Exhibit 2.1
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AGREEMENT AND PLAN OF MERGER
BETWEEN
GLOBIX CORPORATION
and
NEON COMMUNICATIONS, INC.
DATED AS OF July 19, 2004
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TABLE OF CONTENTS
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PAGE
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ARTICLE I THE MERGER...........................................................1
Section 1.1 The Merger..................................................1
Section 1.2 Closing.....................................................2
Section 1.3 Effective Time..............................................2
Section 1.4 Effects of the Merger.......................................2
Section 1.5 Charter.....................................................2
Section 1.6 Bylaws......................................................2
Section 1.7 Officers and Directors of the Surviving Corporation.........2
Section 1.8 Effect on Capital Stock.....................................2
Section 1.9 Treatment of NEON Options...................................4
ARTICLE II EXCHANGE OF CERTIFICATES............................................5
Section 2.1 Exchange of Certificates....................................5
Section 2.2 Exchange Procedures.........................................5
Section 2.3 Dividends; Transfer Taxes; Withholding......................5
Section 2.4 Return of Exchange Fund.....................................6
Section 2.5 No Further Ownership Rights in NEON Securities..............6
Section 2.6 Closing of NEON Transfer Books..............................7
Section 2.7 Lost Certificates...........................................7
Section 2.8 Dissenting Shares...........................................7
Section 2.9 Further Assurances..........................................8
ARTICLE III REPRESENTATIONS AND WARRANTIES.....................................8
Section 3.1 Representations and Warranties of NEON......................8
Section 3.2 Representations and Warranties of Globix...................27
ARTICLE IV COVENANTS RELATING TO CONDUCT OF BUSINESS..........................47
Section 4.1 Covenants of NEON..........................................47
Section 4.2 Covenants of Globix........................................50
Section 4.3 No Control.................................................53
ARTICLE V ADDITIONAL AGREEMENTS...............................................53
Section 5.1 Preparation of Proxy Statement; Stockholders Meetings......53
Section 5.2 Access to Information......................................54
Section 5.3 Reasonable Efforts.........................................55
Section 5.4 Public Announcements.......................................56
Section 5.5 Employee Benefits Matters..................................56
Section 5.6 Fees and Expenses..........................................56
Section 5.7 Directors' and Officers' Indemnity.........................57
Section 5.8 Consents, Waivers and Other Approvals......................57
Section 5.9 Committee for Transition Issues............................58
Section 5.10 Schedules..................................................58
Section 5.11 Financial Review...........................................58
Section 5.12 Cooperation................................................58
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ARTICLE VI CONDITIONS PRECEDENT...............................................59
Section 6.1 Conditions to Each Party's Obligation to Effect the Merger.59
Section 6.2 Additional Conditions to Obligations of Globix.............60
Section 6.3 Additional Conditions to Obligations of NEON...............61
ARTICLE VII TERMINATION AND AMENDMENT.........................................63
Section 7.1 Termination................................................63
Section 7.2 Effect of Termination......................................65
Section 7.3 Amendment..................................................65
Section 7.4 Extension; Waiver..........................................65
ARTICLE VIII SURVIVAL.........................................................65
Section 8.1 Non-Survival of Representations, Warranties and Agreements.65
ARTICLE IX GENERAL PROVISIONS.................................................66
Section 9.1 Amendment and Waiver.......................................66
Section 9.2 Notices....................................................66
Section 9.3 Interpretation.............................................67
Section 9.4 Counterparts...............................................67
Section 9.5 Entire Agreement; No Third Party Beneficiaries.............67
Section 9.6 Governing Law..............................................67
Section 9.7 Severability...............................................68
Section 9.8 Assignment.................................................68
Section 9.9 Submission to Jurisdiction; Waivers........................68
Section 9.10 Enforcement................................................68
Section 9.11 Definitions................................................69
Section 9.12 Additional Definitions.....................................72
EXHIBITS
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Exhibit 1.5 - Certificate of Incorporation of the Surviving
Corporation
Exhibit 1.6 - Bylaws of the Surviving Corporation
Exhibit 1.7 - Officers and Directors of the Surviving Corporation
and Globix After the Effective Time
Exhibit 1.8(c)(ii) - Certificate of Designation of Globix Preferred Stock
Exhibit 1.8 (c)(iii) - Amendment to Class A Warrant Agreement
Exhibit 1.8(c)(v) - Globix Warrant
Exhibit 5.11 - Financial Review Procedures
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This AGREEMENT AND PLAN OF MERGER, dated as of July 19, 2004 (this
"AGREEMENT"), between GLOBIX CORPORATION, a Delaware corporation ("GLOBIX"), and
NEON COMMUNICATIONS, INC., a Delaware corporation ("NEON").
WITNESSETH:
WHEREAS, prior to the Closing Date (as defined below) Globix shall
incorporate a new wholly-owned subsidiary Delaware corporation to be called
"Cornerstone Merger Corp." or such other name as Globix may determine ("MERGER
SUB" and together with NEON, the "CONSTITUENT CORPORATIONS");
WHEREAS, the respective Boards of Directors of Globix and NEON have
each determined that the merger of Merger Sub with and into NEON (the "MERGER"),
upon the terms and subject to the conditions set forth in this Agreement, is
advisable and in the best interests of their respective stockholders, and such
Boards of Directors have approved such Merger pursuant to which each outstanding
share of Common Stock, par value $0.001 per share of NEON (the "NEON COMMON
STOCK") and each outstanding share of 12% Series A Cumulative Convertible
Preferred Stock, par value $0.001 per share (the "NEON CONVERTIBLE PREFERRED
STOCK"), issued and outstanding immediately prior to the Effective Time (as
defined in Section 1.3), and certain other securities of NEON, other than shares
owned or held directly or indirectly by Globix or directly by NEON, will be
converted into the right to receive the Merger Consideration (as defined in
Section 1.8(c));
WHEREAS, for federal income tax purposes, it is intended by the
parties hereto that the Merger shall qualify as a reorganization within the
meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended (the
"CODE"); and the parties intend, by executing this Agreement, to adopt a plan of
reorganization within the meaning of Section 368 of the Code;
WHEREAS, Globix and NEON desire to make certain representations,
warranties, covenants and agreements in connection with the transactions
contemplated hereby and also to prescribe various conditions to the transactions
contemplated hereby.
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth herein, and
intending to be legally bound hereby, the parties hereto agree as follows:
ARTICLE I
THE MERGER
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Section 1.1 THE MERGER. Upon the terms and subject to the conditions
set forth in this Agreement, and in accordance with the Delaware General
Corporation Law (the "DGCL"), Merger Sub shall be merged with and into NEON at
the Effective Time. From and after the Effective Time, the separate corporate
existence of Merger Sub shall cease and NEON shall continue its corporate
existence under the DGCL as the surviving corporation (the "SURVIVING
CORPORATION").
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Section 1.2 CLOSING. Subject to the terms and conditions hereof, the
closing of the Merger (the "CLOSING") will take place on the third Business Day
after the satisfaction or waiver (subject to applicable law) of the conditions
set forth in Article VI (excluding conditions that, by their terms, cannot be
satisfied until the Closing Date), unless another time or date is agreed to in
writing by the parties hereto (any such date, the "CLOSING DATE"). The Closing
shall be held at the offices of Day, Xxxxx & Xxxxxx LLP, One Canterbury Green,
Stamford, Connecticut, unless another place is agreed to by the parties hereto.
Section 1.3 EFFECTIVE TIME. As soon as practicable following the
Closing, the parties shall (i) file a certificate of merger (the "CERTIFICATE OF
Merger") in such form as is required by, and executed in accordance with the
relevant provisions of, the DGCL, and (ii) make all other filings required under
the DGCL. The Merger shall become effective at such time as the Certificate of
Merger is duly filed with, and accepted by, the Secretary of State of the State
of Delaware, or at such subsequent time as Globix and NEON shall agree and
specify in the Certificate of Merger (the date and time the Merger becomes
effective being the "EFFECTIVE TIME").
Section 1.4 EFFECTS OF THE MERGER. At and after the Effective Time,
the Merger will have the effects set forth in 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 Constituent
Corporations shall be vested in the Surviving Corporation, and all debts,
liabilities, obligations and duties of the Constituent Corporations shall become
the debts, liabilities, obligations and duties of the Surviving Corporation.
Section 1.5 CHARTER. The certificate of incorporation of NEON as in
effect immediately prior to the Effective Time, shall upon the Effective Time
and by virtue of the Merger be amended to read in its entirety as set forth in
Exhibit 1.5, and as so amended shall be the certificate of incorporation of the
Surviving Corporation until thereafter changed or amended as provided therein or
by applicable law.
Section 1.6 BYLAWS. The bylaws of NEON as in effect immediately prior
to the Effective Time shall upon the Effective Time be amended to read in their
entirety as set forth in Exhibit 1.6, and as so amended shall be the bylaws of
the Surviving Corporation until thereafter changed or amended as provided
therein or by applicable law.
Section 1.7 OFFICERS AND DIRECTORS OF THE SURVIVING CORPORATION. The
officers and directors of the Surviving Corporation and of Globix after the
Effective Time will be as set forth on Exhibit 1.7.
Section 1.8 EFFECT ON CAPITAL STOCK. As of the Effective Time, by
virtue of the Merger and without any action on the part of Merger Sub, NEON or
the holders of any securities of the Constituent Corporations:
(a) Each issued and outstanding share of common stock, par value $0.01
per share, of Merger Sub shall be converted into one validly issued, fully paid
and nonassessable share of common stock of the Surviving Corporation.
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(b) All shares of NEON Common Stock and NEON Convertible Preferred
Stock that are held in the treasury of NEON and any shares of NEON Common Stock
and NEON Convertible Preferred Stock owned by Globix or Merger Sub shall
automatically be canceled and retired and shall cease to exist and no capital
stock of Globix or other consideration shall be delivered in exchange therefor.
(c) Subject to the provisions of Sections 2.4 and 2.9 hereof:
(i) each share of NEON Common Stock issued and outstanding
immediately prior to the Effective Time (other than shares to be
canceled in accordance with Section 1.8(b)) shall be converted into
the right to receive 1.2748 shares (with the aggregate of all such
converted shares of each stockholder rounded up to the nearest whole
share) (such number being referred to herein as the "EXCHANGE RATIO")
of common stock, par value $0.01 per share, of Globix ("GLOBIX COMMON
STOCK");
(ii) (A) all accrued and unpaid dividends to the Closing
Date shall be treated as if paid in shares of NEON Convertible Stock
issued immediately prior to the Effective Time;
(A) each share of NEON Convertible Preferred Stock
issued and outstanding immediately prior to the Effective Time (other
than shares to be canceled in accordance with Section 1.8(b), but
including those shares treated as issued in accordance with Section
1.8(c)(ii)(A) above), shall be converted into the right to receive (1)
$3.75 in cash (the "PREFERRED CASH CONSIDERATION") and (2) 0.85034
shares of Globix preferred stock with substantially the terms set
forth in Exhibit 1.8(c)(ii) (the "GLOBIX PREFERRED STOCK");
(iii) each outstanding Class A Warrant of NEON issued under
the Class A Warrant Agreement, dated as of December 23, 2002 (the
"CLASS A WARRANT AGREEMENT"), between NEON and American Stock Transfer
& Trust Company, as warrant agent (a "CLASS A WARRANT"), shall be
converted into the right to receive 1.2748 shares of Globix Common
Stock (with the aggregate of all such converted shares of each holder
rounded up to the nearest whole share) in accordance with the
provisions of Exhibit 1.8(c)(iii);
(iv) each outstanding Redeemable Preferred Stock Warrant of
NEON issued under the Redeemable Preferred Stock Warrant Agreement,
dated as of December 23, 2002, between NEON and American Stock
Transfer & Trust Company, as warrant agent (the "REDEEMABLE PREFERRED
STOCK WARRANTS") shall expire at the Effective Time according to their
terms, and the holders thereof shall not have any rights to receive
payments therefor or with respect thereto; and
(v) each outstanding NEON CTA Warrant shall be converted
into the right to receive a Globix Warrant with substantially the
terms set forth on Exhibit 1.8(c)(v) (a "GLOBIX WARRANT") representing
the right to acquire a number of shares of Globix Common Stock
(rounded to the nearest whole number) determined by multiplying the
number of shares of NEON Common Stock subject to such warrant
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immediately prior to the Effective Time by the Exchange Ratio, at a
purchase price per share (rounded to the nearest whole cent) equal to
the purchase price per share of NEON Common Stock subject to such
warrant immediately prior to the Effective Time, divided by the
Exchange Ratio.
The shares of Globix Common Stock referred to in Sections 1.8(c)(i)
and (iii), the Globix Preferred Stock and Preferred Cash Consideration referred
to in Section 1.8(c)(ii), and the Globix Warrants referred to in Section
1.8(c)(v) are together referred to as the "MERGER CONSIDERATION". All such
shares of NEON Common Stock and NEON Convertible Preferred Stock and NEON
warrants (sometimes collectively referred to herein as, "NEON SECURITIES"), when
so converted, shall no longer be outstanding and shall automatically be canceled
and retired and each holder of a certificate representing any such shares shall
cease to have any rights with respect thereto, except the right to receive the
Merger Consideration into which such NEON Securities are converted and any
dividends and other distributions in accordance with Section 2.3.
(d) At the Effective Time, each then outstanding NEON Option, whether
or not then vested or exercisable, shall be modified as set forth in Section
1.9; provided that any right of a holder of any such NEON Option to acquire
Redeemable Preferred Stock or Redeemable Preferred Stock Warrants, as
applicable, shall terminate at the Effective Time.
Section 1.9 TREATMENT OF NEON OPTIONS. At the Effective Time, each
then outstanding NEON Option, whether or not then vested or exercisable, shall
be modified and become and represent an option to acquire, on the same terms and
conditions (including, without limitation, vesting (with credit for amounts
already vested) and acceleration) as were applicable to such NEON Option prior
to the Effective Date, a number of shares of Globix Common Stock (rounded to the
nearest whole number) determined by multiplying the number of shares of NEON
Common Stock subject to such NEON Option immediately prior to the Effective Time
by the Exchange Ratio, at an exercise price per share (rounded to the nearest
whole cent) equal to the exercise price per share of NEON Common Stock subject
to such NEON Option immediately prior to the Effective Time, divided by the
Exchange Ratio. It is the intention of the parties hereto that each NEON Option
so modified will, to the extent permitted by applicable laws, continue to
qualify as an "incentive stock option" within the meaning of Section 422 of the
Code to the same extent such NEON Option qualified as an incentive stock option
immediately prior to the Effective Time. As soon as practicable after the
Effective Time, the Surviving Corporation shall deliver to each Person who,
immediately prior to the Effective Time, was a holder of an outstanding NEON
Option, an instrument evidencing the modification of such NEON Option as
provided in this Section 1.9. As of the Effective Time, Globix and NEON shall
have taken all corporate action necessary to approve the modification of the
NEON Options and the amendment of the NEON Stock Option Plans, to authorize the
issuance of Globix Common Stock upon exercise of the NEON Options as modified
pursuant hereto, to cause Globix, as the sole shareholder of the Surviving
Corporation, to vote all of its shares in the Surviving Corporation in favor of
approval of the NEON Stock Option Plans as so modified in accordance with the
shareholder approval requirements of Section 422 of the Code and the regulations
promulgated and proposed thereunder, and to reserve for issuance a sufficient
number of shares of Globix Common Stock for delivery upon exercise of the NEON
Options as modified pursuant hereto. Globix shall use commercially reasonable
efforts to cause the issuance of shares of Globix Common Stock issuable upon
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exercise of any modified NEON Options to be registered as soon as is reasonably
practicable following the Effective Time pursuant to an effective registration
statement on Form S-8 under the Securities Act of 1933, as amended (the
"SECURITIES ACT"), and to maintain the effectiveness of such registration
statement thereafter for so long as any of such modified NEON Options remain
outstanding; and if the Globix Common Stock is then listed for trading on any
exchange or market, Globix shall use commercially reasonable efforts to cause
shares issuable upon exercise of modified NEON Options to be so listed.
ARTICLE II
EXCHANGE OF CERTIFICATES
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Section 2.1 EXCHANGE OF CERTIFICATES. Globix shall authorize a bank,
trust company, or such other person or persons as shall be reasonably acceptable
to Globix and NEON, to act as Exchange Agent hereunder (the "EXCHANGE AGENT").
As soon as practicable after the Effective Time, Globix shall deposit with the
Exchange Agent, in trust for the holders of NEON Securities converted in the
Merger, the Merger Consideration (other than the Globix Warrants) (such Merger
Consideration, together with any dividends or distributions with respect
thereto, being hereinafter referred to as the "EXCHANGE FUND"). The Exchange
Agent shall deliver the Globix Common Stock contemplated to be issued pursuant
to Sections 1.8(c)(i) and (iii) and the Globix Preferred Stock and Preferred
Cash Consideration to be issued pursuant to Section 1.8(c)(ii), in each case out
of the Exchange Fund. The Exchange Fund shall not be used by Globix for any
purpose other than as contemplated by Section 1.8.
Section 2.2 EXCHANGE PROCEDURES. Five Business Days after the
Effective Time, the Exchange Agent shall mail to each record holder of a
certificate or certificates (including warrant certificates as applicable) which
immediately prior to the Effective Time represented outstanding NEON Securities
converted in the Merger (the "CERTIFICATES") a letter of transmittal (which
shall specify that delivery shall be effected, and risk of loss and title to the
Certificates shall pass, only upon actual delivery of the Certificates to the
Exchange Agent, and shall contain instructions for use in effecting the
surrender of the Certificates in exchange for the Merger Consideration). Subject
to Section 2.1, upon surrender for cancellation to the Exchange Agent of a
Certificate together with such letter of transmittal, duly executed, and the
Class A Warrant Exercise Price, if applicable, the holder of such Certificate
shall be entitled to receive in exchange therefor the Merger Consideration into
which the NEON Securities represented by the surrendered Certificate shall have
been converted pursuant to Section 1.8, and certain dividends and other
distributions in accordance with Section 2.3. Any Certificate so surrendered
shall forthwith be canceled.
Section 2.3 DIVIDENDS; TRANSFER TAXES; WITHHOLDING.
(a) No dividends or other distributions that are declared on or after
the Effective Time on Globix Common Stock or Globix Preferred Stock, or are
payable to the holders of record thereof on or after the Effective Time, will be
paid to any person entitled by reason of the Merger to receive a certificate
representing Globix Common Stock or Globix Preferred Stock until such person
surrenders the related Certificate or Certificates, as provided in Section 2.2.
Subject to the effect of applicable law, there shall be paid to each record
holder of a new certificate representing such Globix Common Stock or Globix
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Preferred Stock: (a) at the time of such surrender, the amount of any dividends
or other distributions theretofore paid with respect to the shares of Globix
Common Stock or Globix Preferred Stock represented by such new certificate and
having a record date on or after the Effective Time and a payment date prior to
such surrender and (b) at the appropriate payment date, the amount of any
dividends or other distributions payable with respect to such shares of Globix
Common Stock or Globix Preferred Stock and having a record date on or after the
Effective Time but prior to such surrender and a payment date on or subsequent
to such surrender. In no event shall the person entitled to receive such
dividends or other distributions be entitled to receive interest on such
dividends or other distributions.
(b) If any Merger Consideration is to be paid to or issued in a name
other than that in which the Certificate surrendered in exchange therefor is
registered, it shall be a condition of such exchange that the Certificate so
surrendered shall be properly endorsed and otherwise in proper form for transfer
and that the person requesting such exchange shall pay to the Exchange Agent any
transfer or other taxes required by reason of the issuance of certificates for
such shares of Globix Common Stock or Globix Preferred Stock, as the case may
be, in a name other than that of the registered holder of the Certificate
surrendered, or shall establish to the satisfaction of the Exchange Agent that
such tax has been paid or is not applicable.
(c) Globix or the Exchange Agent shall be entitled to deduct and
withhold from the consideration otherwise payable pursuant to this Agreement to
any holder of NEON Securities such amounts as Globix or the Exchange Agent is
required to deduct and withhold with respect to the making of such payment under
the Code or under any provision of state, local or foreign tax law. To the
extent that amounts are so withheld by Globix or the Exchange Agent, such
withheld amounts shall be treated for all purposes of this Agreement as having
been paid to the holder of the NEON Securities in respect of which such
deduction and withholding was made by Globix or the Exchange Agent.
Section 2.4 RETURN OF EXCHANGE FUND. Any portion of the Exchange Fund
which remains undistributed to the former holders of NEON Securities for six
months after the Effective Time shall be delivered to Globix, upon demand of
Globix, and any such former security holders who have not theretofore complied
with this Article II shall thereafter look only to Globix for payment of their
claim for Merger Consideration and any dividends or distributions with respect
to Globix Common Stock or Globix Preferred Stock. Neither Globix nor the
Surviving Corporation shall be liable to any former holder of NEON Securities
for any such Merger Consideration and dividends and distributions held in the
Exchange Fund which are delivered to a public official pursuant to any
applicable abandoned property, escheat or similar law. If any Certificates shall
not have been surrendered prior to such date on which any Merger Consideration
or any dividends or distributions with respect to Globix Common Stock or Globix
Preferred Stock in respect of such Certificate would escheat to or become the
property of any Governmental Entity, any Merger Consideration in respect of such
Certificates shall, to the extent permitted by applicable Laws, become the
property of Globix, free and clear of all claims or interest of any person
previously entitled thereto.
Section 2.5 NO FURTHER OWNERSHIP RIGHTS IN NEON SECURITIES. The Merger
Consideration issued upon the surrender for exchange of Certificates in
accordance with the terms hereof (including any cash paid pursuant to Section
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2.3) shall be deemed to have been issued in full satisfaction of all rights
pertaining to the NEON Securities represented by such Certificates and the
modification of the NEON Options pursuant to and in accordance with Section 1.9
shall be deemed to be in full satisfaction of all rights pertaining to NEON
Options including any right to acquire Redeemable Preferred Stock or Redeemable
Preferred Warrants, as applicable.
Section 2.6 CLOSING OF NEON TRANSFER BOOKS. At the Effective Time, the
stock transfer books of NEON shall be closed and no transfer of shares of NEON
capital stock shall thereafter be made on the records of NEON. If, after the
Effective Time, Certificates are presented to the Surviving Corporation, the
Exchange Agent or Globix, such Certificates shall be canceled and exchanged as
provided in this Article II.
Section 2.7 LOST CERTIFICATES. If any Certificate shall have been
lost, stolen or destroyed, upon the making of an affidavit of that fact by the
person claiming such Certificate to be lost, stolen or destroyed and, if
required by Globix or the Exchange Agent, the posting by such person of a bond,
in such reasonable amount as Globix or the Exchange Agent may direct as
indemnity against any claim that may be made against them with respect to such
Certificate, the Exchange Agent will issue in exchange for such lost, stolen or
destroyed Certificate, Merger Consideration and any dividends or other
distributions to which the holders thereof are entitled pursuant to Section 2.3.
Section 2.8 DISSENTING SHARES.
(a) Notwithstanding any other provision of this Agreement to the
contrary, shares of NEON Common Stock and NEON Convertible Preferred Stock that
are outstanding immediately prior to the Effective Time and which are held by
stockholders of NEON who shall not have voted in favor of the Merger or
consented thereto in writing and who shall have demanded properly in writing
appraisal for such shares in accordance with Section 262 of the DGCL and who
shall not have withdrawn such demand or otherwise have forfeited appraisal
rights (collectively, the "DISSENTING SHARES") shall not be converted into or
represent the right to receive the Merger Consideration. Such stockholders of
NEON shall be entitled to receive payment of the appraised value of such shares
of NEON Common Stock and/or NEON Convertible Preferred Stock held by them in
accordance with the provisions of such Section 262, except that all Dissenting
Shares held by stockholders of NEON who shall have failed to perfect or who
effectively shall have withdrawn or lost their rights to appraisal of such
shares of NEON Common Stock or NEON Convertible Preferred Stock under such
Section 262 shall thereupon be deemed to have been converted into and to have
become exchangeable, as of the Effective Time, for the right to receive, without
interest, the Merger Consideration upon surrender, in the manner provided in
Section 2.2 of the Certificate or Certificates which immediately prior to the
Effective Time represented such shares of NEON Common Stock and NEON Convertible
Preferred Stock and the delivery of the other documents required to be delivered
pursuant to such Section 2.2.
(b) NEON shall give Globix prompt notice of any demands for appraisal
received by NEON, withdrawals of such demands, and any other instruments served
pursuant to the DGCL and received by NEON and NEON and Globix shall participate
jointly prior to the Closing in all negotiations and proceedings with respect to
demands for appraisal under the DGCL. NEON shall not, except with the prior
written consent of Globix, make any payment with respect to any demands for
appraisal, or offer to settle, or settle, any such demands.
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Section 2.9 FURTHER ASSURANCES. If at any time after the Effective
Time the Surviving Corporation shall consider or be advised that any deeds,
bills of sale, assignments or assurances or any other acts or things are
necessary, desirable or proper (a) to vest, perfect or confirm, of record or
otherwise, in the Surviving Corporation its right, title or interest in, to or
under any of the rights, privileges, powers, franchises, properties or assets of
either of the Constituent Corporations, or (b) otherwise to carry out the
purposes of this Agreement, the Surviving Corporation and its proper officers
and directors or their designees shall be authorized to execute and deliver, in
the name and on behalf of either of the Constituent Corporations, all such
deeds, bills of sale, assignments and assurances and to do, in the name and on
behalf of either Constituent Corporation, all such other acts and things as may
be necessary, desirable or proper to vest, perfect or confirm the Surviving
Corporation's right, title or interest in, to or under any of the rights,
privileges, powers, franchises, properties or assets of such Constituent
Corporation and otherwise to carry out the purposes of this Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
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Section 3.1 REPRESENTATIONS AND WARRANTIES OF NEON. Except as set
forth in the NEON Disclosure Schedule delivered by NEON to Globix in connection
with the execution of this Agreement (the "NEON DISCLOSURE SCHEDULE") (each
Section of which qualifies the correspondingly numbered representation and
warranty or covenant to the extent specified therein), NEON represents and
warrants to Globix as follows:
(a) ORGANIZATION, STANDING AND POWER.
(i) Each of NEON and its Subsidiaries (i) is a corporation
or other entity duly incorporated or organized, validly existing and
in good standing under the laws of its state of incorporation or
organization, (ii) has all requisite power and authority to own, lease
and operate its properties and to carry on its business as now being
conducted, and (iii) as set forth in Section 3.1(a)(i) of the NEON
Disclosure Schedule, is duly qualified and in good standing to do
business in each jurisdiction in which the nature of its business or
the ownership or leasing of its properties makes such qualification
necessary, except in the case of clause (iii) for such failures as
could not, individually or in the aggregate, reasonably be expected to
have a NEON Material Adverse Effect.
(ii) Section 3.1(a)(ii) of the NEON Disclosure Schedule sets
forth a complete and accurate list of all of NEON's Subsidiaries and
NEON's direct or indirect equity interest therein. Except as set forth
in Section 3.1(a)(ii) of the NEON Disclosure Schedule, neither NEON,
nor any of its Subsidiaries, (A) directly or indirectly owns any
equity, membership, partnership or similar interest in, or any
interest convertible into or exchangeable or exercisable for any
equity, membership, partnership or similar interest in, any
corporation, partnership, joint venture, limited liability company or
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other business association or entity, whether incorporated or
unincorporated, or (B) has, since the NEON Confirmation Effective
Date, been a general partner or managing member of any general
partnership, limited partnership, limited liability company or other
entity as to which NEON or any of its Subsidiaries has any material
liability.
(iii) The copies of the charter, articles or certificate of
incorporation and by-laws (or similar governing documents) of NEON and
each of its Subsidiaries which were made available to Globix are true,
complete and correct copies of such documents as in effect on the date
of this Agreement.
(iv) All minute books and stock record books of NEON and its
Subsidiaries have been made available to Globix or its counsel prior
to the execution of this Agreement.
(b) CAPITAL STRUCTURE.
(i) The authorized capital stock of NEON consists of
100,000,000 shares of NEON Common Stock and 30,000,000 shares of
Preferred Stock, $0.001 par value per share (the "NEON PREFERRED
STOCK"), of which NEON Preferred Stock 2,500,000 such shares are
designated as NEON Convertible Preferred Stock, 21,354,000 such shares
are designated as Redeemable Preferred Stock (the "NEON REDEEMABLE
PREFERRED STOCK"), and the remaining shares of NEON Preferred Stock
are undesignated. The rights and privileges of each class of NEON's
capital stock are as set forth in NEON's certificate of incorporation
and the certificates of designation thereto, as amended to the date
hereof. As of the date hereof, (A) 15,775,863 shares of NEON Common
Stock are issued and outstanding and 341,936 shares of NEON Common
Stock are reserved for issuance to Mode 1 Communications, Inc., (B)
1,101,887 shares of NEON Convertible Preferred Stock are issued and
outstanding, (C) no shares of NEON Redeemable Preferred Stock are
issued or outstanding, (D) 5,511,405 shares of NEON Common Stock are
reserved for issuance pursuant to the terms of the outstanding Class A
Warrants and 650,000 shares of NEON Common Stock are reserved for
issuance pursuant to the terms of the outstanding NEON CTA Warrants,
and (E) no shares of NEON capital stock are held in the treasury of
NEON or by any Subsidiaries of NEON. All of the issued and outstanding
shares of NEON Common Stock and NEON Convertible Preferred Stock have
been duly authorized, and are validly issued, fully paid,
nonassessable and free of preemptive rights created by statute, NEON's
certificate of incorporation or bylaws. None of the issued and
outstanding shares of NEON Common Stock and NEON Convertible Preferred
Stock have been issued in violation of any applicable federal or state
law or any preemptive rights or rights to subscribe for or purchase
securities.
(ii) Except as set forth in Section 3.1(b)(ii) of the NEON
Disclosure Schedule, there are no voting trusts, proxies or other
agreements or understandings with respect to any NEON Common Stock or
NEON Convertible Preferred Stock to which NEON or, to the Knowledge of
NEON, any other Person is a party or by which it or any such other
Person is bound. Section 3.1(b)(ii) of the NEON Disclosure Schedule
lists all issued and outstanding shares of NEON Common Stock and NEON
Convertible Preferred Stock that are otherwise subject to a repurchase
or redemption right or right of first refusal in favor of NEON or any
other Person. NEON has delivered to Globix a certificate certifying
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(A) the name and address of each record holder of NEON Common Stock
and NEON Convertible Preferred Stock, (B) the number and type of
shares held by each such stockholder, and (C) any restrictions imposed
by NEON on the transfer of such shares. Except as set forth in Section
3.1(b)(ii) of the NEON Disclosure Schedule and as contemplated by this
Agreement, there are no registration rights, and there are no rights
agreements, "poison pill" anti-takeover plans or other similar
agreement or restrictive arrangement to which NEON or any of its
Subsidiaries is a party or by which it or they are bound with respect
to any equity security of any class of NEON or any of its Subsidiaries
or with respect to any equity security, partnership interest or
similar ownership interest of any class of any of its Subsidiaries.
(iii) Section 3.1(b)(iii) of the NEON Disclosure Schedule
lists the number of shares of NEON Common Stock and NEON Preferred
Stock reserved for future issuance pursuant to stock options granted
and outstanding as of the date of this Agreement and the plans or
other arrangements under which such options were granted
(collectively, the "NEON STOCK OPTION PLANS") and NEON has delivered
to Globix a certificate with respect to the outstanding options to
purchase shares of NEON Common Stock and NEON Preferred Stock
(including restricted stock) (the "NEON OPTIONS") under the NEON Stock
Option Plans, certifying with respect to each NEON Option (A) the name
of each holder, (B) the number of shares of NEON Common Stock or NEON
Preferred Stock subject to such NEON Option, (C) the relationship of
the holder to NEON, (D) the exercise price, (E) the date of grant, (F)
the vesting schedule, if any, and expiration date thereof, and
including the extent to which any vesting has occurred as of the date
of this Agreement, and (G) whether (and to what extent) the vesting of
such NEON Option will be accelerated in any way by the transactions
contemplated by this Agreement or by the termination of employment or
engagement or change in position of any holder thereof following
consummation of the Merger. Section 3.1(b)(iii) of the NEON Disclosure
Schedule shows the number of shares of NEON Common Stock and NEON
Preferred Stock reserved for future issuance pursuant to warrants,
convertible securities or other outstanding rights (other than NEON
Options) to purchase, or obligations to otherwise issue, shares of
NEON Common Stock or NEON Preferred Stock outstanding as of the date
of this Agreement (such outstanding warrants, convertible securities
or other rights, the "NEON CONVERTIBLE SECURITIES"). NEON has
delivered to Globix a certificate certifying with respect to such NEON
Convertible Securities (A) the agreement or document under which such
NEON Convertible Securities were granted, (B) a complete and accurate
list of the names of all holders of NEON Convertible Securities, (C)
the number and type of shares subject to such NEON Convertible
Securities, (D) the exercise price, (E) the date of grant and (F) the
expiration date thereof. As of and at the Effective Time, the
Redeemable Preferred Stock Warrants will expire according to their
terms, and the holders thereof shall cease to have any rights to
receive payments therefor or with respect thereto. Except for NEON
Options, neither NEON nor any of its Subsidiaries has outstanding any
stock appreciation rights, phantom stock, performance based stock
awards or similar stock rights or obligations. NEON has made available
to Globix accurate and complete copies of all NEON Stock Option Plans
and the forms of all stock option agreements evidencing NEON Options
and NEON Convertible Securities.
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(iv) The shares of stock of each of NEON's Subsidiaries held
by NEON (directly or indirectly) are the only shares of each such
Subsidiary issued and outstanding, and there are no options, warrants,
equity securities, calls, rights, commitments or agreements of any
character to which any of Subsidiary of NEON is a party or by which
any such Subsidiaries is bound obligating it to issue, exchange,
transfer, deliver or sell, or cause to be issued, exchanged,
transferred, delivered or sold, additional shares of capital stock or
other equity interests of such Subsidiary or any security or rights
convertible into or exchangeable or exercisable for any such shares or
other equity interests, or obligating any Subsidiary to grant, extend,
accelerate the vesting of, otherwise modify or amend or enter into any
such option, warrant, equity security, call, right, commitment or
agreement. All the outstanding shares of capital stock or other
ownership interests of each Subsidiary of NEON have been validly
issued and are fully paid and nonassessable and are owned (of record
and beneficially) by NEON, free and clear of all Liens. Except as set
forth in Section 3.1(b)(iv) of the NEON Disclosure Schedule and (A)
for the capital stock or other ownership interests of its
Subsidiaries, (B) as acquired in the ordinary course of business
pursuant to foreclosure, workout, settlement, bankruptcy arrangements
or similar transactions, and (C) for security interests held in the
ordinary course of business, neither NEON nor any of its Subsidiaries
directly or indirectly owns any equity, membership, partnership or
similar interest in, or any interest convertible into or exchangeable
or exercisable for any equity, membership, partnership or similar
interest in, any corporation, partnership, joint venture, limited
liability company or other business association or entity, whether
incorporated or unincorporated that is material to the business of
NEON and its Subsidiaries, taken as a whole. Except as set forth in
Section 3.1(b)(iv) of the NEON Disclosure Schedule, no action is
required to be taken by NEON, its Board of Directors or any trustee
under any NEON Stock Option Plans or any holder of NEON Options, to
effect the treatment of NEON Options described in Section 1.9 hereof.
(v) Except as set forth in Section 3.1(b)(v) of the NEON
Disclosure Schedule, NEON has never declared, nor is there accrued,
any dividend or other distribution with respect to any NEON Common
Stock or NEON Preferred Stock.
(c) AUTHORITY; NO CONFLICTS.
(i) NEON has all requisite corporate power and authority to
enter into this Agreement, to perform its obligations hereunder and to
consummate the transactions contemplated hereby, subject to the
receipt of the NEON Required Vote. The execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby
have been duly authorized by all necessary corporate action on the
part of NEON, subject to the receipt of the NEON Required Vote.
Without limiting the generality of the foregoing, the Board of
Directors of NEON, at a meeting duly called and held, by the requisite
vote of all directors (i) received a fairness opinion that the
Exchange Ratio is fair from a financial point of view to the holders
of NEON Common Stock (as stockholders of NEON) and determined that the
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Merger is in the best interests of NEON and its stockholders, (ii)
adopted this Agreement in accordance with the provisions of the DGCL,
(iii) directed that this Agreement and the Merger be submitted to the
stockholders of NEON for their adoption and approval and resolved to
recommend that the stockholders of NEON vote in favor of the adoption
of this Agreement and the approval of the Merger, and (iv) fixed a
record date for the determination of stockholders of NEON entitled to
vote to adopt this Agreement (the "RECORD DATE"). This Agreement has
been duly executed and delivered by NEON and constitutes a valid and
binding agreement of NEON, enforceable against it in accordance with
its terms, except as such enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium and similar laws relating to or
affecting creditors generally, or by general equity principles
(regardless of whether such enforceability is considered in a
proceeding in equity or at law).
(ii) The execution and delivery of this Agreement does not,
and the consummation of the Merger and the other transactions
contemplated hereby will not, conflict with, or result in any
violation of, or constitute a default (with or without notice or lapse
of time, or both) under, or require an offer to purchase to be made
under, or give rise to a right of termination, amendment, cancellation
or acceleration of any obligation or the loss of a material benefit
under, or the creation of a Lien on any assets (any such conflict,
violation, default, right of termination, amendment, cancellation or
acceleration, loss or creation, a "VIOLATION"): (A) subject to the
receipt of the NEON Required Vote, pursuant to any provision of the
certificate of incorporation or by-laws of NEON or similar governing
documents of any of its Subsidiaries, or (B) except as could not,
individually or in the aggregate, reasonably be expected to have a
NEON Material Adverse Effect and subject to obtaining or making the
NEON Required Consents, pursuant to any Contract or NEON Plan or any
Law applicable to NEON or its Subsidiaries or their respective
properties or assets. Section 3.1(c)(ii) of the NEON Disclosure
Schedule lists all material consents, waivers and approvals under any
NEON Material Contract required to be obtained in connection with the
consummation of the Merger and the other transactions contemplated
hereby.
(iii) No consent, approval, order or authorization of, or
registration, declaration or filing with, any Person or any
Governmental Entity is required by or with respect to NEON or any
Subsidiary of NEON as a result of the execution and delivery of this
Agreement by NEON or the consummation of the Merger and the other
transactions contemplated hereby, except for those required under or
in relation to (A) the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of
1976, as amended (the "HSR ACT"), (B) filing of the Proxy Statement
with the SEC and its effectiveness under the Securities Exchange Act
of 1934, as amended (the "EXCHANGE ACT"), (C) the filing of the
Certificate of Merger pursuant to the DGCL, (D) the NEON Required
Vote, (E) notices and consents from Governmental Entities and other
Persons that regulate CLEC's, franchises and licenses, (F) the matters
listed in Section 3.1(c)(ii) of the NEON Disclosure Schedule and (G)
such consents, approvals, orders, authorizations, registrations,
declarations and filings, the failure of which to make or obtain could
not, individually, or in the aggregate, reasonably be expected to have
a NEON Material Adverse Effect. Consents, approvals, orders,
authorizations, registrations, declarations and filings required under
or in relation to any of the foregoing clauses (A) through (G) are
hereinafter referred to as "NEON REQUIRED CONSENTS."
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(d) FINANCIAL STATEMENTS.
(i) NEON has delivered to Globix true and correct copies of
(a) audited consolidated balance sheets of NEON and its consolidated
Subsidiaries as at December 31 of the years 2001, 2002 and 2003 and
the related consolidated statements of operations, changes in
stockholders' equity and cash flows for each of the fiscal years then
ended, including the notes thereto, together with the reports thereon
(1) of BDO Xxxxxxx, independent auditors, with respect to 2002 and
2003 only, and (2) Xxxxxx Xxxxxxxx, independent auditors, with respect
to 2001 only, and (b) an unaudited consolidated balance sheet as at
May 31, 2004 (the "INTERIM BALANCE SHEET") and the related unaudited
consolidated statements of operations and cash flows for the five
months then ended (the "NEON FINANCIAL STATEMENTS"). The NEON
Financial Statements fairly present in all material respects the
consolidated financial condition, results of operations, changes in
stockholders' equity and cash flows of NEON and its consolidated
Subsidiaries as at the respective dates and for the periods referred
to in such financial statements, all in accordance with United States
generally accepted accounting principles ("GAAP") applied on a basis
consistent with prior periods (except as indicated in footnotes to the
NEON Financial Statements), subject in the case of interim statements
to normal and recurring year-end adjustments that have not been and
are not likely to be material in amount, and the absence of a
statement of stockholders' equity and the absence of notes that, if
presented, would not differ materially from the notes included in the
immediately preceding year-end financial statements.
(ii) No financial statements of any entity other than NEON
and its Subsidiaries are required by GAAP to be included in the
consolidated financial statements of NEON.
(e) NO UNDISCLOSED LIABILITIES; INDEBTEDNESS.
(i) Except (a) as and to the extent of the amounts
specifically reflected or reserved on the audited balance sheet as at
December 31, 2003 (including the notes thereto) (the "NEON AUDITED
BALANCE SHEET") included in the NEON Financial Statements or
intercompany accounts not reflected in the Audited Balance Sheet, (b)
obligations under NEON Material Contracts entered into in the ordinary
course of business and consistent with past practice which are not
required by GAAP to be reflected on the Audited Balance Sheet, (c)
liabilities and obligations incurred in the ordinary course of
business consistent with past practice since the date of the Audited
Balance Sheet, (d) obligations under this Agreement and liabilities
permitted to be incurred pursuant to Section 4.1, and (e) as set forth
in Section 3.1(e)(i) of the NEON Disclosure Schedule, neither NEON nor
any of its Subsidiaries has any liabilities or obligations of any
nature whether absolute, accrued, contingent or otherwise, which
individually or in the aggregate would reasonably be expected to have
a NEON Material Adverse Effect.
(ii) Section 3.1(e)(ii) of the NEON Disclosure Schedule sets
forth a complete and accurate list of all loan or credit agreements,
notes, bonds, mortgages, indentures and other agreements and
instruments pursuant to which any indebtedness of NEON or any of its
Subsidiaries in an aggregate principal amount in excess of $100,000 is
outstanding or may be incurred and the respective principal amounts
outstanding thereunder as of the date of this Agreement.
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(f) ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as set forth in
Section 3.1(f) of the NEON Disclosure Schedule, and except for actions that
would be permitted pursuant to Section 4.1, and except as otherwise contemplated
hereby, from the date of the Audited Balance Sheet to the date hereof: (i) NEON
and its Subsidiaries have conducted their business in all material respects in
the ordinary course in the same manner as heretofore conducted; (ii) there has
not been any NEON Material Adverse Effect; (iii) NEON has not (A) declared, set
aside or paid any dividends or other distribution (whether in cash, stock or
property) in respect of any of its capital stock; (B) split, combined or
reclassified any of its capital stock or issued or authorized any issuance of
any other securities in respect of, in lieu of or in substitution for shares of,
its capital stock, (iv) NEON has not changed its methods of accounting for
financial accounting or tax purposes in any manner that could be reasonably
expected to have a significant adverse effect on its financial statements; (v)
NEON has not made or revoked any material express or deemed election relating to
Taxes; and (vi) neither NEON nor any of its Subsidiaries has (A) waived in
writing any material rights, (B) suffered any extraordinary loss or
extraordinary losses (as defined in Opinion No. 30 of the Accounting Principles
Board of the American Institute of Certified Public Accountants and any
amendments or interpretations thereof) which could reasonably be expected to
have a NEON Material Adverse Effect, (C)(1) granted any severance or termination
payment, (2) entered into any employment, deferred compensation, consulting,
severance, indemnification, change in control, retention or other similar
agreement or arrangement, (3) increased any compensation or benefits payable or
to become payable under any existing severance or termination pay policy or
employment, deferred compensation, stock loan, consulting, severance, change in
control, retention or other similar agreement or arrangement, or (4) increased
the compensation, bonus, incentive or other benefits payable to (or to become
payable to) former or current directors, officers, employees or consultants of
NEON or any of its Subsidiaries, other than an increase in annual salary or
hourly wage rates granted to current employees (other than officers) in the
ordinary course of business, consistent with past practice or otherwise not
material, (D) made or agreed to make any increase in any NEON Plan or adopt a
new employee benefit plan, which in either case could result in a material
increase in liability to NEON, (E) other than in the ordinary course of business
or as otherwise not material, sold or transferred any of the assets of NEON or
its Subsidiaries, or (F) made any capital expenditures in respect of its
business or operations not in the ordinary course of business or otherwise
material. NEON and its Subsidiaries have not agreed or committed (directly or
indirectly) to do any of the foregoing.
(g) INFORMATION SUPPLIED. None of the information supplied or to be
supplied in writing by NEON for inclusion or incorporation by reference in the
registration statement on Form S-4 (together with any amendments or supplements
thereto, the "REGISTRATION STATEMENT") and the proxy statement/prospectus
included therein (together with any amendments or supplements thereto, the
"PROXY STATEMENT") relating to the issuance of Globix Common Stock in connection
with the Merger, the NEON Stockholders Meeting and the Globix Stockholders
Meeting (if applicable) with the Securities and Exchange Commission (the "SEC")
will (A) in the case of the Registration Statement, at the time it becomes
-14-
effective, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein not misleading, or (B) in the case of the Proxy Statement, at
the time of the mailing of the Proxy Statement, at the time of the NEON
Stockholders Meeting and the Globix Stockholders Meeting (if applicable) and at
the Effective Time, contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they are
made, not misleading, or necessary to correct any statement in any earlier
communication with respect to the solicitation of proxies for the NEON
Stockholders Meeting or Globix Stockholders Meeting (if applicable) which has
become false or misleading. If at any time prior to the Effective Time any event
with respect to NEON, its officers and directors or any of its Subsidiaries
shall occur which is required to be described in the Proxy Statement or the
Registration Statement, such event shall be so described, and an appropriate
amendment or supplement shall be promptly filed with the SEC and, as required by
law, disseminated to the stockholders of NEON and Globix. The Registration
Statement will comply (with respect to NEON) as to form in all material respects
with the provisions of the Securities Act, and the Proxy Statement will comply
(with respect to NEON) as to form in all material respects with the provisions
of the Exchange Act. Notwithstanding the foregoing provisions of this Section
3.1(g), no representation or warranty is made by NEON with respect to statements
made or incorporated by reference in the Proxy Statement or the Registration
Statement based on information supplied in writing by Globix or Merger Sub for
inclusion or incorporation by reference therein. For purposes of the foregoing,
it is understood and agreed that information concerning or related to NEON and
the NEON Stockholders Meeting will be deemed to have been supplied by NEON and
information concerning or related to Globix and Merger Sub and the Globix
Stockholders Meeting (if applicable) shall have been supplied by Globix.
(h) ASSETS. Except as set forth in Section 3.1(h) of the NEON
Disclosure Schedule, NEON has good and valid title or a valid leasehold interest
in, free and clear of all Liens other than Permitted Liens, to (i) all of its
assets and properties as reflected on the Audited Balance Sheet, except for
assets and properties disposed of in the ordinary course of business, or as
permitted by Section 4.1, since the date of the Audited Balance Sheet, and (ii)
all of NEON's other assets, real property, interests in real property, rights,
franchises, licenses and properties, tangible or intangible, real or personal,
wherever located which are material to the conduct of its business, other than
property that is leased or licensed, with respect to which NEON or any of its
Subsidiaries has valid and enforceable leases or licenses under which there
exists no default, event of default or event which, with notice or lapse of time
or both, would constitute a default, except for such defaults which have not had
or are not reasonably likely to have, either individually or in the aggregate, a
NEON Material Adverse Effect.
(i) VOTE REQUIRED. The affirmative vote of the holders of (i) a
majority of the outstanding shares of NEON Common Stock and NEON Convertible
Preferred Stock entitled to vote and voting as a single class on the Merger,
(ii) a majority of the outstanding shares of NEON Common Stock and NEON
Convertible Preferred Stock entitled to vote and voting as a single class and a
majority of the outstanding shares of NEON Common Stock entitled to vote and
voting as a separate class on the amendment to the Certificate of Incorporation
of NEON and (iii) two-thirds of the outstanding shares of the NEON Convertible
Preferred Stock voting as a separate class on the amendment of the Certificate
of Designation of the NEON Convertible Preferred Stock (collectively, the "NEON
REQUIRED VOTE") are the only votes of the holders of any class or series of NEON
capital stock necessary to approve the Merger and the other transactions
contemplated hereby, including the amendments to NEON's charter contemplated
hereby.
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(j) OPINION OF FINANCIAL ADVISOR. NEON has received the opinion of
Xxxxx, Xxxxxxxx & Xxxx, Inc. (the "NEON FINANCIAL ADVISOR"), dated the date of
this Agreement, to the effect that, as of such date, the Exchange Ratio is fair,
from a financial point of view, to the holders of NEON Common Stock (as
stockholders of NEON).
(k) RELATED PARTY TRANSACTIONS.
(i) For purposes of this Section 3.1(k), the term "NEON
AFFILIATED PERSON" means (A) any holder of 5% or more of NEON Common
Stock or NEON Convertible Preferred Stock, (B) any director, officer
or senior executive of NEON or any Subsidiary, (C) any Person, firm or
corporation that directly or indirectly controls, is controlled by, or
is under common control with, NEON or any Subsidiary, or (D) any
member of the immediate family of any of such persons.
(ii) Except as set forth in Section 3.1(k)(ii) of the NEON
Disclosure Schedule, since December 31, 2003, NEON and its
Subsidiaries have not, in the ordinary course of business or
otherwise, (A) purchased, leased or otherwise acquired any material
property or assets or obtained any material services from, (B) sold,
leased or otherwise disposed of any material property or assets or
provided any material services to (except with respect to remuneration
for services rendered in the ordinary course of business as director,
officer or employee of NEON or any Subsidiary), (C) entered into or
modified in any manner any contract with, or (D) borrowed any money
from, or made or forgiven any loan or other advance (other than
expenses or similar advances made in the ordinary course of business)
to, any NEON Affiliated Person.
(iii) Except as set forth in Section 3.1(k)(iii) of the NEON
Disclosure Schedule, since December 31, 2003, (A) the contracts of
NEON and its Subsidiaries do not include any material obligation or
commitment between NEON or any Subsidiary and any NEON Affiliated
Person, (B) the assets of NEON or any Subsidiary do not include any
receivable or other obligation or commitment from an NEON Affiliated
Person to NEON or any Subsidiary, and (C) the liabilities of NEON and
its Subsidiaries do not include any payable or other obligation or
commitment from NEON or any Subsidiary to any NEON Affiliated Person.
(iv) Section 3.1(k)(iv) of the NEON Disclosure Schedule sets
forth a complete and accurate list of each Contract to which NEON or
any of its Subsidiaries is a party or bound with any NEON Affiliated
Person (other than any Subsidiary which is a direct or indirect wholly
owned Subsidiary of NEON). Section 3.1(k)(iv) of the NEON Disclosure
Schedule sets forth a complete and accurate description of all
transactions with any NEON Affiliated Person or any of its
Subsidiaries or any transaction that would be subject to proxy
statement disclosure pursuant to Item 404 of Regulation S-K to which
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NEON or any of its Subsidiaries is a party or bound. Complete and
accurate copies of all the agreements, contracts and arrangements set
forth in Section 3.1(k)(iv) of the NEON Disclosure Schedule have been
made available to Globix.
(l) LITIGATION. Except as disclosed in writing to Globix, there are no
Claims pending or, to the Knowledge of NEON, threatened against NEON or any of
its Subsidiaries, or any properties or rights of NEON or any of its
Subsidiaries, before any Governmental Entity, nor is there any judgment, decree,
injunction, ruling or order of any Governmental Entity or arbitrator outstanding
specifically against NEON or any of its Subsidiaries, except for any of the
foregoing as could not, individually or in the aggregate, reasonably be expected
to have a NEON Material Adverse Effect. To the Knowledge of NEON, there has not
been any investigation of NEON or any of its Subsidiaries conducted by any
Governmental Entity during the two years prior to the date hereof which was
concluded and resulted in a significant adverse effect on the ability of NEON
and its Subsidiaries to conduct their respective businesses.
(m) COMPLIANCE WITH LAWS; PERMITS.
(i) Since the NEON Confirmation Effective Date, except as
disclosed to Globix in a certificate, NEON and each of its
Subsidiaries has complied with, is not in violation of, and has not
received any notice alleging any violation with respect to, any
applicable provisions of any statute, law or regulation with respect
to the conduct of its business, the employment of any current or
former employees, or the ownership or operation of its properties or
assets, except for failures to comply or violations that, individually
or in the aggregate, have not had, and are not reasonably likely to
have, a NEON Material Adverse Effect.
(ii) Except as set forth in Section 3.1(m)(ii) of the NEON
Disclosure Schedule, NEON and each of its Subsidiaries have all
permits, licenses and franchises from Governmental Entities required
to conduct their businesses as now being conducted or as presently
contemplated to be conducted (the "NEON Permits"), except for such
permits, licenses and franchises the absence of which, individually or
in the aggregate, has not had, and is not reasonably likely to have, a
NEON Material Adverse Effect. NEON and each of its Subsidiaries are in
compliance with the terms of the NEON Permits, except for such
failures to comply that, individually or in the aggregate, have not
had, and are not reasonably likely to have, a NEON Material Adverse
Effect. Except as set forth in Section 3.1(m)(ii) of the NEON
Disclosure Schedule, all NEON Permits are in full force and effect,
and no NEON Permit shall cease to be effective as a result of the
consummation of the transactions contemplated by this Agreement. NEON
and its Subsidiaries have not received any notice of any material
default under or material violation of, any such NEON Permit.
(n) ACCOUNTS RECEIVABLE; WARRANTIES.
(i) Except as set forth in Section 3.1(n)(i) of the NEON
Disclosure Schedule, all accounts receivable of NEON, whether
reflected in the Interim Balance Sheet or otherwise, represent sales
actually made in the ordinary course of business, have been reflected
properly in its books and records in accordance with GAAP and are not
subject to any material contractual setoffs or counterclaims.
-17-
(ii) Except as set forth in Section 3.1(n)(ii) of the NEON
Disclosure Schedule, no product or service manufactured, sold, leased,
licensed, delivered or otherwise provided by NEON or any of its
Subsidiaries is subject to any guaranty or warranty.
(o) CUSTOMERS AND SUPPLIERS. As of the date of this Agreement, except
as set forth in Section 3.1(o) of the NEON Disclosure Schedule, (i) no material
customer of NEON or any of its Subsidiaries has indicated to NEON or any of its
Subsidiaries that it will stop, or decrease the rate of, buying products or
services from NEON or any of its Subsidiaries, and (ii) no material supplier or
exclusive supplier of NEON or any of its Subsidiaries has indicated to NEON or
any of its Subsidiaries that it will stop, or decrease the rate of, supplying
materials, products or services to them.
(p) CERTAIN BUSINESS PRACTICES. Neither NEON nor any Subsidiary has
(i) used any funds for unlawful contributions, gifts, entertainment or other
unlawful payments related to a political activity, (ii) made any unlawful
payment to any foreign or domestic government official or employee or to any
foreign or domestic political party or campaign or violated any provision of the
Foreign Corrupt Practices Act of 1977, as amended, or (iii) consummated any
transaction or made any payment or entered into any agreement or arrangement or
taken any other action in violation of Section 1128B(b) of the Social Security
Act, as amended.
(q) TAXES.
(i) Except as set forth in Section 3.1(q)(i) of the NEON
Disclosure Schedule or to the extent otherwise not material, as to
amount or otherwise, individually or in the aggregate, including all
matters subject to the representations in this Section 3.1(q)(i):
(A) NEON and its Subsidiaries have timely filed or,
if not yet due, will timely file all Tax Returns required to be filed
by them on or before the Closing Date and all such Tax Returns are or,
in the case of Tax Returns not yet filed, will be, true, correct and
complete in all material respects and NEON and its Subsidiaries have
paid when due all Taxes reported thereon or, in the case of Taxes not
yet due, will pay such Taxes when due.
(B) NEON and its Subsidiaries have paid or have
established on the most recent financial statements required to be
provided to Globix hereunder, in accordance with GAAP, adequate
accruals for the payment of all Taxes (whether or not shown on a Tax
Return), including contingent Tax liabilities, with respect to all
Taxable periods ending on or before the Closing Date and all Taxable
periods starting before and ending after the Closing Date, but only to
the extent attributable to the portion of such periods up to and
including the Closing Date and, in each case, only to the extent
properly accrued as of the date of such most recent financial
statements required to be provided to Globix hereunder.
(C) NEON has made or will make available to Globix
signed copies of all Tax Returns filed by NEON and its Subsidiaries
relating to the four (4) most recent Taxable years ending on or before
the Closing Date.
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(D) No extension of time has been requested or
granted for NEON or any of its Subsidiaries to file any Tax Return
that has not yet been filed or to pay any Tax that has not yet been
paid and NEON and its Subsidiaries have not granted a power of
attorney that remains outstanding with regard to any Tax matter.
(E) There is no pending or, to the Knowledge of NEON,
threatened examination, investigation, audit, suit, action, claim or
proceeding relating to Taxes (a "TAX AUDIT") of NEON or any of its
Subsidiaries.
(F) Globix has received copies of all material audit
reports and correspondence between NEON or its Subsidiaries and any
Tax Authority issued or made during the last three (3) years and a
complete summary of all oral communications between NEON or its
Subsidiaries and any Tax Authority relating to any Tax Audits of NEON
or its Subsidiaries during such years, including without limitation
any Tax Audit that is in progress or for which a still effective
extension of the statute of limitations was granted.
(G) Neither NEON nor any of its Subsidiaries has
within the last four (4) years received notice of a determination by a
Tax Authority that Taxes are owed by NEON or any of its Subsidiaries
(such determination to be referred to as a "TAX DEFICIENCY") and, to
the Knowledge of NEON, no Tax Deficiency is proposed or threatened.
(H) All Tax Deficiencies have been paid or finally
settled and all amounts determined by settlement to be owed have been
paid.
(I) There are no Liens, other than Permitted Liens,
arising from or related to Taxes on or pending against NEON, its
Subsidiaries or any of their properties.
(J) There are no presently outstanding waivers or
extensions or requests for waiver or extension of the time within
which a Tax Deficiency may be asserted or assessed.
(K) No issue has been raised in any Tax Audit which,
by application of similar principles to any past, present or future
period, would result in an adjustment to the amounts reported in a
subsequent period.
(L) NEON has not changed any Tax accounting method
during any of the seven (7) most recent Taxable years ending on or
before the Closing Date. NEON and its Subsidiaries have not taken any
action, whether or not required, that has resulted or will result in
deferring a liability for Taxes of NEON or its Subsidiaries from any
taxable period ending on or before the Closing Date to any taxable
period ending after such date, unless such action is in accordance
with past practice.
(M) Neither NEON nor its Subsidiaries has ever been
required to include in income any adjustment pursuant to section 481
of the Code and no Tax Authority has ever made or proposed any such
adjustment. Neither NEON nor its Subsidiaries has entered into a
closing agreement, as described in section 7121 of the Code, or an
advance pricing agreement or other agreement with a taxing authority
relating to Taxes.
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(N) Neither NEON nor its Subsidiaries owns any
property that is tax-exempt use property within the meaning of section
168(h) of the Code, that is described in section 168(f)(8) of the Code
as in effect prior to its amendment by the Tax Reform Act of 1986,
that is tax-exempt bond financed property within the meaning of
Section 168(g) of the Code or that is "limited use property" within
the meaning of Rev. Proc. 76-30.
(O) Neither NEON nor its Subsidiaries is a party to
any arrangement to which sections 162(m) or 280G of the Code could
under any circumstances apply.
(P) Neither NEON nor its Subsidiaries has filed a
consent pursuant to section 341(f) of the Code or agreed to have
section 341(f)(2) apply to the disposition of any asset.
(Q) Neither NEON nor its Subsidiaries has
participated in or cooperated with any international boycott within
the meaning of section 999 of the Code.
(R) Neither NEON nor its Subsidiaries is now or has
ever been (a) an includable member of an "affiliated group" within the
meaning of section 1504(a) of the Code other than an affiliated group
consisting only of NEON and one or more of its current Subsidiaries or
otherwise liable for the Taxes of a person other than NEON pursuant to
Treasury Regulation section 1.1502-6 or any similar provision of
state, local or foreign law, whether or not as a transferee, a
successor, by operation of law, by contract or otherwise, (b) a member
of any consolidated, combined or unitary Tax Return filing group other
than a group consisting only of NEON and one or more of its current
Subsidiaries, (c) a party to any Tax sharing agreement, Tax indemnity
agreement or similar agreement, arrangement or practice with respect
to Taxes, including an agreement that obligates it to make any payment
computed by reference to the Taxes, Taxable income or Tax losses of
any other individual or entity, (d) a personal holding company as
defined in section 542 of the Code, (e) the owner of an interest in an
entity that is or is treated as a Tax partnership, trust, regulated
investment company as defined in section 851 of the Code, real estate
investment trust as defined in section 856 of the Code or foreign
personal holding company as defined in section 552(a) of the Code, (f)
a United States shareholder as defined in section 951(b) of the Code
of a controlled foreign corporation as defined in section 957 of the
Code, (g) a United States real property holding company within the
meaning of section 897(c)(2) of the Code or (h) a shareholder of a
passive foreign investment company, as defined in section 1297 of the
Code.
(S) NEON has not entered into a gain recognition or
other agreement requiring it to take into account Taxable income or to
incur a Tax liability that it would not have had to take into account
or would not have had to incur but for such agreement.
-20-
(T) NEON has disclosed on its federal, state, local
and foreign income Tax Returns all positions taken therein that could
give rise to a penalty under section 6662 of the Code or any
corresponding provision of state, local or foreign Tax law.
(U) NEON and its Subsidiaries have never
participated, directly or indirectly, in a transaction which is
described in Treasury Regulation sections 1.6011-4(b)(2) or
1.6011-4(b)(3) nor have they ever held "an interest" in a "tax
shelter," as those terms are defined in Treasury Regulation section
301.6112-1.
(V) NEON has no deferred intercompany gains or losses
that have not been fully taken into income for income Tax purposes and
there is no excess loss account with respect to stock of any of its
Subsidiaries.
(W) No unresolved claim and to the Knowledge of NEON,
no claim has ever been made by a Tax Authority in a jurisdiction in
which NEON does not pay Taxes or file Tax Returns that such entity is
or may be subject to Tax in such jurisdiction.
(X) NEON and its Subsidiaries have never requested a
private ruling from a Tax Authority on any matter.
(Y) Neither NEON nor its Subsidiaries has been a
"distributing corporation" or a "controlled corporation" in connection
with a distribution described in Section 355 of the Code.
(Z) Neither NEON nor its Subsidiaries nor, to the
Knowledge of NEON, any NEON Affiliated Person has taken any action or
failed to take any action that would cause the Merger to fail to
qualify as a tax-free reorganization under Section 368(a) of the Code,
and no facts exist that would cause the Merger to fail to so qualify.
(AA) The net operating losses, alternative minimum
tax net operating losses, net capital losses, alternative minimum tax
net capital losses, Tax credits, alternative minimum tax credits and
other Tax attributes of NEON and its subsidiaries are not subject to
any consolidated return limitation, limitation under section 382 of
the Code or any other limitation on their use, allowance or
availability.
(BB) NEON has retained all supporting and backup
papers, receipts, spreadsheets and other information necessary for the
preparation of all Tax Returns that have not yet been filed and the
defense of Tax Audits involving all Taxable periods either (I) ended
on or during the six (6) years prior to the Closing Date or (II) from
which there are unutilized net operating loss, capital loss or
investment tax credit carryovers.
(CC) NEON has collected and remitted to the
appropriate Tax Authorities all sales and use and similar Taxes
required to have been collected and remitted on or prior to the
Closing Date and has been furnished, and if required has filed,
properly completed exemption certificates for all exempt transactions.
NEON has maintained and has in its possession all records, supporting
documents and exemption and resale certificates required by applicable
sales Tax statutes and regulations to be retained in connection with
the collection and remittance of sales and use and similar Taxes for
all periods up to and including the Closing Date.
-21-
Each reference to a provision in this Section 3.1(q) shall be treated
for state, local and foreign Tax purposes as a reference to analogous
or similar provisions of state and local law.
(r) EMPLOYEE BENEFITS; EMPLOYEES.
(i) Section 3.1(r)(i) of the NEON Disclosure Schedule sets
forth a list of each "employee benefit plan" (within the meaning of
Section 3(3) of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA")), severance, change in control or employment
plan, program or agreement, and vacation, incentive, bonus, stock
option, stock purchase, stock loan, and restricted stock plan, program
or policy to which NEON is a party or that is sponsored or maintained
by NEON, any of its Subsidiaries, any of their affiliates and any
trade or business (whether or not incorporated) which is or has ever
been under common control, or which is or has ever been treated as a
single employer, with any of them under Section 4.14(b), (c), (m) or
(o) of the Code ("ERISA AFFILIATE"), in which present or former
employees of NEON or any of its Subsidiaries or ERISA Affiliates
("NEON EMPLOYEES") participate (collectively, the "NEON PLANS"). All
NEON Plans set forth on Section 3.1(r)(i) of the NEON Disclosure
Schedule, if any, that would result in the payment to any NEON
Employee of any money or other property or accelerate or provide any
other rights or benefits thereto as a result of the transactions
contemplated by this Agreement, whether or not such payment or
acceleration would constitute a parachute payment within the meaning
of Section 280G of the Code, are so indicated by an asterisk. The NEON
Plans are in compliance in all material respects with all applicable
requirements of ERISA, the Code, and other applicable Laws and have
been administered in all material respects in accordance with their
terms and such Laws, and there has been no material violation of any
reporting or disclosure requirement imposed by ERISA or the Code. Each
NEON Plan which is intended to be qualified within the meaning of
Section 401 of the Code has received a Favorable Letter (as such term
is defined in Rev. Proc. 2003-44 Section 5.01(4)) as to its
qualification, and nothing has occurred that could reasonably be
expected to cause the loss of such qualification or the loss of the
tax-exempt status for any trust maintained with respect to any such
NEON Plan.
(ii) Except as set forth in Section 3.1(r)(ii) of the NEON
Disclosure Schedule, neither NEON nor Globix shall, at or after the
Effective Time, have any liability with respect to any change in
control, "continuity" or severance agreement, plan, program or policy
with or with respect to any NEON Employee. In accordance with
applicable law, each NEON Plan can be amended or terminated at any
time, without consent from any other party and without liability other
than for notice obligations with respect to amendment or termination,
if any, and benefits accrued as of the date of such amendment or
termination. NEON and its ERISA Affiliates have made full and timely
payment of all material amounts required to be contributed or paid as
expenses under the terms of each NEON Plan and applicable law.
-22-
(iii) No NEON Plan is subject to Title IV of ERISA
(including any "multiemployer plan" (as defined in Section 4001(a)(3)
of ERISA)), and neither NEON nor any of its ERISA Affiliates has ever
contributed or been obligated to contribute to any pension plan
subject to Title IV of ERISA (including any multiemployer plan), nor
could NEON or any ERISA Affiliate have any liability under Title IV of
ERISA.
(iv) No event or condition has occurred in connection with
which NEON or any of its ERISA Affiliates would be subject to any
liability, encumbrance or Lien with respect to any NEON Plan under
ERISA, the Code or any other applicable Law or under any agreement or
arrangement pursuant to or under which NEON or any of its ERISA
Affiliates are required to indemnify any person against such
liability.
(v) True, correct and complete copies of the following
documents with respect to each of the NEON Plans have been made
available to Globix by NEON, to the extent applicable: (A) any plans
or agreements, all amendments thereto and related trust documents, and
amendments thereto; (B) the three most recent Forms 5500 and all
schedules thereto and the most recent actuarial report, if any; (C)
the most recent IRS determination letter; and (D) any summary plan
descriptions or other employee communications.
(vi) With respect to any NEON Plan, no actions, suits or
claims (other than routine claims for benefits in the ordinary course)
are pending or, to the Knowledge of NEON, threatened.
(vii) Except as set forth in Section 3.1(r)(vii) of the NEON
Disclosure Schedule, none of the NEON Plans provide for
post-employment life or health insurance, benefits or coverage for any
participant or any beneficiary of a participant, except as may be
required under the Consolidated Omnibus Budget Reconciliation Act of
1985, as amended ("COBRA") and any such participation is at the
expense of the participant or the participant's beneficiary.
(viii) Except as set forth in Section 3.1(r)(viii) of the
NEON Disclosure Schedule, neither NEON, nor, to the Knowledge of NEON,
any other fiduciary or party-in-interest of any NEON Plan, has
participated in, engaged in or been a party to any transaction that is
prohibited under Section 4975 of the Code or Section 406 of ERISA and
not exempt under Section 4975 of the Code or Section 408 of ERISA,
respectively. With respect to any NEON Plan, (A) neither NEON nor any
of its ERISA Affiliates has had asserted against it any claim for
taxes under Chapter 43 of Subtitle D of the Code and Section 5000 of
the Code, or for penalties under ERISA Section 502(c), 502 (i) or 502
(l), nor, to the Knowledge of NEON, is there a basis for any such
claim, and (B) no officer, director or employee of NEON or any ERISA
Affiliate has committed a breach of any fiduciary responsibility or
obligation imposed by Title I of ERISA.
(ix) Except as set forth in Section 3.1(r)(ix) of the NEON
Disclosure Schedule, there will be no payment, accrual of additional
benefits, acceleration of payments or vesting of any benefit under any
NEON Plan or any other agreement or arrangement to which NEON or any
of its Subsidiaries is a party, and no employee, officer or director
of NEON or its Subsidiaries will become entitled to severance,
termination allowance or similar payments, solely by reason of
entering into or in connection with the transactions contemplated by
this Agreement.
-23-
(x) Except as set forth in Section 3.1(r)(x) of the NEON
Disclosure Schedule, no NEON Plan is subject to the laws of any
country other than the United States.
(xi) None of the NEON Employees is represented in his or her
capacity as an employee of NEON or any of its Subsidiaries by any
labor organization, nor has NEON or any of its Subsidiaries recognized
any labor organization nor has any labor organization been elected as
the collective bargaining agent of any such employees. To the
Knowledge of NEON, there is no union organization activity involving
any of the NEON Employees, pending or threatened in writing, nor has
there been any union representation involving such employees within
the past two years. To the Knowledge of NEON, except as set forth in
Section 3.1(r)(xi) of the NEON Disclosure Schedule, there are no
complaints, charges or claims against NEON or any of its Subsidiaries
pending or, threatened in writing, by or before any Governmental
Entity based on, arising out of, in connection with, or otherwise
relating to the employment or termination of employment or failure to
employ by NEON or any of its Subsidiaries, of any individual. NEON and
its Subsidiaries are in compliance in all material respects with all
laws, regulations and orders relating to the employment of labor,
including all such laws, regulations and orders relating to wages,
hours, the Worker Adjustment and Retraining Notification Act ("WARN")
and any similar state or local "mass layoff' or "plant ---- closing"
law, collective bargaining, discrimination, civil rights, safety and
health, workers' compensation and the collection and payment of
withholding and/or social security taxes and any similar tax. There
has been no "mass layoff" or "plant closing" as defined by WARN with
respect to NEON or any of its Subsidiaries in the 90 day period
immediately prior to the date hereof.
(xii) No more than fifteen (15) "leased employees," as that
term is defined in Section 414(n) of the Code or any other person who
is not classified as a common law employee of NEON, perform services
for NEON or any ERISA Affiliate. No person who is not classified by
NEON as a common law employee is eligible to participate in, nor does
such person participate in, any NEON Plan and no retroactive
participation in any NEON Plan would result due to reclassification of
such an individual as a common law employee of NEON.
(xiii) To the Knowledge of NEON, no employee of NEON or any
Subsidiary of NEON is in material breach as of the date of this
Agreement of any term of any employment contract, inventions
disclosure agreement, confidentiality agreement, non-competition
agreement, or any restrictive covenant to a former employer relating
to the right of any such employee to be employed by NEON or any
Subsidiary of NEON because of the nature of the business conducted or
presently proposed to be conducted by NEON or any Subsidiary of NEON
or relating to the use of trade secrets or proprietary information of
others.
-24-
(s) ENVIRONMENTAL MATTERS. Except as set forth in Section 3.1(s) of
the NEON Disclosure Schedules, (i) NEON, its Subsidiaries, and their activities
and operations are in compliance in all material respects with applicable local,
state or federal environmental statute, regulation, requirement, ordinance,
decree, judgment or order relating to pollution or protection of the environment
and human health or safety, including the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as amended and in effect (collectively,
the "ENVIRONMENTAL LAWS"); (ii) to the Knowledge of NEON, there are no legal,
administrative, arbitral or other proceedings, claims, actions, causes of
action, private environmental investigations or remediation activities or
governmental investigations of any nature with respect to any Environmental Laws
(collectively, "ENVIRONMENTAL CLAIMS") pending or, to the Knowledge of NEON,
threatened against NEON or its Subsidiaries; (iii) to the Knowledge of NEON,
there are no conditions or circumstances that reasonably could be expected to
result in the imposition on NEON or any of its Subsidiaries of, any material
liability or obligation under Environmental Laws; and (iv) to the Knowledge of
NEON, there has not been any release, discharge or disposal of any hazardous or
toxic materials or wastes at, on or under the facilities owned or leased by NEON
or its Subsidiaries that require notification, investigation or remediation by
NEON or its Subsidiaries pursuant to, or that are reasonably anticipated to give
rise to material liabilities or costs to NEON or its Subsidiaries under,
applicable Environmental Laws.
(t) PROPERTIES.
(i) Section 3.1(t)(i) of the NEON Disclosure Schedule sets
forth a complete and accurate list of all real property that either
NEON or any of its Subsidiaries owns.
(ii) Section 3.1(t)(ii) of the NEON Disclosure Schedule sets
forth a complete and accurate list all real property leased, subleased
or licensed by NEON or any of its Subsidiaries, except for easements,
rights of way and regeneration facilities and, with respect to
licensed real property, any such agreements with respect to (A)
Collocation Sites and (B) central office sites under tariff (the
"LEASED REAL PROPERTY"). Except as set forth in Section 3.1(t)(ii) of
the NEON Disclosure Schedule and except for any exceptions to the
following as could not, individually or in the aggregate, reasonably
be expected to have a NEON Material Adverse Effect: (i) each of NEON
and its Subsidiaries has valid leasehold interests in the Leased Real
Property (as landlord or as tenant) by or from it, free and clear of
all Liens other than Permitted Liens (as defined in Section 9.11);
(ii) all leases pursuant to which NEON or any of its Subsidiaries
leases (as landlord or as tenant) any Leased Real Property are in full
force and effect and grant in all respects the leasehold estates or
rights of occupancy or use they purport to grant; and (iii) NEON and
its Subsidiaries have not received any written notice of any default
either on the part of NEON or any of its Subsidiaries under any such
lease and, to the Knowledge of NEON, no event has occurred which, with
notice or the lapse of time, or both, would constitute a default on
the part of NEON or any of its Subsidiaries under any of such leases.
(u) AGREEMENTS, CONTRACTS AND COMMITMENTS.
(i) NEON has made available to Globix a complete and
accurate list of all Contracts that are material to the business,
assets, liabilities, capitalization, condition (financial or
otherwise) or results of operations of NEON and its Subsidiaries,
taken as a whole (collectively, the "NEON MATERIAL Contracts"). For
purposes of this section, materiality is defined as any Contract that
requires or is reasonably anticipated to involve aggregate payments to
or from NEON or its Subsidiaries in excess of $500,000 in any one
year. NEON has made available to Globix a complete and accurate copy
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of each NEON Material Contract (excluding individual orders related
thereto). As of the date of this Agreement, except as set forth in
Section 3.1(u)(i) of the NEON Disclosure Schedule, each NEON Material
Contract is in full force and effect. Except as set forth on Section
3.1(u)(i) of the NEON Disclosure Schedule, neither NEON nor any of its
Subsidiaries is in material default under (x) any Contract to which it
is a party or by which it or any of its properties or assets is bound,
which violations or defaults would, individually or in the aggregate,
have, or are reasonably likely to have, a NEON Material Adverse
Effect, or (y) any NEON Material Contract.
(ii) Except as set forth on Section 3.1(u)(ii) of the NEON
Disclosure Schedule, there is no non-competition or other similar
agreement, commitment, judgment, injunction or order, or any agreement
materially restricting the right to sell services, to which NEON or
any of its Subsidiaries is a party or is subject that has or could
reasonably be expected to have the effect of prohibiting or impairing
in any material respect the conduct of the business of NEON or any of
its Subsidiaries as currently conducted and as proposed to be
conducted.
(iii) Neither NEON nor any of its Subsidiaries is or has
been suspended or debarred from bidding on contracts or subcontracts
with any Governmental Entity; no such suspension or debarment has been
initiated or, to the Knowledge of NEON, threatened; and the
consummation of the transactions by NEON contemplated by this
Agreement will not result in any such suspension or debarment that,
individually or in the aggregate, is reasonably likely to have a NEON
Material Adverse Effect. To the Knowledge of NEON, there is no valid
basis for (a) the suspension or debarment of NEON or any of its
Subsidiaries from bidding on contracts or subcontracts with any
Governmental Entity or (b) any claim pursuant to an audit or
investigation by any of the entities named in the foregoing sentence
that, individually or in the aggregate, is reasonably likely to have a
NEON Material Adverse Effect. To the Knowledge of NEON, neither NEON
nor any of its Subsidiaries has any Contracts which require it to
obtain or maintain a security clearance with any Governmental Entity.
(v) BROKERS OR FINDERS. No agent, broker, investment banker, financial
advisor or other firm or Person is or will be entitled to any broker's or
finder's fee or any other similar commission or fee in connection with any of
the transactions contemplated by this Agreement based upon arrangements made by
or on behalf of NEON, except the NEON Financial Advisor, whose fees and expenses
will be paid by NEON in accordance with NEON's agreement with such firm, based
upon arrangements made by or on behalf of NEON and previously disclosed to
Globix.
(w) INSURANCE. NEON has made available to Globix a summary of all
material fire and casualty, general liability, business interruption, and
sprinkler and water damage insurance policies maintained by NEON or any of its
Subsidiaries. NEON and each of its Subsidiaries have made any and all payments
required to maintain such policies in full force and effect. Neither NEON nor
any of its Subsidiaries has received written notice of default under any such
policy, and has not received written notice of any pending or threatened
termination or cancellation, coverage limitation or reduction with respect to
such policy.
(x) INTELLECTUAL PROPERTY.
(i) Except as disclosed in writing to Globix, NEON and its
Subsidiaries own, or otherwise possess licenses or other valid rights
to use all Intellectual Property used to conduct the business of NEON
and its Subsidiaries as currently conducted or contemplated to be
conducted (in each case excluding generally commercially available,
off-the-shelf software programs licensed pursuant to shrinkwrap or
"click-and-accept" licenses).
-26-
(ii) Except as would not have a NEON Material Adverse
Effect, the execution and delivery of this Agreement and consummation
of the Merger will not result in the breach of, or create on behalf of
any third party the right to terminate or modify, (A) any license,
sublicense or other agreement relating to any Intellectual Property
owned by NEON (the "NEON INTELLECTUAL PROPERTY") or (B) any license,
sublicense and other agreement as to which NEON or any of its
Subsidiaries is a party and pursuant to which NEON or any of its
Subsidiaries is authorized to use any third party Intellectual
Property (the "THIRD PARTY INTELLECTUAL PROPERTY"). NEON has delivered
to Globix a certificate certifying a complete and accurate list of the
NEON Intellectual Property (other than unregistered copyrights, trade
secrets and confidential information) and NEON has made available to
Globix a complete and accurate list of all Third Party Intellectual
Property.
(iii) Except as disclosed in writing to Globix, to the
Knowledge of NEON, as of the date of this Agreement, (A) no person is
challenging, infringing on, misappropriating or otherwise violating
any material right of NEON or any of its Subsidiaries with respect to
any Intellectual Property owned by and/or licensed to NEON or its
Subsidiaries, (B) the use of any Intellectual Property by NEON and its
Subsidiaries does not infringe on, constitute a misappropriation of,
or otherwise violate the rights of any person and is in accordance
with any applicable license pursuant to which NEON or any of its
Subsidiaries acquired the right to use any Intellectual Property, and
(C) neither NEON nor any of its Subsidiaries has received any written
notice of any assertion or claim of infringement, pending or not, with
respect to any Intellectual Property used by NEON or its Subsidiaries.
(iv) Except as disclosed in writing to Globix, all patents,
trademarks, service marks and copyrights, and registrations and
applications therefor, which are held by NEON or any of its
Subsidiaries are valid and subsisting. NEON and its Subsidiaries have
taken reasonable measures to protect the proprietary nature of the
NEON Intellectual Property.
(v) No Intellectual Property owned or licensed by NEON or
its Subsidiaries is being used or enforced in a manner that would
result in the abandonment, cancellation or unenforceability of such
Intellectual Property.
(vi) Sections 3.1(h), 3.1(t) and 3.1(u) shall not apply to
the NEON Intellectual Property and this Section 3.1(x) shall prevail
in the event of any conflict between this Section 3.1(x) on the one
hand and Sections 3.1(h), 3.1(t) and 3.1(u) on the other hand.
Section 3.2 REPRESENTATIONS AND WARRANTIES OF GLOBIX. Except as set
forth in the Globix Disclosure Schedule delivered by Globix to NEON in
connection with the execution of this Agreement (the "GLOBIX DISCLOSURE
SCHEDULE") (each Section of which qualifies the correspondingly numbered
representation and warranty or covenant to the extent specified therein), Globix
represents and warrants to NEON as follows:
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(a) ORGANIZATION, STANDING AND POWER.
(i) Each of Globix and its Subsidiaries (i) is a corporation
or other entity duly incorporated or organized, validly existing and
in good standing under the laws of its state of incorporation or
organization, (ii) has all requisite power and authority to own, lease
and operate its properties and to carry on its business as now being
conducted, and (iii) as set forth in Section 3.2(a)(i) of the Globix
Disclosure Schedule, is duly qualified and in good standing to do
business in each jurisdiction in which the nature of its business or
the ownership or leasing of its properties makes such qualification
necessary, except in the case of clause (iii) for such failures as
could not, individually or in the aggregate, reasonably be expected to
have a Globix Material Adverse Effect.
(ii) Section 3.2(a)(ii) of the Globix Disclosure Schedule
sets forth a complete and accurate list of all of Globix's
Subsidiaries and Globix's direct or indirect equity interest therein.
Except as set forth in Section 3.2(a)(ii) of the Globix Disclosure
Schedule, neither Globix, nor any of its Subsidiaries, (A) directly or
indirectly owns any equity, membership, partnership or similar
interest in, or any interest convertible into or exchangeable or
exercisable for any equity, membership, partnership or similar
interest in, any corporation, partnership, joint venture, limited
liability company or other business association or entity, whether
incorporated or unincorporated, or (B) has, since the Globix
Confirmation Effective Date, been a general partner or managing member
of any general partnership, limited partnership, limited liability
company or other entity as to which Globix or any of its Subsidiaries
has any material liability.
(iii) The copies of the charter, articles or certificate of
incorporation and by-laws (or similar governing documents) of Globix
and each of its Subsidiaries which were made available to NEON are
true, complete and correct copies of such documents as in effect on
the date of this Agreement.
(iv) All minute books and stock record books of Globix and
its Subsidiaries have been made available to NEON or its counsel prior
to the execution of this Agreement.
(v) Prior to the Closing Date, Globix shall incorporate
Merger Sub solely for the purpose of engaging in the transactions
contemplated hereby. As of the Closing Date, Merger Sub (A) will be a
corporation duly incorporated, validly existing and in good standing
under the laws of the State of Delaware, (B) will have all requisite
power to take such action as required pursuant to this Agreement, (C)
will have no debt or other liabilities, and will not have engaged in
any business activities or conducted any operations other than in
connection with the transactions contemplated hereby, other than
executing the subsidiary guaranty required pursuant to the Globix
Indenture.
(b) CAPITAL STRUCTURE.
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(i) The authorized capital stock of Globix consists of
500,000,000 shares of Globix Common Stock, and 5,000,000 shares of
preferred stock, par value $.01 per share, all of which shares of
preferred stock are undesignated shares. The rights and privileges of
each class of Globix's capital stock are as set forth in Globix's
certificate of incorporation. As of the date hereof, (A) 16,460,000
shares of Globix Common Stock are issued and outstanding, and (B) no
shares of Globix Common Stock are held in the treasury of Globix or by
any Subsidiaries of Globix. All of the issued and outstanding shares
of Globix Common Stock have been duly authorized, and are validly
issued, fully paid, nonassessable and free of preemptive rights
created by statute, certificate of incorporation or bylaws. None of
the issued and outstanding shares of Globix Common Stock has been
issued in violation of any applicable federal or state law or any
preemptive rights or rights to subscribe for or purchase securities.
The authorized capital stock of Merger Sub shall consist of 1,000
shares of common stock, par value $0.01 per share ("MERGER SUB COMMON
STOCK"). The rights and privileges of each class of Merger Sub's
capital stock shall be set forth in Merger Sub's certificate of
incorporation. As of the Closing Date, (A) 1,000 shares of Merger Sub
Common Stock will be issued and outstanding and held beneficially and
of record by Globix, and (B) no shares of Merger Sub Common Stock will
be held in the treasury of Merger Sub or by any Subsidiaries of Merger
Sub. As of the Closing Date, all of the issued and outstanding shares
of Merger Sub Common Stock will be duly authorized, validly issued,
fully paid, nonassessable and free of preemptive rights created by
statute, certificate of incorporation or bylaws. None of the issued
and outstanding shares of Merger Sub Common Stock will be issued in
violation of any applicable federal or state law or any preemptive
rights or rights to subscribe for or purchase securities.
(ii) Except as set forth in Section 3.2(b)(ii) of the Globix
Disclosure Schedule, there are no voting trusts, proxies or other
agreements or understandings with respect to any Globix Common Stock
to which Globix or, to the Knowledge of Globix, any other Person is a
party or by which it or any such other Person is bound. Section
3.2(b)(ii) of the Globix Disclosure Schedule lists all issued and
outstanding shares of Globix Common Stock that are otherwise subject
to a repurchase or redemption right or right of first refusal in favor
of Globix or any other Person and Globix has delivered to NEON a
certificate certifying (A) the name and address of each record holder
of Globix Common Stock, (B) the number of shares held by each such
stockholder, and (C) any restrictions imposed by Globix on the
transfer of such shares. Except as set forth in Section 3.2(b)(ii) of
the Globix Disclosure Schedule and as contemplated by this Agreement,
there are no registration rights, and there are no rights agreements,
"poison pill" anti-takeover plans or other similar agreement or
restrictive arrangement which Globix or any of its Subsidiaries is a
party or by which it or they are bound with respect to any equity
securities of any class of Globix or any of its Subsidiaries or with
respect to any equity security, partnership interest or similar
ownership interest of any class of any of its Subsidiaries.
(iii) Section 3.2(b)(iii) of the Globix Disclosure Schedule
lists the number of shares of Globix Common Stock reserved for future
issuance pursuant to stock options granted and outstanding as of the
date of this Agreement and the plans or other arrangements under which
such options were granted (collectively, the "GLOBIX STOCK OPTION
PLANS") and Globix has delivered to NEON a certificate with respect to
the outstanding options to purchase shares of Globix Common Stock
(including restricted stock) (the "GLOBIX OPTIONS") under the Globix
Stock Option Plans, certifying with respect to each Globix Option (A)
the number of shares of Globix Common Stock subject to such Globix
Option, (B) the relationship of the holder to Globix, (C) the exercise
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price, (D) the date of grant, (E) the vesting schedule, if any, and
expiration date thereof, and including the extent to which any vesting
has occurred as of the date of this Agreement, and (F) whether (and to
what extent) the vesting of such Globix Option will be accelerated in
any way by the transactions contemplated by this Agreement or by the
termination of employment or engagement or change in position of any
holder thereof following consummation of the Merger. Section
3.2(b)(iii) of the Globix Disclosure Schedule shows the number of
shares of Globix Common Stock reserved for future issuance pursuant to
warrants, convertible securities or other outstanding rights (other
than Globix Options) to purchase, or obligations to otherwise issue,
shares of Globix Common Stock outstanding as of the date of this
Agreement (such outstanding warrants, convertible securities or other
rights, the "GLOBIX CONVERTIBLE SECURITIES"). Globix has delivered to
NEON a certificate certifying with respect to such Globix Convertible
Securities (A) the agreement or document under which such Globix
Convertible Securities were granted, (B) a complete and accurate list
of all holders of Globix Convertible Securities, (C) the number and
type of shares subject to such Globix Convertible Securities, (D) the
exercise price, (E) the date of grant and (F) the expiration date
thereof. Except for Globix Options, neither Globix nor any of its
Subsidiaries has outstanding any stock appreciation rights, phantom
stock, performance based stock awards or similar stock rights or
obligations. Globix has made available to NEON accurate and complete
copies of all Globix Stock Option Plans, the forms of all stock option
agreements evidencing Globix Options and Globix Convertible
Securities.
(iv) The shares of stock of each of Globix's Subsidiaries
held by Globix (directly or indirectly) are the only shares of each
such Subsidiary issued and outstanding, and there are no options,
warrants, equity securities, calls, rights, commitments or agreements
of any character to which any of Subsidiary of Globix is a party or by
which any such Subsidiaries is bound obligating it to issue, exchange,
transfer, deliver or sell, or cause to be issued, exchanged,
transferred, delivered or sold, additional shares of capital stock or
other equity interests of such Subsidiary or any security or rights
convertible into or exchangeable or exercisable for any such shares or
other equity interests, or obligating any Subsidiary to grant, extend,
accelerate the vesting of, otherwise modify or amend or enter into any
such option, warrant, equity security, call, right, commitment or
agreement. All the outstanding shares of capital stock or other
ownership interests of each Subsidiary of Globix have been validly
issued and are fully paid and nonassessable and are owned (of record
and beneficially) by Globix, free and clear of all Liens. Except as
set forth in Section 3.2(b)(iv) of the Globix Disclosure Schedule and
(A) for the capital stock or other ownership interests of its
Subsidiaries, (B) as acquired in the ordinary course of business
pursuant to foreclosure, workout, settlement, bankruptcy arrangements
or similar transactions, and (C) for security interests held in the
ordinary course of business, neither Globix nor any of its
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Subsidiaries directly or indirectly owns any equity, membership,
partnership or similar interest in, or any interest convertible into
or exchangeable or exercisable for any equity, membership, partnership
or similar interest in, any corporation, partnership, joint venture,
limited liability company or other business association or entity,
whether incorporated or unincorporated that is material to the
business of Globix and its Subsidiaries, taken as a whole. Except as
set forth in Section 3.2(b)(iv) of the Globix Disclosure Schedule, no
action is required to be taken by Globix, its Board of Directors or
any trustee under any Globix Stock Option Plans or the stockholders of
Globix to effect the treatment of NEON Options described in Section
1.9 hereof.
(v) Except as set forth in Section 3.2(b)(v) of the Globix
Disclosure Schedule, Globix has never declared, nor is there accrued,
any dividend or other distribution with respect to any Globix Common
Stock.
(vi) All of the shares of Globix Common Stock issuable at
the Effective Time in accordance with this Agreement will be, when so
issued, duly authorized, validly issued, fully paid and nonassessable
and free of preemptive rights created by statute, Globix's certificate
of incorporation or bylaws and will, when issued, be registered for
sale under the Securities Act, registered under the Exchange Act and
registered or exempt from registration under applicable state
securities laws. All of the shares of Globix Preferred Stock issuable
in exchange for NEON Convertible Preferred Stock at the Effective Time
in accordance with this Agreement, will be, when so issued, duly
authorized, validly issued, fully paid and nonassessable and free of
preemptive rights created by statute, Globix's certificate of
incorporation or bylaws and will, when issued, be registered for sale
under the Securities Act and registered or exempt from registration
under applicable state securities laws.
(c) AUTHORITY; NO CONFLICTS.
(i) Each of Globix and its Subsidiaries has all requisite
corporate power and authority to enter into this Agreement, to perform
its obligations hereunder and to consummate the transactions
contemplated hereby, subject to the receipt of the Globix Stockholder
Vote (if applicable). The execution and delivery of this Agreement by
Globix and the consummation by Globix of the transactions contemplated
hereby have been duly authorized by all necessary corporate action on
the part of Globix, subject to the Globix Stockholder Vote (if
applicable). As of the Closing Date, the consummation by Merger Sub of
the transactions contemplated hereby shall have been duly authorized
by all necessary corporate action on the part of Merger Sub and on the
part of Globix as the sole stockholder of Merger Sub. Without limiting
the generality of the foregoing, the Board of Directors of Globix, at
a meeting duly called and held, by the requisite vote of all directors
(i) received a fairness opinion that the Exchange Ratio is fair from a
financial point of view to the holders of the Globix Common Stock and
determined that the Merger is in the best interests of Globix and its
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stockholders, (ii) adopted this Agreement in accordance with the
provisions of the DGCL and (iii) in the event of a Globix Stockholder
Vote, fixed a record date for the determination of stockholders of
Globix entitled to vote at the Globix Stockholders Meeting (if
applicable). This Agreement has been duly executed and delivered by
Globix and constitutes a valid and binding agreement of Globix,
enforceable against Globix in accordance with its terms, except as
such enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium and similar laws relating to or affecting
creditors generally, or by general equity principles (regardless of
whether such enforceability is considered in a proceeding in equity or
at law).
(ii) The execution and delivery of this Agreement does not,
and the consummation of the Merger and the other transactions
contemplated hereby will not, result in a Violation: (A) pursuant to
any provision of the certificate of incorporation or bylaws of Globix
or similar governing documents of any of its Subsidiaries, or (B)
except as could not, individually or in the aggregate, reasonably be
expected to have a Globix Material Adverse Effect and subject to
obtaining or making the Globix Required Consents, pursuant to any
Contract or Globix Plan or any Law applicable to Globix or its
Subsidiaries or their respective properties or assets. Section
3.2(c)(ii) of the Globix Disclosure Schedule lists all material
consents, waivers and approvals under any Globix Material Contracts
required to be obtained in connection with the consummation of the
Merger and the other transactions contemplated hereby.
(iii) No consent, approval, order or authorization of, or
registration, declaration or filing with, any Person or any
Governmental Entity is required by or with respect to Globix or any
Subsidiary of Globix as a result of the execution and delivery of this
Agreement by Globix or the consummation of the Merger and the other
transactions contemplated hereby, except for those required under or
in relation to (A) the HSR Act, (B) the filing of the Registration
Statement with the SEC and its effectiveness under the Securities Act,
(C) the filing of the Certificate of Merger pursuant to the DGCL, (D)
compliance with applicable state securities laws (if applicable) in
connection with the issuance of the Globix Common Stock in the Merger,
(E) the Globix Stockholder Vote (if applicable), (F) the matters
listed in Section 3.2(c)(ii) of the Globix Disclosure Schedule, and
(G) such consents, approvals, orders, authorizations, registrations,
declarations and filings the failure of which to make or obtain could
not, individually or in the aggregate, reasonably be expected to have
a Globix Material Adverse Effect. Consents, approvals, orders,
authorizations, registrations, declarations and filings required under
or in relation to any of the foregoing clauses (A) through (G) are
hereinafter referred to as "GLOBIX REQUIRED CONSENTS".
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(d) SEC FILINGS; FINANCIAL STATEMENTS.
(i) Globix has filed all periodic reports required to be
filed with the SEC under the Exchange Act for the fiscal year ended
September 30, 2003 and thereafter (collectively, the "GLOBIX SEC
REPORTS"), each of which, as finally amended, has complied as to form
in all material respects with the applicable requirements of the
Securities Act and the rules and regulations promulgated thereunder,
or the Exchange Act and the rules and regulations promulgated
thereunder, each as in effect on the date so filed.
(ii) The consolidated financial statements of Globix
(including any related notes thereto) (a) included in the Globix SEC
Reports and (b) an unaudited consolidated balance sheet as of May 31,
2004 and the related unaudited consolidated statements of operations
and cash flows for the eight months then ended (the "GLOBIX SEC
FINANCIAL STATEMENTS"), fairly present in all material respects the
consolidated financial position of Globix and its consolidated
subsidiaries as of the dates thereof and the consolidated results of
their operations, changes in stockholders' equity and cash flows for
the respective periods set forth therein, in each case, in accordance
with GAAP applied on a basis consistent with prior periods (except, in
the case of unaudited consolidated statements, including quarterly
statements, (A) as permitted by Form 10-Q of the SEC, (B) as may be
indicated in footnotes thereto or in the Globix SEC Reports and (C)
that they are subject to normal and recurring year-end adjustments
that have not been and are not likely to be material in amount, and
the absence of notes that, if presented, would not differ materially
from the notes included in the immediately preceding year-end
financial statements).
(iii) No financial statements of any entity other than
Globix and its Subsidiaries are required by GAAP to be included in the
consolidated financial statements of Globix.
(e) NO UNDISCLOSED LIABILITIES; INDEBTEDNESS.
(i) Except (a) as and to the extent of the amounts
specifically reflected or reserved on the audited balance sheet of
Globix as of September 30, 2003 (including, the notes thereto) (the
"GLOBIX AUDITED BALANCE SHEET") included in the Globix SEC Financial
Statements or intercompany accounts not reflected in the Globix
Audited Balance Sheet, (b) obligations under Globix Material Contracts
entered into in the ordinary course of business and consistent with
past practice which are not required by GAAP to be reflected on the
Globix Audited Balance Sheet, (c) liabilities and obligations incurred
in the ordinary course of business consistent with past practice since
the date of the Globix Audited Balance Sheet, (d) obligations under
this Agreement and liabilities permitted to be incurred pursuant to
Section 4.2 and (e) as set forth in Section 3.2(e)(i) of the Globix
Disclosure Schedule, neither Globix nor any of its Subsidiaries has
any liabilities or obligations of any nature whether absolute,
accrued, contingent or otherwise, which individually or in the
aggregate would reasonably be expected to have a Globix Material
Adverse Effect.
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(ii) Section 3.2(e)(ii) of the Globix Disclosure Schedule
sets forth a complete and accurate list of all loan or credit
agreements, notes, bonds, mortgages, indentures and other agreements
and instruments pursuant to which any indebtedness of Globix or any of
its Subsidiaries in an aggregate principal amount in excess of
$100,000 is outstanding or may be incurred and the respective
principal amounts outstanding thereunder as of the date of this
Agreement.
(f) ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as set forth in
Section 3.2(f) of the Globix Disclosure Schedule, and except for actions that
would be permitted pursuant to Section 4.2 and except as otherwise contemplated
hereby, from the date of the Globix Audited Balance Sheet to the date hereof:
(i) Globix and its Subsidiaries have conducted their business in all material
respects in the ordinary course in the same manner as heretofore conducted; (ii)
there has not been any Globix Material Adverse Effect; (iii) Globix has not (A)
declared, set aside or paid any dividends or other distribution (whether in
cash, stock or property) in respect of any of its capital stock; (B) split,
combined or reclassified any of its capital stock or issued or authorized any
issuance of any other securities in respect of, in lieu of or in substitution
for shares of, its capital stock, (iv) Globix has not changed its methods of
accounting for financial accounting or tax purposes in any manner that could be
reasonably expected to have a significant adverse effect on its financial
statements; (v) Globix has not made or revoked any material express or deemed
election relating to Taxes; and (vi) neither Globix nor any of its Subsidiaries
has (A) waived in writing any material rights, (B) suffered any extraordinary
loss or extraordinary losses (as defined in Opinion No. 30 of the Accounting
Principles Board of the American Institute of Certified Public Accountants and
any amendments or interpretations thereof) which could reasonably be expected to
have a Globix Material Adverse Effect, (C)(1) granted any severance or
termination payment, (2) entered into any employment, deferred compensation,
consulting, severance, indemnification, change in control, retention or other
similar agreement or arrangement, (3) increased any compensation or benefits
payable or to become payable under any existing severance or termination pay
policy or employment, deferred compensation, stock loan, consulting, severance,
change in control, retention or other similar agreement or arrangement, or (4)
increased the compensation, bonus, incentive or other benefits payable to (or to
become payable to) former or current directors, officers, employees or
consultants of Globix or any of its Subsidiaries, other than an increase in
annual salary or hourly wage rates granted to current employees (other than
officers) in the ordinary course of business, consistent with past practice or
otherwise not material), (D) made or agreed to make any increase in any Globix
Plan or adopt a new employee benefit plan, which in either case could result in
a material increase in liability to Globix, (E) other than in the ordinary
course of business or as otherwise not material, sold or transferred any of the
assets of Globix or its Subsidiaries, or (F) made any capital expenditures in
respect of its business or operations not in the ordinary course of business or
otherwise material. Globix and its Subsidiaries have not agreed or committed
(directly or indirectly) to do any of the foregoing.
(g) INFORMATION SUPPLIED. None of the information supplied or to be
supplied in writing by Globix or Merger Sub for inclusion or incorporation by
reference in the Registration Statement and the Proxy Statement will (A) in the
case of the Registration Statement, at the time it becomes effective, contain
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein not misleading, or (B) in the case of the Proxy Statement, at the time
of the mailing of the Proxy Statement, at the time of the NEON Stockholders
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Meeting and the Globix Stockholders Meeting (if applicable) and at the Effective
Time, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they are made, not
misleading, or necessary to correct any statement in any earlier communication
with respect to the solicitation of proxies for the NEON Stockholders Meeting or
the Globix Stockholders Meeting (if applicable) which has become false or
misleading. If at any time prior to the Effective Time any event with respect to
Globix, its officers and directors or any of its Subsidiaries shall occur which
is required to be described in the Proxy Statement or the Registration
Statement, such event shall be so described, and an appropriate amendment or
supplement shall be promptly filed with the SEC and, as required by law,
disseminated to the stockholders of NEON and Globix. The Registration Statement
will comply (with respect to Globix) as to form in all material respects with
the provisions of the Securities Act, and the Proxy Statement will comply (with
respect to Globix) as to form in all material respects with the provisions of
the Exchange Act. Notwithstanding the foregoing provisions of this Section
3.2(g), no representation or warranty is made by Globix with respect to
statements made or incorporated by reference in the Proxy Statement based on
information supplied by NEON for inclusion or incorporation by reference
therein. For purposes of the foregoing, it is understood and agreed that
information concerning or related to Globix or Merger Sub or the Globix
Stockholders Meeting (if applicable) will be deemed to have been supplied by
Globix and information concerning or related to NEON and the NEON Stockholders
Meeting shall be deemed to have been supplied by NEON.
(h) ASSETS. Except as set forth in Section 3.2(h) of the Globix
Disclosure Schedule, Globix has good and valid title or a valid leasehold
interest in, free and clear of all Liens other than Permitted Liens, to (i) all
of its assets and properties as reflected on the Globix Audited Balance Sheet,
except for assets and properties disposed of in the ordinary course of business,
or as permitted pursuant to Section 4.2, since the date of the Globix Audited
Balance Sheet, and (ii) all of Globix's other assets, real property, interests
in real property, rights, franchises, licenses and properties, tangible or
intangible, real or personal, wherever located which are material to the conduct
of its business, other than property that is leased or licensed, with respect to
which Globix or any of its Subsidiaries has valid and enforceable leases or
licenses under which there exists no default, event of default or event which,
with notice or lapse of time or both, would constitute a default, except for
such defaults which have not had or are not reasonably likely to have, either
individually or in the aggregate, a Globix Material Adverse Effect.
(i) VOTE REQUIRED. On or prior to the Closing Date, Globix shall duly
execute and deliver a written consent as the only stockholder of Merger Sub, (i)
approving the Merger and (ii) approving the modification of the NEON Stock
Option Plans in accordance with the shareholder approval requirements of Section
422 of the Code and the regulations promulgated and proposed thereunder (the
"MERGER SUB APPROVAL"), which will not be amended, modified or withdrawn prior
to Closing. The Globix Stockholder Vote, if applicable, is the only vote of the
holders of any class or series of Globix capital stock necessary to approve the
Merger and the other transactions contemplated hereby, including the issuance of
the shares of Globix Common Stock included in the Merger Consideration and the
transactions contemplated by Section 1.9, if applicable.
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(j) OPINION OF FINANCIAL ADVISOR. Globix has received the opinion of
Xxxxxxx & Company, Inc. (the "GLOBIX FINANCIAL ADVISOR"), dated the date of this
Agreement, to the effect that, as of such date, the Exchange Ratio is fair, from
a financial point of view, to the holders of the Globix Common Stock.
(k) RELATED PARTY TRANSACTIONS.
(i) For purposes of this Section 3.2(k), the term "GLOBIX
AFFILIATED PERSON" means (A) any holder of 5% or more of the Globix
Common Stock, (B) any director, officer or senior executive of Globix
or any Subsidiary, (C) any Person, firm or corporation that directly
or indirectly controls, is controlled by, or is under common control
with, Globix or any Subsidiary, or (D) any member of the immediate
family of any of such persons.
(ii) Except as set forth in Section 3.2(k)(ii) of the Globix
Disclosure Schedule, since September 30, 2003, Globix and its
Subsidiaries have not, in the ordinary course of business or
otherwise, (A) purchased, leased or otherwise acquired any material
property or assets or obtained any material services from, (B) sold,
leased or otherwise disposed of any material property or assets or
provided any material services to (except with respect to remuneration
for services rendered in the ordinary course of business as director,
officer or employee of Globix or any Subsidiary), (C) entered into or
modified in any manner any contract with, or (D) borrowed any money
from, or made or forgiven any loan or other advance (other than
expenses or similar advances made in the ordinary course of business)
to, any Globix Affiliated Person.
(iii) Except as set forth in Section 3.2(k)(iii) of the
Globix Disclosure Schedule, since September 30, 2003, (A) the
contracts of Globix and its Subsidiaries do not include any material
obligation or commitment between Globix or any Subsidiary and any
Globix Affiliated Person, (B) the assets of Globix or any Subsidiary
do not include any receivable or other obligation or commitment from a
Globix Affiliated Person to Globix or any Subsidiary, and (C) the
liabilities of Globix and its Subsidiaries do not include any payable
or other obligation or commitment from Globix or any Subsidiary to any
Globix Affiliated Person.
(iv) Section 3.2(k)(iv) of the Globix Disclosure Schedule
sets forth a complete and accurate list of each Contract to which
Globix or any of its Subsidiaries is a party or bound with any Globix
Affiliated Person (other than any Subsidiary which is a direct or
indirect wholly owned Subsidiary of Globix). Section 3.2(k)(iv) of the
Globix Disclosure Schedule sets forth a complete and accurate
description of all transactions with any Globix Affiliated Person or
any of its Subsidiaries or any transaction that would be subject to
proxy statement disclosure pursuant to Item 404 of Regulation S-K to
which Globix or any of its Subsidiaries is a party or bound. Complete
and accurate copies of all the agreements, contracts and arrangements
set forth in Section 3.2(k)(iv) of the Globix Disclosure Schedule have
been made available to NEON.
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(l) LITIGATION. Except as disclosed in writing to NEON, there are no
Claims pending or, to the Knowledge of Globix, threatened against Globix or any
of its Subsidiaries, or any properties or rights of Globix or any of its
Subsidiaries, before any Governmental Entity, nor is there any judgment, decree,
injunction, ruling or order of any Governmental Entity or arbitrator outstanding
specifically against Globix or any of its Subsidiaries, except for any of the
foregoing as could not, individually or in the aggregate, reasonably be expected
to have a Globix Material Adverse Effect. To the Knowledge of Globix, there has
not been any investigation of Globix or any of its Subsidiaries conducted by any
Governmental Entity during the two years prior to the date hereof which was
concluded and resulted in a significant adverse effect on the ability of Globix
and its Subsidiaries to conduct their respective businesses.
(m) COMPLIANCE WITH LAWS; PERMITS.
(i) Since the Globix Confirmation Effective Date, except as
disclosed to NEON in a certificate, Globix and each of its
Subsidiaries has complied with, is not in violation of, and has not
received any notice alleging any violation with respect to, any
applicable provisions of any statute, law or regulation with respect
to the conduct of its business, the employment of any current or
former employees, or the ownership or operation of its properties or
assets, except for failures to comply or violations that, individually
or in the aggregate, have not had, and are not reasonably likely to
have, a Globix Material Adverse Effect.
(ii) Except as set forth in Section 3.2(m)(ii) of the Globix
Disclosure Schedule, Globix and each of its Subsidiaries have all
permits, licenses and franchises from Governmental Entities required
to conduct their businesses as now being conducted or as presently
contemplated to be conducted (the "GLOBIX PERMITS"), except for such
permits, licenses and franchises the absence of which, individually or
in the aggregate, has not had, and is not reasonably likely to have, a
Globix Material Adverse Effect. Globix and each of its Subsidiaries
are in compliance with the terms of the Globix Permits, except for
such failures to comply that, individually or in the aggregate, have
not had, and are not reasonably likely to have, a Globix Material
Adverse Effect. Except as set forth in Section 3.2(m)(ii) of the
Globix Disclosure Schedule, all Globix Permits are in full force and
effect, and no Globix Permit shall cease to be effective as a result
of the consummation of the transactions contemplated by this
Agreement. Globix and its Subsidiaries have not received any notice of
any material default under or material violation of, any such Globix
Permit.
(n) ACCOUNTS RECEIVABLE; WARRANTIES.
(i) All accounts receivable of Globix, whether reflected in
the most recent Globix SEC Financial Statements or otherwise,
represent sales actually made in the ordinary course of business, have
been reflected properly in its books and records in accordance with
GAAP and are not subject to any material contractual setoffs or
counterclaims.
(ii) Except as set forth in Section 3.2(n)(ii) of the Globix
Disclosure Schedule, no product or service manufactured, sold, leased,
licensed, delivered or otherwise provided by Globix or any of its
Subsidiaries is subject to any guaranty, or warranty.
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(o) CUSTOMERS AND SUPPLIERS. As of the date of this Agreement, except
as set forth in Section 3.2(o) of the Globix Disclosure Schedule, (i) no
material customer of Globix or any of its Subsidiaries has indicated to Globix
or any of its Subsidiaries that it will stop, or decrease the rate of, buying
products or services from Globix or any of its Subsidiaries, and (ii) no
material supplier or exclusive supplier of Globix or any of its Subsidiaries has
indicated to Globix or any of its Subsidiaries that it will stop, or decrease
the rate of, supplying materials, products or services to them.
(p) CERTAIN BUSINESS PRACTICES. Neither Globix nor any Subsidiary has
(i) used any funds for unlawful contributions, gifts, entertainment or other
unlawful payments related to a political activity, (ii) made any unlawful
payment to any foreign or domestic government official or employee or to any
foreign or domestic political party or campaign or violated any provision of the
Foreign Corrupt Practices Act of 1977, as amended, or (iii) consummated any
transaction or made any payment or entered into any agreement or arrangement or
taken any other action in violation of Section 1128B(b) of the Social Security
Act, as amended.
(q) TAXES.
(i) Except as set forth in Section 3.2(q)(i) of the Globix
Disclosure Schedule or to the extent otherwise not material, as to
amount or otherwise, individually or in the aggregate, including all
matters subject to the representations in this Section 3.2(q)(i):
(A) Globix and its Subsidiaries have timely filed or,
if not yet due, will timely file all Tax Returns required to be filed
by them on or before the Closing Date and all such Tax Returns are or,
in the case of Tax Returns not yet filed, will be, true, correct and
complete in all material respects and Globix and its Subsidiaries have
paid when due all Taxes reported thereon or, in the case of Taxes not
yet due, will pay such Taxes when due.
(B) Globix and its Subsidiaries have paid or have
established on the most recent financial statements required to be
provided to NEON hereunder, in accordance with GAAP, adequate accruals
for the payment of all Taxes (whether or not shown on a Tax Return),
including contingent Tax liabilities, with respect to all Taxable
periods ending on or before the Closing Date and all Taxable periods
starting before and ending after the Closing Date, but only to the
extent attributable to the portion of such periods up to and including
the Closing Date and, in each case, only to the extent properly
accrued as of the date of such most recent financial statements
required to be provided to NEON hereunder.
(C) Globix has made or will make available to NEON
all Tax Returns filed by Globix and its Subsidiaries relating to the
four (4) most recent Taxable years ending on or before the Closing
Date.
(D) No extension of time has been requested or
granted for Globix or any of its Subsidiaries to file any Tax Return
that has not yet been filed or to pay any Tax that has not yet been
paid and Globix and its Subsidiaries have not granted a power of
attorney that remains outstanding with regard to any Tax matter.
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(E) There is no pending or, to the Knowledge of
Globix, threatened Tax Audit of Globix or any of its Subsidiaries.
(F) NEON has received copies of all material audit
reports and correspondence between Globix or its Subsidiaries and any
Tax Authority issued or made during the last three (3) years and a
complete summary of all oral communications between Globix or its
Subsidiaries and any Tax Authority relating to any Tax Audits of
Globix or its Subsidiaries during such years, including without
limitation any Tax Audit that is in progress or for which a still
effective extension of the statute of limitations was granted.
(G) Neither Globix nor any of its Subsidiaries has
within the last four (4) years received notice of a Tax Deficiency
and, to the Knowledge of Globix, no Tax Deficiency is proposed or
threatened.
(H) All Tax Deficiencies have been paid or finally
settled and all amounts determined by settlement to be owed have been
paid.
(I) There are no Liens, other than Permitted Liens,
arising from or related to Taxes on or pending against Globix, its
Subsidiaries or any of their properties.
(J) There are no presently outstanding waivers or
extensions or requests for waiver or extension of the time within
which a Tax Deficiency may be asserted or assessed.
(K) No issue has been raised in any Tax Audit which,
by application of similar principles to any past, present or future
period, would result in an adjustment to the amounts reported in a
subsequent period.
(L) Globix has not changed any Tax accounting method
during any of the seven (7) most recent Taxable years ending on or
before the Closing Date. Globix and its Subsidiaries have not taken
any action, whether or not required, that has resulted or will result
in deferring a liability for Taxes of Globix or its Subsidiaries from
any taxable period ending on or before the Closing Date to any taxable
period ending after such date, unless such action is in accordance
with past practice.
(M) Neither Globix nor its Subsidiaries has ever been
required to include in income any adjustment pursuant to section 481
of the Code and no Tax Authority has ever made or proposed any such
adjustment. Neither Globix nor its Subsidiaries has entered into a
closing agreement, as described in section 7121 of the Code or an
advance pricing agreement or other agreement with a taxing authority
relating to Taxes.
(N) Neither Globix nor its Subsidiaries owns any
property that is tax-exempt use property within the meaning of section
168(h) of the Code, that is described in section 168(f)(8) of the Code
as in effect prior to its amendment by the Tax Reform Act of 1986,
that is tax-exempt bond financed property within the meaning of
Section 168(g) of the Code or that is "limited use property" within
the meaning of Rev. Proc. 76-30.
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(O) Neither Globix nor its Subsidiaries is a party to
any arrangement to which sections 162(m) or 280G of the Code could
under any circumstances apply.
(P) Neither Globix nor its Subsidiaries has filed a
consent pursuant to section 341(f) of the Code or agreed to have
section 341(f)(2) apply to the disposition of any asset.
(Q) Neither Globix nor its Subsidiaries has
participated in or cooperated with any international boycott within
the meaning of section 999 of the Code.
(R) Neither Globix nor its Subsidiaries is now or has
ever been (a) an includable member of an "affiliated group" within the
meaning of section 1504(a) of the Code other than an affiliated group
consisting only of Globix and one or more of its current Subsidiaries
or otherwise liable for the Taxes of a person other than Globix
pursuant to Treasury Regulation section 1.1502-6 or any similar
provision of state, local or foreign law, whether or not as a
transferee, a successor, by operation of law, by contract or
otherwise, (b) a member of any consolidated, combined or unitary Tax
Return filing group other than a group consisting only of Globix and
one or more of its current Subsidiaries, (c) a party to any Tax
sharing agreement, Tax indemnity agreement or similar agreement,
arrangement or practice with respect to Taxes, including an agreement
that obligates it to make any payment computed by reference to the
Taxes, Taxable income or Tax losses of any other individual or entity,
(d) a personal holding company as defined in section 542 of the Code
or foreign personal holding company as defined in section 552(a) of
the Code, (e) the owner of an interest in an entity that is or is
treated as a Tax partnership, trust, regulated investment company as
defined in section 851 of the Code, real estate investment trust as
defined in section 856 of the Code or foreign personal holding company
as defined in section 552(a) of the Code, (f) a United States
shareholder as defined in section 951(b) of the Code of a controlled
foreign corporation as defined in section 957 of the Code, (g) a
United States real property holding company within the meaning of
section 897(c)(2) of the Code or (h) a shareholder of a passive
foreign investment company, as defined in section 1297 of the Code.
(S) Globix has not entered into a gain recognition or
other agreement requiring it to take into account Taxable income or to
incur a Tax liability that it would not have had to take into account
or would not have had to incur but for such agreement.
(T) Globix has disclosed on its federal, state, local
and foreign income Tax Returns all positions taken therein that could
give rise to a penalty under section 6662 of the Code or any
corresponding provision of state, local or foreign Tax law.
(U) Globix and its Subsidiaries have never
participated, directly or indirectly, in a transaction which is
described in Treasury Regulation sections 1.6011-4(b)(2) or
1.6011-4(b)(3) nor have they ever held "an interest" in a "tax
shelter," as those terms are defined in Treasury Regulation section
301.6112-1.
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(V) Globix has no deferred intercompany gains or
losses that have not been fully taken into income for income Tax
purposes and there is no excess loss account with respect to stock of
any of its Subsidiaries.
(W) No unresolved claim and to the Knowledge of
Globix, no claim has ever been made by a Tax Authority in a
jurisdiction in which Globix does not pay Taxes or file Tax Returns
that such entity is or may be subject to Tax in such jurisdiction.
(X) Globix and its Subsidiaries have never requested
a private ruling from a Tax Authority on any matter.
(Y) Neither Globix nor its Subsidiaries has been a
"distributing corporation" or a "controlled corporation" in connection
with a distribution described in Section 355 of the Code.
(Z) Neither Globix nor its Subsidiaries nor, to the
Knowledge of Globix, any Globix Affiliated Person has taken any action
or failed to take any action that would cause the Merger to fail to
qualify as a tax-free reorganization under Section 368(a) of the Code,
and no facts exist that would cause the Merger to fail to so qualify.
(AA) The net operating losses, alternative minimum
tax net operating losses, net capital losses, alternative minimum tax
net capital losses, Tax credits, alternative minimum tax credits and
other Tax attributes of Globix and its subsidiaries are not subject to
any consolidated return limitation, limitation under section 382 of
the Code or any other limitation on their use, allowance or
availability.
(BB) Globix has retained all supporting and backup
papers, receipts, spreadsheets and other information necessary for the
preparation of all Tax Returns that have not yet been filed and the
defense of Tax Audits involving all Taxable periods either (I) ended
on or during the six (6) years prior to the Closing Date or (II) from
which there are unutilized net operating loss, capital loss or
investment tax credit carryovers.
(CC) Globix has collected and remitted to the
appropriate Tax Authorities all sales and use and similar Taxes
required to have been collected and remitted on or prior to the
Closing Date and has been furnished, and if required has filed,
properly completed exemption certificates for all exempt transactions.
Globix has maintained and has in its possession all records,
supporting documents and exemption and resale certificates required by
applicable sales Tax statutes and regulations to be retained in
connection with the collection and remittance of sales and use and
similar Taxes for all periods up to and including the Closing Date.
Each reference to a provision in this Section 3.2(q) shall be treated
for state, local and foreign Tax purposes as a reference to analogous
or similar provisions of state and local law.
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(r) EMPLOYEE BENEFITS; EMPLOYEES.
(i) Section 3.2(r)(i) of the Globix Disclosure Schedule sets
forth a list of each "employee benefit plan" (within the meaning of
Section 3(3) of ERISA), severance, change in control or employment
plan, program or agreement, and vacation, incentive, bonus, stock
option, stock purchase, stock loan, and restricted stock plan, program
or policy to which Globix is a party or that is sponsored or
maintained by Globix, any of its Subsidiaries, any of their ERISA
Affiliates, in which present or former employees of Globix or any of
its Subsidiaries or ERISA Affiliates ("GLOBIX EMPLOYEES") participate
(collectively, the "GLOBIX PLANS"). All Globix Plans set forth on
Section 3.2(r)(i) of the Globix Disclosure Schedule, if any, that
would result in the payment to any Globix Employee of any money or
other property or accelerate or provide any other rights or benefits
thereto as a result of the transactions contemplated by this
Agreement, whether or not such payment or acceleration would
constitute a parachute payment within the meaning of Section 280G of
the Code, are so indicated by an asterisk. The Globix Plans are in
compliance in all material respects with all applicable requirements
of ERISA, the Code, and other applicable Laws and have been
administered in all material respects in accordance with their terms
and such Laws, and there has been no material violation of any
reporting or disclosure requirement imposed by ERISA or the Code. Each
Globix Plan which is intended to be qualified within the meaning of
Section 401 of the Code has received a Favorable Letter (as such term
is defined in Rev. Proc. 2003-44 Section 5.01(4)) as to its
qualification, and nothing has occurred that could reasonably be
expected to cause the loss of such qualification or the loss of the
tax-exempt status for any trust maintained with respect to any such
Globix Plan.
(ii) Except as set forth in Section 3.2(r)(ii) of the Globix
Disclosure Schedule, neither NEON nor Globix shall, at or after the
Effective Time, have any liability with respect to any change in
control, "continuity" or severance agreement, plan, program or policy
with or with respect to any Globix Employee. In accordance with
applicable law, each Globix Plan can be amended or terminated at any
time, without consent from any other party and without liability other
than for notice obligations with respect to amendment or termination,
if any, and benefits accrued as of the date of such amendment or
termination. Globix and its ERISA Affiliates have made full and timely
payment of all material amounts required to be contributed or paid as
expenses under the terms of each Globix Plan and applicable law.
(iii) No Globix Plan is subject to Title IV of ERISA
(including any "multiemployer plan" (as defined in Section 4001(a)(3)
of ERISA)), and neither Globix nor any of its ERISA Affiliates has
ever contributed or been obligated to contribute to any pension plan
subject to Title IV of ERISA (including any multiemployer plan), nor
could Globix or any ERISA Affiliate have any liability under Title IV
of ERISA.
(iv) No event or condition has occurred in connection with
which Globix or any of its ERISA Affiliates would be subject to any
liability, encumbrance or Lien with respect to any Globix Plan under
ERISA, the Code or any other applicable Law or under any agreement or
arrangement pursuant to or under which Globix or any of its ERISA
Affiliates are required to indemnify any person against such
liability.
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(v) True, correct and complete copies of the following
documents with respect to each of the Globix Plans have been made
available to NEON by Globix, to the extent applicable: (A) any plans
or agreements, all amendments thereto and related trust documents, and
amendments thereto; (B) the three most recent Forms 5500 and all
schedules thereto and the most recent actuarial report, if any; (C)
the most recent IRS determination letter; and (D) any summary plan
descriptions or other employee communications.
(vi) With respect to any Globix Plan, no actions, suits or
claims (other than routine claims for benefits in the ordinary course)
are pending or, to the Knowledge of Globix, threatened.
(vii) Except as set forth in Section 3.2(r)(vii) of the
Globix Disclosure Schedule, none of the Globix Plans provide for
post-employment life or health insurance, benefits or coverage for any
participant or any beneficiary of a participant, except as may be
required under COBRA and any such participation is at the expense of
the participant or the participant's beneficiary.
(viii) Except as set forth in Section 3.2(r)(viii) of the
Globix Disclosure Schedule neither Globix, nor to the Knowledge of
Globix, any other fiduciary or party-in-interest of any Globix Plan
has participated in, engaged in or been a party to any transaction
that is prohibited under Section 4975 of the Code or Section 406 of
ERISA and not exempt under Section 4975 of the Code or Section 408 of
ERISA, respectively. With respect to any Globix Plan, (A) neither
Globix nor any of its ERISA Affiliates has had asserted against it any
claim for taxes under Chapter 43 of Subtitle D of the Code and Section
5000 of the Code, or for penalties under ERISA Section 502(c), 502 (i)
or 502 (l), nor, to the Knowledge of Globix, is there a basis for any
such claim, and (B) no officer, director or employee of Globix or any
ERISA Affiliate has committed a breach of any fiduciary responsibility
or obligation imposed by Title I of ERISA.
(ix) Except as set forth in Section 3.2(r)(ix) of the Globix
Disclosure Schedule, there will be no payment, accrual of additional
benefits, acceleration of payments or vesting of any benefit under any
Globix Plan or any other agreement or arrangement to which Globix or
any of its Subsidiaries is a party, and no employee, officer or
director of Globix or its Subsidiaries will become entitled to
severance, termination allowance or similar payments, solely by reason
of entering into or in connection with the transactions contemplated
by this Agreement.
(x) Except as set forth in Section 3.2(r)(x) of the Globix
Disclosure Schedule, no Globix Plan is subject to the laws of any
country other than the United States.
(xi) None of the Globix Employees is represented in his or
her capacity as an employee of Globix or any of its Subsidiaries by
any labor organization, nor has Globix or any of its Subsidiaries
recognized any labor organization nor has any labor organization been
elected as the collective bargaining agent of any such employees. To
the Knowledge of Globix, there is no union organization activity
involving any of Globix Employees, pending or threatened in writing,
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nor has there been any union representation involving such employees
within the past two years. To the Knowledge of Globix, except as set
forth in Section 3.2(r)(xi) of the Globix Disclosure Schedule, there
are no complaints, charges or claims against Globix or any of its
Subsidiaries pending or, threatened in writing, by or before any
Governmental Entity based on, arising out of, in connection with, or
otherwise relating to the employment or termination of employment or
failure to employ by Globix or any of its Subsidiaries, of any
individual. Globix and its Subsidiaries are in compliance in all
material respects with all laws, regulations and orders relating to
the employment of labor, including all such laws, regulations and
orders relating to wages, hours, WARN and any similar state or local
"mass layoff' or "plant closing" law, collective bargaining,
discrimination, civil rights, safety and health, workers' compensation
and the collection and payment of withholding and/or social security
taxes and any similar tax. There has been no "mass layoff" or "plant
closing" as defined by WARN with respect to Globix or any of its
Subsidiaries in the 90 day period immediately prior to the date
hereof.
(xii) No more than fifteen (15) "leased employees," as that
term is defined in Section 414(n) of the Code or any other person who
is not classified as a common law employee of Globix, perform services
for Globix or any ERISA Affiliate. No person who is not classified by
Globix as a common law employee is eligible to participate in, nor
does such person participate in, any Globix Plan and no retroactive
participation in any Globix Plan would result due to reclassification
of such an individual as a common law employee of Globix.
(xiii) To the Knowledge of Globix, no employee of Globix or
any Subsidiary of Globix is in material breach as of the date of this
Agreement of any term of any employment contract, inventions
disclosure agreement, confidentiality agreement, non-competition
agreement, or any restrictive covenant to a former employer relating
to the right of any such employee to be employed by Globix or any
Subsidiary of Globix because of the nature of the business conducted
or presently proposed to be conducted by Globix or any Subsidiary of
Globix or relating to the use of trade secrets or proprietary
information of others.
(s) ENVIRONMENTAL MATTERS. Except as set forth in Section 3.2(s) of
the Globix Disclosure Schedule, (i) Globix, its Subsidiaries, and their
activities and operations are in compliance in all material respects with
Environmental Laws; (ii) to the Knowledge of Globix, there are no Environmental
Claims pending or, to the Knowledge of Globix, threatened against Globix or its
Subsidiaries; (iii) to the Knowledge of Globix, there are no conditions or
circumstances that reasonably could be expected to result in the imposition on
Globix or any of its Subsidiaries of, any material liability or obligation under
Environmental Laws; and (iv) to the Knowledge of Globix, there has not been any
release, discharge or disposal of any hazardous or toxic materials or wastes at,
on or under the facilities owned or leased by Globix or its Subsidiaries that
require notification, investigation or remediation by Globix or its Subsidiaries
pursuant to, or that are reasonably anticipated to give rise to material
liabilities or costs to Globix or its Subsidiaries under, applicable
Environmental Laws.
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(t) PROPERTIES.
(i) Section 3.2(t)(i) of the Globix Disclosure Schedule sets
forth a complete and accurate list of all real property that either
Globix or any of its Subsidiaries owns.
(ii) Section 3.2(t)(ii) of the Globix Disclosure Schedule
sets forth a complete and accurate list all real property leased,
subleased or licensed by Globix or any of its Subsidiaries, except for
easements, rights of way and regeneration facilities and, with respect
to licensed real property, any such agreements with respect to (A)
Collocation Sites and (B) central office sites under tariff (the
"GLOBIX LEASED REAL PROPERTY"). Except as set forth in Section
3.2(t)(ii) of the Globix Disclosure Schedule and except for any
exceptions to the following as could not, individually or in the
aggregate, reasonably be expected to have a Globix Material Adverse
Effect: (i) each of Globix and its Subsidiaries has valid leasehold
interests in the Globix Leased Real Property (as landlord or as
tenant) by or from it, free and clear of all Liens other than
Permitted Liens; (ii) all leases pursuant to which Globix or any of
its Subsidiaries leases (as landlord or as tenant) any Globix Leased
Real Property are in full force and effect and grant in all respects
the leasehold estates or rights of occupancy or use they purport to
grant; and (iii) Globix and its Subsidiaries have not received any
written notice of any default either on the part of Globix or any of
its Subsidiaries under any such lease and, to the Knowledge of Globix,
no event has occurred which, with notice or the lapse of time, or
both, would constitute a default on the part of Globix or any of its
Subsidiaries under any of such leases.
(u) AGREEMENTS, CONTRACTS AND COMMITMENTS.
(i) Globix has made available to NEON a complete and
accurate list of all Contracts that are material to the business,
assets, liabilities, capitalization, condition (financial or
otherwise) or results of operations of Globix and its Subsidiaries,
taken as a whole (collectively, the "GLOBIX MATERIAL CONTRACTS"). For
purposes of this section, materiality is defined as any Contract that
requires or is reasonably anticipated to involve aggregate payments to
or from Globix or its Subsidiaries in excess of $500,000 in any one
year. Globix has made available to NEON a complete and accurate copy
(excluding individual orders related thereto) of each Globix Material
Contract. As of the date of this Agreement, except as set forth in
Section 3.2(u)(i) of the Globix Disclosure Schedule, each Globix
Material Contract is in full force and effect. Except as set forth on
Section 3.2(u)(i) of the Globix Disclosure Schedule, neither Globix
nor any of its Subsidiaries is in material default under (x) any
Contract to which it is a party or by which it or any of its
properties or assets is bound, which violations or defaults would,
individually or in the aggregate, have, or are reasonably likely to
have, a Globix Material Adverse Effect, or (y) any Globix Material
Contract.
(ii) Except as set forth on Section 3.2(u)(ii) of the Globix
Disclosure Schedule, there is no non-competition or other similar
agreement, commitment, judgment, injunction or order, or any agreement
materially restricting the right to sell services, to which Globix or
any of its Subsidiaries is a party or is subject that has or could
reasonably be expected to have the effect of prohibiting or impairing
in any material respect the conduct of the business of Globix or any
of its Subsidiaries as currently conducted and as proposed to be
conducted.
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(iii) Neither Globix nor any of its Subsidiaries is or has
been suspended or debarred from bidding on contracts or subcontracts
with any Governmental Entity; no such suspension or debarment has been
initiated or, to the Knowledge of Globix, threatened; and the
consummation of the transactions by Globix contemplated by this
Agreement will not result in any such suspension or debarment that,
individually or in the aggregate, is reasonably likely to have a
Globix Material Adverse Effect. To the Knowledge of Globix, there is
no valid basis for (a) the suspension or debarment of Globix or any of
its Subsidiaries from bidding on contracts or subcontracts with any
Governmental Entity or (b) any claim pursuant to an audit or
investigation by any of the entities named in the foregoing sentence
that, individually or in the aggregate, is reasonably likely to have a
Globix Material Adverse Effect. To the Knowledge of Globix, neither
Globix nor any of its Subsidiaries has any Contracts which require it
to obtain or maintain a security clearance with any Governmental
Entity.
(v) BROKERS OR FINDERS. No agent, broker, investment banker, financial
advisor or other firm or Person is or will be entitled to any broker's or
finder's fee or any other similar commission or fee in connection with any of
the transactions contemplated by this Agreement based upon arrangements made by
or on behalf of Globix, except the Globix Financial Advisor, whose fees and
expenses will be paid by Globix in accordance with Globix's agreement with such
firm based upon arrangements made by or on behalf of Globix and previously
disclosed to NEON.
(w) INSURANCE. Globix has made available to NEON a summary of all
material fire and casualty, general liability, business interruption, and
sprinkler and water damage insurance policies maintained by Globix or any of its
Subsidiaries. Globix and each of its Subsidiaries have made any and all payments
required to maintain such policies in full force and effect. Neither Globix nor
any of its Subsidiaries has received written notice of default under any such
policy, and has not received written notice of any pending or threatened
termination or cancellation, coverage limitation or reduction with respect to
such policy.
(x) INTELLECTUAL PROPERTY.
(i) Except as disclosed in writing to NEON, Globix and its
Subsidiaries own, or otherwise possess licenses or other valid rights
to use all Intellectual Property used to conduct the business of
Globix and its Subsidiaries as currently conducted or contemplated to
be conducted (in each case excluding generally commercially available,
off-the-shelf software programs licensed pursuant to shrinkwrap or
"click-and-accept" licenses).
(ii) Except as would not have a Globix Material Adverse
Effect, the execution and delivery of this Agreement and consummation
of the Merger will not result in the breach of, or create on behalf of
any third party the right to terminate or modify, (A) any license,
sublicense or other agreement relating to any Intellectual Property
owned by Globix (the "GLOBIX INTELLECTUAL PROPERTY") or (B) any
license, sublicense and other agreement as to which Globix or any of
its Subsidiaries is a party and pursuant to which Globix or any of its
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Subsidiaries is authorized to use any Third Party Intellectual
Property. Globix has delivered to NEON a certificate certifying a
complete and accurate list of the Globix Intellectual Property (other
than unregistered copyrights, trade secrets and confidential
information) and Globix has made available to NEON a complete and
accurate list of all Third Party Intellectual Property.
(iii) Except as disclosed in writing to NEON, to the
Knowledge of Globix, as of the date of this Agreement (A) no person is
challenging, infringing on, misappropriating or otherwise violating
any right of Globix or any of its Subsidiaries with respect to any
Intellectual Property owned by and/or licensed to Globix or its
Subsidiaries, (B) the use of any Intellectual Property by Globix and
its Subsidiaries does not infringe on, constitute a misappropriation
of, or otherwise violate the rights of any person and is in accordance
with any applicable license pursuant to which Globix or any of its
Subsidiaries acquired the right to use any Intellectual Property, and
(C) neither Globix nor any of its Subsidiaries has received any
written notice of any assertion or claim of infringement, pending or
not, with respect to any Intellectual Property used by Globix or its
Subsidiaries.
(iv) Except as disclosed in writing to NEON, all patents,
trademarks, service marks and copyrights, and registrations and
applications therefor, which are held by Globix or any of its
Subsidiaries are valid and subsisting. Globix and its Subsidiaries
have taken reasonable measures to protect the proprietary nature of
the Globix Intellectual Property.
(v) No Intellectual Property owned or licensed by Globix or
its Subsidiaries is being used or enforced in a manner that would
result in the abandonment, cancellation or unenforceability of such
Intellectual Property.
(vi) Sections 3.2(h), 3.2(t) and 3.2(u) shall not apply to
the Globix Intellectual Property and this Section 3.2(x) shall prevail
in the event of any conflict between this Section 3.2(x) on the one
hand and Sections 3.2(h), 3.2(t) and 3.2(u) on the other hand.
ARTICLE IV
COVENANTS RELATING TO CONDUCT OF BUSINESS
-----------------------------------------
Section 4.1 COVENANTS OF NEON. During the period from the date of this
Agreement and continuing until the Effective Time, NEON agrees as to itself and
its Subsidiaries that (except as contemplated by this Agreement (including the
Schedules thereto), as required by Law or by the rules and regulations of a
Governmental Entity, or to the extent that Globix shall otherwise consent in
writing, which consent shall not be unreasonably withheld or delayed):
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(a) ORDINARY COURSE.
(i) Except as otherwise provided or permitted in this
Section 4.1, NEON and its Subsidiaries shall and shall be permitted to
carry on their respective businesses in the usual, regular and
ordinary course in all material respects, in substantially the same
manner as heretofore conducted, and shall and shall be permitted to
use all commercially reasonable efforts to preserve intact their
present lines of business, maintain their rights and franchises and
preserve their relationships with customers, suppliers and others
having business dealings with them to the end that their ongoing
businesses shall not be impaired in any material respect at the
Effective Time, and shall pay, discharge or satisfy claims,
liabilities or obligations (whether absolute, accrued, asserted or
unasserted, contingent or otherwise), only in the usual, regular and
ordinary course of business.
(ii) NEON shall not, and shall not permit any of its
Subsidiaries to, enter into any new material line of business.
(b) DIVIDENDS; CHANGES IN SHARE CAPITAL. NEON shall not, and shall not
permit any of its Subsidiaries to, (i) declare or pay any dividends on or make
other distributions in respect of any of its capital stock, except for dividends
by Subsidiaries of NEON to NEON or another wholly owned Subsidiary of NEON and
except for accrual of dividends on the NEON Convertible Preferred Stock, (ii)
split, combine or reclassify any of its capital stock or issue or authorize or
propose the issuance of any other securities in respect of, in lieu of or in
substitution for, shares of its capital stock, except for any such transaction
by a wholly owned Subsidiary of NEON which remains a wholly owned Subsidiary
after consummation of such transaction, or (iii) repurchase, redeem or otherwise
acquire any shares of its capital stock or any securities convertible into or
exercisable for any shares of its capital stock other than the purchase from
time to time by NEON of NEON Common Stock in the ordinary course of business
consistent with past practice in connection with the NEON Stock Option Plans.
(c) ISSUANCE OF SECURITIES. NEON shall not, and shall not permit any
of its Subsidiaries to, issue or sell, or authorize or propose the issuance or
sale of, any shares of its capital stock of any class, any indebtedness with
voting rights or any securities convertible into or exercisable for, or any
rights, warrants or options to acquire, any such shares or any indebtedness with
voting rights, or any stock appreciation, phantom stock or similar stock rights
with respect to NEON or its Subsidiaries, or enter into any agreement or
commitment with respect to any of the foregoing, other than (i) the issuance of
341,936 shares of NEON Common Stock to Mode 1 Communications, Inc., (ii) the
issuance of NEON Common Stock upon the exercise of NEON Options, Class A
Warrants or the NEON CTA Warrants, or the conversion of NEON Convertible
Preferred Stock, in each case outstanding as of the date hereof in accordance
with their respective terms, or (iii) issuances by a wholly-owned Subsidiary of
NEON of capital stock to NEON or another wholly-owned Subsidiary of NEON.
(d) GOVERNING DOCUMENTS. NEON and its Subsidiaries shall not amend, in
the case of Subsidiaries, in any material respect, their respective charter,
articles or certificates of incorporation, by-laws or other governing documents.
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(e) NO ACQUISITIONS. NEON shall not, and shall not permit any of its
Subsidiaries to, acquire or agree to acquire by merging or consolidating with,
or by purchasing a substantial equity interest in or a substantial portion of
the assets of, or by any other manner, any business or any corporation,
partnership, association or other business organization or division thereof.
(f) NO DISPOSITIONS. Other than (i) internal reorganizations or
consolidations involving existing Subsidiaries of NEON, (ii) in the ordinary
course of business, (iii) pursuant to Permitted Liens of the type described in
clauses (i) and (ii) of the definition of Permitted Liens, or (iv) as set forth
in Section 3.1(f) of the NEON Disclosure Schedule, NEON shall not, and shall not
permit any Subsidiary of NEON to, sell, lease, encumber or otherwise dispose of,
or agree to sell, lease, encumber or otherwise dispose of, any of its assets
(including capital stock of Subsidiaries of NEON) which are material,
individually or in the aggregate, to NEON and its Subsidiaries.
(g) INVESTMENTS; INDEBTEDNESS. NEON shall not, and shall not permit
any of its Subsidiaries to (i) make any loans, advances or capital contributions
to, or investments in, any other Person, other than (A) by NEON or a Subsidiary
of NEON to or in NEON or any wholly owned Subsidiary of NEON, or (B) financing
transactions in the ordinary course of business (including in connection with
any financing transactions of the type or similar to those previously engaged in
by NEON and its Subsidiaries, in amounts consistent therewith, taking into
account any growth in the business of NEON and its Subsidiaries) or (ii) create,
incur, assume or suffer to exist any indebtedness, issuances of debt securities,
guarantees, loans or advances, or engage in any asset securitization transaction
(whether accounted for as a sale of assets or as a financing transaction) not in
existence as of the date of this Agreement except (A) intercompany indebtedness
between NEON and any of its wholly owned Subsidiaries or between such wholly
owned Subsidiaries, or (B) in the ordinary course of business.
(h) ACCOUNTING METHODS; INCOME TAX ELECTIONS. NEON shall not (i)
materially change its methods of accounting or accounting principles or
practices used by it, except as required by changes in GAAP as concurred in by
NEON's independent accountants, (ii) change its fiscal year, (iii) make or
revoke any material express or deemed election relating to Taxes, (iv) settle or
compromise any Tax liability material to NEON and its Subsidiaries taken as a
whole or (v) change (or make a request to any Tax Authority to change) any
material aspect of its method of accounting for Tax purposes. NEON shall, and
shall cause each of its Subsidiaries to, duly and timely file all Tax Returns
and other documents required to be filed with federal, state, local and other
Tax Authorities, subject to timely extensions permitted by law and except where
any failure to file timely would not have a material cost; PROVIDED, HOWEVER,
that NEON shall promptly notify Globix if it is availing itself of such
extensions.
(i) COMPENSATION. Except as required by Law or an existing agreement,
NEON shall not, and shall not permit any of its Subsidiaries to: (i) enter into,
adopt or amend or terminate any (A) employment, consulting, indemnification,
bonus, profit sharing, compensation, termination, stock option, stock
appreciation right, restricted stock, performance unit, stock equivalent, stock
purchase, pension, retirement, deferred compensation or other employee benefit
agreement, trust, plan, fund, award or other arrangement for the benefit or
welfare of any director, officer or employee of NEON or any of its Subsidiaries
in any manner (other than amendments to maintain the tax qualified status of any
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NEON Plan under the Code), other than in the ordinary course of business
consistent with past practice or to the extent not material, or (B) change in
control, "continuity", retention or severance agreement or other similar plan,
program, policy, agreement or arrangement for the benefit or welfare of any
director, officer or employee of NEON or any of its Subsidiaries in any manner
(other than amendments to maintain the tax qualified status of any NEON Plan
under the Code); (ii) increase any compensation or benefits payable or to become
payable under any existing (A) employment, stock loan, or consulting or other
similar agreement or arrangement, other than in the ordinary course of business
consistent with past practice or to the extent not material, or (B) severance or
termination pay policy, deferred compensation, change in control, retention or
other similar agreement or arrangement; (iii) increase the compensation, bonus,
incentive or other benefits payable to (or to become payable to) former or
current directors, officers, employees or consultants of NEON or any of its
Subsidiaries, other than an increase in annual salary or hourly wage rates
granted to current employees (other than officers) in the ordinary course of
business, consistent with past practice; (iv) make any contribution, other than
regularly scheduled contributions, to any NEON Plan; or (v) make a commitment or
agree to do any of the foregoing.
(j) FUNDAMENTAL TRANSACTIONS. NEON shall not, and shall not permit any
of its material Subsidiaries to, adopt a plan of complete or partial
liquidation, dissolution, restructuring, recapitalization or other
reorganization (other than the Merger) or alter through merger, liquidation,
reorganization, or restructuring the corporate structure or ownership of any of
its Subsidiaries (other than the liquidation of dormant Subsidiaries or the
merger of dormant Subsidiaries into NEON or another Subsidiary of NEON).
(k) MATERIAL CONTRACTS. Except in the ordinary course of business
consistent with past practices or in connection with an action permitted
pursuant to this Section 4.1, neither NEON nor any of its Subsidiaries shall
enter into, renew or modify any Contract which, if in effect on the date hereof,
would have been a NEON Material Contract.
(l) COMMITMENTS. NEON shall not and shall not permit any of its
Subsidiaries to enter into an agreement, contract, commitment or arrangement to
take any of the actions prohibited by the foregoing provisions of this Section
4.1.
Section 4.2 COVENANTS OF GLOBIX. During the period from the date of
this Agreement and continuing until the Effective Time, Globix agrees as to
itself and its Subsidiaries that (except as contemplated by this Agreement
(including the Schedules thereto), as required by Law or by the rules and
regulations of a Governmental Entity, or to the extent that NEON shall otherwise
consent in writing, which consent shall not be unreasonably withheld or
delayed):
(a) ORDINARY COURSE.
(i) Except as otherwise provided or permitted in this
Section 4.2, Globix and its Subsidiaries shall carry on their
respective businesses in the usual, regular and ordinary course in all
material respects, in substantially the same manner as heretofore
conducted, and shall use all commercially reasonable efforts to
preserve intact their present lines of business, maintain their rights
and franchises and preserve their relationships with customers,
suppliers and others having business dealings with them to the end
that their ongoing businesses shall not be impaired in any material
respect at the Effective Time, and shall pay, discharge or satisfy
claims, liabilities or obligations (whether absolute, accrued,
asserted or unasserted, contingent or otherwise), only in the usual,
regular and ordinary course of business.
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(ii) Globix shall not, and shall not permit any of its
Subsidiaries to, enter into any new material line of business.
(b) DIVIDENDS; CHANGES IN SHARE CAPITAL. Globix shall not, and shall
not permit any of its Subsidiaries to, (i) declare or pay any dividends on or
make other distributions in respect of any of its capital stock, except for
dividends by Subsidiaries of Globix to Globix or another wholly owned Subsidiary
of Globix, (ii) split, combine or reclassify any of its capital stock or issue
or authorize or propose the issuance of any other securities in respect of, in
lieu of or in substitution for, shares of its capital stock, except for any such
transaction by a wholly owned Subsidiary of Globix which remains a wholly owned
Subsidiary after consummation of such transaction, or (iii) repurchase, redeem
or otherwise acquire any shares of its capital stock or any securities
convertible into or exercisable for any shares of its capital stock other than
the purchase from time to time by Globix of Globix Common Stock in the ordinary
course of business consistent with past practice in connection with the Globix
Stock Option Plans.
(c) ISSUANCE OF SECURITIES. Globix shall not, and shall not permit any
of its Subsidiaries to, issue or sell, or authorize or propose the issuance or
sale of, any shares of its capital stock of any class, any indebtedness with
voting rights or any securities convertible into or exercisable for, or any
rights, warrants or options to acquire, any such shares or any indebtedness with
voting rights, or any stock appreciation, phantom stock or similar stock rights
with respect to Globix or its Subsidiaries, or enter into any agreement or
commitment with respect to any of the foregoing, other than (i) the issuance of
Globix Common Stock upon the exercise of Globix Options and the Globix CTA
Warrants outstanding as of the date hereof in accordance with their terms, (ii)
issuances by a wholly-owned Subsidiary of Globix of capital stock to Globix or
another wholly-owned Subsidiary of Globix, and (iii) any exchange of outstanding
11% Senior Secured Notes due 2008 of Globix ("SENIOR SECURED NOTES") for shares
of Globix Common Stock in one or more public or private transactions pursuant to
the Globix Debt Purchase, provided that, in the event that Globix desires to
exchange additional Senior Secured Notes for Globix Common Stock, the parties
agree to negotiate in good faith all of the modifications to the provisions of
this Agreement that are necessary or appropriate to reflect any such additional
exchange.
(d) GOVERNING DOCUMENTS. Globix and its Subsidiaries shall not amend,
in the case of Subsidiaries, in any material respect, their respective charter,
articles or certificates of incorporation, by-laws or other governing documents.
(e) NO ACQUISITIONS. Globix shall not, and shall not permit any of its
Subsidiaries to, acquire or agree to acquire by merging or consolidating with,
or by purchasing a substantial equity interest in or a substantial portion of
the assets of, or by any other manner, any business or any corporation,
partnership, association or other business organization or division thereof.
(f) NO DISPOSITIONS. Other than (i) internal reorganizations or
consolidations involving existing Subsidiaries of Globix, (ii) in the ordinary
course of business, (iii) pursuant to Permitted Liens of the type described in
clauses (i) and (ii) of the definition of Permitted Liens or (iv) as set forth
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in Section 3.2(f) of the Globix Disclosure Schedule, Globix shall not, and shall
not permit any Subsidiary of Globix to, sell, lease, encumber or otherwise
dispose of, or agree to sell, lease, encumber or otherwise dispose of, any of
its assets (including capital stock of Subsidiaries of Globix) which are
material, individually or in the aggregate, to Globix and its Subsidiaries.
(g) INVESTMENTS; INDEBTEDNESS. Globix shall not, and shall not permit
any of its Subsidiaries to (i) make any loans, advances or capital contributions
to, or investments in, any other Person, other than (A) by Globix or a
Subsidiary of Globix to or in Globix or any wholly owned Subsidiary of Globix,
or (B) financing transactions in the ordinary course of business (including in
connection with any financing transactions of the type or similar to those
previously engaged in by Globix and its Subsidiaries, in amounts consistent
therewith, taking into account any growth in the business of Globix and its
Subsidiaries) or (ii) create, incur, assume or suffer to exist any indebtedness,
issuances of debt securities, guarantees, loans or advances, or engage in any
asset securitization transaction (whether accounted for as a sale of assets or
as a financing transaction) not in existence as of the date of this Agreement
except (A) intercompany indebtedness between Globix and any of its wholly owned
Subsidiaries or between such wholly owned Subsidiaries, or (B) in the ordinary
course of business.
(h) ACCOUNTING METHODS; INCOME TAX ELECTIONS. Globix shall not (i)
materially change its methods of accounting or accounting principles or
practices used by it, except as required by changes in GAAP as concurred in by
Globix's independent accountants, (ii) change its fiscal year, (iii) make or
revoke any material express or deemed election relating to Taxes, (iv) settle or
compromise any Tax liability material to Globix and its Subsidiaries taken as a
whole or (v) change (or make a request to any Tax Authority to change) any
material aspect of its method of accounting for Tax purposes. Globix shall, and
shall cause each of its Subsidiaries to, duly and timely file all Tax Returns
and other documents required to be filed with federal, state, local and other
Tax Authorities, subject to timely extensions permitted by law and except where
any failure to file timely would not have a material cost; PROVIDED, HOWEVER,
that Globix shall promptly notify NEON if it is availing itself of such
extensions.
(i) COMPENSATION. Except as required by Law or an existing agreement,
Globix shall not, and shall not permit any of its Subsidiaries to: (i) enter
into, adopt or amend or terminate any (A) employment, consulting,
indemnification, bonus, profit sharing, compensation, termination, stock option,
stock appreciation right, restricted stock, performance unit, stock equivalent,
stock purchase, pension, retirement, deferred compensation or other employee
benefit agreement, trust, plan, fund, award or other arrangement for the benefit
or welfare of any director, officer or employee of Globix or any of its
Subsidiaries in any manner (other than amendments to maintain the tax qualified
status of any Globix Plan under the Code), other than in the ordinary course of
business consistent with past practice or to the extent not material, or (B)
change in control, "continuity", retention or severance agreement or other
similar plan, program, policy, agreement or arrangement for the benefit or
welfare of any director, officer or employee of Globix or any of its
Subsidiaries in any manner (other than amendments to maintain the tax qualified
status of any Globix Plan under the Code); (ii) increase any compensation or
benefits payable or to become payable under any existing (A) employment, stock
loan, or consulting or other similar agreement or arrangement, other than in the
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ordinary course of business consistent with past practice or to the extent not
material, or (B) severance or termination pay policy, deferred compensation,
change in control, retention or other similar agreement or arrangement; (iii)
increase the compensation, bonus, incentive or other benefits payable to (or to
become payable to) former or current directors, officers, employees or
consultants of Globix or any of its Subsidiaries, other than an increase in
annual salary or hourly wage rates granted to current employees (other than
officers) in the ordinary course of business, consistent with past practice;
(iv) make any contribution, other than regularly scheduled contributions, to any
Globix Plan; or (v) make a commitment or agree to do any of the foregoing.
(j) FUNDAMENTAL TRANSACTIONS. Globix shall not, and shall not permit
any of its material Subsidiaries to, adopt a plan of complete or partial
liquidation, dissolution, restructuring, recapitalization or other
reorganization (other than the Merger) or alter through merger, liquidation,
reorganization, or restructuring the corporate structure or ownership of any of
its Subsidiaries (other than the liquidation of dormant Subsidiaries or the
merger of dormant Subsidiaries into Globix or another Subsidiary of Globix.)
(k) MATERIAL CONTRACTS. Except in the ordinary course of business
consistent with past practice or in connection with an action permitted pursuant
to this Section 4.2, neither Globix nor any of its Subsidiaries shall enter
into, renew or modify any Contract which, if in effect on the date hereof, would
have been a Globix Material Contract.
(l) COMMITMENTS. Globix shall not and shall not permit any of its
Subsidiaries to enter into an agreement, contract, commitment or arrangement to
take any of the actions prohibited by the foregoing provisions of this Section
4.2.
Section 4.3 NO CONTROL.
(a) Nothing contained in this Agreement shall give Globix, directly or
indirectly, the right to control or direct NEON's or its Subsidiaries'
operations prior to the Effective Time. NEON shall exercise, consistent with the
terms and conditions of this Agreement, complete control and supervision over
its and its Subsidiaries' operations prior to the Effective Time.
(b) Nothing contained in this Agreement shall give NEON, directly or
indirectly, the right to control or direct Globix's or its Subsidiaries'
operations prior to the Effective Time. Globix shall exercise, consistent with
the terms and conditions of this Agreement, complete control and supervision
over its and its Subsidiaries' operations prior to the Effective Time.
ARTICLE V
ADDITIONAL AGREEMENTS
---------------------
Section 5.1 PREPARATION OF PROXY STATEMENT; STOCKHOLDERS MEETINGS
(a) NEON and Globix shall promptly prepare and file with the SEC the
Proxy Statement and Globix shall prepare and file with the SEC the Registration
Statement, in which the Proxy Statement will be included as a prospectus. Each
of Globix and NEON shall use its reasonable best efforts to have the
Registration Statement declared effective under the Securities Act as promptly
as practicable after such filing. As promptly as practicable after the
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Registration Statement shall have become effective, NEON shall mail the Proxy
Statement to its stockholders and Globix shall mail the Proxy Statement to its
stockholders. NEON shall promptly notify Globix if, at any time prior to the
Effective Time, any event with respect to NEON, its officers and directors or
any of its Subsidiaries shall occur that is required to be described in the
Proxy Statement or the Registration Statement, filed with the SEC or, as
required by law, disseminated to the stockholders of NEON or Globix. Globix
shall promptly notify NEON if, at any time prior to the Effective Time, any
event with respect to Globix, its officers and directors or any of its
Subsidiaries shall occur that is required to be described in the Proxy Statement
or the Registration Statement, filed with the SEC or, as required by law,
disseminated to the stockholders of NEON or Globix. Globix shall also take any
action (other than qualifying to do business in any jurisdiction in which it is
now not so qualified) required to be taken under any applicable state securities
laws in connection with the issuance of Globix Common Stock in the Merger, and
NEON shall furnish all information concerning NEON and the holders of NEON
Common Stock and NEON Convertible Preferred Stock as may be reasonably requested
in connection with any such action.
(b) NEON will, as soon as practicable following the date of this
Agreement and the finalizing of the Proxy Statement for distribution, duly call,
give notice of, convene and hold a meeting of stockholders (the "NEON
STOCKHOLDERS MEETING") for the purpose of considering the matters to be
considered under the NEON Required Vote, solicit proxies in favor of approval
and adoption of this Agreement and the other matters contemplated by the NEON
Required Vote and at such meeting call for a vote and cause proxies solicited by
NEON giving the proxyholder voting discretion or authority to be voted in favor
of approval and adoption of this Agreement and the other matters contemplated by
the NEON Required Vote or otherwise according to the instructions provided in
such proxies. NEON has, through its Board of Directors, recommended to its
stockholders the adoption and approval of this Agreement and shall not withdraw,
modify or change such recommendation; PROVIDED, HOWEVER, that the Board of
Directors of NEON may withdraw, modify or change such recommendation in order to
comply with its fiduciary duties if it (i) has concluded in good faith that it
is required to do under applicable law, and (ii) enters into a merger,
acquisition or other agreement (including an agreement in principle) to effect a
competing acquisition or other business combination proposal or the Board of
Directors resolves to do so (a "NEON ALTERNATIVE PROPOSAL").
(c) In the event of a Globix Stockholder Vote, Globix will, as soon as
practicable following the date of this Agreement, or (if later) the date such
Globix Stockholder Vote shall become required, and the finalizing of the Proxy
Statement for distribution, duly call, give notice of, convene and hold a
meeting of stockholders (the "GLOBIX STOCKHOLDERS MEETING") for the purpose of
considering the matters to be considered under the Globix Stockholder Vote,
solicit proxies in favor of the matters contemplated by the Globix Stockholder
Vote and at such meeting call for a vote and cause proxies solicited by Globix
giving the proxyholder voting discretion or authority to be voted in favor of
the matters contemplated by the Globix Stockholder Vote or otherwise according
to the instructions provided in such proxies. In the event of a Globix
Stockholder Vote, Globix has, through its Board of Directors, recommended to its
stockholders the adoption and approval of this Agreement, and it shall not
withdraw, modify or change such recommendation; PROVIDED, HOWEVER, that the
Board of Directors of Globix may withdraw, modify or change such recommendation
in order to comply with its fiduciary duties if it (i) has concluded in good
faith that it is required to do so under applicable law, and (ii) enters into a
merger, acquisition or other agreement (including an agreement in principle) to
effect a competing acquisition or other business combination proposal or the
Board of Directors resolves to do so (a "GLOBIX ALTERNATIVE PROPOSAL").
(d) Globix shall use commercially reasonable efforts to maintain the
effectiveness of the Registration Statement for a period of one year following
the Closing Date to enable holders of 10% of Globix Common Stock following the
Closing who are not affiliated with directors or officers of Globix or NEON to
sell their shares of Globix Common Stock received in the Merger.
Section 5.2 ACCESS TO INFORMATION.
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(a) Upon reasonable notice, NEON and Globix shall, during the period
after the execution and delivery of this Agreement and prior to the Effective
Time, (i) afford to the officers, employees, accountants, counsel, investment
bankers and other representatives of one another reasonable access, during
normal business hours, to their respective properties, books, records and
Contracts, (ii) furnish to one another information concerning the business,
properties, prospects, assets (tangible and intangible), liabilities, financial
statements, ratings, regulatory compliance, risk management, books, records,
contracts, agreements, commitments and personnel as each may reasonably request,
and (iii) make reasonably available, during normal business hours, to one
another their respective appropriate officers and employees for discussion of
their respective businesses, properties, prospects, assets, liabilities,
financial statements, ratings, regulatory compliance, risk management, books,
records, contracts, agreements, commitments and personnel as each may reasonably
request (subject to contractual limitations).
(b) Globix and NEON and their respective representatives will hold any
such information in confidence to the extent required by, and in accordance
with, the provisions of the confidentiality agreement dated on or about January
29, 2004, between NEON and Globix (the "CONFIDENTIALITY AGREEMENT").
(c) Any investigation by Globix shall not qualify the representations
and warranties of NEON, and any investigation by NEON shall not qualify the
representations and warranties of Globix.
Section 5.3 REASONABLE EFFORTS.
(a) Subject to the terms and conditions of this Agreement, each of
Globix and NEON shall, and shall cause its Subsidiaries to, use commercially
reasonable efforts (i) to take, or cause to be taken, all actions necessary,
proper or advisable to comply promptly with all legal requirements which may be
imposed on such party or its Subsidiaries with respect to the Merger and,
subject to the conditions set forth in Article VI hereof, to consummate the
Merger as promptly as practicable and (ii) to obtain (and to cooperate with the
other party to obtain) the NEON Required Consents and the Globix Required
Consents, and to comply with the terms and conditions of any NEON Required
Consent and Globix Required Consent.
(b) Without limiting the foregoing, NEON and Globix shall duly file
with the United States Federal Trade Commission and the Antitrust Division of
the Department of Justice the premerger notification and report form (the "HSR
FILING") required under the HSR Act with respect to the Merger as promptly as
practical following the date hereof. The HSR Filings shall be in substantial
compliance with the requirements of the HSR Act. Each party shall cooperate with
the other party to the extent necessary to assist the other party in the
preparation of its HSR Filing, to request early termination of the waiting
period required by the HSR Act and, if requested, to promptly amend or furnish
additional information thereunder. Globix and NEON shall furnish to each other
all such information as is necessary to prepare any such registration,
declaration or filing. Globix and NEON each shall pay the filing fees with
respect to the HSR Filing as provided in Section 5.6(a), as well as any other
such registration, declaration or filing. Globix and NEON shall keep each other
apprised of the status of any communications with, and any inquiries or requests
for additional information from, any Governmental Entity with respect to the
Merger.
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(c) Notwithstanding anything to the contrary, (i) neither NEON nor
Globix shall be under any obligation to litigate before or with, or contest any
order or decree, or defend against any such actions or proceedings commenced by
any Governmental Entity in respect of the antitrust, competition, merger control
or similar laws and rules or regulations, and (ii) neither Globix nor any of its
Subsidiaries or affiliates shall be obligated to propose or agree to accept any
undertaking or condition, to enter into any consent decree, to make any
divestiture or accept any operational restriction, or take or commit to take any
action that could reasonably be expected to limit (A) the freedom of action of
Globix or its Subsidiaries or Affiliates with respect to the operation of, or
Globix's or its Subsidiaries' or Affiliates' ability to retain, NEON or any
businesses, product lines or assets of NEON, or (B) the ability to retain, own
or operate any portion of the businesses, product lines, or assets, of Globix or
any of its Subsidiaries or Affiliates, or alter or restrict in any way the
business or commercial practices of NEON, Globix, their respective Subsidiaries
or their respective Affiliates. If any such party or any Affiliate thereof
receives a request for additional information or documentary material from any
such Governmental Entity with respect to the Merger, then such party will
endeavor in good faith to make, or cause to be made, as soon as possible and
after consultation with the other parties, an appropriate response in compliance
with such request. Globix, on the one hand, and NEON, on the other hand, shall
promptly inform the other of any material communication from the United States
Federal Trade Commission, the Department of Justice or any other Governmental
Entity regarding the Merger.
(d) Prior to the Closing, each party shall use commercially reasonable
efforts to refrain from taking any action or failing to take any action, which
action or failure to act would cause, or be reasonably likely to cause, the
Merger to fail to qualify as a reorganization within the meaning of Section
368(a) of the Code.
Section 5.4 PUBLIC ANNOUNCEMENTS. No public or other announcement
concerning the transactions contemplated hereby will be made except by the
mutual consent of Globix and NEON, subject in any event to the public reporting
and disclosure requirements of Globix. Subject to the foregoing, Globix will use
its reasonable efforts to submit to NEON any release or public announcements for
its comment prior to issuance, and NEON agrees to provide Globix with comments
on any such release or public announcement within one Business Day of receipt.
Section 5.5 EMPLOYEE BENEFITS MATTERS. Until December 31, 2004,
employees of NEON who remain employed by NEON following the Merger shall be
entitled to employee benefits that are substantially the same as those provided
to employees of NEON immediately prior to the Merger. After December 31, 2004,
and until the end of a period to be determined by the Transition Committee,
employees of NEON shall continue to be provided with such employee benefits or
shall be provided with employee benefits as determined by the Transition
Committee. After such transition period, the employee benefits of NEON employees
shall be determined by the Board of Directors of Globix. If there is any change
in the benefit plans provided to employees of NEON between December 31, 2004 and
the end of the transition period as determined by the Transition Committee, all
such employees participating in such benefit plans shall be offered immediate
participation in the most nearly comparable Globix benefit plans. Except as
required by law, no preexisting condition exclusions shall be applicable to
employees electing immediate participation in such Globix benefit plans, and no
waiting period or exclusions shall be applicable to employees electing immediate
participation in such new benefit plans. All of such employees' periods of
service with NEON shall be counted for all purposes of any Globix employee
benefit plans in which they may become participants.
Section 5.6 FEES AND EXPENSES. If the Merger is not consummated, all
costs and expenses incurred in connection with this Agreement and the
transactions contemplated hereby, including transfer Taxes and the fees and
disbursements of counsel, financial advisors and accountants, as well as fees of
separate counsel, financial advisors, or accountants for employees or others,
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shall be paid by the party incurring such costs and expenses out of the separate
funds of such party, not to be reimbursed by the other, provided that all
printing expenses and all filing fees (including filing fees under the Exchange
Act, any Blue Sky laws and the HSR Act) shall be divided equally between Globix
and NEON. If the Merger is consummated, all costs and expenses incurred in
connection with this Agreement and the transactions contemplated hereby
described in the preceding sentence, to the extent not already paid, shall be
paid by Globix and the Surviving Corporation.
Section 5.7 DIRECTORS' AND OFFICERS' INDEMNITY.
(a) Globix shall and shall cause the Surviving Corporation to
indemnify and hold harmless each present and former director and officer of NEON
and other Persons entitled to indemnification ("COVERED PERSONS") under the
certificate of incorporation and bylaws or similar organizational documents of
NEON or any of its Subsidiaries as in effect on the date of this Agreement (the
"NEON DOCUMENTS") against any costs or expenses (including attorneys' fees),
judgments, fines, losses, claims, amounts paid in settlement, damages or
liabilities (collectively, "COSTS") reasonably incurred in connection with any
threatened, pending or completed claim, action, suit, proceeding or
investigation, whether civil, criminal, administrative or investigative, brought
against a Covered Person and arising out of or pertaining to matters existing or
occurring with respect to NEON or any of its Subsidiaries at or prior to the
Effective Time, whether asserted or claimed prior to, at or after the Effective
Time, to the fullest extent permitted under the NEON Documents and applicable
Law. Each Covered Person will be entitled to advancement of expenses incurred in
the defense of any claim, action, suit, proceeding or investigation from Globix
and the Surviving Corporation within ten (10) Business Days of receipt from the
Covered Person of a request therefor to the fullest extent permitted by the DGCL
and the Xxxxxxxx-Xxxxx Act of 2002; PROVIDED, HOWEVER, that any person to whom
expenses are advanced provides an undertaking, to the extent required by the
DGCL, to repay such advances if it is ultimately determined that such person is
not entitled to indemnification.
(b) Globix shall cause the Surviving Corporation to maintain for a
period of at least five years policies of directors' and officers' liability
insurance and fiduciary liability insurance for the benefit of the Covered
Persons with respect to claims arising from facts or events that occurred on or
before the Effective Time, including in respect of the transactions contemplated
by this Agreement, such insurance coverage to be the same coverage as in effect
for NEON prior to the Effective Time.
(c) If Globix, the Surviving Corporation, any of its Subsidiaries or
any of their respective successors or assigns (i) consolidates with or merges
with or into any other Person and shall not be the continuing or surviving
corporation or entity of such consolidation or merger, or (ii) transfers or
conveys all or substantially all of its properties and assets to any Person,
then, and in each such case, to the extent necessary, proper provision shall be
made so that the successors and assigns of Globix, the Surviving Corporation,
such Subsidiary or such successor or assign assume the obligations set forth in
this Section 5.7.
(d) This Section 5.7 shall survive the consummation of the Merger and
the Effective Time and is intended to benefit and shall be enforceable by the
Covered Persons and their respective heirs, executors and personal
representatives and shall be binding on and enforceable against Globix and the
Surviving Corporation and their respective successors and assigns.
Section 5.8 CONSENTS, WAIVERS AND OTHER APPROVALS.
(a) NEON and its Subsidiaries shall use their commercially reasonable
efforts to obtain all consents, waivers and other approvals necessary in order
to avoid the occurrence, as a result of the Merger, of any (i) Violation under
any NEON Material Contract, or (ii) the loss or diminution in value of any NEON
Permit.
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(b) Globix and its Subsidiaries shall use their commercially reasonable efforts
to obtain all consents, waivers and other approvals necessary in order to avoid
the occurrence, as a result of the Merger, of any (i) Violation under any Globix
Material Contract, or (ii) the loss or diminution in value of any Globix Permit.
Section 5.9 COMMITTEE FOR TRANSITION ISSUES. Subject in all cases to
Section 4.3, upon the execution of this Agreement, NEON and Globix shall cause
their respective Chief Executive Officers, and Globix shall cause its Chairman
of the Board, to form a committee (the "TRANSITION COMMITTEE") to develop
transition plans for the post-Closing period, including employee benefits
arrangements for NEON employees as specified in Section 5.5. In addition, the
Chief Executive Officer of NEON shall have the right to appoint a qualified
member of the Board of Directors of NEON to such joint committee. A qualified
member shall be one of those directors set forth on Exhibit 1.7 of this
Agreement.
Section 5.10 SCHEDULES. Disclosure on a schedule that is part of, or
provided pursuant to, this Agreement will not signify or be deemed an
acknowledgment that the disclosure is material or required to be included in the
schedule. NEON or Globix may, from time to time prior to the Closing by written
notice to the other party, supplement or amend their respective Disclosure
Schedules or additional disclosure documents provided pursuant to this Agreement
to correct any matter that could constitute a breach of any representation or
warranty of NEON or Globix contained in this Agreement. No such supplement or
amendment will act to cure or correct a breach of a representation or warranty
for purposes of Sections 6.2 or 6.3 until after the Closing Date. If the Closing
occurs, then all matters disclosed pursuant to any such supplement or amendment
at or prior to the Closing shall be waived, and the Disclosure Schedules or
additional disclosure documents, as the case may be, as so supplemented or
amended at the time of Closing shall thereafter constitute the Disclosure
Schedules or additional disclosure documents, as the case may be, for purposes
of this Agreement (including Article VIII).
Section 5.11 FINANCIAL REVIEW. Following the date of this Agreement
and prior to the delivery of the Proxy Statement, Globix and NEON shall each
cause their respective independent auditors to perform a financial due diligence
review of the other party in accordance with the procedures described on Exhibit
5.11 attached hereto, which review shall be completed no later than August 15,
2004, and to prepare a report of such review that shall be presented for review
by the Board of Directors and Special Committee of each of NEON and Globix. Each
party agrees that it shall notify the other party no later than September 15,
2004 of any issue that arises as a result of such report and requires further
discussion between the parties.
Section 5.12 COOPERATION. NEON agrees, during the period after the
execution and delivery of this Agreement and prior to the Effective Time, to use
its commercially reasonable efforts to manage its business so that, assuming the
Merger were to occur on September 30, 2004, NEON would have approximately
$7,000,000 in unrestricted cash on a consolidated basis immediately prior to the
Merger and any payment of Preferred Cash Consideration pursuant to Section
1.8(c)(ii). Globix agrees, during the period after the execution and delivery of
this Agreement and prior to the Effective Time, to use its commercially
reasonable efforts to manage its business so that, assuming that the Merger were
to occur on September 30, 2004, Globix would have approximately $18,000,000 in
unrestricted cash on a consolidated basis immediately prior to the Merger.
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ARTICLE VI
CONDITIONS PRECEDENT
--------------------
Section 6.1 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE
MERGER. The obligations of NEON and Globix to effect the Merger are subject to
the satisfaction or waiver on or prior to the Closing Date of the following
conditions:
(a) STOCKHOLDER APPROVAL. NEON shall have obtained the NEON Required
Vote approving the Merger and the other transactions contemplated hereby,
including the amendment to NEON's certificate of incorporation contemplated
hereby. Globix shall have received the Globix Stockholder Vote, if applicable.
(b) NO ORDER. No court or other Governmental Entity having
jurisdiction over NEON or Globix, or any of their respective Subsidiaries, shall
have enacted, issued, promulgated, enforced or entered any law, rule,
regulation, executive order, decree, injunction or other order (whether
temporary, preliminary or permanent) which is then in effect and has the effect
of, directly or indirectly, restraining, prohibiting or restricting the Merger
or any of the transactions contemplated hereby; PROVIDED, HOWEVER, that the
provisions of this Section 6.1(b) shall not be available to any party whose
failure to fulfill its obligations pursuant to Section 5.3 shall have been the
cause of, or shall have resulted in, the enforcement or entering into of any
such law, rule, regulation, executive order, decree, injunction or other order.
(c) HSR AND OTHER APPROVALS/CONSENTS OR WAIVERS.
(i) The waiting period (and any extension thereof)
applicable to the consummation of the Merger under the HSR Act shall
have expired or been terminated.
(ii) All authorizations, consents, orders, declarations or
approvals of, or filings with, or terminations or expirations of
waiting periods imposed by, any Person or Governmental Entity, which
the failure to obtain, make or occur would have the effect of,
directly or indirectly, restraining, prohibiting or restricting the
Merger or any of the transactions contemplated hereby or would have,
individually or in the aggregate, a Globix Material Adverse Effect
(assuming the Merger had taken place), shall have been obtained, shall
have been made or shall have occurred.
(d) REGISTRATION STATEMENT. The Registration Statement shall have
become effective in accordance with the provisions of the Securities Act. No
stop order suspending the effectiveness of the Registration Statement shall have
been issued by the SEC and no proceedings for that purpose shall have been
initiated or, to the Knowledge of Globix or NEON, threatened by the SEC. All
necessary state securities or blue sky filings shall have been made and required
authorizations shall have been received.
(e) DISSENTING SHARES. The number of shares of NEON Common Stock that
are Dissenting Shares shall be no greater than fifteen percent (15%) of the
outstanding NEON Common Stock and the number of shares of NEON Convertible
Preferred Stock that are Dissenting Shares shall be no greater than fifteen
percent (15%) of the outstanding NEON Convertible Preferred Stock, each as of
the Record Date.
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Section 6.2 ADDITIONAL CONDITIONS TO OBLIGATIONS OF GLOBIX. The
obligations of Globix to effect the Merger are subject to the satisfaction of,
or waiver by Globix, on or prior to the Closing Date of the following additional
conditions:
(a) REPRESENTATIONS AND WARRANTIES. Each of the representations and
warranties of NEON set forth in this Agreement (i) that is qualified as to
materiality and Material Adverse Effect shall have been true and correct at and
as of the Closing Date as if made at and as of the Closing Date, and (ii) that
is not so qualified shall have been true and correct in all material respects at
and as of the Closing Date as if made at and as of the Closing Date (except, in
each case, for those representations and warranties which address matters only
as of a particular date, in which case, they shall be true and correct, or true
and correct in all material respects, as applicable, as of such date); and
Globix shall have received a certificate of the chief executive officer and the
chief financial officer of NEON certifying to the satisfaction of the conditions
set forth in this Section 6.2(a).
(b) PERFORMANCE OF OBLIGATIONS OF NEON. NEON shall have performed or
complied with all agreements and covenants required to be performed by it under
this Agreement at or prior to the Closing Date that are qualified as to
materiality and shall have performed or complied in all material respects with
all other agreements and covenants required to be performed by it under this
Agreement at or prior to the Closing Date that are not so qualified as to
materiality, and Globix shall have received a certificate of the chief executive
officer and the chief financial officer of NEON to such effect.
(c) OPINIONS. Globix shall have received an opinion of Day, Xxxxx &
Xxxxxx LLP, in form and substance reasonably satisfactory to Globix, dated as of
the Effective Time, on the basis of facts, representations and assumptions that
are consistent with the state of facts existing as of the Effective Time
substantially to the effect that, for federal income tax purposes, the Merger
will constitute a "reorganization" within the meaning of Section 368(a) of the
Code. In rendering such opinion, Day, Xxxxx & Xxxxxx LLP may receive and rely
upon customary representations from Globix and NEON.
(d) NO MATERIAL ADVERSE CHANGE. Since the date of this Agreement
through and including the time immediately prior to the Effective Time, there
shall not have been any changes, circumstances or effects which, individually or
in the aggregate, have had or could reasonably be expected to have, a NEON
Material Adverse Effect.
(e) LITIGATION. There shall not be pending or threatened (as evidenced
by a writing), any suit, action or proceeding by a federal, state or foreign
governmental entity or any other Person (other than a suit, action or proceeding
based on facts solely relating to Globix or Merger Sub or any of their
respective Subsidiaries) which could reasonably be expected to (i) restrain,
prohibit or declare illegal the consummation of the Merger, (ii) in connection
with the Merger, prohibit or impose any material limitations on Globix's or
Merger Sub's ownership or operation (or that of any of their respective
Affiliates) of all or a material portion of NEON's businesses or assets after
giving effect to the Merger, or (iii) in connection with the Merger, compel
Globix or Merger Sub or their respective Subsidiaries and Affiliates to dispose
of or hold separate any portion of the business or assets of NEON or any of its
Subsidiaries (after giving effect to the Merger).
(f) GLOBIX INDENTURE REQUIREMENTS. NEON and each of NEON's
Subsidiaries shall have entered into a Subsidiary Guaranty Agreement and a
Security Agreement pursuant to the terms of the Indenture, dated as of April 23,
2002, among Globix, certain of its Subsidiaries and HSBC Bank USA, as Trustee
(the "GLOBIX INDENTURE").
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(g) FIRPTA CERTIFICATE. Globix shall have received a statement meeting
the requirements of Treasury Regulation Section 1.1445-2(c)(3) that neither NEON
nor any of NEON's Subsidiaries is a United States real property holding
corporation.
(h) THIRD PARTY/GOVERNMENTAL CONSENTS. NEON or the applicable
Subsidiary shall have obtained all consents, waivers and other approvals
necessary in order to avoid the occurrence, as a result of the Merger, of loss
or material diminution in value of any NEON Permits and NEON Material Contracts.
(i) EXERCISE OF CLASS A WARRANTS; AMENDMENT OF CLASS A WARRANT
AGREEMENT. The holders of ninety percent (90%) or more of the Class A Warrants
shall have exercised their respective Class A Warrants prior to or as of the
Effective Time, and NEON shall have used commercially reasonable efforts to
assist with and facilitate the exercise of all of the Class A Warrants prior to
or as of the Effective Time. The Class A Warrant Agreement shall have been
amended with the consent of at least a majority of the holders of the Class A
Warrant Agreement as provided in Exhibit 1.8(c)(iii) to permit the conversion of
Class A Warrants into shares of Globix Common Stock.
Section 6.3 ADDITIONAL CONDITIONS TO OBLIGATIONS OF NEON. The
obligations of NEON to effect the Merger are subject to the satisfaction of, or
waiver by NEON, on or prior to the Closing Date of the following additional
conditions:
(a) REPRESENTATIONS AND WARRANTIES. Each of the representations and
warranties of Globix set forth in this Agreement (i) that is qualified as to
materiality and Material Adverse Effect shall have been true and correct at and
as of the Closing Date as if made at and as of the Closing Date, and (ii) that
is not so qualified shall have been true and correct in all material respects at
and as of the Closing Date as if made at and as of the Closing Date (except, in
each case, for those representations and warranties which address matters only
as of a particular date, in which case, they shall be true and correct, or true
and correct in all material respects, as applicable, as of such date), and NEON
shall have received a certificate of the chief executive officer and the chief
financial officer of Globix certifying to the satisfaction of the conditions set
forth in this Section 6.3(a).
(b) PERFORMANCE OF OBLIGATIONS OF GLOBIX AND MERGER SUB. Each of
Globix and Merger Sub shall have performed or complied with all agreements and
covenants required to be performed by it under this Agreement at or prior to the
Closing Date that are qualified as to materiality and shall have performed or
complied in all material respects with all agreements and covenants required to
be performed by it under this Agreement at or prior to the Closing Date that are
not so qualified as to materiality, and NEON shall have received a certificate
of the chief executive officer and the chief financial officer of Globix to such
effect.
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(c) OPINION. NEON shall have received an opinion of Xxxxxxx Xxxxx LLP,
in form and substance reasonably satisfactory to NEON, dated as of the Effective
Time, on the basis of facts, representations and assumptions that are consistent
with the state of facts existing as of the Effective Time substantially to the
effect that, for federal income tax purposes, the Merger will constitute a
"reorganization" within the meaning of Section 368(a) of the Code. In rendering
such opinion, Xxxxxxx Xxxxx LLP may receive and rely upon customary
representations from Globix, Merger Sub and NEON.
(d) NO MATERIAL ADVERSE CHANGE. Since the date of this Agreement
through and including the time immediately prior to the Effective Time, there
shall not have been any changes, circumstances or effects which, individually or
in the aggregate, have had or could reasonably be expected to have, a Globix
Material Adverse Effect.
(e) LITIGATION. There shall not be pending or threatened (as evidenced
by a writing), any suit, action or proceeding by a federal, state or foreign
governmental entity or any other Person (other than a suit, action or proceeding
based on facts solely relating to NEON or any of its Subsidiaries) which could
reasonably be expected to (i) restrain, prohibit or declare illegal the
consummation of the Merger, (ii) in connection with the Merger, prohibit or
impose any material limitations on Globix's or Merger Sub's ownership or
operation (or that of any of their respective Affiliates) of all or a material
portion of NEON's businesses or assets after giving effect to the Merger, or
(iii) in connection with the Merger, compel Globix or Merger Sub or their
respective Subsidiaries and Affiliates to dispose of or hold separate any
portion of the business or assets of NEON or any of its Subsidiaries (after
giving effect to the Merger).
(f) THIRD PARTY/GOVERNMENTAL CONSENTS. Globix or the applicable
Subsidiary shall have obtained all consents, waivers and other approvals
necessary in order to avoid the occurrence, as a result of the Merger, of loss
or material diminution in value of any Globix Permits and Globix Material
Contracts.
(g) DEBT PURCHASE. Prior to the Effective Time, Globix shall have
acquired Senior Secured Notes in an amount equal to $12,500,000.00 including
principal and interest accrued thereon in exchange for shares of Globix Common
Stock valued at $2.75 per share (the "GLOBIX DEBT PURCHASE").
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ARTICLE VII
TERMINATION AND AMENDMENT
-------------------------
Section 7.1 TERMINATION. Anything herein or elsewhere to the contrary
notwithstanding, this Agreement may be terminated and the Merger contemplated
herein may be abandoned at any time prior to the Effective Time, whether before
or after stockholder approval thereof:
(a) By the mutual consent duly authorized by the Boards of Directors
of Globix and NEON.
(b) By either of NEON or Globix if:
(i) any Governmental Entity shall have issued an order,
decree or ruling or taken any other action in each case permanently
restraining, enjoining or otherwise prohibiting the Merger and such
order, decree, ruling or other action shall have become final and
non-appealable; PROVIDED, that the right to terminate this Agreement
pursuant to this Section 7.1(b)(i) shall not be available to any party
whose failure to fulfill any of its obligations contained in this
Agreement has been the cause of, or resulted in, the issuance of such
order, decree or ruling;
(ii) the Merger has not been effected on or prior to the
close of business on the date that is 150 days after the earlier of
the expiration or termination of the waiting period applicable to the
consummation of the Merger under the HSR Act; PROVIDED, that the right
to terminate this Agreement pursuant to this Section 7.1(b)(ii) shall
not be available to any party whose failure to fulfill any of its
obligations contained in this Agreement has been the cause of, or
resulted in, the failure of the Merger to have occurred on or prior to
the aforesaid date;
(iii) the other party shall have failed to comply in any
material respect with any of its covenants or agreements contained in
this Agreement required to be complied with prior to the date of such
termination, which failure to comply has not been cured within five
Business Days following receipt by such other party of written notice
of such failure to comply;
(iv) the holders of NEON Common Stock and NEON Convertible
Preferred Stock do not approve the matters submitted for the NEON
Required Vote;
(v) in the event of a Globix Stockholder Vote, if the
holders of the Globix Common Stock do not approve the matters
submitted for the Globix Stockholder Vote; or
(vi) if shares of NEON Common Stock representing greater
than fifteen percent (15%) of the outstanding NEON Common Stock or
shares of NEON Convertible Preferred Stock representing greater than
fifteen percent (15%) of the outstanding NEON Convertible Preferred
Stock, each as of the Record Date, shall be Dissenting Shares.
(c) By NEON if:
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(i) in the event of a Globix Stockholder Vote, and the Board
of Directors of Globix shall not have recommended, or shall have
resolved not to recommend, or shall have qualified, changed, modified
or withdrawn its recommendation of the Merger or declaration that the
Merger is advisable and in the best interest of Globix and its
stockholders, or shall have resolved to do so;
(ii) the Board of Directors of Globix shall have recommended
to the stockholders of Globix any transaction involving the
acquisition of all or substantially all of Globix's business other
than the Merger or shall have resolved to do so;
(iii) there has been a breach of a representation or
warranty of Globix that gives rise to a failure of the fulfillment of
a condition of NEON's obligations to effect the Merger pursuant to
Section 6.3, which breach has not been cured within five Business Days
following receipt by Globix of written notice of the breach;
(iv) there shall have been any changes, circumstances or
effects, which individually or in the aggregate, have had or could
reasonably be expected to have a Globix Material Adverse Effect;
(v) on or prior to September 15, 2004, NEON shall have
notified Globix in writing that the results of the review by NEON of
the financial due diligence report by the auditors of NEON provided to
the Board of Directors of NEON pursuant to Section 5.11 are not
satisfactory and reflect a Globix Material Adverse Effect, as
determined in good faith by the Special Committee of NEON, after a
full discussion with Globix of all issues raised in such review; or
(vi) the Board of Directors of NEON has approved a NEON
Alternative Proposal.
(d) By Globix if:
(i) the Board of Directors of NEON shall not have
recommended, or shall have resolved not to recommend, or shall have
qualified, changed, modified or withdrawn its recommendation of the
Merger or declaration that the Merger is advisable and in the best
interest of NEON and its stockholders, or shall have resolved to do
so;
(ii) the Board of Directors of NEON shall have recommended
to the stockholders of NEON any transaction involving the acquisition
of all or substantially all of NEON's business other than the Merger
or shall have resolved to do so;
(iii) there has been a breach of a representation or
warranty of NEON that gives rise to a failure of the fulfillment of a
condition of Globix's obligations to effect the Merger pursuant to
Section 6.2, which breach has not been cured within five Business Days
following receipt by NEON of written notice of the breach;
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(iv) there shall have been any changes, circumstances or
effects, which individually or in the aggregate, have had or could
reasonably be expected to have a NEON Material Adverse Effect;
(v) on or prior to September 15, 2004, Globix shall have
notified NEON in writing that the results of the review by Globix of
the financial due diligence report by the auditors of Globix provided
to the Board of Directors of Globix pursuant to Section 5.11 are not
satisfactory and reflect a NEON Material Adverse Effect, as determined
in good faith by the Special Committee of Globix, after a full
discussion with NEON of all issues raised in such review; or
(vi) the Board of Directors of Globix has approved a Globix
Alternative Proposal.
Section 7.2 EFFECT OF TERMINATION. In the event of the termination of
this Agreement as provided in Section 7.1, written notice thereof shall
forthwith be given to the other party or parties specifying the provision hereof
pursuant to which such termination is made, and this Agreement (other than
Sections 5.2(b), 5.6 and 7.2 hereof) shall forthwith become null and void, and
there shall be no liability on the part of Globix, Merger Sub, NEON or their
respective officers and directors, except (i) as provided in Section 5.6, and
(ii) nothing shall relieve any party from liability for fraud or any willful
breach of a covenant contained in this Agreement.
Section 7.3 AMENDMENT. This Agreement may be amended by the parties
hereto, by action taken or authorized by their respective Boards of Directors,
at any time before or after receipt of the NEON Required Vote or Globix
Stockholder Vote (if applicable) or approval of the Merger by Merger Sub's
stockholder, but, after any such approval, no amendment shall be made which by
law or in accordance with the rules of any relevant stock exchange requires
further approval by such stockholders without such further approval. This
Agreement may not be amended except by an instrument in writing signed on behalf
of each of the parties hereto.
Section 7.4 EXTENSION; WAIVER. At any time prior to the Effective
Time, the parties hereto may to the extent legally allowed, (i) extend the time
for the performance of any of the obligations or other acts of the other parties
hereto, (ii) waive any inaccuracies in the representations and warranties
contained herein or in any document delivered pursuant hereto, and (iii) waive
compliance with any of the agreements or conditions contained herein. Any
agreement on the part of a party hereto to any such extension or waiver shall be
valid only if set forth in a written instrument signed on behalf of such party.
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 those or any other
rights.
ARTICLE VIII
SURVIVAL
--------
Section 8.1 NON-SURVIVAL OF REPRESENTATIONS, WARRANTIES AND
AGREEMENTS. None of the representations, warranties, covenants or other
agreements in this Agreement or in any instrument delivered pursuant to this
Agreement, including any rights arising out of any breach of such
representations, warranties, covenants or other agreements, shall survive the
Effective Time, except (i) for those covenants and agreements contained herein
and therein that by their terms apply or are to be performed in whole or in part
after the Effective Time, and (ii) for this Article VIII.
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ARTICLE IX
GENERAL PROVISIONS
------------------
Section 9.1 AMENDMENT AND WAIVER. No amendment of any provision of
this Agreement shall be effective, unless the same shall be in writing and
signed by Globix and NEON. Any failure of any party to comply with any
obligation, agreement or condition hereunder may only be waived in writing by
the other parties, but such waiver shall not operate as a waiver of, or estoppel
with respect to, any subsequent or other failure. No failure by any party to
take any action with respect to any breach of this Agreement or default by
another party shall constitute a waiver of such party's right to enforce any
provision hereof or to take any such action.
Section 9.2 NOTICES. All notices and other communications hereunder
shall be in writing and shall be deemed duly given (i) on the date of delivery
if delivered personally, or if by facsimile upon confirmation of receipt, (ii)
on the first business day following the date of dispatch if delivered by a
recognized next-day courier service, or (iii) on the day of receipt if delivered
by registered or certified mail, return receipt requested, postage prepaid. All
notices hereunder shall be delivered in one of the means set forth above to the
addresses set forth below, or pursuant to such other instructions as may be
designated in writing by the party to receive such notice:
(a) if to Globix or Merger Sub, to:
Globix Corporation
000 Xxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxx X. Xxxxxxxxx, Esq., General Counsel
Facsimile: (000) 000-0000
with a copy (which shall not constitute notice) to:
Day, Xxxxx & Xxxxxx, LLP
Xxx Xxxxxxxxxx Xxxxx
Xxxxxxxx, Xxxxxxxxxxx 00000-0000
Attn: Xxxxxx X. Xxx, Esq.
Facsimile: (000) 000-0000
(b) if to NEON, to:
NEON Communications, Inc.
0000 Xxxx Xxxx Xxxxx
Xxxxxxxxxxx, XX 00000
Attn: Xxxxxxxxxxx X. Xxxxxx, Esq., Senior Counsel
Facsimile: (000) 000-0000
with a copy (which shall not constitute notice) to:
Xxxxxxx Xxxxx LLP
000 Xxxxxxxxx Xxx., 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx X. Xxxxxxxxxxx, Esq.
Facsimile: (000) 000-0000
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Section 9.3 INTERPRETATION. When a reference is made in this Agreement
to Sections, Exhibits or Schedules, such reference shall be to a Section of or
Exhibit or Schedule to this Agreement (or Section of a Disclosure Schedule, if
so stated) unless otherwise indicated. The table of contents, index of defined
terms and headings contained in this Agreement are for reference purposes only
and shall not affect in any way the meaning or interpretation of this Agreement.
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. The term "or" is not
exclusive.
Section 9.4 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, it being understood that
all parties need not sign the same counterpart.
Section 9.5 ENTIRE AGREEMENT; NO THIRD PARTY BENEFICIARIES.
(a) This Agreement constitutes the entire agreement and supersedes all
prior agreements and understandings, both written and oral, among the parties
with respect to the subject matter hereof, other than the Confidentiality
Agreement, which shall survive the execution and delivery of this Agreement. The
parties hereto acknowledge and agree that, except as otherwise expressly set
forth in this Agreement, the rights and obligations of NEON and Globix under any
other agreement between the parties not relating to the subject matter hereto
shall not be affected by any provision of this Agreement.
(b) This Agreement shall be binding upon and inure solely to the
benefit of each party hereto, and nothing in this Agreement, express or implied,
is intended to or shall confer upon any other Person any right, benefit or
remedy of any nature whatsoever under or by reason of this Agreement, other than
Section 5.7 and as necessary to permit or require Merger Sub to consummate the
transactions contemplated hereby.
Section 9.6 GOVERNING LAW. Except to the extent that rights of the
stockholders of NEON and Globix and the transactions contemplated hereby,
including the Merger, are governed by the laws of the State of Delaware, this
Agreement shall be governed and construed in accordance with the laws of the
State of New York that apply to contracts entered into and performed in the
State of New York.
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Section 9.7 SEVERABILITY. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any law or
public policy, all other terms and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions 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 Agreement so as to effect the
original intent of the parties as closely as possible in an acceptable manner in
order that the transactions contemplated hereby are consummated as originally
contemplated to the greatest extent possible.
Section 9.8 ASSIGNMENT. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any of the parties
hereto, in whole or in part (whether by operation of law or otherwise), without
the prior written consent of the other parties, and any attempt to make any such
assignment without such consent shall be null and void. Subject to the preceding
sentence, 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 SUBMISSION TO JURISDICTION; WAIVERS. Each of Globix and
NEON irrevocably agrees that any legal action or proceeding with respect to this
Agreement or for recognition and enforcement of any judgment in respect hereof
brought by another party hereto or its successors or assigns may be brought and
determined in the Chancery Courts of the State of Delaware and any Federal court
of the United States of America sitting in the State of Delaware, and each of
Globix and NEON hereby irrevocably submits with regard to any such action or
proceeding for itself and in respect to its property, generally and
unconditionally, to the nonexclusive jurisdiction of the aforesaid courts. Each
of Globix and NEON hereby irrevocably waives, and agrees not to assert, by way
of motion, as a defense, counterclaim or otherwise, in any action or proceeding
with respect to this Agreement, (a) any claim that it is not personally subject
to the jurisdiction of the above-named courts for any reason other than the
failure to serve process in accordance with applicable law, (b) that it or its
property is exempt or immune from jurisdiction of any such court or from any
legal process commenced in such courts (whether through service of notice,
attachment prior to judgment, attachment in aid of execution of judgment,
execution of judgment or otherwise), and (c) to the fullest extent permitted by
applicable law, that (i) the suit, action or proceeding in any such court is
brought in an inconvenient forum, (ii) the venue of such suit, action or
proceeding is improper and (iii) this Agreement, or the subject matter hereof,
may not be enforced in or by such courts.
Section 9.10 ENFORCEMENT. The parties agree that irreparable damage
would occur in the event that any of the provisions of this Agreement were not
performed in accordance with their specific terms. It is accordingly agreed that
the parties shall be entitled to specific performance of the terms hereof, this
being in addition to any other remedy to which they are entitled at law or in
equity.
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Section 9.11 DEFINITIONS. As used in this Agreement:
"AFFILIATE" of a specified Person shall mean any Person who would be an
affiliate of the specified Person pursuant to Rule 12b-2 under the Securities
Exchange Act of 1934, as amended.
"BUSINESS DAY" means any day on which banks are not required or
authorized to close in New York, New York.
"CLAIM" means any claim, action, suit, proceeding or investigation.
"CLASS A WARRANT EXERCISE PRICE" means $0.01 per share of NEON Common
Stock.
"COLLOCATION SITES" means premises at which the telecommunications
equipment of one party are located and are terminated or will be terminated with
the telecommunications equipment necessary to provide interconnection or access
to the telecommunications equipment of a second party, where such premises are
owned, leased or licensed by the second party.
"CONTRACT" means any agreement, contract, obligation, promise, or
undertaking (whether written or oral) that is intended to be legally binding.
"CLEC" means a company, known as a Competitive Local Exchange Carrier,
authorized to provide telecommunications services in competition with an
Incumbent Local Exchange Carrier (or "ILEC"), where the ILEC is, with respect to
a certain geographic area, the local telecommunications service provider that
provided such services within that certain geographic area as of the date of
enactment of the Telecommunications Act of 1996 (Telecommunications Act of 1996,
Pub. LA. No. 104-104, 110 Stat. 56 (1996)) and continues to provide
telecommunications services in the same area.
"GLOBIX CONFIRMATION EFFECTIVE DATE" means April 25, 2002.
"GLOBIX CTA WARRANTS" means those warrants of Globix disclosed in
writing to NEON pursuant to Section 3.2(b)(iii).
"GLOBIX MATERIAL ADVERSE EFFECT" means, with respect to Globix, any
event, change, circumstance or effect that, individually or together with any
other event, change, circumstance or effect, is or could reasonably be expected
to be materially adverse to the business, operations, properties, prospects,
assets, liabilities, financial condition or results of operations of Globix and
its Subsidiaries taken as a whole (other than events, changes, circumstances or
effects that result from economic factors affecting the economy as a whole).
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"GLOBIX STOCKHOLDER VOTE" means if (i) prior to the Effective Time,
the Globix Common Stock is traded on the Nasdaq Small Cap Market or (ii) the
Board of Directors of Globix shall otherwise so require as of the date of this
Agreement, the affirmative vote of the holders of the percentage of the shares
of Globix Common Stock required to approve the matters submitted to a vote of
the stockholders of Globix, which may consist of the following matters: (A) the
election of directors of Globix to serve on the Board of Directors of Globix
following the Merger, (B) the issuance of shares of Globix Common Stock pursuant
to the terms of this Agreement, and (C) the issuance of shares of Globix Common
Stock in respect of NEON Options granted prior to the Merger under the NEON
Stock Option Plans in accordance with the terms of Section 1.9 of this
Agreement.
"GOVERNMENTAL ENTITY" means the United States government or any United
States domestic state, municipal or local government, any instrumentality,
subdivision, court, administrative agency or commission or other authority
thereof, or any United States domestic quasi-governmental or private body
exercising any regulatory, taxing, importing or other United States domestic
governmental or quasi-governmental authority.
"INTELLECTUAL PROPERTY" means (i) all trademarks, trademark rights,
trade names, trade name rights, trade dress and other indications of origin,
corporate names, brand names, domain names, logos, certification rights, service
marks, applications for trademarks and for service marks, know-how and other
proprietary rights and information, the goodwill associated with the foregoing
and registration in any jurisdiction of, and applications in any jurisdictions
to register, the foregoing, including any extension, modification or renewal of
any such registration or application; (ii) all inventions, discoveries and ideas
(whether patentable or unpatentable and whether or not reduced to practice), in
any jurisdiction, all improvements thereto, and all patents, patent rights,
applications for patents (including divisions, continuations, continuations in
part and renewal applications), and any renewals, extensions or reissues
thereof, in any jurisdiction; (iii) nonpublic information, trade secrets and
confidential information and rights in any jurisdiction to limit the use or
disclosure thereof by any person; (iv) writings and other works, whether
copyrightable or not, in any jurisdiction, and all registrations or applications
for registration of copyrights in any jurisdiction, and any renewals or
extensions thereof; (v) all computer software and applications (including data
and related documentation); (vi) processes, formulae, methods, schematics,
technology, know-how and any similar intellectual property or proprietary
rights; and (vii) all copies and tangible documentation thereof and any claims
or causes of action arising out of or relating to any infringement or
misappropriation of any of the foregoing.
"KNOWLEDGE" with respect to (i) NEON or similar references means the
actual knowledge of any of Xxxxxxx X. Xxxxxxx, Xxxxxxx X. Xxxxxxxx, Xxxx X. Xxx
Xxxxxxx, Xxxxxxx X. XxxXxxxxx and Xxxxxxxxxxx X. Xxxxxx, after reasonable
inquiry of the executive or senior managerial employees responsible for the
relevant matters, and (ii) Globix or similar references means the actual
knowledge of any of Xxxxx X. Xxxxxxxxx, Xxxxxx X. Xxxxxxxxxx, X. Xxxxxxx
Xxxxxxxx, Xxxx X. XxXxxxxx, Xxxxx X. Xxxxxxxxx and Xxxx Xxxxxxx (with respect to
Taxes only), after reasonable inquiry of the executive or senior managerial
employees responsible for the relevant matters.
"LAW" means any federal, state, local or foreign law, statute,
ordinance, rule, regulation, order, judgment or decree, administrative or
judicial decision, and any other executive or legislative proclamation.
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"LIENS" means any pledges, claims, liens, charges, encumbrances and
security interests of any kind or nature whatsoever.
"NEON CONFIRMATION EFFECTIVE DATE" means December 20, 2002.
"NEON CTA WARRANTS" means those warrants of NEON other than the Class A
Warrants disclosed in writing to Globix pursuant to Section 3.1(b)(iii).
"NEON MATERIAL ADVERSE EFFECT" means, with respect to NEON, any event,
change, circumstance or effect that, individually or together with any other
event, change, circumstance or effect, is or could reasonably be expected to be
materially adverse to the business, operations, properties, prospects, assets,
liabilities, financial condition or results of operations of NEON and its
Subsidiaries taken as a whole (other than events, changes, circumstances or
effects that result from economic factors affecting the economy as a whole).
"PERMITTED LIENS" means, with respect to a Person, the collective
reference to (i) Liens for current property taxes, assessments and other
governmental charges not yet due and payable or delinquent or being contested in
good faith by appropriate proceedings and for which adequate reserves have been
established in accordance with GAAP, (ii) statutory liens of landlords,
mechanics, carriers, warehousemen, and other Liens imposed by law incurred in
the ordinary course of business, original purchase price conditional sales
contracts and equipment leases with third parties and liens securing purchase
money security interests entered into in the ordinary course of business, (iii)
easements, patent reservations, covenants, rights of way and other similar
restrictions of record, (iv) any conditions that may be shown by a current,
accurate survey or physical inspection of any Real Property, and (v) (A) zoning,
building and other similar restrictions, (B) mortgages, liens, security interest
or encumbrances that have been placed by any developer, landlord or third party
on Real Property over which the Person or any Subsidiary has easement rights or
on any of the leased real property of such Person and subordination or similar
agreements relating thereto, and (C) unrecorded easements, covenants, rights of
way and other similar restrictions, none of which items set forth in clauses
(A), (B) and (C), individually or in the aggregate, materially impair the
continued use and operation of the Real Property to which they relate in the
business of the Person and its Subsidiaries taken as a whole as presently
conducted.
"PERSON" means an individual, corporation, limited liability company,
partnership, association, trust, unincorporated organization, other entity or
group (as defined in the Exchange Act).
"SUBSIDIARY" when used with respect to any Person means any corporation
or other organization, whether incorporated or unincorporated, (i) of which such
party or any other Subsidiary of such party is a general partner (excluding
partnerships the general partnership interests of which held by such party or
any Subsidiary of such party do not have a majority of the voting interests in
such partnership), or (ii) at least a majority of the securities or other
interests of which having by their terms ordinary voting power to elect a
majority of the Board of Directors or others performing similar functions with
respect to such corporation or other organization is directly or indirectly
owned or controlled by such party or by any one or more of its Subsidiaries, or
by such party and one or more of its Subsidiaries.
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"TAX" (including, with correlative meaning, "TAXES" and "TAXABLE")
means (i)(A) any net income, gross income, business and occupation, admissions,
gross receipts, sales, use, value added, ad valorem, transfer, transfer gains,
franchise, profits, license, withholding, payroll, employment, excise,
severance, stamp, rent, recording, occupation, premium, real or personal
property, intangibles, environmental or windfall profits tax, alternative or
add-on minimum tax, customs duty or other tax, fee, duty, levy, impost,
assessment or charge of any kind whatsoever (including but not limited to taxes
assessed to or on real property and water and sewer rents relating thereto),
together with (B) any interest and any penalty, addition to tax or additional
amount imposed by any governmental body (domestic or foreign) (a "TAX
AUTHORITY") responsible for the imposition of any such tax; (ii) any liability
for the payment of any amount of the type described in the immediately preceding
clause (i) as a result of being a member of an affiliated, unitary or combined
group with any other corporation at any time prior to the Closing Date; and
(iii) any liability for the payment of any amount of the type described in the
preceding clause (i) as a result of a contractual obligation to any other
Person.
"TAX RETURN" means any report, return or other information (including
any attached schedules or any amendments to such report, return, document,
declaration or any other information) required to be supplied to or filed with
any taxing authority or jurisdiction (foreign or domestic) with respect to any
Tax, including an information return, any document with respect to or
accompanying payments or estimated Taxes, or with respect to or accompanying
requests for the extension of time in which to file any such report, return
document, declaration or other information.
Section 9.12 ADDITIONAL DEFINITIONS. As defined elsewhere in this
Agreement:
"AGREEMENT" is defined in the Preamble on page 1.
"AICPA" is defined in Section 3.1(f).
"CERTIFICATE OF MERGER" is defined in Section 1.3.
"CERTIFICATES" is defined in Section 2.2.
"CLASS A WARRANT" is defined in Section 1.8(c)(iii).
"CLOSING" is defined in Section 1.2.
"CLOSING DATE" is defined in Section 1.2.
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"CODE" is defined in the Preamble on page 1.
"COBRA" is defined in Section 3.1(r)(vii).
"CONFIDENTIALITY AGREEMENT" is defined in Section 5.2(b).
"CONSTITUENT CORPORATIONS" is defined in the Preamble on page 1.
"COSTS" is defined in Section 5.7(a).
"COVERED PERSONS" is defined in Section 5.7(a).
"DGCL" is defined in Section 1.1.
"DISSENTING SHARES" is defined in Section 2.9(a).
"EFFECTIVE TIME" is defined in Section 1.3.
"ENVIRONMENTAL CLAIMS" is defined in Section 3.1(s).
"ENVIRONMENTAL LAWS" is defined in Section 3.1(s).
"ERISA" is defined in Section 3.1(r)(i).
"ERISA AFFILIATE" is defined in Section 3.1(r)(i).
"EXCHANGE ACT" is defined in Section 3.1(c)(iii).
"EXCHANGE AGENT" is defined in Section 2.1(a).
"EXCHANGE FUND" is defined in Section 2.1(a).
"GAAP" is defined in Section 3.1(d)(i).
"GLOBIX" is defined in the Preamble on page 1.
"GLOBIX AFFILIATED PERSON" is defined in Section 3.2(k)(i).
"GLOBIX ALTERNATIVE PROPOSAL" is defined in Section 5.1(c).
"GLOBIX AUDITED BALANCE SHEET" is defined in Section 3.2(e)(i).
"GLOBIX COMMON STOCK" is defined in Section 1.8(c)(i).
"GLOBIX CONVERTIBLE SECURITIES" is defined in Section 3.2(b)(iii).
"GLOBIX DEBT PURCHASE" is defined in Section 6.3(h).
"GLOBIX DISCLOSURE SCHEDULE" is defined in Section 3.2.
"GLOBIX EMPLOYEES" is defined in Section 3.2(r)(i).
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"GLOBIX FINANCIAL ADVISOR" is defined in Section 3.2(j).
"GLOBIX INDENTURE" is defined in Section 6.2(g).
"GLOBIX INTELLECTUAL PROPERTY" is defined in Section 3.2(x)(ii).
"GLOBIX LEASED REAL PROPERTY" is defined in Section 3.2(t)(ii).
"GLOBIX MATERIAL CONTRACTS" is defined in Section 3.2(u)(i).
"GLOBIX OPTIONS" is defined in Section 3.2(b)(iii).
"GLOBIX PERMITS" is defined in Section 3.2(m)(ii).
"GLOBIX PLANS" is defined in Section 3.2(r)(i).
"GLOBIX PREFERRED STOCK" is defined in Section 1.8(c)(ii).
"GLOBIX SEC FINANCIAL STATEMENTS" is defined in Section 3.2(d)(ii).
"GLOBIX SEC REPORTS" is defined in Section 3.2(d)(i).
"GLOBIX STOCK OPTION PLANS" is defined in Section 3.2(b)(iii).
"GLOBIX STOCKHOLDERS MEETING" is defined in Section 5.1(c).
"GLOBIX WARRANT" is defined in Section 1.8(c)(v).
"HSR ACT" is defined in Section 3.1(c)(iii).
"HSR FILING" is defined in Section 5.3(b).
"INTERIM BALANCE SHEET" is defined in Section 3.1(d)(i).
"LEASED REAL PROPERTY" is defined in Section 3.1(t)(ii).
"MERGER" is defined in the Preamble on page 1.
"MERGER CONSIDERATION" is defined in Section 1.8(c).
"MERGER SUB" is defined in the Preamble on page 1.
"MERGER SUB APPROVAL" is defined in Section 3.2(i).
"MERGER SUB COMMON STOCK" is defined in Section 3.2(b)(i).
"NEON" is defined in the Preamble on page 1.
"NEON AFFILIATED PERSON" is defined in Section 3.1(k)(i).
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"NEON ALTERNATIVE PROPOSAL" is defined in Section 5.1(b).
"NEON AUDITED BALANCE SHEET" is defined in Section 3.1(e)(i).
"NEON COMMON STOCK" is defined in the Preamble on page 1.
"NEON CONVERTIBLE PREFERRED STOCK" is defined in the Preamble on page
1.
"NEON CONVERTIBLE SECURITIES" is defined in Section 3.1(b)(iii).
"NEON DISCLOSURE SCHEDULE" is defined in Section 3.1.
"NEON DOCUMENTS" is defined in Section 5.7(a).
"NEON EMPLOYEES" is defined in Section 3.1(r)(i).
"NEON FINANCIAL ADVISOR" is defined in Section 3.1(j).
"NEON FINANCIAL STATEMENTS" is defined in Section 3.1(d)(i).
"NEON INTELLECTUAL PROPERTY" is defined in Section 3.1(x)(ii).
"NEON MATERIAL CONTRACTS" is defined in Section 3.1(u)(i).
"NEON OPTIONS" is defined in Section 3.1(b)(iii).
"NEON PERMITS" is defined in Section 3.1(m)(ii).
"NEON PLANS" is defined in Section 3.1(r)(i).
"NEON PREFERRED STOCK" is defined in Section 3.1(b)(i).
"NEON REDEEMABLE PREFERRED STOCK" is defined in Section 3.1(b)(i).
"NEON REQUIRED CONSENTS" is defined in Section 3.1(c)(iii).
"NEON REQUIRED VOTE" is defined in Section 3.1(i).
"NEON SECURITIES" is defined in Section 1.8(c).
"NEON STOCK OPTION PLANS" is defined in Section 3.1(b)(iii).
"NEON STOCKHOLDERS MEETING" is defined in Section 5.1(b).
"PREFERRED CASH CONSIDERATION" is defined in Section 1.8(c)(ii).
"PROXY STATEMENT" is defined in Section 3.1(g).
"RECORD DATE " is defined in Section 3.1(c)(i).
"REDEEMABLE PREFERRED STOCK WARRANTS" is defined in Section 1.8(c)(iv).
"REGISTRATION STATEMENT" is defined in Section 3.1(g).
"SEC" is defined in Section 3.1(g).
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"SECURITIES ACT" is defined in Section 1.9.
"SENIOR SECURED NOTES" is defined in Section 4.2(c).
"SURVIVING CORPORATION" is defined in Section 1.1.
"TAX DEFICIENCY" is defined in Section 3.1(q)(i)(G).
"THIRD PARTY INTELLECTUAL PROPERTY" is defined in Section 3.1(x)(ii).
"TRANSITION COMMITTEE" is defined in Section 5.9.
"VIOLATION" is defined in Section 3.1(c)(ii).
"WARN" is defined in Section 3.1(r)(xi).
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, each of the parties hereto have caused this
Agreement to be signed by their respective officers or authorized
representatives thereunto duly authorized, all as of the date first above
written.
NEON COMMUNICATIONS, INC.
By: /S/ XXXXXXX X. XXXXXXX
----------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Chairman of the Board, Chief
Executive Officer and President
GLOBIX CORPORATION
By: /S/ XXXXX X. XXXXXXXXX
-----------------------------------
Name: Xxxxx X. Xxxxxxxxx
Title: President and Chief Executive
Officer
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EXHIBIT 1.5
-----------
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
NEON COMMUNICATIONS, INC.
ARTICLE I
NAME
The name of the corporation is NEON Communications, Inc. (the
"Corporation").
ARTICLE II
REGISTERED OFFICE AND AGENT
The address of the Corporation's registered office in the State of
Delaware is 0000 Xxxxxxxxxxx Xxxx, Xxxxx 000, Xxxxxxxxxx, Xxxxxxxx 00000. The
Corporation's registered agent at such address is Corporation Service Company.
ARTICLE III
PURPOSE
The purpose for which the Corporation is organized is to engage in any
lawful act or activity for which corporations may be organized under the General
Corporation Law of Delaware.
ARTICLE IV
CAPITAL STOCK
4.1 AUTHORIZED STOCK. The total number of shares of all classes of
stock which the Corporation is authorized to issue is One Thousand (1,000)
shares of Common Stock, with a par value of $0.01 per share.
4.2 VOTING RIGHTS. The holders of each share of Common Stock shall be
entitled to one vote for each share so held with respect to each matter voted on
by the stockholders of the Corporation.
4.3 LIQUIDATION RIGHTS. Upon any voluntary or involuntary liquidation,
dissolution or winding up of the affairs of the Corporation, the holders of
Common Stock shall be entitled to receive that portion of the remaining funds to
be distributed. Such funds shall be paid to the holders of Common Stock on the
basis of the number of shares of Common Stock held by each of them.
Exhibit 1.5 - Page 1
4.4 DIVIDENDS. Dividends may be paid on the Common Stock as and when
declared by the board of directors.
ARTICLE V
BOARD OF DIRECTORS
5.1 MANAGEMENT. The business and affairs of the Corporation shall be
managed by the board of directors.
5.2 NO BALLOT. The directors need not be elected by written ballot
unless the bylaws of the Corporation shall so provide.
5.3 LIABILITY. No director of the Corporation shall be personally
liable to the Corporation or to any of its stockholders for monetary damages for
breach of fiduciary duty as a director; provided, however, that to the extent
required from time to time by applicable law, this Section 5.3 shall not
eliminate or limit the liability of a director, (i) for any breach of the
director's duty of loyalty to the Corporation or its stockholders, (ii) for acts
or omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, (iii) under Section 174 of the Delaware General
Corporation Law, or (iv) for any transaction from which the director derived an
improper personal benefit. No amendment to or repeal of this Section 5.3 shall
apply to or have any effect on the liability or alleged liability of any
director for, or with respect to, any acts or omissions of such director
occurring prior to the effective date of such amendment or repeal.
ARTICLE VI
INDEMNIFICATION
The Corporation shall, to the fullest extent permitted by the General
Corporation Law, indemnify each person who was or is a party or is threatened to
be made a party to any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or investigative, by reason
of the fact that he is or was, or has agreed to become, a director or officer of
the Corporation, or is or was serving, or has agreed to serve, at the request of
the Corporation, as a director, officer or trustee of, or in a similar capacity
with, another corporation, partnership, joint venture, trust, limited liability
company or other enterprise (including any employee benefit plan), or by reason
of any action alleged to have been taken or omitted in such capacity, against
all expenses (including attorneys' fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred by or on behalf of an indemnified
person in connection with such action, suit or proceeding and any appeal
therefrom.
The Corporation shall not indemnify any person seeking indemnification
in connection with a proceeding (or part thereof) initiated by such person
unless the initiation thereof was approved by the board of directors of the
Corporation.
Expenses incurred by a director or officer in defending a proceeding
shall be paid by the Corporation in advance of the final disposition of such
proceeding upon receipt of an undertaking by or on behalf of such director or
officer to repay such amount if it shall be ultimately determined that such
director or officer is not entitled to be indemnified by the Corporation as
authorized by the Act.
Exhibit 1.5 - Page 2
The indemnification rights provided in this Article shall inure to the
benefit of the heirs, executors and administrators of the director or officer.
No amendment to or repeal of this Article VI shall apply to or have any effect
on any right or protection of any director or officer occurring prior to the
effective date of such amendment or repeal. The indemnification provided for
herein shall not be deemed exclusive of any other rights to indemnification,
whether under the bylaws or any agreement, by vote of shareholders or
disinterested directors or otherwise.
ARTICLE VII
MEETINGS OF STOCKHOLDERS
Meetings of the stockholders may be held within or without the State of
Delaware, as the bylaws may provide. The books of the Corporation may be kept
(subject to any provision contained in the Delaware statutes) outside the State
of Delaware at such place or places as may be designated from time to time by
the board of directors or in the bylaws of the Corporation.
ARTICLE VIII
BYLAWS
In furtherance and not in limitation of the powers conferred by the
laws of the State of Delaware, the board of directors is expressly authorized to
adopt, amend or repeal the bylaws of the Corporation.
ARTICLE IX
PERPETUAL EXISTENCE
The Corporation is to have perpetual existence.
Exhibit 1.5 - Page 3
ARTICLE X
COMPROMISE OR ARRANGEMENT
Whenever a compromise or arrangement is proposed between this
Corporation and its creditors or any class of them and/or between this
Corporation and its stockholders or any class of them, any court of equitable
jurisdiction within the State of Delaware may, on the application in a summary
way of this Corporation or of any creditor or stockholder thereof or on the
application of any receiver or receivers appointed for this Corporation under
Section 291 of Title 8 of the Delaware Code or on the application of trustees in
dissolution or of any receiver or receivers appointed for this Corporation under
Section 279 of Title 8 of the Delaware Code order a meeting of the creditors or
class of creditors, and/or of the stockholders or class of stockholders of this
Corporation, as the case may be, to be summoned in such manner as the said court
directs. If a majority in number representing three fourths in value of the
creditors or class of creditors, and/or of the stockholders or class of
stockholders of this Corporation, as the case may be, agree to any compromise or
arrangement and to any reorganization of this Corporation as a consequence of
such compromise or arrangement, the said compromise or arrangement and the said
reorganization shall, if sanctioned by the court to which the said application
has been made, be binding on all the creditors or class of creditors, and/or on
all the stockholders or class of stockholders, of this Corporation, as the case
may be, and also on this Corporation.
ARTICLE XI
AMENDMENTS AND REPEAL
The Corporation reserves the right to amend, alter, change, or repeal
any provision contained in this Certificate of Incorporation, in the manner now
or hereafter prescribed by the laws of the State of Delaware, and all rights
herein conferred are granted subject to this reservation.
Exhibit 1.5 - Page 4
EXHIBIT 1.6
-----------
AMENDED AND RESTATED BYLAWS
OF
NEON COMMUNICATIONS, INC.
A DELAWARE CORPORATION
Exhibit 1.6 - Page 1
TABLE OF CONTENTS
PAGE
ARTICLE I Stockholders.........................................................................4
Section 1.1 Annual Meetings........................................................................4
Section 1.2 Special Meetings.......................................................................4
Section 1.3 Meetings by Means of Remote Communication..............................................4
Section 1.4 Participation in Meeting by Means of Remote Communication..............................4
Section 1.5 Notice of Meetings.....................................................................4
Section 1.6 Adjournments...........................................................................5
Section 1.7 Quorum.................................................................................5
Section 1.8 Organization...........................................................................5
Section 1.9 Voting; Proxies........................................................................6
Section 1.10 Fixing Date for Determination of Stockholders of Record................................6
Section 1.11 List of Stockholders Entitled to Vote..................................................7
Section 1.12 Action by Consent of Stockholders......................................................7
ARTICLE II Board of Directors...................................................................8
Section 2.1 Number; Qualifications.................................................................8
Section 2.2 Election; Resignation; Removal; Vacancies..............................................8
Section 2.3 Regular Meetings.......................................................................9
Section 2.4 Special Meetings.......................................................................9
Section 2.5 Notice of Regular and Special Meetings.................................................9
Section 2.6 Telephonic Meetings Permitted..........................................................9
Section 2.7 Quorum; Vote Required for Action.......................................................9
Section 2.8 Organization...........................................................................9
Section 2.9 Action by Consent of Directors.........................................................9
ARTICLE III Committees..........................................................................10
Section 3.1 Committees............................................................................10
Section 3.2 Committee Rules.......................................................................10
ARTICLE IV Officers............................................................................10
Section 4.1 Selection; Statutory Officers.........................................................10
Section 4.2 Time of Election......................................................................10
Section 4.3 Additional Officers...................................................................10
Section 4.4 Terms of Office.......................................................................11
Section 4.5 Compensation of Officers..............................................................11
Section 4.6 Chairman of the Board.................................................................11
Section 4.7 President.............................................................................11
Section 4.8 Vice Presidents.......................................................................11
Section 4.9 Treasurer.............................................................................11
Section 4.10 Secretary.............................................................................12
Section 4.11 Assistant Secretary...................................................................12
Section 4.12 Assistant Treasurer...................................................................12
ARTICLE V Stock...............................................................................12
Section 5.1 Certificates..........................................................................12
Section 5.2 Lost, Stolen or Destroyed Stock Certificates; Issuance of
New Certificates......................................................................12
Exhibit 1.6 - Page 2
ARTICLE VI Miscellaneous.......................................................................13
Section 6.1 Fiscal Year...........................................................................13
Section 6.2 Seal..................................................................................13
Section 6.3 Waiver of Notice......................................................................13
Section 6.4 Interested Directors; Quorum..........................................................13
Section 6.5 Form of Records.......................................................................13
Section 6.6 Amendment of Bylaws...................................................................14
Section 6.7 Gender and Number.....................................................................14
Exhibit 1.6 - Page 3
AMENDED AND RESTATED BYLAWS
OF
NEON COMMUNICATIONS, INC.
(A DELAWARE CORPORATION)
ARTICLE I
STOCKHOLDERS
Section 1.1 ANNUAL MEETINGS. An annual meeting of stockholders shall be
held for the election of directors at such date, time and place, either within
or without the State of Delaware, as may be designated by resolution of the
Board of Directors from time to time. Any other proper business may be
transacted at the annual meeting.
Section 1.2 SPECIAL MEETINGS. Special meetings of stockholders for any
purpose or purposes may be called at any time by the Board of Directors, but
such special meetings may not be called by any other person or persons. Special
meetings of stockholders may be held within or without the State of Delaware, as
may be designated by resolution of the Board of Directors from time to time.
Section 1.3 MEETINGS BY MEANS OF REMOTE COMMUNICATION. The Board of
Directors may, in its sole discretion, determine that any annual or special
meeting of stockholders shall not be held at any place, but shall instead be
held solely by means of remote communication as authorized by Section 1.4.
Section 1.4 PARTICIPATION IN MEETING BY MEANS OF REMOTE COMMUNICATION.
If authorized by the Board of Directors in its sole discretion, and subject to
such guidelines and procedures as the Board of Directors may adopt, stockholders
and proxyholders not physically present at a meeting of stockholders may, by
means of remote communication: (A) participate in a meeting of stockholders; and
(B) be deemed present in person and vote at a meeting of stockholders whether
such meeting is to be held at a designated place or solely by means of remote
communication, provided that (i) the corporation shall implement reasonable
measures to verify that each person deemed present and permitted to vote at the
meeting by means of remote communication is a stockholder or proxyholder, (ii)
the corporation shall implement reasonable measures to provide such stockholders
and proxyholders a reasonable opportunity to participate in the meeting and to
vote on matters submitted to the stockholders, including an opportunity to read
or hear the proceedings of the meeting substantially concurrently with such
proceedings, and (iii) if any stockholder or proxyholder votes or takes other
action at the meeting by means of remote communication, a record of such vote or
other action shall be maintained by the corporation.
Exhibit 1.6 - Page 4
Section 1.5 NOTICE OF MEETINGS. Whenever stockholders are required or
permitted to take any action at a meeting, a written notice of the meeting shall
be given which shall state the place, date and hour of the meeting, and, in the
case of a special meeting, the purpose or purposes for which the meeting is
called. Unless otherwise provided by law, the certificate of incorporation or
these bylaws, the written notice of any meeting shall be given not less than ten
nor more than sixty days before the date of the meeting to each stockholder
entitled to vote at such meeting. Any such notice shall be effective if given by
mail, by courier or other hand delivery, or by a form of electronic transmission
consented to by the stockholder to whom the notice is given. Such notice shall
be deemed to be given: (i) if mailed, when deposited in the mail, postage
prepaid, directed to the stockholder at his address at it appears on the records
of the corporation, (ii) if by courier or by hand, when received at the
foregoing address, (iii) if by facsimile telecommunication, when directed to a
number at which the stockholder has consented to receive notice, (iv) if by
electronic mail, when directed to an electronic mail address at which the
stockholder has consented to receive notice, (v) if by any other form of
electronic transmission, when directed to the stockholder. For purposes of these
bylaws, the term "electronic transmission" means any form of communication, not
directly involving the physical transmission of paper, that creates a record
that may be retained, retrieved, and reviewed by a recipient thereof, and that
may be directly reproduced in paper form by such a recipient through an
automated process.
Section 1.6 ADJOURNMENTS. Any meeting of stockholders, annual or
special, may adjourn from time to time to reconvene at the same or some other
place, and notice need not be given of any such adjourned meeting if the time
and place thereof are announced at the meeting at which the adjournment is
taken. At the adjourned meeting the corporation may transact any business which
might have been transacted at the original meeting. If the adjournment is for
more than thirty days, or if after the adjournment a new record date is fixed
for the adjourned meeting, a notice of the adjourned meeting shall be given to
each stockholder of record entitled to vote at the meeting.
Section 1.7 QUORUM. Except as otherwise provided by law, the
certificate of incorporation or these bylaws, at each meeting of stockholders
the presence in person or by proxy of the holders of shares of stock having a
majority of the votes which could be cast by the holders of all outstanding
shares of stock entitled to vote at the meeting shall be necessary and
sufficient to constitute a quorum. In the absence of a quorum, the stockholders
so present may, by majority vote, adjourn the meeting from time to time in the
manner provided in Section 1.6 of these bylaws until a quorum shall attend.
Shares of its own stock belonging to the corporation or to another corporation,
if a majority of the shares entitled to vote in the election of directors of
such other corporation is held, directly or indirectly, by the corporation,
shall neither be entitled to vote nor be counted for quorum purposes; provided,
however, that the foregoing shall not limit the right of the corporation to vote
stock, including but not limited to its own stock, held by it in a fiduciary
capacity.
Section 1.8 ORGANIZATION. Meetings of stockholders shall be presided
over by the Chairman of the Board, if any, or in his absence by the Vice
Chairman of the Board, if any, or in his absence by the President, or in his
Exhibit 1.6 - Page 5
absence by a Vice President, or in the absence of the foregoing persons by a
chairman designated by the Board of Directors, or in the absence of such
designation by a chairman chosen at the meeting. The Secretary shall act as a
secretary of the meeting, but in his absence the chairman of the meeting may
appoint any person to act as secretary of the meeting.
Section 1.9 VOTING; PROXIES. Except as otherwise provided by the
certificate of incorporation, each stockholder entitled to vote at any meeting
of stockholders shall be entitled to one vote for each share of stock held by
him which has voting power upon the matter in question. Each stockholder
entitled to vote at a meeting of stockholders may authorize another person or
persons to act for him by proxy dated and delivered by mail, courier or other
delivery service, telephone, telecopier or any other form of electronic
transmission permitted by law, but no such proxy shall be voted or acted upon
after three years from its date, unless the proxy provides for a longer period.
A duly executed proxy shall be irrevocable if it states that it is irrevocable
and if, and only as long as, it is coupled with an interest sufficient in law to
support an irrevocable power. A stockholder may revoke any proxy which is not
irrevocable by attending the meeting and voting in person or by filing an
instrument in writing revoking the proxy or another duly executed proxy bearing
a later date with the Secretary of the corporation. At all meetings of
stockholders held for the election of directors a plurality of the votes cast
shall be sufficient to elect. If a ballot is used in the election of directors,
such requirement of a written ballot shall, if authorized by the Board of
Directors, be satisfied by a ballot submitted by electronic transmission,
provided that any such electronic transmission must either set forth or be
submitted with information from which it can be determined that the electronic
transmission was authorized by the stockholder or proxyholder. Unless otherwise
provided by law, the certificate of incorporation or these bylaws, in all
matters other than the election of directors, the affirmative vote of the
majority shares present in person or represented by proxy at the meeting and
entitled to vote on the subject matter shall be the act of the stockholders. Any
copy, facsimile telecommunication or other reliable reproduction of the writing
or transmission created pursuant to this Section 1.9 may be substituted or used
in lieu of the original writing or transmission for any and all purposes for
which the original writing or transmission could be used, provided that such
copy, facsimile telecommunication or reproduction shall be a complete
reproduction of the entire original writing or transmission.
Section 1.10 FIXING DATE FOR DETERMINATION OF STOCKHOLDERS OF RECORD.
In order that the corporation may determine the stockholders entitled to notice
of or to vote at any meeting of stockholders or any adjournment thereof, or to
express consent to corporate action in writing without a meeting, or entitled to
receive payment of any dividend or other distribution or allotment of any
rights, or entitled to exercise any rights in respect of any change, conversion
or exchange of stock or for the purpose of any other lawful action, the Board of
Directors may fix a record date, which record date shall not precede the date
upon which the resolution fixing the record date is adopted by the Board of
Directors and which record date: (i) in the case of determination of
stockholders entitled to vote at any meeting of stockholders or adjournment
thereof, shall, unless otherwise required by law, not be more than sixty nor
less than ten days before the date of such meeting; (ii) in the case of
determination of stockholders entitled to express consent to corporate action in
Exhibit 1.6 - Page 6
writing without a meeting, shall not be more than ten days after the date upon
which the resolution fixing the record date is adopted by the Board of
Directors; and (iii) in the case of any other action, shall not be more than
sixty days before such other action. If no record date is fixed: (i) the record
date for determining stockholders entitled to notice of or to vote at a meeting
of stockholders shall be at the close of business on the day next preceding the
day on which notice is given, or, if notice is waived, at the close of business
on the day next preceding the day on which the meeting is held; (ii) the record
date for determining stockholders entitled to express consent to corporate
action in writing without a meeting when no prior action of the Board of
Directors is required by law, shall be the first date on which a signed written
consent setting forth the action taken or proposed to be taken is delivered to
the corporation in accordance with applicable law, or, if prior action by the
Board of Directors is required by law, shall be at the close of business on the
day on which the Board of Directors adopts the resolution taking such prior
action; and (iii) the record date for determining stockholders for any other
purpose shall be at the close of business on the day on which the Board of
Directors adopts the resolution relating thereto. A determination of
stockholders of record entitled to notice of or to vote at a meeting of
stockholders shall apply to any adjournment of the meeting; provided, however,
that the Board of Directors may fix a new record date for the adjourned meeting.
Section 1.11 LIST OF STOCKHOLDERS ENTITLED TO VOTE. The Secretary shall
prepare and make, at least ten days before every meeting of stockholders, a
complete list of the stockholders entitled to vote at the meeting, arranged in
alphabetical order, and showing the address of each stockholder and the number
of shares registered in the name of each stockholder. Such list shall be open to
the examination of any stockholder, for any purpose germane to the meeting,
during ordinary business hours, for a period of at least ten days before the
meeting, either at a place within the city where the meeting is to be held,
which place shall be specified in the notice of the meeting, or, if not so
specified, at the place where the meeting is to be held. The list shall also be
produced and kept at the time and place of the meeting during the whole time
thereof and may be inspected by any stockholder who is present. Upon the willful
neglect or refusal of the directors to produce such a list at any meeting for
the election of directors, they shall be ineligible for election to any office
at such meeting. The stock ledger shall be the only evidence as to who are the
stockholders entitled to examine the stock ledger, the list of stockholders or
the books of the corporation, or to vote in person or by proxy at any meeting of
stockholders.
Section 1.12 ACTION BY CONSENT OF STOCKHOLDERS. Unless otherwise
restricted by the certificate of incorporation, any action required or permitted
to be taken at any annual or special meeting of the stockholders may be taken
without a meeting, without prior notice and without a vote, if a consent in
writing, setting forth the action so taken, shall be signed by the holders of
outstanding stock having not less than the minimum number of votes that would be
necessary to authorize or take such action at a meeting at which all shares
entitled to vote thereon were present and voted, and if such consent is
delivered to the corporation in accordance with applicable law. Every written
consent shall bear the date of signature of each stockholder who signs the
consent and no written consent shall be effective to take the corporate action
referred to therein unless, within sixty days of the earliest dated consent
which was delivered in the manner required by applicable law, written consents
Exhibit 1.6 - Page 7
signed by a sufficient number of holders to take action are so delivered. An
electronic transmission consenting to an action to be taken and transmitted by a
stockholder or proxyholder, or by a person or persons authorized to act for a
stockholder or proxyholder, shall be deemed to be written, signed and dated for
the purposes of this Section 1.13, provided that any such electronic
transmission sets forth or is delivered with information from which the
corporation can determine (A) that the electronic transmission was transmitted
by the stockholder or proxyholder or by a person or persons authorized to act
for the stockholder or proxyholder and (B) the date on which such stockholder or
proxyholder or authorized person or persons transmitted such electronic
transmission. Any copy, facsimile or other reliable reproduction or a consent in
writing may be substituted or used in lieu of the original writing for any and
all purposes for which he original writing could be used, provided that such
copy, facsimile or other reproduction shall be a complete reproduction of the
entire original writing. Prompt notice of the taking of the corporate action
without a meeting by less than unanimous written consent shall be given to those
stockholders who have not consented in writing and who, if the action had been
taken at a meeting, would have been entitled to notice of the meeting if the
record date for such meeting had been the date that written consents signed by a
sufficient number of holders or members to take the action were delivered to the
corporation.
ARTICLE II
BOARD OF DIRECTORS
------------------
Section 2.1 NUMBER; QUALIFICATIONS. The Board of Directors shall
consist of one or more members, the number thereof to be determined from time to
time by resolution of the Board of Directors. Directors need not be
stockholders.
Section 2.2 ELECTION; RESIGNATION; REMOVAL; VACANCIES. The Board of
Directors shall initially consist of the person or persons named as directors in
the certificate of incorporation (or, if no directors are named in the
certificate of incorporation, the person or persons so named by the
incorporators), and each director so elected shall hold office, subject to his
prior resignation or removal, until the first annual meeting of stockholders or
until his successor is elected and qualified. At the first annual meeting of
stockholders and at each annual meeting thereafter, the stockholders shall elect
directors, each of whom shall hold office, subject to his prior resignation or
removal, until the next annual meeting of stockholders or until his successor is
elected and qualified, or his earlier resignation or removal. Any director may
resign at any time upon written notice given in writing or by electronic
transmission to the corporation. Unless otherwise restricted by the certificate
of incorporation or bylaw, any director or the entire Board of Directors may be
removed with or without cause at any time by the holders of a majority of the
shares entitled to vote at an election of directors. Any newly created
directorship or any vacancy occurring in the Board of Directors for any reason
may be filled by a majority of the remaining members of the Board of Directors,
although such majority is less than a quorum, or by a plurality of the votes
cast at a meeting of stockholders, and each director so elected shall hold
office, subject to his prior resignation or removal, until the expiration of the
term of office of the director whom he has replaced or until his successor is
elected and qualified.
Exhibit 1.6 - Page 8
Section 2.3 REGULAR MEETINGS. Regular meetings of the Board of
Directors may be held at such places within or without the State of Delaware and
at such times as the Board of Directors may from time to time determine, and if
so determined notices thereof need not be given.
Section 2.4 SPECIAL MEETINGS. Special meetings of the Board of
Directors may be held at any time or place within or without the State of
Delaware whenever called by the Chairman, the President, the Secretary, or by
any member of the Board of Directors. Notice of a special meeting of the Board
of Directors shall be given to each director by the person or persons calling
the meeting at least twenty-four hours before the special meeting.
Section 2.5 NOTICE OF REGULAR AND SPECIAL MEETINGS. Notice of regular
or special meetings may be given in writing, by mail or courier or other hand
delivery, addressed to such director, at his address as it appears on the
records of the corporation, with postage thereon or courier or delivery fees
prepaid. Such notice shall be deemed to be given at the time when the same shall
be deposited in the United States mail, if mailed, or when delivered to such
address if delivered by courier or other hand delivery. Notices to directors may
also be given by electronic transmission, when directed to a number or
electronic address at which the director has consented to receive such form of
notice.
Section 2.6 TELEPHONIC MEETINGS PERMITTED. Members of the Board of
Directors, or any committee designated by the Board of Directors, may
participate in a meeting thereof by means of conference telephone or other
communications equipment by means of which all persons participating in the
meeting can hear each other, and participation in a meeting pursuant to this
bylaw shall constitute presence in person at such meeting.
Section 2.7 QUORUM; VOTE REQUIRED FOR ACTION. At all meetings of the
Board of Directors a majority of the directors then in office, but no no event
less than one-third of the total number of directorships, shall constitute a
quorum for the transaction of business. Except in cases in which the certificate
of incorporation or these bylaws otherwise provide, the vote of a majority of
the directors present at a meeting at which a quorum is present shall be the act
of the Board of Directors.
Section 2.8 ORGANIZATION. Meetings of the Board of Directors shall be
presided over by the Chairman of the Board, if any, or in his absence by the
President, or in their absence by a chairman chosen at the meeting. The
Secretary shall act as secretary of the meeting, but in his absence the chairman
of the meeting may appoint any person to act as secretary of the meeting.
Section 2.9 ACTION BY CONSENT OF DIRECTORS. Unless otherwise restricted
by the certificate of incorporation or these bylaws, any action required or
permitted to be taken at any meeting of the Board of Directors, or of any
committee thereof, may be taken without a meeting if all members of the Board of
Directors or such committee, as the case may be, consent thereto in writing or
by electronic transmission, and the writing or writings or electronic
transmissions are filed with the minutes of proceedings of the Board of
Directors or such committee.
Exhibit 1.6 - Page 9
ARTICLE III
COMMITTEES
Section 3.1 COMMITTEES. The Board of Directors may, by resolution
passed by a majority of the whole Board of Directors, designate one or more
committees, each committee to consist of one or more of the directors of the
corporation. The Board of Directors may designate one or more directors as
alternate members of any committee, who may replace any absent or disqualified
member at any meeting of the committee. In the absence or disqualification of a
member of the committee, the members thereof present at any meeting and not
disqualified from voting, whether or not a quorum, may unanimously appoint
another member of the Board of Directors to act at the meeting in place of any
such absent or disqualified member. Any such committee, to the extent permitted
by law and to the extent provided in the resolution of the Board of Directors,
shall have and may exercise all the powers and authority of the Board of
Directors in the management of the business and affairs of the corporation, and
may authorize the seal of the corporation; but no such committee shall have the
power or authority in reference to the following matters: (i) approving or
adopting, or recommending to the stockholders, any action that must be expressly
required by law to be submitted to the stockholders for approval; and (ii)
adopting, amending or repealing any bylaw.
Section 3.2 COMMITTEE RULES. Unless the Board of Directors otherwise
provides, each committee designated by the Board of Directors may make, alter
and repeal rules for the conduct of its business. In the absence of such rules,
each committee shall conduct its business in the same manner as the Board of
Directors conducts its business pursuant to Article II of these bylaws.
ARTICLE IV
OFFICERS
Section 4.1 SELECTION; STATUTORY OFFICERS. The Board of Directors shall
elect a President, a Treasurer and a Secretary, and it may choose a Chairman of
the Board from among its members. The Board of Directors also may elect one or
more Vice Presidents, one or more Assistant Treasurers and one or more Assistant
Secretaries. Any number of offices may be held by the same person.
Section 4.2 TIME OF ELECTION. The officers named above shall be chosen
by the Board of Directors at its first meeting after each annual meeting of
stockholders. Except for the Chairman of the Board, if any, none of such
officers need be a director.
Section 4.3 ADDITIONAL OFFICERS. The Board of Directors may appoint
such other officers and agents as it shall deem necessary, who shall hold their
offices for such terms and shall exercise such powers and perform such duties as
shall be determined from time to time by the Board of Directors.
Exhibit 1.6 - Page 10
Section 4.4 TERMS OF OFFICE. Each officer of the corporation shall hold
office until his successor is chosen and qualified, or until his earlier
resignation or removal. Any officer elected or appointed by the Board of
Directors may be removed at any time for any reason or for no reason by the
Board of Directors, but without prejudice to any contract rights of such
officer.
Section 4.5 COMPENSATION OF OFFICERS. The Board of Directors shall have
power to fix the compensation of all officers of the corporation. It may
authorize any officer, upon whom the power of appointing subordinate officers
may have been conferred, to fix the compensation of such subordinate officers.
Section 4.6 CHAIRMAN OF THE BOARD. The Chairman of the Board shall be
the chairman of the Board of Directors and shall perform and do all acts and
things incident to the position of chairman of the board and shall have such
other duties as may be assigned to him from time to time by the Board of
Directors. The Chairman of the Board shall preside at all meetings of the
stockholders and directors at which he shall be present.
Section 4.7 PRESIDENT. Unless the Board of Directors otherwise
determines, the President shall be the chief executive officer and head of the
corporation, shall perform and do all acts and things incident to the positions
of president and chief executive officer and shall have such other duties as may
be assigned to him from time to time by or under authority of the Board of
Directors. Under the supervision of the Board of Directors, the President shall
have general control and management of the corporation and its business and
affairs, including general supervision over its officers (other than the
Chairman of the Board), employees and agents, subject, however, to the right of
the Board of Directors to confer any specific power upon any other officer or
officers of the corporation. The President shall perform such other duties as
may be assigned to him from time to time by the Board of Directors.
Section 4.8 VICE PRESIDENTS. The Vice Presidents shall perform such of
the duties of the President on behalf of the corporation as may be respectively
assigned to them from time to time by the Board of Directors or the President.
The Board of Directors may designate one of the Vice Presidents as the Executive
Vice President, and in the absence or inability of the President to act, such
Executive Vice President shall have and possess all of the powers and discharge
all of the duties of the President, subject to the control of the Board of
Directors.
Section 4.9 TREASURER. The Treasurer shall have the care and custody of
all the funds and securities of the corporation which may come into his hands as
Treasurer, and the power and authority to endorse checks, drafts and other
instruments for the payment of money for deposit or collection when necessary or
proper and to deposit the same to the credit of the corporation in such bank or
banks or depository as the Board of Directors, or the officers or agents to whom
the Board of Directors may delegate such authority, may designate, and he may
endorse all commercial documents requiring endorsements for or on behalf of the
Exhibit 1.6 - Page 11
corporation. He shall render an account of his transactions to the Board of
Directors as often as the board shall require the same. He shall enter regularly
in the books to be kept by him for that purpose full and adequate account of all
moneys received and paid by him on account of the corporation. He shall perform
all acts incident to the position of Treasurer, subject to the control of the
Board of Directors. He shall when requested, pursuant to vote of the Board of
Directors, give a bond to the corporation conditioned for the faithful
performance of his duties, the expense of which bond shall be borne by the
corporation.
Section 4.10 SECRETARY. The Secretary shall keep the minutes of all
meetings of the Board of Directors and of the stockholders; he shall attend to
the giving and serving of all notices of the corporation. He shall have charge
of the stock certificate book, transfer book and stock ledger, and such other
books and papers as the Board of Directors may direct. He shall, in general,
perform all the duties incident to the position of Secretary, subject to the
control of the Board of Directors.
Section 4.11 ASSISTANT SECRETARY. The Board of Directors may appoint or
remove one or more Assistant Secretaries of the corporation. Any Assistant
Secretary shall perform such duties of the Secretary, and also any and all such
other duties, as the Board of Directors or the President or the Secretary may
designate.
Section 4.12 ASSISTANT TREASURER. The Board of Directors may appoint or
remove one or more Assistant Treasurers of the corporation. Any Assistant
Treasurer shall perform such of the duties of the Treasurer, and also any and
all such other duties, as the Board of Directors or the President or the
Treasurer may designate.
ARTICLE V
STOCK
Section 5.1 CERTIFICATES. Every holder of stock shall be entitled to
have a certificate signed by or in the name of the corporation by the Chairman
of the Board of Directors, if any, or the President or a Vice President, and by
the Treasurer or an Assistant Treasurer, or the Secretary or an Assistant
Secretary, of the corporation, certifying the number of shares owned by him in
the corporation. Any or all of the signatures on the certificate may be a
facsimile. In case any officer, transfer agent, or registrar who has signed or
whose facsimile signature has been placed upon a certificate shall have ceased
to be such officer, transfer agent or registrar before such certificate is
issued, it may be issued by the corporation with the same effect as if he were
such officer, transfer agent or registrar at the date of issue.
Section 5.2 LOST, STOLEN OR DESTROYED STOCK CERTIFICATES; ISSUANCE OF
NEW CERTIFICATES. The corporation may issue a new certificate of stock in the
place of any certificate previously issued by it alleged to have been lost,
stolen or destroyed. The corporation may require the owner of the lost, stolen
or destroyed certificate, or his legal representatives, to give the corporation
a bond sufficient to indemnify it against any claim that may be made against it
on account of the alleged loss, theft or destruction.
Exhibit 1.6 - Page 12
ARTICLE VI
MISCELLANEOUS
Section 6.1 FISCAL YEAR. The fiscal year of the corporation shall be
determined by resolution of the Board of Directors.
Section 6.2 SEAL. The corporate seal shall have the name of the
corporation inscribed thereon and shall be in such form as may be approved from
time to time by the Board of Directors.
Section 6.3 WAIVER OF NOTICE. Any written or electronic waiver of
notice, signed by the person entitled to notice, whether before or after the
time stated therein, shall be deemed equivalent to notice. Attendance of a
person at a meeting shall constitute a waiver of notice of such meeting except
when the person attends a meeting for the express purpose of objecting, at the
beginning of the meeting, to the transaction of any business because the meeting
is not lawfully called or convened. Neither the business to be transacted at,
nor the purpose of, any regular or special meeting of the stockholders,
directors, or members of a committee of directors need be specified in any
written or electronic waiver of notice.
Section 6.4 INTERESTED DIRECTORS; QUORUM. No contract or transaction
between the corporation and one or more of its directors or officers, or between
the corporation and any other corporation, partnership, association or other
organization in which one or more of its directors or officers are directors or
officers, or have a financial interest, shall be void or voidable solely for
this reason, or solely because the director or officer is present at or
participates in the meeting of the Board of Directors or committee that
authorizes the contract or transaction, or solely because his votes are counted
for such purpose, if: (i) the material facts as to his relationship or interest
and as to the contract or transaction are disclosed or are known to the Board of
Directors or the committee, and the Board of Directors or committee in good
faith authorizes the contract or transaction by the affirmative votes of a
majority of the disinterested directors, even though the disinterested directors
be less than a quorum; or (ii) the material facts as to his relationship or
interest and as to the contract or transaction are disclosed or are known to the
stockholders entitled to vote thereon, and the contract or transaction is
specifically approved in good faith by vote of the stockholders; or (iii) the
contract or transaction is fair as to the corporation as of the time it is
authorized, approved or ratified, by the Board of Directors, a committee
thereof, or the stockholders. Common or interested directors may be counted in
determining the presence of a quorum at a meeting of the Board of Directors or
of a committee which authorizes the contract or transaction.
Section 6.5 FORM OF RECORDS. Any records maintained by the corporation
in the regular course of its business, including its stock ledger, books of
account, and minute books, may be kept on, or be in the form of, paper,
electromagnetic, optical, or any other information storage means, provided that
the records so kept can be converted into clearly legible form within a
reasonable time. The corporation shall so convert any records so kept upon the
request of any person entitled to inspect the same.
Exhibit 1.6 - Page 13
Section 6.6 AMENDMENT OF BYLAWS. These bylaws may be amended or
repealed, and new bylaws adopted, by the stockholders and, if provided in the
certificate of incorporation, by the Board of Directors.
Section 6.7 GENDER AND NUMBER. All nouns, pronouns, and any variations
thereof shall be deemed to refer to the masculine, feminine, neuter, singular or
plural as the context may require.
Exhibit 1.6 - Page 14
EXHIBIT 1.7
-----------
OFFICERS AND DIRECTORS OF THE SURVIVING CORPORATION
AND GLOBIX AFTER THE EFFECTIVE TIME
Directors of Globix:
Xxxxx Xxxx
Xxx Xxxxx
Xxxxxx Xxxxxxx
Xxxx Xxxxxxxx
Xxxxx Xxxxxx
Xxxxxx Xxxxx
Xxxxxx Xxxxxx
Xxxxxxx Xxxxxx
Xxxxx Xxxxxxxxx
Directors of the Surviving Corporation will be the directors of NEON immediately
prior to the Effective Time, subject to action by the Board of Directors and/or
stockholder of the Surviving Corporation following the Merger.
Officers of Globix will the officers of Globix immediately prior to the
Effective Time, subject to action by the Board of Directors of Globix.
Officers of the Surviving Corporation will be the officers of NEON immediately
prior to the Effective Time, subject to action by the Board of Directors of the
Surviving Corporation.
Exhibit 1.7 - Page 1
EXHIBIT 1.8(c)(ii)
------------------
CERTIFICATE OF DESIGNATION OF PREFERENCES
AND RELATIVE, PARTICIPATING, OPTIONAL AND
OTHER SPECIAL RIGHTS OF
PREFERRED STOCK AND QUALIFICATIONS,
LIMITATIONS AND RESTRICTIONS THEREOF
OF
12% SERIES A CUMULATIVE CONVERTIBLE PREFERRED STOCK
OF
GLOBIX CORPORATION
---------------------------------------------
PURSUANT TO SECTION 151 OF THE
GENERAL CORPORATION LAW OF THE STATE OF DELAWARE
----------------------------------------------
Exhibit 1.8(c)(ii) - Page 1
Globix Corporation (the "Company"), a corporation organized and
existing under the General Corporation Law of the State of Delaware, does hereby
certify that (i) pursuant to authority conferred upon the board of directors
(the "Board of Directors") by its Amended and Restated Certificate of
Incorporation (the "Certificate of Incorporation"), and pursuant to the
provisions of Section 151 of the General Corporation Law of the State of
Delaware, said Board of Directors is authorized to issue Preferred Stock of the
Company in one or more series; and (ii) the resolutions set forth below (the
"Resolutions") were duly adopted by the Board of Directors, by a vote at a
meeting duly called and duly held on ________ __, 2004;
"WHEREAS, the Board of Directors of the Company is authorized, within
the limitations and restrictions stated in the Certificate of Incorporation of
the Company, to provide by resolution or resolutions for the issuance of shares
of its preferred stock, par value $0.01 per share (the "Preferred Stock"), and
by filing a certificate of designation in the manner prescribed under the laws
of the State of Delaware, to fix and amend the voting powers, full or limited,
or no voting powers, and the designation, preferences and relative,
participating, optional and other special rights, if any, and qualification,
limitations and restrictions thereof;
WHEREAS, the Board of Directors of the Company desires to authorize and
fix the terms of a series of Preferred Stock and the number of shares
constituting such series; and
WHEREAS, capitalized terms used herein and not otherwise defined shall
have the meanings specified in Section 14 hereof;
NOW, THEREFORE, BE IT RESOLVED that, pursuant to the authority vested
in the Board of Directors by its Certificate of Incorporation, the Board of
Directors does hereby designate, create, authorize and provide for the issuance
of 12% Series A Cumulative Convertible Preferred Stock, par value $0.01 per
share, with a liquidation preference of $8.82 per share, consisting of 3,000,000
shares having the designation, preferences, relative, participating, optional
and other special rights and the qualification, limitations and restrictions
thereof that are set forth in the Certificate of Incorporation and in this
Resolution as follows:
1. DESIGNATION. There is hereby created out of the authorized and
unissued shares of Preferred Stock of the Company a series of Preferred Stock
designated as the "12% Series A Cumulative Convertible Preferred Stock" (the
"Convertible Preferred Stock"). The authorized number of shares constituting the
Convertible Preferred Stock shall be 3,000,000. The liquidation preference of
the Convertible Preferred Stock shall be $8.82 per share (the "Liquidation
Preference"). The date the Convertible Preferred Stock is first issued is
referred to as the "Issue Date."
2. RANK. The Convertible Preferred Stock will, with respect to dividend
rights and rights upon the liquidation, dissolution or winding up of the
Company, rank (i) junior to each class of Capital Stock or series of Preferred
Stock, established hereafter by the Board of Directors, the terms of which
expressly provide that such class or series will rank senior to the Convertible
Preferred Stock as to dividend rights and upon liquidation, dissolution or
winding up of the Company ("Senior Capital Stock"); (ii) pari passu with each
class of Capital Stock or series of Preferred Stock, established hereafter by
the Board of Directors, the terms of which expressly provide that such class or
Exhibit 1.8(c)(ii) - Page 2
series will rank on a parity with the Convertible Preferred Stock as to dividend
rights and upon the liquidation, dissolution or winding up of the Company
("Parity Capital Stock") and (iii) senior to all series of common stock, par
value $0.01 per share, of the Company (the "Common Stock") and to any Capital
Stock or series of Preferred Stock, established hereafter by the Board of
Directors, that expressly provides that it will rank junior to the Convertible
Preferred Stock as to dividend rights and upon the liquidation, dissolution or
winding up of the Company ("Junior Capital Stock").
3. DIVIDENDS.
(a) The Holder of shares of the Convertible Preferred Stock
will be entitled to receive, when, as and if dividends are declared by
the Board of Directors out of funds of the Company legally available
therefor, cumulative preferential dividends from the Issue Date of the
Convertible Preferred Stock accruing at the rate of $1.0584 per share
of Convertible Preferred Stock per annum, or $0.5292 per share of
Convertible Preferred Stock semi-annually, payable semi-annually in
arrears on June 15 and December 15 of each year, commencing on December
15, 2004 or, if any such date is not a Business Day, on the next
succeeding business day (each, a "Dividend Payment Date"), to the
Holders of record on the 10th day prior to the relevant Dividend
Payment Date (each, a "Record Date"). Accrued but unpaid dividends, if
any, may be paid on such dates as determined by the Board of Directors.
(b) Dividends payable on the Convertible Preferred Stock will
be computed on the basis of a 360-day year of twelve 30-day months and
will be deemed to accrue on a daily basis. Dividends on the Convertible
Preferred Stock will accrue from the Issue Date.
(c) Any dividend on the Convertible Preferred Stock shall be,
at the option of the Company, payable (i) in cash, or (ii) through the
issuance of a number of additional shares (including fractional shares)
of Convertible Preferred Stock (the "Additional Shares") equal to the
dividend amount divided by the Liquidation Preference of such
Additional Shares.
(d) The Convertible Preferred Stock will not be redeemable
unless all dividends accrued through such redemption date shall have
been paid in full. Notwithstanding anything to the contrary herein
contained, the Company shall not be required to declare or pay a
dividend if another person (including, without limitation, any of its
subsidiaries) pays an amount to the Holders equal to the amount of such
dividend on behalf of the Company and, in such event, the dividend will
be deemed paid for all purposes.
(e) Dividends on the Convertible Preferred Stock will accrue
whether or not the Company has earnings or profits, whether or not
there are funds legally available for the payment of such dividends and
whether or not dividends are declared. Dividends will accumulate to the
extent they are not paid on the Dividend Payment Date for the
semi-annual period to which they relate. Accumulated unpaid dividends
will accrue and cumulate dividends at a rate of 12% per annum. The
Company will take all reasonable actions required or permitted under
Delaware law to permit the payment of dividends on the Convertible
Preferred Stock.
Exhibit 1.8(c)(ii) - Page 3
(f) No dividend whatsoever shall be declared or paid upon, or
any sum set apart for the payment of dividends upon, any outstanding
share of the Convertible Preferred Stock with respect to any dividend
period unless all dividends for all preceding dividend periods have
been declared and paid upon, or declared and a sufficient sum set apart
for the payment of such dividend upon, all outstanding shares of
Convertible Preferred Stock. Unless full cumulative dividends on all
outstanding shares of Convertible Preferred Stock due for all past
dividend periods shall have been declared and paid, or declared and a
sufficient sum for the payment thereof set apart, then: (i) no dividend
(other than, in the case of Junior Capital Stock, a dividend payable
solely in shares of Junior Capital Stock or options, warrants or rights
to purchase Junior Capital Stock, or in the case of Parity Capital
Stock, a dividend payable solely in shares of Junior Capital Stock or
Parity Capital Stock or options, warrants or rights to purchase Junior
Capital Stock or Parity Capital Stock) shall be declared or paid upon,
or any sum set apart for the payment of dividends upon, any shares of
Parity Capital Stock or Junior Capital Stock; (ii) no other
distribution shall be declared or made upon, or any sum set apart for
the payment of any distribution upon, any shares of Parity Capital
Stock or Junior Capital Stock; (iii) no shares of Parity Capital Stock
or Junior Capital Stock or any warrants, rights, calls or options
exercisable for or convertible into any Parity Capital Stock or Junior
Capital Stock shall be purchased, redeemed or otherwise acquired or
retired for value (excluding an exchange for shares of other Parity
Capital Stock or Junior Capital Stock or a purchase, redemption or
other acquisition from the proceeds of a substantially concurrent sale
of Parity Capital Stock or Junior Capital Stock, and repurchases of
Capital Stock held by an employee in connection with the termination of
such employee's termination) by the Company or any of its subsidiaries;
and (iv) no monies shall be paid into or set apart or made available
for a sinking or other like fund for the purchase, redemption or other
acquisition or retirement for value of any shares of a Parity Capital
Stock or Junior Capital Stock or any warrants, rights, calls or options
exercisable for or convertible into any Parity Capital Stock or Junior
Capital Stock by the Company or any of its subsidiaries. Holders of the
Convertible Preferred Stock shall not be entitled to any dividends,
whether payable in cash, property or stock, in excess of the full
cumulative dividends as herein described.
(g) Dividends on account of arrears and dividends in
connection with any optional redemption may be declared and paid at any
time, without reference to any regular Dividend Payment Date, to
holders of record on such date, not more than 45 days prior to the
payment thereof, as may be fixed by the Board of Directors of the
Company.
4. LIQUIDATION RIGHTS. Upon any voluntary or involuntary liquidation,
dissolution or winding up of the Company after payment in full of the
outstanding debt obligations of the Company and the liquidation preference (and
any accrued and unpaid dividends) on Senior Capital Stock, if any, each Holder
of shares of the Convertible Preferred Stock shall be entitled to payment out of
the assets of the Company available for distribution of the Liquidation
Preference per share of the Convertible Preferred Stock held by such Holder,
plus an amount equal to the accrued and unpaid dividends on the Convertible
Preferred Stock to the date fixed for liquidation, dissolution or winding up,
Exhibit 1.8(c)(ii) - Page 4
before any distribution is made on any Junior Capital Stock, including, without
limitation, any series of Common Stock of the Company. After payment in full of
the Liquidation Preference and an amount equal to the accrued and unpaid
dividends to which Holders of Convertible Preferred Steak are entitled, such
Holders will not be entitled to any further participation in any distribution of
assets of the Company. However, neither the voluntary sale, conveyance, exchange
or transfer (for cash, shares of stock, securities or other consideration) of
all or substantially all of the property or assets of the Company nor the
consolidation or merger of the Company with or into one or more corporations
will be deemed to be a voluntary or involuntary liquidation, dissolution or
winding up of the Company, unless such sale, conveyance, exchange, transfer,
consolidation or merger shall be in connection with a liquidation, dissolution
or winding up of the Company.
5. REDEMPTION.
(a) OPTIONAL REDEMPTION. The Convertible Preferred Stock may
be redeemed, in whole or in part, at the option of the Company after
2005 at the redemption prices specified below (expressed as percentages
of the Liquidation Preference thereof), in each case, together with an
amount equal to accrued and unpaid dividends on the Convertible
Preferred Stock and Additional Shares (if any), to the date of
redemption, upon not less than 15 nor more than 60 days' prior written
notice, during the 12-month period commencing on December 16 of each of
the years set forth below:
Period Redemption Price
2005 and 2006 106%
2007 103%
2008 and thereafter 100.000%
(b) GENERAL. On and after any date fixed for redemption (the
"Redemption Date"), provided that the Company has made available at the
office of the Transfer Agent a sufficient amount of cash to effect the
redemption, dividends will cease to accrue on the Convertible Preferred
Stock called for redemption (except that, in the case of a Redemption
Date after a dividend payment Record Date and prior to the related
Dividend Payment Date, holders of Convertible Preferred Stock on the
dividend payment Record Date will be entitled on such Dividend Payment
Date to receive the dividend payable on such shares), such shares shall
no longer be deemed to be outstanding and all rights of the holders of
such shares as holders of Convertible Preferred Stock shall cease
except the right to receive the cash deliverable upon such redemption,
without interest from the Redemption Date.
(c) PARTIAL REDEMPTION. In the event of a redemption of only a
portion of the then outstanding shares of Convertible Preferred Stock,
the Company shall effect such redemption on a pro rata basis, except
that the Company may redeem all of the shares held by Holders of fewer
than 100 shares (or all of the shares held by Holders who would hold
less than 100 shares as a result of such redemption), as may be
determined by the Company.
Exhibit 1.8(c)(ii) - Page 5
(d) MECHANICS. With respect to a redemption pursuant hereto,
the Company will send a written notice of redemption by first class
mail to each holder of record of shares of Convertible Preferred Stock,
not fewer than 15 days nor more than 60 days prior to the Redemption
Date at its registered address (the "Redemption Notice"); provided,
however, that no failure to give such notice nor any deficiency therein
shall affect the validity of the procedure for the redemption of any
shares of Convertible Preferred Stock to be redeemed except as to the
holder or holders to whom the Company has failed to give said notice or
except as to the holder or holders whose notice was defective. The
Redemption Notice shall state:
(i) the redemption price;
(ii) whether all or less than all the outstanding
shares of the Convertible Preferred Stock
are to be redeemed and the total number of
shares of the Convertible Preferred Stock
being redeemed;
(iii) the Redemption Date;
(iv) that the holder is to surrender to the
Company, in the manner, at the place or
places and at the price designated, his
certificate or certificates representing the
shares of Convertible Preferred Stock to be
redeemed; and
(v) that dividends on the shares of the
Convertible Preferred Stock to be redeemed
shall cease to accumulate on such Redemption
Date unless the Company defaults in the
payment of the redemption price.
Each holder of Convertible Preferred Stock shall surrender the certificate or
certificates representing such shares of Convertible Preferred Stock to the
Company, duly endorsed (or otherwise in proper form for transfer, as determined
by the Company), in the manner and at the place designated in the Redemption
Notice, and on the Redemption Date the full redemption price for such shares
shall be payable in cash to the person whose name appears on such certificate or
certificates as the owner thereof, and each surrendered certificate shall be
canceled and retired. In the event that less than all of the shares represented
by any such certificate are redeemed, a new certificate shall be issued
representing the unredeemed shares.
6. VOTING RIGHTS/CONSENT.
(a) GENERAL. Except as otherwise required under the Delaware
General Corporation Law, the holder of each share of Convertible
Preferred Stock shall have the right to one vote for each share of
Common Stock into which such share of Common Stock could then be
converted (with any fractional share determined on an aggregate
conversion basis being rounded to the nearest whole share), and with
respect to such vote such holder shall have full voting rights and
powers equal to the voting rights and powers of the holders of Common
Exhibit 1.8(c)(ii) - Page 6
Stock, and shall be entitled, notwithstanding any provision hereof, to
notice of any stockholders' meeting in accordance with the Amended and
Restated Bylaws of the Company, and shall be entitled to vote, together
with holders of Common Stock as a single class, with respect to any
question or matter upon which holders of Common Stock have to right to
vote.
(b) ISSUANCE OF ADDITIONAL STOCK. For so long as there are at
least 200,000 shares of Convertible Preferred Stock outstanding, the
Company may not authorize, create (by way of reclassification or
otherwise) or issue any Senior Capital Stock or Parity Capital Stock
(including additional shares of Convertible Preferred Stock (other than
the issuance of shares of Convertible Preferred Stock in payment of
dividends on the Convertible Preferred Stock as provided in Section
3(c) hereof)), or any obligation or security convertible or
exchangeable into, or evidencing a right to purchase, shares of any
class or series of Senior Capital Stock or Parity Capital Stock
(including additional shares of Convertible Preferred Stock), without
the affirmative vote or consent of the holders of at least 66 2/3% of
the outstanding shares of Convertible Preferred Stock.
7. CHANGE OF CONTROL.
(a) GENERAL. In the event of a Change of Control, each Holder
shall have the right to require the Company to purchase all or a
portion of such Holder's Convertible Preferred Stock (the "Change of
Control Offer") as of the date that is no earlier than 30 days and no
more than 60 days after the Change of Control Notice Date (the "Change
of Control Purchase Date") for a purchase price equal to 101% of the
Liquidation Preference together with accrued and unpaid dividends to
but not including the Change of Control Purchase Date (the "Change of
Control Purchase Price"). No funds shall be paid by the Company
pursuant to a Change of Control Offer prior to the Company's repurchase
of any securities ranking senior to the Convertible Preferred Stock and
requiring repurchase pursuant to the change of control provisions
governing such senior securities, including, without limitation, the
repurchase of the Company's 11% Senior Secured Notes due 2008 issued
pursuant to that certain Indenture, dated as of April 23, 2002, between
the Company, certain subsidiaries of the Company and HSBC Bank USA, as
Trustee (the "Indenture").
(b) COMPANY NOTICE. Within 30 days after the occurrence of a
Change of Control, the Company shall mail to all Holders of record of
the Convertible Preferred Stock a written notice of the Change of
Control, the date of such notice being the "Change of Control Notice
Date." The notice shall include the form of Change of Control Purchase
Notice (as defined in subsection (c) below) to be completed by the
Holder and shall state:
(i) the date of such Change of Control and,
briefly, the events causing such Change of
Control;
(ii) the date by which the Change of Control
Purchase Notice pursuant to this Section 7
must be given;
(iii) the Change of Control Purchase Date;
(iv) the Change of Control Purchase Price;
Exhibit 1.8(c)(ii) - Page 7
(v) briefly, the conversion rights of the
Convertible Preferred Stock;
(vi) the name and address of the Paying Agent and
the Transfer Agent;
(vii) the then current Conversion Rate;
(viii) that Convertible Preferred Stock as to which
a Change of Control Purchase Notice has been
given may be converted into Common Stock
only to the extent that the Change of
Control Purchase Notice has been withdrawn
in accordance with the terms of this
Certificate of Designation;
(ix) the procedures that the Holder must follow
to exercise rights under this Section 7;
(x) the procedures for withdrawing a Change of
Control Purchase Notice, including a form of
notice of withdrawal; and
(xi) that the Holder must satisfy the
requirements set forth in the Convertible
Preferred Stock in order to convert the
Convertible Preferred Stock.
(c) EXERCISE. A Holder may exercise its rights specified in
subsection (a) of this Section 7 upon delivery of a written notice of
the exercise of such rights (a "Change of Control Purchase Notice") to
the Paying Agent at any time prior to the close of business on the
THIRD Business Day next preceding the Change of Control Purchase Date,
stating:
(i) the name of the Holder;
(ii) the certificate numbers of the Convertible
Preferred Stock that the Holder will deliver
to be purchased;
(iii) the number of shares of Convertible
Preferred Stock that the Holder will deliver
to be purchased; and
(iv) that such Convertible Preferred Stock shall
be purchased pursuant to the terms and
conditions specified in this Certificate of
Designations.
The delivery of such Convertible Preferred Stock to the Paying Agent (together
with all necessary endorsements) at the office of the Paying Agent shall be a
condition to the receipt by the Holder of the Change of Control Purchase Price
therefor; provided, however, that such Change of Control Purchase Price shall be
so paid pursuant to this Section 7 only if the Convertible Preferred Stock so
delivered to the Paying Agent shall conform in all respects to the description
thereof set forth in the related Change of Control Purchase Notice.
Exhibit 1.8(c)(ii) - Page 8
(d) PAYMENT. Upon receipt by the Paying Agent of the Change of
Control Purchase Notice specified in subsection (c) of this Section 7,
the Paying Agent shall promptly so notify the Company, and the Holder
of the Convertible Preferred Stock in respect of which such Change of
Control Purchase Notice was given shall (unless such Change of Control
Purchase Notice is withdrawn as specified below) thereafter be entitled
to receive solely the Change of Control Purchase Price with respect to
such Convertible Preferred Stock. Such Change of Control Purchase Price
shall be paid to such Holder promptly following the later of (i) the
Change of Control Purchase Date with respect to such Convertible
Preferred Stock (provided the conditions in subsection (c) of this
Section 7 have been satisfied) and (ii) the time of delivery of such
Convertible Preferred Stock to the Paying Agent by the Holder thereof
in the manner required by subsection (c) of this Section 7. Convertible
Preferred Stock in respect of which a Change of Control Purchase Notice
has been given by the Holder thereof may not be converted into shares
of Common Stock on or after the date of the delivery of such Change of
Control Purchase Notice unless such Change of Control Purchase Notice
has first been validly withdrawn.
(e) WITHDRAWAL. A Change of Control Purchase Notice may be
withdrawn by means of a written notice of withdrawal delivered by the
Holder to the office of the Paying Agent at any time prior to the close
of business on the Business Day immediately preceding the Change of
Control Purchase Date, specifying:
(i) the name of the Holder;
(ii) the certificate numbers of the Convertible
Preferred Stock in respect of which such
notice of withdrawal is being submitted;
(iii) the number of shares of Convertible
Preferred Stock with respect to which such
notice of withdrawal is being submitted; and
(iv) the number of shares, if any, of each
Convertible Preferred stock that remains
subject to the original Change of Control
Purchase Notice and that has been or will be
delivered for purchase by the Company.
(f) COMPANY DEPOSIT WITH PAYING AGENT. At or before 11:00
a.m., New York City time, on the second Business Day immediately
following a Change of Control Purchase Date, the Company shall deposit
with the Paying Agent an amount of money sufficient to pay the
aggregate Change of Control Purchase Price of all of the shares of
Convertible Preferred Stock that are to be purchased as of such Change
of Control Purchase Date plus accrued and unpaid dividends thereon up
to but not including the Change of Control Purchase Date. The manner in
which the deposit required by this subsection (f) is made by the
Company shall be at the option of the Company, provided that such
deposit shall be made in a manner such that the Paying Agent shall have
immediately available funds on the second Business Day immediately
following the Change of Control Purchase Date.
Exhibit 1.8(c)(ii) - Page 9
(g) FAILURE TO EXERCISE. If a Holder does not exercise the
right to require the Company to purchase such Holder's Convertible
Preferred Stock, each share of such Convertible Preferred Stock shall
thereafter be convertible into the right to receive the consideration
receivable as a result of the Change of Control by a holder of the
number of shares of Common Stock into which such Convertible Preferred
Stock was convertible immediately prior to the Change of Control.
(h) DEFINITION OF CHANGE OF CONTROL. A Change of Control shall
be deemed to have occurred if any of the following occurs: (a) any
"person" or "group" (as such terms are used in Sections 13(d) and 14(d)
of the Securities Exchange Act of 1934, as amended (the "Exchange
Act")), other than Permitted Holders, is or becomes the "beneficial
owner" (as defined in Rules 13d-3 and 13d-5 under the Exchange Act,
except that a person shall be deemed to have "beneficial ownership" of
all shares that such person has or has the right to acquire, whether
such right is exercisable immediately or only after the passage of
time), directly or indirectly, of more than 50% of the total
outstanding Voting Stock of the Company; (b) during any consecutive
two-year period, individuals who at the beginning of such period
constituted the Board of Directors of the Company (together with any
new directors whose election to such Board or whose nomination for
election by the stockholders of the Company was approved by a vote of a
majority of the directors then still in office who were either
directors at the beginning of such period or whose election or
nomination for election was previously so approved), cease for any
reason to constitute a majority of the Board of Directors then in
office; (c) the Company consolidates with or merges with or into any
person or conveys, transfers or leases all or substantially all of its
assets to any person, or any corporation consolidates with or merges
into or with the Company, in any such event, pursuant to a transaction
in which the outstanding Voting Stock of the Company is changed into or
exchanged for cash, securities or other property, except (i) to the
extent necessary to reflect a change in the jurisdiction of
incorporation of the Company or (ii) where no "person" or "group" (as
such terms are used in Sections 13(d) and 14(d) of the Exchange Act)
owns, other than Permitted Holders, immediately after such transaction,
directly or indirectly, more than 50% of the total outstanding Voting
Stock of the surviving corporation; or (d) the Company is liquidated or
dissolved or adopts a plan of liquidation or dissolution. The good
faith determination by the Board, based upon advice of outside counsel,
of the beneficial ownership of securities of the Company within the
meaning of Rules 13d-3 or 13d-5 under the Exchange Act shall be
conclusive, absent contrary controlling precedent or contrary written
interpretation published by the Commission. No inference shall be
created that officers or employees of the Company are acting as a
"person" or "group" (as such terms are used in Sections 13(d) or 14(d)
of the Exchange Act) with the power to designate a majority of the
members of the Board solely because such officers or employees
constitute a majority of the members of the Board.
(i) The provisions of this Section 7 may be amended, modified
or waived only with the consent of holders of not less than sixty-six
and two-thirds percent (66-2/3%) of the shares of Convertible Preferred
Stock then outstanding.
Exhibit 1.8(c)(ii) - Page 10
8. CONVERSION RATES.
(a) Each share of Convertible Preferred Stock will be
convertible at the option of the Holder, at any time, unless previously
redeemed or repurchased, into the number of fully paid and
non-assessable shares of Common Stock (calculated as to each conversion
rounded up to the nearest 1/100th of a share) obtained by dividing the
Liquidation Preference by the Conversion Price (as defined below) (the
"Conversion Rate"). The Conversion Price shall initially be $8.82 per
share of the Convertible Preferred Stock (subject to the adjustments
described below, the "Conversion Price"). The right to convert a share
of the Convertible Preferred Stock called for redemption or delivered
for repurchase will terminate at the close of business on the
Redemption Date for such Convertible Preferred Stock or in accordance
with the terms of Section 7 hereof, with respect to a repurchase in
connection with a Change of Control.
(b) The right of conversion attaching to any share of
Convertible Preferred Stock may be exercised by the Holder thereof by
delivering the share to be converted to the office of the Transfer
Agent, or any agency or office of the Company maintained for that
purpose, accompanied by a duly signed and completed notice of
conversion in form reasonably satisfactory to the Transfer Agent of the
Company. The conversion date will be the date on which the shares and
the duly signed and completed notice of conversion are so delivered. As
promptly as practicable on or after the conversion date, the Company
will issue and deliver to the Transfer Agent a certificate or
certificates for the number of full shares of Common Stock, issuable
upon conversion, with any fractional shares rounded up to full shares
or, at the Company's option, payment in cash in lieu of any fraction of
a share, based on the Closing Price of the Common Stock on the Trading
Day preceding the conversion date. Such certificate or certificates
will be delivered by the Transfer Agent to the appropriate Holder on a
book-entry basis or by mailing certificates evidencing the additional
shares to the Holders at their respective addresses set forth in the
register of Holders maintained by the Transfer Agent. All shares of
Common Stock issuable upon conversion of the Convertible Preferred
Stock will be fully paid and nonassessable and will rank pari passu
with the other shares of Common Stock outstanding from time to time.
Any shares of Convertible Preferred Stock surrendered for conversion
during the period from the close of business on any Record Date to the
opening of business on the next succeeding Dividend Payment Date must
be accompanied by payment of an amount equal to the dividends payable
on such Dividend Payment Date on the shares of Convertible Preferred
Stock being surrendered for conversion. No other payment or adjustment
for dividends, or for any dividends in respect of shares of Common
Stock, will be made upon conversion. Except as otherwise provided
herein, dividends accrued shall not be paid on Convertible Preferred
Stock converted. If any Holder surrenders shares of Convertible
Preferred Stock for conversion between a Record Date and the related
Dividend Payment Date, then notwithstanding such conversion, the
dividend payable on such Dividend Payment Date will be paid to the
Holder on such Record Date. Holders of Common Stock issued upon
conversion will not be entitled to receive any dividends payable to
holders of Common Stock as of any record time before the close of
business on the conversion date.
Exhibit 1.8(c)(ii) - Page 11
(c) Each share of Convertible Preferred Stock shall be
automatically converted into shares of Common Stock at the Conversion
Rate then in effect (i) upon the affirmative vote of the holders of at
least sixty-six and two-thirds percent (66-2/3%) of the outstanding
shares of such Convertible Preferred Stock, or (ii) on the day
immediately following the date on which the Closing Price of the Common
Stock has equaled or exceeded $26.46 (as adjusted for stock splits,
combinations or similar capital changes) for a period of 45 consecutive
Trading Days. Upon the occurrence of either of the foregoing events,
the outstanding shares of Convertible Preferred Stock shall be
converted automatically without any further action by the holders of
such shares and whether or not the certificates representing such
shares are surrendered to the Company or its transfer agent; provided,
however, that the Company shall not be obligated to issue certificates
evidencing the shares of Common Stock issuable upon such conversion
unless the certificates evidencing such shares of Convertible Preferred
Stock are either delivered to the Company or its transfer agent as
provided below, or the holder notifies the Company or its Transfer
Agent that such certificates have been lost, stolen or destroyed and
executes an agreement satisfactory to the Company to indemnify the
Company from any loss incurred by it in connection with such
certificates.
(d) The Conversion Rate shall be adjusted from time to time by
the Company as follows:
(i) In case the Company shall (A) pay a dividend
in shares of Common Stock to all holders of
Common Stock, (B) make a distribution in
shares of Common Stock to all holders of
Common Stock, (C) subdivide its outstanding
Common Stock into a greater number of shares
or (D) combine its outstanding Common Stock
into a smaller number of shares, the
Conversion Rate in effect immediately prior
thereto shall be adjusted so that the Holder
of any share of Convertible Preferred Stock
thereafter surrendered for conversion shall
be entitled to receive that number of shares
of Common Stock which it would have owned
had such share of Convertible Preferred
Stock been converted immediately prior to
the happening of such event. An adjustment
made pursuant to this subsection (i) shall
become effective immediately after the
record date in the case of a dividend in
shares or distribution and shall become
effective immediately after the effective
date in the case of subdivision or
combination.
(ii) In case the Company shall issue rights or
warrants to all or substantially all holders
of any series of its Common Stock entitling
them to subscribe for or purchase shares of
Common Stock (or securities convertible into
Common Stock) at a price per share less than
the current Market Price per share of Common
Stock at the record date for the
determination of shareholders entitled to
receive such rights or warrants, the
Conversion Rate in effect immediately prior
thereto shall be adjusted so that the same
shall equal the rate determined by
multiplying the Conversion Rate in effect
Exhibit 1.8(c)(ii) - Page 12
immediately prior to such record date by a
fraction, of which the denominator shall be
the number of shares of Common Stock
outstanding on such record date, plus the
number of shares which the aggregate
offering price of the total number of shares
of Common Stock so offered (or the aggregate
conversion price of the convertible
securities so offered) would purchase at
such current Market Price, and of which the
numerator shall be the number of shares of
Common Stock outstanding on such record date
plus the number of additional shares of
Common Stock offered (or into which the
convertible securities so offered are
convertible). Such adjustment shall be made
successively whenever any such rights or
warrants are issued, and shall become
effective immediately after such record
date. If at the end of the period during
which such rights or warrants are
exercisable not all rights or warrants shall
have been exercised, the adjusted Conversion
Rate shall be immediately readjusted to what
it would have been based upon the number of
additional shares of Common Stock actually
issued (or the number of shares of Common
Stock issuable upon conversion of
convertible securities actually issued).
(iii) In case the Company shall distribute to all
or substantially all holders of its Common
Stock any shares of Capital Stock of the
Company (other than Common Stock), evidence
of indebtedness or other non-cash assets
(including securities of any company other
than the Company) or shall distribute to all
or substantially all holders of its Common
Stock rights or warrants to subscribe for or
purchase any of its securities (excluding
those referred to in subsection (ii) above),
then in each such case the Conversion Rate
shall be adjusted so that the same shall
equal the rate determined by multiplying the
Conversion Rate in effect immediately prior
to the date of such distribution by a
fraction, of which the denominator shall be
the current Market Price per share of the
Common Stock on the record date mentioned
below less the fair market value on such
record date (as determined by the Board of
Directors, whose determination shall be
conclusive evidence of such fair market
value) of the portion of the Capital Stock,
evidences of indebtedness or other non-cash
assets so distributed or of such rights or
warrants applicable to one share of Common
Stock (determined on the basis of the number
of shares of Common Stock outstanding on the
record date), and of which the numerator
shall be the current Market Price per share
of the Common Stock on such record date.
Such adjustment shall become effective
immediately after the record date for the
determination of shareholders entitled to
receive such distribution. Notwithstanding
the foregoing, in the event that the Company
shall distribute rights or warrants (other
than those referred to in subsection (ii)
above) ("Rights") pro rata to holders of
Common Stock, the Company may, in lieu of
Exhibit 1.8(c)(ii) - Page 13
making any adjustment pursuant to this
Section 8, make proper provision so that
each Holder of a share of Convertible
Preferred Stock who converts such shares of
Convertible Preferred Stock (or any portion
thereof) after the record date for such
distribution and prior to the expiration or
redemption of the Rights shall be entitled
to receive upon such conversion, in addition
to the shares of Common Stock issuable upon
such conversion (the "Conversion Shares"), a
number of Rights to be determined as
follows: (i) if such conversion occurs on or
prior to the date for the distribution to
the holders of Rights of separate
certificates evidencing such Rights (the
"Distribution Date"), the same number of
Rights to which a holder of a number of
shares of Common Stock equal to the number
of Conversion Shares is entitled at the time
of such conversion in accordance with the
terms and provisions of and applicable to
the Rights, and (ii) if such conversion
occurs after the Distribution Date, the same
number of Rights to which a holder of the
number of shares of Common Stock into which
the number of shares of Convertible
Preferred Stock so converted was convertible
immediately prior to the Distribution Date
would have been entitled on the Distribution
Date in accordance with the terms and
provisions of and applicable to the Rights.
(iv) In case the Company shall, by dividend or
otherwise, at any time distribute (a
"Triggering Distribution") to all or
substantially all holders of its Common
Stock cash in an aggregate amount that,
together with the aggregate amount of all
cash distributions to all or substantially
all holders of its Common Stock made within
the 12 months preceding the date of payment
of the Triggering Distribution and in
respect of which no Conversion Rate
adjustment pursuant to this Section 8 has
been made, exceeds 10.0% of the product of
the current Market Price per share of Common
Stock on the Business Day immediately
preceding the day on which such Triggering
Distribution is declared by the Company (the
"Determination Date") multiplied by the
number of shares of Common Stock outstanding
on such date (excluding shares held in the
treasury of the Company), the Conversion
Rate shall be increased so that the same
shall equal the rate determined by
multiplying such Conversion Rate in effect
immediately prior to the Determination Date
by a fraction, of which the denominator
shall be the current Market Price per share
of the Common Stock on the Determination
Date less the amount of cash (plus the fair
market value of such other consideration) so
distributed within such 12 months
(including, without limitation, the
Triggering Distribution) applicable to one
Exhibit 1.8(c)(ii) - Page 14
share of Common Stock (determined on the
basis of the number of shares of Common
Stock outstanding on the Determination Date)
and the numerator shall be such current
Market Price per share of the Common Stock
on the Determination Date, such increase to
become effective immediately prior to the
opening of business on the day following the
date on which the Triggering Distribution is
paid.
(v) In case any transaction or event (including,
without limitation, any merger,
consolidation, sale of assets, tender or
exchange offer, reclassification, compulsory
share exchange or liquidation) shall occur
in which all or substantially all
outstanding Common Stock is converted into
or exchanged for stock, other securities,
cash or assets (each, a "Fundamental
Change"), the holder of each share of
Convertible Preferred Stock outstanding
immediately prior to the occurrence of such
Fundamental Change shall have the right upon
any subsequent conversion to receive (but
only out of legally available funds, to the
extent required by applicable law) the kind
and amount of stock, other securities, cash
and assets that such holder would have
received if such share had been converted
immediately prior thereto.
(vi) In any case in which this Section 8 shall
require that an adjustment be made following
a record date or a Determination Date, as
the case may be, established for purposes of
this Section 8, the Company may elect to
defer (but only until five Business Days
following the filing by the Company with the
Transfer Agent of the certificate described
in subsection (i) of this Section 8) issuing
to the Holder of any Convertible Preferred
Stock converted after such record date or
Determination Date the shares of Common
Stock and other Capital Stock of the Company
issuable upon such conversion over and above
the shares of Common Stock and other Capital
Stock of the Company issuable upon such
conversion only on the basis of the
Conversion Rate prior to adjustment; and, in
lieu of the shares the issuance of which is
so deferred, the Company shall issue or
cause its transfer agents to issue due bills
or other appropriate evidence prepared by
the Company of the right to receive such
shares. If any distribution in respect of
which an adjustment to the Conversion Rate
is required to be made as of the record
date, effective date or Determination Date
therefor is not thereafter made or paid by
the Company for any reason, the Conversion
Rate shall be readjusted to the Conversion
Rate which would then be in effect if such
record date had not been fixed or such
effective date or Determination Date had not
occurred.
(vii) No adjustment in the Convention Price or the
corresponding Conversion Rate shall be
required unless such adjustment would
require an increase or decrease of at least
1% in such rate; provided, however, that any
adjustments which by reason of this
paragraph are not required to be made shall
Exhibit 1.8(c)(ii) - Page 15
be carried forward and taken into account in
any subsequent adjustment. All calculations
under this paragraph shall be made by the
Company and shall be made to the nearest
cent or to the nearest one-hundredth of a
share, as the case may be. No adjustment
need be made for a change in the par value
or no par value of the Common Stock.
(viii) No adjustment need be made for a transaction
referred to in this Section 8 if all holders
of all of the Company's securities are
entitled to participate in the transaction
on a basis and with notice that the Board of
Directors determines to be fair and
appropriate in light of the basis and notice
on which holders of Common Stock participate
in the transaction. The Company shall give
notice to the Transfer Agent of any such
determination.
(ix) No adjustment need to be made for rights to
purchase Common Stock or issuances of Common
Stock pursuant to a Company plan for
reinvestment of dividends of interest. No
adjustment need be made for a change to the
par value or a change to no par value of the
Common Stock. To the extent that the
Convertible Preferred Stock becomes
convertible into the right to receive cash,
no adjustment need be made thereafter as to
the cash. Interest will not accrue on the
cash.
(x) To the extent that any occurrence specified
in this Section 8(d) shall affect only a
particular series of Common Stock, then any
adjustment in respect thereof shall be
computed as though all reference to Common
Stock were to such series of Common Stock.
To the extent that any occurrence specified
in this Section 8(d) shall affect a
particular series of Common Stock
differently from other series of Common
Stock, then any adjustment in respect
thereof shall be computed separately for
each series of Common Stock.
(e) The Company shall be entitled to make such adjustments in
the Conversion Rate, in addition to those required by Section 8, as it
in its discretion shall determine to be advisable in order that any
stock dividends, subdivisions of shares, distributions of rights to
purchase stock or securities or distributions of securities convertible
into or exchangeable for stock hereafter made by the Company to its
shareholders shall not be taxable.
(f) The Company may from time to time reduce the Conversion
Rate by an amount for any period of time if the period is at least 20
days or such longer period as required by law and if the reduction is
irrevocable during the period; provided, however, that in no event may
the Conversion Rate be reduced such that the Conversion Price is less
than the par value of a share of Common Stock.
Exhibit 1.8(c)(ii) - Page 16
(g) Whenever the Conversion Rate is adjusted, the Company
shall promptly file with the Transfer Agent an Officers' Certificate
briefly stating the facts requiring the adjustment and the manner of
computing it.
(h) The Company shall provide to the Holders reasonable notice
of any event that would result in an adjustment to the Conversion rate
so as to permit the Holders to effect a conversion of Convertible
Preferred Stock into shares of Common Stock prior to the occurrence of
such event.
9. CERTAIN COVENANTS.
(a) PAYMENTS FOR CONSENT. Neither the Company nor any of its
subsidiaries shall, directly or indirectly, pay or cause to be paid any
consideration, whether by way of dividend or other distribution, fee or
otherwise, to any Holder of shares of the Convertible Preferred Stock
for or as an inducement to any consent, waiver or amendment of any of
the terms or provisions of the Certificate of Designation or the
Convertible Preferred Stock unless such consideration is offered to be
paid and is paid to all Holders of the Convertible Preferred Stock that
consent, waive or agree to amend in the time frame set forth in the
solicitation documents relating to such consent, waiver or agreement.
(b) REPORTS. Whether or not required by the rules and
regulations of the Commission, so long as any shares of the Convertible
Preferred Stock are outstanding, the Company shall furnish to the
Holders of the Convertible Preferred Stock (i) as soon as practicable
after the end of each fiscal year of the Company a consolidated balance
sheet, as at the end of such fiscal year, a consolidated statement of
operations for such year and a consolidated statement of cash flows for
such year, accompanied by a report and opinion thereon by independent
public accountants of national standing selected by the Board of
Directors; (ii) as soon as practicable after the end of each quarterly
accounting period of the Company, a consolidated balance sheet of the
Company as of the end of each such fiscal quarter, and a consolidated
statement of income and a consolidated statement of cash flows of the
Company for such period and for the current fiscal year to date as well
as any additional information necessary to satisfy the information
requirements of Rule 144A(d)(4) promulgated under the Securities Act of
1933, as amended. In the event the Company has filed any such report
with the Commission, it shall not be obligated to separately furnish
the report to any Holder unless and until such Holder requests a copy
of the report.
10. REISSUANCE OF CONVERTIBLE PREFERRED STOCK. Shares of Convertible
Preferred Stock redeemed for or converted into Common Stock or that have been
reacquired in any manner shall not be reissued as shares of Convertible
Preferred Stock and shall (upon compliance with any applicable provisions of the
laws of Delaware) have the status of authorized and unissued shares of Preferred
Stock undesignated as to series and may be redesignated and reissued as part of
any series of Preferred Stock; provided, however, that so long as any shares of
Convertible Preferred Stock are outstanding, any issuance of such shares must be
in compliance with the terms hereof.
Exhibit 1.8(c)(ii) - Page 17
11. BUSINESS DAY. If any payment, redemption or exchange shall be
required by the terms hereof to be made on a day that is not a Business Day,
such payment redemption or exchange shall be made on the immediately succeeding
Business Day,
12. AMENDMENT, SUPPLEMENT AND WAIVER. The Company may amend this
Certificate of Designation with the affirmative vote or consent of the holders
of a majority of the shares of Convertible Preferred Stock then outstanding
(including votes or consents obtained in connection with a tender offer or
exchange offer for the Convertible Preferred Stock) and, except as otherwise
provided by applicable law, any past default or failure to comply with any
provision of this Certificate of Designation may also be waived with the consent
of such holders. Notwithstanding the foregoing, however, without the consent of
each Holder affected, an amendment (including any amendment or restatement of
the Company's Certificate of Incorporation) or waiver may not (with respect to
any shares of the Convertible Preferred Stock held by a non-consenting Holder);
(i) alter the voting rights with respect to the Convertible Preferred Stock or
reduce the number of shares of the Convertible Preferred Stock whose Holders
must consent to an amendment, supplement or waiver, (ii) reduce the Liquidation
Preference of any share of the Convertible Preferred Stock or adversely alter
the provisions with respect to the redemption of the Convertible Preferred
Stock, (iii) reduce the rate of or change the time for payment of dividends on
any share of the Convertible Preferred Stock, (iv) waive a default in the
payment of dividends on the Convertible Preferred Stock, (v) make any share of
the Convertible Preferred Stock payable in money other than United States
dollars, (vi) make any change in the provisions of the Certificate of
Designation relating to waivers of the rights of Holders of the Convertible
Preferred Stock to receive the Liquidation Preference, to receive dividends on
the Convertible Preferred Stock or (vii) make any change in the foregoing
amendment and waiver provisions.
Notwithstanding the foregoing, without the consent of any Holder of the
Convertible Preferred Stock, the Company may (to the extent permitted by, and
subject to the requirements of, Delaware law) amend or supplement this
Certificate of Designation to cure any ambiguity, defect or inconsistency, to
provide for uncertificated shares of the Convertible Preferred Stock in addition
to or in place of certificated shares of the Convertible Preferred Stock, to
make any change that would provide any additional rights or benefits to the
Holders of the Convertible Preferred Stock or to make any change that the Board
of Directors determines, in good faith, is not materially adverse to Holders of
the Convertible Preferred Stock or is required for the Company to comply with
the Indenture as in effect on the Issue Date.
13. TRANSFER AND EXCHANGE. When Convertible Preferred Stock is
presented to the Transfer Agent with a request to register the transfer of such
Convertible Preferred Stock or to exchange such Convertible Preferred Stock for
an equal number of shares of Convertible Preferred Stock of other authorized
denominations, the Transfer Agent shall register the transfer or make the
exchange as requested if its reasonable requirements for such transaction are
met and such transfer or exchange is in compliance with applicable laws or
regulations.
14. CERTAIN DEFINITIONS. As used in this Certificate of Designation,
the following terms shall have the following meanings (and (1) terms defined in
the singular have comparable meanings when used in the plural and vice versa,
(2) "including" means including without limitation, (3) "or" is not exclusive
and (4) an accounting term not otherwise defined has the meaning assigned to it
in accordance with United States generally accepted accounting principles as in
effect on Issue Date and all accounting calculations will be determined in
accordance with such principles), unless the content otherwise requires:
Exhibit 1.8(c)(ii) - Page 18
"Affiliate" of any specified Person means (i) any other Person which,
directly or indirectly, controls, is controlled by or is under direct or
indirect common control with, the specified Person, (ii) any other Person that
owns, directly or indirectly, 10% or more of the specified Person's Voting Stock
or (iii) any executive officer or director of the specified Person.
"Board of Directors" mean the Board of Directors of the Company or any
committee thereof duly authorized to act on behalf of the Board.
"Business Day" means each day which is not a legal holiday.
"Capital Stock" means, with respect to any Person, any and all shares,
interests, participations, rights in, or other equivalents (however designated
and whether voting and/or non-voting) of, such Person's capital stock, including
Preferred Stock, and any and all rights (other than any evidence of
indebtedness), warrants or options exchangeable for or convertible into such
capital stock.
"Closing Price" means on any day the reported last sale price on such
day, or in case no sale takes place on such day, the average of the reported
closing bid and ask prices on the principal national securities exchange (which
shall include the Nasdaq National Market) on which such stock is listed or
admitted to trading (and if the Common Stock is listed or admitted to trading on
more than one U.S. national or non-U.S. securities exchange, the Company shall
determine, in its reasonable discretion, the principal securities exchange on
which such Common Stock is listed or admitted to trading), or if not listed or
admitted to trading on any securities exchange, the average of the closing bid
and ask prices as furnished by any independent registered broker-dealer firm,
selected by the Company for that purpose, in each case adjusted for any stock
split during the relevant period.
"Commission" means the Securities and Exchange Commission.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Holders" means the registered holders from time to time of the
Convertible Preferred Stock.
"Market Price," for any security as of any date, means the average of
the daily Closing Price for the five consecutive trading days ending on such
date for such security or, if no Closing Prices are available for such security,
the current market value shall be an amount equal to the fair market value of
such security determined in the good faith judgment of the Board of Directors of
the Company.
"Officers' Certificate" means a certificate signed by two officers of
the Company.
"Paying Agent" means the paying agent for the Convertible Preferred
Stock appointed by the Company, which initially shall be Mellon Investor
Services.
Exhibit 1.8(c)(ii) - Page 19
"Permitted Holders" means (i) AIG/SUN America Investments, Inc., (ii)
American General, (iii) AIM Capital Management, (iv) American Express Financial
Advisors, (v) Xxxxxxx, Xxxxx & Co. Special Situations Investing, (vi) LC Capital
Partners, LP, (vii) Xxxxxx Brothers, (viii) Lord Xxxxxx, (ix) Mackay Xxxxxxx,
(x) Xxxxxx Xxxxxxx Asset Management, (xi) Xxxxxxxxxxx Funds, (xii) Xxxxxx
Investments, (xiii) Romulus Holdings, Inc., (xiv) Triage Capital Management,
(xv) Commonwealth Advisors, Inc., (xvi) Lutheran Brotherhood, (xvii) Xxxxx
Xxxxxx & Co. LLC, (xviii) Bay Harbour Management, (xix) Loeb Partners Corp., and
(xx) with respect to each of the foregoing, any majority-owned Affiliate
thereof.
"Person" means any individual, corporation, limited liability company,
partnership, joint venture, association, joint-stock company, trust,
unincorporated organization, government or any agency or political subdivision
thereof or any other entity.
"Preferred Stock" means, with respect to any Person, any and all
shares, interests, participations or other equivalents (however designated) of
such Person's preferred or preference stock, and including, without limitation,
all classes and series of preferred or preference stock of such Person.
"Securities Act" means the Securities Act of 1933, as amended.
"Trading Day" means, in respect of any securities exchange or
securities market, each Monday, Tuesday, Wednesday, Thursday and Friday, other
than any day on which securities are not traded on the applicable securities
exchange or in the applicable securities market.
"Transfer Agent" means the transfer agent for the Convertible Preferred
Stock appointed by the Company, which initially shall be Mellon Investor
Services.
"Voting Stock" means, with respect to any Person, the Capital Stock of
any class or kind ordinarily having the power to vote for the election of
directors or other members of the governing body of such Person."
Exhibit 1.8(c)(ii) - Page 20
IN WITNESS WHEREOF, said Globix Corporation, has caused this
Certificate of Designation to be signed by _________________, its
_______________________, this ____ day of _________, 2004.
GLOBIX CORPORATION
By:
-----------------------------------------
Name:
Title:
Exhibit 1.8(c)(ii) - Page 21
EXHIBIT 1.8(c)(iii)
-------------------
Section 8(b) of the Class A Warrant Agreement shall be amended by inserting the
following sentence immediately after the first sentence in such section:
"In the event of a merger, such effective provision may provide that each holder
of a Warrant then outstanding shall have the right upon payment (or deemed
payment) of the Purchase Price in cash for such Warrant to receive consideration
in the form of the kind and number of shares of stock or other securities or
property (including cash) receivable upon such merger by a holder of the number
of shares of Common Stock that might have been purchased upon exercise of such
Warrant immediately prior to such merger."
Exhibit 1.8(c)(iii) - Page 1
EXHIBIT 1.8(c)(v)
-----------------
THIS WARRANT AND ANY SECURITIES ACQUIRED UPON EXERCISE OF THIS WARRANT HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"), OR THE SECURITIES LAWS OF ANY STATE. NEITHER THIS WARRANT, SUCH
SECURITIES NOR ANY INTEREST THEREIN MAY BE TRANSFERRED EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND APPLICABLE STATE
SECURITIES LAWS OR PURSUANT TO AN APPLICABLE EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND SUCH STATE SECURITIES LAWS.
GLOBIX CORPORATION
WARRANT TO PURCHASE SHARES OF COMMON STOCK
---------------------------------------------
As of _______ __, 200_ [INSERT EFFECTIVE DATE]
This warrant (this "WARRANT") certifies that, for good and valuable
consideration, Globix Corporation, a Delaware corporation (the "COMPANY"),
grants to [INSERT HOLDER] or its permitted assigns (the "WARRANTHOLDER"), the
right to subscribe for and purchase from the Company, at any time during the
Exercise Period (as defined herein), ____________ (______) [INSERT NUMBER OF
SHARES] shares of the Common Stock, par value $0.01 of the Company (the "WARRANT
SHARES"), at the exercise price per share of $_____ [INSERT EXERCISE PRICE] (the
"EXERCISE PRICE"), all subject to the terms, conditions and adjustments herein
set forth. The number of Warrant Shares is subject to adjustment as provided in
ARTICLE III.
This Warrant is being issued in replacement of the Warrantholder's
warrant (the "ORIGINAL WARRANT") for the purchase of shares of NEON
Communications, Inc. ("NEON") as converted pursuant to the terms of that certain
Agreement and Plan of Merger, dated _________, 2004, between the Company and
NEON. By its acceptance of this Warrant, the Warrantholder acknowledges the
replacement and termination of the Original Warrant.
1. DEFINITIONS
1.1. DEFINITIONS. As used herein, unless the context otherwise
requires, the following terms have the following respective meanings:
"AFFILIATE" with respect to any Person, shall mean any other Person
that directly or indirectly, controls, is controlled by, or is under common
control with, such Person.
"BUSINESS DAY" means any day other than a Saturday, Sunday or a day
on which national banks are authorized by law to close in the State of New York.
"CLOSING PRICE" of a share of Common Stock for any day shall mean
the last reported sales price, regular way, or, in the event that no sale takes
place on such day, the average of the reported closing bid and asked prices,
regular way, in either case as reported on the principal national securities
Exhibit 1.8(c)(v) - Page 1
exchange on which such Common Stock is listed or admitted to trading or, if not
listed or admitted to trading on any national securities exchange, on the Nasdaq
National Market System or the Nasdaq SmallCap Market or, if such security is not
quoted on the Nasdaq National Market System or the Nasdaq SmallCap Market, the
average of the closing bid and asked prices on each such day in the
over-the-counter market as reported by Nasdaq or, if bid and asked prices for
such security on each such day shall not have been reported by Nasdaq, the
average of the bid and asked prices for such day as furnished by any reputable
investment banking firm regularly making a market in such security selected for
such purpose by the Board of Directors of the Company or a committee thereof. If
the Closing Price cannot be calculated on such date on any of the foregoing
bases, the Closing Price of such security on such date shall be the fair market
value as reasonably determined by an Independent Financial Expert selected for
such purpose by the Board of Directors of the Company or a committee thereof.
For the purpose of this Warrant, and as appropriate, the Closing Price shall be
determined by the average of the closing prices for the five (5) trading days
prior to the date of the notice of exercise.
"COMMON STOCK" means the common stock, par value $0.01 per share,
of the Company.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended from time to time.
"GOVERNMENTAL AUTHORITY" means any foreign, federal, state, local
or other governmental authority or regulatory body having jurisdiction over the
Company, its Affiliates or the Warrantholder.
"INDEPENDENT FINANCIAL EXPERT" means a nationally recognized
investment banking firm that does not (and whose directors, officers, employees
and Affiliates do not) have a direct or indirect financial interest in the
Company or any of its Affiliates, that has not been and at the time it is called
upon to give independent financial advice to the Company is not (and none of
whose directors, officers, employees or Affiliates is) a promoter, director or
officer of the Company or any of its Affiliates, and that does not provide any
advice or opinions to the Company or any of its Affiliates.
"PERSON" means any individual, firm, corporation, partnership,
limited liability company, trust, incorporated or unincorporated association,
joint venture, joint stock company, Governmental Authority or other entity of
any kind, and shall include any successor (by merger or otherwise) of such
entity.
"SECURITIES ACT" means the Securities Act of 1933, as amended from
time to time.
II. EXERCISE OF WARRANT
2.1. EXERCISE PERIOD. On the terms and subject to the conditions
contained herein, the Warrantholder may exercise this Warrant on any Business
Day starting on _______ __, 200_ and ending at 5:00 p.m., Eastern Standard Time,
on _______ __, 200_ [INCORPORATE PERIOD FROM CONVERTED NEON WARRANT] (the
"EXERCISE PERIOD"), for all or any part of the Warrant Shares.
2.2. EXERCISE PROCEDURE. To exercise this Warrant, the Warrantholder
shall deliver to the Company at its principal executive offices: (a) payment of
the aggregate Exercise Price in the manner provided in SECTION 2.3 (as computed
by multiplying (A) the Exercise Price by (B) the number of shares of Common
Stock for which the Warrantholder is exercising this Warrant at such time); (b)
a completed and properly executed Notice of Exercise in substantially the form
Exhibit 1.8(c)(v) - Page 2
attached hereto as Annex I; and (c) this Warrant. The minimum number of shares
of Common Stock for which this Warrant or any portion thereof shall be
exercisable at any one time shall be 10,000, unless the remaining number of
shares of Common Stock for which this Warrant is then exercisable shall be less
than 10,000, in which case such remaining shares shall be the minimum number of
shares of Common Stock for which this Warrant is then exercisable. Upon receipt
of the aggregate Exercise Price and the required deliverables pursuant to the
preceding sentence, the Company shall, within five (5) Business Days thereafter,
subject to receipt of any required regulatory approvals (including expiration of
any required waiting period), deliver to the Warrantholder duly executed
certificate(s) representing the aggregate number of shares of Common Stock
issuable upon such exercise, together with cash in lieu of any fraction of a
Warrant Share as provided in SECTION 2.6. Such stock certificate(s) shall be in
such denominations and registered in the name(s) as the Warrantholder shall
request in the Notice of Exercise. If this Warrant shall have been exercised in
part, the Company shall deliver to the Warrantholder a new warrant evidencing
the rights of the Warrantholder to purchase the remaining Warrant Shares
issuable (which shall in all other respects be identical to this Warrant). All
shares of Common Stock issuable upon the exercise of this Warrant pursuant to
the terms hereof shall be validly issued, fully paid and nonassessable and
without any preemptive rights.
2.3. PAYMENT OF EXERCISE PRICE. The aggregate Exercise Price (computed
in the manner provided in Section 2.2) may be payable hereunder by the delivery
by certified check or by wire transfer of immediately available funds to the
account of the Company of an amount equal to the aggregate Exercise Price or by
instructing the Company to withhold from the shares of Common Stock to be issued
upon exercise of the Warrant a number of whole or fractional shares of Common
Stock equal to (i) the Exercise Price divided by the Closing Price of a share of
Common Stock ( as of the date of the Notice of Exercise) multiplied by (ii) the
number of shares of Common Stock for which the Warrantholder is exercising this
Warrant at such time.
2.4. RESTRICTIONS. The Company shall not be required to issue any
shares of Common Stock under this Warrant if the issuance of such shares would
constitute a violation by the Company of any provision of any law, rule or
regulation of (i) any Governmental Authority, including without limitation,
compliance with the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as
amended (the "HSR ACT"), and compliance with registration or qualification
requirements of applicable federal and state securities laws or (ii) any
applicable self governing organization or stock exchange, including without
limitation, the rules, regulations or listing requirements of any such
organization or stock exchange. If at any time the Company shall determine,
based upon the advice of counsel, that the registration, qualification or
listing of any shares subject to this Warrant under any applicable state or
federal law or other applicable rules or regulations (including those of any
applicable stock exchange), or any filing or expiration of any waiting period
under the HSR Act, is necessary as a condition of, or in connection with, the
issuance of shares, the Company shall not be required to issue any shares of
Common Stock under this Warrant unless and until the Company has received
evidence reasonably satisfactory to it that such laws, rules or regulations have
been complied with and/or such filing has been made and the applicable waiting
period has expired under the HSR Act; provided, however, that nothing in this
SECTION 2.4 shall limit the Company's obligations under ARTICLE V of this
Warrant.
2.5. PAYMENT OF TAXES. The Company shall pay all stamp taxes and other
similar charges with respect to the issue or delivery of Common Stock hereunder.
The Company shall not be required to pay any transfer tax or other similar
charge imposed in connection with the issue of any stock certificate in any name
other than that of the Warrantholder, and in such case the Company shall not be
required to issue or deliver any stock certificate until such tax or other
charge has been paid or it has been established to the reasonable satisfaction
Exhibit 1.8(c)(v) - Page 3
of the Company that no such tax or other charge is due. The Company shall be
entitled to deduct and withhold from amounts otherwise payable pursuant to this
Warrant to any Warrantholder such amounts as the Company is required to deduct
and withhold with respect to the making of such payment under the Internal
Revenue Code of 1986, as amended or under any provision of state, local or
foreign tax law. To the extent that amounts are so withheld by the Company, such
withheld amounts shall be treated for all purposes of this Warrant as having
been paid to the Warrantholder in respect of which such deduction and
withholding was made by the Company.
2.6. FRACTIONAL SHARES. The Company shall not be required to issue any
fractional shares of Common Stock upon exercise of this Warrant. In lieu of any
fractional share to which the Warrantholder would otherwise be entitled upon
exercise of this Warrant, the Company shall make a cash payment in an amount
equal to the product of (a) the Closing Price per share of Common Stock on the
date of the notice of exercise multiplied by (b) the fraction of a share.
III. ADJUSTMENTS
3.1. SUBDIVISION OR COMBINATION OF COMMON STOCK. If the Company at any
time subdivides (by any stock split, stock dividend, recapitalization or
otherwise) its outstanding shares of Common Stock into a greater number of
shares, then as of the record date for effecting such subdivision the number of
shares issuable upon exercise of this Warrant will be proportionately increased
and the Exercise Price in effect immediately prior to such subdivision shall be
proportionately decreased. If the Company at any time combines (by reverse stock
split, recapitalization or otherwise) its outstanding shares of Common Stock
into a smaller number of shares, then as of the record date for effecting such
combination the number of shares issuable upon exercise of this Warrant will be
proportionately decreased and the Exercise Price in effect immediately prior to
such combination shall be proportionately increased.
3.2. CONSOLIDATION, MERGER, ETC. In case of any consolidation or merger
of the Company with or into any other corporation, entity or person, or (a) any
other corporate reorganization, in which the Company shall not be the continuing
or surviving entity of such consolidation, merger or reorganization or in
connection with which the Common Stock (or other securities issuable upon
exercise of this Warrant) shall be changed into or exchanged for stock of any
other entity or cash or other property, (b) any transaction in which in excess
of 50% of the Company's voting power is transferred to a person not a
stockholder immediately prior to the consummation of such transaction, (c) any
sale of all or substantially all of the assets of the Company or (d) a capital
reorganization or reclassification of the Common Stock (or other securities
issuable upon exercise of this Warrant) that does not result in an adjustment
pursuant to SECTION 3.1 (any such transaction being hereinafter referred to as a
"REORGANIZATION"), then, in each case, the Warrantholder, on exercise hereof at
any time after the consummation or effective date of such Reorganization, shall
receive, in lieu of the Warrant Shares issuable on such exercise prior to the
date of such Reorganization, the stock, other securities, cash or other property
to which such holder would have been entitled upon the date of such
Reorganization if such holder had exercised this Warrant immediately prior
thereto.
3.3. NOTICE OF ADJUSTMENT. Whenever an event necessitating an
adjustment to this Warrant pursuant to this ARTICLE III occurs, the Company
shall promptly deliver written notice thereof, by first class mail, postage
prepaid, addressed to the Warrantholder in accordance with SECTION 7.5, which
notice shall state the increase or decrease in the number or other denominations
of securities purchasable and exercise price payable upon the exercise of this
Warrant setting forth in reasonable detail the method of calculation and the
facts upon which such calculation is based.
Exhibit 1.8(c)(v) - Page 4
OBJECTION: IV. RESTRICTIONS ON TRANSFER
4.1. RESTRICTIONS ON TRANSFER. The Warrantholder, by its acceptance of
this Warrant, agrees to be bound by the provisions of this ARTICLE IV and
acknowledges and confirms that this Warrant and any Warrant Shares issued upon
exercise of this Warrant have not been registered under the Securities Act or
any applicable state securities laws, and may not be sold or transferred except
in compliance with and subject to the Securities Act and such state securities
laws. Unless and until this Warrant and such Warrant Shares have been registered
under the Securities Act and such state securities laws, the Company may
require, as a condition to effecting any sale or transfer of this Warrant or
such Warrant Shares on the books of the Company, an opinion of counsel
reasonably satisfactory to the Company to the effect that an exemption from
registration under the Securities Act and such state securities laws is
available for the proposed transfer or assignment or a certification reasonably
satisfactory to the counsel of the Company in its professional determination
from the transferee that it is an "ACCREDITED INVESTOR" as defined under the
Securities Act and regulations promulgated thereunder. Any purported sale or
transfer of this Warrant and/or such Warrant Shares shall be null and void
unless made in compliance with the conditions set forth in this ARTICLE IV.
Except as provided in SECTION 4.2, (a) this Warrant and any warrant of the
Company issued in exchange or replacement for this Warrant shall be stamped or
otherwise imprinted with a legend in substantially the form set forth on the
cover of this Warrant, (b) each stock certificate for Warrant Shares issued upon
the exercise of this Warrant and each stock certificate issued upon the transfer
of any such Warrant Shares shall be stamped or otherwise imprinted with a legend
substantially to the same effect.
4.2. TERMINATION OF RESTRICTIONS. The restrictions imposed by SECTION
4.1 upon the transferability of this Warrant and the Warrant Shares shall
terminate: (a) when and so long as this Warrant or any such Warrant Shares shall
have been effectively registered under the Securities Act and transferred in
compliance therewith; or (b) when the Company shall have received an opinion of
counsel reasonably satisfactory to it that this Warrant or such Warrant Shares
may be transferred without registration thereof under the Securities Act;
provided, however, that if the Warrant Shares have been held (both legally and
beneficially) by the Warrantholder for at least one (1) year and are proposed to
be sold in compliance with Rule 144 under the Securities Act, no such opinion of
counsel shall be required. Whenever the legend requirements imposed by SECTION
4.1 shall terminate as to this Warrant or the Warrant Shares, the holder of this
Warrant or any Warrant Shares shall be entitled to receive from the Company, at
the Company's expense, a new warrant or a new stock certificate representing the
Warrant Shares, as the case may be, not bearing the restrictive legend described
in SECTION 4.1.
4.3. COMPLIANCE WITH SECURITIES LAWS. The Warrantholder, by acceptance
hereof, represents to the Company that this Warrant and any Warrant Shares
purchased upon exercise of this Warrant are being acquired solely for the
Warrantholder's own account and not as a nominee for any other party, and for
investment, and that the Warrantholder will not offer, sell or otherwise dispose
of this Warrant or any such Warrant Shares except under circumstances that will
not result in a violation of the Securities Act or any applicable state
securities laws.
4.4. TRANSFER PROCEDURE. Subject to compliance with the other
provisions of this ARTICLE IV, transfer of this Warrant, in whole or in part,
shall occur upon surrender of this Warrant at the principal executive offices of
the Company, together with a duly executed written assignment of this Warrant
and funds sufficient to pay any transfer taxes payable upon the making of such
transfer and, if required, an opinion of counsel reasonably acceptable to
counsel of the Company in its professional determination concerning the
compliance of such transfer with the Securities Act and applicable state
securities laws. Upon receipt of such items, the Company shall execute and
Exhibit 1.8(c)(v) - Page 5
deliver a new warrant or warrants in the name of the assignee or assignees and
in the denomination(s) specified in such instrument of assignment, and shall
issue to the assignor a new warrant evidencing the portion of this Warrant not
so assigned, and this Warrant shall promptly be cancelled.
4.5. MAINTENANCE OF TRANSFER BOOKS. The Company agrees to maintain, at
the principal executive office of the Company, books or records for the
registration and the registration of transfer of this Warrant or any warrant of
the Company issued in exchange for this Warrant.
V. NECESSARY ACTIONS
The Company will: (a) use its reasonable best efforts to obtain all
such authorizations, approvals, exemptions or consents from any Governmental
Authority having jurisdiction thereof as may be necessary to enable the Company
to perform its obligations under this Warrant (including, without limitation,
making all necessary filings with such Governmental Authorities); (b) take all
necessary steps (including, without limitation, making appropriate amendments to
its certificate of incorporation) to ensure that the Company has authorized a
sufficient number of authorized but unissued shares of Common Stock to provide
for the issuance of the Warrant Shares; (c) reserve from such authorized but
unissued shares of common stock and keep available for issuance pursuant to this
Warrant a sufficient number of shares of Common Stock to provide for the
issuance of the Warrant Shares upon the exercise of this Warrant; (d) if and so
long as any shares of Common Stock are listed on a national securities exchange,
if permitted by the rules of such exchange, list and keep listed on such
exchange, upon official notice of issuance, all shares of Common Stock issuable
upon exercise of this Warrant; and (d) take all actions as may be necessary or
appropriate to ensure that the Company may validly and legally issue fully paid
and non-assessable shares of Common Stock upon the exercise of this Warrant that
are not subject to any preemptive rights and are free from all taxes, liens,
security interests, charges, and other encumbrances with respect to the issuance
thereof, other than taxes in respect of any transfer occurring contemporaneously
with such issuance. If the Company determines that registration of the Warrant
Shares under any federal or state securities law or any other governmental
approval is required prior to the issuance of the Warrant Shares, then the
Company shall use its reasonable best efforts to secure such registration or
approval, and the right to exercise this Warrant shall be extended until 15 days
after the completion of any such registration or approval.
VI. LOSS OR MUTILATION
On receipt of evidence reasonably satisfactory to the Company of the
loss, theft, destruction or mutilation of this Warrant and (a) in the case of
loss, theft or destruction, on delivery of an indemnity agreement reasonably
satisfactory in form and substance to the Company; or (b) in the case of
mutilation, on surrender and cancellation of this Warrant, the Company shall
execute and deliver, in lieu of this Warrant, a new warrant of like tenor and
amount.
VII. MISCELLANEOUS
7.1 ENTIRE AGREEMENT. This Warrant constitutes the entire agreement
between the Company and the Warrantholder with respect to the Warrant.
7.2 NONWAIVER. No course of dealing or any delay or failure to exercise
any right hereunder on the part of the Warrantholder shall operate as a waiver
of such right or otherwise prejudice the Warrantholder's rights, powers or
remedies.
Exhibit 1.8(c)(v) - Page 6
7.3 BINDING EFFECT; NO THIRD-PARTY BENEFICIARIES. This Warrant shall
inure to the benefit of and shall be binding upon the Company and the
Warrantholder and their respective successors and permitted assigns. Nothing in
this Warrant, expressed or implied, is intended to or shall confer on any person
other than the Company and the Warrantholder, or their respective successors or
permitted assigns, any rights, remedies, obligations or liabilities under or by
reason of this Warrant.
7.4 SECTION AND OTHER HEADINGS. The section and other headings
contained in this Warrant are for reference purposes only and shall not be
deemed to be a part of this Warrant or to affect the meaning or interpretation
of this Warrant.
7.5 NOTICES. Except as otherwise expressly provided herein, all notices
and deliveries referred to in this Warrant shall be in writing (including
facsimile transmission or similar writing) and shall be given to such party at
its address or facsimile number set forth on the signature pages hereof. Each
such notice, request or other communication shall be deemed received by the
other party (i) if given by facsimile transmission, when transmitted to the
facsimile number specified in this Section 7.5 and confirmation of receipt is
received, (ii) if given by mail, 72 hours after such communication is deposited
in the mails with first class postage prepaid, addressed as aforesaid or (iii)
if given by any other means, when delivered at the address specified in this
Section 7.5.
7.6 SEVERABILITY. Whenever possible, each provision of this Warrant
will be interpreted in such manner as to be effective and valid under applicable
law, but if any provision of this Warrant is held by a court of competent
jurisdiction to be invalid, illegal or unenforceable in any respect under any
applicable law or rule in any jurisdiction, such invalidity, illegality or
unenforceability will not affect any other provision of this Warrant or the
validity, legality or enforceability of this Warrant in any other jurisdiction.
In such event, this Warrant will be reformed, construed and enforced in such
jurisdiction as if such invalid, illegal or unenforceable provision had never
been contained herein.
7.7 GOVERNING LAW. All questions concerning the construction, validity
and interpretation of this warrant and the issuance of securities hereunder will
be governed by and construed in accordance with the internal laws of the State
of Delaware, without giving effect to any choice of law or conflict of law
provision or rule (whether of the State of Delaware or any other jurisdiction)
that would cause the application of the laws of any jurisdiction other than the
State of Delaware.
7.8 RIGHTS OR LIABILITIES AS STOCKHOLDER. The Warrantholder shall be
deemed to have become a holder of record of the shares of Common Stock issuable
under SECTION 2.2 as of the date on which all required deliverables pursuant to
SECTION 2.2 have been received by the Company. Until such time the Warrantholder
shall not have any voting rights or other rights or liabilities of a stockholder
of the Company with respect to the Common Stock issuable hereunder.
7.9 AMENDMENT. No amendment or waiver of any provision of this Warrant
shall be effective without the prior written consent of the Company and the
Warrantholder.
Exhibit 1.8(c)(v) - Page 7
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed by
its duly authorized officer.
GLOBIX CORPORATION
By: _________________________
Name: _________________________
Title: _________________________
Warrantholder Information:
[INSERT]
Exhibit 1.8(c)(v) - Page 8
ANNEX I
-------
NOTICE OF EXERCISE
------------------
(To be executed upon exercise of this Warrant)
The undersigned hereby irrevocably elects to exercise the right
represented by this Warrant to purchase _________ shares of Common Stock, and
herewith tenders to the Company as payment for such shares the amount of
$__________ in accordance with the terms of this Warrant. The undersigned
requests that a certificate for such shares be registered in the name of each of
the following:
Name: ___________________
Address: _________________
_________________
_________________
and that each certificate be delivered to the above at the address indicated.
The undersigned represents that it is an "accredited investor" (as
defined in applicable rules and regulations under the Securities Act of 1933, as
amended), and that it is acquiring such shares of Common Stock for its own
account for investment and not with a view to or for sale in connection with any
distribution thereof.
Dated: __________________________
Signature ______________________________
______________________________
(Print Name)
______________________________
(Xxxxxx Xxxxxxx)
______________________________
(City) (State) (Zip Code)
Exhibit 1.8(c)(v) - Annex I - Page 1
EXHIBIT 5.11
------------
FINANCIAL REVIEW PROCEDURES
Perform due diligence including the following areas as of June 30, 2004.
o Review financial statements (balance sheet, income statement, cash
flow & trial balance) comparing to prior months and audited financial
statements
1. Identify and understand significant fluctuations in assets,
liabilities, revenues and expenses. If deemed necessary, test for
unrecorded liabilities.
2. Assess overall adequacy of reserves
o Review any new or changes made to material contracts (vendor or
client) entered into since original due diligence
o Review current status of accounts receivable (aging and bad debt),
accounts payable and accrued liabilities.
o Update of any ongoing or possible litigation
o Verify and review any change in debt structure
o Verify and review employee related activities
1) headcount
2) new or amended employee agreements
o Verify and review any changes in Equity
o Update of competitive environment
o Review status of tax returns, audits and overall status of tax
obligations
o Review accounts receivable netting policy
Accountants shall have discretion to perform additional procedures deemed
necessary to carry out the foregoing engagement.
Exhibit 5.11 - Page 1
