AGREEMENT AND PLAN OF MERGER

Exhibit 2.1

EXECUTION VERSION

 

AGREEMENT AND PLAN OF MERGER

among

SPRINT NEXTEL CORPORATION,

SPRINT MOZART, INC.

and

VIRGIN MOBILE USA, INC.

Dated as of July 27, 2009

 

TABLE OF CONTENTS

 

 

-i-

 

-ii-

 

-iii-

INDEX OF DEFINED TERMS

 

 

-iv-

 

-v-

AGREEMENT AND PLAN OF MERGER

AGREEMENT AND PLAN OF MERGER, dated as of July 27, 2009 (this “ Agreement ”), among Sprint Nextel Corporation, a Kansas corporation (“ Parent ”), Sprint Mozart, Inc., a Delaware corporation and a direct wholly-owned subsidiary of Parent (“ Merger Sub ”), and Virgin Mobile USA, Inc., a Delaware corporation (the “ Company ”).

WHEREAS, the Board of Directors of each of Parent, Merger Sub and the Company has approved and declared it advisable to enter into this Agreement and the merger (the “ Merger ”) of Merger Sub with and into the Company in accordance with the General Corporation Law of the State of Delaware (the “ DGCL ”), upon the terms and subject to the conditions set forth herein;

WHEREAS, the Boards of Directors of each of Parent, Merger Sub and the Company have each declared that it is in the best interests of their respective companies and stockholders, to consummate the Merger provided for herein;

WHEREAS, as a condition to Parent entering into this Agreement and incurring the obligations set forth herein, concurrently with the execution and delivery of this Agreement, Parent is entering into a Voting Agreement with (i) Corvina Holdings Limited and Cortaire Limited and (ii) SK Telecom Co., Ltd. (the “ Voting Agreements ”) pursuant to which, among other things, each of such stockholders has agreed to vote certain of their Company Shares beneficially owned by such stockholders in favor of the adoption of the Merger and the transactions contemplated hereby;

WHEREAS, as a condition to Parent entering into this Agreement and incurring the obligations set forth herein, concurrently with the execution and delivery of this Agreement, Daniel H. Schulman is entering into an employment agreement with Parent, substantially in the form attached hereto as Exhibit A (the “ Employment Agreement ”) to be effective at the Effective Time;

WHEREAS, as a condition to Parent entering into this Agreement and incurring the obligations set forth herein, concurrently with the execution and delivery of this Agreement, Parent, Virgin Mobile USA, L.P. (the “ Operating Partnership ”), Virgin Entertainment Holdings, Inc. and SK Telecom Co., Ltd. are entering into a Termination and Payoff Agreement (the “ Subordinated Debt Termination Agreement ”) relating to the Subordinated Credit Agreement among the Operating Partnership, Virgin Entertainment Holdings, Inc. and SK Telecom Co., Ltd., dated July 19, 2006, as amended, restated, supplemented or otherwise modified (the “ Subordinated Debt Agreement ”);

WHEREAS, as a condition to Parent entering into this Agreement and incurring the obligations set forth herein, concurrently with the execution and delivery of this Agreement, (i) the Operating Partnership and Virgin Enterprises Limited are entering into a Second Amended and Restated Trademark License Agreement (the “ Trademark License Agreement ”), to be effective at the Effective Time, and (ii) the Company, Parent and Corvina Holdings Limited are entering into a Termination and Mutual Release Agreement relating to the Corvina Holdings Limited Tax Receivable Agreement, dated October 16, 2007 (the “ Tax Receivable Termination

Agreement ” and, together with this Agreement, the Voting Agreements, the Employment Agreement, the Subordinated Debt Termination Agreement and the Trademark License Agreement, the “ Transaction Documents ”); and

WHEREAS, it is intended that, for United States federal income tax purposes (i) the Merger shall qualify as a “reorganization” within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended (the “ Code ”) and (ii) this Agreement shall constitute a plan of reorganization within the meaning of Treasury Regulation Section 1.368-2(g).

NOW, THEREFORE, in consideration of the foregoing and the mutual representations, warranties, covenants and agreements herein contained, subject to the conditions set forth herein, and intending to be legally bound hereby, Parent, Merger Sub and the Company hereby agree as follows:

ARTICLE I

THE MERGER

SECTION 1.1 The Merger . Upon the terms and subject to the conditions of this Agreement, and in accordance with the DGCL, at the Effective Time (as defined below), Merger Sub shall be merged with and into the Company. As a result of the Merger, the separate corporate existence of Merger Sub shall cease and the Company shall continue as the surviving corporation of the Merger (the “ Surviving Corporation ”).

SECTION 1.2 Closing; Effective Time . The closing of the Merger (the “ Closing ”) shall take place at 10:00 a.m., local time, at the offices of King & Spalding LLP, 1185 Avenue of the Americas, New York, New York, as soon as practicable, but in no event later than the third business day after the satisfaction or waiver of the conditions set forth in Article VII (other than those conditions that by their terms are not to be satisfied until the Closing, but subject to the satisfaction or waiver of such conditions at the Closing), or the Closing may be consummated at such other place or on such other date as Parent and the Company may mutually agree. The date on which the Closing actually occurs is hereinafter referred to as the “ Closing Date .” At the Closing, the Company shall cause the Merger to be consummated by filing a certificate of merger (the “ Certificate of Merger ”) with the Secretary of State of the State of Delaware, in such form as required by, and executed by the Company in accordance with, the relevant provisions of the DGCL (the date and time of the filing of the Certificate of Merger with the Secretary of State of the State of Delaware, or such later date and time as is specified in the Certificate of Merger and as is agreed to by the parties hereto, being hereinafter referred to as the “ Effective Time ”), and the parties hereto shall make all other filings or recordings required under the DGCL or other applicable Law in connection with the Merger.

SECTION 1.3 Effects of the Merger . The Merger shall have the effects set forth herein and in the applicable provisions of the DGCL. Without limiting the generality of the foregoing and subject thereto, at the Effective Time, all the property, rights, privileges, immunities, powers and franchises of the Company and Merger Sub shall vest in the Surviving Corporation and all debts, liabilities and duties of the Company and Merger Sub shall become the debts, liabilities and duties of the Surviving Corporation.

 

-2-

SECTION 1.4 Certificate of Incorporation; Bylaws .

(a) At the Effective Time, the certificate of incorporation of the Company shall be amended and restated so as to read in its entirety as is set forth on Exhibit B hereto, and, as so amended, shall be the certificate of incorporation of the Surviving Corporation until thereafter amended in accordance with its terms and as provided by applicable Law.

(b) At the Effective Time, the bylaws of the Company shall be amended and restated so as to read in their entirety in the form as is set forth on Exhibit C hereto, and, as so amended, shall be the bylaws of the Surviving Corporation until thereafter amended in accordance with their terms, the certificate of incorporation of the Surviving Corporation and as provided by applicable Law.

SECTION 1.5 Directors and Officers . From and after the Effective Time, the directors of Merger Sub immediately prior to the Effective Time shall be the directors of the Surviving Corporation, each to hold office in accordance with the certificate of incorporation and bylaws of the Surviving Corporation. The initial officers of the Surviving Corporation shall be the officers designated by Parent prior to the Effective Time.

ARTICLE II

EFFECT OF THE MERGER ON THE CAPITAL STOCK

OF THE CONSTITUENT CORPORATIONS

SECTION 2.1 Conversion of Securities . At the Effective Time, by virtue of the Merger and without any action on the part of Merger Sub, the Company or the holders of any of the following securities:

(a) Subject to Section 2.1(h), (i) each share of Class A common stock, par value $0.01 per share, of the Company (the “ Class A Common Stock ”) and each share of Class C common stock, par value $0.01 per share, of the Company (the “ Class C Common Stock ” and, together with the Class A Common Stock and the Class B Common Stock (as defined below), the “ Company Common Stock ”) issued and outstanding immediately prior to the Effective Time (other than (1) any shares of Company Common Stock described in clauses (ii) and (iii) of this Section 2.1(a) and (2) any shares of Company Common Stock to be canceled pursuant to Section 2.1(c)) shall be automatically converted into the right to receive that number (rounded to the nearest  ¹ / 10,000 of a share) (as may be adjusted pursuant to this Section 2.1(a) and Section 2.1(g), the “ Exchange Ratio ”) of validly issued, fully paid and nonassessable shares of Series 1 voting common stock, par value $2.00 per share, of Parent (“ Parent Shares ”) equal to the number determined by dividing $5.50 by the Average Parent Stock Price, (ii) each share of Class A Common Stock and Class C Common Stock held by Corvina Holdings Limited, Cortaire Limited and any of their affiliates to which any such shares are transferred on or after the date hereof (collectively, the “ Virgin Group Stockholders ”) shall be automatically converted into the right to receive that number (rounded to the nearest  ¹ / 10,000 of a share) of Parent Shares equal to the product of the Exchange Ratio

 

-3-

and 93.09% (the “ Virgin Group Exchange Ratio ”) and (iii) each share of Class A Common Stock and Class C Common Stock held by SK Telecom Co., Ltd. and any of its affiliates to which any such shares are transferred on or after the date hereof (collectively, the “ SK Stockholders ”) (such shares of Company Common Stock, together with the shares of Company Common Stock described in clauses (i) and (ii) of this Section 2.1(a) and the Company Preferred Stock (as defined below) issued and outstanding immediately prior to the Effective Time, the “ Company Shares ”) shall be automatically converted into the right to receive that number (rounded to the nearest  ¹ / 10,000 of a share) of Parent Shares equal to the product of the Exchange Ratio and 89.84% (the “ SK Exchange Ratio ”); provided , however , that (x) if the number determined by dividing $5.50 by the Average Parent Stock Price is less than or equal to 1.0630, the Exchange Ratio shall be 1.0630 and (y) if the number determined by dividing $5.50 by the Average Parent Stock Price is greater than or equal to 1.3668, the Exchange Ratio shall be 1.3668 (together with the amount of Parent Shares to be issued pursuant to Section 2.1(b) and any cash in lieu of fractional Parent Shares pursuant to Section 2.1(h), the “ Merger Consideration ”) upon surrender of such Company Shares in accordance with Section 2.3. “ Average Parent Stock Price ” means the average of the closing prices of Parent Shares, as such price is reported on the Composite Tape of the New York Stock Exchange (as reported by Bloomberg Financial Markets or, if not reported thereby, such other authoritative source as the parties shall otherwise agree), for the ten trading days ending on the second trading day immediately preceding the Effective Time;

(b) Subject to Section 2.1(h), each share of the Series A Convertible Preferred Stock, par value $0.01 per share, of the Company (the “ Company Preferred Stock ”) issued and outstanding immediately prior to the Effective Time, if any, shall be converted into the right to receive that number (rounded to the nearest  ¹ / 10,000 of a share) of Parent Shares equal to the product of (x) the number of shares of Class A Common Stock into which each share of Company Preferred Stock is convertible and (y) (i) in the case of the Virgin Group Stockholders, the Virgin Group Exchange Ratio and (ii) in the case of the SK Stockholders, the SK Exchange Ratio;

(c) Each share of Class B Common Stock shall be canceled without any conversion thereof and no consideration shall be delivered in respect thereto;

(d) Each Company Share held in the treasury of the Company and each Company Share owned by Parent and Merger Sub immediately prior to the Effective Time shall be canceled without any conversion thereof and no consideration shall be delivered in respect thereto;

(e) Each Company Share beneficially owned by any direct or indirect wholly-owned subsidiary of Parent or the Company shall be canceled without any conversion thereof and no consideration shall be delivered in respect thereto;

(f) Each share of common stock, par value $1.00 per share, of Merger Sub issued and outstanding immediately prior to the Effective Time shall be converted into one validly issued, fully paid and nonassessable share of common stock, par value $1.00 per share, of the Surviving Corporation and shall constitute the only outstanding shares of capital stock of the Surviving Corporation; and

 

-4-

(g) Adjustments . If at any time during the period between the date of this Agreement and the Effective Time, any change in the outstanding shares of capital stock of Parent or the Company shall occur by reason of any reclassification, recapitalization, stock split or combination, exchange or readjustment of shares, or any stock dividend thereon with a record date during such period, the Exchange Ratio and the number of Parent Shares issuable pursuant to Section 2.1, if any, shall be appropriately adjusted.

(h) Fractional Shares .

(i) No certificates representing fractional Parent Shares will be issued upon the surrender for exchange of Company Shares, and such fractional share interests will not entitle the owner thereof to vote or to any other rights of a shareholder of Parent.

(ii) Notwithstanding any other provision of this Agreement, each holder of Company Shares converted pursuant to the Merger who would otherwise have been entitled to receive a fraction of a Parent Share (after taking into account all Book-Entry Shares (as defined below) delivered by such holder) will receive, in lieu thereof, cash (without interest) in an amount equal to the product of (A) such fractional Parent Share multiplied by (B) the per share closing price on the Closing Date of Parent Shares reported on the Composite Tape of the New York Stock Exchange (as reported by Bloomberg Financial Markets or, if not reported thereby, such other authoritative source as the parties shall otherwise agree).

SECTION 2.2 Treatment of Company Options and other Company Stock-Based Awards .

(a) At the Effective Time, each option (a “ Company Option ”) granted by the Company under the Company Stock Plan to purchase shares of Company Common Stock which is outstanding and unexercised as of the Effective Time (other than an Under Water Option, as defined in this Section 2.2(a)) shall cease to represent a right to acquire shares of Company Common Stock and shall be converted automatically into an option to purchase a number of Parent Shares (a “ Converted Option ”) at an exercise price determined as provided below (and the Converted Option otherwise shall remain subject to the terms of the Company Stock Plan and the agreements or letters evidencing grants thereunder):

(i) the number of Parent Shares to be subject to the Converted Option shall be equal to the product of (x) the number of shares of Company Common Stock subject to the Company Option and (y) the Exchange Ratio, provided that any fractional Parent Shares resulting from such multiplication shall be rounded down to the nearest whole share; and

 

-5-

(ii) the exercise price per Parent Share under the Converted Option shall be equal to the exercise price per share of Company Common Stock under the Company Option divided by the Exchange Ratio, provided that such exercise price shall be rounded up to the nearest cent.

Except as otherwise provided in this Section 2.2, the duration and other terms of each Converted Option shall be the same as the applicable Company Option (after giving effect to any rights resulting exclusively from the transaction contemplated under this Agreement pursuant to the Company Stock Plan and the award agreements thereunder) except that all references to the Company shall be deemed to be references to Parent and all references to the Board of Directors of the Company shall be deemed to be references to the Board of Directors of Parent.

For purposes of this Section 2.2(a), an “Under Water Option” is a Company Option with respect to which the Option Price (as such term is defined in the Company Stock Plan) to purchase a share of Company Common Stock under such option exceeds the Fair Market Value (as such term is defined in the Company Stock Plan) of a share of Company Common Stock immediately before the Effective Time. At the Effective Time, each Under Water Option shall (pursuant to the terms of the Company Stock Plan) be canceled and shall have no further force or effect whatsoever.

(b) At the Effective Time, each right of any kind, contingent or accrued, to receive shares of the Company Common Stock or benefits measured by the value of a number of shares of Company Common Stock, and each award of any kind consisting of shares of Company Common Stock, granted under the Company Stock Plan (including restricted stock, restricted stock units, deferred stock units, performance shares (or units), phantom stock units and dividend equivalents), other than Company Options (each, a “ Company Stock-Based Award ”), which is outstanding immediately prior to the Effective Time shall cease to represent a right or award with respect to shares of Company Common Stock and shall be converted, at the Effective Time, into a right or award with respect to a number of Parent Shares (a “ Converted Award ”) equal to the product of (x) the number of shares of Company Common Stock subject to the Company Stock-Based Award and (y) the Exchange Ratio, provided that any fractional Parent Shares resulting from such multiplication shall be rounded down to the nearest whole share and the Converted Awards otherwise shall remain subject to the terms of the Company Stock Plan and the agreements or letters evidencing grants thereunder after giving effect to any rights resulting exclusively from the transactions contemplated under this Agreement pursuant to the Company Stock Plan and the award agreements thereunder. Any performance-based Company Stock-Based Award with respect to which the vesting terms thereunder is contingent (in whole or in part) upon the timely satisfaction of any performance conditions for any period which extends beyond the Effective Time shall remain subject to all service based vesting conditions through the end of the applicable performance period and shall be subject to the following adjustments with respect to the applicable performance vesting conditions:

(i) 2009 Performance Awards . In the case of a Company Stock-Based Award with a vesting condition linked to calendar year 2009 performance, the determination of whether the applicable performance vesting requirement has been met with respect to the corresponding Converted Award shall be determined based on the Company’s actual performance (adjusted in a manner reasonably acceptable to Parent to eliminate the impact of costs relating to the negotiation, closing, transition and integration of the transactions contemplated by this Agreement) through the end of the calendar month which ends on, or immediately precedes, the Closing Date and comparing such performance to the product of (x) the applicable annual performance target for such Company Stock-Based Award multiplied by (y) a fraction, the numerator of which is the number of completed calendar months for 2009 ending with the calendar month which ends on, or immediately precedes, the Closing Date, and the denominator of which is 12.

 

-6-

(ii) 2010 Performance Awards . In the case of a Company Stock-Based Award with a vesting condition linked to calendar year 2010 performance, the performance condition shall be deemed satisfied in full as of December 31, 2010 with respect to the corresponding Converted Award (without regard to actual performance by the Company or Parent).

(c) Except as set forth under Section 2.2(b) with respect to the waiver of performance conditions related to Company Stock-Based Awards, the Company shall not exercise its discretion under the Company Stock Plan to accelerate the vesting or eliminate the performance conditions related to any Company Options or Company Stock-Based Awards or make any payments with respect to any Under Water Option.

SECTION 2.3 Surrender of Company Shares .

(a) Prior to the Effective Time, Parent shall appoint Computershare Limited (or such other commercial bank or trust company reasonably satisfactory to the Company) to act as agent (the “ Exchange Agent ”) for the purpose of exchanging for the Merger Consideration Company Shares represented by book-entry (“ Book-Entry Shares ”). Parent shall deposit with the Exchange Agent, to be held in trust for the holders of Company Shares, certificates (if such shares shall be certificated) representing Parent Shares issuable pursuant to Section 2.1 and cash in lieu of fractional Parent Shares payable pursuant to Section 2.1(h) in exchange for outstanding Company Shares.

(b) Promptly after the Effective Time, the Surviving Corporation shall cause to be mailed to each record holder, as of the Effective Time, of Book-Entry Shares, a form of letter of transmittal (which shall be in customary form and shall specify that delivery shall be effected, and risk of loss and title to the Book-Entry Shares shall pass, only upon adherence to the procedures set forth in the letter of transmittal) and instructions for use in effecting the surrender of such Company Shares for distribution of the Merger Consideration therefor. Upon surrender to the Exchange Agent of Book-Entry Shares, together with such letter of transmittal, duly completed and validly executed in accordance with the instructions thereto, and such other documents as may be required pursuant to such instructions, the holder of such Book-Entry Shares shall be entitled to receive in exchange therefor Parent Shares and any cash in lieu of fractional

 

-7-

Parent Shares in an amount equal to the Merger Consideration for each Company Share formerly represented by such Book-Entry Shares (less any required withholding taxes) and such Book-Entry Shares shall then be canceled. No interest shall be paid or accrued for the benefit of holders of the Book-Entry Shares on the Merger Consideration issued in respect of the Book-Entry Shares. If issuance of the Merger Consideration is to be made to a person other than the person in whose name the surrendered Book-Entry Shares is registered, it shall be a condition of issuance that the Book-Entry Shares so surrendered shall be properly endorsed or shall be otherwise in proper form for transfer, in the sole discretion of the Exchange Agent, and that the person requesting such issuance shall have paid any transfer and other taxes required by reason of the issuance of the Merger Consideration to a person other than the registered holder of the Book-Entry Shares surrendered or shall have established to the satisfaction of the Surviving Corporation that such tax either has been paid or is not applicable. Until surrendered as contemplated by, and in accordance with, this Section 2.3, each Book-Entry Share (other than Book-Entry Shares representing Company Shares to be canceled pursuant to Section 2.1(c), 2.1(d) or 2.1(e)) shall be deemed at any time after the Effective Time to represent only the right to receive upon such surrender the applicable Merger Consideration as contemplated by this Article II.

(c) At any time following the date that is twelve months after the Effective Time, the Surviving Corporation shall be entitled to require the Exchange Agent to deliver to it any Parent Shares and any cash in lieu of fractional Parent Shares to be issued in respect of Company Shares pursuant to this Article II that remain unclaimed by holders of Book-Entry Shares and thereafter such holders shall be entitled to look to Parent and the Surviving Corporation (subject to abandoned property, escheat or other similar Laws) only as general creditors thereof with respect to the Merger Consideration issuable upon due surrender of their Book-Entry Shares. The Surviving Corporation shall pay all charges and expenses, including those of the Exchange Agent, in connection with the exchange of Company Shares for the Merger Consideration. Notwithstanding the foregoing, none of Parent, Merger Sub, the Company, the Surviving Corporation or the Exchange Agent shall be liable to any person in respect of any amount paid to a public official pursuant to any applicable abandoned property, escheat or similar Law. The Merger Consideration paid in accordance with the terms of this Article II in respect of Book-Entry Shares that have been surrendered in accordance with the terms of this Agreement shall be deemed to have been paid in full satisfaction of all rights pertaining to the Company Shares represented thereby. If any Company Shares shall not have been surrendered prior to six years after the Effective Time (or immediately prior to such earlier date on which any Merger Consideration, any dividends or distributions payable to the holder of such Company Shares or any cash payable in lieu of fractional Parent Shares, would otherwise escheat to or become the property of any Governmental Entity), any such Merger Consideration or dividends or distributions in respect thereof shall, to the extent permitted by applicable Law, become the property of Parent, free and clear of any claims or interest of any person previously entitled thereto.

(d) After the Effective Time, the stock transfer books of the Company shall be closed and thereafter there shall be no further registration of transfers of Company Shares that were outstanding prior to the Effective Time. After the Effective

 

-8-

Time, Book-Entry Shares presented to the Surviving Corporation for transfer shall be canceled and exchanged for the consideration provided for, and in accordance with the procedures set forth in, this Article II.

(e) No dividends or other distributions with respect to Parent Shares issuable with respect to the Company Shares shall be paid to the holder of any unsurrendered Book-Entry Shares until those Book-Entry Shares are surrendered as provided in this Article II. Upon surrender of the Book-Entry Shares, in accordance with this Article II, there shall be issued and/or paid to the holder of Parent Shares, issued in exchange therefor, without interest, at the time of surrender, the dividends or other distributions payable with respect to those Parent Shares with a record date on or after the date of the Effective Time but prior to such surrender and a payment date on or prior to the date of the surrender and not previously paid.

SECTION 2.4 Withholding Rights . Parent, Merger Sub, the Surviving Corporation and the Exchange Agent, as the case may be, shall be entitled to deduct and withhold from the consideration payable pursuant to this Agreement to any holder of Company Shares an amount not in excess of the amount it is required to deduct and withhold with respect to the payment of such consideration under the Code and the rules and regulations promulgated thereunder, or any provision of state, local or foreign tax or other Law. To the extent that amounts are so withheld by or on behalf of Parent, Merger Sub, the Surviving Corporation and the Exchange Agent, as the case may be, such withheld amounts shall be treated for all purposes of this Agreement as having been paid to the holder of the Company Shares in respect of which such deduction and withholding was made.

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF THE COMPANY

The Company hereby represents and warrants to Parent and Merger Sub that, except as otherwise disclosed in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2008 or its other reports and forms filed with or furnished to the Securities and Exchange Commission (the “ SEC ”) under Sections 12, 13, 14 or 15(d) of the Securities Exchange Act of 1934 (the “ Exchange Act ”) after December 31, 2008 (the “ Company SEC Reports ”) and before the date of this Agreement (excluding any disclosures set forth in any section of a filed or furnished Company SEC Report entitled “Risk Factors” or “Forward-Looking Statements” or any other disclosures included in such documents to the extent that they are similarly non-specific or predictive or forward-looking in nature) and except as set forth on the Company Disclosure Schedule delivered by the Company to Parent and Merger Sub prior to, or concurrently with, the execution of this Agreement (the “ Company Disclosure Schedule ”), it being understood and agreed that each item in a particular section of the Company Disclosure Schedule applies to any section to which its relevance is reasonably apparent:

SECTION 3.1 Organization and Qualification; Subsidiaries . The Company and each of its subsidiaries is duly organized, validly existing and in good standing (with respect to jurisdictions that recognize the concept of good standing) under the Laws of the jurisdiction of its formation or organization, as applicable, and has all necessary government approvals and all

 

-9-

requisite corporate or similar power and authority to own, lease and operate its properties and to carry on its business as it is now being conducted, except where any such failure to be so organized, existing or in good standing or to have such power or authority would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect (as defined below). The Company and each of its subsidiaries is duly qualified or licensed to do business in each jurisdiction where the character of its properties owned, leased or operated by it or the nature of its activities makes such qualification or licensing necessary, except for any such failure to be so qualified or licensed or in good standing which has not had, and would not, individually or in the aggregate, reasonably be expected to have, a Material Adverse Effect. The term “Material Adverse Effect” shall mean, with respect to the Company, any change, event or effect shall have occurred or been threatened that, when taken together with all other adverse changes, events or effects that have occurred or been threatened, (i) is or would reasonably be expected to be materially adverse to the business, operations, financial condition, assets or liabilities of the Company and its subsidiaries taken as a whole (provided, however, that with respect to this clause (i), Material Adverse Effect will be deemed not to include effects to the extent resulting from (A) changes in general economic, financial market or geopolitical conditions, (B) general changes or developments in any of the industries in which the Company or its subsidiaries operate, (C) the announcement of this Agreement and the transactions contemplated hereby, including any termination of, reduction in or similar negative impact on relationships, contractual or otherwise, with any customers, suppliers, partners or employees of the Company and its subsidiaries, or any adverse impact on the Company’s credit rating from credit rating agencies, to the extent due to the announcement and performance of this Agreement or the identity of the parties to this Agreement, or the performance of this Agreement and the transactions contemplated hereby, including compliance with the covenants set forth herein, (D) changes in any applicable Laws or regulations or applicable accounting regulations or principles or interpretations thereof (including, changes in accounting principles generally accepted in the United States of America (“ U.S. GAAP ”)), (E) any attack on, or by, outbreak or escalation of hostilities or war or any act of terrorism or (F) any failure by the Company to meet any published analyst estimates or expectations of the Company’s revenue, earnings or other financial performance or results of operations for any period, in and of itself, or any failure by the Company to meet its internal or published projections, budgets, plans or forecasts of its revenues, earnings or other financial performance or results of operations or any change in the price of the Company Common Stock, in and of itself (it being understood that the facts or occurrences giving rise or contributing to such failure that are not otherwise excluded from the definition of a “Material Adverse Effect” may be taken into account in determining whether there has been a Material Adverse Effect); provided that, in the case of the immediately preceding clauses (A), (B), (D) or (E), such changes, effects or circumstances do not affect the Company or its subsidiaries disproportionately relative to other companies operating in the same industry) or (ii) does, or would reasonably be expected to, prevent or materially delay the performance by the Company of any of its obligations under the Transaction Documents or the consummation of the Merger or the other transactions contemplated by the Transaction Documents.

SECTION 3.2 Certificate of Incorporation and Bylaws . The Company has heretofore furnished or otherwise made available to Parent a complete and correct copy of the amended and restated certificate of incorporation of the Company, as amended to date (the “ Company Certificate of Incorporation ”), and the bylaws of the Company, as amended to date

 

-10-

(the “ Company Bylaws ”) and the certificate of incorporation and bylaws (or equivalent organizational documents) of each subsidiary, each as amended to date, as currently in effect. Such certificates of incorporation, bylaws or equivalent organizational documents are in full force and effect and no other organizational documents are applicable to or binding upon the Company or any subsidiary. Neither the Company nor any of its subsidiaries is in violation of any provisions of its certificate of incorporation or bylaws (or equivalent organizational documents).

SECTION 3.3 Capitalization .

(a) The authorized capital stock of the Company consists of (i) 200,000,000 shares of Class A Common Stock, (ii) two (2) shares of Class B common stock, par value $0.01 per share (“ Class B Common Stock ”), (iii) 999,999 shares of Class C Common Stock and (iv) 25,000,000 shares of Company Preferred Stock, of which 51,500 of such shares are designated as Series A Preferred Stock. As of July 25, 2009, (i) 67,121,668 shares of Class A Common Stock, one (1) share of Class B Common Stock and 115,062 shares of Class C Common Stock were issued and outstanding, all of which were validly issued, fully paid and nonassessable and were issued free of preemptive rights, (ii) 51,500 shares of Company Preferred Stock were outstanding, all of which were validly issued, fully paid and nonassessable and were issued free of preemptive rights, (iii) an aggregate of 9,765,825 shares of Class A Common Stock were subject to or otherwise deliverable in connection with outstanding equity-based awards or the exercise of outstanding Company Options issued pursuant to the Company’s 2007 Omnibus Incentive Compensation Plan, as amended through the date hereof (the “ Company Stock Plan ”), (iv) 1,571,318 shares of Class A Common Stock were authorized and reserved for future issuance pursuant to the Company Stock Plan and (v) 39,161 shares of Class A Common Stock were held in treasury of the Company. From the close of business on July 25, 2009 until the date of this Agreement, no options to purchase shares of Company Common Stock or Company Preferred Stock have been granted and no shares of Company Common Stock or Company Preferred Stock have been issued, except for shares issued pursuant to the exercise of Company Options or pursuant to previously granted Company Stock-Based Awards, in each case, in accordance with their terms. Except as set forth above, as of the date of this Agreement, (A) there are no outstanding or authorized (I) shares of capital stock or other voting securities of the Company, (II) securities of the Company convertible into or exchangeable for shares of capital stock or voting securities of the Company or (III) options, warrants or other rights to acquire from the Company or any of its subsidiaries, and no obligation of the Company or any of its subsidiaries to issue, any capital stock, voting securities or securities convertible into or exchangeable for capital stock or voting securities of the Company or any of its subsidiaries (collectively, “ Company Securities ”), (B) there are no outstanding obligations of the Company or any of its subsidiaries to repurchase, redeem or otherwise acquire any Company Securities or to pay any dividend or make any other distribution in respect thereof or to provide funds to, or make any investment (in the form of a loan, capital contribution or otherwise) in, any person and (C) there are no other options, calls, warrants or other rights, agreements, arrangements or commitments of any character relating to the issued or unissued capital stock of the Company or any of its subsidiaries to which the Company or any of its subsidiaries is a

 

-11-

party. Each of the outstanding shares of capital stock of each of the Company’s subsidiaries is duly authorized, validly issued, fully paid and nonassessable and were issued free of preemptive rights, and all such shares are owned by the Company or another wholly-owned subsidiary of the Company and are owned free and clear of all security interests, liens, adverse claims, pledges, limitations in voting rights, charges or other encumbrances (other than limitations on transfer under applicable Law). None of the Company’s subsidiaries owns any Company Shares. The Company and its subsidiaries do not own an equity interest in, or any interest convertible into or exchangeable or exercisable for any equity or similar interest in, any other corporation, partnership or entity or any participating interest in the revenues or profits of any person, other than in each of their subsidiaries. No bonds, debentures, notes or other indebtedness of the Company or its subsidiaries having the right to vote on any matter on which stockholders may vote are issued or outstanding. All Company Shares are uncertificated and represented by book-entry.

(b) All subsidiaries of the Company, their respective jurisdictions of organization, their respective forms of organization and the holders of their respective outstanding capital stock or other equity interests are identified in Section 3.3(b) of the Company Disclosure Schedule.

SECTION 3.4 Authority . Each of the Company and the Operating Partnership has all necessary corporate power and authority to execute and deliver the Transaction Documents to which it is a party, to perform its obligations thereunder and (assuming the Company Requisite Vote is received) to consummate the transactions contemplated thereby. The execution, delivery and performance by each of the Company and the Operating Partnership of the Transaction Documents to which it is a party and the consummation by the Company and the Operating Partnership of the transactions contemplated thereby have been duly and validly authorized by all necessary corporate action and, assuming the accuracy of the representations and warranties of Parent and Merger Sub set forth in Section 4.12, no other corporate proceedings on the part of the Company or the Operating Partnership are necessary to authorize the Transaction Documents to which it is a party or to consummate the transactions so contemplated (other than (i) the adoption of this Agreement by the holders of at least a majority in voting power of the outstanding Company Shares (the “ Company Requisite Vote ”) and (ii) the filing with the Secretary of State of the State of Delaware of the Certificate of Merger as required by the DGCL). Each of the Transaction Documents to which the Company or the Operating Partnership is a party has been duly executed and delivered by the Company and the Operating Partnership, as applicable, and, assuming the due authorization, execution and delivery hereof by Parent and Merger Sub, constitutes a legal, valid and binding obligation of each of the Company and the Operating Partnership enforceable against each of the Company and the Operating Partnership in accordance with its terms, subject to the effects of bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other similar Laws relating to or affecting creditors’ rights generally and general equitable principles (whether considered in a proceeding in equity or at Law). As of the date of this Agreement, the Board of Directors of the Company has (i) approved, and declared advisable, each of the Transaction Documents to which the Company or the Operating Partnership is a party, (ii) determined that the terms of this Agreement are fair to, and in the best interests of, the Company and its stockholders and (iii) recommended that the stockholders of the Company adopt this Agreement at the Stockholders

 

-12-

Meeting. Assuming the accuracy of representations and warranties of Parent and Merger Sub set forth in Section 4.12, the only vote of the stockholders of the Company required to adopt this Agreement and approve the transactions contemplated hereby is the Company Requisite Vote.

SECTION 3.5 No Conflict; Required Filings and Consents .

(a) The execution, delivery and performance by the Company and the Operating Partnership of each of the Transaction Documents to which the Company or the Operating Partnership is a party, as applicable, and the consummation of the Merger and the other transactions contemplated by the Transaction Documents do not and will not (i) conflict with or violate the Company Certificate of Incorporation or the Company Bylaws or equivalent documents of any of its subsidiaries, (ii) assuming that all consents, approvals and authorizations contemplated by clauses (i) through (v) of subsection (b) below have been obtained, and all filings described in such clauses have been made, conflict with or violate any Law, order, judgment or decree applicable to the Company or any of its subsidiaries or by which its or any of their respective properties and assets are bound or affected or (iii) result in any breach or violation of or constitute a default (or an event which with notice or lapse of time or both would become a default), result in the loss of a benefit under, or give rise to any right of termination, cancellation, amendment or acceleration of, result in triggering any payment or other obligations or result in the creation of a lien or other encumbrance on any property or asset of the Company or any of its subsidiaries pursuant to, any note, bond, mortgage, indenture, contract, agreement, lease, license, franchise, permit or other instrument or obligation (each, a “ Contract ”) to which the Company or any of its subsidiaries is a party or by which the Company or any of its subsidiaries or its or any of their respective properties or assets are bound except, in the case of clauses (ii) and (iii), for any such conflict, violation, breach, default, loss, right or other occurrence which has not had, and would not, individually or in the aggregate, reasonably be expected to have, a Material Adverse Effect.

(b) The execution, delivery and performance by each of the Company and the Operating Partnership of each of the Transaction Documents to which the Company or the Operating Partnership is a party and the consummation of the Merger and the other transactions contemplated by the Transaction Documents by the Company and the Operating Partnership do not and will not require any consent, approval, authorization or permit of, action by, filing with or notification to, any governmental or regulatory (including stock exchange) authority, agency, court, commission, or other foreign, federal or state governmental body (each, a “ Governmental Entity ”) or any consent, approval or authorization of, or notification to, any other person, except for (i) applicable requirements of the Exchange Act and the rules and regulations promulgated thereunder (including the filing of the Proxy Statement), the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the “ HSR Act ”), and state securities, takeover and “blue sky” Laws, (ii) the applicable requirements of the New York Stock Exchange (the “ NYSE ”), (iii) the filing with the Secretary of State of the State of Delaware of the Certificate of Merger as required by the DGCL and (iv) any such consent, approval, authorization, permit, action, filing or notification the failure of which to make or obtain would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

 

-13-

SECTION 3.6 Compliance with Law . (a) Neither the Company nor any of its subsidiaries is or has been in violation of any Law, order, judgment or decree applicable to the Company or any of its subsidiaries or by which its or any of their respective properties, business or assets are bound or affected except for any such violation which has not had, and would not, individually or in the aggregate, reasonably be expected to have, a Material Adverse Effect, and (b) the Company and its subsidiaries have all permits, licenses, authorizations, exemptions, orders, consents, approvals and franchises (“ Licenses ”) from Governmental Entities required to conduct their respective businesses as now being conducted, except for any such Licenses the absence of which has not had, and would not, individually or in the aggregate, reasonably be expected to have, a Material Adverse Effect.

SECTION 3.7 SEC Filings; Financial Statements; No Undisclosed Liability .

(a) The Company and its subsidiaries have timely filed and furnished all reports, registrations, schedules, forms, statements and other documents, together with any amendments required to be made with respect thereto (each, a “ Report ”), that they were required to file or furnish since January 1, 2007 with (i) the SEC, (ii) any state or other federal regulatory authority (other than any taxing authority, which is covered by Section 3.14) and (iii) any foreign regulatory authority (other than any taxing authority, which is covered by Section 3.14), and have paid all fees and assessments due and payable in connection therewith, except in each case where the failure to file such Report, or to pay such fees and assessments, has not had, and would not, individually or in the aggregate, reasonably be expected to have, a Material Adverse Effect. Each Report filed with or furnished to the SEC complied as to form in all material respects with the applicable requirements of the Securities Act of 1933, as amended (the “ Securities Act ”), and the rules and regulations promulgated thereunder, the Exchange Act and the rules and regulations promulgated thereunder, and the Sarbanes-Oxley Act of 2002 (the “ Sarbanes-Oxley Act ”) and the rules and regulations thereunder, each as in effect on the date so filed or furnished. None of the Reports of the Company filed with or furnished to the SEC contained, when so filed or furnished, any untrue statement of a material fact or omitted to state a material fact required to be stated or incorporated by reference therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. No executive officer of the Company has failed in any respect to make the certifications required of him or her under Section 302 or 906 of the Sarbanes-Oxley Act, and no enforcement action has been initiated against the Company, and to the knowledge of the Company no enforcement action has been threatened, by the SEC relating to disclosures contained in any Report of the Company made with the SEC.

(b) The audited consolidated financial statements of the Company and its consolidated subsidiaries (including any related notes thereto) included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2008 filed with the SEC have been prepared in accordance with U.S. GAAP in all material respects applied on a consistent basis throughout the periods involved (except as may be indicated in the notes thereto) and present fairly, in all material respects, the related financial position of the Company and its consolidated subsidiaries at the respective dates thereof and the consolidated statements of operations and comprehensive income, cash

 

-14-

flows and changes in stockholders’ equity for the periods indicated. The unaudited consolidated financial statements of the Company (including any related notes thereto) contained in the Company’s quarterly report on Form 10-Q for the three-month period ended March 31, 2009 have been prepared in accordance with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X for interim financial information in all material respects applied on a consistent basis throughout the periods involved (except as may be indicated in the notes thereto) and present fairly, in all material respects, the consolidated financial position of the Company and its consolidated subsidiaries as of the respective dates thereof and the consolidated statements of operations and comprehensive income, cash flows and changes in stockholders’ equity for the periods indicated (subject to normal period-end adjustments that are immaterial in nature and consistent with past experience).

(c) Since the enactment of the Sarbanes-Oxley Act, the Company has been and is in compliance in all material respects with (A) the applicable provisions of the Sarbanes-Oxley Act and (B) the applicable listing and corporate governance rules and regulations of the NYSE.

(d) The Company and its subsidiaries have designed and maintain a system of internal controls over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) sufficient to provide reasonable assurances regarding the reliability of financial reporting. The Company has designed and maintains disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act) to ensure that material information required to be disclosed by the Company in the Reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and is accumulated and communicated to the Company’s Chief Executive Officer and Chief Financial Officer by others as appropriate to allow timely decisions regarding required disclosure.

(e) The Company has disclosed, based on its most recent evaluation prior to the date of this Agreement, to the Company’s auditors and the audit committee of the Company’s Board of Directors (A) any significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect in any material respect the Company’s ability to record, process, summarize and report financial information and (B) any fraud, whether or not material, that involves management or other employees who have a significant role in the Company’s internal controls over financial reporting.

(f) Neither the Company nor any of its subsidiaries has any liabilities of a nature required by U.S. GAAP to be reflected in a consolidated balance sheet, except liabilities that (i) are accrued or reserved against in the most recent financial statements included in the Company SEC Reports filed prior to the date of this Agreement or are reflected in the notes thereto, (ii) were incurred in the ordinary course of business consistent with past practice and which have not had, and would not, individually or in the aggregate, reasonably be expected to have, a Material Adverse Effect, (iii) have been discharged or paid in full prior to the date of this Agreement, or will be discharged or

 

-15-

paid in full prior to the Effective Time, in the ordinary course of business consistent with past practice and which have not had, and would not, individually or in the aggregate, reasonably be expected to have, a Material Adverse Effect or (iv) are incurred pursuant to the transactions contemplated by the Transaction Documents.

(g) The Company has heretofore furnished or made available to Parent a complete and correct copy of any amendments or modifications which have not yet been filed with the SEC to agreements, documents or other instruments which previously had been filed by the Company with the SEC or incorporated by reference as exhibits to the Company SEC Reports pursuant to the Securities Act and the rules and regulations promulgated thereunder or the Exchange Act and the rules and regulations promulgated thereunder.

SECTION 3.8 Absence of Certain Changes or Events . Since December 31, 2008 through the date of this Agreement, except as contemplated by this Agreement, the Company and its subsidiaries have conducted their business in all material respects in the ordinary course consistent with past practice and, since such date, there has not been: (i) any change, event or occurrence which has had, or would, individually or in the aggregate, reasonably be expected to have, a Material Adverse Effect; (ii) any declaration, setting aside or payment of any dividend or other distribution in cash, stock, property or otherwise in respect of the Company’s or any of its subsidiaries’ capital stock or any dividend or distribution by a subsidiary of the Company; (iii) any redemption, repurchase or other acquisition of any shares of capital stock of the Company or any of its subsidiaries; (iv) any material change by the Company in its accounting principles, methods or practices, except as may be appropriate to conform to changes in statutory or regulatory accounting rules or U.S. GAAP or regulatory requirements with respect thereto; (v) any material change in the Company’s internal controls over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act); or (vi) any action of the type described in Section 5.1 that had such action been taken after the date of this Agreement would be in violation of such Section.

SECTION 3.9 Absence of Litigation . Section 3.9 of the Company Disclosure Schedule sets forth a true, correct and complete list of all material claims, suits, actions, governmental investigations, indictments or administrative, arbitration or other legal proceedings (excluding patent inquiry letters and unsolicited ideas) (“ Litigation ”) pending or, to the knowledge of the Company, threatened against the Company or any of its subsidiaries. There are no suits, claims, actions, arbitrations or other proceedings pending or, to the knowledge of the Company, threatened against the Company or any of its subsidiaries, that would, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. As of the date of this Agreement, neither the Company nor any of its subsidiaries nor any of their respective assets or properties is or are subject to any order, writ, judgment, injunction, decree or award (whether rendered by a court, administrative agency, or by arbitration, pursuant to a grievance or other procedure) except for those that would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

 

-16-

SECTION 3.10 Employee Benefit Plans .

(a) Section 3.10(a) of the Company Disclosure Schedule contains a true and complete list, as of the date of this Agreement, of each “ employee benefit plan ” (within the meaning of Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended (“ ERISA ”)), and each other director and employee plan, program, agreement or arrangement, vacation, sick pay or other paid time off policy, fringe benefit plan, and compensation, severance or employment agreement for the benefit of any current or former employee, officer, consultant, independent contractor or director of the Company or any of its subsidiaries (collectively, the “ Company Employees ”) with respect to which the Company or any of its subsidiaries has any material liability (such plans, programs, policies, agreements and arrangements, collectively, “ Company Plans ”).

(b) With respect to each Company Plan, the Company has made available to Parent a current, accurate and complete copy thereof (or, if a plan is not written, a written description thereof) and, to the extent applicable, (i) any related trust agreement or other funding instrument, (ii) the most recent determination letter received from the Internal Revenue Service (the “ IRS ”), (iii) any summary plan description and (iv) for the most recent year (A) the Form 5500 and attached schedules, (B) audited financial statements and (C) actuarial valuation reports, if any.

(c) Except as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect, each Company Plan has been established and administered in accordance with its terms and in compliance with the applicable provisions of ERISA, the Code and other applicable Laws, rules and regulations.

(d) Neither the Company nor any of its subsidiaries contributes to or has any liability with respect to any “multiemployer plan,” as defined in Section 3(37) of ERISA or a “multiple employer welfare arrangement” as defined in Section 3(40) of ERISA.

(e) Except as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect, with respect to each Company Plan, as of the date of this Agreement, no actions, suits or claims (other than routine claims for benefits in the ordinary course) are pending or, to the knowledge of the Company, threatened.

(f) Except as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect, (i) the Company has not incurred any liability under Title IV of ERISA that has not been satisfied in full, and (ii) to the knowledge of the Company, no condition exists that presents a risk to the Company of incurring any such liability other than liability for premiums due the Pension Benefit Guaranty Corporation.

(g) (i) Except as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect, each Company Plan which is intended to be qualified under Section 401(a) of the Code is so qualified, (ii) each such Company Plan has received a determination letter to that effect from the Internal Revenue Service and (iii) to the knowledge of the Company, no circumstances exist which would reasonably be expected to materially adversely affect such qualification or exemption.

 

-17-

(h) The execution, delivery of and performance by the Company of its obligations under the transactions contemplated by the Transaction Documents will not (either alone or upon occurrence of any additional or subsequent events) result in “excess parachute payments” within the meaning of Section 280G(b)(1) of the Code or result in, cause the accelerated vesting or delivery of, or increase the amount or value of, any payment to the benefit to any director, officer or employee of the Company or any subsidiary.

(i) No Company Plan is subject to any ongoing or pending or, to the knowledge of the Company, threatened audit or investigation or other material legal proceeding initiated by any Governmental Entity or by any other person (other than such person’s claims for benefits made in the ordinary course), and to the knowledge of the Company there exists no set of facts which could reasonably be expected to give rise to any such audit or investigation or other similar legal proceeding.

(j) The only outstanding Company Stock-Based Awards are awards of restricted stock and restricted stock units made or otherwise outstanding under the Company Stock Plan (including, without limitation, awards that were initially granted under the Company’s 2007 Restricted Stock Unit Plan and any other “Predecessor Plans”, as defined under the Company Stock Plan, which are considered to be awards governed by the Company Stock Plan pursuant to Article XVIII thereof).

SECTION 3.11 Labor and Employment Matters .

(a) As of the date of this Agreement, neither the Company nor any subsidiary is a party to any collective bargaining agreement with any labor organization or other representative of any Company Employees, nor is any such agreement presently being negotiated by the Company. There are no unfair labor practice complaints pending or, to the knowledge of the Company, threatened against the Company or any of its subsidiaries before the National Labor Relations Board or any other labor relations tribunal or authority. There are no strikes, work stoppages, slowdowns, lockouts, material arbitrations or material grievances, or other material labor disputes or labor organizing activities pending or, to the knowledge of the Company, threatened against or involving the Company or any of its subsidiaries. Except as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect, the Company and each of its subsidiaries has complied with all applicable labor and employment laws, including the Worker Adjustment and Retraining Notification Act.

(b) There are no material investigations, administrative proceedings, charges or formal complaints of discrimination (including discrimination based upon sex, age, marital status, race, national origin, sexual preference, disability, handicap, veteran status, or other protected category) pending or threatened before the Equal Employment Opportunity Commission or any federal, state or local agency or court against or involving the Company or any of its subsidiaries that involve allegations of disparate impact, pattern or practice or class-wide discrimination.

 

-18-

SECTION 3.12 Insurance . All material insurance policies of the Company and its subsidiaries (a) are in full force and effect and provide insurance in such amounts and against such risks as is reasonable and customary for the Company’s business and (b) neither the Company nor any of its subsidiaries is in breach or default, and neither the Company nor any of its subsidiaries has taken any action or failed to take any action which, with notice or the lapse of time, would constitute such a breach or default, or permit termination or modification of, any of such insurance policies.

SECTION 3.13 Properties and Assets . Except as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect, the Company or one of its subsidiaries (i) has good title to all the properties and assets reflected in the latest audited balance sheet included in the Company SEC Reports as being owned by the Company or one of its subsidiaries or acquired after the date thereof (except properties sold or otherwise disposed of since the date thereof in the ordinary course of business consistent with past practice), free and clear of all claims, liens, charges, security interests or encumbrances of any nature whatsoever, except (A) statutory liens securing payments not yet due, (B) such imperfections or irregularities of title, claims, liens, charges, security interests, easements, covenants and other restrictions or encumbrances as do not materially affect the use of the properties or assets subject thereto or affected thereby or otherwise materially impair business operations at such properties and (C) mortgages, deeds of trust, security interests or other encumbrances on title related to indebtedness properly reflected on the consolidated financial statements of the Company, and (ii) is the lessee of all leasehold estates reflected in the latest audited financial statements included in the Company SEC Reports or acquired after the date thereof (except for leases that have expired by their terms since the date thereof or have been assigned, terminated or otherwise disposed of in the ordinary course of business consistent with past practice) and is in possession of the properties purported to be leased thereunder, and each such lease is valid without default thereunder by the lessee or, to the Company’s knowledge, the lessor.

SECTION 3.14 Tax Matters . (a) (i) All material Tax Returns required to be filed by the Company and its subsidiaries have been timely filed (except those under valid extension), (ii) all material Taxes of the Company and its subsidiaries have been paid or adequately provided for on the most recent financial statements included in the Company SEC Reports filed prior to the date hereof, (iii) neither the Company nor any of its subsidiaries has received written notice of any claim from any Governmental Entity with respect to any material Taxes, (iv) there are no liens for any material Taxes (other than Taxes not yet due and payable) upon any of the assets of the Company or any of its subsidiaries, (v) the Company and each of its subsidiaries has withheld and paid over to the relevant Governmental Entity all material Taxes required to have been withheld and paid in connection with payments to employees, independent contractors, creditors, shareholders or other third parties, (vi) neither the Company nor any of its subsidiaries has waived any statute of limitations in respect of any material Taxes or agreed to any extension of time with respect to a material Tax assessment or deficiency, (vii) no foreign, federal, state, or local Tax audits or administrative or judicial Tax proceedings are pending or being conducted with respect to any material Taxes of the Company or any of its subsidiaries, (viii) neither the Company nor any of its subsidiaries has taken any action or knows of any fact

 

-19-

or circumstance that could reasonably be expected to prevent the Merger from qualifying as a reorganization within the meaning of Section 368(a) of the Code, (ix) neither the Company nor any of its subsidiaries (A) has been a member of an affiliated group filing a consolidated federal income Tax Return (other than a group the common parent of which was the Company or one of its subsidiaries), (B) is a party to or is bound by any material Tax sharing, allocation or indemnification agreement or arrangement (other than (i) any Tax sharing or allocation agreement between the Company and its subsidiaries, (ii) customary provisions contained in credit or other commercial lending arrangements, employment agreements, or arrangements with lessors, customers and vendors, and (iii) the tax receivable agreements among (x) the Company, the Operating Partnership and Sprint Ventures, Inc. and (y) the Company and Corvina Holdings Limited, each entered into as of October 16, 2007 or (C) has any liability for any material Taxes of any person (other than the Company or any of its subsidiaries) under Treasury Regulation Section 1.1502-6 (or any similar provision of state, local or foreign Law), as a transferee or successor, by contract or otherwise, (x) neither the Company nor 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 (A) change in method of accounting made in a taxable period ending on or before the Closing Date, (B) “closing agreement” as described in Section 7121 of the Code (or any corresponding or similar provision of state, local or foreign income Tax law) executed on or before the Closing Date or (C) prepaid amount received on or before the Closing Date, and (xi) neither the Company nor any of its subsidiaries has engaged in any “listed transaction” as defined in Treasury Regulation Section 1.6011-4(b).

(b) For purposes of this Agreement, “ Tax ” or “ Taxes ” shall mean any taxes of any kind, including but not limited to those on or measured by or referred to as income, gross receipts, capital, sales, use, ad valorem, franchise, profits, license, withholding, payroll, employment, excise, severance, stamp, occupation, premium, value added, property or windfall profits taxes, customs, duties or similar fees, assessments or charges of any kind whatsoever, together with any interest and any penalties, additions to tax imposed by any Governmental Entity. For purposes of this Agreement, “ Tax Return ” shall mean any return, report or statement required to be filed with any Governmental Entity with respect to Taxes, including any schedule or attachment thereto or amendment thereof.

SECTION 3.15 Proxy Statement . None of the information supplied or to be supplied by the Company for inclusion or incorporation by reference in the Registration Statement on Form S-4 or any amendment or supplement thereto pursuant to which Parent Shares issuable in the Merger will be registered with the SEC (the “ S-4 ”) shall at the time the S-4 is declared effective by the SEC (or, with respect to any post-effective amendment or supplement, at the time such post-effective amendment or supplement becomes effective) or at the Effective Time contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were not, not misleading. None of the information supplied or to be supplied by the Company for inclusion in the proxy statement to be sent to the stockholders of the Company in connection with the Stockholders Meeting (such proxy statement as amended or supplemented, the “ Proxy Statement ”) shall, on the date the Proxy Statement is first mailed to the stockholders of the Company and during the pendency of the

 

-20-

Stockholders Meeting, at the time of the Company Requisite Vote, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. Notwithstand