Exhibit 2.1
AGREEMENT AND PLAN OF MERGER
Among
GLOBAL CROSSING LIMITED,
GC CRYSTAL ACQUISITION, INC.,
and
IMPSAT FIBER NETWORKS, INC.
Dated as of October 25, 2006
<PAGE>
TABLE OF CONTENTS
ARTICLE I THE MERGER; CONVERSION OF SHARES; CANCELLATION OF
CONVERTIBLE
INSTRUMENTS.......................................................
3
1.1. The
Merger...............................................3
1.2.
Closing; Effective Time..................................4
1.3.
Conversion of Shares.....................................6
1.4.
Company Warrants.........................................6
1.5.
Cancellation of Company Options..........................7
1.6.
Payment of Indebtedness..................................7
1.7.
Certificate of Incorporation; By-Laws....................9
1.8.
Directors and Officers of the Surviving Corporation......9
1.9.
Dissenting Stockholders..................................9
1.10. Paying
Agent............................................10
ARTICLE II REPRESENTATIONS AND WARRANTIES OF THE
COMPANY....................11
2.1.
Corporate Status, etc...................................11
2.2.
Capitalization..........................................12
2.3.
Conflicts, Consents.....................................13
2.4. SEC
Filings; Financial Statements.......................14
2.5.
Absence of Undisclosed Liabilities......................15
2.6.
Information Provided....................................16
2.7.
Absence of Certain Changes..............................16
2.8. Tax
Matters.............................................17
2.9.
Litigation..............................................18
2.10. Compliance
with Laws, Permits and Licenses..............18
2.11. Employee
Benefits.......................................19
2.12. Labor
Matters...........................................21
2.13. Real
Property; Tangible Property........................21
2.14.
Intellectual Property...................................22
2.15.
Contracts...............................................23
2.16.
Insurance...............................................24
2.17.
Environmental Matters...................................24
2.18.
Communications Regulatory Matters.......................25
2.19.
Brokers.................................................26
2.20. Provision
of Documentation..............................26
2.21. Audit
Letters...........................................26
2.22. Disclaimer
of Other Representations and Warranties;
Knowledge...............................................26
ARTICLE III REPRESENTATIONS AND WARRANTIES OF PARENT AND
MERGERCO...........27
3.1.
Corporate Status........................................27
3.2.
Authorization, etc......................................27
3.3. No
Conflicts; Consents..................................27
3.4.
Litigation..............................................28
3.5.
Brokers.................................................28
3.6.
Formation of MergerCo; No Prior Activities..............28
3.7. No
Knowledge of Misrepresentations or Omissions.........28
3.8.
Inspection; No Other Representations....................28
ARTICLE IV
COVENANTS........................................................29
4.1.
Conduct of Business by Company and Its Subsidiaries.....29
4.2.
Satisfaction of Closing Conditions......................33
4.3.
Access and Information..................................34
4.4.
Contact with Payers, Suppliers, etc.....................34
4.5.
Publicity...............................................35
4.6.
Employee Matters........................................35
4.7.
Indemnification of Directors and Officers...............36
4.8.
Acquisition Proposals...................................37
4.9.
Information Supplied....................................39
4.10. Filings;
Other Actions; Notification....................39
4.11.
Stockholders Meeting....................................40
4.12. Section 16
Matters......................................40
4.13. Takeover
Statutes.......................................41
4.14.
Deregistration..........................................41
4.15. Subsidiary
Share Transfer...............................41
4.16. Internal
Controls and Procedures........................41
4.17.
Cooperation with Financing..............................41
ARTICLE V CONDITIONS TO
CLOSING.............................................42
5.1.
Conditions to the Obligations of the Company,
Parent and
MergerCo.....................................42
5.2.
Conditions to the Obligation of Parent and MergerCo.....43
5.3.
Conditions to the Obligation of the Company.............44
ARTICLE VI NO SURVIVAL OF REPRESENTATIONS, WARRANTIES AND
COVENANTS.........44
6.1. No
Survival of Representations, Warranties and
Covenants...............................................44
ARTICLE VII
TERMINATION.....................................................45
7.1.
Termination.............................................45
7.2.
Effect of Termination...................................46
ARTICLE VIII DEFINITIONS AND
INTERPRETATION.................................48
8.1.
Definition of Certain Terms; Interpretation.............48
8.2.
Schedules...............................................57
ARTICLE IX GENERAL
PROVISIONS...............................................58
9.1.
Expenses................................................58
9.2.
Further Actions.........................................58
9.3.
Certain Limitations.....................................58
9.4.
Notices.................................................58
9.5.
Limited Disclosure......................................59
9.6.
Binding Effect..........................................59
9.7.
Entire Agreement; Assignment............................60
9.8.
Amendment; Waivers, etc.................................60
9.9.
Parent Guarantee........................................60
9.10.
Severability............................................60
9.11.
Headings................................................60
9.12.
Counterparts............................................60
9.13. Governing
Law...........................................61
9.14. Consent to
Jurisdiction, etc............................61
9.15. Waiver of
Punitive and Other Damages and Jury Trial.....61
9.16. Specific
Performance....................................62
9.17. No Third
Party Beneficiaries............................62
9.18.
Interpretation; Construction............................62
<PAGE>
EXECUTION COPY
AGREEMENT AND PLAN OF MERGER, dated as of October 25, 2006,
among
Global Crossing Limited, a Bermuda corporation ("Parent"), GC
Crystal
Acquisition, Inc., a Delaware corporation ("MergerCo") and IMPSAT
Fiber
Networks, Inc., a Delaware corporation (the "Company"). Capitalized
terms
used herein are defined in Article VIII. An index of defined terms
used in
this Agreement is provided in Article 8.1 hereto.
WHEREAS, the respective Boards of Directors of Parent, MergerCo
and
the Company have determined that it is advisable and in the best
interests
of their respective stockholders for MergerCo to merge with and
into the
Company (the "Merger") with the Company continuing as the
surviving
corporation of such Merger.
WHEREAS, the parties wish to effect the Merger on the terms and
conditions set forth in this Agreement and in accordance with
the
applicable provisions of the Delaware General Corporation Law, as
amended
("DGCL").
WHEREAS, simultaneously herewith, Parent has taken all
necessary
action to cause all shareholders of MergerCo to approve the Merger,
upon
the terms and subject to the conditions set forth in this
Agreement.
WHEREAS, as a condition to and as an inducement to Parent's
willingness to enter into this Agreement, the Principal
Stockholders are,
concurrently with the execution and delivery of this Agreement,
entering
into support agreements (the "Support Agreements"), the forms of
which are
attached hereto as Exhibits A-1, A-2 and A-3, pursuant to which
the
Principal Stockholders are agreeing to support and approve this
Agreement,
the Merger and the other transactions contemplated hereby.
WHEREAS, Parent and Company desire to make certain
representations,
warranties, covenants and agreements in connection with the Merger,
and
also to prescribe various conditions to the Merger.
NOW,
THEREFORE, in consideration of the mutual agreements and
covenants herein, and for other good and valuable consideration,
the
receipt and sufficiency of which is hereby acknowledged, the
parties hereto
agree as follows:
ARTICLE I
THE MERGER; CONVERSION OF SHARES;
CANCELLATION OF CONVERTIBLE INSTRUMENTS
1.1.
The Merger. Upon the terms and subject to the conditions of
this
Agreement and in accordance with the applicable provisions of the
DGCL at
the Effective Time, MergerCo shall be merged with and into the
Company and
the separate corporate existence of MergerCo shall cease. After the
Merger,
the Company shall continue as the surviving corporation
(sometimes
hereinafter referred to as the "Surviving Corporation") and shall
continue
to be governed by the laws of the State of Delaware. The Merger
shall have
the effect as provided in the applicable provisions of the DGCL.
Without
limiting the generality of the foregoing, at the Effective Time,
all the
rights, privileges, immunities, powers and franchises of the
Company and
MergerCo shall vest in the Surviving Corporation and all
restrictions,
obligations, duties, debts and liabilities of the Company and
MergerCo
shall be the restrictions, obligations, duties, debts and
liabilities of
the Surviving Corporation.
1.2.
Closing; Effective Time.
(a)
The closing of the Merger (the "Closing") shall take place at
the
offices of Fried, Frank, Harris, Shriver & Jacobson LLP, One
New York
Plaza, New York, New York 10004, at 10:00 a.m., New York time, on
the third
Business Day following the satisfaction or waiver of the conditions
set
forth in Article V (other than conditions which, by their nature,
are to be
satisfied at the Closing, but subject to the waiver or satisfaction
of
those conditions), or at such other place, time and date as the
parties may
agree. The "Closing Date" shall be the date upon which the Closing
occurs.
(b)
On the Closing Date, MergerCo and the Company will cause the
appropriate certificate of merger (the "Certificate of Merger") to
be
executed and filed with the Secretary of State of the State of
Delaware
(the "Delaware Secretary of State") in such form and executed as
provided
in Section 251(c) of the DGCL. The Merger will become effective at
the time
when the Certificate of Merger has been duly filed with the
Delaware
Secretary of State, or such later time as may be specified in
the
Certificate of Merger (the "Effective Time").
(c)
Subject to the terms and conditions of this Agreement, at the
Closing prior to the Effective Time, Parent shall cause to be paid
to the
Company by wire transfer of immediately available funds, an
amount
necessary to satisfy the payments set forth below (based on the
amounts set
forth in a certificate delivered by the Company as provided in the
last
paragraph of this Section 1.2(c)):
(i) immediately prior to the Effective Time, the Company shall
pay,
in each case, by wire transfer of immediately available funds,
amounts sufficient to repay in full in cash all outstanding
principal,
interest and all other amounts due, and to satisfy or defease
the
obligations of the Company and its Subsidiaries in respect of
the
Credit Agreements, the Company Notes, and the Other Specified
Financing Agreements (in each case other than any securities that
have
been
purchased by the Parent or an affiliate of Parent and other
than
such
Other Specified Financing Agreements as Parent has elected to
not
satisfy or defease as of the Effective Time) in accordance with
Section 1.6 hereof and the Company will take such other steps as
may
be
necessary to cause the satisfaction or defeasance of all such
obligations thereunder;
(ii) at the Effective Time, the Company shall pay in cash, by
wire
transfer of immediately available funds, any payments due under
the
Management Cash Incentive Plan and the Transaction Expenses;
(iii) at the Effective Time, the Company shall deposit or cause
to
be deposited with the Paying Agent (for the benefit of holders
of
Company Options) an amount in cash equal to the aggregate amount
of
Option Cancellation Payments, if any;
(iv) at the Effective Time, the Company shall deposit or cause
to
be
deposited with the Paying Agent (for the benefit of the holders
of
Company Warrants) an amount in cash equal to (x) the excess, if
any,
of
the Per Share Merger Consideration over the Exercise Price per
share of each Company Warrant, multiplied by (y) the number of
shares
of
Company Stock covered by such Company Warrant immediately prior
to
the
Effective Time;
(v) at the Effective Time, the Company shall deposit or cause
to
be
deposited with the Paying Agent (for the benefit of holders of
Company Stock) an amount equal to $9.32 per share (the "Per
Share
Merger Consideration") multiplied by the number of shares of
issued
and
outstanding Company Stock.
In
order to facilitate the payments contemplated by this Section
1.2(c), the Company will deliver to Parent and to MergerCo not less
than
three Business Days prior to the anticipated Closing Date a
statement (the
"Consideration Certificate"), certified by the chief financial
officer of
the Company, that will set forth: (1) the aggregate amount payable
to each
lender under the Credit Agreements, the Company Notes, and the
Other
Specified Financing Agreements pursuant to Section 1.2(c)(i), (2)
the
Transaction Expenses and the amount payable in respect of the
Management
Cash Incentive Plan payable pursuant to Section 1.2(c)(ii), (3)
the
aggregate Option Cancellation Payment payable to the Paying Agent
(for the
benefit of the holders of Company Options) pursuant to Section
1.2(c)(iii),
and (4) the aggregate amounts payable to the Paying Agent (for the
benefit
of holders of the Company Warrants) pursuant to Section 1.2(c)(iv).
The
Consideration Certificate shall also set forth the wire transfer or
other
payment instructions with respect to the payments to be made
pursuant to
Sections 1.2(c)(i) and (ii). All of the calculations and amounts
set forth
in the Consideration Certificate shall be deemed to be conclusive
and
binding on the parties absent manifest error; provided, that the
Company
shall provide Parent with reasonable documentation in support of
the
amounts set forth on the Consideration Certificate as requested by
Parent.
The Company represents and warrants to Parent that each of the
amounts set
forth on Schedule 1.2(c)(i) and Schedule 1.2(c)(ii) of the
Disclosure
Letter represent true, complete and correct estimates, as of the
date set
forth on such Schedule or, if no date is specified, as of the date
of this
Agreement, of the corresponding amounts to be set forth on the
Consideration Certificate, and that each of the amounts set forth
on
Schedules 1.2(c)(iii) and 1.2(c)(iv) of the Disclosure Letter
represents a
true, complete and correct calculations of the corresponding
amounts to be
set forth on the Consideration Certificate. The estimates made in
Schedule
1.2(c)(ii) of the Disclosure Letter have been made based upon the
Company's
good faith and are believed by the Company to be reasonable and
accurate as
of the date of this Agreement. There is no written or oral contract
or
arrangement between the Company and any other Person which served
or should
serve as a basis for Schedule 1.2(c) of the Disclosure Letter that
is not
set forth therein. It is understood that the actual amounts set
forth on
the Consideration Certificate with respect to the items set forth
on
Schedule 1.2(c)(i) of the Disclosure Letter (solely with respect
to
interest amounts accrued as of the Effective Time) and 1.2(c)(ii)
of the
Disclosure Letter are expected to differ from the estimates set
forth on
such Schedule.
(d)
Subject to the terms and conditions of this Agreement, at and
in
connection with the Closing:
(i) as soon as practicable after the Effective Time, the Paying
Agent shall deliver to each holder of Company Stock who, in
accordance
with
Section 1.10(b), has delivered to the Paying Agent a duly
executed Letter of Transmittal and surrendered the applicable
Certificate or Certificates an aggregate amount in cash equal to
the
product of the number of
shares represented by such Certificate or
Certificates and the applicable Per Share Merger Consideration,
without interest thereon;
(ii) immediately after the Effective Time, the Surviving
Corporation shall issue to its direct parent company a stock
certificate or certificates representing that number of shares
of
Surviving Corporation Common Stock equal to the number of all
outstanding shares of MergerCo Common Stock in exchange for the
certificate or
certificates which formerly represented all outstanding
shares of MergerCo Common Stock, which shall be canceled and
converted
pursuant to Section 1.3(c);
1.3.
Conversion of Shares. At the Effective Time, by virtue of the
Merger and without any action on the part of any holders of any
shares of
Company Stock, or of the MergerCo Common Stock:
(a)
Each share of Company Stock issued and outstanding immediately
prior to the Effective Time (other than shares of Company Stock
held as
treasury stock and the Dissenting Shares) shall be converted into
the right
to receive the Per Share Merger Consideration. The issued and
outstanding
Company Stock, when converted, shall no longer be outstanding and
shall
automatically be canceled and retired and shall cease to exist, and
each
holder of a Certificate representing any such shares of Company
Stock shall
cease to have any rights with respect thereto, except the right to
receive
the Per Share Merger Consideration applicable to such Company Stock
upon
the surrender of such Certificate in the manner provided in and
in
accordance with Section 1.2(d).
(b)
All shares of Company Stock that are held by the Company as
treasury stock or otherwise, or by any wholly owned Subsidiary of
the
Company, shall be canceled and retired and shall cease to exist and
no Per
Share Merger Consideration shall be delivered in exchange
therefor.
(c)
Each share of MergerCo Common Stock issued and outstanding
immediately prior to the Effective Time shall be converted into
and
exchangeable for one fully paid and non-assessable share of common
stock,
par value $0.01 per share, of the Surviving Corporation
("Surviving
Corporation Common Stock"). From and after the Effective Time,
each
outstanding certificate theretofore representing shares of MergerCo
Common
Stock shall be deemed for all purposes to evidence ownership of and
to
represent the number of shares of Surviving Corporation Common
Stock into
which such shares of MergerCo Common Stock shall have been
converted.
1.4.
Company Warrants. Subsequent to the date of this Agreement but
prior to the Closing, the Company will enter into a supplement to
the
Warrant Agreement (the "Supplemental Warrant Agreement") to provide
for the
treatment of the Company Warrants set forth in Section 4.04(a) of
the
Warrant Agreement or as otherwise agreed to by the holders of the
Company
Warrants (which other treatment shall be no more beneficial for the
holders
of Company Warrants than the treatment currently set forth in
Section
4.04(a) of the Warrant Agreement). The Company will take or cause
to be
taken all actions necessary to give effect to the Supplemental
Warrant
Agreement.
1.5.
Cancellation of Company Options. At the Effective Time, by
virtue
of the Merger and without any action on the part of the holders
thereof:
(a)
each Company Option granted under the Stock Incentive Plan or
Other Director Agreements and outstanding as of the Effective Time
(whether
or not then vested and exercisable) shall be cancelled in exchange
for a
single lump sum cash payment, which shall be paid by the Paying
Agent from
the funds delivered to it pursuant to Section 1.2(c)(iii) as soon
as
practicable, but in no event more than 5 days following the
Effective Time,
equal to (x) the excess, if any, of the Per Share Merger
Consideration over
the Exercise Price per share of such Company Option, multiplied by
(y) the
number of shares of Company Stock covered by such Company
Option
immediately prior to the Effective Time (the "Option
Cancellation
Payment"). For purposes of clarity, each Company Option for which
no Option
Cancellation Payment is due shall be cancelled at the Effective
Time; and
(b)
the Option Cancellation Payment shall be made, without interest
thereon, by wire transfer of immediately available funds;
(c)
the Paying Agent shall deduct and withhold, or cause to be
deducted or withheld, from any Option Cancellation Payment made
hereunder,
such amounts as are required to be deducted and withheld under the
Code, or
any provision of applicable U.S. federal, state, local or foreign
Tax law.
To the extent that amounts are so deducted and withheld, such
deducted and
withheld amounts shall be treated for all purposes of this
Agreement as
having been paid to the holders of Company Options in respect of
which such
deduction and withholding was made.
1.6.
Payment of Indebtedness.
(a)
Company Notes.
(i) Between the date hereof and the Closing, the Company shall
commence a contingent Offer to Purchase all of the outstanding
Series
A
Notes and Series B Notes (collectively, the "Pre-Closing Offers
to
Purchase") at 101% of the principal amount thereof, plus
accrued
interest thereon (if any) to the Payment Date (the "Offer
Price").
Each Pre-Closing Offer
to Purchase shall (v) state that it is
contingent upon the occurrence of the Closing and that the
Pre-Closing
Offer to Purchase shall be of no effect if this Agreement is
terminated or the Closing does not occur, (w) provide that the
"Payment Date" (as used in the Company Notes) for purposes of
each
Pre-Closing Offer to Purchase shall be the Closing Date, (x) seek
a
waiver of the requirement to make a subsequent Change of Control
Offer
to
Purchase pursuant to Section 4.12 of the Indentures, (y) seek,
to
the
extent necessary, the Indenture Amendments and (z) be conducted
in
a
manner and pursuant to documentation to be mutually agreed upon
in
good
faith by both Parent and the Company.
(ii) Between the date hereof and the Closing, the Company shall
commence separate consent solicitations (the "Consent
Solicitations")
with
respect to each of the Indentures, as described in Schedule
1.6(a) of the Disclosure Letter. The Consent Solicitations shall
be
conducted in accordance with Schedule 1.6(a) of the Disclosure
Letter
and,
unless otherwise specifically provided for therein, all actions
to
be taken in connection therewith by the Company shall be
mutually
determined by Parent and the Company in the exercise of their
respective reasonable judgment.
(iii) Immediately prior to the Effective Time, in accordance
with
Section 1.2(c)(i), the Company shall (x) pay to the Paying Agent
an
amount sufficient to pay the Offer Price for all Series A and
Series B
Notes tendered pursuant to the Pre-Closing Offers to Purchase and
(y)
deposit with the indenture trustee for the Series A Notes and
the
indenture trustee for the Series B Notes the amounts required
under
Article 8 of the Indentures to defease the Company Notes (if any)
that
were
not tendered pursuant to the Pre-Closing Offers to Purchase.
(b)
Argentina Financing Agreement.
Immediately prior to the Effective Time, in accordance with
Section
1.2(c)(i), either (i) the Company will prepay in full the
Obligations
outstanding under the Argentina Financing Agreement pursuant to
Section
3.2(b) thereof and simultaneously terminate the Argentina
Financing
Agreement or (ii) at the option of Parent, Parent will purchase or
cause an
Affiliate of Parent to purchase the indebtedness underlying the
Argentina
Financing Agreement for the same amount as the amount of the
payment in
clause (i). The Company shall take all actions necessary prior to
the
Effective Time to effect such prepayment.
(c)
Brazil Financing Agreement.
Immediately prior to the Effective Time, in accordance with
Section
1.2(c)(i), either (i) the Company will prepay in full the
obligations
outstanding under the Brazil Financing Agreement pursuant to
Section 3.2(b)
thereof and simultaneously terminate the Brazil Financing Agreement
or (ii)
at the option of Parent, Parent will purchase or cause an Affiliate
of
Parent to purchase the indebtedness underlying the Brazil
Financing
Agreement for the same amount as the amount of the payment in
clause (i).
The Company shall take all actions necessary prior to the Effective
Time to
effect such prepayment.
(d)
Other Specified Financing Agreements.
Immediately prior to the Effective Time, in accordance with
Section
1.2(c)(i), either (i) the Company will prepay in full the
obligations
outstanding under the Other Specified Financing Agreements pursuant
to the
terms thereof and simultaneously terminate such Other Specified
Financing
Agreements or (ii) at the option of Parent, Parent will purchase or
cause
an Affiliate of Parent to purchase the indebtedness underlying the
Other
Specified Financing Agreements for the same amount as the amount of
the
payment in clause (i) (other than, in each of clauses (i) and (ii),
such
Other Specified Financing Agreements as Parent has elected to not
satisfy
or defease as of the Effective Time). The Company shall take all
actions
necessary prior to the Effective Time to effect such
prepayment.
1.7.
Certificate of Incorporation; By-Laws.
(a)
From and after the Effective Time, the certificate of
incorporation of the Surviving Corporation shall be the certificate
of
incorporation of the Company in effect immediately prior to the
Effective
Time, until thereafter amended as provided by applicable Law.
(b)
From and after the Effective Time, the by-laws of the Surviving
Corporation shall be the by-laws of the Company in effect
immediately prior
to the Effective Time, until thereafter amended as provided by
applicable
Law.
1.8.
Directors and Officers of the Surviving Corporation.
(a)
The directors of MergerCo immediately prior to the Effective
Time
shall be the directors of the Surviving Corporation until their
successors
shall have been duly elected or appointed and qualified or until
their
earlier death, resignation or removal in accordance with the
Surviving
Corporation's certificate of incorporation and by-laws.
(b)
The officers of the Company immediately prior to the Effective
Time shall be the officers of the Surviving Corporation and shall
hold
office until their respective successors are duly elected or
appointed and
qualified, or until their earlier death, resignation or
removal.
1.9.
Dissenting Stockholders.
(a)
Notwithstanding anything in this Agreement to the contrary, any
issued and outstanding shares of Company Stock held by a Person
(a
"Dissenting Stockholder") who does not vote to adopt this Agreement
and who
properly demands appraisal for such shares in accordance with
Section 262
of the DGCL ("Dissenting Shares") shall not be converted as
described in
Section 1.3, but shall, as of the Effective Time, be converted into
the
right to receive such consideration as may be determined to be due
to such
Dissenting Stockholder pursuant to Section 262 of the DGCL, unless
such
holder fails to perfect or withdraws or otherwise loses his or her
right to
appraisal. If, after the Effective Time, such Dissenting
Stockholder fails
to perfect or withdraws or loses his or her right to appraisal,
such
Dissenting Stockholder's shares of Company Stock shall no longer
be
considered Dissenting Shares for the purposes of this Agreement and
such
holder's shares of Company Stock shall thereupon be deemed to have
been
converted, at the Effective Time, without interest as described in
Section
1.3. Persons who have perfected statutory rights with respect to
Dissenting
Shares as aforesaid will not be paid by the Surviving Corporation
as
provided in this Agreement and will have only such rights as are
provided
by the appraisal rights provisions of the DGCL (the "Appraisal
Rights
Provisions") with respect to such Dissenting Shares.
Notwithstanding
anything in this Agreement to the contrary, if Parent, MergerCo or
the
Company abandon or are finally enjoined or prevented from carrying
out, or
the stockholders rescind their adoption and approval of, this
Agreement,
the right of each holder of Dissenting Shares to receive the fair
value of
such Dissenting Shares in accordance with the Appraisal Rights
Provisions
will terminate, effective as of the time of such abandonment,
injunction,
prevention or rescission.
(b)
The Company shall give Parent and MergerCo (i) prompt notice of
any demands for appraisal of shares of Company Stock, withdrawals
of any
such demands and any other related instruments served pursuant to
the DGCL
received by the Company, and (ii) the opportunity to participate in
all
negotiations and proceedings with respect to any such demands, and
the
Company shall not, without the prior written consent of Parent,
which
consent will not be unreasonably withheld, make any payment with
respect
to, or settle, offer to settle any such demands or agree or commit
to do
any of the foregoing.
1.10. Paying Agent.
(a)
Notices to Stockholders. As promptly as practicable after the
Effective Time, the Surviving Company shall, or shall cause the
Paying
Agent to, mail to each holder of record of Company Stock on the
applicable
record date (i) a letter of transmittal specifying that delivery
shall be
effected, and risk of loss of the Certificates shall pass, only
upon
delivery of the Certificates to the Paying Agent, and which letter
shall be
in customary form and have such other provisions as the Company
may
reasonably specify (the "Letter of Transmittal"), and (ii)
instructions for
effecting the surrender of such Certificates for payment.
(b)
Letters of Transmittal. After the Effective Time, upon
surrender
of a Certificate to the Paying Agent together with the
applicable
transmittal documents, duly executed and completed in accordance
with the
instructions thereto, and such other documents as may reasonably
be
required by the Paying Agent, the holder of such Certificate shall
be
entitled to receive in exchange therefore the applicable Per Share
Merger
Consideration multiplied by the number of shares represented by
such
Certificate, without any interest thereon. In the event of a
transfer of
ownership of shares of Company Stock that is not registered in the
transfer
records of the Company, payment may be made with respect to such
shares to
such a transferee if the Certificate representing such shares is
presented
to the Paying Agent, accompanied by all documents required to
evidence and
effect such transfer and to evidence that any applicable stock
transfer
taxes have been paid.
(c)
Share Transfer Books. At and after the Effective Time, there
shall
be no transfers on the share transfer books of the Company of any
shares of
Company Stock that were outstanding immediately prior to the
Effective
Time. If, after the Effective Time, Certificates of the Company
are
presented to the Surviving Corporation, they shall be cancelled and
the
shares of Company Stock represented thereby shall be converted as
provided
in Section 1.3.
(d)
Withholdings. The Paying Agent, the Company and the Surviving
Corporation, as applicable, shall be entitled to deduct and
withhold from
the amounts payable pursuant to this Agreement such amounts as the
Paying
Agent, the Company or the Surviving Corporation, as applicable, is
required
to deduct and withhold with respect to the making of such payment
under the
Code, or any provision of the United States federal, state, local
or
foreign tax laws. To the extent that amounts are so withheld by
Paying
Agent, the Company or the Surviving Corporation, such amounts
withheld
shall be treated for all purposes of this Agreement as having been
paid to
the appropriate payee in respect of which such deduction and
withholding
was made by the Paying Agent, Company or the Surviving
Corporation.
(e)
Unclaimed Consideration. Six months after the Effective Time,
the
Surviving Corporation shall cause the Paying Agent to deliver any
portion
of the Per Share Merger Consideration that it holds and that
remains
unclaimed to the Surviving Corporation. Any holder of Company
Stock
immediately prior to the Effective Time who has not theretofore
complied
with this Section 1.10 shall thereafter look only to the
Surviving
Corporation (subject to abandoned property, escheat or other
similar laws)
for payment of any portion of the Per Share Merger Consideration
that may
be payable upon surrender of any Certificates such holder holds,
as
determined pursuant to this Agreement, as a general creditor and
without
any interest thereon.
(f)
No Liability. None of the Company, the Surviving Corporation,
Parent and their Affiliates, the Paying Agent or any other Person
shall be
liable for any amount properly delivered to a public official
pursuant to
applicable abandoned property, escheat or similar laws.
(g)
Lost Certificates. If any Certificate shall have been lost,
stolen
or destroyed, upon the making of an affidavit of that fact by the
Person
claiming such Certificate to be lost, stolen or destroyed and, if
required
by the Company or the Surviving Corporation, the posting by such
Person of
a bond in such reasonable amount as the Company or the
Surviving
Corporation may direct as indemnity against any claim that may be
made
against it with respect to such Certificate, the Surviving
Corporation
shall direct the Paying Agent to issue in exchange for such lost,
stolen or
destroyed Certificate the Per Share Merger Consideration payable in
respect
of the shares of Company Stock represented thereby pursuant to
this
Agreement.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
OF THE COMPANY
Except as (i) set forth in that certain letter, dated as of the
date
of this Agreement, from the Company to Parent and MergerCo (the
"Disclosure
Letter"), (ii) disclosed in any Company Reports filed with the
Securities
and Exchange Commission on or after January 1, 2006 and prior to
the date
hereof (each, a "Recent Company Report") excluding (a) all exhibits
(other
than press releases filed as exhibits to any such Recent Company
Report)
and (b) all disclosures in any "Risk Factors" section contained in
any of
the Recent Company Reports or (iii) contemplated under this
Agreement, the
Company and each of its Subsidiaries, jointly and severally,
represent and
warrant to Parent and MergerCo as follows:
2.1.
Corporate Status, etc.
(a)
Organization. Schedule 2.1(a) of the Disclosure Letter lists
all
of the Company's Subsidiaries and their respective jurisdictions
of
incorporation. Each of the Company and its Subsidiaries is a
corporation
duly incorporated, validly existing and in good standing under the
laws of
the jurisdiction of its incorporation, and has full corporate power
and
authority to own, lease and operate its properties and to carry on
its
business as presently conducted. Each of the Company and each of
its
Subsidiaries is duly qualified to do business and in good standing
as a
foreign corporation in all jurisdictions in which the failure to be
so
qualified would, individually or in the aggregate, reasonably be
expected
to have or result in a Material Adverse Effect.
(b)
Authorization, etc. The Company has full power and authority to
enter into this Agreement and to perform its obligations hereunder.
The
execution, delivery and performance by the Company of this
Agreement have
been duly authorized by all necessary corporate action and this
Agreement
is the legally valid and binding agreement of the Company,
enforceable
against it in accordance with its terms, except as such
enforceability may
be limited by applicable bankruptcy, insolvency, moratorium,
reorganization
or other laws affecting creditors' rights generally and by the
availability
of equitable remedies generally and, subject, in the case of the
Merger, to
the receipt of Stockholder Approval. Except as set forth on
Schedule 2.1(b)
of the Disclosure Letter, no vote of any holders of any class or
series of
Company Stock is necessary to approve the Merger and the
transactions
related thereto. The Company Board has unanimously (A) determined
that the
Merger is fair to, and in the best interests of, the Company and
its
Stockholders, approved and declared advisable this Agreement and
the Merger
and, subject to the provisions of Section 4.8(b) below, resolved
to
recommend adoption of this Agreement to the holders of Company
Stock (the
"Company Recommendation"), (B) directed that this Agreement be
submitted to
the Stockholders for Stockholder Approval and (C) received the
opinion of
its financial advisor, Goldman Sachs, to the effect that the Per
Share
Merger Consideration is fair from a financial point of view to
the
Stockholders.
(c)
Prior to the date of this Agreement, the Board of Directors of
the
Company has taken all action necessary so that the restrictions on
business
combinations contained in Section 203 of the DGCL will not apply
with
respect to or as a result of this Agreement or the transactions
contemplated hereby or thereby, including the Merger, without any
further
action on the part of the Stockholders and the Board of Directors
of the
Company. True and complete copies of all resolutions of the Board
of
Directors of the Company reflecting such actions have been
previously
provided to Parent. No other state takeover statute is applicable
to the
Merger.
2.2.
Capitalization.
(a)
Common and Preferred Stock. The authorized Company Stock
consists
of 50,000,000 shares of common stock, par value $0.01 per share,
all of
which have been duly authorized, of which 10,120,685 shares are
outstanding, which shares have been validly issued and are fully
paid and
nonassessable. In addition, 5,000,000 shares of preferred stock,
with a par
value of $0.01 per share have been duly authorized, however no
preferred
stock has been issued by the Company. The issued and outstanding
capital
stock of each of the Company's Subsidiaries is listed on Schedule
2.1(a) of
the Disclosure Letter. Except as set forth on Schedule 2.1(a) of
the
Disclosure Letter, the Company owns directly or indirectly all of
the
outstanding shares of capital stock of such Subsidiaries, free and
clear of
all Liens, other than Liens created by Parent or any of its
Affiliates. All
such shares have been duly authorized and are validly issued, fully
paid
and nonassessable. Other than as set forth in this Section 2.2,
there are
no other authorized or issued equity securities or interests of the
Company
or issued equity securities or interests of its Subsidiaries.
(b)
Convertible Instruments. The Company has granted or issued and
has
outstanding:
(i) Company Options under (a) the Stock Incentive Plan relating
to
1,834,138 shares of Company Stock and (b) the Other Director
Option
Agreements relating to 82,546 shares of Company Stock, which will
be
vested and exercisable as of the Effective Time (unless earlier
canceled in accordance with their terms);
(ii) Company Warrants relating to 3,257,178 shares of Company
Stock;
(iii) Series A Notes convertible into 4,963,748 shares of
Company
Stock; and
(iv) Series B Notes convertible into 1,107,147 shares of
Company
Stock.
The
Exercise Price of each tranche of Company Options, Company
Warrants, Series A Notes and Series B Notes is set forth on
Schedule 2.2(b)
of the Disclosure Letter.
(c)
Agreements with Respect to Company Stock, etc. Other than as
set
forth in the certificate of incorporation of the Company or the
Organizational Documents of its Subsidiaries, or in Section 2.2(b)
hereof,
there are no (i) preemptive or similar rights on the part of any
holders of
any class of securities of the Company or any of its Subsidiaries;
(ii)
subscriptions, options, warrants, conversion, exchange or other
rights,
agreements, commitments, arrangements or understandings of any
kind
obligating the Company or any of its Subsidiaries, contingently
or
otherwise, to issue or sell, or cause to be issued and sold, any
shares of
or other interest in capital stock of any class of the Company or
any of
its Subsidiaries or any securities convertible into or exchangeable
for any
such shares; (iii) stockholder agreements, voting trusts or
other
agreements or understandings to which the Company or any of its
Subsidiaries is a party or to which the Company or any of its
Subsidiaries
is bound relating to the voting, purchase, redemption or other
acquisition
of any shares of the capital stock of the Company or any of its
Subsidiaries; or (iv) outstanding dividends, whether current or
accumulated, due or payable on any of the capital stock of the
Company or
any of its Subsidiaries.
(d)
Equity Interests. Except for its Subsidiaries, the Company does
not own any capital stock of or other equity securities or
interests in any
other Person. The Company is not a party to any stockholder
agreements,
voting trusts or other agreements or understandings relating to the
voting,
purchase, redemption or other acquisition of any shares of capital
stock or
equity interests in any other Person.
2.3.
Conflicts, Consents.
(a)
Conflicts. The execution and delivery of this Agreement by the
Company, and the performance of its obligations hereunder (i) do
not
conflict with the Organizational Documents of the Company or any of
its
Subsidiaries, (ii) subject to obtaining the Consents referred to in
Section
2.3(b), do not conflict with, violate, breach or result in a
default under
(with or without the giving of notice or the lapse of time), give
rise to a
right of termination, of any obligation or to the loss of any
benefit
under, any Permit or any Contract to which the Company or any of
its
Subsidiaries is a party or by which any of them or their
respective
properties or assets are bound or result in the creation or
imposition of
any Liens other than Liens created by or resulting from the actions
of
Parent, MergerCo or any of its Affiliates, or (iii) subject to
obtaining
the Consents referred to in Section 2.3(b), violate any law
applicable to
the Company or any of its Subsidiaries, excluding from the
foregoing
clauses (ii) and (iii) such conflicts, violations, breaches,
defaults,
terminations, cancellations, modifications, accelerations, losses
of
benefits and Liens that would not, individually or in the
aggregate,
reasonably be expected to (A) have or result in a Material Adverse
Effect,
(B) prevent, materially delay or materially impede consummation of
the
Merger and the transactions contemplated hereby or (C) impair in
any
material respect the ability of the Company to perform its
obligations
hereunder.
(b)
Consents. Except for (i) compliance by the Company or its
Subsidiaries with such antitrust and competition Law requirements
described
in Schedule 2.3(b) of the Disclosure Letter; (ii) the filing of
the
Certificate of Merger with the Secretary of State of the State of
Delaware
in accordance with the DGCL; (iii) the filings with the SEC of the
Proxy
Statement in accordance with Regulation 14A promulgated under the
Exchange
Act and such reports under, and such other compliance with, the
Exchange
Act and the Securities Act and the rules and regulations thereunder
as may
be required in connection with this Agreement and the
transactions
contemplated hereby; (iv) compliance by the Company or its
Subsidiaries
with the Federal Communications Act of 1934 (as amended by the
Telecommunications Act of 1996) and such state and foreign
telecommunications Law requirements described in Schedule 2.3(b) of
the
Disclosure Letter; and (v) any consent, approval, order or
authorization
of, or declaration, registration or filing with, or notice to
any
Governmental Entity or Person (other than any of the foregoing
addressed in
clauses (i) through (iv) above), the failure to make or obtain
would not,
individually or in the aggregate, reasonably be expected to (A)
have or
result in a Material Adverse Effect, (B) prevent, materially delay
or
materially impede consummation of the Merger and the
transactions
contemplated hereby or (C) impair in any material respect the
ability of
the Company to perform its obligations hereunder, no Consent of or
with any
Governmental Entity or Person is required to be obtained by the
Company or
any of its Subsidiaries in connection with the execution and
delivery of
this Agreement by the Company or the performance of its
obligations
hereunder.
2.4.
SEC Filings; Financial Statements.
(a)
The Company has filed or furnished, as applicable, with the SEC
on
a timely basis all forms, statements, certifications, reports and
documents
required to be filed or furnished by it with the SEC pursuant to
the
Exchange Act or the Securities Act since March 25, 2003 (the
"Applicable
Date") (the forms, statements, reports and documents filed or
furnished
since the Applicable Date and those filed or furnished subsequent
to the
date of this Agreement, including any amendments thereto, the
"Company
Reports"). No Subsidiary of the Company is required to file or
furnish any
forms, statements, certifications, reports or documents with, or
make any
other filing with, or furnish any other material to, the SEC. Each
of the
Company Reports, at the time of its filing or being furnished
complied or,
if not yet filed or furnished, will comply in all material respects
with
the applicable requirements of the Securities Act, the Exchange Act
and the
Sarbanes-Oxley Act, and any rules and regulations promulgated
thereunder
applicable to the Company Reports. As of their respective dates
(or, if
amended prior to the date hereof, as of the date of such
amendment), the
Company Reports did not, and any Company Reports filed with or
furnished to
the SEC subsequent to the date hereof and up to the Effective Time
will
not, contain any untrue statement of a material fact or omit to
state a
material fact required to be stated therein or necessary to make
the
statements made therein, in light of the circumstances in which
they were
made, not misleading. Except as set forth on Schedule 2.4(a) of
the
Disclosure Letter, as of the date of this Agreement, except to the
extent
that information contained in any Recent Company Report filed and
publicly
available prior to the date of this Agreement has been revised
or
superseded by a later filed Company Report, none of the Recent
Company
Reports contains any untrue statement of a material fact or omits
to state
a material fact required to be stated therein or necessary to make
the
statements made therein, in light of the circumstances in which
they were
made, not misleading. The Company has made available to Parent
copies of
all comment letters received by the Company from the SEC since
March 25,
2003, and relating to the Company Reports, together with all
written
responses of the Company thereto.
(b)
Each of the consolidated balance sheets included in or
incorporated by reference into the Company Reports (including the
related
notes and schedules) fairly presents in all material respects, or,
in the
case of Company Reports filed after the date hereof, will fairly
present in
all material respects the consolidated financial position of the
Company
and its consolidated Subsidiaries as of its date and each of
the
consolidated statements of operations, comprehensive (loss)
income,
stockholders' (deficiency) equity and cash flows included in or
incorporated by reference into the Company Reports (including any
related
notes and schedules) fairly presents, or in the case of Company
Reports
filed after the date hereof, will fairly present the results of
operations,
retained earnings (loss) and changes in financial position, as the
case may
be, of such companies for the periods set forth therein (subject,
in the
case of unaudited statements, to notes and normal year-end
audit
adjustments that will not be material in amount or effect), in each
case in
accordance with GAAP consistently applied during the periods
involved,
except as may be noted therein. The Company has furnished to Parent
its
monthly unaudited financial report for the Company and its
Subsidiaries
(including the balance sheet and income statement) for the month
ended
August 31, 2006. Such monthly unaudited financial report fairly
presents in
all material respects the consolidated financial position of the
Company
and its consolidated Subsidiaries as of its date and the results of
its
operations for the period then ended (subject to notes and normal
year-end
audit adjustments that will not be material in amount or
effect).
2.5.
Absence of Undisclosed Liabilities.
(a)
Except (i) as set forth, reflected or reserved against in the
consolidated balance sheet (including the notes thereto) of the
Company as
of December 31, 2005 included in its annual report filed with the
SEC on
Form 10-K for the fiscal year ended December 31, 2005, (ii) as set
forth,
reflected or reserved against in any consolidated balance sheet
(including
the notes thereto) of the Company included in any other Company
Report
filed with the SEC after the filing date of such annual report on
Form 10-K
for the fiscal year ended December 31, 2005 and prior to the date
hereof,
(iii) for liabilities and obligations incurred since December 31,
2005 in
the ordinary course of business and consistent with past practice,
and,
with respect to liabilities incurred after the date of this
Agreement, not
otherwise prohibited pursuant to this Agreement, (iv) for
liabilities and
obligations incurred in connection with the Merger or any other
transaction
or agreement contemplated by this Agreement, or (v) as set forth
on
Schedule 2.5(a) of the Disclosure Letter, neither the Company nor
any of
its Subsidiaries has any liabilities or obligations of any nature
(whether
accrued, absolute, contingent or otherwise) except for such
liabilities and
obligations which would not reasonably be expected to have or
result in,
individually or in the aggregate, liabilities in excess of
$5,000,000.00.
(b)
Except as expressly contemplated under this Agreement, there is
no
transaction or commitment or arrangement between or among the
Company and
any of its officers or directors or any affiliate or affiliates of
any such
officer or director that would have been required to be publicly
disclosed
as part of a registration statement under the Securities Act that
is not
disclosed in a Company Report.
2.6.
Information Provided. The information with respect to the
Company
to be supplied by or on behalf of the Company for inclusion in the
Proxy
Statement to be sent to the Stockholders in connection with the
Stockholders Meeting shall not, on the date the Proxy Statement is
first
mailed to Stockholders, at the time of the Stockholders Meeting or
at the
time of any amendment or supplement thereof, as amended or
supplemented at
such date or time, contain any statement which, at such time and in
light
of the circumstances under which it shall be made, is false or
misleading
with respect to any material fact, or omit to state any material
fact
necessary in order to make the statements made in the Proxy
Statement not
false or misleading in light of the circumstances under which they
were or
shall be made; or omit to state any material fact necessary to
correct any
statement in any earlier communication with respect to the
solicitation of
proxies for the Stockholders Meeting which has become false or
misleading.
If at any time prior to the Stockholders Meeting any fact or event
relating
to the Company or any of its Subsidiaries which should be set forth
in a
supplement to the Proxy Statement should be discovered by the
Company or
should occur, the Company shall, promptly after becoming aware
thereof,
inform the Parent of such fact or event. The Proxy Statement will
comply as
to form in all material respects with the requirements of the
Exchange Act.
2.7.
Absence of Certain Changes. Other than in connection with or
arising out of this Agreement, or the transactions and the other
agreements
contemplated hereby, since December 31, 2005, the Company and
its
Subsidiaries have conducted their respective businesses only in,
and have
not engaged in any material transaction other than in accordance
with, the
ordinary course of such businesses consistent with past practices
and there
has not been:
(a)
any change in the financial condition, properties, assets,
liabilities, business or results of their operations or any
circumstance,
occurrence or development (including any adverse change with
respect to any
circumstance, occurrence or development existing on or prior to
December
31, 2005) which would, individually or in the aggregate, reasonably
be
expected to have or result in a Material Adverse Effect;
(b)
any material damage, destruction or other casualty loss with
respect to any material asset or property owned, leased or
otherwise used
by the Company or any of its Subsidiaries, which is not covered
by
insurance and that has or would reasonably be expected to result in
damages
or losses in excess of $100,000.00 individually, or $375,000.00 in
the
aggregate.
(c)
any declaration, setting aside or payment of any dividend or
other
distribution with respect to any shares of capital stock of the
Company or
any of its Subsidiaries (except for dividends or other
distributions by any
direct or indirect wholly-owned Subsidiary to the Company or to
any
wholly-owned Subsidiary of the Company), or any repurchase,
redemption or
other acquisition by the Company or any of its Subsidiaries of
any
outstanding shares of capital stock or other securities of the
Company or
any of its Subsidiaries;
(d)
except as required by GAAP and disclosed in the Disclosure
Letter
or a Recent Company Report, any change in any method of accounting
or
accounting practice by the Company or any of its Subsidiaries;
(e)
(A) any increase in the compensation or benefits payable or to
become payable to its present or former directors, officers or
employees
(except, with respect to those employees who are not the forty most
highly
compensated employees of the Company or any of its Subsidiaries,
for
increases in salary or wage rates in the ordinary course of
business and
consistent with past practice) or (B) any establishment, adoption,
entry
into or amendment of any collective bargaining, bonus, profit
sharing,
thrift, compensation, employment, termination, severance or other
plan,
agreement, trust, fund, policy or arrangement for the benefit of
any
director, officer or employee, except for, in the case of (A) or
(B), (i)
any employment agreement with non-executive employees of the
Company or its
Subsidiaries entered into in the ordinary course of business and
consistent
with past practice or to the extent required by applicable laws
and
providing for payments in respect of any individual employee not in
excess
of $100,000.00 in any year, and (ii) any liabilities accrued after
the date
of this Agreement expressly permitted under Section 4.1(h);
(f)
any action taken by the Company that, if taken after the date
hereof, would constitute a breach of the covenants contained in
Sections
4.1(c), (e), (f), (g) or (j); or
(g)
any agreement by the Company to do any of the foregoing.
2.8.
Tax Matters. Except for matters that would not, individually or
in the aggregate, reasonably be expected to have or result in a
Material
Adverse Effect, (a) each Tax Return required to have been filed by
the
Company or any of its Subsidiaries has been filed, all such Tax
Returns are
true and complete in all respects, and all Taxes due and payable
have been
timely paid, except such Taxes that the Company or any of its
Subsidiaries
is contesting in good faith and for which an adequate reserve has
been
established in the Company's financial statements included in a
Recent
Company Report or as set forth on Schedule 2.8 of the Disclosure
Letter,
(b) no written agreement or other document extending, or having the
effect
of extending, the period of assessment or collection of any Taxes
payable
by the Company or any of its Subsidiaries is in effect as of the
date
hereof, (c) neither the Company nor any of its Subsidiaries is, as
of the
date hereof, the beneficiary of any extension of time (other than
an
automatic extension of time not requiring the consent of the IRS or
any
other taxing authority) within which to file any Tax Return not
previously
filed and (d) as of the date hereof there are no pending audits of
any Tax
Return of the Company or any of its Subsidiaries and the Company
has not
received written notice of any unresolved questions or claims
concerning
its Tax liability or the Tax liability of any of its Subsidiaries
except as
set forth on Schedule 2.8 of the Disclosure Letter. All material
Employment
and Withholding Taxes required to be paid or withheld by or on
behalf of
the Company or any of its Subsidiaries have been timely paid or, if
not yet
due, properly set aside in accounts for such purpose. None of the
Company
or any of its Subsidiaries has received written notice from any
governmental agency in a jurisdiction in which such entity does not
file a
Tax Return stating that such entity is or may be subject to
taxation by
that jurisdiction. None of the Company or any of its Subsidiaries
will be
required to include any material item of income in, or exclude any
material
item of deduction from, taxable income for any taxable period (or
portion
thereof) ending after the Closing Date as a result of any (i)
change in
method of accounting for a taxable period (or portion thereof)
ending on or
prior to the Closing Date, (ii) disposition made on or prior to the
Closing
Date, (iii) prepaid amount received on or prior to the Closing Date
or (iv)
intercompany transaction or excess loss account described in
Treasury
Regulations under Code Section 1502 (or any corresponding or
similar
provision of state, local or foreign Tax Law). Neither the Company
nor any
of its Subsidiaries is a party to or bound by any Tax allocation or
sharing
agreement, nor is the Company or any of its Subsidiaries liable for
the
Taxes of any Person other than the Company and its Subsidiaries.
None of
the Company or any of its Subsidiaries nor any of their Affiliates
or
predecessors by merger or consolidation has within the past two (2)
years
been a party to a transaction intended to qualify under Section 355
of the
Code or under so much of Section 356 of the Code as relates to
Section 355
of the Code. Except as set forth on Schedule 2.8 of the Disclosure
Letter,
there are no liens for Taxes (other than Permitted Liens) on any of
the
assets of the Company or any of its Subsidiaries. Except as set
forth on
Schedule 2.8 of the Disclosure Letter, as of the date of the
Company's
financial statements included in its annual report filed with the
SEC on
Form 10-K for the fiscal year ended December 31, 2005, the unpaid
Taxes of
the Company and its Subsidiaries do not exceed by a material amount
the
reserve for tax liability (excluding any reserve for deferred
Taxes
established to reflect timing differences between book and tax
income) set
forth or included in such financial statements, and since such
date, the
Company and its Subsidiaries have not incurred any material
liability for
Taxes outside the ordinary course of business. No foreign
Subsidiary of the
Company is a successor in interest of an entity taxed as a U.S.
corporation.
2.9.
Litigation. Except as reflected or reserved against in the
Company's consolidated balance sheet (and the notes thereto)
included in
the Company Reports filed prior to the date hereof, there is no
judicial or
administrative action, claim, suit, proceeding or investigation
pending or,
to the Knowledge of the Company, threatened against the Company or
any of
its Subsidiaries, in each case, before any Governmental Entity,
that would,
individually or in the aggregate, reasonably be expected to have or
result
in a Material Adverse Effect. There is no judicial or
administrative
action, claim, suit, proceeding or investigation pending or, to
the
Knowledge of the Company, threatened against the Company or any of
its
Subsidiaries, in each case, before any Governmental Entity seeking
to limit
or enjoin in any material respect (a) the type of business in which
the
Company or its Subsidiaries may engage, (b) the manner or locations
in
which the Company or its Subsidiaries may engage in any business or
(c) the
use by the Company or its Subsidiaries of any licenses (excluding
all
licenses provided for in Section 2.18) or software necessary for
the
operation of the businesses of the Company or its Subsidiaries.
2.10. Compliance with Laws, Permits and Licenses.
(a)
The businesses of the Company and its Subsidiaries have not
been
conducted in violation of any law, statute, rule, regulation,
judgment,
order, decree, permit, concession, franchise or other
governmental
authorization or approval applicable to it or to any of its
properties
issued by any Governmental Entity, and none of the Company or any
of its
Subsidiaries is in receipt of any written notice of any such
violation,
except, in each case, for violations which would not, individually
or in
the aggregate, reasonably be expected to have or result in a
Material
Adverse Effect.
(b)
None of the Company, any of its Subsidiaries or, to the
Knowledge
of the Company, any directors, officers, agents or employees of the
Company
or any of its Subsidiaries has (on behalf of the Company or any of
its
Subsidiaries) made any unlawful payment to foreign or domestic
government
officials or employees or to foreign or domestic political parties
or
campaigns or otherwise violated of any provision of the Foreign
Corrupt
Practices Act of 1977, as amended.
(c)
Neither the Company nor any of its Subsidiaries is subject to
any
material outstanding final judgments, orders, writs, injunctions
or
decrees.
(d)
Less than 25% of the total consolidated annual revenue of the
Company and its Subsidiaries for the fiscal year ended December 31,
2005
was obtained from the provision of voice, local or data products
to
customers in North America.
(e)
This Section 2.10 does not relate to tax matters, employee
benefits matters or environmental matters, which are provided
for
exclusively in Sections 2.8, 2.11 and 2.17, respectively.
2.11. Employee Benefits.
(a)
Company Benefit Plans; Employment Agreements. Schedule 2.11(a)
of
the Disclosure Letter sets forth a complete and accurate list of
each
material Plan that is sponsored, maintained, established or
contributed to
by the Company or any of its Subsidiaries and under which any
current or
former officer, director, employee or independent contractor of the
Company
or any of its Subsidiaries, or the beneficiaries or dependents of
any such
Person, is or will become eligible to participate or derive a
benefit, or
under which the Company or any of its Subsidiaries has any present
or
future liability (collectively, whether or not material, the
"Company
Benefit Plans"). In addition, Schedule 2.11(a) of the Disclosure
Letter
sets forth all written employment, severance, retention,
termination,
change of control and other similar agreements other than any
such
agreement (a) (x) that, by its terms may be terminated or canceled
by the
Company or any Subsidiary with notice of not more than the greater
of 120
days and the period of notice required under applicable law, in
each case
without penalty and (y) providing for the payment of annual salary
and
bonus or severance payments less than $15,000.00 in any one case or
(b) are
required by Law ("Company Employment Agreements").
(b)
Compliance; Liability. Each Company Benefit Plan has been
established, operated and administered in accordance with its terms
and in
compliance with applicable Law, except for any failure to do so
that would
not, individually or in the aggregate, reasonably be expected to
have or
result in a Material Adverse Effect. All material contributions
required to
have been made by the Company and its Subsidiaries under any
Company
Benefit Plan have been made by the due date therefor (including
any
extensions). Except as set forth on Schedule 2.12 of the Disclosure
Letter,
there is no pending or, to the Knowledge of the Company,
threatened
material legal action, suit or claim (other than routine claims
for
benefits), nor any administrative investigation, audit or other
administrative proceeding by any Governmental Entity relating to
the
Company Benefit Plans. The Company and its Subsidiaries have
engaged in no
transaction with respect to any Company Benefit Plan that, assuming
the
taxable period of such transaction has expired as of the date
hereof, would
reasonably be expected to subject the Company and its Subsidiaries
to a tax
or penalty imposed by either Section 4975 of the Code or Section
502(i) of
ERISA that would, individually or in the aggregate, reasonably be
expected
to have or result in a Material Adverse Effect. Neither the Company
nor any
of its Subsidiaries is in breach of any Company Employment
Agreement,
except for any such breach that would not, individually or in
the
aggregate, reasonably be expected to have or result in a Material
Adverse
Effect.
(c)
Tax Qualification. Each Company Benefit Plan that is intended
to
be qualified under Section 401(a) of the Code has received a
favorable
determination letter from the IRS as to its qualification under the
Code
and to the effect that each related trust is exempt from taxation
under
Section 501(a) of the Code, and, to the Knowledge of the Company,
nothing
has occurred since the date of such determination letter that
could
reasonably be expected to adversely affect such qualification or
tax-exempt
status that cannot be corrected without material liability.
(d)
Title IV of ERISA; Post-Retirement Benefits. Neither the
Company
nor any ERISA Affiliate has incurred any material liability under
Title IV
of ERISA, and no event or transaction or condition has occurred
that would
result in any material liability to the Surviving Corporation or
any ERISA
Affiliate following the Closing. No Company Benefit Plan is a
"multiemployer plan" as defined in Section 3(37) of ERISA or
"multiple
employer plan" under Section 4063 of ERISA. No Company Benefit
Plan
provides retiree welfare benefits, and neither the Company nor any
of its
Subsidiaries has any obligation to provide any retiree welfare
benefits
other than as required pursuant to Section 4980B of the Code or
other
applicable Laws.
(e)
Triggering Events. Except as set forth in Schedule 2.11(e) of
the
Disclosure Letter, neither the execution of this Agreement, the
performance
of the obligations hereunder by the Company or its Subsidiaries,
nor the
consummation of the Merger (whether alone or in connection with any
other
events) could (i) result in a payment or provision of any benefit
or other
right, or cause the increase in or accelerated vesting of any
payment,
benefit or other right, under any Company Benefit Plan or under any
Company
Employment Agreement, or (ii) result in any payment or provision of
any
benefit or other right under any Company Benefit Plan or under any
Company
Employment Agreement that would be non-deductible by reason of
Section 280G
or 4999 of the Code.
(f)
Non-U.S. Employees. With respect to any current or former
officer,
director, employee or independent contractor of the Company or any
of its
Subsidiaries that performs services or that is employed outside of
the
United States (each, a "Non-US Employee"), or beneficiaries or
dependents
thereof, and with respect to any Company Benefit Plan maintained
for the
benefit of such persons (each, a "Non-US Plan"): (i) if intended to
qualify
for special tax treatment, each Non-US Plan meets all requirements
for such
treatment, except for such failure to meet such requirements that
can be
corrected without material liability, (ii) if required by
applicable Law or
applicable accounting practice to be funded and/or book reserved,
each
Non-US Plan is fully funded and/or book reserved, as appropriate,
based
upon reasonable actuarial assumptions, and (iii) no material
liability
exists or could reasonably be imposed upon the assets of the
Company or any
of its Subsidiaries by reason of a Non-US Plan or any Company
Benefit Plan
outside of the United States (including, without limitation, any
such
liability due to the failure of any Non-US Plan to comply with
applicable
Law or the failure by the Company or any of its Subsidiaries to
make any
required contribution to any such Non-US Plan).
(g)
Documents. With respect to each Company Benefit Plan, the
Company
has made available to Parent true and complete copies of the
following
documents (or, to the extent that no such copy exists, an
accurate
description thereof), to the extent applicable: (i) the most recent
Plan
document and all amendments thereto; (ii) the most recent trust
instrument
and insurance contracts; (iii) the most recent Form 5500 and
attached
schedules filed with the IRS; (iv) the most recent summary plan
description; and (v) the most recent determination letter issued by
the
IRS, audited financial statement and actuarial valuation report.
The
Company has made available to Parent true and complete copies of
the
Company Employment Agreements an all amendments thereto.
2.12. Labor Matters. No labor strike, material labor dispute,
or
concerted work stoppage is currently pending or, to the Knowledge
of the
Company, threatened against the Company. Except as set forth in
Schedule
2.12(a) of the Disclosure Letter, the Company is in compliance with
all
applicable labor laws in connection with the employment of its
employees,
except for such non-compliance that individually or in the
aggregate would
not, individually or in the aggregate, reasonably be expected to
have or
result in a Material Adverse Effect. Except as set forth in
Schedule
2.12(b) of the Disclosure Letter, (i) the Company is neither party
to nor
bound by any Contract or other agreement with any labor union
representing
its employees or collective bargaining agreement and, (ii) to the
Knowledge
of the Company, there are no activities or proceedings of any labor
union
to organize any such employees.
2.13. Real Property; Tangible Property.
(a)
Schedule 2.13(a) of the Disclosure Letter lists all material
items
of real property owned by the Company or its Subsidiaries (the
"Owned Real
Property") or real property leased by the Company or its
Subsidiaries (the
"Leased Real Property") with an annual rental of at least
$20,000.00. The
Company and its Subsidiaries have good and marketable title to the
Owned
Real Property listed on Schedule 2.13(a) of the Disclosure Letter
and valid
leasehold interests in the Leased Real Property listed on Schedule
2.13(a)
of the Disclosure Letter, in each case free and clear of all Liens
except
for Permitted Liens.
(b)
The Owned Real Property and the Leased Real Property, together
with easements appurtenant thereto, include all of the material
real
property used or held for use in connection with or otherwise
required to
carry on the business of the Company and its Subsidiaries, as
currently
conducted.
(c)
Schedule 2.13(a) of the Disclosure Letter contains a complete
and
correct list of all real property leases relating to the Leased
Real
Property to which the Company or any of its Subsidiaries is a party
or is
bound with an annual rental of at least $20,000.00 (the "Leases").
The
Company has made available to Parent correct and complete copies of
the
Leases. Each of the Leases (including any option to purchase
contained
therein) is in full force and effect and is enforceable against
the
landlord which is party thereto in accordance with its terms, and
there
exists no default or event of default (or any event that with
notice or
lapse of time or both would become a default) on the part of the
Company or
any of its Subsidiaries under any Leases, except for such failures
to be in
full force and effect and defaults as would not, individually or in
the
aggregate, reasonably be expected to have or result in a Material
Adverse
Effect.
(d)
Except as set forth on Schedule 2.13(d) of the Disclosure
Letter,
the Company and its Subsidiaries have legal and beneficial
ownership of all
of their respective tangible personal property and assets included
in the
Company's financial statements for the fiscal year ended December
31, 2005
included in its annual report filed with the SEC on Form 10-K for
the
fiscal year ended December 31, 2005, except for properties and
assets
disposed of in the ordinary course of business and consistent with
past
practice since the date of such financial statements, in each case
free and
clear of all Liens other than Permitted Liens.
(e)
Except as would not, individually or in the aggregate,
reasonably
be expected to have or result in a Material Adverse Effect, the
Company and
its Subsidiaries own or have the right to use all of the properties
and
assets necessary for the conduct of their business as currently
conducted.
Each such tangible asset has been maintained in accordance with
normal
industry practice, is in good operating condition and repair
(subject to
normal wear and tear) and is suitable for the purpose for which it
is
currently used.
2.14. Intellectual Property.
(a)
Schedule 2.14(a) of the Disclosure Letter sets forth a complete
and accurate list, as of the date hereof, of all material issued
patents,
pending patent applications, trademark and service mark
registrations and
applications therefor, and copyright registrations and
applications, in
each case, that are owned by the Company or any of its
Subsidiaries
(collectively, "Owned Intellectual Property"). With respect to each
item of
Owned Intellectual Property, (i) the Company is the sole and
exclusive
owner and possesses all right, title, and interest in and to the
item in
the listed country or jurisdiction, free and clear of any Lien
(other than
Permitted Liens); (ii) the item has not been abandoned or canceled;
and
(iii) no claim, action, or proceeding is pending or, to the
Knowledge of
Company, is threatened, that challenges the legality, validity,
enforceability, registration, use, or ownership of the item in the
listed
country or jurisdiction, which claim, action or proceeding
would,
individually or in the aggregate, reasonably be expected to have or
result
in a Material Adverse Effect. There is no claim, action or
proceeding
pending or, to the Knowledge of the Company, threatened, against
the
Company or any of its Subsidiaries alleging that the use of the
Owned
Intellectual Property by the Company or any of its Subsidiaries
infringes,
misappropriates, or otherwise violates the Intellectual Property
rights of
any third party, which claim, action or proceeding would, if found
to be
merited, individually or in the aggregate, reasonably be expected
to have
or result in a Material Adverse Effect. To the Knowledge of the
Company,
the Owned Intellectual Property is in full force and in effect.
(b)
Except as would not, individually or in the aggregate,
reasonably
be expected to have or result in a Material Adverse Effect, the
Company
owns or has the right to use, without payments to any other Person
except
pursuant to a license or similar Contract, all Intellectual
Property used,
or held for use in, the operation of the business of the Company as
the
business is presently conducted. Except as would not, individually
or in
the aggregate, reasonably be expected to have or result in a
Material
Adverse Effect, each item of Intellectual Property owned or used by
the
Company immediately prior to the Closing hereunder will be owned
or
available for use by the Company on identical terms and
conditions
immediately subsequent to the Closing hereunder. Except as would
not,
individually or in the aggregate, reasonably be expected to have or
result
in a Material Adverse Effect, the Company is taking or has taken
all
actions that are required to maintain, and all actions that it
reasonably
believes are required to protect, each item of Intellectual
Property owned
or used by the Company in its business.
(c)
To the Knowledge of Company, no Person has infringed upon,
misappropriated, or otherwise come into conflict with any
Intellectual
Property rights of the Company during the past two (2) years (or
earlier if
not resolved), which infringement, misappropriation or conflict
would,
individually or in the aggregate, reasonably be expected to have or
result
in a Material Adverse Effect.
(d)
Schedule 2.14(d) of the Disclosure Letter sets forth a list, as
of
the date hereof, of all material written license agreements (other
than
non-exclusive licenses of "off the shelf" computer software and
non-exclusive licenses of Intellectual Property incidental to the
provision
or purchase of products and services in the ordinary course of the
business
of the Company or any of its Subsidiaries) pursuant to which (i)
the
Company or any of its Subsidiaries has licensed the Owned
Intellectual
Property to third parties, or (ii) third parties have licensed
Intellectual
Property to the Company or any of its Subsidiaries, in each case,
that are
necessary for the conduct of the business of the Company or any of
its
Subsidiaries as currently conducted (collectively, "IP Licenses").
The
Company has made available to Parent copies of all of the IP
Licenses.
Neither the Company nor any of its Subsidiaries, nor, to the
Knowledge of
the Company, any other party thereto, is in default under any IP
License,
and each IP License is in full force and effect as to the Company
or such
Subsidiary thereof and, to the Knowledge of the Company, as to each
other
party thereto, except for such defaults and failures to be so in
full force
and effect as would not, individually or in the aggregate,
reasonably be
expected to have or result in a Material Adverse Effect.
2.15. Contracts. Schedule 2.15 of the Disclosure Letter sets forth
a
list of all Material Contracts. The term "Material Contracts" means
all of
the following types of Contracts to which the Company or any of
its
Subsidiaries is a party or by which the Company or any of its
Subsidiaries
or any of their respective properties is bound as of the date
hereof (other
than Organizational Documents of any of the Company's
Subsidiaries,
agreements related to employee benefits, agreements related to
labor
matters, real property leases and agreements related to
Intellectual
Property, the last four of which are provided for in Sections 2.11,
2.12,
2.13, and 2.14, respectively):
(a) (i) mortgages,
indentures, loan or credit agreements, security
agreements, and other agreements and instruments relating to the
borrowing
of money or (ii) relating to the extension of credit, other than,
in the
case of this clause (ii), in the ordinary course of business and
consistent
with past practice and in excess of $10,000;
(b)
joint venture and limited partnership agreements (other than
limited partnerships of which the Company owns 100% of the
partnership
interests);
(c)
asset purchase agreements and other acquisition or divestiture
agreements relating to the acquisition or disposition by the
Company or its
Subsidiaries of material assets and properties (other than in the
ordinary
course of business), which were entered into by the Company or
its
Subsidiaries after March 25, 2003;
(d)
other than as set forth in Section 2.2(b), stockholder
agreements,
voting trusts or other agreements or understandings to which the
Company or
any of its Subsidiaries is a party or to which the Company or any
of its
Subsidiaries is bound relating to the voting, purchase, redemption
or other
acquisition of any shares of the capital stock of the Company or
any of its
Subsidiaries;
(e)
any contract for the provision of voice telephony services
between
dealer boards (i.e., turrets) to any business customers in the
financial
services market;
(f)
any Network Contract;
(g)
any contract or agreement purporting to limit in any material
respect either the type of business in which the Company or its
Subsidiaries may engage or the manner or locations in which any of
them may
so engage in any business; and
(h)
any contract or agreement other than those described in
Sections
2.15(a)-(g) above, involving aggregate annual payments in excess
of
$500,000.00, to be made by or to the Company or any of its
Subsidiaries
after the date hereof, and which are not terminable on notice of
120 days
or less without payment or penalty by the Company or any of its
Subsidiaries.
The
Company has either provided or made available to Parent copies
of
all of the Material Contracts. Each such Material Contract is a
valid and
binding agreement of the Company or one of its Subsidiaries and is
in full
force and effect, and neither the Company nor any of its
Subsidiaries nor,
to the Knowledge of the Company, any other Person is in default
under any
Material Contract, except for such failures to be in full force and
effect
and defaults as would not, individually or in the aggregate,
reasonably be
expected to have or result in a Material Adverse Effect. As of the
date of
this Agreement, other than as set forth on Schedule 2.15(i) of
the
Disclosure Letter, the Company has not received a notice of
termination or
non-renewal with respect to any Material Contract, except with
respect to
Material Contracts that do not result in aggregate annual revenues
or
expenditures in excess of $500,000.00. During the period from and
after the
date of this Agreement until the Effective Time, the Company will
provide
Parent with notice of its receipt of a notice of termination or
non-renewal
with respect to any customer contract that provides for aggregate
annual
revenues in excess of $150,000.00. Other than as set forth on
Schedule
2.15(j) of the Disclosure Letter, the Company is not a party to
any
Contract with any Governmental Entity that (a) is classified by any
Law to
require protection against unauthorized disclosure and (b) is in
support of
national security or law enforcement objectives.
2.16. Insurance. Schedule 2.16 of the Disclosure Letter sets forth
a
list of the material insurance policies held by, or for the benefit
of, the
Company and its Subsidiaries as of the date of this Agreement,
including
the underwriter of such policies and the amount of coverage
thereunder.
2.17. Environmental Matters. To the Knowledge of the Company,
the
Company and its Subsidiaries have been, and are in, compliance
with
Environmental Laws, except for such noncompliance as would not,
individually or in the aggregate, be reasonably expected to have or
result
in a Material Adverse Effect. The representations and warranties
set forth
in this Section 2.17 shall constitute the only representations
and
warranties by the company with respect to environmental
matters.
2.18. Communications Regulatory Matters.
(a)
Except as set forth on Schedule 2.18(a)(i) of the Disclosure
Letter, the Company and its Subsidiaries have all licenses,
Permits,
certificates, franchises, consents, waivers, registrations or
other
regulatory authorizations from each Governmental Entity that
regulates
telecommunications in each applicable jurisdiction required for the
conduct
of the Company's business as presently conducted, including,
without
limitation, (i) the FCC (together with any renewals, extensions
or
modifications thereof and any additions thereto made as of the
Closing
Date, the "FCC Licenses"); (ii) the State PUCs (together with any
renewals,
extensions, or modifications thereof and any additions thereto made
as of
the Closing Date, the "State Licenses"); and (iii) the appropriate
foreign
Governmental Entities (together with any renewals, extensions,
or
modifications thereof and any additions thereto made as of the
Closing
Date, the "Foreign Licenses"), except, in each of clauses (i-iii),
where
the failure to have such licenses would not be material to the
Company,
taken as a whole. The FCC Licenses, State Licenses and Foreign
Licenses are
hereafter collectively referred to as the "Communications
Licenses." All of
the Communications Licenses held as of the date of this Agreement
are set
forth on Schedule 2.18(a)(ii) of the Disclosure Letter.
(b)
Each of the Communications Licenses was duly issued, is valid
and
in full force and effect, has not been suspended, canceled, revoked
or
modified in any materially adverse manner and is not subject to
conditions
or requirements that are not generally imposed on such
authorizations,
except, in each case, which would not, individually or in the
aggregate,
reasonably be expected to have or result in a Material Adverse
Effect.
(c)
Each holder of a Communications License (i) has operated in
compliance with all terms thereof in all material respects,
including all
system build-out requirements; and (ii) is in all material respects
in
compliance with, and the conduct of its business has been and is
in
compliance with, the Communications Act and any other applicable
Law in all
material respects, and each such holder has materially complied
with all
requirements to file all registrations, statements, documents and
reports
and paid all fees required by the Communications Act and any
other
applicable Law except, in each case, as would not be material to
the
Company, taken as a whole. There is no pending or, to the Knowledge
of the
Company, threatened action by or before the FCC, any State PUC, or
any
foreign Governmental Entity to revoke, cancel, suspend, modify or
refuse to
renew any of the Communications Licenses, and, except as set forth
on
Schedule 2.18(c) of the Disclosure Letter, there is not now any
issued,
outstanding or, to the Knowledge of the Company, threatened, notice
by the
FCC, any State PUC, or any foreign Governmental Entity of any
violation or
complaint, or any application, complaint, or proceeding (other
than
applications, proceedings, or complaints that generally affect
the
Company's industry as a whole) relating to the business or
operations of
the Company or any Subsidiary. To the Knowledge of the Company, no
Person
has asserted in writing to a Governmental Entity that any
Communications
License should be modified or revoked, or that the Company or
any
Subsidiary is not in material compliance with any Communications
License.
(d)
Except as set forth in Schedule 2.18(d) of the Disclosure
Letter,
to the Knowledge of the Company (after the exercise of reasonable
internal
inquiry), no event has occurred which permits the revocation or
termination
of any of the Communications Licenses or the imposition of any
restriction
thereon, or that would prevent any of the Communications Licenses
from
being renewed on a routine basis or in the ordinary course.
2.19. Brokers. Other than with respect to Persons whose fees
and
expenses will be paid pursuant to Section 1.2(c)(ii), all
negotiations
relating to this Agreement and the transactions contemplated hereby
have
been carried out without the intervention of any Person acting on
behalf of
the Company in such manner as to give rise to any valid claim
against
Parent, MergerCo or the Surviving Corporation for any brokerage or
finder's
commission, fee or similar compensation.
2.20. Provision of Documentation. The Company has provided or
made
available to Parent true and complete copies of all agreements and
other
documents listed in the Disclosure Letter.
2.21. Audit Letters. A copy of each audit letter response received
by
the Company from any attorneys for the Company or any of its
Subsidiaries
in connection with the preparation of the Company's financial
statements or
otherwise since January 1, 2006, relating to any litigation pending
as of
the date of this Agreement to which the Company or any of its
Subsidiaries
is a party and which deems the Company or any of its Subsidiaries
as a
defendant or cross-defendant has been provided or made available to
Parent.
2.22. Disclaimer of Other Representations and Warranties;
Knowledge.
(a)
THE COMPANY HAS NOT MADE ANY REPRESENTATIONS OR WARRANTIES,
EXPRESS OR IMPLIED, OF ANY NATURE WHATSOEVER RELATING TO THE
COMPANY OR ANY
OF ITS SUBSIDIARIES OR THE BUSINESS OF THE COMPANY OR ANY OF
ITS
SUBSIDIARIES OR OTHERWISE IN CONNECTION WITH THE TRANSACTIONS
CONTEMPLATED
HEREBY, OTHER THAN THOSE REPRESENTATIONS AND WARRANTIES EXPRESSLY
SET FORTH
IN THIS ARTICLE II.
(b)
Without limiting the generality of the foregoing, neither the
Company nor any representative of the Company has made, and shall
not be
deemed to have made, any representations or warranties in the
materials
relating to the business of the Company and its Subsidiaries made
available
to Parent and MergerCo, including due diligence materials, or in
any
presentation of the business of the Company and its Subsidiaries
by
management of the Company or others in connection with the
transactions
contemplated hereby, and no statement contained in any of such
materials or
made in any such presentation or otherwise shall be deemed a
representation
or warranty hereunder or otherwise or deemed to be relied upon by
Parent or
MergerCo in executing, delivering and performing this Agreement and
the
transactions contemplated hereby. It is understood that any
estimates,
projections, budgets or other predictions, any data, any
financial
information or any memoranda or offering materials or
presentations,
including but not limited to any offering memorandum or similar
materials
made available by the Company and its representatives, are not and
shall
not be deemed to be or to include representations or warranties of
the
Company, and are not and shall not be deemed to be relied upon by
Parent or
MergerCo in executing, delivering and performing this Agreement and
the
transactions contemplated hereby.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
OF PARENT AND MERGERCO
Parent and MergerCo, jointly and severally, represent and warrant
to
the Company as follows:
3.1.
Corporate Status. Parent is a Company duly formed, validly
existing and in good standing under the laws of Bermuda. MergerCo
is a
corporation duly incorporated, validly existing and in good
standing under
the laws of the State of Delaware.
3.2.
Authorization, etc. Each of Parent and MergerCo has full power
and authority to enter into this Agreement and to perform its
obligations
hereunder. The execution, delivery and performance by Parent and
MergerCo
of this Agreement have been duly authorized by the board of
directors of
each of Parent and MergerCo and by Parent as sole shareholder of
MergerCo,
which constitutes all requisite corporate authorization on the part
of
Parent for such action. This Agreement has been duly executed and
delivered
by each of Parent and MergerCo and constitutes the valid and
binding
obligation of each of Parent and MergerCo, enforceable against each
of
Parent and MergerCo in accordance with its terms, except as limited
by laws
affecting the enforcement of creditors' rights generally or by
general
equitable principles.
3.3.
No Conflicts; Consents.
(a)
The execution and delivery of this Agreement by each of Parent
and
MergerCo and the performance of its obligations hereunder (i) do
not
conflict with the Organizational Documents of Parent or MergerCo,
(ii) do
not conflict with, violate, breach or result in a default under
(with or
without the giving of notice or the lapse of time), give rise to a
right of
termination, cancellation, modification or acceleration of any
obligation
or to the loss of any benefit under, any Contract to which Parent
or
MergerCo is a party or by which any of them or their respective
properties
or assets are bound or result in the creation or imposition of any
Liens,
or (iii) do not violate any law applicable to Parent or MergerCo or
any of
Parent's Affiliates, except in the case of clauses (ii) or (iii)
for such
conflicts, violations, breaches, defaults, terminations,
cancellations,
modifications, accelerations, losses of benefits and Liens that
would not,
individually or in the aggregate, reasonably be expected to
materially
impair the ability of Parent or MergerCo to perform its
obligations
hereunder.
(b)
No Consent of or with any court, Governmental Entity or third
Person, is required to be obtained by Parent or MergerCo in
connection with
the execution and delivery of this Agreement or the performance of
its
obligations hereunder, except for such consents contemplated by
Section
5.1(c) hereof and except where the failure to do so would not,
individually
or in the aggregate, reasonably be expected to materially impair
the
ability of Parent or MergerCo to perform its obligations
hereunder.
3.4.
Litigation. There is no judicial or administrative action,
claim,
suit, proceeding or investigation pending or, to the Knowledge of
Parent or
MergerCo, threatened against Parent or MergerCo, in each case
before any
Governmental Entity, that question the validity of this Agreement
or any
action taken or to be taken by Parent or MergerCo in connection
herewith.
3.5.
Brokers. All negotiations relating to this Agreement and the
transactions contemplated hereby have been carried out without
the
intervention of any Person acting on behalf of Parent or MergerCo
in such
manner as to give rise to any valid claim against the Company for
any
brokerage or finder's commission, fee or similar compensation.
3.6.
Formation of MergerCo; No Prior Activities. MergerCo was formed
solely for the purpose of engaging in the transactions contemplated
by this
Agreement. As of the date hereof and the Closing Date, except for
(i)
obligations or liabilities incurred in connection with its
incorporation or
organization and the transactions contemplated by this Agreement
and (ii)
this Agreement and any other agreements or arrangements
contemplated by
this Agreement or in furtherance of the transactions contemplated
hereby,
MergerCo has not incurred, directly or indirectly, through any
Subsidiary
or Affiliate, any obligations or liabilities or engaged in any
business
activities of any type or kind whatsoever or entered into any
agreements or
arrangements with any Person.
3.7.
No Knowledge of Misrepresentations or Omissions. As of the date
of this Agreement Parent and MergerCo have no Knowledge that any of
the
representations and warranties of the Company in this Agreement are
not
true and correct in all material respects, and as of the date of
this
Agreement Parent and MergerCo have no Knowledge of any material
errors in,
or material omissions from, the Disclosure Letter.
3.8.
Inspection; No Other Representations. Each of Parent and
MergerCo
is an informed and sophisticated entity, and has engaged expert
advisors
experienced in the evaluation and acquisition of companies such as
the
Company and its Subsidiaries as contemplated hereunder. Each of
Parent and
MergerCo has undertaken such investigation and has been provided
with and
has evaluated such documents and information as it has deemed
necessary to
enable it to make an informed and intelligent decision with respect
to the
execution, delivery and performance of this Agreement and the
transactions
contemplated hereby. The Company and its representatives have
answered to
Parent's and MergerCo's satisfaction all inquiries that Parent,
MergerCo or
their representatives have deemed necessary to be answered
concerning the
business of the Company and its Subsidiaries or otherwise relating
to the
transactions contemplated hereby. Without limiting the generality
of the
foregoing or Section 2.21, each of Parent and MergerCo acknowledges
that
(a) the Company does not make any representation or warranty with
respect
to (i) any projections, estimates or budgets delivered to or made
available
to Parent or MergerCo of future revenues, future results of
operations (or
any component thereof), future cash flows or future financial
condition (or
any component thereof) of the Company and its Subsidiaries or the
future
business and operations of the Company and its Subsidiaries or (ii)
any
other information or documents made available to Parent or MergerCo
or
their counsel, accountants or advisors with respect to the Company,
its
Subsidiaries or any of their respective businesses, assets,
liabilities or
operations, except as expressly set forth in this Agreement, and
(b)
neither Parent nor MergerCo has relied or will rely upon any of
the
information described in subclauses (i) and (ii) of clause (a)
above in
executing, delivering and performing this Agreement and the
transactions
contemplated hereby.
ARTICLE IV
COVENANTS
4.1.
Conduct of Business by Company and Its Subsidiaries. During the
period from the date of this Agreement and continuing until the
Effective
Time, the Company agrees as to itself and the its Subsidiaries to
the
following (except as (i) expressly contemplated by this Agreement,
(ii) as
set forth in Schedule 4.1 of the Disclosure Letter, (iii) as
required by
any applicable Law, (iv) as required by a Governmental Entity of
competent
jurisdiction, (v) to the extent approved in writing by Parent prior
to, or
contemporaneously with, this Agreement or (vi) to the extent that
Parent
shall otherwise consent in writing, which consent shall not be
unreasonably
withheld or delayed):
(a)
Ordinary Course. The Company and its Subsidiaries shall in all
material respects carry on their respective businesses in the
usual,
regular and ordinary course and consistent with past practice.
Without
limiting the foregoing, the Company and its Subsidiaries shall use
their
commercially reasonable efforts to preserve substantially intact
their
properties or assets except as otherwise contemplated by this
Agreement and
present lines of business, maintain their rights and franchises
and
preserve substantially intact their relationships with customers,
suppliers
and others having business dealings with them and keep available
the
services of their present officers and employees.
(b)
Dividends; Changes in Share Capital. The Company shall not, and
shall not permit any of its Subsidiaries to (1) declare, set aside,
make or
pay any dividend or other distribution, payable in cash, stock,
property or
otherwise, with respect to any of its capital stock (except for
dividends
paid by any direct or indirect wholly-owned Subsidiary to the
Company or to
any other direct or indirect wholly-owned Subsidiary) or enter into
any
agreement with respect to the voting of its capital stock, or
(2)
reclassify, split, combine, subdivide or redeem, purchase or
otherwise
acquire, directly or indirectly, any of its capital stock or
securities
convertible or exchangeable into or exercisable for any shares of
its
capital stock.
(c)
Issuance of Securities. The Company shall not, and shall not
permit any of its Subsidiaries to, issue, sell, pledge, dispose of,
grant,
transfer, encumber, or authorize the issuance, sale, pledge,
disposition,
grant, transfer or encumbrance of, any shares of capital stock of
the
Company or any its Subsidiaries (other than the issuance of shares
by a
wholly-owned Subsidiary of the Company to the Company or
another
wholly-owned Subsidiary), or securities convertible or exchangeable
into or
exercisable for any shares of such capital stock, or any options,
warrants
or other rights of any kind to acquire any shares of such capital
stock or
such convertible or exchangeable securities, other than required
issuances
of shares of Company Stock upon the exercise of Company Options,
Company
Warrants or Company Notes outstanding as of the date of this
Agreement.
(d)
Governing Documents. The Company shall not, and shall not
permit
any of its Subsidiaries to, amend its respective Organizational
Documents,
except to carry out its obligations under this Agreement.
(e)
No Acquisitions. The Company shall not, and shall not permit
any
of its Subsidiaries to, acquire (or agree to acquire), in a
single
transaction or in a series of related transactions, (i) any
business or
Person or division thereof by merging or consolidating with, or
purchasing
all or substantially all of the assets or equity interest of a
Person or
(ii) any assets at an aggregate cost to the Company and/or its
Subsidiaries
of in excess of $250,000.00, other than in the ordinary course of
business
and consistent with past practice.
(f)
No Dispositions. The Company shall not, and shall not permit
any
of its Subsidiaries to, sell, dispose of, transfer or divest any
(i)
businesses or divisions or (ii) material properties or assets
(including
capital stock of its Subsidiaries), other than in the ordinary
course of
business and consistent with past practice.
(g)
No Liens. The Company shall not, and shall not permit any of
its
Subsidiaries to, create, assume or otherwise consensually incur any
Lien on
any material properties or assets other than Liens incurred in the
ordinary
course of business and consistent with past practice and Permitted
Liens.
(h)
Compensation; Severance. Except (1) as required by applicable
Law
or (2) to satisfy contractual obligations based on a change in
control of
the Company pursuant to the Contracts specified in Schedule 4.1(h)
of the
Disclosure Letter, the Company shall not, and shall not permit any
of its
Subsidiaries to, (i) pay or commit to pay any material severance
or
termination pay other than severance or termination pay that is
required to
be paid pursuant to the terms of a Company Benefit Plan existing as
of the
date of this Agreement, (ii) enter into any material employment,
deferred
compensation, consulting, severance or other similar agreement (or
any
amendment to any such existing agreement other than amendments
necessary or
appropriate to bring such agreements into compliance with Section
409A of
the Code) with any present or former director, officer, employee
or
independent contractor of the Company or any of its Subsidiaries,
(iii)
increase or commit to increase in any material respect any
compensation or
employee benefits payable to any present or former director,
officer,
employee or independent contractor of the Company or any of its
Subsidiaries, including wages, salaries, compensation, pension,
severance,
termination pay or other benefits or payments (except (x) as
required by
the terms of a Company Benefit Plan existing as of the date of
this
Agreement, (y) for Non-Management Employees and Senior Managers,
increases
in salary or hourly wage rates in connection with annual merit
and/or cost
of living increases (such increases with respect to Senior Managers
not to
exceed $10,000 per individual on an annualized basis or $135,000 on
an
annualized basis in the aggregate), and (z) payments under the
discretionary quarterly cash bonus program described in Schedule
2.11(a) of
the Disclosure Letter in amounts not to exceed amounts accrued as
expenses
in the Company's financial statements as of the date hereof for
such
purpose, in the case of (y) and (z), consistent with past practice
in the
timing, amount and procedures for implementation), (iv) adopt,
establish,
enter into, amend, extend or terminate any Company Benefit Plan (or
any
plan, program, trust, fund, policy, understanding or other
arrangement that
would be a Company Benefit Plan if it were in existence as of the
date of
this Agreement), or make any commitment to do any of the foregoing,
or (v)
make any contribution to any Company Benefit Plan, other than (x)
regularly
scheduled contributions and (y) contributions required pursuant to
the
terms thereof. For purposes of this Section 4.1(h),
"Non-Management
Employees" shall mean those employees who are not the forty most
highly
compensated employees of the Company or any of its Subsidiaries,
and
"Senior Managers" shall mean the eleventh through fortieth most
highly
compensated employees of the Company or any of its
Subsidiaries.
(i)
Accounting Methods; Income Tax Elections. The Company shall
not,
and shall not permit any of its Subsidiaries to, (1) change in any
material
respect its methods of accounting or accounting practice as in
effect at
December 31, 2005, except for any such change as required by reason
of a
change in SEC guidelines or GAAP, (2) change its fiscal year or (3)
prepare
or file any material Tax Return materially inconsistent with past
practice
or, on any such Tax Return, take any position, make any election,
or adopt
any method that is materially inconsistent with positions taken,
elections
made or methods used in preparing or filing similar Tax Returns in
prior
periods except, in each case, as required by Tax Law.
(j)
Certain Agreements. The Company shall not, and shall not permit
any of its Subsidiaries to, enter into any Materia
