AGREEMENT AND PLAN OF MERGER
Exhibit 2.1
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of February 28, 2006 (this “Merger Agreement”), by and
among XO Communications, Inc., a Delaware corporation (the “Company”), XO Holdings, Inc., a
Delaware corporation (“Holdings”) and wholly-owned subsidiary of the Company, and XO
Communications, LLC, a Delaware limited liability company and wholly-owned subsidiary of Holdings
(“XO LLC”). The Company and XO LLC are collectively referred to herein from time to time as the
“Constituent Entities.”
R E C I T A L S:
WHEREAS, Holdings, the Company and Elk Associates, LLC, a Delaware limited liability company
(“Buyer”), are parties to that certain Equity Purchase Agreement, dated as of November 4, 2005 (as
amended from time to time, the “Purchase Agreement”), providing for the sale by Holdings to Buyer,
and the purchase by Buyer from Holdings, of all of the issued and outstanding membership interests
of XO LLC (the “Equity Interests”);
WHEREAS, pursuant to the Purchase Agreement, to facilitate the purchase and sale of the Equity
Interests as contemplated thereby, Holdings, the Company and XO LLC agreed to cause the Company to
merge (the “Merger”) with and into XO LLC, with XO LLC as the entity surviving such Merger, upon
the terms and subject to the conditions set forth in this Merger Agreement;
WHEREAS, as of the date hereof, the authorized capital stock of the Company consists of (i)
1,000,000,000 shares (the “Company Common Shares”) of common stock, par value $0.01 per share, of
which 181,933,035 Company Common Shares are issued and outstanding, 47,064,418 Company Common
Shares are issuable upon conversion of the Company Preferred Shares (as defined below), up to
17,600,000 Company Common Shares may be issued from time to time under the Plan (as defined below),
9,188,276 Company Common Shares are issuable pursuant to and upon exercise of outstanding Options
(as defined below), 23,750,000 Company Common Shares are issuable pursuant to and upon exercise of
the outstanding Warrants (as defined below) and none were held in treasury, and (ii) 200,000,000
shares of undesignated preferred stock, par value $0.01 per share, of which 4,000,000 shares are
designated as “6% Class A Convertible Preferred Stock” (the “Company Preferred Shares”), of which
4,000,000 Company Preferred Shares are issued and outstanding and no shares of any other class or
series of such preferred stock were issued and outstanding;
WHEREAS, as of the date hereof, the authorized capital stock of Holdings consists of (i)
1,000,000,000 shares (the “Holdings Common Shares”) of common stock, par value $0.01 per share, of
which 000 Xxxxxxxx Xxxxxx Shares are issued and outstanding and owned by the Company, no shares are
held in treasury and no options, warrants or other rights to acquire Holdings Common Shares are
outstanding, and (ii) 200,000,000 shares of undesignated preferred stock, par value $0.01 per
share, of which 4,000,000 shares are designated as “6% Class A Convertible Preferred Stock” (the
“Holdings Preferred Shares”), none of which Holdings Preferred Shares or shares of any other class
or series of such preferred stock are issued and outstanding;
WHEREAS, the designations, rights, powers and preferences and the qualifications, limitations
and restrictions of the Holdings Common Shares and the Holdings Preferred Shares are the same as
those of the Company Common Shares and the Company Preferred Shares, respectively;
WHEREAS, upon the execution and delivery of the LLC Agreement (as defined below) as provided
herein, the authorized units of Equity Interests of XO LLC will consist of (i) 1,000,000,000 units
of common limited liability company interests, having a capital amount of $0.01 per unit (the
“Common Membership Units”), of which 100 Common Membership Units will be issued and outstanding and
owned by Holdings pursuant to Section 2.1(d), and none of which will be reserved for
issuance upon conversion of the Preferred Membership Interests (as defined below) or held in
treasury, and (ii) 200,000,000 units of preferred limited liability company interests, having a
capital amount of $0.01 per unit, none of which will be issued and outstanding;
WHEREAS, the boards of directors of each of the Company and Holdings and the managing board of
XO LLC have approved and adopted the Merger and deemed the Merger to be advisable and in the best
interests of their respective stockholders or members, as applicable, upon the terms and subject to
the conditions set forth in this Merger Agreement;
WHEREAS, the Merger is intended to be consummated in accordance with Sections 251(g) and 264
of the Delaware General Corporation Law (the “DGCL”) and Section 18-209 of the Delaware Limited
Liability Company Act (“DLLCA”);
WHEREAS, upon the terms and subject to the conditions contained herein, in the Merger, each
holder of Company Common Shares and Company Preferred Shares immediately prior to the Effective
Time (as defined below) will receive for each such Company Common Share and Company Preferred Share
one share of Holdings Common Shares and Holdings Preferred Shares, respectively, having the same
designations, rights, powers and preferences and the same qualifications, limitations and
restrictions as such Company Common Share and Company Preferred Share, respectively, and as a
result of the Merger, XO LLC will remain a direct wholly-owned subsidiary of Holdings;
WHEREAS, the parties intend, by executing this Merger Agreement and an Assignment and
Assumption Agreement substantially in the form attached as Exhibit B hereto (the
“Assignment and Assumption Agreement”), that the Merger (together with the assignments and
assumptions occurring pursuant to the Assignment and Assumption Agreement) will either be treated
as a transaction that is not a sale or other disposition within the meaning of Section 1001 of the
Internal Revenue Code of 1986, as amended (the “Code”) or will qualify as a reorganization under
the provisions of Section 368(a)(1)(F) of the Code; and
NOW, THEREFORE, in consideration of the foregoing premises and the mutual promises and
agreements set forth in this Merger Agreement, and in order to set forth the terms and conditions
of the Merger and the mode of carrying the same into effect, the parties hereby agree as follows:
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ARTICLE I.
THE MERGER
SECTION 1.1. The Merger. Upon the terms and subject to the conditions set forth in
this Merger Agreement, and in accordance with Sections 251(g) and 264 of the DGCL and Section
18-209 of the DLLCA, at the Effective Time, the Company shall be merged with and into XO LLC and
the separate existence of the Company shall thereupon cease and XO LLC shall be the entity
surviving the Merger (the “Surviving Entity”).
SECTION 1.2. Closing. The closing of the Merger shall take place (i) at the offices
of Xxxxxxx Xxxx & Xxxxxxxxx LLP, 000 Xxxxxxx Xxxxxx, Xxx Xxxx, XX 00000 at 10:00 A.M. on the same
business day on which the conditions to the Merger set forth in Section 3 (other than in
each case those conditions that by their nature are to be satisfied at the Closing, but subject to
the fulfillment or waiver of those conditions) shall have been satisfied or waived in accordance
with this Merger Agreement or (ii) at such other place and time and/or on such other date as the
Company, Holdings and XO LLC may agree in writing (the “Closing Date”).
SECTION 1.3. Effective Time of the Merger. As of or as soon as practicable following
the Closing, the Surviving Entity shall file a Certificate of Merger with the Secretary of State
of the State of Delaware (the “Secretary of State”), as provided in the DCGL and DLLCA. The Merger
shall become effective at the time when the Certificate of Merger has been duly filed with the
Secretary of State, or at such later date as is set forth therein (the time at which the Merger
becomes effective, the “Effective Time”).
SECTION 1.4. Effects of Merger. At the Effective Time, the effect of the Merger
shall be as provided in Section 259 of the DGCL and Section 18-209(g) of the DLLCA. Without
limiting the generality of the foregoing, and subject thereto, at the Effective Time all of the
property, rights, privileges, powers and franchises of the Company and XO LLC shall vest in the
Surviving Entity and all debts, liabilities and duties of the Company and XO LLC shall become the
debts, liabilities and duties of the Surviving Entity.
SECTION 1.5. Certificate of Formation and Limited Liability Company Agreement.
(a) Certificate of Formation. At the Effective Time, the Certificate of Formation of
XO LLC, as in effect immediately before the Effective Time, shall continue in full force and effect
as the Certificate of Formation of the Surviving Entity until thereafter amended in accordance with
the DLLCA.
(b) Limited Liability Company Agreement. At the Effective Time, the Limited
Liability Company Agreement of XO LLC shall be in the form attached as Exhibit A hereto
(the “LLC Agreement”) and, as so effectuated, shall continue in full force and effect as the
Limited Liability Company Agreement of the Surviving Entity until thereafter amended as
contemplated by the Purchase Agreement and in accordance with the DLLCA.
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SECTION 1.6. Managing Board and Officers of the Surviving Entity.
(a) Managing Board. At the Effective Time, the members of the managing board of XO
LLC designated as such in the LLC Agreement shall be the members of the managing board of the
Surviving Entity until their successors are duly elected and qualified.
(b) Officers. At the Effective Time, the officers of the Company immediately prior
to the Effective Time shall be the officers of Holdings to serve at the pleasure of the board of
directors of Holdings.
ARTICLE II.
CONVERSION OF SECURITIES AND
ASSUMPTION OF CERTAIN RIGHTS AND OBLIGATIONS
SECTION 2.1. Conversion of Securities. At the Effective Time, as a result of the
Merger and (except as provided in Section 2.1(c)) without any action on the part of the
Company, Holdings or XO LLC or the holders of any securities of any of the foregoing entities:
(a) Company Common Shares. Each Company Common Share issued and outstanding or held
in treasury immediately prior to the Effective Time shall be converted into one Holdings Common
Share, and all Company Common Shares shall no longer be outstanding and shall be canceled and
retired and shall cease to exist, and each certificate (a “Company Common Certificate”) formerly
representing any of such Company Common Shares shall thereafter be deemed for all purposes to
represent the number of Holdings Common Shares into which such Company Common Shares were converted
pursuant to this Section 2.1(a) until such time as the holder thereof shall, pursuant to
Section 2.3, have exchanged such Company Common Certificate for a certificate representing
the Holdings Common Shares into which the Company Common Shares formerly represented by such
Company Common Certificate were so converted.
(b) Company Preferred Shares. Each Company Preferred Share issued and outstanding or
held in treasury immediately prior to the Effective Time shall be converted into one Holdings
Preferred Share, and all Company Preferred Shares shall no longer be outstanding and shall be
canceled and retired and shall cease to exist, and each certificate (a “Company Preferred
Certificate” and, together with the Common Certificates, the “Certificates”) formerly representing
any of such Company Preferred Shares shall thereafter be deemed for all purposes to represent the
number of Holdings Preferred Shares into which such Company Preferred Shares were converted
pursuant to this Section 2.1(b) until such time as the holder thereof shall, pursuant to
Section 2.3, have exchanged such Company Preferred Certificate for a certificate
representing the Holdings Preferred Shares into which the Company Preferred Shares formerly
represented by such Company Preferred Certificate were so converted. The Holdings Common Shares
and Holdings Preferred Shares issuable to holders of Company Common Shares and Company Preferred
Shares, respectively, pursuant to this Article II are collectively referred to herein as
the “Merger Consideration.”
(c) Contribution of Holdings Common Shares Held by the Company and XO LLC. Each
Holdings Common Share held by the Company and/or XO LLC shall be returned to Holdings as a
contribution to capital and shall be canceled, extinguished and retired upon the surrender of
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each Company Common Certificate representing such Company Common Shares by the Surviving
Entity to Holdings.
(d) Equity Interests Held by Holdings. The Equity Interest held by Holdings
immediately prior to the Effective Time shall be converted into 100 Common Membership Units.
(e) Certificate Holders. Each holder of any Certificates shall cease to have any
rights as a stockholder of the Company except as provided by this Article II or as provided
by applicable law.
SECTION 2.2. Successor Issuer. It is the intent of the parties hereto that Holdings
be deemed a “successor issuer” of the Company in accordance with Rule 12g-3 under the Securities
Exchange Act of 1934, as amended, and Rule 414 under the Securities Act of 1933, as amended. At
the Effective Time, Holdings shall file (i) an appropriate report on Form 8-K describing the Merger
and (ii) appropriate pre-effective and/or post-effective amendments, as applicable, to any
Registration Statements on Form S-8 and/or Form S-3.
SECTION 2.3. Transfers; Stock Certificates. At the Effective Time, the stock
transfer books of the Company shall be closed with respect to Company Common Shares and Company
Preferred Shares issued and outstanding immediately prior to the Effective Time and no further
transfer of such Company Common Shares and Company Preferred Shares shall thereafter be made on
such stock transfer books. Promptly after the Effective Time, Holdings shall notify the
stockholders of the Company immediately prior to the Effective Time in writing, at the respective
addresses thereof set forth in the books and records of the Company or its transfer agent, of the
consummation of the Merger and shall instruct such stockholders to present to Holdings or its
transfer agent each of their Certificates for exchange for certificates representing the Merger
Consideration into which the Company Common Shares and Company Preferred Shares (as applicable)
formerly represented by such Certificates were converted pursuant to Section 2.1. After
the Effective Time, if Certificates are presented to the Surviving Entity (prior to the closing of
the purchase and sale of the Equity Interests pursuant to the Purchase Agreement) or to Holdings,
they shall be canceled and exchanged for certificates representing the Merger Consideration into
which the Company Common Shares and Company Preferred Shares (as applicable) formerly represented
by such Certificate were converted pursuant to Section 2.1.
SECTION 2.4. Options and Benefit Plans; Reservation of Holdings Common Shares.
Holdings shall assume and succeed to all of the rights and obligations of the Company under the
Company’s 2002 Stock Incentive Plan (the “Plan”). The outstanding options (“Options”) and other
awards assumed by Holdings at the Effective Time (pursuant to its assumption of the Plan) shall
continue in full force and effect and shall be exercisable for Holdings Common Shares, in lieu of
Company Common Shares, upon the same terms and conditions as under the Plan immediately prior to
the Effective Time. On or prior to the Effective Time, Holdings shall reserve a sufficient number
of Holdings Common Shares to provide for the issuance of Holdings Common Shares upon exercise of
the Options under the Plan.
SECTION 2.5. Warrants. At the Effective Time, Holdings shall assume and succeed to
all of the rights and obligations of the Company under the Series A Warrant Agreement, the
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Series B Warrant Agreement and the Series C Warrant Agreement, each between the Company and
American Stock Transfer & Trust Company, as Warrant Agent, and each dated January 16, 2003
(collectively, the “Warrant Agreements”). All Series A Warrants, Series B Warrants and Series C
Warrants (collectively, the “Warrants”) outstanding under the respective Warrant Agreement and
assumed by Holdings at the Effective Time shall continue in full force and effect and shall be
exercisable for Holdings Common Shares, in lieu of Company Common Shares, upon the same terms and
conditions as set forth therein and in the Warrant Agreements. On or prior to the Effective Time,
Holdings shall reserve a sufficient number of Holdings Common Shares to provide for the issuance of
Holdings Common Shares upon exercise of the Warrants.
SECTION 2.6. Credit Agreement. At the Effective Time, XO LLC shall (i) assume and
succeed to all of the rights and obligations of the Company under the Amended and Restated Credit
and Guaranty Agreement among the Company, certain of the Company’s subsidiaries, as Guarantors,
various lenders who are parties thereto and Mizuho Corporate Bank, Ltd., as Administrative Agent,
dated as of January 16, 2003 (as amended from time to time, the “Credit Agreement”) and the other
Credit Documents (as defined in the Credit Agreement) and (ii) have taken all steps necessary (if
any) to perfect and protect the security interests granted or purported to be granted by the
Collateral Documents (as defined in the Credit Agreement) in the applicable Collateral (as defined
in the Credit Agreement).
SECTION 2.7. No Appraisal Rights. In accordance with Section 262(b) of the DGCL, no
appraisal rights shall be available to holders of Company Common Shares or Company Preferred Shares
in connection with the Merger.
SECTION 2.8. Tax Treatment. If the Merger is treated as a sale or other disposition
within the meaning of Section 1001 of the Code, this Merger Agreement (together with the Assignment
and Assumption Agreement) shall constitute a plan of reorganization for purposes of Sections 368
and 354 of the Code.
ARTICLE III.
CONDITIONS TO THE MERGER
SECTION 3.1. Compliance with Section 251(g) of the DGCL. Prior to the Effective
Time, the parties hereto will take all steps necessary to comply with Section 251(g) of the DGCL,
including without limitation, the following:
(a) At the Effective Time, except as otherwise permitted by Section 251(g) of the DGCL, the
Certificate of Incorporation (including any Certificate of Designation) and By-Laws of Holdings
shall contain provisions identical to the Certificate of Incorporation (including any Certificate
of Designation) and By-Laws of the Company, as in effect immediately prior to the Effective Time.
(b) At the Effective Time, the directors of the Company immediately prior to the Effective
Time shall be the directors of Holdings until their successors are elected and qualified.
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(c) The board of directors of the Company shall have determined that the stockholders of the
Company will not recognize gain or loss for United States federal income tax purposes as a result
of the Merger.
(d) The LLC Agreement shall have been executed and delivered by each party thereto, shall be
in full force and effect and shall include provisions to the effect and substantially in the form
of the following:
(i) Pursuant to Section 251(g)(7)(i)(A) of the DGCL, except for the election or removal
of directors or managers, managing members, or other members of the governing body of XO
LLC, any act or transaction by or involving XO LLC which would require the approval of the
stockholders of XO LLC if XO LLC were a corporation subject to the DGCL or that would
require member approval under the organizational documents of XO LLC shall be approved by
the stockholders of Holdings (or any successor by merger) by the same vote as is required by
the DGCL and/or such organizational documents;
(ii) Pursuant to Section 251(g)(7)(i)(B) of the DGCL, any amendment of the
organizational documents of XO LLC, which amendment would, if adopted by a corporation
subject to the DGCL, be required to be included in the certificate of incorporation of such
corporation, shall require, in addition, the approval of the stockholders of Holdings (or
any successor by merger), by the same vote as is required by the DGCL and/or by the
organizational documents of XO LLC; and
(iii) Pursuant to Section 251(g)(7)(i)(C) of the DGCL, the business and affairs of XO
LLC shall be managed by or under the direction of a board of directors, board of managers or
other governing body consisting of individuals who are subject to the same fiduciary duties
applicable to, and who are liable for breach of such duties to the same extent as, directors
of a corporation subject to the DCGL.
SECTION 3.2. Other Conditions. The respective obligations of the parties to this
Merger Agreement to consummate the Merger and the transactions contemplated hereby shall be subject
to the satisfaction or waiver by the parties at or prior to the Effective Time of the following
conditions:
(a) Holdings shall have taken all actions necessary to cause the Holdings Common Shares to be
issued pursuant to the Merger to meet all requirements necessary to cause the Holdings Common
Shares to be quoted on the Over the Counter Bulletin Board of The Nasdaq Stock Market, Inc.
(b) No statute, rule, regulation, executive order, injunction, stay, decree, judgment or
restraining order that is in effect shall have been enacted, entered, promulagated or enforced by
any court or governmental or regulatory authority or instrumentality which prohibits or makes
illegal the consummation of the Merger or the transactions contemplated hereby.
(c) All third party consents and approvals required, or deemed by the board of directors of
the Company to be advisable, to be obtained under any note, bond, mortgage, deed of trust, security
interest, indenture, lease, license, contract, agreement, exchange membership, exchange
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allocation, plan or instrument or obligation to which the Company is a party or by which the
Company or any property of the Company may be bound, in connection with the Merger and the
transactions contemplated hereby, shall have been obtained by the Company.
(d) The Company and Holdings shall have taken or caused to have been taken all actions
necessary or desirable in order for Holdings to assume and perform the obligations of the Company
under the Plan, the Warrant Agreements and the Credit Agreement, all to the extent deemed
appropriate by Holdings and the Company and to the extent permitted by applicable law.
(e) Holdings shall have procured insurance, or Holdings and the Company shall have taken the
actions necessary in respect of the insurance policies of the Company, such that, upon consummation
of the Merger, Holdings shall have insurance coverage that is substantially identical to the
insurance coverage held by the Company immediately prior to the Effective Time.
(f) The Assignment and Assumption Agreement shall have been executed and delivered by the
parties thereto and such Assignment and Assumption Agreement shall be in full force and effect.
ARTICLE IV.
TERMINATION AND AMENDMENT
SECTION 4.1. Termination. This Merger Agreement may be terminated and the Merger
contemplated hereby may be abandoned at any time prior to the Effective Time by action of the board
of directors of the Company or the managing board of XO LLC if such board of directors or managing
board should determine for any reason that the completion of the transactions provided for herein
would be inadvisable or not in the best interests of such Constituent Entity or its stockholders or
members, as applicable. In the event of such termination and abandonment, this Merger Agreement
shall become void and of no further force or effect and neither the Company nor XO LLC nor their
respective stockholders, directors, managers, members or officers shall have any liability with
respect to such termination and abandonment or otherwise with respect to this Merger Agreement and
the transactions contemplated hereby.
SECTION 4.2. Amendment. At any time prior to the Effective Time, this Merger
Agreement may, to the extent permitted by the DGCL and the DLLCA, be supplemented, amended or
modified by the mutual consent, of the Constituent Entities, which consent shall have been approved
by the board of directors or managing board (as applicable) of such Constituent Entity.
ARTICLE V.
MISCELLANEOUS PROVISIONS
SECTION 5.1. Governing Law. This Merger Agreement and the transactions contemplated
hereby shall be governed by and construed and enforced under the laws of the State of Delaware,
without giving effect to the conflicts of law principles of such State.
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SECTION 5.2. Counterparts. This Merger Agreement may be executed in one or more
counterparts, each of which shall constitute an original, and all of which together shall constitute
one and the same agreement, and this Merger Agreement shall become effective when one or more
counterparts have been executed by each of the parties hereto and delivered to the other parties.
SECTION 5.3. Severability. If any term or provision of this Merger Agreement is
determined by a court or other governmental authority of competent jurisdiction to be invalid,
illegal or unenforceable for any reason, the remaining provisions of this Merger Agreement shall
remain in full force and effect to the fullest extent permitted by applicable law.
SECTION 5.4. Entire Agreement. This Merger Agreement, including the Exhibits
attached hereto and any other agreement entered into in connection herewith, and the Purchase
Agreement contain the entire agreement and understanding of the parties hereto, and supercede all
prior agreements and undertakings, both oral and written, among such parties, with respect to the
subject matter hereof.
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IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement and Plan of
Merger as of the date first written above.
| XO COMMUNICATIONS, INC. | ||||||||
| By: | /s/ Xxxx X. Xxxxxxx | |||||||
| Name: | Xxxx X. Xxxxxxx | |||||||
| Title: | President and Chief Executive Officer | |||||||
| XO HOLDINGS, INC. | ||||||||
| By: | /s/ Xxxxxxx Xxxxxxxx | |||||||
| Name: | Xxxxxxx Xxxxxxxx | |||||||
| Title: | Acting Chief Financial Officer and | |||||||
| Senior Vice President | ||||||||
| XO COMMUNICATIONS, LLC | ||||||||
| By: | XO Holdings, Inc. | |||||||
| its sole member | ||||||||
| By: | /s/ Xxxxxxx Xxxxxxxx | |||||||
| Name: | Xxxxxxx Xxxxxxxx | |||||||
| Title: | Acting Chief Financial Officer and | |||||||
| Senior Vice President | ||||||||
CERTIFICATE OF THE SECRETARY
OF
XO COMMUNICATIONS, INC.
The undersigned Secretary of XO Communications, Inc., a Delaware corporation (the
“Corporation”), hereby certifies, in her capacity as an officer of the Company and not in her
individual capacity, that the Agreement and Plan of Merger (the “Merger Agreement”) to which this
certificate is attached has been adopted pursuant to Section 251(g) of the Delaware General
Corporation Law and that the conditions specified in the first sentence of such Section 251(g) have
been satisfied.
IN WITNESS WHEREOF, the undersigned has executed this certificate as of the 28th day of
February, 2006 in her capacity as an officer of the Company and not in her individual capacity.
| /s/ Xxxxxx Xx | ||||
| Title: Secretary |
