EXHIBIT 2.10
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
MCCC ICG HOLDINGS LLC,
MCCC MERGER CORP.
AND
ICG COMMUNICATIONS, INC.
JULY 19, 2004
TABLE OF CONTENTS
Page
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ARTICLE I THE MERGER............................................................................................. 2
Section 1.1 The Merger......................................................................... 2
Section 1.2 Closing............................................................................ 2
Section 1.3 Effective Time..................................................................... 2
Section 1.4 Effects of the Merger.............................................................. 2
Section 1.5 Certificate of Incorporation and By-Laws........................................... 3
Section 1.6 Directors and Officers of Surviving Corporation.................................... 3
ARTICLE II EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE CONSTITUENT ENTITIES................................. 3
Section 2.1 Effect on Capital Stock............................................................ 3
Section 2.2 Effect on Company Options.......................................................... 4
Section 2.3 Deposit Escrow..................................................................... 4
Section 2.4 Exchange of Certificates; Payments at Closing...................................... 5
Section 2.5 No Further Rights in Company Common Stock or Options............................... 6
Section 2.6 Dissenters' Rights................................................................. 6
Section 2.7 Reduction of Payment Fund.......................................................... 7
Section 2.8 Termination of Payment Fund........................................................ 7
Section 2.9 No Liability....................................................................... 7
Section 2.10 Investment Fund.................................................................... 7
Section 2.11 Lost, Stolen or Destroyed Certificates............................................. 7
Section 2.12 Withholding Rights................................................................. 8
Section 2.13 Fees and Expenses of the Paying Agent.............................................. 8
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY........................................................ 8
Section 3.1 Organization and Standing.......................................................... 8
Section 3.2 Subsidiaries....................................................................... 8
Section 3.3 Capitalization..................................................................... 9
Section 3.4 Authority and Enforceability....................................................... 9
Section 3.5 Conflicts, Consents and Approvals.................................................. 10
Section 3.6 SEC Reports........................................................................ 11
Section 3.7 Financial Statements; Liabilities.................................................. 11
Section 3.8 Disclosure Documents............................................................... 12
Section 3.9 Compliance with Applicable Laws.................................................... 12
Section 3.10 Communication Licenses............................................................. 13
Section 3.11 Environmental Matters.............................................................. 13
Section 3.12 Network Facilities................................................................. 14
Section 3.13 Material Contracts................................................................. 15
Section 3.14 Related Party Transactions......................................................... 15
Section 3.15 ERISA.............................................................................. 16
Section 3.16 Labor Relations.................................................................... 17
Section 3.17 Real Estate........................................................................ 18
Section 3.18 Insurance.......................................................................... 19
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Section 3.19 Taxes.............................................................................. 20
Section 3.20 Intellectual Property.............................................................. 21
Section 3.21 Litigation......................................................................... 22
Section 3.22 Customers and Suppliers............................................................ 22
Section 3.23 Business Combination and Takeover Statutes......................................... 22
Section 3.24 Board Recommendation............................................................... 22
Section 3.25 Voting Requirements................................................................ 22
Section 3.26 Brokers............................................................................ 22
Section 3.27 Opinion of Financial Advisor....................................................... 23
Section 3.28 Weekly Forecasts................................................................... 23
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE BUYER AND MERGER SUB............................................ 23
Section 4.1 Organization and Standing.......................................................... 23
Section 4.2 Authority and Enforceability....................................................... 23
Section 4.3 Conflicts, Consents and Approvals.................................................. 24
Section 4.4 Compliance......................................................................... 24
Section 4.5 Voting Required.................................................................... 25
Section 4.6 Brokers............................................................................ 25
Section 4.7 Ownership of Company Common Stock.................................................. 25
Section 4.8 Compliance with Applicable Laws.................................................... 25
Section 4.9 Capitalization of the Surviving Corporation........................................ 25
ARTICLE V COVENANTS RELATING TO CONDUCT OF BUSINESS.............................................................. 25
Section 5.1 Conduct of Business Pending the Merger............................................. 26
Section 5.2 Advice of Changes.................................................................. 30
Section 5.3 Obligations and Taxes.............................................................. 31
Section 5.4 Interim Management Agreement....................................................... 31
Section 5.5 No Solicitation by the Company..................................................... 31
ARTICLE VI ADDITIONAL AGREEMENTS................................................................................. 33
Section 6.1 Preparation of the Company Proxy Statement; Shareholders Meeting................... 33
Section 6.2 Financial Statements, Reports, etc................................................. 33
Section 6.3 Access to Information; Confidentiality............................................. 34
Section 6.4 Insurance.......................................................................... 34
Section 6.5 Communications License............................................................. 34
Section 6.6 FCC Applications and State PUC Applications........................................ 35
Section 6.7 Delivery of Regulatory Counsel's Opinion........................................... 35
Section 6.8 Landlord Consents and Lease Terminations........................................... 35
Section 6.9 Employee Benefit Plans............................................................. 36
Section 6.10 Environmental Events............................................................... 36
Section 6.11 Notice of Litigation and Judgments................................................. 36
Section 6.12 Notice Regarding Contracts......................................................... 36
Section 6.13 Commercially Reasonable Efforts; Cooperation....................................... 36
Section 6.14 Indemnification.................................................................... 37
Section 6.15 Public Announcements............................................................... 37
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Section 6.16 Issuance of Shares to Trust........................................................ 38
ARTICLE VII CLOSING CONDITIONS................................................................................... 38
Section 7.1 Mutual Conditions.................................................................. 38
Section 7.2 Conditions to Obligations of the Company........................................... 38
Section 7.3 Conditions to Obligations of the Buyer............................................. 39
Section 7.4 Frustration of Closing Conditions.................................................. 41
ARTICLE VIII TERMINATION, AMENDMENT AND WAIVER................................................................... 41
Section 8.1 Termination........................................................................ 41
Section 8.2 Effect of Termination.............................................................. 43
Section 8.3 Fees and Expenses.................................................................. 43
ARTICLE IX GENERAL PROVISIONS.................................................................................... 44
Section 9.1 Non-Survival of Representations and Warranties..................................... 44
Section 9.2 Notices............................................................................ 44
Section 9.3 Definitions........................................................................ 45
Section 9.4 Interpretation..................................................................... 50
Section 9.5 Counterparts....................................................................... 51
Section 9.6 Entire Agreement; No Third Party Beneficiaries..................................... 51
Section 9.7 GOVERNING LAW...................................................................... 51
Section 9.8 Assignment......................................................................... 52
Section 9.9 Consent to Jurisdiction............................................................ 52
Section 9.10 Headings........................................................................... 52
Section 9.11 Severability....................................................................... 52
Section 9.12 Amendment.......................................................................... 52
Section 9.13 Extension; Waiver.................................................................. 52
Section 9.14 Waiver of Jury Trial............................................................... 53
Schedule A -- Directors and Officers of the Surviving Corporation
Schedule B -- Payables Report
Schedule C -- Required Actions with Respect to Material Contracts
Schedule D -- Certain Providers of Professional Services
Exhibit A -- Form of Interim Credit Agreement
Exhibit B -- Form of Security and Pledge Agreement
Exhibit C -- Form of Interim Management Agreement
Exhibit D -- Amended and Restated Certificate of Incorporation of the Surviving Corporation
Exhibit E -- By-Laws of the Surviving Corporation
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER (this "Agreement"), dated as of July 19,
2004, among ICG Communications, Inc., a Delaware corporation (the "Company"),
MCCC ICG Holdings LLC, a Delaware limited liability company (the "Buyer"), and
MCCC Merger Corp., a Delaware corporation and wholly-owned subsidiary of the
Buyer ("Merger Sub").
WHEREAS, the respective boards of directors or managers of the Company,
the Buyer and Merger Sub have each approved the merger of Merger Sub with and
into the Company (the "Merger") and deem it advisable and in the best interests
of its respective shareholders or members, as the case may be, to consummate the
Merger upon the terms and subject to the conditions set forth in this Agreement;
WHEREAS, the respective boards of directors of the Company and the Merger
Sub have each approved this Agreement and have recommended that their respective
shareholders approve this Agreement and the transactions contemplated hereby;
WHEREAS, the Buyer, as the sole shareholder of Merger Sub, shall approve
this Agreement and the transactions contemplated hereby by written consent
immediately after the execution of this Agreement;
WHEREAS, the affirmative vote of the holders of a majority of the
outstanding voting common stock, par value $0.01 per share, of the Company
("Company Common Stock") entitled to vote is required to adopt and approve this
Agreement;
WHEREAS, the Buyer and certain shareholders of the Company representing
approximately 29% of the issued and outstanding Company Common Stock have,
simultaneously with the execution of this Agreement, entered into a lock-up
agreement, pursuant to which such shareholders have agreed to vote their shares
of Company Common Stock in favor of this Agreement and the Merger ("Lock Up
Agreement");
WHEREAS, the Buyer and the Company have, simultaneously with the execution
of this Agreement, entered into an interim credit agreement ("Interim Credit
Agreement") in the form attached hereto as Exhibit A ;
WHEREAS, in connection with the Interim Credit Agreement, the Buyer and
the Company have, simultaneously with the execution of this Agreement, entered
into a security and pledge agreement ("Security and Pledge Agreement") in the
form attached hereto as Exhibit B;
WHEREAS, the Buyer and the Company shall, at the effective time of the
Company Shareholder Approval (as defined in Section 3.25), enter into one or
more management agreement (each, an "Interim Management Agreement")
substantially in the form attached hereto as Exhibit C;
WHEREAS, the Company, the Buyer and Merger Sub desire to make certain
representations, warranties, covenants and agreements in connection with the
Merger;
NOW, THEREFORE, in consideration of the representations, warranties,
covenants and agreements contained in this Agreement, the parties hereto agree
as follows:
ARTICLE I
THE MERGER
Section 1.1 The Merger. Upon the terms and subject to the conditions set
forth in this Agreement, and in accordance with the provisions of the General
Corporation Law of the State of Delaware (as amended from time to time, the
"DGCL"), Merger Sub shall be merged with and into the Company at the Effective
Time (as defined in Section 1.3) and the separate corporate existence of Merger
Sub shall thereupon cease. Following the Effective Time, the Company shall be
the surviving corporation (the "Surviving Corporation").
Section 1.2 Closing. The closing of the Merger (the "Closing") will take
place on the earlier of (i) a date and time specified by the Buyer after
satisfaction or waiver (subject to applicable law) of the conditions (excluding
conditions that, by their terms, cannot be satisfied until the Closing Date) set
forth in Article VII, and (ii) the later of (A) the 90th day following the
effective date of the Company Shareholder Approval (the "Initial Closing
Deadline") or (B) in the event that fewer than all of the FCC Consents (as
defined in Section 6.4(a)) and the State PUC Consents (as defined in Section
6.4(b)) shall have been obtained on or before the Initial Closing Deadline, at
the election of the Buyer, the 60th day thereafter (the "Extended Closing
Deadline"); provided that the Buyer has given written notice to the Company of
its election to close the Merger on the Extended Closing Deadline no fewer than
five (5) days before the Initial Closing Deadline; and provided further that
between the Initial Closing Date and the Extended Closing Date, if any, the
Closing can occur on a date and at a time selected by Buyer within such time
period (the "Selected Closing Deadline") so long as Buyer provides written
notice to the Company five (5) days before the Selected Closing Deadline. The
Closing will be held at the offices of Xxxxxxxx & Xxxxx LLP, 000 Xxxx 00xx
Xxxxxx, Xxx Xxxx, Xxx Xxxx or such other location as the parties hereto shall
agree to in writing. The date on which the Closing occurs is hereinafter
referred to as the "Closing Date".
Section 1.3 Effective Time. Subject to the provisions of this Agreement,
as soon as practicable on the Closing Date, the parties shall acknowledge and
file a certificate of merger (the "Certificate of Merger") with the Secretary of
State of the State of Delaware (the "Delaware Secretary of State") in such form
as is required by and executed in accordance with the DGCL. The Merger shall
become effective when the Certificate of Merger has been filed with the Delaware
Secretary of State, or at such later time as the Company and the Buyer shall
agree and specify in the Certificate of Merger (the "Effective Time").
Section 1.4 Effects of the Merger. The Merger shall have the effects set
forth in this Agreement, the Certificate of Merger and the DGCL. Without
limiting the generality of the foregoing, and subject thereto, at the Effective
Time, all the property, rights, privileges, powers and franchises of the Company
and the Merger Sub shall be vested in the Surviving Corporation, and all debts,
liabilities and duties of the Company and Merger Sub shall become the debts,
liabilities and duties of the Surviving Corporation.
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Section 1.5 Certificate of Incorporation and By-Laws. The Certificate of
Merger shall provide that, at the Effective Time (a) the certificate of
incorporation of the Company shall be amended and restated to embody the terms
set forth on Exhibit D hereto and, as so amended, shall be the certificate of
incorporation of the Surviving Corporation until thereafter amended in
accordance with the terms thereof and the DGCL and (b) the by-laws of the
Company shall be amended and restated to embody the terms set forth on Exhibit E
hereto and, as so amended, shall be the by-laws of the Surviving Corporation
until thereafter amended in accordance with the terms thereof and the DGCL.
Section 1.6 Directors and Officers of Surviving Corporation.
(a) From and after the Effective Time, the directors and officers of
the Surviving Corporation shall be determined as provided in Schedule A attached
hereto until their respective successors are duly elected and qualified, as the
case may be.
(b) In case at any time after the Effective Time any further action
is necessary to carry out the purposes of this Agreement and to vest in the
Surviving Corporation title to all assets, rights, privileges, powers,
immunities, purposes and franchises of either the Merger Sub or the Company, the
officers and directors of such corporation shall be empowered to take all such
lawful action.
ARTICLE II
EFFECT OF THE MERGER ON THE CAPITAL STOCK
OF THE CONSTITUENT ENTITIES
Section 2.1 Effect on Capital Stock. At and as of the Effective Time, by
virtue of the Merger and without any action on the part of the Company or the
Merger Sub:
(a) Cancellation of Treasury Company Common Stock. Each share of
Company Common Stock that is issued and outstanding immediately prior to the
Effective Time and owned by the Company as treasury stock or by any direct or
indirect Subsidiary of the Company ("Excluded Shares") shall be canceled
automatically and shall cease to exist, and no payment shall be made in respect
thereof.
(b) Conversion of Company Common Stock. Each share of Company Common
Stock that is issued and outstanding immediately prior to the Effective Time
(other than shares to be canceled in accordance with Section 2.1(a)) shall be
converted into the right to receive, upon surrender of the certificate
representing such Company Common Stock in accordance with Section 2.3, $0.75 per
share in cash (the "Merger Consideration").
(c) Cancellation and Retirement of Company Common Stock. All
outstanding shares of the Company Common Stock shall automatically cancel and
cease to exist, and each holder of a certificate that immediately prior to the
Effective Time represented shares of Company Common Stock shall cease to have
any rights with respect thereto except (other than in the case of Excluded
Shares) the right to receive the Merger Consideration, without interest, to be
paid in consideration therefore upon surrender of such certificate in accordance
with Section 2.3.
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(d) Capital Stock of Merger Sub. Each issued and outstanding share
of capital stock of Merger Sub shall be converted into and become one fully paid
and nonassessable share of common stock, par value $0.01 per share, of the
Surviving Corporation.
Section 2.2 Effect on Company Options.
(a) For purposes of this Agreement, the term "Option" means each
unexpired and unexercised option, warrant or other security (whether or not
vested or exercisable) that is outstanding at the Effective Time pursuant to
which the holder thereof has the right to purchase Company Common Stock from the
Company (including, without limitation, any Company Stock Option or Company
Stock Warrant). The term "Company Stock Option" means each outstanding option to
purchase shares of Company Common Stock issued under the Employee Benefit Plans,
as amended from time to time. The term "Company Stock Warrant" means each
outstanding warrant to purchase shares of Company Common Stock issued (i) to
certain of the Company's unsecured creditors pursuant to the Company's
proceedings under the Bankruptcy Code in the Delaware Bankruptcy Court (Joint
Case Number 00-4238 (PJW)) (the "Bankruptcy Proceedings") and (ii) in connection
with the establishment of the Company's senior subordinated term loan. As of the
Effective Time, each outstanding Option shall be extinguished and converted into
the right to receive, in complete satisfaction of all obligations owing from the
Company to the holder of such Option on account of such Option, a cash amount
equal to the product of (x) the excess, if any, of $0.75 minus the per share
exercise price of each such Option (the "Option Share Merger Consideration")
multiplied by (y) the aggregate number of shares of Company Common Stock that
would have been issuable had such Option been exercised in full at the Effective
Time, less any required withholding of U.S. federal income taxes.
(b) Except as otherwise agreed to by the parties, (i) each Employee
Benefit Plan which provides for the issuance or grant of any option, warrant,
right or other convertible security of the Company or any Subsidiary shall
terminate as of the Effective Time and the provisions in any other plan, program
or arrangement providing for the issuance or grant of any other interest in
respect of the capital stock of the Company or any Subsidiary shall be
terminated as of the Effective Time, and (ii) the Company shall take all action
necessary to ensure that, following the Effective Time, no participant in the
Employee Benefit Plans or other plans, programs or arrangements shall have any
right thereunder to acquire or participate in changes in the value of the equity
securities of the Company, the Surviving Corporation, Merger Sub or any of their
respective Subsidiaries and to terminate all such plans effective as of the
Effective Time; provided that, for the avoidance of doubt, any such termination
shall not affect the rights of any outstanding Company Stock Option, except as
otherwise provided in the relevant Employee Benefit Plan, other documents
governing such Company Stock Options and this Agreement.
(c) The parties to this Agreement hereby acknowledge and agree that
the Surviving Corporation shall not assume or continue any Options or substitute
any additional option, warrant or other security for such Options.
Section 2.3 Deposit Escrow.
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(a) Deposit with Escrow Holder. Contemporaneously with the execution
and delivery of this Agreement by the parties, Buyer will deposit (or cause
Merger Sub to deposit), in cash, the aggregate amount of the Merger
Consideration and Option Share Merger Consideration (the "Deposit") payable upon
conversion of the outstanding shares of Company Common Stock as provided in
Section 2.1 with a third party escrow holder (the "Escrow Holder"), who will
hold the funds in a segregated account designated for such purpose pursuant to
an escrow agreement executed by the parties (the "Escrow Agreement" and,
together with the Interim Credit Agreement, Security and Pledge Agreement and
the Interim Management Agreement, the "Related Agreements"). The Escrow
Agreement shall be consistent with the terms and conditions of this Agreement.
Interest accrued on the Deposit shall belong and be paid to the Buyer unless the
Deposit is disbursed to the Company pursuant to Section 2.3(b).
(b) Disbursement of Deposit. The Deposit shall be held by the Escrow
Holder until the earlier of (i) the Closing Date and (ii) the effective date of
the termination of this Agreement (the "Disbursement Date"). Upon the Closing,
the Deposit shall be disbursed to the Payment Agent described in Section 2.4
below for disbursement in accordance with such Section and any accrued interest
on the Deposit shall be distributed to the Buyer. Upon the termination of the
Agreement, the Deposit and any accrued interest thereon shall be immediately
disbursed to the Buyer, provided that if this Agreement is terminated by the
Company (i) prior to the effective date of the Company Shareholder Approval,
pursuant to Section 8.1(d) or (ii) on or following the effective date of the
Company Shareholder Approval, pursuant to Section 8.1(b)(ii) or Section 8.1(d),
then the Deposit and any accrued interest thereon shall be immediately disbursed
to the Company as liquidated damages. The fees and costs of the Escrow Holder
shall be borne equally by the Company and the Buyer.
(c) Manner of Disbursement. The Escrow Holder shall be authorized to
disburse the Deposit, together with any interest earned on such sum, to the
party entitled thereto under this Section 2.3, in immediately available funds by
wire transfer to an account designated in writing by such party.
(d) Taxes. Taxes attributable to any interest paid or accrued on the
Deposit while it is held in escrow shall be borne by the party entitled to
receive such interest pursuant to this Section 2.3.
Section 2.4 Exchange of Certificates; Payments at Closing.
(a) Deposit with Paying Agent. Prior to the Effective Time, the
Buyer shall appoint an agent (the "Paying Agent") for the purpose of receiving
the certificates and other documents and instruments (the "Certificates") that
immediately prior to the Effective Time represented shares of either Company
Common Stock or Options and distributing to the holders of Company Common Stock
or Options that are represented by such Certificates payment of the Merger
Consideration or Option Share Merger Consideration, as applicable. As of the
Effective Time, the Escrow Holder shall deposit with the Paying Agent for the
benefit of the holders of Company Common Stock and Options, the aggregate cash
representing the Merger Consideration and Option Share Merger Consideration (the
"Payment Fund") payable pursuant to the other provisions of this Article II in
exchange for the Certificates.
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(b) Exchange Procedures. As soon as practicable following the
Effective Time, the Paying Agent, pursuant to a paying agent agreement which
terms and conditions are reasonably acceptable to the Company and the Buyer,
shall mail to each record holder of the Certificates (as of the Effective Time)
(i) a letter of transmittal (which shall specify that delivery shall be
effected, and risk of loss and title to such Certificates shall pass, only upon
delivery of such Certificates to the Paying Agent and shall be in such form and
have such other provisions as the Company and the Buyer mutually agree) and (ii)
instructions for effecting the surrender of such Certificates in exchange for
the Merger Consideration or Option Share Merger Consideration. Upon surrender to
the Paying Agent of a Certificate, together with a duly executed letter of
transmittal and any other documents reasonably required by the Paying Agent, the
holder of such Certificates shall promptly receive in exchange therefor the
amount of cash equal to the Merger Consideration or Option Share Merger
Consideration, as applicable, to which such holder is entitled pursuant to the
other provisions of this Article II, without interest, less any required
withholding of U.S. federal income taxes, and in each case, the Certificate so
surrendered shall be canceled. Until surrendered as contemplated by this
paragraph (b), each Certificate shall be deemed at any time after the Effective
Time to represent only the right to receive upon such surrender the Merger
Consideration or Option Share Merger Consideration, as applicable, to which the
holder thereof has the right to receive in respect of such Certificate pursuant
to the other provision of this Article II. No interest will be paid or will
accrue on any cash payable to holders of Certificates pursuant to the provisions
of this Article II.
(c) If any portion of the Merger Consideration or Option Share
Merger Consideration payable in respect of any Certificate is to be paid to a
person other than in whose name the Certificate surrendered is registered, it
shall be a condition to payment that the Certificate so surrendered shall be
properly endorsed or otherwise in proper form for transfer, that the signatures
on the Certificate or any related stock power shall be properly guaranteed and
that the person requesting such payment either pay any transfer or other taxes
required by reason of the payment of the Merger Consideration or Option Share
Merger Consideration to a person other than the registered holder of such
Certificate or establish to the satisfaction of the Surviving Corporation that
such tax has been paid or is not applicable.
Section 2.5 No Further Rights in Company Common Stock or Options. All cash
paid upon the surrender of Certificates in accordance with this Article II shall
be deemed to have been paid in full satisfaction of all rights pertaining to the
shares of Company Common Stock or Options formerly represented by such
Certificates. After the Effective Time, there shall be no further registration
of transfers of Company Common Stock or Options that were outstanding
immediately prior to the Effective Date. Subject to Section 2.8, if Certificates
are presented to the Surviving Corporation or the Paying Agent for any reason
after the Effective Time, they shall be cancelled and exchanged as provided in
this Article II.
Section 2.6 Dissenters' Rights. Notwithstanding anything in this Agreement
to the contrary, any issued and outstanding shares of Company Common Stock held
by a person (a "Dissenting Shareholder") who shall not have voted to adopt this
Agreement and who properly demands appraisal for such shares in accordance with
Section 262 of the DGCL shall not be converted into a right to receive the
Merger Consideration, unless such holder fails to perfect or withdraws or
otherwise loses such holder's right to appraisal under the DGCL. If, after the
Effective Time, such Dissenting Shareholder fails to perfect or withdraws or
loses such holder's
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right to appraisal under the DGCL, such Dissenting Shareholder's shares of
Company Common Stock shall be deemed to have been converted into, at the
Effective Time, a right to receive for each share the Merger Consideration. The
Company shall give the Buyer prompt notice of any demands received by the
Company for appraisal of Company Common Stock, and the Buyer shall have the
right to participate in all negotiations and proceedings with respect to such
demands. The Company shall not, without the prior written consent of the Buyer,
make any payment with respect to, or settle, offer to settle or otherwise
negotiate, any such demands.
Section 2.7 Reduction of Payment Fund. Any portion of the Payment Fund
representing Merger Consideration for Company Common Stock for which appraisal
rights shall have been perfected shall be returned to the Buyer, upon demand.
Section 2.8 Termination of Payment Fund. Any portion of the Payment Fund
(including interest) that remains undistributed to the holders of the
Certificates for six months after the Effective Time shall be returned to the
Surviving Corporation, upon demand, free and clear of all claims or interest of
any person previously entitled thereto and may be commingled with the general
funds of the Surviving Corporation. Any holders of Certificates who have not
complied with this Article II prior to that time shall thereafter look only to
the Surviving Corporation and only as general creditors thereof for payment of
their claim for Merger Consideration or Option Share Merger Consideration.
Section 2.9 No Liability. None of the parties to this Agreement, the
Paying Agent or the Surviving Corporation shall be liable to any person in
respect of any Merger Consideration or Option Shares Merger Consideration, as
applicable, from the Payment Fund that is delivered to a public official
pursuant to any applicable abandoned property, escheat or similar law.
Section 2.10 Investment Fund. The Paying Agent shall invest any cash
included in the Payment Fund as directed by the Buyer, in (A) direct obligations
of the United States of America, (B) obligations for which the full faith and
credit of the United States of America is pledged to provide for the payment of
principal and interest, (C) commercial paper rated the highest quality by either
Xxxxx'x Investors Services, Inc. or Standard & Poor's Corporation or (D)
certificates of deposit, bank repurchase agreements or banker's acceptances of
commercial banks with capital exceeding $100 million, and any net profit
resulting from, or interest or income produced by, such investment shall be paid
to the Buyer as and when requested by the Buyer, provided that any such
investment or any such payment of profit shall not delay the receipt by holders
of Certificates of the Merger Consideration or Option Shares Merger
Consideration, as the case may be, or otherwise impair such holders' respective
rights hereunder.
Section 2.11 Lost, Stolen or Destroyed Certificates. In the event that 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 Surviving Corporation, the posting
by such person of bond in customary amount as indemnity against any claim that
may be made against it with respect to such Certificate, the Paying Agent will
issue in exchange for such lost, stolen or destroyed Certificate the Merger
Consideration or Option Share Merger Consideration, as applicable, with respect
to such Certificate, to which such person is entitled pursuant to this Article
II.
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Section 2.12 Withholding Rights. The Paying Agent, on behalf of the
Surviving Corporation, shall be entitled to deduct and withhold from the Merger
Consideration or Option Share Merger Consideration otherwise payable pursuant to
this Agreement to any holder of Company Common Stock or Options, respectively,
such amounts as may be required to be deducted and withheld with respect to the
making of such payment under the Internal Revenue Code of 1986, as amended (the
"Code"), or any provision of state, local or foreign tax law, including, without
limitation, withholdings required in connection with payments in respect of
Company Stock Options held by employees of the Company. To the extent that
amounts are so withheld, such withheld amounts shall be treated for all purposes
of this Agreement as having been paid as Merger Consideration or Option Share
Merger Consideration to the holder in respect of which such deduction and
withholding was made.
Section 2.13 Fees and Expenses of the Paying Agent. The Surviving
Corporation shall pay all fees and expenses of the Paying Agent.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as otherwise set forth in any document filed by the Company with
the Securities and Exchange Commission ("SEC") (such document, a "Company SEC
Document") or in the disclosure schedule delivered by the Company to the Buyer
prior to the execution of this Agreement and attached hereto, ("Company
Disclosure Schedule"), the Company hereby represents and warrants to the Buyer
and Merger Sub as follows:
Section 3.1 Organization and Standing. Each of the Company and its
Subsidiaries is a corporation or other legal entity duly organized, validly
existing and in good standing under the laws of the jurisdiction in which it is
organized and has the requisite corporate or other power, as the case may be,
and authority to carry on its business as now conducted. Each of the Company and
its Subsidiaries is duly qualified or licensed to do business and is in good
standing in each jurisdiction in which the nature of its business or the
ownership, leasing or operation of its properties make such qualification or
licensing necessary, except in each case where the failure to be so qualified or
licensed would not reasonably be expected to have individually or in the
aggregate a Company Material Adverse Effect. The Company has made available to
the Buyer prior to the execution of this Agreement complete and correct copies
of its certificate of incorporation and by-laws and the certificates of
incorporation, by-laws and equivalent organizational documents of its
Subsidiaries, in each case, as amended to the date hereof. Such certificates of
incorporation, by-laws and equivalent organizational documents are in full force
and effect. For the purposes of this Agreement, the term "Company Material
Adverse Effect" means a material adverse effect (a) on the assets, business,
results of operations, condition (financial or otherwise) of the Company and its
Subsidiaries, taken as a whole, or (b) on the ability of the Company to
consummate the transactions contemplated by this Agreement and Related
Agreements.
Section 3.2 Subsidiaries. Section 3.2 of the Company Disclosure Schedule
is a true, accurate and complete list of all of the Subsidiaries of the Company.
All the outstanding shares of capital stock of, or other equity interests in,
each Subsidiary (a) have been duly authorized,
8
validly issued and are fully paid and nonassessable, (b) are owned, directly or
indirectly, by the Company, free and clear of all pledges, claims, liens, taxes,
charges, encumbrances and security interests of any kind or nature whatsoever
(collectively, "Encumbrances") and (c) are free of any other restrictions
(including any restrictions on the right to vote, sell, transfer or otherwise
dispose of such capital stock or other ownership interests). Except for the
capital stock or ownership interest in its Subsidiaries, the Company does not
own, directly or indirectly, any capital stock or other ownership interest in
any corporation, partnership, joint venture, limited liability company or other
entity (other than marketable securities and other short-term investments). No
Subsidiary of the Company has outstanding any securities convertible into or
exchangeable for any shares of its capital stock or ownership interest, and
there are no outstanding subscriptions, options, warrants, puts, calls,
agreements, understandings, claims or other commitments or rights of any type
relating to the issuance, sale, transfer or voting of any securities of the
Company's Subsidiaries. For purposes of this Agreement, the term "Subsidiary",
with respect to a person, means any corporation, limited liability company,
partnership, trust or unincorporated organization of which securities or
interests having by the terms thereof ordinary voting power to elect at least a
majority of the board of directors or other governing body performing similar
functions with respect to such corporation, limited liability company,
partnership, trust or unincorporated organization (or, if there are no such
voting interests, 50% or more of the equity interests of which) are directly or
indirectly owned or controlled by such person or by any one or more of its
Subsidiaries.
Section 3.3 Capitalization. As of the date of this Agreement, the
authorized capital stock of the Company consisted of 100,000,000 shares of
Company Common Stock, and 10,000,000 shares of preferred stock, par value $0.001
per share ("Company Preferred Stock"). As of the date hereof, 7,839,338 shares
of Company Common Stock are issued and outstanding and no shares of Company
Preferred Stock are issued and outstanding. As of the date hereof, there are
2,111,867 shares of Company Common Stock reserved for issuance upon exercise of
the outstanding Company Stock Options and Company Stock Warrants. Except for (a)
160,662 shares of Company Common Stock to be distributed pursuant to the
Bankruptcy Proceedings, (b) warrants to purchase 19,494 shares of Company Common
Stock to be distributed pursuant to the Company's Bankruptcy Proceedings, (c)
Company Stock Warrants representing the right to purchase 1,454,190 shares of
Company Common Stock and (d) Company Stock Options representing the right to
purchase 657,677 shares of Company Common Stock, there are no options, warrants,
convertible securities or other rights, or agreements, arrangement, claims or
other commitments of any type relating to the issuance, sale or transfer of any
shares of capital stock, or other equity interests in, the Company or any of its
Subsidiaries. Each outstanding share of capital stock of the Company is duly
authorized and validly issued, fully paid and nonassessable, and has not been
issued in violation of any preemptive or similar rights. The Company has no
authorized or outstanding bonds, debentures, notes or other obligations or
securities, the holders of which have the right to vote with the shareholders of
the Company on any matter. Other than Company Stock Warrants to purchase 473,684
shares of Company Common Stock having an exercise price of $0.01 per share, none
of the Options has an exercise price of less than $6.
Section 3.4 Authority and Enforceability. Prior to the Company's execution
of this Agreement, the Company had all requisite corporate power and authority
to enter into this Agreement and the Related Agreements and, to consummate the
transactions contemplated
9
hereby, (subject to the Company Shareholder Approval) and thereby. The execution
and delivery of this Agreement and the Related Agreements by the Company at the
time of execution and delivery and the consummation by the Company of the
transactions contemplated hereby (subject to Company Shareholder Approval) and
thereby have been duly authorized by all necessary corporate action on the part
of the Company, and no other corporate proceedings on the part of the Company
(other than the Company Shareholder Approval with respect to this Agreement) is
necessary to authorize this Agreement and the Related Agreements or to
consummate the transactions contemplated hereby or thereby. This Agreement and
the Related Agreements have been duly executed and delivered by the Company at
the time of execution and delivery and, assuming the due authorization,
execution and delivery by the other parties hereto and thereto, shall constitute
valid and binding obligations of the Company, enforceable against the Company in
accordance with their respective terms.
Section 3.5 Conflicts, Consents and Approvals. Except as set forth in
Section 3.5 of the Company Disclosure Schedule, the execution and delivery by
the Company of this Agreement and the Related Agreements at the time of
execution and delivery and the consummation of the transactions contemplated
hereby and thereby will not:
(a) violate any provision of the certificate of incorporation or
by-laws (or equivalent organizational documents) of the Company or any of its
Subsidiaries;
(b) violate, conflict with, or result in a breach of any provision
of, or constitute a default (or an event which, with the giving of notice, the
passage of time or both, would constitute a default) under, require the consent
of any party or the giving of notice to any party under, or entitle any party
(with the giving of notice, the passage of time or both) to terminate,
accelerate, modify, impose any monetary or other economic penalty or call a
default under, or result in the creation of any Encumbrance upon any of the
properties or assets of the Company or any of its Subsidiaries under, any of the
terms, conditions or provisions of any note, bond, mortgage, indenture, deed of
trust, intellectual property or other licenses (except with respect to consents
or approvals with the FCC, State PUCs or Municipal Franchising Authorities
referred to in subsection (d) below), contract, undertaking, agreement, lease or
other instrument or obligation to which the Company or any of its Subsidiaries
is a party, the result of which individually or in the aggregate, could
reasonably be expected to have a Company Material Adverse Effect;
(c) violate any order, writ, injunction, decree, statute, rule or
regulation (except with respect to consents or approvals with the FCC, State
PUCs or Municipal Franchising Authorities referred to in subsection (d) below)
applicable to the Company or any of its Subsidiaries, except where any such
violation would not reasonably be expected to have individually or in the
aggregate a Company Material Adverse Effect; or
(d) require any consent or approval of or registration or filing by
the Company or any of its affiliates with, any third party or any governmental
agency or regulatory authority (each, a "Governmental Entity") which has not
been received or made except for (i) any such consent or approval of or
registration or filing with the Federal Communications Commission ("FCC"), any
state public service or public utilities commission (each, a "State PUC"), and
any municipal franchising authority (each, a "Municipal Franchising Authority")
having regulatory
10
authority over the business of the Company or its Subsidiaries as conducted in
any given jurisdiction, (ii) the requirements of the Securities Act of 1933, as
amended (the "Securities Act"), the Exchange Act of 1934, as amended (the
"Exchange Act"), state securities or "blue sky" laws ("Blue Sky Laws") and state
takeover laws and (iii) any other consent or approval of or registration or
filing which if not obtained or made could not reasonably be expected to have a
Company Material Adverse Effect.
Section 3.6 SEC Reports.
(a) The Company has timely filed with the SEC all required reports,
filings, registration statements and other documents to be filed by it with the
SEC since January 1, 2000, except as set forth in Section 3.6(a) of the Company
Disclosure Schedule or where the failure to have timely filed has not had and
could not reasonably be expected to have a Company Material Adverse Effect.
(b) As of its filing date, or as amended or supplemented prior to
the date hereof, each Company SEC Document complied as to form in all respects
with the applicable requirements of the Securities Act and the Exchange Act,
except as set forth in Section 3.6(b) of the Company Disclosure Schedule or
where the failure to so comply has not had and could not reasonably be expected
to have a Company Material Adverse Effect.
(c) No Company SEC Document, as of its filing date, contained any
untrue statement of a material fact or omitted to state any material fact
necessary in order to make the statements made therein, in light of the
circumstances under which they were made, not misleading.
(d) No Subsidiary is required to file any form, report or other
document with the SEC.
(e) The Company has heretofore made available to the Buyer a
complete and correct copy of any amendments or modifications, which have not yet
been filed with the SEC, to agreements, documents or other instruments which
previously had been filed by the Company with the SEC pursuant to the Exchange
Act.
Section 3.7 Financial Statements; Liabilities.
(a) Each of the consolidated financial statements (including, in
each case, any notes thereto) contained in the Company SEC Documents complied as
to form, was prepared in accordance with U.S. generally accepted accounting
principles ("GAAP") applied on a consistent basis through the period indicated
(except as may be indicated in the notes thereto) and fairly present in all
material respects the financial position of the Company and its consolidated
Subsidiaries as of the dates thereof and its consolidated results of operations
and changes in financial position for the respective periods then ended
(subject, in the case of unaudited statements, to the absence of certain
footnote disclosures).
(b) Except as set forth in Section 3.7(b) of the Company Disclosure
Schedule, the Company and its Subsidiaries have no liabilities or obligations of
any kind whatsoever, whether known or unknown, asserted or unasserted, accrued,
contingent, absolute, determined,
11
determinable or otherwise, in each case, other than (i) liabilities or
obligations disclosed on the face of (rather than in any notes thereto) the most
recent consolidated balance sheet (rather than in any notes thereto) for the
Company and its Subsidiaries included in the Company SEC Documents; (ii)
liabilities or obligations incurred in the ordinary course of business (none of
which results from, arises out of, relates to, is in the nature of, or was
caused by any breach of contract, breach of warranty, tort, infringement or
violation of law) since the date of the most recent consolidated balance sheet
for the Company and its Subsidiaries included in the Company SEC Documents; and
(iii) liabilities or obligations, the existence of which, individually or in the
aggregate, could not have a Company Material Adverse Effect.
(c) Except as set forth in Section 3.7(c) of the Company Disclosure
Schedule, the Company and its Subsidiaries have no Indebtedness for borrowed
money.
Section 3.8 Disclosure Documents.
(a) Each document required to be filed by the Company with the SEC
in connection with the Merger, including, without limitation, the proxy
statement or information statement of the Company (the "Company Proxy
Statement"), if any, to be filed with the SEC in connection with the Merger, and
any amendments or supplements thereto, will comply in all material respects with
the provisions of applicable federal securities laws.
(b) At the time the Company Proxy Statement, including any amendment
or supplement thereto, is first mailed, published or given to shareholders of
the Company and at the time of the meeting of the Company's shareholders
convened for the purpose of approving the Merger (the "Company Shareholders
Meeting"), the Company Proxy Statement as supplemented or amended, if
applicable, will not contain any untrue statement of a material fact or omit to
state any material fact necessary in order to make the statements made therein,
in light of the circumstances under which they were made, not misleading.
Section 3.9 Compliance with Applicable Laws.
Except as set forth in Section 3.9 of the Company Disclosure
Schedule, the businesses of the Company and its Subsidiaries are not being
conducted in violation of any law, ordinance, obligation or regulation of any
Governmental Entity (including without limitation, the (i) Communications Act of
1934, as amended, (ii) the rules, regulations 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 where any such
violation would not reasonably be expected to have, individually or in the
aggregate, a Company Material Adverse Effect. Each of the Company and its
Subsidiaries has in effect all Federal, state, local and foreign governmental
approvals, authorizations, certificates, filings, franchises, licenses, notices,
permits and rights ("Permits") necessary for it to own, lease or operate its
assets and to carry on its business as now conducted (including, without
limitation, those required pursuant to Environmental Laws (as defined in Section
3.11(a)), and there has occurred no default or limitation, or an event which,
with notice or lapse of time or both, would constitute a default or limitation,
with respect to any such Permit, except for the lack of Permits and for defaults
or limitations under Permits which would not reasonably be expected to have,
individually or in the aggregate, a Company Material Adverse Effect. The Company
and its Subsidiaries have
12
complied and are in compliance with the terms of the Permits and all applicable
statutes, laws, ordinances, rules, orders and regulations of any Governmental
Entity, except for instances of noncompliance which, individually or in the
aggregate, would not reasonably be expected to have a Company Material Adverse
Effect. As of the date of this Agreement, no action, demand, requirement or
investigation by any Governmental Entity with respect to the Company or any of
its Subsidiaries which could reasonably be expected to have a Company Material
Adverse Effect is pending or to the best knowledge of the Company threatened,
nor has any Governmental Entity indicated an intention to conduct the same.
Section 3.10 Communication Licenses. 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"), 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 or used in the operation of the
businesses of the Company and its Subsidiaries as now conducted other than any
such licenses from any Municipal Franchising Authority or similar Governmental
Entity the absence of which would not result in any fines, penalties or other
losses in excess of $5,000 individually or $100,000, in the aggregate and which
are obtained in the ordinary course of business. 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 of this Agreement, 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 best 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) material fines
and/or forfeitures. 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 which, in each case, could result in
fines, penalties or other losses in excess of $5,000 individually or $100,000,
in the aggregate, if not cured or otherwise responded to in the ordinary course
of business.
Section 3.11 Environmental Matters.
(a) The businesses of each of the Company and its Subsidiaries are
being and have been conducted in compliance in all respects with all applicable
federal, state, local and foreign statutes, laws, ordinances, rules, orders and
regulations and all common law concerning human health and safety or pollution
or protection of the environment (collectively, "Environmental Law"), except for
instances of noncompliance which, individually or in the aggregate, would not
reasonably be expected to have a Company Material Adverse Effect.
(b) Except as described in Section 3.11(b) of the Company Disclosure
Schedule, (i) the Company and its Subsidiaries are not subject to any litigation
related to, and have not received any notice, report or other information
regarding any violation of or any liabilities (contingent or otherwise) or
obligations arising under, any Environmental Law with respect to any of the
current or past operations of the Company or any of its Subsidiaries, or any
13
of the currently or formerly owned, leased or used property, facilities or
assets of the Company or any of its Subsidiaries; (ii) the Company and its
Subsidiaries have no liability relating to Environmental Law, and neither the
Company nor any of its Subsidiaries nor any other person has caused or taken any
action that will result in any liability or obligation on the part of the
Company or any of its Subsidiaries relating to Environmental Law, including
without limitation (A) the environmental conditions on, under, or about the real
property or other properties, facilities or assets currently or formerly owned,
leased, operated or used by the Company or any of its Subsidiaries or (B) the
past or present use, management, handling, transport, treatment, generation,
storage, disposal, arrangement for or permitted disposal, or release of, or
exposure to, any Hazardous Materials; (iii) neither the Company nor any of its
Subsidiaries is subject to any outstanding order from, or contractual or other
obligation with, investigation by, any Governmental Entity or other person in
respect of which the Company or any of its Subsidiaries may be required to incur
costs arising from the release or threatened release of a Hazardous Material;
(iv) neither the Company nor any of its Subsidiaries has, either expressly or by
operation of law, assumed or become subject to any liability or obligation of
any other person relating to Environmental Laws, other than the obligations to
comply with Environmental Laws in the operation of the Company and its
Subsidiaries in the ordinary course of business; and (v) the Company has
furnished or made available to Buyer all environmental audits, reports and other
material environmental documents relating to its or its Subsidiaries' (or their
respective affiliates' or predecessors') past or current properties, facilities
or operations which are in its possession or under its reasonable control.
"Hazardous Material" shall mean any substance or material that is classified or
regulated as "hazardous" or "toxic" or similar designation, or otherwise subject
to imposition of liability, pursuant to any Environmental Law, including,
without limitation, asbestos, polychlorinated biphenyls, petroleum and
urea-formaldehyde insulation.
Section 3.12 Network Facilities.
(a) Section 3.12(a) of the Company Disclosure Schedule 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) all material inventory of the Company and its Subsidiaries,
(iii) a description of fibers and fiber miles owned or leased by the Company and
its Subsidiaries, and (iv) for the IP backbone of the Company and its
Subsidiaries, route and circuit type and (v) any pending asset, sale of any of
the foregoing. The information provided in Section 3.12(a) of the Company
Disclosure Schedule 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
3.12(a) of the Company Disclosure Schedule) the Company has valid licenses that
will continue to be legal, valid, binding, enforceable and in full force and
effect on identical terms immediately following the consummation of the
transactions contemplated by this Agreement. The Company shall provide the Buyer
with correct and complete copies of all leases with respect to the network of
the Company and its Subsidiaries.
(b) Each of the network facilities described in Section 3.12(a) of
the Company Disclosure Schedule is working, functional, fit for the purpose
intended and has been maintained, subject to ordinary wear and tear.
14
(c) Section 3.12(c) of the Company Disclosure Schedule sets forth
the capital expenditure budget of the Company and its Subsidiaries that is
necessary and appropriate in their ordinary course of business so that the
representation and warranty made in Section 3.12(b) remains true and accurate
through the effective date of the Company Shareholder Approval.
Section 3.13 Material Contracts.
(a) Section 3.13 of the Company Disclosure Schedule sets forth a
correct and complete list of all Material Contracts to which the Company or any
of its Subsidiaries is a party or by which any of them or any of their
properties or assets may be bound. True and complete copies of all written
Material Contracts have been delivered or made available to the Buyer by the
Company. For the purposes of this Agreement, "Material Contracts" mean any
written or oral lease, license, contract, agreement or obligation to which the
Company or any of its Subsidiaries is a party or by which any of them or any of
their properties may be bound (other than this Agreement and the Related
Agreements) involving the exchange of goods or services or payments by or
receipts to the Company in excess of $500,000 per annum or that is otherwise
material to the business, financial position or results of operations of the
Company or any Subsidiary or the ability to consummate the transactions
contemplated by this Agreement and the Related Agreements; including, without
limitation, (i) any agreements related to the provision of co-location services
and (ii) agreements with Level 3 Communications, Inc. (the "Level 3 Agreements")
with respect to the right to provide remote access service to the Company's
customers and related transition services agreement.
(b) Except as set forth in Part I of Section 3.13(b) of the Company
Disclosure Schedule, each Material Contact is valid, binding and enforceable and
in full force and effect, and neither the Company nor any of its Subsidiaries is
or to the best knowledge of the Company is alleged to be in breach of or default
thereunder, and no other party is alleged by the Company or any of its
Subsidiaries to be in breach of or default thereunder, and no event has occurred
which (whether with or without notice or lapse of time or both) would constitute
such a breach or default or would permit termination, modification or
acceleration thereunder, in each case, except for any such breach or default
which, individually or in the aggregate, would not reasonably be expected to
have a Company Material Adverse Effect. Except as set forth in Part II of
Section 3.13(b) of the Company Disclosure Schedule and for such month-to-month
contracts which expire or are terminated in accordance with their terms, each
Material Contract will continue to be legal, valid, binding, enforceable and in
full force and effect on identical terms immediately following the Effective
Time, subject to the receipt of required consents as set forth in Section 3.5 of
the Company Disclosure Schedule. The Company and its Subsidiaries have performed
all of their respective material obligations under the Level 3 Agreement and
have received payments due to date under the Level 3 Agreements with respect to
such performance.
Section 3.14 Related Party Transactions. Neither the Company nor any
Subsidiary of the Company or any of their respective officers with a title of
Senior Vice President or higher (a) owns any direct or indirect material
interest of any kind in, or controls or is a director, officer, employee or
partner of, or consultant to, or lender to or borrower from or has a material
right to participate in the profits of, any person which is (i) an actual or
potential competitor, supplier, customer, landlord, tenant, of the Company or
any Subsidiary or (ii) a participant in any
15
transaction (including a loan transaction, other than employee advances in the
ordinary course of business) to which the Company or any Subsidiary is a party,
except an interest of less than one percent (1%) of the outstanding capital
stock of any public company, or (b) is a party to any contract or agreement with
the Company or any Subsidiary for provisions of goods or services other than an
employment contract with the Company or any Subsidiary.
Section 3.15 ERISA.
(a) Section 3.15(a) of the Company Disclosure Schedule lists each
Employee Benefit Plan that Company or any of its Subsidiaries maintains, to
which Company or any of its Subsidiaries contributes or has any obligation to
contribute, or with respect to which the Company or any of its Subsidiaries has
any liability.
(b) Each Employee Benefit Plan (and each related trust, insurance
contract, or fund) has been maintained, funded and administered in accordance
with the terms of such Employee Benefit Plan and complies in form and in
operation in all material respects with the applicable requirements of Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), the Code, and
other applicable laws.
(c) All required reports and descriptions (including Form 5500
annual reports, summary annual reports, and summary plan descriptions) have been
timely filed and/or distributed in accordance with the applicable requirements
of ERISA and the Code with respect to each such Employee Benefit Plan. The
requirements of COBRA have been met with respect to each such Employee Benefit
Plan and each Employee Benefit Plan maintained by an ERISA Affiliate that is an
Employee Welfare Benefit Plan subject to COBRA.
(d) All contributions (including all employer contributions and
employee salary reduction contributions) that are due have been made within the
time periods prescribed by ERISA and the Code to each such Employee Benefit Plan
that is an Employee Pension Benefit Plan and all contributions for any period
ending on or before the Closing Date that are not yet due have been made to each
such Employee Pension Benefit Plan or accrued in accordance with the past custom
and practice of the Company and its Subsidiaries. All premiums or other payments
due for all periods ending on or before the Closing Date have been paid with
respect to each such Employee Benefit Plan that is an Employee Welfare Benefit
Plan.
(e) Each such Employee Benefit Plan that is intended to meet the
requirements of a "qualified plan" under Code Section 401(a) has received a
determination or in the case of a "prototype plan" is subject to an opinion
letter from the Internal Revenue Service (that takes into account the changes
required by GUST) that such Employee Benefit Plan is so qualified, and nothing
has occurred since the date of such determination or opinion letter that
reasonably could adversely affect the qualified status of any such Employee
Benefit Plan.
(f) There have been no Prohibited Transactions with respect to any
such Employee Benefit Plan. The Company has no direct or indirect liability for
breach of fiduciary duty or any other failure to act or comply in connection
with the administration or investment of the assets of any such Employee Benefit
Plan. No action, suit, proceeding, hearing, or
16
investigation with respect to the administration or the investment of the assets
of any such Employee Benefit Plan (other than routine claims for benefits) is
pending or threatened.
(g) The Company has delivered or made available to Buyer correct and
complete copies of the plan documents and summary plan descriptions, the most
recent determination letter or opinion letter received from the Internal Revenue
Service, the most recent annual report (Form 5500, with all applicable
attachments), and made available all related plan documents, trust agreements,
insurance contracts, and other funding arrangements that implement each such
Employee Benefit Plan.
(h) Neither Company nor any of its Subsidiaries contributes to, has
any obligation to contribute to, or has any liability under or with respect to
any Employee Pension Benefit Plan that is a "defined benefit plan" (as defined
in ERISA Section 3(35)).
(i) Neither Company, nor any of its Subsidiaries contributes to, has
any obligation to contribute to, or has any liability (including withdrawal
liability as defined in ERISA Section 4201) under or with respect to any
Multiemployer Plan.
(j) Neither Company nor any of its Subsidiaries maintains,
contributes to or has an obligation to contribute to, or has any liability with
respect to, any Employee Welfare Benefit Plan providing health or life insurance
or other welfare-type benefits for current or future retired or terminated
directors, officers or employees (or any spouse or other dependent thereof) of
Company or any of its Subsidiaries or of any other Person other than in
accordance with COBRA.
(k) Except as provided in Section 3.15(k) of the Company Disclosure
Schedule, the consummation of the transactions contemplated by this Agreement
will not, either alone or in combination with another event, (A) entitle any
current or former employee, officer or director of the Company or any of its
Subsidiaries to severance pay, unemployment compensation or any other payment,
except as expressly provided in this Agreement, (B) accelerate the time of
payment or vesting, or increase the amount of compensation due any such
employee, officer or director or (C) constitute a "change of control" under any
Employee Benefit Plan.
Section 3.16 Labor Relations. Neither the Company nor any of its
Subsidiaries is a party to, or bound by, any collective bargaining or other
labor union agreement, contract or other understanding with a labor union or
labor organization applicable to persons employed by the Company or any of its
Subsidiaries and no collective bargaining agreement is being negotiated by the
Company or any of its Subsidiaries. Neither the Company nor any of its
Subsidiaries is delinquent in any material respect in payments to any of its
employees or consultants for any wages, salaries, commissions, bonuses or other
compensation for any services. As of the date of this Agreement, (a) there is no
labor dispute, strike or work stoppage against the Company or any of its
Subsidiaries pending or to the knowledge of the Company threatened which may
interfere with the respective business activities of the Company or any of its
Subsidiaries, (b) neither the Company nor any of its Subsidiaries or any of
their respective representatives or employees has committed any unfair labor
practice in connection with the operation of the respective businesses of the
Company or any of its Subsidiaries, (c) except as set forth on Section 3.16 of
the Company
17
Disclosure Schedule, no charge or complaint against the Company or any of its
Subsidiaries with respect to employment practices by or on behalf of any
employee or other individual or any Governmental Entity (including the National
Labor Relations Board or any comparable governmental agency) is pending or to
the knowledge of the Company threatened that could reasonably be expected to
have a Company Material Adverse Effect, and (d) no termination of employees of
the Company and its Subsidiaries which could require reporting under the federal
Worker Adjustment and Retraining Notification Act of 1988 has been effected.
Section 3.17 Real Estate.
(a) Section 3.17(a) of the Company Disclosure Schedule lists the
address and legal description of each parcel of real property owned by the
Company or any Subsidiary (the "Owned Real Property"). Except as otherwise
disclosed in Section 3.17(a) of the Company Disclosure Schedule, the Company or
its applicable Subsidiary has good and marketable indefeasible fee simple title
in and to all of the Owned Real Property subject to no liens, encroachments,
encumbrances, claims, leases, rights of possession or other defects in title
(collectively, "Liens") except for Permitted Liens.
(b) Section 3.17(b) of the Company Disclosure Schedule lists all
leases, subleases and other occupancy agreements in effect as of the date hereof
(the "Leases") for real property (the "Leased Real Property", collectively with
the Owned Real Property, the "Real Property") to which the Company or any of its
Subsidiaries is a party. The Company or its applicable Subsidiary has a good and
valid leasehold interest in and to all of the Leased Real Property under which
it is a tenant or lessee, subject to no Liens except for Permitted Liens. Each
Lease is in full force and effect and is enforceable in accordance with its
terms as of the date hereof and, except as disclosed in Section 3.17(b) of the
Company Disclosure Schedule, will continue to be in full force and effect and
enforceable in accordance with its terms as of the effective date of the Company
Shareholder Approval. Except as disclosed in Section 3.17(b) of the Company
Disclosure Schedule, to the best knowledge of the Company, there exists no
default or condition which, with the giving of notice, the passage of time or
both, could become a default under any Lease in a manner which, individually or
in the aggregate, would have a Company Material Adverse Effect. The Company has
previously delivered or provided access to the Buyer true, complete, and correct
copies of all the Leases. Except as described in Section 3.17(b) of the Company
Disclosure Schedule, (i) no consent, waiver, approval or authorization by a
landlord is required under any Lease as a result of the execution of this
Agreement or the Related Agreements or the consummation of the transactions
contemplated hereby or thereby, provided, however, that with respect to
co-location agreements and right of entry agreements entered in the ordinary
course of business, no consent, waiver, approval or authorization by a landlord
is required except as, individually or in the aggregate, would not have a
Company Material Adverse Effect; (ii) except as set forth in Section 3.17(b)(ii)
of the Company Disclosure Schedule, no security deposit or portion thereof
deposited with respect to any Lease in an amount in excess of $100,000 has been
applied or is reasonably expected to be applied in respect of a breach or
default under such Lease which has not been redeposited in full; (iii) neither
the Company nor any Subsidiary owes, or will owe in the future, any brokerage
commissions or finder's fees with respect to any Lease in an amount in excess of
$100,000 in the aggregate; (iv) the other party to such Lease is not an
affiliate of, and otherwise does not have any economic interest in, the Company
or any Subsidiary; (v) the Company or Subsidiary has not subleased,
18
licensed or otherwise granted any person the right to use or occupy such Leased
Real Property or any portion thereof other than pursuant to co-location rights
granted in the ordinary course of business; and (vi) the Company or Subsidiary
has not collaterally assigned or granted any other security interest in any
Lease or any interest therein.
(c) The Real Property constitutes all of the real property owned,
leased, occupied or otherwise used in connection with the business of the
Company and its Subsidiaries. Except as disclosed in Section 3.17(c) of the
Company Disclosure Schedule, other than the Company and its Subsidiaries and,
with respect to co-location agreements entered into in the ordinary course of
business, the parties to such agreements, there are no parties in possession or
parties having any current or future right to occupy any of the Real Property.
The Real Property and all plants, buildings and improvements located thereon
conform in all material respects to all applicable building, zoning and other
laws, ordinances, rules and regulations. All permits, licenses and other
approvals necessary to the current occupancy and use of the Real Property have
been obtained and are in full force and effect except as, individually or in the
aggregate, could not reasonably be expected to have a Company Material Adverse
Effect. There exists no violation by the Company or any of its Subsidiaries of
any such permit, license or other approval or any covenant, condition,
restriction, easement, agreement or order affecting any portion of the Real
Property except for any violations which, individually or in the aggregate,
would not reasonably be expected to have a Company Material Adverse Effect. Each
of the Owned Real Property and Leased Real Property subject to a Lease that
constitutes a Material Contract is in good condition and repair and is
sufficient and appropriate for the conduct of the business of the Company and
its Subsidiaries, ordinary wear and tear excepted. There is no pending or to the
knowledge of the Company threatened condemnation proceedings affecting any
material portion of the Real Property. Except as disclosed in Section 3.17(c) of
the Company Disclosure Schedule, there are no outstanding options or rights of
first refusal with respect to the purchase or use of any of the Real Property,
any portion thereof or interest therein, other than co-location agreements
entered into in the ordinary course of business and other than any such options
or rights held by the Company or any of its Subsidiaries with respect to real
property of third parties. Except as disclosed in Section 3.17(c) of the Company
Disclosure Schedule, neither the Company nor any Subsidiary is obligated to
purchase any Real Property.
Section 3.18 Insurance. Section 3.18 of the Company Disclosure Schedule
contains a complete and correct list and description (including the name of the
insurer(s), name of the insured(s), amount of coverage, type of coverage,
deductible amounts and significant exclusions) of all material insurance
policies maintained (excluding group life insurance provided by the Company to
its employees and collision insurance on any motor vehicles owned or leased by
the Company but including directors' and officers' liability insurance) by or on
behalf of the Company and its Subsidiaries, including policies that have expired
(the "Expired Policies") but have been renewed by the Company but in respect of
which the Company has not yet received a new policy (the "Replacement
Policies"); provided, that any Replacement Policy shall not contain any
significant exclusions that are materially more adverse to the Company than
those contained in the Expired Policy. The Company has made available to the
Buyer complete and correct copies of all such policies together with all riders
and amendments thereto. Except as noted in Section 3.18 of the Company
Disclosure Schedule, such policies are valid and in full force and effect, and
all premiums due thereon have been paid. The Company and its Subsidiaries have
complied in all material respect with the terms and provisions of such policies
19
and have no liability relating thereto. Except as noted in Section 3.18 of the
Company Disclosure Schedule or otherwise agreed to by the Buyer, none of the
insurance policies will terminate or lapse (or be affected in any other
materially adverse manner) by reason of the execution, delivery or performance
of this Agreement and the Related Agreements by the Company or the consummation
of the transactions contemplated hereby or thereby.
Section 3.19 Taxes. Except as provided on the Company Disclosure Schedule,
(a) Each of the Company and its Subsidiaries has filed all material
federal, state, local and foreign tax returns (including combined, consolidated
or unitary returns), reports and statements, including any schedule or
attachment thereto, ("Tax Returns") that it was required to file under
applicable laws and regulations. All such Tax Returns were correct and complete
in all material respects and have been prepared in substantial compliance with
all applicable laws and regulations. All Taxes due and owing by any of the
Company and its Subsidiaries (whether or not shown on any Tax Return) have been
paid, except as set forth in Section 3.19(a) of the Company Disclosure Schedule.
Neither the Company nor any of its Subsidiaries currently is the beneficiary of
any extension of time within which to file any Tax Return, except as set forth
on Section 3.19(a) of the Company's Disclosure Schedule. Except for Liens for
Taxes being repaid under the Bankruptcy Proceedings, there are no Liens for
Taxes (other than Taxes not yet due and payable or delinquent) upon any of the
assets of the Company or any of its Subsidiaries.
(b) Each of the Company and its Subsidiaries has withheld and paid
all Taxes required to have been withheld and paid in connection with any amounts
paid or owing to any employee, independent contractor, creditor, shareholder or
other third party.
(c) Except as set forth on Section 3.19(c) of the Company's
Disclosure Schedule, no foreign, federal, state, or local tax audits or
administrative or judicial Tax proceedings are pending or being conducted with
respect to the Company or any of its Subsidiaries. Except as set forth on
Section 3.19(c) of the Company's Disclosure Schedule, neither the Company nor
any of its Subsidiaries has received from any foreign, federal, state, or local
taxing authority (including jurisdictions where the Company or its Subsidiaries
have not filed Tax Returns) any (i) written notice indicating an intent to open
an audit or other review, (ii) request for information related to Tax matters,
or (iii) notice of deficiency or proposed adjustment for any amount of Tax
proposed, asserted, or assessed by any taxing authority against the Company or
any of its Subsidiaries. Section 3.19(c) of the Company Disclosure Schedule
lists each jurisdiction in which the Company or any of its Subsidiaries is
required to file Tax Returns as of December 31, 2003, indicates those Tax
Returns that have been audited since October 10, 2002, and indicates those Tax
Returns that currently are the subject of audit. The Company has delivered or
made available to the Buyer correct and complete copies of all federal income
Tax Returns, examination reports, and statements of deficiencies assessed
against or agreed to by any of the Company and its Subsidiaries filed or
received since December 31, 1998.
(d) Neither the Company nor any of its Subsidiaries has waived any
statute of limitations in respect of Taxes or agreed to any extension of time
with respect to a Tax assessment or deficiency, except as set forth on Section
3.19(d) of the Company's Disclosure Schedule.
20
(e) Neither the Company nor any of its Subsidiaries has been a
United States real property holding corporation within the meaning of Code
section 897(c)(2) during the applicable period specified in Code section
897(c)(1)(A)(ii). Each of the Company and its Subsidiaries has disclosed on its
federal income Tax Returns all positions taken therein that could give rise to a
substantial understatement of federal income Tax within the meaning of Code
section 6662. Neither the Company nor any of its Subsidiaries has engaged in a
"listed transaction" within the meaning of section 6012 of the Code.
(f) Section 3.19(f) of the Company Disclosure Schedule sets forth
the following information with respect to each of the Company and its
Subsidiaries (or, in the case of clause (ii) below, with respect to each of the
Subsidiaries) as of December 31, 2002: (i) the basis of the Company or
Subsidiary in its assets; (ii) the basis of the shareholder(s) of the Subsidiary
in its stock (or the amount of any excess loss account); (iii) the amount of any
net operating loss, net capital loss, unused investment or other credit, unused
foreign tax, or excess charitable contribution allocable to the Company or
Subsidiary, and any limitations with respect to the use thereof; and (iv) the
amount of any deferred gain or loss allocable to the Company or Subsidiary
arising out of any intercompany transaction.
(g) Neither the Company nor any of its Subsidiaries has distributed
stock of another person, or has had its stock distributed by another Person, in
a transaction that was purported or intended to be governed in whole or in part
by Code section 355 or 361.
For the purposes of this Agreement, the term "Tax" or "Taxes" means all
(i) United States federal, state or local or non-United States taxes,
assessments, charges, duties, levies or other similar governmental charges of
any nature, including all income, franchise, profits, capital gains, capital
stock, transfer, sales, use, occupation, property, excise, severance, windfall
profits, stamp, stamp duty reserve, license, payroll, withholding, ad valorem,
value added, alternative minimum, environmental, customs, social security (or
similar), unemployment, sick pay, disability, registration and other taxes,
assessments, charges, duties, fees, levies or other similar governmental charges
of any kind whatsoever, whether disputed or not, together with all estimated
taxes, deficiency assessments, additions to tax, penalties and interest; (ii)
any liability for the payment of any amount of a type described in clause (i)
arising as a result of being or having been a member of any consolidated,
combined, unitary or other group or being or having been included or required to
be included in any Tax Return related thereto; and (iii) any liability for the
payment of any amount of a type described in clause (i) or clause (ii) as a
result of any obligation to indemnify or otherwise assume or succeed to the
liability of any other person.
Section 3.20 Intellectual Property. Section 3.20 of the Company Disclosure
Schedule sets forth a complete and accurate list of all of the Company's and its
Subsidiaries' United States and foreign (a) patents and patent applications, if
any, (b) registered and material unregistered trademarks and service marks and
pending trademark or service xxxx registration applications, (c) domain name
registrations, and (d) registered copyrights, indicating for each, the
applicable jurisdiction, registration number (or application number), and date
issued (or date filed). All registered trademarks, patents and registered
copyrights are currently in material compliance with all legal requirements of
the applicable registration authority (including the timely post-registration
filing or affidavits of use and incontestability and renewal applications with
respect to trademarks, and the payment of filing, examination and maintenance
fees and proof of
21
working or use with respect to patents) are not subject to any maintenance fees
or actions falling due within 120 days after the date hereof. Except as set
forth in Section 3.20 of the Disclosure Schedule, (i) no trademark or service
xxxx is currently involved in any opposition or cancellation proceeding and to
the best knowledge of the Company no such action has been threatened in writing
with respect to any such trademarks or service marks or trademark or service
xxxx registration applications, (ii) to the best knowledge of the Company, no
trademarks, service marks, patents or patent applications of any third party
infringe upon the Company's registered trademarks or service marks, patents or
patent applications except for any such infringements which, individually or in
the aggregate, would not reasonably be expected to have a Company Material
Adverse Effect, and (iii) to the best knowledge of the Company, no claim has
been asserted to the Company that the conduct of the Company and its
Subsidiaries infringe upon or misappropriate the intellectual property rights of
any third party except for any infringement or misappropriation which,
individually or in the aggregate, would not reasonably be expected to have a
Company Material Adverse Effect.
Section 3.21 Litigation. Except as set forth in Section 3.21 of the
Company Disclosure Schedule, there is no suit, claim, action, proceeding or
investigation pending or to the knowledge of the Company threatened against the
Company of any of its Subsidiaries or its or their properties which could have a
Company Material Adverse Effect.
Section 3.22 Customers and Suppliers. Except as set forth in Section 3.22
of the Company Disclosure Schedule, since March 31, 2004 through the date
hereof, the Company and its Subsidiaries have not received any notice to, and,
to the best knowledge of the Company, do not know of any party that intends to,
terminate, cancel, curtail or change any Material Contract or the business
relationship of the Company or any Subsidiary with any of their customers or
significant equipment or maintenance supplier other than notices with respect to
matters arising in the ordinary course of business.
Section 3.23 Business Combination and Takeover Statutes. Prior to the date
hereof, the board of directors of the Company has taken all actions necessary or
advisable to exempt the execution, delivery or performance of this Agreement and
the Related Agreements and the consummation of the transactions contemplated
hereby and thereby under or make any of the foregoing actions not subject to
Section 203 of the DGCL or any other takeover law or law that purports to limit
or restrict business combinations or the ability to acquire or vote shares.
Section 3.24 Board Recommendation. As of the date hereof, the board of
directors of the Company has recommended, and such recommendation has not been
rescinded, that the shareholders of the Company vote for adoption of this
Agreement.
Section 3.25 Voting Requirements. The affirmative vote at a shareholders'
meeting of the Company or by written consent of the holders of a majority of the
outstanding shares of Company Common Stock entitled to vote to adopt this
Agreement (the "Company Shareholder Approval") is the only vote of the holders
of any class or series of the Company's capital stock necessary to adopt this
Agreement.
Section 3.26 Brokers. No broker, investment banker, financial advisor or
other person, other than Xxxxxx Brothers Inc., is entitled to any broker's,
finder's, financial advisor's or other
22
similar fee or commission in connection with the transactions contemplated by
this Agreement or the Related Agreements based upon arrangements made by or on
behalf of the Company.
Section 3.27 Opinion of Financial Advisor. The Company has received an
opinion of Xxxxxx Brothers, dated as of the date hereof, that the Merger
Consideration is fair, from a financial point of view, to the holders of shares
of the Company Common Stock.
Section 3.28 Weekly Forecasts. The Company has delivered to the Buyer (i)
weekly projections and forecasts of cash receipts and disbursements for the
Company and its Subsidiaries through December 31, 2004 (the "Weekly Forecasts"),
and (ii) an accounts payable aging report as of July 9, 2004 (the "Payables
Report") attached hereto as Schedule B. The Weekly Forecasts have been prepared
in good faith based upon reasonable estimates and assumptions, have been
prepared on the basis of the assumptions stated therein and reflect the
reasonable estimates of the Company of the results of operations and other
information projected therein. To the best knowledge of the Company, no facts
exist that (individually or in the aggregate) would result in any material
change in any of such projections..
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE BUYER AND MERGER SUB
The Buyer and Merger Sub each hereby represents and warrants to the
Company as follow:
Section 4.1 Organization and Standing. Each of the Buyer and Merger Sub is
a corporation or other legal entity duly organized, validly existing and in good
standing under the laws of the respective jurisdictions in which it is organized
and has the requisite corporate or other power, as the case may be, and
authority to carry on its business as now conducted. Each of the Buyer and
Merger Sub is duly qualified or licensed to do business and is in good standing
in each jurisdiction in which the nature of its business or the ownership,
leasing or operation of its properties make such qualification or licensing
necessary, except where the failure to be so qualified or licensed or in good
standing in such jurisdiction, individually or in the aggregate, would not
reasonably be expected to have a Buyer Material Adverse Effect. The Buyer has
made available to the Company prior to the execution of this Agreement complete
and correct copies of the certificate of incorporation and by-laws and
equivalent organizational documents, in each case as amended to the date hereof,
of the Buyer and Merger Sub. Such certificate of incorporation, by-laws and
equivalent organizational documents are in full force and effect. For the
purposes of this Agreement, the term "Buyer Material Adverse Effect" means a
material adverse effect on the ability of the Buyer to consummate the
transactions contemplated by this Agreement and the Related Agreements.
Section 4.2 Authority and Enforceability. Prior to the Buyer's and Merger
Sub's execution of this Agreement, each of the Buyer and Merger Sub have all
requisite corporate power and authority to enter into this Agreement and the
Related Agreements and to consummate the transactions contemplated hereby and
thereby. The execution and delivery of this Agreement and the Related Agreements
by the Buyer and Merger Sub and the consummation by the Buyer and Merger Sub of
the transactions contemplated by this Agreement
23
and the Related Agreements have been duly authorized by all necessary corporate
action on the part of the Buyer and the Merger Sub, and no other corporate
proceedings on the part of the Buyer or Merger Sub are necessary to authorize
this Agreement and the Related Agreements or to consummate the transactions
contemplated hereby or thereby. This Agreement and the Related Agreements have
been duly executed and delivered by the Buyer and Merger Sub, assuming the due
authorization, execution and delivery by the Company, constitute a valid and
binding obligation of the Buyer and Merger Sub, enforceable against the Buyer
and Merger Sub in accordance with their respective terms.
Section 4.3 Conflicts, Consents and Approvals. The execution and delivery
by the Buyer and Merger Sub of this Agreement and the Related Agreements and the
consummation of the transactions contemplated hereby and thereby will not:
(a) violate any provision of the certificate of incorporation or
by-laws (or equivalent organization documents) of the Buyer or Merger Sub;
(b) violate, conflict with, or result in a breach of any provision
of, or constitute a default (or an event which, with the giving of notice, the
passage of time or both, would constitute a default) under, require the consent
of any party or the giving of notice to any party under, or entitle any party
(with the giving of notice, the passage of time or both) to terminate,
accelerate, modify, impose any monetary or other economic penalty or call a
default under, or result in the creation of any Encumbrance upon any of the
properties or assets of the Buyer or Merger Sub under, any of the terms,
conditions or provisions of any note, bond, mortgage, indenture, deed or trust,
intellectual property or other licenses (except with respect to consents or
approvals with the FCC, State PUCs or Municipal Franchising Authorities referred
to in subsection (d) below), contract, undertaking, agreement, lease or other
instrument or obligation to which the Buyer or the Merger Sub is a party;
(c) violate any order, writ, injunction, decree, statute, rule or
regulation (except with respect to consents or approvals with the FCC, State
PUCs or Municipal Franchising Authorities referred to in subsection (d) below),
applicable to the Buyer or Merger Sub, except where any such violation would not
reasonably be expected to have individually or in the aggregate a Buyer Material
Adverse Effect; or
(d) except as contemplated by this Agreement or the Related
Agreements, require any consent or approval of or registration or filing by the
Buyer or Merger Sub or any of their affiliates with, any third party or any
Governmental Entity, which has not been received or made, except for (i) any
such consent or approval of or registration or filing with the FCC, any State
PUC, or any Municipal Franchising Authority having regulatory authority over the
business of the Buyer or Merger Sub as conducted in any given jurisdiction, (ii)
the requirements of the Securities Act, the Exchange Act, Blue Sky Laws and
state takeover laws and (iii) any such consent or approval of or registration or
filing which if not obtained or made could not reasonably be expected to have a
Buyer Material Adverse Effect.
Section 4.4 Compliance. Neither the Buyer nor Merger Sub is in conflict
with, or in default or violation of, (a) any law, rule, regulation, order,
judgment or decree applicable to the Buyer or Merger Sub or by which any
property or asset of Buyer or Merger Sub is bound or
24
affect, or (b) any note, bond, mortgage, indenture, contract, agreement, lease,
license, permit, franchise or other instrument or obligation to which the Buyer
or Merger Sub is a party or by which Buyer or Merger Sub or any property or
asset of Buyer or Merger Sub is bound or affected, except for any such
conflicts, defaults or violations that could not reasonably be expected to have,
individually or in the aggregate, a Buyer Material Adverse Effect.
Section 4.5 Voting Required. The approval of the Buyer, as the sole
shareholder of the Merger Sub, is the only vote of the holders of any class or
series of the Merger Sub's capital stock necessary to adopt this Agreement.
Section 4.6 Brokers. No broker, investment banker, financial advisor or
other person is entitled to any broker's, finder's, financial advisor's or other
similar fee or commission in connection with the transactions contemplated by
this Agreement or the Related Agreements based upon arrangements made by or on
behalf of the Buyer or Merger Sub.
Section 4.7 Ownership of Company Common Stock. As of the date of this
Agreement, neither the Buyer nor any of its Subsidiaries nor, to the best of
their knowledge, any of their affiliates or associates (as such terms are
defined under the Exchange Act) (A) beneficially owns, directly or indirectly or
(B) is party to any agreement, arrangement or understanding for the purposes of
acquiring, holding, voting or disposing of, in case of either (A) or (B), shares
of Company Common Stock, other than the Lock Up Agreement.
Section 4.8 Compliance with Applicable Laws. The Buyer and the Merger
Sub have complied with all applicable statutes, laws, ordinances, rules, orders
and regulations of any Governmental Entity (other than the FCC and State PUCs)
in connection with the execution and delivery of this Agreement, the Related
Agreements and the Lock Up Agreement except where any such violation would not
have or be expected to have, individually or in the aggregate, a Buyer Material
Adverse Effect. As of the date of this Agreement, no action, demand, requirement
or investigation by any Governmental Entity with respect to the Buyer and the
Merger Sub is pending or, to the knowledge of the Buyer and the Merger Sub,
threatened, nor has any Governmental Entity made any inquiry or indicated an
intention to conduct any investigation of the Buyer and the Merger Sub.
Section 4.9 Capitalization of the Surviving Corporation. Assuming (a) the
transactions contemplated by this Agreement are consummated, (b) the Company
does not breach any of its representations, warranties, covenants or other
agreements in under this Agreement or the Related Agreements and (c) the Company
is in substantial compliance with the Weekly Forecasts, the Buyer reasonably
believes, as of the date hereof, that the Surviving Corporation and its
Subsidiaries, as of the Closing Date, will not have unreasonably small capital
and will be able to satisfy their debts as such debts become due in the ordinary
course of business.
ARTICLE V
COVENANTS RELATING TO CONDUCT OF BUSINESS
25
Section 5.1 Conduct of Business Pending the Merger. During the period from
the date of this Agreement to the Effective Time, the Company shall, and shall
cause its Subsidiaries to, carry on their respective businesses in the ordinary
course consistent with past practice (subject to such departures therefrom as
may be recommended by the Manager under the Interim Management Agreement or as
may be otherwise agreed to by the Buyer and in compliance in all material
respects with all applicable laws and regulations and, to the extent consistent
therewith, use all reasonable efforts to preserve intact their current business
organizations, licenses and authorizations, use all reasonable efforts to keep
available the services of their current officers and other key employees and
preserve their relationships with those persons having business dealings with
them to the end that their goodwill and ongoing businesses shall be unimpaired
at the Effective Time; provided, however, that following the effective date of
the Company Shareholder Approval, the Company and its Subsidiaries shall not be
deemed to be in breach of any of the foregoing requirements if they are unable
to comply solely by reason of their distressed financial condition or other
reason outside of their control. Without limiting the generality of the
foregoing, during the period from the date of this Agreement to the Effective
Time or earlier termination of this Agreement, the Company shall not, and shall
not permit any of its Subsidiaries to, unless recommended by the Manager under
the Interim Management Agreement or otherwise agreed to by the Buyer:
(a) except to the extent required to comply with its obligations
hereunder or required by law, amend or otherwise change its certificate of
incorporation, by-laws or equivalent organizational documents, or merge or
consolidate with any person;
(b) except for the issuance of up to 160,662 shares of Company
Common Stock to be held in trust for the interests of holders of unresolved
claims in the Bankruptcy Proceedings, issue or sell, or authorize the issuance
or sale of (i) any shares of capital stock of any class of the Company or any of
its Subsidiaries or (ii) any options, warrants or other convertible securities
of the Company or any of its Subsidiaries (excluding the grant of Options as
previously disclosed by the Company to Buyer prior to the date of this
Agreement, such as the Company Stock Options);
(c) declare, set aside or pay any dividend or other distribution,
payable in cash, stock, property or otherwise, with respect to any of its
capital stock (other than dividends and distributions by a direct or indirect
wholly owned Subsidiary of the Company to its parent);
(d) split, combine or reclassify any of its capital stock or issue
or authorize the issuance of any other securities in respect of, in lieu of or
in substitution for shares of its capital stock, except for issuances of the
Company Common Stock upon the exercise of the Company Stock Options or Company
Warrants;
(e) except for the issuance of up to 160,662 shares of Company
Common Stock to be held in trust for the interests of holders of unresolved
claims in the Bankruptcy Proceedings, issue, deliver, sell, pledge or otherwise
encumber or subject to any Lien any shares of its capital stock (other than any
issuance, sale or delivery thereof required upon exercise of any Company Stock
Options or Company Warrants), any other voting securities or any securities
convertible into, or any rights, warrants or options to acquire, any such
shares, voting securities or convertible securities;
26
(f) acquire or agree to acquire (including, without limitation, by
merger, consolidation or acquisition of stock or assets) any corporation,
partnership, other business organization or any division thereof or any assets
(other than equipment and other similar assets necessary to operate the
businesses of the Company and its Subsidiaries in the ordinary course and
consistent with past practice);
(g) except for (i) Indebtedness to the Buyer and Merger Sub under
the Interim Credit Agreement or this Agreement and (ii) from and after the
effective date of the Company Shareholder Approval, so long as no default or
event of default exists under the Interim Credit Agreement, Indebtedness for
money borrowed from third parties in replacement of funds that otherwise
constitute Available Cash (as defined in the Interim Credit Agreement) but that
the Buyer has failed to provide under the Interim Credit Agreement (in an amount
not to exceed the aggregate amount of Available Cash requested by the Company
that the Buyer has failed to fund under the Interim Credit Agreement), incur any
Indebtedness for borrowed money or issue any debt securities or assume,
guarantee or endorse, or otherwise as an accommodation become responsible for,
the obligations of any person, or make any loans or advances, or enter into or
amend any contract, agreement, commitment or arrangement to effectuate any
prohibited matter set forth in this Section 5.1(g);
(h) sell, lease, license, mortgage or otherwise encumber or subject
to any Lien (other than any Lien securing the Indebtedness to the Buyer under
the Interim Credit Agreement), abandon or otherwise dispose of any of the
properties or assets of the Company or any of its Subsidiaries, except (i)
immaterial sales of assets in the ordinary course of business or (ii) sales of
assets pursuant to the network consolidation plan which has previously been
disclosed to Buyer; provided, however, that following the effective date of the
Company Shareholder Approval, the Company and its Subsidiaries shall not be
deemed to be in breach of this Section 5.1(h) if, by reason of their financial
distress or other reason outside of their control, an involuntary Lien is placed
on any of their assets;
(i) 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 any other Governmental Entity (collectively, a
"Filing") other than in the ordinary course of the operation of the business or
the planned exit of markets as previously disclosed to Buyer (including without
limitation, the discontinuation of services as currently provided by the Company
and its Subsidiaries), provided, however, that following the effective date of
the Company Shareholder Approval, the Company and its Subsidiaries shall not be
deemed to be in breach of this Section 5.1(i) by reason of making any Filing
which is required by reason of their financial distress or by reason of any
other event outside of their control;
(j) make or agree to make any new capital expenditure or enter into
any agreement or arrangements providing for payments which are, individually, in
excess of $100,000 or, in the aggregate, in excess of $1,000,000, except in
accordance with the Weekly Forecasts and as provided in Section 3.12(c) with
respect to the network facilities of the Company and its Subsidiaries other than
by reason of repair or replacement of an asset material to the businesses of the
Company and its Subsidiaries that is damaged by a casualty event or is otherwise
required in connection with exercise of eminent domain or similar action;
27
(k) engage in any transaction with any Affiliate (other than for
services as employees, officers and directors), including any contract,
agreement or other arrangement providing for the furnishing of services to or
by, providing for rental of real or personal property to or from, or otherwise
requiring payments to or from any such Affiliate or any corporation,
partnership, trust or other entity in which any such Affiliate has a substantial
interest or is an officer, director, trustee or partner, on terms more favorable
to such Person than would have been obtainable on an arm's-length basis in the
ordinary course of business;
(l) enter into any arrangement, directly or indirectly, whereby the
Company or any Subsidiary shall sell or transfer any property owned by it in
order then or thereafter to lease such property or lease other property that the
Company or such Subsidiary intends to use for substantially the same purpose as
the property being sold or transferred;
(m) pay or discharge, or cause to be paid or discharged, any
Indebtedness of the Company or its Subsidiaries (other than Indebtedness owed to
Buyer) provided, however, that the Company may pay (i) regularly scheduled
payments of principal and interest on Indebtedness of the type described in
clause (a) of the definition thereof and which is listed in Section 3.7(c) of
the Company Disclosure Schedule, clause (b) of the definition thereof and which
is listed in Section 3.7(b) of the Company Disclosure Schedule as such
obligations become due and payable in the ordinary course of business, clause
(c) of the definition thereof and which is listed in Section 3.7(b) of the
Company Disclosure Schedule as such obligations become due and payable in the
ordinary course of business, clause (d) of the definition thereof and which is
listed in Section 3.7(b) of the Company Disclosure Schedule as such obligations
become due and payable in the ordinary course of business, and clause (e) of the
definition thereof and which is listed in Section 3.7(c) of the Company
Disclosure Schedule, as such obligations become due and payable in the ordinary
course of business, (ii) scheduled payments under the KERP (as defined below),
(iii) payments for liabilities or obligations as set forth in Section 3.7(b) of
the Company Disclosure Schedule as such amounts become due and payable in the
ordinary course of business, (iv) payments of trade payables in the ordinary
course of business, consistent with recent practice (as evidenced by Payables
Report, which is attached hereto as Schedule B), provided, further, that the
Company shall deliver to the Buyer weekly reports that sets forth the proposed
payment schedule of all payments that exceed $10,000 and shall not make any such
payment as to which Buyer shall have given a written objection to the Company no
later than 5:00 pm (CST) on the Business Day immediately succeeding the date the
Buyer shall have received such weekly report, and provided further that the
Buyer shall have the right to have the Buyer Representative attend any daily
cash flow meetings of the Company and object to the payment of any amount the
Buyer Representative believes in good faith to be outside of the ordinary course
of business as to which no such payment shall be made, and (v) following the
effective date of the Company Shareholder Approval, involuntary payments
pursuant to judicial authority entered into after such date;
(n) increase the compensation or benefits of any director, executive
officer or other key employee or pay any benefit or amount not required by a
plan or arrangement disclosed on Section 3.15(a) of the Company Disclosure
Schedule as in effect on the date of this Agreement to any person;
28
(o) make any capital contribution or provide any other additional
funding to the ICG Key Employee Trust (the "Trust"), whether or not provided for
by the ICG Key Employee Retention Plan in effect as of June 21, 2004 (the
"KERP") or amend the KERP, provided, however, that the Company may amend the
KERP to make executive officers beneficiaries of the Trust following the
effective date of the Company Shareholder Approval and may fund the Trust
accordingly in an amount not to exceed $1,174,500 with respect to those
executive officer beneficiaries;
(p) waive, release, grant, transfer or permit to lapse any material
rights of value, to which the Company or any of its Subsidiaries has any right
on the date of this Agreement other than (i) waivers of rights under this
Agreement, the Interim Credit Agreement or the Interim Management Agreement or
(ii) immaterial waivers in the ordinary course of business, provided, however,
that following the effective date of the Company Shareholder Approval, the
Company and its Subsidiaries shall not be deemed to be in breach of this Section
5.1(p) if, by reason of their financial distress or other reason outside of
their control, a right is lost other than through the volitional act or decision
of the Company;
(q) take any action that would reasonably be expected to have a
material adverse impact on the ability of the Company and the Buyer to obtain
any material consents of any Governmental Entity necessary in connection with
this Agreement or the Related Agreements or the consummation of the transactions
contemplated hereby or thereby; provided, however, that following the effective
date of the Company Shareholder Approval, the Company and its Subsidiaries shall
not be deemed to be in breach of this Section 5.1(q) if, by reason of their
financial distress or other reason outside of their control, the Company and its
Subsidiaries are financially unable to take an action required by this Section
5.1(q);
(r) enter into any contract or agreement containing covenants
purporting to limit the freedom of the Company or any of affiliates to compete
or participate in any line of business or activities in any geographic area;
(s) terminate, amend, modify or waive any material provision of any
Material Contract other than in the ordinary course of business and which would
not involve the incurrence by the Company or such Subsidiary of more than an
additional $100,000 of obligations over the term of the contract or agreement as
so amended or modified or otherwise take or fail to take any action designated
in Schedule C with respect to any such contract; provided, however, that
following the effective date of the Company Shareholder Approval, the Company
and its Subsidiaries shall not be deemed to be in breach of this Section 5.1(s)
if, by reason of their financial distress or other reason outside of their
control, the Company and its Subsidiaries do not have the financial ability to
take an action required by this section;
(t) take or fail to take any action objected to or recommended by
(as applicable) the Manager and which is within the scope of authority granted
to the Manager under the Interim Management Agreement;
(u) unless otherwise determined by the Company, reasonably and in
good faith, to be necessary or appropriate in light of the Company's distressed
financial condition and subject to prior notice to the Buyer Representative,
make any change in its accounting methods
29
or cash management (including its standards for the acceleration, delay or
compromise of payables or receivables) and shall not make any such change to
which the Buyer Representative objects based on the Buyer Representative's good
faith determination that such change is outside of the ordinary course of
business consistent with past practices;
(v) enter into, or agree to enter into, any contract or agreement
(i) outside the ordinary course of business or (ii) involving payment by the
Company or any Subsidiary of more than $100,000 over the term of the contract or
agreement, unless (A) the Company has delivered advance written notice to the
Buyer Representative of its intention to enter into or agree to enter into such
contract or agreement and (B) either (x) the Buyer Representative has notified a
Responsible Officer of the Buyer's approval or (y) such contract represents an
activity of the Company in the ordinary course of business as contemplated in
the Weekly Forecasts which is materially necessary for the Company to comply
with applicable law or its obligations under this Agreement;
(w) purchase, hold or acquire any capital stock, evidences of
Indebtedness or other securities of, make or permit to exist any loans or
advances to, or make or permit to exist any investment in, any other Person (all
of the foregoing, "Investments"), except for (i) ownership by the Company or any
Subsidiary of the capital stock of each of the Subsidiaries of the Company, (ii)
Permitted Investments, (iii) advances and loans among the Company and its
Subsidiaries in the ordinary course of business, and (iv) existing Investments
as of the date hereof described on Section 5.1(w) of the Company Disclosure
Schedule; or
(x) authorize, commit or agree to take any of the foregoing actions.
Notwithstanding the foregoing, nothing set forth in this Section 5.1 shall
be deemed to restrict the Company's ability to take pay, incur, escrow, or
reserve or provide for any fees, costs and expenses of legal counsel,
accountants, financial advisors, turnaround management, and other persons
identified on Schedule D attached hereto rendering professional services to the
Company and its Subsidiaries ("Professional Fees") or to take any action
determined by it, reasonably and in good faith, to be in furtherance of the
performance of its obligations under this Agreement or the Related Agreements.
No action or failure to take any action by the Company approved by or in
accordance with the recommendations of the Manager under the Interim Management
Agreement shall be deemed, and the reasonably foreseeable consequences of such
action or inaction shall not be deemed to have resulted in, a breach by the
Company of its obligations pursuant to this Section 5.1 or pursuant to Section
6.2, 6.5, 6.6, Section 6.9 or Section 6.10.
Section 5.2 Advice of Changes
(a) The Company and the Buyer shall promptly advise the other
parties in writing to the extent it has knowledge of any change or event having,
or which would reasonably be expected to have a material adverse effect on such
party or on the truth of their respective representations and warranties (prior
to the effective date of the Company Shareholder Approval) or the ability of the
conditions set forth in Article 7 to be satisfied, provided, however, that no
such notification shall affect the representations, warranties, covenants or
agreements of the
30
parties (or remedies with respect thereto) or the conditions to the obligations
of the parties under this Agreement or the Related Agreements.
(b) The Company shall promptly advise the Buyer in writing of its
receipt of any notice of, or notice of the intent or request to, terminate,
cancel, curtail or change any Material Contract or the business relationship of
the Company or any Subsidiary with any of their customers or significant
equipment or maintenance supplier outside of the ordinary course of business.
Section 5.3 Obligations and Taxes. The Company shall, and shall cause each
of its Subsidiaries to, pay all of its material obligations promptly and in
accordance with their terms and pay and discharge promptly all material Taxes,
assessments and governmental charges or levies imposed upon it or upon its
income or profits or in respect of its property, as well as all material lawful
claims for labor, materials and supplies or otherwise which, if unpaid, would
become a Lien or charge upon such properties or any part thereof, before the
same shall become in default; provided, however, that the Company and each
Subsidiary shall not be required to pay and discharge or to cause to be paid and
discharged any such obligation, Tax, assessment, charge, levy or claim so long
as the validity or amount thereof shall be contested in good faith by
appropriate proceedings (if the Company and its Subsidiaries shall have set
aside on their books adequate reserves therefor); and provided, further, that
following the effective date of the Company Shareholder Approval, the Company
and its Subsidiaries shall not be deemed in breach of this Section 5.3 if they
are unable to comply solely by reason of their distressed financial condition or
other reason outside of their control.
Section 5.4 Interim Management Agreement. At the effective time of the
Company Shareholder Approval, the Company and the Buyer shall enter into one or
more management agreements substantially in the form attached hereto as Exhibit
C.
Section 5.5 No Solicitation by the Company.
(a) The Company shall not, nor shall it permit any of its
Subsidiaries to, nor shall it authorize or permit any of its directors, officers
or employees or any investment banker, financial advisor, attorney, accountant
or other representative retained by it or any of its Subsidiaries to, directly
or indirectly through another person, (i) solicit, initiate or encourage
(including by way of furnishing information) any inquiries or the making of any
proposal which constitutes a Company Takeover Proposal (as defined below), (ii)
participate in any discussions or negotiations regarding any Company Takeover
Proposal, or (iii) enter into any agreement, arrangement or understanding
requiring it to abandon, terminate or fail to consummate the Merger or any other
transaction contemplated by this Agreement or the Related Agreements; provided,
that if, at any time prior to obtaining the Company Shareholder Approval (the
"Applicable Period"), the board of directors of the Company determines in good
faith, after consultation with a nationally reputable financial advisor and its
outside legal advisors, that such Company Takeover Proposal could reasonably be
expected to result in a Company Superior Proposal (as defined Section 5.5(b))
which was not solicited by it or which did not otherwise result from a breach of
this Section 5.5(a), the Company may (x) furnish information with respect to the
Company and its Subsidiaries to any person making a Company Takeover Proposal
pursuant to a customary confidentiality agreement (as determined by the Company
after
31
consultation with its outside counsel) which terms are no more restrictive
than those in the Confidentiality Agreement (as defined in Section 6.3) and (y)
participate in discussions or negotiations regarding such Company Takeover
Proposal. For purposes of this Agreement, "Company Takeover Proposal" means any
inquiry, proposal or offer from any person relating to any (w) direct or
indirect acquisition or purchase of a business that constitutes 20% or more of
the net revenues, net income or the assets of the Company and its Subsidiaries,
taken as a whole, (x) direct or indirect acquisition or purchase of 20% or more
of any class of equity securities of the Company or any of its Subsidiaries
whose business constitutes 20% or more of the net revenues, net income or assets
of the Company and its Subsidiaries, taken as a whole, (y) tender offer or
exchange offer that if consummated would result in any person beneficially
owning 20% or more of any class of equity securities of the Company or any of
its Subsidiaries whose business constitutes 20% or more of the net revenues, net
income or assets of the Company and its Subsidiaries, taken as a whole, or (z)
merger, consolidation, business combination, recapitalization, liquidation,
dissolution or similar transaction involving the Company or any of its
Subsidiaries whose business constitutes 20% or more of the net revenues, net
income or assets of the Company and its Subsidiaries, taken as a whole, other
than the transactions contemplated by this Agreement or the Related Agreements.
(b) Except as expressly permitted by this Section 5.5, neither the
board of directors of the Company nor any committee thereof shall (i) withdraw
or modify, or propose publicly to withdraw or modify, in a manner adverse to the
Buyer, the approval or recommendation by such board of directors or committee of
this Agreement or the Merger unless the board of directors of the Company
determines in good faith, after consultation with a nationally reputable
financial advisor and its outside legal advisors, that the failure to take the
foregoing actions would be inconsistent with its fiduciary duties under
applicable law, (ii) approve or recommend, or propose publicly to approve or
recommend, any Company Takeover Proposal, or (iii) cause the Company to enter
into any letter of intent, agreement in principle, acquisition agreement or
other similar agreement related to any Company Takeover Proposal (each, a
"Company Acquisition Agreement"). Notwithstanding anything in this Agreement to
the contrary, in response to a Company Superior Proposal which was not solicited
by the Company and which did not otherwise result from a breach of Section
5.5(a), the board of directors of the Company may (subject to this and the
following sentences and payment of fees under Section 8.3(b)) terminate this
Agreement (and concurrently with or after such termination, if it chooses, cause
the Company to enter into any Company Acquisition Agreement with respect to any
Company Superior Proposal), but only at a time that is during the Applicable
Period and is after the fifth Business Day following the Buyer's receipt of
written notice advising the Buyer that the board of directors of the Company is
prepared to accept a Company Superior Proposal, specifying the material terms
and conditions of such Company Superior Proposal and identifying the person
making such Company Superior Proposal. For purposes of this Agreement, a
"Company Superior Proposal" means any proposal made by a third party to acquire,
directly or indirectly, including pursuant to a tender offer, exchange offer,
merger, consolidation, business combination, recapitalization, liquidation,
dissolution or similar transaction, for consideration consisting of cash and/or
securities, more than 50% of the combined voting power of the shares of the
Company Common Stock then outstanding or all or substantially all the assets of
the Company and its Subsidiaries taken together and otherwise on terms which the
board of directors of the Company determines in good faith, upon consideration
of the value of consideration,
32
likelihood of consummation of such proposed transaction and other factors, in
each case, to be more favorable to the Company's shareholders than the Merger.
(c) In addition to the obligations of the Company set forth in
paragraphs (a) and (b) of this Section 5.5, the Company shall promptly (i)
advise Buyer orally and in writing of any request for information or of any
Company Takeover Proposal, and (ii) provide Buyer with a written summary (with
updates) of the material terms and condition of any Company Takeover Proposal,
which shall include the name of the bidder with respect to such Company Takeover
Proposal, unless disclosure of the name of the bidder would violate a
confidentiality agreement entered into before the date hereof and by which the
Company is bound.
ARTICLE VI
ADDITIONAL AGREEMENTS
Section 6.1 Preparation of the Company Proxy Statement; Shareholders
Meeting.
(a) As promptly as practicable after execution of this Agreement and
if required by the Exchange Act, the Company shall prepare and file with the
SEC, and shall use all commercially reasonable efforts to have cleared by the
SEC, and promptly thereafter shall mail to the Company's shareholders, the
Company Proxy Statement. The Company Proxy Statement shall contain the
recommendation of the board of directors of the Company to the Company's
shareholders to vote to approve the Merger and approve and adopt this Agreement.
(b) At the Company Shareholders Meeting, if any, the Company will
use its commercially reasonable efforts to solicit from the Company's
shareholders proxies in favor of the Merger and, subject to fiduciary
requirements of applicable law, will take any other commercially reasonable
action necessary or, in the reasonable opinion of the Buyer, advisable to secure
any vote or consent of the Company's shareholders required by the DGCL to effect
the Merger.
Section 6.2 Financial Statements, Reports, etc. The Company shall deliver
to the Buyer:
(a) within 90 days after the end of each fiscal year of the Company,
the Company's annual report on Form 10-K, as filed with the SEC;
(b) within 45 days after the end of each of the first three fiscal
quarters of the Company, the Company's quarterly report on Form 10-Q, as filed
with the SEC;
(c) commencing with the first fiscal month following the date
hereof, as soon as practicable, but in no event later than 15 Business Days
after the end of each fiscal month of the Company monthly unaudited balance
sheets of the Company and its Subsidiaries, on a consolidated basis, and related
statements of earnings and cash flows of the Company and its Subsidiaries, on a
consolidated basis, for the prior fiscal month, each monthly unaudited balance
sheet (and related statements) certified to its accuracy and correctness by a
Financial Officer of the Company;
33
(d) promptly after the same become publicly available, copies of all
periodic and other reports, proxy statements and other materials filed by it
with the SEC, or any governmental authority succeeding to any of or all the
functions of said commission, or with any national securities exchange, as the
case may be;
(e) from and after the date hereof through the effective date of the
Company Shareholder Approval, not less frequently than weekly, (i) a rolling
thirteen-week weekly forecast of the cash receipts and disbursements of the
Company and its Subsidiaries, on a consolidated basis, in form and substance
consistent with the Weekly Forecasts, and (ii) a report on cash receipts and
disbursements showing actual performance for each weekly period reflected in the
Weekly Forecasts and variance of actual performance from projected performance
in the Weekly Forecasts.
Section 6.3 Access to Information; Confidentiality. To the extent
permitted by applicable law and subject to the confidentiality agreement dated
March 15, 2004 between Columbia Capital LLC and the Company (the
"Confidentiality Agreement"), the Company shall, and shall cause its
Subsidiaries, representatives and agents to, afford to the Buyer and to the
officers, employees, accountants, counsel, financial advisors and other
representatives of the Buyer, reasonable access during normal business hours
during the period prior to the Effective Time to all their respective
properties, books, contracts, commitments, personnel and records and, during
such period, the Company shall, and shall cause each of its Subsidiaries,
representatives and agents to, furnish promptly to the other party (a) a copy of
each report, schedule, registration statement and other document filed by it
during such period pursuant to the requirements of federal or state securities
laws and (b) all other information concerning its business, properties and
personnel as the Buyer may reasonably request.
Section 6.4 Insurance. The Company shall maintain with financially sound
and reputable insurers insurance with respect to its properties and business
against such casualties and contingencies as shall be in accordance with the
general practices of businesses engaged in similar activities in similar
geographic areas and in amounts, containing such terms, in such forms and for
such periods as may be reasonable and prudent and reasonably satisfactory to the
Buyer; provided, however, that following the effective date of the Company
Shareholder Approval, the Company and its Subsidiaries shall not be deemed to be
in breach of this Section 6.4 if, by reason of their financial distress or other
reason outside of their control, the Company and its Subsidiaries are unable to
maintain such insurance.
Section 6.5 Communications License. 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 commercial efforts to (a)
refrain from taking any action which 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
34
and when such approvals, consents, permits, licenses, filings, or reports or
other authorizations are necessary or appropriate; provided, however, that
following the effective date of the Company Shareholder Approval, the Company
and its Subsidiaries shall not be deemed to be in breach of this Section 6.5 if,
by reason of their financial distress or other reason outside of their control,
the Company and its Subsidiaries are unable to maintain any such Communications
Licenses.
Section 6.6 FCC Applications and State PUC Applications.
(a) As promptly as practicable after the date hereof and in no event
later than three (3) Business Days after the date hereof, the parties hereto
shall prepare and file, or cause to be prepared and filed, the necessary
application or applications with the FCC seeking the consent of the FCC to the
transfer of the permits issued by the FCC to the Company and its Subsidiaries in
connection with the consummation of the transactions contemplated by this
Agreement and the Related Agreement (the "FCC Consents"). Each party shall
provide the other party with all information necessary for the preparation of
such applications on a timely basis, including those portions of such
applications which are required to be completed by the first party.
(b) As promptly as practicable after the date hereof and in no event
later than (10) Business Days after the date hereof, the parties hereto shall
prepare and file, or cause to be prepared and filed, the necessary application
or applications with the State PUCs seeking the consent of the applicable State
PUCs to the assignment of the Permits issued or granted by such State PUC to the
Company and its Subsidiaries in connection with the consummation of the
transactions contemplated by this Agreement and the Related Agreements (the
"State PUC Consents"). Each party shall provide the other party with all
information necessary for the preparation of such applications on a timely
basis, including those portions of such applications which are required to be
completed by the first party. In addition, the parties hereto shall cooperate to
make any notice filings required in connection with this matter on a timely
basis.
Section 6.7 Delivery of Regulatory Counsel's Opinion. At or prior to the
Closing Date, the Company shall provide the Buyer and Merger Sub with an opinion
of its regulatory counsel, Xxxxxxx Berlin Shereff Xxxxxxxx, LLP, to the effect
that the representations and warranties of the Company set forth in Section 3.10
hereof is true and correct at and as of the effective date of the Company
Shareholder Approval and otherwise in a form reasonably acceptable to the Buyer.
Section 6.8 Landlord Consents and Lease Terminations. The Company shall,
and shall cause its Subsidiaries to cooperate with Buyer (at the Buyer's
expense) in obtaining (a) lease amendments or consents (but not extensions) to
the consummation of the transactions contemplated by this Agreement and the
Related Agreements or (b) lease termination agreements or reduction amendments,
in each case, with respect to each of the Leases, provided that, prior to
Company Shareholder Approval, the Company shall not be obligated to enter into
any amendment, consent or other agreement that in each case would require the
Company to incur any obligations (including lease termination obligations) or
make any payment on terms different than those contained in the existing Lease
or contract prior to the Effective Date; and provided, however, that following
the effective date of the Company Shareholder Approval, the Company and its
Subsidiaries shall not be deemed to be in breach of this Section 6.8, if by
reason of their
35
financial distress, the Company and its Subsidiaries are unable to take acts
required by this section.
Section 6.9 Employee Benefit Plans. Promptly upon filing the same with the
Department of Labor or Internal Revenue Service, the Company shall furnish to
the Buyer a copy of the most recent actuarial statement required to be submitted
under Section 103(d) of ERISA and annual report (Form 5500, with all required
attachments) in respect of each Pension Plan and (b) promptly upon receipt or
dispatch, furnish to the Buyer any notice, report or demand sent or received in
respect of a Pension Plan under Sections 302, 4041, 4042, 4043, 4063, 4065, 4066
and 4068 of ERISA, or in respect of a Multiemployer Plan, under Sections 4041A,
4202, 4219, 4242, or 4245 of ERISA.
Section 6.10 Environmental Events. The Company shall promptly give notice
to the Buyer (i) of any material violation of any Environmental Law that the
Company or any of its Subsidiaries reports in writing or is reportable by such
Person in writing (or for which any written report supplemental to any oral
report is made) to any federal, state or local environmental agency that has the
potential to materially adversely affect the assets, liabilities, financial
conditions or operations of the Company or any of its Subsidiaries, or the
Company's security interests pursuant to the Security Documents and (ii) upon
becoming aware thereof, of any inquiry, proceeding, investigation, or other
action, including a notice from any agency of potential environmental liability,
of any federal, state or local environmental agency or board, that has the
potential to materially adversely affect the assets, liabilities, financial
conditions or operations of the Company or any of its Subsidiaries, or the
Buyer's security interests pursuant to the Security Documents.
Section 6.11 Notice of Litigation and Judgments. The Company shall give
notice to the Buyer in writing within five (5) days of becoming aware of any
litigation or proceedings threatened in writing or any pending litigation and
proceedings affecting the Company or any of its Subsidiaries or to which the
Company or any of its Subsidiaries is or becomes a party involving an uninsured
claim against the Company or any of its Subsidiaries, which could reasonably be
expected to have a Company Material Adverse Effect, stating the nature and
status of such litigation or proceedings. The Company will give notice to the
Buyer, in writing, in form and detail satisfactory to the Buyer, within ten (10)
days of any judgment not covered by insurance, final or otherwise, against the
Company or any of its Subsidiaries in an amount in excess of $50,000.
Section 6.12 Notice Regarding Contracts. The Company shall use
commercially reasonable efforts to keep the Buyer Representative informed of the
receipt of any notice of, or notice of any intention to, terminate, cancel,
curtail or change any contract involving the payment or receipt by the Company
or any Subsidiary of any goods or services with a value in excess of $20,000
monthly or $250,000 in the aggregate, by any customer or significant equipment
or maintenance supplier of the Company or any Subsidiary.
Section 6.13 Commercially Reasonable Efforts; Cooperation. Upon the terms
and subject to the conditions set forth in this Agreement, each of the parties
agrees to use commercially reasonable efforts to take, or cause to be taken, all
actions, and to do, or cause to be done, and to assist and cooperate with the
other parties in doing, all things necessary, proper
36
or advisable under applicable laws and regulations to consummate and make
effective, in the most expeditious manner practicable, the Merger and the other
transactions contemplated by this Agreement, including (i) the obtaining of all
necessary actions or non-actions, waivers, consents and approvals from
Governmental Entities and the making of all necessary registrations and filings
and the taking of all steps as may be necessary to obtain an approval or waiver
from, or to avoid an action or proceeding by, any Governmental Entity, (ii) the
obtaining of all necessary consents, approvals or waivers from third parties,
(iii) the defending of any lawsuits or other legal proceedings, whether judicial
or administrative, challenging this Agreement or the consummation of the
transactions contemplated hereby, including seeking to have any stay or
temporary restraining order entered by any court or other Governmental Entity
vacated or reversed, and (iv) the execution and delivery of any additional
instruments necessary to consummate the transactions contemplated by, and to
fully carry out the purposes of, this Agreement. Nothing set forth in this
Section 6.6(b) will limit or affect actions permitted to be taken pursuant to
Section 5.5.
Section 6.14 Indemnification.
(a) The Parties agree that from and after the Effective Time, the
Surviving Corporation shall, to the fullest extent not prohibited by applicable
law, indemnify, defend and hold harmless each person who is now or who becomes
prior to the Effective Time, an officer, director or employee of the Company or
any of its Subsidiaries (each, an "Indemnified Party" and collectively, the
"Indemnified Parties") against all losses, costs, expenses (including reasonable
attorneys' fees and expenses), damages or liabilities ("Losses"), incurred in
connection with any claim, action, suit, proceeding or investigation (each, a
"Claim") arising out of or pertaining to the fact that such person is or was a
director, officer or employee of the Company or any of its Subsidiaries prior to
the Effective Time (including, without limitation, any which arise out of or
relate to the transactions contemplated by this Agreement), provided, however,
that in no event shall the Surviving Corporation be required to indemnify,
defend or hold harmless any director, officer or employee of the Company of any
of its Subsidiaries in respect of any Losses (i) incurred by such party in
respect of any Company Common Stock or Options held by such persons prior to or
after the Effective Time or (ii) resulting from any act or omission of such
party that constitutes bad faith, gross negligence or willful misconduct on the
part of such party.
(b) For two years after the Effective Time, the Surviving
Corporation shall provide directors' and officers' liability insurance ("D&O
Insurance") covering the Indemnified Parties for acts or omissions occurring
prior to the Effective Time with respect to the Indemnified Parties on terms and
amount with respect to such coverage substantially similar to those of such
policy maintained in effect by the Company on the date hereof, provided that the
Surviving Corporation shall not be required to spend as an annual premium for
such D&O Insurance of an amount in excess of 110% of the annual premium for such
insurance as in effect on the date hereof; but in such case shall purchase as
much coverage as possible for such amount.
Section 6.15 Public Announcements. The Buyer and the Company will consult
with each other before issuing, and provide each other the opportunity to
review, comment upon and concur with, any press release or other public
statements with respect to the transactions
37
contemplated by this Agreement or the Related Agreements, including the Merger,
and shall not issue any such press release or make any such public statement
prior to such consultation, except as either party may determine is required by
applicable law, court process or by obligations pursuant to any listing
agreement with any national securities exchange. The parties agree that the
initial press release to be issued with respect to the transactions contemplated
by this Agreement or the Related Agreements shall be in the form heretofore
agreed to by the parties.
Section 6.16 Issuance of Shares to Trust. On or prior to the record date
established for a vote of the Company's shareholders on the Merger, the Company
shall issue 160,662 shares of Company Common Stock to be held in trust for the
interests of holders of unresolved claims in the Bankruptcy Proceedings.
ARTICLE VII
CLOSING CONDITIONS
Section 7.1 Mutual Conditions. The obligations of the parties hereto to
consummate the Merger shall be subject to the fulfillment of each and all of the
following conditions:
(a) Shareholder Approval. The Company Shareholder Approval shall
have been obtained.
(b) Certain Governmental and Regulatory Approvals. All consents,
approvals, and actions of, filings with and notices to any Governmental Entity
required of the Company, the Buyer, or any of their Subsidiaries to consummate
the Merger and the other transactions contemplated hereby or by the Related
Agreements, the failure of which to be obtained or taken would have a Company
Material Adverse Effect (other than the FCC or any State PUC or any Municipal
Franchising Authority having regulatory authority over the business of the
Company or its Subsidiaries as conducted in any given jurisdiction), shall have
been obtained in form and substance reasonably satisfactory to each of the Buyer
and the Company.
(c) No Injunctions, Restraints or Litigation. No temporary
restraining order, preliminary or permanent injunction or other order or decree
issued by a court of competent jurisdiction or Governmental Entity of competent
jurisdiction or other legal restraint or prohibition (collectively,
"Restraints") which prevents the consummation of the Merger shall have been
issued and remain in effect, provided, however, that the parties invoking this
condition shall use reasonable efforts to have any such order or injunction
vacated. There shall not be threatened, instituted or pending any action,
proceeding, application or counterclaim by any Governmental Entity or before any
court or governmental regulatory or administrative agency, authority or tribunal
which (i) if adversely determined would have a Company Material Adverse Effect
or the ability of any party to this Agreement to perform its obligations
hereunder or (ii) challenges or seeks to challenge, restrain or prohibit the
consummation of the Merger.
Section 7.2 Conditions to Obligations of the Company. The obligation of
the Company to effect the Merger is further subject to satisfaction or waiver of
the following conditions:
38
(a) Representations and Warranties.
(i) The representations and warranties of the Buyer and Merger
Sub set forth herein shall be true and correct in all
material respects (without giving effect to any limitation
as to "materiality" or "material adverse effect" set forth
therein) when made.
(ii) The representations and warranties of the Buyer and Merger
Sub set forth herein shall be true and correct in all
material respects (without giving effect to any limitation
as to "materiality" or "material adverse effect" set forth
therein) at and as of the effective date of the Company
Shareholder Approval, unless expressly made at and as of
an earlier date, in which case such representations and
warranties shall be true and correct in all such respects
only at and as of such earlier date.
(iii) The representations and warranties of the Buyer and Merger
Sub set forth in Sections 4.1, 4.2, 4.3(a) and 4.3(c) (the
"Buyer Closing Date Representations") shall be true and
correct in all material respects (without giving effect to
any limitation as to "materiality" or "material adverse
effect" set forth therein) at and as of the Closing Date.
Provided, that this Section 7.2(a) shall not be a condition to
the obligation of the Company to effect the Merger unless the
Company notifies the Buyer and Merger Sub of a breach of any of
the representations and warranties (other than the Buyer Closing
Date Representations) of the Buyer and Merger Sub within five
(5) days after receipt of the Officer's Certificate described in
Section 7.2(c)(i).
(b) Performance of Obligations of Buyer. The Buyer and Merger Sub
shall have performed in all respects, and shall not have breached any,
obligations if and to the extent any of the same could reasonably be expected to
have a Buyer Material Adverse Effect required to be performed by it under this
Agreement at or prior to the Closing Date, subject to a ten day grace period
following notice.
(c) Officer's Certificate. The Buyer shall have furnished the
Company with a certificate dated (i) within one (1) Business Day following the
effective date of the Company Shareholder Approval and (ii) the Closing Date, in
each case signed by an executive officer of the Buyer to the effect that the
conditions set forth in Sections 7.2(a) and (b) have been satisfied.
Section 7.3 Conditions to Obligations of the Buyer. The obligation of the
Buyer to effect the Merger is further subject to satisfaction or waiver of the
following conditions:
(a) Representations and Warranties.
(i) The representations and warranties of the Company set
forth herein shall be true and correct in all material
respects (without giving
39
effect to any limitation as to "materiality" or "material
adverse effect" set forth therein) when made.
(ii) The representations and warranties of the Company set
forth herein shall be true and correct in all material
respects (without giving effect to any limitation as to
"materiality" or "material adverse effect" set forth
therein) at and as of the effective date of the Company
Shareholder Approval, unless expressly made at and as of
an earlier date, in which case such representations and
warranties shall be true and correct in all such respects
only at and as of such earlier date.
(iii) The representations and warranties of the Company set
forth in Sections 3.1, 3.2, 3.3, 3.4, 3.5(a) and 3.5(c)
(the "Company Closing Date Representations") shall be true
and correct in all material respects (without giving
effect to any limitation as to "materiality" or "material
adverse effect" set forth therein) at and as of the
Closing Date.
Provided, that this Section 7.3(a) shall not be a condition to
the obligation of the Buyer and Merger Sub to effect the Merger
unless the Buyer notifies the Company of a breach of any of the
representations and warranties (other than the Company Closing
Date Representations) of the Company within five (5) days after
receipt of the Officer's Certificate described in Section
7.3(c)(c)(i).
(b) Performance of Obligations of the Company. The Company shall
have performed in all respects all, and shall not have breached any, obligations
if and to the extent any of the same could reasonably be expected to have a
Company Material Adverse Effect required to be performed by it under this
Agreement at or prior to the Closing Date, subject to a ten day grace period
following notice.
(c) Officer's Certificate. The Company shall have furnished the
Buyer with a certificate dated (i) within one (1) Business Day following the
effective date of the Company Shareholder Approval and (ii) the Closing Date, in
each case signed by an executive officer of the Company to the effect that the
conditions set forth in Sections 7.3(a) and (b) have been satisfied.
(d) No Default. No Default or Event of Default (as defined therein)
shall have occurred and be continuing under the Interim Credit Agreement.
(e) No Material Adverse Change. Prior to the effective date of the
Company Shareholder Approval, there shall not have occurred any fact, event,
change, circumstance or effect that has had or is reasonably expected to have a
Company Material Adverse Effect ("Company Material Adverse Change"). The parties
acknowledge that (i) the Company is currently in a position of financial
distress; (ii) a Company Material Adverse Change shall not be deemed to have
occurred solely by reason of (A) any borrowings by the Company under the
40
Interim Credit Agreement, (B) any payment, incurrence, escrow, or reserve or
provision for Professional Fees, (C) any adverse change affecting the
telecommunications industry or the economy and financial markets as a whole, or
(D) any payment, transaction, contract, action or activity in connection with
the performance by the Company or any of its Subsidiaries of their respective
obligations under this Agreement or the Related Agreements; and (iii) a Company
Material Adverse Change shall be deemed to have occurred if the revenues of the
Company and its Subsidiaries on a consolidated basis deviate negatively from the
Weekly Forecast by more than 7.5% in the aggregate for the cumulative period
from July 2004 through the end of the fiscal month most recently ended as to
which the Company was required to deliver financial statements pursuant to
Section 6.2(c).
(f) Interim Management Agreement. The Company shall have entered
into the Interim Management Agreement in the form attached hereto as Exhibit B,
and the Interim Management Agreement shall be in full force and effect as of the
Effective Date and shall not have been amended or modified other than as a
result of a material breach by the Manager.
Section 7.4 Frustration of Closing Conditions. Neither the Buyer nor the
Company may rely on the failure of any condition set forth in this Article VII,
as the case may be, to be satisfied if such failure was caused by such party's
failure to use commercially reasonable efforts to consummate the Merger and the
other transactions contemplated by this Agreement, as required by and subject to
Section 6.6(b).
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
Section 8.1 Termination. This Agreement may be terminated at any time
prior to the Effective Time, whether before or after the Company Shareholder
Approval:
(a) by mutual written consent of the Buyer and the Company;
(b) by either the Buyer or the Company:
(i) if the Company Shareholder Approval is not obtained on or
before October 31, 2004;
(ii) if the Merger shall not have been consummated on or before
the later of (A) the Initial Closing Deadline or (B) if
the Buyer and Merger Sub have exercised their right to
extend the Initial Closing Deadline pursuant to Section
1.2, the Extended Closing Deadline; provided, that the
right to terminate this Agreement pursuant to this Section
8.1(b)(ii) shall not be available to any party whose
failure to perform any of its obligations under this
Agreement results in the failure of the Merger to be
consummated by either such time;
(iii) if any Restraint having the effect set forth in Section
7.1(c) shall be in effect and shall have become final and
nonappealable; provided,
41
that the party seeking to terminate this Agreement
pursuant to this Section 8.1(b)(iii) shall have used
reasonable best efforts to prevent the entry of and to
remove such Restraint;
(c) by the Buyer, if (i) prior to the effective date of the Company
Shareholder Approval, there shall have occurred a Company Material Adverse
Change, (ii) prior to the effective date of the Company Shareholder Approval the
Company shall have (A) breached any of its representations or warranties or
(B)failed to perform in any material respect any of its covenants or other
agreements contained in this Agreement or the Related Agreements which breach or
failure to perform (x) could reasonably be expected to give rise to a Company
Material Adverse Effect and (y) (1) is not cured within the applicable cure
period set forth in the Related Agreement or, with respect to this Agreement, is
not cured within 30 days after written notice thereof or (2) is incapable of
being cured by the Company or (iii) from and after the effective date of the
Company Shareholder Approval, the Company shall have (C) breached any of its
representations or warranties set forth in Sections 3.1, 3.2, 3.3, 3.4, 3.5(a)
or 3.5(c) or (D) failed to perform in any material respect any of the covenants
or other agreements contained in this Agreement or the Related Agreements which
breach or failure to perform (x) could reasonably be expected to give rise to a
Company Material Adverse Effect and (y) (1) is not cured within the applicable
cure period set forth in the Related Agreement or, with respect to this
Agreement, within 30 days after written notice thereof or (2) is incapable of
being cured by the Company;
(d) by the Company, if (i) prior to the effective date of the
Company Shareholder Approval, the Buyer shall have (A) breached any of its
representations or warranties or (B) failed to perform in any material respect
any of its covenants or other agreements contained in this Agreement or the
Related Agreements which breach or failure to perform (x) could reasonably be
expected to give rise to a Buyer Material Adverse Effect and (y) (1) is not
cured within the applicable cure period set forth in the Related Agreement or,
with respect to this Agreement, within 30 days after written notice thereof or
(2) is incapable of being cured by the Buyer or (ii) from and after the
effective date of the Company Shareholder Approval, the Buyer shall have (A)
breached any of its representations or warranties set forth in Sections 4.1,
4.2, 4.3(a), or 4.3(c) or (B) failed to perform in any material respect any of
the covenants or other agreements contained in this Agreement or the Related
Agreements which breach or failure to perform (x) could reasonably be expected
to give rise to a Buyer Material Adverse Effect and (y) (1) is not cured within
the applicable cure period set forth in the Related Agreement or, with respect
to this Agreement, within 30 days after written notice thereof or (2) is
incapable of being cured by the Buyer;
(e) by the Buyer or the Company upon the Company's (i) execution of
a Company Acquisition Agreement with a third party with respect to a Company
Takeover Proposal or (ii) institution of a Proceeding in connection with an
In-Court Transaction, provided, that for any termination by the Company under
this Section 8.1(e) to be effective, the Company must have complied with all
provisions of this Agreement, including the notice provisions contained in
Section 5.5 and paid the Termination Fee and expense reimbursement to the Buyer
in accordance with Section 8.3;
(f) by the Buyer, if the Company or the board of directors of the
Company shall have (i) breached any provision of Section 5.5, (ii) withdrawn or
modified, in a manner
42
materially adverse to the Buyer or Merger Sub, the approval or recommendation by
the board of directors of the Company of this Agreement or the Related
Agreements or the transactions contemplated hereby or thereby or (iii) approved
or entered into a Company Acquisition Agreement with a third party;
(g) by the Buyer, if the Company shall have instituted legal
proceedings in a United States Bankruptcy Court involving the Company or any of
its Subsidiaries as debtor from and after the date hereof (for the avoidance of
doubt, other than the Bankruptcy Proceedings), provided, however, that Buyer may
not terminate this Agreement by reason of any commencement by the Company of
legal proceedings in any such court if at the time of the commencement of such
proceedings Buyer is in default of its obligations under the Related Agreements.
Section 8.2 Effect of Termination. In the event of termination of this
Agreement by either the Company or the Buyer as provided in Section 8.1, this
Agreement shall forthwith become void and have no effect, without any liability
or obligation on the part of the Company or the Buyer, other than the provisions
of this Section 8.2, Section 8.3 and Article 9, which provisions survive such
termination, provided, however, that nothing herein shall relieve any party from
any liability for any willful and material breach by such party of any of its
representations, warranties, covenants or agreements set forth in this
Agreement.
Section 8.3 Fees and Expenses.
(a) Expenses. In addition to any other amounts which may be or
become payable pursuant to any other paragraph of this Section 8.3, the Company
shall reimburse the Buyer and Merger Sub for all out-of-pocket expenses and fees
payable by the Buyer or Merger Sub, including, without limitation any and all
fees and expenses payable to attorneys, consultants, advisors, and financing
sources and their respective representatives and agents, whether incurred prior
to, on or after the date hereof (not to exceed $1,000,000 (inclusive of amounts
reimbursed by the Company prior to the date hereof)), if this Agreement is
terminated (i) in connection with any of the circumstances described in Section
8.3(b) below or (ii) or pursuant to Section 8.1(b), Section 8.1(c) or Section
8.1(g). Any such required reimbursement shall take place concurrently with the
termination of this Agreement.
(b) Termination Fee. If (i) this Agreement is terminated pursuant to
Section 8.1(e) or Section 8.1(f); (ii) upon the commencement of a Proceeding if
such Proceeding was commenced in order to effectuate an In-Court Transaction as
to which material negotiations have taken place prior to the commencement of
such Proceeding or (iii) absent the commencement of a Proceeding, prior to or
within 180 days after termination of this Agreement (other than pursuant to
Section 8.1(d)) any person (other than the Buyer or Merger Sub or any of their
affiliates) shall have made, proposed, communicated or disclosed a Company
Takeover Proposal in a manner which is or otherwise becomes public by the
Company and this Agreement is terminated pursuant to any of the foregoing
provisions, then the Company shall, simultaneously with such termination of this
Agreement (or in the event of a termination pursuant to clause (ii) above, if
such disclosure occurs after the date this Agreement was terminated, within two
(2) Business Days of such disclosure) pay Buyer a fee of Five Million Dollars
($5,000,000) in cash, which amount shall be payable in same day funds (the
"Termination Fee").
43
(c) Other Expenses. Except as provided otherwise in paragraph (a)
above, all costs and expenses incurred in connection with this Agreement and the
Related Agreements, and the transactions contemplated hereby and thereby, shall
be paid by the party incurring such expenses; provided, that the Company shall
pay all costs and expenses in connection with (i) printing and mailing the
Company Proxy Statement, if any, (ii) all SEC filing fees relating to the
transactions contemplated herein and (iii) all filing and application fees in
connection with obtaining the FCC Consents and State PUC Consents as provided in
Section 6.4; provided, further, that, upon the Closing, all such costs and
expenses of the Buyer shall be paid by the Surviving Corporation.
(d) Security and Pledge Agreement. The obligations of the Company
under Sections 8.3(a) and (b) shall be secured by a security interest in all of
the assets of the Company and its Subsidiaries as and to the extent provided in
the Security and Pledge Agreement.
ARTICLE IX
GENERAL PROVISIONS
Section 9.1 Non-Survival of Representations and Warranties. None of the
representations and warranties in this Agreement or in any instrument delivered
pursuant to this Agreement shall survive the effective date of the Company
Shareholder Approval (other than Sections 3.1, 3.2, 3.3, 3.4, 4.1, 4.2 and 4.3
which shall survive until the Effective Date). This Section 9.1 shall not limit
any covenant or agreement of the parties which by its terms contemplates
performance after the Effective Time.
Section 9.2 Notices. All notices, requests, claims, demands and other
communications under this Agreement shall be in writing and shall be deemed
given at the time of receipt if delivered personally, upon acknowledgment by the
recipients' facsimile equipment if telecopied (which is confirmed) or on the
first Business Day after deposit with a reputable courier if sent by overnight
courier (providing proof of delivery) to the parties at the following addresses
(or at such other address for a party as shall be specified by like notice):
(a) if to the Company, to:
ICG Communications, Inc.
000 Xxxxxxxxx Xxxxx Xxxx
Xxxxxxxxx, XX 00000
Attn: Xxxxxx Xxxxxx, Esq.
with a copy (which shall not constitute to the Company) to:
Pachulski, Stang, Ziehl, Young, Xxxxx & Xxxxxxxxx, PC
00000 Xxxxx Xxxxxx Xxxxxxxxx, Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxx X. Xxxxxxxx, Esq.
44
(b) if to the Buyer or Merger Sub, to:
c/o Columbia Capital LLC
000 Xxxxx Xxxxx Xxxxxx, Xxxxx #000
Xxxxxxxxxx, XX 00000
Facsimile: (000) 000-0000
Attention: Xxxx X. Xxxxxx
and
c/o M/C Venture Partners
00 Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxx, XX 00000
Facsimile: (000) 000-0000
Attention: Xxxxx X.X. Xxxxxx
with a copy (which shall not constitute to the Company) to:
Xxxxxxxx & Xxxxx LLP
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile: 000-000-0000
Attention: Xxxxxxxx Xxxxx, Esq.
(c) if to the Buyer Representative to:
Xxxxxx X. Xxxxxxxxxxx
c/o ICG Communications, Inc.
000 Xxxxxxxxx Xxxxx Xxxx
Xxxxxxxxx, XX 00000
Section 9.3 Definitions.
"Affiliate" of any person shall mean another person that directly or
indirectly, through one or more intermediaries, controls, is controlled by, or
is under common control with, such first person.
"Bankruptcy Code" means 11 U.S.C. Sec. 101 et seq., as from time to
time hereafter amended, and any successor or similar statute.
"best knowledge", with respect to a party, shall mean the actual
knowledge of such party as well as knowledge attributable to such party of such
matters which a reasonable person in such capacity or position should know in
the ordinary course of discharging the duties assigned to such capacity or
position after reasonable investigation, and with respect to Company, shall
refer to the best knowledge of a vice president or more senior officer or
director of the Company.
45
"Business Day" shall mean any day other than a Saturday, Sunday or a
legal holiday on which banking institutions in the State of Delaware are not
required to open.
"Buyer Representative" shall mean an individual designated by the
Buyer who will have an office at the Company's headquarters and shall be
delegated the authority to approve or disapprove the actions contemplated by
Section 5.1(v) and any other person designated from time to time by the Buyer or
Buyer Representative.
"COBRA" means the requirements of Part 6 of Subtitle B of Title I of
ERISA and Code Section 4980B and of any similar state law.
"Collateral" shall have the meaning ascribed to such term in the
Security and Pledge Agreement.
"control" shall mean the possession, directly or indirectly, of the
power to direct or cause the direction of the management policies of a person,
whether through the ownership of voting securities, by contract or otherwise,
provided that the Company shall not be deemed to be an affiliate of the Buyer or
Merger Sub by reason of this Agreement or any of the Related Agreements.
"Employee Benefit Plan" means any "employee benefit plan" (as such
term is defined in ERISA Section 3(3)) and any other employee benefit plan,
program or arrangement of any kind.
"Employee Pension Benefit Plan" has the meaning set forth in ERISA
Section 3(2).
"Employee Welfare Benefit Plan" has the meaning set forth in ERISA
Section 3(1).
"Financial Officer" shall mean the chief financial officer,
principal accounting officer, controller or treasurer of the Company.
"In-Court Transaction" shall mean the sale of all or substantially
all of the assets or business of the Company and its Subsidiaries in one or a
series of related transactions pursuant to a legal proceeding in a United States
Bankruptcy Court or similar proceeding before a state court of competent
jurisdiction.
"Indebtedness" shall mean, as to any person at a particular time,
without duplication, all of the following, whether or not included as
indebtedness or liabilities in accordance with GAAP: (a) all obligations of such
person for borrowed money and all obligations of such person evidenced by bonds,
debentures, notes, loan agreements or other similar instruments, (b) all direct
or contingent obligations of such person arising under letters of credit
(including standby and commercial), bankers' acceptances, bank guarantees,
surety bonds and similar instruments, (c) all obligations of such person to pay
the deferred purchase price of property or services, (d) indebtedness (excluding
prepaid interest thereon) secured by a Lien on property owned or being purchased
by such person (including indebtedness arising under conditional sales or other
title retention agreements), whether or not such indebtedness shall have been
assumed by such person or is limited in recourse, (e) capital leases and
monetary obligations of a person under (i) a so-called synthetic, off-balance
sheet or tax retention lease or
46
(ii) an agreement for the use or possession of property creating obligations
that do not appear on the balance sheet of such person but which, upon
insolvency or bankruptcy of such person, would be characterized as indebtedness
of such person (without regard to accounting treatment), or (iii) an agreement
for the use or possession of property creating obligations that appear on the
balance sheet of such person, (f) all Indebtedness referred to in clauses (a)
through (e) above guaranteed directly or indirectly by such person, or in effect
guaranteed directly or indirectly by such person through an agreement (A) to pay
or purchase such Indebtedness or to advance or supply funds for the payment or
purchase of such Indebtedness, (B) to purchase, sell or lease (as lessee or
lessor) property, or to purchase or sell services, primarily for the purpose of
enabling the debtor to make payment of such Indebtedness or to assure the holder
of such Indebtedness against loss in respect of such Indebtedness, (C) to supply
funds to or in any other manner invest in the debtor (including any agreement to
pay for property or services irrespective of whether such property is received
or such services are rendered) or (D) otherwise to assure a creditor against
loss in respect of such Indebtedness.
"knowledge", with respect to a party, shall mean the actual
knowledge of such party, and with respect to the Company, shall refer to the
knowledge of a vice president or more senior officer or director of the Company.
"Manager" shall have the meaning ascribed to such term in the
Interim Credit Agreement.
"Multiemployer Plan" shall have the meaning set forth in ERISA
Section 3(37).
"Pension Plan" shall mean a defined benefit plan (as defined in
Section 414(j) of the Code and Section 3(35) of ERISA) which meets and is
subject to the requirements of Section 401(a) of the Code.
"Permitted Investments" shall mean:
(a) direct obligations of, or obligations the principal of and
interest on which are unconditionally guaranteed by, the United States of
America (or by any agency thereof to the extent such obligations are backed by
the full faith and credit of the United States of America), in each case
maturing within twelve months from the date of acquisition thereof;
(b) without limiting the provisions of paragraph (d) below,
investments in commercial paper maturing within six months from the date of
acquisition thereof and having, at such date of acquisition, a rating of at
least "A-2" or the equivalent thereof from Standard & Poor's Ratings Services or
of at least "P-2" or the equivalent thereof from Xxxxx'x Investors Service,
Inc.;
(c) investments in certificates of deposit, banker's acceptances and
time deposits (including Eurodollar time deposits) maturing within six months
from the date of acquisition thereof issued or guaranteed by or placed with (i)
any domestic office of the Lender or the bank with whom the Borrower and the
Guarantors maintain their cash management system, provided, that if such bank is
not a Lender hereunder, such bank shall have entered into an agreement with the
Lender pursuant to which such bank shall have waived all rights of setoff and
confirmed that such bank does not have, nor shall it claim, a security interest
therein or (ii)
47
any domestic office of any other commercial bank of recognized standing
organized under the laws of the United States of America or any State thereof
that has a combined capital and surplus and undivided profits of not less than
$250,000,000 and is the principal banking Subsidiary of a bank holding company
having a long-term unsecured debt rating of at least "A-2" or the equivalent
thereof from Standard & Poor's Ratings Services or at least "P-2" or the
equivalent thereof from Xxxxx'x Investors Service, Inc.;
(d) investments in commercial paper maturing within six months from
the date of acquisition thereof and issued by (i) the holding company of the
Lender or (ii) the holding company of any other commercial bank of recognized
standing organized under the laws of the United States of America or any State
thereof that has (A) a combined capital and surplus in excess of $250,000,000
and (B) commercial paper rated at least "A-2" or the equivalent thereof from
Standard & Poor's Ratings Services or of at least "P-2" or the equivalent
thereof from Xxxxx'x Investors Service, Inc.;
(e) investments in repurchase obligations with a term of not more
than seven days for underlying securities of the types described in clauses (a)
through (d) above or clause (f) below entered into with any office of a bank or
trust company meeting the qualifications specified in clause (c) above;
(f) investments in money market funds substantially all the assets
of which are comprised of securities of the types described in clauses (a)
through (e) above; and
(g) to the extent owned on the Closing Date, investments by the
Borrower or any Guarantor in the capital stock of any direct or indirect
Subsidiary.
"Permitted Liens" shall mean:
(a) with respect to Real Property:
(i) real estate taxes, assessments and other governmental
levies, fees or charges which are not due and payable as
of the Closing Date, or which are being contested in good
faith and for which appropriate reserves have been
established in accordance with GAAP;
(ii) carriers', warehousemen's, mechanics', materialmen's,
repairmen's or similar liens for labor, materials or
supplies incurred in the ordinary course of business that
do not materially detract from the value of the property
or the use thereof and which are for amounts which are not
due and payable;
(iii) zoning, building codes and other land use laws regulating
the use or occupancy of real property or the activities
conducted thereon which are imposed by any governmental
authority having jurisdiction over such real property
which are not violated by the current use or occupancy of
such real property or the operation of the business of the
Company or its applicable Subsidiary thereon;
48
(iv) easements, covenants, conditions, restrictions and other
similar matters of record affecting title to Real Property
which do not or would not materially impair the use or
occupancy of such Real Property in the operation of the
business of the Company or its applicable Subsidiary
conducted thereon;
(v) any interest or title of a lessor under any lease entered
into by the Company or any Subsidiary in the ordinary
course of business and covering only the assets so leased;
and
(vi) Liens in existence on the date hereof listed in Section
3.17 of the Company Disclosure Schedule; provided that no
such Lien is spread to cover any additional property after
the date hereof; and
(b) with respect to personal property:
(i) statutory liens of landlords, carriers, warehousemen,
processors, bailees, mechanics, materialmen, suppliers and
other like liens imposed by statute or common law, created
in the ordinary course of business and securing amounts
not yet due or declared to be due by the claimant
thereunder or amounts which are being contested in good
faith and by appropriate proceedings to prevent imminent
foreclosure of such liens and for which ICG has maintained
adequate reserves;
(ii) liens arising with respect to equipment of ICG in
connection with operating leases or purchase money
financing relating to such equipment so long as such liens
are limited to the equipment so leased or financed;
(iii) pledges or deposits made (and the liens thereon) in the
ordinary course of business in connection with workers'
compensation, unemployment insurance, old age pensions and
other types of social security and wage benefits;
(iv) deposits or pledges to secure the performance of bids,
tenders, contracts, leases, fee and expense arrangements,
credit card processing, public or statutory obligations,
surety or appeal bonds, or other deposits or pledges for
purposes of a like general nature made or given in the
ordinary course of business and not in connection with the
borrowing of money;
(v) customary rights of set-off, revocation, refund or
chargeback under deposit agreements or under the uniform
commercial code of banks or other financial institutions
where ICG or any of its respective subsidiaries maintain
deposits in the ordinary course of business;
49
(vi) liens arising by operation of law on insurance policies
and proceeds thereof to secure premiums thereunder;
(vii) such utility, access and other easements, rights of way,
restrictions, exceptions, minor defects or
irregularities in or clouds on title or encumbrances not
arising out of the borrowing of money or the securing of
advances or credit, and which will not interfere with or
impair in any respect the utility, operation or value of
any properties of Borrower;
(viii) liens granted to taxing authorities securing notes
payable and other tax claims in an aggregate amount not
to exceed $200,000 under the Company's Confirmed Chapter
11 Plan of Reorganization in the Bankruptcy Proceedings;
and
(ix) Liens in existence on the date hereof listed in Section
3.17 of the Company Disclosure Schedule; provided that
no such Lien is spread to cover any additional property
after the date hereof.
"Person" shall mean an individual, corporation, partnership, limited
liability company, joint venture, association, trust, unincorporated
organization or other entity.
"Proceeding" means any voluntary or involuntary proceeding commenced
by or against the Company or any of its Subsidiaries under any provision of the
Bankruptcy Code, or under any other bankruptcy or insolvency law, including
assignments for the benefit of creditors, formal or informal moratoria,
compositions, or proceedings seeking dissolution, winding-up, receivership,
reorganization, liquidation, arrangement, or marshalling of assets of any the
Company or any of its Subsidiaries or other similar relief under Federal or
State law.
"Prohibited Transaction" shall have the meaning set forth in ERISA
Section 406 and Code Section 4975.
"Responsible Officer" shall mean to the Chief Financial Officer or
such other Person that has advised the Buyer Representative of the transaction
which is the subject of a notice to be given under Section 5.1(v).
"Security Documents" shall mean the Security and Pledge Agreement
and such other documents as the Company may request from time to time to ensure
the perfection or priority of its security interest in the Collateral.
Section 9.4 Interpretation. When a reference is made in this Agreement to
an Article, Section or Exhibit, such reference shall be to an Article or Section
of, or an Exhibit to, this Agreement unless otherwise indicated. Whenever the
words "include", "includes" or "including" are used in this Agreement, they
shall be deemed to be followed by the words "without limitation." The words
"hereof", "herein" and "hereunder" and words of similar import when used in this
Agreement shall refer to this Agreement as a whole and not to any particular
provision of this Agreement. "Material" and "materially" have correlative
meanings. Any representation or warranty with reference to the "validity,"
"binding" nature, "enforceability," or
50
"force and effect" of a contract, agreement or other instrument, shall be
interpreted as being subject to the exception to the extent that such validity,
enforceability or force and effect may be subject to (i) bankruptcy, insolvency,
fraudulent transfer and conveyance, reorganization, moratorium or other similar
laws relating to the rights and remedies of creditors generally, (ii) general
principles of equity and (iii) the discretion of the court before which any
proceeding in respect of the contract, agreement or instrument or the
transactions contemplated thereby may be brought. The phrases "reasonable
efforts," "commercially reasonable efforts," and "best efforts," and words or
phrases to similar effect unless otherwise expressly set forth herein shall not
be interpreted to impose any obligation on any party to maintain or initiate any
litigation, sell, liquidate or dispose of any assets, or incur any material
amount of Indebtedness or seek any financing (other than any such Indebtedness
pursuant to, or financing as may be available under, the Interim Credit
Agreement). All terms defined in this Agreement shall have the defined meanings
when used in any certificate or other document made or delivered pursuant hereto
unless otherwise defined therein. The phrases "ordinary course," "ordinary
course of business" and words to similar effect, when used with reference to the
Company or any of its Subsidiaries, shall be interpreted to exclude payments
upon acceleration and to include (i) any borrowings by the Company under the
Interim Credit Agreement, (ii) any payment, incurrence, escrow, or reserve or
provision for Professional Fees (as defined herein), or (iii) any payment,
transaction, contract, action or activity that is in furtherance of the
performance by the Company or any of its Subsidiaries of their respective
obligations under this Agreement or the Related Agreements or the transactions
contemplated hereby and thereby and shall take into account the Company and its
Subsidiaries distressed financial conditions. The definitions contained in this
Agreement are applicable to the singular as well as the plural forms of such
terms and to the masculine as well as to the feminine and neuter genders of such
term. Any agreement, instrument or statute defined or referred to herein or in
any agreement or instrument that is referred to herein means such agreement,
instrument or statute as from time to time amended, modified or supplemented,
including (in the case of agreements or instruments) by waiver or consent and
(in the case of statutes) by succession of comparable successor statutes and
references to all attachments thereto and instruments incorporated therein.
References to a person are also to its permitted successors and assigns.
Section 9.5 Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other parties.
Section 9.6 Entire Agreement; No Third Party Beneficiaries. This Agreement
(including the documents and instruments referred to herein) and the
Confidentiality Agreement (a) constitute the entire agreement, and supersede all
prior agreements and understandings, both written and oral, among the parties
with respect to the subject matter of this Agreement and (b) except for the
provisions of Section 6.14, are not intended to confer upon any person other
than the parties hereto any rights or remedies.
Section 9.7 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF DELAWARE, REGARDLESS OF
THE LAWS THAT MIGHT OTHERWISE GOVERN UNDER APPLICABLE PRINCIPLES OF CONFLICT OF
LAWS THEREOF.
51
Section 9.8 Assignment. Neither this Agreement nor any of the rights,
interests or obligations under this Agreement shall be assigned, in whole or in
part, by operation of law or otherwise by either of the parties hereto without
the prior written consent of the other parties. Any assignment in violation of
the preceding sentence shall be void. Subject to the preceding two sentences,
this Agreement will be binding upon, inure to the benefit of, and be enforceable
by, the parties and their respective successors and assigns.
Section 9.9 Consent to Jurisdiction. Each of the parties hereto (a)
consents to submit itself to the personal jurisdiction of any federal court
located in the State of Delaware or any Delaware state court, in the event any
dispute arises out of this Agreement or any of the transactions contemplated by
this Agreement, (b) agrees that it will not attempt to deny or defeat such
personal jurisdiction by motion or other request for leave from any such court,
and (c) agrees that it will not bring any action relating to this Agreement or
any of the transactions contemplated by this Agreement in any court other than a
federal court sitting in the State of Delaware or a Delaware state court.
Section 9.10 Headings. The headings contained in this Agreement are for
reference purposes only and shall not affect in anyway the meaning or
interpretation of this Agreement.
Section 9.11 Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of law
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect. Upon such determination that any
term or other provision is invalid, illegal or incapable of being enforced, the
parties hereto shall negotiate in good faith to modify this Agreement so as to
effect the original intent of the parties as closely as possible to the fullest
extent permitted by applicable law in an acceptable manner to the end that the
transactions contemplated hereby are fulfilled to the extent possible.
Section 9.12 Amendment. This Agreement may be amended by the parties at
any time before or after the Company Shareholder Approval, provided, however,
that after any such approval, there shall not be made any amendment that by law
requires further approval by the shareholders of the Company without the further
approval of such shareholders. This Agreement may not be amended except by an
instrument in writing signed on behalf of each of the parties.
Section 9.13 Extension; Waiver. At any time prior to the Effective Time, a
party may (a) extend the time for the performance of any of the obligations or
other acts of the other party, (b) waive any inaccuracy in the representations
and warranties of the other party contained in this Agreement or in any document
delivered pursuant to this Agreement or (c) waive compliance by the other party
with any of the agreements or conditions contained in this Agreement. Any
agreement on the part of a party to any such extension or waiver shall be valid
only if set forth in an instrument in writing signed on behalf of such party,
provided, however that the extension of the Closing Date as provided in and in
accordance with Section 1.2 shall be effective in the Buyer's sole discretion
and shall not require the agreement on the part of the Company. The failure of
any party to this Agreement to assert any of its rights under this Agreement or
otherwise shall not constitute a waiver of such rights.
52
Section 9.14 Waiver of Jury Trial.. EACH OF THE PARTIES HERETO WAIVES ANY
RIGHT IT MAY HAVE TO TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED ON,
ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT, OR ANY COURSE OF
CONDUCT, COURSE OF DEALING, VERBAL OR WRITTEN STATEMENT OR ACTION OF ANY PARTY
HERETO.
53
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
and Plan of Merger to be signed by their respective officers thereunto duly
authorized, all as of the date first written above.
ICG COMMUNICATIONS, INC.
By: _____________________________
Name:
Title:
MCCC ICG HOLDINGS LLC
By: _____________________________
Name:
Title:
MCCC MERGER CORP.
By: _____________________________
Name:
Title:
EXHIBIT A
CREDIT AND GUARANTY AGREEMENT
AMONG
ICG COMMUNICATIONS, INC.
AS BORROWER
AND
MCCC ICG HOLDINGS LLC
AS LENDER
AND
THE SUBSIDIARIES OF THE BORROWER NAMED HEREIN
AS GUARANTORS
DATED AS OF JULY 19, 2004
TABLE OF CONTENTS
SECTION 1. DEFINITIONS.................................................................... 1
SECTION 1.01 Defined Terms............................................................ 1
SECTION 1.02 Terms Generally.......................................................... 7
SECTION 2. AMOUNT AND TERMS OF BORROWINGS................................................. 7
SECTION 2.01 Commitment of the Lender................................................. 7
SECTION 2.02 Making of Advances and Additional Restructuring Advances................. 7
SECTION 2.03 Repayment of Borrowings; Evidence of Debt................................ 8
SECTION 2.04 Interest on Borrowings................................................... 8
SECTION 2.05 Default Interest......................................................... 9
SECTION 2.06 Mandatory Prepayment; Reimbursement of Lender............................ 9
SECTION 2.07 Optional Prepayment of Borrowings; Reimbursement of Lender............... 9
SECTION 2.08 Taxes.................................................................... 9
SECTION 2.09 Nature of Expenses....................................................... 10
SECTION 2.10 Priority and Liens....................................................... 10
SECTION 2.11 Security Interest in Concentration Account............................... 10
SECTION 2.12 Payment of Obligations................................................... 11
SECTION 3. REPRESENTATIONS AND WARRANTIES................................................. 11
SECTION 3.01 Merger Agreement Representations and Warranties.......................... 11
SECTION 3.02 Use of Proceeds.......................................................... 11
SECTION 4. CONDITIONS OF LENDING.......................................................... 11
SECTION 4.01 Conditions Precedent to the Term Loan and the Initial Advance............ 11
SECTION 4.02 Conditions Precedent to the Term Loan and Each Advance................... 12
SECTION 5. AFFIRMATIVE COVENANTS.......................................................... 13
SECTION 5.01 Merger Agreement......................................................... 13
SECTION 5.02 Notice of Event of Default, etc.......................................... 13
SECTION 5.03 Use of Proceeds.......................................................... 14
SECTION 5.04 Further Assurances....................................................... 14
SECTION 5.05 Cash Management Arrangements............................................. 14
i
TABLE OF CONTENTS
(CONTINUED)
SECTION 5.06 Collateral Preservation.................................................. 14
SECTION 5.07 Real Estate Matters...................................................... 14
SECTION 5.08 Notification of Claim Against Collateral................................. 14
SECTION 5.09 Good Standing Certificates............................................... 14
SECTION 6. NEGATIVE COVENANT.............................................................. 14
SECTION 7. EVENTS OF DEFAULT.............................................................. 15
SECTION 7.01 Events of Default........................................................ 15
SECTION 8. GUARANTY....................................................................... 17
SECTION 8.01 Guaranty................................................................. 17
SECTION 8.02 No Impairment of Guaranty................................................ 18
SECTION 8.03 Subrogation.............................................................. 19
SECTION 9. DEBTOR IN POSSESSION FINANCING; SUBORDINATION.................................. 19
SECTION 9.01 Right of First Refusal on DIP............................................ 19
SECTION 9.02 Subordination............................................................ 19
SECTION 10. MISCELLANEOUS.................................................................. 19
SECTION 10.01 Notices.................................................................. 19
SECTION 10.02 Successors and Assigns................................................... 20
SECTION 10.03 Confidentiality.......................................................... 21
SECTION 10.04 Lender Liability......................................................... 21
SECTION 10.05 Expenses................................................................. 21
SECTION 10.06 Indemnity................................................................ 22
SECTION 10.07 CHOICE OF LAW............................................................ 22
SECTION 10.08 Consent to Jurisdiction.................................................. 22
SECTION 10.09 No Waiver................................................................ 22
SECTION 10.10 Extension of Maturity.................................................... 22
SECTION 10.11 Amendments, etc.......................................................... 23
SECTION 10.12 Severability............................................................. 23
SECTION 10.13 Headings................................................................. 23
SECTION 10.14 Execution in Counterparts................................................ 23
SECTION 10.15 Prior Agreements......................................................... 23
SECTION 10.16 Further Assurances....................................................... 23
ii
TABLE OF CONTENTS
(CONTINUED)
SECTION 10.17 WAIVER OF JURY TRIAL..................................................... 23
EXHIBIT A - Form of Term Note
EXHIBIT B - Form of Revolving Note
EXHIBIT C - Form of Security and Pledge Agreement
CREDIT AND GUARANTY AGREEMENT
THIS CREDIT AND GUARANTY AGREEMENT, dated as of July 19, 2004, is
made by and among ICG Communications, Inc., a Delaware corporation (the
"Borrower"), the Subsidiaries of the Borrower signatory hereto (each such
Subsidiary, a "Guarantor" and, collectively, the "Guarantors"), and MCCC ICG
Holdings LLC, a Delaware limited liability company (the "Lender").
WHEREAS, the Lender, the Borrower and MCCC Merger Corp., a Delaware
corporation ("Merger Corp."), are parties to that certain Agreement and Plan of
Merger, dated as of the date hereof (as amended, restated or otherwise modified
from time to time, the "Merger Agreement"), pursuant to which Merger Corp. will
be merged with and into the Borrower, subject to the terms and conditions set
forth therein;
WHEREAS, pursuant to the terms of the Merger Agreement, at the
effective time of the Company Shareholder Approval (as defined below) the Lender
and the Borrower will enter into an interim management agreement in the form
attached to the Merger Agreement (as in effect from time to time, the
"Management Agreement"), pursuant to which the manager named therein (the
"Manager") will manage the operations of the Borrower and its Subsidiaries
during the period specified in the Management Agreement;
WHEREAS, the Borrower has applied to the Lender for (i) a term loan
in an aggregate principal amount of $2,400,000 to fund certain restructuring
activities to be undertaken by the Borrower and the Guarantors that heretofore
have been disclosed to the Lender (the "Restructuring Activities") and (ii) a
revolving credit facility to finance the Borrower's operational cash shortfalls,
certain expenses as provided herein and certain additional Restructuring
Activities; and
WHEREAS, to provide security for the repayment of the Borrowings and
the payment of the other obligations of the Borrower and the Guarantors
hereunder and under the other Loan Documents, the Guarantors will provide to the
Lender a guaranty of the due and punctual payment and performance of the
obligations of the Borrower hereunder.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements herein contained, the parties hereto hereby agree as follows:
SECTION 1. DEFINITIONS
SECTION 1.01 Defined Terms. As used herein, the following terms shall have
the meanings set forth below:
"Additional Restructuring Advance Date" shall have the meaning set
forth in Section 2.01(b).
"Additional Restructuring Advances" shall have the meaning set forth
in Section 2.01(b).
1
"Additional Restructuring Costs" shall mean, with respect to any
Additional Restructuring Advance Date, the direct costs of Restructuring
Activities to be paid during the immediately succeeding seven-day period
commencing on and including such date, which costs, together with the initial
aggregate principal amount of the Term Loan and any Additional Restructuring
Advances that have theretofore been made, shall not exceed $5,000,000 in the
aggregate.
"Advance" shall have the meaning set forth in Section 2.01(a).
"Advance Certificate" shall have the meaning set forth in Section
4.02(c).
"Advance Date" shall have the meaning set forth in Section 2.01(a).
"Affiliate" shall mean, as to any Person, any other Person which,
directly or indirectly, is in control of, is controlled by, or is under common
control with, such Person. For purposes of this definition, a Person (a
"Controlled Person") shall be deemed to be "controlled by" another Person (a
"Controlling Person") if the Controlling Person possesses, directly or
indirectly, power to direct or cause the direction of the management and
policies of the Controlled Person whether by contract or otherwise.
"Agreement" shall mean this Credit and Guaranty Agreement, as the
same may be amended, restated, modified or supplemented from time to time.
"Bankruptcy Code" shall mean The Bankruptcy Reform Act of 1978, as
heretofore and hereafter amended, and codified as 11 U.S.C. Section 101 et seq.
"Bankruptcy Court" shall mean the Delaware Bankruptcy Court
overseeing the Lender's bankruptcy proceedings (Joint Case Number 00-4238 (PJW).
"Bankruptcy Proceeding" shall have the meaning set forth in
Section 9.
"Borrower" shall have the meaning set forth in the recitals hereto.
"Borrowings" shall mean, collectively, the Term Loan, the Additional
Restructuring Advances and the Advances.
"Budget" shall mean the operating budget for the Company and its
Subsidiaries, on a consolidated basis, as prepared and delivered by the Buyer
and approved by the chief financial officer of the Borrower prior to the date
hereof.
"Business Day" shall mean any day other than a Saturday, Sunday or
other day on which banks in the State of New York are required or permitted to
close.
"Buyer" shall have the meaning set forth in the Merger Agreement.
"Cash" shall mean all cash equivalents of the Borrower and its
Subsidiaries and all cash held in any bank account of the Borrower or any
Subsidiary, less outstanding checks and the proceeds of the Term Loan.
- 2 -
"Cash Demands" shall mean, with respect to any period, the projected
amount of cash disbursements (other than disbursements in connection with
Expenses and Additional Restructuring Advances) of the Borrower and its
Subsidiaries for such period, as set forth in the Budget; provided that Cash
Demands shall not include any such disbursements for payments or expenses that
are not contemplated by the Budget unless otherwise approved by the Manager (the
"Excluded Expenses").
"Cash Receipts" shall mean, with respect to any period, the
projected amount of cash receipts (other than receipts from Advances made under
Section 2.09 and Additional Restructuring Advances and without giving effect to
any Advance requested to be made in respect of such period) of the Borrower and
its Subsidiaries for such period, as set forth in the Budget.
"Change of Control" shall mean (i) the acquisition of ownership,
directly or indirectly, beneficially or of record, by any Person or group
(within the meaning of the Securities Exchange Act of 1934 and the rules of the
Securities and Exchange Commission thereunder as in effect on the date hereof),
of shares representing more than 20% of the aggregate ordinary voting power
represented by the issued and outstanding capital stock of the Borrower, the
Guarantors or any Subsidiary thereof; or (ii) the occupation of a majority of
the seats (other than vacant seats) on the board of directors or similar
management body of the Borrower by Persons who were neither (A) nominated by the
board of directors or similar management body of the Borrower nor (B) appointed
by directors so nominated.
"Closing Date" shall mean the date on which this Agreement has been
executed and the conditions precedent to the making of the Term Loan and the
initial Advance set forth in Section 4.01 and Section 4.02 have been satisfied
or waived.
"Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time, and the regulations promulgated thereunder.
"Collateral" shall have the meaning set forth in the Security and
Pledge Agreement.
"Company Material Adverse Change" shall have the meaning set forth
in the Merger Agreement.
"Company Material Adverse Effect" shall have the meaning set forth
in the Merger Agreement.
"Company Shareholder Approval" shall have the meaning set forth in
the Merger Agreement.
"Concentration Account" shall mean, collectively, the following
accounts: (i) account number 225277 at Mellon Bank, (ii) account number 147060
at Mellon Bank and (iii) account number 1018068921 at Xxxxx Fargo Bank.
"Control Agreement" shall mean a control agreement with respect to
the Concentration Account in form and substance satisfactory to the Lender.
- 3 -
"Debtor Relief Law" shall mean, collectively, the Bankruptcy Code
and all other United States or foreign applicable liquidation, conservatorship,
bankruptcy, moratorium, rearrangement, receivership, insolvency, reorganization
or similar debtor relief laws from time to time in effect affecting the rights
of creditors generally, as amended from time to time.
"Default" shall mean any event or condition that, with the giving of
any notice, the passage of time, or both, would be an Event of Default.
"Dollars" and "$" shall mean lawful money of the United States of
America.
"Eligible Advance Period" shall mean (i) solely for purposes of
Advances made under Section 2.09, the period commencing on the Closing Date and
terminating on the Termination Date, and (ii) for all other purposes hereunder,
the period commencing at the effective time of the Company Shareholder Approval
and terminating on the Termination Date; provided that the Eligible Advance
Period shall automatically be suspended if and for so long as the Company
Shareholder Approval is suspended, revoked or otherwise nullified during which
period of suspension the Lender shall have no obligation hereunder to make any
Advance.
"Event of Default" shall have the meaning given such term in Section
7.01.
"Excluded Expenses" shall have the meaning given to such term in the
definition of "Cash Demands."
"Excluded Taxes" shall mean, with respect to the Lender, any
assignee thereof, or any other recipient of any payment to be made by or on
account of any Obligation, (i) income or franchise taxes imposed on (or measured
by) its net income by the United States of America, or by the jurisdiction under
the laws of which such recipient is organized or in which its principal office
is located or, in the case of any Lender, in which its applicable lending office
is located, and (ii) any branch profits taxes imposed by the United States of
America or any similar tax imposed by any other jurisdiction in which the
Borrower is located.
"Expenses" shall mean, collectively, (i) all fees and expenses
payable by the Borrower or any Subsidiary to the Lender or any of its Affiliates
pursuant to this Agreement or any of the other Loan Documents and (ii) all
expenses of the Buyer under the Merger Agreement in excess of $250,000 that are
paid by the Borrower on or prior to the Termination Date (other than any
expenses reimbursed in connection with the termination of the Merger Agreement).
"Financial Officer" shall mean the chief financial officer,
principal accounting officer, controller or treasurer of the Borrower.
"GAAP" shall mean generally accepted accounting principles as of the
date hereof applied in accordance with Section 1.02.
"Governmental Authority" shall mean any Federal, state, municipal or
other governmental department, commission, board, bureau, agency or
instrumentality or any court, in each case whether of the United States or
foreign.
"Guarantor" shall have the meaning set forth in the recitals hereto.
- 4 -
"Indemnified Party" shall have the meaning set forth in Section
10.06.
"Indemnified Taxes" shall mean Taxes other than Excluded Taxes.
"Interest Rate" shall mean 6.0%.
"Lender" shall have the meaning set forth in the recitals hereto and
shall include any of the Lender's successors or permitted assigns.
"Lien" shall mean any mortgage, pledge, security interest,
encumbrance, lien or charge of any kind whatsoever (including any conditional
sale or other title retention agreement or any lease in the nature thereof).
"Loan Documents" shall mean this Agreement, the Notes, the Security
Documents, and any other instrument or agreement executed and delivered to the
Lender in connection herewith.
"Management Agreement" shall have the meaning set forth in the
recitals hereto.
"Manager" shall have the meaning set forth in the recitals hereto.
"Maturity Date" shall mean the earliest to occur of (i) the date
that is 180 days following the Effective Date (as defined in the Merger
Agreement), (ii) the date on which the Merger Agreement terminates for any
reason, (iii) November 30, 2004, if the Company Shareholder Approval has not
been obtained on or before October 31, 2004 and (iv) June 30, 2005.
"Merger Agreement" shall have the meaning set forth in the recitals
hereto.
"Merger Corp." shall have the meaning set forth in the recitals
hereto.
"Minimum Cash Amount" shall mean $10,000,000 less the amount of
Professional Fees paid on or prior to the effective date of the Company
Shareholder Approval in excess of the amount budgeted therefor through such
date, as set forth in the Weekly Forecasts.
"Net Cash Required" shall mean, as of any Advance Date, the amount
of Cash Demands for the immediately succeeding seven-day period commencing on
and including such date less the amount of Cash Receipts for such seven-day
period, as set forth in the Advance Certificate.
"Notes" shall mean, collectively, the Term Note and the Revolving
Note.
"Obligations" shall mean (a) the due and punctual payment of
principal of and interest on the Borrowings; (b) the due and punctual payment of
the Expenses; and (c) all other present and future, fixed or contingent,
monetary obligations of the Borrower and the Guarantors to the Lender under the
Related Agreements, whether absolute or contingent, liquidated or unliquidated,
whether due or not due, and however arising under any Related Agreement.
- 5 -
"Other Taxes" shall mean any and all present or future stamp or
documentary taxes or any other excise or property taxes, charges or similar
levies arising from any payment made hereunder or from the execution, delivery
or enforcement of, or otherwise with respect to, this Agreement.
"Permitted Advance Amount" shall mean, as of any date of
determination, an amount equal to the sum of (i) (A) the Minimum Cash Amount
less (B) the cumulative amount of Excluded Expenses paid on or prior to such
date, plus (ii) Net Cash Required as of such date, less (iii) Cash as of such
date; provided, that if such sum is less than zero, the Permitted Advance Amount
shall equal zero; provided, further, that notwithstanding anything in this
definition to the contrary, solely for purposes of Advances made under Section
2.09 hereunder, "Permitted Advance Amount" shall mean the amount of unpaid
Expenses owing to the Lender as of such date.
"Permitted Lien" shall have the meaning set forth in the Merger
Agreement.
"Person" shall mean any natural person, corporation, division of a
corporation, partnership, trust, joint venture, association, company, estate,
unincorporated organization or government or any agency or political subdivision
thereof.
"Professional Fees" shall have the meaning set forth in the Merger
Agreement.
"Register" shall have the meaning set forth in Section 10.02(d).
"Related Agreements" shall mean, collectively, the Loan Documents,
the Merger Agreement and the Management Agreement.
"Restructuring Activities" shall have the meaning set forth in the
recitals hereto.
"Revolving Note" shall have the meaning set forth in Section
2.03(d).
"Security and Pledge Agreement" shall have the meaning set forth in
Section 4.01(c).
"Security Documents" shall have the meaning set forth in Section
4.01(c).
"Subsidiary" shall mean, with respect to any Person (herein referred
to as the "parent"), any corporation, association or other business entity
(whether now existing or hereafter organized) of which at least a majority of
the securities or other ownership or membership interests having ordinary voting
power for the election of directors is, at the time as of which any
determination is being made, owned (directly or indirectly) or controlled by the
parent or one or more subsidiaries of the parent or by the parent and one or
more subsidiaries of the parent. Unless the context otherwise requires, any
reference herein to "Subsidiary" shall be a reference to a Subsidiary of the
Borrower.
"Taxes" shall mean any and all present or future taxes, levies,
imposts, duties, deductions, charges or withholdings imposed by any Governmental
Authority, including any interest thereon or penalties imposed with respect
thereto.
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"Term Loan" shall have the meaning set forth in Section 2.01(c).
"Term Note" shall have the meaning set forth in Section 2.03(d).
"Termination Date" shall mean the earlier to occur of (i) the
Maturity Date and (ii) the acceleration of the Borrowings in accordance with the
terms hereof.
"Weekly Forecasts" shall have the meaning set forth in the Merger
Agreement.
SECTION 1.02 Terms Generally. The definitions in Section 1.01 shall apply
equally to both the singular and plural forms of the terms defined. Whenever the
context may require, any pronoun shall include the corresponding masculine,
feminine and neuter forms. All references herein to Sections, Exhibits and
Schedules shall be deemed references to Sections of, and Exhibits and Schedules
to, this Agreement unless the context shall otherwise require. Except as
otherwise expressly provided herein, all terms of an accounting or financial
nature shall be construed in accordance with GAAP.
SECTION 2. AMOUNT AND TERMS OF BORROWINGS
SECTION 2.01 Commitment of the Lender.
(a) The Lender agrees, upon the terms and subject to the conditions
herein set forth, to make revolving credit loans (each such revolving credit
loan, an "Advance" and, collectively, the "Advances") to the Borrower on each
Monday during the Eligible Advance Period (or if any such Monday is not a
Business Day, then on the first Business Day following such Monday) (each such
date, an "Advance Date") in an aggregate principal amount not to exceed with
respect to any such Advance, the Permitted Advance Amount. Advances may be
repaid and reborrowed in accordance with the provisions of this Agreement.
(b) The Lender agrees, upon the terms and subject to the conditions
herein set forth, to make revolving credit loans (each such revolving credit
loan, an "Additional Restructuring Advance" and, collectively, the "Additional
Restructuring Advances") to the Borrower on each Monday from and after the
Closing Date until the effective date of the Company Shareholder Approval (or if
any such Monday is not a Business Day, then on the first Business Day following
such Monday) (each such date, an "Additional Restructuring Advance Date") in an
aggregate principal amount not to exceed with respect to such Additional
Restructuring Advance Date, the Additional Restructuring Costs. Additional
Restructuring Advances may be repaid and reborrowed in accordance with the
provision of this Agreement.
(c) The Lender agrees, upon the terms and subject to the conditions
set forth herein, to make a loan (the "Term Loan") to the Borrower on the
Closing Date in an aggregate principal amount equal to $2,400,000. The Term Loan
is not revolving in nature, and amounts repaid in respect of the Term Loan may
not be reborrowed.
SECTION 2.02 Making of Advances and Additional Restructuring Advances.
(a) No later than 11:00 a.m. New York City time on each Advance Date
(other than with respect to an Advance made pursuant to Section 2.09 hereunder),
the Borrower
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shall deliver to the Lender an Advance Certificate. Pursuant to the terms and
subject to the conditions set forth herein, no later than 5:00 p.m., New York
City time, on such Advance Date, the Lender shall make available to the Borrower
in immediately available funds an Advance in an amount equal to the Permitted
Advance Amount.
(b) No later than 11:00 a.m. New York City time on each Additional
Restructuring Advance Date, the Borrower shall deliver to the Lender an Advance
Certificate. Pursuant to the terms and subject to the conditions set forth
herein, no later than 5:00 p.m., New York City time, on such Additional
Restructuring Advance Date, the Lender shall make available to the Borrower in
immediately available funds an Additional Restructuring Advance in an amount
equal to the Additional Restructuring Costs.
SECTION 2.03 Repayment of Borrowings; Evidence of Debt.
(a) The Borrower hereby unconditionally promises to pay to the
Lender on the Termination Date the then unpaid principal amount of each
Borrowing and all accrued and unpaid interest thereon.
(b) The Lender shall maintain an account or accounts evidencing the
indebtedness of the Borrower to the Lender resulting from the Term Loan and each
Advance made by the Lender, including the amounts of principal and interest
payable and paid to the Lender from time to time hereunder.
(c) The entries made in the accounts maintained pursuant to
paragraph (b) of this Section 2.03 shall be prima facie evidence of the
existence and amounts of the obligations recorded therein; provided that the
failure of the Lender to maintain such accounts or any error therein shall not
in any manner affect the obligation of the Borrower to repay the Borrowings in
accordance with the terms of this Agreement.
(d) The Borrower's obligations owing to the Lender under (i) the
Term Loan shall be evidenced by a promissory note in the form attached hereto as
Exhibit A (the "Term Note") and (ii) the Advances and the Additional
Restructuring Advances shall be evidenced by a promissory note in the form
attached hereto as Exhibit B (the "Revolving Note"). The Borrowings evidenced by
such promissory notes and interest thereon shall at all times (including after
assignment pursuant to Section 10.02) be represented by one or more promissory
notes in such form payable to the order of the payee named therein (or, if such
promissory note is a registered note, to such payee and its registered assigns).
SECTION 2.04 Interest on Borrowings.
(a) Subject to the provisions of Section 2.05, each Borrowing shall
bear interest (computed on the basis of the actual number of days elapsed over a
year with 365 days or 366 days in a leap year) at a rate per annum equal to the
Interest Rate, compounded quarterly on March 31, June 30, September 30 and
December 31 of each year, commencing September 30, 2004.
(b) Interest on all Borrowings shall be payable in arrears on the
Termination Date and, after the Termination Date, on demand.
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SECTION 2.05 Default Interest. Upon the occurrence and during the
continuation of an Event of Default, the Interest Rate then in effect with
respect to the Borrowings shall be increased by (i) 5.0%, in connection with an
Event of Default described in Section 7.01(b), and (ii) 2.0% in connection with
any other Event of Default.
SECTION 2.06 Mandatory Prepayment; Reimbursement of Lender. Upon the
Termination Date, the obligation of the Lender to extend any Borrowings shall be
terminated in full and the Borrower shall repay the Term Loan and all Advances
and Additional Restructuring Advances in full (plus any accrued but unpaid
interest thereon), together with any unpaid Expenses owing to the Lender as of
such date.
SECTION 2.07 Optional Prepayment of Borrowings; Reimbursement of Lender.
The Borrower shall have the right at any time and from time to time to prepay
the Obligations, in whole or in part, upon at least one Business Day's prior
written or facsimile notice to the Lender. Each notice of prepayment shall
specify the prepayment date and the amount of such prepayment, shall be
irrevocable and shall commit the Borrower to make such prepayment on the date
stated therein. All such prepayments shall be applied as follows: (i) first, to
all then unpaid Expenses; (ii) second, to all accrued and unpaid interest on the
Term Loan; (iii) third, to all accrued and unpaid interest on the Additional
Restructuring Advances; (iv) fourth, to all accrued an unpaid interest on the
Advances, (v) fifth, to the outstanding principal amount of the Term Loan and
the Additional Restructuring Advances and (v) sixth, to the outstanding
principal amount of the Advances. In the event the Borrower fails to prepay any
Obligation on the date specified in any prepayment notice, the amount of such
payment, together with accrued and unpaid interest thereon, shall be due and
payable on demand by the Lender, together with any loss or expense incurred by
the Lender as a result of such failure to prepay.
SECTION 2.08 Taxes.
(a) Any and all payments by or on account of any obligation of
the Borrower hereunder shall be made free and clear of, and without deduction
for, any Indemnified Taxes or Other Taxes; provided that if the Borrower shall
be required to deduct any Indemnified Taxes or Other Taxes from such payments,
then (i) the sum payable shall be increased as necessary so that after making
all required deductions (including deductions applicable to additional sums
payable under this Section 2.08) the Lender (as the case may be) receives an
amount equal to the sum it would have received had no such deductions been made,
(ii) the Borrower shall make such deductions and (iii) the Borrower shall pay
the full amount deducted to the relevant Governmental Authority in accordance
with applicable law.
(b) In addition, the Borrower shall pay any Other Taxes to the
relevant Governmental Authority in accordance with applicable law.
(c) The Borrower will indemnify the Lender, within five days
after written demand therefor, for the full amount of any Indemnified Taxes or
Other Taxes paid by the Lender, on or with respect to any payment by or on
account of any obligation of the Borrower hereunder (including Indemnified Taxes
or Other Taxes imposed or asserted on or attributable to amounts payable under
this Section 2.08) and any penalties, interest and reasonable expenses arising
therefrom or with respect thereto, whether or not such Indemnified
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Taxes or Other Taxes were correctly or legally imposed or asserted by the
relevant Governmental Authority. A certificate as to the amount of such payment
or liability delivered to the Borrower by the Lender, shall be conclusive absent
manifest error.
(d) As soon as practicable after any payment of Indemnified
Taxes or Other Taxes by the Borrower to a Governmental Authority, the Borrower
shall deliver to the Lender the original or a certified copy of a receipt issued
by such Governmental Authority evidencing such payment, a copy of the return
reporting such payment or other evidence of such payment reasonably satisfactory
to the Lender.
(e) Notwithstanding any other provision herein, if after the
date of this Agreement any change in applicable law or regulation or in the
interpretation or administration thereof by any Governmental Authority charged
with the interpretation or administration thereof (whether or not having the
force of law) shall change the basis of taxation of payments to the Lender of
the principal of or interest on any Borrowings extended by the Lender or any
fees or other amounts payable hereunder and the result shall be to increase the
cost to the Lender of extending or maintaining any Borrowings or to reduce the
amount of any sum received or receivable by the Lender hereunder (whether of
principal, interest or otherwise) by an amount deemed by the Lender in its sole
discretion to be material, then the Borrower will pay to the Lender on account
of itself such additional amount or amounts as will compensate the Lender for
such additional costs incurred or reduction suffered.
SECTION 2.09 Nature of Expenses. The Borrower irrevocably authorizes the
Lender to disburse amounts necessary to satisfy any unpaid Expenses owing to the
Lender hereunder. For all purposes of this Agreement and the Revolving Note, any
such disbursement shall be deemed to be an Advance to the Borrower hereunder in
the amount of such disbursement, and the amount of such disbursement shall be
added to the unpaid principal amount of the Revolving Note as of the date of
such disbursement.
SECTION 2.10 Priority and Liens. The Obligations will be secured by a
first priority perfected security interest in all presently owned and hereafter
acquired assets of the Borrower and the Subsidiaries to the extent such security
interest is permitted under applicable law, subject to Permitted Liens and the
Lender's obligations to subordinate its liens as set forth in this Agreement and
the Security and Pledge Agreement. All capital stock and other equity interests
of the Borrower or any Guarantor in any Subsidiary of the Borrower will be
pledged by the Borrower and such Guarantor to secure the Obligations on a first
priority basis.
SECTION 2.11 Security Interest in Concentration Account. To secure the
payment and performance of the Obligations, the Borrower and the Guarantors
hereby assign and pledge to the Lender, for its benefit and for the ratable
benefit of any assignees of the Lender, and hereby grant, to the fullest extent
permitted by regulatory law, to the Lender, for its benefit and for the ratable
benefit of any assignees of the Lender, a first priority security interest,
senior to all other Liens, if any, in all of the Borrower's and the Guarantors'
right, title and interest in and to all of their respective presently owned and
hereafter acquired assets and properties, including, without limitation, the
Concentration Account and any direct investment of the funds contained therein.
The Borrower and the Guarantors shall use their respective commercially
reasonable
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efforts to permit the Lender to perfect its security interest in the
Concentration Account, including executing a Control Agreement.
SECTION 2.12 Payment of Obligations. Subject to the provisions of Section
7.01, upon the maturity (whether by acceleration or otherwise) of any of the
Obligations under this Agreement or any of the other Related Agreements, the
Lender shall be entitled to immediate payment of such Obligations.
SECTION 3. REPRESENTATIONS AND WARRANTIES
In order to induce the Lender to extend the Borrowings and request the
issuance of Letters of Credit hereunder, each of the Borrower and the Guarantors
jointly and severally represents and warrants as follows:
SECTION 3.01 Merger Agreement Representations and Warranties. Each of the
representations and warranties made by the Borrower under the Merger Agreement
is true and correct as of the dates and times set forth therein, which
representations and warranties are incorporated herein by reference and made a
part hereof as if such representations and warranties were set forth in full and
made herein.
SECTION 3.02 Use of Proceeds. The proceeds of the Term Loan and the
Additional Restructuring Advances shall be used solely to pay obligations in
connection with the Restructuring Activities and the proceeds of the Advances
shall be used by the Borrower and its Subsidiaries solely for (i) the payment of
Expenses as provided herein and (ii) purposes consistent with the Budget unless
otherwise authorized by the Manager. For the avoidance of doubt, the Borrower
shall not (and shall not permit any of its Subsidiaries to) use the proceeds of
any Borrowing to satisfy any Excluded Expenses.
SECTION 4. CONDITIONS OF LENDING
SECTION 4.01 Conditions Precedent to the Term Loan and the Initial
Advance. The obligation of the Lender to make the Term Loan and the initial
Advance is subject to the satisfaction or waiver of the following conditions
precedent:
(a) Supporting Documents. The Lender shall have received for each of
the Borrower and the Guarantors:
(i) a copy of such entity's certificate of incorporation, as
amended, certified as of a recent date by the Secretary of State of the state of
its incorporation;
(ii) a certificate of such Secretary of State, dated as of a
recent date, as to the good standing of and payment of taxes by that entity and
as to the charter documents on file in the office of such Secretary of State;
and
(iii) a certificate of the secretary or an assistant secretary
of that entity dated on or about the Closing Date and certifying (A) that
attached thereto is a true and complete copy of the by-laws of that entity as in
effect on the date of such certification, (B) that attached thereto is a true
and complete copy of resolutions adopted by the board of directors of that
entity
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authorizing the Borrowings hereunder, the execution, delivery and performance in
accordance with their respective terms of this Agreement, the other Loan
Documents and any other documents required or contemplated hereunder or
thereunder and the granting of the Liens contemplated hereby, (C) that the
certificate of incorporation of that entity has not been amended since the date
of the last amendment thereto indicated on the certificate of the Secretary of
State furnished pursuant to clause (i) above and (D) as to the incumbency and
specimen signature of each officer of that entity executing this Agreement and
the other Loan Documents or any other document delivered by it in connection
herewith or therewith (such certificate to contain a certification by another
officer of that entity as to the incumbency and signature of the officer signing
the certificate referred to in this clause (iii)).
(b) Notes. The Borrower shall have executed and delivered the Term
Note and the Revolving Note, as applicable, and such Notes shall be in full
force and effect.
(c) Security and Pledge Agreement. The Borrower and each of the
Guarantors shall have duly executed and delivered to the Lender a Security and
Pledge Agreement in substantially the form of Exhibit C (the "Security and
Pledge Agreement") and such other documents as the Lender may request from time
to time to ensure the perfection or priority of its security interest in the
Collateral (such other documents, together with the Security and Pledge
Agreement, the "Security Documents").
(d) Opinion of Counsel. The Lender shall have received the favorable
written opinion of counsel to the Borrower and the Guarantors regarding
corporate, security interest, enforceability and other related matters, in form
and substance reasonably satisfactory to the Lender, dated as of the Closing
Date.
(e) Corporate Proceedings. All corporate proceedings and all
instruments and agreements in connection with the transactions among the
Borrower, the Guarantors and the Lender contemplated by this Agreement shall be
reasonably satisfactory in form and substance to the Lender, and the Lender
shall have received all information and copies of all documents and papers,
including records of corporate proceedings, which the Lender may have reasonably
requested in connection therewith.
(f) Representations and Warranties. The representations and
warranties made herein shall be true and correct in all material respects when
made.
SECTION 4.02 Conditions Precedent to the Term Loan and Each Advance. The
obligation of the Lender to make the Term Loan, each Additional Restructuring
Advance and each Advance (including the initial Advance) is subject to the
following conditions precedent:
(a) Notice. With respect to any Additional Restructuring Advance and
any Advance, the Lender shall have received a notice with respect to such
Borrowing, as required by Section 2.
(b) No Default. On the date of each Borrowing hereunder, no Default
or Event of Default shall have occurred and be continuing.
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(c) Advance Certificate. With respect to any Additional
Restructuring Advance and any Advance (other than an Advance made pursuant to
Section 2.09), the Lender shall have received the timely delivery of a
certificate in form and substance reasonably satisfactory to the Lender and
signed by a Financial Officer (the "Advance Certificate") setting forth the
requested amount of such Additional Restructuring Advance or Advance, as
applicable, and certifying as to (i) as of the applicable Additional
Restructuring Advance Date, the Additional Restructuring Costs and (ii) as of
the applicable Advance Date, (A) the amounts of Cash Receipts and Cash Demands
for the immediately succeeding seven-day period commencing on and including such
Advance Date, (B) the amount of Cash as of such date and (C) the cumulative
Excluded Expenses as of such date.
(d) Merger Agreement. The Merger Agreement (i) shall have been duly
executed by each of the Borrower, the Lender and Merger Corp. and shall be in
full force and effect, (ii) shall not have been determined to be invalid or
unenforceable, or its existence, validity or enforceability challenged in a
legal proceeding, (iii) shall not have been terminated by any party thereto
(irrespective of the reasons therefor) and (iv) shall not have been breached in
any respect by the Borrower. No event that would give the Lender the right to
terminate the Merger Agreement shall have occurred.
(e) Management Agreement. With respect any Advance Date occurring on
or after the effective date of the Company Shareholder Approval, the Management
Agreement (i) shall have been duly executed by each of the Borrower and the
Lender and be in full force and effect, (ii) shall not have been determined to
be invalid or unenforceable, or its existence, validity or enforceability
challenged in a legal proceeding, (iii) shall not have been terminated by any
party thereto (irrespective of the reasons therefor) and (iv) shall not have
been breached in any respect by the Borrower.
(f) No Material Adverse Change. There shall not have occurred, prior
to the effective date of the Company Shareholder Approval, a Company Material
Adverse Change.
The request by the Borrower for, and the acceptance by the Borrower
of, each Borrowing shall be deemed to be a representation and warranty by the
Borrower that the conditions specified in this Section 4 have been satisfied or
waived at that time.
SECTION 5. AFFIRMATIVE COVENANTS
From the date hereof and for so long as this Agreement shall be in
effect, any Borrowing or any amount shall remain outstanding or unpaid under
this Agreement, the Borrower and each of the Guarantors agree that, unless the
Lender shall otherwise consent in writing, the Borrower and each of the
Guarantors will:
SECTION 5.01 Merger Agreement. Comply with its obligations under the
Merger Agreement.
SECTION 5.02 Notice of Event of Default, etc. Promptly give to the Lender
notice in writing of any Default or Event of Default.
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SECTION 5.03 Use of Proceeds. Use the proceeds of the Borrowings solely
for the purposes set forth in Section 3.02.
SECTION 5.04 Further Assurances. Cooperate with the Lender and execute
such further instruments and documents as the Lender shall request to carry out
to its satisfaction the transactions contemplated by this Agreement and the
other Related Agreements.
SECTION 5.05 Cash Management Arrangements. Maintain in place its existing
cash management arrangements. Without limiting the generality of the foregoing,
the parties agree that all cash and cash equivalents (excluding deposits held by
third parties in the ordinary course of business) held by the Borrower or the
Guarantors and all proceeds of accounts receivable, chattel paper, general
intangibles and instruments for which the Borrower or any of the Guarantors is
an obligee shall be deposited as promptly as possible into the Concentration
Account, except for amounts (i) held to fund payroll disbursements in account
1018069139 at Xxxxx Fargo Bank and (ii) amounts held to pay benefits claims in
accounts 00-000-000 and 00-000-000 at Citibank and 475-00-9622 at XX Xxxxxx
Chase or (iii) as otherwise approved in writing by the Lender.
SECTION 5.06 Collateral Preservation. Take all such further actions as the
Lender may from time to time request in its commercially reasonable discretion
to preserve, protect, perfect and ensure the priority of the Lender's security
interest in the Collateral, subject to Permitted Liens entitled to priority
under applicable law, including, without limitation, reasonably assisting and
cooperating with the Lender in making required regulatory filings, if any.
SECTION 5.07 Real Estate Matters. At the request of the Lender execute
such instruments, documents and agreements, and take such other action as shall
be necessary to convey to the Lender, a first priority mortgage in any or all
real property owned or leased by the Borrower or any of the Guarantors, and in
connection therewith, deliver such appraisals, environmental assessments,
surveys, reports and information as the Lender shall require.
SECTION 5.08 Notification of Claim Against Collateral. Immediately upon
becoming aware thereof, notify the Lender in writing of any setoff, claim,
withholding or other defense to which any of the Collateral, or the Lender's
rights with respect to the Collateral, is subject.
SECTION 5.09 Good Standing Certificates. To the extent not delivered to
the Lender on or prior to the Closing Date, within ten Business Days following
the date hereof, the Borrower and each Guarantor shall deliver to the Lender a
certificate of the Secretary of State of its state of incorporation as to the
good standing of and payment of taxes by such entity.
SECTION 6. NEGATIVE COVENANT
From the date hereof and for so long as this Agreement shall be in
effect or any Borrowing or other amount shall remain outstanding or unpaid under
this Agreement, unless the Lender shall otherwise consent in writing, the
Borrower and each of the Guarantors will not (and will not authorize, agree or
commit to) (i) take any action that is not permitted by the terms of the
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Merger Agreement or (ii) refrain from taking any action that is required
pursuant to the terms of the Merger Agreement.
SECTION 7. EVENTS OF DEFAULT
SECTION 7.01 Events of Default. In the case of the happening of any of the
following events and the continuance thereof beyond the applicable grace period,
if any, (each, an "Event of Default"):
(a) prior to the effective date of the Company Shareholder Approval,
any representation or warranty made by the Borrower or any Guarantor in this
Agreement or in any other Loan Document or in connection with this Agreement or
the credit extensions hereunder or any statement or representation made in any
report, financial statement, certificate or other document furnished by the
Borrower or any Guarantors to the Lender under or in connection with this
Agreement (including any Advance Certificate), shall prove to have been false or
misleading in any respect when made or delivered; or
(b) default shall be made in the payment of any (i) Expenses,
interest on the Borrowings or other amounts payable hereunder when due (other
than amounts set forth in clause (ii) hereof), and such default shall continue
unremedied for more than two Business Days, or (ii) principal of the Borrowings,
when and as the same shall become due and payable, whether at the due date
thereof or at a date fixed for prepayment thereof or by acceleration thereof or
otherwise; or
(c) the earlier to occur of (i) the termination of the Merger
Agreement by any party thereto unless following a breach by the Lender
thereunder; or (ii) the Merger Agreement shall for any other reason cease to be
the valid, binding and enforceable obligation of the Borrower, or the Borrower
shall so state or allege the same; or
(d) default shall be made by the Borrower or any Guarantor in the
due observance or performance of any covenant, condition or agreement to be
observed or performed pursuant to the terms of this Agreement or any of the
other Loan Documents and, if such default was not willful, such default shall
not have been cured within 30 days following such default; or
(e) the Borrower or any Guarantor shall (i) file a petition under
any insolvency statute, (ii) make a general assignment for the benefit of its
creditors, (iii) commence a proceeding for the appointment of a receiver,
trustee, liquidator or conservator of itself or of the whole or any substantial
part of its property or shall otherwise be dissolved or liquidated, or (iv) file
a petition seeking reorganization or liquidation or similar relief under any
Debtor Relief Law or any other applicable law or statute; or
(f) (i) a court of competent jurisdiction shall (A) enter an order,
judgment or decree appointing a custodian, receiver, trustee, liquidator or
conservator of the Borrower or any Guarantor or the whole or any substantial
part of any such Person's properties, (B) shall approve a petition filed against
the Borrower or any Guarantor seeking reorganization, liquidation or similar
relief under the any Debtor Relief Law or any other applicable law or statute or
(C) under the provisions of any Debtor Relief Law or other applicable law or
statute, assume custody or control of the Borrower or any Guarantor or of the
whole or any substantial part of any such
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Person's properties, or (ii) there is commenced against the Borrower or any
Guarantor any proceeding or petition seeking reorganization, liquidation or
similar relief under any Debtor Relief Law or any other applicable law or
statute;
(g) a Change of Control shall occur; or
(h) any material provision of any Loan Document shall, for any
reason, cease to be valid and binding on the Borrower or any of the Guarantors,
or the Borrower or any of the Guarantors shall so assert in any pleading filed
in any court or before any Governmental Authority; or
(i) any judgment or order for the payment of money in excess of
$50,000 not covered by insurance (other than any judgment in connection with a
claim brought against the Borrower or any of its Subsidiaries by the landlord
under the lease for the property located at 00 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx
arising from the default disclosed in Section 3.13(b) of the Disclosure
Schedules annexed to the Merger Agreement) shall be rendered against the
Borrower or any of the Guarantors and the enforcement thereof shall not have
been stayed within 30 days following the date on which such judgment was
rendered; or
(j) any non-monetary judgment or order shall be rendered against the
Borrower or any of the Guarantors which does or could reasonably be expected to
have a Company Material Adverse Effect, and there shall be any period of 30
consecutive days during which a stay of enforcement of such judgment or order,
by reason of a pending appeal or otherwise, shall not be in effect;
then, and in every such event and at any time thereafter during the continuance
of such event, the Lender may by notice to the Borrower, take one or more of the
following actions, at the same or different times: (i) terminate forthwith its
agreement to extend Borrowings hereunder; (ii) declare the Borrowings then
outstanding to be forthwith due and payable, whereupon the principal of the
Borrowings together with accrued and unpaid interest thereon and any unpaid
accrued Expenses and all other liabilities of the Borrower accrued hereunder and
under any other Loan Document, shall become forthwith due and payable, without
presentment, demand, protest or any other notice of any kind, all of which are
hereby expressly waived by the Borrower and the Guarantors, anything contained
herein or in any other Loan Document to the contrary notwithstanding; (iii)
foreclose on all or any portion of the Collateral, occupy Borrower's premises to
complete inventories, fulfill orders and sell inventories, or otherwise exercise
remedies against the Collateral permitted by applicable nonbankruptcy law; (iv)
exercise its control to foreclose and provide any required instructions or
notices to any Person with respect to the Concentration Account, collect
accounts receivable and apply the proceeds thereof to the Obligations; and (v)
exercise any and all remedies under the Loan Documents and under applicable law
available to the Lender; provided, that upon the occurrence of an Event of
Default described in clause (e) or (f) above, the obligation of the Borrower to
extend Borrowings hereunder shall automatically terminate and the outstanding
principal amount of and interest on the Borrowings and any unpaid Expenses shall
automatically become due and payable.
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SECTION 8. GUARANTY
SECTION 8.01 Guaranty.
(a) Each of the Guarantors unconditionally and irrevocably
guarantees, as a primary obligor and not merely as a surety, the due and
punctual payment by the Borrower of all of the Obligations when the same shall
become due and payable, whether at stated maturity, by acceleration, demand or
otherwise (including amounts that would become due but for the operation of the
automatic stay under Section 362(a) of the Bankruptcy Code). Each of the
Guarantors further agrees that the Obligations may be extended or renewed, in
whole or in part, without notice to or further assent from it, and it will
remain bound upon this guaranty notwithstanding any extension or renewal of any
of the Obligations. Each of the Guarantors acknowledges that the Borrowings are
being extended for the benefit of the businesses of the Lender and its
Subsidiaries and that the Obligations are being incurred for and will inure to
its benefit. The Obligations of the Guarantors shall be joint and several.
(b) Each of the Guarantors waives presentation to, demand for
payment from and protest to the Borrower or any other Guarantor, and also waives
notice of protest for nonpayment. The Obligations of the Guarantors hereunder
shall not be affected by (i) the failure of the Lender to assert any claim or
demand or to enforce any right or remedy against the Borrower or any other
Guarantor under the provisions of this Agreement or any other Loan Document or
otherwise; (ii) any extension or renewal of any provision hereof or thereof;
(iii) any rescission, waiver, compromise, acceleration, amendment or
modification of any of the terms or provisions of any of the Loan Documents;
(iv) the release, exchange, waiver or foreclosure of any security held by the
Lender for the Obligations or any of them; (v) the failure of the Lender to
exercise any right or remedy against any other Guarantor; or (vi) the release or
substitution of any Guarantor or any other Guarantor.
(c) Any interest on any portion of the Obligations that accrues
after the commencement of any proceeding, voluntary or involuntary, involving
the bankruptcy, insolvency, receivership, reorganization, liquidation or
arrangement of the Borrower (or, if interest on any portion of the Obligations
ceases to accrue by operation of law by reason of the commencement of said
proceeding, such interest as would have accrued on such portion of the
Obligations if said proceeding had not been commenced) shall be included in the
Obligations because it is the intention of each Guarantor and the Lender that
the Obligations should be determined without regard to any rule of law or order
that may relieve the Borrower of any portion of such Obligations.
(d) In the event that all or any portion of the Obligations is paid
by the Borrower, the obligations of each Guarantor hereunder shall continue and
remain in full force and effect or be reinstated, as the case may be, in the
event that all or any part of such payment(s) is rescinded or recovered directly
or indirectly from the Lender as a preference, fraudulent transfer or otherwise,
and any such payments that are so rescinded or recovered shall constitute
Obligations.
(e) Each Guarantor hereby waives (i) any defense based upon any
statute or rule of law which provides that the obligation of a surety must be
neither larger in amount nor in
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other respects more burdensome than that of the principal; (ii) any defense
based upon errors or omissions in the administration of the Obligations; (iii)
(A) any legal or equitable discharge of such Guarantor's obligations hereunder,
(B) the benefit of any statute of limitations affecting such Guarantor's
liability hereunder or the enforcement hereof, (C) any rights to set-offs,
recoupments and counterclaims, and (D) promptness, diligence and any requirement
that the Lender protect, secure, perfect or insure any Lien or any property
subject thereto; (iv) notices, demands, presentments, protests, notices of
protest, notices of dishonor and notices of any action or inaction, including
acceptance of this Guaranty, notices of default under any Related Agreement
notices of any renewal, extension or modification of the Obligations or any
agreement related thereto, notices of any extension of credit to the Borrower
and notices of any of the matters referred to below and any right to consent to
any thereof; and (iv) to the fullest extent permitted by law, any defenses or
benefits that may be derived from or afforded by law which limit the liability
of or exonerate guarantors or sureties, or which may conflict with the terms of
this guaranty.
(f) Each of the Guarantors further agrees that this guaranty
constitutes a guaranty of payment when due and not just of collection, and
waives any right to require that any resort be had by the Lender to any security
held for payment of the Obligations or to any balance of any deposit, account or
credit on the books of the Lender in favor of the Borrower or any other
Guarantor, or to any other Person.
(g) Each of the Guarantors hereby waives any defense that it might
have based on a failure to remain informed of the financial condition of the
Borrower and of any other Guarantor and any circumstances affecting the ability
of the Borrower to perform under this Agreement.
(h) Each Guarantor's guaranty shall not be affected by the
genuineness, validity, regularity or enforceability of the Obligations or any
other instrument evidencing any Obligations, or by the existence, validity,
enforceability, perfection, or extent of any collateral therefor or by any other
circumstance relating to the Obligations which might otherwise constitute a
defense to this Guaranty. The Lender makes no representation or warranty in
respect to any such circumstances or shall have any duty or responsibility
whatsoever to any Guarantor in respect of the management and maintenance of the
Obligations.
(i) Subject to the provisions of Section 7.01, upon the Obligations
becoming due and payable (by acceleration or otherwise), the Lender shall be
entitled to immediate payment of such Obligations by the Guarantors without
presentment, demand, protest or other notice of any kind, all of which are
expressly waived by each of the Guarantors.
SECTION 8.02 No Impairment of Guaranty. The obligations of the Guarantors
hereunder shall not be subject to any reduction, limitation, impairment or
termination for any reason, including, without limitation, any claim of waiver,
release, surrender, alteration or compromise, and shall not be subject to any
defense or set-off, counterclaim, recoupment or termination whatsoever by reason
of the invalidity, illegality or unenforceability of the Obligations. Without
limiting the generality of the foregoing, the obligations of the Guarantors
hereunder shall not be discharged or impaired or otherwise affected by the
failure of the Lender to assert any claim or demand or to enforce any remedy
under this Agreement or any other
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agreement, by any waiver or modification of any provision thereof, by any
default, failure or delay, willful or otherwise, in the performance of the
Obligations, or by any other act or thing or omission or delay to do any other
act or thing which may or might in any manner or to any extent vary the risk of
the Guarantors or would otherwise operate as a discharge of the Guarantors as a
matter of law, unless and until the Obligations are paid in full.
SECTION 8.03 Subrogation. Upon payment by any Guarantor of any sums to the
Lender hereunder, all rights of such Guarantor against the Borrower arising as a
result thereof by way of right of subrogation or otherwise, shall in all
respects be subordinate and junior in right of payment to the prior final and
indefeasible payment in full of all the Obligations. If any amount shall be paid
to such Guarantor for the account of the Borrower, such amount shall be held in
trust for the benefit of the Lender and shall forthwith be paid to the Lender to
be credited and applied to the Obligations, whether matured or unmatured.
SECTION 9. DEBTOR IN POSSESSION FINANCING; SUBORDINATION
SECTION 9.01 Right of First Refusal on DIP. If any of the events described
in Section 7.01(e) or (f) shall occur (any such event, a "Bankruptcy
Proceeding"), the Lender shall have a right of first refusal to provide the
debtor-in-possession financing in connection with such Bankruptcy Proceeding on
terms and conditions substantially similar to those offered by a third party
lender and otherwise customary for debtor-in-possession financings.
SECTION 9.02 Subordination. Subject to the Lender's rights under Section
9.01, in the event that the Company Shareholder Approval has not been obtained
on or prior to October 31, 2004, and thereafter the Borrower initiates a
Bankruptcy Proceeding, the Lender agrees that the Obligations of the Borrower
under the Term Loan shall be subordinated to debtor-in-possession financing
(including any professional fees carveout provided therein) on customary terms
obtained by the Borrower in connection with such Bankruptcy Proceeding up to an
aggregate principal amount of $20,000,000.
SECTION 10. MISCELLANEOUS
SECTION 10.01 Notices. Notices and other communications provided for
herein shall be in writing (including facsimile communication) and shall be
mailed, transmitted by facsimile or delivered:
if to the Borrower or any Guarantor, to:
000 Xxxxxxxxx Xxxxx Xxxx
Xxxxxxxxx, XX 00000
Facsimile: (000) 000-0000
Attention: Chief Executive Office
with a copy to:
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Xxxxxxxxx Xxxxx Xxxxx Xxxxx Xxxxx & Xxxxxxxxx
00000 Xxxxx Xxxxxx Xxxxxxxxx, Xxxxx 0000
Xxx Xxxxxxx, XX 00000
Facsimile: (000) 000-0000
Attention: Xxxx X. Xxxxxxxx
if to the Lender, to:
c/o Columbia Capital LLC
000 Xxxxx Xxxxx Xxxxxx, Xxxxx #000
Xxxxxxxxxx, XX 00000
Facsimile: (000) 000-0000
Attention: Xxxx X. Xxxxxx
with a copy (which shall not constitute notice to the
Lender) to:
Xxxxxxxx & Xxxxx LLP
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile: 000-000-0000
Attention: Xxxxxxxx Xxxxx, Esq.
or such other address as such party may from time to time designate by giving
written notice to the other parties hereunder. All notices and other
communications given to any party hereto in accordance with the provisions of
this Agreement shall be deemed to have been given on the fifth Business Day
after the date when sent by registered or certified mail, postage prepaid,
return receipt requested, if by mail; or when receipt is acknowledged, if by any
facsimile equipment of the sender; in each case addressed to such party as
provided in this Section 10.01 or in accordance with the latest unrevoked
written direction from such party; provided, however, that, in the case of
notices to the Lender, notices pursuant to the preceding sentence with respect
to change of address and pursuant to Section 2 shall be effective only when
received by the Lender.
SECTION 10.02 Successors and Assigns.
(a) This Agreement shall be binding upon and inure to the benefit of
the Borrower, the Guarantors, the Lender and their respective successors and
assigns. Neither the Borrower nor any of the Guarantors may assign or transfer
any of their rights or obligations hereunder without the prior written consent
of the Lender. The Lender may sell, assign, transfer or convey all or any
portion of its interest in any Borrowing made hereunder, including by way of
granting participations therein, to any Person; provided that, so long as no
Default or Event of Default has occurred and is continuing, no such transfer
shall relieve the Lender of its obligations to make Advances or Additional
Restructuring Advances hereunder without the consent of the Borrower.
(b) Any lender may, in connection with any assignment or
participation or proposed assignment or participation pursuant to this Section
10.02, disclose to the assignee or participant or proposed assignee or
participant, any information relating to the Borrower or any of the Guarantors
furnished to such lender (including the Lender) by or on behalf of the
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Borrower or any of the Guarantors; provided that prior to any such disclosure,
each such assignee or participant or proposed assignee or participant shall
agree in writing to be bound by the provisions of Section 10.03.
(c) The Lender shall maintain at its office a register for the
recordation of the names and addresses of the Lenders and the principal amount
of and interest on the Borrowings owing to, each Lender from time to time (the
"Register"). The entries in the Register shall be conclusive, in the absence of
manifest error, and the Borrower, the Guarantors, the Lender and the assignees
of the Lender shall treat each Person the name of which is recorded in the
Register as a Lender hereunder for all purposes of this Agreement. The Register
shall be available for inspection by the Borrower or any Lender at any
reasonable time and from time to time upon reasonable prior notice.
SECTION 10.03 Confidentiality. The Lender agrees to keep any information
delivered or made available by the Borrower or any of the Guarantors to it
confidential from anyone other than persons employed or retained by the Lender
who are or are expected to become engaged in evaluating, approving, structuring
or administering the Borrowings; provided that nothing herein shall prevent the
Lender from disclosing such information (i) to any of its Affiliates or to any
other lender, provided such Affiliate agrees to keep such information
confidential to the same extent required by the Lender hereunder, (ii) upon the
order of any court or administrative agency, (iii) upon the request or demand of
any regulatory agency or authority, (iv) which has been publicly disclosed other
than as a result of a disclosure by the Lender which is not permitted by this
Agreement, (v) in connection with any litigation to which the Lender or its
respective Affiliates may be a party to the extent reasonably required, (vi) to
the extent reasonably required in connection with the exercise of any remedy
hereunder, (vii) to the Lender's legal counsel and independent auditors, and
(viii) to any actual or proposed participant or assignee of all or part of its
rights hereunder subject to the proviso in Section 10.02(b).
SECTION 10.04 Lender Liability.
(a) Neither the Lender nor any of its respective directors,
officers, employees, agents or Affiliates shall have any responsibility to the
Borrower or the Guarantors on account of the failure or delay in performance or
breach of any of their respective obligations under this Agreement or any of the
Loan Documents or in connection herewith or therewith.
(b) The Lender, in its capacity as lender hereunder, shall be
entitled to rely on any communication, instrument, or document reasonably
believed by such person to be genuine or correct and to have been signed or sent
by a person or persons believed by such person to be the proper person or
persons, and such person shall be entitled to rely on advice of legal counsel,
independent public accountants, and other professional advisers and experts
selected by such person.
SECTION 10.05 Expenses. Whether or not the transactions hereby
contemplated shall be consummated, the Borrower and the Guarantors agree to pay
from time to time all out-of-pocket expenses incurred by the Lender (including
but not limited to the reasonable fees and disbursements of Xxxxxxxx & Xxxxx
LLP, special counsel for the Lender, any other counsel that the Lender shall
retain and any internal or third-party appraisers, consultants and accountants
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advising the Lender and its Affiliates) in connection with the preparation,
execution, delivery and administration of this Agreement and the other Loan
Documents, the making of the Borrowings, the perfection of the Liens
contemplated hereby, the reasonable and customary costs, fees and expenses of
the Lender in connection with its monthly and other periodic field examinations,
monitoring of assets (including reasonable and customary internal collateral
monitoring fees) and publicity expenses, and, following the occurrence of an
Event of Default, all out-of-pocket expenses incurred by the Lender in the
enforcement or protection of the rights of any the Lender and their assignees in
connection with this Agreement or the other Loan Documents, including but not
limited to the reasonable fees and disbursements of any counsel for the Lender.
The obligations of the Borrower and the Guarantors under this Section 10.05
shall survive the termination of this Agreement and/or the payment of the
Borrowings.
SECTION 10.06 Indemnity. The Borrower and each of the Guarantors agree to
indemnify and hold harmless the Lender, its Affiliates, and their respective
directors, officers, employees, agents, assigns and Affiliates (each an
"Indemnified Party") from and against any and all expenses, losses, claims,
damages and liabilities incurred by such Indemnified Party arising out of claims
made by any Person in any way relating to the transactions contemplated hereby,
but excluding therefrom all expenses, losses, claims, damages, and liabilities
to the extent that they are determined by the final non-appealable judgment of a
court of competent jurisdiction to have resulted from the gross negligence or
willful misconduct of such Indemnified Party. The obligations of the Borrower
and the Guarantors under this Section 10.06 shall survive the termination of
this Agreement and/or the payment of the Borrowings.
SECTION 10.07 CHOICE OF LAW. THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS
SHALL IN ALL RESPECTS BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS
OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO ITS CHOICE OF LAW PROVISIONS.
SECTION 10.08 Consent to Jurisdiction. Each of the parties hereto (a)
consents to submit itself to the personal jurisdiction of any federal court
located in the State of Delaware or any Delaware state court, in the event any
dispute arises out of this Agreement or any of the transactions contemplated by
this Agreement, (b) agrees that it will not attempt to deny or defeat such
personal jurisdiction by motion or other request for leave from any such court,
and (c) agrees that it will not bring any action relating to this Agreement or
any of the transactions contemplated by this Agreement in any court other than a
federal court sitting in the State of Delaware or a Delaware state court.
SECTION 10.09 No Waiver. No failure on the part of the Lender to exercise,
and no delay in exercising, any right, power or remedy hereunder or any of the
other Loan Documents shall operate as a waiver thereof, nor shall any single or
partial exercise of any such right, power or remedy preclude any other or
further exercise thereof or the exercise of any other right, power or remedy.
All remedies hereunder are cumulative and are not exclusive of any other
remedies provided by law.
SECTION 10.10 Extension of Maturity. Should any payment of principal of or
interest or any other amount due hereunder become due and payable on a day other
than a Business Day, except as otherwise expressly provided herein, the maturity
thereof shall be
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extended to the next succeeding Business Day and, in the case of principal,
interest shall be payable thereon at the rate herein specified during such
extension.
SECTION 10.11 Amendments, etc. No modification, amendment or waiver of any
provision of this Agreement or any other Loan Document and no consent to any
departure by the Borrower or any Guarantor therefrom, shall in any event be
effective unless the same shall be in writing and signed by the Lender, and then
such waiver or consent shall be effective only in the specific instance and for
the purpose for which given. No notice to or demand on the Borrower or any
Guarantor shall entitle the Borrower or any Guarantor to any other or further
notice or demand in the same, similar or other circumstances. Each assignee
under Section 10.03 shall be bound by any amendment, modification, waiver, or
consent authorized as provided herein, and any consent by a Lender shall bind
any Person subsequently acquiring an interest on the Borrowings held by such
lender. No amendment to this Agreement shall be effective against the Borrower
or any Guarantor unless signed by the Borrower or such Guarantor, as the case
may be.
SECTION 10.12 Severability. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
SECTION 10.13 Headings. Section headings used herein are for convenience
only and are not to affect the construction of or be taken into consideration in
interpreting this Agreement.
SECTION 10.14 Execution in Counterparts. This Agreement may be executed in
any number of counterparts, each of which shall constitute an original, but all
of which taken together shall constitute one and the same instrument.
SECTION 10.15 Prior Agreements. This Agreement and the agreements
expressly mentioned herein represents the entire agreement of the parties with
regard to the subject matter hereof and the terms of any letters and other
documentation entered into between the Borrower or a Guarantor and the Lender or
any of its Affiliates prior to the execution of this Agreement which relate to
Borrowings to be made hereunder shall be replaced by the terms of this
Agreement.
SECTION 10.16 Further Assurances. Whenever and so often as reasonably
requested by the Lender, the Borrower and the Guarantors will promptly execute
and deliver or cause to be executed and delivered all such other and further
instruments, documents or assurances, and promptly do or cause to be done all
such other and further things as may be necessary and reasonably required in
order to further and more fully vest in the Lender all rights, interests,
powers, benefits, privileges and advantages conferred or intended to be
conferred by this Agreement and the other Loan Documents.
SECTION 10.17 WAIVER OF JURY TRIAL. EACH OF THE BORROWER, THE GUARANTORS
AND THE LENDER HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY
ACTION, PROCEEDING OR COUNTERCLAIM
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ARISING OUT OF OR RELATING TO ANY OF THE LOAN DOCUMENTS OR THE TRANSACTIONS
CONTEMPLATED THEREBY.
- 24 -
IN WITNESS WHEREOF, the parties hereto have caused this Credit and
Guaranty Agreement to be duly executed as of the day and the year first written.
BORROWER:
ICG COMMUNICATIONS, INC.
By: __________________________________________
Name:
Title:
LENDER:
MCCC ICG HOLDINGS LLC
By: __________________________________________
Name:
Title:
Credit and Guaranty Agreement
GUARANTORS:
ICG HOLDINGS, INC.
By: __________________________________________
Name:
Title:
ICG TELECOM GROUP, INC.
By: __________________________________________
Name:
Title:
ICG TELECOM GROUP OF VIRGINIA, INC.
By: __________________________________________
Name:
Title:
ICG CHOICECOM MANAGEMENT, LLC
By: __________________________________________
Name:
Title:
ICG EQUIPMENT, INC.
By: __________________________________________
Name:
Title:
Credit and Guaranty Agreement
ICG MOUNTAIN VIEW, INC.
By: __________________________________________
Name:
Title:
ICG CHOICECOM, L.P.
By: __________________________________________
Name:
Title:
NIKONET, LLC
By: __________________________________________
Name:
Title:
Credit and Guaranty Agreement
Exhibit A to the
Credit and Guaranty Agreement
FORM OF TERM NOTE
See attached.
Credit and Guaranty Agreement
Exhibit B to the
Credit and Guaranty Agreement
FORM OF REVOLVING NOTE
See attached.
Credit and Guaranty Agreement
Exhibit C to the
Credit and Guaranty Agreement
FORM OF SECURITY AND PLEDGE AGREEMENT
See attached.
EXHIBIT B
SECURITY AND PLEDGE AGREEMENT
THIS SECURITY AND PLEDGE AGREEMENT (this "Agreement"), dated as of July
19, 2004, is made by and among ICG Communications, Inc., a Delaware corporation
(the "Borrower"), the subsidiaries of the Borrower that are parties hereto
(together with the Borrower, the "Grantors"), and MCCC ICG Holdings LLC, a
Delaware limited liability company (the "Lender"), pursuant to the Credit
Agreement (as hereinafter defined). Capitalized terms used herein and not
otherwise defined herein shall have the meanings assigned to such terms in the
Credit Agreement.
WHEREAS, contemporaneously with the execution and delivery of this
Agreement, the Lender and the Grantors are entering into a Credit and Guaranty
Agreement dated as of the date hereof (as amended, modified or supplemented from
time to time, the "Credit Agreement"); and
WHEREAS, it is a condition precedent to the making of the Term Loan and
the initial Advance under the Credit Agreement that the Grantors shall have
granted a security interest, pledge and lien on (i) all cash and cash
equivalents maintained in the Concentration Account and (ii) all of the
Grantors' assets and properties and the proceeds thereof as further detailed
below; and
WHEREAS, the parties hereto desire to more fully set forth their
respective rights in connection with such security interest, pledge and lien.
NOW, THEREFORE, in consideration of the premises and in order to induce
the Lender to make the Borrowings, the Grantors hereby agree with the Lender as
follows:
Section 1. Grant of Security and Pledge. To induce the Lender to make the
Borrowings, as security for the full, prompt and complete payment when due
(whether at stated maturity, by acceleration or otherwise) of the Obligations
(including, without limitation, the obligation of the Borrower to reimburse the
Buyer's expenses and pay to the Buyer the Termination Fee (as defined in the
Merger Agreement) in accordance with Section 8.03 of the Merger Agreement;
provided that, without otherwise limiting the grant of the security interest
hereunder with respect to the other Obligations, only $2.0 million of the $5.0
million Termination Fee shall be an "Obligation" secured hereby in the event
such Termination Fee is payable in connection with an In-Court Transaction (as
defined in the Merger Agreement)), each Grantor hereby pledges to the Lender and
grants to the Lender a security interest in all presently owned and hereafter
acquired assets and properties of the Grantors to the maximum extent permitted
by regulatory law (collectively, the "Collateral"), including without
limitation, Accounts, Pledged Collateral, instruments (including, without
limitation, promissory notes), chattel paper, documents, warehouse receipts,
Inventory, Equipment, General Intangibles related to the Collateral,
Intellectual Property, and all proceeds and products of any of the foregoing
(including insurance proceeds), in any form, including, without limitation, any
claims against third parties for loss or damage to or destruction of any or all
of the foregoing; and
Notwithstanding the foregoing or any other provision of this Agreement, in those
states where a Grantor is subject to regulation as a public utility as set forth
on Schedule 5 annexed hereto ("Excepted States") such that an approval or other
regulatory filing is required with such state's
public service commission or its equivalent in connection with the pledge and/or
security interests contemplated under this Agreement, the pledge or grant of the
security interest in Grantor's Collateral located in such Excepted States shall
be conditioned on and not valid until the required regulatory approval is
received or the required filing is made, as the case may be, in the particular
Excepted State.
For the purposes of this Agreement, the following terms have the following
meaning:
"Accounts" means all present and future accounts, accounts receivable and
other rights of each of the Grantors to payment for goods sold or leased or for
services rendered (except those evidenced by instruments or chattel paper),
whether now existing or hereafter arising and wherever arising, and whether or
not they have been earned by performance.
"Copyrights" means all copyrights of the United States, or any other
country, and all registrations and recordings thereof, including, without
limitation, applications, registrations and recordings in the United States
Copyright Office or in any similar office or agency of the United States, any
State thereof, or any other country or political subdivision thereof, all
whether now owned or hereafter acquired by each of the Grantors, including, but
not limited to, those described in Schedule 1(a) hereto and all renewals and
extensions thereof and all licenses thereof.
"Equipment" means all machinery, all manufacturing, distribution, selling,
data processing and office equipment, all furniture, furnishings, appliances,
fixtures and trade fixtures, tools, tooling, molds, dies, vehicles, vessels,
aircraft and all other goods of every type and description (other than
Inventory), in each instance whether now owned or hereafter acquired by each of
the Grantors and wherever located.
"Excluded Property" shall mean, collectively, (i) any permit, lease,
license, contract, instrument or other agreement held by any of the Grantors
that prohibits or requires the consent of any Person other than a Grantor as a
condition to the creation by such Grantor of a Lien thereon, but only, in each
case, to the extent, and for so long as, such prohibition is not terminated or
rendered unenforceable or otherwise deemed ineffective by the UCC or any other
requirement of law; provided, however, "Excluded Property" shall not include any
proceeds, substitutions or replacements of Excluded Property (unless such
proceeds, substitutions or replacements would themselves constitute Excluded
Property).
"General Intangibles" means all rights, interests, choses in action,
causes of action, claims and all other intangible property of each of the
Grantors of every kind and nature (other than Accounts and Intellectual
Property), in each instance whether now owned or hereafter acquired by such
Grantor, including, without limitation, all general intangibles and payment
intangibles; all corporate and other business records; all loans, royalties, and
other obligations receivable; all inventions, designs, trade secrets, computer
programs, software, printouts and other computer materials, goodwill,
registrations, licenses, franchises, customer lists, credit files,
correspondence, and advertising materials (to the extent the same are not
Excluded Property); all customer and supplier contracts, firm sale orders,
rights under license and franchise agreements (including, without limitation,
all Material IT Contracts and all other license and franchise agreements with
any other Person in connection with any of the Intellectual Property or such
2
other Person's names or marks, whether such Grantor is a licensor or licensee
under any such license or franchise agreement but only to the extent such
license or franchise agreements are not Excluded Property and other contracts
and contract rights (to the extent the same are not Excluded Property); all
interests in partnerships and joint ventures; all tax refunds and tax refund
claims; all right, title and interest under leases, subleases, licenses and
concessions and other agreements relating to real or personal property (to the
extent the same are not Excluded Property); all payments due or made to each of
the Grantors in connection with any requisition, confiscation, condemnation,
seizure or forfeiture of any property by any person or governmental authority;
all commercial tort claims; all deposit accounts (general or special) with any
bank or other financial institution; all credits with and other claims against
carriers and shippers; all rights to indemnification; all reversionary interests
in pension and profit sharing plans and reversionary, beneficial and residual
interest in trusts; all proceeds of insurance of which each of the Grantors is
beneficiary; and all letters of credit, letter of credit rights, guaranties,
liens, security interest and other security held by or granted to each of the
Grantors; and all other intangible property, whether or not similar to the
foregoing.
"ICG Shares" means, collectively, the Pledged Shares held by any Grantor
in any other Grantor.
"Intellectual Property" means, collectively, Trademarks, Patents and
Copyrights, as well as all books, records, ledger cards and other property at
any time evidencing or relating to the Trademarks, Patents or Copyrights.
"Inventory" means all goods and merchandise now owned or hereafter
acquired by each of the Grantors wherever located, whether in the possession of
a Grantor or of a bailee or other person for sale, storage, transit, processing,
use or otherwise consisting of whole goods, components, supplies, materials, or
consigned, returned or repossessed goods which are held for sale or lease or to
be furnished (or have been furnished) under any contract of service or which are
raw materials, work-in-process, finished goods or materials used or consumed in
such Grantor's business or processed by or on behalf of any Grantor.
"Material IT Contracts" means any written or oral lease, license,
contract, agreement or obligation to which any Grantor is a party or by which
any Grantor or any of its properties may be bound and that are material to the
business, financial position or results of operations of any Grantor relating to
information technology (including, without limitation, the design, development,
installation, and implementation of information systems and applications);
imbedded and stand-alone computer programs, software and software licensing
rights; recorded data and all other related materials including, without
limitation, those agreements described in Schedule 1(b) annexed hereto and made
a part hereof.
"Patents" means all letters patent of the United States or any other
country, and all registrations and recordings thereof, including, without
limitation, applications, registrations and recordings in the United States
Patent and Trademark Office or in any similar office or agency of the United
States, any State thereof or any other country or any political subdivision
thereof, all whether now owned or hereafter acquired by each of the Grantors,
including, but not limited to, those described in Schedule 1(a) annexed hereto
and made a part hereof, and all reissues, continuations, continuations-in-part
or extensions thereof and all licenses thereof.
3
"Pledged Collateral" all investment property, including without
limitation, (i) all of the shares of capital stock or other equity interests
owned by each Grantor, as applicable, listed on Schedule 3 hereto of any other
Grantor and the other issuers listed thereon (individually, an "Issuer", and
collectively, the "Issuers") and all shares of capital stock or other equity
interests of any Issuer obtained in the future by such Grantor and the
certificates representing or evidencing all such shares (the "Pledged Shares");
(ii) all other property which may be delivered to and held by the Lender in
respect of the Pledged Shares pursuant to the terms hereof; (iii) subject to
Section 9 below, all dividends, cash, instruments and other property from time
to time received, receivable or otherwise distributed, in respect of, in
exchange for or upon the conversion of the securities referred to in clauses (i)
and (ii) above; and (iv) subject to Section 9 below, all rights and privileges
of each Grantor, as applicable, with respect to the securities and other
property referred to in clauses (i), (ii) and (iii).
"Trademarks" means all trademarks, trade names, trade styles, service
marks, prints and labels on which said trademarks, trade names, trade styles and
service marks have appeared or appear, designs and general intangibles of like
nature, now existing or hereafter adopted or acquired, and all registrations and
recordings thereof, including, without limitation, applications, registrations
and recordings in the United States Patent and Trademark Office or in any
similar office or agency of the United States, any State thereof, or any other
country or political subdivision thereof (except for "intent to use"
applications for trademark or service xxxx registrations filed pursuant to
Section 1(b) of the Xxxxxx Act, unless and until an Amendment to Allege Use or a
Statement of Use under Sections 1(c) and 1(d) of said Act has been filed), all
whether now owned or hereafter acquired by each of the Grantors, including, but
not limited to, those described in Schedule 1(a) annexed hereto and made a part
hereof, and all reissues, extensions or renewals thereof and all licenses
thereof, together, in each case, with the goodwill of the business connected
with the use of, and symbolized by each such trademark, service xxxx, trade name
and trade dress.
Section 2. Security for Obligations. This Agreement and the Collateral
secure the payment of all Obligations of each of the Grantors, now or hereafter
existing.
Section 3. Delivery of Pledged Collateral and Instruments; Other Action.
The Grantors (i) with respect to the ICG Shares, shall deliver and (ii) with
respect to (A) any other Pledged Collateral or (B) any promissory notes, upon
the request of the Lender, shall use their commercially reasonable effort to
deliver, all certificates representing or evidencing such ICG Shares or other
Pledged Collateral or such promissory notes, as the case may be, to the Lender.
Any Pledged Collateral or promissory notes so delivered shall be held by the
Lender and shall be accompanied by duly executed instruments of transfer or
assignment in blank, all in form and substance reasonably satisfactory to the
Lender. Upon the occurrence of any Event of Default, the Lender shall have the
right, at any time in its discretion and without notice to the Grantors to
transfer to or to register in the name of the Lender or any of its nominees any
or all of the Pledged Collateral.
Section 4. Representations and Warranties. Each Grantor, jointly and
severally, represents and warrants as follows:
4
(a) Each Grantor's exact legal name is that indicated on the
signature pages hereof. Each Grantor is an organization of the type and is
organized under the laws of the jurisdiction listed on Schedule 2 hereto.
Schedule 2 hereto accurately sets forth each Grantor's organizational
identification number (or accurately states that it has none) and taxpayer
identification number.
(b) Each of the Grantors owns the Collateral free and clear of any
Lien, security interest, charge or encumbrance except for the security interest
created by this Agreement and except as permitted under Section 6.01 of the
Credit Agreement.
(c) Schedule 1(a) annexed hereto sets forth all registrations and
all applications to register material Intellectual Property owned by any Grantor
as of the date hereof. Schedule 1(b) annexed hereto sets forth all Material IT
Contracts that are subsisting as of the date hereof.
(d) The ICG Shares have been duly authorized and validly issued and,
except as set forth on Schedule 4, are fully paid and non-assessable.
(e) Schedule 6 attached hereto sets forth each of the promissory
notes held by any Grantor that evidences an outstanding monetary obligation
owing to any Grantor in excess of $25,000.
(f) Each Grantor, as the case may be, is the legal and beneficial
owner of the Pledged Shares described on Schedule 3, free and clear of any lien,
security interest, option or other charge or encumbrance, except for the
security interest created by this Agreement and Liens permitted under the
Related Agreements, which Pledged Shares represent all of the capital stock and
other equity interests of any other Person owned by the Grantors.
(g) Except as disclosed on Schedule 3, the ICG Shares constitute all
of the issued and outstanding shares of capital stock or other equity interests
of each of the Grantors (other than the Borrower) and no Grantor (other than the
Borrower) is under any contractual obligation to issue any additional shares of
capital stock, equity interests or any other securities, rights or indebtedness.
(h) No authorization, approval or other action by, and no notice to
or filing with, any Governmental Authority or regulatory body is required either
(i) for the grant and pledge by each of the Grantors of the security interests
granted hereby or for the execution, delivery or performance of this Agreement
by each of the Grantors or (ii) for the perfection of the security interests or
the exercise by the Lender of its rights and remedies hereunder except, to the
extent described on Schedule 4, as may be required in connection with the pledge
of the capital stock or other ownership interests of any Person that is not
incorporated or organized in the United States.
(i) The Borrower has been duly organized and is in good standing
under the laws of the State of Delaware, and each other Grantor has been duly
incorporated or organized, as the case may be, and is in good standing under the
laws of its respective state of incorporation or organization.
5
Section 5. Further Assurances.
(a) Each of the Grantors agrees that from time to time, at the
expense of the Grantors, it will promptly execute and deliver all further
instruments and documents, and take all further action, that may be necessary,
or that the Lender may reasonably request, in order to perfect and protect any
security interest granted or purported to be granted hereby or to enable the
Lender to exercise and enforce any of its rights and remedies hereunder with
respect to any Collateral. Without limiting the generality of the foregoing,
each of the Grantors (i) hereby authorizes the Lender to file such initial
financing or continuation statements, or amendments thereto, (ii) will enter
into the Control Agreement (or take such other steps as may be reasonably
requested by the Lender to establish control over the Collateral), (iii) will
deliver to the Lender possession of Collateral (accompanied by instruments of
transfer or assignment duly executed in blank as may be reasonably requested by
the Lender), (iv) will execute and file such other instruments or notices, in
each case, as may be necessary, or as the Lender may reasonably request, in
order to perfect and preserve the security interests granted or purported to be
granted hereby; and (v) will promptly assist and cooperate with Lender to
complete any and all regulatory filings, including without limitation, such
filings with state public service commissions, and to obtain any and all
regulatory approvals required in order to perfect the pledge of and security
interest in the Collateral located in the Excepted States.
(b) Each Grantor hereby authorizes the Lender to file one or more
initial financing or continuation statements, and amendments thereto, relative
to all or any part of the Collateral without the signature of such Grantor.
(c) Each Grantor shall provide the Lender with at least thirty (30)
days prior written notice of (i) any change in the name, organizational
structure or jurisdiction of organization of such Grantor, (ii) a change in the
organizational identification number of such Grantor and (iii) any change in the
location of the chief executive office of such Grantor or place of business of
such Grantor if it only has one place of business. Each Grantor shall also
promptly, but in any event within ten (10) days of receipt of an organizational
identification number, if such Grantor did not previously have one, notify the
Lender of the receipt thereof.
Section 6. As to Equipment and Inventory. Each Grantor shall not move the
Equipment and Inventory (other than Inventory sold in the ordinary course of
business and Equipment and Inventory in transit) other than in the ordinary
course of business.
Section 7. As to Accounts. The Grantors may, upon the occurrence of an
Event of Default, take (and at the direction of the Lender shall take) such
action as the Grantors or the Lender may reasonably deem necessary or advisable
to enforce collection of the Accounts; provided, that upon written notice by the
Lender to any Grantor, following the occurrence of an Event of Default, of its
intention so to do, the Lender shall have the right to notify the account
debtors or obligors under any Accounts of the assignment of such Accounts to the
Lender and to direct such account debtors or obligors to make payment of all
amounts due or to become due to such Grantor thereunder directly to the Lender
and, upon such notification and at the expense of such Grantor, to enforce
collection of any such Accounts, and to adjust, settle or compromise the amount
or payment thereof, in the same manner and to the same extent as such Grantor
might have done. After receipt by such Grantor of the notice referred to in the
proviso to the preceding
6
sentence, and unless and until such notice is rescinded by the Lender by written
notice to such Grantor (i) all amounts and proceeds (including instruments)
received by such Grantor in respect of the Accounts shall be received in trust
for the benefit of the Lender hereunder, shall be segregated from other funds of
the Grantors and shall be forthwith paid over to the Lender in the same form as
so received (with any necessary endorsement) to be held as cash collateral and
applied as provided by Section 15, and (ii) the Grantors shall not adjust,
settle or compromise the amount or payment of any Account, or release wholly or
partly any account debtor or obligor thereof, or allow any credit or discount
thereon without the consent of the Lender.
Section 8. As to Intellectual Property and Material IT Contracts.
(a) No Grantor will, either itself or through any agent, employee,
licensee or designee, (i) file an application for the registration of any
material Intellectual Property with the United States Copyright Office or the
United States Patent and Trademark Office or any similar office or agency in any
other country or any political subdivision thereof or (ii) file any assignment
of any material Intellectual Property, which such Grantor may acquire from a
third party, with the United States Copyright Office or the United States Patent
and Trademark Office or any similar office or agency in any other country or any
political subdivision thereof, or (iii) enter into any Material IT Contract
unless such Grantor shall, within 45 days after the last day of the fiscal
quarter in which such filing or execution of such Material IT Contract occurs,
notify the Lender thereof, and such Grantor hereby constitutes the Lender its
attorney-in-fact to execute and file all such writings, as set forth in Section
5, all lawful acts of such attorney being hereby ratified and confirmed; such
power being coupled with an interest is irrevocable until the Obligations are
paid in full.
(b) Each Grantor will take all necessary actions (including, without
limitation, paying all applicable renewal fees, license fees and other
outgoings) to safeguard and maintain its rights, present and future, in or
relating to all material Intellectual Property Rights owned, used or exploited
by it to the extent that failure to do so could reasonably be expected to have a
Company Material Adverse Effect.
(c) Each Grantor shall execute and deliver to the Lender for filing
in the United States Patent and Trademark Office, a short form trademark
security agreement in a form reasonably satisfactory to the Lender. Each
Grantor, upon acquiring knowledge of any use by any person of any term or design
likely to cause confusion with any material Trademark, shall, if the same could
reasonably be expected to have a Company Material Adverse Effect, promptly
notify the Lender of such use, and if requested by the Lender, shall join with
the Lender, at such Grantor's expense, in such action as the Lender, in its
reasonable discretion, may deem advisable for the protection of the Lender's
interest in and to the Trademarks.
Section 9. As to the Pledged Collateral; Voting Rights; Dividends; Etc.
(a) So long as no Event of Default shall have occurred:
(i) the Grantors (as applicable) shall be entitled to exercise
any and all voting and other consensual rights pertaining to the
Pledged Collateral or any part thereof for any purpose not
inconsistent with the terms of this Agreement;
7
(ii) notwithstanding the provisions of Section 1 hereof, such
Grantors shall be entitled to receive and retain any and all
dividends and other distributions paid in respect of the Pledged
Collateral; provided, that any and all
(A) dividends paid or payable other than in cash in respect
of, and instruments and other property received,
receivable or otherwise distributed in respect of, or in
exchange for, any Pledged Collateral,
(B) dividends and other distributions paid or payable in
cash in respect of any Pledged Collateral in connection
with a partial or total liquidation or dissolution or in
connection with a reduction of capital, capital surplus
or paid-in-surplus, and
(C) cash paid, payable or otherwise distributed in
redemption of, or in exchange for, any Pledged Shares;
shall be, and shall be forthwith delivered to the Lender to hold as
Pledged Collateral, as applicable and shall, if received by any of the
Grantors, be received in trust for the benefit of the Lender, be
segregated from the other property or funds of such Grantor, and be
forthwith delivered to the Lender as Pledged Collateral, as applicable in
the same form as so received (with any necessary endorsement); and
(iii) the Lender shall execute and deliver (or cause to be
executed and delivered) to the Grantors (as applicable) all such
proxies and other instruments as the Grantors (as applicable) may
reasonably request for the purpose of enabling such Grantor to
exercise the voting and other rights which it is entitled to
exercise pursuant to paragraph (i) above and to receive the
dividends which it is authorized to receive and retain pursuant to
paragraph (ii) above;
(b) Upon the occurrence of an Event of Default:
(i) upon written notice from the Lender to the Grantors (as
applicable) to such effect, all rights of such Grantors (as
applicable) to exercise the voting and other consensual rights which
it would otherwise be entitled to exercise pursuant to Section
9(a)(i) and to receive the dividends which it would otherwise be
authorized to receive and retain pursuant to Section 9(a)(ii) shall
cease, and all such rights shall thereupon become vested in the
Lender, who shall thereupon have the sole right to exercise such
voting and other consensual rights and to receive and hold as
Pledged Collateral, as applicable any such dividends; and
(ii) all dividends which are received by such Grantors
contrary to the provisions of paragraph (i) of this Section 9(b)
shall be received in trust for the benefit of the Lender, shall be
segregated from other funds of the Grantors and shall be forthwith
paid over to the Lender as Pledged Collateral, as applicable in the
same form as so received (with any necessary endorsement).
8
Section 10. Insurance. Upon the occurrence of any Event of Default, all
insurance payments in respect of Collateral shall be held, applied and paid to
the Lender as specified in Section 15 hereof.
Section 11. Transfers to Others; Liens; Additional Shares. Each Grantor
shall not:
(a) Sell, assign (by operation of law or otherwise) or otherwise
dispose of any of the Collateral, except for dispositions otherwise permitted by
the Credit Agreement or the Merger Agreement.
(b) Create or suffer to exist any Lien, security interest or other
charge or encumbrance upon or with respect to any of the Collateral to secure
any obligation of any person or entity, except for the security interest created
by this Agreement and the Credit Agreement or except as otherwise permitted by
the Credit Agreement or the Merger Agreement.
(c) Each of the Grantors (as applicable) agrees that it will (i)
cause each of the Issuers that are wholly-owned Subsidiaries not to issue any
stock or other securities in addition to or substitution for the Pledged Shares
issued by such Issuer, except to the respective Grantor and (ii) pledge
hereunder, immediately upon its acquisition (directly or indirectly) thereof,
any and all such additional shares of stock or other securities of each Issuer
of the Pledged Shares, subject to the last sentence of Section 1 hereof.
Section 12. Lender Appointed Attorney-in-Fact. Each Grantor hereby
irrevocably appoints the Lender such Grantor's attorney-in-fact (which
appointment shall be irrevocable and deemed coupled with an interest), with full
authority in the place and stead of such Grantor and in the name of such Grantor
or otherwise, from time to time in the Lender's discretion, upon and during the
occurrence of an Event of Default, to take any action and to execute any
instrument which the Lender may deem necessary or advisable to accomplish the
purposes of this Agreement, including, without limitation:
(i) to obtain and adjust insurance required to be paid to the
Lender pursuant to Section 10,
(ii) to ask, demand, collect, xxx for, recover, compound,
receive and give acquittance and receipts for moneys due and to
become due under or in respect of any of the Collateral,
(iii) to receive, endorse, and collect any drafts or other
instruments, documents and chattel paper, in connection with clause
(i) or (ii) above,
(iv) to receive, endorse and collect all instruments made
payable to the Grantors representing any dividend or other
distribution in respect of the Pledged Collateral or any part
thereof and to give full discharge for the same, and
(v) to file any claims or take any action or institute any
proceedings which the Lender may deem necessary or desirable for the
collection of any of the
9
Collateral or otherwise to enforce the rights of the Lender with
respect to any of the Collateral.
Section 13. Lender May Perform. If any Grantor fails to perform any
agreement contained herein, upon notice to such Grantor, the Lender may itself
perform, or cause performance of, such agreement, and the reasonable expenses of
the Lender incurred in connection therewith (as to which invoices have been
furnished) shall be payable by the Grantors under Section 16(b).
Section 14. The Lender's Duties. The powers conferred on the Lender
hereunder are solely to protect its interest in the Collateral and shall not
impose any duty upon it to exercise any such powers. Except for the safe custody
of any Collateral in its possession and the accounting for moneys actually
received by it hereunder, the Lender shall have no duty as to any Collateral or
as to the taking of any necessary steps to preserve rights against prior parties
or any other rights pertaining to any Collateral, including, without limitation,
ascertaining or taking action with respect to calls, conversions, exchanges,
maturities, tenders or other matters relative to any Pledged Collateral, whether
or not the Lender has or is deemed to have knowledge of such matters.
Section 15. Remedies. If any Event of Default shall have occurred, and
subject to the provisions of Section 7.01 of the Credit Agreement:
(a) The Lender may exercise in respect of the Collateral, in
addition to other rights and remedies provided for herein or otherwise available
to it, five business days following a notice to the Borrower (the "Notice
Period"), all the rights and remedies of a secured party on default under the
Uniform Commercial Code and also may (i) require each Grantor to, and each
Grantor hereby agrees that it will at its expense and upon request of the Lender
forthwith, assemble all or part of the Collateral as directed by the Lender and
make it available to the Lender at a place to be designated by the Lender which
is reasonably convenient to both parties and (ii) without notice except as
specified in the following sentence, sell the Collateral or any part thereof in
one or more parcels at public or private sale, at any of the Lender's offices or
elsewhere, for cash, on credit or for future delivery, and at such price or
prices and upon such other terms as the Lender may deem commercially reasonable.
Each Grantor agrees that, to the extent notice of such sale shall be required by
law, at least five days' notice to the Grantors of the time and place of any
public sale or the time after which any private sale is to be made shall
constitute reasonable notification. The Lender shall not be obligated to make
any sale of Collateral regardless of notice of sale having been given. The
Lender may adjourn any public or private sale from time to time by announcement
at the time and place fixed therefor, and such sale may, without further notice,
be made at the time and place to which it was so adjourned.
(b) The Lender may instruct the Grantors not to make any further use
of the Patents, Copyrights or Trademarks or any xxxx similar thereto for any
purpose to the extent that such use would be inconsistent with the exercise by
the Lender of any other remedies under this Section.
(c) The Lender may license, whether general, special or otherwise,
and whether on an exclusive or nonexclusive basis, any of the Trademarks,
Patents or Copyrights
10
throughout the world for such term or terms, on such conditions, and in such
manner, as the Lender shall in its sole discretion determine.
(d) The Lender may (without assuming any obligations or liability
thereunder), at any time, enforce against any licensee or sublicensee all rights
and remedies of the Grantors in, to and under any one or more license agreements
with respect to the Collateral, and take or refrain from taking any action under
any thereof, and each of the Grantors hereby releases the Lender from, and
agrees to hold the Lender free and harmless from and against any claims arising
out of, any action taken or omitted to be taken with respect to any such license
agreement except claims involving gross negligence, willful misconduct or bad
faith of the Lender.
(e) In the event of any such license, assignment, sale or other
disposition of the Collateral, or any of it, upon the request of the Lender,
each Grantor shall supply its know-how and expertise relating to the Trademarks,
Patents or Copyrights, and its customer lists and other records relating to the
Trademarks, Patents or Copyrights to the Lender or its designee.
(f) In order to implement the assignment, sale or other disposal of
any of the Trademarks, Patents or Copyrights, the Lender may, at any time,
pursuant to the authority granted in Section 12 hereof, execute and deliver on
behalf of the Grantors, one or more instruments of assignment of the Trademarks,
Patents or Copyrights (or any application of registration thereof), in form
suitable for filing, recording or registration in any country.
(g) All cash proceeds received by the Lender in respect of any sale
of, collection from, or other realization upon all or any part of the Collateral
may, in the discretion of the Lender, be held by the Lender as collateral for,
and then or at any time thereafter or shall, be applied (after payment of any
amounts payable to the Lender pursuant to Section 16 hereof) in whole or in part
against, all or any part of the Obligations in such order as provided for in the
Credit Agreement. Any surplus of such cash or cash proceeds held by the Lender
and remaining after payment in full of all outstanding Obligations and the
termination of the Credit Agreement shall be paid over to the Grantors or to
whomsoever may be lawfully entitled to receive such surplus.
(h) If at any time when the Lender shall determine to exercise its
right to sell all or any part of the Pledged Collateral, pursuant to this
Section 15, such Pledged Collateral, or the part thereof to be sold shall not be
effectively registered under the Securities Act of 1933, as amended, and as from
time to time in effect, and the rules and regulations thereunder (the
"Securities Act"), the Lender is hereby expressly authorized to sell such
Pledged Collateral, or such part thereof by private sale in such manner and
under such circumstances as the Lender may deem necessary or advisable in order
that such sale may legally be effected without such registration. Without
limiting the generality of the foregoing, in any such event the Lender, in
compliance with applicable securities laws, (a) may proceed to make such private
sale notwithstanding that a registration statement for the purpose of
registering such Pledged Collateral, or such part thereof shall have been filed
under such Securities Act, (b) may approach and negotiate with a restricted
number of potential purchasers to effect such sale and (c) may restrict such
sale to purchasers as to their number, nature of business and investment
intention including without limitation to purchasers each of whom will represent
and agree to the
11
satisfaction of the Lender that such purchaser is purchasing for its own
account, for investment, and not with a view to the distribution or sale of such
Pledged Collateral,, or part thereof, it being understood that the Lender may
cause or require each Grantor, and each Grantor hereby agrees upon the written
request of the Lender, to cause (i) a legend or legends to be placed on the
certificates to be delivered to such purchasers to the effect that the Pledged
Collateral represented thereby have not been registered under the Securities Act
and setting forth or referring to restrictions on the transferability of such
securities; and (ii) the issuance of stop transfer instructions to such Issuer's
transfer agent, if any, with respect to the Pledged Collateral, or, if such
Issuer transfers its own securities, a notation in the appropriate records of
such Issuer. In the event of any such sale, each Grantor does hereby consent and
agree that the Lender shall incur no responsibility or liability for selling all
or any part of the Pledged Collateral at a price which the Lender may deem
reasonable under the circumstances, notwithstanding the possibility that a
substantially higher price might be realized if the sale were public and
deferred until after registration as aforesaid.
Section 16. Indemnity and Expenses.
(a) Each Grantor, jointly and severally, agrees to indemnify the
Lender from and against any and all claims, losses and liabilities growing out
of or resulting from this Agreement (including, without limitation, enforcement
of this Agreement), except claims, losses or liabilities directly arising from
the Lender's own gross negligence, willful misconduct or bad faith.
(b) The Grantors will upon demand pay to the Lender the amount of
any and all reasonable expenses (as to which invoices have been furnished),
including the reasonable fees and disbursements of its counsel and of any
experts and agents, which the Lender may incur in connection with (i) the
administration of this Agreement, (ii) the custody, preservation, use or
operation of, or the sale of, collection from, or other realization upon, any of
the Collateral, (iii) the exercise or enforcement of any of the rights of the
Lender hereunder or (iv) the failure by any of the Grantors to perform or
observe any of the provisions hereof.
(c) The Grantors assume all responsibility and liability arising
from the use of the Trademarks, Patents and Copyrights.
(d) Each of the Grantors agrees that the Lender does not assume, and
shall have no responsibility for, the payment of any sums due or to become due
under any agreement or contract included in the Collateral or the performance of
any obligations to be performed under or with respect to any such agreement or
contract by any of the Grantors, and except as the same may have resulted from
the gross negligence, willful misconduct or bad faith of the Lender, each of the
Grantors hereby jointly and severally agree to indemnify and hold the Lender
harmless with respect to any and all claims by any person relating thereto.
Section 17. Security Interest Absolute. Subject to Section 2(c), all
rights of the Lender and security interests hereunder, and all obligations of
each of the Grantors hereunder, shall be absolute and unconditional,
irrespective of any circumstance which might constitute a defense available to,
or a discharge of, any guarantor or other obligor in respect of the Obligations
other
12
than payment in full of the Obligations after the repayment of all other
Obligations and the termination of the Credit Agreement.
Section 18. Amendments; Etc. No amendment or waiver of any provision of
this Agreement, nor any consent to any departure by any of the Grantors
herefrom, shall in any event be effective unless the same shall be in writing
and signed by the party against whom enforcement is sought, and then such waiver
or consent shall be effective only in the specific instance and for the specific
purpose for which given. Notwithstanding anything in this Agreement to the
contrary, the Borrower shall have the right, upon written notice to the Lender,
to update and otherwise amend Schedule 1(b) attached hereto on or prior to the
fifth Business Day following the date hereof.
Section 19. Addresses for Notices. All notices and other communications
provided for hereunder shall be in writing and shall be given in accordance with
the applicable provisions of the Credit Agreement.
Section 20. Continuing Security Interest. This Agreement shall create a
continuing security interest in the Collateral and shall (i) remain in full
force and effect until the earliest to occur of (A) the Effective Time (as
defined in the Merger Agreement), (B) the termination of the Merger Agreement by
the Borrower pursuant to Section 8.1(b)(ii) of the Merger Agreement and (C) the
payment in full of the Obligations and the termination of the Credit Agreement
(such earliest event, the "Termination Time"), (ii) be binding upon each of the
Grantors, their successors and assigns and (iii) inure, together with the rights
and remedies of the Lender hereunder, to the benefit of the Lender and its
permitted successors, transferees and assigns. AT THE TERMINATION TIME, THE
SECURITY INTEREST GRANTED HEREBY SHALL TERMINATE AND ALL RIGHTS TO THE
COLLATERAL SHALL REVERT TO THE GRANTORS SUBJECT TO ANY EXISTING LIENS, SECURITY
INTERESTS OR ENCUMBRANCES ON SUCH COLLATERAL. UPON ANY SUCH TERMINATION, THE
LENDER WILL, AT THE GRANTORS' EXPENSE, EXECUTE AND DELIVER TO THE GRANTORS SUCH
DOCUMENTS AS THE GRANTORS SHALL REASONABLY REQUEST TO EVIDENCE SUCH TERMINATION.
Section 21. Subordination. In the event that the Obligations of the
Borrower under the Term Loan shall become subordinated to certain
debtor-in-possession financing (including any professional fees carveout
provided therein) pursuant to Section 9.02 of the Credit Agreement, then the
Lender shall take, at the expense of the Borrower, any action reasonable
requested by the Borrower to subordinate the security interests granted
hereunder in favor of the Lender to the extent of such subordination of the
Obligations.
Section 22. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York, except as
required by mandatory provisions of law and except to the extent that the
validity or perfection of the security interest hereunder, or remedies
hereunder, in respect of any particular Collateral are governed by the laws of a
jurisdiction other than the State of New York and by Federal law to the extent
the same has pre-empted the law of the State of New York or such other
jurisdiction.
Section 23. UCC Terms. All terms used herein and defined in the Uniform
Commercial Code as adopted in the State of New York from time to time (the
"Uniform Commercial Code") shall have the meaning given therein unless otherwise
defined herein. To the extent the
13
definition of any category or type of collateral is expanded by and amendment,
modification or revision of the Uniform Commercial Code, such expanded
definition will apply automatically as of the date of such amendment,
modification or revision.
Section 24. Headings. Section headings in this Agreement are included
herein for convenience of reference only and shall not constitute a part of this
Agreement for any other purpose.
[SIGNATURE PAGES FOLLOW]
14
IN WITNESS WHEREOF, each of the Grantors and the Lender have caused this
Agreement to be duly executed and delivered by their respective officers
thereunto duly authorized as of the date first above written.
GRANTORS:
ICG COMMUNICATIONS, INC.
By: ____________________________________
Name:
Title:
ICG HOLDINGS, INC.
By: ____________________________________
Name:
Title:
ICG TELECOM GROUP, INC.
By: ____________________________________
Name:
Title:
ICG TELECOM GROUP OF VIRGINIA, INC.
By: ____________________________________
Name:
Title:
ICG CHOICECOM MANAGEMENT, LLC
By: ____________________________________
Name:
Title:
ICG EQUIPMENT, INC.
By: ____________________________________
Name:
Title:
ICG MOUNTAIN VIEW, INC.
By: ____________________________________
Name:
Title:
ICG CHOICECOM, L.P.
By: ____________________________________
Name:
Title:
NIKONET, LLC
By: ____________________________________
Name:
Title:
LENDER:
MCCC ICG HOLDINGS LLC
By: ____________________________________
Name:
Title:
EXHIBIT C
MANAGEMENT AGREEMENT
This Management Agreement (this "Management Agreement") is made and
entered into as of this ___ day of September 2004 by and among, ICG
Communications, Inc., a Delaware corporation ("ICG",) ICG Telecom Group Inc., a
Colorado corporation ("Telecom"), ICG Telecom Group of Virginia, Inc., a
Virginia corporation ("Telecom Virginia"), ICG ChoiceCom, L.P., a Delaware
limited partnership ("ChoiceCom") (Telecom, Telecom Virginia and ChoiceCom are
collectively referred to herein as the "ICG Subs" and, together with ICG, as the
"Company"), on the one hand, and MCCC ICG Holdings LLC, a Delaware liability
company ("MCC" or "Manager") on the other hand.
WHEREAS, ICG and MCC have entered into an Agreement and Plan of Merger
(the "Merger Agreement") whereby ICG and MCC have agreed to merge ICG into an
affiliate of MCC, after which MCC will hold a controlling equity interest in
Licensee and the other ICG Subs (the "Merger"); and
WHEREAS, the Company has been granted numerous federal, state and other
Communications Licenses that authorize the operation of the regulated aspects of
its existing telecommunications business (the "Regulated Business"); and
WHEREAS, applicable federal and/or state regulatory requirements require
prior governmental authorization ("Regulatory Approval") for a transfer of
ownership or control of a corporation such as ICG or the ICG Subs that hold,
directly or indirectly, Communications Licenses to own or operate to certain of
their assets (the "Regulated Assets"); and
WHEREAS, ICG and MCC have delayed consummation of the Merger while MCC
seeks Regulatory Approvals, and an affiliate of MCC has agreed to fund the
operating losses of the ICG Subs while such Regulatory Approval is sought on the
terms set forth in the interim credit agreement, dated as of _________, 2004
(the "Interim Credit Agreement"; and
WHEREAS, the Company therefore desires, in conformity with the rules and
policies of state and federal regulatory authorities, and the terms and
conditions of this Management Agreement, to enable and permit Manager to manage
and operate the Regulated Assets and the Regulated Business, including the
provision of telecommunications services to existing customers of the Company
("Customers") pending Regulatory Approval during the Term (as defined herein);
and
WHEREAS, the parties desire to enter into this Management Agreement to
ensure the continued operation of the Company's network, and the associated
billing, collection, and administrative functions thereof, as required to
provide telecommunications services to existing Customers of the Company during
the Term; and
WHEREAS, the Company also desires to give Manager day-to-day control of
its assets and operations not constituting Regulated Assets (the "Other Assets")
and the business related thereto (the "Unregulated Business" and together with
the Regulated Business, the "Business"), subject to the limitations set forth
herein.
NOW, THEREFORE, in consideration of the above recitals and mutual promises
and other good and adequate consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties, intending to be legally bound, agree as
follows:
1. Definitions. Any capitalized term used herein and not otherwise
defined shall have the meaning assigned to it in the Merger Agreement.
2. Appointment. ICG and each of the ICG Subs hereby grant to the
Manager, on the terms and conditions set forth herein and during the Term
hereof, the right to manage the Regulated Assets, the Other Assets and the
Business related thereto on a day-to-day basis including, but not limited to,
the directing of the Company's employees with respect to paying all obligations
of the Company; billing and collecting of all fees, charges or other
compensation due to the Company; maintaining the Company's network, including,
but not limited to, arranging for all labor and materials required to repair and
maintain the network according to standard industry practice; and handling
Customer inquiries.
3. Term. This Management Agreement shall become effective upon Company
Shareholder Approval (the "Effective Date") and shall expire upon the earlier of
(a) the consummation of the Merger; (b) the termination of the Merger Agreement;
(c) the commencement of a case under chapter 11 of the United States Bankruptcy
Code by any of the ICG Subs, (d) so long as no default or event of default
exists under the Interim Credit Agreement, five (5) days following written
notice by ICG to the Manager if MCC has failed to satisfy any request for an
Advance (as defined in the Interim Credit Agreement) properly made under the
Interim Credit Agreement, or (e) the termination of this Management Agreement
upon the mutual agreement of the parties.
4. Management of the Regulated Assets.
(a) During the Term hereof, and subject to the oversight, review
and ultimate control of the boards of directors of ICG and the ICG Sub
(collectively the "Boards"), as applicable, Manager shall (i) have the right to
manage the facilities and operations authorized under the Communications
Licenses in good faith and in a diligent manner on a day-to-day basis in the
operation of the Regulated Assets, the Other Assets and the Business consistent
with the terms of this Management Agreement, the Merger Agreement and the
Interim Credit Agreement and (ii) seek and prosecute applications for Regulatory
Approval of the transactions set forth in the Merger Agreement on behalf of the
Company.
(b) Upon, or immediately following, the Effective Date, Manager
and ICG shall issue a joint communication to the officers and employees of the
Company which shall inform such officers and employees that: (i) the Merger is
subject only to receipt of certain regulatory approvals, (ii) Manager has been
engaged by the Company to oversee the business and operations of the Company
until the receipt of such approvals, (iii) pursuant to such engagement of
Manager, such officers and employees are to follow the instructions of the
Manager and Manager Representatives (as defined in Section 4(j) hereof) in
performing their duties to the Company, and (iv) the operation of the Company is
subject to the restrictions set forth in the Merger Agreement, the Interim
Credit Agreement and this Agreement.
2
(c) Manager, with the assistance of the officers and employees of
the Company, shall be responsible for providing reasonable level of care to the
Customers, and shall provide services in compliance with the Company's existing
tariffs and service contracts, and all applicable laws, including, without
limitation, tariffs in effect from time to time. To maintain the integrity of
the Regulated Assets and the Regulated Business and its reputation in the
marketplace, Manager shall manage the Regulated Assets in a professional manner
and in accordance with all applicable professional or industry standards.
(d) All executives and employees of the Company will report to the
Manager. Each of ICG and the ICG Subs shall remain wholly responsible for, and
shall indemnify and hold Manager harmless against, all employment compensation
and benefit obligations to their respective executives and employees of the
Company. Subject to the terms of this Agreement, Manager shall have the
delegated authority of, and be authorized to take all actions that could be
taken by, the chief operating officers of the Company.
(e) Manager may request, and the Company shall promptly carry out
such request, that ICG and the ICG Subs (i) employ or otherwise manage (other
than discharge) certain personnel of the Company and (ii) discharge certain
personnel identified to the Company prior to the date hereof in conjunction with
the agreed-upon Budget and such other personnel as the applicable Board shall
approve. Manager has no unilateral authority to select, employ, or (except as
set forth below) discharge any senior executive of ICG. Notwithstanding the
forgoing, the Manager shall have the right and the Company shall comply with any
request to terminate any employee for Cause. "Cause" shall be defined for
purposes of this section as that which constitutes in fact and law a breach of
fiduciary duty or any illegal or disreputable conduct which substantially
impairs the reputation or goodwill of Manager, the Company or the Business or
involves misappropriation of funds. Manager shall have sole discretion and
authority to manage all of its own employees, agents, consultants or
contractors.
(f) All accounts receivable and all cash generated from the
operations of the Business, including the operations of the Regulated Assets
pursuant to this Management Agreement, shall be applied by Manager to the
continued operations of the Regulated Assets, Other Assets and the Business as
determined by Manager in furtherance of achieving compliance with the Budget.
(g) Manager, consistent with the terms of the Merger Agreement and
in compliance with all applicable federal and state laws regarding the necessary
form, content, and applicable notice periods for discontinuance of service,
shall determine when any notices to Customers advising them of the
discontinuance of service shall be delivered and when applications or other
filings with governmental authorities in connection with the discontinuance of
service shall be filed if ICG determines to discontinue any Customer's service.
(h) Each of ICG, the ICG Subs and the Manager desire and agree
that this Management Agreement and the obligations performed hereunder shall be
in full compliance with (i) the terms and conditions of the Company's
Communications Licenses; (ii) all applicable rules, regulations and policies of
the FCC; (iii) the Communications Act of 1934, as amended (the "Federal Act"),
47 U.S.C. Section 151, et seq., and (iv) any other applicable federal, state and
local law or regulation. If the FCC or any state body of competent jurisdiction
determines that
3
any provision of this Management Agreement violates any applicable rules,
regulations or policies, the parties shall make reasonable efforts immediately
to bring this Management Agreement into compliance, consistent with the terms of
this Management Agreement. It is expressly understood by ICG, the ICG Subs and
Manager that nothing in this Management Agreement is intended to give Manager
any right which would be deemed to constitute a transfer of control (as
"control" is defined in the Federal Act and/or any applicable FCC or state
regulations, rules or case law) by ICG or the ICG Subs of its operations or of
one or more of the Communications Licenses from the Company to Manager.
(i) Manager acknowledges and agrees that the Company has certain
rights and obligations pursuant to its Communications Licenses with respect to
the use of the various operations authorized thereunder, which includes
compliance with the Federal Act, and the rules and regulations of the FCC and
state regulatory commissions. As a result, Manager's management of the Regulated
Assets and the Regulated Business is not intended to diminish or restrict the
Company's compliance with its obligations before the FCC and state regulatory
commissions, and this Management Agreement shall not be construed to interfere
with the Company's ability to comply with the rules, regulations or directives
of any governmental or jurisdictional authority with respect to its
Communications Licenses or the operations authorized thereby.
(j) Manager may, in all instances, rely upon employees of the
Company as well as any of Manager's employees that Manager deems necessary or
desirable to rely upon for performance of its obligations pursuant to this
Management Agreement (the "Manager Representatives").
(k) At the reasonable request of the ICG Subs' senior officer or
other designee of the ICG Subs, Manager will consult with such officer or
designee from time to time regarding the status of the operations of the
Regulated Assets, Other Assets and the Business (it being understood and agreed
that the foregoing shall not require the Manager to consult with such officer
regarding matters in the ordinary course of business).
(l) At its discretion and at its expense, the ICG Subs may at all
times monitor and audit the actions and recommendations of the Manager to ensure
compliance in all material respects with this Management Agreement, the Merger
Agreement, the Interim Credit Agreement and all applicable government rules and
regulations.
(m) ICG and each of the ICG Subs hereby grant Manager rights of
access, including without limitation, entry and egress to any facilities
involved in the operation of the Businesses of the Company.
5. Compliance with Applicable Laws.
(a) The Company shall use the Communications Licenses in the
operation of the Regulated Assets and the Regulated Business during the Term
hereof in compliance with all applicable laws, ordinances, rules, regulations,
and restrictions, including, but not limited to, the Federal Act, the FCC's
rules, regulations, and policies, local ordinances, and state regulations.
Manager recognizes that ICG and the ICG Subs, as applicable, remains ultimately
responsible
4
for ensuring that the use of the Communications Licenses and the operations
authorized thereunder are in compliance with the applicable rules, regulations,
and policies of applicable federal and local, state or other government
authorities, and shall cooperate fully with ICG and the ICG Subs, as applicable,
to ensure such compliance, including the provision of information regarding the
Regulated Assets and the Regulated Business.
(b) During the Term of this Management Agreement, Manager shall be
responsible for the filing of all applications, reports, correspondence and
other documentation with all federal and state regulatory commissions relating
to the acquisition, use, maintenance, or renewal of the Communications Licenses;
provided that the Company shall cooperate with such filings and provide, upon
Manager's reasonable request, any information that will enable the Manager to
prepare any applications, records and reports required by the FCC and local,
state or other federal governmental authorities; provided further that Manager
shall consult with ICG and the ICG Subs, as applicable, and mutually agree as to
the most effective and efficient means of preparing such filings and in the
selection of any outside professionals or consultants retained by Manager to
assist in such filings.
6. Limitation on Manager's Authority. Notwithstanding anything herein
to the contrary, Manager shall have no authority on behalf of the ICG Subs (a)
to negotiate in respect of any possible amendments, modifications and/or waivers
under the Interim Credit Agreement, (b) to respond to any assertion of an event
of default under the Interim Credit Agreement, (c) to engage in any transactions
outside of the ordinary course without the consent of the appropriate senior
officer of the ICG Subs or the Boards except as expressly set forth in Section 4
hereof, (d) to take any action vested in the Boards pursuant to applicable
corporate law or the organizational documents of the Company, (e) to terminate
any executive officer of the ICG Subs without the consent of the Boards,
provided, however, that Manager may utilize its own employees at its own expense
to perform some or all of the duties of existing senior officers, subject to the
right of the ICG Subs to retain its senior officers in place for the purpose of
monitoring under Section 4(i) of this Agreement, (f) to terminate or decline to
pay in accordance with the Budget any legal counsel, accountant, financial
advisor, turnaround manager or other person rendering professional services to
the Company, (g) to take any action that would impair ICG's or the ICG Subs'
ability to comply with any applicable law or regulation (including, without
limitation, all applicable securities law); or (h) modify or refrain from
complying with the KERP or terminate professionals retained by the ICG Subs as
of the date hereof.
7. Expenses; Insurance. ICG shall reimburse Manager for all reasonable
out-of-pocket costs including amounts advanced by Manager to pay expenses, not
offset by revenue collected by Manager from the Business, incurred, including
amounts advanced by Manager to pay expenses, as a result of the performance by
Manager of its services under this Agreement. Manager hereby waives its right to
reimbursement of expenses in the event that the Merger is not consummated. ICG
shall cause Manager and each of Manager's officers, directors and employees
designated in writing to ICG from time to time by Manager to be named as covered
persons under ICG's and the ICG Subs' insurance policies.
8. Obligation to Renegotiate. In the event of any order or decree of an
administrative agency or court of competent jurisdiction, including, without
limitation, any material change or clarification in FCC rules, policies, or
precedent, that would cause this
5
Management Agreement to be invalid or violate any applicable law, and such order
or decree has become effective and has not yet been stayed, the parties will use
their respective best efforts to negotiate in good faith to modify this
Management Agreement to the minimum extent necessary so as to comply with such
order or decree without material economic detriment to either part, and this
Management Agreement, as so modified, shall then continue in full force and
effect.
9. Amendment and Modification. This Management Agreement may be
amended, modified or supplemented only by written agreement of the parties.
10. Waiver of Compliance; Consents. Except as otherwise provided in this
Management Agreement, any failure of any party to comply with any obligation,
covenant or condition herein may be waived by the party entitled to the benefits
thereof only by a written instrument signed by the party granting such waiver,
but such waiver or failure to insist upon strict compliance with such
obligation, covenant, or condition shall not operate as a waiver of or estoppel
with respect to any subsequent or other failure.
11. Representations and Warranties. ICG and each of the ICG Subs
represents and warrants to Manager, and Manager represents and warrants to ICG,
that (i) it is duly organized, validly existing and in good standing under the
laws of the state of its formation and is fully qualified to transact business
in the state of its incorporation; (ii) it has full corporate power and
authority and all authorizations necessary to carry on the businesses in which
it is engaged and to own and use the properties owned and used by it; (iii) it
has full power and authority to execute and deliver this Agreement and to
perform its obligations hereunder; (iv) this Agreement constitutes the party's
valid and legally binding obligation, enforceable in accordance with its terms
and conditions; (v) neither the execution and the delivery of this Agreement by
it, nor the consummation by it of the transactions contemplated hereby, will
violate any law, rule or regulation to which it is subject or any provision of
its formative or operational documents or constitute a violation of, be in
conflict with or constitute or create a default under, any agreement or
commitment to which it is a party or by which it or any of its properties is
bound or to which it or any of its properties is subject; and (vi) there are no
judicial or administrative actions, proceedings (including bankruptcy
proceedings) or investigations pending or, to the best of its knowledge,
threatened, that question, or draw into question, the validity of this Agreement
or any action taken or to be taken by it in connection with this Agreement or
that, if adversely determined, would have an adverse effect upon its ability to
enter into or perform its obligations under this Agreement.
12. Notices. All notices and other communications hereunder shall be in
writing and shall be deemed given (i) when personally sent/delivered, by
facsimile transmission (with hard copy to follow) or sent by reputable express
courier (charges prepaid) or (ii) five (5) days following mailing by registered
or certified mail postage prepaid and return receipt requested. Unless another
address is specified in writing, notices, demands and communications to the
Company and Manager shall be sent to the addresses indicated below:
(a) If to the Company, to:
________________________
________________________
6
________________________
________________________
________________________
with a copy to:
________________________
________________________
________________________
________________________
________________________
(b) If to Manager, to:
________________________
________________________
________________________
________________________
________________________
with a copy to:
________________________
________________________
________________________
________________________
________________________
13. Assignment. This Management Agreement and all of the provisions
hereof shall be binding upon and inure to the benefit of the parties hereto and
their respective successors and permitted assigns, but neither this Management
Agreement nor any of the rights, interests or obligations hereunder shall be
assigned by any party hereto, including by operation of law, without the prior
written consent of the other party (such consent not to be unreasonably withheld
by the Company); provided that Manager may assign this Management Agreement and
any of the rights, interests and obligations hereunder to any affiliate upon
written notice to the Company, provided that no such assignment shall relieve
Manager of its liabilities and obligations hereunder if such assignee does not
perform such obligations. Subject to the foregoing, this Management Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns, and except as otherwise expressly provided
herein, no other person shall have any right, benefit or obligation hereunder.
Any other assignment of this Management Agreement or any of the rights,
interests or obligations hereunder in contravention of this Section 13 shall be
null and void and shall not bind or be recognized by the Company or Manager.
14. Third Party Beneficiaries; Limitation of Liability. Nothing in this
Management Agreement shall be construed as giving any person other than the
parties hereto any legal or equitable right, remedy or claim under or with
respect to this Management Agreement.
7
15. Severability. If any provision of this Management Agreement is
determined by any court of competent jurisdiction to be invalid, illegal or
incapable of being enforced by any rule of law or public policy, all other
terms, conditions and provisions of this Management Agreement shall nevertheless
remain in full force and effect so long as the economic or legal substance of
the transaction contemplated hereby is not affected in any manner materially
adverse to any party. Upon such determination that any term or other provision
is invalid, illegal or incapable of being enforced, the parties hereto shall
negotiate in good faith to modify this Management Agreement so as to effect the
original intent of the parties as closely as possible in a mutually acceptable
manner in order that the transactions contemplated hereby be consummated as
originally contemplated to the fullest extend possible.
16. Governing Law. This Management Agreement shall be governed by and
construed in accordance with the laws of the State of New York (without giving
effect to the principles of conflicts of law thereof) as to all matters,
including, but not limited to, matters of validity, construction, effect,
performance and remedies.
17. Jurisdiction. Any actions or proceedings, whether at law or in
equity, seeking to enforce or to enjoin the enforcement of any provision of this
Agreement, or based on any right arising out of this Agreement, shall be
brought, tried and litigated against any of the parties in the courts of the
State of New York, or, if it has or can acquire jurisdiction, in the United
States District Court, Southern District of New York, and each of the parties
hereby consents to the jurisdiction of such courts (and of the appropriate
appellate courts) in any such action or proceeding and waives any and all
possible objections to venue laid therein, including forum non conveniens.
18. Counterparts. This Management Agreement may be executed and
delivered (including by facsimile transmissions) in one or more counterparts,
and by the different parties hereto in separate counterparts, each of which,
when executed and delivered, shall be deemed to be an original but all of which
taken together shall constitute one and the same agreement.
19. Entire Agreement. This Management Agreement and the Merger Agreement
(including the Exhibits and the Schedules thereto) constitute the entire
agreement among the parties with respect to the subject matter hereof and
supersede all prior agreements and understandings, whether written or oral,
among the parties with respect thereto.
20. Headings. The descriptive headings contained in this Management
Agreement are included for convenience of reference only and shall not affect in
any way the meaning or interpretation of this Management Agreement.
21. Remedies. The Company and Manager hereby acknowledge and agree that
money damages may not be an adequate remedy for any breach or threatened breach
of any of the provisions of this Management Agreement and that, in such event,
the Company or their successors or assigns, or the Manager or its successors or
assigns, as the case may be, may, in addition to any other rights and remedies
existing in their favor, seek specific performance, injunctive and/or other
relief in order to enforce or prevent any violations of this Management
Agreement.
8
22. No Partnership or Joint Venture Created. Nothing in this Management
Agreement shall be construed or interpreted to make Manager and the Company
partners or joint venturers, or to make one an agent or representative of the
other, or to afford any rights to any third party other than as expressly
provided herein. Neither the Company nor Manager is authorized to bind the other
to any contract, agreement or understanding.
9
IN WITNESS WHEREOF, the parties hereto have executed this Management
Agreement on the day and year first written above.
ICG COMMUNICATIONS, INC.
By: ________________________________
Name:
Title:
ICG TELECOM GROUP, INC.
By: ________________________________
Name:
Title:
ICG TELECOM GROUP OF VIRGINIA , INC.
By: ________________________________
Name:
Title:
By: ________________________________
Name:
Title:
ICG CHOICECOM, L.P.
By: ________________________________
Name:
Title:
MCCC ICG HOLDINGS LLC
By: ________________________________
Name:
Title:
