AGREEMENT AND PLAN OF MERGER BY AND AMONG TALK AMERICA HOLDINGS, INC., CAVALIER ACQUISITION CORP. AND CAVALIER TELEPHONE CORPORATION Dated as of September 22, 2006
Exhibit
2.1
AGREEMENT
AND PLAN OF MERGER
BY
AND AMONG
TALK
AMERICA HOLDINGS, INC.,
CAVALIER
ACQUISITION CORP.
AND
CAVALIER
TELEPHONE CORPORATION
Dated
as of September 22, 2006
TABLE OF CONTENTS
ARTICLE
I
THE MERGER
Section
1.1 The
Merger.
Section
1.2 Effective
Time; Closing Date.
Section
1.3 Effect
of
the Merger.
Section
1.4 Certificate
of Incorporation; By-laws.
Section
1.5 Board
of
Directors and Officers.
Section
1.6 Further
Assurances.
ARTICLE
II EFFECTS OF THE MERGER; CONSIDERATION
Section
2.1 Conversion
of Company Securities.
Section
2.2 Exchange
Procedures.
Section
2.3 Deposit
at Closing.
Section
2.4 Dissenting
Shares.
Section
2.5 Tax
Withholding.
ARTICLE
III REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Section
3.1 Organization,
Standing and Power.
Section
3.2 Authority;
Approvals.
Section
3.3 Capitalization.
Section
3.4 Conflicts;
Consents.
Section
3.5 Financial
Information and SEC Reports; Undisclosed Liabilities.
Section
3.6 Disclosure
Documents.
Section
3.7 Absence
of Changes.
Section
3.8 Assets
and Properties; Network.
Section
3.9 Other
Agreements.
Section
3.10 Environmental
Matters.
Section
3.11 Litigation.
Section
3.12 Compliance;
Licenses and Permits.
Section
3.13 Intellectual
Property.
Section
3.14 Tax
Matters.
Section
3.15 Labor
Relations; Employees.
Section
3.16 Transactions
with Related Parties.
Section
3.17 Brokers.
Section
3.18 Insurance.
Section
3.19 Suppliers.
Section
3.20 Takeover
Statutes.
Section
3.21 Opinion
of Financial Advisor.
Section
3.22 Rights
Agreement.
ARTICLE
IV REPRESENTATIONS AND WARRANTIES OF BUYER AND MERGER SUB
Section
4.1 Organization;
Standing and Power.
Section
4.2 Authority;
Approvals.
Section
4.3 Conflicts;
Consents.
Section
4.4 Disclosure
Documents.
Section
4.5 Brokers.
Section
4.6 Litigation.
Section
4.7 Operations
of Merger Sub.
Section
4.8 Financing
Wherewithal.
ARTICLE
V
CERTAIN COVENANTS
Section
5.1 Conduct
of Business.
Section
5.2 Access
and Information; Confidentiality.
Section
5.3 Proxy
Statement.
Section
5.4 Company
Stockholders’ Meeting.
Section
5.5 Acquisition
Proposals.
Section
5.6 Reasonable
Best Efforts; Further Assurances.
Section
5.7 Public
Announcements.
Section
5.8 Indemnification
of Directors and Officers.
Section
5.9 Expenses.
Section
5.10 Section
16 Compliance.
Section
5.11 Supplemental
Information.
Section
5.12 Tax
Matters.
Section
5.13 State
Takeover Statutes; Rights Agreement.
Section
5.14 Employee
Benefit Matters.
ARTICLE
VI CONDITIONS PRECEDENT
Section
6.1 Conditions
Precedent to Obligations of Each Party.
Section
6.2 Conditions
Precedent to Obligations of Buyer and Merger Sub.
Section
6.3 Conditions
Precedent to Obligations of the Company.
ARTICLE
VII TERMINATION
Section
7.1 Termination.
Section
7.2 Effect
of
Termination and Abandonment.
Section
7.3 Termination
Fee.
ARTICLE
VIII MISCELLANEOUS
Section
8.1 Entire
Agreement.
Section
8.2 Assignment
and Binding Effect; Third Party Beneficiaries.
Section
8.3 Notices.
Section
8.4 Amendment
and Modification; Waiver.
Section
8.5 Governing
Law; Consent to Jurisdiction.
Section
8.6 Waiver
of
Jury Trial.
Section
8.7 Severability.
Section
8.8 Counterparts.
Section
8.9 Enforcement.
Section
8.10 Non-Survival
of Representations and Warranties.
Section
8.11 Disclosure
Letter.
ARTICLE
IX DEFINED TERMS; INTERPRETATION
Section
9.1 Defined
Terms.
Section
9.2 Terms
Defined Elsewhere.
Section
9.3 Interpretation.
THIS
AGREEMENT AND PLAN OF MERGER (this
“Agreement”),
dated
as of September 22, 2006, is by and among Cavalier Telephone Corporation,
a
Delaware corporation (“Buyer”),
Cavalier Acquisition Corp., a Delaware corporation (“Merger
Sub”)
and a
wholly-owned subsidiary of CavTel Holdings, LLC, a Delaware limited liability
company of which Buyer is the sole member, and Talk America Holdings, Inc.,
a
Delaware corporation (the “Company”).
INTRODUCTION
A. The
respective Boards of Directors of each of Buyer, Merger Sub and the Company
have
unanimously (i) approved, and declared advisable and in the best interests
of
Buyer, Merger Sub and the Company and their respective stockholders, the
merger
of Merger Sub with and into the Company (the “Merger”)
in
accordance with the provisions of the Delaware General Corporation Law (the
“DGCL”),
and
subject to the terms and conditions of this Agreement and (ii) approved this
Agreement.
B. Buyer,
Merger Sub and the Company desire to make certain representations, warranties,
covenants and agreements in connection with the Merger and also to prescribe
various conditions to the Merger.
C. Certain
capitalized terms have the meanings set forth in Section 9.1.
AGREEMENT
In
consideration of the mutual representations, warranties, covenants and other
agreements set forth herein, and for other good and valuable consideration,
the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
ARTICLE
I
THE
MERGER
Section
1.1 The
Merger.
At
the
Effective Time, subject to the terms and conditions of this Agreement and
in
accordance with the DGCL, (i) Merger Sub shall be merged with and into the
Company; (ii) the separate corporate existence of Merger Sub shall cease;
and
(iii) the Company shall be the surviving corporation (the Company, as the
surviving corporation in the Merger is sometimes referred to herein as the
“Surviving
Corporation”)
and
shall continue its legal existence under the DGCL.
Section
1.2 Effective
Time; Closing Date.
Subject
to the terms and conditions of this Agreement, the Company and Merger Sub
shall
cause the Merger to be consummated on the Closing Date by filing a certificate
of merger with the Secretary of State of the State of Delaware (the
“Certificate
of Merger”).
The
Merger shall become effective at such time as the Certificate of Merger is
duly
filed in accordance with the provisions of Section 251 of the DGCL, or at
such
later time as may be stated by the parties in the Certificate of Merger (the
“Effective
Time”,
and
the date that includes the Effective Time, the “Effective
Date”).
The
closing of the Merger (the “Closing”)
shall
take place at the offices of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ & Dodge LLP in Boston,
Massachusetts, at 10:00 a.m., Boston time, two Business Days after the date
on
which the last of the conditions set forth in Article VI shall have been
satisfied or waived (other than those conditions that by their nature are
to be
satisfied at the Closing, but subject to the satisfaction or waiver of those
conditions), or on such other date, time and place as the Company and Buyer
may
mutually agree in writing (such date on which the Closing actually occurs
being
referred to herein as the “Closing
Date”).
Section
1.3 Effect
of the Merger.
At
the
Effective Time, the effect of the Merger shall be as provided in the applicable
provisions of the DGCL. Without limiting the generality of the foregoing,
and
subject thereto, at the Effective Time, all the property, rights, privileges,
powers, franchises and assets of the Company and Merger Sub shall vest in
the
Surviving Corporation, and all debts, liabilities, obligations and duties
of the
Company and Merger Sub shall become the debts, liabilities, obligations and
duties of the Surviving Corporation.
Section
1.4 Certificate
of Incorporation; By-laws.
| (a) |
The
certificate of incorporation of Merger Sub, as in effect immediately
prior
to the Effective Time, shall be the certificate of incorporation
of the
Surviving Corporation until thereafter amended as provided by Law
and such
certificate of incorporation.
|
| (b) |
The
by-laws of Merger Sub, as in effect immediately prior to the Effective
Time, shall be the by-laws of the Surviving Corporation, until
thereafter
amended as provided by Law and such
by-laws.
|
Section
1.5 Board
of Directors and Officers.
The
Board
of Directors and the officers of Merger Sub immediately prior to the Effective
Time shall, from and after the Effective Time, be the Board of Directors
and
officers, respectively, of the Surviving Corporation, each to hold office
until
his or her respective successors are duly elected or appointed and qualified
or
until their earlier death, resignation or removal in accordance with the
certificate of incorporation and by-laws of the Surviving
Corporation.
Section
1.6 Further
Assurances.
If
at any
time after the Effective Time the Surviving Corporation shall consider or
be
advised that any deeds, bills of sale, assignments or assurances or any other
acts or things are necessary, desirable or proper (a) to vest, perfect or
confirm, of record or otherwise, in the Surviving Corporation, its right,
title
or interest in, to or under any of the properties, rights, privileges, powers,
franchises or assets of either the Company or Merger Sub or (b) otherwise
to
carry out the purposes of this Agreement, the Surviving Corporation and its
proper officers and directors or their designees shall be authorized to execute
and deliver, in the name and on behalf of the Company or Merger Sub, all
such
deeds, bills of sale, assignments and assurances and do, in the name and
on
behalf of the Company or Merger Sub, all such other acts and things necessary,
desirable or proper to vest, perfect or confirm its right, title or interest
in,
to or under any of the properties, rights, privileges, powers, franchises
or
assets of the Company or Merger Sub, as applicable, and otherwise to carry
out
the purposes of this Agreement.
ARTICLE
II
EFFECTS
OF THE MERGER; CONSIDERATION
Section
2.1 Conversion
of Company Securities.
At
the
Effective Time, by virtue of the Merger and without any action on the part
of
the Company, Merger Sub, Buyer, the Stockholders, the Warrant Holders or
the
Option Holders:
| (a) |
Each
share of common stock of Merger Sub issued and outstanding immediately
prior to the Effective Time shall be converted into and become
one validly
issued, fully paid and nonassessable share of common stock of the
Surviving Corporation.
|
| (b) |
Each
share of Common Stock, together with the related Right attached
thereto,
that is owned by (i) the Company as treasury stock or (ii) any
wholly
owned Subsidiary of the Company, shall be canceled without any
conversion
thereof and no payment or distribution shall be made with respect
thereto.
|
| (c) |
Except
as otherwise provided in clause (b) above and subject to Section 2.4,
each share of Common Stock outstanding immediately prior to the
Effective
Time, together with the related Right attached thereto, shall be
converted
into the right to receive $8.10 in cash, payable to the holder
thereof,
without interest (the “Common
Stock Consideration”).
All shares of Common Stock converted into the right to receive
the Common
Stock Consideration pursuant to this Section 2.1(c) shall cease
to be
outstanding as of the Effective Time, and shall be cancelled and
retired
and shall cease to exist, and each holder of a certificate that
immediately prior to the Effective Time represented shares of Common
Stock, together with the related Rights, shall thereafter cease
to have
any rights with respect to such shares or to such related Rights,
except
the right to receive the Common Stock Consideration to be issued
in
consideration therefor upon the surrender of such
certificate.
|
| (d) |
Each
Warrant issued and outstanding immediately prior to the Effective
Time
shall be converted as of the Effective Time into the right to receive
a
sum in cash equal to such Warrant’s Warrant Cancellation Payment, without
interest, and all such Warrants shall no longer be outstanding
and shall
automatically be cancelled and shall cease to exist, and each former
Warrant Holder shall cease to have any rights with respect thereto,
other
than the right to receive the Warrant Cancellation Payment in respect
of
each Warrant held by such Warrant Holder as set forth herein. The
Company
shall use its commercially reasonable efforts to take all actions
necessary to effectuate the foregoing.
|
| (e) |
Each
Option issued and outstanding immediately prior to the Effective
Time,
whether or not then exercisable, shall be converted immediately
after
giving effect to the Effective Time into the right to receive,
as promptly
as practicable after the Effective Time, a sum in cash equal to
such
Option’s Option Cancellation Payment, without interest, and all such
Options shall no longer be outstanding and shall automatically
be
cancelled and shall cease to exist, and each former Option Holder
shall
cease to have any rights with respect thereto, other than the right
to
receive the Option Cancellation Payment in respect of each Option
held by
such Option Holder as set forth herein. Notwithstanding anything
to the
contrary contained in this Agreement, if the exercise price per
share of
Common Stock of any Option is equal to or greater than the Common
Stock
Consideration, such Option shall be cancelled without any cash
payment
being made in respect thereof. The Company shall use its commercially
reasonable efforts to take all actions necessary to effectuate
the
foregoing. As of the Effective Time, the Stock Plans shall terminate
and
all rights under any provision of any other plan, program or arrangement
of the Company or any Subsidiary of the Company providing for the
issuance
or grant of any other interest in respect of the capital stock
of the
Company or any Subsidiary of the Company shall be
cancelled.
|
| (f) |
The
Common Stock Consideration and amount of the Option Cancellation
Payments
and Warrant Cancellation Payments payable pursuant to Section 2.1(c),
(d)
and (e), respectively, have been calculated based upon the representations
and warranties made by the Company in Section 3.3. Without limiting
the
effect of the failure of the representations and warranties made
by the
Company in Section 3.3 to be true and correct, in the event that,
at the
Effective Time, the actual number of shares of Common Stock and
other
shares of capital stock of the Company outstanding or the actual
number of
shares of capital stock of the Company issuable upon the exercise
of
outstanding Options, Warrants or similar agreements or upon conversion
of
securities (including without limitation, as a result of any stock
split,
stock dividend, including any dividend or distribution of securities
convertible into Shares, or recapitalization) is greater than as
described
in Section 3.3 (including the exercise or conversion of any currently
outstanding Options, Warrants or similar agreements described in
Section
3.3), the Common Stock Consideration, Option Cancellation Payments
and
Warrant Cancellation Payments payable as contemplated herein shall
be
adjusted downward, but only to the extent necessary to ensure that
the
aggregate amount of the Common Stock Consideration and amounts
payable in
respect of Option Cancellation Payments and Warrant Cancellation
Payments
shall not exceed the sum of: (i) $247,175,000 plus
(ii) an amount equal to (A) $8.10 multiplied by (B) the number
of shares
of Common Stock issued as the result of the exercise of any currently
outstanding Options or Warrants prior to the Effective Time, plus
(iii)
$3,835,077, less for each share of Common Stock described in clause
(ii)
above, the difference between $8.10 and the exercise price paid
to the
Company upon the exercise of the Option or Warrant pursuant to
which such
share is issued.
|
Section
2.2 Exchange
Procedures.
| (a) |
Prior
to the Effective Time, Buyer shall appoint the Paying Agent to
act as
agent for the holders of shares of Common Stock and Warrants in
connection
with the Merger and to receive the funds to which such holders
shall
become entitled pursuant to this Article
II.
|
| (b) |
Promptly
following the Effective Time, the Surviving Corporation shall cause
to be
mailed, or otherwise make available, to each holder of record of
Certificates entitled to receive consideration pursuant to Section
2.1 the
form of Letter of Transmittal. After the Effective Time, each holder
of
certificates or other instruments formerly evidencing shares of
Common
Stock or Warrants (the “Certificates”),
upon surrender of such Certificates to the Paying Agent, together
with a
properly completed Letter of Transmittal and such other documents
as may
be reasonably required by the Paying Agent, shall be entitled to
receive
from the Paying Agent, in exchange therefor, the aggregate consideration
for such shares of Common Stock or Warrants as set forth herein,
as the
case may be, in cash as contemplated by this Agreement, and the
Certificates so surrendered shall be cancelled. Until surrendered
as
contemplated by this Section 2.2 (other than Certificates representing
Dissenting Shares), each Certificate shall be deemed at any time
after the
Effective Time to represent only the right to receive the aggregate
consideration for such shares of Common Stock or Warrants, as the
case may
be, in cash as contemplated by this Agreement, without interest
thereon.
All cash consideration delivered upon the surrender of Certificates
in
accordance with the terms of this Section 2.2 shall be deemed to
have been
paid in full satisfaction of all rights pertaining to shares of
Common
Stock and Warrants theretofore represented by such
Certificates.
|
| (c) |
If
any Certificate shall have been lost, stolen or destroyed, upon
the making
of an affidavit of that fact by the Person claiming such Certificate
to be
lost, stolen or destroyed and, if required by the Buyer, the posting
by
such Person of a bond or other surety in such amount as the Buyer
may
reasonably direct as indemnity against any claim that may be made
with
respect to such Certificate and subject to such other reasonable
conditions as the Buyer may impose, the Paying Agent shall deliver
in
exchange for such Certificate the consideration into which shares
of
Common Stock or Warrants theretofore represented by such Certificate
shall
have been converted pursuant to this Article
II.
|
| (d) |
If
any payment under this Article II is to be made to a Person other
than the
Person in whose name any Certificate surrendered in exchange therefor
is
registered, it shall be a condition of payment that the Certificate
so
surrendered shall be properly endorsed or otherwise in proper form
for
transfer and that the Person requesting such payment shall pay
any
transfer or other similar Taxes required by reason of the payment
to a
Person other than the registered holder of the Certificate surrendered
or
such Person shall establish to the satisfaction of the Surviving
Corporation that such Taxes have been paid or are not
applicable.
|
| (e) |
None
of Buyer, Merger Sub or the Surviving Corporation shall be liable
to any
Person in respect of any cash delivered to a public official pursuant
to
any applicable abandoned property, escheat or similar Law. At any
time
following the expiration of one (1) year after the Effective Time,
the
Surviving Corporation shall, in its sole discretion, be entitled
to
require the Paying Agent to deliver to it any funds (including
any
interest received with respect thereto) that had been made available
to
the Paying Agent and that have not been disbursed to holders of
Certificates, and such funds shall thereafter become the property
of the
Surviving Corporation. Such funds may be commingled with the general
funds
of the Surviving Corporation and shall be free and clear of any
claims or
interests of any Person. Thereafter, such holders shall be entitled
to
look to the Surviving Corporation (subject to any applicable abandoned
property, escheat or similar Law) only as general creditors thereof
with
respect to the applicable consideration payable as contemplated
by this
Agreement (net of any amounts that would be subject to withholding)
upon
due surrender of their Certificates, without any interest
thereon.
|
| (f) |
At
the Effective Time, the stock transfer books of the Company shall
be
closed, and there shall be no further registration of transfer
in the
stock transfer books of the Surviving Corporation of the shares
of Common
Stock, Warrants or Options, as the case may be, that were outstanding
immediately prior to the Effective Time. If, after the Effective
Time,
Certificates are presented to the Surviving Corporation or the
Paying
Agent for any reason, they shall be canceled and exchanged as provided
in
this Section 2.2.
|
| (g) |
As
soon as practicable following the Effective Time, the Surviving
Corporation shall, in exchange for the Options that became entitled
to
receive the consideration specified in Section 2.1, make the Option
Cancellation Payment in respect of each such Option to each Option
Holder.
|
Section
2.3 Deposit
at Closing.
At
the
Closing, Buyer shall deposit (or cause to be deposited) with the Paying Agent,
for exchange and payment in accordance with this Article II, an amount equal
to
the sum of (x)
the
aggregate Common Stock Consideration and (y)
the
aggregate Warrant Cancellation Payments. The Paying Agent shall invest funds
held by it for purposes of this Article II as directed by Buyer, on a daily
basis. Any interest or other income resulting from such investments shall
be
paid to Buyer.
Section
2.4 Dissenting
Shares.
| (a) |
Notwithstanding
any provision of this Agreement to the contrary, shares of the
Company’s
capital stock that are outstanding immediately prior to the Effective
Time
and that are held by holders who shall not have voted in favor
of the
Merger or consented thereto in writing and who shall have demanded
properly in writing appraisal for such shares in accordance with
Section
262 of the DGCL (collectively, the “Dissenting
Shares”)
shall not be converted into or represent the right to receive the
consideration set forth in Section 2.1. Such holders shall be entitled
to
receive such consideration as is determined to be due with respect
to such
Dissenting Shares in accordance with the provisions of Section
262 of the
DGCL, except that all Dissenting Shares held by holders who shall
have
failed to perfect or who effectively shall have withdrawn or lost
their
rights to appraisal of such shares under Section 262 of the DGCL
shall
thereupon be deemed to have been converted into and to have become
exchangeable for, as of the Effective Time, the right to receive
the
consideration specified in Section 2.1, without any interest thereon,
upon
surrender, in the manner provided in Section 2.2, of the certificate
or
certificates that formerly evidenced such Dissenting
Shares.
|
| (b) |
The
Company shall deliver to Buyer prompt written notice of any demands
for
appraisal received by the Company, withdrawals of such demands
and any
other instruments served pursuant to the DGCL and received by the
Company,
and the Company shall afford Buyer the opportunity to direct all
negotiations and proceedings with respect to demands for appraisal
under
the DGCL. The Company shall not, except with the prior written
consent of
Buyer, make any payment with respect to any demands for appraisal
or offer
to settle or settle any such
demands.
|
Section
2.5 Tax
Withholding.
The
Surviving Corporation and Buyer shall be entitled to deduct and withhold,
or to
cause the Paying Agent to deduct and withhold (consistent with the Company's
past practice), from the consideration otherwise payable pursuant to this
Agreement to or for the benefit of any holder of any shares of Common Stock,
Options or Warrants such amounts as it is required to deduct and withhold
with
respect to the making of such payment under the Code or any provision of
state,
local, or foreign tax law. To the extent that amounts are so withheld, such
withheld amounts shall be treated for all purposes of this Agreement as having
been paid to the holder of shares of Common Stock, Options or Warrants in
respect of which such deduction or withholding was made, and the Surviving
Corporation or Buyer, as applicable, shall properly and timely remit any
such
withheld amounts to the appropriate Governmental Entity.
ARTICLE
III
REPRESENTATIONS
AND WARRANTIES OF THE COMPANY
Except
as
set forth in the Disclosure Letter delivered by the Company prior to, or
concurrently with, the execution of this Agreement (the “Disclosure
Letter”),
or,
to the extent the qualifying nature of such disclosure with respect to a
specific representation or warranty is readily apparent therefrom, as set
forth
in the Company SEC Reports filed on or after January 1, 2006 and prior to
the
date hereof (without regard to the exhibits thereto or items included therein
that are incorporated by reference to Company SEC Reports filed by the Company
prior to January 1, 2006), the Company hereby represents and warrants to
Buyer
and Merger Sub as follows:
Section
3.1 Organization,
Standing and Power.
Each
of
the Company and its Subsidiaries is a corporation duly organized, validly
existing and in good standing under the laws of its jurisdiction of
incorporation and has all requisite corporate power and authority to own,
lease
and operate its properties and assets and to carry on its business as now
being
conducted. Each of the Company and its Subsidiaries is duly licensed or
qualified to do business and is in good standing in each jurisdiction in
which
such qualification or licensing is necessary because of the property and
assets
owned, leased or operated by it or because of the nature of its business
as now
being conducted, except for any failure to so qualify or be licensed or in
good
standing that, individually or in the aggregate, would not reasonably be
expected to have a Company Material Adverse Effect. Section 3.1 of the
Disclosure Letter lists the jurisdictions of incorporation and foreign
qualifications of the Company and each of its Subsidiaries. The Company has
made
available to Buyer true, complete and correct copies of the constitutive
documents of each of the Company and its Subsidiaries, in each case as amended
to the date of this Agreement, and has made available to Buyer each such
entity’s minute books and stock records. Neither the Company nor any of its
Subsidiaries is in violation of any provision of its respective certificate
or
articles of incorporation, by-laws or similar constitutive document. Section
3.1
of the Disclosure Letter contains a true and correct list of the directors
and
officers of each of the Company and its Subsidiaries as of the date of this
Agreement.
Section
3.2 Authority;
Approvals.
| (a) |
The
execution, delivery and performance of this Agreement by the Company
and
the consummation of the transactions contemplated hereby are within
its
corporate powers and authority and have been duly and validly authorized
by all necessary corporate action on the part of the Company (other
than
the adoption of this Agreement by the Required Company Stockholders).
This
Agreement has been duly and validly executed and delivered by the
Company,
and (assuming due authorization, execution and delivery by Buyer
and
Merger Sub) constitutes the valid and binding obligation of the
Company,
enforceable against the Company in accordance with its terms, except
as
such enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium and other similar laws of general applicability
relating to or affecting creditor’s rights generally and by the
application of general principles of
equity.
|
| (b) |
The
Board of Directors of the Company (the “Company
Board”)
has unanimously (i) determined that this Agreement and the Merger
are fair
to, and in the best interests of, the Company and its stockholders;
(ii)
resolved that the Merger is fair to, and in the bests interests
of, the
Company and its stockholders and declared this Agreement and the
Merger to
be advisable; (iii) resolved to approve this Agreement; and (iv)
resolved
to recommend that the Company’s stockholders adopt this Agreement, and, as
of the date hereof, none of the aforesaid actions by the Board
of
Directors of the Company has been amended, rescinded or
modified.
|
| (c) |
The
affirmative vote of the holders of a majority of outstanding shares
of
Common Stock (the “Required
Company Stockholders”)
is the only vote of the holders of any class or series of the Company’s
capital stock necessary to approve the
Merger.
|
Section
3.3 Capitalization.
| (a) |
The
authorized capital stock of the Company consists of 100,000,000
shares of
Common Stock and 5,000,000 shares of preferred stock, par value
$0.01 per
share (the “Preferred
Stock”).
As of the date of this Agreement, (i) 30,508,638 shares of Common
Stock,
including the associated Rights, were issued and outstanding (none
of
which are shares of Restricted Stock); (ii) 1,333,683 shares of
Common
Stock are held in the treasury of the Company; (iii) no shares
of Common
Stock are held by Subsidiaries of the Company; and (iv) no shares
of
Preferred Stock are outstanding.
|
| (b) |
Section
3.3(b)(i) of the Disclosure
Letter
sets forth a true and correct list of all of the Company’s Subsidiaries,
together with their respective authorized capital stock, number
of shares
issued and outstanding and record ownership of such shares. Except
as set
forth in Section 3.3(b)(ii) of the Disclosure
Letter,
the Company does not have any Subsidiaries or own or hold, directly
or
indirectly, any Capital Securities of, or has made any investment,
in any
other Person. Except as set forth in Section 3.3(b) of the Disclosure
Letter,
all issued and outstanding shares of capital stock of the Company’s
Subsidiaries have been duly authorized, were validly issued, are
fully
paid and nonassessable and subject to no preemptive rights and
are
directly or indirectly owned beneficially and of record by the
Company,
free and clear of all Encumbrances, and free of any other limitation
or
restriction (including any restriction on the right to vote, sell
or
otherwise dispose of such Capital
Securities).
|
| (c) |
Except
for (i) issued and outstanding Common Stock referenced in Sections
3.3(a)(i) and 3.3(a)(ii); (ii) 4,984,060
shares of Common Stock reserved for issuance upon exercise of Options,
as
described in Section 3.3(d) of the Disclosure
Letter;
(iii) 150,000 shares of Common Stock reserved for issuance upon
exercise
of the Warrants, as described in Section 3.3(e) of the Disclosure
Letter;
(iv) the shares of Preferred Stock designated as “Series
A Preferred Stock”
reserved for issuance in accordance with the Rights Agreement;
and (v) as
set forth in Sections 3.3(b) of the Disclosure
Letter,
at the time of execution of this Agreement, no shares of capital
stock or
other voting securities of the Company or any of its Subsidiaries
are
issued, reserved for issuance or outstanding. All outstanding shares
of
capital stock of the Company have been duly authorized, were validly
issued, are fully paid and nonassessable and subject to no preemptive
rights. Except for the Common Stock, there are no bonds, debentures,
notes
or other indebtedness or securities of the Company or any of its
Subsidiaries having the right to vote (or convertible into, or
exchangeable for, securities having the right to vote) on any matters
on
which stockholders of the Company or such Subsidiary may vote.
Except for
the Options, Warrants and Rights, there are no securities, options,
warrants, calls, rights, commitments, agreements, arrangements
or
undertakings of any kind to which the Company or any of its Subsidiaries
is a party relating to the issued or unissued Capital Securities
of the
Company or any Subsidiary. Except for the Options, Warrants and
Rights,
there are no securities, options, warrants, calls, rights, commitments,
agreements, arrangements or undertakings of any kind to which the
Company
or any of its Subsidiaries is a party or by which any such Person
is bound
obligating such Person to issue, deliver or sell, or cause to be
issued,
delivered or sold, additional shares of Capital Securities of the
Company
or any of its Subsidiaries or obligating such Person to issue,
grant,
extend or enter into any such security, option, warrant, call right,
commitment, agreement, arrangement or undertaking. There are no
outstanding rights, commitments, agreements, arrangements or undertakings
of any kind obligating the Company or any of its Subsidiaries (i)
to
repurchase, redeem or otherwise acquire any Capital Securities
of the
Company or any of its Subsidiaries or any securities of the type
described
in this Section 3.3(c) or (ii) to purchase or otherwise acquire
any
Capital Securities of any other Person. No Restricted Stock is
outstanding, and no stock appreciation rights have been issued
by the
Company or any of its Subsidiaries.
|
| (d) |
The
names of the optionee of each Option, the date of grant of each
Option,
the number of shares subject to each such Option, the expiration
date of
each such Option, and the price at which each such Option may be
exercised
are set forth in Section 3.3(d) of the Disclosure
Letter.
No option that became vested and exercisable on or after January
1, 2005
was granted with an exercise price per share that was less than
the per
share fair market value of the Company Common Stock underlying
such Option
on the grant date thereof.
|
| (e) |
The
name of each holder of Warrants as of the date hereof, the date
of
issuance of each Warrant, the number of shares subject to each
such
Warrant, the expiration date of each such Warrant, and the price
at which
each such Warrant may be exercised, are set forth in Section 3.3(e)
of the
Disclosure
Letter.
|
Section
3.4 Conflicts;
Consents.
| (a) |
The
execution, delivery and performance by the Company of this Agreement
and
the consummation of the transactions contemplated hereby, and compliance
by the Company with the terms and provisions hereof, do not and
will not
(i) conflict with or result in a breach of the certificates of
incorporation, by-laws or other constitutive documents of the Company
or
any of its Subsidiaries; (ii) violate, conflict with, breach, result
in
the loss of any benefit, constitute a default (or an event that,
with or
without notice or lapse of time, or both, would constitute a default),
or
except as set forth in Section 3.4 of the Disclosure
Letter,
give rise to any right of termination, cancellation or acceleration,
under
any of the provisions of any note, bond, lease, mortgage, indenture,
or
any license, franchise, permit, agreement or other instrument or
obligation to which any of the Company or its Subsidiaries is a
party, or
by which any such Person or its properties or assets are bound,
which in
any case may result in any loss (including loss of current or future
benefits) or other liability to the Company or its Subsidiaries;
(iii)
violate any Laws applicable to the Company or any of its Subsidiaries
or
any such Person’s properties or assets, which in any case may result in
the imposition of any fees, penalties or other liability to the
Company or
its Subsidiaries; or (iv) result in the creation or imposition
of any
Encumbrance upon any property or assets used or held by the Company
or any
of its Subsidiaries.
|
| (b) |
Except
for (1) the filing of a premerger notification and report form
under the
▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act of 1976, as amended, and the rules and regulations
promulgated thereunder (the “HSR
Act”)
and the expiration or early termination of the applicable waiting
period
thereunder; (2) any filings as may be required under the DGCL or
the
Exchange Act in connection with the Merger; (3) any consents or
approvals
of or registrations or filings with the Federal Communications
Commission
(“FCC”),
any state public service or public utilities commissions or similar
state
regulatory agency or body that regulates the business of the Company
or
any of its Subsidiaries (each, a “State
PUC”);
and (4) where the failure to obtain such consents or approvals,
or to make
such notifications, registrations or filings, that, individually
or in the
aggregate, do not or would not reasonably be expected to result
in a
Material Difference, no consent or approval by, or notification
of or
registration or filing with, any Governmental Entity is required
in
connection with the execution, delivery and performance by the
Company of
this Agreement or the consummation of the transactions contemplated
hereby.
|
Section
3.5 Financial
Information and SEC Reports; Undisclosed Liabilities.
| (a) |
The
Company has timely filed with the Securities and Exchange Commission
(the
“SEC”)
and made available to Buyer all forms, reports, schedules, statements
and
other documents required to be filed by it since January 1, 2003
(together
with all exhibits and schedules thereto and all information incorporated
therein by reference, the “Company
SEC Reports”).
The Company SEC Reports, as of the date filed with the SEC (and,
in the
case of registration statements and proxy statements, on the dates
of
effectiveness and the dates of mailing, respectively, and, in the
case of
any Company SEC Report amended or superseded by a filing prior
to the date
of this Agreement, then on the date of such amending or superseding
filing), (i) did not contain any untrue statement of a material
fact or
omit to state a material fact required to be stated therein or
necessary
in order to make the statements therein, in light of the circumstances
under which they were made, not misleading; and (ii) complied in
all
material respects with the applicable requirements of the Securities
Exchange Act of 1934, as amended (the “Exchange
Act”)
and the Securities Act, as the case may be, and the applicable
rules and
regulations of the SEC thereunder. None of the Company’s Subsidiaries is
subject to the periodic reporting requirements of the Exchange
Act or
required to file any form, report or other document with the SEC,
the
Nasdaq National Market or any other national stock exchange. The
Company
has made available to Buyer true, correct and complete copies of
all
correspondence with the SEC occurring since January 1, 2004 and
prior to
the date hereof and will, promptly following the receipt thereof,
make
available to Buyer any such correspondence sent or received after
the date
hereof. To the Company’s knowledge, as of the date hereof none of the
Company SEC Reports is the subject of ongoing SEC review. As of
the date
hereof, there
are no outstanding comments from or unsolved issues raised by the
SEC with
respect to any of the Company SEC Reports.
|
| (b) |
The
consolidated financial statements of the Company included or incorporated
by reference in the Company SEC Reports, as of the date filed with
the SEC
(and, in the case of registration statements and proxy statements,
on the
dates of effectiveness and the dates of mailing, respectively,
and, in the
case of any Company SEC Reports amended or superseded by a filing
prior to
the date of this Agreement, then on the date of such amending or
superseding filing), complied with applicable accounting requirements
and
with the published rules and regulations of the SEC with respect
thereto,
were prepared in accordance with GAAP applied on a consistent basis
during
the periods indicated (except as may be indicated in the notes
thereto or,
in the case of unaudited statements, as permitted by Form 10-Q
of the
SEC), and fairly presented in all material respects (subject, in
the case
of the unaudited statements, to normal, recurring audit adjustments
not
material in amount) the consolidated financial position of the
Company and
its consolidated Subsidiaries as of the date of such financial
statements
and the consolidated results of their operations and cash flows
for each
of the periods then ended. The books and records of the Company
have been
and are being maintained in accordance with GAAP and all other
applicable
legal and accounting requirements and reflect only actual
transactions.
|
| (c) |
The
Company and its Subsidiaries do not have any liabilities or obligations
(whether absolute, accrued, contingent or otherwise, known or unknown,
and
whether due or to become due), except for (i) liabilities and obligations
to the extent reflected in the consolidated balance sheet of the
Company
and its Subsidiaries at December 31, 2005 or readily apparent in
the notes
thereto, which balance sheet was filed with the SEC by the Company
on
March 28, 2006 in its 2005 Annual Report on Form 10-K/A and made
available
to Buyer (the “2005
Balance Sheet”),
(ii) liabilities and obligations incurred in the ordinary course
of
business consistent with past practice since December 31, 2005,
or (iii)
liabilities and obligations to the extent reflected in the consolidated
balance sheet of the Company and its Subsidiaries at June 30, 2006
or
readily apparent in the notes thereto, which balance sheet was
filed with
the SEC by the Company on August 9, 2006 in its Quarterly Report
on Form
10-Q for the quarter ended June 30, 2006 and made available to
Buyer (the
“June
30 Balance Sheet”),
(iv) liabilities and obligations set forth in Section 3.5(c) of
the
Disclosure Letter or (v) liabilities and obligations that, individually
or
in the aggregate, do not or would not reasonably be expected to
result in
a Material Difference.
|
| (d) |
Since
the enactment of the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of 2002 and the related
rules and
regulations promulgated under such Act (the “▇▇▇▇▇▇▇▇-▇▇▇▇▇
Act”),
neither the Company nor any of its Subsidiaries has made any loans
to any
executive officer or director of the Company or any of its
Subsidiaries.
|
| (e) |
The
management of the Company has (x)
designed and implemented disclosure controls and procedures (as
defined in
Rule 13a-15(e) of the Exchange Act), or caused such disclosure
controls
and procedures to be designed and implemented under their supervision,
to
ensure that material information relating to the Company, including
its
Subsidiaries, is made known to the management of the Company by
others
within those entities and (y)
disclosed, based on its most recent evaluation of internal control
over
financial reporting (as defined in Rule 13a-15(f) of the Exchange
Act), to
the Company’s outside auditors and the audit committee of the Company
Board and to Buyer (A) all significant deficiencies and material
weaknesses in the design or operation of internal control over
financial
reporting that are reasonably likely to adversely affect 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 control
over financial reporting as of the date of such evaluation. Since
December
31, 2003, any material change in internal control over financial
reporting
required to be disclosed in any Company SEC Reports has been so
disclosed
except as is indicated otherwise in any Company SEC Reports since
December
31, 2003.
|
| (f) |
Since
December 31, 2003 and except as is indicated in any Company SEC
Report
since December 31, 2003, or in Section 3.5(f) of the Disclosure
Letter,
(x)
neither the Company nor any of its Subsidiaries nor, to the knowledge
of
the Company, any director, officer, employee, auditor, accountant
or
representative of the Company or any of its Subsidiaries, has received
or
otherwise obtained knowledge of any material complaint, allegation,
assertion or claim, whether written or oral, regarding the accounting
or
auditing practices, procedures, methodologies or methods of the
Company or
any of its Subsidiaries or their respective internal accounting
controls
relating to periods after December 31, 2003, including any material
complaint, allegation, assertion or claim that the Company or any
of its
Subsidiaries has engaged in questionable accounting or auditing
practices
(except for any of the foregoing after the date hereof that have
no
reasonable basis), and (y)
to
the knowledge of the Company, no attorney representing the Company
or any
of its Subsidiaries, whether or not employed by the Company or
any of its
Subsidiaries, has reported evidence of a material violation of
securities
laws, breach of fiduciary duty or similar violation, relating to
periods
after December 31, 2003, by the Company or any of its officers,
directors,
employees or agents to the Company Board or any committee thereof
or to
any director or officer of the
Company.
|
Section
3.6 Disclosure
Documents.
None
of
the information included or incorporated by reference in the Proxy Statement
(including any amendments or supplements thereto) will, on the date the Proxy
Statement is filed with the SEC or on the date mailed to the Company’s
shareholders or at the time immediately following any amendment or supplement
to
the Proxy Statement or at the time the Company Stockholders’ Meeting is held,
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 are made, not
misleading; provided
that the
Company makes no representations regarding any information furnished in writing
by Buyer or Merger Sub specifically for inclusion in the Proxy Statement.
Section
3.7 Absence
of Changes.
Since
December 31, 2005, the Company and its Subsidiaries have been operated in
the
ordinary course consistent with past practice. Since December 31, 2005 and
to
the date hereof, there has not been any Company Material Adverse
Effect.
Section
3.8 Assets
and Properties; Network.
| (a) |
Section
3.8(a) of the Disclosure
Letter
sets forth a true and complete list of all real property owned
or leased
by the Company or any of its Subsidiaries, including all collocation
agreements to which the Company or any of its Subsidiaries is a
party.
Except as set forth in Section 3.8(a) of the Disclosure
Letter,
each of the Company and its Subsidiaries has good fee simple title
to, or
a valid leasehold interest in, as applicable, all of its owned
or leased
real property, including all such property interests identified
in Section
3.8(a) of the Disclosure
Letter
(including all rights, title, privileges and appurtenances pertaining
or
relating thereto) free and clear of any and all Encumbrances, except
for
defects in title or failures to be in full force and effect that,
individually or in the aggregate, do not or would not reasonably
be
expected to result in a Material Difference. All leases, including
all
collocation agreements to which the Company or any of its Subsidiaries
is
a party, in respect of real property leased by the Company or any
of its
Subsidiaries are in full force and effect, neither the Company
nor any of
its Subsidiaries has received any written notice of a breach or
default
thereunder, and to the Company’s knowledge, no event has occurred that,
with notice or lapse of time or both, would constitute a breach
or default
thereunder, except for such breach or default that, individually
or in the
aggregate, do not or would not reasonably be expected to result
in a
Material Difference.
|
| (b) |
Each
of the Company and its Subsidiaries has good title to, or a valid
leasehold interest in, as applicable, all personal property used
in their
respective businesses, except for defects in title or failures
to be in
full force and effect that, individually or in the aggregate, do
not or
would not reasonably be expected to result in a Material Difference.
Such
personal property and the structural elements of the owned and
leased
property (taken as a whole) are in good operating condition and
repair,
ordinary wear and tear and deferred maintenance excepted, and except
for
such failures to be in good operating condition and repair that,
individually or in the aggregate, do not or would not reasonably
be
expected to result in a Material
Difference.
|
| (c) |
Section
3.8(c) of the Disclosure
Letter
sets forth the following information relating to the network of
the
Company and its Subsidiaries: (i) all switches and switch locations
of the
Company and its Subsidiaries; (ii) a description of fibers and
fiber miles
owned or leased by the Company and its Subsidiaries; (iii) any
pending
asset sale of any of the foregoing; and (iv) any material agreement,
arrangement or understanding with municipalities governing access
to
municipal rights of way involving payments in excess of $100,000
in any
one year. The information provided in Section 3.8(c) of the Disclosure
Letter
is
accurate and complete in all material respects; provided,
however,
that the operation of the network of the Company and its Subsidiaries
is
subject to embedded software owned by third parties and licensed
to the
Company or its Subsidiaries, as to which (unless indicated otherwise
in
Section 3.8(c) of the Disclosure
Letter)
the Company has valid licenses as of the date hereof. The Company
has
provided Buyer with correct and complete copies of all leases with
respect
to the network of the Company and its Subsidiaries. Each of the
network
facilities described in Section 3.8(c) of the Disclosure
Letter
is
in good operating condition and repair, ordinary wear and tear
and
deferred maintenance excepted, and except for such failures to
be in good
operating condition and repair that, individually or in the aggregate,
do
not or would not reasonably be expected to result in a Material
Difference.
|
Section
3.9 Other
Agreements.
| (a) |
Section
3.9(a) of the Disclosure
Letter
sets forth a true, correct and complete list, as of the date of
this
Agreement, of each contract, agreement, commitment or lease of
the Company
and its Subsidiaries currently in effect (i) that by its terms
is a
“material contract” (as such term is defined in Item 601(b)(10) of
Regulation S-K of the SEC); (ii) that materially restricts the
conduct of
any material line of business by the Company or any of its Subsidiaries,
or the ability of any such Person to operate in any geographic
area; (iii)
relating to the borrowing of money or any guarantee in respect
of any
indebtedness in excess of $100,000 of any Person (other than any
guarantee
made by the Company in respect of any real property or personal
property
leased by any Subsidiary); (iv) that extends “most favored nations” or
similar pricing to the counterparty to such contract and such contract
involving aggregate payments in excess of $100,000 per year; (v)
with
respect to employment of an officer or director; (vi) with respect
to
engagement of a consultant involving payments of more than $100,000
in any
one year; (vii) that restricts the ability of the Company or any
of its
Subsidiaries to consummate the transactions contemplated hereby
on a
timely basis; or (viii) that is an interconnection agreement. Each
contract, agreement, commitment or lease of the type described
in this
Section 3.9(a), whether or not set forth in Section 3.9(a) of the
Disclosure
Letter,
is referred to herein as a “Material
Contract”.
True, correct and complete copies of all Material Contracts have
previously been made available to
Buyer.
|
| (b) |
All
of the Material Contracts are in full force and effect, and are
enforceable against the Company or its applicable Subsidiary and,
to the
knowledge of the Company, the other parties thereto in accordance
with its
terms, except as such enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium and other similar laws of
general
applicability relating to or affecting creditor’s rights generally and by
the application of general principles of equity, and except to
the extent
that the failure of one or more such Material Contracts to be in
full
force and effect and enforceable, individually or in the aggregate,
do not
or would not reasonably be expected to result in a Material Difference.
Neither the Company nor any of its Subsidiaries nor, to the knowledge
of
the Company, any other party to such Material Contracts is in breach
of or
default under any obligation thereunder or has given notice of
default to
any other party thereunder and, to the knowledge of the Company,
no
condition exists that with notice or lapse of time or both would
constitute a default thereunder.
|
Section
3.10 Environmental
Matters.
Each
of
the Company and its Subsidiaries holds all material licenses,
permits and other governmental authorizations required under all applicable
Environmental Laws with respect to all of its owned real property and, except
for such licenses, permits and other government authorizations the failure
to
hold, either individually or in the aggregate, do not or would not reasonably
be
expected to result in a Material Difference, with respect to all of its leased
real property. None of the Company or any of its Subsidiaries is in material
violation of any requirements of any Environmental Laws in connection with
the
conduct of its business or in connection with the use, maintenance or operation
of any real property owned or leased by the Company or any of its Subsidiaries,
except for such violations with regard to any real property leased by the
Company or its Subsidiaries that, individually or in the aggregate, do not
or
would not reasonably be expected to result in a Material Difference. To the
Company’s knowledge, there are no conditions relating to the Company or any of
its Subsidiaries or relating to any real property owned or leased by the
Company
or any of its Subsidiaries currently or during the last five years that in
any
such case would reasonably be expected to lead to any material liability
of the
Company or any of its Subsidiaries under any Environmental Law.
Section
3.11 Litigation.
Except
as
set forth in Section 3.11 of the Disclosure Letter or that, individually
or in
the aggregate, do not or would not reasonably be expected to result in a
Material Difference, there are no actions, suits, proceedings, arbitrations,
claims or disputes pending or, to the knowledge of the Company, threatened
by or
before any court, arbitration tribunal or other Governmental Entity against
the
Company or any of its Subsidiaries. No injunction, writ, temporary restraining
order, decree or any order of any nature has been issued by any court or
other
Governmental Entity relating to the Company or any of its Subsidiaries or
seeking or purporting to enjoin or restrain the execution, delivery and
performance by the Company of this Agreement or the consummation by the Company
of the transactions contemplated hereby. Neither the Company nor any of its
Subsidiaries has received any written notice of any condemnation or eminent
domain proceeding affecting any owned or leased real property, and, to the
knowledge of the Company, no such action or proceeding has been
threatened.
Section
3.12 Compliance;
Licenses and Permits.
| (a) |
Except
as set forth in Section 3.12(a) of the Disclosure
Letter,
each of the Company and its Subsidiaries is in compliance with
all Laws
applicable to the Company, any of its Subsidiaries or their respective
businesses (including without limitation, (i) the Communications
Act of
1934, as amended, and the communications-related statutes of each
state in
which the Company or any of its Subsidiaries operates; (ii) the
rules,
regulations, orders, and policies of the FCC and State PUCs; (iii)
any and
all Universal Service Fund obligations; and (iv) the Communications
Assistance to Law Enforcement Act), except in each case for failures
to
comply that, individually or in the aggregate, do not or would
not
reasonably be expected to result in a
Material Difference.
|
| (b) |
Each
of the Company and its Subsidiaries holds all federal, state, local
and
foreign governmental approvals, authorizations, certificates, filings,
franchises, licenses, notices, permits and rights (collectively,
“Permits,”
a
true, correct and complete list of which is contained in Section
3.12(b)(i) of the Disclosure
Letter)
that are necessary to conduct their respective businesses as presently
being conducted, except for such Permits the failure to hold that,
individually or in the aggregate, do not or would not reasonably
be
expected to result in a
Material Difference.
Except as set forth in Section 3.12(b)(ii) of the Disclosure
Letter
and except as would not, individually or in the aggregate, reasonably
be
expected to result in a Material
Difference,
(i) such Permits are in full force and effect; (ii) no material
violations are or have been alleged in respect of any thereof;
(iii) no
proceeding is pending or, to the knowledge of the Company, threatened,
against the Company or any of its Subsidiaries in connection with
the
right to operate under the Permits; and (iv) the consummation of
the
Merger and the transactions contemplated by this Agreement will
not result
in the non-renewal, revocation or termination of any such
Permit.
|
| (c) |
The
Company and its Subsidiaries are the authorized legal holders or
otherwise
have rights to all Permits issued by the FCC, State PUCs or any
other
Governmental Entity that regulates telecommunications in each applicable
jurisdiction held by the Company or its Subsidiaries (collectively,
“Communications
Licenses,”
a true, correct and complete list of which is contained in Section
3.12(b)(i) of the Disclosure
Letter),
and the Communications Licenses constitute all of the licenses
from the
FCC, the State PUCs or any other Governmental Entity that regulates
telecommunications in each applicable jurisdiction that are necessary
or
required for the operation of the businesses of the Company and
its
Subsidiaries as now conducted other than any such licenses the
absence of
which would not, individually or in the aggregate, reasonably be
expected
to result in a Material
Difference.
All the Communications Licenses were duly obtained and are valid
and in
full force and effect, unimpaired by any material condition, except
those
conditions that may be contained within the terms of such Communications
Licenses. As of the date hereof, no action by or before the FCC,
any State
PUC or any other Governmental Entity that regulates telecommunications
in
each applicable jurisdiction is pending or, to the knowledge of
the
Company, threatened in which the requested remedy is (i) the revocation,
suspension, cancellation, rescission or modification or refusal
to renew
any of the Communications Licenses, or (ii) fines and/or forfeitures
that
would, individually or in the aggregate, reasonably be expected
to result
in a Material
Difference.
Except as set forth in Section 3.12(c) of the Disclosure Letter,
and
except as would not reasonably be expected to result in a Material
Difference, as of the date of this Agreement, the Universal Service
Administration Company has not initiated any inquiries, audits
or other
proceedings against the Company or its Subsidiaries and, to the
knowledge
of the Company, no such actions are threatened that, in each case,
could
result in fines, penalties or other
losses.
|
Section
3.13 Intellectual
Property.
| (a) |
Section
3.13(a)(1) of the Disclosure
Letter
sets forth an accurate and complete list of all registered Marks
owned (in
whole or in part) by the Company or any of its Subsidiaries (collectively
“Company
Registered Marks”),
Section 3.13(a)(2) of the Disclosure
Letter
sets forth an accurate and complete list of all registered Patents
or
pending applications for registered Patents owned (in whole or
in part) by
the Company or any of its Subsidiaries (collectively the “Company
Registered Patents”)
and Section 3.13(a)(3) of the Disclosure
Letter
sets forth an accurate and complete list of all registered Copyrights
owned (in whole or in part) by the Company or any of its Subsidiaries,
and
all pending applications for registration of Copyrights filed anywhere
in
the world that are owned (in whole or in part) by the Company or
any of
its Subsidiaries (collectively the “Company
Registered Copyrights”
and, together with the Company Registered Marks and the Company
Registered
Patents, the “Company
Registered IP”).
Except as set forth on Section 3.13(a)(4) of the Disclosure
Letter,
no Company Registered IP has been or is now involved in any interference,
reissue, reexamination, opposition, cancellation or similar proceeding
and
the Company has not received written notice of the threat of any
such
action with respect to any of the Company Registered IP. To the
knowledge
of the Company, the Company Registered IP is valid, subsisting
and
enforceable, and neither the Company nor any of its Subsidiaries
has
received any written notice or claim challenging or questioning
the
validity or enforceability or alleging the misuse of any of the
Company
Registered IP. Except as may be set forth in Section 3.13(a)(5)
of the
Company Disclosure
Letter,
neither the Company nor any of its Subsidiaries has knowingly taken
any
action or failed to take any action, which action or failure reasonably
could be expected to result in the abandonment, cancellation, forfeiture,
relinquishment, invalidation or unenforceability of any of the
Company
Registered IP, except for such actions or failures that, individually
or
in the aggregate, do not or would not reasonably be expected to
result in
a Material Difference.
|
| (b) |
Each
of the Company and its Subsidiaries has taken all reasonable steps
to
maintain the confidentiality of all information that constitutes
a
material Trade Secret of the Company or any of its
Subsidiaries.
|
| (c) |
To
the knowledge of the Company, the Company owns exclusively all
right,
title and interest to the Company Registered IP and all other material
Intellectual Property used by the Company or any of its Subsidiaries
that
is not licensed to the Company or any of its Subsidiaries pursuant
to a
written license agreement, free and clear of any Encumbrance or
other
adverse claims or interests, and neither the Company nor any of
its
Subsidiaries has received any written notice or claim challenging
the
Company’s or such Subsidiary’s ownership of any of such material
Intellectual Property. None of such material Intellectual Property
owned
by the Company or any of its Subsidiaries is subject to any outstanding
order, judgment, or stipulation restricting the use thereof by
the Company
or such Subsidiary.
|
| (d) |
Section
3.13(d)(1) of the Disclosure
Letter
sets forth a complete and accurate list of all material agreements
granting to the Company or any of its Subsidiaries any material
right
under or with respect to any Intellectual Property owned by a third
party
that is used in connection with the business of the Company or
any such
Subsidiary other than commercially available standard Software
applications used in the Company’s or any such Subsidiary’s operations
(collectively, the “Inbound
License Agreements”),
indicating for each the title and the parties thereto. Section
3.13(d)(2)
of the Company Disclosure
Letter
sets forth a complete and accurate list of all material license
agreements
under which the Company or any of its Subsidiaries grants any rights
under
any Intellectual Property, excluding non-exclusive licenses granted
by the
Company or any of its Subsidiaries in the ordinary course of business
in
substantially the Company’s standard forms (which have previously been
provided to Buyer). Except for such losses or expirations that,
individually or in the aggregate, do not or would not reasonably
be
expected to result in a Material Difference, no loss or expiration
of any
material Intellectual Property licensed to the Company or any of
its
Subsidiaries under any Inbound License Agreement is pending or,
to the
knowledge of the Company, reasonably foreseeable or, to the knowledge
of
the Company, threatened in writing. There is no outstanding or,
to the
Company’s knowledge, threatened (in writing) dispute or disagreement with
respect to any Inbound License Agreement or any license agreements
under
which the Company or any of its Subsidiaries grants any rights
under any
Intellectual Property (collectively, the “Outbound
License Agreements”)
that, individually or in the aggregate, do not or would not reasonably
be
expected to result in a Material
Difference.
The execution, delivery and performance by the Company of this
Agreement,
and the consummation of the transactions contemplated hereby, will
not
result in the loss or impairment of, or give rise to any right
of any
third party to terminate or reprice or otherwise modify any of
the
Company’s or any of its Subsidiaries’ rights or obligations under any
Inbound License Agreement or any Outbound License Agreement, except
for
such losses, impairments or rights to terminate, reprice or otherwise
modify that, individually or in the aggregate, do not or would
not
reasonably be expected to result in a Material
Difference.
|
| (e) |
To
the knowledge of the Company, the Intellectual Property owned by
the
Company or any of its Subsidiaries or licensed under the Inbound
License
Agreements to the Company or any of its Subsidiaries constitutes
all the
material Intellectual Property rights necessary for the conduct
of the
businesses of the Company and its Subsidiaries as each is currently
conducted, excluding commercially available standard Software applications
used in the Company’s or any such Subsidiary’s
operations.
|
| (f) |
Except
as would not reasonably be expected to have, individually or in
the
aggregate, a Company Material Adverse Effect, none of the products
or
services distributed, sold or offered by the Company or any of
its
Subsidiaries, nor any technology, content, materials or other Intellectual
Property used, displayed, published, sold, distributed or otherwise
commercially exploited by or for the Company or any of its Subsidiaries
has infringed upon, misappropriated, or violated, or does infringe
upon,
misappropriate or violate any Intellectual Property of any third
party.
Neither the Company nor any of its Subsidiaries has received any
written
notice or claim asserting that any such material infringement,
misappropriation or violation is occurring or has occurred. To
the
Company’s Knowledge, no third party is misappropriating or infringing any
material Intellectual Property owned by the Company or any of its
Subsidiaries in any material
respect.
|
Section
3.14 Tax
Matters.
Except
(i) as would not, individually or in the aggregate, reasonably be expected
to
result in a Material Difference or (ii) as set forth in Section 3.14 of the
Disclosure
Letter:
| (a) |
Each
of the Company and its Subsidiaries has filed all Tax Returns required
to
be filed by it within the time and in the manner prescribed by
law (with
due regard to lawful extensions of time). All such Tax Returns
are true,
correct and complete in all material respects, and all Taxes owing
by the
Company or any of its Subsidiaries, whether or not shown on any
Tax
Return, have been paid when due. No claim made by any taxing authority
in
any jurisdiction in which the Company or any of its Subsidiaries
does not
file Tax Returns that the Company or any of its Subsidiaries is
or may be
subject to taxation by that jurisdiction is outstanding or unresolved.
The
Company and each of its Subsidiaries has made adequate provision
on its
financial statements included or incorporated by reference in the
most
recent Company SEC Reports (or adequate provision has been made
on its
behalf), in accordance with GAAP, for all accrued Taxes not yet
due
(excluding any reserve for deferred Taxes to reflect timing differences
between book and Tax income). There are no Liens with respect to
Taxes on
any assets or properties of the Company or any Subsidiary, other
than
Liens for Taxes not yet due and
payable.
|
| (b) |
The
Company and its Subsidiaries have not been and are not currently
in
violation (or, with or without notice or lapse of time or both,
would be
in violation) of any applicable law or regulation relating to
any
withholding or payroll Tax requirements (including reporting).
No person
holds Common Stock that is subject to a substantial risk of forfeiture
(within the meaning of Section 83 of the Code) with respect to
which a
valid election under Section 83(b) of the Code has not been made,
and no
payment to any holder of Common Stock of any portion of the consideration
payable hereunder will result in compensation or other income
to such
person with respect to which Buyer or the Surviving Corporation
would be
required to deduct or withhold any Tax. Section
3.14(b) of the Disclosure Letter lists (i) each person that has,
to the
knowledge of the Company, disposed of any stock of the Company
or any of
its Subsidiaries on or after January 1, 2006 in a transaction
that would
constitute a “disqualifying disposition” (as defined in Section 421(b) of
the Code), and (ii) each person for whom the transactions contemplated
by
this Agreement would constitute a disqualifying disposition,
in each case
identifying the stock disposed of in such transaction and the
exercise
date and exercise price of the option pursuant to which such
stock was
acquired.
|
| (c) |
The
Company has made available to Buyer correct and complete
copies of all
income Tax Returns filed by, and all examination reports
and statements of
deficiencies issued to, assessed against, or agreed to by,
the Company or
any of its Subsidiaries for each of its last three taxable
years. The
federal income Tax Returns of the Company and each of its
Subsidiaries
have been audited by the Internal Revenue Service or are
closed by the
applicable statute of limitations for all taxable years through
the
taxable year specified in Section 3.14(c) of the Disclosure
Letter.
No examination or audit of any Tax Return of the Company
or any of its
Subsidiaries by any Governmental Entity is currently in progress
or
threatened in writing. No deficiency for any Taxes has been
proposed in
writing against the Company or any of its Subsidiaries, which
deficiency
has not been paid in full. Neither the Company nor any of
its Subsidiaries
has participated or engaged in any “reportable transaction” within the
meaning of Treasury Regulations Section 1.6011-4 (or any
corresponding or
similar provision of state, local or foreign
law).
|
| (d) |
There
are no outstanding rulings of, or requests for rulings with,
any Tax
authority addressed to the Company or any of its Subsidiaries
that are, or
if issued would be, binding on the Company or any of its
Subsidiaries.
There are no outstanding agreements, waivers, or arrangements
extending
the statutory period of limitation applicable to any claim
for, or the
period for the collection or assessment of, Taxes due from
or with respect
to the Company or any of its Subsidiaries for any taxable
period, no power
of attorney granted by or with respect to the Company or
any of its
Subsidiaries relating to Taxes is currently in force, and
no extension of
time for filing of any Tax Return required to be filed by
or on behalf of
the Company or any of its Subsidiaries is in
force.
|
| (e) |
Neither
the Company nor any of its Subsidiaries has agreed,
nor is it required, to
make any adjustment under Section 481(a) of the Code
(or any similar
provision of applicable state, local, or foreign
law). Neither the Company
nor any of its Subsidiaries has used the installment
method under Section
453 of the Code (or any similar provision of applicable
state, local or
foreign law) to defer any material income to any
taxable period ending
after the Effective Date. No indebtedness of either
the Company or any of
its Subsidiaries constitutes “corporate acquisition indebtedness” within
the meaning of Section 279(b) of the
Code.
|
| (f) |
Neither
the Company nor any of its Subsidiaries has distributed
stock of another
corporation, or has had its stock distributed by another
corporation, in a
transaction that was governed, or purported or intended
to be governed, in
whole or in part, by Code Section 355 or 361. There is
no limitation on
the utilization by the Company or any of its Subsidiaries
of its net
operating losses, built-in losses, tax credits or other
similar items
under Sections 382, 383 or 384 of the Code (or any corresponding
or
similar provisions of applicable state, local, or foreign
law) or the
separate return limitation year rules under the consolidated
return
provisions of the Regulations (or any corresponding or
similar provisions
of applicable state, local, or foreign law), other than
any such
limitation arising as a result of the consummation of the
transactions
contemplated by this
Agreement.
|
| (g) |
The
Company is not and has not been during the applicable
period specified in
Section 897(c)(1)(A)(ii) of the Code, a United
States real property
holding corporation within the meaning of Section
897(c)(2) of the
Code.
|
| (h) |
Neither
the Company nor any of its Subsidiaries
has ever been (i) a member of an
affiliated group filing or required to
file a consolidated, combined, or
unitary Tax Return (other than a group
the common parent of which was the
Company) or (ii) a party to or bound by,
nor does it have or has it ever
had any obligation under, any Tax sharing
agreement or similar contact or
arrangement. Neither the Company nor any
of its Subsidiaries has any
liability for the Taxes of any other Person
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.
|
Section
3.15 Labor
Relations; Employees.
| (a) |
Except
as set forth in Section 3.15(a) of the Disclosure
Letter,
as of the date hereof: (i) the Company and its Subsidiaries are
in
compliance in all material respects with all applicable Laws respecting
employment and employment practices, terms and conditions of employment,
wages, hours or work and occupational safety and health, and is
not
engaged in any act or practice that constitutes or would reasonably
be
expected to constitute an unfair labor practice as defined in the
National
Labor Relations Act or other applicable Laws; (ii) there is no
unfair
labor practice charge or complaint against the Company pending
or
threatened in writing before the National Labor Relations Board
or any
similar state or foreign agency; (iii) since December 31, 2003,
no labor
strikes, disputes, slowdowns, stoppages or lockouts have occurred,
are
pending, or threatened in writing, involving the Company or any
of its
Subsidiaries; (iv) neither the Company nor any of its Subsidiaries
is not
a party to or bound by any collective bargaining or similar agreement;
and
(v) there are no union organizing activities among the employees
of the
Company. Neither the Company nor any of its Subsidiaries has received
written notice of the intent of any governmental entity responsible
for
the enforcement of labor or employment laws to conduct an investigation
with respect to or relating to employees and no such investigation
is in
progress.
|
| (b) |
Section
3.15(b) of the Disclosure
Letter
contains a list of each pension, profit-sharing or other retirement,
bonus, employment, consulting or termination agreement, deferred
compensation, change in control, retention, deal bonus, stock
option,
stock appreciation, stock purchase or other equity based, performance
share, bonus or other incentive, severance or termination pay,
health, and
group insurance plan, agreement, program or arrangement, as well
any other
“employee benefit plan” (within the meaning of Section 3(3) of ERISA) that
the Company and its Subsidiaries or any of their ERISA Affiliates
sponsor,
maintain, or contribute to or is required to be contributed to
by the
Company and its Subsidiaries or any of their ERISA Affiliates
with respect
to employees (current and former), directors or consultants of
the Company
and its Subsidiaries, or with respect to which the Company or
any
Subsidiary has or may reasonably be expected to have any liability,
whether contingent or direct (each such plan, program or arrangement
being
hereinafter referred to in this Agreement individually as a “Plan”).
|
| (c) |
Except
as set forth in Section 3.15(c) of the Disclosure Letter,
the Company has
made available to Buyer or Buyer’s counsel a true and complete copy of (i)
each Plan (or, to the extent no such copy exists, an accurate
description
thereof) and all amendments thereto, (ii) each trust agreement,
group
annuity contract and summary plan description, if any, relating
to such
Plan, (iii) the most recent IRS determination letter (if
any), (iv) the
three most recent annual reports (Form 5500) filed with the
IRS and
attached schedules, and (v) for the three most recent years,
audited
financial statements and actuarial valuations relating to
each
Plan.
|
| (d) |
Each
Plan has been established and has been operated in
all material respects
in accordance with its terms and applicable Laws, including
but not
limited to ERISA and the Code. Each Plan that is intended
to be
“qualified” within the meaning of Section 401(a) of the Code has
received
a favorable determination letter from the IRS that
remains in effect on
the date hereof. No event has occurred since the date
such favorable
determination letter was issued that could reasonably
be expected to
affect the tax-qualified status of such Plan. Other
than routine claims
for benefits, there are no governmental audits, actions,
claims, lawsuits
or arbitrations pending or, to the knowledge of the
Company, threatened in
writing with respect to any Plan and no facts or circumstances
exist that
could reasonably be expected to give rise to any such
audit, actions,
suits or claims.
|
| (e) |
Except
as set forth in Section 3.15(e) of the Disclosure
Letter,
all required contributions due with respect
to any Plan have been made as
required under ERISA. The reserves reflected
in the 2005 Balance Sheet for
the obligations of the Company under all Plans
were determined in
accordance with GAAP.
|
| (f) |
Neither
the Company, any of its Subsidiaries
nor any of their ERISA Affiliates
(i)
maintains or has ever maintained
a Plan that is or was ever subject
to
Section 412 of the Code, Part 3 of
Subtitle B of Title I of ERISA, or
Title IV of ERISA, (ii) is obligated
or has ever been obligated to
contribute to a “multiemployer plan” (as defined in Section 4001(a)(3)
of
ERISA). No Plan is a “multiple employer plan” for purposes of Sections
4063 or 4064 of ERISA.
|
| (g) |
No
event has occurred and
no condition exists that
would reasonably be
expected to subject the
Company, any of its Subsidiaries
nor any of their
ERISA Affiliates to any
material tax, fine, lien,
penalty or other
liability imposed by ERISA,
the Code or other applicable
Laws.
|
| (h) |
Except
as set forth in Section 3.15(h) of the Disclosure
Letter, no Plan provides
welfare benefits after termination of employment
to any employee, former
employee, director or consultant, except
to the extent required by Section
4980B of the Code, or applicable state
law.
|
| (i) |
Except
as set forth in Section 3.15(i) of the Disclosure
Letter,
neither the Company nor any of its Subsidiaries is
a party to any contract
or agreement, plan, or arrangement, including, without
limitation, the
execution of this Agreement, the consummation of
the transactions or other
events contemplated by this Agreement, concerning
any person that,
individually or collectively with other similar agreements,
and taking
into account any transactions or payments contemplated
by this Agreement,
could reasonably be expected to give rise to the
payment of any amount
that would not be deductible by the Company or any
of its Subsidiaries by
reason of Section 280G of the Code. Neither the Company
nor any of its
Subsidiaries has any obligation to make any reimbursement
or other payment
to any such person with respect to any Tax imposed
under Section 4999 of
the Code. No Plan exists that, as a result of the
execution of this
Agreement or the consummation of the transactions
contemplated by this
Agreement, either standing alone or in combination
with any subsequent
event, will (A) result in any payment becoming due
to any current or
former employee or director of the Company after
the date of this
Agreement; (B) increase any benefits otherwise payable
under, or result in
any other material obligation pursuant to, any Plan;
(C) result in the
acceleration of time of payment or vesting of any
such benefits to any
extent or result in any payment or funding (through
a grantor trust or
otherwise) of any compensation or benefits under
any Plan; or (D) limit or
restrict the right of the Company to merge, amend
or terminate any
Plan.
|
| (j) |
Section
3.15(j) of the Disclosure
Letter
identifies each nonqualified deferred
compensation plan, within the
meaning of Section 409A(d)(1) of the
Code and associated Treasury
Department guidance, including IRS
Notice 2005-1 and Proposed Treasury
Regulations at 70 Fed. Reg. 57930 (October
4, 2005) in connection with the
Company may have any liability with
respect to current or former employees
and directors (each a “NQDC
Plan”).
With respect to each NQDC Plan, it
either (i) has been operated in full
compliance with Code Section 409A since
January 1, 2005, or (ii) does not
provide for the payment of any benefits
that have or will be deferred or
vested after December 31, 2004 and
since October 3, 2004, it has not been
“materially modified” within the meaning of Section 409A
of the Code and
associated Treasury Department guidance,
including IRS Notice 2005-1,
Q&A 18 and the proposed regulations at
70 Fed. Reg. 57930 (October 4,
2005). No NQDC Plan has assets set
aside directly or indirectly in the
manner described in Section 409A(b)(1)
of the Code or contains a provision
that would be subject to Section 409A(b)(2)
of the
Code.
|
Section
3.16 Transactions
with Related Parties.
Except
as
set forth in Section 3.16 of the Disclosure Letter, since January 1, 2006
and
prior to the date hereof, no event has occurred that would be required to
be
reported as a Certain Relationship or Related Transaction pursuant to Item
404
of Regulation S-K promulgated by the SEC.
Section
3.17 Brokers.
No
agent,
broker, investment banker, Person or firm acting on behalf of the Company
or any
of its Subsidiaries or under the authority of the Company or any of its
Subsidiaries, other than The Blackstone Group, is or will be entitled to
any
broker’s or finder’s fee or any other commission or similar fee directly or
indirectly from any of the parties hereto in connection with any of the
transactions contemplated hereby. The fees and expenses due to The Blackstone
Group are as set forth in the agreements between such firm and the Company,
true, correct and complete copies of which have been delivered to
Buyer.
Section
3.18 Insurance.
Section
3.18 of the Disclosure Letter contains a list of each material insurance
policy
maintained with respect to the business of the Company and its Subsidiaries.
Except as set forth on Section 3.18 of the Disclosure Letter, neither the
Company nor any of its Subsidiaries is in material default with respect to
its
obligations under any material insurance policy maintained by them. Neither
the
Company nor any of its Subsidiaries has received written notice of termination,
exhaustion of limits, cancellation or non-renewal of any such insurance policies
from any of its insurance brokers or carriers. The Company has complied with
each such insurance policy except where the failure to so comply would not,
individually or in the aggregate, reasonably be expected to have a Company
Material Adverse Effect, and all material claims thereunder (i) have been
filed
in due and timely fashion, and (ii) have been accepted by the insurer. There
have been no denials or reservations of rights of any such material
claims.
Section
3.19 Suppliers.
Except
as
set forth in Section 3.19 of the Disclosure Letter, and except for disputes
that, individually or in the aggregate, do not or would not reasonably be
expected to result in a Material Difference, as of the date of this Agreement,
neither the Company nor any of its Subsidiaries (a) has received any written
notice of, or has any reason to believe that there are, any outstanding or
threatened disputes with any supplier or vendor (including local and long
distance carriers) that have not been paid or otherwise resolved without
any
further payment or obligation being due from the Company or any of its
Subsidiaries, or (b) has any reason to believe that there exist any reasonable
grounds for any such dispute.
Section
3.20 Takeover
Statutes.
Prior
to
the date of this Agreement, the Board of Directors of the Company has taken
all
actions required to be taken by it in order to exempt this Agreement, the
voting
agreements and the transactions contemplated hereby and thereby from the
provisions of Section 203 of the DGCL, and accordingly, that section does
not
apply to the Merger, the voting agreements or any of the transactions
contemplated hereby and thereby. No other “control share acquisition,” “fair
price” or other anti-takeover regulations enacted under state Laws in the United
States apply to this Agreement or the voting agreements or any of the
transactions contemplated hereby and thereby.
Section
3.21 Opinion
of Financial Advisor.
The
Company has received the opinion of The Blackstone Group that, as of the
date
hereof, the Common Stock Consideration to be received by the holders of the
Common Stock is fair, from a financial point of view, to the holders of the
Common Stock, and such opinion has not been withdrawn or revoked or otherwise
modified as of the date of this Agreement.
Section
3.22 Rights
Agreement.
The
Company has taken all action necessary or appropriate under its Rights Agreement
to ensure that the execution of this Agreement and consummation of the
transactions contemplated hereby, including the Merger, do not and will not
result in the ability of any person to exercise any Rights or enable or require
such Rights to separate from the shares of Common Stock to which they are
attached or to be triggered or become exercisable.
ARTICLE
IV
REPRESENTATIONS
AND WARRANTIES OF BUYER AND MERGER SUB
Buyer
and
Merger Sub jointly and severally represent and warrant to the Company as
follows:
Section
4.1 Organization;
Standing and Power.
Each
of
Buyer and Merger Sub is a corporation duly organized, validly existing and
in
good standing under the laws of its jurisdiction of incorporation and has
all
requisite corporate power and authority to own, lease and operate its properties
and assets and to carry on its business as now being conducted. Buyer has
made
available to the Company true, complete and correct copies of the constitutive
documents of each of Buyer and Merger Sub, in each case as amended to the
date
of this Agreement. Each of Buyer and Merger Sub is duly licensed or qualified
to
do business and is in good standing in each jurisdiction in which such
qualification or licensing is necessary because of the property and assets
owned, leased or operated by it or because of the nature of its business
as now
being conducted, except for any failure to so qualify or be licensed or in
good
standing which, individually or in the aggregate, would not reasonably be
expected to prevent or materially delay consummation of the Merger.
Section
4.2 Authority;
Approvals.
The
execution, delivery and performance of this Agreement by each of Buyer and
Merger Sub and the consummation of the transactions contemplated hereby are
within their respective corporate power and authority have been duly and
validly
authorized by all necessary corporate action on the part of each of Buyer
and
Merger Sub. This Agreement has been duly and validly executed and delivered
by
Buyer and Merger Sub, and (assuming due authorization, execution and delivery
by
the Company) constitutes the valid and binding obligation of each of Buyer
and
Merger Sub, enforceable against each of Buyer and Merger Sub in accordance
with
its terms, except as such enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium and other similar laws of general
applicability relating to or affecting creditor’s rights generally and by the
application of general principles of equity.
Section
4.3 Conflicts;
Consents.
| (a) |
The
execution, delivery and performance by each of Buyer and Merger
Sub of
this Agreement and the consummation of the transactions contemplated
hereby, and compliance by Buyer and Merger Sub with the terms and
provisions hereof, does not and will not (i) conflict with or result
in a
breach of the certificates of incorporation, by-laws or other constitutive
documents of Buyer or Merger Sub; (ii) violate, conflict with,
breach,
result in the loss of any benefit, constitute a default (or an
event that,
with or without notice or lapse of time, or both, would constitute
a
default), or give rise to any right of termination, cancellation
or
acceleration, under any of the provisions of any note, bond, lease,
mortgage, indenture, or any license, franchise, permit, agreement
or other
instrument or obligation to which any of Buyer or Merger Sub is
a party,
or by which any such Person or its properties or assets are bound;
or
(iii) violate any Laws applicable to Buyer or Merger Sub or any such
Person’s properties or assets, except where the occurrence of any of the
foregoing described in clauses (ii) or (iii) above, individually
or in the
aggregate, would not reasonably be expected to prevent or materially
delay
the consummation of the Merger.
|
| (b) |
Except
for (A) the filing of a premerger notification and report form
under the
HSR Act and the expiration or early termination of the applicable
waiting
period thereunder; (B) any filings as may be required under the
DGCL in
connection with the Merger; (C) the consents or approvals of or
registrations or filings with the FCC, any State PUC and any Municipal
Franchising Authority having regulatory authority over the business
of
Buyer and its Subsidiaries as conducted in any given jurisdiction
in
connection with the transactions contemplated hereby; (D) any filings
that
may be required under securities Laws; and (E) such consents, approvals,
notifications, registrations or filings the failure to obtain which,
individually or in the aggregate, would not reasonably be expected
to
prevent or materially delay consummation of the Merger, no consent
or
approval by, or notification of or registration or filing with,
any
Governmental Entity is required in connection with the execution,
delivery
and performance by Buyer or Merger Sub of this Agreement or the
consummation of the transactions contemplated
hereby.
|
Section
4.4 Disclosure
Documents.
None
of
the information supplied or to be supplied by Buyer or Merger Sub for inclusion
or incorporation by reference in the Proxy Statement (including any amendments
or supplements thereto) will, on the date the Proxy Statement is filed with
the
SEC or mailed to the Company’s shareholders or at the time immediately following
any amendment or supplement to the Proxy Statement or at the time the Company
Stockholders’ Meeting is held, 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 are made, not misleading.
Section
4.5 Brokers.
Except
for ▇▇▇▇▇▇▇▇▇ & Company, Inc., no agent, broker, investment banker, person
or firm acting on behalf of Buyer or Merger Sub or under the authority of
Buyer
or Merger Sub is or will be entitled to any broker’s or finder’s fee or any
other commission or similar fee directly or indirectly from any of the parties
hereto in connection with the Merger or any of the transactions contemplated
hereby.
Section
4.6 Litigation.
There
is
no action, suit, investigation or proceeding pending against, or to the
knowledge of Buyer, threatened against or affecting, Buyer or Merger Sub
or any
of their respective properties which, individually or in the aggregate, would
reasonably be expected to impair the ability of Buyer or Merger Sub to perform
its obligations hereunder, or prevent or materially delay the consummation
of
the Merger.
Section
4.7 Operations
of Merger Sub.
Merger
Sub is a wholly owned subsidiary of Buyer, was formed solely for the purpose
of
engaging in the transactions contemplated hereby, has engaged in no other
business activities and has conducted its operations only as contemplated
by
this Agreement.
Section
4.8 Financing
Wherewithal.
Buyer
will have at the Closing and at the Effective Time sufficient funds available
to
permit Buyer to perform all of its obligations under this Agreement and to
consummate all of the transactions contemplated hereby.
ARTICLE
V
CERTAIN
COVENANTS
Section
5.1 Conduct
of Business.
| (a) |
From
the date of this Agreement until the Closing, except as set forth
on
Section 5.1 of the Disclosure
Letter,
as expressly permitted or required by this Agreement, as required
by
applicable Law or as otherwise consented to by Buyer in writing,
the
Company shall, and shall cause each of its Subsidiaries to, operate
its
business only in the ordinary course of business consistent with
past
practice and in compliance in all material respects with all applicable
Laws, including the Communications Act of 1934, as amended, and
the
communications-related statutes of each state in which the Company
or any
of its Subsidiaries operates, and the implementing rules, regulations,
orders, and policies of the FCC and each State PUC, and without
limitation
of the foregoing, shall use its commercially reasonable efforts
to do the
following:
|
| (i) |
Preserve
intact the present organization of the Company and its
Subsidiaries;
|
| (ii) |
keep
available the services of the present officers and employees of
the
Company and its Subsidiaries;
|
| (iii) |
preserve
the Company’s and its Subsidiaries’ goodwill and relationships with
customers, suppliers, licensors, licensees, contractors, lenders
and other
Persons having significant business dealings with the Company and
its
Subsidiaries;
|
| (iv) |
continue
all current sales, marketing and other promotional policies, programs
and
activities of the Company and its
Subsidiaries;
|
| (v) |
maintain
the assets of the Company and its Subsidiaries in good repair,
order and
condition;
|
| (vi) |
maintain
the Company’s and its Subsidiaries’ insurance policies and risk management
programs, and in the event of casualty, loss or damage to any assets
of
the Company or any of its Subsidiaries, repair or replace such
assets with
assets of comparable quality, as the case may be;
and
|
| (vii) |
promptly
notify Buyer of any material federal, state, local or foreign income
or
franchise and any other material suit, claim, contest, investigation,
administrative or judicial proceeding or audit initiated against
or with
respect to the Buyer or any of its Subsidiaries in respect of any
Tax
matter.
|
| (b) |
Without
limiting the generality of the foregoing, except as set forth on
Section
5.1 of the Disclosure
Letter,
as expressly permitted or required by this Agreement or as required
by
applicable Law, the Company shall not, and shall not permit any
of its
Subsidiaries to, without the prior written consent of Buyer, directly
or
indirectly do any of the following:
|
| (i) |
knowingly
cause or knowingly permit (to the extent that the Company or any
of its
Subsidiaries has any control over such action being taken) to be
taken any
act, event or change that would reasonably be expected to have
a Company
Material Adverse Effect;
|
| (ii) |
incur
any indebtedness for borrowed money or assume, guarantee, endorse
or
otherwise as an accommodation become responsible for the obligations
of
any Person, in either case, other than capital lease obligations
permitted
within the limitations set forth in Section 5.1(b)(viii)
below;
|
| (iii) |
amend
or otherwise change its certificate of incorporation or by-laws
or
equivalent organizational
documents;
|
| (iv) |
declare,
set aside or pay any dividend or other distribution with respect
to any
shares of capital stock of the Company or any of its Subsidiaries,
other
than dividends from one Company Subsidiary to another Company Subsidiary
or to the Company;
|
| (v) |
(A)
split, combine or reclassify any shares of its capital stock, or
issue or
authorize or propose the issuance of any other securities in respect
of,
in lieu of or in substitution for shares of its capital stock;
(B)
repurchase, redeem or otherwise acquire any shares of the capital
stock of
the Company or any of its Subsidiaries, or any securities convertible
into
or exercisable for any shares of the capital stock of the Company
or any
of its Subsidiaries; (C) issue or sell, or enter into any contract
for the
issuance or sale, of any shares of capital stock or securities
convertible
into or exercisable for shares of capital stock of the Company
or any of
its Subsidiaries (other than the issuance of shares of Common Stock
upon
the exercise of Warrants or Options outstanding on the date hereof
in
accordance with their terms in existence as of the date of this
Agreement); or (D) cause to become effective its 2006 Employee
Stock
Purchase plan;
|
| (vi) |
sell,
assign, pledge, encumber, transfer or otherwise dispose of any
Company
Registered IP or any other material asset of the Company or any
of its
Subsidiaries;
|
| (vii) |
acquire
(including, without limitation, by merger, consolidation, or acquisition
of stock or assets) any interest in any Person or any assets, other
than
acquisitions of inventory, equipment and supplies in the ordinary
course
of business;
|
| (viii) |
incur
any capital expenditures or commitments or additions to property,
plant or
equipment of the Company and its Subsidiaries (including IT Expenditures),
except for capital expenditures, capital lease obligations or commitments
or additions of at least $1,500,000 in the aggregate per calendar
month
(commencing October, 2006) from and after the date hereof as mutually
agreed by the Company and Buyer (whether or not such expenditures,
commitments or additions were heretofore planned by the
Company);
|
| (ix) |
except
in each case for regular annual salary increases or promotions
in the
ordinary course of business and except as specified in Section
5.1 of the
Disclosure
Letter,
(A) increase the compensation of current or former directors, employees
or
consultants of the Company or any of its Subsidiaries (including
any
increase pursuant to any written bonus, pension, profit-sharing
or other
benefit or compensation plan, policy or arrangement or commitment)
or (B)
increase any such compensation or bonus payable to any officer,
stockholder, director, consultant or agent of the Company or any
of its
Subsidiaries having an annual salary or remuneration in excess
of
$100,000, (C) take any action reasonably within its control to
materially
increase or decrease the total number of employees of the Company
and its
Subsidiaries in any functioning department of the Company and its
Subsidiaries; (D) pay or commit to pay any retention, transaction
bonus,
severance or termination pay other than severance or termination
pay that
is required to be paid pursuant to the terms of any Plan; (E) enter
into
any employment, deferred compensation, consulting, severance or
other
similar agreement (or any amendment to any such existing agreement)
with
any current or former director, officer, employee or consultant
of the
Company or any of its Subsidiaries; (F) adopt or make any commitment
to
adopt any additional employee benefit plan or other arrangement
that would
be a Plan if it were in existence on the date of this Agreement;
(G) make
any contribution to any Plan, other than (1) regularly scheduled
mandatory
contributions and (2) contributions (excluding discretionary matching
or
profit sharing contributions) required pursuant to the terms thereof
or
applicable Law; (H) except as necessary so as to comply with subclause
(J)
below or Section 5.14(c), amend, extend or terminate (or make any
commitments to amend, extend or terminate) any Plan, except for
amendments
required by applicable Law; (I) loan or advance any money or other
property to any current or former director, officer or employee
of the
Company or any of its Subsidiaries other than advances of travel
and
entertainment expenses to current directors, officers and employees
in the
ordinary course; or (J) allow for the commencement of any new offering
periods under the Company Employee Stock Purchase Plan.
|
| (x) |
change
the independent public accountants of the Company and its Subsidiaries
or,
except as required by GAAP or applicable Law, change the accounting
methods or accounting practices followed by the
Company;
|
| (xi) |
make
or change any material Tax election, incur any material liability
for
Taxes other than in the ordinary course of business, adopt
or change any accounting period or method, file an amended Tax
Return,
enter into any closing agreement, settlement, or compromise with
respect
to any Tax claim or assessment related to the Company or any of
its
Subsidiaries, knowingly surrender any right to claim a refund of
Taxes, or
consent to any extension or waiver of the limitation period applicable
to
any Tax claim or assessment relating to the Company or any of its
Subsidiaries;
|
| (xii) |
enter
into, amend, modify or consent to the termination of, or fail to
perform
any material obligation under, any Material Contract (including
entering
into any network or other agreements that cannot be terminated
without
penalty upon thirty days’ or less notice), or amend, waive, modify or
consent to the termination of the Company’s or any Subsidiary’s material
rights with respect to any such Material
Contract;
|
| (xiii) |
(x)
pay, discharge, settle or compromise any material claim, action,
proceeding or investigation for an amount in excess of $100,000
individually or $250,000 in the aggregate, except to the extent
reserved
against in the most recent consolidated financial statements included
in
the Company SEC Reports filed prior to the date hereof (and existing
as of
the date hereof in accordance with GAAP); (y)
settle, compromise or cancel any material debts owed to or claims
held by
them (including the settlement of any claims or litigation) except
in the
ordinary course consistent with past practice or (z)
consent to the issuance of any injunction, decree, order or judgment
restricting or otherwise affecting its business or
operations;
|
| (xiv) |
enter
into any new line of business;
|
| (xv) |
take
any action that will create a requirement to make a filing, registration
or application with, or seek the waiver, consent or approval of,
the FCC,
any State PUC or Municipal Franchising Authority or any other Governmental
Entity other than in the ordinary course of the operation of the
business,
or discontinue or withdraw any authorized service or voluntary
relinquish
any Permits or Communications Licenses;
or
|
| (xvi) |
knowingly
take or agree in writing or otherwise take any of the actions described
in
(i) through (xv) above or any other action that would reasonably
be
expected to delay or prevent the satisfaction of any condition
to closing
set forth in Article VI.
|
Section
5.2 Access
and Information; Confidentiality.
| (a) |
From
the date of this Agreement until the earlier of (i) the Closing
and
(ii) the termination of this Agreement in accordance with Article
VII, the Company shall allow Buyer and its financing parties and
their
respective representatives to make such reasonable investigation
of the
business, operations and properties of the Company and its Subsidiaries,
including environmental site assessments in respect of owned real
property, as Buyer deems reasonably necessary in connection with
the
transactions contemplated by this Agreement. Such investigation
shall
include reasonable access to the respective directors, officers,
employees, agents and representatives (including legal counsel
and
independent accountants) of the Company and its Subsidiaries and
their
respective properties, books, records and commitments. The Company
shall
promptly furnish Buyer and its representatives with such financial,
operating and other data and information and copies of documents
with
respect to the Company and its Subsidiaries or any of the transactions
contemplated by this Agreement as Buyer shall from time to time
reasonably
request. The Company shall promptly advise Buyer orally and in
writing if
the Board of Directors of the Company has reason to believe that
a change,
effect, event, occurrence, state of facts or development constitutes
a
Material Difference or that a Company Material Adverse Effect has
occurred
or is reasonably likely to occur. All access and investigation
pursuant to
this Section 5.2 shall occur only upon reasonable notice and during
normal
business hours and shall be conducted at Buyer’s expense and in such a
manner as not to interfere with the normal operations of the business
of
the Company and its Subsidiaries. During the period prior to the
Closing
Date, the Company shall provide Buyer consolidated monthly balance
sheets,
statements of operations, stockholders’ equity and cash flows within
fifteen calendar days after the end of each
month.
|
| (b) |
The
parties hereto will hold any non-public information regarding the
other
parties, their Subsidiaries and their respective businesses in
confidence
in accordance with the terms of the Confidentiality
Agreement.
|
Section
5.3 Proxy
Statement.
| (a) |
As
promptly as practicable after the execution of this Agreement,
but in no
event later than ten (10) days after the date hereof (subject to
the last
sentence of this paragraph), the Company (in consultation with
Buyer)
shall prepare and the Company shall cause to be filed with the
SEC a proxy
statement (together with any amendments thereof or supplements
thereto,
the “Proxy
Statement”).
The Company will cause the Proxy Statement and all other documents
it is
responsible for filing in connection therewith to comply as to
form in all
material respects with all applicable provisions of applicable
Law. The
Company shall provide to Buyer the opportunity to review and comment
on
the initial preliminary Proxy Statement and all subsequent forms
or
versions of or amendments to the Proxy Statement and the Company
shall
take into good faith consideration all of Buyer’s reasonable comments to
each version of or amendment to the Proxy Statement. Buyer shall
furnish
all information concerning it as may reasonably be requested by
the
Company in connection with the preparation of the Proxy Statement.
Neither
the initial preliminary or any subsequent version of, or any amendment
or
supplement to, the Proxy Statement will be filed by the Company
without
Buyer’s prior written consent, which shall not be unreasonably delayed
or
withheld.
|
| (b) |
The
Company shall notify Buyer promptly after receipt by the Company
of any
comments of the SEC on, or of any request by the SEC for amendments
or
supplements to, the Proxy Statement. The Company shall supply Buyer
with
copies of all correspondence between the Company or any of its
representatives and the SEC with respect to the Proxy Statement.
If at any
time prior to the Effective Time, any event shall occur relating
to the
Company or any of its Subsidiaries or any of their respective officers,
directors or Affiliates that should be described in an amendment
or
supplement to the Proxy Statement, the Company shall inform Buyer
promptly
after becoming aware of such event. Whenever the Company learns
of the
occurrence of any event that should be described in an amendment
of, or
supplement to, the Proxy Statement, the parties shall cooperate
to
promptly cause such amendment or supplement to be prepared, filed
with and
cleared by the SEC and, if required by applicable Law, disseminated
to the
persons and in the manner required.
|
Section
5.4 Company
Stockholders’ Meeting.
The
Company, acting through its Board of Directors, shall, as promptly as
practicable following the execution of this Agreement, establish a record
date
for, duly call, give notice of, convene and hold a meeting of its stockholders
for the purpose of voting upon the adoption of this Agreement (the “Company
Stockholders’ Meeting”);
provided
that the
Proxy Statement shall be mailed to Company stockholders no later than ten
(10)
days after the SEC has indicated that it has no further comments to the Proxy
Statement. Subject to Section 5.5(b), the Company shall, through its Board
of
Directors, (i) recommend to its stockholders adoption of this Agreement and
include such recommendation in the Proxy Statement. Without limiting the
generality of the foregoing, the Company’s obligations pursuant to the first
sentence of this Section 5.4 shall not be affected by, and the Company shall
proceed to convene and hold the Company Stockholders’ Meeting notwithstanding,
(i) the commencement, public proposal, public disclosure or communication
to the
Company of any Takeover Proposal or (ii) the withdrawal or modification by
the
Board of Directors of the Company or any committee thereof of such Board
of
Directors’ or such committee’s approval or recommendation of this Agreement, the
Merger or the other transactions contemplated by this Agreement.
Section
5.5 Acquisition
Proposals.
| (a) |
The
Company shall, and shall cause its Affiliates, Subsidiaries, and
its and
each of their respective officers, directors, employees, consultants,
financial advisors, attorneys, accountants and other advisors,
representatives and agents (collectively, “Representatives”)
to, immediately cease and cause to be immediately terminated any
discussions or negotiations with any parties that may be ongoing
with
respect to, or that are intended to or could reasonably be expected
to
lead to, a Takeover Proposal and to request the prompt return or
destruction of all confidential information previously furnished
to any
such parties. The Company shall not, and shall cause its Affiliates,
Subsidiaries and its and their respective Representatives not to,
(i)
directly or indirectly solicit, initiate, knowingly encourage or
take any
other action to knowingly facilitate (including by way of furnishing
or
disclosing information) any inquiries or the making of any proposal
that
constitutes or could reasonably be expected to lead to a Takeover
Proposal; (ii) enter into any agreement, arrangement or understanding
with
respect to any Takeover Proposal (including any letter of intent,
memorandum of understanding or agreement in principle) or enter
into any
agreement, arrangement or understanding (including any letter of
intent,
memorandum of understanding or agreement in principle) that requires,
or
is intended to or that could reasonably be expected to result in,
the
abandonment, termination or the failure to consummate the Merger
or any
other transaction contemplated by this Agreement; (iii) initiate
or
participate in any way in any negotiations or discussions regarding,
or
furnish or disclose to any Person (other than a party to this Agreement)
any information with respect to any Takeover Proposal; or (iv)
grant any
waiver or release under any standstill or any similar agreement
with
respect to any class of the Company’s equity securities; provided,
however,
that at any time prior to the adoption of this Agreement by the
Required
Company Stockholders, in response to a bona
fide
written unsolicited Takeover Proposal received after the date hereof
that
the Board of Directors of the Company determines in good faith
(after
consultation with outside counsel and a financial advisor of nationally
recognized reputation) constitutes, or would reasonably be expected
to
lead to, a Superior Proposal, and which Takeover Proposal was not,
directly or indirectly, the result of a breach of this Section
5.5, the
Company may, if its Board of Directors determines in good faith
(after
consulting with a financial advisor of nationally recognized reputation
and outside counsel) that it is required to do so in order to comply
with
its fiduciary duties to the stockholders of the Company under applicable
Law, and subject to compliance with Section 5.5(b), (x)
furnish information with respect to the Company and its Subsidiaries
to
the Person making such Takeover Proposal (and its representatives)
pursuant to a customary confidentiality agreement not less restrictive
of
such Person than the Confidentiality Agreement; provided
that all such information has previously been provided to Buyer
or is
provided to Buyer prior to or concurrently with the time it is
provided to
such Person, and (y)
participate in discussions or negotiations with the Person making
such
Takeover Proposal (and its representatives) regarding such Takeover
Proposal.
|
| (b) |
Neither
the Board of Directors of the Company nor any committee thereof
shall (i)
(A) withhold, withdraw (or modify or change in a manner adverse
to Buyer
or Merger Sub), or publicly propose
to withhold or withdraw (or modify or change in a manner adverse
to Buyer
or Merger Sub), the approval, recommendation or declaration of
advisability by such Board of Directors or any such committee thereof
of,
this Agreement, the Merger or the other transactions contemplated
by this
Agreement or make any other public statement inconsistent with
such
recommendation or (B) recommend, adopt or approve, or publicly
propose to
recommend, adopt or approve, any Takeover Proposal (any action
described
in this clause (i) being referred to as a “Company
Adverse Recommendation Change”)
or (ii) approve or recommend, or propose to approve or recommend,
or allow
the Company or any of its Subsidiaries to execute or enter into,
any
letter of intent, memorandum of understanding, agreement in principle,
merger agreement, acquisition agreement, option agreement, joint
venture
agreement, partnership agreement or other agreement constituting
or
related to, or that is intended to or would reasonably be expected
to lead
to, any Takeover Proposal (other than a confidentiality agreement
referred
to in and as permitted by Section 5.5(a)) (an “Acquisition
Agreement”)
or that is intended to or that could reasonably be expected to
result in
the abandonment, termination or failure to consummate the Merger
or any
other transaction contemplated by this Agreement. Notwithstanding
the
foregoing, at any time prior to the adoption of this Agreement
by the
Required Company Stockholders, the Board of Directors of the Company
may
make a Company Adverse Recommendation Change in response to a Superior
Proposal if such Board of Directors determines in good faith (after
consultation with outside counsel and a financial advisor of nationally
recognized reputation) that it is required to do so in order to
comply
with its fiduciary duties to the stockholders of the Company under
applicable Law; provided,
however,
that (i) no such Company Adverse Recommendation Change may be made
if the
Company failed to comply with this Section 5.5; (ii) no such Company
Adverse Recommendation Change shall be made until after the third
(3rd)
Business Day following Buyer’s receipt of written notice (a “Notice
of Adverse Recommendation”)
from the Company advising Buyer that the Board of Directors of
the Company
intends to take such action and specifying the reasons therefor,
including
the terms and conditions of any Superior Proposal that is the basis
of the
proposed action by the Board of Directors and the identity(ies)
of the
Person or group making such Superior Proposal (it being understood
and
agreed that any amendment to the financial terms or any other material
term of such Superior Proposal shall require a new Notice of Adverse
Recommendation and a new three (3) Business Day period) and representing
that the Company has complied with this Section 5.5; (iii) during
such
three (3) Business Day period, the Company shall negotiate with
Buyer in
good faith to make such amendments to the terms and conditions
of this
Agreement as would enable the Company to proceed with its recommendation
of this Agreement as so amended and not make a Company Adverse
Recommendation Change; and (iv) the Company shall not make a Company
Adverse Recommendation Change if, prior to the expiration of such
three
(3) Business Day period, Buyer makes a proposal to amend the terms
and
conditions of this Agreement that the Company’s Board of Directors
determines in good faith (after consultation with its outside counsel
and
with financial advisors of nationally recognized reputation) to
be at
least as favorable as the Superior Proposal after giving effect
to, among
other things, the payment of the Termination Fee set forth in Section
7.3
hereof.
|
| (c) |
Promptly
on the date of receipt thereof, the Company shall advise Buyer
orally and
in writing of any request for information or any Takeover Proposal,
and
the terms and conditions of such request, Takeover Proposal, inquiry,
discussions or negotiations, and the Company shall promptly on
the date of
receipt thereof provide to Buyer copies of any written materials
received
by the Company in connection with any of the foregoing, and the
identity
of the Person or group making any such request, Takeover Proposal
or
inquiry or with whom any discussions or negotiations are taking
place. The
Company agrees that it shall keep Buyer fully and promptly informed
of the
status and details (including amendments or changes or proposed
amendments
or changes) of any such request, Takeover Proposal or inquiry and
keep
Buyer fully and promptly informed as to the details of any information
requested of or provided by the Company and as to the details of
all
discussions or negotiations with respect to any such request, Takeover
Proposal or inquiry.
|
| (d) |
Nothing
contained in this Section 5.5 shall prohibit the Company from taking
and
disclosing to its stockholders a position contemplated by Rule
14e-2 or
Rule 14d-9 promulgated under the Exchange Act; provided,
however,
that in no event shall the Company or its Board of Directors or
any
committee thereof take, or agree or resolve to take, any action
prohibited
by Section 5.5(b).
|
Section
5.6 Reasonable
Best Efforts; Further Assurances.
| (a) |
Upon
the terms and subject to the conditions set forth in this Agreement,
including, without limitation, Section 5.6(b) hereof, each of the
parties
hereto will use its reasonable best efforts to take, or cause to
be taken,
all actions, and to do, or cause to be done, all lawful things
necessary,
proper or advisable to consummate and make effective the transactions
contemplated by this Agreement as soon as practicable after the
date
hereof and to ensure that the conditions set forth in Article VI
are
satisfied, insofar as such matters are within its control, including,
without limitation, the following: (i) making the requisite filings
pursuant to the HSR Act; (ii) making all necessary notifications
required
by and filing all necessary applications with the FCC seeking the
consent
of the FCC to the transfer of the Permits and Communications Licenses
issued by the FCC to the Company and each of its Subsidiaries in
connection with the consummation of the transactions contemplated
by this
Agreement (the “FCC
Consents”);
(iii) making all necessary notifications required by and filing
all
necessary applications with the State PUCs seeking the consent
of the
applicable State PUC to the assignment of the Permits and Communications
Licenses issued or granted by such State PUC to the Company or
any of its
Subsidiaries in connection with the consummation of the transactions
contemplated by this Agreement (the “State
PUC Consents”);
and (iv) making all necessary notifications required by and filing
all
necessary applications with each Municipal Franchising Authority
seeking
the consent of the Municipal Franchising Authority to the transfer
of the
Permits and Communications Licenses issued by the Municipal Franchising
Authority to the Company and each of its Subsidiaries in connection
with
the consummation of the transactions contemplated by this Agreement
(the
“Municipal
Franchising Authority Consents”).
Without limiting the generality of the foregoing, and subject to
Section
5.2, the Company, on the one hand, and Buyer and Merger Sub, on
the other
hand, shall each furnish to the other such necessary information
and
reasonable assistance as the other party may reasonably request
in
connection with the foregoing.
|
| (b) |
In
furtherance and not in limitation of the foregoing, each of the
parties
hereto will use its reasonable best efforts to (i) make or cause
to be
made the applications or filings required to be made by Buyer or
the
Company or any of their respective Subsidiaries under or with respect
to
the HSR Act or with respect to the FCC Consents, PUC Consents,
and
Municipal Franchising Authority Consents, and to pay any fees due
of it in
connection with such applications or filings, within ten (10) days
after
the date hereof (but in the case of HSR filings, fifteen (15) days
after
the date hereof); and (ii) comply as expeditiously as practicable
with any
request under or with respect to the HSR Act or with respect to
the FCC
Consents and PUC Consents for additional information, documents
or other
materials received from the Federal Trade Commission, the Department
of
Justice, the FCC or any State PUC in connection with such applications
or
filings or the Merger and the other transactions contemplated by
this
Agreement. For purposes hereof, it is understood and agreed that
Buyer and
its counsel will prepare the applications and related materials
necessary
to apply for the State PUC approvals and thereafter use its reasonable
best efforts to file and prosecute such applications; and the Company’s
obligation hereunder with respect to seeking PUC approvals is to
use its
reasonable best efforts to cooperate with and assist Buyer in such
process. Each party hereto shall promptly inform the others of
any
communications from any Governmental Entity regarding any of the
transactions contemplated by this Agreement. Notwithstanding anything
to
the contrary contained in this Section 5.6, Buyer shall be under
no
obligation whatsoever to take any action requested by any Governmental
Entity in order to consummate the Merger or other transactions
contemplated by this Agreement, including, without limitation,
making any
divestiture of any asset or agreeing to any type of behavioral
relief that
a Governmental Entity may request that would require Buyer or its
Subsidiaries (i) to forgo revenue through the provision of free
or reduced
rate services (measured by Buyer’s or its Subsidiaries’ standard rates) or
otherwise of more than $10,000,000 over any three year period or
(ii) to
expend any amount that, when combined with any such forgone revenue,
exceeds $10,000,000 in the
aggregate.
|
| (c) |
Between
the date hereof and the Closing Date, the Company shall, and shall
cause
its Subsidiaries to, maintain the validity of the Communications
Licenses
and comply in all material respects with all requirements of the
Communications Licenses and the rules and regulations of the FCC,
and
State PUCs. The Company shall, and shall cause its Subsidiaries
to, use
reasonable best efforts to (a) refrain from taking any action that
may
jeopardize the validity of any of the Communications Licenses or
result in
the revocation, surrender or any adverse modification of, forfeiture
of,
or failure to renew under regular terms, any of the Communications
Licenses; (b) prosecute with due diligence any pending applications
with
respect to the Communications Licenses, including any renewals
thereof;
and (c) with respect to Communications Licenses, make all filings
and
reports and pay all fees necessary or reasonably appropriate for
the
continued operation of the businesses of the Company and its Subsidiaries,
as and when such approvals, consents, permits, licenses, filings,
or
reports or other authorizations are necessary or
appropriate.
|
| (d) |
The
parties shall cooperate with each other in taking, or causing to
be taken,
all actions necessary to delist the Common Stock from the Nasdaq
National
Market and terminate registration of the Common Stock under the
Exchange
Act; provided,
that such delisting and termination shall not be effective until
after the
Effective Time.
|
| (e) |
Subject
to Section 5.6(b), in case at any time after the Effective Time
any
further action is necessary to carry out the purposes of this Agreement,
each of the parties to this Agreement shall take or cause to be
taken all
such necessary action, including the execution and delivery of
such
further instruments and documents, as may be reasonably requested
by any
party hereto for such purposes or otherwise to complete or perfect
the
transactions contemplated by this
Agreement.
|
| (f) |
The
Company shall reasonably cooperate with Buyer, to the extent reasonably
requested by Buyer in connection with any third-party financing
Buyer and
Merger Sub may seek to obtain in order to fund the transactions
contemplated by this Agreement, including without limitation: (i)
reasonably cooperate in the preparation of any offering memorandum,
private placement memorandum, prospectuses or similar documents;
(ii) make
senior management of the Company reasonably available for meetings
and due
diligence sessions; (iii) reasonably cooperate with prospective
lenders,
placement agents, initial purchasers and their respective advisors
in
performing their due diligence; (iv) if expressly authorized and
requested
by Buyer in writing to do so, enter into customary agreements with
underwriters, initial purchasers or placement agents, provided
that no
such agreement shall have any effect or be binding on the Company
unless
and until the Effective Time; and (v) if expressly authorized and
requested by Buyer in writing to do so, enter into or help procure
pledge
and security documents, landlord waivers, other definitive financing
documents or other requested certificates or documents, including,
without
limitation, documents relating to the release of liens; provided
that no
such agreement, document, waiver or certificate shall have any
effect or
be binding on the Company unless and until the Effective Time;
provided
that none of the Company or any Subsidiary shall be required to
pay any
commitment or similar fee or incur any other liability in connection
with
any such third-party financing prior to the Effective Time, and,
provided
further that Buyer shall, promptly upon request by the Company,
reimburse
the Company for all reasonable out-of-pocket costs incurred by
the Company
or the Subsidiaries in connection with such cooperation. It is
expressly
understood and agreed that, notwithstanding anything to the contrary
herein or elsewhere, neither Buyer nor Merger Sub nor any other
Person
shall have a claim against any of the Company, its Subsidiaries,
its and
their directors, officers, employees and advisers and Company stockholders
and affiliates, and none of such Persons shall have any liability
to any
Person, based upon, resulting from or otherwise arising out of
any
compliance or non-compliance or breach or otherwise with or under
the
provisions of this Section 5.6(f), and none of Buyer or Merger
Sub may
raise any such compliance or non-compliance or breach as a defense
or
mitigating factor or otherwise to any claim by the Company or its
stockholders for breach of this Agreement.
|
Section
5.7 Public
Announcements.
The
parties agree to consult with each other before issuing any press release
or
making any public statement with respect to this Agreement or the transactions
contemplated hereby and, except as may be required by applicable Law, will
not
issue any such press release or make any such public statement prior to such
consultation.
Section
5.8 Indemnification
of Directors and Officers.
| (a) |
For
not less than six years from and after the Effective Time, Buyer
agrees
to, and to cause the Surviving Corporation to, indemnify and hold
harmless
all past and present directors and officers of the Company
(“Covered
Persons”)
to the same extent such persons are indemnified as of the date
of this
Agreement by the Company
pursuant to the Company’s
amended and restated certificate of incorporation and amended and
restated
by-laws and indemnification agreements, if any, in existence on
the date
of this Agreement for acts or omissions occurring at or prior to
the
Effective Time; provided, however,
that Buyer agrees to, and to cause the Surviving Corporation to,
indemnify
and hold harmless such persons to the fullest extent permitted
by
applicable Law for acts or omissions occurring in connection with
the
approval of this Agreement and the consummation of the transactions
contemplated hereby. Each Covered Person shall be entitled to advancement
of expenses incurred in the defense of any claim, action, suit,
proceeding
or investigation with respect to any matters subject to indemnification
hereunder, provided that any person to whom expenses are advanced
undertakes, to the extent required by the DGCL, to repay such advanced
expenses if it is ultimately determined that such person is not
entitled
to indemnification. Notwithstanding
anything herein to the contrary, if any claim, action, suit, proceeding
or
investigation (whether arising before, at or after the Effective
Time) is
made against any Covered Person with respect to matters subject
to
indemnification hereunder on or prior to the sixth anniversary
of the
Effective Time, the provisions of this Section 5.8 shall continue
in
effect until the final disposition of such claim, action, suit,
proceeding
or investigation.
|
| (b) |
Immediately
before the Closing, the Company
or
Buyer shall purchase, and Buyer and the Surviving Corporation shall
provide to the Covered
Persons,
a
fully prepaid insurance and indemnification policy (“D&O
Insurance”)
in amount and scope not materially less favorable in the aggregate
than
those in the D&O Insurance policy in effect on the date hereof, that
provides coverage for events occurring on or before the Effective
Time and
that remains in effect until at least the sixth anniversary of
the
Effective Time. If such prepaid policies have been obtained prior
to the
Effective Time, Buyer shall, and shall cause the Surviving Corporation
to,
maintain such policies in full force and effect, and continue to
honor the
obligations thereunder. The Company
represents that the current annual premiums paid by the Company
in
respect of D&O Insurance are as set forth in Section 5.8(b) of the
Disclosure Letter.
|
| (c) |
The
obligations under this Section 5.8 shall not be terminated or modified
in
such a manner as to affect adversely any indemnitee to whom this
Section
5.8 applies without the consent of such affected indemnitee (it
being
expressly agreed that the indemnities to whom this Section 5.8
apply and
their respective heirs, successors and assigns shall be express
third-party beneficiaries of this Section 5.8). In the event Buyer
or the
Surviving Corporation (i) consolidates with or merges into any
other
Person and is not the continuing or surviving corporation or entity
of
such consolidation or merger or (ii) transfers all or substantially
all of
its properties and assets to any Person, then, and in each such
case,
proper provision shall be made so that such continuing or surviving
corporation or entity or transferee of such assets, as the case
may be,
shall assume the obligations set forth in this Section
5.8.
|
| (d) |
The
provisions of this Section 5.8 are intended to be for the benefit
of, and
shall be enforceable by, each Covered Person or indemnitee and
his or her
heirs and representatives.
|
Section
5.9 Expenses.
Except
for expenses arising out of the filing of a premerger notification and report
form under the HSR Act with respect to the Merger (which such expenses shall
be
shared equally by Buyer and the Company) and as otherwise provided in Section
7.3, each party hereto shall bear its own fees, costs and expenses incurred
in
the pursuit of the transactions contemplated by this Agreement, including
the
fees and expenses of its respective counsel, financial advisors and
accountants.
Section
5.10 Section
16 Compliance.
Prior
to
the Effective Time, the Company shall take all such steps as may be required
to
cause to be exempt under Rule 16b-3 promulgated under the Exchange Act, any
dispositions of shares of Common Stock (including derivative securities with
respect to shares of Common Stock) that are treated as dispositions under
such
rule and result from the Merger or other transactions contemplated by this
Agreement by each individual who is subject to the reporting requirements
of
Section 16(a) of the Exchange Act with respect to the Company and whose
transactions are eligible for exemption under Rule 16b-3.
Section
5.11 Supplemental
Information.
The
Company shall give prompt notice to Buyer of (i) any written notice or other
communication from any third party alleging that the consent of such third
party
is or may be required in connection with the transactions contemplated by
this
Agreement; (ii) any Company Material Adverse Effect or the occurrence of
any
event or events that would reasonably be expected to have, individually or
in
the aggregate, a Company Material Adverse Effect; (iii) the Company becoming
aware of any facts, matters or circumstances that would cause any condition
to
the obligations of Buyer or Merger Sub to effect the Merger and the other
transactions contemplated by this Agreement not to be satisfied; or (iv)
the
occurrence or existence of any event that would, or could with the passage
of
time or otherwise, make any representation or warranty contained herein (without
giving effect to any exception or qualification contained therein relating
to
materiality or a Company Material Adverse Effect) untrue in any material
respect; provided,
however,
that
the delivery of notice pursuant to this Section 5.11 shall not limit or
otherwise affect the remedies available hereunder to Buyer.
Section
5.12 Tax
Matters.
To
the
extent permitted under applicable law, the parties hereto agree to treat
the
Option Cancellation Payments with respect to the Options pursuant to Sections
2.1(e) and 2.2(g) of this Agreement as being allocable to the portion of
the
Effective Date after the Effective Time and, accordingly, that any federal
income tax deduction related to such payments shall be reflected on the
Company’s federal income Tax Return for the taxable period beginning on the day
after the Effective Date (and in a consistent manner on any applicable state,
local, or foreign income Tax Returns).
Section
5.13 State
Takeover Statutes; Rights Agreement.
| (a) |
Buyer,
the Company and their respective Board of Directors shall (i) take
all
reasonable action necessary to ensure that no state takeover statute
or
similar statute or regulation is or becomes applicable to this
Agreement,
or the transactions contemplated by this Agreement and (ii) if
any state
takeover statute or similar statute becomes applicable to this
Agreement
or the transactions contemplated by this Agreement, take all reasonable
action necessary to ensure that the transactions contemplated by
this
Agreement may be consummated as promptly as practicable on the
terms
contemplated by this Agreement and otherwise to minimize the effect
of
such statute or regulation on this Agreement or the transactions
contemplated by this Agreement.
|
| (b) |
The
Board of Directors of the Company shall take all action to the
extent
necessary in order to render the Rights Agreement inapplicable
to the
Merger and the other transactions contemplated by this Agreement.
Except
in connection with the foregoing sentence, the Board of Directors
of the
Company shall not, without the prior written consent of Buyer,
(i) amend or waive any provision of the Rights Agreement; or (ii)
take any action with respect to, or make any determination under,
the
Rights Agreement, including a redemption of the Rights, in each
case in
order to facilitate any Takeover Proposal with respect to the
Company.
|
Section
5.14 Employee
Benefit Matters.
| (a) |
Buyer
hereby agrees that it shall provide (or cause the Surviving Corporation
to
provide) health benefits to any employees of the Company
and its Subsidiaries that are offered (and accept) continued employment
by
the Surviving Corporation, Buyer or its Subsidiaries under an arrangement
substantially similar to that provided to Buyer’s or its Subsidiaries’
similarly-situated employees.
|
| (b) |
Employees
of the Company
and its Subsidiaries that are offered (and accept) employment
with the
Buyer and its Subsidiaries, and their eligible dependents, shall
receive
credit for all purposes (including, without limitation, for purposes
of
eligibility to participate, vesting, benefit accrual and eligibility
to
receive benefits) under any employee benefit plan, program or
arrangement
established or maintained by Buyer, the Surviving Corporation
or any of
their respective Subsidiaries for service accrued or, in accordance
with
policies in effect on the date hereof, deemed accrued prior to
the
Effective Time with the Company
or
any of its Subsidiaries to the extent that such service was credited
under
the analogous plan of the Company and its Subsidiaries; provided,
however,
that such crediting of service shall not operate to duplicate
any benefit
or the funding of any such benefit and that in no event shall
such service
be required to be counted with respect to any equity incentive
award or
for purposes of benefit accrual under any defined benefit pension
plan. In
addition, for purposes of participation by employees of the Company
and its Subsidiaries that are offered (and accept) continued
employment
with the Buyer, Surviving Corporation or their respective Subsidiaries,
and their eligible dependents, in any medical plan of Buyer or
its
Subsidiaries, Buyer or its applicable Subsidiary shall waive
any
preexisting condition limitations to the extent waived under
the
applicable medical plan of the Company
and, with respect to the plan year in which such employees first
participate in such medical plan, shall credit such employees
for any
out-of-pocket expenditures, deductibles and employee contributions
that
were credited under any predecessor medical plan of the Company
or
any of its Subsidiaries for such plan
year.
|
| (c) |
Buyer
hereby agrees that following the Effective Time it shall, or
shall cause
the Surviving Corporation and its Subsidiaries to, offer to pay,
subject to receipt of a general release in customary
form, severance benefits of two weeks base salary and health
insurance benefits (with the terminated employee paying the
employee’s
portion of the monthly health insurance premium) plus
two weeks of base salary and such health insurance benefit for
each full or partial year (in excess of the first full year)
of employment with the Company or any of its Subsidiaries to
(i)
management employees of the Surviving Corporation and its Subsidiaries
whose employment with any of the Surviving Corporation, Buyer
or any of
their respective Subsidiaries is terminated by the Surviving
Corporation, Buyer or any of their respective Subsidiaries without
cause within 90 days after the Closing Date and (ii) employees
who
terminate their employment with the Surviving Corporation,
Buyer or any of
their respective Subsidiaries within 90 days after the Closing
Date whose
continued employment is conditioned upon their accepting a
reduction in
base salary as in effect on the date hereof or their principal
place of employment being moved to a location more than 50
miles from
their principal place of employment as of the date hereof.
For purposes of
determining the amount of their minimum severance benefits
under this
Section 5.14(c), employees of the Company
and its Subsidiaries shall receive credit for all service accrued
and, in
accordance with policies in effect on the date hereof, deemed
accrued
prior to the Effective Time with the Company
or
any of its Subsidiaries. Notwithstanding the foregoing, an
employee who is
entitled under the WARN Act to notice of the termination of
such
employee’s employment and who is terminated prior to the expiration
of
such notice period shall not be entitled to severance upon
such
termination except to the extent the amount of severance otherwise
provided for herein with respect to such employee exceeds the
amount
payable to such employee in satisfaction of any WARN Act obligations
(and
the Company shall prior to Closing and to the extent permitted
by Law
amend any Plan or policy regarding severance as necessary in
order to give
effect thereto).
|
| (d) |
From
and after the Effective Time, Buyer shall, and shall cause
the Surviving
Corporation and its Subsidiaries to, honor in accordance
with their terms
all contracts of the Company and its Subsidiaries as in effect
immediately
prior to the date hereof between the Company or any of its
Subsidiaries
and any current or former employees or directors of the Company
or any of
its Subsidiaries as well as any commitments of the Company
or any of its
Subsidiaries made after the date hereof and consented to
by Buyer to any
current employees or directors of the
Company.
|
| (e) |
During
the period commencing on the date of this Agreement and
ending on the
Effective Time, the Company shall use reasonable best
efforts to file any
and all outstanding annual reports on Form 5500 in respect
of the Plans
with the United States Department of Labor (“DOL”)
under the DOL’s Delinquent Filer Voluntary Compliance Program and shall
deliver to Buyer any such filings for review and comment
prior to
submission.
|
ARTICLE
VI
CONDITIONS
PRECEDENT
Section
6.1 Conditions
Precedent to Obligations of Each Party.
The
respective obligations of each party hereto to effect the Merger shall be
subject to the fulfillment or satisfaction, prior to or on the Closing Date,
of
each of the following conditions precedent, any or all of which may be waived,
in whole or in part, to the extent permitted by Section 8.4 and applicable
Law:
| (a) |
Stockholder
Approval.
This Agreement shall have been adopted by the Required Company
Stockholders.
|
| (b) |
No
Order.
No court of competent jurisdiction or other Governmental Entity
shall have
enacted, issued, promulgated, enforced or entered any order, decree,
judgment, injunction or other ruling (whether temporary, preliminary
or
permanent), in any case which is in effect and which prevents or
prohibits
consummation of the Merger.
|
| (c) |
HSR.
Any applicable waiting period, together with any extensions thereof,
under
the HSR Act shall have expired or been
terminated.
|
| (d) |
Other
Governmental Approvals.
(i) All consents, approvals or orders of, authorizations of, or
actions by
the FCC, including the FCC Consents and (ii) all State PUC approvals
under
the Laws of the Requisite Jurisdictions to consummate the Merger
and the
other transactions contemplated hereby shall have been obtained;
provided,
however,
that no such FCC Consent or State PUC approval shall impose or
be
conditioned upon Buyer’s, Merger Sub’s or their Affiliates’ agreement to
or compliance with any term, condition or restriction, or result
in the
waiver of rights asserted by any of the foregoing, that would reasonably
be likely to be materially adverse to Buyer, Surviving Corporation
or any
of their Affiliates in the reasonable judgment of
Buyer.
|
Section
6.2 Conditions
Precedent to Obligations of Buyer and Merger Sub.
The
obligations of Buyer and Merger Sub to effect the Merger shall be subject
to the
fulfillment or satisfaction, prior to or on the Closing Date, of each of
the
following conditions precedent, any or all of which may be waived, in whole
or
in part, to the extent permitted by Section 8.4 and applicable Law:
| (a) |
Representations
and Warranties.
|
(i) Each
of
the Company’s representations and warranties set forth in this Agreement shall
have been true and correct on and as of the date of this Agreement and, except
where the failure or failures to be true and correct, individually or in
the
aggregate, would not reasonably be expected to have a Company
Material
Adverse Effect, each of the Company’s representations and warranties set forth
in this Agreement shall be true and correct (without giving effect for any
materiality or Material Difference qualification) on and as of the Closing
Date
with the same effect as though such representations and warranties were made
on
and as of the Closing Date (except to the extent that such representations
and
warranties expressly relate to an earlier date, in which case such
representations and warranties shall be true and correct as of such earlier
date); provided,
however,
that
the Company’s
representations and warranties set forth in Section 3.2 (Authority; Approvals),
the second sentence of Section 3.7 and Section 3.17 (Brokers) shall be true
and
correct on and as of the Closing Date with the same effect as though such
representations and warranties were made on and as of the Closing
Date.
(ii) Notwithstanding
the foregoing, if the Company notifies Buyer in writing (a “Misrepresentation
Notice”)
after
the date hereof that one or more of the Company’s representations and warranties
set forth herein shall not have been true and correct on and as of the date
of
this Agreement, specifying in detail which representations and warranties
were
not so true and correct and disclosing all information necessary to make
such
representations and warranties so true and correct as well as all such
additional information that Buyer may request in connection therewith, then
the
Buyer shall have twenty (20) Business Days from the date of such disclosure
to
elect to terminate this Agreement. If Buyer so elects to terminate this
Agreement, then this Agreement shall thereupon terminate, which termination
shall for all purposes be deemed to be a termination in accordance with Section
7.1(d)(i). If Buyer does not so elect to terminate this Agreement prior to
the
end of such twenty (20) Business Day period, then the failure of the
representations and warranties the subject of a Misrepresentation Notice
to be
true and correct on and as of the date of this Agreement as described therein
shall be deemed waived for all purposes hereof and the condition set forth
in
Section 6.2(a)(i) above with respect to such representations and warranties
shall be deemed satisfied. Each Misrepresentation Notice delivered to Buyer
hereunder shall itself be a representation and warranty made by the Company
to
Buyer and Merger Sub for all purposes hereof and Buyer’s and Merger Sub’s
obligation to effect the Merger shall be conditioned on the Misrepresentation
Notice and all information delivered to Buyer in connection therewith being
true
and correct on and as of the date of the delivery thereof to Buyer.
| (b) |
Pending
Orders.
There shall not be pending before any court of competent jurisdiction,
and
no Governmental Entity shall have initiated any proceeding that
is
pending, seeking any order, decree, judgment, injunction or other
ruling
(whether temporary, preliminary or permanent) prohibiting the
consummation
of the Merger.
|
| (c) |
Governmental
Approvals.
Each of the consents, approvals, orders, authorizations and actions
referenced in Section 6.1(d)(i) shall have become a Final
Order.
|
| (d) |
Performance
of Obligations.
The Company shall have performed in all material respects and complied
in
all material respects with all agreements and conditions contained
in this
Agreement (other than Section 5.6(f)) that are required to be performed
or
complied with by it prior to or at the Closing
Date.
|
| (e) |
Closing
Certificate.
Buyer shall have received a certificate dated the Closing Date
and signed
by an authorized officer of the Company, certifying that the conditions
specified in Sections 6.2(a) and 6.2(d) have been
satisfied.
|
| (f) |
Company
Material Adverse Effect.
Since the date of this Agreement, no Company Material Adverse Effect
shall
have occurred and be continuing.
|
| (g) |
Performance
Measure.
The Performance Measure shall have been at least
$12,000,000.
|
| (h) |
FIRPTA
Certificate.
Buyer shall have received (i) certification from the Company, dated
no
more than thirty (30) days before the Effective Date and signed
by a
responsible corporate officer of the Company, that the Company
is not, and
has not been at any time during the five years preceding the date
of such
certification, a United States real property holding company,
as defined in Section 897(c)(2) of the Code, and (ii) a copy of
the notice
of such certification provided by the Company to the IRS in accordance
with the provisions of Treasury Regulations §1.897-2(h)(2) and a certified
mail receipt indicating the mailing of such
notice.
|
| (i) |
Director
Resignations.
The Company shall have delivered to Buyer a resignation from each
member
of the Board of Directors of the Company or comparable body for
each
Subsidiary of the Company, which shall be effective as of immediately
after the Effective Time, unless specified by Buyer no later than
five
Business Days prior to Closing.
|
| (j) |
Liens.
The liens set forth on Section 6.2(j) of the Disclosure Letter
shall have
been released and all financial statements related to such liens
shall
have been terminated.
|
Section
6.3 Conditions
Precedent to Obligations of the Company.
The
obligations of the Company to effect the Merger shall be subject to the
fulfillment or satisfaction, prior to or on the Closing Date, of each of
the
following conditions precedent, any or all of which may be waived, in whole
or
in part, to the extent permitted by Section 8.4 and applicable Law:
| (a) |
Representations
and Warranties.
Each of Buyer’s and Merger Sub’s representations and warranties contained
in this Agreement (without giving effect to any “material” or
“materiality” qualification on such representations and warranties) shall
be true and correct on and as of the date of this Agreement and
on and as
of the Closing Date with the same effect as though such representations
and warranties were made on and as of the Closing Date, except
to the
extent that such representations and warranties expressly relate
to an
earlier date, in which case such representations and warranties
shall be
as of such earlier date, except where the failure to be true and
correct,
individually or in the aggregate, would not reasonably be expected
to have
a material adverse effect on the ability of Buyer and Merger Sub
to
perform their respective obligations under this
Agreement.
|
| (b) |
Performance
of Obligations.
Buyer and Merger Sub shall have performed in all material respects
and
complied in all material respects with all agreements and conditions
contained in this Agreement that are required to be performed or
complied
with by them prior to or at the
Closing.
|
| (c) |
Closing
Certificate.
The Company shall have received a certificate dated the Closing
Date and
signed by an authorized officer of Buyer, certifying that the conditions
specified in Sections 6.3(a) and 6.3(b) have been
satisfied.
|
ARTICLE
VII
TERMINATION
Section
7.1 Termination.
This
Agreement may be terminated and the Merger may be abandoned at any time prior
to
the Effective Time as follows:
| (a) |
by
mutual written consent of Buyer and the
Company;
|
| (b) |
by
either Buyer or the Company:
|
| (i) |
if
this Agreement is not adopted by the Required Company Stockholders
at the
Company Stockholders’ Meeting or any adjournment thereof at which this
Agreement has been voted upon (if, in the case of the Company,
it has not
violated Sections 5.3, 5.4 or 5.5);
|
| (ii) |
if
the Merger shall not have been consummated by January 31, 2007,
(the
“Termination
Date”);
provided,
however,
that the right to terminate this Agreement under this Section 7.1(b)(ii)
shall not be available to any party whose breach of any provision
of this
Agreement has been the cause of, or resulted in, the failure of
the Merger
to occur on or before the Termination Date;
or
|
| (iii) |
if
there shall be any final non-appealable order, decree, ruling or
other
action issued by a Governmental Entity permanently restraining,
enjoining
or otherwise prohibiting consummation of the Merger; provided,
however,
that the right to terminate this Agreement pursuant to this Section
7.1(b)(iii) shall not be available to any party whose failure to
fulfill
any obligation under this Agreement has been a principal cause
of or
resulted in any such order, decree, ruling or other
action.
|
| (c) |
by
the Company:
|
| (i) |
if
Buyer or Merger Sub (A) shall have breached any of the covenants
or
agreements contained in this Agreement to be complied with by Buyer
or
Merger Sub such that the closing condition set forth in Section
6.3(b)
would not be satisfied or (B) there exists a breach of any representation
or warranty of Buyer or Merger Sub contained in this Agreement
such that
the closing condition set forth in Section 6.3(a) would not be
satisfied,
and, in the case of both (A) and (B), such breach is incapable
of being
cured by the Termination Date or is not cured by Buyer or Merger
Sub
within twenty (20) Business Days after Buyer or Merger Sub receives
written notice of such breach from the
Company;
|
| (ii) |
or
if, prior to the adoption of this Agreement by the Required Company
Stockholders at the Company
Stockholders’ Meeting, (A) the Company’s
Board of Directors has received a Superior Proposal, (B) the Company’s
Board of Directors determines in good faith, after consultation
with a
financial advisor of nationally recognized reputation and outside
legal
counsel, that such action is required to comply with the fiduciary
duties
of the Board of Directors to the Company’s stockholders under applicable
Law, (C) the Company has complied with Sections 5.3, 5.4 and 5.5
and (D)
at the time of such termination, Buyer has received the fee set
forth in
Section 7.3, provided that the Company’s Board of Directors shall only be
able to terminate this Agreement pursuant to this clause (ii) after
three
(3) Business Days following Buyer’s receipt of written notice advising
Buyer that the Company’s Board of Directors is prepared to do so, and only
if, during such three (3) Business Day period, the Company and
its
advisors shall have negotiated in good faith with Buyer to make
such
adjustments in the terms and conditions of this Agreement as would
enable
the parties hereto to proceed with the transactions contemplated
herein on
such adjusted terms.
|
| (d) |
by
Buyer:
|
| (i) |
if
the Company (A) shall have breached any of the covenants or agreements
contained in this Agreement to be complied with by the Company
such that
the closing condition set forth in Section 6.2(d) would not be
satisfied
or (B) there exists a breach of any representation or warranty
of the
Company contained in this Agreement such that the closing condition
set
forth in Section 6.2(a) would not be satisfied, and, in the case
of both
(A) and (B), such breach is incapable of being cured by the Termination
Date or is not cured by the Company within twenty (20) Business
Days after
the Company receives written notice of such breach from Buyer or
Merger
Sub; or
|
| (ii) |
if,
prior to the adoption of this Agreement by the Required Company
Stockholders at the Company Stockholders’ Meeting, (A) a Company Adverse
Recommendation Change shall have occurred; (B) the Company shall
have
failed to include in the Proxy Statement the recommendation of
the Board
of Directors of the Company that its stockholders vote in favor
of the
Merger and the transactions contemplated hereby; (C) the Board
of
Directors of the Company fails publicly to reaffirm its recommendation
of
this Agreement, the Merger or the other transactions contemplated
by this
Agreement within ten (10) days after Buyer requests in writing
that such
recommendation or determination be reaffirmed; (D) a tender or
exchange
offer relating to any shares of Common Stock will have been commenced
and
the Company will not have sent to its security holders, within
ten (10)
days after the commencement of such tender or exchange offer, a
statement
disclosing that the Company recommends rejection of such tender
or
exchange offer; (E) a Takeover Proposal is publicly announced,
and the
Company fails to issue, within ten (10) days after such Takeover
Proposal
is announced, a press release that reaffirms the recommendation
of the
Board of Directors of the Company that its stockholders vote in
favor of
the Merger and the transactions contemplated hereby; or (F) the
Company
has breached any of its obligations under Sections 5.3 or 5.4
to call, give notice of, convene and hold the Company Stockholders’
Meeting and timely mail the Proxy Statement as contemplated thereby,
which
has not been cured (or is not capable of being cured) within ten
(10)
Business Days following receipt by the Company of written notice
of such
breach.
|
Section
7.2 Effect
of Termination and Abandonment.
In
the
event of termination of this Agreement and the abandonment of the Merger
pursuant to this Article VII, written notice thereof shall be given to the
other
parties hereto, and this Agreement (other than as set forth in this Article
VII
and other than Sections 5.2(b) (Confidentiality), 5.7 (Public Announcements),
5.9 (Expenses), and Articles VIII and IX) shall become void and of no effect
with no liability on the part of any party hereto (or of any of its respective
directors, officers, employees, Affiliates, agents, legal and financial advisors
or other representatives); provided,
however,
that
except as otherwise provided herein, no such termination shall relieve any
party
hereto of any liability or damages resulting from any willful breach of this
Agreement. If this Agreement is terminated and the Merger is abandoned pursuant
to this Article VII, all confidential information received by Buyer or its
representatives and Affiliates with respect to the Company, its Subsidiaries
and
their respective Affiliates shall be treated in accordance with the
Confidentiality Agreement, which shall remain in full force and effect
notwithstanding the termination of this Agreement.
Section
7.3 Termination
Fee.
| (a) |
If
this Agreement shall be terminated pursuant
to:
|
| (i) |
Section
7.1(b)(i), 7.1(b)(ii) or 7.1(d)(i) and (x)
at
any time after the date hereof and before such termination a Takeover
Proposal shall have been publicly announced or otherwise communicated
to
the Company’s Board of Directors and (y) within
twelve (12) months of the termination of this Agreement, the Company
enters into a definitive agreement with any third party with respect
to a
Takeover Proposal or any such transaction involving a Takeover
Proposal is
consummated; or
|
| (ii) |
Section
7.1(c)(ii) or 7.1(d)(ii) hereof,
|
then
the
Company shall (1) in the case of termination pursuant to clause (i) of this
Section 7.3(a), upon the consummation of a transaction referenced in clause
(y)
thereof,
(2) in the case of termination pursuant to Section 7.1(d)(ii), not later
than
the close of business on the Business Day following such termination, or
(3) in
the case of termination pursuant to Section 7.1(c)(ii), on the date of such
termination, pay Buyer a non-refundable fee in an amount equal to six million
two hundred fifty thousand dollars ($6,250,000) (the “Termination
Fee”),
payable by wire transfer of immediately available funds to an account designated
in writing to the Company by Buyer. For purposes of this paragraph (a),
“Takeover Proposal” shall have the meaning assigned to such term in Section 9.1,
except that all references to “15%” shall be changed to “35%”.
| (b) |
If
this Agreement is terminated under any of the circumstances described
in
Section 7.3(a) (but with respect to Section 7.3(a)(i), without
regard to
whether any of the circumstances described in clause (y) thereof
have
occurred), the Company shall reimburse Buyer for all its documented
out-of-pocket fees and expenses up to a maximum amount of $1,250,000
(including attorney’s fees and any commitment and other fees payable by
Buyer under any financing commitment letter Buyer has secured)
incurred in
connection herewith and the transactions contemplated hereby (the
“Company
Expense Reimbursement Amount”),
which reimbursement shall be made in cash by wire transfer of immediately
available funds to an account designated in writing to the Company
by
Buyer, not later than the close of business on the fifth (5th)
Business
Day following such termination. Notwithstanding anything to the
contrary
in this Agreement, the parties hereby acknowledge that in the event
that
both the Termination Fee and the Company Expense Reimbursement
Amount are
paid by the Company pursuant to this Section 7.3, the Termination
Fee and
Company Expense Reimbursement Amount shall be Buyer’s and Merger Sub’s
sole and exclusive remedy for monetary damages under this
Agreement.
|
| (c) |
If
the Company fails to promptly pay the Termination Fee or the Company
Expense Reimbursement Amount, and, in order to obtain such payment
Buyer
commences a suit that results in a judgment against the Company
for the
Termination Fee or the Company Expense Reimbursement Amount, the
Company
shall pay to Buyer its costs and expenses (including attorney’s fees) in
connection with such suit, together with interest on the amount
of the
Termination Fee at a rate equal to the prime rate announced from
time to
time by Wachovia Bank, National Association plus 3% per annum.
|
ARTICLE
VIII
MISCELLANEOUS
Section
8.1 Entire
Agreement.
This
Agreement (including the annexes, exhibits and schedules hereto) and the
Confidentiality Agreement set forth the entire understanding of the parties
hereto with respect to the transactions contemplated hereby, and, except
as set
forth in this Agreement, there are no representations or warranties, express
or
implied, made by any party to this Agreement with respect to the subject
matter
of this Agreement and the Confidentiality Agreement. Except for the matters
set
forth in the Confidentiality Agreement, any and all previous agreements and
understandings between or among the parties hereto regarding the subject
matter
hereof, whether written or oral, are superseded by this Agreement and the
agreements referred to or contemplated herein.
Section
8.2 Assignment
and Binding Effect; Third Party Beneficiaries.
| (a) |
This
Agreement shall not be assigned by any party hereto without the
prior
written consent of the other parties hereto; provided,
however,
that Buyer shall be permitted to (i) assign this Agreement to any
Affiliate of Buyer (provided
that Buyer shall remain liable for all of its obligations hereunder
following such assignment) and (ii) from and after the Effective
Time,
grant a collateral security interest in its rights hereunder to
its
lenders. All the terms and provisions of this Agreement shall be
binding
upon and inure to the benefit of and be enforceable by the respective
successors and assigns of the parties
hereto.
|
| (b) |
Except
as provided in Section 5.8(c), nothing in this Agreement, express
or
implied, is intended or shall be construed to create any third-party
beneficiaries of this Agreement; provided, however,
that from and after the Effective Time, the Stockholders, the Option
Holders and the Warrant Holders shall be deemed third-party beneficiaries
solely for purposes of, and with respect to, the right to receive,
respectively, the Common Stock Consideration, the Option Cancellation
Payments and the Warrant Cancellation Payments in accordance with
Article
II.
|
Section
8.3 Notices.
Any
notice, request, demand, waiver, consent, approval, or other communication
which
is required or permitted to be given to any party hereunder shall be in writing
and shall be deemed given only if delivered to such party personally or sent
to
such party by facsimile transmission (promptly followed by a hard-copy delivered
in accordance with this Section 8.3) or by registered or certified mail (return
receipt requested), with postage and registration or certification fees thereon
prepaid, addressed to the party at its address set forth below:
If
to
Buyer, Merger Sub or the Surviving Corporation:
Cavalier
Telephone Corporation
▇▇▇▇
▇▇▇▇
▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn:
▇▇▇▇ ▇. ▇▇▇▇▇, President
Facsimile:
804.254.9029
with
a
copy to:
▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇ & Dodge LLP
▇▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn:
▇▇▇▇▇▇▇ ▇. Slap
Facsimile:
617.227.4420
If
to the
Company:
Talk
America Holdings, Inc.
▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇
▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn:
▇▇▇▇▇▇▇▇ ▇. Lawn IV
Facsimile:
215.862.1960
with
a
copy to:
▇▇▇▇▇
& ▇▇▇▇▇▇▇▇ LLP
▇▇▇▇
▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇
▇▇▇▇,
▇▇ ▇▇▇▇▇
Attn:
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Facsimile:
212.310.1745
or
to
such other address or Person as any party hereto may have specified in a
notice
duly given to the other parties hereto as provided herein. Such notice, request,
demand, waiver, consent, approval or other communication will be deemed to
have
been given as of the date so delivered, telecopied or mailed.
Section
8.4 Amendment
and Modification; Waiver.
| (a) |
This
Agreement may be amended by the parties hereto by action taken
by or on
behalf of their respective Boards of Directors at any time prior
to the
Effective Time; provided,
however,
that, after approval of the Merger by the stockholders of the Company,
no
amendment may be made that, by Law, requires further approval by
such
stockholders. This Agreement may not be amended except by an instrument
in
writing signed by the parties
hereto.
|
| (b) |
At
any time prior to the Effective Time, Buyer and Merger Sub, on
the one
hand, and the Company, on the other hand, may (i) extend the time
for the
performance of any of the obligations or other acts of the other;
(ii)
waive any inaccuracies in the representations and warranties of
the other
contained herein or in any document delivered pursuant hereto;
and
(iii) waive compliance by the other with any of the agreements or
conditions contained herein; provided,
however,
that after any approval of the Merger by the stockholders of the
Company,
there may not be any extension or waiver of this Agreement or any
portion
thereof which, by Law, requires further approval by such stockholders.
Any
such extension or waiver shall be valid only if set forth in an
instrument
in writing signed by the party or parties to be bound thereby,
but such
extension or waiver or failure to insist on strict compliance with
an
obligation, covenant, agreement or condition shall not operate
as a waiver
of, or estoppel with respect to, any subsequent or other
failure.
|
Section
8.5 Governing
Law; Consent to Jurisdiction.
| (a) |
THIS
AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH,
THE LAWS
OF THE STATE OF DELAWARE WITHOUT GIVING EFFECT TO THE CONFLICTS
OR CHOICE
OF LAW PROVISIONS THEREOF THAT WOULD GIVE RISE TO THE APPLICATION
OF THE
DOMESTIC SUBSTANTIVE LAW OF ANY OTHER
JURISDICTION.
|
| (b) |
All
actions, suits and proceedings arising out of or relating to this
Agreement shall be heard and determined exclusively in any Delaware
state
or federal court. The parties hereto hereby (a) submit to the
exclusive jurisdiction of any state or federal court sitting in
the State
of Delaware for the purpose of any action, suit or proceeding arising
out
of or relating to this Agreement brought by any party hereto, and
(b)
irrevocably waive, and agree not to assert by way of motion, defense,
or
otherwise, in any such action, suit, or proceeding, any claim that
it is
not subject personally to the jurisdiction of the above-named courts,
that
its property is exempt or immune from attachment or execution,
that such
action, suit or proceeding is brought in an inconvenient forum,
that the
venue of such action, suit or proceeding is improper, or that this
Agreement or the transactions contemplated hereby may not be enforced
in
or by any of the above-named
courts.
|
Section
8.6 Waiver
of Jury Trial.
EACH
OF
THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY
JURY
IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE
CONFIDENTIALITY AGREEMENT OR BY THE TRANSACTIONS CONTEMPLATED HEREBY OR
THEREBY.
Section
8.7 Severability.
If
any
term or other provision of this Agreement is determined to be invalid, illegal
or incapable of being enforced by any rule of law or public policy, all other
terms and provisions of the Agreement shall remain in full force and effect.
Upon such determination, the parties hereto shall negotiate in good faith
to
modify this Agreement so as to give effect to the original intent of the
parties
hereto to the fullest extent permitted by applicable Law.
Section
8.8 Counterparts.
This
Agreement may be executed in one or more counterparts (including by facsimile),
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
Section
8.9 Enforcement.
The
parties hereto agree that irreparable damage would occur in the event that
any
of the provisions of this Agreement were not performed in accordance with
their
specific terms or were otherwise breached. It is accordingly agreed that
the
parties hereto shall be entitled to an injunction or injunctions to prevent
breaches of this Agreement and to enforce specifically the terms and provisions
of this Agreement in any court in the United States or any state having
jurisdiction, subject to Section 8.5(b), this being in addition to any other
remedy to which they are entitled at law or in equity.
Section
8.10 Non-Survival
of Representations and Warranties.
Notwithstanding
anything to the contrary contained herein, no representations or warranties
in
this Agreement or in any instrument delivered pursuant to this Agreement
shall
survive the Effective Time, and only those covenants and agreements contained
herein that by their terms are to be performed after the Effective Time shall
survive the Effective Time.
Section
8.11 Disclosure
Letter.
The
representations and warranties contained in Article III are qualified by
reference to the Disclosure Letter. A matter set forth in one section of
the
Disclosure Letter need not be set forth in any other section of the Disclosure
Letter so long as its relevance to the latter section of the Disclosure Letter
or section of the Agreement is reasonably apparent on the face of the
information disclosed in the Disclosure Letter to the person to which such
disclosure is being made. The parties hereto agree that the Disclosure Letter
is
not intended to constitute, and shall not be construed as constituting,
representations and warranties of the Company except to the extent expressly
provided in this Agreement. Buyer and Merger Sub acknowledge that (i) the
Disclosure Letter may include items or information that the Company is not
required to disclose under this Agreement, (ii) inclusion of information
in the
Disclosure Letter shall not be construed as an admission that such information
is material to the Company and (iii) without limitation of the foregoing,
the
information required to be disclosed by this Agreement and the dollar thresholds
set forth herein shall not be used as a basis for interpreting the term,
“Company Material Adverse Effect” or other similar terms in this Agreement.
Similarly, in such matters where a representation or warranty is given or
other
information is provided, the disclosure of any matter in the Disclosure Letter
shall not imply that any other undisclosed matter having a greater value
or
other significance is material. Buyer and Merger Sub further acknowledge
that
headings have been inserted on Sections of the Disclosure Letter for the
convenience of reference only and shall not affect the construction or
interpretation of any of the provisions of this Agreement or the Disclosure
Letter.
ARTICLE
IX
DEFINED
TERMS; INTERPRETATION
Section
9.1 Defined
Terms.
As
used
in this Agreement, the terms set forth below shall have the following
meanings:
| (a) |
“Affiliate”
of a Person means any other Person who directly or indirectly through
one
or more intermediaries Controls, is Controlled by or is under common
Control with such Person.
|
| (b) |
“Business
Day”
means a day other than Saturday or Sunday or a day on which banks
are
required or authorized to close in the State of
Delaware.
|
| (c) |
“Capital
Securities”
means as to any Person that is a corporation, the authorized shares
of
such Person’s capital stock, including all classes of common, preferred,
voting and nonvoting capital stock, and, as to any Person that
is not a
corporation or an individual, the ownership or membership interests
in
such Person, including, without limitation, the right to share
in profits
and losses, the right to receive distributions of cash and property,
and
the right to receive allocations of items of income, gain, loss,
deduction
and credit and similar items from such Person, whether or not such
interests include voting or similar rights entitling the holder
thereof to
exercise control over such Person.
|
| (d) |
“Code”
means the Internal Revenue Code of 1986, as
amended.
|
| (e) |
“Common
Stock”
means the common stock of the Company, par value $0.01 per
share.
|
| (f) |
“Company
Material Adverse Effect”
means any event, change or effect regarding or affecting the Company
and
its Subsidiaries that has had, or would reasonably be expected
to have, a
material adverse effect on either:
|
| (A) |
the
business, operation, financial condition, assets, liabilities or
results
of operations of the Company and its Subsidiaries, taken as a whole,
other
than such event, change or effect resulting from (i) changes in
unbundled
network element availability and rates consistent and in accordance
with
the rules, regulations and Laws established, applied or implemented
by the
FCC or applicable State PUC’s, (ii) occurrences, changes or conditions
relating to or affecting the United States economy or securities
or
financial markets generally or the industries in which the Company
operates that in either case do not disproportionately affect the
Company
and its Subsidiaries relative to similarly situated companies,
(iii) the
announcement or consummation of this Agreement, the Merger or the
transactions contemplated hereby or compliance with the terms hereof,
(iv)
changes in applicable Laws or the application thereof after the
date
hereof that do not disproportionately affect the Company
and its Subsidiaries relative to similarly situated companies,
(v) changes in GAAP after the date hereof or (vi) any action taken
by
Buyer or its Affiliates with respect to the transactions contemplated
hereby or with respect to the Company
or
its Subsidiaries, including Buyer’s unreasonably withholding its consent
to the Company’s taking any action otherwise prohibited under Section
5.1(b)(vii), (xii) or (xiii); or
|
| (B) |
the
ability of the Company
to
perform its obligations under this Agreement or to consummate the
transactions contemplated hereby.
|
| (g) |
“Confidentiality
Agreement”
means the letter agreement, dated as of July 19, 2006 between the
Company
and Buyer, as amended by the Company’s email correspondence to Buyer dated
August 14, 2006.
|
| (h) |
“Control”
means the direct or indirect possession of the power to elect at
least a
majority of the Board of Directors or other governing body of a
Person
through the ownership of Capital Securities, by contract or otherwise
or,
if no such governing body exists, the direct or indirect ownership
of 50%
or more of the Capital Securities of a
Person.
|
| (i) |
“Encumbrances”
means Liens, security interests, deeds of trust, encroachments,
reservations, orders of Governmental Entities, decrees or judgments
of any
kind.
|
| (j) |
“Environmental
Laws”
means all applicable Laws relating to protection and clean-up of
the
environment and activities or conditions related thereto, including
those
relating to the generation, handling, disposal, transportation,
Release,
Remediation of, or exposure of Persons to Hazardous
Substances.
|
| (k) |
“ERISA”
means the Employee Retirement Income Security Act of 1974, as amended,
and
all Laws promulgated pursuant thereto or in connection
therewith.
|
| (l) |
“ERISA
Affiliate”
means, with respect to any Person, (i) a member of any “controlled group”
(as defined in Section 414(b) of the Code) of which that Person
is also a
member; (ii) a trade or business, whether or not incorporated,
under
common control (within the meaning of Section 414(c) of the Code)
with
that Person; or (iii) a member of any affiliated service group
(within the
meaning of Section 414(m) of the Code) of which that Person is
also a
member, any of which includes or included the Company or a Subsidiary
of
the Company.
|
| (m) |
“Final
Order”
means an action or decision that has been granted by the FCC or
any State
PUC or Municipal Franchise Authority as to which (a) no request
for a stay
or similar request is pending, no stay is in effect, the action
or
decision has not been vacated, reversed, set aside, annulled or
suspended
and any deadline for filing such request that may be designated
by statute
or regulation has passed; (b) no petition for rehearing or reconsideration
or application for review is pending and the time for the filing
of any
such petition or application has passed; (c) neither the FCC nor
the
issuing State PUC or Municipal Franchise Authority, as appropriate,
has
the action or decision under reconsideration on its own motion
and the
time within which it may effect such reconsideration has passed;
and (d)
no appeal is pending, including other administrative or judicial
review,
or in effect and any deadline for filing any such appeal that may
be
designated by statute or rule has
passed.
|
| (n) |
“GAAP”
means United States generally accepted accounting
principles.
|
| (o) |
“Governmental
Entity”
means any United States or other national, state, municipal or
local
government, domestic or foreign, any subdivision, agency, entity,
commission or authority thereof, or any quasi-governmental or private
body
exercising any regulatory, taxing, importing or other governmental
or
quasi-governmental authority.
|
| (p) |
“Hazardous
Substances”
means any and all hazardous or toxic substances, wastes or materials,
any
pollutants, contaminants or dangerous materials (including, without
limitation, polychlorinated biphenyls, asbestos, volatile and
semi-volatile organic compounds, oil, petroleum products and fractions,
and any materials which include hazardous constituents or become
hazardous, toxic, or dangerous when their composition or state
is
changed), or any other similar substances or materials which are
included
under or regulated by any Environmental
Laws.
|
| (q) |
“Intellectual
Property”
means any and all of the following in the United States or any
other
jurisdiction throughout the world: (i) all inventions (whether
patentable
or unpatentable and whether or not reduced to practice), all improvements
thereto, and all patents and patent rights, patent applications,
and
patent disclosures, together with all reissuances, continuations,
continuations-in-part, revisions, amendments divisionals, extensions,
and
reexaminations thereof (collectively, “Patents”);
(ii) all trademarks, service marks, designs, trade dress, logos,
slogans,
trade names, business names, corporate names, and Internet domain
names,
together with all translations, adaptations, derivations, and combinations
thereof, whether registered or unregistered, all applications,
registrations, and renewals in connection therewith, and all goodwill
associated with any of the foregoing (collectively, “Marks”);
(iii) all works of authorship, copyrights, and moral rights, and
all
applications, registrations, and renewals in connection therewith
(collectively, “Copyrights”);
(iv) all trade secrets and confidential information (including
ideas,
research and development, know-how, compositions, technical data,
designs,
drawings, specifications, customer and supplier lists, pricing
and cost
information, and business and marketing plans and proposals),
technologies, processes, formulae, algorithms, architectures, layouts,
look-and-feel, designs, specifications, and methodologies, in each
case
that derives economic value (actual or potential) from not being
generally
known to other Persons who can obtain economic value from its disclosure
or use, excluding any Patents or Copyrights that may cover or protect
any
of the foregoing (collectively, “Trade
Secrets”);
(v) all software, including source code, executable code, data,
databases,
Web sites, firmware, and related documentation (collectively,
“Software”);
and (vii) all other proprietary, intellectual or industrial property
rights of any kind or nature that do not comprise or are not protected
by
Patents, Marks, Copyrights, Trade Secrets or
Software.
|
| (r) |
“IT
Expenditures”
means any capital expenditures or commitments or additions, whether
tangible or intangible, relating to or arising out of the Company’s or any
of its Subsidiaries’ information technology infrastructure (including,
without limitation, network software and hardware, back-office
systems and
related items), but does not include software development
costs.
|
| (s) |
“knowledge
of the Company”
or “to the Company’s knowledge” or similar words means the current actual
knowledge, after due inquiry, of any of the individuals listed
in Section
9.1(s) of the Disclosure
Letter.
|
| (t) |
“Laws”
means all foreign, federal, state and local constitutions, statutes,
laws,
ordinances, regulations, rules, resolutions, orders, determinations,
writs, injunctions, awards (including, without limitation, awards
of any
arbitrator), judgments and decrees applicable to the specified
Persons.
|
| (u) |
“Letter
of Transmittal”
means (i) a letter of transmittal in customary form (which shall
specify
that delivery shall be effected, and risk of loss and title to
the
Certificates shall pass, only upon proper delivery to the Paying
Agent by
a Stockholder or a Warrant Holder, as the case may be, of his,
her or its
Certificates in accordance with the instructions thereto), together
with
(ii) the instructions thereto for use in effecting the surrender
of the
Certificates in exchange for the consideration contemplated to
be paid
pursuant to this Agreement, each in form and substance reasonably
acceptable to Buyer and the
Company.
|
| (v) |
“Liens”
means any mortgage, pledge, lien, conditional or installment sale
agreement, encumbrance, covenants, conditions, restrictions, charge
or
other claims or interests of third parties of any
kind.
|
| (w) |
“Material
Difference”
means with respect to a representation and warranty so qualified,
any
Undisclosed Conditions with respect to such representation and
warranty that, when added to the amount of all Undisclosed Conditions
of all other representations and warranties so qualified, equals
or
exceeds $7,500,000.
|
| (x) |
“Municipal
Franchising Authority”
means any municipal Governmental Entity with authority over the
Company
and its Subsidiaries.
|
| (y) |
“Option
Cancellation Payment”
means, with respect to each Option, an amount equal to the product
of (i)
the number of shares of Common Stock subject to such Option, multiplied
by
(ii) (x)
the Common Stock Consideration, minus (y)
the per share exercise price of the
Option.
|
| (z) |
“Option
Holder”
means a Person holding Options.
|
| (aa) |
“Options”
means the issued and outstanding options to purchase shares of
Common
Stock granted pursuant to a Stock
Plan.
|
| (bb) |
“Paying
Agent”
means a financial institution selected by Buyer, which is reasonably
acceptable to the Company, and which has been appointed to act
as agent
for the holders of shares of Common Stock and Warrants in connection
with
the Merger and to receive the funds to which such holders shall
become
entitled pursuant to Article II.
|
| (cc) |
“Performance
Measure”
means the consolidated operating income of the Company and its
consolidated Subsidiaries for the Company’s fiscal quarter ending
September 30, 2006 as included in the Company’s consolidated financial
statements included in its Quarterly Report for the quarter ending
September 30, 2006 and filed with the SEC, plus
the amounts of each of the following included in such operating
income for
such quarter:
|
(i)
depreciation and amortization, stock-based compensation expense and losses
on
the sale of property and equipment;
(ii)
all
legal, accounting and financial advisor fees (including any fairness opinion
fees) and expenses incurred in the preparation, negotiation, approval or
performance of this Agreement or otherwise in connection herewith;
(iii)
any
amounts that may be required to be accrued by reason of the execution of
this
Agreement or the transactions contemplated hereby;
(iv)
any
expenses or charge related to the impairment of assets or goodwill;
(v)
any
charges or accruals related to any minimum contractual commitments; and
(vi)
any
charges or accruals related to the reconciliation of NT Corporation network
cost
accruals;
minus
the
amount of any gains on the sale of property and equipment included in such
operating income for such quarter.
| (dd) |
“Person”
means any individual, corporation, partnership, limited partnership,
limited liability company, trust, business trust, joint stock company,
unincorporated association, joint venture, Governmental Entity
or other
entity or organization.
|
| (ee) |
“Release”
when used in connection with Hazardous Substances, has the meaning
ascribed to that term in 42 U.S.C. §
9601(22).
|
| (ff) |
“Remediation”
means (a) any remedial action, response or removal as those terms
are
defined in 42 U.S.C. § 9601; or (b) any “corrective action” as that term
has been construed by Governmental Entities pursuant to 42 U.S.C.
§
6924.
|
| (gg) |
“Requisite
Jurisdictions”
means Delaware, Georgia, Maryland, Michigan, New York, Ohio, Pennsylvania
and Virginia and each other state where the failure to obtain the
requisite State PUC approval would materially disrupt or interfere
with
Buyer’s, the Surviving Corporation’s or their respective Subsidiaries’
businesses or operations or otherwise subject any of them to fines
or
other material sanctions.
|
| (hh) |
“Restricted
Stock”
means any outstanding share of Common Stock issued by the Company
pursuant
to a Stock Plan or otherwise that is subject to vesting or other
ownership
or transfer restrictions imposed by the Company (other than transfer
restrictions pursuant to federal or state securities
laws).
|
| (ii) |
“Rights”
means, collectively, the rights issued under the Rights
Agreement.
|
| (jj) |
“Rights
Agreement”
means the Rights Agreement, dated as of August 19, 1999, as amended,
by
and between the Company and Stocktrans, Inc., as the successor
rights
agent thereunder.
|
| (kk) |
“Securities
Act”
means the Securities Act of 1933, as
amended.
|
| (ll) |
“Stockholder”
means any holder of record of shares of Common Stock immediately
prior to
the Effective Time.
|
| (mm) |
“Stock
Plan(s)”
means the Company's 1998 Long Term Incentive Plan, 2000 Long Term
Incentive Plan, 2001 Long Term Incentive Plan, 2003 Long Term Incentive
Plan, 2005 Incentive Plan and the Restated Access One Communications
Corp.
1999 Stock Option Plan, Options disclosed in Section 3.3(d) of
the
Disclosure Letter not granted under one or more of the aforementioned
plans and the Talk America Employee Stock Purchase
Plan.
|
| (nn) |
“Subsidiary”
of any Person means another Person under the Control of such
Person.
|
| (oo) |
“Superior
Proposal”
means a bona
fide
written Takeover Proposal (except that references in the definition
of
“Takeover Proposal” to “15%” should be replaced by “50%”), on terms that
the Company’s Board of Directors determines in good faith (after
consultation with its financial advisors and taking into account
all of
the terms and conditions of the Takeover Proposal and this Agreement
deemed relevant by the Board, including any termination or break-up
fees,
conditions to and expected timing and risks of consummation and
the
ability of the party making such proposal to obtain financing for
such
Takeover Proposal, and taking into account all legal, financial,
regulatory and other aspects of the proposal) would result in a
transaction that is more favorable, from a financial point of view,
to
holders of the Common Stock than the
Merger.
|
| (pp) |
“Takeover
Proposal”
means, other than the transactions contemplated by this Agreement,
any
offer or proposal, or any indication of interest from any Person
or group
relating to any (i) direct or indirect acquisition or purchase
of a
business that constitutes 15% or more of the net revenues, net
income or
assets of the Company or its Subsidiaries, taken as a whole; (ii)
direct
or indirect acquisition or purchase of 15% or more of the voting
power of
the Company; (iii) tender offer or exchange offer that, if consummated,
would result in any Person beneficially owning 15% or more of the
voting
power of the Company; or (iv) merger, consolidation, business combination,
recapitalization, liquidation, dissolution or similar transaction
involving the Company or any of its
Subsidiaries.
|
| (qq) |
“Tax”
(and, with correlative meaning, “Taxes” and “Taxable”) means any
and all United States federal, state, local, or foreign taxes,
charges,
fees, duties, levies, deficiencies or other assessments of whatever
kind
or nature, including without limitation all net income, gross income,
profits, gross receipts, excise, value added, real or personal
property,
sales, ad valorem, withholding, social security, social insurance,
retirement, employment, unemployment, minimum estimated, severance,
stamp,
property, occupation, environmental, windfall profits, use, service,
net
worth, payroll, franchise, license, gains, customs, transfer, recording
and other taxes, fees, assessments or charges of any kind whatsoever,
imposed by any taxing authority, including any liability therefor
for a
predecessor entity or as a transferee under Section 6901 of the
Code or
any similar provision of applicable United States federal, state,
local,
or foreign law, as a result of U.S. Treasury Regulation §1.1502-6 or any
similar provision of federal, state, local or foreign applicable
law, or
as a result of any Tax sharing or similar agreement, together with
any
interest, penalties or additions to tax relating thereto.
|
| (rr) |
“Tax
Return”
means any
return, declaration, report, claim for refund, information return,
or
statement, and any schedule, attachment, or amendment thereto,
including
without limitation any consolidated, combined, or unitary return
or other
document and any schedule, attachment, or amendment thereto, filed
or
required to be filed by any taxing authority in connection with
the
determination, assessment, collection, imposition, payment, refund
or
credit of any United States federal, state, local, or foreign Tax
or the
administration of the laws relating to any Tax.
|
| (ss) |
“Undisclosed
Conditions”
means with respect to any representation or warranty qualified
by a
“Material Difference” standard, a loss, liability, obligation or
out-of-pocket cost to or of the Company or any of its Subsidiaries
in
excess of the amount of any established reserve specified on the
June
30 Balance
Sheet or other work papers disclosed or otherwise made available
to
Buyer with
respect to the subject matter of such representation and warranty
that
would have to be disclosed in such representation and warranty in
order for such representation and warranty to be true and
correct as written without regard to such
qualification.
|
| (t) |
“WARN
Act”
means The Worker Adjustment and Retraining Notification Act, as
amended.
|
| (uu) |
“Warrant
Cancellation Payment”
means, with respect to each Warrant, the product of (i) the number
of
shares of Common Stock subject to such Warrant immediately prior
to the
Effective Time, multiplied by (ii) (x)
the Common Stock Consideration, minus (y)
the per share exercise price of the
Warrant.
|
| (vv) |
“Warrant
Holder”
means a Person holding Warrants.
|
| (ww) |
“Warrants”
means the issued and outstanding warrants to purchase shares of
Common
Stock.
|
Section
9.2 Terms
Defined Elsewhere.
The
following terms are defined elsewhere in this Agreement, as indicated
below:
2005
Balance Sheet Section
3.5(c)
Acquisition
Agreement Section
5.5(b)
Agreement Preamble
Buyer Preamble
Certificate
of Merger Section
1.2
Certificates Section
2.2(b)
Closing Section
1.2
Closing
Date Section
1.2
Common
Stock Consideration Section
2.1(c)
Communications
Licenses Section
3.12(c)
Company Preamble
Company
Adverse Recommendation Change Section
5.5(b)
Company
Board Section
3.2(b)
Company
Expense Reimbursement Amount Section
7.3(b)
Company
Registered Copyrights Section
3.13(a)
Company
Registered IP Section
3.13(a)
Company
Registered Marks Section
3.13(a)
Company
Registered Patents Section
3.13(a)
Company
SEC Reports Section
3.5(a)
Company
Stockholders’ Meeting Section
5.4
Copyrights Section
9.1(r)
Covered
Persons Section
5.8(a)
D&O
Insurance Section
5.6(b)
Department
of Labor Section
5.14(d)
DGCL Introduction
Disclosure
Letter Article
3
Dissenting
Shares Section
2.4(a)
Effective
Date Section
1.2
Effective
Time Section
1.2
Exchange
Act Section
3.5(a)
FCC Section
3.4(b)
FCC
Consents Section
5.6(a)
HSR
Act Section
3.4(b)
Inbound
License Agreements Section
3.13(d)
Indemnified
Parties Section
5.8(a)
June
30 Balance Sheet Section
3.5(c)
Marks Section
9.1(r)
Material
Contract Section
3.9(a)
Merger Introduction
Merger
Sub Preamble
Misrepresentation
Notice Section
6.2(a)(i)
Municipal
Franchising Authority Consents Section
5.6(a)
Notice
of Adverse Recommendation Section
5.5(b)
NQDC
Plan Section
3.15(j)
Outbound
License Agreements Section
3.13(d)
Patents Section
9.1(r)
Permits Section
3.12(b)
Plan Section
3.15(b)
Preferred
Stock Section
3.3(a)
Proxy
Statement Section
5.3(a)
Representatives Section
5.5(a)
Required
Company Stockholders Section
3.2(c)
▇▇▇▇▇▇▇▇-▇▇▇▇▇
Act Section
3.5(d)
SEC Section
3.5(a)
Series
A Preferred Stock Section
3.3(c)
Software Section
9.1(r)
State
PUC Section
3.4(b)
State
PUC Consents Section
5.6(a)
Surviving
Corporation Section
1.1
Termination
Date Section
7.1(b)(ii)
Termination
Fee Section
7.3(a)(ii)
Trade
Secrets Section
9.1(r)
Section
9.3 Interpretation.
| (a) |
The
parties hereto and their respective counsel have participated jointly
in
the negotiation and drafting of this Agreement. In the event an
ambiguity
or question of intent or interpretation arises, this Agreement
shall be
construed as drafted jointly by the parties hereto with the advice
and
participation of counsel and no presumption or burden of proof
shall arise
favoring or disfavoring any party hereto by virtue of the authorship
of
any of the provisions of this
Agreement.
|
| (b) |
For
purposes of this Agreement: (i) the headings contained in this
Agreement
are for reference purposes only and shall in no way modify or restrict
any
of the terms or provisions hereof; (ii) except as expressly provided
herein, the terms “include,” “includes” or “including” are not limiting;
(iii) the words “hereof” and “herein” and words of similar import shall,
unless otherwise stated, be construed to refer to this Agreement
as a
whole and not to any particular provision of this Agreement; (iv)
article,
section, paragraph, exhibit, annex and schedule references are
to the
articles, sections, paragraphs, exhibits, annexes and schedules
of this
Agreement unless otherwise specified; (v) the meaning assigned
to each
term defined herein are equally applicable to both the singular
and the
plural forms of such term, and words denoting any gender include
all
genders; (vi) a reference to any party to this Agreement or any
other
agreement or document include also such party’s successors and permitted
assigns; (vii) a reference to any Laws or other legislation or
to any
provision of any Law or legislation shall include any amendment
to, and
any modification or re-enactment thereof, any provision substituted
therefor and all regulations and statutory instruments issued thereunder
or pursuant thereto; (viii) all references to “$”or “dollars” are
references to United States dollars; and (ix) capitalized terms
used and
not defined in the exhibits, annexes and schedules attached to
this
Agreement are used with the respective meanings ascribed thereto
as set
forth in this Agreement.
|
[Signature
Page Follows]
The
parties hereto, intending to be legally bound hereby, have duly executed
this
Agreement and Plan of Merger as of the date first above written.
TALK
AMERICA HOLDINGS, INC.
By:
/s/ ▇▇▇▇▇▇▇▇ ▇. Lawn IV
Name:▇▇▇▇▇▇▇▇
▇. Lawn IV
Title: EVP
- General Counsel
CAVALIER
TELEPHONE CORPORATION
By:
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇
Name:
▇▇▇▇ ▇. ▇▇▇▇▇
Title:
President
CAVALIER
ACQUISITION CORP.
By:
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇
Name:
▇▇▇▇ ▇. ▇▇▇▇▇
Title:
President