EXHIBIT 2.01
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AGREEMENT AND PLAN
OF MERGER
DATED AS OF
JULY 27, 0000
XXXXX
XXXX XXXXXXXX CORPORATION,
BETA GAMMA CORPORATION
AND
GTE CORPORATION
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AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER (this "Agreement"), dated as of
July 27, 1998 ("the date hereof"), is entered into by and among Xxxx
Atlantic Corporation, a Delaware corporation ("Xxxx Atlantic"), Beta Gamma
Corporation, a New York corporation and a wholly owned subsidiary of Xxxx
Atlantic ("Merger Subsidiary"), and GTE Corporation, a New York corporation
("GTE").
WHEREAS, the Board of Directors of each of Xxxx Atlantic, Merger
Subsidiary and GTE has determined that it is in the best interests of its
stockholders that Xxxx Atlantic and GTE enter into a business combination
under which a subsidiary of Xxxx Atlantic will merge with and into GTE
pursuant to the Merger (as defined in Section 1.1 hereof) and Xxxx Atlantic
and GTE desire to enter into the "merger of equals" transaction
contemplated hereby, and, in connection therewith, to make certain
representations, warranties and agreements;
WHEREAS, as a condition to, and immediately after, the execution of
this Agreement, and as a condition to the execution of the Xxxx Atlantic
Option Agreement (as defined below), GTE and Xxxx Atlantic are entering
into a stock option agreement (the "GTE Option Agreement") in the form
attached hereto as Exhibit A;
WHEREAS, as a condition to, and immediately after, the execution of
this Agreement, and as a condition to the execution of the GTE Option
Agreement, GTE and Xxxx Atlantic are entering into a stock option agreement
(the "Xxxx Atlantic Option Agreement", and together with the GTE Option
Agreement, the "Option Agreements") in the form attached hereto as Exhibit
B;
WHEREAS, the Board of Directors of each of Xxxx Atlantic, Merger
Subsidiary and GTE has determined that the Merger and the other
transactions contemplated hereby are consistent with, and in furtherance
of, its business strategies and goals and has approved the Merger upon the
terms and conditions set forth herein;
WHEREAS, for federal income tax purposes, it is intended that the
Merger shall constitute a tax-free reorganization under Section 368 of the
Internal Revenue Code of 1986, as amended (the "Code"); and
WHEREAS, for accounting purposes, it is intended that the Merger shall
be accounted for as a pooling of interests under United States generally
accepted accounting principles ("GAAP");
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements herein contained, and intending to be legally
bound hereby, the parties hereto hereby agree as follows:
ARTICLE I - THE MERGER
SECTION 1.1 The Merger. At the Effective Time (as defined in Section
1.2 hereof) and subject to and upon the terms and conditions of this
Agreement and the New York Business Corporation Law ("NYBCL"), Merger
Subsidiary will be merged with and into GTE (the "Merger"), whereby the
separate corporate existence of Merger Subsidiary shall cease and GTE shall
continue as the surviving corporation which shall be a wholly-owned
subsidiary of Xxxx Atlantic. GTE as the surviving corporation after the
Merger is herein sometimes referred to as the "Surviving Corporation" and
Merger Subsidiary as the non-surviving corporation after the Merger is
herein sometimes referred to as the "Merged Corporation." GTE, Xxxx
Atlantic and Merger Subsidiary are herein referred to collectively as the
"Parties" and each individually as a "Party."
SECTION 1.2 Effective Time. As promptly as practicable after the
satisfaction or waiver of the conditions set forth in Article VIII hereof
and the consummation of the Closing referred to in Section 7.2(b) hereof,
the Parties shall cause the Merger to be consummated by filing a
Certificate of Merger with the Secretary of State of the State of New York
with respect to the Merger, in such form as required by, and executed in
accordance with, the relevant provisions of the NYBCL (the time of such
filing being the "Effective Time").
SECTION 1.3 Effect of the Merger. At the Effective Time, the effect
of the Merger shall be as provided in the applicable provisions of the
NYBCL. Without limiting the generality of the foregoing, and subject
thereto, at the Effective Time all the property, rights, privileges, powers
and franchises of GTE and Merger Subsidiary shall continue with, or vest
in, as the case may be, GTE as the Surviving Corporation, and all debts,
liabilities and duties of GTE and Merger Subsidiary shall continue to be,
or become, as the case may be, the debts, liabilities and duties of GTE as
the Surviving Corporation. As of the Effective Time, the Surviving
Corporation shall be a direct wholly-owned subsidiary of Xxxx Atlantic.
SECTION 1.4 Subsequent Actions. If at any time after the Effective
Time the Surviving Corporation shall consider or be advised that any deeds,
bills of sale, assignments, assurances or any other actions or things are
necessary or desirable to continue in, vest, perfect or confirm of record
or otherwise in the Surviving Corporation its right, title or interest in,
to or under any of the rights, properties, privileges, franchises or assets
of either of its constituent corporations acquired or to be acquired by the
Surviving Corporation as a result of, or in connection with, the Merger or
otherwise to carry out this Agreement, the officers and directors of the
Surviving Corporation shall be directed and authorized to execute and
deliver, in the name and on behalf of either of such constituent
corporations, all such deeds, bills of sale, assignments and assurances and
to take and do, in the name and on behalf of each of such corporations or
otherwise, all such other actions and things as may be necessary or
desirable to vest, perfect or confirm any and all right, title and interest
in, to and under such rights, properties, privileges, franchises or assets
in the Surviving Corporation or otherwise to carry out this Agreement.
SECTION 1.5 Certificate of Incorporation; Bylaws; Directors and
Officers of Surviving Corporation. Unless otherwise agreed by GTE and
Xxxx Atlantic before the Effective Time, at the Effective Time:
(a) the Certificate of Incorporation of GTE as the Surviving
Corporation shall be the Certificate of Incorporation of GTE as in effect
immediately prior to the Effective Time, until thereafter amended as
provided by law and such Certificate of Incorporation;
(b) the Bylaws of GTE as the Surviving Corporation shall be the Bylaws
of GTE immediately prior to the Effective Time, until thereafter amended as
provided by law and the Certificate of Incorporation and the Bylaws of such
Surviving Corporation; and
(c) the directors and officers of GTE immediately prior to the
Effective Time shall continue to serve in their respective offices of the
Surviving Corporation from and after the Effective Time, in each case until
their successors are elected or appointed and qualified or until their
resignation or removal. If at the Effective Time a vacancy shall exist on
the Board of Directors or in any office of the Surviving Corporation, such
vacancy may thereafter be filled in the manner provided by law and the
Bylaws of the Surviving Corporation.
ARTICLE II EFFECT ON STOCK OF THE SURVIVING
CORPORATION AND THE MERGED CORPORATION
SECTION 2.1 Conversion of Securities. The manner and basis of
converting the shares of common stock of the Surviving Corporation and of
the Merged Corporation at the Effective Time, by virtue of the Merger and
without any action on the part of any of the Parties or the holder of any
of such securities, shall be as hereinafter set forth in this Article II.
SECTION 2.2 Conversion of Shares. (a) Subject to Section 2.7, each
share of common stock, par value $0.05 per share, of GTE ("GTE Common
Stock") issued and outstanding immediately before the Effective Time
(excluding those cancelled pursuant to Section 2.3) and all rights in
respect thereof, shall at the Effective Time, without any action on the
part of any holder thereof, be converted into and become 1.22 shares of
common stock, par value $0.10 per share, of Xxxx Atlantic ("Xxxx Atlantic
Common Stock"). Such ratio of GTE Common Stock to Xxxx Atlantic Common
Stock is herein referred to as the "Exchange Ratio."
(b) As of the Effective Time, all shares of GTE Common Stock converted
pursuant to Section 2.2(a) shall no longer be outstanding and shall
automatically be cancelled and retired and shall cease to exist, and each
holder of a certificate (each, an "Old Certificate") representing any such
shares of GTE Common Stock shall cease to have any rights with respect
thereto, except the right to receive shares of Xxxx Atlantic Common Stock,
in accordance with Section 2.2(a), certain dividends or other distributions
in accordance with Section 2.5(b) and any cash in lieu of fractional shares
of Xxxx Atlantic Common Stock to be issued or paid in consideration
therefor upon surrender of such certificate in accordance with Section 2.5,
without interest.
(c) For all purposes of this Agreement, unless otherwise specified,
each share of GTE Common Stock held by employee stock ownership plans of
GTE (i) shall be deemed to be issued and outstanding, (ii) shall not be
deemed to be held in the treasury of GTE and (iii) shall be converted into
shares of Xxxx Atlantic Common Stock in accordance with the Exchange Ratio.
SECTION 2.3 Cancellation of Treasury Shares and Xxxx Atlantic-owned
Shares. At the Effective Time, each share of GTE Common Stock held in the
treasury of GTE or owned by Xxxx Atlantic immediately prior to the
Effective Time shall be cancelled and retired and no shares of stock or
other securities of Xxxx Atlantic or the Surviving Corporation shall be
issuable, and no payment or other consideration shall be made, with respect
thereto.
SECTION 2.4 Conversion of Common Stock of the Merged Corporation into
Common Stock of the Surviving Corporation. At the Effective Time, each
share of common stock of Merger Subsidiary issued and outstanding
immediately prior to the Effective Time, and all rights in respect thereof,
shall, without any action on the part of Xxxx Atlantic, forthwith cease to
exist and be converted into 1,000 validly issued, fully paid and
nonassessable shares of common stock, par value $0.05 per share, of the
Surviving Corporation (the "Surviving Corporation Common Stock").
Immediately after the Effective Time and upon surrender by Xxxx Atlantic of
the certificate representing the shares of the common stock of Merger
Subsidiary, GTE as the Surviving Corporation shall deliver to Xxxx Atlantic
an appropriate certificate or certificates representing the Surviving
Corporation Common Stock created by conversion of the common stock of
Merger Subsidiary owned by Xxxx Atlantic.
SECTION 2.5 Exchange Procedures. (a) Subject to the terms and
conditions hereof, at or prior to the Effective Time Xxxx Atlantic and GTE
shall jointly appoint an exchange agent (the "Exchange Agent") to effect
the exchange of Old Certificates for Xxxx Atlantic Common Stock in
accordance with the provisions of this Article II. At the Effective Time,
Xxxx Atlantic shall deposit, or cause to be deposited, with the Exchange
Agent certificates representing Xxxx Atlantic Common Stock for exchange for
Old Certificates in accordance with the provisions of Section 2.2 hereof
(such certificates, together with any dividends or distributions with
respect thereto, being herein referred to as the "Exchange Fund").
Commencing immediately after the Effective Time and until the appointment
of the Exchange Agent shall be terminated, each holder of an Old
Certificate may surrender the same to the Exchange Agent, and, after the
appointment of the Exchange Agent shall be terminated, any such holder may
surrender any such certificate to Xxxx Atlantic. Such holder shall be
entitled upon such surrender to receive in exchange therefor a certificate
or certificates representing the number of whole shares of Xxxx Atlantic
Common Stock such holder has a right to receive in accordance with Section
2.2 hereof, certain dividends or other distributions in accordance with
Section 2.5(b) hereof, and a cash payment in lieu of fractional shares, if
any, in accordance with Section 2.7 hereof, and such Old Certificate shall
forthwith be cancelled. The whole shares of Xxxx Atlantic Common Stock to
be delivered to such holder shall be delivered in book entry form, unless
such holder shall timely elect in writing to receive the certificates
representing such shares.
Unless and until any such Old Certificate is so surrendered, and except as
may be determined by Xxxx Atlantic for a period not to exceed six months
after the Effective Time, no dividend or other distribution, if any,
payable to the holders of record of Xxxx Atlantic Common Stock as of any
date subsequent to the Effective Time shall be paid to the holder of such
certificate in respect thereof. Except as otherwise provided in Section
2.6 hereof, upon the surrender of any such Old Certificate, however, the
record holder of the certificate or certificates representing shares of
Xxxx Atlantic Common Stock issued in exchange therefor shall receive from
the Exchange Agent or from Xxxx Atlantic, as the case may be, payment of
the amount of dividends and other distributions, if any, which as of any
date subsequent to the Effective Time and until such surrender shall have
become payable and were not paid with respect to such number of shares of
Xxxx Atlantic Common Stock ("Pre-Surrender Dividends"). No interest shall
be payable with respect to the payment of Pre-Surrender Dividends upon the
surrender of Old Certificates. After the appointment of the Exchange Agent
shall have been terminated, any holders of Old Certificates which have not
received payment of Pre-Surrender Dividends shall look only to Xxxx
Atlantic for payment thereof. Notwithstanding the foregoing provisions of
this Section 2.5 (b), neither the Exchange Agent nor any Party shall be
liable to a holder of an Old Certificate for any Xxxx Atlantic Common
Stock, any dividends or distributions thereon or any cash payment for
fractional shares as contemplated by Section 2.7, delivered to a public
official pursuant to any applicable abandoned property, escheat or similar
law or to a transferee pursuant to Section 2.6 hereof.
(b) Notwithstanding anything herein to the contrary, certificates
surrendered for exchange by any "affiliate" of GTE shall not be exchanged
until Xxxx Atlantic shall have received a signed agreement from such
"affiliate" as provided in Section 7.14 hereof.
SECTION 2.6 Transfer Books. The stock transfer books of GTE shall be
closed at the Effective Time and no transfer of any shares of GTE Common
Stock will thereafter be recorded on any of such stock transfer books. In
the event of a transfer of ownership of GTE Common Stock that is not
registered in the stock transfer records of GTE at the Effective Time, a
certificate or certificates representing the number of whole shares of Xxxx
Atlantic Common Stock into which such shares of GTE Common Stock shall have
been converted shall be issued to the transferee together with a cash
payment in lieu of fractional shares, if any, in accordance with Section
2.7 hereof, and a cash payment in the amount of Pre-Surrender Dividends, if
any, in accordance with Section 2.5 (b) hereof, if the Old Certificate
therefor is surrendered as provided in Section 2.5 hereof, accompanied by
all documents required to evidence and effect such transfer and by evidence
of payment of any applicable stock transfer tax. The whole shares of Xxxx
Atlantic Common Stock to be delivered to such holder shall be delivered in
book entry form, unless such holder shall timely elect in writing to
receive the certificates representing such shares.
SECTION 2.7 No Fractional Share Certificates. (a) No scrip or
fractional share certificate for Xxxx Atlantic Common Stock will be issued
in certificated or book entry form upon the surrender for exchange of Old
Certificates, and an outstanding fractional share interest will not entitle
the owner thereof to vote, to receive dividends or to any rights of a
stockholder of Xxxx Atlantic or of the Surviving Corporation with respect
to such fractional share interest.
(b) As promptly as practicable following the Effective Time, the
Exchange Agent shall determine the excess of (i) the number of whole shares
of Xxxx Atlantic Common Stock to be issued and delivered to the Exchange
Agent pursuant to Section 2.5 hereof over (ii) the aggregate number of
whole shares of Xxxx Atlantic Common Stock to be distributed to holders of
GTE Common Stock pursuant to Section 2.5 hereof (such excess being herein
called "Excess Shares"). Following the Effective Time, the Exchange Agent,
as agent for the holders of GTE Common Stock, shall sell the Excess Shares
at then prevailing prices on the New York Stock Exchange (the "NYSE"), all
in the manner provided in subsection (c) of this Section 2.7.
(c) The sale of the Excess Shares by the Exchange Agent shall be
executed on the NYSE through one or more member firms of the NYSE and shall
be executed in round lots to the extent practicable. The Exchange Agent
shall use all reasonable efforts to complete the sale of the Excess Shares
as promptly following the Effective Time as, in the Exchange Agent's
reasonable judgment, is practicable consistent with obtaining the best
execution of such sales in light of prevailing market conditions. The
Exchange Agent shall, out of the proceeds from the sale of the Excess
Shares, pay all commissions, transfer taxes and other out-of-pocket
transaction costs, including the expenses and compensation of the Exchange
Agent, incurred in connection with such sale of the Excess Shares. Until
the net proceeds of such sale or sales have been distributed to the holders
of GTE Common Stock, the Exchange Agent will hold such proceeds in trust
for the holders of GTE Common Stock (the "Common Shares Trust"). The
Exchange Agent shall determine the portion of the Common Shares Trust to
which each holder of GTE Common Stock shall be entitled, if any, by
multiplying the amount of the aggregate net proceeds comprising the Common
Shares Trust by a fraction the numerator of which is the amount of
fractional share interests to which such holder of GTE Common Stock is
entitled (after taking into account all shares of GTE Common Stock held at
the Effective Time by such holder) and the denominator of which is the
aggregate amount of fractional share interests to which all holders of GTE
Common Stock are entitled.
(d) Notwithstanding the provisions of subsections (b) and (c) of this
Section 2.7, GTE and Xxxx Atlantic may agree at their option, exercised
prior to the Effective Time, in lieu of the issuance and sale of Excess
Shares and the making of the payments contemplated in such subsections,
that Xxxx Atlantic shall pay to the Exchange Agent an amount sufficient for
the Exchange Agent to pay each holder of GTE Common Stock an amount in cash
equal to the product obtained by multiplying (i) the fractional share
interest to which such holder would otherwise be entitled (after taking
into account all shares of GTE Common Stock held at the Effective Time by
such holder) by (ii) the closing price for a share of Xxxx Atlantic Common
Stock on the NYSE Composite Transaction Tape on the first business day
immediately following the Effective Time, and, in such case, all references
herein to the cash proceeds of the sale of the Excess Shares and similar
references shall be deemed to mean and refer to the payments calculated as
set forth in this subsection (d). In such event, Excess Shares shall not
be issued or otherwise transferred to the Exchange Agent pursuant to
Section 2.5 (a) hereof or, if previously issued, shall be returned to Xxxx
Atlantic for cancellation.
(e) As soon as practicable after the determination of the amounts of
cash, if any, to be paid to holders of GTE Common Stock with respect to any
fractional share interests, the Exchange Agent shall make available such
amounts, net of any required withholding, to such holders of GTE Common
Stock, subject to and in accordance with the terms of Section 2.5 hereof.
(f) Any portion of the Exchange Fund and the Common Shares Trust which
remains undistributed for six months after the Effective Time shall be
delivered to Xxxx Atlantic, upon demand, and any holders of GTE Common
Stock who have not theretofore complied with the provisions of this Article
II shall thereafter look only to Xxxx Atlantic for satisfaction of their
claims for Xxxx Atlantic Common Stock, any cash in lieu of fractional
shares of Xxxx Atlantic Common Stock and any Pre-Surrender Dividends.
SECTION 2.8 Options to Purchase GTE Common Stock. (a) At the
Effective Time, each option or warrant granted by GTE to purchase shares of
GTE Common Stock which is outstanding and unexercised immediately prior to
the Effective Time shall be assumed by Xxxx Atlantic and converted into an
option or warrant to purchase shares of Xxxx Atlantic Common Stock in such
amount and at such exercise price as provided below and otherwise having
the same terms and conditions as are in effect immediately prior to the
Effective Time (except to the extent that such terms, conditions and
restrictions may be altered in accordance with their terms as a result of
the transactions contemplated hereby):
(i) the number of shares of Xxxx Atlantic Common Stock to be
subject to the new option or warrant shall be equal to the product of
(x) the number of shares of GTE Common Stock subject to the original
option or warrant and (y) the Exchange Ratio;
(ii) the exercise price per share of Xxxx Atlantic Common Stock
under the new option or warrant shall be equal to (x) the exercise
price per share of the GTE Common Stock under the original option or
warrant divided by (y) the Exchange Ratio; and
(iii) upon each exercise of options or warrants by a holder
thereof, the aggregate number of shares of Xxxx Atlantic Common Stock
deliverable upon such exercise shall be rounded down, if necessary, to
the nearest whole share and the aggregate exercise price shall be
rounded up, if necessary, to the nearest cent.
The adjustments provided herein with respect to any options which are
"incentive stock options" (as defined in Section 422 of the Code) shall be
effected in a manner consistent with Section 424(a) of the Code.
(b) At the Effective Time, each stock appreciation right ("SAR") with
respect to GTE Common Stock which is outstanding and unexercised
immediately before the Effective Time shall be converted into an SAR with
respect to shares of Xxxx Atlantic Common Stock on the same terms and
conditions as are in effect immediately prior to the Effective Time, with
the adjustments set forth in subsection (a) of this Section 2.8.
SECTION 2.9 Restricted Stock. At the Effective Time, any shares of
GTE Common Stock awarded pursuant to any plan, arrangement or transaction,
and outstanding immediately prior to the Effective Time shall be converted
into shares of Xxxx Atlantic Common Stock in accordance with Section 2.2
hereof, subject to the same terms, conditions and restrictions as in effect
immediately prior to the Effective Time, except to the extent that such
terms, conditions and restrictions may be altered in accordance with their
terms as a result of the transactions contemplated hereby.
SECTION 2.10 Certain Adjustments. If between the date hereof and the
Effective Time, the outstanding shares of GTE Common Stock or of Xxxx
Atlantic Common Stock shall be changed into a different number of shares by
reason of any reclassification, recapitalization, split-up, combination or
exchange of shares, or any dividend payable in stock or other securities
shall be declared thereon with a record date within such period, the
Exchange Ratio shall be adjusted accordingly to provide to the holders of
GTE Common Stock and Xxxx Atlantic Common Stock the same economic effect as
contemplated by this Agreement prior to such reclassification,
recapitalization, split-up, combination, exchange or dividend.
ARTICLE III CERTAIN ADDITIONAL MATTERS
SECTION 3.1 Certificate of Incorporation and Bylaws of Xxxx Atlantic.
At the Effective Time and subject to and upon the terms and conditions of
this Agreement and the General Corporation Law of the State of Delaware
("DGCL"), Xxxx Atlantic shall cause the Certificate of Incorporation of
Xxxx Atlantic and the Bylaws of Xxxx Atlantic to be amended and restated to
incorporate the provisions set forth in Appendices I-A and I-B hereto,
respectively. Such amendment and restatement of the Xxxx Atlantic
Certificate of Incorporation and amendment and restatement of the Xxxx
Atlantic Bylaws are referred to herein as the "Certificate Amendment" and
the "Bylaws Amendment," respectively.
SECTION 3.2 Dividends. Each of GTE and Xxxx Atlantic shall coordinate
with the other the declaration of, and the setting of record dates and
payment dates for, dividends on GTE Common Stock and Xxxx Atlantic Common
Stock so that holders of GTE Common Stock do not (i) receive dividends on
both GTE Common Stock and Xxxx Atlantic Common Stock received in connection
with the Merger in respect of any calendar quarter or (ii) fail to receive
a dividend on either GTE Common Stock or Xxxx Atlantic Common Stock
received in connection with the Merger in respect of any calendar quarter.
SECTION 3.3 Headquarters. GTE and Xxxx Atlantic agree that immediately
following the Effective Time the headquarters of Xxxx Atlantic shall be
located in New York, New York.
SECTION 3.4 Corporate Identity. GTE and Xxxx Atlantic agree that at
the Effective Time, the corporate name of Xxxx Atlantic shall be as shall
have been agreed by the Parties.
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF GTE
Except as expressly disclosed in the GTE Filed SEC Reports (as defined
below) (including all exhibits referred to therein) or as set forth in the
disclosure schedule delivered by GTE to Xxxx Atlantic on the date hereof
(the "GTE Disclosure Schedule") (each section of which qualifies the
correspondingly numbered representation and warranty or covenant as
specified therein), GTE hereby represents and warrants to Xxxx Atlantic as
follows:
SECTION 4.1 Organization and Qualification; Subsidiaries. Each of GTE
and each of its Significant Subsidiaries is a corporation duly organized,
validly existing and in good standing under the laws of its jurisdiction of
incorporation or organization. Each of the GTE Subsidiaries which is not a
Significant Subsidiary is duly organized, validly existing and in good
standing under the laws of its jurisdiction of incorporation or
organization, except for such failure which, when taken together with all
other such failures, would not reasonably be expected to have a Material
Adverse Effect on GTE. Each of GTE and its Subsidiaries has the requisite
corporate power and authority and any necessary governmental authority,
franchise, license, certificate or permit to own, operate or lease the
properties that it purports to own, operate or lease and to carry on its
business as it is now being conducted, and is duly qualified as a foreign
corporation to do business, and is in good standing, in each jurisdiction
where the character of its properties owned, operated or leased or the
nature of its activities makes such qualification necessary, except for
such failure which, when taken together with all other such failures, would
not reasonably be expected to have a Material Adverse Effect on GTE.
SECTION 4.2 Certificate of Incorporation and Bylaws. GTE has
heretofore furnished, or otherwise made available, to Xxxx Atlantic a
complete and correct copy of the Certificate of Incorporation and the
Bylaws, each as amended to the date hereof, of GTE. Such Certificate of
Incorporation and Bylaws are in full force and effect. Neither GTE nor any
of its Significant Subsidiaries is in violation of any of the provisions of
its respective Certificate of Incorporation or, in any material respect,
its Bylaws.
SECTION 4.3 Capitalization. (a) The authorized capital stock of
GTE consists of (i) 9,217,764 shares of preferred stock, par value $50.00
per share, none of which are outstanding or reserved for issuance, (ii)
11,727,502 shares of preferred stock, no par value per share, none of which
are outstanding and 700,000 of which have been reserved for issuance in
accordance with the Rights Agreement (as defined below), and (iii)
2,000,000,000 shares of GTE Common Stock, of which, as of June 30, 1998,
(A) 963,241,244 shares were issued and outstanding, (B) 25,658,980 shares
were held in the treasury of GTE, (C) not more than 50,000,000 shares were
issuable upon the exercise of options outstanding under the GTE option
plans, and (D) 31,603,945 shares were reserved for issuance in connection
with other GTE Plans (as defined in Section 4.11(b) below). Except for GTE
Equity Rights issued to GTE employees in the ordinary course of business
or, after the date hereof, as permitted by Section 6.2 hereof or pursuant
to the Xxxx Atlantic Option Agreement, (i) since June 30, 1998, no shares
of GTE Common Stock have been issued, except upon the exercise of options
described in the immediately preceding sentence, and (ii) there are no
outstanding GTE Equity Rights. For purposes of this Agreement, "GTE Equity
Rights" shall mean subscriptions, options, warrants, calls, commitments,
agreements, conversion rights or other rights of any character (contingent
or otherwise) to purchase or otherwise acquire any shares of the capital
stock of GTE from GTE or any of GTE's Subsidiaries at any time, or upon the
happening of any stated event, except for rights granted under the Rights
Agreement, dated as of December 7, 1989 (the "GTE Rights Agreement"),
between GTE and the Rights Agent (as defined therein), and the Xxxx
Atlantic Option Agreement. Section 4.3 of the GTE Disclosure Schedule sets
forth a complete and accurate list of certain information with respect to
all outstanding GTE Equity Rights as of June 30, 1998.
(b) Except as set forth in Section 4.3 of the GTE Disclosure Schedule,
pursuant to the Xxxx Atlantic Option Agreement, or, after the date hereof,
as permitted by Section 6.2 hereof, there are no outstanding obligations of
GTE or any of GTE's Subsidiaries to repurchase, redeem or otherwise acquire
any shares of capital stock of GTE.
(c) All of the issued and outstanding shares of GTE Common Stock are
validly issued, fully paid and nonassessable.
(d) All of the outstanding capital stock of each of GTE's Significant
Subsidiaries, and all of the outstanding capital stock of GTE's
Subsidiaries owned directly or indirectly by GTE, is duly authorized,
validly issued, fully paid and nonassessable. All of the outstanding
capital stock of each of GTE's Significant Subsidiaries is owned by GTE
free and clear of any liens, security interests, pledges, agreements,
claims, charges or encumbrances. All of the outstanding capital stock of
GTE's Subsidiaries owned directly or indirectly by GTE is owned free and
clear of any liens, security interests, pledges, agreements, claims,
charges or encumbrances, except where such liens, security interests,
pledges, agreements, claims, charges or encumbrances would not,
individually or in the aggregate, have a Material Adverse Effect on GTE.
Except as hereafter issued or entered into in accordance with Section 6.2
hereof, there are no existing subscriptions, options, warrants, calls,
commitments, agreements, conversion rights or other rights of any character
(contingent or otherwise) to purchase or otherwise acquire from GTE or any
of GTE's Subsidiaries at any time, or upon the happening of any stated
event, any shares of the capital stock of any GTE Subsidiary, whether or
not presently issued or outstanding (except for rights of first refusal to
purchase interests in Subsidiaries which are not wholly owned by GTE), or
any of GTE's direct or indirect interests in any Material Investment, and
there are no outstanding obligations of GTE or any of GTE's Subsidiaries to
repurchase, redeem or otherwise acquire any shares of capital stock of any
of GTE's Subsidiaries or securities related to any investments, other than
such as would not, individually or in the aggregate, have a Material
Adverse Effect on GTE.
SECTION 4.4 Authority Relative to this Agreement. GTE has the
necessary corporate power and authority to enter into this Agreement and,
subject to obtaining the requisite approval of the Merger Agreement by
GTE's stockholders required by the NYBCL (the "GTE Stockholder Approval"),
to perform its obligations hereunder. The execution and delivery of this
Agreement by GTE, and the consummation by GTE of the transactions
contemplated hereby, have been duly authorized by all necessary corporate
action on the part of GTE, subject to obtaining the GTE Stockholder
Approval. This Agreement has been duly executed and delivered by GTE and,
assuming the due authorization, execution and delivery thereof by each of
Xxxx Atlantic and Merger Subsidiary, constitutes a legal, valid and binding
obligation of GTE, enforceable against it in accordance with its terms,
subject to applicable bankruptcy, insolvency, reorganization, moratorium or
other laws relating to or affecting the rights and remedies of creditors
generally and to general principles of equity (regardless of whether
considered in a proceeding in equity or at law).
SECTION 4.5 No Conflict; Required Filings and Consents. (a) Except as
described in subsection (b) below, the execution and delivery of this
Agreement by GTE do not, and the performance of this Agreement by GTE will
not, (i) violate or conflict with the Certificate of Incorporation or
Bylaws of GTE, (ii) conflict with or violate any law, regulation, court
order, judgment or decree applicable to GTE or any of its Subsidiaries or
by which any of their respective property or assets (including investments)
is bound or affected, (iii) violate or conflict with the Certificate of
Incorporation or Bylaws of any of GTE's Subsidiaries, (iv) result in any
breach of or constitute a default (or an event which with notice or lapse
of time or both would become a default) under, or give to others any rights
of termination or cancellation of, or result in the creation of a lien or
encumbrance on any of the properties or assets (including investments) of
GTE or any of its Subsidiaries pursuant to, result in the loss of any
material benefit under, or result in any modification or alteration of, or
require the consent of any other party to, any contract, instrument,
permit, license or franchise to which GTE or any of its Subsidiaries is a
party or by which GTE, any of such Subsidiaries or any of their respective
property or assets (including investments) is bound or affected, except,
in the case of clauses (ii), (iii), and (iv) above, for conflicts,
violations, breaches, defaults, results or consents which, individually or
in the aggregate, would not have a Material Adverse Effect on GTE.
(b) Except for applicable requirements, if any, of state or foreign
public utility commissions or laws or similar local or state or foreign
regulatory bodies or laws, state or foreign antitrust or foreign investment
laws and commissions, the Federal Communications Commission, stock
exchanges upon which securities of GTE are listed, the Exchange Act, the
premerger notification requirements of the HSR Act, filing and recordation
of appropriate merger or other documents as required by the NYBCL and any
filings required pursuant to any state securities or "blue sky" laws or the
rules of any applicable stock exchanges, (i) neither GTE nor any of its
Significant Subsidiaries is required to submit any notice, report or other
filing with any federal, state, local or foreign government, any court,
administrative, regulatory or other governmental agency, commission or
authority or any non-governmental U.S. or foreign self-regulatory agency,
commission or authority or any arbitral tribunal (each, a "Governmental
Entity") in connection with the execution, delivery or performance of this
Agreement and (ii) no waiver, consent, approval or authorization of any
Governmental Entity is required to be obtained by GTE or any of its
Significant Subsidiaries in connection with its execution, delivery or
performance of this Agreement.
SECTION 4.6 SEC Filings; Financial Statements. (a) GTE has filed all
forms, reports and documents required to be filed with the Securities and
Exchange Commission ("SEC") since January 1, 1995, and has heretofore
delivered or made available to Xxxx Atlantic, in the form filed with the
SEC, together with any amendments thereto, its (i) Annual Reports on Form
10-K for the fiscal years ended December 31, 1995, 1996 and 1997, (ii) all
proxy statements relating to GTE's meetings of stockholders (whether annual
or special) held since January 1, 1995, (iii) Quarterly Report on Form 10-Q
for the fiscal quarter ended March 31, 1998, and (iv) all other reports or
registration statements filed by GTE with the SEC since January 1, 1995,
including without limitation all Annual Reports on Form 11-K filed with
respect to the GTE Plans (collectively, the "GTE SEC Reports", with such
GTE SEC Reports filed with the SEC prior to the date hereof being referred
to as "GTE Filed SEC Reports"). The GTE SEC Reports (i) were prepared
substantially in accordance with the requirements of the 1933 Act or the
Exchange Act (as defined in Section 10.4 hereof), as the case may be, and
the rules and regulations promulgated under each of such respective acts,
and (ii) did not at the time they were filed contain any untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary in order to make the statements therein, in the light
of the circumstances under which they were made, not misleading.
(b) The financial statements, including all related notes and
schedules, contained in the GTE SEC Reports (or incorporated by reference
therein) fairly present the consolidated financial position of GTE and its
Subsidiaries as at the respective dates thereof and the consolidated
results of operations and cash flows of GTE and its Subsidiaries for the
periods indicated in accordance with GAAP applied on a consistent basis
throughout the periods involved (except for changes in accounting
principles disclosed in the notes thereto) and subject in the case of
interim financial statements to normal year-end adjustments.
SECTION 4.7 Absence of Certain Changes or Events. Except as disclosed
in the GTE Filed SEC Reports and in Section 4.7 of the GTE Disclosure
Schedule, since December 31, 1997, and except as permitted by this
Agreement or consented to hereunder, GTE and its Subsidiaries have not
incurred any material liability required to be disclosed on a balance sheet
of GTE and its Subsidiaries or the footnotes thereto prepared in conformity
with GAAP, except in the ordinary course of their businesses consistent
with their past practices, and there has not been any change, or any event
involving a prospective change, in the business, financial condition or
results of operations of GTE or any of its Subsidiaries which has had, or
is reasonably likely to have, a Material Adverse Effect on GTE, and GTE and
its Subsidiaries have conducted their respective businesses in the ordinary
course consistent with their past practices.
SECTION 4.8 Litigation. There are no claims, actions, suits,
proceedings or investigations pending or, to GTE's knowledge, threatened
against GTE or any of its Subsidiaries, or any properties or rights of GTE
or any of its Subsidiaries, by or before any Governmental Entity, except
for those that are not, individually or in the aggregate, reasonably likely
to have a Material Adverse Effect on GTE or prevent, materially delay or
intentionally delay the ability of GTE to consummate transactions
contemplated hereby.
SECTION 4.9 Permits; No Violation of Law. The businesses of GTE and
its Subsidiaries are not being conducted in violation of any statute, law,
ordinance, regulation, judgment, order or decree of any Governmental Entity
(including any stock exchange or other self-regulatory body) ("Legal
Requirements"), or in violation of any permits, franchises, licenses,
authorizations, certificates, variances, exemptions, orders, registrations
or consents that are granted by any Governmental Entity (including any
stock exchange or other self-regulatory body) ("Permits"), except for
possible violations none of which, individually or in the aggregate, may
reasonably be expected to have a Material Adverse Effect on GTE. No
investigation or review by any Governmental Entity (including any stock
exchange or other self-regulatory body) with respect to GTE or its
Subsidiaries in relation to any alleged violation of law or regulation is
pending or, to GTE's knowledge, threatened, nor has any Governmental Entity
(including any stock exchange or other self-regulatory body) indicated an
intention to conduct the same, except for such investigations which, if
they resulted in adverse findings, would not reasonably be expected to
have, individually or in the aggregate, a Material Adverse Effect on GTE.
Except as set forth in Section 4.9 of the GTE Disclosure Schedule, neither
GTE nor any of its Subsidiaries is subject to any cease and desist or other
order, judgment, injunction or decree issued by, or is a party to any
written Agreement, consent Agreement or memorandum of understanding with,
or is a party to any commitment letter or similar undertaking to, or is
subject to any order or directive by, or has adopted any board resolutions
at the request of, any Governmental Entity that materially restricts the
conduct of its business or which may reasonably be expected to have a
Material Adverse Effect on GTE, nor has GTE or any of its Subsidiaries been
advised that any Governmental Entity is considering issuing or requesting
any of the foregoing. None of the representations and warranties made in
this Section 4.9 are being made with respect to Environmental Laws.
SECTION 4.10 Joint Proxy Statement. None of the information supplied
or to be supplied by or on behalf of GTE for inclusion or incorporation by
reference in the registration statement to be filed with the SEC by Xxxx
Atlantic in connection with the issuance of shares of Xxxx Atlantic Common
Stock in the Merger (the "Registration Statement") will, at the time the
Registration Statement becomes effective under the 1933 Act, contain any
untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements therein,
in the light of the circumstances under which they were made, not
misleading. None of the information supplied or to be supplied by or on
behalf of GTE for inclusion or incorporation by reference in the joint
proxy statement, in definitive form, relating to the meetings of GTE and
Xxxx Atlantic stockholders to be held in connection with the Merger, or in
the related proxy and notice of meeting, or soliciting material used in
connection therewith (referred to herein collectively as the "Joint Proxy
Statement") will, at the dates mailed to stockholders and at the times of
the GTE stockholders' meeting and the Xxxx Atlantic stockholders' meeting,
contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make
the statements therein, in the light of the circumstances under which they
were made, not misleading. The Registration Statement and the Joint Proxy
Statement (except for information relating solely to Xxxx Atlantic) will
comply as to form in all material respects with the provisions of the 1933
Act and the Exchange Act and the rules and regulations promulgated
thereunder.
SECTION 4.11 Employee Matters; ERISA. (a) Except where the failure
to be true would not, individually or in the aggregate, have a Material
Adverse Effect on GTE, (i) each GTE Plan has been operated and administered
in accordance with applicable law, including but not limited to the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"), and
the Code, (ii) each GTE Plan intended to be "qualified" within the meaning
of Section 401(a) of the Code is so qualified, (iii) except as required by
COBRA, no GTE Plan provides death or medical benefits (whether or not
insured), with respect to current or former employees of GTE or of any
trade or business, whether or not incorporated, which together with GTE
would be deemed a "single employer" within the meaning of Section 4001 of
ERISA (a "GTE ERISA Affiliate"), beyond their retirement or other
termination of service, (iv) no liability under Title IV of ERISA has been
incurred by GTE or any GTE ERISA Affiliate that has not been satisfied in
full, and no condition exists that presents a material risk to GTE or any
GTE ERISA Affiliate of incurring any such liability (other than PBGC
premiums), (v) all contributions or other amounts due from GTE or any GTE
ERISA Affiliate with respect to each GTE Plan have been paid in full, (vi)
neither GTE nor any GTE ERISA Affiliate has engaged in a transaction in
connection with which GTE or any of its Subsidiaries could reasonably be
expected to be subject to either a civil penalty assessed pursuant to
Section 409 or 502(i) of ERISA or a tax imposed pursuant to Section 4975 or
4976 of the Code, (vii) to the best knowledge of GTE there are no pending,
threatened or anticipated claims (other than routine claims for benefits)
by, on behalf of or against any GTE Plan or any trusts related thereto, and
(viii) neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereby will (A) result in any
payment (including, without limitation, severance, unemployment
compensation, golden parachute or otherwise) becoming due to any director
or any employee of GTE or any of its Subsidiaries under any GTE Plan or
otherwise, (B) materially increase any benefits otherwise payable under any
GTE Plan or (C) result in any acceleration of the time of payment or
vesting of any such benefits.
(b) For purposes of this Agreement, "GTE Plan" shall mean each
deferred compensation, bonus or other incentive compensation, stock
purchase, stock option or other equity compensation plan, program,
agreement or arrangement; each severance or termination pay, medical,
surgical, hospitalization, life insurance or other "welfare" plan, fund or
program (within the meaning of section 3(1) of ERISA); each profit-sharing,
stock bonus or other "pension" plan, fund or program (within the meaning of
section 3(2) of ERISA); each employment, termination or severance
agreement; and each other employee benefit plan, fund, program, agreement
or arrangement, in each case, that is sponsored, maintained or contributed
to or required to be contributed to by GTE or by any GTE ERISA Affiliate
or to which GTE or any GTE ERISA Affiliate is party, whether written or
oral, for the benefit of any employee or former employee of GTE or any GTE
ERISA Affiliate.
SECTION 4.12 Labor Matters. Neither GTE nor any of its Subsidiaries
is the subject of any material proceeding asserting that it 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
pending or, to the actual knowledge of its executive officers, threatened
in writing, nor has there been for the past five years, any labor strike,
dispute, walkout, work stoppage, slow-down or lockout involving it or any
of its Subsidiaries, except in each case as is not, individually or in the
aggregate, reasonably likely to have a Material Adverse Effect on GTE.
SECTION 4.13 Environmental Matters. Except for such matters that,
individually or in the aggregate, are not reasonably likely to have a
Material Adverse Effect on GTE: (i) each of GTE and its Subsidiaries has
complied with all applicable Environmental Laws (as defined below); (ii)
the properties currently owned or operated by it or any of its Subsidiaries
(including soils, groundwater, surface water, buildings or other
structures) are not contaminated with any Hazardous Substances (as defined
below); (iii) the properties formerly owned or operated by it or any of its
Subsidiaries were not contaminated with Hazardous Substances during the
period of ownership or operation by it or any of its Subsidiaries; (iv)
neither it nor any of its Subsidiaries is subject to liability for any
Hazardous Substance disposal or contamination on any third party property;
(v) neither it nor any Subsidiary has been associated with any release or
threat of release of any Hazardous Substance; (vi) neither it nor any
Subsidiary has received any notice, demand, letter, claim or request for
information alleging that it or any of its Subsidiaries may be in violation
of or liable under any Environmental Law (including any claims relating to
electromagnetic fields or microwave transmissions); (vii) neither it nor
any of its Subsidiaries is subject to any orders, decrees, injunctions or
other arrangements with any Governmental Entity or is subject to any
indemnity or other agreement with any third party relating to liability
under any Environmental Law or relating to Hazardous Substances; and (viii)
there are not circumstances or conditions involving it or any of its
Subsidiaries that could reasonably be expected to result in any claims,
liability, investigations, costs or restrictions on the ownership, use, or
transfer of any of its properties pursuant to any Environmental Law.
As used herein and in Section 5.13, the term "Environmental Law"
means any law relating to: (A) the protection, investigation or
restoration of the environment, health, safety, or natural resources, (B)
the handling, use, presence, disposal, release or threatened release of any
Hazardous Substance or (C) noise, odor, wetlands, pollution, contamination
or any injury or threat of injury to persons or property in connection with
any Hazardous Substance.
As used herein and in Section 5.13, the term "Hazardous Substance"
means any substance that is: listed, classified or regulated pursuant to
any Environmental Law, including any petroleum product or by-product,
asbestos-containing material, lead-containing paint or plumbing,
polychlorinated biphenyls, radioactive materials or radon.
SECTION 4.14 Board Action; Vote Required; Applicability of Section
912. (a) The Board of Directors of GTE has unanimously determined that the
transactions contemplated by this Agreement and the Option Agreements are
in the best interests of GTE and its stockholders and has resolved to
recommend to such stockholders that they vote in favor thereof.
(b) The approval of the Merger Agreement by two-thirds of the votes of
all outstanding shares entitled to vote thereon by all holders of GTE
Common Stock is the only vote of the holders of any class or series of the
capital stock of GTE required to approve this Agreement, the Merger and the
other transactions contemplated hereby. The provisions of Section 11.A of
the Certificate of Incorporation of GTE will not apply to the transactions
contemplated by this Agreement and the Option Agreements.
(c) The provisions of Section 912 of the NYBCL will not, assuming the
accuracy of the representations contained in Section 5.20 hereof (without
giving effect to the knowledge qualification therein), apply to this
Agreement or any of the transactions contemplated hereby.
SECTION 4.15 Opinions of Financial Advisors. GTE has received the
opinions of Xxxxxxx, Xxxxx & Co. ("Xxxxxxx Sachs"), and Xxxxxxx Xxxxx
Xxxxxx Inc. ("Xxxxxxx Xxxxx Barney"), each dated July 27, 1998, to the
effect that, as of such date, the Exchange Ratio is fair from a financial
point of view to the holders of GTE Common Stock.
SECTION 4.16 Brokers. Except for Xxxxxxx Xxxxx, Xxxxxxx Xxxxx Xxxxxx
and Xxxxx Securities Inc., the arrangements with which have been disclosed
to Xxxx Atlantic prior to the date hereof, which have been engaged by GTE,
no broker, finder or investment banker is entitled to any brokerage,
finder's, investment banking or other fee or commission in connection with
the transactions contemplated by this Agreement and the Option Agreements
based upon arrangements made by or on behalf of GTE or any of its
Subsidiaries.
SECTION 4.17 Tax Matters. Except as set forth in Section 4.17 of the
GTE Disclosure Schedule:
(a) All material federal, state, local and foreign Tax Returns (as
defined herein) required to have been filed by GTE or its Subsidiaries have
been filed with the appropriate governmental authorities by the due date
thereof including extensions;
(b) The Tax Returns referred to in subpart (a) of this Section 4.17
correctly and completely reflect all material Tax liabilities of GTE and
its Subsidiaries required to be shown thereon;
(c) All material Taxes (as defined herein) shown as due on those Tax
Returns referred to in subpart (a) of this Section 4.17 as well as any
material foreign withholding Taxes imposed on or in respect of any amounts
paid to or by GTE or any of its Subsidiaries, whether or not such amounts
or withholding Taxes are referred to or shown on any Tax Returns referred
to in Section 4.17 (a) hereof, have been fully paid or adequately reflected
as a liability on GTE's or its Subsidiaries' financial statements included
in the GTE SEC Reports;
(d) With respect to any period for which Tax Returns have not yet been
filed, or for which Taxes are not yet due or owing, GTE and its
Subsidiaries have made due and sufficient accruals for such Taxes in their
respective books and records and financial statements;
(e) Neither GTE nor any of its affiliates has taken, agreed to take or
omitted to take any action that would prevent or impede the Merger from
qualifying as a tax-free reorganization under Section 368 of the Code;
(f) No deficiencies for any Taxes have been proposed, asserted or
assessed against GTE or any of its Subsidiaries that are not adequately
reserved for under GAAP, except for deficiencies that individually or in
the aggregate would not have a Material Adverse Effect on GTE;
(g) GTE is not aware of any material liens for Taxes upon any assets of
GTE or any of its Subsidiaries apart from liens for Taxes not yet due and
payable; and
(h) As used in this Agreement, "Taxes" shall include all (x) federal,
state, local or foreign income, property, sales, excise, use, occupation,
service, transfer, payroll, franchise, withholding and other taxes or
similar governmental charges, fees, levies or other assessments including
any interest, penalties or additions with respect thereto, (y) liability
for the payment of any amounts of the type described in clause (x) as a
result of being a member of an affiliated, consolidated, combined or
unitary group, and (z) liability for the payment of any amounts as a result
of being party to any tax sharing agreement or as a result of any express
or implied obligation to indemnify any other person with respect to the
payment of any amounts of the type described in clause (x) or (y). As used
in this Agreement, "Tax Return" shall include any declaration, return,
report, schedule, certificate, statement or other similar document
(including relating or supporting information) required to be filed or,
where none is required to be filed with a taxing authority, the statement
or other document issued by a taxing authority in connection with any Tax,
including any information return, claim for refund, amended return or
declaration of estimated Tax.
SECTION 4.18 Intellectual Property; Year 2000.
(a) As used in this Agreement, "GTE Intellectual Property" means all of
the following which are necessary to conduct the business of GTE and its
Subsidiaries as presently conducted or as currently proposed to be
conducted: (i) trademarks, trade dress, service marks, copyrights, logos,
trade names, corporate names and all registrations and applications to
register the same; (ii) patents and pending patent applications; (iii) all
computer software programs, databases and compilations (collectively,
"Computer Software"); (iv) all technology, know-how and trade secrets; and
(v) all material licenses and agreements to which GTE or any of its
Subsidiaries is a party which relate to any of the foregoing.
(b) GTE or its Subsidiaries owns or has the right to use, sell or
license all GTE Intellectual Property, free and clear of all liens or
encumbrances, and all registrations of GTE Intellectual Property are valid
and enforceable and have been duly recorded and maintained, except, in each
case, as would not, individually or in the aggregate, have a Material
Adverse Effect on GTE.
(c) To the knowledge of GTE, the conduct of GTE's and its Subsidiaries'
business and the use of the GTE Intellectual Property does not materially
infringe, violate or misuse any intellectual property rights or any other
proprietary right of any person or give rise to any obligations to any
person as a result of co-authorship, and neither GTE nor any of its
Subsidiaries has received any notice, not satisfactorily resolved, of any
claims or threats that GTE's or its Subsidiaries' use of any of the GTE
Intellectual Property materially infringes, violates or misuses, or is
otherwise in conflict with any intellectual property or proprietary rights
of any third party or that any of the GTE Intellectual Property is invalid
or unenforceable that would, individually or in the aggregate, have a
Material Adverse Effect on GTE.
(d) GTE and its Subsidiaries have used reasonable efforts to maintain
the confidentiality of their trade secrets and other confidential GTE
Intellectual Property.
(e) GTE has undertaken a concerted effort to ensure that all of the
Computer Software, computer firmware, computer hardware (whether general or
special purpose), and other similar or related items of automated,
computerized, and/or software system(s) that are to be used or relied on by
GTE or by any of its Subsidiaries in the conduct of their respective
businesses will not malfunction, will not cease to function, will not
generate incorrect data, and will not provide incorrect results when
processing, providing and/or receiving (i) date-related data into and
between the twentieth and twenty-first centuries and (ii) date-related data
in connection with any valid date in the twentieth and twenty-first
centuries. GTE reasonably believes that such effort will be successful.
SECTION 4.19 Insurance. Except as set forth in Section 4.19 of the
GTE Disclosure Schedule, each of GTE and each of its Significant
Subsidiaries is, and has been continuously since January 1, 1987 (or such
later date as such Significant Subsidiary was organized or acquired by
GTE), insured with financially responsible insurers in such amounts and
against such risks and losses as are customary for companies conducting the
business as conducted by GTE and its Subsidiaries during such time period.
Except as set forth in Section 4.19 of the GTE Disclosure Schedule, since
January 1, 1995, neither GTE nor any of its Subsidiaries has received
notice of cancellation or termination with respect to any material
insurance policy of GTE or its Subsidiaries. The insurance policies of GTE
and its Subsidiaries are valid and enforceable policies.
SECTION 4.20 Ownership of Securities. As of the date hereof, neither
GTE nor, to GTE's knowledge, any of its affiliates or associates (as such
terms are defined under the Exchange Act), (i) beneficially owns, directly
or indirectly, or (ii) is party to any agreement, arrangement or
understanding for the purpose of acquiring, holding, voting or disposing
of, in each case, shares of capital stock of Xxxx Atlantic, which in the
aggregate represent 10% or more of the outstanding shares of Xxxx Atlantic
Common Stock (other than shares held by GTE Plans and the Xxxx Atlantic
Option Agreement).
SECTION 4.21 Certain Contracts. (a) All contracts described in Item
601(b)(10) of Regulation S-K to which GTE or its Subsidiaries is a party or
may be bound ("GTE Contracts") have been filed as exhibits to, or
incorporated by reference in, GTE's Annual Report on Form 10-K for the year
ended December 31, 1997. All GTE Contracts are valid and in full force and
effect on the date hereof except to the extent they have previously expired
in accordance with their terms or if the failure to be in full force and
effect, individually and in the aggregate, would not reasonably be expected
to have a Material Adverse Effect on GTE. Neither GTE nor any of its
Subsidiaries has violated any provision of, or committed or failed to
perform any act which with or without notice, lapse of time or both would
constitute a default under the provisions of, any GTE Contract, except in
each case for those GTE Contracts which, individually and in the aggregate,
would not reasonably be expected to result in a Material Adverse Effect on
GTE.
(b) Set forth in Section 4.21 of the GTE Disclosure Schedule is a list
of each contract, agreement or arrangement to which GTE or any of its
Subsidiaries is a party or may be bound which is an arrangement limiting or
restraining Xxxx Atlantic, GTE, any Xxxx Atlantic or GTE Subsidiary or any
successor thereto from engaging or competing in any business which has, or
could reasonably be expected to have in the foreseeable future, a Material
Adverse Effect on GTE, or to GTE's knowledge, on Xxxx Atlantic.
SECTION 4.22 Rights Agreement. (a) Neither Xxxx Atlantic nor Merger
Subsidiary shall be deemed to be an Acquiring Person (as such term is
defined in the Rights Agreement) and the Distribution Date (as defined in
the Rights Agreement) shall not be deemed to occur and the Rights will not
separate from GTE Common Stock, as a result of entering into this Agreement
or the Option Agreements or consummating the Merger and/or the other
transactions contemplated hereby or thereby.
(b) GTE has taken all necessary action with respect to all of the
outstanding Rights (as defined in the Rights Agreement) so that, as of
immediately prior to the Effective Time, as a result of entering into this
Agreement or consummating the Merger and/or the other transactions
contemplated by this Agreement and the Option Agreements, (i) neither GTE
nor Xxxx Atlantic will have any obligations under the Rights or the Rights
Agreement and (ii) the holders of the Rights will have no rights under the
Rights or the Rights Agreement.
ARTICLE V REPRESENTATIONS AND
WARRANTIES OF XXXX ATLANTIC
Except as expressly disclosed in the Xxxx Atlantic Filed SEC Reports (as
defined below) (including all exhibits referred to therein) or as set forth
in the disclosure schedule delivered by Xxxx Atlantic to GTE on the date
hereof (the "Xxxx Atlantic Disclosure Schedule" and together with the GTE
Disclosure Schedule, the "Disclosure Schedules") (each section of which
qualifies the correspondingly numbered representation and warranty or
covenant as specified therein), Xxxx Atlantic hereby represents and
warrants to GTE as follows:
SECTION 5.1 Organization and Qualification; Subsidiaries. Each of
Xxxx Atlantic and each of its Significant Subsidiaries is a corporation
duly organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation or organization. Each of the Xxxx Atlantic
Subsidiaries which is not a Significant Subsidiary is duly organized,
validly existing and in good standing under the laws of its jurisdiction of
incorporation or organization, except for such failure which, when taken
together with all other such failures, would not reasonably be expected to
have a Material Adverse Effect on Xxxx Atlantic. Each of Xxxx Atlantic and
its Subsidiaries has the requisite corporate power and authority and any
necessary governmental authority, franchise, license or permit to own,
operate or lease the properties that it purports to own, operate or lease
and to carry on its business as it is now being conducted, and is duly
qualified as a foreign corporation to do business, and is in good standing,
in each jurisdiction where the character of its properties owned, operated
or leased or the nature of its activities makes such qualification
necessary, except for such failure which, when taken together with all
other such failures, would not reasonably be expected to have a Material
Adverse Effect on Xxxx Atlantic.
SECTION 5.2 Certificate of Incorporation and Bylaws. Xxxx Atlantic
has heretofore furnished, or otherwise made available, to GTE a complete
and correct copy of the Certificate of Incorporation and the Bylaws, each
as amended to the date hereof, of Xxxx Atlantic. Such Certificate of
Incorporation and Bylaws are in full force and effect. Neither Xxxx
Atlantic nor any of its Significant Subsidiaries is in violation of any of
the provisions of its respective Certificate of Incorporation or, in any
material respect, its Bylaws.
SECTION 5.3 Capitalization. (a) The authorized capital stock of Xxxx
Atlantic consists of (i) 250,000,000 shares of Series A Preferred Stock,
par value $.10 per share, none of which are outstanding or reserved for
issuance, and (ii) 2,250,000,000 shares of Xxxx Atlantic Common Stock, of
which, as of June 30, 1998, (A) 1,553,473,710 shares were issued and
outstanding, (B) 22,722,614 shares were held in the treasury of Xxxx
Atlantic and (C) 80,392,512 shares were issuable upon the exercise of
options outstanding under the Xxxx Atlantic option plans listed in Section
5.3 of the Xxxx Atlantic Disclosure Schedule. Except for Xxxx Atlantic
Equity Rights issued to Xxxx Atlantic employees in the ordinary course of
business or, after the date hereof, as permitted by Section 6.2 hereof or
pursuant to the Xxxx Atlantic Option Agreement, (i) since June 30, 1998, no
shares of Xxxx Atlantic Common Stock have been issued, except upon the
exercise of options and rights described in the immediately preceding
sentence, and (ii) there are no outstanding Xxxx Atlantic Equity Rights.
For purposes of this Agreement, "Xxxx Atlantic Equity Rights" shall mean
subscriptions, options, warrants, calls, commitments, agreements,
conversion rights or other rights of any character (contingent or
otherwise) to purchase or otherwise acquire , any shares of the capital
stock of Xxxx Atlantic from Xxxx Atlantic or any of Xxxx Atlantic's
Subsidiaries at any time, or upon the happening of any stated event,
excluding the GTE Stock Option. Section 5.3 of the Xxxx Atlantic
Disclosure Schedule sets forth a complete and accurate list of certain
information with respect to all outstanding Xxxx Atlantic Equity Rights as
of June 30, 1998.
(b) Except as set forth in Section 5.3 of the Xxxx Atlantic Disclosure
Schedule, pursuant to the GTE Stock Option or, after the date hereof, as
permitted by Section 6.2 hereof, there are no outstanding obligations of
Xxxx Atlantic or any of Xxxx Atlantic's Subsidiaries to repurchase, redeem
or otherwise acquire any shares of capital stock of Xxxx Atlantic.
(c) All of the issued and outstanding shares of Xxxx Atlantic Common
Stock are validly issued, fully paid and nonassessable.
(d) All of the outstanding capital stock of each of Xxxx Atlantic's
Significant Subsidiaries, and all of the outstanding capital stock of Xxxx
Atlantic's Subsidiaries owned directly or indirectly by Xxxx Atlantic, is
duly authorized, validly issued, fully paid and nonassessable. All of the
outstanding capital stock of each of Xxxx Atlantic's Significant
Subsidiaries is owned by Xxxx Atlantic free and clear of any liens,
security interests, pledges, agreements, claims, charges or encumbrances.
All of the outstanding capital stock of Xxxx Atlantic's Subsidiaries owned
directly or indirectly by Xxxx Atlantic is owned free and clear of any
liens, security interests, pledges, agreements, claims, charges or
encumbrances, except where such liens, security interests, pledges,
agreements, claims, charges or encumbrances would not, individually or in
the aggregate, have a Material Adverse Effect on Xxxx Atlantic. Except as
hereafter issued or entered into in accordance with Section 6.2 hereof,
there are no existing subscriptions, options, warrants, calls, commitments,
agreements, conversion rights or other rights of any character (contingent
or otherwise) to purchase or otherwise acquire from Xxxx Atlantic or any of
Xxxx Atlantic's Subsidiaries at any time, or upon the happening of any
stated event, any shares of the capital stock of any Xxxx Atlantic
Subsidiary, whether or not presently issued or outstanding (except for
rights of first refusal to purchase interests in Subsidiaries which are not
wholly owned by Xxxx Atlantic), or any of GTE's direct or indirect
interests in any Material Investment, and there are no outstanding
obligations of Xxxx Atlantic or any of Xxxx Atlantic's Subsidiaries to
repurchase, redeem or otherwise acquire any shares of capital stock of any
of Xxxx Atlantic's Subsidiaries or securities related to any investments,
other than such as would not, individually or in the aggregate, have a
Material Adverse Effect on GTE.
SECTION 5.4 Authority Relative to this Agreement. Xxxx Atlantic has
the necessary corporate power and authority to enter into this Agreement
and, subject to obtaining the requisite stockholder approval of the
issuance (the "Stock Issuance") of Xxxx Atlantic Common Stock pursuant to
the Merger Agreement and the Certificate Amendment (collectively, the "Xxxx
Atlantic Stockholder Approval"), to perform its obligations hereunder. The
execution and delivery of this Agreement by Xxxx Atlantic and the
consummation by Xxxx Atlantic of the transactions contemplated hereby have
been duly authorized by all necessary corporate action on the part of Xxxx
Atlantic, subject to obtaining the Xxxx Atlantic Stockholder Approval.
This Agreement has been duly executed and delivered by Xxxx Atlantic and,
assuming the due authorization, execution and delivery thereof by the other
Parties, constitutes a legal, valid and binding obligation of Xxxx
Atlantic, enforceable against it in accordance with its terms, subject to
applicable bankruptcy, insolvency, reorganization, moratorium or other laws
relating to or affecting the rights and remedies of creditors generally and
to general principles of equity (regardless of whether considered in a
proceeding in equity or at law).
SECTION 5.5 No Conflict; Required Filings and Consents. (a) Except as
described in subsection (b) below, the execution and delivery of this
Agreement by Xxxx Atlantic do not, and the performance of this Agreement by
Xxxx Atlantic will not, (i) violate or conflict with the Certificate of
Incorporation or Bylaws of Xxxx Atlantic, (ii) conflict with or violate any
law, regulation, court order, judgment or decree applicable to Xxxx
Atlantic or any of its Subsidiaries or by which any of their respective
property or assets (including investments) is bound or affected, (iii)
violate or conflict with the Certificate of Incorporation or Bylaws of any
of Xxxx Atlantic's Subsidiaries, or (iv) result in any breach of or
constitute a default (or an event which with notice or lapse of time or
both would become a default) under, or give to others any rights of
termination or cancellation of, or result in the creation of a lien or
encumbrance on any of the properties or assets (including investments) of
Xxxx Atlantic or any of its Subsidiaries pursuant to, result in the loss of
any material benefit under, or result in any modification or alteration of,
or require the consent of any other party to, any contract, instrument,
permit, license or franchise to which Xxxx Atlantic or any of its
Subsidiaries is a party or by which Xxxx Atlantic, any of such Subsidiaries
or any of their respective property or assets (including investments) is
bound or affected, except, in the case of clauses (ii), (iii) and (iv)
above, for conflicts, violations, breaches, defaults, results or consents
which, individually or in the aggregate, would not have a Material Adverse
Effect on Xxxx Atlantic.
(b) Except for applicable requirements, if any, of state or foreign
public utility commissions or laws or similar local or state foreign
regulatory bodies or laws, state or foreign antitrust or foreign investment
laws and commissions, the Federal Communications Commission, stock
exchanges upon which the securities of Xxxx Atlantic are listed, the
Exchange Act, the premerger notification requirements of the HSR Act,
filing and recordation of appropriate merger or other documents as required
by the NYBCL and any filings required pursuant to any state securities or
"blue sky" laws or the rules of any applicable stock exchanges, (i) neither
Xxxx Atlantic nor any of its Significant Subsidiaries is required to submit
any notice, report or other filing with any Governmental Entity in
connection with the execution, delivery or performance of this Agreement
and (ii) no waiver, consent, approval or authorization of any Governmental
Entity is required to be obtained by Xxxx Atlantic or any of its
Significant Subsidiaries in connection with its execution, delivery or
performance of this Agreement
SECTION 5.6 SEC Filings; Financial Statements. (a) Xxxx Atlantic has
filed all forms, reports and documents required to be filed with the SEC
since January 1, 1995, and has heretofore delivered or made available to
GTE, in the form filed with the SEC, together with any amendments thereto,
its (i) Annual Reports on Form 10-K for the fiscal years ended December 31,
1995, 1996 and 1997, (ii) all proxy statements relating to Xxxx Atlantic's
meetings of stockholders (whether annual or special) held since January 1,
1995, (iii) Quarterly Report on Form 10-Q for the fiscal quarter ended
March 31, 1998, and (iv) all other reports or registration statements filed
by Xxxx Atlantic with the SEC since January 1, 1995, including without
limitation all Annual Reports on Form 11-K filed with respect to the Xxxx
Atlantic Plans (collectively, the "Xxxx Atlantic SEC Reports", with such
Xxxx Atlantic SEC Reports filed with the SEC prior to the date hereof being
referred to as "Xxxx Atlantic Filed SEC Reports"). The Xxxx Atlantic SEC
Reports (i) were prepared substantially in accordance with the requirements
of the 1933 Act or the Exchange Act, as the case may be, and the rules and
regulations promulgated under each of such respective acts, and (ii) did
not at the time they were filed contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein or
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
(b) The financial statements, including all related notes and
schedules, contained in the Xxxx Atlantic SEC Reports (or incorporated by
reference therein) fairly present the consolidated financial position of
Xxxx Atlantic and its Subsidiaries as at the respective dates thereof and
the consolidated results of operations and cash flows of Xxxx Atlantic and
its Subsidiaries for the periods indicated in accordance with GAAP applied
on a consistent basis throughout the periods involved (except for changes
in accounting principles disclosed in the notes thereto) and subject in the
case of interim financial statements to normal year-end adjustments.
SECTION 5.7 Absence of Certain Changes or Events. Except as disclosed
in the Xxxx Atlantic Filed SEC Reports and in Section 5.7 of the Xxxx
Atlantic Disclosure Schedule, since December 31, 1997, and except as
permitted by this Agreement or consented to hereunder, Xxxx Atlantic and
its Subsidiaries have not incurred any material liability required to be
disclosed on a balance sheet of Xxxx Atlantic and its Subsidiaries or the
footnotes thereto prepared in conformity with GAAP, except in the ordinary
course of their businesses consistent with their past practices, and there
has not been any change, or any event involving a prospective change, in
the business, financial condition or results of operations of Xxxx Atlantic
or any of its Subsidiaries which has had, or is reasonably likely to have,
a Material Adverse Effect on Xxxx Atlantic, and Xxxx Atlantic and its
Subsidiaries have conducted their respective businesses in the ordinary
course consistent with their past practices.
SECTION 5.8 Litigation. There are no claims, actions, suits,
proceedings or investigations pending or, to Xxxx Atlantic's knowledge,
threatened against Xxxx Atlantic or any of its Subsidiaries, or any
properties or rights of Xxxx Atlantic or any of its Subsidiaries, by or
before any Governmental Entity, except for those that are not, individually
or in the aggregate, reasonably likely to have a Material Adverse Effect on
Xxxx Atlantic or prevent, materially delay or intentionally delay the
ability of GTE to consummate the transactions contemplated hereby.
SECTION 5.9 Permits; No Violation of Law. The businesses of Xxxx
Atlantic and its Subsidiaries are not being conducted in violation of any
Legal Requirements or in violation of any Permits, except for possible
violations none of which, individually or in the aggregate, may reasonably
be expected to have a Material Adverse Effect on Xxxx Atlantic. No
investigation or review by any Governmental Entity (including any stock
exchange or other self-regulatory body) with respect to Xxxx Atlantic or
its Subsidiaries in relation to any alleged violation of law or regulation
is pending or, to Xxxx Atlantic's knowledge, threatened, nor has any
Governmental Entity (including any stock exchange or other self-regulatory
body) indicated an intention to conduct the same, except for such
investigations which, if they resulted in adverse findings, would not
reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect on Xxxx Atlantic. Except as set forth in Section
5.9 of the Xxxx Atlantic Disclosure Schedule, neither Xxxx Atlantic nor any
of its Subsidiaries is subject to any cease and desist or other order,
judgment, injunction or decree issued by, or is a party to any written
Agreement, consent Agreement or memorandum of understanding with, or is a
party to any commitment letter or similar undertaking to, or is subject to
any order or directive by, or has adopted any board resolutions at the
request of, any Governmental Entity that materially restricts the conduct
of its business or which may reasonably be expected to have a Material
Adverse Effect on Xxxx Atlantic, nor has Xxxx Atlantic or any of its
Subsidiaries been advised that any Governmental Entity is considering
issuing or requesting any of the foregoing. None of the representations
and warranties made in this Section 5.9 are being made with respect to
Environmental Laws.
SECTION 5.10 Joint Proxy Statement. None of the information supplied
or to be supplied by or on behalf of Xxxx Atlantic for inclusion or
incorporation by reference in the Registration Statement will, at the time
the Registration Statement becomes effective under the 1933 Act, contain
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements therein,
in the light of the circumstances under which they were made, not
misleading. None of the information supplied or to be supplied by or on
behalf of Xxxx Atlantic for inclusion or incorporation by reference in the
Joint Proxy Statement will, at the dates mailed to stockholders and at the
times of the GTE stockholders' meeting and the Xxxx Atlantic stockholders'
meeting, contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary in order to
make the statements therein, in the light of the circumstances under which
they were made, not misleading. The Registration Statement and the Joint
Proxy Statement (except for information relating solely to GTE) will comply
as to form in all material respects with the provisions of the 1933 Act and
the Exchange Act and the rules and regulations promulgated thereunder.
SECTION 5.11 Employee Matters; ERISA. (a) Except where the failure
to be true would not, individually or in the aggregate, have a Material
Adverse Effect on Xxxx Atlantic, (i) each Xxxx Atlantic Plan has been
operated and administered in accordance with applicable law, including but
not limited to ERISA and the Code, (ii) each Xxxx Atlantic Plan intended to
be "qualified" within the meaning of Section 401(a) of the Code is so
qualified, (iii) except as required by COBRA, no Xxxx Atlantic Plan
provides death or medical benefits (whether or not insured), with respect
to current or former employees of Xxxx Atlantic or of any trade or
business, whether or not incorporated, which together with Xxxx Atlantic
would be deemed a "single employer" within the meaning of Section 4001 of
ERISA (a "Xxxx Atlantic ERISA Affiliate"), beyond their retirement or other
termination of service, (iv) no liability under Title IV of ERISA has been
incurred by Xxxx Atlantic or any Xxxx Atlantic ERISA Affiliate that has not
been satisfied in full, and no condition exists that presents a material
risk to Xxxx Atlantic or any Xxxx Atlantic ERISA Affiliate of incurring any
such liability (other than PBGC premiums), (v) all contributions or other
amounts due from Xxxx Atlantic or any Xxxx Atlantic ERISA Affiliate with
respect to each Xxxx Atlantic Plan have been paid in full, (vi) neither
Xxxx Atlantic nor any Xxxx Atlantic ERISA Affiliate has engaged in a
transaction in connection with which Xxxx Atlantic or any of its
Subsidiaries could reasonably be expected to be subject to either a civil
penalty assessed pursuant to Section 409 or 502(i) of ERISA or a tax
imposed pursuant to Section 4975 or 4976 of the Code, (vii) to the best
knowledge of Xxxx Atlantic there are no pending, threatened or anticipated
claims (other than routine claims for benefits) by, on behalf of or against
any Xxxx Atlantic Plan or any trusts related thereto, and (viii) neither
the execution and delivery of this Agreement nor the consummation of the
transactions contemplated hereby will (A) result in any payment (including,
without limitation, severance, unemployment compensation, golden parachute
or otherwise) becoming due to any director or any employee of Xxxx Atlantic
or any of its Subsidiaries under any Xxxx Atlantic Plan or otherwise, (B)
materially increase any benefits otherwise payable under any Xxxx Atlantic
PlanG or (C) result in any acceleration of the time of payment or vesting
of any such benefits.
(b) For purposes of this Agreement,"Xxxx Atlantic Plan" shall mean
each deferred compensation, bonus or other incentive compensation, stock
purchase, stock option or other equity compensation plan, program,
agreement or arrangement; each severance or termination pay, medical,
surgical, hospitalization, life insurance or other "welfare" plan, fund or
program (within the meaning of section 3(1) of ERISA); each profit-sharing,
stock bonus or other "pension" plan, fund or program (within the meaning of
section 3(2) of ERISA); each employment, termination or severance
agreement; and each other employee benefit plan, fund, program, agreement
or arrangement, in each case, that is sponsored, maintained or contributed
to or required to be contributed to by Xxxx Atlantic or by any Xxxx
Atlantic ERISA Affiliate or to which Xxxx Atlantic or any Xxxx Atlantic
ERISA Affiliate is party, whether written or oral, for the benefit of any
employee or former employee of Xxxx Atlantic or any Xxxx Atlantic ERISA
Affiliate.
SECTION 5.12 Labor Matters. Neither Xxxx Atlantic nor any of its
Subsidiaries is the subject of any material proceeding asserting that it 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 pending or, to the actual knowledge of its executive officers,
threatened in writing, nor has there been for the past five years, any
labor strike, dispute, walkout, work stoppage, slow-down or lockout
involving it or any of its Subsidiaries, except in each case as is not,
individually or in the aggregate, reasonably likely to have a Material
Adverse Effect on Xxxx Atlantic.
SECTION 5.13 Environmental Matters. Except for such matters that,
individually or in the aggregate, are not reasonably likely to have a
Material Adverse Effect on Xxxx Atlantic: (i) each of Xxxx Atlantic and
its Subsidiaries has complied with all applicable Environmental Laws (as
defined below); (ii) the properties currently owned or operated by it or
any of its Subsidiaries (including soils, groundwater, surface water,
buildings or other structures) are not contaminated with any Hazardous
Substances (as defined below); (iii) the properties formerly owned or
operated by it or any of its Subsidiaries were not contaminated with
Hazardous Substances during the period of ownership or operation by it or
any of its Subsidiaries; (iv) neither it nor any of its Subsidiaries is
subject to liability for any Hazardous Substance disposal or contamination
on any third party property; (v) neither it nor any Subsidiary has been
associated with any release or threat of release of any Hazardous
Substance; (vi) neither it nor any Subsidiary has received any notice,
demand, letter, claim or request for information alleging that it or any of
its Subsidiaries may be in violation of or liable under any Environmental
Law (including any claims relating to electromagnetic fields or microwave
transmissions); (vii) neither it nor any of its Subsidiaries is subject to
any orders, decrees, injunctions or other arrangements with any
Governmental Entity or is subject to any indemnity or other agreement with
any third party relating to liability under any Environmental Law or
relating to Hazardous Substances; and (viii) there are not circumstances or
conditions involving it or any of its Subsidiaries that could reasonably be
expected to result in any claims, liability, investigations, costs or
restrictions on the ownership, use, or transfer of any of its properties
pursuant to any Environmental Law.
No representation is made by Xxxx Atlantic in this Section 5.13 for
which neither Xxxx Atlantic nor any of its Subsidiaries is (or would be, if
a claim were brought in a formal proceeding) a named defendant, but as to
which Xxxx Atlantic or any of its Subsidiaries may be liable for an
allocable share of any judgment rendered pursuant to the POR. No
representation is made by Xxxx Atlantic in subsection (i) of this Section
5.13 as to properties owned, leased or operated by AT&T or any of its
Subsidiaries except for such properties which are, or at any time since
November 1, 1983 were, owned, leased or operated by Xxxx Atlantic or any of
its Subsidiaries.
SECTION 5.14 Board Action; Vote Required. (a) The Board of Directors
of Xxxx Atlantic has unanimously determined that the transactions
contemplated by this Agreement and the Option Agreements are in the best
interests of Xxxx Atlantic and its stockholders and has resolved to
recommend to such stockholders that they vote in favor thereof.
(b) The approval of the Certificate Amendment by a majority of the
votes entitled to be cast by all holders of Xxxx Atlantic Common Stock and
the approval of the Stock Issuance pursuant thereto by a majority of the
votes cast thereon, provided that the total votes cast thereon represents
over 50% in interest of all securities of Xxxx Atlantic entitled to vote
thereon, are the only votes of the holders of any class or series of the
capital stock of Xxxx Atlantic required to approve this Agreement, the
Merger, the Certificate Amendment, the Stock Issuance and the other
transactions contemplated hereby.
SECTION 5.15 Opinions of Financial Advisors. Xxxx Atlantic has
received the opinions of Bear, Xxxxxxx & Co. Inc. ("Bear Xxxxxxx") and
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx Incorporated ("Xxxxxxx Xxxxx"), each
dated July 27, 1998, to the effect that, as of such date, the Exchange
Ratio is fair from a financial point of view to the holders of Xxxx
Atlantic Common Stock.
SECTION 5.16 Brokers. Except for Bear Xxxxxxx, Xxxxxxx Xxxxx and
Xxxxxx Xxxxxxx Xxxx Xxxxxx, the arrangements with which have been disclosed
to GTE prior to the date hereof, which have been engaged by Xxxx Atlantic,
no broker, finder or investment banker is entitled to any brokerage,
finder's, investment banking or other fee or commission in connection with
the transactions contemplated by this Agreement and the Option Agreements
based upon arrangements made by or on behalf of Xxxx Atlantic or any of its
Subsidiaries.
SECTION 5.17 Tax Matters. Except as set forth in Section 5.17 of the
Xxxx Atlantic Disclosure Schedule:
(a) All material federal, state, local and foreign Tax Returns required
to have been filed by Xxxx Atlantic or its Subsidiaries have been filed
with the appropriate governmental authorities by the due date thereof
including extensions;
(b) The Tax Returns referred to in subpart (a) of this Section 5.17
correctly and completely reflect all material Tax liabilities of Xxxx
Atlantic and its Subsidiaries required to be shown thereon;
(c) All material Taxes shown as due on those Tax Returns referred to in
subpart (a) of this Section 5.17, as well as any material foreign
withholding Taxes imposed on or in respect of any amounts paid to or by
Xxxx Atlantic or any of its Subsidiaries, whether or not such amounts or
withholding Taxes are referred to or shown on any Tax Returns referred to
in Section 5.17 (a) hereof, have been fully paid or adequately reflected as
a liability on Xxxx Atlantic's or its Subsidiaries' financial statements
included in the Xxxx Atlantic SEC Reports;
(d) With respect to any prior period for which Tax Returns have not yet
been filed, or for which Taxes are not yet due or owing, Xxxx Atlantic and
its Subsidiaries have made due and sufficient accruals for such Taxes in
their respective books and records and financial statements;
(e) Neither Xxxx Atlantic nor any of its affiliates has taken, agreed
to take or omitted to take any action that would prevent or impede the
Merger from qualifying as a tax-free reorganization under Section 368 of
the Code;
(f) No deficiencies for any Taxes have been proposed, asserted or
assessed against Xxxx Atlantic or any of its Subsidiaries that are not
adequately reserved for under GAAP, except for deficiencies that
individually or in the aggregate would not have a Material Adverse Effect
on Xxxx Atlantic; and
(g) Xxxx Atlantic is not aware of any material liens for Taxes upon any
assets of Xxxx Atlantic or any of its Subsidiaries apart from liens for
Taxes not yet due and payable.
SECTION 5.18 Intellectual Property.
(a) As used in this Agreement, "Xxxx Atlantic Intellectual Property"
means all of the following which are necessary to conduct the business of
Xxxx Atlantic and its Subsidiaries as presently conducted or as currently
proposed to be conducted: (i) trademarks, trade dress, service marks,
copyrights, logos, trade names, corporate names and all registrations and
applications to register the same; (ii) patents and pending patent
applications; (iii) Computer Software; (iv) all technology, know-how and
trade secrets; and (v) all material licenses and agreements to which Xxxx
Atlantic or any of its Subsidiaries is a party which relate to any of the
foregoing.
(b) Xxxx Atlantic or its Subsidiaries owns or has the right to use,
sell or license all Xxxx Atlantic Intellectual Property, free and clear of
all liens or encumbrances, and all registrations of Xxxx Atlantic
Intellectual Property are valid and enforceable and have been duly recorded
and maintained, except, in each case, as would not, individually or in the
aggregate, have a Material Adverse Effect on Xxxx Atlantic.
(c) To the knowledge of Xxxx Atlantic, the conduct of Xxxx Atlantic's
and its Subsidiaries' business and the use of the Xxxx Atlantic
Intellectual Property does not materially infringe, violate or misuse any
intellectual property rights or any other proprietary right of any person
or give rise to any obligations to any person as a result of co-authorship,
and neither Xxxx Atlantic nor any of its Subsidiaries has received any
notice, not satisfactorily resolved, of any claims or threats that Xxxx
Atlantic's or its Subsidiaries' use of any of the Xxxx Atlantic
Intellectual Property materially infringes, violates or misuses, or is
otherwise in conflict with any intellectual property or proprietary rights
of any third party or that any of the Xxxx Atlantic Intellectual Property
is invalid or unenforceable that would, individually or in the aggregate,
have a Material Adverse Effect on Xxxx Atlantic.
(d) Xxxx Atlantic and its Subsidiaries have used reasonable efforts to
maintain the confidentiality of their trade secrets and other confidential
Xxxx Atlantic Intellectual Property.
(e) Xxxx Atlantic has undertaken a concerted effort to ensure that all
of the Computer Software, computer firmware, computer hardware (whether
general or special purpose), and other similar or related items of
automated, computerized, and/or software system(s) that are to be used or
relied on by Xxxx Atlantic or by any of its Subsidiaries in the conduct of
their respective businesses will not malfunction, will not cease to
function, will not generate incorrect data, and will not provide incorrect
results when processing, providing and/or receiving (i) date-related data
into and between the twentieth and twenty-first centuries and (ii) date-
related data in connection with any valid date in the twentieth and twenty-
first centuries. Xxxx Atlantic reasonably believes that such effort will
be successful.
SECTION 5.19 Insurance. Except as set forth in Section 5.19 of the
Xxxx Atlantic Disclosure Schedule, each of Xxxx Atlantic and each of its
Significant Subsidiaries is, and has been continuously since January 1,
1987 (or such later date as such Significant Subsidiary was organized or
acquired by Xxxx Atlantic), insured with financially responsible insurers
in such amounts and against such risks and losses as are customary for
companies conducting the business as conducted by Xxxx Atlantic and its
Subsidiaries during such time period. Except as set forth in Section 5.19
of the Xxxx Atlantic Disclosure Schedule, since January 1, 1995, neither
Xxxx Atlantic nor any of its Subsidiaries has received notice of
cancellation or termination with respect to any material insurance policy
of Xxxx Atlantic or its Subsidiaries. The insurance policies of Xxxx
Atlantic and its Subsidiaries are valid and enforceable policies.
SECTION 5.20 Ownership of Securities. As of the date hereof, neither
Xxxx Atlantic nor, to Xxxx Atlantic's knowledge, any of its affiliates or
associates (as such terms are defined under the Exchange Act), (a) (i)
beneficially owns, directly or indirectly, or (ii) is party to any
agreement, arrangement or understanding for the purpose of acquiring,
holding, voting or disposing of, in each case, shares of capital stock of
GTE, which in the aggregate represent 10% or more of the outstanding shares
of GTE Common Stock (other than shares held by Xxxx Atlantic Plans and the
GTE Option Agreement), nor (b) is an "interested stockholder" of GTE within
the meaning of Section 912 of the NYBCL. Except as set forth in Section
5.20 of the Xxxx Atlantic Disclosure Schedule, Xxxx Atlantic owns no shares
of GTE Common Stock described in the parenthetical clause of Section 2.2
(a) hereof which would be canceled and retired without consideration
pursuant to Section 2.3 (a) hereof.
SECTION 5.21 Certain Contracts. (a) All contracts described in Item
601(b)(10) of Regulation S-K to which Xxxx Atlantic or its Subsidiaries is
a party or may be bound ("Xxxx Atlantic Contracts") have been filed as
exhibits to, or incorporated by reference in, Xxxx Atlantic's Annual Report
on Form 10-K for the year ended December 31, 1997. All Xxxx Atlantic
Contracts are valid and in full force and effect on the date hereof except
to the extent they have previously expired in accordance with their terms
or if the failure to be in full force and effect, individually and in the
aggregate would not reasonably be expected to have a Material Adverse
Effect on Xxxx Atlantic. Neither Xxxx Atlantic nor any of its Subsidiaries
has violated any provision of, or committed or failed to perform any act
which with or without notice, lapse of time or both would constitute a
default under the provisions of, any Xxxx Atlantic Contract, except in each
case for those Xxxx Atlantic Contracts which, individually and in the
aggregate, would not reasonably be expected to result in a Material Adverse
Effect on Xxxx Atlantic.
(b) Set forth in Section 5.21 of the Xxxx Atlantic Disclosure Schedule
is a list of each contract, agreement or arrangement to which Xxxx Atlantic
or any of its Subsidiaries is a party or may be bound which is an
arrangement limiting or restraining Xxxx Atlantic, GTE, any Xxxx Atlantic
or GTE Subsidiary or any successor thereto from engaging or competing in
any business which has, or could reasonably be expected to have in the
foreseeable future, a Material Adverse Effect on Xxxx Atlantic or, to Xxxx
Atlantic's knowledge, on GTE.
SECTION 5.22 Merger Subsidiary. Xxxx Atlantic and Merger Subsidiary
represent and warrant to GTE as follows:
(a) Organization and Corporate Power. Merger Subsidiary is a
corporation duly incorporated, validly existing and in good standing under
the laws of the State of New York. Merger Subsidiary is a direct, wholly
owned subsidiary of Xxxx Atlantic.
(b) Corporate Authorization. Merger Subsidiary has all requisite corporate
power and authority to enter into this Agreement and to consummate the
transactions contemplated hereby. The execution, delivery and performance
by Merger Subsidiary of this Agreement and the consummation by Merger
Subsidiary of the transactions contemplated hereby have been duly
authorized by all necessary corporate action on the part of Merger
Subsidiary. This Agreement has been duly executed and delivered by Merger
Subsidiary and constitutes a valid and binding agreement of Merger
Subsidiary, enforceable against it in accordance with its terms, except as
such enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium and other similar laws relating to or affecting
creditors generally, by general equity principles (regardless of whether
such enforceability is considered in a proceeding in equity or at law) or
by an implied covenant of good faith and fair dealing.
(c) Non Contravention. The execution, delivery and performance by
Merger Subsidiary of this Agreement and the consummation by Merger
Subsidiary of the transactions contemplated hereby do not and will not
contravene or conflict with the certificate of incorporation or by-laws of
Merger Subsidiary.
(d) No Business Activities. Merger Subsidiary has not conducted any
activities other than in connection with the organization of Merger
Subsidiary, the negotiation and execution of this Agreement and the
consummation of the transactions contemplated hereby. Merger Subsidiary
has no Subsidiaries.
ARTICLE VI CONDUCT OF BUSINESSES
PENDING THE MERGER
SECTION 6.1 Transition Planning. Xxxx X. Xxxxxxxxxx and Xxxxxxx X.
Xxx, as Chief Executive Officers of Xxxx Atlantic and GTE, respectively,
jointly shall be responsible for coordinating all aspects of transition
planning and implementation relating to the Merger and the other
transactions contemplated hereby. If either such person ceases to be Chief
Executive Officer of his respective company for any reason, such person's
successor as Chief Executive Officer shall assume his predecessor's
responsibilities under this Section 6.1. During the period between the
date hereof and the Effective Time, Messrs. Xxxxxxxxxx and Xxx jointly
shall (i) examine various alternatives regarding the manner in which to
best organize and manage the businesses of Xxxx Atlantic and GTE after the
Effective Time, and (ii) coordinate policies and strategies with respect to
regulatory authorities and bodies, in all cases subject to applicable law.
SECTION 6.2 Conduct of Business in the Ordinary Course. Each of GTE
and Xxxx Atlantic covenants and agrees that, subject to the provisions of
Sections 7.16 and 7.17 hereof, between the date hereof and the Effective
Time, unless the other shall otherwise consent in writing, and except as
described in Section 6.2 of the Disclosure Schedules or as otherwise
expressly contemplated hereby, the business of such Party and its
Subsidiaries shall be conducted only in, and such entities shall not take
any action except in, the ordinary course of business and in a manner
consistent with past practice; and each of GTE and Xxxx Atlantic and their
respective Subsidiaries will use their commercially reasonable efforts to
preserve substantially intact their business organizations, to keep
available the services of those of their present officers, employees and
consultants who are integral to the operation of their businesses as
presently conducted and to preserve their present relationships with
significant customers and suppliers and with other persons with whom they
have significant business relations. By way of amplification and not
limitation, except as set forth in Section 6.2 of the Disclosure Schedules
or as otherwise expressly contemplated by this Agreement and the Option
Agreements, and subject to the provisions of Sections 7.16 and 7.17, each
of GTE and Xxxx Atlantic agrees on behalf of itself and its Subsidiaries
that they will not, between the date hereof and the Effective Time,
directly or indirectly, do any of the following without the prior written
consent of the other:
(a) (i) except for (A) the issuance of shares of GTE Common Stock and
Xxxx Atlantic Common Stock in order to satisfy obligations under the GTE
Plans and Xxxx Atlantic Plans in effect on the date hereof and Xxxx
Atlantic Equity Rights or GTE Equity Rights issued thereunder and under
existing dividend reinvestment plans, which issuances shall be consistent
with its existing policy and past practice; (B) grants of stock options
with respect to GTE Common Stock or Xxxx Atlantic Common Stock to employees
in the ordinary course of business and in amounts and in a manner
consistent with past practice; and (C) the issuance of securities by a
Subsidiary to any person which is directly or indirectly wholly owned by
GTE or Xxxx Atlantic (as the case may be): issue, sell, pledge, dispose
of, encumber, authorize, or propose the issuance, sale, pledge,
disposition, encumbrance or authorization of any shares of capital stock of
any class, or any options, warrants, convertible securities or other rights
of any kind to acquire any shares of capital stock of, or any other
ownership interest in, such Party or any of its Subsidiaries (excluding
such as may arise upon the exercise of existing rights); (ii) amend or
propose to amend the Certificate of Incorporation or Bylaws of such Party
(other than by Xxxx Atlantic as contemplated hereby) or any of its
Subsidiaries (other than wholly owned Subsidiaries) or adopt, amend or
propose to amend any shareholder rights plan or related rights agreement;
(iii) split, combine or reclassify any outstanding shares of GTE Common
Stock and Xxxx Atlantic Common Stock, or declare, set aside or pay any
dividend or distribution payable in cash, stock, property or otherwise with
respect to shares of GTE Common Stock and Xxxx Atlantic Common Stock,
except for cash dividends to stockholders of GTE and Xxxx Atlantic declared
in accordance with existing dividend policy payable to stockholders of
record on the record dates consistently used in prior periods; (iv) redeem,
purchase or otherwise acquire or offer to redeem, purchase or otherwise
acquire any shares of its capital stock, except that each of GTE and Xxxx
Atlantic shall be permitted to acquire shares of GTE Common Stock or Xxxx
Atlantic Common Stock, as the case may be, from time to time in open market
transactions, consistent with past practice and in compliance with
applicable law and the provisions of any applicable employee benefit plan,
program or arrangement, for issuance upon the exercise of options and other
rights granted, and the lapsing of restrictions, under such Party's
respective employee benefit plans, programs and arrangements and dividend
reinvestment plans; or (v) authorize or propose or enter into any contract,
agreement, commitment or arrangement with respect to any of the matters
prohibited by this Section 6.2 (a);
(b) (i) acquire (by merger, consolidation, or acquisition of stock or
assets) any corporation, partnership or other business organization or
division thereof or make any investment in another entity (other than an
entity which is a wholly owned Subsidiary of such Party as of the date
hereof and other than incorporation of a wholly owned Subsidiary), except
for acquisitions or investments which do not exceed $500,000,000 in the
aggregate for all such acquisitions or investments in any 12-month period;
(ii) except in the ordinary course of business and in a manner consistent
with past practice, sell, pledge, dispose of, or encumber or authorize or
propose the sale, pledge, disposition or encumbrance of any assets of such
Party or any of its Subsidiaries, except for transactions which do not
exceed $500,000,000 in the aggregate in any 12-month period and provided
further that, unless and until it is mutually determined that pooling of
interests accounting is not available for the Merger, no Party shall make
any dispositions in excess of an aggregate of $100,000,000 except for those
dispositions that the management of either party has determined, with the
concurrence of its independent accountants, to be either in the ordinary
course of business or not in contemplation of the Merger, and therefore not
a disposition to be measured, individually and in the aggregate with other
dispositions, for material disposition of asset purposes, as required by
Accounting Principals Bulletin No. 16 and the authoritative interpretations
thereto; or (iii) authorize, enter into or amend any contract, agreement,
commitment or arrangement with respect to any of the matters prohibited by
this Section 6.2(b);
(c) incur indebtedness if, following the taking of such action, it is
reasonably anticipated that such Party's outstanding senior indebtedness
would be rated by Standard & Poor's at lower than A-, in the case of GTE,
or at lower than A, in the case of Xxxx Atlantic.
(d) enter into (i) leveraged derivative contracts (defined as contracts
that use a factor to multiply the underlying index exposure) or (ii) other
derivative contracts except for the purpose of hedging known interest rate
and foreign exchange exposures or otherwise reducing such Party's cost of
financing;
(e) take any action with respect to the grant of any severance or
termination pay, stay bonus, or other incentive arrangements (otherwise
than pursuant to any GTE Plan, Xxxx Atlantic Plan (collectively with all
GTE Plans, "Benefit Plans") or any policies, arrangements and agreements of
such Party which were in effect on, or offered or approved to be offered by
the board of directors or senior management of the respective Party prior
to, the date hereof, or pursuant to any renewal or extension subsequent to
the date hereof of the duration of the term of any such Benefit Plans,
policies, arrangements or agreements), or with respect to any increase in
benefits payable under its severance or termination pay policies, or stay
bonus or other incentive arrangements in effect on the date hereof;
provided, however, that this subsection shall not prohibit GTE or
Xxxx Atlantic or their respective subsidiaries from taking any actions
whatsoever that are described in this Section 6.2(e) if (i) such actions
are not Merger-related and are in amounts not materially greater than past
practice or as otherwise required by Legal Requirements or applicable
provisions of the plan, policy or arrangement, and the Party taking such
action consults with the other Party (where such consultation is reasonable
and practicable) reasonably in advance of any such action, or (ii) such
actions are Merger-related, are taken to meet business needs, are
consistent with competitive market practices of large data transmission or
telecommunications companies, and the other Party gives its consent to such
actions (such consent not to be unreasonably withheld after being consulted
by the Party proposing such action (where such consultation is reasonable
and practicable) reasonably in advance of any such action);
provided, further, that on and after the date hereof, each of GTE
and Xxxx Atlantic will use its best efforts in good faith to develop and
adopt within 60 days of the date hereof, in concert with the other, a
common set of principles and guidelines for the design and implementation
of merger-related retention incentives and severance benefits for the
purpose of enabling the respective companies to implement complementary
plans, programs and arrangements, utilizing best competitive practices
which each believes will facilitate the convergence of the benefits and
employment practices and policies of the Parties and their respective
subsidiaries during the period culminating in the Effective Time, and as
soon as practicable after such adoption, each such Party shall comply, and
cause their respective subsidiaries to comply, with such principles and
guidelines (and any amendments thereto which are mutually agreed by the
Parties thereafter);
(f) take any action with respect to increases in employee compensation,
or make any payments under any GTE Plan or any Xxxx Atlantic Plan, as the
case may be, to any director or employee of, or independent contractor or
consultant to, such Party or any of its Subsidiaries, adopt or otherwise
materially amend (except for amendments required or made advisable by Legal
Requirements) any GTE Plan or Xxxx Atlantic Plan, as the case may be, or
enter into or amend any employment or consulting agreement, or grant or
establish any new awards under any such existing GTE Plan or Xxxx Atlantic
Plan or agreement;
provided, however, that this subsection shall not prohibit GTE or
Xxxx Atlantic or their respective subsidiaries from taking any actions
whatsoever that are described in this Section 6.2(f) if (i) such actions
are not Merger-related and are in amounts not materially greater than past
practice or as otherwise required by Legal Requirements or applicable
provisions of the plan, policy or arrangement, and, except in the case of
increases in employee compensation in the ordinary course of business
consistent with past practice, the Party taking such action consults with
the other Party (where such consultation is reasonable and practicable)
reasonably in advance of any such action, or (ii) such actions are taken to
meet business needs, are consistent with competitive market practices of
large data transmission or telecommunications companies, and the other
Party gives its consent to such actions (such consent not to be
unreasonably withheld after being consulted by the Party proposing such
action (where such consultation is reasonable and practicable) reasonably
in advance of any such action);
(g) change in any material respect its accounting policies, methods or
procedures except as required by GAAP;
(h) take any action which it believes when taken could reasonably be
expected to adversely affect or delay in any material respect the ability
of any of the Parties to obtain any approval of any Governmental Entity
required to consummate the transactions contemplated hereby;
(i) other than pursuant to this Agreement, take any action to cause the
shares of their respective Common Stock to cease to be quoted on any of the
stock exchanges on which such shares are now quoted;
(j) (i) other than as consistent with past practice, issue SARS, new
performance shares, restricted stock, or similar equity based rights; (ii)
materially modify (with materiality to be determined with respect to the
Benefit Plan in question) any actuarial cost method, assumption or practice
used in determining benefit obligations, annual expense and funding for any
Benefit Plan, except to the extent required by GAAP; (iii) materially
modify (with materiality to be determined with respect to the Benefit Plan
trust in question) the investment philosophy of the Benefit Plan trusts or
maintain an asset allocation which is not consistent with such philosophy,
subject to any ERISA fiduciary obligation; (iv) subject to any ERISA
fiduciary obligation, enter into any outsourcing agreement, or any other
material contract relating to the Benefit Plans or management of the
Benefit Plan trusts, provided that Xxxx Atlantic and GTE may enter into any
such contracts that may be terminated within two years; (v) offer any new
or extend any existing retirement incentive, "window" or similar benefit
program; (vi) grant any ad hoc pension increase; (vii) establish any new or
fund any existing "rabbi" or similar trust (except in accordance with the
current terms of such trust), or enter into any other arrangement for the
purpose of securing non-qualified benefits or deferred compensation; (viii)
adopt any corporate owned life insurance program; or (ix) adopt or
implement any "split dollar" life insurance program;
provided, however, that this subsection shall not prohibit GTE or
Xxxx Atlantic or their respective subsidiaries from taking any actions
whatsoever that are described in this Section 6.2(j) (with the exception
of clause (j)(i)) if such actions are in amounts not materially greater
than past practice or as otherwise required by Legal Requirements or
applicable provisions of the plan, policy or arrangement, and the Party
taking such action consults with the other Party (where such consultation
is reasonable and practicable) reasonably in advance of any such action; or
(k) take any action which it believes when taken would cause its
representations and warranties contained herein to become inaccurate in any
material respect.
GTE and Xxxx Atlantic agree that any written approval obtained under
this Section 6.2 may be relied upon by the other Party if signed by the
Chief Executive Officer or any other executive officer of the Party
providing such written approval.
SECTION 6.3 No Solicitation. (a) From and after the date hereof,
Xxxx Atlantic shall not, nor shall it permit any of its Subsidiaries to,
nor shall it authorize or permit any of its officers, directors or
employees or any investment banker, financial advisor, attorney,
accountants or other representatives retained by it or any of its
Subsidiaries to, directly or indirectly through another person, (i)
solicit, initiate or encourage (including by way of furnishing
information), or knowingly take any other action designed to facilitate,
any Alternative Transaction (as hereinafter defined) or (ii) participate in
any discussions regarding any Alternative Transaction; provided, however,
that if, at any time prior to approval of the Stock Issuance and the
Certificate Amendment by the holders of Xxxx Atlantic Common Stock, the
Board of Directors of Xxxx Atlantic determines in good faith, after receipt
of advice from outside counsel, that the failure to provide such
information or participate in such negotiations or discussions would result
in a reasonable possibility that the Board of Directors of Xxxx Atlantic
would breach their fiduciary duties to stockholders under applicable law,
Xxxx Atlantic may, in response to any such proposal that has been
determined by it to be a Xxxx Atlantic Superior Proposal (as defined in
Section 7.2(b)), that was not solicited by it and that did not otherwise
result from a breach of this Section 6.3(a), and subject to Xxxx Atlantic
giving GTE at least two business days written notice of its intention to do
so, (x) furnish information with respect to Xxxx Atlantic and its
Subsidiaries to any person pursuant to a customary confidentiality
agreement containing terms no less restrictive than the terms of the
Nondisclosure Agreement dated July 19, 1998 entered into between Xxxx
Atlantic and GTE (the "Nondisclosure Agreement"), provided that a copy of
all such information is delivered simultaneously to GTE, and (y)
participate in negotiations regarding such proposal. Xxxx Atlantic shall
promptly notify GTE orally and in writing of any request for information or
of any proposal in connection with an Alternative Transaction, the material
terms and conditions of such request or proposal (including a copy thereof,
if in writing, and all other documentation and any related correspondence)
and the identity of the person making such request or proposal. Xxxx
Atlantic will keep GTE reasonably informed of the status and details
(including amendments or proposed amendments) of such request or proposal
on a current basis. Xxxx Atlantic shall immediately cease and terminate
any existing solicitation, initiation, encouragement, activity, discussion
or negotiation with any persons conducted heretofore by Xxxx Atlantic or
its representatives with respect to the foregoing. Xxxx Atlantic (i)
agrees not to release any Third Party (as defined below) from, or waive any
provision of, or fail to enforce, any standstill agreement or similar
agreements to which it is a party related to, or which could affect, an
Alternative Transaction and agrees that GTE shall be entitled to enforce
Xxxx Atlantic's rights and remedies under and in connection with such
agreements and (ii) acknowledges that the provisions of clause (i) are an
important and integral part of this Agreement. Nothing contained in this
Section 6.3(a) or Section 7.2 shall prohibit Xxxx Atlantic (i) from taking
and disclosing to its stockholders a position contemplated by Rule 14e-9 or
Rule 14e-2(a) promulgated under the Exchange Act or (ii) from making any
disclosure to its stockholders if, in the good faith judgment of the Board
of Directors of Xxxx Atlantic, after receipt of advice from outside
counsel, failure to disclose would result in a reasonable possibility that
the Board of Directors of Xxxx Atlantic would breach its fiduciary duties
to Xxxx Atlantic's stockholders under applicable law.
(b) From and after the date hereof, GTE shall not, nor shall it permit
any of its Subsidiaries to, nor shall it authorize or permit any of its
officers, directors or employees or any investment banker, financial
advisor, attorney, accountants or other representatives retained by it or
any of its Subsidiaries to, directly or indirectly through another person,
(i) solicit, initiate or encourage (including by way of furnishing
information), or knowingly take any other action designed to facilitate,
any Alternative Transaction (as hereinafter defined) or (ii) participate in
any discussions regarding any Alternative Transaction; provided, however,
that if, at any time prior to approval of this Agreement by the holders of
GTE Common Stock, the Board of Directors of GTE determines in good faith,
after receipt of advice from outside counsel, that the failure to provide
such information or participate in such negotiations or discussions would
result in a reasonable possibility that the Board of Directors of GTE would
breach their fiduciary duties to stockholders under applicable law, GTE
may, in response to a proposal that has been determined by it to be a GTE
Superior Proposal (as defined in Section 7.2(d)), that was not solicited by
it and that did not otherwise result from a breach of this Section 6.3(b),
and subject to GTE giving Xxxx Atlantic at least two business days written
notice of its intention to do so, (x) furnish information with respect to
GTE and its Subsidiaries to any person pursuant to a customary
confidentiality agreement containing terms no less restrictive than the
terms of the Nondisclosure Agreement, provided that a copy of all such
information is delivered simultaneously to Xxxx Atlantic, and (y)
participate in negotiations regarding such proposal. GTE shall promptly
notify Xxxx Atlantic orally and in writing of any request for information
or of any proposal in connection with an Alternative Transaction, the
material terms and conditions of such request or proposal (including a copy
thereof, if in writing, and all other documentation and any related
correspondence) and the identity of the person making such request or
proposal. GTE will keep Xxxx Atlantic reasonably informed of the status
and details (including amendments or proposed amendments) of such request
or proposal on a current basis. GTE shall immediately cease and terminate
any existing solicitation, initiation, encouragement, activity, discussion
or negotiation with any persons conducted heretofore by GTE or its
representatives with respect to the foregoing. GTE (i) agrees not to
release any Third Party from, or waive any provision of, or fail to
enforce, any standstill agreement or similar agreements to which it is a
party related to, or which could affect, an Alternative Transaction and
agrees that Xxxx Atlantic shall be entitled to enforce GTE's rights and
remedies under and in connection with such agreements and (ii) acknowledges
that the provisions of clause (i) are an important and integral part of
this Agreement. Nothing contained in this Section 6.3(b) or in Section
7.2 shall prohibit GTE (i) from taking and disclosing to its stockholders
a position contemplated by Rule 14e-9 or Rule 14e-2(a) promulgated under
the Exchange Act or (ii) from making any disclosure to its stockholders if,
in the good faith judgment of the Board of Directors of GTE, after receipt
of advice from outside counsel, failure to disclose would result in a
reasonable possibility that the Board of Directors of GTE would breach its
fiduciary duties to GTE's stockholders under applicable law.
(c) For purposes of this Agreement, "Alternative Transaction" means,
whether in the form of a proposal or intended proposal, a signed agreement
or completed action, as the case may be, any of (i) a transaction or series
of transactions pursuant to which any person (or group of persons) other
than Xxxx Atlantic and its Subsidiaries and other than GTE and its
Subsidiaries (a "Third Party") acquires or would acquire, directly or
indirectly, beneficial ownership (as defined in Rule 13d-3 under the
Exchange Act) of more than 20% of the outstanding shares of Xxxx Atlantic
or GTE, as the case may be, whether from Xxxx Atlantic or GTE or pursuant
to a tender offer or exchange offer or otherwise, (ii) any acquisition or
proposed acquisition of, or business combination with, Xxxx Atlantic or any
of its Significant Subsidiaries or GTE or any of its Significant
Subsidiaries, as the case may be, by a merger or other business combination
(including any so-called "merger-of-equals" and whether or not Xxxx
Atlantic or any of its Significant Subsidiaries or GTE or any of its
Significant Subsidiaries, as the case may be, is the entity surviving any
such merger or business combination) or (iii) any other transaction
pursuant to which any Third Party acquires or would acquire, directly or
indirectly, control of assets (including for this purpose the outstanding
equity securities of Subsidiaries of Xxxx Atlantic or GTE, as the case may
be, and any entity surviving any merger or business combination including
any of them) of Xxxx Atlantic or any of its Subsidiaries or GTE or any of
its Subsidiaries, as the case may be, for consideration equal to 20% or
more of the fair market value of all of the outstanding shares of Xxxx
Atlantic Common Stock or all of the outstanding shares of GTE Common Stock,
as the case may be, on the date of this Agreement.
SECTION 6.4 Subsequent Financial Statements. Prior to the Effective
Time, each of GTE and Xxxx Atlantic (a) will consult with the other prior
to making publicly available its financial results for any period and (b)
will consult with the other prior to the filing of, and will timely file
with the SEC, each Annual Report on Form 10-K, Quarterly Report on Form 10-
Q and Current Report on Form 8-K required to be filed by such Party under
the Exchange Act and the rules and regulations promulgated thereunder and
will promptly deliver to the other copies of each such report filed with
the SEC. As of their respective dates, none of such reports shall contain
any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading.
The respective audited financial statements and unaudited interim financial
statements of each of GTE and Xxxx Atlantic, as the case may be, included
in such reports will fairly present the consolidated financial position of
such Party and its Subsidiaries as at the dates thereof and the results of
their operations and cash flows for the periods then ended in accordance
with GAAP applied on a consistent basis and, subject, in the case of
unaudited interim financial statements, to normal year-end adjustments.
SECTION 6.5 Control of Operations. Nothing contained in this
Agreement shall give Xxxx Atlantic, directly or indirectly, the right to
control or direct GTE's operations prior to the Effective Time. Nothing
contained in this Agreement shall give GTE, directly or indirectly, the
right to control or direct Xxxx Atlantic's operations prior to the
Effective Time. Prior to the Effective Time, each of Xxxx Atlantic and GTE
shall exercise, consistent with the terms and conditions of this Agreement,
complete control and supervision over its respective operations.
ARTICLE VII ADDITIONAL AGREEMENTS
SECTION 7.1 Joint Proxy Statement and the Registration Statement. (a)
As promptly as practicable after the execution and delivery of this
Agreement, the Parties shall prepare and file with the SEC, and shall use
all reasonable efforts to have cleared by the SEC, and promptly thereafter
shall mail to the holders of record of shares of Xxxx Atlantic Common Stock
and GTE Common Stock, the Joint Proxy Statement, provided, however, that
GTE and Xxxx Atlantic shall not mail or otherwise furnish the Joint Proxy
Statement to their respective stockholders unless and until:
(i) they have received notice from the SEC that the Registration
Statement is effective under the 1933 Act;
(ii) GTE shall have received a letter of PricewaterhouseCoopers
L.L.P., dated a date within two business days prior to the date of the
first mailing of the Joint Proxy Statement, and addressed to GTE, in
form and substance reasonably satisfactory to GTE and customary in
scope and substance for "cold comfort" letters delivered by
independent public accountants in connection with registration
statements on Form S-4 with respect to the financial statements of
Xxxx Atlantic included in the Joint Proxy Statement and the
Registration Statement; and
(iii) Xxxx Atlantic shall have received a letter of Xxxxxx
Xxxxxxxx LLP, dated a date within two business days prior to the date
of the first mailing of the Joint Proxy Statement, and addressed to
Xxxx Atlantic, in form and substance reasonably satisfactory to Xxxx
Atlantic and customary in scope and substance for "cold comfort"
letters delivered by independent public accountants in connection with
registration statements on Form S-4 with respect to the financial
statements of GTE included in the Joint Proxy Statement and the
Registration Statement.
(b) The Parties will cooperate in the preparation of the Joint Proxy
Statement and the Registration Statement and in having the Registration
Statement declared effective as soon as practicable.
SECTION 7.2 Xxxx Atlantic and GTE Stockholders' Meetings.
(a) As promptly as practicable after the Registration Statement is
declared effective under the Securities Act, Xxxx Atlantic shall duly give
notice of, convene and hold a meeting of its stockholders (the "Xxxx
Atlantic Stockholders' Meeting") in accordance with the DGCL for the
purpose of obtaining the Xxxx Atlantic Stockholder Approval and shall,
subject to the provisions of Section 7.2(b) hereof, through its Board of
Directors, recommend to its stockholders the approval of the Stock Issuance
and adoption of the Certificate Amendment.
(b) Neither the Board of Directors of Xxxx Atlantic nor any committee
thereof shall (i) except as expressly permitted by this Section 7.2(b),
withdraw, qualify or modify, or propose publicly to withdraw, qualify or
modify, in a manner adverse to GTE, the approval or recommendation of such
Board of Directors or such committee of the Certificate Amendment or the
Stock Issuance, (ii) approve or recommend, or propose publicly to approve
or recommend, any Alternative Transaction or (iii) cause Xxxx Atlantic to
enter into any letter of intent, agreement in principle, acquisition
agreement or other similar agreement (each, a "Xxxx Atlantic Acquisition
Agreement") related to any Alternative Transaction. Notwithstanding the
foregoing, in the event that prior to the adoption of the Stock Issuance
and the Certificate Amendment by the holders of Xxxx Atlantic Common Stock
the Board of Directors of Xxxx Atlantic determines in good faith, after it
has received a Xxxx Atlantic Superior Proposal (as defined below) and after
receipt of advice from outside counsel, that the failure to do so would
result in a reasonable possibility that the Board of Directors of Xxxx
Atlantic would breach its fiduciary duties to Xxxx Atlantic stockholders
under applicable law, the Board of Directors of Xxxx Atlantic may (subject
to this and the following sentences) inform Xxxx Atlantic stockholders that
it no longer believes that such adoption is advisable and no longer
recommends approval (a "Xxxx Atlantic Subsequent Determination"), but only
at a time that is after the fifth business day following GTE's receipt of
written notice advising GTE that the Board of Directors of Xxxx Atlantic
has received a Xxxx Atlantic Superior Proposal specifying the material
terms and conditions of such Xxxx Atlantic Superior Proposal (and including
a copy thereof with all accompanying documentation, if in writing),
identifying the person making such Xxxx Atlantic Superior Proposal and
stating that it intends to make a Xxxx Atlantic Subsequent Determination.
After providing such notice, Xxxx Atlantic shall provide a reasonable
opportunity to GTE to make such adjustments in the terms and conditions of
this Agreement as would enable Xxxx Atlantic to proceed with its
recommendation to its stockholders without a Xxxx Atlantic Subsequent
Determination; provided, however, that any such adjustment shall be at the
discretion of the Parties at the time. For purposes of this Agreement, a
"Xxxx Atlantic Superior Proposal" means any proposal (on its most recently
amended or modified terms, if amended or modified) made by a Third Party to
enter into an Alternative Transaction which the Board of Directors of Xxxx
Atlantic determines in its good faith judgment (based on, among other
things, the advice of a financial advisor of nationally recognized
reputation) to be more favorable to Xxxx Atlantic's stockholders than the
Merger taking into account all relevant factors (including whether, in the
good faith judgment of the Board of Directors of Xxxx Atlantic, after
obtaining the advice of a financial advisor of nationally recognized
reputation, the Third Party is reasonably able to finance the transaction,
and any proposed changes to this Agreement that may be proposed by GTE in
response to such Alternative Transaction). Notwithstanding any other
provision of this Agreement, Xxxx Atlantic shall submit the Stock Issuance
and the Certificate Amendment to its stockholders whether or not the Board
of Directors of Xxxx Atlantic makes a Xxxx Atlantic Subsequent
Determination.
(c) As promptly as practicable after the Registration Statement is
declared effective under the Securities Act, GTE shall duly give notice of,
convene and hold a meeting of its stockholders (the "GTE Stockholders'
Meeting") in accordance with the NYBCL for the purpose of obtaining the GTE
Stockholder Approval and shall, subject to the provisions of Section 7.2(d)
hereof, through its Board of Directors, recommend to its stockholders the
approval and adoption of this Agreement and the Merger.
(d) Neither the Board of Directors of GTE nor any committee thereof
shall (i) except as expressly permitted by this Section 7.2(d), withdraw,
qualify or modify, or propose publicly to withdraw, qualify or modify, in a
manner adverse to Xxxx Atlantic, the approval or recommendation of such
Board of Directors or such committee of the Merger or this Agreement, (ii)
approve or recommend, or propose publicly to approve or recommend, any
Alternative Transaction, or (iii) cause GTE to enter into any letter of
intent, agreement in principle, acquisition agreement or other similar
agreement (each, a "GTE Acquisition Agreement") related to any Alternative
Transaction. Notwithstanding the foregoing, in the event that prior to the
adoption of this Agreement by the holders of GTE Common Stock the Board of
Directors of GTE determines in good faith, after it has received a GTE
Superior Proposal (as defined below) and after receipt of advice from
outside counsel, that the failure to do so would result in a reasonable
possibility that the Board of Directors of GTE would breach its fiduciary
duties to GTE stockholders under applicable law, the Board of Directors of
GTE may (subject to this and the following sentences) inform GTE
stockholders that it no longer believes that the Merger is advisable and no
longer recommends approval (a "GTE Subsequent Determination"), but only at
a time that is after the fifth business day following Xxxx Atlantic's
receipt of written notice advising Xxxx Atlantic that the Board of
Directors of GTE has received a GTE Superior Proposal specifying the
material terms and conditions of such GTE Superior Proposal (and including
a copy thereof with all accompanying documentation, if in writing),
identifying the person making such GTE Superior Proposal and stating that
it intends to make a GTE Subsequent Determination. After providing such
notice, GTE shall provide a reasonable opportunity to Xxxx Atlantic to make
such adjustments in the terms and conditions of this Agreement as would
enable GTE to proceed with its recommendation to its stockholders without a
GTE Subsequent Determination; provided, however, that any such adjustment
shall be at the discretion of the Parties at the time. For purposes of this
Agreement, a "GTE Superior Proposal" means any proposal (on its most
recently amended or modified terms, if amended or modified) made by a Third
Party to enter into an Alternative Transaction which the Board of Directors
of GTE determines in its good faith judgment (based on, among other things,
the advice of a financial advisor of nationally recognized reputation) to
be more favorable to GTE's stockholders than the Merger taking into account
all relevant factors (including whether, in the good faith judgment of the
Board of Directors of GTE, after obtaining the advice of a financial
advisor of nationally recognized reputation, the Third Party is reasonably
able to finance the transaction, and any proposed changes to this Agreement
that may be proposed by Xxxx Atlantic in response to such Alternative
Transaction). Notwithstanding any other provision of this Agreement, GTE
shall submit this Agreement to its stockholders whether or not the Board of
Directors of GTE makes a GTE Subsequent Determination.
SECTION 7.3 Consummation of Merger; Additional Agreements.
(a) Upon the terms and subject to the conditions hereof and as soon as
practicable after the conditions set forth in Article VIII hereof have been
fulfilled or waived, each of the Parties required to do so shall execute in
the manner required by the NYBCL and deliver to and file with the Secretary
of State of the State of New York such instruments and agreements as may be
required by the NYBCL and the Parties shall take all such other and further
actions as may be required by law to make the Merger effective, and Xxxx
Atlantic shall take all such other and further actions as may be required
by law to make the Certificate Amendment and the Bylaws Amendment
effective. Prior to the filings referred to in this Section 7.3(a), a
closing (the "Closing") will be held at the offices of Xxxx Atlantic (or
such other place as the Parties may agree) for the purpose of confirming
all the foregoing. The Closing will take place upon the fulfillment or
waiver of all of the conditions to closing set forth in Article VIII of
this Agreement, or as soon thereafter as practicable (the date of the
Closing being herein referred to as the "Closing Date").
(b) Each of the Parties will comply in all material respects with all
applicable laws and with all applicable rules and regulations of any
Governmental Entity in connection with its execution, delivery and
performance of this Agreement and the transactions contemplated hereby.
Each of the Parties agrees to use all commercially reasonable efforts to
obtain in a timely manner all necessary waivers, consents and approvals and
to effect all necessary registrations and filings, and to use all
commercially reasonable efforts to take, or cause to be taken, all other
actions and to do, or cause to be done, all other things necessary, proper
or advisable to consummate and make effective as promptly as practicable
the transactions contemplated by this Agreement and the Option Agreements
and to effect all necessary filings under the 1933 Act, the Exchange Act
and the HSR Act. Without limiting the generality of the foregoing, each of
GTE and Xxxx Atlantic shall promptly prepare and file a Premerger
Notification in accordance with the HSR Act, shall promptly comply with any
requests for additional information, and shall use its commercially
reasonable efforts to obtain termination of the waiting period thereunder
as promptly as practicable.
(c) Each of Xxxx Atlantic and GTE shall, in connection with the efforts
referenced in Section 7.3(a) and (b), (i) cooperate in all respects with
each other in connection with any filing or submission and in connection
with any investigation or other inquiry, including any proceeding initiated
by a private party; (ii) promptly inform the other party of any material
communication received by such party from, or given by such party to any
Governmental Entity and of any material communication received or given in
connection with any proceeding by a private party, in each case regarding
any of the transactions contemplated hereby and (iii) consult with each
other in advance of any meeting or conference with any such Governmental
Entity or, in connection with any proceeding by a private party, with any
other person, and to the extent permitted by the applicable Governmental
Entity or other person, give the other Party the opportunity to attend and
participate in such meetings and conferences.
(d) In furtherance and not in limitation of the covenants of the
parties contained in Sections 7.3(a), (b) and (c), if any administrative or
judicial action or proceeding, including any proceeding by a private party,
is instituted (or threatened to be instituted) challenging any transaction
contemplated by this Agreement or the Option Agreements as violative of any
applicable law, or if any statute, rule, regulation, executive order,
decree, injunction or administrative order is enacted, entered or
promulgated or enforced by a Governmental Entity which would make the
Merger or the other transactions contemplated hereby or by the Option
Agreements illegal or otherwise prohibit or materially impair or delay
consummation of the transactions contemplated hereby or thereby, each of
Xxxx Atlantic and GTE shall cooperate in all respects with each other and
use all commercially reasonable efforts to contest and resist any such
action or proceeding, to have vacated, lifted, reversed or overturned any
decree, judgment, injunction or other order, whether temporary, preliminary
or permanent, that is in effect and that prohibits, prevents or restricts
consummation of the transactions contemplated by this Agreement and to have
such statute, rule, regulation, executive order, decree, injunction or
administrative order repealed, rescinded or made inapplicable.
Notwithstanding the foregoing or any other provision of this Agreement,
nothing in this Section 7.3 shall limit a party's right to terminate this
Agreement pursuant to Section 9.1 so long as such Party has up to then
complied in all respects with its obligations under this Section 7.3.
(e) If any objections are asserted with respect to the transactions
contemplated hereby under any applicable law or if any suit is instituted
by any Governmental Entity or any private party challenging any of the
transactions contemplated hereby as violative of any applicable law, each
of Xxxx Atlantic and GTE shall use its commercially reasonable efforts to
resolve any such objections or challenge as such Governmental Entity or
private party may have to such transactions under such law so as to permit
consummation of the transactions contemplated by this Agreement.
SECTION 7.4 Notification of Certain Matters. Each of GTE and Xxxx
Atlantic shall give prompt notice to the other of the following:
(a) the occurrence or nonoccurrence of any event whose occurrence or
nonoccurrence would be likely to cause either (i) any representation or
warranty contained in this Agreement to be untrue or inaccurate in any
material respect at any time from the date hereof to the Effective Time, or
(ii) directly or indirectly, any Material Adverse Effect on such Party;
(b) any material failure of such Party, or any officer, director,
employee or Agent of any thereof, to comply with or satisfy any covenant,
condition or agreement to be complied with or satisfied by it hereunder,
and
(c) any facts relating to such Party which would make it necessary or
advisable to amend the Joint Proxy Statement or the Registration Statement
in order to make the statements therein not misleading or to comply with
applicable law; provided, however, that the delivery of any notice pursuant
to this Section 7.4 shall not limit or otherwise affect the remedies
available hereunder to the Party receiving such notice.
SECTION 7.5 Access to Information. (a) From the date hereof to the
Effective Time, each of GTE and Xxxx Atlantic shall, and shall cause its
respective Subsidiaries, and its and their officers, directors, employees,
auditors, counsel and agents to afford the officers, employees, auditors,
counsel and agents of the other Party complete access at all reasonable
times to such Party's and its Subsidiaries' officers, employees, auditors,
counsel agents, properties, offices and other facilities and to all of
their respective books and records, and shall furnish the other with all
financial, operating and other data and information as such other Party may
reasonably request, including in connection with confirmatory due
diligence.
(b) Each of GTE and Xxxx Atlantic agrees that all information so
received from the other Party shall be deemed received pursuant to the
Nondisclosure Agreement and such Party shall, and shall cause its
Subsidiaries and each of its and their respective officers, directors,
employees, financial advisors and agents ("Party Representatives"), to
comply with the provisions of the Nondisclosure Agreement with respect to
such information and the provisions of the Nondisclosure Agreement are
hereby incorporated herein by reference with the same effect as if fully
set forth herein, provided that such information may be used for any
purpose contemplated hereby.
SECTION 7.6 Public Announcements. GTE and Xxxx Atlantic shall use all
reasonable efforts to develop a joint communications plan and each Party
shall use all reasonable efforts to ensure that all press releases and
other public statements with respect to the transactions contemplated
hereby shall be consistent with such joint communications plan or, to the
extent inconsistent therewith, shall have received the prior written
approval of the other.
SECTION 7.7 Transfer Statutes. Each of GTE and Xxxx Atlantic agrees
to use its commercially reasonable efforts to comply promptly with all
requirements of the New Jersey and Connecticut Property Transfer Statutes,
to the extent applicable to the transactions contemplated hereby, and to
take all actions necessary to cause the transactions contemplated hereby to
be effected in compliance with the New Jersey and Connecticut Property
Transfer Statutes. GTE and Xxxx Atlantic agree that they will consult with
each other to determine what, if any, actions must be taken prior to or
after the Effective Time to ensure compliance with such statutes. Each of
GTE and Xxxx Atlantic agrees to provide the other with any documents to be
submitted to the relevant state agencies prior to submission and agrees not
to take any action to comply with the New Jersey and Connecticut Property
Transfer Statutes without the other's prior consent, which consent shall
not be unreasonably withheld. Each Party shall bear its respective costs
and expenses incurred in connection with compliance with the New Jersey and
Connecticut Property Transfer Statutes. For purposes of this section, the
New Jersey and Connecticut Property Transfer Statutes means the New Jersey
Industrial Site Recovery Act, 1993 N.J. Laws 139, and the Connecticut
Transfer Act, Conn. Gen. Stat. Xxx. section 22a-134(b).
SECTION 7.8 Indemnification, Directors' and Officers' Insurance. For
a period of six years after the Effective Time, Xxxx Atlantic shall cause
GTE to, and Xxxx Atlantic shall, maintain in effect the current policies of
directors' and officers' liability insurance and fiduciary liability
insurance maintained by GTE and Xxxx Atlantic, respectively (provided that
Xxxx Atlantic may substitute therefor policies of at least the same
coverage and amounts containing terms and conditions which are, in the
aggregate, no less advantageous to the insured in any material respect)
with respect to all possible claims arising from facts or events which
occurred on or before the Effective Time. Xxxx Atlantic shall cause GTE to
maintain in effect (a) the current provisions regarding indemnification of
officers and directors contained in the charter and bylaws of GTE and each
of its Subsidiaries until the statutes of limitations for all possible
claims have run; provided that Xxxx Atlantic need not cause GTE to maintain
in effect indemnification provisions contained in the charter and bylaws of
its Subsidiaries if and to the extent that Xxxx Atlantic assumes such
indemnity obligations; and (b) any directors, officers or employees
indemnification agreements of GTE and its respective Subsidiaries. Xxxx
Atlantic shall cause GTE to, and Xxxx Atlantic shall, indemnify the
directors and officers of GTE and Xxxx Atlantic, respectively, to the
fullest extent to which GTE and Xxxx Atlantic are permitted to indemnify
such officers and directors under their respective charters and bylaws and
applicable law. As of the Effective Time, Xxxx Atlantic shall
unconditionally and irrevocably guarantee for the benefit of such
directors, officers and employees the obligations of GTE under the
foregoing indemnification arrangements.
SECTION 7.9 Employee Benefit Plans. (a) Except as otherwise provided
herein or set forth in Section 6.2 of the Disclosure Schedules, GTE and
Xxxx Atlantic agree that, unless otherwise mutually determined, the GTE
Plans and the Xxxx Atlantic Plans in effect at the date hereof shall remain
in effect after the Effective Time with respect to classes of employees
covered by such plans immediately prior to the Effective Time.
From time to time from the date hereof to the Effective Time, the
management of Xxxx Atlantic and GTE shall consult with one another for the
purpose of reviewing such Benefit Plans for management (non-represented)
employees of Xxxx Atlantic and GTE and their respective subsidiaries
("Management Employees"), and determining which of such Benefit Plans
represent best competitive practices, which should be terminated at the
Effective Time (or following a transition period thereafter), and which of
such Benefit Plans should be redesigned and/or extended to other employees
at (or after) the Effective Time. Notwithstanding the foregoing or any
other provision of this Agreement, (1) after the Effective Time, Xxxx
Atlantic shall cause the compensation and benefits provided to similarly-
situated Management Employees of each business unit to be at least as
valuable as the aggregate compensation and benefit package provided to such
employees of that business unit immediately prior to the Effective Time,
except to the extent (i) such benefits and/or compensation plans are
replaced by one or more benefits and/or compensation plans at least as
valuable as those which are provided to similarly situated employees of
comparable business units of the other Party or its subsidiaries, or (ii)
corresponding benefits for similarly situated employees of the other Party
or its subsidiaries are eliminated, (2) from the Effective Time until the
first anniversary thereof, Xxxx Atlantic shall not, and shall ensure that
each of its Subsidiaries shall not, discontinue, or change eligibility
provisions or levels of benefits under, severance plans, policies and
arrangements in which such Management Employees participated immediately
prior to the Effective Time, and further agrees that any of such plans,
policies or arrangements that expire during such one-year period shall be
extended for the duration of such one-year period, and (3) for the 18-month
period immediately following the Effective Time, with respect to those GTE
Management Employees who were relocated as part of the consolidation of
GTE's world headquarters to Texas, Xxxx Atlantic shall not, and shall
ensure that each of its Subsidiaries shall not, discontinue, or change the
relocation benefits program which was applicable to such Management
Employees as of the Effective Time. In addition, with respect to all
Management Employees, at and after the Effective Time (i) each such
employee shall receive full credit for their credited service with their
respective employer prior to the Effective Time for all purposes, including
eligibility (including eligibility for early retirement, disability and
other benefits), vesting, level of benefits and benefit accrual (except to
the extent such benefit accrual would be duplicative); (ii) any provisions
which restrict benefits by reason of pre-existing conditions, waiting
periods or evidence of insurability shall be waived and (iii) such
employees shall receive credit under such plan for co-payments and
deductible during the applicable plan year.
(b) Except as otherwise set forth in Sections 2.8 and 2.9 hereof, in
the case of the GTE Plans under which the employees' interests are based
upon GTE Common Stock, or the respective market prices thereof (but which
interests do not constitute stock options), GTE and Xxxx Atlantic agree
that such interests shall, from and after the Effective Time, be based on
Xxxx Atlantic Common Stock in accordance with the Exchange Ratio.
(c) With respect to all GTE Plans which have entitlement or vesting
terms that are based upon the market price or value per share of GTE Common
Stock, GTE and Xxxx Atlantic agree that from and after the Effective Time,
such market price or value per share shall be adjusted by multiplying it by
the inverse of the Exchange Ratio.
(d) With respect to any GTE Plans maintained or contributed to outside
the United States for the benefit of non-United States citizens or
residents, the principles set forth in this Section 7.9 and in Section 6.2
of the Disclosure Schedules shall apply to the extent the application of
such principles does not violate applicable foreign law.
(e) Without limiting the applicability of Sections 2.8 and 2.9 hereof,
each of the Parties shall take all actions as are necessary to ensure that
GTE will not at the Effective Time be bound by any stock options, SARS,
warrants or other rights or agreements which would entitle any person,
other than Xxxx Atlantic, to own any capital stock of the Surviving
Corporation or to receive any payment in respect thereof, and all GTE Plans
conferring any rights with respect to GTE Common Stock or other capital
stock of GTE shall be deemed hereby to be amended to be in conformity with
this Section 7.9.
SECTION 7.10 Succession. (a) At the Effective Time, pursuant to the
terms of the Employment Agreements (as defined below) and subject to
Section 5.11 of the Bylaws of Xxxx Atlantic reflecting the Bylaws Amendment
(the "Amended Bylaws") (i) Xxxxxxx X. Xxx shall hold the positions of
Chairman and Co-Chief Executive Officer of Xxxx Atlantic and (ii) Xxxx X.
Xxxxxxxxxx shall hold the positions of President and Co-Chief Executive
Officer of Xxxx Atlantic. Pursuant to the terms of the Employment
Agreements and subject to Section 5.11 of the Amended Bylaws (A) on June
30, 2002, Xx. Xxxxxxxxxx shall become the sole Chief Executive Officer of
Xxxx Atlantic and (B) on June 30, 2004, Xx. Xxx shall cease to be Chairman
of Xxxx Atlantic and such position will be assumed by Xx. Xxxxxxxxxx. If
either of such persons is unable or unwilling to hold such offices as set
forth above, his successor shall be selected by the Board of Directors of
Xxxx Atlantic in accordance with the Amended Bylaws. The authority, duties
and responsibilities of the positions set forth above shall be set forth in
the Employment Agreements, which Employment Agreements shall also set forth
in their entirety the rights and remedies of Xx. Xxxxxxxxxx and Xx. Xxx
with respect to employment by Xxxx Atlantic. Neither Xx. Xxxxxxxxxx nor
Xx. Xxx shall have any right, remedy or cause of action under this Section
7.10, nor shall they be third party beneficiaries of this Section 7.10.
(b) As soon as practicable after the date hereof, Xxxx Atlantic shall
enter into employment agreements effective as of the Effective Time (the
"Employment Agreements") with Messrs. Xxx and Xxxxxxxxxx containing
arrangements concerning management succession satisfactory to each Party.
SECTION 7.11 Stock Exchange Listing. Each of the Parties shall use
its best efforts to obtain, prior to the Effective Time, the approval for
listing on the NYSE, effective upon official notice of issuance, of the
shares of Xxxx Atlantic Common Stock into which the GTE Common Stock will
be converted pursuant to Article II hereof and which will be issuable upon
exercise of options pursuant to Section 2.8 hereof.
SECTION 7.12 Post-Merger Xxxx Atlantic Board of Directors. (a) At the
Effective Time, 50% of the directors of Xxxx Atlantic shall be directors
selected by Xxxx Atlantic, to the extent possible from current directors of
Xxxx Atlantic, and 50% shall be selected by GTE, to the extent possible
from current directors of GTE.
The persons to serve initially on the Board of Directors of Xxxx
Atlantic at the Effective Time who are GTE Directors (as defined below)
shall be selected solely by and at the absolute discretion of the Board of
Directors of GTE prior to the Effective Time; and the persons to serve on
the Board of Directors of Xxxx Atlantic at the Effective Time who are Xxxx
Atlantic Directors (as defined below) shall be selected solely by and at
the absolute discretion of the Board of Directors of Xxxx Atlantic prior to
the Effective Time. In the event that, prior to the Effective Time, any
person so selected to serve on the Board of Directors of Xxxx Atlantic
after the Effective Time is unable or unwilling to serve in such position,
the Board of Directors which selected such person shall designate another
of its members to serve in such person's stead in accordance with the
provisions of the immediately preceding sentence.
(b) From and after the Effective Time and until July 1, 2002, the Board
of Directors of Xxxx Atlantic and each Committee of the Board of Directors
of Xxxx Atlantic as constituted following each election of Directors shall
consist of an equal number of GTE Directors and Xxxx Atlantic Directors and
subject to the fiduciary duties of the Directors, the Board of Directors
shall nominate for election at each stockholders meeting at which Directors
are elected, an equal number of GTE Directors and Xxxx Atlantic Directors.
If, at any time prior to July 1, 2002, the number of GTE Directors and Xxxx
Atlantic Directors serving, either as directors or as members of any
Committee of the Board of Directors of Xxxx Atlantic, would not be equal,
then, subject to the fiduciary duties of the directors, the Board of
Directors shall appoint to fill any existing vacancy or vacancies, as
appropriate, such person or persons as may be requested by the remaining
GTE Directors (if the number of GTE Directors is, or would otherwise
become, less than the number of Xxxx Atlantic Directors) or by the
remaining Xxxx Atlantic Directors (if the number of Xxxx Atlantic Directors
is, or would otherwise become, less than the number of GTE Directors) to
ensure that there shall be an equal number of GTE Directors and Xxxx
Atlantic Directors. The provisions of the preceding two sentences shall
not apply in respect of any vacancy which occurs after July 1, 2002. The
term "GTE Director" means (i) any person serving as a director of GTE on
the date hereof who becomes a director of Xxxx Atlantic at the Effective
Time and (ii) any person who subsequently becomes a director of Xxxx
Atlantic and who is designated by the GTE Directors pursuant to this
paragraph; and the term "Xxxx Atlantic Director" means (i) any person
serving as a director of Xxxx Atlantic on the date hereof who continues as
a director of Xxxx Atlantic after the Effective Time and (ii) any person
who becomes a director of Xxxx Atlantic and who is designated by the Xxxx
Atlantic Directors pursuant to this paragraph. From the Effective Time
through July 1, 2002, the Board of Directors shall consist of an even
number of Directors and such number of Directors shall not be amended
unless, immediately following such amendment, the number of GTE Directors
then in office is equal to the number of Xxxx Atlantic Directors then in
office.
(c) Each of GTE and Xxxx Atlantic shall take such action as shall
reasonably be deemed by either thereof to be advisable to give effect to
the provisions set forth in this section, including but not limited to
incorporating such provisions in the Bylaws of Xxxx Atlantic in effect at
the Effective Time.
SECTION 7.13 No Shelf Registration. Xxxx Atlantic shall not be
required to amend or maintain the effectiveness of the Registration
Statement for the purpose of permitting resale of the shares of Xxxx
Atlantic Common Stock received pursuant hereto by the persons who may be
deemed to be "affiliates" of GTE or Xxxx Atlantic within the meaning of
Rule 145 promulgated under the 1933 Act. The shares of Xxxx Atlantic
Common Stock issuable upon exercise of options pursuant to Section 2.8
hereof shall be registered under the 1933 Act and such registration shall
be effective at the time of issuance.
SECTION 7.14 Affiliates. (a) Each of GTE and Xxxx Atlantic (i) has
disclosed to the other in Section 7.14 of the Disclosure Schedules all
persons who are, or may be, as of the date hereof its "affiliates" for
purposes of Rule 145 under the Securities Act or SEC Accounting Series
Release 135, and (ii) shall use all reasonable efforts to cause each person
who is identified as an "affiliate" of it in Section 7.14 of the Disclosure
Schedules to deliver to the other as promptly as practicable but in no
event later than 31 days prior to the Closing Date, a signed Agreement
substantially in the form attached hereto as Exhibit 7.14(a), in the case
of GTE, and 7.14(b), in the case of Xxxx Atlantic. GTE and Xxxx Atlantic
shall notify each other from time to time of any other persons who then
are, or may be, such an "affiliate" and use all reasonable efforts to cause
each additional person who is identified as an "affiliate" to execute a
signed Agreement as set forth in this Section 7.14(a).
(b) If the transactions contemplated by this Agreement and the Option
Agreements would otherwise qualify for pooling of interests accounting
treatment, shares of GTE Common Stock and shares of Xxxx Atlantic Common
Stock held by such "affiliates" of GTE or Xxxx Atlantic, as the case may
be, shall not be transferable during the 30 day period prior to the
Effective Time, and shares of Xxxx Atlantic Common Stock issued to, or as
of the Effective Time held by, such "affiliates" of GTE and Xxxx Atlantic
shall not be transferable until such time as financial results covering at
least 30 days of combined operations of GTE and Xxxx Atlantic have been
published within the meaning of Section 201.01 of the SEC's Codification of
Financial Reporting Policies, regardless of whether each such "affiliate"
has provided the signed Agreement referred to in Section 7.14 (a), except
to the extent permitted by, and in accordance with, SEC Accounting Series
Release 135 and SEC Staff Accounting Bulletins 65 and 76. Any Xxxx
Atlantic Common Stock held by any such "affiliate" shall not be
transferable, regardless of whether such "affiliate" has provided the
applicable signed Agreement referred to in Section 7.14(a), if such
transfer, either alone or in the aggregate with other transfers by
"affiliates", would preclude the ability of the Parties to account for the
transactions contemplated by this Agreement and the Option Agreements as a
pooling of interests. Xxxx Atlantic shall not register the transfer of any
shares of Xxxx Atlantic Common Stock unless such transfer is made in
compliance with the foregoing.
SECTION 7.15 Blue Sky. GTE and Xxxx Atlantic will use their best
efforts to obtain prior to the Effective Time all necessary blue sky
permits and approvals required to permit the distribution of the shares of
Xxxx Atlantic Common Stock to be issued in accordance with the provisions
of this Agreement.
SECTION 7.16 Pooling of Interests. Each of the Parties will use its
best efforts to (a) cause the transactions contemplated by this Agreement
to be accounted for as a pooling of interests in accordance with GAAP, and
such accounting treatment to be accepted by Xxxx Atlantic's independent
certified public accountants, by the NYSE and by the SEC, respectively, and
(b) not take any action which could reasonably be expected to cause such
accounting treatment not to be obtained; provided that the foregoing shall
not apply to any conduct or the effect of any conduct to obtain all
necessary waivers, approvals and consents, and to avoid any contractual,
legal, regulatory or other issues, impediments or delays, to consummate the
transactions contemplated by this Agreement and the Option Agreements.
Nothing in this Agreement shall restrict the rights of any Party pursuant
to the Option Agreements.
SECTION 7.17 Tax-Free Reorganization. (a) Each of the Parties will
use its best efforts to cause the Merger to qualify as a tax-free
reorganization under Section 368 of the Code. (b) Xxxx Atlantic will
deliver an Officer's Certificate substantially in the form of Exhibit
7.17(b)(i) executed as of the Closing Date and GTE will deliver an
Officer's Certificate substantially in the form of Exhibit 7.17(b)(ii)
executed as of the Closing Date
ARTICLE VIII CONDITIONS TO MERGER
SECTION 8.1 Conditions to Obligations of Each Party to Effect the
Merger. The respective obligations of each Party to effect the Merger
shall be subject to the following conditions:
(a) Stockholder Approval. Each of the GTE Stockholder Approval and the
Xxxx Atlantic Stockholder Approval shall have been obtained;
(b) Legality. No federal, state or foreign statute, rule, regulation,
executive order, decree, injunction or administrative order shall have been
enacted, entered, promulgated or enforced by any Governmental Entity which
is in effect and has the effect of (i) making the Merger illegal or
otherwise prohibiting the consummation of the Merger or (ii) creating a
Material Adverse Effect on GTE or Xxxx Atlantic, with or without including
its ownership of GTE and its Subsidiaries after the Effective Time;
(c) HSR Act; California PUC. Any waiting period applicable to the
consummation of the Merger under the HSR Act shall have expired or been
terminated and the decision and order of the California Public Utilities
Commission ("CPUC") authorizing the Merger and making any required
determinations under Section 854(a)-(c) of the California Public Utilities
Code, including its determination as to any required allocation of economic
benefits, if any, of the Merger, between shareholders and ratepayers,
shall have become final;
(d) Regulatory Matters. All authorizations, consents, orders, permits
or approvals of, or declarations or filings with, and all expirations of
waiting periods imposed by, any Governmental Entity (all of the foregoing,
"Consents") which are necessary for the consummation of the transactions
contemplated hereby, other than Consents which, if not obtained, would not
have a Material Adverse Effect on Xxxx Atlantic, with or without including
its ownership of GTE and its Subsidiaries after the Merger, or GTE, shall
have been filed, have occurred or have been obtained (all such Consents
being referred to as the "Requisite Regulatory Approvals") and all such
Requisite Regulatory Approvals shall be in full force and effect, provided,
however, that a Requisite Regulatory Approval shall not be deemed to have
been obtained if in connection with the grant thereof there shall have been
an imposition by any Governmental Entity of any condition, requirement,
restriction or change of regulation, or any other action directly or
indirectly related to such grant taken by such Governmental Entity, which
would reasonably be expected to have a Material Adverse Effect on either of
(A) GTE or (B) Xxxx Atlantic (either with or without including its
ownership of GTE and its Subsidiaries after the Merger);
(e) Registration Statement Effective. The Registration Statement shall
have become effective prior to the mailing by each of GTE and Xxxx Atlantic
of the Joint Proxy Statement to its respective stockholders, no stop order
suspending the effectiveness of the Registration Statement shall then be in
effect, and no proceedings for that purpose shall then be threatened by the
SEC or shall have been initiated by the SEC and not concluded or withdrawn;
(f) Blue Sky. All state securities or blue sky permits or approvals
required to carry out the transactions contemplated hereby shall have been
received;
(g) Stock Exchange Listing. The shares of Xxxx Atlantic Common Stock
into which the GTE Common Stock will be converted pursuant to Article II
hereof and the shares of Xxxx Atlantic Common Stock issuable upon the
exercise of options pursuant to Section 2.8 hereof shall have been duly
approved for listing on the NYSE, subject to official notice of issuance;
(h) Pooling. Unless unable to be delivered due to actions taken by the
Parties which constitute mutually agreed commercially reasonable efforts or
commercially reasonable efforts with respect to wireless operations, (i)
Xxxx Atlantic shall have received a letter from PricewaterhouseCoopers
L.L.P., dated as of the Closing Date, to the effect that the transactions
contemplated hereby will qualify for pooling of interests accounting
treatment; and (ii) GTE shall have received a letter from Xxxxxx Xxxxxxxx
LLP, dated as of the Closing Date, to the effect that the transactions
contemplated hereby will qualify for pooling of interests accounting
treatment;
(i) Consents Under GTE Agreements. GTE shall have obtained the consent
or approval of any person whose consent or approval shall be required under
any agreement or instrument in order to permit the consummation of the
transactions contemplated hereby except those which the failure to obtain
would not, individually or in the aggregate, have a Material Adverse Effect
on Xxxx Atlantic, including its ownership of GTE and its Subsidiaries after
the Merger; and
(j) Consents Under Xxxx Atlantic Agreements. Xxxx Atlantic shall have
obtained the consent or approval of any person whose consent or approval
shall be required under any agreement or instrument in order to permit the
consummation of the transactions contemplated hereby except those which the
failure to obtain would not, individually or in the aggregate, have a
Material Adverse Effect on Xxxx Atlantic, including its ownership of GTE
and its Subsidiaries after the Merger.
SECTION 8.2 Additional Conditions to Obligations of GTE. The
obligations of GTE to effect the Merger are also subject to the fulfillment
of the following conditions:
(a) Representations and Warranties. The representations and warranties
of Xxxx Atlantic contained in this Agreement shall be true and correct on
the date hereof and (except to the extent such representations and
warranties speak as of a date earlier than the date hereof) shall also be
true and correct on and as of the Closing Date, except for changes
permitted under Section 6.2 hereof or otherwise contemplated by this
Agreement and the Option Agreements, with the same force and effect as if
made on and as of the Closing Date, provided, however, that for purposes of
this Section 8.2(a) only, such representations and warranties shall be
deemed to be true and correct unless the failure or failures of such
representations and warranties to be so true and correct (without regard to
materiality qualifiers contained therein), individually or in the
aggregate, results or would reasonably be expected to result in a Material
Adverse Effect on Xxxx Atlantic, either with or without including its
ownership of GTE and its Subsidiaries after the Merger;
(b) Agreements and Covenants. Xxxx Atlantic and Merger Subsidiary
shall have performed or complied with all agreements and covenants required
by this Agreement to be performed or complied with by them on or before the
Effective Time, provided, however, that for purposes of this Section 8.2
(b) only, such agreements and covenants shall be deemed to have been
complied with unless the failure or failures of such agreements and
covenants to have been complied with (without regard to materiality
qualifiers contained therein), individually or in the aggregate, results or
would reasonably be expected to result in a Material Adverse Effect on Xxxx
Atlantic, either with or without including its ownership of GTE and its
Subsidiaries after the Merger;
(c) Certificates. GTE shall have received a certificate of an
executive officer of Xxxx Atlantic to the effect set forth in paragraphs
(a) and (b) above;
(d) Tax Opinion. GTE shall have received an opinion of O'Melveny &
Xxxxx LLP, special counsel to GTE, dated as of the Closing Date, in form
and substance reasonably satisfactory to GTE, substantially to the effect
that, on the basis of the facts, representations and assumptions set forth
in such opinion, the Merger constitutes a tax-free reorganization under
Section 368 of the Code and therefore: (A) no gain or loss will be
recognized for federal income tax purposes by Xxxx Atlantic, GTE or Merger
Subsidiary as a result of the formation of Merger Subsidiary and the
Merger; and (B) no gain or loss will be recognized for federal income tax
purposes by the stockholders of GTE upon their exchange of GTE Common Stock
solely for Xxxx Atlantic Common Stock pursuant to the Merger (except with
respect to cash received in lieu of a fractional share interest in Xxxx
Atlantic Common Stock). In rendering such opinion, O'Melveny & Xxxxx LLP
may require and rely upon representations and covenants including
representations and covenants substantially in the form of those contained
in the GTE officer's certificate and the Xxxx Atlantic officer's
certificate attached hereto as Exhibit 7.17(b)(ii) and Exhibit 7.17(b)(i),
respectively;
(e) Affiliate Agreements. GTE shall have received the agreements
required by Section 7.14 hereof to be delivered by the Xxxx Atlantic
"affiliates," duly executed by each "affiliate" of Xxxx Atlantic; and
(f) Bylaws Amendment, Board of Directors. Xxxx Atlantic shall have
taken all such actions as shall be necessary so that (i) the Bylaws
Amendment shall become effective not later than the Effective Time; and
(ii) at the Effective Time, the composition of Xxxx Atlantic's Board shall
comply with Section 7.12 hereof (assuming GTE has designated the GTE
Directors as contemplated by Section 7.12 hereof).
SECTION 8.3 Additional Conditions to Obligations of Xxxx Atlantic.
The obligations of Xxxx Atlantic to effect the Merger are also subject to
the fulfillment of the following conditions:
(a) Representations and Warranties. The representations and warranties
of GTE contained in this Agreement shall be true and correct on the date
hereof and (except to the extent such representations and warranties speak
as of a date earlier than the date hereof) shall also be true and correct
on and as of the Closing Date, except for changes permitted under Section
6.2 hereof or otherwise contemplated by this Agreement and the Option
Agreements, with the same force and effect as if made on and as of the
Closing Date, provided, however, that for purposes of this Section 8.3 (a)
only, such representations and warranties shall be deemed to be true and
correct unless the failure or failures of such representations and
warranties to be so true and correct (without regard to materiality
qualifiers contained therein), individually or in the aggregate, results or
would reasonably be expected to result in a Material Adverse Effect on GTE
or Xxxx Atlantic (only after including its ownership of GTE and its
Subsidiaries after the Merger);
(b) Agreements and Covenants. GTE shall have performed or complied
with all agreements and covenants required by this Agreement to be
performed or complied with by them on or before the Effective Time,
provided, however, that for purposes of this Section 8.3 (b) only, such
agreements and covenants shall be deemed to have been complied with unless
the failure or failures of such agreements and covenants to have been
complied with (without regard to materiality qualifiers contained therein),
individually or in the aggregate, results or would reasonably be expected
to result in a Material Adverse Effect on GTE;
(c) Certificates. Xxxx Atlantic shall have received a certificate of
an executive officer of GTE to the effect set forth in paragraphs (a) and
(b) above;
(d) GTE Rights Agreement. The rights issued pursuant to the GTE Rights
Agreement shall not have become non-redeemable, exercisable, distributed or
triggered pursuant to the terms of such Agreement and would not become so
upon consummation of the transactions contemplated hereby;
(e) Tax Opinion. Xxxx Atlantic shall have received an opinion of
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP, special counsel to Xxxx Atlantic,
dated as of the Effective Time, in form and substance reasonably
satisfactory to Xxxx Atlantic, substantially to the effect that, on the
basis of the facts, representations and assumptions set forth in such
opinion, the Merger constitutes a tax-free reorganization under Section 368
of the Code and therefore: (A) no gain or loss will be recognized for
federal income tax purposes by Xxxx Atlantic, GTE or Merger Subsidiary as a
result of the formation of Merger Subsidiary and the Merger; and (B) no
gain or loss will be recognized for federal income tax purposes by the
stockholders of Xxxx Atlantic as a result of the Merger, including the
Certificate Amendment. In rendering such opinion, Skadden, Arps, Slate,
Xxxxxxx & Xxxx LLP may require and rely upon representations and covenants
including representations and covenants substantially in the form of those
contained in the GTE officer's certificate and the Xxxx Atlantic officer's
certificate attached hereto as Exhibits 7.17(b)(ii) and 7.17(b)(i)
respectively.
(f) Affiliate Agreements. Xxxx Atlantic shall have received the
agreements required by Section 7.14 hereof to be delivered by the GTE
"affiliates," duly executed by each "affiliate" of GTE.
ARTICLE IX TERMINATION, AMENDMENT AND WAIVER
SECTION 9.1 Termination. This Agreement may be terminated at any time
before the Effective Time, in each case as authorized by the respective
Board of Directors of GTE or Xxxx Atlantic:
(a) By mutual written consent of each of GTE and Xxxx Atlantic;
(b) By either GTE or Xxxx Atlantic if the Merger shall not have been
consummated on or before July 26, 1999 (the "Initial Termination Date" and
as such may be extended pursuant to this paragraph, the "Termination
Date"), provided, however, that if on the Termination Date the conditions
to the Closing set forth in Sections 8.1(b)(i), (c) or (d) shall not have
been fulfilled, but all other conditions to the Closing shall be fulfilled
or shall be capable of being fulfilled, then the Termination Date shall be
extended to March 31, 2000, (the "Extended Termination Date"); and provided
further that if on the Extended Termination Date the conditions to the
Closing set forth in Sections 8.1(b)(i), (c) or (d) shall not have been
fulfilled, but all other conditions to the Closing shall be fulfilled or
shall be capable of being fulfilled, then the Termination Date shall be
extended to June 30, 2000 (the "Final Termination Date"), unless within
five days prior to the Extended Termination Date any Party reasonably
determines that it is substantially unlikely that the conditions to the
Closing set forth in Sections 8.1(b)(i), (c) and (d) will be fulfilled by
the Final Termination Date and delivers to the other Parties a notice to
such effect. The right to terminate this Agreement under this Section
9.1(b) shall not be available to any Party whose failure to fulfill any
obligation under this Agreement has been the cause of, or resulted in, the
failure of any condition to be satisfied;
(c) By either GTE or Xxxx Atlantic if after the date hereof a court of
competent jurisdiction or Governmental Entity shall have issued an order,
decree or ruling or taken any other action (which order, decree or ruling
the Parties shall use their commercially reasonable efforts to lift), in
each case permanently restraining, enjoining or otherwise prohibiting the
transactions contemplated by this Agreement and the Option Agreements, and
such order, decree, ruling or other action shall have become final and
nonappealable;
(d) (i) by GTE, (A) if Xxxx Atlantic shall have breached or failed to
perform in any material respect any of its representations, warranties,
covenants or other agreements contained in this Agreement, which breach or
failure to perform (1) is incapable of being cured by Xxxx Atlantic prior
to the Termination Date and (2) renders any condition under Section 8.1 or
8.2 incapable of being satisfied prior to the Termination Date, or (B) if a
condition under Sections 8.1 or 8.2 to GTE's obligations hereunder cannot
be satisfied prior to the Termination Date;
(ii) by Xxxx Atlantic, (A) if GTE shall have breached or failed to
perform in any material respect any of its representations, warranties,
covenants or other agreements contained in this Agreement, which breach or
failure to perform (1) is incapable of being cured by GTE prior to the
Termination Date and (2) renders any condition under Sections 8.1 and 8.3
incapable of being satisfied prior to the Termination Date, or (B) if a
condition under Sections 8.1 or 8.3 to Xxxx Atlantic's obligations
hereunder cannot be satisfied prior to the Termination Date;
(e) By either GTE or Xxxx Atlantic if the Board of Directors of the
other or any committee of the Board of Directors of the other (i) shall
fail to include in the Joint Proxy Statement its recommendation without
modification or qualification that stockholders approve this Agreement and
the Merger, in the case of GTE, or the Stock Issuance and the Certificate
Amendment, in the case of Xxxx Atlantic Stock, (ii) shall withdraw or
modify in any adverse manner its approval or recommendation of this
Agreement or the Merger, in the case of GTE, or the Certificate Amendment
or the Stock Issuance in the case of Xxxx Atlantic, (iii) shall fail to
reaffirm such approval or recommendation upon such Party's request, (iv)
shall approve or recommend any Alternative Transaction or (v) shall resolve
to take any of the actions specified in this Section 9.1(e); or
(f) By either GTE or Xxxx Atlantic if any of the required approvals of
the stockholders of GTE or of Xxxx Atlantic shall fail to have been
obtained at a duly held stockholders meeting of either of such companies,
including any adjournments thereof.
SECTION 9.2 Effect of Termination. (a) In the event of termination of
this Agreement as provided in Section 9.1 hereof, and subject to the
provisions of Section 10.1 hereof, this Agreement shall forthwith become
void and there shall be no liability on the part of any of the Parties,
except (i) as set forth in this Section 9.2 and in Sections 4.10, 4.16,
5.10, 5.16 and 10.3 hereof, and (ii) nothing herein shall relieve any Party
from liability for any willful breach hereof.
(b) If this Agreement (i) is terminated by GTE pursuant to Section
9.1(e) hereof, (ii) could have been (but was not) terminated by GTE
pursuant to Section 9.1(e) hereof and is subsequently terminated by Xxxx
Atlantic or GTE pursuant to Section 9.1(f) because of the failure to obtain
the Xxxx Atlantic Stockholder Approval, (iii)(A) could not have been
terminated by GTE pursuant to Section 9.1(e) hereof but is subsequently
terminated by Xxxx Atlantic or GTE pursuant to Section 9.1(f) because of
the failure to obtain the Xxxx Atlantic Stockholder Approval, (B) prior to
the Xxxx Atlantic Stockholders' Meeting there shall have been an offer or
proposal for, an announcement of any intention with respect to (including
the filing of a statement of beneficial ownership on Schedule 13D
discussing the possibility of or reserving the right to engage in), or any
agreement with respect to, a transaction that would constitute an
Alternative Transaction (as defined in Section 6.3(c) hereof, except that
for the purposes of this Section 9.2(b), the applicable percentage in
clause (i) of such definition shall be fifty percent (50%)) involving Xxxx
Atlantic or any of Xxxx Atlantic's Subsidiaries, and (C) within 12 months
after the termination of this Agreement, Xxxx Atlantic enters into a
definitive agreement with any Third Party with respect to an Alternative
Transaction, or (iv) is terminated by GTE as a result of Xxxx Atlantic's
material breach of Section 7.1, Section 7.2(a) or Section 7.2(b) hereof
which, in the case of Section 7.1 and Section 7.2(a) only, is not cured
within 30 days after notice thereof to Xxxx Atlantic, Xxxx Atlantic shall
pay to GTE a termination fee of one billion eight hundred million dollars
($1,800,000,000) (the "GTE Termination Fee").
(c) If this Agreement (i) is terminated by Xxxx Atlantic pursuant to
Section 9.1(e) hereof, (ii) could have been (but was not) terminated by
Xxxx Atlantic pursuant to Section 9.1(e) hereof and is subsequently
terminated by GTE or Xxxx Atlantic pursuant to Section 9.1(f) because of
the failure to obtain the GTE Stockholder Approval, (iii)(A) could not have
been terminated by Xxxx Atlantic pursuant to Section 9.1(e) hereof but is
subsequently terminated by GTE or Xxxx Atlantic pursuant to Section 9.1(f)
because of the failure to obtain the GTE Stockholder Approval, (B) prior to
the GTE Stockholders' Meeting there shall have been an offer or proposal
for, an announcement of any intention with respect to (including the filing
of a statement of beneficial ownership on Schedule 13D discussing the
possibility of or reserving the right to engage in), or any agreement with
respect to, a transaction that would constitute an Alternative Transaction
(as defined in Section 6.3(c) hereof, except that for the purposes of this
Section 9.2(c), the applicable percentage in clause (i) of such definition
shall be fifty percent (50%)) involving GTE or any of GTE's Subsidiaries,
and (C) within 12 months after the termination of this Agreement, GTE
enters into a definitive agreement with any Third Party with respect to an
Alternative Transaction, or (iv) is terminated by Xxxx Atlantic as a result
of GTE's material breach of Section 7.1, Section 7.2(c) or Section 7.2(d)
hereof which, in the case of Section 7.1 and Section 7.2(c) only, is not
cured within 30 days after notice thereof to GTE, GTE shall pay to Xxxx
Atlantic a termination fee of one billion eight hundred million dollars
($1,800,000,000) (the "Xxxx Atlantic Termination Fee").
(d) Each termination fee payable under Sections 9.2(b) and (c) above
shall be payable in cash, payable no later than one business day following
the delivery of notice of termination to the other Party, or, if such fee
shall be payable pursuant to clause (iii) of either of Section 9.2(b) or
(c), such fee shall be payable no later than one business day following the
day such Party enters into the definitive agreement referenced in such
clause (iii).
(e) GTE and Xxxx Atlantic agree that the agreements contained in
Sections 9.2(b) and (c) above are an integral part of the transactions
contemplated by this Agreement and the Option Agreements and constitute
liquidated damages and not a penalty. In the event of any dispute as to
whether any fee due under such Sections 9.2(b) and (c) is due and payable,
the prevailing party shall be entitled to receive from the other Party the
costs and expenses (including legal fees and expenses) in connection with
any action, including the filing of any lawsuit or other legal action,
relating to such dispute. Interest shall be paid on the amount of any
unpaid fee at the publicly announced prime rate of Citibank, N.A. from the
date such fee was required to be paid.
SECTION 9.3 Amendment. This Agreement may be amended by the Parties
pursuant to a writing adopted by action taken by all of the Parties at any
time before the Effective Time; provided, however, that, after approval of
the Merger Agreement by the stockholders of GTE or Xxxx Atlantic, whichever
shall occur first, no amendment may be made which would (a) alter or change
the amount or kinds of consideration to be received by the holders of GTE
Common Stock upon consummation of the Merger, (b) alter or change any term
of the Certificate of Incorporation of GTE or the Certificate of
Incorporation of Xxxx Atlantic (except for the implementation at the
Effective Time of the Certificate Amendment) or (c) alter or change any of
the terms and conditions of this Agreement if such alteration or change
would adversely affect the holders of any class or series of securities of
GTE or Xxxx Atlantic. This Agreement may not be amended except by an
instrument in writing signed by the Parties.
SECTION 9.4 Waiver. At any time before the Effective Time, any Party
may (a) extend the time for the performance of any of the obligations or
other acts of the other Parties, (b) waive any inaccuracies in the
representations and warranties contained herein or in any document
delivered pursuant hereto and (c) waive compliance with any of the
agreements or conditions contained herein. Any agreement on the part of a
Party to any such extension or waiver shall be valid only as against such
Party and only if set forth in an instrument in writing signed by such
Party.
ARTICLE X GENERAL PROVISIONS
SECTION 10.1 Non-Survival of Representations, Warranties and
Agreements. The representations, warranties and agreements in this
Agreement shall terminate at the Effective Time or upon the termination of
this Agreement pursuant to Section 9.1 hereof, as the case may be, except
that (a) the agreements set forth in Article I and Sections 2.2, 2.4, 2.5,
2.6, 2.7, 2.8, 2.9, 7.8, 7.9 and 7.12 hereof shall survive the Effective
Time indefinitely, (b) the agreements and representations set forth in
Sections 4.10, 4.16, 5.10, 5.16, 7.5 (b), 9.2 and 10.3 hereof shall survive
termination indefinitely and (c) nothing contained herein shall limit any
covenant or Agreement of the Parties which by its terms contemplates
performance after the Effective Time.
SECTION 10.2 Notices. All notices and other communications given or
made pursuant hereto shall be in writing and shall be deemed to have been
duly given or made as of the date of receipt and shall be delivered
personally or mailed by registered or certified mail (postage prepaid,
return receipt requested), sent by overnight courier or sent by telecopy,
to the Parties at the following addresses or telecopy numbers (or at such
other address or telecopy number for a Party as shall be specified by like
notice):
(a) if to GTE:
GTE Corporation
Xxx Xxxxxxxx Xxxxx
Xxxxxxxx, Xxxxxxxxxxx 00000
Attention: Xxxxxxx X. Xxxx
Executive Vice President-Government
and Regulatory and General Counsel
Telecopy No.: (000) 000-0000
with a copy to:
O'Melveny & Xxxxx LLP
000 Xxxx 00xx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Xxxxx, Esq.
Telecopy No.: (000) 000-0000
(b) if to Xxxx Atlantic:
Xxxx Atlantic Corporation
1095 Avenue of the Xxxxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Vice President and General Counsel
Telecopy: (000) 000-0000
with a copy to:
Xxxx Atlantic Network Services, Inc.
0000 Xxxx Xxxxxx, 00X
Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000
Attention: Assistant General Counsel - Mergers and Acquisitions
Telecopy: (000) 000-0000
and
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Attention: Xxxxx Xxxxx Xxxxxx, Esq.
Telecopy No.: (000) 000-0000
SECTION 10.3 Expenses. Except as otherwise provided in this
Agreement, all costs and expenses incurred in connection with this
Agreement and the transactions contemplated hereby shall be paid by the
Party incurring such costs and expenses, except that those expenses
incurred in connection with the printing of the Joint Proxy Statement and
the Registration Statement, as well as the filing fees related thereto and
any filing fee required in connection with the filing of Premerger
Notifications under the HSR Act, shall be shared equally by GTE and Xxxx
Atlantic. GTE will pay any real property transfer or similar Taxes imposed
on the stockholders of GTE in connection with this Agreement and the
transactions contemplated hereby.
SECTION 10.4 Certain Definitions. For purposes of this Agreement, the
following terms shall have the following meanings:
(a) "1933 Act" means the Securities Act of 1933, as the same may be
amended from time to time, and "Exchange Act" means the Securities Exchange
Act of 1934, as the same may be amended from time to time.
(b) "affiliate" of a person means a person that directly or indirectly,
through one or more intermediaries, controls, is controlled by, or is under
common control with, the first mentioned person.
(c) "commercially reasonable efforts" shall mean those efforts
necessary or advisable to advance the interests of the Parties in achieving
the purposes and specific requirements and satisfying the conditions of
this Agreement, provided that such efforts will not require or include
either expense or conduct not ordinarily incurred or engaged in by Parties
seeking to implement agreements of this type unless part of a separate
mutual understanding of the Parties not contained in this Agreement whether
reached before or after the Agreement is executed.
(d) "control" (including the terms "controlled by" and "under common
control with") means the possession, direct or indirect, of the power to
direct or cause the direction of the management and policies of a person,
whether through the ownership of stock, as trustee or executor, by contract
or credit arrangement or otherwise.
(e) "HSR Act" means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of
1976, as the same may be amended from time to time.
(f) "knowledge" of any Party shall mean the actual knowledge of the
executive officers of such Party.
(g) "Material Adverse Effect" means any change in or effect on the
business of the referenced corporation or any of its Subsidiaries that is
or will be materially adverse to the business, operations (including the
income statement), properties (including intangible properties), condition
(financial or otherwise), assets, liabilities or regulatory status of such
referenced corporation and its Subsidiaries taken as a whole, but shall not
include (I) the effects of changes that are generally applicable in (A) the
telecommunications industry, (B) the United States economy or (C) the
United States securities markets if, in any of (A), (B) or (C), the effect
on GTE or Xxxx Atlantic, determined without including its ownership of GTE
after the Merger, (as the case may be) and its respective Subsidiaries,
taken as a whole, is not materially disproportionate relative to the effect
on the other and its Subsidiaries, taken as a whole. All references to
Material Adverse Effect on Xxxx Atlantic or its Subsidiaries contained in
Article IV, V or VI of this Agreement shall be deemed to refer solely to
Xxxx Atlantic and its Subsidiaries without including its ownership of GTE
and its Subsidiaries after the Merger.
(h) "Material Investment" means (a) as to GTE, any person which GTE
directly or indirectly holds the stock of, or other equity interest in,
provided the lesser of the fair market value or book value of such interest
exceeds $100 million, excluding, however, any person which is a Subsidiary
of GTE; and (b) as to Xxxx Atlantic, any person which Xxxx Atlantic
directly or indirectly holds the stock of, or other equity interest in,
provided the lesser of the fair market value or book value of such interest
exceeds $100 million, excluding, however, any Person which is a Subsidiary
of Xxxx Atlantic.
(i) "person" means an individual, corporation, partnership,
association, trust, estate, limited liability company, labor union,
unincorporated organization, entity or group (as defined in the Exchange
Act).
(j) "POR" means the Plan of Reorganization approved by the United
States Court for the District of Columbia on August 5, 1983 and the
Agreement Concerning Contingent Liabilities, Tax Matters and Termination of
Certain Agreements dated as of November 1, 1983, as amended and
supplemented.
(k) "Significant Subsidiary" with respect to GTE means any Subsidiary
which on the date of determination is a "significant subsidiary" within the
meaning of Rule 1-02(w) of Regulation S-X promulgated under the Exchange
Act and, with respect to Xxxx Atlantic means any Subsidiary which on the
date of determination is a "significant subsidiary" within the meaning of
Rule 1-02(w) of Regulation S-X promulgated under the Exchange Act.
(l) "Subsidiary", "GTE Subsidiary", or "Xxxx Atlantic Subsidiary" means
any corporation or other legal entity of which GTE or Xxxx Atlantic, as the
case may be (either alone or through or together with any other Subsidiary
or Subsidiaries), owns, directly or indirectly, more than 50% of the stock
or other equity interests the holders of which are generally entitled to
vote for the election of the board of directors or other governing body of
such corporation or other legal entity. For purposes of this Agreement,
Grupo Iusacell S.A. de C.V. shall be deemed to be a Material Investment,
and not a Subsidiary, of Xxxx Atlantic.
SECTION 10.5 Headings. The headings contained in this Agreement are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
SECTION 10.6 Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of
law or public policy, all other conditions and provisions of this Agreement
shall nevertheless remain in full force and effect so long as the economic
or legal substance of the transactions contemplated hereby is not affected
in any manner adverse to any Party. Upon such determination that any term
or other provision is invalid, illegal or incapable of being enforced, the
Parties shall negotiate in good faith to modify this Agreement so as to
effect the original intent of the Parties as closely as possible in an
acceptable manner to the end that the transactions contemplated hereby are
fulfilled to the maximum extent possible.
SECTION 10.7 Entire Agreement; No Third-Party Beneficiaries. This
Agreement, the Nondisclosure Agreement and the Stock Option Agreements
constitute the entire agreement and, except as expressly set forth herein,
supersedes any and all other prior agreements and undertakings, both
written and oral, among the Parties, or any of them, with respect to the
subject matter hereof and, except for Section 7.8 (Indemnification,
Directors' and Officers' Insurance) and Section 7.12 (Post-Merger Xxxx
Atlantic Board of Directors), is not intended to confer upon any person
other than GTE, Xxxx Atlantic, and Merger Subsidiary and, after the
Effective Time, their respective stockholders, any rights or remedies
hereunder.
SECTION 10.8 Assignment. This Agreement shall not be assigned by
operation of law or otherwise.
SECTION 10.9 Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Delaware applicable
to contracts executed in and to be performed entirely within that State,
without regard to the conflicts of laws provisions thereof; provided that
the Merger shall be governed by the laws of the State of New York
applicable to contracts executed in and to be performed entirely within
that State, without regard to the conflicts of laws provisions thereof.
SECTION 10.10 Counterparts. This Agreement may be executed in two or
more counterparts, and by the different Parties in separate counterparts,
each of which when executed shall be deemed to be an original, but all of
which shall constitute one and the same Agreement.
SECTION 10.11 Interpretation.
(a) Whenever the words "include", "includes" or "including" are
used in this Agreement they shall be deemed to be followed by the words
"without limitation."
(b) Words denoting any gender shall include all genders. Where a
word or phrase is defined herein, each of its other grammatical forms shall
have a corresponding meaning.
(c) A reference to any party to this Agreement or any other
agreement or document shall include such party's successors and permitted
assigns.
(d) A reference to any legislation or to any provision of any
legislation shall include any modification or re-enactment thereof, any
legislative provision substituted therefor and all regulations and
statutory instruments issued thereunder or pursuant thereto.
(e) All references to "$" and dollars shall be deemed to refer to
United States currency unless otherwise specifically provided.
IN WITNESS WHEREOF, GTE, Xxxx Atlantic and Beta Gamma Corporation
have caused this Agreement to be executed as of the date first written
above by their respective officers thereunto duly authorized.
GTE CORPORATION
By: /s/ Xxxxxxx X. Xxx
------------------------------
Name: Xxxxxxx X. Xxx
Title: Chairman and Chief Executive Officer
By: /s/ Xxxxxxxx Xxxxx
------------------------------
Name: Xxxxxxxx Xxxxx
Title: Secretary
XXXX ATLANTIC CORPORATION
By: /s/ Xxxx Xxxxxxxxxx
----------------------------------------
Name: Xxxx Xxxxxxxxxx
Title: Vice Chairman, President and Chief
Executive Officer
BETA GAMMA CORPORATION
By: /s/ Xxxx Xxxxxxxxxx
------------------------------------------
Name: Xxxx Xxxxxxxxxx
Title: President and Chief Executive Officer
INDEX OF DEFINED TERMS
DEFINED TERM PAGE
$ . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
1933 Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
affiliate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Alternative Transaction . . . . . . . . . . . . . . . . . . . . . . . . 39
Amended Bylaws . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
Bear Xxxxxxx . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Xxxx Atlantic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Xxxx Atlantic Disclosure Schedule . . . . . . . . . . . . . . . . . . 21
Xxxx Atlantic Acquisition Agreement . . . . . . . . . . . . . . . . . . 41
Xxxx Atlantic Common Stock . . . . . . . . . . . . . . . . . . . . . . . 3
Xxxx Atlantic Contracts . . . . . . . . . . . . . . . . . . . . . . . . 31
Xxxx Atlantic Director . . . . . . . . . . . . . . . . . . . . . . . . 50
Xxxx Atlantic Equity Rights . . . . . . . . . . . . . . . . . . . . . . 22
Xxxx Atlantic ERISA Affiliate . . . . . . . . . . . . . . . . . . . . . 26
Xxxx Atlantic Filed SEC Reports . . . . . . . . . . . . . . . . . . . . 24
Xxxx Atlantic Intellectual Property . . . . . . . . . . . . . . . . . . 29
Xxxx Atlantic Option Agreement . . . . . . . . . . . . . . . . . . . . . 1
Xxxx Atlantic Plan. . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Xxxx Atlantic SEC Reports . . . . . . . . . . . . . . . . . . . . . . . 24
Xxxx Atlantic Stockholder Approval . . . . . . . . . . . . . . . . . . 23
Xxxx Atlantic Stockholders' Meeting . . . . . . . . . . . . . . . . . . 41
Xxxx Atlantic Subsequent Determination . . . . . . . . . . . . . . . . 41
Xxxx Atlantic Subsidiary . . . . . . . . . . . . . . . . . . . . . . . 63
Xxxx Atlantic Superior Proposal . . . . . . . . . . . . . . . . . . . . 41
Xxxx Atlantic Termination Fee . . . . . . . . . . . . . . . . . . . . . 59
Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Bylaws Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Certificate Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
Closing Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
Code . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
commercially reasonable efforts . . . . . . . . . . . . . . . . . . . . 62
Common Shares Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Computer Software . . . . . . . . . . . . . . . . . . . . . . . . . 19, 29
Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
control . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
CPUC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
DGCL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Disclosure Schedules . . . . . . . . . . . . . . . . . . . . . . . . . 21
Effective Time . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Environmental Law . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Excess Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Exchange Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
Exchange Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Exchange Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Exchange Ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Extended Termination Date . . . . . . . . . . . . . . . . . . . . . . . 56
Final Termination Date . . . . . . . . . . . . . . . . . . . . . . . . 56
GAAP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Xxxxxxx Sachs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Governmental Entity . . . . . . . . . . . . . . . . . . . . . . . . . . 12
GTE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
GTE Disclosure Schedule . . . . . . . . . . . . . . . . . . . . . . . . 9
GTE Acquisition Agreement . . . . . . . . . . . . . . . . . . . . . . . 42
GTE Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
GTE Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
GTE Director . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
GTE Equity Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
GTE ERISA Affiliate . . . . . . . . . . . . . . . . . . . . . . . . . . 15
GTE Filed SEC Reports . . . . . . . . . . . . . . . . . . . . . . . . . 13
GTE Intellectual Property . . . . . . . . . . . . . . . . . . . . . . . 18
GTE Option Agreement . . . . . . . . . . . . . . . . . . . . . . . . . 1
GTE Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
GTE Rights Agreement . . . . . . . . . . . . . . . . . . . . . . . . . 10
GTE SEC Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
GTE Stockholder Approval . . . . . . . . . . . . . . . . . . . . . . . 11
GTE Stockholders' Meeting . . . . . . . . . . . . . . . . . . . . . . . 42
GTE Subsequent Determination . . . . . . . . . . . . . . . . . . . . . 42
GTE Subsidiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
GTE Superior Proposal . . . . . . . . . . . . . . . . . . . . . . . . . 43
GTE Termination Fee . . . . . . . . . . . . . . . . . . . . . . . . . . 58
Hazardous Substance . . . . . . . . . . . . . . . . . . . . . . . . . . 16
HSR Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
incentive stock options . . . . . . . . . . . . . . . . . . . . . . . . . 8
Initial Termination Date . . . . . . . . . . . . . . . . . . . . . . . 56
interested stockholder . . . . . . . . . . . . . . . . . . . . . . . . 31
Joint Proxy Statement . . . . . . . . . . . . . . . . . . . . . . . . . 14
knowledge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
Legal Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Material Adverse Effect . . . . . . . . . . . . . . . . . . . . . . . . 62
Material Investment . . . . . . . . . . . . . . . . . . . . . . . . . . 62
Merged Corporation . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Merger Subsidiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Xxxxxxx Xxxxx . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Nondisclosure Agreement . . . . . . . . . . . . . . . . . . . . . . . . 37
NYBCL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
NYSE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Old Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Option Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Party . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Party Representatives . . . . . . . . . . . . . . . . . . . . . . . . . 45
Permits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
person . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
POR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
Pre-Surrender Dividends . . . . . . . . . . . . . . . . . . . . . . . . . 5
Registration Statement . . . . . . . . . . . . . . . . . . . . . . . . 14
Requisite Regulatory Approvals . . . . . . . . . . . . . . . . . . . . 52
Xxxxxxx Xxxxx Barney . . . . . . . . . . . . . . . . . . . . . . . . . 17
SAR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
SEC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Significant Subsidiary . . . . . . . . . . . . . . . . . . . . . . . . 63
Stock Issuance . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Subsidiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
Surviving Corporation . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Surviving Corporation Common Stock . . . . . . . . . . . . . . . . . . . 4
Tax Return . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Termination Date . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
the date hereof . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Third Party . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
TABLE OF CONTENTS
ARTICLE I
THE MERGER
SECTION 1.1 The Merger . . . . . . . . . . . . . . . . . . . . . . . . 2
SECTION 1.2 Effective Time . . . . . . . . . . . . . . . . . . . . . . 2
SECTION 1.3 Effect of the Merger . . . . . . . . . . . . . . . . . . . 2
SECTION 1.4 Subsequent Actions . . . . . . . . . . . . . . . . . . . . 2
SECTION 1.5 Certificate of Incorporation; Bylaws; Directors
and Officers of Surviving Corporation . . . . . . . . . . 3
ARTICLE II
EFFECT ON STOCK OF THE SURVIVING
CORPORATION AND THE MERGED CORPORATION
SECTION 2.1 Conversion of Securities . . . . . . . . . . . . . . . . . 3
SECTION 2.2 Conversion of Shares . . . . . . . . . . . . . . . . . . . 3
SECTION 2.3 Cancellation of Treasury Shares and Xxxx
Atlantic-owned Shares . . . . . . . . . . . . . . . . . . 4
SECTION 2.4 Conversion of Common Stock of the Merged Corporation
into Common Stock of the Surviving Corporation . . . . . . 4
SECTION 2.5 Exchange Procedures . . . . . . . . . . . . . . . . . . . 4
SECTION 2.6 Transfer Books . . . . . . . . . . . . . . . . . . . . . . 5
SECTION 2.7 No Fractional Share Certificates . . . . . . . . . . . . . 6
SECTION 2.8 Options to Purchase GTE Common Stock . . . . . . . . . . . 7
SECTION 2.9 Restricted Stock . . . . . . . . . . . . . . . . . . . . . 8
SECTION 2.10 Certain Adjustments . . . . . . . . . . . . . . . . . 8
ARTICLE III
CERTAIN ADDITIONAL MATTERS
SECTION 3.1 Certificate of Incorporation and Bylaws of
Xxxx Atlantic . . . . . . . . . . . . . . . . . . . . . . 9
SECTION 3.2 Dividends . . . . . . . . . . . . . . . . . . . . . . . . 9
SECTION 3.3 Headquarters . . . . . . . . . . . . . . . . . . . . . . . 9
SECTION 3.4 Corporate Identity . . . . . . . . . . . . . . . . . . . . 9
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF GTE
SECTION 4.1 Organization and Qualification; Subsidiaries . . . . . . . 9
SECTION 4.2 Certificate of Incorporation and Bylaws . . . . . . . . . 10
SECTION 4.3 Capitalization . . . . . . . . . . . . . . . . . . . . . . 10
SECTION 4.4 Authority Relative to this Agreement . . . . . . . . . . . 11
SECTION 4.5 No Conflict; Required Filings and Consents . . . . . . . . 12
SECTION 4.6 SEC Filings; Financial Statements . . . . . . . . . . . . 12
SECTION 4.7 Absence of Certain Changes or Events . . . . . . . . . . . 13
SECTION 4.8 Litigation . . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 4.9 Permits; No Violation of Law . . . . . . . . . . . . . . . 13
SECTION 4.10 Joint Proxy Statement . . . . . . . . . . . . . . . . 14
SECTION 4.11 Employee Matters; ERISA . . . . . . . . . . . . . . . 15
SECTION 4.12 Labor Matters . . . . . . . . . . . . . . . . . . . . 15
SECTION 4.13 Environmental Matters . . . . . . . . . . . . . . . . 16
SECTION 4.14 Board Action; Vote Required; Applicability of
Section 912 . . . . . . . . . . . . . . . . . . . . . 17
SECTION 4.15 Opinions of Financial Advisors . . . . . . . . . . . . 17
SECTION 4.16 Brokers . . . . . . . . . . . . . . . . . . . . . . . 17
SECTION 4.17 Tax Matters . . . . . . . . . . . . . . . . . . . . . 17
SECTION 4.18 Intellectual Property; Year 2000 . . . . . . . . . . . 18
SECTION 4.19 Insurance . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 4.20 Ownership of Securities . . . . . . . . . . . . . . . 20
SECTION 4.21 Certain Contracts . . . . . . . . . . . . . . . . . . 20
SECTION 4.22 Rights Agreement . . . . . . . . . . . . . . . . . . . 20
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF XXXX ATLANTIC
SECTION 5.1 Organization and Qualification; Subsidiaries . . . . . . . 21
SECTION 5.2 Certificate of Incorporation and Bylaws . . . . . . . . . 21
SECTION 5.3 Capitalization . . . . . . . . . . . . . . . . . . . . . . 21
SECTION 5.4 Authority Relative to this Agreement . . . . . . . . . . . 23
SECTION 5.5 No Conflict; Required Filings and Consents . . . . . . . . 23
SECTION 5.6 SEC Filings; Financial Statements . . . . . . . . . . . . 24
SECTION 5.7 Absence of Certain Changes or Events . . . . . . . . . . . 24
SECTION 5.8 Litigation . . . . . . . . . . . . . . . . . . . . . . . . 25
SECTION 5.9 Permits; No Violation of Law . . . . . . . . . . . . . . . 25
SECTION 5.10 Joint Proxy Statement . . . . . . . . . . . . . . . . 25
SECTION 5.11 Employee Matters; ERISA . . . . . . . . . . . . . . . 26
SECTION 5.12 Labor Matters . . . . . . . . . . . . . . . . . . . . 27
SECTION 5.13 Environmental Matters . . . . . . . . . . . . . . . . 27
SECTION 5.14 Board Action; Vote Required. . . . . . . . . . . . . . 28
SECTION 5.15 Opinions of Financial Advisors . . . . . . . . . . . . 28
SECTION 5.16 Brokers . . . . . . . . . . . . . . . . . . . . . . . 28
SECTION 5.17 Tax Matters . . . . . . . . . . . . . . . . . . . . . 28
SECTION 5.18 Intellectual Property . . . . . . . . . . . . . . . . 29
SECTION 5.19 Insurance . . . . . . . . . . . . . . . . . . . . . . 30
SECTION 5.20 Ownership of Securities . . . . . . . . . . . . . . . 30
SECTION 5.21 Certain Contracts . . . . . . . . . . . . . . . . . . 31
SECTION 5.22 Merger Subsidiary . . . . . . . . . . . . . . . . . . 31
ARTICLE VI
CONDUCT OF BUSINESSES
PENDING THE MERGER
SECTION 6.1 Transition Planning . . . . . . . . . . . . . . . . . . . 32
SECTION 6.2 Conduct of Business in the Ordinary Course . . . . . . . . 32
SECTION 6.3 No Solicitation . . . . . . . . . . . . . . . . . . . . . 37
SECTION 6.4 Subsequent Financial Statements . . . . . . . . . . . . . 39
SECTION 6.5 Control of Operations . . . . . . . . . . . . . . . . . . 40
ARTICLE VII
ADDITIONAL AGREEMENTS
SECTION 7.1 Joint Proxy Statement and the Registration Statement . . . 40
SECTION 7.2 Xxxx Atlantic and GTE Stockholders' Meetings . . . . . . . 41
SECTION 7.3 Consummation of Merger; Additional Agreements . . . . . . 43
SECTION 7.4 Notification of Certain Matters . . . . . . . . . . . . . 45
SECTION 7.5 Access to Information . . . . . . . . . . . . . . . . . . 45
SECTION 7.6 Public Announcements . . . . . . . . . . . . . . . . . . . 45
SECTION 7.7 Transfer Statutes . . . . . . . . . . . . . . . . . . . . 46
SECTION 7.8 Indemnification, Directors' and Officers' Insurance . . . 46
SECTION 7.9 Employee Benefit Plans . . . . . . . . . . . . . . . . . . 47
SECTION 7.10 Succession . . . . . . . . . . . . . . . . . . . . . . 48
SECTION 7.11 Stock Exchange Listing . . . . . . . . . . . . . . . . 49
SECTION 7.12 Post-Merger Xxxx Atlantic Board of Directors . . . . . 49
SECTION 7.13 No Shelf Registration . . . . . . . . . . . . . . . . 50
SECTION 7.14 Affiliates . . . . . . . . . . . . . . . . . . . . . . 50
SECTION 7.15 Blue Sky . . . . . . . . . . . . . . . . . . . . . . . 51
SECTION 7.16 Pooling of Interests . . . . . . . . . . . . . . . . . 51
SECTION 7.17 Tax-Free Reorganization . . . . . . . . . . . . . . . 51
ARTICLE VIII
CONDITIONS TO MERGER
SECTION 8.1 Conditions to Obligations of Each Party to
Effect the Merger . . . . . . . . . . . . . . . . . . . . 52
SECTION 8.2 Additional Conditions to Obligations of GTE . . . . . . . 53
SECTION 8.3 Additional Conditions to Obligations of Xxxx Atlantic . . 55
ARTICLE IX
TERMINATION, AMENDMENT AND WAIVER
SECTION 9.1 Termination . . . . . . . . . . . . . . . . . . . . . . . 56
SECTION 9.2 Effect of Termination . . . . . . . . . . . . . . . . . . 57
SECTION 9.3 Amendment . . . . . . . . . . . . . . . . . . . . . . . . 59
SECTION 9.4 Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . 59
ARTICLE X
GENERAL PROVISIONS
SECTION 10.1 Non-Survival of Representations, Warranties
and Agreements . . . . . . . . . . . . . . . . . . . . 60
SECTION 10.2 Notices . . . . . . . . . . . . . . . . . . . . . . . 60
SECTION 10.3 Expenses . . . . . . . . . . . . . . . . . . . . . . . 61
SECTION 10.4 Certain Definitions . . . . . . . . . . . . . . . . . 61
SECTION 10.5 Headings . . . . . . . . . . . . . . . . . . . . . . . 63
SECTION 10.6 Severability . . . . . . . . . . . . . . . . . . . . . 63
SECTION 10.7 Entire Agreement; No Third-Party Beneficiaries . . . . 63
SECTION 10.8 Assignment . . . . . . . . . . . . . . . . . . . . . . 64
SECTION 10.9 Governing Law . . . . . . . . . . . . . . . . . . . . 64
SECTION 10.10 Counterparts . . . . . . . . . . . . . . . . . . . . . 64
SECTION 10.11 Interpretation. . . . . . . . . . . . . . . . . . . . 64
