AGREEMENT AND PLAN OF MERGER

 

                                                                                                Exhibit 10.1

AGREEMENT AND PLAN OF MERGER

dated as of

October 18, 2005

Among

NT CORPORATION

TALK AMERICA HOLDINGS, INC.

AND

THNETCO, INC.

     

 

 

Table of Contents

 

 

Exhibits :

A.   Form of Escrow Agreement

 

 

 

AGREEMENT AND PLAN OF MERGER

THIS AGREEMENT AND PLAN OF MERGER (the “ Agreement ”) is dated effective October 18, 2005, by and among TALK AMERICA HOLDINGS, INC. , a Delaware corporation (“ Parent ”), THNETCO, INC. , a Delaware corporation and indirectly wholly owned subsidiary of Parent (“ Merger Sub ”), and NT CORPORATION , a Delaware corporation (“ Company ”). Parent, Merger Sub and Company are referred to collectively herein as the “ Parties ,” and Company and Merger Sub are sometimes collectively referred to as the “ Constituent Corporations .”

WITNESSETH:

WHEREAS , this Agreement contemplates a transaction whereby Parent will acquire all of the outstanding capital stock of Company through a merger of Merger Sub with and into Company;

WHEREAS , the Board of Directors of each of Parent, Merger Sub and Company has approved the acquisition of Company by Parent, including the merger of Merger Sub with and into Company (the “ Merger ”), upon the terms and subject to the conditions set forth herein, and the Board of Directors of each of Company and Merger Sub has adopted this Agreement;

WHEREAS , the Board of Directors of Company has determined that the Merger is advisable and is fair to and in the best interests of the holders of the Company Shares and recommended the approval of the Merger and this Agreement by the stockholders of Company and this Agreement and the Merger have been approved by the requisite vote of the stockholders of Company; and

NOW, THEREFORE , in consideration of the premises and the mutual promises set forth herein, and in consideration of the representations, warranties and covenants set forth herein, the Parties agree as follows:

DEFINITIONS

“ Affiliate ” has the meaning set forth in Rule 12b-2 of the regulations promulgated under the Securities Exchange Act.

“ Affiliated Group ” means any affiliated group within the meaning of Code Section 1504(a) or any similar group defined under a similar provision of federal, state, local or foreign law.

“ Claim Date ” means the earlier of (a) the 60th day after Parent files its Annual Report on Form 10-K with the SEC for its fiscal year ending December 31, 2006 and (b) May 31, 2007.

 

“ COBRA ” means the requirements of Part 6 of Subtitle B of Title I of ERISA and Code Section 4980B and of any similar state law.

“ Code ” means the Internal Revenue Code of 1986, as amended.

“ Combined Material Adverse Effect ” means a Material Adverse Effect on Company or a Material Adverse Effect on Parent and its Subsidiaries (including the Surviving Corporation), taken as a whole, after the Effective Time.

“ Company Board ” means the board of directors of Company.

“ Company’s Restated Charter ” means the Fourth Amended and Restated Certificate of Incorporation of NT CORPORATION filed with the Delaware Secretary of State on July 29, 2004, as in effect as of the Effective Time.

“ Confidentiality Agreement ” means the letter agreement dated August 23, 2005 between Parent and Company, as it may be amended, providing that, among other things, each Party would maintain confidential certain information of the other Party.

“ Consenting Stockholders ” means the Preferred Stockholders that approve the adoption of this Agreement and the Merger by written consent pursuant to Stockholder Consents.

“ Deferred Intercompany Transaction ” has the meaning set forth in Treas. Reg. Section 1.1502-13.

“ Delaware Law ” means the General Corporation Law of the State of Delaware, Chapter 1, Title 8 of the Delaware Code 1953, as amended.

“ Dissenting Stockholder ” at any time means a holder of Company Shares that are Dissenting Shares at such time the holder of which continues to be entitled to appraisal rights under Section 262 of the Delaware Law (including not having withdrawn any demand or otherwise waived or lost such rights) in respect of such shares.

“ Employee Benefit Plan ” means any “employee benefit plan” (as such term is defined in ERISA Section 3(3)) and any other employee benefit plan, program or arrangement of any kind.

“ Employee Options ” means any stock options to purchase shares of Common Stock granted under any employee stock option or compensation plan or arrangement of Company.

“ Employee Pension Benefit Plan ” has the meaning set forth in ERISA Section 3(2).

“ Employee Welfare Benefit Plan ” has the meaning set forth in ERISA Section 3(1).

“ Environmental, Health and Safety Requirements ” means all federal, state, local and foreign statutes, regulations, ordinances and other provisions having the force or effect of law, all judicial and administrative orders and determinations, all contractual obligations and all common law concerning public health and safety, worker health and safety, and pollution or protection of the environment, including all those relating to the presence, use, production, generation, handling, transportation, treatment, storage, disposal, distribution, labeling, testing, processing, discharge, release, threatened release, control, or cleanup of any hazardous materials, substances or wastes, chemical substances or mixtures, pesticides, pollutants, contaminants, toxic chemicals, petroleum products or byproducts, asbestos, polychlorinated biphenyl, noise or radiation, each as amended and as now or hereafter in effect.

“ ERISA ” means the Employee Retirement Income Security Act of 1974, as amended.

“ ERISA Affiliate ” means each entity that is treated as a single employer with Company for purposes of Code Section 414.

“ Excess Loss Account ” has the meaning set forth in Treas. Reg. Section 1.1502-19.

“ FCC ” means the Federal Communications Commission.

“ FCC Consent ” means the grant by the FCC of its consent to the transfer of the FCC Licenses in connection with the consummation of the transactions contemplated hereby.

“ Fiduciary ” has the meaning set forth in ERISA Section 3(21).

“ GAAP ” means United States generally accepted accounting principles as in effect from time to time.

“ Governmental Entity ” means any United States federal, state or local or any foreign government, governmental regulatory or administrative authority, agency, commission (including any department or political subdivision of any of the foregoing), court, tribunal or judicial or arbitral body.

“ Governmental Order ” means any order, ruling, writ, judgment, injunction, decree, charge, stipulation, determination or award entered by or with any Governmental Entity.

“ Intellectual Property ” means (a) all inventions (whether patentable or unpatentable and whether or not reduced to practice), all improvements thereto, and all patents, patent applications and patent disclosures, together with all reissuances, continuations, continuations-in-part, revisions, extensions and reexaminations thereof, (b) all trademarks, service marks, trade dress, logos, trade names and corporate names, together with all translations, adaptations, derivations and combinations thereof and including all goodwill associated therewith, and all applications, registrations and renewals in connection therewith, (c) all copyrightable works, all copyrights and all applications, registrations and renewals in connection therewith, (d) all mask works and all applications, registrations and renewals in connection therewith, (e) all trade secrets and confidential business information (including ideas, research and development, know-how, formulae, compositions, manufacturing and production processes and techniques, technical data, designs, drawings, specifications, customer and supplier lists, pricing and cost information, and business and marketing plans and proposals), (f) all Computer Software (including data and related documentation), (g) all other proprietary rights and (h) all copies and tangible embodiments thereof (in whatever form or medium).

 

 

“ Interim Agreement ” means the Interim Operating and Integration Agreement, dated as of the date hereof, between Parent and Company.

“ Interim Escrow Amount ” means, as of any date, the aggregate amount remaining in the Escrow Fund as of such date, as such amount is reduced by the aggregate amount of any claims for indemnification that have been resolved but not yet paid as of such date or that have not been resolved but have been asserted in writing prior to such date pursuant to Section 7.2.

“ Knowledge ” of any Person that is not an individual means the actual knowledge of (i) such Person’s executive officers, in the case of Parent and Merger Subsidiary, and (ii) each of Leo J. Cyr and Danyelle L. Kennedy-Lantz, in the case of the Company, in each case after reasonable investigation by such individual.

“ Laws ” mean any laws, statutes, rules, ordinances, regulations, codes, plans, injunctions, judgments, orders, writs, decrees, rulings and charges thereunder of any Governmental Entity.

“ Liability ” means any liability (whether known or unknown, whether asserted or unasserted, whether absolute or contingent, whether accrued or unaccrued, whether liquidated or unliquidated, and whether due or to become due), including any liability for Taxes.

“ Lien ” means, with respect to any property or asset, any mortgage, lien, pledge, charge, security interest or encumbrance of any kind in respect of such property or asset.

“ Main Leases ” means collectively all leases by Company or any of its Subsidiaries of 3300 Pace Street, Pensacola, Florida and 2700 N.E. Expressway, Building B, Suites 700 and 900, Atlanta, Georgia.

“ Material Adverse Effect ” means, with respect to or of or on any Person, (a) a material adverse change in, or materially adverse effect on, the business, assets, revenues, financial condition or results of operations of such Person and its Subsidiaries taken as a whole, excluding any such effect resulting from (i) changes in political or regulatory conditions generally, (ii) changes or conditions generally affecting the U.S. economy or financial markets or generally affecting the segments of the telecommunications industry in which such Person or any of its Subsidiaries operates, (iii) changes in GAAP, (iv) actions or forbearances taken in accordance with the terms of the Interim Agreement or (v) the announcement or consummation of this Agreement, or (b) an effect that would prevent, materially delay or materially impair the ability of such Person to consummate the Merger and the other transactions contemplated by this Agreement.

“ Most Recent Balance Sheet ” means the balance sheet contained within the Most Recent Financial Statements.

“ Multiemployer Plan ” has the meaning set forth in ERISA Section 3(37).

“ Nasdaq ” means the Nasdaq National Market.

“ Ordinary Course of Business ” means the ordinary course of business consistent with past practice.

“ Parent Board ” means the board of directors of Parent.

“ PBGC ” means the Pension Benefit Guaranty Corporation.

“ Person ” means an individual, a partnership, a corporation, a limited liability company, an association, a joint stock company, a trust, a joint venture, an unincorporated organization or a Governmental Entity.

“ Preferred Stockholder ” means a holder of record of shares of Preferred Stock.

“ Prohibited Transaction ” has the meaning set forth in ERISA Section 406 and Code Section 4975.

“ Reportable Event ” has the meaning set forth in ERISA Section 4043.

“ Representatives ” has the meaning set forth in the Escrow Agreement.

“ Requisite Stockholder Approval ” means adoption of this Agreement by the affirmative vote, at a meeting or by written consent, of (i) the holders of a majority of the outstanding Common Stock and Preferred Stock voting together as a single class, with the Preferred Stock voting on an as-converted-to-Common Stock basis, (ii) the holders of 60% of the outstanding shares of Series A Preferred, Series B Preferred and Series C Preferred, voting together as a single class, and (iii) the holders of 75% of the shares of Series D Preferred, voting separately as a class.

“ SEC ” means the Securities and Exchange Commission.

“ Securities Act ” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.

“ Securities Exchange Act ” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.

“ Security Interest ” means any Lien other security interest, other than (a) mechanic’s, materialman’s and similar liens; (b) Liens for taxes not yet due and payable; (c) purchase money Liens and Liens securing rental payments under capital lease arrangements; and (d) other Liens arising in the Ordinary Course of Business and not incurred in connection with the borrowing of money.

“ Severance Amounts ” means all out-of-pocket compensation, bonuses, fees and expenses payable by Company or any of its Subsidiaries to any of its employees or directors in connection with or by reason of the transactions contemplated hereby and the consummation of any thereof, including payments and amounts of the categories, natures and types reflected in the statement in Section 5.6(e) of the Company Disclosure Letter and including all costs and payments to be paid as contemplated by Section 5.6(e), but in any case not including payments described in Note 2 of Section 5.6(e) of the Company Disclosure Letter, and any other amount that is stated in Section 5.1(a)(18)(z) to be, or be deemed to be, a Severance Amount. By way of example but not limitation of the generality of the foregoing definition, set forth in Section 5.6(e) of the Company Disclosure Letter is an estimate, as of the date of this Agreement, of the “Severance Amounts.”

 

 

“ State PUC Consent ” means the grant by any state Governmental Entity that granted or issued any of the State Licenses or otherwise has authority in the matter of its consent to the transfer of the State Licenses in connection with the consummation of the transactions contemplated hereby.

“ Stockholder Consent ” means a Consent, executed by a Preferred Stockholder, approving the adoption of this Agreement and the Merger.

“ Subsidiary ” of a specified Person means any corporation, limited liability company, partnership, joint venture or other legal entity of which the specified Person (either alone or together with any other Subsidiary of the specified Person) owns, directly or indirectly, more than 50% of the stock or other equity, partnership, limited liability company or equivalent interests, the holders of which are generally entitled to vote for the election of the board of directors or other governing body of such corporation or other legal entity, or otherwise has the power to vote or direct the voting of sufficient securities to elect a majority of such board of directors or other governing body.

“ Tax ” means any federal, state, local or foreign income, gross receipts, license, payroll, employment, excise, severance, stamp, occupation, premium, windfall profits, environmental (including taxes under Code Section 59A), customs duties, capital stock, franchise, profits, withholding, social security (or similar), unemployment, disability, real property, personal property, sales, use, transfer, registration, value added, alternative or add-on minimum, estimated or other tax of any kind whatsoever, including any interest, penalty, or addition thereto, whether disputed or not.

“ Tax Return ” means any report, return, declaration or other information required to be supplied to a taxing authority in connection with Taxes.

“ Total Merger Consideration ” means $23,000,000, minus the sum of the Transaction Costs and Severance Amounts, as set forth in the Closing Costs Certificate.

“ Transaction Costs ” means all fees and expenses of legal counsel, investment bankers, brokers or other representatives and consultants, including Breckenridge Securities Corp. and The Breckenridge Group, Inc., Latham & Watkins LLP, Cooley Godward LLP, Nowalsky Bronston & Gothard PLLC, Kilpatrick Stockton LLP and Ernst & Young LLP, incurred or accrued by Company, or for which Company or any of its Subsidiaries is liable, in connection with the negotiation, execution and delivery of this Agreement, the performance of the obligations of Company and its Subsidiaries hereunder and the consummation of the transactions contemplated hereby, including payments and amounts of the categories, natures and types reflected in the statement in Section 5.6(b) of the Company Disclosure Letter, the premium payable for the purchase of the “tail” policy required to be procured pursuant to Section 5.5(b) and any other amount that is stated in Section 5.1(a)(18)(z) to be, or be deemed to be, a Transaction Cost. By way of example but not limitation of the generality of the foregoing definition, set forth in Section 5.6(b) of the Company Disclosure Letter is an estimate, as of the date of this Agreement, of the maximum amounts of the various categories of “Transaction Costs.”

 

           (c)    Any reference to any federal, state, local or foreign statute or law shall be deemed also to refer to all rules and regulations promulgated thereunder, unless the context requires otherwise. The words “ include ,” “ includes ” and “ including ” shall mean include, includes or including without limitation. The phrase “ business day ” shall mean any day other than a day on which banks in the State of New York are required or authorized to be closed. The phrases “ herein ,” “ hereof ,” “ hereunder ” and words of similar import shall be deemed to refer to this Agreement as a whole, including the Exhibits and Schedules hereto, and not to any particular provision of this Agreement. The word “ or ” shall be inclusive and not exclusive. Any pronoun shall include the corresponding masculine, feminine and neuter forms.

THE TRANSACTION

On and subject to the terms and conditions of this Agreement, Merger Sub will merge with and into Company at the Effective Time and the separate corporate existence of Merger Sub will thereupon cease. Company shall be the surviving corporation in the Merger (the “ Surviving Corporation ”), and the separate corporate existence of Company, with all of its rights, privileges, summary powers and franchises, shall continue unaffected by the Merger, except as provided for in Section 2.4.

The closing of the transactions contemplated by this Agreement (the “ Closing ”) shall take place (i) at the offices of Latham & Watkins LLP, 555 Eleventh Street, NW, Suite 1000 Washington, D.C. 20004, commencing at 9:00 A.M. local time on January 2, 2006 or, in the event the conditions set forth in Article VI are not satisfied or waived (other than those conditions that by their terms are to be satisfied at the Closing, but subject to the satisfaction or waiver of those conditions) as of such date, the first day that is the last business day of a month and at least three business days after the satisfaction or waiver of all conditions set forth in ARTICLE VI (other than those conditions that by their terms are to be satisfied at the Closing, but subject to the satisfaction or waiver of those conditions) or (ii) at such other place and time or on such other date as Parent and Company may agree in writing (the “ Closing Date ”).

At the Closing, (i) Company will deliver to Parent and Merger Sub the various certificates, instruments and documents referred to in Section 6.2; (ii) Parent and Merger Sub will deliver to Company the various certificates, instruments and documents referred to in Section 6.3; (iii) Company and Merger Sub shall duly execute and deliver a certificate of merger (the “ Certificate of Merger ”)to the Secretary of State of the State of Delaware for filing under Section 251 of the Delaware Law and make all other filings or recordings required by the Delaware Law in connection with the Merger and (iv) Parent will deliver or cause to be delivered the Exchange Fund to the Exchange Agent in the manner provided below in this ARTICLE II.

(Total Merger Consideration minus Preferred Share Liquidation Consideration)

Company Outstanding Shares

 

 

 

 

     (g)    Notwithstanding anything in this Agreement to the contrary, each Share that is held by a holder (i) who has not voted in favor of the Merger or consented thereto in writing, (ii) who shall have properly demanded in writing appraisal of such Shares pursuant to, and who complies in all respects with, Section 262 of the Delaware Law and (iii) who has neither effectively withdrawn nor lost the right to such payment (each such share, a “ Dissenting Share ” and collectively, the “ Dissenting Shares ”) shall not be converted into the right to receive Merger Consideration as provided in Sections 2.4(e) and (f), but rather the holders of Dissenting Shares shall be entitled to payment of the fair value of such Dissenting Shares in accordance with Section 262 of the Delaware Law; provided, however, that if any such holder shall fail to perfect or otherwise shall waive, withdraw or lose the right to appraisal under Section 262 of the Delaware Law, then the right of such holder to be paid the fair value of such holder’s Dissenting Shares shall cease and such Dissenting Shares shall be deemed to have been converted as of the Effective Time into, and to have become exchangeable solely for the right to receive, Merger Consideration as provided in Section 2.4(f). Company shall serve prompt notice to Parent of any written demands received by Company for appraisal of any Company Shares, and Parent shall have the right to participate in and direct all negotiations and proceedings with respect to such demands. Prior to the Effective Time, the Company shall not, without the prior written consent of Parent, make any payment with respect to, or settle or offer to settle, any such demands, or agree to do any of the foregoing.

     (h)    Cancellation of Employee Stock Options . At or immediately prior to the Effective Time, each stock option or warrant to purchase Company Shares or any other capital stock of Company or any Company Subsidiary outstanding, whether or not vested or exercisable, and each commitment or agreement to issue Company Shares or any other capital stock of Company or any Company Subsidiary, including without limitation, all such stock options, warrants and commitments or agreements to issue Shares or any other capital stock of the Company or any Subsidiary set forth in Section 3.2(b) of the Company Disclosure Letter, shall be cancelled without the payment of any consideration, and Company and its Subsidiaries shall take all such actions, and shall obtain all consents and approvals as are necessary, to effect such cancellation.

 

     (i)    Conversion of Capital Stock of Merger Sub . At and as of the Effective Time, each share of common stock, $.01 par value per share, of Merger Sub shall be converted into one share of common stock, $.0l par value per share, of the Surviving Corporation.

2.5.    Procedure for Exchange .

     (a)    Immediately after the Effective Time, (A) Parent shall furnish to StockTrans, Inc., its transfer agent, or such other bank or trust company reasonably acceptable to Company to act as exchange agent (the “ Exchange Agent ”), a corpus (the “ Exchange Fund ”) consisting of cash sufficient to permit the Exchange Agent to make full payment of the Merger Consideration to the holders of all of the issued and outstanding Company Shares (other than any Company Shares owned by Company), less the amount in cash equal to 10% of the Total Merger Consideration, which amount (the “ Escrowed Consideration ”) will be withheld from the amounts otherwise to be delivered to the holders of Preferred Stock as Merger Consideration to which each such holder of Preferred Stock would, but for this Section 2.5(a), be entitled to be delivered pursuant to this Agreement, pro rata in proportion to the respective amount otherwise so deliverable and (B) Parent will cause the Exchange Agent to mail a letter of transmittal (with instructions for its use) in a form to be mutually agreed upon by Company and Parent prior to Closing to each holder of issued and outstanding Company Shares (other than any Company Shares owned by Company) that is entitled to receive any Merger Consideration for the holder to use in surrendering the certificates that, immediately prior to the Effective Time, represented his or its Company Shares against payment of the Merger Consideration to which the holder is entitled pursuant to Section 2.4(f), subject to the escrow of the Escrowed Consideration pursuant to the Escrow Agreement. Notwithstanding the withholding of the Escrowed Consideration and deposit thereof with the Escrow Agent pursuant to Section 2.6(a), each Preferred Stockholder shall, for all purposes of Section 2.4, be deemed to have received its pro rata share of such Escrowed Consideration so withheld and deposited. Upon surrender to the Exchange Agent of these certificates, together with the letter of transmittal, duly executed and completed in accordance with the letter of transmittal instructions, subject to the escrow of the Escrow Amount pursuant to the Escrow Agreement, Parent shall promptly cause to be issued a check representing the Merger Consideration (after giving effect to any required tax withholdings and the withholding of the Escrowed Consideration). No interest will be paid or accrued on any amounts payable to former holders of Company Shares. If payment is to be made to a Person other than the registered holder of the certificate surrendered, it shall be a condition of payment that the surrendered certificate must be properly endorsed or otherwise in proper form for transfer and that the Person requesting such payment shall pay any transfer or other taxes required by reason of the payment to a Person other than the registered holder of the certificate surrendered or establish to the reasonable satisfaction of the Surviving Corporation or the Exchange Agent that this tax has been paid or is not applicable. If any certificate representing Company Shares is lost, stolen or destroyed, upon the making of an affidavit of that fact by the Person claiming a certificate to be lost, stolen or destroyed, the Exchange Agent will issue in exchange for this lost, stolen or destroyed certificate the Merger Consideration deliverable in respect thereof except that the Person to whom this Merger Consideration is paid shall, as a condition precedent to the payment thereof, indemnify the Surviving Corporation in a manner reasonably satisfactory to it against any claim that may be made against the Surviving Corporation with respect to the certificate alleged to have been lost, stolen or destroyed.

     (b)    Parent shall pay, or shall cause the Surviving Corporation to pay, all charges and expenses of the Exchange Agent.

2.6.    Escrow .

     (a)    At the Effective Time, Parent, Merger Sub, Company, the Representatives and the Escrow Agent shall execute and deliver an escrow agreement substantially in the form of the attached Exhibit A (the “ Escrow Agreement ”) under which U.S. Bank Corporate Trust Services or other Person mutually satisfactory to Parent and Company shall act as escrow agent (the “ Escrow Agent ”) with respect to the Escrowed Consideration (the aggregate value of which, the “ Escrow Amount ”), which shall be deposited in an escrow fund (the “ Escrow Fund ”) to be governed by the terms set forth in the Escrow Agreement. Parent shall deposit the Escrowed Consideration with the Escrow Agent, which shall be withheld from the Merger Consideration as provided in Section 2.5 in connection with the indemnification obligations set forth in Section 7.2.

     (b)    Subject to the provisions of this Section 2.6 and the Escrow Agreement, (i) on the first business day that is at least 270 days after the Closing Date, an amount equal to 50% of the Interim Escrow Amount as of such date shall be paid to the Preferred Stockholders, and (ii) on the Claim Date, the then remaining amount in the Escrow Fund, as such amount is reduced by the aggregate amount of any claims for indemnification that have been resolved but not yet paid or that have not been resolved but have been asserted in writing prior to the Claim Date pursuant to Section 7.2, shall be paid to the Preferred Stockholders.

2.7.    Closing of Transfer Record . After the Effective Time, no transfer of Company Shares outstanding prior to the Effective Time may be made on the stock transfer books of the Surviving Corporation. If, after the Effective Time, certificates representing such shares are presented for transfer to the Exchange Agent, they shall be canceled and exchanged for Merger Consideration as provided in Section 2.5.

REPRESENTATIONS AND WARRANTIES OF COMPANY

Except as set forth in the disclosure letter (subject to Section 9.13(c)) delivered to Parent by Company at or prior to entering into this Agreement (the “ Company Disclosure Letter ”), Company hereby represents and warrants to Parent and Merger Sub that:

3.1.    Organization, Qualification and Corporate Power; Transaction Authorization .

     (a)    Each of Company and its Subsidiaries is a corporation duly organized, validly existing, and in good standing under the Laws of the jurisdiction of its incorporation and has all requisite corporate or similar power and authority to own and operate its properties and assets and to carry on its business as presently conducted and is qualified to do business and is in good standing as a foreign corporation in each jurisdiction where the ownership or operation of its assets or properties or conduct of its business requires such qualification, except where the failure to be so organized, validly existing, qualified or in good standing, or to have such power or authority, would not be reasonably expected to have a Material Adverse Effect on Company. Section 3.1 of the Company Disclosure Letter lists for each of Company and its Subsidiaries (i) the directors and officers, (ii) the state of incorporation and (iii) the jurisdictions in which the corporation is qualified to do business. Company has delivered to Parent correct and complete copies of the charter and bylaws of each of Company and its Subsidiaries (as amended to date). The minute books (containing the records of meetings of the stockholders, the board of directors and any committees of the board of directors), the stock certificate books, and the stock record books of each of Company and its Subsidiaries are correct and complete, and Company has delivered to Parent copies of all such items. None of Company and its Subsidiaries is in default under or in violation of any provision of its charter or bylaws.

     (b)    The Company Board has received the opinion of Breckenridge Securities Corp., dated October 18, 2005, to the effect that, as of such date, based upon and subject to the terms, qualifications, assumptions, limitations and exceptions set forth therein, the aggregate consideration to be received by the holders of the Company Shares pursuant to the Merger is fair to such holders, taken as a whole, from a financial point of view. A copy of such opinion was furnished to Parent on or before the date hereof. The Company Board, at a meeting duly called and held, has (i) determined that this Agreement and the transactions contemplated hereby, including the Merger, are fair to and in the best interest of Company’s stockholders, (ii) adopted this Agreement and the transactions contemplated hereby, including the Merger, in accordance with the requirements of Section 251 of the Delaware Law with respect to the transactions contemplated hereby, (iii) adopted resolutions recommending to the Company’s stockholders approval of the transactions contemplated hereby, including the Merger, (iv) directed that this Agreement and the transactions contemplated hereby, including the Merger, be submitted to the Preferred Stockholders for their approval and adoption on or before the date of this Agreement, and (v) taken all necessary action to provide that Employee Options outstanding as of the Effective Time will be in all respects cancelled and of no further force and effect from and after the Effective Time. The only vote of holders of any class or series of Common Stock or Preferred Stock necessary to approve and adopt this Agreement and the Merger and the transactions contemplated hereby is the Requisite Stockholder Approval and no vote of the holders of the shares of Common Stock and the Preferred Stock, or any of them, is necessary to consummate any transaction expressly contemplated hereby other than the Merger. Company has received the consents of the Consenting Stockholders in the Stockholder Consents, a true and correct copy of each of which has been provided to Parent, and such consents so received constitute the Requisite Stockholder Approval. This Agreement and the transactions contemplated hereby, including the Merger, have been duly authorized by all necessary corporate action.

     (c)    Company has all requisite corporate power and authority and has taken all corporate action necessary in order to execute, deliver and perform its obligations under this Agreement and to consummate the Merger in accordance with its terms. This Agreement is a valid and binding agreement of Company enforceable against Company in accordance with its terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general applicability relating to or affecting creditors’ rights and to general equity principles and except as indemnification obligations hereunder may be limited by applicable securities laws. No Stockholder is entitled to any dissenter’s rights with respect to, or other rights of appraisal of, its Company Shares in respect or by reason of the Merger or any of the transactions contemplated hereby, except only such rights of appraisal as a holder of Company Shares that is not a Consenting Stockholder shall have under Section 262 of the Delaware Law.

     (d)    Company has all requisite corporate power and authority and has taken all corporate action necessary in order to execute, deliver and perform its obligations under the Interim Agreement and the Interim Agreement is a valid and binding agreement of Company enforceable against Company in accordance with its terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general applicability relating to or affecting creditors’ rights and to general equity principles.

3.2.    Capitalization .

     (a)    As of the date of this Agreement, Company’s authorized capitalization consisted of:

           (1)    90,028,495 shares of Common Stock, par value $0.01 per share (the “ Common Stock ”), of which 9,408,544 shares were issued and outstanding, an aggregate of 5,033,998 shares were issuable upon exercise of outstanding Employee Options and an aggregate of 67,731,279 shares were issuable upon conversion of shares of the Preferred Stock, as set forth below; and

           (2)    58,020,595 shares of Preferred Stock, par value $0.01 per share (the “ Preferred Stock ” and, collectively with the Common Stock, the “ Company Shares ”), designated as:

     (b)    All of the issued and outstanding Company Shares have been duly authorized, are validly issued, fully paid and nonassessable, and, as of the date of this Agreement, are held of record by the respective stockholders as set forth in Section 3.2(b) of the Company Disclosure Letter (each a “ Stockholder ” and collectively, the “ Stockholders ”). The Company has no treasury stock. Other than the Employee Options that are exercisable for 5,033,998 shares of Common Stock as of the date of this Agreement, there are no outstanding or authorized options, warrants, purchase rights, subscription rights, conversion rights, exchange rights, or other contracts or commitments that could require Company to issue, sell or otherwise cause to become outstanding any of its capital stock. There are no outstanding or authorized stock appreciation, phantom stock, profit participation or similar rights with respect to Company. There are no voting trusts, proxies or other agreements or understandings with respect to the voting of the capital stock of Company, provided that the foregoing representation and warranty is to the Knowledge of Company as respects voting trusts, proxies or other agreements or understandings to which none of Company and its Subsidiaries is a party or has acknowledged in writing. Each Stockholder holds of record and, to Company’s Knowledge, owns beneficially, as of the date of this Agreement, the number of Company Shares set forth next to his or its name and record address in Section 3.2(b) of the Company Disclosure Letter, free and clear, to Company’s Knowledge, of any restrictions on transfer (other than any generally applicable restrictions on transfer under the Securities Act and state securities laws), Taxes, Security Interests, options, warrants, purchase rights, contracts, commitments, equities, claims and demands. To Company’s Knowledge, no Stockholder is a party to any option, warrant, purchase right or other contract or commitment that could require the Stockholder to sell, transfer or otherwise dispose of any capital stock of Company (other than this Agreement). From and after the Effective Time, all Employee Options will be cancelled and shall represent no rights of any holder thereof. As of the Effective Time, each of the Employee Options shall in all respects be cancelled and of no further force or effect.

3.3.    Noncontravention; Consents . Neither the execution and the delivery of this Agreement, nor the consummation of the transactions contemplated hereby, will (i), assuming the filing of the Certificate of Amendment as contemplated by Section 2.3, violate any provision of the charter or bylaws of any of Company and its Subsidiaries or (ii), assuming compliance with the matters referred to in the next sentence of this Section 3.3, (A) violate any Laws or Governmental Order to which any of Company and its Subsidiaries is subject or (B) with or without notice, lapse of time or both, conflict with, result in a breach of, constitute a default under, result in the acceleration of, create in any party the right to accelerate, terminate, modify or cancel, or require any notice under any agreement, contract, lease, license, instrument or other arrangement to which any of Company and its Subsidiaries is a party or by which it is bound or to which any of its assets is subject (or result in the imposition of any Security Interest upon any of its assets), except, in the case of clause (ii), such violation, breach, default, acceleration or other change that would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect on Company. Except for (a) any FCC Consent, State PUC Consent or consent or approval of any other Governmental Entity identified in Section 3.3 of the Company Disclosure Letter, in each case as required by applicable Laws, (b) the filing of the Certificate of Merger with the Secretary of State of Delaware pursuant to the Delaware Law and of appropriate documents with relevant authorities of other states in which Company is qualified to do business to reflect such Certificate of Merger filing, and (c) any other third party approvals as are reflected in Section 3.3 of the Company Disclosure Letter, including with respect to any Computer Software program and databases (other than commercial, non-exclusive end-user licenses having a total consideration, with respect to each license, of less than $50,000), the execution, delivery and performance by Company of this Agreement and the transactions contemplated hereby do not require any consents, waivers, authorizations or approvals of, or filings with, any Governmental Entity or any other third Person except for those that the failure to make or obtain would not reasonably be expected to have a Material Adverse Effect on Company.

3.4.    Compliance with Laws, Licenses .

     (a)    Company and its Subsidiaries are not in violation of any Laws, License or Governmental Order applicable to any of the businesses in which any of Company and its Subsidiaries is engaged except to the extent that noncompliance would not reasonably be expected to have a Material Adverse Effect on Company and no action, suit, proceeding, hearing, investigation, charge, complaint, claim, demand or notice has been filed or, to Company’s Knowledge, commenced, and currently pending, against any of them alleging any failure so to comply, except to the extent such failure would not reasonably be expected to have a Material Adverse Effect on Company.

     (b)    Company and its Subsidiaries hold all permits, licenses, certificates, variances, exemptions, orders, approvals, tariffs, rate schedules and similar documents from Governmental Entities (collectively, “ Licenses ”) that are necessary to own, lease and operate the assets and properties they currently own, lease and operate and to conduct their respective businesses and operations in the manner currently conducted, except where the failure to hold such Licenses would not reasonably be expected to have a Material Adverse Effect on Company. Section 3.4 of the Company Disclosure Letter sets forth all Licenses issued or granted to Company or any of its Subsidiaries by the FCC (“ FCC Licenses ”), all Licenses issued or granted to Company or any of its Subsidiaries by any state public utility commission or other state commission or authority regulating telecommunications businesses or services (“ State Licenses ”) and all Licenses issued or granted to Company or any of its Subsidiaries by any local government regulating telecommunications businesses or services or authorizing Company or any of its Subsidiaries to place facilities within the boundary of such local government (“ Local Licenses ”) and, collectively with the FCC Licenses and the State Licenses, the “ Communications Licenses ”) and all other material Licenses held by Company or its Subsidiaries, together with any pending applications filed by Company or its Subsidiaries for Communications Licenses or other material Licenses that would be Licenses if issued or granted or for modification, extension or renewal of any License. Company has delivered to Parent correct and complete copies of all Licenses (including the applications related thereto) and all pending applications listed on Section 3.4 of the Company Disclosure Letter.

     (c)    Each of Company and its Subsidiaries is in compliance in all material respects with each Communications License. Each of Company and its Subsidiaries is in compliance with (A) its obligations under each of the Licenses and (B) the rules and regulations of the Governmental Entity issuing such Licenses, except for any failures to be in compliance that would not, individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect on Company. There is not pending or, to the Knowledge of Company, threatened in writing before the FCC or any other Governmental Entity any material proceeding, notice of violation, order of forfeiture or complaint or investigation against Company or any of its Subsidiaries relating to any of the Licenses, except, in the case of Licenses other than Communications Licenses, for any of the foregoing that would not, individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect on Company. As of the date of this Agreement, Company has received no written notice, and, as to any Communications License, has no Knowledge, that any event has occurred with respect to any such License or application that would permit the revocation, termination, suspension or denial thereof or would result in any impairment of the rights of the holder thereof. No written notice has been received and to Company’s Knowledge no investigation or review is pending or threatened in writing by any Governmental Entity with regard to any alleged violation by Company or any of its Subsidiaries of any License or any alleged failure by Company or any of its Subsidiaries to have any Licenses. The actions of the applicable Governmental Entities granting all Licenses have not been reversed, stayed, enjoined, annulled or suspended, and there is not pending or, to the Knowledge of Company, threatened in writing, any material application, petition, objection or other pleading with the FCC or any other Governmental Entity that challenges or questions the validity of or any rights of the holder under any License, except, in the case of Licenses other than Communications Licenses, for any of the foregoing that would not, individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect on Company.

3.5.    Customers . Listed in Section 3.5 of the Company Disclosure Letter are the names and addresses of the 50 most significant separate customer billing accounts (by revenue) of Company and its Subsidiaries for the twelve-month period ended June 30, 2005 and the amount for which each such customer was invoiced during such period. As of the date of this Agreement, Company has not received any written notice nor does it have any Knowledge that any of the above-listed significant customers of Company or any of its Subsidiaries has ceased, or will cease, to use the products, equipment, goods or services of Company or any of its Subsidiaries, or has substantially reduced or will substantially reduce, the use of such products, equipment, goods or services at any time.

3.6.    Securities . To the Knowledge of Company, the outstanding shares of Company were issued in accordance with the registration or qualification provisions of the Securities Act and any relevant state securities laws or pursuant to valid exemptions therefrom.

3.7.    Brokers’ Fees . Except for fees payable to Breckenridge Securities Corp. and The Breckenridge Group, Inc. as set forth in the Company Disclosure Letter, neither Company nor its Subsidiaries has any Liability or obligation to pay any fees or commissions to any broker, finder, or agent with respect to the transactions contemplated by this Agreement.

3.8.    Title to Assets . Company and its Subsidiaries have good and marketable title to, or a valid leasehold interest in, the properties and tangible assets used by them, located on their premises or shown on the Most Recent Balance Sheet or acquired after the date thereof, free and clear of all Security Interests, except for (i) properties and assets disposed of in the Ordinary Course of Business since the date of the Most Recent Balance Sheet, (ii) Security Interests disclosed in Section 3.8 of the Company Disclosure Letter, (iii) Security Interests or imperfections of title that are not, individually, material in character, amount or extent and that do not, individually or in the aggregate, materially detract from the value or materially interfere with the present or presently contemplated use by Company of the assets subject thereto or affected thereby, (iv) Security Interests arising under conditional sale or title retention agreements, real property leases, equipment leases or lease purchase agreements that are disclosed in Section 3.8 of the Company Disclosure Letter, (v) Security Interests arising in the Ordinary Course of Business (including, but not limited to, Liens for Taxes or governmental charges or levies, Security Interests of mechanics, carriers, workmen and repairmen, Security Interests incurred in connection with workmen’s compensation, unemployment insurance, social security and other like laws) for amounts that are not delinquent, except such Security Interests as are being contested in good faith, and (vi) Security Interests or imperfections of title that would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect on Company.

3.9.    Subsidiaries . Section 3.9 of the Company Disclosure Letter sets forth for each Subsidiary of Company (i) its name and jurisdiction of incorporation, (ii) the number of shares of authorized capital stock of each class of its capital stock, (iii) the number of issued and outstanding shares of each class of its capital stock, the names of the holders thereof, and the number of shares held by each such holder, and (iv) the number of shares of its capital stock held in treasury. All of the issued and outstanding shares of capital stock of each Subsidiary of Company have been duly authorized and are validly issued, fully paid and nonassessable. All of the outstanding shares of each Subsidiary of Company is free and clear of any restrictions on transfer (other than generally applicable restrictions under the Securities Act and state securities laws), Taxes, Security Interests, options, warrants, purchase rights, contracts, commitments, equities, claims and demands. There are no outstanding or authorized options, warrants, purchase rights, subscription rights, conversion rights, exchange rights or other contracts or commitments that could require any of Company and its Subsidiaries to sell, transfer or otherwise dispose of any capital stock, of any of its Subsidiaries or that could require any Subsidiary of Company to issue, sell or otherwise cause to become outstanding any of its own capital stock. There are no outstanding stock appreciation, phantom stock, profit participation or similar rights with respect to any Subsidiary of Company. There are no voting trusts, proxies or other agreements or understandings with respect to the voting of any capital stock of any Subsidiary of Company. None of Company and its Subsidiaries controls directly or indirectly or has any direct or indirect equity participation in any corporation, partnership, trust or other business association, which is not a Subsidiary of Company.

3.10.    Financial Statements .

Company has furnished to Parent prior to the date of this Agreement audited consolidated balance sheets and statements of income, changes in stockholders’ equity, and cash flow as of, and for the fiscal years ended, December 31, 2002, December 31, 2003 and December 31, 2004 (the “ Most Recent Fiscal Year End ”) for Company and its Subsidiaries, together with the reports of Company’s independent auditors thereon, and the unaudited consolidated balance sheet and statements of income, changes in stockholders’ equity, and cash flow as of, and for the fiscal quarter ended, June 30, 2005 (the “ Most Recent Financial Statements ”). Such financial statements so furnished and the subsequent unaudited quarterly financial statements that may be delivered to Parent as provided in this Agreement are collectively the “ Financial Statements .” The Financial Statements (including the notes thereto) present fairly (or will present fairly, in the case of those furnished after the date hereof) the financial condition of Company and its Subsidiaries as of their respective dates and the results of operations of Company and its Subsidiaries for their respective periods (subject, in the case of the 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 applied on a consistent basis throughout the periods covered thereby.

3.11.    Events Subsequent to Most Recent Fiscal Year End . Since the Most Recent Fiscal Year End, Company and its Subsidiaries have conducted their businesses only in, and have not engaged in any material transaction other than in accordance with, the Ordinary Course of Business of Company and its Subsidiaries. Since the Most Recent Fiscal Year End and prior to the date hereof, there has not been any Material Adverse Effect on Company, provided, however, that, any damage to properties, service interruptions, loss of customers, additional operating and other costs and other adverse consequences resulting from Hurricanes Katrina and Rita, as and to the extent described in the Section 3.11(m) of the Company Disclosure Letter under the heading “Katrina/Rita Impact,” shall not be deemed to be a Material Adverse Effect. Since the Most Recent Fiscal Year End and prior to the date hereof:

        (a)    none of Company and its Subsidiaries has sold, leased, transferred, or assigned any of its assets, tangible or intangible, other than in the Ordinary Course of Business;

        (b)    none of Company and its Subsidiaries has entered into any agreement, contract, lease or license (or series of related agreements, contracts, leases and licenses with the same other party or Affiliates of such other party) either involving more than $250,000 or other than in the Ordinary Course of Business;

        (c)    no party (including any of Company and its Subsidiaries) has accelerated, terminated, modified or cancelled any agreement, contract, lease or license (or series of related agreements, contracts, leases and licenses with the same other party or Affiliates of such other party) involving more than $250,000 to which any of Company and its Subsidiaries is a party or by which any of them is bound;

        (d)    none of Company and its Subsidiaries has made any capital expenditure (or series of related capital expenditures) either involving more than $250,000 or other than in the Ordinary Course of Business;

        (e)    none of Company and its Subsidiaries has made any capital investment in, any loan to, or any acquisition of the securities or assets of, any other Person (or series of related capital investments, loans or acquisitions with the same other party or Affiliates of such other party) either involving more than $50,000 or other than in the Ordinary Course of Business;

        (f)    none of Company and its Subsidiaries has issued any note, bond or other debt security or created, incurred, assumed or guaranteed any indebtedness for borrowed money or capitalized lease obligation either involving more than $50,000 singly or $250,000 in the aggregate;

        (g)    none of Company and its Subsidiaries has delayed or postponed the payment of accounts payable or other Liabilities other than in the Ordinary Course of Business;

        (h)    none of Company and its Subsidiaries has cancelled, compromised, waived or released any right or claim (or series of related rights and claims) either involving more than $50,000 or other than in the Ordinary Course of Business;

        (i)    none of Company and its Subsidiaries has granted any license or sublicense of any rights under or with respect to any Intellectual Property;

        (j)    other than as contemplated by this Agreement, there has been no change made or authorized in the charter or bylaws of any of Company and its Subsidiaries;

        (k)    none of Company and its Subsidiaries has issued, sold or otherwise disposed of any of its capital stock, or granted any options, warrants or other rights to purchase or obtain (including upon conversion, exchange or exercise) any of its capital stock except for the issuance of shares of Common Stock upon exercise of Employee Stock Options outstanding as of the Most Recent Fiscal Year End in accordance with their terms;

        (l)    none of Company and its Subsidiaries has declared, set aside or paid any dividend or made any distribution with respect to its capital stock (whether in cash, property, stock or any combination thereof) or redeemed, purchased or otherwise acquired any of its capital stock;

        (m)    none of Company and its Subsidiaries has experienced any damage, destruction or loss (whether or not covered by insurance) to its property that could reasonably be expected to have a Material Adverse Effect on Company;

        (n)    none of Company and its Subsidiaries (x) has made any loan or advance to, or entered into any other transaction with, any of its directors, officers or stockholders, or (y) made any loans or advances to, or entered into any other transactions with, any of its employees that were in the aggregate as to an employee in excess of $10,000 at any one time outstanding, other than, in the case of transactions with officers or employees (including stockholders in their capacity as officers or employees) referenced in either of clause (x) or (y), employment arrangements in the Ordinary Course of Business;

        (o)    none of Company and its Subsidiaries has entered into any employment contract or collective bargaining agreement, written or oral, or modified the terms of any such existing contract or agreement;

        (p)    none of Company and its Subsidiaries has granted any increase in the base compensation of any of its directors or officers or, other than in the Ordinary Course of Business, any of its employees;

        (q)    none of Company and its Subsidiaries has adopted, amended, modified or terminated any bonus, profit-sharing, incentive, severance or other plan, contract or commitment for the benefit of any of its directors, officers or employees (or taken any such action with respect to any other Employee Benefit Plan);

        (r)    none of Company and its Subsidiaries has made any other change in employment terms for any of its directors or officers;

        (s)    none of Company and its Subsidiaries has made or pledged to make any charitable or other capital contribution other than in the Ordinary Course of Business; and

        (t)    none of Company and its Subsidiaries has committed to any of the foregoing.

3.12.    Undisclosed Liabilities . There are no liabilities or obligations of Company or any Subsidiary of Company, whether or not accrued, contingent or otherwise and whether or not required to be disclosed, nor any other facts or circumstances that would reasonably be expected to result in any liabilities or obligations of Company or any of its Subsidiaries, other than:

        (a)    liabilities or obligations to the extent (i) reflected on the Most Recent Balance Sheet or (ii) readily apparent in the notes thereto;

 

        (b)    liabilities or obligations incurred in the Ordinary Course of Business since the date of the Most Recent Balance Sheet (none of which results from, arises out of, relates to, is in the nature of or was caused by any breach of contract, breach of warranty, tort, infringement or violation of law);

        (c)    liabilities or obligations under this Agreement or in the Interim Agreement;

        (d)    performance obligations under contracts required in accordance with their terms, or performance obligations to the extent required under applicable Laws, in each case to the extent arising after the date hereof; and

        (e)    liabilities or obligations that would not, individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect on Company.

3.13.    Antitakeover Statutes . No anti-takeover or similar statute or regulation under Delaware Law applies to any of the transactions contemplated by this Agreement. No other “ control share acquisition ,” “ fair price ,” “ moratorium ” or other similar anti-takeover laws or regulations enacted under Delaware Law or under any other laws of the State of Delaware or under any laws of the State of Florida apply to this Agreement or any of the transactions contemplated hereby. Without limitation of the foregoing, the business combination restrictions of Section 203 of the Delaware Law are inapplicable to the Merger, this Agreement or the other transactions contemplated by this Agreement and no other state takeover statute or similar statute or regulation is or purports to be applicable to the Merger, this Agreement or the transactions contemplated hereby.

3.14.    Tax Matters .

        (a)    Each of Company and its Subsidiaries has filed all Tax Returns that it was required to file, except, in the case of Tax Returns other than federal or state income, sales and use Tax Returns, where failure to file such Return would not reasonably be expected to have a Material Adverse Effect on Company. All such Tax Returns were correct and complete in all material respects. All Taxes owed by any of Company and its Subsidiaries (whether or not shown on any Tax Return) have been paid, except where failure to pay such Taxes would not reasonably be expected to have a Material Adverse Effect on Company. None of Company and its Subsidiaries currently is the beneficiary of any extension of time within which to file any Tax Return. No claim has been made in the last 5 years, by a Governmental Entity in a jurisdiction where any of Company and its Subsidiaries does not file Tax Returns that it is or may be subject to taxation by that jurisdiction. There are no Security Interests on any of the assets of any of Company and its Subsidiaries that arose in connection with any failure (or alleged failure) to pay any Tax, except for (i) Liens for current Taxes not yet due and (ii) Liens arising in connection with any failure or alleged failure that is being contested in good faith by appropriate proceedings and are set forth in Section 3.14 of the Company Disclosure Letter.

        (b)    Each of Company and its Subsidiaries has, in all material respects, withheld and paid all Taxes required to have been withheld and paid in connection with amounts paid, or owing to any employee, independent contractor, creditor, stockholder or other third party.

        (c)    There is no dispute or claim concerning any Liability for any Tax of any of Company and its Subsidiaries either (A) claimed or raised by any Governmental Entity in writing received by Company or any of its Subsidiaries or (B) as to which any of the directors and officers (and employees responsible for Tax matters) of Company and its Subsidiaries has Knowledge based on personal contact with any agent of such Governmental Entity. Section 3.14 of the Company Disclosure Letter lists all federal, state and foreign income Tax Returns filed with respect to any of Company and its Subsidiaries for taxable periods ended on or after December 31, 2002, indicates those Tax Returns that have been audited and indicates those Tax Returns that currently are being audited. Company has delivered to Parent correct and complete copies of all federal income Tax Returns, examination reports and statements of deficiencies assessed against or agreed to by any of Company and its Subsidiaries since December 31, 2002.

        (d)    None of Company and its Subsidiaries has waived any statute of limitations in respect of Taxes or agreed to any extension of time with respect to a Tax assessment or deficiency, which waiver or extension is currently in effect, in each case with respect to any taxable period that remains open.

        (e)    None of Company and its Subsidiaries has made any payments, is obligated to make any payments or is a party to any agreement that could obligate it to make any payments that will not be deductible under Code Section 280G, in part, as a result of the transactions contemplated by this Agreement. None of Company and its Subsidiaries has been a United States real property holding corporation within the meaning of Code Section 897(c)(2) during the applicable period specified in Code Section 897(c)(1)(A)(ii). Each of Company and its Subsidiaries has disclosed on its federal income Tax Returns all positions taken therein that could give rise to a substantial understatement of federal income Tax within the meaning of Code Section 6662. None of Company and its Subsidiaries is a party to any Tax allocation or sharing agreement. None of Company and 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 Company) or (B) has any Liability for the Taxes of any Person (other than any of Company and its Subsidiaries) under Treas. Reg. Section 1.1502-6 (or any similar provision of state, local or foreign law), as a transferee or successor, by contract or otherwise.

3.15.    Real Property .

     (a)    Neither Company nor any of its Subsidiaries owns any real property.

     (b)    Section 3.15 of the Company Disclosure Letter lists and describes briefly all real property leased or subleased to any of Company and its Subsidiaries. Company has delivered to Parent correct and complete copies of the leases and subleases with respect to the real property listed in Section 3.15 of the Company Disclosure Letter. With respect to each lease and sublease listed in Section 3.15 of the Company Disclosure Letter and, other than with respect to the Main Leases, except as would not reasonably be expected to have a Material Adverse Effect on Company:

           (1)    the lease or sublease is legal, valid, binding, enforceable and in full force and effect;

           (2)    the lease or sublease will continue to be legal, valid, binding, enforceable and in full force and effect on identical terms following the consummation of the transactions contemplated hereby;

           (3)    no party to the lease or sublease is in breach or default, and no event has occurred that, with notice or lapse of time, would constitute a breach or default or permit termination, modification or acceleration thereunder, except for any such breach or default as would not reasonably be expected to have a Material Adverse Effect on Company;

           (4)    no party to the lease or sublease has repudiated any provision thereof;

           (5)    there are no disputes, oral agreements or forbearance programs in effect as to the lease or sublease;

           (6)    with respect to each sublease, to the Knowledge of Company, the representations and warranties set forth in subsections (1) through (5) above are true and correct with respect to the underlying lease;

           (7)    none of Company and its Subsidiaries has assigned, transferred, conveyed, mortgaged, deeded in trust or encumbered any interest in the leasehold or subleasehold;

           (8)    all facilities leased or subleased thereunder have received all approvals of Governmental Entities (including Licenses) required in connection with the operation thereof required to be obtained by Company or any of its Subsidiaries and have been operated and maintained by Company and its Subsidiaries in accordance with all Laws, except in each case (including the Main Leases) where failure to receive such approval or so operate and maintain would not reasonably be expected to have a Material Adverse Effect on Company;

           (9)    all facilities leased or subleased thereunder are supplied with utilities and other services necessary for the operation of said facilities; and

           (10)    to the Knowledge of Company, there are no restrictions that impair the current use or occupancy of the property that is subject to the lease.

3.16.    Intellectual Property .

     (a)    Set forth in Section 3.16 of the Company Disclosure Letter is a complete and correct list of all material patents, patent applications, and all registrations or applications for registration of trademarks, servicemarks, copyrights and mask works owned or used by Company or its Subsidiaries. With respect to all Intellectual Property owned or used by Company or its Subsidiaries, except as would not reasonably be expected to have a Material Adverse Effect on Company, (A) Company and/or its Subsidiaries own or have the right to use all of such Intellectual Property free and clear of any Security Interest, license or other restriction, other than commercial, non-exclusive end-user licenses having a total consideration, with respect to each license, of less than $50,000; (B) no proceedings have been instituted, are pending or, to the Knowledge of Company, are threatened in writing that challenge the rights of Company and/or its Subsidiaries, in respect of such Intellectual Property or the validity thereof and, to the Knowledge of Company, there is no basis for any such proceedings; (C) none of such Intellectual Property violates any Laws, or has at any time infringed on or, to the Company’s Knowledge, violated any rights of others, or, to the Company’s Knowledge, is being infringed by others; and (D) to the Company’s Knowledge, none of such Intellectual Property is subject to any outstanding Governmental Order except for rulings generated in the ordinary course of ex parte prosecution of applications for patents or for registration of trademarks, servicemarks, copyrights or mask works.

     (b)    Company and its Subsidiaries own or have the right to use pursuant to license, sublicense, agreement or permission all Intellectual Property necessary for the operation of the businesses of Company and its Subsidiaries as presently conducted. Each item of Intellectual Property owned or used by any of Company and its Subsidiaries immediately prior to the Closing hereunder will be owned or available for use by the Surviving Corporation or its Subsidiary, on substantially identical terms and conditions immediately subsequent to the Closing hereunder, except as such non-ownership or unavailability or change in terms would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect on Company. Each of Company and its Subsidiaries has taken all necessary action to maintain and protect each item of Intellectual Property that it owns or uses, except where failure to take such action would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect on Company. None of Company and its Subsidiaries has any obligation to indemnify any Person for or against any interference, infringement, misappropriation or other conflict with respect to any item included in such Intellectual Property owned by Company or any of its Subsidiaries.

     (c)    Except where failure so to operate and perform would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect on Company, the IT Assets of Company and its Subsidiaries operate and perform in accordance with their documentation and functional specifications and otherwise as required by Company and its Subsidiaries for the operation of their respective businesses, and, except as the result of such malfunction or failure did not have a Material Adverse Effect on Company at the time, have not malfunctioned or failed within the three (3) year period immediately preceding the date of this Agreement. To the Knowledge of Company, no Person has gained unauthorized access to such IT Assets. Company and its Subsidiaries have implemented and maintained for the three (3) year period immediately preceding the date of this Agreement reasonable and sufficient backup and disaster recovery technology consistent with industry practices.

As used in this Agreement,

                 (1)    “ Computer Software ” means all computer software and databases (including source code, object code, and all related documentation).

                 (2)    “ IT Assets ” means computers, Computer Software, firmware, middleware, servers, workstations, routers, hubs, switches, data communications lines, and all other information technology equipment and elements, and all associated documentation.

3.17.    Tangible Assets . Company and its Subsidiaries own or lease all buildings, machinery, equipment and other tangible assets necessary for the conduct of their businesses as presently conducted. Except as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect on Company, each such tangible asset is free from material defects (patent and latent), 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 purposes for which it presently is used.

3.18.    Contracts . Section 3.18 of the Company Disclosure Letter lists the following contracts and other agreements to which any of Company and its Subsidiaries is a party or by which its assets are bound, in each case as of the date of this Agreement (each contract or other agreement required to be so listed, a “ Material Contract ”):

     (a)    any agreement (or group of related agreements with the same other party or Affiliates of such other party) for the lease of personal property to or from any Person providing for annual lease payments in excess of $50,000 per annum;

     (b)    any agreement (or group of related agreements with the same other party or Affiliates of such other party)