surrendered shall be properly endorsed or otherwise in proper form for
transfer and that the person requesting such payment shall pay any transfer
or other taxes required by reason of the payment to a person other than the
registered holder of the Certificate surrendered or establish to the
satisfaction of the Surviving Corporation or the Paying Agent that such tax
has been paid or is not applicable. One hundred and eighty days following
the Effective Time, the Surviving Corporation shall be entitled to cause
the Paying Agent to deliver to it any funds (including any interest
received with respect thereto) made available to the Paying Agent which
have not been disbursed to holders of Certificates formerly representing
Shares outstanding on the Effective Time, and thereafter such holders shall
be entitled to look to the Surviving Corporation only as general creditors
thereof with respect to the cash payable upon due surrender of their
certificates. Notwithstanding the foregoing, neither the Paying Agent nor
any party hereto shall be liable to any holder of Certificates formerly
representing Shares for any amount paid to a public official pursuant to
any applicable abandoned property, escheat or similar law. Parent or the
Surviving Corporation shall pay all charges and expenses, including those
of the Paying Agent, in connection with the exchange of cash for Shares.
4.3. Dissenters' Rights. If any Dissenting Stockholder shall be
entitled to be paid the "fair value" of his or her Shares, as provided in
Section 262 of the DGCL, the Company shall give Parent prompt notice
thereof (and shall also give Parent prompt notice of any withdrawals of
such demands) and Parent shall have the right to direct all negotiations
and proceedings with respect to any such demands. Neither the Company nor
the Surviving Corporation shall, except with the prior written consent of
Parent, voluntarily make any payment with respect to, or settle or offer to
settle, any such demand for payment. If any Dissenting Stockholder shall
fail to perfect or shall have effectively withdrawn or lost the right to
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dissent, the Shares held by such Dissenting Stockholder shall thereupon be
treated as though such Shares had been converted into the Merger
Consideration pursuant to Section 4.1.
4.4. Transfer of Shares After the Effective Time. No transfers of Shares
shall be made on the stock transfer books of the Surviving Corporation at or
after the Effective Time.
ARTICLE V
Representations and Warranties
5.1. Representations and Warranties of the Company. The Company
hereby represents and warrants to Parent and Merger Sub that, except as
expressly set forth in the disclosure letter delivered to Parent by the
Company on or prior to entering into this Agreement (the "Company
Disclosure Letter"):
(a) Organization, Good Standing and Qualification. Each of the Company and
its Material Subsidiaries (as defined below) is a corporation duly organized,
validly existing and in good standing under the laws of its respective
jurisdiction of organization and has all requisite corporate or similar power
and authority to own and operate its properties and assets and to carry on its
business as presently conducted and is qualified to do business and is in good
standing as a foreign corporation in each jurisdiction where the ownership or
operation of its properties or conduct of its business requires such
qualification, except where the failure to be so qualified or in good standing,
when taken together with all other such failures, would not reasonably be
expected to have a Company Material Adverse Effect (as defined below). The
Company has made available to Parent a complete and correct copy of the
Company's and its Subsidiaries' certificates of incorpora- tion and by-laws,
each as amended to date. The Company's and its Subsidiaries' certificates of
incorporation and by-laws so delivered are in full force and effect, and neither
the Company nor any of its Subsidiaries is in default or violation of any
provisions of its respective certificate of incorporation or by-laws. The
Company Disclosure Letter contains a correct and complete list of each
jurisdiction where the Company and each of its Subsidiaries is organized and
qualified to do business. The only Subsidiaries of the Company are those set
forth in the Company Disclosure Letter. Except as set forth in the Company
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Disclosure Letter, and except for securities acquired in the ordinary course of
business, including in connection with the realization on collateral positions
and the acquisition of securities as part of any financing transaction, neither
the Company nor any of its Subsidiaries owns less than 100% of the outstanding
voting securities or other equity interests of any corporation, joint venture or
other entity (other than investments in marketable securities of any person,
none of which exceed 5% of the outstanding capital stock or other equity
interests of such person).
As used in this Agreement, (i) the term "Subsidiary" means, with respect to
a party, any entity, whether incorporated or unincorporated, of which at least a
majority of the securities or ownership interests having by their terms ordinary
voting power to elect a majority of the board of directors or other persons
performing similar functions is directly or indirectly owned or controlled by
such party or by one or more of its respective Subsidiaries or by such party and
any one or more of its respective Subsidiaries; (ii) the term "Material
Subsidiary" means AT&T Commercial Finance Corporation, AT&T Capital Leasing
Services, Inc., AT&T Credit Corporation, AT&T Systems Leasing Corporation, AT&T
Capital Canada, Inc., NCR Credit Corp., AT&T Capital Limited and The Capita
Corporation Hong Kong Limited; and (iii) the term "Company Material Adverse
Effect" means a material adverse effect on the financial condition, business or
results of operations of the Company and its Subsidiaries taken as a whole;
provided, however, that any such effect resulting from any change prior to the
Effective Time (i) in any law, rule, or regulation or generally accepted
accounting principles or interpretations thereof that applies generally to
companies operating in the same industries as the Company and (ii) in general
economic or business conditions in the industries in which the Company operates,
shall not be considered when determining if a Company Material Adverse Effect
has occurred.
(b) Capital Structure. The authorized capital stock of the Company consists
of 100,000,000 Shares, of which 46,988,695 Shares were outstanding as of the
close of business on May 28, 1996, and 10,000,000 shares of Preferred Stock, par
$.01 value per share (the "Preferred Shares"), of which none were outstanding as
of the close of business on May 28, 1996. All of the outstanding Shares have
been duly authorized and are validly issued, fully paid and nonassessable. The
Company has no Shares or Preferred Shares reserved for issuance. As of April 30,
1996, there were 2,264,246 Shares subject to outstanding Company Options. Since
May 28, 1996, no Shares have been issued except issuance of Shares upon the
exercise of Company Options referred to herein, and since April 30, 1996 no
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Company Options have been authorized, issued or granted. The Company Disclosure
Letter contains a correct and complete list of each outstanding Company Option,
including the holder, date of grant, exercise price and number of Shares subject
thereto. Each of the outstanding shares of capital stock or other equity
securities of each of the Company's Subsidiaries is duly authorized, validly
issued, fully paid and nonassessable and, except for directors' qualifying
shares, owned by the Company or a direct or indirect wholly owned subsidiary of
the Company, free and clear of any lien, pledge, security interest, claim or
other encumbrance (each, a "Lien"). Except as set forth above, there are no
preemptive or other outstanding rights, options, warrants, conversion rights,
stock appreciation rights, redemption rights, repurchase rights, agreements,
arrangements or commitments to issue or sell any shares of capital stock or
other equity securities of the Company or any of its Subsidiaries or any
securities or obligations convertible or exchangeable into or exercisable for,
or giving any person a right to subscribe for or acquire, any equity securities
of the Company or any of its Subsidiaries, and no securities or obligations
evidencing such rights are authorized, issued or outstanding. The Company does
not have outstanding any bonds, debentures, notes or other obligations the
holders of which have the right to vote (or which are convertible into or
exercisable for securities having the right to vote) with the stockholders of
the Company on any matter ("Voting Debt").
(c) Corporate Authority; Approval and Fairness. (i) The Company has all
requisite corporate power and authority and has taken all corporate action
necessary in order to execute, deliver and perform its obligations under this
Agreement and to consummate the Merger and the other transactions contemplated
by this Agreement. This Agreement is a valid and binding agreement of the
Company enforceable against the Company in accordance with its terms, subject to
bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and
similar laws of general applicability relating to or affecting creditors' rights
and to general equity principles (the "Bankruptcy and Equity Exception").
(ii) The special committee of the board of directors of the Company and the
board of directors of the Company (A) have approved this Agreement (unanimously
in the case of the special committee and, in the case of the board of directors,
by the unanimous vote of all directors present and voting) and the Merger and
the other transactions contemplated hereby and (B) have received the opinion of
Goldman, Sachs & Co., dated the date of this Agreement, to the effect that the
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consideration to be received by the holders of the Shares in the Merger is fair
to such holders (other than AT&T and its "Affiliates" (as defined in Rule 12b-2
under the Exchange Act)), a copy of which opinion has been delivered to Parent.
(iii) Subsidiaries of AT&T, as the majority stockholders of the
Company, have approved, by delivering the Stockholders' Consent, this
Agreement and no further action by the stockholders of the Company is
necessary to give effect to such approval.
(d) Governmental Filings; No Violations. (i) Other than the
filings and/or notices (A) pursuant to Sections 1.3 and 6.4, (B) under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR
Act") and the Exchange Act, (C) required by the New York Stock Exchange and
(D) set forth in the Company Disclosure Letter, no notices, reports or
other filings are required to be made by the Company or any of its
Subsidiaries with, nor are any consents, registrations, approvals, permits
or authorizations required to be obtained by the Company or any of its
Subsidiaries from, any United States or foreign governmental or regulatory
authority, court, agency, ministry, commission, body or other governmental
entity ("Governmental Entity"), in connection with the execution and
delivery of this Agreement by the Company and the consummation by the
Company of the Merger and the other transactions contemplated hereby,
except those filings, notices, reports, consents, registrations, approvals,
permits and authorizations as to which the failure to make or obtain would
not be reasonably expected to have a material adverse effect on the
financial condition, business or results of operations of the Company or of
any Material Subsidiary, and those as to which the failure to make or
obtain are not reasonably likely to prevent or materially delay or
materially impair the ability of the Company to consummate the transactions
contemplated by this Agreement.
(ii) The execution, delivery and performance of this Agreement
by the Company do not, and the consummation by the Company of the Merger
and the other transactions contemplated hereby will not, constitute or
result in (A) a breach or violation of, or a default under, the certificate
of incorporation or By-Laws of the Company or the comparable governing
instruments of any of its Subsidiaries, (B) a breach or violation of, or a
default under, the acceleration of any obligations or the creation of a
Lien on any material assets of the Company or any of its Subsidiaries (with
or without notice, lapse of time or both) pursuant to, or give rise to a
right of termination or cancellation under, any provision of any written
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agreement, lease, contract, note, mortgage, indenture, arrangement or other
obligation not otherwise terminable on 90 days' or less notice
("Contracts") of the Company or any of its Subsidiaries or any Law (as
defined in Section 5.1(i)) or governmental or non-governmental permit,
franchise, concession or license (collectively, "Licenses") to which the
Company or any of its Subsidiaries is subject or (C) any change in the
rights or obligations of any party under any of the Contracts, except, in
the case of clause (B) or (C) above, for any breach, violation, default,
acceleration, creation or change that, individually or in the aggregate, is
not reasonably likely to have a Company Material Adverse Effect or prevent,
materially delay or materially impair the ability of the Company to
consummate the transactions contemplated by this Agreement (collectively,
"Material Breaches"). The Company Disclosure Letter sets forth a correct
and complete list of each Contract and License of the Company and its
Subsidiaries pursuant to which a consent or waiver is required prior to
consummation of the transactions contemplated by this Agreement in order to
avoid the occurrence of a Material Breach under such Contract or License.
(iii) Neither the Company nor any of its Subsidiaries is in
breach or default under any Contract other than such breaches or defaults
that, individually or in the aggregate, would not reasonably be expected to
have a Company Material Adverse Effect. No event has occurred (except for
the execution of this Agreement) which either entitles, or would, upon
notice or with the lapse of time or both, entitle the holder of any
indebtedness of the Company or any of its Subsidiaries to accelerate, or
which does accelerate, the maturity of any indebtedness which is material
to the Company and its Subsidiaries taken as a whole.
(e) Company Reports; Financial Statements. The Company has
delivered to Parent each registration statement, report, proxy statement or
information statement prepared by it since August 4, 1993 (the "IPO Date"),
each in the form (including exhibits, annexes and any amendments thereto)
filed with the Securities and Exchange Commission (the "SEC")
(collectively, including any such reports filed subsequent to the date
hereof, the "Company Reports"). As of their respective dates, the Company
Reports did not, and any Company Reports filed with the SEC subsequent to
<PAGE>
the date hereof will not, contain any untrue statement of a material fact
or omit to state a material fact required to be stated therein or necessary
to make the statements made therein, in light of the circumstances in which
they were made, not misleading. As of their respective dates, the Company
Reports complied, and any Company Reports filed with the SEC subsequent to
the date hereof will comply, as to form, in all material respects with the
requirements of the Securities Act or the Exchange Act, as the case may be.
Each of the consolidated balance sheets included in or incorporated by
reference into the Company Reports (including the related notes and
schedules) fairly presents the consolidated financial position of the
Company and its Subsidiaries as of its date and each of the consolidated
statements of income and of changes in financial position included in or
incorporated by reference into the Company Reports (including any related
notes and schedules) fairly presents the results of operations, retained
earnings and changes in financial position, as the case may be, of the
Company and its Subsidiaries for the periods set forth therein (subject, in
the case of unaudited statements, to normal year-end audit adjustments that
are not expected to be material in amount or effect), in each case in
accordance with generally accepted accounting principles ("GAAP")
consistently applied during the periods involved (except as may be noted
therein and except for the permitted omission of certain footnote
disclosures in the unaudited financial statements).
(f) Absence of Certain Changes. (i) Except as disclosed in the
Company Reports prior to the date hereof, since December 31, 1995 (the
"Audit Date"), the Company and its Subsidiaries have conducted their
respective businesses only in, and have not engaged in any transaction
other than according to, the ordinary and usual course of such businesses
and there is not and has not been (A) any change in the financial
condition, properties, business or results of operations of the Company and
its Subsidiaries; or (B) any damage, destruction or other casualty loss
with respect to any material asset or property owned, leased or otherwise
used by the Company or any of its Subsidiaries, whether or not covered by
insurance, with such exceptions to this paragraph (f)(i) that would not,
individually or in the aggregate, reasonably be expected to have a Company
Material Adverse Effect.
(ii) Except as disclosed in the Company Reports prior to the
date hereof, since the Audit Date to the date hereof, there is not and has
not been (A) any declaration, setting aside or payment of any dividend or
other distribution in respect of the capital stock of the Company other
than quarterly cash dividends on the Shares paid from current or
accumulated earnings consistent with past practices; (B) any change by the
Company in accounting principles, practices or methods, except as required
by law or GAAP; or (C) any event or action which, if it had taken place or
been taken following the execution of this Agreement, would not have been
<PAGE>
permitted by Section 6.1 hereof without the prior written consent of
Parent.
(iii) From the Audit Date to the date hereof, except as
provided for herein or as disclosed in the Company Reports prior to the
date hereof, there has not been any increase in the cash compensation
payable or that could become payable by the Company and its Subsidiaries to
their executive officers or the members of the Corporate Leadership Forum
or any amendment of any of the Company Plans (as hereinafter defined) other
than increases or amendments in the ordinary course and compensation
arrangements for newly-hired executives.
(g) Litigation and Liabilities. (i) Except as disclosed in the
Company's Annual Report on Form 10-K for the fiscal year ended December 31,
1995 (the "1995 Annual Report"), there are no civil, criminal or
administrative actions, suits, claims, hearings, investigations or
proceedings pending or, to the knowledge of the Company, threatened against
the Company or any of its Subsidiaries or any other facts or circumstances
which to the knowledge of the Company are reasonably likely to result in
any such suits, claims, hearings, investigations or proceedings other than
such suits, claims, hearings, investigations or proceedings that,
individually or in the aggregate, would not reasonably be expected to have
a Company Material Adverse Effect. There are no judgments, decrees,
injunctions, rules or orders of any Governmental Entity outstanding against
the Company or any of its Subsidiaries other than such judgments, decrees,
injunctions, rules or orders that, individually or in the aggregate, would
not reasonably be expected to have a Company Material Adverse Effect. There
are no liabilities or obligations of any kind, whether accrued, absolute,
fixed, contingent or otherwise, of the Company and its Subsidiaries that
are not specifically reflected or reserved against in the most recent
consolidated balance sheet of the Company included in the 1995 Annual
Report, except such liabilities or obligations which would not,
individually or in the aggregate, reasonably be expected to have a Company
Material Adverse Effect.
(ii) Except as set forth in the Company Disclosure Letter or in
the 1995 Annual Report, neither the Company nor any of its Subsidiaries has
any indebtedness, obligation or liability of any kind relating to forward
commodity contracts, commodity futures and options, currency futures and
options, stock index futures and options, or interest rate swaps, options,
caps, collars or floors, or any hybrids of the foregoing derivative
<PAGE>
products (collectively, "Derivatives"), in each case which is material to
the Company and its Subsidiaries taken as a whole. The Company Disclosure
Letter sets forth as to each Derivative (A) the applicable notional amount,
(B) the aggregate credit exposure of the Company or its Subsidiary, as the
case may be, (C) the existence of any netting arrangements, and (D) the
counterparties.
(iii) The term "knowledge" when used in this Agreement with
respect to the Company shall mean the actual knowledge of the duly elected
or appointed executive officers of the Company, and does not include
information of which they may be deemed to have constructive knowledge
only.
(h) Employee Benefits. Except to the extent that any breach, failure or
inaccuracy, individually or in the aggregate, would not reasonably be expected
to have a Company Material Adverse Effect:
(i) The Company Disclosure Letter contains a true and complete
list of each "employee benefit plan" (within the meaning of section 3(3) of
the Employee Retirement Income Security Act of 1974, as amended ("ERISA"),
including, without limitation, multiemployer plans within the meaning of
ERISA section 3(37)), stock purchase, stock option, severance, employment,
change-in-control, fringe benefit, collective bargaining, bonus, incentive,
deferred compensation and all other employee benefit plans, agreements,
programs, policies or other arrangements, whether or not subject to ERISA
(including any funding mechanism therefor now in effect or required in the
future as a result of the transactions contemplated by this Agreement or
otherwise), whether formal or informal, oral or written, under which the
Company or any of its Subsidiaries has any present or future liability
other than solely as a result of its status as an ERISA Affiliate (as
defined below) of a plan sponsor or any contributing employer (provided,
that, with respect to plans, agreements, programs, policies and
arrangements maintained outside the United States, the Company Disclosure
Letter contains a true and complete list of each plan, agreement, program,
policy and arrangement). All such plans, agreements, programs, policies and
arrangements shall be collectively referred to as the "Company Plans".
(ii) With respect to each Company Plan, the Company has
delivered or made available to Parent a current, accurate and complete copy
(or, to the extent no such copy exists, an accurate description) thereof
and, to the extent applicable: (A) any related trust agreement or other
<PAGE>
funding instrument; (B) the most recent determination letter, if
applicable; (C) any summary plan description and other written
communications (or a description of any oral communications) by the Company
or any of its Subsidiaries to their employees concerning the extent of the
benefits provided under a Company Plan; and (D) for the three most recent
years (I) the Form 5500 and attached schedules, (II) audited financial
statements, (III) actuarial valuation reports and (IV) attorney's response
to an auditor's request for information.
(iii) All Company Plans are in substantial compliance with all
applicable laws, including the Code and ERISA. The Company has received a
favorable determination letter from the Internal Revenue Service with
respect to the qualified status of each Company Plan that is an "employee
pension benefit plan" within the meaning of Section 3(2) of ERISA (a
"Pension Plan") and that is intended to be qualified under Section 401(a)
of the Code and the plan is so qualified and, nothing has occurred, whether
by action or failure to act, that would be reasonably expected to cause the
loss of such qualification. There is no pending or threatened action, suit
or claim relating to the Company Plans and, to the knowledge of the
Company, no facts exist which could give rise to any such action, suit or
claim. Neither the Company nor any Subsidiary has engaged in any
transactions with respect to any Company Plan that could reasonably be
expected to subject the Company or any of its Subsidiaries to a tax or
penalty imposed by Section 4975 of the Code.
(iv) As of the date hereof, no liability under Title IV of
ERISA has been or is expected to be incurred by the Company or any
Subsidiary with respect to any ongoing, frozen or terminated
"single-employer plan", within the meaning of Section 4001(a)(15) of ERISA,
currently or formerly maintained by any of them, or the single-employer
plan of any entity which is considered one employer with the Company under
Section 4001 of ERISA or Section 414 of the Code (an "ERISA Affiliate")
other than the payment of premiums to the Pension Benefit Guaranty
Corporation. None of the Company, its Subsidiaries or any ERISA Affiliate
have contributed, or been obligated to contribute, to a multiemployer plan
under Subtitle E of Title IV of ERISA at any time during the six-year
period prior to the date hereof.
(v) (A) No event has occurred and no condition exists that
would be reasonably likely to subject the Company or its Subsidiaries to
any tax, fine, lien or penalty imposed by ERISA, the Code or other
<PAGE>
applicable laws, rules and regulations with respect to a Company Plan; and
(B) for each Company Plan with respect to which a Form 5500 has been filed,
no material change has occurred with respect to the matters covered by the
most recent Form 5500 since the date thereof.
(vi) All contributions required to be made by the Company or
any of its Subsidiaries under the terms of any Company Plan have been
timely made or have been reflected on the most recent consolidated balance
sheet filed or incorporated by reference in the Company Reports prior to
the date hereof. Neither any Company Plan nor any single-employer plan of
an ERISA Affiliate has had an "accumulated funding deficiency" (whether or
not waived) within the meaning of Section 412 of the Code or Section 302 of
ERISA. Neither the Company nor its Subsidiaries has provided, or is
required to provide, security to any Pension Plan or to any single-employer
plan of an ERISA Affiliate pursuant to Section 401(a)(29) of the Code.
(vii) With respect to each single-employer plan of an ERISA
Affiliate, as of the last day of the most recent plan year ended prior to
the date hereof, the actuarially determined present value of all "benefit
liabilities" within the meaning of Section 4001(a)(16) of ERISA (as
determined on the basis of the actuarial assumptions contained in such
actuarial valuation) did not exceed the then current value of the assets of
any such single-employer plan. Neither the Company nor its Subsidiaries
maintain or contribute to a Company Plan subject to Title IV of ERISA.
(viii) Neither the Company nor its Subsidiaries have any
obligations for retiree health and life benefits under any Company Plan.
(ix) The consummation of the Merger and the other transactions
contemplated by this Agreement will not (x) entitle any of the Company's or
any of its Subsidiaries' employees to severance pay or (y) accelerate or
provide any other rights or credits under, or increase the amount payable
or trigger any other obligation pursuant to, any of the Company Plans.
(i) Compliance with Laws; Licenses. (i) Except as set forth in
the Company Reports prior to the date hereof, the businesses of each of the
Company and its Subsidiaries have not been, and are not being, conducted in
violation of any law, ordinance, regulation, judgment, order, decree,
arbitration award, license or permit of any Governmental Entity
(collectively, "Laws"), except for possible violations that are not,
individually or in the aggregate, reasonably likely to have a Company
<PAGE>
Material Adverse Effect or prevent or materially burden or materially
impair the ability of the Company to consummate the transactions
contemplated by this Agreement. Except as set forth in the Company Reports
prior to the date hereof, no investigation or review by any Governmental
Entity with respect to the Company or any of its Subsidiaries is pending
or, to the knowledge of the Company, threatened, nor has any Governmental
Entity indicated to the Company an intention to conduct the same, except
for those the outcome of which are not, individually or in the aggregate,
reasonably likely to have a Company Material Adverse Effect or prevent or
materially burden or materially impair the ability of the Company to
consummate the transactions contemplated by this Agreement. To the
knowledge of the Company, no material change is required in the Company's
or any of its Material Subsidiaries' processes, properties or procedures in
connection with any such Laws, and neither the Company nor any of its
Material Subsidiaries has received any notice or communication of any
material noncompliance with any such Laws that has not been cured in all
material respects.
(ii) The Company and its Subsidiaries hold all Licenses from,
and have made all filings, applications and registrations with, each
Governmental Entity and other persons necessary for the operation of their
respective businesses as presently conducted, except in each case for such
Licenses, filings, applications and registrations, the failure of which to
hold or make, individually or in the aggregate, would not reasonably be
expected to have a Company Material Adverse Effect; all such Licenses are
in full force and effect, except for such Licenses, the failure of which to
be in full force and effect, individually or in the aggregate, would not
reasonably be expected to have a Company Material Adverse Effect and no
proceedings are pending or, to the knowledge of the Company, threatened by
any Governmental Entity or other person for the suspension, revocation or
termination of any such License, except for such suspensions, revocations,
and terminations that, individually or in the aggregate, would not
reasonably be expected to have a Company Material Adverse Effect. Neither
the Company nor any of its Subsidiaries is in default in any respect under
any such License, except for such defaults that, individually or in the
aggregate, would not reasonably be expected to have a Company Material
Adverse Effect, and, except for statutory or regulatory restrictions of
general application and except as set forth in the Company Disclosure
Letter, no Governmental Entity has placed any restriction on the business
or properties of the Company or any of its Subsidiaries, except for such
<PAGE>
restrictions that, individually or in the aggregate, would not reasonably
be expected to have a Company Material Adverse Effect.
(j) Receivables. As used herein, "Receivables" means all loans,
equipment leases, sale contracts, credit or financing agreements or
arrangements, portfolio servicing agreements, account receivable invoices
and other obligations or rights to payments owned by the Company or any of
its Subsidiaries. All of the Receivables, together with any instruments
securing the same, (i) were made for valuable consideration, (ii) to the
knowledge of the Company, constitute valid obligations in all respects of
the persons shown as indebted thereon by the records of the Company or its
Subsidiaries and (iii) are legally enforceable in all respects according to
their terms (except as affected by bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and other similar laws relating to
or affecting creditors' rights generally), except in the case of clauses
(i), (ii) and (iii) for such Receivables, the failure of which to satisfy
the requirements of such clauses, individually or in the aggregate, would
not reasonably be expected to have a Company Material Adverse Effect. All
of the Receivables, together with any instruments securing the same, (i)
set forth on Attachment 5.1(j) of the Company Disclosure Letter hereto are
freely assignable by the Company or the Subsidiary party thereto and (ii)
are not subject to any valid rights of offset or similar claims, except in
the case of clauses (i) and (ii) for such Receivables, the failure of which
to satisfy the requirements of such clauses, individually or in the
aggregate, would not reasonably be expected to have a Company Material
Adverse Effect. The amounts shown on the records of the Company and its
Subsidiaries to be owing and unpaid on the respective Receivables reflect,
in all respects material to the Company, the true and correct outstanding
balances owing and unpaid thereon as of the respective dates indicated
therein.
(k) Material Contracts. None of the Company or its Subsidiaries
has entered into or is otherwise bound by (i) any Contract which contains
restrictions with respect to payment of dividends or any other
distributions in respect of its capital stock, (ii) any material guarantee
or other contingent liability in respect of any indebtedness or obligation
of any person (other than (A) the endorsement of negotiable instruments for
collection in the ordinary course of business, (B) guarantees of letter of
credit reimbursement obligations, purchase orders and similar obligations
issued for the benefit of customers in the ordinary course of business and
<PAGE>
(C) guarantees of indebtedness of or performance by any wholly owned
Subsidiary of the Company), (iii) any management service or consulting
contract not terminable on less than 90 days' notice which is reasonably
expected to involve the payment by the Company in any year of an amount in
excess of $500,000, (iv) any Contract which would limit or restrict in any
manner the right or ability of the Company or any Subsidiary after the
Closing Date to engage in any line of business, or to compete with any
persons, or (v) any Contract not entered into in the ordinary course of
business which is reasonably expected to involve the payment by the Company
of $2,500,000 or more in any year and is not cancelable without penalty
within 90 days. Each Contract set forth in the Company Disclosure Letter in
reference to this Section 5.1(k) is in full force and effect and there
exist no defaults or events of default or event, occurrence, condition or
act on the part of the Company or, to the Company's knowledge, any other
party to such Contracts (including the consummation of the transactions
contemplated hereby) which, with the giving of notice or the lapse of time,
would reasonably be expected to result in a Company Material Adverse
Effect.
(l) Takeover Statutes. No "fair price," "moratorium," "control
share acquisition" or other similar anti-takeover statute or regulation
(each a "Takeover Statute") or any applicable anti-takeover provision in
the Company's certificate of incorporation or By-Laws is, or at the
Effective Time will be, applicable to the Company, the Shares, the Merger
or the other transactions contemplated by this Agreement.
(m) Environmental Matters. Except as disclosed in the Company
Reports prior to the date hereof and except for such matters that,
individually or in the aggregate, would not reasonably be expected to have
a Company Material Adverse Effect, (i) to the Company's knowledge, the
Company and its Subsidiaries are in compliance with all applicable
Environmental Laws; (ii) to the Company's knowledge, all properties owned
or operated by the Company or its Subsidiaries (the "Properties") are not
contaminated with any Hazardous Substance in violation of any applicable
Environmental Law and have not been operated as a sanitary landfill or
hazardous waste disposal site; (iii) neither the Company nor any of its
Subsidiaries has received any notices, demand letters or requests for
information from any Governmental Entity or any third party indicating that
the Company may be in violation of any Environmental Law and none of the
Company, its Subsidiaries or any of their Properties are subject to any
court order, administrative order or decree arising under any Environmental
<PAGE>
Law and (iv) to the Company's knowledge, no Hazardous Substance has been
disposed of, transferred, released or transported from any of the
Properties during the time such Property was owned or operated by the
Company or one of its Subsidiaries other than as permitted under applicable
Environmental Law.
As used in this Agreement, the term "Environmental Law" means
(i) any federal, state, foreign or local law, statute, ordinance, rule,
regulation, code, license, permit, order, judgment, decree, injunction or
agreement with any governmental entity (A) relating to the protection,
preservation or restoration of the environment, (including air, water
vapor, surface water, groundwater, drinking water supply, surface land,
subsurface land, plant and animal life or any other natural resource), or
(B) the use, storage, recycling, treatment, generation, transportation,
processing, handling, labeling, production, release or disposal of
Hazardous Substances, in each case as amended and as now in effect and (ii)
the federal Comprehensive Environmental Response Compensation and Liability
Act of 1980, the Superfund Amendments and Reauthorization Act, the Federal
Water Pollution Control Act of 1972, the federal Clean Air Act, the federal
Clean Water Act, the federal Resource Conservation and Recovery Act of 1976
(including the Hazardous and Solid Waste Amendments thereto), the federal
Solid Waste Disposal and the federal Toxic Substances Control Act and the
Federal Insecticide, Fungicide and Rodenticide Act, each as amended and as
now in effect.
As used in this Agreement, the term "Hazardous Substance" means
any substance presently listed, defined, designated or classified as
hazardous, toxic, radioactive or dangerous, under any Environmental Law,
including any toxic waste, hazardous substance, toxic substance, hazardous
waste, petroleum radioactive material, friable asbestos and polychlorinated
biphenyls.
(n) Taxes.
(i) Except to the extent that any breach, failure or
inaccuracy, individually or in the aggregate, would not reasonably be
expected to have a Company Material Adverse Effect: (A) all Tax Returns
that are required to be filed by or with respect to the Company and each of
its Subsidiaries have been duly filed and all such Tax Returns are complete
and accurate;
(B) all Taxes shown to be due on the Tax Returns
referred to in clause (A) have been paid in full;
<PAGE>
(C) those of the Tax Returns referred to in clause (A)
that are currently under examination by the Internal Revenue Service or the
appropriate state, local or foreign Taxing authority are set forth in the
Company Disclosure Letter;
(D) all assessments made as a result of the
examinations referred to in clause (C) have been paid in full; and
(E) no waivers of statutes of limitation have been
given by or requested with respect to any Tax Returns of the Company or any
of its Subsidiaries other than those set forth in the Company Disclosure
Letter.
(ii) As used in this Agreement, (A) the term "Tax" (including,
with correlative meaning, the terms "Taxes", and "Taxable") includes all
federal, state, local and foreign income, profits, franchise, gross
receipts, environmental, customs duty, capital stock, severances, stamp,
payroll, sales, employment, unemployment, disability, use, property,
withholding, excise, production, value added, occupancy and other taxes,
duties or assessments of any nature whatsoever, together with all interest,
penalties and additions imposed with respect to such amounts and any
interest in respect of such penalties and additions, and (B) the term "Tax
Return" includes all returns and reports (including elections,
declarations, disclosures, schedules, estimates and information returns)
required to be supplied to a Tax authority relating to Taxes.
(o) Labor Matters. (i) Neither the Company nor any of its
Subsidiaries is a party to or otherwise bound by any collective bargaining
agreement, contract or other agreement or understanding with a labor union
or labor organization relating to employees of the Company, nor is the
Company or any of its Subsidiaries the subject of any proceeding asserting
that the Company or any of its Subsidiaries has committed an unfair labor
practice or is seeking to compel it to bargain with any labor union or
labor organization nor is there, nor has there been for the past five
years, any labor strike, dispute, walkout, work stoppage, slow-down or
lockout involving the Company or any of its Subsidiaries pending or, to the
knowledge of the Company, threatened, except in each case with those
exceptions that would not, individually or in the aggregate, reasonably be
expected to have a Company Material Adverse Effect. There have been no
material work stoppages or other such controversies during the past five
years from the date hereof. The Company and its Subsidiaries are in
compliance in all respects with all federal, state and other applicable
<PAGE>
laws, domestic or foreign, respecting employment and employment practices,
terms and conditions of employment and wages and hours, and have not and
are not engaged in any unfair labor practice, except in each case with
those exceptions that would not, individually or in the aggregate,
reasonably be expected to have a Company Material Adverse Effect.
(ii) The Company has made available to Parent schedules (as of
December 31, 1995) which are accurate and complete in all material respects
setting forth all persons employed by the Company and its Subsidiaries
whose total 1995 cash compensation (including, without limitation, salary,
bonus, and any commission or incentive compensation) exceeded $150,000.
(p) Intellectual Property. (i) The Company Disclosure Letter lists, as of
the date of this Agreement: (A) all material foreign and domestic patents and
patent applications which are owned by the Company and its Subsidiaries; and (B)
all material foreign and domestic copyright registrations, trademark
registrations, trademark registration applications, service mark registrations,
service mark registration applications and trade names which are owned by the
Company and its Subsidiaries (collectively, the "Company IP Rights"). The
Company Disclosure Letter also lists: (1) all material license agreements of
foreign or domestic patent, trademark or service mark rights entered into by or
primarily for use by the Company and its Subsidiaries; and (2) all material
computer programs, databases and other computer software utilized by the Company
and its Subsidiaries as of the Closing Date (collectively, the "Company License
and Computer Rights").
(ii) Except as disclosed in the Company Reports filed with the
SEC prior to the date hereof, the Company owns, or is licensed to use, all
of the Company IP Rights and the Company License and Computer Rights, with
such exceptions and would not, individually or in the aggregate, reasonably
be expected to have a Company Material Adverse Effect.
(iii) Unless otherwise indicated in the Company Disclosure
Letter: (A) there are no existing or, to the knowledge of the Company,
threatened claims by any third party based on the use by, or challenging
the ownership of, the Company or its Subsidiaries of any Company IP Rights
or any Company License and Computer Rights; (B) to the knowledge of the
Company, (I) none of the products, apparatus, methods or services which the
Company or any of its Subsidiaries makes, offers, sells or provides
<PAGE>
infringes upon the intellectual property of others and (II) none of the
intellectual property of the Company or its Subsidiaries is being infringed
by others; (C) each item of Company IP Rights and Company License and
Computer Rights has been duly registered with, filed in or issued by the
appropriate domestic or foreign governmental agency, to the extent required
to protect such property, and each such registration, filing and issuance
remains in full force and effect; (D) none of the Company or its
Subsidiaries has received any oral or written claim or demand from any
person pertaining to or challenging the right of the Company or its
Subsidiaries to use any Company IP Rights or Company License and Computer
Rights, and no proceedings have been instituted, are pending or, to the
knowledge of the Company, are threatened which challenge such rights; and
(E) no litigation or claim is pending or, to the knowledge of the Company,
threatened wherein the Company or any of its Subsidiaries is accused of
infringing or otherwise violating the intellectual property right of
another, or of breaching a contract conveying rights regarding intellectual
property, except in the case of each of clause (A), (B), (C), (D) and (E)
for such exceptions that would not, individually or in the aggregate,
reasonably be expected to have a Company Material Adverse Effect. Within
the six year period immediately prior to the date of this Agreement, to the
knowledge of the Company, neither the Company nor its Subsidiaries made use
of any intellectual property material to the operation of their respective
businesses at the Closing Date other than rights under the Company IP
Rights and the Company License and Computer Rights, except as set forth in
the Company Disclosure Letter and except such uses as would not,
individually or in the aggregate, reasonably be expected to have a Company
Material Adverse Effect.
(q) Insurance. True and complete copies of all material
insurance policies maintained by the Company and its Subsidiaries, together
with written descriptions of all formal self-insurance policies and
programs maintained for the benefit of the Company or any of its
Subsidiaries by the Company, AT&T or any of their respective Affiliates,
have been made available to Parent. Such material policies provide coverage
for the operations of the Company and its Subsidiaries in amounts and
covering such risks as the Company believes is necessary to conduct its
business. Neither the Company nor any of its Subsidiaries has received
formal notice that any such material policy is invalid or unenforceable.
(r) AT&T Agreements; Transactions with Affiliates. (i) The
Company Disclosure Letter sets forth a list of each Contract between the
<PAGE>
Company or any of its Subsidiaries, on the one hand, and AT&T or any of its
Subsidiaries (other than the Company and its Subsidiaries), on the other
hand, which (A) involves annual payments in excess of $250,000, (B) would
limit or restrict in any manner the right or ability of the Company or any
Subsidiary after the Closing Date to engage in any line of business, to
conduct business with any person or to compete with any person, or would
restrict the ability of the Company or such Subsidiary after the Closing
Date to acquire any property or conduct business in any territory, or (C)
has a term in excess of two years and which is not otherwise terminable by
the Company with less than three months' notice, and which, in each case,
will be in effect as of and immediately following the Effective Time (the
"AT&T Agreements"). Except as set forth in Section 6.13 or in the
Transitional Services Agreement (as hereinafter defined), each AT&T
Agreement will be in full force and effect at and immediately following the
Effective Time (as and to the extent provided therein) and will be a valid
and binding agreement of the parties thereto enforceable against each such
party in accordance with its terms, subject to the Bankruptcy and Equity
Exceptions. The Company has made available to Parent a true and complete
copy of each AT&T Agreement in the form that such AT&T Agreement will be in
effect at the Effective Time.
(ii) Except as set forth in the Company Disclosure Letter, to
the knowledge of the Company, no officer or director of the Company or any
of its Subsidiaries is a party to any transaction with the Company or any
of its Subsidiaries (A) providing for the rental of real or personal
property from, or (B) otherwise requiring payments to (other than for
services in their capacities as officers, directors or employees) any such
person or any corporation, partnership, trust or other entity in which any
such person has an interest as a stockholder (other than holdings of less
than 1% of the shares of such corporation), officer, director, trustee or
partner (other than holdings of less than 1% of the partnership interests
in such partnership).
(s) Brokers and Finders. Neither the Company nor any of its
Subsidiaries nor any of their respective officers, directors or employees
has employed any broker or finder or incurred any liability for any
brokerage fees, commissions or finders fees in connection with the Merger
or the other transactions contemplated in this Agreement except that the
Company has employed Goldman, Sachs & Co. to act as the financial advisor
to the Company's Board of Directors, the arrangements with which (including
<PAGE>
a copy of each engagement letter in respect thereof) have been disclosed to
Parent prior to the date hereof.
5.2. Representations and Warranties of AT&T. AT&T hereby
represents and warrants to Parent and Merger Sub that, except as expressly
set forth in the disclosure letter delivered to Parent by AT&T on or prior
to entering into this Agreement (the "AT&T Disclosure Letter"):
(a) Organization, Good Standing and Qualification. AT&T is a
corporation duly organized, validly existing and in good standing under the
laws of New York. AT&T has made available to Parent a complete and correct
copy of its certificate of incorporation and by-laws, each as amended to
date. The certificate of incorporation and by-laws so delivered are in full
force and effect.
(b) Share Ownership. AT&T or Subsidiaries of AT&T own
beneficially and of record 40,250,000 Shares, free and clear of any lien
and subject to no restriction with respect to the voting thereof (except as
contemplated by this Agreement and the Intercompany Agreement, dated June
25, 1993 between AT&T and the Company (the "Intercompany Agreement")). Such
Subsidiaries of AT&T, as the majority stockholders of the Company, have
approved, by delivering the written Stockholders' Consent, this Agreement
and such Stockholders' Consent remains in full force and effect with no
alterations or amendments thereto.
(c) Corporate Authority; Approval and Fairness. AT&T has all
requisite corporate power and authority and has taken all corporate action
necessary in order to execute, deliver and perform its obligations under
this Agreement and to cause the relevant AT&T Subsidiaries to deliver the
Stockholders' Consent approving this Agreement. This Agreement is a valid
and binding agreement of AT&T enforceable against AT&T in accordance with
its terms, subject to the Bankruptcy and Equity Exception.
(d) Governmental Filings; No Violations. (i) Other than the
filings and/or notices (A) under the HSR Act and the Exchange Act and (B)
set forth in the AT&T Disclosure Letter, no notices, reports or other
filings are required to be made by AT&T with, nor are any consents,
registrations, approvals, permits or authorizations required to be obtained
by AT&T from, any Governmental Entity in connection with the execution and
delivery of this Agreement by AT&T, the delivery of the Stockholders'
Consent by the relevant AT&T Subsidiaries and the consummation by the
Company of the Merger and the other transactions contemplated hereby,
except those as to which the failure to make or obtain are not,
<PAGE>
individually or in the aggregate, reasonably likely to have a Company
Material Adverse Effect or prevent, materially delay or materially impair
the ability of the Company or AT&T to consummate the transactions
contemplated by this Agreement.
(ii) The execution, delivery and performance of this Agreement
by AT&T and the delivery of the Stockholders' Consent by the relevant AT&T
Subsidiaries do not, and the consummation by the Company of the Merger and
the other transactions contemplated hereby will not, constitute or result
in (A) a breach or violation of, or a default under, the certificate of
incorporation or by-laws of AT&T, (B) a breach or violation of, or a
default under, the acceleration of any obligations or the creation of a
Lien on the assets of AT&T or any of its Subsidiaries, other than the
Company and its Subsidiaries (with or without notice, lapse of time or
both), pursuant to, or give rise to a right of termination or cancellation
under, any provision of any Contracts of AT&T or any of its Subsidiaries
(other than the Company and its Subsidiaries) or any Law or governmental or
non-governmental permit or license to which AT&T or any of its Subsidiaries
(other than the Company and its Subsidiaries) is subject or (C) any change
in the rights or obligations of any party under any of such Contracts,
except, in the case of clause (B) or (C) above, for any breach, violation,
default, acceleration, creation or change that, individually or in the
aggregate, would not reasonably be expected to have a Company Material
Adverse Effect or prevent, materially delay or materially impair the
ability of the Company or AT&T to consummate the transactions contemplated
by this Agreement. The AT&T Disclosure Letter sets forth to the knowledge
of AT&T, a correct and complete list of Contracts of AT&T and its
Subsidiaries (other than the Company and its Subsidiaries) pursuant to
which consents or waivers are or may be required prior to consummation of
the transactions contemplated by this Agreement.
(iii) The term "knowledge" when used in this Agreement with
respect to AT&T shall mean the actual knowledge of the duly elected or
appointed executive officers of AT&T, and does not include information of
which they may be deemed to have constructive knowledge only.
(e) AT&T Agreements. The Company Disclosure Letter sets forth a
list of each AT&T Agreement. Except as set forth in Section 6.13 or in the
Transitional Services Agreement, each AT&T Agreement will be in full force
and effect at the Effective Time (as and to the extent provided therein)
and will be a valid and binding agreement of the parties thereto
<PAGE>
enforceable against each such party in accordance with its terms, subject
to the Bankruptcy and Equity Exceptions.
(f) Brokers and Finders. Neither AT&T nor any of its
Subsidiaries (other than the Company or any of its Subsidiaries) nor any of
their respective officers, directors or employees has employed any broker
or finder or incurred any liability for any brokerage fees, commissions or
finders fees in connection with the Merger or this Agreement except that
AT&T has employed Morgan Stanley & Co. Incorporated to act as its financial
advisor generally in connection with its restructuring, whose fees will be
paid by AT&T.
(g) Employee Benefits. The consummation of the Merger will not result in
any payment which would reasonably be expected to be an "excess parachute
payment" under Section 280G of the Code.
5.3. Representations and Warranties of Parent and Merger Sub.
Parent and Merger Sub each hereby represents and warrants to the Company
that, except as set forth in the disclosure letter delivered to the Company
by Parent on or prior to entering into this Agreement (the "Parent
Disclosure Letter"):
(a) Organization, Good Standing and Qualification. Each of
Parent and Merger Sub is a corporation duly organized, validly existing and
in good standing under the laws of its jurisdiction of organization and has
all requisite corporate or similar power and authority to own and operate
its properties and assets and to carry on its business as presently
conducted and is qualified to do business and is in good standing as a
foreign corporation in each jurisdiction where the ownership or operation
of its properties or conduct of its business requires such qualification,
except where the failure to be so qualified or in such good standing, when
taken together with all other such failures, would not reasonably be
expected to have a Parent Material Adverse Effect (as defined below).
The term "Parent Material Adverse Effect" means a material
adverse effect on the ability of Parent or Merger Sub to consummate the
transactions contemplated by this Agreement.
<PAGE>
(b) Corporate Authority; Board and Stockholder
Approvals.
(i) No vote of holders of capital stock or other voting
securities of Parent is necessary to approve this Agreement and the Merger
and the other transactions contemplated hereby (other than those which have
been received prior to the date hereof). The Parent and Merger Sub each has
all requisite corporate power and authority and each has taken all
corporate action necessary in order to execute, deliver and perform its
obligations under this Agreement and to consummate the Merger and the other
transactions contemplated by this Agreement. This Agreement is a valid and
binding agreement of Parent and Merger Sub, enforceable against each of
Parent and Merger Sub in accordance with its terms, subject to the
Bankruptcy and Equity Exception.
(ii) The respective boards of directors of Parent and Merger
Sub, and Parent as sole stockholder of Merger Sub, have unanimously
approved the Merger and this Agreement and the consummation of the Merger
and the other transactions contemplated hereby.
(c) Governmental Filings; No Violations. (i) Other than the
filings and/or notices (A) pursuant to Section 1.3, (B) under the HSR Act
and the Exchange Act, (C) required to be made with the NYSE and (D) set
forth in the Parent Disclosure Letter, no notices, reports or other filings
are required to be made by Parent or Merger Sub or their respective
Affiliates with, nor are any consents, registrations, approvals, permits or
authorizations required to be obtained by Parent or Merger Sub or their
respective Affiliates from, any Governmental Entity, in connection with the
execution and delivery of this Agreement by Parent and Merger Sub and the
consummation by Parent and Merger Sub of the Merger and the other
transactions contemplated hereby, except those as to which the failure to
make or obtain are not, individually or in the aggregate, reasonably likely
to have a Parent Material Adverse Effect.
(ii) The execution, delivery and performance of this Agreement
by Parent and Merger Sub do not, and the consummation by Parent and Merger
Sub of the Merger and the other transactions contemplated hereby will not,
constitute or result in (A) a breach or violation of, or a default under,
the certificate of incorporation or by-laws of Parent or Merger Sub or the
comparable governing instruments of any of Parent's Subsidiaries, (B) a
breach or violation of, or a default under, the acceleration of or the
creation of a Lien on the assets of Parent, Merger Sub or any of Parent's
<PAGE>
Subsidiaries (with or without notice, lapse of time or both) pursuant to,
any provision of any Contracts of Parent or any of its Subsidiaries or any
Law to which Parent, Merger Sub or any of Parent's Subsidiaries is subject
or (C) any change in the rights or obligations of any party under any of
the Contracts, except, in the case of clause (B) or (C) above, for breach,
violation, default, acceleration, creation or change that, individually or
in the aggregate, is not reasonably likely to have a Parent Material
Adverse Effect. The Parent Disclosure Letter sets forth, to the knowledge
of Parent, a correct and complete list of Contracts of Parent and Merger
Sub and their respective Subsidiaries pursuant to which consents or waivers
are or may be required prior to consummation of the transactions
contemplated by this Agreement.
(iii) The term "knowledge" when used in this Agreement with
respect to Parent shall mean the actual knowledge of the duly elected or
appointed executive officers of Parent, and does not include information of
which they may be deemed to have constructive knowledge only.
(d) Available Funds. Parent has or will have available to it all funds
necessary to satisfy all of its obligations hereunder and in connection with the
Merger and the other transactions contemplated by this Agreement.
(e) Brokers and Finders. Neither Parent nor any of its
Subsidiaries nor any of their respective officers, directors or employees
has employed any broker or finder or incurred any liability for any
brokerage fees, commissions or finders fees in connection with the Merger
or the other transactions contemplated in this Agreement, except for any
fees and expenses which are or may be payable by the Surviving Corporation
to Nomura International plc or its Affiliates on or following the
consummation of the Merger.
(f) No Prior Activities. Except for obligations or liabilities
incurred, and business and activities arising, in connection with its
incorporation or organization or the negotiation and consummation of this
Agreement and the transactions contemplated hereby, including the financing
referred to in Section 6.1(x), each of Parent and Merger Sub has neither
incurred any obligations or liabilities nor engaged in any business or
activities of any type or kind whatsoever or entered into any agreements or
arrangements with any person or entity.
<PAGE>
ARTICLE VI
Covenants
6.1. Interim Operations. (a) The Company covenants and agrees as to itself
and its Subsidiaries that, after the date hereof and prior to the Effective Time
(unless Parent shall otherwise approve in writing, and except as otherwise
expressly contemplated by this Agreement or Attachment 6.1(a) to the Company
Disclosure Letter):
(i) the business of it and its Subsidiaries shall be conducted
in the ordinary and usual course and, to the extent consistent therewith,
it and its Subsidiaries shall use all reasonable efforts to preserve its
business organization intact and maintain its existing relations and
goodwill with customers, suppliers, distributors, creditors, lessors,
employees and business associates;
(ii) it shall not (A) sell or pledge any capital stock owned by it in any
of its Subsidiaries (other than pursuant to a merger of two or more wholly owned
Subsid-iaries); (B) amend its certificate of incorporation or by-laws; (C)
split, combine or reclassify, or issue or authorize the issuance of any other
securities in respect of, in lieu of or in substitution for, its outstanding
shares of capital stock; (D) declare, set aside or pay any dividend or other
distribution payable in cash, stock or property in respect of any capital stock,
other than regular quarterly cash dividends not in excess of $.11 per Share; or
(E) repurchase, redeem or otherwise acquire, or permit any of its Subsidiaries
to purchase or otherwise acquire, any shares of its capital stock or any
securities convertible into or exchangeable or exercisable for any shares of its
capital stock;
(iii) neither it nor any of its Subsidiaries shall (A) issue,
sell, pledge, dispose of or encumber, or authorize or propose the issuance,
sale, pledge, disposition or encumbrance of, any shares of, or securities
convertible into or exchangeable or exercisable for, or options, warrants,
calls, commitments or rights of any kind to acquire, any shares of its
capital stock of any class or any other property or assets (other than
Shares issuable pursuant to Company Options outstanding on the date
hereof); or (B) other than (x) pursuant to a merger of two or more wholly
owned Subsidiaries, (y) in the ordinary and usual course of business in an
amount not in excess of $10,000,000 in any transaction or series of related
transactions, or (z) in the ordinary and usual course of business in
connection with lease renewals or sales of leased property to the lessee
<PAGE>
thereof, transfer, lease, license, guarantee, sell, mortgage, pledge or
dispose of any other property or assets (including capital stock of any of
its Subsidiaries) or encumber any property or assets (including capital
stock of any of its Subsidiaries) or (C) other than in the ordinary and
usual course of business, incur or modify any material indebtedness or
other liability; or (D) other than in the ordinary and usual course of
business, purchase or acquire assets or other property having a fair market
value in excess of $5,000,000 in any transaction or series of related
transactions;
(iv) neither it nor any of its Subsidiaries shall terminate,
establish, adopt, enter into, make any new grants or awards under, amend or
otherwise modify, any Company Plans or employment agreements or increase
the salary, wage, bonus or other compensation of any employees (other than
payments required or permitted under the Company's severance plans and
annual incentive plans as in effect on the date hereof) except increases
occurring in the ordinary and usual course of business (which shall include
normal periodic performance reviews and related compensation and benefit
increases) or otherwise required by applicable law or the terms of such
plans;
(v) neither it nor any of its Subsidiaries shall settle or
compromise any claim or litigation for an amount in excess of $5,000,000
or, except in the ordinary and usual course of business modify, amend or
terminate any of its material Contracts or waive, release or assign any
material rights or claims;
(vi) neither it nor any of its Subsidiaries shall make any Tax
election or permit any insurance policy naming it as a beneficiary or
loss-payable payee to be cancelled or terminated except in the ordinary and
usual course of business;
(vii) the Company and its Subsidiaries shall promptly notify
the Company of receipt of any notice from any significant customer of the
Company or any of its Subsidiaries of such customer's intention to
terminate any material Contract with the Company or any of its
Subsidiaries;
(viii) neither it nor any of its Subsidiaries shall change any
accounting principle used by the Company or any of its Subsidiaries, other
than as required by GAAP or applicable law (in which case the Company will
give Parent notice of such change);
<PAGE>
(ix) neither it nor any of its Subsidiaries shall enter into or
modify any agreement with AT&T or any of its Affiliates except as
contemplated hereby;
(x) the Company and its Subsidiaries shall provide Parent with
reasonable assistance in connection with Parent's arranging, structuring
and receiving financing (including any asset-based financings) in
connection with the Merger, including without limitation (A) assisting
Parent in preparing any information memoranda or other offering materials
which describe the Company, its business and its assets to be used in
connection with such financings and (B) providing necessary information to
and meeting with such potential investors, rating agencies, lenders and
other financial institutions as may be reasonably requested by Parent;
provided that the foregoing shall not be construed to require the Company
or its Subsidiaries to take any action that (X) obligates the Company or
any of its Subsidiaries to incur any indebtedness or other financing
obligation that is effective prior to the Effective Time, (Y) affects any
existing indebtedness or other financing of the Company and its
Subsidiaries prior to the Effective Time or (Z) unduly disrupts the
operation of the business of the Company and its Subsidiaries prior to the
Effective Time; and
(xi) neither it nor any of its Subsidiaries will authorize or
enter into an agreement to do any of the foregoing.
(b) AT&T covenants and agrees as to itself and its Subsidiaries
that, after the date hereof and prior to the Effective Time (unless the
Parent shall otherwise approve in writing) it shall not sell, assign,
pledge, dispose of or encumber any Shares owned by it or any of its
Subsidiaries; provided, however, that AT&T may sell, assign or dispose of
any or all such Shares to one or more wholly owned Subsidiaries of AT&T.
6.2. Acquisition Proposals. The Company and AT&T each agrees
that neither it nor any of its Subsidiaries nor any of the officers and
directors of it or its Subsidiaries shall, and that it shall direct and use
its best efforts to cause its and its Subsidiaries' employees, agents and
representatives (including any investment banker, attorney or accountant
retained by it or any of its Subsidiaries) not to, initiate, solicit or
encourage any inquiries or the making of any proposal or offer with respect
to a merger, reorganization, consolidation or similar transaction
involving, or any purchase of all or any significant portion of the assets
or the equity securities of the Company (any such proposal or offer being
<PAGE>
hereinafter referred to as an "Acquisition Proposal"). The Company further
agrees that neither it nor any of its Subsidiaries nor any of the officers
and directors of it or its Subsidiaries shall, and that it shall direct and
use its best efforts to cause its and its Subsidiaries' employees, agents
and representatives (including any investment banker, attorney or
accountant retained by it or any of its Subsidiaries) not to, directly or
indirectly, engage in any negotiations concerning, or provide any
confidential information or data to, or have any discussions with, any
person relating to an Acquisition Proposal, or otherwise facilitate any
effort or attempt to make or implement an Acquisition Proposal. AT&T
further agrees that it shall not, and that it shall direct and use its best
efforts to cause its Subsidiaries, and its Subsidiaries' directors,
officers, employees, agents and representatives (including any investment
banker, attorney or accountant retained by it or any of its Subsidiaries),
not to, directly or indirectly, engage in any negotiations concerning, or
provide any confidential information or data to, or have any discussions
with, any person relating to an Acquisition Proposal, or otherwise
facilitate any effort or attempt to make or implement an Acquisition
Proposal. The Company and AT&T each agrees that it will immediately cease
and cause to be terminated any existing activities, discussions or
negotiations with any parties conducted heretofore with respect to any of
the foregoing. The Company and AT&T each agrees that it will take the
necessary steps to promptly inform the individuals or entities referred to
in the first sentence hereof of the obligations undertaken in this Section
6.2 and in the Confidentiality Agreement (as defined in Section 9.7). The
Company and AT&T each agrees that it will notify Parent if any such
inquiries, proposals or offers are received by, any such information is
requested from, or any such negotiations or discussions are sought to be
initiated or continued with it. AT&T and the Company acknowledge that the
remedy at law for breach of the provisions of this Section 6.2 will be
inadequate and that, in addition to any other remedy Parent may have, it
will be entitled to an injunction restraining any such breach or threatened
breach, without any bond or other security being required.
6.3. Information Supplied. (a) The Company, AT&T and Parent
each agrees, as to itself and, in the case of the Company and Parent, each
of their respective Subsidiaries, that none of the information supplied or
to be supplied by it or, in the case of the Company and Parent, each of
their respective Subsidiaries, for inclusion or incorporation by reference
in the Information Statement to be filed with the SEC by the Company will
<PAGE>
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 were
made, not misleading.
(b) If at any time prior to the Effective Time any event or
circumstance relating to the Company or to Parent or AT&T or any of their
Affiliates, or their respective officers and directors, should be
discovered by such party, that is required to be set forth in a supplement
to the Information Statement, such party shall promptly inform the other
parties. All documents that the Company is responsible for filing with the
SEC in connection with the transactions contemplated herein will comply as
to form and substance in all material respects with the applicable
requirements of the Exchange Act and the rules and regulations thereunder.
(c) The agreements contained in this Section 6.3 shall survive
the consummation of the Merger until the first anniversary of the date of
this Agreement.
6.4. Filings; Other Actions; Notification. (a) The Company
shall promptly prepare and file with the SEC an Information Statement
pursuant to Rule 14c-2 under the Exchange Act (the "Information Statement")
and shall comply with any other applicable requirements under the Exchange
Act in connection with the Merger and the other transactions contemplated
by this Agreement. The Company shall use its reasonable efforts to have the
Information Statement reviewed and approved by the SEC as promptly as
practicable after such filing, and promptly thereafter the Company shall
mail the Information Statement to the stockholders of the Company. The
Information Statement shall include a copy of the opinion of Goldman, Sachs
& Co. referred to in Section 5.1(c)(ii), together with a description of the
analyses and procedures utilized by Goldman, Sachs & Co. in arriving at
their opinion. In addition, as promptly as practicable after the date
hereof, the Company shall prepare a notice pursuant to Section 228(d) of
the DGCL (the "Notice"), and shall mail the Notice to the stockholders of
the Company together with the Information Statement. Parent shall have the
right and opportunity to review and make reasonable comments on the
Information Statement prior to its filing with the SEC and the Company
shall not file the Information Statement without the prior approval of
Parent, which approval will not be unreasonably withheld.
(b) The Company, AT&T and Parent each shall cooperate with each
other and use (and cause their respective Subsidiaries to use) their
<PAGE>
respective best efforts to prepare and file as promptly as practicable all
documentation to effect all necessary applications, notices, petitions,
filings and other documents, including notification and report under the
HSR Act, and to obtain as promptly as practicable all permits, consents,
approvals and authorizations necessary or advisable to be obtained from any
third party and/or any Governmental Entity in connection with the Merger
and to consummate the other transactions contemplated by this Agreement.
Subject to applicable laws relating to the exchange of information, the
Company, AT&T and Parent shall have the right to review in advance, and to
the extent practicable each will consult the other on, all the information
relating to the Company, AT&T and Parent, as the case may be, and any of
their respective Subsidiaries, that appear in any filing made with, or
written materials submitted to, any third party and/or any Governmental
Entity in connection with the Merger and the other transactions
contemplated by this Agreement. In exercising the foregoing right, each of
the Company, AT&T and Parent shall act reasonably and as promptly as
practicable.
(c) The Company, AT&T and Parent each shall, upon request by the other,
furnish the other with all information concerning itself, its Subsidiaries,
directors, officers and stockholders and such other matters as may be reasonably
necessary or advisable in connection with the Information Statement or any other
statement, filing, notice or application made by or on behalf of the Company,
AT&T, Parent, or any of their respective Subsidiaries to any Governmental Entity
in connection with the Merger and the transactions contemplated by this
Agreement.
(d) The Company, AT&T and Parent each shall keep the others
apprised of the status of matters relating to completion of the
transactions contemplated hereby, including promptly furnishing the others
with copies of notices or other communications received by the Company,
AT&T or Parent, as the case may be, or, in the case of Parent or the
Company, any of their respective Subsidiaries, from any third party and/or
any Governmental Entity with respect to the Merger and the other
transactions contemplated by this Agreement. The Company, AT&T and Parent
each shall give prompt notice to the other of any change that is reasonably
likely to result in a Company Material Adverse Effect or Parent Material
Adverse Effect, respectively.
(e) The Company shall use its reasonable best efforts to obtain
each consent or approval of each person whose consent or approval is
required in order to permit the succession by the Surviving Corporation
<PAGE>
pursuant to the Merger to any obligation, right or interest of the Company
or any Subsidiary of the Company under any Contract or License to which the
Company or any of its Subsidiaries is a party or is subject.
(f) Without limiting the generality of the undertakings
pursuant to this Section 6.4, the Company and AT&T and Parent each agree to
take or cause to be taken the following actions: (i) provide promptly to
any and all federal, state, local or foreign court or Government Entity
with jurisdiction over enforcement of any applicable antitrust laws
("Government Antitrust Entity") information and documents requested by any
Government Antitrust Entity or necessary, proper or advisable to permit
consummation of the Merger and the transactions contemplated by this
Agreement; and (ii) take promptly, in the event that any permanent or
preliminary injunction or other order is entered or becomes reasonably
foreseeable to be entered in any proceeding that would make consummation of
the Merger in accordance with the terms of this Agreement unlawful or that
would prevent or delay consummation of the Merger or the other transaction
contemplated by this Agreement, any and all commercially reasonable steps
(including the appeal thereof or the posting of a bond, but not including
the sale or other disposition of, or the holding separate of, any assets,
categories of assets or businesses of the Company or Parent or either's
respective Subsidiaries) necessary to vacate, modify or suspend such
injunction or order so as to permit such consummation on a schedule as
close as possible to that contemplated by this Agreement.
6.5. Access. Upon reasonable notice, and except as may
otherwise be required by applicable law, the Company shall (and shall cause
its Subsidiaries to) afford the Parent's officers, employees, counsel,
accountants and other authorized representatives ("Representatives")
reasonable access, during normal business hours throughout the period prior
to the Effective Time, to its properties, books, Contracts, records,
officers and employees and, during such period, shall (and shall cause its
Subsidiaries to) furnish promptly to the Parent all information concerning
its business, properties and personnel as may reasonably be requested,
provided that no investigation pursuant to this Section shall affect or be
deemed to modify any representation or warranty made by the Company or
AT&T, and provided, further, that the foregoing shall not require the
Company to permit any inspection, or to disclose any information, that in
the reasonable judgment of the Company would result in the disclosure of
any trade secrets of third parties or violate any of its obligations with
respect to confidentiality. All requests for access or information made
<PAGE>
pursuant to this Section shall be directed to an executive officer of the
Company or such person as may be designated by its executive officers, as
the case may be. In addition, the Company shall permit Parent to have
located at the Company's principal executive offices two representatives of
Parent for the purpose of conducting preliminary work related to the
financing of the Merger and the other transactions contemplated hereby;
provided that such representatives shall be reasonably acceptable to the
Company, shall conduct themselves in a reasonable manner and subject to
such reasonable limitations as the Company may impose and shall have
entered into an appropriate confidentiality agreement.
6.6. AT&T Operating Agreement and License
Agreement.
(a) Effective as of immediately following consummation of the
Merger, AT&T and the Company shall amend Section 11.2(a)(iv) of the
Operating Agreement, dated as of June 25, 1993, between AT&T and the
Company to read in its entirety as follows:
(iv) at the election of AT&T, by at least 180 days' prior notice to
Capital, in the event that Capital at any time becomes a Subsidiary of any
Person, other than the Person or an Affiliate of the Person which acquired
Capital from the AT&T Entities, without the prior written consent of AT&T (it
being understood that such consent shall not be unreasonably withheld or
delayed);
(b) Effective as of immediately following consummation of the
Merger, AT&T and the Company shall amend Section 2.3(a) of the License
Agreement, dated as of June 25, 1993 (the "License Agreement"), between
AT&T and the Company (i) to replace the words "one year's" in the first
sentence thereof with the words "two year's" and (ii) to replace the words
"one-year" in the second sentence thereof with the words "two-year".
(c) Effective as of immediately following consummation of the
Merger, AT&T and the Company shall amend Section 6.2(iv) of the License
Agreement (i) to replace the words "investment grade" in the first sentence
thereof with the words "Ba1 by Moody's Investor Services and below BB+ by
Standard & Poor's Corporation" and (ii) to delete the words "by at least
two nationally recognized statistical rating agencies" in the two places
that such words appear in the first sentence thereof.
<PAGE>
(d) The parties understand and agree that the amendments to the
License Agreement set forth in paragraphs (b) and (c) of this Section 6.6
shall not apply to the licenses granted by, or the rights and obligations
of, Lucent Technologies Inc. ("Lucent") or NCR Corporation ("NCR") under
the Letter Agreement dated April 2, 1996 between the Company and Lucent and
the Letter Agreement dated April 18, 1996 between the Company and NCR.
6.7. Publicity. (a) The Company, AT&T and Parent each shall
consult with, and receive the prior approval of, the others prior to
issuing any press releases or otherwise making public announcements with
respect to the Merger and the other transactions contemplated by this
Agreement and prior to making any filings with any third party and/or any
Governmental Entity (including any national securities exchange) with
respect thereto, except as may be required by law or by obligations
pursuant to any listing agreement with or rules of any national securities
exchange.
(b) AT&T agrees that all information concerning Parent, Merger
Sub and their respective Affiliates furnished to AT&T or its
representatives by or on behalf of Parent (other than information that
would meet one of the exceptions to the definition of "Evaluation Material"
contained in the first paragraph of the Confidentiality Agreement referred
to in Section 9.7 will be used solely in connection with the transactions
contemplated by this Agreement and will be kept confidential by AT&T and
its representatives; provided that disclosure of such information may be
made (i) to the extent required by law, (ii) to the extent required in the
Information Statement, subject to Section 6.4 hereof, (iii) to the extent
required in any legal proceeding to enforce any rights of AT&T or the
Company against Parent, Merger Sub or their respective Affiliates under
this Agreement or any related agreement and (iv) as consented to in writing
by Parent or Merger Sub.
(c) The agreements contained in this Section 6.7 shall survive
the consummation of the Merger for one month following the Closing.
6.8. Employee Benefit Covenants.
(a) In General. Parent agrees to honor or cause the Surviving
Corporation to honor all Company Plans pursuant to all of the terms of such
Company Plans. In connection with the foregoing, except as otherwise
specifically provided in this Section 6.8, to the extent not prohibited by
law, the Surviving Corporation shall, and Parent shall cause the Surviving
<PAGE>
Corporation to, continue in effect through December 31, 1997 all Company
Plans without any adverse amendment or modification (other than, subject to
Section 6.8(e), the Company's 1993 LSPP, the 1993 LTIP, and the Company's
Share Performance Incentive Plan (the "SPIP") and Employee Stock Purchase
Plan (the "Equity-Based Plans") and the Company's 1993 Deferred
Compensation Plan); provided, however, that the Company's Leadership
Severance Plan and Member Severance Plan (the "Severance Plans") shall be
continued, except as modified by mutual written agreement with the affected
employees, for at least twenty-seven (27) months from the Effective Time;
provided, further, that in lieu of continuing specific welfare benefit and
insurance plans or programs, the Surviving Corporation shall, and Parent
shall cause the Surviving Corporation to, provide welfare benefit and
insurance plans or programs that are no less favorable in the aggregate
than those provided by the Company immediately prior to the Effective Time.
(b) Change in Control. Parent, the Company and AT&T acknowledge
and agree that approval of the Merger by the stockholders of the Company
shall, where applicable, constitute a Change in Control and Sale of Control
of the Company for purposes of the Company Plans.
(c) Executive Benefit Plan. The Surviving Corporation shall,
and Parent shall cause the Surviving Corporation to, continue the Company's
Executive Benefit Plan and the grantor trust established to fund benefits
thereunder in accordance with their terms until all benefits are paid under
such plan to participants who are vested as of the Effective Time or become
vested during the 2-year period following the Effective Time.
(d) Equity-Based Plans. The Surviving Corporation shall, and
Parent agrees to cause the Surviving Corporation to, continue in effect the
1993 LSPP and 1993 LTIP through at least August 6, 1996 to the extent any
awards remain unvested under such plans.
(e) Share Performance Incentive Plan. The Surviving Corporation
shall, and Parent acknowledges and agrees that immediately following the
Effective Time it shall cause the Surviving Corporation to, pay each
participant in the SPIP (including recipients of share performance
incentive awards under the 1993 LTIP) (i) 100% Maximum Payout (as defined
in the SPIP) for each pending performance period (i.e., the second, third
and fourth periods) and (ii) with respect to any performance period
completed within twelve (12) months prior to the Effective Time the excess
of (a) 100% of the Maximum Payout for such participant for such performance
period over (B) the payment actually made to the participant for such
<PAGE>
performance period. The Surviving Corporaiton shall, and Parent further
agrees to cause the Surviving Corporation to, amend the SPIP (and the share
performance incentive awards under the 1993 LTIP) to provide for 100%
Maximum Payout with respect to all future performance periods (beginning
following the Effective Time) under the SPIP and such awards, with such
amounts to be paid immediately following the Effective Time; provided,
that, for those employees who are not members of the Company's Leadership
Forum, any such 100% Maximum Payment for future performance periods shall
be conditioned upon the employee entering into an agreement with Parent and
the Surviving Corporation to revise the terms of the Company severance plan
applicable to such employee to modify the definition of "Qualifying
Termination" under such plan. If no such agreement is reached with a
particular employee, future performance periods under the SPIP or such
share performance incentive awards will continue pursuant to their terms
with respect to such employee.
(f) Annual Incentive Plan. The Surviving Corporation shall, and
Parent agrees to cause the Surviving Corporation to, amend the Company's
Annual Incentive Plan and Senior Executive Annual Incentive Plan to provide
that payments to each participant under such plans for the 1996 calendar
year will be made at no less than such participant's target award for 1996.
(g) Other Plans. The Surviving Corporation shall, and Parent
agrees to cause the Surviving Corporation to, amend the Company's
Supplemental Income Benefits Plan (the "SIB"), Supplemental Executive
Retirement Plan (the "SERP"), and Excess Benefits Plan (the "Excess Plan"),
effective as of the Effective Time, to provide that (i) such plans may not
be amended or terminated to reduce benefits accrued prior to such amendment
or termination, and (ii) with respect to the Excess Plan, all benefits
shall be vested as of the Effective Time.
(h) Credited Service. If any Company Employee becomes a
participant in any employee benefit plan, practice or policy of Parent, or
any of Parent's affiliates (including the Surviving Corporation), such
Company Employee shall be given credit under such plan for all service
prior to the Effective Time with the Company and its Subsidiaries or any
predecessor employer (including AT&T or any of its subsidiaries), which
service has been recognized by the Company under similar plans, policies or
practices, for purposes of eligibility and vesting and for all other
purposes for which such service is either taken into account or recognized;
<PAGE>
provided, however, that such service shall not be credited for purposes of
benefit accruals under tax-qualified plans.
(i) Plan Withdrawals. The Company agrees to withdraw as a
participating employer from all employee benefit plans, practices or
policies sponsored by AT&T and its Subsidiaries (other than the Company)
effective as of the Closing Date, except as otherwise provided in the
Transitional Services Agreement and the Benefits Agreement between AT&T and
the Company dated of of January 1, 1994; provided, however, that such
withdrawal shall not affect the rights of any current retirees of the
Company with respect to AT&T and its plans.
(j) Survival. The agreements contained in this Section 6.8 shall survive
the consummation of the Merger.
(k) Intended Beneficiaries. The provisions of paragraph (e) of this Section
6.8 are intended to be for the benefit of, and shall be enforceable by, each
participant in the SPIP and recipient of a share performance incentive award
under the 1993 LTIP.
6.9. Expenses. Parent or the Surviving Corporation shall pay
all charges and expenses, including those of the Paying Agent, in
connection with the transactions contemplated in Article IV. Subject to
Section 9.1 hereof and except as otherwise provided herein, whether or not
the Merger is consummated, all costs and expenses incurred in connection
with this Agreement and the Merger and the other transactions contemplated
by this Agreement shall be paid by the party incurring such expense;
provided that the reasonable legal fees and other professional expenses
incurred by the management of the Company in connection with the
negotiation of arrangements with the Parent and its affiliates shall be
reimbursed by the Company. The agreements contained in this Section 6.9
shall survive the consummation of the Merger.
6.10. Indemnification; Directors' and Officers' Insurance. (a)
For six years after the Effective Time, Parent shall indemnify and hold
harmless, to the fullest extent permitted under applicable law (and Parent
shall also advance expenses as incurred to the fullest extent permitted
under applicable law provided the person to whom expenses are advanced
provides an undertaking to repay such advances if it is ultimately
determined that such person is not entitled to indemnification), each
present and former director, officer and employee of the Company and its
Subsidiaries (collectively, the "Indemnified Parties") against any costs or
<PAGE>
expenses (including reasonable attorneys' fees), judgments, fines, losses,
claims, damages or liabilities (collectively, "Costs") incurred in
connection with any claim, action, suit, proceeding or investigation,
whether civil, criminal, administrative or investigative, arising out of or
pertaining to matters existing or occurring at or prior to the Effective
Time, including the transactions contemplated by this Agreement.
(b) Any Indemnified Party wishing to claim indemnification
under paragraph (a) of this Section 6.10, upon learning of any such claim,
action, suit, proceeding or investigation, shall promptly notify Parent
thereof, but the failure to so notify shall not relieve Parent of any
liability it may have to such Indemnified Party to the extent such failure
does not materially prejudice Parent. In the event of any such claim,
action, suit, proceeding or investigation (whether arising before or after
the Effective Time), (i) Parent or the Surviving Corporation shall have the
right to assume the defense thereof and Parent shall not be liable to such
Indemnified Parties for any legal expenses of other counsel or any other
expenses subsequently incurred by such Indemnified Parties in connection
with the defense thereof, except that if Parent or the Surviving
Corporation elects not to assume such defense or counsel for the
Indemnified Parties advises that there are issues which raise conflicts of
interest between Parent or the Surviving Corporation and the Indemnified
Parties, the Indemnified Parties may retain counsel satisfactory to them,
and Parent or the Surviving Corporation shall pay all reasonable fees and
expenses of such counsel for the Indemnified Parties promptly as statements
therefor are received; provided, however, that Parent shall be obligated
pursuant to this paragraph (b) to pay for only one firm of counsel for all
Indemnified Parties in any jurisdiction unless the use of one counsel for
such Indemnified Parties would present such counsel with a conflict of
interest, (ii) the Indemnified Parties will cooperate in the defense of any
such matter and (iii) Parent shall not be liable for any settlement
effected without its prior written consent; and provided, further, that
Parent shall not have any obligation hereunder to any Indemnified Party if
and when a court of competent jurisdiction shall ultimately determine, and
such determination shall have become final, that the indemnification of
such Indemnified Party in the manner contemplated hereby is prohibited by
applicable law. If such indemnity is not available with respect to any
Indemnified Party, then the Surviving Corporation and the Indemnified Party
shall contribute to the amount payable in such proportion as is appropriate
to reflect relative faults and benefits.
<PAGE>
(c) The Surviving Corporation shall from and after the Closing
Date have in place officers' and directors' liability insurance providing
insurance protection to the Company's and its Subsidiaries' officers and
directors substantially similar (including as to scope, deductible and
maximum liability) as the insurance currently maintained by or for the
Company ("D&O Insurance") for a period of six years after the Effective
Time so long as the annual premium therefor is not in excess of $750,000
(the "Current Premium"); provided, however, if a future annual premium
exceeds $750,000, the Surviving Corporation will use its best efforts to
obtain as much D&O Insurance as can be obtained for the remainder of such
period for a premium not in excess of $750,000.
(d) Until the Effective Time, AT&T will maintain in place such D&O
Insurance as is currently maintained by AT&T covering directors, officers and
employees of the Company and its Subsidiaries, or renewals thereof in the
ordinary course. From and after the Effective Time, AT&T will (and will cause
its Subsidiaries to) cooperate reasonably with the Surviving Corporation in
submitting claims (or pursuing claims previously made) on behalf of the
Surviving Corporation under any such D&O Insurance in effect prior to the
Effective Time; provided that the Surviving Corporation shall reimburse,
indemnify and hold AT&T and its Subsidiaries (other than American Ridge in its
capacity as an insurer or reinsurer) harmless from all liabilities, costs and
expenses of any nature actually incurred by AT&T or its Subsidiaries as a result
of any such claims made under such D&O Insurance as contemplated above; and
provided, further, that neither the Surviving Corporation nor AT&T nor any of
their respective Affiliates shall have any obligation to reimburse or indemnify
the other with respect to any retrospective rating adjustments or deductibles.
AT&T will also cooperate reasonably with the Company in connection with such
PFBEarrangements as the Company may make to put in place D&O Insurance from and
after the Closing Date, as contemplated by paragraph (c) of this Section 6.10,
provided that AT&T makes no representation or warranty with respect to any such
arrangements the Company may make, and provided, further, that AT&T's
cooperation will not require it to expend any funds (unless promptly reimbursed
by the Company) or to take any actions which would adversely affect its rights,
or lead to the incurrence of additional costs, under any of AT&T's insurance
policies. The provisions of this Section 6.10(d) shall remain in full force and
effect notwithstanding any terms of the Transitional Services Agreement.
<PAGE>
(e) If the Surviving Corporation or any of its successors or
assigns (i) shall consolidate with or merge into any other corporation or
entity and shall not be the continuing or surviving corporation or entity
of such consolidation or merger or (ii) shall transfer all or substantially
all of its properties and assets to any individual, corporation or other
entity, then and in each such case, proper provisions shall be made so that
the successors and assigns of the Surviving Corporation shall assume all of
the obligations set forth in this Section.
(f) The provisions of this Section are intended to be for the
benefit of, and shall be enforceable by, each of the Indemnified Parties,
their heirs and their representatives.
(g) The agreements contained in this Sec- tion 6.10 shall survive the
consummation of the Merger.
6.11. Takeover Statute. If any Takeover Statute is or may
become applicable to the Merger or the other transactions contemplated by
this Agreement, each of Parent, AT&T and the Company and their respective
boards of directors shall grant such approvals and take such reasonable
actions as are necessary so that such transactions may be consummated as
promptly as practicable on the terms contemplated by this Agreement or by
the Merger and otherwise take such reasonable actions to eliminate or
minimize the effects of such statute or regulation on such transactions.
6.12. Reasonable Best Efforts and Cooperation. The Company,
Parent and Merger Sub each shall use (and shall cause its Subsidiaries to
use) its reasonable best efforts and shall cooperate with each other to
cause the conditions set forth in Article VII hereof to be satisfied and to
consummate the Merger and the other transactions contemplated by this
Agreement.
6.13. Tax Matters.
(a) Section 338(h)(10) Election. (i) AT&T and Parent shall
jointly make timely and irrevocable elections under Section 338(h)(10) of
the Code and, if permissible, similar elections under any applicable state
or local income tax laws. AT&T, Parent and the Company shall report the
transaction consistent with such elections under Section 338(h)(10) of the
Code or any similar state or local tax provision (the "Elections") and
shall take no position contrary thereto unless and to the extent required
<PAGE>
to do so pursuant to a determination (as defined in Section 1313(a) of the
Code or any similar state or local tax provision).
(ii) To the extent possible, AT&T, Parent and the Company shall
execute at the Closing any and all forms necessary to effectuate the
Elections (including, without limitation, Internal Revenue Service Form
8023 and any similar forms under applicable state and local income tax laws
(the "Section 338 Forms")). In the event, however, any Section 338 Forms
are not executed at the Closing, AT&T, Parent and the Company shall prepare
and complete each such Section 338 Form no later than 15 days prior to the
date such Section 338 Form is required to be filed. AT&T, Parent and the
Company shall each cause the Section 338 Forms to be duly executed by an
authorized person for AT&T, Parent and the Company in each case, and shall
duly and timely file the Section 338 Forms in accordance with applicable
tax laws and the terms of this Agreement.
(iii) AT&T and Parent agree to allocate the Aggregate Deemed
Sale Price (as defined under applicable Treasury Regulations) of the assets
of each of the Company and its Subsidiaries for which a Section 338(h)(10)
Election is made as follows: AT&T and Parent agree that the fair market
value of the Class I, Class II and Class III assets (each as defined in the
Treasury Regulations under Code Section 1060) of the Company and each of
its Subsidiaries shall equal the book value of such assets on the Closing
Date. Any remaining Aggregate Deemed Sale Price will be allocated to the
Class IV Assets. AT&T and Parent will accept such allocation and will
reflect such allocation in all applicable tax returns filed by any of them,
including but not limited to the Section 338 Forms. Parent and the Company
shall not take a position before any taxing authority or otherwise
(including in any Tax return) inconsistent with such allocation unless and
to the extent required to do so pursuant to a determination (as defined in
Section 1313(a) of the Code or any similar state or local law).
(b) Liability for Taxes and Related Matters.
(i) Except as set forth in the next sentence, liability for
consolidated, combined or unitary federal, state and local income Taxes
("Consolidated Taxes") and entitlement to any refund for any taxable year
or period that ends on or before the Closing Date and, with respect to any
taxable year or period beginning before and ending after the Closing Date,
the portion of such taxable year ending on and including the Closing Date
(the "Pre-Closing Periods") shall be allocated to AT&T and AT&T shall
<PAGE>
indemnify and hold harmless Parent, the Company and the Company's
Subsidiaries for such Taxes. Parent, the Company and each of the
Subsidiaries (the "Parent Group") will pay to AT&T amounts determined in
accordance with Section 6.13(e) hereof with respect to 1995 and 1996 Taxes;
provided, however, that AT&T shall be liable for and indemnify Parent, the
Company and each Subsidiary of the Company for all Taxes attributable to
the election to be made under Section 338(h)(10) of the Code and any state
law equivalent pursuant to Section 6.13(a) hereof. At or prior to Closing,
the Company shall pay to AT&T $35 million in respect of the Taxes accrued
on the balance sheet, (x) less amounts that are paid to AT&T under the
existing tax sharing agreements set forth as Annex A hereto (the "Tax
Sharing Agreements") from the date hereof through the Closing Date in
respect of years ended before 1995 and (y) plus amounts that are paid by
AT&T to the Company and/or its Subsidiaries from the date hereof through
the Closing Date under the Tax Sharing Agreements in respect of years ended
before 1995. AT&T shall be entitled to all refunds with respect to
Consolidated Taxes.
(ii) Parent shall be liable for and indemnify AT&T for (x) the
Taxes of the Company and each Subsidiary of the Company for any taxable
year or period that begins after the Closing Date and, with respect to any
taxable year or period beginning before and ending after the Closing Date,
the portion of the taxable year beginning after the Closing Date and (y)
all Taxes of the Company and each Subsidiary other than Consolidated Taxes
("Standalone Taxes").
(iii) For purposes of paragraphs (b)(i), (b)(ii) and (d),
whenever it is necessary to determine the liability for Taxes of the
Company or any Subsidiary of the Company for a portion of a taxable year or
period that begins before and ends after the Closing Date, the
determination of such Taxes for the portion of the year or period ending
on, and the portion of the year or period beginning after, the Closing Date
shall be determined by assuming that the Company or Subsidiary, as
applicable, had a taxable year or period which ended at the close of the
Closing Date, except that exemptions, allowances or deductions that are
calculated on an annual basis, such as the deduction for depreciation,
shall be apportioned on a time basis.
(iv) Any payment by Parent or AT&T under this Section 6.13 will
be an adjustment to the portion of the Merger Consideration allocable to
the Shares that are held by AT&T immediately prior to the Effective Time.
(v) For purposes of this Section 6.13, the term "AT&T Group"
means any "affiliated group" (as defined in Section 1504(a) of the Code
<PAGE>
without regard to the limitations contained in Section 1504(b) of the Code)
that includes AT&T or any predecessor of or successor to AT&T (or another such
predecessor or successor).
(c) Tax Returns. AT&T shall file or cause to be filed
(including by causing the Company or the relevant subsidiary to file) when
due all Tax Returns with respect to Consolidated Taxes that are required to
be filed by or with respect to a member of the AT&T Group and any of the
Company and/or any Subsidiary of the Company for taxable years or periods
ending on or before the Closing Date, and Parent shall file or cause to be
filed when due all other Tax Returns that are required to be filed by or
with respect to the Company.
(d) Termination of Tax Allocation Agreements. Except to the
extent set forth in Section 6.13(e) hereof, any tax allocation or sharing
agreement or arrangement, whether or not written, that may have been
entered into by AT&T or any member of the AT&T Group and the Company or any
Subsidiary of the Company shall be terminated as to the Company and each
Subsidiary of the Company as of the Closing Date, and all amounts due from
or to the Company or any Subsidiary of the Company under any such sharing
agreement or arrangement shall be paid on or prior to the Closing Date.
(e) 1995 and 1996 Taxes. For purposes of determining the
amounts due to AT&T with respect to the taxable years of the Company and
its Subsidiaries for the year ended December 31, 1995 and the year ending
on the Closing Date, the existing Tax Sharing Agreements shall apply.
However, in lieu of the procedures set forth in the Tax Sharing Agreements,
the following procedures shall govern. With respect to the taxable year of
AT&T ended December 31, 1995 and the period in 1996 prior to the Closing
Date, Parent shall cause the Company promptly to prepare and provide to
AT&T a package of tax information materials with respect to the Company and
its Subsidiaries in the form requested by AT&T and on a basis consistent
with past practices and a calculation of the tax sharing payments due with
respect to Consolidated Taxes (the "Tax Package"), which shall be completed
(x) not later than the internal due date established by AT&T for the
submission of such tax information to AT&T by its Subsidiaries with respect
to the Federal income tax return of AT&T for 1995 and (y) not later than 45
days after the Closing Date for the taxable year of AT&T that includes the
Closing Date (it being agreed and understood that with respect to subclause
(y), such Tax Package will be in draft form and will be revised and
<PAGE>
finalized within 60 days thereafter). The Tax Package shall be reviewed by
Arthur Andersen as to its accuracy prior to its submission to AT&T. Coopers
& Lybrand on behalf of AT&T shall, within 45 days of AT&T's receipt of the
Tax Package (in the case of the Tax Package for the year ended on the
Closing Date, within 45 days of the receipt of the revised, finalized Tax
Package), provide Parent with any comments on the Tax Package and shall
provide its analysis of the amount payable by the Company and its
Subsidiaries under the Tax Sharing Agreement. In the case of Consolidated
Taxes for the Company's year ended on the Closing Date, the analysis of the
tax sharing amount payable shall be based upon estimated results for AT&T
(other than the Company) and apportionment factors for 1995 (the tax
sharing payment so calculated shall be referred to as the "Estimated
Payments"). The Estimated Payments shall be refined and reviewed by Coopers
& Lybrand by July 31, 1997, based upon actual apportionment factors and
other results for 1996 and a final tax sharing payment amount shall be
determined. Arthur Andersen and Parent shall agree or object to each of
Coopers & Lybrand's responses hereunder within 10 days of receipt thereof.
The tax sharing payments for 1995, and any Estimated Payments and
adjustments thereto (resulting in the final payments for 1996), shall be
made by Parent to AT&T within 5 days of such agreement. If Coopers &
Lybrand and Arthur Andersen cannot reach agreement on the Estimated
Payments and/or the tax sharing payment, then (i) Parent shall pay to AT&T
any amount which is agreed to be payable within five (5) days and (ii)
Coopers & Lybrand and Arthur Andersen jointly shall select promptly a third
"big six" accounting firm (the "Neutral Firm") whose fees and expenses
shall be shared equally by AT&T and the Company and whose determination of
the amount payable and of the appropriate reserves shall be binding upon
the parties. Any additional amounts determined thereby to be due shall be
paid within 3 days of the determination of the Neutral Firm. Other than
amounts owed to AT&T under the terms of this Section 6.13(e), Parent,
Company and the Company's Subsidiaries shall have no liability with respect
to 1995 and 1996 Consolidated Taxes (including any liabilities arising from
an audit). The Tax Sharing Agreements with respect to 1995 and 1996 Taxes
shall terminate upon payment of all amounts determined under this
paragraph.
(f) Assistance and Cooperation. After the Closing Date, each of AT&T and
Parent shall:
(i) assist in all reasonable respects (and cause their
respective affiliates to assist) the other party in preparing any Tax
Returns or reports which such other party is responsible for preparing and
<PAGE>
filing in accordance with this Section 6.13 (including in analyzing the Tax
Package);
(ii) cooperate in all reasonable respects in preparing for any
audits of, or disputes with taxing authorities regarding, any Tax Returns
of the Company or any Subsidiary of the Company;
(iii) make available to the other and to any taxing authority
as reasonably requested all information, records, and documents relating to
Taxes of the Company and each Subsidiary of the Company;
(iv) provide timely notice to the other in writing of any
pending or threatened tax audits or assessments of the Company and each
Subsidiary of the Company for taxable periods for which the other may have
a liability under this Section 6.13; and
(v) furnish the other with copies of all correspondence
received from any taxing authority in connection with any tax audit or
information request with respect to any such taxable period.
(g) Contests; Payment Procedure. (i) AT&T shall control, manage
and solely be responsible for any audit, contest, claim, proceeding or
inquiry with respect to Consolidated Taxes and shall have the exclusive
right to settle or contest in its sole discretion any such audit, contest,
claim, proceeding or inquiry without the consent of any other party.
(ii) Parent shall control, manage and solely be responsible for
any audit, contest, claim, proceeding or inquiry with respect to Standalone
Taxes and shall have the exclusive right to settle or contest any such
audit, contest, claim, proceeding, or inquiry without the consent of any
other party.
(h) Survival. The indemnification provisions contained in this Section 6.13
(Tax Matters) shall survive the consummation of the Merger and shall not expire.
6.14. No Solicitation of Employees. From the date hereof
through the fifth anniversary of the Closing Date, neither AT&T nor any of
its wholly owned Subsidiaries, so long as they are wholly owned
subsidiaries of AT&T, shall induce or attempt to induce any employee of the
Company to leave the employ of the Company or any of its Subsidiaries;
provided that the foregoing shall not be construed to prevent AT&T or any
<PAGE>
of its wholly owned Subsidiaries from (a) prior to the Effective Time
complying with its covenants set forth in Article VIII of the Intercompany
Agreement in a manner consistent with past practice or (b) employing former
employees of the Company or its Subsidiaries, so long as AT&T and its
wholly owned Subsidiaries did not induce or attempt to induce such former
employees to leave the employ of the Company or any of its Subsidiaries.
AT&T acknowledges and agrees that the covenant contained in this Section
6.14 is reasonable and necessary to protect the legitimate business
interests of Parent. The agreements contained in this Section 6.14 shall
survive the consummation of the Merger until the fifth anniversary of the
Closing.
6.15. Transitional Services. AT&T and Parent shall enter into a
transitional services agreement, containing such terms and conditions as
AT&T and Parent may reasonably agree (including those terms and conditions
set forth in Exhibit 6.15 hereto), governing the provision by AT&T and its
Affiliates to the Surviving Corporation for a reasonable period after the
Effective Time (not to exceed one year) of those services listed on Exhibit
6.15 hereto (the "Transitional Services Agreement").
6.16. Existing Financing Arrangements. Prior to the Closing,
the Company agrees to: (a) use its reasonable best efforts to solicit and
receive the requisite consents to, or waivers in respect of, the Merger and
the other transactions contemplated by or resulting from this Agreement
from the banks and other financial institutions parties to the agreements
listed in Section A of Attachment 5.1(d)(ii) of the Company Disclosure
Letter, or otherwise amend the terms of such agreements on terms reasonably
satisfactory to Parent; and (b) to use its reasonable best efforts to cause
to be delivered such certificates and opinions as may be required in
connection with the Merger under any debt instruments or indentures to
which it is a party.
6.17. Funding Parent. Parent covenants that not later than June
12, 1996, Parent shall receive a $100 million equity contribution in the
form of cash or direct obligations of the government of the United States
of America ("Government Securities"). Parent covenants that it shall
utilize the proceeds of such equity contribution to purchase Government
Securities having a maturity not later than one year after the date of
purchase or receipt thereof by Parent. Parent covenants that it shall keep
such proceeds so invested (free of any Liens) until the Effective Time.
<PAGE>
ARTICLE VII
Conditions
7.1. Conditions to Each Party's Obligation to Effect the Merger. The
respective obligation of each party to effect the Merger is subject to the
satisfaction or waiver at or prior to the Effective Time of each of the
following conditions:
(a) Regulatory Consents and Orders. The waiting period
applicable to the consummation of the Merger under the HSR Act shall have
expired or been terminated and all other notices, reports and other filings
required to be made by the Company, its Subsidiaries, AT&T, Parent or
Merger Sub with, and consents, registrations, approvals, permits and
authorizations required to be obtained by the Company, its Subsidiaries,
AT&T, Parent or Merger Sub from, any Governmental Entity, in each case as
set forth on the Company Disclosure Letter, the AT&T Disclosure Letter or
the Parent Disclosure Letter, as the case may be, shall have been made or
obtained and shall be in full force and effect, and no court or
Governmental Entity of competent jurisdiction shall have enacted, issued,
promulgated, enforced or entered any statute, rule, regulation, judgment,
decree, injunction or other order (whether temporary, preliminary or
permanent) that is in effect and restrains, enjoins or otherwise prohibits
consummation of the transactions contemplated by this Agreement
(collectively, an "Order").
7.2. Conditions to Obligation of Parent. The obligation of Parent to effect
the Merger is also subject to the satisfaction or waiver by Parent prior to the
Effective Time of the following conditions:
(a) Representations and Warranties. The representations and
warranties of the Company and AT&T set forth in this Agreement shall be
true and correct in all material respects as of the date of this Agreement
and (except to the extent such representations and warranties speak as of
an earlier date) as of the Closing Date as though made on and as of the
Closing Date. Parent shall have received (i) a certificate signed on behalf
of the Company by the Chief Executive Officer or any Senior Vice President
of the Company to the effect of the previous sentence (with respect to the
Company) and (ii) a certificate signed on behalf of AT&T by any Vice
President of AT&T to the effect of the previous sentence (with respect to
AT&T).
<PAGE>
(b) Performance of Obligations of the Company and AT&T. The
Company and AT&T shall have performed in all material respects all
obligations required to be performed by each of them under this Agreement
at or prior to the Closing Date, and Parent shall have received (i) a
certificate signed on behalf of the Company by the Chief Executive Officer
or any Senior Vice President of the Company to such effect (as to
performance by the Company) and (ii) a certificate signed on behalf of AT&T
by any Vice President of AT&T to such effect (as to performance by AT&T).
(c) Consents Under Agreements and Licenses. The Company and
AT&T shall have obtained the consent or approval of each person whose
consent or approval shall be required in order to permit the succession by
the Surviving Corporation pursuant to the Merger to any obligation, right
or interest of the Company or any Subsidiary of the Company under any
Contract or License to which the Company or any of its Subsidiaries is a
party or is subject, except those for which the failure to obtain such
consent or approval is not reasonably likely to have, individually or in
the aggregate, a Company Material Adverse Effect.
(d) Resignations. Parent shall have received the resignations of each
director of the Company.
(e) Transitional Services Agreement. AT&T and the Company shall have
entered into the Transitional Services Agreement.
7.3. Conditions to Obligation of the Company and AT&T. The
obligation of the Company and AT&T to effect the Merger is also subject to
the satisfaction or waiver by the Company prior to the Effective Time of
the following conditions:
(a) Representations and Warranties. The representations and
warranties of Parent and Merger Sub set forth in this Agreement shall be
true and correct in all material respects as of the date of this Agreement
and (except to the extent such representations and warranties speak as of
an earlier date) as of the Closing Date as though made on and as of the
Closing Date, and the Company and AT&T shall have received a certificate
signed on behalf of Parent by an executive officer of Parent and Merger Sub
to such effect.
(b) Performance of Obligations of Parent and Merger Sub. Each
of Parent and Merger Sub shall have performed in all material respects all
<PAGE>
obligations required to be performed by it under this Agreement at or prior
to the Closing Date, and the Company and AT&T shall have received a
certificate signed on behalf of Parent and Merger Sub by an executive
officer of Parent to such effect. The obligation of AT&T to effect the
Merger is also subject to receipt by AT&T of the payment referred to in the
last sentence of Section 6.13(b)(i).
(c) Consents Under Agreements. Parent shall have obtained the
consent or approval of each person whose consent or approval shall be
required in order to permit the succession by the Surviving Corporation
pursuant to the Merger to any obligation, right or interest of Parent or
any Subsidiary of Parent under any Contract to which Parent or any of its
Subsidiaries is a party, except those for which failure to obtain such
consents and approvals is not reasonably likely to have, individually or in
the aggregate, a Parent Material Adverse Effect.
ARTICLE VIII
Termination
8.1. Termination by Mutual Consent. This Agreement may be
terminated and the Merger may be abandoned at any time prior to the
Effective Time by mutual written consent of the Company, AT&T, Parent and
Merger Sub, by action of their respective boards of directors.
8.2. Termination by Parent, AT&T or the Company. This Agreement
may be terminated and the Merger may be abandoned at any time prior to the
Effective Time by action of the board of directors of Parent, AT&T or the
Company if (i) the Merger shall not have been consummated by October 31,
1996 (the "Termination Date"), or (ii) any Order permanently restraining,
enjoining or otherwise prohibiting the Merger shall become final and
non-appealable; provided, that the right to terminate this Agreement
pursuant to clause (i) and (ii) above shall not be available to any party
that has breached in any material respect its obligations under this
Agreement in any manner that shall have proximately contributed to the
occurrence of the failure referred to in said clause.
8.3. Termination by the Company or AT&T. This Agreement may be
terminated and the Merger may be abandoned at any time prior to the
Effective Time, by action of the board of directors of the Company or AT&T
if there has been a material breach by Parent or Merger Sub of any
<PAGE>
representation, warranty, covenant or agreement contained in this Agreement
(other than Section 6.17) that is not curable or, if curable, is not cured
within 30 days after written notice of such breach is given by the Company
or AT&T to the party committing such breach. This Agreement may be
terminated and the Merger may be abandoned at any time prior to the
Effective Time by the Company or AT&T if there has been any breach of the
covenant contained in Section 6.17.
8.4. Termination by Parent. This Agreement may be terminated
and the Merger may be abandoned at any time prior to the Effective Time by
action of the board of directors of Parent, if there has been a material
breach by the Company or AT&T of any representation, warranty, covenant or
agreement contained in this Agreement that is not curable or, if curable,
is not cured within 30 days after written notice of such breach is given by
Parent to the party committing such breach.
8.5. Effect of Termination and Abandonment. In the event of
termination of this Agreement and the abandonment of the Merger pursuant to
this Article VIII, this Agreement (other than as set forth in Section 9.1)
shall become void and of no effect with no liability of any party hereto
(or any of its directors, officers, employees, agents, legal and financial
advisors or other representatives); however, except as otherwise provided
herein, no such termination shall relieve any party hereto of any liability
or damages resulting from any breach by that party of this Agreement.
ARTICLE IX
Miscellaneous and General
9.1. Survival. The representations of AT&T contained in Section
5.2 (except for Section 5.2(g)) shall survive the consummation of the
Merger until the first anniversary of the date of this Agreement and the
provisions of this Article IX shall survive the consummation of the Merger.
The agreements and covenants of the parties made herein shall survive the
consummation of the Merger to the extent so provided by their terms. The
agreements of the parties contained in Section 6.7 (Publicity), Section 6.9
(Expenses), and Section 8.5 (Effect of Termination and Abandonment), and
the representations contained in Sections 5.1(s), 5.2(f) and 5.3(e)
(Brokers and Finders) and this Article IX shall survive the termination of
this Agreement. All other representations, warranties, agreements and
<PAGE>
covenants in this Agreement shall not survive the consummation of the
Merger or the termination of this Agreement.
9.2. Modification or Amendment. Subject to the provisions of
applicable law, at any time prior to the Effective Time, the parties hereto
may modify or amend this Agreement by written agreement executed and
delivered by duly authorized officers of the respective parties.
9.3. Waiver of Conditions. The conditions to each of the parties'
obligations to consummate the Merger are for the sole benefit of such party and
may be waived by such party in whole or in part to the extent permitted by
applicable law.
9.4. Counterparts. This Agreement may be executed in any number of
counterparts, each such counter- part being deemed to be an original instrument,
and all such counterparts shall together constitute the same agreement.
9.5. GOVERNING LAW AND VENUE; WAIVER OF JURY TRIAL. (a) THIS
AGREEMENT SHALL BE DEEMED TO BE MADE IN AND IN ALL RESPECTS SHALL BE
INTERPRETED, CONSTRUED AND GOVERNED BY AND IN ACCORDANCE WITH THE LAW OF
THE STATE OF DELAWARE WITHOUT REGARD TO THE CONFLICT OF LAW PRINCIPLES
THEREOF. The parties hereby irrevocably submit to the jurisdiction of the
courts of the State of Delaware and the Federal courts of the United States
of America located in the State of Delaware solely in respect of the
interpretation and enforcement of the provisions of this Agreement and of
the documents referred to in this Agreement, and in respect of the
transactions contemplated hereby, and hereby waive, and agree not to
assert, as a defense in any action, suit or proceeding for the
interpretation or enforcement hereof or of any such document, that it is
not subject thereto or that such action, suit or proceeding may not be
brought or is not maintainable in said courts or that the venue thereof may
not be appropriate or that this Agreement or any such document may not be
enforced in or by such courts, and the parties hereto irrevocably agree
that all claims with respect to such action or proceeding shall be heard
and determined in such a Delaware State or Federal court. The parties
hereby consent to and grant any such court jurisdiction over the person of
such parties and over the subject matter of such dispute and agree that
mailing of process or other papers in connection with any such action or
proceeding in the manner provided in Section 9.6 or in such other manner as
may be permitted by law, shall be valid and sufficient service thereof.
<PAGE>
(b) Parent hereby designates CT Corporation System as its
authorized agent to accept and acknowledge on its behalf service of any and
all process which may be served in any such suit, action or proceeding in
any such court and agrees that service of process upon said agent at its
office at 1209 Orange Street, Wilmington Delaware 19801, and written notice
of said service to Parent, mailed or delivered to it, c/o Nomura
International plc at the address set forth in Section 9.6, shall be deemed
in every respect effective service of process upon Parent in any such suit,
action or proceeding and shall be taken and held to be valid personal
service upon Parent, whether or not Parent shall then be doing, or at any
time shall have done, business within the State of Delaware, and that any
such service of process shall be of the same force and validity as if
service were made upon it according to the laws governing the validity and
requirements of such service in such State, and waives all claim of error
by reason of any such service. Said designation and appointment shall be
irrevocable.
(c) EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY
WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND
DIFFICULT ISSUES, AND THEREFORE EACH SUCH PARTY HEREBY IRREVOCABLY AND
UNCONDITIONALLY WAIVES ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN
RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING
TO THIS AGREEMENT, OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT. EACH
PARTY CERTIFIES AND ACKNOWLEDGES THAT (i) NO REPRESENTATIVE, AGENT OR
ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT
SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE
FOREGOING WAIVER, (ii) EACH SUCH PARTY UNDERSTANDS AND HAS CONSIDERED THE
IMPLICATIONS OF THIS WAIVER, (iii) EACH SUCH PARTY MAKES THIS WAIVER
VOLUNTARILY, AND (iv) EACH SUCH PARTY HAS BEEN INDUCED TO ENTER INTO THIS
AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN
THIS SECTION 9.5.
9.6. Notices. Any notice, request, instruction or other document to be
given hereunder by any party to the others shall be in writing and delivered
personally or sent by registered or certified mail, postage prepaid:
<PAGE>
if to Parent or Merger Sub
c/o Nomura International plc,
Nomura House
1 St. Martin's-le-Grand
London, England ECIA 4NP
Attention: Managing Director,
Principal Finance Group
and
Attention: Transaction Management Group
(with a copy to William R. Dougherty, Esq.
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, New York 10017)
if to the Company
44 Whippany Road,
Morristown, NJ 07962-1983,
Attention: General Counsel
(with a copy to John P. Mead, Esq.,
Sullivan & Cromwell,
125 Broad Street,
New York, NY 10004.)
if to AT&T
295 North Maple Avenue,
Basking Ridge, NJ 07920.
Attention: Treasurer
and
131 Morristown Road,
Basking Ridge, NJ 07920.
Attention: Vice President-Law and Secretary
(with a copy to Steven A. Rosenblum, Esq.,
Wachtell, Lipton, Rosen & Katz 51 West 52nd Street New York, NY
10019.)
or to such other persons or addresses as may be designated in
writing by the party to receive such notice.
9.7. Entire Agreement. This Agreement (including the exhibits
hereto), the Company Disclosure Letter, the AT&T Disclosure Letter, the
Parent Disclosure Letter and the Confidentiality Agreement, dated January
31, 1996, between Nomura International plc and the Company (the
"Confidentiality Agreement") constitute the entire agreement, and supersede
all other prior agreements, understandings, representations and warranties
<PAGE>
both written and oral, among the parties, with respect to the subject
matter hereof. EACH PARTY HERETO AGREES THAT, EXCEPT FOR THE REPRESENTATIONS AND
WARRANTIES CONTAINED IN THIS AGREEMENT (INCLUDING EXHIBITS HERETO AND DISCLOSURE
LETTERS INCLUDED HEREWITH), NEITHER PARENT, MERGER SUB, THE COMPANY NOR AT&T
MAKES ANY OTHER REPRESENTATIONS OR WARRANTIES, AND EACH HEREBY DISCLAIMS ANY
OTHER REPRESENTATIONS OR WARRANTIES MADE BY ITSELF OR ANY OF ITS OFFICERS,
DIRECTORS, EMPLOYEES, AGENTS, FINANCIAL AND LEGAL ADVISORS OR OTHER
REPRESENTATIVES, WITH RESPECT TO THE EXECUTION AND DELIVERY OF THIS AGREEMENT OR
THE TRANSACTIONS CONTEMPLATED HEREBY, NOTWITHSTANDING THE DELIVERY OR DISCLOSURE
TO THE OTHER OR THE OTHER'S REPRESENTATIVES OF ANY DOCUMENTATION OR OTHER
INFORMATION WITH RESPECT TO ANY ONE OR MORE OF THE FOREGOING.
9.8. No Third Party Beneficiaries. Except as provided in
Section 6.8(k) and Section 6.10 (Indemnification; Directors' and Officers'
Insurance), this Agreement is not intended to confer upon any person other
than the parties hereto any rights or remedies hereunder.
9.9. Obligations of Parent and of the Company; Limitations on
Liability. (a) Whenever this Agreement requires a Subsidiary of Parent to
take any action, such requirement shall be deemed to include an undertaking
on the part of Parent to cause such Subsidiary to take such action.
Whenever this Agreement requires a Subsidiary of the Company to take any
action, such requirement shall be deemed to include an undertaking on the
part of the Company to cause such Subsidiary to take such action and, after
the Effective Time, on the part of the Surviving Corporation to cause such
Subsidiary to take such action.
(b) Except as provided in the immediately following sentence,
nothing in this Agreement is intended to or shall create any liability on
the part of any stockholder, incorporator, officer or director of any party
hereto except that Parent shall be responsible for acts or omissions of
Merger Sub (or any other Subsidiary designated by Parent pursuant to
Section 9.12) and the Company shall be responsible for acts or omissions of
its Subsidiaries, in each case as provided in clause (a). AT&T shall have
no liability hereunder except insofar as its own representations,
warranties and covenants are concerned. Any notice, certificate or opinions
of an officer of a party hereto delivered pursuant to this Agreement shall
be deemed to be an act of the party and shall not create any personal
liability on the part of the officer delivering such notice, certificate or
opinion.
<PAGE>
9.10. Severability. The provisions of this Agreement shall be
deemed severable and the invalidity or unenforceability of any provision
shall not affect the validity or enforceability of the other provisions
hereof. If any provision of this Agreement, or the application thereof to
any person or any circumstance, is invalid or unenforceable, (a) a suitable
and equitable provision shall be substituted therefor in order to carry
out, so far as may be valid and enforceable, the intent and purpose of such
invalid or unenforceable provision and (b) the remainder of this Agreement
and the application of such provision to other persons or circumstances
shall not be affected by such invalidity or unenforceability, nor shall
such invalidity or unenforceability affect the validity or enforceability
of such provision, or the application thereof, in any other jurisdiction.
9.11. Interpretation. The table of contents and headings herein
are for convenience of reference only, do not constitute part of this
Agreement and shall not be deemed to limit or otherwise affect any of the
provisions hereof. Where a reference in this Agreement is made to a Section
or Exhibit, such reference shall be to a Section of or Exhibit to this
Agreement unless otherwise indicated. Whenever the words "include,"
"includes" or "including" are used in this Agreement, they shall be deemed
to be followed by the words "without limitation."
9.12. Assignment. This Agreement shall not be assignable by
operation of law or otherwise without the prior written consent of the
other parties; provided, however, that Parent may designate, by written
notice to the Company, another wholly owned direct or indirect Subsidiary
to be a Constituent Corporation in lieu of Merger Sub, in the event of
which, all references herein to Merger Sub shall be deemed references to
such other Subsidiary except that all representations and warranties made
herein with respect to Merger Sub as of the date of this Agreement shall be
deemed representations and warranties made with respect to such other
Subsidiary as of the date of such designation and no designation under this
Section 9.12 shall be valid or effective unless all such representations
and warranties are true insofar as such new Subsidiary is concerned.
<PAGE>
IN WITNESS WHEREOF, this Agreement has been duly executed and
delivered by the duly authorized officers of the parties hereto as of the
date first written above.
AT&T CAPITAL CORPORATION
By: __________________________
Name:
Title:
AT&T CORP.
By: __________________________
Name:
Title:
HERCULES LIMITED
By: __________________________
Name:
Title:
ANTIGUA ACQUISITION
CORPORATION
By: __________________________
Name:
Title:
<PAGE>
Table of Contents
Page
ARTICLE I
The Merger; Closing; Effective Time . . . . . . 1
1.1. The Merger . . . . . . . . . . . . . . . . . . . . . 1
1.2. Closing. . . . . . . . . . . . . . . . . . . . . . . 2
1.3. Effective Time . . . . . . . . . . . . . . . . . . . 2
ARTICLE II
Certificate of Incorporation and By-Laws
of the Surviving Corporation. . . . . . . . 2
2.1. The Certificate of Incorporation . . . . . . . . . . 2
2.2. The By-Laws. . . . . . . . . . . . . . . . . . . . . 2
ARTICLE III
Officers and Directors
of the Surviving Corporation. . . . . . . . 3
3.1. Directors. . . . . . . . . . . . . . . . . . . . . . 3
3.2. Officers . . . . . . . . . . . . . . . . . . . . . . 3
ARTICLE IV
Effect of the Merger on Capital Stock;
Exchange of Certificates. . . . . . . . . 3
4.1. Effect on Capital Stock. . . . . . . . . . . . . . . 3
(a) Merger Consideration. . . . . . . . . . . . 3
(b) Options and Restricted Shares . . . . . . . 4
(c) Cancellation of Shares. . . . . . . . . . . 5
(d) Merger Sub. . . . . . . . . . . . . . . . . 5
4.2. Payment for Shares . . . . . . . . . . . . . . . . . 5
4.3. Dissenters' Rights . . . . . . . . . . . . . . . . . 6
4.4. Transfer of Shares After the Effective Time. . . . . 7
ARTICLE V
Representations and Warranties . . . . . . . 7
5.1. Representations and Warranties of the Company. . . . 7
(a) Organization, Good Standing and
Qualification . . . . . . . . . . . . . . . 7
(b) Capital Structure . . . . . . . . . . . . . 8
(c) Corporate Authority; Approval and
Fairness. . . . . . . . . . . . . . . . . . 9
<PAGE>
(d) Governmental Filings; No Violations . . . . 10
(e) Company Reports; Financial Statements . . . 11
(f) Absence of Certain Changes. . . . . . . . . 12
(g) Litigation and Liabilities. . . . . . . . . 13
(h) Employee Benefits . . . . . . . . . . . . . 14
(i) Compliance with Laws; Licenses. . . . . . . 16
(j) Receivables . . . . . . . . . . . . . . . . 18
(k) Material Contracts. . . . . . . . . . . . . 18
(l) Takeover Statutes . . . . . . . . . . . . . 19
(m) Environmental Matters . . . . . . . . . . . 19
(n) Taxes . . . . . . . . . . . . . . . . . . . 20
(o) Labor Matters . . . . . . . . . . . . . . . 21
(p) Intellectual Property . . . . . . . . . . . 22
(q) Insurance . . . . . . . . . . . . . . . . . 23
(r) AT&T Agreements; Transactions with
Affiliates. . . . . . . . . . . . . . . . . 23
(s) Brokers and Finders . . . . . . . . . . . . 24
5.2. Representations and Warranties of AT&T . . . . . . . 25
(a) Organization, Good Standing and
Qualification . . . . . . . . . . . . . . . 25
(b) Share Ownership . . . . . . . . . . . . . . 25
(c) Corporate Authority; Approval and
Fairness. . . . . . . . . . . . . . . . . . 25
(d) Governmental Filings; No Violations . . . . 25
(e) AT&T Agreements . . . . . . . . . . . . . . 26
(f) Brokers and Finders . . . . . . . . . . . . 27
(g) Employee Benefits . . . . . . . . . . . . . 27
5.3. Representations and Warranties of Parent and
Merger Sub . . . . . . . . . . . . . . . . . . . . . 27
(a) Organization, Good Standing and
Qualification . . . . . . . . . . . . . . . 27
(b) Corporate Authority; Board and
Stockholder Approvals . . . . . . . . . . . 28
(c) Governmental Filings; No Violations . . . . 28
(d) Available Funds . . . . . . . . . . . . . . 29
(e) Brokers and Finders . . . . . . . . . . . . 29
ARTICLE VI
Covenants. . . . . . . . . . . . . 30
6.1. Interim Operations . . . . . . . . . . . . . . . . . 30
6.2. Acquisition Proposals. . . . . . . . . . . . . . . . 32
6.3. Information Supplied . . . . . . . . . . . . . . . . 33
6.4. Filings; Other Actions; Notification . . . . . . . . 34
6.5. Access . . . . . . . . . . . . . . . . . . . . . . . 36
6.6. AT&T Operating Agreement and License Agreement . . . 37
6.7. Publicity. . . . . . . . . . . . . . . . . . . . . . 38
6.8. Employee Benefit Covenants . . . . . . . . . . . . . 38
(a) In General. . . . . . . . . . . . . . . . . 38
<PAGE>
(b) Change in Control . . . . . . . . . . . . . 39
(c) Executive Benefit Plan. . . . . . . . . . . 39
(d) Equity-Based Plans. . . . . . . . . . . . . 39
(e) Share Performance Incentive Plan. . . . . . 39
(f) Annual Incentive Plan . . . . . . . . . . . 40
(g) Other Plans . . . . . . . . . . . . . . . . 40
(h) Credited Service. . . . . . . . . . . . . . 40
(i) Plan Withdrawals. . . . . . . . . . . . . . 41
(j) Survival. . . . . . . . . . . . . . . . . . 41
(k) Intended Beneficiaries. . . . . . . . . . . 41
6.9. Expenses . . . . . . . . . . . . . . . . . . . . . . 41
6.10. Indemnification; Directors' and Officers'
Insurance. . . . . . . . . . . . . . . . . . . . . . 41
6.11. Takeover Statute. . . . . . . . . . . . . . 44
6.12. Reasonable Best Efforts and Cooperation . . 44
6.13. Tax Matters . . . . . . . . . . . . . . . . 44
(a) Section 338(h)(10) Election . . . . . . . . 44
(c) Tax Returns . . . . . . . . . . . . . . . . 47
(d) Termination of Tax Allocation
Agreements. . . . . . . . . . . . . . . . . 47
ARTICLE VII
Conditions . . . . . . . . . . . . 51
7.1. Conditions to Each Party's Obligation to
Effect the Merger. . . . . . . . . . . . . . . . . . 51
(a) Regulatory Consents and Orders. . . . . . . 51
7.2. Conditions to Obligation of Parent . . . . . . . . . 51
(a) Representations and Warranties. . . . . . . 51
(b) Performance of Obligations of the
Company and AT&T. . . . . . . . . . . . . . 52
(c) Consents Under Agreements and Licenses. . . 52
(d) Resignations. . . . . . . . . . . . . . . . 52
(e) Transitional Services Agreement . . . . . . 52
7.3. Conditions to Obligation of the Company and
AT&T . . . . . . . . . . . . . . . . . . . . . . . . 52
(a) Representations and Warranties. . . . . . . 52
(b) Performance of Obligations of Parent
and Merger Sub. . . . . . . . . . . . . . . 52
(c) Consents Under Agreements . . . . . . . . . 53
ARTICLE VIII
Termination . . . . . . . . . . . . 53
8.1. Termination by Mutual Consent. . . . . . . . . . . . 53
8.2. Termination by Parent, AT&T or the Company . . . . . 53
8.3. Termination by the Company or AT&T . . . . . . . . . 53
8.4. Termination by Parent. . . . . . . . . . . . . . . . 54
<PAGE>
8.5. Effect of Termination and Abandonment. . . . . . . . 54
ARTICLE IX
Miscellaneous and General. . . . . . . . . 54
9.1. Survival . . . . . . . . . . . . . . . . . . . . . . 54
9.2. Modification or Amendment. . . . . . . . . . . . . . 55
9.3. Waiver of Conditions . . . . . . . . . . . . . . . . 55
9.4. Counterparts . . . . . . . . . . . . . . . . . . . . 55
9.5. GOVERNING LAW AND VENUE; WAIVER OF JURY TRIAL. . . . 55
9.6. Notices. . . . . . . . . . . . . . . . . . . . . . . 56
9.7. Entire Agreement . . . . . . . . . . . . . . . . . . 57
9.8. No Third Party Beneficiaries . . . . . . . . . . . . 58
9.9. Obligations of Parent and of the Company;
Limitations on Liability . . . . . . . . . . . . . . 58
9.10. Severability. . . . . . . . . . . . . . . . 59
9.11. Interpretation. . . . . . . . . . . . . . . 59
9.12. Assignment. . . . . . . . . . . . . . . . . 59
<PAGE>1 Exhibit 99
AT&T Capital Corporation
CONSORTIUM TO PURCHASE AT&T CAPITAL
For Immediate Release: June 6, 1996
_____________________________________
Morristown, N.J. -- AT&T Capital Corporation (NYSE - TCC) today
announced that the company has entered into a definitive merger agreement with
a leasing consortium. Certain members of AT&T Capital's senior management,
led by Chairman and CEO Tom Wajnert, plan to participate in the consortium
that will own AT&T Capital upon completion of the merger.
When the merger is consummated, AT&T Capital's stockholders will receive
$45 in cash for each outstanding share of the company's common stock. The
total purchase price for the outstanding shares and stock options will be
approximately $2.2 billion. It is expected that the merger, which is
subject to customary closing conditions, including regulatory approvals, will
be consummated in September.
AT&T, the company's 86-percent stockholder, is a party to and has
executed the merger agreement, along with a written consent to the merger,
thereby assuring stockholder approval of the transaction.
In addition to management, the consortium will include GRS Holding
Company Ltd., owner of a U.K. rail leasing company. Babcock & Brown, a San
Francisco-based leasing, asset and project financing advisory firm, also plans
to participate. The company will continue to be led by AT&T Capital's current
management team, with no significant changes in business strategies or
operations planned.
Financing for the consortium is being arranged by the London-based
Nomura International plc, a wholly owned subsidiary of The Nomura Securities
Co., Ltd., one of the world's leading investment banks. The transaction is
not conditioned on financing.
"I am extremely pleased with this transaction and what it means for AT&T
Capital and its various constituencies," said Tom Wajnert. "This is an
outstanding opportunity and I am thrilled from a number of perspectives --
stockholders will receive exceptional value for their ownership interest and
customers will continue to receive outstanding service from one of the world's
foremost global leasing and finance companies. At the same time, members
(employees) will continue to operate the company and AT&T Capital's core
leadership team will remain in place and continue to pursue the company's long
term strategic objectives.
"AT&T Capital's more than 2,800 members have created a worldwide leasing
business of enormous strategic significance," Wajnert said. "We believe our
capabilities for serving some 500,000 customers -- from sole proprietorships
to multinational manufacturing clients around the globe -- are unparalleled in
our industry."
Goldman, Sachs & Co. has advised AT&T Capital's board of directors in
connection with this transaction and has provided a fairness opinion. The
transaction has been approved by AT&T Capital's board of directors and a
special committee of the board composed of independent directors.
<PAGE>
<PAGE>2 Exhibit 99
AT&T Capital Corporation
AT&T Capital was founded in 1985 principally to finance sales of AT&T
equipment and has since become one of the largest providers of vendor
financing programs to manufacturers, including AT&T, Lucent Technologies and
NCR. The company's financial programs and products help multinational,
domestic and foreign companies increase sales, gain market share and build
customer loyalty. AT&T Capital now operates in 20 countries in North and
South America, Europe and the Asia/Pacific region -- significant markets for
many of its global vendor clients.
A fully diversified leasing and finance company, AT&T Capital also
offers financing and leasing directly to customers, including SBA (Small
Business Administration) guaranteed lending and other commercial financing and
leasing, as well as such specialized equipment financing and services as
vehicle leasing and fleet management.
Wajnert noted that AT&T Capital will continue to serve as preferred
vendor financing provider not only for the newly structured AT&T, but also for
Lucent Technologies and NCR, under operating agreements that continue into the
year 2000.
AT&T Capital Corporation's headquarters will remain in Morristown,
New Jersey.
